[Senate Hearing 110-541]
[From the U.S. Government Printing Office]
S. Hrg. 110-541
FUTURE ENERGY NEEDS
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
RECEIVE TESTIMONY ON THE CHALLENGES TO MEETING FUTURE ENERGY NEEDS AND
TO DEVELOPING THE TECHNOLOGIES FOR MEETING INCREASED GLOBAL ENERGY
DEMAND IN THE CONTEXT OF THE NEED TO ADDRESS GLOBAL CLIMATE CHANGE
JUNE 25, 2008
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
KEN SALAZAR, Colorado JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
C O N T E N T S
Bhatia, Karan, Vice President and Senior Counsel, General
Electric Company............................................... 40
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Domenici, Hon. Pete V., U.S. Senator From New Mexico............. 5
Hirst, Neil, Director, Energy Technology and R&D, International
Energy Agency, Paris, France................................... 8
Kopp, Raymond J., Senior Fellow and Director, Climate Policy
Program, Resources For The Future,............................. 54
Orbach, Raymond L., Under Secretary for Science, Department of
Wilson, Tom, Senior Program Manager, Global Climate Change
Research, Electric Power Research Institute, Palo Alto, CA..... 48
Responses to additional questions................................ 63
FUTURE ENERGY NEEDS
Wednesday, June 25, 2008
Committee on Energy and Natural Resources,
The committee met, pursuant to notice, at 9:36 a.m. in room
SD-366, Senate Dirksen Office Building, Hon. Jeff Bingaman,
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
The Chairman. OK. Thank you all for coming. We have a
hearing on the challenges of future energy needs that we should
be pursuing in order to address our energy needs and the issue
of global climate change as well.
Nearly 20 years ago, James Hanson was before this same
committee testifying that global temperatures had risen beyond
the natural range of variability and since then, in the last 20
years, I think it's now clear to everybody that we should have
been seriously pursuing development of low carbon energy
We've done some work in this area but at least from my
perspective, we have failed to sustain the support that was
needed for many promising technologies that could have
decreased our dependence on fossil fuels.
Today, we're at a crossroads. We have high fuel prices. We
have growing energy demand. We have global greenhouse gas
emissions on a trajectory to unacceptable levels. It's clear
that we need new policies and strategies here in the United
States and we have an opportunity, I believe, to develop the
technologies that will break the world's dependence on fossil
I hope that today's testimony will begin a serious effort
at developing a robust long-term energy strategy that will
ensure not only our energy security, but our economic and
climate security in the future.
Two weeks ago, a little over 2 weeks ago, the International
Energy Agency put out a comprehensive and provocative report
dealing with the mix of technologies that we need to develop
and deploy in order to meet our energy needs and to reduce
greenhouse gas emissions.
We've invited Dr. Hirst from the IEA to talk about the
findings contained in that report. In my view, it's an
excellent and sobering report which I would encourage everyone
to read. I'm in the process of reading it. It's not light
bedtime reading, but it's quite comprehensive.
Transforming our economy from one that's based on fossil
fuels to one that's based on clean energy will require
significant investment in the range of $45 trillion, I think,
between now and 2050 is the estimate. It will require that we
develop and deploy a whole range of clean technologies now in
development, from carbon capture and storage to concentrated
solar power, and will require that all nations, particularly
the nations in the developing worlds, participate wholly with
the United States and other OECD countries in making these
The final message of the report is that the goal of a 50
percent reduction in greenhouse gases by 2050 is attainable but
this is an extremely ambitious and difficult goal to attain.
Our task here is to apply the report's findings, to chart a
path forward. I think there are lessons here for us to learn in
the United States. It is to ensure that the policies are in
place that will take us down the necessary technology
development pathways toward dealing with these challenges.
We need to encourage private sector investment obviously.
We have a chance here in the Congress with our energy tax
incentives to do that. Second, we need to prioritize and
sustain support for promising energy technologies over the long
Today, our funding for energy technology is about half what
it was 25 years ago. The policies----
Senator Domenici. What was that statement?
The Chairman. I said today, our funding for energy
technology is only half what it was 25 years ago.
Policies must be developed which capture the extensive
research and development knowledge that's generated in the
United States and ensure that the technologies that are spun
out of that knowledge are manufactured and deployed here and we
create domestic jobs and wealth in the process.
Lastly, we need to engage other nations in developing these
technologies and I hope we can see a way clear to do that.
I look forward to the testimony this morning. I thank all
witnesses for being here.
Before introducing our first panel, let me defer to Senator
Domenici for his statement.
[The prepared statements of Senators Salazar and Barrasso
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Mr. Chairman and Ranking Member Domenici, thank you for holding
this hearing on the challenges we face as a planet and as a nation in
developing and deploying the energy technologies necessary to satisfy
growing global energy demands in the face of global warming.
The energy crisis that we currently face is dominating the minds of
many citizens. While many are feeling the pain of high gas prices that
is only the most visible symptom of a much deeper and more systemic set
of problems. The price of energy is reflected in every aspect of our
economy--the price of our food, the cost of the goods and services that
we purchase, the cost of travel, manufacturing, mining, water and
sewage treatment, etc. etc.. But the price of energy is also embedded
in the billions of defense dollars we spend each year to monitor our
global oil supply chain, and the billions of dollars we send every day
to hostile oil-backed regimes. And the potential future costs of global
climate change may be too vast to comprehend. This week the
intelligence community published its first classified report on the
national security implications of global warming. Clearly the
environmental, economic, and national security threats that our current
energy portfolio poses are deeply sobering.
Yet, in the face of these threats our nation still struggles with
an energy policy for the 20th century instead of embarking boldly on an
energy policy for the 21st century. Last week the President stated in
the Rose Garden at the White House that our country desperately needs
to maximize domestic production of fossil fuels. I was struck by the
fact that in the seven and a half years since this Administration took
office--since 9-11 and the rise of oil-funded Islamic terrorists, since
the IPCC's conclusive reports heralding the dire threat of global
warming, and since our current energy crisis--the President's
disposition towards energy has not changed one iota. Simply put, this
country has suffered a colossal lack of leadership, insight, and
dedication to tackling our essential energy challenges.
I am raising these broader issues in the context of today's hearing
because I truly believe we are at a watershed moment in our nation's
energy policy. We can either continue to clutch the fossil fuel
dependencies that we have nourished over many decades or we can seek to
forge a new energy economy founded on the exploitation of clean, low-
carbon energy technologies. If we turn away from our current energy
crisis to the old embrace of fossil energy, we will ignore our myriad
The topic of today's hearing is thus the essential piece to the
puzzle. We must do everything we can to capture the environmental,
economic, and national security benefits of low-carbon technologies for
the long term. This quest is three-fold. First, we need to invest in
projects that can provide proven energy gains and savings today and in
the near term. Investing in renewable energy is one of the surest paths
to reducing U.S. carbon emissions while creating good-paying jobs in
these globally-expanding industries. Passing the energy tax package
before the Senate is a critically important step in this direction.
Second, we need innovative public-private partnerships to
accomplish the early commercial-scale demonstration projects that will
prove the viability of carbon capture and sequestration, geothermal
energy, and advanced coal technologies, and other capital-intensive
technologies. Third, we need to embrace a ``Manhattan Project''-
inspired intensive R&D approach to developing the transformative energy
technologies that will contribute new and unforeseen long-term
solutions to our energy and environmental security challenges.
The IEA report that Dr. Hirst will present today makes clear that
time is already running short. Achieving global carbon emissions
reduction goals may require an unprecedented level of cooperation
between developed and developing nations to ensure low-carbon energy
technologies become cost-effective and widespread as quickly as
possible. The high standard of living we enjoy in the U.S. is
intimately related to our longstanding dedication to promoting and
capitalizing on technological innovation. I believe that our innovation
infrastructure holds the key to solving our energy crisis, and I look
forward to discussing the policies that are needed to ensure the global
transformation to a low-carbon energy future with this distinguished
Thank you, Mr. Chairman.
Prepared Statement of Hon. John Barrasso, U.S. Senator From Wyoming
Thank you Mr. Chairman.
We need to develop the technologies we need to meet our future
This hearing today is reviewing that issue in the context of the
addressing global climate change.
Energy demand is going up across the globe.
China and India are emerging economic powers with burgeoning middle
classes. Their people are demanding more energy now than ever before.
They need the power to provide running water, lighted streets, and
heated homes in the heartland of their countries. They also need the
power to provide the manufacturing base that is driving their economy.
In the United States, our energy demand is growing too. We need
energy to power our homes and to power our economy.
Unfortunately for us, the price of energy is going through the
It costs $4.00 a gallon to fill up your gas tank. That impacts moms
and dads trying to get to work, pick up the groceries, and drop their
kids off to school.
It costs hundreds more to pay heating and air conditioning bills.
Oil prices have soared to $135 dollars a barrel. Natural gas prices
have nearly doubled since last year.
It costs hundreds more to buy groceries each month for average
Americans, with the price of fuel impacting the cost of producing food
on our farms.
Many industries across the United States are looking to lower their
energy costs by shipping jobs overseas.
Airlines are canceling flights because they can't afford the price
of jet fuel.
The current status quo is unacceptable. Americans are demanding
more energy for now and for their children's futures.
Now let us consider the status quo in the context of global climate
The best way to address climate change is to have cleaner, more
We need to lower energy prices for all Americans. Any solution to
climate change that does not do that is not worth pursuing.
Proposals that suggest a cap and trade approach to solve climate
change do just the opposite, they dramatically raise energy prices.
The very premise of these approaches is to make carbon intensive
fossil fuels so expensive that energy companies and consumers will make
a radical shift to non-fossil fuel sources.
The bottom line is energy prices are already high, and Americans
are demanding action. We do not need to make them higher for Americans
to get the point.
They know we need abundant, affordable, clean energy to power our
economy and to address climate change.
Then the question is how to get there. For that, I believe we need
to use all our energy resources--clean coal, natural gas, wind, solar,
We need to develop all of these resources using new technologies
that make them cleaner and yes, more affordable.
My home State of Wyoming is blessed with vast deposits of coal.
Coal is perhaps America's most abundant resource.
It would make no sense to not include coal in our energy future.
Reduction of greenhouse gas emissions from coal-fired power plants
will be possible through first capturing the carbon dioxide emissions
and then sequestering it underground.
Both will take time and money.
In order to achieve this challenge the federal government and
private industry must partner in funding research and technological
Timing is critical.
America needs to make a serious and substantial investment in
research and developing commercial technology.
In order to achieve energy security and a clean environment, the
federal government must demonstrate its commitment with targeted, up-
front financial support.
We must show leadership, not merely dictate unreasonable and
unworkable policies and hope for the best.
What does this mean? . . . If Congress mandates reduced emissions,
it is incumbent upon us to also provide the policies to allow our
economy to succeed.
Proven, commercially available, cost-effective technologies must be
developed with respect to carbon capture and sequestration.
These technologies must be efficient, effective, and allow America
to continue to compete globally.
It for this reason that I filed an amendment during the climate
change debate on the floor to provide $50 billion in revenue from
$40 billion for the demonstration and deployment for carbon
capture technologies and;
$10 billion for large-scale geologic carbon storage
This is an enormous investment, but we must take aggressive steps.
This is one approach that will help meet the global demand for
energy. But it's going to take an investment in a number of energy
methods to develop affordable, commercially viable clean energy
Federal funding will also be needed to get the first new modern
nuclear power plants online.
With any major new technology, the first few commercial scale
models are always the most expensive. With the help of the federal
government, we can help lower the costs of the initial plants, and
therefore make future plant construction much more cost effective.
Lower construction costs means lower energy costs for constituents.
With the development of new technologies, the Untied States can be
the leader in the development of the next generation of coal and
nuclear power plants.
Such technology can also help spur the development of cleaner
energy plants across the globe and help address climate change.
I thank the Chairman and look forward to the testimony.
STATEMENT OF SENATOR PETE V. DOMENICI, U.S. SENATOR FROM NEW
Senator Domenici. Thank you very much, Mr. Chairman, fellow
Senators. I'm glad to see so many senators here.
There's no question that the issue before us is a major
one, of great significance to our children and our
First I want to ask, Mr. Chairman, would you put my
prepared statement in the record?
The Chairman. Glad to do that.
Senator Domenici. I just want to make sure that you have
read the Albuquerque Journal from this past Sunday. If you
haven't, I want to talk with this committee and you in
particular about the Journal's editorial, which I believe most
succinctly states the problem that our country has at this
point in our history.
When we have two great problems confronting America at the
same time. One is carbon dioxide emissions, which we want to
try to control because we have the long-term problem of global
warming. We have a second problem that whether we like it or
not, there's a growing energy dependence, which I have chosen
to say causes me to have the greatest fear for our country's
future that I have ever, ever had.
I was quite pleased to see this editorial which is titled,
``It takes black gold to get to green future.'' Now you might
say, is that some kind of wacky right wing newspaper? Not at
all. It's a right down the middle newspaper that has rather
good editorial policies that are realistic. The conclusion in
this Journal editorial is as follows, and let me read you a few
things that are better than I can do.
``With all due respect to Al Gore,'' it starts, ``there is
an urgent new inconvenient truth.'' Continuing, ``Unless
Congress acts quickly to expand domestic oil supplies, the
Nation could face economic destruction long before it sees the
environmental fall-out of global warming.''
Now I know a lot of people don't want to hear that
statement, but I believe that is the way it is, and that's
true, and that's why I'm fearful for our country because, as
this editorial starts, ``we have a new inconvenient truth.''
Remember, Al Gore had inconvenient truth. We have a new one,
and that is we are going to have economic ruin if we do not
find a way to diminish our dependence upon crude oil imports.
It goes on to say that ``for decades it has been easy for
most Americans to dodge the truth about our foreign oil
dependence and just keep driving--but $4 a gallon gas has
finally snapped the trance. Reality is sobering: The United
States has put its economic survival in the hands of unstable
foreign powers and volatile commodities markets. At any time, a
major disruption in foreign supply could bring the enormous
transportation-based U.S. economy to a standstill. The U.S.
trade deficit jumped to its worst level in more than a year in
April, driven primarily by oil imports. Not only does this
empower anti-American regimes, it siphons off money consumers
could be spending or saving or investing.''
Then the best statement in this editorial, it quotes me.
Senator Domenici. It says next, `` `I have never been more
frightened for America's future than I am right now,' Senator
Pete Domenici said last week, urging Congress to remove the ban
on offshore drilling and open the Arctic National Wildlife
Refuge to oil companies.''
Now I can go on and I will tell you, Mr. Chairman, that you
are not left out. The editorial proceeds and says to you, ``As
chairman of the Senate Energy Committee, Bingaman will be a key
player on both fronts of the effort to chip away at America's
dangerous level of dependence on foreign oil.''
What I want to say is, my staff and I have reviewed the IEA
report. If we followed the path for technology that this report
might suggest, and we go out 50 years and we have
CO2 under control, the problem is that at that
point, they say we will still be dependent on crude oil to the
same degree that we are today.
Now I guarantee you that that cannot happen. It won't work.
If we had the wherewithal to follow that approach, we would be
bankrupt before we got to the new technology for CO2
capturing 50 years from now.
So I believe I'm going to put this editorial in the record,
if you'd let me, Mr. Chairman.
The Chairman. No, I'm glad to have that in the record.
editorials.--it takes black gold to get to green future
Sunday, June 22, 2008.
With all due respect to Al Gore, there is an urgent new
``inconvenient truth.'' Unless Congress acts quickly to expand domestic
oil supplies, the nation could face economic destruction long before it
sees the environmental fallout of global warming.
For decades it has been easy for most Americans to dodge the truth
about our foreign oil dependence and just keep driving--but $4-a-gallon
gas has finally snapped the trance. Reality is sobering: The United
States has put its economic survival in the hands of unstable foreign
powers and volatile commodities markets. At any time, a major
disruption in foreign supply could bring the enormous, transportation-
based U.S. economy to a standstill.
The U.S. trade deficit jumped to its worst level in more than a
year in April, driven primarily by oil imports. Not only does this
empower anti-American regimes, it siphons off money consumers could be
spending or saving or investing.
``I have never been more frightened for America's future than I am,
right now,'' Sen. Pete Domenici said last week, urging Congress to
remove the ban on offshore drilling and open the Arctic National
Wildlife Refuge to oil companies.
President Bush--in a speech laced with counterproductive partisan
rhetoric--called on Congress last week to open up several domestic oil,
fields that have been off-limits since the 1980s. ANWR could yield 27
billion barrels; the Atlantic and Pacific coasts contain 17 billion
barrels, and the Gulf Coast could produce another 72 billion. There is
strong evidence this can be done in an environmentally responsible way.
Democratic presidential candidate Barack Obama has so far ignored
polls that show a majority of Americans rallying around calls for
domestic drilling. He continues to argue that the answer to foreign oil
dependence lies in wind, solar and nuclear technologies. The
inconvenient truth, however, is that climate-friendly technologies will
take decades to develop We look forward to the day when we can all plug
our green cars into an electrical grid powered by something other than
Until then, we're going to have keep buying gas. Even if we achieve
a dramatic 20 percent reduction in oil consumption, some experts
estimate that oil will still cost $200 a barrel by 2012. So here's
another ' inconvenient truth: New drilling isn't about returning to
cheap gas. It's about economic survival.
The United States needs to organize a Manhattan Project for
alternative energy, addressing the threats from both global warming and
foreign dependence. We need to vigorously pursue those, along with a
crash course in conservation.
These are monumental undertakings, and to succeed they must
transcend party lines or individual egos. Sen. Jeff Bingaman was on-
target Wednesday when he faulted President Bush for injecting
``election-year politics'' into the Rose Garden speech. As chairman of
the Senate energy committee, Bingaman will be a key player on both
fronts of the effort to chip away at America's dangerous level of
dependence on foreign oil.
The way ahead is not easy. Fuel costs are impacting food and retail
prices. Truckers are parking their rigs. School bus operators and
closing up shop. Airlines are laying off thousands and perhaps are
heading for prices that will put air travel out of reach for the middle
class. The idea of the family flying to Disneyland, for example, would
be out of the question. Even a family vacation by car could look like a
Americans have never backed down from a challenge, however. Once we
know the truth, no matter how inconvenient it may be, we like to get to
work. In this case, the work involves a drilling rig, and the self-
Confidence to use it.
Senator Domenici. I will say that I believe we have not
faced up to this issue the way this editorial says. For
instance, if we are going to apply a new technology, Dr.
Orbach, or even an old technology that the Germans used in the
Second World War, to turn coal to liquid diesel fuel, we would
immediately have those who are worried about CO2 say
no, no, no, that increases global warming.
This editorial says you better not throw that approach away
because you are substituting a barrel of domestic produced
diesel fuel for a barrel of foreign oil and you are minimizing
the destruction path for the American economy. You cannot throw
that approach away in fairness to your country's future and
your grandchildren. You have to follow the bridge to the
future, which is reducing crude oil demands of America.
I thank you, and I hope the hearing goes on well. Thank
you, Mr. Chairman.
[The prepared statement of Senator Domenici follows:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator
From New Mexico
Thank you, Mr. Chairman, for calling this hearing to discuss the
challenge posed by the need to provide the energy that fuels our
economy, while at the same time addressing global greenhouse gas
emissions. This hearing gets to the very heart of the difficult debates
that Congress has conducted over the past several weeks since it forces
us to again consider the short-term actions we must take to build a
bridge to a secure, sustainable energy future. While it is simple to
agree that we must develop a sustainable economy that produces
significantly less greenhouse gas emissions 40 or 50 years from now, it
is difficult to agree on what options we should pursue to achieve that
goal and at what cost.
The Energy Technologies Perspective 2008 report recently published
by the International Energy Agency shows the complex and multifaceted
nature of the problem before us. After considering the projections
provided in this report, though, I am impressed that really the
challenge is three fold. Not only must we address our growing future
energy needs while reducing our carbon emissions, but first, and I
believe most importantly, we must address the immediate danger in which
our continued dependence on foreign sources of energy places us. I have
made no secret of the deep-seated fear I have regarding the future of
our Nation if we continue to export our wealth abroad in exchange for
This is an issue that we must address, no matter what course we
pursue with regard to carbon emissions. Despite the assertions of many
who support reducing our carbon emissions, the Energy Technology
Perspectives 2008 report makes it clear that reducing carbon emissions,
by itself, will not significantly impact our dependence on foreign oil.
Even under the most aggressive CO2 cutting scenarios
described in this report, oil is projected to remain a substantial
portion of the world energy mix by 2050. While world oil use is
projected to decrease under these aggressive scenarios it is still
projected to remain at 60-70 million barrels a day by 2050 compared to
approximately 80 million barrels a day in 2005. What is most notable in
these projections is that the amount of oil obtained from OPEC sources
is projected to be the same in 2050 as it is today. It is the oil
obtained from other sources, including our own domestic production,
that is projected to decline.
I have said on many occasions in recent weeks that I believe
domestic oil production is a bridge to the future. This is an example
of why I make that statement. Are we to accept a future in which we
continue to send billions of dollars overseas to purchase oil, or will
we build a bridge with increased domestic oil production to a future of
new, cleaner technologies? I suggest that our best interests are served
by decreasing our dependence on foreign sources of oil--and we should
There are many ``inconvenient truths'' that we must contend with
today. First, the effort required to reduce our domestic CO2
emissions in the decades to come will be extremely difficult and if not
done correctly will be very costly. Second, no matter how successful we
are in limiting our carbon emissions, oil will remain an essential part
of our domestic energy mix. Third, the immense wealth we expend to
purchase oil from foreign sources increases our trade deficit and
leaves us economically disadvantaged and strategically vulnerable.
Mr. Chairman, I believe we must keep these truths in mind as we
listen to today's testimony. Certainly we must aggressively address the
issue of global greenhouse gas emissions but we must do so while
keeping the economic well being of our country in the forefront of our
thinking. I believe this can be achieved by taking advantage of the
many technological alternatives we will hear about today while ensuring
the maximum utilization of all of our domestic sources of energy.
Again, thank you Mr. Chairman, for convening this hearing. I look
forward to hearing the testimony of the witnesses that have joined us
The Chairman. Thank you very much. Let me introduce our
first panel. We have two witnesses. Dr. Neil Hirst, who is
Director of Energy Technology and Research and Development at
the International Energy Agency in Paris, and also Dr. Ray
Orbach, who is the Director of the Office of Science in our
Department of Energy, and is a fairly frequent witness before
We're going to deviate from the normal procedure here and
give these witnesses, particularly Dr. Hirst, additional time
to go through some of the findings of his report since this
report, I think, is a very major addition to our understanding
and so why don't you take about 20 minutes, if you would, and
summarize the main points of your report. Then, Dr. Orbach, you
can take any time that you think is appropriate and then after
both of you have finished your testimony, we'll go ahead with
So Dr. Hirst, thanks for coming.
STATEMENT OF NEIL HIRST, DIRECTOR, ENERGY TECHNOLOGY AND R&D,
INTERNATIONAL ENERGY AGENCY, PARIS, FRANCE
Mr. Hirst. Mr. Chairman, Senator Domenici, members of the
committee, thank you for the opportunity to appear before you
today to discuss the International Energy Agency's recent
publication Energy Technology Perspectives 2008. It's a great
honor to be here.
I've submitted a written statement which includes a copy of
the full executive summary of this report and I ask that that
be included in the record. Thank you.
The Chairman. We will be glad to include that.
Mr. Hirst. As requested by the committee staff, I've put
together a set of approximately 20 charts and graphs that
summarize key findings and I hope that's accessible to members
in my remarks this morning. I will refer to these charts and
The Chairman. Yes. I think everyone has a copy of those at
Mr. Hirst. Some of the most important of them will also
appear on our stand over here.
At the Gleneagles Summit in 2005, the leaders of the G8
addressed the issues of climate change, clean energy and
sustainable development, and they asked us at the International
Energy Agency to provide scenarios and strategies for a more
sustainable energy future and they also asked us specifically
to report back in time for this year's summit on the Japanese
chairmanship in Hokkaido in July.
Energy Technology Perspectives 2008 is a response to that
request. It shows how we can use energy technology to achieve
really deep cuts in global CO2 emissions and also in
the medium and longer term, how we can ease the pressures on
international energy markets.
The work is based on extensive analytical and modeling work
at the IEA and draws on the work of many experts, including
U.S. experts, who participate in our International Technology
In Energy Technology Perspectives, we examine what it would
take to bring global CO2 emissions back to their
current levels in 2050, referred to as the ``ACT'' scenarios,
but we also examine, and this for the first time, what would be
required for the world to halve the level of current emissions
in the same period.
According to the Intergovernmental Panel on Climate Change,
we need cuts at least this deep in order to contain global
warming within the range of two to three degrees Centigrade,
and the book has some important messages.
First of all, in our business as usual case, only about
one-third of global CO2 emissions in 2050 come from
the developed OECD world and the other two-thirds are from the
developing countries. So even if all the emissions of OECD
countries were eliminated, we still would not meet the target
of a 50 percent reduction. A global effort is required.
In order to bring CO2 emissions back to current
levels in 2050, all options are required at a cost of up to $50
per ton of CO2 saved. To do this, we need to achieve
very large improvements in energy efficiency across all sectors
of the energy economy, industry, buildings, transport,
appliances, and, in addition, we need to substantially
decarbonize power generation.
But this may not be enough. If we are to halve emissions in
2050, all options up to a cost of $200 per ton of
CO2 will be needed and even this is based on fairly
optimistic assumptions for technology development, and the less
optimistic assumptions, we might need options costing up to
$500 per ton of CO2, and as you've already said, Mr.
Chairman, we have estimated the incremental costs, incremental
investment needed in technology deployment between now and 2050
at $45 trillion. That is just over 1 percent of average global
GDP during the period.
It's important to understand a large part of this
investment is on the demand side. A lot of this investment is
consumer investment in low carbon homes, appliances and
But as I will explain later, a large part of the sum, this
amount of additional investment, will subsequently be recovered
as a result of the lower fuel costs that will be incurred
subsequently. So there is a return.
Indeed, the energy security benefits, this is relevant to
what Senator Domenici was saying, the energy security benefits
of such a development would also be substantial. By 2050, oil
demand--excuse me--would be 27 percent below the level of 2005.
This is the first time the IEA has been able to project
scenarios in which global oil demand would actually decline to
Nevertheless, massive investment in remaining oil reserves
will still be needed to make up the shortfall as low reserve
oil provinces are exhausted.
There should be no doubt meeting the target of a 50 percent
cut in CO2 emissions represents a formidable
challenge. We would require immediate policy action and
technology transition on an unprecedented scale. It would
essentially require a new global technology revolution which
would transform the way we produce and use energy.
Now let me turn to the slides that you have. The first
slide simply says who we are at the International Energy
Agency. The second slide I've referred to already, the
Gleneagles Summit, and I want to go directly to the fourth
slide, figure 4 in your chart. It's displayed here. Thank you
This slide summarizes the technologies that we need. The
upper boundary of the colored area shows the business as usual
case for carbon emissions, rising from 28 giga tons of
CO2 today in 2005 on the left-hand side to 62 giga
tons in 2050.
That is actually a slightly greater level of emissions than
we projected back in 2006 when we last did that. That partly
reflects robust growth in the developing world but it also
partly reflects indications of a switch toward coal in the
energy sector which is, of course, a more CO2-
The lower boundary of the colored section shows what we
call our BLUE case. The pathway that we would need to follow to
reduce CO2 emissions to half their count level in
2050. What I want you to note is that the amount of the
reduction that we need to achieve against baseline in 2050 is
actually greater than total global CO2 emissions
today. It's a huge amount and you see the breakdown there. I
will refer to that very briefly.
The biggest element, I don't think anyone will be
surprised, is energy efficiency. Thirty-six percent of those
savings come from energy efficiency. Then we have carbon
capture and storage. Power generation also for industry.
Renewables play a big part, 21 percent, and nuclear power plays
a big part. The contribution of nuclear power is rather
underestimated here because this is against the baseline and
there's quite a big contribution for nuclear in the baseline
Now if I can go on to figure 5, the next one, this is the
same chart, but instead of technology, it just shows it by
power sector. It shows the sector of the economy. It just shows
that all sectors of the economy have to contribute, power,
transport, industry, buildings, in that order, but all very big
I'd like to go on to the next figure, figure 6. Thank you
very much. We also have it here on the stand.
The purpose of figure 6 is to make more real the investment
required in power generation. This is investment to decarbonize
power generation. If you look at this chart for each row, on
the left-hand side, the red section is the current level of
investment in giga watts per year. So you can see in the very
top there's very little investment at the moment in coal-fired
carbon capture and storage. This is actual plant. This isn't
R&D, this is actual plant.
Then the blue section, the dark blue section shows what we
would need to get back to current levels of CO2
emissions, the ACT case, and the pale blue is the incremental
investment needed for the 50 percent reduction case which we
call the BLUE case.
I just highlight that for nuclear power, instead of showing
current investment where the amount of capacity added in recent
years is very low, we've instead given peak investment which
took place in the 1980s when the development of nuclear power
was at its height.
What you see is a measure of the task. On average, we would
need to build 35 coal plants with CCS every year between now
and 2050. We would need to build 32 nuclear plants, one giga
watt nuclear plants, every year between now and 2050, and we
would need to install 14,000 onshore wind turbines every year
between now and 2050.
The point I want to emphasize, there isn't a choice here.
We need to do all of these if we're to achieve that target.
When I say that, for individual countries, there is a degree of
choice as to the balance of these technologies that they use.
If I could go on now to figure 7 which also we have here?
This chart shows how the marginal costs of CO2
abatement will increase as we seek to make deeper and deeper
cuts in global CO2 emissions and there's a slight
health warning. This is a great simplification, but I think
it's helpful to understand the key trends.
