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



 
                     ENERGY TAX INCENTIVES DRIVING
                         THE GREEN JOB ECONOMY

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

                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 14, 2010

                               __________

                           Serial No. 111-47

                               __________

         Printed for the use of the Committee on Ways and Means




                  U.S. GOVERNMENT PRINTING OFFICE
63-079                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


                      COMMITTEE ON WAYS AND MEANS

               SANDER M. LEVIN, MICHIGAN, Acting Chairman

CHARLES B. RANGEL, NEW YORK          DAVE CAMP, MICHIGAN
FORTNEY PETE STARK, CALIFORNIA       WALLY HERGER, CALIFORNIA
JIM McDERMOTT, WASHINGTON            SAM JOHNSON, TEXAS
JOHN LEWIS, GEORGIA                  KEVIN BRADY, TEXAS
RICHARD E. NEAL, MASSACHUSETTS       PAUL RYAN, WISCONSIN
JOHN S. TANNER, TENNESSEE            ERIC CANTOR, VIRGINIA
XAVIER BECERRA, CALIFORNIA           JOHN LINDER, GEORGIA
LLOYD DOGGETT, TEXAS                 DEVIN NUNES, CALIFORNIA
EARL POMEROY, NORTH DAKOTA           PATRICK J. TIBERI, OHIO
MIKE THOMPSON, CALIFORNIA            GINNY BROWN-WAITE, FLORIDA
JOHN B. LARSON, CONNECTICUT          GEOFF DAVIS, KENTUCKY
EARL BLUMENAUER, OREGON              DAVID G. REICHERT, WASHINGTON
RON KIND, WISCONSIN                  CHARLES W. BOUSTANY, Jr., 
BILL PASCRELL, Jr., NEW JERSEY       LOUISIANA
SHELLEY BERKLEY, NEVADA              DEAN HELLER, NEVADA
JOSEPH CROWLEY, NEW YORK             PETER J. ROSKAM, ILLINOIS
CHRIS VAN HOLLEN, MARYLAND
KENDRICK B. MEEK, FLORIDA
ALLYSON Y. SCHWARTZ, PENNSYLVANIA
ARTUR DAVIS, ALABAMA
DANNY K. DAVIS, ILLINOIS
BOB ETHERIDGE, NORTH CAROLINA
LINDA T. SANCHEZ, CALIFORNIA
BRIAN HIGGINS, NEW YORK
JOHN A. YARMUTH, KENTUCKY

             Janice Mays, Chief Counsel and Staff Director

                   Jon Traub, Minority Staff Director

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                             April 14, 2010

                                                                   Page
Advisory of April 7, 2010 announcing the hearing.................     2

                               WITNESSES

The Honorable Michael Mundaca, Assistant Secretary for Tax 
  Policy, United States Department of the Treasury...............     7
Matt Rogers, Senior Advisor to the Secretary, United States 
  Department of Energy...........................................    37
T. Boone Pickens, Chairman, BP Capital...........................    96
Victor Abate, Vice President of Renewables, General Electric.....   110
Jeffrey Sachs, Ph.D., Director, The Earth Institute, Columbia 
  University.....................................................   122
Joseph Romm, Ph.D., Senior Fellow, Center for American Progress..   130
The Honorable Karen Harbert, President and Chief Executive 
  Officer, Institute for 21st Century Energy, U.S. Chamber of 
  Commerce.......................................................   149
Stephanie Burns Ph.D., Chairman, President and Chief Executive 
  Officer, Dow Corning...........................................   186
The Honorable Reed Hundt, Chief Executive Officer, Coalition for 
  Green Capital..................................................   190
The Honorable Rod Dole, Auditor, Controller, Treasury, and Tax 
  Collector, Sonoma County, California...........................   205
Mark Bolinger, Research Scientist, Lawrence Berkeley National 
  Laboratory.....................................................   210
The Honorable David Bohigian, Managing Partner, E2 Capital 
  Partners.......................................................   215

                       SUBMISSIONS FOR THE RECORD

American Forest & Paper Association, statement...................   235
AG Resources, LLC, letter........................................   240
Alan P. Langford, letter.........................................   242
American Biogas Council, letter..................................   243
American Farm Bureau Federation, statement.......................   244
American Meat Institute, letter..................................   246
American Public Power Association, statement.....................   248
American Wind Energy Association, statement......................   251
AO Smith, statement..............................................   256
Associated Builders and Contractors Green, letter................   259
Bechtel Power Corporation, statement.............................   263
Biotechnology Industry Organization, statement...................   264
BullDog BioDiesel, LLC, letter...................................   269
Capstone Turbine, letter.........................................   270
Climate Energy, LLC, statement...................................   276
Coal Utilization Research Council, statement.....................   278
Continental Resources, Inc., statement...........................   283
Domtar Corporation, statement....................................   291
EC Oregon, statement.............................................   293
Edison Electric Institute, statement.............................   297
Electric Drive Transportation Association, statement.............   301
Encana Natural Gas, letter.......................................   304
Environmental Working Group, statement...........................   306
Excelsior Energy Inc., letter....................................   312
FloDesign Wind Turbine Corp., statement..........................   317
Friends of the Earth (FOE), statement............................   319
Geothermal Energy Association, letter............................   328
Griffith Ulum, statement.........................................   330
Growth Energy, statement.........................................   333
Historic Tax Credit Coalition, statement.........................   338
The Honorable Betsy Markey, statement............................   344
The Honorable Erik Paulsen, letter...............................   345
Independent Petroleum Association of America, statement..........   347
James Sebesta, letter............................................   363
Large Public Power Council, statement............................   364
Marathon Engine Systems, statement...............................   368
Michael R. Splinter, statement...................................   372
National Commission on Energy Policy, letter.....................   375
Nuclear Energy Institute, statement..............................   384
Natural Resources Defense Council, letter........................   389
National Alliance of Forest Owners, statement....................   393
National Association of Home Builders, statement.................   399
National Association of Real Estate Investment Trusts, statement.   406
National Biodiesel Board, statement..............................   415
National Hydropower Association, letter..........................   420
National Roofing Contractors Association, statement..............   423
National Rural Electric Cooperative Association, statement.......   427
Nature's Fuel, letter............................................   434
Northeast Combined Heat and Power Initiative, letter.............   435
Northwest Pipe Company for Northwest PowerPipe, letter...........   437
Orion Advocates on behalf of Domtar Corporation, statement.......   439
Paper Industry Coalition to Save Energy and Main Street Jobs, 
  statement......................................................   440
Plug Power Inc., Latham, New York, statement.....................   443
Plumbers and Pipefitters Local Union #589, statement.............   446
Polyisocyanurate Insulation Manufacturers Association, statement.   450
Puget Sound Energy, letter.......................................   454
Real Estate Roundtable, statement................................   456
Renewable Energy Group, letter...................................   460
Renewable Fuels Association, statement...........................   462
Semiconductor Equipment and Materials International (SEMI), 
  statement......................................................   470
Solar Energy Industries Association, statement...................   472
U.S. Green Building Council, statement...........................   481
U.S. Fuel Cell Council, statement................................   487
United Solar Ovonic, LLC, a subsidiary of Energy Conversion 
  Devices, Inc., statement.......................................   489
Windustry, letter................................................   493


          ENERGY TAX INCENTIVES DRIVING THE GREEN JOB ECONOMY

                              ----------                              


                       WEDNESDAY, APRIL 14, 2010

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m., in 
Room 1100, Longworth House Office Building, Hon. Sander M. 
Levin (Chairman of the Committee) presiding.
     [The advisory announcing of the hearing follows:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS




               Chairman Levin Announces Hearing on Energy

              Tax Incentives Driving the Green Job Economy

    House Ways and Means Committee Chairman Sander M. Levin today 
announced that the Committee on Ways and Means will hold a hearing on 
energy tax incentives and the green job economy. The hearing will take 
place on Wednesday, April 14, 2010, in 1100 Longworth House Office 
Building, beginning at 
10:00 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of invited 
witnesses will follow.
      

BACKGROUND:

      
    Over the last several years, the Nation has benefited from an 
unprecedented amount of both public and private investment in renewable 
electricity production, energy efficiency, and renewable fuels, 
ushering in the new, green economy as a driver for sustainable job 
creation. A significant amount of Federal support for investment in 
renewable energy and energy efficiency is provided through the Internal 
Revenue Code. Within the span of 5 months during the Winter of 2008 and 
2009, the Congress passed and the President signed into law 
approximately $39 billion in provisions to stimulate demand for 
renewable electricity and renewable fuels, provide assistance to 
communities to make investments in energy efficiency, and assist 
domestic manufacturers engaged in the production of advanced energy 
equipment. These investments include approximately $17 billion in 
incentives provided in the Energy Improvement and Extension Act of 2008 
(Division B of P.L. 110-343) and approximately $22 billion in 
incentives provided in the American Recovery and Reinvestment Act of 
2009 (P.L. 111-5).
      
    In announcing this hearing, Chairman Levin said, ``Investing in 
energy efficiency and renewable energy has major potential to create 
new jobs and help our economy recover. In recent years we have made 
significant investments in policies to encourage and enhance domestic 
manufacturing and production of renewable energy as well as the use of 
more efficient fuel sources. This hearing will examine benefits 
currently in place and discuss potential for new incentives to further 
drive job creation, economic growth, and reduce our dependence on 
foreign oil.''
      

FOCUS OF THE HEARING:

      
    The hearing will examine the effectiveness of current energy tax 
policy and identify additional steps that the Committee can take to 
ensure continued job growth in this area while at the same time 
advancing national energy policy focus on a discussion of current and 
proposed energy tax incentives.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://democrats.waysandmeans.house.gov, 
select ``Hearings''. Select the hearing for which you would like to 
submit, and click on the link entitled, ``Click here to provide a 
submission for the record.'' Once you have followed the online 
instructions, submit all requested information. ATTACH your submission 
as a Word or WordPerfect document, in compliance with the formatting 
requirements listed below, by close of business Wednesday, April 28, 
2010. Finally, please note that due to the change in House mail policy, 
the U.S. Capitol Police will refuse sealed-package deliveries to all 
House Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons, 
and/or organizations on whose behalf the witness appears. A 
supplemental sheet must accompany each submission listing the name, 
company, address, telephone and fax numbers of each witness.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://democrats.waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman LEVIN. The Committee will come to order. I will 
give my opening statement, and then Mr. Camp, the Ranking 
Member, will give his and then we proceed with the witnesses.
    I think all of you know we have a full day scheduled, with 
three panels. The contemplation is that we will proceed with 
the first panel, and all of us will ask our questions. And then 
the thought was we might have a brief break before the second 
and the third panel.
    So, there is a Ways and Means bill up today, probably 
around 1:00, and that may affect the participation of some of 
the Members. So, we will proceed on that basis with my opening 
statement, and then, Mr. Camp, with yours.
    The Ways and Means Committee is aggressively engaged in 
advancing legislation that will support business expansion and 
create new jobs here in the United States. In the past 2 
months, the Committee has advanced two separate bills to 
encourage businesses to hire new employees, provide tax relief 
to small businesses so they can grow and expand and assist 
local communities, finance infrastructure improvements that 
support local community jobs.
    Today, the Committee will examine ways that the Federal 
Government can help boost the green jobs economy. Consider all 
that is at stake: cutting edge technologies of the future, 
manufacturing capacity to build these advanced technology 
products, lower energy costs for families and businesses, 
reducing our dependence on foreign oil, preserving the 
environment for future generations.
    The upside potential for our country is immense. But it 
will not happen automatically. Unfortunately, while some 
progress has been made in recent years, our country, in this 
area, is playing catch-up. We have lacked an energy policy for 
changing times and changing technologies. We have been behind 
the curve. And we have been handicapped by those who feel it 
should be done only by the private sector.
    The governments of other countries have not taken this 
view, and they are racing ahead to dominate in this area. While 
we need a different partnership than those adopted by others, 
an American partnership, the wrong answer has been that there 
should be no partnership at all.
    Take, for example, the electric vehicle GM is going to 
bring to market on schedule. But initially, the battery packs 
are being supplied from South Korea. Why? In part, because for 
years the South Korean government had a strategy to financially 
support this technology and its local industry. We are on the 
cusp of changing that because of private sector investment and 
accelerated public support for battery development.
    A recent paper from the National Foreign Trade Council 
says--and I quote--``Chinese planners have indicated their 
intention, that eventually most or all of the renewable energy 
equipment installed in China will be made in China. China has 
emerged as a world leader in the manufacture of photovoltaic 
technology, and could become the world's leading exporter of 
wind turbines.''
    Last year, the Recovery Act took important steps in 
boosting consumer demand and investing in advance technology, 
through grants and tax incentives for businesses, individuals, 
and communities. We made the green jobs economy a priority, and 
our actions are having an impact.
    The combination of the Recovery Act and the 2008 energy tax 
package provided long-term extensions of our main incentives 
producing electricity from wind, solar, and other renewable 
sources. We made these incentives work better by providing a 
direct payment option.
    The Energy Information Administration estimated that the 
Recovery Act will result in twice as much electricity generated 
from wind than would have been produced without the policies 
included in the Act. Over the next 6 years, the EIA projected 
that residential tax credits for solar equipment will encourage 
more than 1.6 million solar units to be installed nationwide.
    Tax credits for plug-in electric vehicles are expected to 
bring 90,000 vehicles to market in the year 2015, alone. 
However, we cannot rest. In particular, it is important to 
identify ways that we can build on these efforts. In 
particular, although we are making strides in generating long-
term demand for green technology, we have significant work to 
do to make certain this demand is satisfied with goods produced 
in our country.
    Today we will hear testimony that the U.S. wind turbine 
manufacturing industry is not currently capable of supplying 
100 percent of the wind power capacity that would be 
constructed with the support of Recovery Act programs. While 
jobs are created when we construct a solar facility, still more 
jobs are created when the components that are used in that 
facility are manufactured here, in the United States.
    If we are not aggressive about expanding our green 
manufacturing capacity, these manufacturing jobs will be 
created overseas, and the U.S. will become more reliant on 
products that are produced outside of our borders.
    The U.S. took a good first step toward supporting domestic 
manufacturing in the Recovery Act when we provided 2.3 billion 
of allocated investment tax credits for manufacturers that 
established, equipped, and expand domestic manufacturing 
facilities to produce advanced energy equipment.
    Demand in this area far exceeded its allocation. U.S. 
businesses put forward three times, or over 8.1 billion, of 
investment tax credit plans under this program. The 
Administration has proposed an additional $5 billion of these 
tax credits for a new round of competitive awards.
    What's at stake is clear: good jobs, advanced technology, 
low energy costs, national security, and a cleaner environment. 
What we need to make crystal clear is that the government is a 
full, active, and effective partner in achieving that end.
    I hope that we can proceed here today and beyond on a 
bipartisan basis to achieve these goals. There are a number of 
proposals for renewable energy incentives before the Committee 
that have bipartisan support. And I hope, very much so, that we 
can translate that into bipartisan action because action is 
what is so clearly needed today and for the future of this 
country.
    I now yield to the Ranking Member, Mr. Camp.
    Mr. CAMP. Well, thank you very much, Mr. Chairman. Clean, 
renewable energy is something everyone on this Committee 
supports. And I wouldn't be surprised if, at one time or 
another, most every Member of the committee has signed on to or 
voted for legislation to incentivize the production, purchase, 
and use of alternative fuels. It has been and remains an issue 
about our National security, our environment, and our economy.
    And, clearly, we need to reduce our dependance on foreign 
oil. We should continue to utilize new technologies to ensure a 
clean, safe environment for future generations. And given that 
the unemployment rate appears to be stuck pretty close to 10 
percent, despite the President's promises about the stimulus 
bill, we clearly need more jobs.
    However, we should be realistic about the current status of 
and prospects for the so-called green economy and green energy. 
Over recent years, policy-makers at Federal, state, and local 
levels have significantly stepped up efforts to subsidize 
renewable energy through the Tax Code. And, despite this 
investment as the chart on the screen makes clear, the 
overwhelming majority of America's energy consumption continues 
to be sourced from fossil fuels.
    In fact, petroleum, coal, and natural gas supplied 85 
percent of America's energy demand in 2007, with nuclear 
supplying 8 percent. Renewable energy sources supplied only 7 
percent, virtually unchanged from 2000. Even after a Federal 
investment of nearly $40 billion in new tax subsidies for 
renewables as part of legislation enacted in October of 2008, 
and as part of the February 2009 stimulus package, these 
relative shares remained about the same in 2009.
    So, as the chart on the screen shows, in 2009 83 percent of 
our energy came from fossil fuels, 9 percent from nuclear, and 
8 percent from renewables. And as one executive told me, ``You 
can't run an alternative energy manufacturing plant on wind and 
solar energy.''
    Again, how reliant our families and jobs are on traditional 
sources of energy, given that situation, I am further 
discouraged by the Administration's proposed tax increases on 
the oil and gas and coal industries. President Obama's 2011 
budget proposal would impose an estimated $40.7 billion in 
punitive new taxes on domestic energy production by America's 
oil and gas and coal companies. Most of the proposals targeting 
oil and gas were also proposed in last year's administration 
budget.
    The coal proposals, however, are new. And among many 
others, these include repealing the section 199 domestic 
manufacturing deduction for oil and natural gas companies, 
raising $14.8 billion over 10 years, repealing expensing of 
intangible drilling costs, raising 10.9 billion, increasing the 
amortization period for geological and geophysical costs of 
independent producers from 2 to 7 years, raising $1 billion, 
and repealing the section 199 domestic manufacturing deduction 
for coal and hard mineral fossil fuels, raising $2.1 billion.
    Additionally, the President's 2011 budget contains several 
other revenue raisers. Repealing the last and first out, or 
LIFO, accounting method raises $75.3 billion, modifying rules 
for dual capacity taxpayers, raising $8.2 billion, and 
reinstating superfund excise taxes and corporate environmental 
income taxes, raising $19.2 billion. That would have a 
significant effect on energy businesses, including oil and gas 
production.
    Simply put, it takes today's energy to power tomorrow's 
technology. And these tax increases are dwarfed by the nearly 
$900 billion national energy tax that the majority calls cap 
and trade.
    I should note that this bill has gone nowhere in the 
Senate. Its prospects for revival are, thankfully, not very 
good. So, while the focus of this hearing may be on the energy 
of tomorrow and the tax incentives to encourage its 
development--and I look forward to hearing that testimony--I 
would strongly urge my colleagues to keep in mind the tax 
increases that will be imposed on the energy of today to meet 
the majority's rules are unacceptable. You cannot increase the 
cost of producing 85 percent of the energy being used today and 
expect consumers or employers to benefit from tax incentives 
that are going to less than 10 percent of the energy being used 
today. The math just doesn't add up.
    So, with that, I yield back the balance of my time. I look 
forward to hearing from our witnesses today. Thank you very 
much.
    Chairman LEVIN. Thank you, Mr. Camp. All right. Our first 
panel, two very distinguished gentlemen: the Honorable Michael 
Mundaca, who is the Assistant Secretary for Tax Policy at the 
Treasury Department--welcome, Mr. Mundaca; and Matt Rogers, who 
is a senior advisor to the Secretary, U.S. Department of 
Energy.
    Your full statements will be entered into the record. And 
so, why don't you proceed for 5 minutes or so, as you wish. You 
can follow exactly what's in your testimony or, if you want to, 
summarize it and perhaps highlight certain points.
    So, we will start off with you, Secretary Mundaca. Thank 
you for joining us.

   STATEMENT OF MICHAEL MUNDACA, ASSISTANT SECRETARY FOR TAX 
        POLICY, UNITED STATES DEPARTMENT OF THE TREASURY

    Mr. MUNDACA. Thank you. Good morning, Chairman Levin, 
Ranking Member Camp, and Members of the Committee. Thank you 
for inviting me to testify today. I am going to focus my oral 
remarks on the energy proposals and the President's fiscal year 
2011 budget.
    First, I will briefly discuss the Administration's overall 
environmental and energy policy, in order to provide some 
context for the energy proposals in the budget. The 
Administration believes that our Nation must build a new, clean 
energy economy, curb our dependence on fossil fuels, limit 
emission of greenhouse gases, and make America more energy-
independent.
    It is no longer sufficient to address our Nation's energy 
needs solely by finding more fossil fuels. Instead, we must 
take dramatic steps toward becoming a clean-energy economy. 
These include encouraging the use of and investment in clean 
energy infrastructure and energy efficient technologies.
    The Recovery Act--and I thank the Committee for its 
leadership on the Recovery Act--took an important step in that 
direction, providing more than $80 billion for investment in 
clean energy technologies. The energy provisions in there are a 
real success story in the Recovery Act.
    The Administration's budget takes us further by investing 
in a variety of renewable sources of electricity generation, 
energy conservation measures, supporting the construction of 
new nuclear power plants, advancing the development of carbon 
capture and storage technologies, and providing Federal 
assistance for state, clean energy, and energy conservation 
programs.
    The President has also called on Congress to invest in a 
new program of rebates for consumers who make energy efficient 
retrofits.
    In addition to direct investments in clean energy, the 
Administration's budget proposes a comprehensive, market-based 
policy to reduce greenhouse gas emissions from 2005 levels by 
approximately 17 percent in 2020, and by more than 80 percent 
in 2050. The policy will provide businesses the flexibility to 
find the least costly and most efficient ways of achieving 
greenhouse gas emission reductions, and address the needs of 
vulnerable families, communities, and businesses in the course 
of the transition to a clean energy economy.
    With this background, let me turn briefly to the tax-
related provisions in our budget relating to energy. Current 
law provides a number of credits and deductions that are 
targeted toward oil, gas, and coal activities. These tax 
subsidies are not designed to correct an existing distortion or 
market failure, and therefore, lead to an over-allocation of 
investment resources to these industries and an under-
allocation of resources to others. This distortion in resource 
allocation results in inefficiency, and generally reduced 
economic growth.
    Moreover, the tax subsidies for fossil fuels must 
ultimately be financed with taxes, and thus further result in 
under-investment in other potentially more productive areas of 
the economy.
    Further, in accordance with the President's agreement at 
the G-20 summit in Pittsburgh to phase out subsidies for fossil 
fuels so we can transition to a 21st energy economy, the budget 
proposes to repeal a number of tax preferences that are 
currently available for fossil fuels. The budget also proposes 
to limit the ability of taxpayers to claim the foreign tax 
credit for levies that are likely to represent a payment for 
the right to exploit natural resources, rather than the payment 
of income tax, and proposes as well to reinstate the superfund 
excise taxes, including the taxes on crude oil and imported 
petroleum products.
    The budget also proposes to extend through 2011 a number of 
expired or expiring tax provisions related to energy, including 
incentives for biofuel, renewable diesel, alternative fuels, 
and alcohol fuels, increased tax credits for alternative fuel 
refueling property, tax credits for hybrid automobiles and 
other alternative motor vehicles, tax credits for energy-
efficient new homes, and tax credits for energy-efficient 
improvements to existing homes.
    Finally, the budget proposes to expand the Recovery Act tax 
credit for investments in advanced energy manufacturing 
facilities. The credit, under 48C of the Code is designed to 
help America take the lead in the manufacture of wind turbines, 
solar panels, electric vehicles, and other clean energy and 
energy conservation projects.
    The Treasury Department and the Department of Energy, as 
Mr. Matt Rogers will go into in more detail, cooperated in 
awarding the 2.3 billion of credits authorized by the Recovery 
Act, awarding credits to 183 projects in 43 states, to support 
tens of thousands of high-quality, clean energy jobs and the 
development of a domestic, clean-energy manufacturing base.
    The 2.3 billion cap on the credit has resulted in the 
funding of less than one-third of the technically acceptable 
applications that we received. The budget proposes an 
additional 5 billion in credits that would support at least 15 
billion in total capital investment, creating a partnership 
between government and the private sector, and creating tens of 
thousands of new construction and manufacturing jobs. Because 
there is already an existing group of worthy projects and 
substantial interest in this, the additional credit could be 
deployed quickly to create jobs and support economic activity.
    Mr. Chairman, this concludes my prepared remarks. I will be 
pleased to answer any questions you or other Members of the 
Committee may have.
    [The prepared statement of Mr. Mundaca follows:]

         Prepared Statement of Hon. Michael Mundaca, Assistant
       Secretary for Tax Policy, U.S. Department of the Treasury

[GRAPHIC] [TIFF OMITTED] T3079A.001

[GRAPHIC] [TIFF OMITTED] T3079A.002

[GRAPHIC] [TIFF OMITTED] T3079A.003

[GRAPHIC] [TIFF OMITTED] T3079A.004

[GRAPHIC] [TIFF OMITTED] T3079A.005

[GRAPHIC] [TIFF OMITTED] T3079A.006

[GRAPHIC] [TIFF OMITTED] T3079A.007

[GRAPHIC] [TIFF OMITTED] T3079A.008

[GRAPHIC] [TIFF OMITTED] T3079A.009

[GRAPHIC] [TIFF OMITTED] T3079A.010

[GRAPHIC] [TIFF OMITTED] T3079A.011

[GRAPHIC] [TIFF OMITTED] T3079A.012

[GRAPHIC] [TIFF OMITTED] T3079A.013

[GRAPHIC] [TIFF OMITTED] T3079A.014

[GRAPHIC] [TIFF OMITTED] T3079A.015

[GRAPHIC] [TIFF OMITTED] T3079A.016

[GRAPHIC] [TIFF OMITTED] T3079A.017

[GRAPHIC] [TIFF OMITTED] T3079A.018

[GRAPHIC] [TIFF OMITTED] T3079A.019

[GRAPHIC] [TIFF OMITTED] T3079A.020

[GRAPHIC] [TIFF OMITTED] T3079A.021

[GRAPHIC] [TIFF OMITTED] T3079A.022

[GRAPHIC] [TIFF OMITTED] T3079A.023

[GRAPHIC] [TIFF OMITTED] T3079A.024

[GRAPHIC] [TIFF OMITTED] T3079A.025

[GRAPHIC] [TIFF OMITTED] T3079A.026

[GRAPHIC] [TIFF OMITTED] T3079A.027

[GRAPHIC] [TIFF OMITTED] T3079A.028

[GRAPHIC] [TIFF OMITTED] T3079A.029


                                 

    Chairman LEVIN. Thank you.
    Mr. Rogers.

  STATEMENT OF MATT ROGERS, SENIOR ADVISOR TO THE SECRETARY, 
               UNITED STATES DEPARTMENT OF ENERGY

    Mr. ROGERS. Good morning. Chairman Levin, Ranking Member 
Camp, Members of the Committee, thank you for the opportunity 
to appear before you today to report on the progress of the 
Recovery Act, and specifically the tax credit and payments 
programs under the Recovery Act.
    It's been a privilege to collaborate with Assistant 
Secretary Mundaca and his Treasury team, as well as the 
talented team at the IRS on these programs, and on other 
energy-related tax issues.
    I will keep my remarks brief. This morning I have submitted 
a more detailed testimony for the record.
    It is a tribute to this Committee that the section 48C, 
clean energy manufacturing tax credit, and the section 1603, 
payments in lieu of tax credit programs, have been among the 
most successful clean energy job creation and innovation 
programs under the Recovery Act. Today, these programs are 
putting Americans back to work, and positioning the U.S. to 
regain leadership in high technology, clean energy 
manufacturing and generation.
    The competitive 48C manufacturing tax credit was so 
successful and so over-subscribed, that the President has asked 
Congress for an additional $5 billion to expand that program. 
The 1603 program gave new life to renewable generation in the 
United States, and should be evaluated as part of a 
comprehensive energy and climate legislation.
    This Committee's leadership has been important to the 
success of the Recovery Act, and we look forward to working 
with this Committee to ensure long-term U.S. leadership in high 
technology, clean energy, manufacturing, and generation.
    Across the Federal Government, the Recovery Act included 
more than $90 billion in appropriations, including more than 
$30 billion in tax programs to support more than $150 billion 
in clean energy projects. The Recovery Act directed DOE to work 
with Treasury to administer the $2.3 billion in competitive 
clean energy manufacturing tax credits. And, likewise, the Act 
directed DOE to work with Treasury to administer an estimated 
$16 billion in renewable energy generation payments in lieu of 
tax credits.
    We work closely with our Treasury colleagues to manage a 
detailed, competitive peer review process to select the 183 
projects in 43 states to receive the $2.3 billion available in 
clean energy manufacturing tax credits. The competition for 
these funds was over-subscribed 3-to-1 with good projects, and 
the competitive process allowed us to select a portfolio of 
really great projects to help lead the renaissance in U.S. high 
technology, clean energy manufacturing.
    Likewise, we worked with Treasury so far to award $3.1 
billion in payments in lieu of tax credits to 718 renewable 
energy generation projects in 44 states. The 1603 program 
directly addressed the freeze in the tax equity markets related 
to the financial crisis, enabling these projects to close 
financing and begin construction again. These tax incentives 
help support a 39 percent increase in renewable generation 
capacity in the United States last year. These tax programs 
were particularly effective in getting money out the door 
quickly to put Americans back to work on great projects that 
otherwise would have been idled in the face of the Great 
Recession.
    The combination of the 48C program and the 1603 renewable 
generation payments has put the United States on the path to 
doubling both high technology and clean energy manufacturing, 
and renewable generation capacity by 2012. These programs are 
bringing private capital off the sidelines and back into the 
clean energy financing markets. Importantly, these tax 
incentives have made the United States globally competitive 
again in attracting the best technology and manufacturing 
investments to create jobs in the United States.
    These Recovery Act investments are putting Americans to 
work. The tax programs are not actually required to report into 
Federalreporting.gov, but the 1603 fund recipients reported 
that these projects created 12,000 jobs last year and, if they 
continue as expected, would create 60,000 jobs across the life 
of the program. Likewise, the 48C program applications 
estimated that Federal dollars would support 17,000 jobs 
directly, and more than 50,000 jobs generated by these selected 
clean energy manufacturing projects.
    The energy tax incentives under the Recovery Act have been 
effective in creating jobs quickly, and restarting industries 
that were on the verge of shutting down. These incentives were 
also laying the foundation for a broad expansion in high 
technology, clean energy manufacturing in the United States.
    Thanks to this Committee, these programs are positioning 
the United States to regain global leadership in these high-
growth markets. And these tax programs remain an important 
policy tool for the future.
    Thank you for the time this morning. I look forward to 
answering your questions.
    [The prepared statement of Mr. Rogers follows:]

               Prepared Statement of Matt Rogers, Senior
          Advisor to the Secretary, U.S. Department of Energy

[GRAPHIC] [TIFF OMITTED] T3079A.030

[GRAPHIC] [TIFF OMITTED] T3079A.031

[GRAPHIC] [TIFF OMITTED] T3079A.032

[GRAPHIC] [TIFF OMITTED] T3079A.033

[GRAPHIC] [TIFF OMITTED] T3079A.034

[GRAPHIC] [TIFF OMITTED] T3079A.035

[GRAPHIC] [TIFF OMITTED] T3079A.036

[GRAPHIC] [TIFF OMITTED] T3079A.037


                                 

