[Senate Hearing 113-22]
[From the U.S. Government Publishing Office]
S. Hrg. 113-22
DOE BUDGET FOR FY 2014
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
TO
CONSIDER THE PRESIDENT'S PROPOSED BUDGET FOR THE DEPARTMENT OF ENERGY
FOR FISCAL YEAR 2014
__________
APRIL 18, 2013
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
RON WYDEN, Oregon, Chairman
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
CHRISTOPHER A. COONS, Delaware ROB PORTMAN, Ohio
BRIAN SCHATZ, Hawaii JOHN HOEVEN, North Dakota
MARTIN HEINRICH, New Mexico
Joshua Sheinkman, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 3
Poneman, Daniel B., Deputy Secretary, Department of Energy....... 5
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 1
APPENDIXES
Appendix I
Responses to additional questions................................ 37
Appendix II
Additional material submitted for the record..................... 89
DOE BUDGET FOR FY 2014
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THURSDAY, APRIL 18, 2013
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:01 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden,
chairman, presiding.
OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON
The Chairman. With respect to the Department of Energy's
fiscal year 2014 budget, it's quite clear that our country
needs to have a broad portfolio of energy choices. But it can't
have that when the Energy Department's budget doesn't fund
them. The energy needs and opportunities in Oregon are
different from the energy needs and opportunities in Alaska or
West Virginia or Louisiana or North Dakota.
It is true that no one has a crystal ball that's good
enough to know exactly where technological breakthroughs are
going to occur or how energy markets in our world will change.
Five years ago when the Congress last enacted a major energy
bill, the potential for the kinds of dramatic increases in gas
and oil, in gas resources from shale and oil, were unknown.
Putting all of our research dollars on a few technologies
closes off pathways to other potentially transformative energy
breakthroughs.
I understand that proposing a budget is about establishing
priorities. The current budget problems require tough
decisions. The Department of Energy budget is no exception.
None the less a budget is also about your priorities for
the future. I remain concerned about some of the investment
decisions that I've seen in the Department of Energy budget.
Because I don't think they truly reflect the level playing
field that's needed to promote choice and competition in energy
and particularly encourage energy investment.
This morning I'm not going to go over the same ground on
technologies like energy storage or environmental cleanup that
I discussed with Dr. Moniz last week. I think energy storage,
which has the potential to greatly improve the economics and
challenges of adding renewable energy to the electric system,
has been underfunded. Environmental cleanup is not a problem
that is going to be solved just by spending more money. I do
think it's important to ask for explanations about why the
Department of Energy budget has such dramatic reductions in
fossil energy and nuclear energy and to a lesser extent in
water power and fuel cells.
The DOE budget never seems to be complete without the
Department cutting funding the Congress has added for water
power and fuel cells. These are technologies that the private
sector is anxious to move on quickly. Our competitors around
the world are ramping up their investments in these areas.
Despite that, this year there appears to be no exception to
what I think clearly are misguided cuts.
Year after year funding for fossil energy research is cut
over $74 million, or 15 percent. Sure the fossil budget
includes a new program for collaboration with EPA and the U.S.
Geological Survey to develop safer fracking technologies. The
$17 million budgeted for this program doesn't begin to reflect
the importance of addressing the challenges of improving the
way fracking is done, encouraging best practices, and the
implications that has for U.S. energy production
competitiveness.
Year after year funding for nuclear energy research was cut
$123.6 million, or 16 percent. In the wake of the decision to
cancel the Yucca Mountain repositories, it's hard to understand
how it makes sense to reduce funding on nuclear fuel cycle
research. Earlier this week the Department announced a program
to develop spent fuel storage technologies for high burn-up
fuel of $15.8 million stretched over 5 years. Certainly better
late than never, but like the Department's efforts on fracking
research, the level of effort proposed doesn't seem to me to
begin to match the importance of the challenge.
Funding for fusion energy is proposed to increase at almost
a half a billion dollars with half of that going to fund the
U.S. contribution to the International Fusion Demonstration
Project being constructed in France. ITER is now such a large
part of the fusion budget that it is quite literally eating up
other programs' funding. Even with a large budget increase, the
Department is ordering MIT to shut down its fusion research
program to save dollars.
The Department has now said that the U.S. contribution to
ITER will be capped at $2.4 billion. The last time the
Department provided the Congress with an estimate the total
U.S. project cost was in 2008 when the U.S. share in this
project was estimated to cost less than half of that amount.
Fusion may truly be the breakthrough technology of the future,
but it's time for Congress to take a closer look at this
program-especially the ITER project.
My point here is simple. Not every technology needs to get
the same amount of funding. There should be some genuine
balance among technologies that reflect their likely
contribution to the country's national energy mix. Budgeting
priorities ought to also make sure that addressing problems
that are already at hand, like fracking or spent nuclear fuel
storage, are real priorities, not after thoughts.
We look forward to the Department's testimony. But let me
have Senator Murkowski make her opening statement.
Just 2 procedural points that you and I have talked about
very quickly, Senator Murkowski.
First, the department cannot do its job without receiving
nor this committee cannot do its job without receiving the
department's budget justifications in a timely manner. Senator
Murkowski and I feel very strongly that we absolutely have to
have that and have to have that level of cooperation.
Second, members of the committee invariably have detailed
questions about the budget and the Department's testimony that
they submit after the hearings. Last year, the committee did
not receive the Department's responses to our budget hearing
questions until December, 10 months after they were submitted.
Secretary Poneman, the Department may not completely
control all of the issues with respect to the budget
justifications when Senators up here ask questions. But you do
have complete control when responses to this committee are
submitted. For myself and Senator Murkowski, and we've talked
about this, it is not acceptable to fail to deliver responses
to the committee's questions for months and months on end. That
has got to change. I'm going to want your personal assurance
that the Department is going to answer the questions that
Senators on both sides of the aisle ask in a timely way.
Senator Murkowski, for whatever statement you'd like to
make.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I'd like to
welcome the Deputy Secretary. Appreciate you stepping in to
speak to the President's priorities within the Department of
Energy.
I want to add to Senator Wyden's comments here in terms of
timeliness of responses. I think members take these budget
hearings very seriously. We need to understand where the
Administration is intending to go with their priorities.
But I think it's also very, very important that the
Administration know where we're coming from in our priorities.
That is reflected in these QFRs, these questions for the
record. So it's not just an exercise where we ask our staff to
dream up whatever it is that they think the folks back home
want to hear.
These are important. It's important that we receive
responses in a timely manner. So I just want to add to the
comments of Senator Wyden. Reinforcing that we take these very
seriously and the hope will be that the Department will be
fully cooperative.
Last year when the Administration's budget came out I
expressed disappointment with the overall budget request. This
year, unfortunately, is no different. I am again, disappointed.
I've said that as it relates to the full budget, the fact
that the budget comes in 65 days after it was due, more than 2
weeks after the Senate has already moved through its own budget
resolution. This just make the process a little more
complicated. I think you fully recognize that.
But we're sitting here at $16.8 trillion in debt. We've got
a budget in front of us that adds more, adds more. It tacks
trillions on top of what we already have going forward in this
next decade, a budget that just doesn't come close to
balancing. So this is tough for all of us as we try to, again,
address the priorities but do so in a way that is fiscally
responsible.
There's a lot of things that I don't like within this
budget. But I'll start off with acknowledging a few areas where
I think things are moving in the right direction.
A greater emphasis on research and development, the R and D
focus, I think, is just so key, so critical to us as we move
toward an energy policy that, again, is affordable, abundant,
clean, diverse and secure. It's going to come about through our
advances in technology. So I'm pleased with the focus on the
basic research. I think it will promote the innovation and the
breakthroughs that we need to establish commercial viability.
You've got this new active project management at ERE which
will hopefully help the Department become a better steward of
taxpayer dollars. I think that that's a good thing.
There's some things that clearly I am not in alignment with
the Administration. The chairman has noted that budgets are all
about priorities and we look for that. The Administration has
said repeatedly that they support an all of the above energy
policy. But I don't necessarily see that reflected in this
budget here.
Instead it would appear that there is still the favorites
even amongst the renewables in the vehicle technologies. One
example, the water power account is again cut despite the fact
that hydropower is by far our largest source of clean renewable
electricity generation.
Then there is the fossil R and D budget as the chairman has
noted it remains almost exclusively focused on CCS and a
fracking safety initiative. New supply from unconventional
resources like methane hydrates, distant afterthought. If it's
even an afterthought at all.
Yet that resource could provide natural gas for thousands
of years if it's commercialized. Yet DOE is looking at this,
says $5 million here is less than .02 percent of the total
request. If we're really going to move out and advance some of
these breakthroughs we need to show that support by way of the
budget.
Also want to mention 2 other areas where I do think that we
might be able to find some bipartisan support, but yet I think
the Administration has taken a different approach.
The first is energy taxes. Despite bipartisan support for
the expansion of the master limited partnerships. Senator Coons
is leading on that. I'm pleased to be working with him.
The Administration instead of looking to that is once again
going down the same path that we've seen time and time and time
again which is singling out oil, natural gas and coal producers
with increased taxes. Now I get it. You're looking under every
rock to find dollars for an increased budget.
But we've demonstrated before that it's a bad idea. I think
it's going to be demonstrated again that it is a bad idea. What
we need to do, I think we all recognize, we need to be looking
at how we reform a broken tax code. But singling out one
industry is not going to get us there. I find it really quite
surprising that the budget would make permanent the wind tax
credit just months after the industry itself proposed a
phaseout there.
Another area where I think we might be able to have some
good conversations is in the establishment of a trust fund for
energy research. I think it is a logical way. It's an enduring
way to boost funding in that area. I have included it as a part
of my energy 2020 proposal. I think that we should be able to
find some agreement.
But what the Administration does in its proposal is it
takes new production in areas that are off limits. It takes
them off the table. I'm looking at this and saying the only way
that you're going to really be able to make this work is if you
allow for new production and you take some, a portion, of the
revenues from that new production. That's how you can fund
this.
But if we're taking it from the existing production in this
country you're just taking it from some other source that's
already committed. So I'm afraid that if that's the approach
the Administration is going to take on this it's not going to
go anywhere either despite the fact that I think it's a
promising concept. So we've got to figure out how we make it
all work.
I do appreciate the opportunity to focus on some of the
areas that we might be able to help encourage the
Administration, ways that we, as a committee, can advance good
policy. Again, I appreciate you being here this morning.
The Chairman. Senator Murkowski, thank you very much for a
statement where there were a whole host of areas where I agree.
Hallelujah for your throwing in the point about the tax reform
and fixing the dysfunction tax system as well.
Senator Murkowski. We're working at it.
The Chairman. So that's not your--with it Secretary
Poneman. We'll let you off the hook on that.
But we welcome your remarks. We'll make your formal remarks
a part of the record and look forward to having a chance to
have some back and forth on questions.
So, go ahead.
STATEMENT OF DANIEL B. PONEMAN, DEPUTY SECRETARY, DEPARTMENT OF
ENERGY
Mr. Poneman. Chairman Wyden, Ranking Member Murkowski,
members of the committee, thank you for the opportunity to
appear before you today to discuss the President's fiscal year
2014 budget request for the Department of Energy.
Let me just begin by thanking the committee for voting to
refer the nomination of Dr. Ernest Moniz to the floor. The
expeditious treatment of that is something that we're all very
grateful for.
The United States is on the path to a cleaner and more
secure energy future.
Since President Obama took office responsible oil and gas
production has increased each year while oil imports have
fallen to a 20 year low.
Renewable electricity generation from wind, solar and
geothermal sources has doubled.
The carbon emissions that threaten our planet have fallen
to the lowest level in the United States in nearly 2 decades.
In short, the President's approach is working. It is a
winning strategy for the economy, energy security and the
environment. But even with this progress there is more work to
do.
The Energy Department plays a vital leadership role in
continuing the significant progress America has made in
producing more American energy, creating the clean energy jobs
of the future and increasing energy efficiency across the
economy. In total the President's 2014 budget provides $28.4
billion in discretionary funds for the Department of Energy to
support its mission to assure future generations may live in a
country that is safer, healthier and more prosperous.
As part of the Administration's all of the above strategy,
the President's budget request invests in programs that support
research and deployment of the energy technologies of the
future. These investments will help us double American energy
productivity by 2030, save consumers and business money by
saving energy and support ground breaking research in
innovation to leverage every domestic source of energy from
hydrocarbons and nuclear to solar and wind.
The Administration recognizes the government's role in
fostering scientific and technological breakthroughs and has
committed significant resources so that our Nation can lead the
world in the innovations of the future.
This includes $5.2 billion for the Office of Science to
support basic research that could lead to new discoveries and
help solve our energy challenges.
The President's budget supports DOE's energy frontier
research centers which are working to solve specific scientific
problems to help unleash new, clean energy technology
development and our energy innovation hubs which bring together
our Nation's top scientists and engineers to achieve game
changing energy goals.
The fiscal 2014 request also includes $379 million for the
advanced research projects agencies for energy to support high
impact energy related research projects with a potential to
transform the energy sector.
In addition to strengthening our economy the budget request
also strengthens our security by providing $11.7 billion for
the Department's National Nuclear Security Administration. NNSA
plays a vital role in achieving President Obama's nuclear
security objectives including in the prevention of nuclear
terrorism and the great and urgent threat it presents to our
Nation and to the world.
Finally, the President's budget request of $5.6 billion
provides the resources to clean up the cold war legacy and
continue the world's largest environmental remediation effort
led by the Office of Environmental Management.
Given the urgency of the challenges we face and the current
fiscal climate DOE remains committed to streamlining our
organization to improve performance and save taxpayer money.
The Department has already achieved approximately $322 million
in strategic sourcing savings including reducing our vehicle
fleet by 8 percent.
The President's fiscal year 2014 budget request for the
Energy Department protects Americans from nuclear hazards. It
advances basic science and cutting edge research to strengthen
America's future competitiveness and helps make America a
magnet for jobs again by investing in high tech manufacturing
and innovation, clean energy and infrastructure. The budget
does all these things as part of a comprehensive plan that
reduces the deficit and puts the Nation on a sound fiscal
course.
Thank you. I am now very pleased to answer your questions.
[The prepared statement of Mr. Poneman follows:]
Prepared Statement of Daniel B. Poneman, Deputy Secretary, Department
of Energy
Chairman Wyden, Ranking Member Murkowski, and Members of the
Committee, thank you for the opportunity to appear before you today to
discuss the President's fiscal year 2014 Budget request for the
Department of Energy.
The United States is on the path to a cleaner and more secure
energy future. Since President Obama took office, responsible oil and
gas production has increased each year, while oil imports have fallen
to a 20 year low; renewable electricity generation from wind, solar,
and geothermal sources has doubled; and the carbon emissions that
threaten our planet have fallen to the lowest level in the U.S. in
nearly two decades. In short, the President's approach is working. It
is a winning strategy for the economy, energy security, and the
environment.
But even with this progress, there is more work to do. High gas
prices impact American families and businesses every day, and remind us
that we are still too reliant on oil, which comes at a cost to American
families and businesses. While there is no silver bullet to address
rising gas prices in the short term, President Obama remains committed
to a sustained, all-of-the-above energy strategy and common-sense
proposals that will further reduce our dependence on oil, better
protect consumers from spikes in gas prices, and reduce pollution.
The Energy Department plays a vital leadership role in continuing
the significant progress America has made in producing more American
energy, creating the clean energy jobs of the future, and making energy
more efficient across the economy.
In total, the President's 2014 Budget provides $28.4 billion in
discretionary funds for DOE to support its mission. The FY 2014 Request
supports the President's goal to increase American competitiveness and
reduce our reliance on oil by making strategic investments in critical
research and technology sectors for clean energy and to make
significant national security advances to leave future generations with
a country that is safer, healthier, and more prosperous. Further, the
President proposes investments so the United States will lead the world
in development, demonstration, and deployment of clean energy
technologies, to reduce our dependence on oil and to mitigate the
impact of climate change. The Request also includes increased funding
to modernize the Nation's nuclear deterrents and continue securing
vulnerable materials around the world. In light of the current
discretionary spending caps, these increases in funding are a testament
to the importance of clean energy and innovation to the country's
economic future and the importance of nuclear security to the Nation's
safety.
Investing in clean energy, innovation, jobs of the future
As part of the Administration's all-of-the-above energy strategy,
the President's budget request invests in programs that support
research and deployment of the energy technologies of the future. These
investments will help us double American energy productivity by 2030,
save consumers and businesses money by saving energy, and support
groundbreaking research and innovation to leverage every domestic
source of energy, from natural gas and nuclear to solar and wind.
The budget request invests approximately $4.7 billion in applied
energy programs. This is a 42 percent increase over FY12 enacted levels
and demonstrates the President's commitment to making America a magnet
for clean energy jobs, ensuring our nation's energy security, and
combating climate change.
The Request includes $2.8 billion in funding for programs designed
to help meet the President's goals of investing in the next generation
of renewable energy technologies, advanced vehicles and fuels, and
energy efficiency measures that reduce energy use in Federal agencies
and the industrial and building sectors.
The budget continues to support the Department's successful SunShot
initiative, which aims to make solar energy cost-competitive with
conventional sources of electrical energy, without subsidy, by the end
of the decade. It also supports several other cross-cutting initiatives
including the following:
EV Everywhere Grand Challenge--advances the goal of making
the U.S. the first country in the world to invent and produce
plug-in electric vehicles that are as affordable and convenient
as gasoline powered vehicles by 2022.
Clean Energy Manufacturing Initiative--focuses on
dramatically improving U.S. competitiveness in the
manufacturing of clean energy products and strengthening U.S.
competitiveness across multiple manufacturing industries
through increased energy productivity.
Grid Integration Initiative--develops the technologies,
tools, and approaches to overcome grid integration barriers for
renewable energy, electric vehicles, and energyefficient
building technologies while maintaining grid reliability.
In addition to the Grid Integration Initiative, the budget request
includes $169 million to facilitate grid modernization and increase the
reliability and security of the grid. In FY14, we are 3 undertaking
efforts to produce real-time analysis of the transmission system and
energy supply disruptions, improve response times during emergencies,
and promote effective cyber-security capabilities in the energy sector.
Investing in energy efficiency and renewable energy generation are
fundamental steps necessary for creating a clean energy economy. The
Administration continues to call on Congress to pass HomeStar or
similar mandatory funding legislation aimed at creating jobs and
spurring economic growth by encouraging Americans to invest in energy-
saving home improvements.
Currently, nuclear energy supplies approximately 20 percent of the
Nation's electricity and over 60 percent of clean, non-carbon producing
electricity. Over 100 nuclear power plants are offering reliable and
affordable baseload electricity in the United States, and they are
doing so without air pollution and greenhouse gas emissions. The budget
request invests $735 million in the nuclear energy program to help
develop the next-generation of nuclear power technologies, including
small modular reactors and improved light water reactor systems, and
continue R&D efforts in areas such as improved fuel forms. The Budget
also provides $60 million to support the Administration's Strategy for
the Management and Disposal of Used Nuclear Fuel and High Level
Radioactive Waste, which provides a framework for moving toward a
sustainable program to deploy an integrated system capable of
transporting, storing and disposing of used nuclear fuel and high-level
radioactive waste.
As we move to a sustainable energy future, America's fossil energy
resources will continue to play an important role in our energy mix.
President Obama is committed to developing our oil and gas resources in
a safe and sustainable manner. Today, America produces more natural gas
than ever before--and nearly everyone's energy bill is lower because of
it. The Administration's Budget Request includes $638 million to
advance technologies related to the reliable, efficient, affordable,
and environmentally-sound use of fossil fuels, and provide strategic
and economic security against disruptions in U.S. oil supplies. Key R&D
efforts include developing costeffective carbon capture and storage and
advanced power systems. The Budget also invests $2 billion over the
next ten years from Federal oil and gas development revenue in a new
Energy Security Trust that would provide a reliable stream of mandatory
funding for R&D on costeffective transportation alternatives that
reduce our dependence on oil.
As industry, Congress, and the American people make critical energy
decisions that require an in-depth understanding of domestic and
international energy markets, it's important that we adequately fund
the Energy Information Administration, the nation's premier source of
independent statistical information about energy production and use.
That is why the budget request includes $117 million for EIA.
Investing in Science and Innovation to Keep America Competitive
Competing in the new energy economy will require us to harness the
expertise of our scientists, engineers, and entrepreneurs. As the
President said, the ``the world is shifting to an innovation 4 economy,
and nobody does innovation better than America. In today's innovation
economy, we need a world-class commitment to science and research.''
The President is committed to making investments in research and
development (R&D) that will grow our economy and enable America to
remain competitive. This focus on science and innovation will help
create the industries and jobs of the future and address the challenges
and opportunities of the 21st Century.
The Administration recognizes the Government's role in fostering
scientific and technological breakthroughs, and has committed
significant resources to ensure America leads the world in the
innovations of the future. This includes $5.2 billion for the Office of
Science to support basic research that could lead to new discoveries
and help solve our energy challenges. These funds support progress in
materials science, basic energy science, advanced computing and more.
They also provide America's researchers and industries with state-of-
the-art tools to ensure they stay at the cutting edge of science.
The budget request continues to support Energy Frontier Research
Centers. The Energy Frontier Research Centers are working to solve
specific scientific problems to help unleash new clean energy
technology development. So far, the EFRCs have generated some 3,400
peer-reviewed papers 60 invention disclosures, and 200 patents, and the
Centers report numerous instances of technology transfer. In their
three-plus years of existence, the EFRCs have achieved scientific
breakthroughs in multiple areas, from solar power and batteries to new
catalysts for refining petroleum and powering fuel cells. In FY 2014,
we are going to hold an open re-competition to select new EFRCs and
consider renewal applications for existing EFRCs.
The budget request also supports the five existing Energy
Innovation Hubs and proposes a new Hub in electricity systems. Through
the Hubs, we are bringing together our nation's top scientists and
engineers to achieve game-changing energy goals. The Hubs continue to
make progress. For example, the Modeling and Simulation for Nuclear
Reactors Hub has released the first versions of software that, support
simulating a virtual model of an operating physical reactor. The Fuels
from Sunlight Hub has filed multiple invention disclosures and
published scientific papers. And the Energy Efficient Buildings Hub is
developing advanced building modeling tools and has built one of the
country's first 3-D building design labs.
Additionally, the budget request includes $379 million for the
Advanced Research Projects Agency for Energy, known as ARPA-E, to
support high-impact energy-related research projects with the potential
to transform the energy sector. ARPA-E has invested in roughly 285
high-risk, high-reward research projects that, if successful, could
create the foundation for entirely new industries. 17 of these
projects, which received an initial investment from ARPA-E of
approximately $70 million in total, have attracted over $450 million in
private sector follow-on funding. These companies and research teams
have produced a battery that doubled the energy density of any previous
design, successfully engineered microbes that use carbon dioxide and
hydrogen to make fuel for cars, and developed a 1 megawatt silicon
carbide transistor the size of a fingernail.
In FY14, ARPA-E will continue to work on all aspects of
transportation, including alternative and bio-derived fuels, batteries,
components for transportation electrification, and advanced vehicle
designs and materials. Additionally, ARPA-E will continue to work on
all aspects of stationary power systems, including building efficiency,
stationary energy storage systems, grid modernization, and stationary
energy generation.
Taken together, our research initiatives will help power America's
great innovation machine to accelerate energy breakthroughs and create
jobs.
Nuclear Safety and Security
In addition to strengthening our economy, the budget request also
strengthens our security by providing $11.7 billion for the
Department's National Nuclear Security Administration. NNSA plays a
vital role in achieving President Obama's nuclear security objectives.
As the United States begins the nuclear arms reduction required by
the New START treaty, the science, technology and engineering
capabilities within the nuclear security enterprise will become even
more important to sustaining the U.S. nuclear deterrent. The budget
request includes $7.9 billion for Weapons Activities, a nine percent
increase over the FY 2012 enacted levels. This increase provides a
strong basis for transitioning to a smaller yet still safe, secure and
effective nuclear stockpile. It also strengthens the science,
technology and engineering base of our enterprise.
The budget request also includes $1.2 billion for the Naval
Reactors program to ensure the safe and reliable operation of reactors
in nuclear-powered submarines and aircraft carriers and to fulfill the
Navy's requirements for new nuclear propulsion plants that meet current
and future national defense requirements.
Additionally, the budget request supports NNSA's critical work to
prevent nuclear terrorism--one of the most immediate and extreme
threats to global security. That is why President Obama has elevated
this challenge to the top of our national security goals. It includes
$2.1 billion to implement key nuclear security, nonproliferation and
arms control activities. It supports efforts to detect, secure, and
dispose of dangerous nuclear and radiological material around the
world. And it will help the Department to fulfill its role in
completing the President's four-year plan to secure all vulnerable
nuclear materials worldwide.
Finally, the President's FY2014 Budget Request of $5.622 billion
provides the resources to clean up the Cold War legacy and maintain
momentum in the world's largest environmental remediation effort, led
by the Office of Environmental Management (EM). EM continues to develop
and apply innovative environmental cleanup strategies and construct and
operate one-ofa- kind, highly-complex facilities to safely complete
clean-up in a manner that demonstrates continued value to the American
taxpayers.
Investing for Security and Prosperity
The President's fiscal year 2014 Budget Request for the Energy
Department protects Americans from nuclear hazards, advances basic
science and cutting-edge research to strengthen America's future
competitiveness, and helps make America a magnet for jobs again by
investing in hightech manufacturing and innovation, clean energy, and
infrastructure. The Budget does all of these things as part of a
comprehensive plan that reduces the deficit and puts the Nation on a
sound fiscal course.
As President Obama has said, ``Today, no area holds more promise
than our investments in American energy. After years of talking about
it, we're finally poised to control our own energy future.'' The
investments included in the Administration's Energy Department budget
request are vital to ensuring America's energy security and securing
America's place as the world leader in the clean energy economy.
Thank you, and now I am pleased to answer your questions.
The Chairman. Thank you, Secretary Poneman.
Let me turn first to the question of fracking. In the last
few years the country has seen record highs in production of
natural gas and production of natural gas liquids and crude oil
production is headed back to levels not seen since the 1980s. I
think it's understood that much of this growth is driven by
shale development and with that, fracking.
We also know that while this has certainly been a big plus
for our economy, it benefits our country in a whole host of
ways. I was recently at a school in Central Oregon where we
were looking at 35 percent reductions in natural gas pricing.
So it's very clear that benefits are being felt throughout so
many communities.
Valid concerns, valid concerns, have been raised as to how
safely this continued development can be done. These
environmental issues, in my view, have got to be addressed.
They've got to be addressed right.
So I look at the budget and I'm trying to sort through the
justification for the Department of Energy cutting the fossil
energy research budget by 15 percent. The budget provides 12
million toward research on natural gas technologies. This is in
collaboration with, of course, the Environmental Protection
Agency and the Department of the Interior.
DOE's role or core competency in this effort is intended to
be well integrity and green technologies. Certainly 2 of the
most important components in ensuring future shale development
is done in an environmentally sound way. It just seems to me
that when you really sort through, Senator Murkowski and I have
both said, what our priorities are, what's most important? Any
investment in research in this area would be returned many
times over in savings that would be accrued in environmental
cleanup and revenue from further development.
So there's a lot on the line. It's hard to look at the size
of the stakes and then see this really, very modest,
disproportionately small effort put into research. So what's
your take with respect to that concern?
Mr. Poneman. Thank you, Mr. Chairman.
First of all I would like to strongly agree with both of
the premises of your question which is that the prodigious
increase in natural gas has been a game changer for this
country. Actually the dollars that went into that produced
increase are very, very modest. So one point is that you can
get big bang for the buck sometimes with a very modest
investment.
We've put $137 million into hydraulic fracturing research
and horizontal drilling research between 1978 and 1992 in the
department. From that we've gone from 2 percent to 35 percent
natural gas. So that's the first part.
The second premise we agree with is if we do not take care
to ensure that we do this technologically well and responsibly.
Not only responsibly but in a way that's transparent to the
taxpayers and to the people of this country, we will not be
able to continue to enjoy the incredible benefits this
provides. So we therefore agree on the need to make sure we get
that part right as well.
We are investing in the R and D where it's helpful. There
is leverage, Mr. Chairman, in the fact that we're not doing
this alone. I think you know we have now signed an MOU with the
EPA and with the Department of the Interior, who each of whom
bring relevant expertise to some of the environmental issues
related to fracking.
We have put in this budget $25 million prize for who can
come up with good ideas on how to introduce capture technology
on natural gas fired plants. We're always making, as you well
know, and with your assistance, hard decisions on exactly where
the dollars go. But I want to assure you that the dollars that
we have dedicated to this technology, we believe, are the right
dollars to promote both of the premises of your question.
The Chairman. I think you're making important points. I
think you're playing a bad hand here when the budget cuts 15
percent in a critically important area.
I just want to make one other point very quickly. If you
all don't do this research, I don't think it's going to get
done. I mean, for example, Senator Murkowski and I are going to
start natural gas workshops next month. We intend to work very
closely with the Administration. It's going to be a completely
bipartisan effort.
One of the areas we're going to be looking at is best
practices on our public lands. I'm concerned that the research
that you all do is not going to be as extensive as it might be
with a more fulsome budget in this area. We'll look directly
into this during the workshop Senator Murkowski and I have
planned.
So I hope that you will take this back. Certainly I want
you to know I'm going to do everything I can as chairman of
this committee, and also as member of the Budget Committee, to
turn that around.
I'm going to just mention one other point because my time
has expired.
We like to say up here that we're concerned about the
forgotten renewables. When I went to Alaska with Senator
Murkowski, we looked at geothermal and biomass and hydropower.
Research into hydropower in the budget is cut. Given the
estimates of untapped potential in hydropower resources,
upwards of 60 gigawatts of emissions-free generating capacity,
I am very troubled about that as well.
I'm over my time and want to recognize Senator Murkowski
and Senator Barrasso. But just know how strongly we feel about
these research cuts. In my view, if you all don't do it, it
isn't going to get done. We're going to lose the opportunity to
get returns that will be many times over the cost of any
initial research.
Senator Murkowski.
Senator Murkowski. I want to add a me too, on the hydro.
You know, we heard very, very clearly from Secretary Chu. This
was several years ago that the potential for additional
renewable energy, any power brought online because of
hydropower it's just so untapped. Yet when we look at the
budgets it just doesn't appear to reflect any of that.
With the cuts to the water power program, as I mentioned in
my opening statements and as the chairman has just noted,
you've got a request of $55 million for the water power
program.
You compare this to $356.5 million for solar.
One hundred fourty-four million for wind.
Yet the area where everyone agrees we have so much
potential for growth is hydro. We're looking at a request of
$55 million.
I think you've heard the concerns expressed here by the
chairman and myself. So I don't know. We will keep pushing on
this. In fact we've got a hearing, Mr. Chairman.
The Chairman. Right.
Senator Murkowski. I think next week.
The Chairman. Yes.
Senator Murkowski. On how we can move out hydropower.
The House in an amazing display of partisanship passed
their hydro bill with not one member in opposition to it. We
want to advance something on this side too. We think this is an
opportunity where the President can actually sign something
into law.
But it doesn't seem that there's the level of priority
coming out of the Administration on this.
How much is the Department proposing should go for marine
hydrokinetic technologies and how much for conventional
hydropower research? Do you know that break down?
Mr. Poneman. I can get it for you very quickly.
Senator Murkowski. Would you?
Mr. Poneman. Yes, Senator.
Senator Murkowski. OK. Because I'm curious in knowing what
types of programs and projects DOE is going to focus on within
this water power program. So if you can get me that break down
I'd appreciate it.
Mr. Poneman. Absolutely.
Senator Murkowski. Now the chairman has also been talking
about the great potential that we have for natural gas. The
focus this committee is going to place on all aspects of
natural gas sector here through our round tables coming up.
We've had a lot of discussion in this committee about exports.
We've got pending before the Department currently, we've got 20
applications for licenses to export LNG. The bulk of these
applications are to send LNG to countries that don't have a
free trade agreement.
From a budget perspective are you all including funding
levels sufficient to ensure the timely review of these
applications? I guess I'm asking also for the timeline, if you
have that, for review of these applications.
Mr. Poneman. Thank you, Senator.
If I might just quickly address the first part of your
question. We do strongly agree on the importance of hydro.
Obviously I would note that the $55 million that you've noted
for fiscal 2014 is actually an increase from $20 million in
2013.
Senator Murkowski. But it still looks pretty meager when
you compare it to wind and solar.
Mr. Poneman. I certainly take your point, Senator. The
break down between marine hydrokinetic is 39 million.
Traditional hydro is 15 million in the current fiscal 2014
request of the 55.
On your second question regarding the LNG exports. We do
believe the Department is adequately staffed to process those.
As you know, we've gotten almost 200,000 comments in this 2
round comment process that we've had. They've been working very
actively on sorting through those comments. I think we're, very
soon, going to be in a position to start making decisions based
on the record all the documents that have been supplied.
Senator Murkowski. So when you say very soon within a
period of months? What do you anticipate?
Mr. Poneman. Senator, they're working through them as
quickly as they responsibly can. I don't have a date certain. I
wouldn't think it would be months.
Senator Murkowski. OK.
One more question for you. I raised this in my opening
statement. This is relating to where the President is referring
to as his energy security trust. As I mentioned I've had a
proposal out there that we're calling the Advanced Energy Trust
Fund, same type of concept, but the real key difference is how
you pay for it.
Can you explain exactly how the Administration intends to
pay for its proposal? If you're not opening up any new lands
for development are you proposing deficit spending? Will there
be less money for land water conservation fund? Where do you
figure you're going to get this seed money for the energy
security trust?
Mr. Poneman. Senator, my understanding was that the money,
the $2 billion for that energy security trust, would come out
of the royalty revenues from the Federal lands that are used to
develop those resources.
Senator Murkowski. But those revenues are already going to
help fund other aspects of our budget. So you're then taking
them away from those projects and programs and you're putting
them into your trust fund. I got that.
But then how do you fund the other things you've been
paying for out of your rents and royalties?
Mr. Poneman. Senator, my understanding and of course the
licensing of those Federal lands falls under the jurisdiction
of the Department of the Interior, was that there are licenses
that will be granted that will generate these royalties. But to
give you a specific breakdown and if there are puts and takes
between existing and new licenses I would have to get back to
you.
Senator Murkowski. I'd like to see exactly how that's
proposed.
Mr. Poneman. I'm happy to provide that.
Senator Murkowski. Thank you.
Thank you, Mr. Chairman.
The Chairman. Going back and forth, Senator Heinrich,
you're next.
Senator Heinrich. Thank you very much.
Thanks for joining us, Mr. Poneman. Let's get right to it
because I've got a lot of questions.
I want to start with a question about the Department's
strategy to manage nuclear waste and the importance that I
raised last week of maintaining a clear linkage between the
siting of short term storage facilities and the development of
a permanent or several, potentially, permanent geologic
repositories. It's this linkage throughout the process that
will keep the pressure on the Federal Government to actually
build a repository. Dr. Moniz said here last week that the Blue
Ribbon Commission agreed that there should be a linkage and
that the development of the 2 facilities should proceed in
parallel.
So everybody seems to agree that there should be some sort
of linkage here. But I've yet to hear any discussion of exactly
what that linkage should be or should look like. I note that
the Department's own strategy calls for an interim storage
facility to be in operation by 2021, but not to open a
permanent repository until 2048. That is 27 years later. That,
to me, doesn't sound like a very close linkage.
The history of nuclear waste in this country shows that a
lot can go awry in 27 years. I believe a process without some
sort of linkage is going to be a mistake. The Department is on
record supporting the linkage. The BRC supports a linkage.
Do you agree that a nearly 3 decade gap, you know, barely
constitutes a linkage? Can you tell me what the Department
thinks that an appropriate linkage would look like or should
be?
