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






        PLUGGING INTO ENERGY INDEPENDENCE WITH 150 MPG VEHICLES

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

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 12, 2007

                               __________

                            Serial No. 110-9


             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov




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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington                 Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut          JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California           GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN,           CANDICE S. MILLER, Michigan
  South Dakota                       JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri            MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                     David Moulton, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director














                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared Statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     5
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     6
Hon. John Sullivan, a Representative in Congress from the State 
  of Oklahoma, prepared statement................................     8
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     9
Hon. Hilda Solis, a Representative in Congress from the State of 
  California, opening statement..................................     9
Hon. John Shadegg, a Representative in Congress from the State of 
  Arizona, opening statement.....................................    10
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    11
Hon. John Hall, a Representative in Congress from the State of 
  New York, opening statement....................................    12

                               Witnesses

David Vieau, President and CEO, A123Systems......................    12
    Prepared Statement...........................................    15
Rob Lowe, Actor..................................................    24
    Prepared Statement...........................................    26
Frank J. Gaffney, Jr., President and CEO, Center for Security 
  Policy.........................................................    32
    Prepared Statement...........................................    35
Fred Hoover, Austin City Council on behalf of Mayor Will Wynn....    40
    Prepared Statement...........................................    42

 
   HEARING ON PLUGGING INTO ENERGY INDEPENDENCE WITH 150 MPG VEHICLES

                              ----------                              


                        THURSDAY, JULY 12, 2007

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:05 a.m., in room 
2175, Rayburn House Office Building, Hon. Edward J. Markey 
(chairman of the committee) presiding.
    Present: Representatives Markey, Blumenauer, Inslee, Solis, 
Herseth Sandlin, Cleaver, Hall, Sensenbrenner, Shadegg, Walden, 
Sullivan, Blackburn, and Miller.
    The Chairman. This hearing is called to order.
    The goals of achieving energy independence and reducing our 
global warming pollution cannot be adequately addressed without 
a transformation of our transportation sector. More than any 
other, this sector lies at the very nexus of these twin 
problems which are facing our Nation. Two-thirds of the oil 
which we consume every day currently goes into the 
transportation sector.
    It is a simple fact that during the years after Congress 
mandated a doubling of fuel economy standards from 13.5 to 27.5 
miles per gallon it dramatically reduced our oil dependence. 
During that period our oil imports dropped from 46.5 percent in 
1977 to 27 percent in 1985. But since then, our fuel economy 
standards have been stuck in neutral or even in reverse and our 
dependence on foreign oil has skyrocketed to roughly 60 
percent.
    Plug-in hybrid electric vehicles hold the potential to 
radically transform our use of oil. While the transportation 
sector is powered mostly by oil, the nationwide electricity 
grid runs on very little, only 3 percent according to the 
Energy Information Administration. Increasing the use of plug-
in hybrids can help to make driving much less petroleum 
intensive by using electricity.
    Such a transformation could have an incredible effect, 
according to the Department of Energy's Pacific Northwest 
National Laboratory. Replacing our passenger vehicle fleet with 
plug-in hybrids could reduce our oil consumption by 6.5 million 
barrels a day and our global warming by 27 percent.
    Moreover, turning our vehicle fleet into plug-in hybrids 
would not require a significant expansion of our electrical 
infrastructure, because plug-in hybrids would primarily be 
charged at night during off peak hours. That same study found 
that 73 percent of our existing passenger fleet could be 
powered using the existing electrical generation 
infrastructure.
    Now some automakers have produced plug-in hybrid prototypes 
and are beginning to announce long-term plans to manufacture 
them. We need to ensure that these promises not only become 
reality, but they are surpassed.
    We cannot afford to wait 5 years or more to begin seriously 
looking to unlock the potential of this technology. It is 
already possible to convert the roughly 1 million hybrid 
vehicles that will be on the road this year into plug-in 
vehicles capable of getting 150 miles per gallon.
    This conversion would allow existing hybrids to begin 
travel between 20 to 60 miles on a single charge. The next 
generation vehicles would allow Americans to go from 0 to 60 
miles on barely a drop of oil.
    Consumers were clamoring for a revolution in automotive 
technology. Innovation such as plug-in hybrid should not have 
been sitting on the shelf for so long. After all, this isn't 
rocket science, it is auto mechanics.
    We have to make sure that we pay attention to all of these 
new technologies that have the potential to reduce our oil 
dependence and emissions of heat trapping gases and listen to 
the American people all across the country who are calling for 
them. We have the technology, we have the innovation. The only 
thing that has been missing is the will.
    And now I would like to turn and recognize the ranking 
member of the select committee, the gentleman from Wisconsin, 
Mr. Sensenbrenner.
    [The prepared statement of Mr. Markey follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
    Since the select committee's inception in April I have 
repeatedly stressed four principles that I and many Republicans 
believe must be part of any policy addressing global warming. 
First, I said any policy must produce tangible improvements to 
the environment. I also believe that any policy must protect 
the economy and include participation of all the industrialized 
countries, including China and India.
    Global warming policy must support advanced technological 
progress because technology, not taxes or regulation, provide 
us with the best options to reduce U.S. dependency on foreign 
oil and to reduce greenhouse gas emissions. Between established 
technology like nuclear power and solutions like fertilizing 
carbon dioxide eating plankton, the range of technology 
possibilities to address oil dependency and greenhouse gas 
emissions are fascinating.
    Researchers are reaching breakthrough technologies to 
improve existing ideas, and what better technology to win the 
race than a car. Hybrid car technology is in the marketplace 
and competing with the gasoline powered car. Recent news 
reports show they have reached speeds of over 100 miles per 
hour. Could this mean that the hum of the hybrid could replace 
the roar of the engine at the racetrack?
    Plug-in hybrid cars hold even greater promise of reducing 
our reliance on foreign oil and greenhouse gas emissions. Early 
indications suggest that if this technology were fully 
employed, it could reduce oil consumption by 6\1/2\ million 
barrels a day and greenhouse gas emissions by 27 percent, which 
is very promising indeed.
    Should plug-in hybrid car technology be the winner of this 
race to free us from foreign oil and greenhouse gas? The answer 
is I don't know and I don't think anybody else does either. It 
shouldn't be up to me or any of my colleagues in Congress to 
decide. Ultimately it should be consumers who decide when they 
choose which products they will buy. After all with gas prices 
what they are, I doubt it will take a Congressional mandate to 
sell a car that gets 150 miles to the gallon.
    Despite the promise, plug-in hybrid technology is expensive 
and it is still unclear if it is effective on a mass scale. To 
be sure, it appears that this technology is still a 
breakthrough or two away from being parked in everyone's 
driveway. Maybe we will see breakthroughs in hybrid technology. 
Perhaps there is another technology that will move us beyond 
gasoline, such as biodiesel, hydrogen fuel cells or liquefied 
coal.
    Already we are seeing the private sector taking interest in 
private or plug-in hybrid technology. Last month Internet giant 
Google partnered with A123Systems. They helped fund research 
that could produce some much needed breakthrough in battery 
durability. I am pleased that A123 President and CEO David 
Vieau is here to inform us about the research into this 
technology.
    On Monday, Ford Motors and Southern California Edison 
announced the joint initiative on plug-in hybrid research. That 
is also good news, but while Ford Motor CEO Alan Mulally said 
that plug-in hybrids could probably be in showrooms in 5 to 10 
years, he made no firm predictions or promises. Like any smart 
business, Ford Motors is waiting to see if technology develops 
before making any significant financial commitment. We all know 
the U.S. domestic auto industry is not awash in cash these 
days.
    Congress should be careful in its commitment, especially 
when it comes to funding research. Sure, there is promise in 
plug-in hybrid technology. I am glad to see the private sector 
is willing to fund it indeed, but I caution my colleagues 
against believing technological breakthroughs are merely as a 
result of money and funding.
    For nearly 4 decades Congress devoted billions to nuclear 
fusion research hoping for a breakthrough in energy production. 
So far we are still waiting for commercial results. We can't 
afford to wait 4 decades for a breakthrough that will release 
us from our dependency on foreign oil.
    We now know that hybrids are fast. The question is will 
they be fast enough to win this technological race. I hope 
today's hearing will help us to begin to answer this question.
    I thank the chairman for the time and yield back the 
remainder of my time.
    The Chairman. Gentleman's time is expired.
    The Chair recognizes the gentleman from Washington State, 
Mr. Inslee, for an opening statement.
    Mr. Inslee. Thank you.
    Over the break I experienced the yin and yang of global 
warming. I want to share this with the committee. The yin was I 
went hiking Saturday up in the Cascades in Washington State and 
saw mile after mile of dead and dying fir trees killed by the 
budworm that can ravage our forest because it doesn't get cold 
enough to kill them anymore.
    Sunday, the next day I went to Everett, Washington and saw 
the roll-out of the Boeing 787 Dreamliner, an incredible piece 
of technology that reduces CO2 pollution 20 percent per 
passenger mile, one-fifth less CO2 emissions because of the use 
of technology.
    Yesterday I talked to a guy named David Moore, who works at 
Vulcan, Inc. in Seattle. He is one the first to have a Prius 
plug-in, the user name 123 battery system. He got it converted 
in Boulder, Colorado, drove it back. The first 100 miles he did 
80 miles a gallon. He does better now. He plugs it in at work, 
and I chided him because he is stealing electricity from Paul 
Allen, but he says it is only $0.15 a day, so it is not much of 
a hit. So he can commute 30 miles each way to work and spends 
$0.15 a day for the energy to run his car in his daily commute.
    The number that got me in his description of his plug-in 
Prius is that, finally, since he got the car several months ago 
he has driven 1,200 miles before he had to put a gallon of 
gasoline in it. I think a promise to Americans that you can 
drive to work 30 miles a day, spend $0.15 on your fuel and go 
1,200 miles before you spend a dollar to Saudi Arabia is a 
pretty good deal.
    It is not future rocket science, it is here today. Plug-in 
hybrids are the technological cavalry. They have arrived just 
