[Senate Hearing 111-477]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-477
 
                    DOE BUDGET FOR FISCAL YEAR 2011

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



                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

RECEIVE TESTIMONY ON THE U.S. DEPARTMENT OF ENERGY'S BUDGET FOR FISCAL 
                               YEAR 2011

                               __________

                            FEBRUARY 4, 2010


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               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
Chu, Hon. Steven, Department of Energy...........................     3
Murkowski, Hon. Lisa, U.S. Senator from alaska...................     2
National Association of Royalty Owners (NARO)....................    41

                                APPENDIX

Responses to additional questions................................    49


                    DOE BUDGET FOR FISCAL YEAR 2011

                              ----------                              


                       THURSDAY, FEBRUARY 4, 2010

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:02 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. All right. Good morning, everyone.
    The purpose of today's hearing is to receive testimony on 
the fiscal year 2011 Department of Energy budget.
    We want to thank Secretary Chu for testifying today on the 
Department's 2011 budget, and I compliment him and his staff 
for their timely and thorough budget. That has been a tradition 
in the Department of Energy and very much carried forward this 
year.
    Given our stark fiscal climate, I appreciate the 
President's commitment to the continued development of clean 
energy programs that will help the United States be competitive 
in the world economy. The Department continues to support 
renewables and conservation, as well as electricity delivery 
and transmission, but as in past years, I am concerned about 
the proposal to zero out research for oil and gas development, 
especially in light of the recent natural gas discoveries here 
in the United States.
    The nuclear energy research budget is headed in the right 
direction by integrating it as part of a portfolio of low 
carbon energy sources.
    There is an increase for the Energy Information 
Administration that, in my view, is long overdue.
    Finally, the Department has taken the lead on innovative 
energy research and development by proposing $300 million in 
funding for ARPA-E, the Advanced Research Projects Agency for 
Energy, as well as creating centers or hubs in energy storage, 
energy-efficient buildings, and nuclear reactor simulation, 
similar to the Joint Bioenergy Institute, which I visited with 
Secretary Chu a year or so ago.
    Again, we thank you for appearing before the committee 
today and we will have questions after your statement. But 
first, let me call on Senator Murkowski.

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

    Senator Murkowski. Thank you, Mr. Chairman.
    Thank you, Secretary, for sitting before us this morning. I 
appreciate your contributions.
    Last week at the President's State of the Union, he 
remarked on energy. My take on it was it appeared to present a 
more centrist, kind of an all-of-the-above approach to the 
energy policy. For example, he called for increasing support 
for additional nuclear energy, as well as for oil and gas 
production. This was certainly a welcome change from my 
perspective, expanded beyond the ``renewable only'' mantra that 
we have been hearing from the agencies.
    With the budget request that we received on Monday, I 
already see a disconnect between last week's speech and some 
agencies' budget priorities.
    I will start first with nuclear. I am certainly very 
pleased to see additional funding for the loan guarantee 
program that Congress established in 2005, but I am frustrated 
that DOE has still not issued a loan guarantee for nuclear 
power. I hope that we can expect the first one shortly.
    Perhaps more troubling to me is the Department's plan to 
withdraw its Yucca Mountain application from the NRC with 
prejudice within the next 30 days. This leaves us without a 
viable repository option at this point and it exposes taxpayers 
to billions in liability for the Government's breach of 
contract.
    Some agencies' budget requests are also inconsistent with 
the desire to increase the Nation's energy security through 
domestic oil and gas production. Not only does the budget 
request propose to cancel a $71 million project that would add 
needed capacity to the Strategic Petroleum Reserve, it contains 
substantial tax and fee increases for domestic oil and gas 
producers. These policies are clearly not designed to spur more 
domestic production.
    The budget request also appears to pick winners and losers 
within the renewable industry. I was pleased personally to see 
the additional funding slated for geothermal activities. 
However, while the Department calls for significant funding 
increases for both solar and wind activities, it cuts funding 
for hydropower. In fact, hydropower, which provides emissions-
free baseload power and has tremendous job potential is the 
only renewable resource to see a slash in funding this year.
    I am also concerned that DOE is asking for a budget 
increase on top of the $37 billion in additional stimulus funds 
that it received. As of yesterday, the DOE Web site showed that 
it has spent just $2.1 billion of those funds in the past year, 
just slightly more than the $1.8 billion increase that has been 
proposed for its baseline budget. DOE had authority to spend a 
total of $63 billion last year, but did not come close to that 
level. At a time of record debt and another year with a record 
deficit, we should ask ourselves if the Department truly needs 
authority to spend more this year when we know that DOE is 
having difficulty spending the money that it already has.
    Finally, on a more parochial note, perhaps I am 
disappointed that the administration is not working to improve 
energy technology and energy efficiency efforts in cold-climate 
States like Alaska, particularly since last year's budget 
terminated funding for the Arctic Energy Office.
    I know that we will have an opportunity this morning, Mr. 
Chairman, to get into these issues with a little more detail.
    Again, I want to thank Secretary Chu for being with us.
    The Chairman. Mr. Secretary, why don't you go ahead with 
your statement, and then we will have questions.

 STATEMENT OF HON. STEVEN CHU, SECRETARY, DEPARTMENT OF ENERGY

    Secretary Chu. Thank you, Chairman Bingaman, Ranking Member 
Murkowski, members of the committee. I am glad to have the 
opportunity to discuss the President's fiscal year 2011 budget 
request for the Department of Energy.
    President Obama stated, ``The nation that leads the world 
in creating new sources of clean energy will be the Nation that 
leads the 21st century global economy.'' I fervently share this 
view. The President's fiscal year 2011 budget request for $28.4 
billion for the Department of Energy will help position the 
United States to be a global leader in the new energy economy. 
The budget request makes much-needed investments to harness the 
power of American ingenuity. This request will create clean 
energy jobs, expand the frontiers of science, reduce nuclear 
dangers, and help curb carbon pollution that threatens our 
planet.
    The President's budget request includes an investment of 
$2.4 billion in energy efficiency and renewable sources of 
energy. It also promotes innovative energy efficiency and 
renewable energy projects through $500 million in credit 
subsidy that will support $3 billion to $5 billion in lending. 
It expands the Advanced Manufacturing Tax Credit by $5 billion 
to help build a robust domestic manufacturing capacity for 
clean energy technologies. Through this budget, we will 
increase research, demonstration, and deployment of wind, 
solar, and geothermal energies, make buildings and homes more 
efficient, develop energy-efficient vehicles, and pursue carbon 
capture and sequestration.
    Nuclear energy must also be part of our clean energy mix. 
Our budget request includes an additional $36 billion in loan 
guarantee authority for the nuclear power sector to help 
construct the first nuclear plants in decades, as well as $495 
million for nuclear energy research and development.
    We have many technologies in hand today to begin the 
transition to a low-carbon economy, but we will need 
breakthroughs and better technology to meet our long-term 
goals. The budget request invests in basic and applied 
research. It puts us on a path of doubling the funding for 
science, a key Presidential priority.
    The budget request supports the Department's three new 
complementary approaches to marshaling the Nation's brightest 
minds to accelerate energy breakthroughs.
    The Department will continue funding the three Energy 
Innovation Hubs introduced in fiscal year 2010. In addition, we 
are proposing a new hub to dramatically improve batteries and 
energy storage.
    The Energy Frontier Research Centers program will be 
expanded to capture new and emerging opportunities.
    In the fiscal year 2011 budget, we also include $300 
million for ARPA-E.
    We are requesting $55 million to start the RE-ENERGYSE 
initiative to help educate the next generation of scientists 
and engineers.
    In addition to the health of our economy and our planet, 
the Department of Energy is focused on the safety and security 
of our people. Last April in Prague, President Obama outlined 
an ambitious agenda to address the greatest threat to global 
security, the danger of terrorists getting their hands on 
nuclear weapons or the material to build them. The Department 
is requesting a significant increase, more than $550 million in 
new funding, for the NNSA Defense Nuclear Nonproliferation 
Program to help meet the President's goal of securing all 
vulnerable nuclear materials around the world in 4 years.
    The President has also made it clear that as long as 
nuclear weapons continue to exist, it is essential we ensure 
the safety, security, and effectiveness of our nuclear 
stockpile. With the $7 billion in funds we have requested, we 
can upgrade our infrastructure that has been allowed to decay 
over the past decade, support the cutting-edge work of our 
national labs, and recruit the skilled work force that we need.
    The budget also protects public health and safety by 
cleaning up the environmental legacy of our Nation's nuclear 
weapons program. Additionally, it instructs the Department to 
discontinue its application to the U.S. Nuclear Regulatory 
Commission for a license to construct a high-level waste 
geologic repository at Yucca Mountain. On Monday, the 
Department filed a motion with the NRC to stay all proceedings 
for 30 days. During this time, we will file a formal motion to 
withdraw the application.
    To deal with our nuclear waste management needs, the 
administration has brought together a range of experts to 
conduct a comprehensive review of the back end of the fuel 
cycle. The Blue Ribbon Commission announced last week, co-
chaired by General Brent Scowcroft and Congressman Lee 
Hamilton, will provide recommendations for a safe, long-term 
solution. We also propose breaking down artificial stovepipes 
and merging the Office of Civilian Radioactive Waste Management 
with the Office of Nuclear Energy.
    Finally, we are committed to being good stewards of the 
taxpayers' money. For example, we have eliminated more than 
$2.7 billion in tax subsidies for oil, coal, and gas 
industries. This step is estimated to generate more than $38.8 
billion in revenue for the Federal Government over the next 10 
years.
    To further our reform agenda, the budget request also 
includes $2 million to establish a new management reform 
initiative. This initiative will report directly to me and will 
receive close personal attention.
    Building a clean energy future will not be easy, but it is 
necessary for our economy and our security. As a scientist, I 
am optimistic and I believe we can meet this challenge and lead 
the world in the 21st century.
    President Obama and I are looking forward to working with 
this committee and this Congress to build a stronger, safer, 
and more prosperous future.
    I am pleased to answer any questions at this time.
    [The prepared statement of Secretary Chu follows:]

 Prepared Statement of Hon. Steven Chu, Secretary, Department of Energy
    Chairman Bingaman, Ranking Member Murkowski, and Members of the 
Committee, thank you for the opportunity to appear before you today to 
discuss the President's Fiscal Year 2011 budget request for the 
Department of Energy.
    President Obama has stated, ``The nation that leads the world in 
creating new sources of clean energy will be the nation that leads the 
21st century global economy.'' I fervently share this view. The 
President's FY 2011 budget request of $28.4 billion will help position 
the United States to be the global leader in the new energy economy. 
The budget request makes muchneeded investments to harness the power of 
American ingenuity. This request will create clean energy jobs, expand 
the frontiers of science, reduce nuclear dangers, and help curb the 
carbon pollution that threatens our planet. As part of this 
Administration's commitment to fiscal responsibility, the Department of 
Energy is also proposing several program reductions and terminations.
American Recovery and Reinvestment Act
    The FY11 budget request builds on the investments in the American 
Recovery and Reinvestment Act. Through the $36.7 billion the Department 
received from the Recovery Act, we are putting Americans to work, while 
helping to build a clean energy economy, spur energy innovation, and 
reduce our dependence on oil. We've begun to make our homes and offices 
more energy efficient, modernize our grid, and invest in key renewable 
energy projects. Getting this money out the door quickly, carefully, 
and transparently has been and will continue to be a top priority for 
me.
FY11 Budget Supports Strategic Priorities
    To continue the progress we have made, the FY11 budget request 
supports the Department's strategic priorities of:

   Transitioning to a low-carbon economy by developing and 
        deploying clean and efficient energy technologies, increasing 
        generation capacity and improving our transmission 
        capabilities;
   Investing in scientific discovery and innovation to find 
        solutions to pressing energy challenges and maintain American 
        economic competitiveness; and
   Enhancing national security by ensuring the safety, security 
        and effectiveness of the nuclear stockpile without testing. The 
        budget request also includes funds to work with our 
        international partners to secure vulnerable nuclear material 
        around the world within four years, and advance our nuclear 
        legacy cleanup.

    These strategic priorities will be enabled by a continued 
commitment to improving the management and fiscal performance of the 
Department.
Energy
    To transition to a low-carbon future, we must change the way we 
generate and use energy. The President's budget request invests in 
clean energy priorities, including an investment of $2.4 billion in 
energy efficiency and renewable sources of energy. It also promotes 
innovative energy efficiency and renewable energy projects through $500 
million in credit subsidy that will support $3 to $5 billion in 
lending. It expands the Advanced Manufacturing Tax Credit by $5 billion 
to help build a robust domestic manufacturing capacity for clean energy 
technologies. Through this budget, we will increase research, 
demonstration, and deployment of wind, solar and geothermal energies; 
make buildings and homes more efficient; develop energy efficient 
vehicles; and pursue carbon capture and sequestration.
    Nuclear energy must also be a part of our clean energy mix. During 
his State of the Union address last week, President Obama said, ``To 
create more of these clean energy jobs, we need more production, more 
efficiency, more incentives. And that means building a new generation 
of safe, clean nuclear power plants in this country.'' The President 
and I are committed to restarting our domestic nuclear industry. Our 
budget request includes an additional $36 billion in loan guarantee 
authority for the nuclear power sector to help construct the first new 
nuclear plants in decades, as well as $495 million for research and 
development to support the competitiveness, safety and proliferation 
resistance of nuclear energy in the United States and abroad.
Innovation
    We have many technologies in hand today to begin the transition to 
a low-carbon economy, but we will need breakthroughs and better 
technologies to meet our long-term goals. The budget request invests in 
basic and applied research and puts us on the path to doubling funding 
for science, a key presidential priority. We are also requesting $55 
million to start the RE-ENERGYSE initiative to help educate the next 
generation of scientists and engineers.
    The budget request also supports the Department's three new, 
complementary approaches to marshalling the nation's brightest minds to 
accelerate energy breakthroughs.
    The first approach is the Energy Innovation Hubs. The Hubs are 
multidisciplinary, goal-oriented, and will be managed by top teams of 
scientists and engineers with enough resources and authority to move 
quickly in response to new developments. They are to be modeled after 
laboratories such as MIT's Radiation Laboratory, which developed radar 
during World War II, and Bell Laboratories when it invented and 
developed the transistor. Ideally, this work will be conducted under 
one roof. The Department will continue funding the three Energy 
Innovation Hubs introduced in FY 2010. In addition, we are proposing a 
new Hub to dramatically improve batteries and energy storage.
    The second approach is the Energy Frontier Research Centers. The 
EFRCs are mainly university-based, problem-oriented research. We have 
identified key scientific barriers to energy breakthroughs, and we 
believe we can clear these roadblocks faster by linking together small 
groups of researchers across departments, schools, and institutions.
    The third funding approach is the Advanced Research Projects 
Agency--Energy (ARPA-E). ARPA-E is technology-oriented. We are seeking 
the boldest and best ideas for potentially transformative energy 
technologies and funding them to see if they work. The FY 2011 budget 
request includes $300 million for ARPA-E.
Security
    In addition to the health of our economy and our planet, the 
Department of Energy is focused on the safety and security of our 
people. Last April in Prague, President Obama outlined an ambitious 
agenda to address the greatest threat to global security--the danger of 
terrorists getting their hands on nuclear weapons or the material to 
build them. The Department is requesting a significant increase in the 
budget--more than $550 million in new funding--for the NNSA Defense 
Nuclear Nonproliferation program to help meet the President's goal of 
securing all vulnerable nuclear materials around the world in four 
years.
    The President has also made clear that, as long as nuclear weapons 
continue to exist, it is essential that we ensure the safety, security 
and effectiveness of our nuclear stockpile. With the $7 billion in 
funds we have requested, we can upgrade our infrastructure that has 
been allowed to decay in the past decade, support the cutting-edge work 
of our National Labs, and recruit the skilled workforce we need today 
and in the future. Over the next five years, we intend to boost this 
funding by more than $5 billion. Even in a time of tough budget 
decisions, we must make this investment for the sake of our security.
    The budget also protects public health and safety by cleaning up 
the environmental legacy of the Nation's nuclear weapons program. 
Additionally, it instructs the Department to discontinue its 
application to the U.S. Nuclear Regulatory Commission for a license to 
construct a high-level waste geologic repository at Yucca Mountain. On 
Monday, the Department filed a motion with the NRC to stay all 
proceedings for 30 days. During this time, we will file a formal motion 
to withdraw the application.
    Both the President and I have made clear that Yucca Mountain is not 
an option. To deal with our nuclear waste management needs, the 
Administration has brought together a range of experts to conduct a 
comprehensive review of the back end of the fuel cycle. The Blue Ribbon 
Commission announced last week, and co-chaired by General Brent 
Scowcroft and Congressman Lee Hamilton, will provide recommendations 
for developing a safe, long-term solution to managing the Nation's used 
nuclear fuel and its nuclear waste.
    As part of our comprehensive strategy to restart the nuclear 
industry, we also propose breaking down artificial stovepipes and 
merging the Office of Civilian Radioactive Waste Management into the 
Office of Nuclear Energy.
Management
    Finally, in order to transform the way Americans generate and use 
energy, we must transform the Department itself. As part of the Obama 
Administration's reform agenda, the budget request includes $2 million 
to establish a new Management Reform initiative to provide strategic 
direction, coordination and oversight of reform initiatives. This 
initiative will report directly to me and will receive close personal 
attention. We made important reforms when we began to implement the 
Recovery Act, and now we need to institutionalize those reforms and 
apply them across the Department.
    Additionally, we are committed to being good stewards of the 
taxpayers' money. As we developed the budget, we looked to eliminate or 
reduce programs where we could. For example, we eliminated more than 
$2.7 billion in tax subsidies for oil, coal and gas industries. This 
step is estimated to generate more than $38.8 billion in revenue for 
the federal government over the next 10 years.
    Building a clean energy future won't be easy, but it is necessary 
for our economy and our security. As a scientist, I am an optimist, and 
I believe that we can meet this challenge and lead the world in the 
21st century.
          highlights of the fy2011 department of energy budget
    The Department's Fiscal Year (FY) 2011 budget request of $28.4 
billion, a 6.8 percent or $1.8 billion increase from FY 2010, supports 
the President's commitment to respond in a considered, yet expeditious 
manner to the challenges of rebuilding the economy, maintaining nuclear 
deterrence, securing nuclear materials, improving energy efficiency, 
incentivizing production of renewable energy, and curbing greenhouse 
gas emissions that contribute to climate change. Together with the 
American Recovery and Reinvestment Act of 2009 (Recovery Act) and FY 
2010 budget, the FY 2011 budget request supports investment for a 
multi-year effort to address these interconnected challenges.
    The FY 2011 budget builds on the $36.7 billion in Recovery Act 
funding. By the end of FY 2010, the Department expects to obligate 100 
percent and outlay roughly 35-40 percent of Recovery Act funds. In 
developing the FY 2011 budget request, the Department has taken these 
investments into account. Recovery Act investments in energy 
conservation and renewable energy sources ($16.8 billion), 
environmental management ($6 billion), loan guarantees for renewable 
energy and electric power transmission projects ($4 billion), grid 
modernization ($4.5 billion), carbon capture and sequestration ($3.4 
billion), basic science research ($1.6 billion), and the establishment 
of the Advanced Research Projects Agency--Energy ($0.4 billion) will 
continue to strengthen the economy by providing much-needed investment, 
by saving or creating tens of thousands of direct jobs, cutting carbon 
emissions, and reducing U.S. dependence on oil.
    The President's FY 2011 Budget supports our three strategic 
priorities:

   Innovation.--Investing in science, discovery and innovation 
        to provide solutions to pressing energy challenges
   Energy.--Providing clean, secure energy and promoting 
        economic prosperity through energy efficiency and domestic 
        forms of energy
   Security.--Safeguarding nuclear and radiological materials, 
        advancing responsible legacy cleanup, and maintaining nuclear 
        deterrence

    These strategic priorities will be enabled by a continued 
commitment to management excellence:

   Management: Transforming the culture of the Department with 
        a results-oriented approach
Innovation: Investing in Science, Discovery and Innovation to Provide 
        Solutions to Pressing Energy Challenges
    As President Obama made clear in his remarks to the National 
Academy of Sciences in April 2009, the public sector must invest in 
research and innovation not only because the private sector is 
sometimes reluctant to take large risks, but because the rewards will 
be broadly shared across the economy. Leading requires assembling a 
critical mass of the best scientists and engineers to engage in 
mission-oriented, cross-disciplinary approaches to addressing current 
and future energy challenges. To develop clean energy solutions and 
maintain nuclear security, the Department must cultivate the science, 
technology, engineering, and mathematics workforce of the next 
generation. The FY 2011 budget request of $55 million for RE-ENERGYSE 
(Regaining our ENERGY Science and Engineering Edge) supports K-20+ 
science and engineering education.
    With every initiative the Department undertakes, sound science must 
be at the core. In FY 2011 the Department will increasingly emphasize 
cross-cutting initiatives to link science throughout the Department, 
specifically with energy and national security programs. These cross-
cutting initiatives will enhance science capabilities to create 
knowledge and innovative technologies that can be brought to bear on 
national energy and security issues, leverage world-class science and 
engineering expertise to establish global leadership as clean energy 
innovators, and employ use-inspired research to reduce the cost and 
time to bring technologies to market at scale. The Department believes 
that it will deliver solutions more quickly and efficiently through our 
efforts to break down the traditional stovepipes and operate in a more 
integrated and coordinated manner. The FY 2011 Budget continues to 
address the President's priorities in an integrated and efficient 
manner, and to deliver results for the American taxpayer.
    The Department continues its strong commitment to basic research 
and supports the President's Plan for Science and Innovation by 
requesting funding for the Office of Science at $5.1 billion, a 4.4 
percent or $218 million increase from FY 2010. The FY 2011 budget 
request will support the training of students and researchers in fields 
critical to national competitiveness and innovation, and will support 
investments in areas of research essential for a clean energy future. 
The President's Plan commits to doubling Federal investment in basic 
research at select agencies. The Department supports an overarching 
commitment to science by investing in basic and applied research, 
creating new incentives for private innovation and promoting 
breakthroughs in energy.
    To help achieve the game-changing breakthroughs needed to continue 
leading the global economy, the FY 2011 budget request includes $300 
million for the Advanced Research Projects Agency--Energy (ARPA-E). 
Introduced in FY 2009, ARPA-E is responsible for enabling specific 
high-risk and high-payoff transformational research and development 
projects. Beyond simply funding transformational research that creates 
revolutionary technologies, ARPA-E is dedicated to the market adoption 
of those new technologies to meet the Nation's long-term energy 
challenges. This funding, along with the $400 million made available 
through the Recovery Act, will provide sustained investment in this 
pioneering program.
    The Department will continue funding the three Energy Innovation 
Hubs introduced in FY 2010 to focus on developing fuels that can be 
produced directly from sunlight, improving energy efficient building 
systems design, and using modeling and simulation tools to create a 
virtual model of an operating advanced nuclear reactor. In addition, 
DOE is proposing a new Hub to focus on batteries and energy storage. 
Each of these Hubs will bring together a multidisciplinary team of 
researchers in an effort to speed research and shorten the path from 
scientific discovery to technological development and commercial 
deployment of highly promising energy-related technologies.
    Complementing the Hubs, the Department proposes expanding the 
Energy Frontier Research Centers in FY 2011 to capture new, emerging 
opportunities by furthering its scientific reach and potential 
technological impact by competitively soliciting in two categories: 
discovery and development of new materials critical to science 
frontiers and technology innovations, and basic research for energy 
needs.
Energy: Providing Clean, Secure Energy and Promoting Economic 
        Prosperity through Energy Efficiency and Domestic Forms of 
        Energy
    In Copenhagen, President Obama emphasized that climate change is a 
grave and growing danger. The imperative now is to develop the capacity 
to confront the challenges climate change poses and seize the 
opportunity to be the global leader in the clean energy economy. 
Meeting the Administration's goal to reduce carbon emissions by more 
than 80 percent by 2050 will be achieved by addressing supply and 
demand through increased energy efficiency, renewable generation, and 
grid modernization, as well as improvements in existing technologies 
and information analysis. An important tool that will continue to be 
used to address these issues will be loan guarantees. The Department's 
FY 2011 budget request, building on the FY 2010 budget and the Recovery 
Act, invests in the research, development, and deployment of 
technologies that will position the United States to lead international 
efforts to confront climate change now and in the future. The long-term 
economic recovery will be sustained by these continued investments in 
the new energy economy.

   Loan Guarantees

    The Loan Guarantee Program Office (LGPO) is a vital tool for 
promoting innovation in the energy sector across a broad portfolio of 
clean and efficient energy technologies. In FY 2011, the Department is 
requesting funding and authority to support approximately $40 billion 
of innovative energy technology development. During FY 2010, the LGPO 
streamlined the application review process. In FY 2011, the Department 
will continue to accelerate the availability of loans to leverage 
private sector investment in clean energy projects that will save and 
create jobs and stimulate the economy.

   Energy Efficiency

    In August 2009, President Obama said, ``If we want to reduce our 
dependence on oil, put Americans back to work and reassert our 
manufacturing sector as one of the greatest in the world, we must 
produce the advanced, efficient vehicles of the future.'' In FY 2011, 
the Department will promote energy efficiency in vehicles technologies, 
at $325 million. No less important to achieving the President's stated 
ambitions is decreasing energy consumption through developing and 
advancing building technologies ($231 million) and industrial 
technologies ($100 million). Federal assistance for state-level 
programs, such as State Energy Program grants ($75 million, a 50 
percent increase from FY 2010) and Weatherization Assistance grants 
($300 million, a 43 percent increase from FY 2010), will help States 
and individuals take advantage of efficiency measures for buildings and 
homes, lower energy costs and greenhouse gas emissions, and develop an 
ever-evolving, technically proficient workforce.

   Clean, Renewable Energy Generation

    The FY 2011 budget request will modernize the Nation's energy 
infrastructure by investing in a variety of renewable sources such as 
solar ($302 million), wind ($123 million), water ($41 million), 
hydrogen ($137 million), biomass ($220 million) and geothermal ($55 
million). These sources of energy reduce the production of greenhouse 
gas emissions and continue the pursuit of a clean energy economy built 
on the next generation of domestic production. The Department is also 
continuing to promote domestic clean energy through the four Power 
Marketing Administrations, which market and deliver electricity 
primarily generated by hydroelectric dams.

   Grid Modernization

    In support of the modernization of the electricity grid, the 
President's FY 2011 Budget requests $144 million for research and 
development to improve reliability, efficiency, flexibility, and 
security of electricity transmission and distribution networks. The 
``Smart Grid'' will integrate new and improved technologies into the 
energy mix, ensuring reliability, integration of renewable energy 
resources, and improving security.
    While investing in energy efficiency, renewable energy generation, 
and grid modernization are fundamental steps necessary for creating a 
clean energy economy; investing in the improvement of existing sources 
of energy will provide a bridge between current and future technologies 
These technologies are already a major segment of the energy mix and 
will play a critical role in providing a solid foundation that will 
make possible the creation of this new economy.

   Safe and Secure Nuclear Energy

    Nuclear energy currently supplies approximately 20 percent of the 
Nation's electricity and 70 percent of the Nation's clean, non-carbon 
electricity. The request for the Office of Nuclear Energy includes $495 
million for research, development, and demonstration in addition to 
investments in supportive infrastructure. Work on advanced reactor 
technologies, fuel cycle technologies, waste management, and cross-
cutting technologies and transformative concepts will help ensure that 
nuclear energy remains a safe, secure, economical source of clean 
energy. The Department will also promote nuclear energy through the 
Loan Guarantee Program, which is requesting an additional $36 billion 
in loan authority for nuclear power in FY 2011 (for a total of $54.5 
billion).

