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



                      THE GLOBAL CLEAN ENERGY RACE

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

                                HEARING

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 22, 2010

                               __________

                           Serial No. 111-19










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

                        globalwarming.house.gov







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                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

                      Michael Goo, Staff Director
                       Sarah Butler, Chief Clerk
                 Bart Forsyth, 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. Emanuel Cleaver, a Representative in Congress from the State 
  of Missouri, opening statement.................................     6

                               WITNESSES

Mr. Michael Liebreich, Chief Executive, Bloomberg New Energy 
  Finance........................................................     7
    Prepared Statement...........................................    10
Ravi Viswanathan, General Partner, New Energy Associates.........    17
    Prepared Statement...........................................    20
Tom Carbone, Chief Executive Officer, Nordic Windpower...........    25
    Prepared Statement...........................................    28
Mark Fulton, Global Head of Climate Change Investment Research, 
  Deutsche Bank..................................................    34
    Prepared Statement...........................................    37
    Answers to Submitted Questions...............................   113

                          SUBMITTED MATERIALS

Hon. Edward J. Markey, letter from Ernst & Young, September 20, 
  2010...........................................................    69
Hon. Edward J. Markey, copy of report from Ernst & Young, 
  ``Renewable Energy Country Attractiveness Indices'' 2010.......    72
Hon. Edward J. Markey, copy of report from Ernst and Young, 
  ``Cleantech matters; the electrification of transportation: 
  from vision to reality'' 2010 Ignition Sessions summary report.    76

 
                      THE GLOBAL CLEAN ENERGY RACE

                              ----------                              


                     WEDNESDAY, SEPTEMBER 22, 2010

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:07 a.m., in room 
2325, Rayburn House Office Building, Hon. Edward J. Markey 
(chairman of the committee) presiding.
    Present: Representatives Markey, Cleaver, and 
Sensenbrenner.
    Staff present: Jonathan Phillips.
    The Chairman. Welcome to the Select Committee on Energy 
Independence and Global Warming.
    For generations now, America's universities, national 
laboratories, and innovative companies have fueled the 
technology breakthroughs that have put America in the lead and 
kept Japan, Europe, and other economic competitors in the 
rearview mirror. America's ability to combine innovative brains 
with can-do brawn has meant higher standards of living, a huge 
middle class, and increased economic opportunity for millions 
of our citizens. This is our competitive advantage. This is 
what makes our country a mecca for entrepreneurs and ambitious 
workers the world over.
    Our technology incubators are still pumping out the 
innovations, but our entrepreneurs and workers are increasingly 
being blown off the road. Governments around the world 
recognize the opportunity of the clean energy economy and are 
seizing it. The world will need to invest $26 trillion--that is 
trillion with a T--over the next two decades in order to meet 
our energy needs.
    Developing the clean technologies to serve that market is 
the scientific challenge of the generation. Harnessing the 
industrial might to manufacture those technologies and market 
them to the world is the economic opportunity of the 
generation.
    Last year, I went to China with Mr. Sensenbrenner and with 
the Speaker, and we viewed the wind turbines spilling out of 
factories. I returned home warning of these economic missiles 
pointed at the heart of the U.S. economy.
    Today, the clean energy investment auditors are here to 
share the dismal scorecard. Twice as much money was invested in 
clean energy in China as was invested in the United States last 
year. A decade ago, China made 1 percent of the world's solar 
panels. Today, it makes nearly half of them. The $15 billion 
worth of solar panels China exported last year was more 
valuable than America's corn, beef, and chicken exports 
combined.
    China is no longer coming; they are here. They ate our 
lunch, and they are moving on to our dinner. And China is not 
alone. Germany, Japan, South Korea, and other countries 
recognize that dominating the $1 trillion market of tomorrow 
requires foresight and public investment today. They are 
throwing the kitchen sink of policies at clean energy, 
renewable energy requirements, financing assistance, tax 
incentives, government procurements, carbon pollution limits.
    Here in the U.S., the longest-term Federal incentive for 
clean energy expires in 2 years. Senate Republicans have 
steadfastly stood in the way of any and all long-term policies 
to support the manufacture and deployment of clean energy in 
this country. It is notable that we have entrepreneurs willing 
to invest in U.S. clean manufacturing at all in such an 
unpredictable environment.
    Some of China's clean energy incentives may be illegal 
violations of international trade agreements. Feeling that the 
future of America's clean energy sector is under threat, the 
United Steelworkers Union recently submitted a petition to the 
U.S. Trade Representative. The case alleges that China has used 
hundreds of billions of dollars in subsidies and other illegal 
trade practices to undermine foreign competitors and dominate 
the sector.
    I am very concerned about China's use of unfair trade 
practices to bolster the competitiveness of its industries, and 
I urge prompt action to address violations found through the 
U.S. Trade Representative's investigation.
    But we must not move forward recklessly on this trade 
dispute with China. In the end, competition is good. 
Competition is one of the chief reasons that the price of a 
solar panel has fallen by half in the last 2 years. Competition 
will ultimately make solar energy competitive with grid 
electricity in this decade, but this competition must be fair. 
It must allow American workers to play on the field. It must 
make it possible for us to export these technologies to other 
countries, especially to China. And that is why the U.S. Trade 
Rep must do the job that is necessary in order to protect 
American workers.
    So if we do not act decisively to provide the long-term and 
short-term incentives to make America the best place to invest 
clean energy dollars, someone else will. So let's get real. We 
will trade our addiction to Middle Eastern oil with an 
addiction to Asian or European clean energy technologies.
    From the Manhattan Project to the Apollo program to medical 
research to the Internet, government investments have and will 
continue to make America the place where the next great 
technological breakthroughs happen. The only question that 
remains is whether American industry and workers will ride this 
technological wave. The stakes could not be higher.
    [The prepared statement of Mr. Markey follows:] 



    
    Let me now turn and recognize the ranking member of the 
select committee, the gentleman from Wisconsin, Mr. 
Sensenbrenner.
    Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
    In today's hearings, I expect a slew of experts to tell us 
what we already know. If we mandate that electric companies use 
wind energy, it will drive private investment into the wind 
sector. Of course it will. What investor wouldn't want a 
guaranteed market? If we mandate that everyone drives cars with 
square tires, we will drive investment there, too. But that 
doesn't mean that we should.
    Choosing winners and losers doesn't work. Europe proved as 
much with regard to clean energy investment. In Europe, 
government subsidies drove investment toward renewable energy 
sources. That investment and all associated jobs dried up as 
soon as the subsidies lapsed.
    Just a few years ago, President Obama held Spain as the 
model for encouraging investment in solar energy. Today, 
Spanish unemployment is over 20 percent. Is that really the 
model we want to follow? Europe proved that jobs associated 
with clean energy investment will last only as long as the 
government pays for them.
    Democrats couldn't get cap and tax through Congress, so now 
they are trying to circumvent voters and accomplish the same 
thing through the EPA. Their argument, that if we don't force 
investors to spend their money here they will spend it abroad, 
is wrong.
    The reality is that the technologies the Democrats want to 
mandate will drive the cost of our energy up, which will drive 
more manufacturing jobs overseas. Given the choice between, 
one, forcing investment toward today's political darlings or, 
two, supporting sustainable, market-tested businesses, I am 
going to choose the latter every time.
    During the coming months, the American economy will be at 
the mercy of several environmental regulations from the Obama 
administration. These regulations will not generate jobs. They 
will generate significant costs for the businesses that create 
jobs.
    EPA's endangerment finding, which would allow the EPA to 
regulate greenhouse gas emissions, is the most widely followed 
and probably the most onerous example. Unless Congress stops 
it, these regulations will put EPA in charge of the U.S. 
economy.
    The EPA would target more than 1.3 million commercial 
sources which the EPA defines to include office buildings, 
small businesses, schools, churches, prisons, and similar 
structures. The EPA estimates that an endangerment finding that 
doesn't include legally suspect tailoring rules would cost 
small entities more than $55 billion. The Heritage Foundation 
says that it would lead to $7 trillion--with a T--in lost 
economic activity between 2010 and 2029 and would kill almost 3 
million manufacturing jobs by 2029.
    One administration official told the Wall Street Journal 
that, under the endangerment finding, the EPA was going to have 
to regulate in a command and control way, which will probably 
generate even more uncertainty.
    This is not the only economic threat posed by the Obama 
administration. The President is proposing tax increases on 
energy as a part of his latest $50 billion stimulus plan. One 
expert estimates that these new energy taxes would cost over 
154,000 jobs by the end of 2011, more than $341 billion in lost 
economic output, and more than $68 billion in lost wages 
nationwide.
    EPA has termed another set of onerous regulations boiler 
MACT. These regulations will set emission standards for 
hazardous air pollutants. The Council of Industrial Boiler 
Owners released a study last week that showed exactly how much 
damage the boiler MACT regulations will inflict upon the 
economy. For every $1 billion spent on upgrade and compliance 
costs, up to 16,000 jobs and $1.2 billion in U.S. GDP will be 
threatened.
    With regulations like these, the entire American economy is 
threatened. With unemployment hovering around 10 percent, 
America does not need more job-killing regulations. America 
needs Congress to focus on creating jobs and economic growth.
    In our economic system, it is private investors who take 
risks. Financial success is the potential reward. If investors 
believe that renewable energy sources are the future, then I 
encourage them to invest in these markets. It is not, however, 
in America's interests to mitigate investor risk by 
guaranteeing them a market.
    It makes sense that a Democratic Congress that responded to 
our economic collapse by socializing losses will now seek to 
shift the risk of investing from private businesses to the 
government.
    In today's hearing, the majority is effectively arguing 
that government should bet on winners and losers so investors 
do not have to. The model is backwards and reflects a 
fundamental disagreement on American capitalism. While I will 
gladly work with Democrats to lower taxes and other 
disincentives for investment, I cannot support a model that I 
believe is at odds with how our economy works.
    I thank the Chairman and yield back the balance of my time.
    The Chairman. I thank the gentleman.
    The chair recognize the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. I will continue to 
quote you about the Chinese eating our lunch and beginning on 
our dinner. I think that is exactly what is happening.
    Mr. Chairman, in the 1870s, Thomas Edison invented the 
light bulb. It is a unique creation here in the United States, 
and those light bulbs have been a part of the industrial 
component of the U.S. economy since the 1870s.
    General Electric will discontinue manufacturing the light 
bulbs that we know as incandescent bulbs at the end of this 
month and the United States will now purchase the CFLs from 
abroad, mostly from China. The glass tubes that are twisted, 
which helps in reducing the amount of energy needed, about 75 
percent less energy, requires a lot of hand labor, and that 
hand labor, of course, is infinitely cheaper in China. So a 
unique American invention is now being manufactured almost 
exclusively in China and all of the people in this hearing room 
will in the future purchase these new CFLs after they have been 
imported from China.
    I think that should be a wake-up call, if there is one 
needed, and it is my hope that this hearing this morning will 
allow some additional information to be brought forth that will 
inspire the great ingenuity that has made America what it is to 
continue and recapture particularly those things that began on 
these shores.
    I yield back the balance of my time.
    The Chairman. Thank you, Mr. Cleaver.
    Now we will turn to our first witness, who is Michael 
Liebreich. He is the Chief Executive of Bloomberg New Energy 
Finance. He is an experienced venture capitalist and 
entrepreneur who has helped build more than 25 companies.
    We welcome you. When you feel comfortable, please begin.

STATEMENTS OF MICHAEL LIEBREICH, CHIEF EXECUTIVE, BLOOMBERG NEW 
    ENERGY FINANCE; RAVI VISWANATHAN, GENERAL PARTNER, NEW 
 ENTERPRISE ASSOCIATES; TOM CARBONE, CHIEF EXECUTIVE OFFICER, 
   NORDIC WINDPOWER; AND MARK FULTON, GLOBAL HEAD OF CLIMATE 
           CHANGE INVESTMENT RESEARCH, DEUTSCHE BANK