Mr. Poneman. Senator, thank you for the question.
The, I think, both the Blue Ribbon Commission, sir and the
Administration's response to it clearly acknowledge the
importance of that. When, for example the Blue Ribbon
Commission said although the geologic repository would come
later, the work on it needs to begin today. So we're not
deferring the work on the geologic repository. There's, of
course, more technical challenge involved in certifying it and
getting the research done on the geologic formation and how
they'll perform for millions of years as opposed to a simple
above ground cask storage that is possible with interim
storage.
But I would just say, Senator, that the way we see the
linkage is two-fold.
No. 1, we are, quite literally, doing the research on both
sides. We're not saying we're only working on interim storage
now and we'll get to the other later. We're saying we've got to
start both now. That's consistent with the Blue Ribbon
Commission recommendation.
The second thing is to be very, very clear in the reference
to consent based approvals and that, I think, is one of the
major contributions of the Blue Ribbon Commission, that when
you are talking to communities you need to be very clear about
what they are in for and you can't shift the story line and say
I was just kidding when I said interim. So when we say interim,
we mean interim.
Senator Heinrich. I think that second point is incredibly
important because you're never going to get a community to
consent or especially at the State level, you're never going to
get the buy in you need for interim storage if people think
they're going to get stuck with that interim storage.
Mr. Poneman. Exactly.
Senator Heinrich. It's going to turn into de facto
permanent storage.
I want to move to LANL cleanup real quick. The FY2013
continuing resolution does not provide the Administration's
request for an additional 50 million Los Alamos needs to meet
some pretty critical milestones and for that matter consent
orders with the State of New Mexico for cleanup of legacy
nuclear waste. I want to ask will the Department be requesting
a reprogramming to provide additional funding for Los Alamos to
keep that cleanup on schedule and meeting the milestones within
those consent orders that have been agreed to between the State
and the Department?
Mr. Poneman. Two points, Senator.
First of all, we are firmly committed to meeting our
objectives and requirements under the consent decree. We, as
you know, in the fiscal 2014 budget are requesting an
additional $46 million for LANL cleanup. We are in the process
of finalizing with the amounts we have requested for 2013 not
having come through between the continuing resolution and the
sequester, a series of reprogrammings which we're going to use
to address these outstanding issues in our environmental
portfolio.
Senator Heinrich. I look forward to working with you on
that. Please keep us apprised.
Mr. Poneman. We sure will.
Senator Heinrich. Because that's a critical step forward in
terms of us meeting our commitments and continuing to, you
know, make sure that we have the confidence of those
communities that we're going to do what we say we're going to
do.
With that it looks like my time is expired.
I do want to say real quickly that I think it's a mistake
to shut down the fusion center at MIT. I look forward to
working with the chairman to make sure that we have the right
balance there between our partnerships overseas and our
domestic efforts.
The Chairman. Important point.
Senator Barrasso, you're next.
Senator Barrasso. Thank you very much, Mr. Chairman.
Mr. Secretary, thanks for being with us.
I'd like to ask you about liquefied natural gas exports. On
April third, Bloomberg ran a story entitled, ``Canada seen
beating U.S. in $150 billion Asia LNG race.'' The article*
explains that Canada has approved twice as much LNG export
capacity as the United States. It explains that Canada issued
its latest export permit in February while the DOE has
continued to delay taking action on the pending permits for
almost 2 years now.
---------------------------------------------------------------------------
* See Appendix II
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DOE commissioned a comprehensive study which found that LNG
exports would bring, ``economic benefits'' to the United
States. DOE has now received 2 rounds of public comments on
this study. Yet the DOE continues to delay taking action on any
of the pending export applications of which I know one of which
has been pending for 28 months.
Investors are beginning to interpret DOE's inaction as a
decision against LNG exports. I think this is a terrible
precedent to set. It's going to signal to the world the United
States isn't serious about increasing its exports and the good
paying jobs that those exports were going to create right here.
It is going to signal to export opponents that they can
block exports so long as they just delay the approval process.
So I think it's going also signal to our trading partners that
the United States doesn't really believe in free trade. So my
question is do you appreciate the negative impacts of the
Department's failure to take actions on the pending LNG export
applications?
Mr. Poneman. Senator, thank you for the question. It is
obviously something that's very important. I know people have
been working very hard to process the comments. We want to make
sure that we are addressing this expeditiously. But the issues
that have been raised in nearly 200 thousand comments are
complex.
I will tell you, Senator, we are working on this very hard.
We are clearly aware of the benefits that exports can bring.
But according to the criteria that's been laid out since 1984,
we have to take into account domestic affects and a full range
of those issues that would feed into the public interest
determination that the Natural Gas Act requires. But we are
keenly aware of the need to be acting. We are working on it
very hard.
Senator Barrasso. Thank you, Mr. Chairman.
I'd also like to ask about the Department's new uranium
management plan. The consolidated appropriations act for fiscal
year 2012 says that no later than June 30th of 2012 of last
year, the Secretary shall submit to Congress a revised excess
uranium inventory management plan for fiscal years 2013 through
2018. So now we're 9 and a half months after the deadline and
over 6 and a half months into this fiscal year. But DOE still
hasn't produced a plan.
I think this is inexcusable. The Department has repeatedly
broken its commitments under the 2008, what was called the
excess uranium inventory management plan. Now it refuses to
follow the law and release the revised management plan. The
Department's failure to disclose how it will manage its uranium
stockpile, I mean, it threatens uranium mining projects, good
paying jobs, certainly in my home State of Wyoming and other
States as well.
When will the Department release a revised excess uranium
management plan? Do you have any idea when that's going to be?
Mr. Poneman. Senator, first let me again, agree with the
premise of your question which is to acknowledge the importance
of the domestic uranium industry to, not only our energy
future, but our national security future. I regret that it has
taken longer than it should have. I take the admonition from
the chairman and ranking member from the opening.
We always try to do better. I will undertake, Senator, to
go back to the department, get a timeline and come back to you
with it.
Senator Barrasso. I'd appreciate it. I mean, I'd like to
find out what the reason is for the delay and I know you can't
do that now. But I'd like to get that.
Senator Barrasso. Another thing I'd like to ask about is
duplicative programs. Last week the Government Accountability
Office released its 2013 annual report, entitled, ``Actions
Needed to Reduce Fragmentation, Overlap and Duplication.''
In that report the GAO identified 679 renewable energy
initiatives at 23 different Federal agencies.
Found that 9 agencies implemented 82 different wind energy
initiatives costing taxpayers about $4 billion in fiscal year
2011.
They found 7 initiatives provided duplicative financial
support to the same recipient for a single project.
That 2 wind projects may not have needed the Federal
Government's support at all.
So in light of this study and the duplication is it
appropriate to ask for such dramatic increases in funding for
the renewable energy programs?
Mr. Poneman. I think there are a couple of things, Senator.
First of all, where we actually can find duplication and
things that are being done twice, that's not efficient. We
should find those and root them out.
That having been said, you know, if you look at the
investments that have been made in this portfolio they have
actually returned their investment many times over. I think
we've put $2 billion of R and D funding into wind. We've got a
$9 billion return on that.
You know, we are now at a point where last year alone we
put 14 gigawatts of new wind online. We're up to 60 gigawatts.
We're moving in a number of these directions.
But we live by a management principle that continues
improvement. If we ever do find duplication we will root it
out.
One last thing with that's why we have actually inserted
cross cutting initiatives such as our clean energy
manufacturing initiative precisely to see if something is
happening in science and something is happening in applied
energy that they be brought into the same coherent approach,
not duplicative.
Senator Barrasso. Thank you, Mr. Secretary.
I'm going to submit, Mr. Chairman, with your permission,
additional written questions.
The Chairman. Without objection.
The Chairman. I just want to say to my friend from Wyoming,
it's my intent to work very closely with you and all our
colleagues on both sides of the aisle on this natural gas
export issue.
I chair the Finance Subcommittee on International Trade.
I've voted for every market opening trade agreement since I've
been in the Congress. Trying to find a way perhaps where we can
have it all, where we can strengthen manufacturing, have
exports, have a segway to a broader role for renewables.
Easier said than done, but it's my intention to work very
closely with my friend from Wyoming. I know you have strong
views on it. All 3 of us are Westerners, so I think there's an
opportunity to find some common ground.
Our next Senator is Senator Coons.
Senator Coons. Thank you, chairman. There's even some
Easterners who might support working together on this all of
the above strategy.
The Chairman. Easterners on the program.
Senator Coons. Deputy Secretary Poneman, I just wanted to
start by thanking you and so many others within the Department,
employees, contractors, for the tremendous job you've done over
the last few years, especially as it applies to DOE's core
energy mission. The news of DOE's work has, at times, focused
on a few negatives. When I think there have been broadly many
successes.
I really enjoyed working with Secretary Chu. Look forward
to serving with Dr. Moniz. I think you've made tremendous
accomplishments. In particular I was pleased to see in the
budget the extension, the continuation, of ARPA-E which I think
has yielded great benefits, actual concrete outcomes for the
people of the United States.
I intend to work with Senator Alexander on a
reauthorization of the DOE COMPETES programs in science and
ARPA-E and will work with the other committees that are
relevant to that reauthorization to help get them through
Congress. I Was pleased with the support you've shown and the
President's budget has shown in delivering on ARPA-E as well as
energy hubs and EFRCs; doubling the production of wind and
solar; So many other areas from technical assistance during
tragic disasters like Deep Water Horizon, and the Fukushima and
Hurricane Sandy disasters to nuclear site cleanup progress
that's been discussed previously, so I just wanted to start by
saying thank you to you and so many in the Department.
There's many things I'd love to discuss that come out of
the budget. I was pleased that Senator Murkowski earlier in
this hearing referenced something that I think holds real
promise for a bipartisan path forward, master limited
partnerships, as a vehicle for an all of the above financing
strategy. I understand Dr. Moniz, had positive comments to make
about MLPs and REITs during his confirmation hearing. I look
forward to continuing to work to advance these ideas. We've
been grateful for the technical assistance we've received from
the Department while preparing the bill.
I also was encouraged by the race to the top for energy
efficiency and grid modernization proposal, as well as the
manufacturing initiative and involving development of
innovation institutes.
So for my first question I'd be interested in what more you
can tell us about the schedule for announcement and focus areas
for the DOE specific regional innovation institute that's
directly related to manufacturing.
Mr. Poneman. Thank you very much, Senator. Thank you for
the kind words. I would like to thank you and the members of
this committee for long standing support for many of the
initiatives which would not have gotten anywhere that they have
gotten without the incredible work of the members of this
committee, hubs and ARPA-E and the rest.
Secondly commend you all for your thought leadership on
master limited partnership. The whole issue of lowering capital
costs for our energy resources is obviously going to be
increasingly important. We are always very eager to work with
you on that.
Now in terms of the innovation institutes we are in the
process of building on work that we have already done in
consultation with the Commerce Department, with the Department
of Defense, with National Science Foundation and NASA in
figuring out exactly where the best play is going to be for the
DOE specific institute, innovation institute. We're not done
with that work. It's still under review.
We're looking at a wide range of options and we are open to
soliciting views on where the most effective play can be
because, as you know, they're, as you know, going to be a
series of these institutes. We want to make sure that per the
other questions, we are not duplicating among the different
institutes. DOD is doing 2. We're doing 1. We will keep you
fully and currently apprised of the selection of which
technologies we're going to focus on.
Senator Coons. Terrific. Thank you.
One other question, if I might. The Energy Security Trust
Fund is of particular interest to me as well. I think Chairman
Wyden has led early positive, constructive conversations within
this committee about how we might use a comparable vehicle or
this vehicle for sustained funding and financing for the
development of promising technologies.
How does the Administration view this initiative? Could you
tell us a little bit more about how you anticipate it being
structured and operated?
Mr. Poneman. It comes out of the mandatory appropriations.
We hope to turn the revenues that we generate or by the
royalties on federally owned lands for oil and gas production
to those things that can help fulfill the President's vision to
reduce our dependence on oil imports still further. So I think
you can look in areas such as electrical vehicles, batteries,
biofuel development.
We will be looking to make investments out of that trust
fund to then help us move further along the line which we've
already reduced our foreign oil imports from 57 percent in 2008
to 42 percent. We view this trust fund as a way to further
build an American transportation fleet that is energy secure
for Americans.
Senator Coons. That's terrific. I very much appreciate your
answer. I look forward to working with you as the details of
that are further refined.
Mr. Poneman. Thank you, Senator.
Senator Coons. Thank you very much, Mr. Chairman.
The Chairman. Thank you, Senator Coons.
Let me also say that I too feel that you're making a very
important contribution in a number of areas and especially this
master limited partnership issue. Because this is a chance to
really generate a significant amount of new private sector
investment in renewables. That would make a huge contribution
to what we heard Dr. Moniz talking about even last week. That
is how do we transition to a lower carbon economy.
So I'm going to work very closely with you on that.
Senator Franken.
Senator Franken. Thank you, Mr. Chairman.
It's good to see you, Mr. Deputy Secretary. Thank you for
coming to Minnesota a while back. It was good to spend time
with you there.
I want to talk about nuclear weapons spending. Nuclear
weapons are weapons that we're never going to use. We do need a
safe, secure and reliable nuclear deterrent so that we don't
have to use them, I mean. The Department has an important role
in making sure that we have that.
But we are continuing to spend so much money on weapons
activities in the nuclear, National Nuclear Security
Administration with a budget request of $7.9 billion for this
year. That is money that, if we really move forward on further
nuclear reductions we could spend on other priorities including
other defense priorities or infrastructure priorities.
Can you tell me where the Administration is in its review
of our nuclear doctrine which will help determine the number of
nuclear weapons we really need to maintain that deterrent?
Mr. Poneman. Senator, thank you for the question.
As you know President Obama in Prague in April 2009 laid
out a comprehensive vision of our nuclear future. Actually
articulated a vision of a world potentially without nuclear
weapons, but at the same time he said so long as we have them
and that we and our allies depend on them for the deterrent, we
do need to make sure that it's safe, secure and effective.
There is a nuclear posture review that's already governing
our nuclear posture. It has, for the first time in any such
review, elevated the fighting of nuclear terrorism and
combating proliferation to the very top rank issue of why we
have these nuclear weapons. So the investments you see also
include a $2.1 billion on all the non-proliferation activities.
We are continuously reviewing in consultation with our
colleagues at the White House and in the Department of Defense
what the actual employment doctrine will be for these weapons
to make sure we keep it currently updated. That is a process
that has been going on since sometime last year. We're still in
the process of continuing that review.
Senator Franken. How exactly does our deterrent effect
nuclear terrorism?
Mr. Poneman. Senator, we think of our National Nuclear
Security Administration as a national security enterprise in
which we are investing in both things like second line of
defense, mega ports. Those are directly in the line of stopping
nuclear materials and technologies from reaching bad guys and
terrorists.
In addition to maintain a robust deterrent holds at bay
other potential would be parties who would be tempted,
potentially, to develop their own nuclear arsenal, but for the
fact that the United States has a robust deterrent.
Senator Franken. OK.
Mr. Poneman, when you announced dismantlement of the last
B53 nuclear bomb you said that this is an accomplishment that,
``Has made the world safer and for which everyone involved
should be proud.'' I agree with that sentiment.
You went on to say that, ``Safely and securely dismantling
surplus weapons is a critical step along the road to achieving
President Obama's vision of a world without nuclear weapons.''
But when I look at your budget when I see that while a
billion dollars is devoted to the lifetime extension program
for these weapons only $49 millions is going to the
dismantlement program and that is in spite of the fact that
dismantlement isn't expected to be completed until 2022. Can
you tell me why you're only budgeting $49 million a year for
implementing what you call, ``A critical step along the road to
achieving President Obama's vision of a world without nuclear
weapons.''
Mr. Poneman. Senator, I think it's important to put that
particular effort in the wider context of dismantling nuclear
weapons so that they cannot be used to--in weapons form any
longer. In that respect with Department of Energy leadership we
agreed to purchase 500 metric tons of highly enriched uranium
from Russia. Through that process we got half of the fuel going
to our civilian nuclear reactors in this country, about 20,000
nuclear weapons worth.
So if you put the $49 million which is one piece of it in
the broader context, I think this Nation collectively has
invested enormous resources and gotten enormous benefits out of
the dismantlement of weapons of mass destruction. To be candid,
the ones that are of greatest concern to us from a national
security perspective are those that used to be in war heads in
the former Soviet Union pointed at us. We are always looking to
match up, Senator, the sequencing of the dismantlement with the
processing of the fuels that are coming out of the
dismantlement process.
Some of these issues, as you know for budgetary reasons,
not withstanding our request but the curtailment under the
continuing resolution, have been pushed to the right. So I'd
have to look at the specifics of the 49 million per se, but I
think it has to be viewed in that context. But it does not, in
any way, diminish our overall commitment to going around the
world through the global threat reduction initiative getting
the material out of HU form where we find it in Chile and other
places and bringing it back to a safe place so that it can't be
used by nuclear terrorists.
Senator Franken. Thank you. I'm out of time. I would like
to say that I told Senator Lugar that I felt he was a hero for
what Nunn-Lugar started. I thank you for continuing that.
Mr. Chairman.
The Chairman. Thank you, Senator Franken.
You know the striking point you're making is if you spend,
in a focused way on dismantling nuclear weapons, particularly
the unnecessary weapons, you won't have to spend as much on
maintaining the strategic stockpile. So you're being logical.
Heaven forbid that logic breaks out all over Washington.
But I was looking at that $7.9 billion and if you say,
alright, there's a way to focus on dismantling unnecessary
weapons, you're doing something about lowering those costs. It
makes sense to me.
Senator Franken. Thank you for taking my point.
The Chairman. We don't have colleagues on either side who
haven't had a chance yet. So what I think we'll do is begin a
second round and figure out how to integrate colleagues who
haven't had their first round into this.
Let me turn to the question of nuclear energy, Secretary
Poneman. Senator Murkowski and I have both been to Fukushima.
It was important to see the situation first-hand given how many
nuclear plants operate in our country and around the world.
I start with a proposition. No matter how a United States
Senator feels about nuclear power-and obviously there are
disparate views here-nuclear energy, as of today, provides a
substantial portion of base load electric energy here and
abroad. As we have looked at Fukushima, it raises serious
questions about the safety with respect to commercial nuclear
power plants.
I will tell you I will never forget looking at those spent
fuel rods in spent fuel pools near a body of water. Trying to
think through the implications of what happens if you have
another earthquake which triggers a tsunami. The prospects that
would have for releasing radiation, which of course heads in
our direction.
So there is no way around the need to make sure spent fuel
and the nuclear waste from these plants is safely managed and
find a permanent way to dispose of it. I think the Department
is aware that Senator Murkowski and Senator Alexander and
Senator Feinstein and I are working on a bipartisan effort to
get the Federal Government back into a problem-solving mode on
nuclear waste storage and disposal. We hope to be able to have
more to discuss on those bipartisan efforts here before long.
Now you've been to Japan since the accident. You have been
involved in our government's efforts to help the Japanese deal
with Fukushima and look at the implications of what happened
there. I think you all are aware of the letter I sent as well
because I think those efforts you're making are important.
Given the challenges for making nuclear power plants safer
and the challenges of finding solutions for nuclear waste I was
struck by the fact that while you propose to increase the
Department's energy programs by over a billion dollars, you
propose cutting funding for nuclear energy by over $100
million, including all 5 million for the integrated university
program that provides grants and fellowships to graduate
students in nuclear engineering.
When I thought about my visit to Fukushima-talking with
people there-and our academic efforts, our research efforts are
ones they could only dream of. They will say that. It seems to
me that if there was ever a time when we need nuclear engineers
and investment in safety in nuclear waste technology, this is
it.
So priorities, yes, with you all the way. But why such a
large cut in an area that there is great concern today? It
increases.
As you know, there are current efforts being initiated by
scientists around the proposition that so many of our reactors
in this country seen from a mechanical standpoint to be
configured in much the same way as, you know, Fukushima. So we
are going to need more nuclear engineers. We're going to need
to increase the investment in nuclear safety. There's a big cut
in a program right at a time when we need to make it a higher
priority, in my view.
Mr. Poneman. Mr. Chairman, first of all, once again I have
to agree with the premise of all that you've said about the
importance of supporting Japan as it works its way through the
aftermath of Fukushima. We have ramped up and expanded our
cooperation with Japan to include environmental management,
emergency response and cleanup. It's going to remain very
important.
Also, I can't exaggerate the positive reaction that we have
had. I've done this myself a couple times when we have actually
made announcements about university grants under those nuclear
energy fellowships. It's incredibly important for our own
future that we rebuild a pipeline of scientific and
technological expertise.
The $5 million in question you're referring to is actually
been moved to a government wide stem initiative. So we are
going to continue supporting the student activities that you're
talking about. But it's, as a bookkeeping matter, it's being
now integrated into a government wide approach.
The Chairman. We'll get into the ever eye-glazing process
of looking exactly where funds are moved. Our understanding is
it's not been put into the nuclear part. That it's gone into a
general area.
Is it your understanding that it's actually going to be
spent in the nuclear area?
Mr. Poneman. Mr. Chairman, I was told that it was put into
an integrated stem effort, the degree to which there is within
that overarching effort, individual allocations in the
different subject matters. I would wish to get back to you on
that. I will get back to you about that.
The Chairman. Let's do that because we want to get it
specifically into this nuclear safety and nuclear waste area. I
understand what you're talking about. I think you'll have a lot
of supporters of stem up here. But if it just gets thrown into
the mix, particularly with the funding shortage, this still
could get lost. I think that would be a mistake. So let's go
back and forth with our staff.
Mr. Poneman. OK.
The Chairman. Because our understanding is that whatever
has happened in terms of moving it somewhere else, it is not
going to be specific to nuclear. That strikes me, given what I
saw.
I'll let Senator Murkowski speak for herself, but both of
us made those visits. You don't forget those visits.
Mr. Poneman. No.
The Chairman. OK, Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Once again, I'm concurring with you a lot here this
morning. That's probably a good thing.
The Chairman. Yes.
Senator Murkowski. I'm all over that.
Senator Barrasso would like this article that he referenced
regarding Canada and the U.S. regarding the LNG race, he wanted
that incorporated as part of the record.
The Chairman. Without objection, so ordered.
Senator Murkowski. I have just one follow on question here
for you, Deputy Secretary.
This relates to unconventional resources. The budget is
once again zeroing out funding for the unconventional fossil
energy technologies program. I think we recognize, as I
mentioned in my earlier comments, I'm one who thinks that a
very appropriate role within Department of Energy is to focus
on the R and D side. How we can really move forward these
technologies that are going to make the difference for us into
the future for our energy and our energy portfolio.
We've got great opportunities, I think, in unconventional
resources like our oil shale, our heavy oil, our tar sands. If
we're really going to subscribe to an all of the above energy
policy, I think it is important to recognize that we have huge
opportunities there. Yet, in this particular line item on the
budget, we have zeroed it out.
I'll also point again to the methane hydrates issue that I
referenced in my opening statement. Again, I think there is
enormous potential for us out there. The study that was
completed by USGS suggests that the amount of gas hydrates here
in this country exceeds the volume of known conventional gas
resources were saying we're the Saudi Arabia of natural gas
now. We're not even talking about the unconventional resources
and the potential for us there.
One potential source of funding for the methane hydrates
has been, historically, in the unconventional fossil energy
technologies program. You know, the budget now, as it stands,
shows a 16 percent increase in funding for the natural gas
technologies program. How much of this increase in funding
might be possibly made available to R and D related to methane
hydrates to the unconventional gases as opposed to the
conventional side?
If you could just speak more generally----
Mr. Poneman. Sure.
Senator Murkowski. To what's going on with unconventional
resources.
Mr. Poneman. I'll address both, Senator. Thank you for the
question.
Again, I must agree with the premise. When you think of the
technological breakthroughs in fracking that were one of those
earlier investments, that's also, of course, part of what's
unleashed the unconventional oils. We have now had like 5, 6
hundred thousand barrel per day increase year on year out of
Bakken, Eagle's Ford and so forth which I think, as gas prices
have gone down and the rigs have moved off the dry gas place.
We've seen this incredible upsurge.
So that is a tremendous benefit. We expect perhaps even 700
thousand barrels year on year next year. Point one.
Point 2. Many of the projects that are, of course, being
invested in under our coal portfolio, $6 billion we've got
invested, are looking at ways to add the ute to CCS,
utilization in which enhanced oil recovery. Yet another way to
enhance our development of unconventional oil resources. That
is also very important.
So we are going to continue in the area of liquids.
Secondly on the question of gas resources. I would note in
addition to the fracking investments we've made back in the
day, we put $30 million into coal bed methane development which
also has now produced tremendous benefits. In the area of
methane hydrates it is potentially years out, admittedly, this
tremendous bow wave of yet additional gas resources. We were
very happy and gratified to have very successful results in
your home State of this experiment.
Part of what happens is we do try to promote public/private
partnerships so that in these budgetary constrained times we
can leverage even a small investment. The government of Japan,
as you know, and a U.S. company ConocoPhillips developed a
cooperative with us in that case. We're going--we've got $5
million dedicated to carry on the first successful drilling
that we did in Alaska. We're going to be following up on that
in the year ahead.
We agree that the methane hydrate play, in the long run,
could in fact be the next gas revolution of a tremendous scale.
Senator Murkowski. I appreciate you giving that background.
We have had, I think, a pretty successful partnership with
Japan, who is very, very keenly interested in this and willing
to work with us as well as on the private side. I think it is
the model. It's something that we can look to and say this is
how we can really help to push these out.
But all appearances now seem to be that the U.S. is backing
away from this. I was just over in Japan. The chairman
mentioned our trips to Fukushima. We went at different times,
but part of my trip was also to speak to the Japanese about
opportunities between Alaska and Japan on a host of different
issues.
The Japanese interest, of course, in pursuing the methane
hydrates. Furthering that partnership is pretty keen. But the
message that I heard from them was they're very worried that
we're withdrawing from that. We're pulling back. We're pulling
back the resources. We're losing interest.
I think this is again, an area where we can be leading. But
it takes that commitment of resources and just the focus on
where we go with the future of this.
Thank you, Mr. Chairman.
Senator Heinrich.
Senator Heinrich. Thank you very much, Mr. Chairman.
At first I want to, as an engineer, maybe throw a wrench in
the logic. You mentioned how logical things have started to get
around here. I want to make the point that sometimes things
that seem logical are not necessarily logical even though they
intuitively seem that way.
In particular when it comes to nuclear reductions I'm a
major advocate for the new start treaty. I think it was
absolutely appropriate and critical. But the relationship
between reducing those numbers and the cost savings that that
may or may not incur is not a linear one. It's not a
proportional one. As long as we have one nuclear weapon we're
going to need the infrastructure in place to make sure that it
is safe, secure and reliable.
We have abided by the comprehensive test pantry for many
years even though I don't believe that was ever approved by the
Senate. It's good policy for us not to be testing nuclear
weapons, in my view. It would be cheaper if we just tested it.
It's more expensive to have the super computers to make sure
that those things remain safe, secure and reliable and to be
able to do that testing virtually as opposed to actually
exploding nuclear devices.
So I just want to caution my colleagues that sometimes and
I think we're going to have to tackle the issue of tactical
nuclear weapons with some of our, you know, some of the other
actors in the world, in particular Russia and the numbers of
those that are out there right now. But it won't necessarily
create an enormous savings to be able to spend on other
priorities, even priorities I care deeply about such as
renewable energy, continued research in some of these other
areas.
I want to talk a little bit about diversification and ask
you a question, Mr. Poneman, about the work that's done at our
national security labs and how it complements their core
mission. I'm a little concerned about the constraints on so
called work for others. These are imposed, sometimes they're
just conflicting management between NNSA and DOE and the
different kinds of research that gets done at the national
labs.
I'm curious if you think that there are ways to make that
easier for the labs to foster those new partnerships with both
governmental, university and private entities to make sure that
those constraints on work for others aren't holding our labs
back from their full potential and in particular with regard to
tech transfer.
Mr. Poneman. Senator, it's a great question. I would say we
have worked very hard. I personally spent a lot of time on
trying to make sure that the incredible resources in
technological expertise of our labs is made available. In fact,
I've asked that we stop calling it work for others because that
has a sort of alien sound to it. It's really work for the
Nation. It's work for the President.
Senator Heinrich. Right.
Mr. Poneman. Now what we have done, again, and you'd expect
this of us, I think, in these budgetary straightened times and
to avoid the kind of duplication that some of your colleagues
have mentioned is we have gotten together what we call a
mission executive council. So with the Department of Homeland
Security, the intelligence community, ourselves and the
Pentagon, we sit down. Instead of having little projects where
you, as we say, buy wine by the glass, we say let's invest in
the vineyard.
If we need a capability to do something, it might be a high
powered computer. It may be nuclear material detection.
Let's make sure that we put our heads together.
Get the incredible technical expertise of the labs.
Harness it to that effort.
Promote it.
We have done everything we can from DOE headquarters,
Senator, to promote that kind of thing. If that is not
happening, if you are getting the impression somehow that it is
impeding that kind of work, I would certainly like to hear more
details about it because we are trying to do really quite the
opposite.
Senator Heinrich. We'll share some of that with you. At
times it's been an issue of silos, once again, where in a
certain area we hit a cap on work for others. Yet there was
much more administrative capacity in another department. So
with some work we're able to move things around.
But part of it's also the issue of making sure that when
work for others is done. I like your idea of calling work for
the Nation, that somehow we deal maintaining the administrative
capacity to do all the work because it doesn't necessarily
address that sometimes.
I want to thank you also, something that the chairman
brought up, the DOE's focus on energy storage. I think that's
critical. It could be a real game changer.
My last comment would simply be on this energy security
trust fund. I love the idea, but I would caution us just as
much as the ranking member on, you know, impacting the land and
water conservation fund, the reclamation fund, the other places
that have already been--that are already tied to these
revenues.
We just had a hearing the other day where Senator Franken
very rightly brought up how much money is theoretically in the
reclamation fund verses the paltry 40 million that is in the
President's budget to fund very real needs on Indian
reservations across the Western United States. Communities that
only have 10 years or less of water left available to them. The
Land and Water Conservation Fund, another critical area.
So we need to make sure that those are not endangered by
the creation of a new trust fund.
Thank you.
Mr. Poneman. Thank you.
The Chairman. Senator Heinrich, thank you.
I was just thinking how useful it is to have an engineer in
this committee because if anybody is going to talk about
policies being linear, you're going to be able to tell us
whether they are, in fact, linear. So I appreciate the points
you're making. I'm going to work closely with you and
understand the importance of these issues to your State as
well.
We'll be following up.
Senator Franken, additional questions?
Senator Franken. I would just underscore that in comedy we
do non-linear thinking.
[Laughter.]
Senator Franken. Mr. Poneman, I'm a big believer in
research and development. The U.S. has the best scientific
talent in the world. We have premier universities. We have a
culture that promotes entrepreneurship and innovation.
As a Nation we've already used the strength to become
leaders in biomedical research. That's because of sustained
research funding from NIH which has produced a cadre of
biological researchers who are making important discoveries in
the field of health and medicine every day. That's terrific.
But I don't see any reason why we shouldn't be able to
replicate this for bio energy research. After all bio energy
research utilizes some of the very same tools and expertise
that biomedical research uses.
You can study a microbe to better understand the disease it
causes. You can also engineer a microbe to produce renewable
biofuels. We're focused and dedicated. If we are we will kick
the fossil fuel dependency with advances in renewable fuels.
First, I think bio energy should just be a bigger priority
than it is currently. I hope that we can work together to make
that happen.
In addition this--and what I'm hearing from scientists in
Minnesota and elsewhere is that the grant funding process at
DOE needs to be improved. When I hear from biomedical
scientists in Minnesota they do talk about NIH being easier to
deal with on this kind of grant funding than DOE. Not just for
bio energy, but across the various program offices. I'm told
that often DOE grant funding process can be cumbersome, costly
and time consuming.
Can you describe the Department's grant funding process and
tell me where you think there is room, may be room, to make it
less cumbersome to researchers, more transparent and more
effective?
Mr. Poneman. Senator, I'm happy to do that.
It's a very important point. What we have been trying to do
is where we have adopted some of these better newer, more agile
grant procedures, we're trying to propagate across the
department. I'm talking specifically about the standing up of
ARPA-E with the initial contribution of funding under the
Recovery Act.
We had a chance to develop a process in the following way.
Come up with a specific idea of where we think the
innovation might best be found.
Quickly pull together a workshop that gets lots of
academic, industrial expertise. So that the terms of reference
for a funding opportunity announcement can be articulated,
announced, released to the public.
Get the widest possible response.
Then to line up, especially since they were so heavily
oversubscribed by like a factor of 100 in the first
solicitation, to line up expertise of this interested peer
reviewers who've got expertise, but no axe to grind.
To do this in obviously an expeditious manner.
We found that by, sort of, starting with a blank slate and
doing this fresh with a new set of players, frankly, and a real
drive of urgency under the Recovery Act that the ARPA-E
mechanism was much better than the traditional mechanisms that
we had been using in the Department in the advanced energy
portfolio. We're now trying to bring those best practices over.
We are certainly open to learning if there are other best
practices at places like NIH that could further accelerate and
make transparent, but also rigorously and analytically,
neutrally reviewed processes.
Senator Franken. This is an area where I'd like to work
with you, if I could.
Mr. Poneman. We would love that.
Senator Franken. To make sure our tax dollars are spent
more effectively.
Mr. Poneman. Yes.
Senator Franken. I'm going to try and do this fairly fast
because I don't want to use other people's time.
But we're experiencing a natural gas boom in the country.
We also know that the combustion of natural gas produces fewer
greenhouse gases, gas emissions than oil and coal. But there
are also fugitive emissions or methane leakage during the
extraction processing and delivery of the gas. Methane is a
potent greenhouse gas and a highly--and high hydrates could
diminish the climate benefits of natural gas.
Studies have attempted to determine the leakage. What--just
to jump to the chase here, you know, if the leakage is greater
than some might have calculated this might undercut the
benefits in terms of emissions. My question basically is what
is DOE doing to better understand and grasp natural gas
fugitive emissions?
Mr. Poneman. It's a great question, Senator. This problem
was acknowledged in the subcommittee report of the Secretary of
Energy Advisory's board study on natural gas. Part of the
problem here I know Dr. Moniz has emphasized in his remarks to
the committee where we do add value is in analytically data
driven analysis. We don't do all the regulations some of the
other departments such as Interior do.
With the methane question one of the challenges is not
having a good baseline of data. We don't know what was going on
before. So I think where the Department of Energy specifically
can add value in this is in trying to help analytically
establish what the base line from which we are measuring the
delta of the added increment, if any, that comes out of the
frack wells would be.
Then in having a base line and then analyzing the wells vis
` vis what was the ambient nature of the methane emissions
before come up with a deeper understanding. That is incredibly
important to make sure that what you have just warned about
does not occur. That we inadvertently somehow developed a
resource which could be and should be one that reduces us in
our carbon emissions, gets us on a path to a low carbon future.
But if we're not attended to all aspects of it such as the
possibility of refuted methane emissions, we will obviously
potentially undercut that.
Senator Franken. I'm sorry, but just let me make sure I
understand this. The delta is the delta from what happens when
you have a extracting, you know, through whatever process we're
using the natural gas verses what exists in nature?
Mr. Poneman. Yes.
Senator Franken. Is that the delta?
Mr. Poneman. I am not sure that they have, Senator, pre and
post well drill data on what the methane emissions are in all
of these cases. That's, again, unlike Senator Heinrich, I'm not
an engineer. But that's my understanding of one of the things
that they are looking at.
