[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.
---------------------------------------------------------------------------
   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.

                                    

      
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