                  STATEMENT OF MARK LIEBREICH

    Mr. Liebreich. Good morning, Chairman Markey and gentleman 
of the committee, ladies and gentlemen. First, thank you for 
inviting me here today.
    By way of background, I founded New Energy Finance in 2004 
to help investors and policymakers understand the economics of 
clean energy. I built a team of 140 experts around the world 
before we were bought at the end of last year by Bloomberg, the 
financial information provider.
    I will divide my remarks into two sections.
    The Chairman. Is the microphone on there? Can you try to 
turn on that microphone? Is it on?
    Great. Thank you.
    Mr. Liebreich. It is on.
    If you can pull up the slides.
    I will divide my remarks into two sections. First, when the 
slides arrive, I will provide an up-to-date picture of 
investment activity around the world. Secondly, I will comment 
more generally on the related issues of jobs, policy, and 
international competition.
    If we can move to the first slide.
    As you can see from my first slide, global investment in 
new forms of clean energy surged from under $50 billion in 2004 
to over $170 billion just 4 years later. These figures exclude 
traditional forms of lower carbon energy, large-scale hydro, 
natural gas, and nuclear, though I would be the first to agree 
that these will play a significant role in the energy system of 
the future.
    In 2009, the volume of investment dropped by 7 percent to 
$162 billion as the sector was hit by the financial crisis. At 
one point, valuations of clean energy stocks were down from 
their peak by around 70 percent before recovering some of their 
losses. It is worth noting that they are still double what they 
were in 2003, a compound return over the last 7 years of just 
under 10 percent per annum.
    The impact of the crisis on the industry could have been 
worse, and it will be tempting to think that the green stimulus 
programs around the world were the major factor in staving off 
disaster. However, although we identified a total of $184 
billion of such funds allocated for clean energy alone, the 
fact is that in 2009 only 9 percent of it reached companies and 
projects in need.
    In the U.S., investment fell off a cliff in the aftermath 
of the Lehman collapse. On an annualized basis, it was only 
this year that it started to climb again as the American 
Recovery and Reinvestment Act funds started to flow.
    The world's providers of concessionary finance, the IFC, 
European Investment Bank, Brazil's BNDS, and so on, were much 
quicker in responding to the crisis, increasing their lending 
from just $7 billion in 2007 to $21 billion in 2009. The role 
of these multinational institutions and development banks has 
often been overlooked, and these figures do not include the 
Chinese banks. Their provision of cheap finance to 
manufacturers and developers has been a major factor in driving 
surging investment there.
    By 2009, China is absorbing nearly three times the level of 
clean energy investment as the U.K., the U.S., or Spain. In 
just the past 5 months, the China Development Bank has provided 
$27 billion in concessionary finance to Chinese wind and solar 
companies.
    China's leaders have supported the sector not only by 
providing cheap finance but also by creating domestic demand on 
a grand scale, setting local content rules, maintaining tariffs 
on foreign imports, as well as, of course, maintaining an 
undervalued currency.
    Before we become too pessimistic about the state of clean 
energy in the U.S., we should recall that it remains by far the 
world's leading venue for investment. Even in clean energy 
technologies U.S. companies spend more as a percentage of 
revenue on research, and the U.S. stock markets continue to 
attract public offerings from companies around the world.
    However, there is no question that the period 2007 to 2009 
saw Asia take over from the Americas as the number two region 
of the world for clean energy investment; and when we compile 
the figures for 2010, we will see that Asia has eclipsed Europe 
to take a global lead.
    Now, if I might turn my attention briefly to the question 
of U.S. policy, those who deride the U.S. for inaction are not 
correct. Not only do 30 States have clean energy portfolio 
standards, but there are also significant national programs, 
such as the renewable fuel standard, increasingly stringent 
CAFE standards, and substantial Federal R`D programs. Our 
research shows that ARRA, in particular its grants and loan 
guarantees, played a material role in keeping the flow of 
funding going during 2009 and 2010.
    What is missing is the sort of consistent policy framework 
that has driven the development of clean energy, first in 
Denmark, Germany, and Spain, then China, and now the other 
major economies.
    In 2008, the South Korean President, Mr. Lee Myung-Bak, 
presented a plan to cut the country's carbon emissions by 30 
percent from business-as-usual without jeopardizing growth. The 
Korean government will be investing 2 percent of gross domestic 
product over the next 5 years, and leading Korean industrial 
companies have responded by announcing investments of over $80 
billion between now and 2020.
    Contrast this with the U.S., where the industry's 
production and investment tax credits have in the past been 
allowed to expire every 2 years. A highly effective ARRA 
program may not get extended, and in California proposition 23 
is targeting the repeal of AB-32. Alone amongst the major 
economies, U.S. negotiators had to make a commitment under the 
Copenhagen Accord to cut carbon emissions without national 
legislation in place to deliver it.
    It was Winston Churchill who said the Americans will always 
do the right thing once they have exhausted all the 
alternatives. I have no doubt that the U.S. will at some point 
wake up to the strategic necessity and growth opportunity 
offered by a shift to clean energy. I only hope other countries 
will not in the meantime have established an unassailable 
industrial lead.
    Many thanks for your patience in listening to me.
    [The statement of Mr. Liebreich follows:] 



    
    The Chairman. Thank you very much.
    Our next witness is Dr. Ravi Viswanathan. He is a general 
partner at New Enterprise Associates, where he focuses on 
energy and growth equity investments.
    We thank you for being here, Doctor. Whenever you feel 
comfortable, please begin.

                 STATEMENT OF RAVI VISWANATHAN

    Mr. Viswanathan. Chairman Markey, Ranking Member 
Sensenbrenner, members, thank you very much for inviting me 
here. It is truly an honor.
    I appear before you here today as a general partner of New 
Enterprise Associates, or NEA. NEA is, by assets under 
management, the largest venture capital firm in the country, 
with $11 billion under management. Through our 30 years of 
history, we have funded over 650 companies and have had over 
160 of them go public. Our 50 largest companies have created 
over $65 billion in revenues and have created hundreds of 
thousands of jobs in this country. Today we have a global 
footprint, with offices in India and China and roughly 20 
percent of our committed capital targeted at emerging markets.
    In the past, the U.S. VC industry has played a pivotal role 
in developing industries such as biotechnology, computing, 
medical devices, semiconductors, telecommunications, and the 
Internet. We deploy our capital in rapidly expanding companies 
which have the highest potential for long-term economic growth 
and job creation.
    According to the National Venture Capital Association, U.S. 
VC-backed company revenue has equated to more than 22 percent 
of U.S. GDP; and over the past 3 years alone VC-backed 
companies have accounted for three times more job creation than 
the private sector taken as a whole.
    Today, the energy technology industry represents one of the 
most compelling investment opportunities in the history of 
venture capital. I serve as the co-head of our energy practice, 
overseeing more than 30 portfolio companies here in the U.S. 
that have raised a total of $2 billion in capital. Our 
portfolio includes investments in sectors such as solar, wind, 
nuclear, advanced battery, smart grids, electric vehicles, and 
energy efficient building materials.
    Regarding the current U.S. clean tech landscape, the U.S. 
has long been the home of great innovation in clean energy 
technology, which continues to present a compelling opportunity 
for both entrepreneurs and venture capitalists.
    Though the U.S. continues to be the home of the world's 
best clean energy innovation, the U.S. has lost its leadership 
to China, Japan, and Germany in clean energy manufacturing 
deployment and is challenged and threatened by emerging 
economies such as India, South Korea, Malaysia, and the 
Philippines. I can say that from firsthand knowledge, as I 
spend about a third of my time in Asia trying to understand how 
these economies are doing what they are doing in clean energy.
    These nations have outpaced the U.S. in recruiting, 
incenting, and developing domestic manufacture of solar, wind, 
and battery technology. We are not the market leader in 
producing and supplying this high-growth industry and have 
ceded our historic leadership in manufacturing of these key 
technologies to other nations. As one example, the U.S. market 
share for solar manufacturing has fallen from 45 percent in the 
mid-1990s to roughly 5 percent today.
    Prior to the Recovery Act, this paradigm of developing 
innovative technology in the U.S. and exporting manufacturing 
to poor nations has been driven primarily by a significant 
imbalance between U.S. and foreign tax policies and incentives.
    Contrary to popular belief, low labor costs have not been 
the most important variable in this equation. Up-front 
manufacturers' incentives, long-term tax holidays, and end-
market incentives have been frequently as important, if not 
more important, variables influencing U.S. companies as to 
where they should establish their manufacturing facilities.
    Incentives from foreign nations have often totaled as much 
as 40 or 50 percent of the costs of a new manufacturing 
project. In addition, healthy demand side incentives such as 
national renewable energy standards, feed-in tariffs, and 
direct government loans and tax credits for the deployment of 
clean energy technology have made relocating U.S. manufacturing 
facilities overseas even more attractive.
    Without competitive incentives for companies to stay in the 
U.S., this Nation's best manufacturers have had no choice but 
to look overseas to remain competitive in their industries. The 
result has been a loss of both direct and indirect jobs, a loss 
of intellectual property, and a loss of economic growth here in 
the U.S. for one of the fastest-growing global industries of 
the 21st century.
    In describing this trend, I must remind the committee that 
venture capitalists and entrepreneurs are by definition 
optimists. I believe the U.S. can be a leader in clean energy 
manufacturing and deployment, and I have witnessed this 
firsthand. We are not giving up on the American entrepreneur, 
and I hope you won't either.
    I am grateful to this committee and the current 
administration for recognizing the need to level the playing 
field for U.S. clean energy manufacturers. With the help of the 
tax policies and incentives put forth in the Recovery Act, this 
Nation's best energy technology companies are expanding their 
domestic capacity, reopening and retrofitting closed factories, 
rehiring and retraining new workers, and rebuilding local 
economies depressed by the great recession.
    One of the most important policies in restoring American 
competitiveness in clean energy is the section 48C Advanced 
Manufacturing Tax Credit, providing a 30 percent tax credit for 
investments in facilities that manufacture clean energy 
products such as solar panels and wind turbines.
    This program awarded $2.3 billion in tax credits to over 
100 companies in 43 States and was oversubscribed with requests 
of over $8 billion in projects. Four of our most promising 
companies were awarded this credit and were able to expand 
manufacturing here in the U.S., creating jobs, thanks to your 
efforts in the Recovery Act.
    One of these companies was Suniva, one of our companies. 
They were able to expand their solar manufacturing from 33 
megawatts to 170 megawatts in Norcross, Georgia, hiring an 
additional 60 workers and creating more than 100 construction 
jobs in an economically suppressed suburb of Atlanta.
    This Congress has put forth very important legislation 
which puts a price on carbon. Putting a price on carbon by 
definition will reduce risk for all energy markets, decreasing 
the cost of capital and increasing investment in renewable 
energy. We believe this is an important policy for the U.S. to 
continue to attract capital to fuel the energy needs of our 
21st century economy.
    Growing a strong domestic clean energy manufacturing 
industry requires competitive supply and demand side incentives 
and policies. In order for the U.S. to be truly energy 
independent in a world with clean, cheap, renewable energy, we 
need to reinvigorate our manufacturing base. We can't 
substitute our dependence on foreign oil with batteries, solar 
cells, or wind turbines made overseas.
    As I have discussed, one of the most important pieces of 
the Recovery Act was the section 48C Advanced Manufacturers' 
Tax Credit. In addition, demand side incentives such as the 
1603 grant program for clean energy deployment have been 
critical to sustaining a healthy clean energy economy for U.S. 
manufacturers. We need to make these tax credits permanent and 
refundable, as put forth by Members of this Congress.
    In addition, we need to focus on scaling up and 
commercializing this country's best technologies through 
public-private partnerships. Countries such as Germany, Japan, 
and China have all dedicated funds to scale up the 
commercialization of their technologies.
    We also need an effective national renewable electricity 
standard and energy efficiency standard with an incentive 
system for utilities to move forward without delay. Today, 30 
States have already adopted Statewide renewable energy 
standards, but those policies are at risk should the Federal 
Government fail to act with certainty to adopt a national 
standard.
    In closing, we have never seen a greater opportunity to put 
capital to work in support of U.S. entrepreneurs. We believe 
this is the greatest economic opportunity for our industry, for 
our entrepreneurs, and for our country.
    Thank you very much for inviting me today. I look forward 
to your questions.
    [The statement of Mr. Viswanathan follows:]



    
    The Chairman. Thank you, Doctor, very much.
    Our next witness is Tom Carbone. He has had extensive 
experience in the renewable energy sector. He currently serves 
as the CEO of Nordic Windpower, the largest technology 
developer and manufacturer of two-bladed utility scale wind 
turbines. He is also chairman of the Princeton Energy Group, a 
California-based developer of global renewable energy projects.
    Welcome, Mr. Carbone.