Senator Franken. OK. I know what a delta is. I'm not an
engineer, but in comedy we use delta a lot, usually as the name
of a fraternity.
[Laughter.]
Senator Franken. I guess I have enough time for the next
question?
OK, you know, if you're doing a fake fraternity you do
delta, delta, chi or something.
OK, I want to express my support for the weatherization
assistance program for low income families, seniors and
individuals with disability. This program is crucial for
protecting these families especially during cold winters in
Minnesota. I believe your budget should have been stronger on
this program. I mean, I go to work to make sure people get the
assistance that they need.
Is the Administration committed to making sure that the
weatherization assistance program meets the needs of the people
in cold climes in this country, in Minnesota and elsewhere?
Mr. Poneman. Yes, Senator. It's a very important program.
We've got obviously a very significant assistance, the $5
billion in the Recovery Act for it. We are now, as you've
noted, having challenges with the requests we have put in not
having fully funded. But we are committed to this. We're
committed to optimizing the lesser resources that we, in fact,
received to make sure that every State continues to be able to
have a weatherization program for people who are in cold climes
are protected.
Senator Franken. Can we expect a distribution formula from
DOE that is fair to every State?
Mr. Poneman. We are attempting to do just that, Senator.
We'd be very happy to stay in close touch with you on that.
Senator Franken. Thank you very much. Good to see you
again.
Mr. Poneman. Thank you. Thank you for the trip to Minnesota
was very educational.
Senator Franken. It was fun.
Mr. Poneman. Thank you.
The Chairman. Thank you, Senator Franken.
I think we are all, as a result of this hearing, going to
be linear specialists. We are going to find a way to rally
around that cause.
I gather Senator Heinrich doesn't have any other questions.
I'm going to leave you with one last point, Secretary Poneman.
You touched on it in your comments earlier with respect to
some of the work the Department did in terms of fracking
research. It just highlights my concern, particularly about
some of these cuts we've talked about that look so integral to
the future, like energy storage. I mean, solar and wind, of
course, are intermittent sources of power. They are not there
forever.
Energy storage is going to be absolutely key to their
future. I think you've heard my fairly vociferous comments
about my concern in that area. Dr. Moniz was very responsive in
terms of saying that within 30 days of his confirmation, we'll
get a plan in this area.
But the reason that research is so critical, and we
understand there's plenty of research in the private sector.
It's not as if the Federal Government is the only entity in
America that does research. It just helps us drive down costs,
particularly early on.
I've been struck going back and looking at the history of
gas development, the recent history. It was not very long ago
in a lot of influential quarters people were saying it really
probably is too expensive to get oil and gas from shale. But
despite the research taking place in the private sector,the
Department put significant research effort into fracking issues
and to matters relating to directional drilling. It was a
factor. It helped make natural gas cost effective, not the sole
reason, but it helped make gas cost effective.
That's what we want to do, especially in renewables and at
this crucial time. This country wants to see renewables play a
bigger role in base load power. I'm absolutely convinced that
this country wants to see that.
The challenge is going to be to drive down the costs of
these renewables. That's what people are looking for. They're
looking to see that renewables are cost competitive with the
traditional kinds of sources.
So when we see the reductions in some of these areas that
we've highlighted, whether it's energy storage, hydro, or other
kinds of areas, it comes back to where we think the Department
has a track record. You highlighted it in your statement with
respect to a number of areas, particularly natural gas most
recently.
We want to make sure that we bring that same kind of effort
on the research side in renewables at a pivotal time when it
can help us lower the costs. Particularly get to where the
American people want to go, which is a transition to a lower
carbon economy. Understand that to do it is to make those
renewable sources a bigger role of base load power.
Now I thought that was going to be the last word on the
subject, but I understand that Senator Manchin is on his way.
So why don't we let you respond to that point with respect to
the research function.
Mr. Poneman. I would like to, yes.
The Chairman. That will ensure that I don't just filibuster
until Senator Manchin arrives.
Mr. Poneman. OK.
Mr. Chairman, I think that was eloquently expressed and
profoundly correct. Our value at the Department of Energy is
just as you say in the R and D to drive down costs.
Many countries have experimented with such mechanisms as
feed in tariffs and so on. Often these efforts have just run
into challenges because they end up subsidizing inefficiencies.
So when we promote a sun shot approach, model on the moon shot,
talking about bringing the modular costs of solar down to a
dollar a watt to the extent that we can actually get not just
the modules which of course themselves have come down in cost,
but then the balance of plant, the inverters, the installation.
Get those costs down so what you're talking about the
potential of 5 to 6 cents per kilowatt/hour levelized cost of
electricity. Now a renewable source can compete toe to toe with
conventional forms of energy.
Same thing has happened, obviously in the area of wind.
We're now with extension in the production tax credit in a
place where onshore wind has become quite competitive.
But the other point that you made, Mr. Chairman, I think is
equally important. Sometimes, if I may say, when one looks only
at the DOE piece of the puzzle it might look like a shrinking
effort. But sometimes we're trying to think where is the value
add proposition.
At such point as the private sector can come in a make an
investment. That's a very important thing at such point as such
efforts as the Congress which made a limited time tax benefit
available can help take up the baton from where the Department
left off with the research on horizontal drilling and so forth.
On the back of the good efforts after we made those investments
by the Gas Technology Institute, this is how we can work
together to do exactly what you say.
Drive technology to a place that costs come down. Ideas
like those advanced by Senator Coons which you've also
commented on bring the cost of capital down which would be
critically important since in many of these cases there's no
commodity pricing risk because wind blowing and sun shining
notwithstanding whatever else may happen in the commodity
markets. This is how, I think, our department can work with
members of this committee in trying to drive this energy
economy to that low carbon, prosperous future, bring in lots of
American jobs and a much better future. So we would just
welcome any opportunity to continue our work with you on that.
The Chairman. Very good.
Let's give the last word to Senator Manchin.
Senator Manchin. Thank you, Mr. Chairman. I am so sorry,
but thank you. You've been so kind.
Sir, first of all, thank you for coming. Let me make a
statement up front that I'm for an all in energy policy that
uses every resource we have in this great country. I mean that.
I think I've told the chairman this.
I'd like to start by expressing my dismay at the direction
that the President's budget is taking. I'll say that this
budget doubles down on energy efficiencies and renewables,
asking for almost a billion dollars in additional funding while
cutting fossil energy funding by $95 million, about 18 percent
from the fiscal year 2012 levels which are historic lows.
Now let's put this in perspective. Let me just show you,
sir.
Why don't you look at this? This is your alls figures,
Department of Energy. Where our energy comes from. Where is it
expected to come from by 2040? It doesn't take, you know, a
rocket scientist to figure this out. That's where you're going
to be in 40 years even if you want to bump that to 20 percent.
That's the most it's going to be.
Now let's go on to some more here.
Brings funding--you're bringing fundings for renewables and
efficiency to $2.7 billion for 16 percent return by 2040.
You know, I'm all for everything. Let me show you where
you're money is going. Look at this, Mr. Chairman. Look at this
where they are spending their money.
Energy, that's fine. But 70 percent only gets 16 percent
return? That's not a good investment for the money.
It's got to be a balance. I'm asking for a balance, sir.
If you're telling me that you're expecting 35 percent to
come from coal.
You're expected nukes to do 17 percent.
You're expecting natural gas to do 30.
Look what you did to them. You must not be helping them
very much to get there. They must be doing it all on their own
because they're not getting much help from you all.
That's all I'm asking for. All I'm asking for. Then if you
look at global coal demand, 8.1 billion tons being burnt in the
world. I'm as concerned about the climate in West Virginia as
anybody is anywhere in this great country. We only burned 890
thousand tons of coal last year, 11 percent of the world burn.
I'm not a scientist. But if I think the climate encompasses
the whole globe, right.
Mr. Poneman. Yes, sir.
Senator Manchin. You would think that we're going to make a
difference in the whole world even if we cut 11 percent of the
production of the coal if we cut all of it out. Wouldn't you
think that if we invested a little bit more with the amount of
consumption the world has right now that we could find a
technology to use the resources we're going to depend on for a
long time? Maybe help other countries clean up what they have?
Sir, I'm just asking----
Mr. Poneman. Yes.
Senator Manchin. For a little bit of balance here. I'm more
than, I think the chairman knows, I'm more than happy to work
with anybody. But I think you have to admit this is a little
bit out of balance, is it not?
Mr. Poneman. Senator, let me first underline a strong
degree of agreement. I've been watching these EIA numbers for a
long time. It shows coal 35 percent there. Most of my
educational background coal has been half of our power
generation. It's been fluctuating in no small measure because
of natural gas prices.
Senator Manchin. But worldwide it's going up, correct?
Mr. Poneman. That is correct, sir.
So all by way of saying in agreement with your premise,
coal is and will be a very fundamentally important part of our
power generation and globally.
Senator Manchin. We in West Virginia want to show you and
work with you how to use it better.
Mr. Poneman. We do too, Senator. We have, and I think you
know this, we have a $6 billion investment in combination of
our CCPI and our carbon capture and sequestration projects.
We've just approved phase 2, 2.0. Interesting to see in a
retrofit context what oxyburn will be able to do for the
boilers.
We, all of us, and you know, of course----
Senator Manchin. Sure.
Mr. Poneman. Dr. Moniz has literally written the book.
Senator Manchin. Oh, I know he has. That's why I said very
hopeful, very hopeful.
Mr. Poneman. So we do want to work with you. I think we
see, in terms of providing clean base load power generation,
the----
Senator Manchin. So you're saying you all didn't put this
type of request in from the President's budget? How you want to
spend your money?
Mr. Poneman. No, what I'm saying, Senator, is that's one
piece of a larger effort where we're leveraging investments
that we've made and the portfolio we have out there in terms of
the very large, you know, multi building investment.
Senator Manchin. But you've increased. You're up to 70
percent, 2.7 billion on this right here.
Mr. Poneman. We're seeing results in that. You said you're
in favor of all the above----
Senator Manchin. Oh, I am in favor of all of the above.
Mr. Poneman. So are we.
Senator Manchin. Don't you think you should be doing maybe,
let's say you did 25 and 25 and 25 and 25, not 70 and 19, 11
and nothing.
Mr. Poneman. But, Senator, what I'm saying is there are
different things, apart from the pure R and D as opposed to
some of the deployment strategies in the area of coal.
Obviously we have a tremendously out there of coal fired
plants. So some of the issues to be addressed in coal space
have to do with retrofits and things that can be demonstrated
through such things as our carbon capture and sequestration.
Senator Manchin. But, sir. That, as you know, the National
Energy Technology lab----
Mr. Poneman. I visited.
Senator Manchin. You know. They do tremendous work. There's
the ones that basically developed, with the private sector, as
far as the fracking and defining and unleashing all this gas
that we have now. We have it in Marcellus shale in West
Virginia. I'm very proud of that.
But they're getting cut continuously.
Mr. Poneman. Part of it, Senator, is as I was just telling
the chairman, we are trying to make sure that we leverage the
Federal dollars as best we can where there are existing
industries that can co-invest with us and help us get the same
results. That's what we're doing.
Some of the earlier phase investments in some of the
renewable areas, those are much longer term investments. You
know, we have seen actually huge payoffs.
We put $2 billion into solar investments in terms of
getting cheaper modules. That's got a $9 billion payoff.
We put a billion dollars into improved combustion
technology. We saved $70 billion in truck fuel.
We put $4 billion in wind technology producing a $15
billion benefit.
So we are definitely, Senator, with you in looking for
where the payoff is and where the high returns are. Be very
eager to work with you, particularly in these coal based areas
because there's 2 things we've got to do.
One is we've got to test out, so we can maintain the
confidence of the American people in these saline formations or
EOR, enhanced oil recovery, that the CO2
sequestration is effective over time.
Secondly we really double down on the capture and getting
cheaper more efficient forms of capture.
Those 2 things which again, Dr. Moniz has written
eloquently about, I think will be the ticket to doing just what
you want which is keeping coal a vibrant part of our energy
portfolio.
Senator Manchin. I was just told that I understand the
funding has been reduced for sequestration. Is that correct?
Mr. Poneman. I don't quarrel with the specific R and D
numbers. We, across our portfolio, Senator, we are finding--we
are trying to do more with less.
Senator Manchin. Sir, I'm really not trying to be--I'm
really not. I think I just appreciate the chairman so much and
the ranking member. They've been so kind. They've come to my
State. They've seen the State. It's all in.
If we just the Federal Government working with us as a
partner and not an adversary or an enemy, but an ally, that's
all I'm asking for.
Our little State has done a lot of heavy lifting. I think
you know that. Over the years we've helped develop this great
Nation with the energy we've produced. We just want a partner.
We want somebody that understands our value and works with us,
not against us.
Mr. Poneman. I think we're there, Senator. Let me just say
of the 8 projects that we've got in our existing portfolio. We
have one air products that's in operation. We've got 2 that are
under construction. We've got 2 that are close to financial
closure. We've just approved phase 2 of Future Gen 2.0.
We are very strongly committed to this. We're promoting it.
We wish to work with you further on it.
Senator Manchin. I'll be anxious to bring programs to you
that I think have tremendous value, not just for my State, but
for my country. Be happy to bring them to you, sir. Thank you
very much.
Mr. Poneman. We will be very pleased to work you, Senator.
Senator Manchin. I'm so sorry, Mr. Chairman.
The Chairman. No, no, not at all.
Secretary Poneman, I think what Senator Manchin is talking
about here-and I just want to say to him because we talked
about it a bit when I was in West Virginia-I'm about as pro-
renewables as anybody around whether it's hydropower . . .
Senator Manchin. We have it all, don't we?
The Chairman. Biomass, geothermal. In my home State,
Senator Manchin has heard me say this, I think a lot of folks
think we've got green in our chromosomes. So we very, very much
are committed to this future of a lower carbon economy.
But Senator Manchin, I know you're doing important work on
this gun violence issue. The first question that I asked this
morning relates to your point. That was how can the Department
justify cutting the fossil energy research budget by 15
percent.
It directly relates as you suggest----
Senator Manchin. Thank you.
The Chairman. To some of the ongoing work. We're starting
our natural gas workshops. We want to have best practices.
Something that I think you and I and Senator Murkowski have
talked about.
Senator Manchin. Yes.
The Chairman. We have our industry people, the
environmental people, and scientists together and we try to
find some common ground.
So I want you to know as somebody who is resolutely pro-
renewable, I think this point about cutting the fossil energy
research budget by 15 percent, which essentially encompasses
your question, is a very valid one. I'm going to work very
closely with you. You're chairman of the Mining Subcommittee,
so we're going to work on those issues.
Senator Manchin. You've been very kind, sir. I appreciate
it. I really do.
The Chairman. Alright. On that, Secretary Poneman, you've
been pummeled enough, I think, this morning.
[Laughter.]
The Chairman. We'll excuse you at this time.
Mr. Poneman. Thank you, Mr. Chairman.
The Chairman. The committee is adjourned.
[Whereupon, at 11:41 a.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of Daniel B. Poneman to Questions From Senator Wyden
Question 1. Termination of DOE Graduate Student Programs-DOE's 2014
budget proposes to eliminate or reduce a number of programs that
support graduate level education in critical areas that support DOE's
missions. As discussed in the hearing with Deputy Secretary Poneman,
the Office of Nuclear Energy is eliminating the Integrated University
Program (-$5 million) at a time when the Department itself is expected
to need to engineer, construct, and operate tens of billions of
dollars' worth of nuclear weapons, nuclear waste, and fuel cycle
facilities, and when the Department and the nuclear industry face
significant challenges in improving nuclear reactor safety and waste
management and disposal. In the Office of Science, the Workforce
Development for Teachers and Scientists Program budget cuts more than
half of the funding for the Graduate Student Research Program (-$3
million). The Office of Science is also eliminating the DOE
Computational Science Graduate Fellowship program (-$6 million). DOE
claims that these cuts are justified because their function will be
subsumed by a consolidated National Science Foundation STEM program. I
am concerned that a broad NSF program will not ensure that the
educational needs of the mission-specific disciplines required by DOE
will be met. Please explain and demonstrate how DOE's mission-specific
needs will be met if these cuts occur.
Answer. The Department has a long history in supporting the
training and education of future scientists and engineers at the
graduate level; the majority of this training has occurred through the
support of graduate students through research awards to universities
and DOE national laboratories, rather than through specific graduate
student education programs. For example, the Office of Science supports
over 4,500 graduate students annually under research awards sponsored
by its six research program offices. The Office of Science Graduate
Student Research Program is proposed to be restructured in FY 2014 to
support segments of a graduate student's thesis research at a DOE
national laboratory. The FY 2014 request will support approximately 100
graduate students to conduct graduate research directly tied to Office
of Science research priorities. The Workforce Development for Teachers
and Scientists (WDTS) program will work closely with the Advanced
Scientific Computing Research (ASCR) office to help ensure that the
Graduate Student Research program addresses graduate training in
computational science areas that are relevant to the ASCR mission.
We are committed to working closely with NSF as they develop the
details of their enhanced National Graduate Research Fellowship Program
(formerly the NSF Graduate Research Fellowship program) and with the
National Science and Technology Council's Committee on STEM Education
(CoSTEM), to help ensure the mission needs of DOE are met in graduate
level education and training.
Question 2. In March of this year DOE's office of Nuclear Energy
released its second Funding Opportunity Announcement (FOA) for the
small modular reactor (SMR) licensing support program. The FY2014
budget includes a small $3 million increase for this activity.
According to the announced procurement schedule, industry bids are due
July 1, 2013. DOE has indicated it would announce an FOA award as early
as September 17, 2013. It is unclear whether or not SMR funding will be
divided among 2 proposals--one for each FOA-- or among three proposals
should DOE elect to make two awards in this second round. Does DOE
believe there is adequate funding to fund three proposals and does the
Department intend to make these awards before the end of the current
fiscal year?
Answer. The Department plans to make a selection of prospective
awardees from our Small Modular Reactor (SMR) Licensing Technical
Support program funding opportunity announcement (FOA) for the
development of innovative SMRs by the end of the fiscal year and
negotiate and award the cooperative agreement by the end of calendar
year 2013. It is the Department's intent to make one additional award
on this FOA; however, we may decide to select additional awards if
applications with sufficient merit are received. The award made through
the current selection process will be covered under the program's
approved funding profile of $452 million over six years. The exact
split will not be known until we complete the cooperative agreement
negotiations with the selectees.
Question 3. ``The President's FY 2014 Department of Energy Budget
Request contains a large increase in funding for Vehicle Technologies
and specifically mentions a department- wide, cross-cutting initiative
called the EV Everywhere Grand Challenge which aims to make the United
States the first country in the world to invent and produce plug-in
electric vehicles that are as affordable and convenient as gasoline-
powered vehicles by 2022. At the same time, funding for other
alternative vehicle technologies, like hydrogen fuels cells, is
decreased or remains stagnant. Are we to understand, then, that the
President favors electric vehicles over other forms of alternative fuel
vehicles such those powered by hydrogen fuel cells or natural gas? If
so, isn't that having government pick winners and losers rather than
having the market decide which types of alternative vehicle technology
are best suited to replace gasoline powered vehicles?
Answer. The Department is committed to pursuing a portfolio of
vehicle technologies that, collectively, can reduce our dependence on
oil and works closely with stakeholders--including the automotive
industry--to develop its technology portfolio and adjust it as needed.
It is clear that vehicle electrification is an essential and
significant part of the Administration's effort to transition from oil
to more energy secure alternatives. . The global automotive industry is
already moving in this direction. Electrification will benefit not only
our national economy and energy security but also individual
consumers--today's electric vehicles can ``fuel'' for the equivalent of
about roughly $1/gallon, and the next generation will bring even bigger
savings. It is also important to note that advances in batteries and
other electric drive components support the continued development of
not only plug-in electric vehicles (PEVs) but also hydrogen fuel cell
vehicles (which are also electric-drive vehicles). In addition, the
Department's robust support of materials technologies for vehicle
lightweighting will benefit all vehicles, regardless of size or
propulsion technology.
Although initially slower than some projected, the PEV market is
now growing quickly. Sales increased by 200 percent in 2012 and are
climbing more rapidly than hybrid electric vehicle (HEV) sales when
HEVs were first introduced roughly a decade ago. In addition, the
number of vehicle models available is on the rise--fifteen new hybrid,
plug-in hybrid, and all electric vehicles are expected in model year
2013 and 2014 from numerous original equipment manufacturers. Although
early market PEVs have won critical acclaim with awards and these early
successes are important, it will take many millions of vehicles to
truly transform the transportation sector and significantly reduce our
dependence on oil. As such, we need to continue to pursue the research
and development needed to further reduce cost and improve performance
to move PEVs from early adopters to the mainstream. This is the focus
of the EV Everywhere Grand Challenge.
Question 4. One of my guiding policy principles is to enable the
United States to move towards a low-carbon economy, both to address the
threat of global climate change and also to remain competitive in the
global clean energy marketplace. The DOE's efforts in this regard
represent a critical piece of this transition, and choices DOE makes
tilt the playing field for different technologies. I'd like to
understand what the overall strategy is behind some of the choices. I
often talk about what I call the `forgotten renewables', geothermal
energy and hydropower, two clean sources of energy that the United
States has in abundance. The DOE budget request treats geothermal
favorably, increasing the budget by about 60 percent, but research into
hydropower takes a cut. Given the estimates of untapped potential in
hydropower resources--upwards of 60 gigawatts of emissions free
generating capacity--why has hydropower been deemed less important than
it was in the previous budget?
Answer. The DOE budget request for water power research, including
hydropower, is $55 million for FY 2014. This budget request reflects
DOE's emphasis on research and development in water power (both
hydropower and marine hydrokinetic technologies), and provides evidence
of our intent to support the realization of the technologies' full
potential as a clean energy technology option for our nation.
More specifically, DOE has a vision for water power to provide 15
percent of the nation's electricity by 2030, and hydropower will play a
large part in reaching this goal. Hydropower already provides about 7
percent of the nation's electricity, but there are opportunities to
increase hydropower generation in a variety of settings, including non-
powered dams, conduits, and new sites.
DOE takes an integrated approach to decrease technology costs and
market barriers to advance the deployment and optimal use of hydropower
technologies. DOE's hydropower activities in FY 2014 focus on
developing advanced hydropower technologies and components at lower
cost, using pumped storage to support grid integration of variable
renewables, and supporting advanced manufacturing of lightweight
turbine materials. In addition to the focus on component cost reduction
and renewables integration, other ongoing efforts include: developing
advanced, cost-effective environmental and aquatic species monitoring
sensors and optimization tools; demonstrating, testing, and evaluating
advanced turbine designs and other innovative technologies that co-
optimize electricity generation and environmental performance; and
facilitating stakeholder engagement to provide for public participation
in development of new hydropower.
Question 5. Last week, DOE said that DOE's contribution to ITER for
FY2014 would be $225,000,000 and that DOE had agreement that its annual
contribution going forward would not exceed this amount. DOE then said
that DOE's contribution would be capped at $2.4 billion, including the
cash contribution. Is the $2.4 billion, a cap on the total U.S.
contribution, including prior year funding, or the $2.4 billion cap
applied to future funding. Looking at the DOE budget materials, (page
SC-196), it looks like the last time they provided a total estimated
cost or total project cost for ITER was in FY 2008 at just over $1
billion (TEC 1,078,230) (TPC 1,122,000). If the cap on total U.S.
contributions to ITER is $2.4 billion, why hasn't DOE said so in the
TPC estimate? Why doesn't the budget justification say that the total
project cost is, in fact, $2.4 billion?
Answer. The $2.4 billion represents the pre-CD-2 (Critical Decision
2, ``Approve Performance Baseline,'' which establishes a formal cost
and schedule baseline) estimate by DOE of the total level of U.S.
funding, including prior year funding, necessary to meet U.S.
obligations for ITER to obtain first plasma; this figure includes our
in-kind and cash contributions. This figure is not the total project
cost; while first plasma does not represent total project completion,
it does signify completion of machine assembly, integration, and
commissioning in support of initial operations and is a major
milestone.
Question 6. Race to the Top: The budget includes a one-time request
of $200 million for the ``Race to the Top for Energy Efficiency and
Grid Modernization'' initiative. This would provide grants to states to
make progress toward the goal of doubling national energy productivity
by 2030 by undertaking projects in five areas: efficiency (including
combined heat and power, and demand response); distributed generation;
customer access to data; resiliency and cyber-security; and visibility
in grid operations.
I am concerned that there are five different objectives that
will complicate administration, and that these five areas do
not have the same ability to affect the goal of doubling
national energy productivity.
Wouldn't it be better to focus this initiative on the one-or-two
objectives that have the greatest influence on energy productivity?
Would you please provide the Committee with a rough analysis of the
relative influence that each of these objectives has on energy
productivity?
Answer. The Race to the Top for Energy Efficiency and Grid
Modernization is a challenge to states to implement effective policies
that can increase energy productivity and modernize the grid. To ensure
that participants have sound enabling environments for private
investment, the Race to the Top establishes qualifying criteria in five
policy categories, all of which support improvements in energy
productivity. As proposed, applicants would qualify for the Race to the
Top by meeting criteria for encouraging energy efficiency as well as
their choice of three of the four remaining categories. The Race to the
Top preserves the flexibility of states to develop their own portfolio
of policies , including through technical assistance grants that can be
used to help applicants implement policies that would qualify them to
compete in the challenge.
Improvement in energy productivity and energy efficiency is the
only criterion for final selection of prize winners. All of the
qualifying criteria are aimed at improving conditions for private
sector investment in energy productivity. For example, states that have
implemented policies to incentivize investments in grid modernization
are in a better position to avoid large losses in productivity due to
both manmade causes (e.g. multi-state blackouts due to human error) and
natural disasters (e.g. multi-state blackouts due to storms). States
with policies in place to promote investments in grid resilience are
also better able to attract businesses and drive efficiency gains in
the electric power sector. Similarly, states that act to enhance
household and business access to data about their electricity usage are
likely to be in a better position to realize the benefits of consumer
choices to save energy, leveraging the considerable investments they
have already made in smart meter technologies. For efficiency, a state
may choose to implement a suite of policies, such as the most recent
building codes and incentives, to achieve cost-effective efficiency.
These examples illustrate the integrated nature of policies that
support grid modernization and energy productivity. At present, DOE
does not have analysis that attempts to separate and attribute the
benefits of attaining each of the qualifying criteria in energy
efficiency, distributed generation, customer access to data, grid
resiliency, and visibility in grid operations.
Question 7. Appliance standards: The Appliance Standards program is
one of DOE's most successful programs, having reduced national
electrical demand about 7 percent below what it otherwise would be.
However, the Administration has missed the deadlines for standards for
several appliances--delays that have cost consumers and businesses an
estimated $3.4 BILLION in lost energy cost savings. Please explain the
reasons for these missed deadlines, and whether the budget request will
allow them to be met?
Answer. The budget allows for the timely completion of all
statutory requirements of energy conservation standards and test
procedures. DOE remains committed to meeting its deadlines and the
budget request allows for DOE to meet these important deadlines.
Question 8. High-Performance Computing: For decades United States,
through DOE management, has been the world leader in high-performance
computing, but that lead is slipping quickly to other nations as
competition grows in the race to build the first exascale computer. If
the U.S. loses this race, industry experts believe that the impacts
will trickle down more broadly to electronics industries resulting in
losses in U.S. high tech competitiveness and economic growth. Congress
asked the DOE to submit a plan to Congress detailing how it would
manage exascale computer development and provide for ``Big Data''
computing, but that final report is now more than a year overdue. If
confirmed, what will you do to maintain U.S. leadership in high-
performance computing and how will you focus DOE efforts to win the
race to exascale computing? Will you work to ensure that Congress
receives this report?
Answer. In June 2013, the Department submitted a plan to Congress
outlining its plan for developing exascale computing capabilities. DOE
will draw upon the programmatic and technical strategies that have
helped established the U.S. as the leader in innovative high
performance computing (HPC) systems over the past half-century. These
strategies include: Research, Development, and Engineering (RD&E) to
expedite the timely development of hardware, software, and mathematical
technologies; the transition or redesign of today's science and
engineering simulations and large- scale data analysis tools to take
advantage of exascale technology; and the acquisition, deployment, and
operation of the advanced computing systems on regular timetables and
with predictable budgets.
The focus of this plan is will be on the RD&E effort to deploy
exascale computers that:
provide computational capabilities that are 50 to 100 times
greater than today's systems at DOE's Leadership Computing
Facilities;
have power requirements that are a factor of 10 below the
2010 industry projections for such systems which assumed
incremental efficiency improvements;
execute simulations and data analysis applications that
require advanced computing capabilities;
provide the capacity and capability needed to analyze ever-
growing data streams; and
advance the state-of-art hardware and software information
security capabilities.
This plan will be executed through the National Nuclear Security
Administration (NNSA) and the Office of Science (SC). Responsibilities
will be shared, taking advantage of the core capabilities of the
partners.
The Department's Advanced Scientific Computing Advisory Committee
also recently completed a report on their study of the ``Synergistic
Challenges in Data-Intensive Science and Exascale Computing'' that
identifies research opportunities that are most likely to positively
impact both data-intensive science goals and exascale computing goals.
The Office of Science and NNSA will continue to work
collaboratively on strategic research investments and partnerships
between industry, the national laboratories, and U.S. research
universities. These efforts are advancing development of critical
technologies-both hardware and software-and ensuring that our critical
applications are ready to harness the potential of exascale and Big
Data computing to advanced DOE missions.
Question 9. The U.S. is one of seven participants in the
development of ITER, the international fusion energy science facility
located in France. Since 2006 the cost of ITER has tripled and this
growing cost of the U.S. contribution is having a significant impact on
DOE managed U.S. research programs, including cuts to the very programs
that will benefit from ITER's development. What will be your strategy
for ensuring the DOE maintains robust basic science and domestic fusion
programs while continuing to meet our international commitments to
ITER?
Answer. An important step to maintaining robust basic science and
domestic fusion programs was the development of a funding approach for
the U.S. contributions to ITER that is capped at no more than $225
million per year. The non-ITER component of the FY 2014 budget helps
improve our fundamental scientific understanding of plasma physics and
also ensure the U.S. can take advantage of its investments when ITER
commences operations. The priorities for the non-ITER components were
chosen with a vision for what will be required for the U.S. to be a
leader of fusion and plasma sciences in the next decade. This budget
promotes leverage through exciting partnerships with the Basic Energy
Sciences and Advanced Scientific Computing Research programs, and with
the National Science Foundation. The request also supports targeted
partnerships overseas at facilities with capabilities the U.S. lacks.
The FY 2014 plan also includes investments in vigorous research at
national laboratories, universities, and private industry, supporting
researchers and students who may subsequently choose to conduct
research at ITER. The FY 2014 proposal will support over 240 graduate
student researchers in the fusion and plasma sciences.
Question 10. The buildings sector has lagged behind appliances and
manufacturing in achieving efficiency improvements. What do you see as
the appropriate role, and the appropriate strategy, for DOE to improve
the energy efficiency performance of the buildings sector, and as a
part of your answer how would the President's goal of $2 billion
efficiency retrofit investments using private capital through Energy
Savings Performance Contracts (ESPCs) fit into the strategy?
Answer. The existing building stock across the country remains a
largely untapped opportunity for energy savings through improved energy
efficiency. The Federal government has an important role to play in
establishing reliable tools that help building owners assess the
efficiency of their buildings and identify cost-effective opportunities
for saving energy, as well as providing best practice models for
financing improvements and overcoming other barriers to improving the
efficiency of buildings. Through the new Better Buildings Challenge,
DOE is making progress in many of these areas. This effort includes
showcasing and validating a broad set of best practices, which now
includes more than 100 partners and organizations making meaningful
progress towards the President's goal of making American commercial and
industrial buildings at least 20 percent more energy efficient by 2020.
For the Federal government, ESPCs represent a critical tool to
implement energy efficiency improvements in Federal buildings and
facilities with limited to no upfront capital costs to Federal
agencies, and the President's Challenge is catalyzing greater use of
this financing mechanism. We are currently on track to meet the
President's $2 billion performance contracting goal by the end of 2013.
We are also pursuing opportunities to share the lessons learned in the
Federal sector with public organizations as well as others that can
benefit from performance contracting.
Question 11. The Weatherization Assistance Program serves as the
backbone of the residential buildings efficiency retrofit industry.
This core Federal program is widely supplemented by state governments
and utilities and it is a vital source of standards, best practices,
and a trained workforce. However, with the exhaustion of Recovery Act
funding, the budget for the program is dropping below the level needed
to sustain an effective national program.
What would be your strategy for ensuring that this program
continues to serve as a foundation for the residential retrofit
industry?
Answer. The Department of Energy is pursuing a strategy to continue
the Weatherization Assistance Program (WAP) as a foundation for the
residential retrofit industry. A first step is to mitigate the
detrimental impact of the funding levels provided in FY 2013 through
the Continuing Resolution (CR) and sequestration. The Appropriation
provided through the CR ($68 million less sequestration) is far below
historic funding levels and is insufficient to maintain the
infrastructure of the WAP service delivery network. The Department was
able to identify prior year unobligated balances to supplement the FY
2013 CR appropriated level, and is appreciative of Congress' approval
of its reprogramming request to use these funds to sustain WAP
activities.
The FY 2014 Budget request of $184 million for WAP is closer to
pre-Recovery Act funding levels and is an essential step to sustain the
program. In addition to requesting funding at an appropriate level to
sustain the weatherization network of State and local offices and
continue to provide needed weatherization services to low-income
populations, the Department is investing in resources and training that
will benefit the entire industry. Despite these funding difficulties,
DOE will continue to focus on training for residential efficiency
retrofits. The WAP will continue to certify training centers and
instructors who provide the skill development of workers within the
Program and the residential industry.
As in previous years, the WAP will allow states and territories to
set aside a percentage of their grant funds so that skill development,
training, certification, monitoring and program oversight can be
performed at the grantee and subgrantee levels. The enabling
legislation allows for up to 20 percent of WAP funds to be used for
these training and technical assistance activities. This percentage is
to ensure sufficient funding for performing these activities while
maximizing weatherization production.
Question 12. The State Energy Program provides funding for each
Governor to maintain an essential energy planning and policy
development capability and to coordinate this capability with other
States and Federal agencies. However, funding has now dropped to levels
that threated their continued effectiveness. If confirmed, would you
seek funding in the future to return the State Energy program to the
level of funding that prevailed before the Recovery Act?
Answer. The Department of Energy's (DOE) State Energy Program
assists states in establishing and implementing clean energy plans and
policies, increasing competitiveness, enhancing economic development,
and improving the environment. In its FY 2014 Congressional Budget
Request, DOE requested $57 million to continue assisting states in
reducing their energy consumption and energy costs. Although historic
funding levels have varied, particularly under the Recovery Act, DOE
believes $57 million in FY 2014 is the appropriate level to adequately
support the SEP program. The State Energy Program looks forward to
continuing to support states in their efforts in clean energy policy,
planning and development.
Question 13. Dr. Moniz, a lot of air time was spent last year
bashing the Department of Energy for the Solyndra loan guarantee. No
one likes the idea that the U.S. Government picks technology winners
and losers at the taxpayers' expense. However, the simple truth of the
matter is that countries that we compete with, like China, are
financing the expansion of their energy industries at our expense.
Chinese government solar investments have crippled U.S. producers.
China and other competitors are looking to capture what is rapidly
becoming the next big energy market, to manufacture these new
technologies and own the supply chains, and to reap the economic
benefits of using them throughout their economies. If you are
confirmed, what do you propose to help renewable and other lower-carbon
energy technologies make it, not just in the U.S. marketplace, but also
in the global energy market?
