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



 
    ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                              ----------                              


                        WEDNESDAY, APRIL 2, 2008

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:32 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Byron L. Dorgan (chairman) 
presiding.
    Present: Senators Dorgan, Murray, Domenici, Cochran, Craig, 
and Allard.

                          DEPARTMENT OF ENERGY

STATEMENT OF HON. RAYMOND L. ORBACH, UNDER SECRETARY 
            FOR SCIENCE

              OPENING STATEMENT OF SENATOR BYRON L. DORGAN

    Senator Dorgan. The hearing will come to order. I thank all 
of you for being here today. We are here today to take 
testimony from three program offices within the Department of 
Energy that oversee major aspects of the U.S. Government's 
Science and Energy Research, Development, Demonstration and 
Deployment programs. This is a hearing of the Senate 
Appropriations Subcommittee on Energy and Water Development.
    The programs that we will be discussing today from the 
Department of Energy run the gamut from basic research to 
applied research and development, and, finally, deployment of 
innovative energy technology projects. In essence, they 
represent the A to Z for energy technology research development 
and commercial deployment in the Department of Energy.
    Important research performed by the Office of Science is 
the underpinning of our colossal achievements in energy. The 
research development and demonstration conducted by the Office 
of Energy Efficiency and Renewable Energy builds upon that 
basic research by working to make new technologies deployable.
    And the Loan Guarantee Office provides the financial 
backing to industry for the development of new and innovative 
forms of conservation and energy. Without scientific and 
technical breakthroughs in these programs, the United States 
cannot expect to achieve the lofty goals that we have set for 
ourselves. Both the administration and the Congress have set 
very substantial goals in various energy initiatives and in 
recently enacted energy laws.
    In the 2009 recommended budget for this Department, I think 
there are some concerns. I will express them during the 
questions. Science, of course--Mr. Orbach is with us--is the 
beneficiary in the budget request. The $749 million increase is 
the largest in the Department's budget; energy efficiency is 
evidently the donor. The $467 million reduction is also the 
largest reduction in the budget.
    It seems to me that if we are serious about balancing our 
energy issues--for example, greater independence from foreign 
oil and all the other related matters--we've got to be serious 
about a wide range of things. That includes science.
    It also includes energy efficiency, and it includes 
renewable energy, and so we'll talk about all of that today. 
The proposal from the President is simply his recommendation or 
set of recommendations. The Congress, both Republicans and 
Democrats, take a look at that and then evaluate what our 
recommendations are. In some cases we agree with the President 
and in other cases we do not.
    I understand that those who are here today are duty-bound 
to tell us that they think the President's budget is just 
really wonderful, that they wouldn't change a thing, and that 
they think it's great. But I think, as we look at the 
priorities here, it's important for us in the Congress to 
evaluate how these recommendations relate to the decisions that 
we have previously made about where we want this country to go 
in energy policy.
    With that, I will call on the ranking member, Senator 
Domenici.

             OPENING STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. Thank you very much, Mr. Chairman. I look 
out at the three witnesses, and the only one that I am not 
personally familiar with--and that's my fault--is David Frantz. 
I have read about what you are doing, and I think we have hired 
the right person, but I wonder if you don't wonder, sometimes, 
whether you have been hired to do the right job, since it seems 
like more and more people want to make your job difficult when 
we thought it was going to be a very simple proposition.
    Having said that, we hope that you are truly ready to go 
into the market and issue some loan guarantees as soon as 
possible, and we'll all be asking you that with a great deal of 
anticipation.
    Mr. Chairman, I have prepared remarks. In some respects 
they sound somewhat like yours because you have put your finger 
on what this is that's before us here today. I want to take 
just a few moments, nonetheless, to talk about some of the 
things that are here.
    Today we have these three witnesses who represent the 
entire pipeline of energy technology. Dr. Orbach has 
responsibility for discovery science and developing new 
technology solutions. The budget requests include $100 million 
for Energy Frontier Research Centers, and I think we ought to 
have that explained so we know what that means.
    Last year was a difficult year for Science funding, but I 
am pleased to see that the administration has not changed its 
direction and remains committed to its 10-year strategy of 
doubling the Office of Science: Not just you but all science 
was to be doubled in the next 10 years on the hard side, the 
science, engineering, physics, mathematics, et cetera.
    Assistant Secretary Karsner and his office is the next step 
in the technology development, as you have indicated, and then 
I won't repeat the ins and outs of his budget but we'll talk 
about it here today.
    It is important to put into perspective $42 billion is 
nearly 10 times the annual budget of the Office of Science. The 
reason I bring that up is because Congress has provided $42.5 
billion in guarantee authority for all three for both nuclear 
and the two others that go with it that received excellence 
funding for their guarantees.
    And this is a very large amount of money, but when we look 
at what America will probably have to spend to achieve some 
degree of energy independence, the number approaches $350 to 
$500 billion, and, certainly, some people say it's much higher. 
My own guesstimate would be that we'll spend much more than 
that to get out of the mess that we are in. And the loan 
guarantees are a substantial part, and that's why it makes it 
so important, Mr. Frantz, that we get this part moving.
    I want to comment on, while we have Dr. Orbach here, I'm 
deeply concerned about the lack of investment in upgrading the 
science facilities of NNSA laboratories, specifically the 
LANSCE facility which is needed to be refurbished in order to 
support the ongoing science mission.
    Third, I am frustrated that the Congressional Budget Office 
has charged our bill, Mr. Chairman, with 1 percent of the cost 
of Loan Guarantees program despite the fact that this program 
is self-financed, and the Department is required to cover the 
cost of the program. CBO believes the Department will miss the 
mark by 1 percent. I don't know why they assume it will be 1 
percent all in one direction. It seems if you're going to miss, 
you'll miss some high, some low, and probably come out neutral. 
But they assume it will all be a miss, and we get charged $352 
million.
    That's wrong. And if we had to bear that, that's just like 
coming into our budget, slicing out $352 million for which we 
get nothing. Nothing. And, to me, the Congressional Budget 
Office just didn't read the law. I read the law this morning, 
and it's clear that we cannot lose money. And you have to 
deliver the full cost of the loan to the Secretary before he 
makes the loan and the full cost of the loan to the Government, 
That's the way it's done, and that's what you're going to do.
    I don't understand it, and I hope we all get a hold of this 
one and make sure we do it right. Thank you, Mr. Chairman.
    Senator Dorgan. Senator Craig?

                    STATEMENT OF SENATOR LARRY CRAIG

    Senator Craig. Mr. Chairman, thank you. Both you and 
Senator Domenici have done the broad overview. I'll be more 
specific and probably a little more parochial. And, let me say 
to all of you gentlemen, this will be the last time you will be 
making full budget presentations before this committee. It will 
also be my last time as a Senator to be specific about some of 
the issues that I've been involved in for a good long while.
    Secretary Orbach, as you know, I've been generally pleased 
with your office, overall. My only advice since we first met 
was to look for ways to utilize our Nation's lead nuclear 
laboratory, the INL, as it relates to the help necessary and 
important with nuclear science. The fiscal year 2009 Science 
budget spends about $3.6 million. That's less than 1 percent of 
your total annual budget at INL. That remains a question to me 
as to why that. But there are ways to fix it, and let me 
propose some ideas to you.
    Your budget more than any other reflects the work of the 
Energy Committee, and the work we did in passing the COMPETES 
bill last year. Many educational provisions were funded. If 
you'll remember, a provision I put in with the cosponsorship of 
Senator Domenici and Senator Bingaman was the Nuclear Science 
Talent provision. That is section 5006.
    It's my hope that this provision will be funded above the 
$12 million that had been authorized so that DOE science and 
the INL Center for Advanced Energy studies, the CAES, can 
administer this provision and increase our competitiveness in 
nuclear science. We've simply got to get there, and it is not 
as robust as it has been authorized or as we should allow it.
    Secretary Karsner, I've been continually impressed with the 
results of your office to do so much with so little--only $1.2 
billion. So I guess I am unabashedly pro-renewable, and I serve 
as a member of the Board of the Alliance to Save Energy. And 
efficiency is truly the most affordable clean energy solution 
we have.
    A list of accomplishments from your office is too long, but 
there are some that attract my attention. The biomass, R&D, 
utilizing farm and forest waste is, I think, the nominal 
opportunity for us. Wind power in America, we're now frustrated 
about how we integrate the potential of so much wind power as 
an intermittent source into a baseload situation. Certainly, in 
the Pacific Northwest that may well be an opportunity and a 
difficulty.
    Vehicle technology, advanced factories. I want my grand 
kids driving electric cars, so get with it because they're 
young, but they will soon be at that level, and I see that as a 
phenomenal opportunity even in a distant state like Idaho. Get 
us up to 400 miles, and we're in business. And I think that 
potential is there.
    Industrial technology, I think across the board the R&D 
that we do there advances the efficiencies in all that are 
possible. So let me suggest that your lab and my lab have great 
synergy and cooperative relationships that can produce a lot of 
what you're attempting.
    And, as Pete Domenici said, Director Frantz, we're glad to 
see you. We've been waiting for you for 2\1/2\ years and very 
disappointed that you weren't before us 2\1/2\ years ago. So 
get with it and deliver to us those kinds of loan guarantees 
that push science and push the technology out there.
    As you know, I have focused a good deal on the frustration 
we now have growing out of this bulge in ethanol production, 
corn-base needing the move to cellulosic. In fact, I'm headed 
into Canada next week to look at a stand-up up there that we 
think has some potential, so it is very exciting that we get 
there. Caution is valuable, but daringness is more important as 
we push the edges of technology to get us to an area of energy 
independence. Caution will not get us there.
    Thank you, Mr. Chairman.
    Senator Dorgan. Senator Murray.
    Senator Murray. Thank you, Mr. Chairman. I join you in 
welcoming our witnesses today. I will save my time for 
questions.
    Senator Dorgan. Senator Allard?

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Mr. Chairman, for holding this hearing 
today. I don't think anybody can argue we're dangerously 
relying on foreign sources of energy, and we must decrease our 
reliance on foreign sources of energy by diversifying our 
energy sources, and increasing conservation. I have long felt 
that a balanced energy portfolio that takes no technology off 
of the table is what is best for this country.
    I'd like to extend a special welcome to Mr. Karsner, who 
oversees the Office of Energy Efficiency and Renewable Energy, 
which, in turn, oversees the National Renewable Energy 
Laboratory in Colorado. NREL makes a major contribution to the 
development of renewable energy technology, and the 
technologies that are developed at NREL will remain vital to 
our Nation's energy progress, and they have established a great 
relationship with the research universities there, joining in 
the partnership with the University of Colorado, School of 
Mines, and Colorado State University in this renewable energy 
effort. And I commend them for joining that coalition. I think 
it helps make this a hub of renewable energy ideas.
    Mr. Chairman, you and I co-chaired the Renewable Energy and 
Energy Efficiency caucus, and so I know I don't have to tell 
you about the importance of renewable energy. Renewable energy 
is a very important way that we can begin to reduce the demand 
for oil and thereby help make our country more secure.
    There are great opportunities for solar, wind, geothermal, 
biomass, fuel cells, and hydro to make significant 
contributions. Research and the unit of both government and 
industry partners are very important to allowing these 
opportunities to live up to their potential.
    I look forward to working with the community and share the 
research and development and all fields of energy technology 
are funded in a manner that is responsible, but sufficient to 
ensure that the development and implementation of new 
technology continue.
    Thank you again, Mr. Chairman.
    Senator Dorgan. Senator Allard, thank you very much.
    We will now turn to the witnesses, and I want to thank all 
of them for coming today. We will begin with Dr. Orbach. Dr. 
Orbach, please.

                  STATEMENT OF HON. RAYMOND L. ORBACH

    Dr. Orbach. Thank you, Mr. Chairman. Thank you, Chairman 
Dorgan, Ranking Member Domenici, members of the committee. I'm 
very pleased to be able to appear before your committee for 
what I expect to be my final budget presentation for the 
Department of Energy's Office of Science. I would like to thank 
the Committee for your strong support for the Office of Science 
during my tenure.
    I would particularly like to thank Senator Domenici for his 
invaluable service to the Nation and for his strong support for 
the Nation's scientific enterprise.
    The President's budget request for fiscal year 2009 
continues his strong and clear support for science in this 
country, expressed through his American Competitiveness 
Initiative and Advanced Energy Initiative, both announced in 
2006. Congress has shown strong bipartisan support for an 
aggressive innovation and energy security agenda through the 
Energy Policy Act in 2005 and the America COMPETES Act and the 
Energy Independence and Security Act in 2007.
    The President's fiscal year 2009 request to Congress for 
the Office of Science sustains this bipartisan platform for the 
long-term economic health, energy security, and intellectual 
strength of our country. Just a few examples:
    We are introducing the concept of Energy Frontier Research 
Centers to accelerate scientific breakthroughs and innovations 
essential to the development of advanced energy technologies in 
the 21st century. We are providing $100 million in fiscal year 
2009 to award grants of $2 million to $500 million per year for 
an initial 5-year period on a competitive basis to groups of 
researchers in universities, laboratories, industry, and other 
institutions.
    We seek to engage the Nation's finest intellectual and 
creative talent to tackle the scientific grand challenges 
associated with how nature works to direct and control matter 
at the quantum, atomic, and molecular levels, and to harness 
this new knowledge and capability for some of our most critical 
energy challenges.
    Another example is ITER. While the 2008 appropriation for 
ITER was reduced to R&D, the President's request calls for the 
full $214 million needed to fully engage in this crucial 
experiment. It is high risk, but the potential for energy 
security is immense. ITER will directly benefit U.S. domestic 
industries creating an American workforce knowledgeable in R&D 
and in the production of high tech components for the fusion 
industry.
    My last example is high energy physics. The President's 
request firmly places this critical field back on track for 
world leadership. Former Princeton University President Harold 
Shapiro led the major National Academy of Sciences study on 
Elementary Particle Physics in the 21st century. He stated:

    ``The United States has been at the forefront of elementary 
particle physics for more than half a century. Particle physics 
inspires U.S. students, attracts talent from around the world, 
and drives critical intellectual and technological advances in 
many other fields. The United States has an unprecedented 
opportunity as a leader of nations to undertake this profound 
scientific challenge.''

    President Shapiro's last sentence applies equally across 
the frontiers of basic research in science. The Office of 
Science has prioritized its investments to maintain U.S. global 
scientific leadership. The President's fiscal year 2009 request 
to Congress gives us the chance to be a leader of nations. I 
urge this committee to give our country and its citizens that 
opportunity.

                           PREPARED STATEMENT

    Thank you again for your strong support for the Office of 
Science and for basic research. I look forward to answering 
your questions.
    Senator Dorgan. Dr. Orbach, thank you very much.
    [The statement follows:]
              Prepared Statement of Hon. Raymond L. Orbach
    Thank you Mr. Chairman and members of the committee. I am pleased 
to appear before your committee for what I expect to be my final budget 
presentation for the Department of Energy's Office of Science. I would 
like to thank the Committee for your strong support for the Office of 
Science during my tenure. This support has enabled the Office of 
Science to make investments in basic research and advanced research 
capabilities that have and will continue to improve U.S. global 
competitiveness, energy security, the environment, and our fundamental 
understanding of the universe around us.
    Our Nation continues to face significant challenges in energy 
security and in our ability to maintain the scientific leadership and 
innovation that assures our continued economic security. These 
challenges are addressed by the President in his American 
Competitiveness Initiative and Advanced Energy Initiative announced in 
2006. In this year's State of the Union address, the President again 
called our attention to the importance of harnessing the creative 
genius of American researchers and entrepreneurs in developing the next 
generation of clean energy technologies and in keeping our Nation at 
the forefront of basic research in the physical sciences. The budget 
request for fiscal year 2009 demonstrates his forceful, continued 
commitment to these important initiatives. The Congress has also spoken 
and expressed strong, bipartisan support for an aggressive innovation 
and energy security agenda in passing the Energy Policy Act (EPAct) of 
2005 and in following up with both the America COMPETES Act and the 
Energy Independence and Security Act (EISA) in 2007.
    EPAct and the COMPETES Act both recognize the pivotal role of the 
Office of Science in securing the advantages that basic research as 
well as science, math, and engineering education can bring to the 
Nation. EISA's provisions are intended to reduce America's dependence 
on oil, improve efficiency, and cut emissions. Technology development 
proceeds fastest where there is a strong grounding in scientific 
understanding, but we will not meet the targets with solely incremental 
improvements in current technologies. We need the breakthroughs that 
will result only from transformational basic research.
    Here are a few examples. EISA mandates the use of at least 36 
billion gallons of biofuels by 2022. Without transformational 
breakthroughs in deriving fuels from plant cellulose materials, we 
reduce our chances of reaching these aggressive goals. Even though 
conventional approaches, such as sugar-based and corn-based ethanol, 
can be modestly energy positive--although this is still debated--they 
consume large quantities of food and feed grain. Increasing use of 
these feedstocks raises environmental concerns associated with land use 
changes and impacts on atmospheric concentrations of carbon dioxide. 
Biofuels derived from cellulose, and in particular feedstock crops such 
as switchgrass that can be grown on marginal land with minimal water 
and nutrient requirements, can provide the basis for a sustainable 
biofuels economy in the United States while benefiting the American 
farmer. Breakthroughs in science are essential for the development of 
more efficient and cost-effective processes for deriving fuels from 
cellulose and for developing dedicated feedstock crops. The approaches 
to cellulosic ethanol deployed in many pilot and demonstration 
bioethanol plants across the United States rely on niche feedstocks and 
conversion technologies that are not yet cost competitive. New 
scientific discoveries supported by the Office of Science will speed 
revolutionary gains in production efficiencies and cost reduction--and 
in some cases may be the only way to meet our goals.
    The transformational basic research undertaken by the Office of 
Science's Bioenergy Research Centers is one way the Department is 
addressing the difficulties of cost-effective bioethanol production 
with minimal environmental footprint, by using plant and microbial 
genomics and other novel approaches.
    EISA also mandates a national fuel economy standard of at least 35 
miles per gallon by 2020--an increase in fuel economy of some 40 
percent that will save billions of gallons of fuel. Automobile 
manufacturers will need to employ numerous conventional and advanced 
engine and vehicle technologies to reach this goal. Office of Science 
basic research will be critical in the development of cost effective 
advanced engine and vehicle technologies through research in areas such 
as high-strength, low-weight materials; electrical energy storage; 
hydrogen production, use, and storage; fuel cell materials; catalysts, 
combustion processes, and materials under extreme environments.
    In fiscal year 2009 the Office of Science will initiate Energy 
Frontier Research Centers. They will pursue innovative basic research 
to accelerate the scientific breakthroughs needed to create advanced 
energy technologies for the 21st century. These Centers will pursue 
fundamental basic research areas mentioned above as well as solar 
energy utilization; geosciences related to long-term storage of nuclear 
waste and carbon dioxide; advanced nuclear energy systems; solid state 
lighting; and superconductivity.
    The Office of Science seeks to engage the Nation's intellectual and 
creative talent to address scientific grand challenges. These are the 
necessary transformational discoveries which will fundamentally alter 
our approaches to energy production and use, and they will come from 
the next generation of scientists, mathematicians, and engineers. If 
our fiscal year 2009 request is approved, the Office of Science will be 
able to directly support the research of more than 4,300 graduate 
students--and many more who are supported by other agencies will use 
our world-leadership scientific research facilities in their 
dissertation research.
    The Office of Science is accelerating the pace of discovery and 
innovation to address the Nation's energy needs through our 
multifaceted research portfolio. Your confidence in the Office of 
Science is based on a number of demonstrated successes in our mission 
areas, and your support for the Office of Science has enabled us to 
assess the basic research needs and engage the scientific community to 
respond aggressively. We routinely assess and update these research 
opportunities and priorities with an eye to our mission and with an ear 
to the research community, whether at a national laboratory, a 
university, or in industry. Since we build and operate large-scale, 
long-term, and, by necessity, cost-effective scientific research 
facilities, and because our mission is so important, we take these 
assessments seriously. We cannot afford to go in a wrong direction; we 
need the most complete and robust analysis of scientific opportunity, 
mission need, cost, and benefit.
    A large part of this assessment effort in recent years has been 
accomplished through a series of Basic Research Needs workshops and 
other workshops led by our science programs in partnership with the 
Department's technology programs. These workshops have brought together 
subject experts with diverse views from the broader basic and applied 
research community to discuss and identify areas of focus for DOE's 
basic research efforts. These efforts have enabled the Office of 
Science to stay informed of research needs and new opportunity areas, 
as well as scientific and technological roadblocks, and have enabled us 
to create a prioritized and comprehensive research portfolio within our 
available funding.
    While these workshops are critical to building and balancing our 
research portfolio, we also have a number of planning and advisory 
resources at our disposal to inform our long-term research portfolio 
planning. The National Academy of Sciences, our Federal Advisory 
Committees, informal and formal communication with the international 
scientific community, OSTP, OMB, the Congress, and our in-house Office 
of Science personnel all play important roles. Our programs are strong 
because our research portfolio and facilities are internally and 
externally assessed regularly and because our research and facilities 
are awarded through a competitive merit review process.
    We have established effective processes for assessing basic 
research needs, and we have also developed the capacity to respond 
quickly with highly leveraged investments in scientific facilities and 
research at the national laboratories and universities. This informed, 
rapid response provides the world-class research results that will help 
solve some of our most intractable energy supply and environmental 
challenges, while keeping our Nation's scientific enterprise and 
industry at the forefront.
    I think the best way to bring my statement into sharp focus is to 
discuss some examples of how your investments in the Office of Science 
have brought quick and remarkable results, and what we plan to do with 
the funding requested for fiscal year 2009 to enhance the U.S. 
scientific and innovation enterprise and ensure the best possible 
return to the taxpayer.
    Perhaps the best example of this aggressive and nimble approach is 
the response by the Office of Science to the challenge of High 
Performance Computing (HPC). In 2002 the Japanese announced the Earth 
Simulator, a high performance computer for open science which combined 
unprecedented performance and efficiency. Congress responded by 
dramatically increasing HPC funding, and making the Office of Science 
the lead in an effort to surpass the Earth Simulator. I am pleased to 
report that your confidence in us has already resulted in the United 
States attaining world leadership in open scientific computing--by the 
end of this year we will achieve peak capacity of one petaflop at our 
Leadership Computing Facility in Oak Ridge. This exceptional capability 
is helping us model such phenomena as turbulent flows related to 
combustion and to model and simulate complex climate processes that 
will inform decisionmakers on climate change, mitigation, and 
adaptation.
    The benefits of Office of Science HPC capabilities extend well 
beyond DOE. We provide access to these resources to other Federal 
agencies, universities, laboratories, and industry. We have been 
involved in modeling and simulation runs as diverse as determining 
hurricane effects to save lives, and modeling aircraft engines and 
airframes to improve energy efficiency and reduce time-to-market. We 
use the Innovative and Novel Computational Impact on Theory and 
Experiment (INCITE) program to openly compete access to these world-
leading HPC resources. The Office of Science created INCITE for the 
purpose of bringing the capabilities of terascale computing to the 
community in order to transform the conduct of science and bring 
scientific simulation through computational modeling to parity with 
theory and experiment as a scientific tool. As a result, HPC modeling 
and simulation is now seen as a potent tool in the scientific toolbox; 
one that will potentially save lives, increases our energy and national 
security, and propels us to a competitive edge.
    Another accomplishment of the past year is the successful 
competition and award of three Bioenergy Research Centers. These 
Centers will each take different approaches to discovering 
fundamentally new solutions and solving critical roadblocks on the path 
to energy security--how will we meet the new requirement to produce 36 
million gallons of biofuels by 2022 from renewable plant sources that 
don't compete with the food supply? In authorizing and funding the 
Bioenergy Research Centers, Congress expressed its confidence in the 
ability of the Office of Science to tap the talent of our national 
laboratories and universities to tackle our fuels challenge, and these 
Centers are up and running well.
    U.S. leadership in science and technology depends on the continued 
availability of the most advanced scientific tools and facilities for 
our researchers. The suite of research capabilities operated by the 
Office of Science and used annually by 20,000 researchers from 
industry, academia and government labs are still the envy of the world. 
And over the past several years, with your support, we have delivered 
new facilities and have achieved remarkable technical milestones with 
existing facilities, enabling the United States to work at the cutting-
edge of many scientific disciplines. The Spallation Neutron Source, 
which came on line in 2006, is the world's forefront neutron scattering 
facility providing more neutrons, by a factor of 10, than any other 
neutron source in the world for research of materials and biological 
complexes. Let me give you just one example of why neutrons are so 
important. Neutrons are the only way to peer inside an operating fuel 
cell to view water forming and moving throughout the cell. In a fuel 
cell, water is formed as a by-product of the reaction between hydrogen 
and oxygen. If the water does not drain quickly and efficiently, then 
fuel cells will not work properly.
    The Linac Coherent Light Source currently under construction will 
produce x-rays 10 billion times more intense than any existing x-ray 
source in the world when it comes on line in fiscal year 2010. It will 
have the capabilities for structural studies of nanoscale particles and 
single molecules and for probing chemical reactions in real time. All 
five Office of Science Nanoscale Science Research Centers are now in 
operation, providing unparalleled resources to the scientific community 
for synthesis, fabrication, and analysis of nanoparticles and 
nanomaterials. The Tevatron at Fermilab currently remains the world's 
most powerful particle collider for high energy physics. New records 
for performance in peak luminosity were achieved in 2006, enabling the 
observation of the rare single top quark and bringing researchers 
closer to understanding the basic constituents of matter and the laws 
of nature at high energies.
    On October 24, 2007, the international ITER Agreement went into 
force. The ITER experiment will demonstrate for the first time that a 
reactor can create and sustain a burning plasma. The implications of 
this research are far-reaching. The world faces a series of tough 
choices in meeting our energy needs over the next century. While no 
silver bullet may exist, fusion appears to be the closest. Fusion 
energy provides the real possibility of abundant, economical, and 
environmentally benign energy, starting around mid-century. Our 
investments today will have huge pay-offs for our children and 
grandchildren. We are part of an international consortium that is 
sharing the cost and the risk of the project and will have full access 
to all experimental research data.
    The Office of Science is aggressively pursuing a range of research 
areas that will provide answers critical to our future energy security, 
as the material that follows will show--and we also continue to plan 
for the future, seeking to identify opportunities within available 
resources and to update our priorities appropriately. An example of 
this is the ``Facilities for the Future of Science: A 20-Year Outlook'' 
report, which was released in November 2003 and updated last year. The 
Outlook contained a prioritized list of facilities to underpin our 
major research thrusts over the next 20 years and beyond. These 
facilities are designed to be world class and adaptable to evolving 
basic research needs to ensure that U.S. taxpayers get the most value 
for their money. These facilities also allow researchers access to the 
full array of physical and biological science large-scale resources, 
creating an all-important balance and ``unity'' of science within the 
Office of Science. I ask the members during this appropriations cycle 
especially to consider the lasting value of the basic energy research 
done in the Office of Science to our Nation's well-being and economic 
prowess.
    The following programs are supported in the fiscal year 2009 budget 
request: Basic Energy Sciences, Advanced Scientific Computing Research, 
Biological and Environmental Research, Fusion Energy Sciences, High 
Energy Physics, Nuclear Physics, Workforce Development for Teachers and 
Scientists, Science Laboratories Infrastructure, Science Program 
Direction, and Safeguards and Security.