   Clean and Abundant Fossil Energy

    The world will continue to rely on coal fired electrical generation 
to meet energy demand. It is imperative that the United States develop 
the technology to ensure that base-load electricity generation is as 
clean and reliable as possible. The Office of Fossil Energy will invest 
$438 million in the research and development of advanced coal-fueled 
power systems and carbon capture and storage technologies. This will 
allow the continued use of the abundant domestic coal resources in the 
U.S. while reducing greenhouse gas emissions.
    Accurate energy information and analysis play a critical role in 
promoting efficient energy markets and informing policy-making and 
strategic planning. This budget requests a total of $129 million for 
the Energy Information Administration, the statutory statistical agency 
within the Department, to improve energy data and analysis programs.
Security: Safeguarding Nuclear and Radiological Materials, Advancing 
        Responsible Legacy Cleanup and Maintaining Nuclear Deterrence
   Reduces the Risk of Proliferation

    In an April 2009 speech in Prague, the President called the threat 
of nuclear proliferation ``the most immediate and extreme threat to 
global security'' and announced his support for a new international 
effort to secure all vulnerable nuclear material around the world 
within four years. The FY 2011 budget for the NNSA Defense Nuclear 
Nonproliferation program supports this effort, recognizing the urgency 
of the threat and making the full commitment to global cooperation that 
is essential to addressing this threat. The budget provides $2.7 
billion in FY 2011, and $13.7 billion through FY 2015 to detect, 
secure, and dispose of dangerous nuclear and radiological material 
worldwide. This request is an increase of 26 percent or $550 million 
from FY 2010. The budget supports cooperative nonproliferation 
initiatives with foreign governments and the effort and expertise to 
forge them into durable international partnerships, achieving the 
objective of a world without nuclear weapons. The budget continues the 
installation of radiation detection equipment at international border 
crossings and Megaports, significantly expands materials protection and 
control security upgrades at selected sites in foreign countries to 
address outsider and insider threats, and accelerates the pace of 
highly enriched uranium research reactor conversions with an urgent 
focus to develop the capability to produce the medical isotope 
molybdenum-99 in the U.S. using low enriched uranium. The FY 2011 
budget request provides $4.4 billion over five years for Fissile 
Materials Disposition including the construction of U.S. facilities for 
the disposition of U.S. weapons-grade plutonium in fulfillment of our 
commitment with the Russian Federation under the Plutonium Management 
and Disposition Agreement of September 2000, and provides the first 
$100 million of a $400 million U.S. commitment to advance the 
construction of plutonium disposition facilities in the Russian 
Federation. The FY 2011 budget request also supports a funding increase 
for Nonproliferation and Verification Research and Development for new 
technologies in support of treaty monitoring and verification.

   Leverages Science to Maintain Nuclear Deterrence

    The FY 2011 budget request advances the Department's commitment to 
the national security interests of the United States through 
stewardship of a safe, secure and effective nuclear weapons stockpile 
without the use of underground nuclear testing. As the role of nuclear 
weapons in our Nation's defense evolves and the threats to national 
security continue to grow, the focus of this enterprise must also 
change and place its tremendous intellectual capacity and unique 
facilities in the service of addressing other challenges related to 
national defense. NNSA is taking steps to move in this direction, 
including functioning as a national science, technology, and 
engineering resource to other agencies with national security 
responsibilities. NNSA must ensure our evolving strategic posture 
places the stewardship of our nuclear stockpile, nonproliferation 
programs, counterterrorism, missile defenses, and the international 
arms control objectives into one comprehensive strategy that protects 
the American people and our allies. Through the NNSA, the Department 
requests $7.0 billion for the Weapons Activities appropriation, a 9.8 
percent or $624 million increase from the FY 2010 appropriation. This 
increase provides a strong basis for transitioning to a smaller nuclear 
stockpile, strengthens the science, technology and engineering base, 
modernizes key nuclear facilities, and streamlines the enterprise's 
physical and operational footprint.
    These investments will enable execution of a comprehensive nuclear 
defense strategy based on current and projected global threats that 
relies less on nuclear weapons, yet enhances national security by 
strengthening the NNSA's nuclear security programs. This improved NNSA 
capability base will mitigate the concerns regarding ratification of 
the follow-on Strategic Arms Reduction Treaty and the Comprehensive 
Test Ban Treaty. The FY 2011 request for Weapons Activities has four 
major components. The request for Stockpile Support increases, 
reflecting the President's commitment to maintain the safety, security 
and effectiveness of the nuclear deterrent without underground nuclear 
testing, consistent with the principles of the Stockpile Management 
Program outlined in Section 3113 (a)(2) of the National Defense 
Authorization Act of Fiscal Year 2010 (50 U.S.C. 2524). The request for 
Science, Technology and Engineering increases by over 10 percent, and 
provides the funding necessary to protect and advance the scientific 
capabilities at the U.S. nuclear security laboratories supporting the 
stockpile and broader national security and energy issues. The budget 
request for Infrastructure supports the operation and maintenance of 
the government-owned, contractor-operated facilities in the nuclear 
security enterprise, as well as special capabilities for secure 
transportation and construction. The security and counterterrorism 
component of the budget provides for physical and cyber security in the 
NNSA enterprise, as well as emergency response assets and NNSA's 
focused research and development contribution to the Nation's 
counterterrorism efforts.

   Advances Responsible Environmental Cleanup

    The FY 2011 budget includes $6 billion for the Office of 
Environmental Management to protect public health and safety by 
cleaning up hazardous, radioactive legacy waste from the Manhattan 
Project and the Cold War. This funding will allow the program to 
continue to accelerate cleaning up and closing sites, focusing on 
activities with the greatest risk reduction.
    As the Department continues to make progress in completing clean-
up, the FY 2011 budget request of $189 million for the Office of Legacy 
Management supports the Department's long-term stewardship 
responsibilities and payment of pensions and benefits for former 
contractor workers after site closure.
    The Administration has determined that the Yucca Mountain 
repository is not a workable option and has decided to terminate the 
Office of Civilian Radioactive Waste Management. The core functions and 
staff to support efforts under the Nuclear Waste Policy Act to meet the 
obligation of the Government will transfer to the Office of Nuclear 
Energy by the end of FY 2010.
Management: Transforming the Culture of the Department with a Results-
        Oriented Approach
    In order to transform the way Americans use and produce energy, we 
must transform the Department of Energy. The Department is committed to 
strengthening its management culture and increasing its focus on 
results. The implementation of the Recovery Act provided the Department 
with an opportunity to continue to refine best practices in management, 
accountability, operations, and transparency. These best practices will 
be applied in executing the FY 2011 budget.
    To achieve our strategic priorities, the Department requests a net 
of $169 million for Departmental Administration. These funds, along 
with resources in individual program offices, will help transform key 
functional areas such as human, financial, project, and information 
technology management. The request includes $2 million for Management 
Reform within the Office of the Secretary, which will provide the 
Department with strategic direction, coordination, and oversight of 
reform initiatives.
         department of energy fy 2011 program office highlights
Office of Science: Supporting Cutting-Edge Foundational Scientific 
        Research
    The Department of Energy's Office of Science (SC) delivers 
discoveries and scientific tools that transform our understanding of 
energy and matter and advance the national, economic, and energy 
security of the United States. SC is a primary sponsor of basic 
research in the United States, leading the Nation to support the 
physical sciences in a broad array of research subjects in order to 
improve energy security and address issues ancillary to energy, such as 
climate change, genomics, and life sciences. In FY 2011, the Department 
requests $5.1 billion, an increase of 4.4 percent over the enacted FY 
2010 appropriation, to invest in science research. The FY 2011 request 
supports the President's Plan for Science and Innovation, which 
encompasses the entire SC budget, as part of a strategy to double 
overall basic research funding at select agencies. As part of this 
plan, the budget request supports the training of students and 
researchers in fields critical to our national competitiveness and 
innovation economy, and supports investments in areas of research 
critical to our clean energy future and to making the U.S. a leader on 
climate change.
    SC is addressing critical societal challenges and key missions of 
the Department of Energy through significant improvements in existing 
technologies and development of new energy technologies. SC will 
accomplish this by: (1) sustained investments in exploratory and high-
risk research in traditional and emerging disciplines, including the 
development of new tools and facilities; (2) focused investments in 
high-priority research areas; and (3) investments that train new 
generations of scientists and engineers to be leaders in the 21st 
century. The FY 2011 budget request supports all three of these 
investment strategies.
    Two of the four Energy Innovation Hubs being requested in FY 2011 
are through the Office of Science; these Hubs will bring together teams 
of experts from multiple disciplines to focus on two grand challenges 
in energy: (1) Fuels from Sunlight, a Hub established in FY 2010 and 
(2) Batteries and Energy Storage, a new Hub in the FY 2011 request.
    The Energy Frontier Research Centers (EFRC) program will be 
expanded in the FY 2011 request to capture new, emerging opportunities 
by furthering its scientific reach and potential technological impact. 
New EFRCs will be competitively solicited in two categories: discovery 
and development of new materials that are critical to both science 
frontiers and technology innovations, and basic research for energy 
needs in a limited number of areas that are underrepresented in the 46 
original EFRC awards.
    The FY 2011 request for the U.S. ITER Project ($80 million, a 
decrease of $55 million from FY 2010) is a reflection of the pace of 
ITER construction as of the end of 2009. The Administration is engaged 
in a range of efforts to implement management reforms at the ITER 
Organization and accelerate ITER construction while minimizing the 
overall cost of the Construction Phase for the U.S. and the other ITER 
members.
    The Office of Science supports investigators from more than 300 
academic institutions and from all of the DOE laboratories. The FY 2011 
budget request will support approximately 27,000 Ph.D.s, graduate 
students, undergraduates, engineers, and technicians. Nearly 26,000 
researchers from universities, national laboratories, industry, and 
international partners are expected to use SC scientific user 
facilities in FY 2011.
Advanced Research Projects Agency--Energy: Transformational Research 
        and Development
    The FY 2011 budget request includes $300 million for the Advanced 
Research Projects Agency--Energy (ARPA-E), a program launched in FY 
2009 that sponsors specific high-risk and high-payoff transformational 
research and development projects that overcome the long-term 
technological barriers in the development of energy technologies to 
meet the Nation's energy challenges, but that industry will not support 
at such an early stage. An essential component of ARPA-E's culture is 
an overarching focus on accelerating science to market. Beyond simply 
funding transformational research creating revolutionary technologies, 
ARPA-E is dedicated to the market adoption of those new technologies 
that will fuel the economy, create new jobs, reduce energy imports, 
improve energy efficiency, reduce energy-related emissions, and ensure 
that the U.S. maintains a technological lead in developing and 
deploying advanced energy technologies.
Office of Energy Efficiency and Renewable Energy: Developing and 
        Deploying Clean, Reliable Energy
    The Office of Energy Efficiency and Renewable Energy (EERE) 
strengthens the energy security, environmental quality, and economic 
vitality of the U.S. through the research, development, demonstration 
and deployment (RDD&D) of clean energy technologies and generation and 
advances in energy efficiency. EERE's activities are critical to 
creating a low carbon economy and sustaining strong economic growth and 
job creation while dramatically reducing greenhouse gas emissions and 
energy imports. EERE programs link advances in basic research and the 
creation of commercially successful products and services to ensure 
delivery to the marketplace for general use and implementation.
    The FY 2011 budget request of $2.4 billion, an increase of 5 
percent over FY 2010, is aimed at accelerating revolutionary change in 
the Nation's energy economy. The request includes programs associated 
with meeting the President's goals of investing in the next generation 
of clean energy technologies, vehicles and fuels, and energy efficiency 
measures that reduce energy use in Federal agencies and the industrial 
and building sectors.
            Clean, Renewable Energy Generation
    The FY 2011 budget request continues to work to transform the 
Nation's energy infrastructure by investing over $650 million in a 
variety of renewable sources of electrical generation such as solar 
($302 million, a 22 percent increase over FY 2010), and wind ($123 
million, a 53 percent increase over FY 2010), as well as deploy clean 
technologies to reduce our dependence on oil. The request includes 
expansions on Concentrating Solar Power, biopower and off-shore wind, 
which will provide new, additional avenues for clean energy development 
and deployment. These technologies will reduce the production of 
greenhouse gas emissions and revitalize an economy built on the next 
generation of domestic production.
            Energy Efficiency
    The Department implements a number of efforts to increase energy 
efficiency and conservation in homes, transportation, and industry. The 
FY 2011 budget requests $758 million to accelerate deployment of clean, 
cost-effective, and rapidly deployable energy conservation measures in 
order to reduce energy consumption in residential and commercial 
buildings, and the industrial and Federal sectors. The Department will 
invest $231 million in the Building Technologies program, a 16 percent 
increase over FY 2010 for built environment R&D. Federal assistance for 
state-level programs such as State Energy Program grants ($75 million) 
and Weatherization Assistance Program ($300 million), will continue to 
help citizens implement energy conservation measures, lower energy 
costs and greenhouse gas emissions, and build a technical workforce. 
The FY 2011 request also includes $545 million to accelerate research, 
development and deployment of advanced fuels and vehicles to reduce the 
use of petroleum and greenhouse gas emissions. The FY 2011 budget 
complements the Recovery Act funding for these programs ($3.1 billion 
for State Energy Programs, $5 billion for Weatherization Assistance, $2 
billion for Advanced Battery Manufacturing and $400 million for 
Transportation Electrification).
Office of Electricity Delivery and Energy Reliability: Moving Toward a 
        More Intelligent Grid to Power the Digital Economy
    The FY 2011 budget request for the Office of Electricity Delivery 
and Energy Reliability (OE) budget is $186 million, an increase of 8 
percent over FY 2010. These funds will build on the ``Smart Grid'' 
investments and other activities.
    The ability of the United States to meet the growing demand for 
reliable electricity is challenged by an aging power grid under 
mounting stress. Despite the increasing demand for reliable power 
brought on by the modern digital economy, the power grid in the U.S. 
has suffered from a long period of underinvestment. Much of the power 
delivery system was built on technology developed over 50 years ago and 
thus responds to disturbances with speed limited by the technology of 
that period. This limitation increases the vulnerability of the power 
system to outages that can spread quickly and impact whole regions. 
Breakthroughs in digital network controls, transmission, distribution, 
and energy storage will make the power grid more efficient, alleviating 
the stress on the system, as well as enable greater use of clean and 
distributed energy sources. The return on these investments will come 
from a reduction in economic losses caused by power outages and the 
delay or avoidance of costly investment in new generation and 
transmission infrastructure.
    The budget request provides $144 million for research and 
development, which supports development of technologies that will 
improve the reliability, efficiency, flexibility, functionality, and 
security of the Nation's electricity delivery system. It accelerates 
investment in energy storage capabilities and funds two new research 
initiatives: Advanced Modeling Grid Research, to develop grid-modeling 
capabilities using the large volumes of data generated by advanced 
sensors deployed on the grid; and Power Electronics, to develop new 
power control devices in collaboration with universities. The proposal 
also continues to support the development of ``Smart Grid'' 
technologies and cyber security systems for the power grid.
    The budget request continues support for Permitting, Siting, and 
Analysis ($6.4 million) to assist States, regional entities, and other 
federal agencies in developing policies and programs aimed at 
modernizing the power grid; and for Infrastructure Security and Energy 
Restoration ($6.2 million) to enhance the reliability and resiliency of 
U.S. critical infrastructure and facilitate its recovery from energy 
supply disruptions.
Office of Environmental Management: Reducing Risks and Making Progress
    The mission of the Office of Environmental Management (EM) is to 
complete the safe cleanup of the environmental legacy brought about 
from over six decades of nuclear weapons development, production, and 
Government-sponsored nuclear energy research. This cleanup effort is 
the largest in the world, originally involving two million acres at 107 
sites in 35 states, dealing with some of the most dangerous materials 
known to man.
    EM continues to pursue its cleanup objectives within the overall 
framework of achieving the greatest comparative risk reduction benefit 
and overlaying regulatory compliance commitments 14 and best business 
practices to maximize cleanup progress. To support this approach, EM 
has prioritized its cleanup activities:

   Activities to maintain a safe and secure posture in the EM 
        complex
   Radioactive tank waste stabilization, treatment, and 
        disposal
   Used nuclear fuel storage, receipt, and disposition
   Special nuclear material consolidation, processing, and 
        disposition
   High priority groundwater remediation
   Transuranic and mixed/low-level waste disposition
   Soil and groundwater remediation
   Excess facilities deactivation and decommissioning

    The FY 2011 budget request for $6.0 billion will fund activities to 
maintain a safe and secure posture in the EM complex and make progress 
against program goals and compliance commitments, including reduction 
of highest risks to the environment and public health, use of science 
and technology to reduce life cycle costs, and reduction of EM's 
geographic footprint by 40 percent by 2011. EM continues to move 
forward with the development of the capability for dispositioning tank 
waste, nuclear materials, and used nuclear fuel. The budget request 
includes the construction and operation of three unique and complex 
tank waste processing plants to treat approximately 88 million gallons 
of radioactive tank waste for ultimate disposal. It will also fund the 
solid waste disposal infrastructure needed to support disposal of 
transuranic and low-level wastes generated by high-risk activities and 
the footprint reduction activities. In addition to the FY 2011 budget 
request, EM will continue to expend the $6 billion in Recovery Act 
funding provided by Congress to complete lower-risk footprint reduction 
and near-term completion cleanup activities.
    EM carries out its cleanup activities with the interests of 
stakeholders in mind. Most importantly, EM will continue to fulfill its 
responsibilities by conducting cleanup within a ``Safety First'' 
culture that integrates environment, safety, and health requirements 
and controls into all work activities to ensure protection to the 
workers, public, and the environment, and adheres to sound project and 
contract management principles. EM is also strengthening its project 
and planning analyses to better assess existing priorities and identify 
opportunities to accelerate cleanup work. Working collaboratively with 
the sites, EM continues to seek aggressive but achievable strategies 
for accelerating cleanup of discrete sites or segments of work. In 
addition, functional and cross-site activities such as elimination of 
specific groundwater contaminants, waste or material processing 
campaigns, or achievement of interim or final end-states are being 
evaluated.
    After the EM program completes cleanup and closure of sites that no 
longer have an ongoing DOE mission, post closure stewardship activities 
are transferred to the Office of Legacy Management (LM). LM also 
receives sites remediated by the U.S. Army Corps of Engineers (Formerly 
Utilized Sites Remedial Action Program) and private licensees (Uranium 
Mill Tailings Radiation Control Act, Title II sites). Post closure 
stewardship includes long-term surveillance and maintenance activities 
such as groundwater monitoring, disposal cell maintenance, records 
management, and management of natural resources at sites where active 
15 remediation has been completed. At some sites the program includes 
management and administration of pension and post-retirement benefits 
for contractor retirees.
    The Administration has determined that developing a repository at 
Yucca Mountain, Nevada, is not a workable option and has decided to 
terminate the Office of Civilian Radioactive Waste Management (RW). The 
Nation needs a different solution for nuclear waste disposal. As a 
result, in 2010, the Department will discontinue its application to the 
U.S. Nuclear Regulatory Commission for a license to construct a high-
level waste geologic repository at Yucca Mountain and establish a Blue 
Ribbon Commission to inform the Administration as it develops a new 
strategy for nuclear waste management and disposal. All funding for 
development of the Yucca Mountain facility and RW will be eliminated by 
the end of FY 2010. The Administration remains committed to fulfilling 
its obligations under the Nuclear Waste Policy Act. The Office of 
Nuclear Energy will develop an integrated approach to improve the waste 
management options for the Nation and support the Blue Ribbon 
Commission. Ongoing responsibilities under the Nuclear Waste Policy 
Act, including administration of the Nuclear Waste Fund and the 
Standard Contract, will continue under the Office of Nuclear Energy, 
which will lead future waste management activities.
Innovative Technology Loan Guarantee Program and Advanced Technology 
        Vehicle Manufacturing Program: Supporting Investment in 
        Innovation and Manufacturing
    To encourage the early commercial production and use of new or 
significantly improved technologies in energy projects, the Department 
is requesting an additional $36 billion in authority to guarantee loans 
for nuclear power facilities and $500 million in appropriated credit 
subsidy for the cost of loan guarantees for renewable energy systems 
and efficient end-use energy technology projects under section 1703 of 
the Energy Policy Act of 2005. The additional loan authority for 
nuclear power projects will promote near-term deployment of new plants 
and support an increasing role for private sector financing. The 
additional credit subsidy will allow for investment in the innovative 
renewable and efficiency technologies that are critical to meeting the 
Administration's goals for affordable, clean energy, technical 
leadership, and global competitiveness.
    The FY 2011 budget also requests $58 million to evaluate 
applications received under the eight solicitations released to date 
and to ensure efficient and effective management of the Loan Guarantee 
Program. This request will be offset by collections authorized under 
Title XVII of the Energy Policy Act of 2005 (P.L. 109-8).
    The Advanced Technology Vehicle Manufacturing program requests $10 
million to support ongoing loan and loan monitoring activities 
associated with the program mission of making loans to automobile and 
automobile part manufacturers for the cost of re-equipping, expanding, 
or establishing manufacturing facilities in the United States to 
produce advanced technology vehicles or qualified components, and for 
associated engineering integration costs.
Office of Nuclear Energy: Investing in Energy Security and Technical 
        Leadership
    The Department is requesting $912 million for the Office of Nuclear 
Energy (NE) in FY 2011--an increase of 5 percent over the FY 2010 
enacted level. NE's funding supports the advancement of nuclear power 
as a resource capable of meeting the Nation's energy, environmental, 
and national security needs by resolving technical, cost, safety, 
proliferation resistance, and security barriers through research, 
development, and demonstration as appropriate.
    Currently, nuclear energy supplies approximately 20 percent of the 
Nation's electricity and over 70 percent of clean, non-carbon producing 
electricity. Over 100 nuclear power plants are offering reliable and 
affordable baseload electricity in the United States, and they are 
doing so without air pollution and greenhouse gas emissions. NE is 
working to develop innovative and transformative technologies to 
improve the competitiveness, safety and proliferation resistance of 
nuclear energy to support its continued use.
    The FY 2011 budget supports a reorganized and refocused set of 
research, development, and demonstration (RD&D) activities. This 
program is built around exploring, through RD&D: technology and other 
solutions that can improve the reliability, sustain the safety, and 
extend the life of current reactors; improvements in the affordability 
of new reactors to enable nuclear energy to help meet the 
Administration's energy security and climate change goals; 
understanding of options for nuclear energy to contribute to reduced 
carbon emissions outside the electricity sector; development of 
sustainable nuclear fuel cycles; and minimization of risks of nuclear 
proliferation and terrorism.
    NE is requesting $195 million for Reactor Concepts Research, 
Development and Deployment. This program seeks to develop new and 
advanced reactor designs and technologies. Work will continue on 
design, licensing and R&D for the Next Generation Nuclear Plant to 
demonstrate gas-cooled reactor technology in the United States. The 
program also supports research on Generation IV and other advanced 
designs and efforts to extend the life of existing light water 
reactors. In FY 2011, NE will initiate a new effort focused on small 
modular reactors, a technology the Department believes has promise to 
help meet energy security goals.
    The FY 2011 request includes $201 million for Fuel Cycle Research 
and Development to perform long-term, results-oriented science-based 
R&D to improve fuel cycle and waste management technologies to enable a 
safe, secure, and economic fuel cycle. The budget also requests $99 
million to support a new R&D program, Nuclear Energy Enabling 
Technologies, focused on the development of cross-cutting and 
transformative technologies relevant to multiple reactor and fuel cycle 
concepts. The Crosscutting Technology Development activity provides 
crosscutting R&D support for nuclear energy concepts in areas such as 
advanced fuels and reactor materials and creative approaches to further 
reduce proliferation risks. The Transformative Nuclear Concepts R&D 
activity will support, via an open, competitive solicitation process, 
investigator-initiated projects that relate to any aspect of nuclear 
energy generation including, but not limited to, reactor and power 
conversion technologies, enrichment, fuels and fuel management, waste 
disposal, and nonproliferation, to ensure that good ideas have 
sufficient outlet for exploration. The Energy Innovation Hub for 
Modeling and Simulation will apply existing modeling and simulation 
capabilities to create a ``virtual'' reactor user environment to 
simulate an operating reactor. NE will also continue its commitments to 
investing in university research, international cooperation, and the 
Nation's nuclear infrastructure--important foundations to support 
continued technical advancement.
Office of Fossil Energy: Abundant and Affordable Energy for the 21st 
        Century
    The FY 2011 budget request of $760 million for the Office of Fossil 
Energy (FE) will help ensure that the United States can continue to 
rely on clean, affordable energy from traditional domestic fuel 
resources. The United States has 25 percent of the world's coal 
reserves, and fossil fuels currently supply 86 percent of the Nation's 
energy.
    The Department is committed to advancing Carbon Capture and Storage 
(CCS) technologies in order to promote a cleaner and more efficient use 
of fossil fuels. In addition to significant Recovery Act funds, 
Advanced CCS with $438 million requested in FY 2011 is the foundation 
of the Department's clean coal research program which seeks to 
establish the capability of producing electricity from coal with near-
zero atmospheric emissions.
    In addition, $150 million of FE's $760 million request will be used 
to promote national energy security through the continued operations of 
both the Strategic Petroleum Reserve and Northeast Home Heating Oil 
Reserve programs. These programs protect the Nation and the public 
against economic damages from potential disruptions in foreign and 
domestic petroleum supplies.
The National Nuclear Security Administration: Ensuring America's 
        Nuclear Security and Reducing the Global Threat of Nuclear 
        Proliferation
    The National Nuclear Security Administration (NNSA) continues 
significant efforts to meet Administration priorities, leveraging 
science to promote U.S. national security objectives. The FY 2011 
President's budget request is $11.2 billion, an increase of 13 percent 
from the enacted FY 2010 appropriation. The FY 2011-2015 President's 
Request for the NNSA is a significant funding increase over FY 2010 
levels, reflecting the President's priorities on global nuclear 
nonproliferation and for strengthening the nuclear security posture of 
the United States to meet defense and homeland security-related 
objectives:

   Broaden and strengthen the NNSA's science, technology and 
        engineering mission to meet national security needs
   Work with global partners to secure all vulnerable nuclear 
        materials around the world within four years
   Work towards a world with no nuclear weapons. Until that 
        goal is achieved, ensure the U.S. nuclear deterrent remains 
        safe, secure and effective
   Transform the Nation's Cold-War era weapons complex into a 
        21st century national security enterprise
   Provide safe and effective nuclear propulsion for U.S. navy 
        warships

