[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
RENEWABLE ENERGY OPPORTUNITIES AND ISSUES ON FEDERAL LANDS: REVIEW OF 
TITLE II, SUBTITLE B, GEOTHERMAL ENERGY OF EPACT; AND OTHER RENEWABLE 
              PROGRAMS AND PROPOSALS FOR PUBLIC RESOURCES

=======================================================================


                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                        Thursday, April 19, 2007

                               __________

                           Serial No. 110-18

                               __________

       Printed for the use of the Committee on Natural Resources



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                                   or
         Committee address: http://resourcescommittee.house.gov




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                     COMMITTEE ON NATURAL RESOURCES

               NICK J. RAHALL II, West Virginia, Chairman
              DON YOUNG, Alaska, Ranking Republican Member

Dale E. Kildee, Michigan             Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Wayne T. Gilchrest, Maryland
Solomon P. Ortiz, Texas              Ken Calvert, California
Frank Pallone, Jr., New Jersey       Chris Cannon, Utah
Donna M. Christensen, Virgin         Thomas G. Tancredo, Colorado
    Islands                          Jeff Flake, Arizona
Grace F. Napolitano, California      Stevan Pearce, New Mexico
Rush D. Holt, New Jersey             Henry E. Brown, Jr., South 
Raul M. Grijalva, Arizona                Carolina
Madeleine Z. Bordallo, Guam          Luis G. Fortuno, Puerto Rico
Jim Costa, California                Cathy McMorris Rodgers, Washington
Dan Boren, Oklahoma                  Bobby Jindal, Louisiana
John P. Sarbanes, Maryland           Louie Gohmert, Texas
George Miller, California            Tom Cole, Oklahoma
Edward J. Markey, Massachusetts      Rob Bishop, Utah
Peter A. DeFazio, Oregon             Bill Shuster, Pennsylvania
Maurice D. Hinchey, New York         Dean Heller, Nevada
Patrick J. Kennedy, Rhode Island     Bill Sali, Idaho
Ron Kind, Wisconsin                  Doug Lamborn, Colorado
Lois Capps, California               Vacancy
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth, South Dakota
Heath Shuler, North Carolina

                     James H. Zoia, Chief of Staff
                   Jeffrey P. Petrich, Chief Counsel
                 Lloyd Jones, Republican Staff Director
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    JIM COSTA, California, Chairman
          STEVAN PEARCE, New Mexico, Ranking Republican Member

Eni F.H. Faleomavaega, American      Bobby Jindal, Louisiana
    Samoa                            Louie Gohmert, Texas
Solomon P. Ortiz, Texas              Bill Shuster, Pennsylvania
Rush D. Holt, New Jersey             Dean Heller, Nevada
Dan Boren, Oklahoma                  Bill Sali, Idaho
Maurice D. Hinchey, New York         Don Young, Alaska ex officio
Patrick J. Kennedy, Rhode Island
Hilda L. Solis, California
Nick J. Rahall II, West Virginia, 
    ex officio
                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, April 19, 2007.........................     1

Statement of Members:
    Costa, Hon. Jim, a Representative in Congress from the State 
      of California..............................................     1
    Pearce, Hon. Stevan, a Representative in Congress from the 
      State of New Mexico........................................     3

Statement of Witnesses:
    Bar-Lev, Joshua, Vice President of Regulatory Affairs, 
      BrightSource Energy........................................    68
        Prepared statement of....................................    70
    Gough, Robert, Secretary, Intertribal Council on Utility 
      Policy.....................................................    51
        Prepared statement of....................................    53
        Response to questions submitted for the record...........    58
    Hughes, Jim, Acting Director, Bureau of Land Management, U.S. 
      Department of the Interior.................................     4
        Prepared statement of....................................     6
        Response to questions submitted for the record...........     9
    Jungwirth, Lynn, Executive Director, The Watershed Research 
      and Training Center........................................    63
        Prepared statement of....................................    64
    Kunz, Daniel, President and Chief Executive Officer, US 
      Geothermal Inc.............................................    23
        Prepared statement of....................................    25
    Lutgen, Will, Jr., Executive Director, Northwest Public Power 
      Association................................................    74
        Prepared statement of....................................    76
    Swisher, Randall, Executive Director, American Wind Energy 
      Association................................................    42
        Prepared statement of....................................    44
        Response to questions submitted for the record...........    48
    Tester, Jefferson, Meissner Professor of Chemical 
      Engineering, Massachusetts Institute of Technology.........    11
        Prepared statement of....................................    13
    Thomsen, Paul A., Public Policy Administrator, ORMAT 
      Technologies...............................................    28
        Prepared statement of....................................    29

Additional materials supplied:
    UTC Power, Statement submitted for the record................    90

Information Retained in the Committee's Official Files
    GAO Report to the Ranking Minority Member, Committee on 
      Energy and Natural Resources, U.S. Senate, ``RENEWABLE 
      ENERGY: Increased Geothermal Development Will Depend on 
      Overcoming Many Challenges''
    Massachusetts Institute of Technology Summary Report ``The 
      Future of Geothermal Energy: Impact of Enhanced Geothermal 
      Systems (EGS) on the United States in the 21st Century''


   OVERSIGHT HEARING ON RENEWABLE ENERGY OPPORTUNITIES AND ISSUES ON 
  FEDERAL LANDS: REVIEW OF TITLE II, SUBTITLE B, GEOTHERMAL ENERGY OF 
EPACT; AND OTHER RENEWABLE PROGRAMS AND PROPOSALS FOR PUBLIC RESOURCES.

                              ----------                              


                        Thursday, April 19, 2007

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 2:05 p.m. in 
Room 1324, Longworth House Office Building, Hon. Jim Costa 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Costa, Sali, Pearce, Kennedy, 
Solis, and McMorris Rodgers.

STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF CALIFORNIA

    Mr. Costa. The Energy and Mineral Resources Subcommittee of 
the Natural Resources Committee will now come to order. This is 
an oversight hearing dealing with renewable energy 
opportunities and issues as it relates to our committee's 
jurisdiction on Federal lands. Obviously there are a number of 
areas where we have jurisdiction dealing with Title II and 
Subtitle B as it relates to the Geothermal Energy Act and other 
renewable programs and proposals for public resources.
    We have here this afternoon two panels before us of 
witnesses who are highly reputable and have experience and 
expertise in their respective fields, and we look forward to 
hearing that testimony. Let me indicate that we are challenged 
with a roll call that will be coming up here shortly, and so in 
conversation with the Ranking Member we have decided we would 
give our opening statements if that is fine with you folks, 
although we are not really putting it up for a vote, and then 
we suspect we will be called to go over to the Floor and cast 
our votes, and so that will be as of a form of a little break 
for those of you who would like to have a little break and go 
get some coffee or whatever.
    Hopefully we will be back within 25 minutes but let us try 
to get as far as we can here. We have a lot of other committees 
that are currently holding hearings, and it is that time of 
year, and I am mindful of my colleagues' time, and we want to 
try to expedite it in a way that makes sense. So having said 
all that, let me go through some formalities that I am supposed 
to do as the Chairperson of this Subcommittee.
    As was indicated, under Rule 4[g], the Chairman and the 
Ranking Member may make an opening statement. If any Members 
have other statements, we will include them in the record under 
unanimous consent. Additionally, under Committee Rule 4[h], 
additional material for the record should be submitted by the 
Members or witnesses within 10 days of this hearing. I always 
ask those who are testifying that when we submit questions from 
our colleagues who could not be here because they had another 
commitment or hearing, that you try to get your responses to 
the questions to us sooner rather than later. That would 
certainly be appreciated. So your cooperation is certainly 
important.
    Let me briefly open up in suggesting that this is part of a 
larger effort to look at how we can complement previous efforts 
that have taken place by those Congresses before us to enhance 
our efforts to produce additional energy alternatives and 
enhance other existing energy uses that we and our country 
benefit from both economically as well as socially.
    The testimony that we will receive this afternoon is from 
nine individuals who have various experiences and expertise on 
renewable energy technologies and policies. Those include but 
are not limited to geothermal, solar, wind and biomass, four 
technologies that have I believe significant potential to 
produce additional energy for citizens of this country as it 
relates to public resources on public lands.
    Today we will look at the EPAct Section 211 that urges the 
Secretary of Interior to seek in the next 10 years to have 
approved additional energy from renewable sources on public 
lands within a generation capacity of at least 10,000 
megawatts. Frankly, I would like us to see us do better, and I 
think we can.
    There are a number of focuses as it relates to our current 
energy uses and to all the management tools that currently are 
available to us, and that in the future will be available to us 
as we see new technology breakthroughs occurring. Certainly we 
know that for any scenario that we envision that our current 
sustainable energy uses of coal, oil and gas resources will 
continue to provide a significant, significant amount of our 
energy source as it does today.
    But trying to use new technologies and use additional 
energy sources I think is common sense. This opportunity to 
look ahead then must look at the longer term not just the short 
term, but the longer term to address prospects that include but 
are not limited to climate change and change in terms of 
economies on the world global market. Let me be clear in terms 
of my own opinion of renewable energy. Renewable energy is an 
important opportunity but I do not believe that it is a silver 
bullet.
    I do not think there is a silver bullet but I think that 
continuing efforts, not just in these that we are testifying 
about today, but I also serve on the Ag Committee and we are 
looking at real opportunities that U.S. agriculture can play in 
terms of providing additional energy sources to America, and if 
we are successful here, obviously it will benefit other parts 
of the world. We already see in Brazil where they have done 
that very successfully.
    So that is kind of what I am looking for today in terms of 
the testimony. We have had a number of groups that have weighed 
in. The Western Governors' Association has adopted a resolution 
to develop an additional 30,000 megawatts of energy by the year 
2015, and I think those are good goals. Increasing energy 
efficiency by 20 percent in 2020. I know in California and 
other western states there is an aggressive effort to do just 
that.
    Obviously we are going to have to also look at reliable 
transmission, and I will be interested in hearing these 
witnesses today talk about the challenges of transmission of 
this energy from the source as it becomes a reality. So those 
are among the many questions and concerns I have, and I am 
anxiously looking forward to the testimony. I will now defer to 
my colleague, the gentleman from New Mexico, for an opening 
statement.

 STATEMENT OF HON. STEVAN PEARCE, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW MEXICO

    Mr. Pearce. Thank you, Mr. Chairman. I want to thank you 
for having this hearing on geothermal energy. We have lots of 
hot water in New Mexico, and I find myself in it more than I 
should. You and I both voted for the Energy Policy Act. I felt 
like it was a positive landmark step in the effort to lower 
energy prices for our constituents and reduce our dependence on 
foreign sources of energy.
    The Energy Policy Act sought to find a balance between the 
use of conventional fossil fuels, the expansion of renewable 
and alternative energy sources, and conservation to meet the 
energy needs of our nation. We need to diversify our energy 
resources as we go forward in time. For my part, last August we 
convened a seminar in New Mexico declaring that we as research 
scientists, we as the university people, businesspeople, and 
consumer advocates felt like New Mexico could and should be the 
leader in renewable, the alternative sources of energy. We are 
well positioned with respect to wind, solar, geothermal, 
biomass, hydrogen and nuclear, and so New Mexico can and should 
be a leader in converting to those sources of energy.
    However, there are problems in the transition, and that is 
what I think the purposes of this committee are. This hearing 
is going to focus on geothermal energy, the provisions in the 
Act, and the opportunities for development of other renewable 
energy sources on Federal lands. Among other policies, the 
geothermal provisions allow us to lease geothermal resources 
just like the oil and gas leasing program. It allows us to 
revise and simplify the royalty assessments. It provides 
incentives to companies to expedite construction, and also 
allows us to regrow the BLM geothermal program staff with money 
generated by geothermal leasing by the geothermal leasing 
program itself.
    We will hear from the witnesses on our first panel about 
the opportunities for expanded use of geothermal resources that 
are beyond our imagination when we crafted the geothermal 
provisions of the Energy Policy Act in 2005. These witnesses 
will illustrate once again that the geothermal technology 
continues to evolve, and that Federal research dollars for 
geothermal engineering and science research are a prudent 
investment for our future.
    We hope that in future budgets set by the Administration 
that Department of Energy funding for geothermal research is 
restored. Geothermal energy is an important energy resource to 
my home state of New Mexico and to Chairman Costa's home state 
of California.
    We also included in the Energy Policy Act a sense of 
Congress that the Secretary of the Interior should be 
generating at least 10,000 megawatts from use of renewable 
energy projects including hydroelectric within 10 years. To 
that end, we will hear from Mr. Hughes the progress that BLM 
has made in processing leases for wind energy, biomass, 
geothermal and solar projects on Federal land.
    The Federal lands will play a significant role for the 
western public land states that have established renewable 
portfolio standards. Both California and Nevada have renewable 
portfolio standard requiring that 20 percent of the electricity 
used in that state must come from renewable energy resources 
within 10 years. I would like to remind people that while wind 
and solar can augment our electrical energy generation, they 
cannot provide base load power.
    Fortunately geothermal and hydropower can provide that base 
load power. In fact, today's hydropower provides the largest 
percent of the renewable energy produced in the U.S. and also 
some of the lowest cost energy available, as Mr. Lutgen can 
testify to. Again, I thank all of the witnesses for their time, 
and I look forward to the discussion on implementation of the 
Energy Policy Act 2005 geothermal energy provisions. Thank you, 
Mr. Chairman. I yield back.
    Mr. Costa. Thank you very much, Congressman Pearce, for 
that good statement. And what we will again try to do, asking 
staff now to give us a hand on how far we are from our votes, 
but again to try to expedite the time we are going to see since 
it is five minutes each, 10 minutes now, let us try to see if 
we can get through at least the first statement of our first 
witness who is Mr. Hughes.
    She is trying to confuse me. Mr. Hughes is no stranger to 
this committee. He is the acting Director of the Bureau of Land 
Management, U.S. Department of Labor. U.S. Department of 
Interior. Excuse me. I put you in a different department. 
Before us in the past and here again today, and we are glad to 
have you. Please, we will have your statement and then we will 
break for us to go cast our votes.

              STATEMENT OF JIM HUGHES, DIRECTOR, 
                   BUREAU OF LAND MANAGEMENT

    Mr. Hughes. Thank you, Mr. Chairman, and members of the 
Subcommittee.
    Mr. Costa. Bring that mic a little closer to you, please.
    Mr. Hughes. I appreciate this opportunity to appear before 
you today to discuss renewable energy opportunities and issues 
on Federal lands. With the 37th anniversary of earth day 
approaching this Sunday, it is fitting that I am here today to 
update you on the BLM's ongoing efforts to facilitate renewable 
energy development on public lands and the progress the BLM has 
made implementing the requirements of the Energy Policy Act of 
2005.
    The Energy Policy Act directs the Department of Interior to 
take actions to promote the development of domestic renewable 
energy supplies. The BLM has a clear mandate to provide access 
to energy development on public lands in balance with other 
multiple use purposes. Strict mitigation measures are employed 
to minimize environmental impacts on public lands.
    Through our land use planning process, the BLM works with 
local communities and other interested stakeholders to consider 
a range of concerns and opinions and provide for 
environmentally sound management of the resources. The BLM has 
supported the development of renewable energy projects on 
public lands for decades but recent guidance from the Energy 
Policy Act and increased interest in project development has 
provided the impetus to improve our processes and focus 
increased efforts in the area of renewable energy development.
    Improved technology, higher fossil fuel prices, state 
requirements to produce renewable energy, and extended tax 
credits in the Energy Policy Act have all contributed to 
increased interest in the applications for renewable energy 
projects. Twenty-one states and the District of Columbia have 
already instituted renewable portfolio standards. The BLM 
continues to do its part to contribute to domestic energy 
production through the implementation of the Energy Policy Act.
    Through the Act, Congress affirmed the critical role of the 
public lands in creating a balanced energy portfolio for the 
Nation by direction the Bureau of Land Management to approve 
enough projects on the public lands to generate at least 10,000 
megawatts of electricity from nonhydropower renewable resources 
by the year 2015.
    The BLM is advancing the development of geothermal, wind, 
solar and biomass energy from the public lands. The annual 
electrical needs of 1.2 million homes are currently generated 
by 55 geothermal leases on BLM managed lands. Another one 
million homes could be powered in coming years by wind energy 
produced on public lands. The BLM has approved nearly 300 
geothermal lease applications since 2001, and more than 100 
wind energy right-of-ways during that same period of time. 
Interest in solar energy development is beginning to increase 
on public lands with 43 applications currently pending.
    Significant accomplishments in the geothermal, wind and 
solar programs include the soon to be published geothermal 
regulations. Also the release of the final programmatic wind 
energy development environmental impact statement in 2005 has 
also assisted our efforts, and just this month we released 
updated policy guidance for processing applications for solar 
energy projects on public lands.
    Each of these milestones furthers the BLM's ability to 
respond in a timely, efficient manner to applications for 
renewable energy development on public lands. We have also been 
working with state, tribal and local government partners as 
well as private interests to develop strategies to increase the 
commercial utilization of woody biomass and expand economic 
opportunities for local communities to develop energy 
generation industries.
    Since implementation of its biomass strategy in 2004, the 
BLM has increased its biomass offerings from 30,000 tons to 
122,000 tons in the year 2006. When it comes to our own energy 
consumption, the Secretary of the Interior has made it clear 
that he welcomes the President's call for increased energy 
efficiency in the Federal government, and that DOI will 
continue to be a leader in energy efficiency.
    The BLM has installed over 600 photovoltaic solar equipment 
systems in our facilities to self-generate electricity, and we 
expect to generate more. Energy efficiency as well as the 
installation of renewable energy generation will be a focus in 
future BLM facility improvements and construction projects, and 
we have several current initiatives well underway.
    I have just touched on a few of the highlights in each of 
these areas of renewable energy development and BLM's own use 
of these technologies. Each of these is explained in more 
detail in my full testimony which the committee has. Mr. 
Chairman, this concludes my opening remarks. I will be happy to 
answer any questions when you return.
    [The prepared statement of Mr. Hughes follows:]

               Statement of Jim Hughes, Acting Director, 
       Bureau of Land Management, U.S. Department of the Interior

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear here today to discuss renewable energy 
development on public lands.
Background
    As steward of 258 million acres of this nation's lands, the Bureau 
of Land Management (BLM) has tremendous responsibility to ensure 
multiple-use management of these resources for all Americans. Today's 
testimony will focus on one aspect of that multiple-use mandate: 
renewable energy development.
    In providing an appropriate mix of both renewable and conventional 
energy supplies from the public lands, the BLM contributes to a more 
secure and reliable energy future for our country. The BLM has 
supported the development of renewable energy projects on public lands 
for decades, but recent guidance through the Energy Policy Act of 2005 
(EPAct) and increased interest in project development has provided 
impetus to improve our processes and increase our efforts in the area 
of renewable energy development.
    While the quantity of domestic energy produced from renewable 
resources is relatively small in comparison to conventional resources, 
the Energy Information Administration projects that the use of 
renewable technologies for electricity generation will grow steadily 
through 2030, stimulated by improved technology, higher fossil fuel 
prices, State requirements to produce renewable energy, and extended 
tax credits in the EPAct.
    Through the EPAct, Congress affirmed the critical role of the 
public lands in creating a balanced energy portfolio for the nation by 
providing a sense of the Congress that BLM should approve enough 
projects on public lands to generate at least 10,000 megawatts (MW) of 
electricity from non-hydropower renewable resources by 2015. The BLM 
continues to implement the EPAct, which requires the development of 
renewable energy resources as part of an overall strategy to develop a 
diverse portfolio of domestic energy supplies for our future.
Protecting the Environment
    The BLM's land use planning process seeks to ensure that energy 
development on public lands is done in a way that protects the 
environment. Strict mitigation measures are employed to minimize 
impacts on wildlife from habitat fragmentation, ground disturbances, or 
noise resulting from renewable energy development. Increasingly, BLM is 
mitigating effects of energy production and other activities through 
available land use planning tools.
    In August 2006, an environmental review was completed for the 
largest wind energy project on Federal land in the last 25 years. 
Approval of the Record of Decision and right-of-way grant for the 
Cotterel Wind Power Project on 4,500 acres of BLM-managed public land 
cleared the way for the installation of up to 98 turbines on a ridge in 
south-central Idaho. The right-of-way grant includes important measures 
for mitigating the effects of wind generation on wildlife resources. 
Best Management Practices, offsite mitigation, and adaptive management 
strategies were incorporated into the project to address impacts to 
sage-grouse, raptors, bats, and migratory birds. An interagency team of 
Federal and state biologists developed the mitigation plan and will 
continue to monitor wildlife impacts. In this case, the applicant has 
executed a letter of commitment for annual contributions to be in an 
amount equal to approximately one-half of one percent of the gross 
revenues received from the project's electricity sales. The 200 MW 
project will generate enough electricity to supply approximately 50,000 
homes.
    The Healthy Lands Initiative proposed in the FY 2008 budget is 
another example of taking aggressive steps now to help avoid the need 
for future restrictions on uses of public land that would directly 
affect the Nation's economy and quality of life. Land health is being 
affected by pressures such as community expansion, wildfires, 
unprecedented demands for energy resources, ever-expanding recreation 
uses, and weed invasion. These pressures often interact to affect large 
landscapes and ecosystems, particularly those in the growing wildlife-
energy interface. The Healthy Lands Initiative represents a new concept 
for meeting emerging challenges in managing natural resources with 
flexible, landscape-level approaches for maintaining or improving land 
health where lands continue to be available for multiple uses.
Renewable Energy Development on Public Lands
    The BLM is advancing the development of geothermal, wind, solar, 
and biomass energy from public lands. Recently, BLM began a 
collaborative effort with the Department of Energy's National Renewable 
Energy Laboratory (NREL) to focus on expediting the processing of 
renewable energy projects on public lands. NREL will be providing 
additional technical resources to assist BLM in the review of wind and 
solar projects. In addition, NREL will provide additional assessments 
to identify areas for possible future leasing.
    Geothermal: Fully 90 percent of the existing and future geothermal 
resources in the United States are on Federal lands. The BLM currently 
manages 354 geothermal leases, 55 of which are producing and generate 
over 1,250 MW of electrical power (enough to power 1.2 million homes). 
In addition, the BLM manages a small number of direct-use leases, which 
provide an alternative source of energy for greenhouses, fish farms, 
and other commercial facilities. Demand for both electrical power and 
direct-use from Federal geothermal resources is increasing. Since 2001, 
the BLM has processed more than 200 geothermal lease applications, 
compared to 20 lease applications received from 1997-2001. Geothermal 
energy generates over $12 million in Federal revenues each year.
    Title II of the EPAct made comprehensive changes to the Geothermal 
Steam Act--the authorizing statute for geothermal development on public 
lands--by requiring land nominated and made available for leasing to be 
leased on a competitive basis; restructuring royalties; and revising 
lease terms, conditions and rentals. As a result, the BLM and the 
Minerals Management Service have rewritten their geothermal rules to 
conform to the statutory changes. The Final Rule will be published in 
the Federal Register in the near future, and is scheduled to take 
effect 30 days after publication.
    The BLM and Forest Service signed an Interagency Memorandum of 
Understanding (MOU) in April 2006 in accordance with section 225 of the 
EPAct. The MOU sets the foundation for increasing the collaborative 
approach between the agencies. The BLM and Forest Service have decided 
to prepare a Programmatic Environmental Impact Statement for Geothermal 
Development to assist in geothermal leasing and permitting on BLM 
public lands and National Forest lands. A draft of the Programmatic EIS 
is tentatively scheduled for release in December 2007.
    Wind Energy: Section 211 of the Energy Policy Act provides a sense 
of the Congress that the Secretary of the Interior should seek to 
approve at least 10,000 MW of non-hydropower renewable energy projects 
on BLM-managed public lands by the year 2015. There are 330 MW of 
installed wind energy projects on public lands, and another 599 MW 
proposed or recently approved, creating the potential to power nearly 
300,000 homes. Responding to increasing demand for wind power, the BLM 
has granted over 100 authorizations associated with wind energy in the 
last five years, compared with fewer than five issued between 1997 and 
2001.
    A programmatic Environmental Impact Statement (EIS) relating to the 
authorization of wind energy projects was completed in 2005. This EIS 
amended 52 BLM land use plans and provides the foundation for 
environmental analysis of future wind proposals on BLM lands. The BLM 
has identified 20.6 million acres of public land in the West with wind 
energy potential. Because wind energy facilities require only small 
amounts of land, actual development will involve just a fraction of 
that acreage.
    In 2006, the BLM updated internal policy that implemented Best 
Management Practices and other mitigation measures for wind energy 
projects to avoid impacts to sage-grouse, raptors, bats and migratory 
birds, and to minimize habitat fragmentation, ground disturbance, and 
noise. These measures, combined with advances in technology, are 
allowing increased capacity to generate wind energy on public lands 
while conserving other important resource values.
    Solar: Recognizing the recent technological advancements in the 
production of solar energy, this month the BLM updated policy guidance 
for processing applications for solar energy projects on public lands. 
The latest policy guidance directs BLM field offices to provide 
adequate resources to review and process applications for solar energy 
projects in a timely manner. The guidance also requires the BLM to 
address solar development when revising or updating land use plans for 
areas shown to have potential for commercial solar energy development.
    The policy requires appropriate stipulations in authorizations to 
mitigate environmental impacts of projects, as well as bonding to 
ensure compliance and site reclamation. The guidance also describes the 
level of environmental review required before an authorization can be 
issued.
    The development and use of solar energy has significant potential 
in the Western states. The BLM is prepared to respond to industry 
interest in this renewable energy resource.
    Biomass: Biomass from the public lands managed by the BLM is 
predominantly woody debris, the by-product of hazardous fuels removal 
projects undertaken to reduce the risk of wildland fire and projects to 
improve forest and rangeland health. Using stewardship contracting and 
other tools provided in the Healthy Forests Initiative, the Healthy 
Forest Restoration Act, and the Tribal Forest Protection Act, the BLM 
has been working with state, Tribal, and local government partners, as 
well as private interests, to develop strategies to increase the 
commercial utilization of woody biomass and expand economic 
opportunities for local communities to develop energy generation 
industries. Woody debris that used to go up in smoke may instead be 
converted to heat, light, and economic development. Since 
implementation of its biomass strategy, the BLM increased its biomass 
offering from 30,000 tons in FY 04 to 122,000 tons in FY 06.
    BLM has undertaken biomass demonstration projects across the West, 
including Alaska, California, Colorado, Idaho, and Oregon, in which 
local field offices are working with nearby communities and 
entrepreneurs to develop strategies for using biomass to generate 
energy.
    In 2006 in Lakeview, Oregon, the BLM, the Forest Service, and 20 
others representing local government, business, and non-profit 
organizations signed a Declaration of Cooperation in support of a 10-15 
MW Biomass Energy Facility with the potential to supply electricity to 
more than 14,000 homes. The proposed Biomass Energy Facility is 
expected to be operational in 2008.
    In Central Oregon, the BLM and Forest Service have committed to 
offering 80,000 tons of woody biomass material annually to the 
Confederated Tribes of Warm Springs. In addition, the proposal will 
treat 10,000 acres per year of forest and grasslands hazardous fuels 
for the next ten years. The Tribe will use the agencies' long-term 
commitment to provide biomass material to expand its existing energy 
facility near Warm Springs, Oregon.
    Section 210 of the Energy Policy Act authorizes Federal grants for 
biomass use. BLM assisted the Forest Service with reviews and 
selections of Forest Service Biomass Grants in FY 2006 and 2007. 
Eighteen small enterprises received $4.2 million in grants to develop 
innovative uses for wood biomass as sources of renewable energy and new 
products in 2006, and 26 small businesses and community groups received 
grants totaling $6.2 million in 2007. The grant recipients were 
selected based on their capacity to increase biomass use on Forest 
Service land; however, 14 of them have the potential to also increase 
biomass use on BLM lands. Together with the non-federal matches 
required by the grant program, a total of approximately $12 million 
will be spent on these biomass projects in FY 2007.
Walking the talk--use of renewable energy by BLM
    In addition to its significant role in domestic energy production, 
BLM is taking a leadership role by working to advance the use of 
renewable energy resources at numerous facilities in the field. There 
is significant potential for the installation and use of renewable 
energy resources, such as solar, geothermal, and wind power at existing 
and new BLM facilities.
    The BLM generates a total of 185 megawatt-hours of electricity from 
photovoltaic systems each year from over 600 installations. Varied uses 
of photovoltaic energy include water pumping, outdoor lighting, 
communication sites, weather and water monitoring, remote field 
station, and visitor centers. Since 1995, the BLM has installed over 
130 photovoltaic systems to replace fossil fuel powered generators. The 
seasonal nature of the remote facilities and long summer sun hours have 
made solar energy a cost effective approach to supplying power to these 
facilities.
    The BLM's Campbell Creek Science Center in Anchorage, Alaska, 
recently completed a biomass demonstration project that provided 
environmental education opportunities to demonstrate an alternative to 
diesel fuel to many local villages. A newly installed biomass furnace, 
fired by beetle-killed spruce, was added to the existing natural gas 
system to provide dual-fuel capabilities to reduce heating costs at the 
facility.
    The BLM is expanding on the success of these efforts by 
incorporating energy efficiency technologies and renewable energy into 
more of its installations and facilities. A Greening Workshop was held 
in March for BLM engineers, property and facility specialists, and 
environmental specialists. The purpose of the workshop was to refine 
the BLM Strategic Greening Plan and develop specific action plans for 
the integration of ``greening'' activities in BLM, consistent with 
Executive Order 13423 (Strengthening Federal Environmental, Energy and 
Transportation Management, January 24, 2007). Energy efficiency as well 
as installation of renewable energy generation (solar, wind and 
geothermal) will be a focus in future BLM facility improvement and 
construction projects.
    BLM issued a Fleet Management Plan in 2005, establishing goals for 
general purpose fleet size, reduction in fuel consumption, and the 
acquisition of alternative fueled and more energy efficient vehicles. 
As a result of this process, the BLM fleet size has been reduced by 5 
percent since 2005 and fuel consumption has also been reduced.
Conclusion
    In conclusion, Mr. Chairman, thank you for the opportunity to 
highlight a few of the steps BLM has taken to encourage the development 
of renewable energy resources on public lands and its own efforts to 
employ renewable energy at its facilities. This concludes my testimony. 
I would be happy to answer any questions you may have.
                                 ______
                                 

Response to questions submitted for the record by Jim Hughes, Director, 
                       Bureau of Land Management

P lease describe how your agency is taking an integrated approach to 
        renewable energy generation on BLM lands, to ensure that 
        Congress, States, and the public will understand the total 
        footprint of renewables production in a given area, and 
        cumulative or total impacts on habitat or other natural 
        resources. Please provide an example of ways in which your land 
        use planning programs and your renewables staff have 
        collaborated recently.
    The BLM requested that the National Renewable Energy Laboratory 
(NREL) identify areas on the public lands with renewable resources that 
showed potential for energy development. The NREL reported its findings 
to the BLM in a February 2003 report, entitled ``Assessing the 
Potential for Renewable Energy on Public Lands.'' This information was 
prepared to assist in the incorporation of renewable energy resources 
into future BLM land use planning efforts. It is through our land use 
planning process that we integrate consideration of renewable energy 
resources with other natural resources on the public lands and also 
provide opportunities for State and public input.
    For example, the BLM completed a Programmatic Wind Energy EIS in 
June 2005, to specifically address wind energy development on the 
public lands. This EIS amended 52 BLM land use plans and established a 
set of best management practices to mitigate potential impacts on other 
resource values from wind energy development on the public lands. The 
BLM will be initiating shortly a similar effort for geothermal energy 
development on the public lands. This effort will also amend applicable 
BLM land use plans and the development of mitigation measures for 
protecting other resource values.
P lease detail how and where the Department of the Interior is 
        identifying renewable energy resources zones that have the most 
        energy potential and connecting that information to the long-
        distance transmission planning effort under Section 368 of the 
        Energy Policy Act. The National Renewable Energy Laboratory 
        (NREL) has mapped prime areas for various renewable power 
        generation; are you, for example, integrating the solar power 
        analysis in NREL's report ``Assessing the Potential for 
        Renewable Energy on Public Lands'' (or similar data) with data 
        on transmission constraints or congestion in the process of 
        identifying transmission corridors pursuant to Sections 368 and 
        1221 on the Energy Policy Act? If not, why not?
    In preparing the Programmatic Environmental Impact Statement (PEIS) 
for the West-wide energy corridors study pursuant to Section 368 of the 
Energy Policy Act of 2005 (EPAct), the BLM and the Department of Energy 
(DOE) incorporated the NREL maps showing the distribution of renewable 
energy resources. These maps were used to identify areas in the West 
where renewable energy production exists or may be developed in the 
future. The informationwas then used during development of the 
unrestricted conceptual West-wide energy distribution network. The 
network that was developed and subsequently refined into the proposed 
Section 368 corridors that will be included in the draft PEIS for the 
implementation of Section 368 includes segments that directly intersect 
with, or are within a relatively short distance of, known and potential 
renewable energy sources. The proposed corridors are intended to 
provide access to long-distance transmission paths for energy produced 
from these renewable sources.
    The NREL maps can be accessed at the following website: http://
www.nrel.gov/renewable_resources/
D escribe your current timeline and intended public review process for 
        the programmatic EIS for energy transmission corridors.
    The BLM and the Department of Energy (DOE) are co-lead agencies for 
preparing the Programmatic Environmental Impact Statement (PEIS), 
pursuant to the National Environmental Policy Act (NEPA), for 
implementing Section 368 of the EPAct. The United States Forest 
Service, the Department of Defense and the Fish and Wildlife Service 
are cooperating agencies in the effort. The Department of Commerce is a 
consulting agency. The current schedule anticipates releasing the draft 
PEIS for public review and comment at the end of July 2007. There will 
be a 90-day public comment period, and we plan to have public meetings 
beginning in September 2007 to give the public the opportunity to offer 
their comments in an open forum. After the closure of the comment 
period, the BLM, the DOE, and the cooperating agencies will carefully 
review all comments received and prepare the final EIS.Questions
U nder the new Geothermal Rule, published in the Federal Register on 
        05/01/2007, is there a provision outside of the normal 
        competitive lease sale process for geothermal energy 
        development on public lands adjacent to geothermal energy 
        development projects on private lands?
    The new Geothermal Rule provides for noncompetitive leasing under 
four conditions:
    1.  Subpart 3204 provides that lands offered at a competitive lease 
sale that receive no bids will be available for noncompetitive leasing 
for a 2-year period beginning the first business day following the 
sale.
    2.  Lands available exclusively for direct use of geothermal 
resources may be noncompetitively leased under Subpart 3205.
    3.  The holder of a mining claim for which a current plan of 
operations has been approved may obtain a noncompetitive lease for 
lands subject to the mining claim.
    4.  If a lease application was pending on August 8, 2005, the 
holder may obtain a noncompetitive lease under the leasing process in 
effect on that date.
W hen will the Programmatic EIS on Energy Corridors on Federal lands be 
        published?
    The BLM and the Department of Energy (DOE) are co-lead agencies for 
preparing the programmatic Environmental Impact Statement (PEIS), 
pursuant to the National Environmental Policy Act (NEPA), for 
implementing Section 368 of the EPAct. The United States Forest 
Service, the Department of Defense and the Fish and Wildlife Service 
are cooperating agencies in the effort. . The Department of Commerce is 
a consulting agency. The current schedule anticipates releasing the 
draft PEIS for public review and comment at the end of July 2007. There 
will be a 90-day public comment period, and we plan to have public 
meetings beginning in September 2007 to give the public the opportunity 
to offer their comments in an open forum. After the closure of the 
comment period, the BLM, the DOE, and the cooperating agencies will 
carefully review all comments received and prepare the final EIS.
                                 ______
                                 
    Mr. Costa. And we appreciate that, Mr. Hughes, and we will 
look forward to asking you those questions. However, I am 
informed that we have about five minutes to vote at this time. 
So I am going to take the prerogative of the Chair and ask that 
we recess for the interim. I suspect that will last 
approximately 15, 20 minutes.
    We have a vote now, and then one following this, and so we 
would hope to see all of you back, and we will proceed with the 
other three witnesses on this panel, if I am counting 
correctly, and then we will go through our first round of 
questioning. So we hope to be back here within 15, 20 minutes. 
So we will afford all of you a little opportunity to have a 
break yourselves, and we will see you shortly. Thank you. The 
committee is now in interim recess.
    [Recess.]
    Mr. Costa. All right. We hope you had a sufficient break, 
and we will continue on with our first panel. Our next witness 
I believe is Mr. Tester, and you are a Professor of Chemical 
Engineering at MIT. Obviously a very distinguished university. 
We look forward to your testimony on the future of geothermal. 
Please begin.