Answer. Our nation stands at a critical point in time in terms of
the competitive opportunity in clean energy. In 2012, $268 billion was
invested globally in clean energy, a 500 percent increase since 2004;
trillions more will be invested in the years ahead. Last year, China
pulled ahead of the U.S. in clean energy investment after we gained the
investment lead in 2011. We are essentially trading pole position with
China as the world begins to accelerate into the decades-long
transition to clean energy. In that transition, the United States faces
a stark choice: the clean energy technologies of today and tomorrow can
be invented and manufactured in America, or we can surrender global
leadership and import these technologies from other countries.
To help U.S. renewable and lower-carbon energy technologies excel
in the global marketplace and result in economic benefit in the U.S.,
the Department has created the Clean Energy Manufacturing Initiative
(CEMI). CEMI is a strategic integration and commitment of manufacturing
efforts across the Office of Energy Efficiency and Renewable Energy
(EERE), which has two overall objectives:
1. Increase U.S. competitiveness in the production of clean
energy products: Strategically invest in technologies that
leverage American competitive advantages and overcome
competitive disadvantages, and
2. Increase U.S. manufacturing competitiveness across the
board by improving energy productivity: Strategically invest in
technologies and practices to enable U.S. manufacturers to
increase their competitiveness through energy efficiency,
including combined heat and power.
As part of this Initiative, we are undertaking several efforts to
enhance U.S. manufacturing competitiveness and capture the potential of
the clean energy market. One key example is the establishment of clean
energy manufacturing institutes as part of the President's National
Network of Manufacturing Innovation. These institutes are intended to
provide researchers--especially from small and medium-sized
enterprises--timely, affordable access to physical and virtual tools,
and to develop and demonstrate new materials and critical processes to
advance clean energy manufacturing technologies for industry and their
use. The institutes were established in response to recommendations
from the Advanced Manufacturing Partnership's Steering Committee and
the President's Council of Advisors on Science and Technology included
in their July 2012 ``Report to the President on Capturing Competitive
Advantage in Advanced Manufacturing.''
Question 14. The lesson to me from Solyndra is that taxpayers need
a lot more protections when it comes to Federal financing. There need
to be safeguards to ensure that there aren't any more Solyndras. But,
it is also clear to me that there is a big difference between investing
in windfarm or solar project or geothermal plant that has a customer
and power purchase agreement on Day 1, compared with investing in a
manufacturing plant to make a commercially untested product. The
financial risks to the taxpayers are simply not the same and they
shouldn't all be lumped into the same loan program. When Sen. Bingaman
and Sen. Murkowski held a hearing on the DOE loan guarantee program a
year ago, in March 2012, I asked Herb Allison, the lead author of a
review of program, whether or not the DOE loan program ought to be
carved into separate financing programs based on the financial and
technical risk of the projects the Government was trying to fund. He
agreed that idea made sense. If you are confirmed as Secretary, what
reforms would you propose for the DOE loan programs?
Answer. From the world's largest wind farm and some of the largest
solar generation facilities to the first two all-electric vehicle
manufacturing facilities in the United States, the Department of
Energy's (DOE) Loan Programs Office (LPO) manages a broad portfolio of
new and innovative energy and transportation projects. These
investments are giving the United States a chance to compete and
succeed in the global clean energy race.
Several recommendations were made in the report that resulted from
the review you mention by former Treasury Official Herb Allison. To
date, all of Mr. Allison's concerns have been or are being addressed,
including filling key positions with experienced professionals,
clarifying authorities, strengthening internal oversight of the
programs, establishing a robust early warning system, and improving
reporting to the public. LPO continuously looks for additional ways of
improving its underwriting and asset monitoring activities to ensure
best practices in protecting taxpayer interests.
LPO is one of the largest, most experienced project finance
organizations in the world. As designed, LPO has the capabilities and
tools to support a number of different project types, all while
managing risk appropriately. All projects will continue to undergo
rigorous technical, financial and legal due diligence by officials in
the DOE loan program and their third-party advisors. Transactions are
structured to identify and mitigate risk as effectively as possible
before proceeding with a guarantee. Once a project closes, the LPO will
continue to use powerful monitoring tools-including strong covenants in
all loan guarantees and strict project milestones-to control the amount
of additional risk it assumes. DOE will continue to be an active
manager, continuously monitoring projects, their market environments,
and other identified risks to seize all opportunities to minimize
exposure to loss.
Question 15. The United States and Israel have begun developing a
strong bilateral energy relationship over the last few years. The US-
Israel Energy Cooperation program, established by Congress in 2008
connects DOE with Israel's Ministry of Energy and has proven an
excellent catalyst to private sector cooperation between the countries.
Secretary Chu sought to further this relationship through hosting
Israeli energy delegations in Washington to explore new areas ripe for
cooperation. Now, against the backdrop of a natural gas revolution both
at home and within Israel, new opportunities present themselves to
deepen our relationship, and indeed move it beyond the programmatic
cooperation we've seen to a more strategic realm befitting our
alliance. Do you share these views? What growth opportunities do you
see for the US-Israel energy relationship? Are you committed to
continuing to fund the US-Israel Energy Cooperation Program?
Answer. DOE plans to continue to develop its already strong
relationship with Israel on strategic energy matters. DOE will pursue
opportunities to enhance its cooperation with Israel, and we look
forward to continuing to work with the Government of Israel, including
the Israeli Ministry of Energy and Water Resources.
We value the role the U.S.-Israel Energy Cooperation Program has
played in furthering clean energy technology research, development, and
commercialization partnerships between U.S. and Israeli companies.
Since the program's launch in 2009, DOE and Israel's Ministry of Energy
and Water have jointly funded twelve such partnerships through the
Binational Industrial Research and Development Foundation, leveraging
$6.3M of DOE investment with almost $19M in Israeli government and U.S.
and Israeli private sector cost-share. We are now beginning to see
repayments from projects that have reached commercial success. DOE has
funded the program in every year since its inception.
We are also working together with a number of Israeli government
institutions on critical energy infrastructure protection, energy
efficiency standards, natural gas utilization, investment in resource
development and potential trade opportunities.
Question 16. Appliance efficiency standards: The Committee
regularly hears about two particular concerns with the appliance
standards program testing requirements. First, some equipment, such as
commercial air-conditioners, have a virtual limitless combination of
components, yet DOE requirements seem insensitive to the cost to
manufacturers to test all of these combinations, instead of testing a
subset of combinations and estimating the performance of the other
combinations. Second, there seems to be a trend toward requiring
manufacturers to pay for third-party testing even though Congress has
directed DOE to use industry testing and certification programs where
available and accurate, and OMB directs agencies ``to use voluntary
consensus standards in lieu of government-unique standards except where
inconsistent with law or otherwise impractical''. Does the budget
anticipate DOE working with appliance manufacturers to find ways to
reverse the trend in the increasing burden from these two DOE testing
requirements?
Answer. DOE's current regulations allow for rating of commercial
heating, ventilation, and air-conditioning (HVAC) equipment based on
physical testing or the use of computer simulation models. For those
units that manufacturers elect to test, DOE does not have any third-
party testing or certification requirements; most manufacturers test
their own products and do not pay for third-party testing. DOE has
heard concerns from industry that some modifications to DOE's existing
rating regulations should be considered to better reflect the variety
of combinations and technologies currently found on the market and to
help streamline the rating process for manufacturers. DOE has been
receptive to these concerns and has initiated two separate efforts in
response.
First, DOE is currently conducting a rulemaking (initiated in April
2011) to consider changes to its regulations governing the use of
simulation methods to estimate product performance for commercial HVAC
and refrigeration equipment. Second, and most importantly, DOE has
initiated a negotiated rulemaking to amend the regulations regarding
ratings and reporting for the commercial HVAC and refrigeration
industry. DOE understands that there are many considerations and values
industry input on these issues. DOE accepted nominations for the voting
members of the negotiated rulemaking working group through the
announcement of a Federal Register notice published in March 2013. DOE
received 33 applications from which 25 voting members were selected.
The certification working group is comprised of members representing 2
trade organizations, 7 commercial HVAC manufacturers, 4 commercial
refrigeration manufacturers, 1 commercial heating manufacturer, 3
commercial water heating manufacturers, 3 energy-efficiency
organizations, 1 government representative, 1 utility, 2 testing
laboratories, and 1 independent consultant. The 25 members of the
working group will vote to represent the views of all interested
parties during the negotiations. The purpose of the certification
working group is to undertake a negotiated rulemaking to discuss and,
if possible, reach consensus on proposed certification and compliance
requirements for commercial HVAC, water heaters, and refrigeration
equipment, which would include rating methods, verification programs,
and certification requirements. DOE's budget reflects full support for
this working group in hopes of reaching a consensus-based outcome on
these complex issues.
Question 17. Voluntary industry standard vs. Government standards:
Regulatory issues can be addressed through voluntary commitments
adopted by industry, or that could instead be addressed through
mandatory regulation adopted by government. I favor non-regulatory
marketplace approaches when effective in delivering results. Does this
budget reflect a policy of considering less-costly, voluntary industry
commitments over mandatory regulatory approaches?
Answer. The Department is required by statute to set minimum energy
efficiency standards and develop test procedures for a number of
residential products and commercial and industrial equipment. The
Department's FY 2014 budget request represents a balanced approach that
couples voluntary market partnerships with statutorily mandated energy
conservation standards. Both mechanisms enable cost-effective, energy
efficient technologies and techniques to penetrate the market,
resulting in long-term energy and cost savings by improving the
performance of homes and buildings across our nation.
Question 18. Building energy codes: DOE's role in building energy
code development has been to serve as a technical advisor to the
states. But DOE also publishes a list of proposed changes it wishes to
see implemented in some codes, and thus advocates for specific code
elements. What do you this is the appropriate role for DOE to play in
standards-setting?
Answer. DOE is statutorily required to periodically review the
technical and economic basis of building energy codes, as well as
participate in the industry processes for their review and
modification, including seeking adoption of all technologically
feasible and economically justified energy efficiency measures (42 USC
6836(b)).
DOE is also directed to provide technical assistance to states to
support implementation of state residential and commercial building
energy efficiency codes (42 USC 6833(d)).
More information on statutory requirements and the DOE role
relative to building energy codes can be found at: https://
www.energycodes.gov/about/statutory-requirements.
Question 19. IECC energy building code: Studies have shown the 2012
International Energy Conservation Code, or IECC, is approximately 30-40
percent more energy efficient than the 2006 IECC. I understand that DOE
considered supporting measures that included more flexibility in the
code, while maintaining efficiency levels (e.g. reinstating equipment
tradeoffs), but ultimately withdrew support. Does DOE support standards
based on performance that will allow builders to make their own product
choices?
Answer. DOE participates in industry processes to develop building
energy codes and standards, such as the International Energy
Conservation Code (IECC), and supports performance-based compliance
options. Current provisions in the 2012 IECC target building component
performance levels, and do not specify a particular product or
material. For example, insulation applied in wood framed walls is based
on an R-value (i.e., heat resistance rating), allowing builders to
choose any material that meets the required performance level. The 2012
IECC also allows builders to install measures exceeding minimum code
requirements, which can then be traded against other measures, as
allowed within the code. To ensure this flexibility is available to all
builders, DOE provides free automated compliance software, known as
REScheck and COMcheck, through the Building Energy Codes Program
website.
DOE evaluated several concepts for potential submission to the 2015
IECC, and ultimately did not submit a proposal specifically targeting
the reinstatement of equipment tradeoffs. The allowance for energy to
be traded between residential building envelope and mechanical systems
is a concept that previously existed in the code, but was removed
following the 2006 IECC via the International Code Council (ICC) code
development process. In developing proposals for the 2015 IECC, DOE
solicited public comments on draft code changes. Stakeholder feedback
raised a number of questions on the pros and cons surrounding a
reinstatement of equipment tradeoffs within the IECC. Other
organizations have submitted proposals targeting whole-building energy
savings and performance-based alternative compliance paths. Proposals
have been submitted based on modified versions of the former equipment
tradeoff. The ICC recently published a monograph containing all
submitted code change proposals for the 2015 IECC (http://
www.iccsafe.org/cs/codes/Pages/12-14-Proposed-Group-B.aspx). The DOE-
submitted proposals for the 2015 IECC, including related analyses and
public comments received, are available at https://www.energycodes.gov/
development/residential/2015IECC.
Question 20. ESPCs: Energy Savings Performance Contracts are a
guaranteed way for the government to save taxpayers' money and reduce
the deficit by reducing energy waste in federal facilities. Because the
energy savings are guaranteed by the energy service company performing
the energy efficiency upgrade, there is no chance that the government
will be left paying for a project that doesn't perform. The Department
of Energy has completed ESPCs in 281 federal buildings since 1998,
saving the Federal Government $7.2 billion dollars in cumulative energy
savings. Under this budget, what does DOE plan to do to further expand
the use of ESPCs?
Answer. The Department of Energy's (DOE), Federal Energy Management
Program (FEMP) is embarking on a series of activities to streamline
performance contracting across federal project funding programs and
expand the use of performance contracting in Federal agencies. This
effort builds upon the streamlining progress made to date with the
program and includes ongoing training, a new data effort, as well as a
new contract standardization effort, with overall goals of making
performance contracting business as usual.
A more streamlined process bolstered with better project data and
personnel training will ultimately lead to Federal agencies seeking to
do more projects. This is essential to meet important energy
efficiency, water savings, renewable energy, and greenhouse gas goals.
Question 21. Water heaters as load management devices: Rural
electric cooperatives have long operated programs that use large
electric resistance water heaters to reduce system peaks, store wind
and hydro energy at night, and assist in frequency control. However,
DOE has rejected requests to establish a new class for water heaters
used in this way. Alternatively, on February 2, 2013 DOE published a
notice of proposed rulemaking on the establishment of a waiver to
provide for the continued manufacture of large capacity electric water
heaters for use in demand response programs. The Committee has heard
concerns form electric co-ops that the proposed waiver would only be
granted on an annual basis and with strict limitations, providing
little certainly to manufacturers or utilities operating these
programs. Will DOE continue support for demand response, and in this
case of large electric water heaters, work to ensure that DOE reaches a
solution that is practical and allows electric co-ops and other
utilities to continue, and to expand, their water heater demand
response programs?
Answer. Yes. DOE is currently reviewing all the comments received
on its proposal to allow for a waiver process for demand response water
heaters. DOE also met with several external stakeholders on May 3,
2013, to listen to their particular concerns regarding DOE's proposal.
Question 22. Green building certification: Some have argues that
the Department's current system for identifying a green building
certification system has resulted in the selection of a system that is
not consensus based, and they are urging that Congress amend section
433 of EISA to require that any system selected by DOE must be an
American National Standards Institute (ANSI) standard. Does the
Department agree that the identification of a green building
certification system should be limited to only those systems which
establish ANSI standards? Please explain your reasoning.
Answer. DOE has not identified a green building certification
system, nor have we adopted a system for identifying a green building
certification system. We have published a proposed rule, pursuant to 42
U.S.C. 6834(a)(3)(D)(i)(III), providing criteria for identifying a
certification system and level for green buildings that encourages a
comprehensive and environmentally sound approach to certification of
green buildings. See 75 FR 29933 (May 28, 2010). As required by
statute, among the criteria in the proposed rule that a third party
green building rating systems must provide is an opportunity for
development and revision of the system through a consensus based
process if they are to be considered for Federal agency use in meeting
the proposed rule. See 42 U.S.C. 6834(a)(3)(D(iii))(III) and 75 FR at
29947. DOE notes that agencies are not required by law or any other
authority to use a third party green building rating system.
DOE recognizes that ANSI accreditation can function as an indicator
of the degree to which a third party green building rating system has
been developed using consensus-based processes. However, the criteria
we have outlined in the proposed rule are sufficient to ensure that
agencies wishing to use a third party green building rating system
choose only systems that incorporate consensus-based processes in their
development and revision.
Responses of Daniel B. Poneman to Questions From Senator Murkowski
Question 1. Fossil Energy--The Administration and others have
rightly pointed out that federal R&D spending was at least partly
responsible for the development of hydraulic fracturing, which has led
to record levels of oil and gas production in the United States. Yet
when I look at your budget, research and development for fossil energy
is cut by over $90 million. What is the rationale for deemphasizing
innovative oil and gas technology when it is precisely fossil fuels
that are helping revitalize American industry, boost our exports, and
create jobs?
Answer. The development of innovative oil and gas technologies is
being focused on ensuring that the Federal government's understanding
of the risks associated with oil and gas development keeps pace with
advancements in production technology and developing technologies to
mitigate these risks. For example, DOE has focused on conducting
research to understand and minimize environmental and safety risks
associated with hydraulic fracturing, including unconventional resource
characterization, improved stimulation methods, and the treatment and
handling of produced water. In addition, NETL researchers are pursuing
a range of research activities including assessments that integrate
evaluations of risks to water and air quality, mitigating the impacts
of development, as well as addressing issues related to induced
seismicity.
In addition, the President's FY2014 Budget requested funds to
conduct laboratory and/or field-based research focused on increasing
public understanding of methane hydrates in gas-hydrate-bearing areas.
These public sector-led efforts will be designed to evaluate the
occurrence, nature, and behavior of naturally-occurring gas hydrates
and the resulting resource, hazard, and environmental implications.
Question 2. Oil & Gas Taxes--Once again, the budget request
proposes to raise taxes on our nation's energy producers by $45 billion
over the next 10 years. If the Administration is serious about an ``all
of the above'' energy strategy and reducing our dependence on OPEC oil,
please explain how eliminating these tax provisions will help achieve
these goals.
Answer. The Administration believes that to foster the clean energy
economy of the future and reduce the Nation's reliance on fossil fuels
that contribute to climate change, it is appropriate to repeal tax
provisions that preferentially benefit fossil fuel production. Oil and
gas subsidies are costly to the American taxpayer and do little to
reduce energy prices. Removing these inefficient subsidies would reduce
greenhouse gas emissions and generate $40.7 billion of additional
revenue over the next 10 years. This $40.7 billion represents only a
small percentage of domestic oil and gas revenues--about one percent
over the coming decade. These terminations free up resources to invest
in clean energy development and production, which is critical to the
Nation's long-term economic growth and competitiveness.
Question 3. DOE Funding--Please provide cumulative and year-by-year
totals for all R&D spending that, since 1975, DOE has allotted to 1)
shale gas, 2) safety and environmental impacts of hydraulic fracturing,
3) wind power, and 4) solar power, from the creation of the Department
to the present. If the Department is unable to provide figures from the
1970s to the present, please provide figures since 1990.
Answer. It is appropriate to examine the expenditures of the
Department in the context of a portfolio of investments, and criteria
for those investments. Key criteria include whether a public benefit,
such as reduced pollution, can be expected from the investment and the
ability and motivation of the industry to make an investment on its
own. The two graphs* below show the distribution of DOE's Energy R&D
portfolio over the first 30 years of the Department's history. This
data does not include funding from FY 2009 to the present including
emergency appropriations in the American Recovery and Reinvestment Act.
---------------------------------------------------------------------------
* All graphs have been retained in committee files.
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Clearly each of these areas of investment can be further subdivided
into projects on particular aspects, such as thin film solar or shale
gas. Over the years, these projects can move between programs and
accounts and can therefore be difficult to trace through history. The
Department is happy to provide more detailed information on a specific
funding area, or set of funding areas, below.
Question 4. Energy Spending--Collectively--across all federal
programs and across all federal agencies, from DOE to the extension of
energy-related tax credits--how much does the President's budget
request propose to spend on clean energy in FY 2014? Cumulatively
through FY 2023?
Answer. DOE does not aggregate information on clean energy spending
across all federal programs and across all federal agencies. DOE's FY14
request for clean energy programs is described in the President's
Budget. Estimated funding for FY 2015 through FY 2023 has not been
specifically projected. We would be happy to work with your staff to
answer any specific funding questions on the DOE budget.
Question 5. One of the main missions of the Office of Nuclear
Energy is to support R&D of nuclear energy technologies and related
fuel cycle issues. The Office's budget request reduces the funds
allocated for these activities by more than $59 million, including the
zeroing of the Integrated University Program budget that has been
supporting scholarships and fellowship for nuclear engineering
students. These are all R&D areas that I highlight and support in my
Energy 20/20 energy blueprint in order to maintain strong U.S. domestic
civil nuclear capabilities and our future global competitiveness. Is
DOE confident that these cuts will not adversely affect the important
R&D activities carried out by the Office of Nuclear Energy?
Answer. Yes, DOE is confident the reductions will not adversely
affect progress on NE priorities. The budget supports higher priority
work while shifting the focus away from lower priority efforts. There
is tremendous potential for America to take a leadership role in the
expansion of safe and sustainable nuclear energy technologies around
the world. Our fiscal year 2014 budget request reflects the President's
priorities in this area--supporting the accelerated commercialization
of small modular reactors, making progress on solutions to the back-end
of the fuel cycle, making targeted investments in supporting the
existing fleet of reactors, and maintaining our research and
development infrastructure. We are committed to working closely with
NSF as they develop the details of their enhanced National Graduate
Research Fellowship Program (formerly the NSF Graduate Research
Fellowship program) and with the National Science and Technology
Council's Committee on STEM Education (CoSTEM), to help ensure the
mission needs of DOE for graduate level education and training are met.
Question 6. With regard to the our international engagement with
key organizations, such as the IAEA, the NEA and others, that budget
for that program is being reduced from a very small allocation of
around $3 million in FY 2013 to $2.5 million in FY 2014. How will this
decrease impact our international engagements?
Answer. The $2.5 million requested in FY14 is appropriate and
sufficient to support the Office of Nuclear Energy's important
international engagement activities. Our work with organizations such
as the IAEA, the NEA and the International Framework for Nuclear Energy
Cooperation, will continue. On the bilateral front, we will continue to
engage with priority countries. Both technical and administrative
support provided by our laboratory experts to bilateral activities such
as the Joint Standing Committees on Nuclear Energy Cooperation with
Argentina, Brazil, Taiwan, and South Korea and coordination and
integration support for collaborative fuel cycle and reactor research
and development efforts with Russia, France, and others be streamlined
and focused on accomplishing priority goals.
Question 7. Fossil Energy--The budget documents state that funds
for the natural gas technologies program will continue to be used for
R&D related to hydraulic fracturing. This is in addition to funding
from the Interior Department and EPA. Given scarce federal resources,
coordinated efforts are important. Please describe DOE's work on this
issue and how this relates to the work being done by other federal
agencies with regard to hydraulic fracturing.
Answer. The tri-agency research plan is still under development.
The work to date to develop the plan has been very helpful in both
coordinating the research efforts of the three agencies and developing
the President's FY 2014 Budget Request. The Department's work in this
area has focused on developing technologies and best practices to
address safety and environmental issues associated with hydraulic
fracturing.
DOE, the Environmental Protection Agency (EPA), and the United
States Geological Survey (USGS) will collaborate on research that
improves our understanding of the impacts of developing our Nation's
unconventional natural gas resources, and ensure that these resources
are developed in a safe and environmentally sustainable manner. Through
enhanced cooperation, the agencies will maximize the quality and
relevance of this research, enhance synergies between the agencies'
areas of expertise, and eliminate redundancy.
Question 8. Geothermal Power--As you know, my home state of Alaska
has vast geothermal power resources so I am a strong supporter of
Enhanced Geothermal Systems Research. In the FY 2014 budget request,
the Department seeks a $23 million increase to $60 million for
geothermal activities. Please describe the work DOE proposes to do with
the additional geothermal funding. In addition to EGS, will you also
fund work related to heat pumps? Will DOE perform work designed to
reduce the risk and cost of geothermal well drilling? Will DOE perform
work to better utilizing geothermal cooling and heating in commercial
buildings and homes?
Answer. The Department's request for an additional $23 million is
to expand our efforts to research, develop, and ultimately deploy
Enhanced Geothermal Systems (EGS). Specifically, the proposed funding
increase will allow the EGS subprogram to conduct selection and
preparation of an EGS Field Lab, which aims to achieve the following:
Promote transformative, high-risk science and engineering
that will create a commercial pathway to EGS adoption. EGS
technologies would allow us to tap geothermal resources--
upwards of 100+ GWe, or enough to power 100 million homes--that
would be otherwise inaccessible; and would increase the reach
of geothermal development in the U.S. beyond primarily the
western states.
A key distinction between existing private-sector led, DOE-
funded demonstration projects and the proposed DOE-managed EGS
Field Lab, is the DOE's ability to develop, test, and
comprehensively monitor an engineered reservoir at a scale and
integrity that has not yet been demonstrated, using new
technologies in pre-commercial stages of development. The EGS
Field Lab effort will pave the way to rigorous and reproducible
approaches to EGS that will significantly reduce industry
development risk.
FY14 funds for the EGS Field Lab will be used for the
selection of the EGS Field Lab site and an independent operator
responsible for field implementation; initiation of the
permitting process and any additional required regulatory
steps; and initial site instrumentation for baseline data
collection. This major initiative is an integral part of the
subprogram's strategy to facilitate commercialization of EGS
technology.
DOE's funding request also targets efforts to reduce the risk and
cost of geothermal well drilling:
The EGS sub-program will address drilling in two areas: 1)
the proposed EGS Field Lab will conduct cutting-edge research
to reduce the risk and cost of geothermal well drilling, among
other activities; and 2) A proposed FY14 EGS R&D funding
announcement would include field scale R&D on new drilling
technologies and techniques to address challenges in the high-
temperature, hard-rock environments typical of geothermal
reservoirs.
The Innovative Exploration Technologies sub-program will aim
in FY14 to fund competitively- selected projects that collect
new data and/or apply new analysis methods to indicate
geothermal favorability, which would improve drilling success
rates and thereby reduce the risk and cost of drilling.
Drilling fewer unsuccessful wells has a direct impact on
project economics. DOE considers improving the likelihood of
finding commercial geothermal fields to be a key activity of
the program.
With regard to work to better utilize geothermal cooling and
heating in commercial buildings and homes, we consider the EGS
and Innovative Exploration Technologies portfolios to have
large potential impacts in this area; for example, improved
exploration analysis will allow better identification and
quantification of geothermal potential throughout the country,
including in non-traditional geothermal settings, and the EGS
Field Lab and R&D portfolios offer the real potential to
determine ways in which to make deep geothermal viable for both
new power generation, and for direct use applications.
Question 9. Renewable Energy--One prominently featured in the
President's FY 2014 proposed budget is a ``doubling of renewable
electricity production from wind, solar and geothermal by 2020.'' Why
were these three forms of renewable electricity the only selected? How
does the administration plan to achieve this doubling, and what is the
ultimate goal for wind, solar and geothermal, as a percentage of total
renewable electricity? According to EIA's 2012 data, wind, solar and
geothermal generate about 4 percent of electricity in the U.S. Is the
the goal therefore to generate 9 percent of U.S. electricity from these
three sources?
Answer. The goal to double renewable electricity from wind, solar,
and geothermal resources by 2020 is based on electricity production and
not based on the fraction of electricity production from these
resources relative to electricity production from all energy resources.
At the end of 2008, EIA reports electricity production from wind, solar
and geothermal resources at 72 billion kWh. The first doubling goal,
reached in early 2012, is 144 billion kWh; and subsequently, the second
doubling goal is 288 billion kWh. The EIA AEO 2013 reference case
projects total electricity production from all energy resources at
4,389 billion kWh in 2020. While the exact percentage reached will vary
based on electricity demand in this future year; wind, solar, and
geothermal resources would contribute 7 percent of total electricity
production from all sources, if the second doubling goal is reached in
2020 and the EIA AEO 2013 projected value for total electricity
production is realized.
To meet the proximal goal of doubling renewables by 2020, the
administration has implemented and proposed a number of mechanisms:\1\
---------------------------------------------------------------------------
\1\ Blueprint for a Secure Energy Future (2011); The Blueprint for
a Secure Energy Future Progress Report (2012); Fact Sheet: President
Obama's Blueprint for a Clean and Secure Energy Future (2013; http://
www.whitehouse.gov/the-press-office/2013/03/15/fact-sheet-president-
obama-s-blueprint-clean-and-secure- energy-future)
1. The Section 1603 renewable energy grant program under the
Recovery Act was an essential tool in deploying renewable
energy resources in the U.S., successfully increasing U.S.
manufacturing and supporting tens of thousands of new jobs for
Americans.
2. Clean Energy R&D through institutions such as ARPA-E and
Energy Innovation Hubs have invested in several cutting-edge
projects in areas ranging from smart grid technology to battery
improvements, which can help support increased deployment of
renewables. EERE's contributions to research and develop of
renewable energy technologies have resulted in significant
decreases in price (e.g. U.S. photovoltaic system prices
declined 48 percent from 1998 to 2011) and increases in
deployment (e.g. PV installations increased twenty-fold between
January 2008 and January 2013).
3. Promotion of renewable energy in rural America through the
USDA Rural Utilities Service has funded over 240MW of renewable
energy projects.
4. Permitting clean energy on America's public lands led to
10,000 MW of additional renewable generation capacity thanks to
permitting efforts by the Department of Interior, a process
which continues to become more robust.
5. Permitting of offshore areas through the Department of the
Interior's ``Smart from the Start'' initiative has facilitated
the pending construction of the Cape Wind offshore wind project
and paved the way for additional offshore wind development in
the Atlantic in the coming years.
6. Making the energy Production Tax Credit permanent and
refundable will provide incentive and certainty for investments
in new clean energy. 7. Ultimately, the creation of a Clean
Energy Standard which would double the share of electricity
from clean energy sources to 80 percent by 2035 from a wide
variety of clean energy sources, including renewable energy
sources like wind, solar, biomass, and hydropower; nuclear
power; efficient natural gas; and coal with CCS. Creation of a
domestic market for innovative clean energy technologies will
unleash the ingenuity of our entrepreneurs and ensure that
America leads the world in clean energy.
Question 10. Renewable Energy Deployment Grants--Back in 2007
Congress passed two provisions that I sponsored in the Energy
Independence and Security Act--section 803 for all renewables and
section 625 for geothermal projects in high-cost areas--that provided
grants of up to 50 percent of aid in the actual construction of
renewable energy projects. Given the Administration's interest in
promoting low-carbon energy production, why hasn't the Department ever
sought funding for either of these two programs?
Answer. Section 803, titled ``Renewable Energy Deployment,'' of the
Energy Independence and Security Act (EISA) allows 50:50 cost share of
renewable energy construction grants. To date, the Department has not
requested funding for Section 803. In alignment with mission, the
Department believes that investment in research and development will
provide the maximum rate of return on taxpayer investment as compared
to more expensive, location-specific demonstration and deployment
projects. For instance, EERE's total FY 2014 budget request for
renewable electricity is $616 million. Even if this amount were matched
by private cost share, it would be dwarfed in comparison to what is
invested in building renewable energy projects with other policy
incentives. However, the Department will look to sponsor, when
appropriate, demonstration projects where applying this authority to
validate new technology performance and economics in high cost areas
could spur follow-on private investment and be replicated at scale.
Some of the other Federal government incentives and financing
opportunities for commercializing new technologies and for constructing
renewable energy plants include the DOE and USDA loan guarantee
programs, Modified Accelerated Cost Recovery System depreciation
schedule, production and investment tax credits and the Treasury
Section 1603 grants in lieu of tax credit program. For example, under
the American Recovery and Reinvestment Act, the Section 1603 Treasury
grant program has incentivized over 77,000 projects yielding over 27 GW
of renewable energy capacity when complete and $63 billion in total
renewable energy investment by the government and private sectors. As
the Treasury grant program and tax credits expire, DOE looks forward to
working with Congress and other government agencies to determine the
best policy mechanisms and existing authorities to incentivize private
investment in building new renewable energy projects.
Question 11. Vehicle Spending--Please list the total funding
requested within the President's FY 2014 budget for each of the
following vehicle technologies. Please include (but also distinguish
between) all funding requested by DOE as well as other federal
departments:
a. Electric vehicles (including batteries and electric drive
components)
b. Fuel cell vehicles
c. Natural gas vehicles
d. Other vehicle technologies
e. All vehicle technologies (combined total)
Answer. DOE does not aggregate information on vehicle technologies
spending across all federal programs and across all federal agencies.
The President's FY 2014 budget request for Energy Efficiency and
Renewable Energy (EERE) includes funds for the Vehicle Technologies
Program (total request: $575 million) and the Fuel Cell Technologies
Program (total request: $100 million). Funds requested for EERE for the
specific categories mentioned above are as follows:
a. Electric vehicles (including batteries and electric drive
components): $240.2 million (within Vehicle Technologies--
$170.5 million for Battery/Energy Storage, $69.7 million for
Advanced Power Electronics and Electric Motors R&D). It should
be noted that work under ``other vehicle technologies'' (item d
below), such as lightweight materials, support vehicles of all
types, including electric vehicles. In addition, within the
$118.8 million budget request for Vehicle Technologies
Program's Outreach, Deployment and Analysis/Vehicle
Technologies Deployment, $90 million will support new
Alternative Fuel Vehicle Community Partner projects and $10
million will support a new Clean Cities funding opportunity.
For both of these deployment efforts, competitively awarded
projects with local communities and partners will deploy
multiple fuels and technologies. Although it is expected that
some projects will include electric vehicles, DOE does not
predetermine the level of available funding for each vehicle or
fuel type. The amount of funding will depend on the proposals
submitted and projects selected for award on a competitive
basis.
b. Fuel cell vehicles: $45 million (within Hydrogen and Fuel
Cell Technologies--primarily supports R&D of fuel cell
technologies for automotive applications, cross-cutting
activities such as codes and standards, and demonstration
efforts to validate technology advances). The total Hydrogen
and Fuel Cell Technologies budget request is $100 million,
which includes R&D for hydrogen production, delivery, storage,
and early market applications.
c. Natural gas vehicles: Natural gas vehicles are supported
under the Vehicle Technologies Program's Outreach, Deployment
and Analysis/Vehicle Technologies Deployment activity. Within
the $118.8 million budget request for Vehicle Technologies
Deployment, $90 million will support new Alternative Fuel
Vehicle Community Partner projects and $10 million will support
a new Clean Cities funding opportunity. For both of these
deployment efforts, competitively awarded projects with local
communities and partners will deploy multiple fuels and
technologies. Although it is expected that some projects will
include natural gas vehicles, DOE does not predetermine the
level of available funding for each vehicle or fuel type. The
amount of funding will depend on the proposals submitted and
projects selected for award on a competitive basis.
d. Other vehicle technologies: Additional Vehicle
Technologies Program activities include $70 million for
Vehicles and Systems Simulation & Testing, $59.5 million for
Advanced Combustion Engine R&D, $59.5 million for Materials
Technologies, $17.5 million for Fuel and Lubricant
Technologies, and $26.3 million for other Outreach, Deployment
and Analysis activities.
e. All vehicle technologies (combined total): $620 million
(includes all activities noted above).
Question 12. Vehicle Infrastructure--How much of the Department's
vehicle-related spending request would be applied to infrastructure
R&D? Please describe these activities. Please include a total dollar
amount and a percentage of overall spending.
Answer. Within Energy Efficiency and Renewable Energy, FY 2014
funding for vehicle-related infrastructure R&D is requested under the
Vehicle Technologies Program/Vehicle and Systems Simulation & Testing
(VSST) Subprogram to support the following:
Approximately $1.2 million in the Lab & Field Evaluation
activity for data collection and analysis from deployed
electric vehicle (EV) charging infrastructure.
Approximately $3.1 million in the Codes & Standards activity
for support of the development of codes and standards that
govern EV/grid communications, interoperability, and the
interface between vehicles and charging infrastructure.
Approximately $1.2 million in the Vehicle Systems
Optimization activity to investigate enabling technologies such
as fast-charging and wireless charging technologies.
$20.0 million for the Grid Integration Initiative.