in time. We have to make sure they get implemented.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentlelady from Michigan, Ms. 
Miller.
    Mrs. Miller. I will save my time for the questions, Mr. 
Chairman. Thank you.
    The Chairman. The Chair recognizes the gentleman from 
Oklahoma, Mr. Sullivan.
    Mr. Sullivan. I waive, Mr. Chairman, and will submit my 
opening statements.
    [The statement of Mr. Sullivan follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    The Chairman. The Chair recognizes the gentleman from 
Oregon.
    Mr. Walden. Thank you, Mr. Chairman. I look forward to 
looking through the testimony. Unfortunately, I have some 
conflicts this morning and have to leave a bit early, but I 
think I am the newest Prius owner on the panel. My big old 
Chrysler died a couple weeks ago, and I went out and bought a 
Prius which I had been wanting to do for some time, because I 
wanted to get better gas mileage, and it certainly reduces 
emissions as well.
    I am intrigued by the function of plug-in hybrids. As we 
know, they aren't readily available on the market yet. I know 
that if you recharge the hybrid and run it off the electricity, 
more than the gasoline, you emit one-fourth the amount of 
carbon into the atmosphere if the electricity production comes 
from gas fired energy. The electric energy is produced 
somewhere. So there are other trade-offs certainly in the 
environment.
    In the Northwest we are fortunate because we have a huge 
hydro grid. So if you want the absolute lowest carbon emission 
it may be one of the lowest, if not the lowest, from 
hydropower. So in our part of the world if you can plug them 
in, you are getting renewable energy right from the start into 
the car, and I think this will go a long way.
    I do think there needs to be greater development on the 
batteries themselves, and hopefully a domestic battery industry 
could emerge as well as opposed to those made in China or Japan 
or somewhere else so we truly can become more energy 
independent in America.
    I am intrigued by all of this. I intend to take the 
testimony with me, and I apologize for having to leave early 
today but I look forward to America moving forward.
    The final comment I would make is that in central Oregon is 
a company who has been on the forefront of hydrogen fuel cell 
technology, and I know they are working with some automakers to 
use a hydrogen fuel cell to power some of the electrical needs 
of the car, which, as we know, is significant now and is 
powered through gasoline producing the electric energy that is 
used in the cars. It is innovations such as those that may come 
about in the years ahead that will help move this process 
along.
    Thank you, gentleman.
    The Chairman. I actually drive a Toyota Camry. The Prius 
does a lot better, but you really should upgrade.
    The Chair recognizes the gentlelady from California.
    Ms. Solis. Thank you, Mr. Chairman. I am delighted that you 
are having this hearing today. I often complain about the 
hardships that my district faces in Los Angeles, particularly 
East Los Angeles, one of the harder hit areas that has various 
environmental impacts, one being smog and congestion on the 
road.
    One thing I have to say about the State of California is 
that we have gone beyond by extending past credit for those 
people who do purchase hybrids. In fact, our carpool lanes are 
made more accessible for those who purchase those vehicles.
    I am really proud to say today that we heard mention from 
the other side of the aisle about the innovations that are 
coming forward from places such as obscure districts like mine 
in the 32nd District where Southern Cal Edison is on the 
partnership with the Ford Motor industry. I think it is 
wonderful those creations are occurring in southern California. 
We need to continue to promote that.
    I am a strong advocate to see that we do as much as we can 
and bring about change at the local level, the grass roots 
level, because I really believe that our young people and our 
children when we see them at our local schools often ask about 
what are we doing about changing climate change and what are we 
doing to help improve the environment and what kind of future 
am I going to have. And I think we all have to act responsibly 
and make good decisions.
    So I applaud the witnesses for being here today and thank 
the chairman for the opportunity for us to hear the witnesses.
    The Chairman. The gentlelady's time is expired.
    The Chair recognizes the gentleman from Arizona, Mr. 
Shadegg.
    Mr. Shadegg. Thank you, Mr. Chairman. I am glad to join in 
this love fest. I want to thank and compliment you for holding 
this hearing today on plug-in hybrid vehicle technology and the 
potential to reduce our reliance on oil and particularly on 
imported oil.
    I believe it is one of those great opportunities for 
bipartisan cooperation. Clearly it is incumbent upon all of us 
in America and especially upon policymakers to pursue 
alternatives to oil and alternatives to imported oil, and plug-
in hybrid technology holds great potential.
    In my State of Arizona we face air pollution problems and 
we face long commutes, and the possibility of being able to do 
those with hybrid vehicles that run on electricity and do not 
further pollute or cause additional greenhouse gases is a great 
potential. I certainly agree that there are tremendous 
possibilities for hybrid vehicles. And in addition to the gain 
we can achieve from them in terms of issues of environment and 
issues of global warming, there is also the issue of strategic 
concerns.
    I want to compliment all of our witnesses for being here 
and thank them. In particular, I want to note that I have heard 
Mr. Gaffney say that oil should be a normal commodity and not a 
strategic one. I am greatly concerned about our reliance on oil 
from foreign nations who often are not our friends and who are 
hostile to us.
    I look forward to hearing from the witnesses today and our 
testimony, but I, like my colleague Mr. Walden, have a conflict 
and will have to leave for part of the hearing.
    I would note that in the Energy Policy Act last year I 
inserted language to encourage the U.S. Department of Energy to 
ramp up its development of battery technology. I think it is 
well-known that we lag behind the Japanese in battery 
technology. That is one of the reasons we are not as far ahead 
in hybrids and plug-in hybrids as we might be.
    Fortunately, that language remains in the bill and it is 
now law and we are doing more aggressive things. I hope we can 
do even more. This is certainly a step in the right direction, 
and we need to pursue every alternative energy source we can, 
and again I compliment the chairman on the hearing.
    The Chairman. I thank the gentleman and I thank him for his 
participation, leadership on this issue.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chair, and thank you for the 
hearing. I will waive an opening statement in favor of 
questions at a later time. Thank you.
    The Chairman. The Chair recognizes the gentlelady from 
South Dakota, Ms. Herseth Sandlin.
    Ms. Herseth Sandlin. I too will forego my opening 
statement, but would like to point out that I drive flex fuel 
vehicles and look forward to the day when I can drive a plug-in 
flex fuel hybrid and look forward to Mr. Gaffney's testimony.
    The Chairman. The Chair recognizes the gentlelady from 
Tennessee, Ms. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I thank you for 
the hearing and I want to thank our witnesses for taking the 
opportunity to come and talk with us on this issue.
    As you have heard, we are all interested in what we do to 
achieve energy independence, how we go about making energy 
independence an attainable realistic goal for our country, and 
we appreciate your participation in the discussion today. I am 
looking forward to what we are going to hear about the plug-in 
hybrids and their being a part of the solution as we move 
forward.
    Where I come from right outside of Nashville, Tennessee, we 
have a lot of auto manufacturing. There is so much creativity 
and so much innovation that is going on in this industry, and 
we want to be certain that we encourage that.
    Mr. Shadegg just talked about a provision he had in the 
energy bill we had passed 2 years ago now. We are also working 
on an additional bill that is going through our committee, just 
finished, our Energy Commerce Committee. We are looking at how 
to spread that innovation.
    I do have some concerns. One is the cost. Hybrids are about 
$3,000 more than a conventional car, and then a plug-in hybrid 
is about $6,000 more. As you are talking with consumers that 
becomes an obstacle. So that is something that I am concerned 
about.
    Then the battery is only going to last a 6- to 8-year 
period of time. Then you have the disposal problem with the 
battery. So those are all obstacles and problems that need to 
be solved as we move forward on the issue.
    Also, as we view this I want to be certain we don't pick 
winners and losers on energy technology. There should be 
choices through a free market for our consumers. Right now 
Americans are choosing not to buy hybrids. It is only 2 percent 
of our new car sales. And so although some are selling well, 
others are not. In the future they may choose to buy hybrids, 
but we need to be certain that is done by incentives in the 
market and not mandates from the government. We need to know 
that this is going to be a part of our discussion, a part of 
our solution, plug-in hybrids.
    And we appreciate again your work, Mr. Chairman, the 
staff's work and your work we appreciate.
    I yield back.
    The Chairman. Gentlelady's time has expired.
    The Chair recognizes the gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman. Thank you all, our 
witnesses today.
    In its brief history this committee has addressed many of 
the critical topics related to our dependence on foreign oil 
and the impacts of global warming, but the subject of today's 
hearing may be the most important yet.
    The overwhelming majority of our dependence on foreign oil 
is directly tied to the cars we drive. There is simply no way 
to be serious about lessening the influence of OPEC, reducing 
prices at the pump of working families or cutting down on 
tailpipe emissions that are choking our air and warming our 
planet without making our cars more efficient.
    I and my wife drive American made vehicles. I decided to 
vote with my dollars for an American made hybrid. I could have 
had 20 miles per gallon more by driving a Japanese hybrid. If 
they build it, some of us will come. I believe actually that it 
is essential that we compete as a country and that our industry 
compete for the efficiency market because that is a big part of 
why U.S. auto manufacturers are losing market share when one 
compares American hybrids and the average mileage available in 
an American car with that available in a Japanese or another 
foreign made car.
    I have also noticed that there are currently systems 
available for my car which would take it from 30 some miles per 
gallon to 60 some miles per gallon as a retrofit, and from the 
Prius, which would take it from 50 some to over 100. In the 
after market, third party market, the systems that are being 
built by small companies that inherently have to cost more 
money to the consumer because they are not dealing with the 
scale and quantity of hundreds of thousands of vehicles that 
the original manufacturers could crank out.
    So the sooner that we hopefully get on board and use the 
ingenuity that we have been hearing about and the creativity 
and technological prowess this country is famous for, the 
better.
    The challenge for this Congress is how to push plug-ins 
over the final hurdle from being a novelty to being the norm. 
This means pioneering companies like those represented today 
will grow to economies of scale, help to spur wholesale 
investment in Detroit in this technology, and make plug-ins an 
everyday option.
    I yield back. Thank you, Mr. Chairman.
    The Chairman. Thank you. The gentleman's time has expired, 
and all time for opening statements by members of the select 
committee has expired. We will now turn to hear from our 
witnesses, and I would like to begin by recognizing our first 
witness, David Vieau, who is the President and CEO of 
A123Systems. His company is a leader in the plug-in hybrid 
business, fitting existing hybrids with the batteries and 
equipment needed to convert plug-in hybrids. Mr. Vieau brings 
more than 30 years experience in high technology and component 
businesses. We welcome you, Mr. Vieau. Whenever you feel 
comfortable, please begin.