    The FY 2011 budget request of $7.01 billion for the Weapons 
Activities appropriation provides funding for a wide range of programs. 
Some activities provide direct support for maintaining the nuclear 
weapon stockpile, including stockpile surveillance, annual assessments, 
life extension programs, and warhead dismantlement. Science, Technology 
and Engineering programs are focused on long-term vitality in science 
and engineering, and on performing R&D to sustain current and future 
stockpile stewardship capabilities without the need for underground 
nuclear testing. These programs also provide a base capability to 
support scientific research needed by other elements of the Department, 
to the federal government national security community, and the academic 
and industrial communities. Infrastructure programs support facilities 
and operations at the government-owned, contractor-operated sites, 
including activities to maintain and steward the health of these sites 
for the long term. Security and counterterrorism activities leverage 
the unique nuclear security expertise and resources maintained by NNSA 
to other Departmental offices and to the Nation.
    The Weapons Activities request is an increase of 9.8 percent over 
the FY 2010 enacted level. This level is sustained and increased in the 
later outyears. The multi-year increase is necessary to reflect the 
President's commitment to maintain the safety, security and 
effectiveness of the nuclear deterrent without underground nuclear 
testing, consistent with the principles of the Stockpile Management 
Program outlined in Section 3113 (a)(2) of the National Defense 
Authorization Act of Fiscal Year 2010 (50 U.S.C. 2524). Increases are 
provided which directly support of the nuclear weapon stockpile, for 
scientific, technical and engineering activities related to maintenance 
assessment and certification capabilities, and for recapitalization of 
key nuclear facilities. The President's Request provides funding 
necessary to protect the human capital base at the national 
laboratories -including the ability to design and certify nuclear 
weapons--through a stockpile stewardship program that fully exercises 
these capabilities. Security and nuclear counterterrorism activities 
decrease about 3 percent from the FY 2010 appropriated levels, 
leveraging the continuing efficiencies in the Defense Nuclear Security 
budget.
    The FY 2011 request for Defense Nuclear Nonproliferation is $2.7 
billion, an increase of 25.8 percent over the FY 2010 appropriation. 
The increase is driven by the imperative for U.S. leadership in 
nonproliferation initiatives both here and abroad. In addition to the 
programs funded solely by the NNSA, our programs support the Department 
of Energy mission to protect our national security by preventing the 
spread of nuclear weapons and nuclear materials to terrorist 
organizations and rogue states. These efforts are implemented in part 
through the Global Partnership against the Spread of Weapons and 
Materials of Mass Destruction, formed at the G8 Kananaskis Summit in 
June 2002, and the Global Initiative to Combat Nuclear Terrorism, 
launched in Rabat, Morocco, in October 2006.
    The FY 2011 President's request for International Nuclear Materials 
Protection and Cooperation reflects selective new security upgrades to 
buildings and areas that were added to the cooperation after the 
Bratislava Summit, additional Second Line of Defense sites, and 
sustainability support for MPC&A upgrades. The Global Threat Reduction 
Initiative increases by 68 percent in support of the international 
effort to secure vulnerable nuclear materials around the world within 
four years. The Fissile Materials Disposition program increases by 47 
percent reflecting continuing domestic construction of the MOX Fuel 
Fabrication Facility and the Waste Solidification Building, as well as 
design documentation for a related pit disassembly and conversion 
capability. A portion of the funding increase results from the transfer 
of funding associated with the latter activity from the Weapons 
Activities appropriation starting in 2011.
    The President's request of $1.1 billion for Naval Reactors is an 
increase of 13.3 percent over the FY 2010 appropriated level. The 
program supports the U.S. Navy's nuclear fleet, comprised of all of the 
Navy's submarines and aircraft carriers, including 52 attack 
submarines, 14 ballistic missile submarines, 4 guided missile 
submarines, and 11 aircraft carriers. These ships are relied on every 
day, all over the world, to protect our national interests. Starting in 
FY 2010, there are major new missions for the NNSA Naval Reactors 
program. A significant funding increase is requested for the OHIO Class 
submarine replacement and for the related activity which will 
demonstrate new submarine reactor plant technologies as part of the 
refueling of the land-based prototype reactor. R&D is underway now, and 
funding during this Future Years Nuclear Security Program is critical 
to support the long manufacturing spans for procurement of reactor 
plant components in 2017, and ship procurement in 2019. Resources are 
also included in FY 2011 to support commencement of design work for the 
recapitalization of used nuclear fuel infrastructure.
    The Office of the Administrator appropriation provides for federal 
program direction and support for NNSA's Headquarters and field 
installations. The FY 2011 request is $448.3 million, a 6.5 percent 
increase over the FY 2010 appropriation. This provides for well-
managed, inclusive, responsive, and accountable organization through 
the strategic management of human capital, enhanced cost-effective 
utilization of information technology, and integration of budget and 
performance through transparent financial management practices.
Management: Transforming the Culture of the Department with a Results-
        Oriented Approach
    To transform the way Americans use and produce energy, we need to 
transform the Department of Energy. Because the mission of the 
Department is vital and urgent, it must be pursued using a results-
oriented approach that is safe, fiscally responsible, and legally and 
ethically sound. The Department has developed strong management and 
oversight capabilities during implementation of the Recovery Act, and 
these lessons will be applied to the FY 2011 budget. The budget request 
of $337 million for corporate management includes $75 million for the 
Office of Management, $102 million for the Office of the Chief 
Information Officer, $43 million for the Inspector General's office, 
$62.7 million for the Office of the Chief Financial Officer, $37 
million for the Office of General Counsel, and $2 million for 
Management Reform within the Office of the Secretary. The Management 
Reform effort will provide the Department with strategic direction, 
coordination, and oversight of management initiatives. The primary 
mission of this new office is to identify operational efficiencies to 
free up resources for priority mission activities. The Department is 
also requesting $12 million for a new Acquisition WorkforceImprovement 
initiative which will be utilized to increase the size and improve the 
training of our acquisition professionals.
    The Department's human capital management efforts are focused on an 
integrated approach that ensures human capital programs and policies 
are linked to the Department's missions, strategies, and strategic 
goals, while providing for continuous improvement in efficiency and 
effectiveness.
    To accomplish this goal, the Department will develop different 
strategies to attract, motivate and retain a highly skilled and diverse 
workforce to meet the future needs of the Nation in such vital areas as 
scientific discovery and innovation.
    To improve stewardship of taxpayer dollars, the Department will 
continue to issue audited financial statements in an accelerated 
timeframe and provide assurance that the Department's financial 
management meets the highest standards of integrity. The Department's 
FY 2009 financial statements were reviewed by independent auditors and 
received an unqualified opinion. This was made possible by implementing 
an aggressive plan to mitigate and remediate a number of financial 
management challenges that were identified by the Department and its 
independent auditors. In addition, the Department continues to 
strengthen the execution of program funding dollars by having regular 
execution reviews that will ensure funding is processed, approved and 
spent quickly and responsibly. The Department in FY 2011 will continue 
its effort to build and improve its integrated business management 
system.
    The Department is continuing to make progress in improving project 
management and is implementing an action plan with scheduled milestones 
and aggressive performance metrics. The focus of the action plan is to 
successfully address the root causes of the major challenges to 
planning and managing Department projects. The action plan identifies 
eight measures that, when completed, will result in significant, 
measurable, and sustainable improvements in the Department's contract 
and project management performance and culture.
    To improve financial performance in project management, the 
Department has increased the use of Earned Value Management (EVM) 
techniques within program offices. These techniques objectively track 
physical accomplishment of work and provide early warning of 
performance problems. A certification process was instituted for 
contractors' EVM systems to improve the definition of project scope, 
communicate objective progress to stakeholders and keep project teams 
focused on achieving progress. Currently, 70 percent of the 
Department's capital asset projects have certified EVM systems.
    The Department continues to strengthen information technology 
management by consistent execution of robust IT Capital Planning and 
Investment Control oversight and reporting processes designed to ensure 
successful investment performance, including the use of EVM Systems as 
appropriate, and the remediation of poorly performing investments. 
Through the establishment and use of an Enterprise Architecture that 
aligns to the Federal Enterprise Architecture, the Department has 
ensured that all IT investments follow a comprehensive Modernization 
Roadmap.
    The Department continues to take significant actions to improve its 
cyber security posture by implementing its Cyber Security 
Revitalization Plan to address long-standing, systemic weaknesses in 
the Department's information and information systems. Specifically, the 
Department seeks to ensure that 100 percent of operational information 
technology systems are certified and accredited as secure and that the 
Department's Inspector General has rated the certification and 
accreditation process as ``satisfactory.'' Additional steps will be 
taken to ensure that electronic classified and personally identifiable 
information are secure.

