[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]






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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

                              ----------                              
                                                                   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

                              ----------                              


                         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:]

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    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.]
    [Material submitted for inclusion in the record follows:]

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