What you see on the X axis is reductions, cuts in
CO2 emissions against our base case in 2050, and on
the Y axis, you see the marginal costs, dollars per ton of
CO2. So if you start toward the left-hand side of
the chart, you see that there is a lot of potential for carbon
abatement through energy efficiency measures which actually
have either zero or negative economic cost. The barrier here is
not economics. The barrier here is institutional, regulatory,
perhaps even cultural.
Then we have an intermediate section where we're talking
about decarbonizing power generation. You can see there that
the power options have a positive cost but on the optimistic
side of this chart, and I should explain that the blue area is
the range of uncertainty that we see in the costs. So taking
the lower side of the blue area, we see options for
decarbonizing power that could be in the range of up to $50 per
ton of CO2 saved and that simply takes you to what
we're calling the ACT case, getting back to current levels of
CO2 emissions in 2050.
But beyond that, if you're seeking to halve CO2
emissions, the options become more challenging and more costly.
You have to achieve really deep cuts, going beyond conventional
energy efficiency in industry and in transport, and so, for
instance, you might have to have carbon capture and storage for
the most heavily emitting industries and you will have to have
alternative transport fuels. I'll come on to that, but this is
the area where you're introducing electric vehicles and/or
hydrogen- powered vehicles as well as increasing biofuels.
Could I go on to figure 8? This chart shows what happens in
the various scenarios to the demand for key fuels, and I want
you to focus, first of all, please, on the oil columns. It
takes a little explaining, this chart.
If you look at the oil columns, the left-hand blue column
is current or 2005 global oil demand and there's a space
because the other columns are forecasts or projections. Next
column shows where we would be on our baseline projection in
Now I have to say that opinion varies on whether that level
of oil supply can be provided in 2050. What is certain is that
it's the case where there would be a lot of tensions and
pressures on international energy markets.
Then we have the ACT case in which oil demand is very
significantly less than in our baseline case but still
significantly above the level today, and then, finally, we have
the BLUE case where we're illustrating that oil demand is 27
percent below the current level of oil demand, actual reduction
in oil demand.
Can we move on now to figure 9? Because an important
feature of this study is that we have identified 17 key
technologies or probably it would be fair to say areas of
technology that are needed for the BLUE case. They're listed
here on figure 9, and we have developed roadmaps. I think it
would be fairer to say we have made a first attempt at roadmaps
as to how these technologies need to be deployed, developed and
deployed globally in order to achieve the results that we're
looking for in the BLUE case.
Can we go on to the next figure, figure 10? This is simply
an example, slightly condensed example, of the roadmaps. This
is for carbon capture and storage. It shows in very general
terms what we think the global deployment might be, gives some
of the key milestones for research and development and
deployment of this technology. The colored section shows in
time the different cases, how soon it needs to move beyond the
research stage to demonstration, then to deployment, and then
to full commercialization.
I just give this one example because there is headline
conclusion in this case which is that globally, we need to
commit to 20 full-scale carbon capture and storage
demonstration projects with coal by 2010. That's a very tough
target. We think it is necessary on the pathway to a low carbon
world and it's a target that has been specifically endorsed by
the G8, G8 Energy Ministers at their meeting in Amori, Japan,
just a couple of weeks ago. We have similar roadmaps for
Now since time is running a little short, I'd like to go
direct to figure 13. Figure 13 illustrates government research
and development spending in OECD countries and it's just to
highlight that, and I have to say in presenting this, of
course, the U.S. is a world leader, arguably the world leader,
in the research and development of many of these key energy
technologies and by far the majority of this spending is taking
place in the United States and in Japan.
However, the global trends have been unfavorable and while
we don't set extremely concrete targets for global R&D spending
because we think you have to look at it from the point of view
of the technologies and what they need rather than coming up
with sort of headline numbers, it's clear that this trend has
to be reversed if we're going to bring in the advanced
technologies that we will need by 2050.
If I could go to figure 14, this shows the mix of power
generation in 2050 in our BLUE case. Now what I would like to
highlight here, if you look at the right-hand column, it shows
the total mix, and you see, for instance, that 46 percent of
global power is coming from renewables. If you break that down,
hydro, wind and solar, solar photovoltaics and solar collecting
are the biggest players in that. Other technologies taken
together make up the equivalent of the final quarter.
This chart also gives a more realistic impression of the
role of nuclear. Nuclear in this chart accounts for about
something like a quarter of global power generation, so it does
play big part, but so does coal with carbon capture and storage
and gas with carbon capture and storage.
I'd now like to move on, if I still have a moment or two,
to figure 16. A characteristic of the BLUE case, if you are
looking for really deep cuts in global CO2
emissions, as I said before, you have to begin to address
fundamental technology change in vehicle fuels, and we have to
be honest and say we don't know at this stage which will be the
dominant technologies in 2050.
It may be that it will be fuel cell vehicles. It may be
electric vehicles. It may be a combination of the two. We also
believe that biofuels will play a significant part, although
they are restrained, will always be restrained by resource, and
so we develop a range of--we offer in this study a range of
cases, of which I suppose our central case is the MAP case
which is the third column across from the left, and here we're
seeing a combination.
This is the market share of new vehicles in 2050 and there
are no conventional internal combustion light--this is light
vehicles in this case. What we're seeing there is a combination
of hybrids, of plug-in hybrids, of electric vehicles, and fuel
These technologies need a lot more research and development
before they can be regarded as genuinely commercial
technologies. We believe that even with that development, they
will be relatively high cost in terms of dollars per ton of
CO2 saved, but if we want very deep cuts in
CO2, it is vital to press ahead with those
Now I'm coming toward the end of this. If we could look for
a moment at figure 19, this just illustrates possible trends in
biofuels, and a major finding of this analysis is that if we're
going for these very deep cuts in carbon emissions, it is not
enough simply to address light vehicles, cars. We also have to
address aviation and shipping and there, it's very difficult to
find alternative technologies, but biodiesel represents a
viable option for or will represent, we believe, a viable
option for aircraft fuel and for shipping and therefore that
needs to be a priority for the biofuels that are available in
the longer term.
So that is why we see a trend toward biofuels, particularly
biodiesel, converted, using advanced technology from non-food
elements of biomaterials, straws and waste materials. We also
see a very significant role for cellulosic ethanol as a fuel
for light vehicles, for ethanol from cane.
We think that over a period, ethanol from grain, which is
significantly less efficient from those conversions, will need
to be phased out.
The Chairman. Perhaps you could go ahead and conclude,
summarize your final comments, so that we can get to Dr.
Mr. Hirst. Thank you very much. That basically brings my
remarks to a conclusion.
We're facing an urgent challenge in the energy sector. We
need a global solution. We've spelled out how we could
stabilize emissions, how we could reduce emissions to 50
percent of their current levels, and what is required is a
global technology revolution, a transformation of the way in
which we produce and use energy.
Thank you very much.
[The prepared statement of Mr. Hirsch follows:]
Statement of Neil Hirst, Director, Energy Technology and R&D
International Energy Agency, Paris, France
Mr. Chairman, ranking member Domenici, members of the committee,
thank you for the opportunity to appear before you today to discuss the
International Energy Agency's (IEA) recent publication: Energy
Technology Perspectives 2008.
I have included at the end of this statement a copy of the full
Executive Summary of the Report, as well as a number of additional
charts and graphs that summarize the key points of the report.*
* Document and graphs have been retained in committee files.
At the Gleneagles Summit in 2005, the leaders of the G8 addressed
the issues of climate change, clean energy, and sustainable
development. They asked the IEA to provide ``scenarios and strategies''
for a more sustainable energy future, and they asked us to report back
to this year's Hokkaido summit.
The Energy Technology Perspectives 2008 (ETP) study is a response
to that request. The report shows how we can use energy technology to
achieve really deep cuts in global CO2 emissions and also, in the
medium and longer term, ease the pressures on energy markets. We
describe the technologies required, how they could be deployed across
the globe, and their costs.
The analysis is based on extensive analytical and modelling work at
the IEA, and draws on the work of the many experts who participate in
our international energy technology network. This study concerns CO2
emissions from the energy sector only--including energy use in the
transportation and industrial sectors. This accounts for approximately
60% of all greenhouse gasses. Analysis of other sources, such as
forestry and agriculture, is needed for a complete view of the
potential impact on climate change. This is not the IEA's area of
expertise and is not addressed in the ETP study.
At present, global CO2 emissions are increasing
steadily, and in our business as usual case (the ``Baseline'') this
trend is accelerated by a rising share of coal in energy markets. By
2050, global CO2 emissions could be 130% higher than they
In Energy Technology Perspectives ``ACT'' scenarios we examine, as
we have done before, what it would take to bring global CO2
emissions back to their current levels by 2050. But we also examine,
for the first time, what would be required for the world to halve the
emissions from the energy sector, relative to 2005, by 2050. According
to the Intergovernmental Panel on Climate Change, cuts at least this
deep are required to contain global warming within the range of 2-3
degrees C. This 50% reduction case is referred to as the ``Blue''
scenario in ETP.
A global energy technology revolution is necessary to meet the Blue
target, it is both necessary and achievable; but it will be a tough
challenge. ETP 2008 demonstrates the extent of the task.
To stabilize global emissions in 2050 at today's levels we need to
achieve very large improvements in energy efficiency across all sectors
of the energy economy. In addition, we need to substantially
decarbonize power generation.
The IEA has set out specific measures that we believe governments
should take to enhance energy efficiency--and these represent the most
cost-effective measures to reduce CO2 emissions and as well
as energy demand.
Decarbonising the power generation sector can be achieved through
renewables, nuclear power, and the capture and storage of
CO2 emissions from coal plants. There is a degree of choice,
for each country, as to the balance of these technologies to adopt.
These measures--improving energy efficiency and decarbonizing power
generation could enable us to bring emissions back to current levels by
2050. We would need to use all abatement options with a cost of up to
$50 per tonne of CO2, and the total additional investment
required is 7% higher than in the Baseline at $17 trillion between now
and 2050. But as the IPCC has highlighted, this effort may not be
Emissions Reduction by 50 Percent--Blue
The additional technologies required to halve current emissions--
the ``Blue'' scenario--include buildings with near zero emissions and
the more extensive capture and storage of emissions from industry. They
also include the development of technologies for alternative transport
fuels, such as electric or hydrogen fuel cell vehicles.
Emissions halving implies that all options up to a cost of $200 per
tonne of CO2 will be needed. And even this is based on a set
of optimistic assumptions for technology development. Under less
optimistic assumptions we might need to include options costing up to
$500 per tonne. The total additional investment needs for research,
development and deployment (RD&D) and commercial investments between
now and 2050 are 18% higher than the Baseline and amount to $ 45
trillion, or 1.1% of average annual GDP over the period. That's about
the GDP of Canada each year.
Much more research and development is required before some of these
technologies are ready for the market. Governments, as well as
industry, will need to raise their efforts in this area--we estimate
the cost of additional research, development and demonstration to be $
The capacity additions in the power sector are a measure for the
energy technology revolution that is needed. Investments in
CO2-free power generation need to rise from around 50 GW per
year at present to around 330 GW per year in the period 2035 to 2050.
Annual hydro capacity additions must be maintained at the level of
today. Nuclear capacity additions must rise to 1.5 times their
historical high. Wind capacity additions must increase five-fold, Solar
PV by twenty-fold. New industries for CO2 capture and
storage, concentrating solar power and enhanced geothermal power
generation systems must be developed. On average 35 coal-fired power
plants with CCS must be installed per year between now and 2050. Given
the challenges of establishing a single CCS project today, this is
really an energy technology revolution. More importantly, it is not a
matter of choosing one of these technology options, but doing all at
The transport sector plays a key role and accounts for 78% of the
oil savings. Half of these energy savings are accounted for by fuel
efficiency measures, the other half by alternative fuels. In the Blue
Map scenario, advanced biofuels, battery electric vehicles and hydrogen
fuel cell vehicles each play a role of similar importance. These are
the most expensive CO2 saving options and account for the
majority of the incremental investment required in the Blue case, they
also are some of the most uncertain technology options.
Supply security benefits
So far I have focused on the CO2 challenge, although
there are other benefits from reduced local pollution from power
plants, factories, and vehicles. But of course we have another urgent
energy policy challenge-that of supply security and spiralling energy
costs. ETP's Baseline scenario would require a massive expansion of
fossil fuel production, to an extent that can be questioned. For
example, as shown in Chart 4, oil production would have to rise from
today's level of around 85 million barrel per day to around 135 million
barrels a day in 2050 just to meet rising demand levels. Oil industry
experts are divided if such an expansion is feasible.
In contrast, oil demand in Blue Map in 2050 is 27% below the level
of 2005. Such a development would certainly ease the supply challenge
and could be expected to have a significant impact on price. However,
even this level of production will require massive investments in new
supply in the coming years and decades as oil fields are depleted.
Importantly, total fossil fuel demand in the Blue Map scenario in 2050
is the same as today. So in any case fossil fuels will remain a key
pillar of our energy supply in the coming decades.
Of course the big investments in energy efficiency, renewables, and
nuclear power also lead to fuel cost reductions. At a 3% ``social''
discount rate, these savings would not quite be sufficient to recover
the incremental investment costs.
Roadmaps: The Transition
The study includes 17 energy technology roadmaps which explain how
to get from today's situation to the target situation for 2050. We
think that the development of internationally agreed technology
transition paths and the use of indicators to monitor the progress on
these paths will be crucial. The IEA and its technology collaboration
network are ready to support this change.
Government R&D spending has nearly halved in the last 25 years, to
a level of USD 10 billion per year. Two countries, the United States
and Japan, account for 80% of this investment. Energy R&D accounts for
a mere 3% in total R&D. Clearly this trend is incompatible with energy
policy ambitions and the need for an energy technology revolution. A
very significant rise of research, development and deployment (RD&D)
spending is needed, both in the public and in the private sector, and
this change is urgent.
In conclusion, deep emission cuts are technically achievable.
However a global energy revolution is needed where all countries and
all sectors must participate. This change is urgent. Financing needs,
capital stock turnover and the rate of technology development means
that there is no time to lose. The IEA and its technology network stand
ready to support such a transition to a brighter more sustainable
This concludes my statement, and I would be happy to answer any
questions the committee members may have.
The Chairman. Thank you very much, and again I compliment
you on the report. I think it's an excellent contribution to
our understanding of the issue.
Dr. Orbach, we're anxious to hear your perspective on all
STATEMENT OF RAYMOND L. ORBACH, UNDER SECRETARY FOR SCIENCE,
DEPARTMENT OF ENERGY
Mr. Orbach. Thank you, Chairman Bingaman, Ranking Member
Domenici, and members of the committee.
I just would like to say that it's been a privilege to
testify a number of times before this committee and now your
invitation is very kind to talk on this very serious issue.
As you've heard from Dr. Hirst, and as you read in his
report, and I'm going to quote, ``It is essential to enhance
the science base and its links with technology,'' That is the
role that the Department of Energy has been pursuing; and, in
my position as Under Secretary for Science, which this
committee created, it's been my responsibility to pursue that
We believe that with the investment that this committee has
supported in basic research, one can imagine the following
consequences. We believe that we can construct solar
photovoltaics that exceed thermodynamic efficiency limits.
We believe that we can, by borrowing nature's design for
capturing sunlight, photosynthesis, directly convert sunlight
into chemical fuels. We believe that solar and wind can provide
30 percent of the electricity consumed in the United States.
We believe that a sustainable carbon neutral biofuels
economy, capable of meeting a third of United States
transportation fuel needs, without competing with fuel, feed
and export demands, is feasible.
We believe we can close the nuclear fuel cycle, developing
abundant fossil-free power with zero greenhouse gas emissions
and minimal environmental impact. We believe that we can
achieve safe and environmentally benign underground
sequestration of CO2 for millennia, and finally,
through fusion energy, we believe that we can provide abundant
energy without damaging our earthly environment by bringing the
power of the sun and the stars to earth.
To inform this mission, the Office of Science has held over
15 workshops during this administration, covering such topics
as carbon capture and sequestration. Here we are working with
fossil energy to develop seven new sites for sequestration with
science-based studies of what happens to the CO2,
where it goes, and what happens with underground chemistry.
We are working on electrical energy storage to improve the
quality of batteries. We are working on bioenergy, with major
new developments coming from our bioenergy research centers.
We're talking about using ionic liquids to separate lignins and
the hemicellulose and cellulose. We're using microbes to
produce gasoline and diesel. We are looking at the way nature
provides fuel to see if we can follow suit.
This committee understands that incremental improvements in
our current technologies are not enough to meet the challenge
of increased energy consumption, constrained by concern for the
environment. We will need transformational breakthroughs in
basic science, breakthroughs that provide the foundation for
truly disruptive technologies that fundamentally change the
rules of the game, and I believe we are succeeding because of
This concludes my testimony. I would be pleased to answer
any questions you may have.
[The prepared statement of Mr. Orbach follows:]
Statement of Raymond L. Orbach, Under Secretary for Science,
Department of Energy
Mr. Chairman, Ranking Member Domenici, and Members of the
Committee. Thank you for the opportunity to speak before you today
about the technologies we need to meet increasing global energy demand,
and to do so without adding unduly to atmospheric greenhouse gases. As
you have heard from Dr. Neil Hirst, and as described in the
International Energy Agency's report Energy Technology Perspectives
2008, the challenge we have before us is enormous.
Incremental improvements in our current technologies will not be
enough to meet this challenge. We will need transformational
breakthroughs in basic science to provide the foundation for truly
disruptive technologies that will fundamentally change the rules of the
game. This applies to renewables, nuclear, and CO2 capture
and storage as well as to promising technologies like fusion that are
The good news today is that we may be on the threshold of
scientific and technological breakthroughs in the 21st century every
bit as profound as those which transformed human life forever in the
19th. The scientific world today is changing and advancing with almost
dizzying speed. Every year our capability to direct and control matter
down to the molecular, atomic, and quantum levels is growing. This
increasing ability to control the fundamental, nanoscale building
blocks of both biological and non-biological matter holds out the
promise of eventually forever transforming the way we generate, store,
transmit, and use energy.
One of the chief missions of the DOE Office of Science has been to
nurture and accelerate the development of this new fundamental science
and these cutting-edge capabilities--capabilities that may transform
our energy economy and ultimately provide answers to the great
challenges we face in both energy and the environment.
Over the course of this decade, our Office of Basic Energy Sciences
in the DOE Office of Science has held a dozen major ``Basic Research
Needs'' workshops to assess basic research needs for energy
technologies. These workshops have brought together scientific and
technical experts from universities, national laboratories, industry,
and government, from both here and abroad, to identify scientific
roadblocks and determine research priorities. Each workshop has issued
a major report. Together these reports define a bold and comprehensive
Time and again we see the same themes: new materials design,
development, and fabrication, especially materials that perform well
under extreme conditions; control of photon, electron, spin, phonon,
and ion transport in materials; science at the nanoscale and
femtosecond; designer catalysts; structure-function relationships; bio-
materials and bio-interfaces, and so on.
These are challenging and difficult scientific problems. That is
why we refer to the problems we tackle in the Basic Energy Sciences
program as ``Grand Challenges.'' Late last year our Basic Energy
Sciences Advisory Committee issued a report titled Directing Matter and
Energy: Five Challenges for Science and the Imagination. The report
summarized the work of the Basic Research Needs workshops by setting
forth five grand challenges, as follows.
Controlling materials processes at the level of quantum
behavior of electrons
Atom-and energy-efficient synthesis of new forms of matter
with tailored properties
Emergent properties from complex correlations of atomic and
Man-made nanoscale objects with capabilities rivaling those
of living things
Controlling matter very far from equilibrium
These grand challenges span the Office of Science portfolio and
define the tasks before us today and in the years ahead. I'd like to
talk in a little more detail about our grand challenges in the field of
energy--not just the barriers we face, but the opportunities before us.
These opportunities provide more than hope for our energy future; they
provide sustenance for us to imagine such things as:
Solar photovoltaics exceeding thermodynamic efficiency
Direct conversion of sunlight to chemical fuels
A sustainable, carbon-neutral biofuels economy that meets
over 30 percent of U.S. transportation fuel needs without
competing with food, feed, or export demands
A closed nuclear fuel cycle and abundant fossil-free power
with zero greenhouse gas emissions
Safe and environmentally benign underground storage of
CO2 for millenia
Bringing the power of the sun and the stars to Earth with
While as Under Secretary for Science I am responsible for advising
on the entire R&D portfolio, my remarks today in response to your
questions are focused on the Department's basic research portfolio
aimed at transforming our energy future.
Solar Energy. Let's begin with solar energy. More energy from
sunlight strikes the Earth in one hour than all the energy consumed by
human activity on the planet in one year. This is abundant, carbon-free
energy. Yet solar power today provides less than one-tenth of one
percent of the world's primary energy. There are big challenges here,
but also big opportunities. Silicon-based single crystal solar cells
have reached efficiencies of 18 percent. Triple-junction cells with
Fresnel lens concentrator technology are approaching efficiencies of 40
Imagine if we could develop solar photovoltaics that exceed
thermodynamic efficiency limits.
Imagine, even more boldly, if we could borrow nature's design for
capturing sunlight--photosynthesis--and directly convert sunlight into
There are three ways we can use solar energy--by converting it to
electricity, fuels, or heat. We are particularly interested in the
first two: electricity and fuels. In both cases, there are three steps:
capture, conversion, and storage. The challenge is reducing the costs
and increasing the capacity for conversion of sunlight into electricity
and fuels which can be stored and transported.
The Office of Science is pursing basic research in solar
utilization to try to reach these goals. We are investigating new
concepts for capturing energy from sunlight while avoiding
thermalization, or heating, of carriers, such as multiple-exciton
generation from a single photon. We are exploring ``plastic'' solar
cells from molecular, polymeric, or nanoparticle-based structures that
can provide flexible, inexpensive, conformal electricity systems. And
we are trying to better understand defect formation in photovoltaic
materials and self-repair mechanisms in photosynthesis, with the aim of
developing defect tolerance and active self-repair in solar energy
conversion devices, which would extend their lives.
We are also delving into artificial photosynthesis. We are working
on the design and development of light-harvesting, photoconversion, and
catalytic modules--bio-inspired molecular assemblies--capable of self-
ordering and self-assembling into integrated functional units that can
lead to an efficient artificial photosynthetic system for solar fuels.
The photosynthetic reaction centers of plants are remarkably efficient,
but we still have a lot to learn about their detailed reaction
mechanisms. We are also just beginning to discover the number and
variety of light-harvesting molecules in Nature. For instance, Craig
Venter's analysis of seawater samples taken from the Sargasso Sea
identified 782 new rhodopsin-like photoreceptors, where only 70 were
known before. (Rhodopsin is the photoreceptor that captures light in
the mammalian eye.) There is great potential in this area for direct
production of fuels from sunlight.
Electrical Energy Storage. Next, we turn to the related and vital
area of electrical energy storage. To make an intermittent energy
source such as solar effective for baseload electrical supply, major
breakthroughs are required in electrical energy storage. This is a
much-overlooked requirement for a range of renewable energy sources,
including wind energy.
Electrical energy storage devices with substantially higher energy
and power densities and faster charge times would also make all-
electric and plug-in hybrid vehicles much more market attractive.
Imagine solar and wind providing over 30 percent of electricity
consumed in the United States, and imagine roads where the number of
all-electric/plug-in hybrid vehicles exceeds those running on gasoline.
Electrical energy storage devices such as batteries store energy in
chemical reactants capable of generating charge. Storage devices like
electrochemical capacitors store energy directly as charge. Fundamental
gaps exist in understanding the atomic-and molecular-level processes
that govern operation, performance limitations, and failure of these
devices. Knowledge gained from basic research in the chemical and
materials sciences is needed to surmount the significant challenges in
creating radically improved electrical energy storage devices--whether
improvements in weight, lifetime, and charge time and capacity for
transportation use, or improvements that let us better store and use
large but transient energy sources like solar and wind.
In pursuit of this knowledge, the Office of Science is supporting
research in areas such as nanostructured electrodes with tailored
architectures. For example, fundamental studies of the electronic
conductivity of lithium iron phosphate (LiFePO4) led to the discovery
of doping-induced conductivity increases of eight orders of magnitude.
This discovery led to the DOE
Office of Energy Efficiency and Renewable Energy's funding
development of the high power-density Lithium-ion batteries that power
electric vehicles such as the Chevy Volt. The Office of Science is also
looking at conversion reactions for batteries that yield more than one
electron per redox center. New research on conversion reactions is
looking at advanced materials that yield up to six electrons per redox
center, allowing a large increase in power density. We are also
investing in research on ultracapacitors, which complement battery
power by allowing rapid charge and discharge cycles.
Bioenergy. A third area where we believe fundamental scientific
breakthroughs can change the energy equation is biofuels. The
development of biofuels--especially biofuels made from plant fiber, or
lignocellulose, such as cellulosic ethanol and other fuels--represents
a major scientific opportunity that can strengthen U.S. energy security
while protecting the global environment.
Imagine a sustainable, carbon-neutral biofuels economy capable of
meeting a third of U.S. transportation fuel needs without competing
with fuel, feed, and export demands.
The capability to more efficiently tap into the energy contained in
plant fiber or cellulose would give us the means to produce biofuels on
a scale sufficient to create a nationwide biofuels economy.
Unfortunately, our current means of converting cellulose, or plant
fiber, to fuel is neither efficient nor cost effective. This is a tough
problem. Plant fiber has evolved over the millennia to be extremely
resistant to breakdown by biological or natural forces. The plant cell
walls contain a substance called lignin that is tightly woven with the
cellulose, forming a kind of ``flexible concrete'' which gives the
plant its incredible strength. This ``recalcitrance'' of plant fiber
forms the major cost barrier to making biofuels from plant fiber
Nature, however, has evolved solutions to this problem. Termites,
for example, are frighteningly efficient at converting cellulose and
hemicellulose to fuel. They eat wood at an alarming rate, and convert
the cellulose into energy. Using a systems biology approach to develop
an understanding of the principles underlying the structure and
functional design of living systems, the basic research supported by
the Office of Science is focused on developing the capabilities to
model, predict, and engineer optimized enzymes, microorganisms, and
plants for bioenergy and environmental applications. A series of
workshops led by the DOE Office of Biological and Environmental
Research identified the basic research needs for such an approach.
The emerging tools of systems biology are being used to help
overcome current obstacles to bioprocessing cellulosic feedstocks to
ethanol and other biofuels--research tools such as metagenomics,
synthetic biology, high-throughput screening, advanced imaging, and
high-end computational modeling. In 2007, we launched three new DOE
Bioenergy Research Centers, each funded at $25 million per year for
five years, to pursue these research directions--the BioEnergy Science
Center, led by Oak Ridge National Laboratory; the Great Lakes Bioenergy
Research Center, led by the University of Wisconsin-Madison in
partnership with Michigan State University; and the Joint BioEnergy
Institute, led by Lawrence Berkeley National Laboratory. We believe
that these Centers can crack Nature's code for cost-effective biofuel
The DOE Bioenergy Research Centers are focusing mainly on the use
of enzymes and microbes to break down the lignocellulose or plant fiber
into energy-rich sugars and synthesize these sugars into fuels. Ethanol
is one focus, though the Joint BioEnergy Institute led by Lawrence
Berkeley National Laboratory is also re-engineering microbes to produce
hydrocarbon fuels--green gasoline, diesel, and even jet fuel. Of
course, mankind has known how to make ethanol by fermentation for some
time. Lignocellulose presents special challenges. First, the
degradation process--the process of breaking through recalcitrance--
typically produces chemicals that inhibit or endanger the microbes used
for fermentation. Second, typically you get two types of sugar
monomers, one type having 6 carbon atoms and the other type having 5
carbon atoms. The 5-carbon sugars are more difficult to ferment.
But once we've figured out how to degrade the lignocellulose and
recover sugar monomers from it, there's another route to making fuel:
chemical catalysis. The Great Lakes Bioenergy Research Center is
devoting some resources to this alternative path. The major funder of
this catalytic work within the Office of Science is our Office of Basic
Energy Sciences, which has stewardship within the federal government
Catalysis offers several advantages over fermentation. First,
researchers have shown that catalytic processes can be used to turn
sugar into hydrocarbon fuels, fuels more like gasoline. Ethanol has
certain disadvantages relative to gasoline. Ethanol has only about 70
percent of the energy content per gallon as gasoline. Ethanol is also
water-soluble, which introduces problems of corrosion when shipped by
pipeline or during storage. Also, today's vehicle engines need to be
adapted for use with high concentration ethanol blends, such as E85;
flex fuel vehicles can also carry a cost premium over ordinary gas-
Catalysis may be able to yield biofuels that are essentially
indistinguishable from gasoline, conventional diesel, even jet fuel. We
may also be able to produce such hydrocarbon fuels via fermentation, by
re-engineering microbes to produce them, and our DOE Bioenergy Research
Centers are working on this. If we could produce gasoline from plant
fiber--so-called ``green gasoline''--we could move to a greener fuel
supply without any major infrastructure changes. Our new Energy
Frontier Research Centers initiative, which I'll talk about in a
moment, will provide new funding opportunities for this important work
in catalytic production of biofuels.
Nuclear Energy. Today, nuclear energy provides about 20 percent of
the nation's electricity, with no greenhouse gas emissions or
pollution. Nuclear energy could provide much more carbon-free,
pollution-free energy. A key challenge to industry growth, however, is
the need to solve the problem of spent nuclear fuel. Current ``once
through'' nuclear reactor policy leaves spent fuel rods with long-term
heat loads and radioactive decay, and a significant fission fuel
Imagine if we could close the fuel cycle; imagine abundant fossil-
free electric power with zero greenhouse gas emissions.
