[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE FEDERAL GREEN JOBS AGENDA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
JUNE 19, 2012
__________
Serial No. 112-152
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania EDOLPHUS TOWNS, New York
MARY BONO MACK, California FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina GENE GREEN, Texas
Vice Chairman DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma LOIS CAPPS, California
TIM MURPHY, Pennsylvania MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
_____
Subcommittee on Oversight and Investigations
CLIFF STEARNS, Florida
Chairman
LEE TERRY, Nebraska DIANA DeGETTE, Colorado
SUE WILKINS MYRICK, North Carolina Ranking Member
JOHN SULLIVAN, Oklahoma JANICE D. SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania MIKE ROSS, Arkansas
MICHAEL C. BURGESS, Texas KATHY CASTOR, Florida
MARSHA BLACKBURN, Tennessee EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California GENE GREEN, Texas
PHIL GINGREY, Georgia DONNA M. CHRISTENSEN, Virgin
STEVE SCALISE, Louisiana Islands
CORY GARDNER, Colorado JOHN D. DINGELL, Michigan
H. MORGAN GRIFFITH, Virginia HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 1
Prepared statement........................................... 4
Hon. Diana DeGette, a Representative in Congress from the State
of California, opening statement............................... 6
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 7
Prepared statement........................................... 9
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 11
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 11
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 12
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 12
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 13
Witnesses
Molly Sherlock, Specialist in Public Finance, Government and
Finance Division, Congressional Research Service............... 36
Prepared statement........................................... 38
Answers to submitted questions............................... 120
David W. Kreutzer, Research Fellow in Energy Economics and
Climate Change, The Heritage Foundation........................ 49
Prepared statement........................................... 51
Answers to submitted questions............................... 123
W. David Montgomery, Senior Vice President, NERA Economic
Consulting..................................................... 61
Prepared statement........................................... 63
Answers to submitted questions............................... 126
Kenneth P. Green, Resident Scholar, American Enterprise Institute 76
Prepared statement........................................... 79
Report, dated February 2011, ``The Myth of Green Energy Jobs:
The European Experience''.................................. 83
Answers to submitted questions............................... 128
Michael Breen, Vice President, Truman National Security Project.. 92
Prepared statement........................................... 94
Answers to submitted questions............................... 134
Submitted Material
Article, dated June 18, 2012, ```Clean energy' is money wasted,''
by Charles Lane, Washington Post, submitted by Mr. Stearns..... 15
Report, dated June 4, 2012, ``Clean Energy: Revisiting the
Challenges of Industrial Policy,'' Brookings Institution,
submitted by Mr. Stearns....................................... 17
THE FEDERAL GREEN JOBS AGENDA
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TUESDAY, JUNE 19, 2012
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:22 a.m., in
room 2322, Rayburn House Office Building, Hon. Cliff Stearns
(chairman of the subcommittee) presiding.
Members present: Representatives Stearns, Murphy, Burgess,
Blackburn, Gingrey, Scalise, Gardner, Barton, Upton (ex
officio), DeGette, Schakowsky, Green, and Waxman (ex officio).
Staff present: Sean Bonyun, Deputy Communications Director;
Todd Harrison, Chief Counsel, Oversight and Investigations;
Kirby Howard, Legislative Clerk; Ben Lieberman, Counsel, Energy
and Power; Andrew Powaleny, Deputy Press Secretary; Krista
Rosenthall, Counsel to Chairman Emeritus; Alan Slobodin, Deputy
Chief Counsel, Oversight and Investigations; Sam Spector,
Counsel, Oversight and Investigations; Alex Yergin, Legislative
Clerk; Alvin Banks, Democratic Investigator; Tiffany Benjamin,
Democratic Investigative Counsel; Brian Cohen, Democratic
Investigations Staff Director and Senior Policy Advisor; and
Alli Corr, Democratic Policy Analyst.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Good morning, everybody, and welcome to the
Subcommittee on Oversight and Investigations hearing on the
Federal Green Jobs Agenda.
My colleagues today will examine the Federal investment in
green energy and the employment and economic returns that were
generated by this investment.
When the Federal Government invests taxpayers' dollars in
the energy sector, we must make sure we oversee the returns on
these investments. In 2008, then-Presidential Candidate Barack
Obama promised that as President he would invest $150 billion
in renewable energy programs that would create 5 million well-
paying jobs, nonexportable jobs, in 10 years.
It is hard to know exactly how much the Obama
administration has spent to promote, prop up, and subsidize its
green energy agenda, and even harder yet to accurately put a
number on the green jobs created as a direct result of this
substantial investment.
We know that the President's American Recovery and
Reinvestment Act of 2009, the Stimulus Act, included
approximately $90 billion in direct spending and tax credits
for green energy and associated programs.
In December of 2009, President Obama signed the
Consolidated Appropriations Act, which appropriated $8 million
to the Bureau of Labor Statistics, BLS, to determine the number
of green jobs in the United States. The BLS report,
``Employment in Green Jobs, Goods, and Services,'' was released
on March 22, 2012.
The overly broad and seemingly all-encompassing definition
of what constitutes a green job used by the BLS, combined with
a gimmick accounting method that green job counters appear to
have used, resulted in the conclusion that a total of 3.1
million green jobs exist in America today.
The President would like us to believe that he is on his
way to keeping his green jobs promise, but the truth is we're
nowhere near that today.
Numerous media outlets have scrutinized the BLS report and
concluded that many of the jobs being counted as green jobs are
not green, are not new, and were not in need of saving. Many of
these jobs have been around for decades and were never in need
of a green jobs subsidy in the first place. These green jobs
include tenured professors, bus drivers, trash collectors, and
steel mill workers.
In fact, when the BLS made its proposed definition of a
green job available for public comment, it received the
following feedback. A trade association stated, for example,
that, ``It is our determination that the green jobs label is an
artificial construct that is being imposed subjectively, used
politically, and will in the end be about as successful as
trying to collect fog in a cardboard box.'' A State government
agency, for example, stated, ``If we overstate or generalize
green too much, the resulting data becomes meaningless.''
The Recovery Act led to an influx of money into green
programs. DOE's Loan Program Office has given out nearly $35
billion, including to recipients such as Solyndra. Many are now
bankrupt, and thousands of people have been laid off. In fact,
last week, a Department of Labor report revealed that nearly
1,900 people lost their jobs with the shuttering of Solyndra,
800 more than cited by the previous media accounts.
At the same time, Molly Sherlock, in the prepared testimony
that she has provided to the committee, has confirmed much of
what the committee investigation of the 1603 program had
uncovered, this includes the fact that the 1603 grant ``as an
incentive is of greater value to investors. It is also more
expensive from the government's perspective.''
The Obama administration supports extending a costly
program, yet continues to stress that job creation is not one
of its goals, statutory or otherwise. Dr. Sherlock notes that a
recent attempt at estimating the economic impact of the 1603
program ``does not attempt to estimate how many jobs were
created by the section 1603 grant program.'' DOE's report notes
that some projects supported by the 1603 program award most
likely would have progressed without the award.
Just how many of these free riders are we talking about? To
provide some perspective, Sherlock notes that one early
analysis of the 1603 grant program estimated that roughly 25
percent of the wind capacity installed in 2009 was directly
motivated by the grant. Of wind projects that received the
grant in 2009, roughly 39 percent were dependent upon the
grant. Consequently, Sherlock notes the possibility of job
numbers substantially lower than even those estimated by the
Department of Energy and Secretary Chu.
To learn more about the economic and employment effects of
the Obama administration's green energy agenda, we will hear
testimony today from Dr. Molly Sherlock from the Congressional
Research Service; Dr. Ken Green from the American Enterprise
Institute; Dr. David Kreutzer from the Heritage Foundation; and
Dr. David Montgomery with NERA Economic Consulting; and Michael
Breen of the Truman National Security Project.
I welcome our witnesses today, and with that I respectfully
offer the ranking member an opening statement.
[The prepared statement of Mr. Stearns follows:]
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OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you very much, Mr. Chairman.
From your opening statement I am going to assume that you
are holding this hearing today because of your deep concern
that we're not creating enough green jobs and that the
Republican majority wants to figure out how to make the Obama
green jobs agenda work better so that we can create more green
jobs in our economy.
In fact, Mr. Chairman, if this hearing represented a fair
assessment of how the Obama administration's green jobs agenda
and an honest discussion of how to improve those programs, I
would be in full support. However, I'm sorry to say, instead of
that, I think we will probably only hear complaints and
opposition to President Obama's programs. You would never know
that many of these programs were passed with bipartisan support
or that they began under President Bush or earlier
administrations, again with bipartisan support.
Somehow, it seems to me, having sat on this committee for
many years, that the Republicans only came up with their
vehement opposition to a government role in green energy when
President Obama was elected. Now, every time the Obama
administration tries to make a good decision on how to shift
our economy to clean domestic energy, we hear nothing but
attacks and complaints.
But at the same time, and you could tell I was being
sarcastic at the beginning, because I haven't seen any
bipartisan legislation or, for that matter, partisan
legislation, to create green jobs programs, to improve the
programs that we have, or to try to use oversight facilities to
build better programs. And, frankly, I think this partisanship
is what our constituents are sick of and what they would like
to see eliminated.
The witness list for this hearing provides all the evidence
we need to determine whether it is truly designed as a fact-
finding exercise. There are four different witnesses to
describe how the government's estimates of green jobs and green
job creation are wrong, useless, or inaccurate, but we don't
have a single government witness to respond to these
criticisms. Nobody from DOE, nobody from Treasury, nobody from
EPA, and even though they've been attacked here, nobody from
the Bureau of Labor Statistics. This does not seem to me, as
someone who's been on this subcommittee for 16 years, an
appropriate way to conduct government oversight.
The programs we're talking about today, like the section
1603 tax grant, the Department of Energy weatherization
program, and the DOE loan program, have improved the lives of
citizens around this country, creating jobs, heating homes, and
providing resources to this Nation's energy innovators. The
district or State of every Member of this committee has
benefited from the Federal Government's investment in clean
energy.
Republican and Democratic Members, including Chairman
Upton, have written to DOE in support of companies seeking
funds for renewable energy projects. And if there's a way we
can make these better, I'd be eager to know that, because
they're creating jobs around the country.
Now, because I'm also concerned about clean job creation,
last week I had a day where I toured clean-tech companies in
Denver. One of the places I went was Coolerado, which is a
manufacturer of efficient and quiet air conditioners, using
indirect evaporative cooling technology. As well as being a
really innovative technology, Coolerado has now 40 employees
today, up from 11 employees 5 years ago, and revenue has grown
over 500 percent of that during that time.
I also went to RavenBrick on my clean-tech tour. What they
do is they produce a smart window technology, sort of like
Polaroid glasses for windows, and they began with construction
of an automated plant in Denver which is going to increase
employment from just a handful of employees now to 200 in 2015.
And so not only do we have tremendous opportunity in all
kinds of these industries for increase in job creation, but
these attacks by Congress on clean energy in general and clean
tech threaten these jobs because they cut down investment, and
they cut down consumer confidence and investor confidence.
And so maybe if looking in our districts doesn't prove the
case, we should look at our competitors. The Chinese overnment,
as we know, is making major strategic investments in renewable
energy. And because of these investments, China's market share
has grown dramatically from 6 percent of the solar market in
1995 to 54 percent in 2010.
We should not be complicit in ceding the future green
market to our foreign competitors. So I'm very pleased that
we're working on clean-energy development. I'm pleased we're
working on green jobs. I think we can do more. I think we
should do more, but the last thing we should do is politicize
this whole discussion. Thank you.
Mr. Stearns. I thank the gentlelady.
I recognize the distinguished full committee chairman, the
gentleman from Michigan, Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman. Today we are going to
scrutinize the Obama administration's green jobs agenda.
After borrowing and spending billions upon billions of
dollars, and after 40 consecutive months with a national
unemployment rate higher than 8 percent, I have no doubt that
the American people would welcome any jobs, whether you call
them green, blue, or any other shade of the rainbow.
The American Recovery and Reinvestment Act was touted by
the President as the most sweeping economic recovery package in
history. According to him, it aimed to make investments to put
Americans to work, doing the work that America needs done.
