[Senate Hearing 111-35]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 111-35
 
                      INDUSTRIAL ENERGY EFFICIENCY 

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   TO

      EXAMINE DRAFT LEGISLATION REGARDING STRENGTHENING AMERICAN 
      MANUFACTURING THROUGH IMPROVED INDUSTRIAL ENERGY EFFICIENCY

                               __________

                             MARCH 26, 2009


                       Printed for the use of the
               Committee on Energy and Natural Resources

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel










                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Elliott, R. Neal, Ph.D., P.E., Associate Director for Research, 
  American Council for an Energy-Efficient Economy...............     9
Harper, Stephen, Global Director, Environment and Energy Policy, 
  Intel Corporation..............................................    30
Metts, Jeff, President, Dowding Machine, Eaton Rapids, MI........    35
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2
Rodgers, David, Director for Strategic Planning and Analysis, 
  Office of Energy Efficiency and Renewable Energy, Department of 
  Energy.........................................................     4
Savitz, Maxine, Ph.D., Honeywell, Inc. (Ret.), Los Angeles, CA...    18
Stabenow, Hon. Debbie, U.S. Senator From Michigan................     3
Zepponi, David, President, Northwest Food Processors Association, 
  Portland, OR...................................................    23

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    57

                              Appendix II

Additional material submitted for the record.....................    73


                      INDUSTRIAL ENERGY EFFICIENCY

                              ----------                              


                        THURSDAY, MARCH 26, 2009

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:34 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. Why don't we go ahead and get started. I'm 
advised that Senator Murkowski is on her way and will be here 
fairly soon.
    But we have a couple of other Senators here. Why don't I 
start with a short opening statement. Then we'll introduce the 
witnesses.
    Good morning. Let me welcome everyone to this hearing. It's 
a hearing on S. 661.
    This is a bill that many of us on this committee are co-
sponsoring--Senator Murkowski, Senator Stabenow, Senator Bayh, 
Senator Snowe, Senator Collins, Senator Brown, Senator Pryor, 
Senator Kerry and Senator Schumer. The purpose of the bill is 
to strengthen American manufacturing through improving 
industrial energy efficiency.
    Today our country is struggling with some of the toughest 
economic challenges we've seen, at least in my lifetime. Our 
manufacturing employment has hit a 63 year low. We've lost more 
than 1.3 million jobs in the last year and in this area.
    It's not just employment that our country is losing. The 
industrial foundation upon which the Nation's wealth has been 
built is also eroding. We are losing technical expertise and 
the skilled and inventive work force that go with these jobs. 
We're losing the opportunity to grow our economy and the 
ability to compete on a global scale.
    At the same time we're facing long-term energy climate and 
competitiveness challenges that go even beyond the economic 
hurdles that we face today. Our industrial sector consumes a 
third of our total energy use, produces a third of our 
greenhouse gas emissions. Our competitors overseas are 
capturing and manufacturing the advanced energy technologies 
that were developed here in this country.
    However we have an opportunity today to renew and to 
transform our industrial base to better compete globally 
through superior technical capabilities and product value while 
also reducing our dependence on carbon based fuels, reducing 
greenhouse gas emissions and increasing our productivity. The 
manufacturing sector represents one of the most widespread and 
lowest cost opportunities for energy efficiency in greenhouse 
gas emission reductions. The tremendous growth in renewable 
energy and energy efficiency offers an opportunity for the U.S. 
to increase domestic production of advance energy technologies 
recapturing the clean energy market.
    The legislation that we are focused on today is entitled 
``Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009.'' That's a short title.
    [Laughter.]
    The Chairman. It takes the first steps in achieving this 
transformation by focusing on improving the energy productivity 
of our industry. Through providing financing mechanisms for 
manufacturers to implement cost competitive, energy efficient 
equipment and processes and through establishing public/private 
partnerships with industry to map out where advanced American 
manufacturing is headed to develop and deploy the breakthrough 
processes in technologies that will take us there. The bill 
will help renew our Nation's industrial base into one that is 
more productive and less reliant on fuels of the past.
    We have a distinguished and well qualified panel of 
witnesses today. Before I introduce the panel, let me first--
Senator Murkowski has just arrived here. Would you like a few 
minutes to get your bearings before we turn to you?
    Senator Murkowski. I'm totally beared here.
    [Laughter.]
    The Chairman. You've got your bearings. Ok, let me defer to 
Senator Murkowski for any opening statement she would like to 
make.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I do appreciate 
the hearing today. S. 661, the Industrial Energy Efficiency 
Improvement Act is a good bill because I think it really looks 
toward the future of manufacturing here in the United States. 
That's a good thing for us all.
    Over the last few decades our global competitors have 
improved their productivity and have captured high value 
manufacturing capabilities and in products that were invented 
here in the United States. That ought to charge us all up. If 
we started it here why are we not continuing with that level of 
manufacturing? I think that's one of the things that we want to 
focus on with this bill.
    I think this bill will help to revive and strengthen our 
industrial competitiveness, restore our status as a 
manufacturing leader. A major focus of the bill is to improve 
the energy efficiency in energy productivity within the 
industrial sectors. We should always be working to find ways to 
get as much or more output from the same or less amounts of 
energy.
    To this end within this bill we established the public/
private partnerships that will develop and deploy new 
technologies and processes. These partnerships will help ensure 
the commercialization of these new technologies. So it's 
something that, Mr. Chairman, I'm pleased that we are including 
in our energy bill as we move forward.
    I think it is an important part of our energy discussion. 
I'm pleased to have the witnesses before us this morning.
    The Chairman. Thank you very much. Senator Stabenow 
suggested one of our witnesses today. Let me defer to her to 
introduce him. Then I'll introduce the rest of the panel.

 STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Thank you very much, Mr. Chairman, not 
only for this distinguished panel. I'm very pleased to be 
introducing one of our witnesses, but also for your consistent 
advocacy for manufacturing within renewable energy, alternative 
energy. I very much appreciate coming from the great State of 
Michigan and a great manufacturing State that you understand 
the importance of supporting manufacturing and our ranking 
member as well. Senator Murkowski, thank you very much for 
those comments.
    Mr. Jeff Metts is president of Dowding Machining, a 
manufacturing company in Eaton Rapids near Lansing, my home, 
just south of me. He is also representing MAG, a partner with 
Dowding. I see MAG President Roger Cope sitting right behind 
him, who is also here. We welcome you.
    These gentlemen epitomize the opportunity that our 
manufacturers have to make a situation in our country today 
work for us as it relates to our new energy manufacturing. 
Together they have developed a revolutionary manufacturing 
process to produce wind turbines. If successful, if funding can 
be obtained, this will develop to full scale wind turbine 
manufacturing in the United States.
    While a wind turbine has over 8,000 parts. I've said this 
more than once, every single one of those can be made in 
Michigan. This means a lot of jobs.
    Currently 70 percent of all the jobs that are created 
through wind power come from manufacturing. So this is 
absolutely critical. Companies like Dowding and MAG, true green 
job employers, are an example that we can meet our energy goals 
and create substantial numbers of jobs.
    However in this credit crisis we have to make sure they 
have the financial support to get their innovations and jobs 
developed and get them off the ground. So Mr. Chairman, I look 
forward to the hearing. I know that our energy policy and 
climate change policy will work for jobs if we do this right 
and focus on manufacturing.
    I would finally just say, Mr. Metts, I really appreciate 
your enthusiasm. It's contagious. Your business plan is an 
excellent example of the great opportunities we have for 
advanced manufacturing in Michigan and across the country. 
Thank you.
    The Chairman. Thank you very much. Let me just see if 
Senator Udall had any opening comment he wanted to make before 
I introduce the rest of the panel.
    Senator Udall. I'm eager to hear the panel, Mr. Chairman.
    The Chairman. Alright. Let me introduce them.
    David Rodgers, who is a regular testifier here. He is the 
director for Strategic Planning and Analysis in the Office of 
Energy Efficiency and Renewable Energy in the Department of 
Energy. Thank you for being here.
    Neal Elliott is associate director for research with the 
American Council for an Energy-Efficient Economy. Thank you 
very much for being here.
    Dr. Savitz is a Ph.D. from Los Angeles, California. We 
appreciate your testifying today.
    David Zepponi is the president of Northwest Food Processors 
Association. Thank you for coming.
    Stephen Harper is the global director for Environment and 
Energy Policy for Intel. Thank you very much for being here.
    Why don't we get started with Mr. Rodgers and hear the 
Department of Energy's perspective. If each of you could take 5 
or 6 minutes and give us your main points you think we need to 
understand. We will include everyone's written statement in the 
record in full. But we would like to know the main points so 
that we can ask you some questions about them.
    Mr. Rodgers.

STATEMENT OF DAVID RODGERS, DIRECTOR FOR STRATEGIC PLANNING AND 
  ANALYSIS, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, 
                      DEPARTMENT OF ENERGY

    Mr. Rodgers. Thank you, Mr. Chairman, Ranking Member 
Murkowski, members of the committee. It's a tremendous 
opportunity to appear before you today as you consider the 
Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009. While the administration has not 
finished its review of this bill and has yet to take a formal 
position, I'm pleased to answer your questions and provide 
comments on the cutting edge research and development 
activities at the Department of Energy's Industrial 
Technologies Program.
    As you've mentioned, the manufacturing sector is central to 
the health and vitality of America's economy, contributing more 
than 12 percent of our Gross Domestic Product in 2007. The 
sector directly employs more than 13 million people and 
supports millions more jobs in other sectors of the economy. 
Although capital is tight right now in the current economic 
environment, there could be no better time for industry to 
invest in energy efficiency improvements that lower production 
costs, improve productivity, improve competitiveness, and 
promote job retention here in the United States.
    With worldwide industrial energy use projected to increase 
55 percent by the year 2030 from 2005 levels, there will be a 
global market for energy technology solutions. We believe that 
this new market presents enormous economic opportunities for 
America's workers and scientists. Our Industrial Technologies 
Program relies on collaborative partnerships to reduce energy 
use and carbon emissions in some of our most energy intensive 
industries. We have built long-standing partnerships with core 
industries that convert raw materials into the essential 
building blocks for U.S. manufacturing such as steel and 
chemicals.
    When we make energy efficiency advances in these 
industries, they have a cascading effect throughout the 
economy. For example, chemicals are the building blocks of many 
products that meet our fundamental needs for food, shelter, and 
health. They're also essential to advance computing, 
telecommunications, and transportation. In addition to these 
core industries, we're also advancing technologies in the 
industries of the future such as information and communication 
technologies, helping make data centers more efficient.
    Through our Save Energy Now program, the Department 
provides training and delivers energy savings that benefit U.S. 
manufacturing plants today. For example, our energy experts use 
specialized energy assessment tools and technical software to 
train plant staff in accurately identifying potential 
efficiency improvements. These tools are used by the 
Department's university based, Industrial Assessment Centers to 
help reduce energy consumption across the industrial sector.
    Our Industrial Assessment Centers send teams of engineering 
faculty and students from 26 participating universities to 
local plants who need assessments. These teams perform detailed 
analyses to produce specific recommendations with related cost 
estimates, performance and pay back times. These Industrial 
Assessment Centers also serve as a training ground for the next 
generation of energy savvy engineers and provide a launching 
pad for many students into green jobs. Since 1977, over 2,500 
alumni of the Department's Industrial Assessment Centers have 
gone on to careers in the energy industry.
    The Save Energy Now program has completed over 2,000 
assessments at plants across the country with identified energy 
savings of more than $1 billion. Energy savings of more than 
$190 million have already been implemented on the ground. We've 
also identified potential emissions reductions of carbon 
dioxide of more than ten million metric tons.
    The Department and its partners are bridging the gap 
between mission-oriented science and applied research that 
leads to energy innovations in the marketplace by competitively 
awarding cost shared funding to collaborative research teams. 
Since the inception of our program, we've commercialized dozens 
and dozens of technologies, saving more than five quadrillion 
BTUs of energy, and earning more than 48 R and D 100 awards. 
For example, as this committee has recognized, the application 
of innovative, energy efficiency technologies such as combined 
heat and power represents a promising near term energy option 
for the industrial sector that combines environmental 
improvements and economic viability with improved 
competitiveness.
    In December 2008, our Oak Ridge National Laboratory 
released a report that describes how combined heat and power, 
with the appropriate market and policy incentives, could supply 
up to 20 percent of U.S. electric generating capacity and could 
potentially reduce the increases in our carbon dioxide 
emissions by 60 percent by the year 2030. We've distributed a 
copy of this report to the committee. We look forward to 
discussing those topics with you.
    We believe the industrial sector has made significant 
advancements toward the application of more efficient energy 
practices over the last several years. But many barriers 
remain. As has been mentioned, the tight capital markets make 
it difficult for industry to invest in energy efficiency. In 
many cases we need to increase the awareness of the energy 
efficiency technologies among the private sector, which can 
benefit from its implementation.
    However, we feel that challenges can be addressed by the 
energy efficiency innovation in the industrial sector, as has 
already been demonstrated. We believe that this legislation can 
help us further leverage our partnership with industry, 
universities, and the National Laboratories. We will continue 
to champion collaboration that propels science from the 
laboratory into the marketplace and helps meet our Nation's 
environmental energy and economic challenges.
    Thank you again for the opportunity to appear before you 
today. I'm happy to answer any questions.
    [The prepared statement of Mr. Rodgers follows:]
 Prepared Statement of David Rodgers, Director for Strategic Planning 
    and Analysis, Office of Energy Efficiency and Renewable Energy, 
                          Department of Energy
    Mr. Chairman, Ranking Member Murkowski, members of the Committee, 
thank you for the opportunity to appear before you today as you 
consider the Industrial Energy Efficiency Improvement Act of 2009. 
While the Administration has not finished its review of this bill and 
has yet to take a formal position, I am pleased to offer some 
preliminary comments on the cutting-edge research and development 
activities under the Department of Energy's (DOE) Industrial 
Technologies Program (ITP). ITP collaborates with industry, academia, 
and the national laboratories to develop the next-generation technology 
solutions to industry's critical energy and carbon challenges.
    Many types of energy efficiency improvements offer industry the 
fastest, lowest risk, most economical way to lower greenhouse emissions 
and reduce energy use. Improvements in energy efficiency can be made 
today, with significant benefits: the McKinsey Global Institute 
identified energy savings sufficient to cut world-wide consumption 
growth in half using only existing technologies that offer at least a 
10 percent internal rate of return.\1\
---------------------------------------------------------------------------
    \1\ McKinsey Global Institute, ``Curbing Global Energy Demand 
Growth,'' May 2007.
---------------------------------------------------------------------------
                       the importance of industry
    The manufacturing sector is central to the health and vitality of 
America's economy, contributing 12 percent to U.S. gross domestic 
product (GDP) in 2007. The sector directly employed 13.3 million people 
in 2007 and supports millions more jobs in other sectors of the 
economy.\2\ Internationally, the United States produces nearly one 
quarter of the world's manufacturing output, and in terms of collective 
economic output,\3\ U.S. manufacturers rank first in the world, though 
it is unclear to what extent the recent economic downturn has impacted 
these statistics.
---------------------------------------------------------------------------
    \2\ Bureau of Economic Analysis (applies both to GDP percentage and 
jobs), http://www.bea.gov/industry/gpotables/
gpo_action.cfm?anon=91793&table_id=23975&format_type=0, http://
factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-
ds_name=EC0700CADV1&-_lang=en. Note: Indirect manufacturing support 
jobs removed for 13.3 million. Total is actually 14 million.
    \3\ United Nations Industrial Development Organization, http://
www.unido.org/fileadmin/user_media/Publications/IDR/2009/
IDR_2009_print.PDF; Industrial Development Report 2009, http://
www.uschina.org/public/documents/2009/us_manufacturing.pdf.
---------------------------------------------------------------------------
    To fuel the furnaces and power the engines of American factories, 
U.S. industry consumed 32.3 quads of energy in 2007--nearly a third of 
all U.S. energy consumption.\4\ U.S. industry alone uses more energy 
than the total energy used by any other G8 nation and about half of the 
total energy used by China. U.S. industry is also responsible for 
significant greenhouse gas emissions, producing an estimated 1,640 
million metric tons of carbon dioxide from energy consumption in 
2007.\5\
---------------------------------------------------------------------------
    \4\ Energy Information Administration, Annual Energy Review 2007, 
http://www.eia.doe.gov/aer/pdf/aer.pdf.
    \5\ Energy Information Administration, Emissions of Greenhouse 
Gases in the United States 2007, http://www.eia.doe.gov/oiaf/1605/
ggrpt/pdf/0573(2007).pdf.
---------------------------------------------------------------------------
    Over the last several decades, U.S. industry has committed to using 
energy more efficiently. Although capital is tight in the current 
economic environment, the Department is partnering with industry to 
continue to invest in industrial energy efficiency. By lowering 
production costs, energy efficiency contributes to productivity, 
competitiveness, and job retention. For the long term, early action on 
carbon mitigation may provide a competitive advantage for some 
industrial companies under carbon cap-and-trade policy. With worldwide 
industrial energy use projected to increase 55 percent by 2030\6\ (from 
2005 levels), a global market for energy technology solutions is 
rapidly emerging. This new market presents enormous economic 
opportunities for American workers and scientists. U.S. industry and 
the American research community have the commitment, talent, and skill 
to lead the world in implementing energy efficiency and industrial 
technology innovation.
---------------------------------------------------------------------------
    \6\ Energy Information Administration, International Energy Outlook 
2008. http://www.eia.doe.gov/oiaf/ieo/pdf/0484(2008).pdf.
---------------------------------------------------------------------------
             doe's industrial technologies program strategy
    The Department of Energy's Industrial Technologies Program relies 
on robust, collaborative partnerships to reduce energy use and carbon 
emissions in some of the most energy-intensive industries. The 
Department has built long-standing partnerships with many core 
industries that convert raw materials into the essential building 
blocks for U.S. manufacturing, such as steel and chemicals. Energy 
efficiency advances in these industries have a cascading effect 
throughout the economy. For example, chemicals are the building blocks 
of many products that meet our fundamental needs for food, shelter, and 
health; they're also essential to advanced computing, 
telecommunications, biotechnology, transportation, and more.
    Each of our partner industries has developed a broad vision for the 
future and developed technology roadmaps that lay out clear pathways 
and priorities for research and development (R&D). Many of the 
priorities involve costly, complex research on basic energy-intensive 
processes that are integral to an entire industry--not the type of 
research that individual companies are willing to undertake alone. The 
Department brings together collaborative teams that share the costs and 
risks of research and draw on the diverse strengths of industry, 
academia, and the National Laboratories to solve these technological 
challenges for today and for the future.
   doe helps industry save energy now through outreach and deployment
    Through its Save Energy Now program DOE provides training and 
delivers energy savings that benefit U.S. manufacturing plants today. 
Our energy experts use specialized energy assessment tools and software 
to train plant staff in accurately identifying efficiency gains in 
common plant systems such as steam and heat generation, pumping, motor 
and fans, and compressed air systems. These tools are used by the 
Department's university-based Industrial Assessment Centers (IACs) 
energy experts on manufacturing facilities to help meet the goal in the 
Energy Independence and Security Act of 2007 of 25-percent reduction in 
industrial energy intensity by 2017 (2007 baseline). Companies 
nationwide can participate in no-cost energy assessments and access DOE 
resources to reduce unnecessary expenditures and boost productivity 
through improved energy efficiency. In addition, the Department's IACs 
also send teams of engineering faculty and students from 26 
participating universities to local plants requesting assessments. 
These teams perform detailed analyses to produce specific 
recommendations with related cost estimates, performance and payback 
times. Just as importantly, the IACs serve as a training ground for the 
next-generation of energy-savvy engineers and provide a launching pad 
for many students into ``green collar'' energy efficiency jobs.
    As of March 2, 2009, Save Energy Now has completed over 2,000 
assessments with 1,873 plants reporting:\7\
---------------------------------------------------------------------------
    \7\ Save Energy Now Results, Industrial Technologies Program, DOE, 
http://apps1.eere.energy.gov/industry/saveenergynow/partners/
results.cfm.

   Potential energy cost savings of more than $1.2 billion, of 
        which industry has already implemented more than 15 percent, 
        achieving energy cost savings of more than $190 million
   Potential natural gas savings of 131 trillion Btus
   Total potential reduction in carbon dioxide emissions of 
        10.3 million metric tons.
    doe and partners developing next-generation energy technologies
    DOE and its partners are bridging the divide between mission-
oriented science and the applied research that leads to energy 
innovations in the marketplace. Collaboration among world-class 
scientists from industry, academia, and the Department of Energy's 
National Laboratories is fundamental to technology development success. 
Technological innovation drives economic growth, but such innovation 
requires sound science to serve as the springboard for market 
prosperity. With these realities in mind, the Department competitively 
awards cost-shared funding to collaborative research teams--and 
industry's active participation on these teams helps ensure that the 
technologies meet real-world criteria (e.g., effective operation in 
harsh industrial environments), ultimately accelerating technology 
commercialization.
    A history of leveraging these partnerships has enabled DOE to 
transform innovative science into cutting-edge commercial products that 
improve American productivity, enhance domestic manufacturing 
competitiveness, and reduce national energy consumption. Since the 
inception of the Department's Industrial Technologies Program, DOE and 
its partners have successfully:\8\
---------------------------------------------------------------------------
    \8\ Impacts: Industrial Technologies Program: Summary of Program 
Results for CY2006 http://www1.eere.energy.gov/industry/about/pdfs/
impacts2006_full_report.pdf.

   Commercialized many technologies, 104 of which are currently 
        being followed in industrial markets to track their energy 
        impacts
   Saved 5.6 quadrillion Btus of energy
   Achieved emissions reductions of 103 Million Metric Tons of 
        Carbon Equivalent (MMCTe)
   Earned 48 R&D 100 Awards between 1991 and 2008 with our 
        partners in the National Laboratories and universities 
        representing over half of the awardees.

    Technological change has long been one of the most profound forces 
spurring productivity growth in the United States. The development of 
next-generation products, services, and ways of doing business are 
central to America's long-term prosperity. Today, the Department is 
forging even stronger partnerships with the National Laboratories, 
academia, and industry to address the Nation's energy and climate 
challenges. Nanotechnology and Combined Heat and Power represent two 
especially promising areas in which DOE and its partners are working to 
positively impact the energy intensity, carbon management, and 
competitiveness of American industry.
      near-term and next-generation industrial technology examples
    Combined Heat and Power (CHP) solutions represent a promising near-
term energy option that combines environmental effectiveness with 
economic viability and improved competitiveness. After years of success 
in this arena, DOE and its partners are poised to take CHP's potential 
to the next level. With targeted development and deployment efforts, 
the United States has the potential to save energy, reduce carbon 
emissions, create high-quality ``green'' jobs, improve the Nation's 
energy security, and stimulate economic growth (see Figure 2).\9\ The 
Department's CHP partnerships have already yielded impressive returns. 
In December of 2008, Oak Ridge National Laboratory released a report 
detailing the enormous promise CHP continues to hold. The report, 
Combined Heat and Power: Effective Energy Solutions for a Sustainable 
Future, suggests that with market and policy incentives, CHP could 
potentially (and cost effectively) reduce the projected increase in 
U.S. carbon dioxide emissions by 60 percent by 2030.\10\
---------------------------------------------------------------------------
    \9\ This level of market penetration would require significant 
market and policy incentives. A complete analysis of the cost of these 
incentives for comparison to the above potential benefits has not been 
completed.
    \10\ Combined Heat and Power: Effective Energy Solutions for a 
Sustainable Future, Oak Ridge National Laboratory, December 2008, 
http://www1.eere.energy.gov/industry/distributedenergy/pdfs/
chp_report_12-08.pdf
------------------------------------------------------------------------------------------------------------------------------------------------
20 % of U.S. Electricity Generating Capacity                  240,900 MW
------------------------------------------------------------------------
Annual Energy Savings                                          5.3 Quads
------------------------------------------------------------------------
Annual CO2 Reduction                                             848 MMT
------------------------------------------------------------------------
Annual Carbon Reduction                                          231 MMT
------------------------------------------------------------------------
Cumulative Jobs Created Through 2030                           1 million
------------------------------------------------------------------------
Figure 2. ORNL Report identifies potential benefits that could occur if
  20% of electrical capacity was CHP by 2030.

    The Department is also working to transform nanotechnology science 
into real-world solutions for industrial nanomanufacturing. As part of 
the National Nanotechnology Initiative (NNI) established in 2001, DOE 
worked with industry experts to identify priority needs and 
opportunities and worked with the National Laboratories to initiate 
DOE's first call for nanomanufacturing projects. Projects were judged 
by a diverse team of university, government, business, and consulting 
nanotechnology experts before the Department ultimately selected 20 
projects from 8 DOE National Laboratories.
    In concert with its other initiatives, DOE is providing energy 
technology and deployment solutions that meet industry's critical needs 
today and deliver the next-generation and transformational technologies 
that will support America's industrial leadership in the decades ahead.
                      challenges and opportunities
    While the industrial sector has made significant advancements 
toward more energy efficient practices, a number of barriers remain, 
such as tight capital markets. In addition, industrial energy 
efficiency at times suffers from a lack of awareness among the very 
private sector interests that stand to benefit from its implementation. 
This situation hampers sound energy management and technology 
investment policy from becoming implemented. Many of the benefits that 
industry would enjoy from improved energy management would also provide 
public benefits, such as reduced emissions of pollutants and greenhouse 
gases.
    However, many of these challenges can be addressed by the type of 
innovation that the industrial sector has already demonstrated. DOE's 
Industrial Technologies Program and its partners have already broken 
ground on the next generation of energy technology in areas such as 
nanomanufacturing; and cultivating new industries of the future, such 
as those manufacturing wind turbines, solar panels, and advanced 
batteries, can contribute to energy security and economic development. 
By further leveraging its partnerships with industry, universities, and 
the National Laboratories, the Department will continue to champion 
collaboration that propels science from the laboratory into the 
marketplace and helps to meet the Nation's environmental, energy, and 
economic challenges.
    Thank you again for the opportunity to appear before you today. I 
am happy to answer any questions.

    The Chairman. Thank you very much.
    Dr. Elliott.

 STATEMENT OF R. NEAL ELLIOTT, PH.D., P.E., ASSOCIATE DIRECTOR 
 FOR RESEARCH, AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY

    Mr. Elliott. Mr. Chairman, Senator Murkowski and members of 
the committee, thank you for the opportunity to be here today. 
The ACEEE is a non-profit organization dedicated to advancing 
energy efficiency to promote both economic prosperity and 
environmental protection.
    I've been involved in the manufacturing area for now over 
30 years, the last 16 of those as the Founding Director of the 
Industrial program at ACEEE. As you noted the manufacturing 
sector remains a very important part of the U.S. economy. While 
many people now talk about us moving into a post industrial 
economy, the reality is the United States is now still over a 
fifth of the global manufacturing capacity. As the chairman 
mentioned accounts for about a third of the energy consumption 
in the United States today.
    Prior to the current economic downturn our analysis 
indicated that the manufacturing sector was poised to enter a 
period of major reinvestment in capacity expansion. As recently 
as the third quarter of last year, we saw many sectors of the 
U.S. manufacturing industry in a state of full capacity 
utilization. When the economic downturn occurred obviously we 
saw that drop. We now are in a period of unprecedented--we 
almost are now describing it as hibernation for the 
manufacturing sector with many plants just attempting to 
survive through the economic downturn.
    The drop has occurred very, very rapidly. But we also 
anticipate that once the economy recovers that the demand is 
likely to recover very rapidly as well for the manufacturing 
sector. When that recovery occurs the manufacturing sector will 
need to make major new investments in manufacturing capacity to 
enhance its global competitiveness.
    We, based on our conversations with manufacturing over the 
last 15 years have identified 5 key categories of what we will 
call infrastructure that are necessary to improve the energy 
efficiency of the manufacturing sector and its global 
competitiveness.
    Those are new technologies, products and processes.
    The access to industry specific technical expertise.
    Access to assessment and training services for workers.
    The availability of a trained and capable workforce ranging 
from equipment operators, plant floor operators, all the way to 
senior engineers and management.
    Finally, as David Rodgers had mentioned, access to capital 
needed to make those investments.
    At this point we don't see the industry making the 
investments today. However, one of the things that I think is 
important to remember is it takes time to make an investment in 
the manufacturing sector. We basically turn a switch and we go 
out and buy a light bulb.
    Changing out major process elements in the manufacturing 
sector which is where the big opportunities are can take 3 to 5 
years to plan and schedule and bring all the pieces of 
equipment together. So what we do today is going to affect 
what's going to happen over the next 5 years. As Senator 
Murkowski had indicated though, we have not been investing in 
the manufacturing sector here in the United States over the 
last 15 years.
    At the same time our competitors globally have been making 
major investments and that puts us at a competitive 
disadvantage in this country. Today the industrial technology 
program with the Department of Energy is the only remaining 
Federal resource for the manufacturing sector in terms of their 
competitiveness and energy efficiency. While the program has 
experienced significant budget cuts and staffing reductions 
over the last 15 years, the program is continuing to be able to 
make major contributions to U.S. manufacturing as Mr. Rodgers 
had indicated.
    What we need to do now is begin to rebuild the Department 
and rebuild that program in particular and bring its staffing 
up to the levels. Senator, you and your colleagues, we'd like 
to commend you for the introduction of the Restoring America's 
Manufacturing Leadership through Energy Efficiency Act because 
we think this is probably the most important piece of 
manufacturing energy legislation we've seen in the past 15 
years in the United States.
    We think there are many important provisions in the bill 
that will get the DOE industrial program back on track. We hope 
get the Federal Government reengaged in support of the 
manufacturing sector. We would like to note two provisions.
    The Industrial Research and Assessment Center provision 
that is in the Act is a very important addition. As David 
Rodgers had indicated, the Industrial Assessment Center program 
is a long running program that has been very successful and 
contributed many, much to the industrial sector. We think the 
program is poised to be able to expand significantly from its 
current levels.
    We think the provisions that are set forward in the Act 
would do that in a way that is sensitive to the elements that 
have made the program successful over the many years. We'd like 
to also endorse the creation of the Industrial Technology 
Steering Committee. We think it's important that the program is 
responsive to the needs of the manufacturing sector.
    In the last few years, we've seen that close relationship 
that existed in prior years between the manufacturing companies 
and the program has diminished. We are pleased to see a 
direction and a return to that. We've certainly heard 
indications of that from staff at DOE and so we appreciate 
that.
    So it's my pleasure to endorse this bill. We'd like to 
express our appreciation to you, Senator Murkowski and to the 
other members who've been supportive of this bill. We think 
this is an important bill and look forward to working with the 
committee and the Department on its enactment and 
implementation. Thank you.
    [The prepared statement of Mr. Elliott follows:]
Prepared Statement of R. Neal Elliott, Ph.D., P.E., Associate Director 
     for Research, American Council for an Energy-Efficient Economy
                                summary
    Thank you for the opportunity to testify in support of the 
Restoring America's Manufacturing Leadership through Energy Efficiency 
Act of 2009. ACEEE feels that this bill represents an important 
complement to existing law. The timing of this bill is particularly 
important, as our country needs to prepare now if we are to be ready to 
seize a once-in-a-generation opportunity to influence the energy 
efficiency and sustainability of the manufacturing sector once it 
emerges from the current economic downturn. The manufacturing sector 
and its contributions to the nation's economy and jobs have been 
ignored for far too many years, and it is important that this neglect 
be reversed. This bill will make significant progress if all of its 
provisions are enacted and funded.
    Manufacturing continues to represent an important component of the 
United States economy, accounting for about 14 percent of gross 
domestic product. The manufacturing sector was responsible for almost a 
third of national energy consumption in 2007. According to the National 
Association of Manufacturers, the U.S. share of global manufacturing 
output has remained constant at between 20 and 23 percent over the past 
decade, in spite of perceptions that U.S. manufacturing has been in 
rapid decline. In fact, economic data have shown that up until the 
recent economic downturn, U.S. manufacturing was increasingly healthy, 
having recovered from the energy price shocks of the first half of this 
decade. ACEEE's analysis released last summer suggested the 
manufacturing sector was poised to enter a period new capacity 
investments as the economy approached full utilization of existing 
capacity.
    Beginning in the second quarter of 2008, however, manufacturing 
output in the U.S. began to decline as the economy began to slow, with 
all industries experiencing a sharp drop in production as demand for 
manufactured goods dropped precipitously in the last quarter of 2008. 
These firms are now hibernating in an attempt to survive the economic 
winter. They need the cash to preserve their manufacturing capacity and 
to retain the trained workforce necessary for a future return to 
operation when demand for manufactured goods recovers.
    When the economy recovers, the manufacturing sector will find 
itself in need of significant investments in new manufacturing 
capacity, and will face the need for a trained workforce. This renewed 
investment in expanded and modernized manufacturing capacity will 
represent a unique opportunity not seen in over a generation. To 
accomplish this, however, the necessary infrastructure to support a 
more sustainable industrial base must be built now, before industry is 
fully ready to invest. This infrastructure will take several years to 
implement fully, but it will be needed in order for manufacturing 
companies to modernize, especially since we have underinvested in this 
infrastructure over the past decade. ACEEE research indicates that this 
infrastructure falls into five key categories:

          1. New technologies, products and processes
          2. Access to industry-specific technical expertise
          3. Access to assessment and training services for workers
          4. Availability of a trained and capable workforce, ranging 
        from operators to senior engineering and management
          5. Access to capital to make needed investments

    The coming economic recovery will likely occur quite rapidly, since 
inventories are being drawn down. Once demand for manufactured goods 
recovers, industry will need to rapidly return to production. Firms 
will then need to invest in new capacity to meet increased market 
demands. This situation dictates that now is the time to invest in new 
sustainable capacity for these key resources and not wait till the 
recovery actually begins. If we are not prepared, we run the risk of 
locking in less efficient capacity for decades or losing manufacturing 
capacity and jobs to other parts of the world.
    Over the past 15 years, federal policy makers have largely ignored 
the manufacturing sector at best, and actively worked to undermine the 
programs intended to serve this sector at worst. This neglect has 
occurred all while the sector has experienced an unprecedented series 
of challenges: the globalization of markets, energy price instabilities 
and global competition for resources, including both feedstocks and 
trained workforce. Over the past decade, ITP has experienced 
significant reductions in funding and the attrition of experienced 
staff, seriously compromising its efficacy with funding for industry-
specific research declining 84% since 2001, leaving the pipeline for 
new technologies and innovative practices empty. Concurrently, clarity 
of the program's goals and mission has been lost due to lack of senior 
leadership within the agency and in the prior administration. In spite 
of these challenges, the program has achieved continued success.
    ACEEE commends Senator Bingaman and his colleagues for introducing 
the Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009 (S. 661). We feel this bill changes course on 
support for manufacturing, and complements the industry-specific 
research and development activities authorized in EISA Sec. 452, 
beginning to address many of the infrastructure needs we have 
identified for the support of greater energy efficiency and economic 
competitiveness of the U.S. manufacturing sector.

