[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
           AN EXAMINATION OF DOE'S CLEAN TECHNOLOGY PROGRAMS

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND

                              ENVIRONMENT

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                        WEDNESDAY, JUNE 15, 2011

                               __________

                           Serial No. 112-25

                               __________

 Printed for the use of the Committee on Science, Space, and Technology


       Available via the World Wide Web: http://science.house.gov



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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                    HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR.,         EDDIE BERNICE JOHNSON, Texas
    Wisconsin                        JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas                LYNN C. WOOLSEY, California
DANA ROHRABACHER, California         ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland         DAVID WU, Oregon
FRANK D. LUCAS, Oklahoma             BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois               DANIEL LIPINSKI, Illinois
W. TODD AKIN, Missouri               GABRIELLE GIFFORDS, Arizona
RANDY NEUGEBAUER, Texas              DONNA F. EDWARDS, Maryland
MICHAEL T. McCAUL, Texas             MARCIA L. FUDGE, Ohio
PAUL C. BROUN, Georgia               BEN R. LUJAN, New Mexico
SANDY ADAMS, Florida                 PAUL D. TONKO, New York
BENJAMIN QUAYLE, Arizona             JERRY McNERNEY, California
CHARLES J. ``CHUCK'' FLEISCHMANN,    JOHN P. SARBANES, Maryland
    Tennessee                        TERRI A. SEWELL, Alabama
E. SCOTT RIGELL, Virginia            FREDERICA S. WILSON, Florida
STEVEN M. PALAZZO, Mississippi       HANSEN CLARKE, Michigan
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY
                                 ------                                

                 Subcommittee on Energy and Environment

                   HON. ANDY HARRIS, Maryland, Chair
DANA ROHRABACHER, California         BRAD MILLER, North Carolina
ROSCOE G. BARTLETT, Maryland         LYNN C. WOOLSEY, California
FRANK D. LUCAS, Oklahoma             BEN R. LUJAN, New Mexico
JUDY BIGGERT, Illinois               PAUL D. TONKO, New York
W. TODD AKIN, Missouri               ZOE LOFGREN, California
RANDY NEUGEBAUER, Texas              JERRY McNERNEY, California
PAUL C. BROUN, Georgia                   
CHARLES J. ``CHUCK'' FLEISCHMANN,        
    Tennessee                            
RALPH M. HALL, Texas                 EDDIE BERNICE JOHNSON, Texas



                            C O N T E N T S

                        Wednesday, June 15, 2011

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Andy Harris, Chairman, Subcommittee 
  on Energy and Environment, Committee on Science, Space, and 
  Technology, U.S. House of Representatives......................    18
    Written Statement............................................    20

Statement by Representative Brad Miller, Ranking Minority Member, 
  Subcommittee on Energy and Environment, Committee on Science, 
  Space, and Technology, U.S. House of Representatives...........    22
    Written Statement............................................    24

                               Witnesses:

Dr. Arun Majumdar, Director, Advanced Research Projects Agency--
  Energy, U.S. Department of Energy
    Oral Statement...............................................    27
    Written Statement............................................    31

Dr. Henry Kelly, Acting Assistant Secretary, Office of Energy 
  Efficiency and Renewable Energy, U.S. Department of Energy
    Oral Statement...............................................    42
    Written Statement............................................    44

David Frantz, Director, Loan Guarantee Program Office, U.S. 
  Department of Energy
    Oral Statement...............................................    54
    Written Statement............................................    56

Discussion

              Appendix: Answers to Post-Hearing Questions

Dr. Arun Majumdar, Director, Advanced Research Projects Agency--
  Energy, U.S. Department of Energy..............................    84

Dr. Henry Kelly, Acting Assistant Secretary, Office of Energy 
  Efficiency and Renewable Energy, U.S. Department of Energy.....   120

David Frantz, Director, Loan Guarantee Program Office, U.S. 
  Department of Energy...........................................   196


           AN EXAMINATION OF DOE'S CLEAN TECHNOLOGY PROGRAMS

                              ----------                              


                        WEDNESDAY, JUNE 15, 2011

                  House of Representatives,
                    Subcommittee on Energy and Environment,
               Committee on Science, Space, and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:01 p.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Andy 
Harris [Chairman of the Subcommittee] presiding.


                            hearing charter

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                  SUBCOMMITTEE ON ENERGY & ENVIRONMENT

                     U.S. HOUSE OF REPRESENTATIVES

           An Examination of DOE's Clean Technology Programs

                        wednesday, june 15, 2011
                             2:00-4:00 p.m.
                   2318 rayburn house office building

Purpose

    On Wednesday, June 15, 2011, the Science, Space, and Technology 
Subcommittee on Energy & Environment will hold a hearing entitled ``An 
Examination of DOE's Clean Technology Programs.'' The purpose of the 
hearing is to receive testimony from DOE's Office of Energy Efficiency 
and Renewable Energy (EERE), Advanced Research Projects Agency--Energy 
(ARPA-E), and Loan Guarantee Program Office (LPO) on DOE's Fiscal Year 
(FY) 2012 budget request for clean energy technologies and the relative 
prioritization therein.

Witnesses

      Dr. Arun Majumdar, Acting Under Secretary for Energy, and 
Director, Advanced Research Projects Agency--Energy, U.S. Department of 
Energy

      Dr. Henry Kelly, Acting Assistant Secretary, Office of 
Energy Efficiency and Renewable Energy, U.S. Department of Energy

      Mr. David Frantz, Director, Loan Guarantee Program 
Office, U.S. Department of Energy

Background

    The Department of Energy manages a wide portfolio of activities 
related to the development of clean energy technologies. DOE's programs 
span the lifecycle of energy technology development, ranging from long-
term basic research supported by the Basic Energy Sciences program at 
the Office of Science, through later-stage applied research, 
development, demonstration and commercialization activities supported 
primarily by EERE, ARPA-E, and LPO. In his 2011 State of the Union 
address, President Obama made clean energy a centerpiece, calling on 
Congress to mandate that 80 percent of America's electricity come from 
clean energy sources by 2035 \1\ and committing to placing one million 
``advanced technology vehicles'' on the road by 2015. In addition to 
several tax and regulatory incentives to support this objective, the 
President's FY 2012 budget request touts over $8 billion in spending on 
clean energy technology development programs, representing an 
approximate increase of 33 percent above current funding. \2\
---------------------------------------------------------------------------
    \1\ While the Administration has not set forth a specific 
definition of "clean energy" as part of this goal, the President stated 
it would include "renewable, nuclear power, efficient natural gas, and 
coal with carbon capture and sequestration."
    \2\ http://www.whitehouse.gov/blog/2011/01/31/keeping-america-
competitive-innovation-and-clean-energy.

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Energy Efficiency and Renewable Energy

    The mission of the Office of Energy Efficiency and Renewable Energy 
(EERE) is to ``strengthen the United States' energy security, 
environmental quality, and economic vitality in public-private 
partnerships.'' EERE supports this mission statement by: ``Enhancing 
energy efficiency and productivity; bringing clean, reliable and 
affordable energy technologies to the marketplace; and making a 
difference in the everyday lives of Americans by enhancing their energy 
choices and their quality of life.'' \3\ EERE participates in many 
crosscutting activities with other departments, as well as within DOE 
offices, including collaborations with the Office of Science, the 
Advanced Research Projects Agency--Energy, Office of Electricity, 
Fossil Energy, Federal Energy Management Program, and the Loan 
Guarantee Program Office.
---------------------------------------------------------------------------
    \3\ 1AAll mission statements taken from the relevant Department of 
Energy website.




    The Administration's budget request of $3.2 billion for EERE 
represents a $1.365 billion (74.4 percent) increase over FY 2011 
levels. In addition to the primary research, development, 
demonstration, and commercialization activities conducted by EERE's ten 
program areas, the Office supports cross-cutting activities. EERE's 
Commercialization Team ``works to bridge the gap between research and 
development, and venture capital funding and marketing,'' with a goal 
to ``increase the rate and scale of energy efficiency and renewable 
energy technology market penetration.'' \6\ Education and outreach is 
also a significant component, with an $11 million budget to engage 
stakeholders through new media and conduct public service advertising.
---------------------------------------------------------------------------
    \6\ http://www1.eere.energy.gov/commercialization
---------------------------------------------------------------------------
    EERE also supports a multitude of international activities, both of 
a multilateral and bilateral nature. \7\For example, EERE partners with 
the government of Kazakhstan, through the Save Energy Now program, to 
help improve Kazakh industry energy efficiency. EERE also participates 
in the Asia-Pacific Economic Cooperation to increase the development 
and use of renewable energy.
---------------------------------------------------------------------------
    \7\ http://www1.eere.energy.gov/international/
---------------------------------------------------------------------------
    In FY 2010, EERE's $2.2 billion in funding was distributed 
accordingly: 43 percent to industry, 30 percent to national 
laboratories, 25 percent to city, state, and Federal (i.e. in-house 
EERE R&D) governments, and three percent to universities.

EERE Primary Facilities

    EERE's primary in-house facility is the National Renewable Energy 
Laboratory (NREL), located in Golden, Colorado. NREL conducts focused 
R&D activities aimed to develop renewable electricity, renewable fuels, 
integrated energy system engineering and testing, and strategic energy 
analysis. \8\ NREL hosts a robust commercialization and technology 
transfer program to ``reduce private sector risk and enable investment 
in the adoption of renewable energy and energy efficiency 
technologies'' \9\ and transfer technologies to the marketplace. The FY 
12 budget request includes $301.5 million for NREL, a $13 million (4.4 
percent) increase over the FY 10 enacted levels. \10\
---------------------------------------------------------------------------
    \8\ http://www.nrel.gov/overview/
    \9\ http://www.nrel.gov/technologytransfer/about.html
    \10\ NREL FY 2011 funding was not specified in DOE's Spend Plan.
---------------------------------------------------------------------------
    Located in conjunction with NREL is DOE's Golden Field Office. The 
Golden Field Office ``builds partnerships to develop, commercialize and 
encourage the use of [energy efficiency and renewable energy] 
technologies'' \11\ in addition to managing NREL. The Administration 
request for the Golden office is $550.4 million for FY 12, a $64.6 
million (13.2 percent) increase from the FY 10 appropriated levels.
---------------------------------------------------------------------------
    \11\ http://www.eere.energy.gov/golden/

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Energy Efficiency and Renewable Energy Programs

    The proposed funding for the Solar Energy program is $457 million, 
an increase of $193 million (73.1 percent) over FY 2011 levels. This 
request intends to fund the ``SunShot'' initiative recently proposed by 
the Administration. As a part of this initiative, EERE is advancing a 
``Dollar-a-Watt'' program to make solar energy cost-competitive with 
fossil fuels without subsidies. To achieve this goal, solar generation 
needs to reach a four to five cents/kWh equivalent installed price for 
solar photovoltaics (PV) energy by 2020, or reduce the installed cost 
of solar electricity by approximately 75 percent from current costs. 
Accordingly, an overwhelming percentage of solar energy's increased 
funding is directed to the PV subprogram. EERE will also continue to 
fund the Concentrating Solar Power (CSP) subprogram for further 
research in CSP development and thermal storage activities. As a means 
to accelerate widespread market adoption of solar energy, the program 
also seeks to improve applicable local codes, permitting, education and 
training.
    The FY 2012 funding request for the Wind Energy program is $126.9 
million, an increase of $46.9 million (58.6 percent) over FY 2011 
levels. The request continues funding a demonstration project to 
develop offshore wind technology, and aims to address financial, 
regulatory, technical, environmental, and social issues associated with 
offshore wind.
    The FY 2012 Biomass and Biorefinery Systems budget request is 
$340.5 million, an increase of $157.5 million (86.1 percent) over the 
FY 2011 level. This program aims to develop and transform domestic, 
renewable, and abundant biomass resources into cost-competitive, high 
performance biofuels, biopower, and bioproducts through targeted 
planning, research, development and demonstration. In FY 2012, funding 
for feedstock production trials will be eliminated. The elimination is 
offset by a major increase of $150 million to expand the Cellulosic 
Biofuels Reverse Auction with the intention of rapidly injecting money 
into the emerging cellulosic biofuels industry. Support for integrated 
biorefinery projects also notably decreases with increased focus on R&D 
for downstream deployment efforts.
    The proposed funding level for the Geothermal Technology program is 
$101.5 million, an increase of $63.5 million (167.1 percent) over FY 
2011. This program seeks to broaden its focus to include technologies 
with a near-term impact by confirming undiscovered hydrothermal 
resources with innovative exploration technologies. Additionally, the 
Enhanced Geothermal Systems subprogram is aiming to advance new 
technologies to use waste carbon dioxide to capture heat and make 
electricity.
    The Administration's budget request provides a total of $38.5 
million for the Water Power program, which is an $8.5 million (28.3 
percent) increase from FY 2011 enacted levels. The program funds 
incremental hydropower development and demonstrates marine and 
hydrokinetic (MHK) technologies. The funding will support full-scale 
MHK open water demonstration projects to establish the baseline cost of 
MHK generated electricity by 2013.
    The Hydrogen and Fuel Cell Technologies (HFCT) program requests 
$100.5 million; a $2.5 million or 2.6 percent increase from FY 2011 
levels. The program is refocusing on specific R&D on fuels cells for 
stationary, transportation and portable power applications.
    The budget request for the Buildings Technologies Program (BTP) is 
$470.7 million, a $259.7 million (123.1 percent) increase over FY 2011 
levels. BTP supports efforts to improve the energy efficiency of new 
and existing homes and buildings primarily through advanced building 
technologies, controls, systems, and whole-building design; 
demonstration of integrated approaches for construction; bringing 
transformational tools to the market place; supporting the ENERGY STAR 
program; supporting the adoption, training, and enforcement of building 
codes; and promulgating and finalizing efficiency standards as required 
by law. The Energy Efficient Buildings Systems Design Hub is 
administered by BTP.
    BTP's FY 2012 request includes the President's new Better Buildings 
Initiative, which aims to achieve a 20 percent improvement in 
commercial building energy efficiency by 2020. In addition to increased 
R&D funding for building technologies, the initiative includes new tax 
incentives for commercial building energy efficiency projects and 
financing opportunities for state and municipal governments through the 
``Race to the Green'' competitive grant program. The initiative would 
also receive funding from the Loan Guarantee Program Office.
    The Vehicle Technologies Program (VTP) requests $588 million, an 
increase of $288 million (96 percent) over the FY 2011 level. The 
increase reflects an emphasis on the development and deployment of 
plug-in hybrid vehicles (PHEVs). Specifically, in support of the 
President's goal to place one million electric vehicles on the road by 
2015, VTP is requesting $229 million to fund infrastructure development 
for transportation electrification, including a major new program of 
grants to communities for upgrading electric vehicle infrastructure.
    The Industrial Technologies Program (ITP) request is $319.8 
million, an increase of $211.8 million (196.1 percent) over FY 2011 
levels. ITP seeks to revolutionize industry's energy and carbon 
intensity by developing manufacturing technologies, materials, and 
clean energy manufacturing capacity. The Next Generation Materials and 
Next Generation Manufacturing Processes subprograms are both 
drastically increased to assist in attaining this goal. Additionally, 
the request proposes the creation of an Energy Innovation Hub on 
critical materials. A new $50 million Energy Efficiency Partnership is 
included to assist industry incorporation of energy efficient 
technologies into existing facilities.