                    STATEMENT OF TOM CARBONE

    Mr. Carbone. Thank you, Chairman Markey and Congressman 
Cleaver. We share your passion on the topic today of The Global 
Clean Energy Race.
    My name is Tom Carbone. I am chairman of Nordic Windpower, 
an early stage technology developer and manufacturer of very 
unique wind turbines for Community and Wind Energy products. 
This consists of on-site wind power and small-scale wind farms, 
typically less than 20 megawatts, but could be as large as 100 
megawatts, locally connected to the distribution voltage, close 
to the load.
    Our products and people are focused on making Nordic 
Windpower a leader in this segment. Our proven two-bladed 
technology provides for less weight, higher reliability, ease 
of installation and operation, and, most of all, the lowest 
cost of energy compared to traditional designs.
    Our story is about technology that was born in Sweden, a 
company that was started in the U.K., and today we are a U.S. 
corporation focused on a very interesting and growing segment 
within our domestic wind business.
    We formed the company in late 2007 as a U.K. limited 
corporation. We have headquarters in Berkley, California, an 
assembly facility in Pocatello, Idaho, and an engineering unit 
in the U.K. Last year, we incorporated Nordic's parent in the 
U.S. as a Delaware corporation.
    We employ approximately 40 people--that is double what we 
had at the start of this year--and we will double our 
employment again within the next 9-12 months. There are many 
more people employed within our supply and installation partner 
chain. Each of our one megawatt wind turbines provides enough 
clean electricity for the annual consumption of 250 to 300 
American homes and reduces 300 tons of CO2 
emissions.
    We acquired the turbine technology in Sweden, which was the 
result of a long-term R`D prototype program which was sponsored 
by the Swedish government, universities, and private entities 
at a cost of about $75 million. We have invested well over $10 
million in further improving that technology for local market 
needs.
    Since late 2007, we have completed three rounds of 
financing from venture capitalists in the U.S., the U.K., and 
Europe, for a total committed capital investment of about $58 
million.
    We are the beneficiaries of two Recovery Act provisions. In 
July, 2009, the company secured a $16 million DOE loan 
guarantee which was part of a $25 million project to 
manufacture and commercialize this one megawatt wind turbine in 
the U.S.
    The loan guarantee is a critical form of financing for 
Nordic Windpower and for our future development; and it gives 
us the wherewithal to create jobs, invest in the supply chain, 
invest in tooling to become more efficient and to offset some 
of our technology development costs. It is a loan. We have to 
pay it back. To date, we have not closed on this loan, but we 
are working diligently with the DOE to expedite the closing of 
the loan, which, as I said, is critical to our development.
    It is our view that this program could be improved by 
adopting some of the existing application due diligence and 
closing processes that already exist within our government, 
within other agencies such as U.S. OPIC and USDA, particularly 
to address the needs of small business enterprises like 
ourselves.
    We are also the recipient of $3 million in Advanced Energy 
Manufacturing Tax Credits, the 48C program that Dr. Viswanathan 
mentioned. This money will be used to expand and re-equip our 
manufacturing facility. This incentive will have a positive 
impact on our cash flow in the future when we have a tax 
liability.
    My point is to date we have not deployed one dollar of the 
Recovery Act provisions, but we intend to and are grateful for 
the awards that we have.
    Regarding our location decisions, when we started in 2007 
we determined that there were three principal markets, the 
U.S., Europe, and China. It is our view that China was 
saturated with nearly 100 domestic suppliers and JVs that are 
competing predominantly on low cost and low margin and 
secondarily on quality and reliability. This market could be 
especially challenging for an entry foreign company like 
ourselves.
    We saw limited opportunities for new entrants into the 
slower-growing European on-shore wind markets.
    Thus, the strength of the U.S. market's growth and 
potential for success was an obvious entry point for Nordic 
Windpower and in particular the community wind sector, which 
was relatively unaddressed by the major wind turbine 
manufacturers.
    The company is in the process of establishing and 
relocating to a new center of U.S. operations in the Midwest 
wind belt. We expect that employment at that new location will 
increase to 250 over the next 5 years and will require at least 
$18 million in investment.
    To say the least, wind turbine manufacturing is capital 
intensive, where significant amounts of cash can be tied up in 
the supply chain for working capital and in equipment to 
manufacture these units. As such, at an early stage company 
like ours, a large emphasis is on near-term effective cash 
value of incentives being offered at the local, State, and 
Federal level.
    We started to deliver and install wind turbines this year, 
and we expect to deliver and service over 100 wind turbines 
over the next 2 years, totaling nearly $120 million in sales 
revenue. Our 5-year plan includes new product introductions and 
shipments of more than 750 units.
    We will deliver and install our sixth N-1000 wind turbine 
this year at Fort Wachuka in Arizona. This is the first utility 
scale wind turbine on a U.S. Army base. We have two wind 
turbines supplying power, one to a school in Indiana and 
another to a municipality; and I would like to mention that 
three of our wind turbines were exported and installed in a 
project in Latin America with the ``made-in-America'' stamp of 
quality on them.
    In closing, I would like to provide some recommendations, 
if I may. My recommendations are based on three programs that 
exist today or are contemplated that have already benefited 
from a considerable amount of time and bipartisan cooperation. 
My recommendations are intended to make the programs more 
effective for innovative U.S. energy companies like ours so 
that we can compete more effectively.
    Number one--and you have heard it from Dr. Viswanathan--
pass the Federal Renewable Electricity Standard, the RES. The 
American Wind Energy Association estimates that a quarter of a 
million jobs will be created by this.
    The Chairman. If you could, Mr. Carbone, try to summarize 
quickly. You will get a chance to expand in the question and 
answer period.
    Mr. Carbone. Two more recommendations: Extend the Recovery 
Act 1603 program and allow for the 48C manufacturing tax credit 
to be refundable so that early stage companies like ours could 
use them today, as opposed to in the future when we have a tax 
liability.
    Thank you.
    [The statement of Mr. Carbone follows:]



    
    The Chairman. Our final witness is Mr. Mark Fulton. He is 
the manufacturing director and global head of climate change 
investment research and strategy at Deutsche Bank. He has 
nearly 30 years of experience as an economist and a strategist.
    We welcome you, sir.

                    STATEMENT OF MARK FULTON

    Mr. Fulton. Chairman Markey, Ranking Member Sensenbrenner, 
and members of the Select Committee on Energy Independence and 
Global Warming, thank you for the opportunity to provide 
testimony on the global clean energy race.
    In my role in the assessment management division of 
Deutsche Bank, I coordinate a research team that looks at the 
investment opportunities that climate change and associated 
clean energy technologies offer around the world. Since we in 
asset management started issuing educational white papers on 
these themes in 2007, the basis of our investment thesis has 
been demographic pressures on resources and environmental 
externalities as identified from scientific sources, combined 
with energy security and economic opportunity, which has led to 
government policy response at all levels, creating new 
technologies and industries as companies respond.
    As we sit here today, the U.S. Federal and indeed State 
governments are at a crucial crossroad in their policy stance 
on clean energy, whether to take action to deepen and extend 
policies or will they fall behind other countries around the 
world. The stakes are high in terms of energy security, new 
jobs and industries and the climate. Certainly in a U.S. 
context, policy at Federal, State, and local levels are all 
important.
    This year in the United States has been a challenging one 
for those looking to invest in these new clean energy 
industries on a longer-term basis. Uncertainty abounds. At the 
Federal level, given political complexities, there has been no 
energy or climate bill passed out of the Senate to complement 
the comprehensive approach taken by the House of 
Representatives in passing the American Clean Energy and 
Security Act that directly tackled climate issues and provided 
significant funding to clean energy and energy efficiency. At 
the same time, the most comprehensive climate and clean energy 
provisions of any State are under threat from California's 
Proposition 23, which seeks to suspend the State's Global 
Warming Solutions Act and would have a significant impact.
    Working for investors as an asset manager, these 
uncertainties are discouraging to capital deployment in the 
U.S. in the long term. We have formulated a simple but 
fundamental framework for assessing regulatory environments 
around the world which we call TLC--transparency, longevity, 
and certainty. Investors need transparency in policies to 
create understanding and a level playing field. Longevity means 
policy has to match the time frame of the investment and stay 
the course. Certainty refers to knowing that incentives are 
financeable. In tech terms, TLC should result in a lower cost 
of capital for projects while still delivering a fair and 
market-related return to capital.
    For instance, I believe that U.S. renewable policies could 
include more elements of TLC. State-level renewable portfolio 
standards set targets for near deployment. However, in most 
cases, these do not have enforcement measures nor penalties to 
ensure they are financed. Renewable energy projects have 
therefore relied much in the short term on the complementary 
Investment Tax Credit and Production Tax Credit equity programs 
to get financed. Due to lack of longevity, this has produced an 
on-off pattern in renewable deployment.
    Since the financial crisis, the tax equity market has not 
been strong and so the American Recovery and Reinvestment Act 
of 2009 introduced the Section 1603 Treasury cash grant. This 
indeed has been successful in generating projects in the past 
year, especially when combined with the Advanced Energy 
Manufacturing Tax Credit to encourage domestic production. But 
these programs sunset in 2011, and the renewable project 
pipeline is already under pressure as the tax equity market 
still struggles. As outlined in a paper released on September 
16th by U.S. PREF, this puts over 100,000 jobs at risk. The 
Department of Energy's sections 1703 and 1705 loan guarantee 
programs for early and later stage clean energy projects also 
sunsets in 2011.
    Looking around the world, we see many countries embodying 
TLC in their climate and energy policies and achieving capital 
deployment. As a German bank, we have knowledge of the German 
experience in particular.
    In a recent paper, we looked at the major elements of a 
strong policy regime. In the passage of the EEG in 2000, which 
was updated in 2009, Germany established a feed-in tariff 
regime that supports the EU-mandated goal of 20 percent 
renewable energy as a share of electricity by 2020. This 
embodies TLC for investors. The results have been 300,000 jobs, 
renewable energy as a 13 percent share of electricity and 
rising, a rapid fall in solar PV costs in particular leading to 
lower tariffs on the digression schedule with a forecast of 
grid parity by 2013.
    In summary, to build a secure, vibrant, 21st century clean 
and green energy sector, U.S. policy has to engage in TLC in 
some policy package. The fully comprehensive approach, such as 
embodied in the American Clean Energy and Security Act, is 
certainly a fundamental framework with strong elements of TLC. 
However, that is clearly open to a great deal of debate.
    In the Senate, a number of bills have been proposed. 
Indeed, even without a carbon market, a comprehensive and 
strong national renewable electricity standard complementing 
State RPS, combined with long-term financial incentive programs 
that have longevity and a clean energy bank looking at loan 
guarantees, as well as continued focus on energy efficiency, 
would be very encouraging. I happen to believe that State-level 
feed-in tariffs, if they spread, would be positive.
    We would also like to note Congressman Inslee's national 
feed-in tariff proposal in the Renewable Energy Jobs and 
Security Act.
    In closing, I thank the Select Committee on Energy 
Independence and Global Warming for this opportunity to testify 
and share our perspective. I applaud the committee's commitment 
to addressing these important energy and climate issues. This 
is not just a matter of good policy for the United States, but 
it is a global movement happening that is creating economic 
activity in a race to scale, an so there is a question of 
urgency in whether U.S. citizens will share in the new wealth 
being created.
    Right now, by extending what is already working in the 
Section 1603 Treasury cash grant and the Advanced Energy 
Manufacturing Tax Credit, Congress can help to underpin a 
growing industry and create or preserve valuable jobs.
    Thank you.
    [The statement of Mr. Fulton follows:]