    The Chairman. Thank you for that statement.
    Let me start and just mention an issue that I will not ask 
you to respond here, but to flag it for you because it is one 
of concern. Last year, the administration had proposed zeroing 
out the upgrade for the Los Alamos Neutron Science Center, and 
we had the head of the NNSA testifying before the Strategic 
Subcommittee of Armed Services this last year and the Energy 
and Water Appropriations Committee to the effect that keeping 
that facility operational was essential to maintaining our 
stockpile. So I have a concern that the proposal is continued 
this year to zero out that upgrade of that facility. I will try 
to get with you and try to understand better the position of 
the Department on that in the next few days, if I can.
    Let me move to one of the overall issues that I think 
Senator Murkowski talked about and I know is a difficult one to 
manage, and that is how does the funding that was provided in 
the stimulus bill or the recovery bill relate to the funding 
levels you are now requesting in this new budget in particular 
areas?
    One example I would ask about is this year's budget 
increases funding for grid energy storage research, which I 
think is a very good idea. Maybe you could explain to us how 
these funds, these new funds that are being requested, would 
complement or relate to the demonstrations already underway 
under the Recovery Act in that area.
    Secretary Chu. Yes, I would be delighted to.
    Much of the Recovery Act funding on the smart grid is more 
toward to the user side. This is using the technology and 
piloting and demonstrating the technology that could be used 
for load leveling and things of that nature.
    But as we increase our renewable energy, renewable energy 
is transient. Sometimes the wind stops blowing and the sun 
stops shining. Our experience has shown that once you go over 
20-25 percent, even if you have a large-scale distribution 
system, you still need to integrate into that large-scale 
storage. So what we would like to do is begin--and we have 
started this already. Within our Bonneville Power 
Administration and WAPA to try to develop plans to anticipate. 
When we get to that large fraction and go beyond that, we will 
need to integrate storage. That is why we are requesting these 
funds.
    The Chairman. Let me ask about this carbon capture and 
sequestration task force. I think President Obama announced 
recently, when he spoke to the National Governors Association, 
that he would be asking the Department of Energy and EPA to 
develop an interagency task force on the issue of carbon 
capture and sequestration and how that can be brought into a 
reality.
    Could you elaborate on the role you see the Department of 
Energy playing in this activity and outline what this task 
force would be all about?
    Secretary Chu. The task force that would be co-chaired by 
EPA and DOE has a goal to get the technology developed so that 
we can begin to get rid of the barriers toward beginning a 
routine deployment of CCS in 10 years. That requires a lot of 
things, but the Department of Energy, because of our strong 
technological base, is going to be playing a role both in the 
continuation of deployment of technologies today; and we also 
have a very aggressive research program to see if we can begin 
to improve upon the things that we know today in the capture 
part, and we also have a very aggressive program in the storage 
part. You need to demonstrate in different geological sites 
around the United States that the carbon can be stored safely, 
securely, and for long periods of time.
    But it shows the commitment that we believe given the coal 
resources in the United States, and quite frankly the coal 
resources of the world, that this is something we have to do. 
It is a very important part of decreasing the carbon emissions 
in the world.
    The Chairman. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Secretary Chu, let me start here with nuclear this morning. 
I understand that under the terms of the Nuclear Waste Policy 
Act, you are required to notify Congress of the reasons why the 
Yucca Mountain site is to be terminated. The statement that is 
contained basically is pretty simple. It says President Obama 
zeroed out Yucca funding in his budget. I am wondering when we 
might expect to get that rationale. Hopefully, it will be more 
instructive than just that the President has zeroed it out.
    With Yucca Mountain off the table, from the 
administration's point of view, how do you intend to handle the 
issue of the fees that are imposed on utilities for the nuclear 
waste fund?
    Secretary Chu. First, the whole intent of the Blue Ribbon 
Commission and the whole intent of our strategy coming in was 
that we know a lot more than we did in 1982 and subsequent 
years when the Nuclear Waste Act was written. So we have 
assembled a team of very distinguished people, you know, 
experts in the science and technology, geology, political 
leaders, to look at what we know today, but also to look at 
what we know about the coming decades. The NRC has stated 
repeatedly that dry cask storage will be safe for a half a 
century or more. This will give us time to look at better 
solutions than what was being done at Yucca Mountain.
    So we are still wanting to move forward. We do not think 
the pulling of the Yucca application means that we are at a 
standstill regarding moving forward, but I do believe there are 
better solutions and that is the intent of the Blue Ribbon 
Commission.
    Senator Murkowski. How do you deal with the fees that 
continue to be imposed?
    Secretary Chu. Yes. So we are required to constantly review 
whether the fees collected are appropriate, and we will 
continue to do so. So that has not really changed at all.
    Senator Murkowski. Let me ask you about hydro. I mentioned 
this in my opening statement. The administration will be 
pushing hydro because--this is your words--``an incredible 
opportunity and it is actually the lowest cost clean energy 
option.'' I absolutely agree with you.
    When we look at the jobs that are associated, the National 
Hydropower Association figures that there are upwards of 
700,000 cumulative and direct and indirect jobs that can be 
created working with potential hydropower. To me it seems like 
a pretty good investment these days, yet, when you look at the 
budget, this is the one area of renewables where we are seeing 
cuts, a significant cut, 20 percent, from what Congress 
approved last year.
    Can you speak to the discrepancy in funding? I mentioned 
that solar and wind certainly seem to be the favored child. 
What is the situation with hydropower?
    Secretary Chu. Actually my feeling--hydro is no different. 
I do think it is a very valuable resource and I would be glad 
to work with you and talk with you about that as we formulate 
the budget. We continually have to make tough choices, but I do 
believe that hydro is an important part of the mix. There are 
projects in hydro that have not been fully utilized, and this 
has nothing to do with large new hydro projects but just 
improving the efficiency of what we have today, plus tapping 
hydro storage which was for flood control, but where we can tap 
into that as well, again to me with a minimal environmental 
impact. But I will be happy to work with you on that.
    Senator Murkowski. I would like to pursue this more. I 
would like to know whether or not the funds that will be made 
available for hydro will be divided or disbursed between the 
more conventional hydro projects, and then you have the 
emerging technologies. In Alaska, we are interested in looking 
at the potential for ocean, tidal, in-river, hydrokinetic. But 
again, these are opportunities that we would like to consider 
ways to pursue them. But when you see the substantial 
reductions in this area, it causes us to question whether or 
not we have that level of support from the administration. So I 
would love to talk to you some more about it.
    Thank you, Mr. Chairman.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Good morning, Secretary Chu.
    Let me just start by making a couple of comments, in 
particular, focus on the budget. I know you have made some 
difficult choices in concert with the President. You have 
balanced the needs of clean energy technologies which have so 
many important opportunities for us. I support the President's 
freeze on discretionary spending, so in the end, it is about 
setting priorities. But thank you for your hard work in that 
regard.
    I did also want to mention that I am pleased to see the 
investment in nuclear research and development programs, 
particularly the emphasis on small modular reactors. I 
introduced a bill late last year. We consulted with the 
Department of Energy. The ranking member and the chairman 
graciously cosponsored that legislation. So I look forward to 
moving forward in that particular area because there is real 
potential with modular nuclear reactors.
    Let me turn to the home front. The National Renewable 
Energy Laboratory is based in Colorado. We are very proud of 
that facility. I want to thank you for including the final 
construction funds for the Energy Systems Integration Facility. 
As you know, it will serve as a point of coordination and 
collaboration on clean technology integration.
    Everywhere I go, I hear that the University of New Mexico 
is on the cutting edge and the University of Alaska, the 
University of North Carolina, and Vermont. Every university, 
particularly the State systems, are excited about the 
potential. That is what we want. We want this race to the top, 
to borrow a phrase from the education world. I think this point 
of attention at the Renewable Energy Lab will serve us well.
    Let me turn to the gap that you are well aware of between 
science and applied research. I know you have made that a focus 
of your efforts. Could you update us on your efforts to assure 
that key labs like NREL are achieving that goal?
    Secretary Chu. First, the two under secretaries relevant in 
this, Kristina Johnson, the under for energy, and Steve Koonin, 
the under for science, are working very closely together. They 
have a very good relationship. A lot of the issues that were 
traditionally stove-piped in, let us say, the applied area, 
lots of discussions now with the Office of Science. The Office 
of Science has, in the past, developed a very rigorous review 
process that is being ported over to the other areas so that we 
can improve the decisionmaking process. It is not bad, but I 
think there is always room for improvement. The integration of 
a lot of the things. For example, in the Office of Science, 
they could be focused on many of the research needs that will 
enable one to actually think of much more dramatic 
breakthroughs. That is being integrated more closely with the 
more applied areas. Those applied areas also include the 
beginning of piloting and deployment.
    So this remains something that is a central concern and 
focus for us because there is very little time, if you look at 
what we have to do by mid-century. We have to accelerate the 
deployment from the laboratories and universities and national 
labs into pilot programs and into the marketplace, being picked 
up by the private sector. So there are many, many discussions 
both formal and informal after work--I have to admit sometimes 
lubricated with ``biofuels''--where the leadership are really 
trying to say, OK, what can we do now because we have control 
for the entire value chain of this. So it is something I would 
be glad to talk about in detail, but it is something we remain 
very focused on.
    Senator Udall. Your mention of biofuels--I know that there 
have been concerns at various points, as we have worked to 
encourage more biofuels, that one of the problems we might have 
are the producers might want to drink the biofuels rather than 
use them in their automobiles or trucks.
    [Laughter.]
    Secretary Chu. Carrying charges.
    Senator Udall. I hear my Arkansan friend down here 
chuckling about that.
    In the remaining time, the chairman talked about storage, 
and we had a very important hearing late last year on the 
potential of storage which both involves transmission and 
production. You are doing some work on modeling of the grid to 
better understand how we incorporate that storage. Do you have 
the necessary personnel and resources to really dig deep into 
that opportunity?
    Secretary Chu. We can always use more, but certainly, for 
example, the administrator of the BPA--I had a phone 
conversation with him about a month ago. He is very eager to 
look at integrating power generation with wind. The BPA, the 
Bonneville Power Administration, is 20 percent wind and 80 
percent hydro. They have good hydro storage potential. They 
also actually have, it turns out, good compressed air storage 
potential. So I said this is great. You have my full backing. 
Push on this.
    ARPA-E is looking at storage, not at the scale of hydro 
storage or compressed air storage, but certainly storage for 
large buildings and things. These are liquid metal batteries. 
Within a few years, we will know the prospect of increasing 
megawatt-hour storage by a factor of 10--because of that it 
would have a profound impact on the reliability of our 
electrical systems. It could mean that you could really have, 
in areas like the western part of Alaska, which are off-grid--
you can actually develop renewables and you have a practical 
source of electricity off grid.
    So it is very exciting and it actually makes it much more 
feasible to use photovoltaics generating the capacity. If you 
can have in a building that scale of storage, that means you 
can actually put on much more capacity on your rooftop.
    So going forward, storage is a very important part of 
getting us to low carbon fuels.
    Senator Udall. Thank you. I look forward to working with 
you particularly in this area. Thank you.
    The Chairman. Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. Thank you for your testimony.
    You said that we know more now and that there are better 
choices than Yucca. Now, I happen to be one that has felt that 
Yucca as a planned site was--we are way past that. But tell me 
exactly. What do we know now?
    Secretary Chu. I would be delighted to.
    Let me give you an example. I do not want to prejudge what 
the Blue Ribbon Commission is going to be doing.
    Senator Burr. No. I am trying to get you to justify for me 
why we need a blue ribbon panel if we know it.
    Secretary Chu. Because I think I know something but I am 
smart enough to realize that I certainly know far from 
everything, and to get a distinguished bunch of people together 
to really look over all the things that are going to be 
anticipated--I cannot personally----
    Senator Burr. Mr. Secretary, you and I both know that a new 
nuclear plant is a lot of money, $8 billion average. Many of 
the applications that are in are investor-owned utilities. They 
are going to do this in a combination of Government-guaranteed 
loans and shareholder investment. Do you think we are going to 
maximize the build-out of nuclear until we have resolved what 
we are going to do about nuclear waste?
    Secretary Chu. No. We are going to have a solution to 
nuclear, the back-end fuel issue. I think scientifically we are 
going to have a solution to that, and I think given that, then 
there is no reason----
    Senator Burr. When?
    Secretary Chu [continuing]. To be a little bit tepid.
    Senator Burr. When?
    Secretary Chu. We have decades. As the NRC said, there is 
going to be at least a half a century.
    Senator Burr. But temporary storage does not meet the 
requirement for shareholders to aggressively invest in the 
build-out of nuclear generation. As long as the Government 
loans are in place, we will probably have activity to build 
out. I personally believe that that is not enough nuclear 
generation plants for the future. So if we build out 2 dozen 
and then we stop, where are we better off than the fact that we 
have not built any for decades?
    Secretary Chu. The intent of the loans and the reason the 
administration asked for more loan guarantee authority is to 
get 7 to 10 nuclear powerplants started. By that time, there is 
enough confidence in the investment community and the utility 
community to let the private sector take over. So the intent is 
not to stop at 7 to 10. The intent is to start it and let the 
private sector then take it over.
    Senator Burr. Mr. Secretary, I make the case to you if the 
private investor community does not see an answer to the 
storage--permanent storage, not temporary storage--of nuclear 
waste, they will feel they might be in some way responsible for 
that storage and at the whim of a future administration that 
decides, well, you know what Secretary Chu--the path he was 
headed on really was not the right one because what we know 
today is we ought to bury this in the ground.
    We have got to pick a path and go for it. We either know 
something and we should do it or we are going to kick this can 
down the road which, quite frankly, I am getting tired of 
doing.
    But let me just say this. You are the one that is going to 
have to tell ratepayers that there is not a plan for permanent 
storage but they are going to continue to be soaked by the 
Federal Government, a required payment through their utility 
bill to fund the storage. I find that unacceptable, to be quite 
honest with you. They have been paying into this for years and 
they got nothing. We do not even have a plan now as to where we 
are going to go. We are going to set up another commission.
    So I encourage you, whatever commission we set up, would 
you make sure that the timeline for their decision is as quick 
as possible? Before they start, share with them what we know 
now so we give them a starting point.
    Secretary Chu. I would be delighted to do that and am 
beginning to do that.
    Senator Burr. Good.
    Secretary Chu. Let me just very briefly say that the two 
co-chairs of this commission want to push ahead as rapidly as 
possible, and I share their enthusiasm.
    Senator Burr. In Washington-speak, that can be at a snail's 
pace, and I hope we will not use Washington.
    Mr. Secretary, the administration has proposed a 7 percent 
budget increase. When matched with the stimulus package, the 
way I calculate it, that is an 80 percent increase. Is that 
justifiable right now?
    Secretary Chu. I believe it absolutely is justified. The 
administration said that--across the board, if you take out 
defense and the social programs, they were holding to a flat 
budget.
    Now, the fact that the Department of Energy has gotten 
increase just reflects the priorities in nonproliferation, in 
national security. There is also a 2.8 percent----
    Senator Burr. In national security, we are decreasing the 
funding of the SPR 43 percent. The SPR is there to provide us 
that access to petroleum if, in fact, the Middle East is 
cutoff. We are decreasing funding 43 percent.
    We are not increasing funding of transmission. You have 
talked about the smart grid. But if you go to the northwest of 
Texas and you see a windmill farm, you see a third of the 
windmills turning and two-thirds not down for maintenance, down 
because the transmission lines will not handle that amount of 
generation moving it to a grid. But we have not targeted 
specifically more money to get electricity from a generated 
point to a grid. We are focused on the grid.
    I would only suggest to you that whether it is wind or 
whether it is solar or whether it is another renewable, if we 
are not going to invest in the right areas, then we are not 
going to be able to tap successfully what the country can do.
    Any comment on that?
    Secretary Chu. Let me speak very briefly on the SPR. The 
projections now the EIA is giving us that the U.S. oil, the 
traditional oil, going forward will remain flat. Our increase 
in transportation fuel will increase, but it will be taken up 
by biofuels.
    So we have a statute that says we need a reserve that 
allows 90 days of import protection, and we think that the 
current SPR gives us that. So that is why we are decreasing the 
budget. We had an up-tick in the budget to move one of the 
caverns. That is an environmental issue. But the feeling is 
that the U.S. petroleum is adequately protected.
    Senator Burr. I thank the chairman who has been extremely 
patient. I will stay around for a second round.
    But I would only make this comment. I think when this 
decision was made, the five heads of our intelligence 
organizations and law enforcement did not say to Congress that 
they had 100 percent confidence that there would be an attempt 
to attack us in the next 6 months. Now, I am not sure exactly 
how that computes, but I would only say that it should suggest 
to all the Members of the Senate that the world is not a safe 
place. The Middle East is not a stable region, and the 
likelihood is there might be an interruption and that may or 
may not last more than 90 days. So I thank you.
    The Chairman. Senator Sanders.
    Senator Sanders. Thank you, Mr. Chairman.
    Secretary Chu, thanks for being with us and thank you for 
the great job that you are doing.
    You know, sometimes we forget and we do not look at the big 
picture, but I think since Richard Nixon there has been a 
vision in this country and discussion in this country about the 
need to break our dependency on foreign oil. Right? People have 
been talking about energy independence for decade after decade 
after decade.
    Obviously, we have a very long way to go, but I think it 
would be unfair not to acknowledge that in the last year we 
have made the bolder steps forward than we have in the history 
of this country.
    When Senator Burr talks about large increases in the energy 
budget, he is right. I applaud that because the time is long 
overdue that we end the insanity of spending $350 billion every 
single year supporting Saudi Arabia, getting involved in wars 
for oil rather than moving to energy independence. I note that 
in this budget, solar is increased by 22 percent, wind by 53 
percent, geothermal by 25 percent, $300 million more for 
weatherization, and $75 million more for the State energy 
program. I think all of that is exactly the right thing to do.
    I have a concern, in fact, that we are perhaps getting into 
a very dangerous area by adding another $36 billion in loan 
guarantees for new nuclear plants. I know that many of my 
friends are good conservatives and they tell us to get the 
Government out of everybody's life, but somehow when it comes 
to the Government supporting nuclear energy, well, I guess that 
is a pretty good thing. If it is such a good idea, why is the 
private sector not jumping in? The answer is it is risky 
business. It is risky business.
    But I do want to mention that this $36 billion in loan 
guarantees for new nuclear plants comes on top of an existing 
$18.5 billion that has not yet been used. From the taxpayers' 
perspective, it means that the CBO has told us the risk of 
default on new nuclear plants is above 50 percent.
    So my own feeling is nuclear is probably the most expensive 
way to generate new energy. It is, in fact, risky. I applaud 
you and the President for beginning to put a whole lot of money 
into sustainable energy and energy efficiency, but I think, in 
fact, that is the future of America and not nuclear.
    Let me ask you, Mr. Secretary. Talk to us a little bit 
about some of the breakthroughs that you anticipate, that you 
see are coming in solar. For example, Ken Salazar has talked 
not infrequently about the potential of solar thermal providing 
a substantial part of electricity in this country. We are 
beginning, I think, to make some progress. Can you give us a 
report on that?
    Secretary Chu. Sure. There are two types of solar for 
generating electricity: solar thermal and photovoltaics. There 
are new ways of getting much more efficient, first, higher 
temperatures, tracking to get higher temperatures in solar 
thermal, concentrated solar. Solar thermal has the advantages 
that you can store for about a day the heat, newer fluids that 
allow these things to be more efficient. In photovoltaics, the 
cost continues to go down, the costs of modules. The solar 
modules themselves have now gone below $2.
    Senator Sanders. Can I interrupt you--I am sorry--just to 
ask you this question? At what point do you think solar would 
be competitive with the more conventional energy technologies? 
Are we closing in on that gap?
    Secretary Chu. We are closing. Right now it does need 
subsidy help, but my hope is that especially in photovoltaics, 
for example, because it compliments so nicely the need for 
electricity during hot summer days, once we get an integrated 
module plus inverter micro-integrated--because the inverters, 
the electronics, actually do not last as long as the modules 
themselves, plus thin film--I see once we get that going, the 
price will really come down. At $2 an installed watt, certainly 
a $1.50 an installed watt, then I see all sorts of things 
popping up without subsidy.
    Senator Sanders. We do not have to worry about burying 
waste from solar energy. Is that not right? We do not have to 
spend billions of dollars figuring out how we get rid of that 
toxic----
    Secretary Chu. Actually some of the thin film ones we have 
to be good about recycling the materials.
    Senator Sanders. Right, but not exactly radioactive waste.
    Talk a little bit, if you might. I think there is 
widespread agreement that the most cost effective way of going 
forward in energy is energy efficiency. You are familiar with 
the PACE program. Can you say a word about what you see the 
potential for that concept?
    Secretary Chu. We are working with other agencies, 
particularly Shaun Donovan's HUD. The idea is that energy 
efficiency we believe really does save money, but there are 
hurdles and one of the hurdles is the initial investment if you 
need $3,000 or $4,000. So PACE says a local jurisdiction, a 
town or a city, can volunteer. A homeowner says I want to do my 
house. We will increase your property tax. You get the money at 
a low interest loan. Your monthly payment of increased mortgage 
rate or property tax, for example, is less than what you are 
saving on energy. So it pays for itself.
    Senator Sanders. Mr. Chairman--Mr. Acting Chairman, I would 
just hope that we pay attention to this because one of the 
impediments to moving forward aggressively in energy efficiency 
is that people do not have the $5,000 or $10,000 to retrofit 
their home. By giving them the flexibility of paying it off 
through a few dollars more in property taxes, while they are 
saving money on their electric bill, is very clearly, I think, 
a win-win situation.
    Thank you very much, Mr. Secretary.
    Senator Dorgan [presiding]. Senator Sanders, thank you.
    Senator Lincoln.
    Senator Lincoln. Welcome, Secretary Chu. We are glad to 
have you at the committee, and I certainly enjoyed working with 
you. I appreciate the great job that you are doing.
    I would like to echo my colleague from Alaska's comments 
about hydro. It is very important in a State like ours where we 
have a tremendous amount of fast-moving water, and it has been 
a great source of energy for us in the State of Arkansas and I 
think something that we have managed well and would encourage 
you to look at that. Senator Murkowski brought up the cuts in 
hydro.
    There are some interesting studies and industries. I know 
there is a group out of Massachusetts that is looking at 
putting the ability to capture the energy of moving water at 
the bottom of the rivers and some other different technologies 
out there. So I hope you will not give up on that. I think it 
is important for many of our States and it is something that we 
have access to. We may not have as much of some of the other 
renewables. We certainly have a little bit of everything, and 
that is a good thing.
    Senator Burr brought up the nuclear issue. I guess one of 
my questions there would be to what extent is the 
administration committed to the discussion of possibilities for 
nuclear reprocessing technologies. That never was brought up.
    Secretary Chu. It is a possibility. But again, right now 
what we have I do not think is proliferation-resistant and I 
know it is not financially viable only because of looking at 
the experience of Japan and their reprocessing which is about a 
factor of 2.5-3 over budget. This is going north of $20 
billion.
    Senator Lincoln. But other countries are. That is why Japan 
shipped it somewhere to have it reprocessed.
    Secretary Chu. They are, but their experience in these new 
reprocessing plants is that they are way over budget.
    Senator Lincoln. We can learn from that experience.
    Secretary Chu. Right.
    Our budget and our intent is to do research in 
reprocessing. There are other ways as well. For example, if we 
can develop once-through burning, which is actually what we 
call a much deeper burn, so that you can extract up to 30 
percent of the energy from a once-through cycle, that would be 
transformative because we are extracting less than 1 percent of 
the energy content now.
    Senator Lincoln. It is amazing. I have toured several 
nuclear facilities, and when they have showed that to me and I 
have actually seen it, you are exactly right. I mean, there 
seems like there is a lot of waste that goes out.
    Secretary Chu. Right. There is a large volume. So that is 
decreasing the amount of waste by a factor of 30.
    So I think we are going to be looking at all those things. 
It has to be proliferation-resistant. It has to be economically 
viable. Again, to either of those things, it is not clear what 
the path is, but that is what research is about.
    Senator Lincoln. Right. Would you agree that the 
reprocessing or the extension of what we are able to capture 
out of the leftover energy that we are not using could be a 
part of the competitiveness that you mentioned that is 
important in our nuclear industry?
    Secretary Chu. Yes. We are looking--first, the real, very 
basic research stuff, I think, the Department of Energy simply 
has to support. But once it looks as though the private sector 
is getting interested, then it becomes a partnership with the 
private sector. Again, our view is that there are a lot of new 
ideas out there. These ideas have been popping up only in the 
last 5 years, 10 years. So it is a new day in town in terms of 
what the possibilities are.
    Senator Lincoln. Obviously, maximizing that resource is 
going to be what makes it more competitive, I would assume.
    Just quickly, how quickly do you think you can move forward 
with the construction of these nuclear powerplants?
    Secretary Chu. Despite appearances, we are working very, 
very hard on, first, getting the loan guarantees for SET. There 
are bumps in the road, but I have to say there have been times 
when I have been talking with the CEOs of the various companies 
on an every third or fourth day period trying to nurse these 
things along.
    Senator Lincoln. So that $40 billion that you requested for 
there--is that going to help accelerate the loans?
    Secretary Chu. What it does is it allows us to more in the 
pipeline. The original $18.5 billion could, at most, do three 
to four new reactors. It has been our feeling, the feeling of 
the National Academy of Sciences, that you need more than that 
to give the confidence these things can be built on time, on 
budget. Once you have that, then we believe the financial 
markets, the rate commissioners say, OK, there is enough 
confidence. We know we can do this and we can build these 
things in a timely manner without excessive delays. At that 
point, we hope the private sector picks it up.
    Senator Lincoln. Good. I hope you will share with us the 
ways that you feel like you have improved on that loan 
guarantee program and what else you have got in store for that 
because we want to see those resources out there as quickly as 
possible. I appreciate it because I think there are a lot of 
folks out there that are looking forward to the opportunity of 
being able to get moving on that.
    Particularly, I will certainly associate with the gentleman 
from Colorado. Biofuels are critical for us in rural America, 
but particularly in States like Arkansas. We want to work with 
you from the standpoint of the Agriculture Committee on how 
agriculture can really play a successful role in being a part 
of that.
    Secretary Chu. Thank you.
    Senator Dorgan. Senator Lincoln, thank you very much.
    Mr. Secretary, are you having a good time? The reason I 
asked the question is you received the largest venture capital 
sum in the history of humankind when the Congress gave you $36 
billion in the economic Recovery Act and you have wide latitude 
really with the use of that money to go out and change our 
energy future. So are you having a good time doing that?
    [Laughter.]
    Secretary Chu. Yes. Let me just say in some of the loans, 
the 1703 loans, the way the statutes are configured--we cannot 
fund some of the things we would like to fund. So that is why 
in the new budget, we are asking for $500 million so that we 
can help those loans because otherwise a lot of the more 
progressive, more daring things we simply cannot fund.
    It is a very different story with the nuclear loans because 
they are self-financed. They don't really take something out of 
the Treasury.
    But the short answer to your question is it is an 
incredible opportunity. You probably know Jonathan Silver, a 
very good man. We have started to put together only in this 
last year a very good team of people. It has got a very central 
focus. So we went from 0 to essentially, I think it is, now up 
to 11, and we think we can increase this.
    Senator Dorgan. You were hamstrung by not getting the 
nominations through the Senate very quickly, and we recognize 
that.
    But I do think that you have the opportunity to play a very 
transformative role in this country's energy future.
    I want to ask you a series of questions, if I might. I have 
got four or five. I will do it quickly.
    FutureGen. Have you decided what you want to do with 
FutureGen? If you have not, when will you, do you think?
    Secretary Chu. We are working very closely with the 
FutureGen Alliance. So we hope within a couple of weeks, but 
certainly by mid-March we can get a decision on that. But I 
think they are working very hard. We clearly want them to put 
together a successful package, but it really remains to be 
seen.
    Senator Dorgan. What I hear is you are forward- leaning on 
FutureGen. Is that what you are saying? I am trying to 
understand whether FutureGen is going to happen or whether some 
other approach is going to be used.
    Secretary Chu. The issue here is the cost and whether the 
Alliance--I mean, they need some new partners. They are getting 
some of those partners. I think Senator Durbin has been very 
helpful in that respect. But there are still issues regarding 
that. We do not want a huge overhang into the future on our 
budget.
    Senator Dorgan. One of the issues that I am very interested 
in as chairman of the appropriations subcommittee that funds 
these issues is the beneficial use of CO2. We know 
that CO2 is a problem. We want to have a lower 
carbon future. As we try to understand what to do with 
CO2, part of it is the opportunity for beneficial 
use, that is production of algae as an example, enhanced oil 
recovery as an example, and there are others, the fellow that 
has figured out how to create concrete by mineralizing the flue 
gas and containing the CO2.
    Give me your assessment of beneficial use of CO2 
as a potential solution to a lower carbon future?
    Secretary Chu. It is certainly a partial solution. To the 
list you just named, I would add methane coal bed production. 
Carbon dioxide will displace the methane and you can recover 
more natural gas. We have a research program, methane hydrate 
recovery. We are eager to get on with an experiment. This is 
research in Alaska for that. How do you extract natural gas 
which we see as transition fuel? There are only two sources of 
energy that can be turned on fast enough when the wind stops 
blowing because we will probably only get about an hour or 2 
lead time to say it is tapering off, and that is hydro and 
natural gas. So natural gas is going to be an important part of 
this. So we are continuing to do research on that.
    Senator Dorgan. I would just observe the wind does not stop 
blowing in North Dakota, by the way.
    [Laughter.]
    Senator Dorgan. I want to ask you about the issue of 
transmission. The bill that we created here and I hope will get 
to the floor at some point will help create the interstate 
highway of transmission capability. We have tried to deal with 
the issue of planning, siting, and pricing, which are the 
impediments. One of the things I am interested in--is there new 
technology out there on transmission wires because we are using 
the same old technology for 50 and 70 years. I know there have 
been some advances, but if there is some new technology that 
allows us to make these corridors much more capable, that would 
be helpful.
    Then second, attached to that, in order to electrify the 
vehicle fleet in this country with the 1 million vehicles on 
the road by 2015, which I believe is the administration's goal, 
we are going to have to maximize renewable energy. That means 
getting energy from where the wind blows and the sun shines and 
then putting it on the wires to move it to the load centers.
    So give me your sense of the technology of transmission, 
and then do you believe we are on the road to 2015 really 
having a million vehicles moving toward an electrified vehicle 
fleet?
    Secretary Chu. There is not a radical technology, but there 
is continual improvement. We are going to better materials for 
the wires so you can have more current carrying capability with 
less weight. There is an evolution toward much higher voltages 
which is what you will really need to bring the renewable 
resources to the population centers.
    This is one of those things that really gets in my craw 
that China is now leading the world in the highest voltage 
transmission lines, whereas it was the United States that 
introduced electricity transmission distribution systems with 
Thomas Alva Edison.
    There are some technologies that we are investing in that 
have to do with creating very high voltage DC that you can 
actually take down. Usually DC is only one-way. You generate 
here. You port it a long distance. You bring it down. If we 
have the technologies that can drop it down the way we do AC--
but this requires some technology development in the high 
frequency switching of these very high voltages and high power. 
So that is something we are investing in.
    Senator Dorgan. Just finally, are you positive about an 
electric drive future and 1 million vehicles by 2015?
    Secretary Chu. Positive? I do not know about that. But I 
have a bet with Larry Summers regarding that. I think there 
will be a reasonably large deployment.
    Senator Dorgan. Can you describe the wager?
    [Laughter.]
    Secretary Chu. No. It is a private one between he and I 
that I may or may not win.
    But in any case, it is something that is a very important 
part of what we see in the energy future, namely that we want 
to electrify personal vehicles, especially the short-haul 
stuff, and that is a very important part of it.
    Senator Dorgan. Mr. Secretary, let me just say for myself--
and I think for some others as well--I am really pleased that 
you are where you are. I think you are a man for this moment, 
and this needs to be a transformative time for energy. So 
thanks for your work.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    I would just echo your comments. I think we are all very 
excited that you are at the Department of Energy. It is really 
encouraging to see some of the steps that are being taken. I 
just visited the New Hampshire Electric Cooperative, and they 
are working with a grant they got through ARRA to do smart 
meters, and they are going to have some very interesting data 
and, I think, show what a difference it makes when we do have 
those new technologies and make them available to consumers, 
that consumers are going to respond and be more efficient.
    One of the other programs that got a lot of money through 
the Recovery Act was the EECBG program, and that is something 
that has also been very popular in New Hampshire, a small State 
with lots of small communities. Demand has been six times 
greater than the available funds.
    So can you talk about what you hope can be done to follow 
up on those grants made available through the Recovery Act?
    Also, one of the concerns that we have heard from local 
communities is that a lot of the innovation that is coming is 
coming through local governments, school districts, 
municipalities, and small towns. They find it hard to access 
assistance. They are not sure where to go in the Department to 
get help or to share the information and the innovation that 
they are doing.
    So can you also talk about your vision for responding to 
those small governments?
    Secretary Chu. OK. First, there is a new program that is 
being stood up, and what we are doing is we are helping the 
cities, the towns. We are helping them say if you do these 
certain things, you will not trigger a NEPA review. So we are 
working with EPA and CEQ on what are categorical exclusions. If 
you do this, this, and the other thing, you do not need a NEPA 
review. A NEPA review could trigger an environmental impact 
statement. Once you go down that road, then you are seeing 
delays of a year, a half year, or more. So we are doing that. 
We are giving them language, essentially template language, 
that says you need to do this.
    We have worked with our historical preservation societies. 
It is very common sense, but it needed to be done. If you are 
in a historical site, anything that you do, caulking, 
insulation, anything that is invisible to the outside, you do 
not have to have them review it. There is a blanket agreement 
that says you are good to go.
    So many of the things that would introduce delays, 
especially to a local community which is not used to dealing 
with some of these things, we are trying to say if you do it 
this way, you can bypass that.
    Also, when they want to design a request for a proposal, 
which is allowed under EECBG, again some of our local people 
are not used to this. So we are now saying here is an example 
of a proposal, a template of a proposal, that would be good to 
go, that satisfies all the legal requirements. If you mimic and 
copy the form of this proposal, that saves a lot of staff time, 
a lot of staff uncertainty.
    Finally, we have made it known, in talking with the NARUC 
people, that we want to be responsive within 24, at most, 48 
hours. So we have hotlines. We have Web sites. We have e-mail. 
Just e-mail us if you have a question. We will respond. So it 
is a very fast turnaround. We are doing all those things.
    We are looking at our site offices to make sure that our 
site offices are doing the work flow in the most efficient way 
possible so that there is no hang-up in our site offices. So 
everywhere down the food chain, we want this money out as fast 
as possible because it is fundamentally jobs, as well as saving 
money faster.
    Senator Shaheen. Thank you, and we appreciate that we are 
now over the hump in terms of getting the ARRA money out. That 
is very helpful.
    One of the things that we also have a lot of in New 
Hampshire is biomass. We are the second most heavily forested 
State in the country. As you know, biomass can be helpful not 
just in providing electricity through utilities but also in 
providing heat. So that combined thermal use is something that 
we think is important so that we make use of biomass for both.
    Can you talk about what the Department is thinking about in 
terms of the future of thermal energy?
    Secretary Chu. Sure. There are several areas that can be 
used for biomass. One, of course, is transportation fuel, both 
the gasification of the biomass which would allow you to gasify 
waste products, wood chips, wheat straw, things like that to 
make very clean fuel. When you gasify, you take the carbon 
dioxide you sequester. There are enzymatic ways of doing this. 
Co-firing. So we are now beginning to invest in what it would 
take to treat biomass, blend it in with conventional fossil 
fuel so that you can actually generate electricity.
    Now, the good news here is that once we start capturing the 
carbon from this, the fact that the plant has sucked a lot of 
the carbon dioxide out of the atmosphere--you capture the 
carbon from, let us say, a mixture of coal or natural gas--let 
us say coal and biomass. This becomes environmentally very 
friendly if you sequester that carbon dioxide. So the co-use of 
biomass in electricity generation by burning and capturing the 
carbon is something we are beginning to invest in and trying to 
get that going.
    So there is a whole wide range of things. This is just 
taking advantage of some of the natural resources of the U.S. 
The agricultural resources of the U.S. are enormous. The amount 
of agricultural waste that is not being used, that is 
eventually--you know, microbes turn it into carbon dioxide and 
methane and it goes back into the atmosphere. We can begin to 
capture a lot of that energy. If we sequester it, this becomes 
slurping carbon dioxide out of the atmosphere, which is, quite 
frankly, something we will need.
    Senator Shaheen. Thank you.
    Senator Dorgan. Senator Stabenow.
    Senator Stabenow. Thank you, Mr. Chairman.
    Thank you also, Secretary Chu. I would echo others who have 
said that we are very appreciative of your leadership and the 
work of the Department of Energy. I would say on behalf of our 
State, in Michigan, that we appreciate that you have been a 
partner with us, and we are seeing results. There is much more 
to do, but I think we have turned a real corner. Thank you for 
that.
    You have spoken earlier about China, and I am sure that you 
saw in the New York Times a very concerning article talking 
about China leading the global race to make clean energy. We 
know they are, right now, investing about $280 million a day, I 
am told. So we are in a real race in order to have those jobs 
here and our own energy independence.
    The article talked about vaulting their competitors in 
Denmark, Germany, Spain, and the U.S. to be the largest maker 
of wind turbines, the largest maker of solar panels. Going on, 
they were quoted as saying most of the energy equipment will 
carry a brass plate ``made in China.'' So I hope that our 
effort is all about seeing the words ``made in America.'' That 
is what we want to see happen.
    So to that end, I wanted to ask you about several different 
programs that have been positive in the Recovery Act and how 
you see them going forward.
    First is battery technology. We know we have had a very 
significant investment in the Recovery Act. We in Michigan are 
seeing at least six new manufacturing facilities, different 
companies that are opening advanced battery manufacturing. But 
I am noticing that we do not have additional dollars in this 
budget going forward in a significant way. Battery technology, 
of course, is also critical for the development of wind and 
solar and other alternative energy.
    So I am wondering if you could speak about where you see 
our efforts going forward on investing in battery technology.
    Secretary Chu. We have a number of programs in the 
development of new technologies. In fact, one of the things we 
are proposing is a hub, one of our research hubs, on inventing 
still better batteries that can really transform. The advanced 
battery manufacturing is a very important part of the program. 
Where the dollars are most useful, I think, is looking at 
inventing in the radically new things that will guarantee that 
we are going to not only recapture leadership in battery 
manufacturing, but also will be pushing the frontier.
    The lithium ion battery technology was one of those things 
not invented in Japan. It was invented actually in the U.S., 
but more perfected in Japan.
    So we are putting in a hub. We are putting in a lot of 
other things. The RB is looking at battery technologies. So I 
think, again, can we invent the radically new things?
    I think with this emphasis--responding to Senator Dorgan's 
question, the electrification of personal short- range vehicles 
is one very good way of decreasing our foreign oil dependency. 
It is a very clean system. You know, getting carbon out of the 
transportation sector is clearly the hardest thing that we 
have, and fuel efficient batteries and biofuels are the way.
    Senator Stabenow. If I might just expand on that. As you 
know, I have legislation, working with a colleague, Congressman 
Peters in the House, the Advanced Technology Vehicles Act, that 
would focus us not only on small vehicles but on larger 
vehicles as well because we know that we have a tremendous 
opportunity with our larger vehicles, trucks, and so on. In 
fact, in Michigan, we are developing large batteries to be able 
to address those efforts.
    So I am wondering what efforts are happening in the 
Department to focus on vehicles, specifically larger vehicles 
and trucks so there are more energy savings, carbon emission 
savings?
    Secretary Chu. We have a new initiative, the Super Truck 
Initiative, where we think we can get perhaps 30 percent better 
efficiency out of our long-haul trucks, largely aerodynamics, a 
little bit of auxiliary power, more efficient heat recovery in 
diesel engines. But a lot of it is going to actually come out 
of aerodynamics. But we think 30 percent is achievable.
    The good news is--because the turnover in the truck fleet 
is faster, and so this is, again, something where you can see a 
much faster--and because the trucking industry is so tuned to 
the cost of fuel, to the economics of it, the adoption of a new 
technology that really pays for itself will be faster.
    Senator Stabenow. I know I have run out of time. I would 
just, first, thank you for the administration's strong support 
and your strong support for the manufacturing tax credit, what 
we call 48(c). The $5 billion increase is absolutely critical 
for us. I look forward to working with you as the author of the 
language that is called section 136 retooling loans of the 
energy bill of 2007. I look forward to working with you on how 
we may continue that effort as well. We have put a number of 
things in place that I think are very significant, the 
industrial technology program, a number of things. I was 
pleased to see additional money there as well which is probably 
the fastest way to increase our energy efficiency and reduce 
carbon emissions.
    I think we are on the right track. I would just urge, 
working with us, that you continue to advocate for the level of 
resources that are needed for us to be able to win this race 
that we are in. Thank you.
    Secretary Chu. Thank you.
    Senator Wyden [presiding]. I thank my colleague.
    Secretary Chu, welcome. It is good to have you back. As you 
will recall, the last time you were here, I talked a bit with 
you about particularly expanding exports, expanding exports of 
wind turbines, solar panels, and renewable energy products 
around the world, largely because of the way you framed the 
issue. You said in the past--and I quoted Dr. Chu to Dr. Chu 
that one of the great economic challenges was making sure that 
we got some of those export markets, and I look forward to 
following up on that with you, particularly the developments 
with the Department of Commerce and the Trade Representative 
because I think nailing down that relationship, knocking some 
heads frankly, if you have to, is going to be essential.
    What has happened since our last conversation is the 
President of the United States at the State of the Union set a 
goal of creating 2 million jobs by doubling U.S. exports over 
the next 5 years. Now, it is going to be very hard to attain 
that, I think, very worthwhile goal unless we tap these markets 
overseas for renewable energy products in the export area.
    So my first question to you is, what specifically do you 
intend to do in light of the President's announcement for 
creating 2 million jobs, doubling U.S. exports over the next 5 
years? What are you going to do at the Department specifically 
to help the President attain that objective?
    Secretary Chu. What we do is we support the research, the 
development, and the piloting, and finally deployment of new 
technologies, particularly energy technologies. I think we are 
still viewed in the world as the developers of some of the best 
high technology sectors. There is an overall strategy that we 
are a player in. We are not the major player, as you said. It 
is Commerce and Ron Kirk's office.
    We are trying to get it so that, first, the companies in 
the U.S. have more confidence that they can export the highest 
technology stuff and you do not look under the hood and copy 
it. We are working with countries to say how important it is 
that they abide by patents, abide by intellectual property. But 
again, a large part of that is a mixture of State and other 
things. We are working with Defense and with State on export 
control. A lot of this is out-of-date. So they are looking at 
those things.
    Again, to the extent that we can help Commerce in saying 
what are the things that we can export that are really not a 
threat to our national security--and so we have an active 
working relationship with Secretary Locke in Commerce through 
our Policy and International Affairs with David Sandalow. But 
mostly what we do is we develop stuff that we hope the rest of 
the world will want and buy.
    Senator Wyden. Respectfully, Mr. Secretary, I think you 
would have given me that answer before the State of the Union. 
What I want to know specifically is what new steps are going to 
be taken, and let me walk you through at least one that is in 
your bailiwick and I sure would like to see changed.
    In approving applications for the Green Manufacturing Tax 
Credit--that is 48(c) of the tax code, and this is an area 
where the Department of Energy plays a critical role in 
approving projects that qualify for these credits--is the 
Department going to set in place new rules and new criteria 
that can help us make sure that we would be making products for 
the foreign demand?
    In other words, I do not see, frankly, the Department 
moving. This is an area where you all clearly have a leading 
role to play. In fact, the IRS said we do not know a whole lot 
about this. We are going to make sure that folks who do can run 
it. If you all do not take steps now in an area that I think is 
particularly fertile for exports, I guess I am going to have to 
introduce a piece of legislation--and I serve on the Finance 
Committee--and work there and here to get this changed. But I 
think foreign demand ought to be a big factor in how those tax 
credits are awarded.
    Do you agree? If so, what is going to change to make sure 
additional steps, in light of the President's announcement, are 
taken now?
    Secretary Chu. I agree with you. I think this is part of 
our economic prosperity, that we have to increase our foreign 
exports, and I will be glad to work with you on that.
    But specifically what were you----
    Senator Wyden. Does the Department give in the award of 
these credits any consideration for foreign demand for the 
goods and the producers? I mean, here is an opportunity for you 
to go out and take a statute and, in effect, under what I 
believe is your current authority--you can go out and say we 
are going to give these credits to people that are serious 
about exporting and exporting in an area where there is foreign 
demand. Right now, there is no criteria in this statute, and if 
you all do not put out a new set of criteria that boosts the 
role of exports in 48(c), the Green Manufacturing Tax Credit, I 
guess I am going to have to try and write a law that requires 
you to do it. I do not want to do that. I would like to Dr. 
Chu, somebody I like and respect, just go out and knock heads, 
get this done, and allow us to get it done quickly.
    Secretary Chu. Let us start with I would be glad to work 
with you on this. I think anything that contributes to the 
manufacturing and economic prosperity of the U.S. I am fully in 
favor of. So I will be glad to work with you on that.
    Senator Wyden. So you will commit this morning to doing 
this and moving this up as a priority for these credits, 48(c), 
without the Congress having to move with legislation?
    Secretary Chu. I will commit to looking at and working with 
you and your staff to seeing what type of loan authorities we 
can do and the tax credits we can give that will enhance the 
manufacturing and the wealth generation in the United States. 
This sounds like we are in line and we are in sync with this.
    Senator Wyden. Can you get back to me within 45 days on 
what specifically the Department will do in that area, 48(c), 
to beef up the prospect that more of those credits will go to 
American companies that are exporting to meet the foreign 
demand for renewables?
    Secretary Chu. I will commit to getting back to you in 45 
days.
    [The information follows:]

    The goal of the Advanced Energy Manufacturing Tax Credit (48C) 
Program is to help make the United States globally competitive in long-
term, high-end manufacturing jobs and to increase access to affordable 
renewable energy for future generations. The U.S. Department of 
Treasury is responsible for implementing the 48C program, in 
consultation with the U.S. Department of Energy.
    The 48C Program provides a 30 percent tax credit for investments in 
new, expanded, or re-equipped advanced energy manufacturing projects. 
Neither the legislation (Section 1302 of the American Recovery and 
Reinvestment Tax Act of 2009) nor the Notice (2009-72) distinguished 
between foreign and domestic customers of 48C recipients.
    Under the 48C Program, all 48C applicants are required to 
demonstrate commercial viability and to submit a business plan listing 
confirmed or potential customers. Some successful applicants indicated 
a foreign market for their manufactured product, while other successful 
applicants indicated a domestic market. In providing consultation to 
the U.S. Department of Treasury, the U.S. Department of Energy did not 
distinguish between foreign and domestic markets. Rather, the key 
factor was the reasonableness of the assumptions and claims of any 
market for the manufactured product. Applications were scored against 
four criteria: job creation; greenhouse gas avoidance; technological 
innovation/commercial deployment; and shortest time to completion of 
the project.