The Advanced Research Projects Agency--Energy (ARPA-E)

    The Administration requests $650 million for the Advanced Research 
Projects Agency--Energy (ARPA-E) and increase of $470 million (261 
percent) over FY 2011 levels.




    Established in 2007 by the America COMPETES Act (P.L. 110-69), 
ARPA-E is statutorily charged with developing energy technologies that 
result in ``(i) reductions of imports of energy from foreign sources; 
(ii) reductions of energy-related emissions, including greenhouse 
gases; and (iii) improvement in the energy efficiency of all economic 
sectors.''
    Of the $650 million request, $550 million would be provided through 
discretionary funding for the purpose of sponsoring additional rounds 
of project funding. Potential funding areas include stationary power, 
electrical infrastructure, end use efficiency, embedded efficiency, and 
transportation systems.
    ARPA-E would also administer an additional $100 million Wireless 
Innovation Fund (WIN) aimed at developing clean-energy wireless 
technologies, paid for through a proposed transfer of wireless spectrum 
auction revenues. The Administration proposes to establish WIN as a 
mandatory program.

Current Technology Programs

    Upon receiving $180 million in the FY 2011 Continuing Resolution, 
ARPA-E announced $130 million in funding for five new Funding 
Opportunity Announcements (FOA), the agency's fourth round of funding 
opportunities. The round of FOA include:

      Plants Engineered to Replace Oil (PETRO) to develop low-
cost production of advanced biofuels. ($30 million)

      High Energy Advanced Thermal Storage (HEATS) to research 
advancements in hot and cold thermal energy storage. The energy storage 
technologies would assist storage necessary to deliver solar 
electricity, produce fuel from the sun's heat, and improve driving 
range of electric vehicles due to improvements in air conditioning 
efficiency. ($30 million)

      Rare Earth Alternatives in Critical Technologies (REACT) 
to study technology alternatives to mitigate demand for rare earth 
materials. ($30 million)

      Green Electricity Network Integration (GENI) to advance 
grid control technologies necessary to manage issues relating to 
intermittent sources of electricity generation. ($30 million)

      Solar Agile Delivery of Electrical Power Technology 
(Solar ADEPT) to build on the SunShot Initiative. Solar ADEPT seeks to 
reduce the total cost of utility-scale solar systems by 75 percent by 
2017. ($10 million)

    Each program was preceded by an ARPA-E sponsored workshop with 
specific objectives to identify the technology space in which 
advancements are necessary. \12\ The workshops inform the FOA and 
resulting technology awards. The latest FOA include all program areas 
proposed in the FY 2012 budget request.
---------------------------------------------------------------------------
    \12\1A Workshop descriptions can be found at: http://arpa-
e.energy.gov/EventsWorkshops/PastWorkshops.aspx
---------------------------------------------------------------------------
    Recently, ARPA-E hosted workshops on hybrid energy storage modules 
and small-scale distributed generation. These technology areas are 
likely the next programs to receive funding. ARPA-E currently does not 
have any further workshops scheduled.
    ARPA-E hosted the 2011 ARPA-E Energy Innovation Summit in March, 
2011. The Summit included a Transformational Energy Technology Showcase 
to highlight award winners, finalists, and other innovative energy 
technologies which did not receive previous ARPA-E funding.

ARPA-E, Duke Energy, Electric Power Research Institute MOU

    In March, DOE announced a partnership between ARPA-E, Duke Energy, 
and the Electric Power Research Institute to ``identify opportunities 
for testing and deploying ARPA-E funded projects.'' \13\ Duke Energy, 
in partnership with ARPA-E, will have the opportunity to select 
specific technologies funded by ARPA-E to deploy at Duke facilities to 
test the viability of the technology's wide-scale deployment.
---------------------------------------------------------------------------
    \13\  http://arpa-e.energy.gov/media/news/tabid/83/vw/1/itemid/32/
Default.aspx

---------------------------------------------------------------------------
Prior funding

    First funded the 2009 American Recovery and Reinvestment Act 
(ARRA), ARPA-E's initial tranche of funding resulted in 85 awards to 
companies and universities to develop and commercialize technologies in 
areas such as batteries, carbon capture, biofuels, and building 
efficiency. A complete list of these awards is included in Appendix A.

Loan Guarantee Program Office

    The President's FY 12 budget request for DOE's Loan Guarantee 
Program Office (LPO) is $200 million, equal to the FY 11 funding. Funds 
would be used as a credit subsidy to guarantee (i.e. agree to repay the 
borrower's debt obligation in the event of default) loans authorized 
under Section 1703 of the Energy Policy Act of 2005. This level of 
requested funding would support an estimated $1 to $2 billion in loan 
guarantees to support energy efficiency and renewable energy 
activities.




    According to DOE, the mission of LPO is to ``accelerate the 
domestic commercial deployment of innovative and advanced clean energy 
technologies at a scale sufficient to contribute meaningfully to the 
achievement of our national clean energy objectives-including job 
creation; reducing dependency on foreign oil; improving our 
environmental legacy; and enhancing American competitiveness in the 
global economy of the 21st century.'' \14\
---------------------------------------------------------------------------
    \14\ https://lpo.energy.gov/?page_id=17
---------------------------------------------------------------------------
    Specifically, LPO endeavors to encourage commercial- and utility-
scale development and adoption of new or significantly improved energy 
technologies.
    Since its creation, the LPO has awarded over $30 billion for 28 
projects, financing commercial- and utility-scale development of 
technologies in the following areas:

      Biomass
      Hydrogen
      Solar
      Wind and Hydropower
      Advanced Fossil Energy Coal
      Carbon Sequestration practices and technologies
      Electricity Delivery and Energy Reliability
      Alternative Fuel Vehicles
      Industry Energy Efficiency Projects
      Pollution Control Equipment

    In addition to the President's request for Title 17 loan 
guarantees, the budget asks for $105 million to create a Better 
Building Pilot Loan Guarantee Initiative for Universities, Schools, and 
Hospitals. This new program would fund loan guarantees to retrofit 
commercial buildings and would subsidize up to $2 billion in total loan 
principal.
    On September 30, 2011, the Section 1705 loan guarantees, authorized 
by the Stimulus, will expire. Due to the expiration of the Section 1705 
program, LPO will not have the ability to fund projects in which an 
application has been submitted. Accordingly, LPO notified companies 
farthest along in the application process would be processed under the 
Section 1705 terms, while the remaining companies will have to apply 
for Section 1703 loan guarantees.A full list of loan guarantees issued 
can be found in Appendix B.

ISSUES FOR COMMITTEE CONSIDERATION

    Due to the wide range of clean technology initiatives underway at 
the Department of Energy and the Administration's renewed push for the 
development and deployment of those technologies, Committee examination 
of DOE's clean technology programs warrant continued oversight. Issues 
to be considered include:

      How does DOE coordinate clean technologies programs 
through various DOE offices?

      What technology areas merit government funding and what 
activities should be left to the private market?

      How does DOE prioritize relative programs to gain the 
most value for taxpayer funding?

      How are programmatic activities being administered by 
EERE, ARPA-E, and Loan Guarantee Program Office?

Appendix A

ARPA-E Awards Funding:

Funding Opportunity Announcement I--October 26, 2009

    The Department of Energy announced major funding for 37 research 
projects. $151 million in funding was awarded through the Department's 
recently-formed Advanced Research Projects Agency-Energy.






Funding Opportunity Announcement II--April 29, 2010

    The second round of funding from ARPA-E was awarded to 37 research 
projects and divided into three categories. $106 million was awarded to 
projects that could produce advanced biofuels more efficiently from 
renewable electricity instead of sunlight; design completely new types 
of batteries to make electric vehicles more affordable; and remove the 
carbon pollution from coal-fired power plants in a more cost-effective 
way.

1.  Electrofuels-Biofuels from electricity (DE-FOA-0000206)

    Electrofuels approaches will use organisms able to extract energy 
from other sources, such as solar-derived electricity or hydrogen or 
earth-abundant metal ions. Theoretically, such an approach could be 
more than 10 times more efficient than current biomass approaches.






2.  Batteries for Electrical Energy Storage in Transportation (BEEST) 
(DE-FOA-0000207)

    This ARPA-E program seeks to develop a new generation of ultra-high 
energy density, low-cost battery technologies for long range plug-in 
hybrid and all-electric vehicles. If successful, the technologies 
developed in this program will greatly improve U.S. energy securities, 
spur economic growth, and reduce greenhouse gas emissions.




3.  Innovative Materials & Processes for Advanced Carbon Capture 
Technologies (IMPACCT) (DE-FOA-0000208)

    This ARPA-E program aims to support revolutionary technologies to 
capture carbon dioxide from coal-fired power plants using a range of 
approaches, including solvents, sorbents, catalysts, enzymes, 
membranes, and gas-liquid-solid phase changes.




Funding Opportunity Announcement III--July 12, 2010

    The third round of funding from ARPA-E was awarded to 43 research 
projects and divided into three categories. Funded with $92 million, 
the selections focused on accelerating innovation in green technology 
while increasing America's competitiveness in grid scale energy 
storage, power electronics and building efficiency.

1.  Agile Delivery of Electrical Power Technology (ADEPT) (DE-FOA-
0000288)

    The ADEPT projects explore integrated circuits that incorporate 
high-voltage transistors and high-performance magnetic materials in 
applications. ADEPT is also focused on creating record-breaking, high-
voltage transistors that can allow the electricity grid to be used like 
a large controllable circuit.







2.  Building Energy Efficiency Through Innovative Thermodevices (BEET-
IT) (DE-FOA-0000289)

    The BEET-IT program is focused on developing new approaches and 
technologies for cooling in buildings to dramatically improve energy 
efficiency and reduce the use of refrigerants and their impact on 
climate change.






3.  Grid-Scale Rampable Intermittent Dispatchable Storage (GRIDS)(DE-
FOA-0000290)

    This program seeks to develop revolutionary new storage 
technologies that exhibit energy, cost, and cycle life comparable to 
pumped hydropower, but which are modular and can be widely implemented 
at any location across the power grid.






Transformational Energy Research and Development Projects--September 
10, 2010

    ARPA-E awarded $9.6 million to six projects that could improve 
energy efficiency in buildings by reducing loads on air conditioners; 
reduce costs associated with generating electricity from solar power; 
and improve efficiency and power density of electric machines.



Funding Opportunity Announcement IV--April 20, 2011

    U.S. Department of Energy Secretary Steven Chu announced up to $130 
million from ARPA-E will be made available to develop five new program 
areas.

      1) Plants Engineered To Replace Oil (PETRO)--PETRO aims 
to create plants that capture more energy from sunlight and convert 
that energy directly into fuels. ARPA-E seeks to fund technologies that 
optimize the biochemical processes of energy capture and conversion to 
develop robust, farm-ready crops that deliver more energy per acre with 
less processing prior to the pump.

      2) High Energy Advanced Thermal Storage (HEATS)--ARPA-E 
seeks to develop revolutionary cost-effective thermal energy storage 
technologies in three focus areas: 1) high temperature storage systems 
to deliver solar electricity more efficiently around the clock and 
allow nuclear and fossil baseload resources the flexibility to meet 
peak demand, 2) fuel produced from the sun's heat, and 3) HVAC systems 
that use thermal storage to improve the driving range of electric 
vehicles by up to 40 percent.

      3) Rare Earth Alternatives in Critical Technologies 
(REACT)--ARPA-E seeks to fund early-stage technology alternatives that 
reduce or eliminate the dependence on rare earth materials by 
developing substitutes in two key areas: electric vehicle motors and 
wind generators.

      4) Green Electricity Network Integration (GENI)--ARPA-E 
seeks to fund innovative control software and high-voltage hardware to 
reliably control the grid, specifically: 1) controls able to manage 10 
times more sporadically available wind and solar electricity than 
currently on the grid, and 2) resilient power flow control hardware--or 
the energy equivalent of an internet router--to enable significantly 
more electricity through the existing network of transmission lines.