    Chairman LEVIN. Thank you very much. I will ask a question 
or two, and then, Mr. Camp, why don't you? And then we will go 
down the line.
    As I mentioned to Mr. Camp, there are almost twice as many 
Democrats here at the opening as Republicans, so we will follow 
a process that has been used in the past, two for one, and see 
how that works.
    So, let me ask the two of you and really, I think, 
referring, Mr. Camp, to your charts. I'm not quite sure what 
the message is from the charts, in terms of what the future is 
going to be.
    I noticed, for example, the estimate from the EIA, which 
said early on in 2007 that the U.S. is expected to continue its 
dependence on liquid fuel imports. But recently, what they have 
said is that they expect--this is a more recent estimate, I 
think--taking into account what we have been doing about 
renewables, it's expected to continue to climb from the high 
water mark--this is foreign imports of oil--of 60 percent 
attained in 2005 and 2006 to 45 percent in 2035.
    So, if you would, both of you comment on what you think the 
larger picture is, in terms of a shift not only in terms of 
imported goods and products, but in terms of renewable. Is this 
talk about a significant shift over time simply rhetoric? Is it 
necessary? Is it reality? Put in place what you think are the 
ramifications of a chart that shows renewable 7 percent, 
whether you expect a need for and realization of a substantial 
shift over the next decade or so.
    Who wants to start with that?
    Mr. ROGERS. As we look forward across the next decade, we 
see a significant shift in two primary consumption areas of 
energy in the United States. If you look at the transportation 
sector, one of the most remarkable changes that has already 
occurred is that we probably saw the peak demand for gasoline 
in the United States in 2007. And since then, the demand for 
gasoline has been going down in the United States, and will 
continue to go down for more than the next decade, as a result 
of a combination of renewable fuels, cafe standards, and an 
increasing electrification of the transportation fleet.
    So, we are seeing in front of us right now a restructuring 
of the transportation sector, to allow it to require 
substantially less fossil fuel in the mix than it 
historically--I mean you can actually see demand going down, 
even as the economy continues to grow.
    If you look at the power sector, we likewise are seeing a 
significant shift in the composition of the power sector. We 
are seeing, on current course, a doubling of renewable 
generation, just in the first 4 years of this administration, 
thanks again to the incentives that this Committee has put in 
place.
    And then, if you look more broadly at the investments that 
the Department has put in place, we have things like a 
commitment to renewing nuclear in the United States, and the 
ability to grow that, which again reduces our dependence on 
traditional fossil-based sources.
    And so, again, you can see a relatively rapid shift in the 
composition of the power sector across a decade in time. So if 
you take a snapshot today you say we actually have a small 
number. And what you see, though, is a rapid expansion in the 
mix of renewable generation capacity in the United States that 
is making our power sector substantially less carbon intensive, 
and significantly more energy efficient.
    Chairman LEVIN. Mr.--just briefly, if you would.
    Mr. MUNDACA. Thanks. I will be brief, yes. Just to amplify 
what Mr. Rogers said is we understand this is going to be a 
transition. We look at these numbers that Mr. Camp put up, and 
see an opportunity here. We have to increase our ability to get 
energy from nuclear, from renewables. The President has 
committed to both, as Mr. Rogers said. Loan guarantees with 
respect to nuclear, we're talking today about some of the tax 
incentives for renewables.
    As you said, Mr. Chairman, this is necessary. This is 
reality. We have to do this.
    Again, with respect to the 48C credit, what we have to do 
is make sure we are a leader in producing the goods that are 
going to fund and move us toward a 21st century clean energy 
economy that has a higher percentage from renewables. We need 
to have that manufacturing base here in the United States, both 
for our own needs, and to become a world leader.
    Chairman LEVIN. Thank you. Mr. Camp.
    Mr. CAMP. Well, thank you. Actually, the chairman started 
questioning in the exact area I am interested in, as well, and 
particularly Mr. Rogers.
    As I said, if you look at administration data in 2009, 
fossil fuels--which is petroleum, coal, and natural gas--
supplied about 85 percent of America's energy needs. And 
nuclear was about 8 percent and renewable was about 7 percent. 
Now, those figures are about the same as they were in 2000. 
Now, this is after substantial investment from Federal, state, 
and local governments in renewables.
    What do you expect that breakdown, that profile, to look 
like in 10, 20, and 30 years? If you could, give me a breakdown 
of where you see those breakdowns occurring.
    Mr. ROGERS. So, perhaps the best way to do that is in--I 
can give you the detailed breakdowns at each of those points.
    EIA has gone through a detailed assessment under various 
scenarios of how the future plays out to take a look at that. 
But, effectively, we see renewable generation growing north of 
20 percent of the power--of the generation fleet as we move 
forward over the next several decades, and we see----
    Mr. CAMP. Is that in 30 years, 20 years?
    Mr. ROGERS. So why don't I get you the exact----
    Mr. CAMP. Yes, if you want to respond in writing, yes, 
that----
    Mr. ROGERS. Then we can have the precise data in front of 
us.
    Mr. CAMP. Because I think that's important to understand. I 
mean, we all want renewables to grow. But I think we need to 
understand. Are we getting value for the taxpayer's dollar?
    But the real point I want to ask--and I think maybe this 
probably should also go to Mr. Mundaca--I don't know how you 
can tax 85 percent of energy consumption, from a policy 
standpoint, and continue to grow our economy, when that is how 
jobs are going to be created.
    And, frankly, I don't think people--I don't think gas 
consumption declined because everyone has moved to a hybrid 
vehicle. I think a lot of people aren't driving to work because 
they're unemployed. And I would really like to see the 
background, in terms of that data.
    But if you could, comment on this idea that we can tax 85 
percent of America's energy consumption and still grow our 
economy and, frankly, try to bring it back.
    Mr. MUNDACA. Thank you, Mr. Camp, for the opportunity to 
address that. What we are proposing to do is remove from the 
Tax Code those subsidies for the oil and gas industry that 
distort investment. So we are seeking to remove the special 
preferences in the Tax Code with respect to the oil, gas, and 
coal sectors.
    Again, having no subsidies in the Tax Code leads to an 
over-investment in those areas at the cost of some of the other 
competing areas for investment. If you look at the effective 
tax rates with respect to investment in oil and gas structure, 
they are much lower than with respect to investment in other 
structures.
    Mr. CAMP. But aren't those important for exploration and 
development? And particularly with the discovery of natural gas 
shale all over the country, aren't we going to want to continue 
to incentivize that as well as incentivize renewables? Aren't 
we going to need both?
    Mr. MUNDACA. We are certainly going to need both. Recall 
the President's announcement to open up drilling offshore. 
Again, we recognize this is a transition. But again, the focus 
on removing from the Tax Code the incentives that we don't 
think are operating right now to do anything other than to 
lower the effective tax on these investments.
    Mr. CAMP. But won't developing those resources help lessen 
our reliance on foreign imported oil?
    Mr. MUNDACA. The question is whether these tax incentives 
are necessary and efficient to getting us to that point. We 
don't see that they are. We don't see the need for them. We 
think that right now what they are doing is incentivizing over-
investment into these, at the cost of investment into other 
areas of the economy.
    Mr. CAMP. Well, I just think there are many direct jobs 
that are high-paying jobs directly in the oil and gas 
industries. But so many industries depend on a level of--price 
for energy. So it won't just be the direct jobs in the oil and 
gas industry, and there are thousands--tens of thousands--of 
those. But it will be the indirect effect on energy-intensive 
industries that employ hundreds of thousands of Americans, that 
you are going to be making it more expensive for employers to 
continue to do business. And that means there will be fewer 
jobs created.
    I just--I think I see a problem of taxing what 85 percent 
of America needs to grow our economy in this way.
    Mr. MUNDACA. Again, thank you for the opportunity to 
address those concerns. We are, in the Administration as a 
whole, very focused on jobs.
    I refer back to testimony before the Senate that the Chief 
Economist of the Treasury, Dr. Alan Krueger, made a number of 
months ago. The amount of the tax incentives we are proposing 
to repeal are less than 1 percent of the revenues generated in 
the oil and gas industry. We don't think it will have a 
significant effect on prices, so we don't see that there will 
be a significant effect with respect to employment.
    Again, what the Administration is proposing to do with 
respect to the shift to a clean energy economy--again, the 
focusing, as Mr. Rogers said, creating good jobs for the next 
century that can be sustained as we move to a 21st century 
clean energy economy.
    Mr. CAMP. Well, thank you. I see my time has expired. I 
want to thank you both. And, Mr. Rogers, I look forward to your 
letter. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Rangel.
    Mr. RANGEL. Thank you, Mr. Chairman. One of the problems we 
have in reforming the tax system is that if everyone agreed 
that a subsidy, a tax incentive, was absolutely unnecessary and 
we removed it, other people would be able to say it's a tax 
increase. Because whenever there is an unwarranted benefit, if 
you try to justify it, it's only because of concern of removing 
something that we think is not justified.
    My questions are that during the Carter Administration, he 
was wearing a sweater and we couldn't put on Christmas lights, 
and a lot of people were critical that the American way of life 
was being adversely affected. I think it's safe to say that the 
crisis that we face now is really affecting our foreign policy. 
It really is a problem to do with war and peace and allocations 
of resources that we have to protect.
    Having said that, I don't see this feeling at all as 
relates to the consumers. And I want the name of whoever is in 
charge in either department that I can work with, because 
everybody knows, if you go to any major cities, that the office 
buildings are empty and lit up at night. The air conditioners 
are working. The highways during daytime hours have their 
lights that are on. I am so pleased in seeing our city 
monuments and churches and synagogues all lit up with this new 
creative lighting system, and there is no question that if you 
take away my lights on Times Square I will be here fighting you 
to the end, because it really supports tourism and makes our 
lives easier.
    Having said all of that, it's hard for me to believe that 
the average consumer has a concern, even with incentives, that 
we are talking about national security. We are talking about a 
crisis. It's abundantly clear that these investments, everyone 
should be frustrated, because it looks like to some an increase 
in taxes. And the gains are fairly all--in terms of where we 
would like to find the savings or the alternatives to fossil 
fuels.
    But can you share with me any--recently there was a 1-hour 
shut-off of electricity or something. Are you familiar with 
that? Do you have any idea what that saved, if anything? Do you 
know what it takes to change behavior, in terms of consumption 
of energy? Is there an effort to share with us? Because we have 
the responsibility to share with our constituents how bad the 
situation is, and to talk about some degree of discomfort.
    Mr. ROGERS. Sir, as you described, the situation is urgent 
from a national security standpoint. It's urgent from an 
environmental standpoint. And, frankly, it's urgent from a 
competitiveness and wealth creation standpoint.
    One of the things that we found most exciting about the 48C 
program was its re-establishing of U.S. competitiveness in high 
technology, clean energy manufacturing, which we basically had 
ceded to other countries over the last decade. And so, re-
establishing competitiveness in a set of high-growth industries 
is quite important.
    The second thing, interestingly, about how do we help 
consumers do this better is partly around innovation. One of 
the things that we get most excited about is the rate of 
innovation in things like lighting. We funded a set of projects 
that promised to make your average light bulb use one-tenth the 
energy that it currently uses today for the same price.
    And so, all of a sudden, you can have light, but it 
actually doesn't consume nearly----
    Mr. RANGEL. I don't mean to interrupt you, but time is 
running out, and I think that's great. But I am trying to say 
why would the lights have to be on, low wattages it may be, all 
night long? You can go to any town, any city, and see--10:00, 
11:00 at night--the air conditioners and these low-powered 
lights are on.
    Is there any effort? Just give me the name of somebody that 
has the responsibility of educating the consumer that this is a 
serious problem, just not lower light bills, but the crisis 
that we face in terms of where we have to--feel that we have to 
defend the future of America, in terms of blood and dollars.
    Now, who--what part of our government would have that 
responsibility?
    Mr. ROGERS. So our Assistant Secretary for Energy 
Efficiency, Cathy Zoi, has that direct responsibility and 
charge. And she has been working, actually, with--what's 
interesting in the United States is to work with the local 
state Governors, each of whom has committed to the Secretary of 
Energy to actually implement a set of changes in incentives and 
behaviors at the state level, because a lot of these 
requirements and structures are state-oriented.
    And so, what Cathy is trying to do is educate the consumer, 
and then work with the Governors to change the local 
incentives.
    Mr. RANGEL. Well, I don't think they have been very 
successful. Could you promise me that you would have her to 
send to me the efforts that are being made to educate the 
consumer, which, of course, includes municipalities, local 
governments, and state governments?
    Thank you so much, Mr. Chairman.
    Chairman LEVIN. Mr. Stark.
    Mr. STARK. Thank you, Mr. Chairman, and I thank the 
witnesses.
    I guess my principal concern is allowing VEETC to expire. 
And I wonder if either or both of you can give the Committee 
some indication of what VEETC costs the consumer in higher food 
costs and in higher inflation in their entire operation, and 
whether also you have any figures on what the ethanol, in 
effect, loses as a net energy--either or both of you can 
comment on that. Mr. Mundaca.
    Mr. MUNDACA. Thank you, Mr. Stark. Yes, you referenced we 
have, in the Administration, a budget proposed to extend, as 
part of a package of extenders, the provisions with respect to 
ethanol. But obviously, we are certainly willing to engage with 
you on--in the context of broad energy policy--what the future 
should be with respect to various provisions that have been 
extended year to year.
    As we make a broader effort to understand what our energy 
future is, and how the government role in that should proceed, 
we should look at these individual provisions. And we are more 
than willing to do so.
    Mr. STARK. I guess I am curious if you understand them now, 
as to what it costs the consumers--do you understand now what 
it costs? Do you have to have a study?
    Mr. MUNDACA. We have some revenue numbers on the provision, 
as a whole. We can work on the specific provisions, with 
respect to ethanol and what the revenue costs of those might 
be.
    Mr. STARK. You don't have them.
    Mr. MUNDACA. I don't have them with me right now.
    Mr. STARK. But they are available to you now?
    Mr. MUNDACA. I believe we can get them, yes.
    Mr. STARK. Could I get them tomorrow?
    Mr. MUNDACA. I can't promise tomorrow, but we will get 
them----
    Mr. STARK. The day after?
    Mr. MUNDACA. As soon as we possibly can.
    Mr. STARK. All right, thank you very much.
    Chairman LEVIN. Mr. Herger.
    Mr. HERGER. Thank you, Mr. Chairman. Mr. Mundaca, in your 
testimony you state that the Administration proposes to enact a 
cap and trade program. Last year the House passed a cap and tax 
bill that would have raised taxes by $872 billion. Many of my 
constituents in rural northern California are already paying 
some of the highest gas prices in the country, and can't 
understand why Congress would be considering a massive, job-
killing national energy tax in the middle of a recession.
    Even worse, the data shows that the 872 billion energy tax 
won't have a substantial impact on global emission levels 
unless China and other countries take similar action.
    Mr. Mundaca, why should the United States impose energy 
taxes, either in the form of a cap and tax scheme or direct 
energy taxes, if China, India, Brazil, and other leading 
emitters refuse to take similar actions to reduce their 
emissions?
    And if the United States unilaterally enacts stringent 
emissions standards, aren't we just encouraging even more 
domestic manufacturers and the jobs they support to move to 
countries with less stringent emissions restrictions?
    Mr. MUNDACA. Thank you for that question. As I mentioned in 
my testimony, the Administration does support a market-based 
approach to dealing with the reduction of greenhouse gases. We 
do understand there are differing views on the best way to 
achieve it. We are obviously more than willing to work with 
this Committee and others to form the best way to do it, but we 
do think we need to move ahead on finding the best market-based 
approach to address the needed reduction in greenhouse gas 
emissions.
    We do understand the imperative to get other countries on 
board with this effort, and those efforts are continuing. But 
we do need to move ahead on this, we need to address this 
problem. This Committee and this body as a whole has shown 
leadership on this issue. We look forward to continuing to work 
with you all on this.
    Mr. HERGER. So even though these other countries show no 
indication that they are going to do the same, you feel you 
should move ahead?
    I'm sure the Administration, you're aware that just 
competitive forces will be driving many thousands, if not 
millions, of jobs overseas where they will be more competitive?
    Mr. MUNDACA. Again, I think we can't afford to stay still 
on this. We do need to move ahead. But we understand the need 
to have others with us on this effort. But we need to be in a 
place to propose what it is we're going to do as we engage with 
others in this effort.
    Mr. HERGER. Well, thank you. Moving on to another question, 
I would like to inquire briefly about the existing tax credits 
for renewable energy.
    Currently, the investment tax credit provides for a level 
playing field among different renewable energy and energy 
conservation technologies. However, the production tax credit 
under section 45 provides some renewables such as open loop, 
biomass, and hydropower with only half the credit amount that 
is available to other technologies such as wind and geothermal 
power.
    This is of particular concern for mountainous areas like 
the district I represent, where we have substantial biomass and 
hydropower resources, but where wind power is less feasible. 
Mr. Meek and I have offered bipartisan legislation--H.R. 2626--
that would provide the same production tax credit for all 
electricity produced from renewable resources. We feel that tax 
credit parity would ensure a level playing field for all types 
of renewable energy production, and is consistent with the 
Administration's goal of encouraging more investment and 
renewable energy. I understand, Mr. Mundaca, that you're 
probably not prepared to comment on this specific proposal 
today, but I would appreciate it if you could get back to me in 
writing with your thoughts on this legislation.
    Mr. MUNDACA. We are certainly willing to work with you on 
this. Again, as we move ahead with a comprehensive energy 
policy, we look to review the different elements that make up 
the policy today to see if they can be improved.
    Mr. HERGER. Thank you very much. Thank you, Mr. Chairman.
    Chairman LEVIN. Thank you Mr. McDermott.
    Mr. MCDERMOTT. I have a simple question, and that is, if 
energy conservation is the quickest way to make some changes in 
the CO \2\ in the atmosphere, I would like to hear how you 
think our tax policies are working in terms of encouraging 
individuals to do the retrofitting of their houses, and how 
these tax credits to green industries interact with bringing 
production into the United States, rather than having us buy 
solar panels from China.
    If that's what the situation presently is, as it seems to 
me from reading, I would like to hear how we can change that, 
and change the balance of payments, clean up the energy, and 
get on an even track with the Chinese. They are, it seems to 
me, going to control the whole of the production of green 
energy equipment in the future, if we don't start moving in 
that direction.
    So, I would like to hear what--California said, you know, 
``Paint the top of your roofs white and reflect the energy, and 
you can save a lot of energy.'' And that, in my view, is 
where--I want to understand where the Tax Code can be used to 
encourage that.
    Mr. MUNDACA. I will start briefly, and Mr. Rogers may have 
something to add.
    We agree wholeheartedly we need to look at how the Tax Code 
can incentivize both supply and demand, with respect to clean 
technologies. As you mentioned, we have Tax Codes--provisions 
now that incentivize for individual consumers to buy and 
install solar panels. The President, with respect to the Home 
Star program, is calling for additional incentives for 
retrofits. Obviously, that's on the demand side to get 
consumers----
    Mr. MCDERMOTT. When is that legislation going to be ready? 
Before election?
    Mr. MUNDACA. I believe we're ready to work with anyone 
interested in moving that immediately.
    Mr. MCDERMOTT. You've got the language written----
    Mr. MUNDACA. I don't know that we have the----
    Mr. MCDERMOTT.--for the Home Star program?
    Mr. ROGERS. Yes, the language is written.
    Mr. MCDERMOTT. Thank you. Go ahead.
    Mr. MUNDACA. That's on the demand side. And then, 
obviously, the call for expanding the 48C program is to create 
the manufacturing base here in the United States to supply the 
solar panels, et cetera, that we are incentivizing consumers to 
buy in order to make their homes, their lives, more energy 
efficient.
    So, again, it's a comprehensive program on both sides of 
the equation. We recognize the concerns that other countries 
for years have been incentivizing their own clean energy 
manufacturing industries. We're playing a little bit of catch-
up. That's why the President has made the bold proposal for the 
additional 5 billion under 48C.
    Mr. ROGERS. My only addition would be that this is about 
global competitiveness. The U.S. has among the most advanced 
technologies, both in energy efficiency and in renewable 
energy. Historically, we have innovated and then the 
manufacturing has gone abroad.
    What this Committee did, in terms of having the 48C 
program, created an incentive to bring, just on the renewable 
side, $10 billion of foreign direct investment into the United 
States to create U.S. jobs over the last year. That----
    Mr. MCDERMOTT. From outside?
    Mr. ROGERS. From outside the country into the United 
States, bringing the best technology and the best manufacturing 
here. It's that kind of incentive that, all of a sudden, makes 
the U.S. globally competitive again. We had lost 
competitiveness, and now we are competitive again. Because 
otherwise, you're right, China is going to end up wanting to 
lead in this globally.
    Mr. MCDERMOTT. What percent of the solar panels sold in the 
United States today--or purchased in the United States today--
are made in the United States?
    Mr. ROGERS. I don't have a number for solar. In the wind 
sector it's 62 percent of the value added of the installations 
under the 1603 program were manufactured in the United States. 
So that--and what's powerful, again, about the incentives from 
this Committee is 5 years ago that was 25 percent. So we have 
now more than doubled the manufacturing capacity in the United 
States.
    And things like an expansion of the 48C program are the 
single best approach that we can take to build U.S. 
manufacturing, and make sure that when I buy a U.S. car, I buy 
a Ford, I get a 72 to 74 percent domestic content. That's where 
we can be, just with the 48C investments that we have already 
made--and if we can continue that kind of investment program, 
the U.S. not only can make for the U.S. market, but export 
globally.
    Mr. MCDERMOTT. Are you saying that we are taking back from 
the Danes and the Chinese the actual production of the 
generators?
    Mr. ROGERS. We are taking back----
    Mr. MCDERMOTT. You guys sometimes can baffle us with words, 
okay, and we're not quite sure what you mean when you say 72 
percent is American. You mean made in the United States----
    Mr. ROGERS. We are bringing----
    Mr. MCDERMOTT [continuing].----those generators?
    Mr. ROGERS. That's right. We are bringing manufacturing 
back to the United States from Germany, from Spain, from 
Denmark, from China, as a result of the programs that this 
Committee has put in place.
    Mr. MCDERMOTT. Are there any problems with that program 
that we need to fix to make it easier, to make it work more 
efficiently?
    Mr. ROGERS. Well, the chief problem that we encountered was 
it was capped at $2.3 billion and we had three times the number 
of really good projects that we would have liked to fund under 
the first round.
    And, if we have the opportunity to go out, there are others 
that would now apply, because the technology continues to 
evolve.
    Mr. MCDERMOTT. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Lewis.
    Mr. LEWIS. Thank you very much, Mr. Chairman. Let me thank 
you for being here today for this hearing.
    We need green jobs and we need them now. In my city of 
Atlanta, Georgia, people hear about the green job economy. They 
hear the money has been spent to create the green job economy. 
But they do not see any changes in their everyday lives.
    Could the two of you tell me what the Department of Energy 
and the Department of Treasury--what are you doing to reach out 
to the poor to see that they get their fair share when it comes 
to green jobs?
    Mr. ROGERS. One of the things under the Recovery Act, 
broadly, that has been very important for building green jobs 
in local communities has been the partnerships that we have had 
with states and cities.
    The Weatherization Assistance Program is spending more than 
$5 billion working with community action agencies in every 
community around the country. The Energy Efficiency 
Conservation Block Grant program is sending funds through 
cities to enable them to invest in energy efficiency at the 
local level.
    And as we go out and talk to communities, it is the ability 
to bring local workers into these agencies--what we are trying 
to do with these programs is to buildup a workforce, a trained 
workforce in the local community, that then is able to serve a 
broader market.
    If you think about the combination of the investment in 
weatherization, where we get people trained up, and then in 
Home Star, what we are trying to do is invest in weatherizing 
poorer people's homes, putting money back in their pockets with 
people in the local community so that, as we then move into 
Home Star, we have a trained workforce that is ready to go 
across a much broader marketplace.
    And so, those programs are, in fact, beginning to bear 
fruit as we look at the jobs data that--the next jobs reporting 
period closes here on Friday. I think we are going to be quite 
pleased with the amount of jobs that we are seeing in the local 
community as a result of this work.
    Mr. LEWIS. Thank you.
    Mr. MUNDACA. Thank you. Just to add again the President's 
desire to expand the Home Star program. Again, I think it's the 
best way to deliver benefits to local communities, because it 
is very focused on individual consumers, then using local 
workers with respect to the installation of these purchased 
energy efficient products.
    So, again, that may present the best opportunity to reach 
down to the local communities. As Mr. Rogers mentioned, 
partnering with the states is very important in this effort, as 
well.
    Mr. LEWIS. In many communities all across America you have 
groups that have been funded by the Federal Government. At 
least one group called Youth Build, where young people have 
been trained to go out and help low-income individuals, 
elderly, their families to rebuild, improve their homes. You 
see a possibility of cooperating with organizations and groups 
like Youth Build?
    Mr. MUNDACA. I think there certainly is the possibility. We 
should talk about the best way--outreach, again. I think the 
program to date has worked with state and local governments, 
but I think that could be expanded to individual outreach, as 
well.
    Mr. LEWIS. Thank you very much.
    Chairman LEVIN. Thank you, Mr. Lewis.
    Mr. LEWIS. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Johnson.
    Mr. JOHNSON. Thank you, Mr. Chairman. Mr. Mundaca, I think 
that in your testimony you speak about the President's budget 
proposal to provide an additional $5 billion in advanced energy 
manufacturing tax credits. And that would be on top of a $3.2 
billion already awarded by the Administration.
    I support having a cleaner, greener, more energy-efficient 
economy, but it ought to be market-driven, not government-
directed. Back in my district I note that companies like Wal-
Mart have opened up a state of the art green facility. They did 
it on their own. And they are doing so because it makes sense 
for their bottom line.
    I don't believe Washington bureaucrats ought to be picking 
winners and losers, as is the case with this program. I think 
it's a far better approach to lower our corporate tax rate, 
which is currently the second highest among industrialized 
countries, so that businesses--all businesses--have a stronger 
incentive to invest and create so-called green jobs here at 
home.
    As the Assistant Secretary for Tax Policy, would you agree 
that our high corporate tax rate, in effect, serves as a 
penalty on businesses that successfully undertake green 
investments here at home? And, moreover, the high corporate tax 
rate negatively impacts job creation.
    Also, given that businesses plan for long term, wouldn't a 
permanent reduction in the corporate tax rate be far more 
preferable, in terms of encouraging an economy-wide investment 
in green, as opposed to a short-term credit that's doled out by 
bureaucrats to a few select businesses?
    Mr. MUNDACA. Thank you, Mr. Johnson, for that question. We 
understand, and it's a policy behind the proposed repeal of 
certain incentives in the Tax Code that the Tax Code should be 
as neutral as possible, with respect to investment decisions. 
We make the choice to include incentives when it is that we 
recognize that markets may not be pricing in accordance with 
the full cost of programs.
    For example, there may be positive externalities with 
respect to clean energy, the lower pollution produced by them 
that warrants the Federal Government providing an incentive to 
recognize those positive externalities.
    Regarding the corporate tax rate, we do understand in the 
Administration the role that that rate plays in our general 
economic activity. We recognize that the rate is high. In the 
context of more fundamental tax reform, where we look at all of 
these issues--corporate tax, individual tax--we do need to 
consider the fact that currently we have, on a corporate tax 
side, a relatively high rate, as you identify--by some 
standards, the second highest in the world after only Japan--
but a relatively narrow corporate tax base, such that the 
effective tax rate on corporations in the U.S. is about average 
for G-7, G-20 countries.
    So, as we look to fundamental tax reform, we need to look 
at the rate, we need to look at the base, we need to look at 
the entirety of the tax system to come up with a tax system 
that our country deserves, and can move us ahead, economically, 
going into this century.
    Mr. JOHNSON. And you believe the tax credit is better than 
changing the Tax Code to help them?
    Mr. MUNDACA. I think, as we proposed with respect to 48C, 
those incentives are needed and necessary to transition us to a 
clean energy economy. There is the larger question of other 
provisions in the Tax Code that now are the corporate tax base, 
and therefore necessitate to collect revenue at the higher rate 
that we have.
    Again, we need to look at that rate as compared to what the 
base is, to decide what incentives are left in, what can be 
taken out, and how the rate can be adjusted.
    Mr. JOHNSON. Well, concerning tax increases that are also 
being talked about, do you think that that could cost us green 
jobs that the Administration cares about by raising taxes 
instead of lowering them on corporate structure?
    Mr. MUNDACA. Right now I don't think the budget has a 
particular corporate tax general rate increase. The repeal of 
the subsidies that we're talking about here today are--again, 
getting back to your first point, that we do want the Tax Code 
to be as neutral as possible, with respect to investment 
decisions.
    Mr. JOHNSON. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Rogers, did you--Mr. Johnson has a few 
seconds left. Did you want to participate?
    Mr. ROGERS. My only addition would be I also think there is 
a notion about making sure that these tax incentives are 
efficient. One of the things about the 1603 program that is, 
indeed, benefiting some of the constituencies in your district 
is the efficiency with which that can then be financed.
    Because we need to make sure what the Tax Code says--and 
then the banks actually show up and finance these projects. 
What we had before was relatively inefficient; these are now 
efficient programs, and I think the guidance that this 
Committee has provided to make the Tax Code more efficient has 
actually made a big difference, in terms of how the renewable 
industry can grow.
    Chairman LEVIN. Thank you. Mr. Neal.
    Mr. NEAL. Thank you, Mr. Chairman. Mr. Mundaca, both your 
testimony and that of Mr. Rogers speaks of the success and 
growth of alternative energy manufacturing facilities.
    In Massachusetts recently, the state pulled together more 
than $20 million in grants to ensure a solar manufacturer would 
locate a new plant within our state, the old Ft. Deven site, 
only to watch it be lured away by China, which offered $30 
million in government assistance.
    How can the Committee be assured that our green energy 
policy leads to green jobs and more jobs here in the United 
States?
    Mr. ROGERS. The 48C program is a simple one. In terms of 
bringing manufacturing investments to the United States, it is 
clearly working. We are actually taking market share away from 
other countries, and bringing that manufacturing capacity here, 
to the United States.
    Our challenge, as we look forward, is the resources on the 
manufacturing side are small, relative to the demand on the 
development side. And so, what we need and what we've asked the 
congress for, is the authority to expand that ability to bring 
more manufacturing in, because I think, in terms of global 
competitiveness, the ability to focus on manufacturing--
particularly high technology manufacturing here in the United 
States--is essential for our long-term growth and 
competitiveness.
    Mr. NEAL. Mr. Mundaca.
    Mr. MUNDACA. Yes, I would just say we do recognize the 
challenges. As Mr. Rogers emphasized, this is a global issue. 
We are in competition with other countries to bring these good 
jobs and good technologies here, to the United States. I think 
we do have the leadership in the production of the intellectual 
property. We need to make sure we follow up with the hard 
resources to get the plants here, to produce good jobs, to get 
American-made parts into the clean technologies used here by 
American citizens.
    Mr. NEAL. My guess is you're familiar with the Deven issue?
    Mr. MUNDACA. Yes.
    Mr. NEAL. Yes, it drew a great deal of controversy and fire 
across the state, and it was highlighted by local media for 
days on end. So I think we need to be mindful of that as we 
move forward, that these investments are to be as good as we 
tell everybody they are to be, and we can't have them 
outsourced based upon that competitive nature of one government 
upping the ante toward the next.
    Mr. MUNDACA. That's right. I think, as part of that as 
well--and we need to address this in the context of 
comprehensive energy policy--we do have to have some certainty 
in what benefits are available, so that manufacturers and 
others can know what benefits they are going to get, whether 
they will be there in the future, so they can make the 
decisions to locate here.
    Mr. NEAL. And I think the corollary to that is we--with the 
Recovery Act, we made a very important downpayment on U.S. 
competitiveness in these industries. We now have the 
opportunity and the challenge of making the pivot toward a set 
of long-term incentives. That's why we need to put a price on 
carbon pollution. That's why we need a comprehensive energy and 
climate legislation. That's why, as we look at those, making 
sure that the tax provisions create certainty as we move 
forward will actually help the capital formation that is 
essential to the success of these industries.
    Thank you. Thank you, Mr. Chairman.
    Chairman LEVIN. Thank you, Mr. Neal. Following our rules, 
Mr. Becerra, you are next.
    Mr. BECERRA. Thank you, Mr. Chairman. And, gentlemen, thank 
you for your testimony. A couple of quick questions.
    Do we do anything right now through the Tax Code that 
essentially subsidizes American companies going abroad, outside 
the U.S. borders, to try to explore, research, find, secure, 
and return any sources of energy back to the U.S.?
    Mr. MUNDACA. There are a number of elements of our Tax Code 
that we in the Administration feel may incentivize investment 
by American countries overseas, just through the tax treatment 
of income earned overseas versus the tax treatment of income 
earned here, in the United States. A lot of that does have to 
do with intangible value and the transfer offshore.
    The Administration has put forward a number of proposals in 
the budget to deal with those issues, some specifically 
targeted to intangibles, some more general with respect to our 
tax system and how it treats foreign source income. I think we 
do need to look at that as part of overall--more fundamental 
tax reform. But these proposals we put forward, we think, can 
be moved ahead even outside the context of fundamental tax 
reform, because they address issues under our current rules 
that do incentivize investment overseas at the cost of 
investment here in the U.S.
    Mr. BECERRA. And no one is saying that investment overseas 
is not good. And certainly we need every source of energy that 
we can find. And the sooner we can clean up the sources of 
those energies, the better.
    But to the degree that we have precious dollars to invest 
through the Tax Code or elsewhere, should we try to focus those 
on domestically oriented resources of energy?
    Mr. MUNDACA. Of course. That's exactly right. We need to 
make sure that our Tax Code does not give a rational U.S. 
company the incentive to invest dollars overseas because of the 
tax treatment of the return on that investment.
    Mr. BECERRA. And do you believe, then, that the 
Administration will put forth some good proposals to try to 
help us try to move the incentives toward domestic production 
before we start rewarding folks for doing production--
exploration and production--overseas to bring it back here to 
charge us for it?
    Mr. MUNDACA. We have done a number of proposals already. We 
proposed to make the R&D credit permanent. We have proposed, as 
we have talked about here, some specific energy incentives. We, 
as well, have put forward a series of tax proposals with 
respect to the taxation of income earned overseas, particularly 
with respect to transactions that look to shift intangible 
value overseas.
    Again, it's part of a package. We think that rationalizes 
our tax system, and makes the investment decisions more tax-
neutral, as opposed to now, where there are incentives to move 
investment overseas, at the cost of investment here, in the 
United States.
    Mr. BECERRA. Well, I appreciate those words. And, Mr. 
Chairman, I hope we are able to follow up with the Secretary 
and others, to try to make sure that, as we provide those 
incentives, we do have a rational approach to try to allocate 
our precious resources principally here domestically, to search 
for the--those sources of energy. And, where possible, if it's 
a wise investment, to try to help American firms try to search 
out for that energy wherever it may come from outside the U.S. 
border.
    So, thank you, the two of you, for your testimony. Mr. 
Chairman, I yield back.
    Chairman LEVIN. And thank you, Mr. Becerra. This is a 
hearing that is a prelude to work on specific legislation. And 
we will take that very much into account.
    I think Mr. Linder--I mean Mr. Nunes and Mr. Tiberi wish to 
exchange positions, is that--so that's fine. I think, 
therefore, Mr. Tiberi, you are next.
    Mr. TIBERI. Thank you, Mr. Chairman. And thank you both for 
testifying today.
    Kind of following up on what Mr. Camp talked about when he 
spoke, we believe on this side of the aisle of an all-of-the-
above approach, and we believe that that will help create jobs, 
just across the board.
    Mr. Mundaca, you stated, in response to Mr. Camp, that you 
didn't believe that the provisions in the President's proposal, 
in his budget proposal, his energy proposal, would not impact 
jobs in the domestic oil and gas industry. People in the oil 
and gas industry couldn't disagree with you more in Ohio.
    In Ohio, we have 50,000 people that work in the oil and gas 
industry, mostly employed by small, family owned businesses. In 
Ohio, since the stimulus bill passed, we have lost literally 
hundreds of thousands of jobs. So jobs in Ohio right now is a 
big issue. It's the biggest issue. And this budget that the 
President has proposed has a lot of people worried, with 
respect to the issue of jobs.
    Let me quote from a constituent of mine, who is in the oil 
and gas industry, with respect to this proposal that you have 
talked about today. He says--and I quote--his work ``will 
stop,'' and his industry ``will evaporate overnight'' if the 
President's proposals that you testified about are enacted.
    Now, again, we have over 50,000 men and women in this 
industry. And the irony is when their businesses go away, when 
their employees go away, we will then rely more on foreign, 
out-of-the-country sources to supplement what is going to be 
lost in Ohio.
    How does that jive with what you just talked about? How do 
you respond to that? This is a guy who is actually on the 
ground, an employer working in the industry, and he is not 
alone in saying that they will stop.
    Mr. MUNDACA. Well, thank you for that. We can certainly 
engage further on what specific proposals may be impacting a 
particular taxpayer. Again, when we crafted these proposals and 
we looked at their effects, the overall effect on the industry 
is small. We don't expect the job effects to be significant. We 
look at this as an entire package of provisions to take out of 
the Tax Code, the tax preferences for fossil fuels, while we 
transition to a clean energy economy.
    Again, we are very focused on jobs, and the Administration 
in general are concerned about the loss of jobs and getting us 
back on the path to creating jobs here in the United States.
    Again, I would be willing to talk to you further about any 
of the specific proposals that may be creating these issues. 
But again, when we formulated these, we looked at those 
incentives, those subsidies in the Tax Code, that we could not 
see as being effective, and therefore, led to an over-
allocation of investment to certain sectors at the cost of 
investment in others.
    Mr. TIBERI. Well, reclaiming my time, in conjunction with 
this hearing, the Joint Committee on Tax issued a pamphlet in 
connection with the hearing that says that increases in the 
price of domestic fossil fuel could--and I quote again--
``primarily result in substitution of foreign fossil fuel 
sources for domestic sources.''
    So, essentially, what you are doing in the budget 
proposal--you called it incentives--you are going to raise 
taxes on domestic oil and gas producers in Ohio and in our 
Nation, taxes that would not be raised on foreign sources.
    So, if you are raising taxes on these small businesses, and 
essentially businesses, jobs that exist today that will no 
longer exist tomorrow, how does that help our economy? How does 
that help our domestic energy business, when not only do 
employers and employees in my district in this industry say 
that, but Joint Tax even says that?
    Mr. MUNDACA. Again----
    Mr. TIBERI. And, by the way, it's kind of common sense.
    Mr. MUNDACA [continuing]. Again, we look at this as a 
package of proposals. We have----
    Mr. TIBERI. But aren't you raising taxes on just the 
domestic side and not the foreign side?
    Mr. MUNDACA [continuing]. We have a number of provisions in 
here, as I mentioned, that address those subsidies we see in 
the Tax Code. There is also a provision in there with respect 
to those domestic U.S. companies that have operations overseas 
that are taking a foreign tax credit, with respect to payments 
we think really represent royalties, as opposed to foreign 
tax----
    Mr. TIBERI. Reclaiming my time, last minute. Let me just 
give you his comments here, and I want you to address this. He 
says that you are repealing, specifically for small businesses, 
the percentage depletion, the marginal well tax credit, the 
intangible drilling costs. And also, the intangible drilling 
cost tax credit is necessary because that gives small 
businesses like his the edge, the ability to compete with the 
big guys.
    How would you address that? If you take those away, he is 
gone.
    Mr. MUNDACA. Again, we are looking to remove those 
provisions in the Tax Code that advantage one sector over 
another, that lead to an over-allocation of resources to one 
set of taxpayers, as opposed to another.
    Mr. TIBERI. So you won't deny the fact that if you give 
the--if you take those away from small businesses, they say 
they no longer exist. Foreign competitors aren't impacted by 
it. Then how does that advantage employees in my state?
    Mr. MUNDACA. Again, they're a package of proposals with 
respect to energy provisions. There are proposals we have 
included with respect to the foreign operations of U.S. 
companies where we think there may be too rich a tax credit 
available, with respect to foreign levies that are assessed 
against them. We also have, as we have talked about, incentives 
for transitioning to a clean energy economy.
    We think the package, overall, is fair. It tries to remove 
from the Tax Code those provisions that are leading to 
distortions in investment and again, transition us to a clean 
energy economy.
    Mr. TIBERI. So what do I tell my constituents who are out 
of a job, then?
    Mr. MUNDACA. Again, we are willing to talk to you further 
about what particular aspects of the proposals may be impacting 
individual taxpayers. But again, we have identified those 
provisions that we do think lead to distortions in investment 
and over-allocation of resources, and prevent us from this 
transition we do need to make.
    Mr. TIBERI. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Tiberi, we will be talking about that 
within our committee.
    Mr. Doggett, you are next.
    Mr. DOGGETT. Thank you, Mr. Chairman. And thank you, 
gentlemen, for your leadership in trying to move us from 
fossilized thinking and a fossil-based economy. I think it's 
particularly appropriate that you are here to testify about 
this in this Committee, since Federal policy, as a whole, on 
energy has relied much more on tax expenditures with 
preferences and exclusions and credits in our Tax Code than it 
has on appropriations and direct expenditures to advance energy 
policy.
    As--just with reference to the last question you've been 
responding to, Mr. Mundaca, I would say I see a distinction 
between an Exxon Mobile, which last year reported over $45 
billion of profits and reported a tax liability of 0 on that 
$45 billion in profits, no doubt helped by the fact that it had 
20 wholly owned subsidiaries to help it avoid tax liability in 
the Bahamas, Bermuda, and the Cayman Islands.
    I see a distinction between that and a small, independent 
operator somewhere in the country responsible for finding most 
of the new--particularly natural--gas that I think is important 
to help us transition to a more clean energy economy. And I 
think we have to consider that as we review your budget 
proposals.
    But we certainly need to look at all of these issues if we 
are going to have both our tax expenditure policy complement 
our direct expenditure policy in moving us to our clean energy.
    Let me ask you, Secretary Mundaca, specifically with 
reference to the ongoing discussion that we have in the 
extenders legislation that is pending here before Congress, you 
have called for extending certain expired provisions, but 
letting temporary incentives that benefit fossil fuels expire.
    As we consider these provisions that are in current law, 
would you support efforts to improve these provisions in ways 
that are consistent with the goal of having a clean energy 
economy? That is, without getting into all of the specifics, do 
you welcome attempts by our Committee to improve these 
provisions, to continue the transition from a dirty energy 
economy to a more clean energy economy?
    Mr. MUNDACA. Thank you for that question. Yes, we do 
certainly welcome that effort. We do need, I think, to have 
everything that we can look at on the table to look at, as we 
try to make these improvements, and we try to make these 
transitions.
    As you know, the Administration proposed to extend, in 
whole, certain particular expiring provisions of the Tax Code. 
But we certainly do welcome the effort to look underneath some 
of those provisions to see if there are elements that should be 
improved as we look to extend.
    Mr. DOGGETT. Well, and as we look at the various provisions 
we have--and not all of these, of course, are in the 
extenders--but we have here 132 pages of present Federal tax 
provisions dealing with energy that we are reviewing, as a 
committee, from the Joint Tax Committee today. And I think what 
we do need is more information in order to make an intelligent 
evaluation of which of those incentives work and which don't.
    One of the most important pieces of information--and our 
colleague, Earl Blumenauer, is really principally responsible 
for this--is the request that there be a carbon audit done that 
I know you're familiar with, that Treasury has now engaged the 
National Academy of Sciences, but we need that information, and 
we need it soon to be able to provide a careful evaluation of 
this.
    And then, as I look down the list of incentives that are in 
your testimony, we've got a dollar a gallon for biodiesel 
that's pending. I have at least one plant that's on cold start, 
about to close down, because there hasn't been an extension of 
that. On the other hand, I have got some folks that are saying 
that's diverting feed stock from other industries.
    We've got $.50 for alternative fuels, $.45 for alcohol 
fuels. Whether those are the appropriate levels for the credit, 
and what good those credits are doing, is something we really 
don't have very good information on. It's one of the reasons 
that, on the extenders, I proposed a study to review the 
efficiency of these. But whether $.45 is the right level for 
one--for alcohol fuels, or whether it should be $.60 or whether 
it should be $.25 or should be 0 is something we need to look 
to Treasury and the Energy Department for more information on 
than we currently have.
    I see your testimony is basically saying, ``This is what 
was in the extenders bill,'' or, ``This was what was in the 
stimulus bill,'' or current law, and, ``Let's give it--let's 
extend it a little longer.'' There may be justification for 
doing that, but I don't think we should extend it much longer 
without better information on both the carbon characteristics, 
and we need the Energy Department and the Treasury Department 
both more involved in that process of giving us the information 
to compare and contrast these incentives, all of which are not 
created equal.
    Would you--either of you--care to respond about the role 
your departments can play in helping us provide that 
information and evaluate these tax expenditures in energy?
    Mr. MUNDACA. Yes, I will. We understand the importance of 
reviewing all of these, and obviously, reviewing them on the 
basis of solid information.
    Again, I thank the Committee for their leadership on these 
issues, for getting us the funding for the study that we're now 
talking to the National Academy of Sciences to do, with respect 
to a carbon audit of the Tax Code. It's an important step 
forward in getting the information we need to make these 
important decisions in a fully informed manner.
    Mr. ROGERS. We value the opportunity to collaborate with 
Treasury on the 48C and 1603 programs. We look forward to other 
opportunities to do that. We feel a responsibility to justify 
our appropriations as part of the budget, and we feel a 
responsibility to help Treasury on the tax expenditures, as 
well.
    Chairman LEVIN. Mr. Thompson.
    Mr. THOMPSON. Thank you, Mr. Chairman, and thank you to the 
witnesses for being here.
    I want to follow up on one part of what my colleague, Mr. 
Doggett, mentioned, and that's the importance of Treasury to be 
able to help us quantify where we go.
    One good example of this is in our efforts through the 
Recovery Act to pursue renewable energy policy, we put in place 
some tax measures that would actually grow renewable energy in 
this country. And some of it has been extremely successful.
    At the time, a number of us were concerned that that policy 
agenda would help drive jobs overseas. Specifically, by the 
expansion of renewable energy equipment that is good for this 
country, we were concerned that that equipment would be made in 
China and Japan and Germany, and were able to put language in 
the bill--and it's been referenced here; I think the chairman 
talked about it, the manufacturing tax credit component, which 
sadly is going to expire.
    But that's an example of something that the Department can 
do on the front end to help identify these unintended 
consequences. We caught this one, and it was--what we did was 
good, we just need to continue to do it.
    So, if we could get--or maybe hear from you today--some 
sort of commitment as to how we would continue to be able to 
work together and rely on you as a resource for that, I think 
that would be important.
    And, Mr. Chairman, if it's appropriate, I have got some 
letters. As you know, I am trying to expand that, and I have 
got some letters here that state what it means for jobs in the 
United States of America if, in fact, we do expand that 
manufacturing tax credit. And I would like to submit those for 
the record.
    Chairman LEVIN. Excellent. Without objection.
    [The information follows:]
    Mr. THOMPSON. Thank you. And if you could add anything to 
that, I am all ears.
    Mr. MUNDACA. Thank you. We recognize, as both Mr. Rogers 
and I have testified, the importance of and success of the 48C 
credit. And again, we thank the Committee for their leadership 
on this, their continuing support of this program.
    Again, as we discussed, we have the incentives for 
individual consumers and businesses to buy this equipment. But 
we did need to provide the incentives to have the manufacturing 
facilities here in the U.S. to produce that equipment that 
we're incentive to buy. It's been a great success. We look 
forward to this important expanding, and again, thank the 
Committee and the House for what it did in the Recovery Act, in 
taking these important steps.
    Mr. ROGERS. The only thing that I would add to that is the 
linkage between project development, manufacturing, and 
innovation is central to the competitiveness of the U.S., 
globally. And sometimes we forget a piece of that linkage. But 
what this Committee has clearly done is to link the project 
development and the manufacturing with 1603 and 48C, and then, 
with the R&D tax credit, the innovation side of this.
    And if you think about those three pieces fitting together, 
good jobs grow and stay when you put those three pieces all 
together. If we lose a piece of that equation, all of a sudden 
we just get the development, we lose the manufacturing. By the 
way, the innovation goes too.
    And so, one of the things we have to be cognizant of is how 
we keep those three pieces in balance in the Tax Code and in 
our incentive structures over time.
    Mr. THOMPSON. Do you have any data that would give us an 
idea of what kind of job growth has been accomplished because 
of these tax--because of the tax policy that we put forward in 
the Recovery Act?
    Mr. ROGERS. Sir, the direct jobs attributable to the 1603 
program and the 48C program, to the best of our knowledge, are 
60,000 for the first and 50,000 for the second--60,000 for the 
1603 program across its life; 50,000 for the 48C program across 
its life. Those are the estimates, going in. Obviously, we will 
have to know what it is, ex post. But that is our best estimate 
at the current time.
    Mr. THOMPSON. And that--and you drilled down pretty deep to 
get that? That goes all the way back to the----
    Mr. ROGERS. That goes down to the specific projects and 
building up from the----
    Mr. THOMPSON. But how about all the way back to the 
equipment used to manufacture the----
    Mr. ROGERS. So we are then not going back all the way--if 
you then take a broader look at what's going on across the 
supply chain, the number is much larger, in terms of the total 
jobs generated. Those are just the jobs on the projects that we 
have been able directly to----
    Mr. THOMPSON. Will you be able to get a more accurate and 
more inclusive number for us?
    Mr. ROGERS. This is something we are working closely with 
the Council of Economic Advisors on, is how do we estimate the 
jobs across the full supply chain. And we can do it for pieces, 
and we will provide you with the pieces where we have good 
data.
    Mr. THOMPSON. Thank you. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Thompson, excellent question. And I 
hope that we will have that information as we discuss specific 
legislative proposals.
    Mr. Nunes, I think it is now your turn.
    Mr. NUNES. Thank you, Mr. Chairman. Mr. Mundaca, I want to 
follow up just quickly on what Mr. Thompson was talking about. 
Those--I think, to use your words--he said ``incentivize,'' or 
you said that these are incentives for manufacturing these 
green technologies? So these incentives--yes. Wouldn't those be 
the same thing as, say, incentives for domestic oil producers 
to produce oil here in this country?
    I guess my question is, why is it--what's the difference? 
Why is it okay to have incentives for green technologies, but--
I think you said a little earlier that to incentive the oil 
industry, that that has no effect on domestic oil production.
    Mr. MUNDACA. There are two points to consider, and what we 
considered when making these proposals. One is the 
effectiveness of what it is that we are proposing, what the 
effect of these incentives/subsidies are, and secondly, what 
they are trying to address.
    We feel, as a general matter of tax policy, the Tax Code 
should be used to incentivize or subsidize an investment where 
the market itself is not providing the proper incentives, where 
the cost of an investment isn't an accurate representation of 
either the benefits or the cost of that investment.
    So, for example, on green technologies, what we don't have 
built into the price is the positive externality, to use an 
economics term, of the lower greenhouse gas emissions, less 
pollution, et cetera, but we don't----
    Mr. NUNES. Well, I want to get into this. So that--I just 
had that quick follow-up, but I'm going to get into something 
similar on this.
    So, my question about--I want to discuss China here. And 
you are very concerned about how we're losing our edge to China 
in green technology.
    Mr. MUNDACA. Yes.
    Mr. NUNES. So, I just--we often hear this, and there are 
rhetorical statements that we often hear repeated by the 
Administration in the news media, but I just want to go into a 
few. We never talk about the actual numbers, okay? So--and 
these are just quick questions here, and I am sure you're aware 
of these, but I want to get them on the record.
    So, in 3 years, 2005, 2006, and 2007, China built 273 
gigawatts of electrical generating capacity, while the U.S. 
built 32. You're aware of that?
    Mr. MUNDACA. Yes.
    Mr. NUNES. Okay. Of the--225 gigawatts that China built 
were coal-fired power plants, 225 in 3 years; 40 gigawatts was 
hydroelectric; and only 5.5 gigawatts were wind and solar in 
China. You agree with those numbers?
    Mr. MUNDACA. I don't know the specific numbers, but I----
    Mr. NUNES. I think it's from the energy information----
    Mr. MUNDACA. Right, I think the general breakdown is as I 
understand it, yes.
    Mr. NUNES. So, during those years, the U.S. added twice as 
much wind and solar as China, even though China added nine 
times as much energy as we did, right, during the same 
timeframe.
    Mr. MUNDACA. Yes.
    Mr. NUNES. Okay. So now, the Administration basically--and 
everybody--says that we are going to have to increase, in the 
next 25 years, you know, to meet demand, we are going to have 
to increase our--I have the number here, it's about 270 or so 
gigawatts in the next 25 years that we are going to have to--
somehow we are going to have to get this energy from somewhere.
    So, I mean, we're not doing a very good job, if you look at 
the gigawatts we produce in the last 25 years. So, for the next 
25 years, it just seems to me like--I mean do you guys believe 
that energy use and energy consumption is related to gross 
domestic product?
    Mr. MUNDACA. Yes. And when we talk about, as you stated, we 
are losing our edge to China, I believe those statements are 
made in the context of the manufacturing facilities that 
produce the clean technology.
    So, when a company is going out to buy the windmill 
turbines, for example, where can they look to purchase them? 
China has made huge investments in that sector of its economy, 
with respect to the manufacturing capabilities of----
    Mr. NUNES. But you do agree, though, that GDP and energy 
consumption are tied together.
    Mr. MUNDACA. Yes.
    Mr. NUNES. So how is it when--I don't want to--I'm just 
going to paraphrase what the President said before the--I think 
it was the San Francisco Chronicle during the campaign. But he 
said that under his plans, that energy prices would skyrocket. 
You remember that quote, right?
    Mr. MUNDACA. I don't remember the skyrocket part, but I do 
remember a discussion of----
    Mr. NUNES. Well, I know he used the word ``skyrocket,'' I 
know that.
    So, you believe that GDP is tied to energy consumption. The 
President says that, under his plans, that the energy crisis 
will skyrocket. How, if we're going to increase prices of 
energy, how are we going to grow GDP?
    Mr. ROGERS. Maybe I could address this. If you take a look 
at--wealth creation is tied to productivity across the economy. 
It's also tied to energy productivity. The United States is 
substantially more energy productive than China today, so the 
relationship between our GDP growth and China's GDP growth 
advantages us.
    One of the things that we want to be able to do over time 
is to continue that advantage, to make sure that U.S. GDP 
growth continues with greater and greater energy productivity, 
because that, in fact, makes us more competitive, globally. It 
drives more wealth creation over time. And that's where these 
innovation-driven energy agenda really comes to roost.
    What we are able to do is increase our productivity in the 
energy sector faster than a global economy, and create the----
    Mr. NUNES. So my time is up. So with all the--I mean, but 
at the end of the day, the last 25 years and looking at the 
next 25 years, I mean we're not doing anything but talking 
about how much energy we are going to create. And you know, at 
some point somebody is going to call this what it is.
    I mean it's almost like we're--the Administration is paying 
more attention to the actual tree, and they can't see the 
forest through the trees.
    Mr. ROGERS. So this Administration----
    Mr. NUNES. I mean we're not--no nuclear plants, I mean, no 
major sources of power. I mean at some point--Mr. Mundaca said 
that GDP is tied to energy use. And if we don't produce more 
energy, don't you guys think we are going to have some serious 
problems?
    Mr. ROGERS. What this Administration has already done in 
the first 18 months is to re-establish the nuclear industry of 
the United States to fund, with a loan guarantee, the first 
nuclear power plant in the last 30 years. We are already on 
course to double renewable generation capacity in the first 4 
years of this Administration. We are taking action now to 
actually change that equation that has existed, as you 
described----
    Mr. NUNES. Right. So you are taking credit for nuclear 
power plants that were started under George Bush. But so--which 
is fine. But let's not--I don't want to get into a partisan 
debate here. But at the end of the day, China has 100 or so 
nuclear power plants on the drawing board, and we are talking 
about two.
    I mean, this isn't a partisan issue here. I mean 
Republicans and Democrats got to figure out how we're going to 
grow our energy in this country, our energy, not just our--it's 
not going to happen through solar and wind, guys. Is it? You 
guys believe we can add all this energy with just solar and 
wind and two nuclear plants?
    Mr. ROGERS. Again, the Administration is on record for 
asking for loan guarantee authority to fund the next 10 nuclear 
units, again putting in place the dollars behind making the 
first nuclear plants happen in the last 30 years. We also are 
on the record and have committed the funds to more than double 
renewable capacity in the United States.
    Mr. NUNES. Right. But if we double renewables and we build 
10 nuclear plants, it still doesn't get us to where we have to 
go.
    Mr. ROGERS. And dramatically increase the energy 
productivity of the U.S. economy, so that we continue to be an 
advantage against China in a global race to--for wealth 
creation for U.S. citizens.
    Mr. NUNES. Thank you, Mr. Chairman.
    Chairman LEVIN. It's been, I think, useful. You went over, 
but I think a useful exchange.
    And now we turn to Mr. Larson.
    Mr. LARSON. Thank you, Mr. Chairman.
    Chairman LEVIN. And then Mr. Blumenauer will be next, and 
then Ms. Brown-Waite.
    Mr. LARSON. I want to thank you both for your testimony and 
your service to the country.
    And along a similar theme that has been struck as it 
relates to manufacturing--and I appreciate the efforts both by 
the congress and certainly by the Administration to invest in 
alternative forms of energy--I have a specific concern about 
fuel cell technology.
    And again, I compliment the Administration, to the extent 
that they have moved forward in this area. But I would note in 
alternative fuels, with respect to projects that were funded 
through 48C, as you have discussed earlier, and in section 
1603, only 7 programs were fuel cell-related, whereas in 
section 1603, over 350 projects focused on solar electricity.
    And while I clearly recognize the importance of other 
alternative fuels, I note that nations like Germany, nations 
like Korea, the aforementioned China and others, are moving 
aggressively forward in these areas. And while Congress has 
provided a health tax incentive, I would like to further 
understand the Administration of--the Department of Energy's 
commitment along these lines, which is a value-added 
manufacturer that the United States really--we will lose 
manufacturing capability and our innovation capability if we 
continue to cede ground to other nations.
    Recognizing that transitions to a hydrogen economy may be 
down the road, but not that far down the road, and stationary 
fuel cells already are used in--all across our Nation, and it 
just seems to me that, especially with a value-added 
manufacturing base like this, that we need to have more of an 
emphasis there. Would you care to respond?
    Mr. ROGERS. Thank you, Congressman Larson, for that. The 
role of fuel cells is actually quite important. The stationary 
fuel cells and the efficiency that they bring today is actually 
something we were pleased that, under the 48C program, that UTC 
was one of the manufacturers who was successful in that.
    We would look forward to opportunities to expand fuel cell 
manufacturing capacity as part of an extension of 48C. It's one 
of the areas where we would like more applications to be able 
to fund more manufacturing. We were quite limited, both in 
applications and in the ability to fund.
    And so, that's a specific area where we see significant 
upside, particularly around the stationary fuel cell 
capability. This is an area that you have been quite helpful in 
your leadership on, and the Secretary clearly understands the 
role that those can play, and the efficiency of those 
technologies now, and the innovation that that technology can 
support, going forward.
    So, clearly something that we understand the role of. We 
would like to see more of it in the portfolio. Right now we are 
actually limited, in terms of the dollars, as we looked at the 
manufacturing side of that, and would welcome the opportunity 
to work with the Committee to extend that.
    Mr. LARSON. Are you--excuse me, Mr. Rogers--is there 
something we should be doing, as a Committee? Are you 
suggesting that there is more that we could do in this area, 
specifically, as it relates to manufacturing in this vital----
    Mr. ROGERS. The specific thing that we could do is the 
President has asked for $5 billion in addition to--which would 
enable us both to fund more of the applications that originally 
came in that were good applications that we were unable to fund 
because we only had $2.3 billion in manufacturing. So we have 
actually already gone through the process of ranking the rest 
of those, and so we could move that out the door quite quickly. 
That's one block.
    And, as we go forward, we have the opportunity to target 
sectors that were under represented in the first round of 
solicitations in the next round of solicitations.
    Mr. LARSON. Well, I hope you will consider fuel cells, in 
that they were vastly under represented in the awards that were 
made. And I look forward to working with the Administration on 
that.
    And I don't know if Mr. Mundaca would like to respond----
    Mr. MUNDACA. Not much to add, except again to continue to 
make the plug for the additional funds for the extension of the 
48C program. We think it was very successful. We did leave a 
lot of great projects on the table. We know there is interest 
from people who didn't apply to come back forward now.
    So, again, we would greatly encourage the continued 
leadership of the committee on this issue.
    Mr. LARSON. And, last, I know we're going to hear from 
another panel, and particularly from Boone Pickens, but the 
Administration's position on natural gas and the great 
resources that we have in this country--most recently, I guess, 
statements from people like Morgan Stanley, that there are 
being close to 200 years of reserves in shale.
    Mr. ROGERS. The U.S. natural gas resources are an 
extraordinary endowment, one with--and it's been one of the 
most exciting developments, really in the last decade, is the 
depth of the resource that's available here, in the United 
States. It is clearly part of the U.S. solution for a long time 
to come, and we are quite excited about the developments that 
have occurred here.
    It is one of the less-told stories. The Department of 
Energy spent 10 years investing in unconventional gas 
technology. In the nineties the industry said, ``Hey, this is 
pretty good,'' and it was ready to go, and the industry took it 
from there. And it's been a great collaboration between 
government and the private sector, to open up vast new 
resources.
    Mr. LARSON. Thank you.
    Chairman LEVIN. Mr. Blumenauer.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. I would just begin 
by seeking your help to assist Mr. Camp in finishing his chart, 
which I thought was very useful, but it doesn't tell the story 
about what has happened in the course of the last 2 years. He 
has a little tiny increase in renewable energy, but he doesn't 
talk about what the impact was in installed energy. Installed 
energy in the last 2 or 3 years, we have seen renewables go up 
dramatically. We haven't seen any new coal plants. We haven't 
seen nukes in 25 years or more. No new hydro.
    But what we have seen--my understanding is, and there is 
some great information from Pew; I know you have it--if we 
could just have the next chart that talks about what's happened 
with the incentives that we have had through the Tax Code, 
through the economic recovery package, that has produced 
something like 22.5 percent compound increase in wind, for 
instance, in the United States. That's the story. I think it's 
three times renewables over coal in 2009.
    So, let's--if we could help Mr. Camp finish the chart, I 
think it would illustrate why what we're talking about is so 
important.
    I am pleased in your testimony you talk about re-
implementing the superfund tax. As it happens, I have 
legislation before this Committee that would reimpose the 
superfund tax that was allowed to expire, and has turned our 
superfund program into a stall, sue, and study program. And all 
of us have superfunds in or near our district sites that could 
benefit from this. I am hopeful that you will work with us on 
the Committee, so that we can have a hearing and get busy on 
enacting this specific provision that you are interested in.
    In the main, I think those proposals make a lot of sense. I 
would ask for some evaluation about one of them, where you're 
talking about taking away the deduction for tertiary 
injectants, because we are in a--have a serious problem dealing 
with coal, carbon capture, and sequestration. This is an 
example of where some in the petroleum industry are able to 