                   OFFICE OF SCIENCE FISCAL YEAR 2009 PRESIDENT'S REQUEST--SUMMARY BY PROGRAM
                                             [Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                          Fiscal Year 2009 vs.
                                                 Fiscal Year  Fiscal Year  Fiscal Year      Fiscal Year 2008
                                                     2007         2008         2009    -------------------------
                                                   Approp.      Approp.      Request      Request      Percent
----------------------------------------------------------------------------------------------------------------
Basic Energy Sciences..........................   $1,221,380   $1,269,902   $1,568,160    +$298,258        +23.5
Advanced Scientific Computing Research.........      275,734      351,173      368,820      +17,647         +5.0
Biological and Environmental Research..........      480,104      544,397      568,540      +24,143         +4.4
High Energy Physics............................      732,434      689,331      804,960     +115,629        +16.8
Nuclear Physics................................      412,330      432,726      510,080      +77,354        +17.9
Fusion Energy Sciences.........................      311,664      286,548      493,050     +206,502        +72.1
Science Laboratories Infrastructure............       41,986       66,861      110,260      +43,399        +64.9
Science Program Direction......................      166,469      177,779      203,913      +26,134        +14.7
Workforce Dev. for Teachers & Scientists.......        7,952        8,044       13,583       +5,539        +68.9
Safeguards and Security (gross)................       75,830       75,946       80,603       +4,657         +6.1
SBIR/STTR (SC funding).........................       86,936  ...........  ...........  ...........  ...........
                                                ----------------------------------------------------------------
      Subtotal, Office of Science..............    3,812,819    3,902,707    4,721,969     +819,262        +21.0
Adjustments\1\.................................       23,794       70,435  ...........      -70,435       -100.0
                                                ----------------------------------------------------------------
      Total, Office of Science.................    3,836,613    3,973,142    4,721,969     +748,827       +18.8
----------------------------------------------------------------------------------------------------------------
\1\ Adjustments include SBIR/STTR funding transferred from other DOE offices ($39,319,000 in fiscal year 2007),
  a charge to reimbursable customers for their share of safeguards and security costs (-$5,605,000 in each of
  fiscal year 2007 and fiscal year 2008), Congressionally-directed projects ($123,623,000 in fiscal year 2008),
  a rescission of a prior year Congressionally-directed project (-$44,569,000 in fiscal year 2008), and offsets
  for the use of prior year balances to fund current year activities (-$9,920,000 in fiscal year 2007 and -
  $3,014,000 in fiscal year 2008).

        basic and applied research and development coordination
    I would also like to highlight the fact that the Office of Science 
continues to coordinate basic research efforts in several areas with 
the Department's applied technology offices through collaborative 
processes established over the last several years. These areas include 
biofuels derived from biomass, solar energy, hydrogen, solid-state 
lighting and other building technologies, the Advanced Fuel Cycle, 
Generation IV Nuclear Energy Systems, vehicle technologies, and 
improving efficiencies in industrial processes. The Department's July 
2006 report to Congress DOE Strategic Research Portfolio Analysis and 
Coordination Plan identified 21 additional areas of opportunity for 
coordination that have great potential to increase mission success. The 
Office of Science supports basic research that underpins nearly all 21 
areas; and 6 areas are highlighted in the fiscal year 2009 Office of 
Science budget request for enhanced R&D coordination: Advanced 
Mathematics for Optimization of Complex Systems, Control Theory, and 
Risk Assessment; Electrical Energy Storage; Carbon Dioxide Capture and 
Storage; Characterization of Radioactive Waste; Predicting High Level 
Waste System Performance over Extreme Time Horizons; and High Energy 
Density Laboratory Plasmas. The Office of Science has sponsored 
scientific workshops corresponding to these focus areas in 
collaboration with related DOE applied technology program offices. The 
workshop reports identified high priority basic research areas 
necessary for improved understanding and revolutionary breakthroughs.
    Advanced Mathematics for Optimization of Complex Systems, Control 
Theory, and Risk Assessment.--The Advanced Scientific Computing 
Research (ASCR) program supports basic research in advanced mathematics 
for optimization of complex systems, control theory, and risk 
assessment. A recommendation from the workshop focused on this subject 
indicated additional research emphasis in advanced mathematics could 
benefit the optimization of fossil fuel power generation; the nuclear 
fuel lifecycle; and power grid control. Such research could increase 
the likelihood for success in DOE strategic initiatives including 
integrated gasification combined cycle coal-fired power plants and 
modernization of the electric power grid.
    Electrical Energy Storage.--About 15 percent of the Basic Energy 
Sciences (BES) program funding requested to support basic research in 
electrical energy storage (EES) is targeted for a formally coordinated 
program with DOE applied technology program offices. The workshop 
report on this focus area noted that revolutionary breakthroughs in EES 
have been singled out as perhaps the most crucial need for this 
Nation's secure energy future. The report concluded that the 
breakthroughs required for tomorrow's energy storage needs can be 
realized with fundamental research to understand the underlying 
processes involved in EES. The knowledge gained will in turn enable the 
development of novel EES concepts that incorporate revolutionary new 
materials and chemical processes. Such research will accelerate 
advances in developing novel battery concepts for hybrid and electric 
cars and will also help facilitate successful utilization and 
integration of intermittent renewable power sources such as solar, 
wind, and wave energy into the utility sector, making these energy 
sources competitive for base-load supply.
    Carbon Dioxide Capture and Storage.--BES, ASCR and the Biological 
and Environmental Research (BER) program support basic research in 
carbon dioxide capture and storage. The storage portion of this R&D 
coordination focus area was a subject of a BES workshop on Basic 
Research Needs for Geosciences in February 2007 that focused on the 
research challenges posed by carbon dioxide storage in deep porous 
saline geological formations. The workshop report noted that the 
chemical and geological processes involved in the storage of carbon 
dioxide are highly complex and would require an interdisciplinary 
approach strongly coupling experiments with theory, modeling, and 
computation bridging multiple length and time scales. The BES effort 
supports fundamental research to understand the underlying chemical, 
geochemical, and geophysical processes involved in subsurface 
sequestration sites. The BER research effort focuses on understanding, 
modeling, and predicting the processes that control the fate of carbon 
dioxide injected into geologic formations, subsurface carbon storage, 
and the role of microbes and plants in carbon sequestration in both 
marine and terrestrial environments. These aspects of this focus area 
were also the subject of additional SC workshops that identified basic 
research areas in carbon dioxide capture and storage that could benefit 
the optimization of fossil fuel power generation and the development of 
carbon neutral fuels. The ASCR research effort supports two Scientific 
Discovery through Accelerated Computing (SciDAC) partnerships with BER 
to advance modeling of subsurface reactive transport of contaminants; 
an area that has been identified as directly relevant to carbon 
sequestration research efforts.
    Characterization of Radioactive Waste.--BES, BER, and the Nuclear 
Physics (NP) program support research in radioactive waste 
characterization. This R&D coordination focus area was the subject of 
six Office of Science workshops, including three BES workshops. The 
workshop reports noted that the materials and chemical processes 
involved in radioactive waste disposal are highly complex and their 
characterization requires an interdisciplinary approach that strongly 
couples experiments with theory, modeling, and computation bridging 
multiple length and time scales. The BES effort will focus on research 
relating to the underlying physical and chemical processes that occur 
under the conditions of radioactive waste storage, including extremes 
of temperature, pressure, radiation flux, and multiple complex phases. 
The BER research effort addresses processes that control the mobility 
of radiological waste in the environment. The NP research effort is 
focused on characterization of radioactive waste through the advanced 
fuel cycle activities. The NP program areas are structured as 
scientific disciplines with goals to understand the nuclear cross 
sections important for advanced fuel cycle reprocessing. A small 
portion of on-going research is relevant to the issues involved with 
radioactive waste and related advanced fuel cycles. The knowledge 
gained from this research will lead to enhanced understandings of 
radioactive waste characterization, which would make nuclear power a 
far more attractive component in primary energy usage.
    Predicting High Level Waste System Performance over Extreme Time 
Horizons.--BES supports basic research in predicting high-level waste 
system performance over extreme time horizons. This R&D coordination 
focus area was a subject of a BES workshop on Basic Research Needs for 
Geosciences in February 2007, which focused on research challenges 
posed by geological repositories for high level waste. The workshop 
report identified major research priorities in the areas of 
computational thermodynamics of complex fluids and solids, 
nanoparticulate and colloid physics and chemistry, biogeochemistry in 
extreme and perturbed environments, highly reactive subsurface 
materials and environments, and simulation of complex multi-scale 
systems for ultra-long times.
    High Energy Density Laboratory Plasmas.--The Fusion Energy Sciences 
(FES) program supports basic reach in high energy density laboratory 
plasmas. In May 2007, Office of Science and the National Nuclear 
Security Administration (NNSA) jointly sponsored a workshop to update 
the high energy density laboratory plasmas (HEDLP) scientific research 
agenda. Three scientific themes emerged from the workshop: enabling the 
grand challenge of fusion energy by high energy density laboratory 
plasmas; creating, probing, and controlling new states of high energy 
densities; and catching reactions in the act by ultra-fast dynamics. In 
fiscal year 2009, the FES request expands existing HEDLP research in 
response to the research opportunities identified in the workshop.

                               BASIC AND APPLIED R&D COLLABORATION FUNDING SUMMARY
                                             [Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                          Fiscal Year 2009 vs.
                                                 Fiscal Year  Fiscal Year  Fiscal Year      Fiscal Year 2008
                                                     2007         2008         2009    -------------------------
                                                   Approp.      Approp.      Request      Request      Percent
----------------------------------------------------------------------------------------------------------------
Advanced Mathematics for Optimization of
 Complex Systems, Control Theory, & Risk
 Assessment:
    Science: Advanced scientific computing       ...........       $1,900       $2,000        +$100         +5.3
     research..................................
    Energy Efficiency and Renewable Energy.....  ...........  ...........          500         +500  ...........
    Nuclear Energy.............................      $10,000       19,410       55,000      +35,590       +183.4
                                                ----------------------------------------------------------------
      Total, Advanced Mathematics..............       10,000       21,310       57,500      +36,190       +169.8
                                                ================================================================
Electrical Energy Storage:
    Science: Basic energy sciences.............  ...........  ...........       33,938      +33,938  ...........
    Energy Efficiency and Renewable Energy.....  ...........  ...........        2,000       +2,000  ...........
    Electricity Delivery and Energy Reliability  ...........  ...........       13,403      +13,403  ...........
                                                ----------------------------------------------------------------
      Total, Electric Energy Storage...........  ...........  ...........       49,341      +49,341  ...........
                                                ================================================================
Carbon Dioxide Capture and Storage:
    Science: Basic energy sciences.............        5,915        5,915       10,915       +5,000        +84.5
    Advanced scientific computing research.....  ...........          976          976  ...........  ...........
    Biological and environmental research......       16,841       16,874       17,374         +500         +3.0
                                                ----------------------------------------------------------------
      Total, Science...........................       22,756       23,765       29,265       +5,500        +23.1
    Fossil Energy..............................       97,228      118,908      149,132      +30,224        +25.4
                                                ----------------------------------------------------------------
        Total, Carbon Dioxide Capture and            119,984      142,673      178,397      +35,724        +25.0
         Storage...............................
                                                ================================================================
Characterization of Radioactive Waste:
    Science: Basic energy sciences.............  ...........  ...........        8,492       +8,492  ...........
    Biological and environmental research......  ...........  ...........        1,500       +1,500  ...........
    Nuclear physics............................          200          200        6,603       +6,403       +3,202
                                                ----------------------------------------------------------------
      Total, Science...........................          200          200       16,595      +16,395       +8,198
    Nuclear Energy.............................       37,190       53,722       59,000       +5,278         +9.8
    Environmental Management...................        2,100        2,100        9,500       +7,400       +352.4
                                                ----------------------------------------------------------------
        Total, Characterization of Radioactive        39,490       56,022       85,095      +29,073        +51.9
         Waste.................................
                                                ================================================================
Predicting High Level Waste System Performance
 Over Extreme Time Horizons:
    Science: Basic energy sciences.............  ...........  ...........        8,492       +8,492  ...........
    Environmental Management...................          500          500        1,500       +1,000       +200.0
                                                ----------------------------------------------------------------
      Total, Predicting High Level Waste System          500          500        9,992       +9,492       +1,898
       Performance.............................
                                                ================================================================
High Energy Density Laboratory Plasmas:
    Science: Fusion energy sciences............       15,459       15,942       24,636       +8,694        +54.5
    National Nuclear Security Administration...       10,000       12,295       10,147       -2,148        -17.5
                                                ----------------------------------------------------------------
      Total, High Energy Density Laboratory           25,459       28,237       34,783       +6,546        +23.2
       Plasmas.................................
                                                ----------------------------------------------------------------
      Total, Basic and Applied Research              195,433      248,742      415,108      166,366        +66.9
       Collaborations..........................
----------------------------------------------------------------------------------------------------------------

                               conclusion
    I want to thank you, Mr. Chairman, for providing this opportunity 
to discuss the Office of Science research programs and our 
contributions to the Nation's scientific enterprise and global 
competitiveness. On behalf of DOE, I am pleased to present this fiscal 
year 2009 budget request for the Office of Science.
    This concludes my testimony. I would be pleased to answer any 
questions you might have.

    Senator Dorgan. Next we will hear from Secretary Karsner. 
You may proceed.
    Mr. Karsner. Thank you, sir.
STATEMENT OF HON. ALEXANDER KARSNER, ASSISTANT 
            SECRETARY FOR ENERGY EFFICIENCY AND 
            RENEWABLE ENERGY
    Mr. Karsner. Chairman Dorgan, Ranking Member Domenici, 
members of the committee, thank you for this opportunity of 
testifying in the President's fiscal year 2009 budget request 
for the Office of Energy Efficiency and Renewable Energy.
    EERE's fiscal year 2009 request of $1.25 billion is 
approximately $19 million higher than the fiscal year 2008 
request and provides a balance in diverse portfolio of 
solutions to address the energy and environmental challenges 
facing us today. The request will enable the EERE to research 
and develop renewable energy technologies, to dramatically 
increase the amount of clean energy produced in the United 
States' advanced energy technologies and practices, to 
sustainably decouple energy demand from economic growth, and 
strengthen commercialization and deployment to support rapid 
adoption by private industry of clean energy technologies.
    The need for clean energy solutions is abundantly clear. 
With the Nation's energy challenges plainly identified, our 
efforts today and onward need to be about the implementation of 
solutions: well-identified solutions, multipath solutions, 
parallel path solutions, trying what we must and at a pace that 
is commensurate with the magnitude and urgency of the 
challenges that we face.
    On December 19, 2007, the President signed the Energy 
Independence and Security Act of 2007 into law. The new 
mandates included in EISA are unprecedented in size and in 
scope and in time frame. Together we've taken great strides to 
move beyond problem identification and towards problem-solving 
that will enhance our energy security, diversify our energy 
systems, and reduce our greenhouse gas emissions that 
contribute to the serious challenge of climate change.
    EERE's overall budget request reflects the funding needed 
to meet our energy challenges head on. Advanced fuels in 
vehicles, renewable power, efficiency in buildings and 
industry, and technology deployment comprise EERE's portfolio 
and multipronged approach to energy solutions.
    My written testimony which I'll submit for the record 
includes a description of the priorities and specific funding 
requests of the EERE's program areas. The achievement of EERE 
program goals could save consumers over $600 billion by the 
year 2030, and as much as $4 trillion by 2050, cumulatively.
    Similarly, we expect that our portfolio will avoid at least 
six gigatons of carbon by 2030 and nearly 50 gigatons by 2050, 
cumulatively.
    With action plans, performance milestones, clearly 
articulated deliverables, and continued performance, EERE's 
Budget Request will strengthen our dynamic partnership with 
private industry and academia that have grown our Nation's 
economic well-being.

                           PREPARED STATEMENT

    Our laboratory products and partnerships resulting in 
industry commercialization at unprecedented levels will bring 
clean energy technologies and sources to large-scale commercial 
viability in the foreseeable future.
    This concludes my prepared statement, and I'm happy to 
answer any questions the committee members may have. Thank you.
    [The statement follows:]
              Prepared Statement of Hon. Alexander Karsner
    Mr. Chairman and members of the committee, thank you for this 
opportunity to testify on the President's fiscal year 2009 budget 
request for the Office of Energy Efficiency and Renewable Energy 
(EERE).
    EERE's fiscal year 2009 request of $1.255 billion, approximately 
$19 million higher than the fiscal year 2008 request, provides a 
balanced and diverse portfolio of solutions to address the energy and 
environmental challenges facing us today. The request will enable EERE 
to research and develop renewable energy technologies that can help 
increase the amount of clean energy produced in the United States; 
advance energy efficiency technologies and practices; and promote 
adoption by private industry of clean energy technologies.
    The need for clean energy solutions is clear. With the Nation's 
energy challenges plainly identified, our efforts today and onward need 
to be about the development of solutions--balanced, diverse, well-
identified solutions, multipath solutions, as well as parallel path 
solutions.
    On December 19, 2007, the President signed the Energy Independence 
and Security Act of 2007 (EISA) into law. Together, we have taken great 
strides to move beyond problem identification and toward problem 
solving that will enhance our energy security, diversify our energy 
systems, and reduce emissions that contribute to climate change.
    EERE's overall budget request reflects the funding needed to meet 
our energy challenges head on. Advanced fuels and vehicles, renewable 
power, efficiency in buildings and industry, and technology deployment 
comprise EERE's portfolio and multipronged approach to energy 
solutions. I will now provide a description of the priorities and 
specific funding requests of EERE's program areas.
                  biomass and biorefinery systems r&d
    In fiscal year 2009, the Department is requesting $225 million for 
the Biomass Program, an increase of $26.8 million from the fiscal year 
2008 appropriation. The Biomass Program's funding supports the Biofuels 
Initiative that was launched in 2006 as part of the Advanced Energy 
Initiative (AEI) and is designed to achieve cost competitive cellulosic 
ethanol by 2012. The funding also supports the President's ``Twenty-in-
Ten'' initiative, announced in the 2007 State of the Union, to reduce 
gasoline consumption by 20 percent by 2017.
    EISA includes increased Corporate Average Fuel Economy (CAFE) 
standards and an increased Renewable Fuel Standard (RFS). The act 
increases CAFE standards to 35 miles per gallon for all passenger 
automobiles, including light trucks, by 2020; and mandates the 
replacement of 36 billion gallons of gasoline with renewable fuel by 
2022, including 16 billion gallons of cellulosic ethanol. The Biomass 
Program's funding request for technology development and demonstration 
is expected to support timely achievement of EISA requirements. The 
program is focused on: Feedstock Infrastructure to reduce the cost of 
feedstock logistics; Platforms R&D for efficiently converting 
feedstocks into cost competitive commodity liquid biofuels; and 
Utilization of Platform Outputs to demonstrate and validate integrated 
technologies that achieve commercially acceptable performance and cost 
targets through public-private partnerships. The program strategy is to 
accelerate development of the next generation of feedstocks and 
conversion technology options for validation and demonstration in 
integrated biorefineries at commercial and 10 percent of commercial 
scale. This strategy balances the program's research, development, and 
deployment (RD&D) portfolio by encouraging technology transfer while 
maintaining core R&D funding for next generation technologies. The 
program will continue to emphasize cellulosic ethanol and expand the 
focus on other renewable biofuels, such as biobutanol and green diesel.
                      vehicle technologies program
    The fiscal year 2009 Vehicle Technologies Program's request is 
$221.1 million, an $8 million increase over the fiscal year 2008 
appropriation.
    Vehicle Technologies Program activities focus on advanced, high-
efficiency vehicle technologies, including combustion engines and 
enabling fuels, hybrid vehicle systems (including plug-in hybrids), 
high-power and high-energy batteries, advanced lightweight materials, 
and power electronics. These technologies are critical to near-term oil 
savings when used in advanced combustion hybrid and plug-in hybrid 
electric vehicles (PHEVs). In fiscal year 2009, emphasis will increase 
R&D for PHEVs, such as high energy storage batteries.
    The program continues to place increasing emphasis on accelerating 
RD&D on lithium-ion batteries, plug-in hybrids (including plug-in 
hybrid vehicle demonstrations), and drive-train electrification to 
diversify and make our Nation's vehicles more efficient to reduce 
petroleum dependency. The R&D centers on improving advanced combustion 
engine systems and fuels and on reducing vehicle parasitic losses. The 
Vehicle Technologies budget is modified in the fiscal year 2009 request 
by transferring three activities from the Hydrogen Technology Program: 
Education; Technology Validation; and Safety and Codes and Standards. 
These activity areas have congruent objectives with other efforts 
within the Vehicle Technologies Program, and combining them within one 
program enables management efficiencies.
    The Program will continue fiscal year 2008 efforts to evaluate the 
impact of intermediate ethanol blended gasoline (i.e., greater than 
E10) in conventional (i.e., non-FFV) vehicles and to improve the 
efficiency of engines operating on ethanol blends. Late model and 
legacy vehicles will be tested for emissions, performance, and 
materials impacts. Intermediate blends could provide a way to increase 
ethanol use sooner. These efforts support existing requirements and the 
President's 20 in 10 plan.
                      hydrogen technology program
    The Hydrogen Technology Program's fiscal year 2009 budget request 
is $146.2 million, $64.8 million less than the fiscal year 2008 
appropriation, due in part to the movement of the three activities 
mentioned above to the Vehicle Technologies Program. In 2009, the 
program will focus on remaining critical path barriers to the 
technology readiness goals for 2015. Substantial increases are included 
for hydrogen storage and fuel cell R&D. To provide for those increases, 
all funding for hydrogen production from renewables was eliminated and 
systems analyses continues at a somewhat reduced funding level.
    The Hydrogen Program continues to research and develop critical 
hydrogen technologies that enable near-term commercialization pathways. 
Hydrogen Storage is one of the most technically challenging barriers to 
the widespread advancement of hydrogen and fuel cell technologies in 
the transportation sector. Our portfolio continues to identify new 
materials for on-board storage having the potential for greater than 50 
percent improvement in capacity than those available prior to 2004. 
Much needs to be done to enable these materials to operate at practical 
temperatures and pressures.
    In 2009, the Hydrogen Program will significantly increase 
investment in applied R&D of novel materials and breakthrough concepts 
with potential to meet on-board storage system performance targets. R&D 
funding will be competitively awarded and conducted through both 
Centers of Excellence and independent projects. The overarching goal is 
lightweight, low-cost, low-pressure, and efficient on-board vehicular 
storage systems to achieve a driving range of greater than 300 miles, 
without impacting vehicular cargo or passenger space to be competitive 
with today's vehicles.
    To address the critical barriers of fuel cell cost and durability, 
the fiscal year 2009 request significantly increases funding for Fuel 
Stack Components R&D. Our R&D efforts have made significant progress in 
this area and will continue efforts to achieve our stated goals, 
reducing the high-volume cost of automotive fuel cells from $275 per 
kilowatt in 2002 to $94 per kilowatt in 2007. In 2009, we hope to 
reduce the modeled cost of hydrogen fuel cell power systems to $60 per 
kilowatt. One notable recent achievement was the cost-shared 
development of a membrane with 5,000 hours lifetime, a giant leap 
toward the 2010 goal of 5,000 hours durability in an automotive fuel 
cell system.
    The Hydrogen Program's fuel cell R&D will continue to pursue a 
number of technological advancements. Proton-conducting membranes that 
are low-cost, durable, and operable at a low relative humidity will be 
developed. Non-precious metal and alloy catalysts will be identified 
and developed to further lower the cost of fuel cell systems. Gas flow 
through the flow fields will be modeled and measured while fuel cells 
are in operation to ensure optimal gas and water distribution over the 
catalyst and membrane surface. And fuel cells for distributed energy 
generation will continue to be developed with an emphasis on system 
integration, cost reduction and efficiency improvements. The Department 
will also continue its participation in the International Partnership 
for Hydrogen Economy (IPHE)--collaborating on R&D of materials for both 
fuel cells and storage, and working on such projects as the evaluation 
of fuel cell-related test protocols from different countries, as well 
as hydrogen pathway and infrastructure analyses.
                          solar energy program
    The fiscal year 2009 budget request for the Solar Energy Program is 
$156.1 million, $12.3 million less than the fiscal year 2008 
appropriation. Through the President's Solar America Initiative (SAI), 
announced in the 2006 State of the Union, the Solar Program will 
accelerate market competitiveness of solar photovoltaic technologies 
through R&D aimed at less expensive, more efficient, and highly 
reliable solar systems. Targeting improved performance and reliability 
with reduced cost, the Solar Program focuses its RD&D activities in two 
technology areas: photovoltaics (PV) and concentrating solar power 
(CSP).
    The Solar Program's goal in the area of photovoltaics is to develop 
and deploy highly reliable PV systems that are cost-competitive with 
electricity from conventional resources. The Program focuses on 
improving the performance of cells, modules, and systems; reducing the 
manufacturing cost of cells, modules, plant components, and systems; 
reducing the installation, interconnection, and certification costs for 
residential, commercial, and utility systems; and increasing system 
operating lifetime and reliability. To lower costs more rapidly and 
improve performance, the Solar Program is focusing on PV technology 
pathways that have the greatest potential to reach cost competitiveness 
by 2015. Industry-led partnerships, known as ``Technology Pathway 
Partnerships,'' will be continued in fiscal year 2009 to help address 
the issues of cost, performance, and reliability associated with each 
pathway.
    The Program's CSP focus is to develop concentrating solar 
technologies. A solicitation issued in fiscal year 2007 resulted in 12 
industry contract awards focused on establishing a U.S. manufacturing 
capability of low cost trough components and the technical feasibility 
of low cost thermal storage. In fiscal year 2008, funds will be 
provided for Phase I of these contracts with the more promising 
contracts moving into Phase II in fiscal year 2009. One of the most 
important advantages of CSP is its ability to thermally store power for 
later use. The development of advanced thermal energy storage 
technologies in fiscal year 2009 will be expanded to include single 
heat transfer fluid systems that eliminate the need for multiple heat 
exchangers and thereby increase system efficiency and reduce cost. For 
distributed applications, research in fiscal year 2009 will continue on 
improving the reliability of dish systems through the operation and 
testing of multiple units as well as improving the manufacturability of 
dish systems.
                          wind energy program
    The Wind Energy Program's fiscal year 2009 request is $52.5 
million, an increase of $3.0 million from the fiscal year 2008 
appropriation. The Wind Energy Program supports the AEI objective to 
maximize wind energy resource utilization in the United States by 
leading the Nation's R&D efforts to improve wind energy generation 
technology and address barriers to the use of wind energy in 
coordination with stakeholders.
    In 2007, the United States installed more wind generation capacity 
than any other country by bringing on-line 5 GW of new wind 
installations. Wind is now a major source of new electricity 
generation, and accounts for roughly 30 percent of new capacity from 
all energy sources. Since 2000, wind energy has increased more than 6-
fold, from about 2.5 GW to nearly 16.8 GW today. While there are 
significant challenges, wind resources have the potential to provide up 
to 20 percent of our Nation's generation potential.
    The Wind Program believes that wind energy is at a transitional 
point, particularly for large land-based wind systems. The program is 
concentrating on reducing technological barriers that limit the growth 
potential of wind energy in the United States by focusing on improving 
cost, performance, and reliability of large scale land-based 
technology. As a part of the effort, NREL will be testing its first 
utility-scale multi-megawatt turbine at the National Wind Technology 
Center in Colorado, through a competitive CRADA solicitation.
    In addition, the Wind Program is facilitating wind energy's rapid 
market expansion by anticipating and addressing potential regulatory, 
transmission and manufacturing barriers; and investigating wind 
energy's application to other areas, including distributed and 
community owned wind projects.
    The Program's focus also includes energy storage efforts in 
coordination with the Office of Electricity Delivery and Energy 
Reliability to maximize wind energy resource utilization, which 
supports diversifying the domestic energy supply while enhancing system 
reliability.
                          water power program
    The Water Power Program's budget request of $3.0 million will 
support initial R&D activities, and follows an initial congressional 
appropriation of $9.9 million in fiscal year 2008. The program needs to 
evaluate the results of its fiscal year 2008 R&D projects and 
technology assessments (which will continue into fiscal year 2009) 
before considering further applied research efforts. The mission of the 
Water Power Program is to research and develop innovative and effective 
technologies capable of harnessing hydrokinetic energy resources, 
including ocean wave and current energy.
    The program will focus on conducting technology characterizations 
to identify manufacturers, performance limits and issues, known 
environmental impacts, and other relevant technical and market 
variables. In addition the program will engage in collaborative 
international activities.
                     geothermal technology program
    The fiscal year 2009 request for the Geothermal Technology Program 
is $30 million, which is an increase of $10.2 million from the fiscal 
year 2008 appropriation. The Geothermal Technology Program works in 
partnership with industry to establish Enhanced Geothermal Systems 
(EGS) as an economically competitive contributor to the U.S. energy 
supply. Geothermal energy generates ``base-load'' electricity and/or 
supplies heat for direct applications, including aquaculture, crop 
drying, and district heating, or for use in heat pumps to heat and cool 
buildings.
    The Program focuses on the innovative technology of Enhanced 
Geothermal Systems (EGS), which are engineered reservoirs created to 
produce energy from geothermal resources that would otherwise not be 
economical. EGS is a new pathway for producing geothermal energy by 
drilling wells into hot rock, fracturing the rock between the wells, 
and circulating a fluid through the fractured rock to extract the heat. 
While EGS reservoirs have been designed, built, and tested in various 
countries, a number of technical hurdles remain to be overcome, the 
most important involving creation of EGS reservoirs with commercial 
production rates and lifetimes. The Department's approach will 
concentrate initially on issues related to reservoir creation, 
operation, and management. This may involve working with cost-sharing 
partners at existing geothermal fields to develop, test, and perfect 
the tools needed to fracture hot, impermeable rock and efficiently 
circulate fluids.
    A feasibility study by the Massachusetts Institute of Technology 
(MIT) estimates that EGS could provide 100,000 MW of electric power by 
2050--10 percent of currently installed electric capacity. This 
compares with today's 2,800 MW of installed capacity at existing U.S. 
geothermal power plants using today's technology. Expected program 
outcomes will include creation of a commercial-scale geothermal 
reservoir and power plant (approximately 5 MW in generating capacity) 
capable of operating for 7 years by 2015. This initial plant, followed 
by others in differing geologic environments, should foster rapid 
growth in the use of geothermal energy as predicted by the MIT study.
                     building technologies program
    The Building Technologies Program's fiscal year 2009 request is 
$123.8 million, an increase of $14.8 million from the fiscal year 2008 
appropriation. The Building Technologies Program develops technologies, 
techniques, and tools for making residential and commercial buildings 
more energy efficient, productive, and cost-competitive. The Program's 
funding supports a portfolio of activities that includes solid state 
lighting (SSL), improved energy efficiency of other building components 
and equipment, and their effective integration using whole building 
system design techniques that will enable the design of net Zero Energy 
Buildings. The Program also includes the development of building codes 
and appliance standards and successful education and market 
introduction programs, including ENERGY STAR and EnergySmart Schools.
    The Residential and Commercial Buildings integration components of 
the Building Technologies Program aim to transform the carbon footprint 
of the built environment through Zero Energy Buildings. The 
residential-focused Building America subprogram focuses on reducing 
total energy use in a new home by 60 to 70 percent. During fiscal year 
2009, research for production-ready new residential buildings that are 
40 percent more efficient will continue for three climate zones, with 
completion in two. The Program's activities in the commercial sector 
are focused on alliances of leading market companies with national 
portfolios of buildings. The Program will engage with the developers of 
these buildings, which will provide the opportunity to better 
understand what R&D is needed to help promote the construction of 
highly efficient commercial buildings. DOE's role as convener of 
partnerships with developers and other key actors help promote 
leveraging of resources and encourage the private sector to undertake 
market transformation activities.
    The Emerging Technologies subprogram seeks to develop cost-
effective technologies for residential and commercial buildings that 
enable reductions in building energy use. Solid State Lighting will 
develop technologies that can help reduce commercial building lighting 
electricity consumption. Space Conditioning and Refrigeration R&D will 
continue work on innovative HVAC design concepts. Other highlights 
include highly insulating windows and building integrated solar heating 
and cooling systems.
    The Equipment Standards and Analysis subprogram develops minimum 
energy efficiency standards that are technologically feasible and 
economically justified as required by law. Federal energy conservation 
standards that have gone into effect since 1988 are projected to save a 
cumulative total of 75 quadrillion Btus (quads) of energy by the year 
2045 (in 2007, total annual United States consumption of primary energy 
was about 103 quads). Between fiscal year 2005 and fiscal year 2007, 
the Department identified and carried out significant enhancements to 
rulemaking activities. The Department has made a commitment to clear 
the backlog of delayed actions that accumulated during prior years, 
while simultaneously implementing all new requirements of the Energy 
Policy Act (EPACT) of 2005. EISA significantly increases the number of 
efficiency standards and test procedures DOE must develop. The 
Department will continue to implement productivity enhancements that 
will allow multiple rulemaking activities to proceed simultaneously, 
while maintaining the rigorous technical and economic analysis required 
by statute. Energy conservation standards for 10 products were 
initiated in fiscal year 2006 and 2007 that will continue in fiscal 
year 2009. In fiscal year 2008, efficiency standards rulemakings were 
initiated on four additional products. In fiscal year 2008, DOE is 
proceeding simultaneously on rulemakings for 15 products and 10 test 
procedures. In fiscal year 2009, four more standards and test 
procedures for seven more products will be added.
    The Technology Validation and Market Introduction subprogram funds 
activities that validate and promote clean, efficient, and domestic 
energy technologies. Expanding and modernizing the ENERGY STAR program 
to include solid state lighting, water heaters, photovoltaics, fuel 
cells, micro-wind turbines, combined heat and power, and other advanced 
technologies, as well as targeting the civic infrastructure (e.g., 
schools, hospitals, libraries, municipal facilities), are central 
activities that the program carries out to invest in Energy Smart 
solutions. DOE will continue to work with the Environmental Protection 
Agency on the development and implementation of Energy Star and other 
efforts to minimize duplication and maximize efficiency. In addition to 
these efforts, the Program focuses on outreach efforts to help move 
specific technologies--such as solid-state lighting and high-
performance windows--toward commercial applications. These efforts 
include design and rating tools, durability and product lifetime data, 
testing procedures, demonstrations, retailer education, and training on 
proper installation.
                    industrial technologies program
    The Industrial Technologies Program seeks to reduce the energy 
intensity (energy demand per unit of industrial output) of the U.S. 
industrial sector through coordinated research and development, 
validation, and technical assistance activities to increase 
dissemination of energy efficiency technologies and operating 
practices. The fiscal year 2009 budget request for the Industrial 
Technologies Program (ITP) is $62.1 million, which is $2.3 million less 
than the fiscal year 2008 appropriation. Internal funding shifts 
reflect a continued strategy to emphasize more effective ways to 
increase energy efficiency among energy intensive industries. The shift 
toward more crosscutting and higher impact R&D activities will allow 
ITP to develop advanced, energy-efficient technologies to serve a 
broader set of industries.
    The program will continue to support the Secretary of Energy's 
``Easy Ways to Save Energy'' campaign through the Save Energy Now (SEN) 
industrial energy savings assessments at the Nation's most energy-
intensive industrial facilities. This has been a very successful 
activity, having reached its 24-month goal of conducting 450 
assessments from 2006 through 2007. With 89 percent of the plants 
reporting results from these assessments, the program has identified 
savings of over 88 trillion Btus of source energy, including more than 
71 trillion Btus of natural gas, the amount used by almost a million 
U.S. homes. If implemented, the improvements recommended through SEN 
assessments have a potential energy savings of more than $727 million 
per year and could also reduce carbon dioxide emissions by 6.3 million 
metric tons annually, which is equivalent to taking over one million 
automobiles off the road
    Building on this success, ITP will expand partnerships with leading 
corporations across major manufacturing supply chain and deliver DOE 
plant assessments, tools, and technologies to enable dramatic energy 
efficient improvements, contributing to the EPACT 2005 goal of reducing 
industrial energy intensity by 2.5 percent per year from 2006 to 2016.
                   federal energy management program
    The Federal Energy Management Program (FEMP) budget request for 
fiscal year 2009 is $22 million, which is an increase of $2.2 million 
from the fiscal year 2008 appropriation. FEMP enhances energy security, 
environmental stewardship, and cost reduction within the Federal 
Government through reductions in energy intensity in buildings, 
increased use of renewable energy, and greater conservation of water. 
These goals are accomplished by means of technical assistance, 
coordination of Federal reporting and evaluation, supporting 
alternative fuel use in the Federal vehicle fleet, and supporting the 
Secretary's Transformational Energy Action Management (TEAM) 
Initiative.
    In a new effort this year, FEMP will support private sector 
development of alternative fuel stations at Federal sites, help the 
Federal Government identify opportunities for petroleum displacement to 
increase alternative fuel use, and conduct reporting and analysis of 
the Federal vehicle fleet. In addition, with DOE Specific Investments, 
FEMP will support the Secretary's TEAM Initiative, which will establish 
DOE as the Federal agency leader in strengthening energy and 
alternative fuels management. The TEAM Initiative works with DOE 
programs to help meet and exceed the goals of Executive Order 13423, 
such as a reduction of energy intensity of 30 percent by the end of 
fiscal year 2015.
    As part of the TEAM initiative, the Secretary has instructed all 
DOE sites to host private sector energy service companies to assess 
efficiency opportunities across the complex, addressing all lifecycle, 
cost-competitive options. DOE will lead by example, deploying a wide 
variety of lighting and other advanced technologies to achieve maximum 
energy savings. The Secretary's TEAM Initiative is bold and, as 
Congress looks to ``green'' the Capitol Complex, I would be pleased to 
provide additional information and periodic updates to this Committee 
on our efforts and actions.
        weatherization and intergovernmental activities program
    The fiscal year 2009 request for Weatherization and 
Intergovernmental Activities is $58.5 million. Stakeholders and 
partners include State and local governments, Native American Tribes, 
utilities, and international agencies and governments.
    Significant changes in the fiscal year 2009 budget request include 
increases for the State Energy Program and the Asia Pacific 
Partnership, a refocusing for Tribal Energy Activities, and conclusion 
of funding for the Weatherization Assistance Program (WAP) and the 
Renewable Energy Production Incentive. The results of DOE's 
weatherization assistance activities are little changed in the last 2 
decades: provision of positive limited benefits to selected recipients, 
but failing to catalyze broader solutions for the tens of millions of 
eligible homes that have never received retrofits. The Department 
requests no funding for WAP activities; however, States can continue to 
support weatherization assistance activities with resources provided by 
the Low-Income Home Energy Assistance Program at the Department of 
Health and Human Services. Concluding the program at DOE will allow the 
Department to focus on higher priority research and development as well 
as State, local, and utility energy projects in the State Grants 
program. Through fiscal year 2008, the Renewable Energy Production 
Incentive (REPI) provided financial incentive payments to publicly 
owned utilities, nonprofit electric cooperatives, and tribal 
governments and native corporations that own and operate qualifying 
facilities generating renewable electricity. The incentive value of 
REPI has diminished over time as renewable energy technologies have 
become competitive, rendering the program no longer necessary
    In fiscal year 2009, the State Energy Program will continue to 
include competitive grants for State policies and programs that 
increase adoption and compliance of advanced building energy codes, 
accelerate the use of performance contracting and alternative financing 
by State and local governments, and increase investments in utility 
delivered efficiency programs and other high priority EPACT 2005 and 
EISA programs.
    The State Energy Program helps enable State governments to target 
their high priority energy needs and expand clean energy choices for 
their citizens and businesses. Benefits include reduced energy use and 
costs, environmentally conscious economic development, increased 
renewable energy generation capacity, and lessened reliance on imported 
oil. A combination of technical assistance, outreach, and financial 
assistance support effective program implementation of the National 
Action Plan for Energy Efficiency and provisions of EPACT 2005 and 
EISA.
                     facilities and infrastructure
    The budget request for Facilities and Infrastructure supports 
operations and maintenance (O&M) for the National Renewable Energy 
Laboratory (NREL), a single-purpose laboratory dedicated to R&D for 
energy efficiency, renewable energy, and related technologies. The 
request for fiscal year 2009 is $13.9 million: $10.0 million for core 
O&M (a $3.1 million increase) and $4.0 million required to complete 
Phase I construction of the Energy Systems Integration Facility (ESIF).
    This budget request represents a decrease of $62.2 million compared 
to the fiscal year 2008 appropriation, primarily a reflection of 
Congress's fiscal year 2008 provision of $54.5 million to initiate 
construction activities for the ESIF and to begin additional site 
infrastructure work. Funding beyond that which is requested for fiscal 
year 2009 is not needed, as much of the construction taking place was 
fully funded in prior years. The remainder of the decrease is a result 
of including requested solar research capital equipment replacements 
within the Solar Energy Program budget, where such equipment is 
typically funded.
                               conclusion
    The penetration of EERE technologies into the marketplace could 
save consumers over $600 billion by the year 2030 and save as much as 
$4 trillion by 2050, cumulatively. Similarly, the technologies in our 
portfolio could avoid 6 gigatons of carbon (GTC) by 2030 and nearly 50 
GTC by 2050, cumulatively.\1\ With action plans, performance 
milestones, clearly articulated deliverables, and continued 
performance, EERE's budget request supports priority R&D and the 
achievement of stated goals. Our laboratory products and partnerships 
will help bring cleaner energy technologies and sources to commercial 
viability in the foreseeable future.
---------------------------------------------------------------------------
     \1\ Energy Efficiency and Renewable Energy Fiscal Year 2009 
Congressional Budget, 20.