Advances in basic science leading to new recycling technologies
could in fact provide a major reduction in spent fuel--recycling the
spent fuel for further use in fission reactors and reducing storage
requirements by up to 90 percent. Performance of materials and chemical
processes under extreme conditions is a limiting factor in all areas of
advanced nuclear energy systems. The challenge is to understand and
control chemical and physical phenomena in complex systems from
femtoseconds to millennia, at temperatures to 1,000 degrees Celsius,
and for radiation doses leading to hundreds of displacements per atom.
In 2006 and 2007, the Office of Science held three workshops
designed to identify the basic science needed for the development of
advanced nuclear energy systems and to close the fuel cycle. In
addition to the Basic Research Needs workshops, two additional
workshops were held in the area of nuclear physics and advanced
scientific computing. Research areas identified in those workshops
include: materials and chemistry under extreme conditions; actinide
chemistry; separations science; nuclear theory; developing and scaling
next-generation multiscale and multiphysics codes; and computational
modeling and simulation of reactor and recycling systems.
Hydrogen. Most observers agree that there will be no ``silver
bullet'' to solve our energy dilemmas. As we attempt to meet the energy
and environmental needs of the 21st Century, we will increasingly rely
on a portfolio of different energy sources. Hydrogen as fuel is a
somewhat longer-term possibility, but it is a very attractive one.
Hydrogen has the highest energy content per unit of weight of any
known fuel. Fuel cells powered by hydrogen are more than twice as
efficient as internal combustion engines and produce only water. When
hydrogen is burned in an engine, emissions are significantly lower than
those from other alternative fuel technologies. Hydrogen can be
produced from abundant domestic resources including natural gas, coal
with sequestration, biomass, and even water, using nuclear energy or
renewable energy sources such as solar wind, and geothermal.
Imagine an emissions-free energy future.
Combined with other technologies such as carbon capture and
storage, renewable energy, and fusion energy, hydrogen fuel cells could
make an emissions-free energy future possible. But this is an area that
clearly requires some very fundamental research, in addition to applied
research. Of particular importance is the need to understand the atomic
and molecular processes that occur at the interface of hydrogen with
materials in order to develop new materials suitable for use in a
hydrogen economy. New materials are needed for membranes, catalysts,
and fuel cell assemblies that perform at much higher levels, at much
lower cost, and with much longer lifetimes. The breakthroughs needed to
sustain a hydrogen economy will require revolutionary, not
evolutionary, advances. Discovery of new materials, new chemical
processes, and new synthesis techniques that leapfrog technical
barriers is required. This kind of progress can be achieved only with
highly innovative, basic research.
The Department through the Office of Science supports such research
in five technical focus areas: novel materials for hydrogen storage;
membranes for separation, purification, and ion transport; design of
catalysts at the nanoscale; solar hydrogen production; and bio-inspired
materials and processes. Funding within the Office of Basic Energy
Sciences has enabled major advances in our fundamental understanding of
hydrogen-matter interactions. Recent key accomplishments include:
discovering atomic scale mechanisms in the reversible hydrogen storage
within complex metal hydrides; developing novel micro-and nano-
patterning syntheses for a new generation of fuel cell membranes with
superior power output; theoretically predicting and experimentally
validating new architectures and compositions of catalyst alloys for
efficient hydrogen production from fossil fuels or biomass;
synthesizing mixed metal oxide photoelectrodes for solar hydrogen
production; and providing new insights into the development of oxygen-
tolerant enzymes for bio-inspired hydrogen production. Such fundamental
science accomplishments have significantly advanced our understanding
of the behavior of hydrogen at the atomic level. They have also
contributed significantly to shortening the knowledge gap between
present-day hydrogen technology and commercial viability.
Carbon Capture and Sequestration. Coal provides almost 56 percent
of baseload electricity produced in the U.S. and will likely continue
to be a significant energy source globally over the coming decades.
Carbon dioxide emissions from coal-fired power plants can be reduced by
improving conversion efficiency and by co-firing coal with biomass, but
the largest emission reduction potential will likely come from
employing CO2 capture and storage (CCS).
Imagine safe and environmentally benign underground sequestration
of CO2 for millenia.
While DOE's Office of Fossil Energy, in conjunction with many
academic and industry partners, has worked to ensure that many
components of CCS have been validated at an industrial scale and will
soon conduct large scale field tests to determine the potential for the
long-term safe storage of CO2, full scale deployment of CCS
requires an intensive science-based approach to understanding the long-
term behavior of subsurface geological systems where CO2 can
be safely and securely stored for centuries to millennia. The
scientific foundations must be laid for both firm regulation and public
acceptance. This means we must be able to make the critical
measurements of geological properties needed to design and build
multiple, effective, stable, geological carbon sequestration sites; we
must also improve our ability to predict subsurface properties from
limited invasive sampling. Improved high-resolution geophysical
monitoring and verification approaches are needed to observe subsurface
processes in real time and to track processes at operating
sequestration sites for validation of safety and security.
We must also develop a better understanding of the geochemical
stability of deep potential storage sites, since CO2
injection will introduce new reactive chemical components, and storage
creates compositionally complex systems, potentially reactive chemical
environments, and gradients in pressure and temperature. And we will
need the computational modeling tools that can predict CO2
plume movement and storage integrity for varied geological storage
locations over large distances and long time scales.
Ultimately, we need to predict with confidence the transport and
fate of CO2. To do that, we need to learn how to better
describe the fundamental atomic, molecular, and biological processes
and to translate those microscopic descriptions to properties of
materials and fluids. Sustained investment now in fundamental research
in such areas as dynamic imaging of flow and transport of
CO2, fluid-induced rock deformation, understanding the
complexities and dynamics of mineral-water interfaces, and
biogeochemistry in extreme environments will enable the development of
Fusion. Finally, one of the most promising future energy solutions
lies in fusion. Fusion is the energy that powers the sun and the stars.
Fusion energy on earth will use deuterium from water and lithium to
create tritium, fusing deuterium and tritium into helium and a fast
neutron (14 MeV). Deuterium and lithium are abundant and cheap, the
helium will escape from the earth's gravity, and the energy of the
neutron can be captured to generate electricity or produce hydrogen.
Fusion has the potential to provide clean, carbon-free energy for the
world's growing electricity needs on an almost limitless scale. The key
challenge is sustaining and containing the 100 million degree-plus
fusion reaction on earth. Scientists have made progress containing
fusion reactions using powerful magnetic fields for confinement.
Imagine a future of unlimited, emissions-free energy for humanity.
Imagine a future where humanity ceases to struggle with the challenge
of providing abundant energy without damaging our earthly environment.
The basic science needs to enable this technology include:
fundamental understanding of plasma science; materials for the extreme
thermochemical environments and high neutron flux conditions of a
fusion reactor; and predictive capability of plasma confinement and
stability for optimum experimental fusion power plant design. In
November 2006, the United States signed an agreement with six
international partners to build and operate an experimental fusion
reactor, ITER, that will demonstrate the technical and scientific
feasibility of a sustained fusion burning plasma. US scientists are
working side by side with their counterparts from China, the European
Union, India, Japan, the Republic of Korea and the Russian Federation
in the ITER effort.
Energy Frontier Research Centers. If we are to realize this clean,
abundant, and affordable energy future envisioned here today, we must
engage the Nation's intellectual and creative talent to tackle the
scientific grand challenges of transformational energy research. One
way the Office of Science is seeking to do this is through Energy
Frontier Research Centers, which we are asking Congress to authorize
and fund in the Department's FY 2009 budget request. The funding
opportunity announcement for the Centers was posted on our website on
April 4, 2008. These Centers are intended to conduct innovative basic
research to accelerate the scientific breakthroughs needed to create
advanced energy technologies for the 21st Century. Assuming
Congressional approval of Energy Frontier Research Centers, $100
million will be set aside for these Centers each year, with each Center
receiving $2 to $5 million annually for five years. Universities,
national laboratories, industry, non-profits, and partnerships among
these groups are eligible to apply. The goal is to bring together our
Nation's best minds to tackle formidable energy challenges in groups
large enough to make a difference.
Conclusion. I want to thank you, Mr. Chairman, for providing this
opportunity to discuss the fundamental research the Department of
Energy is pursing to accelerate the scientific breakthroughs necessary
to achieve not only for the United States but for all of our global
neighbors the clean, secure, economic energy future we envision.
This concludes my testimony. I would be pleased to answer any
questions you might have.
The Chairman. Thank you very much. Thank you both for your
Let me start and we'll just do a 5-minute round of
questions from any of the Senators here.
Let me ask, Dr. Hirst, your thoughts as to this whole issue
of carbon capture and storage. You indicated that your
conclusion is that by 2010, we have to have 20 full-scale
projects underway or operating. Is that what I understand?
Mr. Hirst. Committed. Committed.
The Chairman. Oh, committed.
Mr. Hirst. Yes.
The Chairman. We need to have committed to 20 full-scale
projects. I guess I'd be interested first in your view and then
in Dr. Orbach's view as to whether or not the seven projects
that he just mentioned--he mentioned seven new sites for carbon
capture and storage that are committed to, I guess, already by
the Department of Energy and through his office.
How does what he's talking about relate to what you're
saying ought to be done by 2010?
Mr. Hirst. It relates very closely, chairman. There are
other countries, also. The European Union is talking about
aiming for 12 major projects. The United Kingdom, where I come
from, is committed to competition for a full-scale CCS project.
So I think my answer to that is it sounds as though at the
moment they're at the site development stage for the
suitability of the sequestration and if those are indeed moving
to become committed full-scale projects, that would be totally
in accordance with the direction that we're saying we need to
The Chairman Dr. Orbach, did you have any thoughts as to
how what you're doing relates to the goal that Dr. Hirst has
Mr. Orbach. Mr. Hirst talked about the G8 Summit, the
Energy Summit. We actually, together with the FutureGen
announcement that was made yesterday, will have 10 sites by
2010 that meet half of the goal of the IEA.
I would like to----
The Chairman. These will not be demonstration sites. These
will be full-scale----
Mr. Orbach. They will be full-scale. There will be one
million tons of CO2 per year pumped into saline
aquifers. We have 40 states that are participating and four
provinces of Canada that are participating, and seven of these
are going through the permitting process as we speak. We have
developed the science protocol and the best practices manual
for how the contractors who are going to pump the
CO2 will follow.
The Chairman. The report talks a lot about the potential
for hydrogen fuel cell vehicles and I notice, at least in that
one chart that you went over, that is projected to be a
significant part of how we meet our transportation needs in the
My impression has been that this whole technology of
hydrogen fuel cells for vehicles is something that is much
further away than the development of electric vehicles or
hybrid electric vehicles, and therefore I'm surprised to see
the enthusiasm with which you sort of embrace it as a major
part of the solution.
Do you have any comments on that?
Mr. Hirst. Yes, chairman. This is a subject on which I
think we're very open in the report, that we actually do not
know at the moment what may be the winning technology. You're
quite right to imply that hydrogen fuel cell vehicles face a
number of hurdles.
For instance, at the moment, the very high cost of the fuel
cells in prototype form and there are issues about the storage,
the onboard storage of the hydrogen, and there are also issues
about the kind of infrastructure you would need to deliver the
hydrogen to your filling stations. So there are indeed a lot of
difficult issues around hydrogen.
But I think it would be wrong to imply that electric
vehicles don't also face challenges. There are challenges
around development of the kind of batteries that you would need
to deliver electric vehicles at reasonable cost with fully
comparable performance to current internal combustion vehicles.
I think it would be fair to say that in the sort of
technology community, probably people have become slightly
more, relatively slightly more optimistic about the outlook for
electric vehicles over the last year or so because there has
been some quite significant process, but we feel it's too soon
to say that we know what the outcome of this will be and we
need to pursue both of those, the research and development of
both of those avenues in our view.
The Chairman. All right. My time is up. Senator Corker.
Senator Corker. Thank you, Mr. Chairman, for holding this
hearing, and I want to thank our witnesses for being here and
for the great contribution you've made in the world arena as it
relates to focusing on climate.
Mr. Hirst, I have to tell you, I felt a little incredulous,
I guess, as I sat and listened to your presentation. How much
time was put into the putting together of the facts and data to
come up with the charts, if you will, that you just presented?
Mr. Hirst. This study is based on the model that the IEA's
been developing over a period of 6 or 7 years. It's a 15
regional model and it contains a massive data on the costs and
prospects of individual energy technologies.
The model built up on the costs and potential of
technologies and the data that goes in there is not just from
analysts at the IEA. Probably about 20 analysts at the IEA who
have worked on parts of this but they're not quite full time on
that, but most importantly, it's also based on the data and the
advice that comes from the IEA's International Technology
Now these are groups of experts from around the world, U.S.
experts, but experts from other major countries around the
world. There are 40 of these groups. There are probably
thousands of experts who contributed in one way or another to
So I think, of course, I should perhaps emphasize this,
these are scenarios. I put them in specific form because that
makes them concrete. Of course there are enormous uncertainties
around the future in these areas, but we do feel that this is
based on in-depth analysis and taking extensive advice and
Senator Corker. Let me say, and I wish that every member of
the Senate could have seen that presentation and every member
of the House could see that presentation.
I want to say that I generally have, I think, a very good
nature here in the Senate and try to focus on bringing out the
best in all of us to the degree that a human being can and also
try to focus on being blunt and direct in asking questions and
I think that presentation, and I'm speaking to the
presentation and not to you as a person, please, to me, does
more damage to the discussion of climate change than almost
anything that I've seen since I've been here.
I couldn't believe that this sort of command and control
kind of discussion was taking place here and I have to tell you
that if I were you, I would not--if the issue is trying to
cause people to be interested in climate change, I would not
make that presentation again.
So I just want to say to you, I'm stunned, and I think many
of us up here have been stunned in watching this accumulation
of experts talking about what the future will be and creating
these kinds of scenarios. I don't think it's helpful.
But I would like to get back to the good nature component
and say that there were some elements of your presentation that
I found interesting. One of the things that we seem to not be
able to do right now in this body is to bring the two groups of
people together, folks who care deeply about our environment
and folks, as Pete Domenici mentioned, who care deeply about
making sure that countries around the world are energy secures,
and it seems to me that we have a wonderful opportunity right
now with people feeling so vulnerable to be able to do that.
I know that in your presentation, you mentioned the need to
pursue nuclear and that it already was a great--there's much
nuclear development already that takes place in our country and
even more needed to take place.
I think you mentioned to some degree also increased
investments in fossil fuels that are going to be necessary to
meet demands, and I would like to say that while I thought the
facts and the data that were presented were not helpful, I
thought those two comments that you made were most helpful.
I have a meeting tonight with somebody in the environmental
community to discuss just what you said and I wondered if you
might expand a little bit on the opportunity that we have here
in this world today with everybody feeling vulnerable to sort
of take down the barriers that exist right now between these
two communities and to be pragmatic as we use fossil fuels to
some degree to be a bridge to the future, but at the same time
create a tremendous sense of urgency, if you will, as it
relates to moving toward new technologies that hopefully will
solve many of the issues related to climate change.
I'd love for you to expand on that and please forgive me
for my earlier bluntness.
Mr. Hirst. Senator, a couple of comments on that. I do want
to emphasize the reason that we did this study is because we
were asked to by the G8. They asked us for scenarios, literally
for scenarios and strategies for a clean, clever, competitive
energy future. I don't think we would have done this if we
hadn't been asked to do this.
Senator Corker. I would just say that I might not take on
some of the things that G8 asked me to do in the future if
that's the result.
Mr. Hirst. I think your second question is about the
impulse that high energy prices today might give to change in
the energy sector and whether that can awaken and bring
together people from different parts of the community.
I think the answer is that will produce change, but in the
absence of government policies, it won't necessarily change,
produce all the changes that people want, because some of the
responses to high energy prices will actually be through very
high carbon responses, such as unconventional oil, whether it
is oil sands or oil from coal. These are technologies which, in
the absence of carbon capture and storage, are actually higher
in carbon than conventional oil. Now they may also stimulate
low carbon technologies.
The other point I would highlight, and this comes from--we
presented these studies to a group of chief technology officers
of 30 leading energy companies around the world, and their
response was yes, this may be technically possible, but to make
these changes, we need clear and predictable incentives for the
future for these new technologies, and one of the problems with
high energy prices right now is that investors won't
necessarily assume or won't necessarily rely on prices
remaining very high in the future when they make their
investments, whereas they might respond if you have very clear
predictable signals as to the carbon incentives that might be
available in the future.
Senator Corker. Mr. Chairman, I realize my time is up.
Thank you very much for having this hearing and I apologize for
some of the comments I made or having to make them actually.
The Chairman. Senator Salazar.
Senator Salazar. Thank you very much, Chairman Bingaman,
and let me first say I think this is a very, very important
hearing and I appreciate your leadership as the chairman to
have this hearing on the issue of climate change and energy,
and I would hope that one of the things that we might be able
to do as a committee under your leadership is to move forward
with our own bipartisan measures to try to address the issue of
I for one, a U.S. Senator, was not happy, frankly, with
much of what we did in the global warming debate on the Floor a
few weeks ago. I think it's an important debate that needs to
be had, but I also know and we all know of how it is driven so
much by what we do with our energy policy and it seems to me
that this is the appropriate committee to try to deal with the
Let me ask--I wanted just to make that comment to you.
A question that I have for you, Mr. Hirst, and also a
question I'll have for Dr. Orbach, has to do with the
Now, I sense the disbelief from my colleague and friend
Senator Corker. We also look at when you are looking out at
2050, you had to make some assumptions relative to the
allocations of the different energy sources and what we're
going to be doing on the demand side as well.
So if you look at your figure 9, you have the whole chart
of the different energy sources on both the supply side and the
demand side and making predictions about how that all will turn
out in the year 2050.
How did you go about making the allocation that you make
with respect to the different components of our energy
equation? For example, how do you decide what percentage you're
putting on nuclear versus what you're putting into coal and
IGCC versus what you're putting into solar?
I ask that question in all sincerity because it seems to me
that when we are talking about putting 500 megawatt power
plants in the desert of Arizona that are CSB solar plants or
200 megawatts in Bakersfield, California, that some of this
technology is so unfolding and so new, that it's very difficult
to make these predictions at 2050.
So how did you come about the allocation of all these menus
that are in the portfolio on both the supply side and the
Mr. Hirst. Senator, you're right, it is very difficult and
there are uncertainties.
The way the model works is that it chooses the lowest cost
options. So the model contains our best estimate of what you
might call the supply curves in each of the 15 regions to which
it relates. It contains our best estimates of what you might
call the supply curves of each of these technologies, how much
you could obtain at what cost, and then the model selects the
technology which together produce the lowest cost solution for
the level of CO2 cuts, reductions, that you are
Now you're quite right to say there are lots of
uncertainties in that and a key element of the model is what we
call the learning curve. To what extent will the costs, some of
which are very high on developing technologies, to what extent
can they be reduced as the technologies----
Senator Salazar. Let me ask this question to push you a
little bit. I've done a lot of litigation on the water models
and I know that there are black boxes that you can spend months
in litigation over.
Is this a model that's any good or is it just a piece of--
you know, something to talk about? How good is this model?
Mr. Hirst. It's a good model. This is a topic on which
there's quite a community of experts around the world and
people have done, you know, analytical studies of the history
of technologies, how in the past in motor vehicles and many
other technology, they go through a well-established pattern.
Senator Salazar. Let me just say the trustworthiness of the
model, dealing with, you know, 42-year output projections, is
something that is a very important point, I think, for all of
I want to just ask a couple other questions, if I may.
Carbon capture and sequestration, the use of coal. Coal is to
us in the West, much like oil is, I think, to Saudi Arabia. You
talk, both of you, Dr. Orbach and Dr. Hirst, with some optimism
about where we are going, the announcement from DOE yesterday,
How realistic is it that we're going to get there and that
these projections that we have, Mr. Hirst, here on carbon
capture and sequestration are going to be met? Dr. Orbach first
and then Mr. Hirst for a minute.
Mr. Orbach. Frankly, I'm somewhat optimistic. I believe
that we know enough about underground geophysics and
geochemistry to be able to predict what happens to the
I would like to come back to the question you asked Mr.
Senator Salazar. Let me keep pushing you a little bit on
this carbon capture and sequestration.
Mr. Orbach. Please.
Senator Salazar. Sam Bodman is a wonderful man and yet
we've had these conversations about where we're going with
carbon capture and sequestration and FutureGen and it's been
delayed, and yet the reality of it is there are many of us that
want to see how fast we can move forward with that and the
dollars that have been out there have made it impossible for us
to move forward with some projects that are demonstration
Now you're saying 10 projects. How realistic is it from
your point of view as the chief scientist in DOE that we're
going to be able to move forward with those 10 projects? Are we
going to run up against the fiscal walls again?
Mr. Orbach. No, I believe we're going to go forward with
those 10 projects.
Senator Salazar. OK. Now talk about your 20 comments
about--your 20 demonstration projects for about 10 seconds. My
time is up.
Mr. Hirst. Yes, now we do think it's--we're encouraging
that G8--Energy Ministers across the G8 have committed
themselves to this target which is--and we think that they can
do it, yes.
Senator Salazar. Are the other G8 countries ahead of the
United States or about in the same position still as an unknown
with respect to----
Mr. Hirst. It's difficult to generalize, but I would not
characterize them as being ahead, no.
Senator Salazar. Are they behind?
Mr. Hirst. They are doing different things, but they're in
Senator Salazar. Thank you, Mr. Chairman. My time has
The Chairman. Thank you.
Senator Craig. Mr. Chairman, thank you for the hearing, and
Mr. Hirst, thank you for being here and making your
I'm sitting here in a couple of different thought processes
at the moment, not unlike my colleague Senator Corker, but at
the same time, going through a deja vu with the International
You were created in 1973, coming out of the OPEC oil
embargo. The world was in a break point in hydrocarbons at that
time, making fundamental changes in their thinking as developed
nations versus undeveloped nations about what to do, and for
this reason you were created.
I think it was the G5 or the G6 but maybe not the G8. The
world has changed since 1973. You now come to us at what I call
another break point in hydrocarbons for developed nations and
developing nations. So stay with me for a moment because in the
midst of this is a question as relates to your modeling and the
realities of where we go in the future.
In 1973, 1970s, this nation was about 80 percent dependent
on hydrocarbons, but following that, whether it was Great
Britain, Western Europe, the developed nations, and the United
States, we began to change. We changed for a lot of reasons. We
changed because of policy and you've mentioned the need to
Out of that came CAFE standards which we had not heretofore
had and we told the auto industry to make fundamental changes.
Out of that came standards for electrical appliances that
heretofore we did not have. For a period of time through the
balance of the 1970s and the 1980s, we were a pretty forward-
thinking nation as relates to energy and then we fell into the
doldrums of a growing economy and a supply that was reasonably
priced. So we leveled out, but we shifted from an 80 percent
dependency to about a 40 percent dependency on hydrocarbons.
Now I'm not quite sure what the modeling was for Europe but
that happened. Now we are at another break point, in my
opinion, in energy, hydrocarbons, and oil. As a result of that,
coming out of it over the next decade, we will act and think a
great deal differently than we do today.
This Congress is wrestling with that. Dr. Orbach has talked
about it. We were all moving in that direction but maybe not
with the urgency that a $136 or a $140 a barrel oil will bring
us and $5 gas at the pumps. That is a level of urgency and pain
for us, but it is also true across all of the developed nations
that are dependent on oil.
So my question relates to India and China, the emerging
developing nations that are in the high percent of dependency
on hydrocarbons. I think China's at about 90 percent coal and
oil dependent at the moment. India's somewhere in that model
also, they have the capability of responding differently than
we did in the 1970s because they are not as affixed to the
technologies that we were of that day.
By that, I mean, and you saw it happen last Thursday in
China, China raised the tax on their hydrocarbons, a barrel of
oil dropped in the world market, and the stock market went up.
Why could they do that? They could do that because only one per
thousand Chinese owns an automobile at this moment, not 500 per
thousand. But some of the modeling that is being used by you
and others would suggest that China's going to follow our
pattern and that they're all going to develop. They're all
going to go out and buy cars and so it's going to go from one
to 10 to 50 to a 100 to a 150 to 200 per thousand Chinese
owning an automobile.
But the Chinese, unlike us, can control that in a very
different way. They didn't put copper lines between all of
their towns to give everybody a telephone. They simply got them
a cell phone and put up a tower. Why, they grabbed the
technology of the moment and they adjusted and changed very
rapidly. Something we could not do because we were simply the
leaders of technology down through the decades as is true of
My point is, has the modeling that brought you today and
brought the report incorporated the reality of markets that go
through these kinds of dramatic changes based on costs that
cause us to change?
We will be a very different country 10 years from now as
relates to hydrocarbon dependency. Some modeling would suggest
we will drop from 40 to 30, maybe less, based on the market
forcing us to as much as policy.
Now the combination of successes coming out of the 1970s
that created you were a combination of markets and policies.
Today you come with policies and policy change proposals.
How reflective is your modeling of the markets that are
rapidly changing at this moment in a relatively unforeseeable
Mr. Hirst. Senator, you're right, we are assuming in this
that as we see continuing rapid economic development in China
and India, and by the way, the study is based on fairly
optimistic assumption about continuing economic growth, we have
3.3 percent average global economic growth between now and
2050, concentrated in these big developing countries, and we
assume that, yes, as Indians and Chinese become more affluent,
they will want to own vehicles, but we assume certainly in the
more carbon-saving cases, first of all, that they will tend to
own smaller and much more efficient vehicles in the coming
decades and, second, that their cities may evolve on a pattern
that involves higher opportunities for mass transit and public
transport than some of them have in the past.
We do have those trends in there, but you're absolutely
right, you know, that one of the big drivers in all this is the
desire for personal transport by people in developing
countries. We think that's inevitable and hard to question.
As far as the United States is concerned, yes, we have
built in--we have assumptions about oil prices for the future
and we have built in a response to those in terms of increasing
efficiency in the economy as a whole and indeed in vehicle
efficiency in the United States. Yes, we do expect a trend
toward increasing vehicle efficiency.
It's interesting because it bears out exactly what you were
saying. When we look back historically, we saw large energy
efficiency gains in OECD countries in the 1970s and 1980s, but
in the 1990s, a period when oil prices were relatively low, the
rate of improvement almost halved and that's something that we
have to--that, of course, is a bit of a lag between policies
and results. So we don't yet see some of the results of the
most recent policies the governments have been adopting.
Senator Craig. They're not factored into your modeling?
Mr. Hirst. Yes.
Senator Craig. Thank you. Thank you, Mr. Chairman.
The Chairman. Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman, for holding this
important hearing. We appreciate your leadership in this role,
and I would associate myself with the comments from Senator
Salazar in terms of the engagement of this committee in dealing
with this issue as well as our frustration in the first attempt
on climate change.
There seems to be so much more that we need to take into
consideration. Certainly from the testimony you gentlemen
bring, we hope we will.
I often speak on how we're going through a transition from
an old energy economy to a new energy economy and that's
exactly in my book how we have to look at this. I don't think
we should be shocked or amazed at the unbelievable challenges
that we're going to be faced with because it's going to mean
not only changing our economy but in order to change that
economy, we're going to have to change cultural ways among
people and Americans do not change their cultural ways quickly.
I think one of my many main priorities as we continue the
climate change discussion is making sure that all sectors of
our economy have the right tools to meet the types of emission
reductions that we are going to require in order that the
disproportionate burden does not fall upon particularly low-
income or those that live in disadvantaged areas, rural areas,
It's clear that a wide range of energy efficiency
technologies are going to be needed in this new energy economy
in order to be successful in reducing the CO2
emissions which you all speak about in terms of levels and
cost-effective matters and a host of other things.
Just a couple of questions. One to what you had said, Dr.
Hirst, was that predictable and dependable incentives. You
know, I don't think we should be amazed that this is going to
be challenging. We can't even pass the tax incentives for
renewable energies in this Congress, and, you know, there's no
doubt that if what we want to see happen is the investment in
renewable technologies, we've got to incentivize it and it
needs to be more predictable. It needs to be more dependable.
One of the questions I would have for you is you
accommodate in your studies the technologies of more fuel-
efficient vehicles. Do we speed that up? What happens when we
make that rapid in terms of increased automobiles and fleets
with fuel efficiency?
I mean, to me, it seems as if conservation, which his what
that is in many ways, is the most immediate impact we can have
and it seems as if, if we did more of that, we would see a
quicker response with pain perhaps, if we provided the
incentives that are there.
I guess just a couple questions that I would also have to
the Department of Energy. You're aware of the process that's
currently being developed to take advantage of animal waste. I
come from a very rural and agriculturally productive state, but
animal waste, such as chicken litter, as a primary feedstock
for renewable fuels and energy.
What barriers exist in the implementation of that? I guess
the other question would be on cellulosic biomass, you know.
What is the role there? Algae-based fuels.
One of our biggest challenges is that, as you all point
out, moving from these technologies which our constituents hear
about and think that should be into practice the very next day.
There's certainly a long spectrum of steps that have to be
taken before we can get them to the consumer or even into a
technology-based industry that can produce them, much less
getting them deliverable to the consumers.
So algae-based biomass, animal waste, those issues, and to
Dr. Hirst, I guess, a more rapid integration of technologies,
particularly conservation measures and others, just would like
to have your comments on those.
Mr. Hirst. Senator, I'll just comment on fuel efficiency in
vehicles. First to say, yes, you're absolutely right. The issue
is clear, predictable incentives. That's what business tell us
again and again.
Senator Lincoln. Sure.
Mr. Hirst. As far as the vehicle fleet is concerned, we
believe that the technology potential exists with conventional
vehicles to approximately double their fuel efficiency over the
next 20 years and that could be quite a cost-effective
So we do support--you know, we're very aware that the U.S.
is developing its fuel efficiency standards. We strongly
support that, and we would like to see that progressively
developed over the years because we think there's a lot more
quite cost-effective potential there to increase vehicle fuel
Mr. Orbach. Senator Lincoln, your question is right on, and
in particular, we believe that the farmer and the rural areas
have a huge stake in energy. These are cash crops that we're
talking about or use of agricultural waste.
