[Senate Hearing 112-188]
[From the U.S. Government Publishing Office]
S. Hrg. 112-188
QUADRENNIAL ENERGY REVIEW ACT
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE DEPARTMENT OF ENERGY'S QUADRENNIAL TECHNOLOGY
REVIEW (QTR) AND TWO BILLS PENDING BEFORE THE COMMITTEE: S. 1703--
QUADRENNIAL ENERGY REVIEW ACT OF 2011, AND S. 1807--ENERGY RESEARCH AND
DEVELOPMENT COORDINATION ACT OF 2011
__________
NOVEMBER 15, 2011
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington MIKE LEE, Utah
BERNARD SANDERS, Vermont RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan DANIEL COATS, Indiana
MARK UDALL, Colorado ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Holliday, Chad, Chair, American Energy Innovation Council,
Chairman, Bank of America...................................... 35
Koonin, Steven E., Under Secretary for Science, Department of
Energy......................................................... 8
Moniz, Ernest J., Cecil and Ida Green Professor of Physics and
Engineering Systems, Director, MIT Energy Initiative,
Massachusetts Institute of Technology, Cambridge, MA........... 14
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 4
Pryor, Hon. Mark L., U.S. Senator From Arkansas.................. 5
APPENDIX
Responses to additional questions................................ 37
QUADRENNIAL ENERGY REVIEW ACT
----------
TUESDAY, NOVEMBER 15, 2011
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:04 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. The hearing will come to order. Today, we're
here to discuss innovation and energy technology and the
prioritization and integration of the government's energy
activities. These issues are critically important to the
country's energy future and to the work of the committee.
Success in the task will mean the development of
environmentally responsible energy technologies that will
strengthen America's competitiveness and yield increased
national security through decreased energy dependence.
The private sector must, of course, play a vital role in
innovation and bringing that innovation to the marketplace to
address our energy needs.
But there can be no doubt that the government has and will
continue to have an essential role to play as well. Reports
from the President's Council of Advisors on Science and
Technology, PCAST, and from the Department of Energy itself,
provide significant information on these issues from the
country's leading experts inside and outside the government.
PCAST has provided a report on accelerating the pace of
change in energy technologies through an integrated Federal
energy policy.
In addition, as recommended by the PCAST report, the
Department of Energy recently completed the first of its
Quadrennial Technology Reviews. This is a review intended to
provide us with a framework for understanding, discussing and
establishing energy-technology priorities and for advancing
those priorities through the Federal budget process.
Through the review of its own programs, the Department of
Energy has provided valuable insight into areas in which
Federal programs are strong, as well as areas which they
suggest that we are under investing.
We also will hear testimony about 2 pending bills before
the committee that I believe would help ensure continued
progress and understanding in addressing our nation's energy
research needs. S. 1703, which Senator Pryor has introduced,
would mandate that a comprehensive review of the energy
programs and technologies of the Federal Government be
conducted every 4 years. I'm cosponsoring that bill. I look
forward to hearing from Senator Pryor and our witnesses on that
legislation.
The second bill we're discussing is S. 1807, the ``Energy
Research and Development Coordination Act of 2011.'' This is a
bill I have introduced to establish an interagency planning and
budget process for all of the Federal agencies involved in
energy research, development and demonstration.
There can be no doubt about the urgent need for our country
to address its energy challenges. We need to bring together the
best minds throughout the administration as well as outside the
government to work on the challenges that we face.
The bill I've introduced would create a national energy
research coordinating council co-chaired by the director of the
White House Office of Science and Technology Policy and the
Secretary of energy that would be independent of any individual
agency.
The council would include the director of the Office of
Management and Budget and the heads of any agency with a budget
for energy R&D that exceeds $10 million.
The council would produce a governmentwide plan to achieve
solutions to problems in energy supply, transmission and use,
including associated environmental problems in the short- and
the medium- and the long-term.
The council would also prepare a consolidated budget
proposal and budget guidance to the agencies for each fiscal
year to implement its comprehensive plan.
I believe S. 1807 would go a long way toward making our
Federal energy research efforts as effective and efficient as
possible, and I look forward to discussing it with our panel
today as well.
In connection with our consideration of these issues, we
received a written statement from the American Energy
Innovation Council. This is a group of America's business
executives from some of our largest companies. We met with Norm
Augustine and Bill Gates and various others from that council
recently.
The council brings a useful perspective on these issues and
on the importance of the legislation we're considering. They
support both bills. They note that technology innovation,
especially in energy, is at the heart of many of the central
economic, national security, competitiveness and environmental
challenges that we face.
They go on to say, ``As business leaders, we know firsthand
how the private sector can be mobilized to attack these
problems. We also know that government must play a vital role
in the process.''
I look forward to the discussion on these critical issues.
Let me turn to Senator Murkowski for any opening comments
she has before we hear from Senator Pryor.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman, and thank you
for your initiatives that we have before us this morning.
I welcome the opportunity to consider the administration's
recent technology review and our bipartisan legislation to
establish a Quadrennial Energy Review.
I have long believed that our nation needs to develop an
energy policy that is lasting, something that can endure, a
policy that won't be completely revamped every time we have a
new administration that comes into office or every time
Congress passes a new energy policy act. That's why I'm pleased
to be a cosponsor, along with you, of S. 1703, and I appreciate
the leadership of Senator Pryor in advancing this as an
initiative.
This requires the Department of Energy to conduct a review
every 4 years to help develop a coordinated governmentwide
energy policy.
It really is somewhat surprising to recognize that we don't
already have something like a QER in place. Energy is critical
to almost everything that we do, and the Federal Government has
implemented a wide variety of subsidies, regulations and
mandates within the energy area.
But despite that, there really is no regular, high-level
assessment of whether or not our policies are effective and
whether they can be consolidated, improved or even repealed.
Given the challenges that I think that we face today, it
seems more appropriate than ever that we require something like
the QER.
Of course, I recognize that conducting an interagency study
and actually putting a long-term policy in place are 2 very
different challenges, and that's why any study or any plan must
involve all parties from the start. If there's not buy-in
across the political aisle from Capitol Hill to the White
House, from industry and NGO's alike, there's little chance
that the review will help generate a long-term strategy that
can survive the administrations and new Congresses.
I have also long advocated that the government should not
pick winners and losers when it comes to new technologies. In
terms of energy innovation and addressing our energy needs,
there is a role for us to invest in research, absolutely, but I
would suggest that in the vast majority of cases, if not in all
cases, industry and the market will figure out a commercially
viable solution much more quickly and efficiently than we here
in the government would.
I think a good example of this is the development that
we've seen in the fracking technologies to access our nation's
tremendous shale-gas resources. Last week, we held a hearing
here in the energy committee on the export of LNG, which very
few of us would have anticipated just a few short years ago. We
thought that we were going to need to be importing natural gas
from foreign suppliers and not be in a position to potentially
export a small portion of our expanding supply to other
nations.
So as we consider a process to develop a long-term energy
plan, I think that we need to keep examples like this in mind.
We can set goals for our energy technologies, current and
future, and we can lay out a stable statutory and regulatory
environment to achieve those goals, but there is a limit to
what we can do. There is a limit to the effect that government
can have, and, from time to time, there will be developments,
perhaps unexpected developments, that require us to reevaluate
our strategy and our policies.
Mr. Chairman, I'm hopeful that today's hearing will
reinforce the need for a QER and highlight its importance to
the formation of a truly balanced and long-term energy policy.
Thank you, again, for scheduling the hearing and I look
forward to hearing from witnesses. Again, thank you to Senator
Pryor.
The Chairman. Thank you very much.
Senator Pryor, we're glad to have you before the committee
to describe and discuss your legislation as S. 1703. As Senator
Murkowski indicated, we both strongly support your efforts, so
please go ahead, and maybe we can persuade Senator Franken to
be a cosponsor. That would be good.
Senator Franken. Thank you. I require a lot----
The Chairman. All right. We'll work on him.
Go right ahead, Senator Pryor.
STATEMENT OF HON. MARK L. PRYOR, U.S. SENATOR
FROM ARKANSAS
Senator Pryor. Thank you, Mr. Chairman, and thank you for
having me here today, and thank you both for your very kind
words about S. 1703.
I appreciate the opportunity to present the Quadrennial
Energy Review Act of 2011 before this committee.
You don't see a lot of bipartisan support for legislation
these days, yet we have a different story to tell here today.
I believe it's because we can all recognize the need for a
long-term energy strategy and we can all foresee the economic
and security risks that lie ahead for America without one.
I especially want to thank Chairman Bingaman and Ranking
Member Murkowski for their original co-sponsorship, as well as
Senators Coons, Baggage, Burr, Alexander and Tester.
I am optimistic about our energy future. Time and again,
America has shown her ability to seize opportunities when they
present themselves and to create them when they do not. I'm
convinced America can develop and deploy new energy
technologies that are more efficient, clean and enhance our
national security.
In my State of Arkansas, we're leading the Nation in
responsible development of our vast natural-gas reserves. We
need to leverage this creativity, entrepreneurial culture and
restored leadership in science and technology to spread
innovation in the energy sector and spur economic growth.
Our energy needs mirror our security challenges, and the
solution to meeting these needs can be addressed in a familiar
fashion.
In the end, the country that best manages its energy
resources will lead the 21st century and provide its people
secure energy future. The U.S. needs to win the energy race,
and this bill will help put us on that path.
One of the biggest gaps in Federal energy policy is the
lack of an overarching vision in coordination among Federal
agencies to define how the United States produces and uses
energy. Every president since Richard Nixon has called for
America's independence from oil. We also need to make sure st
that our nation has a 21st century electric grid and matches
supply with demand.
If we want to create a more secure energy future for
America, then we need to develop a national energy plan that
coordinates and integrates the energy policies of the various
Federal agencies. The development of such a policy would
enhance our energy security, create jobs and mitigate
environmental harm.
Secretary of Energy Steven Chu recognizes this challenge.
In 2009, he tasked the President's Council of Advisors on
Science and Technology, PCAST, with identifying and
recommending ways to accelerate the large-scale transformation
of energy production, delivery and use.
Led by Dr. Moniz, who is here today, one of PCAST's most
important recommendations was for the administration to
establish a new process that can force a more coordinated and
robust Federal energy policy, a major piece of which is
advancing energy innovation.
The report recommends, ``The president should establish a
quadrennial energy review process that will provide a multiyear
roadmap that lays out in integrated view of short, intermediate
and long-term energy objectives, outlines legislative proposals
to Congress, puts forward anticipated executive actions
coordinated across multiple agencies and identifies resource
requirements for the development and implementation of energy
technologies.''
Last year, the American Energy Innovation Council sounded a
similar call. This group of prominent business leaders came
together to call for a more vigorous public- and private-sector
commitment to energy innovation. Its members include former and
current high-ranking executives from Lockheed Martin, Xerox,
Microsoft, Bank of America, DuPont, GE and Cummins.
Their recent report, Catalyzing American Ingenuity, noted,
and, again, I quote, ``The nation needs a robust energy plan to
serve as a strategic technology and policy roadmap. We support
DOE's Quadrennial Technology Review, which we see as an
important and meaningful first step toward developing a
national energy strategy. The Federal Government should build
on the QTR and move quickly toward a governmentwide QER.''
Our legislation specifically addresses these
recommendations and is modeled after the highly regarded
Quadrennial Defense Review. The QDR is a legislatively mandated
review of defense strategy priorities and sets a long-term
course for the Department of Defense to assess the changing
defense threats and challenges that our nation faces. It is my
hope that the Quadrennial Energy Review can do the same for our
national energy programs.
As the lead agency in support of energy, science and
technology innovation, the Department of Energy has taken a
first step to develop a national energy plan by conducting a
Quadrennial Technology Review of the energy, technology
policies and programs of the department.
The QTR serves as the basis for DOE's coordination with
other agencies and on other programs for which the department
has a key role. I commend Dr. Koonin, who's also here today,
for leading the QTR, and I look forward to his testimony today.
The next step is to build upon DOE's report and perform a
Quadrennial Energy Review. The QER would establish
governmentwide energy objectives, coordinate actions across
Federal agencies and provide a strong analytical base for
Federal energy policy decisions.
The review can significantly contribute to the development
of a national energy plan. It would provide an in-depth
assessment of energy end-use sectors, whether they are
buildings, industrial facilities, transportation, electric
power or agriculture, and the policy choices for increasing our
domestic-energy production.
