[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
GROWING U.S. TRADE IN GREEN TECHNOLOGY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 7, 2009
__________
Serial No. 111-70
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_____
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE BRALEY, Iowa
PETER WELCH, Vermont
(ii)
Subcommittee on Commerce, Trade, and Consumer Protection
BOBBY L. RUSH, Illinois
Chairman
JAN SCHAKOWSKY, Illinois CLIFF STEARNS, Florida
Vice Chair Ranking Member
JOHN SARBANES, Maryland RALPH M. HALL, Texas
BETTY SUTTON, Ohio ED WHITFIELD, Kentucky
FRANK PALLONE, New Jersey GEORGE RADANOVICH, California
BART GORDON, Tennessee JOSEPH R. PITTS, Pennsylvania
BART STUPAK, Michigan MARY BONO MACK, California
GENE GREEN, Texas LEE TERRY, Nebraska
CHARLES A. GONZALEZ, Texas MIKE ROGERS, Michigan
ANTHONY D. WEINER, New York SUE WILKINS MYRICK, North Carolina
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina
JOHN BARROW, Georgia
DORIS O. MATSUI, California
KATHY CASTOR, Florida
ZACHARY T. SPACE, Ohio
BRUCE BRALEY, Iowa
DIANA DeGETTE, Colorado
JOHN D. DINGELL, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 1
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 2
Hon. John Barrow, a Representative in Congress from the State of
Georgia, opening statement..................................... 4
Hon. Steve Scalise, a Representative in Congress from the State
of Louisiana, opening statement................................ 5
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 74
Hon. G.K. Butterfield, a Representative in Congress from the
State of North Carolina, prepared statement.................... 75
Hon. Doris O. Matsui, a Representative in Congress from the State
of California, prepared statement.............................. 78
Witnesses
Mary Saunders, Deputy Assistant Secretary for Manufacturing
Services, International Trade Administration................... 7
Prepared statement........................................... 10
Answers to submitted questions............................... 80
Tim Richards, Managing Director of International Energy Policy,
General Electric Company....................................... 18
Prepared statement........................................... 20
Answers to submitted questions............................... 95
Lisa Jacobson, President, The Business Council for Sustainable
Energy......................................................... 31
Prepared statement........................................... 34
Answers to submitted questions............................... 111
Andrea Larson, Associate Professor, Darden Graduate School of
Business Administration, University of Virginia................ 38
Prepared statement........................................... 41
Answers to submitted questions............................... 123
Steven F. Hayward, F.K. Weyerhaeuser Fellow in Law and Economics,
American Enterprise Institute.................................. 52
Prepared statement........................................... 55
GROWING U.S. TRADE IN GREEN TECHNOLOGY
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WEDNESDAY, OCTOBER 7, 2009
House of Representatives,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:07 a.m., in
Room 2322, Rayburn House Office Building, Hon. Bobby L. Rush
[chairman of the subcommittee] presiding.
Present: Representatives Rush, Barrow, Stearns, Sullivan,
Murphy, Gingrey, Scalise, and Barton [ex officio].
Staff Present: Michelle Ash, Chief Counsel; Angelle Kwemo,
Counsel; Will Cusey, Special Assistant; Theresa Cederoth,
Intern; Aaron Ampour, Fellow; Brian McCullough, Minority Senior
Professional Staff Member; Will Carty, Minority Professional
Staff Member; Sam Costello, Minority Legislative Analyst; and
Shannon Weinberg, Minority Counsel
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. The Subcommittee on Commerce, Trade and Consumer
Protection will come to order for the purpose of a hearing on
``Growing U.S. Trade in Green Technology.'' The Chairman will
recognize himself for 5 minutes for the purposes of an opening
statement.
I want to thank the members of the subcommittee for
participation in this important discussion.
The world is currently engaged in an important economic and
political shift. As President Obama said, and I quote, ``In the
21st century, we know that the future of our economy and
national security is inextricably linked to one challenge:
energy.''
All the developing and industrialized nations are taking
more steps to address their energy needs and environmental
challenges. In this race, some are increasing their production
capacity, others are acting to protect their domestic markets,
and some whose domestic markets are already maturing are
opening up new markets for their industry.
According to the New American Foundation, the U.S. moved
from a positive trade balance of $14.4 billion in green
technology in 1997 to a deficit of $8.9 billion in 2008, and
that included renewable energy products. These swings amount to
almost a $21-billion swing in a little over 20 years.
If our green technology exports continue to plummet, then
the U.S. will miss out on a once-in-a-lifetime opportunity to
become a global leader in the green energy sector. According to
the U.S. Department of Energy, the increase in exports in green
technology could reach $40 billion per year and could create
more than 750,000 jobs by 2020.
It is estimated that the green technology industry in the
U.S. employs 9.1 million U.S. workers. However, only 6 American
companies are among the top 30 leading companies in the world
in the green energy sector.
As we embark on this new adventure--which I would like to
call the ``Green Crusade''--the future of the U.S. Economy will
not only depend on environment domestic policy, but will also
be driven by the global marketplace.
Now we are presented with the following question: How will
we reverse our trade balance and compete in this global market?
How will we serve green jobs by increasing green technology
exports?
I strongly encourage my colleagues to stand by their
commitment to significantly increase our exports, help deploy
clean technologies to developing countries, and to assist them
in addressing climate change, spurring economic growth,
including job opportunities for all American workers.
What would make us a global leader in today's economic
environment is to become an export-led economy. Moving to a
green economy is an opportunity; we must not and we will not
miss.
I am deeply honored to welcome our witnesses to today's
hearing. Considering that you all represent different sectors,
together I hope that we can look specifically at how to best
enhance America's competitiveness in the burgeoning
international market for green technology and therefore create
more domestic job opportunities for our citizens.
This hearing is a great opportunity to highlight the
importance of a strong domestic policy to facilitate U.S.
penetration into the green economy's international market.
Also, it is equally important that we include a strong, long-
term export promotion policy to turn our current domestic
economy into a global leader that will once again be the envy
of the world.
Thank you, and I yield back the balance of my time.
Mr. Rush. It is now my honor to introduce the Ranking
Member of the subcommittee, Mr. Stearns.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Thank you, Mr. Chairman. I'm the Ranking
Member for today in substitution thereof. So I'm pleased to be
here. And obviously this is a very important hearing, so I want
to welcome all the witnesses. Thank you for your time.
It's important, I believe, to have a conversation about the
opportunities that trade holds for American jobs and American
ingenuity, particularly in the emerging green technology
sector.
We must view trade as an opportunity and not a threat if we
want to see our exports grow. Free trade has many benefits to
the global economy, driving economic growth, reducing poverty,
and raising the standard of living for everyone.
Domestically and internationally, trade accounts for
approximately one-third of our gross domestic product, and we
depend on dynamic open markets to sustain our well-being and,
of course, our way of life. Today's hearing will focus on ways
to expand our trade exports in ``green technology.''
As we discovered at a previous hearing on the marketing of
green products, defining green, of course, can be difficult, if
not impossible. Regardless of how we define it, improving the
opportunities and avenues to increase our exports and goods and
services is obviously a worthy goal, particularly as we look to
new businesses and new business models to pick up the slack in
economic activity that is affecting many of our industries
today during the current economic downturn.
The easiest step Congress can take to enact the free trade
agreement we have already negotiated is to simply enact the
free trade agreement we have already negotiated, but which has
not been acted upon. There is no simpler way to open new
markets for these great innovations and increase our exports
than to enact a free trade agreement.
Last year, for example, we ran a $21-billion surplus in
manufacturing with our free trade agreement partner countries.
On top of that, we ran a surplus in all our services trade of
approximately $144 billion. If we lower the barriers to our
exports, it is clear there are willing buyers in the global
economy. We must lower those barriers. And the benefits of this
are not theoretical. High tariffs on our green energy exports
that are currently prohibited in countries like Colombia would
instantly disappear with the enactment of the Colombia Free
Trade Agreement.
Green technology encompasses a broad array of activities
ranging from those designed to minimize the impact on the
environment to those that seek to improve efficiencies in
production, but many discussions about green technology will
naturally focus on the energy industry.
While we vigorously debate whether to institute a national
tax to limit our consumption of fossil fuels, we cannot expect
many of the world's developing nations to simply voluntarily
change their energy policy if it requires them to sacrifice
their growth. Similarly, American companies and taxpayers
should not have to shoulder the burden of a policy that, of
course, limits our economic growth.
So, today, let's focus this discussion on how to expand
economies by expanding trade and cooperation. We don't need an
international agreement like the Kyoto agreement on energy and
the environment to benefit our trade exports in green
technology. We have seen that earlier in my opening statement
here with the 17 countries we have a free trade agreement with.
We have pioneered technology and services over decades,
including those that provide efficiency gains in pollution
reduction. The progress of our energy sector has produced and
will continue to produce new developments that improve energy
delivery, such as the SMART grid technology. These improvements
can be transferred to developing nations through trade. Selling
our innovations to the world will provide developing nations
the technology to improve their energy efficiency, promote
conservation, and limit adverse effects on our global
environment.
To achieve these goals, we must make a marketplace
receptive to our services, and we must incentivize the private
sector to innovate. Therefore, our trade policy must insist
that our partners protect intellectual property rights. A
healthy and innovative market cannot succeed without the
appropriate rewards that follow true innovation and invention.
Whether it is the Hollywood studio movies or the latest
advance in energy efficiency, protection for our innovators'
intellectual property facilitate bringing successful products
to the market.
And finally, Mr. Chairman, as we look at ways to reduce
barriers to trade and green technology, we also must be mindful
of the mistakes other countries have made in their efforts to
develop green industries. Taxpayer-funded subsidies don't
necessarily work. History has shown the fundamental law of
economics, government intrusion, and regulation to restore its
market. If the marketplace cannot support it, why should
taxpayers?
