[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
REINVIGORATING THE ECONOMY THROUGH STIMULUS LEGISLATION: OPPORTUNITIES 
                                FOR ALL

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

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 15, 2009

                               __________

                            Serial No. 111-1


             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
62-183                    WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  

                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr., 
JAY INSLEE, Washington                   Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut          JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California           GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN,           CANDICE S. MILLER, Michigan
  South Dakota                       JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri            MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                   Gerard J. Waldron, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared statement...........................................     3
Hon. F. James Sensenbrenner, Jr. a Representative in Congress 
  from the State of Wisconsin, opening statement.................     5
Hon. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     6
Hon. John Shadegg, a Representative in Congress from the State of 
  Arizona, opening statement.....................................     7
Hon. John Hall, a Representative in Congress from the State of 
  New York, opening statement....................................     8
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     8
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, opening statement...........................     9

                               Witnesses

Hon. Michael A. Nutter, Mayor, City of Philadelphia..............    10
    Prepared statement...........................................    14
Hon. Douglas Palmer, Mayor, City of Trenton......................    28
    Prepared statement...........................................    31
Mr. Van Jones, President, Green for All..........................    39
    Prepared statement...........................................    42
Ms. Denise Bode, CEO, American Wind Energy Association...........    48
    Prepared statement...........................................    51
Dr. David Kreutzer, Senior Policy Analyst, Heritage Foundation...    55
    Prepared statement...........................................    74
    Answers to submitted questions...............................   108
Mr. Trevor Houser, Visiting Fellow, Peterson Institute for 
  International Economics, Director, Energy and Climate Practice, 
  Rhodium Group LLC..............................................    80
    Prepared statement...........................................    83
    Answers to submitted questions...............................   114

                          Submitted Materials

Hon. Edward J. Markey, letter of January 14, 2009, from the U.S. 
  Green Building Council.........................................   117


REINVIGORATING THE ECONOMY THROUGH STIMULUS LEGISLATION: OPPORTUNITIES 
                                FOR ALL

                              ----------                              


                       THURSDAY, JANUARY 15, 2009

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to other business, at 2:20 p.m. 
in room 2172, Rayburn House Office Building, Hon. Edward J. 
Markey (chairman of the committee) presiding.
    Present: Representatives Markey, Blumenauer, Inslee, 
Larson, Solis, Herseth Sandlin, Cleaver, Hall, Sensenbrenner, 
Shadegg, Walden, Miller, Sullivan, and Blackburn.
    Staff present: Danielle Baussan, Jonathan Phillips.
    The Chairman. For that purpose, I welcome back the members 
of the select committee for the first hearing of a new year. 
The beginning of a new year often prompts people to appraise 
the previous 12 months and, sensing the promise of a fresh 
start, resolve to improve over the next 365 days. Though some 
New Year's resolutions have a habit of going in one year and 
out the other, Congress cannot weaken its resolve to address 
two of the most important issues before the Nation, restoring 
the economy and fighting climate change.
    Over the past year, the U.S. economy suffered through a 
market meltdown, a foreclosure crisis, and volatile oil and 
commodity prices. During this time, 2.6 million U.S. jobs were 
lost; the Southeast suffered a serious drought; and a coal ash 
catastrophe in Tennessee created more environmental damage than 
the Exxon Valdez oil spill. We must prevent 2009 from having a 
similar summary.
    The Obama administration has outlined an economic stimulus 
plan to revive the economy through tax incentives and millions 
of jobs in renewable energy, infrastructure improvements, 
increased State and local aid, and improving the energy 
efficiency of buildings. These initiatives offer an 
unprecedented opportunity for green collar jobs and 
environmental reform to be the backbone of a stronger economy.
    Just this past week, it was reported that a sustainable 
building supply company, Serious Materials, is working with a 
bankruptcy court to buy a traditional window factory that 
closed last December. The company is trying to rehire 300 
workers who were laid off with 3 days notice. Congress and the 
administration must support these efforts on a national scale.
    The stimulus package cannot be a plan to dig ditches or 
create a couple of pork ridden specialty projects. These 
greenbacks should yield green results for all. A stimulus 
package focused on more efficient and renewable energy can 
result in greater labor intensity and higher wages than 
investing in oil production.
    This is not robbing Peter to pay Paul. The Center for 
American Progress predicts a net increase of jobs created if 
Congress supports expanding the renewable energy and energy 
efficiency industries.
    As the stimulus plan is adopted, it must reflect short-term 
and long-term benefits, direct infusion to States and 
localities, and kick-start economic and energy development. 
Energy efficiency and weatherization can be deployed 
immediately through existing skill sets and technology. Tax 
incentives can encourage greater investment and employment in 
renewable industries, while smart grid development can sustain 
a national network of long-term permanent employees.
    A green economy didn't get us into this mess, but it can 
get us out. The promise of a green economy can be met in every 
State, in every demographic. It is estimated that 30 percent of 
jobs created or sustained through the stimulus bill will be in 
construction and manufacturing, with another large share in the 
retail, hospitality, and mining industry. These sectors employ 
many low- and middle-income workers who have been hardest hit 
by the recession.
    Technological advancements and corporate investment 
opportunities can augment these economic gains. Congress and 
the administration must seek ways to find a green economic tide 
that lifts all boats.
    Some people may look forward to the new year as a new start 
on old habits, but we cannot afford to overlook the opportunity 
to strengthen the economy by developing a globally competitive 
industry for renewable energy, restoring our failing 
infrastructure, and increasing environmental and energy 
security. This is one resolution we cannot and will not break.
    Let me turn and recognize the gentleman from Wisconsin, Mr. 
Sensenbrenner, for his opening statement.
    [The statement of Mr. Markey follows:]