The review would also assess our energy-supply options and
evaluate how we store, transmit and distribute energy across
the country.
Our bill, the ``Quadrennial Energy Review Act of 2011,''
would authorize the president to establish an interagency
working group of senior-level government officials to submit a
quadrennial energy review to Congress by February 1, 2014, and
every 4 years thereafter.
The group would be co-chaired by the secretary of energy
and the director of the Office of Science and Technology
Policy.
With the QER, we can achieve the bipartisan goals of
creating jobs, increasing domestic energy production and
producing enhanced energy security while moving America toward
a cleaner and healthier environment.
Thank you again for the opportunity to present this bill.
I'll look forward to working with the committee on its passage.
[The prepared statement of Senator Pryor follows:]
Prepared Statement of Hon. Mark L. Pryor, U.S. Senator From Arkansas
on s. 1703
Chairman Bingaman, Ranking Member Murkowski and Members of the
Committee:
Thank you for having me here today. I appreciate the opportunity to
present the Quadrennial Energy Review Act of 2011 before this
committee. You don't see a lot of bipartisan support for legislation
these days. Yet we have a different story to tell here today. I believe
it's because we can all recognize the need for a long-term energy
strategy, and we can all foresee the economic and security risks that
lie ahead for America without one. I especially want to thank Chairman
Bingaman and Ranking Member Murkowski for their original co-
sponsorship, as well as Senators Coons, Begich, Burr, Tester and
Alexander.
I am optimistic about our energy future. Time and again, America
has shown her ability to seize opportunities when they present
themselves and to create them when they do not. I am convinced American
can develop and deploy new energy technologies that are more efficient,
clean and enhance our national security. In my State of Arkansas, we
are leading the nation in the responsible development of our vast
natural gas reserves. We need to leverage this creativity,
entrepreneurial culture, and a restored leadership in science and
technology to spread innovation in the energy sector and spur economic
growth.
Our energy needs mirror our security challenges, and the solution
to meeting these needs can be addressed in a similar fashion. In the
end, the country that best manages its energy resources will lead the
21st century and provide its people a secure energy future. The U.S.
needs to win the energy race and this bill will help put us on that
path.
One of the biggest gaps in federal energy policy is the lack of an
overarching vision and coordination among federal agencies to define
how the United States produces and uses energy. Every president since
Richard Nixon has called for America's independence from oil. We also
need to make sure that our nation has a 21st century electric grid that
matches supply with demand. If we want to create a more secure energy
future for America, then we need to develop a national energy plan that
coordinates and integrates the energy policies of the various federal
agencies. The development of such a policy would enhance our energy
security, create jobs and mitigate environmental harm.
Secretary of Energy Steven Chu recognizes this challenge. In 2009,
he tasked the President's Council of Advisors on Science and Technology
(PCAST) with identifying and recommending ways to accelerate the
transformation of energy production, delivery, and use. Led by Dr.
Moniz, one of PCAST's most important recommendations was for the
Administration to establish a new process that can forge a more
coordinated and robust Federal energy policy, a major piece of which is
advancing energy innovation. The report recommends:
``The President should establish a Quadrennial Energy Review
process that will provide a multiyear roadmap that lays out an
integrated view of short-, intermediate-, and long-term energy
objectives; outlines legislative proposals to Congress; puts forward
anticipated Executive actions coordinated across multiple agencies; and
identifies resource requirements for the development and implementation
of energy technologies.''
Last year, the American Energy Innovation Council sounded a similar
call. This group of prominent business leaders came together to call
for a more vigorous public and private sector commitment to energy
innovation. Its members include former and current high-ranking
executives from Lockheed Martin, Xerox, Microsoft, Bank of America,
DuPont, GE and Cummins, Inc. Their recent report, Catalyzing American
Ingenuity, noted:
``The nation needs a robust National Energy Plan to serve as a
strategic technology and policy roadmap. We support DOE's Quadrennial
Technology Review, which we see as an important and meaningful first
step toward developing a national energy strategy. The federal
government should build on the QTR and move quickly toward a
government-wide QER.''
Our legislation specifically addresses these recommendations and is
modeled after the highly-regarded Quadrennial Defense Review. The QDR
is a legislatively-mandated review of defense strategy and priorities
that sets a long-term course for the Department of Defense to assess
the changing defense threats and challenges that the nation faces. It
is my hope that the Quadrennial Energy Review can do the same for our
national energy programs.
As the lead agency in support of energy science and technology
innovation, the Department of Energy has taken the first step to
developing a national energy plan by conducting a Quadrennial
Technology Review of the energy technology policies and programs of the
Department. The QTR serves as the basis for DOE's coordination with
other agencies and on other programs for which the Department has a key
role. I commend Dr. Koonin for leading the QTR and I look forward to
his testimony today.
The next step is to build upon DOE's report and perform a
Quadrennial Energy Review. The QER would establish government-wide
energy objectives, coordinate actions across Federal agencies, and
provide a strong analytical base for Federal energy policy decisions.
The Review can significantly contribute to the development of a
national energy plan. It would provide an in-depth assessment of energy
end use sectors--whether they be buildings, industrial facilities,
transportation, electric power or agriculture--and the policy choices
for increasing our domestic energy production. The Review would also
assess our energy supply options and evaluate how we store, transmit
and distribute energy across the country.
Our bill, the Quadrennial Energy Review Act of 2011, would
authorize the President to establish an Interagency Working Group of
senior level government officials to submit a Quadrennial Energy Review
to Congress by February 1, 2014, and every 4 years thereafter. The
Group would be co-chaired by the Secretary of Energy and the Director
of the Office of Science and Technology Policy.
With the Quadrennial Energy Review, we can achieve the bipartisan
goals of creating jobs, increasing domestic energy production, and
providing enhanced energy security, while moving America toward a
cleaner and healthier environment. Thank you again for the opportunity
to present this bill and I look forward to working with the Committee
on its passage.
The Chairman. Thank you for taking the initiative to
introduce this in this Congress and we look forward to working
with you.
Senator Pryor. Thank you. Thank you very much.
The Chairman. So thank you. I appreciate it.
We have a second panel, which is made up of Dr. Steven
Koonin, who is Undersecretary for Science in the Department of
Energy, and Dr. Ernest Moniz, who is the Director of the MIT
Energy Initiative, and, of course, a professor of physics and
engineering systems at MIT.
Let me just say very briefly, Dr. Koonin was the leader in
preparation of this Quadrennial Technology Review that we are
discussing today. He also recently announced he will be
stepping down from his position at the Department of Energy.
I'd like to take the opportunity to thank him not just for
being here today and for the work on this Quadrennial
Technology Review, but also for his service, more generally,
and his contributions to energy policy and research here in the
Department of Energy.
I'd also, of course, like to welcome Dr. Ernie Moniz, who's
a regular witness before our committee. As he probably is well
aware, he is a member of the President's Council of Advisors on
Science and Technology, was one of the co-chairs of PCAST's
Energy Technology Innovation System Working Group.
So these are the right people to talk to us. We will, of
course, make your full statements a part of our record, and we
would like you to each take 6 or 8 minutes and just give us the
main points you think we need to understand, and then we will,
obviously, have some questions.
Dr. Koonin, why don't you begin?
STATEMENT OF STEVEN E. KOONIN, UNDER SECRETARY FOR SCIENCE,
DEPARTMENT OF ENERGY
Mr. Koonin. Chairman Bingaman, Ranking Member Murkowski and
members of the committee, I'm pleased to be here today to
discuss the Department of Energy's first Quadrennial Technology
Review and proposed legislation related to it.
The QTR was focused on DOE's activities that research,
develop and demonstrate energy technologies. Its goals were to
define and promulgate a simple framework for non-experts to
think about energy and its challenges, to explain the roles of
the various players in transforming the energy system, to
define a set of principles for forming the DOE portfolio of
activities, and based on all of that, to give broad guidance to
the DOE portfolio.
The report on the Quadrennial Technology Review was issued
on September 27th, and its companion Technology Assessments,
which we have here, will be released shortly, pending final
clearance from OMB. I believe that the process of the QTR, as
well as its substance, will be of interest to this hearing.
Our energy challenges are several and longstanding, with
energy security, economic wellbeing and environmental impacts
foremost among them. Structural features of our energy
circumstances condition the range and nature of solutions we
can imagine. Energy is big and expensive, comprising 8 percent
of GDP. Its capital-intensive infrastructure lasts for decades.
So the phrase ``energy revolution'' is problematic.
The commodities from the supply side, electrical power and
fuel molecules, must satisfy a diversity of demands. The
challenges of the transport sector are quite separate from
those of the stationary sector. We will not change the price at
the pump by deploying more clean power.
The QTR analyses all of that and recommends 6 strategies.
In transport, we must increase conventional vehicle efficiency,
progressively electrify autos and light trucks and deploy
alternative hydrocarbon fuels for heavy trucks. In stationary
energy, we must improve building and industrial efficiency,
modernize the electrical grid and deploy clean power.
Those 6 strategies are both necessary and sufficient to
address our energy problems. Executing each of them will
involve a mix of policies, economics and technologies. The QTR
has focused on the technologies through their demonstration. It
does not deal with commercialization or deployment issues.
Among the QTR's more salient observations are the following:
Given that our resources are limited and the challenges
urgent, we have to be strategic in forming the DOE's portfolio.
To do so, we have to rise above the advocacy and ideology that
plague energy technology discussions. I don't know if
``fuelism'' is a word but it should be
We have to focus on ``solving the problems.'' Greatest
effort should be given to technologies that can make a
difference, soon, so that a technology's maturity, materiality
and market potential are the most important criteria. We must
encourage revolutionary technology advances, but our plans
cannot rely on them.
Second, a strong program in basic scientific and
fundamental engineering research underpins energy technology
work. Particularly important areas are materials, biology and
simulation.
Third, DOE's agenda-setting, convening, regulatory and
informational roles can be very effective catalysts of energy
transformation, quite distinct from the large demonstrations
that the Department has undertaken in the past. They are also
less costly.
Many of the barriers to energy transformation are societal,
not technical. Collectively, we need to integrate social
science, business thinking and policy with technology
development and demonstration.
In that regard, I draw your attention to a report that's
being released today by the American Academy of Arts and
Sciences ``Beyond Technology: Strengthening Energy Policy
Through Social Science'', that describes a program of social
science work relevant to our energy challenges.
Next, DOE's energy technologies portfolio currently
overweights the stationary sector, particularly clean power
technologies, which account for half of our technology budget.
An increased emphasis on transport problems is warranted, given
their greater urgency and multiple impacts.
Because energy is ubiquitous, equities and authorities are
spread across the government and, in fact, across society.
Coordination in policy is essential--as has already been noted
this morning--across both the executive and legislative
branches, with the State and local authorities, and with the
private sector.
Because the natural timescales for energy change are
decades, policy, budgets and programs must be consistent if
they are to have any significant impact. There are
organizational and process changes that we can make across the
Federal Government to ensure that our energy policies have the
focus and consistency comparable to what we do in national
security.
One obvious follow-on exercise to the QTR would be for the
DOE to regularly improve, refine and update the kind of
synthetic technology analysis we've attempted. Important to
doing that will be to establish an enduring energy technology
planning and analysis function in the department. It would also
be relatively straightforward to extend such work to energy
technologies across multiple agencies, as is contemplated in
one of the bills you're discussing today.
However, as you think about the broader QER, I would urge
some caution. One of the reasons the QTR turned out as well as
it did was that we thought through the goals, the framing and
the process before beginning execution. A QER dealing with
technology and policy will be far more complex with many
possible goals and many more participants.
I don't believe that we know how to do it right at the
moment, and, because it needs to be done right, it should not
be done in haste. Structuring and organizing the interagency
effort will require flexibility the first time through, and no
doubt there will be a lot of learning going on. So please bear
in mind as you think about legislation.
Finally, as I told the Committee during my confirmation
hearing two-and-a-half years ago, one of my goals as
Undersecretary for Science was to bring a more factual and
rigorous analysis to energy matters. The completion of the
first QTR was, I think, a good step in that direction.
With that, thanks for your attention, and I'd be happy to
take questions or comments.
[The prepared statement of Mr. Koonin follows:]
Statement of Steven E. Koonin, Under Secretary for Science, Department
of Energy, on S. 1703 and S. 1807
Chairman Bingaman, Ranking Member Murkowski, and Members of the
Committee; thank you for the opportunity to appear here today to report
on the Department of Energy's (DOE) first Quadrennial Technology Review
(QTR). It has been a great honor and privilege to lead this review.