    Senator Wyden. Very good. Thank you.
    My colleague from Alaska, Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Mr. Secretary, the chairman inquired briefly about stimulus 
dollars and I would like to pursue that just a little bit 
further. As of yesterday, the Department of Energy Web site 
showed that we have about $2.1 billion of the stimulus funds 
that was actually spent. As I understand it is about 6 percent 
of what the Department has received, and we understand that to 
be the third lowest rate for any Federal agency.
    I appreciated Senator Dorgan's comments about are you 
having fun with it, because you really did as the Department 
get an incredible amount of Federal funding directed to you. It 
is one of those ``be careful what you ask for, you might get 
it,'' and then you got to deal with it. There is frustration on 
this side, but I know that there has been frustration on yours 
as well as to how you make that happen.
    What I am trying to determine is you have a goal of moving 
those dollars out. There is not a discrepancy, but there is a 
clear difference between obligating and spending those dollars. 
Part of my objection to what we saw with the stimulus was 
timely, targeted, temporary, and we are at that point where we 
are seeing that it is really very difficult to spend those 
Federal dollars within that 2-year period.
    I want to ask you, because there is a lot of discussion now 
about another stimulus or a jobs bill, and I do not know what 
it may look like. I understand that we may be learning in 
matter of days in terms of what will be included with a new 
stimulus or a jobs bill.
    But with the nearly $32 billion that is yet unspent, how do 
you deal with the backlog of funds that you have? Recognizing 
that you are very likely, as I understand a second infusion 
with a jobs bill coming forward, is this a situation where you 
need to say stop already? Or what is going on within the 
Department as we reconcile these 2?
    Secretary Chu. Sure. I think I agree. I mean, we are 
disappointed in the amount of money costed. I can just go down 
the list.
    Weatherization, $5 billion. This is a formula. We give it 
to the States. The States are widely variant in how they are 
getting the money out. There are some States who have costed 
over 20 percent. Other States have costed essentially zero. As 
we became aware of that, we are now sending people out to the 
States and those agencies and trying to help them get moving. I 
mean, this is a State agency or State agencies that are 
supposed to--this is true of weatherization. This is true of 
the State energy programs, the EECBG.
    I talked a little bit about the rules that are required, 
and we are trying to give both the State and the local 
organizations templates that say, OK, if you do this, we can 
move along much faster because many of these organizations with 
the local organizations are not used to dealing with this 
magnitude of money or dealing with some of the Federal rules.
    The loans. We started with essentially very, very--
``skeleton'' is not really the word--staff. We now have a 
dedicated loan official building up the staff. We talk to him 
maybe twice a week on how do you get these--these are very 
complex loans, lots of things to negotiate. There are other 
parts of the Federal Government that have to chime in on this, 
Treasury and OMB as well. So all these things we feel we are 
moving on. It is certainly less than what I hoped initially, 
but things are moving along.
    Senator Murkowski. I appreciate that, and I think we are 
looking very carefully at what you have been able to actually 
spend down and where that has gone. We are talking about this 
second tranche if you will, a second stimulus or a third. I do 
not know what number we are on. But how will you spend more 
when you still have $32 billion that is yet hanging out there? 
I appreciate the difficulty in advancing it, but at some point, 
is it not better to say, wait a minute, we cannot take on more 
within the Department of Energy?
    Secretary Chu. It depends on the flavors in the money. For 
example, in the 1603 tax credits, it does not require a request 
for proposals and evaluation of the proposals. It does not 
require a lot of things. It just requires us to say, OK, do you 
qualify for this tax credit. In those situations, the time from 
the time of application to the time where money is in the bank 
of the companies, I think it was an average of 20-some-odd 
days. If you have to ask a local agency or even a Federal 
agency to say you've got to put out a proposal, you have got to 
get a request for proposals, you have got to bring them in, the 
amount of the $36 billion or $34 billion--only $11 billion was, 
kaboom, here it is. Out of that $11 billion, a lot of it going 
to State agencies, we now have to help those State and local 
agencies spend the money.
    So a lot of the frustration I share with you. We are 
spending now a lot of our time trying to help the local 
agencies spend the money because just obligating the money to 
local agencies we anticipated is not enough.
    Senator Murkowski. I appreciate your comments. I understand 
what you are saying, but I think it still takes me back to my 
initial concern where if you have $32 billion that remains 
unspent, you are seeking a budget increase to the Department 
this year, of about 7 percent, at some point in time as a 
Department you would communicate with our Democratic colleagues 
that are building this jobs bill, you indicate pretty clearly 
we are maxed out over here in our ability to spend these 
dollars in a timely manner. That is what we are talking about 
with the jobs bill, how we get the money out the door today to 
make a difference. This is where so many of us have expressed 
real anxiety and frustration over that initial stimulus package 
because it was not timely, targeted, and temporary in so many 
of those areas that we were keyed on.
    I think in this Department we recognize that there is great 
opportunity, but again at a time when we are looking to reduce 
our budgets everywhere, I think we have to understand what is 
already authorized, your ability to spend it responsibly, not 
just spending the money so we can say we are spending the 
money.
    Mr. Chairman, my time has expired, but Mr. Secretary, I 
just want to add you mentioned the methane hydrate research up 
in Alaska. We have been excited about that for a period of 
time. I recognize that within the budget, we have zeroed out 
the unconventional fossil fuel budget that supports that 
methane hydrate. It is my understanding that you have moved 
that over to the Office of Science, but again that budgetary 
amount that we were hoping for has been reduced from $50 
million to $18 million. I think we recognize the vast potential 
that we have with methane hydrates. I would like to work with 
you on that.
    Thank you, Mr. Chairman.
    Senator Wyden. Thank you, Senator Murkowski.
    We are joined by our colleague from Wyoming, Senator 
Barrasso.
    Senator Barrasso. Thank you, Mr. Chairman. Excellent job 
this morning at the National Prayer Breakfast.
    Senator Wyden. Thank you.
    Senator Barrasso. Mr. Secretary, welcome back to the 
committee. Good to see you again.
    I had a couple of questions. I wanted to start with 
uranium, if I could.
    In the budget, the Department budget includes an increase 
of about $180 million for environmental cleanup at the 
Portsmouth facility in Ohio. We have talked about that in the 
past. It had to do with uranium and excess uranium and selling 
uranium, but it seems that it is now a line item in the budget. 
So it is my understanding that you then plan to discontinue the 
proposed transfers of excess uranium in fiscal years 2011 and 
2012 and 2013. Is that correct?
    Secretary Chu. That is correct. We are shifting over the 
support of the cleanup from transferring uranium because we 
have statutes; we cannot affect the uranium markets that much. 
There are requirements that we do not go over a certain limit. 
So we had just decided simply to put it in the budget rather 
than to take our uranium and barter it.
    Senator Barrasso. Thank you, Mr. Secretary. I am glad to 
hear that the Department recognizes the significant problems 
that these uranium transfers are having on domestic uranium 
producers. I think it is a very good recognition on the part of 
the Department and I think the Department needs to abide by the 
management plan that was put into effect.
    Do you know if the uranium transfers that are already 
planned for fiscal year 2010 are going to proceed as planned, 
and are there other plans in the making, other additional 
uranium barters?
    Secretary Chu. I do not know the full details of that, but 
again, we are very aware of the fact that there is a statute 
that says that we cannot put more than 10 percent out there. We 
do not want to go to 9.9 percent, and so that is essentially 
why we backed off on the Portsmouth barter.
    Senator Barrasso. Thank you, Mr. Secretary.
    I would like to move, if I could, to the clean coal and the 
loan guarantee program. You have expressed your commitment to 
this committee and to me privately to clean coal numerous 
times. Yesterday, President Obama announced the formation of a 
clean coal task force. Your budget includes $36 billion for 
loan guarantees for nuclear, about $500 million in credit 
subsidies for renewable energy, but it contains nothing for 
clean coal and carbon sequestration under the loan guarantee 
program. So it does not seem to fit with what the 
administration said about its commitment to coal or the mission 
of the loan guarantee program. Can you explain that to me, Mr. 
Secretary?
    Secretary Chu. It goes to what our new budget--it goes to 
what Senator Murkowski was saying. What we are asking for in 
this budget and in the stimulus is we looked at the things that 
are oversubscribed, we looked at the things where we know we 
can move the money more quickly. There is a part of the loan 
guarantee in fossil that was not all used. So we said, OK, we 
are moving that along, but there is no need to ask for more 
money in that because we had not used the authority given to 
us. But whereas other programs where there was a shortage by a 
factor of 3; RB, a shortage of a factor of 100, that we can get 
out very quickly.
    So those are the things we are asking for in the new 
economic loans and all those things, the things that we know we 
can move quickly. The things where if we have to work with 
middle people, the States, the local governments, that adds 
another layer of bureaucracy as part of this.
    So we have loan guarantees in fossil.
    Senator Barrasso. Along that line, the Department has made 
a number of commitments under title 17, the loan guarantee 
program, for clean coal technology.
    Secretary Chu. Yes.
    Senator Barrasso. Is there a timeline that you have for 
finalizing these existing commitments? Because there seems to 
be a holdup.
    Secretary Chu. Right now there are two title 17's. There is 
the 1703 and 1705. Again, I would love to talk to you and 
Senator Murkowski about what we are doing in detail so you can 
understand what we are doing that we are not dilly dallying. 
These are very complex agreements and we also need, again under 
the statutes, to negotiate. Each loan is a one-off that you 
have to negotiate with each company and each applicant. We also 
have to protect the taxpayer's money. So there is not really a 
hang-up.
    Senator Barrasso. I would welcome that opportunity to meet 
with you and work with you on that, Mr. Secretary. I just want 
to make sure there are no kind of White House appointees who 
are not confirmed by the Senate, as you have been, who are 
weighing in on these projects either directly to you or to your 
subordinates. I have concerns that we want to make sure that 
this moves through.
    Then finally, Mr. Secretary, just to bring to your 
attention, there is an oil field testing center in the Rocky 
Mountains called the Rocky Mountain Oil Field Testing Center. 
Your budget zeroes out the base funding stream for this 
program. It is in Wyoming. It stems from the President's pledge 
to the International Climate Community at Copenhagen. I can 
tell you, Mr. Secretary, I think that killing jobs in the 
United States, which I believe this will do, to earn 
international applause is bad policy. This is a program that 
offers small businesses and ventures and students the 
opportunity to test technology and learn in a real-world 
situation. So if I could, Mr. Secretary, I will submit a couple 
of questions to you in writing on that program. Thank you, Mr. 
Secretary.
    Thank you, Mr. Chairman.
    Senator Wyden. I thank my colleague.
    Mr. Secretary, I am going to also give you a couple of 
questions in writing, and if I could get a quick response, 
particularly in terms of wave energy and advanced vehicles. 
Again, there are some questions in my mind about whether we are 
tapping all of our opportunities. For example, the Department's 
advanced vehicle programs are aimed at cars and trucks. We have 
got state-of-the-art plug-in motorcycles and streetcars in 
Oregon. So I will submit those in writing.
    I am anxious to work with you personally on this matter 
that you are going to get back to me within 45 days on because 
that 48(c) of the tax code is a trampoline in my view for us to 
be able to tap the opportunity, with foreign demand being so 
high, to get our renewable products overseas, and it can play a 
big role in the President's laudable objective of increasing 
exports.
    Anything else you want to add?
    Secretary Chu. We submitted a budget. I heard a number of 
you have some misgivings about the budget. I would be glad to 
meet with you privately to discuss the rationale and come to 
solutions on these issues.
    Senator Wyden. We always like to give you the last word, 
and I am sure colleagues will take you up on it.
    With that, the committee is adjourned and we will excuse 
you.
    [Whereupon, at 11:37 a.m., the hearing was adjourned.]

    [The following statement was received for the record]
      Statement for National Association of Royalty Owners (NARO)
    NARO opposes certain items in the Department of Energy's 2011 
budget as described in the document entitled ``Terminations, 
Reductions, and Savings: Budget of the U.S. Government Fiscal Year 
2011,'' as currently produced by the Office of Management and Budget. 
The following testimony describes our concerns that said policies will 
be harmful to America's energy policy as a whole, and also to royalty 
owners.
    While NARO shares several policy concerns with the rest of the 
energy community, this testimony seeks to focus the Committee's 
attention more acutely on percentage depletion for royalty owners, 
which is the only tax deduction many NARO members take on their mineral 
royalty income. As will be discussed, many of the royalty owners which 
NARO represents do not have the wealth, time, and resources that larger 
energy and mineral companies do. As a result, they have a more limited 
ability, compared to the rest of the energy community, to organize and 
inform legislators of their concerns.
1. Who does NARO represent?
    We are the National Association of Royalty Owners (NARO) and 
represent the concerns of an estimated 8.5 million American private 
owners of oil and gas mineral and royalty interests. We live and vote 
in all 50 states, even though our producing minerals may be in 
Arkansas, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, and 
Utah, Wyoming or any of the 33 producing states. NARO has been 
educating and advocating for mineral/royalty owners since our original 
incorporation 30 years ago in 1980.
    The average NARO member is over 60 years old, widowed, and receives 
less than $500 in monthly royalties as a supplement to their social 
security retirement income.
    The majority (something over 70%) of the minerals in the U.S. are 
owned by individuals and leased to companies for development. Thanks to 
the efforts of one of our members, we recently took a snap shot of one 
``marginal'' oil well (producing less than 15 barrels of oil per day) 
in Grady County Oklahoma. This one little well has over 300 individuals 
in 46 states receiving royalty payments from its production.


    Remember, these are estimated numbers of royalty owners. The total 
number of mineral owners is much greater, as vast areas are 
unproductive or have not yet been explored and developed.
2. A look back at the rationale for percentage depletion in U.S. 
        history
    In 1913, the 16th amendment to the constitution made the Federal 
income tax a permanent fixture of American life. That same year, 
mineral/royalty owners, in accordance with the newly minted tax code, 
began to account for the depreciation of their mineral properties which 
resulted from the depletion of limited mineral reserves. Congress 
enacted this tax deduction so that mineral/royalty owners could deduct 
a ``reasonable allowance for depletion of ores and all other natural 
deposits . . . '' which results from extraction. What follows is an 
explanation of the conception of percentage depletion, and illustrates 
the continued need for the percentage depletion allowance for mineral/
royalty owners today.
    What is depletion? Put simply, in the context of taxation, it 
represents the depleting value of a limited reservoir of a non-
renewable resource such as Natural Gas, Copper, Oil, etc. Tax liability 
in America has often been dependent on the value of the property being 
taxed. As the object of taxation changes in value, the tax liability 
changes accordingly. This is commonly accepted by federal and state 
governments with regard to all manner of property, whether brick and 
mortar, automobile value, etc. As an automobile depreciates, the tax 
rate is lowered in subsequent years. As the minerals are extracted from 
a given property, the reserves are depleted, and the value of that 
mineral interest depreciates, as should the tax liability.
    Percentage depletion replaced discovery value depletion, which had 
been adopted in 1918 as an incentive to find new oil supplies that were 
needed in World War I. Under discovery value depletion, tax on minerals 
such as oil and natural gas were assessed at the time the minerals were 
discovered, but that proved to be an inefficient and unsavory policy 
for mineral owners, producers, and governmental tax authorities alike. 
Among Discovery value depletion's shortcomings; it resulted in lengthy, 
not to mention expensive, quarrels between taxpayers and tax 
administrators over the predicted quantity and value of the minerals, 
and the subsequent amount of depreciation that would occur from the 
depletion of reserves.
    Even if the quantity and composition of minerals in the ground can 
be known with relative certainty, the markets for energy sources like 
natural gas and oil are volatile. This has been abundantly demonstrated 
with the dramatic price fluctuations of oil and natural gas in recent 
years. These turbulent markets make it difficult to predict the overall 
value of mineral reserves, especially beyond one year.
    Beyond unpredictable markets, there were additional problems with 
discovery depletion. Even today, the science of interpreting seismic 
data and the drilling of exploration wells remain something of an art, 
albeit to a lesser extent than in previous decades. The accuracy of 
pre-extraction predictions on the quality and quantity of minerals can 
prove disappointing. However, the inability to know with certainty the 
total future value of oil or gas from a given mineral interest, and the 
quantity which is likely to be producible, results from more than just 
the imperfections of geological data analysis. The `producible' 
quantity underground is unpredictable due to unknowable, yet inevitable 
changes in technology. The recent advances in horizontal drilling, and 
the impact it has had on hydraulic fracturing technology are a great 
example.
    In the last decade, horizontal drilling innovations have allowed us 
to more cheaply use hydraulic fracturing in layers of shale rock where 
natural gas was previously unreachable due to the cost of recovery. Due 
to these technological improvements, hydraulic fracturing in shale has 
grown at an almost stunning pace. This has contributed to an increase 
of more than 50% in proven reserves of shale gas in just one year, from 
2007 to 2008 (the most recent year yet reported by EIA). These 
innovations have freed up so much previously unrecoverable gas that the 
U.S. is now sitting on an estimated 100 years supply of clean burning 
natural gas at current consumption levels. The U.S. is currently in 
serious contemplation about ways to ensure that our energy policies are 
environmentally responsible for our children's future. The rapid leap 
forward in shale drilling technology, and the resulting massively 
increased quantities of clean burning, locally abundant natural gas, 
are game changers for U.S. energy policy.
    Because of the impossibility, both for taxpayer and tax 
administrator, of predicting the nature and timeline of technological 
advances, and the difficulty for both parties of defending variables 
like quantity of reserves, quality of reserves, and projected market 
value, congress eventually abandoned the practice of determining the 
discovery value of minerals for purposes of the depletion allowance. In 
1926, congress simplified the process by allowing mineral/royalty 
owners the option to claim percentage depletion.
    To figure percentage depletion, you multiply a certain percentage, 
specified for each mineral, by your gross income from the property 
during the tax year. This simplified procedure has proved essential to 
encourage the production of dozens of different minerals, both energy 
related and not. The percentage of income from a producing mineral 
property which one can claim as a deduction to account for depletion is 
currently 15% for oil and natural gas, and higher for certain other 
minerals. For example, the current rate for sulfur, uranium, asbestos, 
lead ore, zinc ore, nickel ore, and mica is currently 22%. These flat 
percentages save on compliance costs for both tax payer and 
administrators, because it prevents the potentially lengthy battle with 
each individual mineral owner over the value of depletion for their 
particular property.
3. Effects of the proposed eliminations on royalty owners
    Under current policy, if the mineral owner feels that the depletion 
percentage specified by statute is unfair for their property's 
particular mineral profile, then they can still alternatively file for 
cost depletion. Large mineral interest owners such as energy companies 
are more likely to file for the cost depletion deduction. The reason 
for this is that they have already incurred the cost of a complex 
analysis of their mineral holdings as part of the process of 
exploration.
    Larger mineral interest owning entities have incentive to be 
reluctant to share information with smaller or individual mineral 
owners from whom they may need to lease or re-lease mineral rights. 
They consider this information proprietary and necessary to compete in 
the marketplace. When compelled by statute to share information, they 
still have an incentive to under represent the value of the minerals to 
these smaller mineral owners because they want to pay them the smallest 
royalty that can be negotiated.
    If small `mom and pop' mineral owners have to rely exclusively on 
the energy companies to which they lease their minerals in order to 
obtain the estimated value of their minerals, then a common result 
would be an undervaluing of the minerals, resulting in an undervaluing 
of the cost of the depletion of their minerals. Percentage depletion 
acts as a hedge that protects these smaller royalty owners from the 
potential double disadvantage of receiving an undervalued royalty from 
an energy company and then having that loss compounded by a subsequent 
undervaluing of the cost of depletion.
    As previously mentioned, the average NARO member's royalty income 
is five hundred dollars per month, with many getting considerably less. 
While collectively the minerals they own are of vast value, the 
minerals owned by a single individual are often relatively small in 
amount. A geological & reservoir assessment can be very costly for 
these small royalty owners. Geologists and engineers bill on an hourly 
basis, plus expenses, and it is hard to estimate the time an adequate 
assessment can take. Royalty owners cannot afford to see their income 
eaten up by the cost of independent geological & reservoir assessments, 
attorney's fees, and accounting fees that can quickly accrue in the 
pursuit of claiming cost depletion.
    Also, as previously mentioned, the average NARO member is over 60 
years old, and widowed. Some are apprehensive about the process of 
negotiating leases with energy companies. Percentage depletion is one 
tool that encourages these mineral owners to more strongly consider 
leasing their minerals for development.
    While percentage depletion is of primary concern for NARO members, 
we realize secondarily that ALL of the proposed tax law changes in the 
FY 2011 DOE budget that affect oil and gas industry decisions to 
drill--such as no longer being able to expense intangible drilling 
costs--affect owners of undeveloped minerals, by rendering their 
properties valueless. We additionally realize that elimination of 
credits for marginal wells and tertiary recovery would result in the 
plugging of thousands of older wells and a subsequent loss of vital 
supplemental income for countless retirees.
    Several of our royalty owner accountants have looked at how the 
elimination of the depletion allowance will impact our elderly, low-
income, royalty owners. We have found that in many instances, the 
elderly folks with incomes less than 50,000 dollars annually will now 
have their Social Security benefits become taxable because of the 
elimination of the depletion allowance. This will lay an undue burden 
on these folks, to not only pay additional tax because of eliminating 
the depletion allowance, but they will be forced to pay additional tax 
on currently non-taxable Social Security benefits.
    We do not believe that congress's intent is to put these additional 
tax burdens on our elderly royalty owners, many of whom already 
struggle to pay their current property tax, ad valorem tax, severance 
tax, state income tax, local tax, non-resident income tax, and federal 
income tax on their producing minerals. Regardless of intent, the 
proposed tax increases (via deduction eliminations) in the DOE budget 
WILL have that effect on many!
    Royalty owners are teachers, farmers, ranchers, homemakers, 
accountants, firemen, plumbers, retirees, dentists, small business 
owners, factory workers, engineers, pet groomers, widows, roofers, 
lawyers, policemen, florists, carpenters, bricklayers, and members of 
Congress; we are ordinary citizens, not multi-national corporations. We 
consider our mineral estates as assets to be managed and protected with 
responsible stewardship. For the majority of us, our minerals are part 
of a family legacy acquired through the hard work and sacrifices of our 
forbearers. Royalty income pays to educate our children, care for aging 
parents, and supplement salaried and Social Security income. We spend 
our money in our communities, give to our local charities and save for 
the future. Our financial benefits come solely from the mineral 
interests we own--deep under American soil. When those resources have 
been exhausted, the royalty income ends.
4. America's energy policy as a whole:
    A large portion of US Energy Secretary Steven Chu's February 4th 
testimony to this Committee was dedicated to discussing the 
administration's plans to parse out research and development funding 
for various spheres of technology that the administration has deemed to 
be inadequately advanced. This funding is hoped to further advance said 
technologies enough to enable a transition to widespread reliance on 
them as alternative energy sources.
    Though the dominate theme of his testimony was how investment can 
eventually improve alternative technologies, he did acknowledge, albeit 
sometimes indirectly, that we are not yet ready to abandon the energy 
sources that have become the workhorses of our economy. Let us first 
look at some of Secretary Chu's comments, and then at some important 
facts that demand serious attention during the process of formulating a 
comprehensive energy policy and departmental budget; facts which have 
seemingly not garnered the attention due to them.
A. Secretary Chu's Testimony
    In Energy Secretary Chu's testimony, he listed several challenges 
to the `` . . . ability of the United States to meet the growing demand 
for reliable electricity.'' He said that `` . . . we will need 
breakthroughs and better technologies to meet our long-term goals.'' He 
expanded on the current limitations of these technologies during his 
discussion of DOE funded research groups called ``Energy Innovation 
hubs.''
    He called for an additional EIH to be created to `` . . . 
dramatically improve batteries and energy storage.'' The call for such 
dramatic improvements is a vicarious admission of the gap between, on 
the one hand, our current level of technological attainment and our 
current infrastructure, and on the other hand, the level of technology 
and infrastructure thought to be necessary to substantially replace 
fossil fuels.
    Secretary Chu expressed hope that ``Breakthroughs in digital 
network controls, transmission, distribution, and energy storage will 
make the power grid more efficient . . . '' Those dramatic increases in 
efficiency and storage technology would be necessary in order to more 
heavily rely on energy sources like wind and solar without 
intermittently suffering significant energy shortages.
    There is no doubt that these technologies will either improve 
eventually, or else other superior technologies not yet conceived will 
take their place. The problems are: First, on what timescale will these 
advances be made; second, what will be the specific quantitative and 
qualitative nature of these advances? Central planners and 
prognosticators throughout history have struggled to grasp at, and have 
often fumbled with, predicting the answers to questions like these.
    Let us once again return to the example of hydraulic fracturing 
technology. Few, if any, could have predicted the pace of the current 
energy renaissance that has occurred in the last few years in regards 
to the recovery of clean burning natural gas. It has resulted from 
rapid strides in drilling technology. According to Secretary Chu:

          Due to research sponsored by DOE from 1978 to 1990 [which 
        studied] methane, coal bed, and shale gas, that research was 
        finally picked up by the oil and gas industries. In 1990, 
        Schlumberger started investing in shale gas research. That has 
        effectively doubled the gas reserves of the United States.

    It has been 32 years since DOE first researched shale gas, and 20 
since Schlumberger began such research. Drilling for natural gas in 
shale has only become economically feasible within the last few years. 
The decades it took for shale hydraulic fracturing technologies to 
become economical should forewarn us not to be surprised at the untold 
decades to come before today's alternative energy sources might become 
viable.
    In formulating our energy policies and budget, we would be wise to 
heed the old idiom: don't put the cart before the horse. We must have 
viable alternatives BEFORE we consider abandoning the energy workhorses 
of our economic security. Putting the ``green'' `cart' before the 
energy `horse' is precisely what our energy policy would do if we 
simply fund research for, as of yet, unreliable energy sources, and 
simultaneously pull the rug out from under our conventional domestic 
energy industry (i.e. removing virtually every incentive they have to 
produce, as is being proposed in the DOE budget eliminations).
B. Facing the facts as they are, not as some may wish them to be
    Throughout this winter season (2009-2010), wind turbines in Britain 
have produced only 20% of their capacity due to lower than average wind 
resulting from a colder than average weather pattern. They currently 
rely on wind for only 5% of their total power, but have been planning 
to rely on it to meet a quarter of their power demand within the next 
ten years, due in part to pressure from the E. U. If they had been 
reliant on wind for 25% of their demand during this winter, then the 
wind generation deficit wouldn't just be an eyebrow raising note of 
caution, it would be an outright crisis, with dramatic, real, and 
painful human costs.
    Let's examine, frankly and forthrightly, the energy situation as it 
exists. Alternative energy sources (i.e. not petroleum, nuclear, 
natural gas, or coal) accounted for 7.301% of total U.S. energy 
consumption in 2008 (the most recent year reported by EIA). Let's 
temporarily remove hydroelectric from the discussion, since the U.S. is 
not building more hydroelectric dams. Let's remove geothermal as well, 
since most available sources are already being exploited. Biomass is 
limited due to the limited acreage upon which to grow the fuels, and 
also because of concerns about the impact of large scale biomass crop 
production on global food prices as subsidized demand for the fuels 
makes them compete with food crops. We are essentially left with wind 
power and solar power as the only alternative ``green'' energy sources 
that are substantially expandable.
    Wind and solar/photovoltaic energy combined account for just 0.605% 
of our total energy consumption. Fossil fuels currently provide 83.436% 
of our energy consumption. Even if you remove the technological 
limitations and reliability issues from the equation (i.e. the wind 
intermittently not blowing or the sun not shining) you're still left 
with a sobering fact: to replace fossil fuels, our wind and solar/PV 
generating capacity would have to be 137.91 times what it is today.
    From 2007 to 2008 according to EIA, U.S. wind generating capacity 
increased to provide an additional 0.173% of our energy needs. Solar 
capacity increased even more slowly, only providing an additional .01% 
beyond its previous levels. If we add the increases together, then at 
this combined increase of 0.183% share of total consumption per year, 
solar and wind combined could close the gap, and grow to replace fossil 
fuels in just over 455 years.
    Of course, 455 years is a bit ridiculous, as it assumes the growth 
rate seen in the last year of EIA data will be constant, which it 
obviously won't. It also precludes increases in generating efficiency 
per installation, etc. There is no crystal ball that can tell us what 
will happen next year, let alone decades or centuries from now. But, 
for the sake of the argument, let's say that we keep pumping hundreds 
of millions, or billions of dollars in subsidies a year into research 
and development for wind and solar. Can that timeframe be cut in half? 
Even at 10% of that figure we're looking at half a century. While the 
455 years figure is certainly an exaggeration because it factors in 
neither unquantifiable future changes in supply and demand, nor 
unforeseeable future technological advances, it is nonetheless a 
thought provoking figure based on real performance data.
    The fact that solar energy generation has grown so slowly is quite 
disappointing considering the level of investment the government has 
been making. The federal government has been subsidizing solar energy 
for years, and the DOE's proposed FY 2011 budget plans to invest 302 
million of taxpayer dollars into solar energy. Subsidizing the solar 
industry seems to have had some kind of effect on their bottom line, 
because shipping of solar cells was up 280% from 2007 to 2008 according 
to EIA. Unfortunately, for all the investment of taxpayer dollars into 
solar, and notwithstanding the increased shipments of solar cells, that 
very same time period showed only the aforementioned increase of .01% 
more of total U.S. power consumption being provided by solar/pv. This 
is partly because solar is currently a MUCH more expensive way to 
create electricity than clean burning natural gas. Thus far, this seems 
to strain credibility as a good return on investment, at least for the 
short and medium term.
5. The Need for Energy Independence
    The American public, our national security interests, and our 
economy have long demanded, and still demand three results from the 
energy policy of our elected officials: an abundant, affordable, and 
uninterrupted energy supply. The more secure our energy supply is, the 
safer we feel, and in fact, the safer we are. Certain policy analyses 
recently expressed by administration officials leave some room to 
question whether those three things are fully understood by our 
leaders.
    In Secretary Chu's testimony, he repeated the mantra of ``reducing 
U.S. dependence on oil'' four times. While the search for alternative 
sources may have its merits, the fact remains, as Secretary Chu himself 
pointed out in his address to the 2010 Washington Auto Show, that our 
``transportation fuels [are] almost totally dependent on petroleum.'' 
95% of our transportation fuels are from petroleum. 28% of the total 
energy used in the U.S. is used for transportation.
    Americans are going to purchase fuel for their vehicles somewhere, 
whether that supply is domestic or from abroad. Administration 
officials, including Secretary Chu and President Obama, have repeatedly 
talked about the need to break our addiction to foreign oil. An obvious 
step would be to maximize our domestic oil production.
    In testimony submitted to the Senate Finance Subcommittee on 
Energy, Natural Resources, and Infrastructure on Sept. 10, 2009, Alan 
B. Krueger, Assistant Secretary for Economic Policy and Chief 
Economist, U.S. Treasury department, said that ``The domestic price of 
oil is determined by global supply and demand because oil is an 
internationally traded commodity.'' He continued, saying ``The 
relatively small U.S. share of global production means that any changes 
in domestic U.S. oil production will have a limited impact on the world 
supply of oil.''
    His focus on the ``world'' supply of oil myopically focuses on 
mathematical equations that in no way account for very real, legitimate 
national security concerns. The American people, and historically 
congress as well, have recognized the importance of maximizing the 
independence of an American supply. Although he painted a relatively 
rosy picture of the negative impact on domestic production that the 
proposed elimination of deductions will bring, he does concede that 
``on the supply side, a change in domestic producer costs could cause 
production to shift from domestic non-integrated producers to 
integrated domestic or foreign suppliers'' of oil.
    Assistant Secretary Krueger's basic conclusion, all things being 
equal, was that the ``world'' supply of oil and gas and therefore the 
supply available in the U.S. should only be negligibly affected by any 
decline in domestic production resulting from the elimination of 
percentage depletion and other deductions. It is understandable how a 
trained economist could arrive at this result. The first thing learned 
in any economics class is the Latin phrase: Ceteris Paribus, meaning 
``All other things being equal.'' Economists are trained to analyze 
hypothetical mathematical situations independently of harder to 
quantify human variables. If the ``455 years'' figure on the previous 
page seemed somehow suspect, then so too must Assistant Secretary 
Krueger's apparent trust in the stability of our supply of oil from the 
rest of the world. Ceteris Paribus may be a useful academic exercise 
that assists with the understanding of certain economic philosophies 
(via studying them in a vacuum); but in this situation, all things are 
regrettably not equal.
    Of course the domestically produced supply does not seem as sizable 
when compared to the total world supply, but history is full of 
examples of supply chains, especially foreign supply chains, being 
suddenly and unpredictably interrupted for extended periods of time. To 
think that similar interruptions could not occur again in the future 
would be naive. In order to safeguard our ability to provide reliable 
and affordable energy, we must maximize our ability to produce energy 
domestically.
    There seems to be a decent level of bipartisan agreement that we 
need to break our addiction on foreign oil, though there are 
disagreements on the most prudent way to do that. Other than maximizing 
our domestic oil production, and in light of the technological 
immaturity and expense of wind and solar, natural gas currently seems 
like the only viable alternative, and for several reasons.
    The EPA has stated that ``natural gas is the cleanest alternative 
transportation fuel commercially available today.'' The group NGV 
America says that the U.S. presently has around 1100 natural gas 
vehicle fueling stations, with about 50% open to the public. Around 1.5 
million miles of natural gas pipelines are already in place throughout 
the country. This preexisting infrastructure would make it easier to 
deliver supplies to newly constructed filling stations well beyond 
those currently available. Also, natural gas is significantly cheaper, 
costing between half to one third the cost of gasoline.
    According to a report from the Edison Electric Foundation and the 
Brattle Group, building new combined-cycle natural gas plants to 
generate electricity is significantly cheaper in dollars per kilowatts 
of capacity added than building new plants for utilizing nuclear, 
solar, wind, or new coal-combustion (CSS). The report says building a 
new combined-cycle natural gas plant would cost $1000/KW of capacity 
added. The most expensive type of new plant would be solar, costing 
$6,600 for the same capacity increase.
    98% of the natural gas the U.S. uses comes from the U.S. and 
Canada. As stated earlier, there is likely enough in the U.S. for up to 
100 years. There is relatively low cost for converting a conventional 
gasoline engine to run on it. It also burns much cleaner than petroleum 
and ``twice as clean as coal'' when burned for electricity.
    Secretary Chu's testimony reports that DOE is ``committed to being 
good stewards of the taxpayers' money.'' If that is true, then we 
sincerely urge the Committee, Secretary Chu, DOE, and the 
Administration at every level to support a budget that will support 
natural gas as an alternative energy source.
6. Conclusions
    Secretary Chu did acknowledge in his testimony the continued need 
for conventional energy. He said that ``The world will continue to rely 
on coal fired electrical generation to meet energy demand. It is 
imperative that the United States develop the technology to ensure that 
base-load electricity generation is as clean and reliable as 
possible.'' Interestingly, in his 20 pages of testimony, secretary Chu 
failed to mention natural gas at all, other than to say:

           . . . we eliminated more than $2.7 billion in tax subsidies 
        for oil, coal and gas industries. This step is estimated to 
        generate more than $38.8 billion in revenue for the federal 
        government over the next 10 years.