You referred to animal waste, also rice stalk, corn stover.
They all contain cellulose and that cellulose--well, the animal
is different. That's an oil, but they contain fuel and the
trick is to keep our options open. There are new technologies
being developed as we speak that are very exciting. I don't
know which one will be the most effective, but our investment
in these new technologies is critical.
The way we look at it is to duplicate what nature does.
Now, we're talking about using plants, about taking the
cellulose that nature has created and producing fuel, gasoline
as well as ethanol. But, why plants? Why not work directly with
artificial photosynthesis? Do what plants do, only with
molecular structures that we can create in the laboratory.
These are options that are very exciting. I can't tell you
if they're going to work, but I can tell you that the country
is electrified, students are pouring into universities,
interested in energy because of these opportunities that are
So, I think you're going to see over the next couple of
years some very exciting options that we have not even thought
about in the past. You mentioned algae as one example.
Biodiesel comes from algae, but you can also produce fuel
directly from cellulose; and we're talking now about diesel and
We have looked at the combustion side as well as the
production side. We have a combustion research center which is
working with people who are doing microbial development because
gasoline comes from oil and the refiners make what they can out
of it, but is that the most efficient fuel? If we can design
the carbon chains for the most efficient combustion, will it
come out to be the same? Will we have the same mixture of these
organic compounds? I don't know.
So what you're seeing is that this energy crisis, as
Senator Craig referred to, has really caused us to open the
box, to think of opportunities that could conceivably be
transformational, and my belief is that the person who will
benefit most from this is the farmer. We are going to give the
farmer a cash crop that is dependable, doesn't depend on the
price of food, one that can use natural resources that are
currently available, and not complete with food.
So I think we have an opportunity here that's very
Senator Lincoln. Thank you. Thank you, Mr. Chairman.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. Following up on
Senator Lincoln's comments about the impact to the poor, the
lower incomes, those on fixed incomes, we've got situations up
north. We're in full-blown energy crisis up there in a state
that's got access to an awful lot and what we're seeing in
Alaska, in some of our villages, some of the very remote, very
small villages, is in an effort to be able to pay for home
heating fuel, in an effort to be able to pay for the diesel
that is the power- generating source, in an effort to put the
fuel in the boat, families are not paying their water and sewer
utility bills at a $126 a month. Those utilities are cutting
them off and we are now going back to the days of the honey
bucket where the human waste is carried outside and dumped in
That is, I would like to think, an extreme example of what
happens when we haven't made that transformation. You are in a
situation where all you're faced with are ever-increasing costs
and the need for the resource is as acute as it is.
I wanted to ask both of you gentlemen, and I thank you for
your testimony here this morning. Clearly, the need is a global
effort, as you have both indicated. I think you referred to
global technology revolution, that we have got to have the
technological breakthroughs, but consistently, the terminology
is on a global scale.
Give me more then in terms of how we get to that level of
cooperation and collaboration globally. We're all looking at
this. This is Alaska's interest. This is the United States'
interest. This is India, this is China. How do we truly
cooperate on this issue and therefore be able to make a
Mr. Hirst. Senator, I'll comment rather generally, if I
may, on that point because it is at the heart of the evolution
that we're trying to achieve because you've talked about poor
people in the United States, but, of course, very, very big
players in this that you've mentioned are countries like India
and China, and there's no doubt that their top energy priority
is development, making, you know, affordable, clean energy
available to very large numbers of people, people who are
without it, and therefore any way forward on a global scale is
going to have to integrate the concerns about affordable energy
with concerns about security and these concerns about
That's why I think we are looking for, you know, the lowest
cost technologies that we can possibly find to solve these
problems, but one has to be honest and say there are some
additional costs and I guess it's for governments and societies
to decide how these costs are going to be spread and how they
can protect weaker people in society, but I don't think from
the technology perspective, I can add very much to this.
Senator Murkowski. Dr. Orbach.
Mr. Orbach. Let me respond directly because it's a very
important question that you've asked and this is a different
kind of energy.
We think of oil and large refineries and huge centralized
facilities; but the kind of energies that we're talking about,
the energies from biomass, for example, are distributed.
There's no reason why you need that huge investment; and in
fact, in rural communities, small towns, it is feasible to
think of a plantation of switch grass or poplar trees or some
other vegetation which can be processed onsite to produce fuel
for the community, to produce a product that can be sold. So,
it's a different kind of energy. It offers a possibility of
dealing with the rural environment that we've not had before.
There are technical issues that we are addressing right
now; but I believe they can be solved. I think that they,
frankly, are going to make a huge difference in rural
environments where there aren't other resources available.
Senator Murkowski. I would agree, and I think you get out
to so many rural communities that are isolated. Alaska's a
perfect example of a state where we don't have the transmission
to move power from one community to another. Each village is
its own freestanding unit and how you figure out how to power
that village, whether it's through harnessing the wind or the
ocean energy or the sap, the willow saplings that are growing
up nearby, it's going to be these kind of mini projects, and
they're prohibitively expensive right now, but I think
otherwise what you're going to have is you're going to have
these smaller communities who will not be energy sustainable
and they will fold, moving people into the cities.
I'm not convinced that that's the best solution there, but
it is how do you identify that energy source for the smaller
particular areas? Mr. Hirst, you look like you want to jump in,
but my time's up.
Mr. Hirst. May I just have a second because this is a most
interesting topic. One of the activities that we're involved in
is engaging with major developing countries on energy
technologies and we said to them, well, here are the things
we're working on. What are your priorities? Particularly South
Africa led on this and said, well, our priority is what they
call rural energization, which is exactly, I think, the topic
that you're talking about.
We had a major workshop on this and there are a lot of
technologies. They're not all prohibitively expensive, but it's
very interesting what the suppliers and the industry can
contribute and what they're really looking for is ownership in
the community of these technologies. If you can find how the
community themselves can own these quite diverse technologies
and operate them and acquire the capability to manage them,
then there are a whole range of technologies and that seems to
be the real challenge in delivering these technologies,
certainly in the major developing economies.
The Chairman. Thank you.
Senator Menendez. Thank you, Mr. Chairman. Thank you both
for your testimony.
I appreciate that some of my colleagues have cause for
concern in your presentation, but the reality is I appreciate
the nature of the presentation because change is always a
difficult challenge and I am concerned that we will rue the day
that in fact we are unwilling to face the change that we need
as we see even today the incredible floods that are taking
place in Iowa and parts of the Midwest, as we see the
incredible number of forest fires taking place in California,
as we look at the erosion along the Eastern Seaboard of some of
our coastal areas, and yet some of us cannot seem to come to
the conclusion that the challenges we have will require
significant leadership and a commitment to change. So I
appreciate the efforts to have people realize the magnitude of
the challenge before us and constantly place that out there.
Having said that, let me ask you, Dr. Hirst. The IEA Report
makes it clear that annual solar power, solar energy dwarfs
just about every other source of power. It says, ``The amount
of energy that hits the earth's surface in an hour is about the
same as the amount of energy consumed by all human activities
in a year.''
It's a pretty significant statement, and you predict that
under any emissions reductions scenario, solar power costs
could drop to five cents per kilowatt hour or perhaps even
less. That would be a deal to my constituents in New Jersey who
are paying beyond that right now.
I want to understand, however, what policy changes we need
in order to deliver on that promise.
Last year, I introduced legislation called The Solar Act,
which would help eliminate interconnection and siting obstacles
for solar panels.
What, in your view, are the primary obstacles to large-
scale deployment of solar panels? What level of support is
needed to develop and supplement the more widespread deployment
of solar technology?
Mr. Hirst. Thank you, Senator. I just refer you quickly, if
I may, to figure 14 which shows the share that we expect for
solar in energy supply in 2050. It's one of the major
components in renewables. I would think just from inspection,
it looks as though it's something like, you know, 6 or 7
percent of global energy. It's a big contribution.
Obviously there's a big difference between the energy
that's inherent in the sunlight or how much we can economically
capture. But to come specifically to your point, there are two
key areas for developing solar, solar power.
One is this is a technology that I would describe as being
in the early stages of deployment. It's still expensive, but it
is capable of mass deployment and experience shows that you
make big economies in any technology as you begin to deploy it
widely. This is because you get mass production, you get much
more efficient ways of developing the materials, and business
learns in all sorts of ways how to be more effective. So we
need the deployment to bring the costs down. The costs have
been coming down quite spectacularly in recent years, albeit
they are still high in relation to conventional generation.
But we also need the research and development. Some of that
needs to be government research and development. I know it's
going on here in the States. It needs to be very closely ranked
with the research and development that big energy companies are
So I think those are the two areas, but we believe and we
expressed it here, much more than we did 2 years ago, by the
way, this is a technology that has the potential to come in and
be competitive as a low carbon energy source.
Senator Menendez. I appreciate that. The report talks about
a global revolution, a dramatic shift in government policies.
Mr. Chairman, as you know from your efforts, we couldn't
even seem to extend the tax credits for renewable electricity
generation, and it's frustrating when we look at that in the
context of the challenge.
Let me ask two last questions. Your report makes it clear
that massive investments are going to be needed to meet rising
global energy demand. Is there a danger of stranding capital in
projects which exacerbate global warming if we don't have clear
policies on carbon emissions?
Finally, Dr. Orbach, in your written testimony, you asked
us to imagine the solar photovoltaics which exceed
thermodynamic efficiency limits. While I'm not sure what that
means, I'm glad that the Department of Energy is working on the
next generation of solar panels.
I'd like to know what you're doing to reduce the costs of
existing PV technologies and how much cheaper can you make
solar, for example, over the next 5 years. If you both could
answer those separate questions.
Mr. Hirst. Senator, the answer is yes, there is a danger of
stranded, because we're going into a period where many
countries around the world, I think including the United
States, will need to make major refurbishment and replacements
of, for instance, their electricity networks, electricity
capacity, and that capacity that is built will be capable of
running probably for a period of 50 or 60 years.
So if the wrong decisions are made now, the risk is of
conflict later on with environmental policies and, indeed, in
this BLUE case that we show, we have really substantial
amounts, for instance, of coal-generating capacity that cannot
be subsequently converted to having carbon capture and storage
actually being phased out early because they're no longer
economic in a low carbon environment.
Mr. Orbach. In regard to solar, what we meant by that
comment was we have one electron transfer now. If we can use
two electrons, we get double the energy out. We're working on
that and that, we believe, is a real possibility.
The actual cost driver right now on solar is more, as Mr.
Hirst has indicated, a production issue. Can you really get
this to mass production? But I would like you to think beyond
solar panels because sun does a lot of things and we are
looking at, for example, artificial photosynthesis.
Can we take sunlight that plants take and produce sugars
that they live off of? Can we do the same molecular structure
and produce fuels directly?
There's another aspect and that is hydrogen. Can we
disassociate hydrogen and oxygen from water using sunlight?
There are new methods we're looking at with various catalysts
that use solar energy to derive hydrogen. So we look at solar
on a much broader scale than just photovoltaics. They're very
important now because they're an immediate capability.
We also believe that solar, just as you pointed out, is one
of the great opportunities for energy for our country in the
future. We're looking at all different ways of capturing that
sunlight and turning it into energy.
The Chairman. Thank you.
Senator Barrasso. Thank you very much, Mr. Chairman. Mr.
Hirst, if I could, you talk about a need for a steep change in
government policies, also closer international collaboration to
address both the global energy demand as well as climate
change, and I'm wondering how we're going to be able to
accomplish that in such a way that we can reduce global energy
I think you talked about a diminished demand for oil and
things over the next several decades.
Mr. Hirst. The way we can do this is by going for the most
economic technologies that we have and perhaps I should say
when we wrote this book and we looked at energy price
projections into the future, we have price projections in the
range of $60 to $65 a barrel which is high but it's an awful
lot less than current oil prices, and it's very interesting
that, you know, you can convert some of the costs of the
technology we're looking at.
For instance, when we say you need technologies up to $200
per ton of CO2, say, that translates into about $80
a barrel on the price of oil. It's the same cost to the person
using the oil.
So you can see that the price of oil that we have seen sort
of takes us into the region where some of these clean
technologies could already be competitive and could pay a plant
in stabilizing prices.
The concern we have is that in the absence of low carbon
technology, it may not be the low carbon alternatives that are
preferred, it may actually be high carbon alternatives that are
preferred. So that's how we see it.
Senator Barrasso. The comparison you just did at $200 per
ton of carbon, you said that equals to $80 per barrel of oil.
That's in addition, on top of the current price of the barrel
of oil? It's based on the 65 to 80?
Mr. Hirst. We did this when we were projecting $65 current
money, $65 a barrel in 2050.
Senator Barrasso. So that would add $15--the carbon
component of that would add $15 to the base cost of the barrel
of oil? That would take you from $65 to $80 or is it $80?
Mr. Hirst. No, no, no. It would add $80.
Senator Barrasso. Add $80 to every barrel. All right. I
just want to be very clear on that. Thank you very much.
Dr. Orbach, if I could, we're talking about coal and the
amount that coal provides for the baseload electricity produced
now in the United States and beyond.
We've heard a comment that we need 20 carbon capture and
sequestration projects, I think, by 2010 at least started.
Mr. Hirst. Committed by 2010.
Senator Barrasso. Committed by 2010, online by?
Mr. Hirst. 2020.
Senator Barrasso. All right. Do either of you have a good
estimate on how much government and private investment's going
to be needed to really get the clean coal technology available
at a commercial scale to really put it on?
Mr. Hirst. I can give ours. I mean, we estimate that the
incremental cost of a full-scale--say you're talking about a
500 megawatt coal plant with carbon capture and storage. We
estimate that the incremental--because obviously an element of
that is the normal commercial investment in the coal plant, but
the incremental investment at this stage for the demonstration
plants, we estimate in the range of a $1 billion to $1.5
Senator Barrasso. For each one? For the 20 or for each one?
Mr. Hirst. For each one.
Senator Barrasso. For each one.
Mr. Orbach. The IGCC, which is terribly important, is
roughly about 20 percent more with CCS (carbon capture and
sequestration) technology. But the beauty is that it enables
you to capture the CO2 before combustion.
The actual cost of sequestration, I don't know if anybody
can really estimate that right now. We don't know enough about
what happens underground in these saline aquifers. But if
you're looking at carbon and CO2, that's what you
want to do, and that's what the purpose of our investment will
Senator Barrasso. Mr. Chairman, I'm afraid I'm out of time.
Thank you very much.
The Chairman. Senator Sessions.
Senator Sessions. Thank you, Mr. Chairman. You know, the
communique from the Gleneagles G8 sets my priorities. It says
it a little bit differently, but I believe we need to protect
our national security when it comes to energy and transmitting
$500 billion a year to foreign nations to purchase that oil is
a matter that we've never seen before in the history of the
I believe we ought to improve our environment, particularly
in SOX and mercury and other things that get
emitted. I certainly believe in that and air pollution is the
phrase you use here, and we ought to eliminate greenhouse gases
and the communique says reduce poverty. I say let's contain the
cost of fuel. I think it's a world ideal, a good ideal, that
energy be less expensive.
I understand where electricity is readily available,
lifespan is twice that where it's not. So this is not something
we want to deny the world, the ability to have low-cost energy,
but so I'm worried and when you indicated, Mr. Hirst, that it
would be $80 a barrel to support a $200 a ton tax or cost on
carbon and then you indicated, I believe earlier in your
remarks, that that 200 may not be enough and it may take $500 a
ton, which would add $200 to the cost of a barrel of oil, which
would have devastating impacts, I submit, on this economy, it
cannot be limited to a one percent impact on GDP. I just can't
imagine how it would.
I would also just express a concern of the concept that
somehow a group of persons can meet in some salon in Europe and
come up with a projection about exactly how it's all going to
work out because you would admit really that technology is
going to lead us the direction we'll go ultimately and there
could be breakthroughs and failures that would make these
projections not be very accurate, I guess, in 50 years. Would
you agree with that?
Mr. Hirst. Senator, of course. You're absolutely right. I
think people are familiar with the scenario approaches.
Everyone knows the world will not turn out exactly as we today
Senator Sessions. I think we're not masters of our universe
to that extent that we can project how that would come out.
Mr. Orbach--excuse me. If you wanted to respond?
Mr. Hirst. Yes, I just wanted to say, you know, we believe
that the impact of this BLUE case would actually be to reduce
oil prices from what they would otherwise have been if we had
not conducted this huge technology transformation, that's very
important, and one way of looking at this transformation is
that some of the resource which would have been used to import
high-cost oil is actually used in engineering and technology
development and technology deployment.
Senator Sessions I tend to agree with that. I think that's
how we need to bring this fight back on oil company profits,
fight back on OPEC demands on this economy, which amount to, in
my opinion, a tax that's not related to the fair market value
of oil because they contain the production to manipulate the
price, and so this is something the Nation needs to do as a
matter of security as well and it has the potential to benefit
our CO2 and our global warming concerns, also. It
should do both.
Dr. Orbach, I've expressed some concern about the
Department of Energy. Senator Domenici has expressed concern
over the slow way of getting loan money out to innovative
industries. I believe that you have tremendous amounts of
information, looking at your website and other things, on all
kinds of technologies.
I would like to see the Department of Energy come to us and
tell us what they think would be the best prospects for loans,
best prospects for subsidies. We get in Floor debate here and
somebody's visited a plant in their home state, like I have,
and I get all excited about it and I want to have you fund it
and we need some real leadership to help us.
Do you think the Department of Energy can do a better job
of helping us sift through the competing demands and make some
recommendations for the best utilization of subsidies and loan
Mr. Orbach. Yes, sir. We are working as quickly as we can.
It's a new process. We're setting it up. There's been a GAO
review which we have been responding to. We hope that we can
get that to Congress very shortly, both for renewables and for
Senator Sessions. That's good. I'm going to offer some
legislation that would require something like that and we're
working on that, and I just believe that we need more than just
you to house extensive research data and you need to develop
policy and not be timid about it. We may not agree.
You mentioned biofuels, switch grass, wood, cellulose. I am
very excited about that. In Alabama, I know of three projects,
four counting the Auburn Portable Gasification Unit that was
just brought up to Washington last week, they won a national
award for it, where you heat cellulose wood, heat wood
products, gas comes off, that gas can be converted to a liquid
and it appears that that could come in less than, considerably
less perhaps than the price of oil on the world market.
Do you--how do you feel about that potential?
Mr. Orbach. First of all, I enjoyed seeing that exhibit at
the Arboretum last weekend and you should be congratulated.
That's a wonderful exhibit--one of the nice things was the age
of the people who were running it. They were young and
aggressive, and that's just the investment that we need.
The methods that they used--and there are other methods,
chemical methods, of separating the lignins, the plant cell
wall from the sugars that you want to get at--but the methods
that they used are energy intensive. They had to use heat,
called pyrolysis, in order to make the plant material available
for the enzymes that would break it down.
We are looking at, as I mentioned earlier, at other ways of
doing that separation. One way, of course, is to use ionic
liquids; we're just exploring that. That will pull them apart
without any energy being put in in the form of heat.
Another method that your state is very actively involved in
with Oak Ridge National Laboratory is looking at the genetic
structure of switch grass and poplar trees and trying to find
out how to manipulate the genetic structure so that we can
weaken the bond between the plant cell wall and the cellulose.
We believe that in the future you will find in Alabama
plantations of perhaps poplar trees that are so engineered that
they can be processed with enzymes much more efficiently than
we currently do it.
So for the future we are looking especially at states like
Alabama that have so many water and land resources to grow
special crops, that's not for food but for fuel.
Senator Sessions. We think, according to a report in a
local paper, that the waste wood left in the forests after
timber harvesting which is a nuisance to the landowner when it
becomes time to replant, would amount to almost the entire
state's utilization of fuel if it were converted to a biofuel
and I think that's not--I'm past my time, Mr. Chairman.
I thank you for those comments and I do think there's
potential. I hope the Department of Energy will seek to
aggressively bring forth the ideas that are best for America so
we can debate them.
The Chairman. All right. Thank you. Thank both of you. I
think your testimony has been very useful. Dr. Hirst, thank you
particularly for this report, and Dr. Orbach, thank you for
your contribution today, too.
So why don't we dismiss this panel and go right to the next
On this second panel, we have Dr. Thomas Wilson with EPRI,
Senior Program Manager with EPRI in Palo Alto, California, Dr.
Raymond Kopp, who's the Senior Fellow with the Resources For
The Future here in Washington, and our third witness is Karan
Bhatia, who is Vice President and Senior Counsel with General
Thank you all for being here. Mr. Bhatia, you have to be
somewhere at noon or to leave here by noon, I'm told. Why don't
you go first and then I'll ask any questions. Senator Sessions
can ask his questions of you, if he has any, and then we'll
dismiss you and go to the other two witnesses.
STATEMENT OF KARAN BHATIA, VICE PRESIDENT AND SENIOR COUNSEL,
GENERAL ELECTRIC COMPANY
Mr. Bhatia. That's very kind. Thank you very much, Mr.
Chairman, Senator Sessions.
On behalf of General Electric, I'm very pleased to be able
to join you for this hearing on the Deployment of Cleaner
Energy Technologies in response to the Challenge of Climate
GE has been at the forefront of climate change for years,
both in the public policy arena and in its commercial
activities. GE is a founding member of the United States
Climate Action Partnership which supports United States cap and
trade legislation to achieve significant reductions of
greenhouse gas emissions and a founding member of the
International Clean Energy Alliance which supports global
programs to promote the deployment of United States cleaner
Commercially, GE has invested billions of dollars in its
EcoImagination products and services, including wind turbines,
coal gasification projects, advanced nuclear power plants, and
aircraft engines, locomotives and gas turbines, which are
significantly more efficient or lower emitting than traditional
While GE remains firmly committed to developing such
products, we do face deployment challenges, particularly in
developing economies which often lack the legal and policy
structures to promote the adoption of such technologies but
which account for an increasingly large share of the world's
economy and greenhouse gas emissions, and my testimony, Mr.
Chairman, which I will synopsize briefly but with your
indulgence, I'd ask the full be entered into the record, the
written version be entered into the record, focuses on this
challenge, on how to ensure that these countries can and do
participate in the deployment of cleaner energy technologies.
We believe that a comprehensive approach to this problem
should include five elements.
First, as its top priority, the United States should renew
its own renewable incentive programs, particularly the
renewable energy production tax credit. Doing so, we believe,
will assure a robust industry in the United States, capable of
offering advanced technology products to the world.
Simultaneously, the United States should provide advice and
assistance to developing countries in the creation and
implementation of effective cleaner technology deployment
incentives in their own countries.
Second, we believe there must be public funding supporting
the deployment of new technologies in the emerging economies.
In this context, we applaud the recent G8 Finance Ministerial
commitment to establish a climate investment fund or funds to
help combat climate change in developing countries as well as
President Bush's request in fiscal year 2009 for a United
States contribution to a clean technology fund.
Once created, we believe these efforts will be most
effective if those funds are guided by four principles: (a)
technology neutrality. The fund should be available to all
technologies that have shown the potential to reduce, capture
and/or store greenhouse gas emissions, (b) the majority of
funds should be available to leverage funding from other
sources, including export credit agencies, (c) the fund should
act in a transparent and speedy manner on transactions brought
to it by recipient countries and/or the private sector, and (d)
the fund should employ a variety of eligibility criteria
looking at both long-term high-impact projects as well as
shorter turnaround projects.
The third initiative is we believe the IEA report makes
clear continued innovation is going to be critical to
addressing the climate change challenge in the years to come
and key to innovation is rigorous intellectual property rights
Recently, some have suggested compulsory transfers of
cleaner technologies from the developed to the developing world
in violation of the established intellectual property rights
provisions. We believe this would be a fundamentally misguided
concept that could immeasurably setback global efforts to
combat climate change and we would urge they be strongly
In fact, we would urge that rigorous intellectual property
rights protection should be a condition of eligibility
participation in funding or other programs to promote cleaner
technology deployment in the emerging economies.
Fourth, we support the elimination of Customs duties and
other trade barriers to environmentally friendly goods and
services, and we applaud a recent United States EU proposal to
this effect. Eliminating such trade barriers will help to cut
project costs and improve the rate of technology deployment.
Finally, a substantial focused United States Government
effort to promote exports of cleaner and renewable energy goods
and services, we believe, is required. We applaud efforts made
by the Departments of Commerce, Energy and State in this area
thus far and we urge that they be expanded and coordinated.
The Cleaner Export Programs established in the Energy
Independence and Security Act of 2007 should be a core piece of
the overall strategy. In sum, we believe that these five
actions could form the foundation of a coherent, comprehensive
United States strategy designed to engage the developing world
in being part of the solution to global climate change. In
doing so, we would not only be benefiting partners abroad but
we would be supporting business decisions to expand United
States investments in cleaner energy technology production,
create United States jobs, and create a cleaner and more
efficient array of energy options for our own domestic energy
Thank you very much.
[The prepared statement of Mr. Bhatia follows:]
Prepared Statement of Karan Bhatia, Vice President and Senior Counsel,
General Electric Company
On behalf of General Electric, I'm pleased to join you for this
hearing on the deployment of cleaner energy technologies in response to
the challenge of climate change. A key element in this effort will be
engaging the world's emerging economies, which account for an
increasingly large share of the world's economy and greenhouse gas
emissions. My testimony today will focus on steps the United States can
take to assist in the reduction of those emissions through the use of
cleaner energy technologies. We recommend: 1) broad U.S. engagement to
provide assistance to help developing nations establish public policies
to incentivize cleaner energy technologies; 2) U.S. participation in
multilateral funds or other mechanisms to provide direct financial
support to offset the higher costs for cleaner energy technology; 3)
continued protection of intellectual property rights as necessary to
advance the development of technology; 4) elimination of trade
barriers, including tariffs, to cleaner energy technologies; and 5)
coordinated promotion of cleaner energy exports. Action in each of
these areas will support the partnership between government and
industry that is essential to solve the global climate challenge.
The International Energy Agency report, ``Energy Technology
Perspectives 2008,'' provides a carefully documented analysis for the
United States Senate to consider. The IEA's conclusions are that much
of the technology to address climate change currently exists, but that
that low and zero emission technology is currently more expensive than
the alternatives and that achieving a 50 percent reduction in
greenhouse gas emissions by 2050 will require considerable additional
research, development and demonstration. General Electric agrees with
each of these findings.
Climate change is one of the most compelling challenges facing the
world today. This threat requires a concerted response from both
governments and the private sector. Governments must provide a stable,
long-term regulatory framework to reduce greenhouse gas emissions. To
play our part in developing such a framework, GE is a founding member
of the U.S. Climate Action Partnership (USCAP), which supports U.S. cap
and trade legislation to achieve significant reductions of greenhouse
gas emissions. GE is also a founding member of the International Clean
Energy Alliance (ICE Alliance), which supports global programs to
promote the deployment of U.S. cleaner energy technology.
The private sector also has a critical role to play. Given the
right policy and legal framework, the private sector must make the
investments and develop the business models that allow for a successful
transformation to low carbon economies. It is GE's belief that this
alignment of government and private sector interests and actions is the
most--if not the only--effective way of addressing climate change. The
result can be a true public-private partnership on a vast scale, in
which private individuals and companies race to find innovative
solutions, without the bottlenecks that can come with government-
Through our Ecomagination initiative, GE is committed to making
those investments. We will sell $20 billion of our Ecomagination
products and services in 2009. Each of those products and services is
significantly more efficient or lower emitting than traditional
products. Our Ecomagination products include wind turbines, coal
gasification projects, advanced nuclear power plants, energy efficient
lighting, and the world's most efficient aircraft engines, locomotives
and gas turbines. We recently announced the purchase of a thin film
solar photovoltaic company to allow us to grow in the solar power area
Just as importantly, we are investing in innovative technologies to
break through to higher efficiencies and lower costs for the future.
Our R&D for zero or lower emission and higher energy efficiency
products and services reached $1.1 billion in 2007 and will increase to
$1.5 billion by 2010.
U.S. greenhouse gas legislation is critically important because the
United States represents approximately 20% of world greenhouse gas
emissions. At the same time, China alone now emits more greenhouse
gases than the United States, and emissions rates in emerging economies
are growing far more rapidly than U.S. emissions. The deployment of
lower emissions technologies in those economies is therefore essential
to any effective response to climate change. The United States has the
opportunity to export many of the needed products, services and
technologies, providing benefits to both the recipient countries and to
our own economy.
A further challenge to be addressed is the need to combat inflation
in commodity prices. Many renewable and cleaner energy technologies
rely on materials whose costs have soared in recent years because of
increased demand. While the high price of oil encourages use of
renewables, the high prices of carbon steel, aluminum, copper, and
other materials pose an increasing challenge for the competitiveness of
cleaner sources of energy. Developing countries that a year ago would
have struggled to pay the higher price for cleaner technologies now
find themselves facing a far greater challenge because of commodity
The solution around high commodity inflation is the same as the
solution to our wider energy challenges: innovation and efficiency.
Right now GE, supported by the renewable energy production tax credit
(PTC), is developing more efficient wind turbines that can produce more
electricity without increasing the amount of commodity inputs required.
GE also is working on finding additional materials that can be
substituted for high-priced commodities without sacrificing
effectiveness. These innovations, and others in the future, will help
combat high inflation in commodities and will work to keep the costs of
cleaner technologies within reach of developing economies.