    [GRAPHIC] [TIFF OMITTED] T2183A.001
    
    [GRAPHIC] [TIFF OMITTED] T2183A.002
    
    Mr. Sensenbrenner. Thank you very much, Mr. Chairman. Let 
me first start out by apologizing that I am going to have to 
leave a little after 3:00 because I have a plane to catch to 
get back to Wisconsin. We are not really into the global 
warming bit, particularly today when the high temperature is 
scheduled to be minus 2, but nonetheless I am happy that the 
committee has been reauthorized and that we will be working on 
this issue in the next 2 years.
    Despite having more than 50 hearings in the last Congress, 
the select committee never fully examined how legislative 
proposals to address global warming will truly affect the 
American economy. I think we are all for creating jobs, green 
jobs, brown jobs, purple jobs, any kind of jobs. But I think 
that we also have to recognize that there are consequences to 
whatever we do. And if a rising tide is to lift all boats, it 
shouldn't be up to the Congress or the Federal Government to 
pick winners and losers. We live in a market economy. It is the 
market that will pick the winners and the losers, and we should 
not deprive people of their right to earn a living to support 
their family and to have a comfortable and acceptable lifestyle 
simply because they happen to be on the politically incorrect 
side of today's equation. So we are going to have to look at 
what tradeoffs result from what we are dealing with here and 
what we are thinking of dealing with here.
    I look at the stimulus proposal as something that can 
either be very good or very bad, and not in between. Let me say 
that we hear from our friends on the other side of the aisle 
that this is all good and nothing is bad at all. I want to put 
a couple of things on the table.
    First of all, if all of this money is borrowed, we are 
going to have to pay it back sometime. And we are borrowing 
money in many cases from people who do not share our interests 
and values, like China and OPEC.
    Secondly, we have to look at what happened in Japan in the 
decade of the 1990s where they had stimulus packages that were 
almost entirely public works oriented; and there were more jobs 
created while the money was being spent building a new bullet 
train line or a new freeway or new buildings or whatever, but 
as soon as that federal or national government money ran out in 
Japan, then they were right back from where they started. And 
most Japanese call the decade of the 1990s the lost decade. We 
Americans cannot afford to repeat that, and I am afraid we 
might be going down that road.
    Now, finally, in terms of the whole issue of cap and tax--
--and that is what I call cap and trade, because the carbon 
credits that have to be bought are really a tax--we have got to 
be careful that the businesses that we are trying to help and 
the segments of the economy that we are trying to help with the 
stimulus package don't end up having to pay on the other end 
what we are trying to give them on one end.
    For example, the concrete industry has a huge carbon 
footprint in it. Making concrete is probably more carbon 
emission intensive than driving your car between here and 
Philadelphia and back. And if we think we are creating jobs by 
improving our infrastructure, and a lot of that involves 
concrete, whether it is roads or bridges or buildings or things 
like that, we just have to make sure that the government does 
not taketh away what it is giving with one hand.
    So I think we are going to have to look at this all very 
carefully, and we are going to have to look at it beyond the 
boundaries of the four corners of the piece of legislation that 
we will be voting on in the next couple of weeks. If we do that 
and do that properly, we will be doing ourselves and the 
American people a great favor. If we don't do this properly, we 
are going to end up being asked to bail out more industries 
that we harm, either by sins of omission or sins of commission, 
and we are going to lose the accountability that we desperately 
need when the Federal Government appropriates a huge amount of 
money.
    And the final point I want to make on this whole business 
is accountability is really the key. There was no 
accountability with the TARP that was passed in September; 
there was no accountability with the Katrina money that was 
spent. And, if we do not have much, much better accountability, 
then we in Congress are breaching the trust that the American 
taxpayers have given to us to spend their tax money wisely and 
to the best possible effect.
    Thank you.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. 
Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman. I appreciated the 
comments from my good friend from Wisconsin. I would take 
modest exception to the notion that we don't care whether these 
are green jobs or brown jobs, because I think it is very 
important that we do not use the economic stimulus, the 
investments that we are going to make, to create jobs of the 
past that are in fact brown or black or dirty, however you want 
to term that. And it is not just the invisible hand of the 
market that has created dirty jobs. Many of these efforts were 
deliberately subsidized by the Federal Government, by our 
policies in terms of energy, tax, public lands, to--whether it 
is coal or nuclear or inefficient transportation patterns or 
Federal policies that virtually dictated suburban sprawl that 
made a huge problem, for example, for the inner city for 
Philadelphia, while it was subsidizing their competition. The 
notion that it is the invisible hand that has worked against 
Detroit when our tax dollars have subsidized the establishment 
of modern foreign owned factories in other States, I beg to 
differ.
    And I think, Mr. Chairman, part of what has been so 
important with this committee under your leadership is that for 
2 years we have focused on what the security and economic 
provisions are.
    Some of our witnesses are no stranger to the committee or 
other committees that I sit on. They have been helping us to be 
able to develop many of the elements of this plan I think are 
excellent. I think it can be better. I look forward to hearing 
the comments from the witnesses here and working with them and 
with the committee to continue to push those boundaries. We can 
refine the package not just for what it means today, but it 
sets a standard for what this Congress and the new 
administration are going to do over the course of 4 years with 
reauthorization, with budget. This starts the job; it doesn't 
finish it.
    We need, however--and the distinguished ranking member is 
right on the money when he talks about how we are going to pay 
for these ultimately. Yes, we are going to stimulate. It would 
undercut our efforts if we would suddenly raise taxes and fees 
to pay for it now. But we are moving into an era where money 
does matter, and, again, creatively capturing, creating and 
capturing green value can help us finance this over time. And I 
look forward to working with the committee and especially our 
distinguished witnesses here today to be able to develop these 
boundaries.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman has expired. The Chair 
recognizes the gentleman from Arizona, Mr. Shadegg.
    Mr. Shadegg. Thank you, Mr. Chairman. I want to commend you 
for holding this hearing, and I want to thank you for the 
adoption of the rules and beg your forgiveness for my 
tardiness. I understand they passed unanimously, and I would 
have been happy to join in that. I am--given the restraint on 
opening statements which is occurring in other committees, I 
want to thank you for being generous in your allotment of time 
to opening statements in this committee, and hope it will 
continue to be the policy of this select committee, and I 
appreciate that very much.
    I think this is an interesting topic, and I think it is 
good that we are having this kind of dialogue. For me, 
stimulating the economy is extremely important. It comes down 
to people losing their jobs and people being unemployed and 
people suffering, but there is an interface between the economy 
and the environment. I think as a nation we have learned that 
when we have done gratuitous damage to the environment, it has 
been economically ill-advised as well. But, by the same token, 
I think it is generally true across the globe that nations that 
are financially prosperous and successful and doing well are 
the nations best able to protect the environment. That is one 
of the reasons why I think looking at a stimulus package and 
looking at a green component of a stimulus package is an 
appropriate thing to do.
    I was interviewed on the radio a week ago--actually, it was 
on a TV show, I think. And they wanted to know why I would not 
object to a green component of a stimulus package. I said, 
well, I think the Nation needs to be very concerned about its 
environment and needs to be looking at green issues, but we 
also need to look at those issues in the context of the 
economy. For example, I argue that there are things that we can 
do that both benefit the economy and benefit the environment. 
On, for example, the emission of greenhouse gases, I made a 
statement today in the Commerce Committee where I pointed out 
that there are things that we can do that have dual benefit, 
that both reduce greenhouse gases and also reduce our reliance 
on foreign energy. And relying on foreign energy is something 
that I think we have discovered is not good for the Nation.
    So I am anxious to stimulate the economy. I am anxious to 
do so in a way which is environmentally sensitive. I don't 
think we can, using government money, spend our way out of the 
current economic troubles we are in, but I do believe that 
there are problems with our infrastructure in the country and 
that where we can look at projects that have both a stimulative 
value and a value that benefits the economy, and particularly, 
for example, improving insulation in buildings, which will not 
only reduce greenhouse gases but also reduce our consumption of 
foreign oil, or we can make more efficient automobiles which 
will have those dual benefits, or where we can rely on 
renewables such as wind or solar, which will have that dual 
benefit, we should pursue those strategies first and foremost.
    The Chairman. I thank the gentleman.
    The Chair recognizes the gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman, for holding this 
hearing, and thank you to our witnesses for being here today.
    Our country is in a recession. Unemployment is on the rise, 
as are foreclosures. At the same time, the stock market is 
falling, wages are stagnating, and home prices are dropping as 
well, wiping out hard-earned equity for many families. So it is 
our responsibility to do whatever we can in the short term to 
stimulate the economy, but in doing so we should also make sure 
that our investments make sense in the long term and that they 
help solve the climate crisis.
    I believe that we need an economic stimulus package, and 
that by focusing on green jobs and green infrastructure we can 
create even more jobs than if we simply invest in traditional 
public works. In fact, we have heard testimony from other 
panels that that is the case. And in fact, we have in the past, 
other Congresses have in the past selected winners or losers; 
for instance, by exempting certain kinds of vehicles from 
emissions or safety standards or by allowing extractive 
industries to take minerals out of public lands without paying 
a fair royalty.
    Those are choices that are being made by government, and I 
think that we can make--we should either have a level playing 
field and not make choices like that, or we should try to favor 
those with the least environmental impact and most 
environmental benefit, such as renewable energy production, 
smart grid technology, energy efficiency, weatherization, which 
can not only create jobs but can have a multiplying effect, as 
my colleague Mr. Shadegg said, by saving consumers and 
businesses money on energy costs. And many weatherization 
projects are not so sophisticated as a highway or a bridge 
design. In fact, in my district we don't call them shovel 
ready, they are already screw driver ready. Many of the 
construction trades people who were laid off of work because of 
the downturn in housing could be hired immediately to start 
saving this energy and saving people the cost of heating or 
cooling their homes and have an immediate impact on our 
economy.
    So these are good policy, economic, environmental policy, 
energy policy, and also for our sovereignty and our 
independence as a nation. I look forward to the testimony of 
our witnesses, and thank you again, Mr. Chairman.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. I want to thank everybody for being 
here, especially Mr. Jones, whose brilliant book, Growing a 
Clean Economy, is just wonderful. And if you have a sleep 
problem, don't read it; you won't be able to go to sleep. 
Thanks for your great work.
    I just want to point out, we are trying to maximize the 
amount of the renewable package that goes to energy. And the 
reason is, we want to have something that is quick but we want 
to have something that is enduring as well. And we know that 
the enduring job creation we are going to have is in green 
collar jobs. That is where the money is, that is where the jobs 
are. That is what is going to grow the economy for the next 
decade or two, not just for the next 60 days.
    And we think we have got quite a number of unexplored 
options available to us. Some of us are going to continue to 
try to improve the amount that has been dedicated to these 
green jobs, both in building and retrofitting our buildings so 
they are more energy efficient, which are immediate things we 
can do, R&D, lithium ion batteries. Some say we can't do this 
right away.
    I had a company, Johnson Controls, just leave my office an 
hour ago. They can have a lithium ion battery manufacturing 
plant built, in operation, by next December. That is fast 
enough, and it is an enduring contribution. We cannot allow--
and if we don't put pedal to the metal in this renewable 
package, we are going to trade a dependence for Saudi Arabian 
oil for a dependence on Chinese lithium ion batteries. And that 
is why we are going to try to do as much as we can on this.
    And thanks for all your testimony.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the former mayor of Kansas City, the 
gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. I appreciate the 
opportunity to be a part of this hearing, and thank you for 
calling it. Particularly, I got a chance to have some dialogue 
with a friend and mayor of Trenton, New Jersey. We served 
together during my terms as mayor of Kansas City, Doug Palmer. 
And of course Michael Nutter, who has already distinguished 
himself as mayor of Philadelphia. And as a former mayor, and my 
colleagues will tell you, at our meeting this morning every 
statement I made as we were talking about this package dealt 
more with issues with which mayors would be concerned, so much 
so that one of my members reminded me that I am the Fifth 
District Representative from Missouri in the United States 
Congress.
    But I am concerned that we are going to spend some enormous 
amounts, as I think we are, in trying to go into public 
housing, for example, retrofit them so that they are energy 
efficient. All of that is good. The problem is whether or not 
we have a sufficient workforce trained to do that. And if we 
are supposed to be screwdriver ready, as my colleague said, if 
these projects must go in 90 days, I am really concerned that 
we are going to leave out a large number of people who would 
otherwise have an opportunity to work in this arena but are 
simply not trained in putting up solar panels. And there is a 
job component, a job training component, but here again if that 
job--and if there is some stuff that doesn't quite fit, I don't 
know how you can train people for a job that has to begin in 90 
days. Because if it doesn't--my understanding is that if the 
jobs don't start in 90 days, particularly money going to the 
Governors, you use it or lose it.
    So I am interested in some exchange, some information, some 
suggestions that you might have on those particular subjects. 
Thank you, Mr. Chairman. I yield back the balance of my time.
    The Chairman. I thank the gentleman. The gentleman's time 
has expired.
    The stimulus package is out. It has been announced, and the 
good news is that this committee is very pleased with what has 
been included in this sector. It reflects the 57 hearings that 
we had last year, it reflects the recommendations which we made 
with regard to what should be included in a stimulus package. 
There is $10 billion in the package to support wind energy; 
there is $4.5 billion for smart grid technology, which uses 
Internet technology, to make America smarter about energy use. 
There is $10 billion for grants to cities and States for 
efficiency programs. There is $6.2 billion for weatherization. 
As Mr. Inslee referred to, there is actually a program for $2 
billion in here for advanced battery research as we move to 
this electric vehicle future.
    So it is an excellent package. It starts to move us in the 
right direction off of energy dependence and towards the goal 
of solving the problem of climate change.
    Our panel today is extremely distinguished, and it has a 
pedigree that is unmatched by any panel that we have had before 
us. And we begin by--first of all, although I am a Patriots 
fan, Mayor Nutter, we are all rooting for you in Philadelphia 
to win. You are not a Jets fan, are you, Mayor Palmer?
    Mr. Palmer. Dallas Cowboys. At least I admitted it.
    The Chairman. So all the more reason to welcome you, Mayor 
Nutter, to the panel. You are a great mayor of a great city. We 
welcome you. Whenever you are ready, please begin.
    Mr. Shadegg. A point of personal privilege. I just want to 
make sure that the ``we all'' doesn't include those of us from 
Arizona, who will be rooting for the Arizona Cardinals. Thank 
you, Mr. Chairman. I do appreciate your sensitivity, but it is 
important to me. I do need to get reelected back in Arizona, 
and I don't want the incorrect implication to arise.
    The Chairman. And if I ever said ``we all,'' then my mother 
is spinning in her grave somewhere.
    Mr. Shadegg. I appreciate that, Mr. Chairman. I am glad I 
have had this chance to set the record straight.
    The Chairman. Mayor Nutter, whenever you are ready, please 
begin.

    STATEMENT OF THE HON. MICHAEL A. NUTTER, MAYOR, CITY OF 
                          PHILADELPHIA

    Mr. Nutter. Good afternoon, Chairman Markey and Ranking 
Member Sensenbrenner, all members of this distinguished 
committee. Thank you very much for the opportunity to be with 
you this afternoon to give testimony.
    I will address the three questions posed to the City of 
Philadelphia by the committee, but let me first preface all my 
responses with an overarching comment about the evolving 
stimulus package. We as policymakers have grown accustomed to 
thinking of cities as warehouses of great need. But in a 
transition to a carbon constrained economy, cities are now 
repositories of great value. Economists and engineers have 
demonstrated that energy efficiency is the most effective way 
to reduce our energy consumption. Cities are, if you will, the 
Saudi Arabia of energy efficiency. With our vast portfolios of 
existing buildings and infrastructure, cities are the best 
places to find this energy resource.
    We are engaged in a great debate over an $800 billion 
package to forestall an unprecedented economic catastrophe; but 
if we are serious about spending the money quickly enough to 
stimulate the economy and wisely enough to maximize the life 
cycle benefits of those investments, then funding existing and 
scalable local projects is one key to that success.
    Where this rubber meets the road is on the streets of 
Philadelphia and many other cities across America. It is 
therefore critical that Congress design a Federal stimulus 
package that allows money to flow directly to cities and to 
those local programs that will spend the money quickly and 
wisely.
    Your first question was, how has the City of Philadelphia 
sought to strengthen its economy by reducing its impact on the 
environment? The City of Philadelphia has a long history of 
reaping the economic benefits of environmental stewardship of 
doing well by doing good, as our Quaker founders might say. 
While I could begin with that history, talking about William 
Penn's establishment of our green country town in 1682, of 
course I want to be very respectful of the committee's time 
today. So I will simply say that making Philadelphia the 
greenest city in America has become a hallmark challenge of my 
administration.
    In April, we will be launching our ambitious action plan to 
reduce our exposure to rising energy prices, limit our 
environmental footprint, and reposition our workforce in 
economic development strategies to leverage our enormous 
competitive advantage in an emerging green economy. Indeed, the 
whole effort could be described as strengthening our economy by 
reducing our environmental impact.
    Your second question posed: Specifically, how does storm 
water management affect cities and the environment? Two hundred 
years ago, Philadelphia was famous for many things, one of 
which was our water system. I am proud to say today that 
admiration for the Philadelphia Water Department, which has 
responsibility for our storm water management system, has only 
grown over the centuries. Cities such as New York and Boston, 
Washington, Milwaukee, and Philadelphia are spending billions 
of dollars to expand their storm water management systems to 
meet the requirements of the Clean Water Act of 1977.
    The traditional gray infrastructure approach to storm water 
management means building bigger and very expensive pipes 
buried in tunnels. That approach further disrupts the natural 
water cycle, effectively wasting the resource of the rainwater. 
Today, there are new approaches being pioneered by cities like 
Philadelphia to use nontraditional green infrastructure 
approaches to limit the negative impacts of past storm water 
management practices. These approaches, which have capital 
costs somewhat similar to gray infrastructure, all attempt to 
use the landscape itself to manage storm water, and are 
outlined in greater detail in my written testimony that was 
submitted.
    Your third question: What policy that is likely to be 
included in a stimulus package would help Philadelphia and 
other cities rebound from a weak economy? In answering this 
question, I focused my testimony on local investments that we 
believe quickly increase employment by simply scaling up 
existing local programs and capacities. We organize these 
investments into two broad categories, a building retrofit 
program and a green infrastructure program.
    First, the retrofit program. There are enormous potential 
returns to energy saving investments in building retrofits, but 
the challenge is in designing effective programs. Building 
retrofits may be self-financing, but they are not self-
implementing. They require both startup capital and effective 
delivery programs.
    The City of Philadelphia currently spends $19 million 
annually on housing preservation and weatherization, $11 
million of which are supported by the CDBG program. These funds 
are used to provide weatherization improvements such as attic 
and wall insulation, window sealing and replacement, and 
upgraded heating equipment. We currently conduct some degree of 
weatherization in about 5,000 homes a year. How large can such 
an effort really be in Philadelphia? This work is truly caulk 
gun ready and could happen as quickly as funds are available.
    There are approximately 400,000 row houses in the City of 
Philadelphia. Using the estimates cited in my written 
testimony, we could raise the energy efficiency of, say, a 
quarter of those row houses by 20 percent. Examples are 
insulation, air-sealing, cool roofs, and so on. By investing 
$250 million over 2 years, 50,000 projects would directly 
employ at least 1,000 people full time over the course of a 
year.
    The kind of weatherization proposal in the above example, 
insulation, air-sealing, cool roofs, typically has a simple 
payback in lower energy bills of about 2 years. In 
Philadelphia, we propose to use that payback to replenish the 
original $250 million; we propose to use that payback--with the 
replenished funds we could weatherize every row house in 
Philadelphia in less than a decade, harvesting a huge return in 
reduced energy consumption and greenhouse gas emissions.
    Capitalizing this effort with stimulus dollars that could 
be leveraged by other sources and used to create a revolving 
fund is critical to conducting building retrofits at a scale 
under current financial conditions.
    Now, a few words on the green infrastructure program. We 
want to deploy green space as a public utility by placing 
thousands of new trees on city streets; increasing the amount 
of green open space; using pervious pavement on parking lots 
and playgrounds; and building green roofs and bioswales. We can 
use green to supplement pipes.
    In the long run, green infrastructure investments are much 
more sustainable as an adaptive approach to climate change and 
sea level rise. In the short term, they improve air quality and 
lower the incidence of heat stress, support walkable streets, 
with bicycle and transit options, and provide access to outdoor 
amenities and fresh locally grown food.
    And, finally, investing in green infrastructure 
technologies also makes us more competitive by growing our 
position in new green technologies and job skills.
    Philadelphia has an extensive catalog of green 
infrastructure projects that we have demonstrated in 
neighborhoods all across the city, from green streets to city 
farms. We have over $100 million worth of green infrastructure 
projects capable of producing benefits in terms of water, air 
quality, family sustaining employment, and more equitable 
access to healthy environments and food. But the current 
downward financial spiral is preventing us from making these 
investments. Providing stimulus funds for this innovative green 
infrastructure approach is critical to the City of Philadelphia 
realizing these benefits over the foreseeable future.
    In conclusion, Mr. Chairman, ranking member, and members of 
the committee, a $250 million building retrofit program in 
Philadelphia would be consistent with the creation of a $50 
billion national program. A $100 million green infrastructure 
program in a city like Philadelphia is consistent with the 
creation of a $20 billion national program. This is less than 
10 percent of an $800 billion stimulus package, 10 percent 
focused on effective local programs that create jobs while 
improving the environment.
    Mr. Chairman, ranking member, members of the committee, 
thank you very much.
    [The statement of Mr. Nutter follows:]