Secretary Chu and I greatly appreciate your interest in it.
Access to clean, affordable, secure, and reliable energy has been a
cornerstone of America's economic growth. And yet, the security of
energy supplies, U.S. competitiveness, and energy's environmental
impacts are long-standing challenges. All remain pressing national
issues.
The President's Council of Advisors on Science and Technology
(PCAST) recognized the importance of a coordinated approach to federal
energy policy and called for a QTR in its November 2010 Report to the
President on Accelerating the Pace of Change in Energy Technologies
Through an Integrated Federal Energy Policy.\1\ The Review we prepared
in response sought to define a simple framework for understanding and
discussing the challenges the energy system presents and to establish a
shared sense of priorities among activities in the Department's energy
technology programs; and to explain to the Department and its
stakeholders the roles that the DOE plays in innovation and energy
transformation. To holistically address our national energy technology
challenges, the QTR highlights six strategies: three in the
transportation sector and three in the stationary sector.
---------------------------------------------------------------------------
\1\ Executive Office of the President-President's Council of
Advisors on Science and Technology. (2010). Report to the President on
Accelerating the Pace of Change in Energy Technologies Through an
Integrated Federal Energy Policy, Washington, DC. Accessed at: http://
www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-energy-
tech-report.pdf
---------------------------------------------------------------------------
Transportation
In transportation, our challenges are energy security--each day we
send $1 billion out of the country to pay for oil--and environmental
concerns over greenhouse gas emissions and other pollutants. Because
oil markets are global and we import nearly 50% of our oil, we face
issues with high prices and security of supply. Globally, demand for
oil is growing which will continue to exert upward pressure on oil
prices. Increased domestic production will allow for domestic job
growth, will increase security. However, domestic production will not
affect the price of oil because as a nation we cannot produce enough
fast enough to significantly affect the global market. Due to the scale
of OPEC's supply relative to other producers, it is able to distort the
global market through cartel power. Other fungible liquid fuels (i.e.,
unconventional crude, biofuels, or gas-to-liquids) will also help
reduce our dependence on oil but will be subject to the same market
pressures.
Going beyond supply measures, reducing oil consumption will
mitigate the impact of global oil price dynamics on the Nation's
economy. Therefore, we will also reduce our crude demand through
efficiency and then by progressive electrification of the light-duty
fleet. Research in advanced biofuels is also necessary to supply those
vehicles that cannot practically be electrified (i.e., long-haul
trucks, aircraft). Our three recommended strategies, ordered by
costeffectiveness and time-to-impact, are:
Vehicle Efficiency--Improving vehicle efficiency is one of
the most effective short-term routes to reduced liquid fuel
consumption. This has been an administration priority, as the
Department of Transportation and the Environmental Protection
Agency have set new Corporate Average Fuel Economy (CAFE) and
greenhouse gas emissions standards for model year 2012-2016
light duty vehicles, and the President announced a framework in
July for standards for MY 2017-2025 light duty vehicles. DOE
will focus on internal combustion engine improvements,
lightweighting, and aerodynamics. DOE's highest leverage
contributions in this area include convening consortia, such as
the United States Council for Automotive Research (USCAR), and
providing unique facilities and capabilities in the national
laboratories, such as the Combustion Research Facility.
Vehicle Electrification--Hybridization of the vehicle fleet
can help reduce oil consumption at the pump in the near-and
mid-term; full electrification would decouple light-duty
vehicles from the global oil market. DOE will focus on
batteries, electric motors, and power electronics that can
improve hybrids and plug-in hybrids. DOE will maintain a
limited program of fundamental research and development (R&D)
in fuel cells for transportation and in hydrogen production and
storage.
Alternative Hydrocarbon Fuels--Since the heavy-duty vehicle
sectors face significant barriers to electrification, this part
of the fleet will always rely to some extent on portable, high
energy density fuels. DOE will focus on drop-in biofuels for
the heavy duty vehicle, air, marine, and train markets because
of the ease of deployment. The negative environmental impacts
of fuels made from non-petroleum fossil fuels without carbon
capture & storage currently outweigh their possible energy
security benefits. We also note that compressed or liquid
natural gas, although a potential alternative, would require
significant investment in infrastructure.
Stationary Heat and Power
The challenges we face in the stationary sector are very different
than in the transportation sector. In our residential, commercial and
industrial sectors, our challenge is to provide heat and power in
environmentally responsible ways that strengthen domestic innovation
and manufacturing capabilities. The stationary sector is complicated by
the fact that generation, transmission, and demand are interdependent.
Our three recommended strategies, ordered by cost-effectiveness and
time-to-impact, are:
Energy Efficiency in Buildings and Industry--Increasing
energy efficiency has net economic advantages because energy
expenditures decrease for the same level of service. In both
buildings and industry, a lack of accessible, actionable
information is a major market barrier. For building efficiency,
DOE will pursue technology and information availability
improvements on both a component and system level. For
industrial efficiency, DOE will pursue improvements in both
existing and innovative manufacturing processes.
Grid Modernization--The U.S. needs a 21st century electrical
grid to provide needed stability and to integrate new forms of
energy. A modernized electrical grid is essential for, among
other things, wide-scale electrification of the vehicle fleet,
deployment of demand response, and efficient integration of
clean electricity generation. While the most critical advances
needed for realization of a modernized grid are not related to
technology or R&D, there are technological improvements
including improving grid observation, understanding, and
operation; improving control of energy and power flow; and
developing and deploying energy storage that would be
beneficial.
Clean Electricity--Multiple generating technologies with
diverse characteristics at varying stages of maturity make it
difficult to prioritize the clean electricity research
portfolio. The usual metrics of potential for cost-competitive
levelized cost of electricity and greenhouse gas intensity do
not sufficiently differentiate among technologies. Other
factors, including modularity and scalability, water
consumption, infrastructure compatibility, and global context,
help to stratify the research portfolio. Comparative
assessments of these factors over the full life cycle of these
technology options will help ensure the cleanest and most cost-
effective options for society. Above all, DOE will use the
materiality, market potential, and maturity of clean
electricity technologies, as described below, to prioritize its
activities.
Prioritizing Our Activities
As Secretary Chu noted in his introduction to the QTR, the
Department's energy technology strategy has been traditionally
organized along individual program lines and based on annual budgets.
With this QTR, our goal is to bind together multiple energy
technologies, as well as multiple DOE energy technology programs, in
the common purpose of solving our energy challenges. In addition, the
QTR provides a framework to help inform our multi-year planning. Energy
investments, if they are to be effective, must be consistent and
flexible, multi-year--, if not multi-decade, investments.
One of the salient facts about energy technology R&D is that there
are always many different technical approaches to solving the same
problem--and more are being proposed every day. While a testament to
the power of human ingenuity, this excess of options creates a
practical problem: since we have limited resources and urgent problems
to solve, how do we choose which subset of these many approaches to
pursue?
The QTR has been, at its core, about developing the principles that
will help inform those difficult choices between different technically
viable approaches that cannot all be pursued. Mere technical promise--
that something could work--is an unjustifiably low bar for the
commitment of DOE R&D funds. As every dollar matters, we must give
priority in our research portfolio to those technologies that are most
likely to have significant impact on timescales commensurate with the
urgency of national energy challenges.
The burden of oil imports and the need to reduce greenhouse gas
emissions dramatically by 2050 sets a relentless clock on our actions.
Because significant changes in energy supply can take 20 years or more,
the Department will focus on a portfolio of technologies that can
confidently be predicted to be material by 2030. Technologies can be
judged by maturity, materiality, and market potential:
Maturity--Technologies that have significant technical
headroom yet could be demonstrated at commercial scale within a
decade.
Materiality--Technologies that could have a consequential
impact\2\ on meeting national energy goals in two decades.
---------------------------------------------------------------------------
\2\ We define ``consequential'' as roughly one Quad per year of
primary energy; such a metric may not be appropriate for all
technologies.
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Market Potential--Technologies that could be expected to be
adopted by the relevant markets, understanding that these
markets are driven by economics but shaped by public policy.
Additionally, we will apply two themes to the development of the
overall R&D portfolio. First, we will balance more assured activities
against higher-risk transformational work to hedge against situations
where reasonably assured paths become blocked by insurmountable
challenges. DOE will reserve up to 20% of the Department's energy
technology R&D funding for ``out of the box activities''. Second,
because the Department neither manufactures nor sells commercial-scale
energy technologies, our work must be relevant to the private sector,
which is the agent of deployment.
Furthermore, we must clearly acknowledge that even the most
carefully planned energy R&D strategy can be upset by unexpected
technical advances, changing market conditions, unanticipated
environmental challenges, and outside events. For that reason, the QTR
found that the Department should maintain a mix of analytic,
assessment, and fundamental engineering research\3\ capabilities across
a broad set of energy technology areas. Such activities in any given
technology area should not imply a DOE commitment to additional
demonstration or deployment activities in that area. The mix of
analytic, assessment, and fundamental engineering research will vary
according to the status and significance of the technology.
---------------------------------------------------------------------------
\3\ Fundamental engineering research is research intended to
understand the sensitivity of man-made systems or components to
specific laws of nature. The goal of fundamental engineering research
is to make better predictions about the behavior of those systems,
which will broadly improve our ability to design, build, and maintain
engineered products and services for particular purposes. Fundamental
engineering research is an essential precursor to technology
development.
---------------------------------------------------------------------------
Conclusions of the Review
As a result of the Review, we found that looking just at DOE:
the Department is underinvested in the transportation sector
relative to the stationary sector (energy efficiency, grid, and
electric power). Within our transportation activities, we
conclude that DOE should gradually increase its efforts on
vehicle efficiency and electrification relative to alternative
fuels.
the Department is underinvested in activities supporting
modernization of the grid and increasing building and
industrial efficiency relative to those supporting development
of clean electricity.
There are several other criteria to consider when balancing the
energy R&D portfolio. There is tension between supporting work that
industry won't, which biases the Department's portfolio toward the
long-term, and the urgency of the Nation's energy challenges. The
appropriate balance requires the Department to focus on accelerating
innovation relevant to today's energy technologies, since such
evolutionary advances are more likely to have near-to mid-term impact
on the Nation's challenges. We found that too much effort in the
Department is devoted to research on technologies multiple generations
away from practical use at the expense of analyses, modeling and
simulation or other highly relevant fundamental engineering research
activities that could influence the private-sector in the nearer term.
Another important finding of this Review is that the Department
impacts the energy sector and energy technology innovation through
activities other than targeted technology-development initiatives--the
most commonly thought-of approach for organizing DOE's effort. Public
comments indicated that DOE's informational and convening roles are
among its most highlyvalued activities. Information collected,
analyzed, and disseminated by DOE helps shape the policy and decisions
made by other governmental and private sector actors. That expertise in
energy technology assessment gives DOE the standing to convene
participants from the public and private sectors to coordinate
collective effort. The Department's energy technology assessments are
founded upon our extensive R&D capabilities. By supporting pre-
competitive R&D and fundamental engineering research, DOE builds
technical capabilities within universities and our national
laboratories and strengthens those capabilities in the private sector.
Also heard clearly from external stakeholders was that DOE's
technology development activities are not adequately informed by how
consumers interact with the energy system or how firms decide about
technologies. As a result, DOE will integrate an improved understanding
of applied social science into its technology programs to better inform
and support the Department's investments.
Fundamental to improving Departmental strategy, to implementing the
outcomes from this process, and to future QTRs will be the development
of strong internal capabilities for integrated technical, economic and
policy analysis. The Department needs an enduring group to provide an
integrated understanding of technology, markets, business, and policy
for the planning and execution of technology programs. This
professional group would integrate the major functions of technology
assessment and cost analysis; program planning and evaluation; economic
impact assessments; industry studies; and energy and technology policy
analysis. Such a group would harmonize assumptions across technologies
and make the analyses transparent. Previous attempts to establish such
capability within the Department have resided within support offices,
rather than at the leadership level, and so have had limited impact.
It is important to state that the QTR is not a substitute for the
annual budget process; however, it should inform the development of
those budgets as well as internal planning over a longer horizon.
Further, the QTR is focused on energy technologies, but it is not,
standing on its own, a national energy strategy. In March 2011, the
Obama Administration released the Blueprint For A Secure Energy Future,
a roadmap to guide the pursuit of key energy policy objectives, such as
the President's goal of reducing oil imports by one-third by 2025.