   The Industrial Energy Efficiency Grant Program (Sec. 2), 
        Small Business Loans (Sec. 5), and Innovation in Industry 
        Grants (Sec. 7) all address the most pressing current challenge 
        facing manufacturing industries: a lack of access to capital. 
        By providing available credit, these provisions support 
        manufacturers who want to make investments in energy efficiency 
        and capacity to manufacture innovative, new technologies.
   The Coordination of Research and Development of Energy 
        Efficient Technologies for Industry (Sec. 3), Energy-Efficient 
        Technologies Assessment (Sec. 4), Industry-Specific Roadmaps 
        (Sec. 5) and Study of Advanced Energy Technology Manufacturing 
        Capabilities (Sec. 8), are all excellent complements to the 
        industry-specific research activities authorized by EISA Sec. 
        452, enabling the research needed to put new technologies, 
        products and processes into the market to keep U.S. 
        manufacturing efficient and competitive.
   ACEEE is particularly excited to see the inclusion of the 
        Industrial Research and Assessment Centers (Sec. 5) provision. 
        This proposal expands and enhances the aforementioned 
        Industrial Assessment Center (IAC) program. The 26 university-
        based IACs play the role of providing access to expertise for 
        small and medium-sized manufacturing facilities while also 
        providing invaluable experience to students who participate in 
        the plant assessments and supporting their faculty's interest 
        in manufacturing energy efficiency. The proposals in this 
        section expand and enhance the IAC program while maintaining 
        the elements that have made the program so successful over its 
        33 year history. By expanding the number of centers, the 
        benefits of assessments will become available to many 
        industrial facilities not currently located near an existing 
        IAC, and the number of graduates from the centers will increase 
        significantly, helping to meet the trained workforce needs that 
        have been identified by manufacturers as a key challenge facing 
        the manufacturing sector.
   We also endorse the creation of an Industrial Technologies 
        Steering Committee (Sec. 9) for U.S. Department of Energy's 
        Industrial Technology Program. The past effectiveness of the 
        program was in large part a result of its strong working 
        relationship with private manufacturing companies that allowed 
        the program's activities to be tailored to address the actual 
        technology and market needs of industry, enabling manufacturers 
        to become more efficient and competitive. Over the past eight 
        years, we have seen this close coordination erode, and we feel 
        that the creation of this committee will help reverse this 
        trend.

    Thank you again for the opportunity to testify in support of this 
bill, and we look forward to working with the committee to see that it 
is passed expeditiously. The manufacturing sector needs the 
infrastructure that is enabled by this bill more now than ever before.
                              introduction
    My name is Neal Elliott, and I am the Associate Director for 
Research of the American Council for an Energy-Efficient Economy 
(ACEEE), a nonprofit organization dedicated to increasing energy 
efficiency to promote both economic prosperity and environmental 
protection. I have worked actively on manufacturing energy efficiency 
issues for over 30 years, the past 16 as the founding director of the 
Industrial Energy Efficiency Program at ACEEE. ACEEE's Industrial 
Program is the leading manufacturing energy policy research program in 
Washington's public interest community, working closely with 
manufacturing companies, trade associations, state and federal 
agencies, other nonprofits and publicly funded industrial energy 
efficiency programs across the country. Because of our wide range of 
contacts, we play a unique convening role, bringing together diverse 
groups to help develop policy and program proposals that address the 
needs of the manufacturing sector for improved energy productivity, 
cost-effective environmental compliance and greater competitiveness in 
a global marketplace, while addressing the environmental and economic 
challenges facing our country as a whole.
    Manufacturing continues to represent an important component of the 
United States economy, accounting for about 14 percent of gross 
domestic product.\1\ The manufacturing sector was responsible for 
almost a third of national energy consumption in 2007.\2\ According to 
the National Association of Manufacturers, the U.S. share of global 
manufacturing output has remained constant at between 20 and 23 percent 
over the past decade, in spite of perceptions that U.S. manufacturing 
has been in rapid decline. In fact, economic data have shown that up 
until the recent economic downturn, U.S. manufacturing was increasingly 
healthy, having recovered from the energy price shocks of the first 
half of this decade. ACEEE's analysis released last summer suggested 
the manufacturing sector was poised to enter a period new capacity 
investments as the economy approached full utilization of existing 
capacity.\3\
---------------------------------------------------------------------------
    \1\ N.D. Swartz, ``Rapid Declines ion Manufacturing Spread Global 
Anxiety,'' N.Y Times, March 20, 2009, http://www.nytimes.com/2009/03/
20/business/worldbusiness/20shrink.html.
    \2\ Energy Information Administration, Annual Energy Outlook 2009 
Early Release, December 2008, http://www.eia.doe.gov/oiaf/aeo/
index.html.
    \3\ R.N. Elliott, A.M. Shipley and V. McKinney, Trends in 
Industrial Investment Decision Making, August 2008, http://aceee.org/
pubs/ie081.pdf.
---------------------------------------------------------------------------
                      impact of economic downturn
    Beginning in the second quarter of 2008, however, manufacturing 
output in the U.S. began to decline as the economy began to slow, as 
can be seen in Figure 1.* Initially the downturn hit the building and 
automotive-related manufacturing industries, with some energy-intensive 
primary manufacturing industries such as steel and chemicals continuing 
to experience robust production. This picture changed dramatically 
during the fourth quarter of 2008, when almost all industries 
experienced a sharp drop in production as demand for manufactured goods 
dropped precipitously. As Figure 1 shows, this manufacturing crisis is 
global, and U.S. manufacturers are actually fairing far better than the 
rest of the world.\4\
---------------------------------------------------------------------------
    * Figures 1-2 have been retained in committee files.
    \4\ Swartz, op cit.
---------------------------------------------------------------------------
    ACEEE's recent conversations with companies and trade associations 
across the entire range of manufacturing industries indicate that firms 
are now in survival mode, conserving cash in hopes of weathering the 
current economic downturn. Without demand for manufactured products, 
companies are shutting down plants to minimize the rate at which they 
use their cash. It may be useful to think of these firms as hibernating 
in an attempt to survive an economic winter, with cash reserves 
analogous to stored calories. They need the cash to preserve their 
manufacturing capacity and to retain the trained workforce necessary 
for a future return to operation. They are hoarding their reserves so 
that when the economic ``spring'' comes, companies are ready to emerge 
to take advantage of a resurgent demand for manufactured goods. 
Unfortunately, firms that don't have sufficient reserves may not be 
able to survive this economic winter, and unlike in more prosperous 
times, the manufacturing capacity of the failed firms will often not be 
acquired by healthy competitors and will instead be lost.
    Some may ask why industry does not invest in energy efficiency now 
since their plants are shut down and staff are not otherwise occupied. 
The reality is that if plants shut down, firms stop generating cash 
flow, and in the current economic environment, no one knows when 
consumer demand for manufactured goods will return. Because of this 
uncertainty, most firms are in no position to invest.
    When the economy recovers, the manufacturing sector will find 
itself in even greater need of investment in new manufacturing 
capacity, and will face the need for a trained workforce as identified 
in ACEEE's 2008 study.\5\ This renewed investment in expanded and 
modernized manufacturing capacity will represent a unique opportunity 
not seen in over a generation. This will be the opportunity to rebuild 
the U.S. industrial base into a more efficient, productive and 
sustainable sector that will allow it to be competitive in a resource-
and carbon-constrained global market. To accomplish this, however, the 
necessary infrastructure to support a more sustainable industrial base 
must be built now, before industry is fully ready to invest. This 
infrastructure will take several years to implement fully, but it will 
be needed in order for manufacturing companies to modernize, especially 
since we have underinvested in this infrastructure over the past 
decade.
---------------------------------------------------------------------------
    \5\ Elliott, et al., op. cit.
---------------------------------------------------------------------------
    Over the past sixteen years, ACEEE has built an understanding of 
the manufacturing sector's needs to invest in a more sustainable 
future. Industry indicates that its needs from the public sector fall 
into five key categories:

          1. New technologies, products and processes
          2. Access to industry-specific technical expertise
          3. Access to assessment and training services for workers
          4. Availability of a trained and capable workforce, ranging 
        from operators to senior engineering and management
          5. Access to capital to make needed investments

    The coming economic recovery will likely occur quite rapidly, since 
inventories are being drawn down. Once demand for manufactured goods 
recovers, industry will need to rapidly return to production. Firms 
will then need to invest in new capacity to meet increased market 
demands. This situation dictates that now is the time to invest in new 
sustainable capacity for these key resources and not wait till the 
recovery actually begins. If we are not prepared, we run the risks of 
locking in less efficient capacity for decades or losing manufacturing 
capacity and jobs to other parts of the world.
         awareness of and support for the manufacturing sector
    Much of the manufacturing sector is largely invisible to outsiders. 
This is due to the interconnected nature of the sector and its supply 
chains. ACEEE estimates that five out of six business transactions 
occur as business-to-business transactions in these interconnected 
supply chains while only 15% of the total transactions occur with end-
users.
    There exists a misperception that the U.S. is a ``post-industrial'' 
country. Over the past 15 years, federal policy makers have largely 
ignored the manufacturing sector at best, and actively worked to 
undermine the programs intended to serve this sector at worst. This has 
occurred all while the sector has experienced an unprecedented series 
of challenges: the globalization of markets, energy price instabilities 
and global competition for resources, including both feedstocks and 
trained workforce. Funding for manufacturing programs by the federal 
government has fallen dramatically, with the Advanced Technology 
Program at the National Institute of Standards and Technology now 
effectively eliminated and the highly successful industrial programs at 
U.S. Department of Energy (DOE) now shadows of what they were a decade 
ago.
    DOE's Industrial Technologies Program (ITP) represents one of the 
only remaining federal programs focused on meeting the technology and 
energy needs of the manufacturing sector in the United States. The 
program has achieved an impressive track record, offering some of the 
most effective federal energy efficiency programs available, and 
recognized by the National Academies as one of the most effective 
federally funded technology and process application programs.\6\
---------------------------------------------------------------------------
    \6\ National Research Council, Energy Research at DOE: Was It Worth 
It? Energy Efficiency and Fossil Energy Research 1978 to 2000, 2001, 
http://www.nap.edu/catalog/10165.html, and Prospective Evaluation of 
Applied Energy Research and Development at DOE (Phase Two), 2007, 
http://www.nap.edu/catalog/11806.html.
---------------------------------------------------------------------------
    Over the past decade, ITP has experienced significant reductions in 
funding (see Figure 2) and the attrition of experienced staff, 
seriously compromising its efficacy. In particular, the funding for 
industry-specific research has declined 84% since 2001, leaving the 
pipeline for new technologies and innovative practices empty. 
Concurrently, clarity of the program's goals and mission has been lost 
due to lack of senior leadership within the agency and in the prior 
administration. In spite of these challenges, the program has achieved 
continued success with Save Energy Now (SEN)--its response to the 
natural gas crisis triggered by Hurricanes Katrina and Rita--and with 
long-running efforts such as the industry co-funded research and 
education initiatives under the Industries of the Future (IOF) and the 
Industrial Assessment Centers (IAC) programs. As can be seen in Figure 
2, SEN and other deployment-related activities have grown to take a 
larger share of the program's budget in recent years, though they still 
are only funded at about half of their 1999 funding levels at a time 
they are most needed in the US.
    One of the under-appreciated successes of ITP has been the 
synergies between the IAC, IOF and SEN programs. The IAC program has 
been among the most successful of these federal programs, and has 
operated continuously since 1976. The program contributes to three 
goals:

          1. It provides energy assessment to small and medium-sized 
        manufacturing facilities, many of which do not have internal 
        energy management capability, by sending in teams of 
        engineering students and faculty from 26 universities across 
        the country;
          2. It provides hands-on training for engineering students in 
        manufacturing engineering and energy efficiency, creating an 
        important pool of trained energy engineers who are in demand by 
        manufacturing companies, energy programs and energy consulting 
        firms; and
          3. It provides a source of support for university professors-
        who serve as IAC directors-to focus on manufacturing energy 
        engineering, developing courses and research programs that 
        reach many more students beyond just those who are part of the 
        IACs.

    Many of the IAC directors are also principle investigators on IOF 
research projects, further supporting their manufacturing engineering 
academic programs, and providing important support for graduate 
students who can fill the ranks of future research positions in 
academia and industry. These directors also represent an important pool 
of certified experts in manufacturing energy efficiency, as they hone 
their research in their roles managing both IAC-and sometimes SEN-
assessments. These three programs combined provide the only significant 
source of federal support for manufacturing-focused energy engineering 
at the university level.
                 recent developments and needed action
    In the past few years, we have seen a growing awareness of the 
imperative to address the needs of the manufacturing sector. The 110th 
Congress stepped up and passed an important legislative provision to 
re-engage government to meet the needs of the manufacturing sector. 
Sec. 452 of the Energy Independence and Security Act of 2007 (EISA) 
reauthorized and expanded the industry-specific research and 
development activities of ITP and reauthorized the IAC program, though 
funding under this new authorization is only just beginning to flow to 
DOE.
    The new Administration and Congress have continued to show support 
for the manufacturing sector. We are encouraged to hear that Secretary 
Chu has increased funding for fiscal year 2009 to $90 million under the 
recent omnibus budget act, and that he has directed that $50 million of 
the funding authorized by the American Recovery and Restoration Act of 
2009 to DOE be used to support existing, unfunded research commitments.
    We hope that the Secretary and the Obama Administration will 
continue this renewed support for ITP, and provide DOE the leadership 
necessary to rebuild the program and its staff so that it can meet the 
current needs of our domestic manufacturers. ACEEE suggests several 
important areas that should receive attention:

   Coordination--ITP should better coordinate with other market 
        players to develop the most useful programs and deploy them in 
        an effective way.

    --Major stakeholders (e.g. manufacturing companies and trade 
            associations, electric and natural gas utilities and state 
            energy offices) and other internal ITP programs (e.g. 
            Distributed Energy Resource activities that have recently 
            returned to ITP from DOE's Office of Electricity) should be 
            integrated with the existing manufacturing R&D and 
            deployment activities of the program (e.g. IACs and 
            industry-specific research projects);
    --In the past, a Federal Advisory Committee, representing key 
            stakeholders, reviewed program plans and advised ITP on 
            strategic directions. This advice helped the program adapt 
            to the changing needs of the manufacturing sector--
            something that has been lost in recent years. This FAC 
            should be reinstated.
    --Internal programs should strive to meet the strategic goals of 
            ITP and the Office of Energy Efficiency and Renewable 
            Energy (EERE). One area where this is crucial is the 
            Distributed Energy Resources (DER) activities. This program 
            has several components, many of which do not focus on 
            industrial technologies. While ACEEE does not think this is 
            a problem, we feel that more resources should be given to 
            industrial waste energy recovery and combined heat and 
            power (CHP) application work, as authorized by EISA Sec. 
            451.

   Fluidity and Flexibility--ITP should recognize that program 
        goals must be aligned with the goals of the changing 
        manufacturing sector, and should embrace change when a specific 
        need arises. The current SEN program is a good example of how 
        this flexibility might occur. This program was a successful ad-
        hoc response to the natural gas crisis precipitated by the 
        hurricanes of 2005. As such, it temporarily diverted resources 
        from other ITP areas to quickly address a pressing unmet need. 
        It was never intended to be a sustained initiative, so it was 
        never given a dedicated funding stream. It has therefore been 
        difficult for the program to transition to a more sustainable 
        model, though its existing model has been very effective. The 
        flexibility leveraged to create SEN was not matched with an 
        internal flexibility of budget to allow for the identification 
        and support of programs that prove themselves worthy. It will 
        be important to retaining ITP's ability to be fluid and 
        flexible will be important, so the program can respond to other 
        crises as it did to the natural gas crisis. However, developing 
        a structure that allows proven programs to grow and mature is 
        also necessary. ITP's Superior Energy Performance initiative, 
        focused on standardizing energy management, energy assessment, 
        and measurement and verification methodologies, is another 
        example of ITP responding appropriately to the manufacturing 
        sector's needs.
   Staffing--ITP is understaffed, and the current mix of skills 
        does not reflect the range of activities the program needs 
        future, long-term success. In particular, the existing staff is 
        predominately focused on research management, while many of the 
        needs are in the areas of communication, market analysis, 
        environmental and utility regulation/policy, project financing, 
        and project implementation. It will be important to bring in 
        fresh staff from the private sector to complement the existing 
        staff, and to acquire a staff with the suite of skills needed 
        for an effective program.
                 provisions in the proposed legislation
    ACEEE commends Senator Bingaman and his colleagues for introducing 
the Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009 (S. 661). We feel this bill complements the 
industry-specific research and development activities authorized in 
EISA Sec. 452, and it will begin to address many of the needs we have 
identified for the support of greater energy efficiency and economic 
competitiveness of the U.S. manufacturing sector. In this section, I 
will discuss how ACEEE sees the provisions of the Act responding to the 
needs of manufacturing sector and enhancing the effectiveness of the 
operation of ITP at DOE.
    The Industrial Energy Efficiency Grant Program (Sec. 2), Small 
Business Loans (Sec. 5), and Innovation in Industry Grants (Sec. 7) all 
address the current challenge facing manufacturing industries: a lack 
of access to capital. The energy efficiency grant program in particular 
will address the most pressing hurdle of lack of available credit 
currently facing manufacturers who want to make investments in energy 
efficiency and capacity to manufacture innovative, new technologies. By 
using existing commercial and state funding entities in a timely 
manner, this provision avoids the delays that have, in the past, 
affected lending programs administered directly by DOE. The one 
potential shortcoming of this provision may be that its benefits for 
larger manufacturing firms will be limited because of the relative 
modest size of the funding for the provision. These firms are currently 
experiencing challenges to their access to capital, so expanding this 
provision so that larger firms can benefit would be ideal, at least for 
the next few year until credit markets return to normal.
    The other funding provisions in the Act will address a longstanding 
challenge of access to capital for innovative and small businesses. 
These companies are important sources of innovation that can transform 
the future of manufacturing by providing new technologies, processes, 
and products that address consumers' needs--some of which they don't 
even realize that they can benefit from, such as solid-state lighting 
and advanced sensors and controls that will facilitate the Smart Grid. 
We hope that Congress will pass this provision and appropriate funding 
for its enactment.
    The Coordination of Research and Development of Energy Efficient 
Technologies for Industry (Sec. 3), Energy-Efficient Technologies 
Assessment (Sec. 4), Industry-Specific Roadmaps (Sec. 5) and Study of 
Advanced Energy Technology Manufacturing Capabilities (Sec. 8), are all 
excellent complements to the industry-specific research activities 
authorized by EISA Sec. 452. While some of these provisions were in 
place when the IOF program was robustly funded a decade ago, ITP has 
always been less effective at coordinating with other agencies and 
outside parties in its research activities. Directing external 
coordination by the program will provide an important incentive to 
reach out to other groups.
    We are particularly excited to see the inclusion of the Industrial 
Research and Assessment Centers (Sec. 5) provision. This proposal 
expands and enhances the aforementioned Industrial Assessment Center 
(IAC) program. As noted earlier, the 26 university-based IACs play the 
role of providing access to expertise for small and medium-sized 
manufacturing facilities while also providing invaluable experience to 
students who participate in the plant assessments and supporting their 
faculty's interest in manufacturing energy efficiency. The proposals in 
this section expand and enhance the IAC program while maintaining the 
elements that have made the program so successful over its 33 year 
history. By expanding the number of centers, the benefits of 
assessments will become available to many industrial facilities not 
currently located near an existing IAC, and the number of graduates 
from the centers will increase significantly, helping to meet the 
trained workforce needs that have been identified by manufacturers as a 
key challenge facing the manufacturing sector. This workforce 
development aspect of the program is further enhanced by establishing 
an internship program for students at the centers. Industrial firms 
have indicated to ACEEE that they would enthusiastically provide co-
funding for these internships to assist in meeting current workforce 
needs and in attracting new talent to their firms.
    Among the enhancements to the existing IAC program is the 
establishment of Centers of Excellence (CoE), which would receive 
additional funding to develop in-depth expertise that the current 
program does not provide. This provision encourages each CoE to support 
other IACs so that more customers across the county can benefit from 
industry-specific expertise. The inclusion of an explicit requirement 
and provision of resources to the CoE for greater coordination with 
other manufacturing energy efficiency activities in the centers' 
service regions provides an opportunity for coordinated follow-up and 
implementation assistance for energy efficiency and productivity 
opportunities identified by the centers' assessments. Further, the 
provision that the Small Business Administration would give preference 
to projects identified by the centers would help address the barrier of 
access to capital that challenges many smaller manufacturing firms.
    With respect to DOE's operation of ITP, we endorse the creation of 
an Industrial Technologies Steering Committee (Sec. 9) for ITP. The 
past effectiveness of the program was in large part a result of its 
strong working relationship with private manufacturing companies. These 
relationships allow the program's activities to be tailored to address 
the actual technology and market needs of industry, enabling 
manufacturers to become more efficient and competitive. Over the past 
eight years, we have seen this close communication erode, and we feel 
that the creation of this committee will address indications from 
current ITP leadership of their interest to better coordinate with 
their customer base.
                       additional recommendations
    The provisions in this act add important new elements to the ITP 
program and provide a renewed focus to the program's activities. For 
this program to be most effective, it needs better data on 
manufacturing economic activity and energy use. The primary source of 
economic information has been the Census of Manufacturing and the 
Annual Survey of Manufacturing, both prepared by the Census Bureau. 
These important data sources have seen their depth and the speed with 
which they are released adversely impacted by significant budget cuts 
at the Bureau. Similarly, the Manufacturing Energy Consumption Survey 
issued by the Energy Information Administration has, due to budget 
cuts, seen its sample size and depth of questions shrink, its frequency 
reduced to every four years, and its preparation time drag out such 
that we are currently waiting for the release of the 2006 data. These 
two agencies need more resources so that more in-depth and timely data 
can be made available to inform ITP program operators and policymakers 
how best to meet the energy needs of the manufacturing sector.
                               conclusion
    Thank you for the opportunity to testify in support of the 
Restoring America's Manufacturing Leadership through Energy Efficiency 
Act of 2009. ACEEE feels that this bill represents an important 
complement to existing law. The timing of this bill is particularly 
important, as our country needs to prepare now if we are to be ready to 
seize a once-in-a-generation opportunity to influence the energy 
efficiency and sustainability of the manufacturing sector once it 
emerges from the current economic downturn. The manufacturing sector 
and its contributions to the nation's economy and jobs have been 
ignored for far too many years, and it is important that this neglect 
be reversed. This bill will make significant progress if all of its 
provisions are enacted and funded. We encourage Congress to pass this 
bill expeditiously. ACEEE stands ready to assist the Committee and 
Congress in addressing any questions or concerns with respect to this 
legislation.

    The Chairman. Thank you very much.
    Dr. Savitz, go right ahead.

