[Senate Hearing 110-94]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 110-94
 
         SMALL BUSINESS SOLUTIONS FOR COMBATING CLIMATE CHANGE

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


                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP



                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 8, 2007

                               __________

      Printed for the use of the Committee on Small Business and 
                            Entrepreneurship


 Available via the World Wide Web: http://www.access.gpo/gov/congress/
                                 senate




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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                 JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan                 OLYMPIA J. SNOWE, Maine,
TOM HARKIN, Iowa                     CHRISTOPHER S. BOND, Missouri
JOSEPH I. LIEBERMAN, Connecticut     NORMAN COLEMAN, Minnesota
MARY LANDRIEU, Louisiana             DAVID VITTER, Louisiana
MARIA CANTWELL, Washington           ELIZABETH DOLE, North Carolina
EVAN BAYH, Indiana                   JOHN THUNE, South Dakota
MARK PRYOR, Arkansas                 BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         MICHAEL B. ENZI, Wyoming
JON TESTER, Montana                  JOHNNY ISAKSON, Georgia

                 Naomi Baum, Democratic Staff Director
                Wallace Hsueh, Republican Staff Director


                            C O N T E N T S

                              ----------                              

                                                                   Page

                           Opening Statements

Kerry, The Honorable John F., Chairman, Committee on Small 
  Business and Entrepreneurship, and a United States Senator from 
  Massachusetts..................................................     1
Snowe, The Honorable Olympia J., a United States Senator from 
  Maine..........................................................     7

                               Testimony

Horowitz, Daniel, Assistant Administrator, Office of Policy, U.S. 
  Small 
  Business Administration........................................    11
Wehrum, William L., Acting Assistant Administrator, Office of Air 
  and 
  Radiation, U.S. Environmental Protection Agency................    17
Boxer, The Honorable Barbara, a United States Senator from 
  California and Chair of Senate Committee on Environment and 
  Public Works...................................................    25
Kennard, Byron, executive director, Center for Small Business and 
  the 
  Environment....................................................    40
Barber, James J., president and chief executive officer, 
  Metabolix......................................................    48
Lynch, Christopher J., director, Environmental Management 
  Assistance 
  Program, Pennsylvania Small Business Development Centers, the 
  Wharton School, University of Pennsylvania.....................    54
Goldstein, Dr. David B., co-director, National Resources Defense 
  Council's Energy Program.......................................    60
Hauge, Scott G., vice chair of Advocacy, National Small Business 
  Association, and president, Small Business California..........    68

          Alphabetical Listing and Appendix Material Submitted

Barber, James J.
    Testimony....................................................    48
    Prepared statement...........................................    50
    Responses to post-hearing questions from Senator Bond........    97
    Additional comments..........................................    98
Bond, Christopher S.
    Post-hearing questions posed to James Barber and subsequent 
      responses..................................................    97
Boxer, The Honorable Barbara
    Testimony....................................................    25
    Prepared statement...........................................    27
Goldstein, Dr. David B.
    Testimony....................................................    60
    Prepared statement...........................................    62
Hauge, Scott G.
    Testimony....................................................    68
    Prepared statement...........................................    71
Horowitz, Daniel
    Testimony....................................................    11
    Prepared statement...........................................    14
    Responses to post-hearing questions from Senator Kerry.......    90
    Responses to post-hearing questions from Senator Lieberman...    92
Kennard, Byron
    Testimony....................................................    40
    Prepared statement...........................................    43
Kerry, The Honorable John F.
    Opening statement............................................     1
    Post-hearing questions posed to Daniel Horowitz and 
      subsequent 
      responses..................................................    90
    Post-hearing questions posed to William L. Wehrum and 
      subsequent responses.......................................    93
Lieberman, The Honorable Joseph I.
    Post-hearing questions posed to Daniel Horowitz and 
      subsequent 
      responses..................................................    92
    Post-hearing questions posed to William L. Wehrum and 
      subsequent responses.......................................    93
Lynch, Christopher J.
    Testimony....................................................    54
    Prepared statement...........................................    56
Preston, Steven C.
    Responses to post-hearing questions from Senator Snowe.......   100
Snowe, The Honorable Olympia J.
    Opening statement............................................     7
    Post-hearing questions posed to Administrator Steven C. 
      Preston and subsequent responses...........................   100
Wehrum, William L.
    Testimony....................................................    17
    Prepared statement...........................................    19
    Responses to post-hearing questions from Senator Kerry.......    93
    Responses to post-hearing questions from Senator Lieberman...    93

                        Comments for the Record

Clevey, Mark H., vice president for entrepreneurship, Small 
  Business Association of Michigan, Entrepreneur Development 
  Center.........................................................   104
Crabtree, Michael C., chairman and CEO, IdleAire Technologies 
  Corporation....................................................   108
 Gatto, Stephen J., chairman and CEO, BioEnergy International LLC   110
Kruse, Andrew J., executive vice president/co-founder of 
  Southwest 
  Windpower......................................................   117
Sklar, Scott, president, the Stella Group, Ltd. (with 
  attachments)...................................................   119


         SMALL BUSINESS SOLUTIONS FOR COMBATING CLIMATE CHANGE

                              ----------                              


                        THURSDAY, MARCH 8, 2007

                      United States Senate,
                    Committee on Small Business and
                                          Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
428A, Russell Senate Office Building, The Honorable John F. 
Kerry (Chairman of the Committee) presiding.
    Present: Senators Kerry, Snowe, and Thune.

  OPENING STATEMENT OF THE HONORABLE JOHN F. KERRY, CHAIRMAN, 
SENATE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP, AND A 
            UNITED STATES SENATOR FROM MASSACHUSETTS

    Chairman Kerry. Good morning. We will come to order. 
Welcome to the hearing on small business solutions for 
combating climate change. I appreciate the Administration being 
here with two witnesses, one from Policy and Planning in the 
Small Business Administration and the other from the 
Environmental Protection Agency.
    Let me just say as an opener that this issue is getting a 
fair amount of national lip service now, but, regrettably, we 
are light years away from taking the kind of steps that are 
really necessary to deal with the issue.
    Senator Boxer is going to be here a little bit later. She 
was delayed. When she does arrive, we will make arrangements 
for her to testify.
    Last night, I was at a board meeting of the H. John Heinz 
Center for Science, Economics and the Environment, and some of 
the top scientists of our country, people who have been deeply 
involved in helping both sides of the aisle to look at this 
issue and understand it were there. I must say, having just 
finished writing a book on this subject, which is coming out in 
a few weeks, we sort of thought we--when I say ``we,'' my wife 
and I--were state-of-the-art and up to speed on everything. 
But, in fact, things are moving so rapidly that even between 
the publication date of the book we have done and today, events 
have cascaded and started moving faster.
    We have something called ``feedback.'' As in anything in 
life, you do something and somebody else gives you some 
feedback on it. And in the matter of science, feedback is 
Mother Nature's way of expressing what is going on as a 
consequence of certain things that have happened.
    In Alaska, for instance, Ted Stevens has now changed his 
position on global climate change and believes we ought to have 
CAFE standards. The reason he has come to that conclusion is 
because he has seen the feedback. The feedback in Alaska is 
that fishermen who used to be able to drive their snowmobiles 
out on the ice and go for 20 miles can no longer do so, because 
at about the 7-mile mark, it turns to mush, and their vehicles 
plunge into the ocean. So that is gone for them. A whole 
village is being moved at a cost of several hundred million 
dollars because of the now incessant damage being done, because 
there is no longer enough ice to protect it from storms. The 
storms come closer, and the village gets hurt. That is 
feedback.
    There is a lot of other feedback taking place. I was really 
quite stunned last night to learn from some of these scientists 
that Russian scientists have now estimated that more than 
4,000,000 billion--that is million billion--tons of methane are 
frozen worldwide. Methane has 20 to 30 times the greenhouse 
effect of CO2. Its uncontrolled release would have a 
runaway effect that would accelerate the warming of the planet.
    The problem is that the ice is now melting--and it is 
melting. Jim Hansen of NASA tells us that over the course of 
the next 30 years, the Arctic ice sheet will disappear--will 
disappear, folks. That is not an if, and, or but. That is a 
``will disappear.'' The ice currently is a reflector of long-
range waves. And the ice reflects, and it feeds back, and you 
get long-range waves that go back up in the atmosphere. But as 
the ocean is exposed more, as the ice disappears, it does not 
reflect. It goes into the ocean, and then the ocean warms. And 
so you accelerate. This is feedback. The more the ocean is 
exposed, the more you accelerate the warming, the more you wind 
up with an increase in climate change impact, the result of 
which is that you now have an increased level of shrinkage of 
the Greenland ice sheet. That should be sending shudders 
through most Americans--and everybody in the world--because 
unlike the Arctic ice sheet, which is floating in the ocean 
and, therefore, the displacement remains essentially the same 
in terms of its melting and its impact on the sea level, the 
Greenland ice sheet is on rock, and as it melts, it goes into 
the ocean and adds to the volume causing it to rise.
    That ice sheet is of a significant enough size that if it 
were to melt or slide off or break off in some significant 
portion, you could have a sea level increase of anywhere from 
16 to 23 feet, in which case say good-bye to Boston Harbor, New 
York Harbor, most of Florida and so on and so forth; much of 
Washington, DC; because the Potomac River comes up, and so 
forth. There are computer formulations that show exactly what 
that impact would be, and people should take the time to go 
look at them.
    But what is really scary, what I was not aware of, even, is 
the degree to which these scientists are now worried about the 
thaw taking place in the tundra across the arctic region. And 
as that melting takes place, permafrost melts, and methane is 
released. So despite our best intentions, there is an enormous 
potential for this 20 to 30 times impact of gas to have an 
impact on global climate change.
    I might add that there is other feedback that we are 
getting. For instance, the acidification of the ocean has 
already increased by 30 percent, with substantial potential 
impacts on the marine food chain. We know that if 
CO2 concentrations over the oceans increase to 600 
parts per million, which is possible by the end of this 
century, then you could have a phytoplankton, coral, oyster 
reef, crab, and other crustaceous species beginning to lose the 
integrity of their supporting skeletal structures, and there is 
an actual demonstration of this which they can show in various 
ways. In addition, we see the destruction of nearly 4 million 
acres of mature white spruce forest on the Kenai Peninsula in 
Alaska, which is happening now because the spruce bark beetles 
have been taking over during the past decade. Why is this 
important? Because in Alaska, they could not survive previously 
because the temperature was such that they would not make it 
through the winter. So the warming has had an impact on the 
spread of disease-bearing beetle larvae that can now survive in 
these warmer temperatures. Plus, they mature faster, and they 
now complete the 2-year life cycle in 1 year. This is feedback.
    So I am not going to go into all the examples of feedback, 
but I am just going to tell you folks that I am so disturbed by 
the lack of urgency in the Federal Government and this 
Administration to deal with this issue. In New England, 
everywhere, but Maine has seen a reduction in the production of 
maple syrup. It is a big industry. Maine has not had it yet 
because Maine's temperature has not yet felt the impact. But 
New Hampshire, Connecticut, Massachusetts, and Vermont have all 
felt it. And the result is a significant reduction in the 
production of syrup. Why? Because of the warmer temperature.
    So there are a lot of impacts here. There is going to be a 
lot of feedback building up, and the bottom line is that we 
really have a responsibility to be serious about this. The 
long-term implications, according to all scientists, are very 
dramatic. If you get to the tipping point, there is no coming 
back.
    We are told we have a 10-year window. I am going to beat 
this until it is dead. I mean, we cannot let go of this. A 10-
year window. That is what scientists tell me. When I sit in 
front of a guy like Bob Hansen or Bob Corell or some of these 
guys and they tell me 10-year window, we better listen.
    Now, what is the downside if those of us who care about 
global climate change are wrong? You know, what happens? What 
is the downside? The downside is we have the world's leading 
technologies and clean and alternative fuels. We create new 
jobs. We have better health. We have fewer kids with asthma, 
less particulates in the air. We have better security because 
we are less dependent on fuel from other countries. And what is 
the downside if they are wrong, the people who are still in the 
flat-Earth caucus? The downside is catastrophe.
    So which side of the ledger do you want to be on, folks? 
And what is clear is that this is not a draconian process that 
will force you to give up your lifestyle or you have to lose 
quality of life or any of that. You do not have to do any of 
that.
    So Nicholas Stern has put out a very sound, well-respected 
economic report for the British Government, which shows clearly 
that the downside of not doing things is 5 to 20 times more 
expensive than the downside of doing it. And in the end, you 
may spend 1 percent of GDP to fix it now, versus a huge 
percentage in responding to the damages if we do not take these 
steps.
    I think this is such a no-brainer, and we are not doing it. 
We have to reduce carbon in the atmosphere. There is no other 
choice. We have to become carbon neutral, even carbon friendly 
in what we are doing. And small businesses--this is where we 
get to the essence of this hearing today--are critical in terms 
of helping to do this. I remember being part of the first 
hearings on global climate change with Al Gore when he was a 
Senator in 1987. Then in 1990, we went down to Rio to be part 
of the Earth Summit Conference, and it has been a long road 
since then. I was in Kyoto. I have been to The Hague, to Buenos 
Aires, part of the COP conferences. I have watched other 
countries look at us and say, ``Well, if the United States does 
not do it, why should we?'' And so China is about to build one 
pulverized coal plant per week. Folks, if that happens, it is 
``Katy Bar the Door.'' But there is no serious international 
effort going on right now to bring people to the table.
    I do not know how many of you read the TXU deal report the 
other day. The environment community got together with those 
folks. Now, they have done pretty well, but they are still 
going to build three plants that are still going to add 26 
million tons of CO2 to the atmosphere instead of 11. 
And it is a big step forward because we do not have a prayer of 
getting China or India or other people or even these small 
businesses that we need to get to respond unless we take the 
lead. The old clean hands doctrine of the law: If you do not 
come to the table with clean hands, it is pretty hard to win 
the equities.
    So we are going to have to take these steps, and as I said, 
I am working with a lot of people outside of the Senate now. We 
are going to have a hearing in the Commerce Committee with some 
of the leading CEOs in the country of Dupont and GE and others 
who have embraced the notion that we have to have a carbon cap. 
You know, it is one thing for a big Fortune 500 company to step 
up to bat and say we are going to do this. Obviously, it is 
another thing for a small business to figure out how can it 
contribute and what role can it play here. And there are 
clearly several different kinds of roles.
    You know, one is to be the innovators, to expand the SBIR 
and SBIC programs and excite people to be able to enter this 
marketplace and help provide the technologies, the 
alternatives. The other is that they themselves are going to 
have to take steps to reduce their own emissions and to find 
ways to be part of the solution.
    This is how critical this fight is. Senator Snowe and I 
have joined together to introduce legislation that would 
require a cap on emissions, with a 65-percent reduction by the 
year 2050. Senator Boxer and Senator Bernie Sanders and others, 
picking up from Senator Jeffords, are looking at about 80 
percent, and that is legitimate because the science says it has 
to be somewhere between a 60 and 80-percent reduction by 2080, 
although this methane issue creates an even larger challenge 
for us.
    So buy-in from big business can get us halfway there, but 
we are going to need a concerted effort from America's small 
businesses in order to help get us home on this issue because 
they employ half of all the private sector workers and produce 
half of the GDP of this country.
    Right now, small business investors are beginning to show 
that they recognize this. In 2004, $1.4 billion in venture 
capital found its way to clean-tech startup companies. These 
companies are not only working to help save the planet, they 
are growing the economy and they are creating new jobs. This 
morning, we will hear from Jim Barber, whose company, 
Metabolix, turns corn sugar and switchgrass into natural 
plastics. Today, plastic and chemical production consumes 
nearly 10 percent of the oil we use. So there are alternative 
ways to be able to do what we are doing, produce what we 
produce, live the way we live, without having to rely on oil 
and fossil fuels.
    I believe that we are at the beginning of the end of the 
oil era, and the question is how fast we are going to move to 
the new era, whatever it is going to be defined as. Nobody 
should be afraid of it. We have done that before in this 
country. We started with whale oil produced in Nantucket. Most 
of Great Britain was lit by whale oil. And then we went to wood 
and coal and finally to a mix of hydro and nuclear, 
alternatives and renewables and so on and so forth. We have 
been through these transitions, and it is clear we are going to 
have to go through one now.
    Jim Barber is reducing America's dependence on fossil fuel, 
but his company is going to create 120 new jobs when he opens 
up his first commercial plant--in partnership, I might add, 
with Archer Daniels Midland in Clinton, Iowa, later this year. 
There are thousands of stories similar to Jim's that 
demonstrate how the entrepreneurial spirit of America can 
reverse the damage that has been done. But innovation alone is 
not going to get us there. There are 25 million small 
businesses in this country, 25 million business owners that are 
focused on keeping their doors open and putting food on the 
table for their families and growing their businesses. Climate 
change sometimes seems like a distant threat compared to rising 
health care costs or staying competitive. But even so, small 
business owners are telling us that energy costs are a concern.
    The National Small Business Association recently conducted 
a poll of its members asking how energy prices affected their 
business decisions. Seventy-five percent said that energy 
prices had at least a moderate effect on their businesses, with 
roughly the same number saying that reduced energy costs would 
increase their profitability. Despite these numbers, only 33 
percent of those small businesses have invested in energy 
efficient programs. So where is the disconnect?
    If high energy costs are driving profits down and 
implementing energy savings programs will lead not only to 
greater profitability but also lower greenhouse gas emissions, 
why aren't American business owners falling over themselves to 
plug the leaks? That is where we ought to be going.
    We need to do a better job of reaching out to America's 
small businesses to demonstrate to them that the savings are 
real, that the win for their bottom line is a win for the long-
term health of the planet. And we need to provide the resources 
through public and private commitments to help business owners 
with the up-front costs of implementing these programs.
    Representatives from the Environmental Protection Agency 
and Small Business Administration are here to testify on how 
committed the Administration is to helping small business join 
this fight. We will hear from Chris Lynch, who is doing 
terrific work for the Pennsylvania Small Business Development 
Centers helping small businesses become energy efficient, and 
he will share with us some of the factors behind that success.
    I really hope we can get this word out. I would just close 
by saying one thing to you. We were talking with these 
scientists last night, and they were talking about how our 
architects and many of our professionals in America are still 
training and working professionally in 20th-century structure. 
I will give you an example: building design. Today, driving in 
here, I was looking at all the construction that is going on in 
Washington. How many of those buildings are going to have green 
roofs? How many of those buildings have been built to the most 
modern specs with respect to energy savings? Most architects 
are still not embracing that.
    My wife was deeply involved in the greening of Pittsburgh, 
which became the greenest city in America, until Portland took 
up the challenge and has now surpassed it. Other cities are 
beginning to see this.
    In Texas, Texas Instruments was about to move to China, and 
they were given a challenge. The workers said, ``Well, if our 
jobs go overseas, what do we do?'' Well, we have to compete. 
How do we keep the costs down? So they challenged their 
engineers and architects and said, ``If you can design a plant 
that saves us the equivalent of what we will save by going to 
China, we will stay here.'' Well, they went and did it. And 
guess what? They did it by removing pipes that bend so you save 
in the friction and can move fluid through the building more 
efficiently, by taking the building down a tier and making it 
two stories instead of three, by being more efficient in 
distribution--I was in a building in Boston the other day, the 
Biogen building, which has shades that are computer driven, 
that change as the sun moves. Those save them enormous amounts 
of energy.
    If you go to Japan and you get on an escalator, it stops 
when you get off; it starts when you get on.
    You walk out of a building in Europe, the lights go out in 
the hall. You move, the lights go up.
    We do not do that. We are the most energy-inefficient 
country in the world, and our businesses are paying for it. We 
actually reward electric companies with more money paid for 
more electricity used.
    So I am telling you folks, there are all kinds of painless 
things that we have to start doing. I know this is a long and 
perhaps a little bit rambling opening, but, we have to put this 
stuff on the table. We have got to get it out to the businesses 
of America. There is money to be saved here. There is money to 
be made here. There is a quality of life to be improved here. 
And it is stupid for us not to be connecting the dots and 
making all of this happen.
    Senator Snowe.