The total funding for these activities is approximately $25.5
million or approximately 36 percent of the $70 million request for VSST
(4 percent of the total request for Vehicle Technologies).
Question 13. EV Grand Everywhere Challenge--
a. How much finding is being requested for the activities within
this initiative?
b. Why is the challenge focused on one technology, with others
excluded?
c. Please describe the Department's intended spending on batteries
for electric vehicles under the FY 2014 request. What percentage of
total funding would be allocated to lithium-ion batteries, versus
alternative chemistries?
d. Please provide an update on the President's previous goal of 1
million electric vehicles on the road by 2015. Does the administration
continue to believe that goal is achievable?
Answer a. In FY 2014, the Energy Efficiency and Renewable Energy
budget request for the Vehicle Technologies Program includes
approximately $325.6 million for work that supports the EV Everywhere
Grand Challenge. This includes $240.2 million for Batteries and
Electric Drive Technology, $32.9 million for Vehicle and Systems
Simulation & Testing, and $52.5 million for Materials Technology.
b. The EV Everywhere Grand Challenge is but one element in the
Administration's ``all-of- the-above'' approach to energy--EERE's
broader, overall R&D portfolio includes multiple vehicle technologies,
such as advanced combustion engines, natural gas and alternative fuels,
and hydrogen fuel cells, as well as electric drive batteries and
vehicles. The Department's Quadrennial Technology Review identified
vehicle electrification as an essential part of the nation's
transportation energy strategy, and the automotive industry is already
moving in this direction. The EV Everywhere Grand Challenge helps
focus, coordinate, and leverage vehicle electrification activities
within EERE. It is also important to note that within the EV Everywhere
Grand Challenge, there are many technologies being developed--such as
lightweight materials and advanced climate control--that are directly
applicable to both conventional and alternative vehicles.
c. Within the Vehicle Technologies Program, the FY 2014 battery R&D
activity will focus on developing technologies to reduce battery costs
from their current $500/kWh to $125/kWh by 2022. In addition, funds
will support vehicle design optimization and performance improvements
such as reducing battery size and weight.
Current lithium ion battery technology is far from its theoretical
energy density limit, and with advances in lithium ion technology,
there is a near-term opportunity to more than double the battery pack
energy density from 100 Wh/kg to 250 Wh/kg. Specific technologies of
interest include (but are not limited to) second generation lithium ion
batteries with high voltage (5V) and/or high capacity (>300mAh/g)
cathode materials, third generation lithium ion batteries with advanced
metal alloy and composite anodes such as silicon carbon (which offer 2-
4 times the capacity as today's graphite anodes), and high voltage and
solid polymer composite electrolytes. FY 2014 funds will further expand
battery research in beyond-lithium-ion technologies such as solid-state
(lithium metal with solid electrolytes), lithium sulfur batteries, and
lithium air batteries, all of which promise energy densities two to
five times that of traditional lithium ion. Research will focus on
overcoming challenges related to cycle life, power density, energy
efficiency, and other critical performance parameters that currently
stand in the way of commercial introduction. Breakthrough innovation at
a reduced cost will be required for these new battery technologies to
enter the PEV market. In addition, FY 2014 funds would support an
Incubator activity, through which DOE will partner with businesses and
researchers to bring new and impactful, ``off-roadmap'' technologies
into the EERE battery portfolio.
In FY 2013, the split between lithium ion and non-lithium ion
technologies is 90 percent to 10 percent, respectively. In FY 2014, the
percentage of non-lithium-ion work would increase slightly, due to a
planned competitive funding opportunity announcement for projects in
this area. Until the projects are proposed and selected, however, it is
impossible to provide a definitive split.
It should be noted that Vehicle Technologies' beyond-lithium work
is coordinated with and complemented by other investments in beyond-
lithium technologies across the Department, including the Energy
Storage Hub and Energy Frontier Research Centers in the Office of
Science as well as related work in ARPA-E.
d. The goal of being the first country in the world to have one
million electric vehicles on the road by 2015 is an ambitious milestone
on the path to the many millions of electric drive vehicles needed to
move U.S. transportation away from dependence on oil. Whether or not we
reach one million vehicles by 2015 is less important than maintaining
the growth trend of the plug-in electric vehicle (PEV) market.
Although initially slower than projected, the PEV market is growing
quickly. U.S. PEV sales increased by 200 percent in 2012 and are
climbing at a faster rate after introduction relative to hybrid
electric vehicles over a comparable span of time after their
introduction . . . A PEV beat all other vehicle models in Consumer
Reports' owner satisfaction survey for the second time (Chevrolet
Volt), and PEVs have won critical acclaim with awards such as 2011
World Car of the Year (Nissan Leaf), 2013 Motor Trend Car of the Year
(Tesla Model S) and 2012 Green Car Vision Award Winner (Ford C-MAX
Energi).
The number of vehicle models available is on the rise--fifteen new
hybrid, plug-in hybrid, and all-electric vehicles are expected in model
year 2013 and 2014 from a number of manufacturers. Improved performance
and a broader range of choices of these cars will encourage additional
purchases as more consumers and businesses find PEVs that match their
needs and budgets. Driving on electricity is cheaper than driving on
gasoline--roughly comparable to $1 per gallon of gasoline equivalent--
and the next generation will bring even bigger savings.
It will take the adoption of many millions of electric vehicles by
consumers to truly transform our transportation sector and
significantly reduce our dependence on petroleum. As such, we need to
continue to pursue the research and development needed to further
reduce cost and improve performance--key aspects of the EV Everywhere
Grand Challenge.
Question 14. Hydrogen + Fuel Cells--This is one of just two
accounts that are cut within the EERE budget, which grows by nearly 56
percent overall. Please explain why it is appropriate for the hydrogen
and fuel cells budget to be reduced--especially while the larger
vehicle technologies program budget request increases by more than $250
million, largely for electric vehicles that are already being sold
commercially.
Answer. The fiscal year 2014 budget request for hydrogen and fuel
cell technologies reflects the sustained commitment by EERE for
hydrogen and fuel cells with a budget of $100 million. The Department
recognizes that hydrogen from renewable or carbon-free resources will
deliver the maximum benefit in terms of greenhouse gas reductions.
Funding in 2014 includes activities to address the critical challenge
of low cost hydrogen, focusing on renewable and low-carbon
technologies. In addition, activities in Vehicle Technologies such as
light-weighting and batteries will also be beneficial for fuel cell
electric vehicles.
Question 15. ATVM Program--
Question 15a. How many applications are currently pending for the
ATVM direct loan program?
Answer. 15a. There are currently no ATVM loan program applications
pending.
Question 15b. How many of those applications are in active review?
Answer. 15b. There are currently no ATVM loan program applications
in active review.
Question 15c. How many applications does the Department anticipate
completing before the end of FY 2013?
Answer. 15c. While it is possible the Department may receive an
application this fiscal year, at this time the Department does not
anticipate completing any ATVM loan applications that might yet be
received by the end of FY 2013.
Question 15d. How do the requirements of current CAFE standards
compare to the baseline standards that DOE uses to determine
eligibility for loans under this program?
Answer 15d. In the ATVM program, in order for a vehicle manufacture
to be an eligible applicant, the adjusted average fuel economy of its
light duty fleet in the most recent model year, must be equal to or
greater than their 2005 (base-year) average and in order for a vehicle
manufacturer's project to be eligible, the vehicle which is the subject
of the application must be an ``Advanced Technology Vehicle''; meaning
the vehicle meets or exceeds 125 percent of the 2005 (base-year)
average fuel economy for vehicles with substantially similar
attributes. These substantially similar attributes are based on
attributes such as EPA vehicle class, interior passenger & cargo
volume, and power to weight ratio. The metric for fuel economy that
ATVM uses to determine eligibility ensures that the manufacturer's
corporate average fuel economy performance will exceed the light duty
CAFE standards.
Question 15e. Please provide a detailed explanation of the spending
of funds appropriated to this program in FY 2012.
Answer. 15e. The ATVM program was appropriated $6 million in FY
2012. Below is a table detailing LPO spending to date for the ATVM
program, broken out according to the Programs' divisions:
Question 15f. Please provide a detailed justification for the $6
million requested for this program for FY 2014.
Answer. 15f. Please see the FY 2014 Congressional Justification.
Administrative expenses are expected to be largely consistent with FY
2012 actuals.
Question 15g. Please describe any legislative improvements the
administration believes are appropriate for this program.
Answer. 15g. The Department is unaware of any Administration
legislative proposals regarding the ATVM program authorities.
Question 15h. Does the administration continue to believe that the
auto industry should have its own, exclusive federal loan program?
Answer. 15h. As the Loan Programs Office is not a policy making
program, it has not formed a view on this topic.
Question 16. Smart Grid--The FY 2014 proposed budget calls for a
37.9 percent decrease from FY 2012 funding levels. Have all the
stimulus funds targeted for Smart Grid been expended? The budget
documents note that the funding will be used, among other purposes, for
``Smart Grid standards and protocols for increased interoperability.''
Please explain. Are these the smart grid interoperability standards
called for by Congress in the 2007 Energy Independence and Security
Act? Has the Department compiled a comprehensive report on the results
of the Smart Grid activities undertaken as a result of the Stimulus
Act? If so, please provide it. If not, does it plan to do so?
Answer. As of the end of April 2013, $3.7 billion (82 percent) of
the $4.5 billion that was provided for Electricity Delivery and Energy
Reliability by the American Recovery and Reinvestment Act (ARRA) have
been expended. For the Smart Grid Investment Grant and Smart Grid
Demonstration Programs, a total of nearly $3.5 billion in payments have
been awarded to funding recipients to date. This amount represents 83
percent of the $4.2 billion in funds allocated to these two programs.
The ARRA-funded projects are on track to complete and expend funds by
FY 2015.
The Department's FY 2014 budget request includes funds for the
``smart grid standards and protocols for increased interoperability,''
which will be used to develop test protocols and conduct pre-standard
testing on interoperable interconnection standards for distributed
energy resources (DER). The DER interconnection standards are a major
component of the smart grid interoperability standards stipulated in
the 2007 Energy Independence and Security Act (EISA). DOE funding will
directly support needs identified by the DER Interconnection Standards
Subgroup under the industry-led Smart Grid Interoperability Panel,
which was established pursuant to EISA.
In addition, the Department is working closely with the recipients
of ARRA funding to determine the impacts and benefits of the smart grid
technologies that are being deployed, which will inform the industry,
its regulators and other stakeholders. These efforts will continue
through FY 2015 as the technology is deployed and tested. To date, six
DOE reports have been issued and may be found at www.energy.gov/OE and
www.smartgrid.gov. They are:
``Demand Reductions from the Application of Advanced
Metering Infrastructure, pricing Programs and Customer-Based
Systems--Initial Results,'' (December 2012),
``Operations and Maintenance Savings from Advanced Metering
Infrastructure,'' (December 2012),
``Reliability Improvements from the Application of
Distribution Automation Technologies--Initial Results,''
(December 2012),
``Application of Automated Controls for Voltage and Reactive
Power Management.'' (December 2012),
``Smart Grid Investment Grant Program, Progress Report,''
(July 2012), and
``Economic Impact of Recovery Act Investments in the Smart
Grid,'' (April 2013)
DOE plans to issue additional reports that more fully describe the
application, costs, and benefits of the technology, as well as the
progress being made in these programs. In addition, DOE will issue
reports that examine the factors affecting the enrollment, response,
and retention of consumers in programs applying dynamic prices to their
customers. The recipients involved in these consumer behavior studies
are also issuing their respective reports, which are being posted on
http://www.smartgrid.gov.
Question 17. Electricity Systems Hub--the FY 2014 budget request
seeks to establish a new $20 million Electricity Systems Hub to address
``fundamental science, technology, economic, and policy issues that
affect our ability to achieve a seamless and modernized grid.'' Is this
type of research already being performed by the federal government? Why
is a new hub necessary?
Answer. The Electricity Systems Hub will address the science,
technology, economic, and policy issues located at the critical
interface between transmission and distribution. This nexus of power
flows, information flows, markets, and regulation will need to be made
seamless to accelerate grid modernization. For example, customers with
microgrids or distributed resources will not be able to participate in
wholesale markets for electricity or services without new technologies,
transactions, and regulations that ensure equity, safety, and system
reliability.
While the Federal government has undertaken some research looking
at aspects of these issues, the integrated nature of the grid
necessitates a multidisciplinary, holistic perspective to effectively
develop solutions. Regional diversity in resources, markets, and
policies also presents unique challenges that are best addressed
through an integrated systems approach. A concerted effort at the Hub
will enable many grid activities at the Department to come to a focal
point and provide a platform for demonstrating and testing new
technologies and concepts.
Question 18. National Electricity Delivery--the FY 2014 budget
calls for $6 million for this office (previously called the Permitting,
Siting, and Analysis Program) and notes that in FY 2014, NED plans to
``streamline siting of transmission facilities on Federal lands by
leading the development of a pre- application process to encourage
early coordination between Federal agencies and potential applicants.''
How does this new initiative differ than previous attempts by this
Administration to streamline transmission siting on Federal lands?
Answer. The FY 2014 budget request for the National Electricity
Delivery program (NED) is not for any new initiative; rather, the
budget request supports on-going activities, which include a multi-year
effort by the Department to comply with existing obligations under
Section 1221(a) of the Energy Policy Act of 2005 and Section 216 to the
Federal Power Act (FPA). Specifically, Section 216(h) of the FPA
directs DOE to coordinate all applicable Federal authorizations and
related environmental reviews required for siting an electric
transmission on Federal lands. NED's on-going efforts to promote and
systematically address coordination on transmission permitting and
review processes support a goal to avoid duplicative Federal reviews,
and provide a transparent, consistent, and predictable path for both
project sponsors and affected communities.
To date, NED has been engaged in a number of activities intended to
facilitate improvements to the review and siting coordination across
the Federal government. In FY 2010, NED initiated efforts to streamline
the permitting process for new electric transmission systems on Federal
lands with the development and execution of a 9-agency Memorandum of
Understanding (MOU) that establishes a framework for early Federal
cooperation to expedite and simplify building of transmission lines on
Federal lands. The 2009 MOU canbe found at: http://energy.gov/oe/
downloads/memorandum-understanding-regarding-coordination-federal-
agency-review-electric. In December 2011, NED also published a rule to
implement the 2009 interagency MOU.
Further, as a part of this interagency collaboration, DOE was
charged with creating an online dashboard to track the permitting
status of transmission projects under the auspices of the 2009 MOU. In
response, NED facilitated the development of, and continues to
maintain, a publicly-available website to track all critical elements
in the Federal review process for qualifying transmission projects.
This online dashboard serves as a publicly-available database
containing pertinent project information, including but not limited to
the physical aspects of the proposed line, lead agency information,
required permits, and project schedules. This online tracking tool can
be found at: http://trackingsystem.nisc-llc.com/etrans/utility/
Search.seam.
Many improvements have been achieved through the 2009 MOU and DOE's
December 2011 final rule,. The FY 2014 budget request provides the
necessary support for NED to continue to act as the Departmental lead
for the purposes of coordinating and tracking these authorizations,
including activities to revise and refine regulations that directly
support streamlined reviews and determinations for entities seeking
permits, special use authorizations, certifications, opinions, or other
approvals required under Federal law to site electric transmission
facilities.
Question 19. Cybersecurity for Energy Delivery Systems--the
Department seeks a 31 percent increase for its cybersecurity efforts
and notes that its request seeks ``to help the energy sector cost
effectively manage cybersecurity risks to increase the resiliency of
the energy systems.'' Please explain and highlight how utility costs
for cybersecurity efforts are factored in for consideration.
Answer. While Cybersecurity for Energy Delivery (CEDS) program in
the Department's Office of Electricity Delivery and Energy Reliability
(OE) eases the transition to practice of cybersecurity capabilities by
decreasing up-front R&D costs, most importantly OE engages energy
sector cyber-asset vendors and utility end users at the very beginning
of R&D projects so that the developed capability respects the cost
constraints that utilities must accommodate throughout installation,
operation and maintenance. The capability must be cost effective--
otherwise it would not successfully transition to practice in the
energy sector, which is the ultimate goal of all OE-funded R&D efforts.
The funding increase will advance cyber risk analysis and
information sharing capabilities. This includes expansion of the
Electricity Subsector Cybersecurity Capabilities Maturity Model to
include the Oil and Natural Gas Subsector in an effort to engage more
energy sector participants through facilitated self assessments, and to
continue to work with industry to implement a framework for the
analysis and appropriate sharing of assessment results to create
cybersecurity capability benchmarks. OE is working to manage and reduce
the risk of energy disruptions due to cyber attacks which includes the
need to keep costs low for utilities seeking to improve their
cybersecurity posture.
Question 20. PMAs--In its FY 2014 budget request materials, DOE
notes that the four Power Marketing administrations ``sell electricity
primarily generated by federally owned hydropower projects,'' giving
preference to public entities and electric cooperatives. The budget
highlight materials further note on page 54 that ``The PMAs also
facilitate the Department's efforts to transform the Nation's energy
system and secure U.S. leadership in clean energy technologies in
promoting the development of higher capacity, more expansive U.S.
energy infrastructure to support the development and delivery of
renewable resources.'' Please provide the legal justification for this
assertion. Does DOE expect the PMA preference customers to pay for its
efforts ``to transform the Nation's energy system and secure U.S.
leadership in clean energy technologies''? If not, how does the
Department propose to fund such an effort?
Answer. The language identified above is a quote taken from DOE's
2011 Strategic Plan. The PMAs ``facilitate'' the Department's efforts
in the sense that they are complementary to broader DOE strategic
goals. Specifically, the PMAs are maintaining and modernizing its
facilities and partnering with industry to expand transmission
infrastructure to ensure flexible and reliable operations--which as
indicated in the budget highlight materials--accommodate industry
change, interconnections and increasing interest in renewable resources
as well as help deliver sources of renewable energy. These actions are
consistent with the statutory obligation of the PMAs to market federal
hydropower to their customers at the lowest possible cost consistent
with sound business principles.
Question 21. Advanced Manufacturing--The Advanced Manufacturing
Office, formerly known as the Industrial Technologies Program, receives
about a 224 percent increase in funding over FY 2012 levels (from $112
million to $364 million). Please detail why such an increase has been
proposed and what authorities will be used to fulfill the mission of
the new Advanced Manufacturing Office.
Answer. The increased funding for AMO will support the U.S.
manufacturing industry's efforts to compete and will focus on three
main applied research, development, and deployment efforts that:
Invest in research and development (R&D) projects focused on
foundational manufacturing processes and materials. These
projects will address core technical issues for foundational
technologies that will potentially enable U.S. manufacturers to
realize significant gains in energy productivity, environmental
performance, product yield, and economic growth.
Support the establishment of approximately three clean
energy manufacturing innovation institutes to help bridge the
gap between research and development and the marketplace. The
institutes are intended to provide researchers from small and
medium-sized enterprises, as well as larger businesses, timely,
affordable access to physical and virtual tools, and to develop
and demonstrate new materials and critical processes to advance
the use of clean energy manufacturing technologies for
industry. DOE is planning to invest between approximately $70M
and $120M into each of these Institutes over the next 5 to 7
years, depending upon the magnitude of the opportunity,
maturity, and capital intensity of the technology; scope of the
focus area; and degree of non-Federal cost-sharing above a 1:1
ratio. DOE plans to fully fund each of these Institutes up
front, depending on the availability of funds and quality of
the proposals. These Institutes are in response to
recommendations from the Advanced Manufacturing Partnership's
Steering Committee and the President's Council of Advisors on
Science and Technology, as set forth in their July 2012
``Report to the President on Capturing Competitive Advantage in
Advanced Manufacturing.'' The recommendations include creating
a fertile environment for innovation through robust support for
basic research; increasing funding for the research and
development of top cross-cutting technologies that are vital to
advanced manufacturing; establishing a network of Manufacturing
Innovation Institutes (MIIs) as a public-private partnership to
foster regional ecosystems in advanced manufacturing
technologies, particularly for the more than 300,000 small and
medium-sized enterprises, which often lack adequate technical
resources; deepening university and industry collaboration;
building excitement for and interest in manufacturing careers;
and developing a high-skilled workforce through hands-on
``training centers'' and course development for universities
and community colleges.
Increase efforts to work with industry to facilitate the
adoption of technologies through technical assistance for
industry that provides them with the information and tools to
support adopting these advanced energy efficiency technologies
in their existing facilities.
Generally, the following public laws have been cited providing
authorization for Advanced Manufacturing Office (AMO) activities..
P.L. 95-91, ``U.S. Department of Energy Organization Act''
(1977)
P.L. 102-486, ``Energy Policy Act of 1992''
P.L. 109-58, ``Energy Policy Act of 1995''
P.L. 110-140, ``Energy Independence and Security Act of
2007''
PL-112-210, ``American Energy Manufacturing Technical
Corrections Act'' (2012)
Specific provisions, with the corresponding U.S. Code citation are
provided below along with any applicable time limitation. Excerpts of
the statutes are also provided for additional reference:
42 USC Sec. 17111(b)--The Secretary shall establish a
program under which the Secretary, in cooperation with energy-
intensive industries\2\ and national industry trade
associations representing the energy-intensive industries,
shall support, research, develop, and promote the use of new
materials processes, technologies, and techniques to optimize
energy efficiency and the economic competitiveness of the
United States industrial and commercial sectors.
---------------------------------------------------------------------------
\2\ For the purpose of this provision ``energy-intensive
industries'' is defined as an industry that uses significant quantities
of energy as part of its primary economic activities, including--
information technology, consumer product manufacturing, food
processing, materials manufacturers, and other energy-intensive
industries, as determined by the Secretary. (See, 42 USC 17111(a))
---------------------------------------------------------------------------
42 USC Sec. 17111(c)(1)--As part of the program, the
Secretary shall establish energy efficiency partnerships
between the Secretary and eligible entities to conduct research
on, develop, and demonstrate new processes, technologies, and
operating practices and techniques to significantly improve the
energy efficiency of equipment and processes used by energy-
intensive industries . . .
P.L. 112-210, Section 7(b)(2)--The Secretary, in
coordination with the industrial sector and other stakeholders,
shall conduct a study of the following: (A) The legal,
regulatory, and economic barriers to the deployment of
industrial energy efficiency in all electricity markets[.]42
USC Sec. 17111(e)--The Secretary shall provide funding to
institutions of higher education-based industrial research and
assessment centers, whose purpose shall be-(1) to identify
opportunities for optimizing energy efficiency and
environmental performance; (2) to promote applications of
emerging concepts and technologies in small- and medium-sized
manufacturers; (3) to promote research and development for the
use of alternative energy sources to supply heat, power, and
new feedstocks for energy-intensive industries; (4) to
coordinate with appropriate Federal and State research offices,
and provide a clearinghouse for industrial process and energy
efficiency technical assistance resources; and (5) to
coordinate with State-accredited technical training centers and
community colleges, while ensuring appropriate services to all
regions of the United States.
42 USC Sec. 15811(b)--The Secretary may enter into
voluntary agreements with one or more persons in industrial
sectors that consume significant quantities of primary energy
for each unit of physical output to reduce the energy intensity
of the production activities of the persons.
42 USC Sec. 13501(a)--The Secretary shall establish a 5-
year National Advanced Materials Program. Such program shall
foster the commercialization of techniques for processing,
synthesizing, fabricating, and manufacturing advanced materials
and associated components.
42 USC Sec. 13502(a)--The Secretary shall establish a 5-
year National Advanced Manufacturing Technologies Program . . .
Such program shall foster the commercialization of advanced
manufacturing technologies to improve energy efficiency and
productivity in manufacturing.
42 USC Sec. 13456(a)--The Secretary. shall-(1) pursue a
research, development, demonstration and commercial application
program intended to improve energy efficiency and productivity
in energy-intensive industries and industrial processes; and
(2) undertake joint ventures to encourage the commercialization
of technologies developed under paragraph (1).
Question 22. Taxes--What rationale is given for the proposal to
extend permanently the Renewable Energy Production Tax Credit when many
renewable industries have stated their support of a gradual phase-out
of this credit?
Answer. The renewable energy investment community requires
certainty and predictability if it is to continue to deploy these
technologies and once again double generation from wind, solar, and
geothermal sources by 2020. Thus, the President has called on Congress
to make the renewable energy Production Tax Credit permanent and
refundable, providing incentives and certainty for investments in new
clean energy.
Question 23. Weatherization Assistance Program--The Weatherization
Assistance Program, which is due to be reauthorized at the end of FY
2013, receives $184 million in the President's Budget FY2014 budget
request, up from $68 million in FY2012. How did the Administration
arrive at the $184 million request? What percentage of that amount is
expected to be spent on administrative costs?
Answer. The FY 2013 request of $68 million for the Weatherization
Assistance Program (WAP) was artificially low due to funding that was
still available through the Recovery Act. The FY 2014 request of $184
million represents the funding that is necessary to support the
infrastructure of the Program in the fifty states, the District of
Columbia, five U.S. Territories and several Native American tribes.
Of the $184 million requested, $157 million will be provided to the
59 Weatherization grantees using the allocation formula contained in
the federal regulations 10 CFR 440.10, and $3 million will be used for
DOE Training and Technical Assistance to support the grantee reporting
system and to make improvements in the program performance measurements
and technology deployment. The remaining $24 million will establish a
competitive solicitation to design and develop models to leverage non-
federal resources to weatherize multi-family buildings (WAP funds will
not be used for loans or other financial instruments).
Approximately $15.7 million will be used to administer the WAP
grants, or 10 percent of the $157 million allocated to grantees. The
provisions in the federal regulations for administrative cost allowance
state that ``not more than 10 percent of any grant made to a State may
be used by the grantee and subgrantees for administrative purposes in
carrying out duties under this part, except that not more than 5
percent may be used by the State for such purposes, and not less than 5
percent must be made available to subgrantees by States.'' (10 CFR
440.18(e))
Question 24. Building Efficiency--In addition to a 40 percent
requested increase in funding for the Building Technologies Program,
there is a one-time $200 million request for the Race to the Top
Efficiency and Grid Modernization, partly directed to give grants to
applicants who demonstrate best practices in building efficiency. This
is in addition to the Better Buildings Initiative (and Better Buildings
Challenge) that showcases the best energy saving strategies for
buildings. Are you concerned that these programs with similar names
create confusion in the marketplace, and could they better be
streamlined into a single program? Additionally, is there no better way
to allocate $200 million than to give grants? It seems that taxpayer
dollars could be better leveraged in this instance.
Answer. The Race to the Top for Energy Efficiency and Grid
Modernization is a performance- based challenge designed to motivate
states to implement policies that encourage private investment in
energy productivity economy-wide. The Better Buildings program focuses
on energy efficiency in buildings. Specifically, the Better Buildings
program challenges companies and partners in state and local
governments to improve building energy performance 20 percent by 2020.
The objectives of these two programs are aligned but distinct. States
that take advantage of the Better Buildings program may more quickly
arrive at best practices for improving energy efficiency in buildings,
which could help inform their approach when applying for the Race to
the Top for Energy Efficiency and Grid Modernization program. But in
order to win, competing states also need to address other aspects of
energy productivity.
The Race to the Top for Energy Efficiency and Grid Modernization
provides technical assistance to participating states to assist them in
improving the market conditions for energy productivity investments. In
addition, performance-based awards are designed to motivate the
implementation of policies that can draw much larger sums of private-
sector investment. Rather than making grants for individual projects,
the Race to the Top is designed to address market barriers that persist
at the state level across the country. As a result, the Race to the Top
for Energy Efficiency and Grid Modernization can deploy federal funds
in a way that is very highly leveraged by private sector investment.
Marshall Islands
Question 25. In 2012, Congress enacted the Insular Areas Act of
2011 (Public Law 112-149) that requires the Secretary of Energy,
through the DOE's Marshall Islands Program, to monitor Runit Dome on
Enewetak Atoll. Recent press reports indicate that DOE intends to begin
this mission this summer. What is the timetable for Runit Dome
monitoring, how much has been set aside in FY 2013 funds for this
summer's activity, how much has been requested from the Department of
Interior (DOI) for this summer's activity, and how much is requested in
FY 2014 funding?
Answer. Public Law 112-149 was enacted to assist the people of
Enewetak Atoll to better understand the long-term environmental and
public health consequences of the waste containment structure on Runit
Island. The legislation requires that DOE perform the work and that DOI
pay for the work related to the radiochemical analysis of the ground-
water surrounding and in the Cactus Crater containment structure on
Runit Island out of Technical Assistance funds within the Office of
Insular Affairs.
In FY 2013, DOE estimated the initial cost for Runit Dome
monitoring to be $500,000.
In April 2013, DOI agreed to transfer $215,200 to DOE to begin this
work. In FY 2014, DOI is expected to transfer an additional $215,200 to
DOE to continue, and DOE will continue to cover any additional costs
through the existing DOE Marshall Islands Environmental Monitoring
Program. A Memorandum of Understanding between DOE and DOI on
Radiochemical Analysis of the Ground-Water Surrounding, and in, the
Cactus Crater Containment Structure on Runit Island is under review by
both agencies.
DOE developed a plan to provide the scientific and technical basis
for the Groundwater Monitoring Program. Runit Dome onsite activities
are scheduled to initiate on May 25, 2013. FY 2013 activities include
the conduct of an engineering survey of the concrete covering the Dome,
assessment of the integrity and load bearing capability of the
concrete, and determination of the structural integrity of the Dome to
determine if the work can be conducted safely, and to establish the
locations for the groundwater sampling wells. Future activities involve
drilling bore holes for sampling over an 18 months baseline period and
performing radiochemical analyses. Upon completion of the baseline, DOE
will issue a final report describing requirements for conducting a
long-term Groundwater Monitoring Program at Runit Dome.
Question 26. Unobligated Balances-Please provide a full and
detailed list of all unobligated balances for every program and account
at the Department of Energy.
Answer. The Department is providing the Committee with detailed
unobligated balance report from with this submission.
Question 27. DOE Contracting--At a recent House hearing, Inspector
General Gregory Friedman said that contracting is the ``weak
underbelly'' of the Department of Energy. He stated, ``.we need to
seriously revisit the question of finding the right balance of
oversight of the contractors and at the same time encouraging the
contractors, incentivizing the contractors to do the right thing . . .
''
27(a) Has the Department taken any steps to address the contracting
deficiencies identified by its own Inspector General?
Answer. 27(a) The Department has taken a number of steps to address
contracting deficiencies including the following:
Issuing recent Deputy Secretary memorandum directing:
--Improved up-front planning
--Greater use of firm-fixed price contracts
--Maximized use of objective performance measures
--Use of provisional fee and cost caps
--Accurately documenting contractor performance;
Addressing GAO High-Risk List concerns regarding major DOE
contracts and projects (over $750M);
--Instituting Deputy Secretary-led ``Deep Dives'' on major
contracts;
Expanding contracting officer certification program to
strengthen skill sets; and,
Improving DOE's enterprise-wide procurement system.
Question 27(b). Please list the Department's strategy for reducing
its cost of contracting.
Answer. 27(b) The Department is constantly striving to reduce its
cost of contracting. It recently completed a study to assess the size
of its acquisition workforce. That report revealed that the cost of
contracting was not caused by the size of our workforce, but more a
function of continuous learning and training of our workforce and our
contracting types and procedures. We are working with the Federal
Acquisition Institute to ensure our acquisition workforce is provided
the best training possible.
As relayed above, we are also making a concerted effort to
transition to the use of more fixed price contracting and, when cost
reimbursable contracting is required, base incentives on objective,
rather than subjective, factors. We are also focused on leveraging
strategic sourcing processes and procedures and greater use of
Government Wide Acquisition Contracts (GWAC's) and GSA Schedules.
Question 28. Stimulus Funding--According to the Department's
website, it has yet to award or obligate roughly $872 from the 2009
stimulus bill, even though more than four years have passed since it
was signed into law.
a. Please summarize all funding that has not been awarded or
obligated as of the date of this hearing.
Answer. 28 In the table below, expired funds are no longer
available and will be or have been returned to Treasury in accordance
with the Dodd Frank Act. As part of the Dodd Frank Act, DOE requested
and received a Presidential waiver for $96M. These funds have no
expiration date, and are only available to cover modification costs on
existing Loan Program Section 1705 ARRA loans.
Prior Year Deobligations (PYDs) are considered expired and will be
cancelled on September 30, 2015. Cancelled PYDs will be returned to
Treasury. As reflected in the change from February to March, the PYD
total will continue to increase as work is finished under cost and
closed out, awards are terminated for failure to meet project
milestones, etc.
b. Please explain what the Department plans to do with the funding
that has not been awarded or obligated.
Answer. With the exception of the $96M of presidentially-waived
credit subsidy balances the other funds will be or have been returned
to Treasury.
c. Is the Department considering returning some or all of that
funding to the Treasury? If no, please explain why not.
Answer. With the exception of the $96M of presidentially-waived
credit subsidy balances the other funds will be or have been returned
to Treasury.
Question 29. Full time Employees--Please list the Department's
total number of full time employees in 2008, as compared to today.
Please include a breakdown of FTEs by office, showing any changes
between 2008 and today.
Answer. The Department is providing information on the number of
full time employees as requested to the Committee with this submission.
Question 30. To what extent, if any, is the Department of Energy
involved with the President's/National Export Initiative and the Trade
Promotion Coordinating Committee? Are high-level department officials
ever asked to attend meetings of these organizations or otherwise offer
their expertise and input?
Answer. The Department of Energy is a member of the Trade Promotion
Coordinating Committee (TPCC), which includes multiple subcommittees
focused on specific sectors. DOE participates in semi-annual meetings
among TPCC agency principals. At these meetings, DOE is typically
represented by the Assistant Secretary for Policy and International
Affairs. The DOE Assistant Secretary for Nuclear Energy co-chairs the
Subcommittee on Civil Nuclear Energy, and the DOE Assistant Secretary
for Energy Efficiency and Renewable Energy co-chairs the Subcommittee
on Renewable Energy and Energy Efficiency. DOE also participates at the
staff level in the TPCC Environmental Technology Working Group as well
as the Infrastructure Working Group.
In the Executive Order that launched the National Export
Initiative, the President established an Export Promotion Cabinet
(EPC), and the Secretary of Energy is a member of the EPC. Because the
EPC and TPCC have substantial overlap in membership, meetings at the
principals level tend to be held jointly. At these meetings, DOE is
typically represented by the Assistant Secretary for Policy and
International Affairs.
DOE participates in trade promotion activities through the TPCC and
the National Export Initiative implemented under the EPC, and DOE often
provides energy-related technical expertise to support cross-agency
activities, including commercial advocacy and review of export
promotion strategies for specific countries or specific industries.
Export credit agencies such as OPIC and the Export Import Bank are also
active in the TPCC, and DOE provides these agencies with direct
technical assistance through its energy programs and national labs.
Question 31. Does the Department of Energy collaborate with the
State Department's Bureau of Energy Resources? If so, to what extent
and in what specific ways?
Answer. The Department of Energy collaborates with the State
Department's Bureau of Energy Resources (ENR) on a number of shared
initiatives, including the International Energy Agency, International
Renewable Energy Agency, Energy and Climate Partnership of the Americas
and the U.S.-Iraq Joint Coordinating Committee on Energy. DOE has
responsibility for providing expertise on energy policies,
technologies, and markets, and analyzing energy security implications,
whereas ENR provides leadership on the nexus of energy and foreign
policy matters and the energy implications of U.S. diplomatic
objectives. DOE leads a number of direct interactions with energy
ministry counterparts with key energy producing and consuming
countries, and ENR provides leadership on foreign policy and
geostrategic implications. DOE supports overall ENR-led economic and
foreign policy dialogues, and offers expert energy policy and technical
input to ENR-led foreign policy initiatives.