STATEMENT OF MAXINE SAVITZ, PH.D., HONEYWELL, INC. (RET.), LOS 
                          ANGELES, CA

    Ms. Savitz. Good morning. I'm pleased to be here, Mr. 
Chairman, Senator Murkowski and other members of the committee. 
I retired from Honeywell several years ago and prior to that 
joining them 20 years ago, I was in Washington at the 
Department of Energy and its predecessor agencies.
    It's a pleasure that to see you introduce this bill and the 
emphasis on energy efficiency that is long needed. I also would 
like to submit for the record in addition to my testimony a 
recent peer review of the Department of Energy's industrial 
technology program which I co-chaired.* I will give you some 
summary of some of our results from that review and they tie 
directly into the legislation that you are supporting.
---------------------------------------------------------------------------
    * Report has been retained in committee files.
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    In that panel we found that they effectively use their 
resources to achieve significant results despite a continuing 
decline in the budget. Up until recently the budget in 2008 was 
$65 million down from $100 million in fiscal year 2002. They 
had achieved several successes.
    They were also looking at some potentially transformative 
technologies such as nano-technology. They've had several 
innovative energy efficient technologies enter the marketplace 
in the aluminum industry, the steel industry, the metal casting 
industry, heavy users of energy. The technology delivery 
program which Dave Rodgers and Mr. Elliott also mentioned was 
particularly praised by the committee and it's a strategic 
investment in manpower as well as infrastructure by getting 
these undergraduates involved in assessments and also helping 
small and medium size business.
    The panel observed that the program has strong stakeholder 
support in both the R and D and the technology needs. We heard 
from customers in our deliberations on their program. There has 
been some concern. There's always been good cost sharing. But 
there's been concern recently as a result of the declining 
budget, industry less willing to participate not knowing 
whether their programs were going to be continued.
    We also want to give the industrial program praise for 
collecting very good metrics on what has been the result of 
their programs. How many have entered into the marketplace? 
What kind of energy is being saved? Probably do one of the best 
examples of that in the Department.
    We had a number of recommendations for making the program 
more effective. One is the current goal is to reduce energy 
efficiency 25 percent in 10 years in helping industry. We 
thought that was unrealistic given that the budgets are too low 
to achieve that goal. So either the budgets need to be 
increased or the goals need to be revisited.
    Goals should be expanded not only to look at energy 
efficiency but greenhouse gas emissions. These are things that 
are also in your bill which we're pleased to see. Within DOE 
itself there's a common problem of the budget and the goals 
being consistent.
    There is some very good R and D at the early stage, but for 
the heavy energy users of industry they were really at the last 
stages of development and demonstration. There needs to be a 
more full pipeline of applied research and demonstration for 
the heavy energy users. There's a cross cutting initiative for 
heat processing materials and like. Those are very good, but 
they don't substitute for working directly with industry doing 
no road maps.
    We feel that they needed to expand their expertise in the 
policy area. Both in regard to climate change with interfacing 
with utilities who can be a very good deliverer of the 
technologies and also financing. Again these are issues that 
are addressed in your bill which really will make the 
industrial program a much broader and more balanced program.
    Portfolio maps should be developed to assist in project 
selection and build a robust program. They'll be both technical 
and market. Show the benefits of the program, the timeframe, 
the total cost and then a strong connection between the R and D 
programs and the technology delivery programs.
    The technology delivery programs have an opportunity to 
identify what are some of the longer term research needs that 
the industry needs that they could then enter cost share 
programs with. It's also an opportunity for the people who are 
going out to give the assessments to tell about the DOE's 
results. It can work both ways.
    We're pleased that the legislation incorporated many of our 
recommendations. Regular assessments, including greenhouse gas, 
road mapping of specific industries, financial mechanisms to 
help provide the capital needed, interactions with other 
programs within DOE and the formation of an advisory group, 
which Dr. Elliott also mentioned.
    I'll mention a couple of the sections that we'd like to see 
some expansion on, particularly in the financial institutions. 
Utilities have been very active in many states at providing 
audits and incentives to the industrial sector. They could also 
be a source of funding for them, so to consider them in section 
two.
    Looking at the comparison of the U.S. technology adoption 
rates with those in Europe, Japan and other countries, it would 
also be useful to find out if they're different. Why are they 
different? Is it because of pricing policies, economic 
policies, other, age of equipment and the like and not just 
reporting? We want to endorse the fact that appropriate to have 
the National Academy to evaluate the critical manufacturing 
capabilities and supply chain to capture the development of 
advanced energy technologies in the United States.
    Then would like you to consider adding a data section for 
the fact that EIA collects data on manufacturing. It used to be 
done every 4 years. It is now done only every 3 years.
    People need that data on how is energy used. What 
technologies are being used? In order to develop policies and 
see how the country is progressing.
    There needs a sustained level of a balanced Federal program 
both as a portfolio of R and D and policies and strongly 
endorse this legislation that along with EISA will go a long 
way to providing that. Thank you.
    [The prepared statement of Ms. Savitz follows:]
Prepared Statement of Maxine Savitz, Ph.D., Honeywell, Inc. (Ret.), Los 
 Angeles, CA, and James L. Wolf, Energy & Environmental Consultant and 
           Former Executive Director, Alliance to Save Energy
    We are pleased to present our views on S. 661, Restoring America's 
Manufacturing Leadership through Energy Efficiency Act of 2009, 
legislation proposed to strengthen American manufacturing through 
improved industrial energy efficiency. The U.S. industrial sector is 
composed of a diverse set of businesses, products and processes with a 
broad range of opportunities for improved energy efficiency. In 2008, 
industry accounted for 33 percent of energy used in the U.S. and 28 
percent of carbon dioxide emissions. (Energy Information 
Administration, Annual Energy Outlook 2008) If we are to achieve our 
national economic, energy, environmental and security goals, U.S. 
industrial energy use needs to be addressed by federal policy and 
programs in a sustained effort.
    While industry does respond to price signals for their investments, 
and there are somewhat less market barriers than in many other sectors, 
federal policy and programs are needed to address the many barriers 
that still exist. In today's financial climate, industry does not have 
the available capital to invest in developing and testing new 
technologies--or even deploying all the known proven existing 
technologies--that will increase their energy productivity. 
Opportunities are being missed to simultaneously address environmental 
and climate concerns, to make our industry more productive in hard 
economic times, as well as to make the nation more secure. The proposed 
legislation takes major steps to rectify these problems, and we have 
suggestions for refinements to it.
    Prior to commenting on some of the specific suggestions of the 
legislation, we will summarize the findings and recommendations of a 
recent peer review of the Department of Energy (DOE) Industrial 
Technology Program (ITP), which we co-chaired. Attached for the record 
is a copy of the peer review report.*
---------------------------------------------------------------------------
    * Report has been retained in committee files.
---------------------------------------------------------------------------
    The DOE Office of Energy Efficiency and Renewable Energy (EERE) 
requires each program to conduct periodic peer reviews to enhance EERE 
program planning. The EERE ITP program held a corporate peer review in 
Washington, DC on October 28-30, 2008. The purpose of the peer review 
was to evaluate the program's effectiveness, management, productivity 
and relevance to EERE programmatic goals. An independent panel of ten 
experts from industry, academia, and government provided comments on 
the ITP mission and goals, program areas, and management.
    The review panel found that ITP effectively uses its resources to 
achieve significant results, despite its recent continually declining 
budget. The program had a budget of $65 million in FY 2008, down from 
$100 million in FY 2002. The program has achieved several key successes 
in R&D and is working on some potentially transformative technologies 
in areas such as nanotechnology. There have been several innovative, 
energy-efficiency technologies that have entered or are nearly ready to 
enter the market, including the Isothermal Melting (aluminum), Mesabi 
Nugget next generation cokeless ironmaking process (steel) and Lost 
Foam Casting (metal casting).
    The ITP program was praised by the panel for its involvement in 
developing transformational technologies that could have a very large 
impact on the future of manufacturing. ITP's new emphasis on supply 
chains was considered a wise strategic direction. The panel felt that 
the program would find even more opportunities in the near term as U.S. 
industrial competitiveness becomes more critical.
    The Technology Delivery program was found to be deserving of high 
praise. Through its Save Energy Now (SEN) initiative, Technology 
Delivery conducts a plant assessment program that helps manufacturing 
facilities save an average of $1.l million, or 8 percent of their 
energy costs. The reviewers were impressed that the initiative had been 
so productive and generated such good results in such a short period of 
time. It was striking that even ``sophisticated'' large energy users, 
including some on the review panel, found the program to be very 
valuable. The panel also praised the ITP university--based Industrial 
Assessment Centers (IAC), which train undergraduate students and offer 
technical assistance to small-and medium-sized plants. The IAC is a 
strategic investment in manpower as well as infrastructure and noted 
the program's importance in training the future workforce and 
developing the next generation of industrial professionals.
    The review panel observed ITP's strong stakeholder support in both 
the R&D and Technology Delivery areas. Partnerships with companies and 
trade associations have produced several industry-specific technology 
roadmaps that identify top research needs and priorities. These 
roadmaps have helped ITP set an R&D agenda that fits industry's needs 
and produces technologies that are eventually adopted by industry. The 
program's cost-sharing with industry is also good, although the 
continued funding uncertainty in the future that has been the hallmark 
of the past several years makes it more difficult to involve industry 
partners. We are pleased that the Energy Independence and Security Act 
(EISA) did authorize higher funding levels and we understand that some 
of the EERE R&D stimulus money will be used by ITP.
    The review panel also noted that ITP maintains a convincing metrics 
collection process to document its achievements. Reviewers noted that 
ITP's metrics and evaluation are some of the ``best in class'' in the 
federal government because they measure achievements with a high level 
of detail and precision. The program's ``Impacts'' report is very good. 
It does take resources to make this commitment and the panel encouraged 
ITP to continue the effort. Their work on both retrospective impacts 
and prospective benefits should be more widely shared with policy 
makers as well as industry.
    The review panel made a number of recommendations to ITP for 
addressing its weaknesses, which included specific suggestions on 
refining the program strategy and goals:

   The review panel found that the credibility of ITP's goals 
        were suspect given its current budget. For example, the panel 
        found that ITP's budget is too small for its stated mission of 
        helping to reduce industry's energy intensity by 25 percent 
        over ten years. To achieve such a goal would require both new 
        and improved technologies with high returns for industry 
        adoption and utilization in this short time frame. More funding 
        and an articulated long term commitment to the program are 
        needed from the Administration and Congress to achieve the 
        current goals. ITP's goals should be expanded to include a 
        specific connection to climate change and carbon emissions, and 
        improving industry's use of alternative feedstocks in addition 
        to fuel flexibility. Goals should be achievable within the 
        budget allocated and they need to be updated on a regular 
        basis, at least every two years, to be consistent with the 
        budgets and progress made on projects.
   ITP needs to undertake more early stage R&D projects to 
        improve the availability of projects across timeframes for 
        implementation by industry. The pipeline of R&D projects 
        appears to be running dry, particularly in the industry 
        specific areas.
   Industry-specific R&D needs to be emphasized and budgets 
        increased. While the cross-cutting energy intensive industrial 
        work is commendable, it is not an adequate substitute for 
        industry specific R&D. A clearer rationale for how the programs 
        are balanced and complement each other to meet overall ITP 
        program goals is required.
   ITP would benefit from increasing its policy expertise at 
        the federal and state levels, which will help achieve its 
        mission and engage new stakeholder groups, utilities, states 
        and other entities. In particular, ITP needs to strengthen its 
        outreach to utilities to help industry overcome barriers to 
        implement energy efficiency projects and new technologies. ITP 
        has begun building partnerships with utilities, but also needs 
        to strengthen its ties with public service commissions and 
        states that are resistant to utility ``decoupling'' of revenues 
        from profits and other load-reducing strategies. Understanding 
        the policy issues and a careful outreach strategy will help ITP 
        communicate with these entities, advance the program's mission 
        and present industry with options to reduce energy intensity. 
        ITP should develop a strategy to assist industry identify 
        financing opportunities for the adoption of technology.
   Portfolio maps that reflect risk (technical and market), 
        benefit, total projected cost and timeframe need to be 
        developed to assist in project selection, better present and 
        explain the overall program and justify the need for any 
        portfolio balancing decisions to meet program goals.
   The panel also recommended that ITP establish a stronger 
        connection between its Technology Delivery and R&D programs. 
        The Save Energy Now (SEN) program could provide feedback on 
        some of the industry longer term R&D needs and the auditors in 
        both SEN and IAC could inform the industry managers about the 
        technologies ITP is developing or has developed.

    We are pleased that the legislation being discussed today has 
incorporated many of the peer committee recommendations mentioned 
above. These include regular assessments including greenhouse gas 
emissions in addition to energy efficiency, road-mapping of specific 
industries, financial mechanisms, interaction with other programs in 
DOE, and the formation of an advisory group.
    The following are suggestions to consider for modifications to the 
proposed legislation:

   Sec. 2 (h) (2) (B) (ii), we recommend adding utilities after 
        financial institutions. Although they could be considered as 
        ``other provider of loan capital'', utilities in some states 
        such as California have been proactive in providing financing 
        for energy efficiency. They could participate as funders or co-
        funders.
   Sec. 3: We suggest adding a sentence requiring a brief 
        letter or report be sent to Congress every other year on the 
        efforts of coordination and results. This will help prompt more 
        consistent coordination.
   Sec. 4 (b): As part of the report, we recommend there be an 
        assessment of how much energy intensity and greenhouse gas 
        emissions could be reduced at different budget levels for ITP. 
        For example, if the budget of ITP were to double, what would be 
        the impact on energy intensity and greenhouse gas emissions in 
        2020? The report should state at a minimum what could 
        realistically be accomplished regarding energy intensity and 
        greenhouse gas reductions at the current budget level. This 
        recommendation is derived from the IPT Peer Review report which 
        found that the current goals are not consistent with the 
        budget.
   The report in Section 4 (b) (4) on comparison of U.S. 
        technology adoption rates with those in the European Union, 
        Japan, and other appropriate countries, should include ``an 
        assessment of the reasons for any differences in adoption rates 
        considering at a minimum both economic (including price) and 
        policy reasons in the U.S. and countries considered.'' 
        Understanding the reasons for any differences in adoption rates 
        can help formulate better policy.
   Sec. 8 (b) Since the National Academy report is due to the 
        Congress within two years from enactment, add a phrase ``within 
        60 days of enactment of the act'' the Secretary enters into the 
        agreement with the Academy. Getting the study underway promptly 
        will allow sufficient time for a rigorous study to be 
        conducted. Also, add a phrase that the Academy shall decide 
        which industries to focus on and supply chains to be analyzed 
        so that not all industries are expected to be analyzed and the 
        study can be of sufficient depth.
   Adding a new Section on data gathering. More detailed data, 
        and data collected more frequently, are needed to better assess 
        the status and prospects for energy efficiency and greenhouse 
        gas emission reductions. The Energy Information Administration 
        (EIA) publishes and analyzes data about energy use in the U.S. 
        An important part of that portfolio is the Manufacturing Energy 
        Consumption Survey (MECS). The public products of the survey 
        include data, by industry and region of total energy use, types 
        of energy (coal, electricity, natural gas, LPG, residual fuel 
        oil, other fuels etc.), the cost of energy and technological 
        features of industry related to current and potential pattern 
        of energy use. Based on the data, the EIA produces critical 
        analyses that address issues such as demand within specific 
        industries for different forms of energy. These in turn allow 
        for projections of energy use and the impact of energy price 
        changes on manufacturing output and employment in the U.S. 
        Timely collection and publication of consistent, comprehensive 
        surveys are necessary to understanding trends in energy use and 
        the impact of existing and proposed public policies.

    Between 1978 and 1981, the EIA funded the Annual Survey of 
        Manufacturers, which included information on industrial energy 
        consumption. The survey was discontinued in 1981 due to budget 
        reductions. MECS started in 1985 and was repeated every three 
        years up to 1994, when it was put on a four-year schedule for 
        1998, 2002, and 2006. Information about the 2006 Survey is 
        still not available. Thus, the detailed information currently 
        available about energy use in industry and emissions of carbon 
        dioxide is over seven years old, missing a period of dramatic 
        changes in energy technology and industry structure in the U.S.

    We suggest adding a section that ``EIA conduct MECS on a three year 
        schedule. It should be coordinated with any GHG reporting 
        requirement that is established pursuant to statute or 
        regulatory authority.''

    In the near term, the U.S. industrial sector can improve its energy 
efficiency and reduce its greenhouse gas emissions through the adoption 
of cost-effective energy efficient technologies and processes. In the 
longer term, the development and implementation of additional 
technologies and processes will further improve its efficiency, 
environmental performance, productivity and competitiveness. The 
targeted greenhouse gas emission reductions being considered in many 
pieces of proposed legislation can only be met with the nation and 
industry greatly accelerating its rate of adoption of existing energy 
efficient technologies and deploying very rapidly new ones that are 
developed.
    There needs to be a sustained level of effort of a Federal 
research, development, demonstration and deployment program with a 
balanced portfolio and appropriate policies. This proposed legislation, 
along with EISA will make progress toward reaching these goals. We 
strongly endorse it and look forward to continue to work with you and 
your staff.

    The Chairman. Thank you very much.
    Mr. Zepponi, go right ahead.

     STATEMENT OF DAVID ZEPPONI, PRESIDENT, NORTHWEST FOOD 
              PROCESSORS ASSOCIATION, PORTLAND, OR

    Mr. Zepponi. Good morning, Mr. Chairman and members of the 
committee. Thank you for inviting me to testify before this 
committee today. My name is David Zepponi. I'm the President of 
the Northwest Food Processors Association. I would like to 
submit my testimony for the record and provide the committee 
with a summary now.
    Established in 1914, NWFPA is a regional trade association 
representing food processing industry in Idaho, Oregon and 
Washington. NWFPA members comprise the third largest 
manufacturing employment sector in the Northwest and add value 
over $20 billion to our economic value in the region's economy.
    NWFPA welcomes this opportunity to provide testimony on the 
Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009. We believe that the programs and 
resources provided by this legislation will promote significant 
improvement of energy efficiency by industry, contribute to 
reductions in greenhouse gas and assure the U.S. industries 
remain competitive in a global environment.
    My testimony today provides an outline of the approach 
NWFPA used to establish the energy efficiency goal and the plan 
to achieve that goal. I will also tell you why we believe this 
proposed legislation will help food processors and other 
industries implement energy efficiency in their activities. 
NWFPA's energy efficiency of goal.
    The food processing industry is facing dramatic changes 
forcing critical strategic adjustments in the way business is 
conducted. In response to these forces NWFPA established the 
Northwest Food Processor's Cluster initiative with the goal to 
reposition the three State food processing industry to compete 
globally through dramatically increased innovation in 
productivity. The key concept is local competitors working 
together along with cluster partners, Federal and State 
agencies, the National Laboratories, educators and suppliers, 
toward a common goal.
    In May 2008, NWFPA invited Doug Kaempf, Program Manager of 
the Industrial Technologies Program of DOE to attend our annual 
executive business summit. We asked him to discuss how we could 
collaborate to achieve energy objectives of our member 
companies. The food processing industry is the second largest 
user of energy in the Northwest behind the pulp and paper 
industry.
    Mr. Kaempf and the ITP challenged the food processors to 
adopt an aggressive approach to energy savings. We decided to 
use energy efficiency as our focal point to improve the 
industry's competitiveness. NWFPA, ITP and the Northwest Energy 
Efficiency Alliance developed a strategy to meet the challenge.
    Last fall NWFPA member executives established the following 
audacious and aggressive goal to accelerate the implementation 
of energy efficiency strategies to reduce member wide energy 
intensity by 25 percent in 10 years and through innovation and 
new technologies and new resources achieve a reduction of 50 
percent in 20 years. Food processing executives recognize that 
the most effective way to manage energy costs, reduce 
greenhouse gas emission and at the same time increase 
productivity and economic growth was through greater 
implementation of energy efficiency.
    Energy needed to be viewed beyond a line item in the 
operational cost. Energy must be viewed as a holistic 
management opportunity. Subsequently food processors and the 
cluster partners participated in a workshop to identify the key 
technologies and actions, research, partnerships and resources 
that could be integrated into the NWFPA energy road map.
    Most recently on February 17, 2009, NWFPA and the U.S. 
Department of Energy signed a memorandum of understanding to 
work collaboratively to achieve these goals. The MOU sets the 
foundation for a partnership to identify and pursue a diverse 
range of opportunities for energy efficiency within the 
Northwest food processing industry. ITP has been an important 
NWFPA partner for many years. In fact in 2003, we received a 
modest grant from the industries of the future to begin our 
entire program.
    Another example of an affiliation that will help us to 
achieve our goal is with the Northwest Energy Efficiency 
Alliance. In 2005 Northwest Food Processors Association has 
been partnering with NEEA on their industrial initiative which 
focuses on making energy efficiency an integral part of both 
corporate and plant business practices. Thirty Northwest Food 
Processor Association member companies are participating in 
NEEA's continuous energy improvement program. We're 
implementing energy management strategies and energy efficiency 
measures that are achieving significant results.
    Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009, S. 661 is critical because it supports 
ITP's industrial efficiency efforts and provides a framework 
for the industry and its partners with ITP. As I have just 
indicated these partnerships are critical for industry to 
achieve a meaningful reductions in energy intensity. NWFPA 
thanks Chairman Bingaman, Senator Murkowski and the co-sponsors 
for introducing this bill and for recognizing the importance of 
energy efficiency for the competitiveness of U.S. industries.
    A couple of sections. Industrial energy efficiency grant 
program, NWFPA supports the creation of a revolving loan 
program to provide funds to the industrial manufacturers for 
implementation of commercially available energy efficient 
technologies and processes. The lack of capital and resources 
are significant barriers to implementation particularly for a 
small- and medium-sized manufacturing companies.
    Many States and Federal energy programs provide tax 
incentives for implementation of energy efficiency programs. 
But they aren't being used. We noticed that we did an 
assessment through the Innovation Productivity Center and 
evaluated 20 years of ITP funded industrial assessment center 
audits. Only about 30 percent of the recommendations were 
actually implemented.
    The industry specific road maps. Earlier I outlined our 
process to establish a goal and develop an energy road map. We 
believe that the road map process is critical to:
    One, coalesce the industry around a goal.
    Two, to identify energy efficiency opportunities within the 
context of business operations and strategies.
    Three, to expand the range of partners in the processes, 
our cluster partners.
    Four, creating critical public/private partnerships that 
will result in collaborative and actual plans.
    The industry research and assessment centers. NWFPA 
supports the concept of the industrial research and assessment 
centers as institutions of higher education as provided by the 
Energy Independence Acts of 2007 and establishing Centers of 
Excellence as provided in this bill.
    Innovation and industry grants. NWFPA supports inclusion of 
Federal funding for State industry partnerships to develop, 
demonstrate and commercialize new technologies or processes to 
achieve NWFPA's industry wide goal of an additional 25 percent 
increment reduction in energy intensity by 2029. A lack of 
prompt funding is a primary barrier to development and 
demonstration of new innovation technologies and processes are 
essential for us to achieve our goal.
    In conclusion NWFPA is very supportive of S. 661 because 
our experience indicates that the programs and resources 
provided by this legislation will promote significant 
implementation of energy efficiency by industry, will assure 
industry and its partners have the resources to achieve these 
ends and will ensure that U.S. industries remain competitive in 
a global marketplace.
    Mr. Chairman, thank you for the opportunity. I'm happy to 
answer questions.
    [The prepared statement of Mr. Zepponi follows:]
    Prepared Statement of David Zepponi, President, Northwest Food 
                  Processors Association, Portland, OR
                              introduction
    My name is David Zepponi and I am the President of Northwest Food 
Processors Association (NWFPA). Established in 1914, NWFPA is a 
regional trade association representing the food processing industry in 
Idaho, Oregon, and Washington. NWFPA members range in size from mom and 
pops to multinationals, although most are medium-size companies. NWFPA 
members comprise the third largest manufacturing employment sector in 
the Northwest and add over $20 billion of economic value to the 
region's economy.
    NWFPA focuses on issues facing the food processing industry 
including food safety and security, environment, transportation, 
productivity, innovation and energy. Our mission is to serve as an 
advocate for the common interests of our members and a resource to 
enhance the industry's competitive capabilities.
    NWFPA welcomes this opportunity to provide testimony on the 
Restoring America's Manufacturing Leadership through Energy Efficiency 
Act of 2009 (S.661). In fact, we are extremely pleased that this bill 
has been introduced. We believe that the programs and resources 
provided by this legislation will promote significant implementation of 
energy efficiency by industry, contribute to reductions in greenhouse 
gas emissions, and assure that US industries remain competitive in the 
global marketplace.
    Today, I will discuss the importance of energy efficiency to food 
processors and how NWFPA's collaboration with its key partners led to 
the setting of an aggressive energy efficiency goal. I will also tell 
you why we believe the proposed legislation provides an approach that 
will help food processors and U.S. industries implement energy 
efficiency.
                     nwfpa's energy efficiency goal
    The food processing industry is facing dramatic changes, forcing 
critical strategic adjustments in the way business is conducted. 
Changes in market, consumer demands, environmental regulation, energy 
supply, security, trade practices coupled with increasing costs of 
energy, commodities, transportation, labor, water treatment and 
regulatory compliance are squeezing profit margins and increasing the 
cost of the food supply for American consumers. In response to these 
forces, NWFPA established the Northwest Food Processors Cluster 
Initiative with the goal to reposition the three-state food processing 
industry to compete globally through dramatically increased innovation 
and productivity.
    Products of this effort include the Northwest Food Processors 
Association's 2006 Cluster Assessment and Roadmap and establishment of 
the Northwest Food Processors Innovation Productivity Center. The 
Cluster Initiative spurred the industry to embrace the concept of local 
competitors working collectively along with other cluster partners--the 
federal government, the states, suppliers, educators, and regional and 
local agencies--sharing ideas and actions to improve the position of 
the cluster to compete in the global marketplace.
    Energy and the environment were identified as strategic issues by 
the Cluster Assessment. Significant energy price increases, climate 
change, greenhouse gas emissions regulations, and water issues have 
brought additional challenges for food processors. Again, NWFPA looked 
to a collaborative approach to guide the industry through these 
challenges and assure a sustainable and competitive food processing 
industry.
    In May 2008, NWFPA invited Doug Kaempf, Program Manager of the 
Industrial Technologies Program of the US Department of Energy (US DOE) 
to attend NWFPA's annual Executive Business Summit to talk to food 
processing executives about how we could collaborate to achieve the 
energy objectives of our organizations. The food processing industry is 
the second largest user of energy in the Northwest, after the pulp and 
paper industry. Doug challenged the food processors to adopt an 
aggressive approach to energy savings.
    Over the summer, NWFPA, DOE Industrial Technology Program and the 
Northwest Energy Efficiency Alliance (NEEA) worked on a strategy to 
meet Doug's challenge. In October, 2008, NWFPA member executives 
gathered at the NWFPA Energy Vision Workshop and created the following 
energy vision and goals for the industry:

          NWFPA Energy Vision.--To enhance the competitiveness and 
        economic growth of NWFPA members through development and 
        implementation of a sustainable energy strategy to increase 
        energy productivity and promote innovation.
          NWFPA Energy Goal.--To accelerate the implementation of 
        energy efficiency strategies to reduce member-wide energy 
        intensity (energy use per unit of output) by 25% in 10 years 
        and through innovation, new technologies and new resources 
        achieve a total reduction of 50% in 20 years.

    Food processing executives recognized that the most effective way 
to manage energy costs, reduce greenhouse gas emissions, and at the 
same time increase the productivity and economic growth of NWFPA 
members was through greater implementation of energy efficiency. Energy 
needed to be viewed beyond line-item operational costs and more as a 
holistic management opportunity.
    NWFPA, ITP and NEEA continued joint efforts and in December 2008, 
NWFPA members, state energy offices, energy utilities, educators, 
suppliers and other partners convened at the NWFPA Energy Roadmap 
Workshop. The objective of the workshop was to identify the key 
technologies and actions, research, partnerships and resources that 
could be integrated into a ``roadmap'' to help the industry reach its 
goals. Facilitated breakout sessions of workshop participants resulted 
in over 500 energy efficiency ideas. NWFPA staff and Innovation 
Productivity Center staff analyzed these ideas and are preparing the 
NWFPA Energy Roadmap document. Key areas of focus have been identified 
and highest priority projects have been developed and are ready for 
implementation.
    On February 17, 2009, as evidence of commitment and support of 
NWFPA's energy efficiency goals, NWFPA and US DOE signed a Memorandum 
of Understanding (MOU) to work collaboratively to achieve the goals. 
The MOU was also signed by the Bonneville Power Administration, Pacific 
Northwest National Lab, Idaho National Lab and several individual NWFPA 
member companies who were present for the signing ceremony. The MOU 
sets the foundation for a partnership to identify and pursue a diverse 
range of opportunities for energy efficiency within the Northwest food 
processing industry. A copy of the MOU has been provided with this 
testimony.*
---------------------------------------------------------------------------
    * Document has been retained in committee files.
---------------------------------------------------------------------------
    ITP has been an important partner in coalescing NWFPA's energy 
efforts into a vision and roadmap. ITP was also instrumental in the 
original launch of NWFPA's energy efficiency efforts in 2003. With a 
very small grant from ITP's Industries of the Future, bridge funds were 
available for NWFPA to hire an energy staff person and develop the 
foundations of our energy program. With another very small US DOE grant 
in 2005, and with the assistance from ITP staff, NWFPA developed a web-
based Energy Portal to provide food-processing specific information on 
energy efficiency best practices and emerging technologies. In 
addition, training seminars and a national energy efficiency satellite 
teleconference were conducted and energy assessment software and 
process control technology specifications were developed.
    NWFPA now has the most significant and effective energy efficiency 
program of any trade association in the U.S. In 2007, the American 
Council for an Energy-Efficient Economy (ACEEE) recognized NWFPA's 
efforts with an Energy Efficiency Champion of the Year Award.
    I'd like to highlight a few of NWFPA's energy programs and 
projects:

          Water and wastewater discharge are ongoing challenges for 
        food processors and many processors are significant users of 
        water. Water supply and availability are becoming major 
        concerns and climate change impacts add uncertainty. Wastewater 
        is considered a key environmental concern and many food 
        processors must treat wastewater prior to discharge.
          The energy costs of wastewater treatment can be significant. 
        NWFPA is addressing these issues in a variety of ways.
          Since 2005, NWFPA has been partnering with the Northwest 
        Energy Efficiency Alliance (NEEA) on NEEA's Industrial 
        Initiative, which focuses on making energy efficiency an 
        integral part of both corporate and plant business practices. 
        Thirty NWFPA-member companies are participating in NEEA's 
        Continuous Energy Improvement Program and are implementing 
        energy management strategies and energy efficiency measures 
        that are achieving significant energy savings.
          Since 2004, NWFPA has been working with Glen Lewis, formerly 
        of Del Monte Foods, to develop an energy management software 
        program we call the Green Energy Management System or GEMS. 
        GEMS provides real-time tracking of water, air, gas, 
        electricity and steam use and associated costs as well as 
        resource use per unit of production and associated greenhouse 
        gas emissions. NWFPA and NEEA are completing a pilot study of 
        GEMS implementation in food processing plants in the Northwest 
        and we are about to take GEMS member-wide.
          A NWFPA associate has just completed a case study on the 
        integration of energy and environmental management technologies 
        at the wastewater operations of a major food processor in 
        California. The case study was sponsored and funded by the 
        California Energy Commission, Public Interest Energy Research 
        (PIER) program and Lawrence Berkeley National Laboratory-Demand 
        Research Center. The objective was to integrate and maximize 
        demand response opportunities, energy efficiency, and reduce 
        carbon emissions while meeting wastewater environmental 
        regulations.
          A significant amount of energy is used to run motors and 
        pumps for aeration and aspiration systems in food processing, 
        municipal, and other industrial wastewater lagoons. These 
        systems maintain dissolved oxygen levels that are required for 
        microbiological degradation of waste, odor control, and water 
        discharge. To assure regulatory compliance, most systems run 
        continuously--24/7/365.
          When an energy tracking system (GEMS) was integrated with 
        real time dissolved oxygen (DO) measurements, it showed that 
        more energy was being used than was necessary to maintain DO 
        levels. Further, when this monitoring information was coupled 
        with weather and temperature data (DO is reduced with high 
        temperatures), operations could be fine-tuned to achieve even 
        more significant reductions in energy use. These significant 
        reductions in energy use also produced significant, real-time, 
        measureable reductions in CO2 emissions.
          Energy efficient-wastewater treatment is a top priority for 
        food processors. NWFPA and its partner, NEEA, plan to conduct a 
        pilot study of this technology at food processing plants in the 
        Northwest.
          NWFPA is currently working with the Gas Technology Institute 
        on the field demonstration of a new ultra-efficient industrial 
        boiler technology at a food processing plant in the Northwest. 
        This ``Super Boiler'' has a 95% fuel to steam efficiency (about 
        20% more efficient than standard technology), results in huge 
        savings in natural gas, as well as significant reductions in 
        NOx and greenhouse gas emissions.