sequester carbon, squeeze more productivity out of existing 
wells, and we are removing it from the atmosphere.
    I think we have the potential of learning a way to deal 
with coal capture and--carbon capture and sequestration. This 
might actually be a negative. And I would respectfully request 
that you help us analyze what the impacts are.
    I have got a concern about the way Treasury is valuing 
certain grants in lieu of the solar ITC. And because time is 
limited, I won't bother you with it now. But I would like to 
submit a vexing question that I got from one of my constituents 
about trying to make this program work, and being able to 
discuss this with your staff to see if we understand it right, 
he understands it right, and what might come forward.
    Finally, I am--I have legislation, H.R. 4599, to create a 
direct payment program for the Recovery Act section 1603. I 
don't think we are going to be in a position where we want to 
just have a grant that may or may not continue over time that 
can be disrupted and actually doesn't necessarily go as broad.
    The legislation I have would make it possible for other 
potential investors to be involved, like real estate investment 
trusts and tax-exempt entities opening up new avenues of 
capital. And I would love to have a chance to work with you 
folks in the Administration to analyze whether this might be a 
way to be able to do it more efficiently, expand the number of 
players that are involved, and do something that might be a 
little better in the long run than the Recovery Act's grant 
program under 1603.
    And I welcome any comments that you would have about 
reimplementing the superfund or other aspects touched on in 
sort of this fuselage that I have thrown your way.
    Mr. MUNDACA. Well, thank you for that, Congressman 
Blumenauer. A couple of things. You raised a lot of very good 
points.
    On tertiary injectants, there are other incentives for 
carbon sequestration technologies. We should work together to 
make sure those are operating properly, and perhaps there is a 
way to have the tertiary injectants proposal, which we have, as 
you mentioned, proposed to repeal, work properly with the 
carbon sequestration incentives we would like to make 
available.
    On, I think, the issue you raise under 1603 with respect to 
certain solar projects and valuation, we are aware of that 
issue. I believe there are meetings at Treasury today with an 
affected taxpayer who is questioning the methodology used for 
valuation. We will continue to engage on those, but welcome the 
opportunity to brief your staff and engage on that, if you 
would desire.
    And then, as well, with respect to 1603, yes, we would very 
much like to speak about if there is a way to have that program 
made more effective.
    Chairman LEVIN. Thank you very much. Ms. Brown-Waite.
    Ms. BROWN-WAITE. Thank you, Mr. Chairman. And I thank the 
gentlemen for being here this morning.
    The Senate climate bill now is apparently going to have 
some increases in gasoline taxes. Where is the Administration 
on this proposal of increasing gasoline taxes? And either one 
of you could----
    Mr. ROGERS. We haven't seen the Senate climate bill as yet, 
so we are looking forward to it, as I'm sure this Committee is, 
as well. And at that point we will be able to evaluate the 
various elements in it. But we are not familiar with the 
provisions, currently.
    Mr. MUNDACA. Yes, we haven't seen it yet, and we will 
assess it in the context of looking at the overall bill.
    Ms. BROWN-WAITE. Okay. So the Senate, in a vacuum, has come 
up with this. They haven't consulted with Energy Department at 
all. Is that what you're telling me?
    Mr. ROGERS. We have, from time to time, had conversations 
with various senators about various provisions, but we are not 
familiar with the provisions of the Senate bill that you 
described, and specifically the gasoline tax provisions. We 
read about them, too.
    Ms. BROWN-WAITE. Well, at a time when, you know, the 
economy is struggling, this would be the least positive time to 
ever add a tax increase on gasoline.
    The other question I have is I have a nuclear power plant 
in my district. And they have applied for an--to build another 
one about 10 miles away, also in my district in Florida. And 
what they wanted to do to ``create jobs,'' because I thought 
that's what this Administration was about, they sought 
permission to do some pre-construction, basically ground 
moving, and were denied.
    How can we say that we are encouraging nuclear power, when 
this kind of obstruction exists in the building, in the 
construction of nuclear power?
    And then I have another question about a tax break. So if 
either one of you gentlemen would like to, respond to that.
    Mr. ROGERS. So I'm not familiar with the specific decision 
in the case of the plant in your district. I am aware that the 
works are actually being constructed on several nuclear power 
plants in the United States currently. And so I suspect there 
are some unique situations there, but I'm not familiar with the 
specific case you cite.
    Ms. BROWN-WAITE. It happens to be Progress Energy. If you 
would like to look into it and get back to me, I would 
appreciate it.
    The other thing is I've got several small renewable diesel 
refineries. I have one in my district and another one near my 
district. And the owners of these two businesses were led to 
believe that if they bet their life savings to invest in 
renewable energy, that the tax credits would be there to make 
this business model viable.
    Well, we all know the Senate failed to pass the extenders 
bill. And many of those businesses actually had to stop 
production of that renewable diesel almost immediately, and the 
other one has limped on for months. The owner that was 
contacted, his name is Stu Lin, and he has tapped his remaining 
savings to service the company's debt and keep 30 people 
working for him, off the unemployment rolls.
    After speaking with Mr. Lin on Tuesday, the issue became 
crystal clear. Here is what he said to me, and I'm going to 
quote him, ``If extenders aren't done in 30 days, I am closing 
my doors. I am not kidding. I have tried my best. I just cannot 
rely on the government as a business partner any more.''
    And he went on to say, ``The government makes a big deal 
about consumer confidence surveys. Why on Earth would 30 guys 
working for me have any confidence?''
    You know, I think we need to realize that when we're 
talking about jobs, it's important that, you know, it's not 
just talking about them, but helping out there in the private 
sector to create these jobs. Now, obviously, these two firms 
are--had created jobs. One of them is still holding on to 30 
employees.
    But when I'm back in my district and people say to me, 
``Where are the jobs,'' I tell them, ``Unfortunately, it's up 
here in Washington, because the bureaucracy is growing.'' It's 
not the private entrepreneur down there who is getting any 
help.
    Could--I would like to hear from you. And I know that this 
is a follow-up to Mr. Doggett's question. You know, why aren't 
we pushing this more? Why isn't the Administration pushing that 
more in the Senate so that these businesses can continue?
    Mr. MUNDACA. Thank you for that. I share your desire to 
move the extenders bill as quickly as possible, and we are 
doing all that we can. I think if you have suggestions about 
what more we can do, we are certainly willing to talk.
    But we would like that bill to be completed as soon as 
possible. We have had some encouraging signs. But again, I 
think there are still major issues with respect to offsets that 
need to be discussed. We have been involved in those 
discussions in trying to supply as much as we can to move this 
forward.
    But again, I do share your desire to get that bill done, 
and on the President's desk as soon as possible.
    Ms. BROWN-WAITE. These are real jobs. Thank you, Mr. 
Chairman. I know I went over a little bit.
    Chairman LEVIN. Okay. If I might add, I am hopeful that the 
extended bill could pass before Memorial. And I would hope we 
could have bipartisan support for it, which hasn't been true.
    There is the issues which need to be worked out, but 
clearly that bill--which has now passed the Senate, as well as 
having passed the House--needs to be worked out. And we are 
trying very diligently to work out the issues and see if we can 
pass it here in the House, and to pass it in a--one form or 
another. And the Senate is going to require 60 votes there. And 
I would hope we could work together on a bipartisan basis.
    Up until now, the extended bills haven't passed on a 
bipartisan basis here, and it did pass in the Senate with, I 
think, five or six Republican votes. So let's work on it, and 
try to get it done well before Memorial break.
    All right. Next--and thank you for raising that--next, Mr. 
Kind.
    Mr. KIND. Thank you, Mr. Chairman. Thank you for holding 
this important hearing, and I want to thank our witnesses for 
your presence and testimony here today, and the 
Administration's strong support in trying to work with us and 
the American people to develop a new energy policy for a new 
century. And one way of doing it is obviously through tax 
incentives and the code that we have working with us.
    But even outside of the issue of climate change or global 
warming, this is the right thing to do for our Nation, as far 
as getting the economy back on track, creating good paying 
jobs, for national security implications, to be better stewards 
of the natural resources that we have, and empowering people in 
their own communities, so they have more control over their 
energy destiny. And through a combination of this, and 
hopefully working in a bipartisan fashion--not only on the 
extenders bill, but also hopefully with a future tax incentive 
bill that we will have coming up before this Congress--and 
working with the Administration, we can put those policy 
proposals in place in order to achieve the desired results.
    Let me just cite a quick study for you. And I want to ask 
both of you for your comment on this. But last year McKinsey 
and Company issued a report which states that the U.S. could 
cut its energy use up to 23 percent below the projected U.S. 
demand level by 2020, just by boosting efficiency, and saving 
over $1.2 trillion in energy costs.
    And I believe one of the best ways to create jobs and 
improve energy efficiency is by creating incentives for 
conservation like energy-efficient retrofits such as is the 
basis of a couple of bills that I have introduced, one with 
Mike Thompson, H.R. 4455, Expanding Industrial Energy 
Efficiency Incentives Act, and H.R. 4226 that I have introduced 
with Representative Reichert from Washington, Expanding 
Building Efficiency Incentives Act, just by creating the 
incentives for buildings to be more energy efficient, improving 
the bottom line of most companies, which I think is going to 
lead to direct job growth, then, which is exactly what we need 
in this country.
    And I am wondering what the Administration's position is on 
incentives for increased building efficiency, as being offered 
in a couple of the bills that I have cited, and other ideas 
that are percolating around here.
    Mr. ROGERS. Energy efficiency is sometimes referred to as 
the first fuel. It is the highest return investment that we can 
make in reducing greenhouse gas emissions, and in reducing our 
dependence on foreign oil and other sources that are at risk.
    So, clearly, a focus on energy efficiency is enormously 
important. The President has talked about the Home Star 
program, and I understand that that's actually ready to be 
introduced here in the House today.
    The opportunities in the industrial sector are enormous. 
One of the programs that we funded additionally under the 
Recovery Act are a set of industrial energy efficiency audits 
that go out and give businesses, if you will, ``Here is the 
menu of investments that you can make.'' These turn out to be 
high-return investments for businesses. One of the great things 
is if you give a business owner a way to save money, they act 
on it very, very quickly. And so it's one of the things that we 
have been quite excited about.
    Same thing is true in the building sector. We have a 
building stock that is not efficient on a global basis. Where 
the investment opportunity puts money back in people's pockets, 
it makes the environment cleaner. And so these are high-return 
investments for the U.S. economy. I actually worked on some of 
the earlier pieces of that in my former life, and believe that 
this is one of the highest return investments that we can make, 
as a Nation. It makes us healthier, it makes us wealthier, it 
makes us safer, all at the same time.
    Mr. KIND. Well, I have been in conversations. Obviously, 
one of the largest manufacturers in my district in western 
Wisconsin, a train company producing high efficiency chillers, 
and they indicated to me that with the right incentives, there 
is no reason why that plant can't expand, create jobs right in 
the domestic market in order to meet an increasing domestic 
demand, as long as, you know, the standards for efficiency get 
updated and the incentives are in place. So, again, I think 
this is a tremendous opportunity for job creation right in my 
area.
    But what I have also noticed in western Wisconsin is an 
increase in investment and production of biogas, methane gas 
from landfills and that. What is the Administration's thought 
as far as that being a part of the energy puzzle that we're 
moving forward on?
    Mr. ROGERS. So two observations. First, the--one of the 
opportunities we had under the 48C program was to invest in at 
least 25 different appliance manufacturers, because the 
opportunities, whether it's air conditioning or consumer 
appliances to improve efficiency, is very, very high. And the 
U.S. has a set of the leadership positions in these 
technologies. We really want to extend that.
    In terms of biogas, clearly an important part of the 
equation, both from the energy side and from the environmental 
side. The methane emissions are quite large. That has serious 
CO \2\ implications. And so again, you get a double benefit: 
you reduce pollution and you improve the energy balance. And 
the technology has moved a long way to making that compatible, 
just with the existing gas grid.
    Mr. KIND. Let me finally ask you--I wish I'd brought the 
article along; I just read it and I forgot--it was a Wall 
Street Journal about how Europe is way out ahead of us in 
regards to landfill use for energy purposes, and why the United 
States is lagging in that area. And I guess maybe we can follow 
up with you at some point and find out why that is, because I 
think we're missing a great opportunity here.
    Thank you, Mr. Chairman.
    Chairman LEVIN. Thank you. Mr. Pascrell.
    Mr. PASCRELL. Thank you, Mr. Chairman. Mr. Chairman, the 
credit we have been talking about here in section 1603, Mr. 
Mundaca, the sole requirement to get the credit or grant is 
that the alternative energy facility be in the United States of 
America. That's the sole requirement. There is no incentive, 
there is no requirement, for domestic content that I can find. 
Taxpayer dollars have been and are being used to fund the 
purchase of foreign-manufactured goods and components for use 
in such projects.
    I want to go back to what my good friend from Wisconsin 
just talked about. How can you have an energy policy and you 
not have a manufacturing policy? It would seem to me that both 
of them go hand in hand, that if you do not have a strong 
manufacturing national policy to stabilize the base of the 
infrastructure, the infrastructure continues to crumble and 
continues to be out of the 21st Century and still back in the 
19th century.
    I think that this is a critical message to take back to the 
Administration, that they must develop a manufacturing policy 
to ensure manufacturers in this country that they are serious 
about this, that this is not simply an esoteric thing we're 
talking about, when we talk about energy policy.
    In light of the reports of foreign parts making up the bulk 
of 1603 projects, what steps is the Administration taking to 
see that a domestic content incentive or requirement is 
included as part of the 1603 program, going forward?
    Mr. MUNDACA. Thank you for raising those important points. 
Again, the Administration did and does recognize the importance 
of addressing the manufacturing aspect of this, the supply 
side, not just the demand. 1603, as you mentioned, is the 
demand. You're buying the components. The 48C that we have been 
talking about, that the Administration is proposing to more 
than double, is with respect to the construction in the United 
States and the manufacturing facilities that are going to 
supply the components that people need to transition to clean 
energy.
    Mr. PASCRELL. Well, what would it take to provide in 1603 
such a provision? Because, you know, I can cite some projects 
under this 1603, these projects, where most of the parts of 
that particular project came from China, or came from another 
country. I don't see what the purpose of that is, if we are 
trying to create jobs here, and trying to strengthen our 
manufacturing policy.
    Now, look. You can talk all you want about strengthening 
the manufacturing policy. I am asking you a very direct 
question. Show me where you're talking more--you're doing more 
than talking, this Administration, about establishing a 
manufacturing policy whereby--and I will repeat, if I may, Mr. 
Chairman--you are stabilizing the infrastructure of the 
manufacturing sector of our economy. Show me.
    Mr. ROGERS. So when the Vice President asked for the 
additional $5 billion for the 48C program, he explicitly did 
that in the context of a view that said we have to grow 
domestic manufacturing. It is not enough just to grow domestic 
development. We have to grow development, manufacturing, and 
innovation together, because unless we do that, all of a sudden 
we innovate and the jobs go overseas, or we develop and we 
import.
    So, it is clearly the Administration's position that we 
need to be making that investment in manufacturing. That is why 
we have asked for the additional funds.
    Mr. PASCRELL. And it would seem to me to make sense, then, 
based upon what the Vice President has said, that we provide a 
portion of 1603 to direct that those parts be manufactured in 
the United States of America. Otherwise, we are defeating the 
very purpose of what we are trying to do. Aren't we?
    Mr. ROGERS. The vast majority of parts under the 1603 
program are, in fact manufactured in the United States. And 
what the 48C program is doing is enabling us to raise the 
domestic content, systematically.
    The challenge that we face is if we were--the U.S., 
particularly against certain components, has significant 
limitations in domestic manufacturing capacity today. So if we 
were to impose a buy American provision on it, what it would do 
is it would actually restrict the number of projects that we 
can do. Our task is to grow that manufacturing base.
    Mr. PASCRELL. Mr. Chairman, I hope you were listening to 
the very distinguished panelists, both of them that we have. 
They are saying that we don't--he is saying that we don't have 
the capacity to build the parts that we need in manufacturing 
in this country, which is my very point, because we have shut 
down manufacturing in this Nation, for a number of reasons--
which is not the subject of this panel.
    But what the gentleman is saying--what Mr. Rogers is 
saying; excuse me--is that we don't have the capacity, even to 
manufacture these parts. And yet we know we had the capacity to 
manufacture these parts at one time. We don't have a 
manufacturing policy, Mr. Chairman, period. And we can't 
compete with China unless we do that.
    Chairman LEVIN. And the purpose of 48C is to help develop a 
manufacturing policy in the U.S. And we will talk another time 
about what requirements there may be in terms of our WTO 
obligations. That's a different issue, though it's a very 
relevant issue.
    So, if we might go on--and we will talk a lot about it--48C 
is an effort, a major effort, to develop what has not been true 
here, a manufacturing policy for the United States.
    Now, let me suggest this. Those who haven't questioned have 
been very patient. I think this is going to work out okay. We 
are supposed to start the next panel at 1:00. We are supposed 
to have a lunch break. There is lunch available for those who 
want to grab it across the hall. And I'm not sure when the 
votes will be on our tax bill. It's a Ways and Means bill 
that's on the floor now, I think, and that's why I think Mr. 
Camp is not here.
    Mr. DAVIS, you are next.
    Mr. DAVIS of Kentucky [continuing]. Thank you, Mr. 
Chairman. I think Mr. Pascrell brings up a very germane point 
on the issue of slating manufacturing and energy policy 
together.
    I have a very strong belief, based on my professional 
experience in manufacturing, that we do have the capacity to 
produce these parts. But from a regulation and energy 
standpoint, it's prohibited.
    You know, one statement that I think ties in Mr. Nunes's 
comments, that are very complimentary to what Mr. Pascrell 
said, is that--dealing with the issue of increasing GDP and 
increasing energy costs at the same time. You can't do that. 
It's not possible.
    You know, when the President made the statement that his 
cap and trade program would ``necessarily cause utility rates 
to skyrocket,'' he has moved to enact on that, but what we're 
seeing, in fact, is a reduction in manufacturing capacity, to 
Mr. Pascrell's point, in the very heavy industrial areas, the 
machine tool operation areas, that would complement the so-
called green energy program.
    And I think we run into a substantive issue here, that 
alternative energy is multiples of three, four, or five times 
the cost per kilowatt hour for industrial electricity to 
produce these same goods.
    If I could shift subjects slightly to another aspect of 
industrial energy, the EIA has predicted that OPEC will have 
increased influence over the world market in 2010 and 2011, 
basically because of decreased production from the non-OPEC 
markets, including the United States. In the short term energy 
outlook, they go on to state that OPEC's share of world liquid 
fuels market is going to grow to a stunning 42 percent by the 
end of next year. And, in addition, what that would do is 
increase their ability to increase prices, because they control 
more of the supply chain.
    Well, I'm glad the Obama Administration has shown some 
interest in expanding our offshore production. I'm a little 
confused why the vast majority of our resources are still off 
limits, and I am concerned about this, in conjunction with the 
reactionary restrictions on coal mining permits, and the 
Administration-backed proposals that support $39 billion in tax 
increases on fossil fuels over the next decade. It's only going 
to hamper our effort to reduce dependency on foreign energy and 
maintain affordable electricity for millions of Americans.
    Coming from a part of the country that has among the lowest 
utility rates in the Nation, our senior citizens are being 
faced with an across-the-board 40 percent rate proposed 
increase because of these very regulations right now.
    Here is my question for Mr. Rogers. Do you think that 
restricting and limiting domestic energy production from proven 
energy resources like coal, and increasing taxes on domestic 
fossil fuels, will better enable us to reduce our dependency on 
foreign energy?
    Mr. ROGERS. I think the set of programs that we are 
beginning to put in place under this Administration go a long 
way toward reducing our dependence on high-risk sources of 
energy.
    Mr. DAVIS of Kentucky. I----
    Mr. ROGERS. We have made a set of commitments to 
restructuring the transportation sector and changing the fuel 
mix in ways that will drive down gasoline demand.
    Mr. DAVIS of Kentucky [continuing]. If I could reclaim my 
time, sir, just one question. You talk about higher-risk 
sources of energy. How is it going to be--I'm trying to 
understand. Are you putting coal, which is the majority of 
energy production in the United States--are you going to say 
that's high-risk energy production? Just yes or no.
    Mr. ROGERS. There is a good deal of pollution risk from 
coal. There are important risks on different sources of energy. 
But clearly, coal is a risky energy source.
    Mr. DAVIS of Kentucky. Even though coal production will 
comply with EPA clean air standards.
    The question then, though, that you haven't answered is, by 
limiting their production, how are you going to enable us to 
reduce our dependency?
    If I see my constituents having a 30 or 40-percent increase 
in their utility rates, that's not having a positive effect on 
the region that actually makes goods and produces energy and 
grows food in the United States. I am trying to understand 
this.
    Mr. ROGERS. So under the Recovery Act, we are investing 
$3.4 billion to try to demonstrate that carbon capture and 
sequestration is economical within the next decade. So we are 
clearly trying to make sure that the coal that we produce in 
this country we can use in this country, both economically and 
environmentally and in appropriate fashions.
    So--and I think the other part is if you take a look at the 
broad base of proposals we put forward, driving energy 
efficiency across the board for American homeowners, should 
reduce homeowner bills and----
    Mr. DAVIS of Kentucky. If that's the case, then, every 
Democrat on the Committee voted against the $7,500 tax credit 
for the purchase of energy star-rated home energy items in the 
stimulus bill last year in the energy title. It was my 
amendment. And I think there is a dissonance in terms of the 
stated priorities and what is actually being put in operation.
    I think, finally, you know, if you feel that sacrificing 
fossil fuels for green energy is necessary, I think the real 
question is why would the Administration choose to pick winners 
and losers when the technology is clearly not there, A, to 
provide this cost incentive? And then, B, just as a follow-up, 
why, in fact, would we impose these increased rates, saying 
that it, in fact, is going to cut overall costs, when in fact 
it creates a disincentive for investment?
    Chairman LEVIN. I think, Mr. Davis, your time is up. If you 
don't mind, let's move on so everybody can finish, unless--
well, how about 10 seconds' worth, Mr. Rogers.
    Mr. ROGERS. The good thing is we're not choosing winners 
and losers. We're running a great competition in the history of 
American entrepreneurship that has really created a competitive 
playing field across innovative technologies that will position 
the United States for long-term leadership across a range of 
energy technologies.
    Chairman LEVIN. All right. Some liked your answer, and I 
think some probably did not.
    Mr. DAVIS of Kentucky. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Crowley, you are next. And then, Mr. 
Davis, you are next, unless two others come before your turn.
    Mr. Crowley.
    Mr. CROWLEY. Thank you, Mr. Chairman. Let me first thank 
you for continuing this Committee's and this congress's vote to 
develop incentives for our Nation to wean itself off of foreign 
oil.
    Pollution is an issue. We need to create green jobs in the 
new economy. Like Democrats said in the nineties, it is vital. 
But I believe the most important reason is our national 
security. The more we export our dollars to hostile oil-
producing nations, the more we export our security and our 
national sovereignty. Green jobs isn't just a cute catch 
phrase, it's one of the most important national security 
actions we can take.
    And I want to start my questioning about the programs set 
up by the Federal Government to increase domestic production of 
green energy at home, and create jobs here in the U.S., while 
having the great effect of weaning the U.S. off of foreign oil 
and making us more energy-independent.
    One program encourages green manufacturing domestically, 
including--that's what my colleagues have alluded to--
legislation that I am in the process of developing with 
Congressman Scott Murphy of New York, who is both a businessman 
who has real-world experience in creating jobs in this country, 
but also someone who sits on the House Armed Services 
Committee, and knows the threats that our Nation faces every 
day.
    Assistant Secretary Mundaca, how did Treasury, with the 
consultation of the Department of Energy, determine which 
projects would be chosen for the 48C domestic manufacturing 
program that was alluded to throughout many questions this 
morning? I have noticed a lack of awarding to the fuel cell 
community, as Mr. Larson alluded to earlier. Was there a list 
of those that had previous private sector venture capital 
investment consideration?
    I believe that the American Government should help 
incentivize private sector manufacture in the U.S. So what were 
the lessons that were learned in this process, both positive 
and negative, from this tax incentive program? And before you 
answer that, I just want to--because time is--so keep that in 
the back of your mind, and time is of the essence here.
    I want to get--my other question is I want to touch on the 
issue of ethanol, which was discussed privately before, and the 
Government incentives for the ethanol program in the Tax Code. 
Last year I introduced the Affordable Food and Fuel for America 
Act, which would phase out the $5 billion a year subsidy for 
gasoline refiners who blend corn ethanol into gasoline, 
eliminate a tariff on imported biofuels, and increase funding 
for the cellulosic biofuel production tax credit.
    I introduced that bill because I am concerned about the 
impact of the subsidy on our food prices, as well as our 
overall deficit, and as well as the impact that it has on green 
energy.
    As the renewable fuels standard requires oil companies to 
buy and blend 12 billion gallons of ethanol into gasoline this 
year, and 15 billion gallons in the year 2015, we already have 
a mandated requirement for the consumption of ethanol in the 
U.S. So is this tax incentive for the production of ethanol 
still needed?
    And, if you could, answer both those questions.
    Mr. MUNDACA. Well, thanks. I will try to be brief. We look 
forward to working with you. This issue on ethanol has been 
raised, as you know, by a number of different congressmen, and 
we look forward to engaging on this as we take forward a more 
comprehensive review of energy policy and energy incentives in 
the Tax Code.
    I am sure Mr. Rogers will have more to add on the criteria 
used for the 1603 program. We follow the statutory provisions 
that--we looked to a number of criteria in assessing the 
projects. As we mentioned, we had a lot of great projects that 
didn't get funded, not because they weren't good projects. You 
know, we simply ran out of money, which is why, on the 48C, we 
are looking to get additional money for that.
    Fuel cells were some of the projects that were not funded 
but, again, technically met the requirements, just didn't get 
the funding.
    Mr. ROGERS. And just quickly on the process, this was a 
broad-based competitive peer review process. We had almost 400 
reviewers involved. We had technical reviewers, we also had 
business reviewers. And so each proposal got three reviews. 
Those that made it across a certain threshold then went through 
a set of peer--merit review panels to get two more reviews 
before we could make the final selection decisions.
    And then, the only other piece that we layered on was the--
on the margin we tried to make sure that we were focusing 
marginal dollars in high unemployment districts. And so, as a 
policy factor, what we tried to do is if the manufacturing 
facility was in a high unemployment area and it was on the 
margin, we brought it in.
    Mr. CROWLEY. Let me just ask if you can further define a 
``high unemployment area.'' Was that areas that had job loss 
recently, or was it communities that have sustained job loss 
over a period of time, many years, considered as well in that?
    Mr. ROGERS. We were looking at the absolute unemployment 
rate in each of the different counties that----
    Mr. CROWLEY. As defined by the Department of Statistics, 
or----
    Mr. ROGERS. As defined--I believe it's a Department of 
Labor statistic.
    Mr. CROWLEY. That's what I'm saying, labor statistics. So, 
okay. I would like to talk a little more about that with you at 
some other point, and not to take up the Committee's time. But 
thank you, Mr. Chairman.
    Chairman LEVIN. Under the rules, Ms. Schwartz is next, and 
then Mr. Boustany. We know you have to go to the floor. So 
you----
    Ms. SCHWARTZ. All right. We will try and do this relatively 
quickly. Two points I wanted to make, and I wanted to thank you 
for your testimony. I actually feel like this should be a 
little more exciting hearing, and--because I think some of the 
comments you have made are really important in how we are 
really moving ahead toward a cleaner, greener economy, and the 
producers of alternative sources, and it does it in a smart 
way.
    So, I think we should be--I think, Mr. Rogers, you actually 
expressed this several times, about what the future brings and 
how we're really moving in a very different direction. While 
continuing, obviously, to use fossil fuels, we are really 
looking in other ways, both through clean technology and also 
energy efficiency.
    So, one quick comment and then--which I would like you to 
consider. Some testimony has been submitted by some groups I 
have been working with on--they're usually referred to as 
historic tax credits. We are interested in--and I have been 
working with them. I have legislation to modernize the historic 
tax credits.
    One of the best, most efficient things we can do is use 
older buildings, rather than build new ones, and I have--one of 
the pieces of my legislation actually provides additional 
incentives for more energy-efficient retrofits of older 
buildings. I think this fits in very well with what the 
Administration is trying to do. I would ask the Administration 
to take a look at that, in working with the Committee, to 
possibly move ahead. Love that to fit into one of these pieces 
of legislation, moving forward.
    Also, renovation of older buildings actually creates good 
jobs. It's reuse. We ought to make them more energy efficient 
at the same time. So I would ask you to take a look at that.
    The other piece I wanted to talk about was really being 
able to extend the 1603 provisions to bio-refineries. I 
mentioned this to both of you earlier. You had talked about how 
important the biofuels production industry is, can be, should 
be, in terms of really adding job growth and also real economic 
value, and really using not food sources, but biomass that 
would be able to be turned into cleaner energy. We know that 
there are a number of industries--some in Pennsylvania--that 
are moving ahead on this.
    One of the barriers is the high cost of building 
refineries. My understanding is, looking through the list of 
the very successful use of 1603, is that it has not been used 
for bio-refineries, and it's not really able to be.
    So, my real question for you to look at--again, whether we 
could do that in legislation moving forward here or in any jobs 
package or in a future energy bill--is, is there a way for us 
to use tax incentives and grants, particularly in lieu--these 
are not companies that are making money, and so they really 
need to be able to get--use some of these kinds of provisions--
for them to be included, these--the building--really moving to 
production.
    This is for other kinds of biomass. We know this is 
potentially a great source of homegrown clean energy. And I 
want to see us be able to move ahead, use some of these tax 
provisions. And I think, Mr. Rogers, if you could, just briefly 
answer how you see that fitting in to some of the provisions we 
already have used so successfully in other areas.
    Mr. ROGERS. So, first observation is that the 1603 and 48C 
programs, again, are among the most successful programs under 
the Recovery Act for job creation.
    Another program under the Recovery Act has put more than 
$600 million into 19 biofuel facilities to really establish the 
economics of cellulosic and next generation biofuels. The 
ability of the United States to take a leadership role--
biofuels are enormously important for what we're trying to do 
in the transportation sector. The ability to reach the next 
generation of biofuels with the new technologies available is a 
very exciting area of innovation that we have been funding with 
the grant programs, and we would be happy to work with Congress 
to figure out what the appropriate tax structures are to move 
that forward.
    The only other observation I would make is our general 
counsel has worked very closely with the states on historic 
preservation, trying to make it easier to do energy efficiency 
in historic buildings, and we have actually established some 
things with the Council of Environmental Quality to make that 
much easier for historic buildings. And so we would be happy to 
work with you on that, as well.
    Ms. SCHWARTZ. That would be great. Thank you very much, and 
I yield back.
    Chairman LEVIN. Thank you.
    Mr. Boustany.
    Mr. BOUSTANY. Thank you, Mr. Chairman. Mr. Mundaca, let me 
start with just a yes or no question. Is it the official 
position of the Obama Administration that we have an over-
production of oil, U.S. oil?
    Mr. MUNDACA. I don't think there is any official position 
on the level of production of oil.
    Mr. BOUSTANY. Well, because it's in your written testimony, 
it is riddled throughout the budget proposal. And also, I 
received a letter from Secretary Geithner about a year ago that 
has the same statement. It basically says, ``To the extent that 
credits''--referring to fossil fuel credits--``encourage over-
production of oil, it is detrimental to long-term energy 
security.'' So, I find a little bit of an inconsistency here, 
and I have deep concerns.
    We all want to get to a comprehensive energy policy. We 
know there are some very exciting biofuel possibilities down 
along the horizon. But the key question for this Committee is 
the transition strategy. How do we transition? And we need to 
have a realistic transition strategy.
    And, Mr. Rogers, I was very encouraged to hear that you are 
excited about the new developments of shale, natural gas. And I 
think many experts in the field believe that natural gas is 
going to be a key component of our short-term transition 
strategy.
    So, is it the position of the Administration to penalize 
American natural gas production? That's my next question.
    Mr. MUNDACA. With reference to the tax provisions, again, 
as I have mentioned, what we are seeking to do is remove those 
subsidies from the Tax Code that we think are inefficient 
that----
    Mr. BOUSTANY. I have heard that. But I think there is a 
little bit of a disconnect, as probably has been mentioned by 
Mr. Tiberi and others earlier, in that when you talk to our 
independent oil and gas producers, these are the small 
companies. These are the ones that have been responsible for a 
lot of our domestic production, whether it's oil or gas--and 
particularly, natural gas now. They are going to be penalized 
by these provisions.
    I have talked to a number of companies and just to put it 
in real terms--this is anecdotal, but I suggest you really need 
to go and listen to these folks. A small producer says, ``I 
will produce 10 gas wells under current law.'' If these tax 
provisions, a repeal of these certain tax provisions occurs as 
proposed in the Obama budget, I will go from 10 wells to 1 
well. So that's going to hurt our natural gas product of 
which--97 percent of it is domestically produced. It's going to 
hurt American jobs, American energy production.
    And so, I have a deep concern about this, and I think 
before the Administration and this Congress moves forward with 
the repeal of these types of provisions, we better really 
understand the facts on the ground.
    Now, I heard you earlier, in response to a question, saying 
that overall there would be no effect on energy production, or 
a very small effect. And by implication, on job production. I 
don't think that's right. I agree with what Mr. Tiberi said 
earlier, and I would urge you to speak to those who are in the 
business of doing this, to understand what the real impact is 
going to be.
    I sent a letter to Secretary Geithner last year, asking 
what would be the impact on American energy production jobs, 
and it's not just the producers, but it's the welders and the 
mechanics and all the others, a lot of blue collar jobs, good 
paying blue collar jobs. And I have yet to get an answer. And 
your statement earlier is not really backed up with any 
substantiation with regard to what this impact would be on 
jobs.
    So, again, getting back to my original point, we need a 
realistic transition strategy. And I understand where they're 
trying to go with biofuels. The third and fourth generation of 
biofuels is very exciting. But we can't penalize current energy 
production without having all of this ready to go. You need the 
proper sequencing.
    So, I would urge you, please, to speak to the industry 
directly to understand what the impact is going to be on 
American energy-producing jobs, and energy production in this 
country.
    Mr. MUNDACA. Well, thank you, Congressman. We are more than 
willing to engage with anyone who has suggestions about the 
effects of these proposals.
    I believe when Dr. Alan Krueger, Chief Economist of 
Treasury, testified before the Senate last year, his analysis 
indicated again less than 1 percent effect, with respect to 
production on oil and gas from these proposals, I think less 
than one half----
    Mr. BOUSTANY. And there have been rebuttals to his 
suppositions and proposals.
    Mr. MUNDACA. I understand, yes.
    Mr. BOUSTANY. And so, I think it's incumbent upon the 
Administration and this congress to get the facts, and get the 
facts on the table.
    Mr. MUNDACA. We understand.
    Mr. BOUSTANY. Thank you. Mr. Chairman, I yield back.
    Chairman LEVIN. And thank you. Mr. Davis of Illinois, and 
then Mr. Etheridge.
    Mr. DAVIS of Illinois. Thank you very much, Mr. Chairman. 
And I want to thank the witnesses for their endurance.
    Job retention, job creation. No matter who I talk to, if 
they're involved in public policy decisionmaking, are very much 
concerned about these issues and have them high on their 
priority list of problems that have to be met and resolved in 
our country. So there is a great deal of hope riding on energy 
conservation, green technology development, finding new sources 
of energy. And when people talk about where will new jobs come 
from, or where can we get jobs, this is one of the places that 
we seriously look.
    Two questions. One, why should Americans really be so 
optimistic that this new emphasis will actually create jobs and 
work opportunities for those who find themselves lacking and 
wanting?
    And two, many argue that labor supply in what we call 
disadvantaged areas, disadvantaged communities, are among 
minority populations, often don't have the skills necessary to 
actualize the opportunities that may very well exist. And so, 
my question there becomes what is the Administration doing or 
proposing that will provide the training opportunities to make 
sure that these affected groups can, in fact, make use of this 
new opportunity that we are all hoping is going to be created?
    Mr. ROGERS. Let me take one shot at that, Representative 
Davis. The--we should be optimistic, because this is, at its 
core, what the United States is best at doing. This is about 
innovation, entrepreneurship, and being ahead of the curve.
    And the opportunity that we have, particularly in the clean 
energy arena, is a set of technologies where the United States 
has a clear global leadership position, where we have not 
historically converted that into the kind of manufacturing 
leadership position that creates the kind of long-term, 
sustainable, good-paying jobs that this country was built on in 
the post-World War II period. And our challenge is to really 
recapture that leadership, recapture leadership in 
manufacturing. And this Committee has been essential for making 
that happen.
    To your point, if we can get the capital formation, 
particularly on manufacturing, we then have the challenge of 
making sure that we have a world class workforce that's able to 
take advantage of these opportunities. And so, we've been 
working very closely with the Department of Labor. Secretary 
Chu actually was out last week, talking about $100 million that 
we were going to spend to train people to be able to implement 
the smart grid investments that we laid out, the smart grid 
investment grants, because it's quite clear that what it takes 
to maintain a smart grid infrastructure is very different than 
what it took to maintain grid infrastructure that was built on 
technologies from the forties.
    And so, we are investing, in that case, $100 million in 
partnership with the Department of Labor in a set of specific 
communities, trying to build those capabilities. And we have 
got to do that in multiple other areas to make sure that we 
have the workers who can take advantage of these opportunities.
    Mr. DAVIS of Illinois. Is the collaboration also taking 
place with Treasury, in terms of the tax incentives that are 
part of the overall effort?
    Mr. MUNDACA. They are. What we try to do--and some of it is 
longer term, some of it is shorter term--is carry out the 
President's focus on education and worker training. There are a 
number of tax provisions addressing that. The American 
Opportunity Tax Credit that was part of the Recovery Act, 
again, part of the longer term efforts to get American labor 
supply skills up to where they need to be.
    And again, as well as incentivizing hiring of persons in 
disadvantaged communities, and disadvantaged categories, a work 
opportunity tax credit as well. So again, the Administration is 
very focused on this issue of increasing the skills in labor 
supply, and providing incentives for hiring people from 
categories that perhaps are disadvantaged.
    Mr. DAVIS of Illinois. Thank you very much, Mr. Chairman. 
Thank you, gentlemen.
    Chairman LEVIN. Mr. Van Hollen, your turn.
    Mr. VAN HOLLEN. I thank you, Mr. Chairman, thank both of 
you gentlemen for your testimony. I am going to submit, in 
writing, a technical question regarding the scope of the 
residential renewable energy tax credit. I would appreciate if 
you could get back to me on that.
    Two questions, one related to biofuels. And as we move 
toward the next generation of biofuels, based on non-food 
feedstock, many of us believe that the federal incentives 
should be technology-neutral. So, for example, algae in other 
sort of next generation biofuels, would be on a level playing 
field with cellulosics. And I assume the Administration shares 
that position, that as we try and design these incentives, they 
should, in fact, be technology neutral, so we are not providing 
a bigger subsidy, arbitrarily, to one or the other, that it's 
based on the science and the technology. Is that right?
    Mr. MUNDACA. That's right. We look forward to working with 
you. These are difficult technical decisions to make about the 
level of subsidies that are in parity across different 
technologies. And again, we look forward to engaging on that to 
make sure we have done that right.
    Mr. VAN HOLLEN. The next issue relates to the amount of 
investment as a Nation that we need to be making in clean 
energy technology in order to meet our goals, our National 
security goals, our jobs goals, our climate change goals.
    And as much as we are doing now, it seems to me we need to 
take a quantum leap forward if we're really talking about the 
kind of jump that we want to make in this technology, and to be 
able to compete with the Chinese and others that are making 
enormous national investments in this area. In this connection, 
I want to commend the Administration, the Department of Energy, 
for working to get out the door the section 1703 loan 
guarantees, and those who are originally part of the 2005 
energy legislation. And more of those projects have been 
financed in the last year than in the previous 4 years. So I 
commend you on that, and also commend you on working with the 
new authority under section 1705 as part of the recovery bill.
    But my question is, just looking at those two programs and 
at least the amounts of money currently allocated to that, 
doesn't it make sense to look at how we can create a mechanism 
that will allow a lot more, in terms of leveraging private 
investment?
    Clearly, I think we've done a good job when it comes to 
providing incentives for cutting edge technologies, but I am 
focused more on established technologies that have already been 
proven effective, where you have lots of people looking for 
capital on the sidelines. And as part of the energy bill that 
passed the House, we had a clean energy bank idea. There are 
different proposals floating around.
    But I just want to get your sense about whether or not, 
given our current level of programming, you believe we can 
leverage what I believe is probably hundreds of billions of 
dollars of private investment that will be needed if we're 
going to reach the goals that we set out nationally, and that 
the President set out. What is your view of that path toward 
the future?
    Mr. ROGERS. With the Recovery Act, we were able to make a 
downpayment on the Nation's energy and environmental future. 
And the 1705 program was critical to enabling us to begin to 
make loans.
    The capital formation challenge ahead of us is very large. 
Energy has historically been one of the sectors that has been 
slower to innovate, in part because of the scale challenges and 
the capital formation challenges.
    And so, as we look forward, we want to build on the 
successes of things like 1603 and 48C that this Committee has 
been so important in leading, because that created a tax 
incentive structure for driving us forward. And we need to make 
sure that that links up with how the capital markets create 
capital behind that.
    And so, you know, as we have talked with the congress, we 
are looking for ways to make things like loan capabilities over 
a long period of time. Right now, we have a set of funding 
under the Recovery Act. We are going to run out of that. We've 
asked for more funds on nuclear, we've asked for more funds on 
renewable energy. And that's going to sort of take us through 
another budget period.
    I think the opportunity and the challenge is, how do we get 
capital formation on a consistent and systematic basis across 
the next decade or two decades? And that, I think, is the 
opportunity both in the Tax Code and then, you know, as you 
described more broadly, the capital formation challenge is 
something we have to think about holistically.
    Mr. VAN HOLLEN. Right. Well, I am looking forward to an 
ongoing conversation on that, because I think that what we have 
done is a very good start, and we would not be as far along as 
we are without the efforts that have been undertaken to date.
    But I still think we've got to take a quantum leap forward, 
especially in finding ways to get a lot of the private capital, 
which I think is interested in moving into this area, but 
understand some of the risks. But given the fact this is a 
national priority, for security reasons and for jobs reasons, 
and for a whole range of other reasons, including the climate 
change issue, it seems to me we need to supercharge this 
effort, and we look forward to working with you on that. Thank 
you, Mr. Chairman.
    Chairman LEVIN. Thank you. Under our rules, Mr. Heller, you 
are next. And then it will be Mr. Etheridge, Mr. Higgins, Mr. 
Pomeroy, and Ms. Berkley. So, Mr. Heller?
    Mr. HELLER. Thank you, Mr. Chairman. I want to----
    Chairman LEVIN. Unless you want to yield to--no, you don't 
want to do that.
    Mr. HELLER. I feel sorry for him, I really do. Thank you, 
Mr. Chairman. And I want to thank the witnesses for being here 
today. And there is some light here at the end of the tunnel, 
so thanks for hanging in there for some of us here in the end.
    I want to shift our attention briefly here to geothermal 
energy. In the State of Nevada, of course, it's a huge source 
of potential energy, and it's a safe, clean, and effective 
source that can be used for large-scale commercial or even 
small-scale residential. So it's very versatile.
    I had a meeting in my office 2 days ago with the National 
Association of Counties. Mostly the smaller counties, the more 
rural areas in Nevada, and this could be effective in six or 
seven other western states. But this is their concern. I am 
glad you're here, because I told them I would bring this to 
your attention, and that is in last year's interior 
appropriations bill it essentially repealed the provision in 
the 2005 Energy Policy Act that allowed for revenue sharing 
with local counties. And the royalties are about 25 percent. 
When you have a community of 20,000 to 25,000, or a local 
county of 20,000 to 25,000, $2 million to $3 million can be 
pretty--it's a large amount of money. And they use that for all 
sorts of issues, whether it's for education or health care or 
some of the other welfare causes, but they also use it to 
develop these renewable resources.
    And so, there is some consternation right now that I am 
seeing with these counties because of the lack and the loss. 
And they are even more concerned, because the Administration, 
in this year's proposed budget, continues to promote this 
policy of removing these royalties to these local governments.
    So, the question is this. And being here from the Treasury, 
Mr. Mundaca, to promote green jobs and renewable energy, would 
you agree that the goal of creating green jobs is negatively 
affected by this policy?
    Mr. MUNDACA. I would have to look at it more carefully. I 
am not familiar--I don't know that there is a tax component to 
it, but I can certainly look into what the revenue sharing 
provision is that you are concerned about.
    Mr. HELLER. Okay. To clarify, though, it is 25 percent. So 
it goes to these small counties, and they use it, of course, to 
develop this energy.
    I have a bill out with Mr. Thompson, a bipartisan bill, 
that would reinstate these royalties. And I am certainly hoping 
to get the support from the Administration moving forward, so 
that we can help develop this.
    Mr. Rogers, you mentioned something about wanting to double 
in 4 years. I think this really stunts the growth of geothermal 
energy if these smaller counties can't share in the revenue 
produced with this energy.
    I want to touch on one other issue quickly, because I know 
my time is short. But that also has to do with transmission 
lines. Transmission lines are important, especially in large 
rural areas, in getting this energy from rural areas to the 
more urban areas. And we are making decisions with this 
Administration that runs contrary to the ability to put these 
transmission lines in place.
    As an example, we have just listed as potential on the 
endangered species list a sage grouse. And sage grouse is 
currently a bird that is being hunted regularly in Nevada, and 
yet it's about to create massive--nearly insurmountable--
hurdles to develop renewable energy in getting that power to 
the urban centers.
    So again, I guess the question is similar to the above in 
stating one goal of promoting renewable power, and then acting 
in a completely different direction and counterproductive 
fashion.
    So, I guess the question remains, what is the 
Administration's plan, if there is one, to address transmission 
lines needs in the west, and wouldn't you agree that this sort 
of management and conflicting policy goals is a problem? Mr. 
Rogers, I will leave that with you.
    Mr. ROGERS. So, Secretary Salazar, Secretary Chu, Chairman 
Wellinghoff have been actually working quite closely together 
on both the transmission siting issue and on the renewable 
siting question, because it involves all three of those 
different departments in making those decisions. One of the 
things that is actually working quite well is the collaboration 
across those departments, to make sure that we get some 
coherence across those programs.
    So, we have been accelerating, as I think you may have 
seen, the siting of renewables in--through the bill of land 
management. And there has been a very important collaboration 
that has expedited the pacing of that to move much faster than 
it historically had.
    We are also doing the same thing around transmission. There 
is a very clear--in the west, the Western Governors Association 
has provided terrific leadership, in terms of creating an 
architecture for what the transmission system needs to look 
like in the west, and we are working very closely with them to 
make sure that that actually comes to pass. We started under 
the Recovery Act, actually through the Western Area Power 
Authority, making loans to one transmission line so far, and we 
have another set ready to go.
    Mr. HELLER. Thank you. Thank you, Mr. Chairman. My time is 
up.
    Chairman LEVIN. Mr. Etheridge.
    Mr. ETHERIDGE. Thank you, Mr. Chairman. Let me thank both 
of you for your perseverance.
    Mr. Davis talked about jobs, and let me carry that a bit 
further, because it's more than about jobs, it's really about 
jobs, the economy, and really, the long-term future. But I come 
from a state and from a district that has a lot of farmers, a 
lot of rural, small business people and communities that really 
rely heavily on energy. And the truth is, we have a designed 
policy in this country to have cheap energy. I mean that's what 
has driven our economy for a long period of time.
    And so, an issue that will profoundly impact everybody back 
home is what happens to energy and how it goes up and down, and 
we know what's happened.
    And it also has a significant impact on our economy. And 
it's been estimated that renewable energy, or energy efficient 
industry, has created or supports about 10,000 jobs, just in 
North Carolina alone. And so, whether you call it green energy 
or whatever you call it, it's win-win.
    So, my question--because I think it does two things, it 
helps the economy and it also frees us from the grip of foreign 
oil. And in just one example, I have one company that happens 
to be in my district that was in the 31st year in a little 
small rural county, and they produced a substantial amount of 
the enzymes for alternative fuels. And they employ about 500 
people and the whole global biofuels market operation, the R&D 
and Department of Energy projects, and others.
    So, my question is this. These projects will be 
cornerstones, or projects like them for the next generation of 
domestic production in advanced biofuels, bio-based 
productions, specialty chemicals, et cetera. Can we expect the 
Administration to increase funding for programs such as bio-
refinery assistance programs? Because I think that's a critical 
part of it, to expand this to include production of bio-based 
materials, chemicals, and products. I think we have to get 
beyond just fuels, but get to chemicals and products related to 
it.
    Mr. ROGERS. We are clearly looking forward, Congressman 
Etheridge, to working with Congress to figure out what the 
scope of any provisions going forward are. Advanced biofuels 
are an important part of meeting our energy and environmental 
goals. Clearly, the enzymatic components to that are an area 
where U.S. innovation is putting us ahead.
    And I think the opportunity, going forward, is to really 
structure both comprehensive energy and climate legislation and 
tax policies as part of that, to really make sure that we are 
advancing the state of the art quite quickly, and making sure 
U.S. leads both in innovation and in manufacturing of each of 
those pieces.
    Mr. ETHERIDGE. Because those chemicals are a critical part 
of that right now.
    Mr. Mundaca, you ran down a whole list of tax proposals 
that the Administration is looking at, as far as pulling back 
some of those brakes. And it looks like my time is out. But I 
would just say, what does the Administration have in place as a 
safety valve? Because as we start to move down this road, if we 
see huge spikes in energy costs, we're going to have a huge 
pushback, and we've got real problems.
    Mr. MUNDACA. I will be brief. Yes, we do understand that. 
Again, our analysis of the ones we have proposed to pull are 
less than one half of 1 percent effect on production prices, et 
cetera. But obviously, we are open to further discussion of the 
effects of what we've proposed.
    Mr. ETHERIDGE. Thank you, Mr. Chairman. I look forward to 
that opportunity.
    Chairman LEVIN. Mr. Higgins, would you like to inquire?
    Mr. HIGGINS. Thank you, Mr. Chairman. The United States has 
5 percent of the world's population and about 28 percent of the 
world's economic growth. We're leaders in virtually every area 
of innovation. But I think in the development of alternative 
energy sources, we have fallen behind. And I think the rest of 
the world is rising behind us.
    And I think the reason for that is that our tax incentives 
are highly fragmented. We have a lot of stops and starts. In 
order to send a price signal to the financial markets and to 
manufacturers to embrace this new technology, I think you have 
to have a very aggressive and sustained tax incentive program 
to get them to embrace this new technology.
    Give you an example. It's a great American company called 
Applied Materials. Applied Materials makes the machinery that 
makes microchips that are in our computers. The Chief Executive 
Officer of Applied Materials about 6 years ago saw the 
volatility in the chip market. So he figured he had to add 
something new to the business line. Using nanotechnology, using 
silicon, Applied Materials decided to make the machinery that 
makes solar panels. A highly successful business. They have 14 
factories throughout the world. Problem is, 95 percent of their 
business is outside of the United States.
    Last year, the industry brought in--or that company 
realized $1.2 billion in revenues. So why is it that there is 
this great American invention by an American innovator, but yet 
there doesn't seem to be the market in our country, which 
should be leading in this regard, relative to the product, the 
machinery, that he is creating?
    As everybody has said here, you know, we use these tax 
incentives to signal to the markets. So they have to be 
stronger in both depth and duration to provide the private 
sector the kind of tax incentives that are necessary to embrace 
this economy, and create real jobs with a real future.
    And I think, to underscore the importance of this, over the 
next 40 years we will add 2.5 billion people to the global 
population, and they will all consume energy. This is an 
opportunity that Germany has taken advantage of. This is an 
opportunity that China has taken advantage of. And this is an 
opportunity that quite--it's perplexing that the United States 
is not as effective in embracing this early on, and creating 
the kind of jobs in this economy.
    Mr. ROGERS. So, thanks to this Committee, we are increasing 
U.S. competitiveness globally in these key areas.
    I think, as you described, consistency in the tax message 
and a clear price on carbon and other pollutants are essential 
for making sure that we continue that competitiveness over a 
long period of time.
    Mr. MUNDACA. Yes, I will be brief. We have heard the same 
concerns, even from Applied Materials themselves. They have 
come in to see us about the uncertainty in the Tax Code, the 
fact that there are changes from year to year, provisions 
expire. The Administration is very cognizant of the effects of 
having these temporary provisions on long-term planning.
    We propose to make the R&D tax credit permanent. I think in 
the context of a comprehensive energy policy, we need to think 
about building in more permanent incentives, so that planning 
can continue, the businesses can know the incentives that are 
there today will be there in 5 years--most of them don't plan 
year-to-year, they plan at least 5 years out. They need to know 
what it looks like 5 years out on the tax side.
    Mr. HIGGINS. Thank you.
    Chairman LEVIN. Mr. Pomeroy, would you like to inquire?
    Mr. POMEROY. Thank you. Thank you, Mr. Chairman. I 
represent North Dakota. We have coal, oil, wind, ethanol, 
biodiesel. We have it all, and I have got, therefore, 45 
minutes of questions for you to get in in 5 minutes.
    Let's start. Is basically increasing energy self-
sufficiency a central tenant of the Administration's energy 
policy?
    Mr. ROGERS. Yes.
    Mr. POMEROY. Perfect. In that regard, let's talk about the 
biofuels, to begin with. The tax credit in support of biodiesel 
has expired. Does the Administration support restoration of 
this tax credit?
    Mr. MUNDACA. We propose to make the tax credit available 
through the end of 2011.
    Mr. POMEROY. That's good enough for right now. The tax 
credit for ethanol is expiring at the end of this year. Does 
the Administration support steps to continue to some 
dimension--we will talk about how long--the continuation of the 
ethanol tax credit, or does it favor having it lapse at the end 
of this year?
    Mr. MUNDACA. Again, it's part of the general extender 
package that the Administration included in the budget. I have 
heard here today there are a lot of different views about that. 
We have offered to engage on that, but the budget proposal, 
again, was to extend it through the end of 2011----
    Mr. POMEROY. Well, this was--to 2011. In this respect, the 
budget proposal is very well taken--maybe modest, but well 
taken. There are very strong feelings on both sides of the dais 
in favor of biofuels. We either have completely--the promise 
they propose, in terms of ramped up production, creation of 
discernable--you know, making a difference in our energy 
supply, increasing prosperity across rural America, putting 
people to work, generating throughout the entire distribution 
chain positive economic activity in excess of 100,000 jobs with 
ethanol alone, at the time we need it.
    The--in addition to that, I--so I strongly favor continuing 
a policy that supports ethanol and domestic ethanol. That would 
mean continuing tariffs, as well. If you are moving toward 
self-sufficiency--if self-sufficiency is a central tenant of 
our goal, we don't want to move to imported ethanol, like we've 
been so dependent on imported oil.
    Now, on to fossil fuel production. Mr. Rogers, your 
background in this area, senior partner at McKinsey, the oil--
American petroleum practice a substantial part of what you did 
with McKinsey, I think you can give us some technical 
information that would be helpful. This business of intangible 
drilling costs actually--I don't know where the word 
``intangible'' comes from, but this is--these are basically 
expenses of putting in the well and paying for people to do it, 
is that correct?
    Mr. ROGERS. So I'm not an expert, actually, on oil and gas 
tax policy. So I would actually defer to Mr. Mundaca on that.
    Mr. MUNDACA. That's right, they are the costs with respect 
to the planning going into the drilling. And the tax issue, as 
I'm sure you know, is whether those need to be included in the 
cost of the asset produced, and therefore depreciated over 
time, or whether they are immediately expensable.
    Mr. POMEROY. My sense is that--and I don't mean to--I see 
that my time has elapsed. It deserves extensive discussion. But 
even wages, under the Administration's proposal, would be 
amortized. That makes no sense. I mean I don't believe we take 
the package of tax proposals relative to oil, as recommended by 
the budget, advance them without having a substantial impact on 
our continued developing domestic production.
    The President now talks about offshore drilling. Well, 
offshore drilling? How about onshore drilling like places like 
North Dakota? These are heavily supported with the present tax 
structure. And I believe that the financing and the 
considerations of continuing this kind of development, 
especially with independent producers, will be impacted by the 
proposal. Thank you, Mr. Chairman, I yield back.
    Chairman LEVIN. Ms. Berkley, you have been so patient. You 
have the last.
    Ms. BERKLEY. Mr. Chairman, thank you very much for your 
patience, and thank you both. I represent Las Vegas, Nevada. We 
are a state with one major industry, and that isn't doing very 
well right now. So I look at energy independence and the 
development of renewable energy as a lifeline for the State of 
Nevada for many reasons.
    One is I think developing renewable energies is important 
for our national security interests. I think it's important for 
our environment. But I think it's--it could be very important 
for our economy. We can create a whole new economy based on 
green jobs and green technology. You know that our senior 
senator, the Majority Leader, is very engaged in these issues, 
and I support his efforts.
    I am a former utility company attorney. I worked for 
Southwest Gas Corporation in a prior life, so I am a big 
advocate for natural gas, and I am glad that we are moving in 
that direction. But I want to talk to you about harnessing sun 
and wind and geothermal, as my colleague from northern Nevada 
spoke of, and the need to develop the--or create the 
transmission lines.
    We, the State of Nevada, could become an exporter of green 
energy to the other western states, and we are very excited 
about that, as well. So I am glad that we are moving in that 
direction. We need to move there with all deliberate haste.
    But there are a couple of things I wanted to bring up 
that--what I would like to see, and discuss this with you very 
briefly. I would like to see a modification of the combined 
heat and power, CHP, investment tax credit to include waste 
recovery systems, also known as recycled energy. As you know, 
recycled energy creates emissions-free clean power and 
currently receives no tax benefits.
    I also would like to see a CHP tax credit increase from 10 
percent to 30 percent for highly efficient systems. I have a 
letter that I would like to submit for the record that has--in 
support of this from 85 corporations, industry associations, 
and so forth.
    I would also like to see----
    Chairman LEVIN. Without objection, it's entered into the 
record.
    [The information follows:]
    Ms. BERKLEY. Thank you very much, Mr. Chairman. I would 
also like to see the creation of a 30 percent tax credit for 
energy efficient motors. I have witnessed them personally at 
McCarran Airport in Las Vegas, and at our Las Vegas Convention 
Center. We have energy efficient motors powering the 
escalators. It has saved these public entities a small fortune 
in energy costs. We need to develop that. And if we can 
incentivize it with a 30 percent tax credit, it will not only 
lower our energy costs, but it will create very important jobs 
that certainly the people in my district can use with 13.9 
percent unemployment in the State of Nevada.
    What do you think about those two proposals?
    Mr. ROGERS. Industrial combined heat and power facilities 
are very important for the competitiveness of U.S. 
manufacturing facilities. The opportunity in the United States 
for expanding that is very large, and it's something that we 
actually had $100 million under the Recovery Act to fund. We 
were 10 times over-subscribed with great projects. This is an 
area that really is important for making U.S. manufacturing 
more competitive.
    Similarly, things like high efficiency electric motors are 
quite important for the ability of U.S. manufacturers to lower 
their energy costs. Very high return investments. And to your 
point, I think the key question is how do we make sure that 
those manufacturers have the--and building owners--have the 
capital in order to fund those kind of projects.
    Ms. BERKLEY. And the legislation that we will be 
considering, do you think that we will be able to put--do you 
think it's worthy of our consideration to put the tax credits 
in for energy efficient motors in our CHP?
    Mr. MUNDACA. I have a copy, I think, of the letter you 
referenced with the list of the companies supporting and with 
the legislation, I think, from Representative Tonko and 
Representative Inslee as well, and we will certainly take a 
close look at that.
    Ms. BERKLEY. I appreciate it. And one other comment in 
closing. For those of my colleagues who are so gung ho on 
nuclear power, if they can figure out what we can do with the 
nuclear waste, other than putting it in the State of Nevada, I 
would be more than glad to consider expanding nuclear power. 
But until we figure out what we're going to do with the waste, 
it's a no-go as far as the people that I represent are 
concerned.
    Chairman LEVIN. And with that further example of the 
tenacity of our colleague from Nevada, to put it mildly--
tenacity we admire--we want to thank you for your tenacity. 
From Treasury, you have been so helpful, and from the 
Department of Energy, we want to thank you for being here for 
so long.
    I think this has been an eventful hearing, and has laid the 
groundwork and our panels will follow for some further 
legislation building on what has been undertaken in recent 
times.
    So, thank you. I think what we will do is to adjourn--
recess for 7 minutes, sending word out to everybody, our 
colleagues, that we will start with the second panel at 1:15.
    And thanks again to both of you.
    [Recess.]
    Chairman LEVIN. The Committee will come to order. Thank 
you. It took an extra 5 minutes to have a cookie for lunch. 
Just wait a minute so our colleagues can gather.
    All right. We have had a really interesting morning. We 
planned this so that our distinguished second panel did not 
have to be here for the entire morning.
    I am not sure if you had reports on the testimony, but it 
was very germane, I think. We had some effective back and forth 
between our colleagues and the two representatives of Treasury 
and Energy.
    Let's begin. Under our procedures, we will follow the same 
order, I guess, as we did this morning in terms of those who 
inquire.
    I have been told that the Minority agrees we will try to 
limit our inquiries to 4 minutes instead of the five. Is that 
okay? We will try. I will try to enforce it.
    Here we go. Thanking all of you on this very distinguished 
panel. I will introduce each of you, kind of go down the row. 
Then if you will just take over one after the other and submit 
your testimony. It will be in the record, but follow whatever 
procedure you would like in terms of referring to it.
    First, no stranger to this place, we welcome you, Mr. 
Pickens, T. Boone Pickens, who is Chairman of BP Capital of 
Dallas, Texas.
    Victor Abate, Vice President of Renewables with General 
Electric. We had the pleasure of visiting with the Chief 
Executive Officer of General Electric yesterday. He could not 
be here, but we are pleased, Mr. Abate, that you could be here.
    Next, Dr. Jeffrey Sachs, who is known to many of us, who is 
the Director of The Earth Institute at Columbia University.
    Next, Dr. Joseph Romm, who is a Senior Fellow at the Center 
for American Progress.
    Finally, we also look forward very much to your testimony, 
the Honorable Karen Harbert, who is President and Chief 
Executive Officer of the Institute for 21st Century Energy at 
the U.S. Chamber of Commerce.
    Welcome, all of you. More of our colleagues will be coming 
in shortly.
    Mr. Pickens, welcome. We look forward to your testimony.