               STATEMENT OF JEFF TESTER, CHAIR, 
                    MIT CLIMATE CHANGE PANEL

    Mr. Tester. Thank you, Mr. Chairman. America's strength as 
a nation can be connected to the diversity of our ideas and our 
people. The time has come now to diversify our energy supply to 
provide a more secure and sustainable future for our children 
and their children. One such option that is too often ignored 
is geothermal, produced both from conventional hydrothermal 
systems as well as enhanced or engineered geothermal systems, 
EGS.
    For 15 months, starting in September of 2005, a 
comprehensive independent assessment was conducted by an 18-
member international panel assembled to evaluate the 
feasibility of EGS for becoming a major supplier of primary 
energy, particular base load generation capacity by the year 
2050. I had the privilege of chairing that panel, and this 
afternoon I would like to share with you some of our findings 
and recommendations.
    In simple terms, the major question that we tried to answer 
was whether there was a feasible path from today's hydrothermal 
system----
    Mr. Costa. Pardon me, Professor, on my time. Since my eyes 
are not as good as I would like them to be, is this included in 
the book that you distributed for us?
    Mr. Tester. Yes. Absolutely.
    Mr. Costa. Would you refer which page it is?
    Mr. Tester. It is also in my testimony, the written 
testimony as a part of the record. This particular slide is not 
but the question is in both that document as well as in the 
report itself.
    Mr. Costa. OK. Very good. On your time.
    Mr. Tester. Is there a feasible path from today's 
hydrothermal systems in the United States with about 3,000 
megawatts of capacity to tomorrow's EGS with 100,000 or more 
capacity by 2050? The reason we picked 100,000 megawatts was to 
put it on the same level as our current combined pumped hydro 
and conventional hydro as well as our nuclear capacity that we 
have right now in the country. We have about a terawatt of 
total generating capacity. So this would place geothermal at 10 
percent or more.
    The study itself had four major components. The first dealt 
with the resource itself, the second with the technology, the 
third with the environmental attributes and constraints 
associated with geothermal, and the fourth with economic 
projections. If we look at the resource--these maps are also in 
the record in the report and in my written testimony--
geothermal in simple terms can be characterized in terms of 
three dimensions. The first has to do with the gradient itself, 
the second with the permeability or connectivity of rock within 
that reservoir, and the third is the amount of fluid that is 
present in the form of liquid, water or steam.
    High grade hydrothermal resources have high average 
gradients, high rock permeability and connectivity, sufficient 
natural fluids in place. All other geothermal resources lack at 
least one of these, and the goal of enhanced geothermal systems 
is to provide a pathway to achieve a means of emulating the 
characteristics of natural commercial geothermal systems.
    EGS will be the enabler that carries us across this 
geothermal continuum from today's hydrothermal sites that are 
given to us by nature to tomorrow's universal heat mining 
plants that will be deployed where we need them. So I would 
like to quickly move to the other three graphs that we have in 
here. This illustrates again what happens as you go deeper into 
the surface beneath our feet from three kilometers, three and a 
half kilometers down to 10 kilometers, and that is how we 
defined our overall resource base for EGS.
    You can see that most of the country when we get to 10 
kilometers begins to look like what we might envision would 
exist in Yellowstone in terms of the stored thermal energy. 
When we add all this up, we come up with a rather 
extraordinarily large figure of 14 million exajoules. That 
amount of energy is obviously many times the amount that we are 
consuming annually, and from our perspective the fraction that 
could be captured and ultimately recovered shown with the blue 
bars in the graph will not be limited by the resource itself. 
It will depend only on extending existing extractive 
technologies for conventional hydrothermal systems and for oil 
and gas recovery.
    Much has been learned, many lessons and much progress in 
the field programs that have occurred around the world. 
Starting in the site in the 1970's at the Fenton Hill, New 
Mexico site in northern New Mexico to where we are now 
operating around the world in such places as Cooper Base in 
Australia and the Soultz site in Europe, a lot has been 
learned.
    Let me just summarize a few of the issues that relate to 
why we should be reinvesting now in enhanced geothermal systems 
as part of the geothermal continuum. This is a large and 
indigenous resource, and it is accessible to us. Again, the 
extractive amount of energy will not be limited by resource 
size. It fits into the portfolio of sustainable renewable 
energy options. EGS and geothermal complement the DOE's 
renewable portfolio. It does not hamper the growth of the 
others.
    It is scalable and environmentally friendly, carbon free. 
We have a graph in our testimony that illustrates that at 
different levels. Many of the elements on feasibility are in 
place right now, and the economic projections are favorable for 
high grade areas, so-called early targets of opportunity as we 
refer to them in our report, and the longer term looks quite 
attainable. In fact, the recommendations that we made in this 
panel in terms of deployment costs and supporting research seem 
very reasonable, averaging about $55 million per year for about 
a 10 to 15-year commitment would demonstrate this technology at 
a commercial scale to achieve these kind of levels of 
diffusion. All of this amounts to something less than the price 
of one clean coal plant. Thank you very much.
    [The prepared statement of Mr. Tester follows:]

     Statement of Jefferson Tester, Meissner Professor of Chemical 
    Engineering, Massachusetts Institute of Technology, Cambridge, 
                             Massachusetts

    Overview: Recent national focus on the value of increasing our 
supply of indigenous, renewable energy underscores the need for 
reevaluating all alternatives, particularly those that are large and 
well-distributed nationally. One such option that is often ignored is 
geothermal energy, produced from both conventional hydrothermal and 
Enhanced (or engineered) Geothermal Systems (EGS). For 15 months 
starting in September of 2005, a comprehensive, independent assessment 
was conducted to evaluate the technical and economic feasibility of EGS 
becoming a major supplier of primary energy for U.S. base-load 
generation capacity by 2050. The assessment was commissioned by the 
U.S. Department of Energy and carried out by an 18-member, 
international panel assembled by the Massachusetts Institute of 
Technology (MIT). This testimony provides a summary of that assessment 
including the scope and motivation behind the study, as well as its 
major findings and recommendations. Supporting documentation is 
provided in the full report (Tester et al., 2006).
    In simple terms, any geothermal resource can be viewed as a 
continuum in several dimensions. The grade of a specific geothermal 
resource depends on its temperature-depth relationship (i.e., 
geothermal gradient), the reservoir rock's permeability and porosity, 
and the amount of fluid saturation (in the form of liquid water and/or 
steam). High-grade hydrothermal resources have high average thermal 
gradients, high rock permeability and porosity, sufficient fluids in 
place, and an adequate reservoir recharge of fluids; all EGS resources 
lack at least one of these. For example, reservoir rock may be hot 
enough but not produce sufficient fluid for viable heat extraction, 
either because of low formation permeability/connectivity and 
insufficient reservoir volume, or the absence of naturally contained 
fluids.
    A geothermal resource is usually described in terms of stored 
thermal energy content of the rock and contained fluids underlying land 
masses that that are accessible by drilling. The United States 
Geological Survey and other groups have used a maximum accessible depth 
of 10 km (approx. 30,000 ft) to define the resource. Although 
conventional hydrothermal resources are already being used effectively 
for both electric and non-electric applications in the United States, 
and will continue to be developed, they are somewhat limited by their 
locations and ultimate potential. Beyond these conventional resources 
are EGS resources with enormous potential for primary energy recovery 
using heat-mining technology, which is designed to extract and utilize 
the earth's stored thermal energy. In addition to hydrothermal and EGS, 
other geothermal resources include coproduced hot water associated with 
oil and gas production, and geopressured resources that contain hot 
fluids with dissolved methane. Because EGS resources have such a large 
potential for the long term, the panel focused its efforts on 
evaluating what it would take for EGS and other unconventional 
geothermal resources to provide 100,000 MWe of base-load electric-
generating capacity by 2050.
    Three main components were considered in the analysis:
    1.  Resource--mapping the magnitude and distribution of the U.S. 
EGS resource.
    2.  Technology--establishing requirements for extracting and 
utilizing energy from EGS reservoirs, including drilling, reservoir 
design and stimulation, and thermal energy conversion to electricity. 
Because EGS stimulation methods have been tested at a number of sites 
around the world, technology advances, lessons learned and remaining 
needs were considered.
    3.  Economics--estimating costs for EGS-supplied electricity on a 
national scale using newly developed methods for mining heat from the 
earth, as well as developing levelized energy costs and supply curves 
as a function of invested R&D and deployment levels in evolving U.S. 
energy markets.
    Motivation: There are compelling reasons why the United States 
should be concerned about the security of our energy supply for the 
long term. Key reasons include growth in demand as a result of an 
increasing U.S. population, the increased electrification of our 
society, and concerns about the environment. According to the Energy 
Information Administration (EIA, 2006), U.S. nameplate generating 
capacity has increased more than 40% in the past 10 years and is now 
more than 1 TWe. For the past 2 decades, most of the increase resulted 
from adding gas-fired, combined-cycle generation plants. In the next 15 
to 25 years, the electricity supply system is threatened with losing 
capacity as a result of retirement of existing nuclear and coal-fired 
generating plants (EIA, 2006). It is likely that 50 GWe or more of 
coal-fired capacity will need to be retired in the next 15 to 25 years 
because of environmental concerns. In addition, during that period, 40 
GWe or more of nuclear capacity will be beyond even the most generous 
relicensing accommodations and will have to be decommissioned.
    The current nonrenewable options for replacing this anticipated 
loss of U.S. base-load generating capacity are coal-fired thermal, 
nuclear, and combined-cycle gas-combustion turbines. While these are 
clearly practical options, there are some concerns. First, while 
electricity generated using natural gas is cleaner in terms of 
emissions, demand and prices for natural gas will escalate 
substantially during the next 25 years. As a result, large increases in 
imported gas will be needed to meet growing demand--further 
compromising U.S. energy security beyond just importing the majority of 
our oil for meeting transportation needs. Second, local, regional, and 
global environmental impacts associated with increased coal use will 
most likely require a transition to clean-coal power generation, 
possibly with sequestration of carbon dioxide. The costs and 
uncertainties associated with such a transition are daunting. Also, 
adopting this approach would accelerate our consumption of coal 
significantly, compromising its use as a source of liquid 
transportation fuel for the long term. It is also uncertain whether the 
American public is ready to embrace increasing nuclear power capacity, 
which would require siting and constructing many new reactor systems.
    On the renewable side, there is considerable opportunity for 
capacity expansion of U.S. hydropower potential using existing dams and 
impoundments. But outside of a few pumped storage projects, hydropower 
growth has been hampered by reductions in capacity imposed by the 
Federal Energy Regulatory Commission (FERC) as a result of 
environmental concerns. Concentrating Solar Power (CSP) provides an 
option for increased base-load capacity in the Southwest where demand 
is growing. Although renewable solar and wind energy also have 
significant potential for the United States and are likely to be 
deployed in increasing amounts, it is unlikely that they alone can meet 
the entire demand. Furthermore, solar and wind energy are inherently 
intermittent and cannot provide 24-hour-a-day base load without mega-
sized energy storage systems, which traditionally have not been easy to 
site and are costly to deploy. Biomass also can be used as a renewable 
fuel to provide electricity using existing heat-to-power technology, 
but its value to the United States as a feedstock for biofuels for 
transportation is much higher, given the current goals of reducing U.S. 
demand for imported oil.
    Clearly, we need to increase energy efficiency in all end-use 
sectors; but even aggressive efforts cannot eliminate the substantial 
replacement and new capacity additions that will be needed to avoid 
severe reductions in the services that energy provides to all 
Americans.
    Pursuing the geothermal option: The main question we address in our 
assessment of EGS is whether U.S.-based geothermal energy can provide a 
viable option for providing large amounts of generating capacity when 
and where it is needed.
    Although geothermal energy has provided commercial base-load 
electricity around the world for more than a century, it is often 
ignored in national projections of evolving U.S. energy supply. Perhaps 
geothermal has been ignored as a result of the widespread perception 
that the total geothermal resource is only associated with identified 
high-grade, hydrothermal systems that are too few and too limited in 
their distribution in the United States to make a long term, major 
impact at a national level. This perception has led to undervaluing the 
long-term potential of geothermal energy by missing a major opportunity 
to develop technologies for sustainable heat mining from large volumes 
of accessible hot rock anywhere in the United States. In fact, many 
attributes of geothermal energy, namely its widespread distribution, 
base-load dispatchability without storage, small footprint, and low 
emissions, are very desirable for reaching a sustainable energy future 
for the United States.
    Expanding our energy supply portfolio to include more indigenous 
and renewable resources is a sound approach that will increase energy 
security in a manner that parallels the diversification ideals that 
have made America strong. Geothermal energy provides a robust, long-
lasting option with attributes that would complement other important 
contributions from clean coal, nuclear, solar, wind, hydropower, and 
biomass.
    Approach: The composition of the panel was designed to provide in-
depth expertise in specific technology areas relevant to EGS 
development, such as resource characterization and assessment, 
drilling, reservoir stimulation, and economic analysis. Recognizing the 
possibility that some bias might emerge from a panel of knowledgeable 
experts who, to varying degrees, are advocates for geothermal energy, 
panel membership was expanded to include other experts on non-
geothermal energy technologies and economics, and environmental 
systems. Overall, the panel took a completely new look at the 
geothermal potential of the United States. This study was partly in 
response to short- and long-term needs for a reliable low-cost electric 
power and heat supply for the nation. Equally important was a need to 
review and evaluate international progress in the development of EGS 
and related extractive technologies that followed the very active 
period of U.S. fieldwork conducted by Los Alamos National Laboratory 
during the 1970s and 1980s at the Fenton Hill site in New Mexico.
    The assessment team was assembled in August 2005 and began work in 
September, following a series of discussions and workshops sponsored by 
the Department of Energy (DOE) to map out future pathways for 
developing EGS technology. The final report was released in January of 
2007.
    The first phase of the assessment considered our geothermal 
resource in detail. Earlier projections from studies in 1975 and 1978 
by the U.S. Geological Survey (USGS Circulars 726 and 790) were 
amplified by ongoing research and analysis being conducted by U.S. 
heat-flow researchers and were analyzed by David Blackwell's group at 
Southern Methodist University (SMU) and other researchers. In the 
second phase, EGS technology was evaluated in three distinct parts: 
drilling to gain access to the system, reservoir design and 
stimulation, and energy conversion and utilization. Previous and 
current field experiences in the United States, Europe, Japan, and 
Australia were thoroughly reviewed. Finally, the general economic 
picture and anticipated costs for EGS were analyzed in the context of 
projected demand for base-load electric power in the United States.
    Findings: Geothermal energy from EGS represents a large, indigenous 
resource that can provide base-load electric power and heat at a level 
that can have a major impact in the United States, while incurring 
minimal environmental impacts. With a reasonable investment in R&D, EGS 
could provide 100 GWe or more of cost-competitive generating capacity 
in the next 50 years. Further, EGS provides a secure source of power 
for the long term that would help protect America against economic 
instabilities resulting from fuel price fluctuations or supply 
disruptions. Most of the key technical requirements to make EGS 
economically viable over a wide area of the country are in effect. 
Remaining goals are easily within reach to provide performance 
verification and demonstrate the repeatability of EGS technology at a 
commercial scale within a 10- to 15-year period nationwide.
    In spite of its enormous potential, the geothermal option for the 
United States has been largely ignored. In the short term, R&D funding 
levels and government policies and incentives have not favored growth 
of U.S. geothermal capacity from conventional, high-grade hydrothermal 
resources. Because of limited R&D support of EGS in the United States, 
field testing and support for applied geoscience and engineering 
research have been lacking for more than a decade. Because of this lack 
of support, EGS technology development and demonstration recently has 
advanced only outside the United States, with limited technology 
transfer, leading to the perception that insurmountable technical 
problems or limitations exist for EGS. However, in our detailed review 
of international field-testing data so far, the panel did not uncover 
any major barriers or limitations to the technology. In fact, we found 
that significant progress has been achieved in recent tests carried out 
at Soultz, France, under European Union (EU) sponsorship; and in 
Australia, under largely private sponsorship. For example, at Soultz, a 
connected reservoir-well system with an active volume of more than 2 
km3 at depths from 4 to 5 km has been created and tested at fluid 
production rates within a factor of 2 to 3 of initial commercial goals. 
Such progress leads us to be optimistic about achieving commercial 
viability in the United States in the next phase of testing, if a 
national-scale program is supported properly. Specific findings 
include:
    1. The amount of accessible geothermal energy that is stored in 
rock is immense and well distributed across the U.S. The fraction that 
can be captured and ultimately recovered will not be resource-limited; 
it will depend only on extending existing extractive technologies for 
conventional hydrothermal systems and for oil and gas recovery. The 
U.S. geothermal resource is contained in a continuum of grades ranging 
from today's hydrothermal, convective systems through high- and mid-
grade EGS resources (located primarily in the western United States) to 
the very large, conduction-dominated contributions in the deep basement 
and sedimentary rock formations throughout the country. By evaluating 
an extensive database of bottom-hole temperature and regional geologic 
data (rock types, stress levels, surface temperatures, etc.), we have 
estimated the total U.S. EGS resource base to be about 14 million 
exajoules (EJ). Figure 1 and Table 1 highlight the results of the 
resource assessment portion of the study. Figure 1 shows an average 
geothermal gradient map and temperature distributions at specific 
depths for the contiguous U.S. while Table 1 lists the resource bases 
for different categories of geothermal. Figure 2 compares the total 
resource to what we estimate might be technically recoverable. Using 
conservative assumptions regarding how heat would be mined from 
stimulated EGS reservoirs, we estimate the extractable portion to 
exceed 200,000 EJ or about 2,000 times the annual consumption of 
primary energy in the United States in 2005. With technology 
improvements, the economically extractable amount of useful energy 
could increase by a factor of 10 or more, thus making EGS sustainable 
for centuries.
    2. Ongoing work on both hydrothermal and EGS resource development 
complement each other. Improvements to drilling and power conversion 
technologies, as well as better understanding of fractured rock 
structure and flow properties, benefit all geothermal energy 
development scenarios. Geothermal operators now routinely view their 
projects as heat mining and plan for managed injection to ensure long 
reservoir life. While stimulating geothermal wells in hydrothermal 
developments is now routine, understanding why some techniques work on 
some wells and not on others can come only from careful research.
    3. EGS technology advances. EGS technology has advanced since its 
infancy in the 1970s at Fenton Hill. Field studies conducted worldwide 
for more than 30 years have shown that EGS is technically feasible in 
terms of producing net thermal energy by circulating water through 
stimulated regions of rock at depths ranging from 3 to 5 km. We can now 
stimulate large rock volumes (more than 2 km3), drill into these 
stimulated regions to establish connected reservoirs, generate 
connectivity in a controlled way if needed, circulate fluid without 
large pressure losses at near commercial rates, and generate power 
using the thermal energy produced at the surface from the created EGS 
system. Initial concerns regarding five key issues--flow short 
circuiting, a need for high injection pressures, water losses, 
geochemical impacts, and induced seismicity--appear to be either fully 
resolved or manageable with proper monitoring and operational changes.
    4. Remaining EGS technology needs. At this point, the main 
constraint is creating sufficient connectivity within the injection and 
production well system in the stimulated region of the EGS reservoir to 
allow for high per-well production rates without reducing reservoir 
life by rapid cooling (see Figure 3). U.S. field demonstrations have 
been constrained by many external issues, which have limited further 
stimulation and development efforts and circulation testing times--and, 
as a result, risks and uncertainties have not been reduced to a point 
where private investments would completely support the commercial 
deployment of EGS in the United States. In Europe and Australia, where 
government policy creates a more favorable climate, the situation is 
different for EGS. There are now seven companies in Australia actively 
pursuing EGS projects, and two commercial projects in Europe.
    5. Impact of Research, Development, and Demonstration (RD&D). Focus 
on critical research needs could greatly enhance the overall 
competitiveness of geothermal in two ways. First, such research would 
lead to generally lower development costs for all grade systems, which 
would increase the attractiveness of EGS projects for private 
investment. Second, research could substantially lower power plant, 
drilling, and stimulation costs, thereby increasing accessibility to 
lower-grade EGS areas at depths of 6 km or more. In a manner similar to 
the technologies developed for oil and gas and mineral extraction, the 
investments made in research to develop extractive technology for EGS 
would follow a natural learning curve that lowers development costs and 
increases reserves along a continuum of geothermal resource grades.
    Examples of benefits that would result from research-driven 
improvements are presented in three areas:
      Drilling technology--Evolutionary improvements building 
on conventional approaches to drilling such as more robust drill bits, 
innovative casing methods, better cementing techniques for high 
temperatures, improved sensors, and electronics capable of operating at 
higher temperature in downhole tools will lower production costs. In 
addition, revolutionary improvements utilizing new methods of rock 
penetration will also lower costs. These improvements will enable 
access to deeper, hotter regions in high-grade formations or to 
economically acceptable temperatures in lower-grade formations.
      Power conversion technology--Although commercial 
technologies are in place for utilizing geothermal energy in 70 
countries, further improvements to heat-transfer performance for lower- 
temperature fluids, and to developing plant designs for higher resource 
temperatures in the supercritical water region will lead to measurable 
gains. For example, at supercritical temperatures about an order of 
magnitude (or more) increase in both reservoir performance and heat-to-
power conversion efficiency would be possible over today's liquid-
dominated hydrothermal systems.
      Reservoir technology--Increasing production flow rates by 
targeting specific zones for stimulation and improving downhole lift 
systems for higher temperatures, and increasing swept areas and volumes 
to improve heat-removal efficiencies in fractured rock systems, will 
lead to immediate cost reductions by increasing output per well and 
extending reservoir lifetimes. For the longer term, using CO2 as a 
reservoir heat-transfer fluid for EGS could lead to improved reservoir 
performance as a result of its low viscosity and high density at 
supercritical conditions. In addition, using CO2 in EGS may provide an 
alternative means to sequester large amounts of carbon in stable 
formations.
    6. EGS systems are versatile, inherently modular, and scalable. 
Individual power plants ranging from 1 to 50 MWe in capacity are 
possible for distributed applications and can be combined--leading to 
large ``power parks,'' capable of providing thousands of MWe of 
continuous, base-load capacity. Of course, for most direct-heating and 
heat pump applications, effective use of shallow geothermal energy has 
been demonstrated at a scale of a few kilowatts-thermal (kWt) for 
individual buildings or homes and should be continued to be deployed 
aggressively when possible. For these particular applications, 
stimulating deeper reservoirs using EGS technology is not necessary. 
Nonetheless, EGS also can be easily deployed in larger-scale district 
heating and combined heat and power (cogeneration) applications to 
service both electric power and heating and cooling for buildings 
without a need for storage on-site. For other renewable options such as 
wind, hydropower, and solar PV, such co-gen applications are not 
possible.
    7. A short term ``win-win'' opportunity. Using coproduced hot 
water, available in large quantities at temperatures up to 100oC or 
more from existing oil and gas operations, makes it possible to 
generate up to 11,000 MWe of new generating capacity with standard 
binary-cycle technology, and to increase hydrocarbon production by 
partially offsetting parasitic losses consumed during production.
    8. The long term goal for EGS is tractable and affordable. 
Estimated supply curves for EGS shown in Figure 4 indicate that a large 
increase in geothermal generating capacity is possible by 2050 if 
investments are made now. A cumulative capacity of more than 100,000 
MWe from EGS can be achieved in the United States within 50 years with 
a modest, multiyear federal investment for RD&D in several field 
projects in the United States. Because the field-demonstration program 
involves staged developments at different sites, committed support for 
an extended period is needed to demonstrate the viability, robustness, 
and reproducibility of methods for stimulating viable, commercial-sized 
EGS reservoirs at several locations. Based on the economic analysis we 
conducted as part of our study, a $300 million to $400 million 
investment over 15 years will be needed to make early-generation EGS 
power plant installations competitive in evolving U.S. electricity 
supply markets.
    These funds compensate for the higher capital and financing costs 
expected for early-generation EGS plants, which would be expected as a 
result of somewhat higher field development (drilling and stimulation) 
costs per unit of power initially produced. Higher generating costs, in 
turn, lead to higher perceived financial risk for investors with 
corresponding higher-debt interest rates and equity rates of return. In 
effect, the federal investment can be viewed as equivalent to an 
``absorbed cost'' of deployment. In addition, comparable investments in 
R&D will also be needed to develop technology improvements to lower 
costs for future deployment of EGS plants.
    To a great extent, energy markets and government policies will 
influence the private sector's interest in developing EGS technology. 
In today's economic climate, there is reluctance for private industry 
to invest funds without strong guarantees. Thus, initially, it is 
likely that government will have to fully support EGS fieldwork and 
supporting R&D. Later, as field sites are established and proven, the 
private sector will assume a greater role in cofunding projects--
especially with government incentives accelerating the transition to 
independently financed EGS projects in the private sector. Our analysis 
indicates that, after a few EGS plants at several sites are built and 
operating, the technology will improve to a point where development 
costs and risks would diminish significantly, allowing the levelized 
cost of producing EGS electricity in the United States to be at or 
below market prices.
    Given these issues and growing concerns over long-term energy 
security, the federal government will need to provide funds directly or 
introduce other incentives in support of EGS as a long-term ``public 
good,'' similar to early federal investments in large hydropower dam 
projects and nuclear power reactors.
    9. Geothermal energy complements other renewables such as wind, 
solar and biomass operating in their appropriate domains. Geothermal 
energy provides continuous base-load power with minimal visual and 
other environmental impacts. Geothermal systems have a small footprint 
and virtually no emissions, including no carbon dioxide. Geothermal 
energy has significant base-load potential, requires no storage, and, 
thus, it complements other renewables--solar (CSP and PV), wind, 
hydropower--in a lower-carbon energy future. In the shorter term, 
having a significant portion of our base load supplied by geothermal 
sources would provide a buffer against the instabilities of gas price 
fluctuations and supply disruptions, as well as nuclear plant 
retirements. Estimates of the carbon emission reductions possible for 
different levels of EGS capacity are shown in Figure 5.
    Recommendations for re-energizing the U.S. geothermal program: 
Based on growing markets in the United States for clean, base-load 
capacity, the panel believes that with a combined public/private 
investment of about $800 million to $1 billion over a 15-year period, 
EGS technology could be deployed commercially on a timescale that would 
produce more than 100,000 MWe or 100 GWe of new capacity by 2050. This 
amount is approximately equivalent to the total R&D investment made in 
the past 30 years to EGS internationally, which is still less than the 
cost of a single, new-generation, clean-coal power plant. Making such 
an investment now is appropriate and prudent, given the enormous 
potential of EGS and the technical progress that has been achieved so 
far in the field. Having EGS as an option will strengthen America's 
energy security for the long term in a manner that complements other 
renewables, clean fossil, and next-generation nuclear.
    Because prototype commercial-scale EGS will take a few years to 
develop and field-test, the time for action is now. Supporting the EGS 
program now will move us along the learning curve to a point where the 
design and engineering of well-connected EGS reservoir systems is 
technically reliable and reproducible.
    We believe that the benefit-to-cost ratio is more than sufficient 
to warrant such a modest investment in EGS technology. By enabling 
100,000 MWe of new base-load capacity, the payoff for EGS is large, 
especially in light of how much would have to be spent for deployment 
of conventional gas, nuclear, or coal-fired systems to meet replacement 
of retiring plants and capacity increases, as there are no other 
options with sufficient scale on the horizon.
    Specific recommendations include:
    1. There should be a federal commitment to supporting EGS resource 
characterization and assessment. An aggressive, sufficiently supported, 
multiyear national program with USGS and DOE is needed along with other 
agency participation to further quantify and refine the EGS resource as 
extraction and conversion technologies improve.
    2. High-grade EGS resources should be developed first as targets of 
opportunity on the margins of existing hydrothermal systems and in 
areas with sufficient natural recharge, or in oil fields with high-
temperature water and abundant data, followed by field efforts at sites 
with above-average temperature gradients. Representative sites in high-
grade areas, where field development and demonstration costs would be 
lower, should be selected initially to prove that EGS technology will 
work at a commercial scale. These near-term targets of opportunity 
include EGS sites that are currently under consideration at Desert Peak 
(Nevada), and Coso and Clear Lake (both in California), as well as 
others that would demonstrate that reservoir-stimulation methods can 
work in other geologic settings, such as the deep, high-temperature 
sedimentary basins in Louisiana, Texas, and Oklahoma. Such efforts 
would provide essential reservoir stimulation and operational 
information and would provide working ``field laboratories'' to train 
the next generation of scientists and engineers who will be needed to 
develop and deploy EGS on a national scale.
    3. In the first 15 years of the program, a number of sites in 
different regions of the country should be under development. 
Demonstration of the repeatability and universality of EGS technologies 
in different geologic environments is needed to reduce risk and 
uncertainties, resulting in lower development costs.
    4. Like all new energy-supply technologies, for EGS to enter and 
compete in evolving U.S. electricity markets, positive policies at the 
state and federal levels will be required. These policies must be 
similar to those that oil and gas and other mineral-extraction 
operations have received in the past--including provisions for 
accelerated permitting and licensing, loan guarantees, depletion 
allowances, intangible drilling write-offs, and accelerated 
depreciations, as well as those policies associated with cleaner and 
renewable energies such as production tax credits, renewable credits 
and portfolio standards, etc. The success of this approach would 
parallel the development of the U.S. coal-bed methane industry.
    5. Given the significant leveraging of supporting research that 
will occur, we recommend that the United States actively participate in 
ongoing international field projects such as the EU project at Soultz, 
France, and the Cooper Basin project in Australia.
    6. A commitment should be made to continue to update economic 
analyses as EGS technology improves with field testing, and EGS should 
be included in the National Energy Modeling System (NEMS) portfolio of 
evolving energy options.
References
    The references listed below are part of those cited in the Synopsis 
and Executive Summary of The Future of Geothermal Energy, by Tester, 
J.W., B.J. Anderson, A.S. Batchelor, D.D. Blackwell, R. DiPippo, E. 
Drake, J. Garnish, B. Livesay, M.C. Moore, K. Nichols, S. Petty, M.N. 
Toksoz, R.W. Veatch, R. Baria, C. Augustine, E. Murphy, P. Negraru, and 
M. Richards, MIT report, Cambridge, MA (2006). A list of all the 
literature that was reviewed and evaluated is in the full report which 
is available at http://geothermal.inel.gov/publications/
future_of_geothermal_energy.
pdf
Armstead, H. C. H. and J. W. Tester. 1987. Heat Mining. E and F. N. 
        Spon, London.
Blackwell, D. D. and M. Richards. 2004. Geothermal Map of North 
        America. Amer. Assoc. Petroleum Geologists, Tulsa, Oklahoma, 1 
        sheet, scale 1:6,500,000.
Bodvarsson, G. and J.M. Hanson. 1977. ``Forced Geoheat Extraction from 
        Sheet-like Fluid Conductors.'' Proceedings of the Second NATO-
        CCMS Information Meeting on dry hot rock geothermal energy. Los 
        Alamos Scientific Laboratory report, LA-7021:85.
Energy Information Administration (EIA). 2006-2007. Annual Energy 
        Outlook and other EIA documents, U.S. Department of Energy 
        (DOE), web site http://www.eia.doe.gov/
McKenna, J., D. Blackwell, C. Moyes, and P. D. Patterson. 2005. 
        ``Geothermal electric power supply possible from Gulf Coast, 
        Midcontinent oil field waters.'' Oil & Gas Journal, Sept. 5, 
        pp. 34-40.
Sanyal, S. K. and S. J. Butler. 2005. ``An Analysis of Power Generation 
        Prospects From Enhanced Geothermal Systems.'' Geothermal 
        Resources Council Transactions, 29.
U.S. Geological Survey, Circulars 726 and 790, Washington, DC (1975, 
        1979)
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    Mr. Costa. Less than one what?
    Mr. Tester. Less than one clean coal plant which would be 
roughly of the order of a billion dollars. So if we summed up 
the average commitment over that 15-year period, it would be of 
that order.
    Mr. Costa. Very good.
    Mr. Tester. Thank you, Mr. Chairman.
    Mr. Costa. Thank you, and we will look forward to getting 
back to you with some questions. Our next witness I believe is 
Mr. Daniel Kunz, President and Chief Executive Officer of U.S. 
Geothermal Inc. Mr. Kunz.

             STATEMENT OF DANIEL KUNZ, PRESIDENT, 
                      US GEOTHERMAL, INC.

