[Senate Hearing 113-22]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 113-22
 
                         DOE BUDGET FOR FY 2014
=======================================================================


                                HEARING

                               before the

                              COMMITTEE ON

                      ENERGY AND NATURAL RESOURCES

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   TO

 CONSIDER THE PRESIDENT'S PROPOSED BUDGET FOR THE DEPARTMENT OF ENERGY 
                          FOR FISCAL YEAR 2014

                               __________

                             APRIL 18, 2013


                       Printed for the use of the

               Committee on Energy and Natural Resources




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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                      RON WYDEN, Oregon, Chairman

TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
DEBBIE STABENOW, Michigan            DEAN HELLER, Nevada
MARK UDALL, Colorado                 JEFF FLAKE, Arizona
AL FRANKEN, Minnesota                TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia      LAMAR ALEXANDER, Tennessee
CHRISTOPHER A. COONS, Delaware       ROB PORTMAN, Ohio
BRIAN SCHATZ, Hawaii                 JOHN HOEVEN, North Dakota
MARTIN HEINRICH, New Mexico

                    Joshua Sheinkman, Staff Director
                      Sam E. Fowler, Chief Counsel
              Karen K. Billups, Republican Staff Director
           Patrick J. McCormick III, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     3
Poneman, Daniel B., Deputy Secretary, Department of Energy.......     5
Wyden, Hon. Ron, U.S. Senator From Oregon........................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    37

                              Appendix II

Additional material submitted for the record.....................    89


                         DOE BUDGET FOR FY 2014

                              ----------                              


                        THURSDAY, APRIL 18, 2013

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden, 
chairman, presiding.

 OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON

    The Chairman. With respect to the Department of Energy's 
fiscal year 2014 budget, it's quite clear that our country 
needs to have a broad portfolio of energy choices. But it can't 
have that when the Energy Department's budget doesn't fund 
them. The energy needs and opportunities in Oregon are 
different from the energy needs and opportunities in Alaska or 
West Virginia or Louisiana or North Dakota.
    It is true that no one has a crystal ball that's good 
enough to know exactly where technological breakthroughs are 
going to occur or how energy markets in our world will change. 
Five years ago when the Congress last enacted a major energy 
bill, the potential for the kinds of dramatic increases in gas 
and oil, in gas resources from shale and oil, were unknown. 
Putting all of our research dollars on a few technologies 
closes off pathways to other potentially transformative energy 
breakthroughs.
    I understand that proposing a budget is about establishing 
priorities. The current budget problems require tough 
decisions. The Department of Energy budget is no exception.
    None the less a budget is also about your priorities for 
the future. I remain concerned about some of the investment 
decisions that I've seen in the Department of Energy budget. 
Because I don't think they truly reflect the level playing 
field that's needed to promote choice and competition in energy 
and particularly encourage energy investment.
    This morning I'm not going to go over the same ground on 
technologies like energy storage or environmental cleanup that 
I discussed with Dr. Moniz last week. I think energy storage, 
which has the potential to greatly improve the economics and 
challenges of adding renewable energy to the electric system, 
has been underfunded. Environmental cleanup is not a problem 
that is going to be solved just by spending more money. I do 
think it's important to ask for explanations about why the 
Department of Energy budget has such dramatic reductions in 
fossil energy and nuclear energy and to a lesser extent in 
water power and fuel cells.
    The DOE budget never seems to be complete without the 
Department cutting funding the Congress has added for water 
power and fuel cells. These are technologies that the private 
sector is anxious to move on quickly. Our competitors around 
the world are ramping up their investments in these areas. 
Despite that, this year there appears to be no exception to 
what I think clearly are misguided cuts.
    Year after year funding for fossil energy research is cut 
over $74 million, or 15 percent. Sure the fossil budget 
includes a new program for collaboration with EPA and the U.S. 
Geological Survey to develop safer fracking technologies. The 
$17 million budgeted for this program doesn't begin to reflect 
the importance of addressing the challenges of improving the 
way fracking is done, encouraging best practices, and the 
implications that has for U.S. energy production 
competitiveness.
    Year after year funding for nuclear energy research was cut 
$123.6 million, or 16 percent. In the wake of the decision to 
cancel the Yucca Mountain repositories, it's hard to understand 
how it makes sense to reduce funding on nuclear fuel cycle 
research. Earlier this week the Department announced a program 
to develop spent fuel storage technologies for high burn-up 
fuel of $15.8 million stretched over 5 years. Certainly better 
late than never, but like the Department's efforts on fracking 
research, the level of effort proposed doesn't seem to me to 
begin to match the importance of the challenge.
    Funding for fusion energy is proposed to increase at almost 
a half a billion dollars with half of that going to fund the 
U.S. contribution to the International Fusion Demonstration 
Project being constructed in France. ITER is now such a large 
part of the fusion budget that it is quite literally eating up 
other programs' funding. Even with a large budget increase, the 
Department is ordering MIT to shut down its fusion research 
program to save dollars.
    The Department has now said that the U.S. contribution to 
ITER will be capped at $2.4 billion. The last time the 
Department provided the Congress with an estimate the total 
U.S. project cost was in 2008 when the U.S. share in this 
project was estimated to cost less than half of that amount. 
Fusion may truly be the breakthrough technology of the future, 
but it's time for Congress to take a closer look at this 
program-especially the ITER project.
    My point here is simple. Not every technology needs to get 
the same amount of funding. There should be some genuine 
balance among technologies that reflect their likely 
contribution to the country's national energy mix. Budgeting 
priorities ought to also make sure that addressing problems 
that are already at hand, like fracking or spent nuclear fuel 
storage, are real priorities, not after thoughts.
    We look forward to the Department's testimony. But let me 
have Senator Murkowski make her opening statement.
    Just 2 procedural points that you and I have talked about 
very quickly, Senator Murkowski.
    First, the department cannot do its job without receiving 
nor this committee cannot do its job without receiving the 
department's budget justifications in a timely manner. Senator 
Murkowski and I feel very strongly that we absolutely have to 
have that and have to have that level of cooperation.
    Second, members of the committee invariably have detailed 
questions about the budget and the Department's testimony that 
they submit after the hearings. Last year, the committee did 
not receive the Department's responses to our budget hearing 
questions until December, 10 months after they were submitted.
    Secretary Poneman, the Department may not completely 
control all of the issues with respect to the budget 
justifications when Senators up here ask questions. But you do 
have complete control when responses to this committee are 
submitted. For myself and Senator Murkowski, and we've talked 
about this, it is not acceptable to fail to deliver responses 
to the committee's questions for months and months on end. That 
has got to change. I'm going to want your personal assurance 
that the Department is going to answer the questions that 
Senators on both sides of the aisle ask in a timely way.
    Senator Murkowski, for whatever statement you'd like to 
make.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I'd like to 
welcome the Deputy Secretary. Appreciate you stepping in to 
speak to the President's priorities within the Department of 
Energy.
    I want to add to Senator Wyden's comments here in terms of 
timeliness of responses. I think members take these budget 
hearings very seriously. We need to understand where the 
Administration is intending to go with their priorities.
    But I think it's also very, very important that the 
Administration know where we're coming from in our priorities. 
That is reflected in these QFRs, these questions for the 
record. So it's not just an exercise where we ask our staff to 
dream up whatever it is that they think the folks back home 
want to hear.
    These are important. It's important that we receive 
responses in a timely manner. So I just want to add to the 
comments of Senator Wyden. Reinforcing that we take these very 
seriously and the hope will be that the Department will be 
fully cooperative.
    Last year when the Administration's budget came out I 
expressed disappointment with the overall budget request. This 
year, unfortunately, is no different. I am again, disappointed.
    I've said that as it relates to the full budget, the fact 
that the budget comes in 65 days after it was due, more than 2 
weeks after the Senate has already moved through its own budget 
resolution. This just make the process a little more 
complicated. I think you fully recognize that.
    But we're sitting here at $16.8 trillion in debt. We've got 
a budget in front of us that adds more, adds more. It tacks 
trillions on top of what we already have going forward in this 
next decade, a budget that just doesn't come close to 
balancing. So this is tough for all of us as we try to, again, 
address the priorities but do so in a way that is fiscally 
responsible.
    There's a lot of things that I don't like within this 
budget. But I'll start off with acknowledging a few areas where 
I think things are moving in the right direction.
    A greater emphasis on research and development, the R and D 
focus, I think, is just so key, so critical to us as we move 
toward an energy policy that, again, is affordable, abundant, 
clean, diverse and secure. It's going to come about through our 
advances in technology. So I'm pleased with the focus on the 
basic research. I think it will promote the innovation and the 
breakthroughs that we need to establish commercial viability.
    You've got this new active project management at ERE which 
will hopefully help the Department become a better steward of 
taxpayer dollars. I think that that's a good thing.
    There's some things that clearly I am not in alignment with 
the Administration. The chairman has noted that budgets are all 
about priorities and we look for that. The Administration has 
said repeatedly that they support an all of the above energy 
policy. But I don't necessarily see that reflected in this 
budget here.
    Instead it would appear that there is still the favorites 
even amongst the renewables in the vehicle technologies. One 
example, the water power account is again cut despite the fact 
that hydropower is by far our largest source of clean renewable 
electricity generation.
    Then there is the fossil R and D budget as the chairman has 
noted it remains almost exclusively focused on CCS and a 
fracking safety initiative. New supply from unconventional 
resources like methane hydrates, distant afterthought. If it's 
even an afterthought at all.
    Yet that resource could provide natural gas for thousands 
of years if it's commercialized. Yet DOE is looking at this, 
says $5 million here is less than .02 percent of the total 
request. If we're really going to move out and advance some of 
these breakthroughs we need to show that support by way of the 
budget.
    Also want to mention 2 other areas where I do think that we 
might be able to find some bipartisan support, but yet I think 
the Administration has taken a different approach.
    The first is energy taxes. Despite bipartisan support for 
the expansion of the master limited partnerships. Senator Coons 
is leading on that. I'm pleased to be working with him.
    The Administration instead of looking to that is once again 
going down the same path that we've seen time and time and time 
again which is singling out oil, natural gas and coal producers 
with increased taxes. Now I get it. You're looking under every 
rock to find dollars for an increased budget.
    But we've demonstrated before that it's a bad idea. I think 
it's going to be demonstrated again that it is a bad idea. What 
we need to do, I think we all recognize, we need to be looking 
at how we reform a broken tax code. But singling out one 
industry is not going to get us there. I find it really quite 
surprising that the budget would make permanent the wind tax 
credit just months after the industry itself proposed a 
phaseout there.
    Another area where I think we might be able to have some 
good conversations is in the establishment of a trust fund for 
energy research. I think it is a logical way. It's an enduring 
way to boost funding in that area. I have included it as a part 
of my energy 2020 proposal. I think that we should be able to 
find some agreement.
    But what the Administration does in its proposal is it 
takes new production in areas that are off limits. It takes 
them off the table. I'm looking at this and saying the only way 
that you're going to really be able to make this work is if you 
allow for new production and you take some, a portion, of the 
revenues from that new production. That's how you can fund 
this.
    But if we're taking it from the existing production in this 
country you're just taking it from some other source that's 
already committed. So I'm afraid that if that's the approach 
the Administration is going to take on this it's not going to 
go anywhere either despite the fact that I think it's a 
promising concept. So we've got to figure out how we make it 
all work.
    I do appreciate the opportunity to focus on some of the 
areas that we might be able to help encourage the 
Administration, ways that we, as a committee, can advance good 
policy. Again, I appreciate you being here this morning.
    The Chairman. Senator Murkowski, thank you very much for a 
statement where there were a whole host of areas where I agree. 
Hallelujah for your throwing in the point about the tax reform 
and fixing the dysfunction tax system as well.
    Senator Murkowski. We're working at it.
    The Chairman. So that's not your--with it Secretary 
Poneman. We'll let you off the hook on that.
    But we welcome your remarks. We'll make your formal remarks 
a part of the record and look forward to having a chance to 
have some back and forth on questions.
    So, go ahead.

STATEMENT OF DANIEL B. PONEMAN, DEPUTY SECRETARY, DEPARTMENT OF 
                             ENERGY

    Mr. Poneman. Chairman Wyden, Ranking Member Murkowski, 
members of the committee, thank you for the opportunity to 
appear before you today to discuss the President's fiscal year 
2014 budget request for the Department of Energy.
    Let me just begin by thanking the committee for voting to 
refer the nomination of Dr. Ernest Moniz to the floor. The 
expeditious treatment of that is something that we're all very 
grateful for.
    The United States is on the path to a cleaner and more 
secure energy future.
    Since President Obama took office responsible oil and gas 
production has increased each year while oil imports have 
fallen to a 20 year low.
    Renewable electricity generation from wind, solar and 
geothermal sources has doubled.
    The carbon emissions that threaten our planet have fallen 
to the lowest level in the United States in nearly 2 decades.
    In short, the President's approach is working. It is a 
winning strategy for the economy, energy security and the 
environment. But even with this progress there is more work to 
do.
    The Energy Department plays a vital leadership role in 
continuing the significant progress America has made in 
producing more American energy, creating the clean energy jobs 
of the future and increasing energy efficiency across the 
economy. In total the President's 2014 budget provides $28.4 
billion in discretionary funds for the Department of Energy to 
support its mission to assure future generations may live in a 
country that is safer, healthier and more prosperous.
    As part of the Administration's all of the above strategy, 
the President's budget request invests in programs that support 
research and deployment of the energy technologies of the 
future. These investments will help us double American energy 
productivity by 2030, save consumers and business money by 
saving energy and support ground breaking research in 
innovation to leverage every domestic source of energy from 
hydrocarbons and nuclear to solar and wind.
    The Administration recognizes the government's role in 
fostering scientific and technological breakthroughs and has 
committed significant resources so that our Nation can lead the 
world in the innovations of the future.
    This includes $5.2 billion for the Office of Science to 
support basic research that could lead to new discoveries and 
help solve our energy challenges.
    The President's budget supports DOE's energy frontier 
research centers which are working to solve specific scientific 
problems to help unleash new, clean energy technology 
development and our energy innovation hubs which bring together 
our Nation's top scientists and engineers to achieve game 
changing energy goals.
    The fiscal 2014 request also includes $379 million for the 
advanced research projects agencies for energy to support high 
impact energy related research projects with a potential to 
transform the energy sector.
    In addition to strengthening our economy the budget request 
also strengthens our security by providing $11.7 billion for 
the Department's National Nuclear Security Administration. NNSA 
plays a vital role in achieving President Obama's nuclear 
security objectives including in the prevention of nuclear 
terrorism and the great and urgent threat it presents to our 
Nation and to the world.
    Finally, the President's budget request of $5.6 billion 
provides the resources to clean up the cold war legacy and 
continue the world's largest environmental remediation effort 
led by the Office of Environmental Management.
    Given the urgency of the challenges we face and the current 
fiscal climate DOE remains committed to streamlining our 
organization to improve performance and save taxpayer money. 
The Department has already achieved approximately $322 million 
in strategic sourcing savings including reducing our vehicle 
fleet by 8 percent.
    The President's fiscal year 2014 budget request for the 
Energy Department protects Americans from nuclear hazards. It 
advances basic science and cutting edge research to strengthen 
America's future competitiveness and helps make America a 
magnet for jobs again by investing in high tech manufacturing 
and innovation, clean energy and infrastructure. The budget 
does all these things as part of a comprehensive plan that 
reduces the deficit and puts the Nation on a sound fiscal 
course.
    Thank you. I am now very pleased to answer your questions.
    [The prepared statement of Mr. Poneman follows:]

 Prepared Statement of Daniel B. Poneman, Deputy Secretary, Department 
                               of Energy
    Chairman Wyden, Ranking Member Murkowski, and Members of the 
Committee, thank you for the opportunity to appear before you today to 
discuss the President's fiscal year 2014 Budget request for the 
Department of Energy.
    The United States is on the path to a cleaner and more secure 
energy future. Since President Obama took office, responsible oil and 
gas production has increased each year, while oil imports have fallen 
to a 20 year low; renewable electricity generation from wind, solar, 
and geothermal sources has doubled; and the carbon emissions that 
threaten our planet have fallen to the lowest level in the U.S. in 
nearly two decades. In short, the President's approach is working. It 
is a winning strategy for the economy, energy security, and the 
environment.
    But even with this progress, there is more work to do. High gas 
prices impact American families and businesses every day, and remind us 
that we are still too reliant on oil, which comes at a cost to American 
families and businesses. While there is no silver bullet to address 
rising gas prices in the short term, President Obama remains committed 
to a sustained, all-of-the-above energy strategy and common-sense 
proposals that will further reduce our dependence on oil, better 
protect consumers from spikes in gas prices, and reduce pollution.
    The Energy Department plays a vital leadership role in continuing 
the significant progress America has made in producing more American 
energy, creating the clean energy jobs of the future, and making energy 
more efficient across the economy.
    In total, the President's 2014 Budget provides $28.4 billion in 
discretionary funds for DOE to support its mission. The FY 2014 Request 
supports the President's goal to increase American competitiveness and 
reduce our reliance on oil by making strategic investments in critical 
research and technology sectors for clean energy and to make 
significant national security advances to leave future generations with 
a country that is safer, healthier, and more prosperous. Further, the 
President proposes investments so the United States will lead the world 
in development, demonstration, and deployment of clean energy 
technologies, to reduce our dependence on oil and to mitigate the 
impact of climate change. The Request also includes increased funding 
to modernize the Nation's nuclear deterrents and continue securing 
vulnerable materials around the world. In light of the current 
discretionary spending caps, these increases in funding are a testament 
to the importance of clean energy and innovation to the country's 
economic future and the importance of nuclear security to the Nation's 
safety.
Investing in clean energy, innovation, jobs of the future
    As part of the Administration's all-of-the-above energy strategy, 
the President's budget request invests in programs that support 
research and deployment of the energy technologies of the future. These 
investments will help us double American energy productivity by 2030, 
save consumers and businesses money by saving energy, and support 
groundbreaking research and innovation to leverage every domestic 
source of energy, from natural gas and nuclear to solar and wind.
    The budget request invests approximately $4.7 billion in applied 
energy programs. This is a 42 percent increase over FY12 enacted levels 
and demonstrates the President's commitment to making America a magnet 
for clean energy jobs, ensuring our nation's energy security, and 
combating climate change.
    The Request includes $2.8 billion in funding for programs designed 
to help meet the President's goals of investing in the next generation 
of renewable energy technologies, advanced vehicles and fuels, and 
energy efficiency measures that reduce energy use in Federal agencies 
and the industrial and building sectors.
    The budget continues to support the Department's successful SunShot 
initiative, which aims to make solar energy cost-competitive with 
conventional sources of electrical energy, without subsidy, by the end 
of the decade. It also supports several other cross-cutting initiatives 
including the following:

   EV Everywhere Grand Challenge--advances the goal of making 
        the U.S. the first country in the world to invent and produce 
        plug-in electric vehicles that are as affordable and convenient 
        as gasoline powered vehicles by 2022.
   Clean Energy Manufacturing Initiative--focuses on 
        dramatically improving U.S. competitiveness in the 
        manufacturing of clean energy products and strengthening U.S. 
        competitiveness across multiple manufacturing industries 
        through increased energy productivity.
   Grid Integration Initiative--develops the technologies, 
        tools, and approaches to overcome grid integration barriers for 
        renewable energy, electric vehicles, and energyefficient 
        building technologies while maintaining grid reliability.