POLICIES TO PROMOTE CLEANER ENERGY DEPLOYMENT
While GE is firmly committed to developing lower-emissions, higher-
efficiency products, we do face deployment challenges. These deployment
challenges exist because traditional, higher emission technologies
generally offer the lowest cost option. In developing economies, in
particular, company decision makers have been understandably unwilling
to pay for greenhouse gas reduction benefits, and governments have not
wished to require such expenditures for cleaner and lower emitting
In international climate change negotiations, emerging economies
have argued that the developed world has emitted most of the gases that
are now causing climate change and should therefore bear the cost of
reducing those emissions. In that context, some have even suggested
mandatory transfers of cleaner technologies from the developed to the
developing world. This is a fundamentally misguided concept that would
immeasurably set back global efforts to combat climate change. It does,
however, reflect the widespread recognition of the need for, and
economic challenges associated with, cleaner energy technology
deployment around the world.
Commercial mechanisms are highly efficient at ensuring the
deployment of technology through the sale of products and services and
through technology licensing. Yet for developing countries there are
many competing demands on the capital available for investment, of
which paying for cleaner but currently more expensive energy
technologies is but only one. Moreover, developing countries feel
little obligation to shoulder this additional cost, particularly when
the United States itself has no national greenhouse gas legislation.
Absent the participation of the emerging economies, it is difficult
to envision an effective solution to the global problem. It is
therefore incumbent on the United States and other developed economies
to offer constructive solutions to facilitate the deployment of cleaner
technologies in the developing world. A comprehensive approach should
include policy development assistance, funding for technology
deployment, intellectual property protection, removal of trade
barriers, and export promotion. Such a combination of initiatives will
be essential to support the transition of emerging countries to a
climate response program.
Policy Development Assistance
Cleaner energy solutions will be deployed when their recognized
benefits to the owner exceed their cost to the owner by more than that
of other energy sources. Because of the higher costs for cleaner energy
technologies, public policies to provide incentives generally are
required in order to make cleaner energy alternatives attractive. In
the United States, for instance, the wind PTC has proven indispensable
to the commercial development of wind farms. In years when the PTC has
expired, wind project development has almost stopped in this country,
and when it has been maintained for several consecutive years, wind
development growth has accelerated.
As its top priority the United States should renew its own
renewable incentive programs, particularly the renewable energy
production tax credit. Doing so will assure a robust industry in the
U.S. capable of offering advanced technology products to the world.
Simultaneously, the United States should provide advice and assistance
to developing countries in the creation and implementation of effective
cleaner technology deployment incentives. Two models for this activity
are the Asia-Pacific Partnership on Clean Development and Climate,\1\
under which renewable and distributed generation policy ideas are being
shared, and the U.S.-China Strategic Economic Dialogue,\2\ under which
the United States will help China adopt a NOX emission
\1\ For additional information, see: http://
\2\ For additional information, see: http://www.ustreas.gov/
The ultimate goal should be to help develop a range of policies
that work effectively together and are compatible with U.S. law and
regulations so that they fit into an international emissions reduction
program. The U.S. has a significant opportunity to lead by example and
share the knowledge gained through the implementation of successful
programs to spur innovative technology that increases energy efficiency
and reduces emissions.
Funding for Technology Deployment in Emerging Economies
As the IEA report makes clear, the scale of required investment
could be in the range of $400 billion to $1 trillion per year through
2050. That is a scope of investment beyond government capability.
However, government funds and financing on a scale in the tens of
billions of dollars can pave the way for private investment by
demonstrating new technologies and achieving initial economies of scale
At their June 13-14 meeting in Japan, G8 Finance Ministers called
for the establishment of climate investment funds to help combat
climate change in developing countries.\3\ The ministers stated their
commitment to ``helping developing countries address climate change in
a way consistent with the development needs of their people.''
President Bush has asked for $400 million in FY 2009 as the initial
U.S. contribution to one such fund, the Clean Technology Fund (CTF),
and is seeking authorization for the U.S. to commit $2 billion to this
multilateral fund over the next three years. The goal is for the CTF to
reach up to $10 billion over the next three years, to be used to help
developing countries in meeting the higher costs of deploying cleaner
\3\ See http://www.mof.go.jp/english/if/su080614a.pdf.
These types of international funds offer a means to buy down the
cost differential between existing technologies and cleaner
alternatives. In GE's view, these efforts will be most effective if
such funds follow four principles:
1. Technology Neutrality
The funds should be open to all types of technologies
and projects having an impact on CO2 and
methane emission reductions. Given the magnitude of the
challenge, the fund should be available to all
technologies that have shown the potential to reduce,
capture and/or store greenhouse gas emissions.
2. Leveraging Funding
The majority of the funds should be utilized to
maximum effect by leveraging funding from other sources
and should include:
Premium payment cover for loan guarantees from Export Credit
Agencies (ECAs), political risk insurance or credit insurance
to backstop local companies' credit, thus allowing leverage of
the Fund with commercial money; and
Grants, including interest rate buy-downs, to offset higher
costs of cleaner energy.
To ensure steady project implementation, the fund
should act in a transparent manner on transactions
brought to it by recipient countries and/or the private
sector. Starting points for the approval process could
be private sector bank and ECA procedures, as opposed
to the processes used for specialized funds such as the
Global Environment Facility. The Congress should also
consider ensuring that the proportion of suppliers on
funded projects reflects the contribution of the
individual donor countries.
4. Eligibility Criteria
The fund administrators should evaluate proposals on
several factors, including the following:
Lowest cost per ton of carbon reduction;
Total amount of potential carbon emission reduction;
Reduction in emissions of other pollutants (SO2, NOX,
Efficient use of water; and
Removal of tariffs that would constitute a barrier to the
introduction of technology imports.
Long term, high impact projects (such as low or zero
emission baseload power plants) as well as shorter
turn-around projects, should be considered on an equal
basis under these criteria.
Intellectual Property Rights Protection
GE is convinced that further research and development, along with
the economies of scale that can be realized by widespread deployment of
existing technologies, are necessary to reduce the costs of addressing
climate change. The IEA report makes clear that much of the technology
to address climate change exists today, but public acceptance of those
technologies will be far easier if there is little or no cost penalty
associated with their adoption. For that reason, we should embrace all
measures that promote innovation, foremost of which is the intellectual
property right protection system, which has fostered two centuries of
innovation in the United States. Forcing the transfer of technology
outside of normal commercial activity would stall the engine of
innovation just when it is most needed.
At the same time, we should emphasize that the benefits of
intellectual property protection are global. The United States, China
and India are all centers of research activity. The next generation of
GE patents on technologies to address climate change will be held by
scientists in our facilities in Shanghai and Bangalore along with their
colleagues in Niskayuna, New York.
It is also important to recognize that intellectual property right
protection does not only promote the initial innovation. It also
encourages commercial deployment of existing technologies. Companies
will be careful to avoid licensing technology or even selling products
to customers in countries where those customers could reverse engineer,
take and use the intellectual property rights.
Rigorous intellectual property rights protection should be a
condition of eligibility for participation in funding or other programs
to promote cleaner technology deployment in emerging economies.
Trade Barrier Elimination
In looking for ways to accelerate the deployment of cleaner
technologies, one mechanism immediately available to governments is to
eliminate customs duties (tariffs) and other trade barriers to
environmentally friendly goods and services. The United States and the
European Union have proposed such an initiative in the World Trade
Organization. Tariffs on wind turbines and components in most countries
are in the 2.5 to 10 percent range. The United States is at 2.5
percent. These tariffs represent an additional cost that governments
impose on the types of projects on which they are simultaneously
offering incentives to support. GE supports the tariff elimination
proposed by the United States and the European Union. Eliminating such
barriers will help to cut project costs and improve the rate of
The potential market for the global clean energy industry over the
next two decades has been estimated at more than $30 trillion.
Realizing the promise of this market requires the coordination among
U.S. government agency programs and the strong support of policy
makers. U.S. government export promotion activities will support
business decisions to expand U.S. investments in cleaner energy
technology production, creating U.S. jobs, a cleaner and more efficient
array of energy options for our own domestic energy future, and an
opportunity to expand and retain workforce in this critical industry.
A substantial, focused U.S. government effort to promote exports of
cleaner and renewable energy goods and services is required. We applaud
efforts made by the Departments of Commerce, Energy and State in this
area thus far, and urge that they be expanded and coordinated. The
cleaner energy export programs established in the Energy Independence
and Security Act of 2007 should be a core piece of the overall
strategy. These include the International Clean and Efficient Energy
Technologies and Investment in Global Energy Markets and International
Clean Energy programs.\4\ These programs are critical to position U.S.
companies to provide services and manufactured goods and deserved to be
\4\ See http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.00006:
Meeting global energy needs in a carbon constrained world is a
challenge that can only be met by a combination of technology provided
by industry and sound public policies that promote the deployment of
cleaner energy technologies around the world. The United States is in a
position to lead by example through the establishment and continuation
of domestic policies to promote technology development and deployment,
such as the renewable energy production tax credit. The United States
also must take a leadership role in the creation and implementation of
multilateral mechanisms, including investment funds, to address the
barriers that today prevent the widespread use of existing cleaner
energy technology. This effort should include assistance to emerging
economies in fashioning appropriate public policies to support the
introduction of new technologies, including incentives, reduction of
trade barriers, and protection of intellectual property rights, and
funding for U.S. government clean energy export promotion programs.
The Chairman. Thank you very much. Let me just ask one
question of you and then Senator Sessions can ask any questions
he has and then we'll go to the other two witnesses.
Mr. Bhatia. Thank you.
The Chairman. General Electric recently put out a report,
as I understand it, quantifying the potential gains or net
gains to the economy that you see from the production tax
credit, and could you give us a little bit of a description of
what you conclude in that report?
Mr. Bhatia. Yes, Mr. Chairman. You are making reference to
a study we put out last week by our GE Energy Financial
Services Branch which had done a careful examination of what
the cost to the U.S. Treasury would be from an extension of the
production tax credit and estimated--the conclusion was that
the effects, the total effect would be a net present value, a
positive net present value to the U.S. Treasury of $250 million
through the renewal of the production tax credit. This is
particularly with reference to wind energy.
I think it's a particularly relevant important study, given
the debate that has been going on about whether the extension
of the production tax credit would be a net positive or net
The conclusion is, and it's, in fact, probably a relatively
conservative estimate, but when you look at the incremental
income generated, the taxes generated and so forth, it would be
a plus of 250 million to the United States Treasury.
The Chairman. OK. Senator Barrasso, Mr. Bhatia needs to
leave for another appointment, so we were going to have any
questions that people wanted to pose to him posed at this time.
Did you have any questions?
Senator Barrasso. I do, Mr. Chairman.
The Chairman. Go ahead.
Senator Barrasso. Thank you very much, Mr. Chairman. Mr.
Bhatia, if I could ask you about public/private partnerships.
General Electric has made a significant commitment in Wyoming
to work with our University of Wyoming School of Energy
Resources, with our legislature, and I think that is a good way
to go in developing technologies. We're working there on clean
coal technologies, coal to liquids, coal to gas, and I was
wondering if you'd like to make any comments about that.
Mr. Bhatia. Senator, first of all, we greatly appreciate
the support that you've offered, that the State of Wyoming has
offered. We, simply said, see this as being an enormous global
challenge and it's one that's not going to have any solutions
that any single company or government acting alone is going to
be able to derive. It's going to necessarily involve
We've been pleased with the cooperation thus far. We look
forward to continuing it and again we see this not just in a
single sector of the energy area but in fact something that's
going to need to be replicated throughout. So we're delighted
Senator Sessions. Thank you very much. Thank you, Mr.
The Chairman. Senator Sessions.
Senator Sessions. Thank you. I noticed that you did say,
Mr. Bhatia, that you felt that mandatory transfers of
technology to developing world, I guess free, requiring
companies who've invested to develop it is not a good policy.
I would just add that I think we have to go to the next
step. The American taxpayers can't give the money to buy it
from GE either. We're in a competitive marketplace. We're
competing with low-wage countries who are putting Americans out
of work and I think that we cannot transfer our wealth around
the globe to meet these goals when we're actually hurting our
Let me ask you about GE's view on nuclear power. Do you
believe, from your commitment and your company's commitment,
that nuclear power can be competitive costwise in the next 50
years in producing electricity with the lowest no
CO2 emissions, no global warming gases, and no
pollutants into the atmosphere?
Mr. Bhatia. Senator, we are very much present in the
nuclear energy industry. We are a significant player in that
industry. We believe that it is an important part of what will
be the solution, a solution here. It's something that we
believe can, with the appropriate policy structures in place,
be an important and cost-competitive part of the equation.
But as I----
Senator Sessions. Let's talk about costs. Are you concerned
that the regulations and some of the practical shortages that
now exist may be driving up costs more than is necessary and
some of that could be avoided?
Mr. Bhatia. To be honest with you, Senator, I don't know
that we have looked at, you know, precisely what the
implications are for specific policy engagements would be on
that front. I'm happy to continue a conversation with you on
that, but at this point, I think all I would say is that we're
confident that nuclear is going to be part of the equation.
The Chairman. Thank you very much. We will include your
full statement in the record.
Mr. Bhatia. Thank you very much.
The Chairman. Why don't you go ahead to your appointment?
Dr. Wilson, we're anxious to hear your testimony and then Dr.
Mr. Bhatia. Thank you.
STATEMENT OF TOM WILSON, SENIOR PROGRAM MANAGER, GLOBAL CLIMATE
CHANGE RESEARCH, ELECTRIC POWER RESEARCH INSTITUTE (EPRI), PALO
Mr. Wilson. Thank you, Chairman Bingaman, Ranking Member
Domenici, and members of the committee.
I'm Tom Wilson, Senior Program Manager for Global Climate
Research at the Electric Power Research Institute.
EPRI conducts research and development on technology,
operations, and environment in the global electric industry,
and we really appreciate the opportunity to be here today to
provide testimony on the challenges to meet future energy needs
while addressing global climate change.
In my written testimony, I describe several EPRI analyses
of climate technology needs that complement the work that IEA
has produced earlier this morning. I compare in that written
testimony the findings and contrasts of our results as well.
I'd like to summarize my results here from those studies
and a few key points. First, while the geographic scope and the
analytical methodologies are different, the key findings of the
EPRI and IEA analyses are strikingly similar.
Significant reductions in future CO2 emissions
are possible, but they require fundamental technology change.
Technology change is slow and requires immediate investment in
RD&D in order to deal with it as well as commitment to deal
with a variety of other issues, including regulatory, siting,
liability, public perception, and deployment issues, especially
at those early plants.
Second, I have a chart in front of you, over here to the
left, that provides a high-level summary of EPRI's analysis, a
technical assessment of how CO2 emissions from the
electric sector could be reduced.
Using the Energy Information Administration's Annual Energy
Outlook 2008 as a starting point, we made more aggressive
assumptions regarding energy efficiency, renewables, nuclear
generation, advanced coal generation, carbon capture and
storage, plug-in electric hybrid vehicles and distributed
Our analysis shows that by deploying advanced technologies,
it's technically feasible to slow, stop and reduce
CO2 emissions from the electric power sector in the
United States Given our aggressive assumptions, we show that
the United States electric power sector emissions could be
reduced to 1990 levels by 2030 and decreased sharply
thereafter. However, in order to achieve these large reductions
in future CO2 emissions, we'll need all of these
technology options, even those which are not currently
Significant additional public and private RD&D funding is
needed over a sustained period to show that these technologies
work, to demonstrate their reliability, to reduce their costs,
and to gain public acceptance.
Third, in addition to the advanced generation targets
highlighted in the IEA study, grid modernization is a necessary
enabling step to significant emission reductions. This includes
smart grids and communications infrastructures to enable end
use efficiency and demand response, enable distributed
generation, and to enable PHEV, Plug-In Electric Hybrid
Vehicle, Integration, along with an electric grid
infrastructure with the capacity energy storage technologies
and robustness to operate reliably with up to 30 percent
intermittent renewable resources in some regions of the
Now RD&D requires the commitment of real money, so I think
it's critical to point out that expanded RD&D is not only
necessary to produce these technologies but is a good
investment for the U.S. economy.
Our economic analysis estimates for a scenario in which
emissions in 2050 for the economy are approximately half of
what they are today in an effectively managed RD&D investment
on the order of tens of billions of dollars over the next 25
years could lower the cost of emission reductions in the United
States on the order of $1 trillion between now and 2050.
The fundamental implication of our work, and I must say
that of the IEA, that of RFF, that of MIT, that of the United
States Climate Change Science Program, and virtually every
study that's been done on this issue over the last decade, is
that we must move from analysis to action if we want to have--
deploy this whole technology of low-cost, low- carbon
technologies in a timely and efficient manner.
EPRI's planning several additional activities that I'd like
to tell you about. First, we're moving forward aggressively to
demonstrate the advanced electric technologies in the chart
before you. One project came online in February of this year.
EPRI, Alstom and We Energies started operation of a 1.7
megawatt electric post- combustion capture and CO2
capture process using a chilled ammonia solvent.
In April, EPRI's Board of Directors approved six larger-
scale technology demonstration projects to examine hyper-
efficient electric end use technologies, smart grid
demonstrations, compressed air energy storage, two
demonstrations of pulverized coal with partial carbon capture
and storage, an IGCC plant with partial carbon capture and
storage, and lower-cost oxygen production.
EPRI's currently launching these initiatives with public
and private sector partners as a vital first step to meeting
growing demand for electricity while reducing greenhouse gas
Second, recognizing this is a global problem, we're
extending our analyses that we've done here in the United
States to work with other countries to understand how their
electric sectors in particular could help decarbonizes.
Mr. Chairman, this concludes my remarks. I look forward to
your questions and those of your colleagues.
[The prepared statement of Mr. Wilson follows:]
Prepared Statement of Tom Wilson, Senior Program Manager, Global
Climate Change Research, Electric Power Research Institute (EPRI), Palo
Thank you, Chairman Bingaman, Ranking Member Domenici, and Members
of the Committee. I am Tom Wilson, Senior Program Manager for Global
Climate Change Research at the Electric Power Research Institute
(EPRI). EPRI conducts research and development on technology,
operations and the environment for the global electric power industry.
As an independent, non-profit Institute, EPRI brings together its
members, scientists and engineers, along with experts from academia,
industry and other centers of research to:
collaborate in solving challenges in electricity generation,
delivery and use;
provide technological, policy and economic analyses to drive
long-range research and development planning; and
support multi-discipline research in emerging technologies
EPRI's members represent more than 90 percent of the electricity
generated in the United States, and international participation extends
to 40 countries. EPRI has major offices and laboratories in Palo Alto,
California; Charlotte, North Carolina; and Knoxville, Tennessee.
EPRI appreciates the opportunity to provide testimony on the
challenges to meeting future energy needs and to developing the
technologies for meeting increased global energy demand in the context
of the need to address global climate change. In my testimony, I will
describe several EPRI analyses of technology needs that complement the
work in the recent International Energy Agency's (IEA) report, ``Energy
Technology Perspectives 2008'', and compare and contrast our findings.
We are in considerable agreement with the IEA study on the need for
immediate investment in research, development and deployment of new
technologies to achieve significant to substantial greenhouse gas
emission reductions. The IEA study adds further detail and specificity
to a rapidly growing set of assessments reaching similar conclusions in
the U.S., in the OECD and around the world. With the global population
expected to increase by 40% by 2050, and with global aspirations for
economic growth (by 2050, the IEA projects global GDP to grow to 4
times its current level), the challenge of providing dramatically
expanded energy services while simultaneously reducing greenhouse gas
emissions is formidable.
In addition to elaborating on the points of agreement, I will also
highlight a few insights that EPRI analysis has identified that are
mentioned in the IEA report, but that are not highlighted there. In
particular, technologies to modernize the electricity transmission and
distribution grid and energy storage technologies appear to us as
critical to enabling the widespread deployment of renewable generation
and to opening new approaches to demand-side efficiency improvements. I
will also provide you a brief update on EPRI's efforts in 2008 to move
from ``analysis to action'', promoting early deployment of the needed
EPRI has conducted national and international research that has
highlighted the role of technology in addressing climate change since
the early 1990s. In 2007, EPRI released its own analysis, The Power to
Reduce CO2 Emissions--The Full Portfolio\1\, which addressed
the technical feasibility for the U.S. electricity sector to achieve
significant future CO2 emissions reductions. The analysis
examined the technology development pathways and associated research,
development and demonstration (RD&D) funding needed to achieve this
potential, as well as the economic impact of realizing emissions
reduction targets under two different technology scenarios. This
analysis is attached as Appendix A of my testimony. The first element
of EPRI's analysis--called the ``Prism'' analysis because of its multi-
colored illustration of the results--examined the impact of enhanced
performance and expanded deployment of a group of advanced technologies
on potential CO2 emissions reductions for the U.S.
electricity sector. Key technologies included:
\1\ This EPRI report was released in August 2007. It is attached
and is publically available at: http://mydocs.epri.com/docs/public/
DiscussionPaper2007.pdf. The Prism analysis has subsequently been
updated to reflect the baseline assumptions in the Energy Information
Administration's Annual Energy Outlook 2008, Report DOE/EIA-0383 (March
end-use energy efficiency
advanced light water nuclear reactors
advanced coal power plants
CO2 capture and storage
plug-in hybrid electric vehicles
distributed energy resources
The analysis revealed that if ``aggressive, but technically
feasible'' advanced technology performance and deployment levels could
be achieved, annual CO2 emissions from the U.S. electric
sector could be reduced to approximately 30% below 2005 levels in 2030.
The analysis also highlighted the critical role that enabling
technologies--energy storage and a modernized transmission and
distribution system--would play.
To understand the potential cost of making significant future
CO2 emission reductions, EPRI subsequently completed an
economic assessment of the entire U.S. economy using the MERGE model\2\
MERGE was used to estimate the least-cost combination of technologies
that meets a representative CO2 emissions constraint. The
MERGE analysis explored two technology scenarios for achieving this
constraint: 1) ``Limited Portfolio''; and 2) ``Full Portfolio''. The
Limited Portfolio focused on the currently-available technologies,
while the Full Portfolio incorporated significant improvements in a
full-range of technologies, including wind, solar, end-use efficiency,
nuclear, advanced coal plants, carbon capture & sequestration and plug-
in hybrid electric vehicles. The results from analyzing the two
scenarios reveal that the Full Portfolio provides a significant
economic benefit, reducing the policy cost of compliance by 50-66% (on
the order of $1 trillion) while still meeting the specified emissions
\2\ MERGE is a general equilibrium model of the global economy
originally developed by Dr. Alan Manne (Stanford University) and Dr.
Richard Richels (EPRI) to assess a wide range of energy and
environmental issues. MERGE has been used for more than a decade to
analyze the cost of CO2 emissions mitigation as a function
of technology cost, availability, and performance. MERGE models long
time horizons to capture economic effects of potential climate change
and encompasses all major greenhouse gases and all emitting sectors of
the economy. Using technology descriptions and policy constraints as
inputs, the model outputs not only energy production by technology, but
also prices for wholesale electricity and carbon emissions. While the
model is global in scale, the current analysis focuses on the U.S.
Four major conclusions emerged from this analysis:
A technology-based strategy for the electric sector has the
potential to lead to sustainable and dramatic reductions in
future U.S. CO2 emissions. Further, this strategy
also creates opportunities to de-carbonize beyond the
electricity sector and outside the US.
A diverse portfolio of advanced technologies will be
required. No single technological ``silver bullet'' will
suffice. Removing any one of the advanced technologies from the
portfolio significantly increases the cost of achieving any
greenhouse gas emission reduction constraint.
Significant additional public and private sector research,
development and demonstration (RD&D) funding is needed over a
sustained period to achieve these technological outcomes. In
the near-term early demonstration of new technologies--e.g.,
carbon capture and storage, new nuclear, advanced transmission
and distribution system--is critical to rapidly move them to
commercial status. Longer-term research to enable full scale
deployment of key technologies is equally critical. Given that
the lead time for moving technology from the drawing board to
full commercial status is measured in decades, the time for
starting is now.
A technology-based strategy reduces the economic costs of
achieving a greenhouse gas emissions constraint. An investment
in RD&D investment (public and private) will lower the cost of
emissions reductions in the U.S. on the order of $1 trillion
between now and 2050.
The IEA also examined two scenarios in its analysis: 1)
technologies needed to reduce global CO2 emissions to 2005
levels by 2050 (the ACT scenario); and 2) technologies needed to reduce
CO2 emissions by 50% below 2005 levels in 2050 (the ``Blue''
scenario). Similar to EPRI's analysis, the IEA Blue scenario concludes
that a full portfolio of both improved and fundamentally new
technologies will be needed to meet the 50% reduction target. The IEA
report delineates 17 technologies that must be deployed in order to
achieve the goals of the second scenario. IEA also urges immediate RD&D
investment to develop the necessary technologies, including
CO2 capture and storage (CCS), renewable energy, and nuclear
power. Finally, IEA perceives tremendous opportunity to de-carbonize
other sectors through electrification.
Major conclusions from the IEA analysis include:
Deep global emissions cuts are technically achievable.
Implementation of RD&D roadmaps for 17 technologies identified
by the IEA are expected to make the largest contributions.
All technologies will be needed, including new and emerging
technologies, such as coal with carbon capture and storage,
renewable energy, and nuclear power.
A major acceleration in RD&D is needed both to bring forward
new technologies and to reduce the costs of those already
Energy efficiency represents a tremendous opportunity and a
cost-effective near-term option. However, if we are to reduce
CO2 emissions by 50% over 2005 levels in 2050, new
technologies still under development must also be deployed that
can achieve de-carbonized power generation.
Differences between EPRI and IEA Analyses
The key findings of the EPRI and IEA analyses--as you have seen--
are strikingly similar. Significant reductions in emissions are
possible, but they require fundamental technological change. Technology
change is slow and requires immediate investment in RD&D as well as the
commitment to deal with regulatory, siting, and public perception
The methodologies that led to these similar conclusions are quite
Geographic Scope. EPRI's Prism and MERGE analyses in 2007-8
focused on the United States. Prism specifically focused even
more narrowly on the electric sector. In contrast, the IEA
study provides a global picture with significant detail for 10
--The IEA approach uses a bottoms-up, partial equilibrium approach
(ETP-MARKAL) , and calculates the amount of emissions and
technology development/deployment costs associated based on
specific assumptions about CO2 emissions costs
and technology deployment levels. In this sense, the IEA
analysis assumes that certain deployment goals will be met
and reflects the consequences of these assumptions.
--EPRI's Prism analysis took a similar approach to the IEA
analysis. We made technology deployment assumptions and
calculated resulting emissions.
--In contrast, the EPRI MERGE model uses a general equilibrium
approach and calculates the lowest cost combination of
technology deployments which achieve a specified emissions
constraint. CO2 emission costs, wholesale
electricity production costs, and the economic impact of a
CO2 constraint on U.S. GDP are also calculated.
The emission reduction scenarios are different. The IEA Blue
scenario, which reaches 50% below 2005 levels in 2050, is most
directly comparable to the EPRI MERGE Full Portfolio scenario.
For the IEA Blue and EPRI Full Portfolio scenarios,
--Electricity production costs in the IEA study for the different
technologies look reasonably comparable to those used in
the MERGE analysis.
--For the electricity sector results in the Blue scenario, the IEA
global generation shares (in percentage terms) for each
technology in 2050 are comparable, although somewhat
different, to results EPRI has obtained for the U.S. based
on MERGE analysis:
The nuclear, coal+CCS generation shares are a little
lower in the IEA Blue scenario.
The gas + CCS, tidal, solar, biomass and biomass + CCS
generation shares are higher in the IEA Blue scenario.
The IEA study examines the possibility of CCS retrofits.
This is particularly important for rapidly developing
countries, which have many relatively new, high-emitting coal
plants. Recent EPRI analyses are exploring the economics and
technical feasibility of CCS retrofits in the US.
Given these methodological differences, we find the results to be
both complementary and reinforcing.
Conclusions and Next Steps--Analysis to Action
One fundamental implication of our work and of the IEA study is
very clear--we must move from analysis to action if we are to deploy
this full portfolio of technologies in a timely and effective manner.
EPRI is planning additional action in two areas:
EPRI Demonstration Projects. EPRI has identified a number of
technology demonstration projects that target critical gaps that must
be filled to achieve this ``Full Portfolio'' of technologies. One
project came on-line in February of this year. EPRI, Alstom and We
Energies are testing a 1.7 MWe post-combustion CO2 capture process
using a chilled ammonia solvent.
In April, EPRI's Board of Directors approved six larger-scale
technology demonstration projects with the intention of accelerating
progress towards a low-carbon future: hyper-efficient electric end-use
technologies; smart grids; compressed air energy storage; pulverized
coal (PC) with partial CCS (two alternate capture technologies);
integrated gasification combined cycle (IGCC) with partial CCS, and
lower-cost O2 production. EPRI is currently launching these initiatives
with public and private sector partners as a vital first step to meet
the growing demand for electricity while reducing greenhouse gas
Global Prism and MERGE analyses. The IEA effort breaks new ground
on examining the technology options for reducing emissions in the so-
called `G8+5' (the Group of Eight developed nations and the five
largest emerging economies of the developing world: China, India,
Brazil, South Africa, and Mexico). EPRI is carrying out a complementary
effort to illustrate the global value of advanced electricity
technologies and to add additional technological detail to the MERGE
global model so that we can provide an integrated, but detailed view of
the possible implications of global climate policies. If we are
successful at developing and globally deploying the ``Full Portfolio''
of low-cost, low-carbon electricity options, we will likely achieve
more benefit for the global climate than would be accomplished through
years of protracted negotiations. Mr. Chairman, this concludes my
prepared remarks, and I look forward to your questions and those of
your colleagues. Thank you.
The Chairman. Thank you for your testimony. Dr. Kopp.