   STATEMENT OF DAVID VIEAU, PRESIDENT AND CEO, A123SYSTEMS, 
                    WATERTOWN, MASSACHUSETTS

    Mr. Vieau. Thank you very much, Mr. Chairman, Congressman 
Inslee, and Congressman Sensenbrenner and the rest of the 
committee, for being here today and for the fine work that you 
are doing to reduce our dependency on foreign oil and to reduce 
the carbon emissions that so plague the climate that we live in 
today. It is a great opportunity for us to be here and tell you 
our story a little bit. I appreciate that as well.
    Outside this building today we have a couple of 
demonstration vehicles that implement some of the technology 
that you have spoken so eloquently about. These vehicles, in 
particular the Toyota Prius vehicle that we have a 
demonstration of with our plug-in hybrid technology, 
demonstrates fuel mileage according to national testing in 
excess of 100 miles per gallon and for commuters that drive 
less than 40 miles per day, urban driving, testing would 
indicate between 100 and 150 miles per gallon.
    The benefits to us on a vehicle-by-vehicle basis is a 
reduction in fuel consumption for the average American of over 
80 percent and a reduction of the carbon emissions of over 60 
percent on a national basis, inclusive of the emissions 
associated with the production of the electricity that is used 
to create the energy for the vehicle.
    This capability is made possible by what I would say is the 
convergence of three events over the last 5 years, the first of 
which is the widespread availability of production hybrid 
electric vehicles, and that was certainly stimulated to a great 
degree by the work done here to create tax incentives and to 
increase awareness of those capabilities.
    The second thing was the development of advanced lithium 
ion battery technologies at A123Systems in Watertown, 
Massachusetts.
    The third of which was the creation of a very eloquent and 
novel system to employ these in a retrofit manner to allow us 
to immediately begin to take advantage of these capabilities. 
That would be in a battery range extension module that can be 
applied to the vehicle to increase the energy capacity so the 
car can depend more on electricity and less on polluting 
gasoline.
    The car is called the plug-in hybrid vehicle. I think 
everyone here is quite familiar with them. The nature of the 
vehicle is that it provides additional electrification to a 
hybrid vehicle. It can be plugged in to charge the batteries 
from a standard household circuit.
    A123Systems started 5 years ago in Watertown, Massachusetts 
with some technology relations from MIT and five people and a 
$100,000 Department of Energy SBIR grant.
    Today we have raised more than $100 million of private 
equity from a combination of venture capital sources and major 
corporations. Our backers include from a corporate standpoint 
General Electric, Procter & Gamble, Motorola, Qualcomm, 
Alliance Bernstein and a host of the top venture capital 
companies in America.
    We have over 380 employees today around the world, 
including our facilities in Ann Arbor, Michigan, where we do 
research and defense related battery technology development, 
and our facility in Watertown and our facility in Toronto, 
Canada.
    We initially took our technology to a commercial partner, 
Black & Decker, to work with them to create an advanced 
cordless power tool set, first of all to help them advance the 
state-of-the-art and add space with more powerful batteries, 
and second to demonstrate the capability of this new technology 
on a commercial scale.
    This has been made possible by this nano phosphate material 
which we licensed from MIT and commercialized in our labs. It 
brings to the market a combination of greater power, better 
safety, improved safety and much longer life, both calendar 
life and cycle life, in a combination of which had never been 
available previously.
    As a result of this we have been selected by General Motors 
to be a partner in development of their batteries and battery 
systems for the next generation plug-in hybrid vehicles which 
we expect to see in the market in the next 3 to 5 years.
    We have partnered with BAE Systems to create battery 
capability to help them with the electrification of commercial 
buses, city buses, and in particular the work on the program 
for the DaimlerChrysler bus system which is used in New York 
City. The implementation of our battery capability in those 
systems saves over 3,400 pounds per bus and significant 
increase in the fuel mileage or the benefits of the 
electrification of vehicle is the result of it and more than 
doubles the life of systems.
    We have partnered with General Electric Corporation on our 
first generation fuel cell hybrid bus technology, and we are 
participating in a number of other commercial programs with 
domestic and international auto companies.
    I say all of this because I want you to understand the 
seriousness that we take in our business and to understand the 
primary nature of the business A123 is to create battery 
systems that can be implemented by the OEMs themselves and 
through the major manufacturers of not only automobiles but 
also trucks and buses.
    We have a message today which I hope is the one key message 
to leave with you. We believe that in all the legislation that 
you have pending in front of you here today in Congress, 
nothing is greater than this plug-in hybrid vehicle module 
conversion, and bringing forward the opportunity to get a 
savings of 80 percent reduction in fuel usage on a consumer 
basis and a 60 percent reduction in emissions with little or no 
change in the infrastructure we have and it can be done in the 
immediate future.
    I think it is a very strong statement, and that is why we 
as a company have been supporting the activity of creating an 
after market opportunity building modules that can be put in 
vehicles, not 5 years from now, but tomorrow.
    With these vehicles there is certainly some criticism at 
times about after market activities and concerns about the 
viability of it. I will say to you that we are very serious 
about making sure that these vehicles have been NHTSA tested 
for safety and crash readiness and EPA certified for emissions 
to provide the increases that we have and improvements that we 
have so testified to.
    The Chairman. If you could summarize.
    Mr. Vieau. In summary, I want to thank you for the 
opportunity here. The cost of the systems is a bit significant 
today. We look forward to your support with tax credits, and 
thank you for the opportunity to be here.
    [The statement of Mr. Vieau follows:]

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    The Chairman. Thank you, Mr. Vieau, very much. You will 
have plenty of opportunity during the question and answer 
period.
    Our next witness, Rob Lowe, has earned an Emmy nomination, 
two Golden Globe nominations for his work on The West Wing. He 
joins us after most recently transitioning from White House 
Communications Director on West Wing to California Senator and 
Republican presidential candidate in the new show, Brothers and 
Sisters. He believes America is ready for a great leap as well. 
Mr. Lowe is a nationally recognized environmentalist.
    We thank you for coming to testify today. Whenever you are 
ready, please begin.

           STATEMENT OF ROB LOWE, ACTOR AND ADVOCATE

    Mr. Lowe. Thank you, Mr. Chairman. Congressmen Inslee, 
Sensenbrenner and other members of the committee, thank you for 
the opportunity to appear today before this distinguished 
panel. And although I have been a senior adviser to the 
President and am currently a Republican junior Senator from 
California running for President, I am honored to sit before 
you today because you are the genuine article. When it comes to 
doing the Nation's business, we all know that you have the 
ability to be the real stars. So thank you.
    Like many Americans, I have watched with increased 
frustration as our country drifts under the status quo without 
any concrete national policy for energy independence. With the 
issue of global warming entering the cultural zeitgeist, it 
seemed like that might break the deadlock, but so far it 
appears to have not.
    And now, in the war on terror in which our oil addiction 
helps fund our enemies and we ask our best and brightest to 
serve and to sometimes to die at least in part to protect our 
oil needs, surely we here at stateside can and must use this 
critical moment in time to at last begin implementing a 
responsible and practical plan for energy independence.
    A large segment of the public already knows this: I believe 
American consumers are patriotic and they are smart and they 
want to do their fair share. They have heard of the potential 
of these electronic cars, fuel cells and the dreams of 
hydrogen, but today and even in the near future they can't go 
out and actually buy any of these dreams. That is why I have 
come here today.
    I would like to suggest with your help and the help of your 
colleagues we may in fact be able to pave the way to use 
existing breakthrough technology to bring far more efficient 
green cars to the American public right now.
    New American technology exists today that can transform 
most conventional hybrids getting 40 to 50 miles per gallon 
into plug-in hybrids getting 100 to 150 miles per gallon, can 
go 40 miles on a single 4-hour charge, costs 60 cents. You plug 
into a standard electrical outlet and it can save the average 
consumer over $1,000 a year and fleet users up to $3,500 in gas 
costs while saving 100 tons of CO2 emissions over the life of 
the car.
    I recently heard about A123Systems and their batteries, 
which are powerful, smaller, safer and longer lasting than 
anything else on the market. They fit in the spare tire well. 
They can increase the on board electrical storage by many 
multiples and cut gasoline consumption by 80 percent, emissions 
by 60.
    Now, I am not a MENSA member, but I play smart guys on TV. 
So I wanted to know more. When I found out that technology has 
been chosen by GM, I read the independent assessment done by 
the Department of Energy's premier Argonne Lab last summer 
which resulted in 150 to 250 mile per gallon in urban driving, 
and I checked with some friends who have the cars and they 
confirmed these results.
    I found this to be amazing. With this education I came here 
today to ask you why not exercise your leadership right now to 
put in place a wartime-like mobilization plan to find out if 
this new technology can cut our oil consumption by 80 percent 
starting right now. Certainly Congress should be able to 
provide the same kind of early user tax credits for these plug-
in modules that were so critical in bringing down the prices 
and jump starting the current growth and demand for standard 
hybrids.
    Obviously game changing advances are sometimes met with 
indifference or even resistance from the establishment. With 
that said, can't our amazing and powerful Detroit automotive 
industry be given a message, together with effective 
incentives, to speed up their conversion to plug-in hybrids by 
using this or any other technological advance?
    In The West Wing someone asked my character, Sam Seaborn, 
why he wasn't practicing law at a big law firm, making a lot of 
money, instead of grinding it out in a life of public policy. 
And he answered with this story:
    In 1940 our Armed Forces weren't among the 12 most powerful 
in the world, but obviously we were going to fight a big war 
and Roosevelt said the United States would produce 50,000 
planes in 4 years and everybody said it was a joke. It turns 
out it was because we produced 100,000 planes. We gave the Air 
Force an armada that would block out the sun. That is the 
spirit we need here.
    So in the end, the choice before this Nation is simple: 
Waiting years for any viable mass marketed plug-in under the 
status quo or a major push now to jump start the conversion of 
plug-ins from the growing millions of hybrids coming to our 
roads. With what is at stake in the world today it is not much 
to ask. We have done far more in the pursuit of far less.
    And yet, when inspired our government is capable of amazing 
achievement. As I once said on The West Wing, over the past 
half century we have split the atom, we have spliced the gene 
and roamed Tranquility Base. We have reached for the stars and 
never have they been closer to being in our grasp. New science, 
new technology is making the difference between life and death 
and we need a national commitment equal to this unparalleled 
moment of possibility.
    That was fiction. We are here today to deal with reality, 
but the stars are aligned. The time is now and patriotic and 
smart Americans await this Congress' successful efforts.
    I thank you for your time and for your service to our 
country.
    [The statement of Mr. Lowe follows:]

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    The Chairman. Thank you, Mr. Lowe, very much.
    Our next witness is Frank Gaffney. He is the founder and 
President of the Center for Security Policy and a leading 
thinker on the national security implications of our energy 
dependence. He was the Deputy Assistant Secretary of Defense 
for Nuclear Forces and Arms Control Policy and Assistant 
Secretary of Defense for International Security Policy under 
President Reagan.
    Mr. Gaffney, welcome. Whenever you are ready, please begin.