    In 1952, the President's Materials Policy Commission examined 
percentage depletion, and concluded that:

           . . . no alternative method of taxation has come to the 
        Commission's attention or could be devised by the Commission 
        which, in its judgment, promises to overcome these limitations 
        and still achieve the desired results, particularly not without 
        seriously dislocating well established capital values and other 
        arrangements in the industries concerned, with highly adverse 
        effects on supply. Taking the practical situation as it finds 
        it, the Commission believes that any radical alteration of 
        existing tax arrangements would be undesirable.

    The ``limitations'' they referred to are the imperfect allotments 
of the cost of depletion that can occur under percentage depletion. 
``Desired results,'' in this case, refers to encouraging the production 
of American minerals in order to provide the energy to grow our economy 
and to provide a greater measure of independence and security.
    We believe the U.S. would presently be better served by a DOE 
budget which invests in maximizing domestic oil and natural gas 
production. We believe this because natural gas is cheap, locally 
abundant in supply, clean burning, and efficient. As a transportation 
and electricity generating fuel, it can work in tandem with currently 
imperfect and experimental technologies like wind and solar. When the 
wind isn't blowing, the sun isn't shining, or yet to be invented 
experimental energy storage systems malfunction, natural gas can 
provide us the uninterrupted electricity we rely upon, cheaply, and 
cleanly. Investing in the natural gas industry will buy us the time we 
need for the market to truly perfect alternative energy systems that 
are presently unreliable.
    We take exception to the provisions in the DOE budget which propose 
to raise the tax burden on what are currently America's only reliable 
energy sources by ``38.8 Billion'' dollars over the next decade, which 
will slow domestic development. Those provisions include raising the 
tax burdens on many of America's most vulnerable retired royalty 
owners. In our pursuit of an energy policy that encourages domestic 
production, we must not allow the smallest participants in America's 
energy production to go unprotected from abuse by the larger ones. The 
protection that percentage depletion provides to them must, itself, be 
protected.
    The DOE budget will eliminate the percentage depletion deduction 
used by `the little guy,' (AKA: small time royalty owners) while 
leaving the cost depletion deduction used by big energy companies 
untouched. Percentage depletion is an important incentive for domestic 
energy development, which helps supply the energy we need to drive our 
economy while making us less dependent on foreign sources of energy. It 
does this while simultaneously protecting small time royalty owners, 
who unlike `big energy' corporations, can't afford to file cost 
depletion. The proposal to eliminate it should be removed from the DOE 
budget for fiscal year 2011.
    We appreciate the opportunity to provide the Committee with our 
thoughts and concerns on these issues and welcome any questions about 
this testimony or the sources we may have utilized.
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

    Responses of Hon. Steven Chu to Questions From Senator Bingaman
    Question 1. Los Alamos Neutron Science Center--As you know, the 
Administration has proposed zeroing out the upgrades for the Los Alamos 
Neutron Science Center. Last year, the Administrator of the National 
Nuclear Security Administration (NNSA) testified before the Strategic 
subcommittee of the Senate Armed Services Committee and the Energy and 
Water Appropriations Subcommittee that keeping the facility operational 
was essential to maintaining our stockpile. A facility upgrade was then 
authorized and appropriated as the most cost effective and timely means 
to achieve that. Why was it zeroed out this year and what are your 
thoughts on this?
    Answer. Los Alamos Neutron Science Center (LANSCE) continues to 
make an important contribution to the needs of the nuclear security 
enterprise and science users, and is expected to continue those roles 
in FY 2011. NNSA spends approximately $70M annually on LANSCE 
operations supporting stockpile management. Operation of LANSCE into 
the longer-term future would require significant funding for additional 
refurbishment. After receiving funding from the Congress for Project 
Engineering and Design (PED) in FY 2009 and FY 2010, we are using these 
funds to investigate the requirements to extend the life of the linac 
and improve its reliability. We are also considering a possible future 
expanded role in materials and nuclear science research, but have not 
yet revalidated the mission need for these potential future 
requirements.
    It is therefore premature to allocate additional funding within the 
budget request for linac refurbishment. The Secretary has asked NNSA to 
work with the Under Secretary for Science and the Office of Science to 
consider options for enabling the materials and nuclear science that 
are needed to sustain stockpile management and to enable scientific 
advances envisioned within the Department of Energy. We expect to 
complete this work in time to make recommendations as part of the FY 
2012 budget formulation phase.
    Question 2. International Engagement in Clean Energy Development--
The Department is facilitating the development and adoption of clean 
energy technologies around the world in China and many other counties--
can you please tell the committee about the Department's strategy for 
international engagement and how that fits into the Agency's larger 
mission?
    Answer. The Department is actively engaging the international 
community to address the challenges of long-term energy security and 
climate change, both of which require concerted global action. A major 
component of this engagement is the development and widespread 
deployment of clean energy technologies that can reduce reliance on 
imported oil, mitigate the worst effects of climate change, and help 
transition the United States to a clean energy economy. Through a 
variety of multilateral mechanisms, such as the Global Partnership of 
the Major Economies Forum on Energy and Climate and the International 
Energy Agency's Climate Technology Initiative, the Department 
collaborates with international partners to increase investment in 
clean energy R&D and accelerate the diffusion of transformational low-
carbon technologies and practices. Additionally, the recent launch of 
the Renewables and Efficiency Deployment Initiative (Climate REDI) 
seeks to promote the dissemination of renewable energy and energy 
efficiency technologies specifically in developing countries. On the 
bilateral front, the Department manages a broad portfolio of 
cooperative agreements with both developed and major developing 
countries, including China and India, which seeks to gain a better 
understanding of clean energy development through exchanges of 
information, sharing of best practices and lessons learned, and joint 
research. Through such widespread multilateral and bilateral 
cooperation, the Department is working to accelerate the transition to 
a sustainable low-carbon economy.
    Question 3. Energy Information Administration--Can you explain in 
more detail the proposed increase for the Administration, particularly 
the financial markets initiative and improving the quality of data?
    Answer. The $18.2M increase above EIA's funding level for FY 2010 
improves its capability to close important gaps in energy information, 
strengthen analysis, and address significant data quality issues. 
Specifically:

   $8.0M of the increase doubles the sample size of the 2011 
        Commercial Buildings Energy Consumption Survey, providing 
        information critical to understanding energy use and 
        performance measurement for energy efficiency programs.
   $1.3M expands analysis of energy market behavior and data to 
        address the interrelationship of energy and financial markets.
   $3.1 M continues implementation of improvements in oil, gas, 
        and electricity data coverage, quality and integration.
   $1.9M supports upgrades to the National Energy Model, which 
        would improve the ability to assess and project supply, demand, 
        technology trends and policy affecting U.S. and world energy 
        markets.
   $1.5M initiates efforts to track and analyze the adoption of 
        ``Smart Grid'' technologies and dynamic electricity pricing 
        plans, which would improve the forecasting of electricity 
        markets and assist policymakers in determining if policy goals 
        were being met.

    A further description of plans for the financial markets initiative 
and energy data quality improvements is provided below.

    Energy and Financial Markets Initiative.--Launched in September 
2009, EIA's Energy and Financial Markets Initiative aims to improve 
energy market transparency, support sound policy and efficient markets, 
and increase public understanding--activities that are central to EIA's 
mission. EIA's traditional coverage of physical fundamentals such as 
energy consumption, production, inventories, spare production capacity, 
and geopolitical risks continues to be essential but, moving forward, 
EIA is also assessing other influences, such as speculation, hedging, 
investment, and exchange rates, as it seeks to fully understand energy 
price movements.
    EIA issued a Federal Register notice in January 2010 seeking public 
comments and recommendations for additional information needed to 
support analysis of financial markets and EIA's traditional fundamental 
analysis. The additional funding requested in FY 2011 will allow EIA to 
take action based on the comments and recommendations it receives, 
through data purchases and/or new data collection efforts. It also 
would allow for increased analytical efforts focused on various aspects 
of financial markets and their interaction with energy markets, such as 
the possible impact of index funds on oil price formulation and the use 
of modeling techniques to assess the impact that investment flows from 
various entities might have on oil prices.
    Data quality.--EIA has requested additional funding for 
improvements in coverage, quality, and integration of oil, gas, 
electricity, and other energy data. This request reflects issues 
arising directly from EIA's aging information technology infrastructure 
that is poorly adapted for keeping up with the changing information 
needs of policymakers, the broader energy industry and its associated 
markets. All aspects of developing and disseminating data have been 
affected, from maintaining survey frames (i.e., lists of possible 
respondents), to collecting and processing data, to analyzing the data 
once acquired, to providing information to the public. This funding 
will support a modernization effort to fill critical data gaps; update 
the statistical techniques used in data collection; better protect the 
integrity of data collected, processed and published; assure 
documentation of data processing decisions; and reduce lifecycle 
development and operating costs for EIA's statistical programs.
    Question 4. Strategic Petroleum Reserve--Your budget does not 
request funds for the expansion of the Richton, Mississippi facility to 
expand to 1 billion barrels--could you explain your reasoning and if 
this could impact mitigation plans for future events that affect 
refinery production such as hurricanes along the Gulf Coast?
    Answer. The Administration is currently reviewing SPR expansion 
policy. While this review is occuring, the FY 2011 President's Budget 
proposes the cancellation of $71 million in balances from prior years 
appropriated for expansion activities and use of these funds to 
partially fund the SPR's budget requirements for FY 2011.
    Question 5. EERE--the budget proposes a level budget for biofuels 
of $220M, while switching the allocation funding from liquid to 
electricity production using biomass--are you concerned that this may 
take away the continuity for ensuring we have adequate funding for 
advanced biofuels which are the underpin the renewable fuels standard 
enacted into law in 2007?
    Answer. This FY 2011 change in funding allocation is not expected 
to negatively affect efforts to support the commercialization of 
advanced biofuels to help meet renewable fuel standards goals. The 
Recovery Act funded the construction phase of one of the commercial-
scale biorefineries. Taking this factor into consideration, the FY 2011 
budget request supports the integrated biorefinery project funding 
needs through September 2011.
    The proposed biopower initiative will accelerate the development of 
advanced technologies to enable substituting biomass for coal in power 
generation. These advanced biopower technologies will have positive 
economic and environmental impacts for the existing utility industry, 
which would promote widespread commercialization.
    Question 6. Building Efficiency--The Senate is considering possible 
legislation (HomeStar) to encourage making residential buildings more 
energy efficient, which provides enhanced rebates for specific 
efficiency measures (insulation, heating and cooling systems, etc.) and 
for whole home energy savings retrofits.
    While you have not had the opportunity to review the legislation in 
detail are you supportive of such a policy?
    Answer. Yes, the Department supports a policy of encouraging 
homeowners to take action to make their homes more energy efficient. 
Residential energy efficiency improvements such as adding insulation, 
upgrading heating and cooling systems, and undergoing whole-home 
retrofits have multiple benefits. Benefits include: homeowners save 
money on utility bills; carbon emissions are reduced; and domestic jobs 
are created in the contractor/construction sector.
    Question 7. Carbon Capture and Sequestration Task Force--President 
Obama recently announced to the National Governors Association that he 
would be tasking the DOE and the EPA with developing an interagency 
task force for carbon capture and sequestration oversight. Could you 
please elaborate on your role and that of the DOE with this task force? 
Could you outline what the main function of this task force will be? Is 
the function more of an oversight role, regulatory design, or a 
technical consulting organization?
    Answer. The purpose of the Interagency Task Force on Carbon Capture 
and Storage is to develop a comprehensive and coordinated Federal 
strategy to speed the commercial development and deployment of carbon 
capture and storage technologies. The President determined that the 
Task Force should be co-chaired by designees from the Department of 
Energy and the Environmental Protection Agency.
    The Task Force has been directed to develop a proposed plan to 
overcome the barriers to the widespread, cost-effective deployment of 
carbon capture and storage (CCS) within 10 years, with a goal of 
bringing 5 to 10 commercial demonstration projects online by 2016. 
Ultimately comprehensive energy and climate legislation that puts a cap 
on carbon will provide the largest incentive for CCS because it will 
create stable, long-term, market-based incentives to channel private 
investment in low-carbon technologies. The Task Force plan should 
explore incentives for commercial CCS adoption and address any 
financial, economic, technological, legal, institutional, social, or 
other barriers to deployment. The Task Force should consider how best 
to coordinate existing administrative authorities and programs, 
including those that build international collaboration on CCS, as well 
as identify areas where additional administrative authority may be 
necessary. The Co-Chairs shall report progress periodically to the 
President through the Chair of the Council on Environmental Quality.
    Question 8. Carbon Capture and Sequestration R&D--There appears to 
be a continued commitment for carbon capture and sequestration research 
and development at Fossil Energy. The focus is mainly CCS couple with 
coal-fired electric utilities. Is there flexibility in the proposed 
budget for CCS applications to other energy intensive industrial 
applications, such as fuels refining, cement manufacturing, steel 
mills, etc? That seems to be a research & development area where rapid 
gains can be made at a more modest level of investment that could be 
conducted concurrently with the more coal-focus R&D.
    Answer. The Office of Fossil Energy has done extensive work in 
carbon capture and storage (CCS) related to fossil energy facilities. 
Since approximately half of the Nation's electricity is produced by 
coal-fired power plants and coal has a greater emission of 
CO2 per unit of electricity produced than oil or natural 
gas, the emphasis on capturing carbon dioxide from this sector is 
essential. Electricity generation using carbon based fuels is 
responsible for over a third of the CO2 emissions in the 
U.S. and globally the amount of CO2 from other industrial 
sources is smaller than coal. However, since the storage of 
CO2 is generally indifferent to the source of 
CO2, obtaining CO2 from industrial sources is 
also an important pathway to pursue.
    Therefore, the Department recently released a Funding Opportunity 
Announcement for Industrial Carbon Capture and Storage from ARRA 
funding that will provide over $1.32B for large-scale industrial CCS 
projects from industrial sources (cement plants, chemical plants, 
refineries, steel and aluminum plants, manufacturing facilities). 
Carbon capture technologies are being developed for all sectors and 
will continue to be pursued since many of the technologies developed 
will be applicable to both the utility and industrial sectors.
    Question 9. Oil and Gas R&D--There have been broad cuts to the oil/
gas R&D programs at Fossil Energy (ultra deep program). In light of the 
growing interest in natural gas extraction from unconventional gas 
plays (shale gas, tight gas sands, and methane hydrates), is there any 
focus on environmentally safe extraction of these resources?
    Question 10. Geothermal--In light of the recent issues surrounding 
the enhanced geothermal project at Geysers in California, has this 
impacted the focus and goals of the geothermal program at the DOE?
    Answer. Enhanced geothermal systems (EGS) have enormous potential 
as a source of clean, renewable energy. The Department remains 
committed to achieving EGS technology readiness by 2015. As with any 
new technology, it needs to be fully developed and various technical 
and environmental issues need to be worked through. Also, as expected 
with any novel technology, new issues are constantly being identified 
as the research proceeds.
    For example, DOE is actively engaged in addressing seismic risk 
associated with underground energy activities. In 2004, DOE initiated 
development of the International Protocol for Induced Seismicity from 
geothermal development with the help of Lawrence Berkeley National 
Laboratory (LBNL) and the international seismic community. The work was 
informed by panels of international experts, and the first edition of 
the Protocol was published in 2008 and adopted by the International 
Energy Agency in 2009. DOE is committed to routinely updating the 
Protocol based on a better understanding of EGS technology, and all 
federally funded EGS projects are required to follow the protocol.
    DOE also continues to work with the geothermal industry, in 
coordination with LBNL, to ensure that the experiences gained from The 
Geysers site can help advance EGS throughout the world.
    Question 11. Grid Energy Storage--This year's budget increases 
funding for grid energy storage research, which I support. Can you 
please explain how these funds will complement the demonstrations 
already underway under the stimulus?
    Answer. The work done through the America Recovery and Reinvestment 
Act (ARRA) emphasizes deployment, while the work supported through 
annual appropriations focuses on the technology research and 
development. The Department has selected 16 large-scale energy storage 
demonstration projects to receive a total of $189 million in ARRA 
funds. These projects will provide field tests of known technologies 
that will show the value of energy storage in a limited number of 
applications. Performance will be carefully monitored and technical and 
economic data will be collected in a database and made available to 
utilities to encourage further projects and aggressive deployment.
    The FY 2011 request for energy storage research will support 
further research and development, which is necessary to bring down 
costs and increase the reliability of storage devices. In FY 2011, new 
and existing storage devices will be extensively bench tested to 
provide utilities with reliable evaluations and assessments. Expanded 
collaborations with state energy offices and utilities will lead to 
additional demonstrations of new technologies and in new applications. 
Analysis studies will develop tools and methodologies to help utilities 
to optimally deploy storage facilities on the grid.
    Question 12. Hiring--The American Recovery and Reinvestment Act of 
2009 resulted in an order of magnitude increase in funding for the 
Office of Electricity and Energy Reliability. The awards made under 
this funding in FY 2009 and FY 2010 will require significant oversight 
and monitoring into FY2011 and later years. At the same time, the 
modernization of our electric grid is seen as the key enabler for 
achieving our clean energy and climate goals; the Office of Electricity 
and Energy Reliability is tasked with ensuring that that we will have 
the technology and know-how to realize this 'smart grid.' I am 
concerned that the requested funding levels for additional FTE's in 
FY2011 falls short of what is needed to effectively provide oversight 
and monitoring of grants and cooperative agreements. Does the Office of 
Electricity have the necessary numbers of skilled FTE's to aggressively 
achieve the vision of a modernized electric grid?
    Answer. The FY 2011 budget request for the Office of Electricity 
Delivery and Energy Reliability (OE) includes a $7.6 million increase 
to maintain the level of FTEs filled over the last two years with 
Recovery Act funding to support Recovery related activities, as well as 
additional FTEs to support the expanded non-Recovery related 
activities. The planned number of FTEs requested in FY 2011 will allow 
OE to have the sufficient level of skilled, bench strength necessary to 
achieve the goals of the organization.
    Question 13. Appliances--You have requested a 14% increase for the 
appliance standards program. This will allow DOE to comply with the 
court settlement directing the Department to resolve the backlog of 
standards. However, Congress is currently considering legislation to 
modify the program and establish new or revised standards for many 
products.
    Has the department considered modifying its rulemaking schedule and 
priorities in light of likely Congressional action? For example, will 
the Department consider lowering the priority for rulemakings for 
standards for products Congress is considering setting a standard by 
statute, or exempting a class of products by statute?
    Answer. The Department is expanding and strengthening its ability 
to fulfill obligations under existing statutes. This includes 
increasing staff and analytical capabilities and reviewing possible new 
areas for standards available with existing authority. This expanded 
capacity will make it easier for DOE to move quickly in implementing 
any new legislation. If new legislation is passed into law, DOE will 
adjust schedules as necessary and reevaluate resource needs, 
priorities, and schedules. When legislation becomes law, the standards 
set by statute supersede DOE developed standards. Therefore, if 
Congress establishes legislation that exempts a product class, and that 
legislation becomes law, then DOE will adhere to the product class 
exemption.
    Question 14. Clean Tech Supply Chain--There is a growing awareness 
that many of our advanced energy technologies (e.g. electric vehicles, 
solar photovoltaics, and wind-turbines) depend upon elements whose 
future supply is predicted to be limited and/or restricted, such as 
indium and several of the rare earth metals. Could you discuss what 
actions the Department is taking to:

    (a) Ensure that there is adequate supply of these elements to meet 
future growth goals for clean energy technologies; and
    (b) Pursue research to identify and investigate alternative earth 
abundant materials and elements for use in clean energy technologies?