Question 32. Does the Department provide any expertise, funding or
other support to oil and gas projects in other countries-- through the
Office of Policy and International Affairs or any other office? If so,
which projects in which countries?
Answer. The Department of Energy does not provide funding for the
development of oil and gas projects in other countries, as that is the
private sector's role. DOE does provide technical expertise and shares
best practices with foreign countries. DOE also engages in R&D
cooperation in those instances where doing so can advance DOE
programmatic objectives.
DOE's Office of Policy and International Affairs (DOE/PI), often in
conjunction with DOE/Office of Fossil Energy (DOE/FE), holds workshops
and roundtables on investment climate issues relating to oil and gas,
but not on specific oil exploration and drilling projects. DOE/PI also
has helped facilitate studies, and sponsor or provide support for
conferences/workshops on such issues as unconventional resource
exploration and development, shale gas cooperation, and safe operation
and maintenance of natural gas systems. DOE/PI also holds regular
bilateral meetings with key energy producers and consumers,
facilitating sharing of market trends, technology trends and best
practices to promote safe, responsible development of oil and gas,
among other energy resources, with the goal of strengthening all
nations' contribution to world supplies and enhancing U.S. energy
security.
DOE/FE provides technical expertise and support to countries that
wish to develop their resources through the following:
Engages in bilateral meetings, sharing technology,
experience, and best practices to promote safe, responsible
development of oil and gas resources in other countries and
regions, which contributes to world supplies and enhances U.S.
energy security;
Holds regular bilateral meetings with the participation of
the private sector to share expertise and help U.S. companies
to do business in other countries;
Conducts methane hydrates research collaboration under
international agreements with Japan, India, and South Korea;
and
Supports, through the International Energy Agency, a high-
level forum on best practices for unconventional gas
development.
DOE/OE provides technical expertise and support to strategic
countries that wish to enhance/protect their critical energy (oil/gas)
infrastructure through the following:
Engages in bilateral meetings, sharing technology,
experience, and best practices to improve the reliability,
survivability, security, and resiliency of strategic countries'
energy sectors, which enhances U.S. energy security and
contributes to global oil/gas supplies; and
Provides, through its headquarters personnel and the
National Laboratories, technical expertise and assistance such
as: training, system effectiveness assessments, modeling and
simulation, and technical exchanges.
Question 33a. Administration Policy--In the second paragraph of
your written statement, you note that ``the President's approach is
working.''
You claim that oil and natural gas production have gone up every
year during this Administration. Has that been the case for the last
two years, 2011 and 2012, on the federal lands and waters under the
President's control?
Question 33b. Administration Policy--In the second paragraph of
your written statement, you note that ``the President's approach is
working.''
Next you claim that generation from wind, solar, and geothermal
have doubled. Can you give us the percentages, to show ``doubling''
really means for each of those resources, as a percentage of total
electricity generation?
Answer 33a. While the U.S. Energy Information Administration (EIA)
estimates that the overall production of crude oil (including lease
condensate), natural gas, and natural gas plant liquids on federal and
Indian lands and waters each decreased in fiscal year (FY) 2011 and FY
2012, there are different trends in offshore versus onshore federal
production.
Production of crude oil on federal onshore lands has increased for
both FY 2011 and FY 2012. Crude oil production on Indian lands,
administered by the federal government, also increased in FY 2011 and
FY 2012. Production of crude oil from offshore federal waters decreased
in both FY 2011 and FY 2012. Production of natural gas on federal lands
decreased in FY2011 and remained virtually unchanged in FY 2012.
Production of natural gas from federal waters decreased in both FY 2011
and FY 2012. Production of natural gas plant liquids on federal onshore
lands increased in both FY 2011 and FY2012 and decreased in both years
from federal offshore waters. EIA's estimates are based on sales data
processed by the Department of the Interior's, Office of Natural
Resources Revenue as of March 15, 2013. Data are available for fiscal
years only.
Answer 33b. In the beginning of his administration, President Obama
set out to double renewable generation from wind, solar, and geothermal
resources. This goal was to double the collective electricity
generation of all three resources, not the generation of each nor the
percentage of total generation of each. In January 2009 when the
President took office, the United States produced 71,843 gigawatt-hours
(GWh) of electricity from wind, solar, and geothermal technologies. In
January 2012, U.S. renewable generation reached and surpassed the
doubling target; wind, solar, and geothermal technologies produced
145,302 GWh of electricity. Recently, the President has established a
new goal of doubling electricity production from wind, solar and
geothermal by 2020.
Question 33c. You state that ``carbon emissions'' are at their
``lowest level.in nearly two decades.'' What percentage of that
decrease would you attribute to the economic downturn, the very slow
recovery, and/or the shale gas revolution?
Answer 33c. In the latest annual report by the Council of Economic
Advisors, the emissions reduction from 2005 to 2012 were broken into
three broad areas and given the following weights: slower economic
growth than trend growth (52 percent), cleaner energy from switching to
both natural gas and renewables (40 percent), and accelerated energy
efficiency (8 percent) relative to trend. These are based on the 2005
values of the carbon content of energy, energy efficiency, and GDP. The
business-as-usual projections are based on published forecasts or
historical trends.
Question 34. ATVM/Fisker--On the evening of April 18, Bloomberg
posted an article with the headline, ``Fisker Spent $660,000 on Each
$103,000 Plug-In Car.'' The article states that, ``Fisker was allowed
to keep using money from its Energy Department loan after violating its
terms multiple times, according to a report released April 17 by
PrivCo, a New York-based researcher specializing in closely held
companies.''
Question 34a. Is the PrivCo report accurate, in that ``Fisker was
allowed to keep using money from its Energy Department loan after
violating its terms multiple times.''?
Answer 34a. The referenced article is based on an inaccurate April
17, 2013 PrivCo report.
Specifically, in the report's timeline of alleged events of
default, every date listed comes after the Department had already
stopped disbursements to Fisker in June 2011.
Question 34b. The Department's Loan Programs Office website claims
that its Fisker loan resulted in 2,000 jobs ``created/saved.'' Is that
figure accurate? How many employees does Fisker currently have?
Answer 34b. The ATVM statute does not require applicants to submit
estimated jobs figures during the application process. However, the
Loan Programs Office requests this information from applicants. Such
estimates are not verified and do not include indirect jobs or the
economic activity created throughout the supply chain. LPO represents
these figures supplied by the borrower.
Responses of Daniel B. Poneman to Questions From Senator Landrieu
Plutonium Disposition
Question 1. Former Senator Slade Gorton, who was a member of the 9/
11 Commission, wrote in an op-ed last month that every dollar diverted
away from plutonium disposition delays the effort to get rid of
plutonium and every delay is potentially more time for the material to
be stolen. He also wrote that eliminating the plutonium and other
fissile material ensures the highest nuclear security, because the
material can never be stolen and used by terrorists. As an added
benefit, the tens of millions of dollars a year it takes to guard this
dangerous material will be saved. Would you agree with Sen. Gorton and
why?
Answer. The United States recognizes the importance of eliminating
surplus fissile materials and is firmly committed to disposing of
surplus weapons-usable plutonium.
Question 2. In June 2010, President Obama at a joint press
conference with Russian President Medvedev stated, ``And to prevent
terrorists from acquiring nuclear weapons, we came together at our
Nuclear Security Summit, where our two nations made numerous
commitments, including agreeing to eliminate enough plutonium for about
17,000 nuclear weapons.'' How are you going to honor the commitment
President Obama made to Russian President Medvedev and fully fund
NNSA's Office of Fissile Materials Disposition and the MOX Project?
Answer. The United States remains committed to achieving the
important nonproliferation mission associated with the disposition of
excess weapon-grade plutonium and to our agreement with Russia.
However, considering the unanticipated cost increases associated with
the MOX fuel approach and the current budget environment, the
Administration is conducting an analysis to determine whether there are
options to complete the mission more efficiently.
Question 3. The plutonium agreement with Russia is one of the few
agreements that seems to be working with the Russians, without the
complaints and bluster that we've seen with other agreements, and the
acrimony we've seen in U.S.-Russia relations over the past 2 years. Why
pause the MOX program, which underpins this very successful agreement,
the Plutonium Management and Disposition Agreement?
Answer. As mentioned in response to your previous question, the
United States remains committed to achieving the important
nonproliferation mission associated with the disposition of excess
weapon-grade plutonium and to our agreement with Russia. However,
considering the unanticipated cost increases associated with the MOX
fuel approach and the current budget environment, the Administration is
conducting an analysis to determine whether there are options to
complete the mission more efficiently.
Question 4. Could you explain the decision to move the Next
Generation Nuclear Plant (NGNP) program under the umbrella of Reactor
Concepts Research Development and demonstration? Could you also explain
the shift laid out to move funding away from NGNP within the larger
RCRD&D budget? In addition, could you give a more precise accounting of
what funds under RCRD&D will be dedicated to the NGNP project?
Answer. In FY 2014, the Next Generation Nuclear Plant (NGNP)
Demonstration Project activities are being refocused from development
and deployment towards longer term research. Consistent with these
actions NGNP is eliminated as a separate subprogram and the ongoing
research activities will be funded alongside other Advanced Reactor
Concepts research. The Department will continue materials and fuels
research and development to address technical uncertainties with high
temperature reactor technology. This consolidation with RCRD&D and
continued research reflects the synergy with the areas of uncertainty
that crosscut other advanced reactor concepts. The plans for FY 2014
call for $20,000,000 of the requested $31,000,000 to be devoted to
continuing fuels and graphite research for high temperature gas-cooled
reactors broadly.
Management of the research efforts under the Advanced Reactor
Concepts and the research performed under the Advanced Small Modular
Reactors R&D has been consolidated into the Office of Advanced Reactor
Technologies and is expected to gain efficiencies and improve
prioritization in addressing those issues facing advanced non- light
water reactor concepts, including high temperature metals,
instrumentation and controls, and supporting reactor and energy
conversion technology.
Responses of Daniel B. Poneman to Questions From Senator Barrasso
Question 1. The Consolidated Appropriations Act for FY2012
specifies that ``No later than June 30, 2012, the Secretary [of Energy]
shall submit to [Congress] a revised excess uranium inventory
management plan for fiscal year 2013 through 2018.'' Over nine and a
half months after this deadline and over six and a half months into FY
2013 DOE has still not submitted a revised excess uranium management
plan. A. When will DOE submit to Congress the revised plan? Will DOE
submit to Congress the revised plan before June 30, 2013? B. What is
the reason for the delay?
Answer. Upon completion of appropriate reviews the report will be
submitted to Congress.
Question 2. On April 18, 2013, Fuel Cycle Week reported that ``DOE
may barter uranium inventories in order to supplement the funding from
Congressional appropriations'' for cleanup in Paducah. Is DOE
considering transferring, bartering, or selling any additional uranium
that DOE has not already disclosed to the public? If so, please explain
in detail:
a. the quantities of uranium DOE will dispose of;
b. in what manner DOE will dispose of this uranium;
c. at what time DOE will dispose of this uranium;
d. to whom DOE will transfer, barter, or sell this uranium; and
e. the steps DOE will take to ensure that all DOE uranium
disposition (including dispositions already known to the public) will
not have an adverse material impact on the domestic uranium mining and
conversion industries taking into account the sale of uranium under the
Russian HEU Agreement and the Suspension Agreement.
Answer. The Department has not made any decision to transfer
uranium in exchange for cleanup services at its Portsmouth or Paducah
sites in excess of those amounts contemplated in the May 15, 2012
Secretarial Determination (May 2012 Determination), which specifically
considered the following transfers for cleanup services:
Up to 2,400 metric tons of uranium (MTU) per year of natural
uranium to DOE contractors as compensation for cleanup services
at the Gaseous Diffusion Plant sites at Paducah, Kentucky, or
Portsmouth, Ohio, in quarterly transfers of up to 600 MTU for
the period 2012 through 2021.
The May 2012 Determination found that these transfers will not have
an adverse impact on the domestic mining, conversion or enrichment
industries. The Department's uranium transfers in 2013 are proceeding
consistent with the May 2012 Determination. DOE will comply with all
laws and regulations, including section 3112(d) of the USEC
Privatization Act, if applicable. As required by section 312 of the
Consolidated Appropriations Act, 2012, DOE will provide notice to
Congress of uranium transfers in exchange for accelerated cleanup
services at a Federal site and such notice will include all information
required by that section.
Question 3. You testified that DOE has received about 200,000
public comments related to the DOE commissioned study on LNG exports.
Roughly what percentage of all the public comments duplicate, in whole
or in part, other public comments on the study?
Answer. DOE received over 188,000 initial comments and
approximately 2,700 reply comments. DOE reviewed each comment and
placed every comment received in the LNG Study docket which is posted
on DOE's website. The initial comment table consists of 399 rows, with
each row consisting of comments DOE assessed to be unique. The reply
comment table consists of 375 rows, which DOE assessed to be unique. In
total, DOE assessed there to be 774 unique comments, which totals to
less than 1 percent of all comments received.
Question 4a. About two weeks ago, it was reported that Fisker
Automotive laid off about 160 employees or 80 percent of its staff. In
2010, DOE awarded a $529 million loan to Fisker Automotive. I
understand that DOE cut off the loan to Fisker at about $193 million
and that Fisker is now on the verge of bankruptcy. There is
approximately $4 billion of unobligated appropriations for the ATVM
loan program. I understand that DOE hasn't awarded any new ATVM loans
over the last two years. As of January 29, 2013, there weren't any
active ATVM loan applications.
Given the unprecedented cuts to the Federal budget, isn't it time
congress rescind the $4 billion in ATVM loan money?
Answer 4a. DOE has supported a broad range of companies, including
large mature companies and start up ventures, and a broad set of
projects, including advanced technology vehicle manufacturers and
suppliers. DOE is committed to administering the program as effectively
and efficiently as possible. As the Loan Programs Office is not a
policy making program, it has not formed a view on this topic.
Question 4b. Wouldn't you agree that our country has much higher
priorities than the ATVM loan program--such as reducing the Federal
deficit and debt?
Answer 4b. As the Loan Programs Office is not a policy making
program, it has not formed a view on this topic.
Question 5. The Office of Legacy Management is responsible for
monitoring and cleaning up contaminated sites throughout the country.
Many of these sites are in the West and a number of sites are on Indian
reservations, including the Wind River in Wyoming. The President's
Budget for FY 2014 requests a $7.38 million or 4.4 percent increase for
the Office of Legacy Management. Meanwhile, the President has requested
hundreds of millions of dollars in new spending on so-called clean
energy programs. Is the Office of Legacy Management still a priority
for the Administration? If so, why isn't that reflected in the
President's Budget for FY 2014?
Answer. The President's Budget for FY 2014 for DOE provides for the
Office of Legacy Management (LM) to continue monitoring closed former
inactive uranium milling sites and other sites for which LM is
currently responsible. This would include groundwater monitoring and
data analysis at the former Riverton uranium milling site on the Wind
River Reservation in Wyoming. In addition, the Administration's budget
request includes funding for a cooperative agreement with the Northern
Arapaho Tribe to continue to provide drinking water to residents in the
vicinity of the Riverton site, as well as a recently established
agreement with the Wind River Tribes to support independent data
collection and community outreach.
Question 6. On February 19, 2013, DOE announced the availability of
the Data Summary Report conducted in August of 2012 at the Uranium Mill
Tailings Radiation Control Act site in Riverton, Wyoming. I understand
that the Report shows that groundwater contamination at this site
increased after the 2010 historic flood event of the Little Wind River.
DOE has said it will provide an analysis of this data in the annual
Verification Monitoring Report which will be available later this year.
A. When specifically does DOE plan to release the Monitoring Report? B.
What steps will DOE take to ensure that the Monitoring Report is
distributed widely throughout the Riverton community?
Answer. DOE anticipates completing the Monitoring Report by the end
of FY 2013 that analyzes and interprets the data from the additional
studies that were conducted after the 2010 historic flood on the Little
Wind River in Riverton. Preliminary results indicate groundwater
contaminant levels are returning to pre-flood concentrations. In
addition, DOE increased its technical staff to manage the work at the
former Riverton uranium milling site by hiring a hydrologist familiar
with the area's groundwater who is a graduate of the University of
Wyoming.
DOE will ensure that the report is widely distributed including
making it available on its website, providing copies in a reading room
at the Riverton Public Library, and sending copies to at least 10
organizations including the Northern Arapaho and Eastern Shoshone
Tribes, the Wyoming Department of Environmental Quality, and the U.S.
Nuclear Regulatory Commission. In addition, press releases may be
prepared, and interviews provided to the press, television news, and
radio reporters.
Question 7. The President's Budget for FY 2014 states that:
``Environmental remediation of NPR-3 facilities will continue to
facilitate the sale/disposition of the property in a manner consistent
with an approved property sale/disposition plan. Final disposition of
the property is estimated to occur in FY 2015.'' A. Has DOE completed a
sale/disposition plan for the property? If not, when will DOE complete
the sale/disposition plan? B. Will DOE make the sale/disposition plan
available to the public?
Answer. The Department has completed the draft Naval Petroleum
Reserve No. 3 Disposition Decision Analysis and Timeline. The draft is
currently undergoing Departmental and Office of Management and Budget
review. As soon as all required concurrences are received, the Decision
Analysis will be transmitted to Congress. At that time the Decision
Analysis will also be available to the public.
Question 8. DOE has a very small program called the Experimental
Program to Stimulate Competitive Research (EPSCoR). I understand that
nine of the ten largest energy producing states, including Wyoming, are
EPSCoR states. Would you provide a state-by state listing of the amount
of R& D funding made available to each state from DOE during the most
recent three years for which such information is available?
Answer. A table showing DOE's EPSCoR funding for those states and
territories that received EPSCoR funding in FY 2011, FY 2012, and
current FY 2014 planned funding is as follows:
The FY 2014 Request column represents current estimates, reflecting
multi-year grants that will be incrementally funded. In addition to the
states and territory listed above, the following other states and
territories were also eligible for EPSCoR funding: Arkansas, Guam,
Hawaii, Iowa, Mississippi, Missouri, Nebraska, Nevada, South Carolina,
U.S. Virgin Islands, Utah, and Vermont. Also, Iowa, Tennessee, and Utah
will lose their eligibility in FY 2013, but any current awards will
continue through completion. FY 2011 funding in Illinois supported a
detailee providing technical assistance to the EPSCoR program. Illinois
is not eligible for EPSCoR awards.
Each of these states is also eligible for funding through other
mechanisms, including funding opportunity announcements for research
across the Office of Science and other DOE programs, and in many cases,
these states receive significantly more non-EPSCoR funding from DOE
than the EPSCoR amounts shown in the above table.
Responses of Daniel B. Poneman to Questions From Senator Cantwell
Question 1. While the FY 2014 budget request for the Department of
Energy is generally strong, I do have a significant concern about the
proposed Electricity Systems Hub.
While I know Dr. Moniz has yet to be confirmed, I was encouraged by
his testimony last week, when he voiced his explicit support for
investment in DOE's smart grid program, given the centrality of grid
modernization to a host of DOE missions and national energy policy
goals.
Dr. Moniz also recognized the vital, direct role that DOE has
played in accelerating energy storage R&D, as well as the Department's
efforts to demonstrate and validate the performance of new storage
technologies-key to encouraging utility and financiers' investment in
the sector.
I am disappointed that this proposed budget follows the same path
as last year's budget request: funding for smart grid R&D as well as
energy storage in DOE's Office of Electricity (OE) seems to fall far
short of the national need.
While a number of Senators and I have also supported the concept of
an Electricity Systems Hub, we have cautioned the Department against
doing so at the expense of these underlying programmatic activities.
Please explain the Department's plan for ensuring sufficient
funding for these underlying smart grid and energy storage R&D program
activities, and expand on DOE's vision for an Electricity Systems Hub.
How does establishing the Hub at the expense of other grid programs
help advance a 21st century grid?
Answer. The FY 2014 request of $169 million for DOE's Office of
Electricity Delivery and Energy Reliability includes critical
investments that will continue progress towards enhancing the
capabilities of a modern power grid. Strategic decisions were made to
prioritize the request to provide a balanced portfolio of programs and
projects, including investments in enhanced capabilities to better
respond to energy disruptions, cybersecurity technologies and
capabilities for the energy sector, and modeling and analysis to
enhance reliability and resiliency. The FY 2014 request also reflects
ongoing efforts to leverage grid-related investments across the
Department, other Federal agencies, and the industry to maximize cost
effectiveness and results.
Investing in the Electricity Systems Hub will focus on the seam
between transmission and distribution--a pinch point of grid
modernization where power flows, information flows, policies, and
markets intersect--tackling the critical issues and barriers associated
with achieving a seamless grid and facilitating the numerous changes
that are happening system-wide. The Hub activities will accelerate
adoption of new technologies within a policy and regulatory framework
that allows efficient utilization of assets and capital investment,
including minimizing consumer costs for grid modernization. Regional
diversity in resources, markets, and policies also presents unique
challenges that are best addressed through an integrated systems
approach. A concerted effort at the Hub will enable many grid
activities at the Department to come to a focal point and provide a
platform for demonstrating and testing new technologies and concepts,
including those in energy storage and smart grid.
Question 2. DOE's FY 2014 Budget Request includes funding for U.S.
participation in BELLE II, an international high energy physics project
located in Japan. The United States has been one of the key partners in
this project for several years, with support from the Office of
Science's High Energy Physics Program. This is an important year for
the project and the U.S. role in it, since it marks the transition from
prototyping to actual constructing of the upgraded BELLE II detector.
This transition is noteworthy from a budgetary standpoint; with the
commencement of the construction phase, BELLE II is now classified as a
new project start and, as such, U.S. participation would be suspended
under another Continuing Resolution. I am concerned that this
interruption could cause further harm to the reputation of the United
States as a reliable partner in the international science community, in
the same way that past interruptions to our funding for other ``big
science'' projects have. What could be done from the DOE side to ensure
that the United States would be able to honor its commitments to BELLE
II and other international projects in the event of another Continuing
Resolution?
Answer. The Office of Science is working with the Pacific Northwest
National Laboratory (PNNL), the DOE project lead, to develop a
mitigation plan that is consistent with the relevant laws and
appropriations committee guidance, and will closely coordinate our
plans with Japan's KEK laboratory that is hosting BELLE-II.
The mitigation actions could include the development of advanced
prototypes, preparing acquisition plans, and conducting project reviews
in advance of the approval of a new start. We will not allow the
expenditure of capital equipment funds without the approval of a new
start from Congress and the appropriations authority to obligate funds
for that purpose.
Question 3. Last week, Energy Secretary Ernest Moniz provided a
response to my question about technology transfer and giving the labs
greater flexibility in this important area. I understand there is a
need to investigate this issue more fully, but I am concerned that
historically these issues have lingered without resolution. I would
like your assurance that progress will continue. To ensure resolution,
will you commit to working with the National Lab Director's Council
(NLDC) to develop an approach that is supported by the NLDC to resolve
outstanding issues, especially enhancement to ACT and enablement of
technology maturation?
Answer. The Department will continue to look for ways to improve
the laboratories' ability to conduct the technology transfer mission.
DOE has recently modified its requirements for advanced payments from
non-Federal sponsors. The Department has also created a Licensing Guide
in order to provide prospective licensees with an understanding of the
terms and conditions found in most DOE laboratory intellectual property
license agreements.
The Department initiated a pilot program, Agreements for
Commercializing Technology (ACT) that allows for greater flexibility
when negotiating a contract with a non-Federal customer wanting to fund
work at a DOE laboratory. DOE is currently monitoring the progress and
results of this pilot. Currently six national laboratories-Brookhaven,
Oak Ridge, Pacific Northwest, Idaho, Lawrence Livermore, and the
National Renewable Energy Laboratory-have been participating in the ACT
pilot.
The ACT pilot is in a very early stage. Several pilot sites are
working on ACT agreements, but so far, only the Pacific Northwest
National Laboratory has completed an ACT agreement. It is not yet
evident whether ACT will be successful and become a preferred approach
when working with a DOE laboratory. We will continue to collect
feedback from representatives from each of the ACT pilot sites and the
NLDC. ACT enhancements will be considered in greater detail after the
results of the pilot have been analyzed and in the context of
applicable Federal laws and regulations.
Regarding enabling technology maturation, Cooperative Research and
Development Agreements (CRADA) allow laboratories to partner with
industry, universities, and state and local government organizations to
increase the Technology Readiness Level (TRL) of selected technologies.
The laboratories are also able to use royalties from licensing their
technologies to fund technology maturation activities. The Department
is also exploring other ways to support technology maturation at the
laboratories.
Question 4. Within a few years, 90 percent of Hanford site will be
cleaned up. As cleanup finishes, the Tri-Cities community is looking to
diversify its economy. To that end, Congress provided the Energy
Department with the authority to transfer nuclear defense properties
over to economic development. DOE completed a Comprehensive Land Use
Plan in 1999 and a 2008 update identified nearly 10 percent of the
Hanford Site that could be used for industrial development in the
future.
(a) Does the Department view this Comprehensive Plan, which
Congress required as part of the National Defense Authorization Act of
fiscal year 1997, as the blueprint for its decisions on future land
uses at Hanford?
Answer. Yes.
(b) President Obama issued a ``Memorandum on Disposing of Unneeded
Federal Real Estate'' on June 10, 2010 that may have clouded important
authority that Congress provided the Department of Energy in Sections
3154-3155 of the National Defense Authorization Act of fiscal year
1994. Does the Department believe that it currently still has all of
these authorities that Congress granted and the ability to use them,
particularly those in Section 3155(a)?
Answer. Yes. The Department has the ability to use the
discretionary authorities provided under sections 3154 and 3155. Under
Section 3154 the Secretary may lease real and related property at a
facility to be closed or reconfigured, and under 3155(a), the Secretary
may transfer unneeded personal property at DOE facilities to be closed
or reconfigured.
Responses of Daniel B. Poneman to Questions From Senator Flake
Question 1. Administrator Jackson, signed a ``joint Federal Agency
Statement Regarding Navajo Generating Station.'' Among other things,
the Secretaries and the Administrator committed to forming an NGS
Working Group. Has that Group been formed? If so, what is the status of
the working group discussions? If not, why have the Agencies delayed in
forming the group?
Answer. In January 2013 the Joint Federal Agency Working Group was
formed and began meeting on the items delineated in the Joint Federal
Agency Statement. These meetings have been held on numerous occasions
via electronic audio and visual links. The working group has shared the
knowledge and background of the individual agencies and begun
developing joint efforts.
Question 2. In the joint agency statement, the Department of Energy
(DOE) committed to ``reviewing current and expected future agency
resources (grants, loans, and other applicable resources) for potential
use towards pollution control, renewable energy development water
delivery, or other regional needs, and seeking funding to cover
expenses for plant pollution control or other necessary upgrades for
the Federal portion of NGS.'' Does DOE's budget include any funding or
other resources for the implementation of EPA's BART proposal? If so,
please describe the nature of those commitments.
Answer. In Goal 4 of the Joint Federal Agency Statement, DOE did
agree to explore resources available to support plans developed for the
Navajo Generating Station (NGS). The Agencies and the owners of the NGS
are still in the stage of defining the scope of potential actions.
Comments are due in August 2013 on the EPA BART proposal. Following
those comments EPA will finalize the scope and timeline for action.
Without those significant clarifications on the scope, specific actions
are not clear enough to justify budget requests from any of the Federal
partners. Future plans and actions by the NGS owners and further
engagement with the Federal Agencies will allow DOE to determine its
appropriate role in supporting the joint agency efforts.
Question 3. In the joint agency statement, DOE committed to
``support, through funding or other means,'' Phase 2 of the National
Renewable Energy Laboratory's analysis of Navajo Generating Station.
Please describe how DOE's budget proposal reflects that commitment.
Answer. The Joint Agency Working Group has begun planning of the
Phase 2 analysis. One section of the scope has been sponsored by the
Bureau of Reclamation. This has helped to inform the deliberation now
underway among the NGS owners. The remaining scope will be developed
after the EPA has made a final determination on the BART ruling. Since
the scale and timing of the Phase 2 analysis is not possible to define
at this time, no funding request has been generated.
Question 4. What is the status of NREL's Phase 2 analysis of NGS?
Answer. The Joint Agency Working Group has been developing a draft
scope of work for inclusion in a possible Phase 2 analysis. At the
current time the first actions in this scope have been sponsored by the
Bureau of Reclamation to look at options for the owners of the Navajo
Generating Station. As the requirements of the EPA are finalized, the
scope of future efforts will be defined and planned for scope, schedule
and costs.
Question 5. Since January 4, 2013, has DOE met with any of the NGS
stakeholders including CAP water deliver customers to discuss
alternatives to NGS? If so, what was the nature of those conversations?
Answer. Since the scope of the specific requirements which will be
implemented at Navajo Generating Station have not been finalized
through the EPA regulatory process, DOE has not made any efforts for
our staff to describe the Joint Federal Agency Working Group or asked
for comments from any members of the public. We did host a meeting with
CAP board members and management in our offices. Our general plan is to
hold meetings with public audiences as a Joint Work Group. Early plans
have been developed for hosting such meetings in Arizona later in 2013.
Question 6. In the Energy Efficiency and Renewable Energy (EERE)
budget justification, DOE explains that its proposal seeks to make
``clean energy technologies directly cost competitive, without
subsidies, with the energy technologies we use today.'' DOE further
states, ``We are now in the unique position where a wide array of
technologies--from solar power, wind power, and plug-in electric
vehicles, to solid-state lighting and cellulosic biofuels--are within
5-10 years of being directly price-competitive without subsidies.''
Consistent with that analysis, does DOE's budget proposal provide for
rescinding those subsidies in 5 or 10 years? If so, how has OMB scored
those rescissions?
Answer. DOE's budget request does not include any policy proposals
concerning subsidies for clean energy technologies. DOE will continue
to share the results of its technology development and demonstration
programs to inform future Administration policies.
Responses of Daniel B. Poneman to Questions From Senator Manchin
Question 1. In your comments in front of the committee, you stated
that the administration has a ``$6 billion investment on CCPI and
carbon sequestration projects.'' However, that's a little disingenuous,
as we haven't actually spent that much money. A lot of those projects
have either not gone forward yet--like FutureGen--or have been
withdrawn.
While I'm happy that we're not spending money on projects that
we've decided aren't going to work, such as in the case of the projects
that are being withdrawn, but it's a little disingenuous to say that
we've spent that money no Clean Coal.
So my question is this: how much money has this administration
actually spent--not ``authorized to spend'' but actually spent--on
Clean Coal research?
Answer. Clean coal technologies encompass a number of programs
within the Department of Energy, including deployment of current
generation technologies; development of next generation technologies;
and investments in basic research through our Office of Science, and
ARPA- E.
The CCPI program is a multi-billion dollar, competitive
demonstration program that has been implemented in three
rounds. The program provides government funding to advanced,
clean coal projects that represent technological advances over
current commercial technology. The CCPI program financially
supports projects selected with appropriated dollars, which
also leverage investments from industry. The CCPI program has
spent $568 million on 12 projects, leveraging an investment
from industry of $9.767 billion. In addition, $826 million
have been obligated and committed to our industrial partners
over the next few years to complete the four active CCPI
projects, for a total investment of $1.4 billion.
The FutureGen program has outlayed $92 million of the total
obligation of $1.048 billion obligated to the project,
leveraging an industry investment of $717 million.
The Industrial Carbon Capture & Sequestration (ICCS) program
has obligated and outlyed $677 million on 51 projects,
leveraging an industry investment of $560 million.
Approximately $810 million that has been obligated and
committed to our industrial partners remains to complete the 39
currently active projects, for a total investment of $1.5
billion.
In addition to the above three programs, this Administration
has obligated roughly $1.8 billion in clean coal research
through the Office of Fossil Energy, and an additional $100
million through our Office of Science, and ARPA-E.
Budget authority is ``spent'' in two steps: obligations and
outlays. The Department has obligated roughly $5.85 billion, which
supports the statement made in my testimony. However, as is standard
project management practice, the Department outlays funding only after
projects meet specified milestones.
Question 2. In your comments, you state that research into geologic
carbon sequestration is very important. Yet we've cut the budget for
this research by $54 million dollars at a critical point in the
development of these technologies. Specifically: these projects, which
have been in moving steadily forward for ten years, are critical to the
safe injection and storage ofCO2, and are just entering the
injection and environmental monitoring stage. If we stop now, all of
that research will have been for naught.
My question is this: I understand we have a limited amount of
funds, but if these projects are so critical, why are we cutting
funding to projects like CO2 storage at a time when they are just
getting started? Especially when we're doubling down on Energy
Efficiency and Renewable Energy (EERE), with a $2.7 billion budget
request there? Are you saying that we can afford to increase funding
for EERE by almost one billion dollars, but we can't afford to spend
five percent of that increase on geologic sequestration?
Answer. The FY 2014 budget request prioritizes research and
development (R&D) activities on carbon capture technologies which have
greater potential to reduce the cost and energy penalty of carbon
capture and storage. The FY 2014 request for carbon storage continues
to support the Program's existing field projects, which are focused on
large volume development tests of storage technologies, injection
techniques, and monitoring at selected geologic site locations, as well
as its existing R&D activities.
Question 3. The Pay-TV industry--cable tv, satellite TV, etc.--has
been working to address their energy impact. For example, they're
working to reduce the energy usage of the cable boxes that people have
in their houses, the so called ``set-top boxes''.
I want to voice support for what this industry has done to address
this issue: set-top box energy efficiency. The industry proactively
developed a consensus agreement that will save their customers money,
deliver immediate energy savings, and still encourage innovation and
competition.
However, there has been some pushback from the DOE that--despite
the industry efforts to be figure out a commonsense solution--they're
going to regulate them anyway.
I fear that any DOE regulation would harm the Agreement's progress,
increase consumer costs, and slow innovative applications that benefit
consumers. Voluntary Agreements have become and internationally
approved approach, with counterpart agreements in Europe and Australia.
What is the Department doing to support, and not undermine, this
industry initiative?
Answer. The Department encourages the development of market-based
solutions that are a result of a consensus from all relevant parties,
and has recently finalized several rules through consensus agreements.
In the case of set-top boxes, DOE had a rulemaking in process, which it
suspended for a six-month period in 2012 following a request from Pay-
TV, consumer electronics industries, and energy efficiency advocates to
provide these stakeholders time to negotiate a voluntary agreement. The
Department is now proceeding with the rulemaking, with DOE issuing an
initial Notice of data availability (NODA) analysis on February 28,
2013, that presents DOE's initial analysis estimating the potential
economic impacts and energy savings that could result from promulgating
a regulatory energy conservation standard for set-top boxes. DOE has
not yet proposed an energy conservation standard for set-top boxes, and
any future proposed standard would not be binding on products for
approximately five years after the publication of the final rule, in
addition to the time that would be required to complete the rulemaking
process. DOE welcomes the voluntary agreement industry has developed,
but also notes that it is without the support of a subset of the
participants originally involved in the negotiation.
DOE has an obligation to ensure standards maximize the economically
justified, technically feasible energy savings potential identified by
a thorough analysis and as part of a notice and comment rulemaking.
However, DOE recognizes that there are multiple paths forward to ensure
that the maximum economic benefits and energy savings from increasing
the efficiency of set-top boxes are achieved, and DOE strongly
encourages and will consider any non-regulatory consensus agreement as
an alternative to a regulatory standard.
Question 4. Can you explain to me why new project areas such as
Grid Modernization and Advanced manufacturing are being placed under
the purview of Energy Efficiency and Renewable Energy (EERE)? Neither
of these areas seem to match the traditional purview of that office.