      STATEMENT OF T. BOONE PICKENS, CHAIRMAN, BP CAPITAL

    Mr. PICKENS. Thank you. Chairman Levin, and I have to 
mention my friend, Chairman Rangel, there on your right, 
because we have worked on this in the past, as you well know.
    Chairman LEVIN. We did.
    Mr. PICKENS. Chairman Levin and Members of the Committee, 
thank you for the opportunity to testify here today.
    Let me begin by telling you something my father once told 
me. He said son, a fool with a plan can be a genius with no 
plan. He and my mother were worried at that point that they 
were raising a fool that had no plan.
    America has not had an energy plan for 40 years. Every 
President since Richard Nixon has pledged to reduce our 
dependence on foreign oil. President Obama had pledged to 
eliminate our dependence on OPEC oil in 10 years. We can do 
that. It is not easy, but we can do it. If we do, President 
Obama will be the only one, the only President, to have made 
good on that promise.
    We are witnessing the greatest transfer of wealth in human 
history, sending more than $1 billion a day to foreign 
countries for oil. Not only that, but because this Committee 
has jurisdiction over trade, I know you will be interested in 
this.
    In January 2010, our trade deficit for the month was $37 
billion; $27 billion of that money was spent overseas to import 
oil. That means foreign oil is responsible for approximately 
three-quarters of our trade deficit.
    When do we stop investing in OPEC and start investing in 
America?
    With the plan I have outlined and spent a good bit of time, 
money and energy in promoting, we will enhance the economy, 
improve the environment and resolve the national security 
threat inherent on our dependence on foreign oil, much of it 
from OPEC and many nations who do not have our best interests 
at heart.
    The Pickens Plan has 1.6 million members. They are the new 
energy army and they are with me here today watching this 
hearing on the Internet.
    We have to go American for power generation. That means 
renewables like wind and solar, nuclear, natural gas and clean 
coal.
    I am for anything that is American. Two-thirds of our 
foreign oil is used as transportation fuel. Building more 
nuclear plants or more solar wind farms will not make a dent in 
dependence on foreign oil. However, they will help, not on 
foreign oil though.
    The only way we can solve the OPEC oil threat is by 
replacing their expensive dirty fuel with cleaner, cheaper 
American natural gas. Natural gas or anything else that is 
American. Ethanol. Anything American, I am for.
    Study after study shows we are awash in natural gas. We 
have well over a 200 year supply by current estimates. We are 
going to look like fools if we do not use natural gas for 
transportation.
    You have the legislation, the Natural Gas Act, H.R. 1835. 
It will provide tax credits to fleet owners to offset the cost 
of going to natural gas trucks as they retire existing 
vehicles.
    The best group outside of the Marines--if we start out to 
give a mission to some group in America, the best group you 
could give it to would be the Marines. The Marines are not 
available for this mission, but this mission could be carried 
out by America's truckers. I think America's truckers look like 
Marines. Give them a job and they will do it.
    If you Members of Congress point the way, we will start to 
solve our foreign oil problem.
    Let's dismiss two concerns I hear over and over. First, 
Government does not have a role in this. Let the free markets 
work, they say. If you think OPEC is a free market, you are a 
sap.
    China is using state owned banks to finance state owned oil 
companies to lock up decades of oil production all over the 
world, including Iraq.
    This really does annoy me, that we went to Iraq 8 years 
ago, we spent $1.5 trillion. We got 31,000 of our people 
injured and 5,000 were killed. We left Iraq with nothing that I 
can see.
    Who got the oil? China. China did not put a dime into that. 
They did not lose one person. They are going to develop two oil 
fields in Iraq. One is the largest oil field in Iraq, which is 
Rumaila. It is 15 billion barrels. The largest oil field we 
have ever had in America is Prudhoe Bay, 14 billion barrels.
    They are going to be given a field that is as large as the 
largest oil field America ever had, and we leave there with 
nothing.
    Second, the skeptics say there is no natural gas fueling 
infrastructure. Forget it. Let's look at our free enterprise 
system. If you create the market, the private sector will build 
it.
    Can you imagine what would have happened if we had told 
Henry Ford forget about building a Model T, there are no 
filling stations.
    It is easy. That part is the easy part. The resource is the 
hard part and we have the resource.
    This is about jobs. There is a lot of talk about the 
economy. We estimate the Natural Gas Act will put 236,000 clean 
natural gas trucks on the American roads. You will displace 5 
percent of the foreign diesel demand each year and create more 
than 600,000 new permanent jobs, roughly the same number of 
temporary jobs created for the 2010 Census.
    Each Class 8 truck, identified Class 8, that is a heavy 
duty 18 wheeler, Class 8, the heaviest of heavy duty, converted 
to natural gas creates six jobs. Each truck creates six jobs.
    This is just the start of it. The worse thing you can do, 
and I know this came up in a meeting I was in today, but do not 
tax the industry at this point. It is not time to tax the 
domestic oil industry.
    If you want to tax something, tax either foreign oil or tax 
gasoline, but do not take away from this industry and this 
country at a critical time when we are trying to get off OPEC 
oil and get on our own resources.
    I urge your action and I want to close with this. The best 
time to plant a tree was 20 years ago, no question. I have said 
that and you have, too. I should have planted a tree 20 years 
ago.
    Just in case you did not plant it, and we do not have an 
energy plan in America and have not had for 40 years, so if you 
did not plant the tree 20 years ago, the second best chance to 
do it is today.
    We have got to have an energy plan for this country. We 
cannot--I am running out of time. I will be 82 years old next 
month. I have to get the energy plan fixed for America because 
we cannot leave this to generations in the future.
    My grandchildren and great grandchildren, and I have 13 of 
them, I cannot go out of here without having an energy plan, 
and we have the resources. We have the resources. All we have 
to do is a plan and you have to introduce it to America, and I 
promise you, we can carry it out.
    Thank you.
    [The prepared statement of Mr. Pickens follows:]

      Prepared Statement of T. Boone Pickens, Chairman, BP Capital

[GRAPHIC] [TIFF OMITTED] T3079A.038

[GRAPHIC] [TIFF OMITTED] T3079A.039

[GRAPHIC] [TIFF OMITTED] T3079A.040

[GRAPHIC] [TIFF OMITTED] T3079A.041

[GRAPHIC] [TIFF OMITTED] T3079A.042

[GRAPHIC] [TIFF OMITTED] T3079A.043

[GRAPHIC] [TIFF OMITTED] T3079A.044

[GRAPHIC] [TIFF OMITTED] T3079A.045

[GRAPHIC] [TIFF OMITTED] T3079A.046

[GRAPHIC] [TIFF OMITTED] T3079A.047

[GRAPHIC] [TIFF OMITTED] T3079A.048

[GRAPHIC] [TIFF OMITTED] T3079A.049


                                 

    Chairman LEVIN. Thank you very much.
    Mr. Abate.

   STATEMENT OF VICTOR ABATE, VICE PRESIDENT OF RENEWABLES, 
                        GENERAL ELECTRIC

    Mr. ABATE. Mr. Chairman and Members of the Committee, I am 
Vic Abate, the Vice President of Renewables at GE Energy, and 
thank you for the opportunity to testify before you today.
    On behalf of GE, I would like to commend the Committee for 
its productive, pro-active positive steps over the past 5 
years, and especially those taken at the height of the recent 
financial crisis.
    The Energy Improvement and Extension Act of 2008 and the 
American Recovery and Reinvestment Act of 2009 made crucial tax 
policy changes that avoided a forecast 50-percent decline in 
wind installations and related jobs and resulted in a 
surprising record year of more than 10,000 megawatts of new 
capacity added to the U.S. grid in 2009.
    GE has been a significant contributor to this growth, since 
nearly one out of every two wind turbines installed in the U.S. 
is a GE wind turbine. Our $6 billion wind business supports 
over 7,000 direct and supplier jobs in 30 states. This is more 
than a twofold increase from 2005 and has been driven by 
supportive renewable energy tax policies.
    For example, two of our key suppliers, TPI Composites, a 
blade supplier in Iowa, and DMI, a tower supplier in North 
Dakota, are utilizing the advanced manufacturing tax credit 
program created in the Recovery Act to increase their 
capabilities to meet our growing demand.
    Sustained tax support for wind has also helped increase 
U.S. domestic content from about 20 percent in 2005 to 50 
percent for projects that were created in 2009. This was done 
while quadrupling production. This equates to an eight-fold 
increase in U.S. made wind components since 2005.
    The Energy Improvement and Extension Act and the Recovery 
Act include significant tax incentives for combined heat and 
power, energy efficient components, manufacturing and smart 
grid deployment.
    Another example of how these tax credits have worked can be 
seen at one of GE's appliances facilities. GE's Bloomington, 
Indiana refrigerator plant was slated to close in January of 
this year, potentially eliminating 547 full time jobs. Instead, 
the plant remains open today to produce high efficient 
refrigerators.
    Over the past 5 years, tax credits have been very effective 
by adapting to a changing environment.
    The environment going forward for green energy deployment 
will be especially challenging. The demand for wind generation 
to meet standards at the state level is down. Electricity 
demand is down. Natural gas prices are down. As a result, our 
wind customers are finding it extremely difficult to sign 
purchase power agreements with utilities at levels that can 
support project economics.
    The challenges facing developers have flowed down to the 
turbine manufacturers who have seen new turbine orders decline 
significantly from the pre-crisis levels.
    In this environment, the convertible tax credit is critical 
to stabilizing wind production for the next few years.
    The section 1603 program of the Recovery Act is available 
through 2012 for wind installations, so long as construction 
begins no later than this year. Treasury guidance requires a 
detailed tracking system to satisfy the 5 percent safe harbor 
provision.
    For a manufacturer that is mass producing 3,000 units a 
year, this represents a tremendous tracking challenge.
    Without a legislative solution, we can see a 50 percent 
drop in wind installations in 2011 and 2012.
    In the spirit of continued green energy tax policy 
innovation, I have included in my written testimony policy 
changes that the Committee may wish to consider, and that can 
have an immediate impact on green energy growth, U.S. 
manufacturing, and job creation.
    Some of these are simply the safe harbor requirement in 
section 1603, making available an additional $5 billion in 
advance manufacturing tax credits, extending the manufacturing 
tax credit for energy efficient appliances, and creating a 30 
percent ITC for highly efficient combined heat and power 
projects.
    The ability of the U.S. to keep up in the global race for 
leadership in green energy investment, manufacturing and job 
creation is tied to our ability to be innovative with our tax 
and other energy policies.
    We appreciate the opportunity to share some of our ideas 
with the Committee, and thank you for your time.
    [The prepared statement of Mr. Abate follows:]

                  Prepared Statement of Victor Abate,
                Vice President of Renewables GE Electric

[GRAPHIC] [TIFF OMITTED] T3079A.050

[GRAPHIC] [TIFF OMITTED] T3079A.051

[GRAPHIC] [TIFF OMITTED] T3079A.052

[GRAPHIC] [TIFF OMITTED] T3079A.053

[GRAPHIC] [TIFF OMITTED] T3079A.054

[GRAPHIC] [TIFF OMITTED] T3079A.055

[GRAPHIC] [TIFF OMITTED] T3079A.056

[GRAPHIC] [TIFF OMITTED] T3079A.057

[GRAPHIC] [TIFF OMITTED] T3079A.058

[GRAPHIC] [TIFF OMITTED] T3079A.059


                                 

    Chairman LEVIN. Thank you.
    Dr. Sachs.

    STATEMENT OF JEFFREY SACHS, PH.D., DIRECTOR, THE EARTH 
                 INSTITUTE, COLUMBIA UNIVERSITY

    Mr. SACHS. Mr. Chairman and Members of the Committee, thank 
you for the opportunity to be here with you. This is an 
unusually complicated topic because we do not have one 
objective here, we have at least three fundamental American 
objectives here.
    The first is energy security. Second is U.S. technological 
leadership, and the third is a low carbon economy.
    If we do not aim for all three of these, we are not 
achieving any kind of real solution for this country, and many 
of the solutions that you hear and that are proposed are 
solutions for one or solutions for the other of these, but they 
do not reach the full range of the three core solutions that we 
are going to need.
    Let me also say while job creation is obviously part of 
this, the way to understand job creation in this is that a 
sound energy policy will make a sound economy. The direct jobs 
at stake are very small relative to the size of the economy, 
but energy is fundamental for the health of the economy and 
fundamental for our competitiveness.
    If we do not have plentiful energy, if we do not have 
secure energy, if we do not have environmentally safe energy, 
we will have devastation for tens of millions of jobs.
    This is not in my opinion principally about creating jobs 
for the individuals who sell wind turbines, with all respect. I 
love GE but that is not where the big issue of employment comes 
from. The big issue is whether we have a sound energy policy in 
this country that allows for our economy to grow and to create 
plentiful jobs.
    Fortunately, the United States has many alternatives right 
now, and arithmetic is extremely important here because the 
alternatives must be large scale to be meaningful. There are a 
hundred ways to produce energy, but there are only a few ways 
that count for an economy that is the size of the U.S. economy 
and in the context of the world economy.
    Those include large scale deployment of solar and wind 
power, the revival of the nuclear industry, the safe deployment 
of large scale natural gas deposits that have been found, and 
major technological changes, for example, the transition to 
electric vehicles and the flexibility that would allow to our 
energy system.
    These technology options are extremely exciting. They each 
involve 10 to 20 year national efforts. They are not something 
that can be accomplished from 1 year to the next. This, I 
think, is extremely important to note.
    I will not describe these individual options although one 
can mention and probably I should mention very quickly, in 
scalability, solar, wind, nuclear carbon capture and 
sequestration, something we have talked about for a decade but 
have not really done almost anything on, conversion to electric 
vehicles, and energy efficiency in a variety of ways, smart 
building, smart grids, smart machinery.
    I do not believe, by the way, that biofuels passes this 
test. Certainly not the first generation biofuels which are 
ecologically and from a food supply relatively a disaster. They 
just do not pass muster when one looks either at any aspect of 
it, carbon, ecology, food price impacts and all the rest.
    These large scale technological transformations are not 
easy to achieve because they are a mix of market incentives and 
many other things. They are the development of pre-commercial 
technologies, complementarities of public infrastructure and 
private investment.
    We have a very unclear regulatory framework on nuclear, 
very unclear on carbon capture, very unclear on large scale 
grid issues. We have very unclear public acceptance and we 
completely lack a road map.
    I want to agree with what Mr. Pickens said. We have 
absolutely no plan right now. I listened to the Administration. 
There are 100 good ideas, but there is no plan. This, I think, 
is the most damaging part for our country, that we do not have 
a framework that comes close to getting this right.
    What is a plan? In my view, it is a clear national 
commitment with targets and time tables, public funding of R&D 
for pre-commercial technologies guided by a long term strategy, 
public funding for pre-commercial demonstration projects, such 
as electrical vehicle deployment.
    In targeted cities, carbon capture and storage, long 
distance transmission grids. Long term tax and other market 
incentives for targeted energy systems.
    I would strongly urge that this Committee urge, even 
insist, that the President and the Administration set forth for 
the first time an overall strategy designed to meet the three 
goals of energy security, technological leadership and 
transition to a low carbon economy.
    Within that, it would be possible to identify strategies in 
each of these respective areas.
    I think at this point, Mr. Chairman and Members of the 
Committee, we just do not know the net effect of our policies 
right now. We do not have in almost any major area of 
technology a clear road map, and we are paralyzed.
    We have been paralyzed in many of these areas for more than 
a decade, and we will not get out of the paralysis until we 
have a plan, and that, I think, within that framework, then the 
tax policy will find a natural role because it is extremely 
important at a number of places.
    We are nibbling around the edges right now without a real 
national strategy and we are not making the large scale 
technological transformation that we need to do the arithmetic 
right for our country.
    With all respect, if you look at the arithmetic, how much 
energy we use, what it means for China to be doubling every 8 
to 10 years in size, today's article about China becoming a 
major coal importer, what all of this really adds up to for our 
security in the next 20 years, we have not gotten started yet 
frankly on organizing a proper scaled, significant 10 year 
effort of an integrated strategy.
    Thank you very much.
    [The prepared statement of Mr. Sachs follows:]

              Prepared Statement of Jeffrey Sachs, Ph.D.,
           Director, The Earth Institute, Columbia University

[GRAPHIC] [TIFF OMITTED] T3079A.060

[GRAPHIC] [TIFF OMITTED] T3079A.061

[GRAPHIC] [TIFF OMITTED] T3079A.062

[GRAPHIC] [TIFF OMITTED] T3079A.063

[GRAPHIC] [TIFF OMITTED] T3079A.064

[GRAPHIC] [TIFF OMITTED] T3079A.065


                                 

    Chairman LEVIN. Thank you very much.
    Dr. Romm.

  STATEMENT OF JOSEPH ROMM, PH.D., SENIOR FELLOW, CENTER FOR 
                       AMERICAN PROGRESS

    Mr. ROMM. Chairman Levin, Members of the Committee, thank 
you for inviting me to testify.
    I worked in the House as a Science Fellow and I served as 
Assistant Energy Secretary. My message here and in my book 
``Straight Up,'' is simple, our energy policy is a Ponzi 
scheme. Michigan and the country face ruin if we do not change 
it.
    Let's start with oil. Why do the majority of veterans of 
the Iraq and Afghanistan war support clean energy and climate 
legislation? Because they know we cannot keep sending $1 
billion a day overseas to buy oil.
    In October, Deutsche Bank forecast $175 a barrel of oil 
price in 2016. The International Energy Agency's chief 
economist said in August bluntly, ``We have to leave oil before 
oil leaves us.''
    More domestic production will not solve the problem. 
President Bush said in 2006 ``America is addicted to oil. You 
do not break your addiction to alcohol by switching from 
imported beer to domestic.''
    Same for our oil addiction. Last year, the Energy 
Information Administration analyzed opening the entire outer 
continental shelf to drilling. The result? In 2030, U.S. 
gasoline prices dropped a mere three cents a gallon. Three 
cents a gallon, from opening the entire outer continental shelf 
to drilling. Not the solution.
    In 2005, President Bush said ``I will tell you, with $55 
oil, we do not need incentives to the oil and gas companies to 
explore.'' That was $55 a barrel. Today, we are at $80 a barrel 
and rising.
    We just do not need those oil incentives, yet last month 
the Senate passed a tax incentive bill that includes subsidies 
for completion of oil wells, low sulfur diesel, refined coal 
facilities, and fuel from coke. Why? Why are we doing this?
    Every year, fossil fuel consumption kills over 20,000 
Americans from air pollution alone and causes half a million 
asthma attacks, according to the American Lung Association.
    A 2008 study found prenatal exposure to coal burning 
emissions was associated with significantly lower average 
developmental scores and reduced motor development for 2 year 
old children.
    Three year old children like my daughter, they do not vote. 
It is up to us to stop subsidizing harmful fossil fuel 
pollution.
    The worse idea yet is subsidizing coal to liquids. I sat 
through many liquid coal briefings for the Defense Science 
Board Taskforce. No independent group has yet found a net 
societal benefit for making liquid fuel from coal. Any 
significant production of liquid fuel would use up increasingly 
scarce water resources. Worse, it would all but guarantee the 
worse case projections for climate change.
    When my brother lost his Mississippi home in Hurricane 
Katrina, I started talking to the Nation's top climate 
scientists. What they told me then is what the scientific 
literature says now--keeping our current energy policy risks a 
staggering nine degree Fahrenheit warming and five or more feet 
of sea level rise by century's end.
    If we did not have any greenhouse gases, the planet would 
be 60 degrees Fahrenheit cooler. Carbon pollution traps heat. 
That is why they call it a ``greenhouse gas.'' Think of it like 
a blanket. Some people claim that if you keep putting more 
blankets on, you will not keep warming. They just want us to 
stay addicted to fossil fuels.
    Carbon pollution is also poisoning the oceans, threatening 
all marine life. As a recent documentary on ocean acidification 
put it, imagine a world without fish.
    Senator Lindsey Graham said in January ``The odd thing is 
you will never have energy independence until you clean up the 
air, and you will never clean up the air until you price 
carbon.'' He also said ``Every day we delay trying to find a 
price for carbon is a day that China uses to dominate the green 
economy.''
    Our competitors understand the fossil fuel Ponzi scheme. 
They understand that in the future, we are not talking about a 
few million clean energy jobs, all jobs are going to be clean 
energy, or else we are just not going to have a livable 
climate, and that is why their governments outspend us.
    They are trying to corner the market in the technologies 
that we invented. We invented the modern solar cell. They are 
dominating the market.
    We cannot make an economy just inventing stuff and letting 
other people deploy and manufacture it. That is not the road to 
high wage jobs for millions of Americans.
    Until we have a carbon price, we need tax incentives for 
clean energy. The good news is those tax incentives work.
    The multi-year tax incentives for clean energy that the 
Committee supported in 2008 and 2009 helped save the U.S. 
renewable energy industry during the harsh recession.
    They helped increase the share of domestically manufactured 
wind turbine components in U.S. wind farms from under 30 
percent in 2005 to over 50 percent today, an amazing 
turnaround.
    We need to add or extend several incentives, including the 
section 48(C) clean energy manufacturing tax credits, the cash 
grant in lieu of investment tax credit, and incentives for 
energy recycling.
    Finally, let me just end by saying the Center for American 
Progress' Action Fund just released two reports, one on energy 
taxes and one on natural gas for heavy vehicles that I would 
like to request you place in the record.
    Thank you.
    [The prepared statement of Mr. Romm follows:]

               Prepared Statement of Joseph Romm, Ph.D.,
               Senior Fellow Center for American Progress

[GRAPHIC] [TIFF OMITTED] T3079A.066

[GRAPHIC] [TIFF OMITTED] T3079A.067

[GRAPHIC] [TIFF OMITTED] T3079A.068

[GRAPHIC] [TIFF OMITTED] T3079A.069

[GRAPHIC] [TIFF OMITTED] T3079A.070

[GRAPHIC] [TIFF OMITTED] T3079A.071

[GRAPHIC] [TIFF OMITTED] T3079A.072

[GRAPHIC] [TIFF OMITTED] T3079A.073

[GRAPHIC] [TIFF OMITTED] T3079A.074

[GRAPHIC] [TIFF OMITTED] T3079A.075

[GRAPHIC] [TIFF OMITTED] T3079A.076

[GRAPHIC] [TIFF OMITTED] T3079A.077

[GRAPHIC] [TIFF OMITTED] T3079A.078

[GRAPHIC] [TIFF OMITTED] T3079A.079

[GRAPHIC] [TIFF OMITTED] T3079A.080

[GRAPHIC] [TIFF OMITTED] T3079A.081

[GRAPHIC] [TIFF OMITTED] T3079A.082


                                 

    Chairman LEVIN. Without objection. You are next.
    [The information follows:]

   STATEMENT OF KAREN HARBERT, PRESIDENT AND CHIEF EXECUTIVE 
  OFFICER, INSTITUTE FOR 21ST CENTURY ENERGY, U.S. CHAMBER OF 
                            COMMERCE

