[Senate Hearing 110-]
[From the U.S. Government Publishing Office]
ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008
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WEDNESDAY, APRIL 11, 2007
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:33 p.m., in room SD-138, Dirksen
Senate Office Building, Hon. Byron L. Dorgan (chairman)
presiding.
Present: Senators Dorgan, Murray, Reed, Domenici, Craig,
Bond, Allard, and Stevens.
DEPARTMENT OF ENERGY
STATEMENT OF HON. DENNIS R. SPURGEON, ASSISTANT
SECRETARY NUCLEAR ENERGY
OPENING STATEMENT OF SENATOR BYRON L. DORGAN
Senator Dorgan. We'll call the hearing to order. This is
the Senate Appropriations Subcommittee on Energy and Water
Development. We thank our witnesses for being here today. This
is a hearing on the Office of Nuclear Energy, the Office of
Energy Efficiency and Renewable Energy, the Office of Fossil
Energy and the Office of Electricity Delivery and Energy
Reliability.
We're here to take testimony from the four program offices
I've just described within the Department of Energy which
oversee major aspects of the U.S. Government's energy R&D
demonstration and deployment programs. I have a great deal of
interest in these issues, as do others on this subcommittee,
and I look forward to hearing today from our witnesses.
Passage of the Energy Policy Act of 2005 (EPACT), thanks to
my colleagues, Senator Domenici and Senator Bingaman and their
leadership, was, I think, a step in the right direction. I was
pleased to be on the authorizing committee and to be a part of
the work in the passage of that legislation.
But it was only a step. More needs to be done and we will
continue to work in the authorization process to do that. The
Energy Policy Act, however, only has its full impact if it is
properly funded and implemented. Our ability to meet head on
the challenges that we tried to describe in our Energy Policy
Act will be hobbled by continued baby steps if we do not fully
fund many of the issues that we care about. We need to be more
deliberate, I believe, in addressing the major challenges that
are associated with energy, since it is the central
underpinning of our other economic, social, environmental, and
foreign policy goals.
So I believe we should set goals. We need to know where we
are going and how we are going to get there; so there are two
points that I think are very relevant to this hearing.
First, we need to do a much better job of investing in our
energy future. Second, we need to begin making these
investments within and across entire energy systems rather than
picking and choosing pieces of an energy puzzle.
Note chart 1. In December 2006, a Government Accountability
Office (GAO) study gave us this information. The total budget
authority for energy research and development has dropped by
over 85 percent in real terms between 1978 and 2005. We need to
put our energy challenges front and center and we will never be
able to move forward with declining investments like that.
Research and development figures in a chart like this should
indicate increasing funding but regrettably, that has not been
the case.
Chart 2 shows that of the Energy Department's $24.3 billion
budget request for 2008, only $3.1 billion is directed toward
energy matters. Let me say that again: Of $24.3 billion in the
Department of Energy budget request, $3.1 billion is directed
toward energy matters and of that only $2.5 billion is directed
at energy technology programs. While I realize the Department
has very broad and important mandates, this means that, in
simple terms, only $1 in $8 in the Department of Energy request
is actually going toward energy issues.
On the second point, energy systems have many elements to
them and we must undertake improvements along the R&D chain to
these systems as wholes. We have two major systems at work, the
transportation system and a power generation system. We must be
prepared to understand these systems and address them at every
stage, not just in bits and pieces.
For example, if we want to promote renewable fuels, and I
do, then we need to look at feed stocks, bio-refineries, fuel
transportation, infrastructure, vehicles, public education, and
marketplace acceptance. The Department of Energy suggests it
does not pick winners and losers but I think in many ways
that's very disingenuous.
We can see many examples where, with tight budgets and
different priorities, some areas have been done well and others
not so well. One needs to look only at the Department's fiscal
year 2007 spending plan. It demonstrates that two of our
witnesses' programs had windfall budget increases while two saw
cutbacks.
The Department's consistency in those areas, I think, is an
inconsistency in following through on long-term commitments and
recognizing the Government's role in investing and directing
policies along each stage of the energy system. I understand
that we have limited resources and nearly unlimited wants. But
we must find a way of addressing those key areas that are
crucial to our energy success in the future.
If our energy policy is going to be central to our Nation's
future, and energy will be central to our Nation's future, then
we're not going to be able to do it on the cheap or do it at
the margins. I'm very interested in hearing today from the four
witnesses, whose direct activities in the Department of Energy
are, I believe, essential and central to the question of
whether we will succeed in meeting our energy needs.
Senator Domenici.
OPENING STATEMENT OF SENATOR PETE V. DOMENICI
Senator Domenici. Mr. Chairman, I realize that we have a
full load of witnesses and many people here to hear what they
have to say, including Senators but I would like to give just a
brief opening statement. It will not be long.
First let me say, I greatly appreciate the statement you
made. I listened to it attentively. Obviously, I'm not sure
that I agree with the conclusions that were arrived at by you
and your helpers. But I do agree wholeheartedly with the
premise and the thesis of what you've said.
Actually, Mr. Chairman, we didn't have a Department of
Energy for a long time. It was a Department put together by
just piecing all kinds of agencies and then for a long time,
nobody knew what the Department of Energy was supposed to do.
You knew that from afar. I knew it from inside. We didn't know
whether we were supposed to be for nuclear power. We didn't
even know if there should be nuclear power mentioned within the
Department of Energy for a number of years, Senator Bond. It
just wasn't even thought of. So that accounts for many of the
ups and downs that you have spoken of.
Today, these four witnesses from the Department of Energy
represent major energy supply R&D accounts. They've developed
innovative research initiatives such as cellulosic biomass
programs, the Global Nuclear Energy Partnership (GNEP),
FutureGen and Solar America, which have the potential of
deploying cleaner burning fossil fuel technology as well as
zero emission technologies such as nuclear, solar and wind
generation.
This budget supports many of the research priorities
included in EPACT, the bill you alluded to that we passed 2\1/
2\ years ago. One important goal of EPACT has been to make sure
that innovative energy technology doesn't stay in the lab but
will be deployed to reduce our greenhouse gas emissions as well
as our country's less dependence on foreign energy sources.
It is a fact that our energy markets are based on low cost,
conventional generation. High cost renewable energy
technologies face a serious challenge in the cost competitive
environment.
In addition to supporting additional R&D efforts, I've been
focused on implementing the title XVII Loan Guarantee Program.
This initiative can be effective--an effective tool in the
leveraging of the Federal balance sheet to make the first of a
kind renewable and alternative energy technology cost
competitive.
I've been surprised by the challenges facing the
implementation of loan guarantee programs that we provided in
the energy bill, especially in light of the fact that the
export/import bank provides $18 billion in loan coverage to
support U.S. commercial investments overseas. This is twice the
level provided to support DOE's title XVII.
I know investment overseas is important but I believe we
have a serious problem when the administration provides greater
assistance to support the sale of nuclear reactors to China
than it provides for the deployment of nuclear reactors in our
own country. I believe that's wrong and I think somehow we must
fix it. It is very hard for us to fix it. I mean, we are going
to have to pass specific laws that specifically direct whatever
it is we want in this area that we're talking about in terms of
loan guarantees.
I'd like to also make a brief point about the Global
Nuclear Energy Partnership--GNEP. This is a very exciting
initiative. It proposes to close the nuclear fuel cycle. I
understand there could be questions about it but I think once
it gets on the table, let's the daylight see it all and see how
it comes out. It is apt to be a very exciting thing that we
should put together and work on.
PREPARED STATEMENTS
I ask that the balance of my statement be made a part of
the record and thank you, Mr. Chairman, for giving me an
opportunity to address these issues and thank you, witnesses.
It's good to have you all here.
Senator Dorgan. Without objection. Senator Reed has also
submitted a statement for the record.
[The statements follow:]
Prepared Statement of Senator Pete V. Domenici
Mr. Chairman, today we have four witnesses representing the
Department of Energy's major energy supply R&D accounts. These offices
have developed innovative research initiatives such as the cellulosic
biomass program, GNEP, FutureGen and Solar America, which have the
potential of deploying cleaner burning fossil fuel technology as well
as zero emission technologies such as nuclear, solar, and wind
generation.
This budget supports many of the research priorities included in
EPACT. One important goal of EPACT has been to make sure that
innovative energy technology doesn't stay in the lab but will be
deployed to reduce our greenhouse gas emissions as well as make our
country less dependent of foreign energy sources.
It is a fact that our energy markets are based on low cost,
conventional generation and that high cost, renewable energy
technologies face a serious challenge in a cost competitive
environment.
In addition to supporting additional R&D efforts, I have been
focused on implementing the title 17 loan guarantee program. This
initiative can be an effective tool in leveraging the Federal balance
sheet to make the first of a kind renewable and alternative energy
technologies cost competitive.
I have been surprised by the challenges facing the implementation
of the loan guarantee program, especially in light of the fact that the
Export-Import Bank provides $18 billion in loan coverage to support
U.S. commercial investment overseas. This is twice the level provided
to support DOE's title 17 program.
I know investment overseas is important, but I believe we have a
serious problem when the administration provides greater assistance to
support the sale of nuclear reactors to China, than it provides for the
deployment of nuclear reactors in our own country.
Mr. Chairman, I would like to make a brief point about the Global
Nuclear Energy Partnership (GNEP). This is a very exciting initiative.
It proposes to close the nuclear fuel cycle and make a significant
reduction on our spent fuel inventories.
The world has begun to embrace nuclear power as a cost effective
energy solution that does not contribute to greenhouse gases. Today,
there are plans to build an additional 200 new nuclear plants in
countries all across the world.
I commend the administration for their efforts to develop a
comprehensive plan that will address spent fuel management and to
optimize this energy resource in a safe and secure manner.
This issue is not going away and this country should be part of the
global solution.
I am looking forward to hearing from our witnesses, who are working
very hard to make our country more energy independent and to reduce
greenhouse gas emission to the lowest levels possible.
Gentlemen, I appreciate your service very much.
______
Prepared Statement of Senator Jack Reed
Chairman Dorgan and Senator Domenici, I want to thank you for
holding this hearing to review the Department of Energy's fiscal year
2008 budget request. Federal funding for energy efficiency and
renewable energy programs is very important to me. I want to express my
disappointment at the Department of Energy's budget proposal for the
Office of Energy Efficiency and Renewable Energy. The fiscal year 2008
budget proposes only $1.24 billion for EERE--a $230 million decrease
compared to the fiscal year 2007 Continuing Resolution funding level.
Our Nation faces significant challenges as we strive to ensure our
energy security, reduce the economic risks of high energy prices, and
address global climate change. Energy efficiency and renewable energy
programs that improve technologies for our homes, our businesses, and
our vehicles must be the ``first fuel'' in the race for secure,
affordable, and clean energy.
Energy efficiency is the Nation's greatest energy resource. We now
save more energy each year from energy efficiency than we get from any
single energy source, including oil, natural gas, coal, and nuclear
power. A 2001 National Research Council report found that for every
dollar invested in the 17 Department of Energy energy-efficiency
research and development programs, nearly $20 is added to the U.S.
economy in the form of new products, new jobs, and energy cost savings
to American homes and businesses.
Unfortunately, under this administration, efficiency funding has
fallen alarmingly since 2002. Adjusting for inflation, funding for
efficiency has been cut by one-third. The fiscal year 2007 Continuing
Resolution provided $1.473 billion for efficiency and renewable energy.
I want to thank Senators Dorgan and Domenici for this increased
funding. The $300 million added in fiscal year 2007 will help to
restore the cuts of recent years, but increased investment is
necessary. The Energy Policy Act of 2005 authorized over $3.8 billion
for the EERE account. In order to reduce our dependency on fossil fuels
and enhance our energy security, this is a time to grow our Nation's
investment in energy efficiency, not cut funding.
I want to add that I am disappointed that the Department of
Energy's fiscal year 2007 spending plan submitted to Congress cut
funding to the Weatherization program. The Senate passed an amendment
to the Supplemental Appropriations bill to restore funding to $237
million. While I hope this amendment will prevail in conference, it is
my hope that the Department will reconsider its spending plan and
restore the funding for weatherization while maintaining funding for
other programs in the intergovernmental account.
In closing, I want to say that I am glad to see the
administration's support for cellulosic ethanol and an increase in
funding to support cost-shared projects with industry for enzyme
development to produce low cost sugars from biomass and for improved
organism development for converting those sugars to ethanol. I want to
make sure that the Department of Energy is aware of important research
being conducted by the University of Rhode Island and Brown University
in this field. Researchers in my State are developing biotechnology
strategies to increase biomass of native grasses and enzymes for post-
harvest digestion of cellulose to improve efficiency of cellulosic
ethanol production.
Senator Dorgan. My colleagues, I would prefer to go to the
witnesses but if you have a very brief opening statement that
you feel like you must make, I'd certainly be happy to respect
that.
Senator Bond. That's a challenge, Mr. Chairman. I was going
to spend most of my time praising you and the ranking member
for the money you put in, the $300 million increase in funding
through the continuing resolution.
Senator Dorgan. Take as much time as you want.
Senator Bond. For efficiency of renewable energy. I
strongly support renewable energy, nuclear power, clean coal
research. We have a lot of problems in Missouri if we have
carbon caps or taxation. For low-income people, LIHEAP only
covers one-sixth of them. We've lost jobs overseas from the
increased cost of natural gas.
These impose tremendous burdens and the best way we can
work, I think, for the future, is through clean coal technology
because right now, I just heard--I don't know, I just heard
this fact that by 2012, the timeframe when Kyoto is going to go
into place--by that time, China and India will build almost 800
new coal-fired powerplants. The combined carbon emissions from
those plants will be five times as much as the total reductions
mandated by the Kyoto Accords and even though nobody is meeting
them and we can't get China and India to meet them and curb
their growth unless we are able to provide them the technology.
I commend the President's Asia Pacific Partnership because
that--developing the technology here, making it comparable in
cost to current technology for coal-fired energy is absolutely
essential. We've got to get over the foot dragging and the
bureaucracy, get the money released for the EPA Act and I
support your efforts and more authorization. I just think this
is a critical element if we're going to take care of the needs
in our country and not see our efforts overwhelmed by the
growth in new coal-powered plants in China and India.
Senator Dorgan. Thank you, Senator Bond. Others?
Senator Craig. With reason and concern, I will only accept
a slight bump up in the Idaho Lab budget. Other than that, I'll
make my comments during the questioning period.
Senator Dorgan. Thank you, Senator Craig.
Senator Craig. Dennis, did you hear that?
Mr. Spurgeon. Yes, sir, I heard that.
Senator Craig. Thank you very much.
Senator Dorgan. Senator Allard.
PREPARED STATEMENT
Senator Allard. Mr. Chairman, I have some comments. I'll
just submit them in the record.
Senator Dorgan. Without objection.
[The statement follows:]
Prepared Statement of Senator Wayne Allard
Mr. Chairman, thank you for holding this hearing today. I think it
is very appropriate that you have asked the offices that are
responsible for dealing with some of the most common ways of producing
electricity to be here with the Office of Delivery and Reliability. And
as we are all aware, no amount of electricity does us any good if we
cannot get it to where it is needed.
No one can argue that we are dangerously reliant on foreign sources
of energy. We must decrease our reliance on foreign sources of energy
by diversifying our energy sources and increasing conservation. I have
long felt that a balanced energy portfolio that takes no technology off
of the table is what is best for this Nation.
For this reason I am a strong supporter of nuclear energy. Nuclear
generation facilities produce vast and reliable quantities of
electricity. I am pleased with the recent movement toward increasing
our nuclear capacity, which has been the result of the Energy Policy
Act passed in 2005. I am hopeful that we can continue this progress.
I would like to extend a special welcome to Mr. Karsner, who
oversees the Office of Energy Efficiency and Renewable Energy, which in
turn oversees the National Renewable Energy Laboratory in Colorado.
NREL makes a major contribution to the development of renewable energy
technology and the technologies that are developed at NREL will remain
vital to our Nation's energy progress.
Renewable energy is a very important way that we can begin to
reduce the demand for oil and, thereby, help make our country more
secure. There are great opportunities for solar, wind, geothermal,
biomass, fuel cells and hydro to make significant contributions.
Research and the input of both government and industry partners are
very important to allowing these opportunities to live up to their
potential.
Finally, fossil energy will remain important to energy production
in this country. Technological advancements have made the use of coal
cleaner and more efficient than ever before. In the United States we
have vast amounts of domestic resources from traditional oil, coal and
gas resources to unconventional sources such as oil shale. I firmly
believe that we can and must continue to use these resources
responsibly.
I look forward to working with the committee to ensure that
research and development in all fields of energy technology are funded
in a manner that is responsible, but sufficient to ensure that the
development and implementation of new technologies continues.
Senator Dorgan. Thank you very much. Well, let me, on
behalf of the entire subcommittee, thank the witnesses. We will
begin today by hearing from the Honorable Dennis Spurgeon, who
is the Assistant Secretary of the Office of Nuclear Energy. Mr.
Spurgeon, let me say to all four of you that your full comments
will be made a part of the permanent record and you may
summarize. Mr. Spurgeon.
STATEMENT OF HON. DENNIS R. SPURGEON
Mr. Spurgeon. Thank you very much, Mr. Chairman. Chairman
Dorgan, Ranking Member Domenici and members of the
subcommittee, it is a pleasure to be here today to discuss the
fiscal year 2008 budget request for the Department of Energy's
Office of Nuclear Energy.
The Office of Nuclear Energy has made progress in the last
several years in advancing our Nation's energy security and
independence in support of the Department's strategic plan. It
is my highest near-term priority to enable industry to deploy a
new generation of nuclear power plants. We have also made steps
toward the developing of advanced nuclear reactor and fuel
cycle technologies while maintaining a critical national
nuclear infrastructure.
Today, 103 nuclear reactors generate roughly 20 percent of
America's electricity, with the 104th reactor, Browns Ferry
Unit 1, about to enter service. U.S. electricity demand is
anticipated to grow 50 percent in the next 25 years, the
equivalent of 45 to 50 1,000 megawatt nuclear reactors must be
built just to maintain that 20 percent share.
The United States is at a critical juncture in the future
of nuclear power in the United States. Unlike many of our
international research partners, our nuclear industry has not
been heavily supported, financially and politically, over the
past 30 years. Today, the need for increased electrical
generation capacity is clear and hopefully undisputed.
NUCLEAR POWER 2010
Fortunately, we do have a growth option that allows us to
have a diversified electrical generation portfolio that
includes a significant carbon emissions-free component and that
is nuclear power. To support near term domestic expansion of
nuclear energy, the fiscal year 2008 budget requests $114
million for the Nuclear Power 2010 Program, to support
continued cost shared efforts with industry to reduce the
barriers to deployment of new nuclear power plants in the
United States.
In the past few weeks, we have seen major milestones met in
the expansion of safe and clean nuclear power. In early March,
the NRC voted to approve the early site permit for the Exelon
Generation Company's Clinton site in central Illinois and 2
weeks ago, the NRC approved the early site permit for the
Entergy Corporation's Randolph site in Mississippi. The
approval of these two sites is a step toward the ordering of
new nuclear powerplants for construction on American soil, a
feat that hasn't happened in 30 years.
Why nuclear power? Nuclear power is the only proven base
load producer of electricity for new capacity that does not
emit greenhouse gases. It is vital that our current fleet of
reactors be expanded in order to meet our needs for carbon-
free, dependable electric power.
GLOBAL NUCLEAR ENERGY PARTNERSHIP
Any serious effort toward expanded global use of nuclear
energy will inevitably require us to address the spent fuel and
proliferation challenges that accompany such an expansion. To
meet these challenges, President Bush initiated the Global
Nuclear Energy Partnership or GNEP, a comprehensive approach to
enable the expansion of nuclear power in the United States and
around the world, to promote nonproliferation goals, to more
efficiently use our nuclear fuel resources and to help resolve
nuclear waste management issues.
Domestically, GNEP provides a solution to the ever-growing
issue of spent nuclear fuel. In conjunction with Yucca
Mountain, GNEP provides a solution that outlines a closed fuel
cycle, where energy is harvested from spent fuel before the end
product is disposed of in a permanent geologic repository. The
spent fuel will be recycled in a manner that will be more
proliferation resistant than current processes used around the
world. A closed fuel cycle will also alleviate some of the
burden placed on Yucca Mountain and will possibly eliminate the
need for a second geologic repository throughout the remainder
of this century. We reiterate though that no fuel cycle
scenario will eliminate the need for a geologic repository.
We are all aware of the enormous amount of energy available
from nuclear fission. One pound of uranium fuel in a reactor
makes the same amount of electricity as 125 million pounds of
coal. Recycling, as we planned in GNEP, while decreasing the
overall mass of spent nuclear fuel, will also make it possible
to use the energy remaining in the used fuel. A recycling
facility processing fuel from existing U.S. light water
reactors could recover the energy equivalent of the oil
delivered by the Alaska Pipeline.
Internationally, GNEP promises to address the growing
global energy demand in an environmentally friendly manner. A
global regime of countries able to provide a complete portfolio
of nuclear fuel services, including Russia, France and possibly
Japan, China and Britain, will provide these services to
countries wanting to use nuclear power to meet their basic and
growing energy needs without the cost and risk associated with
the nuclear fuel cycle infrastructure. By providing these
services to other countries, we hope to dissuade future states
from developing enrichment capabilities like we are
encountering in Iran today.
The fact is, the United States is not currently positioned
to be an active member of the global regime. We have limited
enrichment capabilities and no back end recycling capabilities.
Creating the capabilities needed to participate in the global
expansion of nuclear power will take at least 15 to 20 years,
meaning that in order to become an active participant of the
global nuclear expansion, we need to begin now.
Taking those necessary steps enables us to better assure
that the imminent expansion will be safe, beneficial and will
not promote the proliferation of nuclear weapons.
The Department requests $405 million in fiscal year 2008 to
begin work on developing a detailed, technically sound roadmap
for implementing all aspects of the GNEP vision.
PREPARED STATEMENT
Mr. Chairman, we appreciate the support we have received
from the subcommittee as we seek to address the challenges
surrounding the global expansion of nuclear power. We remain
confident and optimistic about the role of nuclear energy in
providing a solution to our Nation's energy stability and
independence.
I would be pleased to answer your questions, sir.
Senator Dorgan. Secretary Spurgeon, thank you very much for
your testimony. We appreciate it.
[The statement follows:]
Prepared Statement of Hon. Dennis R. Spurgeon
Chairman Dorgan, Ranking Member Domenici, and members of the
subcommittee, it is a pleasure to be here to discuss the fiscal year
2008 budget request for The Department of Energy's (DOE) Office of
Nuclear Energy.
The Department of Energy's strategic plan portrays a long-term
vision of a zero-emission future, free from the reliance on imported
energy. A portfolio of nuclear programs is provided for in this plan
for near-term, medium-term, and long-term sustained advances in nuclear
technology.
The Office of Nuclear Energy has made progress in the last several
years in advancing our Nation's energy security and independence in
support of the Department's strategic plan. The Department remains
committed to enabling industry to deploy a new generation of nuclear
power plants. We have also made steps forward in developing advanced
nuclear reactor and fuel cycle technologies while maintaining a
critical national nuclear infrastructure.
Today, 103 nuclear reactors generate roughly 20 percent of
America's electricity, with the 104th reactor, Browns Ferry unit 1,
about to enter service. U.S. electricity demand is anticipated to grow
50 percent over the next 25 years--the equivalent of 45 to 50 one-
thousand megawatt nuclear reactors must be built just to maintain that
20 percent share. With nuclear power as the only proven base load
producer of electricity that does not emit greenhouse gases, it is
vital that our current fleet of reactors be expanded in order to meet
our needs for carbon-free, dependable and economic electric power.
Any serious effort to stabilize greenhouse gases in the atmosphere,
while providing the increasing amounts of energy needed for economic
development and growth, requires the expanded use of nuclear energy.
This will inevitably require us to address the spent fuel and
proliferation challenges that confront the expanded, global use of
nuclear energy. To meet these challenges, the Department initiated the
Global Nuclear Energy Partnership (GNEP), a comprehensive approach to
enable an expansion of nuclear power in the United States and around
the world, promote non-proliferation goals, and help minimize the
amount of nuclear waste disposal.
GNEP is a perfect example of where global cooperation is required
to address a changing global energy landscape. The United States has a
unique opportunity to influence global energy policy, and more
specifically global nuclear energy policy. However, for the United
States to have influence abroad, we must have an established domestic
policy supportive of a significant role for nuclear power in our energy
future, an aggressive nuclear research and development program, and a
viable nuclear technology infrastructure. Through the GNEP program, we
are pursuing in parallel the development of the policies, technologies,
and facilities necessary for the United States to be a global leader in
the nuclear energy enterprise and to ensure our energy security and
national security objectives.
The Department's fiscal year 2008 budget request proposes an $874.6
million investment in nuclear research, development and infrastructure
for the Nation's future. This budget request supports the President's
priorities to enhance the Nation's energy security while enabling
significant improvements in environmental quality. Our request supports
development of new nuclear generation technologies and advanced energy
products that provide significant improvements in sustainability,
economics, safety and reliability, and proliferation and terrorism
resistance.
While we have made progress in all program areas, much remains to
be done. Our fiscal year 2008 request moves us in the right direction
and I will now provide you a report of our activities and explain the
President's request for nuclear energy.
nuclear power 2010
To support near-term domestic expansion of nuclear energy, the
fiscal year 2008 budget requests $114 million for the Nuclear Power
2010 program to support continued cost-shared efforts with industry to
reduce the barriers to the deployment of new nuclear power plants in
the United States. The technology focus of the Nuclear Power 2010
program is on Generation III+ advanced, light water reactor designs,
which offer advancements in safety and economics over the existing
fleet of nuclear power plants already operating in the United States.
To reduce the regulatory uncertainties and enable the deployment of new
Generation III+ nuclear power plants in the United States, it is
essential to demonstrate the untested Federal regulatory processes for
the siting, construction, and operation of new nuclear plants. In
addition, design finalization of two standard plant designs and NRC
certification of these Generation III+ advanced reactor concepts are
needed to reduce the high initial capital costs of the first new plants
so that these new technologies can be competitive in the deregulated
electricity market and deployable within the next decade.
The fiscal year 2008 budget request continues the licensing
demonstration activities started in previous years. Activities include
completion of the last Early Site Permit demonstration projects and
continuation of the New Nuclear Plant Licensing Demonstration projects
that will exercise the untested licensing process to build and operate
new nuclear plants and complete and obtain certification of two
advanced Generation III+ advanced reactor designs. Engineering
activities in support of the submission of two combined Construction
and Operating License (COL) applications to the NRC will continue. In
addition, two reactor vendors will continue first-of-a-kind design
activities for two standard nuclear plants.
In the past few weeks we have seen major milestones met in the
expansion of safe and clean nuclear power. Earlier this month the NRC
voted to approve the Early Site Permit for the Exelon Generation
Company's Clinton site in central Illinois, and just yesterday the NRC
approved the Early Site Permit for the Entergy Corporation's Grand Gulf
site in Mississippi. The approval of these two sites is a step towards
the ordering of new nuclear power plants for construction on American
soil, a feat that hasn't happened in 30 years. With nuclear power as
the only proven base load producer of electricity that does not emit
greenhouse gases, it is vital that our current fleet of reactors be
expanded in order to meet our needs for carbon-free, dependable and
economic electric power.
The project teams, Dominion Energy and NuStart Energy Development
LLC., involved in the licensing demonstration projects represent power
generating companies and reactor vendors that operate more than two-
thirds of all the U.S. nuclear power plants in operation today. As a
result of the Nuclear Power 2010 program and Energy Policy Act of 2005
financial incentives (e.g. standby support), 14 power companies have
announced their intentions to apply for combined construction and
operating licenses. Several have specifically stated that they are
building on work being done in the Nuclear Power 2010 program as the
basis for their applications.
The United States is at a critical juncture in the future of
nuclear power in the United States. Unlike many of our international
research partners, our nuclear industry has not been heavily supported
financially and politically over the past 30 years. Today the need for
increased electrical generating capacity is clear and hopefully
undisputed. Fortunately, we do have a growth option that allows us to
have a diversified electrical generation portfolio that includes a
significant carbon emissions-free component, and that is nuclear power.
To realize this option, we are asking private companies to build plants
whose collective cost could be a significant percentage of their net
worth. This represents an enormous financial risk that few companies or
lenders will be willing to assume without demonstrated certainty in the
regulatory process and project cost.
If one accepts the fact that we need more electrical generation
capacity, and if one desires to have a component of that new capacity
that is carbon free, and one recognizes the financial considerations
associated with such a large private investment in technologies that we
have not supported in 30 years, then the importance of this program to
our future energy security is self-evident. These companies will be
building new generating capacity in the very near future, but the
question they must first answer is whether this generation will come
from clean, safe, nuclear technologies or not.
If widely deployed in the United States these new technologies will
create significant business opportunities and will support the rapid
growth of heavy equipment fabrication, high technology and commercial
construction industries in this country. Moreover, these American
technologies and industrial capabilities will be highly competitive
internationally and would support our leadership role in the global
expansion of safe, clean nuclear power.
advanced fuel cycle initiative
One of the most important and challenging issues affecting future
expansion of nuclear energy in the United States and worldwide is
dealing effectively with spent nuclear fuel and high-level waste. For
the medium-term, the Advanced Fuel Cycle Initiative (AFCI) will develop
fuel cycle technologies that will support the economic and sustained
production of nuclear energy while minimizing waste in a proliferation-
resistant manner. To support the development of these technologies, the
fiscal year 2008 Budget request includes $395.0 million for AFCI.
AFCI's near-term goals are to develop and demonstrate advanced,
more proliferation-resistant fuel cycle technologies for treatment of
commercial light water reactor spent fuel, to develop an integrated
spent fuel recycling plan, and to provide information and support on
efforts to minimize the amount of material that needs disposal in a
geologic repository. AFCI conducts research and development of spent
fuel treatment and recycling technologies to support an expanding role
for nuclear power in the United States and to promote world-wide
expansion of nuclear energy in a proliferation-resistant manner as
envisioned for the Global Nuclear Energy Partnership (GNEP). AFCI is
the U.S. technology component of the GNEP.
Specifically, in fiscal year 2008, the Department intends to
complete industry-led conceptual design studies for the nuclear fuel
recycling center and the advanced recycling reactor Demonstration
Analysis. Additionally, DOE will continue start-to-finish
demonstrations of recycling technologies, which are expected to produce
separated transuranics for use in transmutation fuel development, as
well as conduct systems analysis and advanced computing and simulation
activities focused on a variety of deployment system alternatives and
supporting technology development. As part of GNEP Technology
Development, the Department also intends to evaluate small,
proliferation-resistant reactors for potential U.S. manufacture and
export to reactor user nations.
GNEP seeks to bring about a significant, wide-scale use of nuclear
energy, and to take actions now that will allow that vision to be
achieved while decreasing the risk of nuclear weapons proliferation and
effectively addressing the challenges of nuclear waste disposal. GNEP
will advance the nonproliferation and national security interests of
the United States by reinforcing its nonproliferation policies and
limiting the spread of enrichment and reprocessing technologies, and
will eventually eliminate excess civilian plutonium stocks that have
accumulated. The AFCI budget request supports the Department's goal of
realizing the GNEP vision. AFCI activities in fiscal year 2007 and
fiscal year 2008 are focused on developing a detailed roadmap for
implementing all aspects of the GNEP vision and informing a Secretarial
decision in June 2008 on the path forward for GNEP.
Long-term goals for AFCI/GNEP will develop and demonstrate an
advanced, more proliferation-resistant closed nuclear fuel cycle system
involving spent fuel partitioning and recycling of long-lived
radioactive elements for destruction through transmutation in fast
reactors that could result in a significant increase in the effective
capacity of the planned Yucca Mountain repository. This capacity
increase could ensure enough capacity to accommodate all the spent fuel
generated in the United States this century from any reasonably
conceivable deployment scenario for nuclear energy. Yet, under any fuel
cycle scenario a geologic repository is necessary. Therefore, GNEP and
Yucca Mountain are proceeding on parallel tracks.
generation iv nuclear energy systems initiative
The fiscal year 2008 budget request includes $36.1 million to
continue development of next-generation nuclear energy systems within
the Generation IV program. For the long term, the Generation IV program
will develop new nuclear energy systems that can compete with advanced
fossil and renewable technologies, enabling power providers to select
from a diverse group of options that are economical, reliable, safe,
secure, and environmentally acceptable. In particular, the Next
Generation Nuclear Plant (NGNP) reactor concept will be capable of
providing high-temperature process heat for various industrial
applications, including the production of hydrogen in support of the
President's Advanced Energy Initiative.
The NGNP, with an investment of $30 million within the Generation
IV Nuclear Energy Systems Initiative, will utilize a Generation IV Very
High Temperature Reactor configured for production of high temperature
process heat for the generation of hydrogen, electricity, and other
industrial commodities. The Energy Policy Act of 2005 (EPACT)
authorized the Department to create a two-phased NGNP Project at the
Idaho National Laboratory (INL). The Department is presently engaged in
Phase I of the EPACT defined scope of work which includes: developing a
licensing strategy, selecting and validating the appropriate hydrogen
production technology, conducting enabling research and development for
the reactor system, determining whether it is appropriate to combine
electricity generation and hydrogen production in a single prototype
nuclear reactor and plant, and establishing key design parameters.
Phase I will continue until 2011, at which time the Department will
evaluate the need for continuing into the design and construction
activities called for in Phase II.
The fiscal year 2008 budget request maintains critical R&D that
will help achieve the desired goals of sustainability, economics, and
proliferation resistance. Further investigation of technical and
economical challenges and risks is needed before a decision can be made
to proceed with a demonstration of a next-generation reactor.
nuclear hydrogen initiative
Hydrogen offers significant promise as a future energy technology,
particularly for the transportation sector. The use of hydrogen in
transportation will reduce U.S. dependence on foreign sources of
petroleum, enhancing our energy security. The fiscal year 2008 budget
request for the Office of Nuclear Energy includes $22.6 million to
continue to develop enabling technologies, demonstrate nuclear-based
hydrogen production technologies, and study potential hydrogen
production strategies to support the President's vision for a future
hydrogen economy.
Currently, the only economical, large-scale method of hydrogen
production involves the conversion of methane into hydrogen through a
steam reforming process. This process produces ten kilograms of
greenhouse gases for every kilogram of hydrogen, defeating a primary
advantage of using hydrogen--its environmental benefits. Another
existing method, electrolysis, converts water into hydrogen using
electricity. Electrolysis is typically used for small production
quantities and is inherently less efficient because electricity must
first be produced to run the equipment used to convert the water into
hydrogen. Additionally, the environmental benefits of electrolysis are
negated unless a non-emitting technology, such as nuclear or renewable
energy, is used to produce the electricity. The Nuclear Hydrogen
Initiative is developing processes that operate across a range of
temperatures for the various advanced reactors being researched by the
Generation IV Nuclear Energy Systems Initiative. These processes,
coupled with advanced nuclear reactors, have the potential for high-
efficiency, large-scale production of hydrogen.
The objective of this program is to demonstrate the technologies at
increasingly larger scales ultimately culminating in an industrial
scale that would be technically and economically suited for commercial
deployment. Fiscal year 2005 and fiscal year 2006 activities were
focused on the validation of individual processes and components;
fiscal year 2007 and fiscal year 2008 are focused on the design,
construction and operation of integrated laboratory scale experiments.
In fiscal year 2008, the Department will complete construction of
integrated laboratory-scale system experiments and begin testing to
enable the 2011 selection of the technology that could be demonstrated
in a pilot scale hydrogen production experiment.
radiological facilities management
The Office of Nuclear Energy's fiscal year 2008 budget request also
includes $53.0 million to maintain critical research and production
facilities for medical isotopes and radioisotope power systems at the
Idaho National Laboratory, the Oak Ridge National Laboratory, the Los
Alamos National Laboratory, the Sandia National Laboratory, and the
Brookhaven National Laboratory. This request also includes funding for
University Research Reactors.
These funds assure that the infrastructure for the facilities meet
essential safety and environmental requirements and are maintained at
operable user-ready levels. Programmatic activities, including
production and research, are funded either by other DOE programs, by
the private sector, or by other Federal agency users.
The Department seeks $14.9 million to maintain one-of-a-kind
facilities at the Idaho, Oak Ridge, Brookhaven, and Los Alamos National
Laboratories for isotope production and processing. These isotopes are
used to help improve the accuracy, effectiveness, and continuation of
medical diagnoses and therapy, enhance homeland security, improve the
efficiency of industrial processes, and provide precise measurement and
investigative tools for materials, biomedical, environmental,
archeological, and other research. Actual operations, production,
research or other activities are funded either by other DOE programs,
by the private sector, or by other Federal agency users.
The Department also maintains unique facilities and capabilities at
the Idaho, Oak Ridge, and Los Alamos National Laboratories that enable
the Department to provide the radioisotope power systems for space
exploration and national security applications. The fiscal year 2008
budget requests $35.1 million to maintain the basic facilities and
associated personnel whereas mission specific development or hardware
fabrication costs are provided by the user agencies. This arrangement
is essential in order to preserve the basic capability regardless of
periodic fluctuations in the demand of the end product users.
Finally, the Department requests $2.9 million in fiscal year 2008
to provide research reactor fuel to universities and dispose of spent
fuel from university reactors. Currently, there are 27 operating
university research reactors at 27 institutions in the United States.
Many of these facilities have permanent fuel cores and therefore do not
require regular fuel shipments. However, DOE supplies approximately a
dozen universities with fresh fuel and shipments of spent fuel as
needed.
idaho facilities management
The Department is working to transform Idaho National Laboratory
into one of the world's foremost nuclear research laboratories. As
such, the fiscal year 2008 budget request seeks $104.7 million for the
Idaho Facilities Management Program to maintain and enhance the
laboratory's nuclear energy research infrastructure.
The Idaho Facilities Management Program operates and maintains
three main engineering and research campuses and the Central Facilities
Area at the Idaho National Laboratory. The 3 main engineering and
research campuses are: (1) the Reactor Technology Complex which houses
the world-renown Advanced Test Reactor, (2) the Materials and Fuels
Complex, and (3) the Science and Technology Campus. As the Idaho
National Laboratory landlord, the Office of Nuclear Energy also
operates and maintains the Central Facilities Area at Idaho National
Laboratory, providing site-wide support services and from which various
site infrastructure systems and facilities, such as electrical utility
distribution, intra-laboratory communications systems, and roads are
managed and maintained. Also included within the Central Facilities
Area is the Radiological and Environmental Sciences Laboratory operated
by the Office of Nuclear Energy.
idaho site-wide safeguards & securities
The mission of the Idaho Site-wide Safeguards and Security program
is to protect the assets and infrastructure of the Idaho National
Laboratory from theft, diversion, sabotage, espionage, unauthorized
access, compromise, and other hostile acts that may cause unacceptable
adverse impacts on national security; program continuity; or the health
and safety of employees, the public, or the environment.
The fiscal year 2008 Budget Request includes $72.9 million to
provide protection of nuclear materials, classified matter, government
property, and other vital assets from unauthorized access, theft ,
diversion, sabotage, espionage, and other hostile acts that may cause
risks to national security, the health and safety of DOE and contractor
employees, the public or the environment.
university reactor infrastructure and educational assistance
While the University Educational Assistance program has concluded,
funding will continue to be provided to the Nation's nuclear science
and engineering universities through our applied research and
development programs by means of our Nuclear Energy Research Initiative
(NERI). NERI funds are competitively awarded to support research
objectives of the Advanced Fuel Cycle Initiative, the Generation IV
Energy Systems Initiative and the Nuclear Hydrogen Initiative. By
increasing the opportunities for university participation in our
research programs, the Department seeks to establish an improved
education and research network among universities, laboratories,
industry and government. Approximately $62 million in funding for
universities is included in the research programs for fiscal year 2008,
a 21 percent increase over the fiscal year 2007 request.
conclusion
This concludes my prepared statement. Your leadership and guidance
has been essential to the progress the program has achieved thus far
and your support is needed as we engage the task ahead of investing in
our energy security.
I would be pleased to answer any questions you may have.
Senator Dorgan. Next, we will hear from Secretary Karsner.
Secretary Karsner is Assistant Secretary for the Office of
Energy Efficiency and Renewable Energy. Secretary Karsner, we
welcome you.