    
    The Chairman. Thank you, Mr. Fulton, very much.
    Now I am going to turn and recognize the gentleman from 
Missouri, Mr. Cleaver, for as much time as he may consume in 
his question and answer period.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Let me apologize to the panel. I have two other committee 
hearings that started at 10 o'clock, Homeland Security and 
Financial Services. One is here, and one is in another 
building. So I apologize. This is, to me, extremely important.
    Mr. Carbone, thank you for being here. Thank you for the 
great work your company is doing.
    This is a somewhat convoluted question, but large Chinese 
windmills are selling for about $685 per megawatt of capacity. 
In the United States, it is about $825 per megawatt of 
capacity. So the Chinese are able to sell it infinitely 
cheaper. That is probably because of--and they probably violate 
some WTO rules. But, in addition to that, they are getting 
government-backed loans to do the work. And when you combine 
that--and they are doing land deals. There is a chance that 
China could suffer the same fate that hit us in December of 
2007 at the beginning of the recession, which is the collapse 
of the real estate market. So their plants are connected to 
land deals and the government is backing the loans.
    Do we have to wait on a potential collapse, do you think, 
in the Chinese economy before we have a chance to catch up, or 
is there something that we can do to not only catch up but to 
supersede the Chinese?
    Mr. Carbone. Thank you for the question, Congressman 
Cleaver.
    In our view, and in particular my view, in our analysis it 
was difficult for us to export to China from the United States 
with our wind turbine. Although a large amount, the majority, 
of our parts are sourced here in the United States, a fair 
amount of the value is today imported. That was the result of a 
very constrained local market here in terms of the supply chain 
in 2008 and 2009 when we had a large booming business. It 
caused us to go offshore. We are currently domesticating a big 
part of our supply.
    Since we have gone global with our supply chain, we are 
finding very competitive domestic supply for wind turbine 
components. There is capacity. I am sure that has driven down 
the supply.
    My figures are a bit different than yours in terms of what 
is the wind turbine package to a wind farm here in the U.S. Our 
pricing and the pricing of our competitors are in excess of 1.2 
to 1.5 million. We have seen Chinese supply coming at about 1 
million a megawatt installed. However, we have also seen that 
it is more than just the product, it is the process and the 
people behind that products and how these products are serviced 
over the 20 years that they are expected to operate.
    So I think today there is competitiveness within the U.S. 
supply chain. It is actually improving, these incentives we are 
talking about today, particularly the ones that Nordic is 
trying to employ. It will increase our productivity and, 
therefore, our competitiveness.
    It will be a fight for sure with Chinese wind turbines and 
Korean wind turbines coming to the U.S., to our shores, but I 
think it is a good fight. It is the one that we really, I 
think, have the opportunity to combat.
    Mr. Cleaver. Let me ask any or all of one question: If you 
were sitting here and necessarily engaging in a debate with 
some good people who think differently, who would say that we 
can't expend large amounts of taxpayer dollars at this time 
because we need to concentrate on reducing or eliminating the 
deficit, so every discussion that surfaces is going to have 
that as a background, do we spend money to make sure that we 
are a 21st century nation, or do we forget that and deal with 
the deficit?
    I am just curious about what any of you would say that in 
that hypothetical--no, it is not a hypothetical. It is a very 
real debate.
    Mr. Carbone. Maybe I could jump in on that first.
    Yes, I think, given the choice, reducing the deficit has to 
be a priority.
    Mr. Cleaver. Even if we fall further behind?
    Mr. Carbone. No. Let me finish my statement.
    Mr. Cleaver. Go ahead.
    Mr. Carbone. I think what we need, though, is the market 
signals. We need a Renewable Electricity Standard to actually 
provide a standard market signal and let the markets--let the 
supply base, let the turbine manufacturers, let the solar 
companies respond to it competitively. In my mind, that would 
be a much stronger signal, particularly a long-term policy 
signal.
    Mr. Liebreich. I think, first of all, it is very difficult 
to have that discussion with somebody if they haven't first 
agreed that there is a benefit to this shift towards cleaner 
energy and towards, in a sense, energy that comes out of 
technology rather than energy that comes out of the ground. So 
that is first. So that is my caveat before I start.
    Mr. Cleaver. Well, that ends it, pretty much.
    Mr. Liebreich. Well, it certainly hinders the discussion 
with some folks. But there are a lot of people who actually are 
in the middle camp, where they see the need, they see China 
forging ahead, Korea is about to start, Europe, and actually do 
see the need to take action.
    And then the issue that you raised specifically around the 
deficit is one that I think one can deal with, because I think 
there are ways of designing policy that don't just require 
checks to be written by either Federal or State governments. So 
renewable portfolio standards, if they had the appropriate 
teeth, would actually achieve a lot of that.
    It is not necessary just to incentivize, just to pay money 
for the good energy. You can actually mandate a volume and then 
let the market decide how to fulfill that. But if you go that 
route, then it does have to have teeth. There is no point in 
having a renewable portfolio standard that can be bought out at 
such a low price that it is essentially ineffective.
    There are other areas where there are barriers to switching 
to clean energy. There are other areas where some of the 
externality costs of the alternatives ought to be priced in.
    So I think that the important thing is to go through the 
policy and look at ways of doing it that don't hit the budget. 
If you believe it is important, then that is the challenge 
ahead.
    Mr. Viswanathan. Congressman Cleaver, I think it is a very 
fair discussion on wanting to reduce the deficit. What I would 
say if I were in your shoes and discussing it with these other 
folks is that it comes down to a few things. It comes down to 
job creation, global competitiveness, and energy independence. 
If we have these incentives, jobs will be created here. If you 
don't have these incentives, for sure they are going to be 
created elsewhere.
    Here is what the frightening scenario is, and I can say 
this from traveling in Asia: These economies, they have speed 
and capital and scale and they are exercising that in the 
manufacturing side. Now that they are getting leadership 
positions on the downstream part of these clean energy 
technologies, they are doing something that we hadn't 
anticipated them doing, and they are going upstream and they 
are starting to innovate. Once they start innovating, then our 
bulwark, our strength, our fortress which we have had for 
hundreds of years, which is innovation, starts getting 
compromised.
    So I think with while the short term is obviously to focus 
on the deficit, I would encourage everyone to start thinking 
about intermediate and longer term, because that trend, 
empirical data suggests it is happening. It is happening in 
solar, it is happening in wind, it is happening in batteries, 
it is happening in electric vehicles. So that is the fear that 
my partners in our industry face when we look at these global 
factors.
    Mr. Fulton. I would echo what I have heard. One obvious 
point about the budget, it has got a lot of numbers in it. Tax 
spending, it is a huge animal. And it is really up to the 
United States to decide where it wants to spend and tax within 
that balance as it brings the deficit down and how important it 
feels that being on the front end of the clean energy race 
really, in terms of its long-term competitiveness. So it is a 
question of priorities. And we believe that this is a strong 
priority.
    I think the second point, bringing up what Michael said, 
was that there are different ways to construct incentive 
programs. Some run through the budget, some run directly into 
the rate pay base. And essentially a lot of the European do not 
run through the budget. So then there is a question of, do you 
think that is the best thing, an electricity base.
    So there are ways of constructing these incentives. You can 
do it, as long as you do it with TLC is our point, fine, tends 
to get it done. And if you don't get longevity that is run 
through the budget, then of course that is an issue.
    Mr. Markey. Does the gentleman need more time? He can 
continue.
    Mr. Cleaver. Well, of course there is no TLC up here on the 
Hill. I agree, we have got to make some choices if we are going 
to do this. But my fear is, while we are struggling with the 
choices, we fall further behind. And nothing moves swiftly 
here. And I guess, I am not looking for you to solve this 
dilemma, but you have helped craft, I think for me at least, an 
argument.
    What do you say, though--I mean, Mr. Sensenbrenner my 
friend left. He had another commitment. But if this is always 
presented as some kind of new way to tax the public, you poison 
the public to the need to move and move swiftly to create.
    Mr. Fulton.
    Mr. Fulton. Well, I think it is interesting, actually, we 
talk a lot about costs, but there is still a big debate about 
how to measure those costs. So at a very narrow level we look 
at the so-called cash costs of deploying, say, solar against 
coal. But of course what we--the wider debate is what are the 
externalities? What are the real costs of those technologies, 
of those fuel sources? And that is when, of course, it gets 
more difficult because we are talking about economist 
externalities. But when you start loading in the externalities, 
if you happen to believe in the environmental impacts, health 
impacts and so on, then you get very different numbers as to 
what is yielding.
    I think the second point I would like to say is that we 
hear a lot about how this is just a lot of subsidies and 
keeping the market going when it should just be doing it 
itself. I think the point is that we particularly see these, as 
I would like to call them, incentives to scale. Essentially, 
these are new industries scaling up. Every new industry, really 
big industry, you go look at history, gets some help from 
government when it is scaling, generally. And so we know fossil 
fuel industries around the world, by the way, have between 3- 
and 500 billion in subsidies, which is calculated by the IEA. 
So it is not a level playing field anyway.
    And secondly, what I would say to you is, if you think 
about it, what we are trying to do is incentivize the scaled 
deployment of these new industries. And as we do that and their 
learning curve, their costs come down. And we are hearing that. 
The Germans believe that as they incentivize the reply side 
response of solar PV--and we have seen the crash in prices, 
which they are now reflecting--then we are going to see grid 
parity against the fossil fuels within 3 to 5 years maximum.
    So we keep talking about, oh, always subsidized. No. These 
are incentives to scale, to develop industries to make the 
clean economy work. And you are right, at the end of the day, 
the next 5 years, I think the next 5 years are very crucial 
because grid parity is sort of coming as these industries 
build. And during that process have you incentivized your own 
manufacturing base and own economies to participate in that?
    Mr. Cleaver. Mr. Liebreich.
    Mr. Liebreich. I have had a minute or 2 to reflect on how 
we can perhaps help you to persuade Mr. Sensenbrenner to 
approve some of the measures that you might want to. And I 
think that I would probably start by talking about the risk to 
the U.S. economy is not going to be defined by the odd program 
here or there and a few billion more or less of this or that 
grant program or loan guarantee. The issue that really is at 
stake here is whether the U.S. is going to be a price taker on 
energy in its economy for the next 2 decades, 50 years, 100 
years.
    If you go back in history, while the U.S. was a net 
exporter, was producing enough energy domestically for its own 
demands, that was not an issue. And what has happened, as U.S. 
oil has depleted and imports have gone up and up, the U.S. is a 
price taker on energy. And this has been at the root of a 
number of different episodes of economic instability which have 
actually destroyed enormous numbers of jobs along the way, and 
it is because the U.S. is a price taker on energy 
fundamentally.
    Now, you move to these technologies, and I think--and the 
analysis that we do and my fellow panel members will confirm--
that these energy technologies will become cheaper in the long 
term than fossil fuels. And so the U.S. has an opportunity--so 
the world will shift to these technologies. It won't be fast. 
We are talking decades, sometimes perhaps many decades, but 
this is the shift that will happen.
    And then the question is, is the U.S. going to be a price 
taker on those technologies? You used the example of compact 
fluorescent light bulbs, LEDs. We are going to be buying those 
from Taiwan. Are we going to be a price taker on our own 
electricity power and on our main fuel sources because we have 
not developed these here in the U.S.?
    And I think there is an opportunity. I think this is the 
real debate. And so if you can win that debate about whether 
the U.S. has to lead in these technologies, then the discussion 
with Mr. Sensenbrenner and his colleagues perhaps is about how 
to do that, rather than about the desirability of doing that. 
And the evidence that perhaps could contribute to that is 
evidence around the economics of this stuff.
    The last 5 years has been very unusual because, first of 
all, the amount of demand that suddenly arrived in the industry 
overwhelmed the supply chain. From 2004 through to 2008, the 
price of clean energy went up, not down. The long-term history 
is it comes down. There is an experience curve. This stuff is 
driven by developing technology, developing logistics, 
developing supply chain, developing skills, developing 
financing mechanisms, and so on, and the price comes down.
    And the last 2 years we have seen that really, we have seen 
the costs come down in a way that has caught up with those 
trends. And I think that when you start to delve into the fact 
that you have fossil fuels getting more expensive and you have 
fossil fuels causing accidents like what we have seen, the 
tragedy in the Gulf Coast that we just all lived through, and 
then you contrast that with the costs coming down, and you can 
provide data on that, this is something that yields to 
analysis.
    Then I think that maybe the debate moves on from whether we 
have this program or that, and is this just tax and spend, or 
is this just a subsidy and will it just stop? And the fact that 
Spain's solar program blew up because it was poorly 
constructed, Spain's wind program certainly didn't and 
Germany's solar program didn't and China's solar and wind 
program certainly didn't and Brazilian ethanol programs 
certainly didn't. There are plenty of examples one can bring to 
bear that back up this thesis that this is the future of the 
energy industry. And America really needs to get into the price 
giving and not the price taking position.
    Mr. Cleaver. Thank you very kindly.
    Mr. Markey. We thank the gentleman very much. And I think 
that the gentleman from Missouri in his questions has laid out 
and your answers have helped to lay out the challenge for 
America. And a couple of you mentioned this challenge to AB 32 
in California. You mentioned that there is now an attempt to 
repeal the clean energy laws of California. And therein lies 
our challenge, because that attempt to repeal the clean energy 
laws in California is being financed by the Koch brothers, 
Tesoro, and by Valero, three companies with oil refineries in 
Texas. So Texas is financing--Texas refineries are financing an 
effort to repeal California clean energy laws. And so what is 
at stake there? Who are the winners if the Koch brothers, 
Tesoro, and Valero win? The winners are those three companies 
and China. Those are your two big winners up on the scoreboard.
    The losers, of course, are anyone who was interested in 
creating a domestic renewable energy industry here in the 
United States with the potential to create hundreds of 
thousands of millions of jobs.
    Mr. Fulton, can you talk about what is at stake in 
California in terms of this battle over AB 32 and what it 
represents if that law is actually repealed by these oil 
refineries in the United States financing that effort?
    Mr. Fulton. Yeah. It is a suspension, as you know, until 
California reaches 5.5 percent unemployment for a number of 
quarters, which we haven't seen for a long, long time. But 
technically it is a suspension, but people would suspect it 
would last for quite a while.
    And we actually quote the U.C.-Berkeley paper that has 
looked at this. The U.C.-Berkeley paper that has looked at this 
very comprehensively I think is very instructive. But 
essentially I think one of the points, apart from the fact that 
it would have a very significant on what is going on in 
California itself--and of course there is a lot of talk about 
how AB 32 then spills over into all of California's other green 
laws--but, essentially, everyone would assume that that would 
put a very major stop on the clean and green development in 