For example, while I understand a portion of the focus of the Grid
Modernization task is the effective integration of intermittent
renewables and energy storage into the grid, but those are end use
technologies and have little to do with the operation of our very
complex electric grid. Shouldn't the Office of Electricity Delivery and
Energy Reliability, whose expertise is the inner workings of the
electric grid, seem like a natural fit for Grid Modernization? Or, if
they're going to be doing all the work, why isn't the money in their
budget instead of EERE's?
Answer. The Department of Energy (DOE) Office of Electricity
Delivery and Energy Reliability (OE) drives grid modernization and
resiliency in energy infrastructure. OE leads the Department of
Energy's efforts to ensure a resilient, reliable, and flexible
electricity system. OE accomplishes this mission through research,
partnerships, facilitation, modeling and analytics, and emergency
preparedness. The grid energy storage program is a program within OE
that will have impact across the grid.
The Office of Energy Efficiency and Renewable Energy (EERE)
conducts research, development, demonstration and deployment programs
in the areas of renewable electricity generation, sustainable
transportation, and energy-savings for homes, buildings and
manufacturing to strengthen U.S. energy security, environmental
quality, and economic vitality.
EERE is pursuing its Clean Energy Manufacturing Initiative (CEMI)
anchored by its Advanced Manufacturing Office and with strong
involvement and dedicated funding through several EERE Technology
Offices. CEMI is focused on the urgent economic opportunity in U.S.
clean energy manufacturing. The goals of this effort are both to
increase U.S. competitiveness in the production of clean energy
products and to boost U.S. manufacturing competitiveness across the
board by increasing manufacturing energy productivity.
Many EERE-funded technologies are approaching direct cost-
competitiveness with conventional energy technologies in the market.
These end-user technologies include rooftop photovoltaics (PV),
electric vehicles and automated building controls. However, mass
deployment of these behind-the-meter technologies will be inhibited if
they are not compatible with the grid. In the fiscal year 2014 budget,
EERE proposed a cross-cutting grid integration program totaling $80
million that is not a new line but identifies $30 million each from its
solar and buildings program and $20 million from its vehicles program.
The aim of this program is to ensure that emerging solar, electric
vehicles and automated building controls can be seamlessly integrated
together and compatible with the grid.. EERE and OE coordinate on grid
integration issues to ensure that renewable generation and end use
efforts under EERE can successfully interface with OE's grid activities
Question 5. I think we can all agree that we need to develop our
energy sources in the most efficient way possible. And I think you all
know that I feel we should take advantage of all the energy sources
that each one of our states has available.
Well, the National Energy Technology Laboratory has released a
study that shows we can almost triple the amount of oil we can get out
of existing oil formations, form 24 billion barrels to over 60 billion
barrels, if we just have a small research and development (R&D)
program, and if we incentivize oil producers to us best practices inhow
they develop these fields. There are even old oil fields in my state of
West Virginia that we can get oil out of . . . about 100 million
barrels worth!
These types of programs are just like the Department of Energy
research that brought us the shale gas revolution: programs that focus
on near term technologies which just need a bump to get across the
finish line.
My question to you, Deputy Secretary, is: Why don't we have
research programs that will make better use of our energy sources, like
increasing the amount of oil& gas that we can recover from existing
fields. I'm not sure I understand how we can spend $2.8 billion dollars
on renewables and energy efficiency. Does the DOE, MR. Deputy
Secretary, have any plans that you are aware of to take advantage of
low-hanging fruit research opportunities? And if not, why?
Answer. The Department's2011 report--Improving Domestic Energy
Security and Lowering CO2 Emissions with ``Next Generation''
CO2 Enhanced Oil Recovery (CO2-EOR)--stated that
about 60 billion barrels of additional economically recoverable oil
could be provided by ``Next Generation'' CO2-EOR. As a
component of our carbon storage R&D, DOE is conducting research
activities aimed at developing and applying the ``next generation'' of
CO2-EOR technologies to get more oil out of existing
domestic oil fields more efficiently while permanently sequestering
CO2. The on-going projects focus primarily on developing and
testing new technologies at laboratory scale. This year, we will
solicit for pilot-scale performance testing and integration of ``next
generation'' of CO2-EOR technologies at carbon capture and
storage project sites.
Question 6. My staff informs me that during the briefing you held
earlier this week a big show was made of how bio-refineries--
particularly those for ethanol--were far enough along that we no longer
needed to fund them. Your staff pointed to the zero'ing out of the
``biorefinery'' program. But now that we have your budget justification
document, as of 7:25 his morning, I see that you have merely re-named
the program ``bioenergy'' and that the budget has actually increased.
Why the smoke and mirrors? And will the department be looking at the
combination of coal and biomass to make liquid transportation fuels,
which has shown to be a cost competitive means of producing biomass
derived fuels RIGHT NOW?
Answer. The Office of Energy Efficiency and Renewable Energy
(EERE), through the Bioenergy Technologies Office (previously Office of
Biomass Programs), has successfully completed a decade of research,
development, and demonstration (RD&D) of pioneering technologies for
the production of cellulosic ethanol. Through pilot scale validation of
state of the art technologies, the modeled cost of mature commercial
production of cellulosic ethanol has proven to be cost competitive with
gasoline. This means that after the initial build out of the cellulosic
commercial industry it is expected that cellulosic ethanol will cost
$2.15/gal ($3.20 gallon of gasoline equivalent). In addition, we expect
the first commercial cellulosic ethanol biorefinery in U.S. history to
fully come online this year. It will transform municipal solid waste
and yard waste into cellulosic ethanol and clean energy, while
commercial cellulosic biorefineries built by two other companies are
expected to be online shortly thereafter, in 2014. Together, these
three facilities will have the capacity to produce more than 50 million
gallons of renewable fuels annually. It should be noted that advanced
biofuels includes cellulosic ethanol, as well as renewable gasoline,
diesel and jet fuels which will allow for the replacement of the entire
barrel of oil. The FY 14 request will not fund additional ethanol
research and development, but rather is focused on bringing the cost of
production down on the remaining suite of products required to displace
petroleum.
Responses of Daniel B. Poneman to Questions From Senator Scott
Plutonium Disposition
Question 1. How can the Administration reconcile a ``slowdown'' to
the program that could ultimately kill the MOX project, and
simultaneously pledge to uphold our agreement with the Russians?
Answer. The United States remains committed to achieving the
important nonproliferation mission associated with the disposition of
excess weapon-grade plutonium and to our agreement with Russia.
However, considering the unanticipated cost increases associated with
the MOX fuel approach and the current budget environment, the
Administration is conducting an analysis to determine whether there are
options to complete the mission more efficiently.
MOX Project
Question 2. How much will the slowdown of the MOX project affect
its cost and schedule?
Answer. As mentioned in response to your first question, the United
States remains committed to achieving the important nonproliferation
mission associated with the disposition of excess weapon-grade
plutonium and to our agreement with Russia. However, considering the
unanticipated cost increases associated with the MOX fuel approach and
the current budget environment, the Administration is conducting an
analysis to determine whether there are options to complete the mission
more efficiently. Cost and schedule impacts will be a central component
in determining next steps for fulfilling our plutonium disposition
commitments.
Question 3. What are NNSA's estimates on how much it would cost to
shut down the MOX project?
Answer. NNSA does not have a current estimate of the cost to
shutdown the MOX project.
Question 4. How much is the study expected to cost and where will
the money come from-NNSA, NE, EM or elsewhere?
Answer. The Administration is conducting an analysis of plutonium
disposition options, which is being funded primarily through NNSA.
Question 5. When is the study expected to be completed?
Answer. The Department intends to use the analysis in order to
inform the FY 2015 budget.
Question 6. What are the other alternatives and are they consistent
with the US-Russia agreement?
Answer. The analysis includes continuing the current path of
disposing of plutonium as MOX fuel as well as other technically and
financially feasible options. The U.S.-Russia Plutonium Management and
Disposition Agreement (PMDA) allows for other disposition paths if
agreed to by both parties.
Question 7. Will the US-Russia Agreement have to be amended if the
Obama Administration shuts down the MOX project to use an alternative?
Answer. The United States remains committed to achieving the
important nonproliferation mission associated with the disposition of
excess weapon-grade plutonium and to our agreement with Russia. The
U.S.-Russia Plutonium Management and Disposition Agreement (PMDA)
allows for other disposition paths if agreed to by both parties.
Question 8. What assurance do we have that Russia will be amenable
to something other the MOX process?
Answer. The U.S. will continue to engage Russia while conducting
the options analysis and will work to continue progress in implementing
the PMDA.
Question 9. What national security assessments will be made if the
MOX project is ultimately shut down?
Answer. The Department has not cancelled the MOX project, and we
cannot prejudge the outcome of the options analysis.
Question 10. What options have been previously reviewed and
eliminated and what has changed since the time of those studies that
these same options should be considered again? What new serious options
exist today that have not already been evaluated?
Answer. As previously mentioned, the United States remains
committed to achieving the important nonproliferation mission
associated with the disposition of excess weapon- grade plutonium and
to our agreement with Russia. However, considering the unanticipated
cost increases associated with the MOX fuel approach and the current
budget environment, the Administration is conducting an analysis to
determine whether there are options to complete the mission more
efficiently. The options include continuing the current path of
disposing of plutonium as MOX fuel as well as other technically and
financially feasible options. Previous reviews of the Administration's
plutonium disposition strategy will be taken into account in this new
analysis. Some options are being analyzed that have been considered in
the past; however, the new analysis will take into consideration new
data and changes in the operating plans of DOE facilities.
Question 11. How does the Administration intend to comply with the
agreement with the State of South Carolina for the permanent
disposition or removal of plutonium in the state?
Answer. The Department understands our commitments under current
legislation, and we will look to ensure compliance with the law as we
analyze plutonium disposition options.
Question 12. What will be the costs of complying with the agreement
with the State of South Carolina and of non-compliance?
Answer. Beginning in 2016, current law stipulates ``economic
assistance'' in the form of fines and penalties of $1 million per day
up to $100 million per year, subject to appropriations.
Question 13. Does the Administration have a contingency for the
removal of all the plutonium in the state of South Carolina?
Answer. The Department understands the provisions of current law,
and we will look to ensure compliance with the law as we analyze
options.
Question 14. If the MOX project is cancelled, will NNSA remove the
plutonium from SRS, and if so, to where? How much will it cost to
package, transport, safeguard and store this sensitive material?
Answer. The Department understands the provisions of the current
law, and we will evaluate the costs associated with meeting
requirements as the path forward is determined.
Question 15. If the plutonium storage facilities at Pantex are
getting full, or, as the DOE IG found earlier this year may not be able
to safely hold plutonium for much longer due to the age and condition
of the storage bunkers, what is NNSA's plan for the plutonium at SRS
and Pantex?
Answer. Although aged, the storage facilities at Pantex are safe
and continue to be maintained by NNSA as mission critical assets.
Additionally, a recent DOE IG study focused its concerns on bunkers
which comprise a portion of the facilities used for plutonium storage
at Pantex. As part of ongoing efforts to develop NNSA's plutonium
strategy, we are evaluating effective ways to safely store plutonium.
Question 16. How many taxpayer dollars have been spent to date on
DOE's rulemaking regarding set-top box energy conservation
requirements?
Answer. To date, DOE has spent a total of approximately $2.9
million in contract funding and approximately $300,000 on Federal
salary and benefits on the development of energy conservation standards
and test procedure development for set-top boxes. This includes the
development of the test procedure that is used to measure the energy
efficiency of the set-top boxes. These test procedures are necessary as
a foundation to both voluntary and regulatory programs.
Question 17. How many taxpayer dollars does DOE anticipate spending
during the lifecycle of this rulemaking process?
Answer. A typical energy conservation standards rulemaking takes
about 3 years to accomplish and costs approximately $3 to $5 million to
complete, depending on the complexity of the rulemaking being
performed. DOE is still early in the rulemaking process for set-top
boxes, and acknowledges that funding of the process is subject to
annual appropriations.
Question 18. Has DOE contracted any of this rulemaking out to third
parties? How much has been spent on the contractors?
Answer. Yes, DOE has contracted approximately $2.9 million for
energy conservation standards analysis and test procedure development
for set-top boxes to date. The analysis was provided to industry and
others and supported the voluntary agreement discussion. Test procedure
development and finalization is necessary for both voluntary agreements
and mandatory regulations. Contractors represent one way for DOE to
access the expertise it needs to advance a rulemaking for the timeframe
DOE requires that expertise.
Question 19. In terms of carbon dioxide emissions savings, what
percentage of the United States' total carbon dioxide emissions do you
anticipate DOE's set-top box energy conservation standards will save?
Answer. DOE has not proposed an energy conservation standard for
set-top boxes, so it is not yet possible to estimate the carbon dioxide
savings that could occur from an energy conservation standard at this
time. If DOE were to propose an energy conservation standard, the
proposed rulemaking would include an estimate of the potential carbon
dioxide savings.
Overall appliance and equipment standards are saving consumers
significant amounts on their energy bills and helping avoid significant
emissions of carbon dioxide. Based on a recent study by Lawrence
Berkeley National Laboratory\3\, Federal energy conservation standards
promulgated through 2011 saved consumers an estimated $42 billion on
their utility bills and carbon emissions reductions attributed to the
standards were realized at 176 million metric tons in 2011.
---------------------------------------------------------------------------
\3\ Lawrence Berkeley National Laboratory, Energy and Economic
Impacts of U.S. Federal Energy and Water Conservation Standards Adopted
From 1987 Through 2011, http://ees.lbl.gov/pub/energy-and-economic-
impacts-us-federal-energy-and-water-conservation-standards-adopted-
1987-0
---------------------------------------------------------------------------
Question 20. What percentage of total global carbon dioxide
emissions do you anticipate DOE's set- top box energy conservation
standards will save?
Answer. DOE has not proposed an energy conservation standard for
set-top boxes. If DOE were to propose an energy conservation standard,
the proposed rulemaking would include an estimate of the potential
carbon dioxide savings.
Question 21. If industry is willing to achieve the same cost and
energy savings throughout a voluntary agreement, is it still DOE's
intention to proceed with a federal rulemaking process?
Answer. DOE strongly encourages and will consider any non-
regulatory agreement as an alternative to a regulatory standard. DOE
recognizes that voluntary or other non- regulatory efforts by
manufacturers, utilities, and other interested parties can result in
substantial improvements to energy efficiency or reductions in energy
consumption. In fact, as part of its rulemaking activities to consider
a regulatory efficiency standard, DOE prepares a regulatory impact
analysis. The regulatory impact analysis evaluates non- regulatory
alternatives to standards, in terms of their ability to achieve
significant energy savings at a reasonable cost, and compares the
effectiveness of each one to the effectiveness of the proposed
standards.
Question 22. Considering the American taxpayers are funding this
federal rule making process, how do additional layers of government
red-tape ultimately benefit the taxpayers considering the industry has
agreed to set-top box energy efficiency standards at no cost to the
taxpayer?
Answer. DOE's statutory requirement is to maximize energy
efficiency that is technologically feasible and economically justified
(42 USC 6295 (o) (2)). DOE's appliance standards program ensures that
taxpayers are receiving cost-effective energy savings as justified by a
thorough analysis of alternatives to determine which option conforms to
this statutory requirement.
DOE's appliance and equipment standards program seeks to deliver
significant benefits to consumers across the country across a wide
variety of products. Overall appliance and equipment standards are
saving consumers significant amounts on their energy bills and helping
avoid significant emissions of carbon dioxide. Based on a recent study
by Lawrence Berkeley National Laboratory\5\, Federal energy
conservation standards promulgated through 2011 saved consumers an
estimated $42 billion on their utility bills and carbon emissions
reductions attributed to the standards were realized at 176 million
metric tons in 2011.
---------------------------------------------------------------------------
\5\ Lawrence Berkeley National Laboratory, Energy and Economic
Impacts of U.S. Federal Energy and Water Conservation Standards Adopted
From 1987 Through 2011, http://ees.lbl.gov/pub/energy-and-economic-
impacts-us-federal-energy-and-water-conservation-standards-adopted-
1987-0
---------------------------------------------------------------------------
Responses of Daniel B. Poneman to Questions From Senator Schatz
Question 1. The Departments of Defense and Energy have enjoyed a
fruitful relationship working together to advance energy technology
research and development that promises to promote their shared interest
in energy security. Since their 2012 memorandum of understanding, the
departments have partnered on a number of activities, including
biofuels research, lightweight materials manufacturing vehicle
electrification, advanced combustion engines and energy storage. These
energy investments will have lasting benefits by helping the military
reduce its fuel consumption while advancing America's long-term mission
to move away from its outsized reliance on oil.
How does the President's fiscal year 2014 budget support the
continuing efforts in the Departments of Defense and Energy to
cooperate with each other in pioneering new energy technologies that
advance their shared interests in energy security?
Answer. The President's fiscal year 2014 budget includes a request
of $45 million for collaboration between the Department of Defense
(DoD) and Department of Energy (DOE) on the development of advanced
biofuels that meet military specifications for jet fuel and diesel. If
approved, the Defense Production Act will be used as the mechanism to
make these funds available for first-of-a-kind integrated bio-
refineries that convert biomass into jet fuel and diesel. Leveraging
the terms of a memorandum-of- understanding, along with funds, the DOE
will provide expertise in advanced bioprocessing technologies,
assessments of technical and financial risks, and experience in
managing merit reviews and project selections for pilot- and
demonstration-scale biorefineries.
DOE and DoD are collaborating on the Smart Power Infrastructure
Demonstration for Energy Reliability and Security (SPIDERS) project,
along with the Department of Homeland Security and utility partners, to
design and demonstrate three microgrids. A microgrid is a localized
grid that can connect and disconnect from the electric grid to operate
autonomously, providing reliable power to critical facilities in
emergencies. The demonstrations will take place at military bases in
Hawaii and Colorado. DOE is contributing $9 million towards the
approximately $35 million project, with the final DOE funding increment
provided in FY 2014. The SPIDERS project's objectives include
demonstrating the microgrid's ability to protect critical assets from
loss of power due to cyber attack, to integrate renewables and other
distributed energy generation to power critical assets in times of
emergency, and to sustain critical operations during prolonged power
outages
The DOE Vehicle Technologies Office (VTO) has been collaborating
with the Army Tank-Automotive Research, Development, and Engineering
Center (TARDEC) through the Advanced Vehicle Power Technology Alliance
(AVPTA) to share technical information, avoid duplicative effort, and
where there is mutual benefit, undertake joint technology development
projects. In fiscal year 2013, the two organizations are jointly
funding approximately $11M in projects for breakthrough techniques for
dissimilar material joining, computer aided engineering for electric
drive batteries, and lubricant formulations to enhance fuel efficiency.
The Advanced Research Projects Agency-Energy (ARPA-E) has and plans
to continue coordinating broadly with organizations throughout the
Federal government and the private sector. These coordination efforts
have been especially strong with DOD, which has allowed both ARPA-E and
DOD to leverage and advance their missions. These engagements span a
wide range of approaches that include follow-on DOD investments in
successful ARPA-E projects, holding a government-industry networking
session at ARPA-E's Annual Energy Innovation Summit, inviting DOD
speakers to present at ARPA-E University webinars, and ARPA-E including
a U.S. Air Force officer on detail as a member of its Technology-to-
Market team. More specifically, some notable engagements include:
ARPA-E AMPED--DOD HESM.--ARPA-E's Advanced Management and
Protection of Energy-storage Devices (AMPED) program is
providing new technical options for the DOD Hybrid Energy
Storage Module (HESM) program. The AMPED program seeks to
significantly improve diagnostics to increase the performance
of energy storage systems across multiple energy storage
technologies. By working with ARPA-E, DOD will be able to build
on ARPA-E's achievements in this area and avoided investing in
duplicative efforts. ARPA-E and DOD are each contributing
approximately $30 million over a three to six-year period to
their respective efforts.
ARPA-E BEETIT--Navy NAVFAC.--ARPA-E received funding from
the Department of the Navy to further advance up to five of
ARPA-E's Building Energy Efficiency Through Innovative Thermo-
devices (BEETIT) performers. This work aims to lower energy use
for things such as air conditioners on military bases as well
as ultimately civilian applications.
Defense Nuclear Nonproliferation Budget
Question 2. The Department of Energy plays a critical role in
America's efforts to curtail the spread of dangerous fissile material.
The National Nuclear Security Administration supports a number of
programs intended to safeguard U.S. nuclear facilities and help our
partners and allies around the world secure their nuclear material. Yet
the President's fiscal year 2014 budget reduces funding for DOE's
Defense Nuclear Nonproliferation programs. Including for important
efforts like the Global Threat Reduction Initiative. How will the
President's fiscal year 2014 budget allow the Department of Energy to
sustain its important nonproliferation work at the current reductions?
Answer. The top-line reduction in funding for GTRI is mainly the
result of the successful completion of our four year surge in nuclear
material removals, is consistent with the four-year plan, and reflects
funding requested in FY 2013 for removal efforts that occur in early FY
2014. The FY 2014 request for GTRI's reactor conversion subprogram is a
requested funding increase, supporting the establishment of a reliable
domestic production capability for the critical medical isotope
Molybdenum-99 (Mo-99) without the use of HEU. Decreases in radiological
material protection are partially off-set by increases in cost-sharing
from our volunteer domestic protection partners. The schedule for
program completion has been adjusted by nine years, from 2035 to 2044.
Responses of Daniel B. Poneman to Questions From Senator Portman
Domestic Source of Enriched Uranium
Question 1. The United States must have the technology for a fully
domestic source of enriched uranium to support our nuclear weapons
program and the Navy nuclear reactors program. Secretary Chu, Assistant
Secretary Lyons, and Ernie Moniz have testified to that fact before
this committee. Do you agree with that sentiment?
Answer. Yes. The United States requires unobligated enriched
uranium for national security missions. Unobligated enriched uranium
can only be produced by using domestic uranium and domestic technology
that is unencumbered by peaceful use restrictions. For this reason, the
Department supports the development of advanced domestic uranium
enrichment technology, which supports NNSA's national security and
nonproliferation mission in several critical strategic ways.
Question 2. International treaties prevent us from purchasing
enriched uranium from foreign-owned companies for military purposes. Is
that your understanding?
Answer. For defense purposes the United States may only use
enriched uranium that is produced using domestic uranium and domestic
technology not subject to peaceful uses restrictions.
Question 3. The budget includes a 40 percent cut (from $238 million
to $142 million) to the ongoing decontamination and decommissioning of
the Portsmouth Gaseous Diffusion Plant. Will this reduction in funding
allow the Department to maintain the Secretarial commitment for
accelerated clean-up that was made public back in 2009?
Answer. The FY 2014 budget request supports workforce continuity
and continues efforts to identify efficiencies to accelerate cleanup at
the site.
Question 4. AMO manages important R&D programs that address
technology needs at various stages of development. AMO also offers
technical assistance programs to promote investment in energy efficient
technologies and practices in the industrial sector. Can you please
provide a complete list of every authorization for the Department of
Energy's Advanced Manufacturing Office, and the date that each of these
authorizations expire?
Answer. Generally, the following public laws have been cited
providing authorization for Advanced Manufacturing Office (AMO)
activities.
P.L. 95-91, ``U.S. Department of Energy Organization Act''
(1977)
P.L. 102-486, ``Energy Policy Act of 1992''
P.L. 109-58, ``Energy Policy Act of 199''
P.L. 110-140, ``Energy Independence and Security Act of
2007''
P.L. 112-210, ``American Energy Manufacturing Technical
Corrections Act'' (2012) Specific provisions, with the
corresponding U.S. Code citation are provided below along with
any applicable time limitation. Excerpts of the statutes are
also provided for additional reference:
42 USC Sec. 13501(a)--The Secretary shall establish a 5-
year National Advanced Materials Program . . . Such program
shall foster the commercialization of techniques for
processing, synthesizing, fabricating, and manufacturing
advanced materials and associated components. At a minimum, the
Program shall expedite the private sector deployment of
advanced materials for use in high performance energy efficient
and renewable energy technologies in the industrial,
transportation, and buildings sectors that can foster economic
growth and competitiveness. The Program shall include field
demonstrations of sufficient scale and number to prove
technical and economic feasibility.
42 USC Sec. 13502(a)--The Secretary shall establish a 5-
year National Advanced Manufacturing Technologies Program . . .
Such program shall foster the commercialization of advanced
manufacturing technologies to improve energy efficiency and
productivity in manufacturing.
42 USC Sec. 13453(a)--The Secretary shall conduct a 5-year
program . . . on advanced pulp and paper technologies. Such
program shall include activities on energy generation
technologies, boilers, combustion processes, pulping processes
(excluding de-inking), chemical recovery, causticizing, source
reduction processes, and other related technologies that can
improve the energy efficiency of, and reduce the adverse
environmental impacts of, pulp and papermaking operations.
42 USC Sec. 13456(a)--The Secretary . . . shall--(1) pursue
a research, development, demonstration and commercial
application program intended to improve energy efficiency and
productivity in energy-intensive industries and industrial
processes; and (2) undertake joint ventures to encourage the
commercialization of technologies developed under paragraph
(1).
42 USC Sec. 16191(a)--The Secretary shall conduct programs
of energy efficiency research, development, demonstration, and
commercial application . . . Programs under this part shall
include . . . advanced technologies to improve the energy
efficiency, environmental performance, and process efficiency
of energy-intensive and waste-intensive industries; advanced
control devices to improve the energy efficiency of electric
motors. and technologies to improve the energy efficiency of
appliances and mechanical systems for buildings in cold
climates, including combined heat and power units and increased
use of renewable resources, including fuel.
42 USC Sec. 17111(b)--The Secretary shall establish a
program under which the Secretary, in cooperation with energy-
intensive industries\7\ and national industry trade
associations representing the energy-intensive industries,
shall support, research, develop, and promote the use of new
materials processes, technologies, and techniques to optimize
energy efficiency and the economic competitiveness of the
United States' industrial and commercial sectors.
---------------------------------------------------------------------------
\7\ For the purpose of this provision ``energy-intensive
industries'' is defined as an industry that uses significant quantities
of energy as part of its primary economic activities, including--
information technology, consumer product manufacturing, food
processing, materials manufacturers, and other energy-intensive
industries, as determined by the Secretary. (See, 42 USC 17111(a))
---------------------------------------------------------------------------
42 USC Sec. 17244(a)--The Secretary shall carry out a
program, to be known as the Renewable Energy Innovation
Manufacturing Partnership Program . . . to make assistance
awards to eligible entities for use in carrying out research,
development, and demonstration relating to the manufacturing of
renewable energy technologies.
42 USC Sec. 12005(b)(1)--The Secretary shall solicit
proposals for demonstration and commercial application projects
for renewable energy and energy efficiency technologies . . .
Such projects may include projects for--(i) the production and
sale of electricity, thermal energy, or other forms of energy
using a renewable energy technology; (ii) increasing the
efficiency of energy use; and (iii) improvements in, or
expansion of, facilities for the manufacture of renewable
energy or energy efficiency technologies.
42 USC Sec. 16197--Not later than 18 months after May 8,
2008, the Secretary shall make grants to nonprofit
institutions, State and local governments, cooperative
extension services, or institutions of higher education (or
consortia thereof), to establish a geographically dispersed
network of Advanced Energy Technology Transfer Centers, to be
located in areas the Secretary determines have the greatest
need of the services of such Centers. 42 USC Sec. 6312(a)--It
is the purpose of this part to improve the efficiency of
electric motors and pumps and certain other industrial
equipment in order to conserve the energy resources of the
Nation.
42 USC Sec. 13451(a)--The Secretary shall conduct a 5-year
program . . . on cost effective technologies to improve energy
efficiency and increase the use of renewable energy in the
buildings, industrial, and utility sectors. Such program shall
include a broad range of technological approaches, and shall
include field demonstrations of sufficient scale and number to
prove technical and economic viability.
42 USC Sec. 17111(c)(1)--As part of the program, the
Secretary shall establish energy efficiency partnerships
between the Secretary and eligible entities to conduct research
on, develop, and demonstrate new processes, technologies, and
operating practices and techniques to significantly improve the
energy efficiency of equipment and processes used by energy-
intensive industries . . .
P. L. 112-210, Section 7(b)(2)--The Secretary, in
coordination with the industrial sector and other stakeholders,
shall conduct a study of the following: (A) The legal,
regulatory, and economic barriers to the deployment of
industrial energy efficiency in all electricity markets.
42 USC Sec. 6345(a)(1)--The Combined Heat and Power
Application Centers of the Department of Energy are
redesignated as Clean Energy Application Centers.
42 USC Sec. 6348(a)(1)--The Secretary shall make grants to
industry associations to support programs to improve energy
efficiency in industry.
42 USC Sec. 6349(b)(1)--The Secretary shall, to the extent
funds are made available for such purpose, make grants to
States which, consistent with State law, shall be used for the
following purposes: (A) To promote, through appropriate
institutions such as universities, nonprofit organizations,
State and local government entities, technical centers,
utilities, and trade organizations, the use of energy-efficient
technologies in covered industries. (B) To establish programs
to train individuals (on an industry-by-industry basis) in
conducting process-oriented industrial assessments and to
encourage the use of such trained assessors. (C) To assist
utilities in developing, testing, and evaluating energy
efficiency programs and technologies for industrial customers
in covered industries.
(c)(3)The Secretary shall establish an annual award program
to recognize utilities operating outstanding or innovative
industrial energy efficiency technology assistance programs.
42 USC Sec. 15811(b)--The Secretary may enter into
voluntary agreements with one or more persons in industrial
sectors that consume significant quantities of primary energy
for each unit of physical output to reduce the energy intensity
of the production activities of the persons.
42 USC Sec. 16193(b)--The [National Building Performance]
Initiative shall integrate Federal, State, and voluntary
private sector efforts to reduce the costs of construction,
operation, maintenance, and renovation of commercial,
industrial, institutional, and residential buildings.
42 USC Sec. 6350--
(a) Not later than 18 months after October 24, 1992, the
Secretary, after consultation with utilities, major industrial
energy consumers, and representatives of the insulation
industry, shall establish voluntary guidelines for--(1) the
conduct of energy efficiency audits of industrial facilities to
identify cost-effective opportunities to increase energy
efficiency; and (2) the installation of insulation to achieve
cost-effective increases in energy efficiency in industrial
facilities.
(b) The Secretary shall conduct a program of educational and
technical assistance to promote the use of the voluntary
guidelines [established].
42 USC Sec. 17111(e)--The Secretary shall provide funding
to institutions of higher education-based industrial research
and assessment centers, whose purpose shall be--(1) to identify
opportunities for optimizing energy efficiency and
environmental performance; (2) to promote applications of
emerging concepts and technologies in small- and medium-sized
manufacturers; (3) to promote research and development for the
use of alternative energy sources to supply heat, power, and
new feedstocks for energy-intensive industries; (4) to
coordinate with appropriate Federal and State research offices,
and provide a clearinghouse for industrial process and energy
efficiency technical assistance resources; and (5) to
coordinate with State-accredited technical training centers and
community colleges, while ensuring appropriate services to all
regions of the United States.
Question 5. The Administration's Clean Energy manufacturing
Initiative leaves some people with the impression that AMO is
refocusing its efforts on a narrow set of technologies not applicable
to the broader industrial sector. Can you please provide a detailed
description of the Clean Energy Manufacturing Initiative?
Answer. The Clean Energy Manufacturing Initiative (CEMI) is a
strategic integration and commitment of manufacturing efforts across
the Office of Energy Efficiency and Renewable Energy (EERE). CEMI has
two overall objectives:
1. Increase U.S. competitiveness in the production of clean
energy products: Strategically invest in technologies that
leverage American competitive advantages and overcome
competitive disadvantages, and
2. Increase U.S. manufacturing competitiveness across the
board by improving energy productivity: Strategically invest in
technologies and practices to enable U.S. manufacturers to
increase their competitiveness through energy efficiency,
combined heat and power, and take advantage of low-cost
domestic energy sources.
This initiative facilitates engagement with a wide array of
relevant stakeholders, including Federal agencies, research
institutions, and private sector partners to map out and implement a
strategy to ensure that U.S. manufacturers are competitive in the
global marketplace.
Additionally, CEMI breaks down silos among the relevant offices
within EERE and the Department. The initiative includes manufacturing
efforts for different technologies that are funded through individual
EERE program offices. For example, the Advanced Manufacturing Office's
Innovative Manufacturing Projects; as well as the Solar Energy
Technologies Office's Solar Manufacturing Technology (SolarMat), are
part of the larger CEMI effort.
Question 6. Does the Clean Energy Manufacturing Initiative mark a
departure from the broader portfolio of technologies AMO has
historically promoted?
Answer. The Clean Energy Manufacturing Initiative (CEMI) does not
mark a departure from the broad portfolio of technologies that the
Advanced Manufacturing Office (AMO) has historically promoted. AMO is
focused on improving the efficiency of several energy intensive
industries, improving the efficiency of industry through broadly
applicable industrial technologies and practices, and advancing cross-
cutting manufacturing and materials innovation. CEMI has been developed
to improve our coordination and our ability to engage stakeholders
across the country in efforts to improve industrial efficiency and
advance manufacturing.
Question 7. In this age of austerity, we need to make sure that the
dollars Congress allocates are spent wisely and efficiently. One way to
make sure that this happens is for the government to consult with its
private sector partners. What is the Department's strategy for engaging
industry stakeholders to help the Advanced manufacturing Office (and
other offices, for that matter) establish the direction of its R&D
programs, prior to funding solicitations (RFPs) from being released?
Answer. The Department of Energy remains committed to making sound
investments in advanced energy technologies that are critical to the
future of American competitiveness. For example, the Department
responded directly to recommendations from a July 2012 report by the
Advanced Manufacturing Partnership's Steering Committee and the
President's Council of Advisors on Science and Technology with
proposals to establish several clean energy manufacturing institutes to
bridge the gap between research and development and the marketplace.
The ``Report to the President on Capturing Competitive Advantage in
Advanced Manufacturing'' recommendations include creating a fertile
environment for innovation through robust support for basic research;
increasing funding for the research and development of top cross-
cutting technologies that are vital to advanced manufacturing;
establishing a network of Manufacturing Innovation Institutes (MIIs) as
a public-private partnership to foster regional ecosystems in advanced
manufacturing technologies, particularly for the more than 300,000
small and medium- sized enterprises, which often lack adequate
technical resources; deepening university and industry collaboration;
building excitement for and interest in manufacturing careers; and
developing a high-skilled workforce through hands-on ``training
centers'' and course development for universities and community
colleges.
The Department's Clean Energy Manufacturing Initiative (CEMI) also
demonstrates a commitment to consult with private sector partners. CEMI
is a new initiative focused on growing American manufacturing of clean
energy products and boosting U.S. competitiveness through major
improvements in manufacturing energy productivity. A key component of
CEMI will be a series of regional summits to gather input on
manufacturing priorities, technology barriers, and opportunities for
growing clean energy manufacturing competitiveness.
CEMI will also be launching new public-private partnerships focused
on improving U.S. clean energy manufacturing competitiveness. For
example, the U.S. Council on Competitiveness is partnering with the
Department to convene a series of dialogues among government, small
business, industry, research institutions and labor leaders to help
develop and recommend strategies for growing the U.S. clean energy
manufacturing sector.
In general, EERE convenes with a wide cadre of stakeholders to
identify R&D priorities relevant to domestic energy systems and taking
into account international supply chains. Prior to developing funding
opportunity announcements, EERE seeks feedback from groups including
industry associations and trade groups, financial institutions,
nonprofit organizations, foundations, think tanks, universities and the
national labs, as well as intergovernmental stakeholders. With the
inclusion of these regular interactions with stakeholders, our R&D
strategy for the current fiscal year fits within the Quadrennial
Technology Review, which received significant input from the private
sector.
Question 8. Is there an institutional process for receiving
industry and other stakeholder input at AMO?
