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



 
    ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                              ----------                              


                        WEDNESDAY, MARCH 5, 2008

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:30 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Byron L. Dorgan (chairman) 
presiding.
    Present: Senators Dorgan, Domenici, Craig, Bond, and 
Allard.

                          DEPARTMENT OF ENERGY

                        Office of Nuclear Energy

STATEMENT OF HON. DENNIS R. SPURGEON, ASSISTANT 
            SECRETARY FOR NUCLEAR ENERGY


              opening statement of senator byron l. dorgan


    Senator Dorgan. I'm going to call the hearing to order this 
morning. I thank all of you for being here. We're here to take 
testimony from officials at the Department of Energy on three 
program offices within the Department of Energy that oversee 
aspects of the Government's Energy, Research, Development, 
Demonstration, and Deployment Programs. I have great interest 
in these issues, and I look forward to hearing from the three 
witnesses today.
    I want to mention that just this morning, starting at 8 
o'clock until 9 o'clock, I have spent an hour on the subject of 
the continued use of our coal resources in this country related 
to the issue of global warming. So I've spent a fair amount of 
time this morning on this issue of coal and global warming. One 
of the keys of that, of course, is embodied in the budget 
requests and the research and development that are done in the 
fossil energy account. I'm going to ask Mr. Slutz about that 
today.
    I do want to point out that with respect to the fossil 
energy account recommended by the President, a substantial 
portion of that increase in the fossil energy account is for 
the Strategic Petroleum Reserve. I want to make a comment about 
that in a moment.
    We've been joined by Senator Domenici. I wanted to mention 
this is the first of a series of hearings that we will do with 
respect to the programs in the Department of Energy, and I 
wanted to recognize at the start of these hearings the long 
service of Senator Domenici. I'm not doing this early because 
I'm anxious for his retirement, but the fact is this is his 
last year working on these accounts, and he's done that for a 
long, long period of time.
    He's served on the Appropriations Committee since 1983 and 
been either a chairman or ranking member of this committee for 
the past 13 years, and he has been a real champion for a lot of 
issues, including energy issues. I just wanted to say to him 
that he's been a significant contributor to all of the work of 
this committee, and I'm pleased to have him as a ranking 
member. I recognize he will retire at the end of this year, but 
I did want to make a comment about that at the front end of the 
series of hearings we will have.
    Last year and this year and in future years, we will work 
closely on these issues on both sides of the aisle. Senator 
Domenici and I worked closely last year to try to figure out 
how to put a bill together.
    I do want to mention that last year, for example, in the 
Senate, we were $1.9 billion above the administration's request 
for this subcommittee. As you know, we had to cut back some of 
that because there was a $22 billion difference between the 
Congress and the President. We had to come down nearly the 
entire $22 billion on the domestic accounts, and it wasn't easy 
to do. But we did it and still tried to preserve what we could 
of the priorities.
    I want to say that the requests for the three Department of 
Energy offices before us today are about $2.69 billion of the 
Department's $25 billion fiscal year 2009 request. The 
Department has asked for some increases for the Nuclear and the 
Fossil Energy Programs, and it has essentially asked for level 
funding for the Office of Electricity and Energy Reliability.
    Let me come back to this issue of Strategic Petroleum 
Reserve. I'm a fan of the Strategic Petroleum Reserve, but I 
think there's a time to fill it and a time to pause. A 
substantial portion of the increase in fossil energy is for the 
Strategic Petroleum Reserve. A proposition of the DOE's request 
is to expand to 1\1/2\ billion barrels of oil in the SPR.
    We are now on the current course at about 96.8-97 percent 
filled with the current goal in the Strategic Petroleum 
Reserve. I am very concerned that we are continuing to put oil 
underground when oil's trading at $103 a barrel. Taking oil 
from the Gulf of Mexico as a royalty in kind and now putting it 
underground takes oil out of the supply and puts upward 
pressure on gas prices.
    I think it's exactly the wrong thing to do, and I have 
introduced legislation to try to stop that. My legislation 
would take a pause for only 1 year--a pause unless, during that 
period, oil comes back below $75 a barrel. The pause would then 
no longer be in effect. This fossil energy account is so 
important because it's where we're going to need to do our 
research for coal, carbon capture and so on.
    In order to continue to use our coal resources, we need to 
invest a lot of money. This includes what used to be the Clean 
Coal Technology Program and other things. We need to invest a 
lot of money if we're going to continue to use our coal 
resources because the emission of carbon. We'll need to find a 
way to capture and sequester it, and I don't see enough money 
requested here, especially when we've got a third of a billion 
dollars off chasing this SPR thing right now and oil's at $100 
a barrel.
    I don't see enough money in this account being focused on 
what we should be dealing with in order to continue to use our 
coal resources. Coal contributes about half of all of the 
electricity that we use in this country. Even with the climate 
change legislation, we're going to continue to use coal. The 
question isn't whether; it's how. We're going to have to 
capture carbon, but we need to prove the technology through the 
demonstration and the commercial application of it. So, we're 
going to need more investments there, in my judgment.
    Having said that, I want to just show three charts, and 
then I'm going to call on the ranking member, Senator Domenici, 
and then also Senator Bond.
    The three charts I want to show are these. These are the 
four places we are now sticking oil underground, 60 to 70,000 
barrels a day at the moment. It's going to go to at least 
120,000 barrels a day in the second half of this year if the 
administration fills it to capacity. Those are the four 
locations. This second chart shows the 1\1/2\ billion barrel 
target.
    I don't think we should fill SPR at any cost. I think we 
ought to take a pause at the moment. The third point in the 
final chart is: Does it make sense to be putting oil 
underground when you've got tanks aboveground that need more 
supply in order to put downward pressure on price? Reducing 
supply increases price. That's just a fact, and our Federal 
Government should not be doing that.
    Senator Domenici and I were at a hearing yesterday, and the 
EIA indicated that it increases price. They estimate a nickel a 
gallon. I think it's probably more than that, but nonetheless 
this is a policy choice that we should address, and I hope to 
address it in the chairman's mark this year.
    Having said all of that, I have some questions for the 
witnesses after they have testified, but I want to call on the 
ranking member, Senator Domenici.


             opening statement of senator pete v. domenici


    Senator Domenici. Well, first, Mr. Chairman, I want to 
thank you for your nice words, and you served with me on this 
subcommittee long enough to know how much it has been a part of 
my life, because I have used this subcommittee, as I see it, to 
foster nuclear--the development of nuclear power in the United 
States and to cause the renaissance that is occurring.
    Much of the things we did came from this subcommittee, and 
some of the various people that worked on this subcommittee are 
nuclear experts out there in America promoting nuclear power.
    Obviously I want to just generally state a few things and 
then put my statement in the record. First, the big issue 
remaining in the nuclear power itinerary is to move with as 
much dispatch as possible to get an American program started 
for reprocessing or recycling, whichever one calls it, the 
waste that comes out of our power plants. It's being done in 
Europe. The United States has let it pass us by, and let me say 
to my friend here on my left who's a proponent of getting 
things done in this area of energy it's almost incredible to me 
that we have put off recycling for such a long time.
    The Secretary in front of us there, Secretary Spurgeon, he 
came here with the notion of getting on with this job in the 
nuclear area, and I'm not sure that we have yet put the glass 
on this and said that here's how we're going to do it, because 
I'm not sure that everybody that has authority is moving in the 
same direction, and we've got to find out whether we're going 
to do that or not.
    If we're not going to move in the same direction, I've got 
other things to do this year. If we are, then I'll work my 
hands till there's nothing left to see if I can't get in place 
an American program for recycling. It is ghastly that we're 
doing what we're doing, and I know you're working on this. We 
may have different ideas as to how the Government ought to go 
about doing it, but I just want everybody to know I'm not a fan 
of waiting around for GNEP and I don't think you are either. 
That's a giant--you call it an ``umbrella.'' I don't know what 
it is, but, you know, it's too big, takes too long, it's going 
to do too many things that we can't wait for. And so under it 
or on top of it, we've got to use the authorities that came 
with the other program that we have ourselves put in the law, 
AFCI, which supersedes and takes the place of GNEP, and that we 
ought to see what AFCI, Alternative Fuel Cycle Initiative--is 
that it?
    Mr. Spurgeon. Advanced Fuel Cycle Initiative.
    Senator Domenici. Advanced Fuel. That's a very important 
concept and we funded it. We funded it--whenever we funded 
GNEP, we funded it, and we've got to see what you're doing with 
that today.
    I want to also say I don't have time for a hearing like 
this to go through the details of the President's budget, but I 
would like to know how his budget stacks up for the funding of 
the laboratories now, this year versus where we ended up this 
year. I don't know if that's any of your business, but we'll 
ask the question and see that the Department answers it so that 
we know because we have our version of what it says.
    I want to say to all of you, the three of you, you're doing 
a great job, all things considered. I want to say for everyone 
to hear that under the leadership of the current Secretary, Mr. 
Sam Bodman, this department has come into its own. It is a 
true, powerful department. It is one that I'm proud to say is 
the United States Department of Energy.
    We walk in there and we know you're in an energy 
department. You're not in a department that won't talk about 
nuclear. You're there, nuclear is on the way. It's a department 
that considers all aspects of energy and does a great job with 
it. And you, sir, Mr. Spurgeon in particular, having taken the 
job late, left a good job to take it, you're doing terrific. 
Sorry you lost Clay Sell. I'm sure everybody is, but you've got 
to get on without him and for the next year get something done 
beyond study. Get something where some of these programs turn 
into action.
    I yield now and thank the chairman very much.
    Senator Dorgan. Senator Domenici, thank you very much. 
Senator Bond?


                statement of senator christopher s. bond


    Senator Bond. Thank you very much, Mr. Chairman, for 
holding this hearing on the Department's budget, and I join 
with you very strongly in saluting our distinguished ranking 
member for his years of farsighted leadership in the energy 
field.
    I can tell you, Senator Domenici, your colleagues are very 
proud of your work. We're going to miss you. There's going to 
be a big hole to fill, but I think that you will leave us with 
a vision that you laid out today that will inspire us for the 
future.
    Today, I'm here, Mr. Slutz, to express my profound dismay 
and disappointment over your Department's attempt to abandon 
the FutureGen Near-Zero-Emission Integrated Coal Power Plant by 
chopping up the program into three smaller projects focusing 
only on carbon capture and sequestration technology or CCS.
    Energy's action on FutureGen calls into question the 
veracity of the Department's statements to Congress, the 
Department's reliability as a partner, the Department's 
credibility as an advocate, and the Department's judgment as an 
agency.
    As we all know, President Bush announced FutureGen in 2003 
as a public-private partnership to build a first-of-its-kind 
coal-fueled near-zero-emission power plant. FutureGen would 
provide a full-scale coal gasification technology, called IGCC 
that generates power and captures nearly all air pollution, 
working together with carbon capture technology that allows for 
carbon collection and sequestration.
    This would be historic because IGCC is not yet proven 
affordable. Carbon capture and sequestration technology, called 
CCS, for power plants is not proven at all, and neither has 
been proven working together at a full-scale affordable and 
reliable facility.
    FutureGen would enable researchers and engineers to 
demonstrate affordable clean coal technology, ensuring its 
reliability, compatibility, and solve production problems that 
arise only when technologies are tested working together and at 
full scale.
    This is vital work because while we must do more with clean 
energy sources, specifically nuclear, including wind, solar, 
biomass, energy efficiency, each is expensive, some are 
controversial, and together they are overwhelmingly 
insufficient to meet our energy needs now and in the long-term 
future.
    Entire regions of the country, such as my Midwest, the 
mountain west, and south, depend upon coal to meet our current 
energy needs. Abandoning coal would place far too much demand 
on replacement energy sources, raising energy prices even 
further, and threatening the products and jobs that depend upon 
affordable energy from coal.
    FutureGen involves what many say is needed: an 
international partnership with governments, power producers, 
coal providers, and technology companies. FutureGen has that 
with 13 industrial partners doing business on six continents, 
including China. One of the best things that the administration 
has done for climate change questions is to develop the Asia-
Pacific Partnership that will allow the transfer of our 
technology, once we demonstrate it, to India, to China, and to 
other countries.
    What are we going to transfer if we haven't demonstrated it 
and don't know whether it works?
    We all believe the Department when the Department of Energy 
said in 2004 that ``FutureGen's integration of concepts and 
components are a key to providing technical and operational 
viability. Integration issues between coal conversion systems, 
power systems, and carbon separation and sequestration systems 
can only be addressed by a large-scale integrated facility 
operation.''
    We all believed DOE when DOE issued a nearly 2,000-page 
environmental impact statement selecting DOE's preferred 
alternative to be providing financial assistance to the 
original FutureGen project. We all believed DOE when Secretary 
Bodman sent a letter this past November 30, supporting site 
selection by the end of the year. And now we all find it hard 
to believe that DOE has left FutureGen at the altar, choosing 
instead three younger cheaper women. Maybe that's not the best 
metaphor, because I support complementary efforts to develop 
CCS technology.
    The Department's suggestion would be fine, if it were in 
addition to the integrated test plan, but the Department's 
reason for restructuring ring hollow. FutureGen's costs are the 
very reason we need Government help to work out technology 
barriers and get costs down.
    The assertion that coal gasification is a proven technology 
obviating the need to fund a full power plant and its carbon 
collection system together is disproved by the Department's own 
statement I just read. It confirmed that testing the technology 
together at full scale is the only way to prove its 
affordability and reliability.
    The future is in applying carbon capture and storage to 
IGCC plants, so we need an integrated plant to prove that 
future possible and affordable technologies can be implemented.
    Mr. Chairman and ranking member, it's up to us to be strong 
leaders on clean coal technology. Others are not going to do it 
for us. Many would saddle us with massively expensive carbon 
reductions and will not care if clean coal technologies are not 
ready when those requirements kick in. We need more funding for 
clean coal technology and clean energy, and an additional few 
tens of millions of dollars here and there on these projects 
will not protect our families from the hundreds of billions, 
hundreds of billions of dollars in energy tax costs from carbon 
caps they would face under a cap-and-trade system.
    If that is implemented before this is demonstrated, there 
is going to be devastation in many areas of the country and 
significant economic harm and harm to the environment. I urge 
the administration to return to the negotiating table and work 
out a revised FutureGen agreement at Mattoon. Industry is 
waiting in good faith for a good faith negotiating partner.
    I also would urge this committee to expand its leadership 
role. We've already--you've already done wonderful work in 
support of clean energy and coal, but even greater efforts are 
needed. We must fund an expanded FutureGen and expanded clean 
coal technology. Our clean energy future depends upon it.
    Senator Dorgan. Senator Bond, thank you very much. Senator 
Bond, I will be announcing a FutureGen hearing. We are working 
on setting a date for that hearing. I'm going to ask Secretary 
Bodman to come.
    Obviously the administration has announced a decision. The 
decision, of course, is a fairly significant decision on a 
program that has been a much-heralded program, and I think it 
would be valuable for us to hear from the Secretary and from 
several other witnesses. I'll be working on setting a date for 
that. I should be able to announce that very soon in terms of 
the date, but we will have a FutureGen hearing in the very near 
future.
    Senator Craig.


                    statement of senator larry craig


    Senator Craig. Well, thank you, Mr. Chairman. I'll be 
brief. I simply cannot match the Senator from Missouri. That 
was absolute eloquence.
    Senator Bond. Thank you.
    Senator Craig. And I mean that most sincerely. I think all 
of us on this committee and certainly the authorizing committee 
recognized the critical necessity to get the technology behind 
coal and to move it. We simply must do that if we can continue 
to expect it to be what it ought to be.
    But Dennis, to you, welcome to the committee, and I want to 
say at the outset how much I've enjoyed working with you over 
the last while, and I want to congratulate you on a job well 
done in reestablishing DOE's commitment to nuclear R&D, not 
unlike some of the thoughts that Senator Domenici has had.
    The NE budget for 2009 is over $1 billion. I remember when 
a Secretary of Energy was quietly coming up to me and saying, 
I've lost my nuclear portfolio, it's down at the White House, 
and you can expect the budget to be zeroed out. And that wasn't 
long ago.
    So, there's been a dramatic turnaround. Programs like NP 
2010, to assist new reactor build, as well NGNP and, of course, 
we still clearly see the need for a global nuclear energy 
partnership with GNEP as we move this whole issue forward.
    You've heard from me, you've heard from my colleague in the 
House, Mike Simpson say that we need to invest in our Nation's 
R&D infrastructure to support these programs as outlined in the 
National Academy of Science's report last year.
    As the custodian of the INL, you know the state of the 
lab's infrastructure, and so I guess my message to you is let's 
fix it this year. I think that's tremendously important.
    A couple of suggestions: Transfer the clean-up liability on 
the lab's side to the clean-up side, freeing up infrastructure 
funding; increase the annual budget request at the INL, 
infrastructure request from about $104 to $150 million a year. 
I think all of that would go a long ways toward assuring that 
lead nuclear lab the kind of facility it will need to meet the 
requirements the DOE will place on it in the future and that 
our Nation is going to place on it.
    Mr. Kolevar, a job well done, enhancing the reliability and 
security of our Nation's electrical infrastructure and working 
with our lab in doing that. We have some excellent projects 
going on out there that, I think, because of the uniqueness of 
the lab and the way its campus is configurated and isolated, 
we've been able to offer some valuable expertise as relates to 
the grid, how we manage it against terrorist opportunity, I 
guess is one way of saying it.
    Mr. Slutz, I'll not deal with--quite with the passion that 
Senator Bond has, but I think that both the chairman and I will 
discuss SPR and the inventory. Both Senator Dorgan and I 
believe that there is another inventory that needs to be done 
besides simply filling up the salt domes, and that's a modern 
inventory of the OCS.
    America needs to know its reserves and its resources, and 
they're currently being denied by those who are simply fearful, 
even though the technology of today would suggest that at 
appropriate times those reserves might well be necessary and 
reachable in an environmentally sound way.
    Certainly in my remaining tenure here, I'm going to push 
that issue and push it very hard. I think it is wrong to deny 
our country that knowledge and we need to modernize that issue 
with the OCS.
    Mr. Chairman, thank you much.
    Senator Dorgan. Senator Craig, thank you very much.
    The subcommittee has received a statement from Senator 
Cochran which we will insert into the record.
    [The statement follows:]
               Prepared Statement of Senator Thad Cochran
    Chairman Dorgan and Ranking Member Domenici, thank you for hosting 
this hearing today. I thank the representatives from the Department of 
Energy for being here this morning, as well.
    Energy issues continue to dominate our Nation's agenda. It is the 
responsibility of all of us here to find ways to keep up with the 
world's ever-expanding electricity demands while at the same time 
increasing energy capacity and security here at home.
    One way in which we can expand our power capacity is to expand the 
use of nuclear energy in America. I am pleased that the request for 
Nuclear Energy is increased from last year, and I hope we can fund 
these efforts at the highest level possible.
    Additionally, it is crucial that we realize the important role 
fossil energy resources continue to play in meeting America's demands 
for energy. Our abundance of coal has always been the main source of 
power in our country, and it is crucial that we find new ways to make 
coal cleaner to use.
    Finally, I would like to speak about the importance of the 
Strategic Petroleum Reserve in securing a stockpile of oil that might 
be tapped in case of emergency. I am pleased that Mississippi was 
chosen by the Department of Energy as the preferred location for 
expansion of the Reserve, and I hope that despite Chairman Dorgan's 
misgivings about filling the Reserve while oil prices are high, we 
might still fund the necessary infrastructure for expansion. As 
evidenced when fuel supplies were interrupted after Hurricane Katrina, 
the United States must have ample resources of oil should a disruption 
in supply occur again.
    I appreciate each of you being here to present your budgets, and I 
look forward to hearing your testimonies. Thank you.