    [GRAPHIC] [TIFF OMITTED] T2183A.003
    
    [GRAPHIC] [TIFF OMITTED] T2183A.004
    
    [GRAPHIC] [TIFF OMITTED] T2183A.005
    
    [GRAPHIC] [TIFF OMITTED] T2183A.006
    
    [GRAPHIC] [TIFF OMITTED] T2183A.007
    
    [GRAPHIC] [TIFF OMITTED] T2183A.008
    
    [GRAPHIC] [TIFF OMITTED] T2183A.009
    
    [GRAPHIC] [TIFF OMITTED] T2183A.010
    
    [GRAPHIC] [TIFF OMITTED] T2183A.011
    
    [GRAPHIC] [TIFF OMITTED] T2183A.012
    
    [GRAPHIC] [TIFF OMITTED] T2183A.013
    
    [GRAPHIC] [TIFF OMITTED] T2183A.014
    
    [GRAPHIC] [TIFF OMITTED] T2183A.015
    
    [GRAPHIC] [TIFF OMITTED] T2183A.016
    
    The Chairman. Thank you, Mayor Nutter, very much.
    Our next witness is the Honorable Douglas Palmer, the mayor 
of the City of Trenton. He has served four terms in office. He 
has been a champion of working families. He has also received 
the Phoenix Award by becoming a national leader on brownfields 
development, and he recently completed a 2-year term as the 
President of the U.S. Conference of Mayors.
    Welcome, Mayor Palmer. Whenever you are ready, please 
begin.

  STATEMENT OF THE HON. DOUGLAS PALMER, MAYOR, CITY OF TRENTON

    Mr. Palmer. Thank you, Mr. Chairman and members of the 
committee. It is a pleasure to be here with this very 
distinguished panel and my good friend and neighbor, Michael 
Nutter. It is also good to see former Mayor Cleaver. But once 
you are a mayor, you are always a mayor.
    I really want to thank you for the opportunity to appear 
today on behalf of the United States Conference of Mayors, who 
represent 1,200 U.S. cities. And also on behalf of the Nation's 
mayors, we also want to express our deep appreciation to the 
committee, especially you, Mr. Chairman, and Ranking Member 
Sensenbrenner, for holding a field hearing, as you remember, at 
our meeting in Seattle, Washington. And it was very fruitful.
    At that time, I was pleased to participate in this hearing 
to discuss the mayors' energy and climate efforts, and most 
notably our call for enactment of the Energy Efficiency and 
Conservation Block Grant Program, which is a top priority of 
the Nation's mayors for the economic recovery package.
    Immediately following your hearing, Congress enacted the 
EECBG program as part of the Energy Independence and Security 
Act of 2007, and thanks to your leadership, Mr. Chairman, 
members of this committee, and others throughout the Congress. 
Since that time, the Nation's mayors, through the Conference of 
Mayors, joined by the National League of Cities and National 
Association of Counties, has spent many months urging Congress 
to fund this program so that we can accelerate our Nation's 
efforts through community-based investments and other 
initiatives to grow green jobs and a greener economy.
    Mr. Chairman, also, we are pleased that the House of 
Representatives today released an outline of its American 
Recovery and Reinvestment Plan, and that plan includes $6.9 
billion to help State and local governments make investments 
that make them more energy efficient and reduce their carbon 
footprint.
    Mr. Chairman, you asked for testimony on three priority 
concerns: How has the economic downturn affected cities' 
efforts to meet fiscal and environmental goals? Can a green 
economic recovery package create jobs and stimulate the 
economy? And, how should stimulus funds between States and 
cities be allocated?
    The reality at the local level is the economic downturn is 
having a profound effect on our fiscal and environmental goals. 
We strongly believe that there is evidence that supports this; 
that the economic recovery plan can create jobs and stimulate 
the economy while providing significant environmental benefits 
for local areas.
    Mr. Chairman, and members of the committee, our Nation's 
cities and their metro areas are the engines of our national 
economy. Our 363 metro areas are home to 86 percent of U.S. 
employment, over 90 percent of wage income, and nearly 90 
percent of our gross domestic product. Therefore, without the 
economic recovery of our cities and metros, there can be no 
U.S. recovery.
    We are going to release at our conference meeting this week 
a forecast of metro unemployment for 2009, which was prepared 
by Global Insight, and of course it is no secret the news will 
not be good. Almost all metros will see significant job 
declines in 2009, and an amazing number of our metro economies 
will experience no employment gains for the decade. And with 
your permission, I would like to add that report to the record.
    The Chairman. Without objection, it will be included in the 
record.
    Mr. Palmer. Complement this jobless picture with a 
significant loss in our tax base due to falling real estate 
prices, which you mentioned as a part of the foreclosure issue, 
and cities are left with almost no fiscal capacity to expand 
existing or start new initiatives on climate protection, energy 
efficiency, and energy independence, areas that are absolutely 
essential to building a competitive economy for the future.
    I want to move a little forward and talk about economic 
recovery plan, job stimulus, and local environmental goals. You 
know, mayors have been consistent in our views about the 
opportunity and necessity to put this Nation on a path to a 
green economy. This has certainly been a central theme of the 
mayors' advocacy of the conference's Main Street Economic 
Recovery Plan, which I will be glad to answer questions later, 
first released in early November. The Nation's mayors have been 
urging Congress and the new administration to make a strong 
commitment to Main Street-oriented investments that will create 
jobs and reinvigorate the economy.
    Mr. Chairman, to support this Main Street recovery plan, we 
are continually surveying our mayors on investments that can 
immediately stimulate job creation from completed projects 
before the end of 2010. This weekend we will release an updated 
survey of ready-to-go projects that illustrate the variety and 
range of investments that could be made in cities all across 
the country.
    At our winter meeting, the conference will release its 
updated survey results based on responses from 779 cities, and 
one of course is in Phoenix, Arizona, just so you know, and 
Portland, and even in Wisconsin. We project that for each $1 
billion in EECBG funding, about 10,000 local jobs in our cities 
would be created exclusive of the many other direct jobs in 
manufacturing and other direct and indirect jobs that will 
result.
    These projects could include, as has been mentioned, energy 
retrofits of public and private buildings, installation of 
solar panels or wind turbines, deployment of new energy 
distribution technologies that significantly increase energy 
efficiency, and the development of systems to capture and 
generate power from methane at landfills.
    Mr. Chairman, we also believe, in conclusion, that 
certainly through this formula one of the best ways to make 
sure that this money is done, as Mr. Sensenbrenner wants to see 
it is done, done right, that there is competition. One of the 
best ways to do this and do it quickly is to put monies direct 
to cities. I love the States and I love the Governors, but I 
think if you want to see things happen right away, where the 
rubber meets the roads, are the Nation's mayors that have 
projects that are transparent. No bridges to nowhere. A lot of 
times, any monies we spend have to be through all kinds of 
public bidding as well as other kinds of things that are 
transparent. My citizens in Trenton, they won't allow me to put 
a bridge to nowhere. They would have my head. So we have the 
transparency. We can get the money out into our communities and 
our cities. And we suggest part of the monies that go, go 
direct to cities.
    And I want to thank you for having the opportunity to be on 
this distinguished panel, and look forward to answering any 
questions.
    [The statement of Mr. Palmer follows:]

    [GRAPHIC] [TIFF OMITTED] T2183A.017
    
    [GRAPHIC] [TIFF OMITTED] T2183A.018
    
    [GRAPHIC] [TIFF OMITTED] T2183A.019
    
    [GRAPHIC] [TIFF OMITTED] T2183A.020
    
    [GRAPHIC] [TIFF OMITTED] T2183A.021
    
    [GRAPHIC] [TIFF OMITTED] T2183A.022
    
    [GRAPHIC] [TIFF OMITTED] T2183A.023
    
    [GRAPHIC] [TIFF OMITTED] T2183A.024
    
    The Chairman. Thank you, Mayor Palmer, very much.
    Our next witness, Van Jones, is the President of Green For 
All, and a Senior Fellow at the Center for American Progress. 
Mr. Jones also co-founded the Ella Baker Center for Human 
Rights and has received numerous awards, including being 
selected by Time Magazine last year as an environmental hero.
    We welcome you back, Mr. Jones. Whenever you are ready, 
please begin.