      5) Solar Agile Delivery of Electrical Power Technology 
(Solar ADEPT)--the Solar ADEPT program focuses on integrating advanced 
power electronics into solar panels and solar farms to extract and 
deliver energy more efficiently. Specifically, ARPA-E aims to invest in 
key advances in magnetics, semiconductor switches, and charge storage, 
which could reduce power conversion costs by up to 50 percent for 
utilities and 80 percent for homeowners.

At this time no awards have been issued for Funding Opportunity 
                    Announcement IV

Appendix B

Loan Guarantee Program Awards Funding:



    Chairman Harris. The Subcommittee on Energy and Environment 
will come to order. Good afternoon. Welcome to today's hearing 
entitled An Examination of DOE's Clean Technology Programs. In 
front of you are packets containing the written testimony, 
biographies and truth-in-testimony disclosures for today's 
witness panel.
    I am now going to recognize myself for five minutes for an 
opening statement.
    I first want to thank our witnesses for being here today to 
testify on the DOE's clean technology programs. I appreciate 
you taking time from your busy schedules to appear before us 
this afternoon.
    But before discussing the substance of today's hearing, I 
would like to take a moment to note my displeasure with the 
DOE's lack of responsiveness to this Committee. Following 
Secretary Chu's March appearance before the Committee on DOE's 
2012 budget request, Members submitted written questions to be 
answered for the hearing record. The questions were sent to DOE 
on March 18, three months ago, but the Committee has yet to 
receive a response.
    Similarly, on May 4, I sent a letter to Secretary Chu 
requesting information on many of the programs we are here 
today to examine. Once more, DOE has yet to respond to my 
letter, almost a month past the requested response date.
    The Department's inability to answer fundamental and 
straightforward questions about programs for which it is 
requesting billions of dollars not only reflects poorly on the 
Department but it hinders Congressional oversight and informed 
budget and policy decision-making. The offices represented 
today are an excellent case in point. The President is 
requesting almost $2 billion in new spending for them. I would 
suggest to DOE that if getting this new money is truly a 
departmental priority, responding to Congress in a timely 
fashion should be a priority as well.
    The budget and policy context in which we consider DOE's 
clean technology programs today is clear and sobering. The 
United States is currently facing a budget deficit of $1.6 
trillion, with a T, for the current fiscal year and our 
government is borrowing more than 40 cents for every dollar we 
spend. Budget projections for the next decade and beyond bleed 
red ink. Yet, in spite of this dire fiscal reality, President 
Obama is requesting massive spending, to the tune of $8 
billion, for ``clean'' energy technologies. This request comes 
on the heels of a 60 percent increase in EERE's base budget 
over the last six years, over $16 billion worth of stimulus 
spending provided to EERE alone.
    While we have only begun to review this spending in detail, 
indications of wasteful, duplicative and inappropriate spending 
may abound and are cause for great concern. At a more 
fundamental level, I believe the growing attention to and 
importance of energy policy warrants more careful consideration 
of the appropriate role of government in energy technology 
development.
    While there is broad agreement that economically feasible 
alternative energy would be of great benefit to the country, 
the Federal Government's increasing tendency to involve itself 
in the energy marketplace is troubling and may even be 
ultimately counterproductive.
    America grows by unleashing its entrepreneurial spirit, 
motivated by the rewards of success, not through the government 
picking winners and losers and allocating capital through 
politically-driven policies and programs. The U.S. economy 
thrives on innovation and a free market, and I look forward to 
hearing from witnesses today how DOE can better help unleash 
this innovation by complementing, not supplanting, private 
efforts.
    In May, the economy experienced another month of anemic 
growth and the unemployment rate remains above nine percent. It 
may be counterintuitive to the Washington mindset, but the best 
way to put American back to work may be to get the government 
out of the way of the private sector. I believe this applies to 
energy specifically as well as it does generally to the overall 
economy.
    Thank you again for your time.
    [The prepared statement of Mr. Harris follows:]

    [GRAPHIC] [TIFF OMITTED] 66925.034
    
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    Chairman Harris. And I now recognize Mr. Miller for five 
minutes for an opening statement.
    Mr. Miller. Thank you. I appreciate Chairman Harris calling 
today's hearing to examine the Administration's clean 
technology programs.
    Unfortunately, at a time when the United States needs 
comprehensive energy policies, the Administration and the 
American people are getting mixed messages from Congress about 
our visions for energy in the future. There is a growing and 
unnecessary divide on both the potential for clean energy 
technologies and the appropriate role of government where 
winners are supposed to be decided largely by the free market.
    I say that winners are decided largely by the marketplace 
because energy markets are really anything but free. The sector 
has always been heavily regulated and heavily subsidized by 
governments, and in many cases, prices are controlled by 
cartels and manipulated by complex financial mechanisms--I 
think we will be discussing that this week on the Floor--that 
have little relation to simple supply and demand.
    Classic economic models are insufficient for reflecting the 
complexities of the energy marketplace. At best, consumer 
choice is often limited to turning down a thermostat or buying 
a more fuel efficient car. The sooner we can get beyond the 
fallacy that free market forces alone can or will determine 
which technologies are best for the public, the sooner we can 
have a productive discussion about how to ensure an 
environmentally and economically sustainable energy future.
    That is the ultimate goal of what is expected of us as 
leaders. We are not expected to block the progress of 
innovation for the sake of standing guard over outdated 
economic doctrine. Our global competitors are more than happy 
to let us quibble over picking winners and losers while we sit 
back assuming the United States will ultimately prevail in the 
global free marketplace that we created. They are busy playing 
an entirely different game. Other governments are very 
aggressively investing in high technology and clean energy 
sectors with enough money to ensure that even their weakest 
players can beat the United States in those new markets. That 
is reason enough to add a few new plays to our playbook.
    The programs that we are discussing today are innovative 
government approaches to this problem. Despite the usual 
rhetoric surrounding energy R&D programs, the government 
actually seldom picks winners or losers. Instead we place bets 
on ground-breaking science, promising technologies, talented 
researchers, and pioneering companies, all for the purpose of 
promoting a more diverse and competitive marketplace where 
cleaner and more efficient technologies stand a chance. 
Sometimes they win, sometimes they lose, and often the benefits 
are unforeseen or simply go unrecognized. But that is what we, 
the government, are supposed to do in R&D programs. From basic 
research on nanoscience materials to loan guarantees for 
deployment of whole systems, the role of government should be 
to take on technological and financial risk that industry and 
academia alone are not equipped or inclined to do. We cannot 
guarantee the success of any project or completely protect 
against failure. If we could do either, the private sector 
should do it.
    So we cast a wide net, invest in a range of technologies 
and projects, manage risk, accept that some disappointment and 
failures are expected and necessary, hope for breakthroughs and 
then translate scientific discoveries into practical solutions.
    The programs today represent different variations on that 
model with the end goals the same. It is a shame that increased 
energy efficiency of the Nation and diversifying our energy 
supply has become so politicized. Some in Congress would like 
to paint the complex world of renewable energy with a single 
brushstroke to make the public believe that it is all a big 
farce. They want the American people to believe it is a zero-
sum game, conventional energy versus clean energy, with the 
latter paving a path to economic ruin.
    We hear them say that renewable energy technologies are a 
waste of taxpayer money because they are not financially viable 
without government support while at the same time arguing that 
those technologies are too mature to warrant government R&D 
funding and are better left to the private sector. Well, which 
is it?
    Stranger still, as my Republican colleagues lobbied to make 
massive cuts or shut down DOE clean energy programs altogether, 
they fail to acknowledge their own longstanding efforts to 
subsidize through tax incentives, R&D programs, liability 
indemnification and other means the oil, gas, nuclear and coal 
sectors, some of the most mature and profitable industries in 
the world. The subsidies for that industry to develop 
technologies appears to be an economically and politically 
powerful industry using their clout to have taxpayers simply 
pick up some of their ordinary business expenses.
    The appropriateness of continued taxpayer support of those 
sectors may be best left to another conversation, but I am 
highlighting the inconsistency in my colleagues' concerns over 
interfering in the free market by picking winners and losers 
and appealing for some even-handedness when determining which 
sectors are deserving of increasingly scarce federal resources.
    In closing, Mr. Chairman, I thank you for your attention to 
this project. In contrast just a few years ago there was an 
unfortunate and growing divide on clean energy with partisan 
politics clouding our judgment on what is the best way for our 
future. I believe that in the future we will all see that a 
diverse and clean energy portfolio is worth the investment, and 
luckily we have made a down payment through programs like ARPA-
E, EERE and the Loan Guarantee program.
    Thank you very much.
    [The prepared statement of Mr. Miller follows:]

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    Chairman Harris. Thank you very much, Mr. Miller. If there 
are Members who wish to submit additional opening statements, 
your statements will be added to the record at this point.
    At this time I would like to introduce our witness panel. 
Dr. Arun Majumdar is the Director for the DOE's Advanced 
Research Projects Agency-Energy, ARPA-E Office. Prior to 
joining to ARPA-E, Dr. Majumdar was the Associate Laboratory 
Director for Energy and Environment at Lawrence Berkeley 
National Laboratory and a Professor of Mechanical Engineering 
and Materials Science and Engineering at the University of 
California, Berkeley. He received his Bachelor's Degree in 
Mechanical Engineering at the Indian Institute of Technology, 
Bombay, in 1985 and his Ph.D. from Berkeley in 1989.
    Dr. Henry Kelly is the Acting Assistant Secretary for the 
Department of Energy's Office for Energy Efficiency and 
Renewable Energy, EERE. Prior to his arrival at DOE, Dr. Kelly 
served as the President of the Federation of American 
Scientists. Dr. Kelly previously worked in the Clinton White 
House as the Assistant Director for Technology for the Office 
of Science and Technology Policy. He has a Ph.D. in physics 
from Harvard University. I am impressed. And a Bachelor of 
Science in Physics from Cornell University.
    Mr. David Frantz serves as the Director of the Department 
of Energy's Loan Guarantee Program, overseeing application 
review, due diligence, negotiation, environmental compliance 
and performance tracking. Prior to working at the DOE, Mr. 
Frantz worked with Overseas Private Investment Corporation as 
well as with Advanced Capital Markets, a Washington, D.C., 
based investment banking firm specializing in international 
project and corporate finance. Mr. Frantz earned two Master's 
Degrees in International Economics and International Business 
respectively from the Fletcher School of Law and Diplomacy at 
Tufts University. He received a Bachelor of Arts and a 
commission in the U.S. Navy from VMI. Mr. Frantz also completed 
post-graduate work at the Harvard Business School.
    And as our witnesses should know, spoken testimony is 
limited to five minutes each, after which the Members of the 
committee will have five minutes each to ask questions.
    I now recognize our first witness, Dr. Arun Majumdar, 
Director of the Advanced Research Projects Agency-Energy, ARPA-
E, at the Department of Energy. Doctor.