Answer. Yes, consistent with DOE and other Federal Agency
practices, AMO employs a range of mechanisms to collect stakeholder
input, primarily public workshops, meetings with stakeholders and
Requests for Information (RFIs).
Question 9. Can you describe how this process works? Please
describe the types of entities which are involved and their input is
requested and received.
Answer. The Department of Energy (DOE) has held public workshops
and meetings with stakeholders covering a wide variety of topics
depending on the purpose, ranging from technical matters specific to
individual industries to general issues that broadly impact the
manufacturing sector. The meetings and workshops incorporated feedback
from a diverse array of stakeholders into DOE's understanding of the
manufacturing challenges facing different industries and how to focus
its resources to achieve the greatest potential impact. Many of these
workshops have taken place in advance of a Funding Opportunity
Announcement (FOA) to ensure that DOE has thoroughly considered and has
a comprehensive understanding of the areas in which it seeks to invest
its appropriations.
Recently, AMO engaged over 250 industry and academic experts
through a series of workshops, each focused on a particular
foundational technology. The workshops discussed the status of each
technology and related R&D, technical challenges, market barriers,
emerging applications, manufacturing costs and challenges, and the
potential benefits of continued development.
In addition, AMO has been a primary member of the Advanced
Manufacturing Partnership (AMP), a private sector-led national effort
to revitalize American manufacturing launched by the President in June
2011 that has involved substantial stakeholder engagement and feedback.
The Advanced Manufacturing National Program Office (AMNPO), hosted by
the National Institute of Standards and Technology, coordinates federal
agencies with manufacturing-related missions. AMO has been an active
participant in AMNPO activities including planning, implementing, and
writing reports from workshops. AMO staff led discussion sessions and
helped compile feedback from over 850 stakeholders in the manufacturing
community obtained through four regional ``Designing for Impact''
workshops hosted by the AMNPO and participated in the review of the 78
responses to a formal Request for Information (RFI) released by the
AMNPO in 2012.
In FY 2014 AMO plans to release an RFI or host a workshop prior to
the release of any FOAs. The intended purpose of these activities is to
gain additional insight into industry's need for support of high-risk
and high-reward concepts for R&D. Once the RFI process or workshop is
complete and the comments analyzed, the FOA concept will be further
refined and approved for the development and publication process.
Through these pre-FOA processes, AMO has consistent procedures in place
to obtain stakeholder feedback to help guide its investments.
Question 10. What was the degree to which the AMO received industry
input on the creation of the Clean Energy Manufacturing Initiative?
Answer. The Clean Energy Manufacturing Initiative (CEMI) is a
strategic integration of manufacturing efforts across the Office of
Energy Efficiency & Renewable Energy's (EERE) technology offices,
including the Advanced Manufacturing Office (AMO), focusing on American
competitiveness in the production clean energy products and through
improvements in industrial energy productivity. In developing the Clean
Energy Manufacturing Initiative, EERE held multiple meetings with a
range of industry stakeholders, including workshops and roundtables in
Colorado and Washington, D.C. Following the Initiative launch in March
2013, the first nine months of the Clean Energy Manufacturing
Initiative are planned to include extensive stakeholder engagement to
further define the Initiative's goals and high-impact efforts that
represent the most effective means by which to reach the Initiative's
goals of manufacturing competitiveness. These engagement activities
include Regional Summits; a Dialogue Series with the Council on
Competitiveness; incorporation of manufacturing competitiveness into
technical workshops; and individual outreach activities.
Question 11. Can you please provide a complete list of
authorizations for DOE's Research Partnership to Secure Energy for
America (RPSEA), and the date that each of the authorizations expire?
Answer. The Energy Policy Act of 2005 (EPAct) authorized the
Secretary of Energy to establish a research program (Program) for
ultra-deepwater and unconventional natural gas and other petroleum
resources, including the technology challenges of Small Producers, and
research by the National Energy Technology Laboratory.
Title IX, Subtitle J, Section 999B of EPAct authorized the
Secretary to contract with a non- profit consortium to administer
portions of the research program while maintaining ultimate
responsibility for and oversight over all aspects of the Program. The
consortium selected to administer portions of the research program was
Research Partnership to Secure Energy for America (RPSEA). RPSEA's
contract with the Department of Energy began in 2007, and RPSEA will
continue to support this work until the sunset of the authority under
Subtitle J, as established under Section 999F, on September 30, 2014.
Question 12. Is there an institutional process for receiving
industry and other stakeholder input at RPSEA?
Answer. Section 999D of the Energy Policy Act of 2005 (EPAct)
authorizes the establishment of two Federal advisory committees to the
Secretary of Energy that are subject to the Federal Advisory Committee
Act (FACA). The FACA sets a very high standard for transparency and
inclusivity. EPACT Section 999B(e)(2)(B) directs the Secretary of
Energy to submit the annual operating plan for the research program to
these two Federal advisory committees, and requires these committees to
provide written comments regarding the plan by a date established by
the Secretary. To date, this process has been used for the annual
operation plans for 2007 through 2013. During September and October
2013, this process will be used for the eighth and final annual plan
for 2014. Of note is the requirement (Section 999B(e)(2)(A)) that that
the Secretary solicit written recommendations in the form of a draft
annual plan from the consortium contracted by the Department of Energy
pursuant to Section 999B(c)(1) to administer a portion of the research
program.
Question 13. Can you describe how this process works? Please
describe the types of entities which are involved and their input is
requested and received.
Answer. The process for receiving industry and other stakeholder
input on the annual plan includes a combination of activities led by
Research Partnership to Secure Energy for America (RPSEA) in the form
of advisory groups, and activities led by the Secretary of Energy in
the form of Federal advisory committees established pursuant to the
Federal Advisory Committee Act.
From its diverse natural gas and oil membership, RPSEA organizes a
series of advisory groups to provide input and direction to its overall
recommendations for its draft annual plan. This process includes
program level and technical level advisory groups, and small producer
and environmental advisory groups. These groups meet multiple times to
review goals, project ideas, and review and recommend projects to the
Secretary of Energy.
For example, in its 2009 draft annual plan, RPSEA reports that for
the development of its recommendations for ultra-deepwater research,
RPSEA's program advisory group and technology advisory groups combined
met 29 times with 591 participants involving over 2,800 hours of time
and effort to focus the 120-plus project ideas for 2007 and 2008 down
to 26 ideas representing approximately $30 million dollars in research
and development.
Question 14. Companies in the cable, satellite and telephone
industry have developed voluntary standards to improve the efficiency
of set-top boxes. What has the Department done to evaluate this
Agreement, and what are its conclusions?
Answer. The Department encourages the development of market-based
solutions that are a result of a consensus from all relevant parties,
and has recently finalized several rules through consensus agreements.
In the case of set-top boxes, DOE had a rulemaking in process, which it
suspended for a six-month period in 2012 following a request from Pay-
TV, consumer electronics industries, and energy efficiency advocates to
provide these stakeholders time to negotiate a voluntary agreement. The
Department is now proceeding with the rulemaking, with DOE issuing an
initial Notice of data availability (NODA) analysis on February 28,
2013, that presents DOE's initial analysis estimating the potential
economic impacts and energy savings that could result from promulgating
a regulatory energy conservation standard for set-top boxes. DOE has
not yet proposed an energy conservation standard for set-top boxes, and
any future proposed standard would not be binding on products for
approximately five years after the publications of the final rule, in
addition to the time that would be required to complete the rulemaking
process. DOE welcomes the voluntary agreement industry has developed,
but also notes that it is without the support of a subset of the
participants originally involved in the negotiation.
DOE has an obligation to ensure standards maximize the economically
justified, technically feasible energy savings potential identified by
a thorough analysis and as part of a notice and comment rulemaking.
However, DOE recognizes that there are multiple paths forward to ensure
that the maximum economic benefits and energy savings from increasing
the efficiency of set-top boxes are achieved, and DOE strongly
encourages and will consider any non-regulatory consensus agreement as
an alternative to a regulatory standard.
Question 15. What is the Department doing to promote voluntary
market solutions that save consumers money and deliver energy savings?
Answer. Through partnerships with other Federal agencies, industry,
manufacturers, and researchers, DOE validates and provides
informational materials on energy efficient products and appliances,
energy management techniques, and building science research best
practices. These voluntary market partnerships are proven to achieve
significant energy and money savings by improving the efficiency of
homes and buildings across our nation. DOE promotes voluntary market
solutions by assuming leadership roles in initiatives and by
encouraging industry and sector alliances, energy efficiency workforce
certifications, decision and design tool deployment and technology, and
research and development programs.
The Better Buildings Alliance (BBA) is an example of a program that
continues to achieve success through voluntary partnerships with
industry. The BBA has grown to include more than 200 members,
representing over 10 billion commercial square feet across seven key
market sectors: retail, food service, commercial real estate, public,
hospitality, healthcare, and higher education. Members agree to
participate in at least one Alliance activity each year and share their
successes with their peers, while DOE commits to connect members with
technical resources, and provide a platform for peer exchange. BBA
challenges have led to the development of highly-efficient air-
conditioning units for commercial buildings through the Rooftop Unit
Challenge. Building off of this success, BBA has expanded the
challenges to energy efficient lighting for parking garages and low-
cost wireless meters. Each effort helps launch energy efficient
technologies and techniques into the marketplace delivering energy
savings solutions to the consumer and the building owner.
Responses of Daniel B. Poneman to Questions From Senator Heinrich
Question 1. Section 1001 of the Energy Policy Act of 2005
established a technology commercialization fund (TCF) where 0.9 percent
of the amount made available to the Department of Energy for applied
energy research, development, demonstration, and commercial application
for each fiscal year are ``to be used to provide matching funds with
private partners to promote promising energy technologies for
commercial purposes.'' The only available public information indicates
that about $14 million was spent shortly after EPAct05 implementation
(2007-2008), but there is no information about subsequent spending and
activities. Assuming that DOE spends roughly $3 billion per year on
``applied energy RD&D'' programs (nuclear, fossil, and EERE), then the
EPAct-required 0.9 percent annual spending would amount to about $27
million per year. Please provide an update on annual funding and
activities of this fund since 2005. What are the department's current
plans to carry out the intent of congress for this fund and ensure its
full implementation?
Answer. DOE's Technology Transfer Policy Board surveyed the DOE
laboratories to assess activities from FY 2008 through 2012 related to
commercialization of energy technologies. The survey asked for
information on all CRADA projects that promoted energy technologies for
commercial purposes and where DOE funds were matched by a combination
of private partner funds and in-kind contributions, meaning projects
that fall under a definition of technology commercialization.
The survey found that such qualifying CRADA projects exceeded the
0.9 percent threshold required, in some cases significantly, in every
year but FY 2010. The survey results are summarized in a table showing
overall funding for applied energy RD&D, CRADA funding, and CRADA
funding as a percent of applied Energy RD&D. The information follows:
Even though CRADA funding in 2010 is slightly less than the 0.9
percent requirement, the percentage of CRADA funding from 2008-2012 is
well above the requirement. The Department will continue to track those
projects across the Department that qualify as Technology
Commercialization projects and report our results annually.
Question 2. I understand the position of Technology Transfer
Coordinator created by Section 1001(a) of EPAct05 is currently vacant,
what are the department's plans to fill this position?
Answer. Per EPAct05, the Technology Transfer Coordinator is
appointed by the Secretary, so this decision will be addressed after
the new Secretary is confirmed. In the interim, Technology Transfer
Policy Board members across the Department's organizational elements
continue to support the Department's technology transfer mission.
Question 3. As part of the FY13 National Defense Authorization Act,
Section 3165 established a pilot program for the purpose of
accelerating technology transfer from the national security
laboratories to the marketplace. What are the department's plans to
implement this program?
Answer. NNSA Technology Transfer activities will utilize this pilot
program to create outreach opportunities. It will be used to promote
and advertise technologies developed within the NNSA weapons programs
that are of interest to the industrial and academic communities. NNSA
will collaborate with these organizations for eventual
commercialization. NNSA laboratories have a long relationship with
Technology Ventures Corporation of Albuquerque, NM, working with Sandia
National Laboratories, to develop technology transfer programs over the
years. NNSA will work with Technology Ventures to seek out and utilize
opportunities at new and unique venues to present developed
technologies to the public. NNSA has been in the process of surveying
laboratory technology transfer organizations for support and input to
ideas for implementation. Activities that are underway will continue
toward development of an outline for implementation and approval. The
Pilot Study must be approved by the Technology Transfer Coordinator,
however, and at present this position is vacant, which affects final
implementation of the program.
Question 4. The department's Strategy for the Management and
Disposal of Used Nuclear Fuel and High-Level Radioactive Waste suggests
that the first pilot interim storage facility could be in operation in
2021. What specific activities and funding levels are proposed in the
budget for fiscal year 2014 to support development of the first pilot
interim storage facility?
Answer. The President's fiscal year 2014 budget request includes
$60 million in the area of used fuel disposition, with $30 million
dedicated to research and development and $30 million for waste system
design and planning.
Waste system design and planning activities will support the
development of a pilot interim storage facility through the following
activities: development of a consent-based siting process in
consultation with stakeholders; outreach to state and tribal groups
along potential transportation routes; preliminary logistical studies
looking into the infrastructure and capability requirements of taking
delivery of used fuel from shutdown reactor sites; and developing high-
level design concepts. Research and development activities that also
support the development of a pilot interim storage facility include
studies on the performance of used nuclear fuel in storage for extended
periods and the performance of fuel in long-distance transportation.
These research and development activities are budgeted to cost $12.8
million, bringing the total activities to support development of the
pilot interim storage facility to $42.8 million in fiscal year 2014, in
anticipation of authorizing language from Congress.
Question 5. The Blue Ribbon Commission calls for a consent-based
approach that will likely require considerable engagement with
communities and states that may be interested in hosting an interim
storage facility. Does the department's strategy for siting nuclear
waste storage facilities include providing federal grant funding
directly to states in FY 2014 or in future years to assist them with
their own assessments and evaluations?
Answer. Prior to the passage of legislation, the Department is
undertaking only generic, or non- site specific activities, including
research into generic geologies for disposal, high-level waste
management system planning, and transportation equipment design and
certification. The Department is also laying the groundwork for the new
management entity to be able to execute a consent-based siting process,
by gathering lessons learned from previous efforts in the United States
and around the world and by beginning to engage stakeholders from state
and community groups on how a consent-based process should work. Full
participation from the full range of stakeholders is critical to the
success of any consent-based process.
Question 6. The department's Strategy for the Management and
Disposal of Used Nuclear Fuel and High-Level Radioactive Waste suggests
a permanent geologic repository would be in operation in 2048. What
specific activities and funding levels are proposed in the budget for
fiscal year 2014 to support the development of a permanent geologic
repository?
Answer. The Department is undertaking a number of activities in FY
2014 to support the development of a geologic repository. Many
activities being undertaken to support development of a pilot interim
storage facility are also applicable to the development of a
repository, including transportation planning and outreach, development
of a consent- based siting process, and development and certification
of transportation equipment. These activities total approximately $10
million in the President's budget. In addition, the Department will
conduct research and development activities related to disposal in the
areas of generic geological formations, including alternative natural
systems and engineered barriers, and deep borehole disposal, totaling
$17.2 million.
Question 7. As I understand it, disposal of defense wastes
alongside commercial wastes is DOE's current policy in accordance with
the 1985 decision to use a single repository for both commercial and
defense high-level wastes. The Blue Ribbon Commission recommended a
reassessment of this policy. What are the department's plans and likely
time frame to reassess the issue of ``co-mingling'' wastes in a
repository?
Answer. The Administration's Strategy noted that the commingling of
commercial and government-managed wastes would be the subject of
analysis going forward. Consistent with this, the Department is
undertaking preparatory technical evaluations now to prepare for a
reassessment of the commingling policy. Specifically, the Department is
looking to entire current and projected inventory to determine whether
and what types of used fuel lend themselves to disposal in specific
geological formations--whether salt, granite, clay, shale, or deep
borehole disposal. This study will also include an examination of
government-managed used fuel and high-level radioactive waste. This
study is expected to be completed in 2013 to facilitate future
decision-making.
Question 8. The possibility of producing electric power from fusion
energy has been suggested since the 1950s. Fusion holds the promise of
a carbon-free energy source with a virtually unlimited supply of fuel.
However, I'm concerned the Office of Science's budget doesn't
adequately support a domestic fusion research program. Are we in danger
of losing our leadership role in fusion research and graduate training
programs?
Answer. The Administration is requesting $458 million for the
Fusion program in FY 2014, which represents the largest percentage
increase of any Office of Science research program compared to the FY
2012 appropriation. Domestic facilities and research are supported in
the FY 2014 budget and can continue to be highly impactful on the world
stage. While some reductions in domestic research are proposed in the
FY 2014 budget, measures are also being developed that will enable U.S.
researchers to stay at the forefront of the field. With over 240 full
time equivalent graduate student researchers to be supported under the
FY 2014 budget, support for workforce training is strong. We are making
sure that U.S. scientists are consistently afforded the opportunity to
engage in world-leading scientific challenges. Many of opportunities
exist to leverage expertise and resources domestically, and Fusion
Energy Sciences (FES) partnerships with the Basic Energy Sciences and
Advanced Scientific Computing Research programs and with the National
Science Foundation are supported in this budget proposal. FES is also
developing a strategy to coordinate the research of the two leading FES
facilities to best position the U.S. as ITER activities proceed. We
must also ensure that we pay attention to investments in new fusion
facilities overseas with capabilities that U.S. facilities do not and
will not have. To this end, the FY 2014 budget supports international
partnerships to leverage U.S. strengths, enable us to work in an
international environment in preparation for ITER's research program,
and yield influential research enterprises. Together, these investments
will position the U.S. to sustain its international leadership in
fusion energy science.
Supply of Medical Isotopes
Question 9. I understand the world is presently facing an unstable
supply of medical isotopes, primarily molybdenum-99, which is used to
diagnose heart disease and cancer in tens of millions of patients per
year. The National Nuclear Security Administration's Global Threat
Reduction Initiative (GTRI) cooperative agreement program helps to
develop and implement technologies to minimize the civilian use of HEU.
GTRI's assistance provides a 50-50 private/public cost share, capped at
$25 million. However, the startup costs for a medical isotope plant
could be in excess of $100 million, meaning the $25 million cap limits
U.S. government support to less than 25 percent of project costs.
Moreover, any commercial source may be in competition with foreign,
government-owned research reactors, which could create and uneven
playing field and discourage investment in new domestic production.
Given the importance of molybdenum-99, does the Department support an
increase in the $25 million cap on startup costs to allow for a full
50-50 partnership with industry?
Answer. The National Nuclear Security Administration's (NNSA)
Global Threat Reduction Initiative (GTRI) has established cooperative
agreements with four U.S. entities to accelerate the development of
four independent non-HEU-based technology pathways to produce Mo-99.
These cooperative agreements have been implemented under a 50--50 cost
sharing arrangement, up to a maximum government contribution of $25
million.
Government subsidies to many of the current Mo-99 producers creates
a challenge for new Mo-99 producers especially those utilizing non-HEU
based production technologies. To ensure a reliable supply of Mo-99,
the market needs to transition to a full-cost recovery model. NNSA's
objective is to accelerate existing commercial projects, and not to
subsidize the initial capital investment to the point of causing a
negative market impact in the long-term. Thus, NNSA does not support an
increase to the government's maximum contribution beyond the current
$25 million cap.
In addition to providing up to $25 million in support to its
cooperative agreement partners, NNSA is leading the U.S. government
actions aimed to transition the global production of Mo-99 to full cost
recovery, with the aim to create an economic environment conducive to
fully sustainable commercial Mo-99 production well into the future.
Appendix II
Additional Material Submitted for the Record
----------
Statement of the Alliance to Save Energy
INTRODUCTION
For more than 35 years, the Alliance to Save Energy has capably
served as a bipartisan, nonprofit coalition of business, government,
environmental, and consumer leaders committed to promoting energy
efficiency worldwide to achieve a healthier economy, a cleaner
environment, and greater energy security. Founded in 1977 by Senators
Charles Percy, a Republican from Illinois, and Hubert Humphrey, a
Democrat from Minnesota, the Alliance has worked tirelessly to improve
the efficiency of America's energy resources and to make certain that
energy is not wasted.
The organization is currently led by Senator Mark Warner as
Honorary Chairman, and National Grid US President Tom King as Chairman
of our Board of Directors. Representatives Michael Burgess, Ralph Hall,
Steve Israel, Adam Kinzinger, Ed Markey, Paul Tonko and Peter Welch,
and Senators Susan Collins, Chris Coons, Lisa Murkowski, Rob Portman,
Mark Pryor, Jeanne Shaheen, Mark Udall and Ron Wyden serve as Honorary
Vice-Chairs. Over 140 companies and organizations support the Alliance
as Associates.
BACKGROUND
Rationale for Federal Energy-Efficiency Programs--Wasted energy is
a costly drag on the U.S. economy, but equally important amid the
ongoing economic recovery is that investing in energy efficiency--the
quickest, cheapest and cleanest way to address our nation's growing
demand for energy--contributes more toward meeting this need than any
other resource.
The Alliance fully recognizes the significant challenges facing the
federal government to reduce spending and spur economic growth.
However, the organization believes strongly that failing to properly
fund energy efficiency and research and development programs at the
Department of Energy's (DOE) Office of Energy Efficiency and Renewable
Energy (EERE) at robust levels would undermine our national economic,
environmental and security interests. These programs have resulted in
exceptional value for American consumers and businesses as a source of
savings that are spent in other economic sectors, yielding benefits far
beyond their nominal outlays.
Over the last 40 years, the United States has made significant
gains in energy productivity, which is the ratio of output divided by
energy consumption and is a useful indicator for understanding the
efficiency of an economy. According to a study conducted by McKinsey &
Company, the country--with government assistance--could cost-
effectively reduce energy consumption by 23 percent from the business
as usual case by 2020 through an array of energy efficiency measures,
saving about 9.1 quadrillion in British thermal units (BTUs) in end use
energy and yielding approximately 1.2 trillion in gross energy savings.
If not for U.S. energy productivity gains since the early 1970s,
our nation would have needed to consume about 50 percent more energy--
with concomitant impacts on energy bills, oil imports, energy
reliability and security, and environmental quality--to deliver today's
gross domestic product (GDP). The following Alliance to Save Energy
figure graphically illustrates the point.
A record of success--Energy efficiency and research and development
programs at the Department of Energy's (DOE) Office of Energy
Efficiency and Renewable Energy (EERE) programs have served as a
central pillar of sound U.S. energy policy. The savings achieved
through the research and development of new energy-efficiency
technologies through EERE programs help these technologies achieve
widespread use and justify continued investment in them. McKinsey &
Company estimated that $354 billion in building energy efficiency
investments during 2009-2020 could yield $685 billion in savings. For
manufacturing, the National Research Council cited approximated
potential savings of 14 to 22 percent of total industrial sector energy
use in 2020. The savings were based on cost-effective technologies that
yield at least a 10 percent internal rate of return.
At a time when too many Americans are suffering financial
hardships, EERE programmatic investments offer real solutions that
would not only help alleviate their economic pain, but would also deal
with the short- and long-term problems associated with rising energy
use.
Summary of the President's Budget Request--The President's fiscal
year (FY) 2014 budget request for DOE's Office of Energy Efficiency and
Renewable Energy recognizes that investments in energy efficiency are
needed to reduce the burden of energy costs on consumers, make
businesses more competitive, and create sustainable growth. The budget
would increase investment and spur innovation in better buildings,
advanced vehicles, competitive manufacturing, and smarter energy
systems. In the current tight fiscal climate, greater efficiency will
boost our long-term fiscal health and economic competitiveness.
Moreover, the President's call for a doubling of the nation's
energy productivity by 2030, consistent with the Alliance Commission on
National Energy Efficiency Policy's Energy 2030 report, is clear
acknowledgment of the power of energy productivity and its ability to
address economic, environmental, and national security concerns. The
addition of $200 million for an energy productivity ``Race to the
Top''--also in the Energy 2030 recommendations--reaffirms the integral
role that state energy efficiency policies play in our national energy
system and thus in reaching our economic, environmental, and security
goals. The Alliance looks forward to engaging the Administration and
the Committee in a bipartisan manner to help design the Race to the
Top, implement effective research and development investments, reform
efficiency tax incentives, and address other areas in the budget.
Several recent analyses show that hundreds of billions of dollars
of investment are needed to reduce the energy waste in our country and
its hindrance on consumer pocketbooks, economic productivity, the
environment, and national security. An analysis by the Rhodium Group
for the Alliance's Commission finds that doubling energy productivity
would require investment of $166 billion each year through 2030, but
would avoid $327 billion a year above those costs, save the average
household $1000 a year, add over a million jobs, and reduce both carbon
dioxide emissions and oil imports by a third.
CONCLUSION
While the United States has made significant energy productivity
progress over the last several decades, the nation cannot afford to
withhold support for federal investments in energy efficiency.
Heightened international economic competition; stresses on American
energy, transportation, and other physical infrastructure; continued
economic and geopolitical vulnerabilities to energy price shocks
(despite increased North American oil and natural gas production); and
multiple environmental challenges associated with energy all indicate a
necessity to strengthen U.S. efforts to enhance energy productivity. To
that end, the President's FY 2014 budget for the U.S. Department of
Energy recognizes that investments in energy efficiency are needed to
address high energy costs, improve our national energy security and
reduce the harmful environmental impacts associated with the production
and use of energy.
______
Bloomberg Article
canada seen beating u.s. in $150 billion asia lng race
Canada is pulling ahead of the U.S. in a contest to be the first
exporter of liquefied natural gas from the North American shale bonanza
to Asia's $150 billion LNG market. An LNG terminal being built at a
cove north of Vancouver financed by a Houston private-equity firm is
scheduled to begin shipping the fuel across the Pacific Ocean in mid-
2015, eight months before the first continental U.S. plant is slated to
start. Canada's government has approved twice as much LNG export
capacity as its southerly neighbor, evincing a friendlier attitude
toward selling domestic gas to the highest bidder and positioning the
nation as the go-to source of gas in North America for overseas buyers.
International energy giants from Exxon Mobil Corp (XOM). to
Malaysia's Petroliam Nasional Bhd (PET) are considering terminal
projects in western Canada to supply Asian utilities and factories that
are paying more than four times the price of U.S. markets. Chevron Corp
(CVX). said it's focusing all of its North American LNG efforts north
of the U.S. border because of the more favorable regulatory climate and
closer proximity to Asia, making exports more profitable for producers.
``The smart money is going to Canada'' to export LNG, said Michelle
Foss, chief energy economist at the Center for Energy Economics at the
University of Texas' Bureau of Economic Geology. ``They don't have any
objections to exporting gas and it's closer to Asia, which cuts down on
shipping costs.''
Project Risks
Taking gas from the vast fields dotting Alberta and British
Columbia and super-chilling it to a liquid for ocean-going tankers has
price risks. LNG terminals can cost tens of billions of dollars to
construct and take decades to pay returns. That can make a facility
obsolete should internal North American demand and prices escalate to
where domestic sales become more profitable than exports, Foss said.
In addition, Canadian LNG developers counting on the tradition of
basing sales on world oil prices could be undercut by Louisiana and
Texas-based producers planning to link contracts to lower-cost Gulf
Coast gas markets, said Dale Nijoka, global oil and gas leader at Ernst
& Young LLP. Three gas export projects have received permission to ship
LNG from Canada's Pacific Coast to destinations such as Japan and
China, compared to just one in the U.S., on the Gulf Coast, according
to data compiled by Bloomberg. In the U.S., policymakers and industry
leaders are divided over how tightly to control gas exports for fear of
driving up domestic prices for the power-plant and furnace fuel.
Doubling Demand
``In the long term, Canada, which carries lower political risk, is
probably more positively seen than the U.S. projects,'' Asish Mohanty,
senior LNG analyst at Wood Mackenzie Ltd. in Houston, said in a
telephone interview. ``The political risk of U.S. LNG is probably going
to outweigh the benefits.''
Energy companies chill gas to -160 degrees Celsius (-256
Fahrenheit) to create a colorless liquid 1/600th of its original volume
for long-distance shipment aboard tankers twice as long as Seattle's
Space Needle is high. Worldwide gas demand is expected to more than
double by 2035 to 6.6 trillion cubic meters (233 trillion cubic feet) a
year, according to the International Gas Union, a trade group based in
Vevey, Switzerland and Oslo.
Global demand will begin to outpace LNG supplies around the end of
this decade and may exceed production by 100 million metric tons (4.87
trillion cubic feet) annually by 2025, Chevron Chairman and Chief
Executive Officer John S. Watson told analysts in New York last month.
`World Class'
Asia leads the world in the growth of demand for LNG as Pacific Rim
economies expand power generation and energy-hungry manufacturing
sectors, Watson said during the March 12 event.
Kurt Glaubitz, a Chevron spokesman, referred a further query about
Canada's LNG outlook to comments from Jay Johnson, Chevron president
for Europe, Eurasia and the Middle East, at the same analyst meeting,
when Johnson lauded Canada's ``world class'' gas resources.
``With such a large resource base, these fields could readily
support additional LNG trains,'' Johnson said.
Aaron Stryk, a spokesman for Exxon, declined to comment for this
story.
``Petronas looks towards Canada's stable fiscal and regulatory
regime as a positive environment for investments of this magnitude,''
as well as the country's ``vast'' gas supply and short shipping times
to Asia, Michael Culbert, chief executive officer of the company's
Canadian unit, said yesterday in an e-mail.
The Asia-Oceania region, excluding Australia, imported 8.847
trillion cubic feet of gas in 2011, the most recent year for which data
was available, according to the U.S. Energy Department in Washington.
At the $16.50 per million British thermal units that Japanese importers
are paying for some supplies, that regional gas market has an annual
value of $150 billion.
Market Reversal
As recently as five years ago, explorers and investors from
ConocoPhillips to billionaire investor George Kaiser were predicting
the U.S. would need to import LNG to meet domestic demand as output
stagnated from its aging fields. Dow Chemical Co (DOW)., Chevron and
Total SA (FP) were among the heavyweights that signed long-term
contracts for LNG import capacity along the Gulf Coast.
At the same time, a then-little-noticed revolution in drilling and
hydraulic fracturing was under way that subsequently vaulted North
American gas production to a record high, saturating local markets,
collapsing prices and prompting would-be importers to look overseas for
an outlet for swelling fuel supplies.
U.S. Delays
After issuing the first permit to export continental U.S. gas to
nations without free-trade agreements almost two years ago, the federal
government suspended reviews of all other applications so it could
study the potential impacts of overseas sales on domestic energy
prices. There are now 19 proposed U.S. LNG projects awaiting export
permits, with the longest on hold for 28 months.
In contrast, Canada, which has seen a similar surge in gas
production, issued its third LNG export license in February for a
project led by Royal Dutch Shell Plc (RDSA) in British Columbia. All
together, the trio of approved Canadian projects will have the capacity
to ship 4.66 billion cubic feet of gas a day, more than double the 2.2
billion cubic feet of capacity that has been permitted in the U.S.,
according to data compiled by Bloomberg.
Asian energy consumption trends will determine the number of LNG
terminals that get built in Canada, where the gas endowment is so large
the government has little reason to restrict exports, Joe Oliver, the
nation's natural resources minister, said in an interview in Vancouver.
Abundant Supply
``We have so much gas in relation to what we need. There are
estimates that we've got between 100 and 200 years of domestic
supply,'' Oliver said, pointing five export projects that may move
ahead. ``If they all do, it's still considerably less than the amount
that would start to impinge on our domestic needs over the long term.''
Douglas Channel Energy Partnership plans to begin shipping as much
as 700,000 tons of LNG annually from a floating plant near Kitimat,
British Columbia, in mid-2015. The project is a joint venture of the
Haisla Nation aboriginal community and LNG Partners, a Houston-based
buyout firm led by Thomas and Glenn Tatham.
Thomas Tatham is the former chairman and CEO of Deeptech
International Inc., an offshore energy explorer that also operated what
once was the largest network of Gulf of Mexico gas pipelines. Deeptech
sold to El Paso Energy Corp., now part of Kinder Morgan Inc., for $298
million in 1998, according to data compiled by Bloomberg. Tatham did
not respond to an e-mail seeking comment.
Cheniere Timing
Douglas Channel's closest U.S. competitor, Cheniere Energy Inc.,
won't be finished building its first LNG export module until February
2016, according to a March 20 filing by the Houston-based company with
the Federal Energy Regulatory Commission in Washington.
``The race is on and governments need to recognize that and take
some steps but industry, really, at the end of the day, is going to
drive this,'' Jim Prentice, senior executive vice president and vice
chairman at Canadian Imperial Bank of Commerce, said in an interview in
Vancouver.
Watson, whose San Ramon, California-based company is building $85
billion in Australian LNG export terminals and plans to begin shipping
LNG from Angola by July, said Canada is a better place than the Gulf
Coast to liquefy and ship the fuel. He cited western Canada's relative
nearness to Asian markets and a political environment where objections
to gas exports are largely absent.
Chevron Focus
``One of the things attracting us to Canada is that it's already a
natural resources exporting country,'' Watson said during a meeting
with reporters after his presentation to analysts. ``We've decided that
Canada is going to be the focus of our North American LNG efforts.''
Chevron agreed in December to buy a 50 percent stake in the Kitimat
LNG project near the Douglas Channel project. The Horn River and Liard
gas fields that will supply Kitimat may hold more than 50 trillion
cubic feet of gas, Watson said, or enough to supply South Korea's
current level of imports for 29 years.
BG Group Plc (BG/), a U.K.-based producer of LNG from the Middle
East and Caribbean, has proposed a gas-export project for Prince
Rupert, British Columbia. Exxon, the world's largest energy company by
market value, also has said it's considering LNG exports from the same
area. Partnerships between AltaGas Ltd (ALA). and Idemitsu Kosan Co
(5019)., as well as Cnooc Ltd (883). and Inpex Corp. are also studying
projects. Pricing Contracts A key element of making Canadian LNG
profitable will be multi-decade contracts indexed to world crude prices
rather than North American gas, Watson said. Oil-linked prices are the
only way to ensure enough cash flow to justify the expense and time
involved in constructing LNG complexes that cost tens of billions of
dollars, he said.
The LNG industry has used crude-linked prices since its inception a
half-century ago in Algeria, Ernst & Young's Nijoka said. Unlike gas,
oil was a globally-traded commodity with transparent price-discovery
mechanisms anyone could monitor anywhere in the world, he said.
Cheniere has bucked the rest of the LNG industry by basing
contracts on the U.S. benchmark price from the Henry Hub pipeline nexus
in Erath, Louisiana. The Henry Hub price has averaged $3.46 per million
British thermal units this year, one- fifth the rate Japanese utilities
pay for LNG imports from major sources such as Qatar and Indonesia,
according to data compiled by Bloomberg.
Holding Out
Gas buyers in Asia and elsewhere probably will migrate to more
Henry Hub-based pricing as existing long-term, oil-indexed contracts
expire, Nijoka said. Energy producers will resist as long as they can
to protect profits, he said.
``These companies like the idea of oil-based pricing because it
gives them a lot more money, but the Asian buyers are pretty shrewd,''
Nijoka said.
Despite the steep discount of U.S. gas to international prices,
many Asian LNG importers may prefer to retain crude- linked contracts
to avoid the volatility of domestic U.S. energy markets that can be
roiled by hurricanes, winter storms and heat waves, said Betsy Spomer,
senior vice president of business development at BG Group (BG/).
``Oil, as an index, has been robust for a long time, primarily
because it's a truly global commodity that is transparent and can't be
manipulated,'' Spomer said at an LNG conference in Vancouver earlier
this year. ``You can't find a coal index that has the same
characteristics, and does Henry Hub really make sense in Tokyo?''