    Mr. Kunz. Thank you, Mr. Chairman and members of the 
Subcommittee. I appreciate this opportunity to discuss your 
oversight of renewable energy opportunities and issues on 
Federal lands. Geothermal has a unique and growing importance 
in the supply of green energy because it can supply clean, 
reliable, low-emission power 24 hours a day, 365 days a year. 
Geothermal energy currently provides nearly 3,000 megawatts of 
reliable electric power in the U.S. This represents only a 
small fraction of the U.S. resource potential.
    There is a study out right now that identifies geothermal 
resource potential of about 22,000 megawatts and in areas of 
undiscovered or unidentified resource, the potential could be 
as high as 127,000 additional megawatts. Currently there is the 
possibility of adding 5,000 megawatts of generation capacity in 
the U.S. within the next 5 to 10 years.
    The MIT study just presented by Professor Tester talks 
about the future of geothermal, and that future needs to be 
addressed today in order for us to get there. I believe that 
the potential for geothermal development can be substantial if 
we can move the EGS concept forward and bring it to a point 
where we can demonstrate that this technology can work.
    I believe also that if you ask the question what is needed 
to significantly move geothermal energy forward today, the 
answer I believe is to have more current and future 
expenditures on exploration, and this means in geological 
investigations on private and public lands. Thermal gradient 
and geofluid exploration well drilling is desperately needed in 
order to advance the understanding of where the resources are 
and what kind of capacities they have for generating power.
    This is a high-risk application generally speaking in the 
renewable sector. Other energy sources, such as solar and wind, 
do not have this particular aspect. Robust investment 
incentives, grants, cost sharing and other methods that will 
reward risk takers for geothermal drilling for both 
conventional and the EGS development on Federal and other lands 
are needed to stimulate this area.
    I believe that the Federal government should extend its 
support to geothermal energy through programs such as an 
enhanced investment tax credit for all geothermal drilling that 
would not be offset against any current credits available, such 
as the production tax credit. The investment tax credit I am 
proposing would be intended to address the crucial and very 
different set of risks and attract the capital necessary early 
on in geothermal development that is involved in this drilling 
that I have been talking about.
    Also enhanced funding for Department of Interior's work to 
allow these agencies to accelerate land and resource management 
plans identify the highest priorities for geothermal 
exploration and conduct the new lease options I think is needed 
to move this work forward. Committed research funding is also 
required I think to move focus forward on EGS and conventional 
geothermal resource discovery and evaluation, drilling 
technology and low to medium temperature energy conversion.
    With regard to the production tax credit, my company, US 
Geothermal, Inc., is developing Raff River, the site in Idaho. 
It will be one of the first new plants to benefit from the 
production tax credit. This tax credit was previously only 
available to the wind sector, and has now been made available 
to all of the renewable energy sectors. This is an important 
credit, and I think it should be extended in a much more 
significant way for geothermal projects. Other renewable energy 
technologies have had this PTC for about a decade, and 
geothermal needs this similar period of time to benefit from a 
shift in capital investment toward geothermal sectors. I urge 
Congress to extend the production tax credit 5 to 10 years.
    I want to thank the Subcommittee for scheduling this 
hearing and inviting me to present testimony on public lands, 
and I will be happy to answer any questions. I have an 
additional testimony already provided in writing. Thank you, 
Mr. Chairman.
    [The prepared statement of Mr. Kunz follows:]

   Statement of Daniel Kunz, President and Chief Executive Officer, 
                           US Geothermal Inc.

    Mr. Chairman and Members of the Subcommittee, I appreciate the 
Committee's interest in geothermal energy, its oversight on renewable 
energy opportunities and issues on Federal lands and its review of 
Title II, Subtitle B--Geothermal Energy of the EPAct.
    I have knowledge that the Geothermal Energy Association (``GEA'') 
submitted a Statement for the Record of this hearing. As a member of 
the board of directors of the GEA, I endorse that Statement of Record. 
To avoid duplication with GEA's statement, my testimony that follows 
comes from the viewpoint of a small but experienced geothermal 
developer who already has a new geothermal power plant under 
construction in Idaho and has the skill and ambition to construct and 
operate more geothermal power plants in the future. My testimony covers 
the issues that impact development of geothermal resources on public 
lands, some of which may be beyond the Bureau of Land Management's area 
of responsibility.
    Geothermal has a unique and growing importance in the supply of 
green energy because it can supply clean, reliable, low emission power 
24 hours a day, 365 days a year. Geothermal energy could also support 
our national hydrogen initiative and national biofuels goals, both of 
which will require significant amounts of energy to produce alternative 
domestic transportation fuels. Geothermal energy currently provides 
nearly 3,000 MW of reliable electric power in the US. But, according to 
the U.S. Geological Survey (USGS), this represents only a small 
fraction of U.S. resource potential. Representatives from the USGS 
testified before the Subcommittee on Energy and Mineral Resources of 
the House Resources Committee, U.S. House of Representatives, on May 3, 
2001 that their 1978 report still represents the best available 
resource estimate. According to that report, there is an identified 
geothermal resource potential of 22,000 MW, and an undiscovered, 
unidentified geothermal resource potential of an additional 72,000 to 
127,000 MW. This estimate totals some 150,000 MW of geothermal 
potential.
    Recent reports issued by the GEA, National Renewable Energy 
Laboratory and Massachusetts Institute of Technology (``MIT'') have 
identified the substantial potential for geothermal energy production 
from a range of technology applications. Each of these studies supports 
the potential to achieve 100,000 MW or more from the geothermal 
resource base.
    A recent report published by MIT on Enhanced Geothermal Systems 
(``EGS''), called the ``future of geothermal energy'', highlights the 
fact that there is an enormous energy potential right beneath our feet 
within the rock of our earth. The technology needed to convert this 
heat to electricity is tried and true as it relates to the above-ground 
aspects of project development: the power plant, turbines, generators, 
control systems and the electrical distribution equipment.
    The technology risks related to the development of EGS power 
sources are limited to deep drilling and fracturing of rock. Deep 
drilling technology has already been advanced a long way by the oil and 
gas industry. That know-how can be transferred to the geothermal 
industry and, with some additional work on better drill bits and faster 
drilling technology, we can assume that deep drilling will become a low 
risk aspect of EGS development. That leaves rock fracturing for 
reservoir development as the main risk area that requires advancement. 
The only way to reduce the development risk of rock fracturing is to 
create sites where the technologies can be advanced. It would be most 
desirable to provide proper investment incentives to private enterprise 
with funding support from the U.S. government.
    I mention the future of geothermal energy first because the United 
States will not get to the future of geothermal power production--a 
future that holds the promise of delivering clean, renewable energy to 
drive economic development and quality of life--without initially fully 
understanding the present geothermal condition.
    Geothermal energy is currently available with low technology risk. 
What is needed is a full appreciation of and recognizable way to 
finance the significant exploration and geologic risks related to this 
type of energy. Conventional and binary cycle geothermal energy under 
development and production today is based on geologic investigations 
that took place decades ago. What is needed to significantly move 
geothermal energy forward? Much more current and future expenditures on 
exploration and geologic investigations in the U.S. on public and 
private lands. Thermal gradient and geofluid exploration well drilling 
is desperately so that our nation can have harder information about the 
extent of geothermal resources suitable for power production.
    Geothermal projects are unique because of the early capital costs 
involved prior to project confirmation. The exploration technologies 
available require confirmation of the resource by drilling, and 
drilling geothermal wells is expensive, with costs ranging from a few 
million to over ten million dollars for a single well. Exploration is 
usually financed with high cost equity that takes a long time to be 
paid back. Exploration can take place up to a decade before any power 
is produced. The cost and risk of exploration for new geothermal 
resources is as high as or higher than those in the oil and gas 
industry, and the ability to attract capital to finance geothermal 
exploration is far more difficult.
    Once an oil or gas discovery well is drilled, it can immediately be 
turned into a profitable cash flow generator. Geothermal wells are just 
the beginning of significant capital investment. A geothermal well 
cannot become profitable without an additional well drilled for 
injection of the fluids back into the reservoir. Then there is a 
requirement to drill more well pairs, build a plant, construct fluid 
pipelines, make transmission connections and deploy system controls. 
After that, the project can begin to generate income. So the geothermal 
drilling risks need to be recognized in a much different way than oil 
and gas drilling.
    Robust investment incentives, grants, cost sharing and other 
methods that will reward risk takers for geothermal drilling for 
conventional and EGS geothermal development on Federal and other lands 
are needed to stimulate this area. I ask that Congress consider these:
    1.  Geothermal receives little support from the federal government 
relative to other forms of renewable energy and its untapped potential 
is vast. It is an indigenous and baseload energy supply with the 
highest availability of any renewable power source.
        a.  Nevertheless, the pace of growth of geothermal energy can 
        benefit greatly from federal government improvements and 
        deployment of human and other resources in federal land leasing 
        programs, specific technology commercialization support, and 
        the extension of critical high voltage transmission 
        infrastructure in the West.
    2.  The federal government should extend its support to geothermal 
energy with a multi billion dollar program over five years that 
provides:
        a.  An enhanced Investment Tax Credit (``ITC'') for all 
        geothermal drilling that is not offset against any other 
        federal credits. The ITC is intended to address a crucial and 
        very different set of risks and attract capital to the early 
        and highest risk stages of geothermal development involving 
        drilling and proving the productive capacity of the geothermal 
        resource.
        b.  Enhanced funding of $25 million to $50 million per year to 
        the Department of the Interior (BLM, U.S. Geological Survey and 
        Forest Service) to allow these agencies to accelerate land and 
        resource management plans, identify highest priority areas for 
        geothermal exploration and new lease auctions and clear 
        existing 10+ year backlog and institutional roadblocks to the 
        growth of geothermal exploration and project development.
        c.  Committed research funding of $75 million to $100 million 
        per year administered by the Department of Energy with research 
        focused on EGS, conventional geothermal resource discovery and 
        evaluation, drilling technology, and low to medium temperature 
        energy conversion (which will lead to additional applications 
        in waste heat to energy conversion at industrial sites)
    3.  A $1 billion to $2 billion dollar program in support of 
geothermal power over five years could generate:
        a.  Tens of thousands of megawatts of new geothermal power 
        generation over the next 10 years;
        b.  Tens of billions of dollars of capital investment in 
        renewable infrastructure;
        c.  Multibillion dollars in tax receipts associated with 
        profits on capital spent;
        d.  Important rural development and thousands of good permanent 
        jobs; and
        e.  Multibillion dollars per year of tax receipts associated 
        with operating profits.
Public Land Leasing System
    US Geothermal Inc. was not entirely in favor of the rule changes 
for federal geothermal land leasing resulting in a competitive auction 
environment. There are significant risks already embedded in the 
geothermal exploration and development effort and the new rules will 
add more risk for a developer. A leasing system similar to gold mineral 
exploration would have been more appropriate because of the 
intellectual and monetary capital required to advance geothermal lands 
to a stage where leasing or claim staking is merited. People will 
develop geologic ideas and theories about the possibility of the 
existence of a geothermal resource using their own capital and know-
how. When the new BLM leasing rules are completed, they will be 
required to offer those ideas to a system that will create a public 
auction of their ideas.
    I am not advocating changing the auction/leasing system now under 
way because it will mean that the entire process will again grind to a 
halt while rules are changed. BLM must keep pushing the current rule 
change process forward as efficiently as possible and make the new 
rules available so that people can plan accordingly. BLM should move 
ahead and set up the auction processes and get them going. It has been 
two years since any activity has resulted in new leases. We need to 
have access to the public lands so that risk expenditures can begin.
    The only prescription for this particular discussion I would offer 
is this: when changes are being made to a leasing system like this, it 
would be more productive to avoid creating a logjam by stopping the 
requests already in the system. In the case of geothermal development 
the protracted lead-time for permitting, discovery, development and 
production of power is already much longer than desired. With the BLM 
rules, we have added another two years or more to the already long 
timeline. Given that new rules will now exist, I think more human 
resources need to be committed to the BLM and Dept of Interior 
specifically for the geothermal energy lease situation to implement the 
changes and accelerate the process.
Production Tax Credit
    The Energy Policy Act of 2005 (EPAct) has already provided a 
significant and positive impact on the geothermal energy industry. To 
be specific, my company, US Geothermal Inc.'s Raft River geothermal 
project currently under construction in southeast Idaho is the first 
new installation that will qualify for the all-important Section 45 
Production Tax Credit (PTC). This PTC, previously available only to 
wind and closed-loop biomass projects, was finally made available to 
the geothermal energy sector as part of the 2005 EPAct. To qualify, US 
Geothermal Inc. scrambled to fast track the development of the Raft 
River project to be constructed and online before the end of 2007. This 
is because the 2005 EPAct initially set that 2007 limit on the projects 
that could qualify. The deadline was subsequently extended one year so 
that any project coming online before the end of 2008 now can qualify.
    This is good but geothermal projects require many more years to 
develop than most other renewable energy projects and I believe that 
the Production Tax Credit should be extended in a much more significant 
way for geothermal projects. Other renewable energy technologies have 
had the PTC for about a decade. Geothermal needs a similar period to 
benefit from a shift of capital investment into the geothermal sector. 
The PTC should be preserved for geothermal for a period of time at 
least equal to the time the tax credit has been available to the wind 
industry before any changes or reductions are made to it. This 
preservation of the existing PTC will allow capital planners to time 
needed to shift investment to the sector and gain the longer-term 
returns on investment needed to make the shift.
    I urge Congress to extend the credit five to ten years. We also 
urge Congress to allow geothermal and other baseload projects to 
qualify once they have binding contracts and are under construction.
    Build and sustain the momentum that EPAct has given geothermal 
energy and it will become a major U.S. energy source with an 
environmental profile we can be proud to promote.
Conclusion
    I thank the Subcommittee for scheduling this important hearing and 
inviting me to present testimony on our public lands' potentially vast 
stores of geothermal energy that can help our nation address is energy 
and environmental needs.
    The production tax credit is helping to spur renewed geothermal 
energy development. I urge Congress to support the BLM in its efforts 
to complete the new rules for public land leasing and provide the human 
resources needed to focus much more effort on geothermal energy. I also 
urge Congress to boldly support this domestic energy source by enacting 
a long-term extension of the production tax credit, modifying placed in 
service treatment for baseload power plants, and providing specific 
incentives for new geothermal exploration.
                                 ______
                                 
    Mr. Costa. Thank you, Mr. Kunz, for not only your testimony 
but your suggestions on how we might further increase 
opportunities for geothermal and for staying within the five-
minute rule. Our next witness on this panel--actually the last 
witness on this panel I believe--is Mr. Paul A. Thomas, who is 
a Public Policy Administrator with ORMAT out of Nevada I do 
believe.

 STATEMENT OF PAUL THOMSEN, PUBLIC POLICY ADMINISTRATOR, ORMAT 
                             NEVADA

    Mr. Thomsen. Thank you, Mr. Chairman, members of the 
Subcommittee. Just for clarification, it is Thomsen. But it is 
my honor to testify today on----
    Mr. Costa. Thomsen. I stand corrected for the record.
    Mr. Thomsen. That is all right.
    Mr. Costa. I do apologize.
    Mr. Thomsen. It is a unique spelling. I am here today on 
behalf of ORMAT Technologies, and by way of introduction, ORMAT 
Technologies is a New York Stock Exchange registered company. 
You can find us under the ticker ORA, and ORMAT is a unique 
geothermal company in the fact that we manufacture, design, own 
and operate geothermal power plants around the world. ORMAT is 
responsible for over 900 megawatts of generation throughout the 
world and 300 megawatts right here in the United States in the 
State of Nevada, California and Hawaii, in no particular order. 
To date ORMAT has arranged for over one billion dollars in 
geothermal projects and corporate financing.
    Now I want to talk about the impact of the EPAct. I had the 
pleasure of testifying to the Senate approximately a year ago 
on this issue, and at that time ORMAT agreed with GAO's report 
findings that it was simply too early to accurately assess the 
impact of the EPAct on the geothermal industry, and that was 
simply because at that time we only had one geothermal power 
plant that qualified for the production tax credit.
    The new regulations for BLM and MMS were still being 
drafted, and the DOE geothermal research program had just been 
zeroed out. Today, unfortunately, little has changed. Since 
that time we have only had one geothermal power plant--which 
happens to be ORMAT's--qualify for the production tax credit. 
As you heard from Mr. Hughes, BLM and MMS regulations are still 
being drafted and have yet to be released. And finally, the DOE 
geothermal research budget again has been zeroed out, and I 
believe reestablished at a mere $5 million.
    I agree with the Chairman that we can do better. That being 
said, ORMAT truly believes that the geothermal power can 
provide a significant domestic base load energy supply to this 
country, especially the PTC, the production tax credit, will 
enhance the ability of geothermal projects to compete with 
fossil fuel technology. The PTC, as I am sure you are all 
aware, can effectively lower the price of geothermal energy by 
approximately 1.97 cents a kilowatt hour, making more resources 
of geothermal energy cost competitive, enabling the full 
development of the 5,600 megawatts of near term economically 
viable geothermal resources in the western United States.
    The John Rishel amendment to the Geothermal Steam Act will 
simplify processes allowing the BLM and other Federal and state 
agencies to work in the spirit of that legislation, encouraging 
expanded geothermal production. And finally, the significant 
increase in funding authorized by the EPAct for DOE's renewable 
research programs including geothermal will facilitate 
collaboration between researchers and industry.
    For an example of what can be done, I turn to the fact that 
ORMAT has signed a cooperative research and development 
agreement with the Department of Energy to validate the 
feasibility of our proven technology in coshared production 
with oil production in the U.S. The project will be conducted 
at the Department of Energy's Rocky Mountain oil test center, 
known as RMOTC, near Casper, Wyoming, and it will use the ORMAT 
Organic Rankine Cycle power generation system to produce 
commercial electricity.
    ORMAT is willing to supply the ORC power unit as its own 
expense while DOE will install and operate the facility for a 
12-month period. ORMAT and DOE are sharing the total cost of 
the test and the study with ORMAT bearing approximately two-
thirds of the less than one million dollar investment.
    The information gathered from this project will have 
implications to some 8,000 similar type wells that have been 
identified in Texas by Professor Richard Erdlac at the 
University of Texas at Permian Basin and the U.S. Department of 
Energy geothermal research project office. And Lyle Johnson, 
the senior engineer at the Rocky Mountain oil test center 
stated that the introduction of geothermal energy production in 
the oil field will increase the life and productivity of those 
fields.
    While ORMAT recognizes that DOE research programs are 
outside the primary jurisdiction of this committee, last year 
the House passed the GEO Fund section of the DOER Act which 
looked at creating a funding mechanism for these types of cost 
shared pilot projects for coshared oil resources, and we hope 
this committee does the same.
    This is one small example of the substantial needs for 
improvements in geothermal technology, information and 
efficiencies for which Federal research is vital. Instead of 
seeking to terminate the geothermal research program, ORMAT 
agrees with the comments of Congressman Pearce that we should 
be working with industry, universities and a laboratory 
research community to develop the tools necessary to access 
this massive domestic base load resource base. Thank you very 
much.
    [The prepared statement of Mr. Thomsen follows:]

      Statement of Paul A. Thomsen, Public Policy Administrator, 
                           ORMAT Technologies

    Mr. Chairman, members of the committee, it is my honor to testify 
today on behalf of ORMAT Technologies.
    By way of introduction ORMAT Technologies, is a New York Stock 
Exchange registered company (symbol ``ORA''). ORMAT technologies 
develops, owns, and operates geothermal and recovered energy facilities 
throughout the world. ORMAT has supplied 800 MWs of geothermal power 
plants in 21 countries. Here in the United States ORMAT owns and 
operates 250 MWs of geothermal power plants in the states of 
California, Hawaii, Nevada, and we are pleased to be providing US 
Geothermal Company with the technology needed to bring Idaho's first 
geothermal power plant online. To date ORMAT has arranged over $1 
billion dollars in geothermal projects and corporate financing which is 
particularly significant since geothermal projects require the upfront 
financing of a continuous lifetime supply of fuel.
Now..on to the Impact of EPAct:
    I had the pleasure of testifying in the Senate approximately a year 
ago and at that time we agreed with the GAO report's findings that it 
was too early to accurately assess the impact of EPAct on the 
geothermal Industry at that time
    WHY? BECAUSE (i) only one operating 20 MW project, which happens to 
be ORMAT's, has qualified to date for the PTC; (ii) the new regulations 
to implement the Rishell Amendment to the steam act are still currently 
being drafted, and (iii) the DOE Geothermal Research Program funding 
for Fiscal Year 2007 was zeroed out by the administration, causing 
uncertainty and delay.
    Today, unfortunately, little has changed: (i) only one operating 20 
MW project, which happens to be ORMAT's, has qualified to date for the 
PTC; (ii) the new regulations to implement the Rishell Amendment to the 
steam act are still currently being drafted, and (iii) the DOE 
Geothermal Research Program funding for Fiscal Year 2007 was zeroed out 
by the administration causing uncertainty and delay.
The Potential Impact of EPAct:
    That being said, the Ormat truly believes that despite the fact 
that geothermal power currently provides approximately a significant 
portion of renewable energy produced in the United States, the 
geothermal provisions in EPAct, specifically the PTC will enhance the 
ability of geothermal projects to compete with fossil fuel 
technologies. The PTC can effectively lower the price of geothermal 
energy by 1.9c/KWh making more resources of geothermal energy cost 
competitive, enabling the full development of the 5,600 MW of near-
term, economically viable capacity that's considered available in the 
Western United States over the next decade. I would note that Ormat is 
in advanced construction of four plants which will qualify for PTC, two 
plants will be operated by third parties and two by Ormat.
    The John Rishel Amendment to the Geothermal Steam Act will simplify 
processes allowing the BLM and other federal and state agencies to work 
in the spirit of the legislation, encouraging expanded geothermal 
production.
    The significant increase in the funding authorized by EPAct for 
DOE's renewable research programs, including geothermal energy will 
facilitate collaboration between researchers and industry to harness 
the underutilized geothermal resources through out this country.
    For example ORMAT has signed a cost-shared Cooperative Research and 
Development Agreement (CRADA) with DOE to validate the feasibility of 
proven technology already used in geothermal and Recovered Energy 
Generation (REG).
    The project will be conducted at the DOE Rocky Mountain Oil Test 
Center (RMOTC), near Casper Wyoming, and will use an Ormat Organic 
Rankine Cycle (ORC) power generation system to produce commercial 
electricity. The test will use a commercial air-cooled, skid mounted 
standard design Ormat Organic Rankine Cycle system. Ormat will supply 
the ORC power unit at its own expense while the DOE will install and 
operate the facility for a 12- month period. Ormat and the DOE will 
share the total cost of the test and the study, with Ormat bearing 
approximately two thirds of the less than $1M total investment.
    Presently there are two large unutilized sources of hot water at 
the RMOTC Naval Petroleum Reserve No. 3, which produces water in excess 
of 190 degrees Fahrenheit and at flow rates sufficient for generation 
of approximately 200 kW. The project will consist of the installation, 
testing and evaluation of a binary geothermal power unit in the field 
near these hot water sources. The ORC power unit will be interconnected 
into the field electrical system and the energy produced will be used 
by RMOTC and monitored for reliability quality.
    Some 8,000 similar type wells have been identified in Texas, by 
Prof. Richard Erdlac of the University of Texas of the Permian Basin, 
and the U.S. DOE Geothermal Research Project Office. Ormat is now 
assessing the feasibility of utilizing some of these wells to support 
on site power generation by employing Ormat's factory integrated sub 
megawatt geothermal power units, based on the Company's proprietary ORC 
technology, which has been field proven in installations totaling 900 
MW world wide.
    While Ormat recognizes that DOE research programs are outside of 
the primary jurisdiction of this Subcommittee, last year the house 
passed a GEO Fund section in the DOER Act which looked at creating a 
funding mechanism for cost shared pilot projects looking at these types 
of projects. We believe it is important to recognize that EPAct 
included a significant increase in the funding authorized for DOE's 
renewable research programs, including geothermal energy.
    There are substantial needs for improvements in geothermal 
technology, information, and efficiencies for which federal research is 
vital.
    Instead of seeking to terminate the geothermal research program, 
the Department of Energy should be working with industry, the 
university, and the laboratory research community to develop the tools 
needed to access this massive resource base.
So how do we make this committee's will a reality?
    ORMAT believes that the Production Tax Credit should be extended 
five to ten years for geothermal facilities. This may be accomplished 
by qualifying geothermal facilities for the PTC before the operational 
placed in service date if: (i) the facility has a power purchase 
contract in place and (ii) has begun construction. This is not without 
precedent. For some other tax provisions with similar time-certain 
requirements, the law allows investments to qualify based upon having 
binding contracts in place that meet specified requirements.
    ORMAT believes that the BLM and other state agencies need to move 
quickly on the pending lease applications and complete regulations that 
will implement the new law. BLM needs to hold new lease sales in every 
western state. Let's implement the new law and urge Congress to 
actively oversee the process to ensure that all agencies keep the 
spirit of the legislation--to boost production of geothermal energy. 
Then and only after a thorough review of the results, should industry 
ask Congress to take action on any changes that may be needed.
    ORMAT believes that the full geothermal potential of the western 
United States can be brought online in the near term with the 
assistance of DOE. In the next decade ORMAT feels that the DOE research 
program can benefit by focusing its funding in the following areas: (i) 
improve accuracy of exploration technology to reduce risk; (ii) improve 
drilling technology to reduce risk and cost; (iii) improve 
identification, and characterizations of geothermal resource areas; 
(iv) share in the cost of exploration and drilling in these new areas; 
and (v) continue investigations into future technologies such as 
Enhanced Geothermal Systems (EGS), Oil and Gas applications, and Geo-
pressured systems.
    On behalf of ORMAT, I want to applaud this committee for its 
interest in the secure domestic baseload energy supply that is 
geothermal energy. We humbly realize that the decisions made by this 
committee impact our nations energy security. This concludes my 
prepared comments I am happy to respond to any questions the committee 
might have.
                                 ______
                                 
