[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
LABORATORIES OF DEMOCRACY: THE ECONOMIC IMPACT OF STATE ENERGY POLICIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 24, 2014
__________
Serial No. 113-165
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania LOIS CAPPS, California
MICHAEL C. BURGESS, Texas MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee JANICE D. SCHAKOWSKY, Illinois
Vice Chairman JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
CORY GARDNER, Colorado BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas PAUL TONKO, New York
ADAM KINZINGER, Illinois JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
7_____
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
STEVE SCALISE, Louisiana BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
RALPH M. HALL, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois PAUL TONKO, New York
JOSEPH R. PITTS, Pennsylvania JOHN A. YARMUTH, Kentucky
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas GENE GREEN, Texas
ROBERT E. LATTA, Ohio LOIS CAPPS, California
BILL CASSIDY, Louisiana MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia DORIS O. MATSUI, California
CORY GARDNER, Colorado DONNA M. CHRISTENSEN, Virgin
MIKE POMPEO, Kansas Islands
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN D. DINGELL, Michigan (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio) HENRY A. WAXMAN, California (ex
officio)
(ii)
C O N T E N T S
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Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 4
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 5
Witnesses
Tom Tanton, Director of Science and Technology Assessment, Energy
and Environment Legal Institute................................ 7
Prepared statement........................................... 9
Fred Siegel, Senior Fellow, Manhattant Institute, and Scholar in
Residence, Saint Francis College............................... 22
Prepared statement........................................... 24
Steve Clemmer, Director of Energy Research and Analysis, Climate
and Energy Program, Union of Concerned Scientists.............. 28
Prepared statement........................................... 31
Steven Nadel, Executive Director, American Council for an Energy-
Efficient Economy.............................................. 48
Prepared statement........................................... 50
Paul E. Polzin, Director Emeritus, Bureau of Business and
Economic Research, University of Montana....................... 63
Prepared statement........................................... 65
Bernard L. Weinstein, Associate Director, Maguire Energy
Institute, Cox School of Business, Southern Methodist
University..................................................... 71
Prepared statement........................................... 73
Submitted Material
Article, ``Top Ten Myths About Wind Power and Birds,'' by Michael
Hutchins, American Bird Conservancy, submitted by Mr. Griffith. 96
LABORATORIES OF DEMOCRACY: THE ECONOMIC IMPACT OF STATE ENERGY POLICIES
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THURSDAY, JULY 24, 2014
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:01 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Hall, Shimkus,
Pitts, Terry, Latta, Cassidy, Olson, McKinley, Gardner,
Kinzinger, Griffith, Barton, Rush, McNerney, Tonko, Engel,
Green, Capps, Barrow, Castor, and Waxman (ex officio).
Staff present: Nick Abraham, Legislative Clerk; Gary
Andres, Staff Director; Charlotte Baker, Deputy Communications
Director; Leighton Brown, Press Assistant; Allison Busbee,
Policy Coordinator, Energy and Power; Tom Hassenboehler, Chief
Counsel, Energy and Power; Jason Knox, Counsel, Energy and
Power; Ben Lieberman, Counsel, Energy and Power; Chris Sarley,
Policy Coordinator, Environment and the Economy; Jean Woodrow,
Director of Information Technology; Jeff Baran, Democratic
Staff Director, Energy and the Environment; Alison Cassady,
Democratic Senior Professional Staff Member; Caitlin Haberman,
Democratic Policy Analyst; and Alexandra Teitz, Democratic
Chief Counsel, Energy and the Environment.
Mr. Whitfield. I would like to call the hearing to order
this morning, and the title of today's hearing, ``Laboratories
of Democracy: The Economic Impact of State Energy Policies.''
And at this time, I would like to recognize myself for a 5-
minute opening statement.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
This is going to be an informative hearing, I believe,
because we have such great witnesses that have really studied
different policies being adopted by different States in a lot
of different areas, and the decisions being made at the State
level today about public policy, particularly as it relates to
energy development, goes a long way in giving us an insight at
the Federal level, because we are having the same debates at
the Federal level in the direction that we should go.
Now, President Obama has made it very clear that he
believes the number 1 problem facing mankind today is climate
change, and a lot of his policy decisions by his administration
are being made based on his concern about climate change. Many
of us on the other side of the aisle, and a lot of Democrats as
well, believe that economic growth is one of the most important
issues facing us today.
Now, let me just say that I read an article in Barron's 3
days ago that said before the most recent recession, there were
122 million full-time jobs in America. Four and a half years
later, there are 118 million full-time jobs in America. Despite
a workforce that is 1.6 million larger, and a working-age
population that is 14 million larger, so full-time employment
is much less today; almost 4 million less today than it was 4
\1/2\ years ago. And then in the 2014 long-term budget outlook
of CBO, which just was released, they talk about our debt held
by the public today as 74 percent of GDP, and they anticipate
by 2030 it is going to be 180 percent of GDP. So the economic
forecasters are saying we are genuinely concerned about the
impact that this is going to have on economic growth in
America, and the availability of capital for economic
expansion.
Supreme Court Justice Louis Brandeis described States as
laboratories of democracy, and we can take some hard-known
facts from decisions being made in States today, and the impact
of those decisions on jobs available in those States and on
economic growth. And then we are going to have the opportunity
to ask our witnesses questions about it after they give their
opening statements on their views, but if you do view that
climate change is the most important issue facing mankind, or
facing America, then you are going to go in one direction on
energy policy, but if you believe economic growth is the most
important, and jobs and providing income for families, then
your approach is going to be a little bit different. And we
know that those approaches make a big difference. For example,
in North Dakota, GDP growth last year was 9.7 percent, the
highest in America. And North Dakota has been the fastest-
growing State in the Nation every year since 2010. And in 2012,
the GDP growth in North Dakota was 20 percent. Now that is
because of the State's oil boom driven by hydraulic fracking in
the Bakken shale formation has been responsible for much of
this growth. On the other hand, let us take a State like
California. Public policy decisions being made in California
are about climate change. And we hear a lot about, well, there
are so many jobs being created in the wind industry and solar,
and so forth, but what about the jobs being lost? But here we
have at the opposite end of the spectrum from North Dakota is
California, 7.4 percent unemployment rate, the highest among
the 10 most populous States, a stagnating economy, some of the
most expensive energy in the Nation. It has been rated the
worst State for doing business 10 years in a row by Chief
Executive magazine. Now, I would be the first to say it is a
beautiful State and we all love to go there, but businesses are
leaving that State. So what we want to look at today is the
impact of these decisions and setting the priorities, because
we can learn a lot from the States as we continue our debate at
the Federal level on what direction we should go. President
Obama wants to go down the pathway of California, which has
proved not to be successful.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
Supreme Court Justice Louis Brandeis famously described
States as laboratories of democracy, and in today's hearing we
will explore this concept in the context of energy policy. We
are pleased to have a panel of witnesses who can share insight
about these State-level experiences.
Under our federalist system, States have considerable
latitude to try out different ideas. Those State-level policy
experiments that are successful can be copied by other States,
as well as by the Federal Government. And those that fail can
serve as a cautionary tale and prevent others from making the
same mistake.
We see many differences between States on energy policy,
and widely varying results. Some States have low electricity
rates and others do not. Some have gasoline prices close to
$3.25 a gallon and others above $4.00 a gallon. And since a
State's energy policy can affect its overall economic
prospects, it is no surprise that some States enjoy very low
unemployment and fast-growing economies, while others struggle
with high unemployment and economic stagnation.
Today, we will hear more about these State differences as
they relate to energy. And there is much tolearn. According to
the Department of Commerce's Bureau of Economic Analysis, many
of the fastest-growing State economies did so due to oil,
natural gas and coal production. For example, North Dakota's
responsible development of its energy resources is a big part
of the reason it has the Nation's lowest unemployment rate and
fastest-growing economy. Additional States making the top ten--
Texas, Colorado, Oklahoma, West Virginia, and Wyoming--are also
making good use of their in-state energy supplies and support
technologies like hydraulic fracturing as well as energy
infrastructure projects like the southern leg of the Keystone
XL pipeline. Other States were able to weather the recent
recession because of their energy policies, such as
Pennsylvania where 90 percent of new job growth between 2005
and 2012 came from the oil and gas sector. In the neighboring
State of New York, which has the same shale potential but has
prohibited modern oil and gas extraction techniques, economic
growth has languished.
I might add that these pro-fossil-energy States are not
just helping the wealthy--quite the contrary, they are
benefitting lower-income households the most. For one thing,
energy production and energyinfrastructure projects create many
high wage blue-collar jobs that provide badly needed
opportunities forupward mobility. For another, the resultant
lower energy costs disproportionately help the least
fortunatewho would otherwise struggle to pay their bills. In
contrast, the anti-drilling, anti-fracking, anti-Keystone,keep-
it-in-the-ground philosophy toward fossil fuels that we see in
other States is an energy policy that only the 1 percent can
afford. Mr. Fred Siegel wonderfully illustrates this issue in
his testimony when he talks about the ``gentry liberals''
driving an environmental policy that satisfies their desires at
the expense of the general population.
Washington should be learning from these State successes
and applying the same pro-energy policies to federally
controlled lands and offshore areas. But unfortunately we are
not doing so. In fact, recentreports from the Congressional
Research Service and Energy Information Administration show
overall declines in energy production from Federal lands. North
Dakota and others have set a good example for the Nation, but
that example is being ignored here in Washington. It is time
for that to change.
At the opposite end of the spectrum, California has one of
the Nation's highest unemployment rates, a stagnating economy,
and some of the most expensive energy in the Nation. It has
been rated the worst State for doing business 10 years in a row
by Chief Executive magazine. This is due in part to costly
energy regulations such as the global warming measures that are
sapping the State of its vitality and chasing away businesses.
Yet we see the Obama administration imposing these same failing
policies on the Nation as a whole.
Indeed, it often seems like the administration has it
backwards--instead of copying the good State energy ideas and
avoiding the bad ones, it is doing precisely the opposite.
We can and should have a reasonable debate over which
States have the best ideas on energy, but I hope we can all
agree that this kind of State-level experimentation should be
allowed to continue. Unfortunately, it is under threat by one-
size-fits-all Federal regulations that preempt State choice and
impose cookie-cutter Federal approaches. We see this most
clearly in the agency's regulatory war on coal which leaves
States no option but to forbid new coal-fired capacity and
impose harsh provisions on existing coal plants. I believe
States that want to continue using coal as an affordable and
reliable component of its electricity mix should be given the
opportunity to do so without Federal interference.
In any event, I hope we can all gain from learning more
about what is going on at the State level on the energy issues
that matter to this subcommittee. Thank you.
Mr. Whitfield. So with that, at this point in time, I would
like to recognize the ranking member of the committee, Mr.
Rush, for 5 minutes for his opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. Well, thank you, Mr. Chairman. I want to thank
you for holding today's hearing on the economic impacts of
State energy policies.
Mr. Chairman, currently, 29 States and the District of
Columbia have already adopted renewal--renewable energy
standards, or renewable portfolio standards, while an
additional 8 States have non-binding renewable energy
standards. And we know that these policies have helped to grow
the renewable energy industry in our Nation with fully 67
percent of the all non-hydro renewable capacity growth
occurring in States with RPS policies between 1998 and 2012.
Mr. Chairman, this investment in renewables as--has helped
not only make us less dependent on carbon-intensive energy
sources, but has also created tens of thousands of good-paying
jobs all across the country in construction, in manufacturing,
in retrofitting and in other sectors. For instance, Mr.
Chairman, the U.S. solar industry now employs more than 142,000
workers, at more than 6,000 businesses located in all 50
States. Additionally, the development of the wind industry has
also generated tremendous economic benefits, so that by the end
of 2013, the wind sector alone was employing more than 50,000
jobs all across this Nation. In fact, Mr. Chairman, my home
State, the State of Illinois, has been at the heart of the wind
industry in this Nation, leading the way in both turbine
manufacturing and also electricity production. Illinois wind
powered the equivalent of 880,000 homes in 2013, supplying
nearly 5 percent of the State's electricity, while hosting
2,195 wind turbines and at least 36,000 manufacturing
facilities that build wind turbine components. Aside from its
forward-thinking renewable energy policies, my State, the great
State of Illinois, is among the top 10 of the American Council
for Energy Efficient Economy, or ACEEE, State efficiency
scoreboard, as Mr. Nadel, as the executive director, notes in
his written testimony before this subcommittee today.
In Illinois, policymakers have implemented an energy
efficient resource standard that has helped to decrease the
Nation's overall electricity usage, while also working with
utilities to deliver savings to Government agencies and to low-
income consumers. As Mr. Nadel points out, the Illinois
Department of Commerce and Economic Opportunity, the agency
responsible for implementing the State's energy efficiency
program, was named the ACEEE's star partner of the year just
this very year of 2014. Additionally, Mr. Chairman, members of
the subcommittee, my State, the great State of Illinois, was
also the first State in the Midwest to adopt the 2012
International Energy and Conservation Code, a national model
building code prepared by the International Code Council.
So, Mr. Chairman, we are not California, we are not
Kentucky, we are Illinois, and it is my sincere hope that
today's hearing will serve as a platform not just to bash
California or bash the Obama administration over its much-
needed climate change policies, but rather to hear about my
State and other States; States that constructively are enacting
smart and resourceful strategies that propel our country
forward by creating jobs and investment, business more
independent, more secure, while also reducing the cost of
energy both in our pocketbooks as well as in our impact on our
environment.
Mr. Chairman, thank you, and I agree with you, we have a
marvelous panel of witnesses today, experts in their field, and
I look forward to hearing every word that they have to say to
us. Thank you.
Mr. Whitfield. Thank you, Mr. Rush. And Mr. Upton is not
going to make an opening statement, so is there anyone on our
side of the aisle that would like to make a statement about the
hearing this morning?
OK. Well, at this time, I would like to recognize the
gentlemen from California, Mr. Waxman, for a 5-minute opening
statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman.
Today's hearing focuses on the economic impacts of State
energy policies. It is an opportunity to examine the growth of
the clean energy sector, and the positive economic benefits of
renewable energy and energy efficiency.
States have taken a leadership role in harnessing the power
of renewable energy. Twenty-nine States and the District of
Columbia have enacted renewable portfolio standards to generate
more electricity from clean energy sources. As a result of
these State programs and Federal incentives, we have doubled
our capacity to generate renewable electricity from wind and
solar in just 5 years. This is important because renewable and
low carbon energy sources are a fundamental part of any serious
plan to address climate change.
In May, the International Energy Agency warned that the
world needs to invest trillions of dollars in renewable and
other clean energy technologies over the coming decades in
order to avoid the worst impacts of climate change. That is a
potentially huge economic opportunity for the United States.
Investing in renewable energy is not only good for the climate;
it is also a boon for U.S. manufacturing, jobs and
competitiveness.
Both blue States and red States have the success stories to
prove it. Texas ranks first in the country for wind power
installations and wind industry jobs. California ranks second.
The wind industry has injected more than $11 billion into
California's economy, and $23 billion into the Texas economy.
This investment translates into jobs and a stronger, more
diverse tax base.
Energy efficiency also will help play a key role as the
world grapples with the challenge of reducing carbon pollution
and slowing dangerous climate change. The International Energy
Agency has concluded if the world does not take action to
reduce carbon pollution by 2017, then the energy infrastructure
existing at that time will lock us into a path toward
devastating climate change. But if we invest now in energy
efficiency, we can give ourselves more time. According to the
IEA, the rapid deployment of energy efficiency measures would
give the world at least 5 additional years to develop long-term
solutions.