    Ms. HARBERT. Thank you. Thank you, Chairman Levin, Ranking 
Member Camp, and Members of the Committee.
    I am Karen Harbert, President and Chief Executive Officer 
of the Institute for 21st Century Energy at the U.S. Chamber of 
Commerce.
    I am delighted to let you know that in 2008, the Institute 
actually submitted a comprehensive plan to secure America's 
energy future, to improve its environmental stewardship and 
grow our economy, and we would be delighted to continue to work 
with this Congress to actually implement those concrete 90 
recommendations to put us on a more concrete path for our 
energy future.
    Let me commend you on the timing of this hearing because 
just last week, Doug Elmendorf, the Director of the 
Congressional Budget Office, highlighted a report that forecast 
an increase in public debt from $7.5 trillion at the end of 
2009 to $20.3 trillion at the end of 2020, if President Obama's 
fiscal year 2011 budget is enacted.
    As we are examining energy policy, it is more important 
than ever that we look to options that do not further burden 
the taxpayer and provide the affordable energy that we need to 
restore the 8.2 million jobs we have lost in the current 
recession and create the more than 12 million jobs our Nation 
will need over the next decade.
    Recognizing the U.S. energy demand will increase by 
probably 20 percent between now and 2030, we need a realistic 
plan that transitions us to a low carbon future while keeping 
our Nation strong and competitive.
    It will take time. It will take investment. It will take 
technology, some of which we do not even have yet.
    Investment on the order of 1.5 to $2 trillion is needed in 
the electricity sector alone to keep it reliable for our 
economy, and for our transportation sector, we are still 94 
percent dependent on oil, and to date, we do not have a 
substitute for oil. Today, less than 1 percent of U.S. 
passenger vehicles are plug in hybrid electric vehicles.
    What are we going to do? First, we have immediate low cost 
benefits which can be realized by focusing on energy 
efficiency, particularly in the building sector and in the 
appliance sector.
    We released a report yesterday about how Federal policy can 
encourage that, and rather than going through that report 
today, I will just ask that it be included for the record.
Chairman LEVIN. Without objection.
    [The information follows:]
    Ms. HARBERT. Let me talk a little bit about renewables, 
such as wind, solar, biomass and waste energy, and they are 
going to be playing an increasingly important role in our 
energy supply, yet today, wind and solar comprises less than 2 
percent of our electricity.
    We have to be realistic about the achievable expansion of 
this important and valuable natural resource.
    Even under the Energy Information Agency's modeling of the 
Waxman-Markey bill and its significant carbon constraints, by 
2030, it forecasts that wind and solar will only comprise 6 
percent of our country's portfolio.
    The history of fiscal incentives for clean energy in our 
country is basically checkered with a boom and bust type 
philosophy. We instead would propose that we extend the 
production tax credits for renewable energy for 8 years 
followed by a 4 year phase out, which would provide for longer 
term certainty for investors, but also provide a definite 
sunset, which would ensure that tax dollars do not continue to 
support technologies that are not commercially viable.
    If you look at the U.S., when subsidies across the U.S. 
sector are compared, renewable resources continue to receive 
the largest percentage of Federal dollars, and the subsidies 
for wind and solar per unit of production are 80 times greater 
than that of natural gas and 25 times larger than that of 
nuclear.
    Let's examine some other mechanisms which actually 
facilitate investment without further burdening the taxpayer.
    Regulatory streamlining. Nearly every single energy project 
in our country is facing burdensome siting problems. We are 
suffering from a plague in our economy which is called the 
``banana syndrome.'' Build absolutely nothing anywhere near 
anything.
    The Chamber has begun to catalog these projects, all the 
energy projects proposed over the last 3 years. We have 
recorded 380 projects, representing 250,000 jobs, and $560 
billion worth of capital investments that is on the side lines 
because of abuse of the permitting process. No type of project 
is immune. Over 40 percent of these projects are in the 
renewable area.
    Congress can eliminate many of these obstacles by 
streamlining the approval process and giving investors the 
needed certainty.
    One clear example where Congress can be very helpful is in 
interstate transmission. Getting approval to site and bid a 
transmission line can take upward of 10 years. We need to fix 
that by giving FERC the authority it needs.
    Securing our energy future is in large part tied to the 
degree we are able to accelerate the deployment of capital. The 
Department of Energy's loan guarantee program is a good start, 
but we would like to see the endorsement for a clean energy 
bank like that discussed in the Senate.
    It would be authorized to provide loan guarantees and other 
financial products and ensure projects which the conventional 
markets today try to avoid. A Federal approach that focuses on 
addressing market inefficiencies rather than competing with 
existing investors is an appropriate role for Government.
    There are two other areas I would like to briefly 
highlight. One is nuclear. It is very important to recognize 
the tremendous benefits that nuclear provides for our economy, 
not only is it 70 percent of our emissions free electricity, 
but it is an economic engine with each plant contributing more 
than $430 million to its local economy, employing 700 workers 
at wage rates about 36 above the local average.
    We estimate that if the 26 plants that are currently 
pending before the Nuclear Regulatory Commission are built, 
240,000 jobs would be created.
    In the oil and gas phase, the oil and gas industry today 
employs about 9.2 million in the United States, and it would 
employ thousands more and it would contribute more in revenue 
if it was allowed to do so.
    We want to reduce America's dependence on foreign oil and 
yet the proposals from the Administration will do the exact 
opposite, constrain domestic production and increase imports.
    First, they are proposing huge new taxes, $80 billion of 
new taxes on the oil and gas industry. We tried this back in 
the 1980s, and what happened? In 1986, imports jumped 19 
percent.
    The Joint Committee on Taxation's report to this Committee 
for today's hearing notes the potential for that to happen if 
these taxes are levied on the industry today. That is a 
dangerous signal for our economy.
    Second, the proposal to actually expand production actually 
does not expand production. It only commits to studying future 
production and actually takes leases off the table.
    In conclusion, to lay the ground work for our Nation's 
energy security, our environmental protection and our economic 
prosperity, we need to pursue policies that put more energy 
options on the table for America, do not pick winners and 
losers, and certainly do not add to our exploding Nation's 
debt.
    Thank you.
    [The prepared statement of Ms. Harbert follows:]

           Prepared Statement of The Honorable Karen Harbert,
            President and Chief Executive Officer, Institute
           for 21st Century Energy, U.S. Chamber of Commerce

[GRAPHIC] [TIFF OMITTED] T3079A.083

[GRAPHIC] [TIFF OMITTED] T3079A.084

[GRAPHIC] [TIFF OMITTED] T3079A.085

[GRAPHIC] [TIFF OMITTED] T3079A.086

[GRAPHIC] [TIFF OMITTED] T3079A.087

[GRAPHIC] [TIFF OMITTED] T3079A.088

[GRAPHIC] [TIFF OMITTED] T3079A.089

[GRAPHIC] [TIFF OMITTED] T3079A.090

[GRAPHIC] [TIFF OMITTED] T3079A.091

[GRAPHIC] [TIFF OMITTED] T3079A.092

[GRAPHIC] [TIFF OMITTED] T3079A.093


                                 

    Chairman LEVIN. Thank you. We are each going to take 4 
minutes. Let me throw out a question that I hope might flush 
out what I think may be differences underlying different 
approaches.
    If you do not mind, Ms. Harbert, I am going to take a 
sentence or two out of your testimony and go down the line and 
ask each of you to comment on it.
    This is the quote. ``Investing in research and development, 
especially deployment of new technologies, will ultimately pay 
major dividends, but it is important to remember that 
government should not be in the business of picking technology 
winners and losers, and that research and development, while 
critically important, takes time.
    The role of the private sector in our future energy 
security is paramount, and we should not seek to crowd out 
their participation, capital, innovations or expertise.''
    We heard earlier from some of our colleagues warning 
against picking winners and losers. If I might ask, starting 
with you, Mr. Pickens, just comment briefly. I think there are 
differing underlying assumptions here that need to be 
discussed.
    Mr. Pickens, your comment, and then you will have the last 
word, Ms. Harbert, if my 4 minutes are not up.
    Mr. Pickens, your comment on what I just read.
    Mr. PICKENS. It is not picking winners or losers because 
you only have one resource. It is already picked. There is only 
one resource we have in America that can move in an 18 wheeler 
other than diesel, which is imported. It is natural gas. You 
cannot move it with a battery.
    I had this conversation with Senator McCain in August of 
2008. He said we cannot be put in a position to pick winners. I 
said it is not a multiple choice question, Senator. There is 
only one resource. You need to understand it, embrace it, 
explain it to the American people and move forward and get an 
oar in the water.
    We have to get something going. We cannot continue to talk 
about this subject forever. Now we are down to a point where we 
only have one resource. It is abundant. Fortunately, it is 
abundant.
    You have four thousand trillion recoverable gas. J.P. 
Morgan says eight thousand trillion in place. You cannot 
recover all that. They know that. Four thousand trillion would 
give you the barrels of oil equivalent of three times what the 
Saudi's claim they have, which I do not think they have what 
they claim they have.
    You will be three times in equivalent barrels of oil. You 
will have it in a cleaner, cheaper domestic fuel than the oil 
you are importing.
    Chairman LEVIN. Mr. Abate. In your testimony, you seem to 
be picking winners and losers. What is your comment?
    Mr. ABATE. The comments were more about where the market is 
today. When you look at the energy system and our energy 
resources long term, it is about diversification. The way we 
see it right now is with alternative energy being less than 2 
percent, the question is is it going to be everything? No. It 
clearly can be more, 5-10-15 percent, and that is a journey 
that we can go down.
    When you look at alternative energy, there is a portfolio 
of ideas in there. As a technology company, we have invested $1 
billion in wind. The cost of wind power has come down 80 
percent in the last 25 years. It is now the most commercially 
scalable alternative resource globally.
    That happened with research that was d1 years ago and then 
market support and the ability to deploy.
    When you look at the alternative energy space, I do not see 
a problem that we cannot solve. The question is we just have to 
make it very clear as to the journey we are on that this is a 
space we want to continue to penetrate with, and you will see 
companies step up to the plate and continue to invest and build 
out.
    You will see solar get more competitive. You will see other 
technologies become more competitive, as long as there is a 
long commitment that this is a journey from a diversification 
and security perspective that the country wants to be on.
    Chairman LEVIN. Briefly, Dr. Sachs.
    Mr. SACHS. Yes. Of course, we target technologies and have 
for decades. We would not have the Internet. We would not have 
a computer industry. We would not have a biomedical industry if 
we had not engaged heavily in federally supported targeting of 
technologies.
    Here, we have many areas where we know we need to go. With 
electric vehicles, we know, for example, the battery technology 
is so important, but there are many other parts of the electric 
vehicle transition that needs Federal support.
    Solar, wind, nuclear, the new grid, carbon captures, 
sequestration, are all very important large scale areas where 
we will have private and public research and development 
efforts that need to be complimentary to get the job done.
    It is complimentarities. That is how large scale 
technological change happens throughout our economy, and it is 
how it has happened for decades.
    Of course, we aim at many opportunities. Which one ends up 
being the big winners, you are never quite sure. It is not to 
go one way. If we only drove 18 wheelers, maybe there would be 
one answer, natural gas, but we drive lots of things. We use 
energy for lots of things as well. We need to go down many 
different pathways.
    Chairman LEVIN. My 4 minutes are up. I will leave it to 
others. Mr. CAMP says I can take more than 4 minutes.
    [Laughter.]
    Chairman LEVIN. Mr. Romm, be brief, if you would.
    Mr. ROMM. I have heard the phrase ``we cannot pick winners 
and losers'' from back when I was at the Department of Energy 
in the nineties. The trick is not to pick winners and losers. 
The trick is just to pick the winners.
    We know what the winners are. The winners are the 
technologies that give us clean air and clean water and that 
get us off oil.
    The question is where do we spend the next dollar. Do we 
keep cropping up the technologies that are polluting the 
environment and have most of the market share or do we start 
vetting on the technologies of the future, the ones that China 
and Europe and Asia are trying to corner the market on, the 
ones that are going to generate all the high wage jobs.
    At some point, governing is about making choices. I think 
we want to choose clean air, clean water and clean energy jobs.
    Chairman LEVIN. Ms. Harbert, I quoted you, so you have the 
last word.
    Ms. HARBERT. Thank you. I think actually everybody has made 
very good points. We are talking about a healthy economy, and a 
healthy economy depends on a diverse set of energy resources 
going forward.
    Our investment strategy to spur the broad sweep of new 
technologies, those types of strategies should be diverse as 
well. Strength and diversity.
    When government tends to get in there and manage those 
choices, it tends to pick the losers, actually not the winners, 
as we have seen by past government failures.
    What we want to see is actually have investments made in a 
broad set of technologies and then to let the market eke out 
the efficiencies and the most competitive technologies rise to 
the surface.
    That is good for the economy. It is good for the consumer, 
and ultimately it is great for exports.
    We want to make sure that we are leveraging financial 
resources from Government along with private capital and 
expertise and not have one crowd out the other.
    Chairman LEVIN. Thank you. Mr. Camp.
    Mr. CAMP. Thank you very much. There has been a lot of good 
testimony today. One of the things that troubles me about what 
I hear is somehow oil and gas production tax credits do not 
work but they are fantastic when they come to wind, solar and 
renewables.
    I guess my concern is given the pamphlet that the Joint 
Committee on Taxation gave us that said that if you increase 
the price of domestic fuels, and I am quoting, ``It will 
primarily result in substitution of foreign fossil fuel sources 
for domestic sources.''
    You are not going to go to renewables. You are going to go 
to importing more foreign oil. Obviously, one of the things we 
want to try to achieve is energy independence here.
    I guess I would ask Mr. Pickens and Ms. Harbert, how would 
increased taxes on domestic oil and gas producers affect our 
dependence on foreign oil in your opinion?
    Mr. PICKENS. Excuse me. I did not hear you.
    Mr. CAMP. How would increased taxes on domestic oil and gas 
producers affect our dependence on foreign oil in your opinion?
    Mr. PICKENS. It will not. Take the IDC, the intangible 
drilling costs, and remove that, it cuts your cap X for the 
industry by 30 percent. There go jobs. There go wells drilled. 
There are reserves un-found.
    The industry has gotten us in a spot where we are 
competitive. It is up to us now to go ahead and execute, which 
we have not done. You need to point to the natural gas and say 
this is going to go into transportation fuel.
    I know a comment here about eight million 18 wheelers is 
not going to fix energy for America. No. Some place, you have 
to start. You have to start.
    Let's say you do the eight million 18 wheelers. That is 
what we have in the country. Those go to natural gas. It is the 
largest target with the smallest number of people to carry it 
out.
    If that happened overnight, it will not, but it will happen 
over 7 years, if that happened over 7 years, we would cut OPEC 
in half. That is 2.5 million barrels a day with only eight 
million 18 wheelers.
    I am going after the most attractive, quickest target.
    Mr. CAMP. I understand. Ms. Harbert, it is going to be some 
time before you can power a manufacturing plant with wind or 
solar.
    Ms. HARBERT. That is absolutely right. You cannot put wind 
and solar in your gas tank yet.
    Mr. CAMP. Not yet, and you cannot power a large 
manufacturing facility, whether it be an automobile plant or 
other manufacturing plant, with wind or solar yet.
    If these incentives for domestic manufacturing of oil and 
gas and domestic production of oil and gas are taken away, as 
proposed in the President's budget, what effect will that have 
on our domestic oil and gas industry and our dependence on 
foreign oil and job creation?
    Ms. HARBERT. I think it has three immediate impacts. The 
first is it is hard to explain if we want to decrease our 
dependence on foreign oil, why would we make domestic oil and 
gas more expensive, because what that sends to the market is a 
signal that says take your money elsewhere. That means take 
your jobs elsewhere.
    If we take our money and our jobs elsewhere, that is bad 
for the economy. It also then does not bring more domestic 
resources of which we know now we have even more than we 
thought we had, and those resources will not be brought to the 
benefit of our economy, so we will import more.
    As I said, in 1986, we saw what happened when we enacted 
the windfall profits tax, on the very companies we are talking 
about. We increased our imports by 19 percent. We are still 
paying for that bad mistake. Do we want to pay for it again?
    Mr. CAMP. Thank you. I see my time is expiring. Thank you, 
Mr. Chairman.
    Chairman LEVIN. Mr. Rangel will inquire.
    Mr. RANGEL. Thank you, Mr. Chairman.
    Mr. Pickens, let's not talk about your age in terms of how 
we have to expedite doing the right thing because it scares me. 
You are going to live a long time but our time to get this time 
is short. I want to thank you for the great contribution you 
have made.
    I just want to ask you quickly, since everyone seems to say 
that your program in terms of natural gas makes a lot of sense, 
have you run across any arguments that you would like to 
present or to state that we should be looking out for?
    Is there any downside as to why we should pay more 
attention and provide incentives for the discovery of natural 
gas?
    Mr. PICKENS. The natural gas is the cheapest----
    Mr. RANGEL. We are with you. I am asking you have you heard 
anything contrary that you would want to share with us.
    Mr. PICKENS. No. Let me add this one point. When somebody 
does say Boone, you do not know what you are talking about or 
Boone, there is something else, I always ask them okay, what is 
better than what I am talking about.
    Then they say, well, I do not like yours. I say then you 
like foreign oil.
    Mr. RANGEL. Makes a lot of sense. My time is going too 
fast.
    Do you think there is a need for incentives for the oil 
industry to produce more oil?
    Mr. PICKENS. I did not hear the question.
    Mr. RANGEL. Do you think that it is necessary for the 
United States to continue to provide incentives to increase the 
production of oil?
    Mr. PICKENS. Well, oil is not natural gas. You know that.
    Mr. RANGEL. I know my question. I am concerned about your 
answer.
    Mr. PICKENS. My answer is the incentives as you have given 
have not increased oil but has increased natural gas.
    Mr. RANGEL. Do you believe it is necessarily to subsidize 
oil any further and we should concentrate on natural gas?
    Mr. PICKENS. I would leave the industry as it because it is 
providing what we want. We have an abundance of natural gas.
    Mr. RANGEL. Would you ever think that we should target 
these incentives and subsidies in other industries such as 
natural gas and alternatives and not consider just removing 
some of the subsidies as an increase in tax?
    Mr. PICKENS. If I was going to tax anything, I would tax 
foreign oil. I would not tax your domestic industry.
    Mr. RANGEL. Okay. Very good. Dr. Sachs, let me say publicly 
how proud I am of the work that you have done over the years in 
so many areas and certainly America and the world has 
complimented you for these initiatives.
    It seems that you agree with Mr. Pickens that we do not 
have a plan and that we should have one. I am certain the 
Administration would think they do have a plan.
    Honorable Harbert, your testimony, is that on behalf of the 
U.S. Chamber of Commerce? I know it is mentioned in your 
testimony. Have they adopted the so-called ``plan?''
    Ms. HARBERT. This is a plan that we have presented on 
behalf of the Institute and the Chamber to the Administration 
and the Congress.
    Mr. RANGEL. Dr. Sachs, have you had a chance to see or hear 
about the plan that the U.S. Chamber would have?
    Mr. SACHS. Unfortunately, I do not know the details of the 
Chamber plan. I liked many things that I heard just now, but I 
do not know----
    Mr. RANGEL. Could you help us out in the Committee by 
reviewing her plan and any other plans that has broad based 
support and see whether you can take the initiatives that the 
Administration has presented and see whether you could tie that 
up into something we could call a ``plan'' and that the 
Committee could look at, and feel free after we get that--we 
can feel free to see where people think priorities should be 
given so we can work with the Administration and tell them that 
what they have done may be a little bit disorganized, but we 
are going in the right direction? That would be very helpful.
    Mr. SACHS. Congressman, I would be happy to do that. Let me 
add they acknowledge they do not have a plan at this point.
    Mr. RANGEL. All the more reason I will be depending on you 
and anyone else that you would be willing to share your 
reputation with, and maybe we can get a plan going.
    Mr. SACHS. Wonderful. Sounds good.
    Mr. RANGEL. I yield back.
    Chairman LEVIN. Thank you. Mr. Stark.
    Mr. STARK. I thank the panelists for their input. I have 
two issues. Dr. Sachs and Dr. Romm are the only other MIT 
trained persons here.
    I am concerned that under a cap and trade policy, economics 
being what they are, that extra amounts could be allocated and 
we would run into a trading frenzy in Iran or something else. 
In other words, the cap and trade thing could become a market 
fiasco. I think there has been some evidence of that where it 
just got too complex and carried away. That is a concern.
    My other concern is that my suspicion is that my idea 20 
years ago of a carbon tax might be a lot simpler. Some of you 
might like it. Some of you might not. I wonder if any of you 
would care to comment on that, Mr. Sachs, Dr. Romm and Ms. 
Harbert, whether that fits in.
    Mr. SACHS. Congressman, I am not a fan of cap and trade. I 
think it would be a very cumbersome, complicated way to 
accomplish things that can be accomplished in a more 
straightforward and with more powerful incentives.
    A carbon tax, for example, is a far more persuasive policy. 
The reason we do not advocate it in our politics is it has the 
``T'' word in it, not because it is a poor policy.
    Mr. STARK. Or a fee, whatever.
    Mr. SACHS. Some combination of clear subsidies for low 
carbon and taxes for emissions is far superior from an 
administrative point of view, a transparency point of view, and 
an incentive point of view than the cap and trade, which is 
unpersuasive on all three counts.
    Mr. STARK. Can the Chamber live with that, Ms. Harbert? Go 
ahead, sir.
    Mr. ROMM. I think the central point is the outcome which is 
to reduce pollution and clean up the air. From my perspective, 
you need a price on carbon. You need a shrinking cap on 
emissions and a rising price.
    The House already passed a bill that is called ``cap and 
trade.'' It is not a perfect bill. I actually think it is a 
very good bill and it would transform the U.S. economy.
    It is entirely possible to design that system so that Wall 
Street does not get rich. You simply do not allow--you only 
allow the industries that are regulated to own permits. You do 
not allow anyone else to own permits.
    Obviously, the term ``cap and trade'' has been quite 
successfully demonized. I think the people who do not want to 
take action to preserve clean air, clean water and a livable 
environment are going to go after any system and demonize it.
    I think one has to keep one's eyes on the prize, which is 
making polluters pay for their pollution and using that revenue 
to jump start the transition to a clean energy economy.
    I do not really care what you call it. I think the House is 
to be commended for the bill that it passed. We will see 
whether you can get 60 votes in the Senate for anything like 
that.
    Mr. STARK. Ms. Harbert.
    Ms. HARBERT. I will just make two quick points. I think you 
raise a very, very good point, that people should be very 
concerned about. We are talking about creating the biggest 
market ever in the history of our Nation.
    There is a great deal of concern that can be manipulated, 
that it will be very non-transparent, and there needs to be 
significant effort given to the oversight, not just of the 
market but also of the industries that have to comply with the 
market.
    Second, the Waxman-Markey bill that was alluded to, if that 
is the cap and trade mechanism that people would want to 
support, let's look at what the EI said that would achieve in 
terms of renewable energy expansion. It would take renewable 
energy, wind and solar, from 2 percent to 6 percent. We are 
creating a huge expensive market and we are just going to 
triple renewable resources.
    What are we really achieving?
    Mr. STARK. Thank you, Mr. Chairman.
    Chairman LEVIN. Mr. Herger.
    Mr. HERGER. Thank you, Mr. Chairman.
    Ms. Harbert, in your testimony, you explain how difficult 
it is to get any type of energy project built, specifically, 
you noted that over 380 projects representing 250,000 direct 
jobs and $560 billion of capital investment have not been 
brought online because of regulatory barriers.
    Of those 380 projects, I believe you testified that 40 
percent were renewable energy projects. Can you give us a sense 
of just how significant these regulatory barriers can be?
    Ms. HARBERT. They are almost insurmountable. If you talk to 
anybody in the energy industry, anyone in the manufacturing 
industry and other facilities that are applying for permits 
from the Federal Government and state governments, it is nearly 
impossible to break through this hugely burdensome process.
    If we are going to be competitive and globally competitive 
with countries like China, we have to be able to get things 
built in this country, whether it is a wind farm, a solar 
array, a natural gas pipeline, a natural gas facility, we 
cannot get anything built.
    Capital is on the side lines. Jobs are not being created. 
It is a huge, huge problem.
    Mr. HERGER. Ms. Harbert and Dr. Sachs, you both mentioned 
in your testimony the need to expand the use of nuclear power 
as part of a comprehensive energy security plan.
    I think this is a very important point that deserves to be 
discussed. I am a big believer in the ``all of the above 
approach.'' We need to step up domestic production of all 
sources of energy and that includes renewable, but the fact is 
according to the Energy Information Administration, we get more 
energy from nuclear power than from all types of renewables 
combined.
    At the same time, we are far behind other countries in 
maximizing our nuclear capacity. France, for example, gets over 
75 percent of its energy from nuclear power versus about 20 
percent here in the United States.
    What are some of the specific policy measures either on the 
tax or regulatory side that would be effective in encouraging 
greater use of nuclear power in the United States?
    First, Ms. Harbert.
    Ms. HARBERT. Thank you for the question. You are right. 
There is a huge opportunity to expand the use of emissions free 
nuclear power in this country. Right now, it takes, one 
estimates, since we have not done it in a very long time, about 
10 years to get a project through the permitting process, and 
in France, it takes five. In China, it takes five. We need to 
streamline the permitting process to get these new facilities 
to enter into our economy.
    We also need to raise the loan guarantee authority that is 
currently within the Department of Energy so we can get more 
than the two or three that are going to be permitted with the 
current loan guarantee authority.
    We also need to make sure that the risk insurance program 
that was authorized by this Congress is actually utilized and 
in sync with current capital costs, since they have gone up 
since this Congress initiated that program.
    Let's streamline it. Let's make sure the loan guarantee 
authority is properly financed, and let's ultimately make sure 
that the manufacturing capability is brought back to this 
country so we can manufacture the components here in this 
country to supply what is a badly needed new supply of clean 
emissions free electricity.
    Mr. HERGER. Thank you. Dr. Sachs.
    Mr. SACHS. Congressman, I agree with those statements, but 
I would say that broadly, this is a matter of public acceptance 
and therefore, it is fundamentally a matter of political 
leadership, and that is as part of what I believe is vital, a 
comprehensive national plan with the arithmetic in it, mind 
you, so that we really see where we are going quantitatively.
    The President could and should explain to the American 
people why nuclear power has a safe and important role as part 
of an energy strategy. With that, I think we would make much 
faster advances on the specifics that were just referred to.
    Mr. HERGER. Thank you.
    Chairman LEVIN. Mr. McDermott.
    Mr. MCDERMOTT. Thank you, Mr. Chairman. Dr. Sachs, Dr. 
Romm, I agree with my colleague, Mr. Stark, or I think I do, 
that you are not going to get anywhere in this country unless 
the Congress sends a very powerful signal, either cap and trade 
or a carbon tax. You can comment in a second.
    I have a second question I want you both to respond to. I 
want you to be policy wonks at the moment, not politicians. Do 
not bring in politics.
    Tell me why you would spend one more dime on coal and clean 
coal technology and all this nonsense with all the water it 
takes and all the problems.
    In the New York Times today, Germany has a story about the 
villages do not want to do carbon sequestration under the 
Earth. You already have the problems in the first plant built 
in the world to do this.
    I would like to hear one reason why we should spend another 
dime on coal in this country.
    Mr. ROMM. From my perspective, obviously coal has 50 
percent market share in electricity or almost 50 percent. It 
has been declining in recent years.
    I do not think as a matter of public policy that you throw 
a lot of money at 19th Century technologies that fundamentally 
are dominate in the marketplace.
    The point of public policy is (a) is there some benefit 
like public health or the environment that is missing in the 
market or (b) do you have a new technology you are trying to 
get into the marketplace.
    Coal has many detrimental effects and many health 
consequences for both the workers and the people who have to 
breathe the air.
    I have a lot of questions about that. The only interesting 
technology in the entire arena of coal is carbon capture 
storage. Can you gassify coal, split out the carbon and bury it 
underground?
    I think it is worth pursuing that as one of many 
technologies. I think the evidence is it is unlikely to play a 
major role for two decades. I would want to make one point very 
clear.
    If we are not going to price carbon, I would not spend a 
nickel on carbon capture storage. If you do not price carbon, 
carbon capture storage will never ever make sense. It will 
always be cheaper to just vent the carbon dioxide.
    Mr. MCDERMOTT. You are basically saying if we do not have 
either a cap and trade market or a carbon tax, coal, there 
should not be another penny spent on it?
    Mr. ROMM. Honestly, I do not see why; no.
    Mr. MCDERMOTT. Dr. Sachs.
    Mr. SACHS. Congressman, quantitatively, coal is so 
important for the world energy supply, including our own, that 
if we were to rule out coal, our prospects economically would 
be far, far grimmer than if we can include coal.
    We really need to check whether coal can be used safely, 
and we do not know that yet because in the last 10 years, we 
have not succeeded in making one real scaled project on carbon 
capture and sequestration.
    Mr. MCDERMOTT. Why? Tell me why that has not happened.
    Mr. SACHS. Because the previous Administration did not work 
hard enough at it.
    Mr. MCDERMOTT. They were in the oil company pockets.
    Mr. SACHS. I think one could have a lot of theories but 
they did have a future gen project which in 7 years, nothing 
ever happened.
    I think this is a tragedy because this is the same amount 
of time that it took us to get a man to the moon and back, and 
we could not build one coal fired power plant to test carbon 
capture and sequestration during that period.
    I would say, Congressman, it would be of the gravest 
consequence if we cannot use coal because it is by far the most 
plentiful fossil fuel on the planet, but we cannot use it the 
way we are using it now safely into future decades. We need 
absolutely to invest in analyzing the answer to your question, 
which is an unknown answer at this point.
    Since China is going to use its coal, absolutely. Since 
India is going to use its coal, since countries around the 
world are going to use their coal, we better find out whether 
this is safe.
    Since we have 25 states which produce coal, let me 
predict--you asked me not to--let me predict as a politician, 
we are going to use our coal, too. We better find out whether 
it is safe to use.
    Let me say as a policy wonk, a carbon tax is so much more 
straightforward, simple, predictable, and will drive the 
results where we want, and the only reason we have not done it, 
they both do the same thing in terms of pricing, but we have an 
allergy to a word and we have twisted for 15 years our public 
discussion because of an allergy to a word.
    They both have the same effect on consumer pricing.
    Mr. MCDERMOTT. Thank you.
    Chairman LEVIN. Mr. Neal.
    Mr. NEAL. Thank you, Mr. Chairman.
    Mr. PICKENS., I was intrigued by your comments that a good 
environmental policy can be a good policy for our economy as 
well. Like most in this town, I enjoy Tom Friedman's columns, 
and he has argued that reducing our dependence on foreign oil 
is geostrategic, geoeconomic, capitalistic, and patriotic.
    You have cited a strategy that China has committed to with 
respect to acquiring oil and meeting their future energy needs.
    Could you talk to us a bit about what China is doing and 
how it would impact their economy and where do you think the 
U.S. should be?
    Mr. PICKENS. First, China has a plan and we have no plan. 
They are carrying out their plan. In the last 18 months, they 
have either bought or made loans that tie up oil around the 
world.
    They made loans to Brazil. They have equity interests in 
Northern Alberta, which was announced yesterday, bought $4.8 
billion of the oil sands oil from Conoco-Phillips there.
    They have loans to the Venezuelans. They have loans to the 
Iranians. They have equity deals, $64 billion worth of equity 
in oil they have purchased, and they spent over $200 billion.
    I mentioned the Iraqi deal. I am telling you, these guys 
are everywhere. They will look at any oil deal in the world. A 
deal that has not been announced but will be shortly, they are 
buying 20 percent in the Santos Basin in Brazil.
    What does that mean? Why did they not buy 100 percent? All 
they need is 20 percent to get in a position to control the 
other 80 percent.
    They have a plan. What is going to happen, what we are 
going to find is in 2 or 3 years, that oil that would have been 
on the market is going to China. They have already made a deal 
for it. They are not in the market trying to buy it. They have 
bought it or tied it up in some fashion or another.
    If we go out 10 years from where we are today and do 
nothing, we will be importing 75 percent of our oil and we will 
be paying $300 plus a barrel for it.
    We cannot stand it. That is $1 trillion a year that will be 
going out of the country where today we are only spending $350 
billion.
    It will be three times what we are doing now to buy oil for 
America. You know, you all talk about carbon and coal and these 
other things. This is a security issue that is absolutely--it 
will be a crisis state in less than 3 years.
    This has to be addressed. How we get off oil from the 
enemy.
    Mr. NEAL. Thank you, Mr. Chairman.
    Mr. STARK. [Presiding.] Mr. Johnson from Texas.
    Mr. JOHNSON. Thank you. I agree with everything you have 
said, Boone. I wish people would listen.
    Ms. Harbert, you state the role of the private sector in 
our future security is paramount. I think we agree. We ought 
not to try to crowd out their participation, capital 
innovations or expertise.
    From your perspective, is the private sector currently 
being crowded out by Government policy and control?
    Ms. HARBERT. I think we are at a crossroads, Congressman, 
because at the moment we have the potential of being taxed and 
regulated into very uncompetitive positions, whether it is 
through the oil and gas industry and putting punitive taxes on 
a single industry that the other parts of our economy currently 
enjoy or whether it is on picking a winner and overly 
subsidizing for an endless amount of time another part of our 
economy or it is in the banana syndrome, where we cannot get 
anything built, so our capital markets are frozen because we 
cannot get anything built because of a burdensome regulatory 
process, or a very litigious society, where every project is 
brought to the court system.
    There is more energy policy being set in the courtroom 
today than in the halls of Congress. That should be of grave 
concern to you as every project is being litigated in the D.C. 
Court, the Court of Appeals, to see whether we can take it 
forward.
    We do have the prospect of being taxed and regulated and 
litigated into a very uncompetitive position.
    Mr. JOHNSON. That is just Government control. You think the 
private industry can take care of themselves if we give them a 
chance without taxing them to death?
    Ms. HARBERT. In every major crisis in the past, we have 
delved into the deep well of American innovation and we have 
succeeded. We have developed the technologies to solve whatever 
challenge we had, and that would equally apply to our energy 
and environmental challenges.
    If we are allowed to innovate, if are allowed to deploy 
these resources, we have the markets and we actually have been 
able to break down the tariff and non-tariff barriers around 
the world to actually export our technologies.
    We worry today about imported oil. We should be worried 
about imported intellectual feedstock, because unless we 
innovate and develop the technologies and sell them, the 
inverse will be happening.
    I think it is a warning bell to the government that the 
private sector is looking to other markets. We have companies 
in the State of Texas, in the drilling area, that are moving to 
Europe, because it is easier to compete there, and they have 
less of a tax burden in Europe than they do in the United 
States, because of double taxation.
    Mr. JOHNSON. You are saying we ought to lower taxes and not 
put some kind of higher tax on. Even incentives, I do not 
think, work as well.
    Thank you very much for your comments. Boone, I appreciate 
what your comments have been. I agree with everything you have 
said. Mr. Chairman, I yield back.
    Mr. STARK. Thank you. The Chair recognizes Mr. Yarmuth.
    Mr. YARMUTH. I thank you very much, Mr. Chairman.
    I want to ask Mr. Abate, as you know, GE's plant in 
Louisville, in my District, announced last year that it would 
bring back from China production of a hybrid heat pump, water 
heater, electric water heater, and begin manufacturing that 
high efficiency product and appliance part.
    How can Congress help GE and other companies continue to 
increase U.S. production of great products and create more 
green producing jobs?
    Mr. ABATE. Yes, Congressman. We are excited about that. As 
you know, there are several appliances that fall under this 
incentive. Currently, that incentive expires this year.
    We would like to see that extended. We think it 
accomplishes a couple of great goals. One is energy efficiency 
and technology leadership.
    If you look at what we are doing now with our appliance 
products, they are leading the world as far as energy 
efficiency, and as a result, reducing the demand, which is part 
of this whole climate problem as well.
    We would like to see that program continue, and that is 
what we support.
    Mr. YARMUTH. Thank you.
    Mr. STARK. The Chair recognizes Mr. Doggett.
    Mr. DOGGETT. Thank you very much. First, I agree fully with 
the emphasis that my fellow Texan, Mr. Pickens, has placed on 
energy independence, on reliance on American natural gas as a 
vital transition fuel, as we move to a cleaner energy future.
    I think it is particularly important for places that are 
relying on coal to move to natural gas as well as some of our 
transportation fleets, and I also recall that the original 
Pickens Plan placed a great deal of emphasis on American wind 
power. I think it is clearly a vital component of our future.
    I find any significant reliance on coal--I have always 
viewed the term ``clean coal'' to be a little like the term 
``dirty poison'' or ``safe poison,'' a conflict in terms. A bit 
more problematic.
    I support fully the effort of President Obama and his 
budget to eliminate wasteful tax expenditures for the coal 
industry, but find particularly problematic--you referred to 
this, Dr. Romm, in your testimony--the addition of provisions 
by the Senate in 2008 that they have stuck on the extender's 
bill that we passed over here, specifically coal to liquids and 
the refined coal credit.
    Let's talk about coal to liquids first. That seems to me to 
be--you referred to it in your written testimony--a good way to 
waste a substantial amount of water, a substantial amount of 
tax money, tax resources, and to generate a product that is 
more polluting, carbon polluting, than if we just used the 
petroleum based products that we already have.
    Mr. ROMM. No question about it. Like I said, I have sat 
through as part of the Defense Science Board actually a 
taskforce on Defense Department energy strategy, because the 
Defense Department itself is trying to figure out how to come 
up with secure liquid fuels.
    There is just no study, no independent study that finds any 
net significant public value from coal to liquids. These are 
staggeringly expensive technologies.
    It cost $5 billion just to build a coal to liquids plant 
capable of producing 80,000 barrels a day.
    Mr. DOGGETT. I think we can put a lot of natural gas trucks 
on the roadway for that.
    Mr. ROMM. For that kind of money, you can get a lot of 
clean energy. You can get a lot more natural gas, and I am 
certainly a supporter of natural gas as a bridge fuel.
    The other thing about coal to liquids is it uses a 
staggering amount of water. It is something like five to seven 
gallons of water are necessary for every gallon of diesel fuel 
that is produced, and double that if you co-produce diesel fuel 
and electricity from coal.
    This country is not making more water. In many parts of 
this country, they are suffering with more and more water 
shortages.
    I just do not think it makes a lot of sense as a matter of 
public policy to be subsidizing coal to liquids. I have a 
figure in here, a chart in here, which shows from the 
perspective of heat trap and greenhouse gases, coal to liquids 
is more than double that of regular diesel fuel and almost any 
conceivable alternative, including just turning natural gas 
into liquid diesel fuel, which would also make a great deal 
more sense, frankly, than turning coal.
    Mr. DOGGETT. This refined coal credit, it was the second 
one added on. It sounds a lot like the boondoggle that was 
called the ``syn fuel credit'' back in the 1900s where people 
would spray on a little coal tar or pine tar or starch 
theoretically to change the substance of the coal to milk the 
Treasury.
    Can you comment on this refined coal credit and whether it 
offers any benefits?
    Mr. ROMM. I just would like to say----
    Chairman LEVIN. [Presiding.] Do it briefly. I have just 
been told we are going to have votes fairly soon. We are going 
to face a dilemma.
    Mr. ROMM. I think it does not make any sense to incentivize 
the greater use of coal. The only context in which it makes 
sense is a climate bill that places a price on carbon and then 
you do want to find out if carbon capture and storage is 
viable.
    These other coal tax credits are just subsidizing the 
combustion of a fuel that harms human health directly.
    Mr. DOGGETT. Thank you.
    Chairman LEVIN. Mr. Thompson.
    Mr. THOMPSON. Thank you, Mr. Chairman. Thank you all for 
being here to testify.
    Mr. Abate, one of the issues that I am interested in is the 
storage of renewable fuels. It is a problem right now. If we 
are able to solve it, we can do a lot of good, I think, by 
being able to address peak demand times and the like.
    I would be interested to know what your company, GE, is 
doing to advance the storage of renewables and what you think 
Congress should be and could be doing to help along those 
lines.
    Mr. ABATE. Yes, Congressman. I think you are correct to be 
talking about storage. Clearly, it is going to be a challenge 
that has to be addressed.
    In our view, on a massive scale, it is more of a 2015 and 
beyond timeframe, other than places like Hawaii or other land 
constrained regions. The country currently has the ability to 
put in a lot of renewable power over the next several years and 
manage it with the system we have.
    If you look at what we are seeing as the wind is continuing 
to get installed, it is very complimentary to natural gas.
    This country has built hundreds of billions of dollars of 
tremendous gas turbine generation, very efficient combined 
cycle systems, so the way we are storing wind energy today is 
we are essentially leaving the gas in the ground or leaving the 
coal in the ground, and there are control systems to make that 
all work and they are really part of the focus we have now.
    Longer term, we are investing in battery storage and other 
technologies. We just announced a battery plant in Schenectady. 
We are looking at this more as an R&D effort.
    I think the question is the cost effectiveness going to be 
there. Today, if I sold a turbine to a customer that had 
storage capability, I do not think they would pay me twice the 
price for it, and you need to get to a point to be able to pay 
for the equipment that goes in it.
    It is going to be cost challenged. Tax credits to support 
to continue the investment but long term, companies are going 
to need that to be able to get the penetration levels over 10-
15-20 percent on a big scale.
    Mr. THOMPSON. Thank you. Dr. Romm, we are told we can save 
about $50 billion in energy costs by providing greater 
efficiency for energy industrial and manufacturing sectors.
    What do you think Congress should be doing to help promote 
that?
    Mr. ROMM. I think there is no question about that. I think 
a couple of these tax credits, the combined heat and power, the 
recycled energy, expanding that, I think that is critical.
    The amount of energy that is wasted and wasted heat that 
goes up our smoke stacks is equal to all the energy Japan uses 
for every purpose.
    Capturing some of that energy in industry and power 
generation is critical. Of course, the manufacturing tax credit 
that was in the stimulus, I think, has been very successful. It 
needs to be extended and expanded. I think there is probably 
general consensus on that.
    Mr. THOMPSON. Mr. Pickens, you had mentioned that if you 
had to tax something, you would tax imported oil. I have heard 
from a lot of folks in my district that is something they think 
we should be doing, that will help drive us away from there, 
capture those tax dollars, and then use that to address our 
energy issues, use that money to address our energy issues 
here.
    If we could do that and without running afoul of some of 
the trade stuff that we have to deal with, do you see any 
problems that might accrue from that, any externalities that 
might surface?
    Mr. PICKENS. No, but I think you may have the trade problem 
on taxing the foreign oil, but I would not be opposed to taxing 
gasoline.
    I think we are going to need money from somewhere. We know 
that. Gasoline tax, no question, it would cut consumption, and 
that would be good if we did that.
    The cars would become more efficient. We will go to light 
duty, more to a hybrid, which is good.
    Once again, anything that is American, I am for. If we 
could cut, for instance, let's say we could cut OPEC in half in 
7 years, that would recover for us $100 billion a year back 
into the United States.
    I do not know valuable that is. Let me take you back to a 
point I want to make. I may not get a chance to do it. Go back 
to the security issue for 30 seconds. That is all I need.
    The State Department recommends that we not travel to 
countries that we get 40 percent of our oil from, excuse me, 40 
percent that the OPEC oil is from. Forty percent, they 
recommend we not travel there.
    If that is not getting oil from a questionable source, I do 
not know what it is. Just say that 40 percent of the OPEC oil 
cut us off, you would be talking about two million barrels a 
day. You would be looking at 200 to $300 a barrel of oil in a 
minute if that happened to us.
    We have got to get loose from this.
    Mr. THOMPSON. Thank you.
    Chairman LEVIN. We are going to have four votes. I think in 
fairness to the panel, we should try to finish.
    Mr. REICHERT, you are next. There are three or four others. 
Do you think you would agree to 3 minutes so we can finish? 
Let's try, okay?
    Mr. REICHERT. I always seem to be in this position. I am 
just pleased to be here, sir. Thank you.
    Chairman LEVIN. So am I.
    [Laughter.]
    Mr. REICHERT. Thank you, Mr. Chairman. I am pleased to take 
3 minutes.
    I want to focus on the job question. Ms. Harbert, if I 
could direct my question to you. We are here today to consider 
some tax incentives to spur development of new energy.
    Americans want jobs. They want new energy, but they want 
that energy, as Mr. Pickens has said, to be American energy.
    If it is natural gas or whatever else we can imagine into 
the future as the new energy source to power our vehicles and 
our factories, boy, would it not be nice to be secure, as Mr. 
Pickens also said, to have that security, have jobs, have the 
economy going, so there is a balance here that we have to 
strike, I understand.
    I just want to ask you a question. We have been working 
together. The American people also need to know there is 
bipartisanship occurring here in this Committee.
    Mr. KIND and I are working on a bill that actually puts 
together a package of tax incentives for energy efficient 
retrofits of homes and buildings. It is H.R. 4226, if you on 
the panel are interested in looking at it.
    Not only is Mr. Kind a part of this, but Mr. Davis of 
Kentucky, Mr. Blumenauer, Mr. Thompson, Ms. Schwartz and 
others.
    The question I have is you have noted the savings that such 
efficiency measures can produce, can you comment on the job 
creation potential of incentives for energy conservation and 
how retrofitting homes and buildings can get more Americans 
back to work, and second, still focusing on the job issue, 
which is the number one issue for Americans today, in terms of 
creating more immediate and sustained jobs in the near term, 
would you say energy efficient tax incentives bring a greater 
return on our investment compared to other energy incentives or 
large scale subsidies?
    Ms. HARBERT. Thank you for that question. I will try and be 
brief. First of all, on energy efficiency, the next best source 
of energy is the one we currently waste every day, so we need 
to make it attractive for people who are moving new commercial 
buildings and are in existing buildings to actually put in the 
infrastructure necessary to save energy, and that will create 
manufacturing jobs here.
    It will create the development of technology, some of which 
is GE and others, they will be selling the technologies and the 
appliances, et cetera, to improve the efficiency of what 
consumes a significant amount of energy here in the United 
States.
    It is an opportunity to create some jobs and certainly to 
save energy.
    On the broader question about creating jobs, we need to 
think about this, not just about creating green jobs, but about 
creating a healthy economy. We need to create 20 million jobs 
over the next 10 years, and clearly not all of those are going 
to be green jobs.
    We have to be realistic about what percentage of those are 
going to be in the energy industry versus how much are actually 
going to be in unrelated industries.
    We need to make sure we have affordable energy, reliable 
energy, that will underpin a healthy economy and not self 
select which parts of the economy and which parts of the energy 
economy we seek to stimulate.
    Mr. REICHERT. Thank you. Mr. Chairman, I yield.
    Chairman LEVIN. Thank you very much. Mr. Larson and then 
Mr. Blumenauer.
    Mr. LARSON. Thank you, Mr. Chairman. Thank you for this 
thoughtful and provocative hearing. I want to thank all of the 
panelists.
    I especially want to give a shout out from the people at 
Augie's and Ray's in East Hartford to Mr. Pickens and thank him 
for being there back in November.
    It seems as though there is great unanimity amongst the 
panel that we do not have and have not had for more than 40 
years a plan as it relates to energy. It also seems there is 
general consensus about the need to be comprehensive in our 
approach.
    There also seems to be an awful lot of consensus that in 
terms of natural gas, there is unanimity that this is 
definitely a way we should go.
    Mr. Pickens raised an intriguing point. He said he was not 
opposed to taxing gas. Mr. Neal raised the point early on about 
Thomas Friedman and his articles about how we continue to 
export dollars abroad that essentially go into the hands of our 
enemies who essentially arm the very terrorists who are going 
after our troops.
    A question to the panelists, and we will start with Ms. 
Harbert, would you agree with Mr. Pickens that if we are 
looking at something to tax, that gasoline perhaps is the way 
to go?
    Ms. HARBERT. I will go back to something that Chairman 
Bernanke said earlier this week, which is we are in such dire 
financial straits, we are going to have to raise taxes or cut 
spending or do both.
    I think before we decide what we are going to tax, we need 
to fully explore all the options so that we do not increase the 
burden on the American taxpayer.
    Mr. LARSON. Would you be opposed taxing gasoline?
    Ms. HARBERT. I think we are talking about how much and what 
the revenue would be used for. If it just evaporates, then it 
is not seeking to do anything useful for the economy.
    Mr. LARSON. Let's say the revenue is put into building 18 
wheeler trucks and powering them with natural gas, the plan Mr. 
Pickens has laid out?
    Ms. HARBERT. I do not know how you actually put that 
revenue there. I think it is an excellent question. The 
question for policy makers to think about is how much in this 
economy and what would the money be used for ultimately.
    Mr. LARSON. Let me go down the list of the panelists. I 
know our time is brief.
    Mr. ROMM. I tend to prefer to raise the price on pollution 
rather than one particular fuel. I think the revenue should 
largely be given back to the consumers and businesses. Some 
used for clean energy. At some point, we are actually going to 
have to reduce the deficit, but I think the focus has to be on 
reducing pollution and promoting clean energy at this point.
    Mr. LARSON. Mr. Sachs.
    Mr. SACHS. I think a gasoline tax makes sense, but one that 
I do not think is fully reflected in our conversation today is 
the incredible opportunity with electric vehicles to absolutely 
affect positively many of the dimensions that we are talking 
about right now.
    If we go to electric vehicles in a significant way over the 
next 15 years, our oil dependence drops considerably. We get 
clean vehicles. We have a much more flexible power system, and 
we get storage, by the way, of intermittent power sources 
because the batteries of a vehicle fleet will vastly provide 
the storage that we are going to need to smooth out the peaks 
of demand.
    One thing that any comprehensive energy plan should have in 
this country is attention to the conversion of our fleet, the 
automobile fleet, not the 18 wheelers, but the automobile 
fleet, to electric vehicles. That is within reach and that is 
where America should take a technological lead, and this 
committee should help to do that, I think.
    Mr. LARSON. Mr. Abate.
    Mr. ABATE. I would just comment that relative to security 
and pollution, diversity and domestic content, I think there 
are many aspects and many ways you can go at this. The question 
is what problem are you trying to solve.
    I would look at this more holistically than just one 
particular target.
    Mr. LARSON. Mr. Pickens.
    Mr. PICKENS. It was my idea. I like it.
    [Laughter.]
    Chairman LEVIN. I think that ends that discussion. That is 
the best short answer we have heard in quite a while.
    Mr. Blumenauer.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. I appreciate the 
reference. I think it may have been Dr. Romm talking about the 
water limitations, something that has not come forward.
    Our ethanol costs 28 gallons of water per mile. One of the 
big limitations in nuclear, and it is going to be a bigger 
problem in the future, is that it is the most water intensive 
of our energy sources, and in a time of global warming climate 
change, reducing snow pack, it is going to be harder to have 
the water to do it.
    I have been taken aback a little bit by some of the 
conversation here today about picking winners and losers. I 
appreciate some of our panel pointing out that the United 
States has been in the business of picking winners and losers, 
starting with the transcontinental railroads through the 
Internet and according to Mr. Abate's testimony, it looks like 
our efforts at betting on a green economy is paying some 
dividends right now in terms of diversity of energy supply and 
creating jobs.
    I like the notion that several of you mentioned, Mr. Sachs 
and Mr. Pickens, about having a vision for how this fits. Not 
just an energy policy. I would be prepared to argue that it is 
for how we rebuild and renew America, transportation, water, 
energy, all of this ought to fit together.
    There is a way to finance it. I am pleased Mr. Pickens 
talked about gas tax. Others of you did. The Chamber has 
testified here before this committee that they would favor a 5 
or 10 cent a gallon increase now.
    I am hopeful that we can think a little different about the 
cost equation, because a lot of costs get swept away. We have 
had reinforced in the last 10 days the cost of coal production, 
100,000 Americans have lost their lives in the coal industry. 
How we factor in mining lives, air pollution deaths of coal, 
bulldozing mountain tops into streams, there is a lot going on 
here.
    The thing that is most vexing for me is I am hearing that 
somehow if we make a small adjustment in some of the subsidies, 
that it is going to destroy our oil and gas industry in the 
United States.
    My recollection is our per barrel price in the last 3 days 
has varied from about $84 to about $85.94. That, I think, is a 
global price for a fungible product.
    I would like to know what any of our witnesses think would 
happen to the global oil price and global oil production if a 
few hundred million or a few billion dollars are factored out 
of what for the United States is two-thirds of $1 trillion a 
year, in a global oil market.
    What is really the impact that is going to be and who is 
going to get the benefit? Global oil markets or it will be 
somehow just the United States?
    Mr. Sachs, do you have something you want to say? Others 
can chime in. And if you think we do not have a global oil 
market.
    Mr. SACHS. We definitely have a global oil market and if I 
understand your point, Congressman, small changes that we make 
domestically are not going to be the main drivers of the global 
oil price. That is absolutely certain.
    Mr. BLUMENAUER. Does anybody else here dispute that? Mr. 
Pickens.
    Mr. PICKENS. I am not going to dispute it. I would like to 
comment.
    Mr. BLUMENAUER. I want to get the point here, that it is a 
global price and oil companies are going to go where they can 
make money on the oil price, the global oil price.
    Mr. PICKENS. Let me just comment. If you get on natural 
gas, your own resource, you can bring the price of oil down, 
but as long as you go back to the global market for more and 
more oil, all you do is send a signal that you are there and 
you are going to have to pay for it.
    There is 85 million barrels of oil produced every day in 
the world. We are using 21 million. We are using 25 percent of 
all the oil with 4 percent of the population.
    Mr. BLUMENAUER. I agree with your point. I want to get to 
the notion that somehow if $1 billion is lost out of all these 
subsidies, that somehow that is going to have a profound effect 
on the global oil price, and if it works, we are going to lower 
the price of the oil for people around the world.
    Ms. HARBERT. Congressman, that is two different questions, 
I think.
    Mr. BLUMENAUER. Mr. Chairman, I would welcome a written 
follow up.
    Chairman LEVIN. Yes, let's do that.
    Mr. BLUMENAUER. I would really welcome the facts on that. 
Thank you.
Chairman LEVIN. I think this is going to work. Mr. Boustany, you are 
    next, and then Mr. Pomeroy.
    Mr. BOUSTANY. Thank you, Mr. Chairman.
Chairman LEVIN. It is Mr. Boustany, Mr. Davis and then Mr. Pomeroy. 
    There are three of us left to inquire before those bells ring. 
    Let's try to do it in 3 minutes each. Thank you.
    Mr. BOUSTANY. Thank you, Mr. Chairman. Dr. Sachs, I 
appreciate your very succinct statement of the three goals. I 
think that is important, and the fact that we lack a strategy 
and we need a strategy. I think there is a big difference 
between strategy with regard to energy versus just policy.
    Also, the need for a realistic transition strategy. I think 
we all have been talking a little bit about natural gas. I know 
Mr. Pickens has made that a big focus.
    I am very concerned because we have the appeal of certain 
tax provisions in the President's budget proposal with regard 
to the oil and gas industry, and these will hit our smaller 
independent operators, American producing companies, that hire 
a lot of folks in my State of Louisiana and Texas and the Gulf 
Coast.
    We know what happened in 1986 with the windfall profits 
tax. We lost a lot of really good workers who dispersed around 
the globe. We lost a lot of technical know-how, and our 
imports, as Ms. Harbert pointed out, jumped 19 percent.
    We have to make a distinction between oil and natural gas. 
I am concerned about these tax increases that will also have an 
impact on our natural gas industry. Natural gas is at a pretty 
cheap price right now. If you put these taxes on the natural 
gas producers, it makes it less likely they could extract gas, 
particularly from shale, which is more expensive.
    Mr. Pickens and Ms. Harbert, I would like you to comment on 
that. I know with hydraulic fracturing, there is a lot of talk 
about making it more cost prohibitive for the regulations on 
it.
    This is going to hurt our energy security in the long run, 
would you not think?
    Mr. Pickens, if you do not mind?
    Mr. PICKENS. If you increase taxes, it will cause a 
problem. Of course, it will. We have the cheapest natural gas 
in the world today. We are cheaper than Mideast natural gas. It 
is obvious that the industry has delivered on the natural gas.
    The technology has been advanced. Everything has worked in 
this way.
    I do not think it is time to tax them. If we get on the 
natural gas, it is the cheapest--let me give you a quick 
comparison. For one MCF of natural gas, it equals seven gallons 
of diesel. One MCF. That is $4. Seven gallons of diesel is $21.
    We are paying $21 for foreign diesel and we have a resource 
in America that we could replace it. By the way, the natural 
gas is 33 percent cleaner than diesel. You get every advantage 
here at a fraction of the cost.
    Mr. BOUSTANY. Ms. Harbert.
    Ms. HARBERT. I think you have three immediate impacts. 
There would be a disincentive to produce. There will be a 
disincentive to innovate and develop technologies that will 
increasingly allow us to produce these resources cleanly, and 
it will drive the smaller guys out of business. That is bad for 
America.
    Those businesses cannot leverage that risk in other 
operations and other parts of the world where some of the 
larger companies can. The smaller guys go away. We reduce the 
ability to produce and we certainly take away the incentive to 
innovate.
    Mr. BOUSTANY. Thank you.
    Chairman LEVIN. Thank you. Mr. Davis.
    Mr. DAVIS of Illinois. Thank you very much, Mr. Chairman. 
Dr. Sachs, you state rather succinctly in your written 
testimony that energy policy will not solve the short term job 
crisis over the next 18 to 24 months, but unless we have a 
sound energy policy, the short term crisis is going to become a 
long term crisis.
    How impactful do you think our energy policy or lack of is 
on the overall job crisis that we face?
    Mr. SACHS. I think that already the lack of a clear energy 
and climate strategy, remember, I am talking about the mix, is 
weighing heavily on our capacity to generate good jobs over a 
time horizon of 5-10-20 years.
    I am very worried about the fact that we cannot decide what 
kind of power plants to build. We cannot decide what kind of 
industries to sponsor right now. We cannot decide what to do 
with electric vehicles, to really make it work.
    That is where we are going to lose lots of jobs down the 
road. What I am saying is I do not think in the next 18 to 24 
months any of this is decisive, but 5-10-15-20 years, how 
viable is our economy going to be if we are facing instability, 
soaring prices, and we have not resolved any of our 
technological leadership in these areas, then it will be very 
serious.
    Mr. DAVIS of Illinois. Thank you. Mr. Pickens, you make a 
real case for increased use of natural gas. Why do you think it 
is so difficult to have your thoughts, ideas and concepts 
really become a core part of our energy policy?
    Mr. PICKENS. I did not hear the last part.
    Mr. DAVIS of Illinois. I like your positions. Why do you 
think it is so difficult?
    Mr. PICKENS. The reason we are in the spot we are in, very 
simply, is we have never had the leadership that said let's use 
our own resources, but in defense of that decision or the lack 
of a decision, we have had cheap oil.
    Cheap oil keeps coming to us and it is so easy to have it 
and to use it, but go back to Nixon in 1970. He said at the end 
of the decade, we will not import any oil, any oil in the 
seventies. At that point, it was 24 percent. At the end of the 
decade, it was 28. Today, it is 68. We will be in 10 years at 
75.
    Because of cheap oil, we keep drifting and drifting. All at 
once, whether it be in the closer I get to the end, not of my 
remarks but of my life, the closer I get to the end, the more I 
realize that divine intervention does show up from time to 
time.
    This is exactly where I see us today. We got lucky. We got 
lucky and came up with four thousand trillion cubic feet of 
natural gas. It is cleaner. It is domestic. It is competing 
against foreign dirty and it is cheaper.
    How in the world did that ever happen? I just gave you the 
reason I think that.
    Mr. DAVIS of Illinois. Thank you very much.
    Chairman LEVIN. Mr. Etheridge, I think you are next and 
then Mr. Pomeroy, and if we each take 3 minutes, we will be in 
good shape.
    Mr. ETHERIDGE. Thank you, Mr. Chairman.
    Mr. Pickens, let me ask you a quick question. I remember 
before I came to this body, I was a state superintendent of 
schools in North Carolina. I had a few buses on natural gas. I 
assume they are still operating.
    My question is broader than that, not only are we talking 
about buses and trucks, what do you see as the challenge, 
because the bulk of the fuel used in this country really is in 
automobiles and small vehicles, but what do you see as the 
challenge if you move to natural gas in those as well?
    Mr. PICKENS. The light duty?
    Mr. ETHERIDGE. Yes, sir.
    Mr. PICKENS. This is the way I see it unfolding. Go ahead, 
and we are hunting with a rifle here, not a shotgun, so we are 
going after the eight million heavy duty. Go ahead and go after 
those. Go after them hard and let's do it quickly.
    Then let the good tentacles that will come out of that go 
wherever they want to go into the transportation, and do not 
pick winners in this. I think there is a very good chance that 
light duty will go to the hybrid or go to the electric car. Let 
it go. Get off the OPEC oil.
    Go ahead and give your model at the top, the biggest users 
using 20,000 gallons a year per vehicle, go for those, knock 
them off, and then I think natural gas will just have to 
compete for the light duty with whatever else is available. For 
heavy duty, we only have one choice.
    Mr. ETHERIDGE. Thank you. Mr. Abate, you spoke about how 
important it is giving businesses the ability to plan with 
renewable energy production tax credits over a period of time.
    As you know, there has been tremendous growth in green jobs 
since some stability was put in the tax credits. What are the 
prospects of continued growth in these areas if that is 
instituted and we put together a plan for the long term?
    Mr. ABATE. If we have a plan for the long term, you will 
see this industry continue to grow. I think right now, there 
are a lot of challenges, as I stated in my testimony. I think 
clearly the next couple of years, we are living more off the 
backlog versus a new order activity and project development 
occurring going forward.
    I think everybody is waiting for a plan similar to Europe 
with a 20/20 or the directive in China--a 100 gigawatt 
commitment. Once that commitment is made, this country is going 
to build out a real infrastructure and you will see investments 
in factories happen very fast.
    We have right now 12 suppliers that we want to bring to 
this country, but by the time they come online, those projects 
will be operating in 2013. There is no policy for renewable 
energy in 2013. They will not make that investment until that 
timeframe is extended.
    Mr. ETHERIDGE. Thank you. Mr. Chairman, I yield.
    Chairman LEVIN. Mr. Pomeroy, you get the last.
    Mr. POMEROY. Thank you, Mr. Chairman. I thank the panel for 
their long indulgence.
    Mr. Abate, I would just observe that North Dakota with its 
fabulous wind source as well as a magnificent blade 
manufacturer, as well as a magnificent tower manufacturer, is 
only missing a turbine manufacturer. This is not a question. I 
just note it for the record.
    Mr. Pickens, you electrified the audience with your vision 
of greater roles of wind and natural gas. I want to ask, we did 
not get a chance to discuss it extensively on that occasion.
    I will direct a question here while you talk to Charlie. I 
will come back, Boone.
    Ms. Harbert, you indicated, I think, an important point, 
that advancing the tax proposals of the Administration relative 
to fossil fuels, oil, especially, would hurt production, hurt 
innovation, and diminish the participation of independent 
players in developing this resource.
    In North Dakota, just to put a case study on what you have 
said, we have had principally independent oil producers, 
basically through extraction innovation, horizontal drilling 
and the fracking, untap the miracle, that means four billion 
barrels of recoverable oil in North Dakota alone, domestic 
supply.
    Clearly, this has been built on the Tax Code as it 
presently is, and as we build out development of this major oil 
play, bringing greater oil sufficiency to our marketplace, 
abolition of these provisions of the Tax Code would clearly 
reduce the rate we recover this domestic supply now made 
available in part because of the structure of the existing Tax 
Code.
    Is that correct?
    Ms. HARBERT. These are long term investments that need 
certainty, and introducing and changing the type of contractual 
underpinnings would be very, very bad policy and it would have 
very big implications on production and innovation and the size 
of the businesses you are talking about.
    We have huge reserves. Why would we be doing something to 
constrain the production for the benefit of our economy right 
now?
    Mr. POMEROY. Mr. Pickens, as someone with such long 
involvement in the industry, I would like your comment on that 
for the balance of my time.
    Mr. PICKENS. Long involvement is right. I got out of school 
in 1951 as a geologist and I have been in it ever since.
    The Bakken and Williston Basins, North Dakota, of course, 
is part of the Williston Basin. That again, you have a 
question, that oil showed up at a funny time in America. I mean 
a funny time, a good time, a fortunate time for us.
    Four billion barrels is a lot of oil. It is a lot more oil 
than we found in the last 10 years in the United States.
    You are going to find technology is going to advance us a 
long way, but you do not want to slow down the industry at this 
point. Turn them loose. Let them go. Try to fix the problem.
    Mr. POMEROY. Thank you very much.
    Chairman LEVIN. Mr. Camp.
    Mr. CAMP. I also want to thank the panel. This was a very 
helpful panel. I appreciate all of your time and effort and 
your good testimony. Thank you very much.
    Chairman LEVIN. I want to very much say to all of you very, 
very busy people involved in so many activities, many, many 
thanks. It has been informative, and I think really a brilliant 
panel.
    I think it helps lay the foundation for further work of 
this Committee.
    We will stand in recess. The third panel has been very 
patient. My guess is we will be back in about half an hour to 
45 minutes. Around here, you are never quite sure. We stand in 
recess. We will start with the third panel as soon as we are 
back.
    [Recess.]
    Chairman LEVIN. The Committee will come to order. Mr. Camp 
and I and our colleagues are really very sorry. There was 
intervening business and it made the delay any longer. You are 
the most patient people in town, at least at the moment.
    What we will do is start the hearing, and we will make sure 
your testimony is very well distributed. We will take extra 
steps to make sure what you present is considered.
    We will go down the line. Stephanie Burns, Dr. Burns, is 
Chairman, President and Chief Executive Officer of Dow Corning 
in Midland, Michigan.
    The Honorable Reed Hundt, Chief Executive Officer of the 
Coalition for Green Capital. Welcome to you.
    The Honorable Rod Dole, who is the auditor, controller, 
treasurer, tax collector, four hats, of Sonoma County, and I 
think Mr. Thompson, you want to say a special hello.
    Mr. THOMPSON. Just that he is a great guy. We have worked 
together for a long time, known each other for a long time. If 
anybody can handle all of those hats, he is the guy that can do 
it, and I am really glad you are here testifying on the great 
work that you are doing in Sonoma County on an issue that we 
all care a great deal about.
    Mr. DOLE. The respect is mutual. Thank you, Mike.
    Chairman LEVIN. Mr. Thompson reminds everybody as to where 
he comes from and the issues that matter most to him.
    Mark Bolinger is a Research Scientist with the Lawrence 
Berkeley National Laboratory, also in Berkeley, California.
    The Honorable David Bohigian is the Managing Partner of E2 
Capital Partners in Bethesda, Maryland.
    We give you a special welcome. I think, Mr. Bohigian, you 
have the least far to go after sitting here all day. We really 
doubly thank all of you for taking the time.
    You probably were able to hear some of the last panel. I 
hope you were not here for the first panel, which means you 
would have been here all day.
    Again, a special thanks. I think, Mr. Camp, you agree, this 
has been a particularly informative panel, so we will be doubly 
sure that your testimony is well distributed and we hope well 
understood.
    I think we will start with you, Dr. Burns, and just go down 
the row, and if each of you would take 5 minutes. If you want, 
you can refer to your testimony. In any event, it will be 
entered into the record.