When the PCAST, as an external advisory board to the President,
recommended the QTR, it also identified its most important
recommendation as the development of a multi-agency QER that would
forge a more coordinated and robust federal energy policy, engaging
many agencies and departments across the Executive Branch. As
envisioned by the PCAST, the emphasis of the QER would be on
establishing government-wide goals, and identifying the non-budgetary
resources needed for the invention, translation, adoption, and
diffusion of energy technologies. The PCAST found that because the
responsibility for setting these goals goes well beyond the reach of
the DOE, the QER would serve as a mechanism for managing this
crosscutting challenge.
I would like to briefly describe how we carried out this
Quadrennial Technology Review. Public engagement was a central tenet of
the QTR. Nearly 700 stakeholders supplied input over the course of the
six-month review. The process began officially in March when we
released the QTR Framing Document along with a Request for Information
in the Federal Register. The framing document established the
framework, scope, key questions, and process for the review. The QTR
team received approximately 60 submissions during the 30-day public
comment period. The Framing Document also served as a foundation for
five stakeholder workshops across the country. Divided along the six
strategies, these workshops solicited input from hundreds of energy
experts from industry, national labs, academia, and government
agencies. The Capstone workshop hosted in Washington, DC, in mid-July
enabled us to summarize what we had learned from the public comments
and topical workshops while provoking discussion on the substance of
what would become our findings and conclusions. Throughout the process,
the team consulted with officials within the Department, our sister
federal agencies, and the Executive Office. That public and interagency
engagement was vital to the quality and clarity of the final document.
DOE appreciates the support received from Congress during the QTR
process as well as the interest from Chairman Bingaman and Senator
Pryor in establishing a broader QER. The Administration is currently
reviewing S. 1703 and S.1807 and does not have a position on the
legislation at this time. The Administration is also currently
reviewing its capacity to carry out a QER under existing authorities.
We look forward to working with the Committee to address these
important questions. Thank you and I am happy to take any questions.
The Chairman. Thank you very much for your comments.
Dr. Moniz, why don't you go ahead and give us your
perspective on this set of issues, and then we will have some
questions.
STATEMENT OF ERNEST J. MONIZ, CECIL AND IDA GREEN, PROFESSOR OF
PHYSICS AND ENGINEERING SYSTEMS, DIRECTOR, MIT ENERGY
INITIATIVE, MASSACHUSETTS INSTITUTE OF TECHNOLOGY, CAMBRIDGE,
MA
Mr. Moniz. Chairman Bingaman, Ranking Member Murkowski and
members of the committee, thank you for the opportunity to
offer views on both the Quadrennial Energy and Technology
Reviews, and it's always good to be back.
I do caution that although I am a PCAST member and co-
chaired the relevant working group, I testify today as a
private citizen.
Reflecting on the nature of the energy enterprise, it's
easy to see the challenge of accelerating change to meet
pressing national economic competitiveness, environmental and
security needs.
An integrated Federal energy policy up to these challenges
needs staying power, and that, in turn, requires a substantive
administration-Congress dialog based on clear objectives and
analysis.
This is challenging in the face of multiple executive
agencies and multiple congressional committees with stakes in
the game, the derivative nature of energy policy and the
diversity of policy instruments. The QER is intended to
facilitate this dialog within the reality of this complexity.
Key organizational principles put forward by PCAST include
prominent roles for the Executive Office of the President and
the Department of Energy. The former has the convening power
across the administration. The latter has core energy
responsibilities, especially for technology, and the scale to
staff a major effort.
So DOE should provide the administration-wide executive
secretariat for a QER. Bills S. 1703 and S. 1807 are aligned
with these organizational principles, and I support both of
them in their key objectives.
The PCAST report listed objectives for the QER: An
integrated view of short- and long-term objectives, legislative
proposals and executive actions, resource requirements, and,
very important, a strong analytical base that has not always
characterized the development of energy policy.
PCAST recognized the daunting scale of such an effort, the
QER--and Secretary Koonin has just referred to that--and,
therefore, recommended starting with the QTR, which is mostly
within the purview of DOE.
The first QTR presents processes and principles needed to
prioritize portfolio choices and puts forward initial
priorities.
I congratulate Secretary Chu, Under Secretary Koonin and
the DOE staff for this accomplishment, and let me also add my
thanks to my good and old friend, Steve Koonin, for his service
in the government. The confession is that our careers have been
entwined for almost 40 years.
The QTR recommendations should generate debate. They are
the start of a conversation. For example, the recommendation to
weigh transportation more heavily in the portfolio and then to
give major emphasis specifically to vehicle efficiency and
electrification over other alternatives are not universally
accepted, but they were based upon a clear rationale and an
argument.
A test of the QTR is whether it will, indeed, stimulate the
kind of discussion that can build sufficient agreement to
support long-term, stable portfolio planning with both
administration and congressional endorsement.
If we return to a technology du jour approach, it will be
difficult to accelerate material impact in the marketplace of
the government's energy programs.
Increased energy RD&D funding is needed, and I raise that
here because it would reshape the QER/QTR portfolio in
important ways.
Now, clearly--and the AEIC that you mentioned earlier, Mr.
Chairman, of course, has the same conclusion, but, clearly, it
will be very hard to find such resources in the appropriations
process, and PCAST recommended that the administration,
Congress and the private sector work together on new funding
streams, whose expenditure would be guided largely by industry.
Several examples within the QTR point to the importance of
sustaining progress toward a full QER. For example, the QTR
rightfully has a special place for efficiency, but efficiency
is not the same thing as demand reduction. The latter needs
integrated technology and policy, like a QER.
Another is the near absence of natural-gas discussion.
While possibly understandable for a document focused on
advanced technology, although our MIT report did highlight
important public-private opportunities for natural gas R&D, the
game-changing natural-gas story has clear implications for the
clean electricity R&D portfolio. Again, a QER would incorporate
that.
Another important objective of the QER would be clarity on
risk-sharing mechanisms for technology adoption and diffusion.
PCAST recommended starting with an inventory of existing
subsidies and incentives.
Perhaps the most important near-term action to continue
building the QER/QTR process is buildup of DOE capacity for
energy engineering-economic analysis. I urge Congress to
support this. This function could be placed in a beefed-up
policy office separated from international affairs. This needs
to happen in 2012 if the first QER is to be delivered early in
2014 as called for in S. 1703.
There is also a need for dramatically expanding energy
economic policy and social science research at universities and
NGO's. So, in addition to building up internal analytical
research capacity at DOE, DOE should be authorized to provide
extramural funding for such research and perhaps to partner
with industry in support of a special-purpose, independent non-
profit.
Finally, I return to S. 1703 and S. 1807. S. 1807 would
establish the National Energy Research Coordination Council,
and this would clearly be a positive development.
The QER/QTR and council processes would also be helped if
we could somehow move to both 4-year congressional
authorizations and more realistic DOE multiyear budget
projections both aligned with a QER/QTR developed with strong
congressional and non-government input.
S. 1703 would legislate a required QER, and this would
clearly reinforce the PCAST recommendation, and I support that.
Two comments: The faster schedule put forward in S. 1703
relative to the PCAST recommendation I think could certainly be
handled in equilibrium, but it wouldn't require, as already
indicated, that 2012 be used effectively to build up DOE
analytical capacity if the accelerated schedule has any chance
of being met.
Second, while OSTP Director Holdren would be an outstanding
co-chair, given his experience in energy technology and policy,
along with the secretary of energy, I personally would still
prefer that the president select the EOP leadership. This would
reinforce the needed convening power from the EOP.
In conclusion, a QER would provide an important vehicle for
framing a sustained, productive administration-Congress dialog,
and your support and engagement will be very important for its
success.
I look forward to addressing your comments and questions.
Thank you.
[The prepared statement of Mr. Moniz follows:]
Prepared Statement of Ernest J. Moniz, Cecil and Ida Green, Professor
of Physics and Engineering Systems, Director, MIT Energy Initiative,
Massachusetts Institute of Technology, Cambridge, MA
Chairman Bingaman, Ranking Member Murkowski, and Members of the
Committee, thank you for the opportunity to offer views on the
Quadrennial Energy and Technology Reviews (QER/QTR) that were
recommended one year ago by the President's Council of Advisors on
Science and Technology (PCAST) and on actions that this Committee might
take to advance the process in concert with the Administration.
Establishing the QER/QTR was the key recommendation in the PCAST Report
to the President on Accelerating the Pace of Change in Energy
Technologies through an Integrated Federal Energy Policy. I also thank
the Committee because the fact that you are holding a hearing on the
QER/QTR itself provides impetus and indicates support for the level of
Administration-Congress dialog that will be needed for success of the
QER/QTR. The QER is a major undertaking that will inevitably sharpen
the key issues that must be addressed for a consistent, sustained and
bipartisan approach to American energy technology and policy
innovation.
I start by emphasizing that, although I am a member of PCAST and
co-chaired the Energy Technology Innovation System Working Group, I
testify today as a private citizen and not as a member of PCAST.
Clearly, my views are shaped by multiple experiences and perspectives,
including the PCAST working group discussions that led up to the QER
recommendation; those discussions included input from many individuals
in academia and labs, the private sector, and government, most notably
Senator Bingaman. In addition, I was part of the Office of Science and
Technology Policy (OSTP) for the scoping of and initial work on the
1997 major PCAST study on Federal Energy Research and Development for
the Challenges of the 21st century, led by John Holdren, now the
President's science advisor and PCAST co-chair; that report recommended
a portfolio approach to DOE energy RD&D programs that remains relevant
for the QTR. I then served as Undersecretary of Energy and had the
opportunity to initiate portfolio and roadmapping approaches that
engaged multiple stakeholders and led to some new research thrusts
(large scale modeling and simulation of energy systems, electricity
system reliability, . . . ). In my current role as Director of the MIT
Energy Initiative, I have the opportunity to work with over sixty
members across the energy technology innovation chain and most closely
with fifteen major energy companies that support a broad research
portfolio engaging hundreds of MIT faculty and students. Finally my own
research program for the last decade has centered on advancing
multidisciplinary studies that link technology, analysis and policy in
order to enable clean energy innovation. All of these experiences
underpin the views on QER/QTR that I will summarize briefly in the
testimony and in the discussion that follows.
In thinking about the need to accelerate energy technology
innovation, it is useful to reflect on the nature of the energy
enterprise:
multi-trillion dollars/year revenues
Very capital intensive
Commodity business/ cost sensitive
Established efficient supply chains, delivery
infrastructure, and customer bases
Essential services for all activities
Reliability of energy delivery valued more than innovation
Highly regulated
Complex politics/policy driven by regional and local
considerations.
This is not the prescription for an agile system that is easily
transformed to meet new challenges, and indeed history tells us that
many decades have been required for major changes of the energy
enterprise. However, the imperative for accelerating change is real:
for economic competitiveness, while recognizing that the
U.S. will not be the principal market for new energy technology
and infrastructure;
for the environment, as prudence calls for starting to
reduce greenhouse gas emissions substantially in the near and
intermediate term;
for security, by reducing oil dependence and lowering the
bill for imports.
An integrated Federal energy policy up to these challenges needs
staying power, and that in turn requires a bipartisan Administration-
Congress dialog based on clear objectives and analysis. Substantial
input from the private sector is essential, gathered in an inclusive
transparent process. The governmental dialog is challenging in the face
of multiple Executive agencies and multiple Congressional committees
with stakes in the game. The QER is intended to facilitate the dialog.
While most decisions about new energy technology, production,
delivery and use are taken in the private sector, the Federal
government has crucial roles to play by investing and sharing risk
along the technology innovation chain and in ``setting the rules''
through policies, standards, and regulations that reflect public goods.
Yet, it has proved difficult to establish consistent, comprehensive and
integrated Federal energy policies and programs. An ``energy policy''
is in many ways the sum of environmental, security, economic
competitiveness, tax, land use, and other policies. And the diversity
of policy instruments is just as broad: research support, technology
development and demonstration, deployment incentives, government
procurement, IP rules, standards and regulation, public-private and
Federal-state collaboration, human resource development through
education and immigration, international agreements, and more.