States have taken action to make our industry, our
buildings and our transportation system more energy efficient.
This is a commonsense policy that saves businesses and families
money on their energy bills while cutting pollution
But we need to do more. We need a national commitment to
clean energy and energy efficiency in order to tackle the
urgent threat of climate change. The Clean Power Plan proposed
by EPA would make that commitment.
The plan lays out key building blocks for how States can
cut emissions from the Nation's largest source of uncontrolled
carbon pollution: power plants. One building block is using
electricity more efficiently. EPA based its proposal on what
States are already doing to make homes and businesses more
efficient.
Another building block is generating more power from zero
and low-carbon energy sources. EPA looked at the renewable
energy potential in each region of the country to determine the
scope of the opportunities here for States. EPA found that all
States can do more, even Kentucky, to tap their clean energy
potential.
The Clean Power Plan is an eminently reasonable and
achievable proposal. It gives States the flexibility to choose
how to achieve critical reductions in power plant carbon
pollution. And it sets us on a path toward cleaner air, better
health, a safer climate, and a stronger 21st century economy.
States will play a critical role in the success of the Clean
Power Plan.
So I thank the witnesses for being here. And I would be
happy to yield the half a minute to anybody who wants to say
anything. If not, I yield it back, and look forward to the
witnesses.
Mr. Whitfield. Thank you very much, Mr. Waxman.
And that concludes the opening statements. And so I want to
welcome the panel of witnesses. As I said in the beginning, we
understand and know that all of you have looked into this very
much, and that you are dedicated and committed to it, and we
look forward to your testimony and then the opportunity to ask
questions.
On the panel today, we have Mr. Tom Tanton, who is the
Director of Science and Technology Assessment of the Energy and
Environment Legal Institute. And what I am going to do, I am
just going to introduce you individually right before you give
your remarks. So, Mr. Tanton, you are recognized for 5 minutes
for your opening statement. And be sure and turn your
microphone on and get it close as possible.
STATEMENTS OF TOM TANTON, DIRECTOR OF SCIENCE AND TECHNOLOGY
ASSESSMENT, ENERGY AND ENVIRONMENT LEGAL INSTITUTE; FRED
SIEGEL, SENIOR FELLOW, MANHATTAN INSTITUTE, AND SCHOLAR IN
RESIDENCE, SAINT FRANCIS COLLEGE; STEVE CLEMMER, DIRECTOR OF
ENERGY RESEARCH AND ANALYSIS, CLIMATE AND ENERGY PROGRAM, UNION
OF CONCERNED SCIENTISTS; STEVEN NADEL, EXECUTIVE DIRECTOR,
AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY; PAUL E.
POLZIN, DIRECTOR EMERITUS, BUREAU OF BUSINESS AND ECONOMIC
RESEARCH, UNIVERSITY OF MONTANA; AND BERNARD L. WEINSTEIN,
ASSOCIATE DIRECTOR, MAGUIRE ENERGY INSTITUTE, COX SCHOOL OF
BUSINESS, SOUTHERN METHODIST UNIVERSITY
STATEMENT OF TOM TANTON
Mr. Tanton. Thank you, Mr. Chairman, members of the
committee.
I intend the testimony to inform the committee of
essentially how to look at State energy policies in 2 regards.
We have heard about climate change being an important goal.
Whether you believe that or not, one also needs to undertake
measures in the most cost-efficient manner to reduce carbon
emissions. Many of the State energy policies, and I will focus
primarily on California, do not do that. They actually take the
most expensive, the least efficient way, which leads to
unintended consequences like emissions leakage. We are driving
businesses to States and countries that are less carbon
efficient than California already is, thereby increasing total
global emissions; counterproductive to the goal.
In summary, the economic impacts of State energy policies,
including the RPS, as well as others, are huge. Generally
speaking, the costs exceed the benefits, even when indirect and
externality costs are included, but the economic impacts cannot
be attributable solely to laboratories of democracy simply
because many of the policies and regulations, and
implementation thereof, take place outside the democratic
process. They take place administratively or evolve outside,
either through mission creep, or lack of legislative oversight.
Costs and burdens are often imposed on residents in neighboring
States creating extraterritoriality and unconstitutionality.
What I do in, say, Minnesota affects generators and
residents and taxpayers in North Dakota, as the Tenth Circuit
found last May. Costs are often hidden or transferred to some
other party. An example of that is wind generation requires
both balancing and backup; backup for when the wind is not
blowing, balancing for when the wind is blowing, and that
imposes inefficiencies on the--on those balancing plants.
Similarly, the taxes that are imposed by California's A.B.32
Cap and Trade provisions affect residents in other States.
Finally, there is misinformation. A good democracy relies
on informed citizens, and informed committee members, for that
matter, and there is often misinformation that is taken at face
value that is spread by either rent-seekers and bureaucratic
advocates such as the cost of certain technologies. The other
thing, and this is crucial to keep in mind, the cost of certain
technologies; wind, natural gas fired combined cycles, et
cetera, are often inappropriately characterized as being cost
competitive, but when one considers the fact that wind provides
only energy, while natural gas fired combined cycles provide
energy and capacity, the value proposition is different, so it
is irrelevant that the costs are the same.
Using States to test policy approaches and mechanisms
results in smaller negative impacts overall, and easier-to-
correct mechanisms. With all due respect, Congress moves slower
than most States. Each State has different needs and
opportunities. What works in Georgia does not work in
California, doesn't work in Florida, et cetera. Now,
opportunities and challenges vary tremendously. The more
centralized a policy is, the harder it is to correct and the
more subject it is to cronyism and nefarious activities.
Ideally, the policy should be at the individual level. I
should get to choose what I buy. Increasing intervention is
seldom the solution to programs that have been put in place
through intervention. The solution to intervention problems is
less intervention.
Various Federal programs have also impeded efficient
achievement of State policy goals. The production tax credit
has led to too much intermittent, volatile wind generation,
which threatens the reliability of the grid in a number of
States. The renewable fuel standard also impedes achievement of
other important State goals, like providing reasonably priced
food and fiber.
There are a number of economically sound policies in the
various States. There was mention of North Dakota earlier.
California also has some bright lights, or shining lights. The
economically sound policies are invariably the result of
democratic activities, not administrative or bureaucratic
activities.
And with that, I will be happy to answer any questions as--
at the time.
[The prepared statement of Mr. Tanton follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. Thank you very much, Mr. Tanton. We
appreciate that, and there are those lights on the front that--
on red to indicate your time is up, but we won't cut you off
immediately, but I--we really appreciate your testimony.
Our next witness is Mr. Fred Siegel, who is Senior Fellow
at the Manhattan Institute, and scholar and resident at Saint
Francis College.
Mr. Siegel, thanks for joining us, and you are recognized
for 5 minutes. And be sure to turn your microphone on and get
it close. I think you might need to just push that button to
turn it on.
STATEMENT OF FRED SIEGEL
Mr. Siegel. This one. Is this working now? Yes, OK.
Thank you for having me. Unlike the other members of this
panel, I am not an energy expert. I am an historian. I have
written about laboratories of democracy in a book I wrote about
Los Angeles, New York and Washington, DC, and more recently, in
a book I wrote about American liberalism, why it is
misunderstood, in a book entitled, Revolt Against the Masses,
which received positive reviews in every single magazine and
newspaper except the New York Times.
The transformation of American liberalism over the last
half century is outlined and disputes rolling and out-of-the-
way place in upstate New York. The southern tier of New York is
little-known. Tioga, Chemung, Broome Counties are not household
names, but they are areas which are gone--have gone terribly.
The total employment in the Binghamton metro area is less than
it was in 2001. The other nearby city of sorts is Elmira. It
too has a smaller workforce than it had in 2001. And if you
were to drive through there, you would find it looks like
Appalachia, and indeed it was. When the Appalachian Commission
was created by the Great Society, an earlier failed program of
liberal policy, these southern tier counties were included, and
they still are. There are several Appalachian Commission
offices scattered across the southern tier. New York is not
good at economic growth; it is very good at creating
commissions and authorities.
In 2008, it looked like something might be done. It looked
like the broken-down barn houses and people selling their land
for taxes, because New York taxes--property taxes are among the
highest in the country, might be coming to an end because it
looked as if the fracking boom, which had hit Pennsylvania,
right across the border, in Pennsylvania it is called the
northern tier, in New York it is called the southern tier, of
counties were bringing jobs to Pennsylvania.
And let me just read from Ed Rendell, former Democratic
Governor of Pennsylvania. Thousands of solid jobs with good
salaries were created in Pennsylvania. Communities came back to
life, and investment in the State soared. The steel, lumber,
concrete, and construction industries, as well as
manufacturing, purchasing, and retail spending, all boomed
because of fracking on the Pennsylvania side.
Now, part of the difference is Pennsylvania has a long
history of energy extraction, New York does not, but there are
others. Thirty-two States now accept fracking. New York is
still studying the issue. The only State that has banned
fracking is Vermont, which has no shale beneath its surface. So
it is--as with so many other things in Vermont, it is
meaningless.
In 2010, a new Governor came into office, Mario--excuse me,
Andrew Cuomo. I am old enough to remember Mario. Andrew Cuomo
came into office and he proposed--he floated what seemed like a
genuinely intelligent compromise. In places where gentry
liberals live, like Ithaca, home or Cornell, or Cooperstown,
where many well-to-do retirees reside, there would be no
fracking. In areas where there was a watershed for either New
York or Syracuse, there would be no fracking. Fracking would be
confined to the southern tier of the southern tier, to the most
adversely affected counties in New York, and that is all. It
seemed like a reasonable compromise. However, opposition to
fracking had become totemized. The support of fracking was to
be--was to align yourself with the spawn of the devil. If that
sounds excessive, no, I am describing conversations I have had
with anti-frackers in New York City at rallies. Fracking is
inherently evil. I am told by anti-frackers that it is fracking
that creates poverty in Pennsylvania, which is a fascinating
idea. It is a bit like saying Israeli rockets are what is
creating the rockets coming out of Gaza. It gets everything
exactly backwards.
That compromise proposal we have only applied to the
counties in New York State, like Chenango, Steuben, and Tioga,
the southern tier of the southern tier, where there were no
aquifers, where the soil is poor, and where there is desperate
poverty.
What is going on--and this is when I got interested in
this. I am not a person who studies energy. I was fascinated at
the rejection, the flat-out, aggressive rejection of a
reasonable compromise. And what I discovered was, in part, it
was a matter of practical interest. People like Yoko Ono, I
don't know how you would describe----
Mr. Whitfield. Mr. Siegel, excuse me for interrupting----
Mr. Siegel. Sure.
Mr. Whitfield [continuing]. But I just wanted to say that
you are about 30 seconds over your 5 minutes, so----
Mr. Siegel. In that case----
Mr. Whitfield [continuing]. If you----
Mr. Siegel [continuing]. I will conclude in 30 seconds.
Mr. Whitfield. OK.
Mr. Siegel. Sorry, I didn't realize I was--it was taking so
long.
The issue of fracking turns out to be a class issue. Upper
middle-class liberals are vehemently opposed in the name of
preserving New York as something like a Currier and Ives photo;
wonderful, beautiful place to retire, but not a place to grow--
and the anti-frackers insist that they want to maintain New
York as this kind of museum preserve. The pro-frackers are
mostly practical people who want to get out of debt.
Mr. Whitfield. Yes.
Mr. Siegel. That class divide explains fracking in New
York.
[The prepared statement of Mr. Siegel follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. Thank you, Mr. Siegel.
At this time, our next witness is Mr. Steve Clemmer, who is
the Director of Energy Research and Analysis for Climate and
Energy Program at the Union of Concerned Scientists.
Mr. Clemmer, welcome, and we look forward to your
testimony. And you are recognized for 5 minutes.
STATEMENT OF STEVE CLEMMER
Mr. Clemmer. Good morning. On behalf of UCS and our 450,000
members and supporters, I would like to thank Chairman
Whitfield and the other distinguished members of the
subcommittee for the opportunity to testify today.
My comments are--will focus on how State renewable
electricity standards have been a key driver for the recent
growth in the U.S. wind and solar industries, spurring
innovation and creating new jobs and income for State and local
economies. I will also show how utilities in most States are
meeting or exceeding their targets at little to no cost to
consumers. Finally, I will highlight how stronger Federal
policies are needed to complement State renewable policies.
I am going to try not to repeat some of the excellent
comments that both Mr. Rush and Mr. Waxman already made about
these policies that are included in here in my testimony.
So a renewable electricity standard requires electricity--
electric utilities to gradually increase the amount of
renewable energy in their power supplies over time. As we
heard, there are 29 States and the District of Columbia that
have standards. Seventeen States and DC have renewable
standards of 20 percent or more, and 18 States have increased
or accelerated their targets since they originally adopted
them. Lawrence Berkeley National Lab estimates that 46,000
megawatts, or more than \2/3\ of all the renewable capacity
installed since 1998, occurred in the States with renewable
standards. They project this amount to more than double to
94,000 megawatts by 2035 as the States continue to ramp up
their standards. California's 33 percent by 2020 standard
creates the Nation's largest market for renewable energy,
followed by Illinois, New Jersey, Texas and Minnesota.
State renewable standards, combined with the Federal tax
credits, have played a key role in the rapid growth of the U.S.
wind and solar industries, as we have heard. Wind power
accounted for nearly \1/3\ of all new electric generating
capacity in the U.S. over the last 5 years, second only to
natural gas, and 9 of the top 10 States in total installed wind
capacity have renewable standards. Meanwhile, the solar
capacity has increased by a factor of 10 since 2009, and a
record 5,000 megawatts of solar was installed in the U.S. last
year. All of the top 10 States with the highest installed solar
PV capacity have renewable standards.
So we heard earlier some of the economic benefits that this
is delivering in terms of 50,000 jobs in the wind industry,
$100 billion of investment in the U.S. economy since 2007, just
in wind alone. Texas is the leader with both installed wind
capacity, but also the most amount of wind jobs, followed by
Iowa, California, Illinois, Colorado, Kansas, Michigan, North
Dakota, Oregon and New York. All of these States but one have
renewable standards. You heard about the domestic manufacturing
of wind turbine components that has also increased dramatically
over the last 5 years as the renewable standards have ramped
up. The domestically sourced content of U.S. wind projects
has--installed today is over 70 percent, up from less than 25
percent in 2005. Wind power is also providing significant
income and tax revenues for rural communities. For example, in
Iowa, which now generates 27 percent of its electricity with
wind, wind projects provided $16 million in annual lease
payments to landowners, and nearly $20 million in annual
property tax payments.
The solar industry has invested about $34 billion in the
U.S. economy over the past 3 years, and as we heard earlier,
there is about 142,000 people that work in the U.S. solar
industry at 6,100 businesses. While California leads the Nation
with about \1/3\ of those jobs, States in the Midwest,
northeast, southeast and southwest are also in the top 10.
The other positive news has been that renewable standards
have been a key driver for technology innovation and cost
reductions. Since 2009, the cost of generating electricity from
wind has fallen 43 percent. The average price of a solar PV
panel has declined 60 percent.