STATEMENT OF RAYMOND J. KOPP, SENIOR FELLOW AND DIRECTOR,
CLIMATE POLICY PROGRAM, RESOURCES FOR THE FUTURE
Mr. Kopp. Thank you, Mr. Chairman, members of the
I'm a Senior Fellow and Director of the Climate and
Technology Policy Program at Resources For The Future, which is
a 50+ year-old resource institution headquartered here in
Washington that focuses on energy, environmental and natural
Resources For The Future is both independent and non-
partisan. We neither lobby nor take positions on specific
legislative or regulatory proposals. However, individual
researchers are encouraged to express their individual opinions
and I emphasize the views I'm going to express today are my
IEA's recent report provides an excellent engineering
perspective on the suite of technologies and scale of
deployment needed to achieve global greenhouse gas
concentration targets. The report is certainly sobering in
terms of investment scale.
At the same time, it is reassuring insofar that it
identifies a feasible technology and investment path consistent
with carbon dioxide concentration stabilization. While reaching
that target represents an enormous technical, economic and
political challenge, the IEA report does demonstrate this is
not an impossible task.
The most important aspect of the report, in my estimation,
is the focus on the global technology and investment building
blocks that will be similar to attain deep reductions in
A similar analysis, focused at a country level, would be
quite valuable and I would encourage the committee to pursue
such an assessment for the United States. The analysis should,
however, go beyond IEA's assessment and address the specific
within-country challenges to the deployment, development and
deployment of non-carbon technology and the public policies
required to overcome those hurdles.
The example of what I mean, let's consider carbon capture
and sequestration. Capturing and sequestering carbon dioxide
emissions from coal-fired power plants is a foundational
technology component of any deep emissions reduction plan.
A carbon price, as well as increased funding on related
research, will be crucial components to successful deployment.
However, by themselves, policies to price carbon and accelerate
R&D are unlikely to be sufficient. Regulations for the storage
of carbon dioxide must be written. Storage sites must be
selected. Almost assured local opposition to storage must be
overcome. A vast carbon dioxide transport infrastructure has
got to be sited, financed and constructed.
These are country-level policy concerns and therefore not
addressed by the IEA, but are nonetheless substantial barriers
to deployment of this technology. A thorough United States
assessment of carbon capture and sequestration deployment would
address these barriers and provide policy solutions.
The same is true for nuclear power. The IEA report suggests
that 30 percent of global energy needs could be met with
nuclear power, but such a large expansion of nuclear power
would require more than a carbon price and R&D directed at
Regulatory reactor safety concerns continue to limit public
support for nuclear power. Long-term waste storage hangs over
the head of the industry. Concerns about proliferation are very
real and would be exacerbated by greatly increased growth in
spent fuel reprocessing, and a worldwide lack of skilled
engineers is still a drag on the technology.
These are all barriers that must be addressed by public
policies, in addition to carbon pricing and funding for
research and development.
The same is true for the deployment of biofuels and I talk
about that in my written testimony. Land use issues are
substantial, both domestically and internationally, and these
must be overcome by policies, in addition to carbon pricing and
additional financing for research and development, and the same
holds true for renewables. Solar, wind, other source renewable
technology require great enhancements to our existing grid.
These are policies that are going to extend beyond carbon
pricing and funding for research and development.
If we choose to undertake U.S. studies as suggested, I
strongly encourage that the analysts, as has already been
suggested by members of the committee here, include a careful
examination of the barriers to technology deployment and point
out where public policy is needed to overcome those barriers,
and if I might, one last point, Mr. Chairman.
Achieving the IEA concentration targets requires a lengthy
investment process. Any delay means greater atmospheric
concentrations in the coming years. Unfortunately, we do not
have a magic wand and will not will this process to commence.
Rather, we must follow a slow and arduous path to develop and
implement the many public policies, domestic and international,
that will remove barriers and enable investment.
This all suggests that we must buy some badly needed time.
Fortunately, I think we have a very good option. The IEA report
addresses only energy-related carbon dioxide emissions, those
coming from the combustion of fossil fuels. Notably absent is
the 15 to 20 percent of global carbon dioxide emissions that
come from land use, most notably deforestation in tropical
While it is widely known that China and the United States
are now the two largest carbon dioxide emitters in the world,
it is less known that the countries ranking third and fourth
are Brazil and Indonesia, primarily due to their carbon dioxide
emissions from deforestation.
Energy-related carbon dioxide emissions can be reduced with
the deployment of non-carbon energy technologies as IEA has
pointed out. These reductions require large-scale investments
and will take a good deal of time.
In contrast, reducing carbon dioxide emissions by reducing
the rates of deforestation can be accomplished with targeted
domestic policies that alter the economics of land use to make
a standing forest more valuable than alternative uses of the
Using the growing international carbon market and the
United States market that might be established under Federal
legislation to monetize the carbon contained in these standing
forests will provide the economic incentives needed to alter
land use decisions.
In principle, such land use decisions could be changed very
quickly, giving rise to rapid reductions in carbon dioxide
emissions. These large-scale reductions in forest-related
CO2 are surely to become ever more valuable in light
of the hard work ahead to achieve the needed energy-related
reductions requiring much longer lead times.
Thank you, Mr. Chairman.
[The prepared statement of mr. Kopp follows:]
Prepared Statement of Raymond J. Kopp, Senior Fellow and Director,
Climate Policy Program, Resources for the Future
Thank you, Mr. Chairman, for the opportunity to offer testimony
before the committee about the challenges of meeting future energy
needs in the context of global climate change. I am a senior fellow and
director of the Climate Policy Program at Resources for the Future
(RFF), a 56-year-old research institution, headquartered here in
Washington, DC, that focuses on energy, environmental, and natural
RFF is both independent and nonpartisan, and shares the results of
its economic and policy analyses with members of both parties,
environmental and business advocates, academics, members of the press,
and interested citizens. RFF neither lobbies nor takes positions on
specific legislative or regulatory proposals, although individual
researchers are encouraged to express their individual opinions, which
may differ from those of other RFF scholars, officers, and directors. I
emphasize that the views I present today are mine alone.
The International Energy Agency's (IEA) recent report, Energy
Technology Perspectives 2008: Scenarios and Strategies to 2050,
prepared in support of the G8 Plan of Action, provides an excellent
engineering perspective on the suite of technologies and scale of
deployment needed to achieve a concentration target of 450 ppm for
carbon dioxide (CO2). Importantly, the IEA augments the
technology information with economic estimates of cost and required
The report is certainly sobering in terms of investment scale,
particularly with respect to investments in research, development, and
demonstration (RD&D) and physical capital. At the same time, it is
reassuring insofar as it identifies a feasible technology and
investment path consistent with CO2-concentration stabilization at 450
ppm. While reaching this target represents an enormous technical and
economic challenge, the IEA report demonstrates it is not impossible.
The report reflects a good deal of our collective understanding of
the challenges posed by climate change:
Most importantly, there is no silver bullet. In addition to
conservation, virtually all of the low-carbon technologies
commercially available and those to become available over the
next few decades must be deployed.
Carbon pricing is crucial to providing incentives for both
conservation and technology development and deployment.
Governments will be required to greatly enhance spending on
RD&D, and to ensure the efficiency and efficacy of that
Additionally, the IEA focuses attention on the global technology
and investment building blocks that will be necessary to attain deep
reductions in emissions. A similar analysis focused on the regional and
country level would be quite valuable and I would encourage the
committee to pursue such an assessment for the United States. That
analysis should go beyond the IEA assessment, however, and address the
specific within-country challenges to the development and deployment of
non-carbon technologies and the public policies required to overcome
If the technologies addressed in the IEA report are to be deployed
at the scale suggested, removal of barriers to deployment will require
a public policy response. While cost and technical feasibility will be
important limiting factors, it would be unwise to overlook the suite of
complementary public policies that must be developed to address
technology-specific barriers. A U.S.-based analysis of technology
roadmaps akin to the IEA report should address specifically these
complementary policies, some of which I've highlighted below. Such
policies will be required for the successful implementation of all the
major technologies needed to reach a 450 ppm target and extend beyond
the establishment of a carbon price and the provision of additional R&D
Carbon capture and sequestration (CCS). Capturing and sequestering
CO2 emissions from coal-fired power plants and eventually
all fossil combustion is a foundational technology component of any
emissions reduction plan targeting 450 ppm CO2. A carbon
price, as well as greatly increased funding of related research,
development, and deployment, will be crucial components to
implementation. However, by themselves, policies to price carbon and
accelerate R&D are unlikely to be sufficient. Regulations for the
storage of CO2 must be written, storage sites selected,
almost assured local opposition to storage to overcome, and a vast
CO2-transport infrastructure sited, financed, and
constructed. These are country-level policy concerns and therefore not
addressed by the IEA report, but are nonetheless substantial barriers
to the deployment of this technology. A thorough U.S. assessment of CCS
would address these barriers and provide solutions.
Nuclear power. The IEA report suggests that 30 percent of global
energy needs could be met by nuclear power, and in the IEA BLUE
scenario, global nuclear power generation triples. But such a large
expansion of nuclear power will require more than a carbon price and
R&D directed to new reactor design, and the issues to be resolved are
substantial. Reactor safety concerns continue to limit public support
for nuclear power. Long-term waste storage hangs over the head of the
industry. Concerns of proliferation are very real and would be
exacerbated by greatly increased growth in spent-fuel reprocessing, and
a worldwide lack of skilled engineers is a drag on the expansion of the
technology. These are all barriers that must be addressed by public
policies in addition to carbon pricing and R&D.
Bioenergy. Both for purposes of electricity generation and the
production of liquid fuels for transport, bioenergy is essential in the
IEA scenarios and is the largest renewable energy source. Carbon
pricing is crucial to the development and deployment of bioenergy
technology and technical innovation has a large role to play, but
several barriers to deployment will remain. Bioenergy will compete
worldwide for land used to produce food and fiber, raising the cost of
all three. Accelerated bioenergy production in the United States can
drive local land-use decisions and have direct impacts--both good and
bad--on local rural development. Expanding the production of crops for
bioenergy can affect U.S. environmental quality, including adverse
impacts to biodiversity and water quality, as well as create
international challenges to ecosystems and biodiversity through
increased deforestation. Public policies to address the land-use issues
raised by increased bioenergy production in the United States are just
as important to the expansion of this technology as carbon pricing and
Wind and solar power. One of the great renewable energy successes
is wind-generated electricity. While it has proven to be an
increasingly economical renewable energy source, it can still benefit
from a carbon charge and additional RD&D. However, wind is generated
where the wind blows, not necessarily where you find the electricity
load centers. Transmission thus becomes crucial. The current U.S. grid
is not designed to take full advantage of western or offshore wind
resources. Therefore carefully planned grid expansion will be required
for a large-scale increase in wind-generated electricity. This is
likely true for solar as well. A greatly expanded and improved
electricity transmissions grid has been a U.S. priority for at least
two decades; however, given the manner in which we regulate and finance
transmission, very little progress has been made. In addition,
intermittency will always be a problem with wind, meaning the
electricity system must be designed to accommodate intermittency with
sufficient reserve capacity, storage, and interconnected systems.
TWO FINAL POINTS
Global demand for energy continues to rise, and over time, the bulk
of that increase will come from non-OECD developing countries. Not
surprisingly, the majority of the investment in energy-producing and -
consuming technologies tracked by the IEA scenarios must take place in
the same non-OECD countries. It is likely that new low-and no-carbon
energy sources (coal with CCS, nuclear, and renewables, for example)
will be more costly than conventional fossil sources. In OECD
countries, we may be willing to bear carbon prices in the range that
the IEA predicts in order to level the playing field between fossil and
non-carbon technologies. However, non-OECD countries that are hard-
pressed to afford current fossil technology will be less willing to
bear the same carbon prices or devote scarce resources to subsidizing
low-and no-carbon energy sources--certainly not in the immediate term.
The obvious question unanswered by the IEA report concerns the elements
of U.S. foreign policy (pursued jointly with the other OECD countries)
that would lead to the necessary global deployment of the technology
The last point concerns time. Achieving the IEA scenarios requires
the process of investment in RD&D, conservation, and physical, energy-
related capital to begin immediately. Any delay means greater
atmospheric concentrations in the coming years. Unfortunately, we
cannot wave a magic wand and will this process to commence; rather, we
must follow a slow and arduous path to develop and implement the many
public policies, domestic and international, that will remove barriers
and enable investment.
We must buy some badly needed time and, fortunately, we have a very
good option. The IEA report addresses only energy-related
CO2 emissions--that is, CO2 released from the
combustion of fossil fuels. Notably absent is the 15 to 20 percent of
global CO2 emissions that come from land use, most
importantly deforestation in tropical countries. While it is now widely
known that China and the United States are the two largest
CO2 emitters, it is less well-known that the countries
ranking third and fourth are Brazil and Indonesia, due to widespread
deforestation in these countries.
Fossil-based CO2 emissions can be reduced with the
deployment of non-carbon technologies, but as noted by the IEA, these
reductions require large-scale investment and will take a good deal of
time. In contrast, reducing CO2 emissions by reducing rates
of deforestation can be accomplished with targeted domestic policies
that alter the economics of land use to make a standing forest more
valuable than alternative uses of the land. Using the growing
international carbon market and the U.S. market that might come into
being to monetize the carbon contained in standing forests will provide
the economic incentives needed to alter land-use decisions. In
principle, such land-use decisions could be changed very quickly,
giving rise to rapid reductions in CO2 emissions. These
large-scale reductions in forest-related CO2 are sure to
become ever more valuable in light of the hard work ahead to achieve
the needed fossil-based reductions requiring much longer lead times.
The Chairman. OK. Thank you both very much for your
Let me ask you each a question. Dr. Wilson, EPRI came out
with a study on plug-in hybrids that has been cited pretty
broadly. Could you just give us the short version of what you
concluded as to the barriers that might need to be overcome for
us to get widespread use of plug-in hybrids? I know you
contemplate that in your chart here.
Mr. Wilson. Yes, sir. We view the plug-in hybrids--I'll
talk about the opportunity briefly. The opportunity is, No. 1,
you can fill up your gas tank for less than a dollar a gallon
at current electricity rates.
No. 2. The study you're speaking to refers--was done
jointly with NRDC, the Natural Resources Defense Council, and
it, I think, is the most detailed demonstration of the fact
that greenhouse gas emissions will be reduced by going to plug-
in hybrid electric vehicles.
No. 3. Reduced oil reliance on foreign oil imports.
Now what are the challenges? The challenges, Number one,
are batteries, trying to get wide-scale deployment and
manufacturing and get the costs down of lithium ion batteries
is the first key challenge. Toyota is introducing a nickel
metal hydride version of their Prius in the near future as a
plug-in hybrid, but that is not the battery of the future. It's
looking toward additional more future batteries and those are
contemplated maybe to be on the market by 2010. So batteries
are one key area.
A second area is the charging and recharging
infrastructure. Now if a plug-in hybrid----
The Chairman. Let me just ask on that. You say Toyota's
going to put on the market a nickel metal hydride plug-in
Mr. Wilson. They're working on the Prius now. They're
The Chairman. I see. We were in Japan and went to their
test site and they are testing it, but they indicated they
weren't going to market it, that they're not going to market a
plug-in hybrid until they can do it with a lithium ion battery.
Is that different from your information?
Mr. Wilson. I'm not entirely sure.
The Chairman. OK. Yes. Why don't you check that and let me
know if you find out something different because we were
advised that even though they are testing a nickel metal
hydride plug-in hybrid, they do not intend to market that?
They're going to market a lithium ion battery hybrid, plug-in
Mr. Wilson. Thank you.
The Chairman. So go ahead. I'm sorry to interrupt you
Mr. Wilson. So getting to the lithium ion is a key
The second challenge is recharging and for plug-in hybrids,
it's different than electric vehicles which you needed to fully
charge in order to use them. You can just partially charge them
at a low rate. In fact, I think having that load in the grid is
sort of like having a--is comparable to a dishwasher in terms
of the drain as on the grid. So it's a very small drain. It's
one which we need to integrate for a couple reasons.
One is so that we can make efficient use of resources,
charging off peak, providing off-peak rates. The second is that
we might be able to use that storage at some point in the
future to help the grid out, to help use that as a source of
electricity in times of need, so that's a second major issue.
The Chairman. All right. Thank you. Dr. Kopp, let me ask
you on your point about deforestation. The emissions trading
scheme that they have in Europe, in that scheme, they do not
recognize carbon credits for avoided deforestation and other
land use practices, and I believe they explain that by saying
that they just think it's too hard to monitor.
How would you suggest that we solve that problem? Do you
think that their concerned about monitoring it is overblown, or
what do you suggest?
Mr. Kopp. Mr. Chairman, their concern is not overblown.
There are several concerns with developing a deforestation-
based carbon asset. Monitoring is one of them. Leakage is
another particular issue. Permanence is another issue. Of
course, you have this fear that since there is so much carbon
dioxide that comes from deforestation, that if you allowed that
into a carbon market, you might ``flood'' the market with these
carbon-based assets and in some sense cause destabilization.
There's a large body of researchers right now that are
working on particularly those issues. As you know, a lot of the
Bali process and the Bali roadmap, there is a well-defined goal
to define mechanisms and procedures that would allow for
deforestation credits to be admitted into the global carbon
market. That process is ongoing right now.
I think I personally have a lot of confidence that we're
going to overcome all those particular issues, but those are
very real issues right now, and at this point in time, the
European Union's trading system did not see fit to include
deforestation as a viable offset, but I believe over the next
18 to 24 months, you're going to see a tremendous amount of
research that suggests this is going to be a very viable asset,
carbon-originating asset, and one that I think does buy us the
needed time while we try to go through all these other
processes of engaging other countries to reduce their carbon
emissions, develop the technologies and deal with these other
particular barriers to technology deployment.
The Chairman. All right. Thank you very much. Senator
Senator Sessions. With regard to the forests, Dr. Kopp,
fundamentally, trees that become mature and start dying give
back carbon dioxide and as they die they give back what's in
their cellulose, I guess, but a healthy growing forest sucks
out of the atmosphere CO2. That's what it breathes.
Do you think there's a possibility that we could learn how
to manage our forests and thin our forests to maintain a
growing vigorous forest, utilize that cellulose and the energy
from the sun, solar and wind sense, to create a sizable
portion, a noticeable portion of our energy needs?
Mr. Kopp. Senator Sessions, I think there's no doubt that
enhanced management of existing forest stands, both within
countries like the United States and elsewhere, is going to be
a component of managing carbon dioxide portfolios going forward
and there's a lot of work already underway to think about how
we should properly manage those forests, both those privately
held and those in the public domain.
Senator Sessions. I couldn't agree more. I do think some of
the public forests could be thinned. Fire breaks could be cut.
Other things could be done and that wood, instead of just being
thrown away that may not be legitimate for timber, could be
ground, chipped, and chipped wood is right now, I believe,
valuable for energy. Chipped wood today delivered as far as 50
miles can produced an energy source that's cost effective and
in our State where you clear cut a tract of land, you replant
the tops and limbs that are left there, they rot, they emit
CO2, where if they could be converted to energy and
it's easier to replant for the landowner and then you have a
vibrant growing forest, it's really a drawing in
CO2. So I think there's great potential here, I
really do, and maybe we can work on it.
I'm very interested also in the plug-in hybrids. I think a
lot of people think that--I mean, this is a solution that goes
to carbon fuel profits. It goes to oil-exporting nations. If we
could create a little better battery--I'd like you to talk to
me a little bit more about that--you could charge that battery
at night and I talked to someone who makes a device that could
time when you charge a battery. It wasn't that expensive, and
you said for a dollar, you could have the equivalent of a tank
of gasoline? A dollar's worth of electricity could produce a
tank of gasoline.
Mr. Wilson. That's the calculation our people have made.
Senator Sessions. Then, of course, you're looking at if it
were nuclear-powered electric generation, you'd have zero
emissions of CO2 or any global warming gases and we
would therefore be able to reduce significantly our imports of
foreign oil, reduce the wealth transfer that's now occurring,
and serve environmental needs, also. Am I off base on that?
Mr. Wilson. Yes, I think you made the points I was trying
to make earlier better than I did. I21Senator Sessions. The
thing is pretty dramatic to me because it seems to me in terms
of a major breakthrough. Would this be perhaps the closest
thing we've got to a breakthrough, a plug-in hybrid?
Mr. Wilson. This one contributor, if you look at our--
unfortunately, you're in a position, we can't see our slices up
there, it's one thing out of the many that would reduce
emissions, but it's an important contributor for the reasons
SenatorSessions. Now if you were going to commute--if the
battery would take you 30 miles or 40 miles without having to
turn on your hybrid engine, just the charged battery, the
electric car battery, and you commuted to work less than that,
you'd use not a drop of oil. You could come back at night and
recharge your battery and if you don't go more than 30-40-50
miles, you may not use any oil at all.
Mr. Wilson. Yes. One estimate is about 78 percent of people
commute less than 40 miles round trip a day.
Senator Sessions. Just think in terms of CO2,
even if you're utilizing a mix of power sources and not totally
nuclear, is it your statement that studies have shown that
still is an improvement on CO2 emissions to utilize
Mr. Wilson Yes. The EPRI/NRDC study that was released last
July says that the emissions from a plug-in electric hybrid
vehicle, taking electricity solely from an old coal plant, is
comparable to a regular hybrid vehicle today. So if you take
electricity from old coal, new coal, coal renewables, nuclear,
hydro and the other--natural gas and the other resources, then
Senator Sessions. If you have a cleaner coal technology as
we go forward and an increase in nuclear power, that would be
less, and then is it not true that nuclear power is a 24-hour-
a-day, seven-day-a-week source of electricity and so you do
have times in which it is particularly valuable at the off-peak
hours, 11 p.m. to 5 a.m. hours?
Mr. Wilson. Yes.
Senator Sessions. So if you were drawing on the grid, you
would be drawing as a percentage more nuclear clean energy than
if you were solely drawing it from a coal, old coal plant?
Mr. Wilson. That's correct.
Senator Sessions. Thank you, Mr. Chairman.
The Chairman. Thank you very much. Let me thank both of you
for coming and testifying. I think it's useful testimony. We'll
include your full statement in the record and that will
conclude our hearing.
[Whereupon, at 12:02 p.m., the hearing was adjourned.]
Responses to Additional Questions
Responses of Karan Bhatia to Questions From Senator Bingaman
Question 1. You have spoken at length about the need for
international collaboration and assistance for clean energy
development. How do you suggest that we support tech transfer between
developed and developing countries without placing a large burden on US
companies and US taxpayers?
Answer. Left unaddressed, climate change threatens to impose
substantial, long-term cost burdens on businesses and taxpayers in the
United States and elsewhere. While potentially imposing some near-term
costs, the policies recommended in my testimony to encourage
utilization of cleaner energy options in the developing world would
likely be very cost-effective over the long run. Moreover some of those
policies would carry little cost burden even in the near term. For
example, ensuring that the United States pursues sound domestic
policies on renewables (including extending the renewable energy
production tax credit), and advising developing countries on sound
energy policies, would not impose substantial costs, and removal of
trade barriers would actually reduce costs, to American businesses or
Similarly, adequate protection of intellectual property rights
(IPRs) is an essential and cost effective means to promote innovation
and transfer of advanced cleaner energy technologies. Companies in
technology-intensive industries will continue to be reluctant to deploy
proprietary technology in countries where the risk of losing control of
the technology is not mitigated by strong IPR regimes. By giving
innovators assurance that their technologies will not be illegally
expropriated, strong IPR systems can increase market-based cross-border
technology transfers, to the benefit of both U.S. and foreign
Additionally, funding mechanisms such as the proposed Clean
Technology Fund should emphasize deployment of new technologies in ways
that will bring down costs so that the cost differential between
advanced clean technologies and the traditional technologies in use
today will be reduced significantly, and with it the need for such
taxpayer supported programs. In this regard, as stated in the written
testimony, it is essential that mechanisms such as the CTF work
effectively with private sector and export credit agency financing.
While GE commends the creation of the CTF, we are concerned about the
practical usability of its financial products especially for private
sector driven projects. We welcome a detailed discussion on this issue.
Question 2. What policies will incentivize companies such as GE
Energy to locate their production facilities in the U.S.?
Answer. The market for cleaner energy technologies is global. GE
currently has and will continue to have a global supply chain, with
manufacturing in the United States as well as other countries. Policies
that support a robust U.S. market for cleaner energy technologies--
particularly the renewable energy production tax credit--support the
decision to locate production facilities in the U.S.
Our wind business offers a case in point. The policy-driven growth
of wind in the U.S. has helped GE expand its wind business revenues
from less than $1 billion in 2004 to more than $6 billion this year.
Since entering the wind industry in 2002, GE has invested over $700
million in technology, increased its wind turbine production six-fold,
and tripled its U.S. wind turbine assembly sites. Renewable-energy
related jobs at GE have grown to more than 2,500. These include
manufacturing jobs in Pensacola, FL; Greenville, SC; Salem, VA; Erie,
PA and Tehachapi, CA, as well as non-manufacturing professional jobs at
our headquarters in Schenectady, NY. Last October we announced plans to
add 500 more jobs in Schenectady, NY in Wind Engineering, Project
Management, and Services.
GE has also tripled the number of its suppliers, who now account
for 2,000 US jobs and cover 15 states. We have made many long-term
agreements with critical suppliers in states from coast to coast,
giving them line-of-sight to our anticipated production volume, so that
they have the confidence to expand with us. Last November, we
celebrated with our suppliers the opening of two new blade supplier
manufacturing facilities for our 1.5-megawatt turbine in South Dakota
and Iowa, which will create approximately 1,250 jobs. These suppliers
provide wind components and subcomponents such as blades, towers,
bedplates, nacelles, gearboxes, generators, pitch and yaw bearings, hub
castings, and cables.
GE's presence in the US wind segment gives us insight into its
future growth, and we see significant job creation potential over the
next five years. We estimate that sustaining a 30% growth rate over the
next five years would triple the size of the U.S. wind industry and
Today, wind turbine manufacturers are struggling with the same
global challenge: obtaining sufficient components from their suppliers
to manufacture and assemble wind turbines. Current bottlenecks in the
wind turbine production chain result from the long lead times
associated with mechanical components such as gearboxes and large
More investment in the supply chain is needed. The ability to make
this investment--particularly the investment needed from our suppliers
themselves--is directly affected by Federal tax policy. When the wind
production tax credit has been allowed to expire, new installed
capacity has dropped dramatically in the following year, as component
suppliers slashed their investments in long term plant and equipment,
scaled back their workforces and reduced their inventories in
anticipation of reduced demand. Then, when Congress renewed the credit
(retroactively in some cases), the key components required to produce
wind turbines were in limited supply. As a result, industry's ability
to add new generating capacity has not been able to keep pace with
This on-and-off policy scheme has made it difficult for suppliers
to make long-term commitments. Conversely, a more stable long term
incentive for wind power would generate the confidence for suppliers to
make the long-term investments in manufacturing capability that are
needed to assure the availability of critical components.
Failure to extend the renewable tax incentives would also cause the
U.S. to forgo long-term export opportunities. The connection between a
stable domestic policy and a vibrant export sector for renewables is
exemplified by Germany, whose incentive system has created the world's
leading installed base in a country with a moderate wind resource. Wind
power technology is Germany's second-leading export industry after
automobiles. The adoption of policies that ensure the predictability of
incentives for solar and wind energy could support a similarly vibrant
export base here in the United States.
Other forms of national and state policies also can sustain the
growth of the U.S. cleaner energy industry. GE has been supportive of a
federal Renewable Portfolio Standard, and has endorsed the
establishment of a cap-and-trade system to control emissions of
Question 3. If a CO2 cap and trade program is
implemented in the U.S. how do we keep production facilities here?
Answer. The energy industry is and will continue to be a global
industry serving a global market and with global manufacturing. A U.S.
cap and trade program would provide another policy incentive to support
the growth of a domestic market for cleaner energy technologies, which,
as in the case of the renewable energy PTC, will support decisions to
locate production facilities in the U.S. Particularly in the case of
large or bulky components there are advantages to locating production
close to the markets where the technology is to be deployed.
Responses of Karan Bhatia to Questions From Senator Domenici
We all recognize that renewable energy must be part of the solution
to meet ever increasing global energy demands while also addressing
CO2 emissions. However, setting goals and targets is quite a
different thing than actually accomplishing them. I understand that
there is a significant backlog of renewable energy projects that are
unable to transmit their energy to the grid. The fact is that with only
a 6.8% growth in total transmission line miles since 1996, our nation's
infrastructure development is simply not keeping pace with system
Question 1. Do you agree that one of the major obstacles to the
development of renewable energy is the lack of available transmission
capacity to bring alternative energy resources online? In EPAct 2005,
Congress sought to address transmission siting in general through the
use of National Interest Electric Transmission Corridors in areas of
severe congestion. Is additional federal authority needed to ensure the
necessary transmission infrastructure?
Answer. GE agrees that the lack of transmission to bring
electricity generated by renewable resources to locations where it is
needed is a major impediment to greater use of the nation's abundant
renewable resources. Many of the nation's most promising wind resources
are located in relatively remote areas where there is little or no
transmission access. In other areas, congestion on the existing grid
also may limit opportunities to deliver wind-generated electricity to
the areas where electricity is consumed.
For renewable energy to reach its full potential, transmission
issues must be solved so that location-constrained resources may be
brought online. In some areas this may require expansion of the grid.
In other areas, this may require regulatory policies to assure that
wind resources have access to the grid.
Further investment in transmission lines is essential for large-
scale wind installations to be built. Congress is to be commended for
providing important incentives for transmission investment in the
Energy Policy Act of 2005. Going forward, it will be important to
implement fully the many EPAct 2005 transmission-related authorities,
including: authority for the Department of Energy to coordinate
transmission planning by Federal agencies; the requirements for the
designation of energy corridors on Federal lands; and the
identification of National Interest Electric Transmission Corridors
where new transmission is needed.