 STATEMENT OF FRANK J. GAFFNEY, JR., PRESIDENT AND CEO, CENTER 
                      FOR SECURITY POLICY

    Mr. Gaffney. Mr. Chairman, thank you. I want to pick up on 
what, I guess it is Senator Lowe, said about the national 
security implications of the plug-in hybrid option.
    About 2 years ago, almost to the day, I had a chance to 
testify before this body's Armed Services Committee about what 
was then pending as a significant public policy problem, which 
was Communist China's attempt to buy a major American oil 
company, Unocal. And I testified at length, and if my full 
testimony would be part of the record I would be grateful, but 
the key point of it was I believe that China has appreciated a 
lesson that I am not sure we have internalized as well as we 
should, which is that energy insecurity can translate into 
tremendous national security problems. Indeed, I think it was a 
catalyst for World War II when the imperial Japanese feared 
that they were not going to have access to the energy needs 
that they believed they needed because of growing competition 
or perhaps a determination by the West to deny them access in 
the western Pacific.
    I said at the time that unless the sorts of steps that I 
and others of my colleagues who have joined an organization 
called the Set America Free Coalition, unless such steps are 
adopted, it would appear as a practical matter we will 
inevitably find ourselves on a collision course with Communist 
China, particularly if worldwide demand for oil approaches 
anything like the projected 60 percent growth over the next 2 
decades.
    In my testimony I go on to enumerate a variety of other 
potential national security threats arising from our energy 
insecurity. As you know, Mr. Chairman, something on the order 
of three-quarters of the world's proven oil reserves are in the 
hands of adherents to an ideology I think is best described as 
Islamofascism. We and our allies are, as Mr. Lowe mentioned, as 
a result transferring enormous wealth in the form of payments 
for imported petroleum to people who are trying to kill us.
    Not least, our putative friend, so-called moderate regime, 
Saudi Arabia, is using such funds to promote a pincer movement 
against the West involving Wahhabi recruitment and 
indoctrination via Saudi-funded mosques, madrassas, political 
influence operations, prison and military chaplain programs and 
campus organizations on the one hand and Muslim Brotherhood 
front organizations on the other.
    Our enabling of so much behavior is the height of folly, an 
irresponsible and certainly unsustainable practice from the 
national security perspective.
    Moreover, various suppliers of oil over the years have 
recognized that the threat of supply constrictions can 
translate into a weapon against the United States and other oil 
consuming nations. In my testimony I enumerate half a dozen of 
them.
    We have not seen another oil embargo of the kind of 1973-74 
fame, but that is not because any of the governments capable of 
trying to mount such an embargo have eschewed it as an immoral 
act or something they would be opposed to in principle. It is 
simply that it doesn't serve their interest at the moment. That 
could change at any time, especially if the world becomes more 
dependent on OPEC oil.
    Terrorists appear to understand as well the dependency of 
our economy on imported oil and the ease with which 
interruptions of the supply can be affected through attacks not 
here, but on the infrastructure elsewhere.
    In fact had the Abqaiq processing facility in Saudi Arabia 
not narrowly avoided a devastating attack, we would be even now 
in the midst of a full blown energy crisis as a result of that 
facility being off-line for some time.
    What is to be done? I mentioned the Set America Free 
Coalition. One of the chairmen, Gal Luft, is here. I thank him 
for his work, among other things, in the field of educating 
people about the hybrid option, but also, if I may just 
mention, the importance of diversifying our energy uses 
particular in the transportation sector in other ways as well.
    In the Set America Free blueprint we talk about ethanol not 
just from corn but from other sources, methanol not just from 
coal but from other sources as well, all of which can be part 
of an alternative fuel approach, fuel choice, if you will, if 
enabled by flexible fuel vehicles one of your colleagues spoke 
of driving today. There are about 5 million of them on the 
road. I cannot for the life of me understand why we allow any 
cars sold in America today to be other than flexible fuel 
vehicle vehicles. It costs about $100 to make them when you are 
doing them en masse, and with very few exceptions every one of 
them would benefit and you instantaneously create the 
opportunity for diversifying the fuel that powers our 
transportation sector.
    Let me turn in closing to the matter at hand. There are 
others on the panel who are more capable of talking about the 
technology. I would suggest to you, Mr. Chairman, that the 
kinds of steps that you and your colleagues are now taking 
constitute a veritable tsunami behind the idea of bringing to 
market not in 10 to 15 years, but today, a technology that may 
not be perfect today but could rapidly begin to address the 
problem that we are facing, the insecurity arising from our 
dependency, particularly in our transportation sector, from the 
consumption of inordinate amounts, very inefficiently, of oil, 
most of which comes from people who are trying to kill us.
    I began with a threat from China, let me close with one. It 
is my understanding that we may well see coming to Wal-marts 
near you the Chery, a vehicle Communist China proposes to sell 
for perhaps as little as 7,000, maybe $10,000, perhaps for as 
little as 12,000 to 13,000 thanks to their dominant position, 
with all due respect, in the battery technology business. You 
may be able to see American consumers offered vehicles that 
could get with a flexible fuel vehicle feature perhaps 500 
miles per gallon of gasoline from a Chery that is a flexible 
fuel and plug-in hybrid electric vehicle.
    I dare say that will be the end of Detroit if that vehicle 
is available in large numbers in America in the near future, 
and it could be. I share my colleagues' view that we mustn't 
let that happen from a national security or an economic point 
of view. I call on you to redouble the efforts you are making 
to ensure that it is not.
    Thank you, sir.
    [The statement of Mr. Gaffney follows:] 

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    The Chairman. Thank you, Mr. Gaffney, very much.
    Our final witness, Fred Hoover, has graciously agreed to 
join us on very short notice after Mayor Wynn was left stranded 
at the Austin airport last night because of severe 
thunderstorms.
    Mr. Hoover represents the City of Austin, which has risen 
to a position of national leadership on energy and climate 
issues. The Austin Climate Protection Plan will eliminate 
greenhouse gas emissions from virtually all municipal 
activities by 2020 while dramatically enhancing the use of 
renewable power at Austin Energy, a utility which it works 
closely with developing a plan for a plug-in hybrid fleet.
    Mr. Hoover, we welcome you. Whenever you are ready, please 
begin.

         STATEMENT OF FRED HOOVER, AUSTIN CITY COUNCIL

    Mr. Hoover. Thank you, Mr. Chairman, and members of the 
committee for the opportunity to speak to you about the 
potential impact of plug-in hybrid vehicles on both the 
Nation's energy usage and global warming.
    The City of Austin has an exceptional asset in its 
municipal utility, Austin Energy. The Green Choice program has 
led the Nation in renewable energy sales for the past 5 years. 
The energy efficiency and greenbuilding programs for commercial 
and residential buildings is a national model.
    Austin Energy is the first electric utility outside of 
California to join the California Climate Action Registry.
    Earlier this year the Austin City Council adopted a climate 
protection plan that sets goals and strategies to make Austin 
the leading U.S. City in the campaign to fight global warming. 
Plug-in hybrids I believe are part of that future.
    The city's interest to plug-in hybrid vehicles took hold as 
they realized the potential environmental and economic benefits 
that come with electrifying the transportation system. These 
are reducing foreign oil with domestic resources for energy 
independence, reducing greenhouse gas emissions from vehicles, 
powering vehicles with renewable energy, reducing air pollution 
in urban areas and lowering fuel costs for consumers.
    The benefits that can be realized from plug-in hybrids 
aren't some futuristic idea, as you have heard earlier today; 
the vehicle technology and the electric infrastructure fuel 
these vehicles is here today.
    In January of 2006, the City of Austin launched Plug-In 
Partners national campaign to persuade automakers to build 
plug-in hybrids by demonstrating that a market for these 
vehicles exists today. Austin Energy has taken a lead in 
forming this national grassroots coalition, which now counts 
600 partners, including 23 of the Nation's largest cities.
    Our city partners include Los Angeles, New York City, 
Chicago, Boston, Portland, Oregon, Seattle, San Francisco, 
Kansas City, Missouri, Milwaukee, Phoenix and Memphis. This 
coalition spreads over 41 States and includes State and local 
governments, electric utilities, environmental and national 
security groups, and the business community, including the 
largest auto retailer, who joined because their CEO believes 
they can sell plug-in hybrid vehicles.
    The automakers have taken notice. GM announced plans for 
two plug-in vehicles, the Saturn Vue and Chevy Volt. Toyota and 
Nissan are working on plug-in hybrids. Ford announced an 
intention to sell plug-in hybrids in the next 5 to 10 years.
    Plug-in hybrids have the ability to enhance energy 
independence in the near term at virtually no cost. Our 
national power system could charge tens of millions of plug-in 
vehicles without requiring new power plants. Consumer demand 
for electricity peaks during the day, but more than 40 percent 
of the capacity of generators in the United States sits idle or 
operates at reduced load overnight. It is during the off peak 
hours that most plug-in vehicles would be charged. The 
Department of Energy's national lab reported that the Nation's 
existing electric generating capacity could be able to fuel 84 
percent of the U.S. cars, pickups and SUVs and plug-in hybrids 
without a single power plant being built.
    Earlier this year the Brookings Institution announced that 
nothing could do more to reduce oil dependence more quickly 
than making cars to connect to the electric grid. Electric 
utilities could be the gas station of the future, with the 
infrastructure already in place and the significant unused 
generating capacity to recharge cars overnight. The only thing 
plug-in hybrid vehicle owners would need is an extension cord.
    Plug-in hybrids offer the most promising approach to 
reducing carbon emissions and transportation. A California Air 
Resources Board study of emissions along the entire supply 
chain found that using today's national electric grid, a 
battery-powered electric vehicle generates 40 percent of the 
greenhouse gases produced by an equivalent gasoline vehicle. 
This would shift the emissions that impact the public health 
from urban areas out to power plants where they are more easily 
controlled.
    As the Nation's grid becomes greener, so would the 
transportation sector. Austin Energy produces a lot of wind 
generated energy mostly at night, which provides a perfect fit 
from environmentally friendly plug-ins. The Green Choice 
customers of Austin Energy would fuel plug-ins from wind from 
west Texas instead of oil from the Middle East. The 
environmental benefits of hybrids will be substantially 
increased as you enact Federal policies encouraging the 
greening of the energy grid.
    As U.S. energy prices currently run about $3 a gallon for 
gasoline and the national cost of electricity at 8.5 cents per 
kilowatt, a plug-in hybrid runs on the equivalent of .75 per 
gallon of gasoline. Given that half the cars are driven 30 
miles or less, a plug-in with even a 20-mile purely electric 
range could reduce petroleum fuel consumption by 60 percent.
    In summing up, Austin Energy is going to put its money into 
this effort. It has committed $1 million in rebates to 
customers who purchase plug-in hybrids when they become 
available. The consumer tax credits offered in the House 
renewable energy bill coupled with these rebates will help put 
plug-ins on the road and start us to the road to energy 
independence.
    Thank you.
    [The statement of Mr. Wynn follows:]