    Senator Dorgan. We will now recognize our witnesses for 
statements.
    Mr. Spurgeon, we're going to call on you first, and let me 
say that I've enjoyed working with you. I agree with Senator 
Domenici. You are a very solid advocate for the programs under 
your jurisdiction, and I thank you for being here. You may 
proceed.
    Let me just say to all three of you, your complete formal 
statements are made a part of the permanent record, and we 
would ask that you summarize your remarks.

                  STATEMENT OF HON. DENNIS R. SPURGEON

    Mr. Spurgeon. Thank you, 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 2009 
budget request for the Department of Energy's Office of Nuclear 
Energy.
    Our Nation's strength and prosperity is built on our 
security and the availability of reliable sources of energy. A 
cornerstone to these goals of continued economic growth and a 
sustainable energy future is nuclear power.
    The Office of Nuclear Energy's budget request supports the 
near-term expansion of safe, reliable, carbon-free nuclear 
power and the development of advanced nuclear technologies now 
and into the future.
    It is significant to note that this administration has 
increased its funding request for nuclear energy every year, 
and in total, the fiscal year 2009 request represents a 330 
percent increase in funding for nuclear energy since President 
Bush took office 7 years ago.
    We can take some pride in this increase, but from a 
historical perspective, our total budget request for 2009 is 
less in absolute dollars than the resources we were devoting to 
nuclear energy the last time I served in government, more than 
30 years ago in the Ford administration.
    In constant dollars, today's budget is about one-third of 
the budget we prepared in 1976. In fiscal year 2009, a total of 
$1.4 billion is requested for nuclear energy activities, 
including $487 million for the Mixed Oxide Fuel Fabrication 
Facility.
    I would now like to take just a moment to highlight our 
program areas and their corresponding budget requests. In 
fiscal year 2009, the President's budget requests $241.6 
million for Nuclear Power 2010, to support industry cost-shared 
near-term technology development and regulatory demonstration 
activities focused on enabling an industry decision to build a 
new nuclear power plant by 2010.
    To this end, the program will continue to support industry 
interactions with the Nuclear Regulatory Commission on new 
plant license applications as well as first-of-a-kind design 
finalization for standardized reactor designs.
    The request also supports the issuance of conditional 
agreements for standby support in fiscal 2009.
    This budget request also includes $301.5 million for the 
Advanced Fuel Cycle Initiative in support of the Global Nuclear 
Energy Partnership. In fiscal 2009, the request supports 
research and development on fuel cycle technologies that will 
support the economic and sustained production of nuclear energy 
while minimizing waste and satisfying requirements for a 
controlled, more proliferation-resistant nuclear materials 
management system.
    The request also supports ongoing international activities 
to establish a framework for ensuring a reliable international 
fuel supply and the availability of grid-appropriate reactors.
    Additionally, this budget requests $70 million for the 
Generation IV Program. This request supports critical research 
and development to achieve design goals that make the Next 
Generation nuclear plant licensable, sustainable, and economic. 
The Generation IV request also supports component and materials 
aging and degradation R&D that will provide the basis for 
supporting the extension of the current operating license 
period for existing nuclear reactors and will also enable the 
design of advanced reactor plants with longer operating 
lifespans.
    A total of $16.6 million is requested for the Nuclear 
Hydrogen Initiative to support research and development on 
enabling technologies, nuclear-based hydrogen production 
technologies, and technologies that will apply heat from 
Generation IV nuclear energy systems to produce hydrogen.
    Finally, $222 million is requested to maintain and operate 
the Department's unique nuclear facilities and infrastructure 
at Idaho National Laboratory, Los Alamos National Laboratory, 
and Oak Ridge National Laboratory. Included in the fiscal year 
2009 requests under Other Defense Activities is $487 million 
for activities associated with the continued construction of 
the Mixed Oxide Fuel Fabrication Facility and $78 million for 
sitewide safeguards and security activities at the Idaho 
National Laboratory.
    I would also like to note the fiscal year 2009 budget 
request continues our commitment to fostering the expansion of 
nuclear engineering programs at our universities. We have 
committed to designating 20 percent of funds appropriated to 
our R&D programs for work to be performed at universities at 
the level set forth in the President's budget. Twenty percent 
represents almost $77 million for this work.

                           PREPARED STATEMENT

    Mr. Chairman, this concludes my opening statement. I would 
be pleased to answer any questions.
    Thank you.
    Senator Dorgan. Secretary Spurgeon, thank you very much for 
your testimony.
    [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 today to discuss the 
President's fiscal year 2009 budget request for the Department of 
Energy's (DOE) Office of Nuclear Energy.
    Our Nation's strength and prosperity is built on our security and 
the availability of reliable sources of energy. The President's $25 
billion fiscal year 2009 budget request for the Department aggressively 
addresses the growing demand for affordable, clean, and reliable energy 
and helps preserve our national security by working to further our 
energy security. A cornerstone to the goals of continued economic 
growth and a sustainable energy future is nuclear power. The Office of 
Nuclear Energy's budget request ambitiously supports the near-term 
expansion of safe, reliable and carbon-free nuclear power and the 
development of advanced nuclear technologies now and into the future. 
It is significant to note that this administration has increased its 
funding request for nuclear energy in every year, and in total, the 
fiscal year 2009 request represents a 330 percent increase in funding 
for nuclear energy since President Bush took office 7 years ago. In 
fiscal year 2009, a total of $1.4 billion is requested for nuclear 
energy activities including $487 million for the Mixed Oxide Fuel 
Fabrication Facility.
    The President's commitment to nuclear power stems from its role as 
the only viable near-term option for producing significant amounts of 
emissions-free, baseload electricity. The expansion of nuclear power 
will play a key role in our decisions to find viable solutions to 
address the challenges posed by greenhouse gas emissions, climate 
change, and energy security while promoting a vibrant economy.
    Today, 104 nuclear reactors generate nearly 20 percent of America's 
electricity and account for nearly 70 percent of electricity produced 
from non-emitting sources. Last month, the Nuclear Energy Institute 
reported that U.S. reactors produced 807 billion kilowatt hours of 
electricity in 2007--enough to power more than 72 million homes for a 
year. That total surpasses the previous record high of 788.5 billion 
kilowatt hours in 2004. However, for nuclear power to maintain its role 
in our energy supply, it must grow. To sustain nuclear power's current 
20 percent share, 40 to 45 new reactors must be built by 2030.
    Worldwide, 31 countries operate 439 reactors totaling 372 GWe of 
electricity capacity. Thirty-four new nuclear power plants are under 
construction worldwide, and when completed, will add an additional 28 
GWe of new electricity. This new construction is taking place or being 
considered in every major region in the world including Africa, Asia 
and the Indian subcontinent, Europe, the Middle East, South America, 
and North America.
    We have recently seen projections that anticipate 55 total 
countries will operate 630 reactors totaling approximately 630 GWe by 
2030. Potentially, a total of 86 countries could have nuclear reactors 
by 2050. Internationally, nuclear power is moving forward at a rapid 
pace with each month seemingly bringing new, significant announcements.
    Nuclear power's ongoing expansion around the world requires us to 
address the used fuel and proliferation challenges that confront the 
global use of nuclear energy. To ensure that the United States plays a 
significant role in global nuclear energy policy, we must foster a 
robust domestic nuclear research and development program that maintains 
a cutting-edge nuclear technology infrastructure, and encourage 
international actions that support reliable nuclear fuel services as a 
viable option for countries that may otherwise consider the development 
and deployment of enrichment and reprocessing technologies. To meet 
these challenges, the President initiated the Global Nuclear Energy 
Partnership (GNEP). The domestic component of GNEP promotes the 
accelerated development and deployment of advanced fuel cycle 
technologies, while the international component encourages cooperation 
among States that share the common vision of the necessity of the 
expansion of nuclear energy for peaceful purposes worldwide in a safe 
and secure manner.
    We have made marked progress in every one of our program areas, but 
much remains to be done. Our fiscal year 2009 budget request moves us 
in the right direction, allowing the Department and the Office of 
Nuclear Energy to take the lead in spurring the nuclear renaissance in 
the United States. I would now like to take the time to highlight our 
program areas and their corresponding budget requests.
                           nuclear power 2010
    A key component of our work and one of our most successful programs 
at the Department of Energy is the Nuclear Power 2010 program or NP 
2010. This program was initiated by President Bush in 2002 and has 
produced significant results toward its goal of reducing the technical, 
regulatory, and institutional barriers to the deployment of new nuclear 
power plants. DOE and the President have increased our commitment to 
cross the finish line by nearly doubling its 2009 budget, calling on 
Congress to provide $241.6 million for NP 2010 to help ensure this 
important program can complete its work.
    NP 2010 supports industry through cost-sharing near-term technology 
development and regulatory demonstration activities focused on enabling 
an industry decision to build a new nuclear plant by 2010.
    Of the six Construction and Operation License (COL) applications 
that have been submitted to the Nuclear Regulatory Commission (NRC), 
five COL applications have been officially accepted for review by the 
NRC. And of these five, two applications--TVA's application for two 
Westinghouse AP1000 reactors at the Bellefonte site in Alabama, and 
Dominion Energy's application for a General Electric-Hitachi Economic 
Simplified Boiling Water Reactor at the North Anna site in Virginia--
were developed through the NP 2010 cost-share program. In total, the 
NRC expects to receive 20 COL applications for 31 new reactors by 17 
different utility companies. Of these 20 COL applications, 8 will 
reference either the Bellefonte or North Anna license applications. 
This simplification in the licensing process is expected to reduce the 
license application and review time these reference COLAs take by up to 
50 percent.
    Three early site permits have been approved for Exelon's Clinton 
site in Illinois, Entergy's Grand Gulf site in Mississippi, and the 
North Anna site, all a part of the NP 2010 cost share program, and a 
fourth ESP permit is pending. In addition, two new reactor design 
certifications have been approved by the NRC, the ABWR and the AP1000, 
and DOE is continuing with on-going first-of-a-kind design finalization 
activities for the standardized AP1000 and ESBWR designs, including: 
preparation of engineering analyses and calculations, design criteria 
documents, and total cost and schedule estimates necessary for an 
industry purchase of a new nuclear plant.
    The NP 2010 program will continue to develop generic application 
preparation guidance for 15 COL applications expected in 2008 to help 
resolve regulatory issues that could potentially delay or derail NRC 
approval.
                advanced fuel cycle initiative and gnep
    President Bush announced the Global Nuclear Energy Partnership 
(GNEP) as part of his Advanced Energy Initiative in February 2006. The 
Advanced Fuel Cycle Initiative (AFCI) is the domestic technology 
development and deployment component of GNEP. The AFCI program aims to 
develop and demonstrate advanced fuel cycle technologies for recycling 
used reactor fuel to develop an integrated used fuel recycling plan, 
and support on-going research efforts with the goal of reducing the 
amount of material that needs disposal in a geologic repository and 
maximizing our use of energy resources.
    In effort to further this important work, our budget request 
includes $301.5 million in fiscal year 2009 funding for AFCI. This 
request supports research and development activities that will advance 
the economic and sustained production of nuclear energy while reducing 
waste and satisfying requirements for a controlled nuclear materials 
management system that helps strengthen the nuclear nonproliferation 
regime. The request also supports on-going international activities to 
establish a framework for ensuring reliable international fuel services 
and the availability of grid-appropriate reactors, and the continued 
utilization of industry for schedule, cost, and technology developments 
for eventual recycling facility deployment.
    Long-term goals of AFCI/GNEP include the partitioning of used fuel 
and recycling of long-lived radioactive isotopes for destruction 
through transmutation in liquid metal-cooled fast neutron spectrum 
reactors for actinide consumption and nuclear resource sustainability
    AFCI/GNEP funding also provides support for a large number of 
universities involved in fuel cycle research and development, which 
both ensures that the United States has the intellectual capital needed 
to sustain our nuclear fuel cycle for the future and provides the 
important research needed for today's fuel cycle activities. Recycling 
used nuclear fuel rather than permanently disposing of it in a 
repository would result not only in utilizing more of the energy, but 
would also reduce the amount of high-level waste that needs disposal in 
a repository, thereby greatly enhancing the potential capacity of any 
geological repository. This increased efficiency in the fuel supply 
could ensure that even with the expansion of nuclear energy, the 
potential capacity of any geological repository would be greatly 
enhanced.
                             generation iv
    The Generation IV program is focused on very high temperature 
reactor technologies for use in a Next Generation Nuclear Power Plant 
(NGNP) to produce electricity, process heat, and hydrogen. Generation 
IV also is readying technologies that will further improve the 
economics and safety performance of existing Light-Water Reactor and 
advanced Generation IV reactor concepts.
    The fiscal year 2009 budget request includes $70 million for the 
Generation IV program. 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.
    Additionally, this request supports component and material aging 
and degradation research and development that will provide the basis 
for extending the operating license period for existing nuclear 
reactors beyond 60 years, and will also enable the design of advanced 
reactor concept plants with longer operating life spans.
                          hydrogen initiative
    Nuclear energy has the potential to produce large quantities of 
hydrogen efficiently without producing greenhouse gases and could play 
a significant role in hydrogen production for transportation and 
industrial sectors. Considerable progress in hydrogen combustion 
engines and fuel cells is bringing hydrogen-powered transportation 
close to reality. The goal of the Nuclear Hydrogen Initiative (NHI) is 
to demonstrate hydrogen production technology at increasingly larger 
scales through the use of nuclear energy that would be technically and 
economically suited for commercial deployment in concert with a nuclear 
power plant.
    A total of $16.6 million has been requested for the NHI to continue 
hydrogen production systems operation and testing, evaluation of 
process improvements, and assessment of long-term process stability, 
operability, and component durability. Furthermore, results from the 
integrated laboratory-scale experiments will be analyzed to identify 
cost drivers with an end goal of supporting a hydrogen technology 
selection by 2011.
                           nuclear facilities
    The Department of Energy supports nuclear science and technology 
through one of the world's most comprehensive research infrastructures. 
The Office of Nuclear Energy has requested $222 million to maintain and 
operate infrastructure at Idaho National Laboratory (INL), Los Alamos 
National Laboratory (LANL), Brookhaven National Laboratory (BNL), and 
Oak Ridge National Laboratory (ORNL). A total of $104.7 million is 
dedicated to Idaho National Laboratory's facilities management. INL 
conducts science and technology research across a wide range of 
disciplines, INL's core missions include: development of advanced, next 
generation fuel cycle and reactor technologies; promotion of nuclear 
technology education, and applying technical skills to enhance our 
Nation's security.
    Additionally, $38.7 million is requested to maintain a wide range 
of nuclear and radiological facilities and their associated 
infrastructures in an operational, safe, secure, and environmentally 
compliant manner at LANL, BNL, and ORNL. This infrastructure supports 
national priorities, including the provision of radioisotope power 
systems for national security uses and space exploration.
                        other defense activities
    Included in the Office of Nuclear Energy fiscal year 2009 request, 
under Other Defensive activities, is $487 million for activities 
associated with the continued construction of the Mixed Oxide Fuel 
Fabrication Facility and $78.8 million for site-wide safeguards and 
security activities at the Idaho National Laboratory to protect the 
assets and infrastructure 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.
                           university funding
    Our fiscal year 2009 budget request continues our commitment to 
fostering the expansion of nuclear engineering programs at our 
universities and research institutions. Specifically, the budget 
request for the Office of Nuclear Energy explicitly states that we 
``will continue to support R&D activities at universities and research 
institutions through competitive awards focused on advancing nuclear 
energy technologies,'' and we have committed to ``designate 20 percent 
of funds appropriated to its R&D programs for work to be performed at 
university and research institutions.'' These funds will support basic 
research and mission-specific applied R&D activities, as well as human 
capitol development activities, such as fellowships and infrastructure 
and equipment upgrades for university-based research reactors and 
laboratories. At the level set forth in the President's budget request 
for fiscal year 2009, 20 percent provides almost $77 million for this 
work. This commitment of 20 percent of appropriated funds will serve as 
a catalyst for success in achieving the objectives of the President's 
American Competitiveness Initiative and the America COMPETES Act.
    This concludes my prepared statement. I would be pleased to answer 
any questions you may have.

    Senator Dorgan. I want to recognize Secretary Kolevar. The 
Office of Electricity is an important office, and we appreciate 
the work you are doing. I was pleased to be the first person to 
announce your confirmation when you were in North Dakota for a 
meeting with a number of interests in August 2007, but thank 
you very much for your work, Mr. Secretary.
    Why don't you proceed?

         Office of Electricity Delivery and Energy Reliability

STATEMENT OF HON. KEVIN M. KOLEVAR, ASSISTANT SECRETARY 
            FOR ELECTRICITY DELIVERY AND ENERGY 
            RELIABILITY
    Mr. Kolevar. Thank you, Mr. Chairman. Mr. Chairman and 
Ranking Member Domenici, members of the committee, thank you 
for the opportunity to testify on the President's fiscal year 
2009 Budget Request for the Office of Electricity Delivery and 
Energy Reliability.
    Our office's mission is to lead national efforts to 
modernize the electric 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 
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 budget requests $134 million for OE, a 17 
percent increase from the fiscal year 2008 request. This 
includes $100.2 million for research and development 
activities, $14.1 million for operations and analysis 
activities, and $19.7 million for program direction.
    Today, the availability of and access to electricity is 
something that can be easy to take for granted. And while more 
than a few people cannot describe what it is or where it comes 
from, electricity 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.
    The Energy Information Administration has estimated that by 
the year 2030, U.S. electricity consumption will be almost 35 
percent higher than it was in 2009. This indicates a growing 
economy but it also promises a significant amount of new demand 
on the electricity infrastructure, an infrastructure that is 
already stressed and aging. This means that we need to focus 
our attention on reliability.
    Climate change is also affecting electric industry 
investments. Uncertainty in climate change legislation and 
policy is limiting investment in generation from fossil fuels, 
coal in particular, and is stimulating investment in 
renewables, such as wind. However, intermittent resources, such 
as renewables, require energy storage or other balancing 
technologies, advanced communications, and sophisticated 
modeling to maximize penetration without affecting the 
reliability and efficiency of our electric system.
    OE's fiscal year 2009 budget request reflects a commitment 
to ensuring this reliability by supporting the research of 
breakthrough technologies, such as those associated with the 
Smart Grid and energy storage. With $5 million dedicated solely 
to Smart Grid development, a $6.6 million increase in the 2009 
request for energy storage, and more than $88 million dedicated 
to other R&D work, the President's request reaffirms the effort 
to ensure increased reliability through research and 
development.
    Modernizing the grid through technical innovation, however, 
represents just one side of the effort needed to tackle 
electricity reliability problems. Building the elaborate 
network of wires and other facilities needed to deliver energy 
to consumers reliably and safely is perhaps one of our greatest 
challenges. This is especially true since renewable energy 
promises to become a substantial generation source.
    Since sources of renewable energy are often found in remote 
locations, we simply have to develop the capacity to deliver it 
to load centers. Basically, if we want to use more renewable 
energy, we need more wires.
    Accordingly, in 2009, the office will continue work to 
implement the major electricity infrastructure provisions of 
the Energy Policy Act of 2005. Consistent with the law, we will 
produce the second national transmission congestion study by 
August of next year. We will begin scoping for the designation 
of energy transport corridors in the eastern United States, and 
we will implement the Department's responsibilities to 
coordinate Federal authorizations for the siting of 
transmission facilities.
    However, energy security and reliability will not be solved 
solely through the modernization and expansion of our energy 
infrastructure. We also need to ensure energy delivery by 
keeping it secure and responding quickly when it is disrupted.
    In fiscal year 2009, we will work to identify systemwide 
vulnerabilities in power and fuels at key domestic and select 
foreign energy sector assets and develop plans to secure and 
reconstitute those assets. We will help to develop tools and 
mitigation solutions to help energy sector owners and operators 
improve resiliency and implement best and effective practices 
and provide solutions to State and local governments to address 
energy supply and infrastructure challenges and to exercise 
those plans.