    I will discuss additional activities and programs of NWFPA as they 
relate to specific sections of the proposed legislation.
restoring america's manufacturing leadership through energy efficiency 
                              act of 2009
    The proposed legislation is critical because it supports ITP's 
industrial energy efficiency efforts and provides a framework for 
industry partnerships with ITP. As I have just indicated, these 
partnerships are instrumental to assisting industry achieve significant 
reductions in energy intensity.
    NWFPA thanks Chairman Bingaman, Senator Murkowski and the co-
sponsors for introducing this bill and for recognizing the importance 
of energy efficiency to the competitiveness of U.S. industries. We are 
very pleased at how consistent this bill is with NWFPA members' 
objectives, and with our approach to achieving industrial energy 
efficiency, which has evolved through our experience pursuing energy 
efficiency through partnerships and collaboration. In the sections 
below, we comment on several of the bill's provisions and also 
recommend some additional provisions that we believe will assure 
program and project success.
Section 2. Industrial Energy Efficiency Grant Program
    NWFPA supports the creation of a revolving loan program to provide 
funds to industrial manufacturers for implementation of commercially 
available energy efficient technologies and processes. Lack of capital 
and resources are significant barriers to implementation, particularly 
for small to medium-sized companies. For these companies, capital is in 
short-supply, especially during this economic down-turn. Energy 
efficiency capital projects must compete with all other business 
priorities and obligations.
    Many state and federal energy programs provide tax incentives for 
implementation of energy efficiency technologies and processes. 
However, interviews with NWFPA member food processors conducted by both 
NWFPA and NEEA indicate that while tax incentives do promote 
implementation, many companies are not able to use these incentives 
because they just don't have the up-front funds to install the energy 
efficiency technology. NWFPA's Innovation Productivity Center 
evaluation of 20 years of ITP-funded Industrial Assessment Center 
audits in the Northwest reveals that only about 30% of the energy 
efficiency opportunities identified by these audits are implemented. We 
found that lack of up-front funds is key to these lost opportunities. 
The proposed loan program will help remove such barriers to energy 
efficiency implementation.
Section 4. Energy Efficient Technologies Assessment
    NWFPA appreciates the inclusion of food processing in the list of 
industries for which assessments of commercially available energy 
efficient technologies will be specifically conducted. NWFPA's goal to 
achieve a 25% reduction in energy intensity in 10 years is to be 
accomplished through the implementation of commercially available 
energy efficient technologies.
    In 2005, with US DOE support, NWFPA developed an inventory of 
existing energy efficiency technologies for food processing for posting 
on our web-based Energy Portal. This inventory proved to be an 
excellent resource for our members and, as indicated by our site visit 
tracking, was extensively used by others as well. However, NWFPA has 
not had the resources to update this inventory. From our experience, we 
know that the assessments conducted under this provision of the bill 
will meet an important need for food processing as well as other U.S. 
industries.
Section 5. Future of Industry Program
    NWFPA was delighted to discover the approach that we have been 
developing in collaboration with ITP, NEEA and our other cluster 
partners has essentially been included as Section 5 of the bill. This 
approach has worked extremely well for Northwest food processors and 
has produced a solid goal and pathway to achieve that goal. NWFPA 
welcomes the opportunity to serve as a model for f the Energy Roadmap 
approach to be used with food processors in other regions of the 
country as well as with other industries.
            Industry-specific Road Maps
    NWFPA established a road map process and is currently developing an 
industry-wide road map document for its members in Idaho, Oregon, and 
Washington. Just as provided in this bill, NWFPA's road map identifies 
near-, mid-, and long-term targets of opportunity and provides 
actionable public/private plans to achieve the roadmap goals. Likewise, 
NWFPA has designed studies to determine the baseline energy intensity 
of the industry, its greenhouse gas emissions levels, and process and 
sub-process operating costs and opportunities.
    We believe the road map process is critical to (1) coalescing 
industry support around the goals; (2) identifying energy efficiency 
opportunities within the context of business operations and strategies; 
(3) expanding the range of identified opportunities by allowing cluster 
partner input; and, (4) creating critical public/private partnerships 
that will result in collaborative actionable plans.
            Industrial Research and Assessment Centers
    NWFPA generally supports the concept of industrial research and 
assessment centers at institutions of higher education as provided by 
the Energy Independence and Security Act of 2007 and the establishment 
of Centers of Excellence as provided in this bill. We believe this will 
provide important educational opportunities, training, experience and 
financial support for students and researchers. However, we believe 
that industry input and participation is critical to the ultimate 
success of these Centers.
    Our experience with such centers in areas other than energy 
efficiency has shown that the products of research conducted in a 
vacuum, absent industry input, do not meet industry needs and are 
difficult to incorporate into industry processes and business planning. 
Often, the research focuses on the institution's or the researcher's 
interests and not on industry's needs. Thus, little of this research 
produces value to industry.
    To assure that the recommendations of the Centers of Excellence and 
Industrial Research and Assessment Centers result in implementable and 
implemented energy efficiency technologies and strategies, the input of 
and coordination with industry must be incorporated throughout this 
subsection.
Section 6. Sustainable Manufacturing Initiative
    NWFPA supports inclusion of a Sustainable Manufacturing Initiative 
in this bill. We believe that sustainability is a key principal of 
smart business management and that energy efficiency is a key element 
of sustainability. A sustainable strategy will contribute to industry's 
competitive advantage. NWFPA and the Innovation Productivity Center are 
developing a sustainability template and metrics for use by the NWFPA 
membership to implement sustainable practices. These metrics include 
energy, greenhouse gas emissions, water and waste.
    NWFPA applauds the establishment of a joint industry-government 
partnership program to conduct research and development of new 
sustainable manufacturing and industrial technologies and processes.
Section 7. Innovation in Industry Grants
    NWFPA supports inclusion of federal funding for State-industry 
partnerships to develop, demonstrate, and commercialize new 
technologies or processes. To achieve NWFPA's industry-wide goal of an 
additional 25% increment reduction in energy intensity by 2029, the 
industry is relying on implementation of innovative energy technologies 
and processes. Therefore, innovation is a priority element of NWFPA's 
Energy Roadmap. Our Innovation Productivity Center has established a 
Technology Transfer/Commercialization Initiative and an Advisory Task 
Force made up of food processors. Working with the states and the USDOE 
national laboratories, we have identified a number of promising 
innovative technologies. Several projects have been developed and a few 
demonstrations are currently underway.
    Lack of funding is the primary barrier to development and 
demonstration of new innovative technologies and processes. Most food 
processors lack sufficient resources for research and development, 
especially in areas outside new product R & D. Federal funds are 
critical to moving technologies and processes forward.
    NWFPA suggests that provisions be added to this section to include 
industry-USDOE national laboratory partnerships. The national 
laboratories have developed a wealth of technologies and processes 
that, with further development in partnership with industry, could 
produce innovative energy efficient applications for many industries. 
Our Innovation Productivity Center and Advisory Task Force are 
exploring opportunities with Pacific Northwest National Lab and Idaho 
National Lab, as well as seeking funding for RD & D projects with these 
organizations.
Section 9. Industrial Technologies Steering Committee
    NWFPA supports the establishment of an advisory steering committee 
and would be pleased to participate and contribute recommendations and 
lessons learned.
                               conclusion
    In conclusion, NWFPA is very supportive of S. 661 because our 
experience indicates that the programs and resources provided by this 
legislation will promote significant implementation of energy 
efficiency by industry, will assure industry and its partners have the 
resources to achieve these ends, and will assure that US industries 
remain competitive in the global marketplace.
    Again, Mr. Chairman, thank you for this opportunity.

    The Chairman. Thank you very much.
    Mr. Harper, go right ahead.

 STATEMENT OF STEPHEN HARPER, GLOBAL DIRECTOR, ENVIRONMENT AND 
                ENERGY POLICY, INTEL CORPORATION

    Mr. Harper. Yes. Thank you, Chairman Bingaman, Senator 
Murkowski and Senators. I'm here representing both Intel 
Corporation.
    I direct our Global Energy and Environmental Policy 
activities. But I'm also here as co-chair of a new group called 
the Digital Energy Solutions Campaign which I'll talk about 
shortly. We think that this program, the bill, S. 661 can play 
a big role in helping to improve the efficiency, the energy 
efficiency of industry as well as the competitiveness.
    First a few words about Intel. We're a fairly well known 
company. We're the largest semiconductor manufacturer in the 
world.
    Our industry is now the second largest exporting industry 
in the U.S. after airlines. Intel is a very big part of that 
overall picture. Within the U.S. we have major manufacturing 
operations in New Mexico, Oregon, Arizona, and Massachusetts. 
We have research and development in other facilities in a 
number of other States around the country.
    Our presence in the U.S. is obviously very significant. 
While about 75 and almost close to 80 percent going forward of 
our revenue is a gain from the sale of products overseas. More 
than half of our employees live and work in the United States.
    This historical investment continues today. Our chairman, 
rather our CEO, Paul Otellini, just announced here in 
Washington a $7 billion, 2-year investment in retrofitting our 
existing facilities. Particularly in Oregon, New Mexico, and 
Arizona with the latest production equipment to continue down 
the road of Moore's Law to make smaller and smaller chips and 
more energy efficient chips to boot.
    At a time when many, if not most companies in our industry 
are offshoring, many of them are outsourcing. We've actually 
made the commitment to increase our presence in the United 
States and increase our manufacturing presence. In fact if you 
look at the total value, about three quarters of all of our 
microprocessors are made here in the United States.
    We spent a good deal of time looking at the energy consumed 
in our manufacturing process and by our products as they're 
used out in the marketplace. It turns out there's quite a bit 
more energy used in the use of the product than the 
manufacturing of the product. But we still spend about $225 
million here in the U.S. every year on energy. About $200 
million of that is electricity alone.
    So, you know, it's part of our ongoing effort to try and 
improve our competitiveness. We look at our energy expenditures 
seriously and look for ways to reduce them.
    We've had since 2001 what we call a cross functional team. 
Every company has its terminology. That's looked very 
thoroughly across the company for what we also call ``best 
known methods'' for reducing energy efficiency because we like 
to find good ideas and then replicate them throughout our 
manufacturing process in what we call copy exactly.
    We've undertaken a number of projects. Since 2001 we've 
invested more than $23 million in projects specifically focused 
on energy efficiency. The return on that has been in excess of 
$50 million, but I must say that we've made a much bigger 
amount of investment in our manufacturing infrastructure in the 
U.S. and globally that's had energy efficiency as an element. 
Because we try to design energy efficiency into everything we 
do.
    We've also had a fruitful recent relationship with the 
industrial technology program and one of the reasons why we 
support the strengthening of that program under S. 661. Working 
with DOE we've had four energy audits completed at our U.S. 
facilities. We're currently undertaking an assessment of which 
of the improvements we've identified in those audits we're 
going to implement. Scheduling those is part of our engineering 
activity. But it's been very good, very fruitful experience 
over the last 3 years.
    It's also convinced us, this experience with the ITP, that 
the funding and research and development programs that S. 661 
would either expand or create are really critical in terms of 
the competitiveness particularly of small- and medium-sized 
companies. We're a big company. We have lots of staff.
    We can analyze these projects. We can self fund the 
projects. We don't have to go out of the capital market for the 
most part. But that's a fairly unusual situation.
    Small- and medium-sized companies typically don't have the 
expertise to go look for these advantages or benefits. We do. 
So S. 661 will be very useful there.
    I think the Centers of Excellence Program actually will 
also be one of the more beneficial aspects of S. 661. In fact 
in our industry we've created Centers of Excellence working 
with DOD and DOE in other respects to focus on what we call 
precompetitive research in the semiconductor manufacturing 
technology. Some of that has big energy efficiency component 
through SEMATECH and the Semiconductor Research Corporation 
which are cross industry platforms.
    I think there'd be a great opportunity in the future for 
SEMATECH and the SRC to work with DOE through the programs, the 
Center of Excellence Program. I think the industry road mapping 
idea is a great one because in our industry we're often 
breaking up against the boundaries of physics. We have industry 
road maps for all kinds of things that are precompetitive. 
We've had experience with the value of that going forward.
    I'd like to just finish quickly by saying that I think the 
element of this bill that focuses on climate change and looking 
for technologies will help us create the breakthrough 
technologies that are going to be necessary to meet the 
challenge of climate change are especially valuable. In that 
regard we have created a group called the Digital Energy 
Solutions Campaign. It's a bunch of IT companies, ACEEE, the 
Alliance to Save Energy, a number of other environmental groups 
and energy groups. We've actually had some very fruitful 
meetings with David Rodgers and his staff.
    Going forward we very much would like to tell the story and 
get the story of the role of IT in improving energy efficiency 
and providing climate solutions. We'd like that story 
incorporated in some of the work that's done under the programs 
in this bill assuming the bill passes.
    Thank you and I'd be glad to answer any questions.
    [The prepared statement of Mr. Harper follows:]
Prepared Statement of Stephen Harper, Global Director, Environment and 
                    Energy Policy, Intel Corporation
    Thank you, Chairman Bingaman and Senators, for the opportunity to 
participate in this hearing considering S 661, the recently introduced 
``Restoring America's Manufacturing Leadership through Energy 
Efficiency Act of 2009.'' My name is Stephen Harper. I serve as the 
Global Director of Environment and Energy Policy for the Intel 
Corporation. I also am the co-Chairman of the Digital Energy Solutions 
Campaign (DESC), a newly-formed coalition of companies, associations, 
and environmental and energy NGOs dedicated to supporting the role of 
information and communications technology (ICT) as part of the solution 
set in addressing our nation's energy and climate change challenges. I 
am here today to speak in support of the ideas embedded in S 661 and to 
relate Intel's own experience in working to improve its own energy 
efficiency.
    First, a few words about Intel. We are the world's largest 
semiconductor manufacturer. The semiconductor industry is the second-
leading exporting industry in the US, with Intel a major part of that 
picture. Within the US, we have a major manufacturing presence in New 
Mexico, Oregon, Arizona and Massachusetts.
    Our presence in the US is significant. While we generate 
approximately 75% of our revenue from abroad, more than half of our 
employees live and work in the US. Our historical investment in the US 
continues today. Our CEO, Paul Otellini, recently made an important 
announcement here in Washington, namely that we will be spending 
approximately $7 billion over the next two years to equip our 
manufacturing facilities in New Mexico, Arizona, and Oregon for our 
next-generation 32nm manufacturing technology. Making microchips is an 
expensive process. At a time when many other companies in our industry 
are off-shoring, out-sourcing, or both, Intel has made a significant 
commitment to manufacturing here at home. In fact, nearly three-
quarters of our microprocessor manufacturing is done in the US.
    We have spent a good deal of time analyzing the energy it takes to 
make our products and the energy those products consume as they are 
embedded in computers and other IT equipment. While we continue to turn 
out ever more efficient silicon products (measured on a work performed 
per unit of energy consumed basis), it turns out that the use of our 
products consumes more energy than does manufacturing those products. 
Nonetheless, our US energy bill is approximately $225 million, with 
approximately $200 million of that amount spent on electricity. 
Increasing our efficiency--both to reduce our environmental footprint 
and to reduce our costs--is a priority for us.
    We have done a lot in recent years to reduce our direct energy 
footprint. Since 2001 we have had a world-wide cross-functional team 
charged with identifying and implementing a wide variety of retrofit 
energy efficiency projects and sharing so-called ``best known methods'' 
(BKMs) throughout the company. Among the types of projects we have 
undertaken are heat recovery on our facility boilers, installation of 
smart controls on lighting and facility heating ventilation and air 
conditioning (HVAC) systems, and using computerized building management 
systems to operate facilities in their most efficient range. In 
addition, we have worked closely with the suppliers who manufacture our 
fab ``tools,'' the typically very expensive machines that run the 
different parts of the semiconductor manufacturing process, to maximize 
their energy efficiency. Overall, since 2001, Intel has invested more 
than $23 million in hundreds of energy efficiency projects, saving more 
than $50 million.
    In addition to our focus on improving the energy efficiency of our 
existing facilities, efficiency also is a priority in the design of our 
new production facilities globally. For example, Intel's most recent 
new US fab in Chandler, Arizona has been certified under the ``LEED'' 
program administered by the US Green Buildings Council. 
Internationally, we have obtained LEED certification for design center 
in Israel and are pursuing LEED-certification for our new chip-set fab 
in Dalian, China.
    Intel's facility energy efficiency team has had a fruitful 
relationship with the US Department of Energy, including the Industrial 
Technologies Program (ITP), a program which would be strengthened by S 
661. Under the ITP, DOE has completed four energy efficiency savings 
assessments (ESA) audits at Intel sites in New Mexico, Arizona, and 
Oregon, with the earliest completed in 2006. These audits focused on 
the efficiency of pumping systems, compressed air systems and fan 
systems, and were conducted by DOE contractors. These audits produced a 
number of potential efficiency projects that currently are being 
evaluated against our internal criteria for capital investments. In 
addition to these audits, the ITP makes available to Intel a variety of 
programs, models and other analytical tools for our use.
    Our experience with DOE's industrial energy efficiency programs has 
convinced us of the importance of the funding and research and 
development programs that would be authorized or expanded by S 661. 
While Intel has benefitted from working with DOE's ITP, the potential 
benefits of additional grant funding and the expansion of the 
Industrial Research and Assessment Centers would especially benefit 
smaller- and medium-sized industrial companies which, collectively, 
comprise the bulk of US manufacturing. Smaller companies often do not 
have the internal resources to identify and seize many of the available 
energy efficiency opportunities and stand to benefit significantly.
    We particularly like the concept of creating Centers of Excellence 
within the Industrial Research and Assessment Centers. We would welcome 
the creation of such a center focused on energy efficiency in 
semiconductor manufacturing. This would create potential opportunities 
for collaboration with SEMATECH and the Semiconductor Research 
Corporation, our industry's leading platforms for path-finding research 
partnerships.
    One concern we have entails funding. Although the recently-passed 
``American Recovery and Reinvestment Act of 2009''--the stimulus 
package--included funding for a number of excellent energy efficiency 
and renewable energy initiatives, advancing industrial energy 
efficiency received little support. Moreover, there were several 
excellent provisions of the Energy Independence and Security Act of 
2007 (EISA) that did not get funded. So we urge Congress to ``complete 
the circuit'' that would be started by S 661 and provide the funding to 
make these programs work.
    In addition, while we understand that the focus of S 661 is on 
creating and supporting ``advanced technologies,'' there are some 
``ready to go'' technologies that Congress should support as well. A 
good example is combined heat and power (CHP). EISA provided grant-
making authority for CHP projects, a program that never got funded.
    Other features of S 661--including additional support for the 
Future of Industry Program and creating the Innovation in Industry 
Grants--should help create the technological leap-frog that will be 
required to address our climate challenge. While estimates vary 
somewhat, increasingly scientists and politicians alike are converging 
on a goal of reducing global carbon emissions by something like 80 
percent by 2050. Achieving that level of deep emissions reductions will 
require development of breakthrough technologies. That will require 
government support and the type of public/private partnerships the bill 
provides.
    Going forward, concerns about climate change will make these types 
of programs even more important to the competitiveness of US 
manufacturing. Whatever form it takes--cap-and-trade, carbon tax or 
regulation under the existing Clean Air Act--the US will have a Federal 
climate policy in the foreseeable future. While Europe already has a 
program in place, and while some developing countries are likely to 
undertake some form of climate change commitment as part of the current 
post-Kyoto Protocol negotiations, it is clear that passage of a US 
program will create an un-level ``playing field'' for those US 
companies that compete with other enterprises in the developing world. 
That clearly will be the case for Intel and the US semiconductor 
industry. I do not say that as a critique of the US implementing its 
own program--Intel in fact supports a Federal climate program. It is 
simply a fact of economic reality. Domestic climate regulations will 
impose manufacturing costs that competitors in the developing world 
will not face, at least to the same extent, in the immediate future.
    But increasing the energy efficiency of manufacturing can help re-
level the industrial playing field. The 2007 McKinsey report, 
``Reducing US Greenhouse Gas Emissions: How Much At What Cost?'', 
documents that energy efficiency in many different manifestations is 
generally the least expensive way for companies and economies to reduce 
their climate emissions. Indeed, as the McKinsey report indicates, and 
Intel's own experience validates, investments in energy efficiency 
often create positive economic returns independent of their effect on 
climate emissions.
    Many of the societal wealth-creating energy efficiency options 
analyzed in the McKinsey study entail some form of information and 
communications technology (ICT). Subsequent studies have fleshed-out 
the contribution ICT can make to improve energy efficiency and reduce 
climate emissions. Most recently, The Climate Group, a leading 
environmental NGO, released two successive ``Smart 2020'' reports. The 
most recent--``Smart 2020: Enabling the Low Carbon Economy in the 
Information Age: US Report Addendum''--estimates that ICT could reduce 
US climate emissions by 22% by 2020. This is a huge number compared to 
other available options.
    What's missing? What is standing in the way of our realizing this 
significant potential? The answer is ``smart'' public policies--
policies that enable, encourage, and expand the energy, environmental 
and economic role of ICT. Smart policies are needed to overcome a 
number of market failures and other barriers to realizing the full 
energy efficiency potential.
    Intel is leading the way in trying to close the policy gap. We have 
joined with technology leaders like AT&T, Dell, EMC, HP, Infineon 
Technologies, Microsoft, National Semiconductor, Nokia, Philips 
Electronics North America, Sony, Sun Microsystems, Telvent, Texas 
Instruments and Verizon to form the Digital Energy Solutions Campaign 
(DESC). Non-governmental organization affiliated with DESC include the 
Alliance to Save Energy, the American Council on an Energy-Efficient 
Economy (ACEEE), the Energy Future Coalition, The Climate Group, the 
GridWise Alliance, the Intelligent Transportation Society of America 
(ITSA), the Technology CEO Council, and the Telework Coalition. 
Additional affiliates include the Technology CEO Council, the 
Semiconductor Industry Association, the Information Technology Industry 
Council and TechNet.
    The mission of DESC is to expand policymakers' understanding of the 
role of ICT in improving the energy efficiency of the broader economy. 
The coalition is committed to advancing public policies that promote 
the use of ICT solutions as a means of solving our nation's energy 
challenge, spur innovation and economic opportunity, and contribute to 
practical strategies for mitigating climate change. By ``ICT 
solutions,'' DESC means the full suite of hardware, software, and 
broadband technologies that can increase the energy efficiency of 
society.
    What does DESC have to do with the programs authorized and expanded 
in the proposed S 661? Intel believes that these programs create a 
number of potentially powerful leverage points for applying ICT to 
advance industrial energy efficiency, realizing the potential 
identified in the Smart 2020 reports and elsewhere. I think I can speak 
for my colleagues in the DESC endeavor in saying we would welcome the 
chance to work with DOE to make this happen should S 661 be enacted.
    Thank you again for this opportunity.

    The Chairman. Thank you very much.
    Mr. Metts, go right ahead.