    Mr. Costa. Thank you very much. The testimony I think is 
very important, and we will reflect on that in terms of our 
questioning which we are coming up to at this point in time. 
Normally and for all who come and attend the various committee 
hearings and subcommittee hearings there is a process under 
which staff is notified for the purpose of photographing or for 
family purposes, and that did not occur in this particular 
instance but I am willing to ask unanimous consent to those who 
have identified themselves for that purpose and put you on 
notice at the same time, and if there is no objection we will 
allow you to continue to witness. Is there any objection?
    Mr. Pearce. No, I do not have an objection, Mr. Chairman, 
but I should get unanimous consent to be forgiven because I am 
the one that directed him from the elevator to here.
    Mr. Costa. Well thank you, I think.
    Mr. Sali. Mr. Chairman, I object. How about that? The 
forgiveness.
    Mr. Costa. OK. All right. We try to be accommodating here 
but please there are rules that we follow, and so for those who 
are interested in filming I mean there is a requirement and 
Members do have an opportunity to object if they want to. So 
anyway that is said. Let us get back to the questions.
    Mr. Hughes, you heard your fellow panel members testify, 
and it seems to me that notwithstanding your efforts that it 
seems to be that the ability to try to process these permits in 
light of the recent Act has not been as effective as one might 
hope, given the nature of the potential of this resource. Do 
you think that your systems, your database, your technologies, 
your staff that you envision to provide additional support we 
need to be looking at this in the Congress so that you can 
handle your renewable energy portfolio in an efficient and 
effective way?
    Mr. Hughes. Mr. Chairman, obviously we want to work with 
the Congress to monitor our resources to advance the cause of 
renewable energy. In the case of geothermal, I think a lot of 
frustration has occurred because we had to shut down our 
leasing program basically while we rewrote a new leasing 
program based on the Energy Policy Act of 2005.
    Mr. Costa. That was referenced in the testimony, and they 
say they are still looking for the rules. Where are we?
    Mr. Hughes. We should have the final rule out on the street 
within the next 30 days. It will be effective 30 days after 
that, and that should lead us to a lease sale this summer.
    Mr. Costa. For certain?
    Mr. Hughes. I am as certain as a bureaucrat could be, sir.
    Mr. Costa. Oh my gosh. Well we are going to want to try to 
keep you to that timeline.
    Mr. Hughes. But having said that, I think in the case of 
wind energy, for instance, in 2005 we completed a programmatic 
EIS which has helped us greatly. That EIS amended 58 land use 
plans across the country. It makes our ability to process wind 
energy projects much easier. We are looking to do that with 
geothermal. We should have a draft programmatic EIS on the 
street in December. We are also considering I guess looking at 
ways to improve our processing of solar applications at the 
same time, sir.
    Mr. Costa. So what you are saying is you are going to try 
to have an even-handed commonality of process for the various 
renewables?
    Mr. Hughes. Yes, sir.
    Mr. Costa. The issue was raised on the hearing Tuesday--you 
may have not been aware of it--but the impact on a footprint on 
various renewable production, and the cumulative or total 
impacts on habitat and other natural resources. Your approach 
is integrated and complementary in working together with states 
when you process these permits for renewable sources of energy?
    Mr. Hughes. Yes, sir. Part of the environmental analysis 
that we go through we work with state game and fish agencies, 
also the Fish and Wildlife Service, and also obviously with the 
companies to try and come up with ways to look at site issues, 
to address environmental issues that will impact wildlife or 
the land there. That is part of the process we go through. In 
many cases there are conflicting uses out there.
    Mr. Costa. We understand that, but you are committed to the 
process and making it seamless as possible?
    Mr. Hughes. Yes, sir.
    Mr. Costa. Let me move on. The area of transmission, of 
course, with geothermal as well as with wind, the transmission 
corridors are an issue. Finding the source of energy is one 
thing but getting that energy to where it is needed is another. 
You know that there is an effort with energy corridor 
designation process under Sections 368 as well as 1221 under 
the Energy Policy Act. I am interested, therefore, in what 
efforts you are pursuing with the Department to identify energy 
renewable resource zones so that we can maximize our 
opportunities for transmission to take place.
    Mr. Hughes. Yes, sir. We are part of an effort that is 
being led by Department of Energy, as you know, which had the 
lead on those energy corridors. We have been working closely 
with them. Initially there were concerns by a great number of 
people regarding where some of these corridors may go, existing 
designated areas that Congress had designated for special uses 
like parks, wildlife refuges, wilderness areas. We think we 
have worked out the vast majority of those issues. I think we 
are down to discussing maybe just about three wildlife refuges 
now where there may be issues involved that we try and 
mitigate.
    But you are correct, and I think the other witnesses will 
tell you the issue of building lines or infrastructure to get 
that energy out of these locations--because in many cases they 
are not near existing transmission lines. So that is a major 
challenge we have, and we look forward to working with the 
companies and then all interested groups to route those 
properly.
    Mr. Costa. My time has expired, but do you have a timeline 
on when you and the Department of Energy will be able to 
publish this effort as it relates to corridors for transmission 
purposes?
    Mr. Hughes. I would have to provide that for the record. I 
am sorry.
    Mr. Costa. Please do.
    Mr. Hughes. Yes.
    Mr. Costa. The gentleman from New Mexico.
    Mr. Pearce. Thank you. I thank the Chairman. Mr. Hughes, I 
would echo the Chairman's concern that we expedite access. If 
you were to give me an understanding of all say the wind, the 
geothermal projects to date that have been requested, how many 
of those are without some environmental objection? In other 
words, I think that is going to be the largest hindrance. So 
give me a feel if you would.
    Mr. Hughes. Mr. Pearce, through our NEPA requirements when 
we go project-by-project, obviously people come forward with 
issues. My guess is probably 95 percent of the projects have 
some issue, and that is the purpose of a NEPA evaluation is to 
identify the extent of that problem, and then define ways to 
mitigate it. Most of the time we are able to find ways to 
mitigate those impacts but whether it is in the case of wind 
power, it can be obviously the bat issue, birds, site issues.
    Mr. Pearce. Yes. But you have objections almost all the 
time, 95 percent of the time, and then we have to work through 
some process. OK.
    Mr. Hughes. That is correct.
    Mr. Pearce. Mr. Tester, when you say that we need to get to 
100,000 megawatts of power, I am trying to get that in my mind 
a fixed compared to the total power of the United States. I am 
not a college professor so you will have to help me here. I am 
trying to compare 100,000 megawatts to 3,660 billion kilowatts, 
and when I do the math--and you are going to have to verify 
it--I start crossing out zeros and I get a relationship of 
about 1 to 36,660. Is that correct?
    Mr. Tester. Mr. Pearce, I do not think that we are talking 
about the same exact thing. When I quoted a terawatt of 
capacity, a terawatt is a million megawatts.
    Mr. Costa. Bring the mic a little closer please.
    Mr. Tester. A terawatt is one million megawatts, and that 
is the capacity that the EIA reports right now for the United 
States. Of that capacity, we were viewing roughly 10 percent of 
it would have the kind of impact that would be comparable to 
what we have for all of our nuclear generating capacity today, 
slightly over 100 plants at about 1,000 megawatts a plant, and 
all of the hydro. If we consider our conventional hydro and 
pumped hydro, I believe the number comes slightly over 100,000 
megawatts. So that is where we came up with the 100,000.
    Mr. Pearce. OK. But the 100,000 megawatts is still a very 
small percent of the overall base load for the U.S.
    Mr. Tester. It seems fairly large if we compare it with 
where we are now which is 3,000.
    Mr. Pearce. But when you consider coal and natural gas and 
all the other sources of energy. Yes, it is a tremendous 
increase in what we are doing now, and I support that 100 
percent. I am just trying to get in mind----
    Mr. Tester. Mr. Pearce, it would be comparable to what all 
of the hydro capacity we have now in the United States. I think 
that is a fairly large component of our generating capacity. 
The nuclear capacity, it is also exactly the same as that.
    Mr. Pearce. OK. Thank you. Mr. Hughes, if we are to take 
that consideration, you have heard the discussion, how possible 
is it to get all those projects permitted? In other words, we 
have already talked about the fact that 95 percent are going to 
meet some resistance. How feasible is it to get that many 
projects permitted and get them online within the technology 
even that exists?
    Mr. Hughes. It will present a tremendous challenge to us.
    Mr. Pearce. OK. That is enough. In other words, we are 
talking about tremendous challenge. We are not talking just 
trying to get through it. Mr. Kunz, what is the cost of 
renewable per KW more or less? Just range.
    Mr. Kunz. It is a function of largely an exercise in 
amortizing the capital----
    Mr. Pearce. Approximately.
    Mr. Kunz. Roughly $60 a megawatt, $65.
    Mr. Pearce. So six?
    Mr. Kunz. Six cents.
    Mr. Pearce. Six cents per KW?
    Mr. Kunz. Yes.
    Mr. Pearce. Three cents more or less for hydroelectric. Six 
cents. What is nuclear? What does nuclear cost? About 7 to 10 
cents on coal fired.
    Mr. Kunz. So it is comparable.
    Mr. Pearce. OK. Comparable. What kind of temperature do we 
have to get to? What kind of temperatures work for geothermal?
    Mr. Kunz. Right now we are exploiting a 280 degree 
Fahrenheit resource in Idaho, and it is a mile below the 
surface of the earth. So that is----
    Mr. Pearce. Now sometimes when we drill oil wells, we get 
very hot oil, very hot water. Is there ever a chance of 
colocating? In other words, using that water that is coming up 
to generate?
    Mr. Kunz. Absolutely. They are called geopressured systems 
in Texas and other areas like that. It happens to be quite a 
briny, nasty solution that has lots of dissolved solids. So you 
have an issue to deal with there.
    Mr. Pearce. Yes, it is. Cleanliness. OK, Mr. Chairman. I 
see my time is out. It looked like maybe Mr. Thomsen or Mr. 
Tester wanted to say something.
    Mr. Costa. Sure. Quickly.
    Mr. Thomsen. Well that is exactly the type of project that 
ORMAT is doing at the Rocky Mountain oil test center, taking 
that hot water and running it through our Organic Rankine Cycle 
system to draw out that extra heat from that process. So we can 
send you more details on that if you would like more 
information.
    Mr. Costa. Thank you. The gentleman from Rhode Island, Mr. 
Kennedy.
    Mr. Kennedy. Thank you, Mr. Chairman. Welcome. I am 
interested in hearing about this notion of how you guarantee 
the long-term sustainability of geothermal when so much of the 
science is predicated on such a mix of factors, stimulating 
large rock volumes, the connectivity of reservoirs, the 
fluidity, the permeability, the flow. I mean it seems as though 
you have got to have not only the right heat but it has to be 
the right flow of fluids, and it has to be the right chemical 
mix, but it cannot be too hot. But it has got to have the right 
pressure, and it cannot be too cold, and if you draw too much 
out it might reduce the pressure.
    I mean it just seems to me you are working with a bag of 
tricks here, if any one of which comes undone, you are 
jeopardizing the whole mix. So how do you guarantee when you 
drill this thing and you have it online that you are going to 
be able to sustain a nameplate capacity?
    Mr. Thomsen. If I can, Mr. Chairman, through you to Mr. 
Kennedy, you have brought up some very crucial points, and 
first I would like to separate the idea of the resource 
definition and maintenance and the equipment needed to produce 
the electricity. ORMAT has designed and manufactured the 
equipment for over 40 years. We are very confident with the 
technology there.
    Maintaining the reservoirs is a key component to adding 
reliability to the geothermal process. Our technology is what 
we call a closed loop system. The water we pump up to draw the 
heat from we reinject to the same reservoir. We let it reheat 
and then pump it back up again, and we have been doing this in 
the city of Reno, Nevada for over 20 years. We have been able 
to maintain the reservoir through heavy duty geology, 
monitoring those temperatures, making sure we do not draw up 
too much water, making sure we do not reinject too close to the 
hottest parts of those reservoirs so that we can maintain that 
heat and produce the same amount of power.
    So with the closed loop system, we are getting much, much 
better at doing exactly that, monitoring the amount of heat we 
are using, the amount of flow that is going through our system, 
and that we are reinjecting back into the earth. The technology 
is pretty mature in that area. In our technology we heat a 
working fluid that then vaporizes and turns the turbine. That 
working fluid that we use has very specific characteristics 
that we can then monitor and maintain.
    So we are taking out a lot of those aspects of risk, and 
those are the key components to a successful geothermal 
project. Finding those resources, maintaining those resources 
is the key component, and that is why we are here today saying 
we need a robust subsurface DOE budget to help us find 
additional resources like that that we can maintain and 
utilize.
    Mr. Kennedy. Explain the talk about similarities in 
hydrothermal. What are those in terms of technology and 
capturing this power base?
    Mr. Thomsen. I can, Mr. Chairman through you and to Mr. 
Kennedy. The two types of technology in California for example 
you have the geysers which were an incredibly hot resource that 
we were able to drill to.
    Mr. Kennedy. Right.
    Mr. Thomsen. When the water comes up, it reacts with the 
atmosphere and the change in pressure, and it starts to boil, 
and then we simply put a steam turbine on that and are able to 
produce power. Incredible amounts of power using an incredibly 
hot resource that as it comes up reaches the boiling point of 
212 and beyond.
    The resources that ORMAT tends to utilize are temperatures 
much lower than that at the surface. We like to pump up water 
that is about at depth 300 degrees Fahrenheit. We keep it in a 
closed system. Let me go back to the first system. The flash 
system then turns to steam, turns the turbine, and then goes 
into the atmosphere, to then come down as rain, recharge and to 
be used again.
    The closed loop system that we have we pump up the water, 
we keep it under pressure. There is no boiling. There is no 
sediment that comes out of it. It heats an intermediary working 
fluid that does the vaporization and turns the turbine. We take 
that water and reinject it back into the earth to preserve that 
reservoir. We do not have any evaporation. We do not have some 
of the environmental concerns of what happens when hot brine 
comes up and mixes with oxygen and things like that. Those are 
the two basic designs there.
    Mr. Kennedy. Very good. Well thank you very much for those 
explanations.
    Mr. Costa. The gentleman's time has expired but we will 
allow an opportunity to come back if you choose. Mr. Sali, the 
gentleman from Idaho.
    Mr. Sali. Thank you, Mr. Chairman. Mr. Kunz, I was reading 
your material, and you are talking about the leasing system and 
while you are not advocating that we change anything right now 
because it will only slow things down, if I understand the 
system that exists today the BLM has gone out and put together 
their idea of what resources are out there, and they are 
offering those up for bid. But you are asking for a system that 
is similar to gold mining where people would go out and stake a 
claim, a certain area and whatnot. Do I understand that 
correctly?
    Mr. Kunz. Well almost, Congressman. Today if you know of 
some lands that you want to lease from the BLM, you file 
applications for that land. So you have some intellectual 
capital knowledge about why you would want to have that land. 
You submit it to the BLM, and then they conduct an auction 
process so that you can acquire those leases by bidding.
    Mr. Sali. And your idea would be just if you have the 
information about what might be there, similar to a gold mine?
    Mr. Kunz. Exactly.
    Mr. Sali. If you believe there is something there----
    Mr. Kunz. You go stake it.
    Mr. Sali. You go stake it.
    Mr. Kunz. There is enough risk in this whole equation as it 
is but as I said in my testimony, I am not advocating any 
changes. I just wanted to make our personal views known on that 
particular topic.
    Mr. Sali. You are not advocating a change now.
    Mr. Kunz. No.
    Mr. Sali. But you would encourage Congress to move that 
direction or the agency to move in that direction. Is that a 
fair statement?
    Mr. Kunz. Well only if it meant that it did not create any 
delays in the current procedures.
    Mr. Sali. Right. Mr. Hughes, why did we not do that?
    Mr. Hughes. We think the system we are setting up through 
our regulations is what the Energy Policy Act directed us to. 
We also have an obligation under the Federal Land Policy 
Management Act for a fair market return for resources that are 
out there. That is why I think this year we are going to start 
a programmatic EIS which will include an assessment of areas, 
reassessment of areas that I think was done in 1979, and then 
updated with some maps in 2004 but working with USGS, Forest 
Service and ourselves to go out there and so we will know where 
those areas are. But we think there is a public interest in the 
way we have set it up. That we satisfy the public interest in 
doing that.
    Mr. Sali. Well Mr. Kunz and Mr. Thomsen have described an 
industry that requires a really significant amount of risk 
getting in on the front end, and if I understand Mr. Kunz' 
complaint, basically he is saying he can go find a place where 
he believes there is a resource, and when that is put out for 
bid, he could essentially lose that part of his investment if 
he does not get the lease. How is that fair to the people who 
are involved?
    Mr. Hughes. Our position is it is not fair to the American 
public. That we have a public interest to protect.
    Mr. Sali. But can you not protect that through the lease 
though and the amount that they pay for the lease?
    Mr. Hughes. Again, we have people competing in the 
marketplace to bid on those leases, and that is what we are 
required to do to protect the public interest.
    Mr. Sali. So you could not end up with a protection of the 
public interest through the leasing terms and basically these 
people if they go out and believe there is an area that could 
be exploited for geothermal energy, if they do not get the 
lease then they are just out of luck?
    Mr. Hughes. That is the way we run our oil and gas program 
where companies nominate those parcels for lease, and then they 
have to go and compete with other companies.
    Mr. Sali. And you do not believe that there is a difference 
in that risk, Mr. Hughes?
    Mr. Hughes. There may be a difference there, but again we 
have a public interest standard that we have to protect the 
public's interest to get the proper revenue for the people, and 
we would do that through a bidding system where there is a 
competitive bid in the marketplace.
    Mr. Sali. Thank you, Mr. Chairman.
    Mr. Costa. Thank you. Mr. Hughes, I am told--and I do not 
know if it is applicable or not--that the example that Mr. Kunz 
used with regards to adjacent property in which they have 
already fulfilled the process that there is no provisions to 
allow without going back through the competitive bid. Under the 
process where you have coal use in that area, if it is adjacent 
under that current process as I again have been told--and I do 
not pretend to understand it completely--that is not required. 
Would you think that such a change should be considered 
applicable for geothermal?
    Mr. Hughes. Perhaps I misunderstood the discussion we just 
had. I was under the assumption that we were talking about an 
area where there is no geothermal, and somebody wants to stake 
it. I am not sure. I would have to discuss this with our folks 
how we have handled that in the regulations.
    Mr. Costa. You are not sure. But I think that is something 
that we should look at. The Subcommittee should look at.
    Mr. Hughes. Right. I think we would be willing to look at 
that.
    Mr. Costa. OK. All right. We will take Mr. Kunz admonition 
that he does not want us to have you rewrite the rules. We are 
not suggesting that.
    Mr. Hughes. Right.
    Mr. Costa. OK. Mr. Tester, you I think with your 
technological background indicated what I believe are under the 
category of good news potential that is available with regards 
to geothermal but first of all you picked the year 2050, if I 
understand you correctly.
    Mr. Tester. Correct.
    Mr. Costa. Which is 40 years away or a little more, and I 
know it is important we think long-term for the purposes of our 
discussion but in terms of today's geothermal generation what 
might be possible with the current technology and the 
technologies that you see that are currently evolving in a 
shorter timeframe, like 2015. I think I cited in my opening 
statement the Western Governors' Association targeted goals on 
2015 and 2020.
    Mr. Tester. The near term hydrothermal certainly is a large 
element of the potential that we would have in this 15-year 
period for sure. If you look at the curve that we provided in 
our written testimony that I would be happy to show you, Mr. 
Chairman, if you like at this moment, we were not really 
talking about EGS coming online in terms of any impact until 
out about 15 years or so.
    Mr. Costa. Why is that?
    Mr. Tester. Well because there has to be a period of time 
where you would demonstrate this technology. Going back to Mr. 
Kennedy's points earlier, the verification of connectivity in 
the subsurface is an important development issue that needs to 
be worked out. The 30 years or so of testing that has occurred 
already around the world has established major elements of that 
but there still are additional thresholds that have to be 
achieved, a factor of two or three let us say in well 
productivity but in order to bring down risk you are going to 
have to operate those field sites for a period of time.
    So what we were trying to do was to superimpose what would 
be a realistic research and development and deployment scenario 
on where we are now with the zero budget to where we might be 
15 years from now, and if you also continue on that curve you 
will see that after about a 15-year period the costs associated 
with EGS would be in line with the current energy prices that 
we have for all electricity.
    Mr. Costa. For all electricity what date did you say 
because I was----
    Mr. Tester. Well 15 years from the starting point of the 
program. So if we started it today, it would----
    Mr. Costa. Geothermal would be cost effective?
    Mr. Tester. No. This is not geothermal. This is the more 
advanced, enhanced geothermal.
    Mr. Costa. Enhanced geothermal?
    Mr. Tester. Right. Now to come back to your earlier point 
though about hydrothermal, one of the issues that we raised in 
this analysis was the need for reenergizing the resource 
assessment elements carried out by the USGS and others. That 
would have to be done as well starting now, not waiting 15 
years.
    Mr. Costa. So you think that needs to be expedited?
    Mr. Tester. Absolutely. Right. I think there----
    Mr. Costa. And listening to what Mr. Hughes said, 
promulgation of rules to be published in 30 days, and then 30 
days for a comment period, and then the following lease, based 
on that timeline different regions of the country, how much 
different sites do you think need to be developed in the next 
10 to 15 years to prove the reduced risk and then therefore 
lower the development costs?
    Mr. Tester. Our recommendation was to first go to high 
grade EGS sites which we refer to in our report as targets of 
opportunity. They would be on the margins of today's most 
characterized systems that we have in place, the hydrothermal 
systems that we have discussed this afternoon. Much of the 
infrastructure would be in place. A lot of information about 
the geology is known. Water issues and other issues are well 
manageable at those sites, and we recommended five or six of 
those in our assessment over this period of time.
    Mr. Costa. And those five or six sites would be all 
located. I mean each site would be within a precise area. How 
much megawatts of power would you anticipate coming from a 
site?
    Mr. Tester. OK. During that early period, we would be 
talking about a typical sized plant in the range of maybe 20 to 
50 megawatts per plant. So you can take that factor and 
multiply it by five or so. So these would be small plants. This 
is not to compete necessarily with where we might want to be at 
the end of 2050 but it is to establish the base of technology 
for going forward.
    Mr. Costa. OK. My time has expired. The gentleman from New 
Mexico.
    Mr. Pearce. Thank you, Chairman. Mr. Tester, now this USGS 
requirement under the 2005 Energy Policy Act to assess the 
geothermal, do you think that is going to be adequate to tell 
us what we need to know about geothermal systems resource 
assessment?
    Mr. Tester. I am not familiar with the details of it but 
our feeling was that a serious geothermal assessment of the 
United States has not been carried out for roughly 30 years. 
The last major study published by the USGS was in 1979. We feel 
that a lot of technology has been developed certainly during 
that period of time that would alter the amount of near term 
geothermal that could be obtained and deployed. I think the 
Western Governors' Conference recently looked at this and would 
agree with that. The people within the USGS certainly feel that 
it needs to be done, and I think we have to get started soon on 
it.
    Mr. Pearce. Does EPAct require a new assessment, Energy 
Policy Act?
    Mr. Tester. Yes.
    Mr. Pearce. Yes. I think the Energy Policy Act.
    Mr. Hughes. Yes, I think that correct.
    Mr. Pearce. Yes. So it is required already. Mr. Hughes, if 
I were going to look at the footprint of a well drilled for 
geothermal purposes, what size casing do they generally run in 
a geothermal well? Do they actually drill a well down to 3 to 
8, 10,000 feet? Do you know what size casing? Mr. Kunz, you may 
be a little bit better or Mr. Thomsen.
    Mr. Kunz. We are just completing drilling some wells in 
Idaho that are about a mile deep, and the casing starts at 
about 28 inches in diameter at the surface. That is the collar, 
and then by the time we get to that bottom depth we are still 
at about 13 and seven-eighths inches.
    Mr. Pearce. That is a big bit. Mr. Hughes, then so the 
footprint on public lands is going to be very similar or maybe 
even a little larger than for an oil well for each geothermal 
well?
    Mr. Hughes. Yes.
    Mr. Pearce. Very similar.
    Mr. Hughes. For a thousand megawatt power generation, our 
figures show we think a geothermal footprint would be about 
7,000 acres. That would compare to oil about 1,700 and natural 
gas about 3,700 acres.
    Mr. Pearce. And if we----
    Mr. Hughes. The original footprint.
    Mr. Pearce. Sure. I do not know exactly which one of you 
might be best qualified to answer this but if we are going to 
extract tremendous amounts of geothermal, what kind of spacing 
are we going to have to have between wells? Professor Tester, 
that might be you. In other words, what is it going to look 
like? What is the land going to look like when we get a serious 
field that is extracting geothermal?
    Mr. Tester. Absolutely. Let me try to answer this in 
several levels of detail. The first is----
    Mr. Pearce. Not too many levels. I have only about two 
minutes.
    Mr. Tester. No. I will be short here. The first is we 
looked at the footprint of geothermal over the full fuel cycle 
or lifecycle of this and compared it with other electrical 
generating systems that we have in the U.S., and if you look at 
coal or others, I think you will see that the footprint is 
quite favorable.
    Another feature that is important here I think in the 
overall impact is the capacity factor geothermal plants are 
very high. Over 90 percent or so is sort of the experience 
worldwide with this. That is an important issue with respect to 
the impact it might have in terms of net generation of not just 
kilowatts or megawatts but megawatt hours or kilowatt hours. 
But each site is going to be slightly different in terms of the 
spacing of wells both injectors and production wells.
    We have a lot of experience with that in the hydrothermal 
development in this country and in other countries, and our 
feeling is that that is of the order of--I can give you the 
exact figures for the record, and I would be happy to provide 
that. It is in the report, and it maps out over a range that I 
think is quite reasonable compared to what we have for 
alternatives.
    Mr. Pearce. OK.
    Mr. Kunz. Mr. Pearce, I might add just one thing. I had a 
letter drawn up to me from the Geothermal Energy Association on 
this very topic, and I would like to submit it for the record.
    Mr. Pearce. With unanimous consent.
    Mr. Costa. Without objection.
    Mr. Pearce. To put that in.
    Mr. Costa. Yes, thank you.
    Mr. Pearce. Mr. Thomsen, these are pretty high risk 
ventures though. Am I correct that if you drill a geothermal 
well you can fail just as easily as you can fail at an oil 
well?
    Mr. Thomsen. Well no. I think you have a different type of 
risk in the fact that if you have an oil well that you have had 
a water break and it is already producing water, you can 
evaluate that resource because it is there at the surface and 
so forth. The Rocky Mountain oil test center project for 
example they kind of knew the temperature, gradient and the 
flow rate that they had. We could evaluate that and base our 
decisions on that.
    When we look at a green field for a new geothermal project, 
it takes approximately two to five years for development to 
have our geologists evaluate the resource, do the drilling that 
is required, and then you are absolutely correct. There is a 
high capital cost to do that initial drilling and large amounts 
of risk. The EGS that you have heard about today as well hopes 
to limit some of that risk. If you find a hot resource that 
maybe does not have the medium, the water or brine, you can 
maybe then add that to the system. All of these technologies 
are tempting and doing it effectively reducing the blind risk 
of just drilling for the very first time somewhere.
    Mr. Pearce. You bet. Thanks. I appreciate it, Mr. Chairman.
    Mr. Costa. Just one quick question, Mr. Kunz, and we will 
go to the next panel. Mr. Tester has described a vision of 2050 
and then in a more reduced time period of potential megawatt 
production and he used another term-of-art. Do you agree with 
those potential as hydrothermal in terms of the totality of its 
source of energy for the U.S. over the long term?
    Mr. Kunz. I do. I think that the shorter term hydrothermal 
possibilities say over the next 5 or 10 years is on the order 
of about 5,000 to 10,000 megawatts, and then from there it 
depends on what we do today to grow beyond that in terms of 
pursuing EGS and so on.
    Mr. Costa. Well thank you and your comments, suggestions 
about credits we will take into account, and we will move on to 
the next panel. Thank all of you for your good testimony and 
for your patience, and the next panel is going to have to bear 
with us I think in a similar fashion, although we want to get 
started because again time is valuable for all of us. But we 
have been notified that we will have to go for a vote here some 
time in the next 10, 15-minute period but during that time let 
us begin on the second panel.
    We have Mr. Swisher, Executive Director of American Wind 
Association. Mr. Robert Gough, Secretary for the Intertribal 
Council on Utility Policy. Ms. Lynn Jungwirth, Executive 
Director, Watershed Research and Training Center. Mr. Joshua 
Bar-Lev, Vice President Regulatory Affairs, Bright Source 
Energy. And Mr. Will Lutgen, Executive Director for the 
Northwest Public Power Association.
    I will do as we did with the other panel, and you will have 
to go with the flow here my friends, and that is we will open 
up with the first witness, and when they tell us we have about 
five minutes left to go and vote, we will recess temporarily 
and then come back. So with that said, let us begin with our 
first witness, Mr. Randall Swisher, the Executive Director of 
American Wind Energy Association. Bring that mic a little 
closer please so that we can all hear you.

STATEMENT OF RANDALL SWISHER, EXECUTIVE DIRECTOR, AMERICAN WIND 
                       ENERGY ASSOCIATION

    Mr. Swisher. Thank you for the opportunity to address you 
today. My name is Randall Swisher, and I serve as Executive 
Director for the American Wind Energy Association, the national 
trade association for the U.S. wind energy industry, based here 
in Washington, D.C. I am here to discuss the topic of wind 
energy and Federal lands.
    In terms of the current status of the wind industry, the 
wind industry is one of the fastest growing sources of 
electricity generation in the world with a worldwide average 
annual growth rate of 36 percent since 1994 which shows no sign 
of diminishing in the foreseeable future. U.S. wind electric 
generation has more than quadrupled in the last six years.
    The potential for U.S. jobs is enormous. In fact, before 
the Senate Finance Committee last week the President of GE 
Energy stated we believe wind and solar energy are likely to be 
among the largest sources of new manufacturing jobs worldwide 
during the 21st century.
    In terms of the potential for wind power in the U.S., the 
wind resource in the U.S. is almost unlimited. In fact, U.S. 
winds could generate more electricity in 15 years than all of 
Saudi Arabia's oil without being depleted. For a number of 
years the wind industry has had a goal of 100,000 megawatts of 
wind developed in the U.S. by 2020. That would represent about 
6 percent of the nation's electricity. That target is 
achievable.
    In fact, at this point it is clear that there are no 
technical barriers to wind energy providing as much as 20 
percent of the nation's electric power which is how much wind 
is currently providing to meet Danish electricity needs. The 
environmental payoff would be huge. According to our 
preliminary analysis, if wind were to provide 20 percent of 
U.S. power generation by 2030, it would avoid over 15 percent 
of expected power generation CO2 emissions.
    In terms of major challenges facing the wind industry to 
achieve that kind of potential, the wind industry's future in 
this country is bright but one barrier--and I appreciated the 
Chairman's reference to transmission. That is the single 
largest constraint facing this industry in the future. But one 
barrier the U.S. will have to address to achieve its wind 
potential is the lack of a predictable permitting regime.
    In terms of wind development on public lands, the U.S. is 
blessed with a huge expanse of public lands. Many of those 
lands, especially in the western U.S., are appropriate for wind 
development and have a significant wind resource as do the 
offshore areas, particularly the northeast coast. The wind 
energy industry has a long relationship with the Bureau of Land 
Management going back to the 1980s when some of the nation's 
first wind projects were developed in the southern California 
area near Palm Springs and Tehachapi.
    BLM managers in that region took the time to understand the 
industry and how best to oversee the development process on BLM 
land, and in the last five years as wind development began to 
spread across the country, it became clear that the effort was 
needed to share lessons learned with public land managers that 
had little or no experience with wind development.
    BLM initiated--as was mentioned earlier--a programmatic 
environmental impact statement in 2004 that was intended to 
address many of the issues that were generic to wind 
development. The objective was to analyze many of wind energy's 
impacts broadly so that site specific environmental assessments 
could deal with the particular issues at a site. The wind 
industry was consulted through the public process, and the end 
result was positive. Best management practices were established 
as part of the process. Approximately 5,000 people participated 
in the scoping process which addressed BLM lands in 11 states.
    As of June 2005, approximately 500 megawatts of wind 
capacity has been installed under right-of-way authorizations 
administered by the BLM with about the same amount of capacity 
approved for construction but not yet built. We are 
conservatively expecting around 2,000 megawatts of additional 
wind development on BLM lands over the next decade, and the 
potential is considerably larger. We applaud BLM for their 
consultative approach. It clearly provides the best outcome for 
all parties involved, and an agency cannot effectively regulate 
without understanding the business practices involved, and BLM 
took the time to achieve that.
    How is the wind industry applying some of the lessons 
learned in the development process? Collaboration is the answer 
with public agencies and nonprofits. Two examples are the bats 
and wind energy cooperative and the grassland species 
collaborative. There are a number of specific recommendations 
in my testimony, written statement, related to BLM, and I will 
ask that that be entered in the record. Thanks for this 
opportunity to be with you.
    [The prepared statement of Mr. Swisher follows:]

           Statement of Randall Swisher, Executive Director, 
                    American Wind Energy Association

    Chairman Costa and members of the subcommittee, thank you for the 
opportunity to address you today. My name is Randall Swisher and I 
serve as Executive Director for the American Wind Energy Association 
(AWEA), the national trade association for the U.S. wind energy 
industry, based here in Washington, D.C.
    My testimony will cover four major topics:
    1.  The current status of the wind industry in the U.S.;
    2.  The potential contribution of the wind industry to U.S. 
electricity needs over the next few decades;
    3.  The major barriers to achieving that potential, and
    4.  The role of federal lands in achieving that potential, as well 
as the experience of the wind industry in working with agencies under 
this Committee's jurisdiction.
Current Status of the Wind Industry
    The wind industry is one of the fastest growing sources of 
electricity generation in the world, with global manufacturing capacity 
for wind turbines having expanded from annual production of 368 
megawatts (MW) in 1994 to 11,200 MW in 2005. This worldwide average 
annual growth rate of 36 percent shows no sign of diminishing in the 
foreseeable future, and has been driven by a number of factors, 
especially competitive economics, the environmental benefits of wind, 
and utility interest in being able to rely upon a diverse mix of 
electric generating options.
    After many years of limited growth through the 1990s, the wind 
industry has begun to come of age in this country, and U.S. wind 
electric generation has more than quadrupled in the last six years. In 
fact, in the last two years, more new wind generating capacity (4,885 
MW) was installed than in the industry's first 20 years (1981-2000).
    The U.S. wind energy industry enjoyed a record year in 2006, 
installing 2,454 megawatts (MW) of new generating capacity, making wind 
one of the largest sources of new power generation in the country and a 
mainstream option with which to meet growing electricity demand. Last 
year the industry grew 27 percent in the U.S., bringing the industry to 
a total installed capacity of 11,603 MW at the end of 2006, with 
commercial-scale projects spread over two dozen states. Energy 
production will vary from site to site based upon the strength of the 
wind resource, but on average, one megawatt of wind power produces 
enough electricity to serve 250 to 300 homes each day.
    This year will be another record, with approximately 3,500 MW of 
new wind capacity going on line. In fact, since 2005, the U.S. has held 
the status of being the largest single annual market in the world for 
new wind generating capacity.
    Despite the rapid growth in the market for wind, we have not taken 
full advantage of the economic development potential of this 
technology. A lack of consistent policy support in the U.S. has been a 
much greater deterrent to investment in manufacturing than in project 
development. Because of the policy uncertainty, manufacturers have been 
slow to invest in U.S.-based turbine manufacturing capacity, and only 
one of the top ten wind turbine manufacturers in the world is based in 
this country. Although the U.S. was a pioneer in wind technology, 
establishing the world's first wind farms in California in 1981, tax 
incentives for wind power were suddenly dropped in 1986, and most of 
our nascent manufacturing capability disappeared at that time. We 
largely ceded policy leadership and market dominance to European 
countries. Today, about 70 percent of the world's installed wind 
capacity is to be found in Europe, and seven of the ten leading global 
turbine manufacturers are based in the three countries of Denmark, 
Germany and Spain.
    But last year's extension of the wind production tax credit through 
the end of 2008 provided an important signal to the market, and because 
of a strong interest among U.S. electric utilities in wind, and this 
country's almost unlimited wind potential, there is movement to 
establish manufacturing facilities in the U.S. The potential for U.S. 
jobs is enormous. In fact, last week, before the Senate Finance 
Committee, Jon Krenicki, President of GE Energy stated: ``We believe 
wind and solar energy are likely to be among the largest sources of new 
manufacturing jobs worldwide during the 21st Century.''
    New jobs can be expected from other sources besides major turbine 
manufacturers such as GE. Manufacturers of components such as wind 
turbine towers, blades and generators, for example, will also provide 
an enormous number of jobs. In addition, rural America will be rewarded 
with a steady number of stable, well-paid jobs in operations and 
maintenance from the wind power plants popping up throughout the Great 
Plains and other rural areas.
    As the U.S. market for wind has expanded, it has attracted well-
capitalized global energy and financial companies with the capability 
to continue driving the industry's growth--manufacturing companies such 
as General Electric, Siemens and Mitsubishi; project developers or 
owners such as FPL Energy, Shell, BP, American Electric Power and AES; 
and international companies such as Babcock & Brown, Iberdrola and 
Electricite de France.
    The surging interest in wind power among electric utilities has 
been sparked in part by increasingly strong technical performance by 
modern wind turbines. Technology has been steadily improving, including 
rotor blade airfoils specially designed for wind turbines, variable-
speed generators, power electronics and sophisticated computer modeling 
of design changes. The scale and efficiency of wind turbines has 
progressed markedly, and new, larger turbines (1 MW to 3 MW each) 
generate 120 times as much electricity as 1980s models at one-fifth the 
cost per unit of output. Performance data from almost 5,000 MW of 
operating wind turbines in the Midwest shows energy production per 
turbine almost 50 percent higher in 2005 than from turbines deployed in 
the years prior to 1999.
    Owing to land constraints, Europe has been the leader in regard to 
offshore wind development. We expect offshore wind development to play 
a role in the U.S., but because it is more expensive compared to land-
based development, offshore wind, outside of a few pioneering projects, 
won't see significant development here until after 2010. Nonetheless, 
the Department of Energy estimates 900,000 MW of wind energy potential 
is located off the east coast of the U.S., strategically located near 
many population centers.
Potential for the Wind Industry in the U.S.
    The growth in the wind industry in the last few years has lead to a 
more robust vision of the potential role wind could play in the U.S. 
electric industry.
    The wind resource in the U.S. is almost unlimited, with endless 
expanses of plains and agricultural land well suited for wind 
development. In fact, U.S. winds could generate more electricity in 15 
years than all of Saudi Arabia's oil, without being depleted.
    For a number of years, AWEA has had an established goal of 100,000 
MW of wind developed in the U.S. by 2020. That would represent about 6 
percent of the nation's electricity. We believe that with proper policy 
support that this is a realistic and achievable goal, building upon the 
current installed capacity in this country of about 12,000 MW.
    Over the last six months, the American Wind Energy Association has 
been working in cooperation with a number of other entities--the U.S. 
Department of Energy, the National Renewable Energy Laboratory, Black & 
Veatch, and other organizations--to develop a more thorough 
understanding of how much of America's electricity could be generated 
from the wind within the next few decades.
    Specifically, the organizations are evaluating the costs and 
benefits of wind providing 20 percent of America's electricity by 2030, 
as well as the major barriers that would need to be overcome. The 
analysis is yet to be completed, but it is clear at this point that 
there are no technical barriers to wind energy providing as much as 20 
percent of the nation's electric power, which is how much wind is 
currently providing to meet Danish electricity needs.
    The environmental payoff would be huge. The existing U.S. wind 
turbine fleet (11,603 MW) displaces more than 19 million tons of carbon 
dioxide each year, based on the current average U.S. utility fuel mix. 
Robert Socolow and his colleagues at Princeton have already identified 
wind as one of the invaluable ``wedges'' that will together be required 
to achieve climate stabilization. According to our preliminary 
analysis, if wind were to provide 20 percent of U.S. power generation 
in 2030, it would avoid over 15 percent of expected power generation 
CO2 emissions.
Major Challenges Facing the Wind Industry
    The wind industry's future in this country is bright, but the U.S. 
will have to address the following major barriers to achieve its wind 
energy potential:
    1.  Lack of consistent policy support--The wind industry, and 
especially the manufacturing sector, has been constrained by the lack 
of consistent federal policy support. The on-again, off-again nature of 
the federal production tax credit, which has been allowed to expire 
three times, has been a significant disincentive to investment. Long-
term, stable policy, such as a ten year extension of the wind 
production tax credit and a federal renewable portfolio standard, will 
be essential to establish the U.S. as a manufacturing center for the 
rapidly growing global wind energy industry.
    2.  Worldwide turbine shortage--Record growth in the wind industry 
has lead to turbine shortages on a worldwide basis. More stable federal 
policies will help assure the creation of a robust global supply chain 
to meet the growing demand.
    3.  Transmission constraints--The need for transmission 
infrastructure serving major wind resource areas on the Great Plains is 
the most significant long-term constraint on the growth of the wind 
industry. The electric industry as a whole has substantially 
underinvested in transmission relative to the needs of our wholesale 
electric markets, so lack of transmission is not an issue that the wind 
industry faces alone. But transmission constraints are particularly 
critical to a resource such as wind that is distant from major cities. 
Despite the level of transmission investment required, the cost is 
modest relative to the value of cost-competitive, clean and renewable 
electricity that would be made available.
    4.  Balkanized electric markets--Electric utilities have grown up 
relatively isolated and their operations have been designed to reflect 
the characteristics of conventional generating technologies such as 
coal or gas-fired generation. For wind to achieve its potential, it is 
important that the Federal Energy Regulatory Commission (FERC), 
regional transmission organizations, and individual electric utilities 
begin to operate more as regional pools, in which variable resources 
such as wind can flourish. Strong progress has been made in this area 
in recent years, such as the introduction of the Midwest ISO covering 
15 states, but other regions have a much longer way to go.
    5.  Environmental costs of fossil fuels not recognized in market 
cost--Wind power produces no air emissions and makes no contribution to 
problems associated with air pollution or global warming. For wind to 
receive a level playing field in the market, the environmental costs of 
conventional electricity must be fully internalized.
    6.  Need to continue reducing the cost of wind power--In the end, 
wind energy's market share will be determined to a significant extent 
by economics. The cost of wind has declined by about 90 percent since 
the mid-80s, but in the last few years, wind turbine prices have 
increased due to turbine shortages and increases in the costs of 
materials such as steel and fiberglass (as they have with conventional 
resources). The industry must focus on continuing to reduce the cost of 
wind-generated electricity, and there are opportunities to do that as 
the industry scales up.
    7.  Lack of a predictable permitting regime--Siting, regulatory and 
permitting agencies at the state and federal level are still learning 
how to deal with wind development, and some permitting processes take 
considerably more time than is in the public interest. Without a more 
predictable and comprehensive permitting or regulatory regime, it will 
be difficult to move from the current pace of about 3,500 MW annually 
and achieve installation rates of 10,000 MW or more per year, which is 
the level required for wind to fully contribute to our national effort 
to reduce the impacts of global warming.
Wind Energy Development on Public Lands
    The U.S. is blessed with a huge expanse of public lands in many 
parts of this country. Many of those lands, especially in the western 
U.S., are appropriate for wind development and have a significant wind 
resource, as do the offshore areas of the northeast coast.
    The wind energy industry has a long relationship with the Bureau of 
Land Management, going back to the 1980s when some of the nation's 
first wind projects were developed in the Palm Springs and Tehachapi 
areas of southern California. BLM managers in that region generally 
took the time to understand the industry and how best to oversee the 
development process on BLM land, but wind development presents some 
unique issues to land managers, and in the last five years, as 
development began to spread around the country, it quickly became clear 
that an effort was needed to systematically share lessons learned in 
California, Wyoming and a few other pioneering areas with public lands 
managers that had little or no experience with wind development.
    As a tool to ensure each office didn't have to ``reinvent the 
wheel,'' BLM initiated a Programmatic Environmental Impact Statement 
(PEIS) in 2004 that was intended to address many of the issues that 
were generic to wind development but not always familiar to agency 
personnel. The objective was to analyze many of wind energy's impacts 
broadly so that site-specific Environmental Assessments could deal with 
the particular issues at a site. The wind industry was consulted 
through the public process and the end result was a document that many 
in the industry and elsewhere support. Best Management Practices (BMPs) 
were established as part of the process, and involved extensive 
consultation with a wide range of interests. Approximately 5,000 people 
participated in the scoping process, which addressed BLM lands in 
eleven states: Arizona, California, Colorado, Idaho, Montana, Nevada, 
New Mexico, Oregon, Utah, Washington and Wyoming.
    As a brief overview, the conclusion of the PEIS reads as follows: 
``it appears that the proposed action would present the best approach 
for managing wind energy development on BLM-administered lands. The 
proposed Wind Energy Development Program is likely to result in the 
greatest amount of wind energy development over the next 20 years, at 
the lowest potential cost to industry. Simultaneously, the proposed 
action would provide the most comprehensive approach for ensuring that 
potential adverse impacts are minimized to the greatest extent 
possible. And, finally, the proposed action is likely to provide the 
greatest economic benefits to local communities and the region as a 
whole. As a result, the proposed action appears to best meet the 
objectives of the National Energy Policy recommendations to increase 
renewable energy production on federal lands.''
    At the conclusion of the process, in January 2006, the Department 
of Interior issued its decision, and AWEA stated the following:
        ``The U.S. wind energy industry welcomes the Department of 
        Interior's record of decision on the final wind energy 
        Programmatic Environmental Impact Statement, both for the 
        inclusive manner in which it was developed, and for the end 
        result: a process that encourages the responsible development 
        on BLM land of a clean, domestic, and strategic energy 
        source.''
    As of June 2005, approximately 500 MW of wind capacity was 
installed under Right Of Way authorizations administered by the BLM. We 
are conservatively expecting around 2,000 MW of additional wind 
development on BLM lands over the next decade. The potential is 
considerably larger, as the projected economically developable wind 
resources on BLM-administered lands in these eleven states is 160,100 
acres.
    We applaud BLM for their consultative approach, and wish other 
agencies were as open to public input. It clearly provides for the best 
outcome for all parties involved, and most certainly the interests of 
the public at large.
    The wind industry likewise has a long history with the U.S. Fish & 
Wildlife Service, although the Service has not always been as effective 
at achieving the agency's objectives. Nonetheless, the wind energy 
industry is pleased that the Department of the Interior has finally 
announced the Wind Turbine Guidelines Federal Advisory Committee. This 
effort has real potential to revise the ineffective 2003 Interim 
Guidelines on wind and wildlife that were developed essentially without 
wind industry or other stakeholder input, and to move the issue forward 
in a collaborative fashion. We applaud the Department and look forward 
to the Secretary naming a constructive group to this important 
committee.
    The wind industry's relationship with the Minerals Management 
Service (MMS) is relatively new. MMS was given oversight for offshore 
wind development as part of the Energy Policy Act of 2005, assuming 
responsibilities for which the U.S. Army Corps of Engineers had 
previously been the lead. Although there are no major offshore wind 
development projects that have been built in U.S. waters (in contrast 
to Europe, where offshore is a major focus for the industry), two 
significant projects off the coasts of Massachusetts and Long Island 
had spent months in the permitting process, only to have jurisdiction 
transferred to MMS midway through the process. One of those projects, 
Cape Wind, proposed off the Massachusetts coast, had filed its original 
permits in 2001, and a 4,000 page draft Environmental Impact Statement 
had been completed by the Corps with 16 federal and state agencies 
involved. Although AWEA supported the transfer of jurisdiction to MMS, 
we were lead to believe that already proposed projects would be treated 
with more fairness, in part because the legislation included a 270 day 
timeline for implementation of the offshore provisions of EPAct (which 
would have resulted in action by May, 2006). Therefore we were 
disheartened to learn that MMS recently announced that the release of 
their final rule would once again be delayed, this time until the fall 
of 2008.
    How is the wind industry applying some of the lessons learned in 
the development process? What are some of the most effective means of 
identifying and institutionalizing wind development best practices?
      AWEA Siting Committee's Wind/Wildlife Initiative--The 
wind industry has worked collaboratively with government agencies and 
non-governmental organizations on a number of levels--locally, state-
wide, regionally or nationally--to develop ways to minimize wind 
energy's biological impacts. AWEA's Siting Committee is looking to 
replicate this model on a bigger scale by proactively meeting with NGOs 
and government agencies to determine how to work together most 
effectively as the industry continues to scale up. Many of the 
questions surrounding wind energy's impacts are evolving, and more 
research is often needed. The best model we have identified is 
collaboration which provides the credible scientific work that all 
parties require, and we are part of some effective public/private 
partnerships today:
        Bats & Wind Energy Cooperative--This collaborative was set 
up immediately after the industry discovered higher-than-expected bat 
mortality at a wind project in West Virginia. AWEA, Bat Conservation 
International, the U.S. Fish & Wildlife Service, and the National 
Renewable Energy Laboratory partnered to determine what research is 
needed to address this issue, and then raised the funds necessary to 
get it done. Collaboration among diverse parties is challenging, but we 
are seeing tremendous progress on an important issue.
        The Grassland/Shrub-Steppe Species Collaborative is set up 
in a similar way, with industry, conservation organizations and 
government agencies. In this instance, the collaborative is attempting 
to find out if prairie chickens, an important grassland species in the 
Plains, are adversely affected by the presence of wind turbines. Again, 
it is only through the partnership of wind companies, The Nature 
Conservancy, NREL, and a state wildlife agency that we are able to fund 
the necessary research to answer this question.
    Based upon years of work with BLM, and the more recent experience 
of developing the PEIS, what are some of the wind industry's potential 
concerns moving forward?
      The wind industry would like to ensure that as BLM's 
policy is carried out in the field, the important analytic work 
underlying the PEIS is systematically relied upon and used as means of 
speeding project approvals to the extent feasible and in the public 
interest.
      The wind industry is a dynamic industry. It is important 
to establish best management practices (BMPs) but there must be 
recognition that this is still a relatively young industry, and as it 
grows, management practices and scientific research are still evolving, 
and there should be a way of ensuring that agency BMPs can keep pace.
      Agency personnel can be competent and collaborative, but 
overwhelming workloads on limited budgets can be detrimental to timely 
decision-making. As the wind industry strives to maximize its 
contribution to our nation's energy and environmental needs, a more 
predictable and comprehensive permitting or regulatory regime is needed 
at the state and federal levels, cutting across multiple agencies. 
Without such a consistent framework, it will be difficult to move from 
the current pace of about 3,500 MW annually and achieve the desired 
installation of 10,000 MW or more per year.
    I appreciate the opportunity to be with you today, and welcome any 
questions you might have.
                                 ______
                                 