    Senator Dorgan. Mr. Karsner, thank you very much. Finally, 
we will hear from David Frantz. Mr. Frantz, you may proceed.
STATEMENT OF DAVID G. FRANTZ, DIRECTOR, LOAN GUARANTEE 
            PROGRAM OFFICE, OFFICE OF THE CHIEF 
            FINANCIAL OFFICER
    Mr. Frantz. Mr. Chairman, members of the committee, I am 
pleased to be before you today to review our budget for fiscal 
year 2009 as well as give you a program update on our office.
    I am happy to inform you that significant progress on this 
program has been made over the past year. In fact, just 1 year 
ago, the Department began its processing of the first 143 
applications from the 2006 solicitation, and that period 
involved very rigorous technical and financial evaluations in 
accordance with criteria set forth by our Credit Review Board, 
the governing board of our program.

                   STAFFING OF LOAN GUARANTEE PROGRAM

    Coincidental with this activity, I was hired and began as a 
top priority: the immediate staffing of the office with 
permanent Government, Federal employees. In the way of a 
background, I have over 35 years of international project 
financing experience, and that also includes over 10 years of 
experience with the Overseas Private Investment Corporation as 
a director of loan origination.
    And I would add, parenthetically, that the initial cadre of 
our officers that we are hiring reflect my background. They are 
significant professional people who have long experience in the 
field and who also have experience with the Overseas Private 
Investment Corporation as well.

                   LOAN GUARANTEE PROGRAM APPLICANTS

    On October 4th, we reached our first significant milestone. 
On that day we announced the promulgation, the announcement of 
the release of the final regulations for our program under 
title XVII, and we also announced the selection of 16 
preapplicants to be invited to submit 4 applications for the 
Loan Guarantee Program.
    Prescreening conferences have been held with all of these 
applicants, finishing in the month of January, and all 16 have 
indicated the desire to proceed with us to full loan guarantees 
through our process of due diligence.
    In addition, a prodigious amount of work has been completed 
to formulate and write policies and procedures to execute this 
program and to institute systems that will facilitate us in a 
very responsive way to process these applications.

                         LOAN GUARANTEES BUDGET

    I would bring your attention to emphasize two points with 
respect to our 2009 budget. The first is that we are asking for 
$19.9 million of additional administrative expense to operate 
our office. And that is a function of the requirement to, 
essentially, double the size of our office within a year to 
accommodate our future solicitations.
    And, finally, we also are seeking an extension on the 
fiscal year 2008 budget in accordance with the report language. 
As you're aware, the whole obligation terminates on September 
30, 2009, and that's far too short a period of time for us to 
begin to prosecute our current workload as well as the new 
solicitations that you have envisioned in the report language. 
So we are seeking to extend that deadline to September 30, 
2010, for all projects other than the nuclear plant facilities 
and for the nuclear plant facilities to extend that deadline to 
2011.
    In addition to the report, the language requires us to 
submit to you and the House Committee on Appropriations a 
Solicitation Implementation Plan for our future solicitations. 
We're in the process of working on that plan, and we hope to 
have it up to you within a month or so.

                    SOLICITATION IMPLEMENTATION PLAN

    In conclusion, I would emphasize one or two items. We 
understand the objectives and roles of title XVII program. We 
are not a research and development program, nor are we an early 
stage venture capital finance group. We issue loan guarantees 
to help fund the advanced stages of projects that are designed 
to take pilot and documentation projects to full commercial 
viability.
    We, in conjunction with the Department's Program Offices, 
will seek innovation and eligible projects as well as 
environmental benefits, and a reasonable assurance of repayment 
of our guaranteed loans in order to bring advances into the 
market, enabling others to replicate or to expand these 
technologies with full participation of the private sector.
    Mitigating financial risk to the taxpayers is of utmost 
importance to us. In my personal conversations with the 
Secretary, he emphasized this point with me, and I can assure 
you our office is committed to do that.
    A number of measures are being taken to ensure risks are 
properly mitigated for each project including a thorough 
investigation and analysis of each project's financial, 
technical, and legal strengths and weaknesses, as well as all 
identifiable risks. In addition to the underwriting expertise 
of our office, each project will be reviewed in consultation 
with independent engineering consultants outside of the 
Department of Energy.

                           PREPARED STATEMENT

    Over the past 12 months a remarkable amount of work has 
been accomplished. Based on my experience at OPIC and my 
familiarity with other loan guarantee programs at other 
agencies in the Federal Government, I can tell you that the 
Department has moved very quickly in making the title XVII 
program operational. I know there has been some congressional 
frustration with the pace of activity, but we have sought to 
move quickly as possible while ensuring technical and fiscal 
soundness of the program.
    I appreciate the opportunity to be before you today, and I 
will be happy to answer any questions you may have. Thank you.
    [The statement follows:]
                 Prepared Statement of David G. Frantz
    Mr. Chairman and members of the committee, I am pleased to be 
before you today to present the Department of Energy's Loan Guarantee 
Program Office (LGPO) fiscal year 2009 budget proposal and program 
update. The LGPO administers the Federal loan guarantee program that 
was authorized for title XVII of the Energy Policy Act of 2005 (EPAct 
2005). Under this program, DOE may issue loan guarantees for innovative 
energy technology projects that avoid, reduce, or sequester air 
pollutants or anthropogenic emissions of greenhouse gases, and have a 
reasonable prospect of repaying the principal and interest on their 
debt obligations.
    I am happy to inform you that significant progress on this program 
has been made over the past year. Let me quickly review with you some 
salient milestones. A year ago this week, two very experienced 
individuals were detailed from the U.S. Treasury Department to help 
lead the effort of evaluating a total of 143 pre-applicants seeking an 
invitation to submit full applications for loan guarantees. The 143 
pre-applicants resulted from the initial solicitation of the program 
which officially closed on December 31, 2006. Supported by contractors, 
over the course of last summer the pre-applicants underwent a rigorous 
technical and financial review in accordance with criteria set forth by 
the Department of Energy's Credit Review Board (CRB), the governing 
board for the program. Coincidental with this activity, I was hired and 
began as a top priority the immediate staffing of the office with 
permanent Federal employees. In the way of background, I have over 35 
years of project finance experience, predominantly in energy, 
independent power and heavy infrastructure industries. I have spent the 
past 10 years with the Federal Government's Overseas Private Investment 
Corporation (OPIC) as a Director of Loan Origination, which provided me 
with significant experience working under the Federal Credit Reform Act 
of 1990.
    On October 4, 2007, DOE achieved two major milestones. DOE 
announced the release of its final regulations implementing the title 
XVII EPAct 2005. These regulations marked a significant step forward 
and were the result of a rigorous review and evaluation of Federal 
credit policy, public comments received on the notice of proposed 
rulemaking and analysis by DOE. The provisions of the final regulations 
have provided greater flexibility in the structuring of transactions as 
compared to the Guidelines originally published in August 2006, 
including the ability to provide guarantees up to 100 percent of one or 
more debt instruments employed in eligible projects. Simultaneously, 
the Department announced that 16 projects from the 143 pre-applications 
submitted in response to DOE's August 2006 initial solicitation would 
be invited to submit full applications for a loan guarantee.
    Pursuant to those invitations, pre-screening conferences were 
conducted with the 16 pre-applicants during the months of December 2007 
and January 2008 to provide the LGPO updates on the respective projects 
as well as to inform the project sponsors of the policies and 
procedures to be followed in preparing and submitting full 
applications. All 16 of the pre-applicants have indicated a desire to 
submit full applications and are currently in the process of preparing 
their applications in compliance with the requirements of title XVII 
program regulations. We expect that the first applications will be 
submitted to DOE this month through the Department's electronic data 
submission system, and the balance of the applications are expected to 
be received in an evenly distributed progression over the next several 
months. To date, the CRB has not established a firm deadline by which 
the 16 applications must be filed but the CRB may do so in the future. 
A prodigious amount of work has been completed to formulate and write 
policies and procedures for the application process; to establish the 
electronic data submission system for receipt of applications and 
supporting documents; to install requisite accounting systems and 
procedures for the office; and to develop a model for determining the 
credit subsidy cost of loan guarantees for projects that receive title 
XVII loan guarantees.
    The LGPO has worked aggressively to assemble a staff of highly 
qualified project finance experts with significant experience in the 
private sector as well as in Government working under the Federal 
Credit Reform Act of 1990 closing other Federal loan guarantees. In 
accordance with the fiscal year 2008 budget, the plan is to fulfill 
organizational staffing for a total of 16 Federal full time equivalent 
(FTE) employees by September 2008 augmented by 6 to 10 contractors. 
This organization is sufficient to perform the credit underwriting and 
due diligence process associated with the 16 projects invited to submit 
full applications, as well as to issue new solicitations within the 
next year. The schedule for hiring additional staff will be undertaken 
in close coordination with the requirements for managing the new 
solicitations and the processing of subsequent applications.
                    fiscal year 2009 budget request
    The Department requests $19.9 million in funding in fiscal year 
2009 for administrative expenses to operate the LGPO and for support 
personnel and associated costs. This request essentially doubles the 
size of the office, over the fiscal year 2008 appropriation, to support 
continued processing and then monitoring of loan guarantees that may be 
issued in response to the August 2006 solicitation, as well as the 
execution of new solicitations to be released this year. This request 
will be offset by fee collections from project sponsors in the same 
amount, as authorized both by EPAct 2005 and the Department's 
implementing regulations.
    In the Committee Report accompanying the Consolidated 
Appropriations Act, 2008, Congress stated the Department should issue 
no more than $38.5 billion in loan guarantees under the title XVII 
program before the end of fiscal year 2009. Pursuant to the act, the 
budgetary authority provided by the act to issue loan guarantees is 
available only until September 30, 2009. DOE's fiscal year 2009 budget 
request seeks to extend that budget authority through fiscal year 2010 
for all projects other than advanced nuclear power facilities and 
through fiscal year 2011 for advanced nuclear power facilities. This 
extension is necessitated by long development lead times for completing 
all of the steps preceding the issuance of loan guarantees for major 
energy projects. Of the total loan guarantee amounts made available by 
Congress and identified in the fiscal year 2009 budget request, $20.0 
billion will be available through fiscal year 2010 to support projects 
such as Uranium Enrichment, Coal Based Power, Advanced Coal 
Gasification, Renewables, and Electricity Delivery. The remaining $18.5 
billion will be available through fiscal year 2011 to support nuclear 
power facilities. The $38.5 billion total is in addition to the $4.0 
billion in authority provided in fiscal year 2007 under Public Law 110-
5.
 fiscal year 2008 and fiscal year 2009 solicitation implementation plan
    The Consolidated Appropriations Act, 2008 requires that at least 45 
days prior to the execution of a new loan guarantee solicitation, DOE 
must submit a loan guarantee implementation plan to the Appropriations 
Committee of both houses of Congress. The implementation plan must 
define award levels and eligible technologies. DOE is in the process of 
preparing such an implementation plan. The Department plans to submit 
the plan to the Committees on Appropriations later this month.
                               conclusion
    In conclusion, I would like to emphasize the following points:
    We understand the role and objectives of the title XVII loan 
guarantee program. We are not a research and development program nor 
are we early stage venture capital providers. We issue loan guarantees 
to help fund the advanced stages of projects that are designed to take 
pilot and demonstration projects to full commercial viability. We, in 
conjunction with the Department's Program Offices, will seek innovation 
in eligible projects as well as environmental benefits, and a 
reasonable assurance of repayment of our guaranteed loans, in order to 
bring advances into the market enabling others to replicate and to 
expand these technologies with full participation of the private 
markets.
    Mitigating financial risk to taxpayers is of utmost importance to 
Secretary Bodman and to the LGPO in implementing the title XVII 
program. A number of measures are being taken to ensure risks are 
properly mitigated for each project prior to approval of a loan 
guarantee. First, the due diligence process includes a thorough 
investigation and analysis of each project's financial, technical, and 
legal strengths and weaknesses as well as all identifiable risks. In 
addition to the underwriting expertise of the LGPO staff, each project 
will be reviewed in consultation with independent engineering 
consultants. Finally, in addition to taking a significant equity stake 
in a project, each project sponsor will also be required to pay to the 
Federal Government the credit subsidy cost to offset the risks 
associated with the DOE's issuance of the loan guarantee.
    The LGPO, when evaluating the eligibility of projects for loan 
guarantees, and throughout the process of negotiating terms and 
conditions with eligible applicants, will give due consideration to the 
technological and commercial maturity of each project in its 
development cycle. For that purpose, the LGPO will draw upon technical 
appraisals from experts both within and outside DOE.
    Over the past 12 months, a remarkable amount of work has been 
accomplished. Based on my experience at OPIC and my familiarity with 
loan guarantee programs at other agencies, I can tell you that the 
Department has moved very quickly in making the title XVII program 
operational. I know there has been some Congressional frustration with 
the pace of activity, but we have sought to move as quickly as possible 
while ensuring the technical and fiscal soundness of the program. We 
are continuing to recruit additional qualified staff to finalize the 
credit subsidy model, as well as to institute comprehensive policies 
and procedures to initiate the application and due diligence process. 
Finally, we are developing state of the art accounting and processing 
systems that will allow the LGPO to monitor and manage the loans over 
the life of the projects.
    I appreciate the opportunity to appear before you today. I will be 
happy to take any questions that the members of the committee may have.

    Senator Dorgan. Mr. Frantz, thank you very much.
    We thank all three of you for testifying. Senator Cochran 
has arrived. Senator Cochran, did you have an opening 
statement?

                   STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Mr. Chairman, I simply want to 
congratulate the witnesses for the work they're doing to lead 
the way with the President's Competitiveness Initiative. It's 
hard work, and I think you're doing a commendable job, and I 
ask unanimous consent that the balance of my statement be 
printed in the record.
    Senator Dorgan. Without objection.
    [The statement follows:]
               Prepared Statement of Senator Thad Cochran
    Mr. Chairman, I appreciate your holding this hearing to review 
budgets of the Department of Energy's Office of Energy Efficiency and 
Renewable Energy, Office of Loan Guarantees, and Office of Science. 
Development of efficient and clean energy technologies is one of the 
most pressing issues in the world today. I'm glad that we are here to 
consider the budgets for these accounts within the Department of 
Energy. I am pleased to welcome Dr. Raymond Orbach, who has been 
gracious in his efforts to keep me informed about current initiatives 
in the Office of Science. I'd also like to thank Dr. Karsner and Mr. 
Frantz for being here to provide testimony and answer questions.
    It is important that the Department continue to look for 
alternative and renewable sources of energy to lessen our dependence on 
foreign sources of oil and gas, while promoting cleaner energy 
production. Mississippi is blessed with abundant resources capable of 
producing biomass-based energy, and funds need to be directed to the 
unique capacities of the Southeastern region of the United States. In 
order to reach a goal of domestic energy sustainability, we must 
research and develop a broad energy portfolio. I am hopeful that 
partnerships between Mississippi's research institutions and the 
Department of Energy will continued be strengthened.
    I am glad that the Department of Energy has created cohesion 
between the Office of Science and the Office of Energy Efficiency and 
Renewable Energy. Without basic scientific research capability, the 
United States cannot reap the benefits of our natural resources to meet 
our growing energy demand. As the rest of the world rapidly increases 
energy demand, they are also advancing their scientific research. We 
need to stay competitive in the world market and make wise choices 
about fulfilling our energy needs.
    Finally, I am pleased that the Loan Guarantee program has begun
    designating its appropriated funds to deserving technologies. I 
hope the program will continue to succeed in helping to fund forward-
thinking projects.
    Thank you all for your time today and for the good work you are 
doing.