Evidence is mounting that government innovation and support
for particular industries in our country is distorting the
marketplace at great cost to the taxpayers, without parallel
benefits. We know from our own experience that the housing
market was heavily subsidized through incentives, tax credits,
and easy financing. The resulting boom and bust should be a
note of extreme caution to all of us that we not distort this
market through heavy-handed intervention and regulation.
Congress cannot be in the business of choosing winners and
losers in a particular industry; rather, we should endeavor to
ensure every company simply has equal opportunity to succeed or
to fail.
I thank the witnesses again. And thank you, Mr. Chairman. I
yield back.
Mr. Rush. The Chair thanks the Ranking Member.
Now the Chair recognizes the gentleman from Georgia, Mr.
Barrow, for 5 minutes for the purpose of an opening statement.
OPENING STATEMENT OF HON. JOHN BARROW, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Barrow. I thank the Chairman. I hope I won't take that
much time. In fact, I think I'm the guy that the witnesses have
been waiting for, because once I'm through, then you all get to
talk. I think I am going to be the last person--wait a minute,
we got a late joiner.
I want to first apologize for those who aren't here and
point out that they also participate who can't be personally
present. We have a caucus going on right now that was not
previously scheduled, so a great many of the members here are
absent because they feel pulled in more than one direction. I
apologize for that. But I just want to add to the concerns that
have been raised. I want to tell you one of the concerns that I
have about this whole area.
We've become aware over time of a number of barriers to
free and fair trade in the area of green technology. We have
got tariff barriers in which some countries are putting up
tariffs on green technologies from our country but that don't
apply to their manufacturers. We have got quality certification
safety standards that are not really just about quality control
and safety, but they are written in such a way to make sure
that only the home producers' products will qualify. So we have
got stuff masquerading as quality control, but it's really
trade protection.
We have got local content requirements that can do the same
thing. We have got development programs that look good on the
outside, but they are essentially the home government of the
producer basically lending to the developing countries on the
condition that they buy from their folks and their folks only.
So we have got a lot of things that look kind of neutral on
the outside, but they are all about erecting barriers so that
we don't have access to their markets on the same terms that
they have access to ours. And what I want to make sure is that
whatever we do in this area, that we don't have a one-way
street in green technology the way we have in so many other
areas.
There are two things we have got to work with, we have got
to work with laws and we have got to work with money. What I
don't like is the idea that other countries can use laws to
keep us out. And we respond to this by not addressing that
problem. We end up turning to the taxpayer to try and figure
out how to jump-start our economy when we're playing on an
unlevel playing field. And I want to make sure that we're not
having to resort to the taxpayers to do for us what the laws
ought to do for us.
So the question I have for all of you--whether I am here to
hear it or not, I hope you will address it for the record and
for the benefit of the members who can't be here--is what are
institutions that are supposed to promote free and fair trade,
institutions like the WTO, doing to protect us from this,
because the sense we get in so many other areas of
international trade is we are being played for chumps in this
country, that the free trade agreements we got are one-way
streets. Other folks are quick to pull the trigger and haul us
in front of the WTO at the drop of a hat, but if we try and get
access to their markets, we have got a case of the slows when
it comes to enforcing our rights to access to other people's
markets when they are not under any disability at all.
So think about that. Help us understand what is it about
the institutions we have got right now that are either working
well or not working well in order to make sure that, as far as
the legal framework, our primary responsibility as legislators
is to make sure that the laws are protecting free and fair
trade. And if they're not doing that or can't do that, I want
to know the reason why.
So thank you all for this opportunity to visit. Mr.
Chairman, thank you for your leadership in bringing this issue
before us. I look forward to the testimony and statements of
our witnesses.
Mr. Rush. The Chair thanks the gentleman.
The Chair now recognizes the gentleman from Louisiana, Mr.
Scalise, for 5 minutes.
OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Scalise. Thank you, Mr. Chairman. And we will see if
anybody else comes in the room in the next few minutes to
continue the opening statements, but I do thank the Chairman
for calling this hearing and for our panelists.
As we all know, our Nation is facing one of the worst
economic downturns since the Carter administration. Our
unemployment rate is approaching 10 percent, and current
estimates predict that it will continue to rise.
Given the economic circumstances we are facing, it is
important that this subcommittee examine ways to enhance
American competitiveness and create jobs, green or any other
color. It is also important that we focus on creating jobs,
given the current energy policies being pushed by this
administration.
If enacted, the proposed cap-and-trade energy tax would be
the most dramatic overhaul of America's energy economy in our
lifetime, and it would ship millions of American jobs overseas.
But the administration has continued to stay--it is focusing on
policies that will create or save jobs. It is good to hear that
there is an understanding that we need to create or save jobs,
but if we have this cap-and-trade energy tax, I think most of
us recognize that we would actually be taking a further
downturn in our economic situation.
Even countries that have enacted climate change policies
have seen negative effects on existing employment. Spain's
renewable subsidies, for example, created over 50,000 jobs, but
led to the destruction of 113,000 existing jobs in other
economic sectors, a loss of 9 permanent jobs for every 1
permanent job created. In addition, 9 out of 10 of the green
jobs created in Spain are now gone. That doesn't sound like
creating or saving jobs to me.
Mr. Chairman, we must improve American competitiveness and
enact smart economic policies, not policies that will hurt
American companies and shift millions of jobs to countries like
China and India. Our international trade industry is one sector
that will be crucial to restoring our economy and creating
jobs.
Unfortunately, there are currently barriers to trade that
are hurting our exporters, one of those being the protection of
intellectual property rights. There are some that believe that
we should not enforce intellectual property rights and protect
patents in the renewable energy industry because the
technologies, they feel, should be free to everyone, and that
that would allow more renewable energy products to be created.
Unfortunately, that is a false assumption.
Without the proper patent protection and proper enforcement
of intellectual property, companies will not take the necessary
risks to develop those new technologies. They will have no
incentive to do so, and therefore, we will see less innovation
and a loss of jobs due to decreased sales.
I look forward to hearing from our witnesses on our current
efforts to remove these trade barriers and to promote export
activity. Hopefully, we are not wasting our time promoting
products and technologies that will not be exported due to
barriers that we are not seeking to remove.
Trade is a vital issue to my district, and it is a crucial
part of restoring our economic prosperity. I hope that we leave
today's hearing with a better understanding of what's being
done to promote international trade, while ensuring that we
protect American jobs and spur innovation and competitiveness.
I thank you and I yield back.
Mr. Rush. The Chair thanks the gentleman.
Now it is my distinct honor and pleasure to welcome all of
our witnesses to this hearing.
It is the normal practice of this subcommittee that we
swear in the witnesses. So before I introduce you, I will swear
you all in. Would you please rise and raise your right hand.
[Witnesses sworn.]
Mr. Rush. Thank you, and please take your seat.
Let the record reflect that the witnesses have all answered
in the affirmative.
Now, let me introduce the witnesses on this panel. And
again, we appreciate you taking time out from your busy
schedule to be with us. And I also would like to apologize for
the scarcity of membership. There is a mandatory caucus meeting
for some that is occurring, so that is the reason why we don't
have a lot of members here. But they will be able to review the
record.
Beginning on my left, Ms. Marie Saunders, she is the Deputy
Assistant Secretary for Manufacturing Services at the
International Trade Administration.
Next to Ms. Saunders is Mr. Tim Richards, who is the
Managing Director of International Energy Policy for General
Electric Company.
Next to Mr. Richards is Lisa Jacobson. Ms. Jacobson is the
president of the Business Council for Sustainable Energy.
And seated next to Ms. Jacobson is Ms. Andrea Larson, who
is an Associate Professor at the Darden Graduate School of
Business Administration here at the University of Virginia.
And last but not least, is Mr. Steve Hayward. He is the
F.K. Weyerhaeuser Fellow in Law and Economics at the American
Enterprise Institute.
TESTIMONY OF MARY SAUNDERS, DEPUTY ASSISTANT SECRETARY FOR
MANUFACTURING SERVICES, INTERNATIONAL TRADE ADMINISTRATION; TIM
RICHARDS, MANAGING DIRECTOR OF INTERNATIONAL ENERGY POLICY,
GENERAL ELECTRIC COMPANY; LISA JACOBSON, PRESIDENT, THE
BUSINESS COUNCIL FOR SUSTAINABLE ENERGY; ANDREA LARSON,
ASSOCIATE PROFESSOR, DARDEN GRADUATE SCHOOL OF BUSINESS
ADMINISTRATION, UNIVERSITY OF VIRGINIA; AND STEVEN F. HAYWARD,
F.K. WEYERHAEUSER FELLOW IN LAW AND ECONOMICS, AMERICAN
ENTERPRISE INSTITUTE
Mr. Rush. I want to thank you again. And we want to
recognize now Ms. Saunders for 5 minutes of opening statement.
TESTIMONY OF MARY SAUNDERS
Ms. Saunders. Chairman Rush, Ranking Member Stearns, and
members of the subcommittee, thank you very much for the
opportunity to testify before you today on the Growing U.S.
Trade in Green Technology.
As you are aware, this is an innovative and growing sector
that has wide-ranging impact both domestically and
internationally. Secretary Locke is leading the Commerce
Department in a series of initiatives to further open up
markets and provide tangible results to workers and businesses
alike. The International Trade Administration within the
Department of Commerce is the lead export promotion agency in
the Federal Government, and ITA is working to expand green
technology opportunities.
Early development and commercialization of green
technologies are critical to the competitiveness of U.S. firms.
First, these technologies result in greater energy efficiency.
Second, as the demand for green technologies grows, so do
export opportunities for U.S. companies. As Chairman Rush
noted, the Department of Energy estimates there could be up to
$40 billion a year in increased exports of green technologies,
generating up to 750,000 green jobs by 2020. However, our
ability to realize this potential depends on achieving U.S.
leadership in the field.
