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


 
                      REVISITING THE INDUSTRIAL 
                      TECHNOLOGIES PROGRAM (ITP): 
                    ACHIEVING INDUSTRIAL EFFICIENCY 

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 25, 2007

                               __________

                           Serial No. 110-56

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.science.house.gov

                                 ______

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                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                 HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
MARK UDALL, Colorado                 LAMAR S. SMITH, Texas
DAVID WU, Oregon                     DANA ROHRABACHER, California
BRIAN BAIRD, Washington              ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas                  JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           JO BONNER, Alabama
LAURA RICHARDSON, California         TOM FEENEY, Florida
PAUL KANJORSKI, Pennsylvania         RANDY NEUGEBAUER, Texas
DARLENE HOOLEY, Oregon               BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey        DAVID G. REICHERT, Washington
JIM MATHESON, Utah                   MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas                  MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky               PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri              BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana          ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana               PAUL C. BROUN, Georgia
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
                                 ------                                

                 Subcommittee on Energy and Environment

                   HON. NICK LAMPSON, Texas, Chairman
JERRY F. COSTELLO, Illinois          BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           RANDY NEUGEBAUER, Texas
MARK UDALL, Colorado                 MICHAEL T. MCCAUL, Texas
BRIAN BAIRD, Washington              MARIO DIAZ-BALART, Florida
PAUL KANJORSKI, Pennsylvania             
BART GORDON, Tennessee               RALPH M. HALL, Texas
                  JEAN FRUCI Democratic Staff Director
            CHRIS KING Democratic Professional Staff Member
         SHIMERE WILLIAMS Democratic Professional Staff Member
         ELAINE PAULIONIS Democratic Professional Staff Member
          ADAM ROSENBERG Democratic Professional Staff Member
          ELIZABETH STACK Republican Professional Staff Member
                    STACEY STEEP Research Assistant































                            C O N T E N T S

                           September 25, 2007

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Nick Lampson, Chairman, Subcommittee 
  on Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................     6
    Written Statement............................................     7

Statement by Representative Bob Inglis, Ranking Minority Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................     7
    Written Statement............................................     7

Prepared Statement by Representative Jerry F. Costello, Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................     8

                               Witnesses:

Mr. Frederick L. Moore, Global Director, Manufacturing and 
  Technology, Dow Chemical Company
    Oral Statement...............................................     9
    Written Statement............................................    11
    Biography....................................................    15

Mr. Paul N. Cicio, President, Industrial Energy Consumers of 
  America
    Oral Statement...............................................    16
    Written Statement............................................    17
    Biography....................................................    18

Mr. Lawrence W. Kavanagh, Vice President, Manufacturing and 
  Technology, American Iron and Steel Institute
    Oral Statement...............................................    18
    Written Statement............................................    19
    Biography....................................................    22

Mr. Malcolm E. Verdict, Associate Director, Energy Systems 
  Laboratory, Texas A&M Engineering Program, Texas Engineering 
  Experiment Station
    Oral Statement...............................................    22
    Written Statement............................................    24
    Biography....................................................    28

Discussion
  ITP Funding and Past ITP Efficacy..............................    28
  ITP Research and Development Limitations.......................    30
  Corporate Welfare Concerns.....................................    30
  ITP Return on Investment.......................................    31
  Natural Gas Prices.............................................    32
  Dow Energy Efficiency Efforts..................................    32
  ITP Energy Savings.............................................    33
  Charging Industry for Assessments..............................    33
  The Chemical Industry in the U.S...............................    35
  Need for Control System Improvements...........................    36

              Appendix: Additional Material for the Record

Section-by-Section: Discussion Draft of the Industrial Energy 
  Efficiency Research and Development Act of 2007................    40

The Industrial Energy Efficiency Research and Development Act of 
  2007...........................................................    41


    REVISITING THE INDUSTRIAL TECHNOLOGIES PROGRAM (ITP): ACHIEVING 
                         INDUSTRIAL EFFICIENCY

                              ----------                              


                      TUESDAY, SEPTEMBER 25, 2007

                  House of Representatives,
            Subcommittee on Energy and Environment,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:05 p.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Nick 
Lampson [Chairman of the Subcommittee] presiding.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            hearing charter

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                       Revisiting the Industrial

                      Technologies Program (ITP):

                    Achieving Industrial Efficiency

                      tuesday, september 25, 2007
                          2:00 p.m.-4:00 p.m.
                   2318 rayburn house office building

Purpose

    On September 25, 2007, the Subcommittee on Energy and Environment 
will hold a hearing on the Department of Energy (DOE) Industrial 
Technologies Program (ITP), and prospects for improving the energy 
efficiency and environmental performance of the country's most energy-
intensive manufacturing processes through technological advancement and 
industrial process assessments. The hearing shall provide background 
for legislation in this area. A copy of the discussion draft and 
section by section is attached.
    The hearing will examine the successes and limitations of the 
Industrial Technologies Program, and how the program can be improved to 
increase industrial energy efficiency and environmental performance in 
the U.S. industrial sector. It will also look at which areas of 
research and development should be enhanced and explored by the ITP and 
the Industrial Assessment Centers, and what cost-effective 
opportunities does a further enhancement of industrial efficiency 
program offer.
    The Subcommittee will hear testimony from four witnesses offering 
perspectives from the U.S. industrial sector, industry trade 
associations, and university-based energy auditing centers. The 
witnesses will also comment on the need and timeliness of this 
legislation, and make recommendations for improving the legislative 
language.

Witnesses

          Mr. Malcolm Verdict, C.E.M., is an Associate Director 
        of the Energy Systems Laboratory within the Texas Engineering 
        Experiment Station (TEES), the engineering research arm of the 
        Texas A&M University System in College Station, Texas. TEES has 
        operated one of the Department of Energy's twenty-six 
        Industrial Assessment Centers since 1986. Previously he held 
        positions at the Alliance to Save Energy, the Texas Public 
        Utility Commission, and the Texas Governor's Energy Management 
        Office.

          Mr. Fred Moore is the Global Director of 
        Manufacturing and Technology for Dow Chemical's Energy 
        Business. He is responsible for the production of power, steam, 
        and other utilities for Dow, and for development, support and 
        application of Energy technology globally and with Dow's major 
        joint ventures. Mr. Moore will be testifying in his position as 
        the Chairman of the Energy Efficiency Task Force of the 
        National Association of Manufacturers.

          Mr. Lawrence Kavanagh is the Vice President of 
        Manufacturing and Technology for the American Iron and Steel 
        Institute (AISI). Prior to joining AISI in 1991, Mr. Kavanagh 
        was general manager of engineering for Davy International's 
        Automation Services Division where he was responsible for 
        engineering, project management, installation and testing for 
        Davy's steel plant equipment installations around the world.

          Mr. Paul Cicio is the President at Industrial Energy 
        Consumers of America. Mr. Cicio's background includes over 20 
        years of public affairs and commercial experience in the energy 
        and environment sector, primarily with The Dow Chemical Company 
        where he was responsible for Dow's energy policy and 
        legislative initiatives.

Background

    An expanding economy, growing population, and rising standard of 
living create rapidly growing demands for energy, making energy 
conservation a key national goal. In the U.S. industry is responsible 
for more than one-third of all energy consumed, the large majority of 
which is consumed by certain heavy industries such as chemical, glass 
and metals production, mining, petroleum refining, and forest and paper 
products. These industries require very large amounts of energy per 
unit of production, making them particularly susceptible to high energy 
prices. These and other energy-intensive industries are ideal 
candidates on which to focus energy efficiency efforts and apply new 
technologies that not only increase efficiency, but also raise 
productivity, reduce wastes, and trim costs.
    While the U.S. industrial sector has become much more efficient 
over the past 30 years, there are still ample opportunities to achieve 
efficiency gains. However, energy-intensive industries face enormous 
competitive pressures that make it difficult to make the necessary R&D 
investments in technology development. Energy-intensive industries tend 
to exhibit relatively low levels of R&D spending, and are often 
unwilling to accept the risks associated with undertaking complex 
capital-intensive technology development and implementation. Without a 
sustained commitment by the private and public sectors to invest in 
technology R&D and adopt new technologies, the ability to close the gap 
between U.S. energy supply and demand will be greatly limited.
    The Industrial Technologies Program (ITP) works to improve the 
energy intensity of U.S. industry through coordinated research and 
development and dissemination of innovative energy efficiency 
technologies and practices. The ITP invests in high-risk, high-value 
cost-shared R&D projects to reduce industrial energy use and process 
waste streams, while stimulating productivity and growth. Competitive 
solicitations are the principal mechanism used by ITP to contract for 
cost-shared R&D. Solicitations reflect the priorities of the Program 
and selection of projects follows merit-based criteria that emphasize 
projected energy, environmental, and economic benefits. In addition, 
ITP makes available information and resources on other financial 
assistance and research opportunities and case studies from past ITP 
projects. The ITP portfolio details over 1,000 technology development 
projects in which ITP has been involved.
    The Industrial Technologies Program claims numerous successes. ITP-
sponsored technologies have won 31 ``R&D 100 Awards'' between 1991 and 
2005, and ITP-sponsored R&D has yielded 156 patents since 1994. While 
DOE R&D has yielded many energy efficient technologies ready for market 
entry, the ITP in particular is considered one of the most effective 
DOE programs at transferring technologies, with over 170 technologies 
reaching the commercial market. An estimated 13,000 U.S. manufacturing 
plants have been improved through the ITP technology delivery effort. 
Nearly five quadrillion Btu of energy (equal to approximately $23 
billion) of energy savings are attributed to the program since its 
inception, with 366 trillion Btu saved in 2004 alone.
    The ITP also sponsors 26 University-Based Industrial Assessment 
Centers (IACs) that provide no-cost energy assessments primarily to 
small and medium-sized manufacturers. Assessments are conducted by 
teams of faculty and students, and involve examinations of potential 
savings from energy efficiency improvements, waste minimization and 
pollution prevention, and productivity improvement. The average 
expected savings per assessment are fifty to seventy thousand, with 
much larger savings possible with large operations. Companies are in 
turn encouraged to replicate accomplishments and share results.
    By operating through university engineering programs the IACs serve 
as a training ground for the next-generation of energy and industrial 
engineers. Roughly 240 students receiving training through the program 
each year. When budgets for the program were higher 38 IACs operated 
around the country, compared to the 26 in operation today. The 
approximately $4 million funding for IACs is relatively small, 
especially given the significant economic benefits of reducing 
industrial energy consumption.

Brief Budget Overview

    Constantly changing market conditions, energy prices, and business 
concerns affect the ability and willingness of industry to pursue 
energy efficiency opportunities. As the role of energy in industry 
changes, the ITP should have the resources to sustain and expand 
operations, adapt, and reshape its strategy where needed. However, the 
budget in recent years has decreased dramatically. The Fiscal Year 2007 
budget request for Industrial Technologies was $45.6 million, an $11.3 
million reduction from the Fiscal Year 2006 Appropriation. By 
comparison, appropriated levels as recently as Fiscal Year 2000 were as 
high as $175 million. These funding levels reflect a dramatic shift in 
priorities away from industrial efficiency R&D.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The following represent a small portion of organizations that 
support, or have benefited from working with, the program:

         AMMEX--The Alliance Materials Manufacturing Excellence

         NAM--National Association of Manufacturers

         ACEEE--American Council for an Energy Efficient Economy

         ACC--American Chemistry Council

         3M Company

         Abbott Laboratory

         Bayer Healthcare

         Boeing

         Caterpillar

         Dow Chemical Company

         DuPont

         Texas Instruments

         Solutia

         Georgia Pacific

         GlaxoSmithKline

         Kaiser Aluminum

    Industrial Assessment Centers are located at Colleges and 
Universities around the country such as: Texas A&M University, 
University of Washington, Iowa State, University of Michigan, West 
Virginia University, Georgia Institute of Technology, University of 
Florida, and University of Miami.
    Chairman Lampson. This hearing will come to order. Good 
afternoon, and welcome to this hearing on the Department of 
Energy's Industrial Technologies Program, the discussion draft 
of my bill, the Industrial Energy Efficiency Act of 2007.
    I want to thank our distinguished panel, all of you, for 
joining us today. We look forward to hearing your perspectives 
about your experiences with the Industrial Technologies Program 
as we seek to highlight and enhance its important work.
    The program carries out this mission through a coordinated 
program of research and development and dissemination of 
technologies and operating practices. The Industrial Technology 
Program leads the Federal Government's ongoing effort to 
improve energy efficiency and environmental performance of the 
Nation's industrial sector in partnership with industry and 
universities. These efforts not only improve the bottom line of 
a wide variety of industries but enhance the quality of life 
for American workers, families, and communities that they 
serve.
    Unfortunately, we have seen the budget for this program 
drop fairly rapidly in the last few years. The Administration's 
fiscal year 2008 budget request for the program is a fraction 
of the fiscal year 2001 appropriation.
    Today our witnesses will identify opportunities to improve 
this important program. And my region of the country has a 
significant stake in this issue, to say the least. Many energy-
intensive industries, especially chemical manufacturing and 
petroleum refining are located east of Highway 35 in Texas. 
That is a big area, but these industries face several 
challenges to their continued economic strength, and many other 
businesses in my area depend upon the health of these core 
industries.
    There is significant pressure to reduce the emissions and 
energy use associated with their processes, while keeping costs 
low enough to maintain the region's attractiveness to industry. 
And that is a tall order when costs for natural gas, one of the 
primary industrial feedstocks, are among the highest in the 
country.
    Texas has the highest percentage of large energy-intensive 
industries, eight percent of the U.S. total. Texas consumes 20 
percent of the energy used by U.S. industry, and over half of 
the energy used in Texas is consumed by the industrial sector.
    It is said that the cheapest energy is the energy you don't 
have to use at all. With energy costs as high as they are, 
increasing efficiency through technology advancement is key to 
keeping these core industries located in the United States.
    Clearly, increasing energy efficiency is in everyone's 
interest and the Industrial Technology Program is an important 
avenue for achieving this important economic, national 
security, and environmental goals.
    So I look forward to the testimony and the recommendations 
of our witnesses, and now I would like to recognize our 
distinguished Ranking Member, Mr. Inglis, of South Carolina, 
for his opening statement.
    [The prepared statement of Chairman Lampson follows:]
              Prepared Statement of Chairman Nick Lampson
    Good afternoon. Welcome to this hearing on the Department of 
Energy's Industrial Technologies Program and the discussion draft of my 
bill, the Industrial Energy Efficiency Act of 2007.
    I would like to thank our distinguished panel of witnesses for 
joining us today. We look forward to hearing your perspectives and 
about your experiences with the Industrial Technology Program as we 
seek to highlight and enhance its important work.
    The program carries out this mission through a coordinated program 
of research and development, and dissemination of technologies and 
operating practices.
    The Industrial Technology Program leads the Federal Government's 
on-going effort to improve energy efficiency and environmental 
performance of the Nation's industrial sector in partnership with 
industry and universities. These efforts not only improve the bottom-
line of a wide variety of industries, but enhance the quality of life 
for American workers, families, and communities they serve.
    Unfortunately, we have seen the budget for this program drop 
rapidly in the last few years. The Administration's FY 2008 budget 
request for the program is a fraction of the FY 2001 appropriation.
    Today our witnesses will identify opportunities to improve this 
important program. My region of the country has a significant stake in 
this issue.
    Many energy-intensive industries, most especially chemical 
manufacturing and petroleum refining, are located east of Highway 35 in 
Texas. These industries face several challenges to their continued 
economic strength, and many other businesses in my area depend upon the 
health of these core industries.
    There is significant pressure to reduce the emissions and energy 
use associated with their processes, while keeping costs low enough to 
maintain the region's attractiveness to industry. That's a tall order 
when costs for natural gas, one of the primary industrial feedstocks, 
are among the highest in the country.
    Texas has the highest percentage of large energy-intensive 
industries, eight percent of the U.S. total. Texas consumes 20 percent 
of the energy used by U.S. industry. Over half of the energy used in 
Texas is consumed by the industrial sector.
    It is said that the cheapest energy is the energy you don't have to 
use at all. With energy costs as high as they are, increasing 
efficiency through technology advancement is key to keeping these core 
industries located in the U.S.
    Clearly, increasing energy efficiency is in everyone's interest and 
the Industrial Technology Program is an important avenue for achieving 
this important economic, national security, and environmental goal. I 
look forward to the testimony and recommendations of our witnesses.

    Mr. Inglis. Thank you, Mr. Chairman. Thank you for holding 
this hearing to discuss the importance of improving industrial 
energy efficiency.
    Industry as I understand it consumes about one-third of all 
the energy used in the United States. We pump more energy into 
our factories than we do into our vehicles. Increasing U.S. 
industrial efficiency will have many payoffs. It will reduce 
emissions, drive down energy costs, enabling domestic companies 
to compete internationally, and transfer energy cost savings to 
the consumer.
    The Department of Energy's Industrial Technologies Program 
has a successful track record of helping U.S. manufacturers 
translate research and development into efficient, cost-saving 
technologies.
    I look forward to hearing from the witnesses today, 
discussing, in discussing ways that the Industrial Technologies 
Program can further enable our nation's industries in their 
achievement of energy efficiency while remaining economically 
competitive.
    Thank you, again, Mr. Chairman. I yield back.
    [The prepared statement of Mr. Inglis follows:]
            Prepared Statement of Representative Bob Inglis
    Thank you, Mr. Chairman, for holding this hearing to discuss the 
importance of improving industrial energy efficiency.
    Industry consumes about one-third of all energy used in the United 
States. We pump more energy into our factories than we do into our 
vehicles. Increasing U.S. industry efficiency will have many payoffs: 
reduce emissions, drive down energy costs enabling domestic companies 
to compete internationally, and transfer energy cost savings to the 
consumer.
    The Department of Energy's Industrial Technologies Program (ITP) 
has a successful track record of helping U.S. manufacturers translate 
research and development into efficient, cost-saving technologies. I 
look forward to hearing from our witnesses today, and discussing ways 
the ITP can further enable our nation's industries to achieve energy 
efficiency while remaining economically competitive.
    Thank you again, Mr. Chairman. I yield back.

    Chairman Lampson. Thank you, Mr. Inglis. And I ask 
unanimous consent that all additional opening statements 
submitted by Subcommittee Members be included in the record. 
Without objection, so ordered.
    [The prepared statement of Mr. Costello follows:]
         Prepared Statement of Representative Jerry F. Costello
    Mr. Chairman, thank you for calling today's hearing to receive 
testimony on the Industrial Technologies Program (ITP) and legislation 
to support research and development of new industrial processes and 
technologies.
    The Science and Technology Committee continues to examine energy 
reform, the globalization of science technology, and the 
competitiveness of our universities and America's overall economy. The 
ITP has a significant positive impact on these issues by working with 
U.S. industry and our university students to improve industrial energy 
efficiency and environmental performance.
    As our nation continues to be impacted by high energy costs and 
environmental challenges, consumers and businesses are faced with few 
if any cost effective options to immediately address these problems. 
The ITP invests in high-risk research and development to improve 
industrial energy efficiency while stimulating productivity and growth. 
The ITP enjoys wide successes in R&D awards. Their research and 
development has resulted in more than 150 patents with over 170 
technologies that have reached commercial markets. The ITP also 
sponsors 26 university-based assessment centers, which provide energy 
assessments to small and medium-sized businesses.
    Congress continues to focus on energy reform and ways to curtail 
our dependence on foreign oil while maintaining a sound environment and 
national economy. As I have said before, one way to accomplish this 
goal is through the use of coal-to-liquid fuels.
    The United States has an abundant supply of coal, and I firmly 
believe coal-to-liquids, particularly in combination with carbon 
capture and storage (CCS) and other technologies, is part of the 
solution to achieving U.S. energy independence, continued economic 
prosperity and improved environmental stewardship.
    Coal-to-liquids plants using CCS can produce fuels with life cycle 
greenhouse gas emission profiles that are as good as or better than 
that of petroleum-derived products.
    In order for CCS technology to become commercially viable, the 
Federal Government must show it is committed to funding the necessary 
research, development, and demonstration (RD&D) projects. Today, we are 
taking an enormous step forward in this goal as we examine legislation 
to establish a program in cooperation with energy industries and 
universities to conduct research, development, demonstration, and 
commercial applications.
    Mr. Chairman, as you know, I have been a strong advocate for 
federal coal initiatives and programs. I intend to continue to work 
with my colleagues on both sides of the aisle to ensure we continue to 
advance technologies, including clean coal technology, to overcome the 
technical and economical challenges for coal-based power plants. I look 
forward to hearing from the witnesses regarding their thoughts on these 
issues.
    These actions will affect American students, U.S. competitiveness, 
and our overall economy.
    There have been several committee hearings in the House and Senate 
to discuss CCS technology. I am glad we are having today's Subcommittee 
hearing because With that, again, thank you Chairman Lampson--I look 
forward to hearing from our witnesses.

    Chairman Lampson. It is my pleasure to introduce the 
excellent panel of witnesses that we have with us this 
afternoon. Mr. Fred Moore is the Global Director of 
Manufacturing and Technology for Dow Chemicals energy business. 
He is responsible for the production of power, steam, and other 
utilities for Dow and for development, support, and application 
of energy technology globally, and with Dow's major joint 
ventures. So he is also the Chairman of the Energy Efficiency 
Task Force of the National Association of Manufacturers.
    Mr. Paul Cicio is the President of the--good Italian name, 
like Lampasona--is the President of the Industrial Energy 
Consumers of America. Mr. Cicio's background includes over 20 
years of public affairs and commercial experience in the energy 
and environmental sector, primarily with the Dow Chemical 
Company, where he was responsible for Dow's Energy Policy and 
legislative initiatives.
    Mr. Lawrence Kavanagh is the Vice President of 
Manufacturing and Technology for the American Iron and Steel 
Institute, or AISI. Prior to joining AISI in 1991, Mr. Kavanagh 
was the General Manager of Engineering for Davey 
International's Automation Services Division, where he was 
responsible for engineering, product management, installation 
and testing for Davey steel plant, equipment installations 
around the world.
    And Mr. Malcolm Verdict is an Associate Director of the 
Energy Systems Laboratory within the Texas Engineering 
Experiment Station, TEES, in the Engineering Research Arm of 
Texas A&M, where my daughters went to school, in College 
Station, Texas. TEES has operated one of the Department of 
Energy's 26 industrial assessment centers since 1986. 
Previously he held positions at the Alliance to Save Energy, 
the Texas Public Utility Commission, and the Texas Governor's 
Energy Management Office.
    And we want to welcome each and every one of you, and thank 
you very much for being here. You will each have five minutes 
for your spoken testimony, and you will notice that little 
black box in the middle. It works like a traffic signal. When 
it becomes red, I would appreciate your stopping and yielding 
to the next person. Your written testimony will be included in 
the record for the hearing, and when all four of you have 
completed testimony, then we will begin questions. Each Member 
will have five minutes to question the panel.
    And Mr. Moore, we will begin with you.

     STATEMENT OF MR. FREDERICK L. MOORE, GLOBAL DIRECTOR, 
       MANUFACTURING AND TECHNOLOGY, DOW CHEMICAL COMPANY

    Mr. Moore. Good afternoon, Mr. Chairman and Members of the 
Subcommittee. My name is Fred Moore, and I am the Director of 
Manufacturing and Technology for Energy with the Dow Chemical 
Company. In that capacity I am responsible for assuring that 
Dow's use of energy is as efficient as possible.
    I am here today in my capacity as Chairman of the Energy 
Efficiency Task Force of the National Association of 
Manufacturers (NAM), the largest industrial trade association 
in the U.S. NAM represents more than 14 million men and women 
in the manufacturing economy producing $1.5 trillion in 
revenues last year. We are pleased to offer our views on DOE's 
ITP Program and how to achieve greater industrial energy 
efficiency.
    Energy efficiency is an imperative for the American 
manufacturers, as well as every other sector of our economy. 
NAM affirmed the importance of energy efficiency with the 
release of its competitiveness model energy legislation earlier 
this year. As a nation we must begin to think of the energy we 
don't use as our first fuel of choice.
    Natural gas prices differ widely around the world from 75 
cents per million BTUs in the Middle East to the winter 
forecast for the U.S. of $9 per million BTUs. Our inability to 
pass on these energy costs in the price of our products results 
in manufacturing being the shock absorber for high and volatile 
fuel prices.
    We are the leading edge of demand destruction in the face 
of high energy prices. The demand destruction is just a stare-
all term for job loss. Nearly three million high-paying 
manufacturing jobs have been lost since the run-up in natural 
gas prices in 2000.
    What are we doing about this? In Dow we are relentless in 
our drive to reduce the amount of energy it takes to produce 
each pound of product. Between 1995, and 2005, we improved our 
energy efficiency by 22 percent, saving nearly 900 trillion 
BTUs. That is enough energy to power all the residential and 
commercial businesses in California for an entire year. And we 
saved nearly $4.5 billion in the process.
    Dow is committed to achieve another 25 percent improvement 
in energy efficiency by 2015. To underscore the impact of 
energy efficiency on our nation's energy security, if our 
entire economy in the U.S. would achieve a similar goal, 
assuming normal GDP growth, we could displace the oil 
equivalent of all of our current imports from the Persian Gulf.
    We have learned much from our work with DOE's ITP Program. 
In addition to being an active participant in their Save Energy 
Now Program, we hosted 13 DOE energy assessments at our nine 
largest sites in the U.S. in the last two years. These joint 
assessments identified nearly four trillion BTUs per year of 
savings, with an annual amount of roughly $30 million.
    In fact, just last week the Department of Energy helped us 
optimize one of our pumping systems at our Texas City Plant in 
Texas. That literally allowed us to begin saving $200,000 a 
year in energy costs that day. It was almost as easy as 
flipping a switch.
    If ITP can identify additional opportunities for us, 
imagine what it can do for the thousands of small and medium-
sized companies that have neither the internal expertise nor 
the resources of Dow. That is why NAM and the DOE recently 
signed a Memorandum of Understanding (MOU) to work together to 
promote energy efficiency among its 12,000-member companies. It 
is our joint responsibility to help them. In order to succeed, 
we need a strong ITP Program, because it brings together the 
collective expertise of business, of government, and others 
such as NAM to multiply its impact.
    You have asked how to strengthen the program. Please 
consider the following suggestions. It should expand to focus 
on co-generation, combined heat and power, and waste heat 
recovery. It should increase its dialogue in involvement with a 
manufacturing company representatives to insure that the 
activities meet the needs of the manufacturing sector.
    Funding should be restored to late 1990 levels to allow re-
staffing of the program. Programs that reach out to small and 
medium manufacturers should be coordinated with other 
governmental activities to minimize redundancy and maximize 
synergy. And last, there should be close coordination with 
EPA's Energy Star Program to make best use of their tools.
    Energy efficiency has for too long been the Rodney 
Dangerfield of energy policy. It gets no respect. Through our 
collective efforts we can assure that energy efficiency gets 
the respect it deserves.
    Thank you, and I look forward to answering any questions.
    [The prepared statement of Mr. Moore follows:]
                Prepared Statement of Frederick L. Moore
    The Dow Chemical Company, on behalf of the National Association of 
Manufacturers (NAM), appreciates the opportunity to submit these 
written comments concerning the Department of Energy (DOE) Industrial 
Technology Program (ITP).
    High U.S. energy prices have spurred a significant amount of 
private sector action on energy efficiency. Many companies, for 
example, have established energy efficiency programs. In our 
experience, in order to be successful, a corporate energy efficiency 
program requires top-level commitment; an integrated approach; and a 
continuous effort to identify, evaluate, and prioritize among energy 
efficiency opportunities. To help companies achieve energy efficiency 
improvements, several third-party initiatives are underway, including 
the recent creation of the NAM Energy Efficiency Task Force.
    The country currently faces significant energy challenges in the 
form of energy security and climate change. Given these dual and 
interrelated problems, promotion of energy efficiency represents the 
consensus first step toward a comprehensive policy solution. However, a 
sole reliance on private sector action is not going to solve the inter-
linked problems of energy security and global climate change. A 
partnership between the private and public sectors will be required to 
promote energy efficiency, the development of renewable and alternative 
energy, and the development and deployment of energy-saving 
technologies. The DOE ITP program represents the kind of government 
program that is necessary to help US manufacturers identify 
opportunities for energy savings through efficiency. We believe this 
very valuable program should be strengthened in order to promote energy 
efficiency across the manufacturing sector.

