[Senate Hearing 110-541]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-541
 
                          FUTURE ENERGY NEEDS

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   TO

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


                     U.S. GOVERNMENT PRINTING OFFICE
44-855 PDF                 WASHINGTON DC:  2008
---------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001

               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

                              ----------                              

                               STATEMENTS

                                                                   Page

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 
  Energy.........................................................    16
Wilson, Tom, Senior Program Manager, Global Climate Change 
  Research, Electric Power Research Institute, Palo Alto, CA.....    48

                                APPENDIX

Responses to additional questions................................    63


                          FUTURE ENERGY NEEDS

                              ----------                              


                        Wednesday, June 25, 2008

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:36 a.m. in room 
SD-366, Senate Dirksen Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    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 
technologies.
    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 
fuels.
    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 
changes.
    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 
term.
    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 
follow:]

   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 
security threats.
    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 
panel.
    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 
energy needs.
    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 
roof.
    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 
change.
    The best way to address climate change is to have cleaner, more 
affordable energy.
    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, 
nuclear, geo-thermal.
    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 
innovations.
    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 
emissions allowances:

   $40 billion for the demonstration and deployment for carbon 
        capture technologies and;
   $10 billion for large-scale geologic carbon storage 
        demonstration projects.

    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 
sources.
    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 
                             MEXICO

    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 
grandchildren.
    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.
    [Laughter.]
    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.

                          Albuquerque Journal
        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 
coal.
    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 
luxury.
    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 
foreign oil.
    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 
start now.
    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 
today.

    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 
this committee.
    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 
questions.
    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 
graphs.
    The Chairman. Yes. I think everyone has a copy of those at 
their place.
    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 
Network.
    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 
especially vehicles.
    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 
2050.
    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 
very much.
    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-
emitting fuel.
    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 
case itself.
    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 
contributions.
    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 
2050.
    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 
others.
    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 
cell vehicles.
    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 
technologies.
    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. 
Orbach.
    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.
---------------------------------------------------------------------------
Introduction
    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 
are today.
    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.
Emissions Stabilisation--ACT
    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 
enough.

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 $ 
2--3 trillion.
    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 
once.

Transport Sector
    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.
R&D Investments
    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.

Conclusion
    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 
future.
    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 
of this.

 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 
direction.
    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 
your support.
    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 
farther off.
    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 
research agenda.
    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 
        electronic constituents
   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 
        limits
   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 
        fusion energy

    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 
percent.
    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 
chemical fuels.
    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 
economically viable.
    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 
conversion.
    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 
for catalysis.
    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-
powered vehicles.
    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 
content.
    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 
these capabilities.
    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 
excellent testimony.
    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 
go.
    The Chairman Dr. Orbach, did you have any thoughts as to 
how what you're doing relates to the goal that Dr. Hirst has 
articulated?
    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 
future.
    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 
Network.
    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 
this.
    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 
guidance.
    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 
making statements.
    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.
    Thank you.
    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 
climate change.
    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 
issue.
    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 
technology options.
    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 
demand side?
    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 
seeking.
    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 
us.
    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, 
Dr. Orbach.
    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 
CO2.
    I would like to come back to the question you asked Mr. 
Hirst.
    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 
projects.
    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 
similar situations.
    Senator Salazar. Thank you, Mr. Chairman. My time has 
expired.
    The Chairman. Thank you.
    Senator Craig.
    Senator Craig. Mr. Chairman, thank you for the hearing, and 
Mr. Hirst, thank you for being here and making your 
presentation.
    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 
Energy Agency.
    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 
drive that.
    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 
Western Europe.
    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 
way?
    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, 
and other.
    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 
transformation.
    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 
efficiency.
    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 
there.
    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 
gasoline.
    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 
exciting.
    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 
the ground.
    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 
difference globally?
    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 
CO2 emissions.
    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.
    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 
also conducting.
    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.
    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 
prices.
    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 
billion.
    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 
be.
    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 
world.
    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 
think.
    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 
monies?
    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 
nuclear.
    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 
panel?
    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 
Electric.
    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 
Change.
    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 
energy technology.
    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 
products.
    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 
protection.
    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 
resisted.
    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 
future.
    Thank you very much.
    [The prepared statement of Mr. Bhatia follows:]

Prepared Statement of Karan Bhatia, Vice President and Senior Counsel, 
                        General Electric Company

                              INTRODUCTION

    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.