 OPENING STATEMENT OF THE HONORABLE OLYMPIA J. SNOWE, A UNITED 
                   STATES SENATOR FROM MAINE

    Senator Snowe. Thank you, Mr. Chairman, and I will be very 
brief. But I do want to commend you for holding this hearing, 
which is the first ever for this Committee to explore ways in 
which small business can play a pivotal role in combating 
climate change. And I also want to applaud the advocacy and the 
leadership of the Chairman on this issue and his longstanding 
commitment and contributions to global warming and 
environmental issues in general.
    Clearly, I think we are witnessing, hopefully, a sea change 
in public and political acceptance of the scientific realities 
regarding this major global challenge that we are confronting. 
And I think a number of political challenges remain, obviously, 
within this Congress. But I think there is no question that we 
have to drive this train through this year, and hopefully we 
can succeed in the legislation that I have joined Senator Kerry 
on with respect to a 65-percent reduction in carbon dioxide 
emissions by 2050, which is a rigorous, realistic approach by 
any measurement and by the standards that many scientific 
experts say that is necessary to accomplish to avert a further 
increase in temperatures that would achieve that tipping point 
to which Senator Kerry referred.
    There is no question about the incalculable impact of 
climate change and global warming, as Senator Kerry outlined. I 
think the question now is: Do we have the political critical 
mass necessary to effect a change that is essential to 
contribute to leadership on a global level? And I have been 
part of an international commission with a colleague in England 
on this question to develop a global consensus on this, outside 
of Kyoto because obviously the United States is not a signatory 
to Kyoto. So is there another way to effect that change and 
develop a template so that we can proceed?
    We had the U.N. report that was issued recently, and 
Columbia University, as well, issued one 2 weeks ago. And I 
think the bottom line is the same, that we have a massive 
challenge, and we have a major impact, a major effect of global 
warming. I think there is no doubt about that.
    Last year was the warmest year, at least in reporting 
temperatures, in the history of the United States. The last 25 
years have been some of the warmest in the history of the 
United States. So we know the direction.
    I applaud you, Mr. Chairman, for focusing on how small 
business can play a fundamental and crucial role, because I not 
only think that they can play a major role, but I think it can 
be profitable in doing so. And I want to welcome, in 
particular, Dr. David Goldstein, who has written a book, 
``Saving Energy, Growing Jobs,'' and in showing the path that 
there are stumbling blocks, but no matter, I think that if 
businesses understand the investments that can be made, there 
is no question that it can be profitable both from an 
environmental standpoint, but also from a monetary standpoint 
as well. So I am very pleased that he is able to be here today 
to contribute to the dialog about tax incentives, and I think 
that is good, and that is one of the issues that I have been 
pursuing here in the Congress. I did back in the Energy Act of 
2005, and today I am introducing, along with Senator Kerry and 
Senator Feinstein, an extension of those tax incentives, 
because that is a way in which I think we can encourage energy 
efficiency investments in new buildings and in the retrofitting 
of old buildings that will reduce energy consumption, and at 
the same time ultimately create jobs.
    And so we want to make sure that there is some permanency 
to these tax incentives so there is reliability and certainty, 
and that is certainly true for industry, and it certainly will 
be true for small businesses.
    There are many examples of small businesses that are 
engaged in making energy efficiency investments. In fact, in 
the State of Maine, we have Lyman Morse Boatbuilding in 
Thomaston, Maine, that are using tax incentives, the very tax 
incentives that were part of the 2005 Energy Policy Act, to 
construct an energy-efficient building. And we want to make 
sure we can encourage more small businesses to invest in green 
building practices because it does reduce energy consumption 
and increases and enhances their profitability.
    We know that the Energy Policy Act directed the SBA, along 
with the EPA and other agencies, to develop a small business 
clearinghouse, which would develop options for small businesses 
to become more energy efficient. We need to discern here today 
if there is any progress being made within this clearinghouse 
and what needs to be done to give a level of urgency to a 
number of these initiatives that can well make a difference, 
because small businesses clearly are the laboratories for 
innovation and creativity. And that is where it is all going to 
spark the entrepreneurial spirit that is going to be so 
essential to helping us combat global climate change.
    Another example in the State of Maine is Oakhurst Dairy. It 
is an 86-year-old business that recently announced it converted 
a fleet of 100 trucks and trailers to a biodiesel fuel blend. 
And the Oakhurst president, Stanley Bennett, sent me a letter 
last week and he said, ``We firmly believe that doing the right 
thing environmentally is almost always the right thing to do 
for your business.'' And I ask unanimous consent to include his 
letter in the record, Mr. Chairman.
    Chairman Kerry. Without objection.
    [The letter follows:]
    [GRAPHIC] [TIFF OMITTED] 35764.001
    
    [GRAPHIC] [TIFF OMITTED] 35764.002
    
    Senator Snowe. And, finally, as we engage in this debate, 
we must be mindful of the potential solutions that we must 
consider the full economic impact on small businesses as well, 
because according to the SBA Office of Advocacy, the compliance 
with environmental regulations costs small businesses 364 
percent more than it does for larger industry. So in developing 
the solutions, I think we do have to keep in mind that small 
businesses are obviously not as resilient as large companies, 
and so we have to avoid a one-size-fits-all mentality and come 
up with a range of solutions that can be economically and 
environmentally effective.
    I look forward to hearing from the panel, both this panel 
and the next one, regarding what we can do to create these 
initiatives, and hopefully we start today with the 
reintroduction of the EXTEND Act, which is going to continue 
these tax incentives to make investments in more energy-
efficient buildings, because I do think that that is a major 
step, and small businesses can play, I think, a profound role 
in that regard. But also what the clearinghouse can accomplish 
in meeting some of these requirements, as well, that will help 
the greater energy efficiencies to create greater profitability 
and ultimately the goal that we all seek to accomplish, and 
that is, reducing greenhouse gas emissions, which is, I think, 
the fundamental goal of this Committee in terms of how we can 
use small business in that endeavor. Engaging the small 
business community is a major step in reducing our carbon 
footprint for the future.
    So thank you, Mr. Chairman.
    Chairman Kerry. Thank you very much, Senator Snowe. Thanks 
for your support and cooperation and partnership in this 
effort, and I appreciate your leadership very, very much.
    Mr. Horowitz and Mr. Wehrum, thank you for being here with 
us. We appreciate it. Why don't you start off, Mr. Horowitz, 
and we look forward to your testimony.

 STATEMENT OF DANIEL HOROWITZ, ASSISTANT ADMINISTRATOR, OFFICE 
         OF POLICY, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Horowitz. Thank you. Good morning, Chairman Kerry, 
Senator Snowe. Thank you for inviting the U.S. Small Business 
Administration to provide remarks related to the Energy Policy 
Act of 2005.
    The Energy Policy Act calls for the SBA and other Federal 
agencies to provide information on the benefits of becoming 
more energy efficient to small businesses across America. SBA 
appreciates the opportunity to update the Committee on its 
efforts, along with our Federal agency partners, to inform 
small businesses on the benefits and opportunities for 
becoming, promoting, and developing products for energy 
efficiency.
    I am Dan Horowitz, Assistant Administrator for the Office 
of Policy, appearing on behalf of Administrator Preston.
    Under President Bush's leadership, America is changing how 
it generates electricity by investing in clean coal technology, 
wind and solar power, and clean, safe nuclear power. Since 
2001, the Federal Government has invested more than $12 billion 
to develop cleaner, cheaper, and more reliable energy sources. 
This Administration is also increasing funding for research and 
development into alternatives to oil and gas, including 
advanced batteries for plug-in and hybrid cars, biodiesel 
fuels, and hydrogen fuel cells. New technologies like these 
have the potential to provide reliable energy at competitive 
prices.
    The Department of Energy, Environmental Protection Agency, 
Department of Commerce, and the SBA have all made progress in 
developing a governmentwide program building on the ENERGY STAR 
Small Business Program. The goals of the program are: one, to 
assist small business in becoming more energy efficient; two, 
to sell their ENERGY STAR qualifying products to the Federal 
Government; three, to identify financing options for energy 
efficiency upgrades; and, four, to establish a Small Business 
Energy Clearinghouse with the technical information and advice 
necessary to help increase energy efficiency and reduce energy 
costs.
    The ENERGY STAR Small Business Program, managed by the EPA 
and DOE, has been positioned as a clearinghouse for information 
related to energy efficiency that may be needed by small 
businesses. Small businesses have access to a wealth of 
information on a wide variety of topics related to energy 
efficiency through the ENERGY STAR Small Business Program. In 
particular, the Web site offers information on eligibility for 
Federal tax credits and a directory of energy efficiency 
programs so that small businesses can learn about utility-
sponsored programs and available rebates for energy efficiency 
products.
    The clearinghouse, when complete, will be accessible 
through the SBA's Web site with links and content provided by 
the EPA, DOE, and the Department of Commerce. However, already 
in 2006, Americans, with the help of the ENERGY STAR Program, 
saved $14 billion on their energy bills, and at the same time 
reduced greenhouse gas emissions.
    In addition to ENERGY STAR, SBA and EPA worked together to 
reach out to small trucking companies with financial assistance 
to encourage the capital investment of fuel-efficient products. 
On November 14, 2006, SBA began making loans available to help 
small trucking companies finance the purchase of SmartWay 
Upgrade Kits. These kits include products that will help save 
the small firms money in reduced fuel costs, while helping the 
environment by reducing greenhouse gas emissions.
    The SBA will distribute information on energy efficiency 
issues through its existing distribution network, including 
Small Business Development Centers, Women's Business Centers, 
and SCORE chapters, along with other Federal agencies, 
including the Federal Emergency Management Agency, the 
Department of Agriculture, and the Department of Commerce. 
Federal agencies will also have access to such information via 
the clearinghouse.
    The EPA will handle telephone requests from small 
businesses for information through its ENERGY STAR hotlines, 
which is 888-STAR-YES. This program will enhance the 
Administration's support of America's entrepreneurs by helping 
them reduce their energy costs, thereby allowing them to grow 
their businesses and bring more jobs to the Nation's economy.
    Thank you again for the chance to discuss the role of SBA 
in the information distribution to small businesses regarding 
energy efficiency with the Committee. I will be pleased to 
answer any questions you might have.
    [The prepared statement of Mr. Horowitz follows:]
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    Chairman Kerry. Thank you, Mr. Horowitz.
    Mr. Wehrum.