 STATEMENT OF STEPHANIE BURNS, PH.D., CHAIRMAN, PRESIDENT AND 
              CHIEF EXECUTIVE OFFICER, DOW CORNING

    Ms. BURNS. Thank you very much, Chairman Levin and 
Representative Camp, for the opportunity to be part of this 
third panel, an important panel today, and to represent 
Michigan.
    As to the growth of renewable energy in America, in 
particular, solar is very important to me personally and 
professionally, as a scientist and as a Chief Executive 
Officer.
    I really do believe our country is at the dawn of a new 
energy era, a transformation that will provide more clean 
energy, options like solar, wind and other renewable sources, 
as well as energy efficiency products that will change the way 
we purchase and use energy in our lives and in our businesses.
    Dow Corning is one of the world's leading manufacturers of 
silicon based products, contributing technology and materials 
along the entire solar value chain. Most notably, at the very 
beginning of the manufacturing process, with polycrystalline 
silicon.
    We are also involved in a number of energy efficiency 
technologies from automotives to appliances and especially in 
green building construction.
    As a result, I know firsthand that America's energy 
transformation is inextricably linked to our Nation's economic 
and manufacturing future.
    This transformation calls for new partnerships, requiring 
the joint leadership and investment of the government and 
private industry. Working together, we can achieve innovative 
policies and prescriptions that address education and workforce 
development, advancement in manufacturing, technology 
deployment and market readiness.
    With forward thinking leadership and management, this 
transformation will bring with it new industries, hundreds of 
thousands of new jobs, a sustainable source of economic growth 
and a reduced carbon footprint, all good for our country and 
for our global environment.
    For our part, Dow Corning has announced more than $5 
billion in investments in solar technology and manufacturing 
capability in the past 5 years.
    While most of that is in capital for advanced manufacturing 
operations in polycrystalline silicon and in saline for 
flexible thin film solar applications, it also includes 
research and development to improve the performance and cost 
efficiency of solar cells and modules, and investments in 
training and education in our local communities.
    We have been on the receiving end of economic development 
offers from other nations, nations that have aggressive 
policies to support the growth of renewable energy in their 
country.
    Companies like ours predisposed to manufacture in the 
United States are attracted by foreign tax structures that 
encourage them to do otherwise.
    It is time for America to enact policies that will 
essentially assure this industry growth here. If we have a tax 
structure that encourages investments and job growth, coupled 
with an increase in domestic consumer awareness and demand for 
renewables, the U.S. will win.
    The advanced energy manufacturing tax credit included in 
the American Recovery and Reinvestment Act was a significant 
first step toward establishing that winning combination.
    The tax credit is encouraging companies like mine and our 
joint venture, Hemlock Semiconductor, to manufacture solar and 
other renewable energy components here in America.
    As a result, we are seeing thousands of jobs in 
construction, engineering, science and skilled trades.
    I am pleased to tell you that Dow Corning benefits from the 
advanced energy manufacturing tax credit. Our customers are 
benefiting and green jobs in our operations are real and 
affecting real families.
    As you know, this tax credit was capped at $2.3 billion, 
and was significantly over subscribed. That is a good thing. 
Both the White House and the Department of Energy indicate that 
many qualified projects were not funded.
    With that in mind, I hope this credit can be made permanent 
or at least long term in any energy climate or jobs bill now 
under development.
    The permanency will help businesses, large and small, plan 
for capital investments in the U.S., and more importantly, it 
signals that this country is serious about leading in the 
global renewable energy sector.
    To build on that and to truly implement the transformation 
before us, Dow Corning proposes a four point plan to address 
technical legislative regulatory manufacturing and workforce 
related factors that influence America's ability to develop a 
thriving domestic renewable energy industry.
    First, we encourage Congress and the Administration to 
enact new Federal policies and regulations that will encourage 
the rapid development and deployment of energy efficient and 
renewable energy technologies.
    We can create new jobs and businesses and promote U.S. 
competitiveness in the global markets and improve the 
environment and increase our energy security.
    We propose a robust Federal renewable energy standard and 
Federal interconnection and net metering standards, all part of 
the larger effort to increase the adoption by Americans.
    I have already mentioned the immediate need for Federal tax 
incentives to spur domestic manufacturing and compete in the 
strength of foreign offerings.
    Despite anticipated domestic growth in renewable energy 
installations, the majority of manufacturing occurs outside the 
United States, in such countries as China, Germany, Malaysia 
and the Philippines, roughly 40 percent of the manufacturing 
tax credits in high demand markets.
    Let's make sure when a corporation is looking to build a 
manufacturing facility the competition is between the states 
here at home and not countries overseas.
    Second, we advocate for increased Federal funding for 
research and development to accelerate solar technology 
innovation and to advance solar manufacturing capabilities.
    We are already today ready to provide seed moneys for an 
American solar research consortium. Dow Corning has spearheaded 
this concept. We have customers, shareholders and universities 
ready to join us in this consortium, even the State of Michigan 
is committed to providing funds. However, the state requires a 
Federal match.
    Today, $6 million in Federal matching funding would move 
this consortium from a concept to immediate ground breaking, 
and this consortium would move solar technology faster to the 
marketplace.
    Third, we support the need to develop green collar 
workforces by supporting training programs, like the programs 
we are already co-sponsoring with Delta College in Michigan and 
with Austin Peay State University in Tennessee, as well as 
training partnerships with non-profit organizations and centers 
of excellence at academic institutions nationwide.
    Fourth, we need the Federal Government to lead by example 
in the implementation of clean technologies, through 
procurement of on-site generation, building retrofits for 
energy efficiency, and new green building standards.
    Finally, but certainly no less important, Congress must 
ensure that new policies to reduce greenhouse gas emissions do 
not inadvertently discourage growth in the manufacturing and 
production of renewable energy sources.
    Yes, we are in favor of a Congressional solution to the 
greenhouse gas regulations.
    I am proud to be one of the more than 10,000 Dow Corning 
employees who are coming to work every day energized to be part 
of the solution. We are committed to a climate of 
collaboration, creativity and urgency for greater energy 
security.
    As a global company, we know that it is fundamental to 
protecting our Nation's competitiveness in the decades to come, 
and fundamental for our economic growth.
    We are hopeful that Congress will continue to do its part 
by enacting policies and incentives to encourage private sector 
investments.
    I look forward to working with each of you as we move to a 
clean energy economy that protects our environment and secures 
energy independence.
    Thank you.
    [The prepared statement of Ms. Burns follows:]

        Prepared Statement of Stephanie Burns, Ph.D., Chairman,
           President and Chief Executive Officer, Dow Corning

[GRAPHIC] [TIFF OMITTED] T3079A.094

[GRAPHIC] [TIFF OMITTED] T3079A.095


                                 

Chairman LEVIN. Thank you very much.
    Mr. Hundt.

STATEMENT OF REED HUNDT, CHIEF EXECUTIVE OFFICER, COALITION FOR 
                         GREEN CAPITAL

    Mr. HUNDT. Good afternoon, Mr. Chairman and Ranking Member 
Camp. I am here as the Chief Executive Officer of the Coalition 
for Green Capital.
    On a personal note, I would like to recognize the 
importance of Michigan on both the Republican and Democratic 
side. I was born in Ann Arbor and I will be going back there 
with my wife for the graduation of our son from the Ross School 
of Business in 2 weeks, assuming the President squeezes us in 
along with the rest of the crowd.
    I met many of the Members of your Committee a decade ago, a 
decade and a half ago, when I was the Chairman of the Federal 
Communications Commission. I mention that because not at all 
exclusively because of Federal regulation, but significantly 
because of the 1996 Telecom Act, a bipartisan measure, that of 
course started in the House and eventually got through the 
Senate.
    Because of that, American entrepreneurs, private equity 
investors, investors from all over the world spent about $1 
trillion building a new America's communications network. 
Everything that we know today, whether we are Twittering or 
Blackberrying or making a cell phone call, is almost always on 
a network that was built some time between 1995 and today.
    That tremendous colossal private sector investment created 
about one-fifth of all of the jobs created in the 1990s, the 20 
million new jobs that made the 1990s the best decade in our 
lifetime for American workers.
    It is that same rebuilding of our buildings in America so 
they are energy efficient and our electricity network, so that 
it is founded on a clean basis and a renewable basis, instead 
of a carbon emissions intensive basis, it is that same 
rebuilding in both respects, in the way we use energy and in 
the way we produce it that we will do two things.
    It will create again about five million new jobs, and it 
also will lead to absolute national security and world 
leadership in the effort to have a clean economy.
    In very, very broad terms, if we invest about $250 billion, 
private sector investment, in replacing existing building 
materials with energy efficient building materials, and about 
$250 billion, the same number, in replacing our carbon 
emissions intensive generation with the less carbon emissions 
intensive generation, those two numbers added together, $500 
billion, should produce about five million new jobs, and should 
give us a reduction of about one-third of the total CO \2\ 
emissions per year in the United States.
    That would take us into world leadership in terms of having 
a clean economy and in terms of carbon abatement.
    Right now, we are 11th in the world in the percentage of 
our GDP that we invest in the change to a clean economy, and we 
are dropping. China is getting farther and farther ahead.
    There are three problems, but first I am going to tell you, 
if you will permit me, I just want to urge two things of the 
many good things that could be mentioned, I want to urge that 
this Committee give serious support to extending Section 1603, 
the grant in lieu of the ITC, for as long as you can see a way 
to do it, and second, I urge this Committee support, as the 
Members have already done in the past, the creation of a green 
bank, such as introduced by Congressman Van Hollen in March of 
2009 in the Green Bank Act, and as Congressman Van Hollen 
knows, whom I had the pleasure of voting for every 2 years, 
that provision was passed in the Energy and Commerce Committee 
51-6. It is a truly bipartisan measure.
    Those are the two suggestions I am going to make. I would 
like to confine my remarks to describing the problem that I 
think those two measures would go a long way to solving. It is 
a three part problem.
    Problem number one. Because of the tremendous drop in the 
total output of the economy, starting with the events of 2008, 
we now have in the United States little or no natural market 
driven new demand for electricity.
    There are a few states that are exceptions, but in most 
states, we have more potential output than we have demand, 
because our total overall consumer demand and business demand 
has dropped so far so fast.
    Therefore, if we depend on the market to demand new forms 
of electricity, we have to wait 6, 7, 8 or 9 years before that 
demand will materialize.
    Lucky China has the fastest growing demand market in the 
world and anybody can sell almost anything in that market. In 
the United States, we have to find a way to replace, not wait 
for new demand.
    Number two, electricity, of all the identical goods and 
services in our economy, none varies more in price state by 
state than electricity. It varies by as much as four times. The 
price in Kentucky, where Congressman Yarmuth is versus 
Connecticut, is almost a four times difference.
    That is because unlike beer and soap and telephone service, 
you cannot send it over a distance without a great expense, and 
also unlike many goods, you cannot really store it.
    Consequently, it needs to be made locally and it is 
consumed locally, which is why the prices vary so much on a 
state by state basis.
    The sad paradox is this. Where emissions are high and 
unemployment is high, the two places you would love to see jobs 
and see the emissions taken out, typically, that is where 
electricity is low priced. Michigan, Ohio, Kentucky, Illinois.
    Somehow, we have to find a way to create incentives for 
firms to put in emissions reduction technologies, for 
businesses to invest in that, and create jobs, precisely where 
electricity prices are low.
    One thing we cannot do, I think, as a practical matter, is 
say to the people in Michigan, at this particular point in 
their history, we know you are paying 9 cents a kilowatt hour, 
why do you not pay 14 cents as a base the way they do in 
California, why do you not pay 17 cents as they do in 
Connecticut, why do you not pay 24 cents the way they are doing 
in Hawaii.
    I would suggest to you that would not be a bipartisan 
measure.
    Somehow, we have to address these problems on a local state 
by state basis, and the third and last problem is this, it is 
just a fact that to have carbon capture for coal facilities or 
combined cycle natural gas or solar or wind, today, the unit 
economic costs are higher than if you were to build a coal 
generation facility.
    They will come down when firms like Dow continue to have 
scale and continue to innovate, but today, it is higher.
    Somehow, we have to lower the price of clean electricity 
and create a way for people to invest in those particular 
products and bring them into the market without saying to the 
consumer you have to lose, and without saying to the 
shareholders of utilities you have to lose. We do not want the 
consumer to lose. We want the consumer to win. We do not want 
the utilities to be punished because we want them to invest in 
this new activity.
    That gets me to the conclusion, which is as Congressman Van 
Hollen outlined in his Green Bank Act, if we create an 
institution that for 20 years, that was the chartered time in 
that Act, for 20 years would provide low cost long term 
financing, and if we make a commitment through tax policy, 
particularly the Section 1603 grant, then those two concepts 
put together mean that it is possible for new investment and 
clean electricity generation, and new financing investment in 
replacing building materials with new efficient product.
    We can have those investments take place so that profit can 
be made and the consumers can be protected.
    Thank you very much.
    [The prepared statement of Mr. Hundt follows:]

         Prepared Statement of The Honorable Reed Hundt, Chief
             Executive Officer, Coalition for Green Capital

[GRAPHIC] [TIFF OMITTED] T3079A.096

[GRAPHIC] [TIFF OMITTED] T3079A.097

[GRAPHIC] [TIFF OMITTED] T3079A.098

[GRAPHIC] [TIFF OMITTED] T3079A.099

[GRAPHIC] [TIFF OMITTED] T3079A.100

[GRAPHIC] [TIFF OMITTED] T3079A.101

[GRAPHIC] [TIFF OMITTED] T3079A.102

[GRAPHIC] [TIFF OMITTED] T3079A.103

[GRAPHIC] [TIFF OMITTED] T3079A.104

[GRAPHIC] [TIFF OMITTED] T3079A.105

[GRAPHIC] [TIFF OMITTED] T3079A.106

[GRAPHIC] [TIFF OMITTED] T3079A.107

[GRAPHIC] [TIFF OMITTED] T3079A.108


                                 

    Chairman LEVIN. Thank you.
    Mr. Dole.

   STATEMENT OF ROD DOLE, AUDITOR, CONTROLLER, TREASURY, TAX 
              COLLECTOR, SONOMA COUNTY, CALIFORNIA

    Mr. DOLE. Chairman Levin, Ranking Member Camp, other 
Committee Members, on behalf of Sonoma County, it is a pleasure 
to be before you. We are really honored for this opportunity.
    I am going to tell you a story. I am trying to see how I 
can bring my PowerPoint up.
    What I am going to do--I would like to tell you a little 
story first, a little background. In 2008, California passed 
Assembly Bill 811. It was authored by Assembly Member Levin in 
California, I thought you would enjoy that, and basically what 
it did, it took a 100-year system, a 100-year process, that 
exists in California and across this Nation, and it said for 
property assessments, where normally we would fund streets, 
highways, curbs, et cetera, we will expand that ability to 
energy efficiency, renewable energy, and water conservation.
    That is called ``PACE,'' property assessment clean energy. 
It was mentioned by Vice President Joe Biden in one of his 
recent speeches.
    It is again a 100-year process that was authorized to 
include these other abilities, and Sonoma County took that bill 
and implemented it.
    What I am going to show you is a simple process, and I am 
going to show you the results of that process. Basically, on 
the ground proof that what we have been talking about works.
    A program basically is authorized for $100 million. We have 
financed that ourselves. We are looking to long-term finance 
this program at low interest rates, and we will talk about 
that.
    In 12 months, we have taken in $41 million in applications. 
We are a half a million population county. This is a 
partnership between our cities and the county, nine cities and 
the county. We have processed and dispersed into our community 
over $23 million. We have paid for $23 million worth of 
projects, and we have $41 million worth of applications going 
through our process.
    We offer this program at 7 percent fixed interest rate, and 
the program is set up to pay for itself, just like any bank. We 
borrow the money at 3 percent. We lend it to the property owner 
at 7 percent, and the 4 percent spread goes toward the 
operating costs of this program.
    That is how we have established this program. We finance 
water conservation, energy efficiency and renewable energy, and 
renewable energy includes solar, wind, geo-exchange.
    This just shows a map of Sonoma County. Hopefully, you have 
been to the wine country. Mike talks about that probably, and 
so do I.
    All nine of our cities are members of this program.
    One of the things we are impressed with is the value this 
is adding to the property. The property owners realize that if 
they volunteer, and this is a volunteer program, they enter 
into an application process, they agree, if you will, to tax 
themselves for the next up to 20 years in order to finance 
these improvements to their properties.
    What we have shown here is how that is broken down. Over 
half of the people are electing to do retrofit on their 
property, and a little less than half are doing solar or 
renewable energy.
    To date, we have actually generated 2.9 megawatts of new 
energy for Sonoma County. Basically, we could power up 800 
homes for an entire year with what has been generated over the 
last 12 months with this program.
    This is just to give you a sense for the growth. The top 
line there is our applications on a weekly basis. We have been 
following this program from the beginning. Our first concern 
was that no one would come through the door and no one would 
fill out an application.
    We did a professional marketing survey, and we found out 
that over 20 percent of our property owners would sign up with 
this program currently. What we really need is 50 to 80 percent 
of our property owners because we know one of the huge carbon 
emitters is property.
    The blue line there is our actual disbursements monthly. We 
make disbursements every month. As I said, we are over $23 
million at this point. We are growing at a rate of about $2.5 
to $3 million per month.
    This is just a breakdown. One of the side benefits to this 
is retail sales. In order to make improvements of property, you 
have to buy the materials. It is improving both goods and 
services in the area.
    This slide shows the growth in employment. The blue lines 
are the funded projects as they came in on a monthly basis. The 
red line is the jobs as shown to us by the California 
Employment Development Department of increase in green building 
jobs during that same period.
    The other way that we thought we would predict this is ARRA 
has estimated at the Federal level that every $92,000 put into 
the economy will generate a job. Our program to date should, 
under that guideline, have generated 252 jobs. That is just 
little Sonoma County.
    We are looking for a partnership. We need help in basically 
three areas, all of them in funding. We need long-term low cost 
funding. We need what we call ``warehouse funding;'' in order 
to sell bonds, we have to have volume. We have to have $20, 
$40, $100 million in contracts in place.
    What we are doing in Sonoma County is we are financing that 
until there is enough volume that we can sell long-term bonds, 
and there are investment firms and banks interested in buying 
those bonds, but there is some interest rate risk there.
    Many jurisdictions do not have the startup money for 
starting this program. It is relatively easy to replicate, but 
it needs startup money.
    In the case of Sonoma County, that startup was a line of 
credit for $1 million. We are probably going to use about half 
of that.
    The long-term funding, Congressman Thompson has been very 
helpful and very close to our program. He has sponsored H.R. 
3525, which would allow tax exemption for these PACE bonds.
    We are also offering that maybe PABS expand the definition 
of ``capital expenditure'' to include PACE bonds; it might be a 
better avenue.
    The energy bank is exciting to us because again it would 
provide low cost financing.
    The intent here is to pass low cost interest rates down to 
the property owner and make this even a better, more motivated 
program.
    With that, I am open to any questions.
    [The prepared statement of Mr. Dole follows:]

   Prepared Statement of The Honorable Rod Dole, Auditor-Controller-
       Treasury-Tax Collector of Sonoma County, County of Sonoma

[GRAPHIC] [TIFF OMITTED] T3079A.109

[GRAPHIC] [TIFF OMITTED] T3079A.110

[GRAPHIC] [TIFF OMITTED] T3079A.111


                                 

    Chairman LEVIN. Thank you very much. Very interesting, 
indeed.
    Mr. Bolinger.

   STATEMENT OF MARK BOLINGER, RESEARCH SCIENTIST, LAWRENCE 
                  BERKELEY NATIONAL LABORATORY

    Mr. BOLINGER. Thank you, Mr. Chairman and Members of the 
Committee. My name is Mark Bolinger, and I am a research 
scientist at Lawrence Berkeley National Laboratory, where I 
conduct research on renewable electricity markets and policies, 
with funding from the U.S. Department of Energy.
    The purpose of my testimony is to summarize findings from a 
preliminary Berkeley Lab evaluation of the first year of the 
section 1603 Treasury cash grant program.
    As you know, this is a Recovery Act program that enables 
renewable power projects to elect cash payments in lieu of tax 
credits.
    Berkeley Lab's selective review of this program was 
prompted by this Committee's request for assistance in 
evaluating the program's effectiveness, and I am submitting as 
part of my written testimony a recent Berkeley Lab report that 
responds in detail to the Committee's request.
    Just to be clear, neither the Berkeley Lab report nor my 
testimony today advocates any particular policy position with 
respect to the section 1603 program.
    I should also note that the Department of the Treasury, 
which administers the program, did not participate in this 
evaluation other than as a data provider.
    With those preliminaries out of the way, our first key 
finding is that the Section 1603 program has been heavily 
subscribed, particularly by wind power projects.
    As of March 1 of this year, wind power had received 86 
percent of the nearly $2.6 billion in grants that had been 
dispersed through this program, followed distantly by 
geothermal at 6 percent, solar at 4.5 percent, and biomass at 
2.8 percent.
    In capacity terms, wind power accounted for nearly 3,900 
megawatts of the 4,250 megawatts of all renewable power 
technologies supported by the program as of that date.
    In addition, the Department of the Treasury has indicated 
that as of March 1, another 2,300 megawatts of wind power that 
were built in 2009 had applied for but had not yet been awarded 
cash grants under this program.
    In total, roughly 6,200 megawatts or about 62 percent of 
all wind power capacity built in the U.S. in 2009 had applied 
for grants as of March 1. More broadly, with the high 
proportion of both geothermal and biomass projects also 
choosing the grant, it is clear that the majority of all 
renewable power capacity built in 2009 elected the grant in 
lieu of either the production tax credit or the investment tax 
credit.
    Some projects that have elected the grant have appeared to 
have done so opportunistically rather than out of necessity. 
For example, we estimate that if a section 1603 program did not 
exist, perhaps 3,800 megawatts of wind power that had applied 
for the grant as of March 1 would likely still have been built 
in 2009 using the production tax credit.
    However, the costs imposed on the U.S. government by this 
opportunistic behavior consist primarily of the difference in 
the present value of the grant versus the production tax 
credit, which is a difference that we find relatively modest on 
average.
    Moreover, the flip side of this issue is that many 
renewable power projects built in 2009 do appear to have been 
motivated at least in part by the grant program.
    We estimate that as many as 2,400 megawatts of wind power 
representing almost one-quarter of all wind power capacity 
installed in the U.S. in 2009 may not have been built last 
year, absent the section 1603 program.
    These 2,400 megawatts of incremental wind power have helped 
to retain or create jobs in the U.S. Using the National 
Renewable Energy Laboratory's Jobs and Economic Development 
Impact model, or JEDI, we estimate that these 2,400 megawatts 
of wind may have supported approximately 51,600 short term full 
time equivalent gross job years during the construction phase 
of these projects, and 3,860 long-term full time equivalent 
gross jobs during the operational phase.
    Moreover, the JEDI model estimates that the majority of all 
wind industry jobs supported by the section 1603 program are 
located right here in the U.S.
    Now, I do want to emphasize that these jobs estimates are 
based solely on modeling runs and are therefore inherently 
uncertain. One must also recognize that these estimates are of 
gross rather than net jobs. In other words, the JEDI model does 
not account for the fact or the possibility that job gains in 
the wind industry will come at the expense of job losses in 
other parts of the energy sector or broader economy.
    A more fairer employment analysis would therefore need to 
consider such macroeconomic influences and focus on net rather 
than gross job impacts.
    Finally, the Berkeley Lab analysis touches on a number of 
issues and possible concerns with the design and implementation 
of the section 1603 program.
    One of these potential concerns is that the 30 percent 
grant rewards investments rather than efficient employment, 
which might call into question the types of incentives being 
created by this program.
    Based on the data currently available to us, however, we 
find no reason at this time for widespread concern with respect 
to either the cost or performance of projects that have 
received section 1603 grants.
    With that, Mr. Chairman, I conclude my statement and I 
would be happy to answer any questions you may have.
    [The prepared statement of Mr. Bolinger follows:]

             Prepared Statement of Mark Bolinger, Research
            Scientist, Lawrence Berkeley National Laboratory

[GRAPHIC] [TIFF OMITTED] T3079A.112

[GRAPHIC] [TIFF OMITTED] T3079A.113


                                 

    Chairman LEVIN. Thank you very much. Your report was 
requested by you, Mr. Rangel.
    Mr. RANGEL. Stellar job. Thank you so much.
    Chairman LEVIN. In February of 2010.
    Mr. BOLINGER. That is correct.
    Chairman LEVIN. That is a fairly prompt response.
    Mr. BOLINGER. Yes.
    Chairman LEVIN. Thank you.
    Mr. Bohigian.