        STATEMENT OF VAN JONES, PRESIDENT, GREEN FOR ALL

    Mr. Jones. Thank you. Good to be here.
    Well, Mr. Chairman, other committee members, I am just 
happy to be here and I appreciate the opportunity to talk. I 
was here in 2007 when the term ``green collar job'' was very 
rarely heard anywhere. This may have been the first place it 
was heard in Congress, and now it is everywhere. And that 
reflects something. It reflects a hunger and a desire on the 
part of the American people to solve the two biggest crises 
possibly ever to face this country, an economic catastrophe and 
a climate crisis, both of which could undermine our Nation's 
security, our economy, not just now but for decades into the 
future.
    You, unlike the rest of us, next week we are going to be 
celebrating; you will celebrate for about 10 minutes and then 
you are going back to sweating, sweating over the details of 
this recovery, sweating over the details of how it is that we 
can actually beat the recession and global warming at the same 
time.
    The 111th Congress will be in the history books. A hundred 
years from now students will study this Congress, and they will 
ask one question: Were you able to solve the problem? Were you 
able to deal with this twin crisis? How did you do it? And you 
are going to get a grade from our great grandchildren, yes or 
no, pass or fail.
    The reason that green jobs are so important is because they 
are the most secure way to ensure success for this Congress, 
because while on the one hand we are facing an economic 
catastrophe and on the other we are facing a climate crisis, 
what we have to keep in mind is that everything that is good in 
the fight against global warming, everything that is good for 
the environment is a job. It is a job. Solar panels do not put 
themselves up. Wind turbines do not manufacture themselves. 
Buildings do not retrofit themselves and weatherize themselves. 
And in our industrial society, trees don't even plant 
themselves. Everything that is good for the environment is in 
fact a job, and that is a key to a breakthrough.
    What I want to implore is three things. Keep in mind as we 
go forward that sometimes--and you know this from your personal 
life--sometimes something really bad has to happen before 
something really good can happen. Sometimes you have to have a 
breakdown before you can have a breakthrough. You look at your 
personal life; that is true. It is not after you had a bunch of 
good days in a row that you say, hey, I need to go on a diet or 
make a big change. It is when you get a bad diagnosis from a 
doctor, it is when something awful happens. That is when you 
sit down and say, I have got to make a difference here, I have 
got to make a change. Well, we just got a bad diagnosis, and 
the whole country now is looking for a change.
    You have the opportunity to turn this breakdown into a 
breakthrough, and you can if you honor three principles: Number 
one, this is a chance for America finally to return to its 
roots as the most important economy in the world, not because 
we are the number one consumers, but because we are the number 
one producers.
    Congressman Inslee pointed out that there is an opportunity 
to bring green manufacturing jobs back to this country making 
batteries, making wind turbines, doing those things in the 
United States. Let us seize the opportunity to abandon the idea 
that we can forever be the most important economy in the world 
based on consumption, based on consumerism, based on credit 
cards. Let's get back to building rather than borrowing in the 
United States. Number one.
    Number two, as we honor Congressman Sensenbrenner's plea 
for accountability--and I will underscore that. We don't want 
to see any more wasted money. We can't afford it. We don't want 
to see any more of the Katrinas and those kinds of things. We 
can't afford it. But as we do that, let's make sure we get our 
math right. This is a green economy we are trying to build, and 
in a green economy the math is different. You don't just count 
what you spend, you count what you save. This is a key point: 
When you are building a green economy, you don't just count 
what you spend, you count what you save. And a massive 
investment, as the mayors are calling for, in energy efficiency 
will save us money over the long term. And that is the 
importance of the Energy Efficiency and Conservation Block 
Grant that the mayors have fought so valiantly for.
    The third is simply this. We have an opportunity to do 
something that no generation of Americans has ever had the 
opportunity to do: We can build a green economy that Dr. King 
would be proud of. We have the opportunity to connect the 
people who most need work with the work that most needs to be 
done, and fight pollution and poverty at the same time, and be 
one country about it. We have a chance to slow up for just a 
second, as Congressman Cleaver said. We might have to delay 2 
weeks to help some of the young men and young women that you 
represent to get a little bit more training to get involved. We 
might have to wait 3. We might have to hold up a month to get 
some of these young folks coming home from wars, coming home 
from prisons, coming out of high school, we might have to even 
wait an extra month to get them trained to become a part of 
this. But if we do that, we will have built a green wave that 
can lift all boats, we will have created green pathways out of 
poverty. We will show a new generation of Americans that we can 
stand together and do great things again, and that differences 
of color and class, starting point differences, don't matter, 
because we have a big future that we are trying to fight for 
together.
    You as the leaders of the 111th Congress on this most 
pressing issue have the opportunity to make us the number one 
producer in the world, to change the math so we count what 
counts; we don't just count what we spend, we also count what 
we save, and to connect the people who most need work to the 
work that most needs to be done. And if you do that, our great, 
great grandchildren will give you an A-plus.
    Thank you very much.
    [The statement of Mr. Jones follows:]

    [GRAPHIC] [TIFF OMITTED] T2183A.025
    
    [GRAPHIC] [TIFF OMITTED] T2183A.026
    
    [GRAPHIC] [TIFF OMITTED] T2183A.027
    
    [GRAPHIC] [TIFF OMITTED] T2183A.028
    
    [GRAPHIC] [TIFF OMITTED] T2183A.029
    
    [GRAPHIC] [TIFF OMITTED] T2183A.030
    
    Mr. Palmer. He gave my speech.
    The Chairman. Let's hear it for Van Jones. What a great 
speech. Fantastic. I agree with you. We don't agree on the 
Dallas Cowboys, but Van Jones we agree on. Is this a great 
panel? Come on, I told you it was a great panel starting out 
here.
    Our next witness is Denise Bode, who is the Chief Executive 
Officer of the American Wind Energy Association. She is a 
nationally recognized energy expert, and previously served as 
CEO of American Clean Skies Foundation and President of the 
Independent Petroleum Association of America.
    Is this recombinant political DNA? This is the Obama era, 
huh? The President of the American Petroleum Association is now 
the head of the American Wind Energy Association, and this is 
the way the wind is blowing now, huh?
    So Ms. Bode, we welcome you. Whenever you are ready, please 
begin.

STATEMENT OF DENISE BODE, CEO, AMERICAN WIND ENERGY ASSOCIATION

    Ms. Bode. Thank you, Mr. Chairman, and Ranking Member 
Sensenbrenner, sorry he had to leave as well, and distinguished 
members of the committee, it is really a pleasure to be here. 
My name is Denise Bode, and I am CEO of American Wind Energy 
Association.
    Our association is a national trade association of 
America's wind energy industry, with more than 1,800 member 
companies, including project developers, manufacturers, 
component and service supply.
    I have to tell you, I come at an extraordinary time, and 
sitting next to Van Jones, I swear I am so excited about the 
future. I was excited before, and now I just want to go out and 
do even better work to support this new era of green energy 
jobs.
    You know the economic, the national security, the energy 
and environmental challenges are numerous and momentous and, 
fortunately, the industry that I represent can play a key role 
in solving many of them for the future, including serving as 
economic driver.
    Last week, I had the opportunity to attend the President-
elect's speech where he announced that he wanted to double the 
amount of renewable energy over the next 3 years, and our 
industry is prepared to achieve that. In fact, to do so, 
though, we need Congress to adopt the right policies in this 
stimulus package as part of the economic recovery bill now 
being developed. And we have had great encouraging conversation 
over the past several days with Members of Congress, transition 
team, and I am really hopeful that when the details and the 
specs come out of this package it will include key provisions 
to enable us to continue to grow through the economic downturn.
    Let me tell you just a little about the status of the wind 
industry, because I think a lot of folks still think of it as 
kind of a boutique industry or not really a major part of the 
growing energy generation source. Last year was the fourth 
straight year of record growth in the industry. We are still 
compiling final numbers, but more than 7,500 megawatts of wind 
energy was installed, second only to natural gas for the fourth 
year running. Total wind energy capacity is now over 24,000 
megawatts, and that is equivalent to 18 typical coal-fired 
power plants, eight nuclear plants. That replaces 140 million 
vehicles off the road.
    Our industry has seen significant growth, though, in 
manufacturing as well. More than 65 new or expanded 
manufacturing facilities have been announced or opened since 
January 2007. That is amazing. Twenty-one States, too. Not just 
in certain select areas. Auto sector facilities have retooled 
the manufacture for wind. A former appliance manufacturing 
plant was renovated to build turbine blades. And I suspect 
there is no other sector of the economy that can point to that 
kind of manufacturing growth over this difficult economic 
period.
    Even though our industry employs over 80,000 workers in 
good-paying jobs, we are just getting started and growing. In 
May 2008, the U.S. Department of Energy released a report on 
the feasibility of achieving 20 percent of our Nation's 
electricity from wind energy alone by 2030, and DOE concluded 
that with no--with absolutely no additional technological 
breakthroughs, that it is doable, and that achieving the level 
of deployment would have significant benefits for the 
environment and economy. And they talk about achieving that 
with increasing to over 500,000 jobs. And let me tell you, if 
you look at the numbers, since that report has been issued we 
have had met or exceeded every target every year in adding 
those megawatts.
    But while the wind industry growth has been strong, the 
industry has not been immune to the larger forces that have 
dragged our economy down. The market is not there for us 
either. In fact, major developers of wind farms have publicly 
announced plans to cut back on turbine installations by 25 to 
50 percent in 2009. And that setback also impacts 
manufacturers. DMI Industries, a tower manufacturer, is laying 
off around 191 employees. There is a blade manufacturer laying 
off 150 workers, another, TPI Composites, another one delayed 
plans to hire 300 workers, and Trinity Structural Towers is 
laying off another 131. Many of those are from all across the 
U.S.
    Job losses will mount without congressional action. And, 
according to recent analysis, a failure to address the credit 
crisis and make sure tax incentives for renewable energy work 
in a down economy will result in the loss of 89,000 jobs in 
wind energy and related industries.
    Because wind industry is capital intensive in growing, many 
developers do not have enough income and large enough tax bills 
to directly use the tax incentives, the production tax credit 
and accelerated depreciation that is intended to permit 
renewable energy. Instead, they partner with financial 
institutions that can use the incentives to offset their own 
tax liabilities.
    The economic decline has eliminated many major financial 
players from the tax equity markets, dramatically reducing the 
ability of many wind power developers to realize the intended 
benefits of available tax incentives. In fact, the number of 
tax equity investors has been slashed from 20 in 2007 to 
approximately five today. Let me tell you, it is critically 
important that we make a huge difference in addressing the 
ability to utilize these tax incentives, and that is a lot to 
ask of only five investors.
    Specific policies are needed in the economic recovery 
legislation. What the wind industry is seeking is temporary 
changes to Federal renewable energy incentives that will help 
expand the number of investors in renewable energy projects, 
assist in providing adequate capital for project development, 
and ensure that incentives provide the benefit Congress 
originally intended when extending the PTC. Specifically, we 
support changes that enable renewable energy developers to 
effectively monetize their tax credits and accelerated 
depreciation benefits to the extent they don't have sufficient 
levels of taxable income to otherwise utilize those tax 
incentives. Why put it in place if you can't use it? Allowing 
renewable energy developers to carry back PTCs against their 
tax liabilities over prior decades, and, third, a long-term 
extension of the PTC to provide a more stable environment for 
renewable energy developers.
    Thank you so much. I have a lot more I can talk about in 
question and answers, and I appreciate the opportunity for 
somebody that has worked in the fossil fuel area who has seen 
the light and has been working now in the clean energy in the 
wind power era to testify before you and to hopefully add to 
this debate.
    [The statement of Ms. Bode follows:] 

    [GRAPHIC] [TIFF OMITTED] T2183A.031
    
    [GRAPHIC] [TIFF OMITTED] T2183A.032
    
    [GRAPHIC] [TIFF OMITTED] T2183A.033
    
    [GRAPHIC] [TIFF OMITTED] T2183A.034
    
    The Chairman. Thank you very much. And thank you for being 
here as well.
    Our next witness, Dr. David Kreutzer, is Senior Policy 
Analyst in Energy Economics and Climate Change at the Heritage 
Foundation. He taught economics at James Madison for more than 
20 years, and he also served as the mayor of Dayton, Virginia 
in 2003 and 2004.
    So we welcome you, sir. Whenever you are ready, please 
begin.