                        RENEWABLE ENERGY FUNDING

    Senator Dorgan. First of all, Mr. Karsner, I'm going to ask 
you a series of questions and as I've indicated before, I'm 
pleased that you have joined public service. I think you do an 
excellent job, and have an excitement and a passion for 
renewable energy. So let that be a precursor to my questions.
    You indicate in your testimony, Mr. Karsner, EERE's fiscal 
year 2009 request of $1.25 billion is approximately $19 million 
higher than fiscal year 2008, and as I heard you I thought, 
well, that's good news. At least they are proposing an 
increase. And then I took a look at the grid sheet and saw that 
I'd already known: In fact, the budget proposal is nearly $450 
million less than the Congress appropriated last year.
    So it's clever to say this is a $19 million increase, but, 
in fact, your budget requests for a very important part of the 
Energy Department is close to a half a billion dollars less 
than last year. To me, that's not justifiable, and so let me 
describe my concern.
    Hydrogen technology. I'm a big fan of hydrogen fuel cells. 
Senator Domenici and I were the only two legislators invited to 
a big deal with President Bush about 3 years ago, because both 
of us have been big supporters of hydrogen, hydrogen fuel cell 
futures. So we went down to the Building Museum, and the 
President talked about his support. The fact is, this year's 
request for hydrogen is not only well under last year's 
request--it cuts it by well over a quarter--it's $50 million 
short of what we were spending three years ago.
    Weatherization Assistance is zero. And I'm going to show 
you when we talk about this, the McMillan Report demonstrates 
that building issues are by far the most likely areas to 
achieve substantial gains in energy efficiency. You know, my 
concern about solar energy is cut. The fact is, we're way 
behind in solar energy, and we ought to be doing much more with 
respect to solar.
    So let me have you take a shot at that. I know you have a 
passion for these things. I know you can't possibly be up here 
feeling good about a budget request that's nearly a half a 
billion dollars under what we gave your office last year. How 
bad do you feel about this?
    Mr. Karsner. Well, thank you, Mr. Chairman, and thanks for 
your passionate support of our portfolio.
    I feel good every day I serve the President and get to work 
with Congress and advance these goals. So to be clear, the 
budget request is above our 2008 request. Of course, the 
Congress was more generous with the request than last year--and 
that was an aberration over the historical line--so we enjoyed 
an enormous plus-up of our portfolio last year, an 
unanticipated surprise, and we are working to integrate and 
manage that money usefully.
    But in terms of the multiyear planning, the programmatic 
technological R&D and deployment portfolio, it is a substantial 
aberration that we went up almost 50 percent last year, and so 
what I'm suggesting is that this year's request is back in line 
with what the administration's request had been consistent.
    Senator Dorgan. Well, Mr. Karsner--let me apologize for 
interrupting you--the decision by myself and Senator Domenici 
and other members of this subcommittee, should not be called an 
aberration. We decided that this is where we wanted to invest 
the money because, in the context of the Energy bill that 
Congress passed, we decided we have to do much, much, much more 
in renewables.
    And, if I might continue to interrupt for one second, this 
is the McKinsey & Company study which you're well aware of.
    Mr. Karsner. Yes.
    Senator Dorgan. Go to the far left side. By far the biggest 
bang for the buck by far in terms of saving energy is building 
insulation. And yet you come with this proposal to zero out 
Weatherization Assistance. I mean, just because we added a half 
a billion dollars in this day and age when energy is so 
critical, don't call it an aberration. It was a decision by a 
subcommittee that was a very informed decision.
    I'm sorry to interrupt.
    Mr. Karsner. No, it's a quite fair statement.
    Would you like me to address each of those, categorically?
    Senator Dorgan. Please do.

                      HYDROGEN TECHNOLOGY FUNDING

    Mr. Karsner. Okay. First let's talk about hydrogen. 
Hydrogen, obviously, was announced in the 2003 State of the 
Union and the President introduced it, a 5-year plan for $1.2 
billion. The Department had completed that 5-year plan in 2008 
for the $1.2 billion. Hydrogen remains amongst the most 
robustly funded of any of the programs in the EERE portfolio, 
precisely because of the progress that was made during the 
years of the hydrogen fuel initiative that enabled us to focus 
on the acute problems and the metrics that would define the 
barriers that needed to be overcome in order to achieve a 2014 
commercialization decision.
    We have upped the amount of budgetary focus on those key 
areas, principally: on-board storage in the vehicles that would 
enable a 300-mile driving range and further reduction of the 
fuel cell stacks, the Pennfuel cell stacks, that would get them 
to the programmatic target of $30 per kilowatt on a 
manufactured basis. We are making continual progress on that, 
but we seek to accelerate the progress by moving more money, 
disproportionately, into those areas.
    It's a little bit deceptive when we talk about the amount 
of money it was cut, because, actually, more than half of the 
hydrogen funding that appears to be lowered was moved over into 
the Vehicles Technology program--things like education cogent 
standard, technology validation, and demonstration--because of 
the need to diversify all of those things across biofuels, 
across plug-ins and hydrogen. In other words, Vehicles 
Technologies was a better-placed program to have a more 
agnostic technology-neutral view of all the technologies that 
we are cultivating for gasoline displacement. In order to do 
that, it has sort of become the air traffic control of 
transportation platforms for education cogent standard.
    The other portion of hydrogen that was diminished are 
specifically those elements that we think are ready for prime 
time and commercialization, and eligible for the Loan Guarantee 
Program today, and that would be renewable production of 
hydrogen, principally through electrolysis. Electrolysis is not 
overly high tech; there is not a lot of value added. When 
compared to the amount of investment, we need to dedicate the 
fuel cell stacks and storage, and so we think we can still, in 
places like the Dakotas, wind power to hydrogen with 
electrolysis using loan guarantees on a commercial basis today. 
That would be a better use of the $10 billion allocation that 
we have in that area. There are some things that need to 
graduate out based on the progress that we've made. That really 
sort of addresses hydrogen. Would you like me to go on, on 
this?

                         WEATHERIZATION GRANTS

    Senator Dorgan. Well, because I want my colleagues to have 
ample time. Weatherization you zero out, and I was thinking of 
the--I forget who it was describe something as the 
``homeopathic soup made from boiling the shadow of a pigeon.''
    How do you zero out weatherization and come here and say 
this is a good approach to dealing with energy efficiency?
    Mr. Karsner. Well, we're driven precisely by the chart that 
you held up with regard to the need to address building 
technologies in the built environment. The question isn't what 
is the mission of weatherization with respect to doing that, 
but what is the efficacy and efficiency of this mechanism, this 
program in doing that?
    Weatherization grants are income-related assistance grants 
that are good and worthwhile things for the Federal Government 
to do, but, chronically, every year we have a discussion about 
not whether we should do them but where in the Federal budget 
they belong. Because competing against the Building Technology 
programs that are the ones that can satisfy the McKinsey 
metrics for 50 percent efficiency savings and that get 20-to-1 
return, these chronically fall short, being rated at about 1.5 
return on the dollars.
    All of the metrics for weatherization suggest that it 
should be competed where it belongs in income-related 
assistance programming, which is a good and worthwhile thing, 
but it is, unfortunately, lodged to compete against these 
building technologies that deal with climate change, national 
security, that require much greater leveraging.
    Senator Dorgan. But the President does not recommend it be 
over in the other area competing in his budget as I see the 
budget. So, I understand your point, but that's not what the 
President is recommending.
    Mr. Frantz, I'm going to allow my colleagues, Senator 
Domenici and Senator Craig to have a pretty good opportunity to 
talk to you, and I know they've got a lot on their minds.
    And, Dr. Orbach, I'm going to wait until a second round. I 
appreciate the work that goes on at our laboratories. Our 
laboratories are very important institutions for investment in 
the future of this country's science. And so I'll wait. But I 
appreciate your testimony, and you've raised a lot of 
interesting questions as well.
    Senator Domenici.

                            LOAN GUARANTEES

    Senator Domenici. Well, first, Mr. Chairman, thank you for 
holding this meeting, and let's hope that within the next 2 or 
3 months we will be fully aware of the facts and the funding 
that we are going to put together for the country in this bill, 
which many fail to understand is so important to the country, 
this small appropriations bill.
    First, let me talk about loan guarantees because nothing is 
more frustrating--it's not your fault, Mr. Frantz, but my good 
friend, Senator Craig, just handed me a piece of paper a little 
bit ago, and he put two dates on it, 2005 and 2011, because you 
indicated that you probably needed 2011 for the Nuclear--which 
is not your fault again. But we just looked at those two 
numbers and shook our heads.
    Six years from the passage of the bill, the General Energy 
bill first in 12 or 15 years that had a provision in it about 
loan guarantees that, frankly, I can tell you everyone on this 
committee that helped with it--two of the members here helped 
on it--he helped a lot--we thought we passed a loan guarantee 
provision in that bill, and we run it through every lawyer 
around, and we thought it was self-executed. And if you read 
it, it's clear that the full authorization for as much loan 
guarantee authority as the Secretary wanted, he could exercise. 
He didn't have to come back to Congress, and we were very 
happy. We thought even though we had then a reluctant Secretary 
of Energy--he was reluctant, he didn't think loan guarantees 
were the right thing--but let me make sure it's understood, he 
changed his mind, and he's been a strong supporter. But the 
changing of the mind took a little while.
    Then we have the Secretary of the Treasury. You remember 
that, Senator Craig. I came to you and said, ``Can you imagine? 
Now we have even a bigger bomber against us, the Secretary of 
the Treasury.'' He didn't know what he was talking about--
excuse me, Mr. Secretary, but you didn't. He thought--he didn't 
read the section of the law, he thought we were pledging the 
Federal Government's full faith in credit to these loan 
guarantees when we aren't. And he didn't read they would pay 
for themselves, and they'd pay an up-front fee equivalent to 
what the estimate risk was. That was the theme, right? And it 
was right.
    So contrary to that we had to go through this whole process 
of appropriating it, getting you hired, setting up a whole new 
operation, and it's been 6 years and we still do not--it'll be 
6 years and we might get some of the loan guarantees for 
Nuclear. They're a little different, and it's how many do you 
have? How many do you clear?
    Senator Craig. Sixteen, Senator.
    Senator Domenici. Sixteen. They're different than that, and 
they're going to be big guarantees for a project, and we 
understand that's not going to be quite as difficult as sorting 
out, because you're not going to have 50 to compete. And we've 
got seven formal applications pending, though, which is rather 
exciting for our country.
    Now, let me ask you, do you have everything you need to 
proceed with your job?
    Mr. Frantz. I do, sir, thank you.
    Senator Domenici. You're adequately funded and adequately--
the Energy Department gives you adequate authority?
    Mr. Frantz. Yes, sir, Senator. With the approval of this 
budget, I'll have sufficient resource to prosecute the----
    Senator Domenici. All right. Now let me ask you, you were 
with which department of the Federal Government doing loan 
guarantees?
    Mr. Frantz. With the Overseas Private Investment 
Corporation, sir.
    Senator Domenici. Now, doesn't it strike you strange that 
the OPIC made money on its loan guarantees using the same 
provisions that we are? They don't lose money, they make money, 
and we've got the Office, the Congressional Budget Office, 
insisting that this one is going to lose 1 percent because 
we're going to make mistakes. You didn't even know who you are, 
what--how good you are, you're just going to lose 1 percent. So 
he charges us $352 million for the whole portfolio even though 
we haven't spent a penny yet.
    Does that strike you as a little bit wrong?
    Mr. Frantz. It does, sir. As a matter of fact, I made a 
presentation, ironically enough, to the Congressional Budget 
Office on December 7, on this very subject and made the very 
point that you're making. And that is when a self-pay program 
which differentiates us from the Overseas Private Investment 
Corporation, as you're well aware, where our clients are 
actually paying this credit subsidy cost to cover our risk, 
that seems redundant, to say the very least, that this 
additional 1 percent would be levied on the projects.
    The answer, the only answer we've received, is that it's 
because it's a new program and there is the technology aspect, 
the unproven technology risk associated with them.
    Senator Domenici. Well, when you build a nuclear 
powerplant, it isn't as if somebody is toying around with new 
technology. When they invest $4 billion, they're using a 
technology that is well known, and it has passed all kinds of 
gifted overseers to make sure that it's correct, and all kinds 
of things are built into the law to make sure that this 
happens. And so it's not like a gamble. They wouldn't gamble. 
American industry wouldn't gamble on nuclear power if they 
thought it was what he thinks over there at CBO.
    Thank you very much. Let me move over to Dr. Orbach.

                          AMERICA COMPETES ACT

    Dr. Orbach, last August Congress passed the President's--
and the President signed--COMPETES, the COMPETES law. This 
proposal is consistent with the recommendations of the National 
Academy of Sciences rising above the gathering storm, and it 
directs the Department to focus greater attention on Science, 
Mathematics, Education.
    Can you tell us, specifically, how your Department is 
supporting this legislation, and how much money is provided in 
the President's request, if you know, for COMPETES legislation?
    Dr. Orbach. Well, in the educational----
    Senator Domenici. For COMPETES.
    Dr. Orbach. For the COMPETES----
    Senator Domenici. Yes.
    Dr. Orbach [continuing]. Itself, I'll have to answer that, 
for the record, our budget is responsive to the America 
COMPETES Act and actually covers the issues that were 
addressed. So I would say that our increase in the budget 
request would deal with the America COMPETES Act.
    Senator Domenici. All right.
    Dr. Orbach. In the specific area of education, we've 
increased the Workforce Development program within the Office 
of Science together with the Fellowship program that matched 
the education components of the America COMPETES Act. About 
half of them--there's a considerable opportunity there--will be 
found in our fiscal year 2009 budget request.
    Senator Domenici. So is it fair to say that this time we 
are taking the COMPETES Act seriously, and we're attempting to 
fund it?
    Dr. Orbach. Yes, sir. I believe it's an opportunity for our 
country, and we are going to be fully behind it.

             LOS ALAMOS NEUTRON SCATTERING CENTER (LANSCE)

    Senator Domenici. All right. LANSCE Refurbishment and 
MaRIE, a proposal that is built around LANSCE; Dr. Orbach, you 
and I have spoken extensively about maintaining our science 
capability at our national laboratories, both the Office of 
Science facilities and NNSA labs. I believe you share my belief 
that we need to update LANSCE at the LANSCE facility to sustain 
cutting-edge science at that lab on materials research. That's 
what it has to do with. This will have relevant science 
applications for both NNSA Weapons programs and the Office of 
Science.
    Now, why doesn't the 2009 budget request provide funding 
necessary to upgrade this excellent facility called LANSCE?
    Dr. Orbach. Well, our part of the funding that surrounds 
the operations of LANSCE works through the Lujan Neutron 
Center, and that's fully funded in the President's request.
    In addition, the Nuclear Physics program has increased its 
funding at Los Alamos to about $4 million. And, finally, we 
have invited Los Alamos to participate in the Energy Frontier 
Research Center competition, and there is a provision in there 
for materials under extreme conditions. And we think this is an 
opportunity for the whole country, but especially for Los 
Alamos in the competitive environment.

                    ENERGY FRONTIER RESEARCH CENTERS

    Senator Domenici. What are the frontiers of science that 
you spoke of?
    Dr. Orbach. The Energy Frontier Research Centers cover the 
basic science that will enable energy prospects for our country 
for the future. Very frankly, we can't get to where we want to 
go using technology that was invented in the 19th century and 
developed in the 20th century.
    The opportunities in the 21st century, as I outlined at the 
atomic molecular level, have yet to be plumbed. And those 
centers are focused on those issues, namely energy issues that 
use modern technology.
    We're talking about opportunities for photosynthesis, 
artificial photosynthesis to take solar energy and produce 
fuels. We're talking about an electrical energy storage that 
will enable the grid issue, which was brought up before, to be 
dealt with which we can't do now, but with advanced 
technologies, with nanotechnology, and multielectron transfer, 
we believe are possible.
    And other elements that I can go into----
    Senator Domenici. That's fine.
    Dr. Orbach [continuing]. Of that basis.
    Senator Domenici. So you're going to do this kind of 
advanced frontier work?
    Dr. Orbach. Absolutely.
    Senator Domenici. Thank you, Mr. Chairman. I have some 
additional questions. I'll wait or I'll submit them.

                   ETHANOL TECHNOLOGY AND PRODUCTION

    Senator Dorgan. Senator Craig?
    Senator Craig. Thank you very much, Mr. Chairman.
    Mr. Frantz, the chairman has already offered you up to 
Senator Domenici and I, so I will not miss that challenge or 
opportunity.
    Let me walk you through a scenario that's going on in 
America as we speak that would suggest to me your sense of 
urgency in dealing with some of these loan guarantees in 
Advance Technology. Last year we produced 7.8 billion gallons 
worth of ethanol, corn-based. Everybody's frustrated now by its 
potential disruption of the food chain right down to, if you 
will, tortilla shells. And the reality that America's 
agriculture will suggest that we may be planting 8 percent less 
corn this year than we did last year.
    We just have a new ethanol plant coming on in Idaho, and 
you're going to see unit trains of corn, literally, moving out 
of the Midwest to Idaho because we're not a corn-production 
State. We're largely cold weather grains and all of that, and 
yet those prices, the whole commodity market is considered by, 
at least historic values, upside down today.
    Farmers are smiling and they should, and they're profiting 
and they should. The consumer is beginning to feel it at the 
shelf in some areas.
    Having said that, last year we suggested, by law, that if 
ethanol production by 2022 can be at 36 billion gallons and yet 
we anticipate that corn-base can only take us to about 15, now 
having said that, we are already stressing out under the 
current environment at 8 to 10 billion gallons. So 15 may be a 
very real stretch unless Monsanto can bring on their GMO of 300 
bushel of corn. But that's still out there in the scientist 
eye.
    Now the environmentalists are concerned about the carbon 
footprint of corn-based ethanol and what that does in climate 
change, and it's very energy intensive, and it needs to be 
subsidized, but yet it's factoring into the price at the pump. 
Articles last week suggested that consumers were paying less 
for gas because of ethanol in the world market.
    My point is quite simple: We believe, many of us who spend 
a lot of time looking at this, that to get to the 36 billion 
gallons or near that, we've got to get to cellulosic ethanol, 
and we must get there as soon as we can. And if you were the 
consumer out there--and you are, like all of us are--buying 
$3.30 or $3.40 a gallon for gas, there is a very real sense of 
urgency, the reason I penciled for Senator Domenici the spread 
of 6 years of time of bureaucratic movement in which we sense 
no urgency whatsoever.
    Now, having said that, New York Auto Show, almost every 
automobile on the floor was a flex fuel or E85 or an electric 
car. And yet the world is not yet ready to produce that, or at 
least we had our discussion about hydrogen today, and the world 
is not yet ready to produce it in the volume that the car 
companies will need because they're about ready to bring to 
commercial value a hydrogen fuel cell car.
    Time is of the essence, and I know you talk very 
optimistically about how you've geared up to handle this. Now, 
I hope that you have running shoes on and you are bringing that 
sense of urgency into that staff.
    Now, diligence, surely. Responsibility, of course. But run 
12 hours a day, turn the lights on, don't oh-hum this and move 
it through. America is ready to become independent, and we are 
struggling to get there, and this whole committee senses that, 
and that's why we jumped in front of it in 2005, and we hit it 
again last year. And we're phenomenally frustrated when it's 
handed off downtown to a sluggish, uncertain, frustrating, and 
sometimes less-than-willing participant.
    I don't know if we can get to cellulosic. I think there are 
some commercial operations stood up, but we ought to try. And 
we ought to try and if we fail in one, there are some 
technologies out there that might lead to the front.
    Now, if you had the loan guarantees ready 2 years ago, we 
would probably have a commercial-grade stand-up operation going 
right now.
    Senator Dorgan. For which?
    Senator Craig. But we don't have that.
    Senator Dorgan. For what?
    Senator Craig. Cellulosic ethanol.
    Senator Dorgan. Cellulosic ethanol.
    Senator Craig. At least that's what we're told by the 
industries involved. I don't necessarily believe you need to 
respond to my small rant, but I hope you appreciate what we're 
sensing on the ground with the consumer, both in food and in 
energy as to their frustration today about their pocketbooks 
being stretched beyond their capability.
    Mr. Orbach, I would like to suggest that in my conversation 
with the Center for Advanced Energy Studies in Idaho this last 
week, they will be contacting you, and sensing the 
opportunities that you hold in your office and that we hold at 
the lab; and I assured them that they should anticipate and 
expect full cooperation from you, as I know that will be the 
case, and I thank you for it.
    I'm out of time, I'll come back. Thank you.
    Senator Dorgan. Senator Craig, thank you very much.
    Senator Murray?

                       PHYSICAL SCIENCES FACILITY

    Senator Murray. Thank you very much.
    Dr. Orbach, as you know well, we've had a number of 
conversations about the level of funding and various pieces of 
the budget that relate to the tri-party memorandum of 
understanding for the Physical Sciences Building being built at 
PNNL, and the 300 Area. I know you know the topic well.
    Last year's fiscal year 2008 appropriations resulted in 
about $65 million to the Department of Energy and the 
Department of Homeland Security. That wasn't an easy task 
because the Department of Homeland Security request was zero, 
and we had to work with our colleagues here to include an 
increase of $15 million for that project.
    I appreciate that the Department of Energy this year has 
requested the appropriate level of funding in the 2009 budget. 
However, the Department of Homeland Security's 2009 budget 
request is not what was assumed in that memorandum of 
understanding. Now, I have no idea what conversations have been 
between your office and Under Secretary Cohen's office, but I 
have been ensured by them that whatever additional funds I will 
be able to add to the Department of Homeland Security budget 
for 2009 will be received, enthusiastically.
    I wanted to ask you while you're in front of our committee 
today what your understanding is of the reasons why DHS didn't 
see the required funding in 2009 consistent with that MOU.
    Dr. Orbach. Senator Murray, first of all I want to thank 
you for your help in moving this critical project forward. We 
deeply appreciate it.
    To be honest with you, I don't know why DHS submitted the 
numbers that it did. It is, as you point out, $13 million less 
than the MOU requirement that we had agreed to. I have been in 
contact through my staff with Under Secretary Cohen, and your 
description is the same as mine, namely, that he is eager to 
implement the MOU. We will do everything that we can to see to 
it that that building is built on time and on schedule.
    Senator Murray. Okay. I don't know the timing for the 
fiscal year 2009 appropriations bill, but ensuring that we have 
sufficient funds for that MOU is going to be a top priority of 
mine.
    I want to ask you if I have your commitment that you will 
do what you can to assure this project as it is currently 
envisioned is going to continue on schedule regardless of when 
the funding is made available in 2009?
    Dr. Orbach. We'll do our very best to do precisely that.
    Senator Murray. Okay, I appreciate that, and we'll work 
with you to do that.

              ENVIRONMENTAL MOLECULAR SCIENCES LABORATORY

    Dr. Orbach, I'm also really pleased to see a small increase 
in funding for the Environmental Molecular Sciences Laboratory, 
and I know the lab is planning to upgrade some of their 
equipment that's now several years old. I wanted to ask you 
today what your vision is for EMSL and what kind of challenges 
you foresee in the future?
    Dr. Orbach. Well, I have two comments to make both of which 
are laudatory about EMSL. When we visited 4 years ago, we set 
them a target. We said this is over the edge. ``This is beyond 
normal, and if you can meet it, we will continue and expand our 
support of the laboratory.'' We didn't tell them what areas to 
invest in, but those two areas that they chose are now world-
leading, and Interfacial Chemistry and Subsurface 
Biogeochemistry, if you say that phrase, people think EMSL. And 
it's really wonderful.
    The opening of the new facility, jointly with Washington 
State University, is again a statement of how successful EMSL 
has been and how it now will have an educational component as 
well.

                  SCIENCES LABORATORIES INFRASTRUCTURE

    With regard to the future, and in particular the 
infrastructure issue that you raised, this is, unfortunately, 
true not just of PNNL but of all of our laboratories. And you 
will see an increase in what we call our SLI component, our 
infrastructure component in the President's request. And I can 
tell you that over the next 5 to 10 years you will see that 
component increasing substantially as we attempt to address 
these needs.
    I met yesterday with all 10 of the laboratory directors of 
the Office of Science, and to a person they spoke of the need 
for infrastructure support. And you will see substantial 
numbers increases as a consequence in our budget proposals.
    Senator Murray. Very good, I appreciate that.
    Mr. Karsner, I also wanted to ask you about the budget 
request for a small investment in Water Power to study the 
potential of marine, ocean, and wave energy. As you know, the 
2007 Energy bill explicitly authorizes R&D for marine and 
hydrokinetic technologies--can you tell me a little bit about 
what your goal is for that research, including ocean and wave 
energies?
    Mr. Karsner. Yes, Senator. I'm actually quite excited about 
the introduction of that budgetary item as part of our request, 
along with the geothermal--reinvention of the Geothermal 
Program. It demonstrates what I'd like to think of as portfolio 
agility as new technologies evolve.
    Obviously, in the early years, it is standing up the 
correct programmatic organizational piece that would be 
disproportionate than what we would predict for subsequent 
years. But we have specific statutory requirements as well that 
need to be addressed in terms of soliciting for Marine Energy 
Center partnerships around the countries. So finding out where 
the best skills lie in universities and laboratories, in 
businesses and product manufacturers around the country, we are 
not long for putting out a solicitation for that purpose in the 
very near future.
    As well, we intend to facilitate some of the existing 
technologies that we know have evolved during the period of 
time that the Department has been engaged in this activity. So 
thanks for run-of-the-river hydro, buoys off the west coast of 
Washington and Oregon, in Hawaii, other places, and we also see 
an international component to this. There are other nations 
that have been engaged in this activity, principally in the 
United Kingdom and Scotland, in Spain, in China, where we want 
to sort of galvanize what the best of has been out and around 
the world.
    We have our work cut out for us to catalyze something new. 
There's a hardware component to it--an organizational component 
to it.
    Senator Murray. Okay. Well, you may know that the DOE's 
only Marine Science Lab is located on the Olympic peninsula in 
my home State.
    Mr. Karsner. I hope to visit there soon.
    Senator Murray. And we'd love to have you come out and see 
it.
    Mr. Karsner. Yes, and I'm going to.
    Senator Murray. I think you'd be really excited about it 
and some of the opportunities there.
    Mr. Karsner. Sure.
    Senator Murray. And while you're out--my time is short--I'd 
love to have you stop by the Bioproduct Science and Engineering 
Lab at WSU and see that great public partnership there that's 
working on some biofuel and bioproduct.
    Mr. Karsner. My intention is to visit PNNL on May 8. 
Hopefully, I can work with your office in collaborating on it.
    Senator Murray. We'd love to work with you on that. 
Fantastic. Thank you very much.
    Senator Dorgan. Senator Allard?