                           PREPARED STATEMENT

    I believe our work in OE is vital to the Nation's energy 
health and the increase in the President's request reflects 
this. 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 your and the committee's questions.
    [The statement follows:]
              Prepared Statement of Hon. Kevin M. Kolevar
    Mr. Chairman and members of the committee, thank you for this 
opportunity to testify on the President's fiscal year 2009 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 2009 budget includes $134 million for 
OE in fiscal year 2009, which is almost a 17 percent increase from the 
fiscal year 2008 request. This includes $100.2 million for Research and 
Development activities, $14.1 million for Operations and Analysis 
activities, and $19.7 million for Program Direction. My testimony on 
the administration's fiscal year 2009 budget request reflects a 
comparison to the administration's fiscal year 2008 budget request.
    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 consumption will be almost 35 percent 
higher than it was in 2009. This indicates a growing economy, but it 
also promises a significant amount of new demand on the electricity 
infrastructure--an infrastructure that is already stressed and aging. 
This means that we need to focus our attention on reliability.
    Climate change is also affecting electric industry investments. The 
uncertainty in climate change legislation and policies is limiting 
investment in generation from fossil fuels and is stimulating 
investment in renewables such as wind. However intermittent resources 
such as renewables require energy storage or other balancing 
technologies, advanced communications and sophisticated modeling to 
maximize penetration without affecting the reliability and efficiency 
of our electric system.
    One of the Department's strategies for reducing our dependence on 
foreign oil is increased electrification by transitioning to electric 
vehicles also known as plug-in hybrids. Plug-in hybrids could provide a 
great opportunity if we begin now to enable smart grid features such as 
enhanced intelligence and control.
    Title 13 and section 641 of the Energy Security and Independence 
Act of 2007 highlights the need for the development of a modernized 
grid. Title 13 addresses the need for a Smart Grid, which is a 
transmission and distribution network modernized with the latest 
digital and information technologies for enhanced operational 
monitoring, control, and intelligence.
    OE's fiscal year 2009 budget request also reflects a commitment to 
ensuring reliability by supporting research of breakthrough 
technologies such as those associated with a Smart Grid and Energy 
Storage. With $5 million dedicated solely to Smart Grid development, a 
$6.6 million increase in the fiscal year 2009 request for Energy 
Storage, and more than $88 million dedicated to other R&D work, the 
President's fiscal year 2009 budget request reaffirms the effort to 
ensure increased reliability through R&D.
    Modernizing the grid through technical innovation, however, 
represents just one side of the effort needed to tackle electricity 
reliability problems. Building the elaborate network of wires and other 
facilities needed to deliver energy to consumers reliably and safely is 
perhaps one of our greatest challenges today. This is especially true 
since renewable energy promises to become a substantial generation 
source. Since sources of renewable energy are often found in remote 
locations, we simply have to develop the capability to deliver it to 
load centers. Basically, if we want to use more renewable energy, we 
need more wires.
    However, energy security and reliability will not be solved by 
focusing solely on expanding our modernization and expansion of our 
energy infrastructure. We also need to ensure energy delivery by 
keeping it secure and responding quickly when it is disrupted. DOE is 
the lead agency when Federal response is required for temporary 
disruptions in energy supply to ensure a reliable and secure 
electricity infrastructure for every American. We will use fiscal year 
2009 funds to apply technical expertise to ensure the security, 
resiliency and survivability of key energy assets and critical energy 
infrastructure at home and abroad.
    The reliability and energy security effort is both multifaceted and 
necessary, and the President's request reflects this.
                        research and development
    Our High Temperature Superconductivity activities continue 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.
    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 activities propose an 
increase of $6.6 million in fiscal year 2009. This will support the 
development of new and improved energy storage devices and systems at 
utility scale, which will be incorporated in DOE's Basic Energy Science 
basic research results. We will also work to achieve substantial 
improvements in seeking lifetime, reliability, energy density, and cost 
of energy storage devices. Through this, highly leveraged prototype 
testing and utility demonstration projects will be expanded with State 
energy office participation focusing on areas of greatest utility need. 
The increase will also serve to 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 activities will 
allocate $5 million in fiscal year 2009 to develop and demonstrate 
Smart Grid technologies for an integrated and intelligent electric 
transmission and distribution network. $28.3 million will be used to 
demonstrate distributed energy systems as a resource to decrease peak 
electric load demand, increase asset utilization, and defer electric 
system upgrades. These funds will also be used to develop renewable 
energy grid integration technologies to facilitate increased deployment 
of renewables and other clean energy sources.
                    permitting, siting, and analysis
    With hopes of creating a more robust transmission system, our 
fiscal year 2009 budget request asks for $6.5 million for the 
Permitting, Siting and Analysis office. This is an $804,000 increase 
from the fiscal year 2008 budget request, and it will help to implement 
major electricity infrastructure provisions such as section 368 of 
EPACT and section 216(h) of the Federal Power Act. Further, work will 
be done to provide technical assistance to State electricity regulatory 
agencies and to electric utilities as they implement their energy 
efficiency initiatives.
    In fiscal year 2009, we will also be working to issue the second 
national transmission congestion study. In this process, we will be 
consulting with States and other interested parties on congestion 
metrics and data, and analyzing current historical congestion by 
region. Before the study is released, we will present draft conclusions 
of data analysis for public review and input.
    The implementation of section 368 of EPACT requires the designation 
of rights-of-way corridors for the transport of oil, natural gas, 
hydrogen, and electricity 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. We have published a draft 
Programmatic Environmental Impact Statement for the designation of the 
energy transport corridors, solicited public comments, and conducted 15 
public meetings, and the final PEIS is expected to be published in 
fiscal year 2008. We are preparing to begin scoping for the designation 
of energy transport corridors in the eastern States, Alaska, and 
Hawaii. The EIS for the remaining designations is expected before the 
end of fiscal year 2009.
    DOE is preparing regulations to implement its responsibilities 
under the new section 216(h) of the Federal Power Act to coordinate 
with eight 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.
             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 Office of 
Infrastructure Security and Energy Restoration (ISER) in 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 2009 
request is for $7.6 million in funding for Infrastructure Security and 
Energy Restoration within the operations and analysis subprogram, which 
is a $1.8 million increase from the fiscal year 2008 request.
    In fiscal year 2009, ISER will work to identify system-wide 
vulnerabilities in power, fuels and other key energy sector assets and 
develop plans to secure and reconstitute those assets. We will help to 
develop tools and mitigation solutions to help energy sector owners and 
operators improve resiliency and implement best and effective 
practices, and provide solutions to State and local governments to 
address energy supply and infrastructure challenges. Further, we will 
continue to conduct vulnerability assessments of key domestic and 
selected foreign energy facilities in close collaboration with 
appropriate interagency and industry partners. And through the 
initialization of selected pilot projects, we will work to exercise the 
integration of regional, State and local energy resiliency and 
emergency response preparedness.
    We help to facilitate energy restoration efforts at the State and 
local level through cooperation and partnerships with local utility 
providers in support of the National Response Framework. In fiscal year 
2009, we will work to create detailed Concept of Operations Plans for 
energy response utilizing an Integrated Planning System.
                               conclusion
    As you have heard, our work in OE is vital to our Nation's energy 
health and the increase in the President's request reflects this. 
Through our research and development of technologies such as power 
electronics, high temperature superconductivity, and energy storage, we 
will work to lower costs, increase 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.

    Senator Dorgan. Secretary Kolevar, I thank you very much.
    Mr. Slutz, you are the Acting Assistant Secretary, I 
believe, and we appreciate very much your being here today to 
describe your programs, and as I indicated in my opening 
statement, I'm going to ask a number of questions about the 
fossil energy accounts, but why don't you proceed? We will then 
have the panel ask questions of the three witnesses.

                        Office of Fossil Energy

STATEMENT OF JAMES SLUTZ, ACTING PRINCIPAL DEPUTY 
            ASSISTANT SECRETARY FOR FOSSIL ENERGY
    Mr. Slutz. 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 proposed fiscal year 2009 budget.
    Fossil Energy's budget request of $1.127 billion for fiscal 
year 2009 is one of the largest Fossil Energy requests made by 
this administration. These funds will allow FE to fulfill its 
mission to create public benefits to supply enhancing U.S. 
economic, environmental, and energy security.
    Achieving this mission means developing technological 
capabilities that can dramatically reduce carbon emissions to 
achieve near-zero atmospheric emission power production, 
thereby meeting the President's priority of expanding our 
climate change options with higher efficiency power plants to 
reduce carbon dioxide emissions, the near-zero emissions power 
plants, known as FutureGen, that link high efficiency with 
carbon sequestration.
    Fossil Energy is also responsible for the management and 
operation of the Nation's petroleum reserves, most notably the 
Strategic Petroleum Reserve, which provides strategic and 
economic security against disruptions in oil supplies with an 
emergency stockpile of crude oil.
    More specifically, the proposed fiscal year 2009 coal 
budget request of $648 million focuses on technology for 
allowing the United States to maintain its technological lead 
in coal use in a way that will not raise climate concerns. This 
is the largest budget request for coal research and development 
and demonstration in over 25 years.
    The budget focuses on advancing the technology aimed at 
reducing costs and enhancing the efficiency of power plants 
with carbon capture. It also focuses on the science and 
technology to assure the safe and effective long-term geologic 
storage of carbon dioxide.
    The budget includes $406 million for coal R&D, including 
in-house research and development, $85 million for the Clean 
Coal Power Initiative, and $156 million for the New Approach to 
the FutureGen Program. The fiscal year 2009 request 
demonstrates the administration's continuing commitment to 
domestically produced energy from coal.
    The $344 million in the fiscal year 2009 budget request for 
the Strategic Petroleum Reserve, an 84 percent increase over 
fiscal year 2008, will allow for expansion of facilities at two 
existing storage sites and begin the development of a new site 
in fiscal year 2009. This expansion is in accordance with the 
provision in EPACT for an expansion of reserve capacity from 
750 million to 1 billion barrels of oil and, with the 
President's recommendation and pending legislation, to further 
increase the reserve's capacity to 1.5 billion barrels of oil.
    Fossil Energy research and development is directed at 
electric power generation from coal----
    Senator Dorgan. Secretary Slutz, could you hold a moment?
    Senator Domenici. You mentioned how much was being spent on 
coal R&D and you talked about how it was a good program.
    Where do we do most of the research that we're talking 
about and who's the head of the research to try to make the 
change to coal so it's more usable?
    Mr. Slutz. We have a coal program here that's headed by Dr. 
Victor Der at headquarters, but then that program is 
implemented through the National Energy Technology Laboratory 
and Carl Bauer is the director of the National Energy 
Technology Laboratory.
    Senator Domenici. And where is that laboratory?
    Mr. Slutz. That laboratory is located in Pittsburgh and 
Morgantown, co-located with other facilities in Tulsa and 
Albany, Oregon.
    Senator Domenici. Mr. Chairman, thank you, sir.
    Senator Dorgan. You may proceed.
    Mr. Slutz. Fossil Energy research and development is 
directed at electric power generation from coal, our most 
abundant and lowest cost domestic fossil fuel.
    This research supports many presidential initiatives and 
priorities, including the Coal Research Initiative, Hydrogen 
Fuel Initiative, Climate Change Technology Program, and 
FutureGen.
    I'll highlight a few of the R&D program components, 
beginning with FutureGen. FutureGen promotes advanced full-
scale integration of integrated gasification compliance cycle 
and carbon capture and storage technology to produce electric 
power from coal with near-zero atmospheric emissions.
    FutureGen is being restructured in a way that accelerates 
the commercial use of near-zero emissions technology. The new 
approach proposes multiple commercial-scale demonstration power 
plants in place of the original plan's single R&D facilities. 
Each plant would produce electricity and sequester an estimated 
annual 1 million metric tons of carbon dioxide.
    FutureGen receives almost $82 million funding increase over 
last year in the 2009 budget proposal.
    The Clean Coal Power Initiative, or CCPI, is a cooperative 
cost-share program between the government and industry to 
demonstrate advanced coal-based power generation technologies. 
The budget request of $85 million for CCPI in fiscal year 2009 
will complete the third round of the project solicitations, 
proposed evaluations, and project selections of advanced 
technology systems that capture carbon dioxide for 
sequestration for beneficial reuse.
    The fiscal year 2009 budget request of $149 million for 
carbon sequestration, one of the key components of our program, 
is a significant increase over the fiscal year 2008.
    Senator Domenici. Would you say that again? I missed the 
last portion of that.
    Mr. Slutz. Our 2009 budget request just for carbon 
sequestration, the carbon storage component, is $149 million. 
That's an increase of $30 million over the $119 million 
provided in fiscal year 2008.
    Senator Domenici. Okay.
    Mr. Slutz. The increase should help develop economical ways 
to separate and permanently sequester greenhouse gas emissions 
from the combustion of fossil fuels.
    Consistent with recent budget requests, the petroleum, 
which is oil technology and natural gas technologies research 
and development programs are being proposed for termination in 
2009.
    The fiscal year 2009 budget request of $344 million for the 
Strategic Petroleum Reserve would continue preparations for 
doubling the current 727-million-barrel capacity and increasing 
the drawdown capability from 4.4 million barrels per day to 
more than 6 million barrels per day. Increasing the capacity 
required--requires expanding two existing sites and adding one 
new site.
    That concludes a brief overview of Fossil Energy's wide-
ranging R&D and petroleum reserve management responsibilities.