  STATEMENT OF DR. ARUN MAJUMDAR, DIRECTOR, ADVANCED RESEARCH 
       PROJECTS AGENCY-ENERGY, U.S. DEPARTMENT OF ENERGY

    Mr. Majumdar. Thank you, Mr. Chairman. First of all, I 
would like to extend my thanks to the Chairman, the Ranking 
Member and the esteemed Members of this Subcommittee for 
inviting me here today to testify on behalf of ARPA-E about our 
R&D activities.
    As I have said before to many of you, I consider you all to 
be my board of directors, and I am now here to report to you, 
my board,on what we have done in the past and what we plan to 
do in the future.
    I want to start today on a historical note. ARPA-E was 
created by this committee and is modeled after DARPA, which was 
launched in 1958 in response to the launch of Sputnik when it 
was felt the United States was losing its technological lead to 
the Soviets and we needed some quantum leaps in technology. In 
the next 30 years, DARPA helped catalyze innovations such as 
the Internet, GPS, stealth-type technology and many others. 
This has strengthened not only our national security but also 
our economic prosperity.
    We are now in a similar critical Sputnik-like moment. We 
are falling behind in a global race of clean and sustainable 
energy solutions. We import more than 50 percent of the oil we 
use while sending over a billion dollars a day overseas. Our 
gasoline prices rise because of instabilities around the world. 
This in the long term is not sustainable. Our children and 
grandchildren's secure future is at stake, and a secure future 
is like a stool with three legs: national security, economic 
security and environmental security. At the foundation of all 
three securities are innovations and energy technology. ARPA-
E's goal is very simple: catalyze energy technology innovations 
for a secure American future.
    In a short existence in just over two years, what have we 
done so far? We have stood up in organization with a philosophy 
of excellence in everything we do. I would now like to share 
with you five core values and some early successes.
    Number one, people; Recruit the best talent possible. We 
have recruited some of the best and the brightest from the 
technical community. Our program directors stay for a maximum 
of three years, and then they have to leave. This is not a 
permanent job. Their future career depends on how they perform 
at ARPA-E, and they have a three-year clock ticking. This has 
led to incredible focus and outcomes.
    Number two, speed and efficiency. To be globally 
competitive, speed is of the essence. We have developed a 
streamlined process where we can execute with a fierce sense of 
urgency at unprecedented speed and efficiency. We have reduced 
the contracting time to 2 months and taken other steps that 
have led us to being called the urgency agency.
    Number three, breakthrough technologies through 
competition. ARPA-E is focused on identifying opportunities for 
new energy technologies that are too risky for the private 
sector. Let me give you an example. We created a program to 
innovate future batteries that would give electric cars longer 
range and make them cheaper than gasoline-based cars so that 
electric cars could sell without subsidies. This battery does 
not exist today. Under this program, we announced ambitious 
targets for cost and performance, but we're agnostic on the 
technology. There are now 15 different teams translating 
science into 15 different competitive technologies. We create 
the competition, and we let the market pick the winners. If one 
of these batteries is successful, it will make today's lithium-
ion batteries obsolete and ensure U.S. technological lead.
    Number four, stewardship and integrity; to be the best 
possible stewards of the taxpayers' dollars. All projects in 
ARPA-E are selected purely based on merit and input from a 
panel of experts. Once selected, our program directors are 
personally invested in each and every project they manage. That 
is, they are essentially part of the team trying to help them 
when they get stuck. But if a technology is not working, we put 
the project on red alert and give them a finite time to 
recover. If this does not work, we will terminate the project. 
We would rather put that money back in the Treasury or fund 
better ideas than continue down an unsuccessful path.
    Number five, create value for secure future. In March we 
announced a partnership with the Department of Defense to co-
develop energy storage systems so that forward operating bases 
can reduce their fuel consumption by more than 30 percent. As 
you know, energy is a national security issue, and nowhere is 
this more vital than in terms of military consumption of 
energy.
    In parallel, we have started a consortium of utilities in 
order to connect these breakthrough smart and clean energy 
technologies to the commercial sector as well. Just like the 
Internet and the GPS, we believe ARPA-E-funded technologies 
will create whole new industries that do not exist today but 
could potentially open up large markets as well.
    Back in 2009 and early 2010, six of our 120 projects 
received $24 million in ARPA-E funding which allowed these 
teams to do their research and reach the milestones ahead of 
schedule. Because of this derisking of technologies, they then 
attracted more than $100 million in private-sector investment 
this year, which is four times leveraging of the taxpayer 
federal dollars.
    Earlier this spring we organized a very successful ARPA-E 
Energy Innovation Summit which was attended by more than 2,000 
innovators, and we showcased not only the technologies that we 
funded but also the technologies we could not fund.
    Where will ARPA-E go in the future? ARPA-E will continue to 
proactively seek out white space in energy technologies where 
it can fill vital gaps in energy R&D with coordination with the 
Department's basic science and applied energy programs. For 
example, we in the United States have found the largest 
reserves of natural gas in the world. Can we use that in the 
transportation sector and reduce our oil use? Can we produce 
high-efficiency, low-cost engines and fuel cells to maximize 
the use of natural gas? Can we engineer new plants and crops 
that are designed to directly produce oil with extremely high 
yield? Can we store heat at high temperatures so that nuclear 
and fossil resources have the flexibility to meet peak demand 
in addition to basic resources? Can we create light materials 
for high-energy density battery packs for electric vehicles? 
These are some of the opportunities that we plan to address 
should Congress provide the funding we are requesting in the 
fiscal year 2012 budget.
    Thank you for the opportunity to testify before you today, 
and I look forward to answering your questions.
    [The prepared statement of Mr. Majumdar follows:]
 Prepared Statement of Dr. Arun Majumdar, Director, Advanced Research 
           Projects Agency-Energy, U.S. Department of Energy
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    Chairman Harris. Thank you very much, Doctor. And I now 
recognize our second witness, Dr. Henry Kelly, Acting Assistant 
Secretary for the Office of Energy Efficiency and Renewable 
Energy at the Department of Energy. Dr. Kelly.

   STATEMENT OF DR. HENRY KELLY, ACTING ASSISTANT SECRETARY, 
    OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. 
                      DEPARTMENT OF ENERGY

    Mr. Kelly. Mr. Chairman, Ranking Member Miller and Members 
of the Subcommittee, thank you for this opportunity to let me 
talk about the U.S. Department of Energy's energy efficiency 
and renewable resources activities.
    EERE, as we are commonly known, supports research and 
development, demonstration and deployment activities on 
technologies and practices important for meeting national goals 
to become more energy independent, reduce pollution and spark 
innovation and entrepreneurship across America to help us win 
the global competition for new jobs and new industries.
    We shouldn't have any illusions that this is going to be an 
easy job. We face determined and increasingly sophisticated 
international competition. Nations such as China have carefully 
crafted plans to acquire the capability to begin low-cost 
manufacturing of innovative products developed principally by 
the United States in order to take leadership in the clean 
energy industry.
    We have lost market share in key parts of the clean energy 
industry including the production of solar devices, compact 
fluorescent lights and many other areas. In fact, the U.S. 
producers had a 40 percent market share in photovoltaics a 
decade ago where now we are below a seven percent world market 
share.
    But even more troubling, losing the U.S. production risks 
losing the incubators of innovation that begin to surround 
production of technologies like these. We have seen this happen 
in key areas like electronics, flat-panel displays, data 
storage devices and cell phones. We simply can't afford to let 
this happen in clean energy.
    The EERE programs that I will be laying out for you today 
are designed to ensure that we not only stem the loss in 
production of these new technologies and reverse the loss in 
market share but also return clean energy manufacturing to the 
United States.
    There is plenty of reason for optimism on this score. Many 
observers were, for example, confident that the United States 
had lost the lithium-ion battery industry overseas. It was 
declared a complete defeat for the United States a few years 
ago. But strategic investments made largely in the American 
Recovery and Reinvestment Act means that we are well on our way 
to establishing capacity to produce enough batteries for 
500,000 plug-in and hybrid vehicles by 2015, hoping for a very 
large increase in global market share.
    The U.S. industry has been clear that in order to compete 
with determined foreign competitors who receive strong 
financial support from their governments, they need the U.S. 
Government to invest in advanced research, promote regulations 
that encourage innovative solutions and, in some cases, provide 
early stage financing for first of a kind production. Nearly 
all the key technologies underlying today's clean energy 
equipment are the direct result of federal research support 
over the years, including EERE support. This includes batteries 
being used in all new electric and hybrid vehicles; low 
emissivity windows that reduce heat conductivity and solar heat 
gain by at least 50 percent compared to standard windows and 
now represent over half the market share in the United States; 
new processes with the potential to turn cellulose into cost-
effective biofuels; and many more. And you will see in my 
testimony there is a list of some of our other achievements.
    Now, the challenges that we face mean that we have to build 
on those successes of the past and move with unprecedented 
speed and scale. Well-crafted federal programs are essential to 
spurring private innovation and investment, and EERE works in 
close collaboration with other DOE organizations that have the 
distinct but related mission, including the Loan Programs 
Office, the Advanced Research Projects Agency for Energy, and 
the Office of Science. We also work very closely with other 
federal agencies and state and local governments.
    Our principal goal is to find ways to reduce the cost of 
renewable energy and energy efficiency technologies to the 
point where they can compete at current energy prices without 
any subsidy. That would be success for us. But EERE also works 
to identify barriers to the introduction of new clean 
technologies, barriers that have blocked the introduction of 
new energy efficiency and renewable technologies, even when 
they are cost effective. We work to address these goals in 
projects that include developing appliance standards; 
developing model building codes; improving consumer information 
by test methods that lead to labels like EnergyStar and the 
Energy Guide labels; supporting the streamlining of regulatory 
processes as well as streamlining permitting and helping 
provide the funding for first-of-a-kind high-risk production 
facilities. EERE has a mandate to help all federal agencies 
meet these goals.
    Because of the importance of EERE's technologies, the 
President's fiscal year 2012 budget request includes a 
significant increase for funding in this area, even as the 
Administration seeks to reduce overall domestic discretionary 
spending to the lowest levels in a generation. The technologies 
supported by EERE will be in high demand worldwide in coming 
years. If we do not move boldly and quickly to seize these 
opportunities, it will be lost to foreign producers. We can 
out-invent and out-compete any nation in the world, but only if 
we are willing to sustain the kinds of private/public 
partnerships that have driven so much American innovation in 
the past, innovations that are now central to our economy.
    Thank you very much, and I would be happy to answer any 
questions you may have.
    [The prepared statement of Mr. Kelly follows:]
  Prepared Statement of Dr. Henry Kelly, Acting Assistant Secretary, 
 Office of Energy Efficiency and Renewable Energy, U.S. Department of 
                                 Energy
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    Chairman Harris. Thank you very much, Dr. Kelly. I now 
recognize our third witness, Mr. David Frantz of the Loan 
Guarantee Program Office of the Department of Energy.