    Answer. The Department is keenly aware of the potential for supply 
constraints among a variety of materials crucial to the widespread 
development and deployment of clean energy applications. Although a 
number of these strategic elements, such as lithium and rare earth 
metals, exist in abundant and geographically dispersed reserves, most 
of their mining and processing are currently concentrated in only a few 
areas outside the United States. This reality presents particular 
vulnerabilities, most notably the potential for supply disruptions due 
to market fluctuations or adverse geopolitical developments. The 
Department is committed to actively monitoring the supply and 
availability of these strategic materials while exploring strategies to 
manage the risk of both short-and longterm supply disruptions, 
including through encouragement of diverse supply chains and 
alternative or substitute materials. For example, the Department's 
Advanced Research Projects Agency--Energy (ARPA-E) recently provided 
funding for research into certain high energy density magnetic 
properties which may provide alternatives to the currently used 
neodymium-iron-boron magnets that utilize rare earth metals. The 
Department will continue to monitor this issue and work across Federal 
agencies to develop sustainable long-term solutions.
    Question 15. Hiring--In a special report by the Department of 
Energy's Office of Inspector General entitled, 'Selected Department of 
Energy Program Efforts to Implement the American Recovery and 
Reinvestment Act,' it was found that as of December 2009, the Office of 
Energy Efficiency and Renewable Energy had filled roughly half of the 
288 positions using the direct hire authority authorized under the 
American Recovery and Reinvestment Act. The Office of Electricity and 
Energy Reliability had only hired about 36 percent of needed employees 
identified on its Recovery Act staffing plan. What steps is the 
Department taking to fill these additional positions?
    Answer. In addition to the special hiring authority for filling 
positions in the Offices of Energy Efficiency and Renewable Energy 
(EERE) and Electricity and Energy Delivery (OE) under the Recovery Act, 
the Department has recently been granted direct hire authority for 
certain other Recovery Act positions. This authority allows filling 
these positions on a time limited basis through September 30, 2011, and 
is available, along with the more specific authority granted for EERE 
and OE, to fill Recovery Act related positions. At this time, all 
Recovery Act hiring requests for EERE have been processed by the Office 
of the Chief Human Capital Officer. One hire for OE is currently in 
process. EERE and OE are currently re-evaluating their need for 
additional staff to support Recovery Act.
    Question 16. Energy Innovation Hubs--In the FY2011 Budget request, 
a new Energy Innovation Hub centered on Batteries and Energy Storage is 
proposed. Could you please explain in greater depth:
    a) What will be the mission of the hub; and
    b) How this hub will interface with and add value to the energy 
storage research being performed within the Office of Science, the 
research, development, and demonstration work being carried out by the 
Office of Electricity and Energy Reliability and the Office Energy 
Efficiency and Renewable Energy, as well as ARPA-E?
    Answer. Today's electrical energy storage approaches suffer from 
limited energy and power capacities, lower-than-desired rates of charge 
and discharge, calendar and cycle life limitations, low abuse 
tolerance, high cost, and poor performance at high or low temperatures. 
Many of these fundamental performance limitations are rooted in the 
constituent materials making up the storage system and in the 
fundamental physics and chemistry that govern the transport and storage 
of energy in the material. The research challenges are inherently 
multi-disciplinary.
    The Batteries and Energy Storage Hub will target science knowledge 
gaps that are preventing breakthroughs in technology platforms for both 
grid and mobile applications. Specifically, the Hub will address a 
number of research areas identified in the Basic Energy Science 
workshop report Basic Research Needs for Electrical Energy Storage. The 
Hub will expand our scientific base for synthesis of novel nanoscale 
materials with architectures tailored for specific electrochemical 
performance, develop new methodologies to characterize materials and 
dynamic chemical processes at the atomic and molecular level, and 
expand our competencies in simulation and prediction of structural and 
functional relationships using leading computational tools.
    The Hub's ultimate technological goals are development of radically 
new concepts for producing storage devices from materials that are 
abundant and have low manufacturing cost, high energy densities, long 
cycle lifetimes, and high safety and abuse tolerance for a broad range 
of energy storage applications. The breadth and depth of the scientific 
challenges associated with these goals will require that the Hub 
integrate premier scientific talent from the disciplines of chemistry, 
physics, materials sciences, biology, and engineering. The engineering 
and manufacturing challenges will demand close consultation with 
industry. The Hub will provide an interdisciplinary, unified research 
framework for energy storage research, bringing fundamental and applied 
research teams together in a single coherent research program that will 
cross-fertilize activities to accelerate fundamental understanding, 
materials discovery, and progress towards commercialization of new 
energy storage technologies.
    Responses of Hon. Steven Chu to Questions From Senator Murkowski
                            alaska-specific
    Question 1. Mr. Secretary, last year you came to Alaska with some 
fellow Cabinet members and saw firsthand how expensive diesel-fired 
electricity is in rural areas. The cost of energy in Alaska, especially 
in rural Alaska, averages about nine times more than in the Lower 48 
states. For electricity rates to drop in rural Alaska, we need federal 
grant assistance to help with the high capital costs of installing 
renewable energy in isolated areas.
    In the 2007 Energy Independence and Security Act, Congress 
recognized this need and authorized such aid. Section 803 of the Act 
authorized a grants program to provide matching funding for renewable 
energy projects but, unfortunately, despite your recent visit this 
provision has yet to be funded. Would you support some funding to begin 
implementation of this authorized program? What else can the 
Administration do to help make renewable energy installation more 
affordable in places like Alaska?
    Question 2. As you know, last year I was extremely disappointed 
that the Administration zeroed out all funding for the Arctic Energy 
Office. That office, which had an annual budget of about $4-7 million, 
has done great work in Alaska over the previous seven years. Right now, 
as they close shop, they're working on much needed renewable energy 
developments in the state. And yet, the Administration's FY 2011 budget 
request contains no new funding to continue cold-climate energy work. 
What is the Department willing to do in FY 2011 to improve energy 
technology and energy efficiency efforts in cold-climate states like 
Alaska?
    Answer. The Department's commitment through the Office of Energy 
Efficiency and Renewable Energy is to continue support for the National 
Renewable Energy Laboratory's efforts on the Transforming Energy in 
Alaska program. This effort will continue to support many opportunities 
that develop in Alaska including collaboration on the use of biomass 
for displacement of diesel heating fuel for U.S. Coast Guard bases 
throughout southeast and southcentral Alaska.
    Question 3a. The Department's FY 2011 budget request zeroes out the 
unconventional fossil fuel budget that supported methane hydrate 
research. However, I understand that the Department is planning on 
continuing its methane hydrate research efforts in the Office of 
Science--Is that correct?
    Answer. Yes. In FY 2011, the Office of Science's Basic Energy 
Sciences program will initiate a new research program in gas hydrates 
($17,517,000). This program will study fundamental scientific questions 
surrounding methane hydrates: How do they form? What is their role in 
the global carbon cycle? What is their role in seafloor ecological 
systems? How extensive are they? How stable are they? In the short 
term, the program will also study hydrates via controlled in situ 
depressurization and physical, thermal, and chemical stimulation in the 
Arctic with supporting laboratory and numerical modeling to enable 
interpretation and extrapolation of results. Existing core sample data 
from the Arctic hydrate formations will provide the scientific 
information of how the hydrate structure sits in the pore space at 
various depths. The planned tests in the Gulf of Mexico in FY 2011 will 
take in situ core samples at various depths and locations for 
evaluation. Computer simulations will be compared with data from 
previous in situ tests. This activity will also support theory, multi-
scale modeling and simulation, and experimental research in areas such 
as the intermolecular forces that govern the structure and properties 
of gas hydrates and studies of gas hydrates in the natural environment.
    Question 3b. I believe the request for methane hydrate research is 
FY 2011 is about $18 million. In the 2005 energy bill, Congress 
authorized up to $50 million a year for methane hydrates. Given the 
very positive review of methane hydrate research released just last 
week by the National Academy of Sciences, why isn't the Department 
providing additional research funding for this area?
    Answer. Funds appropriated for this research have historically been 
less than the authorization level. Yet previous support has been 
essential in enabling the Department to establish industrial and 
international partnerships to tackle critical research and development 
objectives, as identified by several studies. The FY 2011 request is 
sufficient to enable our highest priority activities.
    Question 3c. I understand that there will be funding for an Alaskan 
North Slope test well within the Office of Science, is that correct? 
How much funding will be dedicated to that effort?
    Answer. Plans for several field tests are being developed and 
evaluated during FY 2010. The results of these evaluations, along with 
the availability of funds in FY 2011, will determine our future plans 
for field tests, including the Alaskan North Slope test.
                               hydropower
    Question 1. Mr. Secretary, last September at a Clean Energy Forum 
in Pennsylvania, you said we could add 70,000 megawatts of additional 
hydropower capacity by installing more efficient turbines at existing 
dams, increasing the use of pumped-storage projects, and encouraging 
the use of run-of the-river turbines. You stated that the 
Administration ``will be pushing this'' because it's an ``incredible 
opportunity and it's actually the lowest cost clean energy option.'' A 
new jobs report from the National Hydropower Association estimates that 
there is upwards of 700,000 cumulative direct and indirect jobs that 
could be created by developing 60,000 megawatts of potential hydropower 
by 2025.
    And yet, despite all this incredible potential, hydropower is the 
only renewable resource that takes a hit in DOE's FY 2011 budget 
request. You're seeking $41 million for ``waterpower''-a 20% cut from 
what Congress approved last year.
    Would you support providing more tax credits and grant aid for both 
small and large conventional hydropower development? How about 
providing incentives for pumped storage projects?
    Answer. Additional capacity and generation from conventional 
hydropower represents a potentially significant portion of the Nation's 
future energy portfolio. The significance of hydropower capacity is 
exemplified by a recent Memorandum of Understanding signed by the 
Secretary of Energy and the Secretary of Interior and the Assistant 
Secretary of the Army on March 24, 2010 to promote the use of 
hydropower.
    The FY 2011 budget request identifies the resources necessary for 
the Department of Energy (DOE) to meet the goals and priorities for 
hydropower set by both Congress and the Administration. The FY 2011 
budget request includes funds to assess the potential for incremental 
or new hydropower generation through capacity and efficiency upgrades 
and powering existing non-powered dams. DOE is also investing in 
projects to improve methods for applying and valuing ancillary benefits 
of conventional and pumped storage hydropower assets to meet the needs 
of the Nation's changing electricity grid. DOE's Water Power program 
also received $31.7 million in Recovery Act funding which supports 
reequipping existing hydrokinetic facilities.
    Hydropower is currently treated differently than other renewable 
energy technologies in terms of Federal financial incentives and tax 
credits. For example, only certain types of hydropower that do not 
require the construction of new dams (either incremental capacity 
additions to existing facilities or run-of-river systems installed at 
licensed non-powerproducing dams) can receive either Production or 
Investment Tax Credits, while new hydropower facilities are not 
eligible. Qualified hydropower receives a Production Tax Credit worth 
1.1 cents per kilowatt-hour, half the amount received by wind, 
geothermal, and other renewable energy resources. No tax credits or 
incentives are currently provided for pumped storage facilities.
    Question 2. Of the $41M requested by the department for hydropower, 
how much do you propose to spend on emerging hydrokinetic technologies? 
Where will your research efforts be directed?
    Answer. The Department of Energy (DOE) plans to allocate 
approximately half of its Fiscal Year 2011 appropriation for water 
power towards the research, development and promotion of emerging 
hydrokinetic technologies. In Fiscal Year 2011, the DOE plans to focus 
its efforts on seven key areas:

          1. System development, deployment and verification to improve 
        device functionality and generate cost, performance and 
        reliability data;
          2. Research tools to develop design codes and models 
        necessary for supporting system development and testing;
          3. Ensuring adequate test centers and facilities are 
        developed to generate and collect system data;
          4. Technology characterization to analyze and evaluate test 
        data;
          5. Resource assessments to quantify energy availability and 
        location;
          6. Studies and projects to evaluate and minimize key 
        environmental risks to permitting and deployment of 
        demonstration projects; and
          7. Economic analysis and market development to disseminate 
        technology and resource data and integrate information into 
        energy benefit and deployment models.
                                  spr
    Question 1. The President's FY11 budget request proposes the 
cancellation of $71 million from the Strategic Petroleum Reserve 
project planned for Richton, Mississippi to add capacity to the SPR. 
The SPR is roughly at a 727 million barrel capacity even though the 
2005 Energy Policy Act calls for capacity to be expanded to 1 billion 
barrels. When does the Administration plan to add additional capacity 
to SPR?
    Answer. The Administration is currently reviewing SPR expansion 
policy.
    Question 2. Also, in the Administration's budget materials, you say 
that the FY 2011 SPR request ``provides for the assessment of energy 
efficiency and GHG control at SPR facilities to meet DOE goals for 15% 
LEED buildings by 2015, for application of wind/solar, and to lower GHG 
emissions of all DOE facilities.'' Is the Department authorized to use 
money appropriated for SPR expansion for wind and solar activities? 
Please explain.
    Answer. The Department's FY 2011 request for the SPR program 
includes $1 million to assess energy efficiency and GHG control 
opportunities at SPR facilities, i.e., the potential conversion of 
existing SPR buildings to LEED standard, the potential application of 
wind and/or solar technologies at the SPR sites, and identifying 
opportunities to lower GHG emissions from the SPR storage operations.
    The Administration's FY 2011 budget does not propose the use of 
money appropriated for SPR expansion for wind or solar activities. The 
money proposed would be SPR operational funds used to assess the 
application of wind and/or solar technologies to SPR facilities, not 
for the funding of the Department's wind and solar programs.
                            stimulus funding
    Question 1a. I'd like you to provide clarification for some of the 
terms used to describe stimulus funding. On DOE's website, there are 
three principal divisions: funds spent, funds awarded, and funds 
authorized.
    Can you explain what the term ``awarded'' means? Can you tell me 
how it differs from funds that have been obligated and actually 
disbursed to funding recipients? Can you tell me how much money has 
actually been obligated--meaning the Department is legally obligated to 
spend those funds?
    Answer. The Department of Energy's website ``Energy.gov/Recovery'' 
shows Recovery Act amounts authorized, awarded, and spent. In this 
case, authorized equates to funds appropriated to DOE in the Recovery 
Act; awarded equates to obligations; and spent equates to gross outlays 
or the amount of obligated funds that have been paid to contractors or 
grant recipients.
    As of February 22, 2010, of the $36.7 billion of DOE Recovery Act 
Funding, approximately $25.6 billion has been awarded, and $2.4 billion 
payments have been made to recipients.
    Question 1b. I'd like you to provide clarification for some of the 
terms used to describe stimulus funding. On DOE's website, there are 
three principal divisions: funds spent, funds awarded, and funds 
authorized.
    Let's take Smart Grid funding as an example. The stimulus 
authorized $4.4 billion, and the President announced $3.4 billion in 
grant awards last October. Shortly after that, the Department of Labor 
put out a press release touting a grant for Nevada that was part of the 
President's announcement, which makes it seem like each actual grant 
generates several separate press releases. Can you tell us how much 
Smart Grid funding has actually been spent? How much has been 
obligated? And where you expect those numbers to stand at the end of 
2010?
    Answer. In October 2009, the Department announced it had selected 
100 projects for grants totaling $3.4 billion under the Smart Grid 
Investment Grant program, following a competitive process. Once 
selections were made, DOE began working with the selectees on the scope 
of work, terms and conditions, and other aspects of the grants.
    As of May 8, 2010, the Department has obligated more than $3.2 
billion of the $3.4 billion allocated for the Smart Grid Investment 
Grant (SGIG) program. Final awards were initially slow, because the 
selected organizations raised a number of significant issues that had 
to be addressed. One of the most significant issues was resolved on 
March 10, 2010, when the Internal Revenue Service announced a 
determination on the tax treatment for grantees receiving SGIG awards. 
Under the revenue procedure, the Internal Revenue Service is providing 
a safe harbor under Section 118(a) of the Internal Revenue Code (IRC) 
for corporations receiving funding under the Smart Grid Investment 
Grant program. With the determination that Smart Grid Investment Grants 
to corporations are non-taxable, corporate utilities are able to launch 
their investments with a clear indication of the tax status of their 
projects. Now that this issue is resolved, the Department has been 
working expeditiously to complete awards, finalizing 86 of the 100 
planned awards as of May 8, 2009.
    By the end of FY 2010, the Department expects to fully obligate all 
Smart Grid Investment Grant funds. To date, a little over $2 million 
has been spent for technical support to implement the Smart Grid 
Investment Grant program. Spending will increase significantly over the 
next few months when all grants are awarded and work under the grants 
begins.
                                nuclear
    Question 1. Please provide more detail on what types of 
technologies you expect the new Nuclear Energy Enabling Technologies 
program to develop and support. Is it necessary to have a new, separate 
program from the Reactor Concepts and Fuel Cycle programs to achieve 
these goals?
    Answer. The proposed Nuclear Energy Enabling Technologies program 
has three elements. The first element, Crosscutting Technology 
Development, supports multiple reactor concepts (existing and future) 
and will research technologies in four specific areas: reactor 
materials, advanced methods for manufacturing, new sensor technologies 
for monitoring material and equipment conditions in reactors, and 
proliferation risk assessment.
    The second element, Transformative Nuclear Concepts R&D, is much 
broader in scope and will support, via an open, competitive 
solicitation process, investigator-initiated projects that relate to 
any aspect of nuclear energy generation including, but not limited to, 
reactor and power conversion technologies, enrichment, fuels and fuel 
management, waste disposal, and nonproliferation. This effort will 
encourage the identification and development of ``outside the box'' 
technology options in all aspects of the civilian nuclear energy 
program beyond what may be currently envisioned and to ensure that good 
ideas have sufficient outlet for exploration.
    The third element, the Energy Innovation Hub for Modeling and 
Simulation, is a specific example of the type of crosscutting, 
transformative activity that will enhance many research areas within 
NE, by applying existing modeling and simulation capabilities to create 
a ``virtual'' reactor user environment for engineers and scientists.
    These activities are proposed under the new Nuclear Energy Enabling 
Technologies program to encourage innovative research relevant to 
multiple reactor and fuel cycle concepts, and pursue ``out-of-the-box'' 
options that offer the promise of dramatically improved systems across 
the full spectrum of nuclear energy. Where appropriate, these 
activities will be managed and executed in a matrix fashion, in 
coordination with the Reactor Concepts and Fuel Cycle program elements 
to efficiently support and facilitate the achievement of our program's 
goals.
    Implementation under the proposed Nuclear Energy Enabling 
Technologies umbrella program will help avoid duplication of research 
effort; provide better coordination of research conducted in the 
specified areas; and bring the best research expertise from the 
national laboratories and universities to bear on common issues or 
requirements among the different reactor and fuel cycle technologies. 
Also, in conducting this research under a common program, more 
efficient use of appropriated funds is expected.
    Question 2. As its first regular appropriations request for ARPA-E, 
the Administration requests $300 million. Do you anticipate that $300 
million will be the amount that is requested each year?
    Answer. ARPA-E received an appropriation of $400 million under the 
American Recovery and Reinvestment Act of 2009, and $15 million under 
the Omnibus Appropriations Act, 2009. In ARPA-E's organic legislation, 
the America COMPETES Act of 2007 (42 USC 16538), Section 5012(m)(2) 
authorizes appropriations of $300 million for FY 2008 and ``such sums 
as are necessary'' for the subsequent two fiscal years. The FY 2011 
request for ARPA-E is $300 million. Requests in future years will fund 
the most promising investment opportunities while maintaining the 
Administration's commitment to fiscal responsibility.
    Question 3. The Nuclear Power 2010 program, which the 
Administration is not seeking continued funding for, provided 
assistance for the submission to the NRC of two construction and 
operating license (COL) applications for two reactor designs. The 
nuclear industry has maintained that delays in the NRC licensing 
process is one of their biggest obstacles to constructing new nuclear 
reactors and DOE involvement is necessary to move the process along. Is 
funding provided in the 2011 budget for COL assistance?
    Answer. No funding has been requested in the FY 2011 budget for 
construction and operating license (COL) assistance. The Department 
believes sufficient progress has been made on the NRC licensing review 
of the two COL applications sponsored by the Nuclear Power 2010 
program. The Dominion Energy North Anna COL final environmental impact 
statement is expected in April 2010 and the safety evaluation report 
with no open items is expected in September 2010. The NuStart/Southern 
Company recently received their Early Site Permit, and the COL final 
safety evaluation report with no open items is expected in October 
2010. Final hearings for both COL applications have not been set by the 
NRC, but are expected in early FY 2011.
    The Department believes no further Federal funding of these 
projects is warranted and that industry can support the remaining 
reference COLA licensing activities for the AP1000 and the Economic 
Simplified Boiling Water Reactor (ESBWR).
                              energy star
    Question 1. Within DOE's FY 2011 budget request, you recommend the 
further promotion of Energy Star labels for major appliances such as 
windows, refrigerators, dishwashers and compact fluorescent lights. 
However, DOE staff has briefed Committee staff on transferring the 
promotion of these products to the EPA. Is it the Administration's 
intent to transfer the promotion of Energy Star labels for these 
appliances from the Energy Department to the EPA? If so, what is the 
rationale?
    Answer. The Department of Energy (DOE) is transferring the 
marketing of ENERGY STAR 114 products to the Environmental Protection 
Agency as DOE enhances its technical work, including testing and 
verification in support of ENERGY STARS products. This arrangement of 
work uses agency resources effectively and builds upon the strengths of 
each agency.
                               geothermal
    Question 1. I appreciate that the budget calls for a 25% increase 
for geothermal power development, given the great potential that 
hydrovent and enhanced geothermal systems have for developing carbon-
free electric power. As you know, there is currently an EGS 
demonstration project in Alaska that could power up to 25 rural 
villages with low-cost geothermal power in the future. If EGS systems 
show promise, what can we do to further efforts to commercialize and 
deploy geothermal in the future?
    Answer. The Enhanced Geothermal Systems (EGS) approach to 
geothermal power production is indeed promising, but it is not yet 
ready for large-scale commercialization and deployment. 
Commercialization of EGS will require: improving the science and 
engineering understanding of EGS; improvement and development of the 
technologies needed to access, evaluate, manipulate, and operate EGS 
reservoirs; and solving non-technical policy barriers.
    Improved scientific and engineering understanding of EGS is 
fundamental to scaling from demonstration level projects to 
commercially viable operations. Additionally, improved understanding of 
the scientific and engineering requirements for successful EGS is 
imperative to widening the geographic and geologic deployment of EGS in 
the future. Areas for improved understanding are wide ranging and 
include topics such as: understanding the response of in situ reservoir 
rocks (across physical scales) to EGS operations; development of robust 
computational algorithms and tools for modeling relevant coupled 
processes; adaptation and development of novel remote sensing methods 
and technologies; and other fundamental issues associated with 
manipulation of subterranean environment.
    The technological improvement and development for EGS deployment 
includes technologies that are known today, as well as others yet to be 
identified. It is well understood that many technologies employed in 
other industries (e.g., oil and gas) are applicable to EGS development 
but are not capable of operating in the extreme environments associated 
with potential EGS sites (e.g., high temperatures, hard rocks, 
corrosive fluids, etc.). Additionally, as the understanding of the 
science and engineering needs for EGS are expanded, technology needs 
will also be identified.
    Finally, the commercialization of EGS depends upon effective 
solutions to non-technical policy barriers. Unlike solar and wind 
energy, the geothermal resource is largely hidden; incentives that act 
to mitigate risk to industry would help push EGS development forward. 
Simplified and standardized permitting processes would address 
significant barriers and bottlenecks in the site selection and 
development processes. Increased transmission availability will ensure 
that EGS developers are able to reach the grid.
    An improved understanding of the fundamental science and 
engineering needed to support EGS development, the tools and technology 
necessary to support its development, and supportive development 
policies would act to hasten the deployment of EGS as a source of 
carbon-free electric power.
                                  wind
    Question 1. The Administration is seeking $123 million for wind 
power research this year--that's more than a 50% increase. Part of this 
is for the Department to undertake research and development work for 
offshore wind projects, correct? Does the administration's initiative 
mean the Department does not require congressional authorization in 
this area? Will the Department be examining the use of dual platforms 
that would help offshore wave energy projects develop simultaneously?
    Answer. The Administration's Fiscal Year 2011 budget request 
includes funding for activities that promote and accelerate responsible 
offshore wind power research and development (R&D). The Department of 
Energy (DOE) plans to partner in a demonstration offshore wind project 
to address the specific deployment barriers facing the first commercial 
projects. The DOE will also establish a national offshore wind research 
and development effort. The Energy Policy Act of 2005, Section 
931(a)(2)(B)(ii), authorizes DOE to conduct such a program.
    Furthermore, the proposed offshore wind R&D program will address 
additional issues of mutual interest to the offshore wind and wave 
energy industries. These issues include undersea transmission 
infrastructure, potential environmental effects, equipment 
marinization, and project siting.
                                 solar
    Question 1. The Administration's FY 2011 budget request for solar 
is over $300 million--a 22.4% increase from last fiscal year. Part of 
the rationale for this increase is to make solar energy cost 
competitive by 2015. How realistic is that goal? Please be specific as 
to PV and CSP technologies, and compare such costs to other 
technologies like nuclear, hydropower, coal, wind, and geothermal. Al.
    Answer. The 2015 goal is realistic and can be met across a 
significant portion of the U.S. in multiple markets. Specifically, with 
continued cost reductions, photovoltaics (PV) will become increasingly 
competitive in residential, commercial and utility scale markets, while 
concentrated solar power (CSP) will become increasingly competitive in 
utility scale markets.
    When combined with the 30 percent Investment Tax Credit (ITC) 
passed by Congress in 2009, PV technology is currently competitive in a 
number of residential and commercial markets with a combination of high 
retail electricity prices, good solar resources, and/or local solar 
incentives. These markets include Arizona, California, Colorado, 
Florida, Massachusetts, New York, New Jersey, and Nevada. A recent 
study by the National Renewable Energy Laboratory examined the 
competitiveness of PV in residential electricity markets across the 
U.S. and found that achieving cost reductions in line with the Solar 
Program's targets will lead to PV becoming broadly competitive first in 
the Southwestern and Northeastern states, and then in the Southeastern 
and Midwestern states by 2015.\1\
---------------------------------------------------------------------------
    \1\ Denholm, et al. 2010. Break-Even Cost for Residential 
Photovoltaics in the United States: Key Drivers and Sensitivities. NREL 
technical report NREL/TP-6A2-46909
---------------------------------------------------------------------------
    However, reaching the goal of grid parity without incentives will 
require a reduction in installed system prices of roughly 50-70 percent 
from 2009 benchmarked levels. While this level of cost reductions may 
appear ambitious, it is in line with recent industry trends and bottom-
up engineering estimates of potential cost reductions through the PV 
supply chain. It is an achievable goal with continued and intensified 
funding in PV technology development, systems integration research and 
market transformation, all of which are major parts of the Department's 
Solar Program.
    Similarly, the installed price for CSP systems, including the 30 
percent Federal ITC, is currently at parity with the California Market 
Reference Price (MRP), the price paid in the California market for new 
peak generation resources. Being competitive with the MRP has 
contributed to significant growth in the number of CSP projects in the 
California market and throughout the Southwest. CSP systems are 
projected to reach parity with new peak and intermediate power 
generation prices in the Southwest without subsidies between 2015 and 
2020. To reach parity with base load electricity prices without the 
need for subsidies, CSP systems will require approximately a 50 percent 
reduction in cost. This is projected to occur between 2020 and 2030 
with the introduction of thermal storage technologies and new CSP tower 
systems, both of which are major parts of the Department's Solar 
Program.
    Even with expected cost reductions, PV and CSP technologies are 
still likely to be more costly in the 2015 time frame than some 
conventional technologies like nuclear, hydropower, and coal or some 
renewable technologies like wind and geothermal when you look at total 
lifecycle costs. These cost comparisons, however, do not fully capture 
the value provided by solar technologies through other factors such as 
reducing greenhouse gas emissions and environmental impacts, rapid 
construction times, scalability, and, with CSP, the ability to include 
low-cost thermal storage. PV systems are also the only conventional or 
renewable electricity technologies that can be deployed residentially 
which eliminates transmission infrastructure issues and also provides 
financing through mortgages and home equity loans. For these reasons, 
when combined with projected cost reductions, solar technologies will 
become increasingly competitive in a range of markets throughout the 
U.S. and will play an increasingly significant role in the U.S. energy 
mix in both the short-and long-terms.
    The major increase in funding for the Solar Program in FY 2011 
includes two new initiatives. The PV Manufacturing Initiative is 
designed to help secure a strong U.S. manufacturing base by funding 
collaborative research through both university and industry 
partnerships. For FY 2011, $30 million is proposed for this initiative 
which will be leveraged with private sector funding. The Solar 
Demonstration Zone Initiative will provide the resources required to 
demonstrate leading edge CSP and other solar technologies. These 
demonstrations will provide a critical step in attracting conventional 
financing and allowing these technologies to bridge the 
commercialization ``valley of death.'' For FY 2011, $50 million is 
requested for this initiative which will also be leveraged with private 
sector funding.
                           energy efficiency
    Question 1a. Over the past two months, my staff has repeatedly 
asked DOE for a detailed analysis of how it is allocating funding among 
the many energy efficiency programs it administers. My staff has not 
received a single reply, which is troubling because we have seen press 
reports that the Administration would like to create a new multi-
billion dollar program, called ``Cash for Caulkers'' to move more money 
towards similar energy efficiency projects.
    Please provide me with a detailed analysis on how stimulus funds 
have been obligated and spent within the following energy efficiency 
programs:

   The Weatherization Program
   Energy Efficiency and Conservation Block Grants
   The State Energy Program
   Energy Star Rebates
   Any other program funded within ARRA, and under DOE's 
        jurisdiction, concerning energy efficiency

    Answer. The Department of Energy (DOE) is committed to ensuring 
that Recovery Act funds are obligated and outlaid in a timely manner. 
Of the approximately $15 billion in Recovery Act funding allocated to 
energy efficiency projects, about 90% has been obligated as of April 9, 
2010. Please see Attachment A for a project-level analysis of 
obligations and payments data of DOE's energy efficiency projects 
receiving this $15 billion in Recovery Act funding as of April 9, 2010. 
Furthermore, to ensure that funds are being spent, DOE staff actively 
monitor and reach out to recipients. Continuous updates can be found 
at: http://www.gao.gov/recovery/.
                              attachment a


    Question 1b. Over the past two months, my staff has repeatedly 
asked DOE for a detailed analysis of how it is allocating funding among 
the many energy efficiency programs it administers. My staff has not 
received a single reply, which is troubling because we have seen press 
reports that the Administration would like to create a new multi-
billion dollar program, called ``Cash for Caulkers'' to move more money 
towards similar energy efficiency projects.
    Please also provide the funding implementation schedule for all 
remaining projects to be funded with ARRA monies, within each of the 
before referenced programs.
    Answer. Below is a summary of funding implementation as ofFebruary 
25, 2010, unless otherwise specified.