                           PREPARED STATEMENT

    I'd like to emphasize, by reevaluating, refining and 
refocusing our programs and funding the most cost-effective and 
beneficial projects, the fiscal year 2009 budget submission 
meets the Nation's critical needs for energy, environment, and 
national security.
    Mr. Chairman, that concludes my prepared statement, and I'm 
happy to answer any questions.
    [The statement follows:]
                   Prepared Statement of James Slutz
    Mr. Chairman, members of the committee, it is a pleasure for me to 
appear before you today to present the Office of Fossil Energy's (FE) 
proposed budget for fiscal year 2009.
    FE's budget request of $1.127 billion for fiscal year 2009 is one 
of the largest FE requests made by this administration. These funds 
will allow FE to fulfill its mission: to create public benefits by 
enhancing U.S. economic, environmental, and energy security.
    Achieving this mission means developing technological capabilities 
that can dramatically reduce carbon emissions to achieve near-zero 
atmospheric emissions power production, thereby meeting the President's 
priority of expanding our climate change options with higher-efficiency 
power plants to reduce carbon dioxide and other emissions, including 
through FutureGen demonstration plants.
    FE is also responsible for the management and operation of the 
Nation's petroleum reserves, most notably the Strategic Petroleum 
Reserve, which provides strategic and economic security against 
disruptions in oil supplies with an emergency stockpile of crude oil.
    More specifically, the proposed fiscal year 2009 coal budget 
request of $648 million focuses on technology allowing the United 
States to maintain its technological lead in coal use in a way that 
addresses climate concerns. This is the largest budget request for coal 
research development and demonstration in over 25 years and leverages a 
nearly $1 billion investment in Clean Coal Technology.
    The budget includes $406.5 million for Coal R&D including in-house 
R&D $85 million for the Clean Coal Power Initiative and $156 million 
for a new approach to the FutureGen program.
    The fiscal year 2009 request demonstrates the administration's 
continuing commitment to domestically produced energy from coal. 
Combined with the required private sector cost sharing contribution as 
directed by the Energy Policy Act of 2005 (EPACT), this budget will 
bring the total public and private investment in coal technology 
leveraged by FE to nearly $1 billion. In addition, the Federal 
Government provides support to advance coal technologies through tax 
incentives for clean coal plants, and through loan guarantees to be 
allocated to various types of coal power and other gasification 
projects.
    The $344 million fiscal year 2009 budget request for the Strategic 
Petroleum Reserve, an 84 percent increase over fiscal year 2008 
approved funding, will allow for expansion activities at two existing 
storage sites and the development of a new site in fiscal year 2009. 
This expansion is in accordance with the provision in EPACT for an 
expansion of reserve capacity from 727 million to 1 billion barrels of 
oil, and with the president's recommendation to further increase the 
reserve's capacity to 1.5 billion barrels of oil.
                 fossil energy research and development
    I will begin the detailed presentation of our proposed budget with 
the work of Fossil Energy Research and Development (FERD), which is 
directed at electric power generation from 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.
    FERD supports many Presidential initiatives and priorities 
including the Coal Research Initiative, Hydrogen Fuel Initiative, and 
FutureGen. FERD also supports the Climate Change Technology Program, 
which is a priority for the Department. The components of the FERD 
program begin with FutureGen.
                               futuregen
    FutureGen promotes advanced, full-scale integration of integrated 
gasification combined cycle (IGCC) and carbon capture and storage 
technology to produce electric power from coal while capturing and 
sequestering carbon dioxide (CO2), resulting in near-zero 
atmospheric emissions coal energy systems. FERD is restructuring 
FutureGen in a way that accelerates the commercial use of carbon 
capture and storage technologies.
    The new approach proposes multiple 300-600 Megawatt (MW) 
commercial-scale demonstration clean coal power plants--as opposed to a 
single, 275 MW R&D facility--each producing electricity and capturing 
and safely sequestering at least an estimated annual 1 million metric 
tons of CO2 from each. FutureGen receives an $81.7 million 
funding increase from fiscal year 2008 in the fiscal year 2009 budget 
proposal.
                      clean coal power initiative
    The Clean Coal Power Initiative (CCPI) is a cooperative, cost-
shared program between the Government and industry to demonstrate 
advanced coal-based power generation technologies. CCPI is now focused 
on projects to help accelerate development and deployment of coal 
technologies that could economically capture carbon dioxide, including 
increasing the efficiency and reliability of carbon capture 
technologies. CCPI allows the Nation's power generators, equipment 
manufacturers, and coal producers to help identify the most critical 
barriers to coal use and the most promising advanced technologies to 
use coal cleanly, affordably, and with higher efficiencies that reduce 
carbon intensity.
    The budget request of $85 million for CCPI in fiscal year 2009 will 
complete the third round of project solicitations, proposal 
evaluations, and project selections of advanced technology systems that 
capture carbon dioxide for sequestration or beneficial reuse.
                             sequestration
    The fiscal year 2009 budget request of $149 million for carbon 
sequestration, one of the key components of the Fuel and Power Systems 
program, is an increase of $30 million over the $119 million provided 
in fiscal year 2008.
    The increase should help develop economical ways to separate and 
permanently store (sequester) greenhouse gas emissions from the 
combustion of fossil fuels. The technologies will help existing and 
future fossil fuel power generating facilities by reducing the cost of 
electricity impacts and also providing protocols for carbon capture and 
storage demonstrations to capture, transport, store, and monitor the 
CO2 injected in geologic formations.
    The increase will support site selection and characterization, 
regulatory permits, community outreach, and completion of site 
operation plans for large-scale, geologic, carbon storage tests. It 
will also fund large-scale injections and remaining infrastructure 
development. The additional funding also permits work on capture 
projects and initiates an effort to prepare for and augment the 
monitoring, measurement and verification being conducted in the Phase 
III tests.
                                hydrogen
    The budget request of $10 million in fiscal year 2009 for hydrogen 
from coal--a clean fuel for future advanced power technologies such as 
fuel cells and transportation systems--is down nearly $15 million from 
fiscal year 2008. The decrease is due to the elimination of integrated 
coal-biomass processing for carbon emissions research (which is 
generally advanced through the gasification program), elimination of 
substitute natural gas and coal-to-liquids production research (which 
are mature industries and not the high-return investment that FE 
focuses on), and a right-sizing of the effort level for early 
engineering and design studies on hydrogen production modules in near-
zero emission coal plants.
                        gasification technology
    The Integrated Gasification Combined Cycle (IGCC) budget request 
for fiscal year 2009 is $69 million, a $15.5 million increase over 
fiscal year 2008. The IGCC program develops advanced gasification-based 
technologies aimed at reducing the cost of coal-based IGCC plants, 
improving thermal efficiency, and achieving near-zero atmospheric 
emissions of all pollutants. These technologies will be an integral 
part of the carbon capture and storage demonstration projects.
                               fuel cells
    Flexible fuel cell systems that can operate in central coal-based 
power systems and with applications for electric utility, industrial 
and commercial/residential markets, receive a funding request of $60 
million in fiscal year 2009--an increase over the fiscal year 2008 
appropriation of $55.5 million. This activity enables the generation of 
highly efficient, cost-effective electricity from domestic coal with 
near-zero atmospheric emissions of carbon and air pollutants in central 
station applications. The technology also provides the technology base 
to permit grid-independent distributed generation applications.
                     oil and natural gas technology
    Consistent with the budget requests for fiscal years 2006, 2007 and 
2008, the Petroleum-Oil Technology and Natural Gas Technologies 
research and development programs are being terminated in fiscal year 
2009.
    The Ultra-Deepwater and Unconventional Gas and Other Petroleum 
Research Fund was created by the Energy Policy Act of 2005 (Public Law 
109-58) as a mandatory program beginning in fiscal year 2007. The 
program is funded from mandatory Federal revenues from oil and gas 
leases. Consistent with the fiscal year 2007 and 2008 budget requests, 
the fiscal year 2009 budget proposes to repeal the program through a 
legislative proposal.
                      strategic petroleum reserve
    The Strategic Petroleum Reserve (SPR) exists to ensure America's 
readiness to respond to severe energy supply disruptions. The Energy 
Policy Act of 2005 directs DOE to fill the SPR to its authorized 1 
billion barrel capacity as expeditiously as practicable. Additionally 
the President has proposed expanding the Reserve's capacity to 1.5 
billion barrels.
    The fiscal year 2009 budget request of $344 million would continue 
preparations for doubling the current 727 million barrel capacity up to 
1.5 billion barrels and increasing the drawdown capability from 4.4 
million barrels per day (MMB/day) to more than 6 MMB/day. The 
administration strongly believes that this expansion is necessary to 
protect the economic and energy security of the Nation, given the 
increased risk of disruption that is now apparent in the global oil 
market. Increasing the inventory to 1 billion barrels requires 
expanding two existing sites and adding one new site.
    The fiscal year 2009 budget request reflects completion of land 
acquisition activities for the Richton, Mississippi site in fiscal year 
2008 and the addition of expansion activities at the two existing sites 
and the new site in fiscal year 2009.
                   northeast home heating oil reserve
    The fiscal year 2009 budget request of $9.8 million will fund 
continuing operation of the Reserve and the leasing of commercial 
storage space.
    The President directed DOE in 2000 to establish a Northeast heating 
oil reserve which is capable of assuring a short-term supplement to 
private home heating oil supplies during times of very low inventories 
or in the event of significant threats to immediate energy supplies. 
The 2 million barrel reserve protects the Northeast against a supply 
disruption for up to 10 days, the time required for ships to carry 
heating oil from the Gulf of Mexico to New York Harbor.
                 naval petroleum and oil shale reserves
    The fiscal year 2009 budget request of $19.1 million is slightly 
less than the fiscal year 2008 request of $20.3 million. The decrease 
is due to the completion of the Risk Assessment and Corrective Action 
Studies to determine the cleanup requirements of the Elk Hills site 
(NPR-1) and reductions in operating and facility maintenance costs at 
NPR-3.
    The Naval Petroleum and Oil Shale Reserve (NPOSR) mission is to 
complete environmental remediation activities and determine the equity 
finalization of NPR-1 and to operate NPR-3 until its economic limit is 
reached, while maintaining the Rocky Mountain Oil Field Test Center as 
a field demonstration facility. Because the NPOSR no longer served the 
national defense purpose envisioned in the early 1900s, the National 
Defense Authorization Act for Fiscal Year 1996 (Public Law 104-106) 
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, two of the Naval 
Oil Shale Reserves (NOSR-1 and NOSR-3) were transferred to the 
Department of the Interior's (DOI) Bureau of Land Management, and the 
NOSR-2 site was returned 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). 
Environmental remediation is performed on those facilities which no 
longer have value to either of the missions.
               meeting 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 2009 budget submission is designed to help meet the Nation's 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.

                        POWER OUTAGE IN FLORIDA

    Senator Dorgan. Mr. Slutz, thank you very much.
    Mr. Kolevar, as you know, the recent power outage in south 
Florida disrupted normal life for more than 1 million people 
for a number of hours. The news reports that I read said the 
system worked as it was supposed to, shutting down transformers 
and power units, including two nuclear power sites, and then I 
read later that it was a human error.
    So, how is it the system worked as it was supposed to work? 
I mean tell me about what has happened there.
    Mr. Kolevar. The system did work as it was designed. It was 
human error. The individual took down protective relays at a 
substation during maintenance, attempted to put the relay back 
online without reengaging the protective systems and caused a 
short and a voltage drop within the system that affected Turkey 
Point and, subsequent to Turkey Point's going offline, other 
generation units.
    And the system is designed to try and limit the cascading 
effects of a drop in voltage and certainly the drop of 
generation. The drop in generation, 4,000 megawatts, was felt 
all the way through the system. Operators in New York could see 
that something had happened. They didn't know what it was, but 
they could see that something had happened.
    The reason I make that point is because that, while they 
could see it as far north as New York and probably farther 
north into Canada, the system was able to contain that outage, 
localize it, and Florida Power and Light did an impressive job 
of getting service back on to all of their customers in about a 
3- or 4-hour time frame.

                      STRATEGIC PETROLEUM RESERVE

    Senator Dorgan. Mr. Slutz, in the Office of Fossil Energy, 
there's about a $200 million increase in the fiscal year 2008 
enacted versus the administration's 2009 request. It appears to 
me that about $160 million of that is for the expansion of the 
Strategic Petroleum Reserve. Is that correct?
    Isn't a substantial portion of your increase for the 
increased request for the SPR?
    Mr. Slutz. Correct. About--yes.
    Senator Dorgan. Yes. And you heard me describe why I 
support SPR. I've always supported saving and creating an 
energy security blanket here with Strategic Petroleum Reserve, 
but I just think it is nuts at about $100 a barrel to be 
sticking that oil underground and taking it out of supply. And 
so, to the extent the chairman has the votes on this 
subcommittee, I intend in the chairman's mark to stop this on 
the first day of the next fiscal year. My hope is that I'll be 
able to stop it earlier than that on the floor of the Senate by 
adding it to another piece of legislation.
    We shouldn't be putting 60,000 or 70,000 barrels a day 
today underground, and we shouldn't increase that to 120,000 
barrels a day in the second half of this year. So, I just want 
you to know that, to say that we have a substantial increase in 
the Office of Fossil Energy, when I understand most of that 
increase is in the SPR, building facilities and so on is 
deceiving. My major concern is in the fossil R&D accounts 
because half of this electricity comes from coal, and if we're 
going to be able to use coal in the future, we need to have 
expanded carbon capture and carbon sequestration activities. 
That's going to require a lot of effort and a lot of resources.

                        FOSSIL BUDGET PRIORITIES

    Mr. Slutz, when you talk about increasing the request for 
carbon sequestration by $30 million, I've got to tell you 
that's a drip as opposed to a stream that's needed for us 
because there's an urgency for action.
    We need to figure out how do we capture and how do we 
sequester carbon in order to continue to use coal. I've had 
some really interesting people come in to talk to me. There is 
a Texas demonstration project where they are turning the 
effluents from that plant into chloride, hydrogen, and baking 
soda, and the CO2 from the plant is embedded in the 
baking soda, and they put it in the landfill. That's 
interesting to me.
    I'm going to go see a location within the next couple of 
weeks where they're taking the CO2 and feeding a 
contiguous algae pond, because algae lives on wastewater and 
CO2. They not only consume the CO2 with 
algae, but then they process the algae for a super fuel. So, 
you destroy the CO2, and you produce diesel as a 
result.
    So, a lot of interesting things going on, but in response 
to Senator Domenici's question, I think Carl Bauer is an 
extraordinary resource for us. He's running a great operation 
over there, but we need to do a lot of projects, both in 
research and demonstration and deployment of technologies. 
However, in my judgment, to take most of the increase in your 
Office of Fossil Energy and direct it into SPR doesn't make a 
lot of sense to me.
    We need to be directing that, in my judgment, into fossil 
R&D so that we can use our coal resources in the future in a 
way that captures the carbon and doesn't contribute to global 
warming. Your response?
    Mr. Slutz. Well, I think there are two key components that 
are significant. The Coal Program does have significant 
increases. That was a--the $648 million that is focused, 
proposed for coal research and development, is more than 25 
percent--I think it's a 25 percent increase and that includes--
--
    Senator Dorgan. That includes FutureGen?
    Mr. Slutz. Yes, yes. When you look at the Coal Program and 
break it down, there are both key demonstration projects, which 
include FutureGen and the CCPI Program, and then other very 
important research aspects. And there's about 400--I think $400 
million in the research programs and then--well, $156 million 
for FutureGen and $85 million for CCPI, and the $156 million 
for FutureGen is about--I think I mentioned it was an $80 some 
million increase from previous budgets.
    So, there is significant increase in coal. There is an 
increase--we're proposing about a $171 million in the SPR 
budget for developing new facilities. All but $13 million of 
that $175 million is targeted at increasing from 750 million to 
the 1 billion level which is what was authorized by EPACT.
    There's only $13 million of that $171 million that is 
targeted for the 1 billion to 1.5, and that is for some initial 
environmental impact statement work and some of the analytical 
work needed on site selection. So, just kind of put that in the 
frame of reference that it is incremental steps that are being 
proposed for that.
    Senator Dorgan. I understand that, but resources are 
scarce. In fact, as we give discretion to the Department with 
respect to this process, then we must use them wisely, I mean, 
if you were going to plan a journey with your car some day, and 
you say here's the road I'm taking and then somebody says, 
well, but there's a bridge out halfway through that trip. You 
say, well, it doesn't matter, I'm just going to take this road. 
But when we come to the bridge, we'll just drop off the bridge. 
This is your SPR policy.
    That wouldn't be very smart, and it's not very smart for us 
to say here's the road we're taking with respect to SPR. No 
matter the consequences, no matter the circumstances, no matter 
the price of oil, we're still going to stick it underground.
    I mean, my point is I think there's a need for a pause, a 
1-year pause with a price-cap issue, and I'm going to work on 
that.
    I don't know whether you have described, as Mr. Spurgeon 
has described, a 330 percent increase in his accounts in 7 
years. He smiled broadly as he said it, and I'm sure he feels 
very good about it.
    Have we had a 330 percent increase in the funding for clean 
coal technology and the fossil accounts in the last 7 years?
    Mr. Slutz. I can't answer that question. I mean, I don't 
know the percent increase that we've had or what we had.
    Senator Dorgan. I'm not diminishing Mr. Spurgeon's dramatic 
success, much of which should be attributed to my colleague to 
the left here, but----
    Senator Domenici. Well, I don't have anything to do with 
running the Government.
    Senator Dorgan. No, but, look, we've not been blind here. 
We understand what's been going on.
    Senator Domenici. I thought it was a great priority to get 
nuclear power plants on board and there are.
    Senator Dorgan. We have others that want to ask questions, 
and I want to recognize Senator Domenici, but I just want to 
say this.

                          CARBON SEQUESTRATION

    There isn't a ghost of a chance of us being successful in 
our fossil programs unless we understand that to continue to 
use coal in the future, given what's coming at us and the 
debate on global climate change legislation, unless we decide 
this is urgent. It's going to require significant increases in 
research and also especially in development, because you've got 
to get the commercial-scale development applications to 
understand what technology works and at what cost. Both are 
very important.
    So, as we work on this in this subcommittee, we're going to 
try to find a way to recalculate some of this and make bigger 
investments and bolder investments because we've got to 
continue to use coal, but we have to do it in a manner that 
doesn't injure our environment.
    We're not going to have a future without coal. The question 
is what kind of a future are we going to have with coal when we 
describe conditions of capture and sequestration? I'm a real 
believer that technology can solve some of these problems, but 
technology isn't inexpensive, and so, Mr. Slutz, I'm hoping 
that the next time you come, you'll be able to smile as Mr. 
Spurgeon has about what we might be able to do to increase the 
accounts that you can't ask for because you've got to be here 
supporting the President's request. You know and I know that, 
if we do what I think we should do to your accounts, you would 
be very appreciative.
    Would you agree to that?
    Mr. Slutz. I will agree that managing coal requires us to 
solve the carbon sequestration issue, and it is a huge 
challenge that we need to solve.
    Senator Dorgan. Diplomatically said. Thank you. Senator 
Domenici.
    Senator Domenici. Well, Mr. Chairman and members of the 
executive branch here in front of us, let me say, regardless of 
what my emphasis has been, along with others, like Senator 
Craig, in the field of nuclear and I'm trying to get a nuclear 
renaissance going, there's no doubt in my mind that the 
chairman has properly expressed the situation in the United 
States in terms of our future, and coal is an American--just 
the backbone of America's ability to solve the problem of 
having to import our energy needs.
    In my opinion, it would be a good thing and maybe we could 
do this. We have been spending money on coal research and it 
not all comes to you. Some goes to the Department of the 
Interior, and I think it would be good if we asked the 
administration to submit to us the amount of money that's been 
spent on coal, clean coal research, and let ``clean coal'' be a 
generic term for any kind of research that's been done on coal 
to make it more usable and friendly to American ambient air 
standards and the like.
    I'd like to see how much we've spent in the last 10 years, 
if you could ask them to tell us, and then if there are other 
departments that spend it, you could tell us who they are and 
we could ask them.
    Senator Dorgan. Mr. Slutz, would you submit that to our 
committee?
    Mr. Slutz. Yes. Yes, sir.
    [The information follows:]
                           Clean Coal Funding
    The Department of Energy has invested $3.4 billion in clean coal 
research over the last 10 years to dramatically reduce coal power plant 
emissions (including CO2) and significantly improve 
efficiency, thereby reducing carbon emissions. While funding is not 
readily available, other Government agencies that invest in clean coal 
include the National Science Foundation, the Department of Interior and 
the U.S. Geological Survey.

                     CARBON SEQUESTRATION CONTINUES

    Senator Domenici. What worries me is we've been--every year 
since I've been around doing my work on this subcommittee, we 
hear about the additions that are made to research on clean 
coal. The new addition has been CO2.
    First we had clean coal and we weren't trying to get 
CO2 out of it because climate wasn't a part of the 
issue. We were trying to clean it to meet the standard so we 
could use it in our utility. Now we've added to the research 
the burden of cleaning it and removing and making 
CO2, the removal stick.
    It seems to me that is a question to ask you and maybe you 
can get your experts to tell us. Has the fact that we are 
asking our researchers to find a way to remove and stabilize 
the removed CO2 made the research job of cleaning up 
our coal more difficult and are we ignoring clean coal and 
putting more effort on clean coal and carbon sequestration? Do 
you understand my concern?
    Mr. Slutz. As we focus on CO2, we're missing 
some of the other aspects.
    Senator Domenici. Making it more difficult. If we broke 
through and had clean coal, that'd be one thing. That'd be a 
pretty giant step. We've tried that for years. At least the 
utility companies and America would say we could burn that 
coal.
    If we say research clean coal and carbon sequestration, we 
might be making the clean coal more difficult to achieve and we 
may be taking more time to get it done, and I think I'd like an 
answer from some of your experts as to what we're doing with 
our money in that regard.

                     NATURAL GAS AND COAL RESOURCES

    It is very important. Right now the utilities of America 
are in an absolute dilemma, and that's your business and that's 
your business. You know they can't start a new powerplant, 
right? What they're all going to do is go to natural gas, 
right?
    Mr. Kolevar. Yes, sir.
    Senator Domenici. There's no question. They're going to be 
pushed up against the wall and they're going to eventually say 
whatever the cost, we have no other alternative. We're going to 
natural gas.
    Mr. Kolevar, you don't think that's good policy for 
America, do you?
    Mr. Kolevar. No, sir, it's not.
    Senator Domenici. And then how about you in your research? 
You don't think that's good for America, do you?
    Mr. Spurgeon. No, sir.
    Mr. Slutz. I think its good policy. I think there's a role 
for each of those fuels. There's going to be a role for both 
natural gas and for clean coal. There's--it's not an if--it's 
not an either/or.
    Senator Domenici. Sure.
    Mr. Slutz. It's clearly both.
    Senator Domenici. But if you ignore cleaning up the coal or 
make it take 10 years longer, your utilities can't sit by and 
wait. They're going to add capacity. You just described the 
capacity add-ons that are predicted by Caruso over there at--
that does a great job. His predictions are probably as accurate 
as any, and he says they're going to have to add great 
capacity, right?
    Mr. Slutz. Yes, sir.
    Senator Domenici. Thirty-five--what does he say?
    Mr. Kolevar. About 35 percent by 2030.
    Senator Domenici. Do you know what the utilities are saying 
they're going to do to meet the requirement? We have nuclear 
coming along, but it's by nature pretty slow.
    Mr. Kolevar. I think it's fair to say that a lot of 
utilities are not quite sure how they're going to get there.
    Senator Domenici. That's correct.
    Mr. Kolevar. But we are seeing the cancellation of planned 
coal units now, and much of that new generation coming online 
is going to be natural gas and that will make us more reliant 
on foreign sources of gas.
    Senator Domenici. And you know what natural gas is worth 
now. Remember when we started, Larry? Now it's up to nine. When 
we started, look at here. It's nine-plus, and then they're 
going to have to use it, even though it's in short supply.
    I have a number of questions, but I'm just going to get you 
on this, Bond and others, that keep attacking you. Are you 
feeling all right? Are you holding up under the barrage?