  Response to questions submitted for the record by Randall Swisher, 
          Executive Director, American Wind Energy Association

H ave technologies for wind generation changed in terms of their 
        impacts on bird mortality?
    Yes, wind turbine technology has changed tremendously since the 
first commercial wind energy projects were installed in the early 
1980s. Turbines are much larger in energy capacity and physical size. 
Turbines also are sleeker, with tubular towers and internal ladders and 
access points. And years of study has documented that bird mortality at 
wind energy projects is low. In fact, a recent study released by the 
National Research Council of the National Academies concludes: 
``Compared to relatively high raptor fatalities at some older 
facilities in California [the Altamont Pass, described in more detail 
below], direct impacts of wind energy development on passerines at the 
current level of development appear to be minimal.'' In addition, when 
compared to all of the other human-related causes of bird collisions: 
``Clearly, bird deaths caused by wind turbines are a minute fraction of 
the total anthropogenic bird deaths--less than 0.003% in 2003 based on 
the estimates of Erickson et. al. (2005).''
    Wind technology has evolved dramatically over the last fifteen 
years. Most turbines deployed in the Altamont Pass in California, where 
the only instance of relatively high bird mortality, specifically 
raptors, has occurred in the U.S., were built in the 1980s. The first 
generation technology deployed in the Altamont, along with some of the 
attributes of the site, makes it the avian impact anomaly that it 
remains today. First, the turbines are small and sited relatively 
closely together, so there is not that much space between the swept 
area of one rotor and the swept area of the next. Second, smaller and 
older turbine rotors have a high RPM, a factor which some experts 
believe may contribute to problems; and third, these turbines have 
lattice towers with horizontal reinforcement bars that provide 
convenient perching locations for birds. Modern machines are designed 
to provide few or no perching locations.
    Beyond the technology, the Altamont Pass site also has a number of 
attributes that may make it more harmful to birds: it houses one of 
nation's largest concentrations of federally-protected raptors, there 
is an abundant prey base, and there is also heavy year-round raptor 
use. Thankfully, the experience in the Altamont has not been repeated 
elsewhere, and the industry is now taking steps in partnership with 
groups like the Golden Gate Audubon Society to make changes there to 
reduce the raptor mortality, including even shutting down the turbines 
for a couple of months out of the year and eventually replacing all of 
the older machines with newer machines (at a ratio of about 10 or 15 to 
1), which is expected to reduce mortality there.
C an you tell us about other technological changes or best management 
        practices which are in the works to address wildlife issues 
        which wind development will encounter on public lands?
    The BLM, working in cooperation with the industry, developed Best 
Management Practices (BMPs) as part of the Programmatic Environmental 
Impact Statement completed in 2005. These BMPs lay out some of the 
requirements of how to deal with wildlife issues on BLM-managed lands, 
and they provide clear guidance to developers and BLM field offices of 
how to handle wind energy projects. Examples of BMPs include:
      ``Operators shall evaluate avian and bat use of the 
project area and design the project to minimize or mitigate the 
potential for bird and bat strikes (e.g., development shall not occur 
in riparian habitats and wetlands). Scientifically rigorous avian and 
bat use surveys shall be conducted; the amount and extent of ecological 
baseline data required shall be determined on a project basis.''
      ``Facilities shall be designed to discourage their use as 
perching or nesting substrates by birds. For example, power lines and 
poles shall be configured to minimize raptor electrocutions and 
discourage raptor and raven nesting and perching.''
    As far as technological changes, the wind energy industry is active 
in a number of wildlife research collaboratives and there has been 
technology tested in the past.
      Bats & Wind Energy Cooperative (BWEC)--A relatively new 
wildlife concern is turbine impacts on bats. While bats were found at 
projects during post-construction monitoring in the past, they were not 
discovered in large numbers until 2003 at a project in West Virginia. 
The wind industry immediately moved to partner with Bat Conservation 
International, the U.S. Fish & Wildlife Service, and the Department of 
Energy's National Renewable Energy Laboratory to create the BWEC. 
BWEC's purpose is to identify and fund research needed to understand 
why and how bats are being impacted and to explore ways to minimize 
impacts through deterrent methods. BWEC's current 2-pronged research 
plan is looking at how to determine if a site is risky for bats, 
because mortality is not widespread at projects across the country, and 
testing of a device that would emit an ultrasonic frequency to warn 
bats away from turbines. This type of collaborative effort is producing 
great results and something the wind industry hopes serves as a model 
for other wildlife issues and maybe for other industries.
      Grassland/Shrub-Steppe Species Collaborative (GS3C)--
Another collaborative industry participates in is the GS3C. The GS3C is 
identifying and conducting research on the potential avoidance of 
certain keystone avian species from areas with wind turbines. Species 
such as prairie chickens and sage grouse have demonstrated avoidance 
from structures such as power lines and roads, so the GS3C is 
attempting to discover if the same is true for wind turbines and how 
such impact may be avoided or mitigated.
    Testing has also taken place in the past with regard to raptor 
impacts at the Altamont Pass (described above), the only site in the 
U.S. with demonstrated high avian mortality due to turbine collisions. 
The industry has tested technologies such as painting blades or 
nacelles in specific patterns to increase their visibility to raptors. 
Additionally, advances such as tubular towers to discourage perching on 
new machines and deploying perch guards on older machines have been 
methods to attempt to reduce mortality.
I n your oral and written testimony, you state that American Wind 
        Energy Association has an established goal of generating 
        100,000 MW of wind in the U.S. by 2020--or 6 percent of the 
        nation's electricity. Your testimony says you ``conservatively 
        expect that 2,000 MW will be developed on BLM lands over the 
        next decade.'' Could you comment on why you project that a 
        relatively small proportion of AWEA's goal will be reached on 
        public lands, given the vast developable wind resources in the 
        west?
    Some of this conservative estimate is just that, conservative. With 
more access to transmission lines and new lines installed, the figure 
could be higher. BLM itself through the development of the PEIS 
projected the megawatt (MW) capacity installed in 2015--2630 MW--and 
2025--3260 MW. These projections are derived from information on the 
available wind resource, access to transmission, exclusion areas and 
physical limitations such as slope, etc.
    Policies such as the PEIS should further standardize the permitting 
process on BLM-managed lands. One concern of the wind industry is 
whether the BLM offices have the resources necessary to review the 
multiple applications required for wind projects and that these 
applications are given the high priority they deserve to move ahead. If 
not, developers will move on to other project sites in the development 
pipeline.
D o you think the current Energy Policy Act provisions will enable you 
        to meet your goals on public lands and nationally? If not, why 
        not?
    Section 211 of the Energy Policy Act (EPAct) stated ``It is the 
Sense of Congress that the Secretary of the Interior should, before the 
end of the 10-year period beginning on the date of enactment of this 
Act, seek to have approved non-hydropower renewable energy projects 
located on the public lands with a generation capacity of at least 
10,000 megawatts of electricity.'' As the previous discussion makes 
clear, this will be a stretch goal to achieve.
    The extension of the renewable energy Production Tax Credit (PTC) 
in the Energy Policy Act (EPAct) was a critical component of the wind 
energy industry's continued success. The PTC in 2005 was extended for 
the first time before it expired, allowing for longer planning horizons 
and it avoided the boom-and-bust cycle the industry has experienced due 
to three expirations since it went into effect in 1994. While the two 
year extension in EPAct was enough to keep the market moving forward 
briskly, it has not been a long enough timeframe to facilitate strong 
investment in manufacturing and the supply chain. Those investments 
require a five to ten year extension of the PTC, and it is our hope 
Congress will recognize and respond to that need and the enormous 
economic development opportunity. As Jon Krenicki, President of GE 
Energy, testified before Senate Finance Committee earlier this year, 
``We believe wind and solar energy are likely to be among the largest 
sources of new manufacturing jobs worldwide during the 21st Century,'' 
but they require stable, long-term policy if those jobs are to be 
captured in the U.S. A long-term extension of the PTC and a Renewable 
Portfolio Standard are vital to maximizing these economic development 
benefits for the U.S.
    Another aspect of EPAct was the transference of authority for 
offshore renewable energy resources to the Minerals Management Service 
(MMS). Although offshore wind is well-established in Europe, no 
offshore wind projects are currently installed in American waters. In 
some parts of the country, such as the Northeast, the load (demand for 
electricity) is near the coast and the wind resource over the ocean is 
excellent in some of those same areas. Offshore wind technology is 
limited in where it can currently be installed, so AWEA does not 
predict significant numbers of projects in the near future, but 
offshore wind energy definitely has a role in achieving the wind 
industry's vision in the future. MMS is now developing the regulations 
to govern offshore renewable energy projects, including wind energy. 
AWEA is concerned that MMS has delayed the release of final regulations 
a number of times. While developing new regulations is a difficult 
task, no offshore wind developments can move forward, including the 
Cape Wind and Long Island Power Authority projects that are moving 
separately from this environmental review process, until the 
regulations are final. AWEA will request clarification from MMS on when 
the regulations will be released.
    The Energy Policy Act also included provisions in Section 368 and 
1221 for electric transmission development which are helpful to wind 
energy because transmission is needed to deliver the power from remote 
areas to load centers.
W hat is the position of the American Wind Energy Association of 
        Section 368 of the Energy Policy Act of 2005? What 
        recommendations do you have regarding transmission of wind 
        power?
    AWEA supports the energy corridors provisions in Section 368 of the 
Energy Policy Act (``energy right-of-way corridors on federal land''). 
Section 368 provides an opportunity for the nation to meet growing 
energy demands with resources that are abundant in the West, including 
wind energy. Accessing these resources will require electric 
transmission facilities crossing many federally owned lands, and thus 
many different siting procedures and decision makers. The coordinated 
process under section 368 provides much greater likelihood of 
successfully developing corridors for needed energy delivery 
infrastructure including electric transmission.
    AWEA supports transmission infrastructure development as a critical 
piece of a national strategy to address energy security and global 
warming. The existing transmission grid is congested and has suffered 
from under-investment in recent decades. There are some opportunities 
to increase the efficiency and usage of the existing transmission grid. 
But importantly for this committee, new infrastructure will be required 
to tap the hundreds of Gigawatts of low cost wind resources across much 
of the interior West. The two primary barriers are cost allocation and 
siting. Federal leadership in the West on siting is critical given the 
amount of federal land that would need to be crossed by new 
transmission lines. We encourage federal land managers to work with 
regional transmission planners at the Western Electric Coordinating 
Committee and other forums in the West to ensure properly sited, well 
coordinated infrastructure development.
                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. Swisher, and we will 
get back to you on that and your good testimony. Your radio-
like voice obviously makes you even more effective. We have a 
vote that is being cast as we speak. So in speaking with the 
Ranking Member, if you do not mind we are going to recess 
briefly. The two of us will go and vote, and we will be back I 
would hope in about 10 minutes or so. As long as it takes us to 
walk over and walk back. So anyway you have a little break, and 
we will see you in a little bit. The committee is now recessed.
    [Recess.]
    Mr. Costa. If we have all of our witnesses here, I would 
like to reconvene the Subcommittee and move on to our next 
witness. As I look at the second panel, that on my list happens 
to be Mr. Robert Gough, is that correct?
    Mr. Gough. That is correct, sir.
    Mr. Costa. Who is the Secretary of the Intertribal Council 
Utility Policy.
    Mr. Gough. Yes, sir.
    Mr. Costa. And so that is obviously a lot of public lands 
and sovereign nations that are on those lands. Is this your 
camera?
    Mr. Gough. It is, sir, yes.
    Mr. Costa. Good. Fine. I would like to have a camera follow 
me some day. Anyway. Well maybe not. Please begin with your 
testimony.

             STATEMENT OF ROBERT GOUGH, SECRETARY, 
             INTERTRIBAL COUNCIL ON UTILITY POLICY

    Mr. Gough. I appreciate that. Good afternoon. My name is 
Bob Gough, and I am the Secretary of the Intertribal Counsel on 
Utility Policy, Intertribal COUP. It is composed of tribes in 
the northern plains. Primarily North and South Dakota, Nebraska 
and Wyoming. There are 12 tribes membered there now, and the 
background is spelled out in our testimony, and it is an honor 
to speak to this Subcommittee and in this room.
    About 15 years ago we were here on behalf of the tribes to 
actually secure hydropower allocations. The tribes live along 
the dams on the northern greater plains on the Missouri and 
basically had been flooded. Many of the tribes had been flooded 
with the building of the dams, and it was only this year 2000 
tribes were able to secure hydropower allocations. So it has 
been a long time, and we are glad to be back here on the next 
round of energy development.
    I appreciate what you had to say with regard for the 
nation. There is no silver bullets but I would like to posit 
that there are a lot of silver buckshot. There is a lot of 
opportunities for lots of energy efficiency and the rest to 
make it, and for tribes who are Federal----
    Mr. Costa. I would concur.
    Mr. Gough. And for tribes with Federal lands, that land is 
held in trust, and it is a very special kind of land. It is not 
public land in the same sense that parks are in that it is 
there for the benefit just for the tribes. The tribes hold that 
beneficial title but there is still Federal responsibility to 
help assume economic development on the reservations.
    I have had the honor of serving on the Western Governors' 
Energy Advisory Committee for the last two years, three years 
now--I guess it is into the third year--putting together the 
recommendations and looking at the opportunities. Intertribal 
COUP has posited a plan for 3,000 megawatts of tribally owned 
wind in the great plains. That is only 150 megawatts on 20 
reservations, and that was an audaciously large amount of 
development, and a year later the Western Governors posited 
30,000 megawatts of clean energy for the west. So all of a 
sudden we were like 10 percent of what the Western Governors 
were looking at by 2015.
    I have a number of slides here that I will go through very 
briefly just to put into context of why wind development for 
the reservations makes a whole lot of sense, and a couple of 
changes in policy that need to be considered that could really 
help development happen. If we look at the drought that has 
gripped the west, particularly in the northern plains, we see 
that we are facing almost the same scenario climate change is 
predicting for the west. We are running out of hydropower 
water. Water for hydropower, and we are running into situations 
where more and more even conventional power plants are having 
to curtail because of water constraints, either thermal 
constraints or just lack of water present, and that is what the 
first slide is all about.
    We are looking at new normals and new ways of working with 
the resources. In the west, Western Area Power Administration 
runs from Minnesota to California, and it has got 9 of the 10 
windiest states in the country. The great wind resource and 
they are running out of hydropower. If they just use Class 4 
wind resources and above, we would have 2,000 gigawatts of wind 
power potential. The whole country operates on an installed 
capacity of about 800 gigawatts. So there is a tremendous 
resource out there throughout the west.
    On the reservations, NREL has mapped with the blue dots 
here the wind potential on each of the reservations, and you 
can see clustered in the northern plains the greatest wind 
resource we have in the country. Many of those reservations 
have that. So while it may not be a silver bullet, it could be 
a golden opportunity for reservations to be able to utilize 
that resource.
    The red lines on this map are the WAPA grid. We need to be 
able to find ways for the tribes to have access to that grid. 
Rethinking how we operate the grid. Right now it is operated by 
hydro, and then when there is not enough hydro they go to the 
market for dispatchable coal power. What was once 100 percent 
hydropower is now 15 percent hydro, 85 percent coal on those 
wires, and there is no place for wind on those wires as it 
currently stands.
    The opportunities for treating tribes as governments in a 
government-to-government relationship with the Federal 
government, recognizing tribal projects as governmental 
instrumentalities, and giving them a preference on the grid the 
same way that the dams have a preference on the grid.
    The production tax credit is one of the three major 
incentives of revenue streams for wind power, and that is one 
that the tribes currently do not have access to since they are 
governments. They do not pay Federal income tax. Therefore 
there is no place for that tax credit to hold. We would like to 
tribes in joint ventures to be able to shift their credits that 
they would get as an equity partner over to their private 
capital partners in those tribal joint ventures.
    Great benefits could come to the whole country. The wind 
resource throughout the northeast, you get our air two days 
after we are finished with it, and if we can build more clean 
energy, you have cleaner air coming your way, and it brings 
revenue and new economic and educational opportunities for the 
reservations through the tribal colleges and the like. I 
appreciate the time is up, and I appreciate the committee's 
patience.
    [The prepared statement of Mr. Gough follows:]

                 Statement of Robert Gough, Secretary, 
      Intertribal Council On Utility Policy, Rosebud, South Dakota

    Good afternoon distinguished and honorable representatives. My name 
is Robert Gough and I am the secretary of the Intertribal Council On 
Utility Policy, and I am honored to be able to appear before this 
committee to speak on behalf of the American Indian tribal 
opportunities and desires to develop some of the tremendous wind, solar 
and other renewable energy potentials found on Indian reservations 
across the West. A letter attached below outlines the specific message 
sent to this committee from the President of the Intertribal Council On 
Utility Policy, Mr. Patrick Spears, who could not be here today.
    Background: The Intertribal Council On Utility Policy (COUP) is 
composed of twelve federally recognized Indian tribes in North and 
South Dakota, Nebraska and Wyoming, with affiliates throughout the 
northern Great Plains. Organized in 1994, it is chartered and 
headquartered on the Rosebud Sioux Reservation to provide a tribal 
forum for policy issues dealing with telecommunications and energy 
utility operations and services. Low-cost federal hydroelectric power 
has been generated from tribal lands and waters along the Missouri 
River for decades without proper allocations provided to the tribes in 
the region. Intertribal COUP grew out of the unified efforts of the 
Missouri River Tribes seeking a fair share of the federal power 
distributed by the Western Area Power Administration.
    Mission: Intertribal COUP strongly adheres to the principles of 
tribal self-determination and ecological sustainability, supporting the 
development of sustainable homeland economies built upon renewable 
energy resources. Intertribal COUP is a vehicle for educating Tribal 
governments about economic development opportunities available through 
public and private partnerships to provide reservation utility 
services. Intertribal COUP seeks to assure that the benefits of tribal 
partnerships with the federal government, as envisioned in our 
treaties, are promoted in federal legislation and policy.
    This country could harvest the vast renewable energy from renewable 
such as wind power from the Great Plains and solar from the Southwest 
through changes in federal priorities for renewable energy carried on 
the federal grids throughout the west. American Indian tribes in the 
west have tremendous wind and solar resources and are arrayed along the 
federal grid system built out from the dams on the Missouri and the 
Colorado river systems, for example.
    American Indian tribes have a special ``government to government'' 
relationship with the United States, and their renewable energy 
projects should be considered as ``government instrumentalities'' much 
like the federal dams, often built on and flooding their homelands. It 
would be a tremendous opportunity to meet this country's demand for 
clean energy while honoring our trust relationship and treaty 
obligations with the Tribes in their pursuit for economic development 
though wind and solar energy development. Such a relationship would 
allow tribal projects to stand next to federal energy projects as 
governmental instrumentalities, in terms of access and priority to the 
federal grids which cross and connect almost all of the Indian 
reservations in the heartland of this country.
    To tap this vast resource of clean power and build sustainable 
tribal economies in some of the poorest communities in America, large 
scale tribal renewable energy projects have requirements:
    1.  Assessment of the resources for feasibility and development;
    2.  Access to the federal grid;
    3.  Integration with the federal hydropower resources, and
    4.  Adjustment of federal renewable energy incentives, namely the 
PTC, which as currently written penalize the attraction of outside 
capital to help build tribal projects in which Tribes have an ongoing 
equity interest.
    I have included six slides which I will make reference to during 
this testimony.
    SLIDE 1. The current state of the Missouri River where the dams are 
operated and managed by the Corps of Engineers and the Bureau of 
Reclamation for navigation, flood control, endangered species, and 
irrigation among other purposes. The hydrological system is under no 
one's management and the system is facing dramatic reductions in water 
flow, and thus diminished hydropower resources due to the extended 
drought throughout the West and particularly in the Northern Great 
Plains and headwaters of the Missouri River.
    Western Area Power Administration, with its 20 year hydropower 
allocation contacts, cannot fulfill its allocation contracts with 
reduced hydropower resource currently available, and must purchase 
increasingly more expensive and greater quantities of non-hydropower 
electricity, most often lignite coal power, which is the most carbon 
dioxide intensive power per megawatt hour in the country.
    Coal power is the least expensive source of electric power, only 
because most of its true life-cycle and environmental costs have been 
externalized. Current federal policy utilizing such conventional fossil 
fuel power creates a positive feed back loop, further reducing snow 
pack and precipitation and thus requiring increasing amounts of 
supplement power annually. Western's supplemental power budget has 
increased from $25 million dollars to over $240 million dollars in just 
this decade to date.
    Investment of a portion of such staggering sums, through long-term 
power purchase agreements, into Tribal wind projects could produce 
clean electricity at a relatively fixed cost for over the next three 
decades, without the extraordinary consumption of water currently 
associated with conventional power production.
    SLIDE 2. The Western Area Power Administration sits in the windiest 
region of the country, with 9 of the 10 windiest states within its 
service territory. Just utilizing the potential from the class 4 wind 
sites and above, the WAPA service territory has a total wind power 
potential over 2,000 gigawatts. The entire United States currently has 
an installed electricity generation capacity of about 800 gigawatts, or 
less than half the wind potential of the superior class wind sites in 
the WAPA footprint. Western requires any taker of federal hydropower to 
conduct IRPs or Integrated Resource Plans to optimize the use of a 
variety of its conventional and renewable energy resources. As WAPA 
hydropower is diminished, ways should be sought to optimize the 
region's renewable sources into the federal grid administered by WAPA. 
In line with the federal government's trust responsibilities, treaty 
relationships and statutory requirements to assist Tribes in building 
their reservation economies, Tribal wind coupled with federal 
hydropower could enhance both Western's power supplies while building 
sustainable tribal economies based upon renewable energy.
    SLIDE 3. The blue dots on the U.S. map show the wind potential on 
the Indian reservations across America, which totals to some 535 
Billion kilowatt hours/year. The entire country used about 3,853 
Billion kilowatt hours in 2004. The northern Plains reservations have 
the greatest wind generation potential clustered along the red lines 
representing the federal transmission grid administered by WAPA. In 
seeking to integrate tribal projects onto the existing grid, Tribes 
find themselves in the position as the ``new kid on the block'' 
entering into a long established set of relationships between the 
federal power marketers and the existing utilities with dispatchable 
resources. Western cannot control when or if the Corps of Engineers may 
or can supply federal hydropower from a diminishing resource to meet 
contractual obligations and expected demands. Therefore, it seeks 
dispatchable supplemental generation at the times when it needs the 
power, and thus dismisses the value of wind energy, which is only 
available where the wind blows. The rules of the grid have been formed 
about the formerly reliable hydropower resource and the dispatchable 
conventional sources such as coal or natural gas. Under the current 
practices, there is ``no place on the grid'' for wind if it isn't there 
when the PMA needs it.
    Congress should help the PMA's consider how to integrate wind, the 
cleanest, most abundant but least dispatchable resource, by 
arrangements which provide for the minimal flow of hydropower as the 
river system may require, while making the most advantage of the wind 
when it does blow (about 40% of the time), and then supplementing the 
wind with what ever additional hydropower may be available, and only 
then going to outside non-governmental markets for additional, more 
dispatchable generation. Such a re-thinking of how the grid could 
operate would optimize the two governmental resources of non-polluting 
generation sources, tribal wind and federal hydropower, creating a 
renewable energy dynamo along the Missouri River system, which could 
then be augmented by more conventional, non-governmental sources of 
power. Congress should direct the PMA's to integrate wind and other 
renewable energy sources into their systems, and to give particular 
preference to Tribal projects as part of their unique government to 
government relationship.
    SLIDE 4. This slide shows the approximate revenue streams one might 
expect from a wind project. The price that a wind project might get 
from the sale of the energy generated depends in part, upon the nature 
of the resource, and in part upon the current market price for power in 
the region. In the Northern Great Plains, new wind projects compete 
against heavily subsidized federal hydropower and the low priced 
lignite coal being burned in grandfathered coal plants. Wind, however, 
is very competitive against NEW COAL plants, particularly if the 
project can utilize the federal production tax credit (PTC).
    Reservation projects, under current law, are penalized to the 
extent of tribal ownership because the PTC is apportioned according the 
ownership interest. To the extent private capital flows into a 
reservation project where Tribes hold an equity position, the project 
is penalized to the extent of that ownership because:
    A)  Tribes, as governments, have no federal income tax liability, 
and
    B)  Purchasing utilities ASSUME that the project gets the full tax 
credit when they set their tariffs.
    So far, the federal renewable energy incentives such as the PTC, 
the Renewable Energy Production Incentive (REPI), and most recently the 
Clean Renewable Energy Bonds (CREBs) have been designed with other 
entities in mind, such as municipal utility authorities and rural 
electric cooperatives,--entities which have an obligation to serve 
their rate payers, and not truly tailored to large utility scale tribal 
projects, whose tribal members are often members of rural cooperatives 
or area IOUs. Tribes have historically had little, if any, 
representation on the elected rural cooperative boards. Thus, Tribes 
cannot use their membership to rate-base project development in the 
ways that munies and coops can and do.
    Greater detail on the ``sharable PTC'' is attached to this 
testimony.
    SLIDE 5. The northern tier of the United States sits in a windshed, 
with the richest wind regime sitting upwind from the largest energy 
consuming region in the country. Fossil fuel power generation has 
brought both economic boon and environmental degradation to this region 
in the form of acid rain, NOx, Sox, particulate 
and mercury pollution to the northeastern part of the country. And now 
we realize that our energy system is also a major emitter of carbon 
dioxide as a green house gas associated with global warming.
    As a region, the upwind generation of clean energy could deliver 
cleaner air today, and cleaner power tomorrow, once a smarter and more 
capable transmission system, tying the Great Plains to the Northeast, 
is provided. Tribal wind power on the Great Plains can bring tremendous 
benefit to the nation and regions downwind, while building sustainable 
economic development in the ``New American Ghetto'' as the Dec. 8, 2005 
issue of ``The Economist'' called the states of Montana, Nebraska, and 
North and South Dakota.
    SLIDE 6. There is potential benefit to Indian reservation in terms 
of the training opportunities through the network of tribal colleges 
that can be achieved for the ever growing Indian populations which are 
the fastest growing segment of the U.S. population, the least 
electrified, in terms of rural America, and the most unemployed in the 
country. The same strategic locations of the reservations, in terms of 
large scale distribute wind energy generation, brings value to weather 
forecasting for agriculture in general, and more importantly, wind 
forecasting, in particular, which can be utilized as a new source of 
employment and value-added economics to wind generation.
    CONCLUSION: Wind power and solar, unlike conventional generation 
from the burning of fossil fuels, provides clean electricity but do not 
consume water or generate GHG emissions. Facilitating tribal renewable 
energy could help meet this nation's and build sustainable tribal 
economies based on renewable energy. Tribal lands on the northern 
plains have some 200,000 megawatts of wind resources and could meet a 
significant portion of America's rural and urban electric energy needs.
    Intertribal wind energy from the reservations arrayed along the 
Missouri River and the Western Area Power Administration transmission 
grid could be merged with hydropower delivered by WAPA on the federal 
grid system that connects us all. Native Wind energy can have a major 
impact on the reduction of global warming gases and other pollutants, 
and enhancing the clean energy security of the United States, and the 
building of sustainable economies on America's Indian reservations. I 
would be happy to answer any questions the committee may have either 
now or in writing, and would request the opportunity to expand these 
remarks, should that be necessary.
    Thank you on behalf of the federally recognized Tribes who are 
members of the Intertribal Council On Utility Policy.
                                 ______
                                 