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    The Chairman. Thank you very much, Mr. Hoover. We thank 
each of you for your opening statements and will now turn to 
questions from the committee members, and the Chair will 
recognize himself for an opening round of questions.
    Mr. Lowe, you are one of the very few people who have ever 
driven a plug-in hybrid. I think people are wondering what is 
it like. Is it much different than driving a regular car?
    Mr. Lowe. Well, the most marked thing that I found is you 
get almost competitive with yourself to see exactly how much 
amazing gas mileage you can be. You watch this sort of read out 
and you realize okay, I am going to come off of this stoplight 
a little slower because I will get literally 100, 225 miles per 
gallon. I find it makes you a more economical driver.
    With that said, you can't imagine the attention you get 
from people because the one that I have been driving says 150 
miles per gallon on the side. So people come up to you and stop 
you on the street and want to know where can I buy it. I mean 
my nonscientific field testing tells me there is a huge 
interest in this car.
    The Chairman. And so people want to know, Mr. Vieau, Mr. 
Gaffney, is this a commercially viable idea or is this just 
some dream that people have? Can this happen? Can we actually 
produce vehicles like this that the American people can 
purchase?
    Mr. Vieau. There is absolutely no question that we can do 
it. We made dozens of the demonstrations vehicles to show that 
the technology can be implemented and we are going into the 
third generation design, and we are a couple of steps between 
now and the broad scale release of the product. One is NHTSA 
testing and EPA testing. We know the engineering activities 
associated with that, but these are problems that have been 
solved in numerous ways.
    I can tell you that we as an industry figured out ways to 
package gasoline and it is much more volatile than what we have 
in our battery systems. So there is work to be done, there will 
be no question about it. The big issue is finding ways to 
assure the volumes will be there. We can build the capability 
to do it. The volumes will drive costs down.
    The Chairman. Do you agree, Mr. Gaffney, with Mr. Lowe that 
the volumes will be needed because the public will move to 
technologies like this and it will become a commercially viable 
business?
    Mr. Gaffney. I am not sure I have the expertise to address 
that other than to say I don't know of anybody who wouldn't 
rather get 150 miles a gallon than 17, 20, even 30. There may 
be people who prefer to expend the money associated with it as 
the price keeps going up, but I can't imagine it.
    The question about is this going to be the future, no less 
an authority than Lee Iacocca has said this is the future of 
the industry. I am told that I think it is CalCars started by 
discovering one of their engineers found a switch in his Toyota 
Prius that was inoperative. When he reverse engineered it, he 
figured out it was for a plug-in hybrid feature that simply had 
not been built into the car, this particular model.
    The reason I mention that is I don't know if that is a 
story or true, but the point is Toyota has stolen the march in 
Detroit with the Prius and perhaps with your Camry, but what is 
most important, it seems to me, is if their principal reason 
for not introducing as quickly as they can a plug-in feature is 
that it didn't jive with their marketing plan, which as you 
know has been built around the motif that you don't have to 
plug it in as a way of distinguishing the hybrid they are 
making now from the General Motors electric car which some 
people were frustrated about did not have sufficient mileage.
    We should not be hung up on the basis of some particular 
foreign manufacturer's marketing campaign, and I believe this 
is a wake-up call for Detroit. If indeed there will be a 
Detroit in the future, it should be based on the idea that they 
need to get in front of these kinds of technologies using 
American know-how and wherewithal wherever possible.
    The Chairman. Okay. For you, Mr. Hoover, Austin is 
committed to making this a commercially viable option for the 
residents of Austin?
    Mr. Hoover. Right. When Roger Duncan from Austin Energy 
first started coming to Washington to talk about this idea in 
late 2004-2005, the response of the automakers were that, well, 
this was something that was kind of far in the future, over the 
horizon; the technology was not there because of the batteries. 
In that time frame we have seen, because of the support here on 
Capitol Hill and by the other groups in Washington, D.C., that 
the automakers have steadily accelerated that timetable as to 
when these cars are to become available, and now you have GM 
and Ford discussing these cars as being real production 
vehicles that they will see in the near-term future.
    The Chairman. Thank you. My time has expired.
    I recognize the gentleman from Wisconsin, Mr. 
Sensenbrenner.
    Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
    I think all of us are sold on the concept that a plug-in 
hybrid is really the car of the future. Where we have the 
disconnect, in my opinion, is the fact the battery technology 
is not keeping up with our hopes. So I have a few questions of 
you, Mr. Vieau, since you seem to know more about battery 
technology of everybody in the room.
    Where are your batteries manufactured?
    Mr. Vieau. China.
    Mr. Sensenbrenner. Okay. Is there not an American battery 
of comparable capability available?
    Mr. Vieau. Well, I want to qualify the first comment--
excuse me--that I just made.
    As to the actual cells such as like I have in my hand, we 
are having them produced in China, and we have multiple 
factories that are involved in that process. The systems, 
themselves, that you would see in this car that is out here, 
which is a combination of batteries with a lot of other gear 
and packaging and so forth, is made in America. So about half 
of what you see overall is American content, and about half of 
it is Chinese. There are no significant commercial North 
American lithium ion battery manufacturing facilities today.
    Mr. Sensenbrenner. And why would that be?
    Mr. Vieau. The commercialization of lithium ion technology 
was initiated by Sony Corporation in Japan in 1991, and the 
Japanese put a significant investment in the development of 
lithium ion technology at a time when our major battery 
companies turned in a different direction. I believe by the 
time that our companies came back they felt that it was a bit 
of ``game over.'' Our approach to this has been coming outside 
the box with new chemistries and to reinvent the battery 
technology, and we have been able to change the game 
substantially.
    I will say that it is not out of any personal desire to go 
build batteries anyplace outside the U.S. We made a decision 
that was somewhat defensive to the company's security, which is 
to make sure that we took advantage of the lowest cost 
available in materials and resources in the shortest possible 
period of time to secure a position of global competitiveness 
for our company. In the future and over time, we have the 
resources today and the availability to make choices that will 
allow us to include North American manufacturing in our plans 
for the future.
    Mr. Sensenbrenner. Well, if I were in your position, Mr. 
Vieau, I would have made the same decision, so I am not 
critical of this, but the concern that I think we have as 
policymakers is aren't we exchanging a dependence upon foreign 
sources of energy from the Middle East--a lot of the folks 
there do not like us--for foreign services of energy being made 
in China with lithium ion batteries.
    What do you think Congress can do to be able to jump start 
the North American capability of manufacturing those components 
that you currently have to go to China to get?
    Mr. Vieau. I think there are three pieces of this puzzle in 
order to make sure that we are successful in this initiative 
today as a country.
    One of them is the early-term incentives to create 
awareness and to drive demand and to increase volume. The 
second is to spend more money as a nation in the investment 
research to drive cost and to improve efficiency of the lithium 
ion systems that we have employed today. The third one is the 
creation of an independent pilot scale and at least a small, 
capable manufacturing scale to demonstrate American 
manufacturing competencies, and I believe that it would make a 
great deal of sense for us, as a people, to invest initially in 
those factories to get that up and running.
    Mr. Sensenbrenner. I agree with what you say. Now, I have 
been a veteran of the Science Committee for most of my 29 years 
in Congress, and early on I did an awful lot of overview of the 
nonnuclear energy research that the Department of Energy 
sponsors, and a lot of that includes battery research.
    Can you give me your opinion of whether that research has 
actually helped American manufacturing in this capability or 
whether it has gone in the wrong place?
    Mr. Vieau. We have drawn on the resources of research 
activity around the country. Our people do that on a daily 
basis. The competency that we have as to the fundamental 
research capability in America, I believe, is second to none. 
Where we have failed in the battery industry is in the 
commercialization and execution, so that investment that has 
been made has provided some dividends. The technology that we 
are employing today is considered by the industry to be the 
leading technology for plug-in hybrid vehicles of the future.
    Mr. Sensenbrenner. Thank you, Mr. Chairman.
    Mr. Gaffney. Mr. Chairman, could I just add one quick point 
on that?
    I think you are absolutely right to be concerned about the 
industrial capabilities of this country in this technology. 
From a national security perspective as well as from an 
economic perspective, it is the height of folly for us to be 
depending on China or, for that matter, Japan or Korea, which 
are, I think, the other principal foci of these kinds of 
technologies at the moment. This is a place where we really 
need for both the Defense Department's applications--I have 
served on the Defense Science Board panel, looking into this, 
and I think there is keen interest in this whole question, and 
it really needs your support.
    Thank you.
    The Chairman. Great. The gentleman's time has expired.
    The Chair recognizes the gentleman from Washington, Mr. 
Inslee.
    Mr. Inslee. Thank you.
    First, I want to tell you how happy I am that you are here. 
Mr. Vieau eloquently used a metaphor involving our response to 
World War II, and I have suggested another metaphor, which is 
our Apollo project, and virtually everything you have all 
suggested is contained in the new Apollo Energy Act that I have 
introduced with some of my colleagues. I am glad you are 
telling your story, too. It is a very important one. I have 
tried to tell, Mr. Gaffney, Mr. Hoover, Mr. Vieau, all of your 
stories in a book coming out called Apollo's Fire. I have tried 
to tell your stories because they are good ones, and the more 
that people know them, the more they will embrace both of these 
technologies and the policies they need to drive them.
    I believe we are in a technological race, as we were in the 
original space race, right now with the rest of the world to 
develop the technologies and to manufacture some here and maybe 
some overseas, but we need to keep these technologies 
homegrown, and I think that is the race we are in right now.
    I want to express frustration that this is not moving 
faster. I met a guy, while writing this book, named Felix 
Kramer with a group called CalCars in California. They 
developed the first one of these to get them on the road to try 
to get Detroit and others to promote this, and I am still 
frustrated, frankly, that they are still talking 5 to 10 years 
to get these mass-produced. The Dreamliner that Alan Mulally 
built at Boeing took--I do not know--maybe 6 or 7 years from 
conception to roll-out. These things are on the road today; the 
batteries are manufactured today, and we are still talking 5 or 
10 years for mass production.
    What would you suggest is the most important thing we could 
do to accelerate that rate of getting them on the road? Anyone 
could help me on that.
    Mr. Hoover. Two suggestions, one that has already been 
discussed. Targeted funding for research on the batteries to 
help make sure that the commercialization happens sooner and 
then, secondly, incentives for consumers to buy plug-in 
hybrids.