                               FUTUREGEN

    Mr. Slutz. Thanks, Senator. Yes, we are--I'm holding up. 
We're holding up. It was not an easy decision to make the 
decision on FutureGen, I can tell you, and we're working 
through that. We're working through it with our various 
industry partners. And let me just add one, which I think is--
and we'll have much more in the next few days to come out, but 
after we made the announcement, we immediately released a 
request for information.
    We requested those comments come in by Monday, March 3. I 
was able to determine yesterday we received over 50 comments, 
which is very significant for that type of technical request 
for information.
    I don't want to get ahead of myself because we need to 
analyze those comments, but I'm very optimistic that we have a 
path forward with this restructure of FutureGen that gets these 
projects out quicker in a full-scale commercial environment, 
and we're seeing a lot of interest by utilities because they 
see this as key to being able to use coal, and we're hearing a 
lot of excitement out there.
    So, we need to work through these comments. We're going to 
be working over the next month with some structured outreach 
programs with industry. And we anticipate coming out with a 
funding opportunity announcement very soon, and we'll be 
working very closely with Congress as well on this.
    Senator Domenici. Well, you've got to be smart on what 
you're going to do at the next go-around because you had the 
areas that were committed to this and perceived to have won, 
and now if you have a new program and there in some way it's 
made difficult for them to be participants, this issue will go 
on for years. And so my advice is to work with these companies 
that were part of your proposal before, and I'm sure you're 
going to do that.
    Mr. Slutz. Yes. Yes, sir.

                             NUCLEAR ENERGY

    Senator Domenici. Now let me talk about nuclear just for a 
little bit. Mr. Spurgeon, you're going to leave this Government 
when the President's term's up, I assume, or close thereto.
    Mr. Spurgeon. Yes, sir.
    Senator Domenici. First, I want to say together it would 
appear to me that your short term in this office will be 
evidenced by enormous positive success in the direction of 
nuclear power being used again in large quantities by America 
and certainly much more in the world than it ever has been, and 
we may be a player, whereas before we were doomed.
    We may, in my opinion, be back at it producing engineers 
that are experts, et cetera, and we may be interested in 
nuclear power at every level.
    Am I stating it halfway right?
    Mr. Spurgeon. Yes, sir.
    Senator Domenici. Now, since we've got nuclear power and 
got a lot of companies ready to go, there must be some things 
that are problematic about the future of nuclear power, and I 
might ask you in a minute to tell us a few, if you have them, 
but it seems to me that the overhang that is really big is, 
even though it's not as big a problem in my mind now as it was 
10 years ago, but the problem of what are we going to do with 
the waste is the only thing that stands in the way of maximum 
acceptance of nuclear power.
    You know that, right?
    Mr. Spurgeon. Yes, sir.
    Senator Domenici. That's the only thing people that know 
what they're talking about say and then it's accepted by the 
masses that, well, something's wrong, we don't have the waste 
control. We're doing darn well. We could stay a long time 
without a new repository because of the way things are right 
now.
    But are we going to find a way, a direction to move ahead 
so that we are assured of the next step which would be a 
reprocessing, a recycling plant in America? Is that going to be 
set before you and Mr. Bodman leave office or not or do you 
know?
    Mr. Spurgeon. I certainly hope so, sir. The future is 
always hard to predict, but we have all the ingredients in 
place that should allow that to happen, and that's not taking 
away anything from our long-term R&D efforts which will 
eventually get us to the point in advanced reactors and 
advanced systems that we need to get to and will get to some 
time later in this century.
    But the key to the revival of nuclear energy is making 
concrete progress, and I don't mean that as a pun, but 
``concrete'' meaning real things getting built.
    Senator Domenici. You bet.
    Mr. Spurgeon. That's our next step with respect to nuclear 
reactors in this country. We have the systems in place. We have 
some of the support mechanisms in place, but we need to push it 
over the goal line. Therein you'll see the emphasis in our 2010 
program in this year's budget because it's the new reactors 
that are going to be the pole that gets the flywheel turning.

                          SPENT FUEL RECYCLING

    But for the sustainability of nuclear energy long term--
because we don't just need the 30 or so plants that are on the 
drawing boards in one stage or another today; we need more than 
300 if we're going to have any chance of meeting some of our 
carbon goals in the near term. And so to do that then, we've 
got to solve that second of the two basic questions that have 
been out there for nuclear energy since the 40 years I've been 
in this business, which is, is it safe and what are you going 
to do with the waste?
    I think we have basically answered the question through 
good, solid, reliable operation of our nuclear plants that it 
is safe. We've got that second one to answer, but I think we 
can do that by looking at the entire back end of the fuel cycle 
as a unit.
    We need to look at used fuel and what is the best way and 
an integrated way of managing used fuel? Because through 
recycling, you can make the repository challenge much easier. 
You can put a much more stable waste form into the repository, 
making it such that it's easier to license, easier to----
    Senator Domenici. What is the objection? What is the 
objection to recycling?
    Mr. Spurgeon. It is something that goes back a long time. 
When this business started in the late 1960s and early 1970s, 
the whole policy was that the fuel coming out of a lightwater 
reactor would be recycled back into a lightwater reactor and 
the solidified, vitrified high-level waste would go into a 
repository, and at that point in time it was a salt mine that 
we were looking at for that kind of a repository. And that was 
our plan and that was moving forward, and that's when nuclear 
energy was going to provide a large share of our electric 
energy--projected to provide a large share of our electrical 
energy generation requirement.
    In 1977, President Carter indefinitely deferred 
reprocessing in this country. Now President Reagan did reverse 
that in 1981, but by 1981 nuclear energy was kind of on the 
downslide and there was no basic economic or business 
imperative for us to move forward with recycling.
    Senator Domenici. Yes, sir.
    Mr. Spurgeon. But we're now getting back to where we're now 
seeing that curve again turn upward and where we do need a 
substantial amount of new nuclear power, and to do that, we are 
now relooking at, through the Advanced Fuel Cycle Initiative 
and other programs, the ability to recycle fuel.
    I don't think--I'm sorry. I'll be quiet.
    Senator Dorgan. Let me just mention, though, that I think 
it requires a longer discussion. The reprocessing decision in 
1978 had to do with nonproliferation concerns. Valid or not, 
one might agree or disagree, this is also part of a concern 
about nonproliferation. So that's the origin of that, right?
    Mr. Spurgeon. No question, sir.
    Senator Dorgan. Okay.
    Mr. Spurgeon. Actually, I was there. I mean, I was one of 
the people that were doing the report.
    Senator Domenici. Well, just a minute because I ran out of 
time and you gave a long answer and that's sufficient. You've 
explained it.
    I want to say this. President Carter did stop this by 
executive order, and he said it was based upon the desire of 
the United States that there not be the proliferation that this 
would add to the atmosphere and that if we didn't do it, others 
would not do it since we were a leader that the world followed. 
The problem is that was a mistake and they didn't sit by and 
say we'll skip reprocessing, we'll do something else. They 
reprocessed and we did not, and now we're in a position of 
deciding whether we should or not. And the chairman is correct, 
that President that did it had a good reason. The problem is 
that the reason didn't turn out to be right, and it's many, 
many years since the decision and Europe, led by France, is 
recycling. And that's one of the giant, giant concerns that we 
must confront, and I don't know whether we're ready to confront 
it. I am, but I don't know whether others are.
    Thank you, Mr. Chairman.
    Senator Dorgan. Senator Domenici, the reason I interrupted 
is only to say that the issue of reprocessing is not a 
technical issue. I mean, the decision wasn't made on a 
technical basis. It was made on a broader basis, and one might 
or might not feel it's time to revisit that.
    I think the issue of reprocessing requires a discussion 
about the kinds of things Senator Domenici has just described 
and the kinds of things others would describe about 
reprocessing. That was my only point.
    Senator Craig.
    Senator Domenici. That was fine.
    Senator Craig. Thank you very much, Mr. Chairman. I'll 
become a little more parochial. These are extremely valuable 
discussions, and I would suggest, as it relates to FutureGen 
and clean coal technology, I think the utility industry is 
ready to participate in phenomenally aggressive ways in 
partnerships to provide substantial resources.
    One of the things, if I have any disappointment in this 
administration, is we've not crossed that line of partnerships 
that I think we must if we're going to bring the resources to 
bear on the urgency that you hear this committee speak of when 
we speak about technology and the future and the need.
    Senator Domenici. You're right.
    Senator Craig. We still think we have to fund everything 
out of the hip pocket of the taxpayer, and those relationships 
are to come and they must come. Whether it's building an NGNP 
or whether it's FutureGen, they have to be targeted, they have 
to build consensus, but there's phenomenal resource out there 
waiting.
    I had the president of a major utility the other day tell 
me that they could meet the targets of a cap-and-trade in a 
reasonable fashion given the running room and the technology 
and the partnerships and the relationships with the Federal 
Government. But you all three understand, as we all four up 
here do, we have three people vying for the presidency today 
that hold nearly the same position on climate change and a 
scheme of cap-and-trade that nobody yet can figure out. And if 
that were to become policy today, the fuel switching we talk 
about would go on and distort the marketplace in ways that are 
awfully hard to perceive because utilities would be forced to 
move in the direction they must move to build their base loads, 
the clean coal technology not being in place and certainly the 
nuclear backlog and the building of infrastructure there and 
capability that's obviously under way. That's a frustration to 
all of us, or certainly it is to this senator. It may not be to 
others.

                         ADVANCED TEST REACTOR

    But, Dennis, last April, DOE designated the Advanced Test 
Reactor, ATR, as a national user facility. ATR is a unique test 
reactor that the university research community and the 
commercial nuclear industry can use to perform critical tests.
    Up until now, only the lab and the Navy have had access to 
the ATR. Now the fiscal year 2009 DOE budget only includes $2.5 
million for this activity.
    Do you consider this to be enough funding and what more 
could be done with additional funding?
    Mr. Spurgeon. I think it's a good start, sir. You're 
pointing out something that I consider to be a major 
accomplishment of moving the ATR into the marketplace, if you 
will, because it has a tremendous amount of untapped 
capabilities that can be used. And so, starting this summer, as 
you know, we are going to be having researchers from 
universities that are going to be starting to take advantage of 
that very unique facility.
    So, is it a start? Is it an acceptable start? I believe so. 
I'm hoping that this will take off and grow, and we will 
continue this program because it's--it can be a great example 
of how we can take and make full use of our national assets, 
especially the ATR, which, while it's been around for quite 
awhile, it's a very young 30-year-old plant.
    Senator Craig. Well, we'll watch it very closely because it 
is that nexus of partnership that I think ATR may assist us in 
doing, increasing those relationships with the private sector 
and the university communities that are going to be 
tremendously important.

                        ENVIRONMENTAL MANAGEMENT

    When the Secretary testified before the Energy Committee, I 
asked him to respond to the Idaho delegation's repeated request 
to transfer clean-up liability from the lab to the clean-up 
contractor. The fiscal year 2009 budget did not provide funding 
for these clean-up activities in either of the NE or EM 
budgets.
    Are you planning to fund these clean-up activities through 
NE? That would be the one question. What impact will this have 
on the R&D activities, like NGNP and GNEP, on the lab's 
infrastructure--and the lab's infrastructure?
    Mr. Spurgeon. Obviously any clean-up activity that is done 
at Idaho, however the budget funds end up getting requested, 
would be managed through the EM contractor. Nuclear Energy is 
not in the business of doing clean-up. My office is not in the 
business of managing clean-up, but it all goes through the 
Idaho Operations Office.
    Consequently, the issue here is more of how do we get 
adequate funds to manage the overall national clean-up activity 
that is ongoing and that needs to continue? From my personal 
perspective, I'm in the business of building things. I'm not in 
the business of taking things apart. There's another 
organization within the Department that does that.
    Senator Craig. Okay. Am I out of time, Mr. Chairman?
    Senator Dorgan. Close.

                   OUTER CONTINENTAL SHELF RESOURCES

    Senator Craig. Close. One last question then to you, Mr. 
Slutz, last year I included $10 million to perform an inventory 
analysis of domestic oil reserves in the Outer Continental 
Shelf, in the Energy and Water Appropriations bill.
    What are your thoughts on investing in this type of 
analysis to establish once and for all the Nation's oil 
reserves to be used at a time of need?
    And I say this because what we're looking at today is old 
knowledge, and yet we know that when incentivized, we went into 
the deep waters of the gulf and we applied today's technology 
and found phenomenal oil and oil reserves, and I am just amazed 
that we have decided to put a blindfold on because of the 
politics involved that are old, they're not the new politics 
that ought to be fitted to the new technologies. And I'm going 
to make a run at that again. I'm going to work awfully hard on 
it to see if we can't break through the mental fog out there of 
knowing where our country is as it relates to our reserves.
    Senator Domenici. What is that, Senator, you're going to 
work on, the inventory?
    Senator Craig. Ten million dollars to build the inventory.
    Senator Domenici. We did it. You put it in and then they 
took it out, and we had to take it out in conference.
    Senator Craig. I know we did it and----
    Senator Domenici. It's not law yet.
    Senator Craig [continuing]. My effort is to do it again.
    Senator Domenici. Right. I got you. I didn't understand.
    Senator Craig. Your thoughts, sir?
    Mr. Slutz. Well, let me just tie it back in, I think 
broader, when you look at it from an oil and gas reserve 
assessment, technology assessment, it's actually something 
that, as a nation and the world, that we actually do need to do 
periodically.
    It is probably--and I'll reference a study I was personally 
very involved in, was the National Petroleum Council Study that 
was titled ``Facing the Hard Truth'' when it was issued. And 
one of the key findings from that study, which was actually a 
study of studies and projections that are out there, was that 
it was something not just the United States but globally we 
needed to have a better understanding of our resource base and 
that it was time to really update that, and I think there's 
some real good information in that piece of work on how to get 
started under that.
    And, of course, almost every projection in the world, I 
think, all except one major projection, relies on the United 
States Geological Survey and their reserve assessment. So, I 
think the United States has always shown leadership in reserve 
assessment. I think it is a critical issue, not just to know 
what we have in the offshore and Outer Continental Shelf but 
also, as we look more toward unconventional resources, past 
reserve assessments have not--because of new technology 
developments over the last probably 15 years, some of those 
past assessments don't actually take into account a lot of--for 
instance, what is the real opportunity with oil shale and some 
of those things?
    So, yes, I think there is some opportunity there for us to 
better understand this.
    Senator Dorgan. Mr. Slutz, thank you very much. I do want 
to mention that we put the inventory in our bill last year, and 
I supported that. But it properly belongs with the Interior 
Appropriations Subcommittee.
    Mr. Slutz. Right.
    Senator Dorgan. Both of us are on Interior, I believe. 
That's probably where we'll want to put it.
    Mr. Slutz. I was giving you the general technology answer.
    Senator Dorgan. I understand. I also want to make a point 
that the administration has zeroed out the ultra-deep and 
unconventional oil and gas drilling research. We added back the 
money in the past, but for the second year in a row, the 
administration zeroed that out. I think is a very big mistake 
because there are resources there that we need to further 
research and develop technologies so that we can find them.

                           PREPARED STATEMENT

    Let me call on Senator Allard.
    Senator Allard. Thank you, Mr. Chairman. I would like to 
have my statement made a part of the record, if I might.
    Senator Dorgan. Without objection.
    [The statement follows:]
                Prepared Statement Senator Wayne Allard
    Mr. Chairman, thank you for holding this hearing today. I think it 
appropriate that we are hearing from, not only the offices responsible 
for dealing with electricity production, but also 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 which 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.
    In the area of fossil energy production, technological advancements 
have made the use of coal cleaner and more efficient than ever before. 
In the United States, and in the State of Colorado, 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.
    Again, Mr. Chairman, thank you for holding this hearing. And thank 
you to all of the witnesses for being present.

                          SPENT FUEL RECYCLING

    Senator Allard. Thank you, Mr. Chairman. My approach on our 
energy crisis is that we need to have a balanced approach. We 
can't take any energy source off the table right now, and I 
think that's critical. That's a position that I think is good 
for the country, happens to be good for the State of Colorado 
because we have lots of natural gas, we have lots of clean 
coal, we have lots of sources for renewable energies, and we 
have a lot of the technology to develop some of this.
    The question that I have is when we're talking about 
nuclear energy, what is being done to--that you're familiar 
with--to push the recycling of nuclear energy?
    I visited the recycling nuclear energy plants in Sellafield 
in England. I've been to France and visited those recycling 
units there, and anybody that hasn't been to those areas, I 
think they ought to spend the time to go there because it's 
American technology that they've taken to the European 
community, and I know that we're working on what we call a MOX 
plus, which means when we recycle, we end up with a byproduct 
that is more difficult to convert to a nuclear weapon of some 
type.
    Would you comment on that recycling part on nuclear energy, 
please?
    Mr. Spurgeon. From the budgetary standpoint, that's found 
in the Advanced Fuel Cycle Initiative, which is looking to 
develop the technologies which will allow us on a long-term 
basis to proceed forward with advanced recycling and also with 
advanced reactors that would then be used to recycle the 
material into.
    On a near-term basis, we are looking at, well, what can we 
do to make the fuel cycle more proliferation resistant, that 
is, so that you don't separate out pure plutonium? I don't 
happen to call it MOX plus, but on the other hand your 
description of it is accurate. And that is something that we 
are looking at.
    We look at that as the--I personally look at that as the 
next incremental step along the way toward the ultimate goal of 
long-term fast reactor recycle, but what that also does, as 
Senator Domenici was commenting on just a moment ago, it gets 
us to the point where we can have an easier solution than just 
disposing of used fuel directly in a repository, an easier 
solution to the disposition of high-level waste because the 
product of a recycle facility is a vitrified glass form that is 
easier to dispose of and gives us many more alternatives as to 
how we dispose of that material.
    Senator Allard. Reduces the waste stream.
    Mr. Spurgeon. It does reduce the waste stream. It reduces 
toxicity, but more importantly, if you just dispose of a spent 
fuel element, then you need to be able, because you don't know 
but what you might want to use that material and that resource 
that's still contained in there at some later time, it needs to 
be recoverable or retrievable. That defines a harder problem 
for a repository than if you're disposing of a glass log and it 
just needs to go in there and be safe for the time frame that 
needs to be maintained geologically stable.