Renewable standards are also a good deal for consumers. The
falling cost of wind and solar have allowed most utilities to
fully comply with their standards at little to no cost to
consumers. In May, NREL and LBNL released a comprehensive of
State RPS costs and benefits based primarily on data from
utilities and State regulators. The study found that between
2010 and 2012, the cost of complying with the renewable
standards in 25 States ranged from a net savings of .2 percent
of retail rates, to a net cost of 3.8 percent. This is
considerably lower than the Beacon Hill Institute's studies
that Mr. Tanton mentions in his testimony. UCS and several
other groups have identified serious flaws in these studies
funded by the fossil fuel industry that lead to highly
exaggerated costs. And I would be happy to talk about that in
the Q and A if you want me to.
I can wrap up with about 30 seconds on the Federal policy
angle. So while Federal tax credits have been an important
compliment to State renewable standards, the inconsistent
support from Congress has created significant market
uncertainty. To eliminate the uncertainty, UCS recommends that
Congress extend the PTC by at least 4 years, and transition to
more stable long-term policies. We also recommend allowing
renewable energy technologies to be eligible for master limited
partnerships and other innovated financing mechanisms to
provide parody in the tax code with fossil fuels.
Finally, let me say that, as Mr. Waxman mentioned with
EPA's proposed carbon standards, this provides a really
important opportunity to increase renewable energy use and
reduce carbon emissions. We believe that EPA's proposed
building blocks for existing plants is a flexible and cost-
effective framework to help States meet their proposal. OK.
Mr. Whitfield. So if you will conclude.
Mr. Clemmer. Yes, so my last statement is just that UCS
believes that EPA can go much further. We did an analysis that
shows they can achieve twice the level of emission reductions--
--
Mr. Whitfield. Yes.
Mr. Clemmer [continuing]. And twice the level of----
Mr. Whitfield. All right.
Mr. Clemmer [continuing]. Renewables at a net savings to
consumers.
So I will conclude there.
[The prepared statement of Mr. Clemmer follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. Thank you. Our next witness is Mr. Steve
Nadel, who is the Executive Director, American Council for an
Energy-Efficient Economy.
Thank you for joining us, and you are recognized for 5
minutes.
STATEMENT OF STEVEN NADEL
Mr. Nadel. OK, thank you, Mr. Chairman.
Mr. Whitfield. And be sure and turn your microphone on, get
it close, and----
Mr. Nadel. Thank you, Mr. Chairman, and good morning to all
of the committee.
I am the executive director of the American Council for an
Energy-Efficient Economy, also known as ACEEE. We are a
nonprofit energy efficiency research organization that, since
1980, has acted as a catalyst for energy efficiency policies,
programs, technologies and investments. I appreciate the
opportunity to testify this morning.
There has been much talk on both sides of the aisle about
an all-of-the-above energy policy. ACEEE believes that energy
efficiency should be one of the cornerstones of an all-of-the-
above energy policy. Energy efficiency is generally our least
expensive energy resource, meaning that it often costs less to
save a unit of energy, than it costs to produce that same unit
of energy. Large cost-effective savings are available in all 50
States. All States are promoting energy efficiency to at least
some extent, but some States much more than others. These
efforts are helping to create jobs, grow State economies, and
produce environmental benefits. Many States are increasing
their energy efficiency efforts, but much more is both possible
and advantageous.
In my written comments, I first discussed the favorable
economics of energy efficiency investments; 2, provide some
specific examples of how States are encouraging energy
efficiency, particularly some examples of some of the most
improved States in our annual energy efficiency scorecard; 3, I
discussed the link between energy efficiency and economic
development, with examples from specific studies on California,
Ohio and the northeast, and, 4, I summarized opportunities to
use energy efficiency to create jobs and economic development
in all 50 States. In these oral comments, I wanted to
concentrate just on economic development; the last 2 issues in
my written testimony.
The energy efficiency efforts States make contribute to
jobs and economic development in several ways. When money is
spent to purchase and install energy efficiency measures,
direct, indirect and induced jobs are created. Direct jobs are
the jobs to manufacture and install the energy efficiency
measures, such as producing and installing insulation. Indirect
jobs are generated in the supply chain and supporting
industries that are directly impacted by an expenditure or
effort. For example, as insulation sales increase, jobs might
increase at home improvement stores and trucking firms. Induced
jobs are produced as the direct and indirect workers spend
their paychecks, such as for eating out or attending a baseball
game.
Oil and gas development also spur direct, indirect, and
induced jobs, however, energy efficiency investments have 2
other benefits. First, as consumers and businesses reduce their
energy use, they have more income to spend on other goods and
services, creating additional jobs. Second, energy efficiency
jobs tend to be in construction and services industries, which
are both very labor-intensive sectors of the economy. Spending
a dollar in construction and services generally provides more
jobs than spending a dollar in other sectors of the economy.
This is illustrated in Figure 4 of my written testimony.
Several studies have documented these effects at the State
level. For example, a 2008 study by an economist at the
University of California found that energy efficiency measures
have enabled California households to redirect their
expenditures towards other goods and services, creating about
1.5 million full-time-equivalent jobs with a total payroll of
$45 billion, driven by well-documented energy savings of $56
billion from 1972 to 2006. Another example is Ohio. A 2004
analysis that we did with the Ohio Manufacturers Association
found that implementing Ohio's energy efficiency savings
targets would save consumers nearly $5.6 billion through 2020,
including about $3.4 billion from reduced customer expenditures
on electricity, $0.9 billion from the impacts of efficiency on
wholesale energy prices, and $1.3 billion from the impact on
wholesale capacity markets. Ohio participates in the wholesale
energy market of PJM, and under the laws of supply and demand,
reduced energy use and peak demand reduces the price of energy
and capacity as determined in these markets.
The economic development and other benefits of energy
efficiency achieved in these States can all be achieved in
other States. This April, we published a State-by-State
analysis on how much energy efficiency savings that can be
achieved in each State, and the costs and benefits of such
investments, as well as the impact on employment and gross
State product. The study looked at where each State was, and
how much more they could do, with 4 different policies, as
discussed in my testimony. Overall, we found that such State
efforts could reduce national electricity use by 25 percent by
2030, relative to business-as-usual projections; providing
discounted net benefits of about $48 billion by 2030;
increasing GDP by about $17 billion in 2030; and supporting
more than 600,000 net jobs nationally in 2030. State-specific
estimates of jobs are provided in Table 2 of my testimony.
In conclusion, States are stepping out and leading energy
efficiency efforts. They are creating jobs. Much more is
possible in all of the other States, learning from some of the
examples featured in my written testimony, such as Mississippi,
Oklahoma and Arkansas.
With that, I conclude my testimony.
[The prepared statement of Mr. Nadel follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. Thank you very much, Mr. Nadel.
At this time, I recognize Dr. Paul Polzin, who is the
director emeritus of the Bureau of Business and Economic
Research at the University of Montana. Thanks very much for
being with us, and Dr. Polzin, you are recognized for 5
minutes. Be sure and----
STATEMENT OF PAUL E. POLZIN
Mr. Polzin. Thank you, Mr. Chairman, and members of the
committee. My name is Paul Polzin, and you heard that my title
was director emeritus. That just simply means I flunked
retirement, and I still go into the office there almost every
day.
Now, I have spent the last 45 years of my life studying the
Montana economy, and also studying the economies of rural
communities in the west. The purpose of my testimony today is
to document the economic impact of the new American energy
revolution. I am going to be looking at the specific impacts on
2 rural communities, and rural communities are really an ideal
laboratory to look at economic impact, because you can easily
differentiate between causes and effects.
Now, when we mention economic impact, the first thing that
comes to mind are taxes. Well, there are plenty of taxes
associated with the new American energy revolution. In my part
of the world, the oil and gas industry alone paid the Federal
Government and the State of Montana about $285 million in
taxes, loyalties and other payments, but the real economic
impact is on people, and how the energy boom affects their
employment opportunities and their wages. I looked at 2
specific communities; Sidney, Montana, and Williston, North
Dakota. They sit right on the Montana-North Dakota border, and
that is at the western edge of the Bakken oilfield, which is
the new field that is being developed using new technologies,
and has seen dramatic increases in production.
Now, I analyzed counties rather than cities because that is
just the way the data are published. Sidney, Montana, is in
Richland County, and Williston, North Dakota, is in Williams
County. Now, for most of the last 35 years, both economies have
been stagnant. The number of jobs in Richland County and
Williams County in the early 2000's was just at about the same
level that it was in the mid-1980's, but the trend turned
upward in 2004, and accelerated in 2010. This mirrors precisely
the drilling and other energy-related activity, and the most
recent data showed double-digit increases.
Now, there are boomtown atmospheres in places like Richland
County and Williams County. The streets are full of petroleum
engineers, drilling managers, and environmental specialists,
and there are well-paid workers. Nationwide, the average annual
wage in the oil and gas industry was about $108,000 a year in
2013; roughly double the average of $49,000 for all American
workers. But it is not just these oil and gas industry workers
who are benefiting. I looked at 3 specific industries in each
of these counties. I found that employment opportunities and
wages in all 3 increased faster than expected. I looked at the
construction industry, which includes skilled, blue-collar
workers; I looked at professional services, and this includes
lawyers, architects and accountants; and also I looked at the
accommodations industry, which is traditionally a low-paying
industry, and provides employment opportunities for entry-level
workers. The findings in all 3 of these industries in both
communities are the same. For the 10-year period from 2003 to
2013, employment and wages in all of these industries increased
much faster than otherwise would have been the case. In other
words, there are more jobs and the wages are higher than would
have occurred without energy development. In all 3 of these
industries, in both counties, average wages in 2013 were higher
than their respective statewide average. Now, as an experienced
rural researcher, I know how unusual it is to have rural wages
higher than the statewide average. In most cases, the statewide
averages are dominated by higher wages in urban areas.
In summary, higher wages and a stronger rural economy, when
they are combined with good policies on energy royalties and
tax distribution can enable communities, counties and States
better adjust to energy projects that may have periodic peaks
before they stabilize in the long run.
Thank you very much.
[The prepared statement of Mr. Polzin follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. Thank you, Dr. Polzin, very much.
And our next witness is Dr. Bernard Weinstein, who is the
Associate Director of the Maguire Energy Institute of the Cox
School of Business at Southern Methodist University.
So, Dr. Weinstein, thanks for being with us. You are
recognized for 5 minutes for your opening statement.
STATEMENT OF BERNARD L. WEINSTEIN
Mr. Weinstein. Thank you very much, Mr. Chairman, and
members of the committee, for the invitation to speak today.
I want to talk briefly about 2 topics; number 1, the future
of coal, and, 2, State energy policies.
There may or may not be a war on coal. That may be
hyperbolae, but in any case, coal is being challenged as a
power source as never before. Number 1, you have competition
from abundant and cheap natural gas, as well as renewables. We
now have EPA greenhouse emission standards being proposed for
both existing and new power plants. It is highly unlikely that
a new coal plant will be constructed in the foreseeable future.
We also have regulatory and legal barriers to exports. So I
think it is fair to say, and you can see on this graph, that
coal is slowly going away. In fact, we have lost about 15
percent, or we will lose about 15 percent of our coal-fire-
generating capacity between 2010 and 2016. But a couple of
caveats. Some people are very pleased about the fact that coal
is going away, but we need to keep in mind that we get almost
40 percent of our electricity from coal. It can't be quickly
replaced by alternatives. Renewables, as we have heard, are
intermittent. We need base load capacity. There are serious
issues of grid reliability when demand peaks. Texas has got
more installed wind capacity than any other State, but I
guarantee you, at 3 o'clock this afternoon, 95 percent of those
wind turbines in west won't be turning, and that is when demand
is going to be at its peak.
Then there are issues related to distributor generation.
That is posing challenges for grid reliability, as well as the
finances of investor-owned utilities. You know, who is going to
pay for that backup capacity? So we need to keep in mind that
coal is still the cheapest way to generate electricity, and
that, as coal goes away, power costs to consumers and
businesses are likely to increase. And I make those comments
because I think EPA needs to take cognizance of these and other
issues as it finalizes the greenhouse gas rules for both coal
and gas-fired plants.
Now, getting back to the main topic today: energy and
economic development. We have seen an incredible increase in
oil production just in the last 3 or 4 years; about a 50, 60
percent increase. We didn't see this coming. It has been great
for the economy, and it is not just in a couple of States. I
mean there is shale all over the United States, as you can see
in this graph. Some States have embraced energy development,
while some energy-rich States have opposed energy development.
So I am going to make, you know, a couple of comments about
Texas, California, North Dakota and New York.
First, let us contrast Texas with California. It is a
little hard to see, but the red line is--the red lines are
Texas and the blue lines are California. The red line going up
is increased oil production in Texas; the blue line going down
is declining oil production in California, and then the dotted
lines are the unemployment rates. Guess which State has the
lower unemployment rate. Texas has added 548,000 jobs in the
past 18 months. California, which is half, again, as large as
Texas, has added only 322,000 jobs in the past 6 years.
California is home to the Monterey shale which is estimated to
hold up to \2/3\ of America's shore oil--shale oil reserves,
and yet, because of environmental pushback, regulations and the
like, it is not being developed.
Now, real quickly, if we put the next one up, I don't want
to talk too much about North Dakota and New York because we
have already heard a lot about North Dakota and New York. This
is employment growth in the U.S. on the left, employment growth
in North Dakota on the right.
Four years ago, North Dakota was producing 10,000 barrels
of oil per day. Today, it is 1 million barrels of oil per day.
Booming economy, lowest unemployment rate in the United States.
We have already--Mr. Siegel talked about New York State. This
study was actually done by his institute, maybe it was done by
Mr. Siegel, looking at the potential job growth that could
occur along that southern tier of New York State if the current
moratorium on hydraulic fracturing were lifted. So we will just
have to see how that plays out, but this part of the State has
been losing people and jobs for decades.
Just kind of to summarize. Here are some selected energy
States. The blue bar represents the increase in oil and gas
jobs, the red line represents the increase in GDP growth, and
you can see that in all of these energy-producing States, we
have seen a tremendous increase in the economic growth. And
look at Pennsylvania. We heard about Pennsylvania earlier. Look
at the tremendous increase in oil and gas employment. If it
hadn't been for that increase, Pennsylvania would have had a
very serious recession like the rest of the country. It helped
Pennsylvania avoid the worst of the great recession. And New
York State, right across the border, as we have heard, does not
allow the use of hydraulic fracturing.
So I think it is incontrovertible that States embracing
energy development have healthier and more robust economies
than those fighting energy development.
Do keep in mind 2 other points that have not been
mentioned, is that greenhouse gas emissions in the United
States are at a 20-year low, even though our economy is 70
percent larger.
A final point I would make: We have heard a lot about all
the jobs that have been created in renewables. The
administration says that their policies have created 75,000
jobs in renewable energy. I might add, at a cost of $50 billion
in Federal subsidies. The oil and gas industry has created
700,000 new jobs in the last 4 or 5 years without any new
subsidies.
So I will be happy to answer any questions at the
appropriate time.
[The prepared statement of Mr. Weinstein follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. Dr. Weinstein, thank you very much. And
thank you all of you for your testimony. And I think the
testimony crystalizes exactly what we are trying to look at
here. Those people who are most concerned about global warming
are strong advocates for renewable, and I think all of us
recognize we need renewables, but I don't think, Dr. Weinstein,
we want to be like Europe, which is recognized as the leader of
renewables in the world, and yet they are mothballing natural
gas plants because the gas prices coming out of Russia are so
expensive that they are building new coal plants to meet their
needs. And yet in American, no one expects a new coal plant to
be built right now because natural gas prices are so high, but
shouldn't we have the flexibility, if gas prices go up, to
build a new coal-fired plant? We don't have that ability to do
it today. And would you like to make a comment on that, or----
Mr. Weinstein. Well, I would generally agree with you. I do
think we need standards. We need pollution standards to apply
to all power-generating facilities, but what concerns me is
what we hear from the administration is a policy that seems to
suggest that we can get all--we can meet all of our future
energy needs through a combination of conservation, efficiency
and renewables. I am in favor all of those things, but that is
not going to get us there. If we want to grow our economy, we
are still going to need base-load power plants.