Unfortunately, despite spending nearly a trillion dollars,
the stimulus failed to achieve its promised job creation and
new questions are being raised about programs funded by the
stimulus. This committee is dedicated to ensuring that taxpayer
dollars are used wisely, an objective that cannot be achieved
without fully understanding whether a program is successful
before investing additional taxpayer dollars.
There's no better measure of a stimulus program's success
than its record at job creation, a metric that the American
people are focused on as they watch the stubbornly high
unemployment figures emerge virtually every month. That's why
we were so surprised when both the Department of Treasury and
the Department of Energy confirmed to the committee that a
multibillion-dollar stimulus program with section 1603 grants
for renewable energy does not even include job creation among
its primary objectives.
The number of long-term jobs that DOE estimates may have
been created by this program, both direct and indirect, are
appallingly low, given the sheer amount of Federal dollars
invested in the underlying projects. I say ``may have been
created,'' because DOE itself has cast tremendous doubts on the
inherent accuracy of the computer model generated estimates.
Yet in spite of these very serious questions, the President
has proposed a budget that borrows more and spends more on the
1603 program, not to mention an array of other projects
benefiting renewable energy developers. Our Nation cannot
afford to double down on costly policies with unproven results,
and that's why this hearing is so important, bringing witnesses
to discuss the green jobs agenda and determine what it has cost
taxpayers and what it has delivered or failed to deliver in
return.
Thanks for being here today, and I yield the balance of my
time to Mr. Murphy.
[The prepared statement of Mr. Upton follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stearns. Mr. Murphy is recognized for 1 minute.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Thank you, Mr. Chairman. When President Obama
was elected, and I remember--I recall quite clearly, in his
2011 State of the Union address, he talked about his emphasis
on clean coal. Recognizing that over half of our electric
energy is from coal, I'm still waiting for that promise of
green energy to come true.
With regard to Presidential earmarks for companies like
Solyndra, we have spent more, subsidized more, and it has cost
us more jobs. In this Nation, where we have an abundance of
coal and also natural gas, instead of following through on the
promise of clean coal and natural gas, this administration has
not only abandoned that promise, but blocked it.
New regulations are not cleaning up coal plants but
shutting them down. Twenty percent of the energy generated by
coal plants will be lost, which will result in an increase of
home and factory electric bills by 30 to 40 percent. And the
estimates are we will lose between 160- to 200,000 jobs per
year. And in the area of natural gas, there's no fewer than 10
Federal agencies now creating more barriers instead of helping.
I still believe in the genius of the American spirit, of
our science and creativity and our tenacity to create jobs and
work towards clean coal technology, and I hope that's the
promise of this administration we follow up on.
I yield back.
Mr. Stearns. The gentleman yields.
We recognize the gentlelady from Tennessee for 1 minute.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman.
In preparation for the hearing, we did a little research.
BLS has identified 333 industries that contribute to green
goods and services. These industries have reportedly created a
combined 3.1 million green jobs. However, after reviewing the
list, it appears that this administration's well-documented
policy of picking winners and losers is once again out in full
force, as there is a wide discretion into what constitutes a
green job. This is what we found.
According to BLS, automobile manufacturing of EPA's smart-
way certified vehicles, such as natural gas vehicles, supports
green jobs. However, the construction of gas pipelines that
transports the fuel to the EPA-certified vehicles does not
constitute a green job.
Shellfish farming creates and sustains green jobs.
Shellfish fishing does not. Semiconductor and related device
manufacturing supports green jobs. Semiconductor machinery
manufacturing does not. Manufacturing Energy Star certified
light bulbs, such as CFLs that contain mercury, supports green
jobs. However, manufacturing batteries only supports green jobs
if the batteries are mercury free. We have some discrepancies,
and we look forward to looking into it.
I yield back.
Mr. Stearns. The gentlelady's time has expired.
The gentleman from Texas, Dr. Burgess, is recognized for
the remaining time, which I think is a little less than 1
minute.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Sure. Well, we are just so glad the witnesses
are here today.
Apparently green jobs is as hard to define as a shovel-
ready project. Other subcommittees have heard testimony. Mrs.
Blackburn commented on this. The Bureau of Labor Statistics
testified before an Oversight and Government Reform
subcommittee that someone who sweeps the floor of an energy
facility may be classified as a green job. Someone who drives a
hybrid bus for the city has a green job.
Purveyors of used goods, since apparently all the goods are
being recycled, are considered having green jobs. Even an oil
lobbyist, if he or she advocates on environmental issues, is
deemed working in the green field. Clearly we've got a lot of
explaining to do about this program.
The stimulus, as we all know, failed to deliver on the
promise. It's up to this committee to get to the bottom of it.
I'm glad we have the witnesses here to help us sort through
that, and I'll yield back.
Mr. Stearns. I thank the gentleman, and we recognize the
distinguished ranking member, the gentleman from California,
Mr. Waxman, for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Mr. Chairman, today's hearing is about the
administration's effort to invest in energy and clean-energy
jobs, and I commend the Obama administration for its focus on
developing America's green job economy. Funding loan programs
for renewable energy, encouraging use of energy efficiency
technology in our electric grid, and investing in energy
efficiency, these investments have made a big difference in the
short term and will pay big dividends in the long term.
In the short term, DOE expenditures and loan guarantees
under the Recovery Act have supported 100,000 jobs. In the long
term, these investments are helping move the economy toward a
new, clean-energy industry. The environmental case for a shift
to green energy is indisputable, and the economic reasons are
just as strong.
Last year, the American Energy Innovation Council, a
business group that includes Microsoft Chairman Bill Gates, the
CEOs of Xerox and General Electric, and the former CEO of
Lockheed Martin, recognized the Federal Government's vital role
in promoting clean energy, and here's what they said:
``If the U.S. fails to invest in new technologies and
create new markets and new jobs that will drive the
transformation and revitalization of the 5 trillion global
energy industry, we will have lost an opportunity to lead in
what is arguably the largest and most pervasive technology
sector in the world.''
I agree with these business leaders. America must invest in
building a better clean-energy future. We need to do this for
environmental and public health reasons, and we need to do it
for economic reasons.
Unfortunately, this Congress is moving in the wrong
direction. House Republicans are voting for more oil and coal
at the expense of renewable energy. House Republicans
overwhelmingly deny the scientific evidence of climate change,
and House Republicans continue to vote to roll back
environmental protections. This Congress has earned its title
as the most anti-environmental Congress in history.
Mr. Chairman, a report I released yesterday found that
nearly 1 in 5 of the 1,100 legislative roll call votes thus far
in this Congress, 247 votes, were votes to undermine
environmental protection. In 2011 and in the first half of
2012, the House has voted 109 times on legislation that would
enrich the oil and gas industry. This includes 45 votes to
weaken environmental, public health, and safety requirements
applicable to the oil industry, and 38 votes to prevent
deployment of clean-energy alternatives.
This is the wrong path. We have to address this Nation's
energy and environmental issues or future generations will lose
out.
We have to accept findings of the National Academy of
Sciences that ``climate change is occurring, is very likely
caused primarily by human activities, and poses significant
risks to humans and the environment,'' a statement that the
Republicans voted to deny.
We were elected to address the challenges this Nation faces
head on. We can't simply stick our heads in the sand and hope
these problems go away. We can't simply hope the climate change
stops on its own. This Nation needs a strong, green jobs and
green energy plan to ensure that its children have a strong
future.
The Obama administration has moved in this direction and I
commend them for their effort. We should be working with the
President, not seeking to obstruct his agenda at every turn.
I have a minute left, and I yield it to Ms. Schakowsky.
Mr. Stearns. Ms. Schakowsky is recognized for the balance
of the time.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you. I look forward to our hearing
today, which I believe provides an excellent opportunity to
evaluate our energy priorities and to chart the way forward in
a manner that will stimulate job growth, improve our air and
water quality, promote public health and save lives.
More than 60,000 jobs have already been created as a result
of the 1703, 1705 and ATVM programs. Industries that have
benefited from these programs include solar, wind, and
geothermal, and States from Hawaii to Maine have reaped the
benefits. Those investments have spurred private investment on
unprecedented levels for alternative energy projects.
The argument from fossil fuel supporters that we can't
afford to invest in green energy is incredibly hypocritical.
We're going to spend $40 billion on subsidies to Big Oil in the
next decade, and yet these are the highest revenue-earning
companies in the world.
So I look forward to hearing the testimony today, and I
thank the gentleman for yielding.
Mr. Stearns. I thank the gentlelady.
Before we go on, I would like to put into the record, by
unanimous consent, which I consulted with the minority, a
Washington Post opinion piece that appeared today, ``Clean
Energy is Money Wasted,'' by Chuck Lane. And also I would like
to put in the record the Brookings Institution report earlier
this month, which was cited by Mr. Lane called, ``Clean Energy:
Revisiting the Challenges of Industrial Policy.''
By unanimous consent, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stearns. With that, we welcome again our witnesses. As
you know, the testimony you are about to give is subject to
Title 18, section 1001, of the United States Code.
When holding an investigative hearing, this committee has a
practice of taking testimony under oath. Do any of you have
objection to testifying under oath? It appears not.
The Chair then advises you that under the rules of the
House and rules of the committee, you are entitled to be
advised by counsel. Do you desire to be advised by counsel
during your testimony today? If not, please rise, and we will
swear you in. Raise your right hand.
[Witnesses sworn.]
Mr. Stearns. We now welcome each of you to give a 5-minute
summary of your written statement.
STATEMENTS OF MOLLY SHERLOCK, SPECIALIST IN PUBLIC FINANCE,
GOVERNMENT AND FINANCE DIVISION, CONGRESSIONAL RESEARCH
SERVICE; DAVID W. KREUTZER, RESEARCH FELLOW IN ENERGY ECONOMICS
AND CLIMATE CHANGE, THE HERITAGE FOUNDATION; W. DAVID
MONTGOMERY, SENIOR VICE PRESIDENT, NERA ECONOMIC CONSULTING;
KENNETH P. GREEN, RESIDENT SCHOLAR, AMERICAN ENTERPRISE
INSTITUTE; AND MICHAEL BREEN, VICE PRESIDENT, TRUMAN NATIONAL
SECURITY PROJECT
Mr. Stearns. And, Dr. Sherlock, we'll start with you.
STATEMENT OF MOLLY SHERLOCK
Ms. Sherlock. Thank you, good morning. Mr. Chairman and
members of the subcommittee, I am Molly Sherlock, a specialist
in public finance in the Congressional Research Service of the
Library of Congress. In this role I research and evaluate the
economics of Federal tax policy, including energy tax policy.
Thank you for the opportunity to provide testimony on these
issues.
I have been invited here today to discuss tax provisions
that support renewable electricity. Specifically, I have been
asked to address two issues related to renewable energy tax
incentives: first, the cost of these provisions; and, second,
the potential for these policies to create jobs. Before
addressing these issues, I will briefly summarize the renewable
energy tax incentives that are currently available, as well as
those that have recently expired.
Historically, the primary tax incentives for renewable
electricity have been the Renewable Energy Investment Tax
Credit, or ITC, and the renewable energy production tax credit,
or PTC. The ITC was first enacted in 1978. Currently, the ITC
provides a 30 percent tax credit for investments in various
renewable energy technologies, including solar.
The PTC was introduced in 1992. The PTC is a per-kilowatt
hour incentive paid out over 10 years for the production of
electricity, using certain renewable energy resources,
including wind. Two new tax-related provisions for renewable
energy were introduced as part of the American Recovery and
Reinvestment Act of 2009.
Under section 1603 of the Recovery Act, in lieu of either
the ITC or the PTC, renewable energy investors were eligible to
receive a one-time grant from the U.S. Treasury. As of the end
of 2011, the section 1603 grant option is not available for new
projects.
The Recovery Act also provided 2.3 billion in advanced
energy manufacturing tax credits, all of which were
competitively awarded in 2010.
Regarding the cost of these programs, the Joint Committee
on Taxation, or JCT, has estimates that the renewable energy
ITC cost $500 million in 2011. Over the 2011 to 2015 budget
window, revenue losses for the ITC are projected to be 2.5
billion.
The PTC was estimated to cost 1.4 billion in 2011 with
projected revenue losses from the PTC estimated to be 9.1
billion over the 5-year budget window. The PTC is scheduled to
expire at the end of 2013 for wind and at the end of 2013 for
other eligible technologies.