STATEMENT OF WILLIAM L. WEHRUM, ACTING ASSISTANT ADMINISTRATOR, 
  OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION 
                             AGENCY

    Mr. Wehrum. Good morning, Chairman Kerry, Senator Snowe. 
Thanks for the opportunity to testify on behalf of the EPA. 
Small businesses are key partners in our Nation's efforts to 
promote economic growth and protect the global climate, and I 
am happy to highlight EPA's efforts with small businesses and 
voluntary partnership programs.
    At EPA, we manage a suite of programs that are cost-
effectively reducing greenhouse gas emissions through energy 
efficiency as well as other clean energy strategies. These 
programs are delivering tremendous results across the country 
and are projected to contribute significantly to the reductions 
necessary to meet the President's greenhouse gas intensity goal 
in 2012.
    We have long recognized that energy efficiency offers one 
of the lowest-cost solutions for reducing our energy bills, 
improving our energy security, preventing air pollution, and 
addressing the important issue of global climate change. The 
good news is that small businesses are smart businesses and 
they are embracing the value of sound energy management.
    Over the last 15 years, the ENERGY STAR Program managed 
jointly by EPA and the Department of Energy, has become a 
guidepost for energy efficiency for businesses and consumers. 
Overall, Americans with the help of ENERGY STAR saved $12 
billion on their energy bills in 2005, while avoiding the 
greenhouse gas emissions equivalent to those of 23 million 
vehicles.
    ENERGY STAR assists small businesses in two ways. First, it 
helps small businesses that manufacture and sell energy-
efficient products get those products recognized in a crowded 
marketplace where they might otherwise go unnoticed.
    Second, the ENERGY STAR Small Business Program helps small 
businesses reduce their own energy use, lower costs, and 
decrease greenhouse gas emissions.
    Small businesses have diverse sets of energy issues. 
Restaurants, auto dealerships, convenience and grocery stores, 
hotels, and retail establishments all have very different 
energy use profiles, different challenges, and different 
opportunities. Furthermore, a large number of small businesses 
are home based. To address this diversity, ENERGY STAR provides 
tailored assistance and training for each of these small 
business types. The resources available to small businesses 
through ENERGY STAR are numerous, including online energy 
tracking, recorded and live training, Web resources, expert 
advice, information on tax credits and rebates, a toll-free 
hotline, award opportunities, and much more. With the help of 
ENERGY STAR, small businesses are effectively managing their 
energy use, saving money, and protecting the environment.
    In addition to ENERGY STAR, EPA offers several other 
voluntary programs. The SmartWay Transport Program promotes 
fuel conservation and diesel emissions reductions, resulting in 
potential fuel savings of up to 150 million barrels of oil 
annually. SmartWay reaches out to trucking companies of all 
sizes to participate in the program, including small 
businesses.
    In November of 2006, in partnership with EPA, the SBA 
launched a loan program to help small trucking companies 
finance the purchase of SmartWay Upgrade Kits. These kits 
include a variety of technologies to help save fuel and 
decrease emissions. SmartWay is also collaborating with the 
Owner-Operator and Independent Drivers Association to reach out 
to the owner-operators and encourage greater awareness of 
energy-saving strategies.
    Beyond this important work with voluntary partnership 
programs, EPA is also actively responding to the provisions of 
the Energy Policy Act of 2005. Just as public awareness of the 
ENERGY STAR label has increased from 40 percent in 2000 to 65 
percent in the year 2006, a similar increase in awareness has 
occurred in the small business community. The National Small 
Business Association 2006 Energy Survey independently reported 
that 60 percent of small businesses surveyed indicated they are 
familiar with the ENERGY STAR and its technical support 
program.
    ENERGY STAR also educates small businesses about proper 
maintenance for heating, ventilation, and air conditioning 
equipment. Through our pamphlet ``Putting Energy into Profits: 
ENERGY STAR Guide for Small Businesses,'' as well as our Web 
site and a monthly electronic partner update, we provide 
guidance, checklists, and tips related to HVAC issues.
    In addition, we run two annual consumer education campaigns 
on heating and cooling tips. They reach an estimated audience 
of over 45 million viewers.
    EPA, together with the SBA, has also made progress in 
developing a governmentwide program building on the ENERGY STAR 
Small Business Program. EPA has participated in meetings with 
DOE, SBA, and a number of key small business associations to 
discuss a clearinghouse for information related to energy 
efficiency. EPA looks forward to the outcome of these 
productive discussions.
    In closing, EPA recognizes the important role of small 
businesses in helping our Nation address the challenges of 
global climate change and energy independence. Our voluntary 
programs have been instrumental in helping this large and 
diverse segment of our economy gain recognition for their 
energy-saving products and become more energy efficient. The 
response of small businesses continues to grow.
    We thank you for the opportunity to be here today. I look 
forward to answering any questions. And I will just add that we 
have provided for you some materials developed in support of 
our Small Business Program, and I hope that they will be a 
resource for you as you continue to consider these important 
issues.
    [The prepared statement of Mr. Wehrum follows:]
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    Chairman Kerry. Thank you, and I look forward to following 
up. I have some questions for you, as does Senator Snowe. But 
Senator Boxer is now here, and what I want to do is ask her to 
testify from up here rather than there, if she would.
    Let me just welcome her. She is now the Chair of the 
Environment and Public Works Committee. She is very, very 
focused on this issue, has shown tremendous leadership in it, 
is the sponsor of one of the principal bills looking for 80-
percent reduction by 2050, and has been a terrific partner in 
helping to work with us. So we are really pleased she could 
come today, and thank you for being here to testify.

   STATEMENT OF THE HONORABLE BARBARA BOXER, A UNITED STATES 
 SENATOR FROM THE STATE OF CALIFORNIA, CHAIR, SENATE COMMITTEE 
                ON ENVIRONMENT AND PUBLIC WORKS