                          ENERGY TRANSMISSION

    Senator Allard. Thank you, Mr. Chairman, and Mr. Karsner. 
It's good to see you with us this morning. I'm real proud of 
the work that's being done on Colorado Renewable Energy.
    I'm going to focus on another tangential area which I think 
is important when we look at the total energy picture. One is 
transmission. You know, particularly, in rural areas 
transmission is an issue where you're having electricity travel 
over a certain period of time. There's not only access to 
getting transmission lines, but I think there's some efficiency 
issues that come out.
    What are we doing to develop some technology where, when 
you move your electrical current over a long period of time, 
you don't lose a lot of the electrons in the transmission 
process? And what are you doing in that particular area?
    Mr. Karsner. Thank you, Senator, and thank you for your 
leadership, both in terms of the Colorado Caucus and hosting 
NREL and the Renewable Caucus here up on the Hill. Let me say 
that the principal responsibility for the questions that you've 
asked reside in my colleague Kevin Kolevar's office, the Office 
of Electricity which at one point was part of our office, but 
has, because of the growing role----
    Senator Allard. Yes.
    Mr. Karsner [continuing]. Of the issues that you just 
addressed has stood up admirably, an excellent program for both 
emergency response and grid integration issues.
    On the latter, grid integration and integrating the new 
technologies to meet the intrinsic characteristics of renewable 
technologies, Kevin and I have worked very closely. In fact, we 
jointly program a great deal, and much of that is reflected in 
the budget. He talks about long distance DC lines and available 
technology that need citing, permitting, the transmission 
corridor authority that he's exercising, and also 
superconductivity. I don't want to go----

                           SUPERCONDUCTIVITY

    Senator Allard. I do want to get into the superconductivity 
at this time. I understand those other problems, and what are 
you doing in that area?
    Mr. Karsner. And as I was just about to say, that 
superconductivity is an area where I can't go too far in, 
because that really is Kevin's portfolio.
    Senator Allard. I see.
    Mr. Karsner. But I just would like to add, because of 
NREL's role, because of the new Energy Systems Integration 
facility that we're building, that the Office of Electricity 
will have a role in, that the transmission technologies that 
are evolving through Kevin's portfolio, and the deployment of 
those technologies that David's portfolio are taking care of, 
are indispensable to the growth of renewable technologies on 
the trajectories that our office plans.
    Senator Allard. Okay. Yes, Mr. Orbach?
    Dr. Orbach. Senator Allard, I would like to comment on the 
Superconductivity, directly----
    Senator Allard. Okay.
    Dr. Orbach. Because the Office of Science works very 
closely with Assistant Secretary Kolevar's program on 
electrical transmission. This is an example of where the 
applied program through Kevin Kolevar's program and the basic 
research work very closely together. And you will find in the 
budget a coordinated program for this effort.
    We are using nanotechnology and other methods to increase 
the current carrying capacity at temperatures for high-
temperature superconductors that would allow us to use liquid 
nitrogen cooling rather than having to go down to helium. This 
is a tremendous advance and a power line in the State of New 
York in Albany has already been put into place to demonstrate 
that you can, over reasonably short distances, conduct 
electricity without loss----
    Senator Allard. That's interesting.
    Dr. Orbach [continuing]. Using high TC.
    Senator Allard. I knew with high--with very cold 
temperatures you could do that. This is high temperatures using 
nitrogen.
    Dr. Orbach. Precisely, and that's what we've been working 
on very closely, and that's a perfect example of the 
interaction between basic science and the applied programs 
where we would call it use-inspired research.
    Senator Allard. Yes.
    Dr. Orbach. And because of the new, as I referred to in my 
opening comments, the new capabilities that we have in the 21st 
century, we have made substantial progress.

                        ELECTRIC ENERGY STORAGE

    Senator Allard. Thank you for your comments. The other area 
that's sort of tangential to all the energy development is 
storage. And, of course, though, when you talked about solar or 
wind, it's intermittent to some degree. In Colorado we happen 
to have plenty of both, so maybe it's not as much of a problem 
as it is in some States. But again, storage, I think, is an 
important issue.
    What are you doing on storage technology? I'd like to hear 
some of your comments on that. Yes?
    Dr. Orbach. Could I respond to that? The problem that we 
have currently with storage is that our batteries are no 
different than they were in the 19th century.
    Senator Allard. Yes, you have to think beyond just a 
traditional battery.
    Dr. Orbach. Precisely.
    Senator Allard. Yes.
    Dr. Orbach. And there are two developments that are taking 
place right now that we have great expectations for, but 
they're difficult.
    Senator Allard. Uh-huh.
    Dr. Orbach. The first is to take the battery, which 
currently takes one electron and transfers it, and do two-
electron transfer--actually up to four-electron transfer. That 
would increase the capacity of storage by factors of two to 
four.
    Senator Allard. Uh-huh.
    Dr. Orbach. That's what nature does.
    Senator Allard. Are you changing the materials
    or----
    Dr. Orbach. Oh, yes. We'll be going to vanadium compounds, 
for example.
    Senator Allard. Uh-huh.
    Dr. Orbach. People have even talked about six-electron 
storage.
    Senator Allard. Uh-huh.
    Dr. Orbach. We're looking at these new materials to see 
which would be most efficient, but there's another area that's 
also developing, and if you ever built a radio, you remember 
the electrolytic capacitors back when I was growing up. They 
had microfarads of capacity.
    We now, in the same volume, can store farads--a million 
times more electrical charge--and this is because, again, the 
new technologies that are being developed for nanoparticles, 
the very, very tiny spaces between the electrodes. So it's very 
possible that supercapacitors, which is what we call them, may 
well be an efficient energy storage device.
    Senator Allard. I'd--go ahead.
    Mr. Karsner. I was just going to comment from the applied 
perspective.
    Senator Allard. Sure.
    Mr. Karsner. Ray, Kevin, and myself, in fact, work very 
closely on storage because we all see it as a priority to 
enabling the growth of the technology solutions. So in our 
context it's both transportation and generation. We are moving 
on a much more wholesale basis on the generation side from 
multiple storage solutions that we had not previously invested 
in, like compressed air, molten salt for concentrated solar 
power, grid-based battery storage, electrolysis to hydrogen, 
viewing our hydrogen not just as a source but as a carrier and, 
of course, trying to optimize the best storage that's already 
available out there, which is natural gas turbines that we 
begin to alleviate the gas dependency in already existing 
hardware.
    Senator Allard. Yes, I like the idea of the hydrogen.

                           CELLULOSIC ETHANOL

    Mr. Chairman, I have one comment I want to make. I know my 
time has run out.
    I visited a company in Colorado--they're a research 
company--call Range Fuels, and this is for Senator Craig.
    They actually have developed a very ready-to-go on the 
product, cellulosic source of ethanol. And the by-product they 
bring back into the equipment and itself--they don't have to 
rely on energy itself, it can stand alone--and they're using 
wood chips and converting it to product, a combination of 
alcohols: ethyl, methyl, propo, butanol.
    Then, obviously, there's a way of, you know, separating out 
those different alcohols. So they're ready to go, they tell me, 
but they need more wood than what Colorado can provide, and so 
they're going ahead to Georgia or Southern States where they 
have more wood and shorter growths time as far as the forests 
and what not are concerned.
    So that's good news, and they did it with, I believe, a 
grant from your Energy Department in doing that, and they tell 
me they're ready to go to market.
    Mr. Karsner. In fact yesterday, it was announced in The 
Wall Street Journal that that group was the first to close of 
the six contracts related to the section 932 cellulosic 
facilities. They closed $150 million in private funding against 
the $76 million grant that we provided through the sector 
capital. So it is a success story, particularly in the current 
investment environment that cellulosic ethanol companies that 
are just breaking ground of this initial six are still able to 
track enormous private sector capital.
    Senator Allard. Thank you, that's good to hear.

                              ITER PROJECT

    Senator Dorgan. Dr. Orbach, a quick question about the 
Fusion Energy Sciences Program. Tell me, how close are we to 
some unbelievably exciting breakthroughs in that area?
    Dr. Orbach. Mr. Chairman----
    Senator Allard. Unbelievable.
    Dr. Orbach.--I hope we're very close. We are, together with 
six other parties representing half of the world's population, 
prepared to put our money on the table to build an experimental 
reactor called ITER. And the reason we can do that now and 
could not do that before is our computational facilities have 
now shown that there's a good chance that we can keep that 
plasma continued and operating for significant periods of time.
    This is the most important thing that I think the world 
addresses because we're starting construction within 8 years. 
The construction will be finished, we hope, within 5 to 10 
years. It will meet its target of producing 10 times as much 
energy as it goes into the machine itself.
    I think we're closer, so close that it's so exciting the 
opportunities that fusion brings if either is successful, will 
then generate a demonstration powerplant. And my guess is 
that's somewhere between 20 and 30 years away. So we're not 
talking 50, we're not talking in abstract terms; we're talking 
about leapfrogging the technology from ITER to a demonstration 
power plant.
    ITER itself is half a gigawatt. It's not a small machine, 
and we have every expectation that it will work and work well, 
and we're working very hard on the basic science to make sure 
that it does work.
    Senator Dorgan. The President's recommending close to a 
half a million dollar--half a billion dollars in this coming 
fiscal year, $493 million.
    You talk about the other countries involves. What kinds of 
contribution exists from other countries?
    Dr. Orbach. We have fallen behind an order of magnitude. 
Europe is at the same level we are or higher, and Japan is also 
at the same level or higher. But you have to also now count 
China and India, which are making major investments in fusion.
    In fact, the world's first superconducting tokamak is 
called East in Hefei, China. It's, believe it or not, our 
design, which we never developed. But it is now operating. They 
are putting major efforts into fusion research.
    Senator Dorgan. Do my other colleagues have questions? One 
last one, go ahead, Senator Domenici?
    Senator Domenici. Let Senator Craig, go ahead.

                       IDAHO NATIONAL LABORATORY

    Senator Dorgan. Senator Craig, go ahead.
    Senator Craig. Mr. Karsner, I did not have an opportunity 
to visit with you. In combination with the work that you're 
doing and the work that we have done and are currently involved 
in at Idaho and I'm talking about--we've already talked about 
hydrogen, hydrogen fuel cells, advanced vehicles in that sense, 
both the hybrids and the electrics. We've done a good deal of 
that work out at the lab, and the testing team continues to 
provide this function for present and future vehicle testing.
    I would hope that, you know, where we partner that there's 
a relationship there that makes sense between what you do and 
what they do, and, you know, I know there is this desire that, 
oh, that's that technology. We will reach out and grab it and 
pull it in, and sometimes that effort isn't as productive as it 
relates to how you effectively utilize resources as it is to 
team and to partner.
    We've, you know, when all of us sit here and look at our 
phenomenal lab facilities nationwide and sort out the resources 
as it relates to these labs, we recognize levels of expertise 
and talent, and know that that's where it ought to be versus 
going somewhere else.
    Can you respond to that? What is your vision for the 
vehicle testing program, and what future do you see in the 
relationship that you would have with the INL and its role?
    Mr. Karsner. Well, yes Senator, and I would say I don't 
want to limit my comments to just vehicle testing, because you 
may or may not know that Idaho National Lab was the 
instrumental lab working together with NREL last year in 
resolving the FAA, Department of Defense radar challenges that 
we face.
    Senator Craig. Yes
    Mr. Karsner. It almost closed down the wind industry, and 
the difference between the work that was done, the 
collaborative work between INL and NREL had it not occurred, 
had we not had that collaboration from that expertise located 
at the Idaho National Lab, we would not have been the world 
leader in wind energy last year. Arguably we would have had a 
fraction of the projects come on line.
    What that tells us is exactly what you're suggesting, is 
that there are repositories of good work all around the 
laboratory system, and it has been my philosophy that even 
though I have responsibility exclusively for an applied lab, 
working together with Ray and the Office of Science, we want to 
maximize the available talent spread across all of these 
laboratories. That inspires our visits to Lawrence Livermore 
where they have 50 years of experience on radioactive diffusion 
of particles, so the best wind assessment data available 
globally that can inform the way that we grow that industry: 
Idaho on vehicles and battery technology, and wind, as I 
suggested has been indispensable. Sandia has a very old 
relationship with us and is a leader on the solar technologies 
and high performance computing. We are doing generalized lab 
calls that are new to us to say, what do you have out there? 
Who are we underperforming the opportunity to engage? That's 
the way we approach these labs as national assets.
    Senator Dorgan. Senator Domenici?
    Senator Domenici. Thank you, Mr. Chair--Senator Craig are 
you finished?
    Senator Craig. Thank you, I----
    Senator Dorgan [continuing]. You at the end of the answer 
there, I think.

                              WIND ENERGY

    Senator Craig. No, no. No. No, it's what I wanted to hear 
because I think that we sense that, and we hope that those 
relationships continue, then, and the wind issue, yes, I'm 
familiar with what went on out there. I think it was Gary 
Siefer?
    Mr. Karsner. That's right.
    Senator Craig. That did the work. The Air Force might have 
stopped wind development otherwise. I mean there was that 
problem that got worked out, and he deserves a lot of credit 
for it.
    Mr. Karsner. Absolute credit for Gary. And bear in mind 
because that was a high security lab, we had all those people 
that can contribute had top-level to Q clearances that could 
engage the long-range missile radar that folks in my laboratory 
couldn't.
    Senator Craig. Yes.
    Mr. Karsner. And so it was just a very important 
collaboration we intend to----
    Senator Domenici. Thank you. Thank you very much.
    First, Mr. Karsner, I wanted to say that I suspected when 
we had you before us not too long ago for your hearings on 
whether we should send you to the Senate after the President 
had sent you up here, I was convinced that there was no way to 
contain your enthusiasm, and that if we gave you enough to do, 
you would be enthusiastic every day of the week, and if you 
could invent an extra day you'd use that, too. And I have come 
to believe that that analysis that I made when I said we should 
hurry up and get you there was right.
    Mr. Karsner. Thank you, sir.
    Senator Domenici. And I commend you for the exceptional 
work, and you also work--if you remember, you were very willing 
to say it--you were going to get something done even if we only 
had 2\1/2\ years.
    Mr. Karsner. Yes, sir.
    Senator Domenici. Because no one expects you to stay on if 
a Democrat was elected president. We'll just have to see how 
that all works out. If it works out otherwise, you can rest 
assured we'll be recommending that you stay longer, if that's 
what you'd like.
    Mr. Karsner. Thank you, sir.
    Senator Domenici. In any event----
    Mr. Karsner. My family has other plans for me.
    Senator Domenici. I--specific questions. Did you want to 
comment? Am I wrong about your----
    Mr. Karsner. Thank you for that kind compliment, and I 
would say to you and Senator Dorgan, we've enjoyed so much 
support from your committee, the authorizers and the 
appropriators, that it has made our job easier to work on a 
bipartisan basis and get things done.
    Senator Domenici. I think the real problem we have is that 
so much is going on the poor American people don't believe us 
and don't know what's going on because to get from where we are 
to where we're going to be, it's not going to be a one-way 
path.
    Mr. Karsner. That's right.
    Senator Domenici. And it's paths all over the place things 
are going on. Our money, private money is being invested all 
over with all kinds of people excited, and the public can't 
discern that. A breakthrough is going to be made in one or two 
of these areas and it makes things a lot easier to get where we 
have to go.
    Who knows which ones it's going to be? It might be the one 
you and Dr. Orbach spoke about on capacitors, on storage. That 
may be one of the big ones, if we break it. But it seems to 
have difficulties. I hope you're right, both of you, that 
you're going to make some movement.

                    FEDERAL PROCUREMENT REGULATIONS

    But I'm going to ask you about a New Mexico problem. Part 
of your responsibility problem includes increasing the Federal 
Government's usage of renewable energy, and I've been made 
aware of a Federal Procurement Rule that prevents an air base 
in Albuquerque from signing a long-term power purchase 
agreement beyond 10 years.
    We have a site in New Mexico located between a major piece 
of property called Mesa del Sole and Kirtland Air Force Base. 
It has been identified as an ideal site for 100 megawatt 
concentrating power plant with a molten salt storage reservoir. 
However, procurement rules prevent the base from entering into 
the contract beyond 10 years. That's short of the useful life 
of the plant, which has a big impact on the economics of this 
transaction agreement--potential agreement.
    Do you believe these procurement limitations are having an 
impact on the deployment of Clean Energy Technology, and if 
Congress were to change the requirement to allow Federal 
agencies to enter into a longer term power contracts, do you 
believe this would have a positive impact on commercial 
development of renewables?
    Mr. Karsner. Yes, sir. The answer is, unequivocally, yes it 
would have an impact, and I would go further and say nothing 
would have a greater impact to the Federal Government's role as 
an early adopter moving markets than to change the rules that 
enable life-cycle, cost-effective long-term procurement. It is 
a foolish limitation that is put upon ourselves to not be able 
to buy things cheaper.
    An air base down in Texas buys renewable energy credits 
because it has to when it is surrounded by the cheapest source 
of wind energy available that those wind developers would like 
to sell to the Air Force direct. But they can't sell it 
directed 2\1/2\ cents because of the limitation in long-term 
contracting, so they have to sell it to them as renewable 
energy credits for 15 cents. So we lose twice. We fail to 
stimulate the market, and we charge the taxpayer more for it. 
Nothing could be greater than long-term contracts; and without 
it none of the dams across the West would have ever been built. 
Life-cycle benefits of clean energy can't be realized if we 
can't give 20 and 30-year contracts.
    Senator Domenici. Well, maybe we have to look into that and 
seek your assistance with where we'll put it.
    Mr. Karsner. We'd be pleased.
    Senator Dorgan. Senator Domenici, might I interrupt for 
just a moment, as I want to understand this. I fully agree with 
you and with the intent of Senator Domenici's question.
    But what would prevent, in the absence of a long-term 
contract, a wind developer from Texas providing power at 2\1/2\ 
cents to the air base in Texas. I don't understand what would 
prevent them doing that.
    Mr. Karsner. They do it, indirectly.
    Senator Dorgan. But at 15 cents, what would prevent them 
from doing it, directly, at 2\1/2\?
    Mr. Karsner. Because what the power developer is seeking is 
that long-term contract----
    Senator Dorgan. I understand what they're seeking.
    Mr. Karsner [continuing]. So if the base can't provide it, 
they sell it to the utility. So the utility gets the 2\1/2\ 
cent power, and the obligation then for the military to buy it 
is achieved through the sale of the attributes of the power, 
which is an independent market, the RECs, the Renewable Energy 
Credit.
    Instead of buying the power, they're buying the attributes, 
the green attributes of the power. But it's driven by the fact 
that, ultimately, the developer needs a long-term contract from 
somebody. So the question is; is the Government allowed to be 
that somebody, in its own interest. They will get it from 
somebody. They will get it from a utility, or they won't show 
up.
    Senator Dorgan. But I was trying to understand the point. 
Texas has the largest reservoir of wind power in the country.
    Mr. Karsner. Right.
    Senator Dorgan. That wind power already exists. And I'm not 
talking about what's potentially----
    Mr. Karsner. But the base has to buy it, not wholesale, not 
direct from the supplier, but retail, indirect, from the 
utility.
    Senator Dorgan. There's nothing that prevents them from 
buying it direct except----
    Mr. Karsner. The inability to get the long-term contract.
    Senator Dorgan. But what prevents them from buying another 
short-term contract, year to year buying it direct?
    Mr. Karsner. A private developer won't have--that would put 
them in a merchant power situation where they're selling on the 
spot market their electrons. They need one big long-term, 
stable offtake agreement to pay for that new facility and to 
fund the project without it----
    Senator Dorgan. You're talking about new facilities. I'm 
talking about the largest reservoir of wind power in America 
that's already built. So we'll talk about that later. I'm just 
trying to understand.
    Mr. Karsner. We'd be pleased to engage on this issue.
    Senator Dorgan. I don't disagree on the central point that 
you're making----
    Mr. Karsner. Yes.
    Senator Dorgan [continuing]. But I don't understand another 
piece of that.
    Mr. Karsner. Okay.
    Senator Domenici. Okay. Well, we'll have to work on it 
because we've got to get agreement if we're going to get this 
change.
    Mr. Karsner. I'm enthusiastic about that one as a renewable 
energy developer.
    Senator Domenici. All right.
    Mr. Karsner. So we'd definitely be pleased to provide any 
technical bipartisan direct----

                         CLIMATE CHANGE MODELS

    Senator Domenici. Dr. Orbach, 2 weeks ago I traveled to New 
Mexico with Senator Bennett for a tour of the NNSA 
laboratories. During the tour we received briefings on the 
status of various climate models and challenges facing the 
scientist to develop an accurate predictive capability.
    While your budget seeks modest increases in funding for 
climate modeling, it is unclear what your specific goals and 
priorities are for this program. Does the Department or the 
Federal Government have a roadmap for identifying and solving 
data gaps and modeling limitations, and what is the Department 
of Energy's role in solving these complex problems?
    Dr. Orbach. This is a very serious issue that we take 
particular interest in. There is an increase, as you noted, in 
our budget for Climate Modeling. Last week we held a measure 
workshop on precisely this question. It was joint with the NOA 
from Commerce, the two agencies that are most active in the 
Climate Change Science Program. And it's through that program 
that the Office of Science contributes.
    We believe that the new computational capabilities, some of 
which you visited, will give us opportunities for long-term 
climate change prediction that we've never had before. And so 
the purpose of this workshop was to lay out advice to us on 
where to invest our funding: how much we should invest in 
Measurements and how much we should invest in Modeling.
    The results of that workshop are just becoming clear, and 
we're very excited about the prospect for U.S. leadership in 
this area.
    Senator Domenici. Thank you very much.

                        SOLAR ENERGY TECHNOLOGY

    Mr. Karsner, on Solar Power, recently Sandia Laboratory 
announced a world record for solar to energy conversion. On 
January 31, 2008, a sterling concentrating solar array located 
at Sandia Thermal Test Facility achieved a world record of 
31.25 net efficiency rate.
    Despite the promising performance, your budget maintains a 
wide disparity between funding for Photovoltaic research, $137 
million, and Concentrating Solar research (CSP), $19 million. 
Based on the economics and technology performance with 
concentrating solar, a wide, large disparity, or is there--am I 
missing something?
    Mr. Karsner. No, sir, you're not. It's actually the CSP 
that has come back from almost nothing. Concentrated Solar 
Power a few years ago before I was confirmed was actually 
knocked by the National Academy of Science and others that 
wasn't viable at all.
    I think that their views on that have evolved, largely with 
the engagement of our office and much credit to Sam Baldwin, my 
chief technology officer, so we robustly funded it again, 
organizationally, to start it out and get the ball in motion. 
Because of some of the down selects last year and a greater 
focus on precisely the technology you were talking about, 
molten sodium, molten salt storage, it's a little lower this 
year than it was last year.
    To be clear, I view the potential for concentrated solar 
power to be at par with wind power in this country if we can 
begin to iron out intermittency with improved storage 
capacities. And these new records that we are setting in that 
are proof of that.
    Senator Domenici. What happened is exactly what you said. 
They had this capacity 20 years ago when we had the first solar 
energy push followed by the dramatic drop in oil prices down to 
$8 again, and everybody went out of business. And up there at 
Sandia was this gigantic array thought to be worthless. But 
you're saying it's not worthless.
    Mr. Karsner. Not only that, I'm saying to your previous 
question, if we had 20- and 30-year Federal contracting 
authority through my Federal Energy Management Program, to 
bring the bases into compliance, to bring Federal assets into 
compliance with the EISA law, if we had that tool, you would 
see an explosion of concentrated solar projects in the country.

                       NANOSCALE SCIENCE RESEARCH

    Senator Domenici. And my last one to you has to do with 
nanotechnology, Dr. Orbach. And the Department now has all the 
National Nanotechnology Centers in operation. And each center 
has more applications than they financially support. This 
leaves many important research projects without funding and you 
hear that, we hear that, it's a reality.
    Your budget request provides $20 million in operational 
funding for each center, roughly the same level for the last 2 
years.
    Now, I, myself, understand your limitations. You can't get 
around the fact that when the Federal Government's balancing 
the whole budget and talking about that to the people, and 
they're taking it all out of domestic discretionary spending, 
we don't have enough money to spend even for exciting things. 
And that's got to stop one of these days when we'll be down to 
zero, and then maybe we'll stop cutting it.
    But, in any event, these Nano Center centers have great, 
great potential, and five of them you have in the country. They 
have to have money, and I'm just wondering, is $20 million the 
right number for 2 years in a row for such an evolving, 
explosive kind of R&D? And they need to work with the private 
sector. Each one of them has to go out there and find people 
that work in the same area that put up money for the 
development. That has to happen, right? At each center and 
universities.
    But can they do it with $20 million?
    Dr. Orbach. So far we believe they can. Last year's budget 
was severe, and we were unable to fully fund those operations. 
This year we restored the operations to what we believe is the 
optimum level.
    But you are quite right. These centers are achieving 
performance targets that we did not expect them to achieve in 3 
to 4 years, and so as their needs increase we will support 
them. It's a truly remarkable opportunity for the country. And, 
to be honest with you, we had no--we had some idea, but we were 
delighted at the developments that have taken place, especially 
at CINT.
    Senator Domenici. Let me close by just telling you and Mr. 
Karsner, both, when you have an opportunity to go visit a Nano 
Center, or have an opportunity to go visit a Micro-Engine 
Management Center like they have at Sandia at Mason, and you 
see the development of little things, that's the real push: the 
development of little things.
    And this doesn't mean ``little'' like this, so little that 
you have to work under a microscope, you can't see the machines 
you were operating. They're so small, and you put them on a pad 
just like you do now for computers and you see what they're 
going to do in the future; you just wish that you were 21 
instead of my terrible vintage of 75, because it's so exciting.
    And the nano is just coming to meet up with the micro. 
They're matching up, and I just think you don't want to drop 
the ball on the five centers that are fortunate to have this 
nanotechnology at their disposal. And if they need $25 or $30 
or $40 million, to me it's the best money we could spend.
    I thank you, and thank you for listening to me so much 
today.
    Mr. Karsner. Thank you, sir.
    Senator Domenici. I appreciate it.

                    FEDERAL PROCUREMENT REGULATIONS

    Senator Dorgan. Senator Domenici, thank you very much.
    Let me come back to the point I was trying to make, because 
I think we were talking past each other, Secretary Karsner, on 
the issue of wind energy. You're talking about the incentives 
to develop new wind energy.
    Mr. Karsner. Correct.
    Senator Dorgan. I'm talking about an air base that's paying 
15 cents a kilowatt hour for energy that exists. We have two 
air bases in North Dakota that are buying wind power. I set 
that up. There are no long-term contracts. The two wind 
turbines that provide that power for the Grand Forks and the 
Minot base, two wind turbines each, are owned by Rural Electric 
Co-ops. They then resell to the base, and that puts some money 
in the budget for the base to buy green power.
    But, look, I'd agree with the central point that Senator 
Domenici was making and you're making about long-term 
contracts. I want to ask you about something else.

                             ALGAE RESEARCH

    Two weeks ago I was in Phoenix, Arizona, and I toured an 
area where they are taking carbon off of a coal plant and using 
it to invest in algae. Now, algae is single-cell pond scum. It 
grows in waste water, and it grows by CO2 and 
sunlight.
    And we stopped funding algae research about 15 years ago. 
Last year for the first time I think we put some algae research 
money in, but this particular application is really interesting 
because when you get rid of the CO2 by feeding pond 
scum, you create this algae. The algae increases its bulk in 
hours, and then you harvest it for diesel fuel.
    And the diesel fuel from algae, for an equivalent amount of 
corn-based ethanol, for example, and equivalent amount of 
acreage, algae will produce roughly 10 times the diesel fuel 
that corn-based ethanol will produce for an equivalent amount. 
And so you have the capability of consuming CO2--
which is a terrific thing because we need to be able to use our 
coal plants--by feeding it to algae, growing the algae, and 
harvesting the algae for diesel fuel.
    Now, there are a couple of projects around the country that 
I'm very interested in. The one in Arizona is a very big 
project, and they're not doing it in algae ponds, they're doing 
it in long greenhouse.
    And so my question is, are you looking at that under 
renewable fuels? Because this is a renewable fuel when you can 
harvest the algae, and it's up to 10 times more capable of 
production than, for example, corn-based ethanol. Are you 
looking at that?
    Mr. Karsner. Yes, sir, we are looking at that. We just 
started looking at that, you're right. All of this has been in 
hibernation for quite some time while oil prices were low, and 
we're working, inaugurating work, with folks out of Sandia and 
Los Alamos. NREL has engaged Chevron on that subject. I'm aware 
of the project you're talking about. It's really two separate 
topics that require work. And Ray is aware of this, the push 
for carbon utilization as much as sequestration, as a pathway 
for dealing with climate change solutions, but also, obviously, 
the benefit of using algae and other microorganisms for 
advanced fuels that go beyond ethanol alone. So both of those 
areas are of keen interest to us.
    Senator Dorgan. The Texas company that told me about the 
process they have developed--and this is not renewable energy, 
this goes more to carbon capture--and I know this is fossil 
energy--but they are apparently treating the flue gas 
chemically and producing chloride, hydrogen, and the equivalent 
of baking soda. And the baking soda contains and captures the 
CO2, and then they just landfill the baking soda.
    Dr. Orbach, you're waving your head yes?
    Dr. Orbach. Yes, that's correct.
    Senator Dorgan. Do you agree with that?
    Dr. Orbach. There are two different ways of handling it. 
One is the way you just described it, which is chemically. 
Another is with the IGCC, the integrated plan where you 
actually separate out the CO2 before combustion. 
Both of those now are becoming, you know, within factors of 20 
percent, 30 percent, the same cost as normal coal-fired 
powerplant.
    So those technologies are moving rapidly, and I can assure 
you that fossil energy, the Office of Science and EERE work 
very closely together in developing those parameters.
    Senator Dorgan. I hope. And I hope that's the case because, 
50 percent of this electricity comes from coal. We're going to 
have to continue to use coal. The question is not whether, it's 
how, and we've got to find a way to capture and use, or 
sequester, or contain.
    In June, we're going to have a climate change debate on the 
floor of the Senate. It's going to be a big debate. The 
question is: are the targets of that bill going to meet the 
capability, technologically, for us to deal with CO2 
and to be able to continue to use coal? And much of that is 
going to come, I think, from the basis of scientific inquiry 
and from the work in the case of algae. It would be a terrific 
thing if we could convert CO2 that we don't want 
entering the atmosphere into a superfuel. It represents the 
best of all choices, it seems to me.