General Electric CEO Jeff Immelt and venture capitalist
John Doerr noted in an August Washington Post op-ed titled,
``Falling Behind on Green Tech'' that Amazon, eBay, Google,
Microsoft, and Yahoo were the leading Internet technology
companies, and they are all American companies. And yet out of
the top 30 alternative energy companies in the world, only six
are American.
One of Commerce Secretary Locke's priorities is to enable
new businesses to enter the market and to increase the number
of U.S. Businesses that produce green products and services,
with particular emphasis on manufacturing. ITA administers a
series of programs that are designed to support these goals and
priorities to enhance the competitiveness of U.S. industries
and firms. And these include--I'll just name a few--a new green
tech Web site that aggregates all of our promotion programs in
a single place, providing easy access for industry; and energy
efficiency initiatives to assist U.S. manufacturers to improve
the energy efficiency of their operations as well as to deploy
energy efficient technologies; and industry events on low-
carbon energy sources and fuels to improve the domestic and
international competitiveness of U.S. clean energy companies.
With the world hungry for climate change solutions, the
United States must act as an incubator for innovative
technologies. ITA is actively promoting U.S. Technology
solutions to address government-mandated requirements that
address the effects of climate change.
We have an aggressive green technology promotion program
with over 90 trade events planned worldwide for this year and
next. As examples, clean technology and alternative energy are
the central themes of several ITA export promotion initiatives;
a green building event in Europe; and a solar technology and
energy efficiency mission to India.
In November, we are organizing a five-city green build road
show to Pittsburgh, Denver, San Francisco, San Jose, and
Phoenix to help U.S. companies take advantage of the $975
billion annual construction market in Europe. We have also
ramped up our efforts to promote the commercialization and the
export of green technologies through increased outreach to
industry on best practices and priority markets, technical
assistance, capacity-building events, helping develop trade
policies that favor cleaner technologies, and addressing those
market barriers in other countries.
ITA's sustainable manufacturing initiative encourages U.S.
companies to use sustainable practices that can make them more
competitive in the global marketplace, and therefore
potentially better export candidates. You can't export what you
don't manufacture.
And finally, we also have an initiative known as SMART--
Sustainable Manufacturing American Regional Tours--that shows
small manufacturers how to find success through sustainable
manufacturing that improves the bottom line.
President Obama has called for new policies to advance a
cleaner environment, a stronger response to the challenge of
climate change, and more sustainable natural resources and
energy supplies. To reach this goal requires effort by both
industry and government. Commerce will continue to prioritize
strengthening U.S. competitiveness in this sector and enhancing
U.S. capacity to export green technologies.
In closing, I would like to thank the subcommittee for the
opportunity to highlight ITA's current efforts. I look forward
to answering any questions you may have.
Thank you.
Mr. Rush. The Chair thanks the witness, Ms. Saunders.
[The prepared statement of Ms. Saunders follows:]
Mr. Rush. The Chair now recognizes Mr. Tim Richards for 5
minutes for the purposes of an opening statement.
TESTIMONY OF TIM RICHARDS
Mr. Richards. Thank you very much, Mr. Chairman, and
members of the subcommittee, for holding this hearing today.
Mr. Chairman, as you have made very clear, the entire world
needs cleaner- and lower-emissions technologies, and the United
States has every opportunity to be a major exporter of these
products and services.
The U.S. Energy Information Administration expects that
total world energy consumption will grow by more than 33
percent by 2030 and that 92 percent of that growth will occur
outside of the United States. And much of that future
investment, if not virtually all of that future investment, is
going to occur in areas that are more efficient and lower
emission than we currently see today.
General Electric, with our energy business based in the
State of Georgia, is succeeding in selling and creating
cleaner, more efficient technologies, and we are selling those
all around the globe. We have invested heavily in our
ecomagination products, including high-efficiency gas turbines
which have 200-plus U.S. small- and medium-sized enterprises as
suppliers, technologies for smart grids, coal gasification,
nuclear power, solar energy, high-efficiency appliances and
lighting, efficient aircraft engines, and hybrid locomotives,
to name some of the products and services, as well as wind
turbines.
In this testimony, I would like to address three critical
themes for promoting U.S. exports: First, the Foundation for
Successful Clean Energy Exports lies with a robust domestic
demand. Second, export competitiveness requires a commitment to
competition both here and abroad. And third, the U.S.
Government can assist the private sector by organizing itself
to actively promote competitiveness and exports.
With regard to the first theme, robust domestic demand for
renewable and other cleaner technologies is necessary to drive
innovation, achieve economies of scale, and support a full-
fledged manufacturing base, as Ms. Saunders has made clear.
This in turn will provide the underpinning for strong exports.
Critical components of policy in this area are stable
incentives, such as renewable energy tax credits and the
development of binding national renewable energy standards such
as many other countries have adopted, along with cap-and-trade
legislation that establishes mandates and incentives.
Unfortunately, U.S. policies currently in place to support
renewable energy are insufficient to counter the current weak
investor confidence, and they fall short of those systems
maintained by other nations.
The second theme is the need to maintain competitive and
open markets. Even as they call for projects that enhance
energy security and reduce emissions, many governments maintain
barriers to trade in the very goods needed to realize those
projects. To cite a few examples, most WTO members still impose
tariffs on wind turbines; in fact, those tariffs average 7.4
percent. In Brazil, it's 14 percent; in China, 8 percent; in
India, 7.5 percent. The U.S. also has a tariff on these
products; it is only 1.3 percent, still worth reducing, but not
as large as our competitors.
In addition to these tariff barriers, nontariff barriers
are a serious issue. A few examples there. China maintains a
``buy China'' policy on wind turbines, and recently conducted a
very large procurement in which no foreign-owned company sold
any wind turbines in China.
In Canada, Quebec has applied local content requirements
for wind turbine procurement. Ontario is considering similar
election.
And here in the United States, of course, we have the ``buy
America'' components of the economic stimulus. The protections
represented by tariff and nontariff barriers reduces U.S.
Exports and runs counter to the goal of promoting a globally
competitive industry.
Open competition calls for a three-pronged solution. First,
as Congressman Stearns has suggested, now is the time to roll
back existing trade barriers and prevent the application of new
barriers, and we can do this through the negotiation of an
international agreement, eliminating those barriers for all
environmental goods and services. This is a high-impact, cost-
reduction step governments can take right now.
Second, the U.S. should lead by example and not include
``buy America'' provisions in future legislation.
And third, strong intellectual property rights protection,
such as has been suggested by several members, is essential to
create the economic incentives to develop and deploy new
technologies around the globe.
The third theme is that there is a positive role for the
U.S. Government. The Federal Government is in a position to
facilitate the private sector's growth by undertaking two sets
of actions. First, export finance enhancements; and second,
more active and improved coordination of American advocacy, led
by the Commerce Department, for cleaner energy exports.
Thank you, Mr. Chairman, and members of the subcommittee,
for the opportunity to testify before you this morning. The
U.S. is an innovation leader and has the opportunity to become
a world-class export leader in this field. And with the proper
policy framework, we will achieve that distinction. Thank you
very much.
Mr. Rush. Thank you very much.
[The prepared statement of Mr. Richards follows:]
Mr. Rush. Now the Chair recognizes Ms. Jacobson for 5
minutes for the purposes of opening statement.
TESTIMONY OF LISA JACOBSON
Ms. Jacobson. Thank you, Mr. Chairman, and members of the
subcommittee. The Council very much appreciates your leadership
on this very important set of issues.
The Council is an industry coalition that includes
businesses and trade associations from around the country
representing currently available technology options to meet
pressing energy, national security, economic, and environmental
challenges. The Council is committed to enactment of domestic
and international policies designed to deploy clean energy
technologies, such as renewable energy, energy efficiency, and
natural gas.
The House Energy and Commerce Committee is a leader in the
advancement of comprehensive energy and climate change
legislation in this Congress with the passage of the American
Clean Energy and Security Act. This bill includes vital
provisions to support domestic clean energy manufacturing and
export promotion.
In addition to what's included in the American Clean Energy
and Security Act, I would like to offer additional areas that
Congress may wish to consider.
Given the global nature of clean energy markets, especially
for solar, wind, and efficiency products and components, the
U.S. has an opportunity to embark on an aggressive and
sustained strategy to expand domestic manufacturing and U.S.
exports. The strategy should include six components:
First, strong U.S. markets. Establishment of strong
domestic markets will build the foundation for manufacturing
and exports. Sending the right signals at home through the
adoption of domestic investment and manufacturing incentives
coupled with strong, coordinated, and long-term policy
commitments to clean energy sectors is critical.
Examples of important initiatives include a national
renewable electricity standard and a national energy efficiency
standard, support and expansion of the manufacturing tax
credit, support for the U.S. Department of Energy Loan Guaranty
Program. Those are just a few.
Second, as others have acknowledged, a free and fair trade
policy that includes liberalization of tariff and nontariff
trade barriers to clean energy products and services. Sound
trade policy that recognizes the urgent need for clean energy
products and technology transfer will help make U.S. products
more competitive.
A concern expressed by some clean energy industries is that
some foreign markets are more restrictive to our own. Tim
Richards made some very specific points in that regard. I would
just like to mention again, some nations have domestic content
requirements, tariffs, and numerous other protections. These
issues should be considered as part of a clean energy trade
liberalization effort.
Third, intellectual property right protection. Again, there
seems to be consensus on that topic. As our domestic industries
grow and new technologies are developed, it is critical to
protect the intellectual property rights of firms that invest
and offer innovations to the marketplace.
In support of this, I refer to section 1120(a) of the
Foreign Relations Authorization Act for fiscal years 2010 and
2011. This section directs the U.S. Government to prevent
weakening and fully protect intellectual property rights of
energy and environmental technologies.
Fourth, flexible and innovative government financing. U.S.
firms are best able to compete in foreign markets with
instruments that leverage public and private capital and focus
on the creation of enduring markets. While still in its earlier
phases, the World Bank's Carbon Investment Fund seeks to
embrace this approach.