STATEMENT OF HON. ALEXANDER KARSNER, ASSISTANT
SECRETARY FOR ENERGY EFFICIENCY AND
RENEWABLE ENERGY
Mr. Karsner. I appreciate that. Chairman Dorgan, Ranking
Member Domenici, members of the subcommittee, thank you for
this opportunity to testify on the President's fiscal year 2008
budget request for the Office of Energy Efficiency and
Renewable Energy, EERE.
The request includes $1.24 billion for EERE, approximately
$60 million more than the fiscal year 2007 request to Congress.
To be clear, my statement today is presented primarily in
comparison with the administration's fiscal year 2007 request;
however, because the Department has now submitted its fiscal
year 2007 operating plan, I'm also going to highlight some of
the key allocations from that appropriation.
The fiscal year 2008 budget request addresses pressing
energy and environmental challenges by accelerating the
development of renewable energy and advanced energy efficiency
technologies. Much of EERE's funding is an integral part of the
President's Advanced Energy Initiative (AEI). The AEI was
launched in 2006 to confront our Nation's addiction to oil,
lessen dependence on foreign resources and reduce emissions by
developing clean sources of electricity generation.
In the 2007 State of the Union Address, the President
raised the bar further by seeking legislative action to reduce
gasoline consumption by 20 percent within the decade, the 20 in
10 plan. The 20 in 10 legislative proposals include an
increased alternative fuel standard and reduced fuel
consumption through raising and reforming corporate average
fuel economy with a CAFE&ogram.
The President's budget request increases funding for
programs that support the 20 in 10 goal, including biomass and
biofuels R&D to expand the availability of alternative
transportation fuels. While the fiscal year 2007 continuing
resolution is a substantial increase over the President's
fiscal year 2008 budget proposal, the funds will be used to
accelerate critical components of the Advanced Energy
Initiative. EERE is directing an additional $30 million to
commercial biorefinery demonstrations, $10 million additional
for plug-in hybrid battery development, and over $100 million
for improvements at the National Renewable Energy Laboratory,
NREL. The increase will accelerate the completion of NREL's
research support facility, a state-of-the-art building complex.
As a national model of LEED certified advanced design, it's
going to showcase the renewable energy and energy efficiency
technologies that NREL develops and reduce its operating costs.
Preliminary analyses indicate the potential to achieve up to
$122 million of life cycle savings.
The increase will also support expansion of NREL's
Integrated Bio-Refinery Research Facility, which provides the
industry with a very unique test bed for emerging technologies.
Returning to fiscal year 2008, EERE's overall budget
request reflects the goals of accelerating new energy R&D and
expanding commercialization and deployment of emerging
technologies. The request for biomass and biorefinery systems
R&D is $179.3 million, an increase of $29.6 million or almost
20 percent over the previous year. This proposal highlights the
essential role of the Biofuels Initiative in increasing
America's energy security.
The program is focused on making cellulosic ethanol cost-
competitive by 2012. EERE will continue to support cost-shared
efforts with industry to develop and demonstrate cellulosic
biorefinery technologies that enable the production of
transportation fuels and co-products. In addition, EERE is
engaging in cost-shared projects with industry for enzyme
development and for improved organism development or
ethanologens for converting the sugars into ethanol. These two
projects address major barriers to meeting our 2012 targets.
For the Vehicle Technologies Program, the Department is
requesting $176.1 million for fiscal year 2008 to advance the
development of energy-efficient, environmentally friendly,
flexible platform technologies for cars and trucks that use
significantly less oil and enable industry to comply with the
proposed reformed CAFE standards. This request is $10.1 million
higher than the fiscal year 2007 request and will advance the
state of the art for energy storage batteries, power
electronics and motors, and drive systems and testing needed to
accelerate the viability and delivery of plug-in hybrid
electric vehicles.
Battery technologies have made significant progress,
reducing the cost of next generation hybrid vehicle batteries
in each of the past 3 years, from almost $1,200 per vehicle to
$750 per vehicle. In fiscal year 2008, we expect to bring that
down further to $625 per vehicle and to increase our emphasis
on batteries specifically optimized for plug-in hybrid
applications.
Next, hydrogen is an important element of our strategy for
energy security and environmental stewardship. The President's
$309 million budget request for the Hydrogen Fuel Initiative
fulfills his 5-year commitment of $1.2 billion. The portion of
this under EERE is $213 million, which reflects a $7.2 million
increase over the fiscal year 2007 budget request.
Much progress has been made since the announcement of the
Hydrogen Fuel Initiative in 2003. The research has reduced the
high volume cost of automotive fuel cells from $275 per
kilowatt in 2002 to $107 per kilowatt in 2006, a major step
toward the ultimate cost target of $30 per kilowatt.
Our research is going to continue to sharpen its focus to
meet hydrogen production objectives through renewable pathways,
including performing with bioderived liquids and electrolysis.
For solar energy, the fiscal year 2008 request is $148.3
million, a level that is nearly twice the enacted 2006 level.
The Department's photovoltaic R&D focuses on those technology
pathways that have the greatest potential to achieve more cost
competitiveness and grid parity by or before 2015. Industry-led
partnerships with universities, State groups and national
laboratories, known as Technology Pathway Partnerships, will
continue in fiscal year 2008 to address the issues of cost,
performance, and reliability.
Other priority key program areas of EERE include Building
Technologies, which targets the long-term goal in 2020 of net-
zero energy buildings--houses that can produce as much energy
as they use on an annual basis. We're going to help industry
produce a white light-emitting diode, or LED, lamp, which has
already set the world record for LED brightness and efficacy in
a power chip.
Wind energy focuses on reducing wind power costs and
removing siting and transmission barriers to expand and use
wind energy up to potentially 20 percent of our grid capacity
in the United States.
Industrial Technologies, which in addition to leveraging
successful partnerships with energy intensive industries, will
support the development of next generation technologies that
can revolutionize the U.S. industrial processes and deliver
dramatic energy and environmental benefits.
PREPARED STATEMENT
My written statement, of course, includes greater detail on
these and other programs but this concludes my opening remarks
and I'm happy to answer any questions the subcommittee members
may have of me.
Senator Dorgan. Secretary Karsner, thank you very much for
your testimony.
[The statement follows:]
Prepared Statement of Hon. Alexander Karsner
Mr. Chairman and members of the committee, thank you for this
opportunity to testify on the President's fiscal year 2008 budget
request for the Office of Energy Efficiency and Renewable Energy
(EERE).
The President's fiscal year 2008 budget request includes $1.24
billion for EERE, approximately $60 million (5 percent) more than the
fiscal year 2007 request to Congress. To be clear, because of timing in
drafting this testimony and finalizing the Department's operating plan
for the fiscal year 2007 year-long Continuing Resolution (CR), my
written testimony on the fiscal year 2008 budget request is presented
primarily in comparison to the administration's fiscal year 2007
request. EERE received a $300 million increase in funding under the CR.
I am grateful to Congress for its vote of confidence in the energy
efficiency and renewable energy programs, but note that this level is
above the allocation in the President's request. In allocating the
additional $300 million, EERE will accelerate the priorities reflected
in administration initiatives such as the ``20 in 10'' plan and the
Advanced Energy Initiative (AEI), while still carrying out
implementation of the Energy Policy Act of 2005 (EPACT).
The fiscal year 2008 budget request addresses pressing energy and
environmental challenges facing our country today by accelerating the
development of both renewable energy technologies to increase the
amount of clean energy produced in the United States and advanced
energy efficient technologies, standards, and practices that use less
energy. Much of EERE's funding is an integral part of the President's
AEI, launched in 2006 to confront our addiction to oil, lessen
dependence on foreign resources, and reduce emissions by developing
clean sources of electricity generation. Together, new technologies can
help change the way we power our homes, businesses, and automobiles.
In his 2007 State of the Union address, the President raised the
bar by seeking legislative action for our country to reduce gasoline
consumption by 20 percent in the next 10 years, the ``20 in 10'' plan.
The fiscal year 2008 budget request increases funding for programs that
may help the Nation achieve the ``20 in 10'' goal, including, for
example, biomass/biofuels R&D that may help to expand the availability
of alternative transportation fuels.
EERE's applied science R&D contributes to the foundation for
transforming the Nation's energy options and energy use. For example,
one of this year's R&D 100 awards went to the Department's Idaho
National Laboratory for its work with Xtreme Xylanase, an enzyme
produced by bacteria found in the hot, acidic waters of Yellowstone
National Park. Work on Xtreme Xylanase was funded in part by EERE's
Biomass Program. The metabolic versatility of this enzyme (it breaks
down cellulose and hemicellulose over a broad range of temperatures and
acidic pH conditions) could help make cellulosic ethanol more
efficiently and economically. In the field of solar energy, a new
world-record 40 percent efficient concentrating photovoltaic solar cell
was developed as a result of collaboration between DOE, the National
Renewable Energy Laboratory, and Spectrolab. For general lighting
applications with solid-state lighting, Cree, Inc., with DOE R&D
funding, has released the new XLamp 7090 power white light-emitting
diode (LED), setting a world record for LED brightness and efficacy (at
85 lumens/Watt) in a power chip.
It is essential, however, that, we work not only to accelerate R&D
for new energy technologies, but address the accelerated adoption of
technologies into commercial products that are widely available at
reasonable cost to all Americans. Thus, in addition to its historical
role of leading Federal applied science on emerging technologies, EERE
is taking aggressive steps to catalyze the rapid commercialization and
deployment of critical energy advances through innovative partnerships
and collaboration with lenders and investment groups, the States, and
industry leaders. We seek to help enable and accelerate market
transformation toward the use of more efficient and cleaner
technologies.
EERE's overall budget request reflects the funding needed to meet
our goals. The following EERE programs target and support sectors of
energy use and supply that will help lead our Nation to a secure energy
future:
biomass and biorefinery systems r&d
The fiscal year 2008 budget request for Biomass and Biorefinery
Systems R&D is $179.3 million, an increase of $29.6 million, almost 20
percent above the fiscal year 2007 request. This proposed funding
increase reflects the essential role of the Biofuels Initiative in
increasing America's energy security. Biomass is the most viable
renewable option for producing liquid transportation fuels in the near
term, with the potential to help reduce our dependence on imported oil.
The focus of the program is to make cellulosic ethanol cost-
competitive by 2012. EERE will continue in fiscal year 2008 to support
its cost-share efforts with industry to develop and demonstrate
technologies to enable cellulosic biorefineries for the production of
transportation fuels and co-products. The fiscal year 2008 funding
increase also supports the validation of advancing biomass conversion
technologies and feedstocks in biorefineries at approximately 10
percent of commercial scale. This effort enables industry to resolve
remaining technical and process integration uncertainties for the
``next generation'' of biorefinery process technologies being examined
at a significant, but less-costly scale. Ultimately, 10-percent scale
demonstrations have the potential to reduce the overall cost and risk
to industry along with improving the likelihood of obtaining financing
for commercial-scale facilities.
The fiscal year 2008 funding increase will also support EERE cost-
shared projects with industry for enzyme development for producing low
cost sugars from biomass and for improved organism development or
``ethanologen'' for converting those sugars to ethanol. These two
industry cost-share projects address major barriers to meeting the 2012
cost goal. Overall knowledge gained from section 932 projects, 10
percent validation scale projects, enzyme development, and ethanologen
R&D, combined with other key R&D activities, should accelerate
industry's ability to produce cost-competitive cellulosic ethanol.
To address biomass resource availability and feedstock
infrastructure to reduce the cost and improve the storage of delivered
biomass in different geographical areas of the United States, EERE will
continue to support the Regional Feedstock Partnership work with the
U.S. Department of Agriculture (USDA) and land grant colleges. These
partnerships will help identify the regional biomass supply, growth,
and biorefinery development opportunities.
In order to capture and coordinate Federal-wide activities
supporting the President's goal, the Biomass Program is developing a
National Biofuels Action Plan commissioned through the Biomass Research
and Development Initiative. The Biomass Program will also establish the
framework for an ethanol reverse auction in accordance with section 942
of EPACT 2005. The auction will award incentives on a per gallon basis
of cellulosic biofuels produced.
vehicle technologies program
In fiscal year 2008, the Department is requesting $176.1 million
for the Vehicle Technologies Program to advance development of
increasingly more energy-efficient and environmentally friendly,
flexible platform technologies for cars and trucks that will use
significantly less oil and enable the auto industry to comply with
reformed CAFE standards. This request is $10.1 million higher than the
fiscal year 2007 request, and will advance the state of the art for
energy storage batteries, power electronics and motors, and the hybrid
drive systems and testing needed to accelerate manufacturing viability
and delivery of plug-in hybrid electric vehicles.
Activities in the Vehicle Technologies Program contribute to two
cooperative government/industry activities: the FreedomCAR and Fuel
Partnership (where CAR stands for Cooperative Automotive Research) and
the 21st Century Truck Partnership. The FreedomCAR and Fuel Partnership
is a collaborative effort among the U.S. Council for Automotive
Research (USCAR--representing the three domestic automobile
manufacturers), five energy suppliers, and DOE for cooperative, pre-
competitive research on advanced automotive technologies having
significant potential to reduce oil consumption. The 21st Century Truck
Partnership focuses on commercial vehicles. The partnership involves
key members of the commercial vehicle industry, (truck equipment
manufacturers and engine manufacturers) along with three other Federal
agencies. The R&D centers on improving advanced combustion engine
systems and fuels and on reducing vehicle parasitic losses, meaning
frictional and aerodynamic losses, extra loads like air conditioning,
and other vehicle inefficiencies that increase fuel consumption.
Vehicle Technologies Program activities that support the goals of
the FreedomCAR and Fuel Partnership focus on high-efficiency and
flexible platform vehicle technologies such as advanced combustion
engines and their enabling fuels, hybrid vehicle systems (including
plug-in hybrids), high-power and high-energy batteries, lightweight
materials, and power electronics. These technologies could lead to
substantial oil savings if adopted by industry participants and
included in their manufacturing plans.
The FreedomCAR goals include reducing the volume production cost of
a high-power 25kW battery for use in hybrid passenger vehicles from
$3000 in 1998 to $500 by 2010. In 2006 we projected through the
modeling of research data that lithium ion battery cost could be
reduced to $750 per 25 kW battery system when produced in mass
quantities. This year's request increases the emphasis on plug-in
hybrid vehicle component technologies. Cited by the President as a key
part of the strategy for reducing America's dependence on oil, these
technologies offer the potential to make significant additional
improvements in petroleum reduction beyond that achievable with
standard hybrid configurations.
Combustion engine efficiency has made good progress over the past 3
years (2004-2006), with our R&D increasing the efficiency of light-duty
passenger vehicle diesel engines from 35 to 41 percent. This means that
if manufacturers were to produce these more efficient engines, a car
that previously got the CAFE average of 27 miles per gallon on gasoline
could potentially get 37 miles per gallon with an advanced, clean
diesel. In fiscal year 2008, we expect to reach 43 percent efficiency
for passenger vehicle diesel engines, approaching the 2010 goal of 45
percent. These advanced combustion engines have the potential to
achieve the efficiency goals for cars and trucks while maintaining cost
and durability with near-zero emissions. Battery technologies have also
made significant progress toward program goals, having reduced the cost
of next-generation hybrid vehicle batteries in each of the past 3
years, from almost $1,200 per vehicle at the beginning of fiscal year
2004 to $750 at the end of fiscal year 2006. In fiscal year 2008, we
expect to bring that down to $625 per vehicle, and to increase our
emphasis on batteries specifically optimized for plug-in hybrid
vehicles to have battery technology ready by 2014 that will enable
automobile manufacturers to economically produce competitive plug-in
hybrid vehicles having a 40 mile all-electric range.
R&D programs will also continue to accelerate materials research
directed at light, strong vehicle structures to enable the production
of lighter vehicles that could result in higher efficiency fleets, and
to develop thermoelectric materials for efficient energy recovery from
heat. Other activities will focus on expanding efforts to promote the
adoption and use of petroleum-reducing fuels, technologies, and
practices, principally by working with industry partners, fuel
providers, Clean Cities coalitions and their stakeholders, and end-
users on activities ranging from using more alternative fuel vehicles
and renewable fuel blends to driving smarter, minimizing wasteful idle
time, and purchasing vehicles that get better fuel economy.
Accordingly, the Vehicle Technologies Deployment budget request
(including Clean Cities) will increase by over 100 percent relative to
the fiscal year 2007 request.
hydrogen technology program
Hydrogen is an important element of our Nation's long-term strategy
for energy security and environmental stewardship. It could enhance our
energy security by providing a transportation fuel that may be produced
from a variety of domestic resources; and it should serve our
environmental interests by allowing vehicles to operate using fuel
cells, without generating any tailpipe emissions. The Department's
research is focused on pathways that produce and deliver hydrogen from
diverse origins including emission-free nuclear, and renewable
resources.
The President's $309 million fiscal year 2008 budget request for
DOE for the Hydrogen Fuel Initiative fulfills his commitment of $1.2
billion over 5 years. The portion of this under our purview in EERE is
$213 million, which reflects a $17.2 million increase over the fiscal
year 2007 budget request. The proposed increase will accelerate and
expand efforts to research and develop hydrogen-storage systems to
improve performance, and fuel cell materials and components to reduce
their cost, and improve durability. It will also support accelerating
cost reduction of renewable hydrogen production technologies as well as
critical delivery technologies.
Much progress has been made since the announcement of the Hydrogen
Fuel Initiative in 2003. The research has reduced the high-volume cost
of automotive fuel cells from $275 per kilowatt in 2002 to $107 per
kilowatt in 2006--a major step towards the ultimate cost target of $30
per kilowatt. In fiscal year 2008, we will continue projects on fuel
cell catalysts and membranes, and cold-weather start-up and operation.
In addition to reducing cost and improving performance, this work will
help us achieve our 2010 durability target of 5,000 hours, which should
enable a vehicle lifetime of 150,000 miles.
We have also achieved our 2006 hydrogen cost goal of $3 per
gasoline-gallon-equivalent for hydrogen produced by distributed
reforming of natural gas, a potentially economical early market
pathway. Our research will sharpen its focus to meet the same objective
through renewable pathways--including reforming of bio-derived liquids
and electrolysis. We are also working with the Department's Offices of
Nuclear Energy, Fossil Energy, and Science to develop nuclear-based
hydrogen production, hydrogen from coal--exclusively with carbon
sequestration--and longer-term biological and photoelectrochemical
hydrogen production pathways.
Our diverse hydrogen-storage portfolio is also showing promising
results, with innovative materials being developed in areas such as
metal hydrides, chemical hydrides, and carbon-based materials. Research
conducted at our ``Centers of Excellence,'' and by independent
projects, has continued to increase material storage capacity.
Substantial breakthroughs are required to reach our goal of providing
consumers with enough storage for a 300-mile driving range, without
compromising a vehicle's interior space.
Developing hydrogen technologies that can be manufactured
domestically will also improve our economic competitiveness. Our
manufacturing R&D effort addresses the need for high-volume fabrication
processes for fuel cells and many other components, which are all
currently built one-at-a-time. This is essential to lowering the cost
of these technologies, and to developing a domestic supplier base.
In addition to these R&D activities, we are addressing other
challenges significant to realizing the benefits of hydrogen fuel
cells. Our Technology Validation Program has brought together teams of
automobile manufacturers and energy companies to operate and evaluate
fuel cell vehicles and hydrogen stations under real-world conditions.
To date, the program has placed 69 fuel cell vehicles on the road,
served by 10 hydrogen fueling stations.
Furthermore, we are working to ensure safe practices, and--through
support of existing codes and standards development organizations--we
are laying the groundwork for developing technically sound codes and
standards, which are essential to implementing hydrogen technologies.
Finally, our education activities focus on overcoming the knowledge
barriers inherent in the introduction of new technology. Last month, we
released a multimedia web-based course that introduces hydrogen to
first responders. In the coming year, we will continue to expand the
availability of training and conduct outreach to raise awareness of the
technology.
The effects of the Department's broad-based efforts in the Hydrogen
Program are being seen nationwide, and progress has been substantial.
Investments are not only occurring at the Federal level, but also at
state and local levels. These diverse investments increase our
probability of success in overcoming existing technological barriers,
which will allow industry to make fuel cell vehicles that customers
will want to buy, and encourage investment in a hydrogen refueling
infrastructure that is profitable.
solar energy program
The Solar Energy Program sponsors research, development, and
deployment of solar energy technologies and systems that can help our
Nation meet electricity needs and reduce the stress on our electricity
infrastructure. Through the Solar America Initiative (SAI), the Solar
Program aims to accelerate the market competitiveness of solar
electricity as industry-led teams compete to deliver solar systems that
are less expensive, more efficient, and highly reliable. The Solar
Program supports three technology areas: photovoltaics (PV),
concentrating solar power (CSP), and solar heating and lighting. The
fiscal year 2008 budget request for Solar Energy is $148.3 million, a
level that is nearly twice the enacted fiscal year 2006 level.
To lower costs more rapidly and improve performance, the
Department's PV R&D, budgeted in fiscal year 2008 at $137.3 million,
focuses on those technology pathways that have the greatest potential
to reach cost-competitiveness and grid parity by or before 2015.
Industry-led partnerships with universities, state groups and National
Laboratories, known as ``Technology Pathway Partnerships,'' will
continue in fiscal year 2008 to address the issues of cost,
performance, and reliability associated with each pathway. Work on PV
modules, the heart of PV systems, will be conducted, as well as other
``balance-of-system'' components.
To catalyze market transformation, DOE will promote the expansion
of the solar marketplace by seizing opportunities for growth and by
lowering barriers to entry. The Department will provide technical
outreach to States and utilities, continue pressing work on codes and
standards issues, and solicit new applications for its Solar America
Cities activity. These market transformation activities help pave the
way for technologies developed by our industry partnerships to enter
the marketplace.
We will emphasize the importance of interconnection standard
procedures and net metering regulations that are designed to
accommodate solar and other clean distributed energy systems. A
precondition for large-scale solar market penetration in America is to
have the proper means for homeowners and businesses to connect solar
systems to the grid, as well as to be paid for excess electricity they
feed back into the grid. We are working with our colleagues in the
Department's Office of Electricity Delivery and Energy Reliability to
develop ``best practice'' recommendations for States to use as they
undertake consideration of interconnection procedures and net metering
regulations and make implementation decisions pursuant to sections 1251
and 1254 of EPACT 2005. Fiscal year 2008 funding will also be used to
offer technical outreach to States and utilities to enhance solar
connectivity issues.
Work will continue on the multi-year solicitations launched in
fiscal year 2007 that promote adoption of market-ready solar
technologies and a new effort will support benchmarking, modeling, and
analysis for the systems driven approach, and market, value and policy
analysis needed to support the SAI. EERE's PV activities are
increasingly coordinated and when possible convergent with solar energy
activities in the Building Technologies and the Federal Energy
Management programs, and the research activities of the DOE Office of
Science.
The fiscal year 2008 budget request for CSP--systems that utilize
heat generated by concentrating and absorbing the sun's energy to drive
a heat engine/generator to produce electric power--is $9.0 million. The
development of advanced thermal energy storage technologies will be
expanded, along with continued support to develop next generation
parabolic trough concentrators, solar engines, and receivers. For
distributed applications, research will focus on improving the
reliability of dish systems through the operation and testing of
multiple units. Technical assistance will be provided to industry in
its development of a 1.0 MW dish system in California that is expected
to be the precursor of several much larger plants. Technical support
will also be provided to the Western Governors' Association and several
southwestern utilities to assist their CSP deployment activities.
The Solar Heating and Lighting program, a $2.0 million request,
will focus on R&D to reduce the cost of solar heating in freezing
climates. The program will also support collaboration with EERE's
Building Technologies programs to integrate photovoltaic systems, solar
water heating, and solar space heating into home design and structure.
Such deployment efforts will help to seize market expansion
opportunities.
building technologies program
Energy use by residential and commercial buildings accounts for
over one-third of the Nation's total energy consumption, including two-
thirds of the electricity generated in the United States. Addressing
that significant sector of energy consumption, the $86.5 million
requested this year for the Building Technologies Program represents a
$9.1 million increase of 12 percent over the fiscal year 2007 request.
The funding supports a portfolio of activities that includes solid
state lighting, improved energy efficiency of other building components
and equipment and their effective integration using whole-building-
system design technique, the development of codes and standards for
buildings and appliances, and education and market introduction
programs, including ENERGY STAR and EnergySmart Schools.
Funding for Residential Buildings Integration aims to enable
residential buildings to use up to 70 percent less energy, and to
integrate renewable energy systems into highly efficient buildings to
achieve the long-term goal in 2020 of net Zero Energy Buildings--houses
that produce as much energy as they use on an annual basis. During
fiscal year 2008, research for production-ready new residential
buildings that are 40 percent more efficient will continue for four
climate zones.
The $19.3 million request for solid state lighting will advance
development of the organic and inorganic LEDs that has the potential to
double the efficiency of fluorescent lighting technology. The fiscal
year 2008 requested funding will be used to develop general
illumination technologies with the goal of achieving energy
efficiencies of up to 93 lumens per Watt with improved visual comfort
and quality of light and focus on applied research that enables the
industrial base to manufacture LEDs.
The fiscal year 2008 request reflects the Department's commitment
to clear the backlog of equipment standards and test procedures that
had accumulated in the prior 12 years and meet the statutory schedule
for rulemakings for new products covered by EPACT 2005. The Department
will continue to implement productivity enhancements that will allow
multiple rulemaking activities to proceed simultaneously, while
maintaining the rigorous technical and economic analysis required by
statute.
Funds for the Building Technologies Program will also support
development of highly insulating and dynamic window technologies and
integrated attic-roof systems needed to achieve long-term zero energy
building goals. Efforts to accelerate the adoption of efficient
building technologies by consumers and businesses include expanded
ENERGY STAR specifications and labels for more products, promotion of
advanced building efficiency codes, and public-private partnerships to
advance efficient schools, hospitals, commercial lighting, and home
building.
federal energy management program
The Federal Energy Management Program (FEMP) assists Federal
agencies, including DOE, in increasing their use of energy efficiency
and renewable energy technologies through alternative financing
contract support and technical assistance, and coordinates Federal
reporting and evaluation of agency progress each year. As the single
largest energy consumer in the United States, the Federal government
must set an example and lead the Nation toward becoming a cleaner, more
efficient consumer by using existing energy efficiency and renewable
energy technologies and techniques. On January 24, 2007, President Bush
signed a new Executive Order to strengthen the environmental, energy,
and transportation management of Federal agencies which includes a
requirement for agencies to reduce their energy intensity by 3 percent
each year until 2015, compared with a 2003 baseline.
The fiscal year 2008 request for FEMP is $16.8 million, a slight
decrease of $0.1 million from the fiscal year 2007 request. We are
requesting $7.9 million for FEMP alternative financing programs that
help agencies access private sector financing to fund energy
improvements without the use of current appropriations. We expect to
achieve not less than $160 million in private sector investment through
Super ESPCs, Energy Savings Performance Contracts, and Utility Energy
Service Contracts (UESCs), which will result in about 15 trillion Btus
in energy saved over the lifecycle of the projects. Furthermore, we are
requesting $6.5 million for Technical Guidance and Assistance to help
Federal energy managers identify, design, and implement new
construction and facility improvement projects that incorporate energy
efficiency and renewable energy. FEMP will assist Federal agencies in
meeting the increased energy efficiency goals, established by the new
Executive Order, by orienting its Technical Guidance and Assistance,
Training, and Outreach activities towards attracting private-sector
financing for investment into energy efficiency at Federal facilities.
In addition to the focus on facility energy consumption, FEMP also
tracks alternative fuel use in Federal vehicle fleets.
In fiscal year 2008, the Departmental Energy Management Program
(DEMP) is being discontinued. FEMP will still provide policy guidance
and technical assistance to the Department, but DOE has determined that
the management of energy efficiency and renewable investments at its
facilities can be more effectively conducted by those facilities. While
not reported separately, DOE national labs and other facilities spend
significant funding (direct and indirect) on energy efficiency
improvements, while also using ESPCs and UESCs where appropriate.
wind energy program
The Wind Program focuses on reducing wind power costs and removing
barriers to resource utilization of wind energy technology in the
United States. The program's fiscal year 2008 request is $40.1 million.
As a result of 30 years of R&D, wind turbines can now provide cost-
effective, reliable clean energy in high wind speed areas. While we
will continue to do R&D to improve wind energy technologies in low wind
speed areas, we are also focusing on near-term actions to remove
existing barriers to increasing the use of wind energy, building on the
current robust market for wind energy in the United States. These
efforts could help to set the path for the wind industry to accelerate
its penetration of delivered emission-free energy, significantly
expanding beyond the roughly one percent of installed electrical
generating capacity today.
The program is expanding application and deployment-related
activities. The $12.9 million requested for Systems Integration and
Technology Acceptance will help wind technologies entering the market
to overcome key obstacles such as grid integration, siting, permitting,
and environmental barriers. In addition, there will be increased
support to address issues of pre-competitive turbine reliability and
performance via efforts of National Laboratories and Cooperative
Research and Development Agreements or ``CRADAs'' with industry. The
Wind Program will also establish a Federal interagency siting group to
minimize regulatory delays on wind projects.
The Wind Program is funding a broader effort on distributed wind
technologies and applications to advance the full scope of diverse
opportunities for wind energy on the distribution side of the electric
power system.
A U.S. wind industry-wide roadmapping analysis, being supported by
the DOE wind program, is underway to determine the technical
feasibility for wind energy to generate 20 percent of our Nation's
electricity. To achieve this vision it would require grid
modernization, expansion, and integration, and removal of other
deployment barriers. Success would enable delivery of more than 300
gigawatts of new, clean, affordable, and domestic production capacity
to our urban load centers and be a substantial contributor to economic
growth, manufacturing, and rural prosperity. EERE will work with DOE's
Office of Electricity Delivery and Energy Reliability on several
studies aimed at expanding electricity transmission between remote wind
resources and urban areas.
weatherization and intergovernmental program
In fiscal year 2008, we are requesting $204.9 million for
Weatherization and Intergovernmental Activities, a $20.1 million
decrease from the fiscal year 2007 request. The reduction is primarily
related to the decrease in the amounts requested for the Weatherization
Assistance Program, which will enable greater investments in advanced
R&D within the EERE portfolio to address national priorities: reducing
dependence on foreign oil, accelerating the development of clean,
emission-free electricity supply options, and developing highly
efficient new technologies, products, and practices for our homes and
buildings.
The requested $144 million for the Weatherization Assistance
Program will fund energy efficiency audits and upgrades for at least
54,599 low-income homes. DOE works directly with States and certain
Native American Tribes that contract with local governmental or non-
profit agencies to deliver weatherization services to homes in need of
energy assistance.
The $45.5 million requested for the State Energy Program provides
financial and technical assistance to State governments, enabling them
to target their high priority energy needs and expand clean energy
choices for their citizens and businesses. This request includes $10.5
million for a competitive solicitation that will seek regional and
state partnerships to replicate smart energy policies and programs
among States. The regional context is outlined in EPACT and aligns with
our electricity transmission infrastructure.
Clean electricity generation is targeted by the Renewable Energy
Production Initiative, which provides financial incentive payment to
public and Tribal utilities and not-for-profit electric cooperatives
for renewable generation systems that use solar, wind, geothermal, or
biomass technologies. The Tribal Energy Program aims to facilitate the
installation of 100 MW of renewable energy generation by Native
American tribes by 2010.
The Asia Pacific Partnership (APP) for Clean Development and
Climate requests funding at the $7.5 million level. This international
partnership is an important and innovative accord to accelerate the
development and deployment of clean energy technologies among the six
member countries: Australia, China, India, Japan, South Korea, and the
United States. Representing about half of the world's economy,
population, energy use, and emissions, the six countries have agreed to
work together and with private sector partners to set and meet goals
for energy security, national air pollution reduction, and global
warming, employing policies and practices that promote sustainable
economic growth and poverty reduction, while addressing the serious
challenge of climate change.
industrial technologies program
Industry consumes more energy than the residential, commercial, and
transportation end-use sectors, and it is also the Nation's second
largest emitter of CO2. Advancements in industrial energy-
efficient technology could improve U.S. competitiveness, and contribute
to our national effort to reduce oil imports, alleviate natural gas
price pressure, and pre-empt the need for new power plants and
consequent emissions.
The fiscal year 2008 budget request for Industrial Technologies is
$46.0 million, a $0.4 million increase over the fiscal year 2007
request. The program will leverage its innovative technology transfer
practices and partnerships with energy-intensive industries, while
shifting toward more crosscutting and higher-impact R&D activities that
will bring innovative energy solutions to a much broader group of
industrial companies, at a more accelerated pace.
The Industrial Technologies Program (ITP) has a track record for
moving innovative technologies from R&D through commercialization and
onto the floors of industrial plants. In 2006 alone, 8 technologies
funded by ITP received prestigious R&D 100 awards. New technologies
emerging from ITP's R&D program are being adopted to help solve some of
industry's toughest energy and competitiveness challenges. In many
cases, this is occurring through the industrial energy assessments that
ITP is conducting at 250 of the Nation's largest energy-consuming
manufacturing plants as part of Secretary Bodman's ``Easy Ways to Save
Energy'' initiative. We estimate that ITP-sponsored technologies and
deployment activities have contributed to industrial energy savings of
over $3.1 billion in one year (2004).
The $7.2 million requested for the new activity, Energy-Intensive
Process R&D, will support R&D in 4 crosscutting areas to better deliver
technology solutions for the industrial processes that consume the most
energy. These four areas are Energy Conversion Systems, Industrial
Reaction and Separation, High-Temperature Processing, and Fabrication
and Infrastructure. One example of a technology that cuts across the
industrial sector to deliver savings is ITP's ultra-high efficiency,
ultra-low emissions, industrial steam generation ``Super Boiler.''
Since steam is used in every major sector, the potential benefits are
tremendous. The Super Boiler is 10 to 20 percent more efficient than
current technology and can reduce NOX emissions to below 5
parts per million, which represents an approximately 90 percent
reduction in emissions from a conventional boiler.
The $4.9 million request for the new Inter-Agency Manufacturing R&D
activity working with the National Science and Technology Council will
support the development or adaptation of next-generation technologies
that can revolutionize U.S. industrial processes and deliver dramatic
energy and environmental benefits. These next-generation technologies,
such as entirely new processing routes and supply chains, can have
broad applications across industry, yet they typically require the type
of high-risk, high-return R&D that one industry cannot usually
undertake. Our initial research focus will include development of
techniques and processes needed for nanomanufacturing. We aim to help
transform industrial processes by enabling the mass production and
application of nano-scale materials, structures, devices, and systems
that provide unprecedented energy, cost, and productivity benefits in
manufacturing.
Deployment efforts such as ``Best Practices'' activities and
Industrial Assessment Centers will continue to deliver the results of
energy-efficiency R&D and energy-saving practices to industrial plants
nationwide. A vehicle for educational outreach, the university-based
Industrial Assessment Centers train engineers and scientists in the
energy field, providing opportunities for students to conduct energy
assessments at no cost to small and medium-sized manufacturing plants
in the United States.
facilities and infrastructure
The fiscal year 2008 budget request of $7.0 million for Facilities
and Infrastructure, an increase of $1.0 million from the fiscal year
2007 request, supports the operations and maintenance of the National
Renewable Energy Laboratory (NREL) in Golden, CO. NREL is a single-
purpose National Laboratory dedicated to R&D for energy efficiency,
renewable energy, and related technologies that provides EERE, as well
as DOE's Office of Science and the Office of Electricity Delivery and
Energy Reliability, with R&D, expert advice, and programmatic counsel.
program direction and program support
The Program Direction budget supports the management and technical
direction and oversight needed to implement EERE programs at both
headquarters and the Project Management Center. Areas funded by this
request include: Federal salaries, information systems and technology
equipment, office space, travel, and support service contractors. The
fiscal year 2008 budget request for Program Direction totals $105.0
million, a $14.0 million increase over the fiscal year 2007 request.
This increase reflects EERE's updated staffing needs, which more
closely align critical skills to mission requirements and adds staff to
support technical program staffing shortfalls and implementation of the
AEI and EPACT 2005 priorities.
The Program Support budget request provides resources for
crosscutting performance evaluation, analysis, and planning for EERE
programs and for technical advancement and outreach activities. The
information developed by the Program Support components provides
decision makers at every level the information they need to make
choices related to energy alternatives that can help the Department
achieve its goals. The fiscal year 2008 budget request for Program
Support activities totals $13.3 million, representing a $2.4 million
increase from the fiscal year 2007 budget request. The increase
reflects the expansion of EERE's market transformation and
commercialization analysis and expanded efforts in the Technology
Advancement and Outreach Office.
conclusion
Accelerating research, development, and deployment of America's
abundant clean sources of energy and making more efficient use of all
energy consumed is central to EERE's mission, and to a secure and
competitive economic future that enhances our environmental well-being
for our Nation and our world. We believe the administration's fiscal
year 2008 budget request for energy efficiency and renewable energy
programs strategically positions the stepping stones that will
continuously catalyze and accelerate new energy sources, technologies,
and practices into the marketplace, and hasten the transformation of
how our homes, businesses, and vehicles use energy.
This concludes my prepared statement, and I am happy to answer any
questions the Committee members may have.
Senator Dorgan. Next we will hear from the Honorable Tom
Shope, the Assistant Secretary of the Office of Fossil Energy.
Mr. Shope, thank you for being with us.
STATEMENT OF HON. THOMAS D. SHOPE, ACTING ASSISTANT
SECRETARY FOR FOSSIL ENERGY
Dr. Shope. Thank you, Mr. Chairman, thank you, Ranking
Member Domenici and members of the subcommittee. It is an honor
for me to appear before you today to present the Office of
Fossil Energy's proposed budget for fiscal year 2008.
Fossil Energy's $863 million budget request for fiscal year
2008 will allow the office to support the President's top
initiatives for energy security, clean air, climate change and
coal research as well as DOE's strategic goal of protecting our
national and economic security by promoting a diverse supply
and delivery of reliable, affordable, and environmentally sound
energy.
Let me begin the presentation of our budget with coal, our
most abundant and lowest cost domestic fossil fuel. Coal today
accounts for nearly one-quarter of all of the energy and more
than one-half of the electricity produced in the United States.
Because coal is so important to our energy future, our proposed
budget of $448 million for the President's coal research
initiative, related fuel cell R&D and program direction
accounts for more than one-half of our total budget. Our
overarching goal is to conduct research and development that
will improve the competitiveness of domestic coal in future
energy markets, allowing the Nation to tap the full potential
of its abundant fossil energy resources in an environmentally
sound and affordable manner.
This year's request completes 3 years ahead of schedule the
President's commitment to invest $2 billion on clean coal
research over 10 years. Our coal research initiative is broken
down into the following components. We are requesting $73
million for the Clean Coal Power Initiative, a cooperative,
cost-shared program between the Government and industry to
demonstrate emerging technologies in coal-based power
generation so as to help accelerate commercialization. Work on
promising technologies selected in two prior solicitations will
continue in fiscal year 2008 and we plan to announce a third
solicitation during the year.
The first of a kind, high priority FutureGen project will
establish the capability and feasibility of co-producing
electricity and hydrogen from coal with near zero atmospheric
emissions, including carbon dioxide. FutureGen's proposed
budget of $108 million for fiscal year 2008 will be used to
support detailed plant design and procurement and other
preliminary work. Technology development supporting FutureGen
is embodied in our Fuels and Power Systems Program. Included in
the Program's proposed budget for fiscal year 2008 of $245.6
million, you will find the research and development for carbon
capture and sequestration, membrane technologies for oxygen and
hydrogen separation, advanced combustion turbines, fuel cells,
coal to hydrogen conversion and gasifier related technologies.
The high priority carbon sequestration program with a
proposed budget for fiscal year 2008 of $79 million for
developing a portfolio of technologies with great potential to
reduce greenhouse gas emissions. The goal is to achieve
substantial market penetration after 2012. In the long term,
the program is expected to contribute significantly to the
President's goal of developing technologies to substantially
reduce greenhouse gas emissions.