Consistent with the focus of EPAct 2005 on advanced transmission
technologies and with the smart grid provisions of the Energy
Independence and Security Act of 2007, GE is working to develop and
deploy innovative technologies to increase the capacity and efficiency
of the existing transmission grid. GE also is working to enhance the
ability of wind energy to contribute to the stability of the power
grid. GE's wind turbines support both grid voltage and grid frequency
stability during normal operations, and even contribute to grid voltage
regulation if no wind is present (``WindFree Var'' technology). Recent
grid integration technologies have focused on making wind power plants
more robust during grid failures. Similar to conventional power
generation equipment, modern wind plants stay connected to the utility
grid and help the grid recover from short-term disturbances in a
controlled manner (``Low/Zero Voltage Ride Through'' technology).
Question 2. We often hear the costs of carbon reduction expressed
as a fraction of GDP. In the Energy Technology Perspectives report, for
example, the cost of carbon reduction is projected to be between 0.4%
and 1.1% of global GDP.
How uniformly do you think these costs will be distributed across
the global economy? Will some economic segments bear disproportionate
costs and how can we manage these disparities?
Answer. All economies will be challenged by the costs of cutting
carbon emissions. Without knowing what policy framework will be in
place and the scale of the carbon reductions that will be required, it
is difficult to estimate the distribution of the costs of advanced
cleaner energy technologies. The concern that developing countries will
be unable or unwilling to bear the cost burden for deploying advanced
cleaner energy technologies underlies proposals for multilateral
technology deployment funds. These funds or other incentive mechanisms
offer one way to manage the disparities in economic impacts of carbon
Question 3. In the U.S. we have implemented a number of incentives
and risk mitigation vehicles for clean energy sources including
renewable and nuclear energy. In the Energy Policy Act of 2005 we
provided tax incentives and loan guarantees. Earlier this year I also
introduced the Clean Energy Investment Bank Act of 2008.
How important do you think these strategies are for fostering the
development of low emission technologies domestically and do they
provide a model that can be adopted internationally?
Answer. Policies to stimulate the growth of domestic markets for
cleaner energy technologies are very important to spur technology
investment and innovation. The initiatives included in the Energy
Policy Act of 2005--extension and expansion of the renewable energy
production tax credit, solar investment tax credits, investment tax
credits for integrated gasification combined cycle and other advanced
coal projects; loan guarantees for innovative technologies; and risk
insurance for the first new nuclear power plants--all are important
contributors to the development of a strong domestic market for cleaner
energy technologies. The U.S. industry is responding to these policy
initiatives with investment in research, development, demonstration and
Successful U.S. policy initiatives such as the renewable energy
production tax credit provide an important model that can be adopted
internationally. The PTC has worked well in the U.S., and at a cost
that has not placed an undue burden on U.S. consumers.
Not all types of incentives work equally well, however, and the
type of incentive needs to be tailored to the maturity of the
technology. A production-based incentive that appropriately rewards
advancements in technology and capability, such as the PTC, is
appropriate for a more mature technology such as wind. But for other
technologies, such as solar, where substantial research and development
is needed, tax incentives may more appropriately be investment-based
rather than production-based. Also, financial incentives must be
coupled with government-sponsored research and development programs
until solar and other emerging clean energy technologies reach
sufficient maturity to be near price competitive with traditional
Responses of Neil Hirst to Questions From Senator Bingaman
Question 1. CCS: Overall, this was a very thought-provoking report,
particularly in the scope and scale of both the problem of reducing CO2
emissions and the solution for rapid deployment of clean energy
technologies. The scale is fairly daunting. In particular, the report
calls for significant investments in the area of demonstrating and
deploying carbon capture and sequestration technologies for substantial
CO2 emission reductions. The ACT scenario calls for 20
large-scale demonstration projects by 2020, with a CO2 price
of at least $50/ton to make CCS economically competitive. We have been
working, here in the US, to develop and demonstrate CCS technologies at
scale, but it is difficult to overcome financial, regulatory, and
liability-related issues. These remain as significant obstacles in the
path of rapid deployment. I would consider the US to be a world leader
in this area of technology development despite those hurdles. As it is
difficult to deploy on our own soil, the prospect of developing the
technology abroad is quite daunting. I have particular concerns with
China and India adopting this technology when they currently struggle
to afford higher efficiency coal plants. How do you see CCS moving
forward given these hurdles, and what can be done to diffuse the
technology into the developing world?
Who should be coordinating the global development and deployment of
CCS technologies? Should it be the US or the EU? If not, who?
Additionally, the economic costs for deployment are quite high
according to your report. Who will pay the lion's share of these costs?
Should the American taxpayer be expected to foot the bill for a
technology that needs to be deployed in non-OECD nations? And finally,
if we find that CCS is not feasible due to costs, safety, or any other
reason--what are our options? CCS is a significant portion of your
clean energy technology solution--should it not become a commercially
deployable technology, then what?
Answer. Given the importance of CCS, the deployment of CCS
technologies should be through a multi-country effort in order to
minimise costs and delays. The EU and the United States have a major
role to play, with perhaps 10-15 of the 20 demonstration projects we
think necessary being potentially being led by these two. Demonstration
in the +5 countries is also necessary, probably with technology support
from G8 countries. There should be a co-ordination amongst the
countries involved in the CCS deployment, which could be through an
international group, working with the IEA that would build on the
momentum created by the IEAGHG and the CSLF.
The issue of burden sharing in terms of costs was not covered in
the ETP 2008 analysis for CCS demonstration and hence we are not able
to give you an opinion on your question about who will bear the lions
share of the costs and what role American taxpayers will have in that
process. It should be noted though, that not all arrangements would
lead to CCS costs being borne by the taxpayer once deployment begins. A
number of schemes, such as the European Emissions Trading Scheme, have
been proposed where the CO2 price would provide the
incentive to deploy CCS. For non-OECD nations, including CCS within the
CDM is a priority. Early developers of this technology would be well
placed to sell into the very large global market for CCS that we see in
the BLUE scenario.
Under our ``BLUE no CCS'' scenario emissions halving by 2050 would
not be achieved if we left the CO2 reduction incentive at
USD 200/t CO2. Emissions would fall to only 20.4Gt vs. 14Gt
under the BLUE Map scenario. The share of renewables in power
generation would need to increase from 45% to 63% and nuclear would
rise from 23% to 25%. Alternatively, we estimated that trying to reach
the BLUE Maps 50% reduction would require a near doubling of the
marginal cost of CO2 saved. CCS therefore seems to be a
particularly important option for deep emissions cut scenarios.
Question 2. Given the recent increases in oil and other fossil fuel
prices can you speak on how some of the assumptions and timelines in
the report may have changed? For example, in this country, with
gasoline topping $4/gallon we have seen a significant and rapid shift
in consumer behavior towards hybrid and fuel efficient vehicles.
Answer. We have not done this analysis, but see two possible
effects based on the evolution of our projections over the last three
years as prices have increased. First, is that more efficiency does
occur, but this is modest and is likely to be more than outweighed at
the global level by the second effect, which is a shift to coal in
industry and electricity generation, as well as more CO2
intensive liquid fuels (tar sands, coal to liquids etc).
Question 3. Looking at the 17 key energy technologies profiled, I
am surprised that you have not listed geothermal, specifically enhanced
geothermal energy. MIT put out a report on geothermal energy that
concluded that it would be affordable to generate 100 GW or more by
2050 in the United States alone, for a maximum investment of 1 billion
US dollars in research and development over 15 years. Why do you not
project greater growth in the geothermal energy development sector?
Answer. We believe that geothermal is an important technology. In
terms of electricity generation, it increases 20-fold in the BLUE
scenario from 2005 to 2050, but from a very low level (Page 85). At a
global level in the scenarios, it is competing with CCS, nuclear, wind,
solar etc to decarbonize electricity generation. The 17 technologies
were chosen based on those that contributed the most to CO2
reductions. Although geothermal is an important technology our analysis
showed that it had a smaller contribution globally than the other
Question 4. In your report, you state there are some challenges to
future deployment of geothermal energy--but the fact of the matter is
that this is an off the shelf technology that has been commercially
available in some capacity for at least a decade. With that in mind,
why did the authors feel that other technologies were more viable, such
as fuel cell technology, that are really still in the R&D stage? It
seems that there should be more emphasis on the potential for broad
deployment of geothermal technology.
Answer. Conventional geothermal in areas of geothermal activity is
tried and tested, but enhanced geothermal which is applicable much more
widely needs more development and current cost estimates are higher
than for other alternatives in many cases. Geothermal is mainly for
electricity generation, while fuel cells are predominately for use in
transport, so the two technologies do not compete directly. The
difficulty of decarbonising the transport sector means that this sector
potentially needs technologies that are not yet commercially available.
Question 5. Efficiency plays a large role in this report in
reducing emissions, and several other reports have also discuss the
large gains that can be made at negative costs with efficiency
measures. However, we have not been very successful in deploying
efficiency technologies and measures in this country. Could you talk a
bit on what programs and policies have been successfully in other
Answer. We would have to say that no one country sets a perfect
example across all energy efficiency areas. However, many countries or
regions target particular areas of energy efficiency very well. To
generalize, the most energy efficient economies usually have a history
of a blend of rigorously applied energy efficiency policies, relatively
high energy prices (but not bills) and core technical competences in
the delivery of energy efficient services. While no single economy has
yet applied all available best practice energy-efficiency policies, the
most efficient economies typically include many of the following
Stringent mandatory performance requirements and labelling
for appliances commercial and industrial equipment as well as
building energy codes for new buildings and major
refurbishments. Including, investment in regulatory compliance
infrastructure to ensure mandatory provisions are respected.
Ambitious fuel economy performance requirements and labeling
for light and heavy road vehicles
Capacity building measures in energy efficiency delivery.
Ambitious utility energy efficiency resource standards or
similar delivery mechanisms.
Effective fiscal and financial incentives and funding
mechanisms to encourage energy efficiency in all usage sectors.
Large-scale and significant energy-management incentives and
requirements, as well as awareness raising activities.
Targeted measures to address economic split-incentive
barriers to energy efficiency such as the ``landlord-tenant
Incentives for the development and operation of pubic
transport networks that enable travel-mode shifting away from
private vehicles and facilitate higher urban densities.
Collectively the appropriate blend of policies can be set out
through the development of detailed national and regional energy
efficiency action plans and effective implementation ensured via in-
depth monitoring and evaluation efforts. Some examples of the above
policies are discussed in Energy Policies of IEA Countries--2006
Question 6. What are the most promising new energy efficiency
technologies for buildings -both in the G-8 and in developing
Answer. The buildings sector is interesting in that it relies the
most on existing technologies. They are ``new'' in that they are not
widely deployed today, either because they are costly, or due to a
number of barriers to uptake that affect so many energy efficiency
options. The most important technologies are those to improve the
building envelope to very low energy consumption ``passive house''
levels (double glazing with inert gases, greater insulation,
``tighter'' and smarter building design etc), as well as energy
efficiency in appliances (including air conditioners), highly efficient
heat pumps for space and water heating, solar thermal hot-water
heating, more efficient lighting (including LEDs), solar photovoltaics
and the use of sustainable bioenergy for heating and cooking. (See
Chapter 17 and Annex D of ETP 2008 for a more extensive list of
Buildings sector technologies and also ``Promoting Energy Efficiency
investments: Case Studies in the Residential Sector'', IEA 2008).
Question 7. What are the barriers to further acceptance of these
technologies and how can we meet them?
Answer. Barriers to the uptake of low-carbon and energy efficiency
options are many. A variety of market barriers inhibit energy
efficiency improvements. They take many forms, ranging from higher
initial costs, inadequate access to capital, isolation from price
signals, information asymmetry, and split-incentives. The Energy
Technology Perspectives 2008 deals mainly with technology policy
recommendations. Helping overcome these barriers requires deployment
programmes and an incentive to reduce CO2 emissions. The IEA
undertakes extensive policy analysis of the barriers to energy
efficiency, recent reports include ``Mind the Gap: Quantifying
Principal-Agent Problems in Energy Efficiency'' and ``Promoting Energy
Efficiency Investments''. It is a complicated topic, but getting it
right is essential to achieving low-cost CO2 emission
Question 8. One thing that comes to mind looking at the annual
infrastructure growth numbers in the both the ACT and BLUE scenarios is
how are we going to support this level of growth in terms of production
capacity, commodities and skilled labor supply?
Answer. The annual infrastructure capacity additions presented for
electricity generation are annual averages for the period 2010 to 2050.
These, in the case of the emerging options and nuclear, start out low
and then increase over time. This is an attractive opportunity for
industry and they are likely to be able to have the time to ramp up
capacity in manufacturing and labor skills to meet the growth of these
markets. However, to have the confidence to make these investments and
avoid bottlenecks, industry will need a clear signal that there is a
long-term market for their products. A policy framework that provides a
long-term incentive to reduce CO2 emissions is therefore
Access to a skilled labor force is becoming a significant concern
for all sectors as the skilled workforce ages and birth rates in some
countries have stagnated. Additionally, the growth of skilled engineers
and scientists appears to be strongest in developing nations such as
China and India. (See also ``PISA 2006 Science Competencies for
Tomorrow's World'', OECD 2007).
Question 9. Does the IEA have any plans to do a regional or country
level analysis of energy technology pathways? In your opinion, what
technologies hold the most promise for the United States?
Answer. Energy Technology Perspectives 2008 provides a first
attempt at looking in detail at the transition required to meet the ACT
and BLUE scenarios. We hope to expand upon this analysis of technology
roadmaps in the future if our member countries are interested in us
pursuing this analysis. We have not undertaken any country level
analysis of the technology roadmaps. However, having said that, all 17
roadmaps included in Energy Technology Perspectives 2008 are likely to
be relevant to the United States given your size, geographical
diversity, manufacturing and industrial base, and current energy
system. (See also ``Energy Policies of the United States: 2007
Review'', IEA 2007)
Question 10. As I mentioned in my opening statement, it is the 20th
anniversary this week of James Hansen's ground-breaking testimony on
global warming. This week he made the statement that it is inevitable
that CO2 from oil is going to get into the atmosphere
because we're not going to be able to tell Saudi Arabia and Russia not
to sell their oil. The best that we can do is to phase out all coal use
by 2030 except at those plants fitted with CCS. Have you considered the
difficulties in phasing out oil use in those countries which produce so
Answer. No. Our scenario analysis is based on meeting the goal of a
50% reduction in CO2 emissions below today's level in 2050
at least cost. Currently, the world is dependant on liquid fuels from
oil for transport. Our analysis suggests that to reduce the global use
of oil below today's level is very challenging and potentially
expensive. In our 50% reduction case global oil demand is 25% below
current levels, but this means that oil is still one of the main
sources of energy supply.
Question 11. In your report, you do not really address non-
technology driven carbon sequestration, such as smart agricultural and
forestry management practices--has your agency given any consideration
to these as viable options for CO2 emissions reductions?
Answer. Our analysis is restricted to CO2 and methane
emissions from the energy sector, around 60% of GHG emissions
(depending on the data). Agriculture and forestry issues are outside
our area of expertise and so we have left this analysis to others who
are more competent. What is clear is that these will also have to be
addressed if the goal of stabilizing CO2 concentrations in
the atmosphere is to be achieved. (See also ``Environmental Performance
of Agriculture in OECD Countries since 1990'', OECD 2008).
Question 12. In the report, heat pump technologies are presented in
one of your roadmap scenarios--are you referring primarily to
geothermal heat pumps, air-source or water-source heat pumps? What is
your breakdown in the percentage of each of these down the road? In
other words, is there one type of heat pump technology that is more
readily deployable for broad application? If these are geothermal heat
pumps, that would put a greater emphasis on geothermal energy
Answer. We believe a mix of heat pump technologies will be used.
Ground-source or geothermal heat pumps are significantly more expensive
than air-to-air heat pumps due to the need to install a ground loop.
Given the recent improvement in the operating parameters of air-to-air
heat pumps we believe that these will take the lion's share of the
global market. However, in cold-climate countries, geothermal heat
pumps are likely to maintain significant market share, as their
improved efficiency when operating in low temperature environments will
mean they are more economic (depending on the relative prices of
heating fuels and electricity).
Responses of Neil Hirst to Questions From Senator Domenici
The Energy Technology Perspectives report describes a number of
CO2 emission reduction scenarios based on modelling of the
Question 1. How well do you think these models reflect the
particular realities of the U.S. economy? Are there certain
technological options that the U.S. might not benefit from or,
alternatively, might receive greater benefit from?
Answer. The IEA model is a 15 region global model, supplemented by
individual country models in some cases. The United States is not
currently separated out in the model. However, we worked with
individual country MARKAL modellers from the IEA's implementing
agreement ``Energy Technology Systems Analysis Programme'' to gain
insights into individual country results under the ACT and BLUE
scenarios. From the United States, we worked with Brookhaven National
Laboratory's MARKAL team. As previously mentioned, all 17 technologies
for which we made roadmaps are likely to be relevant to the United
Question 2. As I mentioned in my opening statement, under the most
aggressive scenarios to reduce CO2 emissions by 50% in the
Energy Technology Perspectives report, you predict that global oil
consumption will still be at 60-70 million barrels a day even in 2050.
That is less than current consumption but you know that OPEC supply is
roughly the same as today and that supply from other sources is
Can you explain the features of your modelling that results in OPEC
production being at the same levels in 2050 as they are today?
Answer. OPEC countries are projected to continue to be the least-
cost oil producers into the conceivable future. From an economic
perspective, they are likely to be the most competitive oil producers
and therefore likely to supply the majority of oil in the future, as
the lower-cost conventional oil reserves outside OPEC are depleted.
Question 3. You testified that in order to meet global energy
demand while also addressing global climate change issues, we must
maintain annual hydropower capacity additions at today's level.
What is today's level of annual hydro capacity additions? According
to the Department of Energy, there are 5,677 sites in the U.S. with
undeveloped capacity of about 30,000 MW. Shouldn't we be trying to
develop as much as this capacity as possible? Some environmental groups
have long sought the removal of hydropower dams. Wouldn't such actions
be counterproductive to addressing global climate change?
Answer. At a global level, around 12 GW (12 000 MW) of new hydro
capacity has been added annually in recent years, including increases
in capacity in existing hydro systems. Many of the low-cost options for
additional capacity will come from increasing the capacity of existing
hydro systems. As with many renewables, there is an environmental
trade-off between existing eco-systems and the development of new hydro
dams. This is very much a national issue and a transparent process for
assessment of the costs and benefits, both national and potentially
global when we consider the CO2 savings, is important to the
acceptability of permitting any new electricity generation plant.
Responses of Neil Hirst to Questions From Senator Murkowski
Question 1. In this country there is considerable desire by
environmental groups, not to meet the minimum recommendations of the
IPCC for 50% carbon emission reductions by 2050, but to require
considerably higher reductions of at least 70% and preferably above 80%
by that date. From your research do you have any estimates what it
would cost the global economy or the U.S. specifically to reduce
emissions by 80% by 2050 and do you believe that such a level of
reduction is achievable given current and pending technology?
Answer. We have not done any scenario analysis around a more
stringent target than the 50% global reduction in the BLUE scenario.
For more ambitious goals, the costs and uncertainty would be higher
than in BLUE. A 50% global reduction would imply a considerably greater
reduction in the US, bearing in mind the rapid growth rates of major
Question 2. From the IEA's research, do you have an opinion on
whether a carbon tax or a carbon ``cap and trade'' emissions system
would be more economically advantageous to produce emission reductions?
Is there a discernible consensus in foreign nations and to what
approach is most acceptable to reducing carbon worldwide?
Answer. In theory, with perfect information, both a carbon tax and
emissions trading ought to have the same impact, for an identical price
of carbon. However, in the real world where uncertainty is the norm,
the two approaches have different qualities. A carbon tax provides
certainty on price, but not the quantity of emissions saved, while
emissions trading provides certainty about the emissions saving, but
not the price to achieve it. As there is less certainty on the quantity
saved with a carbon tax, the preference of the majority of IEA
countries has been for ``quantity-based'' approaches, i.e. emission
reduction goals and emissions trading, due to the nature of the risks
of missing emissions targets. This provides the certainty that policy-
makers in the IEA region are demanding on climate change. All countries
that are members of the IEA have either implemented, or are beginning
the process of implementing emissions trading--at the local level if
not the national level as in the US.
In practice, not all sectors are amenable to emission caps because
of administrative and transaction cost, so another form of price signal
may be appropriate in those cases. A tax on carbon emissions would help
for some of these end-uses. Where market failures exist at the end-use,
e.g., in rental apartments where landlords and tenants have objectives,
the IEA has demonstrated that other regulatory measures are effective
and lowest cost policy approach in these special circumstances.
With respect to non-IEA member countries, in particular the rapidly
emerging industrialized economies like China and India, we would note
that they are the most active participants in the CDM market as
sellers. While they clearly have concerns about assuming binding
obligations that may inhibit their economic development, their
enthusiasm for CDM is consistent with a growing comfort with market
based approaches to climate protection.
Responses of Neil Hirst to Questions From Senator Bunning
Question 1. In your testimony you said worldwide government R&D
spending on energy technology has been cut in half in the last 25
years. Of the $10 billion governments did spend last year, $8 billion
came from the United States and Japan. Many of my colleagues insist
that the United States be a leader in addressing climate change. Would
you agree that our leadership in federal support for energy
technologies in the last 25 years has not been followed? Do you believe
these countries who have failed to follow our lead in spending, would
voluntary harm their own economies to follow our lead with climate
Answer. In real terms (real USD 2006), United States government
spending on energy related R&D peaked in 1979 at around USD 8.5
billion, before declining to USD 2.4 billion in 1997. This trend is
broadly replicated in all IEA countries. However, in recent years the
trend has been slightly upward in the United States and other IEA
countries. Our scenarios show that this investment in public sector R&D
needs to grow significantly if the goals in the ACT and BLUE scenarios
are to be met. Only time will tell what agreement is reached at an
international level on post-Kyoto goals, but countries will no doubt
take into account the costs and benefits of taking action to address
Question 2. Mr. Hirst, in your first diagram you outline a plan to
cut carbon emissions in half. Nearly 30% of that reduction comes from
carbon capture and sequestration and improved efficiencies at power
plants. When such a large chunk of emissions reduction could come from
helping coal adopt new technologies, would you agree with me that
comprehensive government incentives for coal are necessary?
Answer. CCS which allows coal to be used in a CO2
constrained world, is certainly a key technology that needs support.
Energy Technology Perspectives 2008 outlines a hybrid policy approach
to meeting the goals of the BLUE scenario. Firstly, a stable long-term
incentive system to reduce CO2 emissions needs to be put in
place to put a value on saving CO2. CCS will never be widely
adopted without this. Secondly, due to the long-term nature of the
problems and the goals, significant deployment programmes need to be in
place to help bring down the costs of promising technologies, including
CCS, and ensure the uptake of energy efficiency options. To get this
process started, investment in R&D and demonstration is also required.
We have called for a commitment to 20 CCS demonstration plants around
the world by 2010. National governments will need to ensure that this
happens. Depending on the approach taken, the financing of these
demonstration plants will be a matter for negotiation between
government's and the potential builders and owners of these plants.
Question 3. Mr. Hirst, you also discuss how important it is to
extend the production tax credit for wind energy. If in 30 years of
government support wind energy still needs a generous tax credit for
companies to make money, what can America hope to achieve by throwing
billions of dollars more at this technology? Does it make sense to
continue to provide generous incentives to one technology while
providing only modest support for the others--like advanced clean coal
and nuclear energy--that are substantial parts of your emissions
Answer. As already discussed, we believe a hybrid policy approach
that covers R&D and demonstration, deployment and an overall
CO2reduction incentive is necessary to achieve the ACT and
BLUE goals. This approach will be required to varying degrees for most
of the 17 key technologies we have identified. National policies will
have to take into account local resource availability, technical
expertise, current energy system etc. For example, wind is now
economical in many parts of the world in excellent wind sites and
depending on local fuel prices. However, additional deployment
policies, particularly for offshore wind, are important at a global
level. Deployment policies help to lower costs through ``learning by
doing'', large-scale deployment should come once the costs have come
down sufficiently not to make the overall programme costs too onerous.
Responses of Tom Wilson to Questions From Senator Bingaman
Question 1. Given the recent increases in oil and other fossil fuel
prices can you speak on how some of the assumptions and timelines in
your analyses may have changed? For example, in this country, with
gasoline topping $4/gallon we have seen a significant and rapid shift
in consumer behavior towards hybrid and fuel efficient vehicles.
Answer. The EPRI Prism analysis which was submitted as part of our
written testimony assesses the technical potential of a wide range of
technologies to reduce CO2 emissions. In particular, we
estimated the annual CO2 reductions if plug-in hybrids
comprised 10% of new light duty vehicle sales by 2017 and 33% by 2030.
We did not analyze the economics of this market penetration in our
submission. However, we do believe that the cost-effectiveness of the
plug-in hybrid will improve as the gasoline price rises, and greater
CO2 reductions will likely result.
Question 2. The IEA report cites public/private partnerships and
industry leadership as key to technology demonstration and deployment.
It also cites international collaboration as being key. EPRI has been
an excellent example of industry driven leadership on energy R&D within
the U.S. Could a similar organization be set up or expanded from EPRI
that is a global consortium?
Answer. We agree with the IEA that public/private partnerships and
industry leadership are critical to technology demonstration and
deployment. The international dimension of this RD&D challenge is
critical. Although EPRI was initially funded by US companies, EPRI now
has members in 40 countries, with non-US members providing 20% of our
research budget. Our nuclear programs are truly global, while non-US
funding of our fossil generation research has grown dramatically in the
last three years. Our current plans call for one of our initial
demonstration projects of CO2 capture and storage to be
located in Europe.
Question 3. The IEA ETP 2008 report sites decarbonizing the
transportation sector as one of the most difficult and expensive
options for CO2 reduction. Do you agree with this
assessment? Do you have rough timelines for plug-in hybrid and EV
penetration into the U.S. and global markets?
Answer. Yes. We agree that decarbonizing the transportation sector
will be difficult. Expanded use of plug-in hybrid electric vehicles--
fueled by increasingly lowcarbon electricity sources--provides another
option for decarbonizing the transportation sector. At present, plug-in
hybrid technology has tremendous momentum, with GM, Ford, Toyota and
others vying to be either first to market or ``best to market''. The
forces driving this interest--pressures to reduce petroleum dependency
and the high cost of fuel and to address climate change--all point in
the direction of PHEV technology deployments in the years ahead.
Question 4. Dr. Wilson, you stated during the hearing that Toyota
plans to market its plug-in hybrid electric vehicles soon. Will these
first vehicles marketed use a NiMH battery pack or Li-ion?
Answer. To the best of our knowledge, all of the major automotive
manufacturers in the U.S. market that are developing plug-in hybrid or
electric vehicle technology are likely to use energy storage systems
based on lithium ion battery technology.
The nickel metal hydride battery has been the enabling technology
of today's highly successful hybrid electric vehicles from Toyota,
Ford, GM, Honda, and others. However, lithium ion batteries can store
much more energy in a smaller, lighter package and this is critical to
automotive designers, especially for plug-in hybrids. Furthermore, the
potential for improvement in lithium ion battery systems is far
greater--it is essentially a family of battery chemistries containing a
wide variety of different designs suited for different purposes.
Over the next several years, it is highly likely that lithium ion
battery systems will occupy a much greater share of the market in all
electric-drive vehicles: hybrid, plug-in hybrid, and battery electric
Responses of Tom Wilson to Questions From Senator Domenici
We all recognize that renewable energy must be part of the solution
to meet ever increasing global energy demands while also addressing CO2
emissions. However, setting goals and targets is quite a different
thing than actually accomplishing them. I understand that there is a
significant backlog of renewable energy projects that are unable to
transmit their energy to the grid. The fact is that with only a 6.8%
growth in total transmission line miles since 1996, our nation's
infrastructure development is simply not keeping pace with system
Question 1. Do you agree that one of the major obstacles to the
development of renewable energy is the lack of available transmission
capacity to bring alternative energy resources online? In EPAct 2005,
Congress sought to address transmission siting in general through the
use of National Interest Electric Transmission Corridors in areas of
severe congestion. Is additional federal authority needed to ensure the
necessary transmission infrastructure?
Answer. The lack of available transmission capacity is a major
obstacle to the deployment of renewable energy. We currently have
unprecedented demand for new transmission related to wind. There are
big problems building needed transmission across the country. Examples
include crossing Arizona, getting into New York City, into California
from the northwest, Idaho to Chicago, into Michigan from the south,
etc. These and other examples are documented in the National
Transmission Grid Study, 2002. It is important to note that the 2002
study was produced before today's huge amount of wind coming into the
queue in several regions of the country. In addition to new
transmission, we need to also look into technologies that will allow us
to much more effectively use existing and new transmission corridors,
such as, higher voltage transmission lines, HVDC lines, advanced
conductors, compact line design, and other technologies and practices.
Question 2. In the Energy Technology Perspectives report electric
vehicles are only seen as a significant contributor to CO2 reductions
under the most aggressive reduction scenarios.
What role do you see electric vehicles playing in domestic U.S.
emission reduction efforts? What is the current status of electric
vehicle technology and infrastructure development?
Answer. Last year, EPRI completed a comprehensive nationwide air
quality and greenhouse gas assessment in cooperation with the Natural
Resources Defense Council. We used the most sophisticated modeling
tools available in order to understand, as closely as possible, what
the electricity system's response to PHEVs will be in terms of which
plants will be dispatched to generate the charging energy, what the net
changes to emissions will be in the electricity and transportation
sectors, and how the emissions will react chemically in the atmosphere
to affect air quality and greenhouse gas emissions. Under nearly any
foreseeable scenario, electricity is a low-carbon fuel, compared with
gasoline and diesel. A PHEV charged by the most carbon-intensive
generating plants is essentially equal to a conventional hybrid in
terms of total greenhouse gas emissions. When you actually look at
utilities' responses with respect to new generation, the increased
regional requirements for renewables, and expected responses to future
carbon constraints, the GHG reductions are considerable.