In addition, to better compete with foreign firms, U.S.
companies need to be able to match the export promotion support
that other governments provide. U.S. firms often face
competition from conditioning of overseas development
assistance as well as tied aid, as was mentioned by Congressman
Barrow.
Currently, the Export-Import Bank of the United States has
a process to assist firms, but this process is burdensome and
needs to be made more flexible and streamlined.
Finally, government financing should be made available to
support capacity building and the regulatory and institutional
frameworks required to open new markets to clean energy
products and services.
Fifth, expansion of clean energy technology promotion
programs. These should have a strategic high-level focus and
involve multiple agencies, and they should support small,
medium and large companies over the full project development
and funding cycle.
Government assistance ranges from identification of market
opportunities and business partners to pre-feasibility and
feasibility studies, to assistance with financing and
overcoming other market barriers. The U.S. has existing
programs in these areas, but would benefit from expanded
funding, enhanced coordination, and consistent high-level
engagement. Other nations approach market development for these
sectors in a highly strategic fashion. We can do that too, we
just need the high level and sustained support.
Finally, global agreements on climate change in the
establishment of a global price on carbon. Clear and long-term
market signals, such as the establishment of a global price on
carbon emissions that contribute to global climate change,
would offer a more competitive environment for U.S. firms going
into a marketplace which continues to include more regulations
in other countries to reduce greenhouse gas emissions.
Finally, I would like to very quickly acknowledge the
important questions that Congressman Scalise mentioned about
the impact of clean energy jobs and support for clean energy
industries. The National Renewable Electricity Laboratory
recently released, August 28 of this year, a response to a
study that I believe Congressman Scalise may have been
referring to. It was called, ``The Study of the Effective
Employment of Public Aid to Renewable Energy Sources.'' That
was the name of the report that was released. And NREL has a
technical response to some of those methodologies, and I think
it has a slightly different perspective on how support for
clean energy industries impacts job creation. So I just wanted
to mention that for the record.
Mr. Rush. Thank you very much. Have you concluded your----
Ms. Jacobson. Yes, thank you very much. I appreciate the
opportunity.
Mr. Rush. Thank you so much, Ms. Jacobson.
[The prepared statement of Ms. Jacobson follows:]
Mr. Rush. Dr. Larson, you are recognized for 5 minutes.
TESTIMONY OF ANDREA LARSON
Ms. Larson. Thank you for the opportunity to contribute my
testimony to the topic today of ``Growing U.S. Trade and Green
Technology.'' I have three recommendations for the
subcommittee.
The first is to support green technology and clean
commerce. Second, use that support to drive economic recovery,
urban revitalization, and economic development going forward.
And third, leverage from the base that's already there, and the
base can be expanded to support U.S. competitiveness in world
markets because the United States is now being eclipsed by
other countries.
Why should the committee listen to these recommendations? I
have 35 years of work on economic development, product safety,
environmental issues, and sustainability topics. The last 25
years were focused on the private sector entrepreneurship,
innovation, and corporate strategy. And for the last 15 years,
I have conducted research and taught MBA students and
executives exclusively on the topics of the intersection of
sustainability, innovation, and entrepreneurship. My work is
about clean commerce.
To start with, it is worth noting what we mean by clean
commerce. First and foremost, it is about creating jobs and
delivering equal or superior product performance to customers
at comparable prices compared with the existing alternatives.
It is about cost-cutting, profitability, and competitive
differentiation for firms. It's about dramatically cutting or
eliminating pollution and toxic waste. It's not just about
efficiency, it's about innovation first and foremost.
It includes green technology, but it's not limited to
technology; it also includes nontechnical innovation. And
critically important, it's not just about energy. Economies are
built on energy and materials. Clean commerce means constant
progress towards clean energy and benign materials.
Drawing from my knowledge base, I can tell you the green
technology and clean commerce arena is the biggest opportunity
in world markets now and for the foreseeable future. It is the
new game. Any country that is willing to invest to build
infrastructure, to innovate, to educate and train, and to
support private equity and corporations to build capacities to
meet domestic needs and engage in global markets will win at
this game.
I have watched the United States being left behind in this
game over the last decade. The follower strategy, which is what
we're doing now, is a legitimate one in the corporate world,
and perhaps that's what the United States wants to do.
Certainly, that is the signal it's sending right now. Yet this
is the growth area that's taking off worldwide.
The drivers of the changes, the drivers that are creating
this huge opportunity are not going away. This is not a fad or
a temporary phenomenon.
To give you a sense of what's happening in global markets,
Denmark, Germany, India, Japan, and Spain account for 91
percent of global exports of wind power in 2008. The world's 12
major economic stimulus packages propose to invest $180 billion
in clean tech in the next few years. Spain invests $430 per
capita compared to the United States $57 per capita in
renewable energy.
In 2008, China became the world's largest manufacturer of
photovoltaic solar panels, the 95 percent of their volume
exported. China has 60 percent of the total global capacity for
solar thermal water heaters. And China protects its domestic
clean energy companies, reserving contracts and restricting
foreign firms.
If you were to point to the leaders in stimulating
innovation in clean commerce and driving clean tech, you would
look to Japan, Denmark, Spain, Germany, Brazil, China and
India. The European Union is taking the lead in setting high
performance standards for clean consumer products, recycling
and product take-back. So you see leadership there as well.
Denmark and Spain have allowed individuals and companies to
sell excess electricity generated back to the grid over a
decade ago. Germany guaranteed grid access for renewable energy
producers as far back as 1991. The United States has just begun
to focus on these issues. States are moving to make changes in
light of the fact that the Federal Government has not been
active, but utilities continue to fight these measures.
The leaders, countries and companies, global companies have
already committed to significant changes. They have set, and
many have achieved, greenhouse gas emission reduction targets,
and new ones are then set. They have set and are meeting energy
efficiency targets. They have set and are meeting cogeneration
targets. They have set and are meeting renewable energy source
targets that reduce their national oil dependency, stabilize
energy prices, and avoid energy security threats. And that's
just the energy picture. As I said, there is comparable
progress being made by other countries on clean materials.
What we are seeing is national strategies characterized by
clear and consistent policies, gradual amendments to update
those policies, protections to control consumer costs,
mitigation for windfall profits, and simplicity to keep public
administration costs low and individual, and corporate
transaction costs minimal.
Given global trade competition in green tech and clean
commerce, given that it is fierce--and that's going to only
increase--and it's being shaped by national strategies to
support and protect domestic innovation and manufacturing, the
U.S. is now at a significant competitive disadvantage compared
to other countries that have already experimented, learned,
adapted and refined integrated national policies that mobilize
citizen behavior, corporate investment, education, and
government purchasing.
The future of global trade is absolutely clear, and clean
commerce and green tech are at its core. For emerging and
developing economies alike, industrial and commercial
activities that support the provision of clean energy and
green-chemistry-designed materials bring green buildings,
sustainable grown foods and clean transportation so that clean
air, clean water, and healthy soil are preserved by design,
these actions are increasingly recognized as delivering on
capitalism's promise of prosperity. And if you are adopting
these strategies, companies and countries can gain competitive
advantage.
The companies and the countries that understand this new
reality will dominate world trade in critical growth
industries. The question is: Do we want to lead or follow?
Thank you.
Mr. Rush. Thank you very much, Dr. Larson.
[The prepared statement of Ms. Larson follows:]
Mr. Rush. Mr. Hayward, you are recognized for 5 minutes.
TESTIMONY OF STEVE HAYWARD
Mr. Hayward. Thank you, Chairman Rush, and members of the
committee.
Over at the American Enterprise Institute, I spend a lot of
time with a team of seven or eight people--economists, lawyers,
a couple of scientists even, some trade experts--puzzling over
the whole picture of energy that changes like a kaleidoscope
every day. It is on the one hand exhilarating and also
daunting. Every day something new comes along and something you
thought you knew looks differently.
I think that whatever happens in the next 10 or 15 years,
it's probably different than what we expect right now. And that
puts me in the frame of mind of the old comment from either Sam
Goldwyn or Yoggi Berra--I'm not clear which--who said ``Never
prophesy, especially about the future.''
That being said, I think there are two broad issues, some
of which have already been suggested here today, that need to
be thought about long and hard. The first is, what are the
actual dynamics of the present marketplace and how will those
market dynamics change under a variety of policy regimes,
either enacted by the industrial world, or the entire world in
concert? Specifically, schemes--whether cap-and-trade or a tax
to put a higher price ban for carbon-based energy.
And then, second, what are some of the cross-cutting
factors that will come to bear on how trade flows will unfold
in the real world? I think there are two factors in that
category. One has already been suggested, but I'll sharpen it a
little bit further. We face the prospect of incipient trade
protection and retaliation for things such as border adjustment
tariffs that are contemplated in the Waxman-Markey bill, but
also the problem that everyone has mentioned of intellectual
property rights for energy technology innovations that the
United States may bring to the marketplace over the next
several decades.
Above all, I am always a little troubled about claims for
new jobs or new businesses that depend vitally upon subsidies
or mandates from Washington. I think Congress in general is
well advised to resist schemes in which business profits are
more dependent on the political marketplace in Washington
rather than the competitive marketplace outside Washington.
Now, you can point to a lot of energy innovations and
efficiency improvements. My favorite is jet aircraft engines,
which GE and Pratt & Whitney, for example, are leaders in the
world in developing, they have neither subsidies nor mandates.
In fact, as I look at the top ten categories of American
manufacturing exports, starting with civilian aircraft
equipment, $73 billion in 2007, none of those need subsidies
and mandates, with the possible exception of financing from the
Export-Import Bank and so forth.
At the present time, as has been mentioned, the U.S. runs a
trade deficit in renewable energy technologies. I think there
is good reason to expect that to continue and maybe even get
worse instead of better.