In addition, the network of seven regional carbon
sequestration partnerships and the International Carbon
Sequestration Leadership Forum established by DOE in 2003 will
continue their important work, including conducting vital,
diverse geologic CO2 storage tests. Research and
development carried out by the Coal to Hydrogen Fuels Program,
funded at a proposed $10 million, will make the future
transition to a hydrogen-based economy possible by reducing the
costs and increasing the efficiency of hydrogen production from
coal.
We have requested $62 million in fiscal year 2008 to
continue the important work of a Solid State Energy Conversion
Alliance, the goal of which is to develop the technology for
low cost, scalable, and fuel flexible fuel cell systems.
Consistent with our fiscal year 2006 and 2007 budget
requests, the Petroleum Oil Technology and Natural Gas
Technologies Research and Development Programs are proposed to
be terminated in fiscal year 2008. However, the Office of
Fossil Energy will continue to carry out important
responsibilities in the oil and natural gas sector, such as
management of the ultra-deep water and unconventional resources
research program mandated by the Energy Policy Act of 2005.
In addition, fossil energy will continue to authorize
natural gas imports and exports, collect and import data on
natural gas trade, operate the Rocky Mountain Oil Field Testing
Center and oversee the Loan Guarantee Program for the Alaska
Natural Gas Pipeline.
The Energy Policy Act of 2005 directs the strategic
petroleum reserve to prepare to increase its oil storage to 1
billion barrels. Additionally, the President recently
recommended expanding the reserve's capacity to 1.5 billion
barrels. Our budget request of $331 million, almost double last
year's request, will fund the reserve's continued readiness as
well as the immediate filling of the reserve to its current
capacity of 727 million barrels. The budget includes $168
million to begin expansion at existing and new sites towards
the 1.5 billion barrels.
PREPARED STATEMENT
Mr. Chairman and members of the subcommittee, this
completes my prepared statement. I'd be happy to answer any
questions you may have.
Senator Dorgan. Secretary Shope, thank you very much for
your testimony.
[The statement follows:]
Prepared Statement of Hon. Thomas D. Shope
Mr. Chairman, members of the committee, it's a pleasure for me to
appear before you today to present the Office of Fossil Energy's (FE)
proposed Budget for fiscal year 2008
Fossil Energy's $863 million budget request for fiscal year 2008,
one of the largest FE requests made by this administration, will allow
the Office to achieve 2 fundamental objectives: first, to support the
President's top priorities for energy security, clean air, climate
change and coal research; and second, to support the Department of
Energy's strategic goal of protecting our national and economic
security by promoting a diverse supply and delivery of reliable,
affordable, and environmentally-sound energy.
More specifically, the proposed budget emphasizes early initiation
of an expansion of the Strategic Petroleum Reserve; rapid development
of technologies to manage and dramatically reduce atmospheric emissions
of the greenhouse gas carbon dioxide from fossil fuel use in power
generation and other industrial activity; and design and other
preparatory work on the FutureGen project to combine in one plant the
production of electric power and hydrogen fuel from coal with near-zero
atmospheric emissions.
the president's coal research initiative
I will begin the detailed presentation of our proposed budget with
coal, our most abundant and lowest cost domestic fossil fuel. Coal
today accounts for nearly one-quarter of all the energy--and about half
the electricity--consumed in the United States. Because coal is so
important to our energy future, our proposed budget of $448 million for
the President's Coal Research Initiative, related fuel cell R&D and R&D
by Federal employees within program direction accounts for more than
half our total budget.
I should mention here that our fiscal year 2008 Budget focuses our
research and development on activities that support the President's
Advanced Energy Initiative and key provisions of the Energy Policy Act
of 2005. These activities will be conducted largely through cost
sharing and industry collaboration. As a result of the evaluations
under the Research and Development Investment Criteria, and the Program
Assessment Rating Tool, activities throughout the program emphasize
research and development for technologies that will be used in the
FutureGen project.
The goal of the overall coal program, which includes the
President's Coal Research Initiative, is to conduct research and
development that will improve the competitiveness of domestic coal in
future energy markets. The administration strongly supports coal as an
important component of our energy portfolio. This year's budget request
completes the President's commitment to invest $2 billion on clean coal
research over 10 years, 3 years ahead of schedule. Our coal budget
request is broken down into the following components:
Clean Coal Power Initiative
We are requesting $73 million in fiscal year 2008 for the Clean
Coal Power Initiative (CCPI), a cooperative, cost-shared program
between the Government and industry to demonstrate emerging
technologies in coal-based power generation so as to help accelerate
commercialization. CCPI allows the Nation's power generators, equipment
manufacturers and coal producers to help identify the most critical
barriers to coal use in the power sector. Technologies to eliminate the
barriers are then selected with the goal of accelerating development
and deployment of applications that will economically meet
environmental standards while increasing plant efficiency and
reliability. Work on promising technologies selected in two prior
solicitations will continue in fiscal year 2008, and we plan to
announce a third solicitation during the year, which will focus on
advanced technology systems that capture carbon dioxide for
sequestration and beneficial reuse.
Some activities of the Clean Coal Power Initiative will help drive
down the costs of Integrated Gasification Combined Cycle (IGCC) systems
and other technologies for near-zero atmospheric emission plants that
are essential to the FutureGen concept.
FutureGen
FutureGen is a high-priority project that will establish the
capability and feasibility of co-producing electricity and hydrogen
from coal with near-zero atmospheric emissions including carbon
dioxide. FutureGen is a public/private partnership designed to
integrate technologies that ultimately will lead to new classes of
plants that feature fuel flexibility, multi-product output, electrical
efficiencies of over 60 percent, and near-zero atmospheric emissions.
FutureGen's goals include electricity at costs no more than 10 percent
above power from comparable plants that are incapable of carbon
sequestration. The capture and permanent storage of atmospheric carbon
emissions is a key feature of the FutureGen concept, as is the
capability to use coal, biomass, or petroleum coke. The project should
help retain the strategic value of coal--the Nation's most abundant and
lowest cost domestic energy resource. FutureGen's proposed budget of
$108 million for fiscal year 2008 will be used to support detailed
plant design and procurement, as well as ongoing permitting,
preliminary design and site characterization work.
To help fund both the CCPI and FutureGen projects in fiscal year
2008, our proposed Budget redirects $58 million in unexpended sums and
$257 million in deferred appropriations from the original Clean Coal
Technology program. Specifically, the Budget proposes to transfer $108
million of the $257 million deferral to the FutureGen project, and
cancel the remaining $149 million from the deferral. Of the unobligated
balances carried forward at the start of fiscal year 2008, $58 million
is transferred to the Clean Coal Power Initiative (CCPI).
fuels and power systems
Technology development supporting FutureGen is embodied in the core
research and development activity of the Fuels and Power Systems
program. The Fuels and Power Systems program's proposed budget for
fiscal year 2008 is $245.6 million. Of this total amount, $183.6
million will fund research and development for carbon capture and
sequestration, membrane technologies for oxygen and hydrogen
separation, advanced combustion turbines, coal-to-hydrogen conversion,
and gasifier-related technologies. The remaining balance of $62 million
will support Fuel Cells.
The program breaks down as follows:
Advanced Integrated Gasification Combined Cycle
With proposed funding of $50 million for fiscal year 2008, the
Advanced Integrated Gasification Combined Cycle program will continue
to concentrate efforts on gas stream purification to meet quality
requirements for use with fuel cells and conversion processes, on
impurity tolerant hydrogen separation, on elevating process efficiency,
and on reducing the costs and energy requirements for oxygen production
through development of advanced technologies such as air separation
membranes.
Advanced Turbines
A funding request of $22 million will allow the Advanced Turbines
program to continue its concentration on the creation of a turbine-
technology base that will permit the design of near-zero atmospheric
emission IGCC plants and a class of FutureGen-descended plants with
carbon capture and sequestration. This research emphasizes technology
for high-efficiency hydrogen and syngas turbines and builds on prior
successes in the Natural Gas-based Advanced Turbine Systems Program.
Advanced Research
The Advanced Research program bridges basic and applied research to
help reduce the costs of advanced coal and power systems while
improving efficiency and environmental performance. The proposed $22.5
million budget for Advanced Research will fund projects aimed at a
greater understanding of the physical, chemical, biological and thermo-
dynamic barriers that currently limit the use of coal and other fossil
fuels.
Carbon Sequestration
The Carbon Sequestration program, with a proposed budget for fiscal
year 2008 of $79 million, is developing a portfolio of technologies
with great potential to reduce greenhouse gas emissions. This high-
priority program's primary concentration is on dramatically lowering
the cost and energy requirements of pre- and post-combustion carbon
dioxide capture. The goal is to have a technology portfolio by 2012 for
safe, cost-effective and long-term carbon mitigation, management and
storage, which will lead to substantial market penetration after 2012.
In the long term, the program is expected to contribute significantly
to the President's goal of developing technologies to substantially
reduce greenhouse gas emissions.
The Carbon Sequestration program's activities in fiscal year 2008
will concentrate on research and development projects for carbon
dioxide (CO2) capture and storage, as well as measurement,
monitoring and verification technologies and processes.
In coordination with the current partnerships, the program will
determine the ``highest potential'' opportunities for the initial
expedited round of large scale sequestration tests in saline, coal,
and/or oil and gas bearing formations. This work will begin with a
physical characterization of the surface and subsurface, reservoir
modeling, and NEPA review.
The Partnerships will also move on to the next phase of the Weyburn
project, where CO2 is being injected into a producing
oilfield. Weyburn's success would deliver both decreased carbon
emissions and increased domestic oil production.
Finally, DOE formed the international Carbon Sequestration
Leadership Forum (CSLF) in 2003 to work with foreign partners on joint
carbon sequestration projects, and to collect and share information.
That work will in continue in fiscal year 2008.
Several members of the CSLF have also signed on to the FutureGen
project, and others have signaled strong interest in joining.
Fuels
Research and development carried out by the Coal-to-Hydrogen Fuels
program, funded at a proposed $10 million, will make the future
transition to a hydrogen-based economy possible by reducing the costs
and increasing the efficiency of hydrogen production from coal. This
program is an important component of both the President's Hydrogen Fuel
Initiative and the FutureGen project.
Fuel Cells
Within Fuel Cells, we have requested $62 million for fiscal year
2008 to continue the important work of the Solid State Energy
Conversion Alliance, the goal of which is to develop the technology for
low-cost, scalable and fuel flexible fuel cell systems that can operate
in central, coal-based power systems as well as in other electric
utility (both central and distributed), industrial, and commercial/
residential applications.
Research by Federal Staff
In addition to the funding levels reflected for Fuels and Power
Systems, there is $20 million provided within the Program Direction
account that directly supports the President's Coal Research
Initiative, plus $1 million for fuel cells. This funding supports
Federal staff directly associated with conducting the research
activities of specific Fuels and Power Systems subprograms.
Petroluem and Natural Gas Technologies
Consistent with the fiscal year 2006 and fiscal year 2007 Budget
Requests, the Petroleum-Oil Technology and Natural Gas Technologies
research and development programs will be terminated in fiscal year
2008.
The Oil and Gas group will manage the Ultra-Deepwater and
Unconventional Resources Research Program mandated by the Energy Policy
Act of 2005. However, I should point out that the 2008 Budget proposes
to repeal this legislation, consistent with the fiscal year 2007 Budget
Request.
In addition, FE will continue to authorize natural gas imports and
exports, collect and report data on natural gas trade, and operate the
Rocky Mountain Oilfield Testing Center.
FE will also oversee the loan guarantee program for the Alaska
Natural Gas Pipeline.
Strategic Petroleum Reserve
The Strategic Petroleum Reserve (SPR) exists to ensure America's
readiness to respond to severe energy supply disruptions. The Reserve
reached its highest inventory level--700 million barrels of oil--in
2005 The Energy Policy Act of 2005 directs DOE to fill the SPR to its
authorized 1 billion barrel capacity, as expeditiously as practicable.
Additionally, in the 2008 Budget, the President proposed expanding the
Reserve's capacity to 1.5 billion barrels.
Our budget request of $332 million for fiscal year 2008--almost
double last year's request--will fund the Reserve's continued readiness
through a comprehensive program of systems maintenance, exercises, and
tests, as well as beginning expansion to 1 billion barrels at existing
and new sites and NEPA work to expand to 1.5 billion barrels. DOE will
begin immediately to fill the reserve to its current capacity of 727
million barrels through purchases of oil with available balances as
well as through placement of the Department of the Interior's royalty
in-kind oil into the SPR.
Northeast Home Heating Oil Reserve
The Northeast Home Heating Oil Reserve was established in July 2000
when the President directed the Department of Energy to establish a
reserve capable of assuring home heating oil supplies for the Northeast
states during times of very low inventories and significant threats to
immediate supply. The Reserve contains 2 million barrels of heating oil
stored at commercial terminals in the Northeast and is in good
condition. The current 5-year storage contracts expire in September
2007. A request for bids was issued in February 2007. The proposed
fiscal year 2008 budget requests $5.3 million for continued operations.
Naval Petroleum and Oil Shale Reserve
The fiscal year 2008 budget request of $17.3 million for the Naval
Petroleum and Oil Shale Reserve (NPOSR) will allow it to continue
environmental remediation activities and determine the equity
finalization of Naval Petroleum Reserve 1 (NPR-1); operate NPR-3 until
its economic limit is reached, and while operating NPR-3, maintain the
Rocky Mountain Oilfield Test Center..
Because the NPOSR no longer served the national defense purpose
envisioned in the early 1900s, the National Defense Authorization Act
for Fiscal Year 1996 required the sale of the Government's interest in
Naval Petroleum Reserve 1 (NPR-1). To comply with this requirement, the
Elk Hills field in California was sold to Occidental Petroleum
Corporation in 1998. Subsequently, the Department transferred 2 of the
Naval Oil Shale Reserves (NOSR-1 and NOSR-3), both in Colorado, to the
Department of the Interior's (DOI) Bureau of Land Management. In
January 2000, the Department returned the NOSR-2 site to the Northern
Ute Indian Tribe. The Energy Policy Act of 2005 transferred
administrative jurisdiction and environmental remediation of Naval
Petroleum Reserve 2 (NPR-2) in California to the Department of the
Interior. DOE retains the Naval Petroleum Reserve 3 (NPR-3) in Wyoming
(Teapot Dome field).
elk hills school lands fund
The National Defense Authorization Act for fiscal year 1996
authorized the settlement of longstanding ``school lands'' claims to
certain lands by the State of California known as the Elk Hills
Reserve. The settlement agreement between DOE and California, dated
October 11, 1996, provides for payment, subject to appropriation, of 9
percent of the net sales proceeds generated from the divestment of the
Government's interest in the Elk Hills Reserve. Under the terms of the
Act, a contingency fund containing 9 percent of the net proceeds of the
sale was established in the U.S. Treasury and was reserved for payment
to California.
To date, DOE has paid $300 million to the State of California. The
first installment payment of the settlement agreement was appropriated
in fiscal year 1999. While no appropriation was provided in fiscal year
2000, the Act provided an advance appropriation of $36 million that
became available in fiscal year 2001 (second installment). The next 4
installments of $36 million were paid at the beginning of fiscal year
2002, fiscal year 2003, fiscal year 2004, and fiscal year 2005
respectively. A seventh payment of $84 million was made in fiscal year
2006.
The fiscal year 2008 budget proposes no funding for the Elk Hills
School Lands Fund. The timing and levels of any future budget requests
are dependent on the schedule and results of the equity finalization
process.
fossil energy's budget meets the nation's critical energy needs
In conclusion, I'd like to emphasize that the Office of Fossil
Energy's programs are designed to promote the cost-effective
development of energy systems and practices that will provide current
and future generations with energy that is clean, efficient, reasonably
priced, and reliable. Our focus is on supporting the President's top
priorities for energy security, clean air, climate change, and coal
research. By reevaluating, refining and refocusing our programs and
funding the most cost-effective and beneficial projects, the fiscal
year 2008 budget submission meets the Nation's critical needs for
energy, environmental and national security.
Mr. Chairman, and members of the committee, this completes my
prepared statement. I would be happy to answer any questions you may
have at this time.
Senator Dorgan. Finally, we will hear from the Honorable
Kevin Kolevar, Director of the Office of Electricity Delivery
and Energy Reliability. Director, you may proceed.
STATEMENT OF KEVIN M. KOLEVAR, DIRECTOR, OFFICE OF
ELECTRICITY DELIVERY AND ENERGY RELIABILITY
Mr. Kolevar. Thank you, Mr. Chairman, members of the
subcommittee for the opportunity to testify on the President's
fiscal year 2008 budget request for the Office of Electricity
Delivery and Energy Reliability.
The mission of the Office is to lead national efforts to
modernize the electricity delivery system, enhance the security
and reliability of America's energy infrastructure, and
facilitate recovery from disruptions to energy supply.
The President's budget request includes $114.9 million for
OE in fiscal year 2008, which represents a 16 percent decrease
from the fiscal year 2007 operating plan. This request includes
$86 million for Research and Development activities, $11.6
million for Operations and Analysis activities and $17.4
million for Program Direction.
I will first address the activities of OE's Research and
Development program. Our request of $86 million for fiscal year
2008 will fund the following four main activities--high
temperature superconductivity, visualization and controls,
energy storage and power electronics, and renewable and
distributed systems integration. The development of these
advanced electricity technologies will influence the future of
all aspects of the electric transmission and distribution
systems.
The first activity I would like to highlight is the science
and development of high temperature superconductivity.
Superconducting cables transmit electricity through conductors
of temperatures approaching absolute zero, thus preventing
resistance to electrical voltage, which allows large amounts of
electricity to be transmitted over long distances with little
line loss. Superconductivity, therefore, hold the promise of
alleviating capacity concerns while moving power efficiently
and reliably.
Another critical piece of a resilient and reliable modern
grid is enhancing the security of our control systems. Our
visualization and control activity focuses on improving our
ability to measure and address the vulnerabilities of control
systems. The research in this area will allow us to detect
cyber intrusion, implement protective measures and response
strategies, and sustain cyber security improvements over time.
Using our understanding from previous energy storage
demonstration activities, we are researching and developing
new, advanced higher energy density materials and storage
devices for utility scale application. The program also focuses
on research in power electronics to improve material and device
properties that are needed for transmission level applications.
Finally, in 2007, the renewable and distributed systems
integration activity will complete the transition away from
generation technology activities and will then focus on grid
integration of distributed and renewable systems in 2008. This
is a logical step in advancing clean energy resources to
address future challenges.
I will now discuss DOE's Permitting, Siting and Analysis
Office, which is tasked with implementing mandatory EPACT
requirements to modernize the electric grid and enhance the
reliability of the energy infrastructure. These requirements
include analyzing transmission congestion, proposing energy
corridors for the Secretary's consideration and coordinating
Federal agency review of applications to site transmission
facilities on Federal lands. The President's budget requests
$5.7 million for this Office in fiscal year 2008.
On August 8, 2006, the Department published its National
Electric Transmission Congestion Study in compliance with
section 1221(a) of the Energy Policy Act. This study
highlighted more than 15 geographic areas where electric
congestion or capacity constraints exist. The Department has
announced that, due to the significant public interest in the
national corridor issues, before the Secretary designates any
national corridor, he will first issue any designations in
draft form to facilitate focused review and comment by affected
States, regional entities, and the general public.
Another major effort involves the implementation of section
368 of the Energy Policy Act, which requires the designation of
energy right-of-way corridors on Federal lands in the 11
contiguous western States. The agencies plan to publish a draft
programmatic environmental impact statement for the designation
of the energy corridors in the late spring of this year and
will solicit public comments.
Finally, this Office is preparing to implement DOE's
responsibilities under the new section, 216(h) of the Federal
Power Act. Section 216(h) provides for the Department to act as
the lead agency for purposes of coordinating all applicable
Federal authorizations and related environmental reviews
required to site an electro-transmission facility.
OE's Office of Infrastructure Security and Energy
Restoration facilitates the protection of the Nation's critical
energy infrastructure. This Office is responsible for
coordinating and carrying out the Department's obligations for
critical infrastructure identification, prioritization,
protection, and national preparedness within the energy sector.
The President's 2008 budget request includes $5.9 million for
this Office.
In times of declared emergencies, this Office coordinates
Federal efforts under the National Response Plan to assist
State and local governments and the private sector in the
restoration of electrical power and other energy-related
activities. DOE personnel deployed in regions affected by
large-scale electrical outages to assist in recovery efforts.
The Infrastructure Security and Energy Restoration Office also
works with States to foster greater awareness of the regional
scope of energy interdependencies and to develop energy
assurance plans that address the potential cascading effects of
energy supply disruptions.
In his 2007 State of the Union Address, the President
emphasized the importance of continuing to change the way
America generates electric power and highlighted the
significant progress we have already made in integrating clean
coal technology, solar and wind energy, and clean safe nuclear
energy into the electric transmission system.
Technology such as power electronics, high temperature
superconductivity and energy storage hold not only the promise
of lower costs and greater efficiency but also directly enhance
the viability of clean energy resources by addressing issues
such intermittency, controlability and environmental impact.
We cannot simply rely on innovative policies and
infrastructure investment. We must also invest Federal dollars
in the research, development, and deployment of new technology
in order to improve performance and ensure our national
security, economic competitiveness, and environmental well-
being.
Mr. Chairman, this concludes my statement. I look forward
to any subcommittee questions.
Senator Dorgan. Dr. Kolevar, thank you very much for your
statement.
[The statement follows:]
Prepared Statement of Kevin M. Kolevar
Mr. Chairman and members of the committee, thank you for this
opportunity to testify on the President's fiscal year 2008 budget
request for the Office of Electricity Delivery and Energy Reliability.
The mission of the Office of Electricity Delivery and Energy
Reliability (OE) is to lead national efforts to modernize the
electricity delivery system, enhance the security and reliability of
America's energy infrastructure, and facilitate recovery from
disruptions to energy supply. These functions are vital to the
Department of Energy's (DOE) strategic goal of protecting our national
and economic security by promoting a diverse supply and delivery of
reliable, affordable, and environmentally responsible energy.
The President's fiscal year 2008 budget includes $114.9 million for
OE in fiscal year 2008, which is an 8 percent decrease from the fiscal
year 2007 request. This includes $86.0 million for Research and
Development activities, $11.6 million for Operations and Analysis
activities, and $17.4 million for Program Direction. As DOE is
currently preparing a spending plan in accordance with the terms of the
2007 Continuing Resolution, my testimony on the fiscal year 2008 budget
request reflects a comparison to the administration's fiscal year 2007
request.
When Thomas Edison opened the Pearl Street Station in lower
Manhattan on September 4, 1884, he could hardly have foreseen the role
electricity would play in the development of American society. Although
the demand for electric lighting and power initially drove the
station's construction, electricity ultimately stimulated and enabled
technological innovations that reshaped America. Today, the
availability and access to electricity is something that most Americans
take for granted. Most people cannot describe what it is or where it
comes from. Yet, it is vital to nearly every aspect of our lives from
powering our electronics and heating our homes to supporting
transportation, finance, food and water systems, and national security.
The Energy Information Administration has estimated that by the
year 2030, U.S. electricity sales are expected to increase by 43
percent from their 2005 level. Although this is a positive indicator of
a growing economy, it is also a significant amount of new demand on an
electricity infrastructure that is already stressed and aging. With
this in mind, OE's fiscal year 2008 budget request reflects a
commitment to implement the directives of the Energy Policy Act of 2005
(EPACT), support research of breakthrough technologies, and coordinate
Federal response to temporary disruptions in energy supply to ensure a
reliable and secure electricity infrastructure for every American in
the coming decades.
Meeting our future electricity needs will not be solved by focusing
only on expanding our generation portfolio or on energy conservation.
Perhaps the greatest challenge today, as it was in Edison's time, is
building the elaborate network of wires and other facilities needed to
deliver energy to consumers reliably and safely.
research and development
The fiscal year 2008 budget request of $86.0 million for the
Research and Development (R&D) program within OE funds 4 activities:
High Temperature Superconductivity; Visualization and Controls; Energy
Storage and Power Electronics; and Renewable and Distributed Systems
Integration.
Over the past 18 years, DOE has invested more than $500 million in
the science and development of high temperature superconductivity.
Superconductivity holds the promise of addressing capacity concerns by
maximizing use of available ``footprint'' and limited space, while
moving power efficiently and reliably. It also supports advanced
substation and interconnection designs that allow larger amounts of
power to be routed between substations, feeders, and networks using
less space and improving the security and reliability of the electric
system.
Today, the High Temperature Superconductivity activity continues to
support second generation wire development as well as research on
dielectrics, cryogenics, and cable systems. This activity is being
refocused to address a near-term critical need within the electric
system to not only increase current carrying capacity, but also to
relieve overburdened cables elsewhere in the local grid. The
superconductivity industry in the United States is now at the critical
stage of moving from small business development to becoming a part of
our manufacturing base.
Enhanced security for control systems is critical to the
development of a reliable and resilient modern grid. The Visualization
and Controls Research & Development activity focuses on improving our
ability to measure and address the vulnerabilities of controls systems,
detect cyber intrusion, implement protective measures and response
strategies, and sustain cyber security improvements over time. The
fiscal year 2008 request reflects an increase of $7.75 million related
to support this effort.
This activity is also developing the next generation system control
and data acquisition (SCADA) system that features GPS-synchronized grid
monitoring, secure data communications, custom visualization and
operator cueing, and advanced control algorithms. Advanced
visualization and control systems will allow operators to detect
disturbances and take corrective action before problems cascade into
widespread outages. The need to improve electric power control systems
security is well-recognized by both the private and public sectors.
The Energy Storage and Power Electronics activity proposes an
increase of $3.80 million in fiscal year 2008 to: (1) leverage
understanding gained from previous Energy Storage demonstration
activities to research and develop new advanced higher energy density
materials and storage devices for utility scale application; and (2)
focus on enhanced research in Power Electronics to improve material and
device properties needed for transmission-level applications.
Large scale, megawatt-level electricity storage systems, or
multiple, smaller distributed storage systems, could significantly
reduce transmission system congestion, manage peak loads, make
renewable electricity sources more dispatchable, and increase the
reliability of the overall electric grid.
The Renewable and Distributed Systems Integration Research &
Development activity completed the transition away from generation
technology activities in fiscal year 2007 and will focus on grid
integration of distributed and renewable systems in fiscal year 2008,
which is a logical step in advancing clean energy resources to address
future challenges.
permitting, siting, and analysis
In fiscal year 2008, the Department is requesting $5.7 million for
the Permitting, Siting, and Analysis (PSA) Office within the Operations
and Analysis subprogram, which implements mandatory requirements set by
EPACT to modernize the electric grid and enhance reliability of the
energy infrastructure by contributing to the development and
implementation of electricity policy at the Federal and State level.
The Permitting Siting and Analysis Office is also tasked with analyzing
transmission congestion, proposing energy corridors for the Secretary's
consideration, and coordinating Federal agency review of applications
to site transmission facilities on Federal lands.
The Department published its National Electric Transmission
Congestion Study on August 8, 2006, in compliance with section 1221(a)
of EPACT, which requires DOE to prepare a study of electric
transmission congestion every 3 years. The study named more than 15
areas of the Nation with existing or potential transmission congestion
problems. The study identifies Southern California and the East Coast
from New York City to Washington, DC, as ``Critical Congestion Areas,''
because transmission congestion in these densely populated and
economically vital areas is especially significant.
During the development of the study, which relied on extensive
consultation with States and other stakeholders, the Department
provided numerous opportunities for discussion and comment by States,
regional planning organizations, industry, and the general public. OE
intends to supplement the tri-annual Congestion Studies study by
publishing annual progress reports on transmission improvements in the
congested areas.
Section 1221(a) also requires the Secretary to issue a report based
on the August 8 Congestion Study. In this report, if consumers in any
geographic area are being adversely affected by electric energy
transmission capacity constraints or congestion, the Secretary may, at
his discretion, designate such an area as a National Interest Electric
Transmission Corridor (National Corridor).
Because of the broad public interest in the implementation of
section 1221(a), the Department invited and received over 400 public
comments on the designation of National Corridors. The Department
continues to evaluate these comments, and has not yet determined
whether, and if so, where, it would be appropriate to propose
designation of National Corridors. Prior to issuing a report that
designates any National Corridor, the Department will first issue a
draft designation to allow affected States, regional entities, and the
general public additional opportunities for review and comment.
Another major effort involves the implementation of section 368 of
EPACT, which requires the designation of energy right-of-way corridors
on Federal lands in the 11 contiguous Western States. An interagency
team, with DOE as the lead agency, conducted public scoping meetings
concerning the designation of corridors in each of the 11 contiguous
Western States. The agencies plan to publish a draft Programmatic
Environmental Impact Statement for the designation of the energy
corridors in late spring of 2007 and will solicit public comments.
In August 2006, DOE and 8 other Federal agencies signed a
Memorandum of Understanding (MOU) that clarifies the respective roles
and responsibilities of Federal agencies, State and tribal governments,
and transmission project applicants with respect to making decisions on
transmission siting authorizations. DOE is preparing to implement its
responsibilities under the new section 216(h) of the Federal Power Act
to coordinate with these 8 other Federal agencies to prepare initial
calendars, with milestones and deadlines for the Federal authorizations
and related reviews required for the siting of transmission facilities.
DOE will maintain a public website that will contain a complete record
of Federal authorizations and related environmental reviews and will
work closely with the lead Federal NEPA agency to encourage complete
and expedited Federal reviews. DOE is currently considering the
procedures it will use in carrying out this program.
infrastructure security and energy restoration
The President has designated the Department of Energy as the Lead
Sector Specific Agency responsible for facilitating the protection of
the Nation's critical energy infrastructure. The Infrastructure
Security and Energy Restoration (ISER) activity of the Operations and
Analysis subprogram is responsible for coordinating and carrying out
the Department's obligations to support the Department of Homeland
Security in this important national initiative. The fiscal year 2008
request is for $5.9 million in funding for Infrastructure Security and
Energy Restoration within the Operations and Analysis subprogram.
The Infrastructure Security and Energy Restoration activity
fulfills DOE's responsibilities as defined in Homeland Security
Presidential Directives 7 and 8 for critical infrastructure
identification, prioritization, and protection and for national
preparedness. In times of declared emergencies, this Office also
coordinates Federal efforts under the National Response Plan to assist
State and local governments and the private sector in the restoration
of electrical power and other energy-related activities.
In the event of a large-scale electrical power outage caused by
natural disasters such as hurricanes, ice storms, or earthquakes, DOE
personnel will deploy to the affected region to assist in recovery
efforts. During the 2005 hurricane season, DOE was specifically
deployed to respond to 5 hurricanes: Dennis, Katrina, Ophelia, Rita and
Wilma. In such instances, DOE coordinates all Federal efforts to assist
local authorities and utilities in dealing with both measures to
restore power and to resolve other issues related to fuel supply.
The Infrastructure Security and Energy Restoration Office also
fosters greater awareness of the regional scope of energy
interdependencies by working with States to develop energy assurance
plans that address the potential cascading effects of energy supply
problems. Exercises are conducted with States and Federal partners to
help sharpen this focus. Finally, staff work with States and DHS in
emergency situations to help resolve issues brought on by temporary
energy supply disruptions, such as the winter 2007 propane shortage in
Maine.
conclusion
In his 2007 State of the Union address, President Bush emphasized
the importance of continuing to change the way America generates
electric power and highlighted significant progress in integrating
clean coal technology, solar and wind energy, and clean, safe nuclear
energy into the electric transmission system.
Technologies such as power electronics, high temperature
superconductivity, and energy storage hold the promise of lower costs
and greater efficiency, and also directly enhance the viability of
clean energy resources by addressing issues such as intermittency,
controllability, and environmental impact.
Federal investment in the research, development, and deployment of
new technology combined with innovative policies and infrastructure
investment, is essential to improving grid performance and ensuring our
energy security, economic competitiveness, and environmental well-
being.
This concludes my statement, Mr. Chairman. I look forward to
answering any questions you and your colleagues may have.
FOSSIL ENERGY BUDGET
Senator Dorgan. Let me begin with a couple of questions and
then I'll call on my colleagues.
First, Secretary Shope, the ability to use the abundant
supplies of coal that we have in this country depends a lot on
the research and development capability in the fossil energy
R&D programs. I was looking at your numbers and if you take out
the 25 percent for FutureGen and then take out the strategic
petroleum reserve money, isn't it then the case that the
administration budget is proposing less money for fossil energy
R&D?
Mr. Shope. Well Senator, we do take a portfolio approach to
not only the coal aspect of the program, the entire fossil
energy program, as I mentioned, focusing on energy security
both in the domestic economic impacts as well as economic
opportunities that it provides. So when we talk about our coal
budget, we really are looking at a $426 million coal budget
going forward. That's the amount of money we will be advancing
in 2008.
Senator Dorgan. But isn't that a substantial reduction?
Mr. Shope. Compared to our 2006 budget, we had $366 million
that was applied in 2006.
Senator Dorgan. Applied by 2007 numbers?
Mr. Shope. In 2007, we're going to be applying $425
million.
COAL RESOURCES
Senator Dorgan. My point was not about your portfolio
approach, admirable as that might be. My point was with respect
to the use of our coal resources, abundant resources that can
probably only be used in the future, in the way that many of us
would like them to be used, if we, through research and
development, unlock the mystery of this technology to be able
to sequester carbon and burn coal in a way that's clean,
doesn't just spoil our atmosphere and so on. My question is, if
you remove SPRO and remove FutureGen, isn't the case, with
respect to the issue of being able to use our coal resources
and able to devote research and development funds, that there
is a substantial reduction there?
Mr. Shope. If you're looking at strictly the MMG research
and the research and development, our fuels and power systems,
that's correct. There's a decrease in there but there is an
increase again--we've looked at our program and said, what is
it that we need to accomplish our goals?
Senator Dorgan. I understand that but then how does one
justify at this moment--it seems to me that we've come to an
important intersection here in energy policy. Some regions have
coal resources, others have oil, nuclear power and so we're
talking about a lot of issues here. We have hundreds of years
of coal resources. We can only use them, in my judgment, if
we're able to make the investment to unlock the mystery of how
to avoid putting effluents into the air and causing all kinds
of issues. How do we use research and development to get to
that point? So how does one justify coming to this
intersection, saying to us, ``Oh, by the way, with respect to
that account, we want to cut funding.''
Mr. Shope. Well, Senator, I agree with your statements
about that. That's exactly what we need to do is to move
forward and we're looking for a technology approach forward. I
would say to you that the research and development--we still
have a very active, vibrant portfolio in our research and
development area. But we also are looking forward to moving
these--the technologies out, getting them applied. So that's
why we do have the FutureGen project going forward. It's part
of our--that's actually a research project in and of itself so
all the money that we are using in FutureGen are research
dollars.
But in addition, we're trying to look at carbon capturing
storage, the issue that is really preeminent in our program and
saying we need to move forward and get these technologies
deployed so we'll increase in our sequestration budget as well,
to bring this to fruition.
Senator Dorgan. You know, the problem is, it's never much
fun to inquire of someone who I think, in a less guarded
moment, would probably say, I understand your point. We should
be asking for more money but this is the President's budget.
I'm here to support the President's budget. That's what I'm
paid for. So I can't get, perhaps, as candid an answer as I
would hope on whether it makes a lot of sense at this
intersection, to cut that portion of the budget. It just seems
nuts to me. With all due respect, if we want to use that
resource, we're going to have to find ways to be able to use it
and unlocking those ways, in my judgment, would require some
directed funding to our priorities. We're going to do that
rather than cutting funding.
ENERGY EFFICIENCY AND RENEWABLE ENERGY BUDGET
But I understand your answers, Mr. Secretary. I don't mean
to badger you. Let me ask Secretary Karsner a similar type of
question. You and I visited the Renewable Energy Laboratory at
Golden, Colorado. I was enormously impressed by it. I, of
course, have a great interest in all of these accounts and a
good many of them are going to be decreased, as you know and I
suspect if I asked you the same question, I'll get an answer--
--
Mr. Karsner. I support the President's budget.
Senator Dorgan. So is there any chance after the hearing,
we could have a cup of coffee and find out where I could ask
you the same questions? But more seriously, you know, we here
in Congress added money to this bill, as you know $300 million.
When you take that with the 2007 level and then the plus up of
$300 million, the 2008 request, in virtually every area, with,
I think, maybe two exceptions, is going to be a cut in funding
2008 versus 2007.
We're talking, on the authorizing committee, Senator
Bingaman, Senator Domenici, myself and Senator Craig, and
others about this notion of how to put together another follow-
on energy bill and what parts are necessary, so we understand
the urgency. It seems to me there is a confluence of events
here with respect to what has become sort of a consensus on
climate change, our vulnerability with respect to oil and
foreign oil. There is a greater urgency to these issues and it
seems to me out of step with that greater urgency to see
proposed reductions in spending in most of the accounts dealing
with renewable and energy efficiency issues. Would you agree
with me, Secretary Karsner?
Mr. Karsner. In substance, in the character of what you're
saying, I do agree. I think the differential is largely
accounted for by the idiosyncrasies of the budgeting process.
This 2008 budget originated more than 2 years ago, just as I'm
currently preparing a 2009 budget 2 years into the future for
an administration I won't be a part of. Technology, of course,
moves much faster, as do these priorities, and when we had the
opportunity for the spend plan, which is really the first
budget that I've had the opportunity to exercise influence
over, it does very accurately reflect our priorities in a
contemporaneous, real-time snapshot of the portfolio approach
and there is a heavier emphasis on efficiency.
Senator Dorgan. I think it is important to note that the
Congress, on a bipartisan basis, in putting together the fiscal
year 2007 appropriation bills, combined, I believe, 10 bills
into one omnibus because we were required to do that.
Republicans and Democrats together said ``You know what? We're
under funded in the renewables area and so we added to all of
these accounts.'' There are priorities that come from the
administration and then priorities that come from the Congress
and we will try to work our will in terms of what we believe
the right priorities will be. I mentioned the renewable energy
and fossil fuel accounts and I think it's important to
understand that there is a renewed urgency here with respect to
both and so your area is going to be critically important to
us. We need to get out of your area some very significant
opportunities and changes for the future.
NUCLEAR ENERGY BUDGET
Secretary Spurgeon, can you tell me how the $114 million
for shared costs of efforts to reduce barriers to deploy
nuclear power, would be spent? I don't quite understand from
the description how that would be dispersed.
Mr. Spurgeon. It's spent through two consortia. The NuStart
Consortia, which consists of 10 electric generating companies
plus two manufacturers and the Dominion Power Group, which has
one utility and manufacturer and architect engineers associated
with it. The whole objective of the Nuclear Power 2010 Program
is to remove the barriers to entry of these first nuclear
powerplants into the marketplace. So what we are doing is we're
spending money on design standardization costs. We're spending
money in design standardization and in preparing the combined
operating licenses for two different types of reactors, one a
boiling water reactor and the second, a pressurized water
reactor.
So it's to get the first ones through the process so that
those that follow can reference the first ones and shorten the
time scale and thus, cost for introducing nuclear power in the
United States.
ELECTRICITY DELIVERY TECHNOLOGICAL ADVANCES
Senator Dorgan. I don't know as much about that area.
That's why I asked the question. I will submit further
questions as well, just so that I understand more. And,
finally, then I will turn to my colleagues.
Director Kolevar, it seems to me that we have not seen any
substantial change in the technology of delivering electricity
for perhaps three-quarters of a century. We string lines and we
run electricity over the lines and we run these lines through a
corridor. I know some companies are working on new
technologies--composite conductors, to name one, and there are
others. If we could see dramatic advances there, we might be
able to use existing corridors to double or triple the
capability of moving electricity to where it's needed and
that's part of what your investment is about, I understand.
With what hope can we approach a future with new
technologies for the transmission of electricity? Thus far, we
have had very few advances in those areas.
Mr. Kolevar. You're correct, Mr. Chairman. It is certainly
challenging space. There have been a variety of new
technological advances that we have not seen penetrate the
system in any significant fashion. I do believe the opportunity
is there for a couple of reasons. One, the system today is
increasingly stressed and in two parts of the country, we
either came close to or experienced blackouts. I think that
will drive greater technological penetration of transmission
scale applications and distribution scale applications that can
enhance reliability.
I also think it's the case that the work that is going on
with the Federal Energy Regulatory Commission (FERC) and the
Nuclear Regulatory Commission (NRC) in pushing new mandatory
reliability standards will help some of these technologies to
be pushed into the market.