STATEMENT OF MR. DAVID FRANTZ, DIRECTOR, LOAN GUARANTEE PROGRAM 
               OFFICE, U.S. DEPARTMENT OF ENERGY

    Mr. Frantz. Thank you, Chairman Harris, Ranking Member 
Miller and Members of the Subcommittee. I again thank you for 
the opportunity to testify today. I would note that I was the 
first federal employee of the Loan Guarantee Program and stood 
up the program in 2007 and 2008 prior to Jonathan Silver's 
arrival as the Executive Director of the office. I welcome the 
opportunity today to review with you the status of the 
programs, the Department's successes achieved thus far and the 
future plans to continue providing critical support to the 
Nation's commercial deployment of clean energy and creating 
jobs.
    As you know, the Energy Policy Act of 2005 (EPACT 05) 
created Section 1703 to address an urgent gap in financing for 
clean energy technologies. This circumstance became even more 
pronounced in the context of the recent economic recession. The 
resistance of the markets to early financing of innovative 
technologies has always been a challenge but became even more 
acute during the recession. The urgent gap is called the valley 
of death in the clean energy development cycle between 
laboratory stage development and pilot facility stage operation 
to ultimate commercial application. The LPO, particularly with 
the advent of the Recovery Act for appropriated subsidies, has 
become a crucially important tool to bridge not only the 
financing gap but to do so on an accelerated basis.
    The Loan Programs Office actually administers three 
separate programs, the 1703 and 1705 programs as well as the 
Advanced Technology Vehicles Manufacturing Incentive program. 
The Section 1705 program was created as a part of the Recovery 
Act to jumpstart the country's clean energy sector by 
supporting commercially viable projects that had difficulty 
securing financing given the tight credit markets. The 1705 
program has different objectives than 1703's somewhat different 
programmatic features. Most notable under 1705 is the 
appropriated credit subsidy costs, which are paid through $2.4 
billion in funds appropriated by Congress. Applicants must 
still pay administrative fees. At this point I would emphasize 
the fact that the program is required to be self-supporting 
under the law by covering its administrative costs with earned 
fees. Therefore, we operate the program at no cost to the U.S. 
taxpayer.
    Additionally, to qualify for 1705 funding, projects must 
begin construction no later than September 30, 2011. DOE's 
authority to enter into loan guarantee agreements under Section 
1705 expires on that date as well.
    I would like to take a minute to highlight some of the 
successes of the program to date. Since March 2009, the 
Department has issued conditional commitments for loans or loan 
guarantees to 30 projects, 16 of which have reached financial 
close with more to follow. The Department of Energy has 
provided or conditionally committed nearly $31 billion in 
financing to these 30 projects which have total project costs 
of $48 billion. Spread across the country, they reflect an 
array of clean energy technologies such as wind, solar, 
advanced biofuels, nuclear and more including the world's 
largest wind farm, two of the world's largest concentrated 
solar power facilities, the first nuclear power plant in the 
United States in the last 3 decades and the world's first 
flywheel energy storage plant. Project sponsors estimate to us 
that these projects will create or save nearly 62,000 jobs, 
including construction and permanent assignments. To date DOE 
has committed and closed five ATVM loans over $8.3 billion 
supporting vehicle and component projects in eight states. We 
anticipate making many more loans in this category as well.
    It is important to remember that the loan program is not a 
grant program. The Loan Programs Office expects that the loans 
will be repaid. In fact, the law has as a statutory requirement 
that each project have a reasonable prospect of repayment. We 
review these projects under very rigorous evaluation exercise 
before we grant any of the loans. Moreover, when the loan is 
fully repaid, the Nation will benefit from the private sector's 
investment at relatively little cost to the taxpayers. With the 
passage of the continuing resolution of fiscal year 2011, we 
have been provided an additional $170 million of appropriated 
subsidy for 1703. The Department is currently working to 
develop a process for implementing this new provision. The 
President's proposed 2012 budget request outlays the policy and 
priorities of the Administration and would support additional 
clean energy development projects should Congress fund it to 
the levels requested.
    In just over two years, the Department's loan programs are 
making a meaningful contribution to our national clean energy 
goals. Through the extraordinary efforts from arguably one of 
the most experienced and talented project finance staffs ever 
assembled, public or private, a prodigious amount of work is 
being accomplished in the program at an accelerated pace while 
maintaining the best practices of our industry. We look forward 
to continuing our progress and to working with Congress to 
ensure that the programs continue spurring clean energy 
deployment and job creation while appropriately protecting 
taxpayer funds.
    Thank you very much for inviting me today, and I look 
forward to responding to your questions.
    [The prepared statement of Mr. Frantz follows:]
   Prepared Statement of Mr. David Frantz, Director, Loan Guarantee 
               Program Office, U.S. Department of Energy
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    Chairman Harris. Thank you very much, Mr. Frantz. I want to 
remind Members of the committee rules limiting questions to 
five minutes, and the Chair is first going to recognize the 
Ranking Member for questions, Mr. Miller.
    Mr. Miller. All right. That is an unusual procedure, but 
that is fine. We often hear the phrase ``crowding out.'' What 
the Federal Government is doing in this area is ``crowding 
out'' private investment, but Mr. Frantz just spoke of the 
valley of death, a phrase that I have frequently heard from 
tech entrepreneurs in my district, the research triangle area 
of North Carolina and also the triad as well where there are a 
couple of research universities, A&T and UNCG. Dr. Majumdar.
    Mr. Majumdar. Majumdar.
    Mr. Miller. I am doing the best I can. Is the space for 
funding for energy research really that small and how does the 
research that is funded by ARPA-E fit in with private funding?
    Mr. Majumdar. Well, thank you, Congressman. I think this is 
a question that, you know, has been asked, and it is a very 
important question that really ought to be addressed.
    Actually, there are multiple valleys of death, and what 
ARPA-E is trying to do is to fill the first valley. And what is 
that valley? How to translate science into breakthrough 
technologies that do not exist today, but if they did, they 
would make today's technologies obsolete. And that is the 
valley of death that we are trying to address.
    One example that I gave in my oral testimony is about the 
next generation battery technology that does not exist today, 
and there is frankly a global race going on to develop that 
battery that will make electric cars cheaper than gasoline-
based cars and have a longer range. That battery does not 
exist. China is investing, Japan is investing and you know, 
there is a global race. And I think we need to sort of go back 
to one of the core competencies of our Nation, which is the 
best science and engineering infrastructure in the world, and 
empower them to innovate these new technologies.
    Another example I would give is new ways of making oil, and 
we had a conversation, Chairman Harris, about this in your 
office, that all the technologies that are there to create 
fuels in terms of using biology is using plants. And that is a 
route that a lot of people in the industry and R&D 
infrastructure are taking. We decided to take a completely 
different route and call it electrofuels, and this is not using 
plants. This is using electricity that is generated locally and 
using non-photosynthetic microbes, and the biology is 
different, to make fuels. And this turns out that it could be 
potentially 10 times more efficient than creating biofuels. 
Now, there is no industry creating electrofuels today. If this 
is successful, we will create the industry. In fact, this is 
too risky for the private sector investment. So I don't think 
they are crowding out private-sector funding at all. There is 
no field like that to start with.
    And that is the kind of thing that we are trying to do 
which is exactly what, if you were to go to 1968, when DARPA 
started investing in Internet and what is now called TCP/IP 
which is the routing and the protocols, et cetera, and at that 
time, there was no Internet industry. In fact, the ARPANET did 
not even exist. They created it. And that is the kind of 
investment they made, and that, you know, led to huge 
industries that were created. And ARPA-E is trying to fill that 
first valley of death, and I don't think it is crowding out 
investment.
    What we do invest in are technologies that are too risky, 
but if they are successful, they will be attractive to the 
private sector, which is where we are seeing now, at least in 
some of the cases, where we have invested let us say $24 
million in six technologies, which has then with the R&D that 
has been done, reduced the risk, shown the results ahead of 
schedule, and that has led to more than $100 million in 
private-sector investment. That is not crowding out. That is 
actually unleashing the private-sector investment after the 
federal dollars have gone in and allowed them to reduce the 
risk.
    Mr. Miller. Okay. We hear about disrupting market 
mechanisms by government involvement, but it certainly doesn't 
look like there are pure market forces at work in energy 
pricing. We don't reflect what we are doing in very unstable 
parts of the world with our military. That may be driven in 
part by a concern about the stability of our energy supply. 
That is not reflected in oil and gas prices. Obviously, 
environmental damage is not really reflected in oil and gas 
prices or other energy prices. The disruption, the 2003 
blackout in the Northeast, was billions of dollars of economic 
disruption. The cost of that, a stable grid isn't really 
reflected either. How much of a lead time for innovations 
before they get to the market is really the point at which the 
government should invest versus when the private sector might 
come in?
    Mr. Majumdar. Well, I would say this is exactly the right 
time to invest because we are not only looking at--you 
mentioned the grid--about the acid wall that the utilities and 
the grid industry, the ISOs and RTOs are going to face because 
many of the things that are there, components on the grid, are 
more than 40 years old. They are beyond their lifetime right 
now. And once they start failing, as you mentioned in the 
Northeast, more might happen. And so there is a security aspect 
of the grid as well. So this is exactly the right time to 
invest to modernize our grid.
    In terms of our transportation sector, as I mentioned, we 
are importing oil. We all know that, and it is a national 
security issue. This is a national security issue not just for 
the United States; it is the same for China and other nations 
as well which are importing oil. So there is a global race to 
figure out how to use domestic resources, like electricity, for 
the transportation sector. And this global race is on right 
now, and I think if you do not invest in it today, we are going 
to fall back and fall behind just like we did for the Sputnik 
era where for a moment, we had fallen behind, and that is when 
the United States went ahead and created DARPA, created NASA, 
other things, and won the space age, and many other things came 
out of that. So I think this is exactly the right time to do 
that.
    Chairman Harris. Thank you very much. Thank you very much, 
Mr. Miller.
    I am going to recognize myself for five minutes. Thank you 
very much again to the panel for being here.
    Dr. Majumdar, let me ask you a little bit about ARPA-E 
because as we talked about, I loved the idea of doing this, you 
know, funding through this first valley of death. But you know, 
when we look through the list of some of the awards that have 
been made, they weren't in the valley of death, some of these 
companies.
    The idea I would think would be to invest in these ideas 
before others have, but you know, in FloDesign, for instance, 
which received an award I believe in the end of 2008 to develop 
wind turbine technology, actually got $8 million investment 
from venture capitalists 18 months before ARPA-E invested $8 
million. Now, one difference we talked about yesterday is 
because I guess of the Bayh-Dole rules, you know, the 
difference is those venture capitalists actually are going to 
make money when that technology yields, but the Federal 
Government isn't, and yet we came in after venture capitalists 
making the same size investment. And it goes on. FloDesign, 
Planar Energy Devices which also got $4 million from the 
Federal Government after $4 million from Battelle Ventures 
which I am pretty sure is a fairly substantial venture capital. 
Codexis actually got $4 million, and they actually went public 
and raised $78 million. Well, the difference is those 
shareholders are going to get a return. The Federal Government 
isn't.
    So my concern is that we are investing in really almost, it 
appears to be, technologies and companies that have actually 
demonstrated they can do something to people with real dollars, 
yet our mission is supposed to be before that point. Could you 
address that?
    Mr. Majumdar. Sure. Thank you, Mr. Chairman. Let me clarify 
that. The policy that we have in ARPA-E is not to invest in any 
ideas that have been invested in the private sector, not 
companies, ideas. So if you look at the FloDesign or any of the 
technologies, these companies may have been invested in before 
for things that are short-term that give you returns for the 
venture capital, you know, in five years, et cetera. But these 
ideas that we invested in these companies are not the ones that 
the venture capital invested in.
    Chairman Harris. Let me just ask, because I only have five 
minutes, let me just ask though, although that is true, if 
those different technologies make money for that company, it is 
going to go to the venture capitalists who were there before, 
who invested in the initial idea. That is usually how venture 
capital is set up, as you are aware of. Is that----
    Mr. Majumdar. Sure.
    Chairman Harris. I mean, that is what I suspect. Thanks for 
confirming what I suspect.
    Dr. Kelly, let me ask you some questions because you know, 
I appreciate your testimony. One of the things it says in your 
testimony that your key goal is put one million electric 
vehicles on the road by 2015, so four years from now.
    What are you doing to make sure there is actually 
electricity at the other end of the socket when those cars get 
plugged in? I mean, you know, we just had an announcement by 
the EPA that they are issuing regulations on mercury emissions 
in plants that are going to result in coal-fire plants actually 
shutting down, actually being--this Administration directly 
will cause the closing of electric capacity in the country, and 
as you know, nuclear power is kind of on hold.
    So what is EERE doing to make sure there is actually 
something that comes out of the outlet when you plug in the 
electric car that is actually affordable? So it has to be 
something low cost.
    Mr. Kelly. Well, as I pointed out, our main goal here is to 
try to drive down the price of renewable electricity to the 
point where it is fully competitive with traditional forms of 
energy. We are getting very close to that. We have----
    Chairman Harris. How close are we on photovoltaics in 
something that is scalable?
    Mr. Kelly. Well, we have a SunShot program whose goal it is 
to make----
    Chairman Harris. Dr. Kelly, not the goal. Something that is 
scalable right now because your--well, they are going to plug 
in electric cars now. Chevy Volt is out there, it is plugging 
in. Is there any technology that you have invested in that is 
actually scalable at a cost of five or six or seven cents a 
kilowatt hour which is what coal is priced at?
    Mr. Kelly. Wind is competitive in many parts of the 
country.
    Chairman Harris. Let me ask you about that because a little 
further down in your testimony, you actually mentioned off-
shore wind as being competitive for a conventional source of 
electricity without subsidy. Now, Dr. Kelly, everything I read 
says that off-shore wind is absolutely not competitive with 
conventional sources of technology because of the increased 
infrastructure cost to bring that energy into the grid. Am I 
reading the wrong things?
    Mr. Kelly. It is way too expensive right now, I mean, way 
more expensive.
    Chairman Harris. So off-shore wind is not one of those?
    Mr. Kelly. It is not----
    Chairman Harris. So there really is nothing that EERE has 
done that will make sure that when you plug in that electric 
vehicle, that we actually can buy electricity for five or six 
or seven cents a kilowatt hour?
    Mr. Kelly. If something that is at that stage of technical 
maturity, we should have been out of it a long time ago. We 
should be at the cutting edge of technology.
    Chairman Harris. Let me ask you one final question. My time 
has run out. You actually mention clean energy sources. You are 
promoting clean energy. Do you consider natural gas a clean 
energy source as the President did in his State of the Union 
Address?
    Mr. Kelly. Yeah, the President has a definition of clean 
energy that includes partial credit for natural gas, clean 
coal----
    Chairman Harris. What has EERE done to promote natural gas 
as a clean energy source?
    Mr. Kelly. Well, we have supported some natural gas powered 
vehicles.
    Chairman Harris. Oh. In the second round we are going to 
get to that. Thank you very much.
    I will recognize Ranking Member Johnson.
    Ms. Johnson. Thank you very much. Thank you, Mr. Chairman, 
for holding this hearing, and let me thank the Ranking Member 
as well.
    I would like to ask unanimous consent to put a statement in 
the record.
    [The prepared statement of Ms. Johnson follows:]

       Prepared Statement of Ranking Member Eddie Bernice Johnson

    I thank Chairman Harris for calling this important hearing today, 
and I welcome all of our distinguished panelists to the Committee. In 
particular, I would like to welcome Dr. Majumdar, who was chosen as the 
first leader of a small and specialized program that saw its origins 
here in this Committee. Dr. Majumdar has worked tirelessly to ensure 
that ARPA-E exceeds our expectations while staying true to the 
authorizing legislation. The President picked the right person for the 
job, and I want to thank you for your work.
    Investments in EERE, ARPA-E, and the Loan Guarantee program serve 
to strengthen U.S. scientific and economic leadership as they advance 
innovation in a wide range of technology areas, support the next 
generation of scientists and technology leaders, seed the industries of 
tomorrow, and ultimately lay the groundwork for a cleaner, more 
sustainable energy future.
    Unfortunately, these programs are seeing devastating cuts in the 
Energy and Water Appropriations bill now moving to the House floor. I 
understand the constraints the Appropriators were under. I commend them 
for working together to protect DOE innovation programs given an 
allocation that all but ensured that most of the programs would see 
significant cuts, and that some could have been eliminated altogether. 
However, I am deeply concerned that these and further efforts at cuts 
will do lasting harm to our ability to meet our energy objectives and 
compete in the global marketplace.
    Every Member feels the pressure to act to bring down energy prices 
now and insulate our economy from future price shocks. Unfortunately, 
we are limited in the types of policies we have to achieve this, and 
opening up new leases for domestic oil and gas production will not be 
enough in the short or long term. However, Congress can continue to 
support the development and demonstration of energy efficiency 
technologies--an investment that is already paying dividends. 
Unfortunately, while savings through efficiency are undoubtedly saving 
money for families and businesses across the country, we know that this 
is still not enough for the private sector to act alone. It is also 
time to take seriously the need to modernize our energy infrastructure 
and transition away from energy sources and technologies of the past. 
We have extended the lifetimes and stretched the infrastructure's 
capacity to the point where massive new investments will be needed in 
the near future. The question is, do we kick the can down the road or 
replace it with the same outdated technologies, or do we take this 
opportunity and leverage our resources to transition to new, cleaner, 
more efficient technologies, many of which can be made in the U.S? If 
the nuclear and fossil energy sectors--some of the most profitable and 
technologically advanced industries in the world--warrant continued 
taxpayer investment, as some of my colleagues propose, then additional 
funding could certainly be leveraged to exploit the full potential of 
the less-commercially mature alternative energy technologies.
    ARPA-E has been an undeniable success. If allowed the time and 
resources to thrive, ARPA-E may well represent the first of a new 
generation of smaller, more agile and efficient research programs. But, 
for ARPA-E to be effective, it must continue to grow. Being temporary 
hires, the initial team that started ARPA-E wil[ be leaving soon, and 
new project managers must be recruited to take their place. To attract 
the same caliber of managers away from the private sector, and often 
away from their families, there must be some indication of consistent 
and robust funding to support new fields of exploration. With the 
current Energy and Water bill devoting $100 million for fiscal year 
2012, while appreciated, ARPA-E gets perilously close to dying on the 
vine.
    I believe that our constituents understand that and still rely on 
our collective wisdom to ensure the long-term welfare of our nation 
through such strategic investments. They know that this country was 
built on a foundation of innovation, hard work, and the willingness to 
take big risks, and that government still plays an indispensible role 
in filling the voids that the private sector is not structured to do. 
In a rapidly changing global marketplace, facing new competitors that 
do not play by the same free market rules, the only thing we can know 
for sure is that the future of the U.S. economy will be dictated by our 
willingness to push back the frontiers in all fields of science and 
technology. The innovation programs at the Department of Energy, with 
their unmatched talent, world-class facilities, and unique role in 
taking on technology challenges that the private sector cannot do 
alone, are some of our most effective tools in ensuring our long-term 
economic growth.
    Thank you, Mr. Chairman.