I have a table in my testimony showing from the latest
complete figures I could find, from the Department of Energy
and the Census Bureau from 2003, of a breakout of the
substantial deficit in our wind power production, our wind
power exports and imports, because we import an awful lot of
the raw materials for the wind power that we make and install.
I notice that the compact fluorescent light bulbs I've been
buying lately are made in China. I think Congress might well
ask industry for assurances that, in return for subsidies and
mandates, expanded production capacity will be located here in
the United States, and not overseas, that have lower materials
and labor costs. I am skeptical that such assurances can be
achieved.
And beyond that, if we really are going to make, say, 20
percent of our electricity by wind power by the year 2030--
which the Department of Energy says is feasible--I'm skeptical
that we can clear the litigation alone for the siting of power
lines to do that. But never mind that; if we are going to do
that, I wonder if we really are going to be able to expand our
own manufacturing capacity enough to meet that kind of
ambiguous target and have additional new capacity to export it
to overseas markets.
Meanwhile, I note that roughly 80 percent of the world's
premium reserves of hydrocarbons are based in less developed
nations. And even if you got a global carbon price of, say, $28
a ton--that's the figure now contemplated over in the Senate in
the Kerry-Boxer bill--hydrocarbon energy will still be cheaper
than present renewables at scale and other renewable
technologies that the United States might export.
And so in other words, if we place a higher price on carbon
in the developed world and the developing world does not--I
wouldn't be at all surprised if 10 or 15 years from now, our
leading energy exports continue to be oil- and gas-drilling
equipment where we have the best in the world and where we
still enjoy, by the way, a trade surplus.
Now, the example of oil and gas technology I think
illustrates the last point, which is some of the train wrecks
that are unfolding in the architecture of our policy in these
matters. A lot of our specialized oil- and gas-drilling
technology companies guard their intellectual and proprietary
property very closely, seeking to work through partnerships
rather than selling licenses or even selling their products
overseas, because they worry about their intellectual property
being stolen by the Chinese, for example.
And yet, as Mr. Scalise pointed out, we are being told that
the dimensions of the climate crisis means we should
essentially give away a lot of technology in the interests of
the world. Well, maybe so, but I note that over $1 billion in
private capital this year, at least $1 billion is going into
algae-based biofuels--a long way off, but I know a lot of
people are very optimistic. It's hard to believe our
entrepreneurs putting up this much capital are going to want to
give away that technology.
In the meantime, a lot of developing nations at their
opening bid at Copenhagen are saying the developed world should
provide $100 to $200 billion a year in foreign aid so they can
buy our technology. Either way, it looks like American
companies will be asked to sell or give away their products
cheaply or that American taxpayers will be made to pay for it.
And finally, I already mentioned the prospect of border
adjustments or high-carbon imports contemplated in some
legislation--even if it doesn't run afoul of WTO rules--is
likely to be, in my mind, counterproductive. And I will stop
there.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Hayward follows:]
Mr. Rush. The Chair thanks all the witnesses. And now the
Chair will proceed with the questioning segment of this
hearing, thereby recognizing himself for 5 minutes for the
purpose of questioning the witnesses.
As I said in my opening statement earlier, in many
instances we see that other countries have policies that make
it difficult for U.S. companies to compete in the global
market. Emerging markets in countries like Russia, China,
India, and Brazil have tariff barriers. Countries with the
largest demand for green technology products, like China, EU
member states, and Japan, have increased their demand and thus
their production capacity. Moreover, Denmark and Germany are
promoting their exports through international development
programs.
As a result of this, out of the top 30 countries in solar,
wind, and advanced batteries, we can count only six American
companies. It is not a surprise that we have a trade deficit in
this sector.
My question is really to each and every one of you. How
would you characterize our current energy policy, especially as
it relates to export promotion of green technologies? And as a
follow-up to that question, obviously in order to return to a
positive balance in trade, the U.S. needs to have a policy that
addresses competition on more than one front. And if you had to
prioritize what needed to be done to increase our exports, what
would be the first action the Federal Government must
undertake?
Those are two questions I would like for answers, beginning
with Ms. Saunders.
Ms. Saunders. Thank you very much.
As to characterizing the U.S. energy policy, I would
characterize it as evolving. There are quite a few legislative
proposals on the table as well as regulatory proposals from,
for example, the Environmental Protection Agency.
Mr. Rush. Is it slowly evolving or rapidly evolving?
Ms. Saunders. Evolving. And let me say this: Deployment,
rapid deployment of clean or green technologies does depend
heavily, as I think several of the other speakers have noted,
on the policy environment. That's true here in the United
States, that's true in foreign countries as well.
So our export markets will be enhanced insofar as we see a
policy environment in other countries, such as China, India,
Brazil, which stimulates clean technologies.
I think Dr. Larson mentioned that in her opinion some of
those governments are ahead of the U.S. Government. But the
major point remains that the policy environment is critical to
facilitate rapid deployment of clean technologies.
We are working as effectively as we can at the Department
of Commerce within the current level of funding and the current
level of responsibilities. Secretary Locke intends to call the
first meeting of the Trade Promotion Coordinating Committee
later this month and meet with the principals. This is the 19
agencies that have trade promotion responsibilities. And I know
that a key topic of discussion will be the clean technology
discussion on how to coordinate the resources of those 19
agencies, which include the State Department, Department of
Commerce, the U.S. Trade Representative's Office, and many
other agencies, to ensure that we're doing all that we can to
promote exports by U.S. companies.
Mr. Rush. Thank you.
Mr. Richards.
Mr. Richards. Thank you. Mr. Chairman, first of all, in
terms of the U.S. energy policy, I think the important point is
that under the status quo, we are actually going to see a
reduction in the total of installation of wind turbines and
other renewable products this year, probably about half of what
was installed last year. So current policy combined with the
situation with the recession has resulted in a dramatic decline
from what was being achieved before, and we do need long-term,
significant policy reform in order to turn that around.
In terms of prioritizing actions, of all the things that I
talked about in my remarks, I think the thing that the United
States could lead on and do quickly that is purely export-
oriented is to negotiate an agreement internationally that
removes many of the barriers you talked about, remove tariffs
and remove nontariff measures, and do it for environmental
goods and services.
Mr. Rush. Thank you.
Ms. Jacobson.
Ms. Jacobson. Yes, thank you.
I think I'll start by echoing that last comment made by Tim
Richards. We very much support a streamlined effort to
liberalize clean energy goods and services. So I hope that that
will be taken up by the coordinating committee and that it will
continue to get support in Congress.
Very briefly, in terms of where things stand with energy
policy and clean energy export programs, in talking to my
industries, I think they have seen significant improvement in
the last several years. There are many more programs that
support them. They are being more effective, and generally
speaking, there has been improvement. But compared to what is
seen in other countries like Germany, a very strategic pinpoint
effort that is high level and sustained, we are not quite there
yet. And so we need to take that opportunity to have a
strategic, coordinated, sustained and high-level effort on
clean energy export promotion.
And then finally, again, support for domestic market will
help our export opportunities and the U.S. players in the
export industries.
Thank you.
Mr. Rush. Yes, Dr. Larson.
Ms. Larson. I would characterize the energy policy as very
fragile and new and slow-moving, given that it's coming out of
a void for a number of years; there really has been no national
energy policy. So that answers the first question you had.
The second, What would be the most important thing to try
to reinforce exports at this stage? There is an enormous amount
of entrepreneurial activity--venture capital activity, private
equity investment--going on now in this arena. It has just
exploded in the last few years. If there are ways to reinforce
this activity to build domestic capacity for innovation and
then scalability, and immediately followed by export--which
will happen if we have the volume--if we have the scalability
and we have the volume, that's what I would focus on.
I also think, though, that there is an issue in this
country with--we lag not just on commerce, but we also lag in
education and training. And if you don't pay attention to those
issues in this arena of clean commerce, then we can't develop
the intellectual--the skills and practical training capacity
that we need to build our domestic infrastructure. And without
that, it's very hard to be able to export.
Mr. Rush. Thank you very much.
Mr. Hayward.
Mr. Hayward. I think I will just limit myself to a comment
about a state of energy policy. I am always kind of in despair
about the matter, in part just because of all the moving parts
involved--the Federalism of the country, our balkanized
electricity grid, State authority regional differences in the
kind of energy mixes generating electricity, and so forth.
I liked Ms. Saunders' analogy to evolution. Of course,
evolution never ends, right? Sometimes it is fast. Sometimes it
is slow. But one part of evolution--if I could extend that
metaphor a little bit, of course--is natural selection, whereby
you kill off the uncompetitive organisms--right?--and the
weaker genes, so to speak. It is hard to do that in the energy
field.
A case in point would be--and I hesitate to do this because
it would be interpreted as a reproach of this body, but the
whole ethanol program, which even most environmentalists now
say is not what we thought it would be when we started. Yet it
is very hard, for all the usual reasons, to change course on
that. You know, that is ultimately, maybe, going to be in the
way of, say, algae biofuels if we make a breakthrough there.
By the way, one of the moving parts in the ethanol story is
our very high tariff against imports of Brazilian ethanol,
which would probably make sense if we really want to focus on
that goal of reducing oil imports or use of traditional
petroleum products. I will just limit it to that.
Mr. Rush. Thank you very much.
The Chair now recognizes the ranking member, Mr. Stearns.
Mr. Stearns. Thank you, Mr. Chairman.
In listening to this hearing, I am starting to believe that
this is really a question of whether we have an energy policy
that is based upon economics or a social policy. Perhaps it
could be a mix of the two. But when you look at our free trade
agreements with the 17 countries, you see how we actually have
a surplus.
As I mentioned in my opening statement, dealing with
manufacturing, we had a $21 billion surplus; in dealing with
services, we had $144 billion. So when you have free trade
agreements, you do not need to necessarily go in and subsidize
all of these industries, including green technology.