 STATEMENT OF DAVID KREUTZER, SENIOR POLICY ANALYST, HERITAGE 
                           FOUNDATION

    Mr. Kreutzer. Thank you very much. Mr. Chairman, I want to 
thank you and the members of the Select Committee on Energy 
Independence and Global Warming for this opportunity to address 
you. I would like to point out that I would thank you even more 
heartily if next time you have me speak before Van Jones 
instead of after.
    My name is David Kreutzer. I am Senior Policy Analyst in 
Energy Economics and Climate Change at the Heritage Foundation. 
The views I express in this testimony are my own and should not 
be construed as representing any official position of the 
Heritage Foundation.
    Concern with the state of our economy is understandable, as 
is the desire to take action to improve it. The committee has 
asked me to address several questions regarding economic 
stimulus as it relates to energy and climate policies.
    The first question is, how would mandatory restrictions on 
carbon emissions affect the U.S. economy? Mandatory 
restrictions on carbon dioxide emissions reduce economic growth 
and destroy jobs. Last summer, a colleague, Dr. Karen Campbell, 
and I analyzed the impact on the economy from regulating carbon 
dioxide as a Clean Air Act pollutant. We have attached that 
report to my testimony, and I hope it would be entered into the 
record.
    The Chairman. Without objection.
    [The information follows:] 

    [GRAPHIC] [TIFF OMITTED] T2183A.035
    
    [GRAPHIC] [TIFF OMITTED] T2183A.036
    
    [GRAPHIC] [TIFF OMITTED] T2183A.037
    
    [GRAPHIC] [TIFF OMITTED] T2183A.038
    
    [GRAPHIC] [TIFF OMITTED] T2183A.039
    
    [GRAPHIC] [TIFF OMITTED] T2183A.040
    
    [GRAPHIC] [TIFF OMITTED] T2183A.041
    
    [GRAPHIC] [TIFF OMITTED] T2183A.042
    
    [GRAPHIC] [TIFF OMITTED] T2183A.043
    
    [GRAPHIC] [TIFF OMITTED] T2183A.044
    
    [GRAPHIC] [TIFF OMITTED] T2183A.045
    
    [GRAPHIC] [TIFF OMITTED] T2183A.046
    
    [GRAPHIC] [TIFF OMITTED] T2183A.047
    
    [GRAPHIC] [TIFF OMITTED] T2183A.048
    
    [GRAPHIC] [TIFF OMITTED] T2183A.049
    
    [GRAPHIC] [TIFF OMITTED] T2183A.050
    
    Mr. Kreutzer. Thank you.
    The damage to the economy is significant. The aggregate 
income loss as measured by gross domestic product over the 
period 2009 to 2029 is $6.8 trillion inflation-adjusted 2008 
dollars: The job losses are also stunning. The manufacturing 
sector is especially hard hit, with job losses of nearly 3 
million by the year 2029. Employment and machinery 
manufacturing and in rubber and plastic products and others 
drop by over 50 percent by that time. Of course, some of the 
unemployed manufacturing workers find jobs in the service 
sector, but not all of them. The net impact drops total 
employment for most years by more than 500,000 and in some 
years by over 800,000. All of these losses, by the way, are net 
of green job creation. A stimulus package should include 
provision to explicitly exempt carbon dioxide as a regulated 
pollutant under the Clean Air Act.
    The second question is, what energy policies should be 
included in an economic stimulus package? A stimulus package 
should not constrain energy supplies, but allow them to expand 
and to include provision to maintain and increase access to 
energy resources of all kinds, but also those on the Outer 
Continental Shelf. We should keep moving forward to develop 
those resources. And while the bigger impacts of this policy 
may not come for several years or more, it should be emphasized 
that this part of the stimulus package does not cost the 
government anything and may well avert an economic crisis in 
the future.
    The third question is, as it develops a stimulus package, 
what lessons can Congress learn from European policies on 
carbon emissions and energy? Some claim that programs forcing a 
move to a less carbon-intensive economy will actually stimulate 
the economy, create green jobs and increase income. The logic 
in supporting the analysis of these studies ignores the 
negative impact caused by diverting resources to green projects 
from other areas of the economy.
    Since they are already pursuing many of these programs, 
Europe provides a lesson. Though many factors determine 
economic growth, stock market performance and unemployment 
rates, European performance in these areas does not argue for 
green stimulus or for creating energy security through 
conservation. In 2008, the FTSE Euro 100 index, a broad measure 
of the Euro area stock market, lost 47.3 percent of its value 
while the Dow Jones Industrial Index for the United States 
dropped less, that is by 33.9 percent. Their economic growth 
was smaller, and their unemployment rate was higher than in the 
U.S.
    If European energy efficiency came from superior 
technology, we would expect to see lower energy prices than in 
the U.S.; instead, we see the opposite. The latest numbers for 
electricity costs show that household electricity prices are 50 
to 200 percent higher in the European Union than in the United 
States, even for those European countries that lead the world 
in wind energy technology and use. Europe's lower carbon 
footprint seems driven more by demand-killing higher prices 
than by efficiencies of a new energy economy. The European 
Union can claim to be leaders in producing wind turbines and 
can point to the many jobs in the factories that build them, 
but that doesn't mean their policies lead to a net job 
increase.
    Evidence better supports a contrary conclusion, that green 
initiatives cost more jobs than they create. A stimulus package 
that forces a move to forms of uncompetitive forms of energy 
will raise costs and thwart economic growth. Instead, a 
stimulus package should focus on policies that reduce costs and 
make production and employment more profitable. Done.
    [The statement of Mr. Kreutzer follows:]

    [GRAPHIC] [TIFF OMITTED] T2183A.051
    
    [GRAPHIC] [TIFF OMITTED] T2183A.052
    
    [GRAPHIC] [TIFF OMITTED] T2183A.053
    
    [GRAPHIC] [TIFF OMITTED] T2183A.054
    
    [GRAPHIC] [TIFF OMITTED] T2183A.055
    
    [GRAPHIC] [TIFF OMITTED] T2183A.056
    
    The Chairman. Thank you, Mr. Kreutzer.
    And our final witness is Trevor Houser, who is a visiting 
professor at the Peterson Institute for International 
Economics.
    We welcome you, sir.

STATEMENT OF TREVOR HOUSER, VISITING FELLOW, PETERSON INSTITUTE 
   FOR INTERNATIONAL ECONOMICS, DIRECTOR, ENERGY AND CLIMATE 
                  PRACTICE, RHODIUM GROUP LLC

    Mr. Houser. Thanks very much, Mr. Chairman, and members of 
the committee. I thank you for inviting me to testify on this 
important and timely topic.
    My name is Trevor Houser, and I am a visiting fellow at the 
Peterson Institute for International Economics and director of 
the Energy and Climate Practice at the Rhodium Group, an 
economic research firm based in New York.
    Last year the Peterson Institute, in partnership with the 
World Resources Institute, launched a multi-year initiative to 
examine the economic trade and financial effects of energy and 
climate policy. Our initial effort, ``Leveling the Carbon 
Playing Field,'' was published last May and was the first in a 
series of reports we will be releasing between now and the 
international climate negotiations in Copenhagen later this 
year.
    As the 111th Congress and President-elect Obama begin to 
work this month on drafting an economic stimulus package, there 
was an interest reflected in the opening statements of members 
in this committee in directing government spending in a way 
that not only generates near-term economic growth and 
employment but also addresses long-term policy goals. Energy 
and environmental objectives, including reducing carbon dioxide 
emissions and dependence on foreign oil, are chief among these, 
and the notion of a green stimulus package has gained 
considerable traction among policy makers and attention in the 
press.
    A Wall Street Journal/NBC poll that was released yesterday 
indicates that public support is strongest for prospective 
energy and environmental components of a stimulus plan. Given 
the speed at which an economic recovery package is being 
drafted, there is a need for a frame work to help legislators 
evaluate which policies and programs to include in order to 
meet both the immediate and long-term policy goals. In a 
forthcoming report from the Peterson Institute, my colleagues 
and I assess a range of policy design options currently being 
considered in terms of their energy and environmental as well 
economic impact.
    In my testimony today, I would like to share some of the 
key findings of our study, and I am happy to follow up with 
members of the committee after the hearing to provide more 
detail on the work. I also have considerable more detail in the 
written testimony that was submitted. The study finds that 
well-tailored energy programs as part of a recovery package can 
create jobs and stimulate the economy while achieving 
significant cost savings for businesses, consumers and the 
government. At the same time, it is clear that $100 to $150 
billion in energy-related investment today is far from 
sufficient to meet long-term energy security and climate change 
goals.
    Green elements of a recovery package, however, can 
complement forthcoming energy and climate policy by focusing on 
four things: First would be market failures, opportunities to 
reduce energy demand and CO2 emissions through 
energy efficiency that will not likely respond to price-based 
energy or climate policies alone. The second is energy 
security, as market based climate policy aimed at reducing 
CO2 emissions, such as a cap-and-trade program or 
carbon tax, does not necessarily reduce dependence on foreign 
sources of energy. The third is technology hurdles, as 
uncertainty about the availability of critical low-carbon 
energy technology between 2012 and 2030 creates anxiety about 
the future cost of climate policy. And the fourth is 
infrastructure bottlenecks. In addition to reducing costs, the 
deployment of low-carbon technology depends on the availability 
of enabling infrastructure. Whether electricity transmission, 
CO2 pipelines or mass transit, the government will 
necessarily have a role in building and regulating that 
infrastructure that facilitates a low-carbon economy.
    So with these principles in mind, let me provide some 
specific results from our analysis. And I think we have a chart 
up here. I like to hold off on the bubble charts until I get to 
that point as people's attention immediately diverts from what 
I have to say. So let me walk you through what this shows here. 
So we modeled 10 different energy stimulus policy scenarios. 
And so on the Y axis here, it is a change in U.S. energy 
imports over the base case as projected by the Department of 
Energy in their annual energy outlook released in December. It 
is important to note that this includes both natural gas and 
oil imports. And in fact, in most of the scenarios, the 
decrease in energy imports is in the form of natural gas. On 
the X axis, we have a change in annual CO2 emissions 
on average between 2012 and 2020. And that is measured in 
million tons of CO2.
    The size of the bubble indicates the number of jobs created 
2009 to 2011. And what we include in here is both the direct 
jobs in the industry getting investment, the indirect jobs in 
supply chains, the induced jobs when the wages are spent, and 
the fourth category, which hasn't been included as much in 
studies to date, is the jobs created by the energy efficiency 
savings, which was referenced by a couple of members on the 
committee.
    We subtract from that jobs lost in fossil-fuel industry by 
lower spending on oil, gas and electric power to create a sense 
of the net. Again, this is just for 2009 to 2011. We did 
similar analysis what the long-term job implications would be, 
which I am happy to share with the committee later.
    So some headline findings, investments in building 
efficiency hold the most promise for near-term job creation and 
long-run reductions in energy imports and CO2 
emissions. Spending $10 million to weatherize homes and 
retrofit Federal buildings would create and sustain up to 
100,000 jobs between 2009 and 2011, and save the economy 
between $1.4 to $3.1 billion a year between 2012 and 2020.
    Incentives for renewable energy can yield comparable energy 
savings and large emission reductions but with more 
uncertainty. Extending the production tax credit would 
stimulate an additional gigawatts of wind power capacity 
construction over business as usual between now and 2014.
    The Chairman. I am going to have to ask you to summarize, 
and then we have a Question and Answer Period, and we can come 
back to you.
    Mr. Houser. So let me wrap up. The one note I would want to 
leave you with is, when considering green stimulus items versus 
other items in the stimulus package, the one component that 
people haven't considered is the long-term implications of 
energy savings. Money we borrow today will have to be paid back 
down the road. And the long-term revenue both to government, to 
households and in job creation can help offset some of those 
costs.
    [The statement of Mr. Houser follows:] 