   STATEMENT OF DAVID BOHIGIAN, MANAGING PARTNER, E2 CAPITAL 
                            PARTNERS

    Mr. BOHIGIAN. Thank you, Mr. Chairman and Ranking Member 
Camp and Members of the Committee for the opportunity to appear 
before you today to discuss some key issues, and I want to say 
how impressed I have been with the Committee today and engaging 
in substantive discussion, and with all the panels, in what has 
been, I am sure, a long day for you.
    I am a small businessman. I am working to establish a firm 
that will deploy energy efficient equipment throughout 
commercial and industrial properties in the United States.
    What I am talking about is HVAC systems, lighting systems, 
windows, and climate control systems, that I am allowing the 
end user to avoid the up front costs, and we all share in the 
savings as that equipment is being used over years.
    My partner and I started this company because we believe 
there is enormous opportunities to do well and to do good. We 
need to solve key market barriers that have prevented the 
deployment of the cleanest form of energy, which is invisible, 
but it is there, it is energy efficiency.
    This business model has been proven to work in government 
buildings and in municipalities, universities, schools, 
hospitals. We are looking to extend that to the private sector, 
where most of the buildings are.
    Our success will not depend upon government grants, tax 
incentives or subsidies. Each of our projects has a positive 
rate of return without using taxpayer dollars. In fact, if you 
look at McKinsey's studies on this, energy efficiency and the 
positive rates of return there in fact help pay for a number of 
the renewable energy technologies that we talk about.
    By using existing energy efficient technologies, that pay 
for themselves, the United States could cap its increase in 
energy demand and greenhouse gas emissions.
    While policy makers and the public are primarily focused on 
renewable energy, I believe minimal consideration has been paid 
to projects that deploy commercially proven equipment into 
existing commercial industrial buildings.
    Over my lifetime, energy efficiency has accounted for 
nearly three-quarters of the demand for new energy services. 
Today, energy efficiency alone is twice the size of the 
renewable energy market and can continue upon that pace for 
years to come.
    Businesses understand they must conserve energy to remain 
competitive. Although the benefits of energy efficiency are 
well documented and the demand for energy efficiency continues 
to grow, companies frequently choose not to deploy energy 
efficient equipment.
    In addition, vendors are not structured to finance their 
customers. In fact, the Department of Energy found that even 
with the median pay back of 1.3 years, more than half the 
projects they recommended were not accepted by industrial 
customers. This is not a credit story for the past 2 years. 
This is a 20 year survey of over 40,000 projects they 
recommended.
    Of those projects that were rejected, a majority were 
rejected for financing reasons.
    Thousands of energy efficient projects are being deferred 
every year. Realizing the potential of energy efficiency 
requires overcoming some of these obstacles.
    When the U.S. Government has focused on energy efficiency, 
it has primarily focused on retrofitting its own buildings, 
which I commend, as well as the residential sector, which I 
commend, but I would also like to talk more about how to 
incentivize the commercial and industrial sectors.
    I would also like to say it is my belief that I do not 
think our national goal should be trying to choose specific 
energy production or energy efficiency technologies to receive 
taxpayer assistance.
    I believe it should be generating measurable and 
identifiable and verifiable savings in energy intensity.
    In addition, while tax incentives have a role, I believe 
other mechanisms may be better suited to encourage the private 
sector and private investment without additional burdens to 
taxpayers.
    Our business model relies on measured and verifiable 
savings that create income streams without taxpayer assistance.
    Some public policy would be helpful, and I want to list 
five measures that I think could help. We have heard about the 
PACE program and allowing commercial building owners to pay for 
energy efficiency equipment through an annual assessment on 
their tax bill.
    This model being adopted in Sonoma and other state and 
local levels in this country have been primarily targeted at 
residential development. I would like to see that expanded to 
include the commercial sector as well and see if there is a 
Federal mechanism that might be able to help on the tax bill as 
well.
    In addition, the Title 17 loan guarantee program has been 
helpful, but it is targeted on new energy efficiency 
technologies rather than proven technologies. I believe looking 
at that program and seeing which technologies could actually 
help reduce our energy use and improve our energy intensity 
bears consideration.
    I believe that extending and potentially expanding the 
energy efficient commercial building tax deductions could be 
helpful.
    I think allowing more rapid depreciation of capital 
equipment and energy efficiency retrofits would also spur the 
market, and last, while it is typically a state and local 
responsibility, helping to develop model building codes that 
encourage energy efficiency through retrofits would be helpful.
    Building owners and policy makers at all levels understand 
that improving energy efficiency is the key to our 
competitiveness.
    I have talked to manufacturers and contractors and vendors 
in lighting, windows, heating, insulation, and other fields 
across the United States that have the ability and the desire 
to serve this market that are going to help create 
manufacturing jobs and insulation jobs in this country.
    I thank you for your time today and know that we stand 
ready to assist Congress in making American businesses become 
more efficient, competitive and create the jobs for the future.
    Thank you.
    [The prepared statement of Mr. Bohigian follows:]

          Prepared Statement of The Honorable David Bohigian,
                 Managing Partner, E2 Capital Partners

[GRAPHIC] [TIFF OMITTED] T3079A.114

[GRAPHIC] [TIFF OMITTED] T3079A.115

[GRAPHIC] [TIFF OMITTED] T3079A.116

[GRAPHIC] [TIFF OMITTED] T3079A.117

[GRAPHIC] [TIFF OMITTED] T3079A.118

[GRAPHIC] [TIFF OMITTED] T3079A.119


                                 

    Chairman LEVIN. Thank you very much. I have a question. Let 
me suggest, Mr. Rangel, why do you not go and then Mr. Camp and 
then our colleagues, Mr. Johnson and Mr. Van Hollen, and then I 
will wrap it up with a question if you have not covered it.
    Mr. Rangel.
    Mr. RANGEL. First, let me thank all of you for your 
patience. This is rather unusual that we would have invited 
guests to come here and then we have to spend so much time on 
the Floor. I hope you heard me thank you generally without the 
mike.
    I also, Mr. Bolinger, would like to thank your outfit for 
the speedy action that you have taken and sharing with us 
whether these programs are working or not.
    My question is to try to get a feel as to where our country 
is as it relates to conservation of energy. I think it goes 
unchallenged that as it relates to dependency on fossil fuel, 
climate, health, and all these things, that the urgency is well 
known by the political, manufacturing and economics' circles.
    As it relates to the consumer, I am not convinced that on 
the issues that they think are important, that this even gets 
on the scale of what they want economists to do.
    I also believe that our country has put a lot of men and 
women in harm's way in order to protect oil because of our 
dependency on this fuel, so there is no question that our 
national security, our foreign policy, our economic decisions 
are based on what we are talking about today.
    I do not know how many of you actually have driven down the 
highways during the days in every major city and see the lights 
are on. I do not know how many of you go to our towns and 
villages after 6:00 or 8:00 or 10:00 and see every light on, 
the air conditioner and the heat, whatever it may be.
    I do not remember hearing, except when my grandfather would 
give me hell saying put out that light, you are wasting 
electricity, which of course, it was a cost issue, and I have 
never forgotten it.
    All that we are doing in terms of providing tax credits and 
removing subsidies from oil, people get critical about what it 
means about their pocketbook.
    We had an experiment, I think, that we asked people to cut 
off electricity for 1 hour or 1 day of a year to see what the 
impact would be. Can any of you give me just a baseball park 
percentage of the waste of energy in terms of the American 
consumer?
    I do not want to get back to the Carter days and tell 
people they cannot have Christmas lights and they have to wear 
a sweater, and I do not want to put all the lights out in Times 
Square because it is a tourist attraction, and we need the 
money.
    I do not really think that people think we have a crisis to 
the extent that people are dying on the battlefields as well as 
with health problems because of this serious problem that all 
of you have studied, investigated, and thank you for the work 
that you are doing to put us on the right track.
    But are there any ideas about consumption that strike you 
that we are not doing? Mr. Dole.
    Mr. DOLE. One of the reasons we tried this program is we 
really felt the community was ready for a cultural change. They 
were thinking along the line that you were. One is that we need 
to conserve on energy. Two, we need to do the right thing.
    What we associate it with is sort of like recycling. 
Nowadays the communities, the population, they have an aluminum 
can in their hand, they're looking for a recycle center. Our 
program is raising that consciousness, that culture, to turn 
off the lights. But even more importantly, to be more efficient 
in their use of energy. And that's what our program has shown.
    Mr. RANGEL. Mr. Dole, your program is very unusual, and you 
provide the incentives, out-of-pocket expenses, improvement, 
and property, and a whole lot of things that a guy living in an 
apartment house in Harlem--besides that electricity bill.
    But there is no sense in America that there is a national 
crisis. And I'm saying that we're paying for this dearly, and 
the threats, in terms of what happens to our economy in the 
future, and China, and all of these other things, and we're 
concerned about annoying our constituents and talking about 
taxes and climate control, and all the things they don't 
understand.
    Do you think our government is doing enough there? Do you 
think Members of Congress are doing enough? Is the message out 
there, that conserving electricity--I mean it's one thing to 
say, ``We give you a tax incentive, you can buy the appliance 
and it costs less,'' and people say, ``Hey, if I can save a 
couple of bucks,'' but I don't see anybody lecturing their kids 
or grandkids about this being a national or international 
issue. I don't.
    And make no mistake about it, come election times we want 
to do what our constituents want us to do. And if this is not 
on their agenda at the town hall meetings, we will wait until 
after we are reelected for the educational bit. But the 
priority is going to be getting reelected. And we just hope 
when we tell them this they don't think that we're just 
lecturing to them.
    And I feel there is a vacuum. Does anyone agree? Do you 
think Americans are sufficiently educated to know how serious 
the problem is?
    Chairman LEVIN. Anybody want to take a brief crack at that?
    Mr. DOLE. I would like to agree with Mr. Rangel. I think 
that the fundamental problem is that in order to have more 
efficient windows, or more insulation in the ceiling or 
whatever is the specific step, if you go to the consumer or to 
the business in the building, the proposition right now is, 
``Please take money out of your pocket, invest it in this 
structure, and over the course of time there will be savings 
and you will be glad you made the investment.''
    But, Mr. Rangel, you are absolutely right. A renter doesn't 
really do that math and say, ``I would like to spend the 
money.'' If your mortgage on your house is bigger than the 
value of the house, you're not thinking, ``I want to put more 
money into this house. Maybe I won't even be able to stay in 
this house.'' If you might lose your job, you are thinking, ``I 
need to save the money for food. I don't have time to make an 
investment that won't pay off for 5, 6 or 7 years.''
    The overwhelming majority of Americans, they can want to 
save that money on the electricity bill, but they have done the 
math in a variety of ways, and they've reached the conclusion 
that they just can't do it.
    So, one of the virtues of a green bank would be to loan 
money at the kind of low rates that we were just told about in 
the PACE program, and to loan it to the people who will have 
the incentive to make these investments over a long-term, to 
loan it to commercial real estate owners, to loan it to 
utilities who are then able, over the course of time, to hire 
people to go in and do the projects, to loan it into the kinds 
of businesses that Dow not only is, but also that constitute 
Dow's customers.
    Mr. RANGEL. That works.
    Mr. DOLE. That will work.
    Mr. RANGEL. And I appreciate it. But how could we go on a 
highway and see the lights on, as all of you have seen during 
the daytime without saying, ``My God.'' He's not a terrorist, 
but somebody is letting America down.
    How do we see buildings with no one in them closed, and all 
the lights on? There has to be something about consumption, 
that we just ignore that as we go after the homeowner and give 
incentives. I'm just saying I don't think America really knows 
how serious this problem is. And I want to thank you for what 
you're doing.
    If you are satisfied there is nothing else to be done in 
terms of national education, then I will have to find another 
panel someplace else. But right now, I want to thank you for 
your contributions. What you are doing is important, but I 
think it's a drop in the bucket, in terms of how urgent the 
problem is. Thank you.
    Chairman LEVIN. Mr. Camp.
    Mr. CAMP. Well, thank you. Thank you, Mr. Chairman, and I 
want to thank all of you for being here, and for your 
testimony. I just have a couple of questions.
    Mr. Bohigian, can you just elaborate a bit on the types of 
measures--just quickly, because I know time is very limited 
here--on the measures you can take to reduce energy consumption 
in buildings and industrial facilities, as you testified, and 
compare that--the environmental benefits and net reductions--
and compare that to converting a building to an entirely 
different type of energy.
    Do you have any--or if you can't quickly answer that, if 
you could, get back to me in writing on a comparison of the two 
approaches, because we have heard a lot about alternative forms 
of energy, and I would just like to see the cost and benefits 
of moving forward on the approach that you have outlined.
    Mr. BOHIGIAN. Well, on a national scale I will give you an 
idea. As we talk about 2 to 4 to 6 to 8 percent as our 
percentage of renewables that we're using in the economy, our 
typical projects are 20 and 30 percent savings at the building 
level.
    So, it's clear to me, as I said, over the past 40 years, 
energy efficiency continues to account for the lion's share of 
energy savings in this country, and the generation and 
renewables simply can't match that in the short term.
    Mr. CAMP. All right, thank you. And, Dr. Burns, I know that 
Dow Corning and their joint venture, Hemlock Semiconductor, 
manufacture solar and other energy-related products. And I know 
that's a very energy-intensive industry. And I know that--and I 
think, for example--I have heard this, if this is accurate--
that Hemlock Semiconductor is the largest single point user of 
energy in the entire state of Michigan.
    Ms. BURNS. Either the largest or second, yes.
    Mr. CAMP. Yes, up there in--one of the top. Can you tell me 
how sensitive you are, as a company, to higher energy costs and 
the comparisons between costs, both regionally and 
internationally?
    Ms. BURNS. Yes. I mean, this industry is extremely 
sensitive to energy costs, because it takes a lot of energy to 
produce this very pure material that goes into the solar cells 
and modules.
    On average, the energy that we use is converted into energy 
savings of about 10 to 15 times that. So, these solar cells 
that last 20, 25, 30 years obviously save a lot of energy in 
their lifetime. But the actual production of the raw material 
takes a lot of energy. We are very sensitive to it. It is one 
of the top components, in terms of deciding where to locate our 
manufacturing plants.
    And, fortunately, we were able to choose Michigan and 
Tennessee, primarily because of the incentives and the good 
rates that we were offered. But on a globally competitive 
basis, that is clearly something that other companies are 
looking at. About 100 new polysilicon plants are announced to 
go into China right now. And a lot of that is driven by labor 
costs. A lot of it is driven by the government's priority on 
solar and renewables, and on attractive energy rates that 
clearly are coming through government support.
    Mr. CAMP. Well, I think that's an important point. While 
the actual facility is a high-energy user, as you go downstream 
into the actual manufactured product you see significant energy 
savings with the use of the solar products that are 
manufactured.
    Ms. BURNS. Correct.
    Mr. CAMP. So, as you look just at one entity, you might 
view them as a high-energy user. But as you get further down 
the chain, it changes dramatically.
    I also wanted to mention--I have just a few minutes left--
the Manufacturing Jobs Creation Act that Congressman Mike 
Thompson has introduced, and a number of Members of the 
Committee are cosponsors, including Chairman Levin and myself. 
The bill, obviously, would make capital investments in plants 
and machinery eligible for a 30 percent investment tax credit 
already offered under section 48.
    Can you just comment on the investment and employment 
impact you might expect such a credit would have?
    Ms. BURNS. Yes. I think it would be huge, and I am a strong 
supporter of this proposal. We are the very first step in the 
value chain. Most of the intermediate steps are not done in the 
United States of America. Most of our product that is shipped 
offshore is converted into cells and modules and then for the 
U.S. market, it gets shipped back.
    We have customers who want to invest in America. They want 
to put their manufacturing plants here, because this is where 
the growing market is for solar.
    This will help them make that decision. This will be an 
incentive that is more globally competitive. It will give them 
certainty in their investments and predictability in terms of 
their returns.
    We have many customers who would like to co-locate in 
Michigan and Tennessee because our material shipment to them 
would be extremely efficient.
    Many of them are Asian customers who do not know how to 
maneuver in the regulatory and political environment in the 
U.S. And are seeking our help and support and partnership to do 
this.
    I think it would be huge and I strongly encourage it.
    Mr. CAMP. Thank you very much, Mr. Chairman.
    Chairman LEVIN. Thank you. Mr. McDermott.
    Mr. MCDERMOTT. Thank you, Mr. Chairman.
    I served in the state legislature in the 1970s and 1980s 
during the era of ``oops,'' and I watched utility guys come in 
and tell me--they would draw these lines about how demand was 
going to continue to go up.
    You are saying, Mr. Hundt, that it is a little off at the 
moment for whatever reason and those lines do not make much 
sense, and it seems to me the conservation part of this is 
really what is most important at this point to really get up on 
top of not only from a green jobs standpoint but from an 
availability of energy at the moment.
    I would like you and Mr. Dole to talk about both the 
qualified residential energy efficiency bonds and the credit 
bonds, in terms of is there anything we need to do to make them 
work better or make them more usable by local governments?
    I sponsored this stuff when we put it in before. For me, it 
is an oversight question. Is it working? Please tell me.
    You can talk about Sonoma County, but you can talk about 
the country. That is why I wanted the two of you.
    Mr. HUNDT. Yes is the answer. First, as to electricity 
demand, normally, it goes right with GDP. In the year we have 
just gone through, this very difficult year, it is down about 3 
percent. You would expect it to be up about one to 2 percent 
every single year, not enough demand to cause a lot of 
investment really in anything new.
    It is going to be necessary, if we want to take the CO \2\ 
out of the air, it is going to be necessary to replace building 
materials that are already installed with something more 
efficient, and to replace carbon intensive generation with 
something that is less carbon intensive.
    We have a replacement story in the United States and a 
growing economy like China, they have a meet new demands story, 
which is why they are on a path to be number one in solar and 
in wind and in hydro and in coal and in nuclear.
    Mr. MCDERMOTT. Is our tax structure tailored to the 
question of replacement rather than new demand?
    Mr. HUNDT. No, it is not. When we talk about--it is 
certainly true that this Committee in the last 18 months has 
done many, many important things that have re-tailored the 
structure, but in order to say for the next 10 years and 
starting right away so you can really build projects that can 
come on stream in the next 10 years, do we have that kind of a 
commitment yet? Predictable long-term, large scale? We do not.
    Do they have that in China? Absolutely, they do.
    In terms of international competitiveness.
    Mr. MCDERMOTT. Competitiveness, and in terms of putting our 
people to work right here in our own country, making that long-
term, large-scale commitment to a beneficial tax policy and a 
very favorable financing environment. That's the special 
province of this extremely important committee. It is also an 
absolute necessity in the United States.
    Very, very specifically, the green bank, as designed in Mr. 
Van Hollen's bill, would have the power to--and I think 
absolutely should, among other things--make loans to PACE 
programs so that some of the startup costs that we heard about 
could be provided from that particular green bank. Otherwise, 
you're asking too much of local entities, in terms of just 
doing it on their own.
    Mr. DOLE. I believe your second question--and thank you for 
that question--regarding the QUIBS. The issue for us was that 
our allocated portion of the QUIBS was, like, $5 million.
    Mr. MCDERMOTT. Nothing.
    Mr. DOLE. As you could see, our disbursements per month are 
running about $2.5 million to $3 million. So we would have gone 
through a lengthy process, but only have received $5 million. 
The reality was----
    Mr. MCDERMOTT. Why was it allocated that way? Was it the 
capital----
    Mr. DOLE. It's allocated based on population. So each state 
gets a share, and then each local jurisdiction got a share. 
When we did the math, our share was $5 million. We realized 
early on that, in order to have a viable program that could 
actually sell bonds later on to the markets, we needed to build 
a volume of at least probably $100 million to $200 million in 
contracts.
    So, it was very helpful. Unfortunately, the amount was so 
small that we just needed a larger share. We had hoped and 
discussed with other organizations about the idea of maybe 
creating a competitive process.
    So, in other words, if Sonoma County wanted to show the 
leadership, could demonstrate that it could use a larger 
allocation and bring around more change, then maybe that 
competitive process would work in order to bring around----
    Mr. MCDERMOTT. Sort of a ready kind of process----
    Mr. DOLE. Exactly, exactly.
    Mr. MCDERMOTT. And you have enough flexibility, once you 
have the bonds, to do what you need to do?
    Mr. DOLE. Yes. What we are finding is that if we can 
provide a reasonable interest rate, the property owner--and we 
finance both commercial and residential property--if at a good 
interest rate they will participate in the program--right now 
we're at 7 percent, we're right on the border line. We probably 
have about a 6 to 7 percent withdrawal ratio right now. We 
figure if we could bring in, like, prime mortgage rates--say 5 
to 6 percent--our participation could as much as double at that 
point.
    So, the instrument that you offered is very favorable to 
local jurisdictions. It just needs to be larger in order to 
bring around sufficient change.
    Chairman LEVIN. Thank you.
    Mr. MCDERMOTT. Thank you.
    Chairman LEVIN. Mr. Thompson.
    Mr. THOMPSON. Thank you, Mr. Chairman, and thank you to all 
of you who have come to testify today.
    I just want to make one remark on the political issues that 
Mr. Rangel raised. Even folks who don't get a direct benefit 
from a program such as the one that's running in Sonoma County 
get other benefits. There are business owners--Rod just 
mentioned the commercial guys participate in this. That means 
that the cost to those businesses are kept down so they can 
keep more employees on, they can pass that savings along. In 
this economy, any time you can push that cost curve down, it's 
beneficial.
    And Mr. Rangel has wineries up in his area, and I know that 
the wineries in my district have been using not this particular 
program, but they have been moving to the renewable energy 
innovation. I've got one winery that went from a $40,000 
utility bill a month to a $4,000 utility bill a month.
    And right now, when--you know, the wine industry is having 
a real tough time right now, and that makes a difference in who 
is keeping employees on. And it's a lot like--why some seniors 
say, ``I don't have any kids in school, why should I pay for 
taxes to go to school;'' I think the whole community benefits 
from this.
    And, Rod, I want to commend you, you've done a great job on 
the program. One area that I would like to hear some more 
about--and I hear it, representing multiple counties, and I 
hear it from surrounding counties--the advantage Sonoma County 
is experiencing today in the home improvement sector, the jobs 
that they are creating. I know one county told me, said, ``How 
do we get in on this,'' because Sonoma County is running away 
with the jobs in that particular sector. And the building 
numbers, home building numbers I think, are even better in 
Sonoma because of this program than they otherwise would be. 
Can you comment on that a little bit?
    Mr. DOLE. Thank you, Congressman Thompson. Yes. What we 
have experienced is about a 7.5 percent growth in green 
building jobs during the period since we started this program, 
neighboring counties--unfortunately, in your district--have 
experienced 2 and 3 percent declines in those jobs.
    Now, we can't take all credit for that, for our program, 
I'm sure there is other reasons. But we know that during that 
period of time we put well over $23 million into the economy at 
that time.
    We have--the other side benefits to this is we actually 
have the building industry changing their business model. We 
have Pinnacle Homes, for example. They do high-end development 
homes. They have changed their business model to now make 
alterations. They have, if you will, educated their people to 
be more technically capable of evaluating homes, determining 
what savings could be done and then, if you will, creating a 
plan, an energy plan, for both commercial properties and 
residential properties. They have taken their business and 
changed that business model. That, for us, is exciting because 
they are now successful in two fields, not just one field.
    We have had a number of companies that have partnered with 
us. One of our biggest partners for marketing this program is 
the installers, contractors, businesses. We have a couple of 
businesses--Sun, Light, and Power, also Solar Works up in our 
area--they conduct presentations to the community, both the 
commercial and residential, with me and present this program.
    They have become huge advocates--if you will, my marketing 
staff. And they have also become very responsible to the 
consumers. One of the things that has impressed me is they want 
to make sure their industry doesn't blow it. This is a great 
program, could be even greater program, but they don't want to 
blow it. They know the rest of the Nation is watching this 
program. Seventeen other states have passed this legislation. I 
get calls every day from new jurisdiction planning to implement 
this. There is a blog that is sponsored by UC Berkeley to help 
other jurisdictions startup this program. It's been a cultural 
change for us, it really has.
    Mr. THOMPSON. Well, I hope you respond to all those calls, 
and I hope my colleagues represent areas that want to do the 
same thing and emulate this program. And there are just a lot 
of benefits to it. You heard--you named some, but there are 
others, as well.
    I know I have--up in Hopland, I've got a place that trains 
solar installers. So they are training people for jobs, and 
retraining people who have lost jobs. So I hope to see this 
spread across the country, and I appreciate all that you have 
done to make it such a success.
    Mr. DOLE. And thank you for all your support.
    Chairman LEVIN. Thank you. Mr. Thompson was eager that you 
come, and you've come a long way. So thank you very, very much. 
Mr. Blumenauer.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. And I appreciate 
Mr. Hundt reminding us of the Michigan connection with you and 
the ranking member. And I am slow off the mark with the 
Michigan suck-up. I should have mentioned my son graduating 
from the business school at Michigan. I will get more into 
this.
    Chairman LEVIN. And the first----
    Mr. BLUMENAUER. He's already done it, but I'm going to 
claim credit for it anyway.
    I must say that this panel was worth waiting for, in terms 
of reviewing the material and some of the items that are laid 
out before us.
    I appreciate, Ms. Burns, your forthright testimony, sort of 
your oversight, your five-point plan, particularly the 
government leading by example as the largest consumer of energy 
in the world, that things that we can do right now by 
administrative fiat, procurement process, we can help jump-
start so much of this, working with the private sector, and 
saving the government money.
    You've got a lot of certified smart people in your company 
and others in the industry, and I would just extend an 
invitation to you to help us think through how we change the 
Federal Government budgeting rules, so it recognizes present 
value accounting. If we can do that, we can break through a 
number of these barriers. And each energy performance contract 
doesn't have to be one off negotiated with some colonel in Camp 
Whatever, and it can be incorporated into GSA, which manages 
365 million square feet.
    And so, if we could posit that as a request for 
assistance----
    Ms. BURNS. Okay. We will take it on. I hope we can provide 
that assistance. And I think it is very critical, when you 
think about the government leading by example, and it gets to 
the point that you made. I don't think that there is one or the 
other. It has to be both. It has to be efficiency, it has to be 
greener buildings and the right standards around those and the 
right procurement practices. And it has to be the right 
incentives for renewables.
    Mr. BLUMENAUER. We are in agreement. This would help us.
    Ms. BURNS. Great.
    Mr. BLUMENAUER. Mr. Reed [sic], your point about energy 
being generated--electricity being generated and delivered 
locally I thought was interesting. And I love the variation. 
But I am struck by the fact that you are only looking at the 
cost per kilowatt hour, not the burden on households, because--
I would invite you to work with us to talk about what people 
actually pay. Because in California, they actually, per 
household, because they employ many of these things, they end 
up paying less.
    And, in fact, I find it striking that some of the--that 
West Virginia, with the lowest cost in the country, has the 
highest household cost, if you prorate as a percentage of 
household income. There is something that's at work here that I 
think is an argument for incentives, and I would invite you to 
help us strategize that, as well.
    Mr. Dole, I love what you're talking about. One of the 
areas that would be--that we could do this almost overnight 
with little or no Federal legislation would be working with the 
51 separate utility regulators around the country, and the 
5,000 electric, gas, and sewer and water utilities that touch 
90 percent of the American public every month, have access to 
capital, have the infrastructure, and have the relationships 
with all the contractors that you're talking about.
    Isn't it possible to do this through a regulatory process 
directly with utilities? Or do you have to be in the business?
    Mr. DOLE. We could certainly use the help. Thank you for 
the question. We don't understand why the utilities have not 
gotten engaged at this point.
    One of the reasons why government needs to run this program 
is it runs through the property tax system. That's very 
efficient----
    Mr. BLUMENAUER. Right, but if you had a regulatory that 
allowed it to be on the utility bill----
    Mr. DOLE. Right.
    Mr. BLUMENAUER [continuing].--wouldn't it accomplish the 
same thing?
    Mr. DOLE. Yes, it would. The----
    Mr. BLUMENAUER. Time is short. I apologize here, but I 
wanted to get to Mr. Bolinger, because I've got a piece of 
legislation that would, in fact, extend the act's section 1603. 
But I think it's going to be very difficult to weave this 
through the process like it happened last time, which is shared 
jurisdiction between Ways and Means, Appropriations, Commerce. 
We don't have anything else like this in the Tax Code.
    I would invite your attention to H.R. 4599 that would 
extend it for another 3 years. Do it like--right through the 
Tax Code directly. It wouldn't be quite as lucrative, maybe, 
for some of the attorneys and consultants that would have to 
wait a little longer. But the people who are in the business 
would be able to do it through their annual filing. And our 
legislation would extend the number of partners to real estate 
investment trust, to publicly owned--public pension funds.
    So, there would be a much bigger audience, simpler to get 
enacted, more partners. And I would hope that there may be a 
way for you to take a look at H.R. 4599 to see if we're on the 
right track, and any thoughts you or others of the panel might 
have to keep this valuable program, but actually get it 
reauthorized and get it reauthorized for another 3 years.
    Chairman LEVIN. If you have some thoughts, do give them to 
us.
    I think we are going to close now with someone who has been 
especially innovative in this whole area. Mr. VAN HOLLEN, you 
have the last crack at it.
    Mr. VAN HOLLEN. Thank you, Mr. Chairman. I want to thank 
all of you for your testimony, as well, and share the view of 
my colleague, that all of you were well worth waiting for. So 
thank you for your patience.
    I think, Mr. Bohigian, in your testimony you identify some 
facts that underline the challenge that we all face. You have 
mentioned the Department of Energy's industrial assessment 
center's finding, that even with a pay-back in less than 1.3 
years, 53 percent of projects were rejected, and that over the 
20-year period, more than 5,000 end users evaluated that almost 
40,000 projects were rejected for financing reasons. That's 
true in the commercial building sector; it's often true in the 
residential sector, which is why creative programs like Sonoma 
County's and others work, because they find a way around that 
financing problem.
    And you specifically, among your recommendations, identify 
the Department of Energy loan guarantee program, and suggest 
that it should not only apply to new technology, but to proven 
equipment. And I think that that's fundamental across the 
board, because we do have good incentive programs for some of 
the cutting edge technologies, but we continue to have a 
financing impediment with respect to on-the-shelf technologies 
which, if they were deployed today in a large fashion, would 
help us dramatically improve energy efficiency and also begin 
to improve the deployment of some renewable energies. But 
especially in the area of energy efficiency.
    And I stand to thank Mr. Hundt, Reed Hundt, because he has 
worked with us on this idea of trying to create a mechanism to 
establish some form of low-cost capital loans. Loan guarantees, 
of course, are one form. You can have some other forms of that.
    And if--Mr. Hundt, if you could, just elaborate a little 
bit on how you would see the green bank, the clean energy 
deployment authority, whatever you want to call it, that we 
have talked about that passed the House in that piece of 
bipartisan--how that would help have more Sonoma Counties, and 
in fact, help, you know, that differential that Mr. Dole talked 
about, and maybe talk about Mr. Bohigian's situation. Then I'm 
interested in your comments on creating that kind of mechanism. 
So, thank you.
    Mr. HUNDT. So thank you very much, Mr. Van Hollen. The 
green bank would, for example, be able to lower the interest 
rate, the 7 percent that Rod was talking about. It reasonably 
could be down in the neighborhood of 6 percent or 5.5 percent. 
These percentage differences, everybody in this committee 
knows, these are not trivial. These are the difference between 
somebody saying, ``Yes, I'm going to invest,'' and, ``No, I 
can't afford to do it.'' And so, that is an example.
    The PACE programs in the 17 states--I believe we would have 
them in 50 states if we had that Federal support. I don't mean 
that we should take over their job. Rod told us really clearly 
that you do want somebody on the ground doing the work in the 
county, talking to the people in the county, and having them, 
as Mr. Rangel said, get with the culture here.
    But it's the Federal Government that has the capability to 
lower the overall interest rates by the 1 and 2 percent that 
make all the difference, in terms of businesses, in terms of 
real estate property owners, in terms of whole communities 
saying, ``This is what we want to do,'' in terms of being more 
efficient.
    And in the same point, when we turn to generation, if we're 
going to bring the solar electricity that's based on the 
products that Dow is inventing, and is a world leader in 
inventing way back up at the research level, if we're going to 
translate those into the market, I think over the next 5 
years--let's just talk about the next 5 years--you can say the 
following to the people, ``Pay $.15, $.16, $.20 a kilowatt 
hour.'' No one is going to do it. You're not going to get 
regulators to say, ``I really want to raise those prices to 
that level,'' you're not going to get businesses to say, ``I 
can build a business around that kind of a price,'' you're not 
going to get consumers to say, ``I really can afford to do 
that.''
    Even with efficiency measures, you can't inflict a 40 and 
50 percent price increase on the whole country in a recession, 
and we are looking at 10 million to 15 million people who need 
to find work in order to get us to full employment. But when 
you provide the low-cost financing, when you bring that into 
the story, you then say, ``You don't need that kind of a price 
in order to get the investors to invest,'' because they have 
affordable, long-term financing.
    And so, they will put their equity into projects. And we 
have been working--with your encouragement, we have been 
working with all the major financial institutions in the United 
States on this project.
    The one thing I am absolutely convinced of after 15 months 
that we have been doing this, Mr. Van Hollen, with you and your 
office and other Members up here, one thing I am convinced of 
is this. The money is there if the economics work. And the low-
cost financing will turn a spigot, and we will see, literally, 
$50 billion, $100 billion a year invested in the economy in 
efficiency and generation that we're not seeing right now. 
Every billion that is spent is 10,000 new jobs.
    Mr. VAN HOLLEN. Mr. Chairman, I don't know if there is time 
for the other gentleman just to comment quickly on how this----
    Chairman LEVIN. Okay, you might want to end on that note 
about all the new jobs. But, please, Mr. Bohigian.
    Mr. BOHIGIAN. I will be brief, and thank you for your 
patience.
    What we have found, and studies have found over the past 
several decades, is that for commercial and industrial users, 
it's avoiding that capital expenditure that is so key. 
Regardless of the savings that might be there, whether that's 
at 4, 5, 6, or 10 percent, people like to not, up front, use 
capital expenditure budgets on HVAC systems and lighting 
systems. They would rather spend it on retaining employees and 
research and development.
    So, to the--to Congressman Rangel's point earlier, it's not 
just about the conservation, it's about being able to continue 
to build your workforce. And the issue that has been on the 
structuring side, which PACE bonds start to address, is that, 
in the commercial sector especially, people don't know where 
they stand on the capital structure. They say, ``We're 
financing equipment,'' but that's behind the tax bill, it's 
behind the mortgage. And I can't tear out an HVAC system very 
easily if I need to, if they're not paying.
    So what PACE and other mechanisms allow that to do is be 
ahead of the mortgage and solve this financing issue that I 
think could result in billions of dollars in deployment in the 
very near term, and thousands of jobs very soon. Thank you.
    Mr. VAN HOLLEN. Thank you all.
    Chairman LEVIN. Well, thank you very, very much. This has 
been a remarkable third panel in a long and, I think, fruitful 
day. I think, Mr. Camp, you very much agree.
    So, since you have been so productive, as well as patient, 
we very much want to thank each and every one of you. And I 
think we will be seeing more of each other.
    With that, I guess we are now, at 5 after 6:00, adjourned. 
Thank you very much.
    [Whereupon, at 6:05 p.m., the Committee was adjourned.]
    [Submissions for the Record follow:]

             American Forest & Paper Association, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.120

[GRAPHIC] [TIFF OMITTED] T3079A.121

[GRAPHIC] [TIFF OMITTED] T3079A.122

[GRAPHIC] [TIFF OMITTED] T3079A.123

[GRAPHIC] [TIFF OMITTED] T3079A.124


                                 
                       AG Resources, LLC, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.125

[GRAPHIC] [TIFF OMITTED] T3079A.126

[GRAPHIC] [TIFF OMITTED] T3079A.127

                                 
                        Alan P. Langford, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.128


                                 
                    American Biogas Council, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.129


                                 
               American Farm Bureau Federation, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.130

[GRAPHIC] [TIFF OMITTED] T3079A.131

[GRAPHIC] [TIFF OMITTED] T3079A.132


                                 
                    American Meat Institute, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.133

[GRAPHIC] [TIFF OMITTED] T3079A.134


                                 
              American Public Power Association, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.135

[GRAPHIC] [TIFF OMITTED] T3079A.136

[GRAPHIC] [TIFF OMITTED] T3079A.137

[GRAPHIC] [TIFF OMITTED] T3079A.138


                                 
              American Wind Energy Association, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.139

[GRAPHIC] [TIFF OMITTED] T3079A.140

[GRAPHIC] [TIFF OMITTED] T3079A.141

[GRAPHIC] [TIFF OMITTED] T3079A.142

[GRAPHIC] [TIFF OMITTED] T3079A.143

[GRAPHIC] [TIFF OMITTED] T3079A.144

[GRAPHIC] [TIFF OMITTED] T3079A.145


                                 
                          AO Smith, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.146

[GRAPHIC] [TIFF OMITTED] T3079A.147

[GRAPHIC] [TIFF OMITTED] T3079A.148


                                 
           Associated Builders and Contractors Green, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.149

[GRAPHIC] [TIFF OMITTED] T3079A.150

[GRAPHIC] [TIFF OMITTED] T3079A.151

[GRAPHIC] [TIFF OMITTED] T3079A.152


                                 
                  Bechtel Power Corporation, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.153

[GRAPHIC] [TIFF OMITTED] T3079A.154


                                 
             Biotechnology Industry Organization, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.155

[GRAPHIC] [TIFF OMITTED] T3079A.156

[GRAPHIC] [TIFF OMITTED] T3079A.157

[GRAPHIC] [TIFF OMITTED] T3079A.158

[GRAPHIC] [TIFF OMITTED] T3079A.159


                                 
                     BullDog BioDiesel, LLC, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.160

[GRAPHIC] [TIFF OMITTED] T3079A.161


                                 
                        Capstone Turbine, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.162

[GRAPHIC] [TIFF OMITTED] T3079A.163

[GRAPHIC] [TIFF OMITTED] T3079A.164

[GRAPHIC] [TIFF OMITTED] T3079A.165

[GRAPHIC] [TIFF OMITTED] T3079A.166

[GRAPHIC] [TIFF OMITTED] T3079A.167


                                 
                     Climate Energy, LLC, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.168

[GRAPHIC] [TIFF OMITTED] T3079A.169

[GRAPHIC] [TIFF OMITTED] T3079A.170


                                 
              Coal Utilization Research Council, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.171

[GRAPHIC] [TIFF OMITTED] T3079A.172

[GRAPHIC] [TIFF OMITTED] T3079A.173

[GRAPHIC] [TIFF OMITTED] T3079A.174

[GRAPHIC] [TIFF OMITTED] T3079A.175

[GRAPHIC] [TIFF OMITTED] T3079A.176


                                 
             Continental Resources, Incorporated, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.177

[GRAPHIC] [TIFF OMITTED] T3079A.178

[GRAPHIC] [TIFF OMITTED] T3079A.179

[GRAPHIC] [TIFF OMITTED] T3079A.180

[GRAPHIC] [TIFF OMITTED] T3079A.181

[GRAPHIC] [TIFF OMITTED] T3079A.182

[GRAPHIC] [TIFF OMITTED] T3079A.183

[GRAPHIC] [TIFF OMITTED] T3079A.184


                                 
                     Domtar Corporation, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.185

[GRAPHIC] [TIFF OMITTED] T3079A.186


                                 
                          EC Oregon, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.187

[GRAPHIC] [TIFF OMITTED] T3079A.188

[GRAPHIC] [TIFF OMITTED] T3079A.189

[GRAPHIC] [TIFF OMITTED] T3079A.190


                                 
                  Edison Electric Institute, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.191

[GRAPHIC] [TIFF OMITTED] T3079A.192

[GRAPHIC] [TIFF OMITTED] T3079A.193

[GRAPHIC] [TIFF OMITTED] T3079A.194

[GRAPHIC] [TIFF OMITTED] T3079A.195


                                 
          Electric Drive Transportation Association, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.196

[GRAPHIC] [TIFF OMITTED] T3079A.197

[GRAPHIC] [TIFF OMITTED] T3079A.198


                                 
                       Encana Natural Gas, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.199

[GRAPHIC] [TIFF OMITTED] T3079A.200


                                 
                 Environmental Working Group, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.201

[GRAPHIC] [TIFF OMITTED] T3079A.202

[GRAPHIC] [TIFF OMITTED] T3079A.203

[GRAPHIC] [TIFF OMITTED] T3079A.204

[GRAPHIC] [TIFF OMITTED] T3079A.205

[GRAPHIC] [TIFF OMITTED] T3079A.206


                                 
                 Excelsior Energy, Incorporated, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.207

[GRAPHIC] [TIFF OMITTED] T3079A.208

[GRAPHIC] [TIFF OMITTED] T3079A.209

[GRAPHIC] [TIFF OMITTED] T3079A.210

[GRAPHIC] [TIFF OMITTED] T3079A.211


                                 
             Flodesign Wind Turbine Corporation, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.212

[GRAPHIC] [TIFF OMITTED] T3079A.213


                                 
                 Friends of the Earth (FOE), Statement

[GRAPHIC] [TIFF OMITTED] T3079A.214

[GRAPHIC] [TIFF OMITTED] T3079A.215

[GRAPHIC] [TIFF OMITTED] T3079A.216

[GRAPHIC] [TIFF OMITTED] T3079A.217

[GRAPHIC] [TIFF OMITTED] T3079A.218

[GRAPHIC] [TIFF OMITTED] T3079A.219

[GRAPHIC] [TIFF OMITTED] T3079A.220

[GRAPHIC] [TIFF OMITTED] T3079A.221

[GRAPHIC] [TIFF OMITTED] T3079A.222

[GRAPHIC] [TIFF OMITTED] T3079A.223


                                 
                 Geothermal Energy Association, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.224

[GRAPHIC] [TIFF OMITTED] T3079A.225


                                 
                        Griffith Ulum, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.226

[GRAPHIC] [TIFF OMITTED] T3079A.227

[GRAPHIC] [TIFF OMITTED] T3079A.228


                                 
                        Growth Energy, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.229

[GRAPHIC] [TIFF OMITTED] T3079A.230

[GRAPHIC] [TIFF OMITTED] T3079A.231

[GRAPHIC] [TIFF OMITTED] T3079A.232

[GRAPHIC] [TIFF OMITTED] T3079A.233


                                 
                Historic Tax Credit Coalition, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.234

[GRAPHIC] [TIFF OMITTED] T3079A.235

[GRAPHIC] [TIFF OMITTED] T3079A.236

[GRAPHIC] [TIFF OMITTED] T3079A.237

[GRAPHIC] [TIFF OMITTED] T3079A.238

[GRAPHIC] [TIFF OMITTED] T3079A.239

[GRAPHIC] [TIFF OMITTED] T3079A.240


                                 
                   Honorable Betsy Markey, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.241

[GRAPHIC] [TIFF OMITTED] T3079A.242


                                 
                     Honorable Erik Paulsen, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.243

[GRAPHIC] [TIFF OMITTED] T3079A.244


                                 
        Independent Petroleum Association of America, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.245

[GRAPHIC] [TIFF OMITTED] T3079A.246

[GRAPHIC] [TIFF OMITTED] T3079A.247

[GRAPHIC] [TIFF OMITTED] T3079A.248

[GRAPHIC] [TIFF OMITTED] T3079A.249

[GRAPHIC] [TIFF OMITTED] T3079A.250

[GRAPHIC] [TIFF OMITTED] T3079A.251

[GRAPHIC] [TIFF OMITTED] T3079A.252

[GRAPHIC] [TIFF OMITTED] T3079A.253

[GRAPHIC] [TIFF OMITTED] T3079A.254

[GRAPHIC] [TIFF OMITTED] T3079A.255

[GRAPHIC] [TIFF OMITTED] T3079A.256

[GRAPHIC] [TIFF OMITTED] T3079A.257

[GRAPHIC] [TIFF OMITTED] T3079A.258

[GRAPHIC] [TIFF OMITTED] T3079A.259

[GRAPHIC] [TIFF OMITTED] T3079A.260


                                 
                         James Sebesta, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.261

[GRAPHIC] [TIFF OMITTED] T3079A.262


                                 
                 Large Public Power Council, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.263

[GRAPHIC] [TIFF OMITTED] T3079A.264

[GRAPHIC] [TIFF OMITTED] T3079A.265

[GRAPHIC] [TIFF OMITTED] T3079A.266


                                 
                   Marathon Engine Systems, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.267

[GRAPHIC] [TIFF OMITTED] T3079A.268

[GRAPHIC] [TIFF OMITTED] T3079A.269

[GRAPHIC] [TIFF OMITTED] T3079A.270


                                 
                     Michael R. Splinter, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.271

[GRAPHIC] [TIFF OMITTED] T3079A.272

[GRAPHIC] [TIFF OMITTED] T3079A.273

[GRAPHIC] [TIFF OMITTED] T3079A.274


                                 
              National Commission on Energy Policy, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.275

[GRAPHIC] [TIFF OMITTED] T3079A.276

[GRAPHIC] [TIFF OMITTED] T3079A.277

[GRAPHIC] [TIFF OMITTED] T3079A.278

[GRAPHIC] [TIFF OMITTED] T3079A.279

[GRAPHIC] [TIFF OMITTED] T3079A.280

[GRAPHIC] [TIFF OMITTED] T3079A.281

[GRAPHIC] [TIFF OMITTED] T3079A.282

[GRAPHIC] [TIFF OMITTED] T3079A.283


                                 
                  Nuclear Energy Institute, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.284

[GRAPHIC] [TIFF OMITTED] T3079A.285

[GRAPHIC] [TIFF OMITTED] T3079A.286

[GRAPHIC] [TIFF OMITTED] T3079A.287

[GRAPHIC] [TIFF OMITTED] T3079A.288


                                 
               Natural Resources Defense Council, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.289

[GRAPHIC] [TIFF OMITTED] T3079A.290

[GRAPHIC] [TIFF OMITTED] T3079A.291

[GRAPHIC] [TIFF OMITTED] T3079A.292


                                 
             National Alliance of Forest Owners, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.293

[GRAPHIC] [TIFF OMITTED] T3079A.294

[GRAPHIC] [TIFF OMITTED] T3079A.295

[GRAPHIC] [TIFF OMITTED] T3079A.296

[GRAPHIC] [TIFF OMITTED] T3079A.297

[GRAPHIC] [TIFF OMITTED] T3079A.298


                                 
            National Association of Home Builders, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.299

[GRAPHIC] [TIFF OMITTED] T3079A.300

[GRAPHIC] [TIFF OMITTED] T3079A.301

[GRAPHIC] [TIFF OMITTED] T3079A.302

[GRAPHIC] [TIFF OMITTED] T3079A.303

[GRAPHIC] [TIFF OMITTED] T3079A.304

[GRAPHIC] [TIFF OMITTED] T3079A.305


                                 
    National Association of Real Estate Investment Trusts, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.306

[GRAPHIC] [TIFF OMITTED] T3079A.307

[GRAPHIC] [TIFF OMITTED] T3079A.308

[GRAPHIC] [TIFF OMITTED] T3079A.309

[GRAPHIC] [TIFF OMITTED] T3079A.310

[GRAPHIC] [TIFF OMITTED] T3079A.311

[GRAPHIC] [TIFF OMITTED] T3079A.312

[GRAPHIC] [TIFF OMITTED] T3079A.313

[GRAPHIC] [TIFF OMITTED] T3079A.314

[GRAPHIC] [TIFF OMITTED] T3079A.315


                                 
         Statement of Manning Feraci, National Biodiesel Board,
                   Vice President of Federal Affairs

    Executive Summary: Biodiesel is a renewable, low carbon diesel 
replacement fuel that is widely accepted in the marketplace. It is the 
only commercial scale Advanced Biofuel produced in the U.S. The 
biodiesel tax incentive has allowed the U.S. to achieve the significant 
economic, environmental and energy security benefits associated with 
expanded domestic production and use of biodiesel.
    Due to volatile commodity prices, unfavorable market conditions, 
difficulty accessing operating capital, and uncertainty regarding 
federal policy, the U.S. biodiesel industry is facing severe economic 
challenges. In particular, the lapse of the biodiesel tax incentive on 
December 31, 2009 has had a detrimental impact on the industry, and the 
domestic production and consumption of biodiesel has been significantly 
curtailed. Plants nationwide have already ceased production, trimmed 
payrolls and laid off employees, and the 23,000 jobs nationwide 
supported by the industry will be in increasing jeopardy the longer the 
tax incentive is allowed to lapse. Accordingly, the U.S. biodiesel 
industry asks Congress to address this immediate issue and act in a 
timely manner to retroactively extend the biodiesel tax incentive.
    In addition, it is difficult for entrepreneurs and investors to 
make long-term business decisions based on year to year extensions of 
the biodiesel tax incentive. Thus, a multiple year extension of the 
incentive is needed to provide certainty and stability in the 
marketplace. In addition, the U.S. biodiesel industry supports 
reforming the biodiesel tax incentive by changing the current blenders 
excise tax credit to a production excise tax credit. This will improve 
Administration of the incentive, eliminate potential abuses and enhance 
tax compliance.