In 2011 the Treasury Department paid out 4.7 billion in
grants under the section 1603 program. From 2011 to 2015,
estimates suggest that a total of 17.2 billion will be paid out
in section 1603 grants. From the perspective of the U.S.
Treasury, the cost of the section 1603 grant program likely
exceeds the foregone revenues associated with the underlying
tax credit.
The Obama administration's fiscal year 2013 budget proposes
to extend the PTC for wind and the section 1603 grant program
for 1 year. The JCT has estimated that this would cost $5.7
billion.
Studies that look at jobs in therenewable energy industry
tend to highlight jobs supported rather than jobs created. Jobs
supported include jobs on projects that may have received a
grant, even if the project would have taken place absent the
grant option. An estimate of the number of jobs created by the
section 1603 grant program can be provided by referring to
estimates of the installed capacity that was actually motivated
by the grant, as opposed to grant recipients for projects that
would have moved forward without the grants.
In my written testimony, I provide an illustrative example
that uses estimates of the installed capacity directly
motivated by section 1603 to illustrate the differences between
jobs supported as opposed to jobs created.
While job creation may be one of the policy objectives of
the renewable energy tax incentives, such policies are often
designed to achieve other policy objectives in addition to job
creation. The section 1603 grant program, for example, was
designed to compensate for weakness in tax equity markets
during the financial crisis. Tax incentives for renewable
electricity may also address environmental concerns and support
growth in the renewable energy industry.
Thank you again for inviting me to appear here today. I am
happy to respond to your questions.
[The prepared statement of Ms. Sherlock follows:]
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Mr. Stearns. Dr. Kreutzer, just pull the thing a little
closer to you, and just put the mike up. That's super. Thank
you.
STATEMENT OF DAVID W. KREUTZER
Mr. Kreutzer. OK. Chairman Stearns, Ranking Member DeGette
and other members, thank you for inviting me to address the
subcommittee on the issue of green jobs. My name is David
Kreutzer. I am Research Fellow in Energy Economics and Climate
Change at the Heritage Foundation. The views I express in this
testimony are my own and should not be construed as
representing any of the Heritage Foundation.
I would like to address several aspects concerning green
jobs and the economy. First, counting jobs is an unsatisfactory
measure of economic policy. A more direct measure, such as
national income, gives us a better picture.
Second, measures of job creation or income creation should
be done on a net basis. Studies of green jobs created by
regulatory burdens or subsidies consistently ignore the
offsetting job losses the regulations or subsidies impose on
the economy.
One study of the impact of regulation on the coal-fired
power industry, cited by EPA Administrator Lisa Jackson, showed
the more burdensome a regulation was, the greater would be the
employment increase. For instance, a regulation whose
compliance cost was 100 times greater created 100 times as many
new jobs.
A study done for the Wind Energy Association and another
done by the renewable--excuse me, the National Renewable Energy
Laboratory, came to similar conclusions regarding subsidies. As
my colleague John Fleming noted, these studies always start
with step two. That is, they assume the money just appears.
They skip the part where taxpayers have to finance subsidies,
or stockholders and ratepayers have to pay for retrofitting
power plants.
Of course, in reality, the money comes out of somebody
else's pockets, which reduces their spending and the job-
creating impact that their spending would have had.
I would like to spend the remainder of my few minutes
discussing the Bureau of Labor Statistics' Green Jobs Report.
The headline number that has been mentioned here already
several times is that the U.S. economy has 3.1 million green
jobs. What many do not know is what jobs were included to get
that 3.1 million total.
For instance, there are over 13,000 green jobs in the
septic tank and portable toilet servicing industry. That total
is 33 times the 400 green jobs in the solar utility industry
and almost three times the number of jobs in all renewable
power utilities combined.
Even wind power utilities, with 2,200 green jobs, rank well
below septic tank servicing and barely above the 1,900 green
jobs in hog farming. That the 3.1 million green jobs total is
used as an argument in favor of subsidizing renewable energy is
grossly misleading.
For instance, the solar power industry has received
subsidies of some sort for most of the last 30 years. Simple
division shows that the subsidies have created about one job
per month at most in the solar utilities industry. According to
the BLS figures, 35,800 or fully 80 percent of the jobs in the
power utility industry are in the nuclear sector.
The numbers make no more sense in the manufacturing sector
where the single largest contributor of green jobs is the steel
mill industry, half of whose jobs are counted as green. And I
want to emphasize this is not the steel fabricating industry,
but rather the part of the industry that makes the raw steel.
The 30,000 plus green jobs in the pulp paper and paper-
board industry is 50 percent higher than the number of green
jobs in turbine and power transmission equipment manufacturing,
which manufacturers turbines for steam, gas and hydro, in
addition to turbines for wind power.
The BLS calculations for the service sector seem almost
comedic. There are over 160,000 green jobs in school and
employee bus transportation. There are over 116,000 green jobs
in trash collection. There are over 106,000 green jobs in used
merchandise stores. Those three categories combined have more
than doubled the green jobs of engineering services and
architectural and related services combined.
Though bus driving, trash collecting, steel and paper
making are all important jobs, they have little to do with
green policy and are not what most people think of when
policymakers talk about a green energy future.
In summary, green job counts are poor measures of the
effectiveness of green subsidies and mandates. That said, the
studies that have been done are consistently biased towards
green subsidies and mandates because they ignore the
significant job losses that these mandates and subsidies will
cause in other parts of the economy.
And, finally, the BLS green jobs study is absolutely
worthless as any sort of measure of the policy effectiveness or
importance of green industries to our overall economy.
Thank you, and I look forward to answering your questions.
Mr. Stearns. Thank you.
[The prepared statement of Mr. Kreutzer follows:]
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Mr. Stearns. And Dr. Montgomery.
STATEMENT OF W. DAVID MONTGOMERY
Mr. Montgomery. Thank you. I also want to thank the
committee for the invitation to testify today.
My name is David Montgomery. I'm a senior vice president of
NERA Economic Consulting, and likewise my testimony today
represents my own conclusions, may not necessarily be shared by
all of my colleagues.
The question I was asked to address is how is it possible
to create jobs by means of burdensome regulations and programs
that replace less costly energy with more costly energy? I
agree with the key points that were made by Dr. Kreutzer, so I
will summarize that part of my testimony very quickly.
Green job studies would be harmless, except they create the
appearance of creating--of increasing the total number of
persons employed in the U.S. economy. That's where they go
wrong because they do that only by telling half the story, and,
as Dr. Kreutzer described, they ignore what these workers would
have been doing otherwise.
I don't think you will find anyone to deny this. Everyone
knows that this is the game in calculating green jobs, and it's
not just green jobs. This half-truth is found in almost every
green jobs study, but it's also found in most of the claims
from industry about how many jobs they create, simply a
question of what else would they--all of these claims ignore
what else it is that the workers would have been doing, and
that's the critical question for what the opportunity cost is
to the economy.
The second point is that some studies do find job benefits
using a comprehensive model; that is, they do take into account
what it is that workers would have been doing otherwise. But
they get to their conclusion about job benefits by assuming the
conclusion, which is basically that government agencies know
better than businesses and consumers what is in their own
private economic interests.
For that I would cite in particular EPA's most recent
regulatory impact analysis of the economic benefits of fuel
economy standards. But here I would make a further note because
it's not--in addition to being highly paternalistic, these
analyses are based on excessive certainty. They're all
forecasts. Job impact studies are all forecasts of what's going
to happen in the future.
In several of its recent regulatory impact analyses, EPA
has based its favorable conclusions about the costs and
benefits of regulation on one set of official forecasts of
future energy prices. One thing that I think we can also agree
on is that government agencies have a consistent track record
of being wrong on what future energy prices are going to be.
But EPA never tested what the outcome for consumers would
be if they offered--if the official gas prices were wrong. This
requires a broader scenario analysis, which could reveal that
taking away the freedom of consumers to make choices based on
their own diverse opinions, by taking that choice away, EPA
actually imposes a uniformity that leaves the economy unhedged
against the possibility, for example, that oil prices might
fall. After all, natural gas prices just fell dramatically
after everyone was sure they would never do that.
In reflecting on my testimony last night, I realized,
though, that I had left out the most important part. The jobs
are not an appropriate measure of the merits of energy and
environmental policies. The BLS'--the report is valuable in an
ironic way because it pushes the obsession to counting jobs to
an extreme.
The valid reason for environmental regulations is not job
creation. We should be concerned about the current level of
unemployment, but environmental regulations and energy
subsidies make no contribution to solving it. They are more
likely to move and employ people from one job to another, and
they don't address the underlying causes of unemployment.
Job creation is a little irrelevant to them. The reason for
environmental regulation is to deal with externalities, cases
in which the market is not sufficient to get the maximum
benefit for society. And in order to get that maximum benefit
for society regulations like ambient air-quality, standards
need to be set at levels that balance benefits for health in
the environment against the other goods that must be given up
to provide those benefits.
Part of the cost of environmental regulations is the labor
that's diverted from other productive activities, so jobs are
part of the cost. They need to be paid attention to, but on
that side of the ledger. I'm much more skeptical that economic
justification can ever be found for the complex of energy
subsidies and mandates that now masquerade as energy--
environmental and energy security policies.
But if it's to be found, it won't be in treating these
programs as engines of job creation or new economy, but by
evaluating whether they provide energy security and
environmental benefits worth more than their cost. And even
more important, by comparing the current policies that pick the
winners among technologies based on political and bureaucratic
evaluations, with policies that address the alleged
environmental and energy security issues directly, and create a
level playing field for all the solutions.
So my conclusion from the job estimates tell us nothing
about any of the matters that have to be considered in an
attempt to design energy and environmental policy that makes
the largest contribution to our national welfare.
Thank you, Mr. Chairman.
Mr. Stearns. Thank you.
[The prepared statement of Mr. Montgomery follows:]
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Mr. Stearns. Dr. Green, welcome.
STATEMENT OF KENNETH P. GREEN
Mr. Green. Chairman Stearns, Ranking Member DeGette, thank
you, and members of the subcommittee, thank you for inviting me
to testify today.
I am Kenneth Green. I'm a resident scholar at the American
Enterprise Institute and I can, in fact, define a green job.
That is one of these jobs that I hold, since all of my jobs, of
course, have been green jobs, and my family has been Green for
many generations now.
So as with the others, my testimony reflects my views only
and should not be construed as reflecting the views of any
organization I may affiliate with.
I have appended a study with my testimony on the subject of
green jobs conducted in 2011, and I would request that that be
added to the official record when my testimony is submitted.
Mr. Stearns. By unanimous consent, so ordered.
Mr. Green. Thank you. Much of my commentary will derive
from that study and the research that went into it.
Three fallacies underpin the green jobs agenda. The first
fallacy is that there is a compelling reason for the government
to reorder the private sector economy to make things more green
more quickly. The second fallacy is that the government can
intervene in the economy and create new jobs on net. And the
third fallacy is that bureaucrats make good venture
capitalists.
I will take them in order. In the United States and in
virtually every other developed country, we have seen the same
trends play out while people engage in ordinary nongreen jobs
using nongreen technology to pursue development. At first they
degrade their environment, but as they meet their basic needs,
they clean up their environment.
Hence, environmental improvement in the United States has
been spectacular in virtually all parameters. Our air and water
pollution levels are bare fractions of what they were. The
burden of persistent chemicals in the environment is down.
Deforestation was reversed. Wildlife is largely protected, and
the U.S. leads the world in reduction of emissions of
greenhouse gases without, I might point out, either being part
of an international coalition or having national legislation.
To be sure, some of these improvements are driven by
regulations, particularly local regulations. But what made them
possible was the underlying reality, which is free market
economies naturally seek to use less energy and resources per
unit of production simply out of a desire to make a profit, and
the democratic market economies follow a predictable cycle of
environmental repair as people are free to express their values
for environmental quality.
Indeed, there is evidence that we are far past the point of
diminishing returns on many environmental regulations, and we
should be seeking ways to reform them so that they impose less
burden on our economy rather than looking to pile on still more
in the name of a green agenda.
The second fallacy is that government intervention in
markets can improve them to the point where they create more
jobs. Well, to create a job at point A, the government must, as
my other panelists have pointed out, must take money from the
productive economy at point B. The government doesn't have
money, its own money, so it has to take the money out of the
economy.