    [NOTE: Slides have been retained in the Committee's official 
files.]
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.eps[GRAPHIC] [TIFF OMITTED] 34825.008


  .epsResponse to questions submitted for the record by Robert Gough, 
            Secretary, Intertribal Council On Utility Policy

    Thank you for the opportunity to address your questions with regard 
to my testimony of April 19th before the Energy and Minerals 
Subcommittee of the House Resources Committee.
C an you quantify some of the environmental or social benefits you 
        foresee specifically for tribes from the wind energy 
        development areas you envision?
        [GRAPHIC] [TIFF OMITTED] 34825.009
        

    .epsWind energy development on tribal lands can have significant 
social and environmental benefits in the Northern Great Plains and 
throughout the West.
    The social benefits would include the ability of well over 150 
reservations to be able to generate most of the energy consumed on 
their reservation from clean renewable energy, with over half of those 
able to provide off reservation sales of surplus energy, providing 
millions of dollars of income over the life of the projects. One 
important aspect of wind power as a renewable resource, tribes could 
generate 35% to 40% of their electricity from a one-time, single 
capital investment, to realize both power and additional revenues from 
the sale of ``green tags'' (the environmental benefits associated with 
non-polluting generation) also called ``renewable energy credits'' or 
``carbon offsets'' for the 25 to 30 year life of the project, and after 
that time period, have no open pit holes in the ground, have unpolluted 
waters and still have 100% of the resource they started with.
    Further, it has been estimated by the Union of Concerned Scientists 
that over the life of the project there is one new job for every 10 
megawatts of installed generation. With an estimate 209,639 total 
tribal potential installed megawatts from wind, there could be at least 
20,000 new, direct, longterm, well paying jobs created in Indian 
Country to service the tribal wind energy potential. Construction could 
add some 7,000 to 10,000 or so well paying, short-term reservation jobs 
that would have applicability in the off reservation wind industry as 
well. Additional jobs could also be assumed if manufacturing and 
assembly plants for wind power technologies were located in Indian 
Country. It is unlikely that the full potential wind power on tribal 
lands would actually be realized, so job estimates would necessarily be 
revised downwards in proportion to the actual build out, both on tribal 
lands and on other federal lands where Tribes may exercise their 
government to government partnerships for tribal projects may be built 
on federal public lands. A further benefit would be for employment in 
more energy dependent industries and activities that could use wind 
energy as electricity or in other forms (such as mechanical) or stored 
as ice or heat, for later use in heating or cooling (displacing need 
for carbon based electricity). Such energy intensive activities might 
be agriculture based, such as for water pumping, green house heating, 
lighting and cooling, food processing, and in service activities such 
as community or industrial laundries for hospitals and care homes.
    The environmental benefits would include a major reduction in air 
pollution and green house gas generation. Given that well over half of 
America's electrical power comes from the burning of fossil fuels, if 
tribes installed up to their potential, then nearly 25% of that fossil 
generation could be displaced by tribal wind power, leaving almost 
32,000 tons of coal in the ground and carbon out of the atmosphere for 
each megawatt of wind generation over the life of the project.
    Beyond air quality benefits, wind power does not consume any water 
when compared to conventional generation, such as coal, oil, nuclear or 
gas power plants, most of which boil water to spin turbines and require 
make up water even for closed loop systems and require the evaporation 
of thousands of gallons of water per minute to cool their steam plants 
down. In the drought stricken West, the water savings alone could be 
extremely significant.
Y our testimony focused on wind power, but please share any thoughts 
        you have on solar power generation on tribal lands as relevant 
        to the jurisdiction of the Subcommittee on Energy and Minerals 
        and the Energy Policy Act of 2005.
    Tribes have already utilized both photovoltaic and active and 
passive thermal technologies capturing solar power in a variety of ways 
for electricity and hot water, particularly to meet residential housing 
and remote, off-grid electrical needs.
    A detailed report on the vast array of tribal renewable energy 
opportunities has been produced by the Energy Information 
Administration and is found at: http://www.eia.doe.gov/cneaf/
solar.renewables/ilands
    And, specifically, at:
    http://www.eia.doe.gov/cneaf/solar.renewables/ilands/chapter3.html
    The following slides from that EIA report show the country's solar 
photovoltaic and large scale solar power potentials.
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.eps[GRAPHIC] [TIFF OMITTED] 34825.013


    .epsAs can been seen by the slides above, Tribes have an extremely 
significant solar potential on their federal Indian reservations, with 
over 17,606 billion kilowatt hours available annually. While solar 
power is often more expensive on smaller scales technologies, Tribes 
could, in partnership with federal projects and agencies, produce solar 
power to meet local and regional needs. With regard to tribal renewable 
energy development on lands subject to this subcommittee's 
jurisdiction, several of the southwestern Tribes are exploring some 
large, utility scale projects that would warrant significant investment 
to jump start solar technology manufacturing that could be of a scale 
to bring down solar costs. Again, utility scale projects installed on 
tribal or federal lands can produce a significant contribution to the 
country's energy mix.
    Again, I thank the subcommittee for their consideration of the 
renewable energy potential on tribal lands and the opportunities for 
Tribes to consider projects on a variety of other federal, non-tribal 
lands throughout the West. Tribal participation in industrial scale 
projects will also require appropriately crafted incentives that do not 
penalize tribal participation in renewable energy projects. 
Congressional support and passage of such legislation as H.R. 1954, 
which will allow tribal to transfer renewable energy production tax 
credits in the context of tribal joint ventures with private capital 
and expertise.
                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. Gough. I thought all 
the wind that occurred here originated here but that must be a 
different kind of wind I am talking about. Our next witness--
and we will come back to you with questions--is Ms. Lynn 
Jungwirth, is that correct, the Executive Director for the 
Watershed Research and Training Center.

STATEMENT OF LYNN JUNGWIRTH, EXECUTIVE DIRECTOR, THE WATERSHED 
                  RESEARCH AND TRAINING CENTER

    Ms. Jungwirth. Thank you.
    Mr. Costa. Thank you.
    Ms. Jungwirth. I am happy to be here.
    Mr. Costa. We are happy to have you here.
    Ms. Jungwirth. And to talk about the potential for biomass 
from public lands. I understand the testimony about the 
permitting processes and the difficulty with the technologies. 
Biomass and public lands has other problems, as you might 
imagine. Getting social agreement to do that has been a 
challenge as well as making the economics work.
    I work with public land communities all over the west, and 
my job was to bring to you some examples of how we are 
approaching that and how that seems to be working out. The 
biomass issue on public lands for us is a natural resource 
management issue. It is not a renewable energy issue. We have 
lots of public lands that need to be restored, and the fire 
suppression budget, as you probably know, is really inhibiting 
the ability of the land management agency to manage their lands 
and to restore them so that the fire that costs all that money 
does not have to happen. Biomass we see as part of that 
solution.
    But there are several issues. The only place that this 
works is where people work collaboratively to set a restoration 
framework and to agree that they will allow the NEPA process to 
move forward to make that supply available. We have seen that 
happen. It works where local businesses have ownership and try 
to figure out the highest and best use. Wood biomass to 
electricity is only one energy use of wood. Liquid fuels is 
going to happen, and then you have thermal energy from wood 
pellets.
    We think that this is really important. A stand alone 
biomass plant that just makes electricity is 20 percent 
efficient, 20 percent efficient. Wood ethanol is 50 percent 
efficient. A wood pellet is 80 percent efficient. We do not 
believe that subsidizing a low efficiency use of wood is in our 
interest and will help us get the restoration work done. So we 
would like you to consider encouraging the use of high 
efficiency energy from wood.
    We also would like you to consider encouraging integrated 
use facilities, and let me tell you why that is important. 
Right now hog fuel for a biomass plant to make electricity is 
worth about $20 a ton. That is it, and if you put all of that 
into that biomass market for electricity at 20 percent 
efficiency on a long-term contract that will be the price you 
are going to have for 10 years.
    In the Apache-Sitgreaves on the White Mountain, they sold 
that material to a pellet plant who then pulled out higher and 
better use for post and pole and saw timber, and now they have 
13 businesses instead of one business supported by that 
material, and they have increased the value of that material so 
the cost of doing that treatment dropped from $600 an acre to 
$400 an acre, and saved the Federal government $20 million. We 
have to let this integrated use happen, differentiating the 
markets, letting people get access to material to create value 
for that material because the Federal government cannot pay for 
the restoration of Federal lands anymore.
    Biomass is a good way to help us do that but only if it is 
appropriately scaled, only it have the social agreement through 
a restoration collaborative framework so people let the NEPA 
happen, and only if we encourage integrated use. There you go. 
You have time back.
    [The prepared statement of Ms. Jungwirth follows:]

           Statement of Lynn Jungwirth, Executive Director, 
      Watershed Research and Training Center, Hayfork, California

    Thank you for the opportunity to address these important subjects 
today. I work in a small, public land community in the middle of the 
Shasta-Trinity National Forest. In 1994 our forest changed from timber 
management to management for biodiversity, clean water, clean air, and 
other ecosystem services. The icon of that change was the Northern 
Spotted Owl. We have worked diligently since the early 1990s to find 
pathways to restoring the forest, protecting the owls and the coho, and 
restoring our local economic vitality. During that period I have worked 
with others on the National Fire Plan, (I currently serve on the 
Western Governors' Forest Health Advisory Group), stewardship 
contracting, collaborative stewardship, Community Wildfire Planning, 
and the nexus of forest management and community health. Through the 
Rural Voices for Conservation Coalition, a group of over 60 western 
community groups working with public land issues, I have developed a 
unique perspective on biomass and renewable energy, which I hope to 
share with you today.
    My comments will deal with the role of public lands and the role of 
federal investments in developing biomass energy facilities with supply 
from public lands. The Community Forestry groups believe biomass 
utilization is a land management issue, not a renewable energy issue. 
We see renewable energy as part of an integrated strategy to
    1.  Improve the resilience and health of the forest.
    2.  Reduce the cost of fire suppression
    3.  Improve the social and economic condition of public land 
communities
    I believe our collective jobs are to use the federal investment and 
federal lands to maximum advantage in terms of forest health, energy 
efficiency, and local economic returns. Luckily, we have some examples 
of how that can work and what it takes to make it work. My comments are 
based upon actual experiences on the ground and in your public land 
communities.
Renewable Energy production is possible in an integrated-use program. 
        It cannot stand alone.
    Rural businesses and communities are working with Forest Service 
and BLM partners to develop ``integrated-use biomass facilities''. 
These facilities usually include a clean chip product (for sale to a 
regional paper plant), a dirty chip product (for use in a co-located 
pellet plant or wood-fired boiler for steam/electricity), a post and 
pole processor, and a small log processor. The key is the ability to 
sort and merchandize for highest and best use, therefore creating 
maximum value for the raw materials and maximum market flexibility.
    These integrated-use program oftentimes include a composter, dry-
kiln, animal bedding, or landscape bark plant, moulding plants, and 
wood-plastic facilities. The key is that they are developed at the 
local level as appropriate. Instructive examples come from the 
Collaborative Forestry Restoration Program in New Mexico, the White 
Mountain Stewardship Contract on the Apache-Sitgraves National Forest, 
and the Boardman Chip Plant. Other communities around the west are in 
some phase of similar development.
    The White Mountain Stewardship Contract on the Apache-Sitgraves 
National Forest is the most mature example. It included: 1) A 
collaborative process which included a very powerful environmental 
activist community. 2.) Federal Investment of $1.5million in four 
businesses through the Economic Action program of the Forest Service, 
Forest Products Lab woody-biomass grants, and the Four Corners/
Sustainable Forests Partnership. 3.)A ten-year stewardship contract on 
150,000 acres which brought a consortium of local businesses to the 
table. 4.) An integrated use approach including clean chips/dirty 
chips/roundwood/and sawlogs.
    So far, the results have been: per acre costs of treatments fell 
from over $600/acre to under $400 (that alone is a $20 million savings 
to the federal treasury); 9,000 acres treated; 24,000 acres under 
contract; 70,000 acres NEPA ready; businesses involved grew from five 
to thirteen with expansion into molding/flooring/ and oriented strand 
board in the planning stages; job count, 449 f.t.e.; and, $12 million 
per year in local purchasing of goods and services. The payroll and 
business taxes alone have proven this to have been a smart investment 
for the federal government.
    If that supply had been dedicated to a single-use stand alone 
biomass to electricity plant, the employment would have been 15-24 jobs 
at the plant, and the supply would have been monopolized by that plant 
for 10 years. Single use is an inefficient model for public land supply 
and limits innovation and adaptability.
Lessons from the field:
A.  A Collaborative forest restoration program appears to be a pre-
        requisite for public land supply: It provides a politically 
        durable agreement to maximize forest health and provide raw 
        material for utilization through stewardship contracts and 
        appropriated dollars.
    Collaborative forest restoration projects require an up-front 
federal investment in the collaborative process. Where restoration 
frameworks have been worked out through a multi-stakeholder process 
projects have social support and appeals are reduced. Examples abound 
throughout the west and appear to be essential in making biomass 
available from public lands. Collaboration is not in current agency 
performance measures or targets and therefore, often does not get 
dedicated resources.
B. Using woody bio-mass for solid pelletized fuel which maximizes the 
        energy efficiency in wood.
    A standard wood-fired electrical generation plant recovers about 
20% of the energy in the wood it burns. Converting wood to ethanol 
gives you about a 50% net efficiency. Converting wood residues into 
solid pelletized fuel gives you about a net 80% efficiency.
    The cost of a standard wood-fired bio-mass to energy electrical 
plant is about $2.5 million per megawatt. That would be about $25 
million for a 10 megawatt plant. A ten megawatt plant requires 167,500 
green tons of wood residue per year. A ten megawatt plant requires a 
7.5cents/kilowatt hour in order to work economically and today the 
biomass to electricity industry needs a subsidy to reach that 7.5cents. 
If you assume thinning 25 tons/acre you would have to thin 6,700 acres 
per year to feed the plant. That's roughly the equivalent of 33.5 
million board feet.
    A wood pellet facility for 60,000 green tons (about 35% of what a 
10 megawatt plant would require) can be built for $2.5 million (about 
10% of what a 10 megawatt plant would require.) That 60,000 green tons 
is roughly equivalent to 12 million board feet but delivers roughly 1.5 
times the renewable energy of the 10 megawatt biomass to electricity 
plant.
    If the federal policy is to subsidize the market for bio-mass 
generated electricity, then perhaps it needs to incentivise markets for 
solid pelletized fuel as well--which can directly heat schools, 
hospitals, public buildings and homes, as well as co-fire coal plants 
and help them burn more cleanly.
C. Build Integrated ``Use facilities: to maximize local economic 
        returns.
    Integrated-use facilities simply mean a single campus making more 
than one product out of forest biomass. Currently the historic example 
is a sawmill or veneer plant with a wood-fired boiler for both steam 
and electricity. These are the plants you see being proposed and built 
in Oregon, where they still have private land forestry and the public 
land supply is becoming more predictable because it comes from 
thinnings. These plants work economically because the wood products 
plant uses the heat and some of the electricity for its own processing. 
That is the traditional ``sawlog'' version.
    The woody bio-mass version is a small scale facility that can 
produce a clean chip for the paper industry, hogged-fuel for a biomass 
plant or pellet plant, a small pole, and a small log processing 
facility. Oftentimes a composter is added, or a dry kiln, or a 
landscape bark facility. The concept is, you go for the highest and 
best use. That allows you to be flexible over time as markets change. 
It also allows you to have multiple locally owned businesses 
participating. These integrated use facilities work for local economies 
because of appropriate scale, and appropriate ownership structure. They 
also add the greatest value, eventually making the raw material more 
valuable, thus reducing treatment costs on public land.
    1.  Ownership structure: While many reports have noted the 
potential for rural development around biomass utilization, most fail 
to address how a community might participate in the benefits. The 
examples of bio-energy that has been most studied recently are ethanol 
plants owned by farmers or co-ops of farmers. Ownership of ethanol 
refineries by local farmers and community members is seen as the key 
aspect to sustainable rural development. Local ownership, as opposed to 
absentee-ownership, assures that the facility is based to some extent 
on local resources and needs, and that much of the money generated 
remains in the local economy. While ``economies of scale'' 
traditionally pointed to larger plants, today ``economies of scale'' 
point to the added benefits of smaller, locally owned plants, where 
typically the spending of dividends by community investors has been 
found to contribute significantly more to the local economy. An initial 
plant corn-ethanol would create about 40 full-time jobs and an increase 
in annual direct spending in the community of around $56 million. When 
community investors re-invest dividends in their community we see an 
additional 821 jobs, an increase in $37 million in household income, 
and over $60 million more in Gross State Product--than what a community 
gains through local siting of an absentee-owned plant. (studies by John 
Urbanchuk, ``Economic Impacts on the Farm Community of Cooperative 
Ownership'' (2002-2006) www.ncga.com)
    2.  Federal Role: If the Federal Government wants to invest in 
biomass utilization through transportation subsidies, technical 
assistance, and grants, it would do well to incentivise these 
integrated-use facilities now emerging. For example: SBS Wood Shavings 
in New Mexico is now SBS Wood Shavings and Sawmill and Dry Kiln; Dodge 
Logging in Oregon is now the Boardman Chip Plant and Pellet Mill and 
small log mill, Fremont Lumber is working with DG Energy on a mixed-use 
facility in Lakeview, Oregon as is the Warm Springs Tribe in Central 
Oregon.
D. Scale is an issue. It's a supply issue:
    In the earlier discussion of a 10 megawatt power plant (considered 
small scale by many in the biomass industry) the supply required is 
equivalent to 33.5 million board feet. Consider, if you will, the 
drastically reduced allowable sales quantities on most of your National 
Forests. For instance, the entire ASQ for the Trinity Forest, where I 
live is 28 million, and they rarely put out more than 8 million (the 
ASQ in 1989 was around 200 million board feet). On the neighboring 
Klamath Forest (which produced 440 million board feet in 1989 )the ASQ 
is 44 million board feet and they average about 15 million board feet 
per year.
    Large scale facilities can no longer be supported on the public 
land supply alone. Even where there is an inadequate mix of public/
private land, they are struggling to survive.
    Small scale isn't just the best alternative for public lands. It is 
often the only alternative in areas where public ownership is over 50% 
of the land and volumes of material are so small compared to an 
industrial scale.
    Its an environmental issue: Restoration forestry is a fairly new 
science. Our monitoring for learning (as opposed to compliance or 
accountability) is likewise fairly new and while most of the 
conservation community supports landscape level treatments there are 
those who don't and who will surely oppose large scale approaches. 
Collaboration helps. There are several strategies for ``scaling up''. 
We believe you are seeing ``small scale on a large scale'' emerging 
throughout the west and should support it. The industry that builds 
renewable energy opportunities from public land supply has to remain 
responsive to maintaining forest health in a dynamic system. Diversity 
in the industry maintains adaptability and stops boom/bust cycles.
    It's a sustainability issue: Clean chips, dirty chips, roundwood, 
and sawtimber allow the businesses to change as the needs of the forest 
change overtime. At biomass conferences I'm often challenged by 
activists to defend the ``sustainability'' of biomass energy plants. My 
response is simple: ``I hope this isn't sustainable. I hope, that in 20 
years we are no longer facing 130 million acres of overstocked stands, 
catastrophic wildfire, and forest conversion to brushfield. I hope we 
will move on to a more resilient forest, a larger diameter size class 
and a new global standard for sustaining our public lands for ecosystem 
services, including biodiversity, clean water, clean air, carbon, and 
forest products.'' I do not expect the public lands to be managed for 
quick rotation fuel for renewable energy plants.
    It's a community development issue. The west is replete with 
infrastructure in the form of abandoned mill sites, commonly referred 
to as ``brownfields''. They usually are 50 or so miles apart. They are 
located on major transportation routes, close to transmission lines 
(because most used 3 megawatts of power for their processing) and close 
to water sources. These old mill sites are perfect for small scale, 
integrated-use facilities are fairly low capital, reduce the energy 
loss and the high costs of transportation, and are appropriate to the 
landscape and the community.
Recommendations:
    The Federal Investments should be in priority areas where fire 
suppression costs are escalating, over 50% of the forest is in Fire 
Risk Condition Class 3, and the likelihood of a catastrophic fire is 
over 10 on the current assessment scale. The Forest Service has this 
data available by Region. Investments should go to areas within the 
highest risk quartile in each region.
    The Federal Investments should be in creating the supply: 
stewardship contracts, increased planning resources, and increased 
resources for collaborative processes. Focused up-front investment in 
collaboration paid off for the Apache-Sitgraves, the Lakeview 
Stewardship Unit, the Colorado Front Range, and many other areas.
    The Federal Investments should be in developing the harvesting and 
processing capacity: Continue to fund The Forest Products Lab Woody-
biomass Grants and Technical Assistance; fund Section 210 of the Energy 
Bill and perhaps add some pilots for these integrated-use facilities; 
fund the Forest Service Economic Action Program, this program has the 
flexibility to provide grants to communities for collaborative 
planning, technical and market assistance, and demonstration projects. 
The Farm Bill's Rural Development Title could provide substantial 
funding to assist rural business start-ups and provide public land 
communities and businesses with access to capital. Most Rural 
Development programs are aimed at private landowners. Public land 
communities do not own the land and will probably need a specific 
program. The Farm Bill's energy title and the Energy Policy Act could 
put greater emphasis on appropriate, community-scale development. It 
may be appropriate to authorize and fund some pilot/demonstration 
integrated-use facilities.
    The Federal Investments should be in incentivising markets: 
subsidize the burners and boilers needed to use pellets for heat, 
equalize the renewable energy tax credit to the same standards as wind 
and solar for wood-fired electrical generation when it is part of a 
combined heat and power, integrated-use facility.
    Do not subsidize transportation. That seems counter-intuitive if we 
are trying to save energy. Instead, fund forest health treatments and 
require the utilization of the material when appropriate. (This is an 
aside: Agency targets often inadvertently double count acres when one 
line item is used to pay a crew to cut and pile biomass (say at $600/
acre) and a force account crew is paid to burn the piles (say at $400/
acre). By reporting twice and counting twice, the average per acre 
treatment is $500. If a biomass facility wants to cut and extract the 
same material at a cost of $700, it cannot compete merely because of 
the accounting system, not the outcomes. To incentivize utilization, 
perhaps acres treated through extraction and therefore not requiring 
pile burning should also be double counted. Considering the return to 
the federal coffers through payroll and business taxes, perhaps they 
should be triple counted.)
    Take a business plan approach. Award these incentives to projects 
where the business plan shows the reduction in cost of acres treated 
over time and the reduction in the likelihood of a Type 3 fire incident 
overtime as a result of these investments. Award these incentives to 
integrated-use facilities in public land communities with low income 
and expressed need for economic development (hub-zone designation comes 
to mind). Award these incentives to communities in counties where the 
federal government owns over 50% of the land (for example) and where 
the fire risk condition class is very high and the risk of catastrophic 
wildfire is ranked above 10 on the current scale.
    The public lands are in need of restoration. Your public land 
communities and businesses are taking the lead in finding solutions to 
these complex challenges of developing social agreement, learning 
appropriate land treatments, finding economic uses for by-products of 
forest restoration/ fuels reduction and creating a fire-adapted 
society. Renewable energy is an important piece of this system, but 
forest health and community vitality must remain the drivers.
                                 ______
                                 
    Mr. Costa. Wow. You have given us an extra minute. Well we 
will reward you in some way.
    Ms. Jungwirth. Thank you.
    Mr. Costa. The Chair is pleased to welcome a new addition 
to our Subcommittee this afternoon, Congresswoman McMorris from 
eastern Washington state, and she has a constituent I believe 
who will be testifying here shortly, and it is good to have you 
here. Our next witness is another Californian. I understand you 
are from Hayfork, California?
    Ms. Jungwirth. Hayfork, California, yes.
    Mr. Costa. Wally Herger country, right?
    Ms. Jungwirth. Absolutely, Wally Herger country.
    Mr. Costa. Another Californian, Mr. Joshua Bar-Lev who is 
Vice President of Regulatory Affairs with Bright Source Energy 
and a gentleman who I think I ran across in Sacramento in a 
previous life. Mr. Bar-Lev.

   STATEMENT OF JOSHUA BAR-LEV, VICE PRESIDENT OF REGULATORY 
                  AFFAIRS, BRIGHTSOURCE ENERGY

    Mr. Bar-Lev. Is that right?
    Mr. Costa. Yes.
    Mr. Bar-Lev. I would like to remember that.
    Mr. Costa. You were with PG&E?
    Mr. Bar-Lev. Yes, I was for almost 30 years.
    Mr. Costa. Yes.
    Mr. Bar-Lev. Thank you very much for having me.
    Mr. Costa. We will not go all over those people that we 
know together but go ahead. Please testify.
    Mr. Bar-Lev. OK. I would like to talk about technology, 
land and policy. You have my testimony, and I have provided a 
lot of information, and I think I have also provided some maps 
up there that I think are great maps that show the potential 
for this technology. Let me talk a little bit about the 
technology. In a former incarnation, which is when I may have 
known you, I was vice president of a company called Luz 
International Limited that built solar projects in the Mojave 
Desert, and between 1984 and 1991, we were able to build nine 
of these projects, and they are still there today operating 
beautifully and reliably, and in a total of 350 megawatts, 
which is enough for roughly 400,000 people.
    That photograph is a picture of one of our projects. I 
believe that was probably number six, probably only about 30 
megawatts. Each of our projects and most of these concentrated 
solar power type solar projects need about a square mile for 
every 100 megawatts. The reason that this picture is so 
instructive is that I was with that company 16 years ago, and 
there are lessons to be learned because that company ultimately 
went bankrupt.
    Mr. Costa. Are those people down in between those solar 
panels? It looks like four people from here.
    Mr. Bar-Lev. Those are three I think human beings.
    Mr. Costa. Well that give size and perspective. I was 
trying to figure out if those were ants or if those----
    Mr. Bar-Lev. No. And by the way what is sort of interesting 
about that photograph is it was the cover photo for Audubon 
magazine in 1991, and on the bottom right on the caption would 
say on the magazine cover, it said, ``Renewable energy-answer 
to global warming?'' And that was 1991.
    So what we were able to do in the seven years of our 
existence at that time, just through very simple tinkering, 
economies of scale, learning, was to reduce our costs by almost 
50 percent, and we were actually we felt we were within earshot 
of being competitive with fossil fuel, but that was during a 
period when the Federal and state governments were very 
supportive of solar energy, and because of long-term policies 
in place at that time we were able to actually reduce our costs 
by almost 50 percent.
    And that makes me confidently able to tell you that if we 
had that kind of dedication from this Congress and from the 
states we would be competitive with fossil fuel in the very 
near term, and I am confident of that based on the experience I 
had with Luz at that time and having been at PG&E for 30 years.
    The second thing I want to talk about is land, and that is 
our most treasured resource. If you look at the map over there 
of the western United States that we got from NREL, what NREL 
did that is just wonderful actually is that they eliminated all 
the sloping, all the environmentally fragile high radiation 
land and basically filtered it out so that what you have there 
in different colors is optimal solar areas, and all these sort 
of orange to gold----
    Mr. Costa. You are describing the lower left-hand corner?
    Mr. Bar-Lev. That is right. Well, they are spread in 
Nevada, New Mexico.
    Mr. Costa. No. I understand that but I mean where the inset 
is where it seems to be magnified.
    Mr. Bar-Lev. Yes. But what NREL also did then was that they 
filtered out. What they wanted to do was show how many of those 
high radiation areas were near transmission lines, gas lines, 
highways and load centers, and so what you have and I think you 
have the maps there, are a tremendous filtering that shows you 
how valuable this land can be.
    The United States has some of the best solar energy in the 
entire world. Just what NREL has done there is capable of 
generating 200 gigawatts, which is about three and a half times 
what California's peak is, and if you wanted to put that in 
square miles, 200 gigawatts would be roughly 40 miles by 50 
miles. So you could put that kind of technology on 40 miles by 
50 miles. That is 2,000 square miles of high desert land, 
probably trying to seek the dark red areas over there, but any 
of the gold, orange and red areas would be suitable, and you 
could take care of the entire west's needs.
    The problem that we have is we need consistent and stable 
policy, and that is we need a long-term investment tax credit 
which has already been submitted to this Congress. I think that 
is H.R. 550, and we need the BLM to move forward, to be funded, 
to identify the optimal solar areas in the west and to provide 
us with programmatic environmental clearance for those areas, 
and to work with the DOE to bring transmission to those areas. 
I am beyond my time, and I very much appreciate the opportunity 
to speak to you.
    [The prepared statement of Mr. Bar-Lev follows:]

  Statement of Joshua Bar-Lev, Vice President of Regulatory Affairs, 
                          BrightSource Energy