California. And I think, as was pointed out, the signal effect 
within the United States, and you could even say globally, 
might be quite significant because California has always been 
seen as a leader, a global leader to some extent, in this 
whole----
    Mr. Markey. And why would three oil refiners in Texas want 
to stop that law in California?
    Mr. Fulton. Well, I am not an oil expert, but I assume they 
feel that that is something that would be good for them. I 
don't know.
    Mr. Markey. I guess you don't have to be Dick Tracy to 
figure out why they would be opposed to it. The oil refining 
industry clearly has a stake in putting an end to this clean 
energy revolution. Not all of them. There are some that are 
willing to make the transition. But these three companies are 
clearly intending on keeping us dependent upon imported oil on 
the one hand, and not putting in place a domestic policy that 
challenges China in terms of the manufacturing of the new 
technologies that inevitably are going to be deployed here in 
the United States, if for no other reason than States have put 
on the books their own laws that are going to require renewable 
energy to be deployed, and local governments increasingly as 
well.
    Mr. Viswanathan, you mentioned AB 32 as well I think in 
your statement?
    Mr. Viswanathan. I didn't. But I think my comment is I 
would echo everything you have said. I think it would be 
disastrous. If you look at what has happened in innovation, and 
my colleagues have eloquently pointed out about how costs would 
come down. So the whole field of material science, which is the 
underpinnings of a lot of these technologies, has grown up. It 
used to be science projects in universities. We spun them out 
of universities, we helped scale them. And guess what happened? 
That happened 3 to 5 years ago. In that period of time, you had 
an economic meltdown, you had capital that fled the system, you 
had China with their commitment and resolve take over. And so 
you keep getting body blows, and this is yet another one.
    So this really doesn't help us at all in what we are trying 
to do, which is take these technologies which have actually 
come of age. And this is when you want to press fast-forward 
and get into that next level. You know, these negative 
incentives can be disastrous.
    Mr. Markey. Do any of the rest of you wish to comment on 
how disastrous a repeal of the California clean energy laws 
would be? Mr. Liebreich.
    Mr. Liebreich. I could comment on how disastrous it would 
be. I think, again, we don't need to be Dick Tracy to know it 
would be disastrous, because California is seen not just as a 
U.S. leader in essentially capping its energy use per capita, 
but it is also actually a global leader.
    But I want to comment on I think one aspect of this, which 
is that even with money from oil companies, it wouldn't be 
threatening. There would be no chance of success if they were 
not tapping into a strain of concern and skepticism amongst a 
proportion of the population. And so I think having--except 
that it would be catastrophic, it is something that definitely 
will set the industry back considerably. Perhaps some thoughts 
on what could be done to create a protection against that, 
because I think that the debate has become too much about 
subsidies or not.
    Mr. Markey. Just so I can say this. You know, the Koch 
brothers also finance Tea Party activities. And it does tap 
into something that is quite deep, because 70 percent of Tea 
Party members do not believe in evolution. So to the extent to 
which they don't believe in evolution and they don't believe in 
clean energy, I guess they are tapping into something. The 
question is, are they tapping into anything that is valid 
scientifically? And if they pour millions of dollars into that 
effort, do they drive an ultimate result that is completely at 
odds with everything that we know scientifically and 
technologically that we should be advancing as a strategy in 
our country?
    So I understand what you are saying, that you are tapping 
into something. But I just want to define that they are also 
creating the thing that they are tapping into, which is this 
defiance of 150 years of scientific breakthroughs in our 
society.
    Mr. Liebreich. I agree. I have speculated privately as to 
whether there is a correlation between those who deny evolution 
to those who don't believe in climate change to those who don't 
believe we can ever change to new energy sources.
    Mr. Markey. Well, if the same source of funding is 
providing the public debate on those issues, then while you are 
looking at the people who are reflecting what they are reading, 
what they are hearing, the questions that are raised, you have 
to understand that it all goes back to these oil refiners that 
are financing these efforts--and not necessarily to advance the 
goals of denial of evolution--but, rather, to use those people 
as a way of then killing things that they believe might 
interfere with their own economic objectives, which is the 
continuation of massive importation of oil into the United 
States from the Middle East that they have the opportunity to 
refine. So I don't think--again, that is a complex formula. I 
think every American, every thinking American actually supports 
that.
    Mr.  Liebreich. But one could get into a discussion--I 
actually trust that people are smart about--not entirely smart, 
but they will figure out who is doing the talking. But I want 
to move----
    Mr.  Markey. See, here is the problem. As you know, there 
are new Supreme Court decisions that actually allow for a 
masking of who is financing much of what is going to be going 
on in America. So you have almost the worst-case scenario, you 
know, where the people who have an agenda are also increasingly 
able to mask their agenda under the guise of raising other 
issues that don't go to their own economic interests here, 
which would be oil being imported which they have the 
opportunity to refine and to spew it out into the atmosphere.
    So I just want to make it clear that the political terrain 
is not such that it makes it transparently easy for the voter 
to understand, in fact, what is at stake as these issues are 
being publicly debated. So, please continue.
    Mr. Liebreich. So what I wanted to suggest is that there 
is, however, a powerful constituency that one could try to--
that one could try to develop to oppose that, the money that is 
being spent on the repeal campaign, and that is California's 
technology community and also those who--people need to 
understand that this is the way to create jobs and wealth and 
prosperity, so to counter this idea that all it is is about 
increasing taxes and giving away money to technologies that 
don't work.
    And the particular constituency that I think has not been 
brought into this whole discussion is around the telecoms, the 
IT industry, the industry of innovation around the electrical 
system more broadly. Because if we are going to integrate these 
large quantities of clean energy, then there are all sorts of 
other industries, particularly around telecoms and information 
technology, who are going to benefit enormously. And, to a 
certain extent, they are sitting on the sidelines and not 
getting involved in the discussion. And I think that the people 
in California and elsewhere don't necessarily understand just 
how many jobs are required if we start building out the grid 
and we start integrating these technologies very broadly into 
our lives.
    We saw what happened with the Internet which, again, it was 
funded originally through government spending, the development 
of it. It then went viral in the economy, and it created 
hundreds of thousands and then millions of jobs in very 
unpredictable ways, ways that could not have been predicted 
when the first grant appropriations were made to experiment 
with or to build out the first implementations.
    So I think there is a constituency that needs to be 
educated as a counterweight to those who suggest that we should 
do nothing and simply cut taxes and walk away from this 
problem.
    Mr. Markey. I think you point out--and I thank you for 
doing so--yes, the Internet was funded by the federal 
government, it was called DARPANET originally, but a strategy 
had to be developed in order to deploy it into the society as a 
whole. And I was the chairman of the Telecommunications 
Subcommittee. So that was a three-bill strategy.
    Bill number one was to create an 18-inch satellite dish 
industry, which the cable industry opposed because they didn't 
want the competition. But that put pressure on the cable 
industry to deploy even greater capacity.
    Second, was moving over 200 megahertz of spectrum in 1993 
that created the third, fourth, fifth, and sixth cellphone 
license in the United States. They all went digital and went to 
under 10 cents a minute. The two incumbents, who for this 
purpose would be the oil refineries in a telecommunications 
setting, they went both analogue and 50 cents a minute with a 
phone the size of a brick in 1993.
    And the third bill became the Telecommunications Act of 
1996, which moved us from dial-up to broadband, which moved us 
from black rotary phones to BlackBerries.
    By 1998 there is a new company called Google that can be 
started and HULU and YouTube and EBay, all highly 
anticipatable, not in terms of what they actually do, but with 
this incredible additional broadband, yeah, we are going to 
create a couple of million new jobs.
    That was my strategy back in the 1990s. I knew what I 
wanted to accomplish, but you needed new public policies 
because the incumbent two companies weren't going to move 
rapidly in that direction. It is always good to have a monopoly 
or duopoly in any marketplace; you can divvy it up 50 percent 
apiece, which is a good business if you can get it.
    So we need to do the same thing here, and we need to do the 
public education that explains how these new jobs are going to 
be created for a new economy. And, of course, they are going to 
be created, but they will in China. They are going to be 
created, but they will in Germany. They are going to be 
created, but they will be in other parts of the world, and we 
will inevitably wind up importing them into our country. That 
is our challenge.
    So I have a chart here that I would like you each to 
comment upon, because I think it gets to the point that each of 
you have been making. This is a chart put together by 1366 
Technologies, which is a photovoltaic company up in Lexington, 
Massachusetts. And what it does is it charts the price of 
photovoltaics, the installed cost of electricity per kilowatt 
hour in 1978 at $5 a kilowatt hour, down to about 22, 23 cents 
a kilowatt hour today. And it assumes annual production growth 
of 35 percent and an 18 percent learning-curve for 
photovoltaics, cost based on an 18 percent capacity factor and 
a 7 percent discount rate. So you can see that it is almost 
like a Moore's law of photovoltaics, and it keeps moving 
inexorably lower in terms of its costs. And they project that 
by the year 2020, it will be at the cost of coal, if not 
sooner. Mr. Fulton and others have pointed that out. It could 
be sooner. And, that once you hit the cost of coal, it could 
almost, by 2020, because of the developing world and their need 
to install new energy technologies, could become 7 percent of 
all electricity generation in the planet.
    Now, again, you have to have a little bit of vision here on 
this subject, because when we were basically moving over the 
spectrum for the third, fourth, fifth, and sixth cellphone 
license, our goal was of course not just to lower the price 
here in America, but to create a new global industry. Who would 
think that in 2010 there would be cellphones in villages of 
Africa and Asia and South America that would be the markets?
    Well, you first have to have a policy that develops the 
products that can then open up these markets, and these 
countries could jump the wire-line revolution and go right to 
cellphones, which is what happened.
    Well, the same thing can happen here with photovoltaics. 
You don't have to build out that entire electricity grid. So 
that is kind of the vision.
    Do any of you want to comment on--this is Professor Emanuel 
Sachs at MIT. He is the guy who developed the technology that 
was used by Evergreen Solar Company. And now this new 
technology, he believes, is 40 percent more efficient than 
previous technology, dramatically more efficient than even is 
Evergreen photovoltaic technology.
    Does anyone want to comment on this vision and where we can 
go and how we can have a domestic production capacity rather 
than inevitably importing it from China?
    Mr. Fulton.
    Mr. Fulton. It might sound technical, but I think you can 
even make it look more aggressive than that, because----
    Mr. Markey. He is too conservative in terms of this 
revolution.
    Mr. Fulton. There is in particular something that the 
German Environment Ministry, when they were looking at how much 
the entire cost, they did something called the ``effect of the 
merit-order run of a load curve of electricity.'' So what they 
talked about was the fact that solar PV comes in at the peak 
load when gas peak is usually running, and gas peak is the most 
expensive form of electricity on the grid. Normally we look at 
average cost. But if you look at the gas peakers, if you 
replace the gas peakers, then you have a very big effect.
    Now, the German Environment Ministry estimated that the 
whole of the feed-in tariff was entirely paid for by the cost 
of replacing the gas peak----
    Mr. Markey. What is a feed?
    Mr. Fulton. In simple terms it says--it is a standard offer 
document, about two pages long.
    Mr. Markey. It is a stand off document? I just asked you to 
please explain it in English and you said stand off.
    Mr. Fulton. A standard offer. So what it means is that 
everyone gets the same bit of paper in front of them; whether 
you are a utility or an independent power producer or whoever 
you are, you get a two-page document. You know what you are 
getting, what tariff you are getting. So essentially the 
tariffs are set by the government, but in consultation with the 
market in terms of costs. They are reviewed.
    And in the German system, there is a digression over time, 
and the digression is actually targeted at what they believe 
will be grid parity. Therefore, the signal that is given to the 
industry: You had better be off that curve, because we are not 
paying you to get off the curve; we are paying you to get on 
the curve. And that is why I call them incentives of scale.
    There is a strong signal, this is a temporary incentive to 
get to scale, get your costs down, and they try to influence 
the direction of the digression of the cost curve.
    Mr. Markey. Does this tell us, Mr. Fulton, that we had 
better have a strategy?
    Mr. Fulton. That is what I think I said.
    Mr. Markey. To reduce these technologies here? Because once 
something hits 7 percent of global energy electricity, once 
something reaches 7 percent of global electricity production, 
that is a great economic opportunity. And it will only grow as 
each year goes by.
    And right now, in your opinion, you know, do we have a 
program in place that will keep these companies here in the 
United States, given the fact--here is the interesting thing: 
that last year 45 percent of the solar technology in the world 
was produced in China and they exported 95 percent of it. They 
did not deploy it in China. They exported 95 percent of it. So 
this gets to the U.S. Trade Representative, this gets to what 
the steelworkers are talking about. This gets to whether or not 
we have an aggressive enough across-the-board strategy to make 
sure that we are protecting our own potential domestic 
production capacity here so that it winds up with Americans 
with these jobs. Could you expand on that?
    Mr. Fulton. Very briefly. I think I said the next 5 years I 
think are very important for the grid parities on solar and 
wind. And essentially this is when industries are being built 
right now. And you know, as I said, we feel that U.S. policy 
lacks TLC at the moment and therefore we could see more done.
    Mr. Markey. TLC, again, stands for?
    Mr. Fulton. Transparency, Longevity, and Certainty.
    Mr. Markey. Dr. Viswanathan.
    Mr. Viswanathan. This is one of our favorite charts. You 
are exactly right, it is Moore's law for photovoltaics. It is 
the fundamental thesis on which we invest in solar, which is a 
significant portion of our portfolio.
    The point I would make is, you are exactly right. 
Basically, we are very close to grid parity, ``very close'' 
being the next few years. If we have the right incentives, we 
will get there in the U.S. And we are at that stage when this 
is where the incentives kick in. It is in the labs, it is going 
into deployment. If we don't have those incentives, what will 
happen is you will have lines coming from all of those points, 
and they are going to go to different countries--China, Taiwan, 
Korea. And that is what is scary.
    Having said that, this chart--if you show it to our 
competitors globally--scares them, because they cannot come 
down that curve. They can only come down in certain ways 
because they fundamentally--that, from 1978 to today, is 
innovation.
    Mr. Markey. And that is America.
    Mr. Viswanathan. And that is America.
    Mr. Markey. This is our innovation.
    Mr. Viswanathan. Exactly.
    Mr. Markey. These are the breakthroughs made largely in the 
United States. So here we are, the innovators, creating these 
huge technological breakthrough historical moments, and the 
other countries are taking note of it, putting in place 
policies, some of them protectionist, so that they can capture 
the opportunity that we created out of our universities.
    Mr. Viswanathan. And to build on what Mr. Fulton said and 