                         WEATHERIZATION PROGRAM

    Now, one other point I want to make. I think that we have 
not done a very good job on solar. The fact is, there have been 
some technology changes in the last 20 years. I understand that 
the solar plates are still solar plates, but there have been 
some advances in solar capability, and I think both from a tax 
incentive standpoint and in other areas, our country has not 
done well with solar. We need to do much, much better, and I 
hope we can continue to talk about that.
    And, finally, Mr. Karsner, you seemed not to be very 
disappointed about a proposal to cut your funding by about half 
a billion dollars. We're hoping to make you happier than you 
might want to let on.
    Mr. Karsner. Can I speak to that, sir?
    Senator Dorgan. Yes, of course.
    Mr. Karsner. Because--and it's considered bad form to not--
to speak to something and I wasn't directly asked, but this is 
my last hearing in front of this committee, and most of that 
cut is about the Weatherization Program.
    Senator Dorgan. About half of it.
    Mr. Karsner. And so I wanted--but the largest chunk is 
weatherization.
    Senator Dorgan. That's true.
    Mr. Karsner. Most of my mission today is making my 
successor more successful than I was. This issue is chronic, 
and we will work with anybody in this town, any administration 
or in Congress, to rationalize where income-related 
weatherization assistance can best be placed. It's something 
that is worthwhile and good, and I believe that the people that 
deserve that money ought to get it.
    But 30 years into this, we have delivered 5\1/2\ million 
homes with an annual need of 27 million people. So we are 
underperforming that mission. Then, at the same time, we're 
underperforming the mission of the McKinsey Study that you held 
up by not enabling greater investment in the building 
technologies that can seriously transform the built-
environment. We have got to separate the assistance programs 
from the technology programs and be able to serve them both. 
That is our mission this year.
    Senator Dorgan. But the key is to serve them both, and the 
zeroing out here and not adding it elsewhere means that we're 
missing a part. And so that was my point.
    I don't put on your shoulders the zeroing out of 
weatherization assistance. I don't assume that you recommended 
that, but--and it is about half of the reduction--I do think, 
however, that the reduction in the Hydrogen Technology, and for 
all the reasons you have described, I still think it is not 
justifiable.
    I think, if we're going to really make progress looking out 
15 and 25 and 40 years from now about what we want to have our 
grandchildren drive--in my judgment hydrogen fuel cell 
vehicles--I think we really need to put our shoulder to the 
wheel and fund these projects. The same with solar and other 
things.
    So I agree with Senator Domenici, I like your spirit and 
your passion, and, you know, I wish you had the resources in 
your President's budget to match your passion. But we'll 
probably see if we can help a little bit on that this year.

                      LONG-TERM INVESTMENT FUNDING

    I do want to make one final point, because Senator Domenici 
was chairman of the Budget Committee for so long, and he made 
the point that we've got to make sense of all this. We 
understand that there has to be some belt-tightening, but it's 
also important the things that really invest in this country's 
future, really invest in a big way and pay dividends such as 
trying to fix this energy situation. Failure to invest also can 
cost you a lot of money.
    Now, we have a big fiscal policy problem. People say the 
deficit this year is $400 billion in the President's proposal. 
It's not. We're going to end up borrowing $800 billion this 
year on the fiscal policy side, and $800 billion red ink, and 
then Trade side $800 billion. That's $1.6 trillion on a $14 
trillion economy. There isn't anybody that looks at that from 
around the world and says that that's an economy on track.
    So I understand the challenge. We've got to find a way to 
deal with all of this. My hope remains, however, that the 
allocation this subcommittee gets is an allocation that 
understands the difference between spending and investing. And 
there's a very big difference: Investments bring dividends, 
dividends that will accomplish a better future for this 
country. And I think if we understand that as we allocate 
funding in the appropriations process, the investments in 
energy, the investments of basic science, investments in clean 
energy facilities for the future, this country will be well 
served by those investments.
    I want to thank all three of you for being here today, and 
wish you well as you work through this year. And I thank my 
colleague Senator Domenici for his work on this subcommittee.

                  FEDERAL LOAN GUARANTEE APPLICATIONS

    Senator Domenici. Mr. Chairman, could I ask David Frantz, 
you mentioned how many applications you have and how many 
you've cleared. Are the subject matter of those cleared 
applications private? Or are they available for committee to 
look at?
    Mr. Frantz. They're private, Senator, while we're 
processing them. They're business-confidential and proprietary 
information relative to each of the projects that are----
    Senator Domenici. How long will that last? How long will 
that--a couple years, or----
    Mr. Frantz. Yes, at least. Really, a lot of the information 
can only be released by the applicants that are applying, not 
on our side. Most of that information is business-confidential 
proprietary.
    Senator Domenici. And aren't we going to know, for the 
people of our country, that we have funded a program doing such 
and such, or is that not going to happen on along that----
    Mr. Frantz. We'll publicly, with their permission, we will 
publicly make announcements as we have reached a successful 
conclusion on each one of their applications.
    Senator Domenici. I would hope so. I mean, it's very, very 
important.
    Mr. Frantz. Yes, sir.
    Senator Domenici. Not next week but that it be on your 
agenda.
    Mr. Frantz. Yes, sir.