The Dow Chemical Company

    Dow was founded in Michigan in 1897 and is one of the world's 
leading manufacturers of chemicals and plastics. We supply more than 
3,300 products to customers in 175 countries around the world, 
including hundreds of specialty chemicals, plastics, crop protection 
products, and pharmaceutical raw materials essential to life.
    Dow is an energy-intensive company. Dow uses energy, primarily 
natural gas liquids, as a feedstock to make our products. We also use 
energy to drive the chemical reactions necessary to turn our feedstock 
materials into useful products, many of which lead to net energy 
savings.
    Dow is committed to sustainability. Our ambitious 2015 
sustainability goals underscore this commitment to reduce our energy 
and climate ``footprint,'' and to assist other manufacturers and the 
public to do likewise.
    Dow has invested in a comprehensive energy efficiency program, and 
we have achieved impressive results. Between 1995 and 2005, we reduced 
our energy intensity (i.e., energy use divided by production output) by 
22 percent. We are not stopping there. We have committed to reduce our 
energy intensity by an additional 25 percent from 2005 to 2015. Such an 
improvement, if replicated across the country, would be extremely 
beneficial.
    For example, if the U.S. reduced its energy intensity by 25 percent 
between 2005 and 2015, and assuming GDP grows at the expected three 
percent rate, we would eliminate the oil equivalent of all the Persian 
Gulf imports today.
    Our financial investment in energy efficiency has been rewarded 
several times over in terms of energy savings. We believe our 
experience with energy efficiency can serve as an example for other 
companies and the general public.
    Aside from financial rewards, our energy efficiency program has 
also helped reduce our absolute levels of greenhouse gas emissions, and 
we are committed to do even better in the future. Our aggressive focus 
on energy intensity has contributed to, since 1990, a reduction of over 
20 percent in absolute greenhouse gas emissions--below the reduction 
target set in the Kyoto Protocol.

Energy Efficiency at Dow

    Dow is using its expertise to minimize its energy and climate 
``footprint'' and to develop products that enable its downstream 
customers to do likewise.
    The Dow Chemical Company is a recognized industry leader in energy 
management. Energy efficiency has been part of our heritage since the 
very early years of our company, when Dow helped pioneer the use of 
industrial combined heat and power, also known as co-generation. In 
conventional power plants, a significant portion of the energy is lost 
(usually through cooling towers or flue gas) in the process of 
electricity generation. In contrast, co-generation captures more of the 
heat, utilizing less fuel, which has a significant impact on greenhouse 
gas emissions and improved air quality relative to conventional utility 
power. Co-generation typically uses 20 to 40 percent less fuel than 
separate steam and power generation because energy is captured and used 
that would otherwise be wasted.
    In recent years, through a company-wide focus on energy efficiency, 
we have dramatically reduced our energy intensity--and exceeded an 
aggressive, long-term corporate energy efficiency goal mentioned 
previously. Figure 1 shows how our $1 billion investment in energy 
efficiency has returned around $4.5 billion in energy savings.

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    Dow's experience in energy efficiency has convinced us that we can 
help others realize these benefits, too. Indeed, energy efficiency is a 
universal tool. It should be the tool of choice, irrespective of 
whether one's motivation is to save money, reduce GHG emissions, or 
reduce dependence on foreign energy. It is the cheapest and most 
renewable ``fuel'' of all.
    Dow's energy efficiency and conservation initiative relies strongly 
on our structured approach to resource conservation and energy 
intensity reduction. At the core is the sustained commitment and 
support of Dow's corporate leadership. The overall Energy Efficiency 
and Conservation effort within Dow is driven by a Global Energy 
Efficiency Leader, who has full responsibility and accountability for 
implementing and managing an aggressive global energy conservation 
plan. The energy conservation leader sponsors technology center and 
site energy efficiency teams and networks throughout the company to 
identify energy saving opportunities, develop long-term energy 
improvement plans, and implement projects.
    In addition, each business unit at Dow is responsible for aligning 
its goals and plans to the corporate goal on energy efficiency. Focal 
points within each business unit are responsible for driving energy 
efficiency within their respective technologies. Energy efficiency is 
further driven by the energy conservation teams at our 13 largest 
energy-consuming sites, which account for over 90 percent of Dow's 
energy usage. These local teams actively engage employees in energy 
efficiency improvement projects at their sites and drive an energy 
efficiency mindset and culture at the local level.

The ITP: Promoting Energy Efficiency

    Outside of Dow, the company also partners with, and/or supports, 
government and other organizations in their efforts to promote energy 
efficiency among all consumers. Dow is an active participant in the 
U.S. Department of Energy's ``Save Energy Now'' industrial energy 
efficiency campaign. Save Energy Now is sponsored by the DOE Industrial 
Technology Program. Dow was one of the first six companies selected for 
a DOE Energy Savings Assessment (ESA) because of its interest and past 
success in setting an example in energy management.
    In the past two years, the company has hosted thirteen energy 
assessments at nine of its largest U.S. manufacturing facilities. These 
assessments have included steam, process heating, and pumping systems. 
These joint assessments identified additional energy saving 
opportunities:

          The total energy savings potential found in the 
        assessments was more than 3.75 trillion Btu per year, valued at 
        more than $30 million per year.

          At the end of August, seven of the plants have 
        reported implementing energy savings valued at more than $6.1 
        million.

          Additionally, $3.4 million worth of energy savings 
        projects are underway.

          Finally, $4.7 million worth of energy savings 
        projects are scheduled to be done.

    Further, Dow collaborated with the DOE to pilot conducting a series 
of Industrial Best Practices training sessions via webcast, also well 
as hosting, in-depth DOE Steam Systems Assessment training sessions in 
Texas and Louisiana, drawing not only Dow engineers but also 
surrounding industrial community members, enabling other companies to 
benefit from energy saving assessment tools and strategies. We are 
continuing that collaboration on other projects, such as the Superior 
Energy Performance Partnership, whose purpose is to develop a more 
consistent framework for achieving greater energy efficiency in all 
U.S. manufacturing plants. The goal of the Partnership is to reduce, by 
25 percent, the energy intensity of U.S. industry over the next ten 
years. Meeting this goal would save 8.4 quadrillion Btu per year, which 
is equal to the annual energy consumption of the State of California.
    It is useful to provide an illustration of the value of the ITP. 
Last December, one of Dow's combined heat and power (CHP) units, known 
as Power 6, participated in the Energy Savings Assessment sponsored by 
the Department of Energy's ``Save Energy Now'' program. The three-day 
activity was facilitated by an expert consultant, and focused on steam 
system optimization and energy conservation. The assessment yielded a 
list of opportunities that were evaluated by the Operations and 
Technology Center teams.
    Several of the opportunities were implemented and led to 
significant energy savings. DOE is launching a recognition program to 
reward plants who have implemented significant savings through the 
energy assessment. Power 6 has achieved the highest award level--Energy 
Champion--by saving over 250,000 million Btu and/or over 15 percent 
total energy savings.
    If a company like Dow, that has a successful track record in energy 
efficiency, can benefit so much from the ITP program, then what about 
the thousands of small and medium-size companies that have neither the 
internal expertise nor the resources?
    This is where the unique collaboration between the National 
Association of Manufacturers (NAM), government, and other organizations 
can help take industrial energy efficiency to the next level. The U.S. 
industrial sector is responsible for 33 percent of total U.S. energy 
consumption. The opportunities for energy efficiency are enormous.
    The NAM is the largest industrial trade association in the United 
States. The NAM represents the more than 14 million men and women 
employed in the manufacturing economy, producing $1.5 trillion in 
revenues last year. Through its membership, the NAM has access to a 
large number of U.S. manufacturers, and has the means to both 
communicate and market to candidate companies on the availability of 
energy efficiency resources. In support of the NAM's agenda to 
establish a national commitment to reduce energy intensity of the U.S. 
economy through strategic goal-setting, public-private partnership and 
consumer education, the NAM created its Energy Efficiency Task Force.
    The NAM further affirmed the importance of energy efficiency with 
the release of its comprehensive model energy legislation earlier this 
year, the Energy Security for American Competitiveness Act (ESAC), 
which treats energy efficiency as a virtual domestic energy source that 
can displace imports. The NAM recently signed a Memorandum of 
Understanding (MOU) with the DOE to promote increased industrial energy 
efficiency among NAM member companies. The purpose of this MOU is to 
establish a working arrangement between the U.S. Department of Energy 
(DOE) Office of Energy Efficiency and Renewable Energy's Industrial 
Technologies Program (ITP) and the NAM. The NAM and the EPA's Energy 
Star Program are working on a partnership. The NAM continues to work on 
this project with NGO partners, such as the Alliance to Save Energy 
(ASE) and the American Council for an Energy Efficient Economy (ACEEE).
    This MOU supports a variety of activities, which aim to assist 
manufacturing facilities to initiate and implement energy management 
programs, adopt clean energy efficient technologies, and achieve 
continual energy efficiency and intensity reduction improvements. NAM 
and DOE will also coordinate in measuring and documenting the energy 
savings achieved in NAM member company manufacturing facilities as 
impacted by the energy efficiency campaign supported by the parties and 
other partners to the extent the information is available. This MOU 
represents a non-binding expression of intent between the parties to 
work together to promote energy efficiency in manufacturing.
    As we face the interrelated issues of energy security and climate 
change, we must increasingly rely on the energy we do not use as the 
fuel of choice. Energy efficiency is the well we must tap for this 
resource.
    High global oil prices affect the economy as a whole. Natural gas 
prices differ widely around the world, from 75 cents per million Btu in 
the Middle East to a forecast of nearly $9.00 for this coming winter in 
the U.S. Since we often can't pass on our energy costs in the price of 
our products, manufacturers become the shock absorber for volatile and 
high natural gas prices.
    Manufacturing is the leading edge of demand destruction in the face 
of high energy prices. And demand destruction is just a more palatable 
economic term for job destruction. Figure 2 shows how high energy costs 
have contributed to over three million high paying manufacturing jobs 
being lost since the run up in natural gas prices began in 2000.