    Ms. Johnson. But I do have a question. It has been good to 
hear so many accomplishments in such a short period of time 
that you have had to achieve these, and I guess we all have to 
work to reshape the Department and do all we can to eliminate 
waste through collaboration, what have you.
    Before the majority's budget cuts take effect, I am glad we 
are having this hearing because I think that many of the 
proposed cuts are irresponsible. They might not claim they pick 
winners and losers, and it is clear, you know, what sector they 
favor, and that is good except that I do think that we have a 
very major role to play. After investing billions of dollars 
from the stimulus a few years ago, we are finally beginning to 
see that these new technologies do flourish, and when we run 
into cuts, we really dismantle, we lose talent, and we end up 
starting over.
    So what will these additional cuts to clean energy do to 
DOE because it is clear that we need ``all the above'' in 
looking for alternative energies? I have a different take on 
the White House pulling the plug on so much stuff. I think 
that, as I understand, what we are trying to do is find some 
alternative ways of getting ahead and trying to stay on the 
world's playing field. So give me an idea as to how directly 
any additional cuts will affect these programs?
    Mr. Majumdar. Thank you, Congresswoman. I think this 
President has made clean energy a priority. I believe, and he 
has said in his State of the Union message, that we need to 
out-innovate, out-build and out-educate the rest of the world. 
As I mentioned in my oral statement, energy and innovations in 
energy are the foundation of our national security, our 
economic security, prosperity of our children and 
grandchildren, as well as our environmental security.
    So I think if you do not support clean energy at this 
point, I believe our future, our children's future and 
grandchildren's future are at stake because we are in a 
globally competitive world which is focusing on this particular 
issue.
    Mr. Kelly. I certainly agree with what Dr. Majumdar has 
just said. I think the President said that this is a Sputnik 
moment and a Sputnik moment because like Sputnik, we have 
gotten a wake-up call. We have gotten a wake-up call that the 
technologies that are going to dominate world markets in the 
future in clean energy may no longer be made in the United 
States. So not only are we going to slow the rate of 
introduction of things like the clean sources of electricity 
that are competitive with conventional sources that also meet 
environmental goals, we are not going to be able to take 
advantage of world markets and efficient light bulbs, in the 
next generation of heating/cooling equipment. We are not going 
to be able to go in and retrofit the buildings that we work in 
and live in so that we can save the people who live in them, 
protect them from the exigencies of rising prices. We are going 
to find ourselves facing constantly fluctuating prices in the 
price of driving.
    So the technologies and the businesses and the jobs that 
are created by solving these problems are going to be abroad 
and not here, and that is what we are risking.
    Ms. Johnson. Continue.
    Mr. Frantz. I would simply reiterate the point of my two 
colleagues that our continued involvement and activity in this 
space we believe is critically important and should continue at 
a robust pace. We are very pleased that Congress has 
appropriated in the continuing resolution the $170 million for 
appropriated subsidy which will certainly help activity in the 
renewable space for us, but that is just a small step. We are 
very hopeful that the funding will continue for this program 
because we are in a neutral taxpayer cost basis contributing 
mightily now to job creation and employment of these new 
technologies.
    Ms. Johnson. Thank you. My time is expired.
    Chairman Harris. Thank you very much, Ms. Johnson. I 
recognize the gentleman from California, Mr. Rohrabacher.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman, and I 
appreciate both the subject that you have chosen for today and 
also your leadership in this issue.
    I would like to talk to--everybody is having trouble with 
your name. I am sorry.
    Mr. Majumdar. Majumdar.
    Mr. Rohrabacher. Okay. Got it. Thank you. Rohrabacher. 
Everybody gets that all wrong as well.
    Mr. Majumdar. I hope your question is easier than my last 
name.
    Mr. Rohrabacher. Listen, you were talking about battery 
research that you have been funding. How much total is the 
funding for battery research?
    Mr. Majumdar. For the transportation sector? From ARPA-E--
--
    Mr. Rohrabacher. From ARPA-E, yes, for battery research.
    Mr. Majumdar. It is about on the order of about $40 or $50 
million.
    Mr. Rohrabacher. Forty or $50 million.
    Mr. Majumdar. That has been invested so far.
    Mr. Rohrabacher. Okay. And are you aware of how much money 
is being spent in the private sector to develop new battery 
technology?
    Mr. Majumdar. The next generation batteries that we are 
investing in? I am not aware of--the ones that we have invested 
in, for example, the all-electron battery which is going on at 
Stanford University, for example. There is no all-electron 
battery today, and so I don't think there is any investment in 
that. In the lithium-ion flow battery that is being developed 
at MIT, there was no lithium-ion flow battery.
    Mr. Rohrabacher. You are unaware of private companies that 
have invested large amounts of money in battery technology?
    Mr. Majumdar. Oh, they are investing in lithium-ion battery 
that is going into the Chevy Volts and things like that today 
but not in the batteries that we have invested. Magnesium-ion 
batteries----
    Mr. Rohrabacher. You don't know of any companies that are 
involved with developing new battery technology?
    Mr. Majumdar. Not the high-risk ones that we are investing 
in.
    Mr. Rohrabacher. Not the high-risk ones that you are 
investing in.
    Mr. Majumdar. These are risky propositions, and you know, 
many of them will fail. And you know, that is the kind of risk 
that----
    Mr. Rohrabacher. Now, if you succeed, those batteries 
succeed, let us say, in the private sector, the people who are 
investing their money will get their money back and actually 
make a big profit on it. What will the American taxpayers get 
out of this except of course a better society but are they 
going to get a payback if this new battery technology actually 
works?
    Mr. Majumdar. Well, if it works, I certainly hope, and I 
think you have shared your concern in the past that the 
manufacturing of these technologies, if it is created out here, 
remains in the United States, and I share your concern on that. 
And the manufacturing is going to lead to jobs, just like if 
you go back in the history----
    Mr. Rohrabacher. But the actual profit from the technology, 
what you are trying to get around is not telling me that the 
American taxpayers won't get a penny back?
    Mr. Majumdar. Well, we could create a different system, but 
that is the system that we have been following so far.
    Mr. Rohrabacher. I know. And would you like to see a system 
or would you advocate a system where if you invest in a new 
technology and it is the taxpayers who are paying for it, that 
ownership of that technology isn't just passed on and profited 
by people who haven't been doing the investing?
    Mr. Majumdar. I will be happy to work with you on that.
    Mr. Rohrabacher. All right. Let us do that. Mr. Chairman, I 
think that is a very important and significant point.
    Chairman Harris. Yes.
    Mr. Rohrabacher. Let me ask our last witness. I noticed in 
your testimony you talked about $31 billion in financing to 30 
projects, they are loans, that you have given to these energy 
projects. Are any of them nuclear projects?
    Mr. Frantz. Well, yes, included in that project is the 
Vogtle project in Georgia, and that project, as a matter of 
fact, Congressman, will be the first to receive the nuclear 
regulatory license expected in November, and we are already in 
the closing process.
    Mr. Rohrabacher. Can you describe that project for us?
    Mr. Frantz. Well, it is the first nuclear project sponsored 
by the Southern Company. There are three other investors.
    Mr. Rohrabacher. Are these small modular reactors?
    Mr. Frantz. No, they are not, sir.
    Mr. Rohrabacher. Are they gas-cooled reactors?
    Mr. Frantz. No, this is the Westinghouse 1000.
    Mr. Rohrabacher. This is money that has been put into light 
water reactors?
    Mr. Frantz. I am not familiar with the specific technology.
    Chairman Harris. I would like to note, Mr. Chairman, light 
water reactors have been around for a long time, and this may 
be a new approach----
    Mr. Frantz. No, it is. It is.
    Mr. Rohrabacher. Okay. Why----
    Mr. Frantz. This is a new technology.
    Mr. Rohrabacher. Well, then why haven't we put money into, 
instead of to new approaches, like the high-temperature gas-
cooled reactors or how about the small modular reactors? Have 
we put money into those concepts?
    Mr. Frantz. Our program has not. I don't know----
    Mr. Rohrabacher. All right.
    Mr. Frantz. [continuing]. If there are other programs 
within the Department----
    Mr. Rohrabacher. So we have a major expenditure into a 
light water reactor with a new approach which is an old 
concept, I might add, of how to produce nuclear energy. But the 
modular reactors, which are being heralded as really 
revolutionary, as well as the high-temperature gas-cooled 
reactors, which are revolutionary as well, have not been 
invested in. I would suggest that perhaps there should be a 
second look. I notice your staff is giving you a little note 
there if you would like to answer that.
    Mr. Frantz. We can take this question for the record and 
make a more fulsome response to your question, Congressman----
    Mr. Rohrabacher. All right.
    Mr. Frantz. [continuing]. Through our nuclear group.
    Mr. Rohrabacher. Thank you very much. Thank you, Mr. 
Chairman.
    Chairman Harris. Thank you very much. And we have been told 
we can begin as early as 3:15, so I would ask the Members to 
keep to the five-minute limit as much as you can. And I am 
going to recognize the gentleman from California, Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman. Dr. Majumdar, thank 
you for coming here today, and I am glad to be from Northern 
California where a lot of the innovation is happening, and I 
think you are doing a great job there at ARPA-E.
    Do you see that the private sector supports your mission of 
investing in high-risk, high-reward projects? Do you see 
evidence of that?
    Mr. Majumdar. I think there is general support by the 
private sector in our mission, in some of the things that we 
invested because as I said before, these are too risky for the 
private sector. No one is going to invest in an electrofuel 
which is a completely different biological route for creating 
fuel because it did not exist before. And when I talk about 
this to the private sector, they feel that this is too risky 
for them.
    So I think there is a tremendous amount of support because 
we don't know which one is going to win at the end, and we are 
not going to pick the winners. But I think out of 15 or 16 
technologies where the competition has been created, which is 
what we did, some of them may succeed, and then we will let the 
private sector pick the winners. But at this stage, at this 
early, early stage, I don't think the private sector can 
invest.
    And so that is exactly where we are, filling that first 
valley of death.
    Mr. McNerney. Thank you. Mr. Frantz, is it fair to say that 
the Loan Guarantee program which was first created by the 
Republican Congress, or Republican-dominated Congress, will 
help the private sector companies create jobs that are 
maintained after the loans are repaid?
    Mr. Frantz. Oh, certainly. The objective of our program--in 
fact, our rule specifies that we are to only do three projects 
in a specific sector operating for five years as an example, as 
a precursor, to the investment in the private markets to follow 
our lead on those projects.
    So it is our absolute objective to set the path and then to 
vacate to the private markets.
    Mr. McNerney. And then those jobs are maintained. Do you 
have any experience with jobs being maintained after the loans 
are repaid?
    Mr. Frantz. Well, no, all of our projects are long-term 
projects. The shortest loan that I am familiar with is at least 
ten years. So these are permanent assignments, particularly in 
the manufacturing, in the new solar manufacturing and in the 
generation space that are creating permanent jobs that will 
last many years, after our loan is repaid.
    Mr. McNerney. Okay. Thank you. Dr. Kelly, can you describe 
how the work undertaken by your Department has translated into 
financial benefits, real financial benefits for American 
families?
    Mr. Kelly. Well, it does this in two ways. First of all, it 
is developing products that help save energy and money so you 
can drive a vehicle that is more efficient, you can have a home 
that is more comfortable that uses much less energy. So that 
benefit directly translates into things that are useful to 
Americans.
    But at the same time it sets up an ability to produce the 
technologies to achieve those goals which means setting up 
factories that make lithium-ion batteries, that make next 
generation lighting. And so this is recognized worldwide as one 
of the areas of rapid growth, and it is a place where U.S. 
investment can generate a lot of new business opportunities and 
jobs.
    Mr. McNerney. So not only will the products save money by 
lowering consumption, but they will also create jobs in America 
which will benefit the economy as a whole. That is basically 
what you are saying?
    Mr. Kelly. Exactly.
    Mr. McNerney. Thank you. From a policy perspective, then, 
what are some of the biggest barriers to the more widespread 
development of renewable energy technologies?
    Mr. Kelly. Well, we of course, need to drive the price down 
so that you don't have a price differential, and I think we are 
well on the track to doing that in a number of different 
technical areas.
    But as I said in my statement, just because you have the 
price down doesn't mean that you have a guaranteed market for 
this. There are many places, for example, on siting wind or 
photovoltaic fields, utility scale fields, the regulatory 
problems are enormous. You have five or six different agencies 
and lot of complexity. So we are part of an interagency team 
that is going to greatly streamline them.
    Mr. McNerney. Do you see transmission as an issue?
    Mr. Kelly. Transmission is a major issue. There are a lot 
of issues having to do with the way utilities communicate with 
each other. There are a lot of contractual problems that you 
run into, so we are trying to work with the Office of 
Electricity to try to make sure that we have the most efficient 
electricity market in the world but that is also compatible 
with the introduction of intermittence.
    Of course, one of the problems of some kinds of solar 
lights is that it is variable, and you have to integrate this 
variable input into a utility which is a complex process.
    Mr. McNerney. Okay. Thank you. I will yield back.
    Chairman Harris. Thank you very much, Mr. McNerney. I 
recognize my colleague from Maryland, Dr. Bartlett.
    Mr. Bartlett. Thank you very much. I wanted to spend a few 
moments in putting our discussions in context. I think the 
staff has been able to load a couple of slides for me, if they 
can put the first one on the screen.
    [Slide]
    Mr. Bartlett. Okay. Yeah, this is a slide from World Energy 
Outlook from '08, and note several significant things there. 
The dark blue at the bottom is conventional oil. We have been 
pumping more and more of that as we have used more and more of 
it. Now, for the last five years, we have reached a plateau 
that conventional oil plus the two bars above it, which is 
unconventional oil and natural gas liquids, add up to 84 
million barrels a day. That is where we are today, 84 million 
barrels a day.
    Note what is going to happen. When they run this out to 
'30, note what happens. Conventional oil is going to go down, 
down, down. That happened in our country in 1970. Now we 
produce half the oil that we produced in 1970 in our country, 
in spite of drilling more oil wells than all the rest of the 
world put together.
    Notice the really dark red slice there, the small one that 
is enhanced oil recovery? The brighter red below that is oil 
that they say we are going to find from fields we haven't even 
found yet. These are fields yet to be discovered. And the light 
blue wedge there is developing fuels they already discovered, 
like one in the Gulf of Mexico under 7,000 feet of water, 
30,000 of rock. Pretty tough to develop that field. So when oil 
is more expensive than $100 a barrel, they may start doing 
that.
    Notice that by 2030 they thought that we would be producing 
106 million barrels of oil a day. Just two years later, the 
next slide, shows you what has happened just two years later.
    [Slide]
    Mr. Bartlett. Ah, there is the next slide, just two years 
later. The two wedges on top have flipped, so you have to 
notice that. They are different colors and they flipped those. 
And they run this out to '35. Notice that by '35, little oil 
they believe that we are going to be getting from conventional 
oil. Notice that the little dark red one I mentioned, enhanced 
oil recovery, that has disappeared. That is now incorporated 
under conventional oil. They have huge slices there for oil to 
be developed from fuels to be discovered, and the light blue up 
there, fields yet to be discovered. Those two wedges will not 
happen to that extent. They just won't happen. The world oil 
output is going to follow the United States output, and we have 
been going down, down, down since '70.
    Notice, and maybe you can see it up there. It is too far 
away for me to see. But already they are showing a dip down in 
the total production of oil at the top. They are 
prognosticating that that is going to go up. I do not think 
that will go up.
    The point I wanted to make with this was that the market 
forces did not result in any clean or alternative energy 
investments in anticipation of peak oil. Your government has 
paid for four reports, two of them issued in '05, two of them 
issued in '07. The big SAIC; the Hearst Report in '05; the 
Corps of Engineers Report in '05; the Government Accountability 
Office report, GAO report, in '07; and the National Petroleum 
Council report in '07, all four reports saying the same thing, 
a message your government did not want to hear, so they simply 
turned a deaf ear and paid no attention to it. The reports all 
said that the peaking of oil is either present or imminent with 
potentially devastating consequences. The Hearst Report said 
that the world has never faced a problem like this. You know, 
the social and the economic consequences of this are 
unprecedented, is what they said. Unless we anticipated it by a 
decade, there would be very serious social and economic 
consequences of this.
    I put these slides up there to kind of put this in context. 
You know, we should have started a couple of decades ago. We 
knew very well. We knew of an absolute certainty 31 years ago 
in 1980 when we looked back at 1970, and we could see very 
clearly that M. King Hubbard was right about the United States. 
We did peak in oil production in 1970. The United States has to 
be a microcosm of the world. If it happened in the United 
States, it should happen in the world. The only question was, 
when was it going to happen in the world? So we now have blown 
31 years we knew with absolute certainty we would be here today 
peaking in conventional oil production with essentially no 
possibility of making up for the fall off in conventional oil 
production by oil from other sources. So we should have started 
two or three decades ago with the technologies you are now 
working on. It is desperately important, my hope is, my prayer 
is, that ARPA-E can do for us what DARPA did for these other 
programs because if it doesn't, we are in a heap of trouble and 
the world is in a heap of trouble.
    I think that once again we can become a manufacturing, 
exporting Nation. We are clearly still the most creative, 
innovative society in the world if we just get turned on and 
our people know. But they haven't been told. They don't know 
because your government has refused to tell the people the 
truth.
    Thank you very much, Mr. Chairman.
    Chairman Harris. Thank you very much, Dr. Bartlett, and I 
will recognize Mr. Lujan.
    Mr. Lujan. Thank you very much, Mr. Chairman. I almost want 
to give Dr. Bartlett five more minutes. I really appreciate 
that conversation and where he was going.
    Chairman Harris. I am sure he had five more minutes.
    Mr. Lujan. With that, Mr. Chairman, thank you very much for 
this hearing. Dr. Majumdar, I am a big supporter of technology 
transfer, and we have had a chance to visit about this in this 
committee as well as among our colleagues in many capacities. 
And we have actually started a tech transfer caucus to talk 
about these kinds of ideas.
    Some view ARPA-E as a top-down technology transfer program. 
That is technology transfers specific technologies that have 
been identified or pushed from the top down. DOE has a 
technology transfer coordinator; please describe how you are 
working with Dr. Edmonds as we talk about DOE's application of 
technology transfer as it impacts you in this area.
    Mr. Majumdar. Thank you, Congressman. Let me just describe 
first of all ARPA-E. I mean, ARPA-E is not a technology 
transfer office; it is an innovation office. It is a technology 
innovation office, as I said, to provide some top leadership 
and get the community engaged in technology development, 
creation, which does not exist today, and if it did, it is just 
too risky for the private sector.
    Mr. Lujan. And just in clarification, understanding the 
role of ARPA-E, what are you doing to work with----
    Mr. Majumdar. With Dr. Edmonds.
    Mr. Lujan. [continuing]. With Dr. Edmonds to make sure that 
we are pushing this technology out as well----
    Mr. Majumdar. Right.
    Mr. Lujan [continuing]. Understanding the constraints that 
DOE has, unlike those with the intelligence community, DHS, 
DOD, where they have that private-sector component that they 
can match up.
    Mr. Majumdar. We are working very closely with Dr. Edmonds 
in terms of technology transfer. You know, after she joined the 
Department of Energy, she has worked with all the national 
labs, for example, to create this ``America's Next Top 
Innovator'' Award. It is a challenge. It is a competition that 
will be announced in our next ARPA-E energy innovation summit 
which is going to be the end of February next year, just like 
we had this year. And in this period she has reduced the cost 
of licensing from all the national labs to $1,000 for a certain 
period of time so that it takes the IP that has been created 
and offers it up to the entrepreneurs and innovators, take that 
IP and create businesses. And that is the kind of thing that 
she has been doing, and we are working very closely with her.
    Mr. Lujan. I appreciate that very much. Dr. Kelly, EERE 
established the Efficiency and Renewables Advisory Committee to 
ensure that EERE is focusing on transformative research to 
achieve technological innovations that move quickly into the 
marketplace and expedite job growth. Can you comment on the 
effectiveness that ERAC has in helping to guide the 
Department's investments in renewable energy technologies and 
what do you envision the ERAC's role in promoting clean energy 
job growth?
    Mr. Kelly. Well, thank you for the question. As you know, 
this is a new group we put together, and it has a number of 
functions but one of them is to get advice from a very diverse 
community, not only how we are choosing our research but also 
how we are trying to transfer and get it adopted. One of the 
great concerns we have got or a lot of the concerns that have 
been expressed by this committee is to make sure that we are in 
fact supporting innovation and not competing with other sources 
of investments. So we have significant representation from the 
venture capital community. The former head of research of 
General Electric is on the committee. The former head of 
technology at Honeywell is on the committee. So they have been 
helping us work with the financial community to make sure we 
can constructively engage the private sector.
    They have also allowed us to make contacts with people who 
weren't aware of our problems of the kinds of challenges, 
research challenges we worked on, so we can broaden the scope 
of the people that we work with. So they have been very 
effective both in helping us open up and make our process more 
transparent and helping us shape our program.
    Mr. Lujan. I appreciate that. And Mr. Chairman, I would 
like to ask unanimous consent to submit a few more questions 
into the record if I can't get to them on that second round of 
questioning, as well as some opening comments.
    Chairman Harris. Without objection.