Mr. Whitfield. Right.
Mr. Weinstein. We have to recognize that fact.
Mr. Whitfield. Absolutely, and I agree with you, we need
standards, and we have a lot of standards, and the standards
are so explicit on new coal-fired plants that the technology is
not available to meet it on a large-scale basis.
Mr. Weinstein. Just as an aside, I had the chief power
engineer from Luminant Energy speak to my class a couple of
months ago. He runs the newest, most efficient coal-fired
generating plant in the country, and he said that this plant
that just went online 3 years ago would not be able to meet the
proposed GHG standards for new power plants that have been----
Mr. Whitfield. Absolutely.
Mr. Weinstein [continuing]. Proposed by EPA.
Mr. Whitfield. That is absolutely--there is not any plant
that would meet that standard.
Well, thank you. You know, a few years ago when President
Obama was first elected, with the stimulus package, he talked
about shovel-ready projects, and, of course, large sums of
money went for renewable projects, which is fine, and we hear a
lot about growth in the renewable sector, new jobs, but you all
heard me in my opening statement say that today, full-time jobs
are 4 million people less today than it was 4 \1/2\ years ago.
And the question I would ask you, Dr. Weinstein, what would
be our economy today if it weren't for the huge increase in oil
and natural gas production from hydraulic fracturing and
horizontal drilling, recognizing there has been a lot of growth
in renewables, but what would our economy look like today
without what is happening?
Mr. Weinstein. I don't think there is any question that
levels of employment would be lower, and the unemployment rate
would be higher.
Let me just give you one statistic. Five years ago, the oil
and gas sector contributed about 5 percent--no, excuse me,
contributed about 2 percent to the Nation's economic growth.
Today, the oil and gas industry alone is contributing 10
percent to the Nation's economic growth, so that is a fivefold
increase.
Mr. Whitfield. Well, I think it is something that is quite
startling; 4 million less full employed today, despite this
energy boom and despite the growth in renewables, we are still
4 million less full employed.
Recently, I was talking to a CEO for a major utility in
California, who was talking about the 30 percent renewable
mandate in California, which is the most stringent, and he was
talking about reliability and getting the electricity from
where the renewables are located into the urban areas, they are
having to build a new grid system, and he talked about the most
recent mileage for their new grid system, the lines that they
were building, was costing them $100 million per mile, which is
an astounding and astonishing figure.
Now, you mentioned, Dr.--Mr. Tanton, that you felt like the
RPS, that the cost far exceeded the benefits. Would you
elaborate on that just a little bit for me?
Mr. Tanton. I would be happy to, Mr. Chairman.
There are a number of unaccounted-for costs, but let me
first mention that some technologies that are eligible for the
RPS, their benefits are not proportional. The first wind
turbine provided some level of benefits, and the last wind
turbine significantly, significantly less per turbine.
So as we look at things like RPS, we need to keep in mind
that just because something has done good so far, doesn't mean
it is going to do good forever. It is a typical and traditional
fallacy of composition.
There are a number of costs that are offloaded from the
developer; things like transmission, significant cost; costs
imposed for backup and balancing, significant cost. Our
estimates are that those additional costs that have been
offloaded to other nonparticipants effectively double the cost
of wind generation, from being competitive to being essentially
noncompetitive. But those--and more recently, we have been
hearing about environmental externalities from some of the
concentrating solar facilities in California, basically frying
the birds and bats that fly around, and blinding pilots.
So there are--traditionally externalities in those costs
have been focused on air emissions, either criteria pollutants
or perhaps greenhouse gas emissions.
Mr. Whitfield. Thank you, Mr. Tanton. And my time has now
expired, so maybe some of the other witnesses will get to you,
but at this time, I would like to recognize Mr. Rush for 5
minutes of questions.
Mr. Rush. Mr. Chairman, thank you so very much. Mr.
Chairman, I might want to--I might remind all the members of
the subcommittee that--and those who are in the audience here
that, on Tuesday, we will hear from folk where we will also
have a more in-depth debate on the President's power plant plan
and his common regulation, and I believe, Mr. Chairman, we are
moving toward mission creep here in terms of the--today's
testimony.
Today, we want to hear about innovative State strategies in
incorporating renewables and energy efficiency measures.
And so, Mr. Chairman, I--with that in mind, I want to
address my questions to Mr. Nadel. Mr. Nadel, what are the
biggest benefits to State and Federal Governments that exists
in making the country's energy network more efficient in
regards to job creations, savings, environmental impact and
other benefits, and at the same time you ask, what are the
biggest benefits, including what are the disadvantages to
investing in energy efficiency?
Mr. Nadel. OK. Yes, Congressman, yes, as you point out,
energy efficiency does have enormous benefits. It reduces
energy use so that energy bills go down, consumers and
businesses have more money to spend on other goods and services
in their businesses, et cetera. That helps create economic
growth, it helps displace some demand for power. It is not
going to eliminate the demand for power, but it helps reduce
the demand for power, saving money, but also providing
environmental benefits. So there really is an enormous
multiplier from investing in energy efficiency, as many States
have shown, and I think it is particularly gratifying that many
of the States are actually increasing their energy efficiency
activities. They are recognizing this.
You are saying what are the disadvantages? You know, a--for
the consumer, not really a disadvantage. You have to spend a
little time familiarizing yourself with what the opportunities
are. That does take some time. Clearly, those who like to sell
more energy and don't want to see efficiency, they may not be
happy, but for most consumers and businesses, the benefits are
quite large.
Mr. Rush. Mr. Nadel, Dr. Weinstein was pretty persuasive in
summarizing, kind of stimulating in terms of his rationing some
of his conclusions. How would you address his--some of his
conclusions that--particularly as it relates to economic
development, job creation, and how that should impact his--
America's future? If you--if we were to concentrate solely on
his outlook and his conclusion without really entertaining or
even discussing efficiencies----
Mr. Nadel. Can----
Mr. Rush [continuing]. Where do you think we are going to
wind up at?
Mr. Nadel. Right. I mean I think Dr. Weinstein points out
that there are jobs with oil and gas development. I would agree
with that. I suspect he would agree that there are jobs with
energy efficiency and renewable energy. Maybe that is something
we could all agree on. So that is good.
I think where we might differ is I would emphasize
efficiency and renewables a bit more, particularly the
efficiency because it has more jobs per million dollars'
investment than just about anything else, but I would say that
we do not see that, at least for the foreseeable future, we
will 100 percent rely on efficiency and renewables. We
definitely will need natural gas. There will be a bunch of coal
plants that will continue to operate. We do see a balanced
energy system, although he would probably want to promote a lot
more construction, particularly of new coal, than we would.
Mr. Rush. So are we headed down this--excuse me, this path
or--of either or? Any--does that make sense, or shouldn't it be
both and?
Mr. Nadel. Right. I mean my hope is there is a middle
ground. We can all agree that energy efficiency and renewable
energy makes sense. We can all agree that we do need some oil
and gas development. There may be some differences about what
the appropriate rules are, but I think just about everybody
would agree that, yes, we do need some oil and natural gas.
There may be some differences on coal, but I think most people
would agree that we will continue to use coal, it is just a
question of how much. So I am in favor of trying to find that
middle ground and saying it is not total, you know, left versus
right, but there is something more toward the center.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Whitfield. Thank you, Mr. Rush.
At this time, recognize the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
First of all, I want to welcome my SSA young man in the
front, who just showed up. I am going to meet with him after I
get through these questions, and they get to observe a little
bit of a congressional hearing. So----
Mr. Whitfield. Welcome. Welcome.
Mr. Shimkus. First of all, just a statement. Dr. Weinstein,
you know, the President of the United States is from my home
State, I am a coal-producing State of Illinois, and you
shouldn't be confused; there is a definite war on coal. It has
been planned by this administration, and the real proof is
his--if you have never seen his response to the Editorial Board
of the San Francisco Chronicle in 2008, he basically said, and
on record, it is--you can check it, that his goal was to make
the cost of generating electricity so high that it would
bankrupt the industry.
So having said that, I understand other competitive
pressures, but make no mistake, this is a designed application
of Executive Branch force to destroy low-cost power and coal
mining jobs in this country. And I just want to put that on the
record.
Don't--now I would like to go to--I also want to raise the
issue of, you know, Germany and Europe is a great example of
this debate. So there is a Reuters article, April 15, that says
Germany subsidizes cheap electricity for its neighbors. And in
the first paragraph it just says Germany's neighbors enjoy
cheap imported power subsidized by Berlin's green energy
policy, and paid for by German households, analysts say. And it
just goes through the debate that, obviously, we believe in
all-the-above energy, and we believe that renewables can be
part, but it has to be a specific portion of portfolio, and
that you cannot escape the need for base-load energy, even if
you are a green energy supporter, because base-load helps us
with the ability for the intermittent operability of solar and
wind to be applied.
I want to go to Mr. Clemmer for a first question. Has the
Union of Concerned Scientists ever studied decibel output of
wind generation and its effect on people in and around the
area, and what a setback might be?
Mr. Clemmer. We haven't specifically studied that issue,
but there have been other studies out there.
Mr. Shimkus. I would ask, just for my sake, that you do
that. I do have a constituent, he has been to me numerous
times, he has a beautiful home. He actually was involved in the
siting of these things. He was pro-wind. He has been driven out
of his house. Every time I talk to this family and the in-laws,
which I just did recently about 3 weeks ago in my office in
Danville, they break down crying.
So I would ask that you would do that to help us bring some
sense to the fact is this really an issue, and it also is an
issue on the setback ratio. In the State of Illinois, we are
having this debate right now that siting is approved by the
counties, which I like at the local level. There is also a
movement to take away the counties' ability to do this, which I
would not support, but in local zoning--and the setback thing.
So I would ask you to do that and consider that as your
respective organization, and if you would do that, I would
appreciate it.
My final questions really go to Mr. Polzin and Mr. Siegel.
Deep southern Illinois also is prime for the fracking
revolution. We have been a marginal oil well producer. We were
one of the major oil-producing States during World War II. Of
course, now there are marginal wells. We have a very aggressive
State piece of legislation. Bipartisan, environmental
community, and the energy community. The problem is, is that
the government--the State government has delayed rollout of the
rules, so the poor communities in southern Illinois aren't
receiving the economic benefits that have been planned. Mr.
Polzin, Mr. Siegel, what should my constituents expect once the
final rules are laid out?
Mr. Polzin. I have been looking at reasonable economies for
a long time, and one thing I have learned is don't generalize.
One can--different communities have different impacts. But one
thing I am sure about, if you add a number of jobs paying
$100,000 a year, oil and gas jobs, it will have a significant
impact on almost any community, except something that is very
large where it would be diluted. Exactly how that plays out I
think depends on the community. Is it a rural community, is it
an isolated community, is it next to an urban area, these are
all the kinds of things which determine the exact impact of
that increase in new jobs. But will there be an impact?
Absolutely.
Whenever you add any number of $100,000 jobs to an area, it
will have an impact.
Mr. Siegel. I would agree. There is a considerable impact.
I think New York State is peculiar. In New York State, the
desirability of $100,000 job is contested by people who are
considerably wealthier. And so I think that is a peculiar
situation which is a function of what you in--you here in
Congress have done with the Federal Reserve, in part, pouring
money into the money center banks in New York, driving the
stock market up, allowing people to invest in real estate, in
buying summer homes all over upstate New York. So this is not
something that is a national problem, but it is a New York
problem.
In New York, we have the peculiarity of the--of people who
see creating new jobs and new wealth as the problem. They want
it just--things just as they are. There is a kind of
reactionary quality to the liberalism in New York State.
Mr. Whitfield. Gentleman's time has expired.
At this time, recognize the gentleman from California, Mr.
McNerney, for 5 minutes.
Mr. McNerney. Mr. Chairman, my ears are burning from all
the bashing of California we have heard this morning.
Mr. Whitfield. Don't take that personal.
Voice. And New York.
Mr. McNerney. And New York too, I hear.
But, you know, California is a big State. Some regions are
suffering from a poor economy. My region, for example, has a
poor economy, but I think that can be attributed largely to the
unregulated financial market that caused the housing crash in
2008. But if you go to Silicon Valley, if you go to Los
Angeles, the economy is booming, there are a lot of people that
are coming in there with innovation to create jobs. And I can
tell you high-end companies like to go where the environment is
nice, and you will find that in California. So to say that the
regulation is causing a job exodus, there are jobs that are
coming and going in any State, so I will contest that.
Now, I also want to push back on something that Mr.
Weinstein said that the Monterey shale hasn't been developed
because of regulatory environment in California. The Monterey
shale is a very complicated geographic feature. It is not
economic to frack there yet. I mean you can put a well in, you
will get some oil out, but it expires quickly because of all
the stratification there. So there are some misapprehensions
about what is going on in California.
I would like to follow up, Mr. Nadel, on energy efficiency.
Do you have a way to estimate the return of--on investment on
energy efficiency? In other words, for every dollar you invest
in energy efficiency, within a 5-year period, say, what would
your return on investment be?
Mr. Nadel. OK. Thank you. Yes, Figure 1 in my written
testimony provides an average figure. There is a great
variation. Sometimes you can get 100 percent return on
investment, sometimes it is only 1 or 2 percent, but on
average, we find it is typically about a 25 percent return on
investment. So that is better than most other alternative
investments.
Mr. McNerney. So that is year and year----
Mr. Nadel. Yes.
Mr. McNerney [continuing]. 25 percent.
Mr. Nadel. That would be about the average.
Mr. McNerney. That would be considered a pretty good ROI.
Mr. Nadel. Yes.
Mr. McNerney. And then would you please also reiterate
about the kinds of jobs that are created with investments and
energy efficiency.
Mr. Nadel. Yes. There are a lot of jobs, more engineering,
specifying, figure-adding--out exactly what needs to get
installed in a particular home or business, a lot of jobs
installing energy efficiency measures. There are also jobs
manufacturing more efficient equipment, whether it is a light
bulb, an air conditioner, insulation, et cetera, and then each
of those jobs, they spend the money, that creates other jobs
elsewhere in the economy. And then perhaps the biggest effect
is that consumers and businesses save on their energy bills.
They have more money to, say, to spend, to go out for dinner or
whatever it is, and that helps----
Mr. McNerney. And what State----
Mr. Nadel. And----
Mr. McNerney [continuing]. Has the highest energy
efficiency standards?
Mr. Nadel. Say that again.
Mr. McNerney. What State would have the highest energy
efficiency standards?
Mr. Nadel. Depends on how you look at it. In our scorecard,
Massachusetts has been ranked number 1 overall. If you are you
looking at savings as a percent of, say, electricity sales,
Vermont has typically been the leader, although Arizona is
getting very close to them. They are probably number 2 now.
It--like many things, it depends on what your yardstick is.
Mr. McNerney. And so are these citizens complaining about
the utility bills in those States?
Mr. Nadel. Any State, you have a diversity of citizens, but
no, by and large, my understanding is they don't complain.