Since the government also has--imposes costs to operate,
they must take a cut of the money that passes through their
hands on the way from point A to point B. And since they tend
to create union-wage jobs rather than competitive market-wage
jobs, at the end of the day the result is less jobs on net.
The third fallacy is that bureaucrats can direct taxpayer
capital to uses rejected by private venture capitalists, and
through special knowledge, only privy to them, pick the
technologies that will win in the marketplace of the future and
find consumer demand.
Government certainly has a role, a legitimate role to play
in funding basic R&D. The military is particularly good with
this, in producing technologies that later have commercial
potential. But evidence suggests government is a very poor
venture capitalist when it comes to investing in R&D, and even
worse in trying to help self-proclaimed technologies of
tomorrow cross over the valley of death, which all the
technologies that we have today somehow manage to get over
without much help from government. The landscape is positively
littered with the debris of the President's green technology
investment programs, with billions of dollars of taxpayer money
thrown into businesses that were of dubious potential from the
start.
According to one list published in May of this year, failed
efforts included: Solyndra, Beacon Power, Ener1, Range Fuels,
Solar Trust of America, Spectrawatt, Evergreen Solar, Eastern
Energy, Unisolar, Bright Automotive, Olson's Crop Service,
Energy Conversion Devices, Sovello, Siag, Solon, Q-Cells, and
Mountain Plaza.
I could go--there's another list in my testimony of
companies teetering on the brink of bankruptcy, and these
include Abound Solar, A123 Systems, Brightsource Energy, Fisker
Automotive, First Solar and more.
Now, I was asked to quickly discuss how the green job
agenda is played out in other countries that have tried it,
I'll start in Spain. In March of 2009 researchers at the
Universidad Rey Juan Carlos calculated that from 2000 to 2009
Spain spent about $800,000 to create each green job, and the
cost of wind energy jobs was $1.5 million. That meant that in
the general economy, for every green job created, 2.2 jobs were
foregone or destroyed.
In Italy, a study performed by the Bruno Leoni Institute
found that because green jobs are so expensive to create there,
for every job in the green sector created, 5 to 7 jobs would
have been foregone in the general economy, and 60 percent of
those jobs created were temp jobs.
In the U.K., they found the value of 3.7 jobs foregone in
the general economy for every green job created, and this was
using the government's own model of job creation and loss based
on tax revenues and monetary flows.
In conclusion, the idea that we need the government to
engineer our massive reorganization of the private sector
economy in the name of greenness, the idea that government can
create jobs on net in the economy, and the idea that
bureaucrats make good venture capitalists are fallacious and
pursuing them is likely to do more harm than good.
The experience of Europe, which has preceded us in
embracing these fallacies, is uniformly negative, causing
increased prices for power, industry flight, and increasingly
high levels of energy poverty. The green agenda has been shown
to be itself unsustainable and rife with corruption and
cronyism.
Thank you again for the opportunity to testify. I look
forward to your questions.
Mr. Stearns. Thank you.
[The prepared statement of Mr. Green follows:]
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Mr. Stearns. Mr. Breen, welcome.
STATEMENT OF MICHAEL BREEN
Mr. Breen. Thank you, Chairman Stearns, Ranking Member
DeGette, members of the committee, ladies and gentlemen.
I'm honored to appear before you today to discuss the
critical national security importance of clean energy
development. I am the vice president of the Truman National
Security Project, a former Army officer in Iraq, and
Afghanistan combat veteran. I'm also proud to be one of the
leaders of Operation Free, a nonpartisan national coalition of
veterans who believe that our dependence on fossil fuel poses a
clear national security threat to the United States.
The men and women of Operation Free have walked the burning
oil fields of Iraq and patrolled the mountain roads of
Afghanistan, where the fully burdened cost of fuel is $30 a
gallon and 1 in 24 fuel convoys ends in an American casualty.
They have seen firsthand why it is an established consensus in
the defense community that our dependence on oil threatens our
national security.
America sends over $1 billion per day overseas for oil. It
should not be a surprise, then, that oil is the single largest
contributor to our foreign debt, outpacing even our trade
deficit with China. Worse, far too many of those dollars wind
up in the hands of regimes that wish us harm. According to the
CIA, over 50 percent of Iran's entire oil budget--excuse me,
Iran's entire national budget--comes from the oil sector.
For every $5 rise in the price of a barrel of crude, Iran
receives an additional $7.9 billion annually. That's billions
of dollars to build new nuclear facilities, repair centrifuges,
and support terrorist groups that threaten Americans and target
our Israeli allies. But there's another consensus emerging in
the defense community, and it is this: climate change poses a
serious threat to our national security.
I know not everyone in this room believes that climate
change is real, but our national security professionals do. The
Pentagon's Quadrennial Defense Review, the military's most
important strategic document, states that climate change is,
quote, an accelerant of instability and conflict and that
climate change and reliance on fossil fuels are, quote,
prominent military vulnerabilities for the Nation.
The CIA has established The Center on Climate Change and
National Security. The Council on Foreign Relations, the Center
for Strategic and International Studies, the Center for a New
American Security, the CNA's Military Advisory Board, the
National Research Council and numerous other nonpartisan
organizations have all found independently of one another that
climate changes poses a serious and growing threat to our
national security.
According to a recent study, over 97 percent of climate
scientists say that man-made climate change is a reality. Now,
I'm not a climate scientist, I'm a former front-line combat
leader in the U.S. Military. And as a combat leader, if 97
percent of my intelligence indicated that I would face a lethal
danger that would risk the lives of my paratroopers, I would be
committing unconscionable military malpractice if I did not
listen and act on that information.
Fortunately, we see leaders acting in the same vein today
in Kern County, California, and other places across America.
Located in the high desert, Kern supplied the crude that fueled
much of the mid-20th century oil boom.
Kern County has always been proud to provide American
energy. That's why in the 21st century Kern has turned to
renewable sources, becoming the largest producer of wind and
solar energy in California by a very large margin. Clean
technologies are creating jobs in a place where unemployment
had been 64 percent higher than the national average.
Two months ago in this very building, I stood with Jeff
Duff, the CEO of Air-Streams Renewables, a technical school in
Kern County that trains wind turbine technicians. Air-Streams
is proud that 70 percent of its graduates are veterans. One of
Jeff's students, a naval electrician, struggled to find work
after leaving the service. He left a night job at a mortuary to
join Air-Streams and then graduated at the top of his class.
Now he is serving his community by building the energy economy
of the future.
As we debate clean technologies, we often ignore energy's
impact on our national security. There will be a lot of
emphasis in this room today on cost. But the price of fossil
fuels includes more than searching and extracting and shipping;
there are security costs that we must recognize.
Fossil fuels fund extremists and breed dependency on
nations that don't share our values. We can let stories like
Kern County's be what they are today, promising but not
commonplace, or instead we can lead by investing in 21st
century technologies that keep America safe and prosperous.
Thank you for the opportunity to testify, and I look
forward to your questions.
Mr. Stearns. Thank you.
[The prepared statement of Mr. Breen follows:]
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Mr. Stearns. And I will open with my questions.
Dr. Sherlock, let me ask, we have a slide we would like to
put up, if you could, and perhaps not everybody can see it, but
I will give a copy to the ranking member and anybody other----
Ms. DeGette. I don't know, where is this slide from?
Mr. Stearns. It's from Dr. Sherlock's prepared testimony.
Ms. DeGette. OK.
Mr. Stearns. And if you look at this slide, and Dr.
Sherlock, I will have you explain it, you can see that the
upper portion of the slide is computer generated by the
Department of Energy on construction phase jobs that are
created and what they project operational jobs being created.
And the lower portion is actually what actually occurred; is
that correct, Dr. Sherlock?
Ms. Sherlock. It's an illustrative example to demonstrate
the difference between a job supported as opposed to a
potential job created.
Mr. Stearns. But it's also to show that the projected,
based upon a computer model, isn't it also. And actually what
occurred?
Ms. Sherlock. It's based on NREL's computer model and then
based on earlier research using the estimate of 39 percent
where early estimates show that 39 percent of the wind energy
capacity installed in 2009 was directly motivated by the grant,
rather than resulting from other incentives or other factors.
Mr. Stearns. Well, let's take one of the most egregious
examples. The total direct plus indirect and induced
operational phase shows that from 9,700 to 10,000 jobs would be
created, but the direct plus, indirect, actually is 1,989 to
2,145 according to the illustrative example estimated by the--I
guess, your office; is that correct?
Ms. Sherlock. It is the NREL's estimates multiplied by the
39 percent that was found in the earlier Berkeley lab study,
yes.
Mr. Stearns. To what do you attribute the huge difference,
for example, between the 10,000 and the 2,000 that was shown on
the chart? What do you attribute that to?
Ms. Sherlock. The major difference is that a number of
projects would have gone forward even if the grant were not
available. So, for example, if only the PTC and the ITC had
been available, some of the projects that chose to elect to
receive the grant would have happened in the alternative world
that's not observed, where only the tax credits were available,
so those projects that would have happened in the alternative
world are jobs that are supported rather than jobs that are
directly created.
Mr. Stearns. So the long and short of it, the computer
model is including a lot of jobs that would have occurred
anyway?
Ms. Sherlock. Essentially, yes.
Mr. Stearns. How much money so far has been provided under
section 1603 to fund these large wind projects?
Ms. Sherlock. I don't have the precise number for wind
creation in front of me. It's been about $11 billion out the
door total, and roughly 90 percent of that has gone to wind.
Mr. Stearns. And these are the jobs that resulted from that
expenditure on your chart?
Ms. Sherlock. This is wind and solar jobs, yes.
Mr. Stearns. Isn't it true that additional money has come
from private and other sources without the government?
Ms. Sherlock. Yes, yes, so the government grants 30
percent, roughly, and then the rest of that would be from
private investments.
Mr. Stearns. Anything else you would like to add from this
chart before we move on?
Ms. Sherlock. I think it's really important to emphasize
when you are looking at job studies, when you're looking, just
to make sure you're comparing apples to apples, that when you
are looking at jobs reported, that's what you are looking at.
And when you're looking to try to have jobs created, that's
what you are looking at. So be careful with the language that's
used.
Mr. Stearns. You know, the stimulus package that provided
this 1603 program--wasn't the inducement for instead of getting
tax credits, you're going to get sheer payment; isn't that
true?
Ms. Sherlock. Yes, that was the purpose.
Mr. Stearns. And isn't that a stronger incentive for the
companies because they can get cash from the government,
instead of a tax incentive, to be in the 1603 program?
Ms. Sherlock. Yes. There were a number of companies that
faced financing frictions, weren't able to find partnerships to
turn those tax credits into equity. And the tax equity markets
may have worked well for some of the larger projects, but
especially for smaller companies.
Mr. Stearns. So basically the government is giving money
away rather than putting it as a tax incentive.
Ms. Sherlock. It is being paid out as a grant rather than
as a foregone revenue.
Mr. Stearns. OK. Mr. Kreutzer, with regard to the BLS
report concluding that there are 3.1 million green jobs, is
there a coherent and rational definition of green jobs, or is
it so broad that it is meaningless?
Mr. Kreutzer. Well, it seems to be very, very broad. They
do give features of a green job that if you do recycling, you
know, if you are involved in helping the environment and so on,
but when you look at 50 percent of the jobs in the steel mill
industry are green, you have to question is there any meaning
at all to this.
You can come up with any definition you want. As I
mentioned, you could say people who wear green on St. Patrick's
Day have a green job, but that doesn't tell us anything.
Mr. Stearns. Or Dr. Green here, he says from generation to
generation he's been working on green jobs.
For example, are jobs producing energy, nuclear energy, are
they considered green jobs?
Mr. Kreutzer. Yes. The vast majority of jobs in the nuclear
power sector are green, I think it's over 80 percent.
Mr. Stearns. So aren't the President's anti-Yucca and
otherwise anti-nuclear policies actually impeding creation of
new green jobs?
Mr. Kreutzer. Yes.
Mr. Stearns. Under his own definition. If the definition of
green jobs is nuclear energy, and he is out there protesting
against--put storage in Yucca Mountain, and he also is--his
anti-nuclear policies, aren't they actually impeding green
jobs?
Mr. Kreutzer. According to their definition, yes.
Mr. Stearns. Are jobs associated with steel making
considered green?