The QER and its derivative QTR were put forward as a way to bring
more structure and transparency to the process. Key organizational
principles put forward in the PCAST report lead to prominent roles for
the Executive Office of the President (EOP) and for the Department of
Energy (DOE). The former has the convening power to bring together the
many agencies with stakes in energy and with the levers for
implementation. The DOE has core energy responsibilities, especially
for technology, and the scale to staff a major effort; it would provide
the QER Administration-wide Executive Secretariat. The DOE also has the
breadth of industry contacts and domain knowledge needed to ground the
QER in energy sector reality. The PCAST report left the decision to the
President as to who in the EOP would lead the QER along with the
Secretary of Energy. I will return later to specific comments on the
bills S.1703 and S.1807, which are pretty well aligned with these
organizational principles.
The PCAST report listed key objectives of the QER, which I repeat:
lays out an integrated view of short-, intermediate-, and
long-term objectives for Federal energy policy in the context
of economic, environmental, and security priorities;
outlines legislative proposals to Congress;
puts forward anticipated Executive actions (programmatic,
regulatory, fiscal, and so on) coordinated across multiple
agencies;
identifies resource requirements for the RD&D programs and
for innovation incentive programs; and
provides a strong analytical base.
I pay special attention to the call for an analytical basis for
constructing the multiyear roadmap. This is essential for developing a
resilient plan that maintains stability in the face of major events in
the energy sector and changes in the political makeup of the
government.
The PCAST report recognizes that a government-wide QER is a major
undertaking calling for new processes and new alignments of the many
departments and agencies that must work together. It is more complex
than the Quadrennial Defense Review, which requires much less input
from outside the department. Consequently, it was recommended that the
first installment in 2011 focus on energy science and technology, which
is mostly within the purview of DOE. This has been termed the QTR, and
a number of characteristics were indicated in the PCAST report (where
the term DOE-QER was used, rather than QTR). The first QTR builds on
technology roadmapping processes that had already gone on at DOE, but
importantly adds processes and principles needed to prioritize
portfolio choices. It balances different energy challenges, different
timescales, and different strategies. It also begins the process of
establishing contact with other departments and agencies involved in
energy R&D. I congratulate Secretary Chu, Undersecretary Koonin and
their staffs for carrying out this first QTR and providing a clear set
of priorities and a rationale that, if followed, will shift the DOE
portfolio in significant ways. I would also like to thank the
Undersecretary for his distinguished service at DOE, to which he
brought a unique background in both academia and the energy industry.
The QTR recommendations should generate considerable discussion. In
particular, the recommendation that the DOE portfolio give more weight
to transportation technologies that reduce oil dependence and the
subsequent priority for engine efficiency and electrification of
transportation are well argued but of course will not have uniform
agreement. A test of the QTR is whether it will stimulate the kind of
discussion than can build sufficient agreement to support long term
stable portfolio planning with both Administration and Congressional
endorsement. If we return to the ``technology du jour'' approach of the
past (e.g. the hydrogen car), it will be difficult to follow through on
key programs that eventually make a material difference in the
marketplace and help provide technology leadership.
Here it is important to repeat the PCAST report call for
substantially higher levels of funding for energy RD&D if the economic
competitiveness, environment, and security goals are to be met. There
is no magic number for what Federal support should be, but numerous
analyses, including those of business leaders who put together A
Business Plan for America's Energy Future, converge around a $10B/year
shortfall. Clearly the severe pressures on the Federal budget make it
very unlikely that such funding could be found through the
appropriations process any time soon, so PCAST recommended that the
Administration, Congress and the private sector work together to
explore new revenue streams based upon energy production, delivery and/
or use. There are good examples of such approaches, in which the funds
are managed by non-profit organizations with strong industry guidance
in setting the RD&D agenda. This is relevant to the QER/QTR since
portfolio design can be quite different for substantially different
anticipated funding levels and mechanisms.
There are several examples within the QTR that point to the
importance of placing recommendations within the broader context
envisioned in a QER. For example, the QTR justifiably emphasizes the
importance of efficiency for vehicles, buildings and industry. However,
technological developments that increase efficiency do not necessarily
equate with demand reduction. A classic example is the failure to
capture the benefits of automobile engine efficiency increases as the
advances were played off against increased horsepower. This emphasizes
how technology development and policy need to be integrated in order to
address the ultimate policy objectives (reduced oil usage in the
example above).
Another example is the near absence of mention of natural gas in
the QTR, even though increased gas supply and lowered prices stimulated
by shale gas development may be the prime U.S. energy gamechanger for
this decade. This is understandable for an effort focused on advanced
technology, although the MIT Future of Natural Gas study did point out
a number of areas for which a public-private partnership should support
important natural gas R&D (testimony before this Committee in July
2011). The natural gas story of bridging to a low-carbon future has
significant implications for how one establishes R&D priorities for
clean electricity. These considerations would be part of the broader
multi-agency QER.
Another important objective for the QER would be clarity on the
variety of risk-sharing mechanisms for government support of energy
technology adoption and diffusion and on their application in different
situations. For example, legislation since 2005 has favored up-front
loan guarantees over mechanisms that reward successful project
performance. An analytical approach based on historical performance
would provide the basis for an Administration-Congress conversation on
best practices fit to purpose. The PCAST report recommends a
comprehensive cataloging of existing energy subsidies and incentives as
a first step towards realignment with QER priorities.
As recognized in the QTR, there is much to do for further iteration
of the QTR and for building up capacity to support a full QER. The most
striking need is to build up substantial government strength in energy
engineering-economic analysis as a core competence. The DOE (and its
labs) have little strength in this area in comparison to the private
sector, but such skills are essential for going to the next meaningful
stage of the QTR. The ability to integrate technical, economic and
policy analysis is in turn essential for the QER Executive Secretariat
function. I urge that the Congress support buildup of this capability
within the DOE. This function could be placed in an expanded Office of
Policy supporting the Secretary; the PCAST report recommends
establishment of a policy office separate from the international
affairs function. In my view, the first QTR should be followed in 2012
by a renewed effort to build on the first edition, incorporating more
analytical functions, engaging more agencies, and building momentum
towards a QER that will presumably be launched more aggressively in
early 2013.
Since the QER depends on strong analysis, I note that there is
underinvestment in support for energy economic/policy/social science
research and analysis at universities and NGOs. In addition to building
up internal capability, DOE should be authorized to provide extramural
funding for such research through the Office of Policy, EIA, and/or
Science/BES. This need might also be addressed through establishment of
an independent non-profit with core government funding, perhaps with
matching funds from industry. The National Bureau of Economic Research
could provide an organizational model, with research affiliates drawn
from universities across the country. The QER could benefit greatly by
drawing on the independent research results of such an organization.
Finally I will comment briefly on S.1703, the ``Quadrennial Energy
Review Act of 2011'', and S.1807, the ``Energy Research and Development
Coordination Act of 2011''. Both would have the Secretary of Energy and
the Director of the Office of Science and Technology Policy in the EOP
as co-chairs of multi-agency activities.
S.1807 would establish the National Energy Research Coordination
Council, co-chaired as indicated above and including the OMB Director,
the heads of departments and agencies with energy RD&D annual budgets
in excess of $10M, and others at the discretion of the President. It
would generate an annual cross-cutting Federal energy RD&D program plan
and budget proposal based on the QER/QTR. The Council would represent
the agencies with input into the QTR and would codify the QTR role in
guiding coordinated annual plans. It would facilitate multi-agency
collaborations as appropriate, both within the Administration and in
discussions with multiple Congressional committees. This would be a
positive development. I make two additional observations. First, the
Council might draw upon the analytical capabilities that we feel is
essential for the QER Executive Secretariat. Second, the QER/QTR and
Council processes would be helped enormously if Congress could adopt
four-year authorizations in sync with the QER. The QER would provide an
integrated government-wide roadmap that would provide a basis for
Congressional discussions spanning committee jurisdictions and for a
multiyear authorization. More realistic multi-year budget projections
from DOE, consistent with the QER/QTR, would be an important part of
the discussion. The annual appropriations process would continue in
response to the Council program plans and budget proposals.
S.1703 would legislate the QER as a required submission to the
Congress, providing ``an integrated view of national energy objectives
and Federal energy policy, including alignment of research programs,
incentives, regulations, and partnerships.'' Clearly this is in accord
with the intentions put forward in the PCAST report. An interagency
working group would be established at the beginning of each
Administration, with the QER due one year later. This date is displaced
by one year from that recommended by PCAST. In steady state, this shift
by one year is quite reasonable. My concern is whether the first QER
can be put together well by early 2014, given that the entire process
needs to be invented. This can be ameliorated to some extent if the
buildup of analytical capabilities and process development are funded
and pursued aggressively in 2012.
The second significant difference to the PCAST recommendation is
the naming of the Secretary of Energy and the OSTP Director as co-
chairs. The PCAST report left selection of the EOP lead to the
President. Clearly today, OSTP is headed by John Holdren, who is one of
the nation's leading energy researchers and analysts and thus well
suited to being a leader in the QER development. He would be an
outstanding choice. Nevertheless, I would still favor leaving the
President with the discretion to choose, since the EOP convening power
is very important for the QER. This is especially so since agencies
with policy and regulatory equities but without appreciable science and
technology programs will be key players.
In conclusion, a successful QER process would establish a new
opportunity for weaving together the many threads that make up a
comprehensive energy policy and for applying multiple policy
instruments in a targeted way. It would also provide a vehicle for
framing a productive Administration-Congress dialog on moving the U.S.
towards widely-held energy economic, environmental, and security goals.
The QTR is both an important first step towards the QER and a guide to
constructing an energy RD&D portfolio aligned with national strategic
goals. Mr. Chairman, Ranking Member Murkowski, and members of the
Committee, your support for and engagement with the QER/QTR process
will be important for its success.
I look forward to addressing your comments and questions.
The Chairman. Thank you both for your excellent testimony.
Let me start with a few questions.
This whole issue of the QTR, the first Quadrennial
Technology Review, which is what Dr. Koonin has described to us
and what has now been developed, and the distinction between
that and a Quadrennial Energy Review, I think is one that we
really need to think about, and both of you have commented on
it.
I guess that, from my perspective, a concern I would have
is that if we just stick with a Quadrennial Technology Review,
how do we ensure that the conclusions from that actually make
their way into policy?
I think perhaps developing a Quadrennial Energy Review is
much more difficult, as Dr. Koonin pointed out. But it does
increase the likelihood that what we conclude in the
Quadrennial Technology Review actually impacts on the policies
that we follow, although it doesn't ensure that.
So I don't know if either of you have any additional
comments on how these 2 interact and how we need to proceed.
Obviously, I think everyone agrees the Quadrennial
Technology Review is a good thing. I'm just not sure it is
adequate to actually cause the administration and the Congress
to do what makes good sense, based on the Quadrennial
Technology Review.
Dr. Koonin, did you have any thoughts on that?
Mr. Koonin. Technology development, absent an understanding
and shaping of the policy and market contexts in which it would
get deployed, is not a very productive exercise.
So I think we absolutely have to bring the technology, the
policy, the market environments together in a coherent picture
if we're going to make progress on the challenges that we're
facing.
So I would agree the technology review was limited in
scope, both because it was what we felt we could get
accomplished, barely, with the time and resources we had
available, but also, it's an easier part of the problem.
The Chairman. Dr. Moniz, did you have some thoughts on
this?
Mr. Moniz. Yes, and I certainly concur with both
statements. Let me just add a couple of points.
First of all, I think we should not lose sight of the fact
that the QTR is, in and of itself, a positive step forward, and
it also needs further development through the kind of, for
example, engineering-economic capacity that remains to be built
up, I think, much more strongly at DOE.
Secondly, however, its impact, as I think both of you have
said, will be limited if it is not embedded in a broader policy
context.
An example that I pointed out is this question of
efficiency. We have historical examples, as with, for example,
let's say, cafe standards, where, as the standard was
increasing, technology responded also for demand reduction.
But, by definition, when the standard was flat, there was no
demand reduction, even though efficiency of engines kept
increasing. It was just targeted at horsepower instead.
So that's where the technology is critical, but the policy
is needed to make it effective in achieving our national goals.
Having said that, I will just repeat what Secretary Koonin
has said and what the PCAST report said, that we should not
underestimate the challenge of getting the QER right. That's
why we have to be--I think we cannot afford to have 2012 pass
without preparing the structures that will be needed for a
successful QER.
The Chairman. OK. I think you've noted that the QTR was
designed to look at the Department of Energy programs and
priorities. It does not look at the broader set of issues.
Should future Quadrennial Technology Reviews be broadened
beyond the DOE policies and priorities or programs and
priorities, Dr. Koonin?