Ms. Saunders, you mentioned a potential increase of $40
billion per year in green technology exports. But, obviously,
that is going to consist of a little bit of subsidizing by
taxpayers. We had $80 billion set aside in the American
Recovery and Reinvestment Act for clean energy investment. The
President has indicated he wants to invest another $150 billion
into R&D. So my question to you is: This $40 billion you are
talking about, couldn't we just get this by additional trade
revenue generated by just passing pending trade agreements that
we have to get this number that you offered?
Ms. Saunders. Thank you, Mr. Stearns.
That number is from the Department of Energy, a projection
on the value of potential exports and its relationship to jobs
in that sector.
To speak to free trade agreements, there are tremendous
benefits, as you have already illustrated effectively, both in
terms of markets--tariff-free or low-tariff markets--for
finished products, but I think equally important is opening up
markets for intermediate inputs that U.S. manufacturers input
as part of their supply chain. So it frees up both the ability
of manufacturers to locate facilities here in the United States
and import inputs as part of their supply chain as well as the
markets for their end products; and we have seen a tremendous
benefit, as you noted, from the 17 current free trade
agreements.
The areas where we have the key markets for green
technologies and also where we have some of the greatest
challenges are China, India, and Brazil, for example.
Mr. Stearns. Well, with that in mind, how do U.S. tariffs
for green technology imports compare to tariff levels imposed
by other countries for similar products and technologies?
Ms. Saunders. Generally, U.S. tariffs are lower, on
average, than tariffs in most other countries.
As several of the speakers said earlier, we agree it is
critically important to push for a negotiation of an agreement
on environmental goods and services. These are new products,
new tariff lines, which are not necessarily covered under
existing WTO commitments and perhaps not under existing free
trade agreements, and so we have called them out as a special
set. Then, as a subset of environmental goods and services, the
U.S. and the European Union have both joined to push for
particularly rapid movement in the areas of clean energy
technologies because of the demonstrated global need for those
technologies.
So we agree it is very important to negotiate environmental
goods and services agreements to lower both tariff and non-
tariff barriers. We are trying a variety of means to support a
global agreement, which includes bilateral discussions with key
trading partners as well as moving issues through the Asia-
Pacific Economic Cooperation, which sometimes provides a good
venue to tee-up concepts that can then go global.
Mr. Stearns. Mr. Hayward, I will let you respond to that.
You might also talk in response, as you talk in your
testimony, about how domestic mandates on the energy supply can
actually decrease exports of green technology. You might touch
on that, too, and expand a bit on it.
Mr. Hayward. Well, by that, all I mean is something very
simple, which is, if we really do try and seriously ramp up
wind, solar, and other renewable energy installations in this
country on a large scale, as is contemplated in various
policies, it seems to me we are going to be using all of our
own production capacity ourselves and, quite possibly, since we
are going to need a lot of minerals that we are not currently
producing in large enough quantities in this country we will
have to import some.
That is not necessarily a bad thing. I am trying to speak
narrowly to this question of are we actually going to see
growth in energy exports across the board or are we actually
going to end up importing more? As I say, that is not
necessarily a bad thing, but let's not get too carried away
with ourselves thinking there is a free lunch here in that if
we expand our renewable energy production that we are going to
be selling lots and lots of it overseas, even if we can fight
through the tariff barrier problems.
Mr. Stearns. What are the economic downsides when you take
money out of more productive areas of the economy through taxes
or increased national debt to less efficient sectors in the
economy? Is there an economic response to the subsidies and
what the danger could be?
Mr. Hayward. Well, that gets back to some classical
economic ideas that have fallen out of favor. You know, the
classical old idea was the broken window fallacy. You know, if
somebody throws a rock through a storekeeper's window, the
glassmaker gets a job. On the other hand, the storekeeper is
not spending that capital on something else that might be net
more productive across an economy.
So lots of things are changing fast, and cost curves are
shifting very quickly in solar and wind and the other things we
are talking about--you know, maybe hydrogen in 15 years. Who
knows? But, at the present time, most renewable technologies we
are trying to develop at scale are quite a bit more expensive.
It also will mean, if we are serious about closing, you
know, 100 coal-powered plants in the next 20 or 30 years, we
will be retiring assets before their useful life is up, so we
will be diverting some capital in the classic sense of
opportunity costs, and that will have some effect on the
economy elsewhere.
Now what I would like to say is, you know, we are a rich
country, or we used to be until a year ago, and we will be
again, and, you know, we can afford a lot of these things in
the service of we are wanting to change our greenhouse gas
emissions and so forth. But unless the entire world follows
along with us, it is going to make a lot less difference to the
bottom line on climate change in 30, 40 years.
Mr. Stearns. Mr. Chairman, I will just close.
I just want each of the panelists to answer yes or no. Do
you support the three pending free trade agreements, and do you
support pursuing new free trade agreements? Just down the line.
Yes or no?
Ms. Saunders. Yes.
Mr. Stearns. Mr. Richards.
Mr. Richards. Yes to both questions.
Ms. Jacobson. Yes.
Ms. Larson. I do not know enough to comment.
Mr. Hayward. Yes.
Mr. Stearns. OK. Thank you, Mr. Chairman.
Mr. Rush. The Chair now recognizes the gentleman from
Georgia, Mr. Barrow, for 2 minutes for questioning.
Mr. Barrow. Thank you, Mr. Chairman.
Mr. Hayward, the broken window theory has different
meanings in different contexts. I understand the meaning that
has been immortalized in the motion picture The Fifth Element.
Some job is in it for somebody. If you break something, there
is always somebody who is going to get something good out of
this.
In the law enforcement context, it has an entirely
different notion. You take care of the little things, and the
big things will take care of themselves.
If you have got crime running rampant in the streets, if
you enforce the zoning laws and the building maintenance laws--
little things you can get a handle on, you know, get rid of
graffiti--you will find the bigger problems sort of take care
of themselves because of the ripple effect. You have the
miracle of compound interest in terms of folks' involvement in
their communities, is sort of one way of looking it.
Also, about the little thing about a level playing field.
Because the sense I get is the WTO ain't even trying to address
free trade in environmental goods and services.
So if I get the sense of what the witnesses are telling us
today, it is not that the whole approach of free trade has been
tried and found wanting so much as it has not been tried at all
in the first place. Is that the sense of things?
Mr. Hayward. I would not--I actually was, when you made
your opening statement----
Mr. Barrow. No, it doesn't have to be you.
Is anybody willing to say that the WTO is actually focused
on this like it is on agriculture and other sectors? Is anybody
willing to say that?
Mr. Hayward. No. I think you are generally right about
that.
Mr. Barrow. OK. Well, that is a concern I have got. Because
we have so much experience in the areas where the WTO is
active, and that is not very satisfactory for us. If, for
example, in Denmark, they are using laws that are ostensibly
for safety standards but essentially what they are doing is
protecting the domestic industry, at the same time, they are
using the tax expenditure policy to essentially raise money
from their taxpayers to lend to customers in other countries to
buy stuff only on the condition that it is made in their
country. They are using both laws and the public fisc to
promote their industries for those folks who want us to engage
in advocacy and to use the tax expenditure policy of this
country to promote industry here.
I want to point out that we ain't going to be doing that on
a level playing field if our laws are going to be laying us
wide open to unfair competition; and we are asking the
taxpayers in America, basically, to compete with both the
lawmakers and the taxpayers in other countries. That ain't a
level playing field.
Can anybody help us understand how free trade in this area
can work in some way that is not a one-way street?
Mr. Richards. Mr. Barrow, I think that you are correct. The
WTO, for the most part historically has not addressed energy
trade, by and large. However, there is growing recognition in
the WTO and among member states of the WTO that this is an
important area to move into.
The WTO did have its first--the first that I am aware of--
conference focused on different types of cleaner energy
technologies and what needs to be done to remove barriers to
those technologies, and there will be another conference that
is cosponsored by the WTO in a couple of weeks in Geneva.
There were also some statements in the press, both by the
European Union and by the U.S. Trade Representative, last week
that they are seriously looking at this idea of an
environmental goods and services agreement; and they talked
about its being done probably within the confines of the WTO to
make it binding.
The value of this, Mr. Barrow, would be that it allows the
United States, which has, as Ms. Saunders said, relatively low
tariffs, to move to a level playing field with our competitors
if we get them to sign onto this sort of agreement.
Mr. Barrow. Thank you, Mr. Chairman.
I will only note that there will only be a level playing
field if the rules are going to be enforced fairly. What I am
concerned about is we have very little confidence, in the way
things have been run so far, to think that the rules that have
supposedly opened up their markets on the same terms that ours
will be open to them will be played on a level playing field.
That is just a concern I have got.
Thank you, Mr. Chairman.
Mr. Rush. The Chair recognizes Mr. Scalise for 2 minutes.
Mr. Scalise. Thank you, Mr. Chairman.
I know that in a lot of these new technologies we are
talking about wind turbines and some of the different hybrids
with the battery technology requirements. The actual components
to build those--and I will talk specifically about some of the
metals and the rare elements--copper, zinc and others--that
exist in the United States but really are not accessible
because of Federal policies, and so we end up importing a lot
of those from places like China.
As we try to look at the different effects of green jobs
and the increased requirement to bring in more of these
products to make some of these different things--Ms. Saunders,
if you could start--how does our country address that when we
actually have policies that block us from making access to a
lot of our own natural resources here?
Ms. Saunders. Well, I can address what we are doing in the
international trade space. We are well aware of the critical
resource issues that are facing U.S. companies and tariffs and
other, you know, materials, raw materials; and we are well
aware that China has been buying up lots of mining rights in
various parts of the world in those areas. You may know that,
recently, China has proposed to initiate a limit, or a
restriction, on exports of those critical materials; and they
have yet backed off from that policy under a lot of pressure
from the United States Government and other governments.
So we are well aware it is a critical issue. We work
closely with both U.S. companies that need access to those
materials as well as with the Department of Defense and its
critical national stockpile of critical materials.
Mr. Scalise. So are you all going to be doing anything in
policy to open up more of the United States' natural resources
so that we do not have that dependence on countries like China
to produce?