Mr. Kreutzer. About half of them, a little over half.
Mr. Stearns. And isn't the wave of EPA regulations
targeting steel plants likely destroying the potential for
green jobs?
Mr. Kreutzer. Yes, I guess if you consider them green jobs.
Mr. Stearns. Quickly, with regard to claims that the
military needs to go green, are alternative energy sources
necessarily better for our military today?
Mr. Kreutzer. I think there's a good bit of bait and switch
going on in the national security fossil fuel debate. First of
all, windmills don't do anything to reduce the costs or the
number of convoys----
Mr. Stearns. You can't run a Humvee with a windmill or with
solar panels.
Mr. Kreutzer. In addition, the biofuels have lower energy
density and would require more convoys to take those fuels to
the front. Third, we can provide securely petroleum from North
America. We could provide two or three times as much petroleum
as the whole Pentagon uses from the XL pipeline.
Mr. Stearns. OK. Well, I'll just conclude. But, you know,
we're hearing austerity from the Department of Defense, and
they're cutting and planning sequestration. But adding the cost
of alternative fuel, isn't this a drag on the military and
actually diverting funds that they could use for our national
defense that they are using instead for these alternative
fuels?
Mr. Kreutzer. Yes. And I am absolutely sympathetic to
provide as much security for the men and women fighting as
possible. But cloaking, you know, cloaking green jobs--excuse
me, green energy--in their heroism I think is a disservice.
Mr. Stearns. My time has expired. The gentlelady from
Colorado is recognized.
Ms. DeGette. Thank you so much, Mr. Chairman. Mr. Breen, I
appreciated your testimony a lot, and one of the places I went
on my green energy tour last week in Denver was I went to the
Veterans Green Jobs office, which is a national--you're shaking
your head. You probably know about that. It's a national
nonprofit designed to help place veterans in green jobs.
And their business plan shows that they are going to have
placed 600 veterans in these jobs by next year, weatherization
jobs as well as in high-tech industry. So, they are doing
something practical for veterans.
I was a little bit offended, I'll be honest, by the
statement that was just made by Dr. Kreutzer about windmills
can't power tanks----
Mr. Stearns. Humvees.
Ms. DeGette. I'm sorry, Humvees. And I'm wondering, Mr.
Breen, if you can just briefly say what you mean, very briefly,
that it's in America's interest to move towards alternative
energy. Did you mean something as shallow as windmills can't
power Humvees?
Mr. Breen. Of course not.
Ms. DeGette. What did you mean, Mr. Breen?
Mr. Breen. We have two very linked problems in the national
security space. One is a dependence on petroleum as a single
source of fuel for virtually every platform that we use. It's
from Naval to ground base. And again, I think there's a lot of
apples to oranges comparisons going on in the analysis. Nobody
is talking about moving Navy biofuels to a forward operating
base. The Navy doesn't have any forward operating bases; let's
be clear on that.
Second, we have the problem of climate change, an
acknowledged national security threat of climate change. And
taking action on that, certainly wind, solar, other
technologies, that allow us to use our resources cleanly have a
lot to do with that. But climate change is not the sole reason
that, for example, the Air Force is moving many of its
installations to wind and solar. They want to be able to
continue military operations if they're cut off from the
civilian grid for a variety of reasons, many of which are
plausible, such as a Chinese cyber attack on the grid, which
any cyber expert will tell you is more than possible.
Ms. DeGette. Thank you.
I have a couple of other questions. And I agree with what a
lot of our witnesses said about the fact that the sole reason
for the government to invest in any energy policy, including
clean energy and renewable, is to develop renewable energy.
Job creation should be a tertiary benefit. It should be the
primary benefit. It should flow from this policy to move us
away from foreign fuels and into domestically developed fuel.
So I want to ask--first of all, I want to ask you, Dr.
Sherlock, you talked about the statistics, and I think it is an
interesting point about would the jobs have been there anyway.
I want to ask you about if you have reviewed the tax
credits related to oil and gas, if those same principles apply
about job creation from oil and gas industry tax breaks.
Ms. Sherlock. If the market prices are going to be the
motivating factor generating investment in oil and gas
resources, then that may be the factor driving jobs rather than
the tax incentives.
Ms. DeGette. OK. So just because you are giving tax
incentives to the oil and gas industry doesn't mean that is
necessarily what is creating jobs, correct?
Ms. Sherlock. The same holds for those industries.
Ms. DeGette. Right. OK. So that is true for any energy tax
credit, right?
Ms. Sherlock. Yes.
Ms. DeGette. OK. Now, I want to ask a couple of questions
about the government role in energy production in general, both
from the standpoint of green energy and oil and gas. Several of
the witnesses have been critical of the job estimates from the
section 1603 renewable energy grant program. So I just want to
take a step back.
Mr. Green, do you support any Federal role in supporting
green and renewable energy, yes or no?
Mr. Green. Yes.
Ms. DeGette. Yes. OK, Mr. Kreutzer? Dr. Kreutzer, excuse
me.
Mr. Kreutzer. No.
Ms. DeGette. No. Dr. Montgomery, yes or no?
Mr. Montgomery. Yes, on R&D and no on production.
Ms. DeGette. Thank you. And Mr. Breen?
Mr. Breen. Yes, of course.
Ms. DeGette. Now, let me turn to oil and gas subsidies. Ms.
Sherlock--I am about to ask her.
Ms. Sherlock, your testimony describes the subsidies and
tax credits that go to traditional fossil fuels. What is the
annual value of those tax credits? Do you know?
Ms. Sherlock. It depends which incentives are being
included, whether you are including things like the section 199
deduction that's assigned.
Ms. DeGette. My staff says it was about $2.4 billion in
2010. Does that sound about right?
Ms. Sherlock. Yes.
Ms. DeGette. Now, Dr. Green, do you support those tax
credits and tax breaks for oil and gas, yes or no?
Mr. Green. I am on record repeatedly as opposing all
genuine subsidies.
Ms. DeGette. So your answer is no.
Mr. Green. No.
Ms. DeGette. Dr. Kreutzer?
Mr. Kreutzer. This is ``have you stopped beating your
wife'' sort of question so I can't give you yes or no.
Ms. DeGette. Well, do you support the tax credits and tax
breaks for oil and gas? You said you don't support them for
renewable fuels. Do you support them for oil and gas?
Mr. Kreutzer. The one that you're talking about for oil and
gas applies to renewables.
Ms. DeGette. Yes or no?
Mr. Green. I don't support genuine subsidies. I don't call
the 199 a subsidy.
Ms. DeGette. OK. Dr. Montgomery, yes or no?
Mr. Montgomery. Again, it's not a question that can be
answered yes or no. It's highly oversimplified and I can't----
Ms. DeGette. So you can give a clear answer for the
renewables but not for the oil and gas, correct?
Mr. Montgomery. I did give a clear answer that for the
renewables I support R&D and the production subsidies.
Ms. DeGette. OK. Let me ask about one more thing. The
section 263(c) tax deduction is a deduction for intangible
drilling costs. This subsidy allows oil producers to deduct
business costs like fuel repairs and drilling supplies and
then, rather than taking them over the life of the investment,
oil companies can claim them in the first year.
Dr. Kreutzer, do you support that tax break for oil
companies, yes or no?
Mr. Kreutzer. We are in favor of having everything expensed
for everybody.
Ms. DeGette. OK. So your answer would be no because it is
in one year.
Mr. Kreutzer. No, we're in favor of--yes, we want that and
we would like to have those.
Ms. DeGette. Dr. Montgomery--Mr. Chairman, you spent a
minute and 30 seconds.
Mr. Stearns. It is the prerogative of the chairman, and I
am the chair.
Ms. DeGette. Oh, you are going to cut me off sooner?
Mr. Stearns. Well, you have had a minute and a half over,
OK? You are finished.
All right, Dr. Burgess, you're recognized.
Mr. Burgess. This is a fascinating exchange. I was willing
to let it continue for a while.
Ms. DeGette. The chairman didn't want it to.
Mr. Burgess. Well, can I just ask a question on the
intangible drilling costs. I mean, there are other industries
that are able to deduct the costs of inputs; is that not
correct? Dr. Kreutzer.
Mr. Kreutzer. Yes. The question is whether it's a capital
expense or a, you know, a continuing expense that you would
have. And I think that distinction is not a helpful one to
make, and I think it would be better if our whole Tax Code
simply had expensing for every dollar that a company spent this
year they get to deduct from their revenues before taxes are
calculated.
Mr. Burgess. Well, let me just go on record as being in
agreement with you, and I hope fundamental tax reform is
undertaken by this Congress in the next term, that we seriously
address that, because I think it is a serious shortcoming of
the Tax Code we have now, and we wouldn't even be having this
discussion if it didn't seem like the Federal Government, both
Republican and Democrat administrations, were trying to pick
winners and losers using the Tax Code.
Dr. Kreutzer, you mentioned in an answer to a question
about the job creation side of the ledger. You also referenced
right at the end of your answer to that question that it was
offset by job losses and other parts of the economy. Could you
elaborate on that?
Mr. Kreutzer. Sure. When you take money to spend in one
part of the economy, it has to come out of somebody else's
pockets. If it's taxed, you take it from taxpayers today; if
it's borrowed, you take it from lenders today, and then
taxpayers later when you pay it off. And the money that the
taxpayers are not spending because they have to provide the
subsidies is money that is not going to be creating jobs as the
grocers and the butchers and so on that they would have created
had they had kept the money themselves.
Mr. Burgess. And do you have a sense as to the--a number?
We have been talking today about numbers of jobs created,
destroyed, enhanced, supported. Do you have a sense of the
numbers.
Mr. Kreutzer. We at Heritage have not done a comprehensive
study of these green jobs, so I couldn't give you a number on
that. We have looked at cap and trade bills in the past where
the net impact is hundreds of thousands of jobs lost on net.
Mr. Burgess. Dr. Green, did you have something you wanted
to add to that?
Mr. Green. Yes. If you look at the countries where they
have studied the question, the estimates range between roughly
two and seven. They cluster in such a way, using different
economic models suggest that is probably----
Mr. Burgess. Wait a minute. Could you expand a little bit
on the numbers two and seven?
Mr. Green. Sure. Well, if you look at, as I said in my
testimony, if you look at Spain and you simply add up--these
are not terribly complicated, don't misunderstand. If you
simply add up what was spent and how many jobs were created by
the government's own accounting, and you ask how many private
sector jobs that same amount of money would have supported in
the rest of the economy, it is a simple and relatively
straightforward division. And Spain found, in a study in Spain,
it was found that for every green job that was created, it cost
so much that two jobs, 2.2 jobs were foregone in the rest of
the economy. That is, it sucked up the money that would have
paid for two jobs and only made one. And in Italy the number
was even higher. In Italy the numbers ranged from five to seven
jobs, because it was particularly expensive to create green
jobs in Italy, especially wind jobs. And in the United Kingdom,
they found that one green job cost as much to make as 3.7 jobs.
So it's somewhere between two jobs and probably five jobs.
Mr. Burgess. So the green jobs program is in fact a job
sink which is pulling jobs out of the broader economy?
Mr. Green. Yes, that is correct.
Mr. Burgess. Let me ask you a question because you
referenced the that government doesn't have a place as being a
venture capitalist. This committee had a hearing with Jeffrey
Zientz and Jonathan Silver. Jonathan Silver was a deputy
secretary at the Department of Energy, and Jeffrey Zientz was
with--is now the acting director of Office of Management and
Budget, but at the time was deputy director of the Office of
Management and Budget. And Jeffrey Zeintz, I asked him a
question about was it OK that Solyndra--at this point Solyndra
had just filed its initial bankruptcy filing--and was this a
good investment of taxpayer dollars? And he was very dismissive
of the notion and said, any venture capitalist can tell you
that sometimes you are going to lose on one of these bets. And
my counter to him was, but we, the government, should not be in
the business of venture capitalism because if someone loses an
investment with a venture capitalist, that is an investment
that they voluntarily put forward and money that they felt they
could put at risk. We are now talking about taxpayer dollars in
the case of Solyndra, money literally take at the tip of a
spear from taxpayers under threat of force from the IRS, and we
invested it in something which really had no hope of ever
returning on equity.
Do you have any feelings about that?