  STATEMENT OF JEFF METTS, PRESIDENT, DOWDING MACHINE, EATON 
                           RAPIDS, MI

    Mr. Metts. Thank you for inviting me, Mr. Chairman. Thank 
you, Senator Stabenow for your comments. I appreciate yours, 
Senator Murkowski.
    I heard you all speak and what you want to accomplish here. 
It gives me goose bumps because I know I'm here to bring 
solutions. Real solutions that we can make things happen, make/
create jobs, create new technologies and drive it right now.
    I know what it's like now to be on deck in the major 
leagues also. So this is a unique experience.
    When you come from Michigan jobs are important. I mean, 
we're at 12 percent unemployment. Every day when we get up as a 
manufacturer we think about how do we become world class? How 
do we get better?
    It's nothing that ever leaves. It never will change. It is 
what it is. We compete around the world with the best minds you 
can imagine. We have some of the best minds in the world right 
here in Michigan to be able to do these things.
    We looked at the renewable energy program about 2 or 3 
years ago. We started thinking how do we get involved in this? 
We think it is something that's going to go somewhere. It can 
create jobs, create opportunity for us.
    We looked at what was happening in that marketplace. When 
you come to renewable energy and the types of volumes that you 
talk about here, you can begin to think totally different from 
a manufacturing sector. I think that they came to the country 
so far and they've tried to do things on a, we're going to make 
one. We're going to make 10. We're going to make 50. We're 
going to make 1,000.
    So you're manufacturing processes have been set up around 
that. We saw where we could make dramatic changes and bring 
automotive type technology to this industry. That's where it 
has to go.
    The President has asked for 20 percent renewable energy by 
2025. I don't think we can meet it with the technology we have 
today. I don't think we can meet it with what we have in place 
today.
    Last year we produced 4,000 turbines in this country. The 
problems in trying to produce 4,000 turbines for these 
manufacturers or assemblers was huge. Some of them had to carry 
up to 90 days worth of inventory because they couldn't get 
parts in, the quality issues that were taking place. To carry 
that kind of an inventory at those types of product is not how 
you want to do this business.
    The President's goal wants to 10,000 of these a year. If we 
can't do it well at 4, we've got to find a way to do it well at 
10. We think we've come up with some of those solutions. By the 
innovative technologies that have already been here from 
automotive industries. We're being able to make those 
technology transfers into this type of equipment.
    I don't think people realize what we're talking about here. 
Most parts that you make you can pick up and put them on 
something. Pick them up and take them off.
    These parts weigh 20 tons. So it's not an easy thing to 
just say we're going to take this technology forward or we're 
going to do this type of thing. We're not set up to do that.
    When you buy a machine that can handle those kinds of 
parts, you already have it full of work. You're not out looking 
for work to put on it. So when somebody comes in and says we're 
going to add all of this work into this country. Where are you 
going to put it?
    So we began to look at those processes and how do we take 
this and make this transfer? I've got some charts behind me or 
some pictures behind me that can show some of the things that 
can bring you up to speed on really what it is in the 
manufacturing process that makes this difference. One of the 
most common ones is a hub. This is where the blades attach to 
that spin and make the power.
    Today's technology, a hub, is manufactured with basically 
legacy equipment. This equipment has been around since World 
War II. There's 120 holes on each side of this that have to be 
machined. To pick this up and to turn it or to turn it on a 
turntable or to move it or whatever it becomes a real process 
in trying to do.
    We approached one of the larger wind manufacturing 
companies in the world. We said we'd like to bid on your hub 
business. We think we can do it better than anybody. They said, 
please try.
    We think we're the best in the world. We can do a hub in 24 
hours. We approached MAG and we said, we think that we see this 
opportunity. We want to do it.
    We want to go forward. How do we bring this process from 
the process of the legacy type process? I can do one-one 
machine, one part in 24 hours. If I want to do 100 of them, I 
have to have 100 machines if I have to do this in 24 hours.
    We came up with a concept that we can take 24-hour 
machining process and bring it down to 3\1/2\ hours. I can take 
50 percent of the cost out of this part. I can begin to drive 
wind turbines technologies where kilowatt hours begin to reduce 
dramatically because of the cost of what's taking place in 
these turbines.
    There are four major parts in a turbine that we're 
attacking. I've just brought one today because it gets kind of 
long when I go through all of them. But these are very large 
parts. They're very difficult to do. The capacity is not here 
to get these done.
    We can solve this issue and in solving this issue because 
these jobs, this capacity is not here. It creates jobs. This is 
something new. It has to be done. We're going to invent a new 
industry. We can become world class in this basically 
overnight.
    This will be the standard throughout the world. When 
somebody tells me that they are the best at 24 hours on this 
part and I can say I can reduce it to 3\1/2\. This is American 
technology. This is American ingenuity and thinking. This is 
what we do well.
    I love this country. It's an honor to be a part of this 
process and to transfer what we're doing to you is very, very 
important today.
    The bottlenecks that are in this area have got to be dealt 
with. This is, I think if you look at what people, at what the 
European manufacturers have tried to do by coming to this 
country. They looked at what's available. What kind of machines 
are available?
    When you do a part that's this large, you normally might do 
50 or 100 of them a year, maybe 200 a year. That is a big job. 
But these companies are coming to you saying we want 1,000 a 
year. Where do you put this work? Where does the work go that 
was already on that machine? It has to go somewhere else.
    Wow. I'm out of time.
    Blades, we saw a huge problem. The blade manufacturer 
today, the best blade technology in the world is handmade boat 
technology. It's as old as plastic boats.
    It's laid up by hand. Blade problems are becoming an issue. 
Blades have gone from 70 feet to 150 feet to 180 feet and 
they've now put up blades that are 400 feet long. The weight 
that comes on these blades that lays on the nose of that 
turbine is causing problems with the gears, the augers and all 
inside internal things.
    We have come up with a process. This shows these guys 
putting this on by hand. They're laying down this fiberglass 
and putting the resin on by hand with a scraper.
    We need to move this along. Just to give you one example of 
what's happening. Suzlon just set aside $139 million to fix 
blades that are already in the field for John Deere. It's in 
this country.
    One of the companies we work with has to touch every single 
blade that they work with, de-lamination, splits, cracks, 
coming apart. So we said, how do we? We went back to MAG, who 
has made the wings for Air Bus and they work on the F22. 
They're very, very strong in this carbon fiber industry. 
They're moving us in too.
    We can take this technology. We already know how to do this 
and transfer this right into this blade technology. We can 
automate and make it the world's best process out there. This 
is a machine type. You can see the difference as we show you of 
laying this out by hand where we do it all through C and C.
    One of the things that makes processes good, it makes you 
world class. It makes you better and brings in quality and 
reduce costs and brings up delivery is that I have a stable 
process that's the same every single time. That's what I can do 
with this type of machinery.
    The blades are going to give me 10 percent more energy 
efficiency, 30 percent less weight, superior strength, all of 
these problems that you're seeing in this type. If I can go to 
Suzlon and say, guess what we no longer have to pay out $139 
million in warranty costs because you've got blades cracking. 
I'm going to get their attention.
    We can make smart blades. We can put sensors all along this 
thing that says there's stresses on this or this is happening 
to it. We can read it in real time. We can look at it every 10 
minutes. We can look at every 10 days. We can look at it every 
10 months and know the condition of that blade.
    That blade can begin to speak back to us. We can put de-
icing on these blades so that we don't have ice throws and 
things like this. We can take this technology and begin to move 
it forward. We can move this technology into the automotive 
sector.
    I know I'm out of time. I'm sorry. But we can build so many 
jobs and so much opportunity through the things that we're 
going to do that are going to transfer into other units and 
other ways of doing things that aren't being done today.
    We're like Japan after World War II that we can look back 
and they can see the United States how we do things. They can 
say those are the problems they could have. We're not going to 
carry over those problems into this. We're going to start 
afresh and anew. We have that opportunity right now.
    I'm sorry that I've gone so long. But I appreciate you 
allowing me to speak today.
    [The prepared statement of Mr. Metts follows:]
     Prepared Statement of Jeff Metts, President, Dowding Machine, 
                            Eaton Rapids, MI
    Mr. Chairman, my name is Jeff Metts and I serve as President of 
Dowding Machining, a manufacturing company founded in 1965 and located 
in the great state of Michigan. On behalf my colleagues at Dowding/MAG, 
thank you for holding this hearing today to discuss a path forward in 
the new energy economy and the role that wind manufacturers can play in 
building a world class industry through a needed transformation of the 
American industrial base. We are particularly grateful to Senator 
Stabenow for helping make possible our participation today, and I want 
to recognize the assistance of her staff.
    In 1962, President Kennedy stood before a stadium full of students 
at Rice University. He described to them a vision; that the United 
States would begin a project to reach the Moon. I know he did not tell 
them it would cost more than the Panama Canal. I am also sure the 
President had no idea the technology advances and discoveries would 
touch every area of human life. Nobody could know what technology would 
be birthed from his reaching this unimaginable goal.
    To the students, it must have seemed impossible, we had only gone 
162 miles into space. The President told them we would go 240,000 miles 
from the Earth, in a 300-foot spaceship that had not yet been invented, 
made from metals that had not yet been discovered. Guided by a system 
that had not yet been developed, land them on the Moon and then return 
them safely to the Earth, and do it before the end of the decade.
    He also said to accomplish this ``We must be bold''. Kennedy 
changed the world and our lives, forever. We are once again at a 
turning point in our Nation's history, we can and will change the lives 
of our children and grandchildren, and once again, we must be bold.
    The United States may be in the perfect storm. Though it is a time 
of great trial, it is also a time of unparalleled opportunity. This 
economic downturn has put job creation on the mind of every citizen in 
this America. Today, this nation is in need of solutions that empower 
entrepreneurs and create new employment opportunities in our 
communities.
    We are confident, as Americans, we can solve this crisis better 
than anyone in the world. This nation will respond with the same 
innovation, ingenuity and excellence that put America in space. As part 
of our recovery effort, the President is calling for 20% of our energy 
needs to come from renewable sources by 2025. As a business owner, as a 
citizen, I am here today to support the effort to grow the renewable 
energy industry.
    As never before, there is now a public will to wean ourselves from 
foreign oil. ``Green'' has become as common a word as the ``Hot Dog''. 
As the nation searches for solutions and employment opportunities, the 
President has answered, and as part of the recovery plan, is calling 
for 20% of our energy needs to come from renewable sources by 2025. For 
once, we have immediate answers that seriously address the issues of 
less oil and the growth of our carbon footprint; that answer is 
renewable clean energy. Within that solution is the by-product of the 
creation of good high paying jobs.
    We are here with solutions, but like everyone else, we have a 
similar problem, there are no funds available. Our core business is off 
50%; we have gone from 250 employees to 147 in 6 months. We are not 
just positioning ourselves to ride out this storm. We are not quitters! 
We are not depressed or hunkered down waiting for this economy to turn 
around.
    We have invested millions of dollars into an idea that is now 
exploding into technology advances that are providing us a competitive 
edge in global clean energy markets. However, the current economic 
conditions make tax abatements, guaranteed loans and bank financing an 
unusable formula to leverage private investments. We are asking for 
grant money that will allow a real opportunity for unprecedented 
success in this industry.
    American innovators have designed energy technologies that will be 
the envy of the world. We will create tens of thousands of high paying 
permanent jobs here in the U.S. and deliver hope that there is a future 
with immediate employment opportunities and real solutions in renewable 
energy. Buildings will be built, employees will be hired, machines will 
be constructed and the spin-off from these technologies will create 
thousands of jobs in industries that haven't been invented yet.
    With a lack of oil and gas resources, Europe has been far in front 
of the U.S. in renewable energy for decades. In spite of our late 
start, we have become the world's largest installers of wind turbines 
in just a few short years. However, to meet the President's aggressive 
agenda, we will need to make fundamental changes in manufacturing 
processes. The United States installed approximately 4,000 wind 
turbines in 2008. During this same period, the European OEMs found it 
difficult to maintain supply flow to meet demand. In order to reach the 
goal of 20% renewable energy production by 2025, we need to increase 
the number of turbines installed from 4,000 to over 10,000 annually. 
Current production rates and serious quality issues must be addressed 
or we will fall short of the President's goal.
    Because demand is outrunning production, the European manufacturers 
are getting components from overseas. It is not the best choice, by any 
means, for delivery, cost or quality. The United States has some of the 
best engineering and manufacturing minds in the world. These 
individuals have cut their teeth in the most fertile, advanced 
engineering market in the world, the automotive industry. The material 
advances we are introducing to energy components can only help 
revitalize the ailing auto companies. Bringing them into the future of 
strong, light weight and low cost components. These advancements can 
help reduce that industry's tooling costs by 70%.
    These ideas will catapult the United States into this new energy 
market and immediately make us the energy standard in this major global 
market. Is there anything as powerful as the scientist, the engineer, 
and the entrepreneur all focused on the same motivation and goal? It is 
critical that we energize and involve them in this equation.
    Dowding Machining entered the renewable market two years ago; we 
quickly identified the problems in the supply chain and began 
transferring the automotive production model into wind energy. The U.S. 
suppliers seemed unwilling to consider anything outside of the current 
European model, even though it utilized sixty-year-old technology. The 
United States is in a position much like Germany and Japan after World 
War II. We have the opportunity to develop a new industry with advanced 
engineering technologies. We knew we could lower cost and improve 
quality and increase throughput by moving beyond legacy methods and 
developing state of the art machines and processes.
    The size of these structures has grown dramatically, from Kilowatt 
outputs to now Megawatt. Machines have also grown to accommodate these 
significantly larger parts. The skill level of the worker is also at a 
high level. Michigan and the automotive community are ripe with a 
workforce able to easily step in and make wind turbine production parts 
utilizing world class automotive standards. The average wind turbine 
contains over 8,500 separate components. With volumes approaching 
10,000 units a year, it only makes sense to adapt automotive and 
aerospace technologies to the manufacturing process of these parts.
    Dowding Industries has been in manufacturing since 1965. We have 
re-invented ourselves several times over the years as the economic 
conditions and part processes changed. We made a conscious decision 10 
years ago to find parts that would continue to be manufactured in the 
United States. We developed customers like Caterpillar, Cummins Engine, 
Borg Warner and others. Two years ago we invested 10 million dollars in 
a facility dedicated to renewable energy. We immediately advanced the 
thought process on manufacturing large components and brought it to an 
automotive mindset.
    We chose MAG as our exclusive machine tool supplier. We chose them 
because of their understanding of the large machine tool business and 
the character of the company. Now we have partnered with MAG, the 
largest builder in America and third largest in the world for machine 
tool development. We are jointly designing specialized machinery for 
the wind turbine market. Dowding/MAG of Michigan has an incredible, 
game-changing opportunity to become the first in the world to introduce 
advanced manufacturing techniques to the fabrication of wind turbine 
components.
    Our plan to modernize the machining of metal components will 
decrease machine time of wind turbine hubs from 24 hours to 3 hours and 
20 minutes, this 70% reduction in machining time will cut the cost of 
production up to 50%. We are developing this technology in the four 
largest components, weighing from 10,000lbs to 40,000lbs, and expect 
similar improvements in all four machining processes. Machining 
capacity and quality issues for these large components are a major 
constraint for this industry. This is a real solution that advances the 
U.S. and positions us to export this ``made in America'' competitive 
technology around the world.
    Our second area of improvement is the manufacture of the turbine 
blades. Blade failures have increased dramatically as turbines have 
increased in size. Until recently, turbine blades were 90 feet in 
length. Today, many blades will exceed 150' and offshore installations 
are expected to grow to 200' and beyond. A recent article on Suzlon, an 
Indian wind turbine manufacturer, states they will set aside $139 
million for warranty payouts on cracked blades which resulted in a 46% 
drop in stock share price this year. These type of failures are 
devastating to the growth of this industry. The technology advancement 
we are proposing, will eliminate these issues.
    Blade manufacturing today is as old as the fiberglass boat 
business. All over the world these blades are made by hand. The use of 
hand layup methods has resulted in extensive field failures. Blades are 
separating (de-bonding) at the adhesive joint due to improper 
application of adhesive. Misalignment of blade skins and delaminating 
between layers of the fiberglass composite are major failure modes. 
This is not a world class process and demands efficiency and 
improvement. This ``hand made'' process is currently the most advanced 
technology available world wide, until now.
    Continuous fiber materials as used in aerospace designs provide 
significant improvements in strength and durability. These high 
performance materials cannot be applied by hand. The key technology 
enabler that allowed today's aircraft builders to change from aluminum 
and metal structures to composites lies in the ability to precisely 
align a continuous fiber to meet structural load requirements. Once 
again, this cannot be done by hand.
    We are developing a fully automated process. This process will 
introduce the same carbon fiber technology used in the manufacture of 
modern aircraft. MAG pioneered the continuous carbon fiber placement 
technology and as a result of twenty-five years of research and 
development, they now lead the world in the aerospace composites 
market.
    MAG machines are currently used to manufacture many different 
components in the aircraft industry. For example, the majority of the 
Boeing 787 fuselage, a major section of the A380 fuselage, portions of 
the F-35, the A400M, the C-17, the F-18 E/F, the Eurofighter, the V-22, 
the F-22, the Ariane 5, and the A350, among others.
    Weight has become a major issue, affecting not only blade life and 
efficiency but also the ability of the structure to remain intact under 
increased stresses. The high weight of currently manufactured blades 
will shorten the useful life of yaw gears and other components. Repairs 
to wind turbines in the field are an extremely expensive proposition. 
We feel we can reduce the blade weight factor by 30%. This dramatically 
changes the life cycle cost of the entire turbine and lowers Kilowatt 
per hour cost.
    Our blade manufacturing technology will give us the flexibility to 
incorporate innovative design architecture such as the ``Twist Bend 
Coupling'' (TBC) that can improve the turbine wind capture efficiency 
up to 10% over today's blade capability. We will embed part health 
monitoring sensor technology, giving the turbine OEM and the wind farm 
operator real time feedback on blade stress currently being 
experienced. This same technology can also enable ``Smart Turbine'' 
feedback which allows the turbine to react to adverse spikes in the 
operating environment, such as high wind gusts. The ability to 
incorporate de-icing technology is enabled through the utilization of 
our advanced manufacturing techniques.
    The United States can and must be the birthplace of the lightest, 
strongest, lowest cost and most efficient wind turbine components in 
the world. These technology advancements will drive costs down, drive 
energy output up, improve quality, public safety and create excellent 
high paying American jobs.
    It will take 10 to 14 blade plants to meet the 20% renewable energy 
goal. Each plant will create 1,400 jobs plus an additional 1,400 
construction jobs, if new plants are built. The four machine metal 
components will need 9 to 12 facilities, each creating 150 jobs. We can 
manufacture the other 8,494 components in the existing automotive 
supply base already in place in the United States.
    But, all of these technology upgrades, all of the advancements 
lowering cost per Kilowatt hour, all of the warranty cost reductions, 
all of the productivity advances, all of the capacity advances, all of 
the thousands of high paying jobs, will remain just an idea if grant 
funding can not be acquired. The realization that the United States can 
become the world standard in wind turbine technology, outpacing the 
closest competitor by a decade of advances, again will remain just an 
idea if grant funding can not be acquired. For this to succeed we need 
the help of the government. NASA would have never happened without 
Federal dollars leading the way. Our military superiority would not 
exist if not for government intervention. The US will remain stagnant 
and follow other nations in the advancement of clean energy technology 
if additional federal funding is not quickly approved to leverage our 
technical and manufacturing capabilities. We have the drive, the 
ability, the technology and the passion to see this through.
    We appreciate your time and support in our nation's search for 
solutions. We are poised to assume the role that manufacturers can play 
in re-building a world class industry through a needed transformation 
of the American industrial base. We believe we can bring relief to 
Michigan, a state which unfortunately has been at the leading edge of 
the economic calamity ravaging our nation.

    [Attached graphics have been retained in committee files.]

    The Chairman. Thank you very much. That's very, very useful 
testimony from all of you. It's great to see your enthusiasm as 
Senator Stabenow indicated when she introduced you that you 
think we can make real progress here. That's what we're about.
    Let me just, before I start questions, just indicate Alicia 
Jackson is the person here on our staff who has done all the 
work on developing this. She deserves great credit for that.
    Let me ask a few questions starting with David Rodgers. I 
don't know if you're far enough into the new administration to 
really speak with a great deal of authority as to what is 
planned ahead. But a major thrust of this legislation is to 
dramatically increase the emphasis in this area, upgrade 
staffing, increase staffing, upgrade the funding, have a 
broader mix of skill sets that we make available here.
    Is that in the plans of the Department at this point or is 
it just too early in the administration to say with any 
conviction what's planned?
    Mr. Rodgers. Thank you, Mr. Chairman. We still are at a 
very early stage. As you know Secretary Chu still has a very 
slim team supporting him.
    But I think what we can tell you is that this is going to 
be a very important area. The Secretary has identified 
investments in energy efficiency as one of his top priorities. 
Bridging the linkages between basic science and applied R & D 
to develop new energy efficiency technologies will be a 
priority.
    You're going to see investments of the Recovery Act funding 
going into industrial efficiency technologies. So I think that 
the signals and the direction are very consistent with what you 
are proposing.
    The Chairman. Let me ask on international comparisons. I 
mean we are competing. Our manufacturing sector is competing 
with manufacturers worldwide. My impression is that we have 
given less attention to this issue of energy efficiency in 
manufacturing than some that we compete against and that we are 
behind some other countries in this regard.
    I guess I'd ask anyone on the panel whether or not that 
impression is accurate. Then second, what explains that? I mean 
is this something that the government has been asleep at the 
switch or is industry been asleep at the switch or why are our 
manufacturers behind the curve on giving attention to the 
problem?
    Dr. Savitz, maybe you could start out.
    Ms. Savitz. Yes. I think you can compare the steel 
industry, the energy used to produce a ton of steel here verses 
say, Japan or Korea or Germany. They are more efficient than we 
are.
    We've improved our----
    The Chairman. Are they just marginally more efficient or 
substantially more?
    Ms. Savitz. Ten to 15 percent. But we've increased. We've 
been closing that gap better over time.
    Part of it was that a lot of their steel mills aren't much 
newer. We've been taking and retrofitting our mills. When we do 
retrofit them we do put in energy efficient equipment, just as 
Mr. Harper talked about what Intel has been doing in theirs.
    U.S. steel industry has a goal, 40 percent reduction in 
energy use from 2003 and by 2025. So it's a matter of what 
natural resources. We also tend to make a lot more of our steel 
from scrap which is more efficient than started pure from iron 
ore. So that has helped us.
    So I think if you look at each industry in general as we've 
turned over our capital stock in the industry we are getting 
more efficient and closing that gap between the two. I think 
it's good that your bill, as I mentioned, has that comparison. 
We can then see is it matter of price of energy is higher in 
other countries than here until recently. That drives how you 
make your decisions.
    Then are there other policies and finances. I think part of 
your bill will be able to find that out and make the changes.
    The Chairman. Mr. Harper.
    Mr. Harper. Yes, a couple of comparisons. When we set about 
to create the digital energy solutions campaign, which is 
primarily focused in the U.S. but we've also got some 
activities in India and China and Japan and potentially in 
Europe as well. You know, just focusing on knowledge of and 
appreciation of the role of IT embedded in other technologies, 
embedded in other industry's products because that's what I 
know the best.
    There is a much greater appreciation of that in Europe and 
Japan than in the United States. I think a lot of it has to do 
with energy prices. Those two governments are much farther 
along in developing public policies to support IT as an 
infrastructural item in an energy efficiency strategy.
    But even in China where I spend some of my time, you know 
the Chinese economy is generally speaking much less efficient 
than even the U.S. economy. But probably for that reason and 
because of energy security concerns and air pollution and a lot 
of other factors the Chinese government is tremendously focused 
on the energy efficiency and driving the energy efficiency of 
their industries as a competitive differentiator through 
programs like the top 1,000 program that we've been somewhat 
involved in. So, you know, they reached out to us.
    They've reached out to a largely American dominated, 
Japanese dominated industry and asked for help in incorporating 
the ICT component of their energy efficiency activities. You 
know I think this bill and there obviously are a lot of fine 
programs already in existence to build on. But I think we do 
have lessons to learn from other countries, even as to say 
China which is less energy efficient than we are.
    The Chairman. Why don't you go ahead Mr. Zepponi and then 
my time will be up here. It already is. Go ahead.
    Mr. Zepponi. I'll just be very brief then. Food processors 
and I'd say this is true about manufacturing. Energy efficiency 
has two components. One is its productivity and productivity 
improvement. I think that American manufacturers and especially 
food processors have really focused in and honed in on leaning 
out their processes.
    But innovation is also a critical part of remaining 
competitive and looking to the future and an investment in 
innovation, innovative processes, in the manufacturing of new 
products, especially in an industry group like ours, food 
processing, a basic industry in the United States. We have 
focused our attentions on productivity improvements and 
improving and reducing waste.
    The issue that we need to be looking at right now is an 
investment in innovation so that we can continue to improve 
over the long term. This is about sustainability of our 
industries, not just focusing on reducing and reducing and 
reducing and leaning it out. We're investing.
    The Chairman. Alright.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman. Boy, Mr. Metts, 
I love your enthusiasm. You know, we can demonstrate to the 
rest of the world that we take the ideas that you have taken 
and used to build your competitive manufacturing strength. Then 
we're going to come back and do it twice as good. I appreciate 
that.
    Mr. Rodgers, I want to ask you very briefly about nuclear 
manufacturing. At one point in time we did pretty well here in 
this country. Now I think we look to Japan, quite honestly, for 
most of the component parts within that industry.
    Is there anything that you see encouraging that would 
suggest we might/may see a resurgence in the manufacturing of 
certain parts when it comes to the nuclear industry?
    Mr. Rodgers. I appreciate that. I think you've identified a 
critical issue that applies not only in nuclear, but in many of 
our other sectors where we have lost expertise overseas. We do 
not make enough of the technologies that we need here, 
batteries, biofuels, nuclear. These are all great examples.
    We would like to rebuild that workforce. We would like to 
extend the connections between basic science and applied 
science. I think that the policies that the Congress is 
establishing that point us toward emphasizing manufacturing are 
going to be critical to that.
    Senator Murkowski [presiding]. I appreciate that. Let me 
ask a question. I'll direct it to all of you.
    We had a hearing a few weeks ago looking at the nexus 
between water and our renewable energy sources and a 
recognition that with some generation of energy. Solar is one 
example. We actually use more water than we are able to create. 
These are in parts of the country, where we have real issues 
with water.
    Talk to me a little bit about the nexus of water to energy 
efficiency as it relates to the manufacturing. Dr. Savitz, I 
don't know whether that was addressed in the report that you 
prepared. Mr. Zepponi, I'd be curious to know within food 
processing how big of an issue is this?
    I'm trying to understand how we, when we look to the 
accounting for energy efficiency are we also making sure that 
we're not over utilizing another one of our resources, very 
precious water. Who wants to answer first?
    Dr. Savitz.
    Ms. Savitz. my report did not address water specifically. 
But what we did do is in our recommendations suggest that DOE 
look at portfolio mapping consider a greenhouse gas emissions 
and also other resources, water being one of them depending on 
the manufacturing process. As you get more efficient in any 
process the water you should decrease.
    I think we'll turn to food processing which does use a fair 
amount of water.
    Mr. Zepponi. Thank you very much for the question. It's a 
wonderful question. I think it's quintessential to our industry 
the nexus between energy efficiency and the use of water.
    Food processing and I'll extend that to agriculture, uses a 
lot of water. I'm going to use the term use as opposed to 
actually consuming that water. We don't consume as much as you 
would think. But we do use a lot.
    It's important. There's an indirect component and a direct 
component of water use. Of course you put water in products to 
move the product along, put it in the jars. That's a very small 
part of it.
    But in the area of waste water treatment for example, when 
the product comes off of the line we use a lot of water in the 
processing of our products. We reuse that by pumping it into a 
system, aerating it. We have systems in place that are these 
huge pumps that move that product around, the water around.
    Now we re-characterized a few years ago, actually I was 
part of legislation in Washington State that re-characterized 
that stream from waste water to actually it's not waste water. 
It's just nutrient water. It's water that we can use in the 
fields again.
    So we take that water and move it into the fields. That 
process actually helps us to re-grow and grow our products. So 
we're looking at the use of moving the water around. We're 
using variable frequency drive motors. We've replaced some of 
the single drive motors that we've had in the plants. That's a 
huge savings to us.
    We're looking at a super boiler for example. This super 
boiler has new technologies that actually captures the 
condensate of water in the boiler process. We use a lot of 
steam in a plant. Actually captures that condensate and reuses 
it more efficiently.
    So when you look at energy the biggest place, the most 
important place for energy efficiency is going to be in the 
movement of our water in our systems and actually application 
and distribution of that water throughout the plant.
    Senator Murkowski. Can I ask you, Mr. Rodgers. Within the 
Department then as you look to those energy efficient 
technologies, do you take into consideration water use as 
opposed to consumption?
    Mr. Rodgers. Yes, it is a very important part of our 
analysis. In general, energy efficiency is going to improve 
water utilization both directly and indirectly. In fact, when 
you reduce electricity consumption through energy efficiency 
you can directly save water at utility generation facilities. 
We have compiled a road map on the use of water and the nexus 
between water and energy. I'd be happy to provide that for the 
record.
    Senator Murkowski. I'd appreciate that. Thank you. Thank 
you, Mr. Chairman.
    [The information referred to follows:]

    The roadmap for the energy and water nexus has not yet been 
released. However, as soon as it is released we will be sure to provide 
it to the Committee.