Ms. Saunders. Well, that is something I will take back to
the Department. That is not within the purview of the
International Trade Administration, but I will take that back.
Mr. Scalise. I understand, but it still impedes our
country's ability to truly export if we have to import in order
to make the products that we want to export.
Mr. Richards, your company, when you are making decisions
on where to locate manufacturing facilities, how much of a
factor is the geographical relationship and the ability to
access the natural resources that you need to make those
products? How much of that is a factor in where you locate the
manufacturing facilities?
Mr. Richards. In our particular area, if you think of wind
turbines or solar panels or efficient gas turbines, those rare
Earth minerals are not actually a major component of our
decision making in where to locate. More important are
questions of transportation costs, what the investment
environment is like in any given location, what the market is
like in that location, but I would not say that the rare Earth
minerals has been a big issue for us.
Mr. Scalise. Mr. Hayward, I know you have talked about some
of these issues.
Mr. Hayward. Well, I mean, one example that comes to mind
is battery technology. If someone or some company can come
along and make a battery technology that is comparable in its
energy potency to a gasoline engine--gasoline storage in a gas
tank--it changes everything. That would be the game changer we
would need that would be equivalent to the green revolution in
agriculture that Norman Borlaug brought us 40 years ago.
If we use some variation of existing lithium ion technology
that, right now, we use in all our laptops, well, we would need
a whole lot of lithium. We do not have a lot of it here. The
leading supplier is Bolivia. We talk about how we do not like
to buy resources from countries that do not like us, which
sounds sensible to me; and this week Bolivia does not like us.
So we are trading one kind of problem for another, potentially.
So yes. I mean, once again, it is not entirely a black-and-
white situation; and I always like to say--and will sort of
abstract slightly--that the idea of energy independence
interpreted strictly as a four-square production of all our
energy inside the borders of the U.S. is really a nonsensical
idea. We should be looking for energy resilience and energy
diversity, so it might include importing a lot of lithium from
Bolivia, but it will mean that our trade flows are going to
continue to be kind of murky.
Mr. Scalise. I yield back. Thank you, Mr. Chairman.
Mr. Rush. The Chair now recognizes Mr. Murphy for 2
minutes.
Mr. Murphy. Thank you, Mr. Chairman.
I first want to start by pointing out that one of the
things that happens is we recognize wind power is wanted, but
Congress does a lot of things to prevent them from being built
in their districts. That also means we need power lines to send
electricity from a source like that to other places, too, but
Members of Congress oftentimes block building grids in their
districts.
We know that nuclear energy is a valuable, clean source,
but Members oftentimes say, let's not store that nuclear fuel,
and let's not recycle it.
We recognize natural gas is a valuable, clean resource, but
Members of Congress block building facilities in their
districts and block taking down bridges so ships can move
through there.
Of course, it was Members of Congress who would oftentimes
block free trade agreements to deal with the tariffs, so I do
not have a lot of optimism here that Congress is working
smoothly for these things. But I have a couple of questions
here on a couple of specific issues.
Mr. Richards, in some of your testimony here, you talk
about the number of jobs being created through wind energy. I
think you list about 4,000 overall that are growing from here.
Does that sound about right as to what growth GE is seeing?
Mr. Richards. That is correct. That is jobs within GE and
our suppliers here.
Mr. Murphy. I might note for the record that is about the
same number of jobs it takes to build and operate one coal-
fired power plant.
I also noticed that you have worked very hard at sending
jobs over to China for bulbs--light bulbs--and are working to
send some locomotive manufacturing jobs over to China as well.
Can you tell me how that helps our exports, please?
Mr. Richards. Congressman, we invest in many countries all
around the world, and we are investing heavily in the United
States.
Mr. Murphy. Well, then what percentage of your windmills
are actually manufactured in the United States?
Mr. Richards. I cannot give you the exact figure, but it is
well over 50 percent.
Mr. Murphy. So just under 50 percent then is manufactured
in other places around the world?
Mr. Richards. That is correct. We have manufacturing in the
European Union--in Germany.
Mr. Murphy. Does the place in the European Union also
manufacture windmills and solar panels? I am just wondering, in
other markets, how are we creating these that will actually
sell to the markets if other countries are building them as
well and we have tariffs and other things in line that block
our products from being sold. So how are we going to compete in
other countries?
Mr. Richards. Very frequently we will export the highest
technology components of a product, even if we are doing final
assembly in another country. For instance, with high-efficiency
gas turbines, that is generally what we do; and we manufacture
those here in the United States.
The same is true with locomotives. When we have the final
assembly of locomotives in another country, usually we are
making the highest technology component of that in Grove City,
Pennsylvania, and in Erie, Pennsylvania, for export.
So it truly is a global economy, and we have to be able to
have local manufacturing in some cases, but that does not mean
that it precludes U.S. exports. Often that facilitates U.S.
exports.
Mr. Murphy. So, with regard to some of those things then,
when you find that you can make them less expensively in other
countries, that is obviously a business decision that GE makes.
So what assurance do we have in opening up these markets, if
that is where the growth is going to be in some of these areas,
that you are not just going to move that manufacturing over to
other countries? How is that helping U.S. exports? Because you
have done it in the past. How is that going to help?
Mr. Richards. Congressman, we have maintained U.S.
manufacturing in virtually every one of the areas that I spoke
of with our ecomagination projects. We have a commitment to
growing our manufacturing presence in the United States, and we
have a desire to be----
Mr. Murphy. Now, do you plan on making any compact
fluorescent bulbs in the United States?
Mr. Richards. Congressman, I am afraid I do not have that
information. I would have to----
Mr. Murphy. Well, that is an important green source of
jobs, and that does not help us if you export those.
That is all I have, Mr. Chairman.
Mr. Rush. The Chair now recognizes the gentleman from
Georgia for 2 minutes.
Dr. Gingrey. Mr. Chairman, thank you.
Mr. Hayward, in your testimony, you briefly and succinctly
indicated that American renewable energy produces--rightly
point to existing trade barriers and tariffs as an obstacle to
expanded trade in the energy technology. In my opinion, one of
the easiest, most beneficial ways to assist these companies is
to help remove tariffs by enacting free trade agreements.
Specifically, the United States has already signed three free
trade agreements that have yet to be fully implemented by the
Democratic majority.
The first of these is the Colombia Free Trade Agreement.
Over 10,000 companies are already exporting to Colombia; and,
of these companies, 85 percent are small- to medium-sized
companies. In 2007, the United States exported close to $8.6
billion in goods to Colombia. By enacting this FTA, we will
greatly benefit, particularly in the agricultural industry, by
eliminating high tariffs on items that could inevitably be used
in renewable energy production. Since the signing of the FTA
with no congressional action, United States' exports have faced
an estimated $1.1 billion in tariffs in Colombia, while 91
percent of imports from that country have entered the United
States duty free.
In addition to the Colombia FTA, this Congress has still
not acted on the Panama Trade Promotion Agreement; and it was
signed back in 2007. In that year, the United States employed a
large trade surplus of $3.3 billion with the Central American
country. Under this agreement, 88 percent of American
commercial product would be allowed to enter duty free
immediately; and this could certainly benefit American
manufacturers during these most difficult economic times.
Lastly, the United States has signed but not enacted a free
trade agreement with South Korea. The United States
International Trade Commission estimates that the reduction of
Korean tariffs and tariff rate quotas on goods alone would add
between $10 and $12 billion to our annual GDP and around $10
billion to annual merchandise exports to Korea. Enacting this
free trade agreement would have a direct impact on jobs growth
in the United States by opening additional markets for export.
The U.S. Chamber of Commerce recently released a study on
the price that inaction on these FTAs has cost American
business and exports. This study, entitled ``Trade Action or
Inaction: The Cost for American Workers and Companies,''
indicates that a failure to implement FTAs with South Korea and
Colombia alone will lead to a decline of $40.2 billion in U.S.
exports of goods and services. A failure to act would also
leave $44.8 billion in missed opportunity of U.S. output, while
also missing the chance to create 400,000 jobs for hardworking
families right here at home.
Mr. Hayward, I have outlined the benefits of these free
trade agreements and the cost of inaction for the purpose of
explaining how we can take immediate and decisive steps to help
bolster exports, including in the arena of green technology, by
facilitating free and fair trade. Although you only briefly
mentioned the trade barriers that exist due to tariffs, I would
like to get your thoughts on this matter.
Mr. Hayward. Well, I guess I would say that we are in
heated agreement.
I would make two comments of a general nature.
One is, you know, of all things economists argue about, the
thing they argue about the least is free trade. I mean, there
is almost no daylight between Milton Friedman and Paul Krugman,
which is really amazing when you think about it. I mean, there
is probably no greater economic issue for which there is
greater consensus, I would say, among probably 95 percent of
professional economists than on free trade.
But as a political matter, it seems to me, the case for
ratifying those treaties is overwhelming, especially in the
case of Colombia, which is a country friendly to us, under
tremendous political pressure at the moment, vulnerable to a
civil war. It would be much better to assist them with free
trade and expanded trade than it would be to contemplate what
the alternatives might be if that country falls apart.
Panama and South Korea are under some pressures as well,
also, but certainly, in the case of Colombia, the political
reasons to do it seem to me overwhelming.
Dr. Gingrey. Mr. Chairman, thank you. I took a long time
framing that question. I thought it was important.
I appreciate, Mr. Hayward, your direct and succinct answer.
I agree with you 100 percent.
Mr. Chairman, I will yield back.
Mr. Rush. The Chair thanks the gentleman.
We will engage in a second round of questioning. We will
limit the questioning to 2 minutes, and I would ask the
witnesses to be as succinct as possible in their answers.
The Chair recognizes himself for 2 minutes.