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    The Energy Efficiency Task Force, chaired by Dow, is partnering 
with DOE, EPA EnergyStar, the Alliance to Save Energy, the American 
Council for an Energy Efficient Economy, and other energy efficiency 
organizations to make use of readily available tools which will help 
manufacturers identify and address cost-effective energy efficiency 
opportunities.
    The partners are providing their specific expertise and services to 
access, communicate, and market to a large number of U.S. 
manufacturers, and deliver a consolidated catalog of tools, 
technologies, and a menu of options for future direction in energy 
management. NAM will utilize a website portal to access the right 
energy efficient technology, a consolidated library of tools, and 
roadmaps to implementing effective energy management programs.
    Through marketing and outreach efforts, the partners plan to reach 
a greater number of small and medium-sized manufacturers; help them 
progress toward greater energy efficiency; and establish systems and 
technology improvements capable of delivering immediate and sustaining 
long-term energy savings.

Recommendations for Congress and the Administration

    The ITP program offers a wide range of important benefits to the 
manufacturing sector:

          The program provides training for the next generation 
        of manufacturing energy efficiency engineers through the 
        Industrial Assessment Program. Graduates of this program have a 
        proven track record of being able to perform in jobs much more 
        quickly than students without the experience. These students 
        also become sensitive to identifying and implementing energy 
        efficiency opportunities.

          The program has the ability to convene 
        representatives from a wide range of companies to work on 
        manufacturing issues as a whole, without raising anti-trust 
        concerns.

          The program's cooperative RD&D efforts have been 
        valuable to industry by allowing industry and government to 
        work together to target research that meets the needs of 
        manufacturing industries, resulting in near-term impacts.

    Dow and NAM support the ITP, which is currently the only federal 
program that supports manufacturing research.
    To strengthen the program, we recommend the following:

          Expand the program to focus on co-generation, CHP and 
        recycled energy as important opportunities.

          Develop closer relationships to manufacturing company 
        representatives to ensure that ITP activities meet the needs of 
        the manufacturing sector.

          Program funding should be restored to late-1990s 
        levels to allow re-staffing of the program.

          The program should be coordinated with NIST MEP 
        Centers and DOE CHP Regional Application Centers to maximize 
        synergies between program offerings and minimize redundancies.

Conclusion

    U.S. manufacturers are doing a great deal to improve their energy 
efficiency performance. High U.S. energy prices are a driver, as are 
the dual problems of energy dependence and rising GHG emissions. But a 
sole reliance on private sector action is not going to solve these 
problems. A partnership between the private and public sectors will be 
required to promote energy efficiency, the development of renewable and 
alternative energy, and the development and deployment of energy-saving 
technologies.
    Public policy plays an important role, and Congress must enact 
measures to reduce demand, increase supply, and promote alternatives. 
The first order of business should be to promote energy efficiency. The 
DOE ITP program represents the kind of government program that is 
necessary to help U.S. manufacturers identify opportunities for energy 
savings through efficiency. We believe this very valuable program 
should be strengthened in order to promote energy efficiency across the 
manufacturing sector, increase our energy security, and reduce GHG 
emissions.

                    Biography for Frederick L. Moore
    Fred Moore is the Global Director of Manufacturing & Technology for 
the Energy business in Dow. He is responsible for the safe and reliable 
production of power, steam, and other utilities for Dow globally, which 
represents more than 10 percent of Dow's asset base. In his Technology 
role, he is responsible for development, support and application of 
Energy technology globally and with Dow's major joint ventures.
    Fred is a graduate of Purdue University and began his career with 
Union Carbide in 1975. In subsequent years, he has held technical roles 
and managerial roles in a number of businesses, functions, and 
locations in the U.S. and Canada. In addition to his manufacturing 
experiences in North America, he has been a corporate media 
spokesperson for environmental matters, lobbied at the State and 
Federal levels of government, served on a joint venture board of 
directors, been chairman of or served as board member of several state 
and industry trade association groups.

    Chairman Lampson. Thank you, Mr. Moore.
    Mr. Cicio.

 STATEMENT OF MR. PAUL N. CICIO, PRESIDENT, INDUSTRIAL ENERGY 
                      CONSUMERS OF AMERICA

    Mr. Cicio. Good afternoon, Chairman Lampson, Ranking Member 
Inglis. Thank you for the opportunity to be here.
    The Industrial Energy Consumers of America (IECA) is a 
national, non-profit, non-partisan trade association whose 
membership are exclusively energy-intensive industry companies. 
The manufacturing sector competes globally, where energy-
intensive industries reducing energy consumption is essential. 
We either continually reduce our energy consumption per unit of 
product, or we cease to be competitive. And while energy 
efficiency is highly valued by the industrial sector, other 
energy issues weigh heavy on us and can overshadow the benefits 
of energy efficiency.
    Since 2000, the manufacturing sector has lost 3.1 million 
jobs, specifically 18 percent of all manufacturing jobs. To our 
knowledge this is the first time in U.S. history where we have 
lost manufacturing jobs despite robust economic growth for the 
last four years. High relative energy costs, particularly 
natural gas costs and now rising electricity costs, have been a 
significant factor for these energy-intensive industries, and 
we are fearful that if Congress does not increase availability 
and affordability of domestic energy, more manufacturing plants 
will move offshore.
    Manufacturers are also wary of the direct and indirect 
costs of Congressional efforts to cap greenhouse gas emissions. 
Greenhouse gas emission concerns have already incentivised 
power generators to increase their consumption of natural gas 
by 19 percent since 2000, which has driven up the cost of 
natural gas and electricity for all consumers. And we are 
concerned that without resolving these issues more 
manufacturing jobs will be lost.
    While the industrial sector represents 32 percent of U.S. 
energy consumption, we have demonstrated absolutely remarkable 
performance in energy efficiency. Since 1990, the industrial 
sector total energy consumption increased by one percent, and 
we increased the total industrial value of shipments by almost 
32 percent. The ITP Program has been an important part of that 
success story.
    Improvement in energy efficiency has also played an 
important role in reducing greenhouse gas emissions. In the 
industrial sector, the direct and indirect greenhouse gas 
carbon emissions, in 2006, are below the 1990, levels. 
Residential carbon emissions are up 31 percent, commercial, up 
34, transportation, up 25, electricity production, up 32 
percent. So the performance of the industrial sector has been 
remarkable.
    There is no sector in the economy that is more supportive 
of energy efficiency than our sector. The Industrial Technology 
Program gets high marks from the IECA member companies. Given 
the relatively modest federal money dedicated to the program, 
the benefits to the industrial sector and to the United States 
economy are significant. In our view we simply need to do more 
of the same, including restoring higher levels of funding. We 
do support higher levels for cost-sharing research, 
demonstration, and deployment of technology and continue to 
expand programs like Save Energy Now.
    The industrial sector needs R&D in areas that provide long-
term, cost-effective solutions, particularly for the high-risk, 
high-value, long-term process technology. Examples of R&D 
interests of our members deal with control systems, 
optimization of energies in steam generation, process heaters, 
heat recovery technology, and alternative energy fuels and 
feedstocks.
    Lastly, IECA member companies wish to be sure this 
Subcommittee knows how much they value the Save Energy Now 
Program. Save Energy Now is a superb program because it helps 
companies accelerate finding high-quality energy reduction 
projects through plant assessments and uses existing 
technology, existing products, and existing knowledge to reduce 
energy consumption. The 200 assessments completed in 2006, 
found over $500 million in potential energy savings, and the 
DOE spent only $3 million on the specific program. A tremendous 
investment for federal dollars.
    Thank you.
    [The prepared statement of Mr. Cicio follows:]
                  Prepared Statement of Paul N. Cicio
    Good afternoon Chairman Lampson and Ranking Member Inglis. Thank 
you for the opportunity to testify before this important subcommittee 
and on this very timely topic.
    The Industrial Energy Consumers of America (IECA) is a national 
non-profit non-partisan cross-industry trade association whose 
membership is exclusively from the energy intensive manufacturing 
sector and is dedicated to a broad array of energy and environment 
related issues.
    The manufacturing sector competes globally. For energy intensive 
industries, reducing energy consumption per unit of product produced is 
essential. We either continually reduce our energy cost per unit of 
product or we will cease to be competitive.
    While the industrial sector represents 32.2 percent of the U.S. 
energy consumption we have demonstrated remarkable performance in 
energy reduction. Since 1980 the industrial sector total energy 
consumption increased by only one percent while increasing total 
industrial value of shipments by 53 percent.
    Improvement in energy efficiency has also played an important role 
in reducing GHG emissions. The industrial sector direct and indirect 
carbon dioxide emissions in 2006 are slightly below the 1990 level 
while GHG emissions from the residential sector increased 31.4 percent; 
commercial +34.6 percent; transportation +25 percent and electricity + 
31.7 percent.
    Energy is used as both fuel and feedstock and can represent as high 
as 70 percent of the cost of producing some products. For perspective, 
the industrial sector contains about 226,000 manufacturing sites. 
However, there are about 6,800 sites that use greater than $2 million 
of energy annually and consume about 53 percent of all energy in the 
industrial sector.
    The Industrial Technology Program gets high marks from IECA member 
companies. Given the relatively modest federal money dedicated to the 
program, the benefits to the industrial sector and the U.S. economy are 
significant.
    In our view, we simply need to do more of the same. IECA supports 
greater spending on R&D programs that provide cost sharing research, 
demonstration and deployment of technology and continuing to expand 
programs like ``Save Energy Now.''
    The industrial sector needs R&D in areas that provides long-term 
cost-effective technology solutions, particularly for high-risk high-
value long-term technology. Examples of R&D areas of interest are: 
energy management systems that include control and data acquisition; 
control system improvements and optimization in the areas of steam 
generation, process heaters; heat recovery technology; and alternative 
energy sources for fuels and feedstock.
    Lastly, IECA member companies wish to be sure this Subcommittee 
knows how much they value the ``Save Energy Now'' program. ``Save 
Energy Now'' is a superb program because it helps companies accelerate 
finding high quality energy reduction projects through plant 
assessments and uses existing technology, product and knowledge to 
reduce energy consumption.
    Thank you.

                      Biography for Paul N. Cicio
    Paul N. Cicio has been the President of the Industrial Energy 
Consumers of America (IECA) since its founding six years ago. IECA is a 
non-profit trade association created to promote the interests of 
manufacturing companies for which the availability, use and cost of 
energy, power or feedstock play a significant role in their ability to 
compete in domestic and world markets. Membership represents a diverse 
set of energy intensive industries including: plastics, cement, 
aluminum, paper, food processing, brick, chemicals, fertilizer, 
insulation, steel, glass, industrial gases, pharmaceutical and brewing.
    Mr. Cicio is well know in Washington circles as a consumer advocate 
for the industrial sector on issues related to natural gas supply, 
natural gas price manipulation, electricity, energy efficiency and 
climate change policy. He has testified four times before the U.S. 
House of Representatives; twice before the U.S. Senate; and twice 
before the Federal Energy Regulatory Commission. He has also intervened 
at the Commodity Futures Trading Commission.
    In 2006, the Secretary of the Interior appointed Mr. Cicio to the 
U.S. Department of Interior Outer Continental Shelf Policy Advisory 
Committee. And in 2007, the Secretary of Energy appointed him to the 
National Coal Council, an advisory council to the Secretary. In both 
appointments, Mr. Cicio became the first energy consumer advocate.
    Previous to IECA, Mr. Cicio was employed by The Dow Chemical 
Company where he held a number of diverse responsibilities including: 
hydrocarbons and energy global issues management and Federal Government 
affairs, hydrocarbons and energy senior commercial manager, marketing 
manager, district sales manager, product sales manager and field sales. 
He retired from Dow Chemical with almost 30 years of service.

    Chairman Lampson. Thank you, Mr. Cicio.
    Mr. Kavanagh.