    Senator Boxer. Senator Kerry, Mr. Chairman, Senator Snowe, 
Ranking Member, I am just really so pleased to be here with 
you, and I want to thank both of you for your work on global 
warming. I think your bill is also one of the principal bills, 
and as I have told both of you, we are going to all work 
together to really move this issue forward. And it takes focus, 
and we just have to move every day closer toward the day that 
we do produce a bill that we can put on the President's desk.
    I also want to take a moment to welcome Scott Hauge of 
Small Business California. We go back a very long time, Scott, 
and I am just so happy to see you here and, of course, 
continuing to fight to protect the environment.
    Small Business California was one of the first business 
groups to support the passage of California's landmark global 
warming bill, AB 32. And here is the thing, I think, Senator 
Kerry and Senator Snowe, that you know: Supporting strong 
global warming legislation is good for business, and that is 
why it is so great that you are doing this from the Small 
Business and Entrepreneurship Committee, and it is adding so 
much to the dialog.
    We know global warming is one of the most pressing issues 
of our time. Every day we learn more and more. We all talked 
about the Intergovernmental Panel on Climate Change. Senator 
Snowe and I talked to a gathering of parliamentary leaders from 
all over the world to tell them that there is hope on the 
horizon now, that we can do something. We know there is a 90-
percent certainty humans are causing most of the warming.
    That report was followed by the U.N. Foundation report, 
which essentially underscored those findings, and we know that, 
left unchecked, global warming will lead to increased extreme 
weather events, to sea level rises, to more flooding and 
hurricanes, changes in our weather patterns that could reduce 
water supplies. Those are just a few of the effects if we do 
not address this issue.
    When you talk about the kind of environment we need for our 
businesses to flourish, clearly the kind of environment we will 
get if we do nothing about, global warming will not enable 
anyone to flourish. So I think it is very clear that this 
Committee has to focus on this.
    I believe there is an overwhelming consensus that global 
warming is happening. Yes, there are a few naysayers, but there 
are just a few. But there always are a few. When science comes 
out and they say, for example, that there is a tie-in between 
tobacco use and lung cancer, there are always a few people who 
doubt it. There are a few people who doubt that HIV causes 
AIDS. But we need to move forward when we have a consensus, and 
that is what we are doing in this Senate.
    But there are still those who say, yes, we think it is 
happening, but it is too costly to our economy. But, again, I 
think we need to challenge that because if you look at the 
Stern report, for example, you realize that by doing nothing, 
there is a tremendous cost to our economy and every dollar we 
put in now to reverse the global warming impacts will yield $5 
in return.
    Many in business and the investment community are waking up 
to the business opportunities that will result from reducing 
greenhouse gas emissions. And we have seen big business come 
together, and we have had them before the Environment 
Committee. But we also see now that the can-do entrepreneurial 
spirit that resides in America's small businesses is really 
being tested here, and I believe these businesses will be 
nimble enough to adjust rapidly to a low- carbon, low-fossil 
fuel economy.
    Since small business consumes more than half the 
electricity and natural gas that is used for commercial 
purposes, reductions from small businesses can make a 
difference. So small business can be part of the solution and 
can be leaders in energy efficiency, which at the end of the 
day cuts costs. We need to help small business undertake more 
energy-efficient projects which will also, again, increase 
their bottom line and increase our competitiveness.
    Mr. Chairman, you and I, as well as Senator Snowe, have 
made many visits to places like the Silicon Valley and other 
areas where venture capital is leading the way in both of your 
States. And we see now that there are tremendous opportunities 
here. Imagine if we can lead the way in the world with these 
new technologies, these green technologies. Think about China; 
think about India. We know they are looking to us. We cannot 
sit back and wait for them to do the right thing. That is 
ridiculous. We need to do the right thing, and our small 
businesses can do the right thing, and we can all prosper at 
the end of the day.
    So I would ask that the rest of my testimony be placed in 
the record because I see my time is winding down. But I would 
just say this to you, Mr. Chairman and Ranking Member Snowe: 
You are positioned in a very important way, both with this 
Committee and also the Commerce Committee, to be full partners 
with the Environment Committee and the Energy Committee so that 
we can really get our heads together and get moving. And I 
believe that just like in California, where small business led 
the way in passing landmark legislation, they can do it on the 
national level, and we should approach global warming with not 
fear, but determination and hope. And if we do it right, it 
could turn into a huge opportunity for our small businesses.
    Thank you so much for this chance to stop by.
    [The prepared statement of Senator Boxer follows:]
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    Chairman Kerry. Well, we are delighted, Senator. We love 
your passion on this issue, and we really look forward to and 
are grateful for your leadership because you have directed the 
Environment Committee to make this its lead priority.
    Senator Boxer. Thank you.
    Chairman Kerry. People may not believe it, but next to the 
war on terror, folks, this is the biggest priority that we 
face, and we have to treat it accordingly.
    Senator Snowe. Mr. Chairman, I just want to compliment 
Senator Boxer, who chairs the Environment Committee, because I 
think her leadership is going to be critical in that endeavor, 
and also for the innovative approach you adopted recently by 
having an open mike for Members of the Senate to testify, in 
which you had a third of the U.S. Senate testify on global 
warming.
    Senator Boxer. We did.
    Senator Snowe. So thank you very much for giving the level 
of urgency that this issue rightfully deserves.
    Senator Boxer. Thank you both.
    Chairman Kerry. We appreciate it. Thank you very, very 
much.
    Mr. Wehrum, thank you for your testimony, and Mr. Horowitz 
also. There is no question that the ENERGY STAR Program is a 
good program. It serves a valuable role in promoting energy 
efficiency for consumers. It certainly has increased awareness 
in the country of the ENERGY STAR label.
    I think the question is: Are we really sufficiently 
committed to it? Is it all that it could be? And are we doing 
all that we can? I would ask you, Mr. Wehrum, you received $50 
million in appropriations for 2006, but the President requested 
only $44 million for it for this next year. Can you explain why 
the President is looking to devote fewer resources for a 
successful energy-reducing program?
    Mr. Wehrum. Yes, Chairman Kerry. I would say three things.
    One, ENERGY STAR is an enormously effective program and 
will continue to be an enormously effective program. The goal 
of the program all along since its inception has been to foster 
partnerships with our private sector and other partners that we 
have in the program.
    Chairman Kerry. Do you believe we are at a level of those 
partnerships that is acceptable, that is what we ought to have?
    Mr. Wehrum. We are doing very well, and I would say we----
    Chairman Kerry. That is not what I asked you. Are we at the 
level that we could be and ought to be with respect to the 
challenge of this issue?
    Mr. Wehrum. There is always more opportunity, Mr. 
Chairman----
    Chairman Kerry. Then why are we cutting the program?
    Mr. Wehrum. Well, the first reason is I do believe we are 
making progress in mainstreaming these issues. ENERGY STAR has 
been about win-win solutions where, done correctly, significant 
energy savings and, therefore, cost savings can be achieved. At 
the same time, great benefits to the environment, including 
reductions in the growth of and outright reductions in 
greenhouse gas emissions can also be achieved.
    The second thing I will say is that part of the reduction 
in the 2008 budget reflects a greater emphasis on international 
action. The President's budget in 2008 asks for $5 million, for 
example, to support the Asia Pacific Partnership, and a key 
aspect of the Asia Pacific Partnership is to support 
infrastructure development and real projects, and they call for 
sustainable development and energy efficiency. And ENERGY STAR 
is a significant component of our international efforts that 
way.
    The third thing I would say is that times are tough budget-
wise, and we at the EPA, along with our colleagues at the other 
departments and agencies, are doing what we can to help promote 
fiscal responsibility and contribute to our ability to reach a 
balanced budget, and we are trying very hard to do that.
    Chairman Kerry. Well, it seems to me it is sort of penny-
wise, pound-foolish in the end because of the savings that it 
would mean to those companies, the increased profits and then 
the increased revenues.
    Mr. Wehrum. Mr. Chairman, there is great opportunity, and 
as the Administrator said yesterday in testimony, we are all 
about results, and we think this is an enormously successful 
program and will continue to be an enormously successful 
program. And I am personally quite proud to have the 
opportunity to work with the folks who run this program and 
developed the program. It is among the best of what EPA and the 
Government has to offer, and I think we do a great job.
    Chairman Kerry. Well, what percentage of the ENERGY STAR 
Program is dedicated to energy small business?
    Mr. Wehrum. On the specific dollars, we spend about $1 
million a year directly on our small----
    Chairman Kerry. Percentage.
    Mr. Wehrum. That is 1 in 50, so that is, you know----
    Chairman Kerry. A tiny percent.
    Mr. Wehrum. Two percent, but----
    Chairman Kerry. Small business is 50 percent of the 
businesses in the country in terms of energy use.
    Mr. Wehrum. Well, the other part of the answer, Mr. 
Chairman, is that the small business part of our program 
benefits from many of the other efforts that are underway in 
the program at large. With regard to developing the ENERGY STAR 
brand, promoting development of energy-efficient products, you 
know, our efforts specifically to small businesses are very, 
very important, and we take them quite seriously. But those 
efforts leverage off the broader efforts within the ENERGY STAR 
Program.
    Chairman Kerry. Not unless people have the technical 
assistance and the knowledge of it. I mean, a lot of small 
business people are working head-down, straight-ahead, 6 a.m. 
in the morning until 11 p.m. at night. It is a long day. It is 
a tough ordeal. And they do not have a lot of time. They are 
not necessarily tuned into the Web. They do not know what is 
going on with ENERGY STAR. There needs to be a kind of 
proactive effort to help a lot of those folks be aware. Many of 
them are immigrants. Many of them are new to business. A lot of 
them are startups of two or three people, or whatever, and they 
are just not aware of these things. But there could be big 
savings to them.
    Mr. Wehrum. Mr. Chairman, we agree completely, and the 
money that we specifically spend on the small business aspect 
of the program goes at exactly the issues that you just talked 
about. For instance, one of the documents that we have provided 
to you is the ENERGY STAR Guide for Small Businesses. We make 
this widely available as a published document. It is available 
on the Internet. And you are exactly right, many folks do not 
have access to the Internet or do not have the time to access 
the Internet. But, nevertheless, that is quite a valuable 
resource.
    Chairman Kerry. Does the EPA proactively work in joint 
venture with the Small Business Administration to reach out to 
small businesses?
    Mr. Wehrum. Yes, Mr. Chairman, we do.
    Chairman Kerry. What is the format for that?
    Mr. Wehrum. Much of the focus of late has been to satisfy 
our mutual obligations under the Energy Policy Act. That law 
called for the SBA to lead an effort to create a clearinghouse 
for information, and I am sure my colleague has some thoughts 
on this. We feel like as a Government, and especially through 
the ENERGY STAR Small Business Programs, we have done a lot of 
what that law, I think, envisions as being helpful in setting 
up that clearinghouse. But we have spent time working with our 
SBA colleagues and others within the Government to figure out 
what it means to put the clearinghouse together.
    And setting aside ENERGY STAR, we do have other programs, 
as I mentioned in my testimony. A good example is the SmartWay 
Program, which is directed at reducing fuel utilization and 
increasing efficiency of over-the-road trucks. And we worked 
very successfully with SBA late last year to put together a 
loan guarantee program directed at small businesses to help 
make financing more readily and easily available to small 
owner-operators or those that operate small fleets in order to 
take advantage of these energy efficiency opportunities.
    Chairman Kerry. You mentioned the President's greenhouse 
goal by 2012. What is that goal by 2012 for greenhouse gas?
    Mr. Wehrum. An 18-percent reduction in greenhouse gas 
intensity.
    Chairman Kerry. Which gets you to where?
    Mr. Wehrum. I do not have that figure in front of me. It 
slows the growth of greenhouse gas emissions between now and 
2012.
    Chairman Kerry. But an 18-percent reduction by 2012--is 
that what you said?
    Mr. Wehrum. Yes, Mr. Chairman.
    Chairman Kerry. What is there in the current approach that 
suggests, since it is voluntary, that that is achievable?
    Mr. Wehrum. We take the Administration's commitment to that 
objective quite seriously, and, in fact, there is a 
governmentwide effort to track progress against that goal. And, 
in fact, much of the work that is done within EPA and, I 
believe, our primary contribution--one of our primary 
contributions to the governmentwide climate effort is to get 
real results against that goal.
    My testimony and my colleague's testimony pointed out what 
we believe are some of the measurable results just from ENERGY 
STAR alone, $12 to $14 billion in energy savings for program 
participants. That can be expressed in a lot of different ways. 
The figure we often use is what is that equivalent to in terms 
of automobiles. It is 23 million vehicles.
    Chairman Kerry. But there is nothing historically--I mean--
with all due respect, that kind of just talks around it. In the 
22 years I have been on the Commerce Committee, we have been 
struggling with emissions, and we have been struggling with 
emissions nationally. Our emissions are only going up. We are 
not reducing. We set voluntary goals in 1992. President George 
Herbert Walker Bush signed the Voluntary Framework, and it has 
done nothing but go up. There has never been a reduction over 
the course of that time. The demand levels across the country 
show nothing but an increase.
    Why do you think USCAP--are you familiar with USCAP?
    Mr. Wehrum. Yes, Mr. Chairman.
    Chairman Kerry. Why do you think these leaders of major 
corporations are coming out and saying we need a mandatory cap? 
Why are they ahead of the EPA?
    Mr. Wehrum. As on many important and complex issues, there 
is a diversity of views right now.
    Chairman Kerry. Well, these are not your--I mean, these are 
American CEOs of big companies. I doubt that--you know, most of 
them probably voted for George Bush, but they all believe that 
we need a cap because you have to do this mandatorily.
    Mr. Wehrum. Well, Mr. Chairman, the Administration's policy 
is that mandatory measures are not appropriate, but the 
policy----
    Chairman Kerry. Why? Why would they not be appropriate if 
you have to achieve a certain goal?
    Mr. Wehrum. Because since the President set out the goal--
and the goal is just one of four significant, four major prongs 
of the Administration's strategy. But since that objective was 
set by the President, we have been tracking progress against 
it. In fact, we have been exceeding on a pro rata basis what we 
otherwise need to achieve in terms of energy savings to meet 
the greenhouse gas intensity targets. So we have great 
confidence we are going to meet and probably exceed the target 
that has been set out by the President.
    The President's goal has been to reduce the growth of 
greenhouse gas emissions in this country and, as appropriate, 
seek to stop the growth and reverse the growth. But the ``as 
appropriate'' goes to the other three prongs of the strategy. 
The other three prongs include substantial investment in 
continued scientific research, basic scientific research, and 
EPA does have a role in that as well. And substantial 
investment in technology development. You mentioned in your 
opening remarks that next-generation technologies and spurring 
those technologies is an important part of this debate and this 
effort, and we agree with that completely and spend something 
on the order of $3 billion per year as an administration on 
development of next-generation technology. And as I have 
alluded to in my comments today, aggressive action on the 
international front is a big part of our strategy, and we have 
been working hard at that. I personally have been involved in 
many important aspects of that effort.
    Chairman Kerry. On the international front?
    Mr. Wehrum. Yes, Mr. Chairman.
    Chairman Kerry. I want to turn to Senator Snowe, but can 
you just articulate what the Administration is doing on the 
international front?
    Mr. Wehrum. Sure, and I will give you a couple good 
examples based on my personal experience. The EPA administers a 
program called Methane to Markets. It is an international 
partnership program that currently has 19 member countries, and 
I happen to be the Chair of the Steering Committee of that 
effort.
    The goal of Methane to Markets is to leverage the 
experience, the substantial experience that we have developed 
domestically to identify and reduce emissions of methane from 
primarily agricultural sources, coal mines, landfills, and oil 
and gas development and distribution.
    We have had domestic programs in each of those areas for 
many years now, and we have had great success. So the idea of 
Methane to Markets is to leverage off of our experience and 
success and provide our technology, provide our know-how to the 
world at large, and seek to have projects implemented across 
the world to reduce methane emissions, because, again, as you 
pointed out in your opening remarks, methane is a very powerful 
greenhouse gas, and focused efforts on reducing methane can 
have that much more of an effect in reducing greenhouse gas 
emissions and in our case contributing to our goal of reducing 
greenhouse gas intensity between now and 2012.
    That is one example of many, Mr. Chairman.
    Chairman Kerry. Well, you know, it may well be that that is 
taking place. I will tell you that in my conversations--and 
most recently we had the Global Legislators for a Balanced 
Environment here, with delegations from China and India and 
Great Britain and all over the world. They met just downstairs 
in Senate Caucus Room 325, and to listen to them, they think we 
are one of the largest parts of the problem. They have no sense 
of our participation globally. They have no sense that this 
Administration is doing any of this or that it is making any 
difference. They see us as 25 percent of the world's pollution 
and not part of the solution.
    Mr. Wehrum. Mr. Chairman, I will just say there is 
substantial effort on the part of the Administration and the 
U.S. Government is directed at effective activity on the 
international level. Methane to Markets is one example. The 
Asia Pacific Partnership, which I mentioned previously, is 
another great example where we are seeking to get six countries 
on the Pacific Rim to invest significantly in sustainable 
development, which will have in part the effect of helping 
manage greenhouse gas emissions and the global climate change 
issue.
    Chairman Kerry. I will come back to that afterwards.
    Senator Snowe.
    Senator Snowe. To come back to the ENERGY STAR Program, is 
it true that you only have one employee that works on this 
program?
    Mr. Wehrum. Senator Snowe, specific to the small business 
component, we have two FTEs committed to it. So the equivalent 
of two employees. Again, I think it is very important to 
emphasize that our efforts specific to small businesses are 
able to take advantage of and leverage off of many other 
components of the program where substantially greater resources 
are invested. And, again, a good example is development of the 
ENERGY STAR brand and the promotion and the defense of that 
brand. We spend a tremendous amount of time and effort making 
sure the brand has value, making sure the brand is recognized 
and promotes the goals of the partnership. And small 
businesses, they benefit directly from that and substantially 
from that effort.
    Senator Snowe. So how many small businesses have benefited 
from it? Do you have the numbers?
    Mr. Wehrum. I do not have that number in front of me. I 
would be happy to get that to you for the record.
    Senator Snowe. Well, I think the key here is that you have 
25 million small businesses in America, so we have enormous 
potential. And when you are looking at the surveys, one was 
done by the National Small Business Association and said that 
75 percent of small businesses believe that energy efficiency 
can make a significant contribution, yet only 33 percent have 
successfully made investments in that regard.
    If you look at the other statistics, 40 percent of small 
businesses are still not familiar with the ENERGY STAR product 
label and technical support programs that are available. As I 
said, only a third or more have taken steps to reduce their 
energy costs and making the investments necessary.
    So we have enormous potential here, and I am not sure that 
we are accomplishing the maximum in getting this message out 
and making the outreach to the 25 million small businesses who 
are out there that can ultimately make a difference. I mean, if 
they make an investment in reducing their energy infrastructure 
that is efficient, they can reap savings of more than 50 
percent. That fact has been demonstrated time and again.
    This is a good example of a program that can be enormously 
helpful to small business and also to our environment.
    Mr. Wehrum. Senator, we could not agree more, and we 
believe there is great opportunity. That is how we see it. 
Progress, tremendous progress, has been made; 60-percent brand 
recognition within the small business community is remarkable. 
That rivals many other national brands on the retail level, and 
we think that is a real strong indicator of the success of this 
program.
    Senator Kerry pointed out that small businesses have 
particular challenges as compared to the larger businesses and 
industrial concerns in this country, and that is exactly right. 
A big part of what we try to do in the small business part of 
the ENERGY STAR program is identify those key differences and 
challenges that small businesses face and then try to find 
effective ways to deal with it. So time, as the Chairman 
pointed out, is a very real challenge for small businesses. 
There are only so many hours in the day, and many small 
businessmen just do not have time to surf the Web and time to 
read even the materials that we make available.
    Money is always an issue, and particularly a challenge. 
Getting relevant information, getting technical support----
    Senator Snowe. Well, do you ever get feedback from small 
businesses about the program and what their needs are?
    Mr. Wehrum. We do----
    Senator Snowe. I will ask the same of Mr. Horowitz, but are 
we getting feedback?
    Mr. Wehrum. We do, Senator. We work very closely with a 
wide variety of businesses and business associations. A good 
example is the auto dealers. In fact, I just, a couple months 
ago at the Washington Auto Show, announced a partnership with 
the National Auto Dealers Association, which is largely 
comprised of small businesses, but not completely, to leverage 
our combined resources to really promote energy efficiency and 
ENERGY STAR in the retail automobile industry. It is a great 
opportunity. That is an energy-intensive small business 
industry because of the lighting and the ventilation, HVAC 
requirements to run these kinds of establishments. They saw a 
great opportunity, and we saw a great opportunity, and that is 
just one good example of where feedback and working together 
has allowed us to make real inroads into that particular 
segment in the small business community.
    Senator Snowe. Mr. Horowitz, can you shed some light on the 
SBA's role in this regard? In the 2005 Energy Policy Act, we 
elaborated on the requirements to buildupon the ENERGY STAR 
Program and to help small businesses. Can you tell me how 
successful we have been in meeting all of the goals that have 
been enumerated in the act in 2005 to help small businesses 
become more energy efficient? And, also, specifically on this 
clearinghouse, too, exactly what role is that playing? How many 
small businesses are tapping into it? And has it been 
successful?
    Mr. Horowitz. Senator Snowe, I would like to be completely 
clear, forthright, and upcoming. I have been at the SBA 5 
weeks, so I have limited knowledge on this issue.
    That being said, having reviewed the----
    Chairman Kerry. Is that why they sent you up here today?
    [Laughter.]
    Mr. Horowitz. I am also a former House Committee staffer 
from the House Committee on Small Business, so I am aware of 
these issues somewhat as well.
    Chairman Kerry. So which way do you want it? Do you know 
everything or----
    [Laughter.]
    Mr. Horowitz. I am aware of them from a congressional staff 
point of view, and now I am responsible for fulfilling these 
needs and requirements on the agency level.
    That being said, the SBA is required under the Energy 
Policy Act of 2005, in consultation with DOE and EPA, to 
develop and coordinate the program building on the ENERGY STAR 
Program. The four key points in the act are straightforward. 
There is a need for the Small Business Administration to 
finalize the clearinghouse and put it online. There are several 
people working on it. Information is readily available, and 
this hearing has provided a catalyst for making that a 
priority.
    Senator Snowe. Did you know there was not?
    Mr. Horowitz. I do not. I do know that now I am responsible 
for it, and I will make it happen.
    Senator Snowe. Well, I think that is the essence of the 
problem we are facing. Unfortunately, it affects small 
businesses. It is not unique to this program. It has 
unfortunately become more the norm within the Federal agencies, 
frankly. But the SBA is supposed to be the leader and the voice 
for small businesses across this country, and to provide a 
level of urgency, but also a sense of impetus for implementing 
these programs and reaching out and helping them. So that was 
2005 when we passed the act, and here we are today in 2007, and 
basically the clearinghouse, for example, has not been 
implemented. And, frankly, I think we need to have submitted to 
the Committee and all the five goals under this requirement in 
the act, I would like to have a response from SBA in terms of, 
you know, what progress has been made or has not been made on 
these requirements and this commitment.
    I mean, if 40 percent are not even familiar with the ENERGY 
STAR label or the technical support available, we have a long 
ways to go in reaching out to millions of small businesses 
across this country. And we fail to do so at a time at which I 
think it is an imperative, not to mention the fact they can be 
instrumental in many ways to helping us combat this problem.
    Mr. Horowitz. We will get back to you with those answers.
    Senator Snowe. Well, it is not encouraging, frankly. That 
is the fundamental concern that I have. And I understand that 
you are new in your position, but, nevertheless, that should 
not be the issue here today.
    Mr. Horowitz. Correct.
    Senator Snowe. It should be carrying over the policies that 
have already been in place. And so I think that that is 
unfortunate here.
    Mr. Horowitz. Well, I do not want to say that the SBA has 
not been doing anything in this regard. That would be far from 
the truth. The SmartWay trucking initiative was a great example 
of partnership between the agencies of something that has been 
done that specifically targets small businesses to help them 
realize the possibilities of energy efficiency. This has 
allowed the small business firms to get loans under the 7(a) 
program, to get the upgrade kits, and do such things as put a 
400-pound generator on the back of their cab or their truck, so 
instead of idling at a truck stop on the side of the road 
burning diesel fuel, they are allowed to run off the electrical 
generator, thus not burning fossil fuel. Now, this is a 
potential to save 1 billion gallons in diesel across the board. 
That is, I think, a significant opportunity.
    We have to continue to work to make sure that such 
partnerships such as the Owner-Operator Independent Drivers 
Association (OOIDA) has the opportunity to make sure that their 
members and the other members of similar associations provide 
that information to the truckers and the owners of the small 
firms.
    Senator Snowe. What is the relationship between EPA and SBA 
on the ENERGY STAR Program? How well do you work together? Has 
there been a standardized relationship in the ENERGY STAR 
Program, for example? We have the clearinghouse and all of 
these initiatives that were passed in 2005.
    Mr. Wehrum. Senator, ENERGY STAR itself is a program 
implemented in partnership between EPA and the Department of 
Energy. SBA does not have a primary role in developing----
    Senator Snowe. No, I understand that. But how well do you 
work with SBA on this issue?
    Mr. Wehrum. I think we work together very well.
    Senator Snowe. Because the primary goal of the 2005 
provisions were to buildupon the ENERGY STAR Program, so I just 
did not know what level of communication existed.
    Mr. Wehrum. Our staffs have been working together quite 
well and with great frequency, and, in fact, with growing 
frequency. We within the ENERGY STAR Program see the 
relationship as a great opportunity, a great opportunity for us 
to leverage the efforts of the Federal Government and use the 
resources of SBA to further spread the word about what we are 
doing with ENERGY STAR and making important information and 
resources more widely available. So it is a relationship we 
think is important, we are trying to foster, and I think we 
will continue to grow, and the clearinghouse is a great 
opportunity for us to have a common goal and a common project 
to accomplish all those ends.
    Mr. Horowitz. On the SBA side of it, following the Energy 
Policy Act, there has been a concerted effort by the SBA to 
gather materials from the ENERGY STAR products and the other 
programs within the Department of Energy and the Department of 
Commerce and provide them through the regional district offices 
and through our affiliates, the SCOREs, the SBDCs, and the 
Women's Business Centers, across the country.
    So the opportunity is there to provide the material on the 
Main Street level so that small business people see it whenever 
they are in the various locations of the SBA and our 
affiliates, in addition to the Web-site-based clearinghouse.
    Senator Snowe. Thank you.
    Thank you, Mr. Chairman.
    Chairman Kerry. Thank you very much, Senator Snowe.
    Let me emphasize that we would really like the information 
provided that Senator Snowe asked for, and we will leave this 
record open in order to submit some questions in writing from 
the Committee that we want to follow up on.
    Before we move to the next panel, I have a few more 
questions, if I could ask them.
    Following up on what Senator Snowe just asked you, Mr. 
Wehrum, you said something about the resources that we apply to 
the ENERGY STAR Program, but you pointed out the two people who 
are effectively working on it with respect to small business. 
If I understand it correctly, most of what the EPA does with 
respect to the ENERGY STAR Program is either done over the 
phone or on the Internet, fundamentally. Isn't that accurate? I 
mean, the information is provided and made available to people, 
but you are not providing energy audits, for instance, or 
technical assistance.
    Mr. Wehrum. Mr. Chairman, it is difficult to quantify. It 
is very true that we emphasize----
    Chairman Kerry. It is not hard to quantify that. I mean, 
the answer is you are not providing audits.
    Mr. Wehrum. And that is exactly right. That is----
    Chairman Kerry. Is that accurate?
    Mr. Wehrum. That is exactly right.
    Chairman Kerry. What is hard to quantify about that?
    Mr. Wehrum. But the question is, do we provide other means 
of disseminating information and provide technical support 
beyond the telephone and the Internet, and the answer is surely 
yes, and that is what is difficult to quantify. We work very 
closely, as I pointed out before, with a wide variety of 
companies and small business associations, and that gives us 
great leverage. That gives us great access----
    Chairman Kerry. Well, I want to get a better 
quantification.
    Mr. Wehrum. Sure.
    Chairman Kerry. I want to give some questions to you that 
really try to break this down so we can see what is really 
happening, because what we get from small businesses is that, 
you know, not much actually touches them somehow.
    Now, let me give you an example. Chris Lynch of the 
Pennsylvania SBDCs is going to testify in the next panel about 
this technical assistance issue. He will testify that six out 
of the eight ENERGY STAR Awards given out nationally to small 
businesses in 2006 went to his clients in Pennsylvania, and he 
provides those audits.
    So I guess, you know, given the success of the EPA program 
in Pennsylvania, doesn't that sort of scream to you to say, 
Wow, maybe we ought to be able to augment this by providing a 
lot of audits?
    Mr. Wehrum. Well, I think that success is a great example 
of what we can accomplish through these relationships and 
leveraging relationships.
    Chairman Kerry. Did you accomplish it or did Chris?
    Mr. Wehrum. Oh, Chris. No doubt about it. But----
    Chairman Kerry. So why can't you augment that, replicate 
it? Don't you see the urgency of this?
    Mr. Wehrum. It is absolutely urgent, and, again, this is a 
just a great example of what we are trying to accomplish 
where--you know, one of the basic strategies of ENERGY STAR is 
that the Government, the Federal Government, should not be 
doing all the work, that we should be able to incentivize and 
energize other interested parties, including in this case small 
business associations and small businesses, to pick up the 
issue and help carry it along. And this is just a great example 
of that. We have worked great with Mr. Lynch's organization, 
and that has paid off in the form of--I mean, the awards are 
just evidence of the fact that it has paid off on the ground. 
And we try to replicate that, and we are working hard to 
replicate that across the country.
    Chairman Kerry. Well, they are all resource-starved, I can 
tell you that. And as Senator Snowe pointed out, when you look 
at this gap between the 75 percent and the 33 percent receiving 
it, if I were sitting in your seat, I would say I want to close 
that gap.
    Mr. Wehrum. Absolutely. Great opportunity, Mr. Chairman.
    Chairman Kerry. Where is the proposal to close it?
    Mr. Wehrum. We work hard every day on those issues. And 
we----
    Chairman Kerry. Mr. Horowitz, let me ask you a question. 
You say that the SBA and its collaborating agencies have made 
progress in developing a governmentwide program to assist small 
businesses in becoming more energy efficient. That is what we 
mandated in the Energy Policy Act of 2005. Can you be a little 
more specific about what you mean by that progress? Define it 
for us.
    Mr. Horowitz. Well, I think the ENERGY STAR Program is 
evident of the massive amount of work----
    Chairman Kerry. Is that all you mean, just the ENERGY STAR 
Program?
    Mr. Horowitz. Well, the SBA----
    Chairman Kerry. It is not your program. That is theirs.
    Mr. Horowitz. Correct. Well, consulting with the Office of 
General Counsel of the SBA, reading the Energy Policy Act, the 
SBA's role is to provide a conduit for small businesses to 
access that information, to make it more readily available for 
them.
    Now, there are two ways we can do that: One is through the 
Web site that allows them to--we want to collate the 
information across the DOE, Department of Commerce, and the EPA 
so that small businesses have an easy-to-find, one-stop shop. 
Second is to take all the printed material, such as what you 
have on your table, and disseminate it to the Regional and 
District offices of SBA as well as our affiliates, the SBDCs, 
the Women's Business Centers, and the SCORE offices.
    Chairman Kerry. And that is what is happening now, that 
information is being disseminated?
    Mr. Horowitz. It has not yet begun.
    Chairman Kerry. It has not yet begun.
    Mr. Horowitz. No.
    Chairman Kerry. OK. Let me ask you further: Who is the 
designated official or is there a designated entity within SBA 
to lift on this issue?
    Mr. Horowitz. There has not been one; thus, it is my 
responsibility to take that up and to make sure----
    Chairman Kerry. So, thus far, there is no sort of major 
Administration policy with respect to a small business global 
climate change initiative?
    Mr. Horowitz. Well, I do not believe that would necessarily 
be the case. I----
    Chairman Kerry. Well, what is----
    Mr. Horowitz. Sitting----
    Chairman Kerry. You just said that----
    Mr. Horowitz. Becoming aware of the information--pardon me. 
Becoming aware of the information that the EPA has been working 
on such as----
    Chairman Kerry. I am saying SBA. Within the SBA.
    Mr. Horowitz. I understand.
    Chairman Kerry. The Small Business Administration.
    Mr. Horowitz. There is no one person that has been 
designated to be that person that I am aware of. Thus, it has 
become my responsibility.
    Chairman Kerry. What is your designation? You are the----
    Mr. Horowitz. Assistant Administrator for Policy and 
Planning. I will make certain it gets done.
    Chairman Kerry. Well, I think Senator Snowe and I will 
probably have a conversation with Administrator Preston and try 
to see what we can do to augment this effort within SBA. It 
seems to me there is just a huge opportunity for proactivity 
being missed here that is pretty critical.
    Mr. Horowitz. Very much so.
    Chairman Kerry. And for joint venturing. At any rate, I 
will leave the rest of the questions for the record.
    Senator Snowe, do you have any additional questions?
    Senator Snowe. No, I do not, Mr. Chairman, but I agree.
    Chairman Kerry. Thank you both. Appreciate it. We will have 
panel two come up.
    Did the EPA and SBA leave? Have they left? Oh, you are 
here. SBA is here. Well, good. I am glad you are here. The EPA 
is not, however. I think they might have benefited by 
listening. One person from EPA is here.
    Well, thank you, members of this panel. Byron Kennard, 
Executive Director for the Center for Small Business and the 
Environment, a leader in the movement to bring small businesses 
to the table in the search for solutions to global warming. I 
appreciate your being back here before the Committee. You were 
here previously.
    Jim Barber, President and CEO of Cambridge-based Metabolix, 
which is, as I said, a small business applying tools of 
biotechnology to create a new generation of versatile, 
sustainable, bio-based, bio-degradable natural plastics and 
chemicals.
    Chris Lynch, Director in the Environmental Management 
Assistance Program, Pennsylvania Small Business Development 
Centers.
    David Goldstein, Co-Director of the Natural Resources 
Defense Council Energy Program. I might add that Dr. Goldstein 
helped negotiate the agreement that led to the National 
Appliance Energy Conservation Act back in 1987, and many other 
things, so we appreciate all of you being here very, very much.
    Scott Hauge, Vice President, National Small Business 
Association, and founder of Small Business California, which 
was already mentioned by Senator Boxer. We appreciate your good 
work in these efforts.
    So thank you all for being here. We look forward to your 
testimony. If you can try to compress it into 5 minutes, that 
would be helpful. Then we can have more time for some exchange.
    Mr. Kennard, do you want to begin? Can you press the mike 
on? There is a little button on the mike. Make sure the light 
is on, and then bring it close to you. Just pull it right 
toward you.
    Mr. Kennard. Is that working now?
    Chairman Kerry. That is great.