                         SOLAR ENERGY RESEARCH

    Senator Domenici. And on solar and what I say, Mr. 
Chairman, I agree with you. And I think the mistake was made 
because we stopped the program when the price of oil cam down 
because we made it--too big of demands on solar were made at 
that point because of the disparity.
    But now we ought to relook at where we are, and maybe you 
and I could figure out a way to meet for an hour or so and talk 
about solar in our budget and see where we might make some 
better investments. And your use of the word ``investment'' 
used to not impress me when I was doing the budget because I 
was always being asked for more money; but as I look at how we 
spend our Government's money, the committees and all, without 
trying to take precedence, our committee over another, it is 
not too difficult to determine where we have an energy crisis, 
where we have energy-related investments.
    I mean, this is the nucleus of whether we're going to get 
out of this mess 10 years early or 30 years later. Science 
breakthroughs, that's the difference. And we're there whether 
people like to spend money on us or not.
    Thank you all very much.
    Senator Dorgan. Senator Domenici, thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    At this time, if the members of the subcommittee have any 
additional questions, please submit them 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. Raymond L. Orbach
             Questions Submitted by Senator Byron L. Dorgan
                                competes
    Question. Last August the Congress passed and the President signed 
the COMPETES legislation into law. This proposal, consistent with the 
National Academy of Sciences study ``Rising Above the Gathering 
Storm,'' directs the Department to focus greater attention on science 
and mathematics education and research. Can you tell me specifically 
how the Department is supporting this legislation and how much money is 
provided in the President's request to implement the COMPETES 
legislation?
    Answer. The Department is committed to meeting its responsibility 
to help increase America's talent pool in science, technology, 
engineering, and mathematics and ensure that we will have the 
scientific workforce we will need in the 21st century to address future 
challenges and maintain U.S. global competitiveness. No additional 
funds were appropriated in fiscal year 2008 to expand existing programs 
or to establish new programs authorized under the COMPETES Act. The 
fiscal year 2009 request, however, contains increases for STEM 
education efforts aligned with the American Competitiveness Initiative 
and consistent with the goals of the COMPETES Act.
    The fiscal year 2009 budget request includes $13,583,000 for the 
Office of Science Office of Workforce Development for Teachers and 
Scientists (WDTS), a $5,539,000 increase from the fiscal year 2008 
appropriated levels. Of this increase, $4,214,000 is for the DOE 
Academies Creating Teacher Scientists (DOE ACTS) program. The $6.4 
million requested for the DOE ACTS program is consistent with the 
summer institutes authorized in section 5003(d) of the COMPETES Act. 
This section calls for the establishment or expansion of programs of 
summer institutes at each of the DOE national laboratories to provide 
additional training to strengthen the science, technology, engineering, 
and mathematics (STEM) teaching skills of teachers employed in public 
schools for K-12 students. Fiscal year 2008 is the fourth year the DOE 
ACTS program will bring K-12 teachers into the laboratories for 
research intensive experiential-based opportunities to build their 
content knowledge in STEM fields that they then bring back to their 
classrooms. The teachers selected for the program participate in 
research at the DOE national laboratories for three consecutive summers 
and bring their new knowledge and skills back to their school 
districts. The fiscal year 2009 request will support an additional 227 
teachers to participate in the program, for a total of 341 teachers.
    The Outstanding Junior Investigator award programs carried out by 
the Office of High Energy Physics, the Office of Fusion Energy 
Sciences, the Office of Nuclear Physics, and the Office of Advanced 
Scientific Computing Research, and the Office of Science Early Career 
Programs are consistent with the early career award programs authorized 
in section 5006 of the COMPETES Act. These programs are focused 
outstanding scientists that are yet to be tenured university faculty 
early in their careers and support the development of their individual 
research programs. Approximately $10,298,000 is requested in fiscal 
year 2009 across the programs to support early career scientists.
    In addition to the programs above, the Office of Science supports 
several activities that are consistent with the intent of several 
sections of the COMPETES Act, but differ in their specific 
implementation. The fiscal year 2009 budget request outlines several 
programs targeted towards support of graduate student activities and 
graduate student fellowships that are consistent with the PACE 
fellowships authorized in section 5009 of the COMPETES Act. The fiscal 
year 2009 request provides approximately $19,121,000 in graduate 
programs that range from traditional graduate fellowships that include 
stipend and tuition support to summer programs for graduate students 
for experiential learning experience in a number of scientific 
disciplines supported by the Office of Science. This is an increase of 
$983,000 over the fiscal year 2008 appropriated levels.
    Section 2008 of the COMPETES Act authorizes discovery science and 
engineering innovation institutes at the DOE national laboratories. 
These institutes must focus on the missions of the Department and 
should support science and engineering research and education 
activities related to areas such as sustainable energy technologies, 
multiscale materials and processes, micro- and nano-engineering, 
computation, and genomics and proteomics. Several research centers 
supported by the Office of Science for a total of $183 million are 
consistent with this authorization. This includes two of the three DOE 
Bioenergy Research Centers located at Lawrence Berkeley National 
Laboratory and Oak Ridge National Laboratory ($50,000,000 total in 
fiscal year 2009) and seven of the Scientific Discovery through 
Advanced Computing (SciDAC) Centers for Enabling Technologies that are 
multiple institution partnerships but centered at the national 
laboratories. In fiscal year 2009 approximately $18,800,000 is provided 
to support these seven centers. Additionally, approximately 
$100,000,000 is requested for the Energy Frontier Research Centers in 
fiscal year 2009. The competition for centers is open to laboratories, 
universities, and private sector organizations, or partnerships among 
these groups. Awards for each center will be $2-5 million per year for 
an initial 5-year period and centers will focus on innovative basic 
research to advance scientific breakthroughs relevant to 21st century 
energy technologies.
    The fiscal year 2009 request of $4,721,969,000 for the Office of 
Science will support approximately 23,700 Ph.D's, graduate students, 
undergraduates, and technical staff at universities and the national 
laboratories, a significant number of the Nation's scientific and 
technical skilled workforce. Additionally, the request will support the 
use of the Office of Science scientific user facilities by over 21,000 
researchers in fiscal year 2009. These sophisticated research 
instruments and facilities are a significant pillar of the U.S. 
scientific enterprise, enabling U.S. researchers to remain at the 
cutting-edge of science and innovation, and provide tremendous training 
opportunities for researchers and students across the country.
                          lansce refurbishment
    Question. Dr. Orbach, you and I have spoken extensively about 
maintaining our science capabilities at our national labs--both the 
Office of Science facilities and the NNSA labs. I believe you share my 
belief that we need to upgrade the LANSCE Facility to sustain cutting 
edge science at the lab in advanced materials research. This will have 
relevant scientific applications for both the NNSA weapons program and 
the Office of Science. Why doesn't the fiscal year 2009 budget request 
provide the funding necessary to support an upgrade of this facility?
    Answer. The Office of Science-supported Manuel Lujan Jr. Neutron 
Scattering Center (Lujan Center) is part of the Los Alamos Neutron 
Science Center (LANSCE). The combined facility is comprised of a high-
power 800-MeV proton linear accelerator, a proton storage ring, and 
instrumented beam lines for the Lujan Center for civilian research and 
the National Nuclear Security Administration (NNSA) Weapons Neutron 
Research facility for national security research. NNSA is responsible 
for the accelerator upgrade project, which would increase the LANSCE 
neutron source intensity by delivering more proton beam power to the 
neutron production target.
    The Office of Science has invested a total of $26 million in the 
development of six new instruments and the refurbishment of two 
existing instruments at the Lujan Center in the last decade, and 
significant strides have been made at the Lujan Center during the past 
several years. New sample environment capabilities complement existing 
strengths in high pressure and engineering stress, and the improved 
quality of user experiments are resulting in more scientific 
publications. Continued support of the Lujan Center by Science is 
contingent upon the Science triennial peer review, and further 
instrument upgrades by Science are contingent on the LANSCE accelerator 
upgrade by NNSA. The LANSCE accelerator upgrade was not possible in 
fiscal year 2009 due to competing priorities in NNSA.
    Although the Spallation Neutron Source (SNS) will become the 
Nation's signature neutron scattering facility, an October 2006 
workshop, ``The Lujan Center in the SNS Era,'' concluded that a strong 
national neutron research program requires the SNS plus other high 
intensity user facilities. The Lujan Center can remain world class with 
a future emphasis on cold neutron instruments optimized for 20Hz 
repetition rate and a shift to more inelastic neutron scattering 
capabilities at the facility.
                       sandia--advanced computing
    Question. The fiscal year 2008 Energy and Water Conference report 
directed the Department to establish an Institute for Advanced 
Architectures and Algorithms at Sandia National Labs and Oak Ridge as a 
joint endeavor between the NNSA and the Office of Science to continue 
research of high performance computing architectures. I included this 
language because I am very concerned about maintaining the U.S. and DOE 
leadership in high performance computing. As you are well aware the 
Science-based Stockpile Stewardship program and the NNSA labs pioneered 
the advanced computing platforms being deployed today and we should not 
forfeit our leadership in this field. What is your office doing to 
carry out the congressional direction to establish this joint Advanced 
Computing R&D capability and what is your plan to sustain this research 
capability?
    Answer. The Office of Science appreciates this committee's support 
for High Performance Computing in the Department. On January 28, 2008, 
Sandia and Oak Ridge briefed NNSA and the Office of Science and opened 
a dialogue about the Institute for Advanced Architectures and 
Algorithms. This was followed by a series of conference calls and a 
formal proposal from Sandia. The proposal was funded by the Office of 
Science in May and it is being jointly managed by the Office of Science 
and the NNSA.
    As we look to the future, research on advanced architectures and 
algorithms will continue to be a critical element of the computing 
programs of both the Office of Science and the NNSA. This area is one 
in which sustained, multi-year efforts are required to achieve progress 
and where active collaboration between the Office of Science and the 
NNSA will leverage scarce resources and enable the broadest impact.
                             climate change
    Question. Dr. Orbach 2 weeks ago, I traveled to New Mexico to host 
Senator Bennett on a tour of the NNSA laboratories. During this tour we 
received briefings on the status of various climate models and the 
challenges facing the scientists to develop an accurate predictive 
capability. While your budget seeks a modest increase in funding for 
climate modeling, it is unclear what your specific goals and priorities 
are for this program. Does the Department, or the Federal Government, 
have a roadmap for identifying and solving data gaps and modeling 
limitations? What is the Department of Energy's specific role in 
solving these complex problems?
    Answer. The Department coordinates its climate change research, 
including its climate modeling activities, with other agencies through 
the interagency Climate Change Science Program (CCSP). While the CCSP 
has a Strategic Plan that was released in 2003, it does not have an 
implementation plan or roadmap for achieving the scientific goals of 
the CCSP. The Department of Energy's Climate Change Research Program is 
focused on addressing data and information gaps and uncertainties that 
are limiting climate modeling. DOE has a draft strategic plan that 
provides a roadmap to address the key gaps and uncertainties and 
improve climate models and modeling. We will utilize findings and 
recommendations from several recent reports and workshops to revise our 
draft strategic plan before it is released. The reports we will use to 
guide the revision include a pending report from a recent DOE-sponsored 
workshop on grand challenges in climate change research, the 2007 
Intergovernmental Panel on Climate Change (IPCC) Working Group I Report 
on the Physical Science Basis of Climate Change, a 2007 report from a 
jointly organized workshop by the Department of Energy's Program for 
Climate Model Diagnosis and Intercomparison and the World Climate 
Research Program on Systematic Errors in Climate and Numerical Weather 
Prediction Models, and National Research Council reports on climate 
change research science.
    DOE's specific role in solving data gaps and limitations in climate 
modeling include developing and applying diagnostic tools and methods 
for evaluating climate model performance and identifying the 
limitations in model performance; supporting research and 
infrastructure to collect data and information; developing new and 
improved process models and parameterization schemes that more 
accurately represent the effects of clouds and aerosols, the two 
largest sources of uncertainty in climate modeling; developing and 
applying new and improved ocean, sea ice and land ice models for 
simulating their role in climate and sea level changes and potential 
feedbacks between sea and land ice changes and climate change; 
providing the climate modeling community with access to high 
performance computing capabilities at DOE laboratories needed to 
implement advanced, high resolution climate and Earth system models 
that are essential to modeling the physics of climate processes (e.g., 
transport of heat, atmospheric motion, formation and evolution of 
clouds, etc.) and the resulting response of climate to natural and 
human-induced forcing at regional to global resolution over decade to 
century time scales; and developing new and improved models of global 
carbon cycling in the ocean and terrestrial biosphere that can be 
incorporated in an Earth system model to simulate the interactions and 
feedbacks between climate, carbon cycling and CO2 forcing of 
climate.
    Question. The Advisory Committee for the Office of Biological and 
Environmental Research raised concerns in its report from May 2007 
regarding the availability of computing time at the laboratories to run 
climate simulations. They also raised concerns regarding general 
difficulties in ``engaging'' DOE. What has been done to improve this 
interaction and access?
    Answer. Two DOE Federal Advisory Committees, the Biological and 
Environmental Research Advisory Committee (BERAC) and the Advanced 
Scientific Computing Advisory Committee (ASCAC) were charged by me to 
address the computing needs for climate modeling, including changes 
that may be needed to provide and improve access to DOE high 
performance computing capabilities for climate modeling. The findings 
and recommendations in the report of a joint ASCAC-BERAC committee are 
under review, and a plan will be forthcoming that addresses the climate 
modeling access issues raised in the May 2007 BERAC report.
                             nanotechnology
    Question. Dr. Orbach, the Department now has all the National 
Nanotechnology Centers in operation and each center has more 
applications than they financially support. This leaves many important 
research projects without funding. Your budget request provides $20 
million in operations funding for each center, roughly the same level 
for the last 2 years. In light of the tremendous interest in this field 
of research, why hasn't your office sought an increase? If additional 
funding was provided to these centers, do you believe it would be well 
spent?
    Answer. The fiscal year 2009 request provides for support that will 
allow for full operation of the five Office of Science Nanoscale 
Science Research Centers (NSRCs). The recently completed NSRCs are user 
facilities that scientists from all sectors--academia, Federal 
laboratories, and industry--can access to pursue their ideas and are 
still in the early phases of maturing their operations. As the unique 
capabilities of the NSRCs become more widely known, the NSRCs are 
becoming oversubscribed with applications for time from potential 
users. The synchrotron and neutron scattering user facilities operated 
by the Basic Energy Sciences program have a history of such 
oversubscription. It is important to understand that such 
oversubscription is natural and healthy, because all applications for 
use of the NSRCs undergo rigorous peer review, which ensures that the 
best user proposals are supported. Furthermore, the number of users to 
whom time can be allocated is not simply dependent on the level of 
operating funds. Each NSRC was designed to operate at its full capacity 
to serve users with an annual operating budget of approximately $20 
million. It is imperative, however, that the operating budgets for the 
NSRCs--and all SC user facilities--receive appropriate cost-of-living 
increases in subsequent fiscal years so that they may maintain full 
operations. This was not possible in fiscal year 2007 and 2008, and the 
fiscal year 2009 budget request for the NSRCs seeks to redress the 
situation. As with other user facilities, additional funding will be 
required and requested in subsequent years to re-capitalize the 
equipment in the NSRCs.
                             radiation r&d
    Question. Dr. Orbach, in your testimony, you highlight the role 
your office is playing in ``Predicting high level waste system 
performance over extreme time horizons.'' I would think this research 
would be very valuable to the EPA and the NRC which has responsibility 
for setting regulatory and safety standards for nuclear waste. How will 
the data your office develops be integrated into the rulemaking process 
to ensure that the standards are scientifically sound? How far into the 
future do you intend for your models to predict? Do you intend to make 
predictions as far out as 1 million years?
    Answer. Predicting high level waste (HLW) system performance over 
extreme time horizons is one of the research coordination efforts 
proposed for the Office of Science in the fiscal year 2009 budget 
request. This area was identified as one of the scientific grand 
challenges in the Basic Energy Sciences (BES) workshop on Basic 
Research Needs for Geosciences in February 2007. The regulatory 
framework for HLW systems asks that the performance of a geological 
repository be predictable for time periods of up to 1 million years. 
Current models require significant improvements to become capable of 
more accurate predictions on such time scales. This is why the 
scientific community identified this area as a grand challenge in the 
BES Geosciences report and why we are targeting this area as one of our 
R&D coordination efforts in fiscal year 2009. The BES workshop report 
noted that the chemical and geological processes involved in the 
performance of HLW systems over extreme time scales are highly complex 
and require an interdisciplinary approach that strongly couples 
validation experiments with theory, modeling, and computation bridging 
multiple time and length scales. The report further concluded that 
fundamental research is required to provide the scientific basis for 
predictive models of HLW in geological repositories over extreme time 
horizons, including research on: computational thermodynamics of 
complex fluids and solids, the physics and chemistry of particles and 
colloids on the nanoscale, biogeochemistry in extreme and perturbed 
environments, highly reactive subsurface materials and environments, 
and simulation tools that can handle an enormous range of spatial and 
temporal scales.
    The Office of Science is not directly involved in rulemaking 
regarding HLW systems. The data, scientific knowledge, and 
computational models generated from the fundamental studies we perform 
will, of course, be widely and openly disseminated in the scientific 
literature. In addition, the R&D coordination effort proposed for 
fiscal year 2009 will directly benefit and involve the Office of 
Civilian Radioactive Waste Management (OCRWM) and the Office of 
Environmental Management (EM). An important component of integration 
between BES and these offices are the strong BES programs in the DOE 
laboratories in actinide and radiation chemistry, materials sciences, 
and geosciences. Capabilities and knowledge developed in these lab 
programs are readily and directly conveyed to complementary programs in 
the labs that are supported by OCRWM and EM.
                       joint dark energy mission
    Question. I have a few questions that underscore this committee's 
continued interest and support for DOE's role in JDEM and the science 
it is meant to address. Given that this now appears to be a NASA-led 
mission, are you comfortable that JDEM will yield the best science to 
address the science priorities of the Office of Science's High Energy 
Physics Office?
    Answer. DOE and NASA will coordinate in selecting the winning 
concept for JDEM. An important part of the selection process will be to 
ensure that the science obtained by the concept will address the needs 
of both the NASA science mission and of the High Energy Physics science 
mission. If the submitted concepts fall short of either agency's 
mission need, then the agencies will reevaluate the mission.
    Question. Last year the National Research Council considered a 
number missions and experiments to advance the state of physics 
``Beyond Einstein.'' The resulting report stated that JDEM should be 
the top priority. Unfortunately, we've heard from BEPAC panel members 
that the mission being planned will not meet their very explicit 
expectations due to budget restrictions within NASA. Are you confident 
that the Joint Dark Energy Mission that results from NASA's competition 
will be within the range of the specific scientific objectives laid out 
by the NRC panel?
    Answer. NASA and DOE are jointly planning the mission. Although 
NASA will issue the Announcement of Opportunity (AO), we will be 
working with them to write the terms of the AO and will coordinate the 
selection process. We will work together to ensure that the selected 
mission will significantly advance the study of dark energy in the most 
cost-effective manner. Until we see the actual proposals we cannot 
evaluate how well they meet the scientific objectives of the NRC panel. 
The agencies will need to decide whether the science provided by the 
selected JDEM concept is sufficient.
    Question. Recent reports from NASA indicate that DOE's contribution 
to JDEM will be ``up to'' $200 million. This is a big reduction from 
the $400 million that DOE had pledged earlier. First, is this accurate? 
Second, if so, why was this change made and where is the remaining $200 
million going? DOE has requested and this committee has provided tens 
of millions of dollars in research and development for JDEM. We would 
hate to see our significant investments go underutilized.
    Answer. DOE's expertise is in the areas of scientific 
collaborations and instrumentation. NASA, in addition to expertise in 
these areas, is the agency with the expertise and stewardship 
responsibilities for space launches and operations. The mission concept 
studies that are nearly complete indicate that the science could be 
done in a medium-class strategic mission targeted at a cost of 
approximately $600 million, not including the launch services. The 
scientific package is estimated to cost about $400 million and both DOE 
and NASA want to participate in the fabrication and operation of the 
scientific package. An equal partnership in the scientific package is 
the basis of the present $200 million cost estimate for DOE.
    With the reductions from the requested levels in the fiscal year 
2007 and fiscal year 2008 congressional appropriations, there is no 
``remaining $200 million,'' and indeed the present $200 million 
commitment will stress the High Energy Physics program. In our 
planning, the projects and programs that can be supported depend upon 
the funding available and their priority for mounting a world-class, 
productive U.S. High Energy Physics program. The funding level is 
determined by congressional appropriations. We use guidance from the 
scientific community as input to establishing priorities within the 
funding available. Guidance is presently being sought from the High 
Energy Physics Advisory Panel about the options and priorities for an 
optimal U.S. program at different funding levels.
    Question. Are you confident that DOE's investment in this project 
to date--that is, the country's investment in this project--will be 
adequately utilized?
    Answer. Yes, DOE's investment has been and will be well utilized. 
DOE's investment to date is mostly in the Supernova/Acceleration Probe 
(SNAP) concept for JDEM for R&D on the advanced optical and infrared 
sensors that would be used in the camera, as well as in designing a 
mission concept. This sensor development R&D can also be used for other 
missions and by the general scientific community. The SNAP concept 
development funded by DOE has helped the technical advancement of the 
whole JDEM mission, which was noted by the National Research Council 
study as a particular strength of JDEM compared to some other Beyond 
Einstein mission proposals.
    Question. Will DOE and NASA jointly select the winner of the JDEM 
competition?
    Answer. Yes, DOE and NASA will coordinate in selecting the winning 
concept for JDEM.
    Question. Dr. Orbach, can you give us the background on the 
development and overall strategy for the Energy Frontier Research 
Centers? As you know, this is an initiative contained in the fiscal 
year 2009 budget that some might construe as an alternative to ARPA-E 
or as another way of funding additional programs in the Science budget, 
as opposed to the Energy R&D budgets.
    Answer. The overall goal of the Energy Frontier Research Centers 
(EFRCs) is to foster, encourage, and accelerate high-risk, high-reward 
research that may provide the basis for transformative energy 
technologies of the future. The EFRCs will bring together the skills 
and talents of a critical mass of investigators, especially from 
universities, to enable energy relevant, basic research of a scope and 
complexity that would not be possible with the standard single-
investigator or small-group award. EFRCs will enable research programs 
that are balanced and comprehensive and, as needed, support 
experimental, theoretical, and computational efforts. Finally, the EFRC 
program provides a tremendous opportunity for universities to engage in 
fundamental basic research critical to future energy technologies, and 
to inspire, train, and support leading scientists of the future who 
have a deep and sincere appreciation for the global energy challenges 
of the 21st century.
    The scientific background for the EFRC initiative has been 
developed over the last 6 years through an extensive series of 
workshops sponsored by the Basic Energy Sciences (BES) program and its 
advisory committee, the Basic Energy Sciences Advisory Committee 
(BESAC). In 2002, BESAC sponsored a workshop on Basic Research Needs to 
Assure a Secure Energy Future. That workshop lead to a series of 10 
more BES workshops on basic research needs for the hydrogen economy, 
solar energy utilization, superconductivity, solid state lighting, 
advanced nuclear energy systems, combustion of 21st century 
transportation fuels, geosciences, electrical energy storage, materials 
under extreme conditions, and catalysis for energy. Finally, BESAC 
recently completed a report entitled Directing Matter and Energy: Five 
Challenges for Science and the Imagination. This set of 12 workshop 
reports, developed by some 1,500 scientists from universities, DOE 
laboratories, and industry, define the scientific and technological 
basis for the EFRC initiative.
    The high-risk, high-reward fundamental research within the EFRCs 
represents 15 percent of the total BES funding for research; the 
success of the EFRCs depends in part on their integration with the core 
research programs in BES. All of the core research programs in BES are 
actively engaged in coordination efforts with the DOE technology 
offices to promote the flow of knowledge and ideas from basic to 
applied research. This integration obviates the need for the creation 
of a new ARPA-E bureaucracy, rendering it unnecessary and 
counterproductive.
    Question. Dr. Orbach, can you give us the background on the level 
of funding for General Plant Projects (GPP)? I understand that the GPP 
level has increased over time to reflect inflation, etc. and the 
current level is $5 million per project. Anything above $5 million 
requires a reprogramming or to be a part of a Science Laboratory 
Infrastructure project. Do you believe the current level of $5 million 
provides you the flexibility to do the projects that are necessary 
under those constraints? If not, what level would you recommend?
    Answer. General Plant Projects are miscellaneous minor new 
construction projects of a general nature, the total estimated costs of 
which may not exceed $5 million per project. This $5 million threshold 
has been set since fiscal year 1999. A construction project that 
otherwise met the GPP criteria, but with a total cost above $5 million, 
would have to be requested and appropriated as a line-item construction 
project, which could stretch the necessary time frame between 
identification of the need and completion of the project, and thus 
increase overall costs. Based upon the Engineering News Report Annual 
Construction Inflation Index, $5 million in fiscal year 2009 would 
construct a project that would have required only $3.6 million in 
fiscal year 1999. So over time, inflation has reduced the Department's 
flexibility to pursue minor construction projects using GPP. An 
increase in the GPP threshold to $7 million would make the GPP 
threshold approximately equivalent after inflation to what it was when 
it was last increased in fiscal year 1999. GPP is supported both 
through direct funding and through Institutional General Plant 
Projects, or IGPP, which are funded through laboratory overhead for 
projects that cannot be allocated to a specific program. Examples of 
acceptable IGPP projects include site-wide maintenance facilities and 
utilities, such as roads and grounds outside the plant fences or a 
telephone switch that serves the entire facility. In the fiscal year 
2009 Office of Science request, $31 million is planned for direct-
funded GPP and an additional $35 million is anticipated in IGPP funding 
at Office of Science laboratories, for an overall level of $66 million 
for such minor construction projects.
    Question. Dr. Orbach, the Basic Energy Sciences budget has grown 
substantially over the past few years with the construction of several 
projects, namely SNS, the Nano Centers, and CLS at Stanford, etc. What 
do you envision the Basic Energy Sciences budget's steady state being 
in 5 years?
    Answer. The fiscal year 2009 budget request of $1,568 million for 
the Basic Energy Sciences (BES) program in the Office of Science 
reflects part of a Government-wide strategy to enhance U.S. world 
leadership in the physical sciences and maintain our Nation's 
competitive lead in technology. This strategy is the result of 
important actions by two branches of Government--first by the 
administration's American Competitiveness Initiative (ACI), and second 
by the congressional passage of two authorization acts, the America 
COMPETES Act (Public Law 110-69) and the Energy Independence and 
Security Act of 2007 (Public Law 110-140). Together these actions would 
approximately double the budget for the SC over a period of 7 to 10 
years. The Science portfolio supports a broad research program and 
facilities operations that seek to understand the fundamentals of how 
nature works and then to use this understanding to promote 
transformational changes in the way we approach energy production, 
conversion, transmission, storage, and waste mitigation.
    Under the ACI and congressional authorizations, we envision that 
the BES program will continue to be strong in 5 years with many 
exciting new capabilities. In developing future BES budget requests, 
Science will consider giving priority to six components of the BES 
budget: providing increases at least at the rate of inflation for core 
research programs and core facility operations; providing significant 
research increases in energy sciences, including the growth of Energy 
Frontier Research Centers; providing optimal construction funding, 
including for the NSLS-II project; providing instrumentation upgrades 
and fabrication for the scientific user facilities and the core 
research programs; upgrading and expanding the Spallation Neutron 
Source; and planning and conducting R&D toward the next-generation of 
light sources. The fiscal year 2009 request begins to put the BES 
budget on track with respect to the doubling path defined by the ACI 
and congressional authorizations. Projecting along that path in 
subsequent fiscal years would see the BES budget grow to approximately 
$2 billion by fiscal year 2013. I encourage your strong support of the 
President's fiscal year 2009 request to help bring this vision to 
fruition.
    Question. Dr. Orbach, the Office of Science budget this year 
includes funding that was formerly in the Office of Nuclear Energy 
budget dealing with medical isotopes. What is the rationale for the 
decision to transfer the funding from Nuclear Energy to Nuclear 
Physics?
    Answer. The Office of Science, with sustained commitment in 
promoting physical science research and experience in facility 
operation and infrastructure management, is well equipped to meet the 
needs for a successful and viable national isotope program. In fiscal 
year 2009, the Nuclear Energy isotopes program will be transferred to 
the Nuclear Physics (NP) program within Science, and will be renamed 
and reformed as the Isotope Production and Applications program. This 
new program will expand the scope of the present program of 
radioisotope production to include research production of commercially-
unavailable radioisotopes in response to the needs expressed by the 
entire research community. Based on the successful NP model of 
fostering fundamental research, and within the scope of fiscal year 
2009 budget, the new program will include the support of $3.2 million 
for development and production of research isotopes, based on 
competitive peer review. The recent report of the National Academy of 
Sciences (NAS), entitled ``Advancing Nuclear Medicine Through 
Innovation'' (September 20, 2007) raises concerns about Federal support 
for sustained U.S. competitiveness including deteriorating 
infrastructure, lack of a domestic source for research isotopes, 
shortage of trained workforce and lost opportunities. The NP has 
established a working group with the National Institutes of Health to 
address the recommendations in the report and is also planning a 
workshop in the summer that will bring, for the first time, all of the 
major stakeholders in isotope production together discuss the Nation's 
needs in isotope development and production and initiate the 
development of a community-driven strategic plan.
                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein
    Question. The Department of Energy (DOE) does not always allocate 
funding to transform basic research results into applied applications. 
What is the Department doing to expedite development and deployment of 
fuel cell technology and other technologies to bridge the gap between 
basic and applied research?
    Answer. The Office of Science's fiscal year 2009 budget request 
contains proposals for four new areas of coordination between programs 
in Basic Energy Sciences (BES) and the applied technology offices 
within DOE. In each area, the basic research needs required to advance 
energy technologies and close the gap between basic and applied 
research have been identified through one or more of the Basic Research 
Needs workshops conducted by BES. The four areas are Electric Energy 
Storage (EES), Carbon Dioxide Capture and Storage, Characterization of 
Radioactive Waste, and Predicting High-Level Waste System Performance 
Over Extreme Time Horizons.
    In EES, the BES workshop on Basic Research Needs for EES (April 
2007) identified key areas of interfacial chemistry, electrochemistry, 
and materials science required to advance EES for novel battery 
concepts in hybrid and electric cars and for the effective utilization 
in the utility sector of renewable, but intermittent energy sources, 
including solar, wind, and wave energy. DOE technology offices that 
might benefit include Electricity Delivery and Energy Reliability for 
utility-scale energy storage and Energy Efficiency and Renewable Energy 
for the FreedomCAR and Vehicle Technologies program and the Solar 
Energy Technologies program.
    Carbon Dioxide Capture and Storage was a primary topic of the BES 
workshop on Basic Research Needs for Geosciences (February 2007), which 
identified the research challenges associated with the complex chemical 
and geological processes that occur when carbon dioxide is stored in 
deep porous underground formations. The Office of Fossil Energy is the 
primary beneficiary of this coordination effort.
    Characterization of Radioactive Waste is a broad coordination area 
that was covered in three BES Basic Research Needs workshops: Advanced 
Nuclear Energy Systems (July 2006), Geosciences (February 2007), and 
Materials Under Extreme Environments (June 2007). These workshops noted 
the extraordinary combination of complex chemical and physics processes 
that occur under the extreme environments associated with radioactive 
waste (temperature, pressure, radiation flux, and multiple complex 
phases) and defined the materials, chemical, and geological sciences 
needed to address them. Technology offices that could benefit from this 
coordination area include the Offices of Nuclear Energy (NE), 
Environmental Management (EM), and Civilian Radioactive Waste 
Management (RW).
    Predicting High-Level Waste System Performance over Extreme Time 
Horizons was also covered in the BES workshop on Basic Research Needs 
for Geosciences (February 2007), which addressed the remarkable 
challenge of developing the scientific understanding of the chemical 
and geological behavior of high-level waste in geological repositories 
necessary to develop models with predictive capability over extreme 
time durations, perhaps up to 1 million years. The DOE technology 
offices benefiting from this area include EM, NE, and RW.
    These four new coordination areas complement and expand already 
ongoing areas of coordination between Science and the technology 
offices in the hydrogen fuel initiative (HFI) and solar energy 
utilization. Our HFI coordination is noteworthy because it has been in 
operation for over three fiscal years and has demonstrated impressive 
results, particularly in the area of fuel cells. The BES and EERE have 
coordinated their HFI activities through extensive interactions between 
program managers, including information sharing on proposal 
solicitations and awards, and by promoting scientific interactions 
between BES investigators and those supported by EERE through joint 
contractor research meetings, which began in fiscal year 2006 and have 
continued on an annual basis since then.
    An example of the benefits of the HFI coordination in the area of 
fuel cells comes from work funded both by BES and EERE and conducted at 
Brookhaven National Laboratory. This work is aimed at developing 
electro-catalytic materials for hydrogen fuel cells that address one of 
the key barriers to widespread use of this technology--the prohibitive 
cost of fuel-cell catalysts that are based on precious metals, 
typically platinum. Basic research supported by BES led to the rational 
design, enabled in part by advanced computational chemistry, and 
development of nano-structured, electrocatalytic materials that have 
ultra-low platinum content. Detailed characterization of these new 
materials demonstrated improved catalytic activity toward the oxygen 
reduction reaction, which causes most of the efficiency loss in low-
temperature fuel cells. In work supported by EERE, this fundamental 
discovery is being examined for its potential in making efficient 
catalysts that may be used to convert hydrogen to electricity in fuel 
cells for electric vehicles. While platinum is the most efficient 
electrocatalyst for accelerating chemical reactions in fuel cells in 
electric cars, platinum dissolves in reactions during stop-and-go 
driving--a major impediment. Recently, however, Brookhaven researchers 
added gold clusters to a platinum electrocatalyst, which kept it intact 
during an accelerated stability test under laboratory conditions, a 
potential breakthrough for fuel-cell technology.
    Question. I am pleased to see the administration has again asked 
for an increase in spending at the Office of Science. DOE's Office of 
Science plays an essential role in developing cleaner sources of 
energy, stimulating breakthroughs in the biological sciences, pushing 
the frontiers of knowledge in physics, and improving energy efficiency. 
If Congress provides you with the increase to $4.7 billion for the 
Office of Science, as requested, what will the agency be able to do 
that it cannot do under its current budget?
    Answer. The fiscal year 2009 budget request will help enable the 
Office of Science to meet mission needs of the Department in energy, 
the environment, and national security as well as the goals of the 
American Competitiveness Initiative and the America COMPETES Act of 
2007 for U.S. leadership in science and innovation.
    Specifically the increase in the budget request will fully fund the 
U.S. fiscal year 2009 commitment for ITER (+$203,874,000). In fiscal 
year 2008 funding for ITER was limited to $10,626,000 and fell far 
short of the U.S. commitment of $160,000,000. The ITER project, which 
will demonstrate the scientific and technical feasibility of fusion 
power, is the top priority new facility for the Office of Science and a 
high-visibility international commitment. While the Office of Science 
and the U.S. ITER Project Office have implemented a strategy to 
mitigate the adverse impacts in fiscal year 2008, the United States 
would likely be forced to default on its ITER commitments and terminate 
the U.S. ITER project if sufficient funds are not provided and would 
likely damage our credibility as a partner in future large scale 
international projects.
    The requested increase will also allow the Office of Science Basic 
Energy Sciences program to initiate support for new areas in what we 
refer to as use-inspired research related to future energy technologies 
and fundamental research grand challenges that could result in greater 
understanding of how nature works. Approximately +$100,000,000 will be 
for the Energy Frontier Research Centers. The centers will bring 
together the Nation's intellectual and creative talent from 
universities, national laboratories, and private sector organizations 
to conduct innovative basic research to advance scientific 
breakthroughs relevant to 21st century energy technologies. Research 
topics would include solar energy utilization; hydrogen production, 
storage, and use; electrical energy storage; advanced nuclear energy 
systems; superconductivity; solid-state lighting; materials under 
extreme environments; catalysis; combustion of 21st century 
transportation fuels; and geosciences related to long-term storage of 
CO2 and nuclear waste. Awards for each center will be $2-5 
million per year for an initial 5-year period and we would expect to 
make 20-30 awards.
    Approximately +$71,270,000 of the requested increase would provide 
for more optimal operations of our major scientific user facilities. 
These facilities, from synchrotron light sources, neutron scattering 
sources, and whole genome sequencing facilities to particle colliders, 
high-performance computing resources, and nanoscale science research 
centers, are used by over 21,000 individuals each year. The suite of 
research capabilities and instruments supported by the Office of 
Science make up a significant pillar of the U.S. scientific research 
enterprise. Users come from universities, national laboratories, and 
industry. The increase in funding requested for the facilities will 
provide for maintenance, improved operations and extended operation 
times which enable greater researcher utilization
    Approximately +$136,280,000 is requested for construction of the 
next generation scientific user facilities and instruments. This 
includes continued construction of the Linac Coherent Light Source at 
Stanford Linear Accelerator Center, an x-ray light source with 
unprecedented intensity and ultrashort pulses for probing materials and 
biological molecules and observing chemical reactions in real time; the 
initiation of construction of the National Synchrotron Light Source II 
at Brookhaven National Laboratory, which will have the capability to 
resolve molecular and materials structures down to the 1 nanometer 
level resolution; and the 12 GeV upgrade to the Continuous Electron 
Beam Accelerator Facility at Jefferson Laboratory, which will enable 
advanced studies of nuclear structure. The funding increase will also 
support scientific instrument fabrication for several projects 
including the Neutrinos at the Main Injector (NuMI) Off-Axis Neutrino 
Appearance (NOvA) detector at Fermilab.
    Additional increases for research (+$265,387,000) is requested for 
high performance computing, systems biology for bioenergy and 
environmental applications, chemistry, materials sciences, climate 
change research, plasma sciences, high energy physics, and nuclear 
physics and radioisotopes. Part of this increased funding is requested 
for international linear collider (ILC) research and superconducting 
radiofrequency (SRF) research to support the development of next 
generation accelerator-based facilities such as light sources, neutron 
sources, and particle colliders. Such research is not only critical to 
push the technology frontiers of future facilities, but it also enables 
advancements in technologies for medical instruments and cancer 
treatments. Fiscal year 2009 funding increases for neutrinos research 
capabilities such those enabled by NOvA, the ILC, and SRF research 
provide support for U.S. researchers to participate in the Large Hadron 
Collider at CERN. Such investments will position U.S. researchers to 
participate in the leading-edge high energy physics research here and 
abroad and maintain the critical scientific and technical capabilities 
to successfully lead the development of the next-generation particle 
collider facility in the coming decades.
    Research increases in scientific computing and applied mathematics 
will enable U.S. researchers to take advantage of petascale computing 
capabilities for the advancement of some of our most challenging 
scientific questions that are not tractable through theory or 
experimentation. Increases will also support transfer of the DOE 
Isotope Program to the Office of Nuclear Physics from the Office of 
Nuclear Energy and the creation of a research and isotope production 
program that will focus on addressing the radioisotope needs of the 
medical, research, and industry communities in the United States.
    The fiscal year 2009 request of $4,721,969,000 for the Office of 
Science will support approximately 23,700 Ph.D's, graduate students, 
undergraduates, and technical staff and universities and the national 
laboratories, a significant number of the Nation's scientific and 
technical skilled workforce. In fiscal year 2006, the Office of Science 
provided approximately $161,472,000 to California universities and 
research and industry organizations, not including the research and 
facilities supported at the four DOE laboratories in your State. The 
contributions that California scientists and engineers make to the 
Department's mission and to U.S. innovation and competitiveness are 
tremendous and I assure you they are well positioned to participate in 
the research activities we have proposed as part of the fiscal year 
2009 budget request.
    Question. I am interested by your proposed plan to establish Energy 
Frontier Research Centers (EFRC) Initiative. I think we can anticipate 
that many California universities will be eager to apply for the 
centers. How is the Department soliciting input from the scientific 
community on the initial areas of investment?
    Answer. The areas of emphasis for the EFRC initiative were 
developed over the last 6 years in an extensive series of workshops 
sponsored by the Basic Energy Sciences program and its advisory 
committee, the Basic Energy Sciences Advisory Committee (BESAC). These 
began with a BESAC workshop on Basic Research Needs to Assure a Secure 
Energy Future in 2002. This was followed by a series of 10 Basic 
Research Needs workshops run by BES that covered the hydrogen economy, 
solar energy utilization, superconductivity, solid state lighting, 
advanced nuclear energy systems, combustion of 21st century 
transportation fuels, geosciences, electrical energy storage, materials 
under extreme conditions, and catalysis for energy. Finally, BESAC 
recently completed a report on scientific grand challenges, ``Directing 
Matter and Energy: Five Challenges for Science and the Imagination.'' 
In total, some 1,500 scientists, the bulk of whom were from 
universities, participated in these workshops. The EFRC initiative 
requests proposals that satisfy two criteria with regard to topical 
areas--that they address one of the grand challenge themes from the 
BESAC report and that they address one of the energy grand challenges 
put forth in the series of 10 Basic Research Needs workshop reports.
    Question. What is your vision for the centers?
    Answer. We envision the EFRCs as centers that will bring together 
the skills and talents of a critical mass of investigators to enable 
energy relevant, basic research of a scope and complexity that would 
not be possible with the standard single-investigator or small-group 
award. The EFRCs should present research programs that are balanced and 
comprehensive and, as needed, support experimental, theoretical, and 
computational efforts. We expect that EFRCs will be lead and managed in 
such a way as to present world-leading programs that encourage high-
risk, high-reward research. Finally, the EFRC program provides a 
tremendous opportunity to inspire, train, and support leading 
scientists of the future who have a deep and sincere appreciation for 
the global energy challenges of the 21st century.
    Question. When do you anticipate the competition to be announced?
    Answer. The Funding Opportunity Announcement (FOA) for the ERFC 
competition (DE-PS02-08ER15944) was initially published on April 4, 
2008, and was amended on April 23, 2008. Applications in response to 
the FOA will be accepted through October 1, 2008.
    Question. How will universities be judged?
    Answer. Pursuant to section 989 of EPAct 2005 regarding DOE merit 
review of proposals, the EFRC FOA provides a single opportunity 
announcement for universities, for-profit companies, nonprofit 
entities, and DOE laboratories. The FOA is open equally and fairly to 
all of these entities and, importantly, is very flexible with regard to 
teaming between such entities. All applications, regardless of the 
nature of the lead organization, will be judged through rigorous merit 
review, in accordance with 10 CFR 605.10(b), on the basis of four major 
criteria: scientific and/or technical merit of the project, 
appropriateness of the proposed method or approach, competency of the 
applicant's personnel and adequacy of the proposed resources, and 
reasonableness and appropriateness of the proposed budget. Additional 
information on the EFRCs, including a link to the FOA, can be found on 
the EFRC webpage on the BES website at http://www.sc.doe.gov/bes/
EFRC.html.
    Question. As you know, Berkeley Lab is leading the Joint BioEnergy 
Institute (JBEI), along with Sandia, Livermore, UC Davis, UC Berkeley 
and the Carnegie Center for Plant Biology at Stanford. With funding 
from the Office of Science, JBEI is developing the science and 
technology that will drive sustainable biofuel solutions to the market 
in time to make a difference. Could you please give the committee a 
report on the progress of JBEI and the other bioenergy research 
centers? Is $25 million per year, per center, enough to meet the 
biofuel production targets in the Energy Independence and Security Act?
    Answer. All three DOE GTL Bioenergy Research Centers (BRCs) are up 
and running today and engaged in cutting-edge basic research needed to 
develop cost-effective methods of producing cellulosic biofuels. 
Secretary Bodman announced the award of the three BRCs on June 26, 
2007, following an open competition and an intensive scientific merit 
review process. From July through September, DOE negotiated with the 
lead institutions of the selected BRCs on the terms and conditions of 
the awards. These negotiations were concluded before the end of fiscal 
year 2007, and each of the BRCs received $9.97 million in fiscal year 
2007 funds to accelerate their start-up. The Department plans to 
provide each BRC with $25 million per year through fiscal year 2012, 
for a total 5-year program investment of $405 million.
    The three BRCs are the Joint BioEnergy Institute (JBEI), led by the 
Lawrence Berkeley National Laboratory (LBNL) and located near Berkeley, 
CA.; the BioEnergy Sciences Institute (BESC), led by Oak Ridge National 
Laboratory (ORNL) and based on the ORNL campus in Oak Ridge, TN; and 
the Great Lakes Bioenergy Research Center (GLBRC), led by the 
University of Wisconsin-Madison (UMW) in partnership with Michigan 
State University and based on the UMW campus in Madison, WI. All three 
BRCs represent multi-institutional partnerships. Partner institutions 
include universities, DOE National Laboratories, private firms, and one 
nonprofit.
    DOE will evaluate the performance of the BRCs on a yearly basis. 
The Department conducted an early Technical and Management Review of 
the BRCs in November 2007. As a result of the review, all three BRCs 
have put in place strong management plans and systems and have 
established clear sets of scientific milestones and deliverables to 
focus and guide their research programs.
    The BRCs are geographically dispersed, with scientific approaches 
that are complementary and synergistic. All three BRCs are using the 
advanced genomics-based techniques of modern systems biology to re-
engineer both plants and microbes for more efficient biologically-based 
conversion of plant fiber into fuels.
    JBEI is focusing on the widely studied ``model plants'' of 
Arabidopsis and rice (as well as some work on switchgrass), for which 
there is abundant genotypic and phenotypic information. JBEI believes 
that critical changes can be accomplished more readily in model plants 
and then transferred to bioenergy crops. JBEI is pursuing a novel 
strategy vis-a-vis lignin--a substance that occludes cellulose and 
forms a major barrier to deconstruction of plant fiber. Through 
detailed analysis of cell wall biosynthesis, JBEI is seeking to change 
the monomer composition of lignin, replacing existing monomers with new 
monomers whose mutual bonds can be cleaved by specialized enzymes. In 
addition, JBEI is studying the use of ionic liquids for pretreatment 
using advanced imaging technology, in an effort to overcome the 
limitations of current pretreatment methods, which produce chemical 
byproducts that inhibit enzymes used in subsequent hydrolysis and that 
are often toxic to the microbes used for fuel synthesis. JBEI is 
pursuing a series of unique strategies on microbes, including re-
engineering microbes to better degrade plant fiber and to produce a 
range of fuels beyond ethanol that are more like gasoline. JBEI is also 
seeking to adapt microbes to achieve Consolidated Bioprocessing, using 
single microbes or microbial communities.
    BESC is focusing on the central problem of ``recalcitrance,'' i.e., 
overcoming the resistance of plant fiber, or lignocellulose, 
degradation into sugars that can be converted into fuels (usually by 
fermentation). Research by BESC investigators has shown that 
recalcitrance of plant fiber forms the major cost barrier to achieving 
commercially viable production of cellulosic ethanol and other fuels 
from lignocellulose. BESC is focusing directly on the bioenergy crops 
of switchgrass and poplar as well studying the microbes that can 
degrade them, attempting to re-engineer both the plants and microbes to 
facilitate degradation. On the plant side, BESC is building a high-
throughput screening system with standardized pretreatment and 
enzymatic hydrolysis steps to screen thousands of genetic variants of 
switchgrass and poplar for amenability to deconstruction. The genomes 
of the most readily deconstructed variants will then be re-sequenced to 
identify the genes responsible for cell wall digestibility, providing a 
basis for genetically engineering optimized feedstocks. On the 
microbial side, BESC has engaged in bioprospecting in hot pools in 
Yellowstone National Park, inhabited by thermophiles that degrade 
cellulose. Samples are being subjected to metagenomic DNA sequencing 
and analysis in an effort to discover more efficient cellulases 
(cellulose-degrading enzymes) that operate at high temperatures. BESC's 
long-term objective is to achieve ``Consolidated Bioprocessing,'' or 
combined degradation and fuel synthesis in one step, using a re-
engineered microbe or community of microbes.
    GLBRC, in addition to focusing on recalcitrance of plant fiber, is 
pursuing the alternative approach of engineering plants to produce more 
starches and oils. These substances can be more readily converted to 
fuels. GLBRC points out that a 20-percent increase in plant oil content 
could nearly double the fuel yield from plant biomass. GLBRC, 
reflecting its affiliation with universities with strong agricultural 
programs, is focusing on re-engineering a wide variety of plants as 
well as microbes that can degrade plants and produce fuels, and they 
are investigating the sustainability of biofuel production. GLBRC plant 
researchers (mostly located at the Plant Research Laboratory at 
Michigan State University) are pursuing in-depth, genomics-based 
analysis of the complex process of cell wall biosynthesis to find 
methods of inducing more starch and lipid production in these 
structures. GLBRC is also engaged in bioprospecting and metagenomic 
analysis of microbial communities using somewhat different techniques 
and focusing on samples from Costa Rican rain forests. GLBRC is 
utilizing the technique of directed evolution (accelerated by a new 
generation of genomic sequencing technologies now available at the DOE 
Joint Genome Institute) to optimize microbes for ethanol production. 
GLBRC is also studying the production of hydrogen through microbial 
biorefineries.
    The current level of proposed funding for the three Bioenergy 
Research Centers will yield transformational discoveries that will 
enable dramatic improvements in our ability to produce biofuels from 
biomass at greatly reduced cost.
    Question. Recently you described to me how the Joint Genome 
Institute in Walnut Creek, California is sequencing the genomes of the 
organisms within the guts of termites in search of ways to more 
efficiently and cost-effectively break down biomass for conversion into 
fuel. Could you please elaborate on why this research is important and 
why the Office of Science is the appropriate funder and steward of this 
type of scientific inquiry? Additionally could you explain the broader 
role the JGI is playing in the Office of Science's energy research 
objectives? Finally, please describe how technologies developed through 
the bioenergy research centers will make their way to the marketplace.
    Answer. The diverse community of microbes inhabiting the guts of 
termites is one of nature's most efficient systems for breaking down 
cellulosic plant material and converting it into simpler products, 
including hydrogen and short chain carbon compounds, that feed the 
termite host. Although we have a general understanding of the chemical 
reactions that take place in the termite gut, we know relatively little 
about the specific microorganisms and enzymes that carry out these 
processes. However, new research techniques are now allowing us to 
directly probe novel metabolic capabilities encoded in the genomes of 
termite gut microbes. The DOE Joint Genome Institute recently completed 
sequencing of the microbial community genomes (i.e. ``metagenomes'') of 
two Costa Rican termites capable of very high rates of cellulose 
degradation. More than 800 new genes believed to be involved in 
cellulose breakdown were identified, as well as over 150 genes involved 
in hydrogen production and hundreds of additional genes encoding 
functions crucial to the operation of the system. Far more than just a 
catalogue of new genes and enzymes, this study provides researchers 
with an important new tool to understand the complex systems biology 
that allows the host and microbial community to act as an integrated 
whole. Continued studies of the termite gut symbiosis will allow us to 
not only consider novel approaches that are being applied to the 
conversion of plant biomass to biofuels, but also provides critical new 
information on a key component of the global carbon cycle. As the 
Federal Government's lead agency for biofuels research, DOE's Office of 
Science is the appropriate funder and steward for this fundamental, 
transformation research.
    In addition to its critical sequencing of the termite gut 
metagenome, the JGI is playing a key role in the DNA sequencing and 
analysis of prospective biomass crops, including the poplar (the first 
tree genome), soybean (for biodiesel), and switchgrass and of other 
microbes with enzymes or biochemical pathways important for cellulose 
degradation and carbon cycling.
    All three DOE Bioenergy Research Centers have already begun laying 
the groundwork for eventual transfer of new technologies that emerge 
from their research. Both the BioEnergy Sciences Institute (BESC), led 
by Oak Ridge National Laboratory (ORNL), and the Great Lakes Bioenergy 
Research Center (GLBRC), led by the University of Wisconsin-Madison 
(UMW) in partnership with Michigan State University, have industry 
partners as integral members of their respective teams. All three BRCs 
have advisory boards with industry representatives. The Joint BioEnergy 
Institute (JBEI), led by the Lawrence Berkeley National Laboratory 
(LBNL) and located near Berkeley, CA is developing close relations with 
the biotech industry and investment community centered in the San 
Francisco Bay Area. The BRCs will have multiple paths for 
commercialization of new technologies that flow from their discoveries. 
In addition, BER is coordinating the research in its Genomics:GTL 
program, including research at its Bioenergy Research Centers, with 
biorefinery demonstration projects funded by DOE's Office of Biomass 
Programs.
    Question. The Department of Energy's Office of Science pioneered 
the field of modern supernova cosmology. DOE's strength in this area 
has led to many awards, prizes and international recognition of the 
strength of this program. It was your personal support of this 
important work that set the stage for this international scientific 
leadership. Through the Joint Dark Energy Mission, which is a 
collaboration between your office and NASA, are you confident that DOE 
will maintain its vitality and leadership in the field? Please give the 
Committee an update on the Joint Dark Energy Mission.
    Answer. The DOE sponsored scientific community has broad expertise 
in scientific collaborations, data analysis, and advanced 
instrumentation. By contributing to these areas of expertise the 
community will maintain vitality and a leadership role in the field.
    DOE, NASA, and OSTP have been meeting regularly to lay out the plan 
for the Joint Dark Energy Mission (JDEM). As a result of the agency 
collaboration, DOE and NASA have agreed to participate in a JDEM; JDEM 
will be a medium-class strategic mission with a competitively selected, 
principal investigator-led dark energy science investigation; DOE and 
NASA will partner in the fabrication and operation of instrumentation 
necessary to execute the science investigation; and DOE's cost for the 
fabrication and operations phase is estimated to be up to $200 million 
in fiscal year 2008 dollars, or roughly 25 percent of the cost of the 
expected total lifecycle mission. The agencies are currently working on 
a Memorandum of Understanding describing the collaboration. The 
planning schedule includes the release of the Announcement of 
Opportunity (AO) near the end of 2008, with a draft in summer; 
selection of a particular concept and start of conceptual design in 
fiscal year 2009, and launch in 2014 or 2015.
                                 ______
                                 