ELECTRICITY DELIVERY AND ENERGY RELIABILITY BUDGET
Senator Dorgan. Director Kolevar, I'll give you the
opportunity to learn from Secretary Shope on this subject but
you're probably not happy to see a $132 million research and
development budget drop to $86 million. I assume that this is
probably not advancing our pursuit of new technologies.
Mr. Kolevar. We were able to leverage a number of synergies
in the program where we saw the drop that you reference from
fiscal year 2006 to 2008. Mr. Chairman, I would also note that
the majority of that reduction was scheduled for phase-out. It
was in some reciprocating engine work and in some combined heat
and power work where we had achieved or came very close to
achieving some pre-established milestones. There was a general
thought that when we achieve what we set out to achieve that we
ought to then discontinue that project and focus on some other
applications.
Senator Dorgan. Would you prefer at least the minimum level
of funding for the pursuit of research and development for new
technology in electric transmission?
Mr. Kolevar. I'm sorry, I don't understand your question.
At the minimum 2008 level?
Senator Dorgan. At least in the pursuit of research and
development and in the area where there has been so little
progress for so long and where so much is necessary for us to
be able to produce in one area and transmit to another. I was
wondering whether you would prefer level funding, at a minimum
level, for this function of research and development.
Mr. Kolevar. Yes, sir. Level funding at a minimum would be
appreciated.
Senator Dorgan. Thank you. Senator Domenici.
Senator Domenici. Well, Mr. Chairman, you succeeded.
Senator Dorgan. I did. I didn't want to mention that but I
did.
Senator Domenici. Three witnesses and three shots but you
got there. Let me make an observation first. Obviously, he's
sitting in the chair and I'm sitting next to him as ranking
member. That got turned around just a few months ago but I
think that it should be--it would be appropriate for me to
indicate to the four of you that I can recall your coming
before the subcommittee to get confirmed for your jobs and I
was obviously sitting in this position with my friend and
ranking member--who came before the Energy and Natural
Resources Committee, which frequently gets confused with this
subcommittee. This isn't the subcommittee.
And I was quite impressed when we finished getting all of
you, the four of you, that this late in this administration, we
were going to get such qualified people. I openly expressed
myself as saying that the Secretary of Energy and his Under
Secretary, Clay Sell, have done some exciting work in getting
the four of you to take these jobs. And I repeat that. I hope
you're as enthused now as you were when you told us why you
would take this job, knowing full well that whether it is a
Republican or a Democrat, there is a big chance you will not be
around for 5 or 6 years to see your dreams achieved.
I do believe I was right in my assessment about you. Your
work has been exciting. I think you are challenged even though
you had a terrible start with the lousy work that the United
States Senate did and we were in charge, not them, in not
getting an appropriation bill and then throwing upon you the
kind of appropriation that we did and then you having to
address questions like you are here, when this appropriation
process is all out of focus for the year 2005, 2006, 2007, and
2008. But I commend you.
PREVENTING REGIONAL BLACKOUTS
Now I want to just start with you on the right hand side.
When we passed the energy bill, the authorizing bill, those of
us who were very thrilled with the bill had a check-off list
and almost everybody had one item that said that if this works,
it should not be too long before America can say, we will not
have any more regional blackouts in our grid across the
country. I didn't ask you, Director Kolevar, whether I could
make that statement. We thought that's what we did. I'm sure
Senator Craig said the same thing. He had it on his list. What
we had done is created authority in you so that we should avoid
the pitfalls that cause the grid failures.
Now quickly, without too much elaboration, did we give you
the right authority and are you pursuing--is this being pursued
with vigor so that what we told the American people may become
a reality in terms of the stability of the grid system?
Mr. Kolevar. Yes, sir, I would say that you did. We believe
that the provisions contained in the Energy Policy Act of 2005,
when executed, will dramatically assist reliability of the
overall transmission and distribution systems.
Senator Domenici. I want to say to you, I think they're
right and I certainly would not want you to operate under this
law if it is deficient. If it is, I think you ought to tell us
because we don't want you to go 4 years or so trying to give us
stability in the grid and then tell us, the law was short. You
got it?
LOAN GUARANTEE PROGRAM
Mr. Kolevar. Yes, sir.
Senator Domenici. Now let me move over to Secretary
Karsner.
Secretary Karsner, I'll try to hurry up but I can't resist.
If you or any of the other witnesses are talking about a budget
and you're talking about the amount of money the Federal
Government is putting into an account and you look to the
energy bill and found that there is a section that provides for
loan guarantees for new technology or technologies that
implement this act, would it be fair to think that you would
assume that maybe some loan guarantees would be added to your
portfolio so that more money could be spent by the
entrepreneurs and business people that took advantage of this
law?
Mr. Karsner. That would be fair.
Senator Domenici. Let me just say, that is fair and that
is--the chairman knows that and he was not talking against that
in his questions but the truth of the matter is and Senator
Craig, would you believe that we still do not have a packaged
set of regulations from the Department of Energy----
Senator Craig. Twenty months after the passage of the act.
Yes, I'm counting, month by month, week by week, day by day.
Senator Domenici. No, I'm telling you that I understand
that every time we turn around, we run into another stalwart
and they are stalwarts--in this administration that say, I
don't like loan guarantees and therefore, they get them
stalled. We write them. They pass judgment based on their
existence in life and say, well, I don't like them. I submit
and Mr. Chairman, that on loan guarantees, when we're finished,
even though we're not an authorizing committee, that we ought
to ask our staff how to write loan guarantee provisions in this
bill that if signed by the President, we will be rid and
finished with them having any judgment with reference to how to
write the loan guarantee bills. And I'm going to try to do
that, if you would help, we'll do it bipartisan and get it
written and get that out of the way so loan guarantees will be
finished in terms of having to look at authorizing language.
Would that help you and would that help you, Secretary Shope,
in your part of this law, too?
Mr. Shope. The loan guarantee provisions are beneficial to
our program.
Senator Domenici. Not yours; Secretary Karsner?
Mr. Karsner. They are essential to the growth of
commercialization in our----
Senator Domenici. What about you, Secretary Spurgeon?
Mr. Spurgeon. Essential.
Senator Domenici. Even in the big nuclear program, you need
it?
Mr. Spurgeon. Yes, sir.
Senator Domenici. Oh and the administration loves the
nuclear program. Have they said anything to you as to why we
can't get the loan guarantees going?
Mr. Spurgeon. Senator Domenici, the administration--the
Department of Energy is moving very aggressively to implement
the loan guarantee program. Now that we have the requisite
authorization to move forward with creating the office, which
was established, which was received 1 month ago. It is a matter
of public record that the Department has prepared a notice of
proposed rulemaking and that has been received and is under
review at the Office of Management and Budget as of March 16.
Senator Domenici. So you must be part of driving this
thing?
Mr. Spurgeon. Yes, sir.
COAL USAGE
Senator Domenici. Well, that's good. I like the way you
drive things. It's apt to get done. It's very important that
you understand what's going on or it won't happen. We'll be
through another Congress.
I have one last question to ask of the Secretary who is in
charge of coal. People think that the United States is going to
stop using coal because of environmental problems. Everything I
read about the future says that there will be more coal used in
the next decade than this previous--this decade past. Is that
the assumption you're operating under?
Mr. Shope. Yes, it is, Senator. I would agree with that.
Senator Domenici. And is it not true that we must convert
coal to things like liquids and other usable products and that
requires a lot of technology and innovative--and money to be
invested?
Mr. Shope. It does, Senator and it is part, again, of the
President's alternative fuel strategy to include clean coal to
liquids technologies, to make it part of our strategy. So yes,
the entire use of coal is essential to our Nation's energy
security.
GLOBAL NUCLEAR ENERGY PARTNERSHIP
Senator Domenici. My last question is, who knows anything
about the GNEP Program? Secretary Spurgeon, how much money did
the President put in to start this program?
Mr. Spurgeon. To start it in 2008?
Senator Domenici. Yes.
Mr. Spurgeon. Four hundred and five million dollars, sir.
Senator Domenici. That's what you are here asking us for.
Mr. Spurgeon. Yes, sir.
Senator Domenici. That won't get you ready in terms of
specifications?
Mr. Spurgeon. Yes, sir. That gets us to the point where we
can define a technology pathway forward with sufficient
information so that we're not guessing at what the right answer
might be. We need to offer it to the Secretary for the
Secretary to make a decision on a pathway forward and you need
to inform that decision by good information from industry, from
our national laboratories and from our universities.
Senator Domenici. Thank you very much.
Senator Dorgan. Senator Craig.
Senator Craig. Thank you, Mr. Chairman. I didn't make an
opening statement so let me react not unlike the ranking member
has, by agreeing certainly with the premise of your opening
statement as it relates to our energy future and where we need
to go and what we've done to date and what I hope we will do in
the future.
Let me also say that last Wednesday, I stood on the top of
a reactor core, EBR-1. For those of you who don't know what
EBR-1 was, it's now an historic site. I didn't think we'd been
involved in the nuclear business long enough to describe it as
a historic event but it was, is an historic site so designated
by President Lyndon Johnson. EBR-1 was first constructed in
1949. It started producing power in 1951. It lit the first
light bulb ever powered by nuclear generated electricity in
1951 out on the high deserts of Idaho.
When I was standing on top of that reactor core, Dennis, I
thought, oh, if we had only continued from that point forward
at the rate we were moving at that time. We might not even be
so dependent upon the Middle East today or anybody else for
that matter and my guess is, we wouldn't be generating
electricity at the rate of only 20 percent total nuclear. It
would be substantially greater than that and we'd have the
waste problem solved a decade or so ago. But we stalled out
politically. We simply--we were fearful of where we were even
though the technology argued there was nothing to fear. We've
changed that. We've adjusted and thank goodness America is
awakening to a new reality and that new reality is embodied in
the Energy Policy Act of 2005 that deals primarily with power
generation, in something that the chairman and I introduced
just recently that deals primarily with transportation sector
fuels, the SAFE Act and all I am saying to all of you in your
presentation today is, too many good ideas and not enough
money.
Because we can help drive industry in the right direction
by creating some of the safeguards, some of the buffers and
some of the incentives. But the marketplace is doing a
marvelous job at this moment. I say this publicly and loudly,
even though I don't like saying it. The good news of last year
is that we got $3 gas. We may get it again this summer. The bad
news is we got $3 gas but the good news, is it's probably
creating and generating in the marketplace, one of the greatest
resurgent and investment in energy than the total energy
portfolio ever in the history of our country. And that's good
because I find it shameful of a great power to be so reliant
upon those who would jerk our diplomatic chain and change our
foreign policy in a way simply so that we can continue to serve
our habits and I'm talking about hydrocarbon habits.
NEXT GENERATION NUCLEAR POWERPLANT
Now, having said that, let me switch back to EBR-1 or
should I fast-forward to GNEP and NGNP because that's really
where we are today. Since the time that Pete Domenici and I and
Jeff Bingaman and everybody else on that committee crafted
EPACT, 33, 34 nuclear reactors on the drawing board? What is it
today, Dennis?
Mr. Spurgeon. The number can be either but it's either 33
or 34.
Senator Craig. Somewhere in that range. Now, let me say
this to you as a statement because I don't disagree with any
direction you're headed in. I just wish we could head there a
little faster. You're going to find too many of us on this--not
too many of us on this subcommittee would in any way disagree
with you as it relates to nuclear power and the role it plays
and the value of it in the future--our security, our
competitiveness, reduction of greenhouse gases--all of that.
And I would suspect that you would not hear any complaints from
myself, Senator Domenici or the chairman regarding the strong
emphasis you've placed on the budget for securing nuclear power
through your R&D efforts in the advanced fuels cycle initiative
or NGNP or GNEP.
My only advice to you would be that you remain flexible. In
dealing with both chambers, both parties as it relates to a
broad goal that we all seem to support. The resurgence of
nuclear power in the United States, I think, is upon us. I'm
not sure where a new administration will take us but I'm
confident that the two committees of authority in the House and
the Senate, in a bipartisan way, will advance the cause we
started with the passage of EPACT.
However, you may find that the narrow goals of GNEP that
must follow may not be pursued as aggressively as some of us
might like. Instead, we all need to keep focused on moving the
ball forward for nuclear and maintaining the momentum of what
we've done. I think you understand what I'm saying. If the
nuclear budget remains whole but it doesn't reflect exactly
what any one of us might ask for, we can all agree that the
nuclear resurgence continues and will be as a positive step
forward for this country. My guess is that we'll tinker around
the edges and we may add a few dollars here or there to all of
your budgets. They are woefully inadequate.
I'm willing to shift the priorities in the entire budget to
give you greater ability in your budget. I am just growing so
very tired, as the American people are, of finding this great
Nation jerked around by puppet governments around the world,
largely because of a dependency we've now developed and a lack
of vision decades ago in where we needed to get.
Thank you all for your presentations today. You are very
skillful in doing it. If the Secretary had been here, he'd have
got 10 minutes. You each got 10 minutes. So we were glad to see
you and not the Secretary.
Because I think it was important that all that you said be
said for the sake of the country and the policy you project.
Thank you. Thank you, Mr. Chairman.
Senator Dorgan. Senator Craig, thank you very much. Senator
Allard?
NAVAL OIL SHALE RESERVE CERTIFICATION
Senator Allard. Thank you, Mr. Chairman. Thank all of you
for your testimony. Secretary Shope, you're familiar with the
naval oil shale reserve legislation and the agreement that was
worked out by the Department of Energy and the Department of
the Interior when there was a transfer of management of that
particular property in Colorado?
Mr. Shope. I am, yes sir.
Senator Allard. My understanding is that the Department of
the Interior is ready to certify that you're not ready to
certify because you're waiting for a cleanup to be completed.
What is your estimate it is going to cost to finish that
cleanup?
Mr. Shope. Again, Senator, the reserve has been transferred
to the Department of the Interior, so actually----
Senator Allard. I'm sorry. I got that turned around.
Mr. Shope. Yes, sir.
Senator Allard. I apologize for that.
Mr. Shope. So we actually will wait until the Department of
the Interior certifies the plant.
Senator Allard. They need to certify and I've been told
that we're waiting for your certification but you're not
willing to give that until they have cleaned up the Anvil Point
facility.
Mr. Shope. Senator, I'll have to take that particular
question for the record because that's inconsistent with what
my current knowledge is of that matter, Senator.
Senator Allard. Okay, well that's what we've been told by
the Department of Energy is that you're waiting for the cleanup
of that and we've been estimated that the cleanup is around $13
million at the high end. It's not anticipated to go over $13
million--that's a high figure and yet, there is revenue being
generated from that property now. I've been told that equals
about $70 million. The legislation directs that the revenue
from the natural resources on that property be returned to the
local communities and the State of Colorado and you have $13
million of outside costs and you're holding $70 million in
there that you're not redistributing back to the State of
Colorado.
It seems to me that there ought to be more of a concerted
effort to get that return. Why are you sitting on that money?
Mr. Shope. Well again, Senator, the Department of the
Interior has the lead on it. We would certify after their
certification--and you're indicating----
Senator Allard. According to our information, they have
certified it.
Mr. Shope. And that has not been made known to me but I
will immediately look into it and address that in the record.
Senator Allard. They had indicated--they indicated to my
staff that they are willing to certify. The legislation
requires joint certification, which means the Department of
Energy also has to certify. So that's our understanding and I
would hope that you would get back to us because that's
important. For the life of me, I don't understand why you're
sitting on $70 million when the maximum estimate on cleanup on
that is around $13 million. Heck, even if you wanted to raise
your estimate to $20 million, if you could get the other $50
million or so to the local communities because they're being
impacted right now because of the oil shale development that is
happening in that particular area of the State. So they need
that to meet their challenges that they are facing with that
development. So, we'll continue to stay in touch with you on
that and if you'll respond back. We'll get a formal question to
you and then if you could respond back to us, we'd appreciate
it.
Mr. Shope. Absolutely, Senator.
[The information follows:]
Anvil Points Mine Site
When the management of Anvil Points mine site was transferred to
the Department of the Interior there was environmental remediation work
that needed to be completed. The Department of the Interior assumed
responsibility for the cleanup of Anvil Points; however, the Secretary
of Energy must approve the cleanup plan.
To the best of our knowledge the Department of the Interior has
completed a feasibility study and the detailed engineering plan. The
final cleanup plan appears to be in draft form; however, the cleanup
plan has not been submitted to the Department of Energy for approval.
It is also our understanding that part of the cleanup plan involves
removal of the mine access road. However, before this can happen the
U.S. Geological Survey must get into the mine and remove drilling cores
that have been stored there.
The Department of Energy remains ready to review and approve the
Anvil Points environmental remediation plan once it is submitted by the
Department of the Interior.
PROGRAM ASSESSMENT RATING TOOL (PART) SCORES
Senator Allard. Also, you're familiar with the PART Program
of the President. I suppose all of you have done that. It's
where you measure--you put goals out there that are measurable
and then you are evaluated. Actually, the Department of Energy
has done better than most of the agencies and I want to
compliment you on that.
But there are six areas in which I think there are some
issues that need to be addressed and I'm just going to call
them quickly to your attention. In the Department--and I'm not
calling these up because I support them but what I want to make
sure is that the taxpayer dollars that are going in there are
creating results. There are two programs that have been
measured and this is done by the Office of Management and
Budget (OMB), by the way. There are two areas where you have
been rated as ineffective. I don't know who has jurisdiction
over the Natural Gas Technology Program.
Mr. Shope. I do, Senator.
Senator Allard. Why is that rated ineffective?
Mr. Shope. It's rated ineffective based upon the other
priorities within the Office of Fossil Energy. So it's
ineffective in the sense of--not that the program is
mismanaged, not that there has been any inappropriate
activities or misspending of money----
Senator Allard. What's happening to the money they're
getting?
Mr. Shope. It's now being effectively utilized, all the
dollars have been and our reviews demonstrate that. What the
ineffectiveness refers to is the balance of putting money
toward natural gas research and development in light of the
high costs, the high price of hydrocarbons as they are being
received today.
Senator Allard. Is that a correctable problem?
Mr. Shope. Well, we corrected it by terminating the
program.
Senator Allard. Okay, so it's terminated.
Mr. Shope. At the end of 2008.
Senator Allard. Okay, very good. All right, what about oil
technology? That's rated as ineffective.
Mr. Shope. Again, the same thing. This is not ineffective
in the sense of mismanagement or any inappropriate--it's a
matter, is this--is the taxpayer dollars being best spent by
investing in this research in 2008?
Senator Allard. It will be terminated?
Mr. Shope. Yes.
Senator Allard. It will be terminated. All right. Now there
are some that don't demonstrate any results. It's all--there is
the National Nuclear Infrastructure Program and they haven't
bothered to set any goals at all or measure them so why haven't
they bothered to do that? I guess that's you, Secretary
Spurgeon.
Mr. Spurgeon. I think that's another program within the
Department that's being referred to there, sir.
Senator Allard. And that will be terminated or what?
Mr. Spurgeon. I'm not sure which program that is, so. I
think it's a Defense program.
Senator Allard. It's called the national nuclear
infrastructure. If you go on Expectmore.gov on the Internet,
you'll see it there.
Mr. Spurgeon. Let me take that for the record for the
Department, sir.
[The information follows:]
Program Assessment Rating Tool
The National Nuclear Infrastructure Program Assessment Rating Tool
(PART) is focused on activities carried out by the Office of Nuclear
Energy's Idaho Facilities Management and Radiological Facilities
Management programs at Idaho National Laboratory (INL).
Performance measures were established for the INL during the fiscal
year 2005 merger of the Idaho National Engineering and Environmental
Laboratory (INEEL) and the Argonne National Laboratory-West (ANL-W).
The National Nuclear Infrastructure PART assessment was completed
during the fiscal year 2006 budget formulation process, concurrent with
activities associated with creation of INL.
The overall rating of ``Results Not Demonstrated'' is not due to
the lack of performance measures, but the inability to demonstrate
results against the established performance measures during the short
period of time between the establishment of the new laboratory and
completion of the PART assessment. The Department continues to track
its performance against cost and schedule baselines. Further, the
Department employs a Facility Operability Index performance measure
that assesses the readiness of the infrastructure to support NE, other
DOE and Work-For-Others milestones. The Department continues to
evaluate and look for improvements in the operation of INL.
PROGRAM ASSESSMENT RATING TOOL (PART) SCORES
Senator Allard. All right. And then on the University
Nuclear Education Program--results not demonstrated. Why is
that?
Mr. Spurgeon. What was that, Senator?
Senator Allard. It's the University Nuclear Education
Programs. Results are not demonstrated. In other words, they
haven't been able to establish goals that show that they're
getting anything accomplished.
Mr. Spurgeon. We have a--I think our university dollars are
being very well spent. It's sometimes very difficult to
quantify goals for research that is happening and support of
developing education programs for us. I'll give you a better
answer than I'm able to give up here.
Senator Allard. When they make application, you can insist
on them giving you----
Mr. Spurgeon. We are. We are moving the university research
programs to be program based and so that we will be able to
have a better measure of performance against objective.
[The information follows:]
Part Score For University Nuclear Education Program
The mission of the University Reactor Infrastructure and Education
Assistance program has been to enhance the national nuclear educational
infrastructure to meet the manpower requirements of the Nation's
energy, environmental, health care, and national security sectors. More
specifically, the program was designed to address declining enrollment
levels among U.S. nuclear engineering programs.
A PART assessment was completed for the University Reactor
Infrastructure and Education Assistance program during the fiscal year
2007 budget formulation process. The assessment, conducted under the
title ``University Nuclear Education Programs,'' determined that
enrollment target levels of the program had been met and that Federal
assistance was no longer needed to encourage students to enter into
nuclear-related disciplines. Since the late 1990s, enrollment levels in
nuclear education programs have tripled, reaching upwards of 1,500
students in 2005, the program's target level for the year 2015. In
addition, the number of universities offering nuclear-related programs
also has increased. These trends reflect renewed interest in nuclear
power. Students continue to be drawn into this course of study and
universities, along with nuclear industry societies and utilities,
continue to invest in university research reactors, students, and
faculty members. However, the assessment also concluded that the
program performance measures that did not clearly communicate the
linkage between Federal funding and growth in enrollment in nuclear-
related disciplines. This led to the rating of ``Results Not
Demonstrated''.
The Department is using part of its fiscal year 2007 funds to
support all students currently on an Office of Nuclear Energy
fellowship or scholarship for the period of their initial appointment.
No student is in danger of losing his/her funding assuming that they
stay within the original guidelines of the program with regard to
course of study and grades. No additional funds are requested in fiscal
year 2008 for these activities, effectively closing out the program.
However, $2.9 million was requested in fiscal year 2007 to provide
fresh reactor fuel to universities and to dispose of spent fuel from
university reactors. Under the fiscal year 2007 CR, these activities
are also being funded. In fiscal year 2008, $2.9 million is requested
for these activities under Research Reactor Infrastructure, within the
Radiological Facilities Management program.
In addition to funding research reactor activities, the Department
remains committed to supporting university research through its Nuclear
Energy Research Initiative (NERI). In fiscal year 2007, $38.3 million
will support NERI grants to universities within NE's R&D programs. The
fiscal year 2008 budget request includes $58.6 million to support NERI
grants to universities within NE's R&D programs.
PROGRAM ASSESSMENT RATING TOOL (PART) SCORES
Senator Allard. Now there's one other program, the State
energy programs. What's happening there? They are--who has
those?
Mr. Karsner. That's me.
Senator Allard. Why aren't those--why aren't there any
results being demonstrated there?
Mr. Karsner. I can't speak to the report. I feel like there
are results being demonstrated there but I'm happy to analyze
that report.
Senator Allard. The Office of Management and Budget did an
evaluation on that and said they----
Mr. Karsner. It will not be the first time I disagree with
the Office of Management and Budget.
Senator Allard. Well, if you could get something back to us
on those. As policy makers, if we knew----
Mr. Karsner. Absolutely, sir.
[The information follows:]
State Energy Program Part Score
In 2004, the State Energy Program (SEP) received a rating of
``Results Not Demonstrated'' for the OMB Performance Assessment Rating
Tool (PART) exercise. This rating is ``given when programs do not have
acceptable long-term and annual performance measures'' (quoted from OMB
PART Tool Guidance No. 2007-02, Jan 29, 2007). The Program had offered
information for the PART based on an evaluation conducted by Oak Ridge
National Laboratory (ORNL). OMB cited the need for a more comprehensive
impact methodology for the study as well as an independent evaluator.
DOE has taken several actions in response to OMB's concerns. In
2005, SEP requested an independent review of the ORNL report by the
Board of Directors of the International Energy Program Evaluation
Conference, Inc. This independent review found the ORNL study to be a
``reasonable foundation from which to estimate the national effects of
the SEP program.'' In 2006 the program finalized the SEP Strategic
Plan, which established long-term goals, objectives, and strategies to
set a new direction for the program in response to the OMB assessment.
In 2007 SEP initiated a comprehensive evaluation of the program by an
independent evaluator to quantify program performance and identify
areas for improvement.
UNIVERSITY NUCLEAR EDUCATION PROGRAM
Senator Allard. Some of these programs, I think--they look
good and sound good so I want to--and like all the rest, I want
to see us move forward on that. So I just want to follow up
that. Thank you, Mr. Chairman.
Senator Domenici. Mr. Chairman?
Senator Dorgan. Yes?
Senator Domenici. With reference to the program you asked
about, it referred to----
Senator Dorgan. University, yes.
Senator Domenici. I want to say that in 1995, when there
was nothing going on and this Senator decided we should get
started on some and we started by putting back into the
university system what had been there for many years and
terminated and that was some assistance to encourage youngsters
who had the proclivity for nuclear engineering and the like,
excited them about--and it was working and we spent about $25
million a year at the maximum and then the President, because
he didn't have enough money, terminated it and I don't think
I've been able to put it back. But that's the history.
Senator Dorgan. Thank you for that response and I'd agree
that we need to encourage students to get into these areas.
It's probably important when you have a shortage there.
Senator Domenici. Thank you.
Senator Dorgan. Senator Murray.
Senator Murray. Thanks very much, Mr. Chairman, for holding
this hearing and Senator Domenici and all of our panelists. I
think it's been a very interesting discussion. I think we all
are looking for ways to provide alternative energy and I think
there are a lot of great ideas out there. This has been a great
panel and chance to hear all that. I was out in my state over
the last week and had a chance to talk to my sorghum grain
farmers there, very interested in the opportunities that are
out there and obviously, my dairy farmers are talking about
biowaste. We've got nuclear, biodiesel, hydrogen--so many
opportunities and a lot of work ahead of us.
I think we have to remember, we've got to be careful what
we do. Every source of energy seems to have a challenge to it
and how we move forward is really important but I appreciate
all the work that you're doing.
VEHICLE EFFICIENCY
Secretary Karsner, let me start with you. I really
appreciate the President's initiative to cut our dependency on
oil through the greater use of biofuels but there are other
things we can do as well. We not only need to introduce
alternative fuels but we have to look at how we can get
efficiency in vehicles as well. Your efficiency programs--we've
seen a significant increase in the 2007 spending plan and the
increase in the 2008 EERE budget seems to emphasize funding for
hybrid electric systems and decreases funding for research and
materials and advance combustion. According to the Department's
own estimates, these activities would have a lot more dramatic
and near term impact on CO2 emissions and reducing
our dependency. Can you comment on whether you agree that
improvements in combustion processes could greatly enhance our
fuel economy by new lightweight materials, things like that?
Mr. Karsner. I do agree that improvements will remain a
central focus. I think some of the diminishing, programmatic
budgeting there might reflect some of these successes,
actually. In other words, there are natural limits to what
gains can be had from the physical properties of internal
combustion efficiency and it's going to ultimately be balanced
against the emissions that come out of those engines. So the
idea is, optimizing the efficiency to the maximum degree as a
physical device and minimizing the emissions in some of those
cases, for example, heavy trucks, is what that applies to.
We're getting right up to that optimum barrier.
Senator Murray. Do you think we know everything we need to
know?
Mr. Karsner. No, absolutely not.
Senator Murray. Okay. Well, how much of the 2007 spending
plan was directed to advanced combustion R&D?
Mr. Karsner. I can report back with the precise numbers but
we did have a substantial increase in the 2007 spend plan to
vehicle technologies.
[The information follows:]
Funding For Advanced Combustion R&D
For fiscal year 2007, $49,706,000 is being directed to advanced
combustion R&D in the Vehicle Technologies Program.
FUNDING FOR ADVANCED COMBUSTION RESEARCH
Senator Murray. And your 2008 is reduced funding?
Mr. Karsner. Well, of course, the 2008 was submitted ahead
of the 2007, so as Senator Dorgan pointed out, it's a bit of an
anomaly this year.
Senator Murray. Okay. Well, it just seems to me that we
need to keep focusing on all kinds of programs and reducing the
research on that is not going to help us improve our--or help
us get off our dependency of oil. So I'm a little bit concerned
about that.
BIOFUELS
I also wanted to ask you, DOE seems to be putting a lot of
their focus on cellulosic ethanol but there are other biofuels
that contribute to the mix as my farmers tell me, constantly.
What is the Department doing to support really a diversified
approach to reducing our Nation's dependence with fuel such as
biodiesel or biomethane?
Mr. Karsner. Well, of course, we support all biofuels and
of course, the President's approach is to have the broadest
scope available to alternative sources to gasoline. That's the
subject of a hearing tomorrow but the administration endorses
all of those.
Some of them are more mature than others in terms of their
efficiency process and their competitiveness so they don't need
the level of breakthrough that cellulosic ethanol needs. The
other sort of metric that we look at is the quantitative or
volumetric capacity to make an impact of those biofuels and,
although all of these are important and we want to maximize
what each of them can contribute, there is no question that
ethanol, through various forms of biomass, volumetrically will
contribute much, much more than any of those that you named and
so that's why it gets a greater emphasis.
Senator Murray. Are there projects out there that do cross
funding that help both of them----
Mr. Karsner. Well, codes and standards, by way of example--
in fact, I would say we have more emphasis on the codes and
standards for biodiesel so that we can certify them. Since we
have a fairly competitive biodiesel industry that is growing
very rapidly, it's very important to us that engine
manufacturers be able to warrant the use of those in different
ambient conditions so that's a big focus with biodiesel. We've
just certified B-5 in some of the engines. I understand we're
looking at B-20 levels and so codes and standards will be one
of those that is cross funded.
GRID RESEARCH AT PACIFIC NORTHWEST NATIONAL LABORATORY
Senator Murray. Okay, thank you. I appreciate that and
Director Kolevar, I just wanted to mention, I heard Senator
Dorgan talking to you about the grid and modernizing our grid
and moving to better technologies and what we needed to do and
I just wanted to make sure you knew about the Pacific Northwest
National Lab and the work that they're doing out of my State to
help efficiency on the grid. Have you ever visited there?
Mr. Kolevar. I have not, Senator. I intend to this year.
I'm aware they're pulling real time data from Bonneville Power
and visualizing, from a layman's perspective and then in more
detail on some of the work that is going on there. It sounds to
be very promising.
Senator Murray. Yes, the Grid Wise Program is really
starting to look at how we can really focus on some
efficiencies and better transmission. We'd really love to have
you come out and take a look at it. Mr. Chairman, you might
want to, too. I think you're right to mention that we need to
have some efficiencies with that system and there is some work
being done. I think we need to do more but we'd love to have
both of you visit. So, thank you very much.
RETRIEVABLE ENERGY IN SPENT NUCLEAR FUEL
Senator Dorgan. Thank you very much. Just a couple other
queries. Secretary Spurgeon, you talked about the closed fuel
cycle. Can you tell me, just for my own information, how much
energy is retrieved from spent fuel? You talked about
retrieving the energy from spent fuel. What percent of the
energy?
Mr. Spurgeon. Well, if we do a recycle and if we just
recycle one time, in a light water reactor, you would recover
20 percent roughly of the input fuel. Now there are ways,
looking to the future, where you could recover substantially
more than that. But just one recycle and that's where I made
the comparison base when I said as much as the Alaska Pipeline
provides in energy value. It's just based on one recycle, 20
percent saving existing reactors, not including new ones that
might be built in the future.
WEATHERIZATION
Senator Dorgan. Secretary Karsner, the issue of
weatherization. I did not ask you about that. I assumed since I
come from North Dakota that you would have expected me to so I
don't want to disappoint you here. As you know, in the
weatherization account, the proposal is to make a cut in that
account. It was $242 million in fiscal year 2006. In fiscal
year 2008, it will be $144 million, which is the budget
request. Tell me what you think the consequences of that would
be, to cut $100 million from weatherization?
Mr. Karsner. Well, there are lots of consequences. One of
the primary consequences is that we have more funding to
accelerate biofuels for national security and lower greenhouse
gas emissions. That's on the positive side. On the negative
side, it will mean, because that is an additive program for
returns; that is, that there is a correlation between dollars
spent and houses weatherized. It will obviously mean a
diminution in the amount of houses we can achieve in a fiscal
year.
Senator Dorgan. I've been out to watch what they do in the
weatherization program to substantially improve some of these
older homes in order to reduce the amount of heat loss. Is that
program effective? Also, is it a part of our energy efficiency
efforts? Because we're saving energy by insulating homes and so
on, so tell me how you view that program.
Mr. Karsner. I view any efficiency improvements as
effective but with a limited pool of dollars and an enormous
task, as I said, for the larger aggregate goals of lowering
greenhouse gas emissions and enhancing national security, it
has the unfortunate disposition of competing against other
efficiency investments in our applied research and development
portfolio that have enormous returns that are multiplicative
across the population. Although this is a very important
segment of the population and it is a worthy program to focus
on, in the context of competing in our portfolio to achieve
those same efficiency objectives, the returns are very, very
low.
Senator Dorgan. Are these mostly lower income people that
are competing?
Mr. Karsner. For the weatherization dollars?
Senator Dorgan. Right.
Mr. Karsner. It is all low income people.
Senator Dorgan. So the competition, we've put them in here
as the lower income people that own old homes that are leaking
heat and terribly inefficient, trying to struggle through the
winter to pay a heat bill. They're put in competition with all
the other accounts and so they get hit with a $100 million
reduction in funding. Is that something you support?
Mr. Karsner. Well, I don't support the phrasing of it in
that particular way but I do support the cut in the sense that
I have to look at it as a portfolio. I have no other choice but
to look at the precious taxpayer dollars that way. In fact in
reality, this cut is really restoring what the Clinton
administration budgetary year appropriations were in terms of
apportionment of the portfolio. The President, in his first
term push for poverty alleviation, substantially injected new
funding into the weatherization program, I think at a time
before most of the other technologies were reasonably
commercial where they are today and at a time before we felt
this kind of pressure from $3 gas and other pressing
priorities.
So we are sort of putting it back into balance to where it
had historically been, which still makes it one of the largest
programs in the Nation's applied research and development
portfolio for new energy developments. And these are difficult
choices but we feel like turning the housing stock itself
quicker in the aggregate through working on the building
envelope, insulation, better windows across the board is at
least as important ultimately.
Senator Dorgan. Mr. Karsner, we added $25 million in the
Supplemental here in the Senate for weatherization. Do you
support that?
Mr. Karsner. No, I do not.
Senator Dorgan. Do you oppose it?
Mr. Karsner. I do oppose that.
Senator Dorgan. Why?
Mr. Karsner. The first reason is a little bit personal. We
submitted a $160 million budget for fiscal year 2007 and though
we had the authority of the spend plan through Congress'
generous markup of our budget, of my own volition and push, I
sought to meet the Senate written mark of $204 million and
added $40 million to the weatherization program in the spend
plan. Much of that money this late in the year will roll over
into next year so it is well funded to begin with and it is at
the level that the Senate itself had written into the budget,
albeit I understand it was the last Senate. Every new dollar
that we add for that is taking a dollar away from the other
efficiency programming markups that we have and the returns on
those are 20 to 1, according to the National Academy of
Sciences, and I think the returns are too big to forfeit.
Senator Dorgan. Let me--well, first of all, thank you. You
know, while we might agree and disagree about certain
priorities and the importance of certain accounts, I agree with
Senator Domenici's statement earlier. I think all four of you
are significant public servants whose background and
capabilities give you the opportunity to do a good job for this
country and coming to serve in an administration that is not so
long for this town, what 20 or 21 months left? I mean, you've
not signed on for a 6- or 8-year term in most cases.
You've come from various disciplines to assume leadership
in these accounts and I appreciate that. I think all four of
you have a lot to offer this country, even when we might
disagree about priorities. It's my intent that I and the other
members of this subcommittee work with you as we want to learn
from you and want to help you meet the challenges ahead. While
we might disagree on the exact amounts that should be invested
in certain activities, at the end of the day, I think, we all
share a common interest in success in your four areas. All four
of these areas are very, very important as functions in the
Department of Energy and your coming here today to respond to
our questions and to give us a glimpse of what you're doing is
very important.
I understand Senator Domenici has made a career of this
during the Clinton administration, having agency witnesses come
up and defend the President's budget. That's what they're paid
to do. It's what they are required to do and if they didn't do
that, they'd probably go back and find out that their desk was
cleaned out. So it is a little frustrating for us sometimes but
having recognized that, we appreciate working with you and we
appreciate you being here today.
Senator Domenici, do you have anything to add at the
conclusion?
Senator Domenici. One last one. First, Mr. Chairman, I want
to thank you for your last remarks. I have great admiration for
a Senator who speaks as you have just spoken and I don't know
you that well even though we've been here a long time but the
more I learn, the more I like what I hear and I thank you for
that.
I want to say and ask which one of you would be--would
represent global warming, the problems with global warming,
proposed solutions. Which one would have----
Mr. Karsner. I think that's the Department, sir.
Senator Domenici. The Department. So we'll talk to the
Department on that, okay? I think that's okay. I'll talk to the
Department because I want to just make a statement.
You know, we're soon going to be called upon to perhaps
vote on a program, an American program to help contain
CO2, one way or another. There are various ways to
do that, one of which is the simplest one was to put a tax on
carbon.
I think that has lost favor quite a bit. In between there,
there are various ways. I'd just like to make a point that I
have spent a substantial amount of time and continue to spend
more on analyzing the amount of CO2 that China and
India are producing and emitting and the lack of positive
action on the part of either of those countries to diminish the
carbon dioxide and to the contrary, a dramatic increase in
power plants that are fed by dirty coal. That's your area,
Secretary Shope. You know about that. You're not in charge of
the big picture but you know about that. They are unfortunate--
they have a lot of coal but it's dirty coal. At least the Lord
could have made it clean and it wouldn't have had an ambient
problem. They don't even clean up the first stage in the
countries I just spoke of. They burn it without anything on
there to clean up the pollutants as it is burned.
But I'm going to close with this remark. As of now, we
understand that they produce in China--not India, China, about
one reactor that is somewhere between 500 and 750 kilowatts--
megawatts, excuse me, a week, about one a week. Now, you can't
hardly imagine that being an American even though we claim we
are the biggest gobblers of energy and we do nothing like that,
such that if we were asked to spend great amounts of money to
constrain carbon dioxide, the question will be asked of those
who are for it, what is China and India going to do?
And if the answer is nothing, then it would appear to me
that the American people would have a very big, big issue to
raise with the Congress that would do something because all we
would do would be to tie our own hands and legs, do nothing
significant to help the problem of CO2 in the outer
atmosphere because, as a matter of fact, it is global in nature
not American. And I'm not going to support unilateral
containment without some hope--no, without some real evidence
that China and India will join us in research and development
and expenditure of substantial money to contain CO2
in their countries.
I think that's important that those of us who are involved
get our heads together and see what all this means. It may mean
that China might have to think a little sooner rather than
later about what they'll do because I don't know that we'll sit
by and buy their products forever either at the prices that are
reduced because they spend nothing to clean it up while we
spend much. That's a true impediment to us selling any products
worldwide or vice versa. I thank you, Mr. Chairman. I yield.
Senator Dorgan. Senator Domenici, thank you. If in fact it
is a global economy and we all live in the same fishbowl then
global pollution affects all of us as well and the Senator has
expressed himself with respect to a vote on the Kyoto Treaty,
believing that you cannot begin to deal with these issues,
leaving China and India out of the equation. Especially because
it's a global economy, those industries, those manufacturing
plants and others that want to belch pollutants into the air
have no regulatory costs of doing so and can simply move their
plant overseas, fire their American workers and accelerate the
job loss in this country.