  STATEMENT OF BYRON KENNARD, EXECUTIVE DIRECTOR, CENTER FOR 
               SMALL BUSINESS AND THE ENVIRONMENT

    Mr. Kennard. Thank you, Chairman Kerry and Senator Snowe. 
Congratulations on holding this hearing. You are making vitally 
important connections between small business and climate change 
that have not been made by policymakers thus far. Why is this 
so? Largely because small business has not had a seat at the 
table where environmental and energy policies are determined. 
That has to change. Here is why.
    Small businesses may be disproportionately harmed by 
extreme weather events associated with global warming. They do 
not have the financial reserves to bounce back from such 
disasters. Look at the impact of Hurricane Katrina on small 
businesses in the Gulf Coast region where they constituted the 
backbone of the economy. But there is a positive connection 
here, too. Every single small business in the Nation can profit 
by making its workplace more energy efficient.
    According to EPA's ENERGY STAR Small Business Program, 
small firms can save between 20 and 30 percent on their energy 
bills through off-the-shelf, cost-effective energy upgrades. 
The job--it is not rocket science--consists of installing the 
same few simple devices like programmable thermostats over and 
over again in millions of small business workplaces.
    Now, small business is one-half of the economy. This means 
one-half of the economy could be quickly and profitably made 
more energy efficient. And there are devices to help this 
happen. My favorite is called On-Bill Financing about which you 
will hear more from other panelists, but basically this makes 
energy efficiency for small businesses as easy as falling off a 
log. It is described in my written submission.
    The other critical connection between small business and 
climate is innovation. When it comes to producing technical 
solutions to the problem, entrepreneurs and small businesses 
are way out ahead of everybody else. They are ahead of the 
Government, they are ahead of the environmentalists, they are 
ahead of the regulators. The entrepreneurs are out there doing 
their thing.
    Now, many of these clean-tech companies are now thriving 
and creating abundant new jobs. We call these fast-growing 
businesses ``green gazelles.'' The technologies being produced 
by green gazelles are increasingly cost-effective. What is 
more, investment in them is soaring both here and abroad. Last 
year a record $71 billion was invested worldwide in renewable 
energy. Venture capitalist John Dorr, who invested early in 
Google and Amazon, recently declared, ``Going green may be the 
biggest economic opportunity of the 21st century. It is the 
mother of all markets.''
    Vinod Khosla, another renowned venture capitalist who co-
founded Sun Microsystems, was asked why he is investing so 
heavily in clean tech. ``Because,'' he said, ``the best brains 
in the country are no longer working on the next pharmaceutical 
drug or the next Silicon Revolution. They want to work on 
energy.''
    So envision this: A huge swarm of entrepreneurs tackling 
the problem from all directions and in countless ways. To me, 
these entrepreneurs are heroes, providing leadership of a high 
order, unique, indispensable, and ultimately transformational.
    But the path of these heroes is not smooth. As Members of 
this Committee know all too well, entrepreneurs are forced to 
play on a playing field that is not level. Now facing the dire 
threat of global warming, the need to level the playing field 
is more urgent and compelling than it ever was. There are lots 
of ways to do this. In my written submission I propose the 
creation of a congressionally mandated initiative for the SBIR 
program to make green technology a priority. And we also 
propose the idea of a transferable R&D tax credit whereby 
entrepreneurs who are not profitable can go to a firm with the 
strength to commercialize their technology and strike a deal 
whereby the larger firm can take advantage of the tax credit.
    In conclusion, small business needs and richly deserves a 
seat at the table when proposals to curb global warming are 
being hammered out. We call on you, Mr. Chairman and Senator 
Snowe, and your colleagues on this Committee to take the lead 
in making this happen.
    Thank you very much.
    [The prepared statement of Mr. Kennard follows:]
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    Chairman Kerry. Thank you very much, sir. That is an 
important statement, and we appreciate it very much.
    I might add that Vinod Khosla and John Doerr are people I 
have talked to about this. I think we are going to have them in 
front of the Commerce Committee at some point. We are working 
on dates with them. But they are indeed leading the venture 
capital field in that effort, and I like your idea about SBIR.
    Mr. Barber, welcome. Good to have you here. It is a little 
colder up in Massachusetts, isn't it?
    Mr. Barber. It has been.

