[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

                              ----------                              
                                                                   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

                              ----------                              


                        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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