There was actually a very interesting study that came out
about a week ago that looked at energy bills around the
country, and energy bills depends on both the rates as well as
the consumption. And some of the States with the highest energy
bills were actually States with pretty low rates, but because
they often use energy inefficiently, they actually had some of
the highest energy bills.
Mr. McNerney. Thank you.
In California, the renewable portfolio standards initially
were about 18 percent. The large public utilities easily met
those standards within a few years before the deadlines and the
legislature increased those standards. And it looks like they
will meet those 33 percent standards easily by 2020, so the RPS
hasn't been too much of a burden on the California utility
systems.
Mr. Clemmer, would you please discuss the job creation
effect of renewable energy in some of these States?
Mr. Clemmer. Sure, yes. You know, as I said in my
testimony, the--I mean the growth of the wind and solar
industries has been tremendous over the past few years, and the
jobs have followed that and, you know, frankly, the industry is
growing dramatically globally and that really positions the
U.S. to be able to, you know, provide--create jobs and export
equipment to other countries. The fact that we are now
manufacturing 70 percent or more of the wind turbine components
in the United States, that is amazing. That has happened over a
5-year period. Companies have moved to the United States to do
that. You know, the manufacturing jobs really have been spread
out too all over the country. There is a high concentration in
the Rust Belt States, in the Midwest, where there is great
manufacturing capacity, but California, Texas, Colorado, Iowa,
New York, I mean they are--all of these places are experiencing
incredible job growth. And I would just----
Mr. McNerney. Thank you----
Mr. Clemmer [continuing]. You know----
Mr. McNerney [continuing]. My time is just about over.
Mr. Chairman, we don't really need to bash renewables and
fossil fuels, no need to bash each other, we can work together
for----
Mr. Whitfield. Absolutely. Yes, we are--that is what this
is all about; working together.
Mr. Olson of Texas, I recognize him now for 5 minutes.
Mr. Olson. I thank the Chair, and welcome to our witnesses.
Last month, my local paper, the Fort Bend Herald in
Rosenberg, Texas, had a story on our economy in Texas. It was
another good story. It said we added over 380,000 jobs last
year. That is the largest increase we have had in almost 2
decades. Most of those jobs came in the energy sector. In fact,
if we were a country again, we would be the eighth largest oil-
producing nation in the whole world. But as you all have
mentioned, we are not just oil and gas, we are number 1 in wind
production in America, and there are many reasons for that. One
is our guys in Austin do a better job than people here in DC in
terms of regulation. Our railroad commission, which oversees
oil and gas operations in Texas, acts with commonsense and
certainty to get permits approved. Our Public Utilities
Commission gets power lines approved in a timely manner. They
understand that protecting the public and growing our economy
are not mutually exclusive.
When States or the Federal Government put up barriers to
energy, they put up barriers to jobs and our quality of life.
And beyond jobs, our State and local governments have seen
billions in new revenues. That money has made things many--many
things possible that weren't possible before. In Dimmit County,
right on the border with the Eagle Ford shale play, a poor,
rural school district has used revenue from the Eagle Ford to
rocket them into the 21st century. Their kids can compete now
in the global economy.
My first question is for Dr. Weinstein, Dr. Polzin and Mr.
Siegel. When States turn their backs on energy production, what
do they miss out on in terms of funding other priorities like
schools, like roads? Dr. Weinstein, you are up first, my
friend. And, Dr. Weinstein, speak Texan, and I can translate
for everybody here if you want to.
Mr. Weinstein. You know, I actually grew up here in
Washington, DC, but I escaped 40 years ago.
Well, there is no question that energy development creates
all kinds of benefits for the States in which they are located,
for local communities, for school districts in Texas. I can
remember when I first moved to Texas in '75 during the last
boom, energy accounted for about 25 percent of the State's
economy. Then after the bust, it was down to about 10 percent
of the State's economy. Well, now, it is back up to about 15
percent of the economy, but, of course, we are a much bigger
State overall. We are not just about energy, we are about high-
tech and we are about healthcare and, I mean, you know, we have
26 million people.
Mr. Olson. Yes, aerospace, you have--yes.
Mr. Weinstein. And aerospace in your community. So, you
know, you are talking about the Eagle Ford in south Texas,
there is no question that the shale boom has done more to
uplift the quality of life and the standard of living and
employment opportunities in those low-income south Texas
counties than any Federal or State programs in the past. So it
has been, you know, a tremendous boon to those communities.
There is an important point that I didn't have--that is
kind of related to this and we need to keep in mind, is this
shale boom, all of this new oil and gas production, 90 percent
of it has occurred on privately owned land. Even though there
is lots and lots of Federal land with shale reserves, not to
mention the offshore, 90 percent of this increase is coming
from private land, and that makes us different really from any
other country in the world, and is, I think, largely
responsible for the fact that the shale boom occurred first in
the United States and not somewhere else.
Mr. Olson. Dr. Polzin, any comments, sir?
Mr. Polzin. I would just like to build on what Professor
Weinstein said. I have here a recent release from the U.S.
Energy Information Administration, and the headline is
Production of Fossil Fuel from Federal and Indian Land Sale in
2013. So we are seeing a very different mix of energy
production. More and more of it is coming from private land,
and less and less of it is coming from Government land in one
form or another.
Mr. Olson. Yes, sir, all production in Texas comes from
private land, every drop comes from private land.
Mr. Polzin. And I would say the same thing for Montana and
North Dakota. That is entirely--all of the shale oil production
comes from private land.
Mr. Olson. I am out of time. I will submit questions to the
record. Thank you, Mr. Chairman.
Mr. Whitfield. Gentleman's time has expired.
At this time recognize the gentleman from California, Mr.
Waxman, for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
In identifying the best system of emission reductions, we
certainly have renewable energy and energy efficiency success
stories in every region of the country. Some States are years
ahead in developing a renewable energy industry, and
implementing energy efficiency programs, others are just
getting started. When identifying the best system of reduction
under the Clean Power Plan, EPA estimated a reasonable amount
of renewable energy and energy efficiency that each State could
achieve.
Mr. Nadel, was EPA conservative in its estimate of how much
low-cost energy efficiency is available to States?
Mr. Nadel. Yes, we do believe that EPA was conservative
with its energy efficiency estimates. They assumed that every
State could gradually, over many years, ramp up to 1 \1/2\
percent energy savings per year, but there are several States
that are already achieving over 2 percent, and quite a few
others are already aiming for that. And that is just from
utilities sector programs. They did not include private sector
efficiency investments, such as with energy service companies,
they did not include building codes, they did not include
combined heat and power plants, so we believe there is quite a
bit more savings available.
Mr. Waxman. As States look for ways to improve their energy
efficiency, where should they look first? Where can they get
the biggest bang for their buck?
Mr. Nadel. It is going to vary to some extent from State to
State. It will often be electricity because electricity is a
premium-priced energy source that is very good for highly
exacting applications, but it is a little bit more expensive.
Obviously, if it is a cold State, they should be looking at
heating. If it is a warm State, they should be looking at
cooling. There are lots of opportunities in industry, in--
throughout the country, so lots of different opportunities
everywhere.
Mr. Waxman. Mr. Clemmer, for renewables, EPA looked at what
States were achieving in each region of the country, and then
applied the regional estimate to each of the States in the
region. Again, was this a conservative approach? Could many or
most States do more at a reasonable cost, and would they
benefit from doing that?
Mr. Clemmer. Yes. EPA's approach is very conservative. It
basically was--is a business-as-usual approach that says States
are going to meet their RPS requirements. For some States, they
had higher levels, but for the most part, at the national
level, the amount of renewable energy was essentially business
as usual, if States just implement their RPS's.
We did an analysis that showed that they could go twice as
far as that and achieve 25 percent nationally, and achieve
deeper emission reductions overall for the--for their proposals
for the States. As with ACEEE, we also included higher levels
of efficiency in that analysis based on what the States are
already achieving. So we think it is conservative, and there
are some issues in their methodology with renewables too where
some States are actually producing less renewable energy in
2030 than they are today because of the methodology they
applied, and so we are hoping that that gets fixed.
Mr. Waxman. Um-hum. Many of my Republican colleagues claim
that the Clean Power Plan will hurt consumers and put a drag on
the economy. I think you have heard some of them this morning.
I disagree. EPA's Clean Power Plan will help drive
technological innovation in clean energy and efficiency
technologies. I think that will be a huge benefit to the U.S.
economy, boosting manufacturing and competitiveness. And above
all it will take a critical step toward cutting dangerous
carbon pollution and mitigating climate change.
Do you agree with that?
Mr. Clemmer. I strongly agree with that. In fact, our
analysis, which we used the EIA's national energy modeling
system to do this analysis, it was a modified version of that,
we found that the benefits in 2020 were 3 times the cost, and
they were even higher in 2030, and part of that has to do with
implementing efficiency, which is very cheap, and cost-
effective renewable technologies, but the other part of it is
the public health and emission benefits both from reducing
carbon, but also from reducing criteria pollutants, has a--
there is a huge economic benefit to that.
Mr. Waxman. So do you think that some of these Republicans
are just engaging in scare tactics to attack the proposal?
Mr. Clemmer. I think there is a lot of rhetoric being
thrown around, yes, and I think it would be good to have some,
you know, actual data out there to look at different
alternatives to see what is the best approach for achieving
the----
Mr. Waxman. Is looking at data the same thing as looking at
evidence? Is that sort of like science?
Mr. Clemmer. Science and economics, yes, and engineering,
yes, all of that.
Mr. Waxman. All of that. OK, thank you.
Mr. Whitfield. Thank you, Mr. Waxman.
And at this time, we recognize the gentleman from Virginia,
Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman.
You know, it is very interesting, it may be rhetoric to
some, but I represent the coalfields in Appalachia and
southwest Virginia. We lose jobs on a regular basis over the
last couple of years, another 135 this week. Jobs that paid
between $75,000 and $100,000. They are good-paying jobs in a
region that doesn't have other jobs. As Mr. Siegel pointed out,
Appalachia has long suffered from not having good-paying jobs,
and energy extraction is one of the ways that we can offset
that.
When you look at businesses closing, and you realize that
these are real people and real families whose roots go back in
the community for generations, it is just really hard to sit
here and hear people say that there is just a lot of rhetoric
out there. These are real people; people that I know, people
that I care for, people that want to work and want to live in
the communities in which their parents, their grandparents,
their great-grandparents, and their great-great-grandparents
have lived in. And everybody always wants to say, well, we can
shift or we can alternate to something else, but, you know, my
region also heard those same arguments on furniture
manufacturing and textiles and tobacco. Those were our big
industries in the region, along with general agriculture and
some other things thrown in. And now, as Dr. Weinstein said
earlier, he is not sure whether there is a war on coal. I can
assure you there is. Living in the middle of the fields out
there and seeing the people who are affected, there is a war on
coal.
But I would have to ask you, Dr. Weinstein, when you are
losing these jobs, that clearly affects the economy of my
region, but you indicated, and I think you are correct, that
when you put the pressures on coal that have been placed on
coal over the last few years, you are going to drive energy
costs up. Is that not correct?
Mr. Weinstein. I would say that, you know, other things
being equal, if coal is going to contribute less to the power
grid, and other forms of energy are more expensive, then
obviously that is going to be passed on to businesses and
consumers. So that is why I argue that we--that EPA and other
regulatory agencies need to proceed with caution, with a rule
of reason when promulgating these, you know, the final rules--
--
Mr. Griffith. And I would agree.
Mr. Weinstein [continuing]. Of the greenhouse gas
emissions.
Mr. Griffith. And I would agree. We have to proceed with
reason and with caution, and to make sure that we let the
science get in front of the regulations, and not have the
regulations in front of the science. And I couldn't agree with
you more, which is why I have supported clean energy technology
and clean coal technology, because we have to continue to do
the research, but we cannot eliminate coal, which seems to be
the goal of this administration, without having that passed on
to the consumers. And interestingly, the President said so in
his 2008 interview with the San Francisco Chronicle. He said
these costs will necessarily be passed on to the consumers.
What people often forget is they are the consumers. And when
those consumers happen to be large manufacturing facilities,
and their facilities start to age, wouldn't you agree that some
people, depending on the product being manufactured, would have
to look at areas of the world where they can compete better
because we have driven our energy costs up. Wouldn't you agree
with that, Dr. Weinstein?
Mr. Weinstein. No, that is absolutely true, and one of the
reasons we are seeing a revival in this Nation's manufacturing
base is because our power costs, our energy costs in general
are lower than in most other countries. That is one of the
reasons that we find companies from Germany, where power costs
are so high, moving their operations or expanding in places
like Texas and Louisiana. So in a perverse way, that is kind of
good for the U.S.
Mr. Griffith. Yes.
Mr. Weinstein. Something important hasn't been mentioned
today, and that is the--you would think that the United States
is an energy wastrel, but we are not. We have improved energy
efficiency more in the United States than in any other country
over the last 30 years. Today, we get $1 of economic output
with half of the energy input that was required 30 years ago,
and we need to keep that in mind. We have made tremendous
progress in terms of energy efficiency.
Mr. Griffith. And we have, and we can do that and continue
to use coal as well, and we should improve on all aspects of
our energy, and we should always be looking for ways that we
can make it more environmentally friendly.
With that, Mr. Clemmer, I would ask, have--has your group
studied the impact of wind on birds? And Mr. Shimkus mentioned
earlier the impact with the sound, have you all studied that
impact, the loss of life to numerous species of birds?
Mr. Clemmer. We are part of the National Wind Coordinating
Collaborative that thoroughly researched that issue and found
that the impacts on avians from wind turbines are relatively
small compared to other things, including----
Mr. Griffith. And it may be----
Mr. Clemmer [continuing]. Fossil fuel development, and coal
and nuclear plants.
Mr. Griffith. And it may be relatively small compared to
some other things in your opinions, but I would have to say
there are some opinions that, while agreeing that some fossil
fuels have issues as well, wind needs to do better siting, et
cetera, and I would ask that we include into the record, Mr.
Chairman, if we could, the spring edition of the magazine of
American Bird Conservancy--yes, I know it probably shocks my
colleagues I read this on a regular basis--in which it includes
an article on the top 10 myths about wind power and birds.
Mr. Whitfield. Without objection, we will enter this into
the record.
[The information follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. The gentleman's time has expired.
At this time, we recognize the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, and the ranking member
for holding the hearing today.
The recently finalized EPA carbon rule has raised some
questions, and hopefully, through a series of hearings, we can
get answers.
Before the 4 blocks of the rule for existing power plants
were proposed and finalized, Texas is doing its part to reduce
carbon emissions. Thanks to the rapid increase and production
of natural gas from the Permian Basin and the Eagle Ford shale,
we have been a leader in fuel switching. Thanks to an abundant
wind resource, Texas now has more than 14,000 megawatts of wind
power. Both of these resources are supplanting coal as our
base-load fuel. On the energy efficiency front, Texas has been
a leader as well. For older buildings, Texas has passed laws to
encourage retrofits and increase access to financing. For the
new buildings, Texas put the 2009 Energy Conservation Code into
effect that requires 15 percent more efficiency. Our city of
Houston is the leader in Texas by requiring an additional 10
percent above that 2009 code. However, in the utilities
section, there is--may be some room for improvement, and that
is how we improve that interests me.
I support the EPA's mandated duty to regulate carbon. The
recent rule has raised some eyebrows, not just amongst the
regulated entities, but across the board. I have particular
interest in block 4 in the energy efficiency block, and we have
reviewed the rule and the EPA calculations. There are some
questions I would like to have answered.
I am happy the panel is before us, and I believe we can
answer some of the questions that relate to the States.