   The Weatherization Program--This project was 96 percent 
        obligated as of April 9, 2010. The remainder of funds is for 
        two funding opportunity announcements (FOAs); one FOA for a 
        Training & Technical Assistance Program and one FOA for a 
        Consumer Rebate Program. Applications to the Training & 
        Technical Assistance FOA are currently under review. A Request 
        for Information for the Consumer Rebates FOA is under review.
   Energy Efficiency and Conservation Block Grants: As of April 
        9, 2010 this project was 80 percent obligated. Approximately 14 
        percent of funds remaining to be obligated are part of a 
        competitively selected portion of this program. The majority of 
        the remainder of unobligated funding for this project is due to 
        eligible entities (for the formula grants) which have not yet 
        applied or entities which have withdrawn. The application 
        deadline for this project is September 30, 2010.
   The State Energy Program: Nearly 100 percent of funds have 
        been obligated for this project.
   Energy Star Rebates: One hundred (100) percent of funds have 
        been obligated for this project.
   Four other energy efficiency programs under the jurisdiction 
        of the Office of Energy Efficiency and Renewable Energy 
        comprise an additional $3.4 billion in Recovery Act funding: 
        the Building Technologies Program, the Federal Energy 
        Management Program, the Industrial Technology Program, and the 
        Vehicle Technologies Program. About $2.7 billion, or 80 
        percent, of these funds have been obligated across 15 projects 
        as of April 9, 2010. Further, an additional $173.5 million 
        under the Vehicles Technologies Program is scheduled to be 
        obligated by May 2010. Please see Attachment A for a project-
        level analysis of obligations and payments data as of April 9, 
        2010 for DOE's energy efficiericy projects receiving Recovery 
        Act funding, as well as estimated timeframes for obligating 
        remaining funds.
    Question 1c. Over the past two months, my staff has repeatedly 
asked DOE for a detailed analysis of how it is allocating funding among 
the many energy efficiency programs it administers. My staff has not 
received a single reply, which is troubling because we have seen press 
reports that the Administration would like to create a new multi-
billion dollar program, called ``Cash for Caulkers'' to move more money 
towards similar energy efficiency projects.
    I assume that DOE has a tracking mechanism on how ARRA funding is 
actually spent after it is awarded, and on what types of projects. 
Please provide the funding implementation schedule for each state, and 
when the money will actually be spent.
    Answer. The Department of Energy (DOE) has systems to track 
recipients' use of Recovery Act funding. DOE expects funds for the 
State Energy Program (SEP), the Weatherization Assistance Program 
(WAP), and the Energy Efficiency Block Grant Program (EECBG) to be 
expended within three years. DOE has been working closely with state 
and local recipients to ensure awarded funds are being used 
appropriately and in a timely manner. As of February 25, 2010, DOE 
obligated to recipients 100 percent of funds for the SEP, 96 percent of 
funds for WAP, and 73 percent of funds for EECBG.
    In some cases, recipients received conditional awards that limit 
their ability to spend funds until certain conditions are cleared 
[e.g., National Environmental Policy Act (NEPA) determinations]. DOE is 
working with recipients to clear those conditions as expeditiously as 
possible. Recipients are making progress in obligating and expending 
these funds. For example, as of February 25, 2010:

   States have obligated $777 million in SEP funds and expended 
        about $60 million. DOE's target is for states to obligate $1 
        billion of SEP funds by the end of March 2010 and $2.5 billion 
        by the end of June 2010. As such, DOE also has targets of 
        awarding 90 percent of strategy conditioned funding and making 
        75 percent of NEPA determinations by the end of March. DOE is 
        closely tracking progress towards achieving these targets.
   Weatherization recipients have expended $573 million. DOE 
        expects States to increase their rate of expenditure as 
        weatherization activities ramp up in the spring and summer 
        months; the months of greatest activity in cold weather states.
   State and local recipients have expended $83.3 million under 
        EECBG. DOE also has targets of awarding 90 percent of strategy 
        conditioned funding and making 75 percent of NEPA 
        determinations by the end of March. DOE is closely tracking 
        progress towards achieving these targets.

    Also, continuous updates to Recovery Act spending can be found at 
http://www.energy.gov/alaska.htm and http://www.recovery.gov/Pages/
home.aspx.
    Question 1d. Over the past two months, my staff has repeatedly 
asked DOE for a detailed analysis of how it is allocating funding among 
the many energy efficiency programs it administers. My staff has not 
received a single reply, which is troubling because we have seen press 
reports that the Administration would like to create a new multi-
billion dollar program, called ``Cash for Caulkers'' to move more money 
towards similar energy efficiency projects.
    Finally, the DOE IG has recently issued reports on alleged ``waste, 
fraud and abuse'' within programs currently being funded by the 
stimulus. Please describe what you are doing to address the concerns 
that have been raised, and other implementation issues that have arisen 
within the programs you oversee, including State Energy Programs and 
funding within the Energy Efficiency and Conservation Block Grants that 
are related to ARRA funding. What are the concrete steps you are 
undertaking to address the alleged ``waste, fraud and abuse'' as well 
as other implementation problems, as you propose billions more to do 
similar programs?
    Answer. In response to the Inspector General's recent reports on 
alleged waste, fraud, and abuse, senior and program management have 
established corrective action plans, with milestones, that include 
weekly reporting to monitor the progress of the corrective actions in 
satisfying the recommendations provided by the DOE IG. In addition, 
quarterly reporting on all corrective actions will be submitted to the 
Office of Risk Management and Office of Inspector General for review 
and comment.
    The Office of Risk Management is in regular and ongoing discussions 
with program offices to analyze current implementation status, risks, 
and controls to mitigate the possibility of waste, fraud, and abuse. On 
a monthly basis, the Department reviews each program's progress towards 
meeting the goals and objectives of the Recovery Act, including risk 
assessments, financial status, and performance measures. In addition, 
the Office of Risk Management has participated in State, sub-grantee, 
and home visits in conjunction with the Office of Weatherization and 
Intergovernmental Programs (OWIP) that were led by the Recovery Act 
Team to assess the preparedness of the States for this expanded 
Recovery Act project. The Office of Risk Management continues to work 
with the program office by helping to develop the OWIP monitoring 
manual and the field monitoring questionnaire.
                           cash for caulkers
    Question 1a. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    Please describe what outside groups have been involved in drafting 
the legislation. In addition, who provided the President's Economic 
Recovery Advisory Board the language to create the program?
    Answer. An industry-led coalition calling itself the ``Home Star 
Coalition'' has been working to draft legislation that would create a 
program known as ``Home Star.'' The Department understands this 
coalition has been working closely with the Senate Energy and Natural 
Resources Committee as part of that drafting process. The Department is 
unaware of the specific authors on the President's Economic Recovery 
Advisory Board (PERAB) report.
    Question 1b. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    Press reports indicate that the goal is to have this program be 
``quick and easy'' like ``cash for clunkers.'' Before anyone knew it, 
the ``cash for clunkers'' program was oversubscribed, and Congress had 
to take an additional $2 billion from the DOE renewable loan guarantee 
program to pay for it. Do you have a plan for ensuring that the 
government doesn't get on the hook more money than it can deliver? How?
    Answer. DOE is prepared to execute any program authorized and 
funded by Congress. DOE's understanding is that such a program would 
receive a fixed appropriation and that the program would end once the 
appropriated funds have been expended.
    Question 1c. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    Is there a sufficient qualified workforce in place to do this type 
of home retrofit work?
    Answer. DOE has worked with the Environmental Protection Agency 
(EPA) for several years to support the Home Performance with ENERGY 
STAR program, which works with contractors who deliver whole-home 
retrofits and quality assurance. This contractor workforce is 
continually expanding. In addition, the construction industry is 
currently experiencing very high unemployment due to the slow-down in 
new home construction. These trained contractors are available to enter 
into the home retrofit industry immediately.
    Question 1d. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it. DOT had to scramble to find 
personnel to administer the ``cash for clunkers'' program, and the 
program was still overwhelmed. Trading cars is infinitely simpler than 
renovating the vast range of different housing and building types in 
the country. How will the Administration process the requests for 
funds? Who will be eligible to receive the funds?
    Answer. DOE has closely examined the Report to Congress from the 
``cash for clunkers'' program, and is studying the payment processing 
mechanism used in that program. DOE understands the Home Star Coalition 
is working on details within potential draft legislation.
    Question 1e. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    Is there a sufficient workforce to ensure quality assurance? How do 
you plan to monitor quality assurance to ensure that the work is being 
done, being done properly and will actually result in energy savings? 
How many additional government employees or contractors will be needed 
to do this?
    Answer. DOE has worked with EPA for several years to support the 
Home Performance with ENERGY STAR program, which works with 
contractors who deliver whole-home retrofits and quality assurance. 
Based on lessons from this program, DOE is confident there are 
sufficient national providers of quality assurance to enable a scale-up 
of home retrofit work. The resources DOE would need to run a new home 
retrofit program would depend on the size of the program's 
appropriation.
    Question 1f. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    How did you determine which retrofit products would be eligible for 
rebates?
    Answer. DOE understands that the industry-led Home Star Coalition 
has internally determined a suggested list for which retrofit products 
would be eligible for rebates in the draft legislation.
    Question 1g. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    Who will be eligible to provide the worker training for the 
program? Will programs developed by both union and non-union workers be 
eligible to provide the training and workforce within the short and 
long term horizon of the program?
    Answer. DOE is eligible to establish program rules on worker 
training based on the program's standing authorization.
    Question 1h. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it. Are individual homeowners eligible 
to obtain rebates if they do their own work on their home?
    Answer. This determination has yet to be made and will need to be 
addressed in the proposed legislation.
    Question 1i. Over the last couple of months we have heard many 
press reports about a new program your Administration is developing 
called HOMESTAR, otherwise known as ``Cash for Caulkers.'' As of yet, 
we have not received any information regarding how it would be 
implemented, and who would run it.
    How many types of jobs are created by each eligible retrofit (i.e. 
Window replacing, caulking, insulation, duct sealing etc.)?
    Answer. Based on DOE's experience with the Weatherization 
Assistance Program, the following job categories are involved in the 
process of home retrofitting: carpenters, electricians, HVAC mechanics, 
plumbers, sheet metal workers, and weatherization workers.
                             energy storage
    Question 1. Is the Office of Science Energy Innovation Hub on 
Batteries and Energy Storage going to examine a broad spectrum of 
energy storage technologies and their potential impact for both mobile 
and stationary applications?
    Answer. Yes, the Hub will expand our Nation's scientific base for 
synthesis of novel nanoscale materials with architectures tailored for 
specific electrochemical performance, develop new methodologies to 
characterize materials and dynamic chemical processes at the atomic and 
molecular level, and expand our competencies in simulation and 
prediction of structural and functional relationships using modern 
computational tools. The research will be applicable to both mobile and 
stationary applications with the detailed technological focus 
determined by the successful proposal team.
    Question 2. When does the Office of Electricity anticipate 
completing its roadmap for energy storage technologies? Will this 
roadmap look at all of the potential electric storage devices that 
could be used for electric grid applications?
    Answer. The Department of Energy is in the process of preparing the 
roadmap for energy storage technologies. We expect it will be 
comprehensive in scope.
    Question 3. What role does DOE have in ensuring that energy storage 
technologies are sufficiently developed and demonstrated to allow for 
utilization of these technologies by the utilities?
    Answer. The Department has requested a significant increase in FY 
2011 for energy storage activities in the Office of Electricity 
Delivery and Energy Reliability (OE), which has the lead within the 
Department for applied research, development and deployment of energy 
storage applications for the electric grid. OE focuses on bringing new 
technologies to commercialization, and works closely with utilities, 
state energy agencies, and technology providers to further deployment 
of storage technologies on the grid. OE conducts an ongoing program to 
develop, bench test, and field test energy storage devices for grid 
level energy storage. It also supports a testing facility at Sandia 
National Laboratories which determines the reliability and efficiency 
of new storage devices, so that utilities have reliable performance 
data on available technologies. Analytical tools are being developed to 
help utilities and Independent System operators (ISOs) understand cost/
benefit relations of different technologies and to optimize placement 
of storage facilities on the grid. OE will also monitor the progress of 
the storage demonstration projects funded under the American Recovery 
and Reinvestment Act through site visits, reliability analysis, and 
coordinating data acquisition. Data obtained from these projects will 
be made available to utilities.
    While OE works directly with utilities on technology applications, 
other offices in the Department are engaged in research on energy 
storage that may eventually lead to technologies that can be deployed 
by utilities. The Office of Science conducts basic research in energy 
storage materials and the fundamental mechanisms that underpin 
electricity storage. The Advanced Research Projects Agency-Energy 
(ARPA-E) focuses on developing leapfrog solutions for high capacity, 
utility-scale energy storage applications. Also, the Office of Energy 
Efficiency and Renewable Energy evaluates where energy storage systems 
can support the application of renewable technologies it develops and 
sponsors demonstrations of on-site energy storage technologies to 
support renewables deployment.
     Responses of Hon. Steven Chu to Questions From Senator Shaheen
    Question 1a. The FY 2011 budget proposes $50 million for a new 
large-scale biomass power program to help large utilities who are co-
firing coal power generation with biomass or switching from coal to 
biomass. I support the use of biomass power, but I have worked in this 
Committee to ensure that we use these biomass resources as efficiently 
as possible. Burning wood to make power helps reduce emissions, but if 
75-80% of that energy is lost in the form of waste heat we are wasting 
a very important natural resource.
    Can you tell me how this program will focus on thermal efficiency?
    Answer. The initiative will conduct research, development, 
demonstration and deployment of advanced biopower technologies to 
improve the efficiency of biomass power systems and promote and 
accelerate the commoditization of biomass. The initiative will include 
assessments of feedstock resources, feedstock logistics and 
sustainability. It will also include research, development and testing 
of conversion intermediates such as biochar, syngas, pyrolysis oil, and 
densified biomass in advanced technology systems capable of improved 
operating efficiency. The goal of this program would be to facilitate 
the building of biopower facilities and enable biopower generation with 
less than 30 percent losses in the form of waste heat.
    Question 1b. The FY 2011 budget proposes $50 million for a new 
large-scale biomass power program to help large utilities who are co-
firing coal power generation with biomass or switching from coal to 
biomass. I support the use of biomass power, but I have worked in this 
Committee to ensure that we use these biomass resources as efficiently 
as possible. Burning wood to make power helps reduce emissions, but if 
75-80% of that energy is lost in the form of waste heat we are wasting 
a very important natural resource.
    What policies need to change so we are not inadvertently 
encouraging large electric biomass facilities (usually only 25% 
efficient), while discouraging decentralized, more local use of woody 
biomass in community thermal applications (usually 75-80% efficient), 
such as in campuses, hospitals, schools and institutions?
    Answer. The Department is not aware of any current Federal energy 
policies that would inadvertently provide advantages for large biopower 
facilities and discourage smaller distributed facilities.
    Question 2a. The Energy Independence and Security Act (EISA) of 
2007 included a provision Section 471--for Energy Efficiency and 
Sustainability Grants to help communities, school districts and 
universities implement or improving district energy systems, combined 
heat and power systems, production of energy from renewable resources--
like biomass--and develop sources of thermal energy.
    A number of communities across New Hampshire are clamoring for 
assistance to help design and build these systems and many of them will 
be powered with biomass.
    What is the status of implementing this program authorized in EISA?
    Answer. Section 471 of the Energy Independence and Security Act 
(EISA) of 2007--entitled Energy Efficiency and Sustainability Grants 
and Loans for Institutions--authorized funding for Fiscal Year 2009 
through 2013 in the amount of $250 million annually for grants and $500 
million annually for direct loans to provide institutional entities 
assistance in improving their energy efficiency and sustainability. 
Section 471 also included very specific requirements regarding the 
nature of grant activities, grant size, conditions for awardees, 
maturity of loans, and other implementing criteria. However, since the 
passage of EISA, Congress has not appropriated designated funding to 
implement Section 471 activities. Two Recovery act awards were made to 
``institutional entities'' that fit the definition of EISA Section 471, 
for approximately $29 million. The Recovery Funding Opportunity 
Announcement did not follow the selection criteria within Section 471 
or the award funding maximums. With numerous competing priorities and 
without designated funding, the Department has not initiated any 
Section 471 activities.
    Question 2b. The Energy Independence and Security Act (EISA) of 
2007 included a provision Section 471--for Energy Efficiency and 
Sustainability Grants to help communities, school districts and 
universities implement or improving district energy systems, combined 
heat and power systems, production of energy from renewable resources--
like biomass--and develop sources of thermal energy.
    A number of communities across New Hampshire are clamoring for 
assistance to help design and build these systems and many of them will 
be powered with biomass.
    Why is the administration proposing a new program to help large-
scale users of biomass power when we have laws on the books that 
haven't been implemented yet?
    Answer. The Administration is considering a variety of technology 
options to reduce U.S. greenhouse gas (GHG) emissions. Biopower offers 
one renewable energy opportunity, among others such as wind and solar 
energy, to achieve GHG reductions.
    The Energy Policy Act of 2005 authorizes the Department of Energy 
to support research, development, deployment, and commercial 
application of biopower under Section 932 (Title IX, Subtitle C). The 
Department requested FY 2011 funding for a biopower program that is 
anticipated to result in highly efficient biomass power technologies 
applicable to both small-and large-scale power systems. The proposed 
biopower program is designed to help meet the Administration's 
objectives for reducing GHGs, creating green jobs, and spurring new 
businesses and markets. Furthermore, it will accelerate the deployment 
of biopower technologies in support of potential future national 
renewable portfolio standards. Biopower is also an option for meeting 
state-level renewable portfolio standards.
    Question 3. EIA has projected an exponential increase in presently 
non-commercially available cellulosic ethanol production in the coming 
2 decades, and virtually no (4%) increase in thermal use of biomass, 
which has proven, available technologies, in this same time period. Is 
this based on anything other than an assessment and projection of 
existing policies that are promoting that direction?
    Answer. EIA projects that the production of cellulosic biofuels 
will benefit significantly from both Federal and State-level programs 
that are already in place, including the Federal renewable fuel 
standard that includes a specific mandate for the use of cellulosic 
biofuels. The expected rate of technological change and projected world 
oil prices also play a role in the projection for increased cellulosic 
biofuels production in the Annual Energy Outlook 2010 (AE02010) 
reference case, which is based on current laws and regulations. By 
2035, U.S. cellulosic ethanol production is projected to use 1,035 
trillion Btus of biomass and provides approximately 3.6 percent of the 
liquid fuels supply in the United States. The production of other 
cellulosic motor fuels, such as biomass-to-liquids diesel fuel via the 
Fischer-Tropsch process, uses an additional 2,375 trillion Btu of 
biomass (see table below).
    Regarding the thermal use of biomass, it is unclear to what AE02010 
projection the 4 percent figure in the question is referring. In fact, 
thermal uses of biomass in industry, and especially in the electric 
power sector, grow substantially in EIA's AE02010 reference case 
projection. Biomass use in the industrial and electric power sectors 
combined is projected to increase by about 82 percent and be 
responsible for about 26 percent of the total increase in all biomass 
consumption between 2008 and 2035. Some of the increase in biomass 
consumption is spurred by State-level renewable portfolio standards.


    Question 4. In the Northeast, we now use 84% of the nation's home 
heating oil. Yet current policy seems to encourage use of our forest 
resources inefficiently for electricity or liquid biofuels while 
leaving the heating oil scenario in place.
    Since heating oil is a transportation fuel, wouldn't it make sense 
to displace as much of this as possible with the local forest resources 
used efficiently, freeing up that diesel fuel for on-road use?
    Answer. DOE's Thermochemical Conversion Platform focuses on the 
conversion of biomass into renewable fuels such as diesel, jet fuel, 
gasoline, and heating fuel oil. These technologies, when implemented 
commercially, will use lower quality biomass such as forest thinnings 
and slash, agricultural residues, and possibly cleaned municipal solid 
waste. These types of processes will not put undue stress on the 
Nation's existing forest or agricultural lands. The technologies being 
developed will be deployable within the current refinery 
infrastructure, thereby reducing the cost of the final fuel. These fuel 
products could directly replace their petroleum counterparts and 
contribute to displacing foreign oil, making the U.S. more energy 
independent while lowering greenhouse gas emissions.
    Question 5. Is forest and agricultural biomass densification for 
renewable thermal fuels considered a ``renewable fuel refining and 
blending technology'' and an eligible manufacturing technology under 
section 48C, the Advanced Energy Manufacturing Credit?
    Answer. The Department of Energy (DOE) would need specific 
information about the proposed project and the property it will 
manufacture to determine 48C eligibility. Information included in an 
application would need to describe what aspect of densification is 
being proposed as a project. For example, if a company proposed to 
manufacture equipment that would be used for densification of renewable 
thermal fuels, such an applicant would qualify, assuming it meets all 
other requirements. However, if the company simply operated 
densification equipment, the activity would not qualify for a Section 
48C tax credit because it does not constitute a manufacturing 
technology. Notice 2009-72 Section 4 defines a Qualifying Advanced 
Energy Project as one that ``re-equips, expands, or establishes a 
manufacturing facility for the production of specified advanced energy 
property.'' Further, property that can be used for the refining or 
blending of any transportation fuel, not solely for the refining or 
blending of renewable fuel, is not eligible, as per Section 4.01(3). 
All of this is available online at http://www.energy.gov/recovery/
48C.htm.
    Responses of Hon. Steven Chu to Questions From Senator Barrasso
    Question 1a. The Department of Energy budget request zeroes out the 
base funding stream for the Rocky Mountain Oil Field Testing Center in 
Wyoming. The justification says it is an effort to phase out support 
for fossil fuels. The proposal would result in job losses in Wyoming.
    RMOTC offers small businesses, inventors, and students the 
opportunity to test technology and learn in a real-world situation. The 
facility is being used to work on numerous issue, ranging from using 
geothermal energy to make oil production more energy efficient to train 
students from Casper College in wind energy and mechanical engineering.
    RMOTC must have a base funding stream to remain operational.
    Do you consider training students in renewable energy and 
mechanical engineering is a handout to the oil industry?
    Answer. No, training students in renewable energy and mechanical 
engineering is not a handout to the oil industry; however, the 
Department does believe that the oil and gas industry is capable of 
training its workers without funding from the Federal government. The 
Department is confident that training for students in renewable energy 
technologies will continue through programs funded elsewhere within the 
Department, particularly from the Office of Energy Efficiency and 
Renewable Energy.
    Question 1b. The Department of Energy budget request zeroes out the 
base funding stream for the Rocky Mountain Oil Field Testing Center in 
Wyoming. The justification says it is an effort to phase out support 
for fossil fuels. The proposal would result in job losses in Wyoming.
    RMOTC offers small businesses, inventors, and students the 
opportunity to test technology and learn in a real-world situation. The 
facility is being used to work on numerous issue, ranging from using 
geothermal energy to make oil production more energy efficient to train 
students from Casper College in wind energy and mechanical engineering.
    RMOTC must have a base funding stream to remain operational.
    Do you think giving small businesses a chance to test their 
innovative technologies to make our energy cleaner is a bad thing?
    Answer. To the contrary, providing small businesses a chance to 
test their innovative technologies to make our energy cleaner is most 
beneficial. Through fully reimbursable (funds-in) agreements, RMOTC 
will contract with industry, academia, and other government agencies to 
field test and demonstrate oil and gas technologies, new environmental 
products, and focused energy efficient, geothermal and other renewable 
technologies as they relate to oil and gas operations.
    Responses of Hon. Steven Chu to Questions From Senator Sessions
    Question 1. Over a year ago, this Committee asked you to provide us 
with the basis for the decision to eliminate Yucca Mountain as an 
option for our Nation's geologic repository and you have repeatedly 
told us ``we can do better.'' In my opinion, that is not a basis for 
the decision. Why have you repeatedly avoid answering the question and 
fail to provide any new data or technical evidence as to why Yucca 
Mountain is now no longer suitable as a repository?
    Answer. The Administration has made a decision to bring the Yucca 
Mountain project to an orderly close. This decision reflects the 
Administration's belief that we can find a better solution that 
achieves a broader national consensus. That is why we have convened the 
Blue Ribbon Commission; it will provide advice and make recommendations 
on alternatives for the storage, processing, and disposal of civilian 
and defense used nuclear fuel and nuclear waste.
    Question 2. The Office of Civilian Radioactive Waste Management is 
a statutory office under section 304 of the Nuclear Waste Policy Act, 
therefore what authority does the Department of Energy have to abolish 
this office absent a Congressional amendment to the Act?

          Nuclear Waste Policy Act [P.L. 97-425]
          Sec. 304. (a) ESTABLISHMENT.--There hereby is established 
        within the Department of Energy an Office of Civilian 
        Radioactive Waste Management. The Office shall be headed by a 
        Director, who shall be appointed by the President, by and with 
        the advice and consent of the Senate, . . . 
          (b) FUNCTIONS OF THE DIRECTOR--The Director of the office 
        shall be responsible for carrying out the functions of the 
        Secretary under this Act. The Director of the Office shall be 
        directly responsible to the Secretary.
          (c) ANNUAL REPORT TO CONGRESS--The Director of the Office 
        shall annually prepare and submit to the Congress a 
        comprehensive report on the activities and expenditures of the 
        Office.

    Answer. The Secretary of Energy has broad authority under section 
643 of the Department of Energy Organization Act (``DOE Organization 
Act'') to ``establish, alter, consolidate or discontinue such 
organizational units or components within the Department as he may deem 
to be necessary or appropriate.'' (42 U.S.C. Sec.  7253(a)) This 
authority is limited only to the extent that the Secretary seeks to 
abolish ``organizational units or components established'' by the DOE 
Organization Act, to the transfer of functions vested by the DOE 
Organization Act in any organizational unit or component, and as to the 
National Nuclear Security Administration. Section 304 of the Nuclear 
Waste Policy Act established the Office of Civilian Radioactive Waste 
Management, but in doing so it did not amend the DOE Organization Act. 
(42 U.S.C. Sec.  10224) Because the Office of Civilian Radioactive 
Waste Management was not established by the DOE Organization Act and it 
is not part of the National Nuclear Security Administration, the 
Secretary has unlimited authority to ``alter, consolidate or 
discontinue'' the Office of Civilian Radioactive Waste Management 
pursuant to Section 643 of the DOE Organization Act.
    Question 3. It is my understanding that the Department of Energy 
has issued 17 separate Environmental Impact Statements which 
specifically define Yucca Mountain as the disposal pathway for high 
level waste. Are those Environmental Impact Statements still valid in 
light of your decision that Yucca Mountain is no longer an option?
    Answer. Each DOE Environmental Impact Statement takes into account 
the facts and circumstances as they exist at the time the document is 
produced. A change in those facts or circumstances does not render the 
EIS (or the Record of Decision which is based on the EIS) invalid.
    Question 4. Would you please describe to me the legal obligations 
that the Department of Energy has with regards to preserving the 
scientific information, core samples, studies, and research that the 
Department has conducted in connection with the licensing of Yucca 
Mountain? Can you tell me the status of the above mentioned items-are 
they being destroyed or preserved?
    Answer. In general, the Department will preserve all material in 
its Licensing Support Network databank in its current form during the 
pendency of the NRC proceeding and any appeals. In addition, the 
Department will preserve records and material produced in connection 
with the Yucca Mountain Project in compliance with federal requirements 
and consistent with DOE's objective of preserving the scientific 
knowledge from the Yucca Mountain project.
    Specifically, the Department is required to comply with the records 
retention and disposition requirements of the Federal Records Act and 
related regulations. The Federal Records Act establishes the framework 
for records management programs in Federal agencies and prohibits the 
destruction of Federal records, except in accordance with the 
procedures described in Chapter 33 of Title 44 of the United States 
Code. These procedures allow for records destruction only under the 
authority of a records disposition schedule approved by the Archivist 
of the United States. Records schedules provide for specified retention 
periods, which are, in some cases, permanent--meaning that the records 
involved would never be destroyed.
    As noted above, the documents related to the licensing proceeding 
will be preserved during the current proceeding and through any 
appeals. The Department will comply with the Federal Records Act, NARA 
regulations, and NARA-issued or -approved records schedules for such 
items. Beyond that the Department will consider whether there are 
additional steps that it should take to ensure that the scientific 
knowledge gained from the Yucca project is not lost. For example, it 
has already been decided that a number of the scientific studies and 
research reports produced for the Yucca Mountain project will be 
retained permanently under the NARA-approved records schedule for our 
Office of Scientific and Technical Information (or OSTI).
    Question 5. The President's FY 2011 budget request indicates that 
the Department of Energy intends to use the balance of FY 2010 funds 
for Yucca Mountain to close out the project. The President's FY 2010 
request did not seek funds to close out the project. Does the 
Department intend to submit a reprogramming request to this Committee 
for the specific purpose of closing out the Yucca Mountain Project?
    Answer. On February 17, 2010, the Department of Energy sent the 
Chairman of the Subcommittee on Energy and Water Development of the 
Committee on Appropriations a notification of its intent to reprogram 
funds for Yucca Mountain Project and program office termination 
activities within the Nuclear Waste Disposal and Defense Nuclear Waste 
Disposal appropriations.
    Question 6. The President requested an additional $36 billion in 
authority to guarantee loans for nuclear facilities (for a total of 
$54.5 billion) will these loans be released prior to the final report 
issued by the Blue Ribbon Commission?
    Answer. In announcing the establishment of the BRC on January 29, 
2010, Secretary Chu directed the Commission to produce an interim 
report on its recommendations within 18 months and a final report 
within 24 months. The Commission's work is not linked in any way to the 
operation of the Loan Guarantee Program and its timetable for issuing 
future loan guarantees for new nuclear power plants. A license from the 
NRC is one of the conditions that must be satisfied prior to issuance 
of a loan guarantee for each project. The Department of Energy is 
relying on the U.S. Nuclear Regulatory Commission (NRC) to determine if 
each reactor design fulfills the regulatory requirements for design 
certification and a construction and operating license. In granting a 
license for a new nuclear plant, it is up to the NRC to determine 
whether there is reasonable assurance that a permanent disposal 
facility will be found.

                                    

      
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