    STATEMENT OF MR. LAWRENCE W. KAVANAGH, VICE PRESIDENT, 
MANUFACTURING AND TECHNOLOGY, AMERICAN IRON AND STEEL INSTITUTE

    Mr. Kavanagh. Thank you, and good afternoon. I work at the 
American Iron and Steel Institute, but today I am representing 
the Alliance for Materials, Manufacturing Excellence, or AMMEX. 
AMMEX consists of manufacturers in aluminum, chemicals, glass, 
forest products, metal casting, and steel and other 
organizations concerned about energy use and competitive 
manufacturing. So my remarks are in that larger context today.
    A little bit of background. The Inter-Governmental Panel on 
Climate Change says that we need to reduce CO2 
emissions by 50 percent by 2050 to keep global warming below 
two degrees. Two degrees is kind of the threshold above which 
bad stuff happens and below which everything is okay. So if you 
look at the chart that is in my testimony, it shows the 
improvements in energy use and CO2 emissions that 
materials manufacturers have made over time, and a lot of that 
was done in cooperation with DOE and the gentleman to my right 
has already quoted the figures and facts extensively.
    So the energy usage gains that we have been able to make 
make sense because all processes are mature, and we have been 
working on lowering energy use for some time.
    However, it also shows, and this is the key point, that to 
make any significant change in energy use and CO2 
emissions going forward, new processes are required. There is 
just not enough left in today's processes because we are 
relatively energy efficient already. Not to get to the big 
gains that are required or will be required in a carbon-
constrained economy.
    So whether you call these breakthrough, game changing, or 
transformational technologies, new process development is the 
only path to meeting society's needs regarding energy use and 
CO2 emissions.
    AMMEX supports an ITP Program establishing a public, 
private R&D focused on new process development over the long-
term, and our estimates indicate the same as has been already 
mentioned that a funding level of the late '90s period of $125 
million or so is a good place to start.
    Federal dollars coupled with industry dollars is a very 
powerful combination, and not only addresses the technical 
challenges we face, but by placing this joint funding at 
universities, it also addresses our crucial and expanding need 
for the next generation of scientists and innovators in our 
industries.
    We also recognize there is a need for near-term and 
incremental work, and this part of the program should address 
censors, motors, steam, pumps, and the like, and it should also 
invite the participation of new stakeholders that may have more 
room for improvement in the near term than materials 
manufacturing.
    In summary, it is necessary that we realize we could not 
incrementalize to the type of energy savings necessary to 
manufacture in the carbon-constrained world. High-efficiency 
motors and light bulbs will simply not be enough to come close. 
Reducing energy use and CO2 emissions are everyone's 
responsibility, the public and the private sector. And the way 
to meet this challenge is to create a jointly-funded R&D 
program to transform industrial processes into ones that use 
less and diverse forms of energy while emitting little or no 
CO2.
    Thank you.
    [The prepared statement of Mr. Kavanagh follows:]
               Prepared Statement of Lawrence W. Kavanagh
    Chairman Lampson, Ranking Member Inglis, and other Members of the 
Subcommittee, thank you for inviting me here to speak today.
    My name is Lawrence Kavanagh and I am Vice President--Manufacturing 
and Technology at the American Iron and Steel Institute. I am here 
today on behalf of the Alliance for Materials Manufacturing Excellence 
or AMMEX. The organizations that are AMMEX members include the basic 
materials manufacturing sector [aluminum, chemicals, forest products, 
glass, metal casting, steel] in the U.S. economy along with several 
stakeholders in materials manufacturing, such as the Northeast Midwest 
Coalition, the National Association of State Energy Officials and the 
American Council for an Energy-Efficient Economy.
    The member organizations of AMMEX have been partners with the 
Department of Energy's Industrial Technology Program since its 
inception. ITP is a true public-private partnership. DOE and materials 
manufacturers jointly fund cutting-edge research that addresses the 
needs of the Nation and materials manufacturers. All projects have the 
shared goals of reducing energy consumption, reducing environmental 
impact and increasing competitive advantage of U.S. materials 
manufacturers.
    By reducing the energy intensity of materials manufacturers and 
accelerating the delivery of new technology, ITP has helped make U.S. 
materials manufacturers more competitive in global markets, preserving 
and creating good-paying jobs in the process. The program is unique 
because we select only projects with ``dual benefits''--a public 
benefit such as reduced emissions or petroleum use, justifying the 
federal funding; and an industry benefit such as a more efficient 
process, justifying the industrial funding.

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    By reviewing the chart above, one can see that materials 
manufacturers have greatly reduced energy use since 1990 because of 
their co-investment with DOE. Materials manufacturers have become very 
efficient for the processes they operate today and in order to make the 
type of gains in the future that have been seen since 1990, new process 
development is required. Research and development efforts into new 
processes will open up large energy savings and carbon dioxide 
mitigation opportunities.
    AMMEX fully supports the Bill's focus on the development and 
deployment of new process technologies.
    U.S. materials manufacturing continues to face challenges resulting 
from increased cost and decreased availability of traditional energy 
supply resources. These challenges have stimulated innovation in the 
materials manufacturing sector in order to create significant energy 
improvements and to diversify the energy supplies. While the 
innovations of the past have brought the materials manufacturing sector 
a long way, the sector cannot go further without new innovations. In 
order to do this, the materials manufacturing processes must be 
transformed, i.e., new processes and new innovations must be developed 
which will use much less energy and which will be able to utilize 
diverse forms of energy.
    To accomplish these goals, the Federal Government and industry will 
need to embark upon a co-funded effort to broaden and accelerate 
inherently high-risk research, development, and deployment of new 
materials manufacturing processes that utilize diverse energy sources. 
This effort will also allow the materials manufacturing sector to 
lessen dependence on natural gas and oil resources and conventional 
electricity sources--thus benefiting consumers through contribution to 
a stable energy market.
    Dramatic increases in industrial energy prices and growing global 
competition threaten the vitality and the future of U.S. materials 
manufacturing. Unless this trend is reversed, American manufacturing 
jobs in these key industries will increasingly move overseas. 
Manufacturers have responded to such challenges in the past by applying 
the power of innovation to create new products and processes that 
sustain the foundation of the U.S. economy.
    Secondarily, proposed changes within the DOE Industrial 
Technologies Program are also supported by AMMEX members:

          The broadening of the stakeholder group to include 
        data centers and food processors is important as it may offer 
        opportunities for incremental energy savings in the near-term

          The establishment of a cross-cutting portfolio that 
        includes lightweight materials research, inclusive of those 
        made by AMMEX members [e.g., advanced high strength steels, 
        aluminum, metal castings, composites, glasses and others]

          The establishment of a cross-cutting portfolio that 
        includes nano-manufacturing so long as it recognizes that 
        materials made by AMMEX members are in fact nano-materials.

    AMMEX remains concerned with the recent funding levels of ITP. In 
the years 1990-96 the program consisted largely of ``industry specific 
funding'' and averaged $100 million annually. Both the House and Senate 
appropriations bills would increase the total funding for ITP to $58 
million. However, this amount remains far less than historical levels 
for the program, and far less than what is necessary to go after the 
sizable benefits associated with new process development. As the 
Committee further examines ITP, we request your assistance in:

          Increasing funding for ITP to at least $125 million.

          Retaining a balanced portfolio of research from the 
        point of view of research application, i.e., that the portfolio 
        includes both industry specific R&D in at least aluminum, 
        chemicals, forest products, glass, metal casting and steel; and 
        cross-cutting research.

          Retaining a balanced portfolio of research from the 
        point of view of research impact, i.e., that 50 percent or more 
        of the funding go to research into new process development 
        [where the energy savings potential in industry is highest].

    We would be happy to provide input to the Committee detailing the 
above points.
    The U.S. also faces serious shortages in the science and 
engineering manpower that is needed to keep America's competitive edge 
in world markets through technology innovation and timely application. 
From the President's State of the Union Address to the Protecting 
America's Competitive Edge Act in Congress, the Nation is awakening to 
the need for a re-energizing of our commitment to technology education.
    We have proposed to the Committee an effort to both rebuild 
America's materials manufacturing industries and revitalize our science 
and engineering institutions. It builds a new public-private 
partnership to support these twin goals. It will ensure that the U.S. 
materials manufacturing industry will remain vital and competitive 
through:

          Accelerating technology innovation to ensure the 
        future competitiveness, resource efficiency and sustainability 
        of our domestic materials manufacturing industry;

          Building the vital intellectual infrastructure, in 
        American universities and laboratories, that will work in 
        partnership with the materials manufacturing industry; and

          Maintaining the healthy American materials 
        manufacturing base, which is vital to our national security.

    Our proposal would accomplish these goals by:

          Establishing an industry co-funded research program 
        that develops the innovative, breakthrough technologies that 
        will sustain our competitiveness, while realizing national 
        goals in energy and resource efficiency;

          Supporting materials manufacturing research programs 
        at universities and research institutions across the country;

          Establishing a program that accelerates the adoption 
        of technology innovation in the marketplace; and

          Assisting industrial facilities in identifying 
        opportunities for greater energy efficiency, improved product 
        quality and reduced environmental impacts.

    On behalf of my partners in the AMMEX coalition, I thank you for 
the opportunity to appear before you today. We look forward to 
continuing to work with the Committee as you move forward on potential 
legislation.

                   Biography for Lawrence W. Kavanagh
    Mr. Kavanagh is responsible for AISI's activities concerning how 
steel is made today, how steel will be made in the future and how steel 
competes with other materials, and alignment of these tasks with AISI's 
overall goal of making steel the ``material of choice.'' These include 
oversight of a) various manufacturing committees whose main goals are 
extensive operations benchmarking and the development and sharing of 
best practices, problem-solving and the identification of ``technical 
needs'' which would lower cost, advance safety, etc.; b) collaborative 
research and development among steel makers, suppliers, universities 
and labs designed to improve process control, performance and/or 
climinate technical barriers to market growth; c) programs to evaluate 
how steel performs vs. competing materials in order to assess where we 
have advantages/disadvantages with the goal of developing projects to 
widen our lead/narrow the gap as appropriate.
    Prior to joining AISI in 1991, Mr. Kavanagh was General Manager, 
Engineering for Davy International's Automation Services Division [now 
doing business as Kvaerner and VAI]. In this capacity, Mr. Kavanagh was 
responsible for all phases of project execution--estimating, sales 
support, specification, engineering, project management, field start-up 
and acceptance testing for Davy's steel plant equipment installations 
around the world.
    Mr. Kavanagh is a graduate of the University of Notre Dame [BSEE] 
and the `mini-MBA' program at George Mason University. He is an active/
former board member of various community service and research 
organizations.

    Chairman Lampson. You are welcome. Thank you.
    Mr. Verdict.

STATEMENT OF MR. MALCOLM E. VERDICT, ASSOCIATE DIRECTOR, ENERGY 
   SYSTEMS LABORATORY, TEXAS A&M ENGINEERING PROGRAM, TEXAS 
                 ENGINEERING EXPERIMENT STATION

    Mr. Verdict. Chairman Lampson, Ranking Member Inglis, and 
Members of the House Subcommittee on Energy and Environment, I 
would like to thank you for this opportunity to testify on the 
U.S. Department of Energy's Industrial Assessment Centers, 
which provides technical assistance for small and medium-sized 
manufacturers and industrial facilities, utilizing university, 
faculty, and students from 26 universities around the Nation.
    My name is Malcolm Verdict, and I appear before you this 
afternoon representing the Texas Engineering Experiment Station 
located in College Station, Texas. The Texas Engineering 
Experiment Station, known as TEES, is a statewide engineering 
research agency of the State of Texas. We are located on the 
Texas A&M campus where our engineering programs educate over 
9,000 undergraduate and graduate engineering students every 
year.
    We have run an industrial assessment center for the past 21 
years and have seen first-hand the tremendous positive benefits 
it has had on industry and our young engineering students. I 
would like to address three main points this afternoon for the 
Committee. First, the many valuable contributions of the 
program, some of its current limitations, and recommendations 
to build upon its past successes.
    First, the Industrial Assessment Centers (IAC) have made 
significant, long-term contributions to industry and to the 
education of participating engineering students. The program is 
very unique within DOE since it directly involves engineering 
students in close partnership with industry. Engineering 
faculty and undergraduate students conduct on-site assessments. 
These are typically one-day visits and provide written 
recommendations to the owners and operators for saving energy 
and reducing pollution.
    The many valuable benefits from this program include; one, 
providing cost-effective recommendations for reducing energy 
and pollution and increasing their productivity. Two, enabling 
small and medium-sized manufacturers in industry to compete in 
a highly-competitive global economy. Three, providing real 
world energy-related job experience for engineering students, 
and finally, creating valuable new industrial partnerships for 
the participating universities.
    Some significant IAC Program successes include over 13,500 
assessments have been made involving over 3,000 engineering 
students. Participating facilities save on average $5,500 per 
year with a payback often less than 12 months. U.S. companies 
have saved more than 700 million in energy and productivity 
gains according to the Department of Energy. In fact, enough 
energy has been saved to power the city of Boston, 
Massachusetts. And more than 1.5 million industrial jobs have 
been created through this program.
    Mr. Chairman, giving you a good Texas example, the Texas 
Tile Manufacturing Company in Houston, Texas, is but one great 
example of the many valuable benefits with DOE Program provides 
its clients. With high energy prices, inefficient energy 
practices, increased foreign competition, and located within 
the EPA-designated, non-attainment area, this manufacturer was 
an ideal IAC Program candidate. In 2006, our Texas A&M team 
conducted an on-site assessment and identified over $250,000 in 
energy savings and enabled the firm to find an additional 
$100,000 in savings while implementing all of the team's 
recommendations.
    Equally important, the energy savings are helping the 
Houston region meet its EPA clean air requirements. It bears 
repeating that the IAC Program helps educate students with 
highly-critical engineering skills needed in the Nation's next 
engineering workforce. Most IAC graduates go on to energy-
related jobs in industry, national laboratories, U.S. 
Department of Energy, and in engineering teaching careers. In 
fact, a University of Tennessee study on the careers of IAC 
graduates found that 73 percent of those surveyed held a 
position at one time related to energy efficiency, and an 
amazing 58 percent of these graduates have remained in energy 
efficiency as a part of their job description throughout their 
career.
    While the Industrial Assessment Centers have made 
significant, long-term contributions to industry, it is not 
achieving its full potential in our opinion. Some examples of 
program limitations include program management continuity and 
resources have been very inconsistent, especially in the last 
three years. Participation by only 26 universities leaves some 
areas of the Nation under-served. The program fails to address 
other valuable target audiences. The program does not include 
an energy research component, which limits its opportunities 
for university, facility, and student educational activities. 
And there is no clear charter to leverage federal dollars.
    Finally, program success metrics do not incorporate the 
value of training our nation's future energy engineers. We 
believe that the IAC Program, which is already a very good 
program, could be enhanced. Some suggestions for improvement 
include recreating an IAC-like program advisory group within 
the Office of Industrial Program, expanding the target audience 
to include medium-sized commercial buildings and federal 
facilities to be run by other programs within DOE. Expanding 
the geographic coverage by authorizing centers in all 50 states 
and territories where practical, increasing the educational 
effectiveness through applied research activities such as 
regularly involving IAC students as summer interns at national 
laboratories and in other DOE-funded industrial and commercial 
building research activities. And finally, authorizing adequate 
resources to implement an expanded IAC Program.
    Mr. Chairman, I was asked to comment on the Subcommittee 
draft legislation entitled Industrial Energy Efficiency Act for 
2007. This draft already addresses many of the items mentioned 
in my oral and written testimony. We applaud your efforts to 
expand upon this very valuable program and to broaden its 
impact.
    In conclusion, the IACs have been highly successful at 
helping reduce industrial energy efficiencies, pollution, and 
providing cost savings while providing critical education to 
the Nation's engineering students. Congress showed much 
forethought and wisdom in creating this program, and the 
concept is still very relevant today as our nation faces even 
greater energy environmental challenges. In fact, the IAC 
Program is a perfect trifecta energy environment and education 
in my opinion.
    After 32 years of success now is the time for improving 
this great program to help meet tomorrow's energy needs and 
train the next generation of energy engineers.
    Mr. Chairman and distinguished members, again, I thank you 
for the opportunity to appear her this afternoon and point out 
the importance of the IAC Program to our nation's energy future 
and to share our ideas to increase its effectiveness.
    This concludes my remarks, and I am happy to respond to any 
questions the Members may have.
    [The prepared statement of Mr. Verdict follows:]
                Prepared Statement of Malcolm E. Verdict
Chairman Lampson, Ranking Member Englis, and Distinguished Members of 
the House Subcommittee on Energy and Environment:

    I thank you for the opportunity to testify on the U.S. Department 
of Energy's (DOE) Industrial Assessment Centers (IACs), which provide 
technical assistance for small and medium-sized manufacturers and 
industrial facilities utilizing university faculty and students. My 
name is Malcolm Verdict and I appear before you today representing the 
Texas Engineering Experiment Station in College Station, Texas.
    The Texas Engineering Experiment Station (TEES), within the Texas 
A&M Engineering Program, is a statewide engineering research agency of 
the State of Texas, serving industry in our region while educating over 
9,000 undergraduate and graduate engineering students annually. TEES 
has a long history of partnering with industries, communities, and 
other academic institutions to provide practical solutions that help 
improve the quality of life, promote clean economic development, and 
enhance the Nation's educational systems. We also promote new 
technology education and investigate problems in energy, renewables and 
the environment.
    Texas A&M Engineering's strong commitment to energy efficiency is 
voiced at all levels, especially at the top. The Vice Chancellor for 
Engineering, Dr. G. Kemble Bennett, recently remarked that efficient 
energy use must be a national priority and that university educated 
energy engineers have a major role to play. Programs like the IAC 
produce highly qualified energy engineers with a conservation mindset 
who can hit the ground running to save energy for the Nation's 
manufacturers and others.
    Congress showed much forethought and wisdom in creating this 
program in 1976 after the first oil supply disruption, which some of us 
in this room can still vividly remember. The IAC concept embraced at 
that time is still relevant today as the Nation faces even greater 
energy and environmental challenges. The good news is that with today's 
clean energy technologies, combined with the expertise and dedication 
of the graduate engineers from the IAC program, our nation is even 
better equipped to meet these challenges than when this program first 
began. The IACs have been a critical component in improving energy 
efficiencies and providing cost savings to thousands of industrial 
firms, while at the same time, training hundreds of new, dedicated 
energy efficiency experts. In fact, the IAC program is a perfect 
trifecta--Energy, Environment and Education.
    My testimony draws on my personal experience in energy management 
programs and policy since 1978 at the State and federal levels, the 21 
years of field experience of the Texas A&M IAC Center Director, Dr. 
Warren Heffington, and the 14 years of experience of Mr. Jim Eggebrecht 
as our IAC Assistant Director. As you can see, our personnel represent 
significant experience and knowledge in this area and are strong 
advocates for its importance. I will address three key points this 
afternoon:

          The many valuable contributions that IACs have made 
        to industry and to the education of one of America's most 
        valuable natural resources--engineering students,

          Current limitations to the IAC program, and

          Recommendations to build upon the successes of the 
        IAC program to help meet the energy and environmental needs of 
        industrial facilities and others during the 21st century.

    Industrial Assessment Centers within the U.S. Department of 
Energy's (DOE) Industrial Technologies Program (ITP) have made 
significant, long-term contributions to industry and to the education 
of participating engineering students since its inception in 1976.

    The IAC program is unique within DOE as it directly involves 
engineering students in a significant manner in partnership with 
industry. Using standardized procedures, engineering faculty and 
undergraduate and graduate students from accredited universities 
provide on-site assessments and written recommendations for energy 
saving and pollution prevention opportunities. This small but highly 
effective DOE program conducts 500-600 energy assessments each year and 
provides educational opportunities for 250 new energy-efficiency 
engineers.
    The many valuable benefits to industry and to the participating IAC 
universities include:

          Providing objective recommendations for reducing 
        energy and pollution and increasing industrial productivity, 
        using the latest technologies and techniques,

          Enabling small and medium-size manufacturers and 
        industry to compete in a highly competitive global economy,

          Facilitating real-world experience for students 
        analyzing industrial processes who are highly sought after upon 
        graduation, and

          Creating valuable new industrial partnerships for 
        participating universities in their energy engineering 
        programs.

    According to DOE, 38 different universities have participated in 
the IAC program since its inception and 26 are currently participating. 
The program name was changed from the original Energy Analysis and 
Diagnostic Centers (EADCs) to the current name to reflect its broader 
mission. The DOE field manager, Rutgers University, maintains a wealth 
of program and applied energy conservation technology information 
available online in a searchable database by technology, location, 
paybacks, and types of participating facilities (www.Iac.rutgers.edu).
    Illustrative examples of notable IAC program successes include 
[Source DOE website]:

          13,550 assessments have been conducted as of mid-
        September 2007.

          Participating facilities have saved $55,000 per year 
        on average. Payback on implementation averages only 12 months, 
        and the savings keep adding up, year after year.

          Texas A&M recommendations have resulted in local 
        manufacturers spending over $21 million to implement projects 
        saving $26 million annually.

          U.S. companies have saved more than $700 million 
        through efficiency and productivity improvements.

          Enough energy has been saved to power the city of 
        Boston, MA for one year.

          More than 1.5 million industry jobs have been created 
        and maintained in the United States.

    The Texas A&M Industrial Assessment Center has performed over 500 
assessments in companies such as bakeries, print shops, machine shops, 
light manufacturing, and chemical, petroleum and wood product 
industries. The Texas Tile Manufacturing Company in Houston, Texas is a 
good, recent example of the many benefits this program provides its 
clients. With high energy prices, inefficient energy practices, 
increased foreign competition and a location within an EPA-designated 
non-attainment area, this vinyl floor manufacturer was a prime IAC 
candidate.
    In 2006, a team from the Texas A&M Industrial Assessment Center 
identified over $250,000 in energy savings and enabled the firm to find 
an additional $100,000 in savings while implementing the team's 
recommendations. In all, the majority of recommendations were 
implemented within six months of the Texas A&M visit. The remainder is 
scheduled for completion this year. Equally important, the energy 
savings will reduce critical air emissions and help Houston meet the 
EPA Clean Air standards.
    Illustrative examples of the significant program benefits to 
engineering students include:

          Approximately 3,000 students nationwide have 
        participated in the program with over 200 from Texas A&M 
        University and Prairie View A&M University.

          Real-world engineering experience is provided 
        students in an industrial setting.

          Long-term energy-related careers are frequently 
        launched upon graduation.

    It bears repeating that the IAC program educates students with 
highly critical engineering skills needed in the Nation's next 
engineering workforce. Participating students have done remarkably well 
after graduation in helping solve our nation's energy problems. In 
fact, the program produces some of the best energy-educated engineers 
in the world. Most IAC graduates go on to energy-related jobs in 
industry, national laboratories, U.S. DOE, and engineering teaching 
careers. One of A&M's successful graduates is now the Director of the 
Industrial Assessment Center at the University of Dayton in Ohio. And, 
our assistant director, Jim Eggebrecht was an IAC student engineer as 
well. A University of Tennessee study on the careers of IAC graduates 
found 73 percent of those surveyed held a position at one time related 
to energy-efficiency and 58 percent have remained in energy efficiency 
throughout their career. (B. Tonn & J. Peretz, Univ. of Tennessee, 
2002)
    These are just a few examples demonstrating how IACs successfully 
help industry save energy and money, while educating students. The 
program has constantly received high praise from assessment recipients 
and others familiar with its impact. As noted recently by one senior 
former DOE official, the IAC program was one of the most successful he 
had seen in his 24-year career dealing with energy efficiency at the 
Department.

    Although the Industrial Assessment Centers have made significant, 
long-term contributions to industry by reducing energy use, pollution 
and energy costs, and providing critical energy engineering skills, it 
has not achieved its full potential.

    Program limitations include:

          Program management continuity and resources have been 
        inconsistent.

          Participation of only 26 universities leaves some 
        areas of the Nation under-served.

          The program fails to address other viable target 
        audiences such as medium-size commercial buildings and federal 
        buildings and industrial processes.

          The program does not include an energy research 
        component, which limits opportunities for university faculty 
        and student educational activities.

          There is no clear charter to leverage resources 
        through cost-sharing for assessments and for partnering with 
        others.

          The program does not require the distribution of 
        information on financing resources and local engineering 
        expertise required to implement more complex recommendations.

          Program success metrics do not incorporate the 
        importance of the intrinsic, long-term value of training our 
        nation's future energy engineers.

    Although it has been very successful, the IAC Program is not 
achieving its full potential. Having been around 32 years, it has 
naturally gone through numerous re-organizations and managers within 
DOE. Within the last 10 years, the original IAC program managers have 
all retired and new internal champions have not emerged. Also, no 
official mechanism exists for external feedback on the IAC program.
    The small number of participating universities leaves some areas of 
the Nation under-served. Existing resources do not come close to 
meeting demand. For example within the first four weeks, the Texas A&M 
IAC had applications for all its available assessment slots for the 
coming year. Also, there is no mechanism for leveraging IAC funds with 
other resources such as utility efficiency and State energy programs 
which also target industrial end users.
    The industrial sector has proven to be a wise choice for targeting 
energy inefficiencies. The IAC model would also work quite well for 
commercial building owners. Buildings represent over 34 percent of our 
electricity use in the U.S. [E.IA. 2004] and most buildings need 
upgrades or operational improvements. Mid-size buildings [25-50,000 
square feet] are good candidates for IAC-like assessments. Likewise, 
process energy consumption in the federal sector is over seven percent 
of the energy use in federal facilities [Alliance to Save Energy, 
Leadership by Example]. The ITP program has no charter to assist the 
Federal Energy Management Program even though expertise resides in the 
Industrial Technologies Program and the IACs.
    The demand for motivated, skilled energy engineers has never been 
greater. The one DOE mechanism designed to increase the educational 
opportunities is very limited in its approach. The program does not 
have an educational charter beyond student participation in industry 
assessments which restricts valuable opportunities. Faculty and 
students could greatly benefit from participating in industrial 
research already funded by U.S. DOE. Internships are also excellent 
programs for students and industry but are rarely provided.
    In addition, the usefulness of the assessment reports is somewhat 
limited as the focus is primarily on the energy efficiency 
recommendations. Adding a program requirement of providing other 
implementation information such as qualified engineering firms, State 
and utility industrial programs and financial resources would help 
smaller firms with limited staff.

    The IAC program effectiveness could be enhanced by improving 
program continuity, expanding the target audiences and geographic 
coverage, increasing the educational value and leveraging federal 
program dollars.

    Based on the limitations described previously, the IAC program 
effectiveness could be improved by the following actions:

          Creating an IAC industry/university advisory group 
        within the Office of Industrial Programs for enhancing program 
        responsiveness and ensuring continuity,

          Expanding the target audience to include medium-size 
        commercial buildings and federal facilities,

          Expanding the geographic coverage by authorizing 
        centers in all 50 states and territories where practical and 
        increasing field management resources,

          Providing an information clearinghouse on qualified 
        engineering firms, utility programs and rebates, State energy 
        office industrial programs and financial resources as part of 
        the assessment reports,

          Increasing the educational effectiveness through 
        applied research activities such as regularly involving IAC 
        students as summer interns at national laboratories and 
        involving IAC faculty and students in other DOE funded 
        industrial and commercial building research initiatives, and

          Authorizing adequate resources to implement an 
        expanded IAC scope.