Mr. Nadel, energy efficiency is often called the silent
fuel. You state in your testimony that energy efficiency should
be the cornerstone of all-of-the-above energy policy. The ACEEE
has created a State efficiency standard scoreboard which
examines 29 variables in 6 categories. Does the ACEEE scorecard
offer a statewide annual electric savings rate?
Mr. Nadel. No, we haven't--wait, yes, it does. We do
provide that figure for each of the individual States. It is on
Table 14 of our most recent one.
Mr. Green. OK.
Mr. Nadel. If you have a question about a particular State,
I would be happy to answer it.
Mr. Green. The ACEEE rates California as number 2, is that
correct?
Mr. Nadel. Overall, yes.
Mr. Green. OK.
Mr. Nadel. California was number 2.
Mr. Green. Do you have a sense of California's annual
savings rate?
Mr. Nadel. California, for electricity in 2011, which is
the numbers I have in front of me, saved 1.35 percent of their
electricity through energy efficiency.
Mr. Green. OK.
Mr. Nadel. They were fourth in that category.
Mr. Green. EPA believes that, ultimately, States can
reasonably achieve a 1.5 percent savings rate per year. Is that
generally correct?
Mr. Nadel. Yes, they do.
Mr. Green. If California ranks number 2 with approximately
1.3 annual savings, how do the bottom third of the States
reasonably achieve 1.5?
Mr. Nadel. California's overall number too, they are not as
high as in the electricity savings. In terms of States that are
already doing the 1.5, that includes Arizona, Massachusetts,
Rhode Island, Vermont, are all achieving those already, and
there are several other States that plan to do it in the next
year or 2.
Mr. Green. In your testimony, you state the Federal
Government can help and encourage States through guides and
assistance. What types of the policy or guides are necessary to
achieve that 1.5 percent?
Mr. Nadel. Mainly, it will have to come at the State level.
They will have to work typically with the utilities to offer
energy efficiency programs for consumers and businesses.
Federal Government can provide technical assistance,
information on best practices, those types of things I think
would aid the States to do what they can do.
Mr. Green. The EPA's technical support documents show that
engineering-based studies state that the maximum achievable
energy efficiency goal is .5--0.5 percent annual savings rate.
How does EPA achieve the 1.5 percent when various engineering
and--based studies state that the--that level is not possible?
Mr. Nadel. Many of the engineering studies that I am
familiar with show that 1.5 or even 2 percent or higher are
possible, as witnessed by the fact that a number of States are
actually achieving that.
Mr. Green. OK. Do pollution controls affect the power
plants' energy efficiency?
Mr. Nadel. Yes, they do a little.
Mr. Green. OK, do pollution controls actually lower the
efficiency of the power plants?
Mr. Nadel. Commonly, yes. It varies from plant to plant.
Mr. Green. OK. Can residents or customers achieve enough
energy savings through appliances and thermostats to offset
loss of the power plants?
Mr. Nadel. I haven't done those calculations. I would want
to enter----
Mr. Green. Mr. Chairman, I know I only have 9 seconds left,
but I would like to ask Mr. Tanton, in your statement, the--you
say that production tax credit has led buildings and enormous
amounts of variable and volatile electric--electrical
generation, threatening State reliability to the electrical
grid. How does enormous amounts of volatile production lead to
problems with the State grid? It seems like if we are producing
more, it would give more certainty to the grids.
Mr. Tanton. Well, you need to keep supply and demand in
perfect harmony. So as more volatile generation comes online,
less volatile or more stable generation has to go offline, but
they have to be standing-by. They have to be idling, as it
were.
Mr. Green. Yes.
Mr. Tanton. And in that operation, it threatens the grid
because they can't respond fast enough. They can respond fast
enough if you have a little bit of wind or solar on the system,
because the typical marginal unit is a fast-responding
combustion turbine or something like that. If you have a lot of
variability from the wind, then you start dispatching your
base-load units, which can't respond fast enough. If you can't
respond fast enough, the grid suffers a shortage, i.e., a
blackout or brownout.
Mr. Green. Well----
Mr. Whitfield. The gentleman's time has expired.
Mr. Green. Thank you, Mr. Chairman. Obviously, it is a
great panel.
Mr. Whitfield. At this time, we recognize the gentleman
from West Virginia, Mr. McKinley, 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
Dr. Weinstein, with all due respect, you had said--you used
the word hyperbolae about the war on coal, and I really want to
reinforce what has been mentioned by a few of the people that
preceded me, that there is a war on coal, and anyone needs to
come to the coal producing areas around this country and
understand what is going on for this war on coal. The
uncertainty that is swirling about the industry, even the gas
industry is now becoming more concerned that once they--once
the EPA's successful battle on coal, it is going to switch over
to them next. And--because my--the--I think the general
understanding is, for those of us in the energy fields, that
the--this administration believes that we can have higher
utility bills. We should be able to--I have heard them refer to
Europe, the European bills are higher so, therefore, we can
afford it. I just want to get past that it is not hyperbolae,
it is real, and it----
Mr. Weinstein. Well, you understand that I am a
dispassionate academic, so, you know----
Mr. McKinley. Well----
Mr. Weinstein [continuing]. I have to base my comments on
facts.
Mr. McKinley. I am engineer, and I base my facts--on facts
and real life, not academic. I am facing those families that
are struggling, that are unemployed, that are--they are worried
about what is going to happen next to them. I have--in eastern
Ohio where we have an aluminum plant with approximately 1,000
employees gone because the cost of electricity, they can't
product it, they can't produce aluminum, because aluminum--
about 60 percent of the cost of producing aluminum is
electricity, and when that rate continues to hike because of
what policies we are setting here at the Federal Government
level, we are putting them out. Ravenswood, the same thing;
1,000 employees down there. It is just having a startling
effect, so I just wanted to build off this, these Federal
policies, how Federal policies are affecting States. They are
affecting States. And the coal industry, for all of you to
understand, my grandfather was a coalminer and so I can relate
very comfortably to what this is doing. When you shut down a
coalmine because of the structure that we are doing here in
Washington, you are affecting not only the coalminer, but you
are affecting all those related industries that are involved
with--the timber industry, the concrete industry, the
machinists, the building, the machinists, all the people that
are involved in, let alone the jobs that are on the outside
industry. So we have to be very careful of the policies that we
set.
But let me return back, if I could, to the--what I
understand is the headline of this meeting, is the economic
impact of State energy policies. And each of you have presented
some very interesting scenarios about your research into the--
what the States are doing, as laboratories of democracy with
this. So if I could go down a list with each of the 6 of you,
would you give us, in a short time frame, what would be the
number 1 thing that we should learn from your research? One
thing, and I will start with you, Mr. Tanton, what would be the
number 1 action statement that we should be listening to in
Washington to what you have learned, and what is your opinion?
Just 1 thing.
Mr. Tanton. There are so many things, but if you----
Mr. McKinley. All right, I----
Mr. Tanton. If you ask for 1----
Mr. McKinley. Try and limit to 1.
Mr. Tanton [continuing]. I will give you 1. Separate the
end goal from the mechanism of achieving it. Keep in mind as
you do that that economic forecasts are forecasts, they are not
answers, they raise questions. You have heard a lot of
estimates of forecast this morning. I would argue they should
be used to raise questions, and build in contingencies in your
policies and automatic off-ramps.
Mr. McKinley. Thank you. Mr. Siegel?
Mr. Siegel. I would suggest that----
Voice. Microphone.
Mr. McKinley. I can't--I am sorry.
Mr. Siegel [continuing]. And that energy--thank you--energy
is important for reducing inequality, and that the places that
produce high costs of energy like California have enormous--or
New York, have enormous, enormous inequality, and they are ill
suited to lecture the rest of the country----
Mr. McKinley. All right.
Mr. Siegel [continuing]. On how we should proceed.
Mr. McKinley. Thank you. Mr. Clemmer?
Mr. Clemmer. The most important thing from my perspective
is that we need to transition even further than we have gone to
low carbon energy, whether that be using carbon caption storage
with coal or natural gas, producing low-carbon energy from
renewables, nuclear power, we need--the costs of climate change
are just too tremendous, and we are already seeing that with
the cost of extreme weather on the increase and the frequency
happening, and so we need to move in that direction.
Mr. McKinley. Steve?
Mr. Nadel. Yes, I would note that energy efficiency
typically provides about a 25 percent return on investment, and
is very labor-intensive and is particularly good at generating
jobs.
Mr. McKinley. OK.
Mr. Mr. Polzin. The local economic impacts of energy
development are real and they are significant. There are some
supposedly--there are some negative aspects. For example,
housing in rural areas, but the benefits, the increased wages
and employment, provide resources that we can address these
other effects.
Mr. McKinley. OK. Dr. Weinstein?
Mr. Weinstein. I would argue that when it comes to energy
development, if there is no evidence the States are doing a
poor job, the Feds ought to stay out of the way.
Mr. McKinley. Thank you.
Mr. Weinstein. And secondly, it is time to remove all
restrictions from the export of natural gas and oil.
Mr. McKinley. OK.
Mr. Weinstein. And coal.
Mr. McKinley. Thank you very much.
Mr. Whitfield. Gentleman's time has expired.
At this time, recognize the gentlelady from California,
Mrs. Capps, for 5 minutes.
Mrs. Capps. Thank you, Mr. Chairman, for holding this
hearing and for collecting together such an interesting panel.
I want to thank each of you panelists for your testimony.
I think we would all agree that fossil fuels are a finite
resource, which means that sooner or later we will have no
choice but to find alternative energy sources. Knowing this, I
believe we owe it to our children and grandchildren to begin
moving in that direction now, rather than waiting years down
the road when it may be too late. My home State, which has
gotten some attention this morning, California, understands
this and has been a leader in implementing clean and
sustainable energy policies. Setting renewable production
standards and increasing investments in energy efficiency are 2
of the more critical elements of these policies. These policies
have paid significant dividends for my State and for my
district, which is on California's central coast. For example,
my district is home to 2 of the largest operating solar farms
in the world, and more are on the way. Together, the California
Valley Solar Ranch and the Topaz Solar Farms in eastern San
Luis Obispo County are already generating well over 550
megawatts of electricity, and powering hundreds of thousands of
California homes. These projects created hundreds of local jobs
as they were being built, and still do, and injected hundreds
of millions of dollars into our local economy. One of these
projects used Federal loan assistance, and the other was
financed entirely with private capital.
It seems to me that at least in my district, California's
policies were key drivers of economic growth and private
investment.
And my question, Mr. Clemmer, I am hoping you would agree,
I am assuming you would, but I wanted you to talk briefly about
the ways that Government policies can support renewables and
impact private investments in renewable energy projects. How is
this partnership going to work?
Mr. Clemmer. Thanks. Yes, good question. So, yes, I mean I
would agree, as my testimony alluded to, that projects like
that in California and other States around the country are
being driven in large part by State renewable electricity
standards, which have been beneficial in not only deploying the
technologies, but driving down the cost. And we have seen that
dramatically with wind and solar PV in particular that that is
happening.
The Federal policies, I think, to learn from the States, is
we need long-term, stable, predictable policies to facilitate
that investment, to continue to invest in manufacturing. The
production tax credit has been a good policy, but the short-
term extensions of it has created a boom-bust cycle that has
not been good for the industry.
Mrs. Capps. Yes.
Mr. Clemmer. We need something that is longer term, whether
that be a longer-term tax credit, whether that be a national
renewable standard is something we have been advocating for for
years, where UCS and EIA have done many analyses over the last
15 years showing large national benefits to adopting a national
renewable standard.
Mrs. Capps. I agree with you. And I have a question now for
you, Mr. Nadel. My district has also seen significant economic
benefits from California's strong energy efficiency standards.
These standards have driven researchers and entrepreneurs to
innovate and develop new products to meet these standards. We
have at my home institution at UC Santa Barbara, the Institute
for Energy Efficiency, which is dedicated entirely to
developing cutting-edge energy efficiency technologies. And we
also have private companies, for example, like Transphorm,
which is a global leader in energy-efficient power conversion
technologies.
I believe there is a clear link between strong energy
efficiency standards and innovation.
So could you elaborate on this? I have a little bit of time
left. How do innovators benefit from strong energy efficiency
standards? Is this the winning path for the future?
Mr. Nadel. Yes, we do believe there is. Lots of new
technologies keep being developed all the time. You have
pointed out some. Just to mention 2 technologies that were
developed first in California, electronic ballasts which now
power all the fluorescent lamps, as well as low emissivity
coatings on windows that help keep some of the heat out. Those
are examples.
Another area where California has really been leading is
what we call intelligent efficiency. It is that marriage
between energy efficiency and Silicon Valley, if you will. How
do we use information and communication technologies to
understand where the energy is being used in real time and
immediately correct it, either automatically or by giving
information to the operator.
So sometimes people talk about energy efficiency being the
low-hanging fruit. Fortunately, the fruit keeps growing back on
the trees as, through research, as you pointed out, we keep
developing new ways to save energy.
Mrs. Capps. Thank you. Yield back.
Mr. Whitfield. Gentlelady yields back.
At this time, recognize the gentleman from Texas, Mr.
Barton, for 5 minutes.
Mr. Barton. Mr. Chairman, I--Mr. Terry got here before me.
I would----
Mr. Whitfield. Well, they tell me that you had been here
earlier, so if you are going to yield----
Mr. Barton. No, I am----
Mr. Whitfield [continuing]. To Mr. Terry----
Mr. Barton. I am happy to let Lee go and then----
Mr. Whitfield. All right.
Mr. Barton [continuing]. I will be the cleanup----
Mr. Whitfield. Recognize Mr. Terry from Nebraska for 5
minutes.
Mr. Terry. Be the closer.
Mr. Barton. That is right, baby.
Mr. Terry. That is awesome. So a little over a year ago,
our chairman led a group of us on this side of the aisle, not
on tax dollars, to go to western North Dakota, and it was
educational in the sense that we went from the very beginnings
of a project, all the way to when it is just pumping and it
is--all the construction has finished. And it was extremely
interesting to see what little footprint there is after the
construction has finished and it is just pumping and pumping
and pumping. But one of the things that really stood out to me,
especially when we were talking to the workers there, is how
highly paid they are. And I think that is a product, probably,
or market, free market, you know, when someone is in demand,
they can garner higher wages. But as Ed can testify to, we were
being told that just a lumper that unloads and loads trucks for
a warehouse in that area of North Dakota earns $60,000 to
start.
Now, we talked to some of the folks that were putting
together the drilling rig, and they were in the 6 figures. So
it is incredible to me the high wages, and the number and
volume of young people, men and women, that are there for the
good wages. And I think that is one of the things that we don't
think about when we talk about the gas and oil production in
the United States, is it is a way of elevating lower income
workers to higher wages. And, frankly, it is interesting that a
machine operator is making virtually--not virtually, is making
80 percent of what a United States Congress is making. That is
awesome.
So, Mr. Polzin, your area of expertise is in the economics
that this brings. What is the--looking at something like
Pennsylvania and North Dakota, and the economic driver of the
oil boom and gas boom, can you tell us what impacts that really
has, not only on the local economy, the State economy, but the
national economy, that one--that guy that was running the
machinery, making $130,000, $140,000 a year, what is the
multiplier effect of that? Mr. Polzin--Dr. Polzin.
Mr. Polzin. When you look at a local economy----
Mr. Terry. Microphone.