    [GRAPHIC] [TIFF OMITTED] T2183A.057
    
    [GRAPHIC] [TIFF OMITTED] T2183A.058
    
    [GRAPHIC] [TIFF OMITTED] T2183A.059
    
    [GRAPHIC] [TIFF OMITTED] T2183A.060
    
    [GRAPHIC] [TIFF OMITTED] T2183A.061
    
    [GRAPHIC] [TIFF OMITTED] T2183A.062
    
    [GRAPHIC] [TIFF OMITTED] T2183A.063
    
    [GRAPHIC] [TIFF OMITTED] T2183A.064
    
    [GRAPHIC] [TIFF OMITTED] T2183A.065
    
    [GRAPHIC] [TIFF OMITTED] T2183A.066
    
    [GRAPHIC] [TIFF OMITTED] T2183A.067
    
    [GRAPHIC] [TIFF OMITTED] T2183A.068
    
    The Chairman. Thank you, Mr. Houser, very much. We will 
come back to you.
    Now we are going to go to a question-and-answer period. I 
would like to have a conversation with our two mayors in terms 
of how they envision the stimulus package, as you have heard 
the outlines, impacting your cities and other cities in the 
country, and what the job creation potential is and what the 
transformative capacity is of these programs to really even 
change the way in which the cities think of themselves.
    Could we begin with you, Mayor Nutter?
    Mr. Nutter. Mr. Chairman, thank you very much for the 
question.
    I think there are two primary areas that I would draw 
attention to. The first is, as Mayor Palmer laid out and I have 
made the same case, and I raise this issue in my testimony, 
stimulus dollars coming directly to cities again with every 
respect to States, and you have to balance those interests, are 
dollars that are going to be immediately spent. We talk about--
I heard a new term today, but I usually talk about shovel-
ready, hammer-ready, money-ready, we heard about screw-diver-
ready, and I am fine with that as well. That is a project that 
is 90 to 120 days, ready to go, can be completed in 2 years.
    The stimulation, quite frankly, to our economy from the 
Federal resources does two big things. One, helps us to not 
take counterbalancing actions of our own because of the 
economic crisis in our cities. And by that I mean, a couple of 
months ago, I had to announce that we were laying people off 
from city government, which is unfortunately putting more 
people out of work while the Federal Government is trying to 
put people back to work; cutbacks in programs and services and 
the like. So you stop a number of bad things from happening 
with the stimulus dollars.
    The second is, we are able to make the kind of investments 
that I talked about earlier in my testimony, and I know that 
Congressman Cleaver had to go, but I would lay out, for the 
record, his concern with regard to how quickly some people can 
be trained. I will tell you, in Philadelphia, there is a new 
job training program that has been developed by our Energy 
Coordinating Agency that will certify new weatherization 
specialists. Some of this training can be completed in as 
little as 2 weeks to get people ready to go and take on some of 
the challenges that are out there. Some programs may take 
longer. But there are many opportunities. Again, when you talk 
about what Van Jones is talking about in terms of green-collar 
jobs, these often are not jobs that take forever to get ready 
for.
    So we can put people to work. We have the population. We 
have the projects. Literally, Mr. Chairman, and members of the 
committee, all we are lacking is the resources to make these 
projects happen and make them a reality.
    The Chairman. Mayor Palmer, do you want to add to what 
Mayor Nutter just said?
    Mr. Palmer. Absolutely, and just the best way to get people 
in the inner cities and the metro economies is to give people 
jobs. I, like Mayor Nutter, have the unfortunate task to make 
tough decisions, but we are laying off people in the City of 
Trenton. We talked about closing libraries, rec centers. It is 
something no mayor would want to do, and we struggle with that. 
But we need to get our people back to work. And you can do it, 
as Van was saying, as being producers.
    I will give you just a quick example of how you can take 
care of a number of things with stimulus money going direct to 
cities, which is a transparent process. In the City of Trenton, 
we have like many older northeast cities, problems with lead 
and how it affects our children and their ability to learn. We 
have estimated that we have about 4,000 homes in the City of 
Trenton that have lead problems. You can with stimulus dollars 
do two things. One, you can train people on how to abate all 
the houses that have lead problems, which help in terms of 
environmentally; all those houses at the same time be trained 
how to retrofit a lot of these homes as well, whether it is 
energy-efficient windows, whether it is thermostats or creating 
green or white roofs. Not only can you do that, but you are 
training people that are willing, ready and able to learn how 
to do those things. We are working with Public Service Electric 
and Gas, my city and Newark, for a training program with Isles 
and YouthBuild to do those kinds of things. When you look at 
retrofitting, public housing projects and getting the costs 
that you can measure, how much would it cost to reduce your 
energy efficiency in public housing, which has some of the 
largest buildings, New York City, for instance, or in 
Philadelphia or Trenton, Washington, D.C., get the cost of how 
much it will save in terms of energy, you can actually use that 
cost and, if the banks would give up the money, use that 
savings and get loans that you could retrofit public housing 
with the caveat as you are doing that to train the people that 
in public housing or around public housing or in the area code, 
to train those individuals for jobs.
    The Chairman. So you are saying that, in a lot of these 
areas, these are ready-to-go jobs with limited, with not a lot 
of training necessary, that produce a huge benefit for your 
cities and get people off the rolls and into a job.
    Mr. Palmer. And real quick, absolutely, we had the 
MainStreet, U.S. Conference of mayors did this MainStreet 
stimulus plan; 774 cities participated, projects that are 
shovel-ready in 2 years, because we have many more than that 
that are sustainable and will be able to be done right and get 
moving right away. So it is not pie in the sky. It is things 
that can help our economy and help our citizens.
    The Chairman. Mr. Jones can you comment about what Mayor 
Nutter and Mayor Palmer just said? Just deal with the cities 
aspect of this if you could.
    Mr. Jones. I would be happy to, and hopefully, we will get 
a chance to talk about the rural agenda as well, but just to 
talk about cities for one second. There is a great program 
called Solar Richmond very close to where we are. They take 
people that come from disadvantaged backgrounds and teach them 
how to become solar panel installers in 6 weeks. What people 
have to remember is when we are talking about green jobs, we 
are not talking about space-age George Jetson, Buck Rogers 
science-fiction jobs that no one has ever heard of. We are 
talking about very familiar trades. We are talking about very 
familiar kinds of work but upgraded and upskilled to function 
in a more carbon constrained environment. The Green Jobs Act 
which----
    The Chairman. Just give me an example. Let's take the Green 
Jobs Act. Let's look at Trenton and Philadelphia here for a 
second. Give us a couple examples of programs that, if we pass 
this package, will have an immediate impact on cities like 
Trenton and Philadelphia.
    Mr. Jones. Sure, well, for instance, you take homes that 
are leaking energy, just to sort of go on your example whether 
public housing projects or frankly just regular homes. Most 
people are not going to--you can tell them all day if you 
wanted to that if you invested X amount of money, you will 
ultimately save $3,000, $20,000 on their energy bill. Most 
people do not have the ability to spend that $2,000 to $3,000 
dollars right now. If you have a more collective approach, 
where we can actually deploy a workforce--look at the kind of 
jobs very low-skilled people can do right away. Energy 
auditing, knock on the door; you have a clip board. Knock on 
the door; you have a small laptop. You talk to that homeowner. 
You show them where they can make immediate improvements in 
terms of energy efficiency, but you also point out where a 
little bit more work--what is the next problem? Blowing and 
clean nontoxic insulation. That is a low-skilled job that can 
have an immediate impact that day on the heating and cooling 
cost of that building. What is next? Replacing windows that 
don't fit, doors that don't fit with high-performance windows 
and doors. Somebody has to make all those parts and bring them 
in. There is your manufacturing agenda that is getting ready to 
go. Replacing all those boilers and furnaces. Some are 20, 30 
years old, incredibly inefficient, replacing them with new 
modern furnaces and boilers. You are going up the ladder now in 
terms of skill and training, and yet you can now retrofit homes 
with geothermal. You don't even need a boiler. These are the 
kind of things that have immediate, short-term effect in terms 
of stimulus to the economy but long-term effects in terms of 
savings and carbon reduction.
    The Chairman. Let me come back to you again, Mayor Nutter 
and Mayor Palmer. What is your response to Mr. Jones in terms 
of how this would impact Philadelphia or Trenton?
    Mr. Nutter. Mr. Chairman, Mr. Jones is absolutely correct. 
We are doing about 5,000 homes a year in Philadelphia. If we 
were able to scale that up literally to about 100,000 houses, 
you will put thousands of people to work. You will dramatically 
lower the energy costs of those homeowners which, quite 
frankly, rather than the dollars going for energy resources, 
literally money back in their own pockets. We propose a program 
where for about $2,500 and in over 2 years, that homeowner 
would stay pretty much at the payment right that they have been 
making. We pay back those dollars into the fund and do more of 
this same kind of work, and after that point, the homeowner 
enjoys the benefits of significant 20- to 30-percent energy 
reduction costs. That is money literally going through the 
roof, out the door, rather than staying in their own pockets. 
This can work. It is the capitalization upfront of dollars that 
clearly here, that is the need, but I have got 400,000 flat 
roofs in Philadelphia. They are tar black roofs today. They can 
be pulled or green later on and significantly reduce even the 
temperature in someone's home just by changing it, the tar 
roof.
    Mr. Jones. That would be paint-brush ready.
    The Chairman. Mayor Palmer.
    Mr. Palmer. Absolutely. And mayors are leading the way, 
quite frankly, when the Federal Government didn't. Our good 
friend from Seattle, Washington, Mayor Greg Nickels signed up 
now and started with 120 mayors to sign our Climate Protection 
Agreement. We have over 900. We are doing it now, except we 
can't do it to the scale that we would like to do to the 
training and the retrofitting without an infusion of capital.
    The other thing it will do, if you have seniors and others 
that are on fixed incomes or just got laid off that are 
hurting, they are choosing between now--it used to be fuel and; 
food, now it is their energy costs. You can reduce their energy 
costs. You can help sustain their homes. Another thing you can 
do is, Van was saying--Mayor Nutter so well knows--we have 
got--I am not trying to be political. People need hope. When 
they have a job and they are people that are now being trained 
and helping people reduce energy, they have hope. They have a 
job they can walk through the neighborhoods and be proud about. 
They are not knocking people over the heads. They are not doing 
other kinds of things and the other thing that will go----
    The Chairman. Turn on your mike.
    Mr. Palmer. It is on. The other thing they can do is become 
taxpayers as well, and so all of these things help. We can all 
be a part of this new recovery by making sure it is 
transparent, that we are all held accountable, and that is it 
is sustainable.
    The Chairman. Thank you.
    Chair recognizes the gentleman from Oregon, Mr. Blumenauer.
    Mr. Blumenauer. Thank you.
    I appreciate it, Mayor Nutter, where you were talking in a 
more comprehensive, way you talked about issues that were 
related for example to water quality as part of the economic 
stimulus, both in terms, perhaps, of the standards and the 
methodology. And I would put to you, actually to both our 
mayors, a request for you to help us as we work with the new 
administration to think about how we change the standards of 
the--and the relationship of the Federal partnership. A lot of 
it is prescriptive, having still scars that haven't healed 
entirely from trying to work with the previous administration 
when I was in your shoes, trying to negotiate agreements with 
EPA about spending a couple billion dollars much more 
effectively if we were greening it. And we found out that 
people just wouldn't accept the extent to which you, with the 
resources, with your fellow mayors, could help us develop 
alternative approaches for regulation where you would commit 
to, not just meet, but exceed the water quality standards, but 
we would cut a deal with you so that you could be more 
flexible, daylighting creeks, using maybe some investments 
upstream that would actually produce better water quality 
improvement than you spending massive sums for a river that is 
already polluted before it gets to you. Would you be willing to 
help us with your certified smart people that work with you to 
think about how we change those standards and give you some 
flexibility?
    Mr. Nutter. Yes. Absolutely, Congressman, this is some of 
the most important work that goes on in Philadelphia. We, 
again, not trying to brag too much about our great city, but 
the Philadelphia Water Department has been a leader in storm 
water management for a long, long period of time. And it is why 
I talked about it earlier. Sometimes, even though on the 
environmental side, when people talk about, well, we are just 
going to plant a lot of trees, and isn't that nice? I love 
trees as much the next person. It is not just about trees. It 
is the fact that the trees absorb water. We create pits around 