    In addition to the Grid Integration Initiative, the budget request 
includes $169 million to facilitate grid modernization and increase the 
reliability and security of the grid. In FY14, we are 3 undertaking 
efforts to produce real-time analysis of the transmission system and 
energy supply disruptions, improve response times during emergencies, 
and promote effective cyber-security capabilities in the energy sector.
    Investing in energy efficiency and renewable energy generation are 
fundamental steps necessary for creating a clean energy economy. The 
Administration continues to call on Congress to pass HomeStar or 
similar mandatory funding legislation aimed at creating jobs and 
spurring economic growth by encouraging Americans to invest in energy-
saving home improvements.
    Currently, nuclear energy supplies approximately 20 percent of the 
Nation's electricity and over 60 percent of clean, non-carbon producing 
electricity. Over 100 nuclear power plants are offering reliable and 
affordable baseload electricity in the United States, and they are 
doing so without air pollution and greenhouse gas emissions. The budget 
request invests $735 million in the nuclear energy program to help 
develop the next-generation of nuclear power technologies, including 
small modular reactors and improved light water reactor systems, and 
continue R&D efforts in areas such as improved fuel forms. The Budget 
also provides $60 million to support the Administration's Strategy for 
the Management and Disposal of Used Nuclear Fuel and High Level 
Radioactive Waste, which provides a framework for moving toward a 
sustainable program to deploy an integrated system capable of 
transporting, storing and disposing of used nuclear fuel and high-level 
radioactive waste.
    As we move to a sustainable energy future, America's fossil energy 
resources will continue to play an important role in our energy mix. 
President Obama is committed to developing our oil and gas resources in 
a safe and sustainable manner. Today, America produces more natural gas 
than ever before--and nearly everyone's energy bill is lower because of 
it. The Administration's Budget Request includes $638 million to 
advance technologies related to the reliable, efficient, affordable, 
and environmentally-sound use of fossil fuels, and provide strategic 
and economic security against disruptions in U.S. oil supplies. Key R&D 
efforts include developing costeffective carbon capture and storage and 
advanced power systems. The Budget also invests $2 billion over the 
next ten years from Federal oil and gas development revenue in a new 
Energy Security Trust that would provide a reliable stream of mandatory 
funding for R&D on costeffective transportation alternatives that 
reduce our dependence on oil.
    As industry, Congress, and the American people make critical energy 
decisions that require an in-depth understanding of domestic and 
international energy markets, it's important that we adequately fund 
the Energy Information Administration, the nation's premier source of 
independent statistical information about energy production and use. 
That is why the budget request includes $117 million for EIA.
Investing in Science and Innovation to Keep America Competitive
    Competing in the new energy economy will require us to harness the 
expertise of our scientists, engineers, and entrepreneurs. As the 
President said, the ``the world is shifting to an innovation 4 economy, 
and nobody does innovation better than America. In today's innovation 
economy, we need a world-class commitment to science and research.'' 
The President is committed to making investments in research and 
development (R&D) that will grow our economy and enable America to 
remain competitive. This focus on science and innovation will help 
create the industries and jobs of the future and address the challenges 
and opportunities of the 21st Century.
    The Administration recognizes the Government's role in fostering 
scientific and technological breakthroughs, and has committed 
significant resources to ensure America leads the world in the 
innovations of the future. This includes $5.2 billion for the Office of 
Science to support basic research that could lead to new discoveries 
and help solve our energy challenges. These funds support progress in 
materials science, basic energy science, advanced computing and more. 
They also provide America's researchers and industries with state-of-
the-art tools to ensure they stay at the cutting edge of science.
    The budget request continues to support Energy Frontier Research 
Centers. The Energy Frontier Research Centers are working to solve 
specific scientific problems to help unleash new clean energy 
technology development. So far, the EFRCs have generated some 3,400 
peer-reviewed papers 60 invention disclosures, and 200 patents, and the 
Centers report numerous instances of technology transfer. In their 
three-plus years of existence, the EFRCs have achieved scientific 
breakthroughs in multiple areas, from solar power and batteries to new 
catalysts for refining petroleum and powering fuel cells. In FY 2014, 
we are going to hold an open re-competition to select new EFRCs and 
consider renewal applications for existing EFRCs.
    The budget request also supports the five existing Energy 
Innovation Hubs and proposes a new Hub in electricity systems. Through 
the Hubs, we are bringing together our nation's top scientists and 
engineers to achieve game-changing energy goals. The Hubs continue to 
make progress. For example, the Modeling and Simulation for Nuclear 
Reactors Hub has released the first versions of software that, support 
simulating a virtual model of an operating physical reactor. The Fuels 
from Sunlight Hub has filed multiple invention disclosures and 
published scientific papers. And the Energy Efficient Buildings Hub is 
developing advanced building modeling tools and has built one of the 
country's first 3-D building design labs.
    Additionally, the budget request includes $379 million for the 
Advanced Research Projects Agency for Energy, known as ARPA-E, to 
support high-impact energy-related research projects with the potential 
to transform the energy sector. ARPA-E has invested in roughly 285 
high-risk, high-reward research projects that, if successful, could 
create the foundation for entirely new industries. 17 of these 
projects, which received an initial investment from ARPA-E of 
approximately $70 million in total, have attracted over $450 million in 
private sector follow-on funding. These companies and research teams 
have produced a battery that doubled the energy density of any previous 
design, successfully engineered microbes that use carbon dioxide and 
hydrogen to make fuel for cars, and developed a 1 megawatt silicon 
carbide transistor the size of a fingernail.
    In FY14, ARPA-E will continue to work on all aspects of 
transportation, including alternative and bio-derived fuels, batteries, 
components for transportation electrification, and advanced vehicle 
designs and materials. Additionally, ARPA-E will continue to work on 
all aspects of stationary power systems, including building efficiency, 
stationary energy storage systems, grid modernization, and stationary 
energy generation.
    Taken together, our research initiatives will help power America's 
great innovation machine to accelerate energy breakthroughs and create 
jobs.
Nuclear Safety and Security
    In addition to strengthening our economy, the budget request also 
strengthens our security by providing $11.7 billion for the 
Department's National Nuclear Security Administration. NNSA plays a 
vital role in achieving President Obama's nuclear security objectives.
    As the United States begins the nuclear arms reduction required by 
the New START treaty, the science, technology and engineering 
capabilities within the nuclear security enterprise will become even 
more important to sustaining the U.S. nuclear deterrent. The budget 
request includes $7.9 billion for Weapons Activities, a nine percent 
increase over the FY 2012 enacted levels. This increase provides a 
strong basis for transitioning to a smaller yet still safe, secure and 
effective nuclear stockpile. It also strengthens the science, 
technology and engineering base of our enterprise.
    The budget request also includes $1.2 billion for the Naval 
Reactors program to ensure the safe and reliable operation of reactors 
in nuclear-powered submarines and aircraft carriers and to fulfill the 
Navy's requirements for new nuclear propulsion plants that meet current 
and future national defense requirements.
    Additionally, the budget request supports NNSA's critical work to 
prevent nuclear terrorism--one of the most immediate and extreme 
threats to global security. That is why President Obama has elevated 
this challenge to the top of our national security goals. It includes 
$2.1 billion to implement key nuclear security, nonproliferation and 
arms control activities. It supports efforts to detect, secure, and 
dispose of dangerous nuclear and radiological material around the 
world. And it will help the Department to fulfill its role in 
completing the President's four-year plan to secure all vulnerable 
nuclear materials worldwide.
    Finally, the President's FY2014 Budget Request of $5.622 billion 
provides the resources to clean up the Cold War legacy and maintain 
momentum in the world's largest environmental remediation effort, led 
by the Office of Environmental Management (EM). EM continues to develop 
and apply innovative environmental cleanup strategies and construct and 
operate one-ofa- kind, highly-complex facilities to safely complete 
clean-up in a manner that demonstrates continued value to the American 
taxpayers.
Investing for Security and Prosperity
    The President's fiscal year 2014 Budget Request for the Energy 
Department protects Americans from nuclear hazards, advances basic 
science and cutting-edge research to strengthen America's future 
competitiveness, and helps make America a magnet for jobs again by 
investing in hightech manufacturing and innovation, clean energy, and 
infrastructure. The Budget does all of these things as part of a 
comprehensive plan that reduces the deficit and puts the Nation on a 
sound fiscal course.
    As President Obama has said, ``Today, no area holds more promise 
than our investments in American energy. After years of talking about 
it, we're finally poised to control our own energy future.'' The 
investments included in the Administration's Energy Department budget 
request are vital to ensuring America's energy security and securing 
America's place as the world leader in the clean energy economy.
    Thank you, and now I am pleased to answer your questions.