    Mr. Chairman and members of the Subcommittee, I am Joshua Bar-Lev, 
Vice President for Regulatory Affairs, BrightSource Energy, a company 
located in California that seeks to develop utility scale solar energy 
projects. I am here to speak on behalf of the utility scale solar 
member companies of Solar Energy Industries Association (SEIA). SEIA is 
the national trade association of companies which supports the 
development of clean renewable solar energy. Neither BrightSource nor I 
are new to this subject.
    BrightSource has the same management team as did a solar company 
that ceased operations in 1991, Luz International Ltd. Over 16 years 
ago, Luz built nine (9) utility scale solar energy plants in the 
California Mohave Desert that still are operating today and together 
produce 350 MW of electricity. That history informs my remarks and 
recommendations to this Subcommittee on what actions Congress might 
take to encourage utility scale solar energy.
    First, some background. In order to use solar energy to produce 
commercial levels of power, a technology called Concentrated Solar 
Power (CSP) is used to reflect and focus solar energy onto an absorbing 
material. This absorbing material becomes quite hot and in the case of 
the use of a heat engine causes a gas to expand and drive a piston, or 
in the case of a steam turbine heats water to create steam to power a 
conventional steam turbine. Either CSP method creates electricity which 
is then transmitted to the customer over transmission lines. See U.S. 
Department of the Interior, Bureau of Land Management, Solar Energy 
Development Policy (IM 2007-097), and attachment defining solar energy 
systems. Ex. 1. (www.blm.gov/wo/st/en/info/newsroom/2007/april/
NR0704_1.print.html)
    There are a number of CSP companies in the market--each with a 
different technology. These technologies include: the use of parabolic 
mirrors to focus the sunlight against tubes that run up and down the 
field of mirrors; others use flat mirrors to reflect against a tower 
containing heat absorbing pipes; and others may use photovoltaics to 
concentrate the sun. Unlike direct use solar, each of the CSP 
technologies is built to generate large amounts of electricity that can 
be integrated into the utility system.
    Typically, utility scale CSP systems need roughly a square mile 
(800 acres) of reflective mirrors and turbines to generate about 100MW 
of electricity. A 100MW facility serves a city of roughly 100,000 
people. CSP plants are particularly well-suited to meet peak demand 
load in the West beginning in the late morning and then throughout the 
daylight hours. CSP plants typically use natural gas as back-up power 
for those times when the cloud cover prevents the solar powered start-
up and shut-down of the CSP plant. CSP plants are built to last 30 
years and typically use very little water.
    I invite the Committee to take a field trip to see these 
impressive, essentially carbon-free systems in operation. A CSP system 
is being completed near Boulder City, NV, another is underway in 
Arizona and a number are in operation in Spain. As I mentioned, I was 
personally involved in the construction of several CSP systems between 
1984 and 1991 in California's Mohave Desert that continue in operation 
today--generating enough energy for 400,000 people. See http://
www.blm.gov/wo/st/en/prog/energy/solar_energy.html for links to Mohave 
Desert projects.
    These California projects, besides having personal meaning to me, 
are an instructive example to this Subcommittee about the consequences 
of failing to maintain consistent, supportive policies to encourage the 
development of alternative energy sources. The momentum that was 
encouraging the development, testing and increased economies of CSP 
technologies in the 1980's and 1990's was lost when the government 
reversed policy course for solar energy. It is my opinion that our 
nation squandered an opportunity to sustain the development of a clean, 
secure, and infinite source of energy.
    The lessons from these early California CSP plants are several. 
First, during the years we built these projects, the federal and state 
governments had in place long-term tax policies that encouraged the 
development of utility scale solar projects.
    Second, these long-term tax policies gave the industry stability 
and predictability. This allowed Luz to learn as we operated these 
solar plants, to find economies of scale, and to build, finance and 
sell projects at a progressively lower cost of production. By 1991, we 
were able to build our projects at almost 50% of the cost per kWh 
compared to our early projects in 1984. Luz believed that within a few 
years we would become competitive with the cost of fossil fuel power 
plants.
    Third, once those supportive government policies ended, our capital 
intensive projects could not be financed and we had to cease 
operations. Since 1991, no utility scale solar power plant has been 
built in the United States until very recently. Favorable tax and 
government policies for alternative energy are once again encouraging 
development of CSP.
    After being in the solar business and also working as a chief 
counsel at a utility, Pacific Gas and Electric Company, for many years, 
I can tell you confidently that with supportive near-term federal and 
state policies in place, large scale, and cost effective, competitive 
solar energy is within reach. That is the conclusion of many experts, 
including the Department of Energy (DOE), and is also the conclusion of 
the Western Governors' Association (WGA) in their 2006 resolution 
supporting the Clean and Diversified Energy Committee (CDEAC) report. 
To assist the Subcommittee, I have attached the WGA recommendations of 
their Policy Resolution, 06-10, ``Clean and Diversified Energy for the 
West'', detailing near term renewable energy policy initiatives as well 
as the executive summary of the CDEAC solar committee report. Ex. 2 See 
also www.westgov.org/wga/initiatives/cdeac/index.htm for links to full 
reports.
    I will come back to SEIA's policy recommendations to the 
Subcommittee in a moment, but let me start with an important basic 
foundation for the U.S. CSP industry--our unique national resource--
plentiful, flat, non-environmentally sensitive desert land in the West 
that has high solar insolation, low cloud cover and is in proximity to 
gas and electric transmission lines, highways and urban load centers.
    This CSP quality land is largely public land managed for multiple 
uses including energy production by the Department of the Interior, 
Bureau of Land Management (BLM). BLM reported that as of April 1, 2007 
there are 43 solar applications pending in California, Arizona and 
Nevada with 34 in California alone. As recently as the end of 2004, 
there was no expressed interest in CSP development on BLM public lands. 
Enactment of California's renewable portfolio standard and favorable 
tax policies led to the filing of these BLM applications--most over the 
last eight months.
    In 2003, BLM and the Department of Energy (DOE), National Renewable 
Energy Lab (NREL) issued a GIS-based report, ``Assessing the Potential 
for Renewable Energy on Public Lands.'' See http://www.nrel.gov/docs/
fy03osti/33530.pdf. More recently, in support of the WGA CDEAC 
initiative, NREL has mapped the best locations for solar energy on 
public lands in Arizona, California, Nevada, and New Mexico. The NREL 
report and GIS maps identify areas with 1 percent or less of slope with 
high levels of solar insolation for utility-grade CSP plants. I have 
attached the multi-state and California CSP maps prepared by NREL. Ex. 
3 (http://www.nrel.gov/csp/maps.html).
    The NREL study ``filtered out'' unsuitable land that had too much 
slope (mountains), was too cloudy, too environmentally sensitive, in or 
near Wilderness, Parks or other unsuitable areas. The result will not 
surprise any of you from the West. The western United States has some 
of the best solar radiation areas in the entire world. Conservatively, 
there is enough land using today's utility scale technology to generate 
at least 7000GW of solar energy. This 7000GW of potential solar energy 
is about seven times the total United States demand capacity. To give 
you a sense of scale, California's peak demand capacity is 60GW.
    California alone has at least 6000 square miles of ideal desert 
terrain for CSP. However, if we limit the development of CSP to high-
potential solar areas that also have proximity to gas and electric 
transmission lines, we can conservatively estimate that we have ideal 
desert land for at least 200GW.
    How do we bridge the cost gap to get utility scale solar energy to 
be competitive with conventional and other renewable fuels? Energy 
experts believe that a concerted effort to develop somewhere around 4GW 
(which represents about 10% of the expected growth in peak load for the 
western states) of CSP in the next decade will bring the cost down to 
competitive levels, through R&D, economies of scale and learning curve 
benefits. The WGA study found that development of as little as 4GW will 
bring the cost of solar down to fewer than 10 cents a kWh, which is 
equivalent to $7 per MMBTU gas.
    Production of 4GW of CSP energy will have major economic benefits--
one study by Black and Veatch estimates that 4GW will produce a $22 
billion increase in gross state product, including 13,000 construction 
jobs, 1,100 permanent jobs and $2 billion in state tax revenues. And 
this 4GW will conservatively displace almost 8 million tons of CO2, 
which is 7% of California's electric utility output of carbon.
    What governmental policies will result in deployment of sufficient 
utility scale solar energy in the western United States in the next 
decade? I believe it's a combination of federal and state actions. I 
will focus first on federal actions and conclude with a brief mention 
of state initiatives.
                            RECOMMENDATIONS
Federal actions:
      Facilitate the use of federal public lands for CSP. 
Public lands are uniquely important for the development of CSP. Much of 
the best CSP solar is on public lands and these lands also provide the 
land area necessary for CSP facilities. First, the Secretaries of 
Interior and Energy should carry out the directive of EPACT 2005, 
Sec. 201 to assess and update available assessments of solar resources. 
See also EPACT Sec. 1833 (directing the preparation of a National 
Academy of Science (NAS) study of the renewable potential of public 
resources.) The agencies should be provided the budgetary resources to 
identify, in no more than six months, optimal sites for utility scale 
(CSP) solar energy. By optimal, I mean sites that are in proximity to 
electric and gas transmission lines, are sufficiently flat, not 
environmentally sensitive, and have a radiation level of at least 7 kWh 
per square meter. Although the NREL GIS report and maps mentioned above 
are a good start, more assessment work can and should be done to 
accelerate the development of CSP. For example, the NREL GIS maps must 
be integrated with the BLM land use planning GIS, which is not now the 
case.
      These identified optimal sites should be set aside as 
potential ``CSP solar parks'' of at least 10 square miles (enough for 
at least 1GW in each solar park). This designation would allow common 
infrastructure--roads and transmission lines--to be effectively 
consolidated and timely and cost-efficient planning and environmental 
permitting completed.
      BLM must be directed to expeditiously update their land 
use plans in these optimal areas to provide for the use of public lands 
for CSP projects and the development of CSP solar parks. BLM has 
recently identified the need to complete new or updated land use plans 
to include consideration of the NREL solar assessments of CSP potential 
areas. BLM has suggested that land use plan amendments can be 
concurrently completed during the application process for a particular 
CSP project. Ex. 1, BLM IM 2007-097 at 2.
      We are concerned about BLM's suggested approach for land 
use plan amendments to allow for CSP development. First, conducting 
plan amendments as CSP projects are proposed would create significant 
delay for the development of solar power on public lands. These BLM 
plan amendments take at least 18 months and, in California, some 
planning processes have stretched as long as 10 years. This should be 
an unacceptable delay to those in Congress interested in accelerating 
the development of CSP. Second, this proposal places the considerable 
costs of preparing a plan amendment and the required National 
Environmental Policy Act (NEPA) Environmental Impact Statement (EIS) on 
the first CSP project proponent in the area. We do not believe this is 
the most efficient way to analyze the use of public lands for CSP nor 
is it appropriate to have the first applicant in line bear the cost for 
all other applicants to follow. We believe the development of public 
land solar is a larger public good that should be borne by the public 
as a whole. Accordingly, we request that Congress consider the use of a 
Programmatic Environmental Impact Study (PEIS) for CSP that would, in 
one action, amend all BLM land use plans in these optimal areas to 
provide for the development of CSP. We request that Congress fund the 
preparation of this PEIS. A PEIS was utilized by the BLM in amending 
land use plans to permit the development of wind energy on public lands 
in 2005. See http://windeis.anl.gov. A PEIS is being used by BLM and 
DOE to carry out the West-wide Transmission study in EPACT 2005 
Sec. 368. See http://corridreis.anl.gov. A CSP PEIS would be timelier, 
more cost-effective and would demonstrate the nation's support for 
alternative energy sources. Preparation of such a CSP PEIS should be 
given a time certain deadline of 18 months for completion.
      Congress should examine what other federal procedures 
could be made more efficient: including project-specific NEPA 
documents; Endangered Species Act consultations; National Historic 
Preservation Act cultural resource consultations; and related federal 
permitting procedures including BLM's processing of right of way 
permits for CSP projects. Today solar projects must go through a second 
round of project specific NEPA and environmental compliance after the 
NEPA conducted at the BLM plan level. This takes considerable time and 
we suggest that Congress consider how to expedite the permitting 
process so that CSP developers may take advantage of the tax incentives 
and the current window of opportunity. One process improvement we would 
suggest is that the proposed CSP PEIS for solar parks act as the 
environmental clearance process for such solar parks so that projects 
within the solar parks are deemed in compliance with all federal and 
state environmental laws and process. Alternatively, Congress could 
consider the use of a NEPA categorical exclusion for CSP projects 
within identified solar parks analyzed in the suggested CSP PEIS. Or, 
Congress could consider if project specific NEPA can be tiered to plan 
amendment NEPA documents. State and federal agencies must be encouraged 
to work together more efficiently to permit CSP projects.
      Right of way fees charged by BLM for the rental of public 
lands for CSP projects or for the proposed CSP solar parks should be at 
the lowest cost for the use of public lands as an incentive to develop 
solar energy, rather than the highest rental cost. Today, Title V of 
the Federal Land Policy Management Act (43 U.S.C. Sec. 1761) and BLM 
right of way regulations (43 C.F.R. Sec. 2804) require ``fair market 
value'' for the rental of public land. See also Ex. 1, BLM IM 2007-096 
at 2, 4-5. BLM solar policy currently directs that annual rent for CSP 
be established by BLM using appraised values for ``commercial land or 
industrial land, as of the date of the appraisal.'' Id. at 4. Thus the 
rental for CSP is at the highest rental rate for the use of public 
land--a rate charged for coal-fired power plants or other industrial 
facilities. For example, in an existing Boulder City, NV example, the 
fair market value for a CSP facility amounts to $25,000 per acre and 
several millions of dollars per year in rent. We would ask Congress to 
direct a specific per acre rental fee for CSP that would be at a dollar 
amount to create an incentive for solar energy production from public 
lands. We would suggest that the CSP rental for public lands be closer 
to the assessed value of the land for livestock grazing rather than the 
value of the land for industrial facilities.
      The Departments of Energy and Interior should complete 
within 6 months the directive in EPACT 2005 Sec. 368 to identify 
transmission corridors in the West with particular attention to 
transmission to the optimal solar areas identified by the BLM. In 
addition, the EPACT 2005 Sec. 1221 study should expeditiously identify 
optimal solar areas where transmission constraints or congestion exist. 
The Departments of Energy and Interior should work together with state 
authorities and transmission operators to develop transmission 
facilities to access such solar areas. Using the authority in EPACT 
2005 Sec. 1221 the Federal Energy Regulatory Commission (FERC) should 
issue transmission construction permits to such areas. In the absence 
of expeditious transmission permitting and construction by local 
transmission authorities, the Secretary of Energy, acting through the 
geographically appropriate power marketing agency, should use its 
authority under EPACT Sec. 1222 to ``design, develop, construct, 
operate, maintain or own'' transmission lines to such optimal solar 
zones.
      FERC should facilitate interconnections to utility scale 
solar projects. Right now the FERC and state processes of queuing up 
and getting interconnections to the transmission grid is time-consuming 
and beset with bureaucratic delays. It now takes a solar project longer 
to connect to the transmission grid than it does to permit and 
construct the solar project. FERC should encourage transmission 
operators to determine if there is a batch of renewable projects in a 
given area and then support efforts to permit utilities to add the cost 
of such interconnection to rates.
      The federal Investment Tax Credit (ITC) for solar 
currently expires at the end of 2008. Congressmen Michael McNulty (D-
NY) and David Camp (R-MI) have introduced the Securing America's Energy 
Independence Act (HR 550) an eight year extension of the ITC and, 
currently, the bill has over 50 cosponsors. It is imperative that, 
despite the challenge of the federal budget process, the ITC for CSP 
receives a long-term extension. This is the strong recommendation of 
WGA and recognizes the importance of the ITC to the development of a 
CSP industry. I have already provided an example of what can happen 
when the tax policies of the federal government change--the CSP 
industry stalled. CSP projects are capital intensive projects and take 
4-6 years to negotiate, permit, finance and construct. If CSP 
developers and their suppliers are to have a predictable, stable 
climate for planning and financing, for building manufacturing plants 
for mirrors and other parts, and for negotiating multi-year development 
contracts to bring down the cost of CSP energy, the industry must have 
a ten year tax credit.
State actions:
      States must also do their part to facilitate the 
development of a utility scale solar energy industry in their 
economies. States should work together with federal agencies to 
expedite transmission planning and permitting to solar zones. States 
should make their property and sales tax policies fairer to capital 
intensive solar equipment. States should encourage longer power 
purchase agreements with solar developers, reflecting the length of 
time these projects normally last, and states should enact legislation 
or promote policies that encourage the construction of transmission to 
identified solar areas, including the ability to recover the cost of 
such transmission in rates. Finally, State and Federal agencies must be 
encouraged to work together more efficiently to permit CSP projects.
    Conclusion: On behalf of the CSP member companies of SEIA and 
BrightSource, I want to thank the Subcommittee for the opportunity to 
testify about recommendations for change in federal policies to support 
the development of utility scale solar energy. We have a window of 
opportunity now, when this Congress and the nation are focused on 
diversifying our energy supply with clean, low-carbon domestic sources 
of energy. We urge the Committee to act expeditiously.
    Thank you, Mr. Chairman and members of the Subcommittee. I will be 
happy to answer any questions you may have.
    NOTE: Exhibits have been retained in the Committee's official 
files.
                                 ______
                                 
    Mr. Costa. Well thank you very much, Mr. Bar-Lev. We 
appreciate your testimony, and we will have some questions when 
we come to that point of the hearing. Our last witness, but 
certainly not least, and I stand corrected, it is Congresswoman 
McMorris-Rodgers, and I am pleased to have you here. I answer 
to a lot of things but that is not here nor there. But a person 
I believe who is from your part of the country, Mr. Will 
Lutgen, Executive Director of Northwest Public Power 
Association and how hydropower has an important part in this 
effort, and I think you have some suggestions you want to leave 
with us. Mr. Lutgen.

STATEMENT OF WILL LUTGEN, JR., EXECUTIVE DIRECTOR, NORTHWESTERN 
                    PUBLIC POWER ASSOCIATION

    Mr. Lutgen. Thank you, Mr. Chairman, Ranking Member Pearce 
and certainly to Representative McMorris-Rodgers. Thank you for 
being here today. I am with the Northwest Public Power 
Association. We are a nonprofit organization serving 148 
electric municipal utilities, cooperatives and public utility 
districts throughout the western United States.
    Our members serve approximately 15 million customers. To 
give you an idea of our footprint, our most northerly member is 
the city of Barrow, Alaska, our most southerly member is the 
Imperial Irrigation District on the Mexican border, and our 
most easterly member is Tongue River Electric in Ashland, 
Montana. So we have quite a footprint of utilities that know 
about public lands.
    I am pleased to be here today to share my thoughts about 
actions that Congress might take to pursue renewable 
opportunities on public lands. My written testimony covers four 
things: One, a request that Congress reconsider hydro as a 
renewable resource; two, NWPPA's support for fully funding 
renewable energy production incentives or REPI; clean renewable 
energy bonds so that public power utilities have comparable 
incentives to investor owned utilities in building renewable 
energy projects.
    My written testimony also covers a request to consider 
renewable portfolio standards that do not conflict with state 
standards and recognize that a one-size-fits-all will not work. 
Finally, my written testimony requests that Congress be very 
deliberate in how it approaches regulating greenhouse gas 
emissions and allocation of emission allowances.
    Since five minutes does not permit covering everything in 
my written comments, I would like to spend my time discussing 
why I think hydro should be a renewable resource. Webster's 
dictionary defines a renewable resource as, ``Capable of being 
replaced by natural ecological cycles.'' Under this definition, 
hydropower is a renewable resource. However, for a variety of 
reasons over the last number of years hydropower has fallen out 
of favor, and in many instances is not treated as renewable.
    I think it is time for Congress to reconsider this policy 
because hydro has several very important attributes that make 
it a valuable addition to the U.S. energy portfolio. First, 
hydropower is a flexible resource that can be used to produce 
both base load and peaking energy. Second, hydropower serves a 
very valuable function in assuring electric reliability. The 
committee might be aware that during the 1996 west coast 
blackout that Hoover Dam was used and was resynchronized and 
brought the west back online. Similarly, Glenn Canyon Dam on 
the Colorado River is designated as the primary black start 
unit in the event of a shortage in the southwest.
    Third, hydropower works extremely well to integrate wind 
resources into the existing power system because it can be 
brought online when the wind is not blowing to backup wind 
projects. For this reason, the Bonneville Power Administration 
and the Northwest Power and Conservation Council recently 
announced a plan to integrate nearly 6,000 megawatts of 
proposed wind generation into the northwest power system, again 
using hydropower as the critical backup resource.
    Fourth, hydropower is a clean resource that is relatively 
emissions free and can play a positive role in controlling 
greenhouse gases. The National Hydropower Association estimates 
that more than 160 million tons of CO2 emissions were avoided 
in the U.S. in 2004 when 268 million megawatt hours of 
hydropower were generated.
    Finally, hydropower, unlike other renewable resources such 
as solar and geothermal, is located in most regions of the 
country, and therefore would be a benefit to consumers 
throughout the United States. During the rest of the 21st 
century, we will face increasingly difficult challenges in 
order to meet anticipated increases and demand for electricity, 
reduce emissions of greenhouse gases, and reduce dependence on 
foreign sources of fuel.
    It is my understanding that no single generation resource 
can meet those challenges alone and that each resource has both 
positive and negative aspects. I believe we must use all arrows 
in our energy resource quiver in a balanced way.
    In conclusion, I would like to thank the committee for this 
opportunity to provide some input on why hydropower should be 
considered as the quintessential renewable resource. I hope you 
will take the time to read my written testimony regarding the 
need to fully fund incentives to develop renewables, the need 
to carefully consider a national renewable portfolio standard, 
and the need to treat all forms of generation and regions of 
the country equally when it comes to policies on emissions of 
greenhouses gases. Thank you.
    [The prepared statement of Mr. Lutgen follows:]