    As I mentioned, Austin Energy is willing to put its money 
up for those types of incentives, but I think the Federal 
incentive that was done originally for hybrids was a big part 
of that. I formerly served in the Maryland State Government. We 
had a State incentive to encourage people to buy hybrids back 
when they first came into the market, and it had a lot to do 
with pushing that. So I think those types of things can be done 
immediately.
    Mr. Inslee. You will be pleased to know that I think both 
of those are going to be in our bill and that we have a tax 
incentive for consumers with an increasing amount per megawatt 
hour of capacity.
    Also, I passed an amendment, with the help of others, last 
week to develop an R&D program to develop the software we need 
to use these batteries as part of the utility grid because now 
we have this tremendous ability to use batteries as a storage 
capacity for the utility grid. We had earlier testimony from 
another committee member who said it might have an economic 
value of $3,000 for owners to essentially rent their battery to 
the utility to store the utility electricity in their grid 
while you are asleep. That is a good way to make some money. We 
hope that will happen.
    I want to focus and ask you all about the ability--I think, 
Mr. Hoover, you made reference to the fact that, even on 
today's grid, which is mostly coal-powered, a mostly dirty, 
CO2-emitting, coal-powered grid--even on today's dirty grid, we 
get CO2 savings relative to gasoline and other situations. My 
perception is, as that grid becomes cleaner, as we move to more 
renewable resources, including perhaps clean coal someday, I 
believe this technology can get cleaner over time. In other 
words, the car you buy today is actually going to get cleaner 
over time because you are going to be using cleaner 
electricity.
    Is that a fair assessment?
    Mr. Hoover. I would agree with that. I mean our view has 
been--to put it in a simple way, it is much easier to control 
emissions from the generation side than from the tailpipe side. 
Previously, what we have tried to do with automobiles is to 
deal with what comes out of the tailpipe and to do things to 
that. If you change the mixture that the car runs on so as it 
is running on a cleaner fuel you are lowering emissions, and 
you are pushing the control of the emissions to one central 
place as opposed to thousands of tailpipes.
    Mr. Inslee. Okay. Thank you.
    A quick question to Mr. Vieau as far as costs.
    Costs are high now, relative. We are in a small 
manufacturing situation. They are obviously going to come down. 
We have these huge scales of economy.
    Can you make any projections about costs, once we get to 
mass-scale production, for these vehicles relative to hybrid 
costs today? Also, as far as operating costs, I have heard 
numbers as low as 1 cent to 2 cents per mile; whereas, gasoline 
is at least 9 cents a mile to run your car.
    Could you address both of those issues?
    Mr. Vieau. Certainly.
    With respect to the initial costs today, we are projecting 
a sale price for the multi-year warranted conversion of an 
existing hybrid next year of less than $10,000. We expect that 
that will go down by about 40 percent over a 3- to 5-year 
period by increasing volumes gradually over that time and by 
improvements in the technology that we have in our product 
pipeline.
    As far as the operating costs are concerned on the vehicle, 
we are expecting an 80 percent reduction in the consumption of 
gasoline and in the associated costs. Now, one of the questions 
is the cost of the electricity that is used at night. In some 
areas of the country and in the world, smart metering is being 
implemented to take advantage of the lower costs of electricity 
in the evening as opposed to the daytime costs, and so in some 
areas where it is 10 cents to 12 cents per kilowatt hour in the 
day, the cost is now being provided for evening use of 
electricity in the 2- to 3-cent-per-kilowatt-hour range, the 
combination of which would make these systems even more cost-
effective.
    Mr. Inslee. Thank you.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentlewoman from Michigan, Mrs. 
Miller.
    Mrs. Miller. Thank you very much, Mr. Chairman.
    I think this entire hearing is fascinating. Certainly, the 
subject matter is something I have a great degree of interest 
in, my coming from Detroit--outside of Detroit, I should say--
but really Michigan actually during World War II was known as 
the ``arsenal of democracy'' because we had the manufacturing 
capability that literally built the armaments that led the 
world to peace, and yet now Congress seems to be making a 
conscious decision to bankrupt Detroit, and I appreciate the 
fact that particularly--Mr. Gaffney, my principal committee 
assignment is sitting on the House Armed Services Committee, 
and I wanted that committee assignment because I believe that 
the first and foremost responsibility of the Federal Government 
is to provide for our national defense and to protect the 
homeland. Yet, when we think about what Congress is trying to 
do to achieve energy independence/energy security, which does 
equal national security--I absolutely do believe that--we have 
put Detroit in a bind because we expect them, the domestic auto 
industry, to compete internationally in building automobiles 
with countries like Japan, which you mentioned about Sony in 
making your investment.
    Actually, the Japanese government has spent over $1.5 
billion on lithium ion battery technology and doing the R&D. 
China, the government of China, is doing the same kinds of 
things. There are health care costs that the foreign automobile 
industry does not have to pay. Yet our industry obviously does 
have to pay them. GM has over 1 million retirees right now who 
we are paying health care costs on.
    We want to be an active participant in getting to where we 
need to be as a country. Yet we are so focused on the 
antiquated modeling system of CAFE, which is crazy. It is nuts. 
That was actually initiated in the 1970s to get us off of the 
consumption of foreign fuel. Since that time our consumption of 
foreign fuel has increased by 100 percent. Now, I am not a 
mathematician, but it seems like that is not working.
    Wouldn't it be better for us as the Federal Government to 
assist the domestic auto industry on R&D with lithium ion 
battery technology and all of these kinds of things? Because if 
we do not do so, we are literally going to put the domestic 
auto industry out of business under the CAFE standards that 
just passed the Senate. Chrysler will go bankrupt because of 
the product mix. About 70 percent of their product line is SUVs 
and light trucks, et cetera. So we are going to bankrupt the 
domestic auto industry.
    How does that--I guess this is my question. How does that 
advance our national security interest and our energy 
independence interest to bankrupt the domestic auto industry, 
thereby only allowing our consumers the availability of buying 
foreign cars?
    Mr. Vieau. I would like to make at least the first comment 
on this.
    It is just that we need the domestic auto manufacturing 
capability now and in the future, and I believe that the 
cooperation of American technology being developed today by us 
and by others--by the way, there are a number of other 
companies working in the same field as aggressively as we are 
at this point in time, the combination of which can be very 
competitive on the global scale today, and I think that without 
that union of the two and without that available, our business 
is not going to be as successful in the long term. Our 
opportunity is in the cooperation with General Motors, Ford and 
DaimlerChrysler.
    Mrs. Miller. Yet--and I would like to hear your answers--
Ford loses $3,200 on every Ford Focus that it sells, and they 
are selling these cars just to comply with these crazy CAFE 
standards. We will never be able to compete under this model.
    Mr. Gaffney. I am very sensitive to the concerns you have 
expressed. Particularly, as I said earlier in response to 
Congressman Sensenbrenner, the industrial base of this country 
is a national security imperative. I think, in a previous 
appearance before your committee, I testified that one of the 
things that I think we have done a woefully inadequate job on 
is understanding how dependent we are becoming on foreign 
suppliers for even the military hardware of this country that 
may not be available to us in time of war, let alone these 
other industrial capabilities. The public is now suddenly aware 
of this in the context of the dependence that, all of a sudden, 
we realize we have on China for food and for other products 
that are perhaps unsafe. That is a microcosm of a larger 
problem. Let me give you just one example directly relevant to 
your constituents.
    I was at the unveiling at the Washington auto show of the 
GM Volt. It is a very exciting concept car that they are very 
anxious to produce, they say. The reason given, in response to 
Congressman Inslee's question of why is it still 5 or 10 years 
away, is they say they cannot get batteries for that car.
    Now, I am hopeful that the kinds of technologies that we 
are talking about here will help rectify that, but as long as 
we continue to rely on China or on Japan or on Korea or on 
somebody else to supply this stuff, we will always be at the 
mercy of guys who do not necessarily want the Volt to come on 
the market and to be an effective competitor with their future 
products.
    Mrs. Miller. Yet the domestic auto industry--actually, the 
auto industry is the only industry in America that has carbon 
constraints placed on it. We do not place carbon constraints on 
the oil and gas industry, on the electrical industry or what 
have you. Apparently, Congress has made a conscious decision to 
do whatever they can to bankrupt the domestic auto industry.
    Do you think this is the best way for energy independence?
    Mr. Gaffney. I certainly do not. More to the point, I think 
if that industry goes away our dependence for other directly 
militarily relevant vehicles will also become a greater 
problem. So this is not purely a lunatic economic approach. It 
is also, I think, a national security problem.
    Mr. Vieau. I think that, from what I have seen of the 
American auto companies right now, they are beginning to 
embrace the electrification of vehicles, and the Chevy Volt is 
a great example of the technological change that can change 
this whole dynamic that you are talking about. Having a 
superior vehicle with superior technology, with advances--we 
had that Chevy Volt at our facility yesterday so all of our 
employees could drive it and take a look at it and experience 
it and be motivated by what it means.
    The key point right now is that we need to start something 
today and to demonstrate these capabilities. There are pockets 
of reluctance and resistance around the industry and around the 
world saying a lot of this cannot be done. I think the key 
thing is we need to do some things, and the combination, too, 
is going to strengthen the automotive competitiveness.
    Mrs. Miller. Thank you, Mr. Chairman.
    The Chairman. The gentlelady's time has expired.
    The Chair recognizes the gentlewoman from South Dakota, Ms. 
Herseth Sandlin.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman.
    I want to thank Mr. Cleaver for yielding his time to me at 
the outset to make a call at 11:30.
    As I mentioned in my opening statement, I drive Flex Fuel 
Vehicles. I drive a Chevy Impala that can fill up with E85--an 
85 percent blend of ethanol--and I drive a Jeep Liberty Common 
Rail diesel that can fill up with biodiesel.
    Given what Mrs. Miller has been saying about the importance 
of our domestic auto manufacturing capacity, I think that 
Detroit has made a significant commitment in trying to find a 
competitive edge in light of a number of factors that she 
identified and that Flex Fuel Vehicle manufacturing has been 
where they have been in trying to find a niche in light of some 
of the difficulty of getting access to these batteries for 
their hybrid manufacturing. So I do not want to in any way 
undercut but, rather, to enhance what Detroit has already done 
and the direction that we hope to incent as it relates to plug-
in hybrid technology.
    I am wondering if any of you can address the issue of why 
we have not seen any manufacturing of the flex fuel gas-
electric hybrids, let alone any flex fuel plug-in hybrids. Is 
it an infrastructure issue and the availability of fuels like 
E85, like biodiesel? Is it primarily the issue of the 
difficulty of getting the batteries to be able to integrate 