the trees to take more water; 90 percent of the major storms in 
Philadelphia result in about an inch or less of rain fall. 
Rather than that water going in our storm water management 
system, it should be going into pervious surfaces all over the 
City of Philadelphia. That is being smart about green and not 
investing in the old gray infrastructure as opposed to green 
infrastructure to deal with storm water management issues.
    Mr. Blumenauer. You can help us, and I won't take time now. 
I have some other questions for other panelists, and I want to 
circle back to you where you can help us, so we can look at 
this comprehensively with the new administration.
    You mentioned street trees, which deal with the heat island 
effect, the reduction of storm water runoff and actually some 
natural filtration, if we can think comprehensively so you can 
get multiple benefits and maybe move ahead of the line as we 
move this forward.
    Mayor Palmer, you referenced, I think, a partnership with 
your local utility. And I am curious, and Mr. Jones may have 
some observations along this line, we have thousands of 
utilities, public and private, around the country, electric, 
gas sewer and water, that collectively probably the top 4,000 
have a monthly relationship with probably, what, 95 percent of 
American business and households. They have a credit rating 
that is pretty good these days. They have established 
relationships and programs, and they work with subcontractors. 
Can you envision our being able to work, maybe in the next 
round of energy legislation that is coming, where we could 
develop partnerships where we could actually use on bill 
financing that wouldn't require massive Federal outlays, 
wouldn't require lots of actual approval and tax increases, but 
develop a partnership with those public and private utilities 
to finance deep green projects that would have a payback period 
that would be well within the scope of when they would pay it 
back, 3, 5, 10 years, maybe even the Federal Government and 
other government agencies negotiate a special rate to finance 
the deep green, not just energy efficiency, but it may actually 
be new construction or major reconstruction, have you given any 
thought to that? Does that of any potential, Mayors, Mr. Jones?
    Mr. Palmer. It absolutely does, and that is one of the 
reasons why we were able to work with our Public Service 
Electric and Gas to come up with the pilot program to do those 
kinds of things. They did have to go to the Board of Public 
Utilities to get approval of what they wanted to do, but 
certainly, I think now is the time, and they are willing to 
make those kinds of investments.
    The other thing, I just want to let you know that the U.S. 
Conference of Mayors and our president, Manny Diaz, wanted me 
to let you know that the Conference of Mayors is ready to work 
with you even on the water. We have what is called the Mayors' 
Water Council, Mayor Diaz from Albuquerque and Mayor Coody from 
a town in Arkansas or Mississippi--he is going to kill me when 
he hears I don't--but I got his name right. But we talk about 
all kinds of issues, water, waste water, removing the volume 
cap for private activity bonds and a number of issues and that 
we are a great resource to help in that area and to work with 
you and this committee as we craft the kind of policy that will 
help us.
    Mr. Blumenauer. Before I turn to Mr. Jones for elaboration, 
let me just posit one other item, because I am not sure we 
should be afraid of actually engaging our State, public 
regulatory commissions. Right now many people in the inner 
cities are disadvantaged because you are subsidizing sprawl and 
inefficient patterns of energy, the line loss. Maybe we should 
be looking at having a regulatory system that rewards 
efficiency that is sanctioned by the State, sort of get into 
wind energy and other alternatives here, but it is using 
existing mechanisms and the market.
    Mr. Nutter. Congressman, with your permission, just share 
two pieces of information from back home in Philadelphia. First 
PECO energy, the main energy company in Philadelphia, was a 
leader, is a leader, in green roof activity on one of their 
buildings in Philadelphia. One of the first green roofs for any 
corporation was done by PECO. Second, the city is working with 
PECO to reduce our total base load by 1 percent by 2011. And 
there is also a new State legislation in that regard. So when 
you raise the issue of States, States can absolutely have an 
impact here. That would result in 20 percent less electricity 
being used, equal to about 200,000 homes, right in the City of 
Philadelphia. So there are clear partnerships at the city, 
State and Federal level on all of these issues, and we would 
be, I would be pleased, I am sure Mayor Palmer and many others 
would be pleased to work directly with you and the Members of 
this committee and the Congress on these kinds of issues.
    Mr. Blumenauer. I would love to follow up with you both in 
terms of the water and the utility partnership so we are able 
to magnify the Federal legislation in part, and Mr. Markey has 
got all sorts of leadership positions, and we may be able to 
convince him to have some Federal assistance and incentives for 
decoupling. And maybe on the Ways and Means Committee, we can 
find a little way to nudge that in terms of how they are 
treated financially.
    Mr. Jones.
    Mr. Jones. First of all, where have you been all my life, 
man? You had me at hello with that.
    This is exactly where I think the next round is going to 
be. Our utility companies have to be partners with us at the 
local level to do the one thing we can do right now, which is 
to capture these energy cost savings and use them as a way to 
incent private capital. McKenzie did a study that shows that in 
2 to 4 years, all the work we just ascribed around energy 
retrofits and weatherization can pay for itself in energy cost 
savings, which means essentially you are talking about, if you 
do everything the mayors just said, look what you just did? If 
you can recapture those cost savings by having on bill 
repayment like you said. If utilities companies would be 
partners with us, you get to bring up home values, bring down 
unemployment, cut greenhouse gas emissions, clean up the air, 
reduce asthma, and it pays for itself. It is revenue neutral. 
We have a genius in this room named Jason Walsh, whom I want to 
brag on, and point out--who is the man blushing but Jason Walsh 
has actually taken your instinct and your insight and put 
together a proposal that would actually, for about $30 billion, 
let us weatherize and retrofit millions of buildings, put about 
600,000 people to work. And because we are using revolving loan 
funds and loan guarantees, it would pay for itself. What we 
need is partnership with local utilities.
    We can unlock the value. We have a choice, as the mayors 
said; the money can go out the roof, or it can go into the 
pockets of workers and then become savings for homeowners and 
for building owners. That is the opportunity that we have here.
    Mr. Palmer. I have to leave, but this committee had me when 
they asked me to be here and my other colleagues, but thank you 
very much. The U.S. Conference of Mayors, we look forward to 
working with you.
    Mr. Blumenauer. I look forward to following up with you on 
these specifics.
    As you are walking out the door, one little thing, Mr. 
Chairman, before--I appreciate your indulgence, but it doesn't 
like a lot of people waiting to elbow ahead of me. But I want a 
cautionary note just in terms of the training because some of 
the people we want to engage in this, again based on prior life 
as a local official and dealing back when we used to have 
training programs, CETA, JPTA, back--these acronyms, nobody in 
this room is old enough to remember this stuff.
    Mr. Kreutzer. Some of us are, sir.
    Mr. Blumenauer. But dealing with the population that we 
want to engage, I am sorry, 2 weeks isn't enough, and I am with 
you 200 percent in terms of training and engagement and using 
the community, working with the community colleges, working 
with utilities, working with the people in the affected 
neighborhoods, but we can't set this up to fail. And we need to 
invest in particularly some of these young people are people 
who have been out of the workforce for some time; there is more 
than just learning how to slap down the solar panel. That is 
the least of it in terms of job readiness. So, please, make 
your case. I think it is right that it can be done much easier 
than people think, but we shouldn't minimize the need to invest 
in the human infrastructure if we are going to be successful in 
the energy infrastructure and the new challenges.
    Mr. Nutter. If the chairman would allow, on the 
Congressman's point, one of the issues that I have been raising 
about the overall stimulus package has been the issue with 
regard, the word of the decade may be ``infrastructure.'' And I 
will just have to say this at least as Mayor of Philadelphia 
and some of the things that have happened in our city and many 
other cities across America, whether it is on the energy 
efficiency side, and, Congressman, I absolutely agree with you. 
I was trying to be responsive to Congressman Cleaver about one 
particular program. For some things, 2 weeks may be enough. For 
some programs, 2 weeks is no where near enough, and there is 
everything in between.
    But when we talk about infrastructure, whether it is 
bridges, roads, tunnels, underground communications, storm 
water, management systems, schools, and the like, specifically 
in the construction industry but a number of others, I would 
only ask for consideration that, in cities like Philadelphia, 
there are many people who have been left out and locked out of 
opportunities to participate, especially in the construction 
industry and a number of others. And I don't know ultimately 
how you will do this, but for many of these job creation 
programs, they are certainly, I would ask that there might be 
consideration of requirements for diversity in the workforce, 
job training components, the opening up of apprenticeship 
programs and others. If everyone is supposed to participate in 
this economic revitalization, if we are really talking about 
putting Americans back to work, then we just can't put the same 
Americans who have always had the opportunity back to work and 
leave others sitting on the sidewalk. And I would ask for that 
consideration as well.
    Mr. Blumenauer. Mr. Chairman, I appreciate your courtesy. I 
hope at some point--we spent a little time, in Portland, 
Oregon, we were the first city in the country with a 
comprehensive energy policy in 1979. We have got a few of 
these, we have had great experience working with this in the 
past. The Chairman indicates that some day we may even visit 
Portland to talk about some of the transportation, land use, 
and energy connections, but I really appreciate the way that 
you have captured it and the way the panel has presented an 
opportunity.
    And this is this has been very helpful for me Mr. Chairman.
    The Chairman. I thank the gentleman.
    And to you, Mayor Nutter, I couldn't agree with you more. I 
was in a meeting last week with some African American 
Congressmen, and one of them, who was a little older, said his 
mother and father, said they were not happy in the South during 
the New Deal because the Governors of those States who were 
Democrats insisted that in most New Deal programs, there was 
actually a prohibition on African American participation in 
them. And it was only when Harry Truman's Fair Deal came along 
in 1949 that there was a fuller inclusion.
    And I agree with you. We have to make sure that we do this 
in a way that reflects a fair deal for the 21st century in this 
green jobs area. And we thank you so much for being here, and 
we are honored to have had you here.
    Mr. Nutter. Thank you, sir.
    The Chairman. Mr. Van, now we can have you swing back over 
to the other side of the panel, and I would like, Ms. Bode, if 
you could, to just elaborate a little more on this green job 
revolution as it is manifesting itself in the wind sector and 
tell us about, maybe you could do this Mr. Jones as well, the 
president of the American Steel Workers told me that it takes 
28 tons of steel for every wind turbine that is built in 
America. That is a lot of steel workers--thank you, mayor. It 
was an honor to have you here.
    Can you talk a little about that and the jobs implications 
for our country, not just in the way people might think of it 
as some kind of a white collar, you know, Boston-San Francisco 
kind of oriented wind industry? Who gets employed, and can you 
take us through that from beginning to end?
    Ms. Bode. Absolutely, absolutely. In fact, it is 
interesting that you ask today because tomorrow the President-
elect will be visiting one of those facilities in Akron, Ohio, 
like many other facilities that has expanded from doing auto 
parts and other kinds of parts and equipment to adding jobs in 
the area of building supply chain equipment for wind turbines. 
He is going to be going to Cardinal Fasteners, which provides 
those huge long bolts that helps put those turbines and 
facilities in place and into the ground. So it is a very 
exciting opportunity, I think, for America.
    Our association had a workshop in December where they 
thought they might have 200 or 300 companies come to learn 
about opportunities to convert, to grow, to add new jobs in the 
wind area. Over 850 companies showed up in Cleveland, Ohio, to 
try to see how they might grow and add these jobs in their 
area. When you talk about 80,000 or 90,000 jobs, it is just a 
down payment. It is like where you are just at the beginning of 
this new, clean jobs revolution. I mean, we are talking about 
half a million jobs just as a kind of a starting point when you 
start putting these in place. And as I said, the megawatts are 
growing exponentially, and it is not just the generation, the 
jobs around generation. It is about manufacturing facilities. 
Much of these parts were really not made in the U.S. initially, 
and now all of these new facilities are coming to the U.S. When 
you talk about the growth in energy jobs, this is where the 