                          CLEAN COAL RESEARCH

    Senator Allard. Thank you for that. I also think that we 
have to continue to rely on working on our traditional energy 
sources. Mentioned was coal. Colorado has a source of clean 
coal because it's hard, has high mercury levels. You go further 
east, you have soft coal with lower mercury levels.
    What is being done in clean coal technology to look at how 
we can easily remove mercury from coal? Is anything being done 
there?
    Mr. Slutz. In the past, we have had programs that focused 
strictly on clean coal and particularly mercury, and that was 
in our Innovations to Existing Plants Program.
    Now, what we've done is we are proposing in 2009--we 
actually proposed no funding in 2008 because much of that work 
had been done, and in 2009, we're proposing money in the 
Innovations to Existing Plants but that again is focused on the 
carbon capture piece of it and it's capturing carbon from the 
existing coal fleet, is where that line is moving to.
    So, we are--in the past, we have done work on mercury, but 
now we're moving more toward carbon capture.
    Senator Allard. Now, what I'm hearing on this carbon 
capture, some of this you're talking about disposing of the 
carbon in one way or another.
    Just sitting here listening to your discussion, I know that 
we make carbon compounds that are very light and extremely 
strong. Is there a possibility of taking those carbon compounds 
that you have left over from your coal utilization, and 
converting those into a commercial product like these carbon 
compounds where they're extremely light and extremely hard? And 
they're actually using them. Taking these synthetics and 
actually making them part of the fuselage of planes and whatnot 
because of their lightness and durability. Is there anything 
being done on that?
    Mr. Slutz. I think there's been past work being done on 
other ways to store it, other than sequestration, but right 
now, we're focused on sequestration. And I'll tell you part of 
the challenge----
    Senator Allard. Is there a future in that?
    Mr. Slutz. Well, part of the challenge is the scale. And if 
I could just give you a sense of that----
    Senator Allard. If you would.
    Mr. Slutz. If you captured all the carbon from all the 
power--the coal-burning powerplants in the United States and 
then you compressed it so it was a liquid, like it was, it's 
called super-critical, so it's like a liquid. You would have to 
manage 50 million barrels a day of that liquid. That's 2\1/2\ 
times our current oil-handling capability.
    So, from a scale--it's not that I'm not saying it doesn't--
I don't know the answer to whether it does and we can look into 
that from a standpoint of giving a technical answer of the 
possibility of that, but the part of the challenge is the 
amount of carbon dioxide we could deal with.
    Senator Allard. Well, I see that, is this liquid carbon 
dioxide or is this----
    Mr. Slutz. When you move it, you compress it.
    Senator Allard. Is this frozen carbon dioxide what you're 
dealing with in the end?
    Mr. Slutz. No, it's actually--carbon dioxide is a gas when 
you compress it.
    Senator Allard. Right. And then it----
    Mr. Slutz. And then it becomes like a liquid.
    Senator Allard [continuing]. Becomes a liquid and then a 
solid.
    Mr. Slutz. Yes.
    Senator Allard. Yes. But when you--carbon sequestration. I 
mean, if you take the oxygen out, you've got carbon?
    Mr. Slutz. Right. But CO2 is you inject it for 
sequestration.
    Senator Allard. Okay, all right. So, you inject the 
CO2 for sequestration. My point is there a carbon 
compound that's left over in the process?
    Mr. Slutz. In----
    Senator Allard. Not really?
    Mr. Slutz. Not really.
    Senator Allard. Not really. So, when we combine this with 
soda, soda ash, for example, what is happening? I mean, why are 
we combining it with soda ash? Is this a way of disposing of 
the carbon, CO2?
    Mr. Slutz. I would have to get back with you on that. I'm 
not sure of the answer to that question.
    Senator Allard. I'm trying to get an understanding here of 
the disposal cycle as we go through the sequestration.
    Mr. Slutz. Oh, sequestration. You're actually inject--what 
you're doing is you're injecting the CO2 into a deep 
underground saline aquifer, so it stays in that--because of the 
geologic pressure, it stays in that super-critical liquid.
    Senator Allard. CO2.
    Mr. Slutz. CO2, yes.
    Senator Allard. Okay.
    Mr. Slutz. Now----
    Senator Allard. No attempt has been made to take these 
byproducts and put them to a useful purpose, is what I'm trying 
to get to.
    Mr. Slutz. In the past, I think there's been some limited 
work in that.
    Senator Allard. Yes. But do you think that there--we should 
be doing something like that?
    Mr. Slutz. I don't know what the--I'm not sure what the 
potential is on that.
    Senator Allard. I think we ought to look at that. I mean, 
we always have a disposal problem, but we need to look at, you 
know, how you recycle this stuff, and if there's the technology 
there to put it to some useful purpose, I think we ought to 
look at that.
    Mr. Slutz. There is one area that we see a significant--
it's still not done on a full scale, but using CO2 
for enhanced oil recovery is one very likely possibility and an 
early possibility for finding an alternate use for 
CO2. As it's injected into the oil reservoir, it 
increases oil production. It's done--there are some--at Permian 
Base in west Texas, significant enhanced oil recovery is done 
by using CO2. So, yes, that's probably one of the 
largest reuse opportunities in enhanced oil recovery.
    Senator Allard. I see my time has expired. Thank you.
    Senator Domenici. Excuse me, Mr. Chairman. Might I comment?
    Senator Dorgan. Senator Domenici?
    Senator Domenici. I might say Senator and Mr. Secretary, 
this injection that you speak of has been done for--that's a 
pretty old use of carbon dioxide, and it was not done for the 
purpose of leaving CO2 underground. Nobody was 
trying to remove CO2. We didn't know it was a 
problem. It was a good way to fill the underground veins of oil 
and push the oil up. So, we find out now that maybe that's a 
way to get CO2 out of circulation, and it does quite 
well.
    I might say to the Senator, one of the most interesting 
things happened in testimony yesterday from Mr. Caruso from the 
Energy Information Agency. When we passed the CAFE standard for 
automobiles, Mr. Caruso just told us yesterday how much carbon 
dioxide we saved, will save by 2030 because of the forced 
change in the size of automobiles and et cetera.
    We're going to save 5 billion tons just by that law and its 
implementation among the car owners of America. So, we're not 
going to get rid of carbon dioxide only by----
    Senator Allard. Well, you need to have CO2 if 
you're going to have plant life on this world.
    Senator Domenici. Yes. But what I'm saying is there's lots 
of ways we're going to reduce it. That's one. We didn't even 
have to do anything except pass a bill to change the model of 
cars and you cut 5 billion tons in that.
    I've told the chairman that I had to leave, Secretaries, 
and I want to thank all of you and especially you, Mr. 
Spurgeon. We'll be working hard with you for the next 10 months 
to see that we can come up with some more good things before 
you leave.
    Thank you, Mr. Chairman.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Dorgan. Senator Domenici, thank you very much. At 
this time I would ask the committee members to please submit 
any additional questions they have for the witnesses for the 
record.
    [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 Pete V. Domenici
    Question. The difference between the Department's fiscal year 2008 
request and fiscal year 2009 request for the Advanced Fuel Cycle 
Initiative (formerly GNEP) is down roughly $100 million. Clearly this 
will result in significant change in the research objectives of this 
program. Can you please explain to the subcommittee how the Department 
has modified the scope of this program and what are the near term 
technology goals for this program?
    Answer. The reduced funding between the fiscal year 2008 budget and 
fiscal year 2009 budget for AFCI, which is the domestic technology 
research and development component of GNEP, results from, among other 
considerations, a planned reduction in R&D resulting from industry 
feedback to date showing that prior R&D scope might be greater than 
required to meet industry needs. In fiscal year 2008 the Department 
solicited input from industry to determine whether the near-term 
technology and deployment goals of GNEP could be met using commercially 
available technologies. This interaction indicated that the initial 
deployment of spent nuclear fuel recycling technologies could utilize 
technologies already in use on an industrial scale in Europe and Asia, 
with modifications to ensure pure plutonium is not separated.
    Question. The fiscal year 2008 Energy and Water bill directed the 
Department to develop a strategy to address the spent fuel inventories 
at the closed civilian nuclear facilities in New England and the West 
Coast. These sites, which have no ongoing nuclear operations, are 
simply long term storage facilities for spent nuclear fuel. What is the 
Department doing to implement this Congressional direction and what are 
the options currently under consideration?
    Answer. The fiscal year 2008 Report language requested the 
Department of Energy (DOE) develop a plan for accepting spent nuclear 
fuel currently stored at decommissioned reactors at either an existing 
Federal site, at one or more existing reactor sites, or at a 
competitively-selected interim storage site (including those sites that 
volunteered to host Global Nuclear Energy Partnership facilities). The 
Department is currently evaluating pertinent information and preparing 
a report in response to this request.
    Question. As I noted in my opening remarks, the MOX fuel 
fabrication facility has not received adequate funding and the 
Department will be forced to rebaseline the program to establish a new 
budget and schedule for this project. Can you please inform the 
subcommittee of the impacts of Congressional cuts to the MOX program 
and how much taxpayers will pay as result of these cuts? What will this 
do in terms of delaying our goal of eliminating excess plutonium from 
the U.S. weapons stockpile?
    Answer. DOE is currently analyzing the MOX cost and schedule 
impacts that will result from the $217 million funding reduction to the 
MOX project (this reduction includes $100 million cut from the budget 
request, the rescission of $115 million and a $2 million reduction in 
Other Project Costs) in the 2008 Consolidated Appropriations Act. It is 
premature to speculate on the impacts of these changes until this 
analysis is completed. However, we expect that the funding reductions 
could increase the total project cost of the currently validated 
baseline for the MOX facility, delay the facility construction and 
operations schedule, and ultimately, delay our goal of eliminating 
plutonium that has been declared excess to U.S. defense needs.
    Question. Last year, as part of the Energy and Water bill, Congress 
directed the Department to make investments in our national labs 
instead of pursuing a brand new consolidated fuel technology center. 
The labs support a wide variety of nuclear research ranging from 
nuclear weapons to medical isotopes, but the infrastructure at these 
facilities are aging and require new investments to sustain the 
scientific capability. Do you agree that we need to continue to invest 
in our scientific infrastructure and how does the fiscal year 2009 
budget request support this goal?
    Answer. The Department of Energy (DOE) strongly believes that 
investment in our scientific infrastructure is critical to successful 
accomplishment of our mission. The fiscal year 2009 budget supports 
this goal, and DOE will continue to support and maintain our facilities 
and equipment so that research and development (R&D) of nuclear energy 
technology can be conducted with the best available laboratory assets.
    DOE is actively reviewing existing facilities to determine how they 
can be used in the near term to develop and demonstrate the 
technologies we envision for the Global Nuclear Energy Partnership 
(GNEP) such as advanced fuel separations, transmutation fuel 
fabrication, improved waste forms, and integrated safeguards. Potential 
new GNEP facilities are being evaluated to inform policy decisions and 
understand the environmental impacts associated with them. It is 
important to have facilities that can perform integrated testing at an 
engineering scale to enable the United States to become a leader in 
advanced fuel cycle R&D.
    The fiscal year 2009 budget request supports funding for 
establishment of the Materials Test Station (MTS) at the Los Alamos 
Neutron Science Center (LANSCE). This work, conducted in parallel with 
NNSA's LANSCE-Refurbishment, will establish an advanced-fast-reactor-
fuel test capability in a currently unused target station at LANSCE. 
The budget request also supports infrastructure investment at the Idaho 
National Laboratory, DOE's lead laboratory for nuclear energy R&D. It 
also supports the continuation of an effort initiated this year to 
characterize the full compliment of nuclear facilities and capabilities 
that will provide data to inform future decision making. One goal of 
this effort is to help assure needed nuclear facilities are maintained 
without regard for their location or ownership. This is an ambitious 
undertaking, but I feel it is critically important to understand our 
infrastructure requirements and to target future investments according 
to a well-researched plan.
    Question. NRC Licensing of New Nuclear Plants.--It seems to me that 
the most successful NE program has been the NP 2010 program, which is a 
joint DOE/Industry cost share program to design and prepare a standard 
license for NRC review. It occurs to me that many of the new facilities 
being supported by DOE research such as the Next Generation Nuclear 
Power Plant and the spent fuel recycling facilities must at some point 
address the NRC licensing requirements and safety standards. What is 
your office doing to respond to the inevitable NRC licensing 
requirements for these facilities?
    Answer. The Energy Policy Act of 2005 (EPAct), requires the 
Secretary of Energy and the Chairman of the U.S. Nuclear Regulatory 
Commission (NRC) to jointly submit to Congress a licensing strategy for 
the Next Generation Nuclear Plant (NGNP), by August 8, 2008. EPAct also 
directs the U.S. Department of Energy (DOE) to develop the NGNP 
prototype for commercialization and directs NRC to license the 
prototype. DOE and NRC staff have worked closely together to jointly 
develop a comprehensive strategy for licensing the NGNP. This report 
was completed and submitted on August 13, 2008. This strategy 
identifies NRC policies considerations, procedures, analytical tools, 
and methods expected to be needed to establish a gas reactor safety 
review infrastructure.
    DOE envisions that spent fuel recycling facilities will be 
designed, constructed, and operated by commercial entities under NRC 
regulation. In July 2007, DOE established a Memorandum of Understanding 
(MOU) with NRC that provides for increased cooperation between DOE and 
NRC to allow NRC staff to become more educated on technologies and 
engineering aspects of potential nuclear fuel recycling facilities. NRC 
is participating in meetings, observing testing, touring DOE 
facilities, and reviewing industry deliverables provided to DOE. NRC 
staff members are considering regulatory framework issues associated 
with licensing and regulating a nuclear fuel recycling facility.
    Question. Later today, the Energy Committee will receive testimony 
on the status of the domestic nuclear fuel cycle and how various trade 
agreements and the ``Eurodif'' decision will impact the our domestic 
energy security. (I am sure you are fully aware that the United States 
is over 80 percent dependent on foreign uranium enrichment today.) Do 
you have any concerns about the viability of a domestic mining, 
enrichment and conversion industry to keep pace with expected growth in 
nuclear plants?
    Answer. The Department of Energy (DOE) agrees that the United 
States is very dependent on foreign sources of uranium, conversion, and 
enrichment to meet its domestic nuclear fuel needs. Over the past 
several years, DOE has observed encouraging signs that higher prices 
for uranium have spurred interest in domestic uranium exploration which 
will lead to increased uranium production, that the U.S. conversion 
industry is increasing its annual output, and that the United States 
will increase its domestic uranium enrichment capacity. Louisiana 
Energy Services and USEC Inc. have received licenses from the Nuclear 
Regulatory Commission to build and operate new enrichment plants in the 
United States. AREVA NC and GE Hitachi have also announced plans to 
build new enrichment plants in the United States. The Department is 
working with these private enrichers by assisting these companies in 
complying with U.S. laws and regulations regarding the protection of 
proliferation-sensitive enrichment technology. Additionally, the fiscal 
year 2008 appropriations legislation authorizes DOE to issue up to $2 
billion in loan guarantees for advanced nuclear facilities for the 
``front-end'' of the nuclear fuel cycle.
    Question. Based on the trade history of the Russian Government do 
you have any concerns regarding the ability of U.S. nuclear fuel 
industry to be competitive with their Russian counterparts?
    Answer. The U.S. enrichment industry is in a transitional phase and 
is beginning to plan and construct newer, more efficient enrichment 
plants. The Department of Energy (DOE) is concerned that unlimited 
sales of foreign enrichment at less than fair value prices in the 
United States could pose a threat to the viability of plans for 
constructing and expanding modern enrichment technologies in the United 
States. DOE is currently working with other U.S. departments and 
agencies on a number of options to address this issue.
    On December 21, 2007, DOE, the Departments of State, Commerce, and 
Defense jointly sent a letter to Senators McConnell and Bunning and 
Representative Whitfield expressing the administration's views 
regarding H.R. 4929 and a companion bill S. 2531 that would amend the 
Tariff Act of 1930 to make clear that all imports of low enriched 
uranium (LEU) are subject to coverage under the antidumping law without 
regard to the nature of the transactions pursuant to which LEU is 
imported.
    Question. USEC recently announced that the cost of the American 
Centrifuge Plant is going to increase from $2 billion to $3.5 billion. 
This plant is being counted on to replace the existing gaseous 
diffusion plant and provide a much needed source of domestic uranium 
enrichment. This technology was provided to USEC by the U.S. Government 
at no cost. Can you tell me what the state of this project is and 
whether or not you believe this facility will be commercially viable?
    Answer. While the Department of Energy (DOE) granted USEC, Inc. 
(USEC) a nonexclusive patent license to DOE-developed centrifuge 
technology at no initial cost in 2006, the license contains substantial 
royalty payments once commercialization at USEC's American Centrifuge 
Plant (ACP) is at a certain level, with royalty payments capped at $100 
million. It should be noted that the cost of developing and deploying 
centrifuge technology and constructing the ACP is being borne by USEC, 
and not the Federal Government. The Government provided access to USEC 
to the existing centrifuge facilities at Portsmouth for the purpose of 
deployment of advanced enrichment technology in a commercial plant 
under a lease amendment, executed in 2006. USEC has spent an estimated 
$540 million of its own funds to advance the centrifuge technology, a 
highly classified technology the Government still owns. In the next 
year, USEC plans to spend an additional $1 billion on research, 
deployment, and construction of the ACP. These funds have in part been 
used to support research into centrifuge technology by the Oak Ridge 
National Laboratory (ORNL) and to upgrade and modernize DOE-owned 
centrifuge facilities at the former Gaseous Diffusion Plants (GDPs) in 
Portsmouth, Ohio, and Oak Ridge, Tennessee under a Cooperative Research 
and Develop Agreement (CRADA) executed in 2002. Under the CRADA, USEC 
retains rights to inventions USEC makes during the work; however, the 
Government retains a license for Government use and a right to 
negotiate for commercial rights. Any inventions made by ORNL employees 
under the CRADA work are owned by DOE.
    Retaining the domestic capability to enrich uranium is vital to the 
Nation's energy security and national security. USEC has demonstrated 
in a lead test cascade that the American Centrifuge is capable of 
producing the level of enrichment required by its customers and has 
increased machine performance beyond initial objectives. These 
developments suggest that USEC has advanced the American Centrifuge 
sufficiently to build and operate a commercially viable full-scale 
enrichment production facility. DOE's Office of Nuclear Energy 
continues to closely monitor the progress of development and deployment 
of the American Centrifuge and to assure that the Department's rights 
and options are protected.
    Question. What will happen to this Government technology if USEC 
fails to commercialize the project technology?
    Answer. A number of actions are possible. As noted above, the 
technology license is nonexclusive. If USEC fails to commercialize the 
technology, the technology will remain available for license to another 
entity by DOE. Additionally, under the 2006 lease of the gas centrifuge 
facilities at Portsmouth with DOE, the lease can be terminated and 
rights to USEC's background technology and new technology can be 
assumed by the Government should certain commercialization failures 
occur. Similar provisions regarding the assumption of technology are 
contained in a DOE-USEC 2002 Memorandum of Understanding.
    Question. Your office has been working on a strategy to sell excess 
uranium inventories, the largest amount of material contained in the 
depleted uranium tails still stored at Paducah and Portsmouth 
enrichment facilities. I understand that the plan will propose to sell 
up to 10 percent of total annual market to avoid undermining the market 
prices. When will this plan be available for review and what does the 
Department propose to do with the proceeds of these sales?
    Answer. The Secretary of Energy recently released a Policy 
Statement on the Management of the Department of Energy's (DOE) Excess 
Uranium Inventory. This statement provides the framework within which 
DOE will make decisions concerning future use and disposition of its 
inventory. During the coming year, DOE will continue its ongoing 
program for down-blending excess highly enriched uranium into low 
enriched uranium (LEU), evaluate the benefits of enriching a portion of 
its excess natural uranium into LEU, and complete an analysis on 
enriching and/or selling some of its excess depleted uranium. Specific 
transactions are expected to flow from these analyses.
    As stated in the Policy Statement on Management of the Department's 
Excess Uranium Inventory, in the absence of otherwise applicable 
statutory authority, the Department currently may not retain any money 
it receives from the sale of uranium and use that money for 
Departmental programs, but rather must treat any such proceeds as 
receipts subject to the Miscellaneous Receipts Act.
    Question. Mr. Spurgeon, your budget proposes to spend $20 million 
this year and $100 million over the next 5 years to develop ``grid 
appropriate reactors''. It is my understanding that these small 
reactors are intended to be sent to countries with ``limited nuclear 
experience'' (fiscal year 2009 budget justification). Everything I have 
learned about nuclear power over my 36 years in the Senate is that 
economies of scale are critical to making these zero-emission 
facilities economic. Before the Department commits $100 million of 
taxpayer resources, I would be very interested in your explanation of 
the business case for this project.
    Answer. Economy of scale (EOS) is an important factor when 
optimizing the cost of electricity from any power source, but it is not 
the only factor to consider in a decision to deploy nuclear power. More 
than half of the developing countries interested in pursuing nuclear 
power have physical and/or financial constraints that preclude them 
from considering large plants. Factors such as grid capacity and 
stability, availability of investment capital, and concerns for total 
project risk will likely limit these countries to consider plants with 
electrical capacities less than 500-600 MW and total construction cost 
less than $1 billion. Because the cost of power from alternative energy 
sources in many of these countries is 5-10 times higher than for the 
United States, the modest EOS penalty on the cost of electricity from a 
smaller-sized nuclear power plant is of less concern than the total 
project cost.
    Detailed analyses by the IAEA have shown that the EOS penalty can 
be reduced (by about 85-90 percent from a large reactor) by several 
other factors associated with smaller plants, including: common systems 
shared among a group of reactors; more rapid ``learning'' during 
fabrication; phased construction of multiple small units, allowing 
revenues from initial plants to offset capital outlays of follow-on 
plants; reduced interest costs due to shorter construction times and 
lower capital outlays; economic efficiencies gained by better matching 
of the energy supply and demand rates; and simplifications in the plant 
design enabled by their smaller size. Given all these factors, it is 
likely a small reactor will be extremely competitive with other energy 
forms in the local economy of a developing country.
    The introduction of nuclear energy brings other benefits that favor 
its introduction even if economics favor a less expensive alternative. 
The need to be technically competent to safely regulate and operate 
nuclear technology requires a significant amount of infrastructure 
development that will enable significant spin-off benefits. For 
example, once a competent nuclear regulator and radiation protections 
are in place, the country can pursue nuclear medicine. Once nuclear 
certified welders, electricians and mechanics are available, they can 
also fill other skilled occupations. Engineering and science based 
academic curricula will produce technical talent for other sectors in 
the economy. In short, introduction of nuclear energy will act as a 
fulcrum to raise the technological competence of an entire nation, with 
substantial benefits. For example, the Republic of Korea's first 
reactor was purchased as a turn-key project from Westinghouse. An 
element of the deal was training the welders to perform portions of the 
construction. After completion of the reactor these highly-trained, 
skilled welders became available to expand ROK's shipbuilding industry, 
which is now a world leader.
    Question. On Saturday, the Washington Post reported that the United 
States and Russia have initialed but not signed a ``123 Agreement'' on 
nuclear cooperation. However, without final signatures and Senate 
approval, there are limits on our ability too cooperate with Russia on 
civilian nuclear research and trade. Can you explain how this will 
impact your GNEP program?
    Answer. Work with Russia under the Global Nuclear Energy 
Partnership (GNEP) has not been impacted by the lack of a 123 Agreement 
with Russia. We continue to interface with Russia on issues concerning 
GNEP. However, without a 123 Agreement, GNEP research and development 
(R&D) collaboration with Russia will be delayed. This will limit our 
access to Russia's experience and facilities, both of which could 
reduce the cost and time to develop the technologies required to close 
the fuel cycle. GNEP could develop the technologies without the 
assistance of Russia or other international partners, but the time, 
effort, and cost will be greater.
    Integration of foreign experience into the U.S. advanced fuel cycle 
R&D program significantly declined in the 1980s and 1990s, which 
accelerated our loss of expertise and nuclear infrastructure. The 
United States now lacks many of the facilities needed for GNEP. We have 
no commercial-scale separations plant, no engineering-scale separations 
or transmutation fuel fabrication capability, no operating sodium fast 
reactor, etc. Meanwhile, Russia, France, Japan, and others have made 
significant progress in developing technology and related 
infrastructure. Collaboration with GNEP R&D partners is necessary, at 
least until the United States has rebuilt the required domestic 
infrastructure. Collaboration with Russia will give the United States 
access to a significant number of research laboratories that have 
relevant expertise. During the last 9 years, we gained significant 
access to Russian experts and facilities, allowing us to rebuild our 
capabilities by integrating their most recent results.
    Question. Will the lack of an agreement limit U.S. commercial 
entities from selling natural uranium or fuel services to Russia?
    Answer. Section 123 Agreements for Cooperation act in conjunction 
with other nonproliferation tools, particularly the Non-Proliferation 
Treaty, to establish the legal framework for significant nuclear 
cooperation with other countries. While the lack of such an agreement 
will prevent the United States from exporting natural uranium to 
Russia, a wide range of cooperative activities with Russia may still go 
forward. The United States and Russia drafted a report, entitled Joint 
Working Group on the Development of a Bilateral Action Plan to Enhance 
Global and Bilateral Nuclear Energy Cooperation that details principal 
areas of cooperation as well as short-term cooperative focus areas. The 
report establishes measures that will promote sustainable and safe 
nuclear energy use and expansion, in the United States, Russian 
Federation, and worldwide while strengthening nuclear nonproliferation 
and effectively addressing waste management. Specifically, it outlines 
national strategies in nuclear power; identifies the common bases for 
U.S.-Russian cooperation in advanced reactors, exportable small and 
medium reactors, nuclear fuel cycle technologies, and nonproliferation; 
and defines a plan for cooperation.
    Question. In the fiscal year 2006 Energy and Water bill, Congress 
provided $20 million and directed the Department to work with 
interested communities to support site development plans for a 
recycling plant, advanced fuel fabrication facility and an advanced 
reactor. What is the status of this effort and what is the Department 
doing to support these sites and provide technical support? What is the 
status of the Programmatic Environmental Impact Statement? What are the 
next steps for these communities?
    Answer. The Site Characterization Reports conducted by 11 
commercial and public consortia are the product of the $10,458,242 in 
grant awards made on January 30, 2007. Recipients had 90-days to 
complete these studies and submitted the reports to DOE on May 1, 2007. 
Information generated from these reports, coupled with existing site 
information, provide a variety of data relating to both DOE and non-DOE 
sites, including: site and nearby land uses; demographics; ecological 
and habitat assessment; threatened or endangered species; historical, 
archaeological and cultural resources; geology and seismology; weather 
and climate; and regulatory and permitting requirements. The Site 
Characterization Reports were made available to the public, and 
reviewed by DOE as part of the National Environmental Policy Act (NEPA) 
process and used in preparing the draft Programmatic Environmental 
Impact Statement (PEIS). DOE met with the associated communities last 
fall to identify key community issues related to GNEP that included the 
need to educate the public about the program.
    The Department received more than 14,000 comment documents during 
the scoping period for the GNEP PEIS. Evaluation of these comments 
resulted in consideration of several alternative nuclear fuel cycles 
and technologies.
    DOE is working to clarify the impact of GNEP technical and policy 
decisions on the local communities. Communications with potentially 
affected communities will continue throughout the NEPA process.
    Question. The Department has significantly increased its support 
for this program. While the two reference reactor designs continue to 
develop better fidelity in the project details, costs continue to 
increase and reactor vendors are now concerned that the original 
agreement to cost share $1.1 billion will not be sufficient to provide 
the total cost for the Standard Design. What are the Department's plans 
to address the potential shortfall?
    Answer. The fiscal year 2009 congressional budget request is based 
on an increase in the licensing demonstration project from an initial 
total estimate of $1.1 billion to $1.45 billion ($727 million in 
Federal cost share). This increase is required to address increases in 
regulatory related costs and design standardization costs.
    The Department of Energy's (DOE) cost share primarily supports the 
development and implementation of the ``untested'' regulatory process 
for the combined Construction and Operating License (COL) applications 
for two new nuclear plants. Since the 2005 Baseline estimates were 
prepared, Nuclear Power 2010 (NP 2010) has evolved from a 
``demonstration'' program to become the centerpiece of two Design 
Centered Working Groups (DCWG) on which COL applications for 10 or more 
plants (most are twin units) depend for success. It also supports the 
completion of the first-of-a-kind engineering for two reactor designs. 
The designs must have sufficient engineering design details to provide 
power companies reliable cost and schedule information they need to 
make plant orders. A number of the utilities participating in NP 2010 
also need this information to support regulatory approvals at the State 
level via their Public Utility Commissions (PUC).
    Additional funding related to increases in regulatory-related costs 
primarily supports the evolving Nuclear Regulatory Commission (NRC) 
licensing process (significant revisions to NRC rules/requirements, 
responses to NRC requests for information, etc.) and escalating NRC 
review fees. Additional funding related to increased standardization 
supports the industry's effort to extend the level of design detail 
required for increased standardization for procurement, operation, and 
maintenance of the plants. This level of design detail would provide 
specifications of equipment and components. DOE believes this degree of 
standardization is critical to ensuring the past inefficiencies of our 
existing commercial nuclear fleet are not repeated. Without additional 
funding, there is a high risk that the aggressive operational dates 
(approximately 2015) for the first units of the two standard designs 
may not be met.
                                 ______
                                 