  STATEMENT OF JAMES J. BARBER, PRESIDENT AND CHIEF EXECUTIVE 
                       OFFICER, METABOLIX

    Mr. Barber. Thank you very much, Senator Kerry and Senator 
Snowe, for this opportunity to meet with you today and talk a 
bit about what one small business is doing to combat global 
climate change.
    Everyone knows by now about our unhealthy addiction to oil 
and that our consumption of oil contributes to global climate 
change and greenhouse gas emissions. What everyone does not 
know is that nearly 10 percent of the oil we use is used for 
producing plastics and chemicals, that is, products. And just 
as biofuels provide a path to reduce global climate change by 
reducing our use of oil, so do bioproducts. There are 
initiatives underway in the United States, by ourselves and 
others, to develop bioproduct alternatives to petroleum-based 
plastics and chemicals. These bioproduct alternatives will 
reduce our consumption of petroleum and reduce our emissions of 
greenhouse gases.
    Metabolix is a small biotech company based in Cambridge, 
Massachusetts, 60 people today. We were formed 15 years ago, in 
1992, to use bioscience to provide clean, sustainable solutions 
to our need for plastics, fuels, and chemicals, and last 
November we became a publicly traded company and are now listed 
on Nasdaq. We have had some help along the way from the 
Department of Energy, the Department of Agriculture, and the 
Department of Commerce in the form of research grants, and in 
2005, we received the President's Green Chemistry Award.
    We are now building our first commercial plant in Clinton, 
Iowa, in a joint venture with Archer Daniels Midland to convert 
corn sugar to natural plastic, a bioproduct. Natural plastic is 
useful in a wide range of everyday products--I brought a few 
here--from coffee cups and lids to gift cards to packaging, 
housewares of all sorts, bottle caps, plastic bags, many of the 
sorts of things that we now find in petrochemical-based 
plastics.
    This first plant will startup next year, 2008, and will 
produce 110 million pounds per year of natural plastic, a small 
amount in comparison to the nearly 100 billion pounds per year 
of plastic material we make and use in the United States every 
year, but still displacing enough oil to fuel over 20,000 cars 
for a year.
    While petroleum-based plastics are significant emitters of 
greenhouse gases in their manufacture and contribute to global 
warming, natural plastic will substantially reduce greenhouse 
gas emissions. In fact, our first plant in Clinton, Iowa, will 
be powered by biomass and other forms of renewable energy.
    In Metabolix's case, our natural plastic bioproduct is 
totally biodegradable, so unlike any other plastic, natural 
plastic harmlessly biodegrades even in wetland and marine 
environments. Petroleum-based plastics, on the other hand, last 
virtually forever and are creating a growing solid waste and 
environmental challenge. Yet natural plastic, like wood that we 
build our homes of, is very durable in use and combines 
durability and biodegradability.
    While this is a start, we can do much more as we expand 
production of natural plastic and so reduce our petroleum 
usage, greenhouse gas emissions, and waste in the environment. 
This commercial plant in Iowa is a realization of the 
opportunity to couple the biotechnology strength we have here 
in the United States, much of it in small companies, with the 
agricultural resources we have. But it is only a start.
    Beyond our first platform now being commercialized, we have 
other exciting developments in the pipeline. Five years ago, we 
started working on developing enhanced switchgrass that would 
produce natural plastic right within the leaves and stems. And 
we now have test plants of switchgrass producing measurable 
levels of natural plastic growing in our greenhouse in 
Cambridge, Massachusetts. The natural plastic produced within 
the leaves and stems will be extracted for use in everyday 
products like you have seen here, and the remaining biomass 
will be used for producing cellulosic ethanol or other biofuels 
and will result in significant cellulosic ethanol cost 
reduction.
    The production of a valuable co-product, natural plastic, 
along with switchgrass biomass that can be converted to liquid 
fuels will significantly lower the hurdle to economic 
production of cellulosic biofuels. And we have earlier stage 
concepts for bio-based production of large-volume chemical 
intermediates as well, now made from petroleum and natural gas.
    There is another way you can affect climate change today. 
We and others developing and commercializing natural bioproduct 
alternatives to petroleum-based products are doing so without 
the policy initiatives that are speeding adoption of biofuels, 
such as bioethanol, yet bioproducts will displace oil just as 
effectively as biofuels do. We strongly encourage the Congress 
to consider extending the policy initiatives already in place 
to encourage and accelerate the adoption of biofuels to 
accelerate the adoption of bioproducts that displace petroleum 
uses as well. A barrel of oil displaced is a barrel of oil 
displaced, whether by biofuels or bioproducts, and there is a 
great deal to be gained here. Similarly, we encourage the 
Congress to assure that the greenhouse gas emissions associated 
with the manufacture of petroleum-based products are included 
in such a way that users are encouraged to adopt bioproduct 
alternatives.
    I believe we have the opportunity to take the global 
leadership in this area with your help, and I appreciate your 
time and consideration this morning.
    [The prepared statement of Mr. Barber follows:]
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    Chairman Kerry. Thank you very much, Mr. Barber. That is 
very interesting.
    Mr. Lynch.

         STATEMENT OF CHRISTOPHER J. LYNCH, DIRECTOR, 
ENVIRONMENTAL MANAGEMENT ASSISTANCE PROGRAM, PENNSYLVANIA SMALL 
BUSINESS DEVELOPMENT CENTERS, THE WHARTON SCHOOL, UNIVERSITY OF 
                          PENNSYLVANIA

    Mr. Lynch. Good morning, Chairman Kerry, Ranking Member 
Snowe. I am pleased and honored to join you this morning to 
discuss small business solutions for combating climate change. 
Specifically, I would like to add to the discussion about 
energy efficiency as a solution.
    In looking for small business opportunities to help address 
climate change, small business energy efficiency needs to be at 
the top of everyone's list. Since America's 25 million small 
businesses create more than 50 percent of the GDP, one could 
also assume that small business energy consumption is about 
equal to half of the total energy used for commercial and 
industrial purposes. Assuming small business energy usage is 50 
percent, national data indicates that if small commercial and 
industrial businesses used energy efficiency to achieve 
realistic energy consumption reductions of 20 to 30 percent, 
then small businesses could help the United States reduce 
carbon dioxide emissions 93 to 140 million tons per year, while 
at the same time saving themselves an estimated $12 to $18 
billion on annual energy costs.
    To achieve these kinds of dramatic results, however, there 
are two primary challenges I would like to bring to your 
attention. First, small businesses have a significant need for 
technical assistance in order to make wise investment choices. 
And, second, as you are well aware, small businesses typically 
have limited capital.
    With regard to technical assistance, the U.S. EPA's ENERGY 
STAR Small Business Program is an excellent destination for 
information and a limited amount of unbiased technical support, 
especially for do-it-yourself business leaders. But I think 
additional technical assistance is often required. When the 
Pennsylvania SBDC Environmental Management Assistance Program 
launched an energy efficiency outreach and education campaign 
in 1997, we quickly found that information and education alone 
were often not enough to see businesses go through with energy 
efficiency projects. In response, the Pennsylvania SBDC 
developed more advanced technical assistance. Starting in about 
2003, our energy efficiency services were expanded upon and 
demand for these services has steadily grown ever since.
    In 2004, about 38 percent of our clients requested energy 
efficiency assistance. The following year, this number 
increased to 49 percent. Last year, of the 428 businesses 
assisted by the program, more than half--a full 60 percent--
sought assistance with energy issues.
    Based on approximately 300 energy onsite assessments, we 
have consistently found that our recommendations, if fully 
implemented, will save SBDC-assisted businesses an estimated 25 
to 30 percent on energy consumption and associated utility 
costs.
    Now, obviously, implementation usually requires project 
finance, and this brings me to my second point: The need for 
small business financial incentives to address the scarcity of 
up-front capital. A few years ago, we worked closely with the 
Pennsylvania Department of Environmental Protection to create a 
micro-grant program offering a 50-percent cost share up to 
$7,500 for small business energy and environmental 
improvements. Demand on this grant program has been very 
strong, and a significant backlog has developed. In this 
current fiscal year, with a little over $780,000 available for 
grants, the Department had to stop accepting applications after 
just 10 weeks. Many potential applicants were turned away, 
including at least 50 small businesses that the SBDC was 
working with in Pennsylvania. But the bottom line is these 
grants really do help. Clients of the Environmental Management 
Assistance Program have been awarded 58 grants, totaling just 
under $360,000. These grants have been leveraged to implement 
projects costing over $792,000, and, most importantly, it is 
estimated that these 58 projects alone will ultimately save the 
businesses more than $273,000 per year on energy costs.
    We are convinced that small business owners have the 
interest and the desire to become more efficient users of 
energy, both to control their internal operating costs and to 
become effective partners in reducing greenhouse gas emissions. 
Additional Government investment in the right mix of 
educational and technical and financial assistance tools can 
help significantly.
    Again, thank you for this opportunity to speak with you 
this morning, and thank you for your leadership and your 
inclusion of the small business community in this debate.
    [The prepared statement of Mr. Lynch follows:]
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    Chairman Kerry. Thank you very much for your testimony, and 
thanks for what you are doing. We appreciate both.
    Mr. Goldstein.

       STATEMENT OF DR. DAVID B. GOLDSTEIN, CO-DIRECTOR, 
      NATIONAL RESOURCES DEFENSE COUNCIL'S ENERGY PROGRAM

    Dr. Goldstein. Thank you very much, Chairman Kerry, and 
thank you, Ranking Member Snowe, for calling this hearing. I 
think the fact that this is being held elevates the issue and 
is very important to getting the dialog moving in the right 
direction.
    My testimony is going to argue that setting strict limits 
on greenhouse gas emissions can have a large, beneficial effect 
on small business.
    Surprisingly little research on the effect of environmental 
protection policies on economic growth has been done, and that 
is one of the reasons I wrote the book that Senator Snowe so 
graciously referred to, ``Saving Energy, Growing Jobs.'' This 
book examines the scientific evidence that is available and 
supplements it with experiential evidence on how environmental 
protection policy, and particularly greenhouse gas limitations, 
can enhance economic growth. It finds that limiting climate 
change provides an opportunity to increase economic development 
and small business growth because the primary opportunities for 
reducing greenhouse gas are through increased end-use energy 
efficiency. Efficiency cuts costs, as previous speakers have 
mentioned, and creates jobs. Policies to foster efficiency spur 
innovation and competition and produce larger economic 
benefits, particularly for small business.
    There are opportunities everywhere, widespread throughout 
the economy, to cut greenhouse gas emissions in a way that 
increases profit. But because of formidable and nearly 
universal failures of the marketplace, most of these 
opportunities are going unrealized. Pollution reduction 
opportunities with annual rates of return on investment of 30 
percent, even 100 percent and more, are not being exploited in 
the marketplace.
    Government policies have a demonstrated track record of 
overcoming these failures. California has reduced its 
greenhouse gas emissions per capita by about half compared to 
the rest of the country over 30 years through growth-enhancing 
policies that have been pursued by both Republicans and 
Democrats in State leadership.
    There are many examples of such policies, ranging from 
performance-based tax incentives for energy efficiency, such as 
the Snowe-Feinstein-Kerry bill introduced today, to reformed 
regulation for utility companies such that they profit from 
promoting customer energy efficiency. And this is actually a 
very big deal because the utilities are the front lines of 
contact with small business. They have an account with every 
small business in the country, and if they have the right 
incentives in their regulation, they can provide information 
and financial incentives to small business so that they can 
take advantage of these opportunities. And, of course, codes 
and minimum standards set on a performance basis are also 
important.
    A misunderstanding of economic theory suggests that new 
technologies will automatically find their way from invention 
to acceptance by market leaders to universal applicability. But 
in the real world, this does not happen. Government policies of 
both incentives and regulation are needed every step of the way 
to assure that the economically optimal solution happens, and 
that is also the greenest solution.
    The failure of the market to take advantages of 
opportunities to reduce emissions at a profit creates an even 
more powerful barrier to innovation indirectly than it does 
directly, and that is, if an existing product or service that 
saves energy at a profit does not sell, where is the motivation 
to develop the next generation of technologies? However, with 
the right incentives, this will be turned into a virtuous 
circle. Business A saves money by installing green technology. 
This creates a business opportunity for B to sell them the 
technology and competition with all of B's competitors to do it 
at increasingly lower costs and with side benefits that often 
outweigh the value of the energy benefits directly.
    One of the ways to do this that is addressed in the Snowe-
Feinstein-Kerry bill is to deal with existing homes, which 
account for 20 percent of greenhouse gas emissions, which is a 
little bit more than cars. These emissions can be cut 
dramatically while improving comfort and safety. The first step 
in doing so is to provide consumers with the information 
specific to their own home about what the opportunities are.
    There is an emerging industry of small businesses that 
train and certify the technical expertise to do these energy 
ratings. In the European Union, where such ratings are required 
for all buildings, they are predicting tens of thousands of new 
jobs just from the ratings industry alone. Now, of course, when 
people act on the ratings, that produces construction jobs, 
which are also a small business opportunity.
    In conclusion, mandatory limits on greenhouse gas 
emissions, if done right, can enhance market forces and 
increase innovation and competition. What does it mean to do it 
right? What actually works in the market is an issue of data, 
not philosophy or ideology. Promoting a purely market-based 
solution to the climate change problem should be both a 
conservative issue, a moderate issue, and a liberal issue. It 
should attract enthusiastic support from Republicans and 
Democrats alike.
    As I said, greenhouse gas emissions reductions can be 
achieved in a market-based way guided by data, and a critical 
part of this is energy policies that enhance market forces 
where they are weak and rely on them more heavily where they 
are strong. Economic incentives should complement regulations 
to maximize innovation to the benefit of both the environment 
and the economy. The fact that large unexploited opportunities 
for energy efficiency persist in the economy is evidence that 
current markets just are not working well for efficiency. But 
the success of such policies as performance-based incentives 
and regulations shows that these failures can be overcome and 
markets enhanced to allow small companies and new startup 
companies to compete more effectively.
    Thank you very much.
    [The prepared statement of Mr. Goldstein follows:]
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    Chairman Kerry. Thank you very, very much.
    Mr. Hauge.