                               __________

    Chairman Levin, Ranking Member Camp and Members of the Committee, I 
thank you for the opportunity to submit written testimony on behalf of 
the National Biodiesel Board (NBB) regarding the need to retroactively 
extend and reform the biodiesel tax incentive.
    About NBB: NBB is the national trade association representing the 
biodiesel industry as the coordinating body for research and 
development in the U.S. It was founded in 1992 by state soybean 
commodity groups who were funding biodiesel research and development 
programs. Since that time, the NBB has developed into a comprehensive 
industry association, which coordinates and interacts with a broad 
range of cooperators including industry, government and academia. NBB's 
membership is comprised of biodiesel producers; state, national and 
international feedstock and feedstock processor organizations; fuel 
marketers and distributors; and technology providers.
    Background and Industry Overview: Biodiesel is a diesel replacement 
fuel that is an Advanced Biofuel under the Renewable Fuels Standard 
(RFS2) program. The fuel is made from agricultural oils, fats and waste 
greases and is refined to meet a specific commercial fuel definition 
and specification. The fuel is produced by reacting feedstock with an 
alcohol to remove the glycerin and meet the D6751 fuel specification 
set forth by the American Society for Testing and Materials (ASTM 
International). Biodiesel is one of the best-tested alternative fuels 
in the country and the only alternative fuel to meet all of the testing 
requirements of the 1990 amendments to the Clean Air Act. There are 
currently 173 biodiesel plants in the U.S. with a combined production 
capacity of 2.69 billion gallons.
    Biodiesel is primarily marketed as a 5 percent (B5) blending 
component with conventional diesel fuel, but can be used in 
concentrations up to 20 percent (B20). It is distributed utilizing the 
existing fuel distribution infrastructure with blending occurring both 
at fuel terminals and ``below the rack'' by fuel jobbers. Biodiesel is 
beginning to be distributed through the petroleum terminal system. To 
date, biodiesel is available in over 72 fuel distribution terminals. 
Last year, two major pipeline companies successfully tested B5 blends 
in pipelines, and the biodiesel industry has committed funds to 
continue to study the technical needs required for moving biodiesel 
through U.S. pipelines. Already, biodiesel is moved through pipelines 
in Europe, and expanding that capability in the U.S. would 
significantly increase biodiesel penetration in the U.S. diesel fuel 
market.
    Status and Background on the Biodiesel Tax Incentive: The biodiesel 
tax incentive was enacted in 2004 as part of the American Jobs Creation 
Act (P.L. 108-357). The incentive was subsequently extended through 
December 31, 2008 as part of the Energy Policy Act of 2005 (P.L. 109-
190). H.R. 1424, the Emergency Economic Stabilization Act of 2008 (P.L. 
110-343), again extended the incentive for 1 year through December 31, 
2009. The biodiesel tax incentive has expired, and the current lapse in 
the biodiesel tax incentive has had a detrimental impact on the 
domestic biodiesel industry.
    On December 9, 2009, the U.S. House of Representatives approved 
H.R. 4213, The Tax Extenders Act of 2009, by a 241-181 margin. This 
legislation, among its provisions, provides a 1-year extension of the 
biodiesel tax incentive. The U.S. Senate voted to approve its version 
of H.R. 4213, The American Workers, State, and Business Relief Act of 
2010, on March 10, 2010 by a 62-36 margin. H.R. 4213 as approved by the 
U.S. Senate provides a 1-year retroactive extension of the biodiesel 
tax incentive.
    The biodiesel tax incentive is designed to encourage the production 
and use of biodiesel by making the fuel's price competitive with 
conventional diesel fuel. In general, current law allows taxpayers to 
claim the biodiesel tax incentive as either a $1.00 per gallon general 
business income tax credit or as a $1.00 per gallon blenders excise tax 
credit. To qualify for the biodiesel tax incentive, the fuel must by 
statute meet both the ASTM D6751 fuel specification and the 
Environmental Protection Agency's (EPA) registration requirements under 
Section 211 of the Clean Air Act. The income tax credit can be claimed 
either as a biodiesel mixture credit, which provides the incentive for 
each gallon of biodiesel that is blended with conventional diesel fuel, 
or as a B100 biodiesel credit for each gallon of pure biodiesel that is 
used as a fuel.
    The biodiesel tax incentive also provides a biodiesel blenders 
excise tax credit. The credit is $1.00 for each gallon of biodiesel 
that is blended with conventional diesel fuel. The blenders excise tax 
credit differs from the biodiesel mixture income tax credit and the 
B100 biodiesel income tax credit in that the blenders credit can be 
used to offset excise tax liability, and is refundable to the degree 
that the credit exceeds excise tax owed by a taxpayer. The B100 
biodiesel credit and biodiesel mixture income tax credit are 
coordinated to take into account amounts claimed via the blenders 
credit. The vast majority of biodiesel tax incentives are claimed as a 
blenders excise tax credit.
    Lastly, current law provides for a small agri-biodiesel producer 
income tax credit. The credit is 10 cents per gallon and can be claimed 
by taxpayers with less than 60 million gallons of cumulative annual 
production capacity. The credit is limited to the first 15 million 
gallons of annual production. To qualify for the small producer credit, 
fuel must be produced from either virgin vegetable oils or animal fats.
    Biodiesel Public Policy Benefits: The biodiesel tax incentive has 
helped achieve the worthwhile policy goal of increasing the production 
and use of biodiesel in the U.S. In 2004, when the incentive was 
initially enacted, the U.S. produced 25 million gallons. In 2009, that 
number rose to 545 million gallons. There are compelling public policy 
benefits associated with the enhanced production and use of biodiesel 
in the U.S.
    The Biodiesel Industry is Creating Green Jobs and Making a Positive 
Contribution to the Economy: In 2009, the U.S. biodiesel industry 
supported 23,000 jobs in all sectors of the economy. This added $4.1 
billion to the Nation's Gross Domestic Product (GDP) and generated $828 
million in tax revenue for federal, state and local governments.
    By conservative estimates, there is domestic feedstock available to 
support 1.77 billion gallons of annual biodiesel production in the U.S. 
The domestic industry has the capacity to support this level of 
production. The production of 1.77 billion gallons of fuel would 
support 78,619 jobs; add $6.660 billion to the GDP; generate $1.345 
billion in revenue for federal, state and local governments; and reduce 
greenhouse gas emissions by 27.4 billion pounds--the equivalent of 
removing 2.38 million passenger vehicles from U.S. roads.
    Biodiesel Reduces our Dependence on Foreign Oil: Biodiesel plays a 
constructive role in expanding domestic refining capacity and reducing 
our reliance on foreign oil. The 1.9 billion gallons of biodiesel 
produced in the U.S. since 2005 has displaced an equivalent amount of 
diesel fuel with a clean-burning, efficient fuel that reduces lifecycle 
carbon dioxide emissions by as much as 86 percent compared to petroleum 
diesel fuel and creates 4.56 units of energy for every unit of energy 
that is required to produce the fuel.
    Biodiesel is Good for the Environment: Biodiesel is an 
environmentally safe Advanced Biofuel, and is the most viable 
transportation fuel when measuring its carbon footprint, life cycle and 
energy balance. The U.S. Department of Agriculture (USDA)/Department of 
Energy (DoE) life cycle study shows that biodiesel yields a 78 percent 
reduction in direct lifecycle CO \2\ emissions compared to petroleum 
diesel fuel. The EPA's RFS2 life cycle analysis shows that biodiesel 
reduces greenhouse gas emissions by as much as 86 percent. One billion 
gallons of biodiesel will reduce current life cycle greenhouse gas 
emissions by 16.12 billion pounds, the equivalent of removing 1.4 
million passenger vehicles from U.S. roads. In 2009 alone, biodiesel's 
contribution to reducing greenhouse gas emissions was equal to removing 
over 774,000 passenger vehicles from America's roadways.
    Biodiesel's emissions significantly outperform petroleum diesel. 
Biodiesel emissions have decreased levels of all target polycyclic 
aromatic hydrocarbons (PAH) and nitrited PAH compounds, as compared to 
petroleum diesel exhaust. These compounds have been identified as 
potential cancer causing agents.
    Biodiesel is the only alternative fuel to voluntarily perform 
Environmental Protection Agency (EPA) Tier I and Tier II testing to 
quantify emission characteristics and health effects. That study found 
that B20 (20 percent biodiesel blended with 80 percent conventional 
diesel fuel) provided significant reductions in total hydrocarbons, 
carbon monoxide, and total particulate matter. Research also documents 
the fact that the ozone forming potential of the hydrocarbon emissions 
of pure biodiesel is nearly 50 percent less than that of petroleum 
fuel. Pure biodiesel typically does not contain sulfur and therefore 
reduces sulfur dioxide exhaust from diesel engines to virtually zero.
    The Biodiesel Industry Stimulates Development of New Low-Carbon 
Feedstocks: The feedstock used to produce U.S. biodiesel has 
increasingly diversified, with waste products such as animal fat and 
used restaurant grease (yellow grease) making up a larger portion of 
the feedstock used to produce fuel. Biodiesel production is currently 
the most efficient way to convert lipids into low-carbon diesel 
replacement fuel, and as a result, industry demand for less expensive, 
reliable sources of fats and oils is stimulating promising public, 
private and non-profit sector research on second generation feedstocks 
such as algae.
    Algae's potential as a source of low carbon fuel has been well 
documented, and a stable, growing biodiesel industry is necessary if 
the U.S. is to eventually benefit from the commercial scale production 
of algal-based biofuels. The NBB estimates that for every 100 million 
gallons of biodiesel that is produced from algae, 16,455 jobs will be 
created and $1.461 billion will be added to the GDP.
    U.S. Biodiesel Industry is Facing Severe Economic Hardship: Despite 
recent growth, the industry is in the midst of an economic crisis. 
Plants are having difficulty accessing operating capital. Volatility in 
commodity markets and reduced demand for biodiesel in both domestic and 
global markets are making it difficult for producers to sell fuel. 
Lastly, uncertainty relating to federal policy that is vital to the 
industry's survival--in particular the current lapse of the biodiesel 
tax incentive--is sending inconsistent signals to the marketplace and 
undermining investor confidence in the industry.
    If prolonged, this downturn will lead to a severe retraction in 
U.S. biodiesel production capacity. Because of the lapse in the 
biodiesel tax incentive, the price of biodiesel is significantly higher 
than petroleum diesel. This has made it nearly impossible for biodiesel 
plants to produce fuel at a profit, and as a result, U.S. production 
and consumption of biodiesel has been severely curtailed. If this 
situation is allowed to persist, the energy security, environmental, 
and job creation benefits that the Nation realizes from biodiesel 
production will be lost.
    Multiple Year Extension of a Reformed Biodiesel Tax Incentive is 
Consistent with Sound Tax and Energy Policy: The biodiesel tax 
incentive has helped the nascent U.S. biodiesel industry reach 
commercial scale production of renewable, low carbon diesel replacement 
fuel. This in turn has allowed the Nation to realize the energy 
security, economic and environmental benefits associated with the 
domestic production and use of biodiesel. It is, however, difficult for 
entrepreneurs and investors to make long-term business decisions based 
on year to year extensions of the biodiesel incentive. Thus, a multiple 
year extension of the biodiesel tax incentive is needed to provide 
certainty and stability in the marketplace.
    NBB also supports a structural reform of the tax incentive. 
Specifically, the U.S. biodiesel industry supports changing the current 
blenders excise tax credit to a production excise tax credit of equal 
value. This change will streamline Administration of the credit and 
promote tax compliance while preserving the elements of the existing 
incentive that have effectively incentivized the production and use of 
biodiesel. This reform proposal is encompassed in H.R. 4070, 
legislation introduced by U.S. Representative Earl Pomeroy (D-ND) and 
U.S. Representative John Shimkus (R-IL) and S. 1589, The Biodiesel 
Reform and Extension Act of 2009, introduced in the U.S. Senate by 
Senator Maria Cantwell (D-WA) and Senator Charles Grassley (R-IA).
    There are several shortcomings associated with the current 
structure of the biodiesel blenders excise tax credit that would be 
remedied by restructuring the incentive as a production excise tax 
credit. Specifically:
    Current Blenders Excise Tax Credit Structure Presents 
Administrative Difficulties: Blending biodiesel with diesel fuel, the 
event that triggers the blenders credit, can occur at multiple stages 
in the fuel distribution chain. This significantly increases the number 
of registrants eligible to claim the credit and makes it difficult to 
ensure that only fuel that qualifies for the benefit claims the 
incentive. Changing the blenders excise tax credit to a production 
excise tax credit would allow the incentive to be claimed at either a 
biodiesel plant or at an Internal Revenue Service (IRS) registered 
terminal, making it easier to ensure that only fuel meeting the ASTM 
D6751 fuel specification receives the tax incentive while preserving 
the incentive's underlying economic benefits.
    Existing Blenders Excise Tax Credit Does Not Work Well with the 
U.S. Department of Treasury's Excluded Liquids Rule: Under existing 
regulations, for purposes of the 24.3 cents per gallon diesel fuel 
excise tax, diesel fuel does not include ``excluded liquids.'' Among 
other things, liquids with less than 4 percent paraffin content are 
considered an excluded liquid. Existing IRS regulations allow B99.9 
biodiesel blends and other blends to qualify for the biodiesel blenders 
excise tax credit, even if the blend is an excluded liquid not subject 
to the federal diesel fuel excise tax. B99.9 blends do not have 4 
percent paraffin content, and thus, are not currently subject to the 
diesel fuel excise tax. Because biodiesel is typically used as a lower 
level blend component in the marketplace that is eventually subject to 
the federal diesel fuel excise tax, this leads to a situation where 
excise tax liability is triggered at varying points ``below the rack.'' 
This makes collection of the 24.3 cents per gallon diesel fuel excise 
tax burdensome for both taxpayers and the IRS.
    In an attempt to address this issue, the IRS issued a proposed rule 
on July 29, 2008 that would modify the Excluded Liquids rule in a 
manner that would subject B99.9 biodiesel blends to the federal diesel 
fuel excise tax. This change, however, would further complicate the 
taxation and distribution of biodiesel in fuel terminals. For example, 
under the proposed rule, a B99.9 blend sold by a biodiesel producer to 
a position holder in an IRS registered terminal would be subject to the 
24.3 cents per gallon diesel fuel excise tax. When the B99.9 fuel is 
further blended to a B5 through B20 level and is sold at the terminal 
in a taxable sale, the biodiesel component of the blend would again be 
subject to the diesel fuel excise tax. Though there is an existing 
regime that would allow for the refunds, this system is not timely and 
is difficult for taxpayers to navigate. As a result, this change would 
again have the unintended consequence of artificially inflating the 
price of biodiesel in the marketplace on account of the fuel being 
subject to double taxation and could cause cash flow issues for fuel 
marketers and terminal operators who sell and promote biodiesel in the 
marketplace. Further, terminal operators who handle both B100 and B99.9 
biodiesel blends would be forced to expend capital to purchase 
additional storage tanks and other infrastructure to handle biodiesel, 
again serving as a deterrent to the expanded use and sale of biodiesel 
through the Nation's fuel terminals.
    The IRS is also in the midst of a process that would incorporate 
biofuels, including biodiesel, in the existing ExStars fuel reporting 
system. ExStars is a fuel excise tax compliance reporting system that 
tracks the flow of fuel through IRS registered terminals. In an effort 
to collect the 24.3 cents per gallon diesel fuel excise tax owed on 
biodiesel blends ``below the rack,'' the IRS envisions significantly 
expanding the number of taxpayers that must file reports under the 
ExStars system to include small ``below the rack'' fuel marketers. This 
would impose an onerous regulatory burden on small businesses.
    To remedy this issue, H.R. 4070 and S. 1589 would treat pure 
biodiesel as diesel fuel for tax purposes. In general, the reform 
proposal would provide that the biodiesel tax incentive would be 
claimed and the diesel fuel excise tax would be paid when biodiesel was 
sold by the plant. The proposal would also allow for the sale of tax-
exempt, non-credit claimed fuel to an IRS registered terminal, and the 
credit would be claimed and excise tax paid at the terminal. This 
structure would avoid the complexities associated with subjecting B99.9 
blends to the diesel fuel excise tax under the current structure of the 
biodiesel tax incentive. In addition, this would significantly improve 
tax compliance and remove the need for the IRS to impose onerous below 
the rack ExStars reporting requirements on fuel distributors and 
marketers.
    Change to Production Excise Tax Credit Would Stop Potential 
Transshipment Schemes: P.L. 110-343 contained a provision designed to 
give the IRS the statutory authority to stop so-called ``splash and 
dash'' transactions. A ``splash and dash'' transaction occurs when 
biodiesel produced in a foreign country is sent to the U.S., splash 
blended with diesel fuel to claim the U.S. biodiesel blenders excise 
tax credit, and then sent to a third country for final use as biodiesel 
or diesel fuel at any blend level. P.L. 110-343 clarified that 
effective May 15, 2008, fuel produced outside the U.S. for use outside 
the U.S. does not qualify for the biodiesel tax incentive. There is 
clearly no energy or tax policy justification for this sort of 
transaction, and the NBB was fully supportive of efforts to close this 
unjustified and unforeseen tax loophole.
    Though Congress closed the ``splash and dash'' loophole, the 
current law blenders credit could inadvertently allow for other 
potential abuses associated with the transshipment of foreign fuel 
through the U.S. to claim the blenders credit. In addition, further 
refinements to the blenders excise credit to address these issues are 
likely to run contrary to U.S. WTO commitments. A change to a 
production excise tax credit would thwart any potential transshipment 
abuses in a WTO-consistent manner.
    Transition to Production Excise Tax Credit Could be Accomplished 
with Minimal Marketplace Disruption: Under current law, a blend of 99.9 
percent biodiesel and .1 percent diesel qualifies for the biodiesel 
blenders excise tax credit. Biodiesel plants are currently permitted to 
claim the incentive. Thus, for practical purposes, the current 
incentive in these instances functions as a production credit. A change 
to a production excise tax credit would preserve the incentive's 
liquidity and could be easily administered by both taxpayers and the 
IRS.
    Conclusion: The biodiesel tax incentive has helped achieve the 
desired goal of increasing the domestic production and use of 
biodiesel, and in turn has helped the U.S. realize the energy security, 
economic and environmental benefits associated with displacing 
petroleum with domestically produced renewable fuels. These benefits, 
however, will be lost if Congress does not act in a timely manner to 
address the immediate issue facing the industry and retroactively 
extend the biodiesel tax incentive. In addition, to provide certainty 
and improve the incentive, the U.S. biodiesel industry urges Congress 
to reform the biodiesel tax incentive as a production excise tax 
incentive and provide a multiple year extension of the reformed 
incentive.
    Chairman Levin, Ranking Member Camp and Members of the Committee, I 
again appreciate having the opportunity to submit written testimony on 
this issue of significant importance to the U.S. biodiesel industry.

                                 
                National Hydropower Association, Letter
April 16, 2010




The Honorable Sander Levin                  The Honorable David Camp
Chairman                                    Ranking Minority Member
Committee on Ways and Means                 Committee on Ways and Means
1102 Longworth House Office Building        1139E Longworth House Office
                                             Building
Washington, DC 20515                        Washington, DC 20515



Dear Chairman Levin and Ranking Member Camp:

    The National Hydropower Association \1\ (NHA) appreciates this 
opportunity to comment on the need for continued federal investment in 
the Nation's hydropower system to support the ambitious renewable 
energy goals set by Congress, the Administration, as well as the 
states.
---------------------------------------------------------------------------
    \1\ NHA is a non-profit national association dedicated exclusively 
to advancing the interests of the U.S. hydropower industry, including 
conventional, pumped storage and new ocean and other hydrokinetic 
technologies. NHA's membership consists of more than 170 organizations 
including public utilities, investor owned utilities, independent power 
producers, project developers, equipment manufacturers, environmental 
and engineering consultants and attorneys.
---------------------------------------------------------------------------
    Significantly increased renewable energy generation has many short- 
and long-term benefits, such as reduced emission of greenhouse gases 
and other pollutants. However, to meet these aggressive goals and reap 
the benefits, aggressive federal policy support, particularly in the 
form of expanded tax incentives, is needed.
    NHA believes the U.S. hydropower industry is primed for responsible 
growth and can play a significant role in the effort to increase 
renewable energy generation. Numerous opportunities are available to 
expand this country's hydropower base while at the same time providing 
responsible environmental stewardship of the Nation's rivers.
    These opportunities have grown dramatically with Congress' 
enactment of the Energy Policy Act of 2005 (EPAct 2005), and more 
recently, the American Recovery and Reinvestment Act of 2009 (ARRA). 
However, policies remain unfinished or not addressed by these statutes 
that would provide the long-term certainty needed by utilities and 
project developers to attract investment in the hydropower sector and 
to finance new development.
    NHA commends to the Committee the following items for inclusion in 
any tax package as part of a jobs stimulus or energy and climate bill:

          Section 45 Production Tax Credit Parity for 
        Hydropower and Hydrokinetic Resources Internal Revenue Code 
        (IRC) Section 45 provides for a production tax credit (PTC) for 
        electricity produced from certain renewable resources. Under 
        current law, the PTC discriminates between technologies, 
        picking winners and losers. Certain facilities, such as wind 
        and geothermal power, are eligible to receive the full PTC, 
        while other qualified facilities, including qualified 
        hydropower, small irrigation power and marine and hydrokinetic 
        power receive only 50 percent of the full PTC rate.

           All of the technologies that qualify for the PTC play an 
        important role in expanding the Nation's use of renewable 
        electricity and reducing the effects of climate change. The 
        disparity in the PTC distorts market dynamics and makes it 
        difficult for facilities that receive only a 50 percent credit 
        to compete with those that receive the full amount of the 
        credit. It is critical for Congress to provide technology-
        neutral tax incentives to promote the growth of all clean 
        electricity resources. (See introduced bipartisan parity 
        legislation--H.R. 2626, the Renewable Energy Parity Act.)

           In ARRA, Congress recognized the need for equal tax 
        treatment for renewables by allowing all renewable energy 
        project developers to elect the 30 percent ITC. NHA recommends 
        Congress extend the same treatment to the PTC, which would 
        harmonize the policies and ensure there is no slanting of 
        investment in favor of any one technology over another.

          Extension of Section 1603 Grants Section 1603 of ARRA 
        created a Department of Treasury grant program that provides 
        for a 30 percent cash grant in lieu of the IRC section 48 ITC 
        for specified energy property (a) placed in service in 2009 or 
        2010 (regardless of when construction began), or (b) placed in 
        service after 2010 but before January 1, 2017, but only if the 
        construction of such property began during 2009 or 2010.

           Although the grant program has been very helpful in 
        providing access to financing for qualified energy facilities 
        during the Nation's economic downturn, a 2-year extension of 
        the grant program would ensure the creation of additional 
        facilities to expand production of renewable energy and create 
        thousands of new green technology jobs. NHA also recommends 
        adoption of a mechanism that allows public power to utilize the 
        Section 1603 program.

          Increase Funding of CREBs. Clean Renewable Energy 
        Bonds (CREBs) are tax credit bonds that provide the equivalent 
        of interest-free loans to provide financing for capital 
        expenditures for qualified public power projects. Additional 
        funding of the CREBs program is critical to ensuring that 
        qualified projects have access to capital to construct new 
        facilities.

          Expansion/Extension of the IRC Section 48C Advanced 
        Manufacturing Credit. ARRA created a new IRC Section 48C 30 
        percent ITC for qualified investment in projects that re-equip, 
        expand or build manufacturing facilities used to produce 
        certain specified advanced energy property. ARRA provided for 
        $2.3 billion in credits to be awarded through a competitive 
        application process. President Obama has proposed increasing 
        funding for the program to $5 billion in order to expand the 
        Nation's green energy manufacturing capacity and create high-
        paying new green technology jobs in the U.S.

          Pumped Storage Investment Tax Credit and CREBs 
        Eligibility. Pumped storage of electricity is a proven, viable, 
        large-scale method of storing energy and is an ideal option for 
        firming the variability of other renewable energy resources, 
        such as wind and solar. Pumped storage provides several grid 
        reliability benefits, including energy storage, load balancing, 
        frequency control, and incremental and decremental reserves. 
        There are approximately three dozen new projects under 
        consideration--almost entirely in the western half of the 
        country. These proposed facilities are situated in key areas 
        where new development of variable resources is occurring at a 
        rate that will challenge the capabilities of the transmission 
        system and existing flexible generation resources to manage.

           Pumped storage is also the largest-capacity form of grid 
        energy storage currently available. Projects generally range in 
        size from 500-1500 MWs, an important factor considering the 
        tremendous increase in variable renewable generation, 
        particularly wind, which is growing at a rate of thousands of 
        MWs per year.

           Legislation has been introduced that would provide a 20 
        percent investment tax credit and CREBs eligibility for energy 
        storage property, including pumped storage. Enactment of this 
        bipartisan legislation, H.R. 4210, the Storage Technology of 
        Renewable and Green Energy Act, would help to significantly 
        expand the Nation's capacity to provide the reliability and 
        grid stability benefits pumped storage provides.

          Long-Term Extension of PTC and ITC. With ARRA, the 
        Congress extended the production and incentive tax credits 
        through 2013. This multi-year extension has been critical for 
        the hydropower industry to utilize the credits as the 
        development and deployment timeline of larger, more capital-
        intensive hydropower projects is longer than that of other 
        renewables. To date, over 4 dozen projects have been certified 
        for PTCs and several other projects are looking to utilize the 
        ITC or were resurrected after being put on the shelf because of 
        the ITC availability.

           All of these projects though, involve adding new capacity at 
        existing hydropower facilities. Also eligible under the PTC and 
        ITC are new hydropower facilities at existing non-powered dams. 
        Currently, only 3 percent of the country's 80,000 dams have 
        power facilities. However, these projects are required to 
        complete a licensing process that takes 5 to 5.5 years, on 
        average, with additional time needed for construction and 
        equipment manufacturing. A further extension of the credits for 
        hydropower facilities is needed to ensure that these larger 
        projects with longer lead times have the certainty of the 
        incentives. Otherwise, investment will continue to flow, by 
        default, to those technologies that can deploy in less time.

    NHA appreciates the opportunity to submit this statement for the 
record. We believe there are tremendous opportunities to accelerate 
deployment of hydropower resources to realize our national clean 
energy, jobs, and environmental goals by utilizing the benefits 
hydropower provides. However, policy matters, and we strongly encourage 
the Committee to adopt the recommendations outlined above.
            Sincerely,
                                                Linda Church Ciocci
                                                 Executive Director

                                 
          National Roofing Contractors Association, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.316

[GRAPHIC] [TIFF OMITTED] T3079A.317

[GRAPHIC] [TIFF OMITTED] T3079A.318

[GRAPHIC] [TIFF OMITTED] T3079A.319


                                 
       National Rural Electric Cooperative Association, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.320

[GRAPHIC] [TIFF OMITTED] T3079A.321

[GRAPHIC] [TIFF OMITTED] T3079A.322

[GRAPHIC] [TIFF OMITTED] T3079A.323

[GRAPHIC] [TIFF OMITTED] T3079A.324

[GRAPHIC] [TIFF OMITTED] T3079A.325

[GRAPHIC] [TIFF OMITTED] T3079A.326

[GRAPHIC] [TIFF OMITTED] T3079A.327


                                 
                         Nature's Fuel, Letter
April 27, 2010

Ways and Means Committee
U.S. House of Representatives
Washington, DC 20515

Honorable Members of the Ways and Means Committee:

    My name is Glenn Johnson. I am the Chief Operating Officer and 
President of Nature's Fuel located in Fort Wayne, Indiana. I am writing 
in response to the House Ways and Means Committee hearing entitled, 
``Tax Incentives Driving the Green Job Economy,'' to offer my 
perspective on current Federal tax incentives and express my concern 
over certain inequities related to recently-expired renewable fuel 
incentives.
    Nature's Fuel currently has a plant operating in Atwood, IN that 
produces bio-oil and bio-char made from pyrolyzed wood waste from the 
recreational vehicle industry. We have just permitted a plant at the 
landfill in Huntington, IN that will process and pyrolyze municipal 
solid waste, tires, wood and construction and demolition waste and 
other non-hazardous wastes to make low-sulfur renewable oil, bio-char, 
and eventually an ultra-low sulfur renewable diesel. At this facility, 
100 percent of its intake will be made into renewable energy, renewable 
building products or recycled and sold to remake into other commercial 
products using an environmentally-friendly process. Nature's Fuel bio-
oil can be used as a clean feedstock for biodiesel, as clean heating 
oil or as renewable diesel using the Fischer-Tropsch process.
    While incentives are a powerful tool in shaping our country's 
energy future, they can also skew private sector outcomes. It is my 
understanding that the House Ways & Means Committee has serious 
concerns with the Alternative Fuel Tax Credit (AFTC) because coal-to-
liquid fuels would be incentivized by the $.50 per gallon AFTC. My 
company simply has a different feedstock and business plan. Before the 
expiration of the AFTC in 2009, Nature's Fuel was eligible to receive a 
$.50 per gallon credit for the bio-oil produced from discarded wood 
waste. Please be assured that the AFTC was critical to our investment 
in our first and second plants.
    Nature's Fuel is advancing its technical capability to produce 
Renewable Diesel and/or Biodiesel. Therefore, my company strongly 
supports the conversion of the blender tax credits to producer tax 
credits. Production is simply a harder part of the business and 
requires a much higher degree of capital investment. Finally, it is 
much closer aligned with the public policy goal of incentivizing more 
domestically produced transportation fuels to displace our foreign oil 
imports from the Middle East.
    Moving to a producer tax credit will directly result in new 
construction that will help create jobs in our country and helps to 
further develop the renewable and biodiesel industries. Finally, this 
proposed change in federal law will also help eliminate ``splash and 
dash'' activity.
    Thank you for your consideration of this timely and crucial matter. 
Please do not hesitate to contact me if you have any questions.
            Sincerely,

                                                    Glenn W Johnson
                                       COO-President, Nature's Fuel

                                 
          Northeast Combined Heat and Power Initiative, Letter
April 27, 2010




The Honorable Sander Levin                  The Honorable David Camp
Ways and Means Committee                    Ways and Means Committee
1102 Longworth House Office Building        1139E Longworth House Office
                                             Building
Washington, DC 20525                        Washington, DC 20515



Dear Chairman Levin and Ranking Member Camp:

    On behalf of the members of the Northeast Combined Heat and Power 
Initiative, we are writing to urge your consideration of an important 
bill to support residential combined heat and power in the United 
States.

         The Northeast Combined Heat and Power Initiative (NECHPI) is a 
        volunteer organization dedicated to accelerating the deployment 
        of clean, efficient combined heat and power in the Northeastern 
        United States. NECHPI leads the Northeast Region in encouraging 
        the implementation of CHP technologies and drives CHP roadmap 
        action items in support of the U.S. Department of Energy's 
        (DOE) programs. NECHPI is an alliance which includes the DOE, 
        the North East Clean Energy Application Center, The U.S. 
        Environmental Protection Agency CHP Partnership, CHP developers 
        and equipment manufacturers, State and local governmental 
        organizations and others involved with energy and the 
        environment. NECHPI provides for coordination and 
        communications among the various stakeholders in the region, 
        including but not limited to federal agencies, state agencies, 
        utilities, project developers, equipment manufacturers, CHP 
        users, universities, research institutions, and public interest 
        groups.

    Congress has an opportunity to make American homes more energy 
efficient, save homeowners thousands of dollars on rising energy bills, 
reduce emissions associated with the residential sector, and create 
jobs by creating incentives to promote the installation of residential 
CHP systems. The residential sector represents 22 percent of energy 
usage in the United States, and now homeowners can reduce energy usage 
by installing cogeneration systems that have been developed for the 
home. Micro-combined heat and power (micro-CHP) technologies, which are 
increasingly used in Europe and Japan, can greatly improve energy 
efficiency in a majority of U.S. homes while creating thousands of new 
green energy jobs across America.
    Based upon EIA 2010 Annual Energy Outlook data, if one-half of the 
electricity delivered for residential consumption could be replaced by 
electricity produced on-site by micro-CHP, total U.S. energy 
consumption can be reduced by approximately 5 percent or five 
quadrillion Btus due to electricity related losses that are avoided. 
This represents both an enormous efficiency opportunity and cost 
savings.
    We ask you to support a bill that will enhance America's 
residential energy efficiency and help establish further micro-CHP 
manufacturing in the U.S. Micro-CHP, which recaptures heat created in 
the electrical generation process and uses it to heat the home, 
currently, receives no tax benefits. We urge Congress to pass Rep. 
Higgins' bi-partisan H.R. 2328 which would establish a 30-percent tax 
credit for the installation of highly efficient micro-CHP systems in 
homes in the U.S.
    In today's economy, having the opportunity for homeowners to save 
on their utility bills while utilizing less energy and producing fewer 
emissions is part of a bold and necessary energy action plan. Micro-CHP 
systems will strengthen our electric utility infrastructure through 
increasing the amount of distributed generation, and will promote 
energy independence by utilizing our domestic sourced natural gas.

          A tax credit for homeowners who install residential 
        CHP systems would encourage energy efficiency and create 
        investments by utilities, financing authorities, heating and 
        cooling manufacturers, and many other residential home 
        industries.
          The tax credit would result in the immediate and 
        long-term creation of thousands of jobs across many industries, 
        including the manufacturing, sales, installation, maintenance, 
        and service of micro-CHP systems in the U.S.
          The tax credit would encourage owners of the 3-4 
        million central heating systems installed each year in the U.S. 
        to consider adding cogeneration to their homes, vastly 
        decreasing fuel use and harmful air pollutants.
    Thank you for your consideration of this tax credit that will 
create jobs, encourage homeowners to save money, reduce fuel use and 
emissions, and help to establish a micro-CHP industry in the United 
States.
            Sincerely,





John Rathbun                                  Thomas Kelly
Chairperson                                   Vice Chairperson
Northeast CHP Initiative                      Northeast CHP Initiative



    Submitted by:
    John Rathbun
    Chairperson
    Northeast CHP Initiative
    [email protected]
    516-545-3863 office
    516-659-6431 cell

                                 
         Northwest Pipe Company for Northwest PowerPipe, Letter

[GRAPHIC] [TIFF OMITTED] T3079A.328

[GRAPHIC] [TIFF OMITTED] T3079A.329


                                 
       Orion Advocates on behalf of Domtar Corporation, Statement

[GRAPHIC] [TIFF OMITTED] T3079A.185

[GRAPHIC] [TIFF OMITTED] T3079A.186


                                 
                Paper Industry Coalition to Save Energy
                    and Main Street Jobs, Statement
             Submitted by: The Paper Industry Coalition to
                    Save Energy and Main Street Jobs




Appleton Papers                             Old Town Fuel & Fiber

Boise Incorporated                          Port Townsend Paper Corp.

Buckeye Technologies                        Sappi Fine Paper North
                                             America

Domtar                                      Stratex Energy

Finch Paper LLC                             Thilmany Papers

Glatfelter                                  Verso Paper Corp.

Lincoln Paper & Tissue LLC



    The use of renewable energy resources to reduce reliance on foreign 
fossil fuel sources and secure American jobs is a laudable and 
worthwhile goal, and one that our forest products industry coalition 
wholeheartedly encourages.
    Forest products firms--in particular pulp and papermaking 
companies--have been leaders in the use of renewable, green energy for 
decades. We use every part of the tree. What is not made into paper is 
recycled into a major source of clean, renewable, and essentially 
carbon-neutral energy used to help power the mills. As a result, U.S. 
pulp and paper mills are, on average, 65% energy self-sufficient. The 
environmental benefits of this commitment are significant. We've 
eliminated the need for approximately 6.5 billion gallons of fossil 
fuels annually that would otherwise have been burned to power the 
mills. Waste streams have been reduced and air quality improved.
    Customers have had continued access to environmentally friendly, 
sustainable products because U.S. mills have continued to produce 
products from responsibly harvested trees grown in well-managed 
forests. The alternative is buying lower-cost pulp imported from 
countries with less stringent forestry restrictions and practices, such 
as Indonesia, Brazil and China, involving the harvesting of rainforests 
and requiring millions of gallons of fossil fuel to be burned to ship 
the products to the U.S.
    To expand production of green energy in the United States, protect 
valuable American manufacturing jobs in rural communities, and 
encourage investment in environmental protection and efficient 
manufacturing, the Paper Industry Coalition to Save Energy and Main 
Street Jobs--in partnership with the United Steelworkers--strongly 
supports the Green Energy Paper Manufacturing Act of 2009 (H.R. 4389) 
sponsored by Representatives Scott Murphy, Michael Michaud, Steve Kagen 
and David Roe. The bill would provide a tax credit to help level the 
playing field among producers of wood-based bioenergy, and require 
reinvestment in domestic mills to help protect American manufacturing 
jobs.
    The paper industry leads the world in the production and use of 
renewable energy, and H.R. 4389 would allow paper companies to continue 
to invest in green energy processes--advancing improved environmental 
efficiencies in paper manufacturing and renewable fuels use.
    As Congress looks to further encourage the use of renewable energy 
resources, it must be mindful of the impact of government incentives 
that choose winners and losers in the use of renewable energy. While 
the government can play an important role in helping to promote the use 
of green technologies, to incentivize one industry at the expense of 
another undercuts the goal of job stability and creation.
    Technology-neutral incentives, such as H.R. 4389, provide an 
equitable benefit to users of biomass-based renewable energy, while 
retaining and expanding manufacturing jobs that are critical to meet 
the dual goals of reducing dependence on foreign energy and improving 
the stability of domestic manufacturing.
    Current incentive programs treat the same tree in vastly different 
ways, depending on who is using this renewable resource. Significant 
tax advantages are provided to certain producers that burn the wood 
only as a biofuel. Companies that make value-added products, like 
paper, from the same kind of fiber--and use the waste fiber to fuel a 
large part of the manufacturing process--are not eligible for these tax 
incentives. In addition, those incentives are raising the cost of raw 
materials for pulp and papermakers.
    Wood fiber prices are highest in the Northeast, where regional 
incentive programs played a key role in pushing up wood fiber prices in 
2008 three times higher than the price for similar wood in the South, 
where there are far fewer incentive programs. Comparable wood is still 
typically 30 percent to 40 percent more expensive in the Northeast 
today.
    Inequitable incentive programs mean the same wood fuel used by 
paper mills and the same technology to burn it (biomass and biomass 
boilers) are treated differently than at stand-alone biomass plants, 
effectively undercutting pulp and paper energy production. Generating 
both electricity and heat through cogeneration--the most efficient 
means of wood energy recovery--at paper mills is given less 
encouragement than simple cycle plants. Stand-alone biomass plants 
selling electricity to third parties are eligible to receive more than 
1 cents per kilowatt hour of production as an incentive, whereas pulp 
and paper producers receive no such benefit for use of the same 
biomass-based power in creating steam and electricity to make paper.
    The Green Energy Paper Manufacturing Act of 2009 (H.R. 4389) is a 
technology-neutral tax incentive program that provides a level playing 
field for the industry, and should be part of the government's final 
package of green energy tax incentives.
    The coalition strongly supports this bill because it would provide 
a modest production tax credit of $4 per million BTU of energy derived 
from biomass fuels, on par with the open loop biomass production tax 
credit of $2.94, and lower than the current equivalent tax credits of 
$5.92 per million BTUs for ethanol; $6.15 for wind and $13.29 ($1.01 
per gallon) for cellulosic ethanol.
    The bill calls for:

      A production tax credit of $4 per MMBTU of energy derived 
from biomass fuels;
      A cap of $25 million annually per facility, to limit 
costs to Treasury;
      A requirement that mills reinvest 50% of the refundable 
credit in energy efficiency and environmental improvement projects.

    Providing this limited tax credit will assist a critical industry 
that provides high wages and good benefits. Pulp and papermaking 
employees earned an estimated $36 billion in wages in 2008, or an 
average of about $70,000 a year in wage and benefit packages for jobs 
in mostly rural areas where similar employment is not readily available 
and the jobs are not easily replaceable. The industry is a major 
economic driver in the country, accounting for 6 percent of the U.S. 
manufacturing GDP, or approximately $200 billion in annual sales.
    While on par with the auto industry in terms of the sheer number of 
jobs and related benefits, the economic benefits of the pulp and paper 
industry are not concentrated in a single region but widely distributed 
geographically. The industry is a top-10 manufacturing employer in 48 
states, and paper mills are among the largest school and municipal 
taxpayers and charitable contributors in the small communities where 
they operate.
    With nearly 1 million direct employees and up to 6 million 
additional indirect jobs, the forest products industry is a key 
American manufacturing sector, but it is facing increasing competition 
for its most essential raw material with power producers who can afford 
to pay more for biomass as a result of government tax credits and other 
subsidies.
    The Paper Industry Coalition to Save Energy and Main Street Jobs 
represents approximately 25,000 people in rural areas in more than 20 
states from Maine to Florida to Washington state. With the industry's 
job multiplier effect, that's an additional 88,000 to 132,000 jobs that 
rely on the health of these paper companies in communities where 
sustainable and stable employment is elusive. This is why the United 
Steelworkers are standing with us to secure passage of this essential 
support for rural manufacturing jobs in the new Green Economy.
    We appreciate the opportunity to present these comments to the 
Committee, and look forward to working in partnership with the 
government to reduce foreign energy dependence through the use of 
green, renewable fuels, while solidifying an American manufacturing 
icon that supports rural communities and small towns across the 
country.
    Members and staff with an interest in learning more about this 
topic are encouraged to contact Mark L. Behan of Behan Communications 
Incorporated at [email protected] or at (518) 792-3856, or any of 
the following members of our coalition:





Appleton Papers                             Old Town Fuel & Fiber
(Appleton, WI)                              (Old Town, ME)
Tom Ferree 920-991-8127                     Dick Arnold 207-827-7711
[email protected]                   [email protected]

Boise Inc.                                  Port Townsend Paper Corp.
(Boise, ID)                                 Eveleen Muehlethaler 360-379-
                                             2112
Virginia Aulin 208-384-7837                 [email protected]
[email protected]

Buckeye Technologies                        Sappi Fine Paper North
                                             America
(Memphis, TN)                               (Boston, MA)
Dennis Livingston 901-320-8906              Amy Olson 617-423-5409
[email protected]               [email protected]

Domtar                                      Stratex Energy
(Fort Mill, SC)                             (Portland, ME)
Tom Howard 803-802-8041                     Gordon Grimes 207-228-7233
[email protected]                    [email protected]

Finch Paper LLC                             Thilmany Papers
(Glens Falls, NY)                           (Kaukauna, WI)
Adam Blumenthal 212-488-1341                Russ Wanke 920-766-8520
[email protected]                          [email protected]

Glatfelter                                  Verso Paper Corp.
(York, PA)                                  (Memphis, TN)
Mike Springer 717-225-2780                  Mike Jackson 877-837-7606
[email protected]             [email protected]

Lincoln Paper and Tissue LLC
(Lincoln, ME)
Keith Van Scotter 207-794-0601
[email protected]