    Mr. Lujan. Mr. Frantz, in order to take full advantage of 
renewable capacity as we see across the country, I appreciate 
the question by Congressman McNerney around transmission. If we 
are going to be able to solve our Nation's constraints for 
delivering power, when we talk about electrons being generated 
from any fuel source, but especially where there are renewable 
opportunities, can you talk about how the Guaranteed Loan 
program can help accelerate that?
    Mr. Frantz. Certainly. Thank you for the question, 
Congressman, and for the entire committee's benefit, I think it 
is important to realize that our program initiates through 
applications on a competitive basis. So in the first instance 
we have to issue a solicitation for specific sectors which we 
have done for transmission. We have closed a transmission 
project. Among the 16 we have closed, we have closed the 
Southwest Intertie in the State of Nevada. We have three other 
major projects presently in the due diligence that I can't 
discuss right now publically.
    So we are acutely aware of the need for upgrade and 
financing in transmission and in particular among those new 
solar generation projects that we are currently in the process 
of financing. There are critical issues associated with 
expansion of the transmission systems, particularly in the 
Southwest.
    Mr. Lujan. Thank you. Thank you, Mr. Chairman.
    Chairman Harris. Thank you very much, and I recognize our 
colleague from Illinois, Mrs. Biggert.
    Mrs. Biggert. Thank you, Mr. Chairman, and thanks for 
holding this Subcommittee hearing. I have got a question for 
Mr. Majumdar about ARPA-E. The fiscal year 2012 budget request 
for ARPA-E includes $100 million in mandatory spending to be 
spent to develop cutting-edge wireless technologies? My 
question is why do innovative wireless companies, and it could 
be Motorola or it could be Apple or there are a lot of various 
companies, but why do they need an additional $100 million to 
fund wireless technology development? Is there a concern that 
there is a lack of incentive for innovation within the wireless 
technology sector? Why is that singled out?
    Mr. Majumdar. Well, first of all, Congresswoman, before I 
answer that, let me just thank all of you for making such an 
effort to pronounce my last name. I think my mother will be 
very appreciative of that.
    This fund is a mandatory fund, as you pointed out, and this 
is for wireless technology. This is not for the Motorolas. This 
is really for--let me just give you an example. If you look at 
the grid today, it is a system that does not have feedback 
control. It is what is called open loop which is why when--in 
the Northeast there is an instability. The instability grows 
and just breaks apart the whole grid, and you have failure. And 
to be able to manage that, and it is what is called in 
mathematical terms, a non-linear system, which goes into what 
is called also chaotic behavior. This is a field of mathematics 
and science that needs to be developed in what is called 
distributive control, and for that, you need the wireless 
communication. This is an area of science or wireless 
technology that has not gone in--well, it has got technology in 
iPhones and Blackberries, et cetera, but not for example in 
controlling the grid because the technology that is needed for 
that which will be developed in the universities and the 
national labs, et cetera, around the country has to be 
different and has to be integrated in the right----
    Mrs. Biggert. Well, who makes that decision?
    Mr. Majumdar. In terms of the technologies?
    Mrs. Biggert. No, who makes the decision that we should 
have the wireless technology, the $100 million?
    Mr. Majumdar. Well, I think this has to go through Congress 
in terms of which committee. It has to be approved through 
that. And if should it be approved, then that is the fund, you 
know.
    Mrs. Biggert. But it comes from ARPA-E or it comes from 
DOE?
    Mr. Majumdar. No, it comes through ARPA-E through Congress' 
approval.
    Mrs. Biggert. Okay. All right. I guess I get it but it 
seems like somebody has to have the idea that yes, we need to 
do this, and I don't think--is it somebody in Energy and 
Commerce that is deciding that or is it somebody that----
    Mr. Majumdar. I can get back to you with the committee that 
is responsible for that. I don't know exactly which committee 
that is.
    Mrs. Biggert. Okay, but it is a committee?
    Mr. Majumdar. Yes.
    Mrs. Biggert. Okay. That was my question. Then Mr. Frantz, 
I understand that there are about 500 different companies that 
have applied for loans, for the Loan Guarantee program, but 
only about 30 awards have been made. Doesn't the reality of 
limited funding for the program relative to qualified 
applicants result in picking winners and losers among competing 
companies?
    Mr. Frantz. We do not pick winners and losers. As I 
mentioned, our whole process is handled through a competitive 
application process, and the driving factor, among all, is 
readiness to proceed.
    So we do not spend any time concerned about geographic 
distributions or even the specific sectors. We look at the 
applications purely from a very rigorous underwriting 
perspective, and we work on those in a prioritized fashion on 
fully the basis of a readiness to proceed with the transaction 
itself.
    Mrs. Biggert. So you don't think that the government 
involvement would result in a crowding out of some of the 
private investment that would rather not compete against the 
government-backed companies?
    Mr. Frantz. No, not at all. As a matter of fact, as I 
indicated in my prepared testimony, by the allocation measure 
that Congress has given us as well as the appropriated subsidy, 
among those applications that we are now working on, we fully 
expect to utilize all of the appropriated subsidy in the 
allocation.
    Mrs. Biggert. Okay. And I thank you. And I did miss your 
testimony, so I am glad that you pointed that out. Thank you. I 
yield back.
    Chairman Harris. Thank you very much. We are going to be 
called to vote, we believe, within the next 15 minutes. So we 
are going to allocate five minutes to each side for one 
additional set of questions, and I recognize Mr. Miller.
    Mr. Miller. Thank you. Dr. Kelly, the investments in EERE 
technologies, have there been similar investments in the past 
to the kinds of things we are doing now through EERE?
    Mr. Kelly. Oh, yes. We have what we think is a proud track 
record of supporting energy and technologies. I mentioned a 
few. Over half the windows now are extremely efficient because 
of our investments. We have gone through several generations of 
batteries. The batteries that were in the first generation of 
hybrids, the nickel metal hydride batteries were the direct 
result of what we have done. Our goal in all of this is to get 
the heck out of the business and let the private sector take 
over, and that is how we define success and that has happened 
in many occasions.
    Mr. Miller. In the testimony to this point, it sounds like 
all these agencies are actually talking to each other which is 
pretty refreshing, and also to the private sector. How do you 
get suggestions or do you get suggestions and if so, how do you 
get suggestions from the private sector on how to structure the 
program for what the priorities ought to be? Mr. Majumdar or 
Dr. Kelly.
    Mr. Majumdar. Well, I mean, we spend a lot of time not only 
talking to the industry and the businesses but also talking to 
the academia, really the sort of intellectual horsepower of 
this Nation in academia and national labs, et cetera, to 
identify where are the white spaces, the big gaps, and that is 
done in coordination with the Applied Energy offices, with the 
EERE, for example, Fossil Energy and others as well as with the 
Basic Energy Sciences in the Office of Science. And using that, 
we identify the white spaces that is too risky again for the 
private sector, that no one has created this technology but 
should a technology be created, this would change the ballgame 
and become a quantum leap in technology.
    And that is how we identify the white space and then create 
the technology just exactly the way DARPA created Internet, 
GPS, et cetera.
    Mr. Miller. Dr. Kelly, you don't have to add if you don't 
want to, but you can.
    Mr. Kelly. Just very briefly. We try very hard to get the 
understanding of what industry is going to do and what they are 
not going to do. Typically we hold a series of workshops. Many 
of them have been jointly with ARPA-E and Science and sort of 
triangulate on them. One of our flagship projects is SunShot, 
and we have had a number of workshops with all parts of the 
industry and regularly meet. These are shared with ARPA-E, and 
they bring in venture people. They bring in companies, they 
bring in academics. And we develop very precise roadmaps of 
where we want to go and then have that reviewed by the 
community.
    Mr. Miller. Dr. Majumdar, you talked about intellectual 
horsepower in this area a moment ago, and in your testimony you 
said that one of the indicators of success would be the ability 
to track the ``best minds'' to energy R&D. How is ARPA-E going 
about that? Is that one of your goals and how do you do it?
    Mr. Majumdar. Very actively. I think this is the time that 
if you are to create a future of clean energy and provide the 
security for our children and grandchildren, it is extremely 
important to parallel what we did in information technology and 
biotechnology, that is, to get the best minds in science and 
engineering, the best biologists, the best anesthesiologists 
perhaps, and the best computer scientists and the material 
scientists, to say can you offer your knowledge and your 
intellect and the creativity to address the problems so that we 
can get off foreign oil so we can provide security for future 
generations. So we are actively pursuing that. We are trying to 
get people from the other fields as well. And it is not only 
just me and my colleagues out here. Secretary Chu is trying to 
do the same as well, to get the physicists and the chemists 
involved and looking at the energy issues, not just the medical 
issues for example. So this is a very active pursuit for us.
    Mr. Miller. How will cuts to the ARPA-E budget affect your 
ability to attract, to get the horses for the intellectual 
horsepower, to bring in the best minds for energy?
    Mr. Majumdar. I think this will, you know, severely hamper 
our efforts. I mean, it is absolutely true. I have been an 
academic myself in the past, and if you are trying to do 
research, you want to see whether there is an assurance of 
funding down the line. And you know, if that assurance is not 
there, you are not going to get the best minds to solve the 
energy problems of the future. So it is extremely important 
that we have sustained funding, exactly as I said before. 
ARPANET started in 1968 and it took sustained funding over 20 
years to make it, to create ARPANET and to make it compatible 
for creating businesses in the commercial world. That kind of 
sustained funding is absolutely critical if you are to create 
the clean energy of the future and address the issues that 
Congressman Bartlett raised for our future.
    Mr. Miller. My time is expired, Mr. Chairman.
    Chairman Harris. Thank you very much. In a second here when 
Mr. Bartlett returns, I am going to yield 30 seconds to him. He 
wants to show one more slide. Let me just start. Dr. Kelly, I 
respect that we have to--you know, we want to spend this money, 
we want to create American jobs, we want to make ourselves 
efficient. But I have got a press release that had been sent 
out that would suggest that EERE actually spends money, for 
instance, ``engaged in multiple technology and policy efforts 
to improve energy efficiency in the Chinese building sector.'' 
Now look, I am all for energy efficiency, but I got to believe 
it should start here in the United States first.
    Why is your shop spending money to improve energy 
efficiency in the Chinese building sector? I mean, we are 
literally borrowing money from them because every additional 
dollar we spend is a dollar borrowed from China. Why would we, 
as good policy, be borrowing money from China to spend it to 
make their building sector energy efficient?
    Mr. Kelly. I am not certain what that press release was 
about, but as you know, the Chinese are building enormous 
numbers of buildings. They are building the equivalent of----
    Chairman Harris. Yeah, just to answer your question, it 
says ``key EERE partnerships in the building sectors in China 
include the code standards and labeling projects, software 
design tools and training for energy efficient building design 
projects.'' These are all from the website.
    Mr. Kelly. Well, one of the things that we had started 
recently is a joint research program with the Chinese that will 
not move any of our money to China but will--we are setting up 
a research program here in the United States funded partly by 
us and partly by business. They have set up a parallel 
operation in China. They are actually very sophisticated in 
many of the areas that we are doing research in. So there are 
areas where we can learn as much from them as they are learning 
from us. In fact, we can learn a lot from them. And so we want 
to make sure we take advantage of the areas where they do want 
to collaborate partnerships on----
    Chairman Harris. So you think we are going to get something 
from China on this? You think we are that good bargainers with 
the Chinese?
    Mr. Kelly. Well, I hope. The good thing about research, 
particularly on these sort of basic issues, is it really is a 
win-win situation. We have to be careful we choose the right 
areas, but there are places where, by collaborating, we both 
end up further ahead.
    Chairman Harris. But this isn't to improve energy 
efficiency in general. It is to improve it in the Chinese 
building sector, and we will probably go ahead and submit some 
questions in writing that might follow up with that.
    Now, Mr. Frantz, I did have one question because the loan 
program worked, it changed a little bit over the last few years 
because now there are federal dollars that are going to pay the 
cost of these guarantees that flow. So your statement that it 
doesn't cost, and I think I wrote it down, that the quote is 
``no cost to the U.S. taxpayer.'' But in fact, the U.S. 
taxpayer is paying the cost of that premium to guarantee the 
loan.
    Mr. Frantz. Well, my assertion in my testimony, Mr. 
Chairman, was the fact that all of our admin, the overhead and 
admin, is covered----
    Chairman Harris. Beyond admin there is a cost to the U.S. 
taxpayer with this program.
    Mr. Frantz. That is right. But the point is it is in the 
form of loan or loan guarantees which are repaid in 
contradistinction to a grant. So we expect to be----
    Chairman Harris. But----
    Mr. Frantz. [continuing]. Fully repaid.
    Chairman Harris. [continuing]. That premium, if it is not--
I don't understand. We are paying a premium to guarantee that 
loan.
    Mr. Frantz. You are probably referring to the credit 
subsidy appropriated----
    Chairman Harris. Yes, credit subsidy. I like that word 
subsidy because for the oil companies it is bad, but here it is 
good, I guess.
    Mr. Frantz. That----
    Chairman Harris. Yeah.
    Mr. Frantz. The subsidy is what, under the Federal Credit 
Reform Act of 1990, is a loan loss reserve which is required by 
that law for all Federal Government loan programs. In most 
Federal Government programs, that subsidy is appropriated by 
Congress and the reason is it is such a terrific burden to all 
the applicants.
    In the original concept of the 1703 program designed to be 
tax-cost neutral of the taxpayer, that is a self-paid subsidy 
program. So all of our large projects are under the 1703 
program, the nuclear program, the fossil program. That all has 
to be paid by our applicants.
    Chairman Harris. Right. So in fact, in the 1705 program, 
there really is a cost to the U.S. taxpayer?
    Mr. Frantz. There is.
    Chairman Harris. It is not administrative but it is that 
other cost?
    Mr. Frantz. And of course, that program as I mentioned is 
expiring on September 30.
    Chairman Harris. Sure, no, I understand that. With regard 
to the loan programs, you know, the only disconcerting thing I 
think and one of the reasons why we hold the hearing is that 
you know, we open up the paper and whether it is Politico 
yesterday or ABC News, you know, we hear about loan guarantees 
going to companies where people made very large contributions 
to people in the Administrations, very large political 
contributions. Large. How are you going to assure me that the 
system is not biased? And I will tell you what. I am going to 
submit that in writing, if you can submit that in writing to me 
because I am going to recognize Dr. Bartlett for 30 seconds to 
show his slide, and then we are going to adjourn.
    [Slide]
    Mr. Bartlett. This slide, is it the first one or second 
one? Show the second slide. This slide goes out to '30, the 
second one goes out to '35. This is the second one. It goes out 
to '35, and it peaks out not at 106 million but at 96 million 
barrels a day. So in just two years, they have lowered their 
expectations.
    I want to note, Mr. Chairman, that 4-1/2 years ago I led a 
Codel to China to talk about energy. Nine of us went to China 
to talk about energy, and I was stunned when they began their 
discussion of energy by talking about post-oil. Of course there 
will be a post-oil world. By the way, the first person that I 
know to recognize that was Hyman Rickover, the father of our 
nuclear submarines who gave a fantastic talk the 15th day of 
May, I think it was, 1957, in St. Paul, Minnesota, to a group 
of physicians. And he noted then that in the 8,000 year 
recorded history of man, the age of oil would be but a blip. 
And he called this its golden age. He had no idea how long the 
golden age would last. He said how long it lasted was important 
in only one regard. The longer it lasted the more time would we 
have to plan an orderly transition to other sources of energy. 
Of course, we have done none of that, and now we are up against 
a real crisis here. I love crises, by the way, because they 
challenge you. So I am exhilarated by this. This is a huge 
challenge.
    And if I think our government starts being honest with the 
American people--the Chinese talked about post-oil. Of course 
there will be a post-oil world. They think in terms of decades 
and generations. You know, do anything you can to get yourself 
elected two years and you will start to be responsible. And our 
corporate people look at the next quarterly report. That has 
got to look good or hell is going to break loose. So I will do 
anything I have to make that look good. Who is looking down the 
road in our country? I know ARPA-E is, thank you, but you know, 
somebody else may need to be looking down the road, I think.
    Thank you very much, Mr. Chairman.
    Chairman Harris. Thank you, Dr. Bartlett. Thank you for 
your patience here. I will thank the witnesses for their 
valuable testimony and the Members for their questions. The 
Members of the Subcommittee may have additional questions for 
the witnesses, and we will ask you to respond to those in 
writing.
    Now, I hate to make an addition here, but given the fact 
that I still am waiting for answers to my letter from months 
ago, I am going to ask you to be timely if you can. I am going 
to ask each of you to commit to me that you will be timely in 
this so it will be included in the record. You have . . .
    Mr. Majumdar. You have my commitment.
    Chairman Harris. I am going to say Dr. M because I am not 
going to pronounce his name anymore. The record will remain 
open for two weeks for additional comments from Members. The 
witnesses are excused. The hearing is adjourned.
    [Whereupon, at 3:30 p.m., the subcommittee was adjourned.]
                                Appendix