both technologies into one vehicle?
    My understanding is that, perhaps down at Virginia Tech, 
they have been doing some research. They have got a car that is 
a hybrid Flex Fuel Vehicle, but are there any others on the 
road that you are aware of, and don't you agree that it makes 
sense--I think, Mr. Gaffney, you say in your testimony--to take 
the next sort of step or to add the small step of ensuring that 
we can have vehicle engines that can run on any combination of 
liquid fuel and electricity? Beyond that, we have to ensure 
that the liquid fuel is anything from pure gasoline to pure 
ethanol to biodiesel and anything in between.
    Perhaps, you might want to comment as well on vehicle 
engines as it relates to diesel fuel. We know that in Europe we 
have far more passenger vehicles that utilize the diesel engine 
technology. What are your thoughts on what we can do in this 
area?
    Mr. Gaffney. May I respond?
    One of the fuels that you mentioned--or failed to mention, 
I should say--is methanol, and I think the marginal additional 
cost in programming the chip to ensure that it can also consume 
methanol is negligible, so we ought to be making sure that that 
is a piece of the Flexible Fuel Vehicle equation.
    As I said in my testimony, I cannot imagine why we are not 
making it an obligation of any car manufacturer--not just 
Detroit--but of any car manufacturer that wishes to sell cars 
in the United States. They have to have seatbelts for every 
passenger. That is a given. They have to have airbags for the 
front two passengers. That is a given. They ought to also have 
a Flexible Fuel Vehicle capability built into the car. It just 
immediately--whether there are supply problems right now or 
whether there are localized areas where you can get this 
particular alternative fuel or another over time, the fleet is 
transformed into one that has a requirement for a fraction of 
the gasoline. Now, you may want to use gasoline for other 
reasons, but you do not have to if you have got these other 
features built into it.
    My hope is--you are absolutely right--that what we will do, 
as a result of what I call the ``tsunami of legislation,'' is 
to create incentives, to create R&D programs, to create 
demonstration programs, to create education programs, but most 
especially, to facilitate production in this country so that 
you will have plug-in hybrid electric vehicles that have, yes, 
a Flexible Fuel Vehicle capability as well.
    Mr. Hoover. If I could offer a couple of thoughts on that, 
it seems that from our view the plug-in hybrid is part of the 
solution, but it is not the only solution, and our attitude is 
that we need to sort of diversify the way we fuel vehicles in 
order to have the purchasing ability for Americans to have a 
vehicle that fits their needs best.
    Right now, we do that basically by size. You pick a car for 
your needs on that. What we need to do is to change the fueling 
infrastructure and to change the engine technology so that cars 
can run on a multiplicity of fuels. That way, consumers can 
pick that type of vehicle that best fits their needs. For an 
urban consumer who does a daily commute, a plug-in hybrid might 
be best. In other areas, it may be a Flex Fuel Vehicle that has 
other capabilities, but I think that is how we sort of get away 
from this problem we have of the overdependence on one fuel 
source.
    Ms. Herseth Sandlin. Well, I thank you for your responses. 
Does anyone want to address the diesel engine technology issue?
    Mr. Vieau, are there complications with utilizing the 
battery technology with a diesel engine?
    Mr. Vieau. No. No, not at all.
    I think that the proposition that we have today for plug-in 
hybrid vehicles is a system that is in harmony with a Flex Fuel 
Vehicle by the very nature of it, and the electrification is a 
piece of the problem. I do not think anyone is suggesting, 
though, that we are ready technologically to make fully 
electric vehicles. It is probably in the category of where we 
looked at fuel cell vehicles a few years ago. There is a lot 
more time to get to the point where you have that.
    The Chevy Volt and I think the GM platform suggests that 
the proper combination for the technology we have available 
today is a vehicle that runs on an electric motor with a series 
of batteries that power that. The batteries can be provided 
with energy from a number of flexible sources. One of those can 
be a generator that runs on biofuels, diesels and a number of 
different materials, and it can be plugged in as well from a 
local source. So having that combination of flexibility is 
really what the American people want. They want to have a 
vehicle that they can use extensively, that they can use 
efficiently and with less pollution.
    Ms. Herseth Sandlin. Thank you.
    Just one final comment, Mr. Chairman.
    I agree with what Mr. Gaffney said in his response, that 
any requirement, any incentive but any, again, requirement that 
we will consider as it relates to Flex Fuel Vehicles has to be 
on any car sold in the United States. It cannot be simply 
targeted to Detroit, which has already made a significant 
commitment in this area. I think that, again, whether it is 
fuel choice or vehicle choice, it is important.
    Then, of course, I appreciate what Austin is doing as it 
relates to the importance of smart grid metering, because we 
have a lot of wind in South Dakota just like you have a lot of 
wind in Texas, and I think that we have tremendous opportunity 
for storage capacity in electric vehicles.
    Thank you, Mr. Chairman.
    The Chairman.  The gentlelady's time has expired.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Lowe--Senator. I am sorry--right now there is not a lot 
of discussion about the fact that ethanol is subsidized at 
about 51 cents a gallon, which is tremendous. There is a 
tremendous subsidy of $4.4 billion a year.
    What do you think the Federal Government can do or should 
do that would encourage the manufacturers and the public to 
move significantly toward plug-in hybrids?
    Mr. Lowe. Well, first of all, what you have to understand 
is that I am playing a presidential candidate, so I am loath to 
get into ethanol because I would like to win Iowa, but that 
said, I think part of what--certainly, my thrust here today is 
to raise awareness that we are even having this discussion, 
that for those who are still in the flat earth society that 
there is maybe not a problem with our environment, okay, let us 
take that off the table.
    Certainly, you will agree that this is a national security 
issue. So there are two wonderful reasons to be having this 
debate, and when the public tunes into this, I think that they 
will be engaged, and like I said in my testimony, I believe 
they do want to do their part.
    One of my best friends has just recently converted his 
whole fleet to biodiesel. He loves it. I have been driving this 
plug-in hybrid. I have been able to drive some other 
prototypes. When Governor Schwarzenegger was sworn in, all of 
his official fleet at the swearing-in were prototypes from all 
over the world, and they were extraordinary.
    So I think, in answer to your question, you have to lead 
the public into an area where they are ready to accept this and 
are ready to take action and, on a parallel track, you need to 
be working with Detroit and also making sure that the other 
foreign manufacturers have the same amount of--``impediments'' 
is not the right word, but what is good for the goose needs to 
be good for the gander, I think, and so I think it is really a 
parallel track.
    Mr. Cleaver.  I have a mobile office in Kansas City and, 
incidentally, Ford Motor Company has a plant there that 
produces the Escape hybrid, but my mobile unit runs on 
vegetable oil, which costs about 70 cents a gallon, and it is 
true that you sometimes smell like a Big Mac, but----
    Mr. Lowe. How is that for your diet?
    Mr. Cleaver [continuing]. I agree with you.
    I brought this up because I think there probably should be 
a--I mean we should use every available source of reducing our 
dependence on foreign oil, and I think we will be making a 
terrible mistake if we think that we can solve this problem 
simply by getting more plug-in hybrids or E85 or, you know, any 
other Flex Fuel Vehicles. There is a problem that I would like 
someone to address.
    When we use flex fuels, the engines are not calibrated to 
operate optimally for any of them, and so the more we talk 
about flex fuels we are also talking about not putting cars on 
the road that are operating at their optimum.
    Is that a concern that I should discard?
    Mr. Gaffney. Well, what is the object of the exercise?
    From my perspective, the object of the exercise is reducing 
the amount of oil that we rely upon to power our transportation 
fleet. If we have alternatives to oil that may be used less 
efficiently in some respects but that are indigenously 
available, that we are getting from products--and I would add 
to your ethanol question the obvious, immediate opportunities 
of sugarcane-based ethanol coming from sources other than 
dangerous Wahhabists and Islamafascists in the Middle East, for 
example, and in Latin America, also the possibility that we 
will shortly see cellulosic ethanol become a real contributor. 
These are, in other words, alternative sources of fuel that, 
you may be well right, are not as efficiently used or that we 
consume more of than we might consume of oil on a per mile 
basis, but yet if the object of the exercise is to stop 
transferring wealth to people who are trying to kill us, I 
think that is a good trade-off to be making. You are absolutely 
right. It is flexible fuel, and these alternative fuels are 
just one piece of a comprehensive approach that we call in the 
Set America Free Coalition ``fuel choice.''
    Mr. Cleaver. Thank you.
    Thank you. I thought I would catch you talking, and I would 
slip another one in. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. 
Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman.
    Mr. Vieau, is there a conversion kit available for those of 
us who drive a Toyota Highlander hybrid?
    Mr. Vieau. Not at this point in time. We do have plans to 
expand which modules we have available. We do have a Ford 
Escape, and we do have the Prius on a small scale, but we are 
in the process of completing testing and then scaling up from 
there into different models.
    Mr. Blumenauer. Would you keep me on your mailing list?
    Mr. Vieau.  We will do that for sure.
    Mr. Blumenauer. Thank you. Thank you very much.
    Mr. Lowe or others, I have a vision in the world of West 
Wing that if confronted with a recalcitrant Congress that I 
could envision a President's issuing an executive order that he 
is not going to wait for them, that since the Department of 
Defense is the largest consumer of energy in the world, since 
the Federal Government purchases thousands of vehicles a month, 
that he would just execute an executive order that says, 
``After September 30th, we are not going to purchase anything 
that is not a hybrid, that does not have the dual-fuel capacity 
and that does not have the capacity for a plug-in conversion.'' 
I can envision this on West Wing. I can also envision it in the 
next administration. It would also seem to me that this might 
be something that even some of our friends who are somewhat 
skeptical about broader applications in Congress might agree to 
as far as the Federal Government's leading by example.
    Would any of you have any thoughts about the impact of a 
Federal Government executive order or Federal legislation that 
would mandate that the Federal Government do this within 6 
months, a year and let those market signals ripple out?
    Mr. Lowe. I think you are right that my character would 
advise President Bartlet that that might be a pretty good idea, 
and I do think perhaps it is an opportunity to tell Detroit, 
look, we are going to preorder a large number of these. You 
know, you are not going to go broke when you have the Federal 
Government buying X amount of vehicles.
    Listen, I am really sympathetic to those concerns. I think 
we need to buttress that industry, and we need to not penalize 
that industry to the extent that we can, but you know, there 
has been such a lack of the bully pulpit on issues like this, 
and there is enough blame to go around. It is not a Republican 
or a Democrat issue. It just has not been at the forefront of 
the debate that it needs to be, particularly in a time of war. 
We should be hearing as much about this as our plans in the 
Middle East and as we are hearing about anything else, and we 