 STATEMENT OF SCOTT G. HAUGE, VICE CHAIR OF ADVOCACY, NATIONAL 
   SMALL BUSINESS ASSOCIATION, AND PRESIDENT, SMALL BUSINESS 
                           CALIFORNIA

    Mr. Hauge. Thank you, Chairman Kerry, Ranking Member Snowe. 
Thank you for inviting me to speak today on this vital issue of 
climate change and for recognizing the important role that 
small business can and should play in any effort to combat it. 
I would also like to thank Senator Boxer for her leadership and 
her kind comments.
    My name is Scott Hauge. I am the owner of a small business 
in San Francisco. I am the president of Small Business 
California, which is a grass-roots, nonpartisan advocacy group 
in California, as well as vice president of Advocacy for the 
National Small Business Association, the oldest small business 
advocacy organization in the United States.
    While I appear today wearing two hats, the respective 
policy positions are not identical. Regardless of the 
differences, however, the two organizations both believe that 
climate change is real and significant. Small Business 
California and the National Small Business Association also are 
steadfast in their shared belief that if America is serious 
about confronting the specter of global climate change, the 
deficiencies of its national energy policy and the 
environmental, economic, and security threats posed by its oil 
dependence, small business must be comprehensively involved in 
the effort.
    As you said, Senator Kerry, small business is half the 
economy, and undoubtedly we are responsible for a commensurate 
amount of the Nation's energy consumption as well. It is, 
therefore, both unfair and unwise to attempt to address this 
serious issue without the input and collaboration of America's 
small business.
    I would like to begin my comments by addressing the role 
Small Business California played in the passage of AB 32 in 
August of last year, the so-called Global Warming Solutions 
Act. With the passage of AB 32, California became the first 
State in the Nation to limit statewide global warming 
solutions. The first general business association to support AB 
32 was Small Business California.
    Although other business groups lent their support to AB 32 
before Small Business California, these organizations were 
industry-specific or environmentally oriented. This is not to 
diminish their role in its passage. It is simply an 
acknowledgment that the support of SBC went beyond the 
conventional.
    SBC is not an environmental organization. We advocate for 
the interest of 3.1 million small businesses in California. We 
advocated for the passage of AB 32 because we believed it was 
right for the State of California and right for all of small 
business. I note this echoes Senator Snowe's original comments.
    SBC thought the passage of AB 32 would help small 
businesses in three important ways:
    First, AB 32 has the potential to help small firms find 
ways to reduce their energy use. Small businesses waste too 
much energy, not because they have made a conscious business 
decision to do so, but they do not know how to solve the 
problem.
    Second, the effort to combat global warming and curb 
emissions is creating new industries, which is good for nimble 
and innovative small businesses. We are confident that the 
California small businesses will take advantage of these 
opportunities.
    Third, we believe that even those businesses not on the 
cutting edge of innovation will find increased business 
opportunities in the wake of AB 32's passage because they 
provide services that reduce energy use. For example, heating, 
ventilating, and air conditioning contractors all will have 
opportunities in the maintenance area for reduced energy. I am 
proud of the leadership role that Small Business California 
played.
    As I previously outlined, in addition to my role with Small 
Business California, I am the vice chair of Advocacy for the 
National Small Business Association, which recently adopted a 
comprehensive energy policy. The small business owners at NSBA 
believe that the time has come to conclusively address 
America's national energy and environmental policies. Utilizing 
the power of the market, the effort should focus on 
technological innovation, the development of viable and cost-
competitive clean and renewable energy solutions, and an 
increase in energy efficiency. The effort also must avoid 
placing too onerous a burden on America's small businesses, 
which are particularly vulnerable to increased regulation and 
tax obligations and already shoulder a disproportionate share 
of the cost of Federal regulations and paperwork.
    This national endeavor must not only protect small 
businesses, it must also make full use of them. You have heard 
about green gazelles from Byron Kennard and Jim, about the 
potential, and we think those potentials need to be fully 
developed.
    The need to increase the allocation of Federal research and 
development to small businesses is clearly illustrated by the 
Small Business Innovation Research Program, which helps small 
business innovators compete for Federal R&D funds and requires 
11 Federal departments and agencies, including the Department 
of Energy and the Environmental Protection Agency, to reserve a 
portion of their R&D budgets for small businesses. Small 
technology firms with less than 500 employees now employ 54.8 
percent of all scientists and engineers in United States 
industrial research and development. Yet these 6,000 scientists 
and engineers are able to obtain only 4.3 of the extramural 
Government R&D dollars. Congress should buildupon the successes 
of the SBIR program during SBIR's upcoming reauthorization 
process and increase the percentage of agencies' R&D funds 
reserved for small businesses.
    Improving energy efficiency must be a central component of 
any national effort to confront climate change in the country's 
energy dependence, and the ENERGY STAR Small Business Program 
can play a crucial role. Although the ENERGY STAR Small 
Business Program has been highly successful, its full, vast 
promise is yet to be realized as its limited budget has 
hindered its ability to reach the general small business 
community. As was mentioned, only 60 percent of the respondents 
to the NSBA survey were aware of this program. This lack of 
visibility must change. The budget of ENERGY STAR Small 
Business Program must be increased--now, this year, and this 
budget.
    With limited funding, electronic outreach is the most cost-
effective way for the ENERGY STAR Program to get information to 
as many businesses as possible. Online information and 
technical content about ENERGY STAR should be readily available 
on SBA, EPA, and DOE Web sites. The three agencies should 
integrate and promote key ENERGY STAR-provided hotlinks 
directly from their home pages to the ENERGY STAR Small 
Business home pages, as NSBA and Small Business California have 
done.
    Simply making more small businesses aware of the benefits 
of improved energy efficiency is not enough, however. More must 
be done to help small businesses afford and utilize energy-
efficient products and services. Congress should extend 
existing tax incentives for the purchase of ENERGY STAR 
products and establish additional tax incentives for a larger 
range of energy-efficient products and services. On-Bill 
Financing is a proven method of providing improved capital 
access to small businesses seeking improved energy efficiency, 
and Congress should work with States to extend On-Bill 
Financing and other access to capital to small businesses 
across the United States.
    U.S. small businesses are ready to do more than just talk. 
Accordingly, it is my pleasure today to announce that for the 
first time the National Small Business Association, in 
partnership with the ENERGY STAR Small Business Program, will 
soon challenge the 150,000 small businesses we reach to reduce 
their energy use by 10 percent or more as part of the ENERGY 
STAR Challenge. America's small business community is ready to 
do its part.
    Thank you.
    [The prepared statement of Mr. Hauge follows:]
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    Chairman Kerry. That is terrific, Mr. Hauge. Thank you very 
much. That is a welcome announcement, one that might better 
have been made with the Administration standing up with you in 
a joint venture. But we obviously welcome the initiative.
    I wish that Mr. Wehrum were here from the EPA when you 
testified that to sort of hear--partly to hear you, but partly 
also to kind of get the texture of all of you. In fact, I wish 
more people could hear a panel like this and listen to the 
kinds of things that you are all saying. It is really so 
important. And, Mr. Horowitz, I know you are not at the top of 
the hierarchy over there, but I assure you we are going to try 
to help leverage your ability to be able to affect this, 
because you hear this. I mean, you hear what these folks are 
saying, that more could be done, that there is not enough money 
within the current ENERGY STAR Program, that a lot of people 
are being left on the wayside, that there is a big gap that 
they recognize and are trying to fill it.
    How many years have you been working with small business, 
Mr. Hauge?
    Mr. Hauge. Twenty-five years.
    Chairman Kerry. Twenty-five years. And 25 years as a what?
    Mr. Hauge. Well, I am an owner of a small business, but I 
founded the Small Business Network, which is 17 associations 
with 19,000 businesses in San Francisco, and I founded Small 
Business California and have been involved with NSBA for about 
10 years.
    Chairman Kerry. When did you found Small Business 
California?
    Mr. Hauge. Twenty-seven months ago.
    Chairman Kerry. And you did that to augment the ability to 
represent small business interests?
    Mr. Hauge. I felt that there was a need for grass-roots 
small business representation in Sacramento. It was sorely 
lacking.
    Chairman Kerry. Do you feel that way about national efforts 
as well? Do you think that that is true?
    Mr. Hauge. Well, I think the National Small Business 
Association does a good job, obviously, but I do think there 
needs to be a stronger voice for grass-roots small business 
people, a nonpartisan voice for small business people.
    Chairman Kerry. It is very important what you just said, 
``nonpartisan.'' I mean, there is no ideology and no party 
label that brings you here.
    Mr. Hauge. No. We get both sides.
    Chairman Kerry. You are here in order to advocate for small 
business.
    Mr. Hauge. Yes.
    Chairman Kerry. And in advocating for small business, you 
have clearly said today that you believe that recognizing 
global climate change and responding to it is both good for 
small business from a business point of view as well as policy, 
correct?
    Mr. Hauge. Yes.
    Chairman Kerry. What do you say to those who are sitting on 
the sidelines and resisting this right now?
    Mr. Hauge. Well, my initial response, when asked about why 
we supported AB 32 in California, was somewhat similar to what 
you said in your opening comments. We have a choice here. I 
think global warming is pretty much well accepted, so we have a 
choice. Do we plan or do we react in crisis? And I think a much 
smarter way to go is planning, and obviously on this particular 
issue, if we act in crisis, it could be too late.
    Chairman Kerry. Mr. Barber, with respect to the natural 
plastic that you are producing now, you have done this without 
any policy initiative, as you mentioned. You said the absence 
of a policy initiative has probably handicapped it to some 
degree, but you are proceeding forward because you think there 
is ultimately a market there.
    Mr. Barber. Indeed.
    Chairman Kerry. How would a policy initiative or a 
different Government framework have affected you?
    Mr. Barber. The products that we are commercializing now 
have a natural place in the market, but the adoption of those 
products, their pace of adoption, would be affected by the 
policy framework in which people make decisions.
    In general, there are costs of switching all through a 
value chain, and so when an end user, a product manufacturer, 
decides to adopt a new product, there are inherent costs in 
that decision. And so making that decision in the absence of 
some encouragement is just a slower process than it might 
otherwise be. But I think the history with the biofuels is a 
good example to look to.
    Chairman Kerry. How about the capitalization? Would that be 
affected if the policy of the Government said that we are going 
to move in this direction and we are setting a goal and it is 
mandated, et cetera? I assume capital would move more easily to 
those sectors as it did in the late 1970s, early 1980s, when we 
had a huge amount of environmental remediation companies in 
Massachusetts while that Government commitment existed.
    Mr. Barber. Sure, it would. And what it would also do is to 
allow that capital to find and support those opportunities that 
would most efficiently displace a barrel of oil, as opposed to 
being right now channeled only into certain particular avenues 
of displacement.
    Chairman Kerry. Mr. Lynch, in your efforts to reach these 
companies, what difference--would more money make a difference 
from the EPA? Would more focus from SBA make a difference? 
Could there be a joint venture that would help with these 
audits that you think would reduce costs for small business 
more significantly?
    Mr. Lynch. I certainly think additional resources to be 
able to offer in other States, and even be able to expand our 
offerings in Pennsylvania, energy efficiency, onsite technical 
assistance, and one-on-one kind of assistance is really 
important, and the resources would certainly help.
    Chairman Kerry. Do you think we are missing opportunities 
right now?
    Mr. Lynch. Oh, absolutely.
    Chairman Kerry. Is there a cost to missing those 
opportunities?
    Mr. Lynch. I think there is as energy prices go up and the 
National Small Business Association Survey you referenced that 
found that 75 percent of small businesses had been at least 
moderately to significantly impacted by rising energy prices, 
when asked the further question, you know, what are you doing 
in response to these rising costs, how are you coping, 18 
percent said that they had reduced workforce. You know, there 
is a cost. There is a cost in terms of jobs when you do not do 
anything on the energy efficiency side.
    Chairman Kerry. There are also unmeasured lost opportunity 
costs.
    Mr. Lynch. Absolutely.
    Chairman Kerry. Let me cede to Senator Snowe, and then come 
back if we need to.
    Senator Snowe. Thank you, Mr. Chairman.
    Well, it is a pleasure to listen to this panel. It is a 
reaffirmation of the programs and approaches that work, and it 
is a confirmation that we need to do much more. And you all 
have provided collectively and individually some very exciting 
initiatives that I think we ought to attempt to build on, 
frankly.
    Sometimes I often think in the hearings we ought to reverse 
the panels. I have often thought about that, listening to the 
last panel first and then have the Administration officials.
    Chairman Kerry. I have had the same reaction for many years 
of wanting to be able to do that.
    Senator Snowe. I know. But we appreciate, Mr. Horowitz, 
that you are here listening. I think that is very important 
because as Senator Kerry and I have been discussing, we need a 
level of energy and commitment to the programs that now exist 
and what can we do more where small business can play a role. 
And it is not even in this quarter. We have this problem in 
terms of resistance within the Federal bureaucracy toward 
reaching out to small businesses. It has just been an ongoing 
problem, and here is another example. Yes, it has worked well, 
but it is not the level of energy and commitment that I think 
is commensurate with the crisis that we are facing with respect 
to this issue and how it can help to create more jobs since 
small businesses are the job creators in America. It creates 
three-quarters of the net new jobs in America.
    So you would think that the Federal Government would have a 
genuine interest to make sure what can we do to save jobs, and 
ultimately, as one of your testimonies indicated, the way they 
respond to energy cost increases is to cut jobs. So we have to 
help small businesses avert that response. And so, in any 
event, I appreciate what has been mentioned here today.
    Dr. Goldstein, I do again want to welcome you. I know it 
has been a long road, and I have to say to my colleague, 
Chairman Kerry, that Dr. Goldstein really was a great influence 
on these energy tax incentives, paved the way back in 1999 as a 
way in which to create these incentives that can make a 
difference, and then ultimately he shared it with the world 
with his book. And so he has been an invaluable resource.
    Chairman Kerry. I understand you wrote the foreword to that 
book. Is that right?
    Senator Snowe. Yes. See how I am touting it?
    [Laughter.]
    Senator Snowe. But it is a very good one.
    Chairman Kerry. I hear you.
    Senator Snowe. It sure is, and he has provided an 
abundance, I think, of information and data that ultimately 
reinforces some of the issues here and what we are now 
hopefully, being able to address in the Congress.
    When you were mentioning on the ratings, Dr. Goldstein, 
that was interesting, about the certification of those who 
would rate homes for example. And in the new legislation that 
we have introduced today, not only do we extend many of tax 
incentives that were created in the 2005 act, but we have also 
improved upon them. And one is to create a new tax incentive 
for the costs associated with training for the certification 
process. And hopefully that will create not only a new 
industry, but also help to accelerate this process that makes 
it more pervasive across this country.
    Do you think that that will be helpful in that regard?
    Dr. Goldstein. Yes. The concepts in the bill, the tax 
incentives bill, are to focus on the very cutting-edge 
technologies, to take things from the laboratory to enough 
commercial practice that they can be picked up by the world in 
general. And this has been the missing piece of American energy 
policy and, frankly, global energy policy for the last 20 or 30 
years. How do you get the really leading-edge technologies to 
be bigger than five demonstration projects and to get to a 
point where the market can take them seriously, where small 
business can rely on the infrastructure that is built up to 
respond to the tax incentive and then be able to have these 
services available for themselves?
    So in the case of ratings, we are not talking about small 
business as the client. It is homeowners. But small business is 
the provider of the service that would be offered.
    We really have not done much on retrofitting existing homes 
in the last 20 years, but when we have made all-out efforts, we 
have been able to get about 90-percent market share in 3 years. 
So hopefully the tax incentives can spur this creation, again, 
of a virtuous circle of self-financing because the energy 
savings pay for the costs of the loan to do the home retrofit. 
Self-financing retrofits that can make a big impact on 
technology, as well as energy reductions.
    Senator Snowe. I appreciate that.
    Mr. Hauge, you were mentioning the Small Business 
Innovation Research Program, and earlier I meant to ask Mr. 
Horowitz about this program, because I do think it is another 
way of helping with innovative firms. And when you were giving 
the statistics, it is actually amazing how underutilized this 
program is with respect to scientists and researchers. And you 
said small business technology firms with less than 500 
employees now employ 54 percent of all scientists and engineers 
in U.S. industrial R&D, yet these nearly 6,000 scientists and 
engineers are able to obtain only 4.3 percent of the extramural 
research grants.
    So I have included in the last SBA reauthorization, 
incentives for green initiatives under this program, but 
clearly we have to do far more than what we are doing with this 
program if we are going to invite more R&D and those who are 
able to provide it.
    Mr. Hauge. It is particular interesting because most of the 
R&D done in this country is done by small businesses, and yet 
we are getting such a very tiny percentage.
    Senator Snowe. Actually, it is stunning, the extent to 
which this program is underutilized. We did the same thing in 
the defense authorization bill last year with respect to 
Federal contracts and energy-efficient initiatives as well, 
because there is another dimension where we are not small 
businesses have not been given any advantages in that regard. 
So we are also kind of focused on those defense contracts 
specifically.
    But I think this is an excellent idea, and I think we have 
to continue, as Mr. Kennard mentioned as well, to make sure 
that that is passed this year and mandating incentives for 
green initiatives under the ENERGY STAR Program, but also to 
provide tax incentives for those products that are labeled with 
the ENERGY STAR. I think that is an excellent idea, and we 
ought to incorporate that as well.
    Chairman Kerry. A terrific idea, absolutely.
    Senator Snowe. It is. It is a very good idea.
    Chairman Kerry. Also, get the SBIR designation thing, maybe 
the SBA would just move on it and do it.
    Mr. Hauge. Could I make a quick comment?
    Senator Snowe. Yes.
    Mr. Hauge. To kind of back up, because I want to applaud 
NRDC. In California, while we were asked by the Governor to get 
involved in this and we took a role, one of the problems small 
businesses had in the past is dealing with environmental 
groups, and to NRDC's credit, they reached out and worked with 
us, recognizing the role of small business. And I just want to 
thank them for that.
    Dr. Goldstein. I appreciate that, and I think it points out 
an important point that this hearing brings out, and that is, 
if you did a blind reading of the testimony and asked which 
were the business representatives and which were the 
environmentalists, you would have trouble telling the 
difference. That is, I think, an important take-away message 
and something we learned from the AB 32 discussion in 
California, that there are a lot of common interests.
    Chairman Kerry. A very good point. That is a very good 
point.
    Senator Snowe. Well, you know, the whole mandatory cap in 
trade and the fact is that the 10 largest companies in America 
have now rallied around the mandatory cap in trade program. 
They want uniformity across the country with respect to 
regulations in the CO2 reductions, which is sort of 
interesting. See, I think we are at a crossroads here, and I 
think this could become the nexus for doing more in this area, 
because they want the certainty, the uniformity of regulations 
across the country; otherwise, we are going to be dealing with 
a patchwork of regulations. And our States are in the Northeast 
initiative and following California's lead. So I think that if 
there is impetus to do something nationally, which I think 
there is, something gets done, hopefully for that 
bipartisanship that will be essential to that, I think this 
certainly is another dimension that I think would be a real 
catalyst for action.
    Mr. Lynch, you mentioned SBDCs, which is also fascinating 
to me. They have specifically an Energy Assistance Program 
within the SBDC?
    Mr. Lynch. In Pennsylvania.
    Senator Snowe. Yes, in Pennsylvania.
    Mr. Lynch. Yes.
    Senator Snowe. That is interesting. And so that was self-
initiated, I gather.
    Mr. Lynch. Yes. We actually were the beneficiaries of a 
small grant from U.S. EPA's ENERGY STAR Small Business Program 
back in 1997 to try to start testing out the idea of providing 
energy efficiency assistance in the business development 
context. And it was something that we found that there really 
was an interest and there was a need. So we have been able to 
build the program with State funding since that initial seed 
funding.
    Senator Snowe. I am curious if you are the only State that 
does that. I am not sure that we know of another State that has 
a specific energy program within SBDC.
    Mr. Lynch. There are a couple of others that have tried 
working with the utilities. The Nevada SBDC would be another 
example. But in terms of having people on staff who can go out 
and do onsite visits and energy audits, I think Pennsylvania is 
the only State.
    Senator Snowe. Well, I think that is something that we 
ought to look at very carefully, because I think that is also 
an exciting initiative.
    Mr. Lynch. I think it would be a welcome----
    Senator Snowe. It is an ideal way of reaching out to small 
businesses in respect of States, frankly.
    Mr. Lynch. Absolutely.
    Senator Snowe. So I think that is an excellent idea.
    Mr. Barber, you mentioned what you are doing in this whole 
renewable with plastics. Tell me, should we consider any 
competitive research grants in any way that would help, you 
know, for R&D, like in the SBIR Program or something? Would 
that be a benefit?
    Mr. Barber. There is a certainly a role to play for 
competitive research grants here, and the SBIR Program has been 
one way for small businesses to access that, and we have on 
occasion over the years.
    One aspect, though, of the SBIR program specifically is 
that those grants, as typically implemented, tend to be rather 
small. And given the nature of the kind of research that is 
necessary to solve the sort of problems we are talking about 
here, it typically requires considerably greater resources than 
are available in the SBIRs themselves.
    Now, the agencies have certainly offered up other 
opportunities to compete for grants. One thing I would point 
out, though, is that under the Energy Policy Act, there was 
specific provision for the funding of research to develop not 
only bio-based fuels, but also bio-based products. And I think 
the record would show that very little money has actually moved 
to the support of development of bio-based products.
    I think there is a great opportunity to do far, far more 
than has been done here. As I pointed out in my own remarks, 
our first plant is 100 million pounds per year serving a 100-
billion-pound U.S. market, and so there is an enormous 
opportunity to make an impact here on greenhouse gas emissions 
associated with the product side of the ledger as opposed to 
the fuel side of the ledger. Products--plastics and chemicals--
consume almost 10 percent of the petroleum we use here in the 
United States.
    Senator Snowe. Thank you.
    Thank you, Mr. Chairman.
    Chairman Kerry. Well, thank you, Senator Snowe. I 
appreciate your questions, and you and I are in sync on this. 
It is--it is frustrating.
    Senator Snowe. It is scary, isn't it?
    [Laughter.]
    Senator Snowe. It is. It is frustrating.
    Chairman Kerry. It might be scary at some----
    Senator Snowe. At some point.
    Chairman Kerry. But it is pretty positive.
    Again, I emphasize that there is such a diversity here 
sitting in front of us. Mr. Kennard, did you also have the same 
kind of experience Mr. Hauge did? How did you come to this?
    Mr. Kennard. I was an organizer of Earth Day. I have been 
in the game as long as it was a game. But in 1973, I read a 
book called ``Small Is Beautiful,'' written by E.F. Schumacher, 
who became my friend and collaborator. And so I have been 
advocating scale as a primary concern ever since. Look at the 
size. Look at the size.
    New things first appear small. They do not first appear 
big. So if you are interested in the process by which the 
economy is renewed, new technology is born, then you want to 
look at the small and see, well, what happens there, go back to 
the source. And that has been a message I have been preaching 
for a long time.
    But the policymakers and many of the advocacy groups are 
devoted to the work of large centralized institutions, so this 
has been an uphill struggle. What has happened in California, 
AB 32, which is most interesting to me, was the new voices of 
business that were raised in the debate changed the debate and 
made victory possible. You had clean-tech companies and the 
green small businesses mobilized politically for the first 
time, and so the debate was no longer jobs and economy versus 
the environment. The debate was between a clean-tech future 
versus the industrial status quo. And we won.
    That should be a lesson that people in Washington, DC, 
heed.
    Chairman Kerry. With respect to the comments I made 
earlier, is there any disagreement among any of you about the 
ability of the Government to show greater leadership on this 
issue at this point in time? Well, let me ask the question 
differently. I would like an answer from each of you. Do you 
believe that greater leadership is necessary now in order to 
respond to this issue?
    Mr. Kennard.
    Mr. Kennard. The best policy results when you have 
entrepreneurial endeavors working in sync with Government 
policy. You need large and small working together in balance, 
and then you get a beautiful result.
    Chairman Kerry. Mr. Barber.
    Mr. Barber. Indeed, inherently the kind of issue we are 
talking about here is one in which the costs are external to 
the normal pricing mechanisms in the market. And so the market 
mechanisms by themselves will not lead to a response to these 
kind of problems, and that----
    Chairman Kerry. We have to set up----
    Mr. Barber. That becomes the role of----
    Chairman Kerry. Encourage the market or direct it in a 
sense. Entice it.
    Mr. Barber. Indeed, that becomes the role of policy.
    Chairman Kerry. Mr. Lynch.
    Mr. Lynch. I also agree that more on the national level 
needs to be done to address this significant issue, and 
ignoring the contributions that small businesses can make, you 
know, just does not make any sense anymore. We need to really 
involve the small business community.
    Chairman Kerry. Mr. Goldstein.
    Dr. Goldstein. Chairman Kerry, we desperately need stronger 
leadership at the national level on this issue. The role of 
Government is apparent because you can just look at what 
different States have done. If Government did not matter, you 
would see parallel paths among all 50 States. But what you see 
is States like your own, like California, like New York, where 
they have made efforts on energy efficiency, the results are 
visibly different.
    Chairman Kerry. Mr. Hauge.
    Mr. Hauge. Well, I would echo that. In California, there 
was leadership, and you saw the resulting legislation that came 
out of it. I think that would be very helpful to have that same 
kind of leadership in Washington.
    Chairman Kerry. I might add that California, I will remind 
people, is the sixth-largest economy in the world. And if 
California can move and embrace that, given the businesses that 
are there and the recognition, there is no excuse for a whole 
bunch of other places to not be able to move similarly.
    This has been very, very helpful. There is a lot on the 
record. We are going to leave the record open for 2 weeks. 
There will be, I am confident, some questions submitted so that 
we can build that record. And I am very grateful to all of you. 
Your full testimony will be placed in the record as if 
delivered in full. All of it is very, very helpful to us, and 
we are deeply appreciative for you, many of you coming back, 
having testified previously at one time or another.
    But thank you for your leadership. Thank you for what you 
are doing, and we need to get this job done. So let's go do it.
    Thank you. Thank you, Senator Snowe.
    [Whereupon, at 12:20 p.m., the Committee was adjourned.]
                      APPENDIX MATERIAL SUBMITTED
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Response by Daniel Horowitz to Written Questions from Senator Lieberman