    The Chairman [presiding]. Thank you very much.
    Senator Stabenow.
    Senator Stabenow. Thank you, Mr. Chairman. If I might just 
add my opinion, Mr. Chairman to your very important question 
about where we are in terms of what's happened in terms of our 
country or other private sector. I would just share one example 
where in the area of batteries, which we're not talking about 
specifically this morning but where every other country in the 
world decided a number of years ago, decade or more ago, to 
focus on public funding for battery technology for automobiles.
    So we see Japan and China and Korea and Germany has a great 
battery alliance. You go on and on and we chose not to do that 
and instead left all the innovation to industry in this 
country. Competing against the country's investments around the 
world which certainly has put us at a disadvantage in terms of 
where battery cells come from right now.
    So the good news is, is we've put $2 billion into the 
recovery package. This committee has been at the forefront of 
supporting the efforts to the loan programs and so on. So 
hopefully we can begin to get some of that back. But we, I 
believe our companies have been competing against countries. 
Hopefully now with the right policies we can change that.
    Thank you to all of you again. Mr. Metts, I wanted to ask a 
question related to your comments about the auto industry and 
wind industry. The fact that your engineering experiences from 
the auto industry have transferred into what you are now doing. 
I wondered if you could talk a little bit more about how the 
two industries relate and whether the auto industry could 
benefit from the new technologies that you're developing in 
wind turbines?
    Mr. Metts. It's interesting you asked that because exactly 
where we came from in this large machining, you know, I think 
people think that these kinds of things are all around the 
country. They're not. Michigan, Ohio, Indiana, Pennsylvania, 
we're set up to do this kind of work.
    We had a company that was an automotive company that went 
out of business and we hired all of their machinists. Excuse 
me, not all of them, we hired everyone that could handle our 
machines because we bought these large machines. They're, I 
mean, there's 106 feet long, this machine. It manufactures and 
makes parts as big as the center of this room.
    You don't just turn that over to anybody and that 
technology that they worked in for many, many years was a 
direct link. We hired the whole group of them.
    We didn't have to go through the learning curve of them 
learning how to do this process. They moved right in. On the 
other side when we come into this carbon fiber technology.
    When we put factories together like on Mound Road we've got 
a factory that we'd like to do this in. As they come in, all 
the automotive companies will come see what's going on. It's 
too big. When you start making something that's 150 feet long 
out of carbon fiber, they want to know what does it do? Can we 
do it here? Can we do it there?
    MAG is, right now, working with companies in Europe on this 
type of technology. It needs to be brought here. You're 
absolutely right there are so many of these technologies we 
think about here and somebody else does them. We need to do 
them.
    The types of things that we're talking about right now are 
game changing. They're not just small improvements. These are 
game changing improvements. We will be the standard around the 
world overnight.
    So those technologies will come in. Yet we've got some 
great ideas that we'd like to talk to them about. How do you do 
that transfer?
    With 8,500 part numbers in these turbines, automotive has a 
hard time letting go of automotive. But once you convince them 
to let go of automotive. This is the same technologies you're 
using. It's cutting metal. It's working with plastics.
    It's the same things you're putting in an automobile. It 
may be a little bit bigger. But this transfer is direct. We can 
put many, many people back to work in Michigan that are looking 
for another avenue to go in.
    Senator Stabenow. Thank you. When you're talking about 
other countries, I know one of the things that we've worked on 
with the recovery plan was a manufacturing credit which the 
chairman led and was pleased to partner in. In our efforts to 
get a 30 percent manufacturing credit on the books, this bill 
that we have in front of us will address financing through a 
clean energy fund which we're also putting into the budget 
resolution.
    I have that committee happening as well. I have to leave to 
go to in a moment. But I'm wondering if you might talk about, 
from a financing standpoint, why it's so important to have 
these mechanisms in place in order for manufacturers to be able 
to get the capital they need and be able to do what you're 
talking about.
    Mr. Metts. You can't get funding today. We can talk about 
this for hours. You just can't get it.
    If I go to the bank and ask them for the kind of funding 
that I need right now they're going to ask me to take a drug 
test. It just isn't working. Where do you go do this? How do 
you get the funding for the original set up?
    It's like McDonald's. How do you make the first one? You've 
got to get the first one. Now we can go back to that market and 
copy this and copy this and copy this. But it's creating that 
first one.
    I'm telling you we have international pressure on who is 
going to be first. Don't think that people aren't sitting 
around desks and offices with these kind of volumes looking at 
it and thinking they're not.
    We're going to put 300 mega watts in this country. They're 
going to 600 mega watts in China, Europe and this country. Giga 
watts, excuse me, a little bit bigger. That's a lot of 
turbines. That's in just wind.
    So the funding availability, it's almost like an automotive 
company saying we want to make a minor change to an automobile. 
It takes $150 million to do that. But look what you get from 
that. Look what comes out of that.
    For us to go find that funding is not available and to go 
and sell that technology, if you're working on loans, it takes 
it out of the marketplace. We have to look at this as how do we 
set up this process, No. 1? How do we get it in place that 
allows us to sell this in the marketplace? The second, the 
third, the fourth, the fifth, I know I can get private money 
that will want to do this.
    This is the first one is going to be the tough one. That's 
where we need your help. We need to find rent money to do this.
    Senator Stabenow. Thanks very much. Thank you, Mr. 
Chairman.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman. I'm going to 
express an opinion. But as the saying goes, I want to be clear 
that the opinion I'm about to express does not represent the 
views of the ranking member or necessarily the chairman.
    But when I hear Mr. Metts and others speak here about the 
supply chain potential it strikes me that this is the reason 
once again to seriously consider a renewable electricity 
standard for the country. Even if your State doesn't have 
abundant wind or sun, it may have abundant biomass. It may have 
abundant manufacturing capability and it will lift all of us. 
So thank you for indulging me with that point of view.
    If I might I'd like to turn to Mr. Harper for a question on 
a different, but it's a related topic I believe and that's 
energy use by the Federal Government, specifically in regards 
to IT, information technology. From what I've learned despite 
this committee's efforts and despite the administration's 
commitment to energy efficiency I keep hearing comments that 
the CIO is the Chief Information Officers, who make decisions 
about IT purchases, may still not consider energy efficiency 
and therefore the long term energy costs in their procurement 
decisions.
    Why don't they do this? It's my belief that it's because 
the energy cost of their systems aren't their responsibility. 
They get no carrot. There's no stick, no impact at all from 
these energy costs.
    I think to make real progress in this the CIOs will need to 
have some mix of accountability and responsibility for the 
energy costs of their systems. Would you comment and what are 
your views on this? If others on the panel would like to 
comment as well. I'd like to hear what they have to say.
    Mr. Harper. Thank you, Senator. I should say at the outset 
that I'm not an expert on the procurement process. But I have 
seen it a little bit up close and personal as a former Federal 
employee and a contractor at one point to the Federal 
Government. It's an imperfect process.
    I actually think in the case of IT and the energy component 
of IT that the situation isn't all that different in the 
Federal Government than it is in the private sector. You know, 
the focus today is mostly on the data center. The data center 
means different things in different agencies.
    It can be everything from a closet that serves a few 
offices, you know, with a couple of servers to, you know, the 
more traditional industrial scale data center that people 
generally have in mind. Just like in the private sector we 
found in the Federal Government, State governments as well, the 
CIO is responsible for specifying what equipment he or she 
needs and managing that equipment. Reliability is king when it 
comes to data centers.
    But they're typically not the ones who pay or see the 
electricity bill. So, I mean, this is a classic market failure 
that you see all over the economy when it comes to energy 
efficiency. It's why, for example, we believe you need some 
minimum appliance standards and other kinds of requirements 
like that even if you have a price for carbon or you have some 
other market pricing signal. You've got to somehow get around 
these barriers.
    I don't know exactly how you fix that in the Federal 
Government. I think in the private sector, I think 
increasingly, just CFOs being aware of this issue and being 
able to connect, you know and look under the rock so to speak 
as to where this expense is coming from and see the potential 
is key. You know, part of it is procuring more efficient 
servers. Our industry is turning out much more energy efficient 
technology, generation on generation.
    But with the data centers, again, where much of the energy 
is consumed it's not just about the individual pieces of 
equipment. It's about the architecture of the structure. It's 
how the equipment is cooled. You know, it's a systems issue.
    But somehow getting, closing the link between the CFO or 
the finance side of an agency and the IT side of the agency, 
whatever you could do would be helpful there.
    Senator Udall. Mr. Zepponi.
    Mr. Zepponi. I thank you very much for the question. Supply 
chain management is an absolutely critical part of energy 
efficiency. I mentioned in the testimony that management has a 
tremendous opportunity to approach energy efficiency as the 
metric in which to develop management systems to improve the 
entire production operations, including the supply chain.
    In food processing it's particularly important because 
we're carrying around bulky products and we need from the 
agricultural, from the farm, all the way through the system to 
Walmart. It's particularly important for us to pay attention to 
that supply chain. What we're really talking about is a change 
management question. It's not an engineering question. This is 
a change management question.
    When we signed on to the memorandum of understanding with 
the Department of Energy and the National Laboratories what we 
were saying is that these executives signed this document that 
said we make a commitment in our organizations to improve 
energy efficiency. They have made a commitment to improve 
energy intensity by 25 percent in 10 years and 50 percent with 
the investment of innovation technologies over the next 20 
years. That's what you need.
    You need to have top-down leadership and then training and 
process and empowerment within the organizations along with the 
other partners, with the private/public/quasi public entities 
in our regions to make this come to bear. That's how we're 
going to improve energy efficiency.
    Senator Udall. Mr. Chairman, are we going to have another 
round?
    The Chairman. We sure can. Yes.
    Senator Udall. That would be prudent.
    The Chairman. Let me ask a couple questions. See if Senator 
Murkowski has questions and then go back to you here.
    I wanted to ask Mr. Rodgers this issue about having this 
goal of a 25 percent improvement, a reduction in energy 
intensity in the next 10 years. That seems to be something 
everyone is sort of aware of that. Dr. Savitz, as I understand 
it, in the report that she just co-authored. They've concluded 
that that's not going to happen given the amount of resources 
we're committed in this area, given the way things are now 
proceeding.
    Mr. Zepponi, I guess your organization has independently 
endorsed the same objective for your organization. I'm just 
wondering how real is this? I mean we give a lot of speeches 
around the Congress here about how we're going to reduce energy 
dependence on foreign oil and all that by X amount, by such and 
such a date.
    Then there's when you get behind it and ask. I mean this 
happened in last couple, 3 years. I mean we see these 
statements coming out of the administration.
    I remember writing letters to Secretary Bodman and saying 
is there anybody who has a plan for how we get from here to 
achievement of this goal or is this just sort of a thrown out 
number? Do you have any ideas? Is there any plan for getting 
this 25 percent reduction in energy intensity in 10 years?
    Mr. Rodgers. Thank you very much, Senator. I think Dr. 
Savitz did summarize this very appropriately. Unless we have 
the right mixture of appropriations that leads to research and 
development and new technologies in the pipeline, unless we 
have the right combination of market-based policies and 
government policies, it's unlikely that our industrial partners 
can reach that goal.
    We do, however, have road maps for specific industrial 
sectors that show the capability, the potential to achieve the 
goals. We're working very hard to do that. We are signing up 
CEOs who want to make a commitment as indicated to achieve 
these goals.
    So I think the opportunity is there. I think you're taking 
a very important step by identifying the additional pieces that 
we need in terms of authorization, but the other pieces will 
also be needed.
    The Chairman. To the extent that changes in policy are 
required then Congress is required to weigh in on that. I 
certainly hope you'll advise us as to what those are so we 
don't wind up passing this bill and then coming back and having 
another hearing in 5 years or something. People say if you just 
would adopt the right policies we could do these things.
    Mr. Rodgers. Yes, sir.
    The Chairman. I don't know. Mr. Zepponi, do you have a 
real, in addition to having endorsed this ambitious goal of 25 
percent reduction in energy intensity in 10 years, 50 percent 
in 20 years, do you have a plan to get there or is this just 
sort of a notional idea in your organization?
    Mr. Zepponi. Mr. Chairman, again, I appreciate this 
question because yes, indeed we do have a plan. It's in the 
development stages. I think it's going to, we're going to adopt 
it.
    But before we agree to the 25 percent reduction in 10 
years, we actually did some background research. our staff felt 
that 20 percent was clearly reasonable just by using new 
technologies. Now remember the food processing industry has 
been around for a long time.
    There are many areas where we can improve. We have re-
torques that are the canning equipment that have been in place 
for 25, 30 years with very little improvement because they've 
been depreciated. They stay in place.
    When you compare that project change, if you will, to, you 
know, the energy efficiency gains that you'll get in replacing 
that piece of equipment to developing a new market for example 
or another capital investment internally it becomes a bit of a 
challenge. But we do have a plan. We have identified projects 
and processes.
    It's important to note that we feel that many of the 
advances we can get in energy efficiency are going to be in 
process improvements, the supply chain improvements that we 
discussed briefly earlier as well as using technologies. many 
of those new technologies are not new to other industries. For 
example we have rapid battery recharge in our forklifts. this 
is an important new technology that we're using.
    That was technology that was developed in the airline 
industry in order to allow those planes to be up in the air 
more frequently. They developed it because they had huge assets 
at hand. We took that technology and put it into our cold 
storage and in our warehousing facilities in order to make sure 
that we don't have to have these huge fleets creating this huge 
overhead for our company. So we're using those technologies 
from other industries that are out there we just need to bring 
them over into the industry.
    So we think we can do it. We do need to have an 
institution. We need to have an organization like an NWFPA that 
represents the industry and pulls them all together so that we 
have a cluster that's working toward that end. Thank you.
    The Chairman. Dr. Elliott, did you want to make a comment?
    Dr. Elliott. Yes, sir. Thank you, Senator Bingaman. One of 
the things I think that's important to understand is the issue 
of investment. We have not been investing in our manufacturing 
sector. You've heard this sort of all up and down.
    We're still using technologies we were using in factories 
that have been around for decades to manufacture products out 
there. We have stated the art of manufacturing in this country 
that is efficient. Dr. Savitz mentioned that in the steel 
industry.
    Some of the steel mills that are being constructed today 
are among the most efficient in the world. The problem we've 
got is again, this is depreciated. We're going to continue to 
run that plant until there is some incentive that is brought by 
the policy to basically make those new investments.
    Part of this actually has a hangover from the investments 
in the 1950s and 1960s and 1970s and when we changed the tax 
policies to discourage the investment in capital assets, we've 
seen a major reduction in that. In many cases we're just living 
off the depreciation of those investments in the past.
    What I think we need to do is go into a new period of 
investment if we want to change the future of the energy and 
competitiveness of the manufacturing sector.
    The Chairman. Very good.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman. Not a question, 
just a comment to follow up. Several of you, at least several 
of you have mentioned the fiscal environment that we're in. 
This is a time of tight credit markets.
    Dr. Elliott you point out that you haven't had the 
investment over a period of time. I think we recognize that we 
might be able to enhance budgets a little. We certainly can 
look at tax policies that encourage the manufacturing or re-
growth of manufacturing in this country, which is key to us.
    But I think we have gotten a little pragmatic about where 
we are right now and the fact that the capital markets are not 
conducive to doing what we're trying to do and meet these 
aggressive goals. I'm not suggesting that we pull back. But I 
think the Chairman's questions are very important.
    There has to be a level of pragmatism about where we are. 
Our financial markets are not where we want them to be right 
now. But I appreciate the comments and the testimony from all 
the witnesses today.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman. Again, I want to 
acknowledge the panel. The time you took to come to Washington 
and share a lot of good news and a lot of exciting potential.
    Dr. Savitz, I wanted to direct a question to you and also 
extend an invitation to the rest of the panel to respond once I 
share my question with you. It's important, of course, that we 
focus on improving end use efficiency which is the amount of 
energy that a product or a device consumes to produce heat, 
light or some other benefit. But I think there's some other 
efficiencies as well that we could focus on improving. I'm 
particularly thinking of distributed generation and storage 
technology.
    This could save manufacturers and residential and 
commercial buildings and other end users the need to purchase 
energy at peak load times. It could also help the grid, I 
think, be more secure and more stable. You mentioned in your 
report a few recommendations. If you wanted to elaborate I'd 
like you to do so and then extend the invitation to the rest of 
the panel.
    I would note that, for example, it has come to my attention 
there's a company in Colorado that and I'm not an engineer. 
I'll show you that very quickly when I describe what they do. 
But in effect at night when base load power sometimes goes 
wanting, but certainly there isn't a demand for peak power, 
they will freeze 500 gallon tanks of water which then during 
the daytime heat are used to cool buildings by the use of 
small, very efficient electric motors as opposed to the 
compressors and pumps and all that goes into a full scale air 
conditioning system.
    It's an exciting product and exciting concept. One that I 
want to see driven more into the marketplace. Would you comment 
and others.
    Dr. Savitz. Yes, I mean there are lots of technologies that 
like that. The whole distributed energy combined heat and power 
just can raise the efficiency from, you know a 35 percent 
turbine or to 70, 80 percent because you take that heat and you 
recover it either for your water which can be used for an 
industry process. It can be used for the heating in a 
McDonald's to do their cooking and their cleaning or you can 
use it for commercial buildings, as you say.
    That's a lot. I mean these are opportunities. Sometimes the 
distributed energy market at the smaller systems, these are in 
the hundreds of kilowatts rather than mega watts.
    There's a disincentive if you have to hook up the utility. 
They make it as hard so that you need those standards and you 
need, you know, interconnects. In some way to buy back the 
power.
    So this is type of thing that needs to be addressed across 
all of the sectors to really encourage more combined heat and 
power. That will make them economical for companies to do it. 
We've had the experience of Honeywell, very good micro 
turbines, but can't have different standards in every State to 
do that.
    Senator Udall. You are describing a variation of the net 
metering debate, I believe. Is that accurate?
    Ms. Savitz. That is feeding power in. But the whole net 
metering and I think some of the states are experimenting, just 
like you say. If you generate your use of power off peak your 
rates will be lower and so there's an incentive along that way. 
This is actually being able to hook the equipment up.
    Renewables will have some of the same problem. As you get 
smaller systems to connect into the grid you want to make sure 
that they're not disincentives and have some standardization. I 
think the looking at grid activities that the Stimulus package 
puts in and that the DOE is taking more aggressively should 
help that.
    Senator Udall. Dr. Elliott and then we'll go to Mr. Harper.
    Mr. Elliott. Thank you, Senator. This is something near and 
dear to my heart.
    Senator Udall. Good.
    Mr. Elliott. As the founding Director--founding President 
of the U.S. Combined Heat and Power Association a dozen or more 
years ago. So this is, as I said, something near and dear to my 
heart. I think this is an important thing to look at. One of 
the things that is the opportunity, as Dr. Savitz said, is to 
look at the efficiencies we can get through distributed energy.
    What is does is really require us to rethink the model of 
our electric utility system out there. Today we have a grid 
where we have generation, transmission, distribution and 
consumption. What we need to do is rethink that where we can 
have generation distributed near the point of use.
    We take the grid and the grid becomes a leveling system, 
the net metering idea. You take when you need. You give back 
when you have more than you have.
    I think that's one of the things that really is potentially 
very exciting about the whole smart grid concept. One of the 
problems that we have at ACEEE with the smart grid is it's 
currently looking at making the existing grid smart. What we 
think we need to do is also think about how do we make the 
existing grid smart so that both the power can flow from the 
generator to the consumer, but if you have distributed 
resources where the power can flow back.
    This is really important for intermittent resources like 
many renewables. So we need to think about how we use 
technology. To my colleague from Intel, one of the things 
that's important to understand is smart is going to be very 
important because information and communication technologies 
are the technologies that are really going to be able to 
transform our energy use.
    Many of the technologies we're looking at in food products, 
in the wind turbine manufacturing or any of the sectors that I 
work with. The most important thing that has transformed 
manufacturing in this country and globally has been the 
application of what we call sensors and controls. It's 
intelligence.
    Bringing smarts to the manufacturing plant because that new 
manufacturing plant, using CNC controls, using PLC systems, 
using the adjustable speed drives. That's really where the 
technology and intelligence are going to allow us to work 
smarter and work more efficiently. Part of that clearly is 
going to be that distributed aspect.
    Senator Udall. Has not the IT network itself undergone this 
same evolution?
    Mr. Elliott. Absolutely.
    Senator Udall. So there's an analog here that we and we 
know better where every bit and byte is. We can also begin to 
know where every electron is and where every wasted BTU is and 
put them to work in a real time way.
    Mr. Elliott. You are absolutely correct, Senator. I think 
what we want to do is when we smarten the grid we want to look 
to the experience that you mentioned with ICT. Because what we 
want to do is move from a grid that Thomas Edison would have 
been very comfortable with a century ago to a grid that is much 
more analogous to the internet.
    Senator Udall. Mr. Harper, did you want to comment?
    Mr. Harper. Yes. I mean----
    Senator Udall. I think the terminal bill should be for a 
little longer.
    Mr. Harper. This is right down the alley of our digital 
energy group. You know, we were basically created to increase 
the awareness of the role of ICT as part of a solution set for 
energy efficiency in climate. There's been a lot of focus, I 
mean going back to your original question, Senator.
    There's been a lot of focus in improving the energy 
efficiency of individual devices. Energy Star program is the 
best example of that. There's been tremendous progress in terms 
of the amount of work per unit of energy input that a 
microprocessor now exhibits compared to 5, 10, 15 years ago.
    But there's a much bigger leverage in--that's what we call 
the micro story. There's a much bigger leverage to be had in 
the so-called macro story. ACEEE did a report a little over a 
year, 15, 16 months ago that showed on average in the U.S. 
economy for every additional kilowatt hour consumed by a new 
ICT device everything from sensors to servers an average of ten 
kilowatt hours was saved in the broader economy through the 
energy productivity services of ICT.
    A lot of that, I mean, some of that is computers. But a lot 
of that is sensors and variable speed motors and you know, the 
equipment that the IT is embedded in. There's a much greater 
appreciation, as I alluded to earlier.
    In Japan for example where industry and the government have 
something called the Green IT Promotion Council. Which is both 
trying to improve the energy efficiency of the IT devices, but 
also trying to embed more intelligence, more smarts in the grid 
and in other parts of the Japanese industry and economy to 
further improve the overall energy efficiency. There's a huge 
amount of gain to be had there.
    The last thing I'll say is McKinsey did a report that's 
fairly famous showing the marginal cost of abating carbon 
emissions for different things you could do. You know, some are 
very expensive like carbon capture and storage. Some are 
actually cheap, free or save or create wealth for society.
    Most of the things on the curve that were either free or 
created wealth were energy efficiency activities or energy 
efficiency policies. A lot of those had an IT component. Again, 
it's not in my industry. It's the stuff my industry makes 
embedded in, you know, industries represented at this table 
that's the real story.
    Senator Udall. Thank you. I know others wanted to respond. 
I think my time is probably expired. But I----
    The Chairman. Go ahead if anyone else has----
    Senator Udall. I know Mr. Rodgers looked like----
    Mr. Rodgers. Senator, I think the technologies you 
described for distributed generation are really a win-win for 
industry and the utilities. Rightfully so--as this committee 
has looked at our power policy, which is set primarily at the 
State and local level--the focus has been on consumers building 
efficiency and encouraging utilities to promote efficiency.
    Too often industrial and manufacturing needs for power 
policy reform are neglected. I think distributed generation is 
the answer to how our manufacturing sector can help the utility 
sector promote energy efficiency. I think it's a very important 
area. I thank you for identifying that.
    Senator Udall. Mr. Metts, you had the last word last round. 
Do you want to have it again?
    Mr. Metts. Oh, dear. It's interesting the conversations 
because we see it. We're using it.
    You know when I was a kid if you got 70,000 miles out of 
your engine you felt pretty good. Today you'll drive it for 
300,000. This is all technology improvements and CNC type 
machine processes.
    You know we look today at what we want to do. If I told you 
in most of your manufacturing processes you're going to get a 
10-percent improvement. You'd jump up and down. That's a huge 
improvement.
    Because of technologies we can now take what is old boat 
manufacturing for a blade, bring it into. For instance, we 
think that we're pretty strong when we have a five axis machine 
which means I can operate that machine head on five different 
axes. What we're talking about machines that have 50 axes that 
operate.
    I mean this is stuff that humans can't even--it has to be 
done with this type of intelligence. But it's allowed us to 
move from a hand laid fiberglass now to a machine laid, 
perfectly laid, perfectly done, sensored system that gives us a 
10-percent improvement in energy production. These are the type 
of technology advancements that need to get here.
    They're not being done around the world. We don't take a 
step forward. We take a leap forward in world technology. We 
become the standard that needs to come here to get this done 
around the world.
    I'm tired of chasing the Japanese and the Germans. I want 
someone to chase us for a while.
    Senator Udall. We all are. We want them to eat our--instead 
of having our lunch eaten. We want to eat their lunch.
    [Laughter.]
    Senator Udall. But thank you. I would note too the 
important role that aerospace and aeronautics have played in 
the development of some of these materials and these processes. 
It speaks to the need to have a robust investment in those 
areas. I say that as a former chair in the House side of the 
Space and Aeronautics Subcommittee and a big proponent of NASA.
    But thank you all for being here. Two quick comments. In 
the sense I hear the potential for almost a self firming role 
that the grid could play. We hear a lot about, Mr. Chairman 
that the need to firm solar and wind and other renewables. But 
if you have a grid that's this smart you actually add that 
capacity, I think in that regard.
    Again I want to thank the panelists. It's been very 
crucial. In the end we want to make energy efficiency the 
sexiest thing around, don't we?
    We're still looking to make that case in a way. But 
Americans are frugal. We also can be profit good at the same 
time, but I think there's a way to make the sale here 
particularly when we see the advantages and the outcomes and 
the profit and the wealth creation that will evolve from all of 
this.
    Finally this is what we need to support the chairman and 
the ranking member is a very comprehensive approach on a new 
grid system and that will be a key part of the bill that we 
send to the floor.
    The Chairman. Thank you all. I think it's been very useful 
testimony. We will take it to heart and try to make some 
improvements on the legislation that we're moving ahead with. I 
appreciate your coming to testify today. That will conclude our 
hearing.
    [Whereupon, at 11:17 a.m. the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

    Responses of R. Neal Elliott to Questions From Senator Bingaman
    Thank you for the opportunity to testify and to respond to your 
questions. I would like to offer one clarification and amplification to 
my testimony. I neglected to mention the industrial efforts that have 
been ongoing at the Environmental Protection Agency (EPA) in the policy 
and voluntary programs offices. These activities, which have also 
experience funding constraints represent important parts of an overall 
government response to energy efficiency and sustainability of our 
manufacturing sector and should be receiving additional funding, as 
well as the activities at Commerce and Energy.
    I look forward to the opportunity to respond to any addition 
questions or amplifications that the committee may have.
    Question 1. Dr. Elliot, in your testimony you state that the 
pipeline of R&D projects is running dry. What do you see as the 
immediate steps that should be taken to refill this pipeline? Are there 
specific industries that we should be focusing on?
    Answer. The Department has already taken an important first step by 
allocating $50 million of American Recovery and Restoration Act of 2009 
(ARRA) funding to existing, unfunded research agreements. It is 
important that funding continue to be provided for research in future 
as was envisioned by the provisions in Sec. 452 of the Independence and 
Security Act of 2007 (EISA). The industries that have existing 
cooperative research agreements with DOE's Industrial Technology 
Program (ITP) represent the first place that funding should be directed 
because they have the research roadmaps in place that can make best use 
of the funding immediately. Other industries can be added as funding 
becomes available and the industries can be engaged by the Department.
    Question 2. Dr. Elliot, what industries do you believe have the 
most to gain from energy efficiency improvements? What industries will 
need technological breakthroughs to reach significant energy savings 
and greenhouse gas reduction targets?
    Answer. The energy-intensive industries that the ITP program has 
historically worked with represent among the biggest opportunities for 
energy efficiency, and could the ones that will be most adversely 
impacted by climate policies. There are a few energy intensive 
industries that have not historically participated in the ITP program, 
including petroleum refining, cement and food processing that might 
also benefit from support from the ITP program. As was noted at the 
hearing, food products has begun to receive attention from the Program 
at the regional level, which ACEEE believes is the appropriate point of 
engagement because of the diversity of the food products industry 
between regions. With respect to the other two industries, I know that 
ITP has reached out to these industries in the past, but has not found 
them disinterested. The EPA Energy Star Manufacturing program has been 
more successful in engaging them, which suggests that different 
industries may require different program approaches to meet their 
needs.
    Question 3. In your opinion, what do believe are the biggest 
roadblocks to achieving significant increases in industrial energy 
efficiency? What does this bill do or not do that could help remove 
some of those roadblocks?
    Answer. The most significant challenge to making major increases in 
industrial energy efficiency is our aging industrial infrastructure. 
Much of our existing infrastructure was built before the 1980s, and is 
now nearing the end of it technical life. Many of our economic 
competitors have encouraged investment over the past decade in their 
manufacturing sectors so their more-modern manufacturing infrastructure 
provides them an energy efficiency and productivity advantage over our 
domestic industry. While we can make important incremental improvements 
in our existing infrastructure, we will never be able to realize the 
efficiency opportunities that would results from rebuilding our 
manufacturing using the most current and efficient technologies and 
practices. As an example of this vintaging challenge, the average 
industrial boiler is over 50 years old with an efficiency of less than 
70%, while the advanced ``super boiler'' is approaching 90%, as are the 
most current combined heat and power (CHP) systems.
    The challenge for domestic manufacturing is that they need to be 
assured that they will have a robust marketplace for their products in 
the coming decades since the investments in new infrastructure is paid 
back over decades not quarters. Certainly the current financial crisis 
has impacted their ability to invest by removing demand for 
manufactured goods as well as access to capital. In the short-run the 
access to financing provide by S. 661 will provide an important bridge 
until the financial markets can recover, and provides the workforce and 
net technologies that represent critical building block for the new 
infrastructure. What is needed in addition is a change in investment 
policies that encourages the replacement of existing vintage 
manufacturing capacity with new state of the art capacity. This 
investment can occur at both new ``green-field'' and existing ``brown-
field'' sites.
    Question 4. S. 661 directs DOE to complete an assessment of 
industrial energy efficiency technologies that are not widely 
implemented within the U.S. and to compare adoption rates to those of 
other countries. Could you speak to the main reasons that certain 
technologies are widespread in industry elsewhere, but not within the 
U.S.? Is it simply a matter of higher energy prices in other countries?
    Answer. The proposed global assessment of available manufacturing 
technologies represents an important contribution to the discussion of 
how to make our domestic manufacturers more efficient and competitive. 
The reasons that these technologies are not more fully implemented are 
complex, and to some extent industry specific. Among the major reasons 
however are the vintaging of our manufacturing capacity as discussed 
above, where the manufacturing stock of many our economic competitors 
is much more modern and has been better able to implement the most 
current technologies.. This aging infrastructure is complicated by 
volatile energy prices, particularly for natural gas in this country 
that make energy savings investments difficult to commit to. While 
energy efficiency investments do reduce the exposure of companies to 
energy price volatility, uncertainty discourages investments by 
industry for the long-term when companies must consider whether they 
will continue operate a particular domestic facility or shift 
production to another, more modern domestic or foreign facility. This 
lack of investment is not so much motivated by higher energy prices in 
other countries, but rather more stable prices.
    Question 5. It is clear that if the U.S. is going to be committed 
to reducing its energy consumption and meeting greenhouse gas reduction 
targets, industry will have to play a large role in meeting those 
goals. What is the level of effort that we are going to need to 
transform our industry to use less energy and reduce emissions, while 
increasing its competitiveness? How far does S. 661 go in meeting these 
goals? And what other steps are needed?
    Answer. As is noted in my response to question 3, a rebuilding of 
the domestic manufacturing infrastructure will be critical to achieving 
our climate goals as well as insuring the long-term health of the 
manufacturing sector. As noted, S. 661 begins to assemble the critical 
building blocks that are necessary to effect this change. Climate 
legislation may represent the second part of the puzzle by creating the 
mechanisms necessary to start our manufacturing sector on an investment 
path that will provide us with a manufacturing infrastructure for a 
21st century world where energy productivity and sustainability will be 
needed to compete globally while meeting our ambitious climate goals. 
It is important to remember that we will need a healthy manufacturing 
sector to produce the sustainable energy products and materials that we 
will need to improve global energy efficiency and empower our next 
generation of energy supply technologies including renewable, clean-
fossil fuel and nuclear.
      Response of R. Neal Elliott to Question From Senator Lincoln
    Question 6. I appreciate your optimistic outlook for the 
manufacturing sector and agree that we should be forward-thinking about 
this industry's recovery and use this economic downturn as an 
opportunity for improvement. You state in your testimony that a more 
sustainable industrial base must be built now, but at the same time we 
recognize that credit is limited. How do you believe that the access to 
capital granted in this manufacturing efficiency legislation will help 
incentivize the kind of growth you would like to see occur? How do you 
think that this legislation will help eliminate the uncertainty that is 
currently preventing firms from investing in energy efficiency?
    Answer. I feel that the access to funding provided by this 
legislation represents a bridge for manufacturing until the private 
financing market recovers. What ultimately will be needed are 
complementary measures to those provided in S. 661 that develop new 
technology and human capital develop that will encourage large, long-
term investments in our manufacturing sector that will ensure its 
economic competitiveness in a carbon constrained global economy.
    Responses of R. Neal Elliott to Questions From Senator Murkowski
    Question 7. Please describe whether water conservation and less 
energy intensive water measures should be funded through the Department 
of the Energy, in particular programs that promote energy efficiency.
    Answer. Water efficiency is a critical aspect of industrial energy 
efficiency for a number of reasons. Water is increasing the most 
limited resource that is required for the manufacturing sector, and 
competitions between manufacturing, power generation, agriculture and 
domestic consumption. Manufacturing water efficiency has the potential 
to reduce water use by both greater water efficiency in manufacturing 
processes and by reducing demand for electricity associated with water 
and wastewater treatment, which further reduces demand for water in the 
power generation sector. It is thus important that ITP consider water 
efficiency as an important category of energy efficiency measures.
    Question 8. Is there a cost-effectiveness methodology for water 
measures comparable to that employed for the consideration of other 
energy efficiency measures?
    Answer. As noted in my response to question 7, the estimation of 
the impacts from water efficiency and energy efficiency are somewhat 
more complex than for straight energy efficiency. My colleagues at 
Lawrence Berkeley National Laboratory (LBNL) have done some work on 
exploring this water-energy ``nexus'' that the ITP program can draw 
upon.
    Question 9. Please describe the programs and measures currently in 
place that are likely to save water and energy.
    Answer. The ITP program has had a low-level effort on manufacturing 
water efficiency for several years. A more concerted focus on this 
topic would likely yield significant benefits. At this point the 
technical leadership in this area has come from state efforts in New 
York and California in concern with the national labs that could be 
leveraged to build a more robust national effort. Similarly, on-going, 
low-level efforts at EPA could complement the efforts from DOE.
    Question 10. Please describe opportunities that you have pursued to 
save energy or water. Such measures could include, conserving water; 
switching to less energy-intensive water sources, or increasing the 
energy efficiency of current water deliver or treatment processes.
    Answer. Several years ago, ACEEE lead a road-mapping exercise 
funded by a range of interests including, CEC, EPA and NYSERDA to 
identify opportunities for cooperation and coordination between the 
energy efficiency and water communities. These efforts have lost much 
of their momentum as other water related issues such as security of 
water supply have attracted the attention of the experts. The primary 
focus of these efforts have devolved into a focus on the energy 
efficiency of wastewater treatment, focusing particularly on pump 
system efficiency, rather than on the overall water-energy nexus.
    Question 11. Please describe briefly how, in your opinion, this 
bill best improves upon the industrial sector and how it will work 
toward our overall goal of being more energy efficient.
    Answer. As noted in my testimony, ACEEE feels that S. 661 provides 
important new strategic direction to the ITP program, address some of 
the existing short-comings in existing program authorization that have 
existed for decades, and provide important new focus on what is needed 
by the manufacturing sector to position itself for responding to 
opportunities for new investment that are likely to present themselves 
in coming years. What this bill does not do is remove the structural 
disincentives to investment in new manufacturing capacity as was 
discussed in my response to question 3.
    Question 12. You cite numbers from the National Association of 
Manufacturers that the U.S. share of global manufacturing output has 
remained constant over the past decade. Why is there a perception that 
U.S. manufacturing has been in decline?
    Answer. Over the past three decades we have seen a dramatic 
expansion of the share of the U.S. GDP coming from finance. Until 1985, 
finance never accounted for more than 16% of the corporate profits. By 
2007 the finance accounted for more than 41%. As a result of the rapid 
increase in finance activity, the relative share of domestic activity 
from manufacturing decreased, even as the actual level of activity in 
manufacturing remained relatively constant. In addition, as labor 
productivity in manufactured increased dramatically over the same 
period, the share of the workforce employed by manufacturing declined 
even as production increased.
    Question 13. You testified that clarity of the DOE's Industrial 
Technologies Program's goals and missions have been lost due to lack of 
senior leadership. How can this framework be restored?
    Answer. We already have seen a shift in the leadership and its 
willingness to allocate both ARRA funds and FY 2009 funding to ITP is 
an important first step. I feel that the re-establishment of an 
external advisory committee for the program as is proposed in S. 661 
will also be an important step in institutionalizing a new direction 
for the program, as will regular oversight by the Committee.
                                 ______
                                 