just hear nothing, and I am hopeful that that will change in 
the next administration regardless of what party controls the 
White House.
    Mr. Gaffney. Could I just add to that?
    There is no reason why this should wait for the next 
administration. The President has diagnosed our condition as 
addicted to oil, this President. I mean you talk about Nixon's 
going to China. This is an opportunity--I have argued it with 
my friends in the administration. This is an opportunity for 
this President to make--you are absolutely right--the Federal 
Government an early adopter that will enormously catalyze the 
kinds of industrial retooling and changes that are required 
from both a national security and an economic point of view.
    Mr. Hoover. I would like to add one final thing.
    There is one specific part of the government that is made 
to order for plug-in hybrids, and that is the U.S. postal 
system. If you look at how their vehicles are used, it is a no-
brainer that they should be moving to this technology.
    Mr. Vieau. This is an important message for me on the 
problem that we face in trying to execute more efficient 
battery systems, and the same thing carries across into flex 
fuels and the like.
    At the working level, we go in to our business partners in 
industries that have tremendous resources, and we say, ``We 
want you to work on `such and such' chemical that will have a 
huge impact.'' they say, ``There is no demand.'' they say, 
``There is no market. When you get a market and there is a 
demand, we will come back and work on it.'' I am talking about 
major multinationals in North America today and around the 
world.
    Three years ago, I went forward and said, ``Hey, we have 
got brand new technology.'' I sat with some major corporations 
and said, ``We are going to start moving into this area.'' they 
said, ``You are kidding yourself. There is no market.''
    What the government needs to do is to demonstrate that 
there is a market and a capability. That is what you would do 
with that activity.
    Mr. Blumenauer. Mr. Chairman, I appreciate your courtesy. I 
feel extraordinarily strongly that recommendation come from 
this committee that the Federal Government be that early 
adopter, that the Federal Government work with friends like we 
have here on this panel to decide what is the earliest feasible 
date and we set down a marker.
    I am mindful that the war in Iraq is the most energy-
intensive military operation in the history of the world, four 
times more intense than was the first Gulf War--16 gallons of 
fuel per day per soldier. It is putting our soldiers' lives at 
risk. It is costing an inordinate amount of money. This would 
have a broad ripple effect, and I would hope we could work with 
the committee and our friends here to establish that marker and 
to move it forward.
    The Chairman.  I think that the gentleman has made an 
excellent suggestion, and I would recommend that we work with 
the Republicans on the committee to adopt that as a 
recommendation.
    The gentleman's time has expired. I apologize to you. We 
need unanimous consent for the gentleman from Washington State 
to ask one quick question before we end the hearing.
    I am going to ask each one of the witnesses, at the 
conclusion of the questioning from Mr. Inslee, to each give us 
a 1-minute summary statement of what you want the committee to 
remember as we leave.
    The gentleman from Washington.
    Mr. Inslee. Thank you, Mr. Chairman.
    Mr. Vieau, I wanted to make sure that we had clarity. I was 
asking about the costs both of the batteries and of the 
operating costs, and I wanted to make sure we got the right 
answer. I want to ask you:
    When these batteries become part of the original 
manufacturing, when it is not a conversion but when in fact it 
is part of the original manufacturing--we are doing 200,000 
units every couple of months. This is a mainstream part of the 
industry, and I believe we are going to get to that position.
    When we get to that position, could you give us, first, a 
projection of what that cost may be relative to just a hybrid 
today--and I realize it is just a projection--and second, what 
the per mile cost at that point will be of running the car when 
it is on the electrical mode versus gasoline per mile today?
    Again, these are projections, but if you can just give us 
your best shot, we would appreciate it.
    Mr. Vieau. On the first part, I think I can give a pretty 
clear answer. The second part may be a little more challenging 
for me. On the cost of the system today as we talk about a 
system that is available for less than $10,000 next year, 
coming down in the range of 40 percent over a 3- to 5-year 
period, this is a system that we create which has redundant 
capabilities in it to an existing vehicle. We must create a 
system that adds more materials and more competency than if you 
put it in the car. So, clearly, if you build a system into the 
car, which is being done today, the cost is going to be 
significantly less, and I would say it will be in the range of 
another 30 to 40 percent less than that by eliminating 
redundant components. So take that $10,000 system down to 
$3,000 or $4,000, and you have a system that could be 
implemented to create an 80 percent fuel savings and a 60 
percent reduction in emissions.
    I do not have a number off the top of my head that tells 
you on a per mile basis exactly what that translates into. I am 
not sure if I can get any help from anyone here.
    It would be about 2 or 3 cents a mile according to my 
colleague.
    Mr. Inslee. Clearly, you will save money over the life of 
the car with those numbers. Thank you.
    Mr. Vieau. Thank you.
    The Chairman. Thank you, Mr. Vieau.
    Let us go in reverse order of the opening statements, and 
we will ask each one of our witnesses to now give us their 
concluding comments that they want the committee to remember as 
we are moving forward with policymaking this year.
    We will begin with you, Mr. Hoover.
    Mr. Hoover. Thank you, Mr. Chairman.
    From Austin Energy's viewpoint, what we have tried to do 
with plug-in partners is to actually create a market research 
program for the automakers to demonstrate to them that there 
actually is a market out there. From our vast number of 
partners, there is a lot of interest in buying these cars. The 
only thing we ever get asked is how soon can we get them.
    Our view is that Congress, through its appropriations, can 
support advanced battery research to make sure that the battery 
problem gets solved, and then at that point it becomes 
incentives both from the Federal Government's purchase of these 
vehicles to incentives for consumers to purchase these 
vehicles.
    The Chairman. Thank you, Mr. Hoover.
    Mr. Gaffney.
    Mr. Gaffney. Mr. Chairman, a quick point on Mr. 
Blumenauer's last comment.
    Not only is this an intensive, energy-demanding environment 
in Iraq, but one of the most dangerous things we are doing is 
moving fuel around inside the country. So there is a tremendous 
imperative. I mentioned I was on the Defense Science Board's 
review of this. There is intense interest in figuring out how 
to make the Defense Department more energy independent, and 
this technology, I think, can play a role.
    We should not be in the business of picking winners and 
losers. We should be moving aggressively to facilitate an 
industrial base that taps into the best of these technologies 
and does so, I think, in a dynamic way.
    I am all in favor of an executive order. I would be 
delighted to work with you on that if I could. I think one of 
the issues we are going to bump up against probably in crafting 
of it is in trying to encourage American sources to be 
utilized, especially as that conflicts, for reasons we have 
been talking about all morning, with how fast you can do it.
    Finally, Mr. Chairman, as I have said in my testimony 
repeatedly, there is a national security imperative to all of 
this. We are, I believe, in mortal peril of an oil collapse of 
some kind. I do not know whether it will be from a terrorist's 
taking out a key facility or whether it will be from some 
government or other deciding not to sell to us, but this is a 
peril that we see coming. We need to be doing all of these 
things as aggressively as possible.
    I will commend you, if I may, Mr. Chairman. I would like to 
submit for the record the Set America Free blueprint that this 
coalition of national security-minded people, labor people, all 
different kinds of environmentalists, and so on have come 
together around specifically because I think what it suggests 
is we will wind up doing every single one of these 
recommendations later, if not sooner, and ``later'' is going to 
be harder.
    The Chairman. My father always said, ``Try to start out 
where you are going to be forced to wind up, because it is 
prettier that way.'' So we hope that we are now on that new 
course. I thank you, Mr. Gaffney.
    Mr. Lowe.
    Mr. Lowe. The first money I ever made as an actor, when I 
had a moment to invest it, I invested in an alternative energy 
source. That was over 20 years ago. So this is an area that I 
have cared about for a long time, but it is recent events in 
the world--global warming reaching this sort of critical mass--
that has gotten me off the sidelines and brought me here today.
    I am not a big proponent of taxes. I am just not. That 
said, I do think there is a time when you invest in something 
that has the potential to create new industry, particularly the 
kind of new industry that secures our Nation and that cleans 
our environment, and so I would urge you and your colleagues to 
do whatever you can to help, whether it is by the early-user 
tax credits or by any other economic incentives that you can 
come up with to jump start this industry, particularly with the 
plug-in hybrid cars that are ready to go on the road today.
    The Chairman. Thank you, Mr. Lowe, very much.
    Mr. Vieau.
    Mr. Vieau. In January, Bob Lutz, the Vice Chairman of 
General Motors, stepped up in front of the public and said that 
he has found some battery technology in Boston, Massachusetts 
that is changing their view about the limitations of batteries, 
and they believe that the technology exists today sufficiently 
so that they are willing to commit to a new model of electric 
vehicle based around this competency.
    I am going to repeat what I said earlier. I think the 
strongest message that we can make is that we do not believe 
that you have any legislative opportunity in front of you that 
can provide a greater return for a limited investment using 
current infrastructure than what we are talking about today in 
the near term, and so we appreciate the effort that you have 
made, and we hope that you can continue with your efforts and 
support this activity.
    The Chairman. Thank you, Mr. Vieau, very much. I know, Mr. 
Vieau, that your technology comes from MIT.
    When the Soviet Union challenged us with Sputnik, President 
Kennedy asked Jerome Wiesner, a professor from MIT, to become 
his science adviser and to help shepherd through this goal of 
putting a man on the Moon and returning him to Earth in 8 
years, and we were successful.
    When the Soviet Union threatened us, potentially, with a 
nuclear strike that could destroy our communications capacity, 
MIT developed a new technology that first was called 
``DARPANet,'' and it is now called the ``Internet,'' and we 
have deployed it ubiquitously around the world.
    Hopefully, our technology, the technology at A123 which has 
come out of MIT, can be embraced as well, at least as a concept 
where not only your company but dozens of other companies could 
accept this challenge to give us the capacity to break our 
dependence on imported oil and to give this technology to the 
rest of the world as well. It is that important for our energy 
security and also for our national security.
    This panel, I think, has helped to really focus us on this 
issue. Speaker Pelosi created this select committee as her only 
select committee in her first 2 years as Speaker of the House, 
and it was to have these kinds of hearings, and I can promise 
you that, in the legislation which we are considering this 
year, the kind of tax incentives and regulatory changes are now 
being seriously considered that can hopefully open up these new 
technologies to adoption and to telescope the time frame it 
takes in order to see them deployed ubiquitously, not only 
across our country but across the world.
    We thank you for your testimony today. This hearing is 
adjourned.
    [Whereupon, at 11:54 a.m., the committee was adjourned.]
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