Having said all that, I think the testimony today, for
example, with respect to the search for new technologies, the
search for carbon sequestration, the search of this country to
unlock the mysteries from these new technologies is very
important because I assume that we will want very quickly to
share those technologies with everyone around the world. I
would say to you, Senator Domenici, I was persona non grata in
my State for some long while with the coal industry when I
served in the State capitol. I was one of those that led the
fight to demand that, with respect to strip mining of coal,
there would be segregation of topsoil, that companies ensure
the contouring of the land for reclamation and that every new
plant producing electricity had to have the latest available
technology, wet scrubbers for instance.
You can well imagine the way the industry responded. I was
an enemy of the industry. Well, guess what? Twenty years later,
twenty-five years later, they are all glad they did it and all
of us in North Dakota are glad they did it.
We produce a lot of coal. We're the first State in the
country to meet the ambient air standards, even though we had
substantial plants, because we spent the money to put those wet
scrubbers on. We now see contoured land that looks great. It
was land from which coal seams were extracted and topsoil was
segregated and the contour was redone. You drive past there
these days and see the vegetation, you can't tell there was
coal mined from it.
It is always harder at ground zero to begin to push these
issues. You're absolutely right. If we decide to proceed and
China and India do nothing, we will have accomplished very
little and yet, in many ways, just as with stopping the spread
of nuclear weapons, it falls on our country's shoulders. We
must at least, at a minimum, begin a series of no regret steps
as we begin to address all of these issues.
ADDITIONAL COMMITTEE QUESTIONS
So, Senator Domenici, you and I will have a lot of work to
do and I'll enjoy doing it with you because you have a great
deal of experience and have offered a lot to this subcommittee
over many, many years.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted to Hon. Dennis R. Spurgeon
Questions Submitted by Senator Byron L. Dorgan
global nuclear energy partnership
Question. I have heard Secretary Bodman talk about the Global
Nuclear Energy Partnership (GNEP) as being an initiative that will take
a couple of decades. Yet, your testimony refers to a Secretarial
decision in June 2008. Further, your testimony refers to the
development of commercial-scale reprocessing facilities in conjunction
with industry. I understand many in industry feel more research and
development is necessary on GNEP before moving forward on facilities.
So, I am confused by the disconnect between Secretary Bodman's own
observation of GNEP being a couple decade long process and this rush to
a Secretarial decision in June 2008 and development of commercial scale
reprocessing facilities.
First, can you please explain to me what the Secretarial decision
in June 2008 will be about? And second, can you explain why we would be
turning so soon to development of commercial scale facilities?
Answer. The Secretarial decision in 2008 is intended to determine
the GNEP path forward. The Department intends for this decision to
include a decision on whether or not and how to proceed with a nuclear
fuel recycling center and an advanced recycling reactor. This will
require compiling information regarding the requisite technologies,
economics, and environmental impacts. The specific elements supporting
the decision are a credible technology pathway and progress on its
implementation; a business plan; definition of a government-private
partnership that could be formed; completion of NEPA requirements; and
a nonproliferation assessment.
In addition, a path forward on the Advanced Fuel Cycle Facility is
anticipated to be part of the Secretarial decision.
The Department's work with industry at this stage will focus our
research and development in support of future commercial-scale
facilities. Engaging industry at this time could save the United States
nearly a decade in time and a substantial amount of money, while still
engaging and reinvigorating the nuclear community with new facilities
and continued long-term R&D. Development of a credible U.S. program for
construction of commercial fuel cycle facilities is a critical element
of a strategy to convince other States considering nuclear energy
programs that they can rely on the United States for their fuel cycle
needs. Making the United States an influential participant in fuel
cycle technology is vital to fulfilling the GNEP vision.
Question. Under GNEP, I understand it will take one new fast
reactor to burn the reprocessed fuel from approximately every three to
four light water reactors. If this is correct and today there are 103
existing light water reactors, we will need 25 to 34 new fast reactors
to burn just the reprocessed fuel from existing light water reactors. I
understand the nuclear power industry is not interested in building
fast reactors. For GNEP to work properly, will the Federal Government
have to build 30+ fast reactors or will industry be mandated to build
them?
Answer. Deployment of advanced fast reactors is currently
envisioned as a commercial activity, with revenues being generated from
the production of electricity while the transuranic material is
simultaneously consumed. One goal for GNEP is to establish a business
case that supports the commercial deployment of advanced recycling
reactors, which are fast reactors. The number of advanced recycling
reactors required to use the fuel recovered from LWR spent nuclear fuel
depends on a number of factors. For example, a key factor is the rate
at which an advanced recycling reactor would destroy the transuranic
elements, recovered from the spent nuclear fuel, while generating
electricity. Other factors include the initial core loading of an
advance recycling reactor and the ability to recycle the spent fuel
from the advanced recycling reactors.
Question. A primary goal of GNEP is to develop a reprocessing
technology that is ``proliferation resistant.'' Some claim DOE's
proposed separations technologies all provide less than 1 percent of
the International Atomic Energy Agency's ``self-protection'' standard
for plutonium. Given these considerations, how can DOE's GNEP proposal
meet the nonproliferation goal?
Answer. One goal of GNEP is to develop a reprocessing technology
that is ``more'' proliferation resistant than those currently used
throughout the world which separate pure plutonium. The separations
technologies being considered by the Department would not separate pure
plutonium and would, therefore, be more proliferation resistant than
those currently in use. The Department's fiscal year 2008 budget
request supports over $88 million for further research and development
on advanced reprocessing technologies.
Question. Another goal of GNEP is to confine reprocessing and
uranium enrichment to ``countries that already have substantial, well-
established fuel cycles.'' Does DOE's fiscal year 2008 budget request
include funds for cooperation with the Korea Atomic Energy Research
Institute (KAERI) for pyroprocessing research and development?
Answer. Bilateral collaboration with South Korea on nuclear energy
R&D occurs under the International Nuclear Energy Research Initiative
(I-NERI). All I-NERI joint projects employ cost sharing on an
approximately equal basis by the participating countries. Each country
is responsible for funding its side of joint projects. In the case of
the United States, current-year approved program budgets provide the
funding for our contributions to the joint projects. As part of I-NERI
collaborations, Korea, as represented by KAERI, is actively engaged in
relevant work in fiscal year 2007 and supported in the fiscal year 2008
budget request.
It is important to note, however, that KAERI does not process spent
fuel or special nuclear material as part of this cooperation. All
pyroprocessing-related research and development activities involving
use of spent fuel or special nuclear material under these I-NERI
projects or work-for-others programs is done at DOE National
Laboratories. Annual meetings between the U.S. Government, National
Laboratory and KAERI officials have been instituted since 2006 to
monitor cooperative activities in the area of pyroprocessing and
advanced fuel cycle technologies.
Question. Does DOE intend to offer the Republic of Korea, a country
that the United States to date has not permitted to reprocess due to
proliferation concerns, a role in GNEP as a ``supplier'' country?
Answer. The Republic of Korea has the sixth largest nuclear power
program in the world. The Government of the Republic of Korea has made
the decision not to possess reprocessing or enrichment facilities and
is limiting the scope of its research and development on pyroprocessing
technologies. Nevertheless, the Republic of Korea is actively engaged
in the development of advanced reactor and fuel cycle technology,
nuclear safety, radioactive waste management, and other related work
programs on the national, bilateral and multilateral levels. We gain a
great deal by working with these experts. The Republic of Korea is
engaged in research and development that supports GNEP involving small-
reactors, advanced burner reactors, computer modeling, safeguards and
basic science, but not separations of spent fuel.
At this point, DOE has not specifically invited countries to
participate in GNEP as ``supplier countries.'' It is generally
anticipated that the expansion of civilian nuclear power could be
provided by countries already possessing the infrastructure to
manufacture nuclear power plants as well as provide fuel supply
services.
Question. Which countries has DOE invited to participate in GNEP as
``supplier'' countries?
Answer. At this point, DOE has not specifically invited countries
to participate in GNEP as ``supplier countries.'' It is generally
anticipated that the expansion of civilian nuclear power could be
provided by countries already possessing the infrastructure to
manufacture nuclear power plants as well as provide fuel supply
services.
Question. Which countries has DOE invited to be ``users''?
Answer. DOE believes it is advantageous to seek partnerships for
the expansion of civilian nuclear power worldwide by providing support
on infrastructure development for countries newly considering nuclear
power (e.g., legal, regulatory, safety, knowledge base, experience,
etc.). DOE does not plan to invite countries as ``users'' or
``suppliers,'' but rather seeks partners. The GNEP partnership is open
to all countries agreeing to the statement of principles. The benefit
of partnership is having access to products and services on the front
and back end of the fuel cycle while relieving countries of the
liability, infrastructure and expense associated with such facilities.
Ultimately, there will be technology partners, materials partners
(e.g., uranium) and infrastructure partners. In December 2006, the
United States co-hosted, along with several other IAEA Member States
(Canada, China, France, India, Japan, Russia, and South Korea), a
workshop in Vienna, Austria, on ``Issues for the Introduction of
Nuclear Power.'' Twenty-six countries currently without nuclear power--
yet considering it as a potential addition to the energy portfolio--
attended this workshop.
nuclear energy's role
Question. The Energy Information Administration's Annual Energy
Outlook 2007 reference case indicates that nuclear power provided 19
percent of the Nation's electricity in 2005 and is expected to provide
15 percent of the Nation's electricity in 2030.
How do you reconcile the fact that, even as the U.S. Government is
providing greater Federal assistance to the nuclear power industry
through various research programs and deployment incentives than ever
before, that portion of electricity generated from nuclear power
facilities is expected to decrease as a percentage of our overall
electricity production in the next 25 years?
Answer. As you know, there has been no new construction of nuclear
plants in the United States in 30 years. However, nuclear power still
supplies a significant percentage of our electrical needs, because
plant efficiencies have increased electricity production equivalent of
27 1000 megawatt plants without new construction. As such, there is
little additional efficiency to be gained with the existing fleet of
reactors.
According to the Energy Information Administration's (EIA) Annual
Energy Outlook 2007, America's demand for electric power is projected
to increase at an average annual rate of 1.5 percent between now and
2030. In the Annual Energy Outlook 2007, EIA assumes that the
equivalent of 12 new nuclear plants (1,000 megawatts each) would be
built by 2030. The capacity lost from the few currently operating
plants that will be retired by 2030 is assumed to be offset by power
uprates at existing plants and the restart of TVA's Browns Ferry Unit
One. Therefore EIA estimates total nuclear capacity to increase from
100 GW today to 112 GW in 2030. Based on EIA's assumptions, all the
nuclear plants operating in 2030 would produce only about 15 percent of
the generation mix in the United States.
The Department is aggressively pursuing actions through our Nuclear
Power 2010 program to ensure the growth of electricity produced by
nuclear power. To date, 15 power companies have notified the Nuclear
Regulatory Commission of their intentions to submit 19 applications for
combined Construction and Operating Licenses for 33 new reactor plants.
Therefore, we expect that much more than the 12 gigawatts of new
nuclear capacity projected by EIA will be realized before 2030. New
nuclear plants would only need to be brought on line at a rate of three
or four per year, a rate lower than that already proven achievable in
some years in the 1970s, in order for nuclear power to provide 20
percent of the mix in 2030.
______
Questions Submitted to Hon. Dennis R. Spurgeon
Questions Submitted by Senator Pete V. Domenici
gnep advanced fuel cycle facility--luxury or necessity?
Question. Mr. Spurgeon, the Department has requested funding for
the Advanced Fuel Cycle Facility. This new research facility is
intended to perform all of the critical advanced reactor fuel
development. However, it seems to me that this brand new facility
actually duplicates the numerous older facilities located across the
DOE complex that are still in use today.
This funding would go a long way in upgrading several existing
facilities and would have the added benefit of supporting a diverse
scientific mission such as medical isotopes, environmental
characterization, and support for the space mission.
This new facility seems to be more of a luxury, rather than a
necessity.
Can you please explain your rationale for deciding to build a
single brand new facility rather than make the necessary investments in
our existing laboratory infrastructure?
Answer. The Advanced Fuel Cycle Facility (AFCF) project is in the
early stages of the conceptual design; no decision has been made to
construct the facility and DOE is evaluating reasonable alternatives.
The Department is aware that facilities exist that, with refurbishment
or upgrades, could perform some, but not all, of the functions
currently planned for the AFCF. A full examination of the trade-offs
between constructing a new facility and upgrading existing ones is
required in accordance with the Department orders for a major system
acquisition.
The AFCF would allow the Department to perform R&D, technology
development, and demonstrate the integrated operations and processes
involved in the recycling of spent nuclear fuel. These operations would
include receiving the spent nuclear fuel, separating its various
constituents, fabricating new fuel, containing transuranic elements,
for an advanced recycling reactor, manufacturing lead test assemblies
that are necessary for fuel qualification, and waste handling. This
facility would have a continuous throughput rate from start to finish,
from reprocessing both spent thermal and fast reactor fuel to
fabricating new fuel types yet to be fully developed. Currently, no
single facility with that capability exists.
np 2010 program
Question. Mr. Spurgeon, your budget provides $113 million for the
Nuclear Power 2010 program. This is significantly below the $183
million needed to fulfill the 50/50 cost share agreement to prepare the
detailed engineering designs needed to resolve the technical,
engineering and regulatory challenges needed to license a new reactor.
What is the Department's justification for failing to meet its cost
share commitment and how will this impact the cost and schedule of this
project?
Answer. The Department of Energy (DOE) is meeting its cost-share
funding commitment for these important nuclear energy projects. DOE
remains committed to spend $586.5 million as Federal cost share as
agreed to with industry. DOE's cost-share primarily supports the
demonstration of the ``untested'' regulatory process for the combined
Construction and Operating Licenses for two new nuclear plants. It also
supports the completion of the first-of-a-kind engineering for two
reactor designs. The designs will be completed in sufficient detail to
give power companies the cost and schedule information they need to
make plant orders. If the fiscal year 2008 budget request of $114
million is appropriated by Congress, DOE will have provided industry
with over $300 million of the $586.5 million total of Federal cost
share by the end of fiscal year 2008.
In November 2006, the industry proposed DOE increase its cost-share
for these two projects by $161 million to a new total DOE cost-share of
$727 million. With this increase, industry proposes activities worth
$183 million in fiscal year 2008. DOE declined this industry request
because its cost and scope went beyond DOE's original commitments.
Question. Based on the budget shortfall, are you able to predict
which design, engineering, or regulatory activities will not be funded.
Do you believe this will impact one reactor design over the other?
Answer. DOE does not believe one particular reactor design would
have an advantage over the other based on DOE's fiscal year 2008 budget
request.
The fiscal year 2008 budget request of $114 million for the Nuclear
Power 2010 program is sufficient for funding necessary activities in
fiscal year 2008. The request is consistent with the agreed-to cost-
share funding commitment.
np 2010 program reforms
Question. Last year, I raised a number of tough questions about the
cost controls of the NP 2010 program and whether or not the NuStart
team would be able to deliver on the budget commitments they had agreed
to. This criticism seemed to force the reactor vendors to sharpen their
pencils and improve the work product.
Do you believe the DOE's private partners have made the necessary
improvements to get this program back on track?
Answer. Given that these are uncharted waters for industry and DOE,
substantial improvements have occurred on the NuStart and Dominion
projects and the Department recognizes some risks remain. These known
risk areas and the contingency plans to address them are under constant
NuStart and Dominion management review.
One of the more substantial improvements has been the integration
of the reactor vendor engineering and power company combined
Construction and Operating License (COL) application development
efforts. These integration efforts are evident through formal review
teams such as the Economic Simplified Boiling Water Reactor and the AP
1000 Engineering Review Teams and the Design Control Document/
Construction and Operating License Integration Team. DOE believes these
industry efforts significantly improve the likelihood two COL
applications will be submitted to the Nuclear Regulatory Commission in
the first quarter of fiscal year 2008.
Question. Are you confident that this program will be able to
deliver two reactor designs that the NRC will be able to license?
Answer. The Department of Energy (DOE) is highly confident the
licensing demonstration projects with Dominion and NuStart will yield
approved Nuclear Regulatory Commission (NRC) design certifications and
combined Construction and Operating Licenses (COL) for the two advanced
light water reactor designs: the Westinghouse Advanced Passive (AP)
1000 and the GE Economic Simplified Boiling Water Reactor (ESBWR). The
NRC already certified the reactor design for the AP 1000 in December
2005. NRC has projected the ESBWR design certification could occur in
fiscal year 2010. DOE expects COL applications to be submitted to NRC
in the first quarter of fiscal year 2008 and NRC issuance of approved
licenses in fiscal year 2010.
foreign interest in nuclear energy
Question. Mr. Spurgeon, it seems everyday that I pick up a
newspaper, another country or company is announcing that they are going
forward with a new nuclear plant, or expanding their existing fleet to
meet their growing energy needs. Countries such as India, China,
Pakistan, Russia, Romania, Finland, Argentina and the United States all
have plants under construction. Worldwide there are another 200 new
plants on the drawing boards.
The countries that have expressed an interest in a nuclear plant
also need to make plans for uranium fuel supplies and a solution for
their nuclear waste. Not all of these questions have been answered and
this has forced the IAEA to think about how the world can safely expand
civilian nuclear power without increasing the proliferation threat.
It occurs to me that the rest of the world is moving ahead with
civilian nuclear power regardless of what the United States does.
What do you think about the worldwide nuclear effort and how will
GNEP play a role in this?
Answer. Worldwide, nations are becoming more concerned with meeting
energy demands, providing energy security and engaging in energy
practices that are acceptable for sustaining the environment. DOE sees
nuclear power as a safe, clean, and efficient means to meet these
needs. The expansion of nuclear power can satisfy these needs and must
be expanded in a safe and proliferation resistant manner. For that
reason, DOE, through the Global Nuclear Energy Partnership (GNEP),
plans to assist countries newly interested in nuclear power to work
toward developing sound infrastructure. In December, 2006, the U.S. co-
hosted a workshop in Vienna, Austria, on ``Issues for the Introduction
of Nuclear Power.'' Twenty-six countries currently without nuclear
power--yet considering it as a potential addition to the energy
portfolio--attended this workshop.
While a key goal of GNEP is expansion of nuclear energy, GNEP has
other roles. Another key objective of GNEP is to reduce the
proliferation risks that might otherwise be associated with the global
expansion of nuclear energy. GNEP supports the goals and objectives
outlined in the Energy Policy Act of 2005 which calls for diversifying
the U.S. energy supply with sources such as nuclear power which is an
important emissions-free component of the U.S. energy portfolio. GNEP
provides a vision for future energy needs worldwide in a way that
reduces waste burdens and proliferation risks. GNEP aims to reinforce
nonproliferation policies by offering reliable nuclear fuel services to
discourage the spread of enrichment and reprocessing technologies. GNEP
also aims to draw down and eventually to eliminate excess stocks of
separated civil plutonium that have accumulated. In addition, GNEP
facilities aim to reduce proliferation and security risks by using
materials that are less easily used in nuclear weapons than separated
plutonium.
gnep
Question. Mr. Spurgeon, the budget request for the GNEP program is
extremely complicated. The budget seems to fund three separate
activities including fundamental R&D, technology design and then a
third category known as ``technology development.'' This third
category, which consumes one-third of the GNEP budget, seems to
duplicate the other activities.
Can you please clarify this and provide me with a detailed written
accounting of the spending plan for the GNEP Technology Development
Account.
Answer. The GNEP Technology Development activity includes
activities within the Advanced Fuel Cycle Initiative that provide
support to each of the three Global Nuclear Energy Partnership (GNEP)
projects: the nuclear fuel recycling center, advanced recycling
reactor, and an advanced fuel cycle research facility. Whereas the work
associated with GNEP R&D activities such as Separations and Advanced
Fuels Development involves basic research and bench-scale or
laboratory-scale experiments of a variety of potential technologies,
the Technology Development activity funding will be used to further
develop technology that has been shown to be feasible at the laboratory
or engineering scale, as well as to optimize design parameters and size
equipment. This account also supports the small reactor and
international collaboration efforts.
As the Department continues its research and development, industry
engagement, and other activities, the specific allocations for fiscal
year 2008 for GNEP Technology Development activity could change.
However, for fiscal year 2008, the Department currently anticipates
allocating approximately $50 million for the nuclear fuel recycling
center, $34 million for an advanced recycling reactor, $38 million for
an advanced fuel cycle research facility, $6 million for international
collaborations and agreements, and $5 million for grid-appropriate
reactors in developing countries.
gnep--coordinating research with other ne programs
Question. The committee would like to understand the Department's
view on the plans to tie together the various elements that make up its
nuclear programs such as NGNP and GNEP. First, there is the potential
to cooperate on fuel technologies that would benefit the high
temperature gas reactor being considered for NGNP as well as Advanced
Reactors being developed under the GEN IV program.
Will the Department conduct the appropriate analysis high
temperature gas cooled reactor's capability to burn nuclear waste and
the potential for synergy with the NGNP and GNEP?
Answer. One of the key objectives of the Global Nuclear Energy
Partnership (GNEP) is to make nuclear power an attractive alternative
to fossil fuels for developing countries around the world. Because the
power demand requirements are limited for these countries, they will
likely need smaller reactors. A Very High Temperature Reactor (VHTR),
such as that being developed in the Next Generation Nuclear Plant
(NGNP) program, is a small modular reactor design that could
potentially be well suited in meeting the objectives of GNEP for global
deployment of nuclear power to developing countries. While the
Department (DOE) has conducted studies regarding the use of VHTRs for
actinide destruction, DOE chose to utilize fast reactors initially for
this component (actinide destruction) of the GNEP mission, while DOE
continues research and development on VHTR and other technologies. The
decision to use fast reactors is detailed in DOE's December 2006
report, The U.S. Generation IV Fast Reactor Strategy. The Sodium-Cooled
Fast Reactor (SFR) was chosen as the most promising fast reactor
concept for meeting DOE's strategic goals. The United States has
extensive experience with SFRs, and an SFR deployed as the Advanced
Burner Reactor under GNEP could be operational in the 2020-2025
timeframe.
DOE is performing research and development on the NGNP consistent
with the timeline established in the Energy Policy Act of 2005.
Additional research and development on the use of high-temperature gas-
cooled reactor for actinide burning could be performed after the
underlying concepts supporting VHTR operation with uranium have been
thoroughly validated.
cooperative nuclear fuel research with russia
Question. I understand that NNSA, in conjunction with Rosatom, is
developing the technology such as fuel and advanced power conversion
systems for high temperature gas cooled reactors in a cost-shared
program whose purpose it is to ultimately burn surplus Russian weapons
plutonium.
How much has been committed to this program and under what program?
What is the nature of the research and how will this benefit the GNEP
effort? Is this research being coordinated with NE?
Answer. Between fiscal year 1999 and fiscal year 2006, the
Department provided $17.1 million to Russian Institutes to develop the
Gas Turbine-Modular Helium Reactor (GT-MHR) for plutonium disposition
in Russia. During that timeframe, Rosatom provided an equivalent $17.1
million of matching Russian funds as well. This program is managed
through the National Nuclear Security Administration (NNSA) and has
been in place for over 8 years. The current scope of this cooperation
is to conduct research and development in high risk technology areas
such as the development of plutonium particle fuel and power conversion
unit technologies. The advanced recycling reactor component of the GNEP
program may benefit from this effort as it continues to develop
advanced fuel forms and power conversion technologies. The Office of
Nuclear Energy receives and considers reports summarizing the Russian
GT-MHR research program.
Question. Based on the Russian's level of indecision on MOX; why
does the Department believe this would be a prudent use of resources at
this time. Is this being cost shared?
Answer. The Russian view of weapon grade plutonium is that it is a
valuable national resource and that disposition in Russian Light Water
Reactors (LWRs), such as the VVER, is not the most efficient use of
this resource. Originally, both the United States and Russia had agreed
to MOX disposition in LWRs. However, over time, the Russians expressed
misgivings with LWR disposition, although they have never specifically
excluded use of LWRs for disposition. The Russians have since proposed
consideration of two additional approaches, which they consider to be a
more efficient use of their plutonium. These two additional approaches
are disposition in the BN-800 fast reactor, which is under construction
(the plutonium disposition program has always considered the
disposition of a limited quantity of plutonium in the BN-600 fast
reactor); and development of a High Temperature Gas Cooled Reactor for
possible use for plutonium disposition, should this reactor become
available in time.
The current Russian proposal includes cost sharing in every
scenario under discussion, including LWRs, although specific details
have yet to be negotiated.
nuclear fuel cycle
Question. Mr. Spurgeon, much of the focus of the Department since
the passage of the Energy Policy Act 2005 toward nuclear power has been
on the development of new nuclear reactors. As you know, there are
other valued components of the domestic nuclear fuel cycle. Currently,
our country has only one functioning aging enrichment facility and
another soon to come on-line in the next few years. These facilities
will provide the fuel of the nuclear renaissance in America and build
upon the President's energy security programs.
Can you tell me what the Office of Nuclear Energy is doing to
encourage development in the front end of the U.S. nuclear fuel cycle,
in the enrichment areas of the fuel cycle?
Answer. With 104 nuclear power plants currently licensed in the
United States and the announcements by power companies for license
applications for over 30 new plants, the Department of Energy (DOE)
believes that U.S. energy security would be significantly enhanced by
private sector investment in new domestic uranium enrichment capacity.
Currently, the aging and energy-intensive gaseous diffusion plant at
Paducah, Kentucky is the Nation's only operating enrichment plant.
Three private companies, General Electric (GE), Louisiana Energy
Services (LES), and USEC Inc. (USEC) are at various stages of deploying
new U.S. enrichment plants featuring advanced technology. LES is the
furthest along with construction having started on its National
Enrichment Facility in New Mexico that will utilize gas centrifuge
technology commercially deployed by Urenco in Europe. USEC and GE are
working to demonstrate commercial viability of the American Centrifuge
and SILEX projects, respectively.
With respect to the Department working with private enrichers, DOE
and USEC signed an agreement in June 2002, whereby USEC Inc. made a
commitment to deploy an enhanced version of DOE's previously developed
gas centrifuge technology at the Portsmouth Gaseous Diffusion Plant
site. USEC, in order to demonstrate its American Centrifuge, is funding
a Cooperative Research and Development Agreement with the DOE's Oak
Ridge National Laboratory. In December 2006, DOE and USEC signed a
long-term lease agreement for USEC to build its commercial plant at DOE
facilities at Portsmouth, Ohio. At the same time, DOE granted USEC a
patent license for DOE's gas centrifuge technology that requires USEC
to pay royalties to the U.S. Government on annual sales of enriched
uranium from centrifuge plant production. While LES and GE are pursuing
other technical approaches, DOE encourages all three companies in their
efforts to deploy reliable and competitive advanced enrichment
technology.
Question. Does the Department need any new authorities in this
regard?
Answer. Both LES and USEC are seeking to use DOE's uranium
inventories to facilitate the startup of their new enrichment
facilities. At this time, DOE does not need additional authorization to
sell or transfer uranium to a private company.
______
Questions Submitted to Hon. Alexander Karsner
Questions Submitted by Senator Byron L. Dorgan
balancing renewable and efficiency funding
Question. DOE has strongly backed many of the programs in your
office and the President highlighted initiatives to be pursed by the
Office of Energy Efficiency and Renewable Energy in his State of the
Union address. This includes work on hydrogen technology, biomass and
biorefinery R&D, solar energy, and vehicle technologies. These are all
important.
However, it seems that there is much greater emphasis on targeted
renewable energy programs than other programs within your office such
as energy efficiency programs, the Weatherization Assistance Program,
and the State Energy Programs. In your opinion, do you have the right
balance between the renewable side of your office and the energy
efficiency side of your office? Why are these energy efficiency
programs not seeing the same funding increases as the renewable energy
programs are?
Answer. Yes, the Office of Energy Efficiency and Renewable Energy
maintains a balanced portfolio that supports achievement of programs'
goals and ensures optimal use of resources.
The fiscal year 2008 budget request includes increases for many of
our energy efficiency programs. The Building Technologies Program
budget request is $9.1 million greater than the fiscal year 2007
request, the Vehicle Technologies Program budget request is $10.1
million greater than the fiscal year 2007 request and the Industrial
Technologies Program is $435,000 greater than the fiscal year 2007
request.
Many of the Department's efficiency programs have very high returns
at low cost, such as FEMP, appliance standards, energy efficiency
building codes, ``Save Energy Now'', and Energy Star rating system, to
name a few.
balancing research with deployment funding
Question. I recognize that money at DOE is being devoted to R&D
but, voluntary deployment and market transformation programs also are
needed to move new technologies into the marketplace, and standards and
codes are needed to set a minimum threshold for using cost-effective
technologies. By some accounts, just over 50 percent of your $1.24
billion in your fiscal year 2008 budget request is for research and
development activities. Is this an appropriate amount? What portion of
funding is being applied to renewable energy R&D and what portion to
energy efficiency R&D? What is the Department doing, beyond the basic
R&D, to transition new technologies into the marketplace on the
efficiency side?
Answer. The Office of Energy Efficiency and Renewable Energy (EERE)
maintains a balanced portfolio of programs to advance renewable power
generation, diversify transportation fuels, and promote energy
efficiency. In our fiscal year 2008 request, almost 52 percent is R&D
with the balance invested in regulation, commercialization and grant
programs. This balance is appropriate because many of the Department's
efficiency programs are lower cost programs, such as FEMP, appliance
standards, energy efficiency building codes, ``Save Energy Now'', and
Energy Star rating system, to name a few.
The Office of Energy Efficiency and Renewable Energy (EERE)
programs related to energy efficiency comprise approximately 46 percent
of the total EERE proposed fiscal year 2008 budget (including program
direction and support funds).
The Department's approach to promoting new technologies couples
technology push with market demand pull, and works to address barriers
to the market adoption of advanced technologies through various program
initiatives. For example, the Department plans to lead by example with
the Executive Order 13423 and become an early adopter of energy
efficient and renewable energy technologies. By identifying markets
where the life-cycle costs of advanced energy technologies currently
form a compelling economic argument, the Federal Government will create
demand pull which will increase the economies of scale and drive the
technologies down the cost curve. The Department is also looking to
stimulate the commercialization of advanced technologies by bridging
the gap between R&D and the market place. To this end, the Department
has designated a Director of Commercialization and Deployment, located
within the Energy Efficiency and Renewable Energy Program, to oversee
and guide our deployment-related efforts. However, ultimately
commercialization decisions are up to industry.
weatherization assistance program
Question. The Weatherization Assistance Program funding has been
cut from $242.5 million in fiscal year 2006 to $204.5 million in the
fiscal year spending plan, and the fiscal year 2008 request is for $144
million. That is a 41 percent cut from fiscal year 2006. Why is the cut
so significant? Is the Department still interested in moving the
Weatherization Assistance Program to another Federal agency?
Answer. The 2007 operating plan optimizes resources and provides
the appropriate amount of resources to support the achievement of goals
and priorities. We have chosen to prioritize investments in energy
efficiency and renewable energy R&D that have multiplicative returns
such as improvements to appliances and the building envelope that
affect the whole American population rather than additive returns not
associated with technological R&D that target a single segment of the
population. For example, the National Academy of Sciences studied the
benefits of the energy efficiency portfolio and found that the return
on the research and development (R&D) investment was roughly 20 to 1.
In contrast, the Weatherization Assistance Program has a return on
investment of 1.5 to 1.
The Department of Energy has no current proposal to move the
Weatherization Assistance Program to another Federal agency.
appliance standards
Question. As you know, DOE has been plagued for years by long
delays in issuing appliance efficiency standards. So far, you seem to
be meeting the aggressive schedule you set last year for getting the
required standards out, and I am pleased that you asked for additional
funds. However, a recent GAO report said additional changes are needed
in the program, and I am concerned that recent proposed standards have
been weak and are not using the tremendous potential of this program to
address our energy needs.
The GAO report said the program faces a 600 percent increase in
workload with a 20 percent resource increase in the fiscal year 2007
budget. Have you analyzed the staffing and funding requirements to
carry through the standards plan, and can you share that with us?
Answer. Yes, the Department has conducted a thorough assessment of
resource needs for the efficiency standards program. On January 31,
2006, the Department submitted an aggressive plan to Congress,
addressing both the history and the future plans for the Appliance
Standards Program. That plan does in fact commit to a rulemaking
schedule that is six times the historical rulemaking rate for this
program. The actions detailed in that plan are expected to dramatically
increase the efficiency of the process and the output rate. In addition
in our fiscal year 2007 operating plan, we have directed resources
necessary to improve the program. Early improvements in the program are
evidenced by the timely issuance of final test procedures for various
products and final standards for commercial products, as set out in the
plan DOE provided to Congress. . Changes in our process include
implementing product bundling within a single rulemaking and organizing
staff into seven technology teams.
Since committing to this schedule for the standards program, the
Department has met 100 percent of its scheduled deadlines. We have
completed eight rulemakings since EPACT 2005, including test procedure
rulemakings and codification of prescribed standards, and have made
significant progress on others that were underway prior to EPACT 2005.
In 2006, we initiated standards rulemaking for 12 additional products
and remain on schedule for all future deadlines.
Question. Some of the largest possible savings, for example from
standards on furnace fans and refrigerators, are not included in the
plan, and thus will not be considered for at least 5 years. Can you
tell us how much additional resources you would need to begin work on
the most important standards now?
Answer. You correctly note that the plan did not include provisions
for new refrigerator and furnace fan efficiency standards. Current
statutory requirements for refrigerator standards have been met and
refrigerators of today consume approximately 70 percent less energy
than they did in the early 1970s. The Energy Policy Act of 2005 gave
DOE the authority to set standards for furnace fans but did not specify
a statutory deadline. The plan provided to Congress is focused on
implementing all statutorily required rulemakings, which are numerous.
We continue to evaluate our published schedule for opportunities to
accelerate and expand to additional products, such as furnace fans,
while staying on schedule.
Question. DOE has rejected some recent suggested standards because
they were not deemed consistent with current law. Do you need any
additional legal authority to issue standards that make the most sense
for consumers?
Answer. In February, Secretary Bodman sent legislation to Congress
requesting authorization to streamline the standards process and bring
more efficient products to market sooner. This fast-track legislative
proposal would allow the Department to move directly to a Final Rule
for certain products when a clear consensus for a standard exists among
manufacturers, efficiency advocates, and other stakeholders. By using
this process, we would be able to promulgate an energy efficiency
standard directly when all relevant interests jointly have negotiated
and submitted an agreed proposed standard that meets all statutory
criteria. In some cases, directly issuing a final rule would shorten
the time to a completed standard by nearly a third and shave months off
the rulemaking process. To be clear, if the Department determines that
a consensus does not exist, this proposal would not preclude
rulemaking; it would simply require the Department to use the
traditional three-stage process.
Other pending legislative proposals would fix various problems with
the existing statute, provide DOE with needed flexibility in some
areas, establish statutory efficiency standards for several products,
and mandate DOE to develop standards for other products. We are hopeful
that constructive legislation in this area will be enacted before the
end of this year.
building codes
Question. A small DOE program to assist States in setting and
achieving compliance with their building energy codes leverages a few
million dollars to improve the efficiency of every new building in much
of the country. It has been rated the most cost-effective of all DOE
programs assisting States. Yet the proposed fiscal year 2008 budget
request would cut it.
Several studies have shown we are wasting huge amounts of energy
because of poor compliance with codes. EPACT 2005 authorized a program
to help States improve compliance. With so much building occurring
around the country, wouldn't this be a good time to add a little
funding to help make sure these buildings are up to code?
Answer. Yes, we are currently restarting and reinvigorating the
codes program under the fiscal year 2007 Continuing Resolution which
provided approximately $2 million to the State building energy codes
activities. The fiscal year 2008 request is $3.8 million. The
Department has effectively provided technical assistance and training
through the Building Energy Code Program website,
(www.energycodes.gov), technical support, web-based training, stand-up
training, webcasts, and Setting the Standard newsletter. Efficient use
of funds allows the Department to continue to provide assistance to
improve compliance to national, regional, and State building code
officials and stakeholders. For example, there are over 3 million hits
a month on the Department's www.energycodes.gov website and some 6,000
residential code compliance tools are downloaded monthly by designers,
builders and code officials. The Department trains approximately 2,000
code officials, designers, and builders to implement these codes and
updates and improves the core materials and code compliance software to
reflect recent changes in the model energy codes and emerging energy
efficiency technologies.
federal energy management program
Question. I understand that you are big supporter of improving
energy efficiency in Federal facilities. I am concerned about the
ability of your office to sufficiently train, educate, and support
other agencies of the Federal Government related to the Federal Energy
Management Program (FEMP). In January, President Bush signed an
Executive Order with new and updated energy savings targets and other
requirements. Yet the proposed budget would cut the Federal Energy
Management Program, which leads the Government-wide effort to save
energy, by another 12 percent.
What is DOE's role in implementing the new Executive Order? What
funding is provided in the budget for this purpose?
Wouldn't additional funding for FEMP save the Federal Government
more money than it would cost by reducing energy waste?
Answer. The Department's role is to provide specific and
authoritative guidance to Federal agencies on the provisions of the
Executive Order and to support agency efforts to meet the goals through
assistance with third party financing and design assistance. Virtually
all of FEMP's fiscal year 2008 budget request of $16.8 million will be
used for the implementation of the Executive Order and associated
statutory requirements in some way.
The private sector will be the most important funding source for
saving energy at Federal agencies. FEMP's third party financing
activities, in conjunction with the private sector, can potentially
fund projects needed to meet the Executive Order goals.
public education
Question. Public education is the quickest way to reduce energy use
and address current energy prices and supply-demand imbalance. Yet
there is almost no money for public education on energy efficiency in
the budget, despite a $90 million authorization in EPACT 2005.
How much funding would be available for proactive energy-efficiency
public education programs under this budget? Where is that funding in
the budget?
What is your plan for using those funds, including plans for
partnering or contracting with other organizations?
Answer. Within our fiscal year 2008 budget request, we include $4.9
million in funding to support public information activities within our
Program Support budget line and within each program's budget.
The funding supports a range of activities and programs including
websites, Energy Saver fact sheets, development of publications, the
EnergyStar program, and the Energy Efficiency and Renewable Energy
Information Center. In the past we have partnered with the
Environmental Protection Agency (EPA), the Alliance to Save Energy,
retailers and utilities to promote energy efficiency through public
awareness campaigns such as ``Powerful Savings,'' ``Easy Ways to Save
Energy'' and the ``Power Is In Your Hands.'' We have also collaborated
with EPA and retailers to promote EnergyStar qualified products through
the EnergyStar program. The 2008 budget supports our partnerships with
business and non-governmental organizations to help leverage funding to
promote education on energy efficient technologies and products as well
as alternative sources of energy and fuel.
oil savings
Question. In the State of the Union address, President Bush called
for reducing our gasoline use by 20 percent in 10 years. This budget
increases some budget areas important to that goal, such as DOE's
Biomass program, but decreases others, including DOE's Vehicle
Technologies program.
If we are serious about addressing our ``addiction'' to oil, don't
you think we need to invest more in vehicle efficiency as well as in
new fuels, and in improving trucks and buses as well as cars?
Answer. The Department's balanced portfolio of investments
addressing both efficiency improvements and alternative energy sources
outlined in the 2008 budget optimizes the use of resources and supports
the achievement of stated goals. The 2008 Budget for the Vehicle
Technologies Program is approximately $10 million above the 2007
request. Most of the increase is to support the development of plug-in
hybrid technologies, which show great promise of increasing light duty
vehicle fuel economy.
Question. The president's goal assumes a 4 percent annual fuel
economy improvement in new cars and light trucks, but the light truck
fuel economy standards issued so far only increase by 2 percent a year.
What will change to get a 4 percent increase in the future? Do we need
more research to support this goal?
Answer. The President's goal to reduce gasoline consumption is
ambitious and would require the use of more advanced fuel economy
technologies in the new vehicle fleet. The Department believes that
accelerated consumer adoption of hybrid and plug-in hybrid electric
vehicles and advance combustion engines offers the potential to
significantly reduce oil consumption in the near-term. However, any
requirements to improve new car and light truck fuel economy would also
have to be technologically feasible, economically practicable, and
ensure that vehicle safety is not compromised.