                                OVERVIEW

    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-
directed planning.
    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 
as well.
    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 
inflation.
    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 
technologies.
    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 
trading program.
---------------------------------------------------------------------------
    \1\ For additional information, see: http://
www.asiapacificpartnership.org/.
    \2\ For additional information, see: http://www.ustreas.gov/
initiatives/us-china/.
---------------------------------------------------------------------------
    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 
and experience.
    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 
energy technologies.
---------------------------------------------------------------------------
    \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.

          3. Usability

                  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, 
        particulates, mercury);
   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 
technology deployment.

Export Promotion
    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 
fully funded.
---------------------------------------------------------------------------
    \4\ See http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.00006:
---------------------------------------------------------------------------
                               CONCLUSION

    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 
negative.
    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 
substantial partnerships.
    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 
by it.
    Senator Sessions. Thank you very much. Thank you, Mr. 
Chairman.
    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 
own economy.
    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. 
Kopp.
    Mr. Bhatia. Thank you.

STATEMENT OF TOM WILSON, SENIOR PROGRAM MANAGER, GLOBAL CLIMATE 
CHANGE RESEARCH, ELECTRIC POWER RESEARCH INSTITUTE (EPRI), PALO 
                            ALTO, CA

    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 
energy resources.
    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 
available.
    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 
country.
    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 
emissions.
    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.
    Thank you.
    [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 
                                Alto, CA

    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 
        and issues.

    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 
technologies.

EPRI analysis
    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 
2008).

   end-use energy efficiency
   renewable energy
   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 
constraint.
---------------------------------------------------------------------------
    \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.

IEA analysis
    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 
        available.
   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 
issues.
    The methodologies that led to these similar conclusions are quite 
different:

   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 
        countries.
   Modeling Approach.

    --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 
emissions.
    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 
committee.
    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 
resource issues.
    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 
own.
    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 
emissions.
    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 
reactor design.
    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 
countries.
    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 
land.
    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 
resource issues.
    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 
investment.
    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 
        spending.

    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 
those hurdles.
    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 
funding.
    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 
R&D.
    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 
suite.
    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 
testimony.
    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 
hybrid?
    Mr. Wilson. They're working on the Prius now. They're 
testing it.
    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 
hybrid.
    Mr. Wilson. Thank you.
    The Chairman. So go ahead. I'm sorry to interrupt you 
there.
    Mr. Wilson. So getting to the lithium ion is a key 
challenge.
    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 
Sessions.
    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 
you've outlined.
    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 
hybrid technology?
    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 
it's lower.
    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.]

                                APPENDIX

                   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 
taxpayers.
    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 
innovators.
    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 
associated jobs.
    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 
bearings.
    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 
demand.
    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 
greenhouse gases.
    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 
demands.
    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 
reduction policies.
    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 
technology deployment.
    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 
technologies.
                                 ______
                                 
       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 
technologies listed.
    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 
countries?
    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 
policies:

   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 
        problem''.
   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 
Review.
    Question 6. What are the most promising new energy efficiency 
technologies for buildings -both in the G-8 and in developing 
countries?
    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 
reductions.
    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 
important.
    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 
much?
    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 
technologies.
    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 
global economy.
    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 
States.
    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 
reduced.
    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 
developing countries.
    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 
change legislation?
    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 
climate change.
    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 
reduction plan?
    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 
vehicles.

       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 
demands.
    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 
garages.
    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 
scenario combinations.
    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 
Press. www.nap.edu.
---------------------------------------------------------------------------
    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 
technologies.
    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 
energy programs?
    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 
applied research.
    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 
industrial process.
    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 
energy research.
    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 
years.
    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 
working groups.
    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 
coatings.
    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 
commercialization?
    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 
technology development?
    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 
power?
    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 
coal-to-liquid products.
    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 
and industry.
                                 ______
                                 
    [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 
technologies?
    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 
benefit decisions?
    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?

                                    

      