    We are aware of a draft Subcommittee bill entitled the ``Industrial 
Energy Efficiency Act of 2007,'' which addresses many of the items 
covered in this testimony. We applaud your efforts to improve upon the 
IAC program which has served our country extremely well.
    In conclusion, the IACs have been highly successful at helping 
reduce industrial inefficiencies, pollution and providing cost savings 
while providing critical education to the Nation's engineering 
students. However, the program is not without its limitations. After 32 
years of success, it is now time for improvement to meet tomorrow's 
energy needs. The current DOE program and the required information 
provided to industry should be expanded, student educational 
opportunities should be increased, and the intrinsic, long-term value 
of the educational benefits should be more fully recognized.
    Mr. Chairman and distinguished Members, I thank you again for the 
opportunity to highlight the importance of the IAC program to our 
nation's energy future and to share some ideas to increase its energy, 
environment and education impacts. I would be glad to respond to any 
questions you may have.

                    Biography for Malcolm E. Verdict
    Mr. Verdict is Associate Director of the Energy Systems Laboratory, 
a division within the Texas Engineering Experiment Station and the 
Texas A&M University System. Mr. Verdict has over 29 years of energy 
management program and policy experience at the State and federal 
levels. He is currently project manager for numerous building 
commissioning projects in large public and private buildings, and works 
closely with the Laboratory team that created the innovative emissions 
reduction calculator for energy and renewables.
    From 1992 to 2001, he was a senior program manager at the Alliance 
to Save Energy in Washington, DC and was responsible for their energy 
efficiency financing, Home Energy Rating, Federal Energy Productivity, 
Habitat for Humanity, and Energy Star Home initiatives. He worked 
closely with DOE to help develop the Presidential Executive Order 13123 
``Greening the Government Through Efficient Energy'' and drafted many 
of the Federal Agency energy management requirements in the Energy 
Policy Act 2005. He also served on DOE's Financial Advisory 
Subcommittee for the International Performance Measurement and 
Verification Protocol (IPMVP) and the Greening of the White House 
(1994) sustainability initiative. In 2004, he was appointed as the 
Texas State representative to the Western Governor's Energy Efficiency 
Task Force for Clean and Diversified Energy.
    Prior to joining the Alliance in 2001, Malcolm was Deputy Director 
of the Texas State Energy Conservation Office where he helped create 
the award-winning $98 million LoanSTAR energy retrofit loan program. 
Still going strong today, LoanSTAR has saved Texas taxpayers over $215 
million since 1990. Before entering the energy efficiency field in 
1978, Malcolm was a commercial banker in Louisiana.
    He holds a Bachelor of Science (BS) from the U.S. Air Force Academy 
in Colorado and a Masters in Business Administration (MBA) from 
Louisiana Tech University. He is a Certified Energy Manager (C.E.M.) 
and was selected the ``2005 Energy Manager of the Year'' by the 
Association of Energy Engineers. He holds a commercial pilots license 
and was a former Air Force fighter pilot in Vietnam.

                               Discussion

    Chairman Lampson. Thank you very much, Mr. Verdict. All of 
you. Good presentations. We appreciate you all.
    I am going to yield the first five minutes to myself as 
Chairman, and we will begin our questioning process.

                   ITP Funding and Past ITP Efficacy

    I am going to ask a number of questions, if you will. To 
begin, I would like for all of you to comment very shortly so I 
can get through as much of this as I possibly can.
    Over the past several years the funding for the ITP Program 
has been on a significant decline; $175 million in 2000, to $55 
million in 2007. What has the trend done to the efficacy of the 
program, and what is the appropriate level of funding that we 
need to be putting into this bill?
    If we just go down the line, if you don't mind.
    Mr. Moore. Let me start. I find it amazing that we are not 
even funding at the level that we were in the late 1990s, at 
the 175 million funding level. When you think about what our 
energy bill is, I think Paul may have mentioned it earlier, but 
let me just put it in perspective for Dow.
    At an average price of $8 for natural gas, my fuel bill 
just to produce steam and power is $5 billion a year. I think 
that we are missing opportunities to drive that down for our 
manufacturing sector and impact our energy security for the 
United States by not bellying up to the table something in 
excess of $100 million just seems kind of silly.
    Chairman Lampson. What is the right amount?
    Mr. Moore. I would say a good start is the $150 plus 
million that we had in the program in the 1990s, late 1990s.
    Chairman Lampson. Thank you. Mr. Cicio.
    Mr. Cicio. Thank you, Mr. Chairman. You need a 
significantly well-funded program like we talked about, like in 
the late 1990s to do the quality of research on projects on 
technologies that yield the best opportunity. Those are the 
high-risk, long-term, and expensive research projects, and with 
a shrinking budget you can't do those types of high-quality 
projects that make a big difference when they become reality. 
And that is probably one of the most significant answers to 
your question of what is the impact of reducing that funding. 
You cannot do projects that are of the scale and magnitude that 
really have the most significant payoffs.
    Chairman Lampson. Mr. Kavanagh.
    Mr. Kavanagh. What he said. I mean, we--it is exactly 
right.
    Chairman Lampson. He didn't give me an amount, though, and 
I got to go, I would go back to him.
    Mr. Kavanagh. To do projects of significance, and I am here 
advocating that we try to transform our industries, how we make 
steel a different way, make aluminum a different way. It takes, 
you know, in the '80s and '90s when this program was at the 
125, 175 level, we were investigating. We had enough momentum 
when you put in what industry was matching to really do 
something and a lot of the processes we are using today came 
out of this. Since the program has been down now for six or 
seven years, we have been treading water trying to make due in 
these investments, and what we got is a gap. It normally takes 
eight to ten years to get something from the lab into the plant 
of significance, and we have got a six-year window that, you 
know, we are going to pay a price at some point in the future 
because we have not, you know, the pipeline is dry basically.
    So that is the consequence.
    Chairman Lampson. So what is the right amount to put in the 
bill?
    Mr. Kavanagh. The right amount to put in the bill is, I 
have my testimony 125, but I like the 175 number.
    Chairman Lampson. You want to give me a number?
    Mr. Cicio. Yes, sir. One seventy-five.
    Chairman Lampson. Mr. Verdict, your turn.
    Mr. Verdict. Sir, I am not sure that I am authorized to 
give you a number, but I certainly like hearing some of the 
numbers that are being mentioned by some of my colleagues. I 
would like to give you some of the real world impacts that this 
tremendous reduction has recently.
    Recently we have had some very highly-dedicated faculty for 
a number of years and all of these centers and some of the 
program leaders, and when you see us pulling the rug out from 
underneath what we consider a very successful program and also 
reducing the funding, you see a great deal of disillusionment 
upon the faculty as well as the students. And even more 
importantly is that by not putting people in the field, we used 
to have 500 audits per year at the $7 million level, and that 
is down to 300 audits per year. What you really got is a lot of 
missed opportunities, and that is energy that is wasted if you 
are not there with another set of eyes helping these small and 
medium-sized firms.

                ITP Research and Development Limitations

    Chairman Lampson. What are some of the limitations in the 
current efficiency of the research and development of the ITP? 
Any comment on that, limitations? Other than money.
    Mr. Kavanagh. You mean how things are carried out or----
    Chairman Lampson. Yes.
    Mr. Kavanagh. The way the program is structured and 
managed, you know, the mechanism for delivering funds to 
universities and matching them with industries, that has been 
in place for 20 years, and we have been in the program for 20 
years, and it works. So our opinion is the structure and 
delivery mechanism is right. It is just the focus has to go 
back to new process development, and the dollars have to be 
there to support it.
    Chairman Lampson. Are there any specific areas of research 
that could be enhanced or explored, maybe that would better 
serve the industrial sector?
    Mr. Kavanagh. Again, I will jump in. The six industries 
that are a part of AMMEX, steel, aluminum, glass, forest 
products, metal casting, and chemicals, have identified their 
priority research areas going forward to do this type of 
transformational work, and I would be happy to send that to 
you, Mr. Chairman.

                       Corporate Welfare Concerns

    Chairman Lampson. Please. Okay. How do you address the 
concern of corporate welfare when discussing the Industrial 
Technologies Program and other private, public partnerships.
    Mr. Kavanagh. It is a very good question, but it is an easy 
one to answer. Again, speaking from our realm of experience 
within the AMMEX member industries, for there to be corporate 
welfare, corporations have to get the welfare. Okay. That 
doesn't happen in this program. The industries don't receive 
the money. They put money in. DOE puts money in. Industry puts 
money in, and the recipients are places like Texas A&M. Okay.
    So the whole idea of corporate welfare as far as this 
program goes is a myth.
    Chairman Lampson. But they do get the benefit, and there 
will be----
    Mr. Kavanagh. Yes, but they are co-investing. They are 
earning the benefit, aren't they?
    Chairman Lampson. Yes, sir. Mr. Cicio.
    Mr. Cicio. Mr. Chairman, the corporate welfare issue goes 
back to one of the points I had made earlier, that the 
breakthrough technology in the most important areas are too 
expensive for any one company, even the size of companies like 
a Dow Chemical Company, to do all by themselves.
    Again, the breakthrough technologies will be the technology 
of choice for a period of 20, 25, sometimes 30 years. You are 
talking about major breakthrough technology. One company does 
not have the money and the time and the risk tolerance to be 
able to do that all by itself.

                        ITP Return on Investment

    Chairman Lampson. Thank you. What kind of return on 
investment can your industries expect from projects conducted 
with the ITP Program? You all already said many of the numbers, 
but the match that you make, is it typically equal? What are 
some of the kinds of matches that you may know of?
    Mr. Kavanagh. The matches range in our industries for a 
third to half, depending on the type of research and the risk 
that is involved.
    Chairman Lampson. And then some of the returns? Give me 
some examples of what kind of return.
    Mr. Kavanagh. Oh, the return goes to how good the projects 
you pick. So let me explain it this way. The mechanism that 
industry uses to decide what projects to propose and fund is 
very carefully done because you are investing company capital 
that could go into product development and any other part of 
the business. So when you select a research project, there has 
to be some probability of success.
    Within the steel industry, we have over time developed some 
60 different projects, and the level of successful 
commercialization of that technology is about one in four. 
Okay. That is pretty good for research, especially, we are 
still learning a lot from the three that don't actually result 
in a commercial process or technology.
    So the return for industry as you pointed out before is you 
get the benefit of the technology. It is getting the technology 
to the plant floor, lowering your costs of operations, 
improving the quality of your product, and lowering the energy 
bill.
    Chairman Lampson. And ultimately lowering the cost to the 
consumer, which we are all after. These are the kinds of things 
that I think our whole Committee exists for. The more money we 
invest and the kinds of programs that give us the kinds of 
returns that we are talking about here, the better off we as a 
nation are. We have always done that. We seem to have slipped 
some of late, but hopefully this and other ways will help us 
find a way to get back.
    Both of you comment, and then I want to turn it over to the 
Ranking Member.
    Mr. Moore. I am just going to just make a brief comment, 
not so much because I am not really here to testify about the 
investment aspects but just a concept around DOE and ITP 
Program and what they can do around technology.
    Today the technology exists to split water via electrolysis 
or some other means, produce hydrogen, use a gasification plant 
to take coal to syngas and with enough hydrogen cogeneration 
you can actually produce chemicals with no CO2 
emissions. Zero. None. Okay.
    What we are missing today is the high enough efficiency in 
electrolyzing that water to make hydrogen, or some other 
mechanism to do that in order to make that economically 
competitive on a global basis. Once we do that it means that 
you can use non-carbon source fuels like solar or photovoltaic 
or nuclear or the like and match them up with a coal-to-olefins 
technology and basically have a process that produces all the 
chemicals we rely on every day of our lives with no CO2 
emissions.
    These are the kinds of things where the DOE has come to 
play and can come to play in helping fund some of these 
integrated efforts around fuel diversity, energy diversity, 
alternate fuels, and feedstock.
    Chairman Lampson. Nicely stated. Thank you.
    Mr. Cicio. Your question was about what kind of return, 
that these companies are looking at when they do cost sharing. 
And I am not an expert in this area, but based on what the 
companies have told me, that is not nomenclature that they use 
in their judgment in doing these R&D programs.
    Even at cost sharing of 50 percent, these are risky. This 
is money that is an outlay that they currently have an 
alternative, some other alternative to do something with. Build 
a production facility, expand a product line, pay employees 
more, employee benefits. The rate of return is not really part 
of the decision-making and whether they invest in a DOE project 
like this or not. It is about are you going to make a 
commitment to your future by potentially having a winning 
research project that is going to have substantial benefits ten 
years from now.
    So that type of discussion normally doesn't happen.
    Chairman Lampson. Thank you very much.
    Mr. Inglis.

                           Natural Gas Prices

    Mr. Inglis. Thank you, Mr. Chairman. Mr. Cicio, I was 
struck by your reference to the price of natural gas, and that 
is a significant concern. I think you are right, that the more 
we use it for electrical generation, the more we drive the 
price up and the more the plastics industry, especially in 
places like South Carolina's fourth district, become imperiled.