             Questions Submitted to Hon. Alexander Karsner
             Questions Submitted by Senator Byron L. Dorgan
                        biomass/ethanol mandate
    Question. The Energy Independence and Security Act of 2007 requires 
that suppliers must blend 36 billion gallons of renewable fuel into 
gasoline by 2022. Of the 36 billion gallons of renewable fuel, 21 
billion gallons must be ``advanced biofuels'' (fuels produced from non-
corn feedstocks). On March 4, Guy Caruso, Administrator of the Energy 
Information Administration, testified before the Senate Energy 
Committee, and said that it was unlikely that we would reach these 
mandates by 2022. Do you believe that we can reach the 36 billion 
gallon mandate by 2022?
    Answer. The Department believes that the Renewable Fuels Standard 
(RFS) established in EISA is achievable. Achievement of the RFS will 
require consistent policy and regulatory certainty so as to sustain the 
necessary private investment.
    The RFS is not limited to ethanol. Other biofuels, including 
biodiesel and biomass-to-liquids, may contribute to the mandates 
specified in the RFS. However, ethanol is expected to play a central 
role in the fulfillment of this standard. In terms of ethanol produced 
from corn, the current U.S. ethanol production capacity exceeds 9.9 
billion gallons with an additional 3.7 billion gallons under 
construction.\1\ Based on current trends and our analysis of industry 
plans, we believe that the industry will likely reach the 15 billion 
gallons of conventional biofuel requirement before the scheduled 2015 
date.
---------------------------------------------------------------------------
    \1\ See Renewable Fuels Association, http://www.ethanolrfa.org/
industry/locations/ as of August 20, 2008.
---------------------------------------------------------------------------
    Integrating large amounts of renewable fuels required by the RFS 
into the current transportation fuel distribution system presents 
unique challenges, most likely requiring the use of either E85 or 
possibly intermediate ethanol blends. Combining the supply and demand 
elements of the RFS will require close coordination among renewable 
fuel and feedstock producers, transportation fuel producers and 
blenders, and Federal and State agencies. The Biomass R&D Board will 
play an important role in achieving the national goals established in 
EISA by bringing coherence to Federal strategic planning. The Board is 
co-chaired by the Departments of Energy and Agriculture, and also 
consists of senior decisionmakers from across the Federal Government.
    Question. What advanced biofuel do you foresee making up the 21 
billion gallon requirement?
    Answer. In terms of advanced biofuels, DOE's goal is to make 
cellulosic ethanol cost-competitive by 2012. We anticipate that 
cellulosic ethanol will comprise the majority of the 21 billion gallon 
``advanced biofuel'' requirement.
                             weatherization
    Question. Mr. Karsner, I understand that since 1976, we have spent 
$8 billion on the Weatherization Program, but only improved 5 million 
homes. Your budget states that, ``EERE's Energy Efficiency portfolio 
has historically provided approximately a 20 to 1 benefit to cost 
ratio; in comparison, Weatherization has a benefit to cost ratio of 1.5 
to 1.'' Clearly, we have a considerable amount of work to do to make 
our buildings and homes more energy efficient. But, as policy makers we 
need to understand the quickest and most cost effective way to do so. 
If you were to develop a more effective program what would you propose?
    Answer. After almost three decades, DOE has weatherized about 5.5 
million homes out of the 34 million annually eligible. As you have 
noted, based on a study by the National Research Council, investments 
in some energy efficiency applied R&D between 1978 and 2000 resulted in 
returns 20 times greater than the cost of the investment.\2\ In 
contrast, the energy savings from Weatherization Assistance Program 
grants result in a significantly lower benefit/cost ratio of 1.53 to 1. 
This ratio was calculated by Oak Ridge National Laboratory based on 
past evaluation efforts and Energy Information Administration projected 
energy prices.\3\ Weatherization Assistance is an important goal, but 
is an anomaly because it addresses social welfare goals in addition to 
energy efficiency improvement.
---------------------------------------------------------------------------
    \2\ ``Energy Research at DOE: Was It Worth It?'' National Research 
Council (http://www.nap.edu/openbook.php?isbn=0309074487). This study, 
published in 2001, analyzed investments in 17 energy efficiency R&D 
activities between 1978 and 2000 costing a total of $1.566 billion 
(p.23) and representing about one fifth of energy efficiency program 
spending in that time frame. The NRC found overall net economic returns 
of about $30 billion (p.29) . This is a public return 20 times greater 
than the cost of the investment within the time period considered. In 
addition, the NRC calculated net environmental benefits worth $3-20 
billion for these activities. As is the case with many diverse R&D 
investment portfolios, most of the benefits were generated by few--in 
this case, 3 of 17--activities assessed (p. 29).
    \3\ The ORNL analysis can be found on the web (http://
weatherization.ornl.gov/pdf/CON-493FINAL10-10-05.pdf). The benefit/cost 
ratio in the study is 1.34--the 1.53 ratio cited above uses the same 
calculations with energy cost data updated for 2006.
---------------------------------------------------------------------------
    Prudent portfolio management requires DOE to focus available 
resources on its core areas of expertise and mission consistent with 
the DOE Strategic Plan. DOE is currently prioritizing development of 
new technologies, model building codes, and innovative programs for 
existing homes. Through the Building Technologies Program, the 
Department is committed to developing reliable, affordable, and 
environmentally sound renewable energy and energy efficiency 
technologies that significantly reduce the energy consumption and peak 
electrical demands of residential and commercial buildings. During the 
design and construction of a new home, far more can be achieved to 
bring it to net zero energy use in a cost-effective way than can be 
done with an existing building. Furthermore, many of these gains can be 
achieved in new construction at no initial first cost. It is important 
that buildings added to the housing stock be more energy efficient when 
built, so as to prevent the more costly and less effective task of 
fixing the problem by retrofitting them in the future.
    However, building energy codes only establish a minimum level of 
construction below which builds cannot be built. While it is important 
to continue to raise the building energy codes bar, it is also 
important to invest in research, development and demonstration of homes 
that can achieve greater energy efficiency than code and eventually 
net-zero energy homes, as well as to apply these technologies to 
existing homes as much as possible. It is important to raise the bar on 
appliance standards, so that replacement appliances and equipment are 
made continually more efficient than the models they replace. It is 
also important to put in place incentive programs, such as Home 
Performance with ENERGY STAR, to encourage private sector investment in 
greater efficiency, as well as upgrade our existing building stock.
                       mesa del sol solar project
    Question. Mesa del sol.--Mr. Karsner, part of your responsibilities 
include increasing the Federal Government usage of renewable energy. I 
have been made aware of Federal procurement rules that prevent Kirtland 
Air Force Base from signing a long term power purchase agreement beyond 
10 years. We have a site in New Mexico, located between Mesa del sol 
and Kirtland AFB that has been identified as an ideal site for a 100 MW 
concentrating power plant with a molten salt storage reservoir. 
However, procurement rules prevent the base from entering into a 
contract beyond 10 years, well short of the useful life of the plant, 
which has a big impact on the economics of the deal. First, do you 
believe these procurement limitations are having an impact on the 
deployment of clean energy technology?
    Answer. It is true that the Government-wide authority for utility 
purchases is limited, in most instances, to 10 years. That authority 
was created for traditional utility purchases and is not well-suited to 
the type of renewable energy projects that would require a substantial 
initial capital investment.
    Question. If Congress were to change the requirement to allow 
Federal agencies to enter into longer term power contracts, do you 
believe this would have a positive impact on the commercial deployment 
of renewable energy technology? Would you support this change?
    Answer. The Federal Government should lead by example in its use of 
renewable energy. To do so, we should assess whether there are legal 
impediments to its use. If so, the administration stands ready to work 
with Congress to develop workable solutions.
                       concentrating solar power
    Question. Recently Sandia National Lab announced a world record for 
solar to energy conversion. On January 31, 2008, a sterling 
concentrating solar array located at Sandia Thermal Test Facility 
achieved a world record of 31.25 percent net efficiency rate. Despite 
the promising performance, your budget maintains a wide disparity 
between funding for photovoltaic research ($137 million) and 
concentrating solar research. ($19 million). Based on economic and 
technology performance with concentrating solar technology, why the 
large disparity in funding? How will the Department facilitate the 
commercial deployment with such low levels of funding?
    Answer. The Department believes that it has struck an appropriate 
balance between photovoltaic (PV) and concentrating solar power (CSP) 
technology funding. CSP's advantages include a lower cost than solar PV 
technology, as well as the capability to store thermal energy for later 
use. PV, however, remains the focus of most of DOE's solar program 
funding for several reasons.
    Primarily, PV can provide energy solutions for the entire Nation, 
not just the Southwest. Also, PV technology faces more challenges to be 
cost competitive with conventional electricity sources. It has a 
significantly larger and more diverse industry base with Federal R&D 
support needs in multiple technology areas (e.g., crystalline silicon, 
thin films, multi-junction cells) at various links in the supply chain 
(e.g., semi-conductor devices, PV modules, inverters). Significant R&D 
advances will be needed to achieve the aggressive Solar America 
Initiative PV electricity goal, to be cost-competitive nationwide with 
grid electricity by 2015.
                       plug in hybrid technology
    Question. There is no doubt that we must improve our battery 
technologies across a broad range energy sources that rely on storage 
as a key component. In my opinion, energy storage is one of the most 
important pieces currently missing in our energy puzzle. What is EERE 
currently doing to advance battery technologies?
    Answer. In fiscal year 2008, DOE's Office of Energy Efficiency and 
Renewable Energy (EERE) is providing approximately $48.2 million to 
support long-term research, applied research, and technology 
development of advanced batteries for electric, hybrid-electric and 
plug-in hybrid vehicle (EV, HEV and PHEV) applications. EERE's applied 
research is focused on developing advanced materials for the next 
generation of energy storage technologies that offer the potential for 
significant improvements over existing batteries. In fiscal year 2009, 
DOE plans to award battery contracts focusing on improving battery 
performance through the development of manufacturing technology. This 
approach is expected to improve performance attributes such as cycle 
life, while simultaneously fostering domestic manufacture of advanced 
battery technology and reducing production cost.
    In addition to battery research, EERE is providing $22 million in 
support of modeling, simulation and testing of PHEVs in fiscal year 
2008. Activities include laboratory and closed track testing, and real-
world monitored fleet evaluations.
    Question. When do you believe we can have large scale deployment of 
plug-in hybrid cars and what public policies changes are needed to 
achieve this objective?
    Answer. The Department is working to achieve faster market 
penetration of plug-in hybrids (PHEVs) by developing technological and 
cost improvements to battery and electric drive components. The 
Department's goal is to reduce the high-volume production cost of 
lithium ion batteries to $300/kW by 2014, which, along with other 
improvements, could help PHEVs become cost competitive.
    Lower costs help enable industry make the decision to 
commercialize, but ultimately greater market penetration is dependent 
on automakers as they make production decisions over the next several 
years, and by investments in battery manufacturing. GM plans to 
introduce its Chevy Volt PHEV in 2010, but we expect that there will be 
significant incremental cost that may prevent large-scale deployment. 
Other manufacturers have been non-committal on dates for commercially 
offering PHEVs.
    Consistent and durable policies have been critical to the rapid 
uptake of hybrids, and will be critical to PHEVs as well. Automakers, 
suppliers, and battery manufacturers may also be eligible to apply for 
the Department's Loan Guarantee Program under title XVII of the Energy 
Policy Act of 2005, which lowers the financial risk of private 
enterprise in moving the successful results of research investments 
from the laboratory to the commercial marketplace. The Department is 
currently soliciting up to $10 billion in loan guarantees for 
innovative energy efficiency, renewable energy, and advanced 
transmission and distribution technologies in fiscal year 2008.
                         building technologies
    Question. I know that it is the goal of the Building Technologies 
program to spur commercial production of Net-Zero Energy Homes by 2020. 
I believe that building technologies can play a very significant role 
in reducing our Nation's energy consumption. How do you expect this 
program to have nationwide effectiveness when numerous States do not 
even have a building code?
    Answer. The Department's Building Technologies Program goal of 
achieving commercially viable Net-Zero Energy Homes by 2020 is a 
research and development effort involving building industry leaders, 
many of whom recognize the inherent value in building homes that 
perform significantly beyond State and/or national model codes. While 
State and national building codes set the minimum levels of 
performance, our zero energy building-related efforts do not rely on 
the existence of codes in a jurisdiction, in moving ``beyond code.'' 
Codes require a minimum level of construction and energy efficiency 
below which houses should not be built. While there is substantial 
value in State adoption, implementation, and enforcement of building 
energy codes for the Nation, it is important for all housing can 
benefit from advances in building energy codes. We can encourage the 
construction of a significant number of Net-Zero Energy Homes by 2020.
    To reduce energy consumption and to help U.S. home builders and 
buyers make informed decisions about efficiency and distributed energy, 
the Department has developed activities to encourage a robust market 
demand for more efficient homes through national and regional consumer 
education efforts. Combined with market forces (i.e. energy prices) and 
acceptance (i.e. consumer demand), builder training and codes can work 
in concert to drive standard practice toward net-zero energy homes over 
the long term for broader deployment of energy efficient technologies.
                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein
    Question. Mayor Villaraigosa and the city of Los Angeles are 
interested in the green technologies funded by EERE. What is the best 
way for the Appropriations Committee to assure that EERE's funding is 
spent in a way that rewards the best ideas of local government?
    Answer. The proven way to ensure funds are allocated to the best 
ideas is the competitive solicitation process. The Department offers a 
number of resources for local governments, including programs in the 
Solar Technologies Program (Solar America Cities), Vehicle Technologies 
Program (Clean Cities), Building Technologies Program (Building 
America), and the Wind and Hydropower Technologies Program (Wind 
Powering America). In addition, cross-cutting resources are available 
such as the State Energy Program formula and competitive grants, and 
the Technical Assistance Project supported by the Department's national 
laboratories and funded by the State Energy Program. Funds for Solar 
America Cities and State Energy Program-competitive grants are awarded 
competitively to applicants through a rigorous merit review process. 
Funds provided to local governments through the State Energy Program-
formula grants are allocated according to a method determined by the 
individual State. The Technical Assistance Project (TAP) requires an 
application process and proposal review to determine eligibility for 
assistance. TAP helps States with individualized, short-term assistance 
in areas that are not covered by other DOE programs. Projects are 
limited to $5,000 or between 30-60 hours of staff time. Funding is used 
to cover staff time and travel for laboratory experts and is not 
distributed directly to the applicant.
    Question. According to a recent study by McKinsey and Company, one 
of the most cost effective opportunities to reduce greenhouse gas 
emissions is in household electronics. Specifically, the growing use of 
electricity in televisions and computers is a matter of great concern. 
What can EERE or Congress do to reduce this energy use?
    Answer. DOE is actively engaged in establishing energy efficiency 
standards for consumer electronics. The Energy Independence and 
Security Act recently prescribed efficiency standards for the most 
common class of external power supplies which become effective July 1, 
2008. In addition, the Department is currently in the beginning phases 
of initiating a rulemaking on battery chargers and external power 
supplies, which is scheduled for completion by July 2011. This 
rulemaking will address the energy use associated with a wide variety 
of products including laptop computers, cell phones, power tools, and 
printers, among others.
    In addition, the Energy Independence and Security Act of 2007 (EISA 
2007), Public Law 110-140, authorizes DOE to incorporate standby mode 
and off mode energy consumption into all new or revised standards 
adopted after July 1, 2010 (for residential products). The Department 
is now working to revise certain test procedures to account for standby 
mode and off mode energy consumption in accordance with the deadlines 
in EISA 2007. When in place, these energy efficiency standards have the 
potential to greatly reduce energy consumption and greenhouse gas 
emissions.
    DOE and the Environmental Protection Agency jointly administer the 
ENERGY STAR program to promote more efficient products, including 
consumer electronics. The Federal Government generally is required to 
purchase energy efficient products, including ENERGY STAR-labeled 
products, and has led in the procurement of low standby power devices.
    Question. I was pleased to see EERE ask for money to fund 
geothermal research this year. Please describe exactly how these funds 
will be spent, and for what purpose.
    Answer. The mission of the Department's Geothermal Technology 
Program is to conduct research and development (R&D) on Enhanced 
Geothermal Systems to advance the technology as an economically 
competitive contributor to the United States energy supply. Enhanced 
Geothermal Systems (EGS) are engineered reservoirs created to produce 
energy from geothermal resources deficient in hot water and/or 
permeability. If EGS development is successful, the technology may be 
deployable nationwide as opposed to conventional geothermal technology 
that is limited to the western United States.
    The Department issued a competitive solicitation on June 18, 2008, 
for awarding industry cost-shared EGS projects. Two topic areas are 
listed in the solicitation: component R&D technologies that address key 
aspects of reservoir creation, management, and utilization, and 
demonstration projects that will test and validate stimulation 
techniques for improving well productivity. The EGS-related R&D in the 
areas of reservoir stimulation, fracture mapping, and fluid circulation 
will also have applicability for expanding conventional (i.e., 
hydrothermal) fields.
    impact of tax credits for renewable energy and energy efficiency
    Question. I have worked with my Senate colleague Olympia Snowe to 
extend existing tax credits for renewable energy and energy efficiency. 
Please describe what impact these tax credits are having in the market 
place. Please identify the amount of new investment in renewable energy 
and energy efficiency that has resulted as a result of these tax 
provisions. Please estimate the job impacts if Congress allowed these 
credits to expire at the end of 2008.
    Answer. While the Department is unable to quantify the exact amount 
of investment in energy efficiency and renewable energy directly 
resulting from these tax provisions, the past 10 years demonstrate a 
strong correlation between the intermittent availability of the 1-year 
production tax credit (PTC) extension and the volume of investment in 
renewable energy sources such as wind power. The tax policy has likely 
spurred investment; however, American Wind Energy Association data show 
that expirations of the Federal PTC in 1999, 2001, and 2003 were 
followed by drops in new wind installations in 2000, 2002, and 2004.
    With the tax credit in effect in 2007, the United States led the 
world in new wind installations with over 5,300 MW installed.\4\ This 
growth translates into approximately $9 billion (real 2007 dollars) 
invested in wind project installations.\5\ While there are no studies 
on the exact number of jobs directly associated with the tax credit, 
increased demand has led to increased manufacturing jobs in the wind 
industry, which may compete with other energy sectors.
---------------------------------------------------------------------------
    \4\ See Annual Report on U.S. Wind Installation, Cost, and 
Performance Trends: 2007, U.S. Department of Energy's Office of Energy 
Efficiency and Renewable Energy (May 2008) http://www.nrel.gov/docs/
fy08osti/43025.pdf.
    \5\ Id.
---------------------------------------------------------------------------
                                 ______
                                 
                 Questions Submitted to David G. Frantz
             Questions Submitted by Senator Byron L. Dorgan
                               timetable
    Question. Mr. Frantz, it has been over 90 days since the President 
signed the Consolidated Appropriations Act providing the Department 
with $38.5 billion in loan guarantee authority. This bill directed the 
Department to develop a plan to execute the program and to send this 
report to Congress for review within 45 days. When can we expect the 
Department to send this proposed plan to Congress? When do you expect 
to put a solicitation out on the street for bids and how soon do you 
expect to make awards?
    Answer. On April 11, 2008, the Department of Energy submitted an 
``fiscal year 2008 Implementation Plan.'' The Consolidated 
Appropriations Act, 2008, requires that DOE wait for a period of 45 
days from submission of the Implementation Plan to Congress prior to 
issuing a new loan guarantee solicitations. The Implementation Plan 
outlines the Department's plans to issue loan guarantee solicitations 
in two stages this summer for up to $38.5 billion for projects that 
employ advanced technologies that avoid, reduce, or sequester emissions 
of air pollutants and greenhouse gases. These planned solicitations 
will mark the second and third rounds of solicitations for the 
Department's Loan Guarantee Program, which encourages the development 
of new energy technologies and is an important step in paving the way 
for clean energy projects.
                        loan guarantee potential
    Question. Mr. Frantz, I have noticed from your bio you have over 35 
years of experience in project finance in the energy sector and served 
10 years as the Director of Project Finance for OPIC. That is quite an 
extensive amount of experience. Can you please explain what the 
financial advantage the loan guarantee program provides to the 
investors of these alternative energy projects? What is the cost 
savings of receiving Federal assistance?
    Answer. One of the goals of the Department of Energy's title XVII 
Loan Guarantee Program is to encourage the commercial use in the United 
States of new or significantly improved energy-related technologies. 
There are a number of financial advantages that the loan guarantee 
program provides to investors of these types of alternative energy 
projects. Primarily, without a loan guarantee, investors in an 
innovative energy project may not have the financing necessary to 
establish the project, thereby potentially denying the commercial scale 
up of their respective technologies due to the unavailability of 
alternative debt financing.
    While the Department's loan guarantee program offers clear benefits 
to alternative energy project investors, there is no measurement of the 
aggregate cost savings of participating in the program. In fact, energy 
investors might not even be permitted to proceed to full 
commercialization due to the unavailability of alternative financing. 
Each project supported by a loan guarantee will be evaluated on its 
particular strengths and weaknesses to determine the risk factor 
associated with the project. Depending on this risk assessment, each 
project will be levied a credit subsidy cost and other fees that will 
determine the ultimate cost to the project sponsors.
                          credit subsidy model
    Question. Mr. Frantz, I understand that the Department has been 
working to perfect its credit subsidy model, which is the risk 
calculation of each loan. Getting this model correct is important as it 
sets the level of payment each borrower is required to pay under the 
EPACT title 17 loan program and will have an impact on the scoring of 
our bill by the Congressional Budget Office. What is the status of the 
credit subsidy model and how confident are you that this will provide 
an accurate risk analysis of each loan to ensure taxpayers are not on 
the hook for bad technology loans? What other agencies have reviewed 
this model for accuracy?
    Answer. The Department has been working for several months to 
develop the credit subsidy cost model and is confident that once 
completed it will allow the Department to accurately calculate the 
subsidy costs of title XVII loan guarantees. It will not be made 
publicly available. The Office of Management and Budget must review and 
approve credit subsidy cost estimates. We expect it to be completed in 
the near future.
                   staffing of loan guarantee office
    Question. Mr. Frantz, in your testimony you state that you have 16 
people on your staff to execute the $40 billion loan guarantee program. 
This sounds like an immense challenge. Can you explain how this 
compares to similar loan guarantee programs at other Federal agencies?
    Answer. There are presently 16 members of the staff which is an 
adequate number to prosecute the 16 successful applicants under the 
2006 solicitation representing an allocation in excess of $4 billion. 
This staff is also adequate to initiate the proposed solicitations for 
fiscal year 2008 which is presently planned for $38.5 billion. This 
staff is presently inadequate to prosecute the results of the fiscal 
year 2008 solicitation. The Loan Guarantee Program Office (LGPO) has 
requested in its fiscal year 2009 administrative budget $19.9 million 
with a planned staff of 35 full-time employees (FTEs), augmented by 
independent contractors as necessary to handle the workload associated 
with the fiscal year 2008 solicitations. The organizational plan of the 
LGPO is based upon years of experience by the existing LGPO staff at 
the Overseas Private Investment Corporation.
                       current investment climate
    Question. Mr. Frantz and Mr. Karsner, the clean energy technologies 
being developed by the Department can only be effective if they are 
commercially deployed. Can you please describe the financial 
environment for renewable energy technologies and the financial 
barriers facing these technologies? How has the credit crisis impacted 
investment in these sectors?
    Answer. The two principal goals of the title XVII Loan Guarantee 
Program are to encourage commercial use in the United States of new or 
significantly improved energy related technologies and to achieve 
substantial environmental benefits, with a reasonable certainty of 
repayment. In general, debt capital, a key component of an optimally 
financed project and the kind of financing the loan guarantee program 
encourages, flows to what is perceived to be the least risky 
investment. While many renewable energy projects can represent both a 
sound investment to investors and a benefit to the public through 
environmental benefits, debt financing will often instead flow to 
projects in industries that have a long and established history of low 
risk. The credit crisis only magnifies the barriers to financing of 
advanced renewable energy projects, both making capital less available 
for all project finance deals, but also encouraging the flight of 
capital to established industries and technologies and away from the 
type of projects supported by the Department's Loan Guarantee Program.

                          SUBCOMMITTEE RECESS

    Senator Dorgan. This hearing is recessed.
    [Whereupon, at 11:21 a.m., Wednesday, April 2, the subcom
mittee was recessed, to reconvene subject to the call of the 
Chair.]
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