     Responses of David Zepponi to Questions From Senator Bingaman
    Question 1. In your opinion, what do you believe are the biggest 
roadblocks to achieving significant increases in industrial energy 
efficiency? What does this bill do or not do that could help remove 
some of these roadblocks?
    Answer. I believe the single biggest roadblock to achieving 
significant increases in industrial energy efficiency is the economics 
of implementing energy efficiency. Access to capital, the cost of 
capital, and risk tolerance influence a company's willingness to invest 
in energy efficiency measures. Investments in energy efficiency need to 
come close to the payback thresholds or hurdle rates of other projects 
and priorities competing for scarce capital. Thus, many companies will 
only invest in energy efficiency measures that have a payback period of 
one to one-and-a-half years.
    To achieve significant increases in industrial energy efficiency, 
this economic roadblock must be overcome, which means we need to impact 
the economics of energy efficiency. The best solution is to provide 
financial incentives that improve the economics of investment in energy 
efficiency. Incentives could take several forms and a portfolio 
approach, rather than one-size-fits-all, would allow companies to 
select those that best fit their individual circumstances. This 
portfolio could include grants, loans, and tax credits which will all 
favorably impact the economics of energy efficiency by reducing the 
cost to industry. Further, companies should be able to combine 
incentives to further improve economics.
    Section 2 of S.661 creates a revolving loan program for 
implementation of commercially available energy efficiency technologies 
and processes. We believe this loan program could help remove the 
economic roadblock for many companies. For some companies, up-front 
funding is critical and will make the difference whether energy 
efficiency is implemented or not.
    For many more companies, tax incentives provide the impetus to 
overcome the economic hurdle. The potential savings from the tax credit 
are included in the project cost calculations, reducing overall project 
costs and/or payback periods. S.661 does not include a recommendation 
for a tax credit program. We would like to see the Senate Energy and 
Natural Resources Committee work with the committee of jurisdiction on 
tax incentives for industrial energy efficiency. I believe federal tax 
credits for industrial energy efficiency would provide needed incentive 
to significantly increase industrial energy efficiency. Federal tax 
credits are available for renewable energy and vehicles but not for 
industrial energy efficiency. A program that NWFPA members have found 
to work very well is Oregon's Business Energy Tax Credit (BETC), which 
provides a 35% tax credit for industrial energy efficiency. An increase 
of this credit to 50% is currently being considered by the Oregon 
legislature.
    Some have suggested that the way to promote energy efficiency would 
be to dramatically increase the cost of energy. This would improve the 
economics of energy efficiency investments. But, it would also have 
more immediate and adverse impacts on company economics that I believe 
would result in production cut-backs and employee lay-offs at best and 
at worst a substantial number of plant closures. Limited capital would 
not be spent on energy efficiency. This approach of increased energy 
prices would cause U.S. manufacturers to become less competitive and 
would not result in increased energy efficiency.
    Lack of corporate-level understanding and awareness of the benefits 
of energy efficiency and support for implementation of energy 
efficiency projects in their plants is another key roadblock. NWFPA's 
experience has shown that without corporate-level commitment, energy 
efficiency is not implemented or sustained. Further, when energy 
efficiency is seen as an end unto itself, other business needs often 
take priority. The fact is that implementation of energy efficiency can 
improve plant productivity, product quality, reliability and safety and 
reduce greenhouse gas emissions. I believe a company's commitment to 
energy efficiency is a good indicator of the ``health'' of the company. 
The issue is then, how do we convince corporate executives that energy 
efficiency makes good business sense?
    Education and outreach targeted at industry executives will be key 
to overcoming this roadblock. We have found that communications among 
industry executives are most influential. S.661 sets up a framework 
within which an executive education and outreach program could be 
developed and implemented.
    A third roadblock is shortage of trained technical personnel that 
focus on energy efficiency. The cause of this shortage is two-fold. 
First, skilled and knowledgeable workers are in short supply. Fewer 
students are graduating with engineering degrees and fewer engineering 
students are attracted to manufacturing. In addition, skilled operators 
and maintenance workers are necessary to keep plants operating 
efficiently. Plants have become automated and equipment is now driven 
by electronic systems and advanced technologies that require advanced 
skills. Too few technical programs and too few trained workers are 
available to supply industry's needs.
    The second cause is that even if skilled and knowledgeable 
personnel are available, most personnel at manufacturing plants are 
busy maintaining production. Few plants have the financial resources to 
devote personnel to energy efficiency. Energy efficiency becomes a low 
priority in the hierarchy of plant production concerns. We have found 
that when personnel are designated to address energy efficiency, energy 
savings are achieved and sustained.
    The funding provided in S.661 for the internship programs of the 
Industrial Assessment Centers will provide a pool of trained engineers 
in industrial energy efficiency that will become available for 
employment by industry. It will also directly expose students to 
manufacturers and the manufacturing industry. The expansion of the 
Industrial Assessment Centers is also critical. These centers provide 
the technical resources that many small to medium-sized companies 
cannot provide through their own personnel for the reasons I discussed 
above. Continued support for existing Industrial Technologies Program 
energy efficiency training and information and technical resources is 
also critical.
    Question 2. S.661 directs DOE to complete an assessment of 
industrial energy efficiency technologies that are not widely 
implemented within the U.S. and to compare adoption rates to those of 
other countries. Could you speak to the main reasons that certain 
technologies are widespread in industry elsewhere, but not within the 
U.S.? Is it simply a matter of higher energy prices in other countries?
    Answer. Higher energy prices in other countries clearly have been a 
factor in broad implementation of energy efficiency technologies. It is 
not the only factor, however. Other countries have been more highly 
regulated. However, government subsidies, incentives and programs to 
promote industrial energy efficiency have been more readily available 
in other countries for quite some time. The roadblocks I discussed in 
my response to question number one are key factors. Cultural 
differences are another factor. For example, in Europe, low grade heat 
(100-120 F) produced by industrial plants is typically recovered to 
provide heating for residential housing. Such opportunities are not 
available in the U.S. because most Americans prefer not to live next to 
industrial plants.
    Question 3. It is clear that if the U.S. is going to be committed 
to reducing its energy consumption and meeting greenhouse gas reduction 
targets, industry will have to play a larger role in meeting those 
goals. What level of effort are we going to need to transform our 
industry to use less energy and reduce emissions, while increasing its 
competitiveness? How far does S.661 go in meeting those goals? And what 
other steps are needed?
    Answer. A considerable level of effort will be needed to transform 
industry to use less energy and reduce emissions, while increasing 
competitiveness. The global playing field is not level. Environmental 
and other regulations, employee wages, healthcare costs, and production 
costs may be significantly lower in other countries. The result for 
U.S. companies is lower prices for American goods and reduced profit 
margins. Available capital will be allocated to the most critical 
needs.
    Many individual companies have adopted energy efficiency goals and 
implemented programs. However, to transform industry, industry-wide 
approaches and aggressive steps to overcome the economic roadblocks I 
discussed in my response to question number one must be taken. 
Government financial and technical assistance to support these efforts 
is crucial.
    NWFPA has the most significant energy efficiency initiative of any 
trade association in the U.S. In January of this year, our members 
adopted an industry-wide goal to reduce energy intensity by 25% in 10 
years. It took us five years of intensive effort and an important 
partnership with the Northwest Energy Efficiency Alliance (NEEA) to 
bring us to this point. The roadblocks I discussed earlier are very 
real. Although Northwest food processors have come a long way as an 
industry, we will need assistance to achieve our energy intensity goal.
    Section 5 of S.661 calls for research to establish an industry-
specific road map process. NWFPA, with the support of NEEA and U.S. 
Department of Energy completed a road map process and is currently 
preparing a road map document that includes actionable plans to achieve 
our energy intensity goal. Northwest food processors are unique in that 
they have the NWFPA organization as the focus for development of an 
energy efficiency goal and road map. Most industries lack this 
infrastructure. The road map process, coupled with financial and 
technical support, could provide the necessary infrastructure to move 
regional industry sectors in this direction and contribute to 
transformation.
    In addition, to transform industry, industry leaders and executives 
must be committed to energy efficiency. They must recognize that energy 
efficiency makes good business sense. The roadmap process also could be 
an opportunity for outreach to and networking among industry leaders.
     Responses of David Zepponi to Questions From Senator Murkowski
    Question 4. Please describe whether water conservation and less 
energy intensive water measures should be funded through the Department 
of Energy, in particular programs that promote energy efficiency.
    Answer. I understand that the Environmental Protection Agency's 
Energy Star program includes some information on water/energy 
efficiency improvements and technologies and that the EPA also has 
water conservation programs. Significant water savings can be realized 
as a result of energy efficiency efforts. The Alliance to Save Energy 
coined the term ``watergy'' to describe the strong link between water 
and energy in municipal water systems. I think this term could be 
applied to food processing systems as well, since many food processors 
use very large amounts of water (100s of millions of gallons) in their 
processing.
    I think it makes sense to fund industrial water conservation 
through the U.S. Department of Energy. The major water uses in food 
processing are for washing, conveying (using a moving stream of water 
instead of a conveyer belt), blanching or cooking, and cooling the raw 
material. High temperature and/or high pressure water is also used in 
cleaning and sanitation of equipment and facilities as well as product. 
Motors, pumps and boilers are used to heat or distribute this water. 
And, since motors, pumps and boilers are the major energy users in the 
processing facility, they are the prime targets for energy efficiency. 
Actions and technologies that will increase energy efficiency will also 
increase water efficiency. A water efficiency program could very easily 
be incorporated into an energy efficiency program since the skills, 
knowledge and solutions are essentially the same.
    Question 5. Is there a cost-effectiveness methodology for water 
measures comparable to that employed for the consideration of other 
energy efficiency programs?
    Answer. Yes, the methodology is essentially the same, a cost-
benefit analysis and an estimated payback period for implementing 
efficiency. An additional cost consideration for water is the cost for 
its disposal. In most food processing plants (non-beverage processors), 
water is used in the process but not consumed. Therefore, this 
``process-water'' must be disposed. Many Northwest food processors 
discharge their process water to publicly operated treatment works. 
Others pre-treat and land apply the process water, while others treat 
and discharge directly to waterways. All of these disposal methods are 
regulated and include stringent conditions, permit fees, and penalties 
for noncompliance.
    Question 6. Please describe the programs and measures currently in 
place that are likely to save water and energy.
    Answer. Clearly, programs and measures that focus on the big energy 
users--motors, pumps and boilers--are likely to save water and energy. 
The U.S. Department of Energy's Industrial Technologies Program has 
information, training and online software tools for motors, pumps, 
boilers and other key systems.
    Question 7. Please describe opportunities that you have pursued to 
save energy or water. Such measures could include, conserving water; 
switching to less-energy intensive water sources, or increasing the 
energy efficiency of current water delivery or treatment processes. 
Please describe briefly how, in your opinion, this bill best improves 
upon the industrial sector and how it will work toward our overall goal 
of being more energy efficient.
    Answer. The following are a few of the broad categories of measures 
that our members have pursued to save energy and/or water:

          a. Optimize operation and maintenance--this can have a 
        radical impact on energy and water savings.
          b. Install energy efficient motors--applies to both energy 
        and water (motors run pumps).
          c. Install efficient pumps (about 75% of the life-time cost 
        of a pump is energy).
          d. Optimize compressed air systems (right-sized compressors, 
        right-sized air pressure, and repair all leaks).
          e. Optimize water systems (right-sized pumps, right-sized 
        pressure, and repair all leaks).
          f. Optimize refrigeration systems (optimize compressor, 
        evaporator and condenser efficiencies, repair all leaks, reduce 
        refrigeration loads through building insulation and efficient 
        lighting).
          g. Optimize energy systems (power factor improvements, gear 
        boxes, reduce transformer and cable losses).
          h. Utilize heat recovery devices whenever possible (e.g., use 
        waste heat to heat water or reuse hot water).
          i. Optimize boiler systems (insulate, reuse steam condensate 
        and boiler blow-down water, reuse hot water where feasible).
          j. Use of high efficiency boiler technology (NWFPA is working 
        with US Department of Energy and the Gas Technology Institute 
        on demonstrations of this new technology in our member plants).
          k. Use of direct fire heat sources where practical (e.g., 
        using natural gas to directly heat a dryer instead of using 
        natural gas to heat water to produce steam to heat the dryer, 
        which is much less efficient).
          l. Use metering and automation controls to adjust scheduling 
        and operations to optimize systems and to meet compliance or 
        operational targets.
          m. Use cooling towers to recycle non-contact cooling water.
          n. Make energy efficiency and water efficiency criteria when 
        purchasing new equipment.
          o. Develop and implement a continuous energy improvement 
        plan.

    In addition, NWFPA is currently working with Portland General 
Electric to develop an Energy and Water Efficiency seminar for food 
processors that will stress the synergy between energy efficiency and 
water efficiency and present measures and technologies that apply to 
both.
    In my opinion, S661 best improves upon the industrial sector and 
promotes energy efficiency by providing information and technical 
support as well as financial support for the industrial sector.
    Question 8. Please describe recent and proposed changes to federal 
law that are likely to impact the way your members conduct their 
business.
    Answer. National subsidies and tax credits for corn ethanol 
production have adversely impacted many food processors. Diversion of 
cropland and corn for ethanol production has increased the cost of raw 
product to food processors. This has reduced profit margins and 
increased food costs to consumers.
    The legislative directive to the Environmental Protection Agency to 
develop a greenhouse gas reporting rule has resulted in a lengthy and 
detailed proposed rule, which was published on April 10. NWFPA is 
currently reviewing the rule and assessing its impacts to our members. 
The rule will impose new record-keeping, data collection and reporting 
requirements on food processors that could be extremely costly and 
resource intensive. As I pointed out in my response to question number 
one, lack of personnel is a roadblock to energy efficiency. Personnel 
will need to be allocated to this reporting, since it will be a 
mandatory requirement.
    National emissions caps and an emissions trading mechanism could 
have significant impacts on NWFPA members. We believe that such a 
system could result in significant increases in energy prices and 
competitive disadvantages to U.S. manufacturing. If not properly 
structured with safeguards against manipulation, this market could also 
produce economic winners and losers.
    NWFPA supports efforts to reduce greenhouse gas emissions levels. 
We believe the focus must be on measureable and attainable carbon 
reduction strategies, such as increased energy efficiency and energy 
conservation that will provide real results and benefits. We advise 
that other strategies to reduce greenhouse gas emissions, such as cap 
and trade or carbon taxes be thoroughly evaluated for their costs, 
benefits, and unintended consequences.
    Question 9. Please describe the financing you believe is needed to 
meet your goal to reduce member-wide energy intensity by 25% in 10 
years.
    Answer. At this point, we don't have an estimate for the cost to 
achieve the 25% reduction goal. We are only beginning to investigate 
the actions and technologies that would be required to achieve our 
goal. We have begun a project, which will be completed this summer, to 
determine our current member-wide energy intensity. This will be the 
baseline against which we will reduce our intensity. We will then have 
an energy intensity target (25% below the baseline) upon which we can 
design a long-term energy efficiency implementation plan. We are also 
developing a project to conduct an energy audit at every member plant, 
which will produce a list of energy efficiency opportunities for each 
plant. These opportunities will be incorporated into the implementation 
plan. At this time, we will have good data to use in determining the 
cost to achieve the energy intensity goal.
    What I do know with certainty is that it will be very costly. I 
have heard from some energy managers at plants that costs to implement 
this level of energy efficiency could cost on average at least as much 
as the annual cost of energy. Depending on the intensity of individual 
energy use, the costs could be considerably higher. Costs could be in 
the hundreds of thousands or millions of dollars. This is why federal 
financial assistance in the form of loans, grants, tax incentives, etc. 
is so critical if industry is to achieve significant levels of energy 
efficiency and improve global competitiveness at the same time.
    Question 10. Please further elaborate on the different ways your 
members have addressed the energy costs associated with waste-water 
treatment.
    Answer. The following are a few of the broad categories of measures 
that our members have pursued to reduce energy costs associated with 
wastewater (process-water) treatment.

          a. Install meters and monitors on wastewater treatment 
        systems and set control limits and alarms when limits are 
        exceeded. Members are exploring more sophisticated automated 
        systems, including the system I described in my testimony 
        currently studied by the California Energy Commission.
          b. Use land application of wastewater for organic waste 
        treatment, rather than waste treatment systems that require 
        pumping and aeration. This approach reuses the nutrients in the 
        discharge to fertilize the land and avoids use of commercial 
        fertilizer which requires a lot of energy to produce.
          c. Use anaerobic digesters with biogas recovery to obtain 
        energy benefits.
          d. Minimize waste; separate low and high strength waste 
        streams.
          e. Recover waste materials and reprocess into a valuable 
        product.
          f. Reduce amount of water used in cleaning (hi pressure-low 
        flow hoses with correct spray nozzles and automatic shut off 
        when not in use).
          g. Reuse process water where feasible.

    Question 11. Are there ways to assure regulatory compliance without 
having to run your systems continuously for waste, odor and water 
discharge?
    Answer. I want to stress that for NWFPA members, environmental and 
safety compliance is not optional. It is of the highest priority. If a 
plant does not have the means to monitor and control on a real-time 
basis, it will operate systems continuously to assure compliance.
    Metering, monitoring and control systems allow processors to 
optimize treatment system performance and efficiency while at the same 
time complying with regulatory standards. A basic, inexpensive 
monitoring system will indicate when conditions may exceed compliance 
and sounds an alarm or sends a message to an operator who must take 
action or it triggers a shut-off valve. A relatively expensive system, 
which includes meters, monitors, telemetry and controls not only 
monitors for compliance, but operates the treatment system in such a 
way that maximizes energy and water efficiencies, while maintaining 
compliance.
                                 ______
                                 
     Responses of Maxine Savitz to Questions From Senator Bingaman
    Question 1. Dr. Savitz, in your testimony you state that to achieve 
a goal of 25% saving in 10 years will require both new and improved 
technologies with high rates of return for industry adoption. What 
specific areas of technology development do you believe have the most 
promise for yielding high returns and achieving widespread industry 
adoption?
    Answer. Most of the gains would occur in pulp and paper, iron and 
steel, cement, chemicals and petroleum refining. The pulp and paper 
industry could use more waste heat for drying, advanced water-removal 
technologies; advanced filtration methods; high-efficiency pulping 
technology, and modern line kilns. Promising technologies for iron and 
steel are advances in electric arc furnaces (EAF) melting, blast 
furnace slag heat recovery, integration of refining functions, and heat 
capture from EAF waste gas. In cement, major energy savings would 
require a significant upgrade to an advanced dry-kiln process. 
Efficiency could also be enhanced with advanced control systems, 
combustion improvements, indirect firing and optimization of certain 
components. In the chemicals and petroleum industry, technologies for 
improving energy efficiency include high temperature reactors, 
corrosion resistant metal and ceramic lined reactors, and sophisticated 
process controls.
    A set of cross-cutting technologies exist that could improved 
energy efficiency in a wide range of industrial applications. Most 
important is the increased implementation of combined heat and power 
(CHP). The implementation of CHP is not as much a technology 
development issue as one of deployment, although some technology 
development could be performed. Other cross cutting technologies are 
steam and process heating technologies that can improve quality and 
reduce waste, separation processes that are based on membranes and 
other porous materials, advanced materials that resist corrosion, 
degradation and deformation at high temperatures; controls and 
automation; and sensor technology that reduces waste by improving 
control.
    Question 2. Dr. Savitz, in your testimony you state that the 
pipeline of R&D projects is running dry. What do you see as the 
immediate steps that should be taken to refill this pipeline? Are there 
specific industries that we should be focusing on?
    Answer. The ITP program should update the technology roadmaps in 
partnership with industry. These would be used to identify top industry 
needs and R&D priorities. ITP could then use these updated roadmaps as 
input to issue solicitations for industry-specific R&D projects. The 
portfolio could be balanced with projects that are in various stages of 
development. In addition to aluminum, chemical, forest products, iron 
and steel, and metal steel, which ITP is currently focusing on, they 
should consider a program with the cement industry as it is a heavy 
user of energy and also large emitter of green house gases. They should 
also approach the petroleum refining industry to see if they are 
interested in participating in a collaborative program.
    Question 3. Dr. Savitz, what industries do you believe have the 
most to gain from energy efficiency improvements? What industries will 
need technological breakthroughs to reach significant energy savings 
and greenhouse gas reduction targets.
    Answer. The industries mentioned in answer to question one have the 
most to gain from energy efficient improvements. Technologies mentioned 
in answer one, both for specific technologies and cross-cutting are 
important to be developed and demonstrated. An area that is not 
receiving much attention in the current ITP program, as mentioned in 
our peer review report, are alternative feedstocks that would be very 
useful for the chemical industry. A program on the use of distressed/
non traditional carbon based feedstocks or syngas would be appropriate 
to investigate. This might also have applicability in the biofuels 
area.
    Question 4. In your opinion, what do you believe are the biggest 
roadblocks to achieving significant increases in industrial energy 
efficiency? What does this bill do or not do that could help remove 
some of those roadblocks?
    Answer. Industry does respond to energy price signals for their 
investments, but energy investments compete with many other industry 
investment opportunities that are often of higher priority to 
management. In today's financial climate industry does not have the 
available capital to invest in developing and testing new 
technologies--or even deploying all the known proven existing 
technologies--that will increase their energy productivity. Other 
barriers to deployment include the technical risks of adopting a new 
industrial technology; perceived risk of downtime with a new 
technology; lack of specialized knowledge about energy efficient 
technologies; and unfavorable fiscal policies as reflected in the tax 
code. Energy is still not perceived as critical to competitive 
processes in some industries. Energy is only one of the many challenges 
that they face.
    The bill provides financing mechanisms for industry by establishing 
DOE grants to community/lender partnerships for regional loan programs 
for manufacturers and links DOE assessments to SBA loans. It also 
provides expansion of the Industrial Assessment Centers (IAC), which 
provide audits to small and medium sized manufacturers. The bill does 
not address issues regarding tax policies such as depreciation rules 
that often require firms to depreciate energy efficiency investments 
over a longer period of time than other investments.
    Question 5. S.661 directs DOE to complete an assessment of 
industrial energy efficiency technologies that are not widely 
implemented within the U.S. and to compare adoption rates to those of 
other countries. Could you speak to the main reasons that certain 
technologies are widespread in industry elsewhere, but not within the 
U.S.? Is it simply a matter of higher energy prices in other countries?
    Answer. In our written testimony, we suggested that Section 4 (b) 
(4) which requires a comparison of U.S. technology adoption rates with 
those of the European Union, Japan, and others include ``an assessment 
of the reasons for any differences in adoption rates considering at a 
minimum both economic (including price) and policy reasons in the U.S. 
and countries considered.''
    Question 6. It is clear that if the U.S. is going to be committed 
to reducing its energy consumption and meeting greenhouse gas reduction 
targets, industry will have to play a large role in meeting those 
goals. What is the level of effort that we are going to need to 
transform out industry to use less energy and reduce emissions, while 
increasing its competitiveness? How far does S. 661 go in meeting these 
goals? What other steps are needed?
    Answer. Competitiveness includes many factors--from energy costs to 
labor costs, to tax policy, to proximity to raw materials and markets. 
S. 661 does a very good job from the energy perspective, but that is 
only one part of the overall competitive picture. There needs to be a 
comprehensive approach to ensure that manufacturing jobs will stay here 
and new ones be placed here. We do not want to import all of our 
technologies.
     Responses of Maxine Savitz to Questions From Senator Murkowski
    Question 7. Please describe briefly how, in your opinion, this bill 
best improves upon the industrial sector and how it will work toward 
our overall goal of being more energy efficient.
    Answer. The best improvements are the financing mechanisms for 
industry with the loans and grants program and the expansion of the 
IAC, which in addition to providing information through audits to small 
and medium sized businesses provides training for the workforce. The 
technology assessments required with give attention to energy 
efficiency and greenhouse gas emissions will provide a good baseline on 
what technologies are actually being implemented and needed.
    Question 8. In addition to the Industrial Technology Program, are 
there other Federal programs pursuing similar goals to develop more 
efficient technologies within the industrial sector?
    Answer. There are two other Federal programs which are 
complimentary to DOE's program and focus on deployment. The 
Manufacturing Extension Program at NIST, which could include energy 
improvements in their technical assistance, and the EPA Energy Star for 
industry program.
    Question 9. Please describe innovative technologies that have moved 
from the concept stage to commercialization. What are the major 
impediments of getting to the commercialization of a new technology?
    Answer. Some examples of R&D successes from the ITP program include 
the Mesabi Nugget next generation cokeless ironmaking process for 
steel, Lost Foam Casting for metal casting, advanced reciprocating 
engines for CHP currently in demonstration, and wireless sensors for 
process control. The impediments are discussed in answer 4.
    Question 10. It appears that the Industrial Assessment Centers 
provide a quick return on investment to industrial users through their 
reviews and the corresponding actions taken by the users to improve 
their efficiencies. Please describe the typical rate of return of the 
Save Energy Now (SEN Initiative).
    Answer. We do not know the answer to this question. DOE might be 
able to supply the answer.
    Question 11. Please describe the work that you are undertaking to 
strengthen your outreach to utilities to help industry overcome 
barriers to implement energy efficiency projects and new technologies.
    Answer. DOE is best suited to respond to this question. The Peer 
Review Final Report that we co-chaired recommended that DOE increase 
its efforts with the utilities to assist industry in obtaining 
financing through utility programs and encouraging appropriate policies 
with utilities to increase implementation of energy efficient 
technologies in industry such as decoupling.
                                 ______
                                 
     Responses of Stephen Harper to Questions From Senator Bingaman
    Question 1. In your opinion, what do believe are the biggest 
roadblocks to achieving significant increases in industrial energy 
efficiency? What does this bill do or not do that could help remove 
some of those roadblocks?
    Answer. Information, or the lack thereof, is along with financing 
among the biggest roadblocks. Financing ideally will be addressed 
through the steps currently being taken to shore up our banking system. 
This bill addresses this in a number of ways, including establishing a 
joint industry-government manufacturing partnership program and 
expanding the regional Industrial Assessment Centers program.
    Question 2. S. 661 directs DOE to complete an assessment of 
industrial energy efficiency technologies that are not widely 
implemented within the U.S. and to compare adoption rates to those of 
other countries. Could you speak to the main reasons that certain 
technologies are widespread in industry elsewhere, but not within the 
U.S.? Is it simply a matter of higher energy prices in other countries?
    Answer. I am not an expert in this arena, but I suspect that energy 
prices play a significant role in technology adoption rates. New 
technologies in the energy and environmental field are adopted 
typically because they are required by government mandates or are 
incented via government subsidies or via energy prices.
    Question 3. It is clear that if the U.S. is going to be committed 
to reducing its energy consumption and meeting greenhouse gas reduction 
targets, industry will have to play a large role in meeting those 
goals. What is the level of effort that we are going to need to 
transform our industry to use less energy and reduce emissions, while 
increasing its competitiveness? How far does S. 661 go in meeting these 
goals? And what other steps are needed?
    Answer. Two things will be required by industry: First, adoption of 
existing technology to make efficiency gains in the short run. Second, 
a more radical transformation of technology in the future to 
dramatically reduce industrial energy demand. This bill addresses the 
former by expanding the public private partnership program and 
expanding the regional IAC program. The longer-term need is addressed 
through the industry roadmapping provision and the Industrial 
Innovation Grants program. In addition, it would engage the National 
Academies of Science to asses the critical manufacturing needs for 
development of advanced energy technologies.
    Responses of Stephen Harper to Questions From Senator Murkowski
    Question 4. Please describe whether water conservation and less 
energy intensive water measures should be funded through the Department 
of the Energy, in particular programs that promote energy efficiency.
    Answer. No expertise or views on this issue.
    Question 5. Is there a cost-effectiveness methodology for water 
measures comparable to that employed for the consideration of other 
energy efficiency measures?
    Answer. No expertise or views on this issue.
    Question 6. Please describe the programs and measures currently in 
place that are likely to save water and energy.
    Answer. Intel has a long standing program with funds dedicated to 
energy conservation projects across the company. We continuously 
evaluate energy conservation opportunities at all of our facilities and 
fund a large number of them every year. As a result, the amount of 
energy we use per unit of product produced has decreased 20% since 
2002.
    Question 7. Please describe opportunities that you have pursued to 
save energy or water. Such measures could include, conserving water; 
switching to less energy-intensive water sources, or increasing the 
energy efficiency of current water deliver or treatment processes.
    Answer. We have used a wide range of measures to conserve energy, 
including recovering and reusing heat from combustion systems, 
implementing smart controls on large equipment and systems, utilizing 
building management systems to maintain equipment in its most efficient 
operating range and requiring efficiency improvements in new process 
manufacturing equipment.
    Question 8. Please describe briefly how, in your opinion, this bill 
best improves upon the industrial sector and how it will work toward 
our overall goal of being more energy efficient.
    Answer. See responses to Questions 1-3.
    Question 9. Please elaborate on your relationship with DOE's 
Industrial Technologies Program (ITP) and how Intel has benefitted from 
the relationship, and also why it is important for smaller companies to 
have an opportunity to engage in the Program.
    Answer. Intel's facility energy efficiency team has had a fruitful 
relationship with the US Department of Energy, including the Industrial 
Technologies Program (ITP), a program which would be strengthened by S 
661. Under the ITP, DOE has completed four energy efficiency savings 
assessments (ESA) audits at Intel sites in New Mexico, Arizona, and 
Oregon, with the earliest completed in 2006. These audits focused on 
the efficiency of pumping systems, compressed air systems and fan 
systems, and were conducted by DOE contractors. These audits produced a 
number of potential efficiency projects that currently are being 
evaluated against our internal criteria for capital investments. In 
addition to these audits, the ITP makes available to Intel a variety of 
programs, models and other analytical tools for our use
    Our experience with DOE's industrial energy efficiency programs has 
convinced us of the importance of the funding and research and 
development programs that would be authorized or expanded by S 661. 
While Intel has benefitted from working with DOE's ITP, the potential 
benefits of additional grant funding and the expansion of the 
Industrial Research and Assessment Centers would especially benefit 
smaller-and medium-sized industrial companies which, collectively, 
comprise the bulk of US manufacturing. Smaller companies often do not 
have the internal resources to identify and seize many of the available 
energy efficiency opportunities and stand to benefit significantly.
    Question 10. You mentioned in your testimony that you use 
``computerized building management systems to operate facilities in 
their most efficient range.'' Can you talk a little more about the 
whole-building approach that you take in your facilities?
    Answer. I was referring not so much to Intel's practices 
specifically but rather to the well-document capabilities of 
information and communications technology (ICT), applied to improve the 
energy management of buildings and industrial processes.
                                 ______
                                 
       Responses of Jeff Metts to Questions From Senator Bingaman
    Question 1a. In your opinion, what do believe are the biggest 
roadblocks to achieving significant increases in industrial energy 
efficiency?
    Answer. The biggest roadblock to significant increases in 
industrial energy efficiency is concentrated in the cost of renewable 
energy, particularly wind power. The demand in the United States for 
wind turbines up until now has been relatively low. Subsequently there 
was not much need for the Wind Turbine Industry to focus efforts on 
advancing the manufacturing processes. Processing of wind turbine 
blades and large component machining has been, and still is, dominated 
by European manufactures. The United States has a unique opportunity to 
advance current technology far into the future by adapting aerospace 
and automotive materials and techniques. Many blade manufacturers still 
employ fiberglass boat hull manufacturing technologies. Simply put, 
current methods are not precise or robust enough to withstand today's 
demand for a larger and heavier blade. This outdated technology 
consumes extensive amounts of time and labor. Further, it is outdated 
and inadequate, especially in consideration of U.S. capabilities in 
development today.
    With volume projections on the rise today, the current 
manufacturing supply base and its capabilities will not be scalable in 
the timeframe required to meet the United States goal of 20% energy 
reliance from wind energy by the year 2030. The issue accelerates 
dramatically, if the President's goals of 25% by 2025 are to be 
attained. Therefore newer, quicker and less expensive methods must be 
developed to meet this demand. Blade technology must be advanced to 
support required production rates. Increased blade length and weight 
have become additional negative factors that must be addressed.
    There are two primary manufacturing roadblocks:

   Wind turbine blade designs--Today's blade designs use lower 
        strength to weight materials and have limited regard to whether 
        the blade can be manufactured consistently and to the geometry 
        intent of the design. By focusing on the blade design itself, 
        Dowding/MAG's objective is to target a design that reduces 
        weight, improves performance and maximizes manufacturability. 
        With such a blade design the turbine OEM's can begin to rethink 
        all design parameters associated with gearboxes, bearings, hubs 
        and even tower designs. Many of these internal components are 
        designed to operate effectively with yesterday's heavy blades 
        at very high cost.
   Manual Manufacturing processes--The manual processes 
        employed today yield limited consistency, varying quality and 
        high cost, unreliable blades. Warranty cost for OEM's is a 
        major issue. Blade failures in the field are one of the biggest 
        problems plaguing the industry today. Many failures can be 
        traced directly back to either the design or manufacture of the 
        blade. Today's highly manual, inconsistent processes are 
        resulting in a 10%-15% reduction in the energy output of a wind 
        turbine system. The varying results of this process increase 
        true lifecycle cost, and present a very different price per 
        blade than originally expected. These inefficiencies deliver an 
        elevated turbine cost and an increase in cost per Kilowatt-hour 
        to the public.

    Question 1b. What does this bill do or not do that could help 
remove some of those roadblocks?
    Answer. This bill targets the single biggest roadblock to advancing 
the industry, which is R&D funding. These types of funds are currently 
unavailable to private industry to make the necessary advances. By 
making these investments, the United States will accelerate by several 
years, a normally slow incremental improvement process. At the same 
time it will set the stage for United States based companies to 
participate at a leadership level in the world's alternative energy 
markets.
    Specifically, this bill provides the opportunity for US industry to 
take the initiative to create revolutionary blade and machine tool 
designs that enhance and improve manufacturability. These technologies 
will lower cost, reduce warranty issues, provide higher efficiency 
performance and, show exceptional durability in the field. Most 
importantly, the United States will become a showcase to the world for 
wind turbine manufacturing.

   Heavy emphasis will be placed on optimizing and automating 
        manufacturing processes that will significantly reduce human 
        error and will provide a level of consistency on the 
        manufacturing floor. The manufacturing machinery and processes 
        will support higher performance blades. In addition, the actual 
        geometry of the blade will be optimized, which will provide as 
        much as 10-15% performance improvements in the output 
        efficiency of the wind tower.
   The new blade design would take full advantage of uni-
        directional materials, like those used in composite aerospace 
        structural parts. Applying new materials will result in 
        lighter, stronger, more durable blades and provide an 
        opportunity for the rest of the wind turbine system, including 
        the hub, tower, and gearbox, to be optimized for the lighter 
        more efficient blades. Ultimately, this will reduce the cost to 
        the consumer.