    The Chairman. Thank you, Secretary Poneman.
    Let me turn first to the question of fracking. In the last 
few years the country has seen record highs in production of 
natural gas and production of natural gas liquids and crude oil 
production is headed back to levels not seen since the 1980s. I 
think it's understood that much of this growth is driven by 
shale development and with that, fracking.
    We also know that while this has certainly been a big plus 
for our economy, it benefits our country in a whole host of 
ways. I was recently at a school in Central Oregon where we 
were looking at 35 percent reductions in natural gas pricing. 
So it's very clear that benefits are being felt throughout so 
many communities.
    Valid concerns, valid concerns, have been raised as to how 
safely this continued development can be done. These 
environmental issues, in my view, have got to be addressed. 
They've got to be addressed right.
    So I look at the budget and I'm trying to sort through the 
justification for the Department of Energy cutting the fossil 
energy research budget by 15 percent. The budget provides 12 
million toward research on natural gas technologies. This is in 
collaboration with, of course, the Environmental Protection 
Agency and the Department of the Interior.
    DOE's role or core competency in this effort is intended to 
be well integrity and green technologies. Certainly 2 of the 
most important components in ensuring future shale development 
is done in an environmentally sound way. It just seems to me 
that when you really sort through, Senator Murkowski and I have 
both said, what our priorities are, what's most important? Any 
investment in research in this area would be returned many 
times over in savings that would be accrued in environmental 
cleanup and revenue from further development.
    So there's a lot on the line. It's hard to look at the size 
of the stakes and then see this really, very modest, 
disproportionately small effort put into research. So what's 
your take with respect to that concern?
    Mr. Poneman. Thank you, Mr. Chairman.
    First of all I would like to strongly agree with both of 
the premises of your question which is that the prodigious 
increase in natural gas has been a game changer for this 
country. Actually the dollars that went into that produced 
increase are very, very modest. So one point is that you can 
get big bang for the buck sometimes with a very modest 
investment.
    We've put $137 million into hydraulic fracturing research 
and horizontal drilling research between 1978 and 1992 in the 
department. From that we've gone from 2 percent to 35 percent 
natural gas. So that's the first part.
    The second premise we agree with is if we do not take care 
to ensure that we do this technologically well and responsibly. 
Not only responsibly but in a way that's transparent to the 
taxpayers and to the people of this country, we will not be 
able to continue to enjoy the incredible benefits this 
provides. So we therefore agree on the need to make sure we get 
that part right as well.
    We are investing in the R and D where it's helpful. There 
is leverage, Mr. Chairman, in the fact that we're not doing 
this alone. I think you know we have now signed an MOU with the 
EPA and with the Department of the Interior, who each of whom 
bring relevant expertise to some of the environmental issues 
related to fracking.
    We have put in this budget $25 million prize for who can 
come up with good ideas on how to introduce capture technology 
on natural gas fired plants. We're always making, as you well 
know, and with your assistance, hard decisions on exactly where 
the dollars go. But I want to assure you that the dollars that 
we have dedicated to this technology, we believe, are the right 
dollars to promote both of the premises of your question.
    The Chairman. I think you're making important points. I 
think you're playing a bad hand here when the budget cuts 15 
percent in a critically important area.
    I just want to make one other point very quickly. If you 
all don't do this research, I don't think it's going to get 
done. I mean, for example, Senator Murkowski and I are going to 
start natural gas workshops next month. We intend to work very 
closely with the Administration. It's going to be a completely 
bipartisan effort.
    One of the areas we're going to be looking at is best 
practices on our public lands. I'm concerned that the research 
that you all do is not going to be as extensive as it might be 
with a more fulsome budget in this area. We'll look directly 
into this during the workshop Senator Murkowski and I have 
planned.
    So I hope that you will take this back. Certainly I want 
you to know I'm going to do everything I can as chairman of 
this committee, and also as member of the Budget Committee, to 
turn that around.
    I'm going to just mention one other point because my time 
has expired.
    We like to say up here that we're concerned about the 
forgotten renewables. When I went to Alaska with Senator 
Murkowski, we looked at geothermal and biomass and hydropower. 
Research into hydropower in the budget is cut. Given the 
estimates of untapped potential in hydropower resources, 
upwards of 60 gigawatts of emissions-free generating capacity, 
I am very troubled about that as well.
    I'm over my time and want to recognize Senator Murkowski 
and Senator Barrasso. But just know how strongly we feel about 
these research cuts. In my view, if you all don't do it, it 
isn't going to get done. We're going to lose the opportunity to 
get returns that will be many times over the cost of any 
initial research.
    Senator Murkowski.
    Senator Murkowski. I want to add a me too, on the hydro. 
You know, we heard very, very clearly from Secretary Chu. This 
was several years ago that the potential for additional 
renewable energy, any power brought online because of 
hydropower it's just so untapped. Yet when we look at the 
budgets it just doesn't appear to reflect any of that.
    With the cuts to the water power program, as I mentioned in 
my opening statements and as the chairman has just noted, 
you've got a request of $55 million for the water power 
program.
    You compare this to $356.5 million for solar.
    One hundred fourty-four million for wind.
    Yet the area where everyone agrees we have so much 
potential for growth is hydro. We're looking at a request of 
$55 million.
    I think you've heard the concerns expressed here by the 
chairman and myself. So I don't know. We will keep pushing on 
this. In fact we've got a hearing, Mr. Chairman.
    The Chairman. Right.
    Senator Murkowski. I think next week.
    The Chairman. Yes.
    Senator Murkowski. On how we can move out hydropower.
    The House in an amazing display of partisanship passed 
their hydro bill with not one member in opposition to it. We 
want to advance something on this side too. We think this is an 
opportunity where the President can actually sign something 
into law.
    But it doesn't seem that there's the level of priority 
coming out of the Administration on this.
    How much is the Department proposing should go for marine 
hydrokinetic technologies and how much for conventional 
hydropower research? Do you know that break down?
    Mr. Poneman. I can get it for you very quickly.
    Senator Murkowski. Would you?
    Mr. Poneman. Yes, Senator.
    Senator Murkowski. OK. Because I'm curious in knowing what 
types of programs and projects DOE is going to focus on within 
this water power program. So if you can get me that break down 
I'd appreciate it.
    Mr. Poneman. Absolutely.
    Senator Murkowski. Now the chairman has also been talking 
about the great potential that we have for natural gas. The 
focus this committee is going to place on all aspects of 
natural gas sector here through our round tables coming up. 
We've had a lot of discussion in this committee about exports. 
We've got pending before the Department currently, we've got 20 
applications for licenses to export LNG. The bulk of these 
applications are to send LNG to countries that don't have a 
free trade agreement.
    From a budget perspective are you all including funding 
levels sufficient to ensure the timely review of these 
applications? I guess I'm asking also for the timeline, if you 
have that, for review of these applications.
    Mr. Poneman. Thank you, Senator.
    If I might just quickly address the first part of your 
question. We do strongly agree on the importance of hydro. 
Obviously I would note that the $55 million that you've noted 
for fiscal 2014 is actually an increase from $20 million in 
2013.
    Senator Murkowski. But it still looks pretty meager when 
you compare it to wind and solar.
    Mr. Poneman. I certainly take your point, Senator. The 
break down between marine hydrokinetic is 39 million. 
Traditional hydro is 15 million in the current fiscal 2014 
request of the 55.
    On your second question regarding the LNG exports. We do 
believe the Department is adequately staffed to process those. 
As you know, we've gotten almost 200,000 comments in this 2 
round comment process that we've had. They've been working very 
actively on sorting through those comments. I think we're, very 
soon, going to be in a position to start making decisions based 
on the record all the documents that have been supplied.
    Senator Murkowski. So when you say very soon within a 
period of months? What do you anticipate?
    Mr. Poneman. Senator, they're working through them as 
quickly as they responsibly can. I don't have a date certain. I 
wouldn't think it would be months.
    Senator Murkowski. OK.
    One more question for you. I raised this in my opening 
statement. This is relating to where the President is referring 
to as his energy security trust. As I mentioned I've had a 
proposal out there that we're calling the Advanced Energy Trust 
Fund, same type of concept, but the real key difference is how 
you pay for it.
    Can you explain exactly how the Administration intends to 
pay for its proposal? If you're not opening up any new lands 
for development are you proposing deficit spending? Will there 
be less money for land water conservation fund? Where do you 
figure you're going to get this seed money for the energy 
security trust?
    Mr. Poneman. Senator, my understanding was that the money, 
the $2 billion for that energy security trust, would come out 
of the royalty revenues from the Federal lands that are used to 
develop those resources.
    Senator Murkowski. But those revenues are already going to 
help fund other aspects of our budget. So you're then taking 
them away from those projects and programs and you're putting 
them into your trust fund. I got that.
    But then how do you fund the other things you've been 
paying for out of your rents and royalties?
    Mr. Poneman. Senator, my understanding and of course the 
licensing of those Federal lands falls under the jurisdiction 
of the Department of the Interior, was that there are licenses 
that will be granted that will generate these royalties. But to 
give you a specific breakdown and if there are puts and takes 
between existing and new licenses I would have to get back to 
you.
    Senator Murkowski. I'd like to see exactly how that's 
proposed.
    Mr. Poneman. I'm happy to provide that.
    Senator Murkowski. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Going back and forth, Senator Heinrich, 
you're next.
    Senator Heinrich. Thank you very much.
    Thanks for joining us, Mr. Poneman. Let's get right to it 
because I've got a lot of questions.
    I want to start with a question about the Department's 
strategy to manage nuclear waste and the importance that I 
raised last week of maintaining a clear linkage between the 
siting of short term storage facilities and the development of 
a permanent or several, potentially, permanent geologic 
repositories. It's this linkage throughout the process that 
will keep the pressure on the Federal Government to actually 
build a repository. Dr. Moniz said here last week that the Blue 
Ribbon Commission agreed that there should be a linkage and 
that the development of the 2 facilities should proceed in 
parallel.
    So everybody seems to agree that there should be some sort 
of linkage here. But I've yet to hear any discussion of exactly 
what that linkage should be or should look like. I note that 
the Department's own strategy calls for an interim storage 
facility to be in operation by 2021, but not to open a 
permanent repository until 2048. That is 27 years later. That, 
to me, doesn't sound like a very close linkage.
    The history of nuclear waste in this country shows that a 
lot can go awry in 27 years. I believe a process without some 
sort of linkage is going to be a mistake. The Department is on 
record supporting the linkage. The BRC supports a linkage.
    Do you agree that a nearly 3 decade gap, you know, barely 
constitutes a linkage? Can you tell me what the Department 
thinks that an appropriate linkage would look like or should 
be?
    Mr. Poneman. Senator, thank you for the question.
    The, I think, both the Blue Ribbon Commission, sir and the 
Administration's response to it clearly acknowledge the 
importance of that. When, for example the Blue Ribbon 
Commission said although the geologic repository would come 
later, the work on it needs to begin today. So we're not 
deferring the work on the geologic repository. There's, of 
course, more technical challenge involved in certifying it and 
getting the research done on the geologic formation and how 
they'll perform for millions of years as opposed to a simple 
above ground cask storage that is possible with interim 
storage.
    But I would just say, Senator, that the way we see the 
linkage is two-fold.
    No. 1, we are, quite literally, doing the research on both 
sides. We're not saying we're only working on interim storage 
now and we'll get to the other later. We're saying we've got to 
start both now. That's consistent with the Blue Ribbon 
Commission recommendation.
    The second thing is to be very, very clear in the reference 
to consent based approvals and that, I think, is one of the 
major contributions of the Blue Ribbon Commission, that when 
you are talking to communities you need to be very clear about 
what they are in for and you can't shift the story line and say 
I was just kidding when I said interim. So when we say interim, 
we mean interim.
    Senator Heinrich. I think that second point is incredibly 
important because you're never going to get a community to 
consent or especially at the State level, you're never going to 
get the buy in you need for interim storage if people think 
they're going to get stuck with that interim storage.
    Mr. Poneman. Exactly.
    Senator Heinrich. It's going to turn into de facto 
permanent storage.
    I want to move to LANL cleanup real quick. The FY2013 
continuing resolution does not provide the Administration's 
request for an additional 50 million Los Alamos needs to meet 
some pretty critical milestones and for that matter consent 
orders with the State of New Mexico for cleanup of legacy 
nuclear waste. I want to ask will the Department be requesting 
a reprogramming to provide additional funding for Los Alamos to 
keep that cleanup on schedule and meeting the milestones within 
those consent orders that have been agreed to between the State 
and the Department?
    Mr. Poneman. Two points, Senator.
    First of all, we are firmly committed to meeting our 
objectives and requirements under the consent decree. We, as 
you know, in the fiscal 2014 budget are requesting an 
additional $46 million for LANL cleanup. We are in the process 
of finalizing with the amounts we have requested for 2013 not 
having come through between the continuing resolution and the 
sequester, a series of reprogrammings which we're going to use 
to address these outstanding issues in our environmental 
portfolio.
    Senator Heinrich. I look forward to working with you on 
that. Please keep us apprised.
    Mr. Poneman. We sure will.
    Senator Heinrich. Because that's a critical step forward in 
terms of us meeting our commitments and continuing to, you 
know, make sure that we have the confidence of those 
communities that we're going to do what we say we're going to 
do.
    With that it looks like my time is expired.
    I do want to say real quickly that I think it's a mistake 
to shut down the fusion center at MIT. I look forward to 
working with the chairman to make sure that we have the right 
balance there between our partnerships overseas and our 
domestic efforts.
    The Chairman. Important point.
    Senator Barrasso, you're next.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    Mr. Secretary, thanks for being with us.
    I'd like to ask you about liquefied natural gas exports. On 
April third, Bloomberg ran a story entitled, ``Canada seen 
beating U.S. in $150 billion Asia LNG race.'' The article* 
explains that Canada has approved twice as much LNG export 
capacity as the United States. It explains that Canada issued 
its latest export permit in February while the DOE has 
continued to delay taking action on the pending permits for 
almost 2 years now.
---------------------------------------------------------------------------
    * See Appendix II
---------------------------------------------------------------------------
    DOE commissioned a comprehensive study which found that LNG 
exports would bring, ``economic benefits'' to the United 
States. DOE has now received 2 rounds of public comments on 
this study. Yet the DOE continues to delay taking action on any 
of the pending export applications of which I know one of which 
has been pending for 28 months.
    Investors are beginning to interpret DOE's inaction as a 
decision against LNG exports. I think this is a terrible 
precedent to set. It's going to signal to the world the United 
States isn't serious about increasing its exports and the good 
paying jobs that those exports were going to create right here.
    It is going to signal to export opponents that they can 
block exports so long as they just delay the approval process. 
So I think it's going also signal to our trading partners that 
the United States doesn't really believe in free trade. So my 
question is do you appreciate the negative impacts of the 
Department's failure to take actions on the pending LNG export 
applications?
    Mr. Poneman. Senator, thank you for the question. It is 
obviously something that's very important. I know people have 
been working very hard to process the comments. We want to make 
sure that we are addressing this expeditiously. But the issues 
that have been raised in nearly 200 thousand comments are 
complex.
    I will tell you, Senator, we are working on this very hard. 
We are clearly aware of the benefits that exports can bring. 
But according to the criteria that's been laid out since 1984, 
we have to take into account domestic affects and a full range 
of those issues that would feed into the public interest 
determination that the Natural Gas Act requires. But we are 
keenly aware of the need to be acting. We are working on it 
very hard.
    Senator Barrasso. Thank you, Mr. Chairman.
    I'd also like to ask about the Department's new uranium 
management plan. The consolidated appropriations act for fiscal 
year 2012 says that no later than June 30th of 2012 of last 
year, the Secretary shall submit to Congress a revised excess 
uranium inventory management plan for fiscal years 2013 through 
2018. So now we're 9 and a half months after the deadline and 
over 6 and a half months into this fiscal year. But DOE still 
hasn't produced a plan.
    I think this is inexcusable. The Department has repeatedly 
broken its commitments under the 2008, what was called the 
excess uranium inventory management plan. Now it refuses to 
follow the law and release the revised management plan. The 
Department's failure to disclose how it will manage its uranium 
stockpile, I mean, it threatens uranium mining projects, good 
paying jobs, certainly in my home State of Wyoming and other 
States as well.
    When will the Department release a revised excess uranium 
management plan? Do you have any idea when that's going to be?
    Mr. Poneman. Senator, first let me again, agree with the 
premise of your question which is to acknowledge the importance 
of the domestic uranium industry to, not only our energy 
future, but our national security future. I regret that it has 
taken longer than it should have. I take the admonition from 
the chairman and ranking member from the opening.
    We always try to do better. I will undertake, Senator, to 
go back to the department, get a timeline and come back to you 
with it.
    Senator Barrasso. I'd appreciate it. I mean, I'd like to 
find out what the reason is for the delay and I know you can't 
do that now. But I'd like to get that.
    Senator Barrasso. Another thing I'd like to ask about is 
duplicative programs. Last week the Government Accountability 
Office released its 2013 annual report, entitled, ``Actions 
Needed to Reduce Fragmentation, Overlap and Duplication.''
    In that report the GAO identified 679 renewable energy 
initiatives at 23 different Federal agencies.
    Found that 9 agencies implemented 82 different wind energy 
initiatives costing taxpayers about $4 billion in fiscal year 
2011.
    They found 7 initiatives provided duplicative financial 
support to the same recipient for a single project.
    That 2 wind projects may not have needed the Federal 
Government's support at all.
    So in light of this study and the duplication is it 
appropriate to ask for such dramatic increases in funding for 
the renewable energy programs?
    Mr. Poneman. I think there are a couple of things, Senator.
    First of all, where we actually can find duplication and 
things that are being done twice, that's not efficient. We 
should find those and root them out.
    That having been said, you know, if you look at the 
investments that have been made in this portfolio they have 
actually returned their investment many times over. I think 
we've put $2 billion of R and D funding into wind. We've got a 
$9 billion return on that.
    You know, we are now at a point where last year alone we 
put 14 gigawatts of new wind online. We're up to 60 gigawatts. 
We're moving in a number of these directions.
    But we live by a management principle that continues 
improvement. If we ever do find duplication we will root it 
out.
    One last thing with that's why we have actually inserted 
cross cutting initiatives such as our clean energy 
manufacturing initiative precisely to see if something is 
happening in science and something is happening in applied 
energy that they be brought into the same coherent approach, 
not duplicative.
    Senator Barrasso. Thank you, Mr. Secretary.
    I'm going to submit, Mr. Chairman, with your permission, 
additional written questions.
    The Chairman. Without objection.
    The Chairman. I just want to say to my friend from Wyoming, 
it's my intent to work very closely with you and all our 
colleagues on both sides of the aisle on this natural gas 
export issue.
    I chair the Finance Subcommittee on International Trade. 
I've voted for every market opening trade agreement since I've 
been in the Congress. Trying to find a way perhaps where we can 
have it all, where we can strengthen manufacturing, have 
exports, have a segway to a broader role for renewables.
    Easier said than done, but it's my intention to work very 
closely with my friend from Wyoming. I know you have strong 
views on it. All 3 of us are Westerners, so I think there's an 
opportunity to find some common ground.
    Our next Senator is Senator Coons.
    Senator Coons. Thank you, chairman. There's even some 
Easterners who might support working together on this all of 
the above strategy.
    The Chairman. Easterners on the program.
    Senator Coons. Deputy Secretary Poneman, I just wanted to 
start by thanking you and so many others within the Department, 
employees, contractors, for the tremendous job you've done over 
the last few years, especially as it applies to DOE's core 
energy mission. The news of DOE's work has, at times, focused 
on a few negatives. When I think there have been broadly many 
successes.
    I really enjoyed working with Secretary Chu. Look forward 
to serving with Dr. Moniz. I think you've made tremendous 
accomplishments. In particular I was pleased to see in the 
budget the extension, the continuation, of ARPA-E which I think 
has yielded great benefits, actual concrete outcomes for the 
people of the United States.
    I intend to work with Senator Alexander on a 
reauthorization of the DOE COMPETES programs in science and 
ARPA-E and will work with the other committees that are 
relevant to that reauthorization to help get them through 
Congress. I Was pleased with the support you've shown and the 
President's budget has shown in delivering on ARPA-E as well as 
energy hubs and EFRCs; doubling the production of wind and 
solar; So many other areas from technical assistance during 
tragic disasters like Deep Water Horizon, and the Fukushima and 
Hurricane Sandy disasters to nuclear site cleanup progress 
that's been discussed previously, so I just wanted to start by 
saying thank you to you and so many in the Department.
    There's many things I'd love to discuss that come out of 
the budget. I was pleased that Senator Murkowski earlier in 
this hearing referenced something that I think holds real 
promise for a bipartisan path forward, master limited 
partnerships, as a vehicle for an all of the above financing 
strategy. I understand Dr. Moniz, had positive comments to make 
about MLPs and REITs during his confirmation hearing. I look 
forward to continuing to work to advance these ideas. We've 
been grateful for the technical assistance we've received from 
the Department while preparing the bill.
    I also was encouraged by the race to the top for energy 
efficiency and grid modernization proposal, as well as the 
manufacturing initiative and involving development of 
innovation institutes.
    So for my first question I'd be interested in what more you 
can tell us about the schedule for announcement and focus areas 
for the DOE specific regional innovation institute that's 
directly related to manufacturing.
    Mr. Poneman. Thank you very much, Senator. Thank you for 
the kind words. I would like to thank you and the members of 
this committee for long standing support for many of the 
initiatives which would not have gotten anywhere that they have 
gotten without the incredible work of the members of this 
committee, hubs and ARPA-E and the rest.
    Secondly commend you all for your thought leadership on 
master limited partnership. The whole issue of lowering capital 
costs for our energy resources is obviously going to be 
increasingly important. We are always very eager to work with 
you on that.
    Now in terms of the innovation institutes we are in the 
process of building on work that we have already done in 
consultation with the Commerce Department, with the Department 
of Defense, with National Science Foundation and NASA in 
figuring out exactly where the best play is going to be for the 
DOE specific institute, innovation institute. We're not done 
with that work. It's still under review.
    We're looking at a wide range of options and we are open to 
soliciting views on where the most effective play can be 
because, as you know, they're, as you know, going to be a 
series of these institutes. We want to make sure that per the 
other questions, we are not duplicating among the different 
institutes. DOD is doing 2. We're doing 1. We will keep you 
fully and currently apprised of the selection of which 
technologies we're going to focus on.
    Senator Coons. Terrific. Thank you.
    One other question, if I might. The Energy Security Trust 
Fund is of particular interest to me as well. I think Chairman 
Wyden has led early positive, constructive conversations within 
this committee about how we might use a comparable vehicle or 
this vehicle for sustained funding and financing for the 
development of promising technologies.
    How does the Administration view this initiative? Could you 
tell us a little bit more about how you anticipate it being 
structured and operated?
    Mr. Poneman. It comes out of the mandatory appropriations. 
We hope to turn the revenues that we generate or by the 
royalties on federally owned lands for oil and gas production 
to those things that can help fulfill the President's vision to 
reduce our dependence on oil imports still further. So I think 
you can look in areas such as electrical vehicles, batteries, 
biofuel development.
    We will be looking to make investments out of that trust 
fund to then help us move further along the line which we've 
already reduced our foreign oil imports from 57 percent in 2008 
to 42 percent. We view this trust fund as a way to further 
build an American transportation fleet that is energy secure 
for Americans.
    Senator Coons. That's terrific. I very much appreciate your 
answer. I look forward to working with you as the details of 
that are further refined.
    Mr. Poneman. Thank you, Senator.
    Senator Coons. Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Senator Coons.
    Let me also say that I too feel that you're making a very 
important contribution in a number of areas and especially this 
master limited partnership issue. Because this is a chance to 
really generate a significant amount of new private sector 
investment in renewables. That would make a huge contribution 
to what we heard Dr. Moniz talking about even last week. That 
is how do we transition to a lower carbon economy.
    So I'm going to work very closely with you on that.
    Senator Franken.
    Senator Franken. Thank you, Mr. Chairman.
    It's good to see you, Mr. Deputy Secretary. Thank you for 
coming to Minnesota a while back. It was good to spend time 
with you there.
    I want to talk about nuclear weapons spending. Nuclear 
weapons are weapons that we're never going to use. We do need a 
safe, secure and reliable nuclear deterrent so that we don't 
have to use them, I mean. The Department has an important role 
in making sure that we have that.
    But we are continuing to spend so much money on weapons 
activities in the nuclear, National Nuclear Security 
Administration with a budget request of $7.9 billion for this 
year. That is money that, if we really move forward on further 
nuclear reductions we could spend on other priorities including 
other defense priorities or infrastructure priorities.
    Can you tell me where the Administration is in its review 
of our nuclear doctrine which will help determine the number of 
nuclear weapons we really need to maintain that deterrent?
    Mr. Poneman. Senator, thank you for the question.
    As you know President Obama in Prague in April 2009 laid 
out a comprehensive vision of our nuclear future. Actually 
articulated a vision of a world potentially without nuclear 
weapons, but at the same time he said so long as we have them 
and that we and our allies depend on them for the deterrent, we 
do need to make sure that it's safe, secure and effective.
    There is a nuclear posture review that's already governing 
our nuclear posture. It has, for the first time in any such 
review, elevated the fighting of nuclear terrorism and 
combating proliferation to the very top rank issue of why we 
have these nuclear weapons. So the investments you see also 
include a $2.1 billion on all the non-proliferation activities.
    We are continuously reviewing in consultation with our 
colleagues at the White House and in the Department of Defense 
what the actual employment doctrine will be for these weapons 
to make sure we keep it currently updated. That is a process 
that has been going on since sometime last year. We're still in 
the process of continuing that review.
    Senator Franken. How exactly does our deterrent effect 
nuclear terrorism?
    Mr. Poneman. Senator, we think of our National Nuclear 
Security Administration as a national security enterprise in 
which we are investing in both things like second line of 
defense, mega ports. Those are directly in the line of stopping 
nuclear materials and technologies from reaching bad guys and 
terrorists.
    In addition to maintain a robust deterrent holds at bay 
other potential would be parties who would be tempted, 
potentially, to develop their own nuclear arsenal, but for the 
fact that the United States has a robust deterrent.
    Senator Franken. OK.
    Mr. Poneman, when you announced dismantlement of the last 
B53 nuclear bomb you said that this is an accomplishment that, 
``Has made the world safer and for which everyone involved 
should be proud.'' I agree with that sentiment.
    You went on to say that, ``Safely and securely dismantling 
surplus weapons is a critical step along the road to achieving 
President Obama's vision of a world without nuclear weapons.''
    But when I look at your budget when I see that while a 
billion dollars is devoted to the lifetime extension program 
for these weapons only $49 millions is going to the 
dismantlement program and that is in spite of the fact that 
dismantlement isn't expected to be completed until 2022. Can 
you tell me why you're only budgeting $49 million a year for 
implementing what you call, ``A critical step along the road to 
achieving President Obama's vision of a world without nuclear 
weapons.''
    Mr. Poneman. Senator, I think it's important to put that 
particular effort in the wider context of dismantling nuclear 
weapons so that they cannot be used to--in weapons form any 
longer. In that respect with Department of Energy leadership we 
agreed to purchase 500 metric tons of highly enriched uranium 
from Russia. Through that process we got half of the fuel going 
to our civilian nuclear reactors in this country, about 20,000 
nuclear weapons worth.
    So if you put the $49 million which is one piece of it in 
the broader context, I think this Nation collectively has 
invested enormous resources and gotten enormous benefits out of 
the dismantlement of weapons of mass destruction. To be candid, 
the ones that are of greatest concern to us from a national 
security perspective are those that used to be in war heads in 
the former Soviet Union pointed at us. We are always looking to 
match up, Senator, the sequencing of the dismantlement with the 
processing of the fuels that are coming out of the 
dismantlement process.
    Some of these issues, as you know for budgetary reasons, 
not withstanding our request but the curtailment under the 
continuing resolution, have been pushed to the right. So I'd 
have to look at the specifics of the 49 million per se, but I 
think it has to be viewed in that context. But it does not, in 
any way, diminish our overall commitment to going around the 
world through the global threat reduction initiative getting 
the material out of HU form where we find it in Chile and other 
places and bringing it back to a safe place so that it can't be 
used by nuclear terrorists.
    Senator Franken. Thank you. I'm out of time. I would like 
to say that I told Senator Lugar that I felt he was a hero for 
what Nunn-Lugar started. I thank you for continuing that.
    Mr. Chairman.
    The Chairman. Thank you, Senator Franken.
    You know the striking point you're making is if you spend, 
in a focused way on dismantling nuclear weapons, particularly 
the unnecessary weapons, you won't have to spend as much on 
maintaining the strategic stockpile. So you're being logical. 
Heaven forbid that logic breaks out all over Washington.
    But I was looking at that $7.9 billion and if you say, 
alright, there's a way to focus on dismantling unnecessary 
weapons, you're doing something about lowering those costs. It 
makes sense to me.
    Senator Franken. Thank you for taking my point.
    The Chairman. We don't have colleagues on either side who 
haven't had a chance yet. So what I think we'll do is begin a 
second round and figure out how to integrate colleagues who 
haven't had their first round into this.
    Let me turn to the question of nuclear energy, Secretary 
Poneman. Senator Murkowski and I have both been to Fukushima. 
It was important to see the situation first-hand given how many 
nuclear plants operate in our country and around the world.
    I start with a proposition. No matter how a United States 
Senator feels about nuclear power-and obviously there are 
disparate views here-nuclear energy, as of today, provides a 
substantial portion of base load electric energy here and 
abroad. As we have looked at Fukushima, it raises serious 
questions about the safety with respect to commercial nuclear 
power plants.
    I will tell you I will never forget looking at those spent 
fuel rods in spent fuel pools near a body of water. Trying to 
think through the implications of what happens if you have 
another earthquake which triggers a tsunami. The prospects that 
would have for releasing radiation, which of course heads in 
our direction.
    So there is no way around the need to make sure spent fuel 
and the nuclear waste from these plants is safely managed and 
find a permanent way to dispose of it. I think the Department 
is aware that Senator Murkowski and Senator Alexander and 
Senator Feinstein and I are working on a bipartisan effort to 
get the Federal Government back into a problem-solving mode on 
nuclear waste storage and disposal. We hope to be able to have 
more to discuss on those bipartisan efforts here before long.
    Now you've been to Japan since the accident. You have been 
involved in our government's efforts to help the Japanese deal 
with Fukushima and look at the implications of what happened 
there. I think you all are aware of the letter I sent as well 
because I think those efforts you're making are important.
    Given the challenges for making nuclear power plants safer 
and the challenges of finding solutions for nuclear waste I was 
struck by the fact that while you propose to increase the 
Department's energy programs by over a billion dollars, you 
propose cutting funding for nuclear energy by over $100 
million, including all 5 million for the integrated university 
program that provides grants and fellowships to graduate 
students in nuclear engineering.
    When I thought about my visit to Fukushima-talking with 
people there-and our academic efforts, our research efforts are 
ones they could only dream of. They will say that. It seems to 
me that if there was ever a time when we need nuclear engineers 
and investment in safety in nuclear waste technology, this is 
it.
    So priorities, yes, with you all the way. But why such a 
large cut in an area that there is great concern today? It 
increases.
    As you know, there are current efforts being initiated by 
scientists around the proposition that so many of our reactors 
in this country seen from a mechanical standpoint to be 
configured in much the same way as, you know, Fukushima. So we 
are going to need more nuclear engineers. We're going to need 
to increase the investment in nuclear safety. There's a big cut 
in a program right at a time when we need to make it a higher 
priority, in my view.
    Mr. Poneman. Mr. Chairman, first of all, once again I have 
to agree with the premise of all that you've said about the 
importance of supporting Japan as it works its way through the 
aftermath of Fukushima. We have ramped up and expanded our 
cooperation with Japan to include environmental management, 
emergency response and cleanup. It's going to remain very 
important.
    Also, I can't exaggerate the positive reaction that we have 
had. I've done this myself a couple times when we have actually 
made announcements about university grants under those nuclear 
energy fellowships. It's incredibly important for our own 
future that we rebuild a pipeline of scientific and 
technological expertise.
    The $5 million in question you're referring to is actually 
been moved to a government wide stem initiative. So we are 
going to continue supporting the student activities that you're 
talking about. But it's, as a bookkeeping matter, it's being 
now integrated into a government wide approach.
    The Chairman. We'll get into the ever eye-glazing process 
of looking exactly where funds are moved. Our understanding is 
it's not been put into the nuclear part. That it's gone into a 
general area.
    Is it your understanding that it's actually going to be 
spent in the nuclear area?
    Mr. Poneman. Mr. Chairman, I was told that it was put into 
an integrated stem effort, the degree to which there is within 
that overarching effort, individual allocations in the 
different subject matters. I would wish to get back to you on 
that. I will get back to you about that.
    The Chairman. Let's do that because we want to get it 
specifically into this nuclear safety and nuclear waste area. I 
understand what you're talking about. I think you'll have a lot 
of supporters of stem up here. But if it just gets thrown into 
the mix, particularly with the funding shortage, this still 
could get lost. I think that would be a mistake. So let's go 
back and forth with our staff.
    Mr. Poneman. OK.
    The Chairman. Because our understanding is that whatever 
has happened in terms of moving it somewhere else, it is not 
going to be specific to nuclear. That strikes me, given what I 
saw.
    I'll let Senator Murkowski speak for herself, but both of 
us made those visits. You don't forget those visits.
    Mr. Poneman. No.
    The Chairman. OK, Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Once again, I'm concurring with you a lot here this 
morning. That's probably a good thing.
    The Chairman. Yes.
    Senator Murkowski. I'm all over that.
    Senator Barrasso would like this article that he referenced 
regarding Canada and the U.S. regarding the LNG race, he wanted 
that incorporated as part of the record.
    The Chairman. Without objection, so ordered.
    Senator Murkowski. I have just one follow on question here 
for you, Deputy Secretary.
    This relates to unconventional resources. The budget is 
once again zeroing out funding for the unconventional fossil 
energy technologies program. I think we recognize, as I 
mentioned in my earlier comments, I'm one who thinks that a 
very appropriate role within Department of Energy is to focus 
on the R and D side. How we can really move forward these 
technologies that are going to make the difference for us into 
the future for our energy and our energy portfolio.
    We've got great opportunities, I think, in unconventional 
resources like our oil shale, our heavy oil, our tar sands. If 
we're really going to subscribe to an all of the above energy 
policy, I think it is important to recognize that we have huge 
opportunities there. Yet, in this particular line item on the 
budget, we have zeroed it out.
    I'll also point again to the methane hydrates issue that I 
referenced in my opening statement. Again, I think there is 
enormous potential for us out there. The study that was 
completed by USGS suggests that the amount of gas hydrates here 
in this country exceeds the volume of known conventional gas 
resources were saying we're the Saudi Arabia of natural gas 
now. We're not even talking about the unconventional resources 
and the potential for us there.
    One potential source of funding for the methane hydrates 
has been, historically, in the unconventional fossil energy 
technologies program. You know, the budget now, as it stands, 
shows a 16 percent increase in funding for the natural gas 
technologies program. How much of this increase in funding 
might be possibly made available to R and D related to methane 
hydrates to the unconventional gases as opposed to the 
conventional side?
    If you could just speak more generally----
    Mr. Poneman. Sure.
    Senator Murkowski. To what's going on with unconventional 
resources.
    Mr. Poneman. I'll address both, Senator. Thank you for the 
question.
    Again, I must agree with the premise. When you think of the 
technological breakthroughs in fracking that were one of those 
earlier investments, that's also, of course, part of what's 
unleashed the unconventional oils. We have now had like 5, 6 
hundred thousand barrel per day increase year on year out of 
Bakken, Eagle's Ford and so forth which I think, as gas prices 
have gone down and the rigs have moved off the dry gas place. 
We've seen this incredible upsurge.
    So that is a tremendous benefit. We expect perhaps even 700 
thousand barrels year on year next year. Point one.
    Point 2. Many of the projects that are, of course, being 
invested in under our coal portfolio, $6 billion we've got 
invested, are looking at ways to add the ute to CCS, 
utilization in which enhanced oil recovery. Yet another way to 
enhance our development of unconventional oil resources. That 
is also very important.
    So we are going to continue in the area of liquids.
    Secondly on the question of gas resources. I would note in 
addition to the fracking investments we've made back in the 
day, we put $30 million into coal bed methane development which 
also has now produced tremendous benefits. In the area of 
methane hydrates it is potentially years out, admittedly, this 
tremendous bow wave of yet additional gas resources. We were 
very happy and gratified to have very successful results in 
your home State of this experiment.
    Part of what happens is we do try to promote public/private 
partnerships so that in these budgetary constrained times we 
can leverage even a small investment. The government of Japan, 
as you know, and a U.S. company ConocoPhillips developed a 
cooperative with us in that case. We're going--we've got $5 
million dedicated to carry on the first successful drilling 
that we did in Alaska. We're going to be following up on that 
in the year ahead.
    We agree that the methane hydrate play, in the long run, 
could in fact be the next gas revolution of a tremendous scale.
    Senator Murkowski. I appreciate you giving that background. 
We have had, I think, a pretty successful partnership with 
Japan, who is very, very keenly interested in this and willing 
to work with us as well as on the private side. I think it is 
the model. It's something that we can look to and say this is 
how we can really help to push these out.
    But all appearances now seem to be that the U.S. is backing 
away from this. I was just over in Japan. The chairman 
mentioned our trips to Fukushima. We went at different times, 
but part of my trip was also to speak to the Japanese about 
opportunities between Alaska and Japan on a host of different 
issues.
    The Japanese interest, of course, in pursuing the methane 
hydrates. Furthering that partnership is pretty keen. But the 
message that I heard from them was they're very worried that 
we're withdrawing from that. We're pulling back. We're pulling 
back the resources. We're losing interest.
    I think this is again, an area where we can be leading. But 
it takes that commitment of resources and just the focus on 
where we go with the future of this.
    Thank you, Mr. Chairman.
    Senator Heinrich.
    Senator Heinrich. Thank you very much, Mr. Chairman.
    At first I want to, as an engineer, maybe throw a wrench in 
the logic. You mentioned how logical things have started to get 
around here. I want to make the point that sometimes things 
that seem logical are not necessarily logical even though they 
intuitively seem that way.
    In particular when it comes to nuclear reductions I'm a 
major advocate for the new start treaty. I think it was 
absolutely appropriate and critical. But the relationship 
between reducing those numbers and the cost savings that that 
may or may not incur is not a linear one. It's not a 
proportional one. As long as we have one nuclear weapon we're 
going to need the infrastructure in place to make sure that it 
is safe, secure and reliable.
    We have abided by the comprehensive test pantry for many 
years even though I don't believe that was ever approved by the 
Senate. It's good policy for us not to be testing nuclear 
weapons, in my view. It would be cheaper if we just tested it. 
It's more expensive to have the super computers to make sure 
that those things remain safe, secure and reliable and to be 
able to do that testing virtually as opposed to actually 
exploding nuclear devices.
    So I just want to caution my colleagues that sometimes and 
I think we're going to have to tackle the issue of tactical 
nuclear weapons with some of our, you know, some of the other 
actors in the world, in particular Russia and the numbers of 
those that are out there right now. But it won't necessarily 
create an enormous savings to be able to spend on other 
priorities, even priorities I care deeply about such as 
renewable energy, continued research in some of these other 
areas.
    I want to talk a little bit about diversification and ask 
you a question, Mr. Poneman, about the work that's done at our 
national security labs and how it complements their core 
mission. I'm a little concerned about the constraints on so 
called work for others. These are imposed, sometimes they're 
just conflicting management between NNSA and DOE and the 
different kinds of research that gets done at the national 
labs.
    I'm curious if you think that there are ways to make that 
easier for the labs to foster those new partnerships with both 
governmental, university and private entities to make sure that 
those constraints on work for others aren't holding our labs 
back from their full potential and in particular with regard to 
tech transfer.
    Mr. Poneman. Senator, it's a great question. I would say we 
have worked very hard. I personally spent a lot of time on 
trying to make sure that the incredible resources in 
technological expertise of our labs is made available. In fact, 
I've asked that we stop calling it work for others because that 
has a sort of alien sound to it. It's really work for the 
Nation. It's work for the President.
    Senator Heinrich. Right.
    Mr. Poneman. Now what we have done, again, and you'd expect 
this of us, I think, in these budgetary straightened times and 
to avoid the kind of duplication that some of your colleagues 
have mentioned is we have gotten together what we call a 
mission executive council. So with the Department of Homeland 
Security, the intelligence community, ourselves and the 
Pentagon, we sit down. Instead of having little projects where 
you, as we say, buy wine by the glass, we say let's invest in 
the vineyard.
    If we need a capability to do something, it might be a high 
powered computer. It may be nuclear material detection.
    Let's make sure that we put our heads together.
    Get the incredible technical expertise of the labs.
    Harness it to that effort.
    Promote it.
    We have done everything we can from DOE headquarters, 
Senator, to promote that kind of thing. If that is not 
happening, if you are getting the impression somehow that it is 
impeding that kind of work, I would certainly like to hear more 
details about it because we are trying to do really quite the 
opposite.
    Senator Heinrich. We'll share some of that with you. At 
times it's been an issue of silos, once again, where in a 
certain area we hit a cap on work for others. Yet there was 
much more administrative capacity in another department. So 
with some work we're able to move things around.
    But part of it's also the issue of making sure that when 
work for others is done. I like your idea of calling work for 
the Nation, that somehow we deal maintaining the administrative 
capacity to do all the work because it doesn't necessarily 
address that sometimes.
    I want to thank you also, something that the chairman 
brought up, the DOE's focus on energy storage. I think that's 
critical. It could be a real game changer.
    My last comment would simply be on this energy security 
trust fund. I love the idea, but I would caution us just as 
much as the ranking member on, you know, impacting the land and 
water conservation fund, the reclamation fund, the other places 
that have already been--that are already tied to these 
revenues.
    We just had a hearing the other day where Senator Franken 
very rightly brought up how much money is theoretically in the 
reclamation fund verses the paltry 40 million that is in the 
President's budget to fund very real needs on Indian 
reservations across the Western United States. Communities that 
only have 10 years or less of water left available to them. The 
Land and Water Conservation Fund, another critical area.
    So we need to make sure that those are not endangered by 
the creation of a new trust fund.
    Thank you.
    Mr. Poneman. Thank you.
    The Chairman. Senator Heinrich, thank you.
    I was just thinking how useful it is to have an engineer in 
this committee because if anybody is going to talk about 
policies being linear, you're going to be able to tell us 
whether they are, in fact, linear. So I appreciate the points 
you're making. I'm going to work closely with you and 
understand the importance of these issues to your State as 
well.
    We'll be following up.
    Senator Franken, additional questions?
    Senator Franken. I would just underscore that in comedy we 
do non-linear thinking.
    [Laughter.]
    Senator Franken. Mr. Poneman, I'm a big believer in 
research and development. The U.S. has the best scientific 
talent in the world. We have premier universities. We have a 
culture that promotes entrepreneurship and innovation.
    As a Nation we've already used the strength to become 
leaders in biomedical research. That's because of sustained 
research funding from NIH which has produced a cadre of 
biological researchers who are making important discoveries in 
the field of health and medicine every day. That's terrific.
    But I don't see any reason why we shouldn't be able to 
replicate this for bio energy research. After all bio energy 
research utilizes some of the very same tools and expertise 
that biomedical research uses.
    You can study a microbe to better understand the disease it 
causes. You can also engineer a microbe to produce renewable 
biofuels. We're focused and dedicated. If we are we will kick 
the fossil fuel dependency with advances in renewable fuels.
    First, I think bio energy should just be a bigger priority 
than it is currently. I hope that we can work together to make 
that happen.
    In addition this--and what I'm hearing from scientists in 
Minnesota and elsewhere is that the grant funding process at 
DOE needs to be improved. When I hear from biomedical 
scientists in Minnesota they do talk about NIH being easier to 
deal with on this kind of grant funding than DOE. Not just for 
bio energy, but across the various program offices. I'm told 
that often DOE grant funding process can be cumbersome, costly 
and time consuming.
    Can you describe the Department's grant funding process and 
tell me where you think there is room, may be room, to make it 
less cumbersome to researchers, more transparent and more 
effective?
    Mr. Poneman. Senator, I'm happy to do that.
    It's a very important point. What we have been trying to do 
is where we have adopted some of these better newer, more agile 
grant procedures, we're trying to propagate across the 
department. I'm talking specifically about the standing up of 
ARPA-E with the initial contribution of funding under the 
Recovery Act.
    We had a chance to develop a process in the following way.
    Come up with a specific idea of where we think the 
innovation might best be found.
    Quickly pull together a workshop that gets lots of 
academic, industrial expertise. So that the terms of reference 
for a funding opportunity announcement can be articulated, 
announced, released to the public.
    Get the widest possible response.
    Then to line up, especially since they were so heavily 
oversubscribed by like a factor of 100 in the first 
solicitation, to line up expertise of this interested peer 
reviewers who've got expertise, but no axe to grind.
    To do this in obviously an expeditious manner.
    We found that by, sort of, starting with a blank slate and 
doing this fresh with a new set of players, frankly, and a real 
drive of urgency under the Recovery Act that the ARPA-E 
mechanism was much better than the traditional mechanisms that 
we had been using in the Department in the advanced energy 
portfolio. We're now trying to bring those best practices over. 
We are certainly open to learning if there are other best 
practices at places like NIH that could further accelerate and 
make transparent, but also rigorously and analytically, 
neutrally reviewed processes.
    Senator Franken. This is an area where I'd like to work 
with you, if I could.
    Mr. Poneman. We would love that.
    Senator Franken. To make sure our tax dollars are spent 
more effectively.
    Mr. Poneman. Yes.
    Senator Franken. I'm going to try and do this fairly fast 
because I don't want to use other people's time.
    But we're experiencing a natural gas boom in the country. 
We also know that the combustion of natural gas produces fewer 
greenhouse gases, gas emissions than oil and coal. But there 
are also fugitive emissions or methane leakage during the 
extraction processing and delivery of the gas. Methane is a 
potent greenhouse gas and a highly--and high hydrates could 
diminish the climate benefits of natural gas.
    Studies have attempted to determine the leakage. What--just 
to jump to the chase here, you know, if the leakage is greater 
than some might have calculated this might undercut the 
benefits in terms of emissions. My question basically is what 
is DOE doing to better understand and grasp natural gas 
fugitive emissions?
    Mr. Poneman. It's a great question, Senator. This problem 
was acknowledged in the subcommittee report of the Secretary of 
Energy Advisory's board study on natural gas. Part of the 
problem here I know Dr. Moniz has emphasized in his remarks to 
the committee where we do add value is in analytically data 
driven analysis. We don't do all the regulations some of the 
other departments such as Interior do.
    With the methane question one of the challenges is not 
having a good baseline of data. We don't know what was going on 
before. So I think where the Department of Energy specifically 
can add value in this is in trying to help analytically 
establish what the base line from which we are measuring the 
delta of the added increment, if any, that comes out of the 
frack wells would be.
    Then in having a base line and then analyzing the wells vis 
` vis what was the ambient nature of the methane emissions 
before come up with a deeper understanding. That is incredibly 
important to make sure that what you have just warned about 
does not occur. That we inadvertently somehow developed a 
resource which could be and should be one that reduces us in 
our carbon emissions, gets us on a path to a low carbon future. 
But if we're not attended to all aspects of it such as the 
possibility of refuted methane emissions, we will obviously 
potentially undercut that.
    Senator Franken. I'm sorry, but just let me make sure I 
understand this. The delta is the delta from what happens when 
you have a extracting, you know, through whatever process we're 
using the natural gas verses what exists in nature?
    Mr. Poneman. Yes.
    Senator Franken. Is that the delta?
    Mr. Poneman. I am not sure that they have, Senator, pre and 
post well drill data on what the methane emissions are in all 
of these cases. That's, again, unlike Senator Heinrich, I'm not 
an engineer. But that's my understanding of one of the things 
that they are looking at.
    Senator Franken. OK. I know what a delta is. I'm not an 
engineer, but in comedy we use delta a lot, usually as the name 
of a fraternity.
    [Laughter.]
    Senator Franken. I guess I have enough time for the next 
question?
    OK, you know, if you're doing a fake fraternity you do 
delta, delta, chi or something.
    OK, I want to express my support for the weatherization 
assistance program for low income families, seniors and 
individuals with disability. This program is crucial for 
protecting these families especially during cold winters in 
Minnesota. I believe your budget should have been stronger on 
this program. I mean, I go to work to make sure people get the 
assistance that they need.
    Is the Administration committed to making sure that the 
weatherization assistance program meets the needs of the people 
in cold climes in this country, in Minnesota and elsewhere?
    Mr. Poneman. Yes, Senator. It's a very important program. 
We've got obviously a very significant assistance, the $5 
billion in the Recovery Act for it. We are now, as you've 
noted, having challenges with the requests we have put in not 
having fully funded. But we are committed to this. We're 
committed to optimizing the lesser resources that we, in fact, 
received to make sure that every State continues to be able to 
have a weatherization program for people who are in cold climes 
are protected.
    Senator Franken. Can we expect a distribution formula from 
DOE that is fair to every State?
    Mr. Poneman. We are attempting to do just that, Senator. 
We'd be very happy to stay in close touch with you on that.
    Senator Franken. Thank you very much. Good to see you 
again.
    Mr. Poneman. Thank you. Thank you for the trip to Minnesota 
was very educational.
    Senator Franken. It was fun.
    Mr. Poneman. Thank you.
    The Chairman. Thank you, Senator Franken.
    I think we are all, as a result of this hearing, going to 
be linear specialists. We are going to find a way to rally 
around that cause.
    I gather Senator Heinrich doesn't have any other questions. 
I'm going to leave you with one last point, Secretary Poneman.
    You touched on it in your comments earlier with respect to 
some of the work the Department did in terms of fracking 
research. It just highlights my concern, particularly about 
some of these cuts we've talked about that look so integral to 
the future, like energy storage. I mean, solar and wind, of 
course, are intermittent sources of power. They are not there 
forever.
    Energy storage is going to be absolutely key to their 
future. I think you've heard my fairly vociferous comments 
about my concern in that area. Dr. Moniz was very responsive in 
terms of saying that within 30 days of his confirmation, we'll 
get a plan in this area.
    But the reason that research is so critical, and we 
understand there's plenty of research in the private sector. 
It's not as if the Federal Government is the only entity in 
America that does research. It just helps us drive down costs, 
particularly early on.
    I've been struck going back and looking at the history of 
gas development, the recent history. It was not very long ago 
in a lot of influential quarters people were saying it really 
probably is too expensive to get oil and gas from shale. But 
despite the research taking place in the private sector,the 
Department put significant research effort into fracking issues 
and to matters relating to directional drilling. It was a 
factor. It helped make natural gas cost effective, not the sole 
reason, but it helped make gas cost effective.
    That's what we want to do, especially in renewables and at 
this crucial time. This country wants to see renewables play a 
bigger role in base load power. I'm absolutely convinced that 
this country wants to see that.
    The challenge is going to be to drive down the costs of 
these renewables. That's what people are looking for. They're 
looking to see that renewables are cost competitive with the 
traditional kinds of sources.
    So when we see the reductions in some of these areas that 
we've highlighted, whether it's energy storage, hydro, or other 
kinds of areas, it comes back to where we think the Department 
has a track record. You highlighted it in your statement with 
respect to a number of areas, particularly natural gas most 
recently.
    We want to make sure that we bring that same kind of effort 
on the research side in renewables at a pivotal time when it 
can help us lower the costs. Particularly get to where the 
American people want to go, which is a transition to a lower 
carbon economy. Understand that to do it is to make those 
renewable sources a bigger role of base load power.
    Now I thought that was going to be the last word on the 
subject, but I understand that Senator Manchin is on his way. 
So why don't we let you respond to that point with respect to 
the research function.
    Mr. Poneman. I would like to, yes.
    The Chairman. That will ensure that I don't just filibuster 
until Senator Manchin arrives.
    Mr. Poneman. OK.
    Mr. Chairman, I think that was eloquently expressed and 
profoundly correct. Our value at the Department of Energy is 
just as you say in the R and D to drive down costs.
    Many countries have experimented with such mechanisms as 
feed in tariffs and so on. Often these efforts have just run 
into challenges because they end up subsidizing inefficiencies. 
So when we promote a sun shot approach, model on the moon shot, 
talking about bringing the modular costs of solar down to a 
dollar a watt to the extent that we can actually get not just 
the modules which of course themselves have come down in cost, 
but then the balance of plant, the inverters, the installation.
    Get those costs down so what you're talking about the 
potential of 5 to 6 cents per kilowatt/hour levelized cost of 
electricity. Now a renewable source can compete toe to toe with 
conventional forms of energy.
    Same thing has happened, obviously in the area of wind. 
We're now with extension in the production tax credit in a 
place where onshore wind has become quite competitive.
    But the other point that you made, Mr. Chairman, I think is 
equally important. Sometimes, if I may say, when one looks only 
at the DOE piece of the puzzle it might look like a shrinking 
effort. But sometimes we're trying to think where is the value 
add proposition.
    At such point as the private sector can come in a make an 
investment. That's a very important thing at such point as such 
efforts as the Congress which made a limited time tax benefit 
available can help take up the baton from where the Department 
left off with the research on horizontal drilling and so forth. 
On the back of the good efforts after we made those investments 
by the Gas Technology Institute, this is how we can work 
together to do exactly what you say.
    Drive technology to a place that costs come down. Ideas 
like those advanced by Senator Coons which you've also 
commented on bring the cost of capital down which would be 
critically important since in many of these cases there's no 
commodity pricing risk because wind blowing and sun shining 
notwithstanding whatever else may happen in the commodity 
markets. This is how, I think, our department can work with 
members of this committee in trying to drive this energy 
economy to that low carbon, prosperous future, bring in lots of 
American jobs and a much better future. So we would just 
welcome any opportunity to continue our work with you on that.
    The Chairman. Very good.
    Let's give the last word to Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman. I am so sorry, 
but thank you. You've been so kind.
    Sir, first of all, thank you for coming. Let me make a 
statement up front that I'm for an all in energy policy that 
uses every resource we have in this great country. I mean that. 
I think I've told the chairman this.
    I'd like to start by expressing my dismay at the direction 
that the President's budget is taking. I'll say that this 
budget doubles down on energy efficiencies and renewables, 
asking for almost a billion dollars in additional funding while 
cutting fossil energy funding by $95 million, about 18 percent 
from the fiscal year 2012 levels which are historic lows.
    Now let's put this in perspective. Let me just show you, 
sir.
    Why don't you look at this? This is your alls figures, 
Department of Energy. Where our energy comes from. Where is it 
expected to come from by 2040? It doesn't take, you know, a 
rocket scientist to figure this out. That's where you're going 
to be in 40 years even if you want to bump that to 20 percent. 
That's the most it's going to be.
    Now let's go on to some more here.
    Brings funding--you're bringing fundings for renewables and 
efficiency to $2.7 billion for 16 percent return by 2040.
    You know, I'm all for everything. Let me show you where 
you're money is going. Look at this, Mr. Chairman. Look at this 
where they are spending their money.
    Energy, that's fine. But 70 percent only gets 16 percent 
return? That's not a good investment for the money.
    It's got to be a balance. I'm asking for a balance, sir.
    If you're telling me that you're expecting 35 percent to 
come from coal.
    You're expected nukes to do 17 percent.
    You're expecting natural gas to do 30.
    Look what you did to them. You must not be helping them 
very much to get there. They must be doing it all on their own 
because they're not getting much help from you all.
    That's all I'm asking for. All I'm asking for. Then if you 
look at global coal demand, 8.1 billion tons being burnt in the 
world. I'm as concerned about the climate in West Virginia as 
anybody is anywhere in this great country. We only burned 890 
thousand tons of coal last year, 11 percent of the world burn.
    I'm not a scientist. But if I think the climate encompasses 
the whole globe, right.
    Mr. Poneman. Yes, sir.
    Senator Manchin. You would think that we're going to make a 
difference in the whole world even if we cut 11 percent of the 
production of the coal if we cut all of it out. Wouldn't you 
think that if we invested a little bit more with the amount of 
consumption the world has right now that we could find a 
technology to use the resources we're going to depend on for a 
long time? Maybe help other countries clean up what they have?
    Sir, I'm just asking----
    Mr. Poneman. Yes.
    Senator Manchin. For a little bit of balance here. I'm more 
than, I think the chairman knows, I'm more than happy to work 
with anybody. But I think you have to admit this is a little 
bit out of balance, is it not?
    Mr. Poneman. Senator, let me first underline a strong 
degree of agreement. I've been watching these EIA numbers for a 
long time. It shows coal 35 percent there. Most of my 
educational background coal has been half of our power 
generation. It's been fluctuating in no small measure because 
of natural gas prices.
    Senator Manchin. But worldwide it's going up, correct?
    Mr. Poneman. That is correct, sir.
    So all by way of saying in agreement with your premise, 
coal is and will be a very fundamentally important part of our 
power generation and globally.
    Senator Manchin. We in West Virginia want to show you and 
work with you how to use it better.
    Mr. Poneman. We do too, Senator. We have, and I think you 
know this, we have a $6 billion investment in combination of 
our CCPI and our carbon capture and sequestration projects. 
We've just approved phase 2, 2.0. Interesting to see in a 
retrofit context what oxyburn will be able to do for the 
boilers.
    We, all of us, and you know, of course----
    Senator Manchin. Sure.
    Mr. Poneman. Dr. Moniz has literally written the book.
    Senator Manchin. Oh, I know he has. That's why I said very 
hopeful, very hopeful.
    Mr. Poneman. So we do want to work with you. I think we 
see, in terms of providing clean base load power generation, 
the----
    Senator Manchin. So you're saying you all didn't put this 
type of request in from the President's budget? How you want to 
spend your money?
    Mr. Poneman. No, what I'm saying, Senator, is that's one 
piece of a larger effort where we're leveraging investments 
that we've made and the portfolio we have out there in terms of 
the very large, you know, multi building investment.
    Senator Manchin. But you've increased. You're up to 70 
percent, 2.7 billion on this right here.
    Mr. Poneman. We're seeing results in that. You said you're 
in favor of all the above----
    Senator Manchin. Oh, I am in favor of all of the above.
    Mr. Poneman. So are we.
    Senator Manchin. Don't you think you should be doing maybe, 
let's say you did 25 and 25 and 25 and 25, not 70 and 19, 11 
and nothing.
    Mr. Poneman. But, Senator, what I'm saying is there are 
different things, apart from the pure R and D as opposed to 
some of the deployment strategies in the area of coal. 
Obviously we have a tremendously out there of coal fired 
plants. So some of the issues to be addressed in coal space 
have to do with retrofits and things that can be demonstrated 
through such things as our carbon capture and sequestration.
    Senator Manchin. But, sir. That, as you know, the National 
Energy Technology lab----
    Mr. Poneman. I visited.
    Senator Manchin. You know. They do tremendous work. There's 
the ones that basically developed, with the private sector, as 
far as the fracking and defining and unleashing all this gas 
that we have now. We have it in Marcellus shale in West 
Virginia. I'm very proud of that.
    But they're getting cut continuously.
    Mr. Poneman. Part of it, Senator, is as I was just telling 
the chairman, we are trying to make sure that we leverage the 
Federal dollars as best we can where there are existing 
industries that can co-invest with us and help us get the same 
results. That's what we're doing.
    Some of the earlier phase investments in some of the 
renewable areas, those are much longer term investments. You 
know, we have seen actually huge payoffs.
    We put $2 billion into solar investments in terms of 
getting cheaper modules. That's got a $9 billion payoff.
    We put a billion dollars into improved combustion 
technology. We saved $70 billion in truck fuel.
    We put $4 billion in wind technology producing a $15 
billion benefit.
    So we are definitely, Senator, with you in looking for 
where the payoff is and where the high returns are. Be very 
eager to work with you, particularly in these coal based areas 
because there's 2 things we've got to do.
    One is we've got to test out, so we can maintain the 
confidence of the American people in these saline formations or 
EOR, enhanced oil recovery, that the CO2 
sequestration is effective over time.
    Secondly we really double down on the capture and getting 
cheaper more efficient forms of capture.
    Those 2 things which again, Dr. Moniz has written 
eloquently about, I think will be the ticket to doing just what 
you want which is keeping coal a vibrant part of our energy 
portfolio.
    Senator Manchin. I was just told that I understand the 
funding has been reduced for sequestration. Is that correct?
    Mr. Poneman. I don't quarrel with the specific R and D 
numbers. We, across our portfolio, Senator, we are finding--we 
are trying to do more with less.
    Senator Manchin. Sir, I'm really not trying to be--I'm 
really not. I think I just appreciate the chairman so much and 
the ranking member. They've been so kind. They've come to my 
State. They've seen the State. It's all in.
    If we just the Federal Government working with us as a 
partner and not an adversary or an enemy, but an ally, that's 
all I'm asking for.
    Our little State has done a lot of heavy lifting. I think 
you know that. Over the years we've helped develop this great 
Nation with the energy we've produced. We just want a partner. 
We want somebody that understands our value and works with us, 
not against us.
    Mr. Poneman. I think we're there, Senator. Let me just say 
of the 8 projects that we've got in our existing portfolio. We 
have one air products that's in operation. We've got 2 that are 
under construction. We've got 2 that are close to financial 
closure. We've just approved phase 2 of Future Gen 2.0.
    We are very strongly committed to this. We're promoting it. 
We wish to work with you further on it.
    Senator Manchin. I'll be anxious to bring programs to you 
that I think have tremendous value, not just for my State, but 
for my country. Be happy to bring them to you, sir. Thank you 
very much.
    Mr. Poneman. We will be very pleased to work you, Senator.
    Senator Manchin. I'm so sorry, Mr. Chairman.
    The Chairman. No, no, not at all.
    Secretary Poneman, I think what Senator Manchin is talking 
about here-and I just want to say to him because we talked 
about it a bit when I was in West Virginia-I'm about as pro-
renewables as anybody around whether it's hydropower . . . 
    Senator Manchin. We have it all, don't we?
    The Chairman. Biomass, geothermal. In my home State, 
Senator Manchin has heard me say this, I think a lot of folks 
think we've got green in our chromosomes. So we very, very much 
are committed to this future of a lower carbon economy.
    But Senator Manchin, I know you're doing important work on 
this gun violence issue. The first question that I asked this 
morning relates to your point. That was how can the Department 
justify cutting the fossil energy research budget by 15 
percent.
    It directly relates as you suggest----
    Senator Manchin. Thank you.
    The Chairman. To some of the ongoing work. We're starting 
our natural gas workshops. We want to have best practices. 
Something that I think you and I and Senator Murkowski have 
talked about.
    Senator Manchin. Yes.
    The Chairman. We have our industry people, the 
environmental people, and scientists together and we try to 
find some common ground.
    So I want you to know as somebody who is resolutely pro-
renewable, I think this point about cutting the fossil energy 
research budget by 15 percent, which essentially encompasses 
your question, is a very valid one. I'm going to work very 
closely with you. You're chairman of the Mining Subcommittee, 
so we're going to work on those issues.
    Senator Manchin. You've been very kind, sir. I appreciate 
it. I really do.
    The Chairman. Alright. On that, Secretary Poneman, you've 
been pummeled enough, I think, this morning.
    [Laughter.]
    The Chairman. We'll excuse you at this time.
    Mr. Poneman. Thank you, Mr. Chairman.
    The Chairman. The committee is adjourned.
    [Whereupon, at 11:41 a.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