also a response to Mr. Cleaver's question, the incentives we 
are not saying is permanent. It is a few years until we get 
into that large orange-red band, and then grid parity takes off 
and you don't need the incentives. So I think that is the 
fundamental tenet that needs to be reinforced over and over.
    Mr. Markey. And by the way, let me just say this. There 
were huge subsidies that had to be built into the system in 
order to build an electricity grid in the United States, 
especially out to rural America. It was subsidized. It was 
largely subsidized by urban Americans taking care of suburban 
and rural Americans. In telecommunications there was a huge 
subsidy program so we could have a telecommunications program 
in the United States, and it was largely subsidized by urban 
Americans who subsidized suburban and rural Americans so they 
could have the same phone service that those in the cities had. 
But it was a huge multi-multibillion-dollar subsidy--that still 
continues to this day, by the way, still continues the subsidy, 
of rural America for telecommunications, for example.
    So I think people are kidding themselves if they think 
there hasn't been an ongoing industrial policy in the United 
States to ensure that the electricity, the solar I mean, and 
the telecommunications revolution was available. It still 
exists. It is multibillions per year.
    So then when we turn to this new technology revolution, the 
crocodile tears come down from, in many instances, the very 
companies that got subsidized to be created, in the way that 
the telecommunications companies didn't want a third, fourth, 
fifth, and six license to be put out there, in the same way 
that the existing companies are saying, ``Why would we want 
broadband? We already have a monopoly. We already have all the 
customers that exist in America. Why would we want other 
independent companies?'' And hundreds of them moved into this 
space once we had this broadband revolution. Why would we want 
those people in as well?
    So we have to work it through in order to explain to the 
American people that there are millions of jobs here that we 
can create in the United States, because technology always 
triumphs. Technology always triumphs. This is going to happen. 
It is only a question of whether we as a country are going to 
start out where we are going to be forced to wind up anyway, in 
terms of the importation of these technologies into our 
country, or the development, the creation of the jobs here in 
the United States that will then export them to other countries 
in the world. That is the only question. Not whether or not 
there is a Moore's law in solar. There is.
    Are we going to have a plan to capture it here for our 
country? Mr. Carbone.
    Mr. Carbone. Yes. I was just going to say that similar laws 
were applied in the wind business as well. If you wind the 
clocks back 30 years, you see a similar curve. We took 
advantage, at least in the early part of this past decade, of 
the scale that was produced in Europe here in the U.S. in terms 
of bringing that price of wind power through the price of wind 
turbines, which was the main driver in the cost models.
    Mr. Markey. By the way, if you have that chart, I would 
like to use that as well. If you have a similar chart to that 
in wind, I would like to use that as well, just so that people 
can see the inexorable inevitability of the triumph of 
technology, and whether or not we--rather than being in denial 
of whether or not this is going to happen. And we understand 
why the Koch brothers and Tesoro and Valero are. Okay?
    But whether or not--Adlai Stevenson, someone said to him, 
``Every thinking voter is with you.'' And he said, ``Yeah, but 
I need a majority.'' And the way you need to get a majority is 
we have hearings like this. We have a big public debate. So to 
a certain extent this California referendum is a great 
opportunity for us as well. Let's have this debate. Let's see 
where California wants to be. And let's also, though, show who 
is on the other side of the debate, because they are clearly 
looking at history in a rear-view mirror.
    Mr. Carbone, please continue.
    Mr. Carbone. Just to finish. I think we fully agree, it is 
technology that will continue to drive us down that curve. 
Unfortunately, the wind business, a lot of the innovations were 
not born here. But today they are. And my company in particular 
is taking a different approach with the technology in order to 
defer the drive-down of the cost of energy. It is just--and it 
is all technology.
    Mr. Markey. But America is now catching up in innovation in 
wind.
    Mr. Carbone. Absolutely.
    Mr. Markey. Mr. Liebreich.
    Mr. Liebreich. First of all, a couple examples just to 
confirm this is not an academic exercise, this is real. Italy 
is pretty much where at the moment, this year or next, the cost 
of solar in the sunnier parts in the south of Italy will be 
parity with the retail price of electricity. So in Italy you 
get to the point where if you want to put an air-conditioning 
unit in, you should generate the electricity from photovoltaic 
on your own roof. California, perhaps a few years--this is 
without subsidy--California, perhaps a few years behind, but 
not far.
    Mr. Markey. And what is the difference between retail and 
wholesale price for solar?
    Mr. Liebreich. Well, the price at the moment is absolutely 
accurate on that chart. It is about 22 cents per kilowatt hour. 
It depends how sunny and so on. Italy has very high daytime 
electricity costs and good sun; therefore, it will get that 
amongst the first locations. Obviously, wholesale is different. 
If you are generating electricity and then putting it into the 
grid, then you are competing with the coal-fired power station 
or the gas-fired power station, and then you have to get to a 
lower price, which is shown on the chart.
    Mr. Markey. So if you are a Texas oil refiner, it is very 
sunny in Texas; it is very sunny at Fort Huachuca, Arizona; it 
is very sunny in Florida. Or those ads are going to start to 
run again, where a bad day in Florida in winter is when one 
cloud goes by. So they advertise all the sun there, and there 
is a lot more sun there than in Italy or Germany. So----
    Mr. Liebreich. There are lower electricity prices though.
    Mr. Markey. Excuse me?
    Mr. Liebreich. Italy is going to get there first because of 
slightly higher daytime electricity prices, which also matter.
    Mr. Markey. But if you are an oil refiner in Texas that 
really wants to just continue to bring in oil from OPEC to 
refine, all that sun in Texas, it is going to be scary every 
day you go out and you have to put on sun protection. And you 
are an oil refiner in Texas? It has got to be a little bit--you 
have to be a little bit apprehensive, not only about your own 
personal health but the health of your future in terms of these 
competitive industries that--you have to go to California to 
slow it down or kill it first, before this epidemic of new 
energy technologies reaches Texas in its full-blown, market-
based form that no longer needs subsidies in 5 or 10 years 
because you have now created a complete market for it. Do you 
agree with that?
    Mr. Liebreich. Well, it should be scary, because the 
combination of solar with electric vehicles or plug-in hybrids 
is a real large-scale threat to the current way of doing 
business, and so it should be. I do want to raise one other----
    Mr. Markey. You are saying that because 70 percent of all 
of the oil which we consume in America goes into gasoline 
tanks, that these oil refiners have a stake in making sure we 
don't have a plug-in hybrid and an all-electric vehicle 
revolution, because they could be using solar- and wind-
generated electricity to power these vehicles and tell OPEC we 
don't need their oil any more than we need their sand.
    But that wouldn't require oil to be imported from these 
countries into refiners in America and reduce our dependence 
upon imported oil, change our national security status in terms 
of where we import this oil from, and the funding that we give 
to these countries and other countries.
    So there is a huge national security element that goes to 
the creation of a domestic renewable energy industry that then 
is providing the lower cost electricity for the plug-in hybrids 
and all-electric vehicles that we are using.
    Mr. Liebreich. Indeed. I saw an interview with the Saudi 
Oil Minister who was asked about alternative energy and whether 
he considers the drive towards clean energy as a threat. And 
his response was to say, ``No, we are absolutely happy for it 
to happen, because it will never in any way threaten anything 
we do essentially.'' And I just thought, well, that is spoken 
like somebody who hasn't seen the chart and the trends.
    Mr. Markey. You would think that a country that is sunny 99 
percent of the time--Saudi Arabia--of the times that it is not 
the middle of the night.
    Did you ever see Lawrence of Arabia and poor Lawrence is 
out there in the middle of the desert? It is very windy in the 
middle of the night, apparently, over there in Saudi Arabia in 
the desert. So you would think it would be a country that would 
have some insight into the power of solar and wind, but they 
continue to finance, in fact, questions about climate change 
and questions about the need to move in this direction as well. 
Although they could be the leaders, in fact, in the development 
of that technology. But they are not unlike their oil refining 
brethren here in Texas that is going to try to slow down this 
domestic revolution.
    Mr. Liebreich. Could I, if I may, comment on one other 
aspect of this global race which this raises? And that is, 
there is a caveat around how we go for those manufacturing 
jobs. And if you go back to the analogy of the telecoms 
industry, which was an enormously successful industry and 
created jobs through your efforts and the efforts of others in 
creating the frameworks, we do import almost all of our mobile 
phones. The manufacturing is not generally domestic U.S., but 
the license, the technology, the value add, very much is. And 
we have an analogous situation where those innovations, many of 
which were here in the U.S., are embedded in a lot of the 
technology that is coming out of China and other parts of the 
world.
    So I would just urge caution about seeing success as 
whether we manufacture cells in the U.S., yes or no, because 
our research shows just how integrated the supply chain, the 
technology licensing, the financing, the search for talent, 
managerial talent and so on, it is very, very integrated. And 
the number one challenge for the shift to clean energy is to 
keep going down that curve, which requires all countries to be 
progressing and playing to their strengths.
    And so I think, particularly given the drum beat of concern 
about China, about its exchange rate, about its potentially 
illegal support of its industry, what we mustn't allow to 
happen is for that to turn into a tit-for-tat trade war in this 
sector.
    Mr. Markey. I agree with that.
    Mr. Liebreich. And so that is my caveat, because it is 
important that we use their cheap manufacturing where that is 
appropriate.
    Mr. Markey. But you also agree that we shouldn't be Uncle 
Sucker; that we shouldn't allow them to say--which I think they 
are trying to say to us--Why don't we do this? Why don't we 
take all of these brilliant innovations that you have in solar, 
and then allow us, with our very low-cost workforce, to 
manufacture it, and together we will save the world, you coming 
up with the ideas, we with making the products. And, by the 
way, in order to ensure that that is the case, engage in 
protectionist activity and subsidies that are questionable 
under World Trade Organization rules in order to create that 
beachhead of manufacturing capacity in our country that then 
makes it very difficult for you to compete.
    So we clearly don't want to be left as Uncle Sucker here, 
investing in all the research, and then not seeing the jobs in 
America in its fair proportion to what it should represent 
given the investment that we made as a Nation.
    You agree with that, Mr. Liebreich?
    Mr. Liebreich. I would not disagree with that.
    Mr. Markey. Thank you. Mr. Fulton.
    Mr. Fulton. I just think it is interesting that the 
Lawrence Livermore Laboratory and the DOE did some research on 
the percentage of the domestic share of turbine costs, and it 
has risen from 15 percent in 2006 to 60 percent in 2009. So as 
we have seen the U.S. wind industry scale, that has brought 
manufacturing on shore.
    Now, I think there is no doubt that these incentive 
programs have played a strong role there, so I don't think it 
is like America has to lose out here. The data suggests that 
America has the wherewithal, it has the companies, it has got 
some of the biggest multinational companies in the world, 
capable of producing the best technology, and it looks like 
they are prepared to look at manufacturing it.
    Mr. Markey. Do you agree with that, Mr. Carbone?
    Mr. Carbone. That is what I said earlier. It is the race, 
it is the fight, it is the good fight.
    Mr. Markey. Mr. Viswanathan, is there any reason the U.S. 
should lose their fight?
    Mr. Viswanathan. There is no reason. And to just build on 
what you said earlier, just take a page out of the 
semiconductor industry. The innovation was done here. Intel, 
some of the greatest companies are here. They have outsourced 
manufacturing to the fabs in China and Taiwan. We have ceded 
nothing in terms of innovation. All of what is going on in 
cellphones, videos, et cetera, a lot of that is emerging. Some 
of that is coming from Asia, but a lot of that, the core 
innovation is coming from here, and that is resulting in a lot 
of jobs.
    Mr. Markey. Mr. Fulton, you contributed to a report 
published earlier this month that looked at the claims made by 
global warming skeptics regarding the fundamental science of 
climate change. First of all, why did Deutsche Bank decide to 
put out that report?
    Mr. Fulton. Well, that report actually came out of my 
research unit so I take responsibility. Deutsche Bank's name is 
on our research, but it is. Since I work in an asset management 
division that has climate change investment, it would be a 
means of fiduciary not to check, which is that there is climate 
change. So to me it is an absolute necessity to be aware of the 
science and then aware of the facts.
    And if you have an investment thesis and you are wrong, you 
have to change that investment thesis. So we went to Columbia 
University, to the climate center there, and we said: We are 
not scientists, but we know you well. But could you conduct for 
us a very fair and balanced look at these skeptics' arguments, 
because we want to know what is going on in those arguments?
    So they were set out in some detail in a 55-page document. 
And we asked, Could you give us, as best you could, peer-
reviewed answers to that? And that is what they did. And at the 
end of that, our conclusion as--we are not scientists, but our 
conclusion as investors is we felt comfortable with our 
investment thesis. There is still a serious threat from 
emissions in climate change.
    Mr. Markey. And how has that approach to the issue, and 
investment in climate and clean energy technology as a result, 
evolved over the last several years at Deutsche Bank?
    Mr. Fulton. Well, we have at the moment $5 billion under 
management related to climate change themes, and that has gone 
up and down with the markets. And there is no doubt, since the 
financial market crisis hit and since the volatility--and I 
would say the volatility in policy, because these are policy-
related markets. And it has been more on hold in terms of not 
what we are doing, but in terms of investor perception.
    So I think we now are again at a very important crossroad. 
Because at the end of the day, as you are pointing out, unless 
investors get behind it, where is that trillions of dollars 
coming from?
    So we are looking--the markets are doing their best at 
innovating. We have a private equity group as well. So we are 
trying to do our best. Everyone is. But at the end of the day, 
unless we have--I am afraid to go back to this TLC structure--
then while we are in that scaled deployment phase, which we are 
in for the next----
    Mr. Markey. TLC stands for, again?
    Mr. Fulton. Transparency, Longevity, and Certainty. Unless 
we have that as investors, the cost of capital is going to 
remain high and the uncertainty is going to remain there, and 
you won't see the adequate flows that you are going to need to 
really get there. So I think at the moment a lot of us are 
saying, okay, let's see how policy goes in America in 
particular in the next few months. I think it is a very 
important signal.
    Mr. Markey. Thank you.
    Now, Mr. Liebreich, I have a slide that I would like to put 
up for a moment. I don't believe that you used this one during 
your presentation, but I think it is a very interesting one, if 
we can get it up on the screen here.
    Could you explain briefly what we are looking at? I think 
this is the one that says that U.S. wind manufacturing supply 
is projected to ramp up to 14,000 to 15,000 megawatts per year 
over the next couple of years but projected demand falls way 
short of that.
    Could you put that up on the screen, please?
    Please, could you talk about that a little bit?
    Mr. Liebreich. Yes. Certainly. Thank you very much. So this 
is output from our wind team. The years up until 2009 are 
historic; 2010 is our estimated out-turn for this year.
    Mr. Markey. There is a downturn this year in wind?
    Mr. Liebreich. There is a downturn. Financing activity, 
which I showed in the data that I presented in my prepared 
statement, slowed down quite dramatically at the end of 2008 