The Department of Energy's role in this effort is to accelerate
advanced technology vehicles including through significant new
investments in advanced batteries for hybrid and plug-in hybrid
electric vehicle applications. Also, the Department is continuing
research and development of advanced combustion engines to address the
technical barriers to the commercialization of more efficient advanced
internal combustion engines. Specific goals for combustion research are
to improve, by 2012, the efficiency of internal combustion engines from
30 percent to 45 percent for light-duty applications while meeting
cost, durability, and emissions constraints.
epact 2005 and geothermal programs
Question. The Energy Policy Act of 2005 provides specific
directives for DOE's renewable energy research efforts. In general, the
overall approach is spelled out in section 931, which states: (a)(1)
OBJECTIVES.--The Secretary shall conduct programs of renewable energy
research, development, demonstration, and commercial application,
including activities described in this subtitle. Such programs shall
take into consideration the following objectives: (A) Increasing the
conversion efficiency of all forms of renewable energy through improved
technologies. (B) Decreasing the cost of renewable energy generation
and delivery. (C) Promoting the diversity of the energy supply. (D)
Decreasing the dependence of the United States on foreign energy
supplies. (E) Improving United States energy security. (F) Decreasing
the environmental impact of energy-related activities. (G) Increasing
the export of renewable generation equipment from the United States.
Subsection (c) of this section of EPAct specifically provides
direction for geothermal energy research. It states:
GEOTHERMAL.--The Secretary shall conduct a program of research,
development, demonstration, and commercial application for geothermal
energy. The program shall focus on developing improved technologies for
reducing the costs of geothermal energy installations, including
technologies for: (i) improving detection of geothermal resources; (ii)
decreasing drilling costs; (iii) decreasing maintenance costs through
improved materials; (iv) increasing the potential for other revenue
sources, such as mineral production; and (v) increasing the
understanding of reservoir life cycle and management.
For the fiscal year 2007 Spending Plan and the fiscal year 2008
budget request, how do the Department's decisions in each of those
documents with respect to the geothermal energy research and
development program comport with the statutory direction provided by
Congress in section 931 of Public Law 109-58?
Answer. Since the 1970s, the Department of Energy has conducted a
research and development program in geothermal technology valued in
excess of $1.3 billion. That investment has helped to produce the
strong market for geothermal energy we see today. In fiscal year 2007
and fiscal year 2008, the Department requested zero funds for the
Geothermal Program because the program has achieved key research
objectives for conventional hydrothermal technology development and
there are substantial incentives that support the near-term development
of the technology and deployment of the geothermal resource base.
Consequently, power production from high-temperature, shallow resources
is now a relatively mature technology. Projects under construction, or
which have both power purchase agreements and are undergoing production
drilling, amount to 489 megawatts in eight Western States. The fiscal
year 2007 operating plan for the Department included $5 million to
support geothermal power co-produced with oil and gas demonstration
efforts, for an evaluation of enhanced geothermal systems to help
industry prioritize its technology needs, and to bring to completion
selected projects on exploration, drilling, and/or conversion
technologies. In addition, some fiscal year 2006 unspent or uncosted
funds will also be used to conclude research projects on exploration,
drilling, and/or conversion technologies.
geothermal program and the national research council recommendations
Question. The administration's repeated efforts to close down and
defund the geothermal research program also appears to contradict the
recommendations of the last external review of the Department of
Energy's renewable programs, the 2000 report of the National Research
Council entitled Renewable Power Pathways. That National Research
Council's examination of the geothermal program states in clear terms
the importance of the program, and the recommendation that it continue
to be funded: ``In light of the significant advantages of geothermal
energy as a resource for power generation, it may be undervalued in
DOE's renewable energy portfolio.''
Does the Department agree with the National Research Council that
the U.S. geothermal resource base holds significant potential to
contribute to national energy needs?
What actions did the Department take to implement the
recommendations made by the National Research Council in 2000?
Has the Department had further communications with the National
Research Council about its assessment and any follow-up by the
Department?
Answer. Yes, the U.S. geothermal resource base is large, and can
contribute to diversification of our national energy portfolio through
increased private sector development. DOE's Geothermal Program has
achieved its key research objectives for conventional geothermal
resources. There are substantial incentives that support development of
the geothermal resource base without further investment in R&D. The
fiscal year 2007 operating plan for the Department included $5 million
to support geothermal power co-produced with oil and gas demonstration
efforts, for an evaluation of enhanced geothermal systems to help
industry prioritize its technology needs, and to bring to completion
selected projects on exploration, drilling, and/or conversion
technologies. In addition, some fiscal year 2006 unspent or uncosted
funds will also be used to conclude research projects on exploration,
drilling, and/or conversion technologies.
Since 2000, the Department has taken actions to implement all 10
recommendations made by the National Research Council. These actions
include new or expanded research initiatives, technology demonstration
projects, increased collaboration with other agencies, and improved
international cooperation.
The Geothermal Program has not had any further communication with
the National Research Council; however the Department has continued to
work with the National Research Council in other areas of renewable
energy.
______
Questions Submitted by Senator Dianne Feinstein
geothermal termination
Question. The President's budget for fiscal year 2008 proposes to
eliminate funding for geothermal energy research. Based on reports by
the National Renewable Energy Laboratory (NREL) and the Massachusetts
Institute of Technology, the Geothermal Energy Association estimates
that, with a relatively small amount of research funding, geothermal
energy can meet up to 20 percent of U.S. power needs by 2030. Please
answer the following questions:
Given the critical need to develop low-carbon electricity
generation technologies, why does the DOE propose to stop conducting
research into geothermal energy?
Answer. The Department's geothermal program has achieved its key
research objectives and there are substantial incentives that support
the near-term development of the technology and deployment of the
geothermal resource base. Geothermal power production from high-
temperature, shallow resources is now a relatively mature energy
technology. Projects under construction, or which have both Power
Purchase Agreements and are undergoing production drilling, amount to
489 megawatts in eight Western States. The Western Governors
Association geothermal task force recently identified over 100 sites
with an estimated 13,000 megawatts of near-term power development
potential.
wind and solar production costs
Question. The Massachusetts Institute of Technology (MIT) has
released a report suggesting that, for less than the cost of a single
clean-coal power plant, the United States could conduct the research
needed to enable production of up to 100 GWe of low carbon energy from
enhanced geothermal systems by 2050. How much would it cost for EERE
research programs to enable production of 100 GWe of energy from wind
and solar sources by 2050?
Answer. The primary factors contributing to production of 100 GWe
of wind and solar energy are no longer exclusively or even
substantially driven by government funded research projects. The rate
at which potential capacity is converted to productive projects will
depend on the amount and type of private capital investments in
projects, and on the durability and scope of policy incentives. The
goal of the Wind Program and Solar Program is to enable these renewable
energy technologies to compete with conventional electricity throughout
the Nation by helping to reduce costs. Under the President's Solar
America Initiative, the goal is to improve the performance and reduce
the cost of solar energy systems to make photovoltaics cost-competitive
with conventional electricity sources by 2015. The President's fiscal
year 2008 budget request of $40 million for wind and $148 million for
solar contributes to these goals being met. Also, the Department's
investment in technology development of next-generation systems may
help enable solar companies to invest more private capital in scaling
up manufacturing, as well as accelerate cost reductions to help
increase demand for solar as it reaches cost-competitiveness in more
markets.
If the research goals are met, DOE estimates 177 GW of wind power
and 190 GW of solar power by 2050. These estimates are in accordance
with the Government Performance and Results Act (GPRA) analysis that
accompanies the President's budget.
enhanced geothermal systems
Question. The Massachusetts Institute of Technology (MIT) report
only considers the potential to tap geothermal energy from putative
``Enhanced Geothermal Systems (EGS).'' What is the additional untapped
capacity of more conventional geothermal technologies? How much of this
capacity could be tapped by 2030 with sustained investment of $50-$100
million per year? By 2050?
Answer. Currently, conventional geothermal production is
approximately 3,000 MWe. A recent Western Governor's Association report
indicates that there is potential for up to 5,600 MWe by 2015.
The rate at which potential capacity is converted to productive
projects will largely depend on the amount and type of private capital
investments in projects.
Question. In the Energy Policy Act (EPACT), the Secretary of Energy
was instructed to ``promulgate regulations which describe in detail
methods for calculating and verifying energy and power consumption and
cost, based on the provisions of the 2005 California Non-Residential
ACM manual.'' Please answer the following questions:
What is the DOE's progress towards this goal?
Can DOE provide a detailed comparison between proposed regulations
and the California Non-Residential ACM manual, with justification for
deviations? If not, how much additional funding is needed to complete
this effort?
If such funding were provided, when would these new regulations be
issued?
Answer. EPACT section 1331 directs the Secretary of the Treasury,
in consultation with the Secretary of Energy, to promulgate methods of
calculation for energy consumption and cost. On June 26, 2006, the
Department of the Treasury and the Internal Revenue Service (IRS)
issued Notice 2006-52, Deduction for Energy Efficient Commercial
Buildings, that set interim guidance relating to the deduction for
energy efficient commercial buildings under 179D of the Internal
Revenue Code. The Department of Energy provided technical guidance for
the Notice. It is my understanding that Treasury elected to adopt the
provisions of the California ACM manual that do not conflict with
ASHRAE Standard 90.1-2001.
At this time, the IRS has only promulgated interim guidance in
advance of proposed regulations. The justification for any potential
deviation from the California manual and proposed Federal rules would
rest with the Department of Treasury.
At this time, I am not able to provide an answer as to when the
Department of Treasury might request funding for this rule nor when
Treasury might promulgate a proposed rule.
Question. Can DOE provide similar updates for progress towards all
other energy efficiency regulatory requirements of the Energy Policy
Act (EPACT)?
Answer. I am pleased to report progress on a number of energy
efficiency requirements of EPAct. On January 31, 2006, the Department
submitted a report to Congress on its standards activities prepared in
response to section 141 of EPACT 2005. The report publicly laid out our
action plan and schedule for rulemakings out to the year 2011. Since
committing to this schedule for the standards program, the Department
has met 100 percent of its targets. We have completed eight rulemakings
since EPACT 2005, including test procedure rulemakings and codification
of prescribed standards, and have made significant progress on others
that were underway prior to EPACT 2005. The Department has also
established guidelines regarding the use of energy metering in Federal
buildings, as outlined in section 103. A standard for premium efficient
electric motors was published in the Federal Register on August 18,
2006, per section 104. The section 109 requirement for a determination
on whether the revised ASHRAE (American Society of Heating,
Refrigeration and Air-Conditioning Engineers) code requires revisions
to Federal building performance standards is on track. In addition, an
acquisition plan for an energy efficiency pilot program for states has
been completed and a procurement requirements document developed to
fulfill section 140.
global nuclear energy partnership
Question. The Department of Energy's Office of Nuclear Energy (DOE-
NE) has given many different reasons for the need to invest in the
nuclear fuel reprocessing aspects of the Advanced Fuel Cycle Initiative
through the program known as the ``Global Nuclear Energy Partnership
(GNEP).'' This initiative represents a significant change from long-
standing U.S. nuclear policy, but no consensus has been established and
program goals have not yet been fully vetted by an independent
authority. The President's budget requests an increase of $152 million
over fiscal year 2007 levels for this program, and an even greater
increase with respect to fiscal year 2006 levels. These increases are
much greater than the combined increases for research into all
renewable resources such as wind, solar, geothermal, and biological.
Please answer the following questions:
What is the primary justification for this program? In order of
priority, what are the secondary justifications for this program?
Answer. Today, 103 nuclear reactors generate roughly 20 percent of
America's electricity. U.S. electricity demand is anticipated to grow
50 percent over the next 25 years--the equivalent of 45 to 50 one-
thousand megawatt nuclear reactors must be built just to maintain that
20 percent share. With nuclear power as the only proven base load
producer of electricity that does not emit greenhouse gases with the
ability to increase output substantially, it is vital that our current
fleet of reactors be expanded in order to meet our needs for carbon-
free, dependable and economic electric power.
Any serious effort to stabilize greenhouse gases in the atmosphere,
while providing the increasing amounts of energy needed for economic
development and growth, requires the expanded use of nuclear energy.
This will inevitably require us to address the spent fuel and
proliferation challenges that confront the expanded, global use of
nuclear energy. To meet these challenges, the Department initiated the
Global Nuclear Energy Partnership (GNEP), a comprehensive approach to
enable an expansion of nuclear power in the United States and around
the world, promote non-proliferation goals, and help minimize the
amount of nuclear waste disposal.
Additionally, many formerly non-nuclear countries are now
considering the nuclear option to meet their energy needs. It is vital
for the United States to be able to influence the safety, security and
proliferation characteristics of nuclear reactors intended for these
emerging nuclear states, as well as position U.S. industry for
leadership in this growing international market. Together with the
assurance of reliable fuel services, GNEP provides an attractive energy
solution for many countries that could serve to eliminate the need for
them to develop the more proliferation-vulnerable parts of the nuclear
fuel cycle. Coupled with the spent fuel recycling and actinide burning
technologies of GNEP, the United States has the potential to meet its
growing energy demands and those of developing countries in a manner
that minimizes potential negative impact to the United States and the
world.
Question. The GNEP implementation plan calls for rapid construction
of demonstration facilities for nuclear fuel reprocessing. Can you
provide a consensus statement from our international partners
describing what their contribution will be and what their requested
contribution from the United States is?
If such a consensus is not available, then what level of funding is
needed to establish the needed international consensus prior to
building new facilities on U.S. soil? Please justify.
Answer. Discussions are currently in progress with several of our
international partners to help define the parameters of and potential
deployment strategies for the GNEP facilities. Those discussions are
not yet at the point where a consensus on the amount of cost sharing,
or if cost share at all, could be established. At this time, given the
undefined technical, political, financial, and strategic aspects of
GNEP, it is not possible to pursue quantitative discussions with our
partners. Likewise, those same undefined factors render it impractical
to make a reasonable estimate of the level of funding required to
establish an international consensus prior to constructing the GNEP
facilities in the United States. When GNEP has developed sufficiently
to develop those estimates, the Department would be able to provide
them.
Question. In his statement, Assistant Secretary Spurgeon stated
that ``Any serious effort to stabilize greenhouse gases in the
atmosphere, while providing the increasing amounts of energy needed for
economic development and growth, requires the expanded use of nuclear
energy''. No further documentation was provided to support this
conclusion. Can DOE provide a comparison of the complete lifecycle
costs to produce nuclear energy and safely manage nuclear waste as
compared to producing a comparable amount of energy from renewable
energy resources? If such a comparison cannot be provided, then please
provide scientific, peer-reviewed support for this statement.
Answer. A recent study by the European Commission (``External
Costs--Research results on socio-environmental damages due to
electricity and transport,'' European Commission, 2003, p. 12, [http://
ec.europa.eu/research/energy/pdf/externe_en.pdf]) states, ``Nuclear
power in general generates low external costs, although the very low
probability of accidents with very high consequences and the fuel cycle
impacts are included. It is also a technology with very [lifecycle] low
greenhouse gas emissions.'' On page 13 of the report, a table shows
that nuclear power's external costs are on a par with renewables. While
this study considered European experiences, it is expected the
situation in the United States would not differ significantly.
Other reports may contradict this. What can be said is that there
is currently in operation no clean, base-load, fossil-fuel power-
generation technology; solar and wind power have great potential in
their limited ranges of operations; hydroelectric is essentially fully
subscribed; and that leaves nuclear power. Nuclear power now provides
over two-thirds of our Nation's non-emitting electricity while
renewables, primarily hydropower, account for the rest. Until such time
as we can efficiently store the power produced by wind and solar power,
they will continue to augment but cannot replace base-load power
generation. Nuclear power is the only non-emitting technology that is
ready today to be deployed in quantities sufficient to meet our growing
demand for electricity.
fossil energy
Question. The Department of Energy's Office of Fossil Energy (DOE-
FE) has proposed extensive new investments in coal energy, yet proposes
cuts in funding for oil and gas research. Acting Assistant Secretary
Shope justifies this change with an argument that can be summarized as,
``because coal is a critical domestic energy resource today, it will
continue to be so in the future.'' This may happen, but continued
innovation may well replace coal with improved new technologies. Coal
is a valuable energy resource over the near-term, but its long-term
future is still uncertain. Please answer the following questions:
A recent study by the Climate Group indicates that the global
market for biofuels, wind power, solar photovoltaic, and fuel cells
will be $167 billion by 2015; with $523 million of venture capital
invested in these technologies in California in 2005. What is the
comparable global market for clean coal technologies? How will
continued investment in coal research and development improve American
competitiveness in a global, carbon-constrained economy? How does the
return on investment for coal compare to that for other technologies?
Answer. Recent estimates indicate large markets for clean coal
technologies through the near-term and continuing out to 2030. The
International Energy Agency (IEA) World Energy Outlook (WEO) 2006
projects that coal will remain the dominant source of electricity to
2030 in both scenarios investigated (a reference scenario and an
alternate scenario that significantly reduces the rate of increase in
demand and emissions). Coal-based power generation in 2030 will be at
least 60 percent higher than today, remaining the world's largest
source of electricity in 2030. Investment in electricity generation is
expected to exceed $5.2 trillion cumulatively by 2030, resulting in
more than 5000 GW of new capacity. Over 144 GW of integrated
gasification combined cycle (IGCC) capacity is expected over that
timeframe. Assuming a conservative capital cost of $1,000 per kilowatt
for new coal plants, this equates to roughly a $150 billion market for
the expected new IGCC plants alone.
With the increased demand for coal, R&D investments in clean coal
technology development aimed at near-zero emissions, while improving
its efficient use, could help coal remain a competitive and
environmentally-sound energy option for future generations of power
plants, as well as for production of alternative fuels. As energy
demand rises, coal will continue to compete by deploying new systems
and innovative technologies that will keep it, and the existing fleet
of coal-fueled generating stations, viable well into the future.
We will continue to rely on all forms of energy sources to meet the
growing energy needs. Coal will continue to be relied upon for baseload
power generation. Continued investment in coal R&D (including low cost
carbon capture and storage) will help produce clean, economical, and
efficient coal-based power plants to keep the United States at a
competitive advantage and poised to take advantage of global
opportunities even in a carbon-constrained scenario. Meeting future
global energy needs will require the introduction of a variety of
technologies to meet growing electricity demands with stringent
emission regulations. Coal will remain in the near-term and beyond.
Question. The United States Geological Survey (USGS) has recently
completed a series of studies indicating that only 10-20 percent of
total U.S. coal resources may be economically recoverable. How does
this compare with prior estimates by the Department of Energy? If the
USGS estimates are correct, to what extent does this limit the
capability of coal to power America's future?
Answer. The Department of Energy's coal resource estimates are all
based on U.S. Geological Survey (USGS) data. It is our understanding
that USGS has not completed any full basin studies that validate the
findings of the several local studies referred to. We look forward to
reviewing the systematic inventory of the U.S. coal reserve base
currently underway by the USGS, once it is available. The coal resource
in the United States is vast; estimated to be 4,000 to 9,600 billion
tons. Current usage is about 1 billion tons/year. Coal will be able to
power America for the foreseeable future.
Question. Energy experts at the Electric Power Research Institute
(EPRI) have suggested that the technology to separate carbon dioxide
from the emissions of coal fired utilities is ready for commercial
demonstration, and that the biggest challenge is demonstrating the
ability to safely sequester carbon dioxide. Is this true? If so, then
why does the proposed fiscal year 2008 budget direct significantly more
funding to research into coal combustion and carbon dioxide separation
than to research into carbon sequestration?
Please provide a comparison between total requested funding for
carbon sequestration, and that for coal combustion and carbon capture.
Answer. The emphasis of the funding for Carbon Sequestration
(capture and storage) remains focused on the storage component of
sequestration, including CO2 field injection tests. However,
cost and efficiency penalties of existing capture technologies remain a
challenge in terms of affordability and net plant output impacts. While
certain post-combustion CO2 capture technologies, such as
amine-based systems, could be ready for commercial demonstration in the
next several years, several other advanced systems are only at the
laboratory, bench-, and pilot-scale stage of development. Because of
differences in plant age, size, configuration, and other site-specific
factors, it is expected that a suite of CO2 capture
technologies will be employed by electric utilities in order to achieve
significant reductions in emissions from coal-based power plants
without significantly increasing the cost of electricity.
The Department of Energy (DOE) estimates that based on current
amine scrubbing technology, the removal of CO2 from the flue
gas of an existing coal-fired power plant would constitute as much as
90 percent of the total cost of carbon capture, transport, and storage.
Hence, the criticality of continued research and development of
CO2 capture technologies. DOE's coal program targets
improved performance and cost savings based on a system-wide approach
that targets the most effective avenues for advancing carbon capture
and storage technology. DOE conducts R&D on technologies that will
enable carbon capture and storage in the following program areas:
Integrated Gasification Combined Cycle, Turbines, Sequestration, Fuels,
Fuel Cells, and Advanced Research.
The DOE Carbon Sequestration Program aims to develop technologies
that will lower both the cost of the carbon capture technology, but
also the amount of additional power capacity required due to efficiency
loses. It is the goal of the Program, by 2012, to develop technologies
resulting in less than a 20 percent increase in the cost of electricity
for post-combustion capture and oxycombustion technologies. Pre-
combustion (integrated gasification combined cycle related)
technologies are targeting less than a 10 percent increase in the cost
of electricity. Of the approximately $86 million requested for the
Carbon Sequestration Program (including roughly $7 million of R&D by
Federal employees under the Program Direction line item), about $15
million (or about 18 percent) is intended to be used for carbon capture
technology research. These technologies are based on application to
both coal combustion and gasification systems.
______
Questions Submitted by Senator Jack Reed
epact and efficiency programs
Question. Mr. Karsner, you have recognized energy efficiency as a
critical response to the Nation's energy challenges, but the budget
proposed by the President does not. Funding for the President's
Advanced Energy Initiative programs is coming mostly from cuts in
efficiency programs. Given that efficiency is the Nation's fastest and
most abundant clean energy resource, how can you justify a budget that
continues to cut research, development, and deployment in this
strategically critical area? Do you believe that the funding for
energy-efficiency programs in the budget match the Nation's need for
saving energy? What would be the impacts of the proposed budget cuts,
including for industrial and vehicles R&D, and for weatherization
assistance?
Answer. The fiscal year 2008 budget adequately funds a balanced
portfolio of activities at levels that support achievement of programs'
goals. It is important to note that the Office of Energy Efficiency and
Renewable Energy (EERE) programs related to energy efficiency comprise
approximately 46 percent of the total EERE proposed fiscal year 2008
budget (including program direction and support funds). For example,
the Building Technologies Program budget request is $9.1 million
greater than the fiscal year 2007 request and the Vehicle Technologies
Program budget request is $10.1 million greater than the fiscal year
2007 request and the Industrial Technologies Program is $435,000
greater than the fiscal year 2007 request.
EERE maintains a balanced portfolio that uses an integrated
strategy of energy efficiency and renewable energy to increase our
energy security and reduce our dependence on oil. The 2008 budget
request optimizes resource use and appropriately funds all energy
efficiency programs to support achievement of stated goals.
The fiscal year 2008 budget request includes funding increases for
both the Industrial Technologies Program and the Vehicle Technologies
Program. In general we have chosen to prioritize investments in energy
efficiency and renewable energy R&D that have multiplicative returns
such as improvements to appliances and the building envelope that
affect the whole American population rather than additive returns not
associated with technological R&D that target a single segment of the
population. For example, the National Academy of Sciences studied the
benefits of the energy efficiency portfolio and found that the return
on the research and development (R&D) investment was roughly 20 to 1.
In contrast, the Weatherization Assistance Program has a return on
investment of 1.5 to 1.
Question. Mr. Karsner, the Energy Policy Act of 2005 (EPACT 2005)
authorized a number of new energy-efficiency programs on public
education, utility efficiency programs, building codes, appliance
rebates, and other areas. Are any new energy-efficiency programs
authorized in EPACT funded in the proposed budget? Does this budget
allow you sufficient funding to implement the energy bill, including
the added requirements on the appliance standards, Federal energy
management, and Energy Star programs?
Answer. Yes, we are implementing numerous energy efficiency
programs authorized by EPACT 2005. Here are some selected examples. The
fiscal year 2008 requests funds for the establishment of new
EnergyStar qualification levels for clothes washers, as directed in
EPACT section 131; the issuance of grants to establish Advanced Energy
Efficiency Technology Transfer Centers as directed in EPACT section
917; reporting on the establishment of a program to inform the public
on various aspects of energy efficiency as directed in section 134 and
developing the next generation of low-emission, high efficiency diesel
engine technologies as directed in section 754. We have also requested
funds under section 140 to provide financial assistance to States to
carry out energy efficiency pilot programs.
Yes, the fiscal year 2008 budget request includes adequate funding
for a balanced portfolio that supports achievement of goals, including
sufficient funding for appliance standards, Federal energy management
and EnergyStar.
weatherization funding decrease
Question. Mr. Karsner, I led a bipartisan letter to Secretary
Bodman supporting the fiscal year 2007 funding level of $242.5 million
for Weatherization. You chose to cut that program to $204.5 million,
and in recent House testimony I think you referred to Weatherization as
a ``welfare program.'' As you know, in the fiscal year 2007
Supplemental Appropriations bill passed by the Senate, we included an
additional $25 million for Weatherization. Weatherization provides
almost 25 percent in energy savings for every house we improve, and
well over 100,000 homes were done this past year. It is clearly a
successful deployment program that helps lower-income homeowners and
neighborhoods today. It is not a welfare program, it is an energy
program. With the administration's support and focus on reducing energy
demands, why wouldn't you also strongly support Weatherization?
Answer. The 2008 budget optimizes resources and adequately supports
the achievement of the program's goals and priorities. We have chosen
to prioritize investments in energy efficiency and renewable energy R&D
that have multiplicative returns such as improvements to appliances and
the building envelope that affect the whole American population rather
than additive returns not associated with technological R&D that target
a single segment of the population. The National Academy of Sciences
studied the benefits of the energy efficiency portfolio and found that
the return on the research and development (R&D) investment was roughly
20 to 1. In contrast, the Weatherization Assistance Program has a
return on investment of 1.5 to 1.
industrial efficiency program funding decrease
Question. Mr. Karsner, the industrial energy efficiency program has
been slashed from well over $100 million just a few years ago to
approximately $50 million in fiscal year 2007. The fiscal year 2008
budget request would further reduce this effort. With over one-third of
our energy use in this sector, what is the justification for this cut?
Answer. The fiscal year 2008 request for the Industrial
Technologies Program (ITP) is $435,000 higher than the fiscal year 2007
request. Also, under the discretion given to the Department by Congress
under the fiscal year 2007 Continuing Resolution, this program was
increased by $11 million. ITP has historically worked with the eight
most energy-intensive manufacturing industries to research, develop,
and implement advanced technologies that save energy, reduce costs, and
improve environmental performance. These activities have contributed to
significant reduction in energy use. As the program evolves, we are
seeking more effective and efficient ways to develop technologies that
are high impact and applicable to multiple industries. ITP has
developed a new strategy with more emphasis on crosscutting R&D which
will allow ITP to continue partnership with end-user industries while
broadening industry participation to include other growth industries
and technology developers.
materials manufacturing and industrial materials
Question. Mr. Karsner, in fiscal year 2006, research and
development for the materials manufacturing industry was $21 million.
There is only $9 million in your budget for fiscal year 2008, a 55
percent cut, and research and development for industrial materials is
slashed by 57 percent to $5 million. These low numbers reflect a
decision to back away from development of key new technologies that
could significantly strengthen our manufacturing global competitiveness
while reducing carbon emissions in a sector that consumes more energy
than any other sector of the economy. Materials manufacturers co-fund
this research and development effort and outlined a program in the
range of $250 million to support the development of the next generation
of production process technologies needed by their industries to be
able to dramatically reduce their energy use per unit of output, cut
carbon emissions, and compete globally. What is the rationale for
cutting back investment in research and technology in materials
manufacturing and industrial materials?
Answer. The Industrial Technologies Program (ITP) has invested
approximately $21 million in fiscal year 2006 through the Industries of
the Future on technology development, focusing on industry-specific
research needs. However, ITP is seeking more effective and efficient
ways to develop technologies that have higher impacts and are
applicable to multiple industries. ITP has developed a new strategy
with more emphasis on crosscutting R&D which will minimize duplicative
efforts and allow ITP to develop technologies meeting the needs of
multiple industries. This approach will also accelerate technology
development with broader industry participation to include other growth
industries and technology developers. Materials manufacturing R&D will
continue to play an important part of this program.
``save energy now'' campaign
Question. Mr. Karsner, EERE has implemented the ``Save Energy Now''
campaign to audit the 200 largest industrial customers/facilities in
the United States. Could you specifically detail what facilities have
been audited and most importantly, what energy measures have been
implemented in those facilities? If changes have not been implemented,
could you please explain why? Do you think funding support through the
industrial program would help on the implementation side?
Answer. As of December 31, 2006, the first 200 Energy Savings
Assessments, with the firms listed in the following pages, were
conducted. Several companies had more than one plant audited.
Approximately half a billion dollars per year in energy savings was
identified from those audits. Typical energy savings identified
consisted of 5 to 15 percent of a plant's total energy use, consistent
with a potential reduction of 3.3 million tons per year in
CO2 emissions. The audited firms are being contacted 6
months, 1 year, and 2 years after the audit to determine implementation
of these recommendations. To date, the energy measures most commonly
implemented in the plants as a result of these audits are in the areas
of process heat and steam.
It is entirely the choice of the audited company as to whether
savings recommendations are implemented and the cost-effectiveness of
the recommendations is dependent on interest rates, and equipment,
labor, materials prices, and other considerations in addition to the
energy prices. Often the purchases must wait for the next capital
acquisition cycle or the next time that the plant shuts down for
routine maintenance. Nevertheless, as of April 24, 2007, $116 million
of the potential $494 million per year of energy savings has already
been implemented or is in the process of being implemented.
The fiscal year 2008 budget funding level is appropriate and
sufficient to support achievement of the program's mission and goals.
The program is not designed to be an implementation mechanism--it is
the choice of the audited company as to whether it is worthwhile and
cost-effective to implement the audit findings. The Save Energy Now
initiative has demonstrated it can provide useful information to inform
these industry decisions.
appliance efficiency standards
Question. Mr. Karsner, DOE has been plagued for years by long
delays in issuing appliance efficiency standards. So far you seem to be
meeting the aggressive schedule you set last year for getting the
required standards out, and I am pleased that you asked for additional
funds. However, a recent GAO report said additional changes are needed
in the program, and I am concerned that recent proposed standards have
been weak and are not using the tremendous potential of this program to
address our energy needs.
The GAO report said the program faces a 600 percent increase in
workload with a 20 percent resource increase in the fiscal year 2007
budget. Have you analyzed the staffing and funding requirements to
carry through the standards plan, and can you share that with us?
Some of the largest possible savings, for example from standards on
furnace fans and refrigerators, are not included in the plan, and thus
will not be considered for at least 5 years. Can you tell us how much
additional resources you would need to begin work on the most important
standards now? DOE has rejected some recent suggested standards because
they were not deemed consistent with current law. Do you need any
additional legal authority to issue standards that make the most sense
for the American people?
Answer. Yes, the Department has conducted a thorough assessment of
resource needs for the efficiency standards program. On January 31,
2006, the Department submitted an aggressive plan to Congress,
addressing both the history and future plans for the Appliance
Standards Program. That plan does in fact commit to a rulemaking
schedule that is six times the historical rulemaking rate for this
program. The actions detailed in that plan will dramatically increase
the efficiency of the process and the output rate. In addition, in the
2007 operating plan and 2008 budget, the Department directed resources
to support these efforts. Changes in our process include implementing
product bundling within a single rulemaking and organizing staff into
seven technology teams.
Since committing to this schedule for the standards program, the
Department has met 100 percent of its scheduled deadlines. We have
completed eight rulemakings since EPACT 2005, including test procedure
rulemakings and codification of prescribed standards, and have made
significant progress on others that were underway prior to EPACT 2005.
In 2006, we initiated standards rulemaking for 12 additional products
and remain on schedule for all future deadlines.
______
Questions Submitted by Senator Pete V. Domenici
loan guarantee regulations
Question. I understand that the Department sent its proposed draft
regulations at the end of March to OMB for approval. It has been nearly
3 weeks without any action.
Based on the delays in approving the regulations, will you be able
to meet the August deadline for the implementation of regulations as
established in the Joint Funding Resolution?
Answer. The Department is working to meet the August 2007 deadline
contained in the Revised Continuing Appropriations Resolution, 2007,
Public Law 110-5. A Notice of Proposed Rulemaking was published in the
Federal Register on May 16, 2007 and is open for public comment until
July 2, 2007. It is not possible to guarantee that the rule will be
completed by the August deadline but an aggressive effort is underway
to make that happen.
loan guarantee programs (title 17 of epact)
Question. The Export-Import Bank of the United States is planning
to provide over $18 billion in new loan guarantees in fiscal year 2008,
more than double the level proposed for the Department of Energy. A
portion of these loan guarantees will be for new advanced technology
power generation facilities being built overseas.
Can you explain why the administration has such a difficult time in
providing adequate loan authority to implement a no-cost loan guarantee
program at the similar level as we support foreign economic development
under the Export-Import Bank program?
Answer. The nature of the Energy Policy Act of 2005 Title XVII loan
guarantee program is unique among other Federal loan guarantee programs
in that it encourages the employment of new or significantly improved
and innovative technologies to reduce or sequester pollutants or
greenhouse gas emissions, while at the same time requiring a
``reasonable prospect of repayment.'' Other programs are primarily
concerned with commercial market risk. To manage the inherent risks of
this loan guarantee program, DOE is planning for an initial small
portfolio of projects in order to gain experience and expertise and to
ensure that the program is implemented correctly.
loan guarantee--technical evaluation and financial evaluation
Question. It is my understanding that the Department is attempting
to recruit staff that has strong project development experience to
evaluate these applications from a financial standpoint.
At the same time, the evaluations are currently undergoing a
technical evaluation by DOE staff to determine whether or not the
technology is commercially viable.
How are the evaluations proceeding and when do you expect these
evaluations to be completed?
Answer. The Department is completing a preliminary review of the
143 pre-applications submitted in response to the August 2006
solicitation and guidance has been issued to program offices to begin
the technical reviews of the pre-applications. Until the program
offices have had the opportunity to complete the technical reviews on a
sufficient number of pre-applications, the Department cannot say
precisely how long it will take to complete the evaluations.
Separately, the Loan Guarantee Office will be reviewing each pre-
application for compliance with the financial, commercial, and other
criteria set forth in the August 2006 solicitation and accompanying
guidelines. Ultimately, the goal is to complete the pre-application
evaluations this summer.
deploying new technology
Question. Mr. Karsner, our energy sector has developed around low
cost energy technologies such as coal. We have spent decades and
billions of dollars supporting alternative energy sources such as wind
and solar, yet these technologies still only make up a small portion of
our generation mix. Tax credits have helped, but the intermittent
nature of these incentives has undermined their effectiveness.
It appears that we need to come up with a new model that will
encourage the commercial deployment of alternative energy sources
utilizing private capital. Obviously, this is something we have
attempted through the loan guarantee program, but I wonder if we need a
larger more aggressive solution in order to transform our energy
sector--similar to the Export Import Bank or Overseas Private
Investment Corporation.
I assume you have met with investors and venture capital groups
interested in deploying new technology. What is the major concern of
these groups and what can we do to encourage investment in new
alternative energy technology to get it out of the lab and into the
market?
Answer. In general, investment decisions center on maximizing the
expected return for a given level of risk. With respect to alternative
energy technology investments in particular, private sector investors
repeatedly voice at least three primary concerns: an unstable and
irregular policy environment and the negative economic incentive to
build first-of-a-kind plants.
By creating a stable and standardized policy environment with
reasonable investment incentives, the Federal Government can help to
lower risk and to increase private sector support of alternative energy
technologies.
Question. What about the deployment of high cost investments such
as nuclear power?
Answer. The principal causes of the financial risk surrounding
nuclear power are political and regulatory uncertainties. By
demonstrating the new Nuclear Regulatory Commission licensing process,
codified at 10 CFR part 52, via our partnership program, Nuclear Power
2010, the political and regulatory uncertainties of nuclear power would
be significantly reduced. Further, the Department has just released a
Notice of Public Rulemaking and has not yet solicited expressions of
interest for loan guarantees by the nuclear power utilities, so it is
not clear how the industry will respond to such an offering.
Consequently, it is too early for the Department to assess whether a
more aggressive solution would be needed to encourage more nuclear
power plant construction.
battery r&d
Question. Mr. Karsner, your budget for Vehicles Technology is
presented in a new format that provides fewer details about specific
research projects.
I am interested to learn what the budget provides for battery R&D.
As you are well aware the gasoline/electric hybrid car technology has
become very popular. However, batteries continue to be the greatest
technology challenge facing auto manufacturers.
How much funding has the President requested for battery research
in fiscal year 2008 and how has that changed over the past 2 years?
Answer. The fiscal year 2008 budget includes $42 million to support
advanced battery R&D, such as batteries for plug-in hybrid vehicles.
This includes work on long-life, abuse-tolerant lithium batteries and
more advanced high-power batteries along with power-control systems and
components that are optimized for plug-in hybrids. The fiscal year 2008
request for energy storage R&D is a 70 percent increase over the fiscal
year 2006 appropriations, and is level with the fiscal year 2007
operating plan.
Question. Please explain to the subcommittee what your goals are
for battery research? What can we expect in terms of performance
improvements over the next 5 years?
Answer. Energy storage research aims to reduce costs and help
overcome specific technical barriers related to performance, life, and
abuse tolerance. The current cost of high energy, plug-in hybrid
vehicle battery is $1,000/kWh; our cost goal in support of the AEI is
to reduce the cost of these batteries to $300/kWh by 2014. These
barriers are being addressed collaboratively by the DOE's technical
research teams and battery manufacturers.
solar energy
Question. Mr. Karsner, during the past 6 years there has been
explosive growth (+45 percent) in solar cell manufacturing worldwide.
However, the United States currently produces only about 10 percent of
the solar cells produced worldwide and has only grown by 7 percent
since 2001. The current manufacturing leaders are Japan and Europe.
Clearly there are many factors that contribute to this outcome, but
I am interested to know if the United States is behind because we lack
the technical capability or if policies being pursued in Europe and
Japan are driving this demand growth.
Answer. The capabilities in U.S. industry and at national
laboratories and universities are strong. Indeed, U.S. companies are
producing the highest-performance products in a variety of PV
technologies, including crystalline silicon, amorphous silicon, and
concentrating PV. Additionally, the leading global producer of
polysilicon feedstock is a Michigan-based subsidiary of Dow-Corning
(Hemlock Corporation).
The United States has lost market share in solar photovoltaic (PV)
manufacturing because in recent years solar companies have sited
manufacturing facilities near locations with the highest demand for the
technology. Installations have increased significantly in Japan and
Germany due to their long-term policies and incentives. Similarly, the
solar manufacturing capacity in these countries has increased steadily
as well, a fact that can be linked to the policies. For example, the
German feed-in tariff program guarantees the owner of the panel a
steady price for generated energy (that is even higher than the price
of electricity) for 20 years following the installation; this tariff
established a long-term, stable investment environment that has been
attractive to companies looking to site facilities for adding
manufacturing capacity. In addition, Germany and the European Union
have also bundled cash grants, cost savings and other incentives for
companies building new manufacturing facilities--offsetting up to 40
percent of the capital expenditure required to build a new plant--which
has resulted in U.S. companies announcing plans to site facilities in
Germany.
Question. What is the Department of Energy doing to improve the
efficiency and deployment of solar technology in the United States?
Answer. The Solar America Initiative (SAI) in February 2006 will
make solar photovoltaics (PV) cost-competitive by 2015. Achieving the
goal of the SAI will require a significant investment in reducing the
cost of PV systems. Funding in fiscal year 2007 for the Solar America
Initiative totals $159 million.