     Responses of Daniel B. Poneman to Questions From Senator Wyden
    Question 1. Termination of DOE Graduate Student Programs-DOE's 2014 
budget proposes to eliminate or reduce a number of programs that 
support graduate level education in critical areas that support DOE's 
missions. As discussed in the hearing with Deputy Secretary Poneman, 
the Office of Nuclear Energy is eliminating the Integrated University 
Program (-$5 million) at a time when the Department itself is expected 
to need to engineer, construct, and operate tens of billions of 
dollars' worth of nuclear weapons, nuclear waste, and fuel cycle 
facilities, and when the Department and the nuclear industry face 
significant challenges in improving nuclear reactor safety and waste 
management and disposal. In the Office of Science, the Workforce 
Development for Teachers and Scientists Program budget cuts more than 
half of the funding for the Graduate Student Research Program (-$3 
million). The Office of Science is also eliminating the DOE 
Computational Science Graduate Fellowship program (-$6 million). DOE 
claims that these cuts are justified because their function will be 
subsumed by a consolidated National Science Foundation STEM program. I 
am concerned that a broad NSF program will not ensure that the 
educational needs of the mission-specific disciplines required by DOE 
will be met. Please explain and demonstrate how DOE's mission-specific 
needs will be met if these cuts occur.
    Answer. The Department has a long history in supporting the 
training and education of future scientists and engineers at the 
graduate level; the majority of this training has occurred through the 
support of graduate students through research awards to universities 
and DOE national laboratories, rather than through specific graduate 
student education programs. For example, the Office of Science supports 
over 4,500 graduate students annually under research awards sponsored 
by its six research program offices. The Office of Science Graduate 
Student Research Program is proposed to be restructured in FY 2014 to 
support segments of a graduate student's thesis research at a DOE 
national laboratory. The FY 2014 request will support approximately 100 
graduate students to conduct graduate research directly tied to Office 
of Science research priorities. The Workforce Development for Teachers 
and Scientists (WDTS) program will work closely with the Advanced 
Scientific Computing Research (ASCR) office to help ensure that the 
Graduate Student Research program addresses graduate training in 
computational science areas that are relevant to the ASCR mission.
    We are committed to working closely with NSF as they develop the 
details of their enhanced National Graduate Research Fellowship Program 
(formerly the NSF Graduate Research Fellowship program) and with the 
National Science and Technology Council's Committee on STEM Education 
(CoSTEM), to help ensure the mission needs of DOE are met in graduate 
level education and training.
    Question 2. In March of this year DOE's office of Nuclear Energy 
released its second Funding Opportunity Announcement (FOA) for the 
small modular reactor (SMR) licensing support program. The FY2014 
budget includes a small $3 million increase for this activity. 
According to the announced procurement schedule, industry bids are due 
July 1, 2013. DOE has indicated it would announce an FOA award as early 
as September 17, 2013. It is unclear whether or not SMR funding will be 
divided among 2 proposals--one for each FOA-- or among three proposals 
should DOE elect to make two awards in this second round. Does DOE 
believe there is adequate funding to fund three proposals and does the 
Department intend to make these awards before the end of the current 
fiscal year?
    Answer. The Department plans to make a selection of prospective 
awardees from our Small Modular Reactor (SMR) Licensing Technical 
Support program funding opportunity announcement (FOA) for the 
development of innovative SMRs by the end of the fiscal year and 
negotiate and award the cooperative agreement by the end of calendar 
year 2013. It is the Department's intent to make one additional award 
on this FOA; however, we may decide to select additional awards if 
applications with sufficient merit are received. The award made through 
the current selection process will be covered under the program's 
approved funding profile of $452 million over six years. The exact 
split will not be known until we complete the cooperative agreement 
negotiations with the selectees.
    Question 3. ``The President's FY 2014 Department of Energy Budget 
Request contains a large increase in funding for Vehicle Technologies 
and specifically mentions a department- wide, cross-cutting initiative 
called the EV Everywhere Grand Challenge which aims to make the United 
States the first country in the world to invent and produce plug-in 
electric vehicles that are as affordable and convenient as gasoline-
powered vehicles by 2022. At the same time, funding for other 
alternative vehicle technologies, like hydrogen fuels cells, is 
decreased or remains stagnant. Are we to understand, then, that the 
President favors electric vehicles over other forms of alternative fuel 
vehicles such those powered by hydrogen fuel cells or natural gas? If 
so, isn't that having government pick winners and losers rather than 
having the market decide which types of alternative vehicle technology 
are best suited to replace gasoline powered vehicles?
    Answer. The Department is committed to pursuing a portfolio of 
vehicle technologies that, collectively, can reduce our dependence on 
oil and works closely with stakeholders--including the automotive 
industry--to develop its technology portfolio and adjust it as needed. 
It is clear that vehicle electrification is an essential and 
significant part of the Administration's effort to transition from oil 
to more energy secure alternatives. . The global automotive industry is 
already moving in this direction. Electrification will benefit not only 
our national economy and energy security but also individual 
consumers--today's electric vehicles can ``fuel'' for the equivalent of 
about roughly $1/gallon, and the next generation will bring even bigger 
savings. It is also important to note that advances in batteries and 
other electric drive components support the continued development of 
not only plug-in electric vehicles (PEVs) but also hydrogen fuel cell 
vehicles (which are also electric-drive vehicles). In addition, the 
Department's robust support of materials technologies for vehicle 
lightweighting will benefit all vehicles, regardless of size or 
propulsion technology.
    Although initially slower than some projected, the PEV market is 
now growing quickly. Sales increased by 200 percent in 2012 and are 
climbing more rapidly than hybrid electric vehicle (HEV) sales when 
HEVs were first introduced roughly a decade ago. In addition, the 
number of vehicle models available is on the rise--fifteen new hybrid, 
plug-in hybrid, and all electric vehicles are expected in model year 
2013 and 2014 from numerous original equipment manufacturers. Although 
early market PEVs have won critical acclaim with awards and these early 
successes are important, it will take many millions of vehicles to 
truly transform the transportation sector and significantly reduce our 
dependence on oil. As such, we need to continue to pursue the research 
and development needed to further reduce cost and improve performance 
to move PEVs from early adopters to the mainstream. This is the focus 
of the EV Everywhere Grand Challenge.
    Question 4. One of my guiding policy principles is to enable the 
United States to move towards a low-carbon economy, both to address the 
threat of global climate change and also to remain competitive in the 
global clean energy marketplace. The DOE's efforts in this regard 
represent a critical piece of this transition, and choices DOE makes 
tilt the playing field for different technologies. I'd like to 
understand what the overall strategy is behind some of the choices. I 
often talk about what I call the `forgotten renewables', geothermal 
energy and hydropower, two clean sources of energy that the United 
States has in abundance. The DOE budget request treats geothermal 
favorably, increasing the budget by about 60 percent, but research into 
hydropower takes a cut. Given the estimates of untapped potential in 
hydropower resources--upwards of 60 gigawatts of emissions free 
generating capacity--why has hydropower been deemed less important than 
it was in the previous budget?
    Answer. The DOE budget request for water power research, including 
hydropower, is $55 million for FY 2014. This budget request reflects 
DOE's emphasis on research and development in water power (both 
hydropower and marine hydrokinetic technologies), and provides evidence 
of our intent to support the realization of the technologies' full 
potential as a clean energy technology option for our nation.
    More specifically, DOE has a vision for water power to provide 15 
percent of the nation's electricity by 2030, and hydropower will play a 
large part in reaching this goal. Hydropower already provides about 7 
percent of the nation's electricity, but there are opportunities to 
increase hydropower generation in a variety of settings, including non- 
powered dams, conduits, and new sites.
    DOE takes an integrated approach to decrease technology costs and 
market barriers to advance the deployment and optimal use of hydropower 
technologies. DOE's hydropower activities in FY 2014 focus on 
developing advanced hydropower technologies and components at lower 
cost, using pumped storage to support grid integration of variable 
renewables, and supporting advanced manufacturing of lightweight 
turbine materials. In addition to the focus on component cost reduction 
and renewables integration, other ongoing efforts include: developing 
advanced, cost-effective environmental and aquatic species monitoring 
sensors and optimization tools; demonstrating, testing, and evaluating 
advanced turbine designs and other innovative technologies that co-
optimize electricity generation and environmental performance; and 
facilitating stakeholder engagement to provide for public participation 
in development of new hydropower.
    Question 5. Last week, DOE said that DOE's contribution to ITER for 
FY2014 would be $225,000,000 and that DOE had agreement that its annual 
contribution going forward would not exceed this amount. DOE then said 
that DOE's contribution would be capped at $2.4 billion, including the 
cash contribution. Is the $2.4 billion, a cap on the total U.S. 
contribution, including prior year funding, or the $2.4 billion cap 
applied to future funding. Looking at the DOE budget materials, (page 
SC-196), it looks like the last time they provided a total estimated 
cost or total project cost for ITER was in FY 2008 at just over $1 
billion (TEC 1,078,230) (TPC 1,122,000). If the cap on total U.S. 
contributions to ITER is $2.4 billion, why hasn't DOE said so in the 
TPC estimate? Why doesn't the budget justification say that the total 
project cost is, in fact, $2.4 billion?
    Answer. The $2.4 billion represents the pre-CD-2 (Critical Decision 
2, ``Approve Performance Baseline,'' which establishes a formal cost 
and schedule baseline) estimate by DOE of the total level of U.S. 
funding, including prior year funding, necessary to meet U.S. 
obligations for ITER to obtain first plasma; this figure includes our 
in-kind and cash contributions. This figure is not the total project 
cost; while first plasma does not represent total project completion, 
it does signify completion of machine assembly, integration, and 
commissioning in support of initial operations and is a major 
milestone.
    Question 6. Race to the Top: The budget includes a one-time request 
of $200 million for the ``Race to the Top for Energy Efficiency and 
Grid Modernization'' initiative. This would provide grants to states to 
make progress toward the goal of doubling national energy productivity 
by 2030 by undertaking projects in five areas: efficiency (including 
combined heat and power, and demand response); distributed generation; 
customer access to data; resiliency and cyber-security; and visibility 
in grid operations.