Mr. Green. Well yes. You're exactly spot on, which is the
key difference between a private venture capitalist and a
government venture capitalist is that the private venture
capitalist loses their own money and/or money people have
entrusted to them and therefore they take the consequence. When
the government engages in venture capitalism the bureaucrats at
the Department of Energy, for instance, who are giving out the
money, are not losing their own money, they're not using their
friends' money or their investors' money, they're losing
taxpayer money, and there's no market consequence for them. It
is not that people are going to say, ``Wow, you pretty much
suck at investing, I'm not going to put my money with you
anymore.'' Instead, they just go for another round. And so the
problem is one of incentives and responsibility.
I wanted to quickly just comment on something Dr. Kreutzer
said, and that my position I think was misinterpreted on R&D. I
do believe in basic R&D as a legitimate role of government.
Genuine subsidies I am against. That is, special treatment I'm
against. Uniform tax treatment, I'm for. Thank you.
Mr. Stearns. The gentleman's time has expired.
The gentlelady from Illinois is recognized for 5 minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
The ranking member was asking a question that only Dr.
Kreutzer had answered. So let me ask Dr.--Mr. Montgomery and
Mr. Green. It was referring to section 193 tax deduction for
tertiary well injectants for oil wells and whether or not you
support those.
So, Mr. Montgomery? Dr. Montgomery. Sorry.
Mr. Montgomery. Thank you. I was hoping to have a chance to
answer that question. I think I have been quite clear in
testimony and in presentations at various workshops that it's
my conclusion that any subsidy which tilts the playing field in
favor of one form of energy versus another is bad energy policy
and an excessively costly way of achieving the goals of energy
security, environmental protection or----
Ms. Schakowsky. So, no.
Mr. Montgomery. On the other hand, the Tax Code is very
complex. And the simple fact that one particular provision of
the Tax Code allows an entity to pay less tax than they would
have if they're a different provision is one that requires
quite detailed analysis to figure out whether it's a subsidy,
and I have not done that on this provision.
Ms. Schakowsky. It is just really interesting to me how the
witnesses of the majority have called are very certain when it
comes to how ill-advised it is to subsidize clean energy, green
energy, but not so clear when it comes to oil and gas.
Dr. Green.
Mr. Montgomery. I'm sorry. I think you're misstating my
testimony. I said that I am opposed to subsidizing----
Ms. Schakowsky. I know. But you haven't figured this one
out.
Dr. Green.
Mr. Green. Well, I have three degrees. None are in tax
preparation. I am not an expert on the Tax Code so I can't
testify in any way to the benefit of one or another----
Ms. Schakowsky. But aren't you talking about that? Isn't
that exactly why you are here, to talk about the subsidies?
Mr. Green. In my testimony I spoke about principles,
economic principles, as to why can we not be certain about a
single tax provision?
Well, I can be fairly certain about very large things, like
if I step off of a cliff, I'm going to fall downward. The
individual Tax Codes are not an area in which----
Ms. Schakowsky. No, no. You listed all of the problems with
the investments in clean energy, and you seemed very certain
about all of those.
Let me go on to another question. In general then, section
613 tax deduction for, quote, percentage depletion of oil and
gas wells. Dr. Kreutzer?
Mr. Kreutzer. Yes. I'm not sure that I've looked at all of
that but I think we would be opposed to that.
Ms. Schakowsky. And Dr. Montgomery?
Mr. Montgomery. Yes, I think that the percentage depletion
actually has very little effect on oil production because it's
so limited in its scope and who can claim it.
Ms. Schakowsky. So is that a no? You don't support that tax
deduction?
Mr. Montgomery. I don't think it's providing any particular
benefit.
Ms. Schakowsky. And Dr. Green?
Mr. Green. If it's a unique subsidy that distorts the
market and unlevels the playing field, I oppose it.
Ms. Schakowsky. I see. And I am sure you are aware that
since 1918 we have been giving subsidies to the oil and gas
industry. So the history of the United States of America
actually making investments in gas and oil, not a new thing.
We've been doing it for a lot of years, and I don't know if the
American Enterprise Institute and the Heritage Foundation have
opposed those.
I wanted to ask, Mr. Breen, in your testimony, you talk
about a 2007 study that found strong and surprising
intersection between the two great security threats of the day:
climate change and international terrorism waged by Islamic
extremists. Dr. Kreutzer said that was somehow a disservice. I
wonder how a reliance on oil and natural gas benefits these
groups and does threaten our national security.
Mr. Breen. Sure. Thank you. First let me say it's hard for
me to understand, leading a coalition of over a thousand Iraq
and Afghanistan combat veterans, how we're cloaking our
arguments in anything. Frankly, that was strange.
On the point that you make, the study was conducted by the
Center for Strategic and International Studies and the Center
for New American Security, and it found in the most--it
basically did three different sets of projections from the most
conservative climate projection to the most aggressive
possible, it found all three had very serious national security
consequences.
The link that it found between terrorism, essentially
Islamic or otherwise, and climate was twofold. First it found
that the solution to both of those problems was highly linked
to our national energy policy, which I think is very germane to
this hearing. Second, it found that climate change was
extremely likely, overwhelmingly likely in some cases, to act
as an accelerant of terrorism.
For example, climate change causes and accelerates certain
natural phenomenon like drought, flooding, famine, pandemic
disease. All of these things create the conditions of
desperation that are necessary for terrorist recruitment. For
example, after recent flooding in Pakistan, we saw a threefold
rise in al-Qaeda's recruiting numbers out of that region. So
anytime that you've got people who are making their living off
the land in a very marginal way and that living is disrupted,
terrorist recruitment tends to go up.
Ms. Schakowsky. Thank you. I yield back.
Mr. Stearns. The gentlelady from Tennessee is recognized
for 5 minutes.
Mrs. Blackburn. Thank you. And I want to stay with Mr.
Breen and the national security issue if I can, because I think
that looking at our energy security, economic security,
national security, is something that is vitally important, and
I know that you all are doing a little bit of work trying to
delve into that. So let me you about this, and this follows
right on to the question Ms. Schakowsky had asked you.
The EPA and their war on coal, is that making this Nation
more or less secure?
Mr. Breen. I'm sorry. I don't know what you're referring to
when you're talking about the war on coal.
Mrs. Blackburn. Oh, you don't----
Mr. Breen. I am afraid I don't, no.
Mrs. Blackburn. Well, the EPA is seemingly developing
policies that are against all things coal. Now, there are many
of us, like those of us from my region of the country, that
feel clean coal technologies need to be used for electric power
generation. So if you take coal out, does that make our Nation
more or less secure, and should coal be a part of an all-of-
the-above energy policy for our country?
Mr. Breen. As we like to say, that there is no single
technological solution. There is no silver bullet to solve the
climate problem or the energy dependence problem when it comes
to transportation fuels. It's really a silver buckshot
solution, if you'll forgive the analogy. So what that means is
that----
Mrs. Blackburn. I appreciate the analogy because I do
understand buckshot.
Mr. Breen. I'm sure you do.
Mrs. Blackburn. You go right ahead. Those of us in
Tennessee get that.
Mr. Breen. Yes. Sure. Didn't mean to imply that you didn't.
As a lifelong hunter, I certainly do as well.
Mrs. Blackburn. Yes.
Mr. Breen. My point being that we support any mix of
technologies that sufficiently reduces carbon emissions so that
it's clean and that it's safe. If clean coal meets that
standard, great. I'm not an expert in whether or not clean coal
does meet that standard.
Mrs. Blackburn. What about natural gas?
Mr. Breen. Again, if natural gas meets that low carbon
standard and is safe, sure. But I would refer you to experts
who can tell you whether or not it does meet that using a life-
cycle analysis.
Mrs. Blackburn. Let's ask some of the experts that are on
the panel. Would anyone else like to weight in on this, EPA and
their battle against coal? Go ahead.
Mr. Kreutzer. It certainly doesn't make us more energy
secure to ignore the energy source that we have in greatest
abundance, which we do not need to import as we export it.
Mr. Green. I think it's increasingly obvious that the word
``green'' here in this case really only means low carbon.
Therefore, the agenda is one of purely decarbonization and
climate change, not really of energy security, not really of
air pollution, because if it were about air pollution or just
clean energy, you would have uniform support for things like
diverse nuclear power, natural gas, and so forth.
And so to repeat what Dr. Kreutzer said, affordability
being a critical part of keeping our economy going, which is
how we fund our military, which is how we stay secure in a
world that is that way, it does not make sense to increase the
cost of energy production and use in the United States and that
does not make us more secure.
Mr. Montgomery. I guess I would make two observations if I
could. The first is that it's by no means clear to me that
anything the United States does to reduce its greenhouse gas
emissions is going to actually deal with any of the problems
that Mr. Green is talking about because of the immense growth
of emissions from other parts of the world that we don't
control.
The second part is that if we cared about climate change,
what we would be doing is discussing a way of putting a price
on carbon dioxide or putting overall limit on greenhouse gas
emissions from all sources. We would not be discussing a mixed
bag of uneven and largely ineffective subsidies for different
kinds of favored energy that can get votes.
Mrs. Blackburn. I appreciate that.
Dr. Kreutzer, let me come to you. Let's talk about jobs,
because I look at what has happened with this global warming
agenda that we have had in front of us, and a couple of other
members and I that are on the dais were over in Copenhagen for
that climate summit a couple of years ago. And you just have to
wonder what's going on when it comes to jobs, and I know you
all have touched on that.
So when you look at this, this administration's global
warming agenda and you get to the end of it, would you say it
is a net job creator or a net job destroyer; and the EPA, their
regulations as you look at this and study the issue, do you see
it on net as a job creator or job destroyer?
Mr. Kreutzer. No. It was not on net a job creator and it's
not just the Heritage Foundation that would come to that
conclusion. We had a panel at Heritage that included economists
from the Brookings Institution, the Congressional Budget Office
and the Environmental Protection Agency back when we were
looking at the cap-and-trade legislation. None of them found
that cap-and-trade legislation stimulated the economy. The
argument was over how much it costs the economy, and there was
disagreement on that. But no, no serious economists really
looked at restricting carbon and energy as a job creator.
Mr. Stearns. The gentlelady's time has expired. Mr. Scalise
is recognized for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
having this hearing. Appreciate the panelists for being here. I
want to start, Mr. Breen, with you. In your statement, you
opened by saying it is an established consensus in the defense
community that our dependence on oil threatens our national
security. I've heard many people in the Defense Department, and
I'd agree with them, frankly, that our dependence on Middle
Eastern oil specifically is a threat to our national security.
I have heard of no established consensus that our dependence on
oil is a threat to our national security. Do you have any data
that backs this up, that creates this established consensus you
refer to?
Mr. Breen. I rely on the statements of the Secretary of
Defense, the Chairman of the Joint Chiefs of Staff, and all
three service secretaries when I say ``established consensus.''
Mr. Scalise. I have heard many of them express their
concern about foreign oil, and I'd make it even more specific
to Middle Eastern oil, but frankly, I would imagine if you
asked the Secretary of Defense to count how many billions of
dollars that American energy production actually yields to the
Federal Treasury to pay for our national security to fund the
Department of Defense, I hope you are not suggesting that if we
just shut down our oil manufacturing in the United States that
that would be a good thing for our national security. Is that
what you are saying?
Mr. Breen. No, of course not. I'm not saying that the use
of oil--and I want to be very clear on this point. I'm not
saying the use of oil is in any way bad for our national
security. What I'm saying, sir, is dependence on a single
source of fuel is a threat.
Mr. Scalise. Well, nobody is talking about--I support an
all-of-the-above energy strategy which says that you don't just
depend on oil but you absolutely explore for oil, you explore
for natural gas, you advance coal, you advance nuclear, you
advance wind, you advance solar. You do all of the above. But I
would hope that you would recognize that American energy
production is really the key to energy independence in this
country, and the fact that so many areas of American known
reserves and even potential reserves are shut off by Federal
policy, a threat to our national security.
That's why I was asking. You say that there is an
established consensus. That would imply that you've got some
kind of data to back that up and if you do, please get it to
me. When I hear people talking about concerns and threats to
our national security, it's things like Middle Eastern oil
dependency that is a real problem. But the fact that we produce
energy, oil, natural gas and others in this country, I haven't
heard anybody in the Defense Department implying there is a
consensus to the problem because it actually funds our national
security.