There are critical areas where the Department is focusing its
efforts to help increase efficiency, cost-effectiveness and deployment
of solar technologies. First, solar thermal concentrating solar power
plants (CSP) have the potential to contribute significantly to
electricity supply in the Southwest, home to 15 of the 20 fastest-
growing metro areas in the country. Second, by focusing on the
development of building efficiency design and technologies coupled with
distributed PV, the Department could help enable Americans nationwide
to buy new ``zero energy'' homes and to work in ``zero energy'' office
buildings--which will produce as much energy as they use.
Question. What can we expect in terms of technology or
manufacturing improvements over the next 5 years?
Answer. On March 8, 2007, under the SAI, the Department announced
the selection of 13 industry-led solar technology development projects
expected to receive up to $168 million in Federal funding over the next
3 years (subject to appropriations). These projects may ultimately help
to expand the annual U.S. manufacturing capacity of PV systems. These
projects are specifically focused on developing new photovoltaic
components or manufacturing equipment, or even complete photovoltaic
systems.
cellulosic biomass--reverse auction
Question. The fiscal year 2008 budget request includes $5 million
to develop options to establish a reverse auction for biofuels as
proscribed in section 942 of EPACT. This incentive program is intended
to help make cellulosic biofuels cost competitive by 2015. It is my
understanding that the reverse auction would require DOE to solicit
bids from eligible producers. The lowest bid on a per gallon basis
would receive the incentive funding.
This is a first of a kind proposal for biofuels. Do you believe
that we are ready technologically or economically, to support this
auction?
Answer. The Department is evaluating section 942 of EPACT 2005,
which directs the establishment of a reverse auction incentive program
for the production of cellulosic biofuels. The fiscal year 2008 budget
request includes $5 million to develop background knowledge and
evaluate options for this incentive program.
improved building efficiency
Question. Mr. Karsner, the fiscal year 2008 budget requests an
increase in funding for building efficiency R&D including improvements
to window, lighting, and insulation designs. At the same time, funding
for weatherization has been reduced.
Are you able to quantify the benefits of investing in innovative
building technologies over the weatherization program? In other words,
can we save more energy by investing in building technologies R&D and
deployment as opposed to the weatherization assistance?
Answer. EERE is evaluating the potential benefits of the Building
Technologies Program and the Weatherization Assistance Program. In
addition, the National Academies of Science has indicated that the
Weatherization Program's return on investment is 1.5 to 1, compared to
an approximately 20 to 1 return on investment for the Building
Technologies Program.
concentrating solar
Question. I have been very interested in the commercialization of
the concentrating solar power (CSP) technology. What is DOE's plan for
supporting this dish technology deployment in the fiscal year 2007 and
fiscal year 2008 budgets?
In the fiscal year 2006 budget, DOE provided about $3.3 million to
Sandia to support the development of a 1 MW dish engine pilot project.
Is the plan to increase that funding in fiscal year 2007 budget to
continue these efforts? If so, for how much money and when will it
become available?
Answer. The Department is working with industry on the development
of two CSP technologies: parabolic trough and dish-engine systems. The
Department is providing technical assistance to the first commercial
U.S. CSP project, a 64 MW trough system near Las Vegas, by Solargenix/
Acciona Solar Power, which is expected to become operational in May
2007. Stirling Energy Systems (SES), a dish system developer, plans to
commercialize dish technology through two projects (300 MW and 500 MW)
in California. The Department is supporting the SES effort by providing
technical assistance in improving the reliability of their Stirling
engine, and helping in the design-for-manufacture of the system. The
effort will continue through fiscal year 2008.
In fiscal year 2007, the Department is funding Sandia at the $1.5
million level to support technical assistance to SES for system
deployment. At this time, Sandia has access to the entire $1.5 million.
As I understand it, there are two solar projects targeted to start
actual construction (``hardware in the ground'') in late 2008 or early
2009. A major program to commercialize the dish engine systems for
high-volume, low-cost manufacture is underway. When the transformation
from low-volume to high-volume production of this hardware is
completed, it will pave the way for U.S.-based companies to take a very
big step into the large-scale solar market.
Question. How can the Department most effectively support the
commercial deployment of this technology in the near term in order to
realize large scale commercial deployment?
Answer. We believe our support for technical assistance to
companies pursuing trough and dish technologies as designed and funded
in the fiscal year 2008 budget is very effective. Large scale, near-
term CSP commercialization is ultimately the decision of industry and
depends on competitive Net Present Value (NPV) assessments by capital
markets, which can only be realized through life cycle cash flows.
existing biomass awards
Question. Recipients of the alternative hydrogen production and
utilization competitive grants (No. DE-PS26-06NT42801) are telling
Congress that DOE's fiscal year 2008 budget does not includes funds for
their awards and that they need to cease work.
Can you clarify the funding commitment for this competitively
awarded program to the subcommittee and provide details on how DOE will
fund the competitively awarded grant in the future?
Answer. The fiscal year 2008 budget request for the Fuels program
is $10 million, which is a reduction of $12 million from the fiscal
year 2007 operating level. Fiscal year 2008 funding will only support
areas of research and development (R&D) that are central to the
production of hydrogen from coal. We will continue Hydrogen from Coal
Research to develop improved, novel technology for the production of
hydrogen including research in scale-up technologies which will
simultaneously produce and separate coal-derived hydrogen from the
other gas constituents in one membrane reactor. All research in high-
hydrogen content liquid fuels will be terminated because these are
mature but evolving technologies where the private sector has the
resources and incentives to conduct R&D. All research in hydrogen
utilization for mobile applications (e.g., car engines) will be
terminated because this research is conducted by the Office of Energy
Efficiency and Renewable Energy (EERE). This research terminated within
the Office of Fossil Energy would include projects selected as a result
of Funding Opportunity Notice No. DE-PS26-06NT42801 since they are
aimed at ethanol production and mobile applications of hydrogen
utilization. Termination of this work is proceeding in an orderly
manner and contractors have been properly notified.
deployment of renewable energy technologies
Question. In a GAO report to Congress dated December 2006, it is
repeatedly stated that DOE has made steady incremental progress in
making each of the renewable energy technologies more cost competitive.
As I have mentioned in my opening statement, I am more concerned at
this point about deployment of these technologies.
What is the Department doing to take these technologies that are
more cost competitive and fully deploy them into the marketplace?
Answer. The Department's approach to promoting new technologies
couples technology push with market demand pull, and works to address
barriers to the market adoption of advanced technologies through
various program initiatives. For example, the Department plans to lead
by example with the Executive Order 13423 and become an early adopter
of energy efficient and renewable energy technologies. By identifying
markets where the life-cycle costs of advanced energy technologies
currently form a compelling economic argument, the Federal Government
will create demand pull which will increase the economies of scale and
drive the technologies down the cost curve. The Department is also
looking to stimulate the commercialization of advanced technologies by
helping to bridge the gap between R&D and the market place. To this
end, the Department has designated a Director of Commercialization and
Deployment, located within the Energy Efficiency and Renewable Energy
Program, to oversee and guide our deployment-related efforts. However,
commercialization decisions are ultimately up to industry.
______
Question Submitted by Senator Thad Cochran
Question. Secretary Karsner, it is my understanding that your
office is willing to consider funding for renewable energy programs
through an ``unsolicited proposal'' process. Mississippi State
University has submitted an unsolicited proposal to your office for its
Sustainable Energy Research Center (SERC), a program which was funded
in fiscal year 2006 and included in the fiscal year 2007 Senate Energy
and Water Appropriations report. What is the status of this proposal?
Will the SERC receive fiscal year 2007 funding?
Answer. On February 27, 2007 the Office of the Biomass Program
received the SERC unsolicited proposal via email. The Program responded
on March 6, 2007 by directing Mississippi State University to the
formal channels for submitting an unsolicited proposal and by inviting
them to meet with the Program. For any proposal to be considered
unsolicited, it must be unique and not covered by any current or
proposed solicitation. The Biomass Program hosted Dr. Glenn Steele and
Dr. William Batchelor at DOE on April 12, 2007 and informed them of
upcoming competitive solicitations that would be applicable to their
area of focus. We will provide a formal response to the unsolicited
proposal. Currently, the Program is in the process of preparing that
response.
The Office of Biomass Program is in the process of evaluating the
SERC proposal. The Program needs to make a determination that the
proposal is meritorious and compliant with criteria for unsolicited
proposals, and meets and supports the Program's Research, Development
and Deployment plans to be recommended for funding.
______
Question Submitted by Senator Wayne Allard
electricity delivery and energy reliability
Question. What is being done to increase available transmission
from the often remote sites where renewable energy is produced to the
more populated areas where the electricity is needed and how are your
offices working together on that?
Answer. The transmission grid needs to be sufficiently large and
robust to accommodate the increased level of renewable energy resources
that are becoming available, as well as to meet the many other
challenges of the 21st century.
The Department is implementing the provisions of the Energy Policy
Act of 2005 (EPACT) to help ensure that consumers receive electricity
over a dependable, modern infrastructure. These provisions include
EPACT section 368 that requires designation of energy corridors on
Federal lands; section 1221(a) that requires a study of electricity
transmission congestion once every 3 years, coupled with the authority
given to the Secretary of Energy to designate national interest
electric transmission corridors; and the new Federal Power Act section
216(h) that requires the Department to act as the lead agency for
purposes of coordinating all applicable Federal authorizations and
related environmental reviews to site an electric transmission
facility.
The Department also provides technical assistance to States,
regional bodies, and others on issues such as methods and tools to
increase regional planning and coordination of transmission, improving
transmission siting, better understanding the location of suitable
renewable resources (``resource characterization''), and improving the
ability of the grid to plan for and operate with renewables that are
intermittent (``grid integration issues''). Technical assistance is
provided to the Department's Power Marketing Administrations as they
explore what role they can play in providing access to additional
renewable generation through transmission. With some types of
assistance, such as renewable grid integration, the technical
assistance is informed by research and development that is sponsored by
the Department.
At the distribution level of the grid, the Department continues to
provide technical assistance to States that wish to adopt more
favorable interconnection standards, metering, demand response, and
related methods that enable greater use of distributed renewables
generation. For example, the Department funded the national voluntary
``IEEE 1547'' interconnection standard that is referenced in EPACT
section 1254 regarding ``Interconnection Standards'' for States to
consider.
In addition, using funding under the Renewable & Distributed
Systems Integration activity line of the fiscal year 2007 Operating
Plan, the Office of Electricity Delivery and Energy Reliability (OE) is
soliciting for projects that would integrate renewable and distributed
energy systems into the grid. By successfully demonstrating this
integration, the use of renewable and distributed energy technologies
to support electric distribution operations should substantially
increase for supplying power and other ancillary services during peak
load periods. The project would also demonstrate the ability of these
technologies to reduce power required by the distribution feeder. This
will be accomplished through modeling, design, integration, and R&D of
renewables and distributed energy integration into the distribution
system; low-cost sensors; advanced monitoring; and consumer
information.
The Office of Energy Efficiency and Renewable Energy (EERE)
typically focuses research and development activities on improving the
efficiency, cost, and emissions profiles of generation technologies,
including renewables.
OE and EERE understand that for this policy to succeed, it is
crucial to collaborate not only on grid-scale innovations, but also on
bringing the applications to the consumer. In coordinating near-term
and long-term goals, OE and EERE remain alert to changes in need and
demand. Both offices also support State and regional efforts to
integrate renewable and distributed energy resources in their electric
system planning efforts. In this spirit, OE and EERE have formed a
focus group to concentrate on integration issues with renewables. OE
and EERE are closely coordinating fiscal year 2007 activities under the
operating plan in this area.
Question. I am also curious what research is being done to develop
electricity storage, especially electricity manufactured from renewable
sources?
Answer. The energy storage program of the Office of Electricity
Distribution and Energy Reliability has conducted a research program on
basic storage mechanisms, devices, and systems for over a decade. The
program is considered worldwide to be one of the leaders in this field.
Research is conducted on advanced batteries, flow batteries,
supercapacitors, and flywheels, as well as the necessary megawatt level
power electronics. Major demonstrations are fielded in partnership with
utilities, the California Energy Commission (CEC), and the New York
State Energy Development Authority. In particular, we are involved with
the CEC in the development of a microgrid which incorporates 500kW of
supercapacitors to harmonize wind and hydro power. We also work with
the Bonneville Power Administration on a power electronics device which
will smooth short term wind and wave power fluctuations when combined
with storage. A project with the Iowa municipalities explores the
possibility of using 200MW of compressed air storage in conjunction
with a 75MW wind farm and inexpensive off-peak power.
Energy storage can significantly increase the integration of
renewable sources of energy into the electric system. Storage increases
the reliability of intermittent resources like wind and photovoltaics,
allowing these sources to become relatively constant sources of power.
Renewable power produced in off-peak periods can be stored and used
during periods of greater demand, thus making renewables dispatchable.
Likewise, energy storage can bridge the gap during decreased periods of
renewable production and, when combined with appropriate electronics,
it can also eliminate short term flutters that decrease power quality
and impact digital equipment on the grid.
______
Questions Submitted to Hon. Thomas D. Shope
Questions Submitted by Senator Byron L. Dorgan
fossil energy budget request
Question. Your testimony suggests that your fiscal year 2008 budget
request of $863 million is one of the largest fossil energy requests by
this administration. Yet, there are only two large program requests in
your budget--a doubling of funds for the FutureGen project and a
doubling of funds for the Strategic Petroleum Reserve (SPR) expansion.
The FutureGen request now makes up 25 percent of the coal R&D request.
With the extraction of the requests for FutureGen and the SPR
expansion from your budget request, are you not actually cutting many
other fossil energy R&D programs?
Answer. The FutureGen project is a key Presidential priority in the
Office of Fossil Energy's portfolio and is an important component of
the Coal Research Initiative. It remains a significant step towards
realizing the goal of creating a near-zero atmospheric emission energy
option for coal. The Strategic Petroleum Reserve provides an emergency
oil stock to bolster U.S. energy security and a possible mitigation
when disruptions in commercial oil supplies threaten the U.S. economy.
We believe the current budget represents a balanced Fossil Energy
Program portfolio that addresses all of the highest priority
requirements to meet the program goal.
coal r&d research funding
Question. The President's fiscal year 2008 Budget Request
recommends $245.6 million for the coal R&D program, is approximately
$55.7 million less than the fiscal year 2006 enacted budget level. This
is largely due to some programs being zeroed out or severely cut back.
This includes the Innovations for Existing Plants (IEP) program and the
Advanced Research program. For example, defunding the IEP program will
eliminate work for testing mercury control technologies and research on
the energy-water nexus. This program is extremely important in
validating mercury control technologies to insure different coals will
be competitive under the mercury control (mercury MACT) rules, which
require utilities to begin making reductions of mercury from their
emissions by 2012. Without this program, there is a very real
possibility that technologies will not be available by 2012 that can
capture the mercury emitted from the combustion of coals.
Why has the Department requested elimination or reduction of
important coal research and development programs?
Answer. The fiscal year 2008 Coal Research and Development budget
request proposes a balanced research and development (R&D) program
portfolio in support of the overall goal of near-zero atmospheric
emissions coal.
Within the Advanced Research Program, bioprocessing was determined
too long term to have an appreciable impact and certain other topics
are not focused on technology being developed in the Coal R&D Program
aimed at achieving the overall goal of near-zero emissions coal.
The IEP Program was developing low-cost technologies for reducing
emissions from existing coal power plants and has been very successful.
However, the industry now has regulatory drivers to incentivize them to
continue development and deployment on their own of such technologies.
EPA promulgated the Clean Air Interstate Rule (CAIR) to reduce
emissions of sulfur dioxide and nitrogen oxides and the Clean Air
Mercury Rule (CAMR) to reduce mercury emissions. These regulations
provide industry with incentives to fund R&D for technologies for low-
cost compliance to meet the emissions standards. Therefore, further
Federal investment in mercury removal and other emission control
technology is not needed.
carbon sequestration funding
Question. The carbon sequestration program request is proposed at
$79 million for fiscal year 2008, and the Department funded $100
million in the fiscal year 2007 Spending Plan. I have noted that the
DOE budget justification states that DOE will conduct demonstrations in
3 or 4 sites across the country with the $79 million sequestration
budget, as opposed to conducting large-scale demonstrations in each of
the 7 regional sequestration partnerships--which is necessary to insure
this technology can be used in every region of this country.
Are the funds requested for fiscal year 2008 sufficient enough to
conduct the several large-scale carbon sequestration demonstrations in
every region of this country that are necessary to insure carbon
sequestration is a valid option to insure carbon capture and storage
from coal fired power plants? What is the Department's longer-term
strategy related to the carbon sequestration program?
Answer. The Department's long-term strategy is to conduct large-
scale field tests to determine that carbon capture and storage is a
safe, effective approach to reduce greenhouse gas emissions. In 2007,
the program is beginning work on the ``highest potential''
opportunities for an initial expedited round of four large scale
sequestration tests (approximately 1 million tons CO2 per
year for each site). DOE has provided additional funding in the fiscal
year 2007 budget for the Carbon Sequestration Program to award these
initial large volume sequestration tests. The fiscal year 2008 budget
request is sufficient to continue the four large-volume sequestration
injection projects that were accelerated with additional funding
received in fiscal year 2007.
clean coal power initiative funding
Question. The DOE request for the Clean Coal Power Initiative
(CCPI) is $73 million for fiscal year 2008. Although this has increased
by $68 million over the President's request of $5 million in fiscal
year 2007, it still seems inadequate. The CCPI program is the only
mechanism through which those clean coal technologies can be
demonstrated in order to determine their commercial acceptable. It is
through the demonstration program at DOE that this country has achieved
significant reductions in NOX, SOX and
particulate matter because of technologies that were developed and
demonstrated with DOE support. As a result, our Nation has
significantly reduced criteria pollutants from coal-fired power
generation, while both maintaining low cost electricity for the
consumer and increasing the amount of coal-fired electric power
generation over the last 3 decades. Given the success of this program,
it would be a prudent decision to increase the budget for this program
so that DOE can work with industry to conduct several large scale
projects to demonstrate carbon capture and sequestration technologies
that can be applied to both the existing fleet and new coal plants if
we are going to achieve meaningful reductions of carbon dioxide
emissions.
Is it not the case that, of the $73 million requested in fiscal
year 2008, $58 million was returned from a previous project that did
not go forward? Does this mean that the Department is only asking for
$15 million in new funding for the CCPI program in fiscal year 2008?
The Department has made much larger requests for the CCPI program in
previous years so why is the Department not committed to funding this
program to the same extent in fiscal year 2008?
Answer. The Department's strategy has been to accumulate sufficient
funds over several years and issue a solicitation to support the Clean
Coal Power Initiative (CCPI). The $68 million increase for CCPI in
fiscal year 2008 over the fiscal year 2007 request is derived in part
from the transfer of $58 million in balances from the Clean Coal
Technology Program that are no longer needed to complete active
projects. This increase allows for the solicitation of a third round of
demonstration projects in fiscal year 2008. In addition the fiscal year
2007 funding level which was increased by $55 million over the request
will be used for the third round solicitation.
rescission of $149 million from the clean coal technology account
Question. The President's fiscal year 2008 budget request
recommends rescinding $149 million of previously appropriated clean
coal technology funds. Rescinding these dollars would effectively
cancel that money for future clean coal demonstration projects and send
these funds back into the Federal Treasury. The clean coal program is
under funded in a time when accelerated investments in coal technology
development have never been more important. We should not be rescinding
clean coal funds, but adding new funds to the program to insure we
develop, in a timely manner, cost effective coal technologies.
Why does the administration insist on rescinding this funding,
which was previously appropriated and can be directed for clean coal
demonstration projects in future years?
Answer. All project funding commitments in the CCT Program have
been fulfilled and only project closeout activities remain. The
administration proposes to transfer $108 million of the $257 million
deferral to the FutureGen project, and cancel the remaining $149
million. Of the $66 million in unobligated balances carried forward at
the start of fiscal year 2008, $58 million is transferred to the Clean
Coal Power Initiative (CCPI). CCPI will complete the Round 3
solicitation using unobligated funds from projects that were selected
but not awarded, plus appropriations that have not yet been committed
to projects. We believe that the cumulative available funding will be
sufficient for a Round 3 CCPI solicitation.
university oil and gas research funding
Question. I am very concerned about the impacts of the cuts in oil
and gas research funding for a number of reasons but am particularly
worried about the impacts of these cuts on the education of our next
generation of energy technologists who are graduate students today.
Can you tell me how many universities will be affected by the
scheduled elimination of almost all oil and gas R&D by DOE in its
fiscal year 2007 Spending Plan?
Can you please list those universities that currently receive
funding? Can you tell me if and when you intend to issue a stop work
order to these institutions?
Will these universities be forced to shut down their oil and
natural gas research programs?
Answer. There are 25 projects at universities that will be affected
by the funding reduction in the operations plan. Federal funding for
oil and gas research and development activities is not needed because
industry has the incentives and resources to accomplish such activities
on its own. Given the private sector's incentives and capabilities, we
believe that private industry is best positioned to fund R&D at
universities and elsewhere, which will provide educational
opportunities for our next generation of energy technologists.
The universities that currently receive funding are: University of
Alaska, Fairbanks; University of Alabama; University of Arkansas;
University of Arizona; Baylor University; California Institute of
Technology; Carnegie Mellon University; Clemson University; Colorado
School of Mines; Stanford University; University of Illinois;
University of Kansas; Florida International University; Georgia Tech
University; Kansas State University; Louisiana State University;
Massachusetts Institute of Technology; Michigan Tech University;
Western Michigan University; University of Mississippi; Mississippi
State University; University of Southern Mississippi; Montana State
University; Montana Tech--Bureau of Mines; New Mexico Institute of
Mining and Technology; State University of New York; University of
Columbia; University of Oklahoma; Oklahoma State University; Prairie
View A&M University; University of North Carolina; University of Tulsa;
University of Pittsburgh; Penn State University; University of Texas--
Austin; University of Texas--Bureau of Economic Geology; Texas A & M
University; University of Houston; Rice University; University of Utah;
West Virginia University; Woods Hole Oceanographic Institute; and the
University of Wyoming.
The Oil and Natural Gas program has previously sent letters to all
program participants notifying them of the potential shortfalls in the
fiscal year 2007 budget. These researchers are currently working using
existing (prior year) funds. Subsequently, all universities with
existing cooperative agreements impacted by the decrease in funds were
contacted and informed of the lack of funding for fiscal year 2007. The
majority of DOE projects are grants or cooperative agreements, for
which a stop work order is not issued.
Each university program will have to examine its particular
situation. In many cases, other Government and/or industry funding may
be available to the university.
natural gas cartel
Question. In his 2006 State of the Union speech, President Bush
indicated he wanted to reduce our reliance on ``imported energy
sources.'' At the same time, DOE and FERC have launched an aggressive
campaign to import more liquefied natural gas (LNG) into the United
States.
The two largest suppliers of imported liquefied natural gas to the
United States are Trinidad Tobago and Algeria. Trinidad Tobago has only
around 23 trillion cubic feet of gas reserves and will ultimately have
to get gas supplies from Venezuela if it wants to continue its
liquefaction enterprise. Algeria is a member of OPEC. Further, I note
that Russia, Iran, Qatar, Algeria, and Venezuela announced recently
they are meeting in Doha this week to discuss forming a natural gas
cartel. This is very troubling.
Finally, I would point out that according to DOE's 2003 National
Petroleum Council Gas Supply Study, the United States has almost 60
years of technically recoverable natural gas, but we need new
technologies to produce them.
How does the administration's policy of reducing our reliance on
imported energy sources square with its policies to encourage the
imports of very large volumes of LNG, especially in light of this very
disturbing news about a possible gas cartel?
Answer. Historically, U.S. imports of natural gas have come
primarily from Canada by pipeline with small amounts of LNG imported
from various countries. In the Energy Information Administration's most
recent Annual Energy Outlook natural gas imports from Canada are
forecast to decline and LNG imports are expected to rise to fill this
gap.
The administration's role in addressing LNG imports is to ensure
that importing facilities are permitted in a timely manner. The market
will decide what facilities are economic, which ones will be built, and
how much LNG to import. Furthermore, we don't believe intense
discussions of a gas cartel are likely to result in the development of
a cartel at this point, considering the relative infancy of the global
LNG spot market.
The administration's policy of reducing our reliance on imported
energy also includes research and development that will strengthen the
Nation's energy security. For example, the administration has proposed
to make the R&D investment tax credit permanent. Under the Advanced
Energy Initiative, the 2008 Budget includes initiatives for hydrogen
fuel, biofuels, plug-in hybrid vehicles, clean coal, nuclear, and solar
photovoltaics to help displace future demand for oil and natural gas.
The administration also supports removing unnecessary barriers to
developing existing reserves of oil and gas including, for instance,
the environmentally responsible exploration and development of reserves
in Alaska.
Question. Is the administration aware of the fact that if all LNG
import facilities approved by the administration were built and
operating at capacity we would be importing almost 60 percent of our
natural gas most of it from many of the same countries that hold us
hostage to imported oil?
Answer. The administration is responsible for permitting proposed
LNG import facilities. However, the market will decide which ones will
ultimately be built and become operational. It is unlikely that it
would be economical to construct every LNG import facility that has
been proposed, and historically LNG importing facilities have typically
operated below their peak capacity levels. Also, Australia and Norway,
countries that are viewed as reliable energy suppliers, are developing
LNG exporting facilities that could supply U.S. markets.
Question. Who are the 10 largest U.S. investors and partners in
building and operating regasification facilities in the United States?
Answer. There are currently only five built and operating LNG
import terminals in the United States. These include the Distrigas
terminal in Everett, Massachusetts owned by Suez; the Cove Point,
Maryland terminal owned by Dominion; the Elba Island, Georgia terminal
owned by El Paso; the Trunkline terminal in Lake Charles, Louisiana
owned by Southern Union; and the Energy Bridge terminal in the Gulf of
Mexico offshore Louisiana owned by Excelerate Energy.
Question. Why would the administration propose eliminating all
funding at DOE for natural gas supply research when we have 60 years of
technically recoverable gas reserves in the United States but need new
technologies to produce them?
Answer. Natural gas production is a mature industry that has every
incentive, particularly at today's prices, to enhance production and
continue research and development of technologies on their own. There
is no need for taxpayers to subsidize natural gas companies in these
efforts.
______
Questions Submitted by Senator Robert C. Byrd
futuregen
Question. Mr. Secretary, in 2004, the President announced the
initiation of the FutureGen project, a $950 million, 10-year
demonstration project to construct the world's first coal-fueled, near-
zero emissions electricity and hydrogen power plant.
I have been supportive of the concept behind FutureGen. FutureGen,
if successful in meeting the intended goals, could be a major
breakthrough for a clean and efficient use of coal and good for the
economic and environmental well being of our country and the world.
However, ever since the inception of this project, I have been very
vocal about my major concerns about the project--namely how the
administration intends to pay for its $700-plus million share of this
project without robbing the basic Fossil Energy research and
development programs and the total cost growth potential of this
project, given increasing costs of construction and the types of
unanticipated costs that usually accompany first-of-its-kind projects.
The Department of Energy's press release, dated April 10,
announcing that the price of construction materials and equipment,
labor, and other heavy construction expenses have significantly driven
the estimated total costs of the FutureGen project to $1.7 billion
through fiscal year 2016 came as no surprise to this Senator. Even with
the Department assuming $300 million in anticipated power sales to
offset the costs of the project, the Federal Government is still left
with a hefty cost share of $1.1 billion--at least $300 million more
than anticipated.
Despite the many inquiries I have submitted to the Department of
Energy in the past, the Department has never been able to adequately
explain to me how it is planning to fund its $700 million-plus share
for the FutureGen project. Can you explain to me how the Department
plans to pay for this major escalation of an additional $300 million?
Answer. The initial cost estimate for FutureGen was developed by
the National Energy Technology Laboratory (NETL), which estimated the
total cost of the FutureGen Project at approximately $950 million in
constant 2004 dollars. This cost estimate was included in the 2004
Report to Congress. While the Department has acknowledged that costs
for some of the currently planned components of the FutureGen plant
have generally increased, the Department has made no commitment beyond
the $39 million Government cost-share in Budget Periods Numbers 0 and
1. Budget Period No. 1 will begin the detailed design for the plant and
re-scoping of the project may be necessary to remain within budget. The
cost for the FutureGen Project is shared between the Department of
Energy, the FutureGen Industrial Alliance, and contributions from
foreign governments. The Department anticipates requesting sufficient
appropriations for the Government's cost-share for FutureGen to meet
the objectives and schedule for this initiative.
Question. I have helped to provide funding for many major
Government construction projects in the past and know that
unanticipated costs are commonplace. Beyond inflation increases that
DOE has just projected, how does the Department plan to cope with
unforeseen costs that might arise with the construction of this first-
of-its-kind project? How much funding has been set aside for future
contingencies?
Answer. The project is structured in phases such that progression
to the next phase depends on the successful accomplishment of
objectives and milestones from each preceding phase.
To date, the cost basis estimate has remained the same as the
original cost estimate identified in the March 2004 Program Summary to
Congress. Contingencies are inherent in the base cost estimate as a
function of design definition and technology development. The inherent
contingency in the FutureGen cost estimate is consistent with industry
recommended practices for a conceptual design with substantial advanced
technologies. The costs associated with these contingencies are
included in anticipated funding profile.
Cost and schedule risks are very real for large, first-of-a-kind
projects and cannot be eliminated completely until construction is
completed. We are making our best efforts to maintain budget for this
important validation of the coal-based near-zero atmospheric emissions
concept.
Question. In fiscal year 2008, the FutureGen program is funded at
$108 million, a 500 percent increase from the fiscal year 2006 level,
while the Natural Gas R&D program, the Oil R&D program, and the
Innovations for Existing Plants program under the Coal R&D program were
zeroed out. This is a very disturbing trend, and one that I suspect
will only worsen as the project goes to construction in future years.
Will you be cutting into the Coal R&D program even deeper to fund cost
growths in FutureGen?
Answer. During the 2000 campaign, the President committed to spend
$2 billion over 10 years on clean coal technology. The budget completes
that commitment 3 years ahead of schedule, with $385 million in funding
for the Coal Research Initiative in 2008. The funding levels in the
budget for clean coal activities are among the highest in this
administration and also from any President in the last 2 decades.
The fiscal year 2008 budget request for FutureGen, when adjusted
for inflation, is consistent with the funding profile as disclosed in
the FutureGen Program summary as reported to Congress in fiscal year
2004. The fiscal year 2008 funding request is to cover NEPA compliance,
significant design activities, and procurement of long-lead items.
FutureGen is integral to the Coal R&D program, and continual
investments in the coal R&D program are necessary in order to support
the development of technologies to drive towards the goal of near-zero
atmospheric emissions coal, which includes the integrated, scale-up
testing of the necessary R&D.
The Natural Gas research and development (R&D), the Oil R&D, and
the Innovations for Existing Plants programs are proposed for
termination because the Federal R&D role in these areas have been
completed and industry should take on that responsibility. The oil and
gas industry has the incentives and resources to accomplish oil and gas
R&D without additional Federal subsidies, which are unwarranted in
today's price environment. Promulgation of CAIR and CAMR provided a
market incentive for developing many advanced, cost-effective emissions
controls and has ended the need for Federally funded R&D in areas under
the Innovations for Existing Plants program. The current fiscal year
2008 budget request has been formulated based on the needs of the
Fossil Energy Program and is consistent with meeting the goals and
objectives of the Department's Strategic Plan.
Question. What role will the National Energy Technology Laboratory
play in FutureGen? Enough to support the approximately 1,200 Federal
and contractor staff who currently support Fossil Energy Research and
Development program?
Answer. The National Energy Technology Laboratory (NETL) has the
lead responsibility for managing the FutureGen project as well as the
many other projects that it has under its purview to advance the
Department's goals and carry out its mission.
Question. If FutureGen is successful, will the Department be able
to deploy FutureGen-type technologies in other locations across the
country in coming decades or will additional resources, studies, tests,
and demonstrations to expand deployment of these technologies be
necessary?
Answer. The goals of the FutureGen project are to prove the
technical feasibility and economic viability of a near-zero atmospheric
emission coal energy option, thus leading to the broad acceptance of
the concept. The FutureGen project has been designed to operate under
real-world conditions and at large enough scale to adequately prove the
viability of the concept. The key is to prove that near-zero
atmospheric emissions coal is technically viable and that its costs are
not prohibitive. The coal research and development program of which
FutureGen is a part, is designed to advance the development of
technologies that reach the goal of near-zero atmospheric emissions
while increasing efficiencies, increasing clean energy production, and
decreasing costs. Ultimately, the market will determine when and how
many of these plants are deployed, yet a successful operation of the
first FutureGen plant is an important prerequisite to the widespread
deployment of near-zero atmospheric emission coal plants.
clean coal power initiative
Question. The administration has included $73 million for the Clean
Coal Power Initiative (CCPI) in the fiscal year 2008 budget, which is a
considerable improvement over the $5 million that the President sought
in his fiscal year 2007 budget request.
I understand that two CCPI Round II projects are experiencing cost
growths. Will the fiscal year 2008 CCPI funds be used to make up these
cost growths and how much would be made available to each project? How
much fiscal year 2008 funding and how much prior-year funding will be
applied to a third CCPI solicitation?
Answer. Additional funding provided by DOE to an awarded project to
help cover project cost growth due to the increase in material,
equipment, and skilled labor cost comes from unobligated funds
appropriated to the coal demonstration program before fiscal year 2006.
These are funds previously committed to projects which have withdrawn
from the demonstration program since selection and would be used for
the Round III solicitation absent cost growth in projects from previous
rounds. Funds provided to a project to cover cost growth will not be
available to fund projects selected in CCPI Round 3. No fiscal year
2008 funds will be used to cover any cost growth for existing projects
but cost growth will reduce the funding available for the next round of
solicitations. The CCPI program operates under the fiscal constraints
of the Clean Coal Technology program, so the maximum allowable increase
in the Government share to these projects is 25 percent over the
Government's original estimate of costs. In the case of the Southern
Company, Orlando IGCC project, this means a maximum increase in the
Government share of $59 million, and $59 million in cost growth has
been approved. In the case of the Western Greenbrier Cogen. WVa FBC
project, this means a maximum potential increase in the Government
share of $28 million, but no cost growth has been approved. Combined,
the maximum potential net reduction in the planned fiscal year 2008
CCPI solicitation is $87 million, of which $59 million has been
approved.
CCPI will complete the Round 3 solicitation using unobligated funds
from projects that were selected but not awarded, plus appropriations
that have not yet been committed to projects. We believe this
cumulative amount is sufficient for proceeding with a Round 3 CCPI
solicitation.
coal-to-liquids initiative
Question. It is my understanding that the coal-to-liquids process
is only commercially feasible when the price for crude oil is at $40
per barrel or higher. What is the Department of Energy doing to provide
price guarantees or other financial incentives for investors? Does the
administration support legislation that promotes coal-to-liquids
projects?
Answer. The Department is closely following the response to the
incentives established by the Energy Policy Act (EPACT) of 2005 which
include coal-to-liquids deployment projects being eligible for
incentives such as tax credits and/or loan guarantees as authorized in
EPACT.
The President has set a goal of increasing the supply of renewable
and alternative fuels, including coal-derived liquid fuels, by setting
a mandatory fuels standard to require 35 billion gallons of renewable
and alternative fuels in 2017--nearly five times the 2012 target now in
law. In 2017, this will displace 15 percent of projected annual
gasoline use.
The administration wants to work with Congress to allow coal-
derived liquids to be eligible under the proposed alternative fuels
standard. The standard should be structured to allow the market to
determine the most efficient way to meet the standard, including to
what extent coal-derived fuels will be used.
Question. I understand that there are environmental concerns
associated with the coal-to-liquids process. What support can the
Office of Fossil Energy provide to industry in identifying ways to
incorporate the capture and storage of carbon dioxide emissions from
the coal-to-liquids process and from using the fuel produced by the
process?
Answer. The Office of Fossil Energy is supporting industry in this
area through its carbon sequestration technology development effort.
This Carbon Sequestration Program includes laboratory and pilot-scale
research aimed at developing new technologies and systems for
greenhouse gas mitigation, which could be applied to coal-to-liquids
processes as well as other industrial processes, though the primary
objective is to apply them to power generation systems. In 2007, the
program is beginning work on the ``highest potential'' opportunities
for an initial expedited round of large scale sequestration tests
(approximately 1 million tons CO2 per year for each site).
DOE has provided additional funding in the fiscal year 2007 budget for
the Carbon Sequestration Program to award several large volume
sequestration tests.
impact of the fiscal year 2008 budget on the national energy technology
laboratory
Question. If this fiscal year 2008 budget is enacted, how many
Federal, contractor, and construction jobs will be eliminated at the
National Energy Technology Laboratory, which is based in Morgantown,
West Virginia; Pittsburgh, Pennsylvania; and Tulsa, Oklahoma; with
smaller offices in Tulsa, Oklahoma; and Fairbanks, Alaska?
Answer. We are managing our human resources effectively to achieve
our program goals and do not anticipate significant changes in staffing
levels.
Question. In the past, NETL has received approximately $2 million
per year in General Plant Projects, which covers critical maintenance
needs. Can you tell me why the past several Fossil Energy budgets have
zeroed out funds for critical maintenance at the major NETL sites, all
of which are more than 40 years old? Will this impact the health and
safety of the workers?
Answer. NETL received almost $2 million in fiscal year 2006 for
General Plant Projects and $4 million in fiscal year 2007. It is
anticipated that NETL has sufficient funds to continue these activities
in fiscal year 2008.
clean energy technology exports initiative
Question. I initiated the Clean Energy Technology Exports (CETE)
Initiative in the fiscal year 2001 Energy and Water Appropriations
bill. The administration then completed a 5 Year Strategic Plan in
2002. From fiscal year 2004-2006, I helped provide $1.6 million in
funding to help further this initiative.
Please provide me with a detailed account on how these appropriated
funds were utilized.
Answer. The Department remains committed to the goals of the Clean
Energy Technology Export (CETE) Initiative. I have attached a matrix of
our spending allocations in 2005 and 2006. In summary, we have funded
programs that support direct partnership with industry, as well as
programs that coordinate interagency efforts and improve the efficacy
of Federal activities to support deployment.
CETE PROJECTS
----------------------------------------------------------------------------------------------------------------
Funding Amount
Activity/Short Title Project Partners/ Leverage Summary Comments (In thousands)
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2005CETE Website........................ GETF........................ Provides central site for $25
CETE info dissemination,
and to summarize
opportunities from other
donor organizations like
EBRD, ADB and GEF. Allows
both novice and
sophisticated market
players to find appropriate
points of contact for
questions. Could eventually
be used to track
performance metrics.
DOE-USAID Hydropower Partnership.... U.S. Hydropower Council for Fiscal year 2005 focus on 100
International Development. project development and
$200k from USAID and closure in India, Mexico
private sector. and Guatemala. Track record
of success. Multiple
private sector partners.
Sustainable Finance................. Resource Mobilization Continue work in Poland and 175
Advisors (RMA). $200k from Mexico. Initiate work in
U.K. Govt, NADBank and Philippines to build
World Bank. portfolio of viable EE
projects for investment.
Initiated study on
Financing Mechanisms to
support clean energy with
input from private partners
and U.S. agencies.
Supported Resource Guide as
outreach tool for U.S.
exporters.
Management Plan..................... ORNL........................ ............................ 75
Tsunami Study....................... Argonne..................... ............................ 75
Sustainable Communities............. GTI......................... ............................ 35
Green Olympics/Beijing.............. ORNL........................ ............................ 45
REEEP............................... ............................ ............................ 50
Africa Geothermal................... ............................ ............................ 15
===============
Fiscal Year 2006CETE Website........................ Global Environment Provides central site for 40
Technology Foundation CETE info dissemination,
(GETF). and to summarize
opportunities from other
donor organizations like
EBRD, ADB and GEF. Allows
both novice and
sophisticated market
players to find appropriate
points of contact for
questions. Could eventually
be used to track
performance metrics.
DOE-USAID Hydropower Partnership.... U.S. Hydropower Council for Fiscal year 2006 focus on 150
International Development. project development and
$400k from USAID and closure in India and
private sector. Guatemala. Track record of
success with more than $50
million in projects
finalized in the past 2
years. Multiple private
sector partners.
Sustainable Financing for EE........ Resource Mobilization Expect to close on $10 100
Advisors (RMA). $500k from million in EE project with
Philippine Govt, NADBank, U.S. partners in Mexico in
USTDA and World Bank. next 6 months. New deals in
Poland and Philippines in
next 18 months.