here in the U.S. and into 2009. And, of course, the build rate 
drops away sometime after the financing activity.
    What we are seeing in the U.S. is that over the longer 
period, from 2005 through till 2008, 2009, was that demand 
outstripped supply.
    There are a number of reasons for this. There are only two 
domestic manufacturers, GE and a smaller company called 
Clipper, before Nordic Winds' arrival on the scene, a very 
welcomed development. And the demand that built up through the 
incentives, through the programs that were in place, 
outstripped that supply, and the supply was partly held back by 
the lack of what my colleague Mark Fulton would call TLC.
    The fact that the production tax credit for wind expired 
every 2 years meant that companies were reluctant to--the 
European companies, principally, were reluctant to invest here 
in the U.S. in order to meet that demand, because there was so 
much uncertainty about the use of those assets.
    What is happening now is that there is substantial new 
investment, and you can see on this chart who is doing the 
investing. Now, you can see GE in dark blue and Clipper at the 
top in light blue. But the expansion in capacity is coming from 
Vestas of Denmark, Siemens of Germany, Gamesa of Spain, and 
Nordex of Germany. And they are coming to the U.S. and they are 
building manufacturing or assembly plants. This is all measured 
at the end assembly stage.
    The issue is, though, that now there is insufficient demand 
to fill those plants. So we are moving from a situation of 
undercapacity, supply constraint, to overcapacity, which is 
very good news for the cost of turbines, which are coming down. 
We produced the wind turbine price index, and we are seeing 
turbine prices coming down already by around 20 percent from 
their peaks in 2009. So we are going into a period where there 
is going to be a lower level of installations because of the 
difficulty of financing in the post-crisis environment at the 
same time as----
    Mr. Markey. You are saying that the derivatives-driven 
financial meltdown has now had an impact. The fact that we 
didn't regulate derivatives accurately, wisely, inside of the 
financial system now has a collateral consequence in terms of 
now receiving financing for something that obviously has seen a 
reduction in the overall cost of producing this new technology.
    Mr. Liebreich. Well, I don't think I mentioned derivatives.
    Mr. Markey. I just want everyone--when you say the 
``catastrophe'', we know the catastrophe is that unfortunately, 
around the world, people were buying derivatives packed with 
all kinds of very poorly structured investment vehicles that 
were not well understood by the global investment community 
that unfortunately has come back to haunt all other industries 
as well.
    And I am not sure Tea Party activists fully understand that 
counterparties actually don't have a stake in policing the 
derivatives global marketplace, since the CEOs of most of these 
companies who produced the derivatives don't even understand 
what a derivative is, except that it was a center of economic 
profit for them.
    But ultimately the bubble bust, and it is having an impact 
in other economic areas as well. I only say that just to point 
out--I was the chairman over Wall Street for 14 years as well, 
so I bring that knowledge in, as well as telecom from the 
1990s, just to add it in as an extra factor of what the 
consequences are of turning a blind eye to things that were 
completely knowable in terms of the impact that derivatives and 
subprime mortgages would have upon not only ours, but the 
global economy. So I just throw that in as an editorial 
comment.
    Mr. Liebreich.
    Mr. Liebreich. So there was a crisis.
    Mr. Markey. There was a crisis.
    Mr. Liebreich. And it did have a substantial impact on this 
sector, and the sector is still suffering from that. If you 
step away from the various support mechanisms, the availability 
of capital is much reduced, and the cost of capital in the 
private markets, the debt markets, the equity markets, remains 
stubbornly high even now, 2 years after.
    And so that is why there is such a focus on programs like 
the cash grants, because it is impossible otherwise to get the 
same level of projects financed. Some projects will get 
financed, but there is a chunk that will not happen without the 
continuance of some of these programs here in the U.S.
    And what we are seeing here in terms of the dotted line 
that you see on the chart, which is the line of demand, that is 
on the assumption that the cash grants continue in place, the 
Recovery Act cash grants continue in place. We will see a bad 
year this year, a drop to 6 gigawatts of installation, and then 
bouncing back somewhat. But that bounce-back is in jeopardy if 
those grants are not continued.
    Mr. Markey. So you want a continuation of the grant 
programs, the loan programs, the tax programs that are on the 
books. And would you also want a national renewable electricity 
standard to be put on the books, so that you have a belt-and-
suspenders program where there is a policy that is established, 
combined within the financing programs that are put in place 
that help to facilitate the installation of the renewable 
energy sources that create a much more--TLC stands for what 
again?
    Mr. Fulton. Transparency, Longevity, and Certainty.
    Mr. Markey. Longevity and certainty for the investment 
community, right? So that is really what we are trying to do 
here.
    I have to keep repeating that in English, because we are 
going to have a big public debate in the United States, and TLC 
means something completely different than what you mean it to 
mean. It means more the way Aretha Franklin used it in the song 
Respect. So TLC means something else.
    Mr. Fulton. We sort of hope people might relate to it.
    Mr. Markey. Right. They should. But it is the TLC for the 
renewable industry, but it includes the grants, the loans, plus 
the policy that is put in place that creates an environment 
where they get a lot of TLC, right? But it has to be 
continuous, there has to be some longevity, and there has to be 
some predictability to it.
    Mr. Liebreich.
    Mr. Liebreich. So when you say ``we,'' we, one, we are an 
information provider so we don't--that have used that approach. 
But certainly the industry and our clients would be 100 percent 
behind the push for transparency and longevity.
    Mr. Markey. Mr. Viswanathan, you are a financer.
    Mr. Viswanathan. Yes.
    Mr. Markey. You provide the money.
    Mr. Viswanathan. Yes.
    The Chairman. So, lay out for us what you need to see put 
in place so that we have this more predictable investment 
climate that leads to the reduction in cost and ultimately 
withdrawal of the need to have the public financing programs be 
put in place.
    Mr. Viswanathan. Certainly. I think exactly what you had 
said, Mr. Markey. We would like a continuation of these 
programs, 48(c), 1603. We would like the 48(c) also to be 
refundable, as Mr. Carbone said, especially given a lot of 
these innovations are happening in startups that are starved 
for cash and we need to incentivize them.
    I think the loan guarantee program has been very successful 
and there is a lot of good coming out of it. We need to have 
that in place.
    We need to have a national electricity standard and energy 
efficiency standard. If you look at some of our peers across 
the globe, in China they have multiple of these incentives. 
They have a stimulus for clean energy, they have a renewable 
energy standard, they have a feed-in tariff, they have an 
energy development fund. All of these things are going to be 
very, very helpful as we build that clean-tech economy.
    The Chairman. But your firm is still putting up billions of 
dollars in the clean energy sector. Why is that, if you see all 
these pessimistic signs on the road as well? Why are you still 
investing so many new billions of dollars into the clean energy 
sector?
    Mr. Viswanathan. Well, that is a very good question. There 
are two ways to answer it. Because we fundamentally believe in 
all of the things you said in terms of your chart. Having said 
that, if all of these stop, you will see investment dry up from 
our community, because we cannot do it ourselves.
    The scale that is needed is so massive that you will see 
innovation dollars dry up, and then that will have a spiraling 
effect on the actual innovation that is trying to get to 
market.
    The Chairman. Okay. Now, could we pull up Mr. Liebreich's 
slide number 9, please, so that we could have a little bit of 
discussion about that.
    So this is Venture Capital new investment in clean energy 
by sector, the top 15 countries. The United States is in the 
lead, looking over at its shoulder at number 2, 3, 4, 5 and 6 
in the world. That is a reason to be optimistic.
    Mr. Carbone, can you take a look at that chart and tell us 
why that is happening, and are you optimistic that it can 
continue?
    Mr. Carbone. Well, while Michael provides information and 
Ravi provides the money, we initially consume the money but we 
hope to make the money as well.
    The Chairman. Great.
    Mr. Carbone. Yes, I would have to say, and we showed in our 
chart as well, that this money is for the most part financing 
innovation and technology development, and a lot of those early 
stage startup companies are actually starting here in the U.S. 
And actually our company is one of them, and Mr. Viswanathan is 
actually one of the investors in our company as well.
    We initially were invested in by U.K. and European-based 
investors, and just recently in the rounds of financing we did 
late last year, we were able to attract investment from the 
U.S. community and actually establish ourselves here in the 
U.S. So we are part of that, somewhere, a small part, but part 
of that top bar on this chart.
    The Chairman. Thank you.
    So, Mr. Liebreich, thank you so much for providing these 
great graphs. It is very, very important for us to understand 
it.
    Mr. Fulton, last month your colleague at Deutsche Bank, 
Kevin Parker, was quoted in a Reuters article. Here is what he 
said. ``They are asleep at the wheel on climate change, asleep 
at the wheel on job growth, asleep at the wheel on this 
industrial revolution taking place in the industry. You just 
throw up your hands and say, we are going to take our money 
elsewhere.
    Now, this is your company's global head of asset 
management. Can you give us some context here, what Mr. Parker 
was talking about? This is testimony ultimately before the 
United States Senate as they were trying to pass a climate and 
clean energy bill that ultimately was stopped by, I hate to say 
it, but it is basically the oil Senators from Oklahoma and the 
coal Senators from Kentucky, the Republicans that basically 
just stop it over there. So, again, we continue to have this 
tension that exists.
    Can you talk a little bit about what Mr. Parker was making 
reference to?
    Mr. Fulton. Well, I can't talk for him directly, but I 
think as I understand it, what we are saying, what he is saying 
and what I believe is that it is very simple. The U.S. Congress 
has not passed anything this year and it has been an important 
year. So that is just a fact. We don't have a climate or energy 
bill coming out into law, so, as I say, that is just fact.
    In terms of capital deployment, again, I think the point is 
that particularly in the longer term, where is capital going to 
go in the next 5 to 10 years? And unless the United States has 
this policy package and structure that is going to encourage 
that flow, it is not going to take place.
    The Chairman. It is not going to take place. Now, I 
understand that none of you are international trade lawyers, 
but I would like to get your views on the United Steelworkers 
petition to the U.S. Trade Representative regarding China's 
violations of trade rules in the clean energy sector.
    As I mentioned in my testimony, I believe that we very much 
need a climate of intense Darwinian paranoia inducing 
competition in the renewable energy sector so that we can drive 
down the cost of each of these technologies as quickly as 
possible. But if China is violating international trade laws, 
our domestic workers and domestic industry as a whole are put 
at an obvious disadvantage.
    I would like to ask each of you how important this issue is 
in terms of leveling the playing field so that all countries 
feel that they have a stake in this competition to create a 
manufacturing sector that induces the paranoia that lowers the 
cost for production as quickly as possible.
    Mr. Fulton, and right across, you can each disclaim any 
knowledge of international trade law.
    Mr. Fulton. Yes, indeed I do disclaim any knowledge of 
international trade law and obviously would make the point that 
we have to wait and see what is determined in that situation.
    I would make one comment about China's policy. It is very 
comprehensive. We have heard from other participants. They are 
tackling this issue at many, many levels. We even note that 
they will have been talking about looking at carbon markets 
domestically in China.
    So one thing I would say is I think sometimes people say 
the Chinese may not be doing anything. Well, the Chinese are 
certainly taking action here. The question is if it happens to 
be contravening WTO, which I don't know, then that is up to the 
WTO.
    The Chairman. Mr. Carbone.
    Mr. Carbone. Yes, my knowledge on the situation isn't 
entirely what it should be, what you would like to have. But I 
think there is a relationship, we discussed some of it here 
earlier, between technology development, manufacturing, the 
financing of it and the deployment of it.
    I am not sure, because I haven't educated myself enough to 
really understand what the U.S. steelworkers are trying to 
accomplish and what in particular technologies are they really 
trying to tackle here.
    The Chairman. Thank you.
    Mr. Viswanathan.
    Mr. Viswanathan. Yes, I would build on what you said about 
leveling the playing field, and that is what this whole 
discussion has been. A lot of it has been around incentives and 
spurring that innovation. But the flip side of that is making 
sure we have policies where if there are trade violations, we 
figure out what it is and make sure we have policies so 
globally no country can arbitrage the system to get away with 
it.
    The Chairman. Mr. Liebreich.
    Mr. Liebreich. Again, I will make the caveat that I am not 
an international trade lawyer. But on the economics of it, I 
think that first of all, the big opportunity for U.S. wind 
turbine manufacturers is not exporting to China. Likewise, I 
suspect that Chinese manufacturers are going to find it easier 
to export to some of the other markets where their technology 
might be more appropriate. So their technology is not as 
productive, the yields are not as high and so on.
    I was recently in Brazil and came across a number of 
representatives of Chinese wind turbine manufacturers. So the 
battle between U.S. wind technology and Chinese wind technology 
might well be happening elsewhere in the world.
    I think in terms of the case, if you look at some of those 
elements, it will be very difficult, without knowing, without 
claiming to be a lawyer, very difficult to prevail in terms of 
cheap loans and so on. It is hard to distinguish some of those 
programs from some of the programs here.
    One element of what China is doing gives me great cause for 
economic concern, and that is anything to do with restricting 
the export of rare Earth minerals has to achieve a different 
status of attention, I believe, from all of the normal trade 
law and trade--the tit-for-tat and the to-and-fro around trade. 
We can deal with that through WTO.
    Rare Earth minerals are different because there are no 
other substantial sources on this planet that have been 
developed, that have been found.
    The Chairman. Outside of China. Which minerals are you 
referring to?
    Mr. Liebreich. We are talking about some of the exotic 
dysprosium and some of the doping minerals that you need to 
make permanent magnets in some of the solar technologies, and 
the permanent magnets that go into the most advanced sorts of 
wind turbines to reduce their weight and increase their power 
outputs.
    These are essential technologies also around the smart 
grid. We are not going to have a smart grid without rare Earth 
minerals. So I think that we should be prioritizing, ensuring 
that there is a global and open market for these minerals, 
perhaps over some of the more eye-catching issues around cheap 
loans where one can get into an argument about who is doing 
what to whom and take our eye off the ball.
    The Chairman. So you are saying that we need to ensure the 
raw materials are there so that other countries have the 
capacity to participate in this global competition, because the 
denial of access to the rare materials makes it impossible, 
really, for a level playing field to be created.
    Mr. Liebreich. Indeed. If the manufacturers in the rest of 
the world can't have access to the rare Earth minerals or the 
products that they go into, the magnets and so on, then it is 
going to put those countries at a very, very substantial 
disadvantage.
    The Chairman. Yet the Department of Energy is actually 
considering loan guarantees for U.S. rare Earth production, 
which is something that I also think is very important; that we 
begin to recognize that as something that should be specially 
focused upon in terms of rare Earth minerals here in the United 
States and the extent to which we are also financing that 
development as well.
    Mr. Liebreich, could you put the Recovery Act in context 
for us a little bit? How important was that legislation last 
February of 2009 in making sure that we did not see a 