              Questions Submitted to Hon. Kevin M. Kolevar
             Question Submitted by Senator Byron L. Dorgan
    Question. I am pleased that the President has proposed to double 
the Energy Storage and Power Electronics account in your budget. It 
still seems to me that this number ($13.4 million) is far too low to 
adequately address our needs to develop commercial scale energy storage 
capabilities which are critical to placing renewable energy onto the 
grid. Do you believe that $13 million is enough to allow you to 
accomplish what needs to be done in this area? What other technical 
challenges would your office focus on with additional funding, and how 
would these technologies facilitate integration of renewable energy 
onto the grid?
    Answer. The President's budget request of $13.4 million for the 
Office of Electricity Delivery and Energy Reliability adequately funds 
Energy Storage and Power Electronics to further storage technology as 
an important component of the modern electrical grid. The request 
focuses on critical areas of concern. The fiscal year 2009 
Congressional request will continue to demonstrate utility scale 
storage technologies (cost-shared, pre-commercial projects) and 
initiate a partnership with the Office of Science specifically 
investigating the use of nano-materials for advanced storage electrodes 
and new high voltage electrolytes.
    Additional technical challenges include developing new storage 
technologies with improved cost effectiveness, safety, and reliability. 
Applied research would include new engineered materials and ionic 
liquids to increase energy density of storage systems. Additional 
systems research would focus on scaling up existing technologies into 
megawatt devices suitable for grid applications. Energy storage systems 
will advance the penetration of renewables by helping to eliminate 
integration concerns such as short term variations and ramping 
problems, and allow energy management by dispatching renewable energy.
                                 ______
                                 
            Questions Submitted by Senator Pete V. Domenici
    Question. Part of DOE's mission is to promote America's energy 
security through reliable, clean and affordable energy. I understand 
that EPA plans to propose a revised rule before the end of the year 
governing cooling water intake structures at existing power plants as a 
result of a recent 2nd Circuit Court decision. The central question 
before the agency is what should be deemed the best technology 
available (BTA) to minimize the adverse environmental impacts that 
might result from cooling water intake structures. The Court has 
directed the agency to clarify why cooling towers or their performance 
equivalent, were not deemed BTA. I understand that approximately 40 
percent of the Nation's existing generation will be directly and 
materially affected by this rulemaking. Has DOE examined the short and 
long term energy reliability and security impacts of designating 
cooling towers as BTA for existing generation facilities and does DOE 
believe they would be significant?
    Answer. The Department has not prepared a study on the specific 
issue of electricity reliability impacts of a cooling tower mandate, 
but has studied the energy penalties that would occur if existing steam 
generators were required to replace existing ``once-through'' cooling 
systems with recirculating cooling tower systems. This October 2002 
report is titled the Energy Penalty Analysis of Possible Cooling Water 
Intake Structure Requirements on Existing Coal-Fired Power Plants (see 
attached). The Department agrees that a new Clean Water Act rule 
requiring cooling towers for existing steam generation units could have 
implications on the adequacy and reliability of electricity supplies in 
the near and mid-term. Moreover, the effect of such a rule could be 
significant if combined with other retrofit mandates that may be 
required of existing generators under, for example, the Clean Air Act. 
The Department participated in an interagency review of EPA's original 
rule under E.O. 12866 and will do so again when the new rule is 
submitted to the Office of Management and Budget for review.
    Question. Could DOE do an analysis of the potential impacts for 
this committee, including the impacts on electricity reliability on a 
regional basis, and provide preliminary results as early as May so that 
these results could be meaningfully considered in the EPA rulemaking?
    Answer. DOE will prepare an expedited analysis of the potential 
impacts of a ``cooling tower'' rule on electricity supply and 
reliability in order to provide the committee with preliminary results. 
In addition, the Office of Electricity Delivery and Energy Reliability 
will conduct a more thorough analysis of the issues facing the existing 
steam generation fleet, with a goal of completing that study in the 
fall of this year. We have asked EPA and the Federal Energy Regulatory 
Commission to cooperate with the Department on these studies, 
particularly with respect to the electricity reliability analysis.
                                 ______
                                 