Mr. Breen. Sure. As I said, this is a silver buckshot
problem, first of all. Nobody is suggesting that oil is not
part of the solution.
Mr. Scalise. No, but your statement is not targeted towards
foreign oil. If we open up Keystone tomorrow, which I would
hope we would do--unfortunately, President Obama chose a
radical approach to saying no--but if we opened up Keystone
tomorrow, that is a million barrels a day we would be getting
from a friend that we wouldn't have to be getting from some of
these countries that don't like us. I think that would advance
our energy security. But your statement actually implies the
opposite.
Mr. Breen. Can I respond to that, sir?
Mr. Scalise. Well, do you have any data? I'm looking for
data. I mean, you are making a statement that there is an
established consensus about an area that you really haven't
supplied any information to back up.
Mr. Breen. There's data in my submitted written testimony.
A $10 increase in a barrel of oil costs the Department of
Defense an estimated $1.3 billion. That's because oil is a
globally--it is because it is a globally traded commodity. And
so you ask----
Mr. Scalise. My time is running out. I hope you recognize
that if we produced more of that in America, that would be
billions more. It would not only mean millions more American
jobs, which I think is a good thing, some people don't, but it
would also be billions more dollars that would come into the
Federal Treasury that would help fund an adequate Department of
Defense. That's money that funds our national security. And
maybe you don't see it that way.
I want to ask Dr. Kreutzer, because in your testimony you
talk about and highlight some of these green energy programs.
And I know you had talked with Dr. Burgess and others about
this loose definition of a green job which really is very
nebulous at best. But you talk about the loan program
specifically, and we have had hearings in this subcommittee on
the Department of Energy's loan program. The director, Dr.
David Frantz, has testified. And you talk about some of the
highlights that the administration has used, and there were
four in particular that David Frantz had listed. And of course,
we have all heard about Solyndra, $535 million just gone,
company went bankrupt. The President said, ``The future is
Solyndra.''
Mr. Kreutzer. Right.
Mr. Scalise. I guess that means he thinks the future is
bankruptcy and lost jobs. I sure think we should go a different
route.
But you also go further and talk about Beacon Power, First
Wind Holdings, Nevada Geothermal. Do you want to expand on what
you have seen in terms of what you've seen that the
administration highlights as successes in the green energy
sector?
Mr. Green. The markets are always seeking out cheaper, more
effective forms of energy and things that they can make money
on. If somebody requires a subsidy, that is a pretty good
signal that they couldn't make money in the market. And we saw
that played out. The loan administrator had two criteria that
were required to get that 1603 loan. And that first one is--not
the 1603 but the 1705. You had to be able to prove you couldn't
get private financing and you had to have a market-viable
project. Those are mutually exclusive. And we saw that play
out.
He gave--this was 2 years ago. The four examples he gave
were before anybody had gone into--had trouble, were Solyndra,
Beacon Power, both of whom have gone bankrupt since then.
Nevada Geothermal is having trouble. Their stock price is at 4
cents per share. And I apologize, I don't have the fourth one
in front of me.
Mr. Scalise. First Wind Holdings.
Mr. Green. First Wind Holdings. After they got the loan,
they had to--they tried to have an initial public offering. But
they had to withdraw it because of the problems.
Mr. Scalise. Appreciate that. Thanks, I yield back, Mr.
Chairman.
Mr. Stearns. Your time has expired.
The gentleman from Texas, Mr. Green, is recognized for 5
minutes.
Mr. Green of Texas. Thank you, Mr. Chairman. Sorry I wasn't
here. We have an energy subcommittee going on downstairs that
also has interest in green jobs. I appreciate the opportunity
to ask questions.
My district in Houston is the largest petrochemical complex
in the country, in the center of the world, our Nation's energy
sector. Many of the energy companies, both large and small,
have invested heavily in green technology and renewable energy.
Houston is now the home of nearly 40,000 green jobs, even
though we have a huge number of refinery jobs. We have five
refineries in our district and at least 20 chemical plants. So
we are not complaining about whatever color job they have,
whether they are green or not.
Dr. Sherlock, can you speak to the possible consequences of
the Federal Government's inconsistent and on-and-off-again
support for green and renewable energy over the past two
decades.
Ms. Sherlock. Especially in industries that have faced
expiring incentives or incentives have lapsed and then they've
retroactively reinstated, it's hard to plan, it's hard to
invest. It's hard to secure financing when you just don't have
certainty about what incentives are going to be available going
forward.
Mr. Green of Texas. Let me give you a benefit, having
served on this committee for a good while. A lot of the things
that were part of the Recovery Act were just building on the
2005 energy bill or energy law that was passed by a Republican
Congress and Republican President. And that is what I am
concerned about, the stop and start. We actually started some
of that.
In fact, I heard coming in, the testimony--Solyndra--that
was authorized, those loans were authorized under the 2005
energy law. And so granted, there was a bad investment. We
should have done better, but there are other things that we
could be doing.
Do you believe that looming expiration of the tax credits
being discussed at this hearing will create uncertainty in the
private sector and keep these very companies, some of them in
my district, from further investing in new technology and
creating these jobs?
Ms. Sherlock. Yes. With uncertainty about tax incentives,
there's reluctance to invest.
Mr. Green of Texas. Following my colleague from Louisiana,
coming from our area where obviously we believe in domestic
production, I want to ask some questions about national
security implications of energy. We cannot continue to depend
on hostile nations for a sizable amount of our energy needs,
whether it be Iran, Venezuela, or some of them use these
profits to build weapons and arsenals against us and our
allies.
Mr. Breen, how much money does America send overseas to pay
for overseas energy sources every day? Do you have that
information?
Mr. Breen. It's roughly $1 billion a day. Of course it
fluctuates as the market changes.
Mr. Green of Texas. Now, recently we've seen a reversal of
importing domestic oil for lots of reasons. Obviously, we are
doing better on conservation, which I think is part of whatever
solution we should have. But we are also producing more
domestic energy, and particularly liquids that we can use in
transportation fuel. Do you believe that increasing our
domestic energy production would reduce these costs?
Mr. Breen. I think increasing our domestic energy
production is all to the good and would. But let's remember
that this is a globally traded commodity we're talking about.
The U.S. demand has been static for quite some time, on the
very high, but that global demand continues to rise. So I think
it's unrealistic looking down the road to think we are going to
see lowering oil prices anytime soon.
Mr. Green of Texas. Well, we have seen lowering oil prices
in the last few weeks and for a number of reasons. Like you
said, it's a world price, and I can tell people if I drilled a
well in my backyard, believe me, I'd want to have the world
price on oil. So in Texas, I guess a lot of my fellow Texans
can say that. They just don't let me drill in my neighborhood.
Can you summarize for us ways in which developing and using
more domestic and renewable energy sources could improve our
national security?
Mr. Breen. Sure. There are several, and this varies from
the tactical all the way to the strategic. Strategically, it
comes down to cost as the point has been made here a couple of
times. Our economic prosperity and the amount of money we spend
on defense is the underpinning of our national security, right,
these things cost money. As you see increasing volatility in
the oil market, as you see prices in the long term I think rise
and continuing to rise predictably, having alternative sources
for the Department of Defense, which is the number one fuel
user in the Federal Government, is all to the good and
developing advanced technologies is all to the good.
Some of these technologies have tactical applications. At
the tactical level, there was some mention made earlier of
forward operating bases in biofuels, which is a bit of an
apples-to-oranges comparison. But at the tactical level we've
seen the highly successful use, under battlefield conditions,
of wind and solar projects that are designed to keep tactical
forward operating bases free from the need to resupply
generators for fuel. So these have direct battlefield
implications. Down to the point of a backpack solar panel that
India Company, part of the Fifth Marine Corps, is currently
using in Afghanistan to great effect.
Mr. Green of Texas. OK. Our dependence on energy from
hostile nations has dangerous implications for our Nation's
security. It makes economic, environmental, and national
security sense to transition away from these nations and
develop newer, smarter, and domestic sources of energy, like
you said, that helps our military. And I know I only have 3
seconds left. So, Mr. Chairman, thank you.
Mr. Burgess [presiding]. The gentleman yields back.
I recognize the other gentleman from Texas, Mr. Barton, the
chairman emeritus of the committee.
Mr. Barton. Thank you, Mr. Chairman. I didn't--wasn't here
at the beginning. I was downstairs on the greenhouse gas
hearing in the energy subcommittee. So I have scanned the
testimony, but I have missed the oral questioning so far. So if
I ask something that is redundant, I want to apologize.
My first question would be a general question. Do we have
an agreed-upon definition of what a green job is? I see a lot
of shakes of head.
Mr. Green. Not that any of us have heard a coherent
definition of green jobs. Of course it's very difficult to
define a green product or a green thing. To do a life-cycle
analysis even on a foam cup would be tricky. To do it on a
person's job would be impossible.
Mr. Barton. Let me give you some examples and you tell me
if this is a green job. If a farmer grows corn for food 1 year,
and the next year he on that same land and the same acreage, he
grows the same crop of corn but he grows it for ethanol, is
that a green job?
Mr. Kreutzer. I have no idea.
Mr. Green. I would say it's probably anti-green, given the
effect ethanol has.
Mr. Barton. All right. What if the farmer the next year
switches from corn to cotton for fiber. Or a cotton farmer
switches to corn. Is that a green job?
Mr. Kreutzer. Yes, I think you're getting straight to the
point that it's very difficult to define, and it is not clear
that it is a useful exercise in the first place.
Mr. Barton. If a truck driver is driving a truck that runs
on diesel, and that truck switches from diesel to natural gas,
is that a green job?
Mr. Green. I think green job proponents would say yes, but
only because it has a lower carbon footprint.
Mr. Barton. OK. What about a logger who cuts down trees in
the forest and that's all--he's always done that. Is that a
green job?
Mr. Kreutzer. Surprisingly, a large fraction of logging
jobs, according to the BLS, are considered green. I don't know
that I would consider it green.
Mr. Barton. So we don't, we don't really have a definition
of what a green job is. I mean, a commodity trader who is
trading in green energy credits, for global warming credits in
the European market, would that be a green job? Credits that
don't exist, that actually--you know, trees not planted in
India or power plants not--you know, coal plants not built in
India so they take credit on the market.
Mr. Kreutzer. Yes. I am certainly not going to defend that
as a green job, and I don't think the BLS looked at any jobs in
the financial sector as being green.
Mr. Barton. OK. Well, I just--when I was briefed on this
hearing, it struck me there is such a thing as a green job. I
mean, you know, if you switch from a source that uses a lot of
energy to a source that uses less energy, you know, I certainly
think somebody going to work in a solar factory that didn't
exist, if the solar factory stays in business and actually
produces solar panels that are sold and used, I would say that
would be a green job.
I think somebody working in the wind energy sector that
didn't exist, that actually generates electricity that's
actually used, I think that is a green job. So I do think there
is such a thing, and I do think you can create green jobs. But
I also think there is also a lot of mythology and double-
counting about what green jobs are.
Is there a better way for the Federal Government to create
green jobs in some of the programs that we talked about today?
And if so, what would that way be? I will ask Mr. Montgomery
that question.
Mr. Montgomery. Thank you. Yes, I think there clearly is,
and it's to focus on what we are trying to accomplish with our
energy and environmental policies. If what we care about is
greenhouse gas emissions, the way to deal with that is by
addressing greenhouse gas emissions, and the way to determine
what we are doing is by doing an inventory of our greenhouse
gas emissions. We don't learn anything about greenhouse gas
policy by trying to calculate the number of jobs that are being
created by it.
Likewise, if our objective is to deal with mercury, what
we--you know, our policy to--you know, if we want to, if we
want to create green jobs reducing the amount of mercury that's
being released into the atmosphere, then our policy needs to
address mercury. It needs to address it broadly and
evenhandedly, not by picking out the smallest source and
regulating it into nonexistence. And it doesn't matter how many
people are involved in doing that--actually it does matter,
because the more people it takes to do it, the more it costs
us, and the less they can do that's actually producing goods
and services that people want to consume.
So I think if we want to create green jobs, if we want to
create the number of green jobs that is consistent with
maximizing the economic welfare of the country, we would stop
counting them completely and we would focus our policy
attention on solving the problems of energy security and
environment in themselves.