Mr. Koonin. Yes, I would say, as--for example in S. 1807,
it would be a good next step toward a full-blown QER. In our
conversations with our interagency colleagues, there were
numerous technology connections, and synergies that many people
were just realizing for the first time. I think bringing all of
that together under a similar comprehensive framework would be
a productive thing to be doing.
The Chairman. OK. All right. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman, and, gentlemen,
thank you for your testimony here.
It sounds like, while both of you support the direction of
a QER, you are both urging caution and making sure that we take
the time to do this right. I think we've got some pretty good
examples around here of instances where, in an effort to do
something, we just kind of move forward and we may be living
with a little bit of regret that we didn't take a little bit of
caution. So I appreciate your testimony here today.
In my comments, I mentioned that we have a tendency around
here to want to pick winners and losers. We certainly do with
the technologies that are out there. Dr. Moniz, you used the
term ``technology du jour,'' which made me smile a little bit,
but I think that's oftentimes what happens. We see what is in
favor this year. We favor it with tax credits.
We need to make sure that, as we move forward with policies
we would hope to implement with a QTR, that it focuses or
emphasizes the innovation in near-term technologies, but not so
much in the potential, for instance, with unconventional fossil
fuels, whether it's oil, shale. We've got some methane hydrates
that we're very, very interested in up north.
What role, if any, do you think that DOE should play in
advancing the development of these resources, again, trying to
stay away from the technology du jour, stay away from that
picking of winners and losers? How do we advance this? Your
thoughts.
Mr. Koonin. As we think about what the proper role of the
government is in stimulating technologies, we have to look at
the maturity of technologies and the capacity of the private
sector to move the technologies forward.
Having spent 5 years in the oil and gas business, I know
well that there are great resources within the industry that
can be applied to problems as they see appropriate.
So I think, with respect to the development of
unconventionals, the government probably has a smaller role
than it does with respect to developing technologies that are
less mature and whose industries are not as robust.
Senator Murkowski. Does that get you into the situation,
though, where--and this is actually a point that was raised in
a New York Times article recently, that DOE is essentially
doing what the rest of the market has been doing in recent
years, shifting from high-risk, long-term research to short-
term, low-risk? Is that the direction that you see DOE going
then? Go ahead.
Mr. Koonin. Yes, we need to be solving these problems, and
we can make a good start by enhancing the lower-risk, shorter-
term technologies. At the same time, we need to balance that
with the more speculative things, of course. But let's get on
with solving some of these problems by refining today's
technologies and getting them out there.
Senator Murkowski. If it's lower-risk, shorter-term, isn't
that an area where you would see the private sector more
willing to step in then, because of that lower risk?
Mr. Koonin. Indeed, the Department's role there would be
different. We can bring some things. Our simulation capacity,
for example, can be brought to bear in engine design. I mean,
engine design is a fairly mature technology. Nevertheless, the
Department has certain simulation capabilities that it can use
to make engines even better, and we should be working with the
private sector to make that happen.
Also, in materials. High-strength, corrosion-resistant,
high-temperature materials can make important, although
incremental, advances in today's technologies, and those are
important things to be working on also.
Senator Murkowski. Let me ask you something else and I'll
ask you, Dr. Moniz, to comment on the same question that I
asked Dr. Koonin, but, also, both of you have mentioned the
societal issues, and I think you said, Dr. Koonin, that the
societal problems may be a bigger issue for us than determining
the technologies.
How do we really deal with that part of it? That, it seems
to be much more difficult to get your arms around than figuring
out how we fully build out technologies that will get us to
policy goals. Dr. Moniz.
Mr. Moniz. Thank you, Senator Murkowski. First, let me
perhaps refreshingly differ a little bit from my colleague in
one of his answers, specifically, the comment with regard to
unconventionals, and you raised methane hydrates, for example.
I will cast this as part of a theme that was just referred
to as, I think, public-private partnerships are, in many ways,
being underutilized effectively.
In our natural-gas report, that I testified before this
committee in July on, we showed a historical example in terms
of coal-bed methane, and, to a certain extent, shale, in which
what was critical was that the Department of Energy had some
upfront investment--reservoir characterization issues, et
cetera.
Then, in those days, the Gas Research Institute, a public-
private kind of partnership, then built on top of that with a
stable, 12-year roadmap that developed the core technologies.
At the same time, the Congress passed an incentive for
producing from the unconventional wells. The incentive would
have made no difference without the technology, and the
technology wouldn't have been deployed without the incentive.
Very importantly, the incentive was, right from the beginning,
time limited. Nobody had the view this is going to be a gravy
train forever. That was extremely effective.
I think methane hydrates can be the coal-bed methane of the
future if we, in fact, put together a kind of integrated
roadmap of DOE, public-private and appropriate incentives. So I
think that is exactly the kind of discussion that a QER would
have that goes beyond a Quadrennial Technology Review.
So I would say, even in that area, there are pieces of the
puzzle where the Department of Energy and public-private
partnerships have a major role.
I think maybe I could stop--stop----
Senator Murkowski. I appreciate it. Thank you, Mr.
Chairman.
The Chairman. Senator Franken.
Mr. Moniz. Oh, social science. Social----
The Chairman. Oh, did you want to----
Mr. Moniz. With your permission, I forgot to go to the
social science part.
The Chairman. Oh, OK. Go ahead and complete your answer
then, and then we'll have----
Mr. Moniz. I might say that, at MIT, in our energy program,
the importance of integrating social science with the science
and engineering work is a place where we definitely walk the
talk.
Right from the beginning, our program has been organized in
that way because, in agreement with what Secretary Koonin
says--and the example I just gave actually in terms of the
coal-bed methane, for example--technology itself will
eventually, if it is good, cost-effective technology will
eventually find its way into the marketplace.
But if we want to accelerate, which I think is needed in
the context of our current needs of economic-competitiveness
environment, especially addressing the carbon issue and
security, that can only happen with the appropriate policies,
the appropriate economics, the appropriate understanding of the
marketplace and societal needs. We are dramatically under-
investing in this area, and, frankly, it would be a pretty
cheap investment compared to technology development.
So I strongly endorse the idea, and the PCAST report as
well endorsed the idea that we should authorize the department
to support some of this research.
The Chairman. Senator Franken.
Senator Franken. Thank you, Mr. Chairman, and thank the 2
of you.
Reading the summary of the report and being in this
committee for this Congress, it strikes me in many ways that
there are a lot of cross currents going on here and that
sometimes there's an elephant in the room that we don't quite
address head on, and that is global climate change.
Ninety-seven percent of scientists who write on the subject
agree that climate change is real and that it's caused by human
activity. I know the president understands this, which is why
he set out goals of 83 percent greenhouse reductions by 2050.
But reading what I read of this report, it feels like the
climate issue is on the sidelines, like we don't want to call
too much attention to it, because it's somehow controversial.
It's not very controversial. It's not controversial among
scientists. The national security challenges posed by climate
change are every bit as urgent as the security threats from our
reliance on foreign oil.
You don't have to take it from me. You can take it from the
Defense Department or the National Intelligence Council, both
of which have said that climate change is a major threat to our
national security.
So I'd like you to explain how you have considered the
challenge of climate change when making recommendations in this
QTR, because if we're electrifying our vehicle fleet, which I
think we should do, but just burning coal in coal-fired plants,
that gets us off foreign oil. It certainly doesn't do much to
reduce greenhouse emissions.
Mr. Koonin. So, as a general remark, first, I think your
question highlights the fact that there are multiple challenges
here: the oil security issue, the greenhouse gas, and, more
generally, environmental problems and the economic issues, and
different steps we can take will address those issues in
different proportions.
I think one of the elements of the kind of discussion we
need is, how do we weight those various problems? What should
we be addressing first? Some may be easier than others. That's
the first comment.
Senator Franken. Yes, I think we have to navigate those
strains of concerns, and I don't feel like we are doing that
head on in this. I feel like we're skirting it out of
sensitivity for some, maybe, in Congress who are, shall we say
skeptics, and get their information from skeptics.
Mr. Koonin. With respect to the report itself, there's a
healthy section on clean power which is the source of 50
percent or more of U.S. emissions, greenhouse-gas emissions. I
think all of the technologies that we consider in the report
are low- or zero-emissions technologies.
Senator Franken. OK. You know, there's so much to follow up
on on that, but let me get into one thing. I know you want to
talk about transport as opposed to stable stuff, but I want to
talk about buildings for a second.
The president has set a goal of making non-residential
buildings 20 percent more energy efficient by 2020. This will
take major investments in both the public and private sectors.
The QTR notes that many of the cost-effective energy-
efficiency measures available today for business and industry
are not implemented, in part because it's so difficult to
finance efficiency projects.
Last month, I launched an initiative called Back to Work
Minnesota aiming to create jobs in our State by implementing
more energy efficiency retrofits. One of the main goals of this
initiative is to identify financing solutions for retrofit
projects.
Do you have recommendations on how to unleash financing for
energy efficiency retrofit projects in commercial--especially
in commercial buildings, but also in public buildings, to
deploy the efficiency technologies that are already available?
Mr. Koonin. I'm afraid I don't have much to add to that. I
mean, all of this is outside the scope of what we did in the
QTR, which really went through the demonstration phase.
Deployment is something that needs to be considered in a
broader QER.
Senator Franken. OK. We're working on that.
Mr. Koonin. That's very good.
Senator Franken. So if you are interested, my office has
been working on that exactly.
OK. My time is up and I thank the chair.
Mr. Koonin. Let me just say the example you cite of
improving efficiency is a great example of the more general
problem that it's the societal problems as much as it is the
technology.
Senator Franken. Hence, the social science.
Mr. Koonin. Social science----
Senator Franken. Dr. Moniz was talking about it.
The Chairman. Dr. Moniz, you want to comment also?
Mr. Moniz. Senator Franken, first of all, I wanted to say
that I completely endorse your statement about a stronger focus
on the issues of global warming and climate change.
Senator Franken. I thank you. You're a brilliant man.
Mr. Moniz. Among the major drivers, we should point out
that the one in which the clock is set by nature and not by
social systems is the climate challenge, as opposed to the
economic and security challenges.
Second, I believe that the argument around climate change
has regrettably focused much too much on the issues around
complex models and their interpretation.
Frankly, simple arithmetic tells us that we are impacting
the atmosphere in material ways, and prudence, therefore, calls
for us to look at least at what you would almost call no
regrets actions toward new technologies.
In fact, third, would argue that the security challenge is
also about carbon, and so there are many, many synergistic
responses to both climate and security.
On the buildings, I completely agree that this is a major
near-term opportunity. I believe we need to go to something
like, you know, energy savings contracts, in a certain sense.
That's No. 1.
But, No. 2, and this is very difficult, it's extremely hard
to see how we make major progress while having such a
fragmented standards setting for buildings at the, frankly,
even local and city level.
With that, it's very difficult to educate the trade unions,
for example, in terms of the simple technologies that are
available. I mean, we'd be delighted to work with you on that.
Senator Franken. Oh, that'd be terrific. Thank you, Dr.
Moniz.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Coons has agreed to allow Senator Manchin to go
ahead with his questions, and so, Senator Manchin, go ahead.
Senator Manchin. Thank you, Mr. Chairman, and thank you,
Senator Coons. I appreciate it.
Thank both of you for being here, and I appreciate very
much your testimonies. Also, I've gone through some of your
findings, and I appreciate that also.
My concern has always been energy independence for the
security of this nation, our addiction to oil and the price
that we pay in so many ways.
With that, on page 19, you'd said that, ``Currently the
Nation is virtually energy independent in the stationary
sector. Neither natural gas nor coal--the fossil fuels most
important to stationary energy--are currently traded in an
integrated global market that sets a global price.''
I would just say that why would we not want to use energy
sources that we have an abundance today to replace that oil
until we find the fuels of the future?
Let me say in my little State of West Virginia, we're doing
everything we can, and I know that we're very--as you know, an
extraction State and produce an awful lot of coal.
Now, we've found the natural gas, as far as our Marcellus
shale. Utica shale is going to be coming on, and that's
tremendous, fine opportunities for all of us.
Also, we have an abundance of coal, as you know. We have
coal-to-liquids, and I know that--I've heard the arguments back
and forth. We have more wind power, we have more wind farms
than anyone east of the Mississippi. People don't know that.
We're using every ounce of hydro that we have everywhere on the
rivers. So we're willing to do what we can. We have tremendous
biofuel potential.