          I am concerned that there are five different objectives that 
        will complicate administration, and that these five areas do 
        not have the same ability to affect the goal of doubling 
        national energy productivity.

    Wouldn't it be better to focus this initiative on the one-or-two 
objectives that have the greatest influence on energy productivity?

    Would you please provide the Committee with a rough analysis of the 
relative influence that each of these objectives has on energy 
productivity?

    Answer. The Race to the Top for Energy Efficiency and Grid 
Modernization is a challenge to states to implement effective policies 
that can increase energy productivity and modernize the grid. To ensure 
that participants have sound enabling environments for private 
investment, the Race to the Top establishes qualifying criteria in five 
policy categories, all of which support improvements in energy 
productivity. As proposed, applicants would qualify for the Race to the 
Top by meeting criteria for encouraging energy efficiency as well as 
their choice of three of the four remaining categories. The Race to the 
Top preserves the flexibility of states to develop their own portfolio 
of policies , including through technical assistance grants that can be 
used to help applicants implement policies that would qualify them to 
compete in the challenge.
    Improvement in energy productivity and energy efficiency is the 
only criterion for final selection of prize winners. All of the 
qualifying criteria are aimed at improving conditions for private 
sector investment in energy productivity. For example, states that have 
implemented policies to incentivize investments in grid modernization 
are in a better position to avoid large losses in productivity due to 
both manmade causes (e.g. multi-state blackouts due to human error) and 
natural disasters (e.g. multi-state blackouts due to storms). States 
with policies in place to promote investments in grid resilience are 
also better able to attract businesses and drive efficiency gains in 
the electric power sector. Similarly, states that act to enhance 
household and business access to data about their electricity usage are 
likely to be in a better position to realize the benefits of consumer 
choices to save energy, leveraging the considerable investments they 
have already made in smart meter technologies. For efficiency, a state 
may choose to implement a suite of policies, such as the most recent 
building codes and incentives, to achieve cost-effective efficiency.
    These examples illustrate the integrated nature of policies that 
support grid modernization and energy productivity. At present, DOE 
does not have analysis that attempts to separate and attribute the 
benefits of attaining each of the qualifying criteria in energy 
efficiency, distributed generation, customer access to data, grid 
resiliency, and visibility in grid operations.
    Question 7. Appliance standards: The Appliance Standards program is 
one of DOE's most successful programs, having reduced national 
electrical demand about 7 percent below what it otherwise would be. 
However, the Administration has missed the deadlines for standards for 
several appliances--delays that have cost consumers and businesses an 
estimated $3.4 BILLION in lost energy cost savings. Please explain the 
reasons for these missed deadlines, and whether the budget request will 
allow them to be met?
    Answer. The budget allows for the timely completion of all 
statutory requirements of energy conservation standards and test 
procedures. DOE remains committed to meeting its deadlines and the 
budget request allows for DOE to meet these important deadlines.
    Question 8. High-Performance Computing: For decades United States, 
through DOE management, has been the world leader in high-performance 
computing, but that lead is slipping quickly to other nations as 
competition grows in the race to build the first exascale computer. If 
the U.S. loses this race, industry experts believe that the impacts 
will trickle down more broadly to electronics industries resulting in 
losses in U.S. high tech competitiveness and economic growth. Congress 
asked the DOE to submit a plan to Congress detailing how it would 
manage exascale computer development and provide for ``Big Data'' 
computing, but that final report is now more than a year overdue. If 
confirmed, what will you do to maintain U.S. leadership in high-
performance computing and how will you focus DOE efforts to win the 
race to exascale computing? Will you work to ensure that Congress 
receives this report?
    Answer. In June 2013, the Department submitted a plan to Congress 
outlining its plan for developing exascale computing capabilities. DOE 
will draw upon the programmatic and technical strategies that have 
helped established the U.S. as the leader in innovative high 
performance computing (HPC) systems over the past half-century. These 
strategies include: Research, Development, and Engineering (RD&E) to 
expedite the timely development of hardware, software, and mathematical 
technologies; the transition or redesign of today's science and 
engineering simulations and large- scale data analysis tools to take 
advantage of exascale technology; and the acquisition, deployment, and 
operation of the advanced computing systems on regular timetables and 
with predictable budgets.
    The focus of this plan is will be on the RD&E effort to deploy 
exascale computers that:

   provide computational capabilities that are 50 to 100 times 
        greater than today's systems at DOE's Leadership Computing 
        Facilities;
   have power requirements that are a factor of 10 below the 
        2010 industry projections for such systems which assumed 
        incremental efficiency improvements;
   execute simulations and data analysis applications that 
        require advanced computing capabilities;
   provide the capacity and capability needed to analyze ever-
        growing data streams; and
   advance the state-of-art hardware and software information 
        security capabilities.

    This plan will be executed through the National Nuclear Security 
Administration (NNSA) and the Office of Science (SC). Responsibilities 
will be shared, taking advantage of the core capabilities of the 
partners.
    The Department's Advanced Scientific Computing Advisory Committee 
also recently completed a report on their study of the ``Synergistic 
Challenges in Data-Intensive Science and Exascale Computing'' that 
identifies research opportunities that are most likely to positively 
impact both data-intensive science goals and exascale computing goals.
    The Office of Science and NNSA will continue to work 
collaboratively on strategic research investments and partnerships 
between industry, the national laboratories, and U.S. research 
universities. These efforts are advancing development of critical 
technologies-both hardware and software-and ensuring that our critical 
applications are ready to harness the potential of exascale and Big 
Data computing to advanced DOE missions.
    Question 9. The U.S. is one of seven participants in the 
development of ITER, the international fusion energy science facility 
located in France. Since 2006 the cost of ITER has tripled and this 
growing cost of the U.S. contribution is having a significant impact on 
DOE managed U.S. research programs, including cuts to the very programs 
that will benefit from ITER's development. What will be your strategy 
for ensuring the DOE maintains robust basic science and domestic fusion 
programs while continuing to meet our international commitments to 
ITER?
    Answer. An important step to maintaining robust basic science and 
domestic fusion programs was the development of a funding approach for 
the U.S. contributions to ITER that is capped at no more than $225 
million per year. The non-ITER component of the FY 2014 budget helps 
improve our fundamental scientific understanding of plasma physics and 
also ensure the U.S. can take advantage of its investments when ITER 
commences operations. The priorities for the non-ITER components were 
chosen with a vision for what will be required for the U.S. to be a 
leader of fusion and plasma sciences in the next decade. This budget 
promotes leverage through exciting partnerships with the Basic Energy 
Sciences and Advanced Scientific Computing Research programs, and with 
the National Science Foundation. The request also supports targeted 
partnerships overseas at facilities with capabilities the U.S. lacks. 
The FY 2014 plan also includes investments in vigorous research at 
national laboratories, universities, and private industry, supporting 
researchers and students who may subsequently choose to conduct 
research at ITER. The FY 2014 proposal will support over 240 graduate 
student researchers in the fusion and plasma sciences.
    Question 10. The buildings sector has lagged behind appliances and 
manufacturing in achieving efficiency improvements. What do you see as 
the appropriate role, and the appropriate strategy, for DOE to improve 
the energy efficiency performance of the buildings sector, and as a 
part of your answer how would the President's goal of $2 billion 
efficiency retrofit investments using private capital through Energy 
Savings Performance Contracts (ESPCs) fit into the strategy?
    Answer. The existing building stock across the country remains a 
largely untapped opportunity for energy savings through improved energy 
efficiency. The Federal government has an important role to play in 
establishing reliable tools that help building owners assess the 
efficiency of their buildings and identify cost-effective opportunities 
for saving energy, as well as providing best practice models for 
financing improvements and overcoming other barriers to improving the 
efficiency of buildings. Through the new Better Buildings Challenge, 
DOE is making progress in many of these areas. This effort includes 
showcasing and validating a broad set of best practices, which now 
includes more than 100 partners and organizations making meaningful 
progress towards the President's goal of making American commercial and 
industrial buildings at least 20 percent more energy efficient by 2020. 
For the Federal government, ESPCs represent a critical tool to 
implement energy efficiency improvements in Federal buildings and 
facilities with limited to no upfront capital costs to Federal 
agencies, and the President's Challenge is catalyzing greater use of 
this financing mechanism. We are currently on track to meet the 
President's $2 billion performance contracting goal by the end of 2013. 
We are also pursuing opportunities to share the lessons learned in the 
Federal sector with public organizations as well as others that can 
benefit from performance contracting.
    Question 11. The Weatherization Assistance Program serves as the 
backbone of the residential buildings efficiency retrofit industry. 
This core Federal program is widely supplemented by state governments 
and utilities and it is a vital source of standards, best practices, 
and a trained workforce. However, with the exhaustion of Recovery Act 
funding, the budget for the program is dropping below the level needed 
to sustain an effective national program.
    What would be your strategy for ensuring that this program 
continues to serve as a foundation for the residential retrofit 
industry?
    Answer. The Department of Energy is pursuing a strategy to continue 
the Weatherization Assistance Program (WAP) as a foundation for the 
residential retrofit industry. A first step is to mitigate the 
detrimental impact of the funding levels provided in FY 2013 through 
the Continuing Resolution (CR) and sequestration. The Appropriation 
provided through the CR ($68 million less sequestration) is far below 
historic funding levels and is insufficient to maintain the 
infrastructure of the WAP service delivery network. The Department was 
able to identify prior year unobligated balances to supplement the FY 
2013 CR appropriated level, and is appreciative of Congress' approval 
of its reprogramming request to use these funds to sustain WAP 
activities.
    The FY 2014 Budget request of $184 million for WAP is closer to 
pre-Recovery Act funding levels and is an essential step to sustain the 
program. In addition to requesting funding at an appropriate level to 
sustain the weatherization network of State and local offices and 
continue to provide needed weatherization services to low-income 
populations, the Department is investing in resources and training that 
will benefit the entire industry. Despite these funding difficulties, 
DOE will continue to focus on training for residential efficiency 
retrofits. The WAP will continue to certify training centers and 
instructors who provide the skill development of workers within the 
Program and the residential industry.
    As in previous years, the WAP will allow states and territories to 
set aside a percentage of their grant funds so that skill development, 
training, certification, monitoring and program oversight can be 
performed at the grantee and subgrantee levels. The enabling 
legislation allows for up to 20 percent of WAP funds to be used for 
these training and technical assistance activities. This percentage is 
to ensure sufficient funding for performing these activities while 
maximizing weatherization production.
    Question 12. The State Energy Program provides funding for each 
Governor to maintain an essential energy planning and policy 
development capability and to coordinate this capability with other 
States and Federal agencies. However, funding has now dropped to levels 
that threated their continued effectiveness. If confirmed, would you 
seek funding in the future to return the State Energy program to the 
level of funding that prevailed before the Recovery Act?
    Answer. The Department of Energy's (DOE) State Energy Program 
assists states in establishing and implementing clean energy plans and 
policies, increasing competitiveness, enhancing economic development, 
and improving the environment. In its FY 2014 Congressional Budget 
Request, DOE requested $57 million to continue assisting states in 
reducing their energy consumption and energy costs. Although historic 
funding levels have varied, particularly under the Recovery Act, DOE 
believes $57 million in FY 2014 is the appropriate level to adequately 
support the SEP program. The State Energy Program looks forward to 
continuing to support states in their efforts in clean energy policy, 
planning and development.
    Question 13. Dr. Moniz, a lot of air time was spent last year 
bashing the Department of Energy for the Solyndra loan guarantee. No 
one likes the idea that the U.S. Government picks technology winners 
and losers at the taxpayers' expense. However, the simple truth of the 
matter is that countries that we compete with, like China, are 
financing the expansion of their energy industries at our expense. 
Chinese government solar investments have crippled U.S. producers. 
China and other competitors are looking to capture what is rapidly 
becoming the next big energy market, to manufacture these new 
technologies and own the supply chains, and to reap the economic 
benefits of using them throughout their economies. If you are 
confirmed, what do you propose to help renewable and other lower-carbon 
energy technologies make it, not just in the U.S. marketplace, but also 
in the global energy market?
    Answer. Our nation stands at a critical point in time in terms of 
the competitive opportunity in clean energy. In 2012, $268 billion was 
invested globally in clean energy, a 500 percent increase since 2004; 
trillions more will be invested in the years ahead. Last year, China 
pulled ahead of the U.S. in clean energy investment after we gained the 
investment lead in 2011. We are essentially trading pole position with 
China as the world begins to accelerate into the decades-long 
transition to clean energy. In that transition, the United States faces 
a stark choice: the clean energy technologies of today and tomorrow can 
be invented and manufactured in America, or we can surrender global 
leadership and import these technologies from other countries.
    To help U.S. renewable and lower-carbon energy technologies excel 
in the global marketplace and result in economic benefit in the U.S., 
the Department has created the Clean Energy Manufacturing Initiative 
(CEMI). CEMI is a strategic integration and commitment of manufacturing 
efforts across the Office of Energy Efficiency and Renewable Energy 
(EERE), which has two overall objectives:

          1. Increase U.S. competitiveness in the production of clean 
        energy products: Strategically invest in technologies that 
        leverage American competitive advantages and overcome 
        competitive disadvantages, and

          2. Increase U.S. manufacturing competitiveness across the 
        board by improving energy productivity: Strategically invest in 
        technologies and practices to enable U.S. manufacturers to 
        increase their competitiveness through energy efficiency, 
        including combined heat and power.