    It is the Dowding/MAG objective to use this project as an 
opportunity to bring together a strong team of key individual 
contributors and industry players, with the intent of revolutionizing 
portions of this industry in under two years. Ultimately, over the next 
five years, re-engineer the entire turbine, utilizing modern 
technologies and improving output. This will result in lower energy 
costs, competitive with other existing sources. We are assembling a 
strong and experienced manufacturing team, which will utilize the 
funding from this bill to optimize blade design and machine processes. 
We will develop manufacturing systems to certify a new blade design, as 
well as lowing cost and improving throughput in machining of the large 
components. The players include but are not limited to the following:

   Dowding Industries--a major US Manufacturer that provides 
        machining services, assembly and manufacturing operations 
        expertise to spearhead the physical manufacturing facility 
        which will be located in Michigan.
   MAG Industrial Automation Systems--a major US Manufacturing 
        Solutions company with proven experience combining machine tool 
        expertise, Aerospace composites knowledge/implementation, 
        automation expertise and manufacturing process/assembly 
        optimization.
   Dr. Kyle Wetzel, a PHD Aerospace Engineering major wind 
        industry credentialed blade designer with over 25 years of 
        experience designing airfoils and turbine blades for many of 
        the major OEM's including GE, MFG,
   We have a short list of US based Turbine OEM's that we are 
        approaching one by one to join our team to help us realize our 
        longer term objectives. Ultimately the design of blades, hubs, 
        gear boxes, bearings, etc. all have complementary impact on 
        each other in realizing the long term goal of developing leap 
        frog advances in wind turbine performance, efficiency, weight 
        reduction and longevity.
   We have worked with one U.S. manufacturer, GE, for many 
        years implementing carbon fiber composites in aircraft engine 
        components, so they would be well suited as a team contributor 
        to provide credentialed carbon fiber designers to work with 
        Kyle Wetzel and our staff of carbon fiber application engineers 
        to optimize the usage of conventional blade materials with that 
        of aerospace carbon fiber materials to achieve a revolutionary 
        breakthrough in blade design.

    The funding provided by this bill will kick off the proposed 
Dowding/MAG initiative which has both short term and long term vision. 
Of course we need to tackle the short term increase in demand for wind 
turbine components and the limiting equipment/processes required to 
manufacture the components. However, long term we need to focus on the 
overall efficiency, weight and reliability of the wind turbine as a 
whole.

   Short Term (12-24 months)--As explained above, our short 
        term focus is to launch development programs to bring 
        incremental improvements that can be implemented immediately in 
        current wind turbine installations. These improvements include 
        a unique machine tool platform design which will greatly reduce 
        the machining times of large wind turbine bearings, gearbox 
        components, blade hubs, etc. and to optimize the manufacturing 
        processes of blades by strategically adding automation, 
        material design improvements and increased local US based blade 
        production.
   Long Term (2-5 years)--We are working to bring a major U.S. 
        OEM (focus on GE but there are other U.S. manufacturers) with 
        the objective of cross-pollinating our years of aerospace know-
        how with the experience of wind turbine blade designers in 
        order to take advantage of the lighter weight, stronger 
        materials of aerospace without increasing the cost of a blade 
        set. Ultimately, these advances in blade efficiency, weight 
        reduction and performance will allow for the optimization of 
        turbine components to reduce cost, weight and installation 
        costs. All of these factors will result in lower energy costs.

    Question 2. S. 661 directs DOE to complete an assessment of 
industrial energy efficiency technologies that are not widely 
implemented within the U.S. and to compare adoption rates to those of 
other countries. Could you speak to the main reasons that certain 
technologies are widespread in industry elsewhere, but not within the 
U.S.? Is it simply a matter of higher energy prices in other countries?
    Answer. During the early 1970's when the United Sates was 
experiencing its first energy crisis brought on by a shortage of fossil 
fuels. This resulted in a heavy reliance on fuel supplied by the Arab 
nations. The US government invested in a wind energy program through 
NASA to enhance the development of wind turbine technology. The result 
was NASA developing the worlds first 3.5 MW wind turbine. As the years 
went by and the energy crisis subsided, this program was forgotten by 
most, with the exception of one group of people; the Danish Government. 
As a result, today Denmark is a global leader in wind technology and 
production supplying around half the worlds wind turbines.
    However, we believe that the project described in this bill is not 
being duplicated today anywhere in the world. Spain recognizes the 
importance of wind turbine manufacturing and the government is 
supporting Gamesa, and to MTorres, in developing an automated 
manufacturing processes. These two companies have recently issued 
releases to the general press about working together to develop future 
wind turbine systems. Funding provided by the Spanish Government has 
enabled Gamesa to partner with MTorres and greatly accelerate their 
development process.
    Today's blades are being produced primarily by hand with minimum 
capital investment. Hand layup, while not capital intensive, does not 
produce defect free blades, nor does it provide a platform to optimize 
manufacturing efficiencies. Lowest cost material selection fits 
naturally with today's blade's design and manufacturing processes. This 
combination of design, process and materials yields a seemingly low 
cost blade at the expense of quality and durability. These quality 
problems are now being realized in field failures and increased 
warranty expense.
    Conversely, in the aerospace industry field failures can be 
catastrophic and designers are willing to buy the highest strength to 
weight materials. The benefits of these advanced materials can only be 
realized through highly accurate automated manufacturing process. Our 
process would take a total cost of ownership perspective, like those of 
the machine tool or aircraft industry, and apply that perspective from 
the earliest stages of design through final manufacture. Most of these 
material and manufacturing advances become exponentially more important 
as you look at the ramp up in demand for wind turbines now and in the 
future.
    Question 3a. It is clear that if the U.S. is going to be committed 
to reducing its energy consumption and meeting greenhouse gas reduction 
targets, industry will have to play a large role in meeting those 
goals. What is the level of effort that we are going to need to 
transform our industry to use less energy and reduce emissions, while 
increasing its competitiveness?
    Answer. There are three aspects that must be focused upon by the 
United States government to effectively make huge advancements in 
energy consumption reductions in an acceptable amount of time:

   Industrial Consumers--incentives must be focused at the 
        source of energy consumption, the industrial users of energy. 
        Incentives can be focused on the US manufacturing base to 
        promote the acquisition of more energy efficient manufacturing 
        equipment and equipment updates. Tight capital markets and 
        global competition are slowing this improvement in energy 
        efficiency.
   Manufacturers--This bill provides incentives which will spur 
        development of manufacturing capacity and will enhance 
        technology advancement. Wind power generator components tend to 
        be large in nature, thereby requiring investment in large 
        equipment to machine them. Incentives to acquire these larger 
        machines could create more capacity, reduce costs, accelerate 
        development of new manufacturing methods and improve the U.S. 
        competitive position globally.
   Utilities--incentives must also be directed to the utilities 
        to drive them toward the use of alternative energies and away 
        from fossil fuel based energy production.

    The level of effort needs to be significantly greater than 
initiative programs of the past and should be targeted at companies 
where the impact will be more immediate, yet long lasting. As we have 
pointed out, industrial consumers, manufacturers and utilities must all 
be given an economic incentive they cannot ignore.
    Question 3b. How far does S. 661 go in meeting these goals? And 
what other steps are needed?
    Answer. S.661 Provides a very valid foundation to support new 
materials and manufacturing techniques that can be implemented in the 
wind energy market. Boeing revolutionized commercial aircraft design by 
designing an aircraft from ground up that took full advantage of high 
strength to weight, unidirectional composite materials and the latest 
manufacturing processes and equipment. Only by taking a total systems 
approach and leveraging all aspects of implementing composite 
materials, were the benefits realized to create a revolutionary product 
that now has sales exceeding all previous new aircraft model 
introductions. S.661 provides the foundation for a similar revolution 
in wind turbine system design, manufacture and performance, by 
introducing new materials, design and manufacturing equipment to the 
wind market.
        Response of Jeff Metts to Question From Senator Lincoln
    Question 4. In my home state of Arkansas, I am proud that even 
though wind energy potential is limited, we are contributing to the 
supply chain for wind energy by manufacturing the blades and turbines 
for future wind farms. I am interested in your statement that ``the 
U.S. can and must be the birthplace of the lightest, strongest, lowest 
cost and most efficient wind turbine components in the world.'' I agree 
that these advancements in technology will help bring the costs down, 
and energy input up while also increasing the number of jobs. What 
steps do you believe that Congress should take that would help the U.S. 
to set the world standard in wind turbine technology?
    Answer. Suggestions:

          1. Establish recurring funding source for ongoing research 
        and development so that further reaching manufacturing 
        technologies and materials can be developed over the course of 
        several years. (This one may already be in place via the 
        national labs. If so would there be any benefit of having a 
        source to review and allocate money to non redundant projects 
        to foster some competition amongst emerging technologies and 
        corresponding projects.)
          2. Strongly support the United States imitative to obtain a 
        20% reliance on wind energy by the year 2030. Provide federal 
        funding to entice states to adapt mandates from local power and 
        utility companies to purchase a greater percentage of their 
        energy from renewable sources such as wind energy.
          3. Commercialize wind turbine certification to create 
        competition.
          4. Provide incentives to re-blade current wind turbines in 
        the field with new significantly improved blades that increase 
        efficiency of older, disabled or damaged units.
          5. Recognize the importance of manufacturing automation by 
        establishing a Composite Automation Research and Development 
        Center near a major automation solutions provider, so that 
        manufacturing technologies can be developed under leadership of 
        experienced automation systems designers. Such a center could 
        allow cross pollination of ideas and solutions applied from a 
        variety of disparate industries.
                                 ______
                                 
    [Responses to the following questions were not received at 
the time the hearing went to press:]

           Questions for David Rodgers From Senator Bingaman
    Question 1. Mr. Rodgers, in testimony given at the hearing, it was 
stated that DOE has allowed its industry specific R&D pipeline to run 
dry. This is particularly concerning given the energy, climate and 
competitiveness challenges that our industry is currently facing, and 
the technological improvements and breakthroughs that will be necessary 
for our industry to meet these challenges. Do you share this view, and 
what steps is the Department taking to ensure that this pipeline is 
quickly refilled?
    Question 2. Mr. Rodgers, both Dr. Savitz and Dr. Elliott mention in 
their testimony the need for better manufacturing data. Specifically, 
both Dr. Savitz and Dr. Elliott call-out EIA's Manufacturing Energy 
Consumption Survey (MECS), of which the most recent 2006 survey still 
has not been released. What has been the delay in releasing the 206 
survey, and do you know when this 2006 survey will be released? Does 
the Department support the recommendation to conduct the survey on a 
three year schedule? (as opposed to the current 4 year schedule?)
    Question 3. Mr. Rogers, in recent years the industrial technologies 
program has expanded beyond its focus on traditional energy intensive 
industries to new industries including food processing and data 
centers. What other `emerging' industries are fertile ground for energy 
efficiency improvements?
    Question 4. Mr. Rogers, as Mr. Metts has described, the wind 
industry is ripe with opportunities for both technological improvements 
in manufacturing technology as well as technical improvements in the 
turbine components themselves. Has DOE considered applying the 
capabilities of the industrial technologies program to its Wind Energy 
Program? (S. 661 instructs the Sec. of Energy to establish R&D 
partnerships between the Industrial Technologies Program and other DOE 
R&D programs.)
    Question 5. Mr. Rogers, as Mr. Harper has just described for Intel, 
there is a significant amount of overlap between buildings energy 
efficiency and industrial energy efficiency. How does the Department, 
as it moves forward, plan to leverage and combine the expertise of the 
both the building technologies program and the industrial technologies 
program to achieve the greater energy savings?
    Question 6. In your opinion, what do believe are the biggest 
roadblocks to achieving significant increases in industrial energy 
efficiency? What does this bill do or not do that could help remove 
some of those roadblocks?
    Question 7. S. 661 directs DOE to complete an assessment of 
industrial energy efficiency technologies that are not widely 
implemented within the U.S. and to compare adoption rates to those of 
other countries. Could you speak to the main reasons that certain 
technologies are widespread in industry elsewhere, but not within the 
U.S.? Is it simply a matter of higher energy prices in other countries?
    Question 8. It is clear that if the U.S. is going to be committed 
to reducing its energy consumption and meeting greenhouse gas reduction 
targets, industry will have to play a large role in meeting those 
goals. What is the level of effort that we are going to need to 
transform our industry to use less energy and reduce emissions, while 
increasing its competitiveness? How far does S. 661 go in meeting these 
goals? And what other steps are needed?
            Questions for David Rodgers From Senator Lincoln
    Question 9. The Restoring America's Manufacturing Leadership 
Through Energy Efficiency Act of 2009 seeks to improve and encourage 
energy efficiency in our manufacturing sector. In my state of Arkansas, 
I have several oil refiners who have all made positive strides in the 
area of energy efficiency in their refinery operations. I am interested 
in making certain that these independent refiners are eligible for any 
grants and other benefits that will provide incentives to continue and 
expand the energy efficient work they have already done.
    Question 10. Is it your understanding that refiners, as part of an 
energy intensive industry, will be able to take advantage of these 
opportunities through the manufacturing efficiency legislation? How do 
you see oil refineries fitting into our overall transition from an old 
energy economy to a new energy economy?
           Questions for David Rodgers From Senator Murkowski
    Question 11. Please describe whether water conservation and less 
energy intensive water measures should be funded through the Department 
of the Energy, in particular programs that promote energy efficiency.
    Question 12. Is there a cost-effectiveness methodology for water 
measures comparable to that employed for the consideration of other 
energy efficiency measures?
    Question 13. Please describe the programs and measures currently in 
place that are likely to save water and energy.
    Question 14. Please describe opportunities that you have pursued to 
save energy or water. Such measures could include, conserving water; 
switching to less energy-intensive water sources, or increasing the 
energy efficiency of current water deliver or treatment processes.
    Question 15. Please describe briefly how, in your opinion, this 
bill best improves upon the industrial sector and how it will work 
toward our overall goal of being more energy efficient.
    Question 16. ACEEE testified that the Industrial Technologies 
Program is understaffed and that the current mix of skills does not 
reflect the range of activities the program needs for long-term 
success. What would you do to address this situation?
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

          Statement of the American Forest & Paper Association
                              introduction
    The American Forest & Paper Association (AF&PA) appreciates this 
opportunity to comment on the Restoring America's Manufacturing 
Leadership through Energy Efficiency Act of 2009 (S. 661). AF&PA is the 
national trade association of the forest products industry, 
representing pulp, paper, packaging and wood products manufacturers, 
and forest landowners. Our companies make products essential for 
everyday life from renewable and recyclable resources that sustain the 
environment. The forest products industry accounts for approximately 6 
percent of the total U.S. manufacturing GDP, putting it on par with the 
automotive and plastics industries. Industry companies produce about 
$200 billion in products annually and employ more than 1 million people 
earning $54 billion in annual payroll. The industry is among the top 10 
manufacturing sector employers in 48 states.
     af&pa members' energy profile and greenhouse gas reductions\1\
---------------------------------------------------------------------------
    \1\ AF&PA member performance metrics are from 2008 AF&PA 
Environmental, Health & Safety (EHS) Verification Program Biennial 
Report, 2008 (http://www.afandpa.org/Content/NavigationMenu/
Environment_and_Recycling/Environment,_Health_and_Safety/AF&P 
A_EHSReport08_final5web.pdf. Industry statistics on cogeneration are 
from: 2007 energy cogeneration data from the Energy Information Agency 
(http://www.eia.doe.gov/cneaf/electricity/page/eia906_920.html.)
---------------------------------------------------------------------------
Overall Efficiency
    AF&PA members have steadily increased their energy efficiency, 
while also increasing reliance on carbon-neutral renewable biomass 
power, and reducing fossil fuel use. Overall, total energy use per ton 
of production at member pulp and paper mills has decreased by 26.6 
percent since 1972, and by 11 percent between 1990 and 2006.
Combined Heat and Power
    One of the ways in which members have increased their efficiency is 
through the use of combined heat and power (CHP), which is the practice 
of using exhaust steam from electrical generators for heat in 
manufacturing processes or for space heating. Based on U.S. Department 
of Energy (DOE) data from 2007, the forest products industry is a 
leader in the use of CHP-generated energy--99 percent of the 
electricity generated on-site at pulp and paper mills and 95 percent of 
the electricity generated on-site at wood products facilities was co-
generated. The forest products industry represents one third of the 
industrial CHP-generated energy in the U.S.
Renewable Biomass Energy
    The forest products industry also is the leading producer and user 
of renewable biomass energy in the U.S. In fact, the energy we produce 
from biomass exceeds the total energy produced from solar, wind, and 
geothermal sources combined. Sixty-five percent of the energy used at 
AF&PA member paper and wood products facilities is generated from 
carbon-neutral renewable biomass.
Fossil Fuel and Purchased Energy
    Our increasing efficiency and greater reliance on biomass energy 
has enabled AF&PA members to significantly reduce the use of fossil 
fuel and purchased energy, much of which also is generated from fossil 
fuel. From 1972 to 2006, the fossil fuel component of the AF&PA member 
mill energy mix decreased by over 55 percent, and the use of both 
fossil fuel and purchased energy has decreased by 56 percent.
Greenhouse Gas (GHG) Reductions
    Our commitments to energy efficiency, CHP, renewable biomass 
energy, and other actions have enabled AF&PA members to achieve 
significant reductions in GHG emissions. Since 2001, working together 
AF&PA members voluntarily reduced their carbon dioxide (CO2) 
emissions intensity by 13 percent. From 2000 to 2006, our members 
collectively reduced their direct greenhouse gas emissions 34 percent. 
Approximately half of this reduction can be attributed to improvements 
in greenhouse gas emissions, such as efficiency improvements or reduced 
fossil fuel use, and half can be attributed to decreases in production 
and changes in the baseline from the year 2000.
U.S. Forest Products Industry Competitiveness Pressures
    AF&PA applauds the Committee for considering legislation to restore 
U.S. manufacturing leadership through energy efficiency. U.S. forest 
products manufacturers face significant competition from global 
competitors. U.S. imports of forest products have grown for the most 
part at a faster rate than American exports. These competitive 
pressures make the U.S. forest products industry (especially the pulp 
and paper sector) acutely aware of the cost of energy, which, despite 
our overall reductions in energy use, remains our third highest 
manufacturing cost. Because the U.S. forest products industry operates 
in a highly competitive global market, we cannot pass on higher energy 
costs to consumers and still remain competitive; we strongly support 
policies to enable us to reduce those costs through energy efficiency 
improvements.
    The recent downturn in the nation's economy, especially the housing 
market, has only compounded these challenges:

   The declining economy has reduced the demand for consumer 
        goods and advertising products, and therefore their associated 
        packaging and paper products. Production of paper and 
        paperboard packaging plunged 18% percent from January 2008 to 
        January of this year and preliminary data suggest that the 
        February decline was equally sharp.
   Housing starts slumped to a seasonally-adjusted annual rate 
        of 540,000 units during the December-February period, their 
        lowest three-month level since the government began collecting 
        new starts data back in 1959.
   Since early 2006, the industry has lost 190,000 jobs--15 
        percent of its workforce. Many paper and wood products 
        facilities are in rural areas where they are the economic hub 
        of their communities.
policies to improve manufacturing energy efficiency over the short and 
                               long term
    U.S. manufacturing competitiveness challenges have both short and 
long term components, and we support S. 661 including provisions that 
address both time horizons. Many of the provisions of S. 661 are 
directed at restoring U.S. manufacturing leadership in the long term, 
through a variety of programs, including a joint industry-government 
partnership program to conduct research and development of new 
industrial technologies that maximize system energy efficiency. The 
forest products industry is currently participating in just such a 
partnership through the Agenda 2020 Technology Alliance, a Special 
Project of AF&PA. We anticipate that Agenda 2020 will submit their own 
comments on the bill.
    Our comments below suggest ways in which S. 661 could be revised to 
more effectively amplify the industry's energy efficiency and improve 
its competitiveness in the short term. As the statistics above 
demonstrate, the need for short term action to increase efficiency and 
competiveness and help retain jobs is particularly urgent. In addition 
to the devastating impact on industry employment, the other hallmark of 
the current economic downturn is the virtual elimination of available 
capital for the kinds of energy efficiency projects contemplated by S. 
661.
    Congress recognized the need to provide funding on an urgent basis 
in the recentlypassed American Recovery and Reinvestment Act, which 
provides DOE with $16.8 billion for energy and conservation, including 
$3.2 billion for the Conservation Block Grants (EECBG) program and $3.1 
billion for State Energy Programs. While some of these funds can and 
will be used by DOE and States to finance energy efficiency projects at 
industrial facilities, the Stimulus Bill did not include funding 
specifically targeted for that purpose. S. 661 can fill that need.
    Section 2 would establish a new Industrial Energy Efficient Grant 
Program, under which DOE would make grants to eligible lenders to 
provide loans for commercial and industrial manufacturers to implement 
commercially available technologies or processes to improve energy 
efficiency. The emphasis on commercially available technologies and 
processes is important, as many AF&PA members have undertaken the 
analysis needed to identify energy efficiency projects that could be 
implemented rapidly, but for funding barriers. However, the economic 
condition of the industry makes loans a less effective vehicle to 
finance such products. Instead, grants to industry facilities would 
greatly facilitate the ability of AF&PA members to take advantage of 
the program and implement energy efficiency projects.
    The program also would provide a funding priority to partnerships 
that include a power producer or distributor. It has been AF&PA's 
experience that these entities are not always the most cooperative 
partners in advancing energy efficiency projects, and we believe the 
program would be more effective without this requirement. Instead, 
priority should be placed on projects that have been identified through 
the DOE Save Energy Now Assessment program. That program provides DOE 
resources to undertake comprehensive facility energy assessments and 
recommend specific measures and projected energy savings for the 
facilities assessed. Over 100 forest products industry facilities have 
had assessments under this program, including several in 2009\2\.
---------------------------------------------------------------------------
    \2\ http://apps1.eere.energy.gov/industry/saveenergynow/partners/
by_industry_list.cfm/industry=Forest%20Products
---------------------------------------------------------------------------
    We note that Section 7 of S. 661 would create an ``Innovation in 
Industry Grants'' program which would provide funding to State-industry 
partnerships to develop new technologies or processes for energy 
efficiency, pollution reduction and increased competitiveness. Funding 
is limited to $500,000 per grant. This program was not designed to 
fulfill the need we have identified above to provide grants for energy 
efficiency projects in that it is directed at new technologies and each 
grant cannot exceed $500,000. Nonetheless, a similar grant program 
without these limitations would more effectively allow the industry to 
implement energy efficiency projects and improve competitiveness.
    We thank the Committee for considering legislation on this critical 
need for the forest products industry. We look forward to working with 
the Committee as the legislation is developed. Also, we recognize that 
the industry may face significant policy approaches in the near future 
that may further challenge our competitiveness. Such approaches, such 
as cap-and-trade legislation, are not the objective of this 
legislation. It should be noted that this legislation should not be 
viewed as a way by which to mitigate the negative impact of some 
potential legislation on the forest products industry.
                                 ______
                                 
                              Capstone Turbine Corporation,
                                    Chatsworth, CA, March 25, 2009.
Hon. Jeff Bingaman,
Chairman, Energy and Natural Resources Committee, U.S. Senate, 304 
        Dirksen Senate Building, Washington, DC.
    Dear Chairman Bingaman: On behalf of Capstone Turbine Corporation, 
I would like to thank the Committee for inviting us to submit testimony 
in support of the ``Restoring America's Manufacturing Leadership 
through Energy Efficiency Act of 2009.'' This is an important bill with 
noble and necessary aspirations to support the manufacture of clean and 
efficient technologies here in the United States.
    Capstone Turbine Corporation is a prime example of the type of 
innovative American manufacturer of clean, efficient technology that 
this bill seeks to promote. We hold nearly a hundred technology patents 
on our microturbines. The Capstone microturbine is an ultra low 
emission, energy efficient power generator that can be installed in a 
variety of applications. These applications include combined heat and 
power systems, commonly known as CHP, where the exhaust heat is 
captured and utilized by the customer. Similarly, exhaust heat can be 
utilized in an absorption chiller to provide air conditioning or 
chilled water to a facility, in what is known as combined cooling heat 
and power, or CCHP. Our microturbines can power batteries in a hybrid 
electric vehicle, to deliver improved energy efficiency and reduced 
emissions for buses. In the oil and gas industry, microturbines use 
flare gas to provide electricity to offshore platforms and provide 
remote power to pipelines and pumping stations by using associated 
gases. Microturbines have the capability to run off of renewable fuels 
such as methane gas, biogas, and biodiesel, allowing us to lower 
emissions and use waste fuels at landfills, wastewater treatment 
facilities, and food and agricultural production facilities.
    Founded in 1988, Capstone Turbine Corporation spent a decade 
devoted to the development of microturbine technology. We began 
commercial production of our first thirty kilowatt microturbine, in 
1998. Over the past decade we have worked to gain acceptance for our 
products in the marketplace while increasing our production capacity. 
In 2000, Capstone went public and was listed on the NASDAQ, ticker 
symbol CPST. We are now the world leader in microturbines with over 
4,000 units shipped and twenty million operating hours across the 
fleet. Seeking to expand our target market, in 2008 Capstone developed 
a two-hundred kilowatt microturbine and a one megawatt package, thereby 
increasing our addressable market to $4.5 billion annually. The value 
we provide to our customers is reliability, low maintenance because of 
our patented air bearing design, low emissions, and high efficiency.
    Capstone employs approximately two hundred people in its primary 
facilities in California and at its sales and service centers 
worldwide. The employees at our manufacturing and engineering 
facilities in California are the green collar workers that our country 
must foster and replicate if the United States is to be competitive in 
the new economy. All of our microturbines are manufactured in the 
United States by Capstone employees. We are dedicated to growing our 
business through the sale of our existing product line and through the 
development of new and even more efficient technologies in the future. 
The Capstone microturbine is so clean that it is certified by the 
California Air Resources Board to meet its strict emission 
requirements--the only combustion technology outside of fuel cells to 
earn this certification. Despite our accomplishments in producing the 
cleanest possible technology, we are not resting on our laurels. Our 
research and development efforts are geared towards constant 
improvement so that we can provide our customers the cleanest, most 
reliable and efficient turbines available.
    Capstone is a wholehearted supporter of the Department of Energy 
Industrial Technologies Program. Our company has been the beneficiary 
of the DOE's efforts to identify technologies that will improve the 
energy, environmental, and financial performance of power systems for 
manufacturing, processing, and other commercial applications. Our new 
two-hundred kilowatt microturbine, ``the C200'', was developed in part 
with support from the DOE under the Advanced Microturbine Systems 
(AMTS) program. The objectives of that program were to achieve outputs 
in the two-hundred kilowatt range with electrical efficiency of forty 
percent and nitrogen oxide (NOx) emissions less than seven parts per 
million by volume (ppmv). The resulting designs were to be durable and 
cost effective. The AMTS program awarded grants to five companies, 
including Capstone. At the conclusion of this program, only Capstone 
was able to complete a full microturbine design and bring it into 
commercial production. Demand for the 0200 has been extremely high both 
in the United States and abroad.
    Additional DOE support was provided to Capstone to complete a 
commercial microturbine design that meets the stringent California Air 
Resources Board emissions requirements. Our C65 sixty-five kilowatt 
microturbine has been able to achieve NOx levels as low as four ppmv. 
The DOE also supported Capstone, and others, to develop packaged 
cooling, heating and power systems for buildings. This resulted in 
collaboration between Capstone and United Technologies using a 
specially designed double-effect absorption chiller from UTC's Carrier 
division. These integrated packages have proven to be commercially 
successful, and have been installed in many visible projects--including 
a 1MW addition to the Ronald Reagan Presidential Library to house its 
Air Force One exhibit.
    Our company's customer list is varied across industries and the 
country. Here are just a few examples that provide an insight into how 
Capstone microturbine technology is helping to create a cleaner, more 
efficient economy:

   In our home state of California, sixteen of our sixty five 
        kilowatt microturbines provide electricity to the Ronald Reagan 
        Presidential Library. The waste heat from the turbines runs 
        through an absorption chiller to provide air conditioning to 
        the Air Force One Pavilion. Installing this CCHP system 
        eliminated the need to construct an additional power line to 
        the site and saves the facility over $300,000 per year in 
        utility bills.
   In Michigan, at the Dulk Dairy in Ravenna, the biogas from 
        cow manure powers a microtubine that creates clean onsite power 
        while the heat is used in the farm's processes. This dairy 
        project and others like it help farmers become cleaner, more 
        efficient, and more productive.
   DesignLine , North Carolina-based company packages our 
        microturbines into hybrid electric buses. New York City has 
        just decided to purchase ninety of these hybrid buses after 
        successful beta testing. The bus's microturbine can run on 
        diesel, biodiesel, or compressed natural gas, and is much more 
        energy efficient and produces significantly less emissions than 
        a traditional bus.
   In Oregon, a microturbine CHP plant provides electricity and 
        hot water to the I,EED Platinum Oregon Health and Science 
        University building. The CHP system helped OHSU to receive all 
        ten LEED energy points. The building is a showcase on how our 
        technology can interact with other clean and efficient 
        technologies, such as solar energy.
   In New Mexico, fifteen of our units provide remote power to 
        a booster station on an oil pipeline near Ramon, where there is 
        no grid power. The reliability of our technology was the 
        motivation for this customer. Microturbines provide primary 
        power at pumping stations across New Mexico and in other oil 
        and gas producing states.
   In Alaska and the Gulf of Mexico, Capstone has installed 
        dozens of microturbines on offshore oil and gas platforms, 
        where they produce clean electricity from gases that are 
        typically flared and wasted. Producing power from fuel onsite 
        reduces the need to transport diesel fuel to the platforms, 
        while providing reliability to their operations in harsh 
        weather conditions.
   In New York City, we have several microturbine CHP plants 
        located on rooftops and setbacks of skyscraper office 
        buildings. The electricity produced from these systems 
        drastically reduces tenants' energy prices while providing 
        secure power through any sort of blackout. The exhaust heat 
        captured by the system provides heat and in some cases air 
        conditioning to the building.

    Our continued success is not guaranteed, and it has often been a 
bumpy road to get to this point. The growth of companies like Capstone 
depends on enlightened policy from government like the legislation 
being considered today. We strongly support this bill and urge the 
Congress in the months ahead to fight on the side of the emerging 
innovative, green economy in America. The approach to climate change 
and renewable energy should balance the desire to cut carbon emissions 
with the realization that fossil fuels can be used cleanly and 
efficiently. Energy efficiency is a key weapon in the double-pronged 
fight against climate change and the economic challenges we face today.
    In particular, it is critical that increasing our nation's combined 
heat and power assets be a priority of forthcoming energy legislation. 
Adding CHP will increase energy efficiency, lower emissions, bolster 
energy efficiency, create jobs, and increase economic competitiveness.
    Again, on behalf of the 200 green employees at Capstone, I thank 
you for this opportunity to provide testimony on this important 
legislation.
            Sincerely,
                                         Darren R. Jamison,
                                                 President and CEO.

                                    

      
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