    Question 1. I am unclear how the Environmental Protection 
Agency and the Small Business Administration work together to 
promote the ENERGY STAR program. Please describe exactly how 
the collaboration works. Do your respective agencies reach out 
to small businesses, or do you rely upon small businesses to 
contact you for assistance?
    Answer. EPA and SBA staff have held a number of meetings 
and conference calls to comply with the requirements of EPAct 
2005. As a result of SBA and EPA's collaboration, EPA now 
provides a full web page of SBA finance links which is 
available at http://www.energystar.gov/
index.cfm?c=small_business.sb_index.

    Question 2. What is the Small Business Administration's 
plan for reaching out to small businesses about the ENERGY STAR 
program? Does the SBA have an action plan? What is it?
    Answer. The information within the Energy Star brochures 
and supporting material is being distributed to each of the 
SBA's field offices and those of our affiliates, These well-
produced materials are the best source of information available 
and should be readily welcomed by anyone inquiring at any SBA 
location or that of our affiliates.

    Question 3. I looked on the SBA's Web site to find 
information about green initiatives for small businesses, and 
could not find any links or content about ENERGY STAR or any 
other energy saving program. Can you explain why such 
information is not prominently available on the SBA's Web site? 
Do you intend to fix this omission?
    Answer. SBA is in the process of updating it's Web site at 
www.sba.gov. When the upcoming update is complete, the program 
will be accessible through SBA's Web site.
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    Response by James Barber to Written Questions from Senator Bond

    Question 1. Your statement says that you have test plants 
of switchgrass producing measurable levels of natural plastic 
within its leaves and stems. The natural plastic that is 
produced within the leaves and stems will be extracted for use 
in everyday products, and the remaining biomass will be used 
for producing cellulosic ethanol or other biofuels, and will 
result in significant cellulosic ethanol cost reduction. Is 
this technology commercial yet?
    Answer. No, the technology for this plant-based system is 
not commercial yet. We have successfully demonstrated 
feasibility, and are working on ramping up development efforts 
to reach field trials.

    Ouestion 2. How soon do you think that you can achieve that 
objective?
    Answer. With adequate funding, field trials can be reached 
in 4 years (2011).

    Ouestion 3. Is there anything that we can do to help you 
with that R&D?
    Answer. Metabolix is seeking to partner with the Government 
to adequately fund the project. Absent additional support; it 
will take significantly longer to reach field trials (8-10 
years). Although the project directly addresses national goals, 
no programs have been funded at the Departments of Energy or 
Agriculture to support this type pf project.
    The Energy Policy Act of 2005, Sec. 932, funded the biomass 
program to include research and development for bioproducts. 
Your help to convince and or require the Department of Energy 
or the Department of Agriculture to fund this R&D would be most 
helpful.
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