Mr. Polzin. When you look at a local economy, it--the
actual impact will vary depending on a number of factors, but
if you--the real specific question is what is the multiplier
for an oil and gas job, I would have to go back and look it up,
but I think it is somewhere around 2.5 or 2.8. That sounds
lower than, you know, a turnover ratio of 7 or something like
that, which really has no exact meaning, but that 2.5, 2.7
comes out of a number of economic models, one called implant,
and I think that is a pretty solid figure. So you are looking
at an additional 1.8 jobs for every oil and gas job.
Mr. Terry. That is interesting, and so--and the other part
about this is when a pump is just there and it is on such a
very small pad, less than the size of half of this room, the
landowners were telling us how pleased they were.
Mr. Polzin. They were very pleased.
Mr. Terry. They were making royalties off of that. And it
is interesting to me that States like New York are fighting oil
and gas production in their States when I--it--Mr. Siegel, in
the last 27 seconds, why would States not want to use their
natural resources to elevate especially lower income people in
their State?
Mr. Siegel. Wealthy people want a pristine environment. If
you are a wealthy person living in New York City and you have a
summer home upstate, you don't want economic growth. But
besides that, there is something that has come out of the
universities, that is the idea that progress as was
traditionally understood was industrialization, but
industrialization in much of academia is seen negatively. It is
seen as producing the effluvients of modern economic society,
and there is a desire to avoid that.
So on a local level, you ask people why don't you want
fracking, they will say too many roughnecks, too many crowded
roads, too many prostitutes. And then you push them a little
and you ask and you say, well, but doesn't this reduce economic
inequality? Won't this pass? And then pumping--you will talk
about--is there. That is what they are opposed to. They don't
want industrialization. They don't want manufacturing to
revive. What gentry liberals want is the status quo for
themselves, and that is very difficult to deal with, and that
is a function of extreme wealth. We have considerable wealth in
New York concentrated in the New York metro area, coming out of
the financial services, and as upstate declines and declines
further, it is easier to buy properties up there and that is
fine for some people.
Mr. Whitfield. Gentleman's time has expired.
At this time, recognize the gentleman from New York, Mr.
Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
Dr. Weinstein, just a clarification on the end portion of
your statement about contrasting the renewables with oil and
gas and subsidies. Did you state that there are no subsidies on
oil and gas?
Mr. Weinstein. No, I didn't say that.
Mr. Tonko. What did you say?
Mr. Weinstein. I said that in the last 5 years--5 or 6
years, according to the Obama administration, 75,000 new jobs
had been created in renewable energy, and then I added that
Federal subsidies for renewables have been about $50 billion
over that period. I then said that the oil and gas industry has
added more than 700,000 jobs over that period with no new
subsidies.
Mr. Tonko. What are the subsidies on oil and gas?
Mr. Weinstein. This can take us very far afield of the
hearing today----
Mr. Tonko. No, but just----
Mr. Weinstein [continuing]. Because I would argue that the
oil and gas industry does not receive subsidies. What the oil
and gas industry receives are tax benefits that are available
to just about every manufacturing and mining----
Mr. Tonko. Isn't that semantics?
Mr. Weinstein. No, it is not--well, we could turn it into a
semantic argument. We can look at all of the tax preferences
that are available to all industries, but no matter how you
want to define them, relative to output, the subsidies to
renewables are way ahead of any----
Mr. Tonko. And----
Mr. Weinstein [continuing]. Of any definition of
subsidies----
Mr. Tonko. OK, so are----
Mr. Weinstein [continuing]. Through fossil fuel.
Mr. Tonko [continuing]. Are your tax benefits permanent?
Mr. Weinstein. Excuse me?
Mr. Tonko. Are your tax benefits for oil and gas permanent?
Mr. Weinstein. Well, they are--what is in the code is in
the code until they are----
Mr. Tonko. No, no, no, that is what I am asking, is it
permanent?
Mr. Weinstein. Well, nothing in the tax code is permanent.
Mr. Tonko. Well, I think it is a lot more permanent than
some of the benefits given in subsidy format to renewables.
Let me just state, the renewable energy and energy
efficiency programs are a win-win for the environment and the
economy. They create jobs, save consumers money on their
electric bills, and do cut dangerous carbon pollution, which is
an important element of concern. Despite these benefits, or
perhaps because of them, conservative activists organizations
have been pushing bills and State legislative bodies to weaken
or repeal State clean energy and energy efficiency programs. I
find it troubling that anyone would fight efforts to make our
economy more energy efficient or more energy secure by
diversifying our energy options by adding renewable sources.
Mr. Clemmer, can you briefly describe what has been
happening in some statehouses? Who is behind an effort to
weaken or repeal clean energy and energy efficiency programs?
Mr. Clemmer. Sure, I would be happy to. Yes, they have been
under attack the last few years. The American Legislative
Exchange Council, some of the groups that Mr. Tanton is
associated with, the Beacon Hill Institute, the Koch brothers
have been on the attack, and actually, with respect to
renewable standards, I can say that they have failed miserably,
with the exception of this year there was a freeze in Ohio, but
in every other case, they have not gone through. And I would
like to highlight an example of Kansas, for example, which has
been kind of front and center for some of these attacks, and
I--my feeling is the big reason why that they are failing is
because they are seeing the economic development benefits of
wind development in their State, and on top of that, they know
from their Public Utility Commission, the Kansas Corporation
Commission, that the cost of meeting these standards have been
on the order of 1 to 2 percent. But the studies that are coming
out from the Beacon Hill Institute, that Mr. Tanton references
in his testimony, put the cost in Kansas at 45 percent increase
in electricity rates. It is just, in my opinion, disingenuous
and seriously flawed. I would be happy to talk about what those
problems are if you would like me to.
Mr. Tonko. Thank you. In June, the Ohio Governor signed a
Bill freezing the State's renewable energy standard for 2
years. He did this over the objections of not only the wind
industry and environmental organizations, but also numerous
companies including Ingersoll-Rand, Honeywell, Honda, Owens
Corning and Whirlpool.
Mr. Nadel, your organization worked with the Ohio
Manufacturing Association to document the potential costs
associated with delaying implementation of the State's clean
energy and energy efficiency standards. What did you find?
Mr. Nadel. We found that these energy efficiency standards
would save Ohio ratepayers, businesses and consumers, more than
$5 billion by 2020. That was the mixture of lower electricity
bills as well as the impact of the energy efficiency on the
wholesale markets, and under supply and demand, if demand goes
down, prices go down. Now that they will be saving less energy,
the prices will be higher.
Mr. Tonko. Thank you, sir. And I note my time has expired,
so----
Mr. Whitfield. Thank you very much.
At this time, recognize the gentleman from Texas, Mr.
Barton, for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman.
I am--have to do a few disclosure requirements. We have an
expert from Texas, Dr. Bernard Weinstein, here. He is with the
Maguire Energy Institute. I know Cary Maguire very well, and it
is at the Cox School of Business, I know the Cox family very
well. So I am biased in that I know one of the witnesses that
are here today, and I know the institution that he represents.
The title of our hearing, Mr. Chairman, is ``Laboratories
of Democracy: The Economic Impact of State Energy Policies,''
and I think it is important, as the Republican side, to
emphasize that we support the rights of States to have energy
policies, and, if you support that right, then you support the
rights of States to have different energy policies. And that is
certainly the case, if you compare my home State of Texas with
the Golden Gate State of California, or the Empire State of New
York.
So I am going to ask Dr. Weinstein, in terms of
environmental issues in Texas, is there any evidence that,
because of our energy policy, our environment is worse than New
York or California?
Mr. Weinstein. Well, understand that we do have a lot of
intensive manufacturing industries, including refining and
petrochemcials. You don't find industries of that nature
prevalent in New York State, at least not to the degree we have
in Texas. So, in that sense, yes, you know, we have more
challenges----
Mr. Barton. But we are in attainment in Texas on all air
quality standards. The DFW area and the Houston area have been
in nonattainment, but under current law, current standards, we
are in attainment. If they tighten them up even tighter for
ozone, we might go back into nonattainment, but certainly, we
are nowhere near nonattainment status of, say, the Los Angeles
basin, which has got the worse air quality in the country for
30 years in a row, and looks like they are going to keep that
for another 10 or 15 years. So I am not aware of any
outstanding environment issues that it put us, us being Texas,
lower in the pecking order than the other urbanized States like
California, New York, Florida, that are, you know, highly
populated.
Mr. Weinstein. Well, no, I agree, but the point I was
trying to make is that despite the fact that we do have a lot
of heavy industry, you know, we have been able to maintain
compliance, you know, with EPA standards across the State----
Mr. Barton. Yes.
Mr. Weinstein [continuing]. And by just about any measure
you want to use, whether we are talking about air quality,
water quality, any other measure of environmental quality, it
is improving in Texas even as energy production increases.
Mr. Barton. Well, we say in Texas that we have created more
jobs in the last 10 years than the rest of the country
combined. Is that a true statement?
Mr. Weinstein. Well, not quite.
Mr. Barton. Most of----
Mr. Weinstein. Let me--I will put it this way.
Mr. Barton. Well, compare us to California. Job--you know,
California is the most populous State, Texas is number 2.
Mr. Weinstein. Yes, I think--let me check my notes. I said
earlier that in the last 18 months, Texas has added 548,000
jobs----
Mr. Barton. Do you know what----
Mr. Weinstein [continuing]. In 18 months. OK?
Mr. Barton. Do you know what California has added?
Mr. Weinstein. California, which is half again as large as
Texas, has only added 322,000 jobs over the last 6 years. So
there is really no comparison in terms of job growth.
Mr. Barton. As a general statement, it is fair to say that
Texas has created more jobs than California.
Mr. Weinstein. Yes, by far.
Mr. Barton. Unless you go back 100 years or something, or
go back to 1849, I mean it is----
Mr. Weinstein. About 40 percent of all the jobs created in
the U.S. since 2001 have been in the State of Texas.
Mr. Barton. OK. What is--do you know what the average
electricity price in California is compared to the average
electricity price in Texas?
Mr. Weinstein. I don't know what specifically----
Mr. Barton. Well, do you know what the----
Mr. Weinstein [continuing]. But I know it is a lot higher
in California.
Mr. Barton. Do you know what your electricity price is at
your home in Dallas?
Mr. Weinstein. Well, I know that my electric bills have
been falling for the last couple of years, even though the
temperature has been rising, and that is because we get about
60 percent of our electricity from natural gas----
Mr. Barton. Well, if your----
Mr. Weinstein [continuing]. In the State of Texas.
Mr. Barton. You know, interestingly, Boone Pickens didn't
know what he was paying for electricity either, but if you are
as smart as I think you are, you have a wife that pays the
bill, you are probably paying about 9 to 10 cents retail for
electricity per kilowatt. If you----
Mr. Weinstein. No, actually, I think I am paying 8 1/2
cents, but remember, we have a deregulated market in Texas.
Mr. Barton. Well, if you are in California, you couldn't
find an 8 1/2 cent rate, it would be at least 20 cents, and you
are lucky if you can find that.
Mr. Weinstein. You are probably right.
Mr. Barton. Yes, I am right. I am not probably right, I am
right.
Well, Mr. Chairman, let me simply say that, again, I
support the rights of States to have energy policies, but if
you look at my home State of Texas, we have the highest
economic growth in the country, we have as good air quality and
water quality as any other State in the country, and we have a
private-sector-based energy policy that has created more energy
over the last 100 years than any other State in the country----
Mr. Weinstein. Yes.
Mr. Barton [continuing]. And I think that is a pretty good
record.
Mr. Weinstein. Yes, but the energy boom in Texas, North
Dakota, Pennsylvania, Ohio, and other States is benefitting the
entire country by reducing our dependence on imports, by
providing cheap natural gas, it is holding down power bills and
heating bills for consumers and businesses across the U.S. So
it is not just us energy producers who are benefitting, the
whole country is benefitting.
Mr. Whitfield. Thank you very much.
At this time, I would like to recognize the gentlelady from
Florida, Ms. Castor, for 5 minutes.
Ms. Castor. Thank you very much, Mr. Chairman.
This is very timely because, in the State of Florida, our
Public Service Commission is considering just this week about
reducing our very modest energy efficiency goals.
So I want to focus on, Mr. Nadel, your important point that
it costs less to save energy than to produce energy, but there
is a tension in the way States are--have organized their
utility regulation. Consumers, homeowners, businesses save
money when they conserve energy, but the business model for our
investor-owned electric utilities that have monopolies in their
service areas, they profit off of the kilowatt hour used and
the large operating plants that are constructed.
Mr. Nadel, do you agree that many States have significant
financial incentives to construct expensive power plants?
Mr. Nadel. Yes, I would agree with that. I would point out
that a majority of States, but I don't believe this includes
Florida, have revised their regulations so if sales go down,
the utilities are made whole, and if they achieve energy
efficiency goals, the shareholders get a little extra
incentive. So those policies have worked very well, but I don't
believe you have them in Florida.
Ms. Castor. No, in fact, we are moving backwards. We are
very sensitive to this, the--and I think no matter where you
are from, what your view is, you would be concerned to learn
that Florida ratepayers on the west coast of Florida are on the
hook for $3 billion in costs for nuclear power plants that were
damaged and not constructed. So not one kilowatt hour produced,
but the ratepayers are still on the hook for $3 billion because
the State of Florida had the utilities advocated for an
advanced recovery fee so that ratepayers would pay in advance
to construct these very expensive plants, but didn't protect
the consumer when it come to the fact if the business--if the
utility made a bad business decision, or, in effect, broke
their nuclear power plant.
So, Mr. Nadel, what could Floridians have done with $3
billion in the energy efficiency realm if we had those monies
to devote to the investments under energy efficiency?
Mr. Nadel. You could have made some very large and cost-
effective investments in energy efficiency. I don't know the
exact amount, but you could have reduced----
Ms. Castor. Give us some examples. Just what could you
spend $3 billion on that would help----
Mr. Nadel. Right.
Ms. Castor [continuing]. Those things----
Mr. Nadel. New, more efficient air conditioners. You have
quite a demand for air conditioning.
Ms. Castor. So we could have purchased air conditioners for
more cost-efficient air--I guess energy--more energy efficiency
appliances.
Mr. Nadel. Right. There is a new generation of air
conditioners that uses variable speed drives, advanced controls
to save 30 percent or more compared to the air conditioners
that----
Ms. Castor. And air conditioning in Florida----
Mr. Nadel [continuing]. Were common a few years ago.
Ms. Castor [continuing]. Is very important, so I bet we
could have purchased a lot of other insulation for----
Mr. Nadel. Right, absolutely.
Ms. Castor [continuing]. Weatherized homes.
Mr. Nadel. Yes. You could have helped your industry. You do
have quite a bit of industry, as one of the other witnesses
pointed out, and helped them to be more efficient and more
competitive there.
Ms. Castor. Well, that sounds like a huge job creator. If I
could get a lot of folks working at home and construction, and
weatherizing homes and installing installation and all of these
appliances.
Mr. Nadel. Right.
Ms. Castor. Do you agree?
Mr. Nadel. Yes. No, I agree. No, energy efficiency does
tend to be the low-cost resource. I would say the majority of
utilities around the country have been very supportive of
energy efficiency. I wouldn't count the Florida utilities among
them.
Ms. Castor. Yes, so why--what do we do with this outdated
business model if all of the incentives are on kilowatt hours
produced and building large, expensive power plants, it would
seem like, you know, especially with the challenges of the
changing climate, we have to begin to look at a more modern
business model for our utilities, so maybe they--maybe there is
an incentive to make a little money on promoting conservation.