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Dr. Arun Majumdar, Director,
Office of Advanced Research Projects Agency-Energy

Questions Submitted by Mrs. Biggert

Q1.  Who makes the decision that we should have the wireless 
technology, the $100 million?

A1. The House Energy and Commerce Committee and the Senate Commerce, 
Science and Transportation Committee have jurisdiction over the 
Wireless Innovation Fund and will be responsible for passing any 
legislation that will determine where the money will go.
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Responses by Dr. Henry Kelly, Acting Assistant Secretary,
Office of Energy Efficiency and Renewable Energy

Questions Submitted by Chairman Harris

Q1.  So there really is nothing that EERE has done that will make sure 
that when you plug in that electric vehicle, that we actually can buy 
electricity for five or six or seven cents a kilowatt hour?

A1.  Every renewable energy generation technology in EERE has been 
making significant strides towards grid parity, and our energy 
efficiency programs continue to help reduce our overall demand for 
energy. Today, onshore wind power is one example of an EERE technology 
that is competing with non-renewable fossil fuels like coal and natural 
gas. Currently 25% of 695 patents in the commercial wind market cite 
one or more of the 112 EERE-funded patents or papers relating to 
onshore wind electricity generation.
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Responses by Mr. David Frantz, Director,
Loan Programs Office

Questions Submitted by Chairman Harris

Q1.  With regard to the loan programs, the only disconcerting thing I 
think and one of the reasons why we hold the hearing is that we open up 
the paper and whether it is Politico yesterday or ABC News, we hear 
about loan guarantees going to companies where people made very large 
contributions to people in the Administrations, very large political 
contributions. Large. How are you going to assure me that the system is 
not biased?

A1.  The process by which loan guarantee applications are reviewed and 
loan guarantees awarded is not biased in favor of any individuals, 
entities, locations, or technologies. Every application is subject to a 
rigorous, comprehensive, fair, and transparent review process, and 
decisions arebased solely on the project's financial and technical 
attributes and merit.

Questions Submitted by Mr. Rohrabacher

Q2.  We have a major expenditure into a light water reactor with a new 
approach which is an old concept of how to produce nuclear energy. But 
the modular reactors, which are being heralded as really revolutionary, 
as well as the high-temperature gas-cooled reactors, which are 
revolutionary as well, have not been invested in. I would suggest that 
perhaps there should be a second look. I notice your staff is giving 
you a little note there if you would like to answer that.

A2.  The Department of Energy (DOE) is very supportive of modular 
nuclear reactor technology.To date, however, no such projects have 
applied for DOE loan guarantees, and the program currently has no open 
solicitations and insufficient authority to support even the projects 
in its active pipeline. Should the Loan Programs have sufficient 
authority in the future, DOE would welcome applications from eligible, 
creditworthy projects employing modular reactor technologies.
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