    As part of this Initiative, we are undertaking several efforts to 
enhance U.S. manufacturing competitiveness and capture the potential of 
the clean energy market. One key example is the establishment of clean 
energy manufacturing institutes as part of the President's National 
Network of Manufacturing Innovation. These institutes are intended to 
provide researchers--especially from small and medium-sized 
enterprises--timely, affordable access to physical and virtual tools, 
and to develop and demonstrate new materials and critical processes to 
advance clean energy manufacturing technologies for industry and their 
use. The institutes were established in response to recommendations 
from the Advanced Manufacturing Partnership's Steering Committee and 
the President's Council of Advisors on Science and Technology included 
in their July 2012 ``Report to the President on Capturing Competitive 
Advantage in Advanced Manufacturing.''
    Question 14. The lesson to me from Solyndra is that taxpayers need 
a lot more protections when it comes to Federal financing. There need 
to be safeguards to ensure that there aren't any more Solyndras. But, 
it is also clear to me that there is a big difference between investing 
in windfarm or solar project or geothermal plant that has a customer 
and power purchase agreement on Day 1, compared with investing in a 
manufacturing plant to make a commercially untested product. The 
financial risks to the taxpayers are simply not the same and they 
shouldn't all be lumped into the same loan program. When Sen. Bingaman 
and Sen. Murkowski held a hearing on the DOE loan guarantee program a 
year ago, in March 2012, I asked Herb Allison, the lead author of a 
review of program, whether or not the DOE loan program ought to be 
carved into separate financing programs based on the financial and 
technical risk of the projects the Government was trying to fund. He 
agreed that idea made sense. If you are confirmed as Secretary, what 
reforms would you propose for the DOE loan programs?
    Answer. From the world's largest wind farm and some of the largest 
solar generation facilities to the first two all-electric vehicle 
manufacturing facilities in the United States, the Department of 
Energy's (DOE) Loan Programs Office (LPO) manages a broad portfolio of 
new and innovative energy and transportation projects. These 
investments are giving the United States a chance to compete and 
succeed in the global clean energy race.
    Several recommendations were made in the report that resulted from 
the review you mention by former Treasury Official Herb Allison. To 
date, all of Mr. Allison's concerns have been or are being addressed, 
including filling key positions with experienced professionals, 
clarifying authorities, strengthening internal oversight of the 
programs, establishing a robust early warning system, and improving 
reporting to the public. LPO continuously looks for additional ways of 
improving its underwriting and asset monitoring activities to ensure 
best practices in protecting taxpayer interests.
    LPO is one of the largest, most experienced project finance 
organizations in the world. As designed, LPO has the capabilities and 
tools to support a number of different project types, all while 
managing risk appropriately. All projects will continue to undergo 
rigorous technical, financial and legal due diligence by officials in 
the DOE loan program and their third-party advisors. Transactions are 
structured to identify and mitigate risk as effectively as possible 
before proceeding with a guarantee. Once a project closes, the LPO will 
continue to use powerful monitoring tools-including strong covenants in 
all loan guarantees and strict project milestones-to control the amount 
of additional risk it assumes. DOE will continue to be an active 
manager, continuously monitoring projects, their market environments, 
and other identified risks to seize all opportunities to minimize 
exposure to loss.
    Question 15. The United States and Israel have begun developing a 
strong bilateral energy relationship over the last few years. The US-
Israel Energy Cooperation program, established by Congress in 2008 
connects DOE with Israel's Ministry of Energy and has proven an 
excellent catalyst to private sector cooperation between the countries. 
Secretary Chu sought to further this relationship through hosting 
Israeli energy delegations in Washington to explore new areas ripe for 
cooperation. Now, against the backdrop of a natural gas revolution both 
at home and within Israel, new opportunities present themselves to 
deepen our relationship, and indeed move it beyond the programmatic 
cooperation we've seen to a more strategic realm befitting our 
alliance. Do you share these views? What growth opportunities do you 
see for the US-Israel energy relationship? Are you committed to 
continuing to fund the US-Israel Energy Cooperation Program?
    Answer. DOE plans to continue to develop its already strong 
relationship with Israel on strategic energy matters. DOE will pursue 
opportunities to enhance its cooperation with Israel, and we look 
forward to continuing to work with the Government of Israel, including 
the Israeli Ministry of Energy and Water Resources.
    We value the role the U.S.-Israel Energy Cooperation Program has 
played in furthering clean energy technology research, development, and 
commercialization partnerships between U.S. and Israeli companies. 
Since the program's launch in 2009, DOE and Israel's Ministry of Energy 
and Water have jointly funded twelve such partnerships through the 
Binational Industrial Research and Development Foundation, leveraging 
$6.3M of DOE investment with almost $19M in Israeli government and U.S. 
and Israeli private sector cost-share. We are now beginning to see 
repayments from projects that have reached commercial success. DOE has 
funded the program in every year since its inception.
    We are also working together with a number of Israeli government 
institutions on critical energy infrastructure protection, energy 
efficiency standards, natural gas utilization, investment in resource 
development and potential trade opportunities.
    Question 16. Appliance efficiency standards: The Committee 
regularly hears about two particular concerns with the appliance 
standards program testing requirements. First, some equipment, such as 
commercial air-conditioners, have a virtual limitless combination of 
components, yet DOE requirements seem insensitive to the cost to 
manufacturers to test all of these combinations, instead of testing a 
subset of combinations and estimating the performance of the other 
combinations. Second, there seems to be a trend toward requiring 
manufacturers to pay for third-party testing even though Congress has 
directed DOE to use industry testing and certification programs where 
available and accurate, and OMB directs agencies ``to use voluntary 
consensus standards in lieu of government-unique standards except where 
inconsistent with law or otherwise impractical''. Does the budget 
anticipate DOE working with appliance manufacturers to find ways to 
reverse the trend in the increasing burden from these two DOE testing 
requirements?
    Answer. DOE's current regulations allow for rating of commercial 
heating, ventilation, and air-conditioning (HVAC) equipment based on 
physical testing or the use of computer simulation models. For those 
units that manufacturers elect to test, DOE does not have any third-
party testing or certification requirements; most manufacturers test 
their own products and do not pay for third-party testing. DOE has 
heard concerns from industry that some modifications to DOE's existing 
rating regulations should be considered to better reflect the variety 
of combinations and technologies currently found on the market and to 
help streamline the rating process for manufacturers. DOE has been 
receptive to these concerns and has initiated two separate efforts in 
response.
    First, DOE is currently conducting a rulemaking (initiated in April 
2011) to consider changes to its regulations governing the use of 
simulation methods to estimate product performance for commercial HVAC 
and refrigeration equipment. Second, and most importantly, DOE has 
initiated a negotiated rulemaking to amend the regulations regarding 
ratings and reporting for the commercial HVAC and refrigeration 
industry. DOE understands that there are many considerations and values 
industry input on these issues. DOE accepted nominations for the voting 
members of the negotiated rulemaking working group through the 
announcement of a Federal Register notice published in March 2013. DOE 
received 33 applications from which 25 voting members were selected. 
The certification working group is comprised of members representing 2 
trade organizations, 7 commercial HVAC manufacturers, 4 commercial 
refrigeration manufacturers, 1 commercial heating manufacturer, 3 
commercial water heating manufacturers, 3 energy-efficiency 
organizations, 1 government representative, 1 utility, 2 testing 
laboratories, and 1 independent consultant. The 25 members of the 
working group will vote to represent the views of all interested 
parties during the negotiations. The purpose of the certification 
working group is to undertake a negotiated rulemaking to discuss and, 
if possible, reach consensus on proposed certification and compliance 
requirements for commercial HVAC, water heaters, and refrigeration 
equipment, which would include rating methods, verification programs, 
and certification requirements. DOE's budget reflects full support for 
this working group in hopes of reaching a consensus-based outcome on 
these complex issues.
    Question 17. Voluntary industry standard vs. Government standards: 
Regulatory issues can be addressed through voluntary commitments 
adopted by industry, or that could instead be addressed through 
mandatory regulation adopted by government. I favor non-regulatory 
marketplace approaches when effective in delivering results. Does this 
budget reflect a policy of considering less-costly, voluntary industry 
commitments over mandatory regulatory approaches?
    Answer. The Department is required by statute to set minimum energy 
efficiency standards and develop test procedures for a number of 
residential products and commercial and industrial equipment. The 
Department's FY 2014 budget request represents a balanced approach that 
couples voluntary market partnerships with statutorily mandated energy 
conservation standards. Both mechanisms enable cost-effective, energy 
efficient technologies and techniques to penetrate the market, 
resulting in long-term energy and cost savings by improving the 
performance of homes and buildings across our nation.
    Question 18. Building energy codes: DOE's role in building energy 
code development has been to serve as a technical advisor to the 
states. But DOE also publishes a list of proposed changes it wishes to 
see implemented in some codes, and thus advocates for specific code 
elements. What do you this is the appropriate role for DOE to play in 
standards-setting?
    Answer. DOE is statutorily required to periodically review the 
technical and economic basis of building energy codes, as well as 
participate in the industry processes for their review and 
modification, including seeking adoption of all technologically 
feasible and economically justified energy efficiency measures (42 USC 
6836(b)).
    DOE is also directed to provide technical assistance to states to 
support implementation of state residential and commercial building 
energy efficiency codes (42 USC 6833(d)).
    More information on statutory requirements and the DOE role 
relative to building energy codes can be found at: https://
www.energycodes.gov/about/statutory-requirements.
    Question 19. IECC energy building code: Studies have shown the 2012 
International Energy Conservation Code, or IECC, is approximately 30-40 
percent more energy efficient than the 2006 IECC. I understand that DOE 
considered supporting measures that included more flexibility in the 
code, while maintaining efficiency levels (e.g. reinstating equipment 
tradeoffs), but ultimately withdrew support. Does DOE support standards 
based on performance that will allow builders to make their own product 
choices?
    Answer. DOE participates in industry processes to develop building 
energy codes and standards, such as the International Energy 
Conservation Code (IECC), and supports performance-based compliance 
options. Current provisions in the 2012 IECC target building component 
performance levels, and do not specify a particular product or 
material. For example, insulation applied in wood framed walls is based 
on an R-value (i.e., heat resistance rating), allowing builders to 
choose any material that meets the required performance level. The 2012 
IECC also allows builders to install measures exceeding minimum code 
requirements, which can then be traded against other measures, as 
allowed within the code. To ensure this flexibility is available to all 
builders, DOE provides free automated compliance software, known as 
REScheck and COMcheck, through the Building Energy Codes Program 
website.
    DOE evaluated several concepts for potential submission to the 2015 
IECC, and ultimately did not submit a proposal specifically targeting 
the reinstatement of equipment tradeoffs. The allowance for energy to 
be traded between residential building envelope and mechanical systems 
is a concept that previously existed in the code, but was removed 
following the 2006 IECC via the International Code Council (ICC) code 
development process. In developing proposals for the 2015 IECC, DOE 
solicited public comments on draft code changes. Stakeholder feedback 
raised a number of questions on the pros and cons surrounding a 
reinstatement of equipment tradeoffs within the IECC. Other 
organizations have submitted proposals targeting whole-building energy 
savings and performance-based alternative compliance paths. Proposals 
have been submitted based on modified versions of the former equipment 
tradeoff. The ICC recently published a monograph containing all 
submitted code change proposals for the 2015 IECC (http://
www.iccsafe.org/cs/codes/Pages/12-14-Proposed-Group-B.aspx). The DOE-
submitted proposals for the 2015 IECC, including related analyses and 
public comments received, are available at https://www.energycodes.gov/
development/residential/2015IECC.
    Question 20. ESPCs: Energy Savings Performance Contracts are a 
guaranteed way for the government to save taxpayers' money and reduce 
the deficit by reducing energy waste in federal facilities. Because the 
energy savings are guaranteed by the energy service company performing 
the energy efficiency upgrade, there is no chance that the government 
will be left paying for a project that doesn't perform. The Department 
of Energy has completed ESPCs in 281 federal buildings since 1998, 
saving the Federal Government $7.2 billion dollars in cumulative energy 
savings. Under this budget, what does DOE plan to do to further expand 
the use of ESPCs?
    Answer. The Department of Energy's (DOE), Federal Energy Management 
Program (FEMP) is embarking on a series of activities to streamline 
performance contracting across federal project funding programs and 
expand the use of performance contracting in Federal agencies. This 
effort builds upon the streamlining progress made to date with the 
program and includes ongoing training, a new data effort, as well as a 
new contract standardization effort, with overall goals of making 
performance contracting business as usual.
    A more streamlined process bolstered with better project data and 
personnel training will ultimately lead to Federal agencies seeking to 
do more projects. This is essential to meet important energy 
efficiency, water savings, renewable energy, and greenhouse gas goals.
    Question 21. Water heaters as load management devices: Rural 
electric cooperatives have long operated programs that use large 
electric resistance water heaters to reduce system peaks, store wind 
and hydro energy at night, and assist in frequency control. However, 
DOE has rejected requests to establish a new class for water heaters 
used in this way. Alternatively, on February 2, 2013 DOE published a 
notice of proposed rulemaking on the establishment of a waiver to 
provide for the continued manufacture of large capacity electric water 
heaters for use in demand response programs. The Committee has heard 
concerns form electric co-ops that the proposed waiver would only be 
granted on an annual basis and with strict limitations, providing 
little certainly to manufacturers or utilities operating these 
programs. Will DOE continue support for demand response, and in this 
case of large electric water heaters, work to ensure that DOE reaches a 
solution that is practical and allows electric co-ops and other 
utilities to continue, and to expand, their water heater demand 
response programs?
    Answer. Yes. DOE is currently reviewing all the comments received 
on its proposal to allow for a waiver process for demand response water 
heaters. DOE also met with several external stakeholders on May 3, 
2013, to listen to their particular concerns regarding DOE's proposal.
    Question 22. Green building certification: Some have argues that 
the Department's current system for identifying a green building 
certification system has resulted in the selection of a system that is 
not consensus based, and they are urging that Congress amend section 
433 of EISA to require that any system selected by DOE must be an 
American National Standards Institute (ANSI) standard. Does the 
Department agree that the identification of a green building 
certification system should be limited to only those systems which 
establish ANSI standards? Please explain your reasoning.
    Answer. DOE has not identified a green building certification 
system, nor have we adopted a system for identifying a green building 
certification system. We have published a proposed rule, pursuant to 42 
U.S.C. 6834(a)(3)(D)(i)(III), providing criteria for identifying a 
certification system and level for green buildings that encourages a 
comprehensive and environmentally sound approach to certification of 
green buildings. See 75 FR 29933 (May 28, 2010). As required by 
statute, among the criteria in the proposed rule that a third party 
green building rating systems must provide is an opportunity for 
development and revision of the system through a consensus based 
process if they are to be considered for Federal agency use in meeting 
the proposed rule. See 42 U.S.C. 6834(a)(3)(D(iii))(III) and 75 FR at 
29947. DOE notes that agencies are not required by law or any other 
authority to use a third party green building rating system.
    DOE recognizes that ANSI accreditation can function as an indicator 
of the degree to which a third party green building rating system has 
been developed using consensus-based processes. However, the criteria 
we have outlined in the proposed rule are sufficient to ensure that 
agencies wishing to use a third party green building rating system 
choose only systems that incorporate consensus-based processes in their 
development and revision.
   Responses of Daniel B. Poneman to Questions From Senator Murkowski
    Question 1. Fossil Energy--The Administration and others have 
rightly pointed out that federal R&D spending was at least partly 
responsible for the development of hydraulic fracturing, which has led 
to record levels of oil and gas production in the United States. Yet 
when I look at your budget, research and development for fossil energy 
is cut by over $90 million. What is the rationale for deemphasizing 
innovative oil and gas technology when it is precisely fossil fuels 
that are helping revitalize American industry, boost our exports, and 
create jobs?
    Answer. The development of innovative oil and gas technologies is 
being focused on ensuring that the Federal government's understanding 
of the risks associated with oil and gas development keeps pace with 
advancements in production technology and developing technologies to 
mitigate these risks. For example, DOE has focused on conducting 
research to understand and minimize environmental and safety risks 
associated with hydraulic fracturing, including unconventional resource 
characterization, improved stimulation methods, and the treatment and 
handling of produced water. In addition, NETL researchers are pursuing 
a range of research activities including assessments that integrate 
evaluations of risks to water and air quality, mitigating the impacts 
of development, as well as addressing issues related to induced 
seismicity.
    In addition, the President's FY2014 Budget requested funds to 
conduct laboratory and/or field-based research focused on increasing 
public understanding of methane hydrates in gas-hydrate-bearing areas. 
These public sector-led efforts will be designed to evaluate the 
occurrence, nature, and behavior of naturally-occurring gas hydrates 
and the resulting resource, hazard, and environmental implications.
    Question 2. Oil & Gas Taxes--Once again, the budget request 
proposes to raise taxes on our nation's energy producers by $45 billion 
over the next 10 years. If the Administration is serious about an ``all 
of the above'' energy strategy and reducing our dependence on OPEC oil, 
please explain how eliminating these tax provisions will help achieve 
these goals.
    Answer. The Administration believes that to foster the clean energy 
economy of the future and reduce the Nation's reliance on fossil fuels 
that contribute to climate change, it is appropriate to repeal tax 
provisions that preferentially benefit fossil fuel production. Oil and 
gas subsidies are costly to the American taxpayer and do little to 
reduce energy prices. Removing these inefficient subsidies would reduce 
greenhouse gas emissions and generate $40.7 billion of additional 
revenue over the next 10 years. This $40.7 billion represents only a 
small percentage of domestic oil and gas revenues--about one percent 
over the coming decade. These terminations free up resources to invest 
in clean energy development and production, which is critical to the 
Nation's long-term economic growth and competitiveness.
    Question 3. DOE Funding--Please provide cumulative and year-by-year 
totals for all R&D spending that, since 1975, DOE has allotted to 1) 
shale gas, 2) safety and environmental impacts of hydraulic fracturing, 
3) wind power, and 4) solar power, from the creation of the Department 
to the present. If the Department is unable to provide figures from the 
1970s to the present, please provide figures since 1990.
    Answer. It is appropriate to examine the expenditures of the 
Department in the context of a portfolio of investments, and criteria 
for those investments. Key criteria include whether a public benefit, 
such as reduced pollution, can be expected from the investment and the 
ability and motivation of the industry to make an investment on its 
own. The two graphs* below show the distribution of DOE's Energy R&D 
portfolio over the first 30 years of the Department's history. This 
data does not include funding from FY 2009 to the present including 
emergency appropriations in the American Recovery and Reinvestment Act.
---------------------------------------------------------------------------
    * All graphs have been retained in committee files.
---------------------------------------------------------------------------
    Clearly each of these areas of investment can be further subdivided 
into projects on particular aspects, such as thin film solar or shale 
gas. Over the years, these projects can move between programs and 
accounts and can therefore be difficult to trace through history. The 
Department is happy to provide more detailed information on a specific 
funding area, or set of funding areas, below.
    Question 4. Energy Spending--Collectively--across all federal 
programs and across all federal agencies, from DOE to the extension of 
energy-related tax credits--how much does the President's budget 
request propose to spend on clean energy in FY 2014? Cumulatively 
through FY 2023?
    Answer. DOE does not aggregate information on clean energy spending 
across all federal programs and across all federal agencies. DOE's FY14 
request for clean energy programs is described in the President's 
Budget. Estimated funding for FY 2015 through FY 2023 has not been 
specifically projected. We would be happy to work with your staff to 
answer any specific funding questions on the DOE budget.
    Question 5. One of the main missions of the Office of Nuclear 
Energy is to support R&D of nuclear energy technologies and related 
fuel cycle issues. The Office's budget request reduces the funds 
allocated for these activities by more than $59 million, including the 
zeroing of the Integrated University Program budget that has been 
supporting scholarships and fellowship for nuclear engineering 
students. These are all R&D areas that I highlight and support in my 
Energy 20/20 energy blueprint in order to maintain strong U.S. domestic 
civil nuclear capabilities and our future global competitiveness. Is 
DOE confident that these cuts will not adversely affect the important 
R&D activities carried out by the Office of Nuclear Energy?
    Answer. Yes, DOE is confident the reductions will not adversely 
affect progress on NE priorities. The budget supports higher priority 
work while shifting the focus away from lower priority efforts. There 
is tremendous potential for America to take a leadership role in the 
expansion of safe and sustainable nuclear energy technologies around 
the world. Our fiscal year 2014 budget request reflects the President's 
priorities in this area--supporting the accelerated commercialization 
of small modular reactors, making progress on solutions to the back-end 
of the fuel cycle, making targeted investments in supporting the 
existing fleet of reactors, and maintaining our research and 
development infrastructure. We are committed to working closely with 
NSF as they develop the details of their enhanced National Graduate 
Research Fellowship Program (formerly the NSF Graduate Research 
Fellowship program) and with the National Science and Technology 
Council's Committee on STEM Education (CoSTEM), to help ensure the 
mission needs of DOE for graduate level education and training are met.
    Question 6. With regard to the our international engagement with 
key organizations, such as the IAEA, the NEA and others, that budget 
for that program is being reduced from a very small allocation of 
around $3 million in FY 2013 to $2.5 million in FY 2014. How will this 
decrease impact our international engagements?
    Answer. The $2.5 million requested in FY14 is appropriate and 
sufficient to support the Office of Nuclear Energy's important 
international engagement activities. Our work with organizations such 
as the IAEA, the NEA and the International Framework for Nuclear Energy 
Cooperation, will continue. On the bilateral front, we will continue to 
engage with priority countries. Both technical and administrative 
support provided by our laboratory experts to bilateral activities such 
as the Joint Standing Committees on Nuclear Energy Cooperation with 
Argentina, Brazil, Taiwan, and South Korea and coordination and 
integration support for collaborative fuel cycle and reactor research 
and development efforts with Russia, France, and others be streamlined 
and focused on accomplishing priority goals.
    Question 7. Fossil Energy--The budget documents state that funds 
for the natural gas technologies program will continue to be used for 
R&D related to hydraulic fracturing. This is in addition to funding 
from the Interior Department and EPA. Given scarce federal resources, 
coordinated efforts are important. Please describe DOE's work on this 
issue and how this relates to the work being done by other federal 
agencies with regard to hydraulic fracturing.
    Answer. The tri-agency research plan is still under development. 
The work to date to develop the plan has been very helpful in both 
coordinating the research efforts of the three agencies and developing 
the President's FY 2014 Budget Request. The Department's work in this 
area has focused on developing technologies and best practices to 
address safety and environmental issues associated with hydraulic 
fracturing.
    DOE, the Environmental Protection Agency (EPA), and the United 
States Geological Survey (USGS) will collaborate on research that 
improves our understanding of the impacts of developing our Nation's 
unconventional natural gas resources, and ensure that these resources 
are developed in a safe and environmentally sustainable manner. Through 
enhanced cooperation, the agencies will maximize the quality and 
relevance of this research, enhance synergies between the agencies' 
areas of expertise, and eliminate redundancy.
    Question 8. Geothermal Power--As you know, my home state of Alaska 
has vast geothermal power resources so I am a strong supporter of 
Enhanced Geothermal Systems Research. In the FY 2014 budget request, 
the Department seeks a $23 million increase to $60 million for 
geothermal activities. Please describe the work DOE proposes to do with 
the additional geothermal funding. In addition to EGS, will you also 
fund work related to heat pumps? Will DOE perform work designed to 
reduce the risk and cost of geothermal well drilling? Will DOE perform 
work to better utilizing geothermal cooling and heating in commercial 
buildings and homes?
    Answer. The Department's request for an additional $23 million is 
to expand our efforts to research, develop, and ultimately deploy 
Enhanced Geothermal Systems (EGS). Specifically, the proposed funding 
increase will allow the EGS subprogram to conduct selection and 
preparation of an EGS Field Lab, which aims to achieve the following:

   Promote transformative, high-risk science and engineering 
        that will create a commercial pathway to EGS adoption. EGS 
        technologies would allow us to tap geothermal resources--
        upwards of 100+ GWe, or enough to power 100 million homes--that 
        would be otherwise inaccessible; and would increase the reach 
        of geothermal development in the U.S. beyond primarily the 
        western states.