But with that being said, I can't believe in this many--the
21st century we don't have an energy policy that's totally
energy independent, and that starts with each State looking at
its resources and availability.
I'll make one comment and then I'd like to have you all
comment on that is we did an energy audit in the State of West
Virginia. We've declared energy independence. We don't believe
that we should be dependent on a drop of foreign oil.
This audit turned up showed that by May 1st of every year
we're dependent on foreign oil, because of how we run our State
and the dependence we have on petroleum.
With that being said, we can convert our coal to gas. We
can convert a lot of our equipment now to compressed natural
gas or propanes, a lot of our transportation as far as our
schools and school buses and our mass transit and all those
things.
We're looking at that, but we're not seeing any type of a
holistic approach to how we can use what we have now because of
the demonizing of the fossils, and still we're depending on
more than 50 percent of fossils to carry the load until we find
the fuel of the future.
I noticed there wasn't much in here about that, you know.
If you could comment on that, either one. Doctor, if you would
start, Dr. Koonin, and then Dr. Moniz.
Mr. Koonin. The transport sector is the one where we have
the greatest concern about foreign dependence. But I think the
concern goes beyond that, and let me just take a moment to talk
about some of the nuances here.
We are coupled to a global oil market. Oil is priced
globally. There are some differences due to quality and
location, but, basically, there is one global oil price. We are
not in control of that price, as the president has said. We're
a small producer and a large consumer in that global market.
We can take steps, such as increasing domestic production.
You could do coal-to-liquids, if the economics were favorable,
gas to liquids. All of those will produce liquid hydrocarbons
that are fungible with oil, and, consequently, will continue to
sell and trade at the global price.
So if we really want to free ourselves from foreign
influences, we've got to get beyond energy independence to
price independence. There is a difference. Let me give you an
example I like to cite. If you look at the UK in the year 2000,
there were fuel riots because of an increase in diesel and
petrol prices driven by a global rise in oil.
At the same time, in 2000, the UK was more than energy
independent. It was exporting a lot of oil. So even if we
produced it all at home, which I think would be very difficult
to do, we will still be subject to the dynamics of the global
market.
If you want to decouple from those dynamics, free yourself
from them, we need to run our transportation on something other
than a liquid hydrocarbon, and that means either electricity or
natural gas or hydrogen.
Senator Manchin. Dr. Moniz.
Mr. Moniz. Yes, so I think this issue of oil imports is
certainly a very important one, and I focus more on the dollar
exports than the oil imports, personally. But I think, as was
just said, implicitly, at least, I think we need to work toward
that. It will take a while.
However, and this gets to, I think, to the price
independence, we can, I believe--on the road to that, we can
have a huge impact earlier if we pursue issues of, for example,
flex-fuel vehicles, where we can draw upon petroleum, biomass
and natural gas feedstocks, a so-called open fuel standard
that's been considered in the Congress. In our natural gas
report, we urge that that open fuel standard be supported.
The idea is that if the consumer has arbitrage
possibilities essentially at the pump, that removes--that
completely removes the strategic value of oil and provides more
of this price stability, and particularly price volatility
stability. So that's a first step.
Now, I mentioned petroleum biomass and natural gas
feedstocks. There is, of course, also the fourth major
reservoir of carbon is the coal feedstock and coal to liquids
you mentioned. There, of course, the challenge is that I
personally believe that we will at some reasonable time be
restricting carbon emissions, and so this brings us back to
what I believe the job of the government is here. It's not to
set market shares of technologies. It's to provide the options
to the marketplace to choose.
A critical option in this context is carbon sequestration.
It is extremely disturbing that we have not made more progress
in getting this demonstrated at scale. In fact, we believe--We
had a workshop on this last year together with the University
of Texas. We believe, frankly, that the departmental program
should be restructured explicitly around the co-benefits of
enhanced oil recovery and sequestration, because, ultimately,
the problem is always ultimately the cost of carbon capture.
So we need basic research to reduce that. In the meantime,
we need to do something to monetize part of that cost. So
that's, I think, what we should do in a more comprehensive way.
Senator Manchin. Thank you, sir, both of you.
The Chairman. Senator Coons.
Senator Coons. Thank you, Chairman Bingaman. Thank you for
calling this hearing. I was happy to accommodate Senator
Manchin. He and I are both celebrating our 1-year anniversary
as Senators today. So--and I----
The Chairman. Congratulations.
Senator Coons. Thank you. It's been an interesting year, I
must say.
Senator Franken. My anniversary doesn't fall on the normal
anniversary.
The Chairman. That's right.
Senator Franken. Yes, I remember----
[Laughter.]
Senator Coons. I wanted to start simply by thanking Dr.
Koonin for his service and his leadership and express my regret
at hearing you're moving on from your current role within the
department and look forward to hearing from you in future
roles. I think you've contributed greatly to progress on the
core topic of this hearing today.
I don't believe I've ever heard the word ``fuelism''
before, but I appreciate your ongoing efforts to expand my
fairly limited lexicon of energy-related terminology.
I, you know, was struck in sort of looking over the 2 bills
that are really sort of the core of focus today. The S. 1703,
which Senator Pryor spoke to earlier, does enjoy bipartisan
support, broad support, and I am hopeful that out of this
hearing we'll move forward with both Pryor's bill and the
chairman's bill.
If you would, Dr. Koonin, just start by helping me
understand some of the context here. The Quadrennial Reviews
that have long been performed by the Department of Defense,
and, in the current administration by the Department of State,
the Quadrennial Technology Review is a DOE effort to look at
technology, and the QER, which we've largely been focused on
here today, is intended to bring an administration-wide look at
priorities and projects.
The very interagency cooperation that would be required to
make the QER possible also makes the undertaking far more
complicated.
How will the DOE, as the agency in charge of coordinating
the QER, deal with that complexity, ensure that the final
product is useful and engage the many different entities across
the administration?
Mr. Koonin. I think that's a wonderful question. I don't
think we've thought it through entirely, but I can give you my
own sense of how it should be done.
The QTR process began with the good framing of the issues.
What are we trying to answer? I would think that, in doing a
QER, that's probably the first step. What are we trying to
focus on? I don't think you can do it all the first time. You
might choose to focus on transportation. You might choose to
focus on greenhouse-gas emissions or some other direction just
to take a bite-size chunk.
I think it's then a lot of groundwork to frame whatever
issues you're trying to address, background, suggestions, and
then, frankly, it's a lot of legwork out with the agencies. We
did, in the course of the QTR, a lot of bilateral meetings with
folks in the agencies not only to enroll them, but also to get
their ideas, and I think the product was much better for that.
Then, because energy is in the hands of the private sector
and the consumers, you've got to be out a lot. We used
workshops in the QTR, focus groups. I think that's the way in
which you can build the kind of broad consensus that Senator
Murkowski was talking about in order to make something that is
both sensible and has a chance of enduring.
Senator Coons. One of the things the administration has
recognized is that there's a whole range of clean-energy
technologies that are currently in sort of development and
deployment that cross departmental lines.
For example, you know, wind, solar, geothermal on Federal
lands. You've got permitting and access and approval issues,
hydrokinetic, offshore wind, of particular interest to me,
you've got across departmental lines, and they require
significant agreement that is, at times, difficult to achieve.
Do you believe that, by undertaking the QER, we'll have a
better baseline to which to refer to allow us to resolve some
of these jurisdictional regulatory hurdles going forward,
regardless of the technologies of focus?
Mr. Koonin. We found, in the bilateral meetings at the
senior working level, I would say, a great appetite for this
kind of discussion and coordination. It's an untapped potential
within the government that someone needs to exploit.
Senator Coons. Dr. Moniz, if I might just toot my
Governor's horn for a moment, my home-State Governor has, I
think, done a great job of leading a broad review of a state
energy plan, an integrated resource plan. We have a number of,
I think, innovative financing mechanisms, the sustainable
utility, for example.
Energy and technology policy are obviously made at the
state and regional level as well as federally. How would you
envision a QER engaging states and other outside groups, non-
Federal groups?
Mr. Moniz. By the way, if I may add to your list, another
issue is grids----
Senator Coons. Yes.
Mr. Moniz [continuing]. Which has both multiple agency and
multiple State issues along all the lines of your comment.
If I may add a comment with what Steve said, I mean, our
view is that, while the Department of Energy must form the
executive secretariat and has great convening power in the
energy industry, the convening power across the government does
not reside with the DOE, and that's why it must be a strong
partnership with the EOP to provide that. Then if DOE builds up
this powerful engineering economic analysis capacity, that will
give the--to back up the framing that DOE does.
The States, as you rightfully say, the States, and also
sometimes regional collections of States, have been leaders,
obviously, in much of energy-policy development. The QER will
not work without recognizing that. Indeed, we make a point--
it's actually in my written testimony as well--that the
regional--the legitimate regional differences in the United
States for energy technology and energy policy and fuels must
be recognized in a robust and resilient policy. Frankly, I
think, for too long, we failed to recognize that and dead on
arrival. So the States must play a critical role.
I would say that it goes 2 ways. The States, I think, have
a tremendous amount of input to make to the process. But I must
also say that, in some cases, we bear a history of organization
around States like, for example, in the electricity sector.
That does not reflect the physical reality of grids, for
example, of moving renewable resources across many, many state
boundaries.
So I think the States also must be part of the conversation
and must also show the flexibility to address some of these key
questions.
Senator Coons. Thank you. I see my time is up. I have other
questions I might submit for the record about the Executive
Office of the President and other entities and how to
facilitate the objectives put forward today in this hearing.
Thank you both. Thank you very much.
The Chairman. Very good. Senator Hoeven.
Senator Hoeven. Thank you, Mr. Chairman. Greetings to our
distinguished witnesses today.
Mr. Koonin, thank you very much for coming to North Dakota
yesterday for our----
Mr. Koonin. Pleased to do so.
Senator Hoeven. Empower North Dakota Energy Conference.
Appreciate it very much and appreciate your remarks there.
The question I have for you is something that we talked
about yesterday. As you saw, we had tremendous representation
from all the different industry sectors at the energy expo,
both traditional sources of energy, natural gas, oil, coal, as
well as the renewable sectors--wind, biofuels, biomass, solar.
We talked about the different programs we have and how we
have great cooperation among the different industry sectors in
terms of our State's comprehensive energy policy and power in
North Dakota which we've built up over the past decade.
When I had an opportunity to make some remarks, I talked
about how important it is that we get the traditional sector
and the renewable sector working together. If we're going to
have the kind of legal and regulatory climate we need to truly
develop our energy resources, to stimulate the private
investment, to deploy the technology, to produce all these
energy sources, we've got to get fossil and the renewable
communities working together.
Tell me how we do that, how you're working at DOE as under
secretary to do that and the role that technology plays in that
effort, but specific ideas on how we get them working together,
how you're working to do that and how the technology will help
us accomplish that. These synergistic partnerships which we
know are out there which we're doing, please talk about that a
little bit. I'll ask the same question to Dr. Moniz, too.
Mr. Koonin. So, first of all, thanks for helping host a
wonderful day yesterday as I was getting a sense of North
Dakota. As you mentioned, I was particularly impressed by the
diversity of folks that were around the table--industry, NGO's,
government--discussing energy matters in what I thought was a
very considered and productive way.
I think one of the greatest outputs of a QER, beyond
whatever document itself emerges, is a greater understanding
and dialog across different parts of industry and then with
industry and government and the consumer and so on.
In the QTR exercises that we have carried out to prepare
this report, I think some of the greatest value was getting
that kind of diversity in the room and focusing on a specific
technology or set of technologies.
So I think it starts with just understanding and dialog
which has been sorely absent, I think, in a lot of what we do
in energy.
The second thing is that there are legitimate ways in which
traditional and new energy technologies can work together by
firming renewables with gas, like the fly ash example that I
saw in North Dakota yesterday. I think we need to be on the
lookout for those in the Department, and the government more
generally, promoting them.
Senator Hoeven. Pleased to hear you mention the fly ash,
because I have legislation on that very subject, and I think it
is an opportunity to bring traditional and renewable together.
The other example you gave, would you repeat that one?
Mr. Koonin. I'm blanking right now. The Department of
Energy firming renewables, right. So you can have intermittent
renewables and back them up with natural gas to make sure that
the power is----
Senator Hoeven. Right. That's what I mean. I think that
really is an opportunity, but I just wanted some specific--
You're talking about wind and natural gas, gas-fired plants. I
mean, just wanted you to give me some examples in that
category.