Africa Geothermal Mission........... EERE, Govt of Kenya......... Reverse trade mission 30
bringing officials from
Kenya to U.S. Geothermal
Conference to meet multiple
vendors.
Energy Efficiency Initiative in IRG, Govt of Ukraine. $600k Create audit fund and 50
Ukraine. from USAID. project development support
with U.S. ESCO's and local
partners in Ukraine. CETE
money will piggyback USAID
to help engage U.S.
technology vendors.
Clean Tech in Thailand with Southern FE, SSEB, Govt of Thailand.. Good exposure to technology 40
States Energy Board (SSEB). vendors in 16 States
through SSEB. Track record
of success. Multiple SME
private partners. Potential
projects include biomass/
coal hybrid and upgrades to
existing thermal plants.
India Coal Beneficiation............ FE, Govt. of India.......... Builds on previous studies. 45
Necessary to mitigate
negative environmental
impacts of near-term coal
expansion in huge market.
Multiple potential private
partners. Could expand
under Asia Pacific
Partnership. Possible USAID/
India buy-in.
China Ombudsman for Renewable....... U.S. companies attending Goal is to set up side 29
Renewable Conference. meetings with interested
parties in China around
conferences where U.S.
companies are participating
and/or exhibiting. First
event is in September 2006.
China Combined Heat and Power (CHP). LBNL, U.S. CHP Association.. Seed funding to develop a 45
market plan, consider tech
options and get U.S.
vendors involved. Huge
market potential.
Caribbean--New Energy sources....... IDB, CARICOM, USAID......... Support for new initiative 20
to explore alternatives to
fossil fuel in the broad
Caribbean market. Launch
Conference in September.
CETE funding used to engage
U.S. vendors for wind,
hydropower and biofuels
technology.
PI-Kazakhstan Nuclear power tour.... ORNL. Nuclear Energy Responds to S-1 trip. 45
Institute (NEI), Govt of Reverse trade mission to
Kazakhstan. visit U.S. sites with
potential vendors and
investors. Large market and
potential for U.S. sales.
PI-Kazakhstan Petrochemical Industry GOK......................... Responds to S-1 trip. ..............
Tour. Reverse trade mission. U.S.
industry interest unclear.
---------------
Total....................... ............................ ............................ 594
----------------------------------------------------------------------------------------------------------------
In fiscal year 2006, we instituted performance metrics to measure
the specific and tangible impact of the CETE program and we also
solicited input on jointly funded projects. As a result, we are now co-
funding projects with USAID, TDA and the DOE Offices of Fossil Energy
and Energy Efficiency and Renewable Energy.
We have supported programs in 13 different countries in partnership
with more than 20 private companies and 10 international organizations.
Our funding is being leveraged at least 2:1 with other resources from
private partners and other donor organizations.
The programs we are supporting are intended to benefit multiple
projects with multiple U.S. vendors and developers, and yet could not
be accomplished by any one U.S. company acting alone.
Regarding interagency coordination, we host CETE Working Group
meetings on a quarterly basis. Representatives from all nine
participating agencies regularly attend. We have also developed the
``Clean Energy Exports Assistance Network'' (www.cleean.net) as a tool
to better inform U.S. clean technology partners of specific energy
market conditions and opportunities, and to better coordinate
interagency resources.
We also supported the preparation of a report titled ``Financing
Mechanisms for Clean Energy Technology Exports'' with input from
industry and CETE participating agencies. The report may be found at
the website.
Question. Because the Department of Energy has discretion to fund
programs though the fiscal year 2007 Joint Funding Resolution, what is
the Department doing to further develop and integrate the CETE
Initiative into its overall international energy technology deployment
strategies?
What does the Department plan to do to continue to pursue the goals
of the CETE Initiative in fiscal year 2008?
Answer. The Office of Policy and International Affairs and the
Office of Energy Efficiency and Renewable Energy are working together
to define useful projects for fiscal year 2007 and an overall strategy
for programs in fiscal year 2008. The goal is to focus on projects that
may create lasting institutional abilities, and that have the potential
to transform markets.
Programs we are considering in fiscal year 2007 include further
input to the website (www.cleean.net), and a training program on clean
energy technologies for foreign service and foreign commercial service
officials. We also plan to support industry events focused on new
market opportunities in China, Central American, and the Caribbean.
In fiscal year 2008, we want to pursue a strategy of integrating
the CETE goals into our international programs by ensuring better
industry participation and more effective coordination with other
agencies and with large donor organizations such as the World Bank and
the Global Environment Facility. We expect to narrow our focus to fewer
strategic markets, and to support activities in those markets that
offer the greatest potential for commercial implementation.
Question. How is the Department and the administration integrating
CETE with other administration activities such as the Asia-Pacific
Partnership?
Answer. As you know, the CETE program encompasses all clean
technologies and is global in focus whereas the Asia-Pacific
Partnership (APP) has seven technology-based working groups and is a
partnership of six countries: Japan, Australia, S. Korea, India, China
and the United States. Further, the goals of the CETE program are to
support the efforts of U.S. industry, while the APP more broadly
supports green-house gas emission reductions with participation by
industries from all member countries.
Question. How is the Department working with other Federal agencies
as well as the private sector on all of these initiatives?
Answer. Despite the differences in focus, we are coordinating
efforts through the CETE interagency working group and on the website
(www.cleean.net). Many of our industry partners under the CETE umbrella
also participate in the APP. We anticipate that some projects supported
under the CETE program in India and China may be good candidates for
funding under the APP and vice-versa.
gao report
Question. In December 2006, the GAO issued a report entitled ``Key
Challenges Remain for Developing and Deploying Advanced Energy
Technologies to Meet Future Needs.''
The report summarized that despite the United States being more and
more reliant on imported energy resources, the DOE's total budget
authority for fossil energy R&D dropped from $1.9 billion (in real
terms) in fiscal year 1979 to $434 million in fiscal year 2006. With
the Energy Information Administration projecting that total U.S. energy
demand will increase by about 28 to 35 percent between 2005 and 2030,
GAO recommended that the Congress consider further stimulating the
development and deployment of a diversified energy portfolio by
focusing R&D funding on advanced energy technologies.
I note with disappointment that DOE had no comment on this
recommendation. Would you please provide me with your comments on GAO's
recommendations?
Answer. The GAO report provides valuable information that will be
useful to the Department and the Government (in general terms) in
connection with our research and development activities. Success in R&D
is measured by its transition to commercial application. Examples in
the oil and gas sector include down-hole telemetry, horizontal
drilling, 3-D seismic analyses, and polycrystalline diamond drill bits,
all of which have been adopted by the industry. Examples in the area of
renewable energy are geothermal energy and hydropower, both now
considered as fully developed technologies. The GAO report also notes
that there is over $5 billion in tax expenditures (financial
incentives) targeted at energy suppliers and users of advanced
technology. The Energy Policy Act of 2005 augments these incentives
with an estimated $11 billion worth of additional financial incentives
over 10 years. The primary role for Government in this area is to fund
high-risk, basic energy research, as was explicitly outlined by this
administration in the Research and Development Investment Criteria
issued in 2003. The GAO study fails to take stock of the increases over
the last 2 decades in funding in this area, offsetting some of the
declines in applied R&D. Taking into account all of these factors, we
believe that DOE R&D is sufficient to meet our Nation's energy needs.
oil and gas price relationship
Question. Would you please provide comments on EIA forecasts of
natural gas and oil prices in its Annual Energy Outlook (2005 to 2007).
It appears that each year, EIA significantly underestimates future
prices of these fuels, specifically:
In EIA's Annual Energy Outlook 2006 and 2007, natural gas price
forecasts depart from a traditional price relationship to oil based on
Btu parity, as demonstrated in the 2005 version. This departure is
evident in both the reference case and the high oil price scenario.
What is the basis for this significant departure? Why do industry
analysts continue to stick with the traditional gas-oil price
relationship while EIA sees the price ratio as almost doubling as in
the high oil price case? (EIA)
Answer. The historical record shows substantial variability in oil
and natural gas prices and in the relationship between them. The ratio
between the annual average prices of a barrel of West Texas
Intermediate (WTI) oil and one million British Thermal Units (BTU) of
natural gas at the Henry Hub has varied since 1990 from a high of 14.5
to a low of 5.7.
Historically, fuel switching between oil and gas was thought to
have been a major contributor to the price relationship, but there has
recently been some decline in the capacity to switch between these
fuels in many end-use applications. While oil and natural gas continue
to compete in some applications, oil and natural gas prices are also
linked to the availability of alternative sources of supply;
competition between coal, nuclear power, renewables, and natural gas as
fuels for electricity generation; the availability and cost of inter-
fuel conversion technologies, such as gas-to-liquids; environmental
restrictions; and the relative importance of transportation costs in
the total delivered price of energy from each source, which affects the
regional scale of inter-fuel competition. EIA expects there to be a
relationship between oil and natural gas prices that varies somewhat
depending on many factors, not necessarily a constant ratio of price
between oil and gas that is closely linked to the ratio of their energy
content that some industry analysts expect.
Tighter markets, as we have experienced in recent years, result in
greater price impacts from similar shifts in demand or supply than
would be seen in looser markets. On the supply side, higher oil prices
result in increased drilling for oil and thus higher costs for oil and
gas drilling, placing upward pressure on gas prices. Higher oil prices
also generally result in increased cash flow and the potential for
greater investment in oil and gas prospects, placing downward pressure
on gas prices. Over the longer-term, world markets will play a larger
role in determining the relationship between oil and natural gas prices
in the United States due to increasing trade in liquefied natural gas.
This relationship will be influenced by worldwide fuel switching
capability, exploration and production costs (E&P) costs, and the
potential for a growing gas-to-liquids market.
Numerous changes occur from one Annual Energy Outlook (AEO) to
another. Nothing was specifically implemented in the model to change
the oil-to-natural gas price relationship. For example, natural gas
prices in the AEO2006 and AEO2007 are higher compared to the AEO2005,
partially as a result of much higher costs. Higher prices resulted in
slower projected growth in residential, commercial, and industrial gas
consumption through conservation and inter-fuel substitution. In the
power generation market, higher natural gas prices dramatically lower
the future natural gas generation share and raise the coal share from
what it might have been with lower natural gas prices. However,
notwithstanding the possibility of significant policy changes affecting
energy use over the next 25 years, AEO reference case projections
generally assume that current laws and policies remain in place
indefinitely, in order to provide a baseline for policy analyses
requested by Congress and the administration. Should future policy
actions to mitigate greenhouse gas emissions preclude significant
growth in coal-fired generation, and if new nuclear power plants that
would be economically attractive under such circumstances are blocked
by other concerns, continued growth in gas-fired generation would
likely reduce the future ratio of oil-to-natural gas prices from that
projected in AEO2007.
______
Questions Submitted by Senator Dianne Feinstein
elk hills
Question. As compensation for the Federal Government's sale of the
Elk Hills Reserve, Congress mandated in the fiscal year 1996 National
Defense Authorization Act (Public Law 104-106) that 9 percent of the
net sales proceeds be provided to California for its claims to State
school lands located in the Reserve. Of the $317.7 million owed to the
State under the terms of this settlement, approximately $300 million
has been paid to date.
The Department of Energy's fiscal year 2008 budget does not provide
for the remaining compensation. It is my understanding that California
has already agreed to allow the Department to hold $6 million of the
remaining compensation as a ``worst case scenario'' to complete the
equity finalization process. The State is willing to come to a
compromise with the Department over the remaining payment, and has
offered to complete the claim with a final appropriation of $9.7
million. Would this be an acceptable solution to the Department, and if
not, why?
Answer. If the State of California wishes to submit a proposal to
the Department, we are open to considering it.
Question. What is the Department's timeline to complete this
settlement with the State of California?
Answer. The equity finalization process is a complicated matter,
and thus the timeline is uncertain.
______
Questions Submitted by Senator Pete V. Domenici
carbon sequestration
Question. Mr. Shope, as you are well aware, coal is the most
CO2 intensive source of energy. Today, 75 percent of coal
reserves are held by the United States, Russia, China, India and
Australia, and it is clear that coal will be a major energy provider
for each of these nations for the foreseeable future.
The recently released MIT report, The Future of Coal, stresses the
importance of large-scale demonstration projects for carbon capture and
storage technologies. The authors conclude that projects inject less
than 1 million tons of carbon dioxide per year and will not be large
enough to replicate the geological stresses that a full commercial
scale operation would produce. I understand that the current carbon
injection projects are on a much smaller scale.
Do you agree that such large-scale demonstrations are needed, and
in what timeframe? What is the Department doing to expand its R&D
efforts in this area?
Answer. The Department of Energy (DOE) agrees that large-scale
projects are necessary to demonstrate that carbon sequestration
technologies are necessary to replicate commercial-scale operations.
DOE has been planning for large-scale sequestration tests since 2004.
The Regional Carbon Sequestration Partnerships are currently conducting
some smaller tests that are helping to build the infrastructure and
demonstrate the technology on a small scale. In 2007, the program is
beginning work on the ``highest potential'' opportunities for an
initial expedited round of large scale sequestration tests
(approximately 1 million tons CO2 per year for each site).
DOE has provided additional funding in the fiscal year 2007 budget for
the Carbon Sequestration Program to award several large volume
sequestration tests. The DOE is in the process of negotiating these
large volume tests with the Regional Partnerships and plans to make
some of the awards by the end of fiscal year 2007. The Regional
Partnerships have come forward with a portfolio of project
opportunities, a variety of geologic conditions, and future
commercialization opportunities.
Question. Has the Department developed a R&D roadmap to address the
challenges facing adoption of carbon capture and sequestration?
Answer. The DOE Carbon Sequestration Program issues a revised
roadmap annually in May. It contains a discussion of the program's
structure, challenges, and goals for technology development. This
roadmap can be downloaded from the following website: http://
www.netl.doe.gov/publications/carbon_seq/refshelf.html.
china--carbon sequestration collaboration
Question. The MIT study also calls for up to 10 other large-scale
demonstration projects in other countries. China in particular is
building coal-fired power plants at a spectacular rate.
Would you support a major initiative to partner with China to
develop carbon capture and storage technologies?
Answer. The Department is actively engaged with China on the
development of carbon capture and storage technologies. China is
involved in the FutureGen Alliance. China is also a member of the
Carbon Sequestration Leadership Forum, whose purpose is to make
information on viable carbon capture and storage projects broadly
available internationally and identify and address wider issues
relating to carbon capture and storage. Finally, carbon sequestration
is within the purview of the Asia Pacific Partnership's Cleaner Fossil
Energy Task, in which both China and the United States participate. We
look forward to continued collaborations with China in the area of
carbon capture and storage.
Question. In your view, how can we best encourage China to
collaborate with the United States in developing these technologies?
Answer. The Department of Energy (DOE) will continue to encourage
China through involvement in the Carbon Sequestration Leadership Forum,
the FutureGen Alliance, and the Asia Pacific Partnership on Clean
Development and Climate. China is a member of the Carbon Sequestration
Leadership Forum, whose purpose is to make information on viable carbon
capture and storage projects broadly available internationally and
identify and address wider issues relating to carbon capture and
storage. China is also involved in the FutureGen Alliance. Finally, the
DOE and China are members of the Asia Pacific Partnership on Clean
Development and Climate, which has a mission to promote the technical
transfer and demonstration of clean coal technologies. We would look
forward to this continued collaboration with China.
carbon capture r&d
Question. Developing carbon capture and storage technologies will
require progress on several research fronts. First, the costs of carbon
capture must be brought down to affordable levels. Second, the
feasibility of injection technologies must be demonstrated at
commercial scales. Third, monitoring and verification technologies must
be developed.
Which of these research areas do you believe to be the most
challenging given today's technologies?
Answer. The Department of Energy (DOE) believes that the
demonstration of carbon storage at the appropriate scale and the
development of low-cost carbon capture technologies are equally
important. The need to demonstrate carbon storage at scale is needed to
stress the injection operations and determine the effects on the
storage formations. Different geological conditions and settings need
to be assessed to show that the capacity and injectivity exists for
full scale deployment. Protocols for the site selection,
characterization, well construction, permitting, monitoring, and
closure need to be developed from these projects so that full scale
deployment can occur. Carbon capture technologies exist today in
industrial applications, but have not been demonstrated at full scale
in conjunction with electricity generation. In addition, the commercial
systems that exist today would increase the cost of electricity by
approximately 30 percent to 80 percent, for pre and post combustion
technologies, respectively. Novel capture technologies are being
researched in the laboratory and have the potential to reduce the
increase in cost of electricity to DOE's goal of not more than 10
percent. Continued research and demonstration of these technologies is
needed at a pilot-scale and in full-scale integrated demonstration.
Monitoring, mitigation, and verification technologies are necessary but
new technologies are not critical to deployment of carbon capture and
storage as a greenhouse gas mitigation technology. Existing
technologies can be adapted for monitoring CO2 in geologic
formations. Advancement in this area could improve our knowledge of the
fate of CO2 and drive down the associated cost of
monitoring.
Question. In your view, how should the Office of Fossil Energy
allocate its resources between these areas?
Answer. The Department of Energy (DOE) has issued a roadmap for
technology development, which is working to stage the funding
requirements for the capture and storage demonstration projects. Early
emphasis is on the demonstration of storage projects and bringing down
the cost of CO2 capture. As the capture program has success
in developing novel technologies for low cost capture, DOE is
supporting pilot and demonstration tests to demonstrate that these
capture technologies are ready for commercial deployment.
Question. How should the Federal Government and the private sector
share the cost burden of developing these technologies?
Answer. The Department's Carbon Sequestration Program administers
research and development awards through cooperative agreements, which
require that participating organizations provide a minimum of 20
percent cost share. For demonstration projects selected under a Clean
Coal Power Initiative solicitation, the recipient would need to provide
a minimum of 50 percent cost-share and agree to a schedule to reimburse
the Government based on future revenues from sales of the
commercialized technology.
taxation of coal r&d dollars
Question. Under the Clean Coal Power Initiative, Round 2, the
Department of Energy has authorized funding of various private sector
projects to demonstrate advanced clean coal technology, including
advanced gasifier technology.
It is my understanding that the IRS has changed its long standing
policy toward Federal research funding to make these funds taxable as
corporate income. The practical effect of this policy change is that
one branch of government is providing funding to encourage a public
purpose activity, while another branch of government is reducing that
funding by taxing it.
I have worked too hard on this subcommittee and as Chairman of the
Energy Committee to make Federal energy R&D research a priority. Now to
have the IRS change it's policy to levy a huge tax on the Federal R&D
funds would be devastating in our effort to increase our energy
independence.
Can you please explain the logic behind this decision and what
impact it will have on Federal R&D efforts to have upwards of one-third
of the funding going toward tax payments instead of research?
Answer. I would refer you to the Department of Treasury for an
explanation and rationale of their decisions.
Question. Has Secretary Bodman contacted Treasury Secretary Paulson
to discuss this matter?
Answer. The Department of Energy has been in contact with the
Treasury Department to understand the rationale behind this ruling and
what options may be available under current law to utilize allocated
research and development funding.
______
Question Submitted by Senator Wayne Allard
naval oil shale reserves royalty distribution
Question. As you may be aware, when Congress transferred Naval Oil
Shale Reserves (NOSR) Numbers 1 and 3 from the Department of Energy to
the Department of the Interior in 1998 the legislation stated that DOI
could not begin the ``normal'' process of royalty distribution until
DOE was compensated for their ``original investment'' and for the costs
of cleanup of the Anvil Points facility. To ensure this happened
section 7439 (f)(2) of the Transfer Act stated that the Secretaries of
Interior and Energy must jointly certify to Congress that the monies
have been recouped prior to making revenue available for distribution
to the State of Colorado.
Oil and gas receipts collected from production within NOSR Number 3
have now far surpassed the estimate of what was needed to fully
reimburse DOE for their original investment as well as covering the
cost of environmental remediation at the Anvil Points site. It is my
understanding that the agencies will not agree to certification until
the necessary clean-up is complete. As you and I both know, that will
likely take several more years.
I was serving in the Senate at the time and played an active role
in the passage of this provision. It is my view that DOE and DOI have
misread the intent of Congress in determining that the clean-up must be
complete. Can you please tell me what this position was based on?
Answer. Although the Department of the Interior assumed
responsibility for the environmental remediation of Anvil Points, the
Secretary of Energy must certify that there are adequate funds in the
account to offset all costs incurred by the Government, including the
Department of the Interior's proposed cleanup plan. It is our
understanding that Department of the Interior has not finalized its
cleanup plan; consequently the cost of that plan remains to be
estimated.
At such time as the Department of the Interior completes the plan
along with the estimate of costs, the Department of Energy stands ready
to quickly review and certify whether the funds generated exceed the
total costs. We will continue to work closely with the Department of
the Interior to facilitate the completion of the necessary measures to
initiate the appropriate distribution of the royalty payments from the
former Reserves.
______
Questions Submitted to Kevin M. Kolevar
Questions Submitted by Senator Byron L. Dorgan
consolidation of research programs
Question. I have noticed that the Distributed Energy Systems has
been renamed to Renewable and Distributed Systems Integration. The
funding has been reduced and the focus changed to distributed
generation technologies on the utility side of the meter. What has
happened to development of technologies on the customer side of the
meter? Has it been reduced, eliminated, or moved to another research
area? Why was this done?
Answer. The Office of Electricity Delivery and Energy Reliability's
(OE) Distributed Energy Systems budget line has been renamed to reflect
the fact that distributed generation technologies have been completed.
The Distributed Energy Program has met its performance targets of: (1)
achieving three integrated energy systems (combined heat and power
systems) of greater than 70 percent efficiency; (2) demonstrating a 38
percent efficient microturbine; and (3) demonstrating a 44 percent
efficient reciprocating engine. The research efforts will now address
Renewable and Distributed Systems Integration (RDSI), as reflected in
the budget request. This research will concentrate on the integration
of renewable and distributed energy technologies into the grid at the
distribution system level.
The successful demonstration of this integration could
substantially increase the use of renewable and distributed energy for
supplying power and other ancillary services during peak load periods
in support of electric distribution operations. These projects will
also demonstrate the ability of these technologies to reduce power
required to the distribution feeder. This will be accomplished through:
modeling, design, integration, and RD&D of renewables and distributed
energy integration into the distribution system; low-cost sensors;
advanced monitoring; and consumer information. The goal of RDSI is to
demonstrate a peak load reduction of 20 percent by 2015 and improve
asset management on distribution feeders. This will be accomplished
through the implementation of distributed energy (including renewables)
and energy management systems that are cost competitive with system
capacity upgrades.
The development of technologies on the customer side of the meter
is the responsibility of the Office of Energy Efficiency and Renewable
Energy. Currently, only renewable technologies that can be placed on
the utility side of the meter are being supported in this office. The
Distributed Energy activities were moved by Congress in the fiscal year
2006 appropriations.
Question. DOE has developed programs such as GridWise and GridWorks
to facilitate grid systems integration while fostering development of
the ``smart grid'' concept. Your office has restructured and
streamlined your R&D programs in fiscal year 2007 and into fiscal year
2008.
Thus, what is the status of these efforts? What has your office
done since the 2003 Blackout to address the role of advanced
technologies to avoid similar situations and to coordinate with the
private sector to shepherd these technologies into the marketplace?
Answer. In fiscal year 2005, the Department issued a solicitation
and awarded cooperative agreements in support of the Gridwise and
Gridworks research plans. Some of these awards are completed and others
are still in progress. The Department remains committed to completing
the activities initiated under this solicitation for Gridwise and
Gridworks. As a result of these activities, the Department has
recognized the need to promote advanced grid control technologies
(Gridwise) and improved hardware (Gridworks) in a systematic manner.
We have identified the causes of the 2003 blackout and have made
progress in implementing the recommendations made by the U.S.-Canada
Power System Outage Task Force (Task Force). The most important
recommendation of the Task Force was for the U.S. Congress to enact
legislation to make compliance with reliability standards mandatory and
legally enforceable, which the Congress did in the Energy Policy Act of
2005. The Federal Energy Regulatory Commission implements this policy
through oversight of the North American Electric Reliability Council as
the Nation's ``Electric Reliability Organization.''
The electricity delivery system is extremely complex and remains
subject to combinations of mechanical and human failures. Although
improvements have been made to the grid since 2003 in areas such as
operator training, we can never entirely prevent blackouts from
occurring. What we can do is improve our ability to identify and
isolate problems on the grid when they arise. That is why my office
works with transmission system operators on the next level of
technologies that will increase the ability of operators to receive
real-time information regarding transmission problems.
It is also important that we are not just prepared for a blackout
similar to that of August 14, 2003; we must be well-prepared for a
wider range of possible events. The Office of Electricity's (OE)
Infrastructure Security and Energy Reliability program provides hands-
on expertise to assist in the recovery of the transmission network, no
matter what the cause of the failure. Finally, under authority from the
Energy Policy Act of 2005, OE assists State and regional planners by
identifying areas of electric congestion, coordinating Federal
authorizations required to site new transmission, and where
appropriate, designating national interest electric transmission
corridors to enable the FERC, under certain circumstances, to site
transmission facilities.
high temperature superconductivity research
Question. I note that the funding level for high temperature
superconductivity research and development has been cut by 42 percent
from the funding level in fiscal year 2006. Why such a significant cut?
What technology applications are being reduced because of these cuts?
Answer. The cut was to focus the high temperature superconductivity
program on higher priority wire development and cable demonstrations
(including fault current limiters). The cut in high temperature
superconductivity reflects phasing out of motor research and completing
flywheel cooperative agreements.
electricity transmission and energy delivery
Question. I have noted your office's work on determining areas of
congestion and defining national corridors as well as your work in
siting and permitting. North Dakota has a variety of energy resources
that are stranded and that are not able to move to markets. What is
your office doing to help promote and expand transmission delivery and
efficiency in North Dakota and around the country?
Answer. My office is involved in four major activities to help
transmission delivery and improve efficiency in North Dakota and around
the country.
First, in August 2006, in accordance with section 1221(a) of the
Energy Policy Act of 2005 (EPACT), the Department of Energy (DOE)
released the National Electric Transmission Congestion Study
(Congestion Study), which examined transmission congestion and
constraints and identified constrained transmission paths in many areas
(except Texas) that are facing growing demand. The congestion study
identified three categories of congestion areas that merit further
attention throughout the continental United States. The third type of
congestion areas in the study, ``Conditional Congestion Areas,''
identified areas where congestion is not presently acute, but could
become so if considerable new electric generation were to be built
without associated transmission capacity. The region from the Dakotas-
Minnesota falls into this category because it contains potential
locations for new large-scale wind and coal generation that could serve
distant load centers.
Second, in addition to fulfilling the EPACT requirement that the
Department update the Congestion Study every 3 years, DOE will also
issue annual reports in the interim that detail the progress made in
addressing the congestion challenges as identified in the 2006
Congestion Study. My office is preparing a draft for the Department's
Congestion Alleviation Update that will be published in fall 2007. This
update will detail the transmission, generation, and demand reduction
activities that have occurred in the areas of transmission congestion
that the Department identified in its August 2006 study.
Third, my office is implementing two other areas of EPACT that
relate to transmission delivery. One of these is in accordance with
EPACT section 368 and is a joint effort with the Departments of
Agriculture, Commerce, Defense, and Interior to designate energy
corridors on Federal lands for oil, gas, and hydrogen pipelines in
addition to electricity transmission and distribution facilities. A
record of decision for the 11 contiguous Western States, is expected to
be completed in fiscal year 2008. Corridor designation for the Eastern
United States, Alaska, and Hawaii will begin in early fiscal year 2008.
The second area of EPACT is in accordance with the new Federal Power
Act section 216(h) created under EPACT section 1221(a). The Department
is now beginning this process of coordinating all applicable Federal
authorizations and related environmental reviews that are required to
site an electric transmission facility.
Fourth, my office has been and continues to support the efforts of
States and transmission planners to work on a regional basis to better
coordinate electric infrastructure improvements. For example, for a
number of years we have given direct funding support, as well as in-
kind support from various technical analyses and studies, to the
Western Governor's Association for its ``Committee on Regional Electric
Power Coordination,'' which is an ad-hoc group of Western State
officials who meet regularly to better coordinate and encourage needed
electric infrastructure improvements in the Western Interconnection. A
number of regional and sub-regional transmission planning and study
groups in the West have emerged as a result of the encouragement of
these State officials and their Governors. In fact, the Department
reviewed many of the documents these groups have produced in conducting
analysis for the Congestion Study. As a result of the Congestion Study,
the western region, with oversight by a body of State officials, has
now developed regional transmission planning through the Western
Electricity Coordinating Council.
Similarly, in the Eastern Interconnection, grid planners are
undertaking efforts to conduct interconnection-wide analyses. The new
Eastern Reliability Working Group has brought together all of the
regional transmission operators, independent system operators, and
reliability councils in the Easter Interconnection.
The Office of Electricity also coordinates with the Office of
Energy Efficiency and Renewable Energy to provide technical assistance
to transmission planners and grid operators seeking to integrate wind
generation into the transmission grid. This includes working with the
Midwest Independent System Operator to identify possible transmission
upgrades that will enable wind generation in North Dakota to be
developed.
loan guarantee questions
Question. Since the passage of the fiscal year 2007 Joint Funding
Resolution, the Department has moved forward on several fronts related
to the loan guarantee program. Please tell the committee where the
Department stands in terms of setting up the new loan guarantee office,
issuing final regulations for this program, and reviewing the pre-
applications submitted last year.
Answer. The Department has advertised the position for the Director
of the Loan Guarantee Program Office. A number of resumes have been
received to date, and the Department will review the resumes for
qualified candidates. In addition, two senior Department of the
Treasury employees with experience in Federal loan guarantee programs
have joined the Loan Guarantee Program Office on 6 month details to
help establish the office. Once the Director has been hired, the
Director will make a determination on required staffing expertise and
those positions will be recruited.
With respect to the issuance of final regulations, the Department
is working to meet the August 2007 deadline contained in the Revised
Continuing Appropriations Resolution, 2007, Public Law 110-5. A Notice
of Proposed Rulemaking was published in the Federal Register on May 16,
2007 and is open for public comment until July 2, 2007.
Finally, the Department is completing a preliminary review of the
applications to determine which applications are responsive to the
solicitation. Guidance has been issued to program offices to begin the
technical reviews of the pre-applications. Separately, the Loan
Guarantee Office will be reviewing each pre-application for compliance
with the financial, commercial, and other criteria set forth in the
August 2006 solicitation and accompanying guidelines. Ultimately, the
goal is to complete the pre-application evaluations this summer.
Question. With all of these activities underway, when do you think
that the Department can reasonably expect to make the public
announcements regarding awards to industry?
Answer. The Department anticipates that it will take until at least
the first quarter of calendar year 2008 to issue the first loan
guarantees.
Question. In the fiscal year 2007 Long-term Funding Resolution,
Congress provided funding to support establishment of a loan guarantee
office. Congress authorized up to $4 billion in loan guarantees to be
available immediately and directed that no loan guarantee awards can be
made until final loan guarantee regulations are in place, 6 months from
the date of enactment of the fiscal year 2007 Long-term Funding
Resolution. Furthermore, in fiscal year 2008, the Department is seeking
additional funding to support the loan guarantee office, and you are
requesting $9 billion in additional authority with a caveat that this
amount would be reduced from amounts previously provided.
If the request is for $9 billion to be reduced by the amount
previously provided, is that amount previously provided, the $2 billion
the Department previously announced would be available late last year
or the $4 billion that the Long-term Funding Resolution provided?
Answer. As the Department anticipates that it will take until at
least the first quarter of calendar year 2008 to issue the first loan
guarantees, DOE anticipates issuing $9 billion in loan guarantees in
fiscal year 2008.
Question. Does the Department believe that new coal and nuclear
power plants are very capital intensive and thus requiring additional
assistance to construct first-of-a-kind technologies? The committee is
aware of information that the costs of these plants are very large
relative to the market capitalization of some of the utility companies
that are interested in constructing such facilities.
What is the Department's current assessment of the economic
viability of new commercial coal and nuclear power plants?
How would Federal loan guarantees affect the relative economics of
these new coal and nuclear power plant projects?
In view of the uncertainties and regulatory risks associated with
the initial deployment of a new fleet of IGCC carbon capture-ready and
nuclear power plants, in your judgment would the loan guarantee program
play an important role bringing these planned projects to fruition?
Answer. Advanced, environmentally friendly, clean coal technologies
are poised to enter the market, but some require a price premium
relative to more conventional technology. In spite of the higher cost,
the private sector has shown great interest in these technologies. The
2008 budget continues robust funding for the President's Advanced
Energy Initiative to develop and accelerate the deployment of advanced
energy technologies, including new coal and nuclear technologies. Long-
term regulatory drivers, such as the Clean Air Interstate Rule (CAIR)
and the Clean Air Mercury Rule (CAMR), also provide an incentive for
the private sector to invest in these technologies.
The Department received 143 pre-applications requesting more than
$27 billion in loan guarantee protection for this initial round of
guarantees. Twenty-three projects, representing $16 billion in loan
guarantees were for advanced fossil technology.
Loan guarantees, along with other provisions in the Energy Policy
Act of 2005, can play a role in accelerating the deployment of advance
coal and carbon capture technologies.
______
Question Submitted by Senator Jack Reed
distributed generation
Question. Mr. Kolevar, the 2008 request essentially zeroes out the
Distributed Energy Resource program, which used to be a $60 million
program aimed at helping Combined Heat and Power and other clean and
efficient technology get onto the grid. This program was shifted to the
Office of Energy Distribution and Energy Reliability last year and now
is slated for elimination. Has EDER abandoned its commitment to develop
clean distributed generation, and focus only on transmission and power
delivery issues?
Answer. The focus on the development of distributed generation
technologies has been completed. The Distributed Energy Program has met
its performance targets of: (1) achieving three integrated energy
systems (combined heat and power systems) of greater than 70 percent
efficiency; (2) demonstrating a 38 percent efficient microturbine; and
(3) demonstrating a 44 percent efficient reciprocating engine. The
research has now shifted to Renewable and Distributed Systems
Integration (RDSI) work. This research will concentrate on the
integration of renewable and distributed energy technologies into the
grid at the distribution system level. By successfully demonstrating
this integration, the use of renewable and distributed energy in
support of electric distribution operations should substantially
increase for supplying power and other ancillary services during peak
load periods.
These projects will also demonstrate the ability of these
technologies to reduce power required to the distribution feeder. This
will be accomplished through modeling, design, integration, and RD&D of
renewables and distributed energy integration into the distribution
system; low-cost sensors; advanced monitoring; and consumer
information. The goal of the RDSI is to demonstrate peak load reduction
of 20 percent by 2015, and improve asset management on distribution
feeders with the implementation of distributed energy (including
renewables), and energy management systems that are cost competitive
with system capacity upgrades.
______
Questions Submitted by Senator Pete V. Domenici
office of energy electricity delivery and energy reliability
Question. Mr. Kolevar, I understand that your office has had the
responsibility for complying with section 1221 of the Energy Policy Act
that requires the Secretary to designate ``National Interest Electric
Transmission Corridors''
We all know how difficult it is to site electric transmission
lines, but with a projected 19 percent increase in electricity demand
over the next decade; we must work through the NIMBY issues.
What is the status of this report and what are the next steps in
designating these critical infrastructure corridors.
Answer. Section 216(a) of the Energy Policy Act of 2005 authorizes
the Secretary, in his discretion, to designate geographic areas where
transmission congestion or constraints adversely affect consumers as
national interest electric transmission corridors (National Corridors).
On April 26, 2007, DOE issued two draft National Corridor designations,
in relation to the two Critical Congestion Areas identified in the
Department's August 2006 Congestion Study. The first is the draft Mid-
Atlantic Area National Corridor and the second is the draft Southwest
Area National Corridor. If, after consideration of all comments on
these drafts and consultation with the affected States, the Secretary
of Energy decides that designation of either or both areas is
appropriate, he will issue one or more orders doing so.
DOE welcomes comments on the draft National Corridor designations
and has opened a 60-day public comment period, which will end on July
6, 2007. Please refer to the Federal Register Notice for information on
the comment process. The full text of the notice is available at http:/
/nietc.anl.gov. During the public comment period, the Department
intends to hold seven public meetings to discuss these drafts.
In 2006, the Department announced that, in addition to the
statutory requirement under section 216(a) of FPA that the Department
release a congestion study every 3 years, DOE would issue annual
progress reports in addition to the triennial studies. Accordingly, the
Department is beginning a review of mitigation activities underway in
each of the congestion areas identified in last year's Congestion
Study. The activities that will be examined include the status of
transmission projects that are proposed, permitted and completed since
last August. We will also be identifying new or proposed local
generation, demand response programs, and energy conservation and
efficiency programs affecting congestion in the identified congestion
areas. The Department intends to issue this congestion alleviation
progress report in fall 2007.
energy storage r&d
Question. Mr. Kolevar, your fiscal year 2007 spending plan provides
only $5 million to support R&D storage. This level of funding is
woefully inadequate considering the biggest challenge to the deployment
of renewable generation is the intermittent nature of these
technologies. It is vitally important that your office work with Asst.
Secretary Karsner's team to ensure that energy storage R&D compliments
the renewable research.
Can you explain why this important R&D effort has received so
little in spending? If Congress provided and additional $5 million or
$10 million how would you spend this funding?
Answer. Funding requests for energy storage research during the
last 5 years have fluctuated between approximately $5 million and $3
million. However, this amount has been augmented by up to $11 million
in congressionally directed funding and by some $7 million in annual
cost share from our State and utility partners. The program is
considered worldwide as one of the leaders in this field.
An extra $5 million or $10 million would expand the scope of OE's
research program.
energy infrastructure security
Question. Mr. Kolevar, your fiscal year 2007 spend plan recommends
a significant increase in funding for infrastructure security, which
was not included in your fiscal year 2007 request and it is unclear
from the spend plan how this funding is being used and for what
purpose.
Is this funding being used to improve foreign energy infrastructure
security--are these Middle East countries?
Answer. In fiscal year 2007 the Office of Electricity (OE) has been
tasked as the technical lead assisting the State Department in
executing the Critical Energy Infrastructure Protection (CEIP)
initiative, which is overseen by the National Security Council (NSC).
The Department of Energy's (DOE) role is to assess and advise foreign
countries who have requested U.S. assistance on needed improvements to
their energy infrastructure security. Our teams of expert teams travel
to the host country and assess current security measures and recommend
improvements. The host country funds and implements the actual
improvements that are identified in the development of a CEIP security
program.
The specific countries targeted by this program were selected by
the intelligence community, were coordinated through the interagency
process, and were provided in a report to the NSC. To date, CEIP
Initiative activities have been limited to the Middle East, although
DOE and the Department of Homeland Security have provided similar
support to Canada and Mexico because of the interconnected nature of
our energy systems.
Question. Is this funding being cost shared by the nation that is
benefiting from this security evaluation? Is there any reason why the
country can't or should not pay for this activity?
Answer. Each host country has shared the cost of the consultation
with the U.S. Government, although specific cost-sharing mechanisms
vary depending on the country. The Office of Electricity funds travel
and lodging of U.S. Government employees and required security training
for U.S. Government employees traveling to dangerous areas. It also
provides for the participation of contractors with specific expertise
relevant to energy security in a high-threat environment and Federally-
funded national lab experts and scientists. Finally, OE reimburses U.S.
Embassies for their support efforts. All participating host foreign
nations have agreed to pay for the technical experts' internal travel
while in country. They have also provided aircraft and watercraft that
the teams have needed and have supported the teams' security needs.
While DOE helps to evaluate security requirements, the host country has
the sole responsibility for funding all such security enhancements to
the critical energy infrastructure.
Question. Is this a free service we intend to provide to other
countries in the future or, do we have a special obligation to these
nations?
Answer. The United States is not responsible for the entire cost of
the consultation--the costs are shared with the host nation. The fiscal
year 2007 initiative is limited to those nations the intelligence
community has identified in a classified document to the NSC.
SUBCOMMITTEE RECESS
Senator Dorgan. We thank the witnesses for appearing. This
hearing is recessed.
[Whereupon, at 4:15 p.m., Wednesday, April 11, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]