                   Questions Submitted to James Slutz
             Questions Submitted by Senator Byron L. Dorgan
    Question. We see news around the country about proposed coal-fueled 
power plants being canceled or postponed almost every week due to 
rising construction costs, the uncertainty of future regulations on 
carbon emissions, and much more. The Office of Fossil Energy has a 
longstanding relationship of working with industry in the various clean 
coal programs. The next round for the Clean Coal Power Initiative 
(CCPI) is slated to focus on carbon capture and storage and other 
beneficial uses of CO2. What do you propose to do to get new 
coal plants built so we can continue to utilize our abundant domestic 
coal resources?
    Answer. The Department of Energy's Clean Coal efforts begin with 
Research and Development (R&D) to advance technologies serving as 
building blocks for affordable, near-zero atmospheric emissions coal 
plants. These technologies, such as advanced turbines, gasifiers, fuel 
cells, and carbon capture and storage technologies are then integrated 
and demonstrated at commercial scale through the Clean Coal Power 
Initiative (CCPI). In parallel to CCPI, large volume carbon 
sequestration tests will demonstrate the technical viability of 
geologic CO2 injection at commercial scale. FutureGen is 
restructured to focus on accelerating the commercial experience with 
the integration of carbon capture into advanced plants including 
Integrated Gasification Combined Cycle (IGCC). These early commercial 
demonstrations will help accelerate deployment of carbon capture and 
storage by addressing technical, siting, permitting and regulatory 
issues. Loan Guarantees and Tax Credits may help accelerate commercial 
deployment of advanced technologies through financial incentives and 
mitigation of some risk.
    Question. When will the Department release the CCPI Round III 
Solicitation? Is the redirection of the FutureGen program hindering the 
release?
    Answer. The CCPI Round III Draft Funding Opportunity Announcement 
(FOA) was released on October 3, 2007. The redirection of the FutureGen 
program did not hinder its release. A Public Workshop was held on 
November 1, 2007, to answer questions and receive public input on the 
Draft FOA. The public comment period was held open until November 23, 
2007. The Department is currently revising the FOA based on public 
input to ensure that it is best suited to meet the needs of both the 
public and the Department. The Department is planning to release the 
Announcement this fiscal year, with project selections taking place in 
fiscal year 2009.
    Question. How much does the Department believe will be available 
for this next solicitation?
    Answer. The Department currently expects to have $224 million 
available for CCPI Round III, which includes an anticipated $85 million 
in fiscal year 2009 funding.
    Question. In the Clean Coal Power Initiative Rounds I and II, in 
2003 and 2004 respectively, the Department made more than $300 million 
available. Is the Department still planning to go ahead even though 
this $300 million threshold may not be met?
    Answer. Yes, the Department plans to issue the CCPI Round III in 
fiscal year 2008. The Department has received a significant amount of 
interest from industry in CCPI Round III. Over 80 participants from 
industry attended the CCPI Round III Public Workshop, and they 
identified numerous projects that will be seeking to participate in 
CCPI Round III. The Department believes that meaningful projects can be 
selected. Delays of an additional 6 to 9 months would be required to 
wait for fiscal year 2010 funds to become available.
    Question. Why is the Department planning on combining the funding 
for the CCPI and FutureGen programs (as indicated in the fiscal year 
2009 budget request) and how does the Department propose to go forward 
with both?
    Answer. In the fiscal year 2009 budget request, funding for the 
CCPI and FutureGen programs has been requested as separate line items. 
The Department plans to move forward with both CCPI and FutureGen by 
issuing a separate Funding Opportunity Announcement (FOA) for each 
program. Each FOA will outline the specific requirements of each 
program, allowing potential applicants to determine which program is 
the best fit for their technology and business model.
    Question. The carbon sequestration program has grown significantly 
in the last few years and the regional partnership program has been 
well received by many stakeholders. Four of the seven Regional Carbon 
Sequestration Partnerships have been funded to conduct large-scale 
demonstrations. The Departments budget request for fiscal year 2009 is 
$149 million. Does the Department plan to fund remaining three 
partnerships with this funding in the coming year? If not, why not?
    Answer. DOE has made awards for five large-scale tests to four of 
the Regional Carbon Sequestration Partnerships (RCSP) for Phase III 
Large Volume Sequestration Testing. DOE is developing a peer-reviewed 
plan to be completed this spring that will identify the scientific and 
engineering test parameters to guide design and selection of large-
scale tests. Items to be addressed include: rate of injection, duration 
of injection, and number and phasing of tests. The remaining proposed 
Phase III projects will be evaluated in the context of this plan. The 
evaluation process requires: (1) finalizing the technical scope of the 
projects by means of an independent study by an international group of 
experts; (2) undertaking a scientific evaluation; and (3) performing a 
cost analysis of the proposed projects to ensure the project costs are 
adequate prior to award. The estimated time frame for evaluating the 
remaining awards is the summer of fiscal year 2008.
    Question. Are these funds sufficient enough to conduct the large 
scale carbon sequestration demonstrations in every region of this 
country to insure carbon sequestration is a valid option from coal-
fired power plants and other facilities?
    Answer. There are sufficient funds in the fiscal year 2009 budget 
request to conduct the pre-injection activities and initiate some 
preliminary injection activities for the large scale carbon storage 
demonstrations. These demonstrations will require funding beyond fiscal 
year 2009 for remaining CO2 injection and post-injection 
monitoring activities.
    Question. The administration has asked Congress for funding in 
fiscal year 2009 to expand the SPR to the 1.5 billion level. This will 
require a national commitment through 2029 to get to that level under 
the Bush administration's plan. Has the Department done an estimate of 
how much it would cost to construct the facilities and fill oil to the 
1.5 billion barrel level?
    Answer. The Department has not finalized its expansion plan, nor 
selected the sites for the expansion of the SPR from 1.0 billion to 1.5 
billion barrels. DOE has requested $13.5 million in fiscal year 2009 to 
prepare its expansion plans and complete a NEPA environmental review. 
However, assuming the development of 2 additional new salt dome storage 
sites of 250 million barrels in the gulf coast, the total estimated 
construction cost for the expansion of the SPR from 1.0 billion to 1.5 
billion barrels, is estimated in the order of $6.5 billion.
    Question. What is the cost of developing the Richton, MS site and 
expanding the Bayou Choctaw, LA and Bill Hill, TX sites to reach the 1 
billion barrel level?
    Answer. The total estimated construction cost for the expansion of 
the SPR from its current capacity of 727 million barrels to 1 billion 
barrels, is estimated at $5.1 billion. This is based on conceptual 
design estimates which were prepared in 2006.
    Question. How does the administration respond to its policy efforts 
to put the SPR fill on autopilot without consideration of cost and at 
the same time? Are there not better ways that we can invest our 
resources this year? Over time?
    Answer. It is the policy of this administration to expand and fill 
the Strategic Petroleum Reserves in a manner that is both consistent 
and deliberate in order to maximize the energy security of the United 
States. The costs associated with this endeavor are important and they 
are carefully considered at every step.
    Question. I have also noted that there is approximately $585 
million in the SPR account from the sale of oil after Hurricane 
Katrina. Does the Department plan to issue more RIK contracts later 
this year or seek to directly purchase oil for the SPR with this $585 
million regardless of the price of oil or offers made in a solicitation 
for direct purchase?
    Answer. The fiscal year 2009 budget states ``In fiscal year 2008 
DOE will use available balances for the purchase of additional SPR oil, 
and will continue to fill using Federal royalty oil until 727 MMB is 
achieved in fiscal year 2009.'' The administration's objective is to 
complete the fill of the SPR to 727 million barrels before the end of 
calendar year 2008 by using the $584 million in available balances from 
the Hurricane Katrina oil sale for direct purchases and continuing the 
modest transfer of royalty oil from the Department of the Interior.
    The Strategic Petroleum Reserve has undertaken a market analysis in 
accordance with the Procedures for the Acquisition of Petroleum for the 
Strategic Petroleum Reserve (10 CFR 626) to assure that the planned oil 
acquisition will not stress the market.
    Question. The Energy Policy Act of 2005 provides guidance to expand 
the Strategic Petroleum Reserve (SPR) to the level of 1 billion barrels 
but only ``without incurring excessive cost or appreciably affecting 
the price of petroleum products to consumers.'' The Department has said 
it conducts market analysis the impacts of filling the SPR and the 
price of petroleum and did so before the recent RIK contracts. Can you 
provide more detail about how the Department performs this analysis? 
Was the analysis peer-reviewed by the EIA, other agencies or 
independent experts? Is the analysis available to the public?
    Answer. Prior to engaging in activities to acquire crude oil for 
the Strategic Petroleum Reserve, the Office of Petroleum Reserves 
conducts an assessment of market conditions to evaluate the potential 
for impacts on crude oil markets. A number of market indicators are 
examined in these assessments including stock levels, spot and futures 
prices, market fundaments, and energy security policy. The most recent 
market assessment was conducted in February 2008 and is currently being 
reviewed by Department officials and was informally peer reviewed by 
staff at the Energy Information Administration. However, EIA was not 
asked to comment on or evaluate the policy recommendations contained 
within the document. These assessments are not published on the 
internet, but they have been transmitted to the Congress.
    Question. Does the Department believe there is a price threshold 
for not continuing the RIK transfer?
    Answer. It is difficult to assign such a threshold without consider 
other contemporaneous market conditions. However, in the past the 
Department of Energy has suspended or delayed its fill activities in 
response to major petroleum market events and would do so again should 
the need arise. When acquiring petroleum, whether by purchase or 
royalty transfer, DOE will seek to balance the objectives of assuring 
adequate security and minimizing impact to the petroleum market. To 
this end, DOE will consider various factors that may be affecting 
market fundamentals and the geopolitical climate. DOE decisions on 
crude oil acquisition will take into consideration the current level of 
inventories, import dependency, the international and domestic 
production levels, oil acquisition by other stockpiling entities, the 
security value of additional storage, incipient disruptions of supply 
or refining capability, market volatility, the demand and supply 
elasticity, petroleum logistics, and any other considerations that may 
be pertinent. Monetary policy, the rate of economic growth, specific 
domestic market segments, and foreign policy considerations will also 
be evaluated. The timing of DOE entry into the market, its sustained 
presence, and the quantities sought will all be sensitive to these 
factors and their impact on U.S. energy security.
    Question. Secretary Bodman stated to me and other Senators in a 
letter dated Jan. 8, 2008, that one of the reasons to increase the 
capacity of the SPR is that it only contains 57 days of import 
protection. However, Department's own website said that the United 
States has 118 days of public and private strategic stocks for import 
protection. The requirement to meet U.S. treaty obligations with the 
International Energy Agency (IEA) is for 90 days of import protection. 
Why is the Department telling U.S. policy makers that we need to fill 
the SPR for import protection and telling the international community 
that we are currently meeting our treaty obligations for import 
protection?
    Answer. Under the Agreement on an International Energy Program (the 
Charter of the IEA), member countries are permitted to meet their 
required 90 day stockholding obligations through both public and 
private stocks. The United States currently relies on U.S. industry 
stocks to make up a significant portion (one-third) of its obligation.
    Question. The fiscal year 2009 budget once again proposes to 
eliminate all oil and natural gas R&D programs. Ninety-four percent of 
this funding goes to small, independent producers that do not 
sufficient funding to conduct R&D of their own. The fiscal year 2009 
budget request also proposes to eliminate $50 million in direct 
spending for ultra-deepwater offshore and unconventional onshore 
natural gas exploration technologies that would go largely to smaller 
independent oil and gas producers.
    Small, independent, domestic producers and universities are the 
primary beneficiaries of Federal oil and gas R&D funding. Contrary to 
the administration's views, ``Big Oil'' does not have an interest in 
these programs. I am particularly concerned about the impacts of the 
cuts on the education of our next generation of energy professionals. 
Why is this administration being so shortsighted by decreasing funding 
to programs that are so vital to the Nation's future energy security 
and domestic energy production?
    Answer. Oil and gas are mature industries and both have 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 oil companies in these efforts. 
Although independent operators may not have the resources to fund 
technology development directly, the service industry that supplies 
them with equipment funds significant development of applicable 
technologies. The Department expects the service industry to continue 
to provide technological innovations for use by major and independent 
producers.
    Question. Why is the administration turning its back on potential 
long-range solutions to declining domestic gas production?
    Answer. DOE is supportive of efforts to increase the availability 
of domestic sources of natural gas. DOE supports the prompt 
construction of an Alaska natural gas transportation system to deliver 
gas from the North Slope of Alaska to the lower-48 States. Alaska's 
North Slope gas resources are estimated at 35 trillion cubic feet (TCF) 
discovered and 100 TCF potential. Industry has estimated the cost at 
more than $25 billion to build a 4.5 billion cubic feet per day (bcfd) 
pipeline with expansion capacity to 5.6 bcfd. To support such a 
project, the Department is authorized under section 116 of the Alaska 
Natural Gas Pipeline Act (ANGPA) to issue loan guarantees up to $18 
billion, indexed for inflation according to the Consumer Price Index 
from October 13, 2004, to a qualified infrastructure project or, in the 
case of a qualified liquefied natural gas project, up to $2 billion of 
principal.
    Question. A significant research project within the Natural Gas 
program is Methane Hydrates. If only 1 percent can be rendered 
economic, it would double the Nation's supply of natural gas. Why would 
the Department turn its back on this huge potential resource?
    Answer. The administration does not support spending Department of 
Energy funds for research and development (R&D) on safety or production 
of methane hydrates, given the economic incentives industry has to 
pursue this R&D on its own. This is consistent with its position that 
oil and gas are mature industries and both have 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 oil and gas companies in these efforts. 
However, several other Government agencies are supporting methane 
hydrate research where it fits their missions, including the U.S. 
Geological Survey (USGS), the Bureau of Land Management (BLM), and 
Minerals Management Service (MMS) within the Department of the 
Interior; the National Oceanic and Atmospheric Administration (NOAA); 
the National Science Foundation; and the Naval Research Laboratory.
    Question. In the fiscal year 2008 Omnibus legislation, Congress 
requested that the Department begin the development of coal/biomass to 
liquids technologies with funding in the Fuels subaccount. Why is the 
Department's Coal Fuels request only focused on hydrogen from fossil 
fuels?
    Answer. The Fossil Energy Coal Fuels Research Development and 
Demonstration (RD&D) Program was identified as a participant in the 
Hydrogen Fuel Initiative at the beginning of the Department's Hydrogen 
Program. Therefore, the focus on hydrogen from coal is the principal 
activity proposed in the Coal Fuels Program for fiscal year 2009, as 
the Coal-to-Liquid Fuels Technology Program had successfully achieved 
its RD&D goals for turning synthesis gas into liquid fuels, and these 
technologies can be commercialized by the private sector. The fiscal 
year 2009 budget includes development of technology for co-feeding and 
gasifying coal/biomass for electricity generation application. As with 
much of DOE's gasification program, DOE's fiscal year 2009 coal/biomass 
research targets electricity generation applications, but could also be 
used by the private sector for other applications, such as production 
of transportation fuels.
    Question. Why does the Department not support this coal-biomass 
technology opportunity?
    Answer. Consistent with the fiscal year 2008 appropriated funding, 
the Department has prepared, and will soon release, a Coal and Biomass 
to Liquid Fuels Funding Opportunity Announcement. This announcement 
will request applications for research and development proposals 
specifically limited to liquid hydrocarbon fuels from coal/biomass 
mixtures.
    Coal-biomass to liquids technology involves two major steps: First, 
the coal-biomass feedstock must be turned into a synthesis gas. Second, 
the synthesis gas must be turned into liquid fuel. The first step, 
gasification of coal-biomass, is not mature and therefore continues to 
receive funding in the fiscal year 2009 budget. As with much of DOE's 
gasification program, DOE's fiscal year 2009 coal/biomass research 
targets electricity generation applications, but could also be used by 
the private sector for other applications, such as production of 
transportation fuels. The second step, turning synthesis gas into 
liquid fuel is mature and therefore is not supported in the fiscal year 
2009 budget. The Coal-to-Liquid Fuels Technology Program had 
successfully achieved its RD&D goals for turning synthesis gas into 
liquid fuels, and these technologies can be commercialized by the 
private sector.
    Question. Congress also directed that the Department address 
energy/water technology issues in the fiscal year 2008 Omnibus 
legislation. This includes a research program to help develop tools 
that thermoelectric power plants can apply to better manage the 
critical link between water and fossil energy extraction and 
utilization is vital. The Department only supported CO2 
capture at existing facilities in its fiscal year 2009 budget request 
for the Innovations for Existing Plants program. Why does the 
Department not support the availability of funding for technologies to 
reduce water usage and consumption, while minimizing impacts on water 
quality?
    Answer. Many of the technologies for reducing water use are mature 
and subject to incremental improvement that the private sector has the 
incentives and capability to undertake on its own. Improved water 
associated with transformational technologies is supported in the 
fiscal year 2009 budget request. Integrated Gasification Combined Cycle 
(IGCC) technology supported by the Gasification program uses 
significantly less water than the conventional Pulverized Coal (PC) 
technology. The focus of the Innovations for Existing Plants Program 
(IEP), will be on the continued research and development of advanced 
carbon capture technologies applicable to new and existing coal-fired 
power plants. The IEP program will develop technologies to separate and 
permanently store CO2 that can be economically and 
effectively employed on pulverized coal power plants. As noted in the 
fiscal year 2009 budget request, the Department will also conduct 
research on optimizing power plant water use as it relates to 
CO2 capture efficiency and optimization.
                                 ______
                                 
            Questions Submitted by Senator Pete V. Domenici
    Question. As I noted in my opening statement, the Department has 
shifted its strategy from a single 275 Megawatt facility toward 
multiple commercial demonstrations of carbon capture and sequestration 
applied to an IGCC facility. I am concerned that this strategy will 
take years to develop before we have any serious results from these 
demonstration efforts. What is the Department doing to accelerate this 
important research and what other near term efforts is the Department 
undertaking to support carbon capture and sequestration research?
    Answer. Our commitments to the program goals of FutureGen are 
unchanged--to make near-zero atmospheric emission coal power plants a 
viable technology solution to address energy security and climate 
change concerns.
    The Department is refocusing its investment on multiple, commercial 
demonstrations of Carbon Capture and Storage (CCS) technology 
integrated with Integrated Gasification Combined Cycle (IGCC) systems 
or other advanced technology coal power plants. The difference is that 
under the restructured program, our plan, with current cost estimates, 
is to support not just a single less-than-commercial-scale R&D testing 
laboratory, but rather to provide funding for commercial demonstration 
of integrated advanced carbon capture and storage technologies.
    The restructured FutureGen will provide commercial data on cost, 
performance, and reliability. This information will help reduce risk of 
siting/permitting and operations for subsequent deployment, confirm 
economics associated with CCS, and facilitate industry-wide private 
capital offerings. It is expected that these commercial projects will 
be in operation in the next 6 to 8 years or possibly sooner depending 
on the sites selected.
    The Department's fiscal year 2009 budget request proposes 
substantial increases for FutureGen, Clean Coal Power Initiative (CCPI) 
demonstration of CCS, and Carbon Sequestration. We have also increased 
overall R&D in the area of carbon capture and storage. For example, the 
fiscal year 2009 Sequestration Program budget was increased to $149 
million with the bulk of this funding being used to support the field 
test program through the Carbon Sequestration Regional Partnerships--
including five large-scale (Phase III) demonstrations of the 
feasibility of storing CO2 in geological formations. The 
results of this research will be directly applicable to the capture and 
storage of CO2 from advanced power systems such as IGCC and 
existing coal-fired power plants. Further, the Gasification Program 
fiscal year 2009 budget of $69 million will focus on continuing to 
increase the efficiency of IGCC while lowering costs. Research from 
both programs will advance the development and ultimate commercial 
deployment of IGCC with carbon capture and storage.
    Question. I am pleased to see that the office of Fossil Energy 
remains committed to expanding the Strategic Petroleum Reserve to a 1 
billion barrel capacity, as outlined in the Energy Policy Act of 2005. 
I have noticed in your budget that there is $13.5 million for planning 
purposes to expand past a one billion barrel capacity. In these tight 
budgetary times, do you not believe that we should focus on reaching 
the one billion barrel capacity before we fund the planning of further 
expansion?
    Answer. The expansion of the Strategic Petroleum Reserve to 1.5 
billion barrels is essential to providing the United States with 
critical energy security. The Department has requested an initial $13.5 
million to perform planning studies to determine the optimum 
configuration of the expansion beyond 1 billion barrels, and complete 
the environmental review process and site selection. Once the sites 
have been selected, the expansion project is expected to require in the 
range of 12 to 15 years to develop the additional 500 million barrels 
of storage capacity.
    Question. The new CURC-EPRI roadmap, released in September 2006, 
defines the steps necessary to achieve near zero emissions from coal 
use, including the capture and sequestration of CO2, and 
suggests that the investment necessary to achieve the goals of Roadmap 
is approximately $17.0 billion between now and 2025. In fiscal year 
2008, we provided nearly half that amount through the DOE Loan 
Guarantee Program. Do you believe that the funds provided through the 
Loan Guarantee Program in fiscal year 2008 will get us half way to near 
zero emissions from coal use?
    Answer. No, the Loan Guarantee Program, although an important 
incentive for deployment of new clean coal technologies, by itself is 
not expected to move the Nation half-way to near-zero atmospheric 
emissions for coal use. The CURC-EPRI roadmap, released in September 
2006, proposes a funding level for a Research, Development, and 
Demonstration (RD&D) program focused solely on coal-based electricity 
generation. The loan guarantee program is intended to provide 
incentives for deployment of early commercial facilities, which would 
come online after successful commercial-scale demonstration. As stated 
in the program regulation, it isn't a research, development or 
deployment program. Though we expect there to be some synergy between 
early commercial projects and demonstration projects, by and large the 
Government spending proposed by CURC-EPRI is geared toward reducing the 
cost and improving the performance of the technologies. The Loan 
Guarantee Program will support commercialization of technologies that 
have already been successfully demonstrated.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran
    Question. What are the Department's goals in regards to Clean Coal 
and Carbon Capture? Request levels have varied dramatically in the last 
few years, but I'm pleased to see an increase in the program. Is the 
Department planning on researching coal-to-liquids technology?
    Answer. The technology goal for the Carbon Capture and 
Sequestration Program is ``to develop, by 2012, fossil energy 
conversion systems that offer 90 percent carbon dioxide capture with 99 
percent storage permanence at less than a 10 percent increase in the 
cost of energy services.''
    With respect to researching coal-to-liquids technology, the 
Department is planning and will soon release a Coal and Biomass to 
Liquid Fuels Funding Opportunity Announcement. This announcement will 
request applications for research and development proposals 
specifically limited to liquid hydrocarbon fuels from coal/biomass 
mixtures.
    Question. The Department of Energy has chosen a site in my State as 
the preferred location for expansion of the Strategic Petroleum 
Reserve, and funds were included last year for land acquisition. Mr. 
Slutz, can you speak about the time frame and future steps required for 
such expansion to occur?
    Answer. It will take approximately 12 years to complete the site.
    Project Steps and Schedule: Design and Land Acquisition--2008-2011; 
Facilities and Pipeline Construction--2010-2016; Cavern Development 
(Solution Mining)--2014-2018; Initial Oil Fill Capability--2016; 
Planned Site Completion--2019.
                                 ______
                                 
              Questions Submitted by Senator Wayne Allard
    Question. I understand that the administration has decided to 
restructure their approach to FutureGen. Can you tell me more about 
that decision and the reasoning behind it?
    Answer. The FutureGen project encountered significant cost 
increases, which raised the total estimated project cost from $950 
million (in 2004 constant year dollars) to $1.757 billion (in 2007 as-
spent dollars). Since the Department was responsible for 74 percent of 
the total project cost, DOE's projected investment had risen to 
approximately $1.3 billion. The Department was concerned over the 
prospect of further uncontrollable cost increases and attempted to 
limit its exposure to future cost growth by engaging the Alliance in a 
series of discussions. After several months of negotiation with the 
Alliance, a mutually acceptable agreement with the Alliance could not 
be reached.
    Therefore, a ``restructuring'' of the FutureGen initiative was 
pursued in order to maintain the Department's commitment to the 
administration's goal of developing a near-zero atmospheric emission 
power plant operating on coal. A Request for Information (RFI) was 
released on January 30, 2007, and the comments received from that RFI 
are now being reviewed and analyzed.
    Rather than investing in the total cost of a single commercial-
scale experimental facility integrated with carbon capture and storage, 
the restructured FutureGen approach will invest only in the carbon 
capture and storage portion of several commercial power projects. This 
will limit taxpayers' financial exposure to only help fund the carbon 
capture and storage portion of the plant. Furthermore, this new 
approach will allow us to accelerate nearer-term technology deployment 
in the marketplace faster than the timetable for the previous approach. 
In order to be successful in competitive power markets (and comply with 
the Department's competitive proposal evaluation process), the 
underlying power plant projects will still need to be efficient, 
competitive, and environmentally sound.
    Question. What does this decision do to ensure that the results of 
the project are something that industry can pick-up and integrate into 
current or future facilities smoothly, especially with regard to high-
altitude.
    Answer. FutureGen will provide early carbon capture and storage 
(CCS) demonstration experience in a commercial setting, which is aimed 
at accelerating deployment and advancing carbon capture policy. The 
previous approach to FutureGen would have created a single ``living 
laboratory'' for research and development of advanced technologies, 
which may have needed significant testing before being considered to be 
``commercial'' by industry.
    The intent is to select multiple projects competitively and at full 
commercial size. The scale of these projects is in the range of 300 to 
600 MW, with the demonstration portion involving CCS integration to be 
on one power unit (300MW). Depending upon where the winning projects 
are located, this approach should yield more diverse information for 
future facilities than would a single FutureGen project in terms of 
coal types, regional geology, and altitude.

                          SUBCOMMITTEE RECESS

    Senator Dorgan. Let me thank all three of the Secretaries 
who have joined us today, and I think this is a useful and 
important hearing to try to establish priorities and necessary 
funding requirements as we proceed with some very important 
programs at the Department of Energy.
    This hearing is recessed.
    [Whereupon, at 11:02 a.m., Wednesday, March 5, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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