                     Dow Energy Efficiency Efforts

    And, Mr. Moore, I was very interested in your comments 
about the incredible savings that Dow has found. I think you 
also found incredible savings in greenhouse gas emissions. 
Right? I mean, didn't I hear that the other night from your CEO 
about some incredible number?
    Mr. Moore. Actually, if you go back to 1990, largely as a 
result of our energy efficiency improvements, our actual 
greenhouse gases from 1990, through today are actually down 
more than 20 percent.
    Mr. Inglis. Yeah.
    Mr. Moore. All of those energy efficiency efforts.
    Mr. Inglis. Yeah.
    Mr. Moore. At the same time that we have grown our company 
substantially.
    Mr. Inglis. It is very impressive, so that is very 
encouraging.

                           ITP Energy Savings

    You reached significant savings. I think you said $4.5 
billion in savings as a result of the energy efficiency that 
you have achieved. Right?
    Mr. Moore. Right.
    Mr. Inglis. So I guess some people would say, and perhaps 
this is what the Administration is saying, that Dow did it for 
very good reasons, and that is their citizens, your citizens of 
the world, and you are in this country, and you are also 
interested in making money, which is a wonderful thing. I am 
all for making money. I think profit is a great thing, and so 
$4.5 billion delivered to the bottom line is a pretty 
substantial incentive to a company to do this. And so some 
would say why have the Department of Energy help with that if 
Dow is going to get the benefit. Right?
    Mr. Moore. I think the important thing here is not so much 
the benefit that Dow is going to get from the ITP Program. It 
is the benefit that literally the thousands of others will get 
from it. One might wonder that, you know, I mentioned the Texas 
city example where Dow actually found benefit from ITP's 
Industrial Assessment Program, but just as important, if not 
more importantly, that learning, via the ITP Program, can now 
be leveraged across ten or 20,000 small and medium-sized 
manufacturers.

                   Charging Industry for Assessments

    Mr. Inglis. Right. And as I understand it, the program has 
two parts. Right? I have just learned this from Elizabeth, but 
it has got two parts. The R&D and then it has got the 
assessment part of it. The R&D as currently used and in place 
seems to be a decent way of going, that the Department of 
Energy spends money, helps create the R&D, and develop new 
technology.
    In the case of the assessment, why would the entity benefit 
if not paid, say on a contingency fee basis, to the DOE for the 
assessment? In other words, right now what you have, right, is 
the money, and Mr. Kavanagh, I differ with you about the 
definition of corporate welfare there. What you just described 
is a subsidized rate. It is like you and I have decided to go 
out to dinner tonight, we are going to split the bill, and it 
is either that we go to Charlie Palmer's or we go to Burrito 
Brothers. And if Elizabeth is going to pay, we are going to 
Charlie Palmer's. Even if I am putting some of the money in 
myself, right? Because I am going to get something out of it. 
So it is a subsidized rate.
    So what I am wondering about is whether, if industry X out 
there is going to benefit from this assessment, why not have 
money flow back to DOE based on how much they saved to cause 
DOE to become a profit center. I am into profit. To have the 
DOE become a profit center for the government. We could 
actually maybe start paying for things that DOE does by what we 
collect from our customers that are served by the universities, 
they are achieving these savings. Is there a problem with that?
    Mr. Verdict. Sir, if I may attempt to answer that question. 
It is a wonderful concept, and I think it provides maybe the 
right motivation and practicality to be able to actually add a 
monitoring verification component to the Small Industrial 
Assessment Program, and actually verify the savings like 
companies have to do that are in a shared saving, performance 
savings arrangement. You would probably drive the program costs 
out of existence. It barely survives on being able to do these 
simple walk-throughs and these quick returns.
    So I think you would end up spending at least in the IAC 
Program as much money trying to verify the savings as the 
company would get back.
    Mr. Inglis. Well, I can see a problem. It would provide 
some employment for lawyers as well as scientists, however, 
which would be helpful as a lawyer, but I can see that as a 
challenge. In other words you have to set up some definition. 
You have to have a contract that sets up definitions about how 
much energy is being used now and when you are going to measure 
it, and therefore, how you are going to pay.
    But I just wonder whether that would solve the 
Administration's concerns, which I assume are these things 
about corporate welfare, that you actually get a profit model 
going and truly have a very enlightened kind of partnership 
between government and industry. Right? Where government can 
actually benefit.
    Mr. Kavanagh. You have to get down to another level of 
detail. I don't really agree with your dinner analogy, and I 
will try to explain why. Within the ITP Program we pick 
projects that serve the government's goals as well as the 
industries' goals. We don't pick projects that only benefit 
industry. There has got to be some public good or benefit 
associated with success.
    Mr. Inglis. Well, there is always going to be public good 
in reducing energy consumption, because we are all concerned 
about energy security. So 100 percent of the projects would be 
for government good.
    Mr. Kavanagh. Well, that defeats the corporate welfare 
argument, doesn't it, because----
    Mr. Inglis. No.
    Mr. Kavanagh.--that justifies--should the DOE----
    Mr. Inglis. Because you could go----
    Mr. Kavanagh.--invest in projects for the public good?
    Mr. Inglis. Well, it doesn't necessarily because there are 
still winners and losers. If you have an unlimited budget, 
yeah, then you would have everyone in industry getting that 
benefit. But if you have only some, then you have some 
benefiting and others not, unless you have an infinite budget.
    Mr. Kavanagh. I agree with you there, and that is another 
important distinction. I can't speak for the Industrial 
Assessment Center side, but on the R&D side, the projects are 
not undertaken between the Department of Energy and one 
company. They are taken with a sector so the entire sector 
benefits, and that enhances the public good because it is 
replicating the technology throughout a part of the industry, 
and at the same time all of that sector is investing their own 
dollars as well. Okay.
    So it is like you and I are going out to dinner, and we are 
both eating. It would be unfair if only I ate. Okay. So that is 
kind of the way the program is set up, and in fact, in some of 
the programs there is a repayment provision when you develop a 
technology that is commercially successful, okay, the companies 
that invested and took the risk get a royalty-free use of it, 
just like the government, because it invested and took a risk. 
But if there is another company out there that was not an 
investor, okay, and the technology is commercially available, 
they have to pay a royalty to use it, and that royalty then 
flows back into the treasury to help repay the investment.
    Now, that works, and it has been done, but you know, the 
time scale that we are talking about for that kind of dramatic 
process development takes 8 to 10 years. So it can get messy, 
which is why some projects have gone away from the repayment 
provision. But in the steel industry we use it, and we are in 
favor of it.
    Mr. Inglis. My time is well up, and we got a vote on, don't 
we?
    Chairman Lampson. We do. We have a vote on. It is about 
seven minutes before the first one. There is a total of three. 
Five-minute votes will follow the 15-minute vote, and I would 
personally like to head back. If you all can be patient with us 
while we go and vote, we will come back.
    Mr. Inglis. Keep going here if you want to. I mean, if you 
have, how much time do you have?
    Chairman Lampson. We have----
    Mr. Inglis. I am happy to yield back at this point.
    Chairman Lampson. Only 25 people have voted, so I think we 
have got a little while, but let me, again, let me try to go 
through these somewhat quickly, and if you will keep your 
answers as succinctly as you possibly can, I would appreciate 
it. And let me go to Mr. Moore.

                   The Chemical Industry in the U.S.

    DOW's CEO has said that you are investing heavily outside 
the United States. Is it too late to save the chemical industry 
in the United States?
    Mr. Moore. The simple answer is no, but let me add a little 
bit of background in-between.
    Across the globe there have been 19 world scale crackers. 
These are big, ethylene conversion assets are used in 
integrated petro-chemical complexes that have been announced to 
be built in the next decade. Not one of them is scheduled to be 
built in the U.S.
    Then I go and I look at what Dow is doing. Dow is growing, 
and it is growing globally, but it is not growing significantly 
in the U.S. You can just look at our announced joint ventures 
with Saudi Arabia, with Saudi Aramco, or in Kuwait as an 
example. And we are growing there because they have reliable 
and competitive-priced fuel and feedstocks.
    Now, chemical industry is not immediately at risk in the 
U.S. In fact, it is terribly important to Dow and to most other 
companies that operate here. In fact, 50 percent of Dow's 
assets are still in the U.S. They are terribly important. They 
are critical to our success.
    It is terribly important for us to operate them both 
effectively and efficiently, and as I noted earlier, the 
importance of having a reliable and a secure and a competitive 
price, fuel and feedstock, is ultimately tied to our long-term 
success here in the U.S.

                  Need for Control System Improvements

    Chairman Lampson. Mr. Cicio, there are numerous energy-
intensive industries, and the ITP does not have the resources 
to focus on all of them. So in your opinion where can ITP have 
the largest impact, the most bang for the buck?
    Mr. Cicio. If I may, when I polled my companies, which is a 
broad cross section of these energy-intensive industries, it 
was pretty unanimous that there are plenty of areas that almost 
all would benefit from. And this gets to the issue of control 
system improvements, optimization of steam generation. See, 
lots of manufacturers use steam process heaters, heat recovery 
technology. These are basic types of technology that are used 
to route these industries.
    So there is a lot of room for focus on those technologies 
that would benefit almost all of them.
    Chairman Lampson. Thank you. Mr. Verdict, talk about IAC 
for just a second. Can you or do you have an estimate for an 
appropriate level of funding for the IAC Program to meet the 
demand that you describe?
    Mr. Verdict. I think at the minimum it needs to go back to 
where it was six or seven years ago, but I think there are 
additional opportunities, and if DOE would run this as a 
business model, then they would actually go out and sample the 
demand. I think they are going to find there is tremendous 
demand there for this product, and I think they are going to 
find willing partners even to do some cost sharing. I think you 
are going to find programs in many states where you have a very 
active and aggressive utility funded programs to also be 
willing to work with the assessment centers.
    But we really had no guidance or no authorization to 
actually try to match up funding. But there is certainly, just 
indirectly the demand is far greater than what the current 
funding levels are.
    Chairman Lampson. Well, like I said awhile ago, these are 
exactly the things that I think this Science Committee needs to 
show the leadership on if we at all possibly can. I put our 
country's resources into things that give us back significant 
return. Clearly what you have described here today and helped 
us understand is one of those areas.
    Yes, sir.
    Mr. Verdict. If I could just add one thing on the 
educational benefit. We keep talking about the immediate 
payback, but once you train one of these energy engineers, and 
he stays out there, he is continually working and improving the 
processes which he is involved in. It is very, very hard to put 
a dollar benefit to that, but we say we were going to add 3,000 
in the program over some 31 years. That is really not that many 
engineers. We really have got to train a lot more engineers 
than that, and they are out there with the first line of 
defense, with their computers and their meters, and they are 
helping save energy, and I think that is the right thing that 
some of our Government resources should be doing.
    Chairman Lampson. I totally agree. Thank you and thank you 
all, and we are not going to come back after this vote, so we 
dismiss the panel. We thank you very, very much. Under the 
rules of the Committee, the record will be held open for two 
weeks for Members to submit additional statements and any 
additional questions that they may have for the witnesses. You 
may be receiving some things from us. We thank you very much 
for your testimony today.
    The meeting is adjourned.
    [Whereupon, at 3:02 p.m., the Subcommittee was adjourned.]
                               Appendix:

                              ----------                              


                   Additional Material for the Record




                  Section-by-Section: Discussion Draft

                Industrial Energy Efficiency Act of 2007

Section 1. Short Title

    ``The Industrial Energy Efficiency Act of 2007''

Section 2. Findings

    The U.S. Industrial sector accounts for more energy use (32.2 
percent) than the residential, commercial, or transportation sectors. 
Industries have almost reached optimal energy efficiencies and new 
innovations and technologies' research, development, and demonstration 
are necessary to increase energy efficiency and diversify energy and 
feedstock sources.

Section 3. Industrial Technologies Program

    Establishes a program within the Department of Energy to work with 
energy-intensive industries, industry trade associations, and 
institutions of higher education to conduct cost-shared research, 
development, demonstration, and commercial application activities for 
new innovations and technologies to enhance industrial energy 
efficiency, environmental performance and economic competitiveness of 
U.S. industrial sector.
    Defines the activities of the program to include: research to 
improve the quality and quantity of feedstocks recovered from waste 
streams; to develop alternative resources for use as industrial 
feedstocks; developing alternative energy sources to supply heat and 
power for energy-intensive industries.

Section 4. University-Based Industrial Research and Assessment Centers

    Requires the Secretary to operate university-based Industrial 
Research and Assessment Centers to aid small and medium-sized 
manufacturers by identifying opportunities to optimize their energy 
efficiency and improve environmental performance, to serve as 
clearinghouses for technical assistance resources, and to train 
students to conduct energy assessments, and to conduct educational 
outreach in cooperation with other state-accredited technical training 
centers and community colleges.

Section 5. Authorization of Appropriations

    Funding is authorized from FY 2009 through 2013 and has not yet 
been determined.

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