Mr. Barton. I agree. My time has expired, Mr. Chairman. Let
me just end up with this editorial note. I do think, however
you define a green job, at some point in time it has to be a
job that is sustainable in the marketplace with either no
government assistance or minimal government assistance. If you
can't meet that definition over time, then it is not a job at
all and shouldn't be counted.
With that, I yield back.
Mr. Burgess. I thank the chairman emeritus for his
observation and editorial comments.
I recognize the gentleman from Colorado, 5 minutes for
questions.
Mr. Gardner. Thank you, Mr.Chairman, and thank you to the
witnesses for being here today.
Dr. Sherlock, I wanted to go back to this estimate of jobs
supported and created by the section 1603 grant program that I
believe you provided; is that correct?
Ms. Sherlock. Yes.
Mr. Gardner. At the bottom it says Notes and it says,
``potential jobs created by the section 1603 grant are
calculated as 39 percent of the estimated jobs supported, as
reported in the NREL Study. Induced jobs are not included in
the potential job creation section as such estimates are less
reliable than those presented for direct and indirect jobs.
These figures are provided for illustrative purposes and may
vary according to factors described in the text.''
So you've got induced jobs, direct and indirect jobs, 39
percent of estimated jobs. What does this mean?
Ms. Sherlock. It means that the numbers in the bottom half
of the table are 39 percent of the numbers presented in the top
half of the table. I did not provide the induced jobs in the
bottom half of the table, just because it would be
extrapolating an uncertainty that I believe was already very
uncertain.
Mr. Gardner. Very uncertain in terms of the number of jobs
created?
Ms. Sherlock. Induced. Induced jobs. When you're looking at
jobs, direct jobs, and then extend the model to indirect jobs,
and then to extend the model again to induced jobs, you're just
adding additional variables, additional assumptions, additional
degrees of uncertainty at each stage in the modeling process.
Mr. Gardner. So what is an induced job?
Ms. Sherlock. So an induced job would be because the
workers who are employed in construction of the solar facility
or the wind farm go out and spend on groceries,and so because
they're spending more on groceries, the grocery store needs to
hire more employees. So that would be--
Mr. Gardner. And so a direct job would be?
Ms. Sherlock. The actual construction work itself.
Mr. Gardner. And an indirect job would be?
Ms. Sherlock. The manufacture of the steel that goes into
the facility.
Mr. Gardner. OK. And then this 1603 program, I believe you
stated in your testimony that it cost $17 billion?
Ms. Sherlock. That's over the 5-year budget, so yes.
Mr. Gardner. So $17 billion 5-year budget, and so these 39
percent of the direct, indirect, and induced jobs cost how much
a year?
Ms. Sherlock. Well, this is only looking at jobs in the
first couple years of the program, so this would be about 10
billion, roughly.
Mr. Gardner. So $10 billion for the first 2 years of the
program?
Ms. Sherlock. Roughly.
Mr. Gardner. To create 40,000 jobs.
Ms. Sherlock. Depending on which number you're looking at--
if you're looking at the induced, the direct, or the indirect.
Mr. Gardner. Which number should I look at?
Ms. Sherlock. It depends what you want to be counting. Do
you want to count the direct?
Mr. Gardner. How many jobs did the 1603 grant create?
Ms. Sherlock. What type of jobs?
Mr. Gardner. Jobs. I just want to know how many jobs were
created.
Ms. Sherlock. If you're looking at the direct jobs, this
one estimate has direct jobs created at 3,666 in the
construction phase and direct jobs created at 355. Direct jobs
would just be the construction jobs and then the ongoing
operations and maintenance jobs. But if you wanted to look at
supporting jobs in other industries, then you'd want to look at
the other figures.
Mr. Gardner. So for direct jobs, just if we look at the
first few, this is average jobs per year. It is 355 jobs per
year. In 2 years, 355 jobs created a year, $10 billion?
Ms. Sherlock. That would be jobs per year going forward. So
these would be jobs that would be retained, average jobs per
year going forward, yes.
Mr. Gardner. For $10 billion.
Ms. Sherlock. Yes.
Mr. Gardner. Shifting gears and talking a little bit about
some of the talk we have had on taxes--and Dr. Sherlock, I will
leave you out of this. But Dr.Kreutzer, and I will go down the
line, if I could get this answered, do you believe increasing
taxes will result in lower costs of energy?
Mr. Kreutzer. No.
Mr. Gardner. Dr. Montgomery.
Mr. Montgomery. That one I could answer ``no.''
Mr. Gardner. Dr. Green.
Mr. Green. No.
Mr. Gardner. Mr. Breen.
Mr. Breen. You'd have to ask an economist. I'm sorry.
That's not why I'm here.
Mr. Gardner. OK. And then would ask another question about
the President made a statement in 2008. As a matter of public
policy, does it make--he made a statement in 2008 where he said
under his plan--and he was specifically referring to cap-and-
trade--electricity rates would necessarily skyrocket. Do we
have--you know, we need for our economy to succeed for jobs to
grow, we need lower cost energy; is that correct?
Mr. Kreutzer. Yes. It grows better with lower cost energy.
Mr. Gardner. Dr. Montgomery.
Mr. Montgomery. The real growth in our economy is certainly
dependent on the cost of producing energy. The less it costs to
produce energy, the more we have left over for doing other
things.
Does it affect jobs? No. I think the best estimate is jobs
are going to be at full employment in this economy most of the
time when we are growing, except for temporary hiccups. None of
these programs are going to affect that at all.
Mr. Gardner. Dr. Green.
Mr. Green. Lower cost energy leads to lower cost goods and
services, greater consumption, and therefore greater economic
prosperity. And I don't think there is anybody really who
argues against that option, that notion. And then when the
country is growing, of course, we have lower unemployment
rates; therefore, there are more jobs.
Mr. Gardner. Mr. Breen.
Mr. Breen. Again, I am sure that at the Bureau of Labor and
Statistics, there is somebody else you might have called who
would have been happy to answer the question, but I can't.
Mr. Gardner. So do policies that result in higher energy
costs hurt the economy?
Mr. Kreutzer. Yes. If we have policies that make energy
costs go up, that does not--it makes it more expensive and
we're going to get fewer goods.
Mr. Gardner. Dr. Montgomery.
Mr. Montgomery. Not necessarily. It depends on how they do
it, and I know your time is short.
Mr. Gardner. Dr. Green.
Mr. Green. Well, we see this when oil prices spike up, the
economy tends to contract. So clearly the relationship is
there. Higher priced energy, lower economic output.
Mr. Gardner. Mr. Breen, I will give you another shot.
Mr. Breen. Same answer.
Mr. Gardner. Thank you.
Mr. Burgess. The gentleman's time has expired. I think if
it is OK with everyone, we have dwindled down on the dais here,
but I would like to recognize Ranking Member DeGette for a
follow-up question.
Ms. DeGette. Thank you very much, Mr. Chairman.
So I just wanted to follow up on a couple of things. The
first one is I really thought that Mr. Barton actually-- too
bad he's not here. I thought he made two good points. The first
good point is that if you are going to create green jobs, they
should be sustainable over time. Just like any other government
support you are going to give to any program, whether it is in
traditional fuels or anything else, it should be viewed as a
start-up, not as over-time, say since 1918.
But the second thing I think we need to figure out, and I
think that Mr. Barton really made a good point about this, is
that if we are going to be looking at these renewable energy
programs and alternative energy as job creators, we really
should kind of nail down the types of jobs. And, Dr. Sherlock,
that is the point you are making is, we need to really nail
down what types of jobs. And to that end, Mr. Chairman, maybe
you can talk to Chairman Stearns about the concept of actually
bringing in some of these agencies that are defining these jobs
in these ways, like the Bureau of Labor Statistics and the
other agencies, so they can explain to us. Rather than just
criticizing this in a vacuum, we can find out why they are
defining some of these jobs as green jobs and others as not
green jobs. That's my only suggestion.
Mr. Breen, I just wanted to ask you, you were trying to
answer Mr. Scalise's question about domestic oil versus foreign
oil, and did that make a difference in terms of our oil
independence? And he didn't really let you get your whole
answer out, so I thought I'd give you this opportunity to
complete your answer.
Mr. Breen. Thank you. I appreciate that very much. My
answer is that the problem is one of single-source dependence.
If you need a single--if you rely on a single globally traded
commodity, and again, the foreign domestic distinction is
somewhat--somewhat vacuous, right? This is a globally traded
commodity. It, again, is dependent on a global market, right?
Demand for that commodity is increasing faster than production.
I think that is very clear. In some cases, dramatically faster
than production.
So if you need that one commodity to run all of your
military operations, not to mention 97 percent of your domestic
transportation sector, I think you have a national security
problem. And so what you ought to be looking for is
opportunities to find choice, which is very much a free market
thing. So that the Defense Department or a consumer can go to a
pump, and if gas costs too much, they can buy something else to
power their vehicle. That's not outside the realm of
technological or economic possibility. It's just something that
we have to invest in because, like many other technologies,
these are emerging technologies.Of course at this point,
they're nascent and they're expensive. But it's worth investing
in these things now.
Ms. DeGette. So thank you. That jars my memory. A couple
months ago--I don't think Mr. Burgess was there--but I was at a
conference in Brazil, and one of the things they were talking--
you weren't there? No, he wasn't there.
Mr. Burgess. Let the record show I was not on that junket.
Different bill.
Ms. DeGette. It actually wasn't a junket. It was a very
interesting conference on Brazil's energy policy. And one of
the things that I learned which I hadn't known before was
Brazil has a lot of indigenous biofuels. And what they have
done is, with their cars they have adapted their fuels, their
automobile fuels, so that they can--and their automobiles, so
that they can run on any mixture of petroleum and biofuels and
ethanol.
And it was fascinating to me to see, because it is all
dependent on market forces. So if oil is low, the price is low,
they can fuel up with oil. If there is some kind of a problem
or a--you know, if the cartel raises the prices, then they can
shift almost entirely to biofuels. And I thought that was just
really an interesting concept and one that supports what you
are saying.
Thank you very much, Mr. Chairman. I yield back.
Mr. Burgess. The gentlelady yields back. I thank you for
that.
Let me just ask in the way of a follow-up, have any of you
had any experience with the RIN program, the Renewable
Identification Number program, that has come to this
committee's attention? This is a program by the EPA to allow
the sale--it reminded me very much of cap-and-trade when I
heard about it, except it's an agency-derived program that
allows the sale of these renewable identification numbers in
order for people to blend their diesel with a certain amount of
biofuel. And as it turns out, many of these places that are
supposedly biofuel production areas, where companies have
brought those RIN credits, in fact don't exist, or a church
parking lot, or a rummage sale. But they're not a biofuel
producer.
And it really--Dr. Green, I saw in your bibliography that
you--and it is quite impressive, very extensive--but you had as
one of the pieces that you have written, the intractable flaws
of the cap-and-trade scheme, and it jarred my memory about the
RIN program and how terribly flawed this was and took all of
the glamor of mortgage-backed securities and brought it to the
renewable energies market.
Would you care to share with us a little bit about what you
wrote on that intractable problem with cap-and-trade?
Mr. Green. Sure. Cap-and-trade is actually a venerable way
of controlling certain kinds of pollution. If you have a
localized pollutant, one pollutant to one sector, one
jurisdiction, available control technologies that are
affordable, cap-and-trade is a useful technique. None of that
is true for the greenhouse gases. And none of that is true,
generally speaking, in renewable energy credits, which are
another form of cap-and-trade. And what you've pointed out is
that because of these complexities, multiple jurisdictions,
rivalrous rent-seeking groups, and special interests, disparate
pollutants that are non-equivalent in many ways, you just
create a very fertile environment for game-playing and for
corruption.
And we've seen this with tradeable credits in Europe for
carbon reduction. We'll see it wherever it's deployed, simply
because you create incentives for people to behave badly, and
they'll behave badly.
Mr. Burgess. So noted. Well, I want to thank the panelists.
It has been a very informative morning and certainly appreciate
your time.
What do I have to say here? I want to thank the witnesses
for coming today and for the testimony, and for members for
their devotion to this hearing today. The committee rules
provide that members have 10 days to submit additional
questions for the record to the witnesses. Without objection,
so ordered.
And this hearing stands adjourned.
[Whereupon, at 12:13 p.m., the subcommittee was adjourned.]
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