Mr. Nadel. Yes. No, I agree. As I mentioned briefly, the
majority of States now have adjustments to rates, so if sales
go down, utilities can recover their fixed cost, they don't
have to eat them, and also that they give the shareholders
incentives if they meet their energy saving goals. So these are
very modest cost adjustments, but they make it in the business
interest of the utility to do what is in their interest.
Ms. Castor. Thank you very much.
Mr. Whitfield. The gentlelady yields back.
At this time, recognize the gentleman from Illinois, Mr.
Kinzinger, for 5 minutes.
Mr. Kinzinger. Well, thank you, Mr. Chairman, and thank you
all for being here and providing us with some great testimony.
We have been discussing, obviously, and I am going to ask
this of Mr. Tanton, Mr. Clemmer suggested the Federal
Government should establish a Federal mandate that requires
electric utilities to procure at least 25 percent of their
power for renewable resources by 2025.
A very similar mandate was instituted in my home State of
Illinois in 2007 that demanded almost the exact same thing
through a program called the Renewable Portfolio Standard. This
program specifically mandated that 25 percent of the
electricity sales in Illinois come from renewable resources by
2026, but it has since faltered dramatically with the Illinois
legislature, which, by the way, is overwhelmingly Democrat,
coming to the conclusion this past ring--this past spring that
they should look at reversing this detrimental program.
In addition to this, just last month, the Beacon Hill
Institute at Suffolk University released a study on the
potential impacts of the RFS in Illinois, and here are just a
few of the negative impacts--or RPS, I am sorry, the negative
impacts that this mandate will have on Illinois families going
forward. The RPS mandate will cost Illinois electricity
customers an additional $4.5 billion over current prices from
2014 to 2026. Disposable income will drop by an expected $793
million. The Illinois economy, already suffering very
drastically by our government in Springfield, will shed some
8,000 jobs. And some industrial businesses will see costs rise
by nearly $300,000.
Mr. Tanton, I see you have done some of your own work in
analysis of California's policies on the topics. What do you
think the impact of a Federal mandate on this issue would be to
the average American, should a Federal mandate such as this be
put in place?
Mr. Tanton. It would be devastating. Anybody that argues
that prices go down or stability increases as a result of
renewable portfolio standards is being disingenuous. If the
renewables were more cost-effective, they would be adopted by
the market, period. There are not a lot of irrational business
leaders. The renewable portfolio standard tries to force-fit
something in where it doesn't. It recognizes the energy but not
the capacity needs of a grid. I have studied California, I have
studied many other States, I have worked internationally. We
see, in fact, FERC's own data shows that the States with the
renewable portfolio standards have seen more rampant increase
in electricity prices than States without them. That is a fact.
Now, I would argue, however, looking at the forecast going
forward, we need to keep in mind that those forecasts should be
viewed probabilistically, not deterministically. It is not
dueling banjos, it is not dueling forecasts. I am the first to
admit that forecasts are wrong, but the fact that forecasts are
wrong should give us information of use. And I will use the
debacle in 2000 in California as an example. The bidding
protocol was predicated on having a surplus supply. We put in
place, basically, reverse Dutch auction which only works, as it
turns out, in surplus supply situations. Well, we found
ourselves in a supply deficit situation, which was not what the
forecast had said. I know because I was responsible for the
forecast.
As it turned out, had we put in place a biding protocol and
a market clearing protocol of bid as paid, rather than the
reverse Dutch auction, during those periods of supply shortage,
we would have turned a--what ended up as a $30 billion hit to
the California economy, into maybe a $3 billion hit. Still bad,
but nowhere near as bad.
Mr. Kinzinger. Right. And just the 55 seconds I have left,
what can the Federal Government do or do better to help States
in designing and implementing their own energy policies?
Mr. Tanton. I think today's hearing is a good example of
what the Federal Government, broadly speaking, should do, and
that is to provide more competent information, comprehensive
information, and reduce the advocacy information. Recognize
that we are a country of 300 million people, and 300 million
people are 300 million more brains, with all due respect, than
435 members of Congress or the various State legislatures. The
more brains that are put on making choices, the better the
choice ends up. We will have a more diverse situation if we
have more of a free market environment within which to work.
Mr. Kinzinger. Well, thank you, sir.
And time flies. Mr. Chairman, I will yield back.
Mr. Whitfield. The gentleman's time has expired.
And at this time, recognize another gentleman from New
York, Mr. Engel, for 5 minutes.
Mr. Engel. Thank you. Thanks very much. Thanks very much,
Mr. Chairman.
You know, when it comes to this--these policies, I am about
as open-minded as you can get. I am for renewables, but I
understand that we cannot go from step 1 to step 10 overnight,
and that fossil fuels are going to have to be used at least for
a while, and so it would seem to me that we should all be
working for ways to get the cost down, but at the same time, we
don't want to pollute the environment, and I think that it is a
very delicate balance that we have to look at.
The United States, obviously, needs to have a national
energy policy. We want to reduce dependence on foreign oil, we
want to keep our districts clean, and we want to lower
Americans' energy bills, and we try to somehow throw everything
into the mix. But in my State of New York, we do have a model
for a policy that I think could be implemented at the national
level. Governor Cuomo announced the Reforming Energy Vision
Initiative, which is a proposal to reform New York's energy
grid by shifting away from centralized plants, and instead
having utility companies purchase energy from a multitude of
small producers. This change would allow for greater reliance
on smaller, cleaner sources, and reduce our dependence on a
small number of plants like Indian Point, which has its
troubles, very few miles from my district.
So let me ask Mr. Clemmer, because in addition to the
environmental and safety advantages of the Governor's
initiative, I believe his proposal would also produce economic
benefits. Wind and solar power create jobs. So, Mr. Clemmer,
could you discuss what kinds of benefits these initiatives like
Governor Cuomo's proposal might yield, and might this be an
approach that other States can use as well?
Mr. Clemmer. Sure. The--good question. The--we put out a
report in April that looked at the impacts of climate change on
the electricity grid, and there are several different climate
impacts that pose vulnerability. And we have seen an increase
in frequency and severity of impacts that have caused power
outages that have cost lots of money. And the initiative that
New York is pursuing is probably more comprehensive than I have
seen anybody else do, but there are other examples of States
that are trying to implement similar types of programs in
which--obviously, it is spending money to harden the
electricity grid is important, but we also need to reduce
carbon emissions as well so that we can reduce the cost that
climate change is having on the grid. And so things like energy
efficiency, distributed generation, solar PV, other renewables
that are smaller, when an extreme weather event knocks out some
facility like that, it has less impact on the grid than it does
if it is a large nuclear plant or a large coal plant. And some
of the recent extreme weather events that we have seen, both
with the polar vortex, but also with actually heat waves, have
caused lots of problems with large nuclear and coal plants in
particular.
One of the impacts from heat and drought, which is directly
related to climate change, is that those plants use a
tremendous amount of water, and renewables like wind and solar
don't use any water. Efficiency, obviously, reduces the need
for water as well, so it helps reduce the vulnerability of the
electricity grid to those types of impacts.
Mr. Engel. Mr. Nadel, would you essentially agree with
that?
Mr. Nadel. Yes, I would. New York is to be commended for
really taking a lead at looking at the future of the utility
industry. A lot of people in the industry are starting to think
about it, but New York is really taking the lead.
The industry is changing in dramatic ways, as just about
everybody in the industry will agree, and it is time to reform
regulation to address the 21st century industry, not the 19th
century industry.
Mr. Engel. Thank you.
Mr. Clemmer, the Beacon Hill study has been referenced a
couple of times, and I know you have some serious concerns
about it. I would like to give you a chance to elaborate on
that.
Mr. Clemmer. Sure. I mentioned a couple of times some of
the flaws in these studies, so let me just outline a few of
them quickly.
One is that they, first of all, assume it is going to
pretty much all be wind that meets the RPS, which, obviously,
there are other choices, but for the most part wind has been a
large contributor to the State RPS's, but they have assumed
that wind costs are 2 to 4 times what the actual wind contract
prices have been in the United States, documented actual real
projects. They are also assuming transmission costs that are
ridiculously high, 3 times as high as what projects have cost.
There is a recent project that just went in in Texas that is
facilitating wind projects there.
The assumptions that they make around the impact of
integrating wind, which Mr. Tanton has referred to several
times, are way overblown. Wind does not need one-to-one backup
for all of its generation. It does provide mostly energy to the
system as he said, but there have been studies by regional grid
operators, utilities all over the country looking at 20 to 30
percent renewables from variable sources that have shown very
small costs for doing that, because we--utility grid operators
have been doing this for decades. They have to manage the
variability that comes from demand, from other power sources
going off-line, and their systems are built to accommodate
that. And so as we move towards more natural gas, that actually
increases the flexibility on the grid to accommodate more
renewables. And so those are just some of the assumptions that
lead to really, really high cost estimates from their studies.
Mr. Engel. Thank you. Thank you----
Mr. Tanton. Can I respond a little bit?
Mr. Engel. Yes.
Mr. Tanton. I think too often, people equate price with
cost. Yes, the prices paid to wind developers are low, but that
doesn't mean that the costs are low because other people are
paying the cost. We refer to transmission costs, but keep in
mind, when the capacity factor for wind is only 30 percent, the
capacity factor for that associated transmission is also only
30 percent. That will easily triple to you per kilowatt hour
transmitted cost.
Mr. Whitfield. The gentleman's time has expired.
And at this time, recognize the gentleman from Louisiana,
Dr. Cassidy, for 5 minutes.
Mr. Cassidy. Thank you.
Mr. Nadel, we all agree in conservation, absolutely, and I
like your graph about the cost benefit ratio of conservation
versus other things.
Looking at your graph though on summary of State scores on
conservation, and then looking at something on the Web as the
kind of ranking of utility costs, there is an inverse
relationship, if you will. The higher the State scored,
typically the higher their utility cost. So that makes sense;
you are going to have more savings, therefore, more inducing--
inducement, if you will, to invest in conservation if you are a
high-cost utility State, but there also is, I think, somewhat
of a relationship between low-cost energy and economic growth.
So the States with the lower cost energy are more vibrant, and
the States with the higher cost energy are either losing
members of Congress, or staying flat. I say that because
members of Congress reflect population. So New York has lost
several members of Congress, Massachusetts has lost members of
Congress, et cetera.
Now, that begs the question, in States with high utility
costs, is there an inverse relationship with prosperity? I
think we have made a good case in Texas, which picked up 4
members of Congress, has a pretty vibrant economy, and
Massachusetts losing a member of Congress, or New York losing
members of Congress, maybe not as much.
Any thoughts on that?
Mr. Nadel. OK. A couple of comments. First, I would note,
regardless whether you are a high-cost State or a low-cost
State, there is a lot of energy efficiency that is cost-
effective as shown by Louisiana, for example, which has just
decided to have their utilities do energy efficiency programs.
All the major utilities have just proposed that.
Yes, if your costs are lower, that will help attract
businesses, absolutely. I point out that there is a tendency
for the rural States to have lower costs than some of the urban
States. Transmission and distribution systems tend to be much
more expensive in urban areas.
The other thing I would point out is that rates are one
thing, but bills are also very important. It is that
combination of rates plus the consumption. There was just this
week something published by WalletHub on average energy bills,
and many of the least efficient States actually had the highest
average bills.
Mr. Cassidy. Well, the least efficient States are often, if
you will, hot States, and so they are going to have a higher--
Louisiana is going to have a higher utility bill than a very
moderate northern California clime, so I will accept that.
Now, I am also interested, there is in these States--
somebody spoke of the prosperity in California. California has
a little bit of an hourglass economy, as does New York, with
some really wealthy people and lots of poverty, but a middle
class getting squeezed, Dr. Weinstein, do you have a sense of
blue-collar job growth in Texas, Louisiana, et cetera, versus
other States, because I think of oil and gas giving us upstream
and downstream, blue-collar, middle class job growth. Is that a
fair statement?
Mr. Weinstein. What we are seeing is a fairly mass exodus
of small and medium-sized manufacturers and other businesses
from California, New York and some other States to places like
Texas.
Mr. Cassidy. Now, that is associated with high utility
costs. Can you trace it back to high utility costs?
Mr. Weinstein. I would say that if you are a----
Mr. Cassidy. Is it causal?
Mr. Weinstein. If you are a manufacturer that uses a lot of
electricity, clearly, that is going to be a factor, and----
Mr. Cassidy. So if your input cost is that much higher for
a major thing, a major input, which is electricity, you are
going to move to a low-electricity State.
Mr. Weinstein. Yes, of course.
Mr. Cassidy. Of course. Makes sense.
Mr. Weinstein. If there are other factors that make it
worth the move, but----
Mr. Cassidy. Mr. Siegel--actually, no, I am just out of
time. Mr. Siegel, I am going to read your book, ``Revolt
Against the Masses.'' I love that title.
Mr. Siegel. Thank you.
Mr. Cassidy. But I do get a sense, in New York, you speak
of the elites basically squashing the economic prospects of the
middle class and denying property owners the highest value of
their property. Would you comment a little bit more on that,
please?
Mr. Siegel. You talk about an hourglass economy, New York
City in particular has an hourglass economy in the extreme.
Wall Street is doing extremely well, real estate is doing
extremely well, the middle class has been heading for the exits
for a long time.
What that produces politically is a framework in which
things like energy costs just aren't that important. The
legislature, of which Mr. Tonko--I wish he had asked me a
question--was once a member, the legislature--in New York State
legislature, you are more likely to be removed by a Federal
prosecutor or a State prosecutor than you are to be defeated
for reelection.
Mr. Cassidy. But let me--then, Mr. Siegel, it seems to me,
though, if we are going to relate high utility costs with low
economic growth, and migration of blue-collared jobs to States
with low energy costs, these high energy costs, if you will,
are a war on the middle class. They are destroying their
economic opportunity.
Mr. Siegel. I think what you are describing is more true of
upstate. Upstate New York, which was once the center of
manufacturing, well, more recently was the center of
manufacturing than downstate, there is no question. When--and
now I am just--anecdotally, you will talk to people who are
considering to moving to New York State because of the water.
There is tremendous water available to New York, and Symantec,
and so the chip industry is--to have this inexpensive water is
enormously useful. However, energy costs in New York are, on
average, twice the national average. That simply drives people
out.
In the city, this is not a problem. In the city, it is
really--it is the cost of living more generally that drives the
middle class. What is fascinating to me is why it is that so
many people from New York have no interest in the loss of the
middle class.
Mr. Cassidy. Because they are unaffected.
I will finish by saying blue-collar workers traditionally
employed in mining, manufacturing, and construction, and I will
say that energy obviously creates lots of mining jobs which I
just learned tends to--I have already known but I affirmed--it
tends to create manufacture. Mining begets manufacturing,
because low energy costs create that, and more manufacturing
begets more construction.
It seems we have a jobs program, Mr. Whitfield, and that is
more use of America's natural resources. Thank you.
Mr. Whitfield. Dr. Cassidy, thank you very much.
And that concludes today's hearing. I want to thank all of
you who participated in our panel, and I know many of you came
from long distances, and it is a very important issue and we
appreciate your taking time to be with us, and giving us your
views and responding to our questions.
And with that, we will conclude today's hearing. The record
will remain open for 10 days for any additional materials.
And I want to thank you all once again, and we look forward
to working with you as we move forward to address these issues.
Thank you very much.
Today's hearing is concluded.
[Whereupon, at 12:35 p.m., the subcommittee was adjourned.]
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