      Statement of Will Lutgen, Northwest Public Power Association

    Thank you, Chairman Costa, Ranking Member Pearce and other members 
of the Subcommittee for inviting me to be here today. My name is Will 
Lutgen, Jr. I'm the Executive Director of the Northwest Public Power 
Association, an organization of 148 not-for-profit public or people's 
utility districts, electric cooperatives and municipalities providing 
cost-based electric services to approximately 15 million customers in 
the Western U.S. NWPPA also serves over 230 Associate Members and is a 
member of the National Rural Electric Cooperative Association and the 
American Public Power Association.
    I am pleased to be here today to speak about renewable resource 
opportunities on public lands. Throughout the West and Northwest, NWPPA 
members and the consumers they serve have benefited for decades from 
hydropower generated at federal dams and marketed by the Bonneville 
Power Administration and the Western Area Power Administration. They 
have also benefited from hydropower generated at numerous FERC-licensed 
projects on navigable rivers and streams throughout those regions.
    I am here today to share my thoughts about actions Congress can 
take to:
    (1)  Recognize that hydropower is a renewable resource;
    (2)  Fully fund incentives to encourage all sectors of the utility 
industry to develop renewable resources;
    (3)  Consider carefully a national renewable portfolio standard; 
and
    (4)  Not disadvantage certain regions of the country and certain 
forms of electric generation as it works to develop policies to address 
limiting emissions of greenhouse gases.
Hydropower is a Renewable Resource
    Merriam Webster's dictionary defines a ``renewable'' resource as 
``capable of being replaced by natural ecological cycles...'' Under 
this definition, hydropower is a renewable resource. However, for 
various reasons, over the last several years hydropower has fallen into 
disfavor and, in many instances, is not treated as a renewable 
resource. I think it is time for Congress to re-consider that policy, 
because hydro has several significant attributes that make it a 
valuable addition to the U.S. energy portfolio.
    First, hydropower is a flexible resource that can be used as a 
baseload or peaking resource. The Federal Columbia River Power System 
uses its dams as both a baseload and a peaking resource. Hydropower is 
relatively affordable and, when used as a ``peaking'' resource during 
the hours when electric demand is highest, it avoids the use of much 
higher cost alternatives.
    Second, hydropower serves a very valuable function in assuring 
electric reliability and restoring power after an outage, because it 
can be brought on line almost instantaneously. This ``cold start'' 
capability can be used to re-start fossil generators, which need a much 
longer time to come on line.
    Third, hydropower works extremely well to integrate wind resources 
into a power system because it can be brought on line when the wind is 
not blowing, to backup the wind projects. For this reason, the 
Bonneville Power Administration and the NW Power and Conservation 
Council recently announced a plan to integrate nearly 6000 MW of 
proposed wind generation into the Northwest Power System, using 
hydropower as the critical backup resource.
    Fourth, hydropower is a clean resource that is relatively 
emissions-free and, thus, can play a positive role in controlling 
emissions of greenhouse gases. The National Hydropower Association 
estimates that more than 160 million tons of CO2 emissions were avoided 
in the U.S. in 2004, when 268 million megawatt hours of hydropower were 
generated.
    Finally, hydropower, unlike some other renewable resources, such as 
solar or geothermal, is located in most regions of the country and, 
therefore, would benefit consumers throughout the United States.
    In the rest of the 21st century, we will face increasingly 
difficult challenges in order to meet anticipated increases in demand 
for electricity, reduce emissions of greenhouse gases and reduce 
dependence on foreign sources of fuel. No single generation resource 
can meet those challenges alone and each available resource has 
positive and negative aspects. I believe that we must use all available 
domestic resources to meet these goals in a balanced way.
Need to Fully Fund Renewable Incentives
    NWPPA fully supports the tax incentives for renewable resources 
that Congress authorized (or extended) in the Energy Policy Act of 
2005. The two federal incentives that are of particular benefit to 
NWPPA members, as not-for-profit utilities, are the Renewable Energy 
Production Incentive (REPI) and the Clean Renewable Energy Bond (CREB) 
program.
    REPI is funded through appropriations and, because it must compete 
for dollars against a large number of worthy water and power programs, 
it has been funded, historically, at only about $5 million per year. 
The Department of Energy estimates it would take more than $50 million 
per year to pay the full incentive to projects that have already met 
the criteria to receive funds. In Fiscal Year 2008 and beyond, we hope 
Congress will remedy this situation and provide adequate funding for 
REPI.
    The CREB program, essentially, provided interest free bonding 
authority to consumer-owned utilities and other public entities to 
develop renewable projects. NWPPA supports H.R. 1821, introduced by 
Rep. Jim McDermott and Jim Ramstad, to extend and expand the CREB 
program. We urge your support for that bill.
Renewable Portfolio Standard
    We understand that Congress will soon debate whether to enact a 
federal renewable portfolio standard (RPS). To date, 23 states and the 
District of Columbia have enacted an RPS. When the debate begins, we 
urge you to consider these factors:
      If there is a ``one-size-fits-all'' RPS, states that are 
not lucky enough to have native wind, solar, geothermal or other 
renewable resources may find themselves at a competitive disadvantage, 
compared to those states that have plentiful renewable resources. As a 
partial remedy for this problem, and for the reasons stated above, 
NWPPA believes that hydropower must be considered a renewable resource;
      A single federal RPS will likely increase the cost of 
renewable resources by creating a surge of demand for those resources. 
In addition, in the so-called ``organized markets'', operated by 
Regional Transmission Organizations or Independent System Operators, 
renewable resources sold on the spot market will be priced at the 
highest bid, which would also likely increase the cost to consumers.
      The debate on a federal RPS should recognize that 
numerous jurisdictions have already adopted policies on renewables. 
Care must be taken to ``grandfather'' those prior state laws or to 
ensure that a federal RPS does not require utilities to comply with two 
sets of mandates or impose inconsistent or conflicting requirements on 
utilities; and
      If Congress enacts a federal RPS, it must ensure that the 
level of incentives available to not-for-profit, consumer-owned 
utilities matches the level of incentives provided to investor-owned 
utilities under the Production Tax Credit and the Investment Tax 
Credit.
Climate Change Legislation
    We know some in Congress want to move quickly on climate change 
legislation, but it is a very complex task and the devil is always in 
the details. We ask that Congress be very deliberate in how it 
approaches regulating greenhouse gas emissions and the allocation of 
emissions allowances. For example, we hope that the Northwest, which is 
heavily hydropower dependent, will not be penalized for having an 
abundance of this clean, renewable resource. In the future, utilities 
in the Northwest will have to develop new generation to meet electric 
demand, and if our utilities are not given a fair share of allowances, 
they may be competitively disadvantaged.
    In conclusion, I would like to thank the committee for this 
opportunity to provide some input on why hydropower should be 
considered the quintessential renewable resource; the need to fully 
fund incentives to develop renewables; the need to carefully consider a 
national renewable portfolio standard; and the need to treat all forms 
of generation and regions of the country equally when it come to 
policies on emissions of greenhouse gases.
    Thank you.
                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. Lutgen, for your 
focused testimony. I concur with you. I do believe that 
hydroelectric power should be treated as a renewable source, 
and trying to provide equitable treatment with all the 
renewable sources of energy is a goal certainly I think we 
should aspire for. I know some of the challenges that we faced. 
Having said that, we are now at the question stage. So let us 
begin.
    Mr. Swisher, I am interested in a couple of areas that you 
addressed in your testimony. One, you talked about the 
transmission challenges that affect when we look at the maps 
and we see where our wind power generation that you and Mr. 
Gough both indicated, and unfortunately where a lot of that 
resource is although there are some transmission access. I want 
to get a sense from you whether or not BLM and the efforts on 
those public lands are doing all that they possibly could to 
provide the access for the transmission of that power that is 
generated.
    Mr. Swisher. I am sure they could always do more. In 
general though, our experience with BLM is that they have been 
paying attention and responsive on these issues.
    Mr. Costa. You indicated that the goal is to establish I 
believe 100,000 megawatts in the U.S. by the year 2020 or 6 
percent of the nation's electricity, is that correct?
    Mr. Swisher. That is correct.
    Mr. Costa. But your testimony says that you conservatively 
expect 10,000 megawatts to be developed on BLM lands over the 
next decade. Did I get that number right, 2000 megawatts?
    Mr. Swisher. Two thousand, correct.
    Mr. Costa. Yes. On BLM land?
    Mr. Swisher. Correct.
    Mr. Costa. That is a big gap between 2,000 on public lands 
and the 100,000 megawatts. So you believe then most of the wind 
generation is going to be developed on private lands?
    Mr. Swisher. That is correct.
    Mr. Costa. OK. This is the last question and when I was 
touring Minnesota and some of the other areas where there is 
active generation and, of course, in California there is as 
well down in as was indicated the Palm Desert area and as well 
as up near the east bay of San Francisco. The technology as I 
understand was initially developed by General Electric and by 
others, but now most of the technology that we are purchasing 
to establish wind power is now from Europe. We have sold it. We 
have exported it.
    Mr. Swisher. Actually most. Only one of the top 10 
manufacturers in the world is a U.S. based company, GE, and I 
think that that is attributable to the on again, off again 
nature of Federal policy support. It has had a very detrimental 
impact on manufacturing. You know the market is growing very 
strongly for wind in the U.S. but manufacturers require more 
than just a year or two extension of the production tax credit 
to feel secure about making multi billion dollar investments in 
the U.S.
    Mr. Costa. Mr. Gough, quickly before my time expires, 
having some experience with tribal sovereignty issues in 
California, you are required under the testimony that you gave 
to fulfill the requirements of the New Energy Act. You do not 
have to deal with the Bureau of Indian Affairs on these lands, 
do you?
    Mr. Gough. Absolutely.
    Mr. Costa. For these energy projects?
    Mr. Gough. Yes. You have to deal currently with many of the 
Federal regulations. NEPA is still required. There is an option 
for tribes to bring in their own permitting system and work 
with the Secretary to do that. No tribe to my knowledge has yet 
done that in the energy scope. Tribes could do it just for 
renewables if they liked but currently we are on Federal trust 
lands, have to abide by NEPA, Fish and Wildlife. We go through 
all of the Federal permitting process as well on tribal lands 
plus whatever tribal permitting may be required.
    Mr. Costa. OK. Mr. Bar-Lev, you spoke of the challenges 
when this project or the consortium with these projects went 
bankrupt, was that correct?
    Mr. Bar-Lev. Yes.
    Mr. Costa. And you attributed that to inconsistent 
policies?
    Mr. Bar-Lev. Well the cessation of policies. There was a 
property tax exemption at the state level that Governor 
Deukmejian at that time vetoed. These projects were all 
operating on the basis of being permitted by March by the 
California Energy Commission and having to be built in nine 
months, and we did it every time but all we needed to have was 
one sort of thing go wrong and that would sort of be the end of 
it. So when state and Federal policy sort of changed direction, 
we became much less credible in the market and it was difficult 
to hang on.
    Mr. Costa. My time has expired but I want to come back to 
that. Are these facilities currently operating now?
    Mr. Bar-Lev. Absolutely and very well, and it has been over 
20 years.
    Mr. Costa. They have been bought by another company?
    Mr. Bar-Lev. Yes, they did. Yes, they were.
    Mr. Costa. OK. The gentleman from New Mexico.
    Mr. Pearce. Ms. Jungwirth, with respect to biomass what is 
happening in the area around the biomass plant needs to be 
dedicated to the harvesting for it to be economic. Do you have 
that number?
    Ms. Jungwirth. Well it really depends on the size of the 
biomass plant of course, and that is one of the issues is 
scale.
    Mr. Pearce. What about 30 KW say?
    Ms. Jungwirth. Thirty KW will take the equivalent of 100 
million board feet, which is the size that we used to have to 
run our sawmills. So depending, of course, upon the forest type 
and trying to manage it sustainably, you are going to have to 
have a pretty big land base of probably----
    Mr. Pearce. Any estimate of how big?
    Ms. Jungwirth. Half a million acres.
    Mr. Pearce. So how many square miles would that be?
    Ms. Jungwirth. It is about 800 square miles.
    Mr. Pearce. Eight hundred square miles. So about 40 miles 
square?
    Ms. Jungwirth. Yes.
    Mr. Pearce. OK. And the reason I ask that is because we had 
a couple of biomass plants that wanted to come into southern 
New Mexico. Typically our arid climate would only support about 
50 trees per acre, and we are up to about 2,500 trees per acre 
is one reason that our forests are burning.
    Ms. Jungwirth. Correct.
    Mr. Pearce. So there is the environmental need to go in and 
thin the trees back down to where nature would have normally 
put them but the Forest Service is just resistant to give that 
protection, that access to the timber, and so we cannot get 
these biomass plants because they do not have any certainty of 
supply, and it is a $20 million project to build a 30 KW plant. 
So do you find that to be a problem elsewhere? Is that just 
probably in our district or do you think----
    Ms. Jungwirth. No. That is the problem elsewhere but there 
are places where they have solved that, and when they do a 
collaborative process like they did with the White Mountain 
stewardship project that you are probably aware of, 150,000 
acres, they built a restoration framework that everyone agreed 
upon including the environmental community. The Forest Service 
then tiered their NEPA to that, and they scaled their project 
to that.
    This will happen if this material is made available as a 
byproduct of forest restoration. It will not happen if we want 
to lease public land to grow fuel for a renewable energy plant. 
That is not going to happen. We are not going to move the short 
rotation forestry for energy on public lands. So yes, there are 
ways to make that happen.
    Mr. Pearce. It is not like we are going to lease it to grow 
it. It is like we need to get rid of the junk anyway, and we 
literally are burning the forests down in New Mexico.
    Ms. Jungwirth. Absolutely, and the environmental community 
understands that, and has helped through these collaborative 
processes create the agreements to move forward.
    Mr. Pearce. Actually they are the ones that are blocking 
the process in New Mexico, and so it is very difficult.
    Ms. Jungwirth. It depends on if they get to come into the 
process up front and early they work it out. If you wait until 
the end, they stop them, and I am not part of the environmental 
community just let me tell you. I am a local person but we have 
found ways to broker the politics to make a durable, political 
solution to restore the land, reduce the cost of the wildfire 
suppression and help these local communities build jobs.
    Mr. Costa. Will the gentleman yield, please?
    Mr. Pearce. Sure.
    Mr. Costa. We have stopped the clock so no one's time is 
being taken. I have to step out for a brief moment but we are 
going to continue the hearing, and as his time expires he will 
then take my time and continue the questioning, and then when I 
come back we will follow up on a couple of the questions that I 
did not get to ask. So the gentleman from New Mexico.
    Mr. Pearce. Thank you, Mr. Chairman. Mr. Bar-Lev, I was 
interested, you said that back in some period of time--I would 
guess it to be the late 1980s, maybe in the 1990s--that you 
felt like you were just almost within the grasp of 
competitiveness with the oil and gas, with the fossil fuel 
generation. Can you give me an idea how close you were?
    Mr. Bar-Lev. It has been 15 years, but we were around 15 
cents a kilowatt hour at that point, and we had come down from 
about 28 cents a kilowatt hour.
    Mr. Pearce. See the thing that I find curious is I know the 
economics of the oil and gas is that back at that period oil 
and gas was selling for somewhere between $10 to $20 per 
barrel, and natural gas was about a dollar a quarter per MCF, 
and now then the price of oil is about $70, and the price of 
natural gas is about $7. So maybe a five-fold increase in 
natural gas and at least a three, maybe three and a half time 
increase in the price of oil, and with those dramatic increases 
I would believe that you would be at this point competitive, 
and that would be my hope because the economics of one industry 
then begin to affect the economics of another industry. So can 
you comment on that?
    Mr. Bar-Lev. I did not hear the last part. Did you think 
that we would be competitive at this point?
    Mr. Pearce. Yes. It seems like if you take a resource that 
you just were within a hair of competing with and you drive it 
up by a factor of three to five times which is happening, I 
mean the oil is three and a half times, gas is five to maybe 10 
times higher.
    Mr. Bar-Lev. Yes.
    Mr. Pearce. It seems like at this point you all would be 
competitive.
    Mr. Bar-Lev. Well, I do not think I used the phrase within 
a hair. I think that there were certain technology fixes that 
we were working on, and one of the major things that we were 
working on at that time was trying to get a change in the 
limitation and size of our projects because we were not allowed 
to build more than an 80 megawatt project. So we felt as though 
if we could really build a 200 megawatt project or a 300 
megawatt project we were thinking about that in Nevada at that 
time, and we were working on the technology of the mirrors so 
that they could follow the winter sun as well as just going 
east and west so that they would be essentially dual axis.
    We felt that that was going to get us very, very close. It 
is true the prices today are not that far but I think that in 
order to get the technology say within the next 10 years to in 
fact a competitive level, the industry needs a push, and that 
push needs to come from a consistent policy that would 
encourage as the Western Governors have encouraged. A sort of a 
push of at least four gigawatts of this kind of technology 
which would provide thousands of jobs, millions of voided 
carbon emissions.
    Mr. Pearce. Let me if I could.
    Mr. Bar-Lev. Sorry.
    Mr. Pearce. We are all kind of limited on time. Mr. 
Swisher, when you quote that Denmark has 20 percent of their 
power is presented by wind, is that a net 20 percent? In other 
words, because do they not have a problem? I think I have read 
where they have a problem because they have to generate the 
base load. What kind of a net power production are they having?
    Mr. Swisher. I think there is a misunderstanding about the 
impact that wind's variability has on the system. Any power 
plant is going to go offline in an unplanned way, and the value 
of the grid is providing backup for the entire system, and 
every power plant on it. So 20 percent of Denmark's electricity 
coming from wind does not mean that you have to have 20 percent 
backup generation to be ready all the time.
    Mr. Pearce. Let us say they are at 100 percent capacity.
    Mr. Swisher. Yes.
    Mr. Pearce. Say that you barely have enough. You just 
barely have enough energy. Twenty percent is wind, 80 percent 
is something else.
    Mr. Swisher. Correct.
    Mr. Pearce. You are telling me that you do not have to have 
a 20 percent backup?
    Mr. Swisher. I am saying the way the system works----
    Mr. Pearce. No. I just want to stay on that one question.
    Mr. Swisher. Yes. That is correct.
    Mr. Pearce. You do not have to?
    Mr. Swisher. Well any electric system has a reserve of I 
think 18 percent. It used to be what the standard reserve was.
    Mr. Pearce. Yes. All I know is that if you turn on a gas 
generator or a coal fired generator, they do not have the 
variability. In other words----
    Mr. Swisher. That is correct.
    Mr. Pearce.--you just keep feeding the fuel but now as a 
pilot of an airplane I can tell you that I am very conscious of 
wind blowing and cross winds especially, and the wind can go 
from 50 knot cross wind down to 2 knots in a matter of an hour. 
I can be headed somewhere thinking how in the world am I going 
to get this thing on the ground, and by the time I get there, 
there is no wind.
    And so if you are at 100 percent capacity, you do not have 
any excess generation, you tell me that that 20 percent 
reduction does not present some requirement for a greater 
backup than if I just have a standard 100 percent gas or 100 
percent coal fired plants?
    Mr. Swisher. One of the things that we have noticed is that 
the geographic distribution of wind plants across a service 
territory has a moderating influence on the variability, and so 
if you have a large utility like Xcel with a large service 
territory, the variability of the wind is not nearly as big a 
deal as when you have a single wind turbine in a single 
location.
    Mr. Pearce. New Mexico, I suspect, probably has as many 
wind generators as anywhere, and I am very supportive of it. 
However, when I asked can we put in more because New Mexico has 
tremendous capabilities, P and M, a public service company of 
New Mexico, told me No. They cannot do any more because they 
have to have a backup for every single kilowatt, and they have 
to have a backup capability to generate. Otherwise they cannot 
sell into California because it is not predictable.
    And so to them they have reached their threshold. They 
cannot invest any more, and this is them, and when I look at 
the facts what I am told is that and Denmark instead of 
producing 20 percent of the power that when you deduct out the 
backup power we are actually closer to 8.3 percent, and I do 
not mind the fact that we have to do it but those factors have 
to be included.
    Mr. Lutgen, at some point hydroelectric has been a very big 
component of our energy production yet I think two years ago we 
began to have discussions about not renewing any of the 
hydroelectric in the country. What sort of discussions are 
going on right now about habitat? What sort of discussions are 
going on about just shutting down the hydroelectric energy, and 
how much percentage of the national energy does that produce?
    Mr. Lutgen. In the northwest on the west coast, there is 
certainly some discussion about possibly breaching the Snake 
River Dam.
    Mr. Pearce. Can you pull your mic a little bit closer?
    Mr. Lutgen. Sure.
    Mr. Pearce. And maybe turn it on if you have not.
    Mr. Lutgen. Yes, it is on.
    Mr. Pearce. OK. Yes.
    Mr. Lutgen. And the Northwest Power Planning Council and an 
independent commission has taken a look at that possibility, 
and both of those organizations have reported back that there 
would be no advantage to the region in breaching those dams. 
Certainly there is other discussion about climate change as it 
impacts the hydroelectric system. The Bonneville Power 
Administration and our members served by the Bonneville Power 
Administration are cognizant of this and are certainly taking a 
look at the impact that that change might have on the system 
are discussing plans like pump storage and other kinds of 
things to accommodate that.
    Mr. Pearce. OK. Mr. Gough, you seem to be kind of chomping 
at the bit to get in on that discussion about the backup. In 
your projects for the tribal lands, do you all have a backup 
source of energy or do you just depend? In other words, if the 
wind generation drops down, do you go out and then you can 
address anything that you would like about the whole discussion 
I was having with Mr. Swisher there? In other words, trying to 
figure out as best we can how this stuff all interrelates.
    Mr. Gough. Well the interrelation for tribes; within their 
boundaries, tribes have great geothermal resources. Rosebud 
does. It was one of the tribes on the map we saw in the earlier 
panel. We have a tremendous wind resource. Within Todd County, 
one of the counties on the reservation, 30 by 90 miles we have 
estimates of up to 50 gigawatts of wind power potential just 
within that one county.
    Mr. Pearce. Do you have backup?
    Mr. Gough. We have hydropower in the Missouri River, and 
that is why working with wind and hydro together the 
opportunity for regionally the northern plains looking at 
coupling wind and hydro together as a dynamo where each one 
complements the other is a model that could work in many places 
throughout the west, and we are seeing that the competition 
that we have in that price point was the other concern I had. 
The competition for wind for reservations we have the same 
problems.
    We do not have the production tax credit coming for the 
tribes, and when that market we are selling into, we are 
selling into a market that is 1.4 cents avoided cost. So with 
the cost of wind power being about 4 cents, 5 cents and having 
the utilities assume that you get the production tax credit 
when it is available and we do not get it, we are going in with 
a penalty basically.
    So looking at backup, looking at how to rethink the system 
in a larger sense, the backup that we have depended upon has 
been coal but we are seeing now that the coal plants are being 
curtailed from Wyoming to St. Louis because of the lack of 
water availability in the Missouri River. So we have to look at 
all of these clusters. So we are looking at solar. We are 
looking at biodiesel on the reservation. To have biodiesel 
generators there as backup to complement the wind we have.
    Mr. Pearce. Mr. Bar-Lev, I am looking at figures that the 
DOE provides, and if you are going to make a construction of 
different types of facility, the cost per kilowatt hours is 
sort of significant, and I just wanted to see if this sounds 
like what you find or if these numbers are not quite accurate 
but to build a coal generating plant about $1,290 per kilowatt 
hour, and that would compare at about $4,751 per KW produced 
out of solar. Is that something that----
    Mr. Bar-Lev. I am sorry. What was the amount for the solar?
    Mr. Pearce. Yes. About $4,751, and we could throw wind in 
at about $1,200. Geothermal about $1,880. Hydro at $1,500. 
Anyway, it is very helpful considering large-scale projects. 
Can you address that pretty large, about four times the entry 
costs it looks like? Does that fit with your experiences I 
guess? This is DOE numbers. So I am always suspect when----
    Mr. Bar-Lev. Well, we are more expensive than coal. There 
is no question about that but I cannot vouch for the accuracy 
of those numbers, and I would like to supplement the record.
    Mr. Pearce. Sure. Think about it and take another look.
    Mr. Bar-Lev. That is about four times as much as coal. That 
may not be that far off.
    Mr. Pearce. OK.
    Mr. Bar-Lev. But I will have to supplement the record.
    Mr. Pearce. You bet. If it changes the conclusion, because 
those are sort of significant numbers when we as policymakers 
begin to think about it. When I look at these large arrays of 
solar, in New Mexico we have a fairly brisk dispute between the 
public agencies and the ranchers, is it possible to continue 
growing grass underneath there and continue grazing or is that 
an improbability?
    Mr. Bar-Lev. Well what is interesting about those maps is 
that they have chosen areas----
    Mr. Pearce. No, not the maps. I am looking at the picture. 
I am sorry.
    Mr. Bar-Lev. I am sorry.
    Mr. Pearce. I am visualizing these out through New Mexico, 
and frankly we have some really neat big projects on different 
things. However, I am wondering is this compatible with the 
ranchers because ranchers have a significant conflict in 
grazing applications on public lands. I am wondering if we 
could be producing solar energy and still do the grazing 
underneath. It looks like those are fairly tall.
    Mr. Bar-Lev. Yes. But I think that the cattle would 
generate dust. Dust and mirrors do not mix. We would have to be 
washing these things very often.
    Mr. Pearce. New Mexico generates dust I tell you. A 
baseball game when I was growing up if you could see the second 
baseman something was wrong.
    Mr. Bar-Lev. But there is so much excellent solar radiation 
in New Mexico. There is so much.
    Mr. Pearce. Yes.
    Mr. Bar-Lev. That NREL says that there is room for both.
    Mr. Pearce. OK. Real fine. I see the Chairman coming back 
in. I am going to yield back to him, and we do appreciate you 
all's indulgence. Great discussions with everyone here.
    Mr. Costa. I thought you were doing well. I did not want to 
stop you when you were on a roll. All right. We try to run an 
amicable committee here. I wanted to get back to the biomass 
efforts because since we are both Californians, we have had 
some similar experiences over the last 15, 20 years. It is 
really very similar to some of the comments that I see as a 
common weave in your testimony, and that is that inconsistent 
policy, government policy over the last 20 years, both at the 
state and the Federal level, has made a lot of these efforts 
difficult. When you are trying to attract venture capital and 
you are trying to get things going--and then the rules change 
and the process changes--then people say well gee, maybe they 
are not really serious about this.
    And in the case of biomass, we had as you may know, Ms. 
Jungwirth, a number of facilities that were primarily ag 
related in my portion of the San Joaquin Valley in a number of 
communities that used as the bio waste stream much of the ag 
products from permanent crops, both vineyards, orchards and the 
like and, of course, there was a favorable credit with the 
California Energy Commission that provided the incentive, and 
then there was an agreement with the utility companies that my 
friend from PG&E may remember, and we were able to use that 
byproduct.
    Now, of course, in the valley we have now issues of CO2 and 
other air quality related matters that make that more 
difficult. We have one of those plants left. I think at one 
time down at Delano Way at one time I think we had nine, if my 
memory serves me correctly. And there is this facility that has 
continued to operate as new ownership. They want me to come 
down and view it. I have not done so but they believe they have 
a technology that allows them to deal with the air quality 
issues.
    We are moving from potentially severe to an extreme status 
as it relates to the EPA in the valley, as you may know, on air 
quality which is a real problem. How do you see biomass being 
able to deal with those challenges as it relates to that 
element of the waste stream?
    Ms. Jungwirth. Well just burning green wood and turning a 
turbine with steam to make electricity is a pretty inefficient 
thing to do, and you have to put an electrostatic precipitator 
and clean the air if you are going to do that. As a replacement 
for coal fired plants, of course, it is a good idea because it 
does not put out the sulfur that the coal plants put out.
    California Air Quality expects that in the cement plants 
which put out a lot of the carbon. They are the second largest 
contributor of carbon because when they crack limestone to make 
cement, it releases carbon. They also put out carbon and affect 
air quality because they burn coal to heat the stuff to make 
cement from. California Air Quality is recommending that they 
co-fire those with wood pellets for the thermal energy to 
reduce those emissions. Biomass has a potential to reduce 
emissions, and to help clean up the air if it is used properly 
with proper policy.
    Mr. Costa. Well it continues to be a challenge, and 
obviously we thought there were a combination of benefits that 
were taking place. Not only the benefit of the energy but also 
that waste product is something that we have to deal with 
regardless, and hopefully with the new technologies we will be 
able--notwithstanding the air quality challenges we have--to be 
able to continue to in some fashion use that biomass material 
in a way that is cost effective of course.
    Ms. Jungwirth. I think it is the dirty air from the forest 
fires that you are going to find the biggest advantage.
    Mr. Costa. And you support cap and trade in that instance?
    Ms. Jungwirth. As long as we can get God to sign off on 
that.
    Mr. Costa. I do not know how you do that. Anyway Mr. Bar-
Lev, I do not know if you are in a position with your 
experience, obviously it is significant, but compare the state 
of the United States solar power industry with incentives for 
solar in the U.S. with other countries, and I mean I assume you 
have a sense of what is going on in other parts of the world to 
incentify solar power, and what recommendations would you 
advise this Subcommittee as we try to add value to an energy 
package that we may consider later this year?
    Mr. Bar-Lev. Well Spain is the most interesting country 
because in fact they do not have anywhere near the excellent 
radiation or the space that we have here in the western states, 
and yet Spain has encouraged with a rather high what is called 
feed-in tariff, it is sort of a price that would have to be 
paid for solar energy, very high, and for a limited size 
projects. And so a lot of companies came in with different 
technologies which was good because then they would compete and 
everyone would learn from everybody else, and so there are a 
lot of different technologies that are competing in Spain, 
getting the benefits of this feed-in tariff.
    You see some that look good, that might be applicable here. 
Others maybe not. And the other thing that has been very 
interesting about Spain is transmission. Here it takes probably 
two times, three times longer to connect up to the transmission 
grid because of all the strange rules.
    Mr. Costa. Our strange rules?
    Mr. Bar-Lev. Yes. The strange, large generator 
interconnection procedures.
    Mr. Costa. That is an interesting description. I am going 
to add that to the legislative generic of terminology we have. 
Strange rules we are dealing with.
    Mr. Bar-Lev. Strange rules and strange cost allocations but 
in Spain again they cut through that. They built----
    Mr. Costa. In Spain they are not strange?
    Mr. Bar-Lev. In certain ways they might be but not on 
transmission or on solar energy. So that is the best example 
but I think the real lesson to be learned from Spain is that if 
we were to set aside some Federal land, identify the optimal 
solar zones, and set aside a bunch of BLM land, say enough for 
four gigawatts which is what the Western Governors are 
recommending, you would bring the cost down of solar 
dramatically.
    You would have competition among the different 
technologies, and if you build transmission out to those, that 
would benefit everybody. That would be a great win-win, and 
that is what we are recommending. We are recommending a program 
that is not that different from what Spain did.
    Mr. Costa. Well I am intrigued by that idea, which is where 
I wanted to end with in my questions to you, because it seems 
to me that if you want to set up--for lack of a better term--a 
pilot project of significance where you could really make a 
mark and do it in a way that would be environmentally 
acceptable, the map that you have up there surely clearly 
indicates that there has got to be in all of that area and I 
have traveled through a lot of it over the years, and knowing 
how some of that area exists, I would think this would be a 
wonderful use.
    I do not think it would adversely impact to a large degree 
the sort of wildlife corridors and other kinds of things that 
often are raised as issues. I am sure that to the degree it was 
even within an area that someone thought would impact their 
aesthetics as it relates to site of line and those kinds of 
things, they would raise issues, of course, because you are 
always going to have that. I mean people do that about wind 
power in a couple of areas in California that I am very 
familiar with.
    Describe the footprint again of this significant pilot 
project that we are discussing that would provide the four did 
you say----
    Mr. Bar-Lev. Four gigawatts.
    Mr. Costa. Four gigawatts.
    Mr. Bar-Lev. Which is 4,000 megawatts, which is roughly say 
about 8 percent, maybe 7 percent of California's peak load.
    Mr. Costa. Right.
    Mr. Bar-Lev. Would cover an area of perhaps 40 square 
miles. So that is five miles by eight miles, and there are many 
areas right within California or near Las Vegas or near Phoenix 
that are ideal for that.
    Mr. Costa. Absolutely. I concur.
    Mr. Bar-Lev. And it is not us but really the Western 
Governors has estimated that the employment benefits alone for 
four gigawatts----
    Mr. Costa. How quickly could something like that be 
installed?
    Mr. Bar-Lev. Well that is a really good question because--
--
    Mr. Costa. That is not a fair question. Let me add a little 
more information. If we made this of the significance of a 
pilot project, and therefore we cleared a lot of the process or 
expedited the process because I know time is money and when I 
asked you the question you are not just thinking about the 
construction, you are thinking about how do we get through the 
maze of the process.
    Mr. Bar-Lev. That is right.
    Mr. Costa. But if we could somehow expedite in some sort of 
a fast tracked way that would be within a 12-month time period, 
and I am just picking a number, how long would it take to 
construct such a pilot project?
    Mr. Bar-Lev. Well the contracts we are negotiating right 
now are going to require us to produce about 100 megawatts 
about every nine months to a year. Now what I assume is it in 
such a solar park that we are talking about here different 
companies would be invited to bid.
    Mr. Costa. So you would want that. You would actually want 
a multiple.
    Mr. Bar-Lev. Absolutely.
    Mr. Costa. Right.
    Mr. Bar-Lev. That is the idea.
    Mr. Costa. And if you cleared that part of the process, 
then you think this is kind of like Field of Dreams?
    Mr. Bar-Lev. It is exactly Field of Dreams. If you build 
it, they will come. They will arrive, and there are probably 
six or eight companies in the United States right now, maybe a 
little bit more, that are very actively looking at these 
technologies. Say if each one of them said I will take a square 
mile, I will take a square mile, then these could be built very 
quickly.
    Mr. Costa. As an aside, Apollo Alliance in the U.S. used to 
be the leading producer of photovoltaics. I mean a lot of the 
stuff has gone to Japan and elsewhere, right?
    Mr. Bar-Lev. That is right.
    Mr. Costa. Do we have much of an industry left here in the 
United States?
    Mr. Bar-Lev. There is one project that is being actively 
built and almost finished near Boulder City new Las Vegas. 
There are not any others. We were the last one, and we went out 
of business in 1991. So the answer is we do not really have the 
parts right now.
    Mr. Costa. If we required buy American and that it be 
manufactured here in the United States, would that create a few 
jobs?
    Mr. Bar-Lev. It would create a lot of jobs. Four gigawatts 
would create--as I was saying before--12,000, 13,000 
construction jobs, 1,100 permanent operations jobs, tremendous 
increase in gross state output because of all the dollars that 
are being generated, and an industry would be built. I always 
use sort of Detroit or Silicon Valley as an example. We have 
the resources in this country and the brain power to create 
literally a whole new industry in the west.
    Mr. Costa. Well I want to try to be a partner on a 
bipartisan basis with whoever would like to join in this 
effort, because I think it has a lot of potential. Last 
question and then unless my friend the gentleman from New 
Mexico wants to add any further, we will close the hearing. You 
mentioned, our friend from Washington, that hydropower ought to 
be treated as renewable, and if this question has been asked 
while I was out I will get the answers from those who you 
answered. What is the single largest or single biggest 
impediment in your opinion from hydropower being considered 
among other renewable sources?
    Mr. Lutgen. By impediment, I am not sure what you mean.
    Mr. Costa. Well you laid out a list of why it should be 
included as a renewable resource but you said under the Energy 
Act it is not treated as one, and I am asking you what you 
think is the largest impediment from treating it as such.
    Mr. Lutgen. I think the largest impediment is the view that 
hydropower is an existing resource and that what renewables are 
all about is developing new kinds of resources and new kinds of 
technologies, and I am not sure if I am answering your 
question.
    Mr. Costa. No, no. I think you are going along those lines. 
I mean there is also a conflict clearly. I mean hydropower is 
everything you said it was. I mean at least I believe it is. 
That does not make it so but it means that you and I agree.
    Mr. Lutgen. Sure.
    Mr. Costa. But there are some folks who really have an 
aversion to how hydropower is developed and would prefer not to 
see those dams that allow that hydropower to take place. So 
therein lies a conundrum. I do not know if you see it that way.
    Mr. Lutgen. Frankly, I am having a hard time understanding.
    Mr. Costa. Are we building any new hydropower? Let us put 
it that way.
    Mr. Lutgen. I do not know. I would have to----
    Mr. Costa. That is very limited.
    Mr. Lutgen. Yes.
    Mr. Costa. I mean we have some facilities that we have 
refitted that did not have hydro.
    Mr. Lutgen. Sure.
    Mr. Costa. Now that electricity rates have gone up, we have 
put hydroelectric plants, turbines in them but the notion that 
we are going to putting any more facilities in the near term of 
significance is I would submit to you less likely. I say that 
as a westerner and a person who deals with water policy all the 
time in California.
    Mr. Lutgen. Sure. I think that what the industry is looking 
for is incremental improvements in existing hydro facilities.
    Mr. Costa. OK. The way the process works here we ask the 
questions and you answer them but I will allow my friend to 
make a point.
    Mr. Gough. I appreciate that.
    Mr. Costa. And we are going to close.
    Mr. Gough. There is a possible answer actually. The Federal 
government is in a unique position with the Western Area Power 
Administration in Bonneville and TVA in its control over 
hydropower to really optimize the hydropower we do have, 
working it in combinations and a demonstration wind project, 
wind-hydro has been authorized but never funded for the 
northern plains to see how the Missouri working with our 
largest storage capacity of the dams in the country up on the 
Missouri River with the greatest wind resource. Finding ways to 
direct WAPA to couple those resources and optimize the 
resources we have could make a tremendous difference in making 
some of the points that you have been seeking to get from the 
other renewable resources.
    A demonstration project could be up and running in 12 
months and really demonstrate the compatibilities of renewables 
working together.
    Mr. Costa. Well I think that is a good point, and we should 
look into that. I am going to close here but the gentleman from 
New Mexico, ask one quick question.
    Mr. Pearce. You bet, and we are going to walk our way down 
through it now. I have to question if you think short term. We 
will call short term 0 to 5 years, medium term 5 to 20, long 
term 20 to beyond or never, and all I want to know is let us 
say that we have the capacity to stop coal production or stop 
energy from coal as we get the replacement energy. Fifty 
percent of our power comes from coal today.
    Can we do it in short term, middle term, long term or 
never? And we will just go down. Mr. Lutgen. Yes. Give me your 
view. This is not very scientific, and the Chairman is waiting 
to adjourn. So do not think very long.
    Mr. Lutgen. Short term.
    Mr. Pearce. Short term. We could reduce 50 percent of the 
power with the short term from wind, solar or geothermal? Those 
three. All of them together or just the three?
    Mr. Lutgen. I would say all of them together.
    Mr. Pearce. All put together, short term. Yes, sir. Mr. 
Bar-Lev?
    Mr. Bar-Lev. Medium term.
    Mr. Pearce. OK. Ms. Jungwirth?
    Ms. Jungwirth. I have no idea.
    Mr. Pearce. Thanks.
    Mr. Gough. Short term with wind I think you can get 20 
percent. Short term.
    Mr. Pearce. OK. Mr. Swisher?
    Mr. Swisher. I would say 20 to 30 timeframe.
    Mr. Pearce. OK. Yes. I tend to think Mr. Swisher is right 
but it is good information. Thank you, Mr. Chairman.
    Mr. Costa. Thank you, gentleman from New Mexico. Thank the 
witnesses for your interesting and I believe encouraging 
testimony, and we will look forward to continuing to work with 
you as we continue this process. This Subcommittee is now 
adjourned.
    [Whereupon, at 5:15 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [A statement submitted for the record by UTC Power 
follows:]

            Statement submitted for the record by UTC POWER

    UTC Power appreciates the opportunity to submit a statement for the 
hearing record on issues related to renewable energy opportunities on 
federal lands.
Company Background
    UTC Power, a business unit of United Technologies Corporation (UTC) 
is a world leader in commercial stationary fuel cell development and 
deployment. UTC Power also develops innovative combined cooling, 
heating and power applications for the distributed energy market. UTC 
Power is developing organic Rankine cycle technology known as the 
PureCycle system for geothermal and other energy resources. This 
technology is in the development stage. We are partners with Chena Hot 
Springs Resort outside of Fairbanks Alaska, the Department of Energy 
and Alaskan authorities in validating this exciting new geothermal 
technology. Operating with geothermal hot water at 165+ F, this project 
has featured the use of the lowest temperature geothermal energy 
resource in the world. On April 12, 2007 UTC Power announced a series 
of agreements with Raser Technologies of Provo, Utah to provide up to 
135 PureCycle systems for three Raser power plants. In total, these 
systems will generate approximately 30 megawatts of renewable 
electrical power.
Summary
    Geothermal energy addresses many of our national concerns, but its 
potential is largely untapped. UTC Power's PureCycle system represents 
an innovative advancement in geothermal energy production and is 
operating successfully today in Alaska as part of a demonstration 
effort. This geothermal energy breakthrough offers the possibility of 
tapping significant U.S. geothermal reserves including oil and gas 
resources for a domestic, renewable, continuously available source of 
power to meet our growing energy demands. Congressional action is 
needed, however, to continue research and development funding; 
characterize our national geothermal resources, including low and 
moderate temperature sources; and extend the production tax credit. 
While not all of these issues fall under the jurisdiction of the House 
Natural Resources Committee, the Committee can play a key role in 
helping to develop and ensure implementation of a comprehensive 
geothermal energy strategy to ensure we take maximum advantage of these 
important resources to address energy security and environmental 
concerns.
Geothermal Energy Addresses Many National Concerns, but Huge Potential 
        is Largely Untapped
    Our nation is faced with air quality and global climate change 
challenges, ever-increasing fuel costs and a desire to be less 
dependent on energy sources from politically unstable areas of the 
world. The United States is blessed with an abundance of geothermal 
energy resources that offer a renewable, continuously available, 
largely untapped domestic resource. The country generates approximately 
2,800 MWe of geothermal energy for power production in California, 
Nevada, Utah and Hawaii (and now Alaska) and another 2,400 MWe is under 
development.
    While estimates vary, the Geothermal Energy Association indicates 
that with effective federal and state support, as much as 20 percent of 
U.S. power needs could be met by geothermal energy sources by 2030. The 
National Renewable Energy Laboratory's report ``Geothermal: The Energy 
Under Our Feet'' concludes: ``Domestic resources are equivalent to a 
30,000-year energy supply at our current rate for the United States.'' 
The study also notes: ``New low-temperature electric generation 
technology (referencing UTC Power's PureCycle system) may greatly 
expand the geothermal resources that can be developed economically 
today.'' In addition, the Massachusetts Institute of Technology 
recently released its report ``The Future for Geothermal Energy'' and 
concluded that enhanced geothermal system technology could provide 
100,000 megawatts of base-load power, without any greenhouse gas 
emissions, by 2050 if the federal government increases its research 
commitment to resource characterization and assessment.
Description of PureCvcle Technology
    The PureCycle system is based on organic Rankine cycle (ORC) 
technology--a closed loop process that in this case uses geothermal 
water to generate 225 kW of electrical power. Think of an air 
conditioner that uses electricity to generate cooling. The PureCycle 
system reverses this process and uses heat to produce electricity. The 
system is driven by a simple evaporation process and is entirely 
enclosed, which means it produces no emissions. The only byproduct is 
electricity, and the fuel--hot water--is a free renewable resource. In 
fact, after the heat is extracted for power, the water is returned to 
the earth for reheating, resulting in the ultimate recycling loop.
What is the Significance of Low Temperature Geothermal Energy?
    In the past, geothermal energy for power production was 
concentrated in only four Western U.S. states where the highest 
temperature geothermal resources are located. The need for high 
temperature steam previously limited the use of geothermal resources 
and increased the life cycle cost.
    The ability to use small power units at lower temperature 
geothermal resources will make distributed generation much more viable 
in many different regions of the country. Simply put, PureCycle 
technology could result in significant new domestic, continuously 
available renewable energy resources--not just in Alaska, but across 
the country. The capability to operate with a low temperature resource 
allows the UTC Power PureCycle System to utilize existing lower 
temperature wells and to ``bottom'' higher temperature geothermal steam 
and flash plants as well as many existing ORC binary power plants. A 
``bottoming'' application with the PureCycle product would utilize hot 
water exiting from existing geothermal plants to produce additional 
power. This water would normally be re-injected to the earth or 
otherwise discarded since use of this water was previously not 
practical for power production with conventional recovery systems.
Oil and Gas Geothermal and Other Applications
    There are more than 500,000 oil and gas wells in the United States, 
many of which are unprofitable. The use of geothermal hot water, which 
is abundant at many oil and gas well sites, to produce a renewable 
source of electrical power could extend the life of many of these 
assets. This would result in significant environmental, energy 
efficiency, climate change, economic and other benefits associated with 
the development of geothermal oil and gas electrical power.
    We appreciate efforts by this Committee last year to pursue the oil 
and gas geothermal energy production application. The Deep Ocean Energy 
Resources Act of 2006 (HR 4761) included a provision that would create 
a Department of Interior demonstration program to assess the use of 
innovative geothermal technologies, such as our PureCycle system, at 
new and existing oil and gas wells. This initiative would validate 
technology that would enable the United States to capture the heat in 
oil and gas wastewater to produce electricity and allow fields to 
produce longer while co-producing electrical power with no emissions. 
As Congress proceeds with its deliberations on measures to enhance our 
nation's energy independence and security, we urge the inclusion of a 
geothermal demonstration provision based on last year's language and 
would be happy to work with the Committee in this regard.
    In addition, PureCycle technology has other potential applications 
including the use of industrial or other electrical generating 
technologies that produce waste heat in the form of hot water at 
greater than 165s F and with sufficient volume can generate electricity 
as well. Examples include: waste heat recovery from the water used to 
provide cooling for industrial reciprocating engines as well as exhaust 
from these engines; production plant and landfill flares used to burn 
off waste or exhaust gases; and heat generation from biomass burners.
Need for Resource Characterization
    One of the key barriers to full utilization of our nation's 
geothermal resources is the lack of up-to-date survey information. The 
most recent U.S. Geological Survey for geothermal energy was conducted 
in 1979. This survey used techniques that are outdated and was based on 
technology available 30 years ago. It did not consider low to moderate 
temperature resources since there was no technology available at the 
time that could utilize these resources in a cost-effective manner. The 
exploration and drilling phase of any geothermal project generates 
considerable risk and expense. An up to date survey is essential to 
identify potential resources with more precision thus helping to 
minimize risk and expense. The 2005 Energy Policy Act (EPAct) 
authorized such surveys and an update was underway, but funding 
shortfalls at both the Department of Interior (DOI) and Department of 
Energy (DOE) and uncertainty regarding the future of DOE's geothermal 
program have stalled the effort. We urge Congress to direct the 
Departments of Interior and Energy to expedite this initiative and to 
ensure that low and moderate temperature resources are addressed.
Recommended Actions
    It is unfortunate that at this moment in time when there are 
exciting innovative developments in the world of geothermal technology, 
the federal government is cutting off research and development funding 
and stalling resource characterization efforts. The rationale given is 
that the technology is mature and represents a resource with limited 
value since it is confined to only a few Western states.
    We have only scratched the surface regarding our nation's 
geothermal energy potential. We have not exhausted the R&D 
possibilities and this is not a resource that is limited to only a few 
Western states. There are advances in low-temperature geothermal energy 
alone that prove otherwise.
    The National Research Council report ``Renewable Power Pathways'' 
recognized the importance of geothermal energy and stated: ``In light 
of the significant advantages of geothermal energy as a resource for 
power generation, it may be undervalued in the DOE's renewable energy 
portfolio.''
    UTC Power recommends that Congress pass legislation requiring DOE 
and DOI to enter into cost-shared partnerships to enhance the 
performance of existing successful systems, increase the size of the 
low temperature units to one megawatt, boost system efficiency to 
extract as much energy as possible from the source water, improve 
working fluid characterization, evaluate different feed stocks as fuel 
and demonstrate benefits for the oil and gas market. We also recommend 
continued federal funding for resource assessment and identification, 
exploration, and drilling and incentives for the exploration, drilling 
and deployment activities.
    As our Chena project and recent Raser Technologies arrangement 
demonstrate, far from being a mature technology with limited geographic 
reach, geothermal energy has the potential to satisfy a significant 
portion of our growing energy needs with a renewable, continuously 
available domestic resource. But appropriate government policies must 
be adopted and implemented to make this a reality. Congress can help to 
ensure we realize the full potential of geothermal energy. Attached is 
a position paper by the Geothermal Energy Association that outlines key 
industry recommendations and action items including:
      Extension of the geothermal production tax credit and 
revised ``placed in service'' rules;
      Robust funding for DOE's Geothermal Research Program;
      Incentives for geothermal exploration; and
      Comprehensive nationwide geothermal resources assessment.
    We also recommend that Congress enact legislation creating a 
demonstration program to assess the use of innovative geothermal 
technology, including organic Rankine cycle systems, at new and 
existing oil and gas wells, such as the provision in the Deep Ocean 
Energy Resources (DOER) Act approved by the Committee on June 21, 2006. 
This initiative presents a significant opportunity for clean, renewable 
energy at more than 500,000 oil and gas wells in the United States.
    We thank you for the past support Congress and this Committee have 
provided for geothermal energy and look forward to working with you to 
translate the exciting promise of geothermal technology into reality.
                                 ______
                                 

                Achieving a 20% National Geothermal Goal

    The United States, as the world's largest producer of geothermal 
electricity, generates an average of 16 billion kilowatt hours of 
energy per year. While substantial, U.S. geothermal power is still only 
a fraction of the known potential. Today, roughly sixty new geothermal 
energy projects are under development in over a dozen states that will 
double current geothermal power production. With effective federal and 
state support, recent reports indicate that as much as 20% of U.S. 
power needs could be met by geothermal energy sources by 2030.
    To achieve this, the Administration and Congress should adopt the 
following National Geothermal Goals for federal agencies: Characterize 
the entire hydrothermal resource base by 2010; sustain double digit 
annual growth in geothermal power, direct use and heat pump 
applications; demonstrate state-of-the-art energy production from the 
full range of geothermal resources; achieve new power or commercial 
heat production in at least 25 states; and, develop the tools and 
techniques to build an engineered geothermal system (EGS) power plant 
by 2015.
    To support these goals and accelerate the production and 
development of energy from our geothermal resources, the following 
priority actions are needed:
    Revise the Section 45 Production Tax Credit (PTC) to support 
sustained geothermal power development. The PTC timeframe is too short 
for most geothermal projects to be completed by the current placed in 
service deadline. To achieve sustained geothermal development, Congress 
should immediately amend the law to allow facilities under construction 
by the placed in service date of the law to qualify, and extend the 
placed in service deadline by at least 5 years, to January 1, 2014, 
before its expiration.
    Fund a strong and effective DOE Geothermal Research Program that 
prioritizes the discovery and definition of geothermal resources; 
expands GRED funding; develops new exploration technologies; supports 
state-based programs to expand knowledge of the resource base and its 
potential applications; improves drilling technology; demonstrates 
geothermal applications in presently non-commercial settings; and 
develops and demonstrates of Enhanced Geothermal Systems techniques. 
DOE's geothermal program should be expanded to meet today's challenges 
and funded at $75 million annually.
    Provide incentives for geothermal exploration through renewed DOE 
cost-shared funding and other measures. Ninety percent of geothermal 
resources are hidden, having no surface manifestations. Exploration is 
therefore essential to expand production, but exploration is expensive 
and risky. Cost-shared support for exploration drilling has been 
provided through DOE's Geothermal Resource Exploration and Definition 
(GRED) program. GRED should be continued and expanded, with at least 
one-half of DOE's effort supporting exploration, and an exploration tax 
credit should be established.
    Expand and accelerate geothermal initiatives on the public lands. 
USGS should conduct a comprehensive nationwide geothermal resource 
assessment that examines the full range of geothermal resources and 
technologies; USGS should collect and make available to the public 
geologic and geophysical data to support exploration activities; BLM's 
Programmatic Environmental Impact Statement (PEIS) should be completed 
as a top priority; planning, leasing and permitting activities on BLM 
and National Forest lands should be adequately funded and conducted 
promptly. Appropriations (and dedicated funding) of $25 million 
annually should be provided for these agency efforts.

_______________________________________________________________________

                     Geothermal Energy Association

            209 Pennsylvania Ave SE, Washington, D.C. 20003

  Phone 202-454-5261, fax 202-454-5265; email [email protected]

                                 
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