Recently, we have seen Uni-Solar Ovonics, a Michigan-based
company, which produces thin film solar, partnered with
Montcalm Community College to provide training for current and
future employees. If each of you could answer this question: I
am curious to know what education level will be required for
individuals to adequately perform the jobs created from the
expansion of the green technology market both at home and
abroad. Secondly, are certain skills that are attained from
other industries easily transferable?
Would each one of you take a stab at those two questions?
Ms. Saunders. This is not my area of expertise.
What I have heard from companies and from State economic
development administrations and community colleges in my
travels around the country is that there will be a variety of
jobs from the technician level to the undergraduate degree in
engineering to a master's degree in engineering. There will be
a variety of levels, but the basic level will be the technician
level.
Then, in some areas, job retraining is not terribly
difficult. I really do point to and congratulate the various
State programs that have gotten out in front of this issue. As
I said, the Economic Development Administration is working with
universities and working with community colleges to provide
training programs, working with companies. I am sure GE has
programs like that. These are critical skill development
opportunities that we need to make more broadly available.
Mr. Rush. Are there any model States?
Ms. Saunders. Well, I will not call it a ``model State,''
but I was just mostly recently in Toledo, Ohio, on an energy
efficiency road show. Toledo has done--that area has done an
excellent job of reinventing itself as a leader in solar
technology, and it was impressive to see the university and the
local community colleges and the manufacturing extension
partnership and all of the resources working together, but that
is just because it was a recent trip.
Mr. Rush. Thank you.
Mr. Richards.
Mr. Richards. Thank you, Mr. Chairman.
I would agree with the points made by Ms. Saunders and
would just add one personal note about the point that many of
the skills, in fact, are transferable.
I was with a group that was recruiting at the U.S. Naval
Station in Norfolk, and we were recruiting for wind service
technicians there. Because we found that many of the naval
personnel who had worked in technical jobs in the Navy actually
had the skills that we needed to perform maintenance and
service on wind turbines. So I think that, in fact, there are,
obviously, a large subset of skills that are transferable and
others that require further community college and other worker
training.
Mr. Rush. Ms. Jacobson.
Ms. Jacobson. I concur largely. I can just add another
industry layer. I often speak with our solar industry, and they
talk specifically about how they work with the roofers. You
know, that, for them, is a very transferable skill set, a very
good group of high-quality jobs, and they are very happy to
work with them.
But what I hear universally, because I represent efficiency
both on the supply and demand side, a wide range of renewable
energy technologies and natural gas, is that we have a
tremendous need for this workforce right now, and they have a
very difficult time finding qualified workers across the whole
supply chain and across the whole spectrum of job
opportunities.
So thank you.
Mr. Rush. Thank you.
Dr. Larson.
Ms. Larson. I would just like to emphasize that one of the
ways that we develop our domestic capacities in order to excel
in global markets is to have constant feedback into the process
of innovation so that your technologies and the ability of
people to work with the application of those technologies have
to be continuously upgraded. This is an area of innovation that
most people overlook. It is imperative that we have people who
are trained in the communities to be able to install new
technologies, work with them, provide feedback--sensible
feedback--to manufacturers to continue to refine and upgrade
and innovate. Currently, we do not really have that capacity at
the local level.
A lot of the skills definitely are transferable--there is
no doubt about that--and the stimulus package has moved money
into my community in Charlottesville, Virginia; and some of
that money will be used to train people to be able to work on
improving the community's efficiency--this is in neighborhoods
and residential and businesses--as well as the installation of
clean-tech equipment. There is a huge opportunity there.
You know, I do not really understand why one member has
referred to some of these ideas as social versus economic. You
know, having a really skilled workforce around the introduction
and use and in the continued improvement of these technologies
is an economic decision, and that is a really critical piece of
this picture that has to be addressed.
Mr. Rush. Thank you.
Mr. Hayward.
Mr. Hayward. I do not have an opinion on this particular
question, Mr. Chairman. Thanks.
Mr. Rush. All right. Thank you so much.
The Chair recognizes Mr. Stearns.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. Hayward, Mr. Barrow was here because the argument is
made that if we subsidize the greening technology industry--so
you give government subsidies to these people. Then they go out
and compete with similarly foreign companies that are also
subsidized. Then the competition is based pretty much on who
gets the most from the government. So, in effect, taxpayers are
supporting the competition for industry to export their
products.
If we develop an export industry that is almost entirely
dependent upon these Federal subsidies, obviously, the
taxpayers are going to be affected; and I do not know if that
is a sustainable model when there is probably an alternative
model, which is to allow the free trade and perhaps to give
loans to these companies but not to subsidize them.
So you might just touch on the fact, of the heavily
subsidized industries in America, how do we compete--like in
Mr. Barrow's argument, if other governments are subsidizing
their industry and we do not subsidize ours and yet we have
free trade, don't the other governments then, by providing
subsidies to their companies, gain an advantage? So this goes
to the fundamental aspect of how free markets work and why
competition and not subsidizing sometimes gets more innovation.
Mr. Hayward. Yes. I think in a lot of cases what you will
find is, in technologies that are comparable--and this is an
important point to come back to in a moment--it ends up being a
zero sum game. I am sorry Mr. Barrow left, because I have been
puzzling over his opening statement, which I have a lot of
sympathy for, and I think a key distinction needs to be kept in
mind here.
When you are talking about roughly comparable products--you
know, windmills of X efficiency versus X plus 5 percent
efficiency, that ours might be better--and maybe we have a 10
percent better price--then some of those tariff barriers and
local content requirements will tip the balance unfairly in
favor of a foreign country's own producers.
On the other hand, there are a lot of areas where we have
massive competitive advantage. I am thinking, by the way, again
of our leading manufactured export from 2 years ago, which was
aircraft equipment. We beat the world at most areas of that,
especially jet engines. And we have seen the case of where, I
think, we did win--I did not follow this intimately, but I
think we did win the WTO complaint against subsidies for Airbus
production. Although I notice Airbus--most of them use our
engines because ours are so much better than theirs that those
marginal preferences--in other words, the preferences you try
and give either through a 10 percent tariff or for a local
content requirement, we simply blow right through those because
ours are so much better.
So the challenge for industry is please subsidize us for
solar or wind power or other technologies that other countries
can make almost as well as we can and, therefore, we are
fighting something of a zero sum game, which is: Can our
industries make those technologies that are so much better? It
is true of our oil and gas equipment, which is superior in many
respects. Drilling equipment is superior in many respects. That
all those kinds of attempts that these other countries use to
prefer their own producers, you simply blow right through them
because ours are better. That is the challenge, it seems to me,
for industry.
I think I will just stop and leave it at that. It seems to
me that is a distinction that needs to be laid out and that
people need to get their hands around.
Mr. Stearns. Just another question for Ms. Saunders. You
state the Department of Energy estimates green technology will
export up to 750,000 jobs by 2020. How many jobs will be lost
due to green technology displacing them, particularly if we
subsidize green technology?
Ms. Saunders. I do not have the answer to that question. I
can go back and try to see if I have an answer to that
question.
Just a brief comment on subsidization, which I agree with
you is an important issue to consider: Our import
administration, which is a component of the International Trade
Administration, is very active in enforcing the existing trade
laws which address anti-dumping and countervailing duties for
goods that are coming into the United States that are either
subsidized in foreign countries or are being produced at less
than production cost, and we have quite a few cases ongoing
right now.
Mr. Stearns. Thank you, Mr. Chairman.
I would ask Ms. Saunders to just respond to my question in
writing, if she could--basically, you know, of the cost risk
analysis.
Mr. Rush. The Chair thanks you.
The Chair recognizes the gentleman from Pennsylvania, Mr.
Murphy, for 2 minutes.
Mr. Murphy. Thank you, Mr. Chairman.
I want to continue to follow up on some of my questions
here and follow up on Mr. Stearns' question as well.
Continuing on with General Electric, how many jobs have we
lost from closing our light bulb plants in the U.S.?
Mr. Richards. Congressman, I do not have those figures with
me, but we would be----
Mr. Murphy. How many jobs has China gotten from your
opening up factories in China to make light bulbs?
Mr. Richards. Again, Congressman, I do not have any
information with me at this time.
Mr. Murphy. Ms. Saunders, just to follow up on Congressman
Stearns' question, too, about the displacement of jobs, I am
assuming for all of you, if you went to the doctor and the
doctor said, ``I want you to take some medicine,'' one thing
you would want to know is what are the side effects.
If the doctor says, ``I am clueless. I never studied the
side effects of medicine. I will just tell you what it is going
to do to you,'' you would think he is kook, and you would leave
the room, right?
So I would like to know what are the side effects of this.
Because we have to balance all this out because we want to make
sure, as Congress, we are doing this in a way that we are not
losing jobs. We want to promote these technologies in solar and
wind and all of these other things and make sure we have this
but to not do this in a way that actually hurts our job
development.
So does anybody have an answer to that question? Then you
should not be here. Not a single one of you should come
unprepared with that, because that is important to us. I think
that is extremely important, because we have got to know how we
balance this out.
So let me ask this then, too: As we go through these issues
then on--well, I see I am out of time here. You are going to
keep this at 2 minutes, but you get my point. Please come
prepared and give us an answer.
Thank you.
Mr. Rush. I think that the gentleman made a strong point.
However, I think that the witnesses have really adequately
addressed the questions of most of the members of the
subcommittee. I do not want the witnesses to think that their
time and their participation was for not.
I think you provided us with some really important
information that we can proceed with, and you have been a real
help to the work of this subcommittee, and I do not want you to
get the impression that we do not really appreciate your time
and your comments and your input. We want to thank you for
participating with us here and for taking the time out from
your busy schedules.
We want to just inform the members of the subcommittee that
the record will be open for 7 days and that, if there are any
questions that the members of the subcommittee would like to
address to the witnesses in writing, you have 7 days to prepare
those questions. We would ask that the witnesses take an
additional 7 days to get back to us with answers to the
questions. I want to thank you again so very much.
The subcommittee is now adjourned.
[Whereupon, at 11:45 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]