Electric vehicle technology is improving rapidly, although large
scale commercialization of electric-drive vehicles is still difficult.
Most of the fundamental technologies required for electric vehicles
(EVs) and PHEVs, like motors and electric accessories, have been
developed and commercially deployed in hybrid electric vehicles from a
number of automotive manufacturers. However, powerful electric motors
are still expensive, and the large `energy' batteries required for EVs
and PHEVs have not been produced in commercial quantities and the
ability of these batteries to satisfy warrantee durability requirements
has not been established. Automakers, EPRI, the DOE, and other
organizations are performing the research to demonstrate the durability
of the battery technology, but the work is still ongoing.
The infrastructure to support PHEVs is in place for initial vehicle
deployments. PHEVs were designed with the lessons learned from
difficulties in the attempt at EV commercialization in the mid-90's, so
the amount of electrical energy on board was limited so that a PHEV
could be charged overnight from a standard 120V wall plug. This means
that a PHEV is equivalent to about 3 large-screen TVs, or a wall-mount
air conditioner. As the number of PHEVs increases and as EVs are
introduced into the market, infrastructure improvements will be
required to: allow higher charge rates for a number of vehicles in a
neighborhood, automate measurement of energy for reduced night-time
rates, and allow public charging away from home and for people without
Question 3. I was interested to learn that EPRI is moving forward
with a large-scale technology smart grid demonstration program. I
believe we must modernize our nation's electricity transmission and
distribution system and to that end, Congress included a Smart Grid
title in the 2007 Energy Independence and Security Act.
Why isn't EPRI working with the Energy Department as part of its
Smart Grid Advisory Committee? Is EPRI working with the federal
government in any capacity on Smart Grid issues?
Answer. EPRI is working closely with the Department of Energy,
Environmental Protection Agency, Federal Energy Regulatory Commission,
and the NationalInstitute of Science and Technology on Smart Grid
issues. We meet regularly with each of these organizations to discuss
interoperability standards, common information protocols, and the
overall requirements for the Smart Grid. Recently, EPRI was invited by
DOE to present ``Smart Grid Characteristics, Values and Metrics'' at
its Smart Grid Implementation Workshop in Washington. We have also been
invited to present at the July 23 FERC-NARUC Smart Grid Collaborative
meeting. EPRI staff attended the first Electricity Advisory Committee
meeting and the Institute would be most pleased to contribute technical
information at any time. In addition, EPRI is developing a five-year
Smart Grid Demonstration Initiative that is expected to have ten or
more substantial demonstrations focusing on the integration of widely
distributed resources. We anticipate broad stakeholder participation
and close coordination with DOE.
Responses of Tom Wilson From Senator Sessions
Question 1. How do carbon emissions of plug-in hybrid vehicles
compare to conventional gasoline-, diesel-, and hybrid-powered vehicles
when taking the current national electricity mix into account?
Answer. EPRI recently examined this question in the most
comprehensive environmental assessment of electric transportation to
date. Conducted with the Natural Resources Defense Council (NRDC), the
assessment focuses on the likely environmental impacts of bringing a
large number of PHEVs onto American roads over the next half century.
The first part of the study used a scenario based modeling analysis
to determine how PHEVs would change U.S. greenhouse gas (GHG) emissions
between 2010 and 2050 under various circumstances. This inclusive
``well to wheels'' analysis tracked emissions from the generation of
electricity to the charging of PHEV batteries and from the production
of motor fuels to their consumption in internal combustion vehicles.
Researchers used detailed models of the U.S. electricity and
transportation sectors to create a range of potential scenarios and
changes in both sectors. The three scenarios for the electricity sector
represented high, medium, and low levels of carbon dioxide
(CO2) and total greenhouse gas emissions, as determined by
the projected mix of generation technologies and other factors. For the
transportation sector, the three scenarios represented high, medium,
and low market penetration of PHEVs from 2010 to 2050. Results were
unambiguous: GHG emissions were reduced significantly over the nine
The cumulative GHG emissions reduction by 2050 was at least 3.4
billion metric tons (Gt), assuming a persistently high level of
CO2 intensity in the electricity sector and a low level of
PHEV fleet penetration. Assuming low CO2 intensity and a
high level of fleet penetration, the cumulative GHG reduction was 10.3
Gt. Reductions were realized for each region of the country.
Responses of Raymond L. Orbach to Questions From Senator Bingaman
Question 1. The TEA report lists Hydrogen Fuel Cell Vehicles as on
[sic] of its 17 key technologies. In your testimony you list hydrogen
as a fuel as an attractive, breakthrough technology, but one that is a
longer-term possibility. Should it be considered as a technology that
will be able to achieve significant market penetration by 2030? Will it
be commercially viable before 2030? Before 2050?
Answer. The Department of Energy's (DOE) Hydrogen Program is
working to overcome barriers to the commercialization of hydrogen and
fuel cell technologies--including fuel cell vehicles (FCVs) as well as
fuel cells for stationary and portable power applications. The Program
is led by the Office of Energy Efficiency and Renewable Energy (EERE),
and integrates EERE's efforts with the R&D efforts of the offices of
Nuclear Energy, Fossil Energy, and Science, and coordinates with the
Department of Transportation. The Program's primary strategic document,
the Hydrogen Posture Plan, identifies a number of technology
development targets in the 2015 timeframe that will enable automobile
and energy companies to opt for commercialization of fuel cell vehicles
(FCVs) and hydrogen fuel infrastructure by 2020. The Posture Plan is
currently being updated by DOE.
Analysis conducted by Oak Ridge National Laboratory\1\ suggests
that if the Hydrogen Program's 2015 targets are met and effective
transition policies are in place to overcome initial economic barriers,
the market share of fuel cell vehicles could grow to 50 percent by 2030
and more than 90 percent by 2050. However, the exact timeline of market
penetration and commercialization will depend on a variety of factors,
including the pace of scientific and technological progress, the
market's acceptance of a new technology, and the time it takes the
private sector to make the necessary investments in infrastructure.
\1\ Analysis of the Transition to Hydrogen Fuel Cell Vehicles and
the Potential Hydrogen Energy Infrastructure Requirements (ORNL/TM-
2008/30). March 2008. D. Greene et al & P. Leiby (ORNL); B. James & J.
Perez (Directed Technologies, Inc.); M. Melendez & A. Milbrandt (NREL);
S. Unnasch, D Rutherford & M. Hooks (TIAX)
In 2004, the National Research Council conducted a comprehensive
analysis of the path toward a hydrogen economy.\2\ In its ``optimistic
scenario,'' hydrogen fuel cell vehicles would comprise 40 percent of
new vehicle sales (not the fleet stock) in 2030.
\2\ National Research Council. 2004. The Hydrogen Economy:
Opportunities, Costs, Barriers, and R&D Needs. National Academies
Question 2. It is clear from the IEA report that the sooner we can
implement technologies still in the basic and applied research stage,
the more options we will have to reduce emissions. How can [sic]
structure our R&D system to speed up the transfer of knowledge being
generated from basic research to its implementation in the applied
areas of technology development?
Answer. Department-wide research and development (R&D) integration
activities seek to align the science programs and the technology
programs to accelerate the seamless transfer of basic discovery science
to the applied research and technology development stages. Science
pursues high-risk, game-changing knowledge that has the potential to
create transformational technologies. Science also seeks solutions to
the longer-term scientific issues that challenge multiple technology
platforms (such as materials in extreme environments, basic biological
processes in plants and microbes that form the basis of renewable
biomass, control of energy, and charge transduction in solar energy
conversion). Technology programs focus on improving the performance and
reliability of existing technology platforms towards specific near-to-
mid-term goals. By housing science programs and technology programs in
a single agency, DOE brings the strengths of both types of programs to
bear in solving our Nation's energy security challenges.
The basic research programs in the Office of Science and the DOE
applied technology programs also facilitate the bridging of basic and
applied research by holding joint arantee and contractor meetings.
These meetings promote communication between researchers and technology
developers, stimulate the sharing of ideas, and promote collaboration
to bridge and minimize gaps in the research continuum. The Hydrogen
Fuel Initiative, for example, which funds both basic and applied
research, promotes links between the two communities through joint
meetings among all of the grantees to directly foster interactions and
transfer knowledge. The Department's Small Business Innovation Research
(SBIR) program also provides a mechanism for the research community to
bridge basic and applied research for the development of new
There have been many cases of knowledge transfer between basic and
applied research programs with successful industrial impact. One
example concerns battery research. A basic research project initiated
by the Office of Science at the Massachusetts Institute of Technology
more than a decade ago led to the discovery of a new nanostructured
cathode material for battery applications. Based on the knowledge
gained, a new battery technology was developed by A123Systems of
Watertown, Massachusetts. The development was further supported by a
DOE SBIR grant starting in 2002 and support by the Office of Energy
Efficiency and Renewable Energy. Within the last three years these new
batteries have reached the commercial marketplace in power tools
produced by North America's largest toolmaker, Black and Decker, and
they currently are being implemented in hybrid and plug-in hybrid
electric vehicles, amongst other applications. In early August 2007,
Al23Systems and General Motors (GM) announced the co-development of
Al23Systems' nanophosphate battery for use in GM's electric drive E-
Flex system. This joint effort is expected to expedite the development
of batteries for both electric plug-in hybrid vehicles and ftiel cell-
based vehicles. This successful effort testifies to the importance of
long-term, broad-based fundamental research: it also serves as a model
for the Department's successful transfer of basic discovery research to
breakthrough technology applications which underpin globally
competitive U.S. industries.
Question 3. The IEA report emphasizes the need for RD&D
partnerships in developing critical energy technologies. What current
partnerships is the DOE office of Science involved in? What nations
should we be pursuing closer research partnerships with?
Answer. The Office of Science has international research
partnerships in a number of areas. The best examples of such
partnerships are U.S. participation in the Large Hadron Collider, an
important high energy physics experiment, and in ITER, an international
partnership to build the first sustained burning plasma fusion
experimental reactor. The common feature of these two experiments is
their scale--their size would make it prohibitive for any one nation to
attempt to build them.
The question of large-scale scientific facilities was one of the
featured discussions at the G-8 Science Ministerial in Okinawa, Japan
in June, 2008. The U.S. delegation raised the topic of the need for
continued international cooperation on these large-scale science
facilities; and Ministers generally understand the importance of
cooperation not only to fund such large-scale projects, but also to
gain the widest scientific, engineering and project management
expertise possible. The G-8 Science Ministers will continue to discuss
this issue at coming meetings, with the hope of creating a template for
future international cooperation.
Secretary Bodman participated in the G-8 Energy Ministerial
meetings in June where ministers and other high-level government
officials from G8 countries, China. India, and Korea (G8+3) discussed
ways to enhance global energy security, while simultaneously combating
global climate change. During the meeting the G8 countries stressed the
critical role of carbon capture and storage (CCS) in tackling the
global challenges of climate change and energy security. The countries
agreed to launch 20 carbon capture and storage demonstration projects
by 2010. Under its restructured FutureGen program, the U.S. will
provide funding for the addition of CCS technology to multiple
commercial-scale Integrated Gasification Combined Cycle (IGCC) or other
advanced clean-coal technology power plants. Additionally, the U.S. is
funding nine large-scale field tests of geologic storage of carbon
dioxide (injecting at least 500,000 tons/year of carbon dioxide), using
carbon dioxide from a variety of conventional sources.
Secretary Bodman and his G8+3 colleagues agreed to the
establishment of the International Partnership for Energy Efficiency
Cooperation (IPEEC). The IPEEC will serve as a high-level forum for
facilitating a broad range of actions that yield high efficiency gains.
The partnership will support on-going work of the participating
countries and relevant organizations, exchanging, information of best
practices policies and measures and developing public-partnership in
key energy consuming sectors as well as on a cross-sectoral basis.
Question 4. Undersecretary Orbach, you oversee the Department's
science and technology portfolio and you have often stated it is your
job to manage this portfolio in an integrated fashion. Can you please
explain the programs you have or are proposing for FY2009 that
integrate the Office of Science activities with those of the applied
Answer. The Office of Science (SC) provides basic research in broad
areas relevant to the Department's applied programs, as well as to
applied research programs in universities, research institutions, and
industry. This support is provided primarily through our Basic Energy
Sciences, Biological and Environmental Research, Advanced Scientific
Computing Research, and Nuclear Physics programs, although other SC
programs have also provided discoveries that have application in
The Department's July 2006 report, ``DOE Strategic Research
Portfolio Analysis and Coordination Plan,'' identified 21 additional
areas of opportunity for coordination that have great potential to
increase mission success. SC supports basic research and coordination
efforts that underpin nearly all 21 areas, and six areas are
highlighted in the FY 2009 SC budget request for increased R&D
coordination: Advanced Mathematics for Optimization of Complex Systems,
Control Theory, and Risk Assessment; Electrical Energy Storage; Carbon
Dioxide Capture and Storage; Characterization of Radioactive Waste;
Predicting High Level Waste System Performance over Extreme Time
Horizons; and High Energy Density Laboratory Plasmas. The Office of
Science request for FY 2009 R&D coordination is $114.9 million. These
areas are in addition to the research areas the Office of Science has
coordinated with the Department's applied programs over the past
several years, including hydrogen production, storage, and use; solar
energy utilization; biofuels derived from biomass; advanced nuclear
fuel cycle technologies; and building technologies and efficient
SC also proposes in our FY 2009 budget to initiate new models of
research management. Following on the success of the Bioenergy Research
Centers, which recently began operations. the request provides
competitive funding for Energy Frontier Research Centers. These
centers, which we expect will be built around collaborations among
universities, laboratories, and private entities, will allow SC to
harness even more of the Nation's inventive genius in pursuit of energy
and national security, as well as economic competitiveness. We expect
these basic research effiwts will have significant benefits for applied
Question 5. Undersecretary Orbach, you have often stated that while
it is important for the Office of Science to integrate in with the
activities of the applied energy programs--they should not drive the
Office of Science--you often call this a reverse osmosis effect--can
you please explain what you mean by that?
Answer. Reverse osmosis is, perhaps, not the best analogy. The
issue has to do with the extent to which basic research should he
independent of direction by the technology needs of the Department,
While basic research should collaborate with the applied programs, it
should never be directed by them. Such direction, even if well-
intentioned, could serve to down-select basic research solely to those
areas of greatest perceived promise and thus diminish the potential for
basic research discoveries and breakthroughs to bring to light new
technology solutions that may have broader. unexpected impacts. The R&D
community and the science mission agencies have long recognized that
the results of basic research often cannot be foretold. A single basic
research discovery can have hundreds, if not thousands of applications,
which may evolve only gradually over time. That is the unique benefit
of basic research--to the Department's technology programs and to the
Nation. At the same time, however, the basic research community should
be informed of the needs of the applied research community and the
technological barriers they face and should develop basic research
directions (``use-inspired'' research) that attempt to answer questions
and acquire the fundamental knowledge needed to overcome the
technological barriers. Such communication has been facilitated by the
technical workshops the Office of Science has lead over the past six
I would also like to point out that attempts in the past to place
an applied technology ``filter'' on basic research programs in the
mission agencies have not been successful. The well intentioned attempt
of the Mansfield Amendments of 1973, for example, to tightly couple
basic research to applications failed to achieve the desired results
and had adverse impacts on basic research that have reverberated
throughout the research enterprise. The Mansfield Amendments also
famously separated the basic academic research community from the
defense R&D establishment and negatively affected the NASA and AEC
realms as well. Such attempts to ``direct'' basic research drive
federal agencies to place greater focus on short-term R&D at the
expense of longer-term basic research. Private sector R&D is also
increasingly focused on short-term R&D with demonstrated value to
company stockholders. As a result, basic research funding in the U.S.
has been relatively flat in recent years. If this trend continues, the
U.S. will find it increasingly difficult to develop the truly
transformational energy technologies we need to maintain our global
leadership and economic competitiveness.
Question 6. Undersecretary Orbach, in my visits to the national
laboratories it is becoming apparent to me that facilities like the
Combustion Research Facility at Sandia Livermore are becoming the de
facto interface between basic and applied programs. Does the Department
realize that this gap exists in translating basic energy research into
applied research and what is it doing to solve this problem?
Answer. The Department of Energy (DOE) has long recognized the
challenge of translating basic energy research into applied programs
and ultimately into transformative energy technologies. The ongoing
efforts to identify and address priority research needs that help
bridge the gap between basic and applied research include the DOE
scientific and technical workshops and the basic and applied R&D
coordination working group efforts, and Federal and DOE laboratory
The example you cite, the Combustion Research Facility (CRF) at
Sandia National Laboratories, Livermore, is one of many examples of a
successful interface between basic and applied energy programs at the
DOE laboratories. The CRF was originally implemented 28 years ago as an
Office of Science user facility and, as with all SC user facilities,
has served both basic and applied researchers in the area of combustion
science by providing unique experimental and computational resources.
Over the years, the CRF has evolved into a laboratory with a
significant internal portfolio of basic research, supported by the
Office of Science, and applied research, supported by DOE technology
programs. At the same time, the CRF has maintained a leading presence
in the combustion science community as a center for collaborative
research that has included strong connections with th U.S. automotive
and engine manufacturing industries.
There are numerous other examples beyond CRF and vehicle
technologies where the co-siting and co-funding of basic and applied
researchers have led to effective knowledge transfer and significant
technological progress. Examples of such successes include multi-
junction solar cell research at the National Renewable Energy
Laboratory that set the world record in photovoltaic efficiency;
development of intermetallic alloys at Oak Ridge National Laboratory
that achieved savings of millions of dollars at U.S. steel plants; and
ultrananocrystallince diamond research at Argonne National Laboratory
that enabled world-wide commercialization of abrasion-resistant
Furthermore, knowledge transfer is best accomplished by people--and
SC supports the training of large numbers of students and researchers
by funding their experiments and their use of major SC facilities such
as light sources, neutron sources, Nanoscale Science Research Centers,
electron micro-characterization facilities, and supercomputers. The
Department will continue these and other efforts to enhance the
integration of basic and applied research at scientific user
facilities, DOE national laboratories, U.S. universities, and
industries and to better address the critical need to translate basic
scientific discovery into transformative energy technology.
Question 7. Undersecretary Orbach--along these lines of inquiry--
why hasn't the Department been able to initiate a focused basic
research program to support the applied programs in solid state
lighting, it seems a natural area for your nanosciencc areas but for
more than four years no such program has emerged?
Answer. The Office of Science (SC) supports a forefront Fundamental
research program that builds a solid foundation of new knowledge to
increase our understanding of how nature works, helping create
transformational technologies for long-term energy security.
Specifically, SC-supported nanoscience research focuses on
understanding and controlling matter at the quantum, atomic, and
molecular levels, where energy is generated, stored, transferred, and
utilized. Such knowledge will impact a broad range of current and
future generation energy technologies, including lighting applications.
In the spring of 2006, SC held a workshop on basic research needs
for solid state lighting, which further highlighted the impact of
nanoscience on energy applications. Had the FY 2008 appropriation
supported the requested level, we would have been able to initiate a
focused solid state lighting research program during FY 2008; however,
it did not. The FY 2009 budget request proposes Energy Frontier
Research Centers that will bring together teams of investigators to
address the grand challenges in basic research, as identified in
several workshops, and could include solid state lighting research.
Question 8. Undersecretary Orbach,--Table 5.3 in the ETP 2008
report seems to me to be the critical underpinning of implementing
technologies in a carbon constrained world, I ask that the Department
please evaluate this table and give the committee its opinion on
current cost, learning rate and cost to target to reach
Answer. While I cannot comment on the specific economic assumptions
and predictions contained in the table, I can state that each of these
forms of energy generation may require additional basic and applied
research to make it a desirable alternative.
Responses of Raymond L. Orbach to Questions From Senator Domenici
The Energy Technology Perspectives report emphasizes the importance
of funding for basic science education and technology research and
development, particularly in energy. The IEA analysis says that funding
in these areas is half what it was 25 years ago.
Question 1. Although the U.S. science and technology R&D funding is
significantly greater than that of other countries, do you believe
there is a need to reprioritize funding to better support energy
Answer. The Office of Science (SC) is constantly assessing the
priorities of our research efforts to ensure the best return on
investment to the U.S. taxpayer and support the Department's mission.
In setting priorities we consider existing and developing mission needs
and areas of greatest promise for basic research, as informed by a
series of rigorous assessments. These assessments include National
Academy of Sciences studies, SC research planning workshops, and SC
Advisory Committees' reports, as well as coordination across the
Administration and consultation with the Congress. Congressional
Committees of Jurisdiction receive information on SC priorities
primarily through the budget process but SC also provides the
Committees and interested Members with information from the various
expert professional assessments it commissions.
Further, SC is proposing to initiate a new model of research
management and prioritization. Following on the success of the
Bioenergy Research Centers, which recently began operation, the Office
of Science will provide competitive funding for Energy Frontier
Research Centers. These centers will allow the Office to harness even
more of the Nation's inventive genius in pursuit of our goals of energy
and national security, as well as economic competitiveness.
Question 2. The Energy Technology Perspectives report considers
technology implementation over the next 40 years. Even with this
horizon the TEA argues that it is necessary to make technology
selections today given the long economic life typical of energy
generation and industrial facilities.
Of the transformational technologies you discussed in your
testimony, which do you believe have the best prospects for impacting
the implementation of low carbon technology on that time scale?
Answer. The transformational technologies I mentioned will result
from basic research investments we make today. I expect many of the
technologies will be available within 40 years, but it is difficult to
predict precisely. In the area of biological innovation, where the
investment is quite large in terms of facilities, researchers, and
research facilities we may see transformational changes in years,
rather than decades. But fusion energy, for example, which holds
tremendous long-term potential, is still decades away, and will likely
be nearing commercialization towards the end of 40 years.
It is important to maintain a balanced research portfolio to assure
that we have the ability to continue to build our energy supply through
currently existing low carbon methods such as nuclear energy, coal with
sequestration, and renewables, while continuing to pursue breakthroughs
in transformational energy research areas.
Question 3. The Energy Technology Perspectives report describes a
number of CO2 emission reduction scenarios based on modeling
of the global economy. How well do you think these models reflect the
particular realities of the U.S. economy? Are there certain
technological options that the U.S. might not benefit from or,
alternatively, might receive greater benefit from?
Answer. Energy Technology Perspectives 2008 (ETP'08) contains an
assessment of clean energy technologies, roadmaps to commercialize
these technologies and emission reduction scenarios (``Baseline'',
``ACT'' and ``Blue'' scenarios). ETP'08 does not provide country-level
data so a direct comparison with U.S. energy-technology models is not
possible. Nonetheless, the technology strategies identified in the U.S.
Climate Change Technology Program Strategic Plan (September 2006, DOE/
PI-0005) are consistent with those outlined in ETP'08. All important
energy technologies identified in ETP'08 are part of DOE's technology
portfolio and supported in the President's FY 2009 budget request.
Responses of Raymond L. Orbach to Questions From Senator Bunning
Question 1. Mr. Orbach, you suggest that much of our needs could be
met by nuclear power, but you also mention that many hurdles stand in
the way. While I understand some of these obstacles like the Yucca
Mountain program that has been stalled by some of my colleagues, would
you please offer this committee any policy suggestions that we can
hopefully pass today to make new nuclear facilities a real source of
Answer. While it is too early to declare victory, I remain
guardedly optimistic that we will see new nuclear capacity during the
next decade. Over the last 5 years, there has been significant progress
in revitalizing commercial nuclear power within the United States,
stemming from federal energy policy, market conditions and forecasts,
and concerns over carbon emissions. The nuclear industry has indicated
interest in submitting applications to construct up to 34 new reactors
domestically; applications that cover 18 units have already been
received by the Nuclear Regulatory Commission.
Equally important to bringing new reactors online is maintaining
the current fleet of 104 operating reactors. Operating these reactors
for periods longer than their present certification requires better
understanding of plant components and systems. I believe the best
strategy to achieve the required level of understanding is through
development and application of science-based tools that can
systematically evaluate the components and systems of these reactors,
which I believe is necessary to ensure their continued contribution to
our energy portfolio for as long as reasonably possible.
And finally, we need to fully implement the Advanced Fuel Cycle
Initiative/Global Nuclear Energy Partnership, which will help reduce
proliferation risks and address longer-term waste concerns. We want to
work with emerging nuclear power nations as they take their first steps
to help ensure that increases in global demand for nuclear energy are
met with proliferation-resistant solutions.
Question 2. I want to be clear--I support efforts to expand wind
and solar energy where it makes economic and logistical sense. However,
I am not naive--the wind does not always blow and the sun does not
always shine. And in times like these, I believe it is critical that
our nation's electric grid have a backstop to ensure generation does
not cease due to weather conditions. Dr. Orbach, would you agree that
until renewable energy can be stored at a level that meets all the
demands of our utility grid, our nation would be wise to also invest in
other advanced energy infrastructure--like new coal plants and nuclear
plants--that meet future demand no matter the forecast?
Answer. Yes. While the Administration promotes all forms of clean
energy through the Department of Energy's research and development
programs, there are currently no proven technologies other than coal
and nuclear power that can provide large quantities of ``always on''
electricity needed to power America's businesses and industry. The
Department is focusing its research and development efforts on advanced
energy technologies that could transform the way we produce and use
energy. Basic and applied research that could improve technology to
capture and store electricity is key to deploying some renewable energy
technologies at a greater scale. Investing in a portfolio of energy
technologies, including nuclear and coal, is the best approach to
meeting the Nation's near-term and long-term projected energy demands.
Question 3. Dr. Orbach, you mentioned that scientific breakthroughs
in bioenergy can change the whole equation. While I hope you to be
right. I would also like to look at what can be done today to diversify
our nation's fuel source outside of our agriculture industry. That is
why I introduced coal-to-liquid legislation. This clean burning diesel
and jet fuel allows our nation to kick its dependence on middle east
oil and keeps energy dollars here at home. Would you agree that if
given similar incentives to that of bioenergy, CTL could increase our
energy supply and bring relief to domestic air carriers, along with
other forms of American transportation?
Answer. Depending on the economics of production and the price of
transportation fuels, coal-to-liquids technology could increase our
diesel and jet fuel supply. The U.S. Government--directly and through
industrial partnerships and international cooperation--has previously
supported research and development on coal-to-liquids technology. These
government programs resulted in improved processes, catalysts and
reactors. In part as a result of these past efforts, technology is
commercially available for producing liquid fuels from coal that are
clean, refined products requiring little if any additional refinery
processing. These fuels can use the existing fuels distribution and
end-use infrastructure. The greatest market barriers for commercial
introduction of the technology in the U.S. are the uncertainty of world
oil prices, the high cost of coal to liquids production coupled with
high initial capital cost, the long decision-to-production lead times,
and the challenge of incorporating carbon management into producing
Question 4. Dr. Orbach, I often hear that the United States must do
more as a leader of clean technologies. Yet, some of the folks who make
this argument object to policy that would give clean coal technology
the same incentives given to wind and solar energy, even as China
builds roughly 50 coal plants a year. You said that there are obstacles
when addressing carbon sequestration and clean coal technology, but do
you believe that if given the same incentives as other clean
technologies, United States clean coal can change the way the world
approaches coal generation?
Answer. Clean coal technology is an important component of the
Administrations vision for a cleaner, more secure energy future.
Advancements in this technology can address concerns about
CO2 emissions and global climate change while maintaining
coal's important role in our economic and energy security. Proper
incentives and policy can support the development of technologies for
affordable CO2 capture and Carbon Capture and Storage (CCS)
demonstration projects that will help accelerate their deployment in
the energy market. In addition, the Department is working through the
Office of Fossil Energy's Carbon Sequestration Program to develop low-
cost novel technologies to capture CO2 and to validate the
safety and effectiveness of CO2 geologic sequestration.
However, technology development takes significant time and resources.
Scaling from laboratory experiments to a commercial operation may
require years of effort and investment both by the Federal Government
[Responses to the following questions were not received at
the time the hearing went to press:]
Questions for Raymond J. Kopp From Senator Bingaman
Question 1. In your testimony you make the important point that
only with complementary policies will an energy technology deployment
scheme be workable. Can you speak to the effectiveness of the EU ETS in
encouraging the development and deployment of clean energy
Question 2. In regards to carbon pricing and carbon allowance
allocation, the IEA report makes the statement that given the distinct
sector emission reduction pricing ranges and option characteristics, a
single generic price or cap across the whole energy system may not be
the best approach to incentivizing CO2 reductions. In such
circumstances, industries with cheaper options could benefit from large
windfall profits. Do you have any thoughts on a workable allocation or
pricing scheme that would avoid such a situation?
Questions for Raymond J. Kopp From Senator Domenici
In your testimony you refer to the impact that public perceptions
have on the adoption of low carbon emitting technology. Perceived risks
and ``not in my back yard'' concerns have certainly had an impact on
needed expansions to the electrical grid and adoption of clean nuclear
and renewable technologies.
Question 1. Can you suggest ways in which we might educate the
public on the fundamental issues associated with energy technology and
greenhouse gas emissions so that they can make better informed cost
Question 2. We all recognize that renewable energy must be part of
the solutions to meet ever increasing global energy demands while also
addressing CO2 emissions. However, setting goals and targets
is quite a different thing than actually accomplishing them. I
understand that there is a significant backlog of renewable energy
projects that are unable to transmit their energy to the grid. The fact
is that with only a 6.8% growth in total transmission line miles since
1996, our nation's infrastructure development is simply not keeping
pace with system demands.
Do you agree that one of the major obstacles to the development of
renewable energy is the lack of available transmission capacity to
bring alternative energy resources online? In EPAct 2005, Congress
sought to address transmission siting in general through the use of
National Interest Electric Transmission Corridors in areas of severe
congestion. In addition federal authority needed to ensure the
necessary transmission infrastructure?