growth in energy jobs, clean energy jobs in over 21 States, 65 
new manufacturing facilities have opened up.
    The Chairman. So a lot of people are talking about a 
nuclear renaissance. Right now, the nuclear industry produces 
100,000 megawatts of electricity every day. Now you are saying 
that the wind industry added 7,000 new megawatts of electricity 
this year.
    Ms. Bode. Second only to natural gas, which is the top.
    The Chairman. And 4 or 5 years from now, if we get the 
policies right, how many new megawatts per year do you think we 
could produce in the United States, new megawatts?
    Ms. Bode. We are talking about 20 percent of the Nation's 
electricity.
    The Chairman. Do you think that could be 12 new megawatts a 
year?
    Ms. Bode. 13 gigs.
    The Chairman. What do you think is possible?
    Ms. Bode. Well, last year, we don't have the final figures 
from last year, but we know it approached or exceeded 7,500 
megawatts. It will be growing like that. If we get the stimulus 
package right, we hope to at least match that or get close to 
that if the uncertainty is not----
    The Chairman. Five years from now----
    Ms. Bode. Five years from now. We are going to be able--in 
3 years, we are going to meet the President's target of 
doubling the amount of generation that we have. Over the last 3 
years, we doubled it. We believe truly----
    The Chairman. What I am trying to do is give people who are 
listening an idea, though, of the scale of what we are talking 
about.
    Ms. Bode. We are talking about 16 gigawatts.
    The Chairman. Again, I am trying to keep it in one metric, 
and that metric is the nuclear industry produces 100,000 
megawatts a year. That is 20 percent of all electricity in 
America. They haven't built a new power plant successfully from 
ordering to completion since 1974. So there won't be any new 
nuclear power plants to come online in the United States, even 
if they began today, for about 10 years. In 10 years, how many 
megawatts, for example, do you think that we could meet? So, 
today, there are 20----
    Ms. Bode. 24,000.
    The Chairman. 24,000. You are saying that you will meet, if 
this stimulus package is put together, you will meet the 
President's goal of doubling that in 3 years. Is that correct?
    Ms. Bode. That is right.
    The Chairman. Well that takes you to 48,000 megawatts. 
Again, the nuclear industry after 50 years produces 100,000 
megawatts a year. So if you extrapolate that out and you go out 
10 years altogether, you might be looking at 100,000 to 125,000 
megawatts of wind in the United States before the first new 
nuclear power plant produces 1,000 new megawatts of wind. Is 
that correct?
    Ms. Bode. Good point, yes.
    The Chairman. Does that math work for you, or is that too 
ambitious for your industry?
    Ms. Bode. I don't think that is too ambitious at all.
    The Chairman. Well, that is exciting because that is a 
guarantee of what is going to happen because there hasn't been 
any new nuclear power plants for so long, and we know this is 
something that is creating new jobs. And what is the upside? 
How many jobs per year do you think you can actually create in 
the wind industry if you were producing 15,000 or 20,000 
megawatts a year?
    Ms. Bode. I think what we are talking about right now is, 
you know, in the next, with this and with the renewable 
electricity standard, which we hope to have into place in the 
next 3 years, and perhaps close to 200-plus thousand jobs.
    The Chairman. By the way, this is not to say there isn't 
going to be any new nuclear power plant generation in America. 
It is just to contrast it, so that there can be an 
understanding of what is happening already in the wind sector, 
and this doesn't include solar or geothermal or tidal or a 
whole range of other renewable energy sources that will be 
creating new jobs over the next year as well.
    Mr. Jones, how would you respond to that?
    Mr. Jones. Well, first of all, that is an exciting number 
when you are talking about 200,000 jobs creating something that 
is going to deal with the greenhouse gas crisis. One of the 
things I think is very important is that we look at Detroit; we 
look at our so-called Rust Belt. Why don't we put Detroit back 
to work, not making SUVs that are going to help destroy the 
world but in making these wind turbines? The thing about wind 
turbines is they are so heavy that it actually doesn't make 
sense to make them on the other side of the world and bring 
them over here. When you are talking about 28 tons of steel, 
you are talking about putting steel workers to work in this 
country, and you can put our automakers back to work. A wind 
turbine has 8,000 finely machined parts in it, 8,000. That is a 
car. You want to bail out Detroit, that is great, but let's 
bail out the people on the planet, too. I would like to see a 
$15 billion purchase order from the U.S. Government going to 
General Motors. They are called General Motors, not General 
Cars, not General SUVs. The motors we need right now are wind 
turbines to get us the jobs of the future.
    The Chairman. They actually make automobiles in Akron, 
Ohio. Or they did. It is in jeopardy. But the president is 
coming with some good news for them----
    Ms. Bode. Absolutely.
    The Chairman. Tomorrow that those same workers can be 
employed making some other technology, as Van Jones just said, 
that also requires a skill set that can help to assemble the 
new energy devices for the next century.
    Let me turn again and recognize the gentleman from 
Portland.
    Mr. Blumenauer. I wanted, Ms. Bode, to just make a request. 
I am wearing another hat here. You mentioned some of the 
vagaries with finance because, at this point, we need some 
Federal assistance with production tax credit, something that 
is part of how we have helped incent the industry and there 
have been all sorts of Federal involvement and all sorts of 
energy sources in times past, and we have made a judgment that 
I think is appropriate that we need to help get this off the 
ground to get to critical mass. And we still need to have some 
financial incentive; a, financial incentive, and, b, it needs 
to be predictable and efficient.
    I wonder if you could help us with the benefit of your team 
of members and staff to evaluate the efficiency of the 
production tax credit. How much of what we give away of Federal 
tax benefit actually is used by the developer to create the 
project? How much leakage is there because of the vagaries? 
Some of it is unpredictable. Now there are not quite as many 
people who can use the tax credit, and there is a discount; 
there is always some sort of discount and deal-making. Are you 
in a position to help us evaluate just how much of each dollar 
ends up in the production of wind energy?
    Ms. Bode. Well, it is interesting because, you know, the 
production tax credit is so interesting because it is based on 
the production of electricity. It is not like the investment 
tax credit, where you can build something and then get the 
credit without the next step. So, actually, that is why it was 
put in place, which I think is, again, a very important tax 
policy consideration. But the lion's share of the money from 
the production tax credit in normal years is monetized for the 
use, to go into building and using for those facilities. But in 
the startup years, most of these companies do not--I mean, they 
are investing all their money into building this stuff, so they 
don't have the extra revenue to utilize the tax breaks on it. 
So, in terms of the exact percentage, I can get that for you. 
But that is part of the problem now. That is why we are talking 
about asking for the refundability and the transfer ability of 
the issue, because that way, that way, you are actually able to 
utilize all of it for them without having to deal with going 
through the financing.
    Mr. Blumenauer. We have a package that, at least the last 
meeting I was at, seemed to have elements here that address 
those problems.
    So we hopefully will give you a clear window to operate 
going forward here for the, hopefully, the next couple of years 
so that we can kind of sort this out. While we do that, I would 
appreciate your helping us evaluate its effectiveness; how they 
are able to take advantage of it; what the efficiency is in 
terms of the Federal outlay versus how much is actually 
utilized; how much leakage there is. And in part, any 
calibration or estimate about loss because of uncertainty, the 
start, stop, these would help us because we are going to have 
an energy bill, I anticipate, coming forward in the next few 
months as the administration kind of settles in, and we will 
be, because of the artful way that Karl Rove and Tom DeLay and 
Bill Thomas structured all the tax cuts to kind of expire, we 
are going to be revisiting the Tax Code in a, hopefully, pretty 
comprehensive way so we may be able to work with you to make 
sure that benefit, however much it should be, actually gets to 
you in the most efficient way.
    Ms. Bode. I very much appreciate that, and I wanted to say 
thank you to you as well because your work in terms of 
renewables, both wind and solar, on the Ways and Means 
Committee has been absolutely incredible. And I wanted to say 
thank you for the work on that.
    Also I wanted to mention as an old tax hand, I started off 
working on the Senate Finance Committee staff back in 1979, so 
I have kind of been through the whole wars on the renewable, 
what was renewable tax credit and not a production tax credit. 
And I was a State regulator for 10 years, and so we actually 
had to start wind projects in my home State of Oklahoma by 
putting an encouragement in rate cases. So what you do when you 
do not have a long-term or a permanent extension of these tax 
credits, whether you decide at some point to eliminate them or 
not, is you create this rush to build a project and then, 
without the certainty, then you have this drop off and, so you 
don't have the long-term interest. You don't build up the 
market of investors available to go in and to raise the capital 
to have this be a growing industry. And that is what has 
happened. We can chart it, every single time a tax credit. And 
that is why this is an important--short term, addressing the 
short-term problem in terms of the production tax credit. What 
we really need long term and mid term is to really get in there 
and address a renewable electricity standard that addresses the 
issues you were talking about, utilities, addresses the issues, 
giving people certainty, a signal from the Federal Government 
that this is the right answer.
    Mr. Blumenauer. And I am confident that that should and 
will be a part of the next wave in terms of having a real 
renewable portfolio standard in the legislation.
    Mr. Houser, do you have----
    Mr. Houser. I can maybe provide some color on that. We 
analyzed this in our study, and Ms. Bode has more on-the-ground 
experience with the wind industry. But from a modeling 
standpoint, the Department of Energy currently predicts that, 
between now and 2014, an additional 5.9 gigawatts of wind will 
be built. In our scenario, using that model, and we extend the 
production tax credit to 2014, the additional wind capacity 
build is 16 gigawatts. So you are paying for the 5.9 gigawatts 
that would have happened anyway but there are 16 gigawatts in 
addition created, so--which isn't bad in terms of leakage, as 
you say. It is about 70 percent of the marginal increase that 
you get as the result of your tax credit.
    The more important question I think is what this body and 
the Senate are planning in terms of climate policy, because if 
our goal is to reduce CO2 emissions, then, as an 
economist, that is where we want to put the price is on 
CO2 emissions and not support specific technologies. 
If you put in place something like Lieberman-Warner that took 
effect in 2013 in addition to the production tax credit, the 
amount of new wind created in our model goes up to 44 
gigawatts, but the share of that that the PTC is responsible is 
significantly less, and so you are double paying for the wind 
that you get both through the production tax credit and through 
climate policy. So I think, in thinking about the timeframe for 
incentives created under a stimulus package, it is important to 
keep climate policy in mind because, again, all the things that 
we are talking about here are only going to make the very 
smallest of a beginning in reducing CO2 emissions.
    The Chairman. Thank you. Thank you all. I feel a little 
awkward because I think I must adjourn the hearing, and I have 
to apologize. I have got 9 minutes to sprint across the 
Capitol, so I apologize. But I do deeply appreciate your being 
here.
    I have a letter that I want to enter into the record that 
Mr. Inslee wanted to be a part of. And we will look forward to 
following up with you individually because you have really 
sparked our interest and attention and look forward to 
continuing this work with the committee and maybe in some of 
our other committees on Budget and Ways and Means. I am sure we 
will be crossing paths.
    Ms. Bode. Well, you have given us a good to-do list, so I 
will follow up.
    Mr. Jones. Thank you so much. Also our colleague from 
Heritage raised some very, very important questions, especially 
comparing what is happening in Europe to what could happen 
here. And I think his point about doing what we can to lowering 
the cost of clean energy is something that we should follow up 
on very aggressively.
    Mr. Blumenauer. Thank you. Thank you all.
    Ms. Bode. Thank you very much.
    [Whereupon, at 4:10 p.m., the committee was adjourned.]

    [GRAPHIC] [TIFF OMITTED] T2183A.069
    
    [GRAPHIC] [TIFF OMITTED] T2183A.070
    
    [GRAPHIC] [TIFF OMITTED] T2183A.071
    
    [GRAPHIC] [TIFF OMITTED] T2183A.072
    
    [GRAPHIC] [TIFF OMITTED] T2183A.073
    
    [GRAPHIC] [TIFF OMITTED] T2183A.074
    
    [GRAPHIC] [TIFF OMITTED] T2183A.075
    
    [GRAPHIC] [TIFF OMITTED] T2183A.076
    
    [GRAPHIC] [TIFF OMITTED] T2183A.077
    
    [GRAPHIC] [TIFF OMITTED] T2183A.078
    
    [GRAPHIC] [TIFF OMITTED] T2183A.079
    
    [GRAPHIC] [TIFF OMITTED] T2183A.080
    
                                  