precipitous drop-off, almost catastrophic in terms of the 
deployment of wind and solar and geothermal and biomass 
technologies in the United States?
    Mr. Liebreich. Well, there are two parts to that answer. 
The big part to the answer is that it played a very substantial 
role, and had that act not been passed, we would not see the 
level of installations and also the level of factory openings 
and job creation that we are seeing now.
    The caveat, the small part of the answer is that there was 
actually a period where the industry was actually waiting, 
because they were waiting for that act to be first passed and 
then for it to be clarified and so on. So the stimulus for a 
period acted as an anti-stimulus. And I say that only because 
we are through that period and I say it only for the record 
that it was actually a difficult period. We saw the end of 
2008, the beginning of 2009, a drop that is perhaps more 
precipitous as companies waited to see whether they would 
qualify, what the detailed rules would be.
    The Chairman. What did it mean for you, Mr. Carbone, that 
the stimulus bill passed?
    Mr. Carbone. Actually little this year, but a lot next 
year, if we get it passed.
    The Chairman. A lot next year. So it is giving you an 
investment climate.
    Mr. Carbone. Absolutely. We have customers lined up, 
actually TLC, who are looking for that certainty.
    The Chairman. TLC stands for?
    Mr. Carbone. Transparency, Longevity and Certainty.
    The Chairman. Got it. Thank you.
    Let me finally move to this question of the renewable 
electricity standard. We have to live here in Congress in an 
acronym-free world because we are trying to talk to all of 
these people that Mr. Liebreich says if they get all the 
information, you know, in a digestible form, they will make the 
right decision. But part of our responsibility is to be the 
translators out of the world of experts.
    There is no such thing as a congressional expert compared 
to real experts. It is an oxymoron, like jumbo shrimp or Salt 
Lake City nightlife. There is no such thing as a congressional 
expert, except to the extent we help to translate it into 
English and other languages spoken in the United States that 
help to ensure that voters understand what exactly is at stake.
    So, in terms of a renewable electricity standard, how 
important do each of you believe that is for a long-term TLC 
for all of these technologies that you are talking about?
    We will go with you first, Mr. Liebreich.
    Mr. Liebreich. Sir, I think an aggressive renewable 
industry standard in terms of its ambition and also in terms of 
its penalties for non-achievement could be the single most 
important long-term factor in the development of the market 
here in the U.S.
    But I do say that it has to be ambitious, not something 
that is easily achieved. The good things in life tend to be 
hard to achieve. And if it doesn't spur changes in investment 
practices and so on, then it is not going to be substantial. 
So, ambitious in scale, and with penalties that are meaningful.
    In other words, of the various companies, utilities can't 
simply pay the penalty and go on with business as usual. That, 
in place over a long period, setting a long-term target, would 
be very important.
    The single critical thing that has to happen, whether it is 
through a feed-in tariff, whether it is through a portfolio 
standard, whether it is through any other mechanism, is that it 
has to create demand.
    We are not going to win this simply by working on the 
supply side. We have got to have demand so that the companies 
that are being financed and that are producing the technologies 
know that they will be able to sell and get revenues here in 
the U.S., not just that it will be cheap just to open a 
factory, but there is somebody to sell the products from.
    So I think it is critically important. The States have 
shown great leadership in moving ahead with their own renewable 
energy standards. As I mentioned, 30 States have got some sort 
of standard. And a national standard which builds on that, 
which goes beyond that, would be very, very helpful.
    The Chairman. As you know, maybe I am going to inform you 
of this, but on June 26, 2009, inside of the Waxman-Markey 
bill, was language, my language actually, that created a 15 
percent renewable electricity standard by the year 2020 in the 
United States for all 50 States, not for 30 States, and another 
5 percent that would have to be extracted by the utilities in 
new energy efficiencies, in the way in which they generate 
electricity. So it would be 20 percent by 2020.
    Would that meet your standard for challenging the system?
    Mr. Liebreich. It would most certainly help, there is no 
question. My own view is if you look at those cost curves, one 
should err on the side of being aggressive and ambitious.
    The Chairman. What I am saying to you is if they are all 
right and that curve is just going to continue, adding in 20 
more States, setting that goal, we will probably beat that 
anyway just because of the market that we open up? So while you 
are right, AT&T testified before Congress in 1981 that 1 
million people would have cell phones in the United States in 
the year 2000. One million. A big goal for AT&T, as a monopoly.
    But as I was moving over the third, fourth, fifth and sixth 
spectrum license, I wasn't going to predict that everyone would 
have two devices in their pocket by 2010, and children would 
have their own little devices as well that they could be 
walking around with. But I kind of have confidence that 
technology ultimately triumphs, and once you set this larger 
goal, actually it will probably be exceeded; as long as you set 
something that was reasonable, that people will go over it.
    Anyway, that is just the way I view it, given my experience 
in the cable, satellite, and telecom sector, and I think that 
is what will happen if we can get something passed.
    Do you agree with that, Dr. Viswanathan?
    Mr. Viswanathan. I agree very much with that. As Mr. Fulton 
said, 30 States have it now, but those policies are in danger 
unless the Federal Government adopts a national standard. So I 
am very much in favor of that.
    The Chairman. Yes. They are in danger, of course, because 
oil refiners in Texas, if they win in California, they are 
going to go State by State.
    Mr. Viswanathan. Exactly.
    The Chairman. And they will be on a path of destruction for 
a renewable energy policy being in place in those States. There 
is no question about it. So we have to win in California.
    Mr. Carbone.
    Mr. Carbone. Number one on my list, Congressman, I am not 
sure I would argue whether it should be 15 percent or 17 
percent or 18 percent, I think it should be now. It really 
should be now. And then we can get ourselves out of production 
tax credits, investment tax credits and other things as we get 
the incentive to scale. It is more important that we do it now.
    The Chairman. Thank you. I am with you.
    Mr. Fulton.
    Mr. Fulton. Yes. Yes, well, particularly I echo Michael's 
point that it should be ambitious, and if it is going to stand 
alone it has to have enforcement and penalty on it or else, 
again, you need this whole structure underneath it of 
incentives. So you can do it in different formats.
    The other point I would make is that at a technical level, 
a national REC market, renewable energy credit market, is 
probably more efficient than a pure State-based one. So it has 
actually a technical side to it. When you go and talk to the 
guys that are actually trading these RECs, they actually like a 
national standard.
    The Chairman. Thank you. And here is the perverse position 
that we are in; the Edison Electrical Institute signed off on 
that standard in that bill on June 26th, 2009. So that is where 
American public policy is right now, trapped over in the 
Senate, with a minority of Senators coming from and 
representing the perspective of oil and coal from Kentucky and 
Oklahoma, kind of denying the rest of this country this 
revolution, while we were still funding in this bill, by the 
way, $60 billion for carbon capture and sequestration, research 
development and deployment.
    Sixty billion dollars in the bill, so that the older 
industries could move along as well as part of this clean 
energy revolution. So it wasn't as though it was just all one 
side, it was going to be a comprehensive all-of-the-above 
strategy.
    So we are going to wrap up the hearing right here, and we 
are going to ask each of you to give us the 1 minute you want 
the American public to remember from your presentation as we go 
forward on this clean energy debate here in the United States.
    We are going to go in reverse order of the original 
testimony so that you can each give us your summary.
    So we will begin with you, Mr. Fulton. Again, if you could 
move over to that microphone, we would very much appreciate it.
    Mr. Fulton. Again, we would say that creating transparency, 
longevity, and certainty in policy structures is crucial to 
creating a new clean and green energy sector which will stand 
the United States in great stead in the long run. And in doing 
that, at the moment there is a lot of discussion about national 
renewable electricity standards, about extending the incentives 
coming out of the stimulus package. And all of these should be 
looked at very carefully at the moment, because this is a 
critical moment.
    The United States needs to get on the job in the next 5 
years. This is when the cost curves are falling. This is when 
the manufacturing and the industries are being created.
    The Chairman. Thank you. Mr. Carbone.
    Mr. Carbone. Yes, thank you. Look, we are an early-stage 
company and we will require some support. We have very 
supportive customers and investors. But support in the way of 
real, near-term, cash-based incentives like a refundable 48(c) 
manufacturer's tax credit or cash grant in lieu of taxes for 
our customers or near-term benefits that will support an early-
stage company.
    Long-term, renewable electricity standards is really 
something. It is a market signal that will absolutely benefit 
us. We encourage your bill, the Senate to get on and the 
President to get on with that this year.
    The Chairman. Thank you, Mr. Carbone.
    Dr. Viswanathan.
    Mr. Viswanathan. So my firm invests in innovation, and that 
has been the hallmark of the United States for decades and it 
has led to the creation of massive industries resulting in 
millions of jobs. That spilled over into clean tech, which we 
are very excited about.
    Having said that, we risk losing that competitiveness based 
on the commitment and resolve of a lot of the global players, 
particularly in Asia. To stem that tide, we absolutely need to 
have some of the policies we discussed. And, in your words, Mr. 
Markey, I would use ``all of the above.''
    The Chairman. Thank you.
    Mr. Liebreich.
    Mr. Liebreich. Sir, I would like to highlight, the world is 
undertaking this shift to a lower carbon energy future. This is 
not something that is debatable, this is something that is 
happening, maybe in the earlier stages, but it is happening.
    That shift will be enormously profound. It will echo not 
just through the energy industry, but through the sorts of 
housing, the sorts of transportation. All industries will be 
impacted by the shift to lower carbon energy. And in so doing, 
it will create an enormous wealth of new technologies, a wealth 
of new jobs, and a wealth of new wealth.
    And I think that the U.S. is at a pivotal point where it 
has to decide whether it is going to be a price taker for the 
next century on energy, or whether it is going to be a price 
giver, whether it is going to be leading that revolution or 
accepting the technologies from other players. That is what is 
at stake.
    Then finally, I would also like to highlight the importance 
of what is happening for investors. By ``investors'' I don't 
just mean investment banks or asset management companies. I 
mean every American who has a 401(k) or who is saving. And that 
is, that if you see what is happening in the world in terms of 
the trends in clean energy, then inevitably you conclude that 
it is riskier to invest in fossil fuels than it is to invest in 
clean energy. The perception still is the other way around, but 
the perception is incorrect.
    The Chairman. Thank you, Mr. Liebreich.
    Thank each of you for your very important testimony, 
because we are at a critical juncture in this clean energy 
debate. For the last several years, the opponents of dealing 
with climate change have said, ``Well, what is China going to 
do? We shouldn't do anything until China moves.'' Well, China 
is moving. China has targeted this sector. China has a plan.
    The United States needs a plan. When the United States has 
a plan, the United States wins. If the United States does not 
have a plan, we are going to lose. That chart will have China, 
Germany, India, country after country, ahead of us in terms of 
capturing the full economic benefits of this clean energy 
revolution. So we really don't have a choice.
    To use this analogy, that is, the telecommunications 
sector, the United States Government had to invest in DARPANET. 
We had to put up the money initially. When Al Gore was talking 
about the Internet, we actually had to pass a bill here in 
Congress in 1991 to take DARPANET and to turn it into the 
Internet. That is what he was talking about.
    It was privatized, but it was a public sector investment to 
create it, not only here but globally. It was a plan which the 
United States had. And because we had a plan, and because we 
then privatized it in 1991, we were able to capture the lion's 
share of the benefits, as long as we then in 1992, 1993, and 
1996 passed the accompanying legislation to make sure it was 
deployed here in the United States more rapidly, more quickly, 
than in other parts of the world, because then the development 
of the ancillary ideas would be here as well.
    We need a similar plan here in the energy sector. The rest 
of the world is moving. If America put a plan in place, which 
is what the Waxman-Markey bill was, a green energy bank, a 
renewable electricity standard, a 50 percent improvement in the 
efficiency of all new buildings by 2016, a dramatic increase in 
the appliance efficiency standards in our country, it would 
incentivize our own country to make the breakthroughs. Sixty 
billion dollars in carbon capture and sequestration for 
research, development and deployment.
    We would be the leader. We would be exporting. We would be 
the price maker, not the price taker. We would be telling the 
rest of the world, here it is. If you want it, let's have a 
negotiation over how we share it with you. Instead, we are now 
confronted with real plans, some of them borderline legal, that 
have been put in place in other countries, so that they are 
able to get the lion's share.
    So I agree with all of you. We need a national renewable 
electricity standard. We have to put on the books, on a 
permanent basis, these incentives--the tax, the loans, the 
other programs--so that over a period of time we create the 
industries. Then we can pull away the incentives because they 
have reached grid parity. Then they don't need the government 
anymore. They are off and running and our private sector has 
been the winner.
    So, in the same way that we deployed telephone service 
across America, we deployed electricity service across the 
country, we invested in the Internet in the early years with 
government money, you can then pull away. You don't have to do 
it any longer. Because those people who want to be millionaires 
and billionaires move in, and they are going to move a lot 
faster than the government would ever move.
    Whoever makes that breakthrough in photovoltaic will become 
the wealthiest person on the planet. They will dwarf Bill 
Gates. They will dwarf other billionaires. That is a lot of 
electricity for a lot of people around the planet. It is a race 
to be the wealthiest person on the planet.
    We have to have a strategy so the names come from the 
United States. That is our goal. Some of them are sitting at 
this table. And that is who they want to be, the people who 
ultimately, from the planning, from the financing, then make 
this stuff and get rich. That is what it should be all about.
    Right now, my goal, Henry Waxman's goal, Nancy Pelosi's 
goal, is to create a whole new generation of millionaires and 
billionaires in our country. And what we are going to need is 
the venture capital, the banking industry, the technology 
sector, to get into this fight. They have to get on the playing 
field. We cannot have Texas oil refineries defining the fight. 
We need these other industries that are the beneficiaries.
    We need the future billionaires to get into this, the 
people who believe in the technology sector, so that we have a 
level playing field politically, because we are quite confident 
that our vision is correct.
    Let me just say again, it is not that we leave behind coal, 
that we leave behind oil, because we make the investment in 
them as well to ensure that they become a cleaner set of 
technologies as well. We need all of the above. That is what 
our plan has to be, and then America will win, looking over its 
shoulder at number two and three in the world. Thank you all so 
much for your participation today.
    I have a report and a letter on clean energy investment 
prepared by the accounting firm of Ernst ` Young that I would 
like to put into the record, without objection. And hearing no 
objection, it will be in the record.
    [The information follows:]



    
    The Chairman. This hearing is adjourned. Thank you all so 
much.
    [Whereupon, at 12:30 p.m., the committee was adjourned.]





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