Mr. Koonin. So, you know, the beneficial use of carbon
dioxide to enhance oil recovery----
Senator Hoeven. Exactly.
Mr. Koonin [continuing]. Is another kind of----
Senator Hoeven. Something that we're very interested in
doing.
Mr. Koonin. Right. Right.
Senator Hoeven. We need you to help drive that process with
your programs.
Mr. Koonin. Right.
Senator Hoeven. We have that opportunity, both with carbon
capture, thorough our--not only our traditional coal-fired
electric, but gasification plants, and, of course, the
proximity to oil fields.
Mr. Koonin. As for all beneficial uses of carbon dioxide,
though, I would urge a little bit of tempering of enthusiasm.
The U.S. used a total of 60-million tons of carbon dioxide last
year from other sources for enhanced oil recovery. That amounts
to just about 1 percent of the U.S. CO2 emissions.
So even if we doubled or tripled that, it still is a small bite
out of a much bigger problem.
Senator Hoeven. The same challenge that we had in producing
oil out of the Bakken with horizontal drilling. When we
started, it was not economic to do that. It is not economic to
do carbon capture and sequestration, even though we've got all
the elements----
Mr. Koonin. Yes.
Senator Hoeven. This is where we need the technology to
help drive the process by driving the cost down, the efficiency
higher.
Your programs are key here. Again, we need to go back to
your original comment, the dialog, we have got to engage both
communities, the traditional and the renewable sectors in this
discussion where they both perceive a victory, and that's not
happening.
Mr. Koonin. No.
Senator Hoeven. We've got to somehow drive that in
Congress, but we need your help. I think that technology is a
big, big factor in helping make that happen.
Mr. Koonin. As I said, I think the QER could be an
important catalyst and forum for that dialog.
Senator Hoeven. Mr. Chairman, if I could beg your
indulgence for another several minutes.
Doctor, would you--and, again, if you can drill in on some
specific examples, maybe that helps us move the dialog forward.
Mr. Moniz. Sure. I should congratulate you on your State's
energy economy. It's booming.
But let me pick up exactly on these examples. I would
differ a little bit with Secretary Koonin's statement on the
EOR. In fact, I think before you arrived I commented that we
have advocated that the department's program be restructured
explicitly around the co-benefits of enhanced oil recovery and
carbon storage. Largely for the reasons you expressed, we need
to do something to offset the costs of carbon capture if we are
to demonstrate large-scale storage, and, of course, having more
domestic production is a benefit.
Today, as was stated, there are about 60-million tons of
CO2 being used to produce around 300,000 barrels a
day in the United States. The estimates are that this won't
happen quickly, but over about 20 years, that could go up
roughly 10 X, potentially, to about 3-million barrels a day,
which would be a pretty substantial contribution in 20 years.
That would then soak up approximately 20 percent of the
CO2 from coal plants, and, bluntly, that may be
about the limit of credible retrofit of our coal fleet. So
there may be a very good match between what we can do with
retrofits and enhanced oil recovery.
The key, however, ultimately, is new technology for carbon
capture that reduces the cost not incrementally, but by factors
of 2 or 3 or pi. I believe that will not come from incremental
improvements around today's technology, the so-called amine
capture.
This is where we need a parallel program demonstrating the
storage and doing a lot of basic research and some wild ideas
about what could be effective--reductions in cost.
On the renewable and gas, another very, very important
issue, let me say that that's a case where the challenge today
is probably less on new technology and much more on the policy
and regulatory structures.
For example, if we're going to balance, let's say, wind
with gas, we may very well be requiring gas plants that are
used at rather low capacity factors. So we also need a
regulatory structure that pays somebody to build capacity and
not just to produce kilowatt hours. So that's where the
technology and the policy come together, and the States will
play a huge role in that.
Senator Hoeven. The key is figuring out how you work with
markets to drive that process in a cost-effective way.
Back to your first example for just a minute--if I could
have just a couple more minutes, Mr. Chairman--for example, in
North Dakota, we have the elements to do the carbon capture and
sequestration process, because you have both the coal, we have
both, again, electricity and gasification where we actually
produce----
Mr. Moniz. Yes, Great Plains, yes.
Senator Hoeven [continuing]. Synthetic natural--Exactly.
In proximity to oil fields that have both the maturity--The
Weyburn field, for example, in Canada, which has the maturity,
but also the density, the--you know, a lot of wells in close
proximity.
The nature of the Bakken is such, over this next X number
of years, we're going to be doing a lot of infield drilling. So
you're going to end up with mature fields with a lot of wells
close together, which works with sequestration.
So what I'm saying is this is fertile ground to do exactly
what you just described in terms of that technology development
and deployment to make this commercially viable.
If we make it commercially viable, that is how you are
truly going to capture CO2, not through a policy
ordering somebody to do it when it's not economic, not just for
this country, but for other countries, too, because they'll see
that it's a cost-effective proposition.
So what I'm saying is that's a very fertile place for the
DOE to really go to work and figure this out.
Mr. Moniz. Again, I agree with that. Although, I do feel,
in the end, it would be a combination of the EOR value plus
some kind of carbon pricing that would make it a large-scale
commercial enterprise.
But I would just also add that when we advocate exactly
what you're calling for, a more organized approach around EOR,
this is not just about saying the project will do EOR. It's
about a much more comprehensive planning around what is a
CO2 transportation infrastructure. How do you assign
liabilities? How do you share the rent between the
CO2 producer and the enhanced oil recovery? So it
needs a very different kind of program design.
Senator Hoeven. In our State, we've utilized the Interstate
Oil and Gas Compact Commission model to put a legal and
regulatory structure in place to address liability issues.
Final point is I would be interested in both cases, both
with the carbon capture and sequestration and this marriage
between, for example, gas and wind to work with both you at MIT
and----
Mr. Moniz. Possibly difficult relationship as opposed to
marriage.
Senator Hoeven. Exactly. But I think there's real
opportunity if we can figure out how to drive it. I'm going to
have my staff follow up with you, both of you on these issues--
--
Mr. Moniz. We'd certainly be happy to work with your staff.
Senator Hoeven. Thank you for coming today and for your
testimony.
Again, Dr. Koonin, thank you for coming to North Dakota
yesterday. Truly appreciate it.
Mr. Koonin. It was great. Thank you.
The Chairman. Thank you both very much.
Let me just ask Dr. Koonin, maybe you would describe a
little more. You said that there are individual policy studies
or technology studies that accompany the technology review that
you earlier released. Could you give us a little more
information on those and when we might expect them?
Mr. Koonin. Sure. There are 17 Technology Assessments that
include analyses of the history, the technical potential,
roadmaps for development, milestones and so on, for all of the
usual suspects: nuclear, wind, biofuels and perhaps a few
unusual ones.
They've been prepared by teams of people inside DOE in the
national labs and peer reviewed by a set of independent
external reviewers. They are all, more or less ready to go. We
are in almost real-time discussions with OMB to get final
clearance to post them up on the web. I would hope that that
will come in the next day or 2. They're an integral part of the
main report.
The Chairman. Very good. We congratulate you on the report
and on the other studies as well, and, again, wish you well in
your upcoming ventures.
Mr. Koonin. Thank you. It's been a pleasure interacting
with this committee in my current capacity, and there may be
opportunities in the future----
The Chairman. Well, we appreciate your excellent work.
Mr. Moniz, we appreciate your excellent work, as always.
Thank you both very much, and that'll conclude our hearing.
[Whereupon, at 11:29 a.m., the hearing was adjourned.]
[The following statement was received for the record.]
American Energy Innovation Council,
November 15, 2011.
Hon. Jeff Bingaman,
Chairman, Senate Committee on Energy and Natural Resources, 304
Dirksen, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Senate Committee on Energy and Natural Resources, 304
Dirksen, Washington, DC.
Dear Chairman Bingaman and Ranking Member Murkowski: As chair of
the American Energy Innovation Council (AEIC), I offer our support for
S. 1703, the Quadrennial Energy Review Act of 2011, a bipartisan bill
sponsored by Senator Mark Pryor, and S. 1807, the Energy Research and
Development Coordination Act of 2011, sponsored by Senator Jeff
Bingaman.
The AEIC is a group of America's top business executives who came
together in 2010 to recommend ways to promote American innovation in
clean energy technology. We are united in our belief that technology
innovation--especially in energy--is at the heart of many of the
central economic, national security, competitiveness, and environmental
challenges facing our nation. As business leaders, AEIC members know
firsthand how the private sector can be mobilized to attack these
problems, but we also know the government must play a vital role in
this process.
Since coming together, the AEIC has released two reports calling on
a series of measures to bolster and improve our country's energy
innovation capacity. Central among our recommendations is the need for
the U.S. to develop a well coordinated National Energy Plan that can
serve as an energy technology and policy roadmap. Importantly, such a
plan should pinpoint key market failures and technology chokepoints in
order to better orient federal programs and resources. To this end,
AEIC strongly supports efforts to align, coordinate and improve the
federal government's energy innovation activities. We support DOE's
recent QTR process, which provided an important and meaningful first
step toward developing a national energy strategy consistent with our
own call for a National Energy Plan, and believe the federal government
should move quickly toward a government-wide QER.
In the current era of fiscal austerity, it is paramount that
federal programs are well designed, strategically coordinated, and
streamlined--especially those related to energy innovation. The
legislation being considered today implements a key AEIC recommendation
and will help the country align and utilize federal resources related
to the country's much needed energy innovation activities. The AEIC
offers our full support for S. 1703 and S. 1807.
Sincerely,
Chad Holliday,
Chair, American Energy Innovation Council.
Chairman, Bank of America.
APPENDIX
Responses to Additional Questions
----------
Responses of Steven E. Koonin to Questions From Senator Murkowski
Question 1. One of the requirements of S. 1703, in establishing a
Quadrennial Energy Review, is to assess policy options to increase
domestic energy supplies. Based on your work with the Quadrennial
Technology Review, would the Obama Administration include fossil fuels
among the domestic energy supplies?
Answer. The Administration fully recognizes the role of fossil
fuels in the nation's energy supply. That the Quadrennial Technology
Review (QTR) respects this context is evident by the focus on
infrastructure compatibility for new energy technologies.
The scope of the QTR is energy technology R&D supported by the
Department of Energy. It does not address broader aspects of energy
policy nor set priorities for energy R&D carried out elsewhere in
government. Broader energy policy is discussed in the Blueprint for a
Secure Energy Future. The QTR should be considered only one piece of
what a larger Quadrennial Energy Review (QER) could look like. Such a
QER could address detailed issues relevant to fossil resource
extraction and the deployment of technologies to harness renewable
resources alike.
Question 2. The QTR report states that the DOE is underinvested in
the transport sector compared to the stationary sector, which suggests
that the current Administration will seek to shift resources from
stationary to transport. Which parts of the stationary sector do you
see as being cut to increase investment in transport?
Answer. As we stated in the QTR, DOE focuses too much effort
currently on researching technologies that are multiple generations
away from practical use at the expense of analyses, modeling and
simulation, or other fundamental engineering research that could
influence private-sector, we also found that DOE is underinvested in
activities supporting modernization of the grid (although the most
critical advances needed for a modernized grid are not related to
technology or R&D) and increasing building and industrial efficiency
relative to those supporting the development of clean electricity. In
identifying specific technologies for greater or less emphasis in the
DOE portfolio including clean electricity technologies, we will assess
their potential against our criteria of materiality, markets, and
maturity (DOE QTR, pp. 106-109).
Question 3. the QTR states that DOE ``will not support R&D on fuel
pathways that have greater life cycle carbon emissions than
voncentional fuels'' because the emissions from those fuels ``outweigh
the potential benefits for petroleum displacement.'' What exactly is
that analysis based on--did you conduct a cost-benefit analysis, or
qualify the costs of climate change versus the benefits of reducing
fuel imports?
Answer. Greenhouse Gas (GHG) emissions per unit of transportation
fuel or electricity produced from various technologies and feedstocks
are estimated using a series of technical calculations. since we are
trying to make progress on three separate goals--economic growth,
energy security, and environmental impacts--our decision criteria was
that potential advances in pursuit of one goal should be balanced
against potential impacts on either of the remaining two goals. In the
case of technologies that convert a fossil fuel feedstock to liquid
transportation fuels (e.g., coal-to-liquid or gas-to-liquid) in the
absence of carbon capture and sequestration, the potential progress in
the direction of energy security (alternative fuels to oil) may result
in greater GHG emissions than traditional petroleum fuels.