   A key distinction between existing private-sector led, DOE-
        funded demonstration projects and the proposed DOE-managed EGS 
        Field Lab, is the DOE's ability to develop, test, and 
        comprehensively monitor an engineered reservoir at a scale and 
        integrity that has not yet been demonstrated, using new 
        technologies in pre-commercial stages of development. The EGS 
        Field Lab effort will pave the way to rigorous and reproducible 
        approaches to EGS that will significantly reduce industry 
        development risk.

   FY14 funds for the EGS Field Lab will be used for the 
        selection of the EGS Field Lab site and an independent operator 
        responsible for field implementation; initiation of the 
        permitting process and any additional required regulatory 
        steps; and initial site instrumentation for baseline data 
        collection. This major initiative is an integral part of the 
        subprogram's strategy to facilitate commercialization of EGS 
        technology.

    DOE's funding request also targets efforts to reduce the risk and 
cost of geothermal well drilling:

   The EGS sub-program will address drilling in two areas: 1) 
        the proposed EGS Field Lab will conduct cutting-edge research 
        to reduce the risk and cost of geothermal well drilling, among 
        other activities; and 2) A proposed FY14 EGS R&D funding 
        announcement would include field scale R&D on new drilling 
        technologies and techniques to address challenges in the high-
        temperature, hard-rock environments typical of geothermal 
        reservoirs.

   The Innovative Exploration Technologies sub-program will aim 
        in FY14 to fund competitively- selected projects that collect 
        new data and/or apply new analysis methods to indicate 
        geothermal favorability, which would improve drilling success 
        rates and thereby reduce the risk and cost of drilling. 
        Drilling fewer unsuccessful wells has a direct impact on 
        project economics. DOE considers improving the likelihood of 
        finding commercial geothermal fields to be a key activity of 
        the program.

          With regard to work to better utilize geothermal cooling and 
        heating in commercial buildings and homes, we consider the EGS 
        and Innovative Exploration Technologies portfolios to have 
        large potential impacts in this area; for example, improved 
        exploration analysis will allow better identification and 
        quantification of geothermal potential throughout the country, 
        including in non-traditional geothermal settings, and the EGS 
        Field Lab and R&D portfolios offer the real potential to 
        determine ways in which to make deep geothermal viable for both 
        new power generation, and for direct use applications.

    Question 9. Renewable Energy--One prominently featured in the 
President's FY 2014 proposed budget is a ``doubling of renewable 
electricity production from wind, solar and geothermal by 2020.'' Why 
were these three forms of renewable electricity the only selected? How 
does the administration plan to achieve this doubling, and what is the 
ultimate goal for wind, solar and geothermal, as a percentage of total 
renewable electricity? According to EIA's 2012 data, wind, solar and 
geothermal generate about 4 percent of electricity in the U.S. Is the 
the goal therefore to generate 9 percent of U.S. electricity from these 
three sources?
    Answer. The goal to double renewable electricity from wind, solar, 
and geothermal resources by 2020 is based on electricity production and 
not based on the fraction of electricity production from these 
resources relative to electricity production from all energy resources. 
At the end of 2008, EIA reports electricity production from wind, solar 
and geothermal resources at 72 billion kWh. The first doubling goal, 
reached in early 2012, is 144 billion kWh; and subsequently, the second 
doubling goal is 288 billion kWh. The EIA AEO 2013 reference case 
projects total electricity production from all energy resources at 
4,389 billion kWh in 2020. While the exact percentage reached will vary 
based on electricity demand in this future year; wind, solar, and 
geothermal resources would contribute 7 percent of total electricity 
production from all sources, if the second doubling goal is reached in 
2020 and the EIA AEO 2013 projected value for total electricity 
production is realized.
    To meet the proximal goal of doubling renewables by 2020, the 
administration has implemented and proposed a number of mechanisms:\1\
---------------------------------------------------------------------------
    \1\ Blueprint for a Secure Energy Future (2011); The Blueprint for 
a Secure Energy Future Progress Report (2012); Fact Sheet: President 
Obama's Blueprint for a Clean and Secure Energy Future (2013; http://
www.whitehouse.gov/the-press-office/2013/03/15/fact-sheet-president-
obama-s-blueprint-clean-and-secure- energy-future)

          1. The Section 1603 renewable energy grant program under the 
        Recovery Act was an essential tool in deploying renewable 
        energy resources in the U.S., successfully increasing U.S. 
        manufacturing and supporting tens of thousands of new jobs for 
        Americans.
          2. Clean Energy R&D through institutions such as ARPA-E and 
        Energy Innovation Hubs have invested in several cutting-edge 
        projects in areas ranging from smart grid technology to battery 
        improvements, which can help support increased deployment of 
        renewables. EERE's contributions to research and develop of 
        renewable energy technologies have resulted in significant 
        decreases in price (e.g. U.S. photovoltaic system prices 
        declined 48 percent from 1998 to 2011) and increases in 
        deployment (e.g. PV installations increased twenty-fold between 
        January 2008 and January 2013).
          3. Promotion of renewable energy in rural America through the 
        USDA Rural Utilities Service has funded over 240MW of renewable 
        energy projects.
          4. Permitting clean energy on America's public lands led to 
        10,000 MW of additional renewable generation capacity thanks to 
        permitting efforts by the Department of Interior, a process 
        which continues to become more robust.
          5. Permitting of offshore areas through the Department of the 
        Interior's ``Smart from the Start'' initiative has facilitated 
        the pending construction of the Cape Wind offshore wind project 
        and paved the way for additional offshore wind development in 
        the Atlantic in the coming years.
          6. Making the energy Production Tax Credit permanent and 
        refundable will provide incentive and certainty for investments 
        in new clean energy. 7. Ultimately, the creation of a Clean 
        Energy Standard which would double the share of electricity 
        from clean energy sources to 80 percent by 2035 from a wide 
        variety of clean energy sources, including renewable energy 
        sources like wind, solar, biomass, and hydropower; nuclear 
        power; efficient natural gas; and coal with CCS. Creation of a 
        domestic market for innovative clean energy technologies will 
        unleash the ingenuity of our entrepreneurs and ensure that 
        America leads the world in clean energy.

    Question 10. Renewable Energy Deployment Grants--Back in 2007 
Congress passed two provisions that I sponsored in the Energy 
Independence and Security Act--section 803 for all renewables and 
section 625 for geothermal projects in high-cost areas--that provided 
grants of up to 50 percent of aid in the actual construction of 
renewable energy projects. Given the Administration's interest in 
promoting low-carbon energy production, why hasn't the Department ever 
sought funding for either of these two programs?
    Answer. Section 803, titled ``Renewable Energy Deployment,'' of the 
Energy Independence and Security Act (EISA) allows 50:50 cost share of 
renewable energy construction grants. To date, the Department has not 
requested funding for Section 803. In alignment with mission, the 
Department believes that investment in research and development will 
provide the maximum rate of return on taxpayer investment as compared 
to more expensive, location-specific demonstration and deployment 
projects. For instance, EERE's total FY 2014 budget request for 
renewable electricity is $616 million. Even if this amount were matched 
by private cost share, it would be dwarfed in comparison to what is 
invested in building renewable energy projects with other policy 
incentives. However, the Department will look to sponsor, when 
appropriate, demonstration projects where applying this authority to 
validate new technology performance and economics in high cost areas 
could spur follow-on private investment and be replicated at scale.
    Some of the other Federal government incentives and financing 
opportunities for commercializing new technologies and for constructing 
renewable energy plants include the DOE and USDA loan guarantee 
programs, Modified Accelerated Cost Recovery System depreciation 
schedule, production and investment tax credits and the Treasury 
Section 1603 grants in lieu of tax credit program. For example, under 
the American Recovery and Reinvestment Act, the Section 1603 Treasury 
grant program has incentivized over 77,000 projects yielding over 27 GW 
of renewable energy capacity when complete and $63 billion in total 
renewable energy investment by the government and private sectors. As 
the Treasury grant program and tax credits expire, DOE looks forward to 
working with Congress and other government agencies to determine the 
best policy mechanisms and existing authorities to incentivize private 
investment in building new renewable energy projects.
    Question 11. Vehicle Spending--Please list the total funding 
requested within the President's FY 2014 budget for each of the 
following vehicle technologies. Please include (but also distinguish 
between) all funding requested by DOE as well as other federal 
departments:

          a. Electric vehicles (including batteries and electric drive 
        components)
          b. Fuel cell vehicles
          c. Natural gas vehicles
          d. Other vehicle technologies
          e. All vehicle technologies (combined total)

    Answer. DOE does not aggregate information on vehicle technologies 
spending across all federal programs and across all federal agencies. 
The President's FY 2014 budget request for Energy Efficiency and 
Renewable Energy (EERE) includes funds for the Vehicle Technologies 
Program (total request: $575 million) and the Fuel Cell Technologies 
Program (total request: $100 million). Funds requested for EERE for the 
specific categories mentioned above are as follows:

          a. Electric vehicles (including batteries and electric drive 
        components): $240.2 million (within Vehicle Technologies--
        $170.5 million for Battery/Energy Storage, $69.7 million for 
        Advanced Power Electronics and Electric Motors R&D). It should 
        be noted that work under ``other vehicle technologies'' (item d 
        below), such as lightweight materials, support vehicles of all 
        types, including electric vehicles. In addition, within the 
        $118.8 million budget request for Vehicle Technologies 
        Program's Outreach, Deployment and Analysis/Vehicle 
        Technologies Deployment, $90 million will support new 
        Alternative Fuel Vehicle Community Partner projects and $10 
        million will support a new Clean Cities funding opportunity. 
        For both of these deployment efforts, competitively awarded 
        projects with local communities and partners will deploy 
        multiple fuels and technologies. Although it is expected that 
        some projects will include electric vehicles, DOE does not 
        predetermine the level of available funding for each vehicle or 
        fuel type. The amount of funding will depend on the proposals 
        submitted and projects selected for award on a competitive 
        basis.
          b. Fuel cell vehicles: $45 million (within Hydrogen and Fuel 
        Cell Technologies--primarily supports R&D of fuel cell 
        technologies for automotive applications, cross-cutting 
        activities such as codes and standards, and demonstration 
        efforts to validate technology advances). The total Hydrogen 
        and Fuel Cell Technologies budget request is $100 million, 
        which includes R&D for hydrogen production, delivery, storage, 
        and early market applications.
          c. Natural gas vehicles: Natural gas vehicles are supported 
        under the Vehicle Technologies Program's Outreach, Deployment 
        and Analysis/Vehicle Technologies Deployment activity. Within 
        the $118.8 million budget request for Vehicle Technologies 
        Deployment, $90 million will support new Alternative Fuel 
        Vehicle Community Partner projects and $10 million will support 
        a new Clean Cities funding opportunity. For both of these 
        deployment efforts, competitively awarded projects with local 
        communities and partners will deploy multiple fuels and 
        technologies. Although it is expected that some projects will 
        include natural gas vehicles, DOE does not predetermine the 
        level of available funding for each vehicle or fuel type. The 
        amount of funding will depend on the proposals submitted and 
        projects selected for award on a competitive basis.
          d. Other vehicle technologies: Additional Vehicle 
        Technologies Program activities include $70 million for 
        Vehicles and Systems Simulation & Testing, $59.5 million for 
        Advanced Combustion Engine R&D, $59.5 million for Materials 
        Technologies, $17.5 million for Fuel and Lubricant 
        Technologies, and $26.3 million for other Outreach, Deployment 
        and Analysis activities.
          e. All vehicle technologies (combined total): $620 million 
        (includes all activities noted above).

    Question 12. Vehicle Infrastructure--How much of the Department's 
vehicle-related spending request would be applied to infrastructure 
R&D? Please describe these activities. Please include a total dollar 
amount and a percentage of overall spending.
    Answer. Within Energy Efficiency and Renewable Energy, FY 2014 
funding for vehicle-related infrastructure R&D is requested under the 
Vehicle Technologies Program/Vehicle and Systems Simulation & Testing 
(VSST) Subprogram to support the following:

   Approximately $1.2 million in the Lab & Field Evaluation 
        activity for data collection and analysis from deployed 
        electric vehicle (EV) charging infrastructure.
   Approximately $3.1 million in the Codes & Standards activity 
        for support of the development of codes and standards that 
        govern EV/grid communications, interoperability, and the 
        interface between vehicles and charging infrastructure.
   Approximately $1.2 million in the Vehicle Systems 
        Optimization activity to investigate enabling technologies such 
        as fast-charging and wireless charging technologies.
   $20.0 million for the Grid Integration Initiative.

    The total funding for these activities is approximately $25.5 
million or approximately 36 percent of the $70 million request for VSST 
(4 percent of the total request for Vehicle Technologies).
    Question 13. EV Grand Everywhere Challenge--

    a. How much finding is being requested for the activities within 
this initiative?
    b. Why is the challenge focused on one technology, with others 
excluded?
    c. Please describe the Department's intended spending on batteries 
for electric vehicles under the FY 2014 request. What percentage of 
total funding would be allocated to lithium-ion batteries, versus 
alternative chemistries?
    d. Please provide an update on the President's previous goal of 1 
million electric vehicles on the road by 2015. Does the administration 
continue to believe that goal is achievable?

    Answer a. In FY 2014, the Energy Efficiency and Renewable Energy 
budget request for the Vehicle Technologies Program includes 
approximately $325.6 million for work that supports the EV Everywhere 
Grand Challenge. This includes $240.2 million for Batteries and 
Electric Drive Technology, $32.9 million for Vehicle and Systems 
Simulation & Testing, and $52.5 million for Materials Technology.
    b. The EV Everywhere Grand Challenge is but one element in the 
Administration's ``all-of- the-above'' approach to energy--EERE's 
broader, overall R&D portfolio includes multiple vehicle technologies, 
such as advanced combustion engines, natural gas and alternative fuels, 
and hydrogen fuel cells, as well as electric drive batteries and 
vehicles. The Department's Quadrennial Technology Review identified 
vehicle electrification as an essential part of the nation's 
transportation energy strategy, and the automotive industry is already 
moving in this direction. The EV Everywhere Grand Challenge helps 
focus, coordinate, and leverage vehicle electrification activities 
within EERE. It is also important to note that within the EV Everywhere 
Grand Challenge, there are many technologies being developed--such as 
lightweight materials and advanced climate control--that are directly 
applicable to both conventional and alternative vehicles.
    c. Within the Vehicle Technologies Program, the FY 2014 battery R&D 
activity will focus on developing technologies to reduce battery costs 
from their current $500/kWh to $125/kWh by 2022. In addition, funds 
will support vehicle design optimization and performance improvements 
such as reducing battery size and weight.

    Current lithium ion battery technology is far from its theoretical 
energy density limit, and with advances in lithium ion technology, 
there is a near-term opportunity to more than double the battery pack 
energy density from 100 Wh/kg to 250 Wh/kg. Specific technologies of 
interest include (but are not limited to) second generation lithium ion 
batteries with high voltage (5V) and/or high capacity (>300mAh/g) 
cathode materials, third generation lithium ion batteries with advanced 
metal alloy and composite anodes such as silicon carbon (which offer 2-
4 times the capacity as today's graphite anodes), and high voltage and 
solid polymer composite electrolytes. FY 2014 funds will further expand 
battery research in beyond-lithium-ion technologies such as solid-state 
(lithium metal with solid electrolytes), lithium sulfur batteries, and 
lithium air batteries, all of which promise energy densities two to 
five times that of traditional lithium ion. Research will focus on 
overcoming challenges related to cycle life, power density, energy 
efficiency, and other critical performance parameters that currently 
stand in the way of commercial introduction. Breakthrough innovation at 
a reduced cost will be required for these new battery technologies to 
enter the PEV market. In addition, FY 2014 funds would support an 
Incubator activity, through which DOE will partner with businesses and 
researchers to bring new and impactful, ``off-roadmap'' technologies 
into the EERE battery portfolio.
    In FY 2013, the split between lithium ion and non-lithium ion 
technologies is 90 percent to 10 percent, respectively. In FY 2014, the 
percentage of non-lithium-ion work would increase slightly, due to a 
planned competitive funding opportunity announcement for projects in 
this area. Until the projects are proposed and selected, however, it is 
impossible to provide a definitive split.
    It should be noted that Vehicle Technologies' beyond-lithium work 
is coordinated with and complemented by other investments in beyond-
lithium technologies across the Department, including the Energy 
Storage Hub and Energy Frontier Research Centers in the Office of 
Science as well as related work in ARPA-E.
    d. The goal of being the first country in the world to have one 
million electric vehicles on the road by 2015 is an ambitious milestone 
on the path to the many millions of electric drive vehicles needed to 
move U.S. transportation away from dependence on oil. Whether or not we 
reach one million vehicles by 2015 is less important than maintaining 
the growth trend of the plug-in electric vehicle (PEV) market.

    Although initially slower than projected, the PEV market is growing 
quickly. U.S. PEV sales increased by 200 percent in 2012 and are 
climbing at a faster rate after introduction relative to hybrid 
electric vehicles over a comparable span of time after their 
introduction . . .  A PEV beat all other vehicle models in Consumer 
Reports' owner satisfaction survey for the second time (Chevrolet 
Volt), and PEVs have won critical acclaim with awards such as 2011 
World Car of the Year (Nissan Leaf), 2013 Motor Trend Car of the Year 
(Tesla Model S) and 2012 Green Car Vision Award Winner (Ford C-MAX 
Energi).
    The number of vehicle models available is on the rise--fifteen new 
hybrid, plug-in hybrid, and all-electric vehicles are expected in model 
year 2013 and 2014 from a number of manufacturers. Improved performance 
and a broader range of choices of these cars will encourage additional 
purchases as more consumers and businesses find PEVs that match their 
needs and budgets. Driving on electricity is cheaper than driving on 
gasoline--roughly comparable to $1 per gallon of gasoline equivalent--
and the next generation will bring even bigger savings.
    It will take the adoption of many millions of electric vehicles by 
consumers to truly transform our transportation sector and 
significantly reduce our dependence on petroleum. As such, we need to 
continue to pursue the research and development needed to further 
reduce cost and improve performance--key aspects of the EV Everywhere 
Grand Challenge.
    Question 14. Hydrogen + Fuel Cells--This is one of just two 
accounts that are cut within the EERE budget, which grows by nearly 56 
percent overall. Please explain why it is appropriate for the hydrogen 
and fuel cells budget to be reduced--especially while the larger 
vehicle technologies program budget request increases by more than $250 
million, largely for electric vehicles that are already being sold 
commercially.
    Answer. The fiscal year 2014 budget request for hydrogen and fuel 
cell technologies reflects the sustained commitment by EERE for 
hydrogen and fuel cells with a budget of $100 million. The Department 
recognizes that hydrogen from renewable or carbon-free resources will 
deliver the maximum benefit in terms of greenhouse gas reductions. 
Funding in 2014 includes activities to address the critical challenge 
of low cost hydrogen, focusing on renewable and low-carbon 
technologies. In addition, activities in Vehicle Technologies such as 
light-weighting and batteries will also be beneficial for fuel cell 
electric vehicles.
    Question 15. ATVM Program--
    Question 15a. How many applications are currently pending for the 
ATVM direct loan program?
    Answer. 15a. There are currently no ATVM loan program applications 
pending.
    Question 15b. How many of those applications are in active review?
    Answer. 15b. There are currently no ATVM loan program applications 
in active review.
    Question 15c. How many applications does the Department anticipate 
completing before the end of FY 2013?
    Answer. 15c. While it is possible the Department may receive an 
application this fiscal year, at this time the Department does not 
anticipate completing any ATVM loan applications that might yet be 
received by the end of FY 2013.
    Question 15d. How do the requirements of current CAFE standards 
compare to the baseline standards that DOE uses to determine 
eligibility for loans under this program?
    Answer 15d. In the ATVM program, in order for a vehicle manufacture 
to be an eligible applicant, the adjusted average fuel economy of its 
light duty fleet in the most recent model year, must be equal to or 
greater than their 2005 (base-year) average and in order for a vehicle 
manufacturer's project to be eligible, the vehicle which is the subject 
of the application must be an ``Advanced Technology Vehicle''; meaning 
the vehicle meets or exceeds 125 percent of the 2005 (base-year) 
average fuel economy for vehicles with substantially similar 
attributes. These substantially similar attributes are based on 
attributes such as EPA vehicle class, interior passenger & cargo 
volume, and power to weight ratio. The metric for fuel economy that 
ATVM uses to determine eligibility ensures that the manufacturer's 
corporate average fuel economy performance will exceed the light duty 
CAFE standards.
    Question 15e. Please provide a detailed explanation of the spending 
of funds appropriated to this program in FY 2012.
    Answer. 15e. The ATVM program was appropriated $6 million in FY 
2012. Below is a table detailing LPO spending to date for the ATVM 
program, broken out according to the Programs' divisions:



      
    Question 15f. Please provide a detailed justification for the $6 
million requested for this program for FY 2014.
    Answer. 15f. Please see the FY 2014 Congressional Justification. 
Administrative expenses are expected to be largely consistent with FY 
2012 actuals.
    Question 15g. Please describe any legislative improvements the 
administration believes are appropriate for this program.
    Answer. 15g. The Department is unaware of any Administration 
legislative proposals regarding the ATVM program authorities.
    Question 15h. Does the administration continue to believe that the 
auto industry should have its own, exclusive federal loan program?
    Answer. 15h. As the Loan Programs Office is not a policy making 
program, it has not formed a view on this topic.
    Question 16. Smart Grid--The FY 2014 proposed budget calls for a 
37.9 percent decrease from FY 2012 funding levels. Have all the 
stimulus funds targeted for Smart Grid been expended? The budget 
documents note that the funding will be used, among other purposes, for 
``Smart Grid standards and protocols for increased interoperability.'' 
Please explain. Are these the smart grid interoperability standards 
called for by Congress in the 2007 Energy Independence and Security 
Act? Has the Department compiled a comprehensive report on the results 
of the Smart Grid activities undertaken as a result of the Stimulus 
Act? If so, please provide it. If not, does it plan to do so?
    Answer. As of the end of April 2013, $3.7 billion (82 percent) of 
the $4.5 billion that was provided for Electricity Delivery and Energy 
Reliability by the American Recovery and Reinvestment Act (ARRA) have 
been expended. For the Smart Grid Investment Grant and Smart Grid 
Demonstration Programs, a total of nearly $3.5 billion in payments have 
been awarded to funding recipients to date. This amount represents 83 
percent of the $4.2 billion in funds allocated to these two programs. 
The ARRA-funded projects are on track to complete and expend funds by 
FY 2015.
    The Department's FY 2014 budget request includes funds for the 
``smart grid standards and protocols for increased interoperability,'' 
which will be used to develop test protocols and conduct pre-standard 
testing on interoperable interconnection standards for distributed 
energy resources (DER). The DER interconnection standards are a major 
component of the smart grid interoperability standards stipulated in 
the 2007 Energy Independence and Security Act (EISA). DOE funding will 
directly support needs identified by the DER Interconnection Standards 
Subgroup under the industry-led Smart Grid Interoperability Panel, 
which was established pursuant to EISA.
    In addition, the Department is working closely with the recipients 
of ARRA funding to determine the impacts and benefits of the smart grid 
technologies that are being deployed, which will inform the industry, 
its regulators and other stakeholders. These efforts will continue 
through FY 2015 as the technology is deployed and tested. To date, six 
DOE reports have been issued and may be found at www.energy.gov/OE and 
www.smartgrid.gov. They are:

   ``Demand Reductions from the Application of Advanced 
        Metering Infrastructure, pricing Programs and Customer-Based 
        Systems--Initial Results,'' (December 2012),
   ``Operations and Maintenance Savings from Advanced Metering 
        Infrastructure,'' (December 2012),
   ``Reliability Improvements from the Application of 
        Distribution Automation Technologies--Initial Results,'' 
        (December 2012),
   ``Application of Automated Controls for Voltage and Reactive 
        Power Management.'' (December 2012),
   ``Smart Grid Investment Grant Program, Progress Report,'' 
        (July 2012), and
   ``Economic Impact of Recovery Act Investments in the Smart 
        Grid,'' (April 2013)

    DOE plans to issue additional reports that more fully describe the 
application, costs, and benefits of the technology, as well as the 
progress being made in these programs. In addition, DOE will issue 
reports that examine the factors affecting the enrollment, response, 
and retention of consumers in programs applying dynamic prices to their 
customers. The recipients involved in these consumer behavior studies 
are also issuing their respective reports, which are being posted on 
http://www.smartgrid.gov.
    Question 17. Electricity Systems Hub--the FY 2014 budget request 
seeks to establish a new $20 million Electricity Systems Hub to address 
``fundamental science, technology, economic, and policy issues that 
affect our ability to achieve a seamless and modernized grid.'' Is this 
type of research already being performed by the federal government? Why 
is a new hub necessary?
    Answer. The Electricity Systems Hub will address the science, 
technology, economic, and policy issues located at the critical 
interface between transmission and distribution. This nexus of power 
flows, information flows, markets, and regulation will need to be made 
seamless to accelerate grid modernization. For example, customers with 
microgrids or distributed resources will not be able to participate in 
wholesale markets for electricity or services without new technologies, 
transactions, and regulations that ensure equity, safety, and system 
reliability.
    While the Federal government has undertaken some research looking 
at aspects of these issues, the integrated nature of the grid 
necessitates a multidisciplinary, holistic perspective to effectively 
develop solutions. Regional diversity in resources, markets, and 
policies also presents unique challenges that are best addressed 
through an integrated systems approach. A concerted effort at the Hub 
will enable many grid activities at the Department to come to a focal 
point and provide a platform for demonstrating and testing new 
technologies and concepts.
    Question 18. National Electricity Delivery--the FY 2014 budget 
calls for $6 million for this office (previously called the Permitting, 
Siting, and Analysis Program) and notes that in FY 2014, NED plans to 
``streamline siting of transmission facilities on Federal lands by 
leading the development of a pre- application process to encourage 
early coordination between Federal agencies and potential applicants.'' 
How does this new initiative differ than previous attempts by this 
Administration to streamline transmission siting on Federal lands?
    Answer. The FY 2014 budget request for the National Electricity 
Delivery program (NED) is not for any new initiative; rather, the 
budget request supports on-going activities, which include a multi-year 
effort by the Department to comply with existing obligations under 
Section 1221(a) of the Energy Policy Act of 2005 and Section 216 to the 
Federal Power Act (FPA). Specifically, Section 216(h) of the FPA 
directs DOE to coordinate all applicable Federal authorizations and 
related environmental reviews required for siting an electric 
transmission on Federal lands. NED's on-going efforts to promote and 
systematically address coordination on transmission permitting and 
review processes support a goal to avoid duplicative Federal reviews, 
and provide a transparent, consistent, and predictable path for both 
project sponsors and affected communities.
    To date, NED has been engaged in a number of activities intended to 
facilitate improvements to the review and siting coordination across 
the Federal government. In FY 2010, NED initiated efforts to streamline 
the permitting process for new electric transmission systems on Federal 
lands with the development and execution of a 9-agency Memorandum of 
Understanding (MOU) that establishes a framework for early Federal 
cooperation to expedite and simplify building of transmission lines on 
Federal lands. The 2009 MOU canbe found at: http://energy.gov/oe/
downloads/memorandum-understanding-regarding-coordination-federal-
agency-review-electric. In December 2011, NED also published a rule to 
implement the 2009 interagency MOU.
    Further, as a part of this interagency collaboration, DOE was 
charged with creating an online dashboard to track the permitting 
status of transmission projects under the auspices of the 2009 MOU. In 
response, NED facilitated the development of, and continues to 
maintain, a publicly-available website to track all critical elements 
in the Federal review process for qualifying transmission projects. 
This online dashboard serves as a publicly-available database 
containing pertinent project information, including but not limited to 
the physical aspects of the proposed line, lead agency information, 
required permits, and project schedules. This online tracking tool can 
be found at: http://trackingsystem.nisc-llc.com/etrans/utility/
Search.seam.
    Many improvements have been achieved through the 2009 MOU and DOE's 
December 2011 final rule,. The FY 2014 budget request provides the 
necessary support for NED to continue to act as the Departmental lead 
for the purposes of coordinating and tracking these authorizations, 
including activities to revise and refine regulations that directly 
support streamlined reviews and determinations for entities seeking 
permits, special use authorizations, certifications, opinions, or other 
approvals required under Federal law to site electric transmission 
facilities.
    Question 19. Cybersecurity for Energy Delivery Systems--the 
Department seeks a 31 percent increase for its cybersecurity efforts 
and notes that its request seeks ``to help the energy sector cost 
effectively manage cybersecurity risks to increase the resiliency of 
the energy systems.'' Please explain and highlight how utility costs 
for cybersecurity efforts are factored in for consideration.
    Answer. While Cybersecurity for Energy Delivery (CEDS) program in 
the Department's Office of Electricity Delivery and Energy Reliability 
(OE) eases the transition to practice of cybersecurity capabilities by 
decreasing up-front R&D costs, most importantly OE engages energy 
sector cyber-asset vendors and utility end users at the very beginning 
of R&D projects so that the developed capability respects the cost 
constraints that utilities must accommodate throughout installation, 
operation and maintenance. The capability must be cost effective--
otherwise it would not successfully transition to practice in the 
energy sector, which is the ultimate goal of all OE-funded R&D efforts.
    The funding increase will advance cyber risk analysis and 
information sharing capabilities. This includes expansion of the 
Electricity Subsector Cybersecurity Capabilities Maturity Model to 
include the Oil and Natural Gas Subsector in an effort to engage more 
energy sector participants through facilitated self assessments, and to 
continue to work with industry to implement a framework for the 
analysis and appropriate sharing of assessment results to create 
cybersecurity capability benchmarks. OE is working to manage and reduce 
the risk of energy disruptions due to cyber attacks which includes the 
need to keep costs low for utilities seeking to improve their 
cybersecurity posture.
    Question 20. PMAs--In its FY 2014 budget request materials, DOE 
notes that the four Power Marketing administrations ``sell electricity 
primarily generated by federally owned hydropower projects,'' giving 
preference to public entities and electric cooperatives. The budget 
highlight materials further note on page 54 that ``The PMAs also 
facilitate the Department's efforts to transform the Nation's energy 
system and secure U.S. leadership in clean energy technologies in 
promoting the development of higher capacity, more expansive U.S. 
energy infrastructure to support the development and delivery of 
renewable resources.'' Please provide the legal justification for this 
assertion. Does DOE expect the PMA preference customers to pay for its 
efforts ``to transform the Nation's energy system and secure U.S. 
leadership in clean energy technologies''? If not, how does the 
Department propose to fund such an effort?
    Answer. The language identified above is a quote taken from DOE's 
2011 Strategic Plan. The PMAs ``facilitate'' the Department's efforts 
in the sense that they are complementary to broader DOE strategic 
goals. Specifically, the PMAs are maintaining and modernizing its 
facilities and partnering with industry to expand transmission 
infrastructure to ensure flexible and reliable operations--which as 
indicated in the budget highlight materials--accommodate industry 
change, interconnections and increasing interest in renewable resources 
as well as help deliver sources of renewable energy. These actions are 
consistent with the statutory obligation of the PMAs to market federal 
hydropower to their customers at the lowest possible cost consistent 
with sound business principles.
    Question 21. Advanced Manufacturing--The Advanced Manufacturing 
Office, formerly known as the Industrial Technologies Program, receives 
about a 224 percent increase in funding over FY 2012 levels (from $112 
million to $364 million). Please detail why such an increase has been 
proposed and what authorities will be used to fulfill the mission of 
the new Advanced Manufacturing Office.
    Answer. The increased funding for AMO will support the U.S. 
manufacturing industry's efforts to compete and will focus on three 
main applied research, development, and deployment efforts that:

   Invest in research and development (R&D) projects focused on 
        foundational manufacturing processes and materials. These 
        projects will address core technical issues for foundational 
        technologies that will potentially enable U.S. manufacturers to 
        realize significant gains in energy productivity, environmental 
        performance, product yield, and economic growth.

   Support the establishment of approximately three clean 
        energy manufacturing innovation institutes to help bridge the 
        gap between research and development and the marketplace. The 
        institutes are intended to provide researchers from small and 
        medium-sized enterprises, as well as larger businesses, timely, 
        affordable access to physical and virtual tools, and to develop 
        and demonstrate new materials and critical processes to advance 
        the use of clean energy manufacturing technologies for 
        industry. DOE is planning to invest between approximately $70M 
        and $120M into each of these Institutes over the next 5 to 7 
        years, depending upon the magnitude of the opportunity, 
        maturity, and capital intensity of the technology; scope of the 
        focus area; and degree of non-Federal cost-sharing above a 1:1 
        ratio. DOE plans to fully fund each of these Institutes up 
        front, depending on the availability of funds and quality of 
        the proposals. These Institutes are in response to 
        recommendations from the Advanced Manufacturing Partnership's 
        Steering Committee and the President's Council of Advisors on 
        Science and Technology, as set forth in their July 2012 
        ``Report to the President on Capturing Competitive Advantage in 
        Advanced Manufacturing.'' The recommendations include creating 
        a fertile environment for innovation through robust support for 
        basic research; increasing funding for the research and 
        development of top cross-cutting technologies that are vital to 
        advanced manufacturing; establishing a network of Manufacturing 
        Innovation Institutes (MIIs) as a public-private partnership to 
        foster regional ecosystems in advanced manufacturing 
        technologies, particularly for the more than 300,000 small and 
        medium-sized enterprises, which often lack adequate technical 
        resources; deepening university and industry collaboration; 
        building excitement for and interest in manufacturing careers; 
        and developing a high-skilled workforce through hands-on 
        ``training centers'' and course development for universities 
        and community colleges.

   Increase efforts to work with industry to facilitate the 
        adoption of technologies through technical assistance for 
        industry that provides them with the information and tools to 
        support adopting these advanced energy efficiency technologies 
        in their existing facilities.

    Generally, the following public laws have been cited providing 
authorization for Advanced Manufacturing Office (AMO) activities..

   P.L. 95-91, ``U.S. Department of Energy Organization Act'' 
        (1977)
   P.L. 102-486, ``Energy Policy Act of 1992''
   P.L. 109-58, ``Energy Policy Act of 1995''
   P.L. 110-140, ``Energy Independence and Security Act of 
        2007''
   PL-112-210, ``American Energy Manufacturing Technical 
        Corrections Act'' (2012)

    Specific provisions, with the corresponding U.S. Code citation are 
provided below along with any applicable time limitation. Excerpts of 
the statutes are also provided for additional reference:

   42 USC Sec.  17111(b)--The Secretary shall establish a 
        program under which the Secretary, in cooperation with energy-
        intensive industries\2\ and national industry trade 
        associations representing the energy-intensive industries, 
        shall support, research, develop, and promote the use of new 
        materials processes, technologies, and techniques to optimize 
        energy efficiency and the economic competitiveness of the 
        United States industrial and commercial sectors.
---------------------------------------------------------------------------
    \2\ For the purpose of this provision ``energy-intensive 
industries'' is defined as an industry that uses significant quantities 
of energy as part of its primary economic activities, including--
information technology, consumer product manufacturing, food 
processing, materials manufacturers, and other energy-intensive 
industries, as determined by the Secretary. (See, 42 USC 17111(a))
---------------------------------------------------------------------------
   42 USC Sec.  17111(c)(1)--As part of the program, the 
        Secretary shall establish energy efficiency partnerships 
        between the Secretary and eligible entities to conduct research 
        on, develop, and demonstrate new processes, technologies, and 
        operating practices and techniques to significantly improve the 
        energy efficiency of equipment and processes used by energy-
        intensive industries . . . 
   P.L. 112-210, Section 7(b)(2)--The Secretary, in 
        coordination with the industrial sector and other stakeholders, 
        shall conduct a study of the following: (A) The legal, 
        regulatory, and economic barriers to the deployment of 
        industrial energy efficiency in all electricity markets[.]42 
        USC Sec.  17111(e)--The Secretary shall provide funding to 
        institutions of higher education-based industrial research and 
        assessment centers, whose purpose shall be-(1) to identify 
        opportunities for optimizing energy efficiency and 
        environmental performance; (2) to promote applications of 
        emerging concepts and technologies in small- and medium-sized 
        manufacturers; (3) to promote research and development for the 
        use of alternative energy sources to supply heat, power, and 
        new feedstocks for energy-intensive industries; (4) to 
        coordinate with appropriate Federal and State research offices, 
        and provide a clearinghouse for industrial process and energy 
        efficiency technical assistance resources; and (5) to 
        coordinate with State-accredited technical training centers and 
        community colleges, while ensuring appropriate services to all 
        regions of the United States.
   42 USC Sec.  15811(b)--The Secretary may enter into 
        voluntary agreements with one or more persons in industrial 
        sectors that consume significant quantities of primary energy 
        for each unit of physical output to reduce the energy intensity 
        of the production activities of the persons.
   42 USC Sec.  13501(a)--The Secretary shall establish a 5-
        year National Advanced Materials Program. Such program shall 
        foster the commercialization of techniques for processing, 
        synthesizing, fabricating, and manufacturing advanced materials 
        and associated components.
   42 USC Sec.  13502(a)--The Secretary shall establish a 5-
        year National Advanced Manufacturing Technologies Program . . . 
         Such program shall foster the commercialization of advanced 
        manufacturing technologies to improve energy efficiency and 
        productivity in manufacturing.
   42 USC Sec.  13456(a)--The Secretary. shall-(1) pursue a 
        research, development, demonstration and commercial application 
        program intended to improve energy efficiency and productivity 
        in energy-intensive industries and industrial processes; and 
        (2) undertake joint ventures to encourage the commercialization 
        of technologies developed under paragraph (1).

    Question 22. Taxes--What rationale is given for the proposal to 
extend permanently the Renewable Energy Production Tax Credit when many 
renewable industries have stated their support of a gradual phase-out 
of this credit?
    Answer. The renewable energy investment community requires 
certainty and predictability if it is to continue to deploy these 
technologies and once again double generation from wind, solar, and 
geothermal sources by 2020. Thus, the President has called on Congress 
to make the renewable energy Production Tax Credit permanent and 
refundable, providing incentives and certainty for investments in new 
clean energy.
    Question 23. Weatherization Assistance Program--The Weatherization 
Assistance Program, which is due to be reauthorized at the end of FY 
2013, receives $184 million in the President's Budget FY2014 budget 
request, up from $68 million in FY2012. How did the Administration 
arrive at the $184 million request? What percentage of that amount is 
expected to be spent on administrative costs?
    Answer. The FY 2013 request of $68 million for the Weatherization 
Assistance Program (WAP) was artificially low due to funding that was 
still available through the Recovery Act. The FY 2014 request of $184 
million represents the funding that is necessary to support the 
infrastructure of the Program in the fifty states, the District of 
Columbia, five U.S. Territories and several Native American tribes.
    Of the $184 million requested, $157 million will be provided to the 
59 Weatherization grantees using the allocation formula contained in 
the federal regulations 10 CFR 440.10, and $3 million will be used for 
DOE Training and Technical Assistance to support the grantee reporting 
system and to make improvements in the program performance measurements 
and technology deployment. The remaining $24 million will establish a 
competitive solicitation to design and develop models to leverage non-
federal resources to weatherize multi-family buildings (WAP funds will 
not be used for loans or other financial instruments).
    Approximately $15.7 million will be used to administer the WAP 
grants, or 10 percent of the $157 million allocated to grantees. The 
provisions in the federal regulations for administrative cost allowance 
state that ``not more than 10 percent of any grant made to a State may 
be used by the grantee and subgrantees for administrative purposes in 
carrying out duties under this part, except that not more than 5 
percent may be used by the State for such purposes, and not less than 5 
percent must be made available to subgrantees by States.'' (10 CFR 
440.18(e))
    Question 24. Building Efficiency--In addition to a 40 percent 
requested increase in funding for the Building Technologies Program, 
there is a one-time $200 million request for the Race to the Top 
Efficiency and Grid Modernization, partly directed to give grants to 
applicants who demonstrate best practices in building efficiency. This 
is in addition to the Better Buildings Initiative (and Better Buildings 
Challenge) that showcases the best energy saving strategies for 
buildings. Are you concerned that these programs with similar names 
create confusion in the marketplace, and could they better be 
streamlined into a single program? Additionally, is there no better way 
to allocate $200 million than to give grants? It seems that taxpayer 
dollars could be better leveraged in this instance.
    Answer. The Race to the Top for Energy Efficiency and Grid 
Modernization is a performance- based challenge designed to motivate 
states to implement policies that encourage private investment in 
energy productivity economy-wide. The Better Buildings program focuses 
on energy efficiency in buildings. Specifically, the Better Buildings 
program challenges companies and partners in state and local 
governments to improve building energy performance 20 percent by 2020. 
The objectives of these two programs are aligned but distinct. States 
that take advantage of the Better Buildings program may more quickly 
arrive at best practices for improving energy efficiency in buildings, 
which could help inform their approach when applying for the Race to 
the Top for Energy Efficiency and Grid Modernization program. But in 
order to win, competing states also need to address other aspects of 
energy productivity.
    The Race to the Top for Energy Efficiency and Grid Modernization 
provides technical assistance to participating states to assist them in 
improving the market conditions for energy productivity investments. In 
addition, performance-based awards are designed to motivate the 
implementation of policies that can draw much larger sums of private-
sector investment. Rather than making grants for individual projects, 
the Race to the Top is designed to address market barriers that persist 
at the state level across the country. As a result, the Race to the Top 
for Energy Efficiency and Grid Modernization can deploy federal funds 
in a way that is very highly leveraged by private sector investment.
Marshall Islands
    Question 25. In 2012, Congress enacted the Insular Areas Act of 
2011 (Public Law 112-149) that requires the Secretary of Energy, 
through the DOE's Marshall Islands Program, to monitor Runit Dome on 
Enewetak Atoll. Recent press reports indicate that DOE intends to begin 
this mission this summer. What is the timetable for Runit Dome 
monitoring, how much has been set aside in FY 2013 funds for this 
summer's activity, how much has been requested from the Department of 
Interior (DOI) for this summer's activity, and how much is requested in 
FY 2014 funding?
    Answer. Public Law 112-149 was enacted to assist the people of 
Enewetak Atoll to better understand the long-term environmental and 
public health consequences of the waste containment structure on Runit 
Island. The legislation requires that DOE perform the work and that DOI 
pay for the work related to the radiochemical analysis of the ground- 
water surrounding and in the Cactus Crater containment structure on 
Runit Island out of Technical Assistance funds within the Office of 
Insular Affairs.
    In FY 2013, DOE estimated the initial cost for Runit Dome 
monitoring to be $500,000.
    In April 2013, DOI agreed to transfer $215,200 to DOE to begin this 
work. In FY 2014, DOI is expected to transfer an additional $215,200 to 
DOE to continue, and DOE will continue to cover any additional costs 
through the existing DOE Marshall Islands Environmental Monitoring 
Program. A Memorandum of Understanding between DOE and DOI on 
Radiochemical Analysis of the Ground-Water Surrounding, and in, the 
Cactus Crater Containment Structure on Runit Island is under review by 
both agencies.
    DOE developed a plan to provide the scientific and technical basis 
for the Groundwater Monitoring Program. Runit Dome onsite activities 
are scheduled to initiate on May 25, 2013. FY 2013 activities include 
the conduct of an engineering survey of the concrete covering the Dome, 
assessment of the integrity and load bearing capability of the 
concrete, and determination of the structural integrity of the Dome to 
determine if the work can be conducted safely, and to establish the 
locations for the groundwater sampling wells. Future activities involve 
drilling bore holes for sampling over an 18 months baseline period and 
performing radiochemical analyses. Upon completion of the baseline, DOE 
will issue a final report describing requirements for conducting a 
long-term Groundwater Monitoring Program at Runit Dome.
    Question 26. Unobligated Balances-Please provide a full and 
detailed list of all unobligated balances for every program and account 
at the Department of Energy.
    Answer. The Department is providing the Committee with detailed 
unobligated balance report from with this submission.
    Question 27. DOE Contracting--At a recent House hearing, Inspector 
General Gregory Friedman said that contracting is the ``weak 
underbelly'' of the Department of Energy. He stated, ``.we need to 
seriously revisit the question of finding the right balance of 
oversight of the contractors and at the same time encouraging the 
contractors, incentivizing the contractors to do the right thing . . . 
''
    27(a) Has the Department taken any steps to address the contracting 
deficiencies identified by its own Inspector General?
    Answer. 27(a) The Department has taken a number of steps to address 
contracting deficiencies including the following:

   Issuing recent Deputy Secretary memorandum directing:

    --Improved up-front planning
    --Greater use of firm-fixed price contracts
    --Maximized use of objective performance measures
    --Use of provisional fee and cost caps
    --Accurately documenting contractor performance;

   Addressing GAO High-Risk List concerns regarding major DOE 
        contracts and projects (over $750M);

    --Instituting Deputy Secretary-led ``Deep Dives'' on major 
            contracts;

   Expanding contracting officer certification program to 
        strengthen skill sets; and,
   Improving DOE's enterprise-wide procurement system.

    Question 27(b). Please list the Department's strategy for reducing 
its cost of contracting.
    Answer. 27(b) The Department is constantly striving to reduce its 
cost of contracting. It recently completed a study to assess the size 
of its acquisition workforce. That report revealed that the cost of 
contracting was not caused by the size of our workforce, but more a 
function of continuous learning and training of our workforce and our 
contracting types and procedures. We are working with the Federal 
Acquisition Institute to ensure our acquisition workforce is provided 
the best training possible.
    As relayed above, we are also making a concerted effort to 
transition to the use of more fixed price contracting and, when cost 
reimbursable contracting is required, base incentives on objective, 
rather than subjective, factors. We are also focused on leveraging 
strategic sourcing processes and procedures and greater use of 
Government Wide Acquisition Contracts (GWAC's) and GSA Schedules.
    Question 28. Stimulus Funding--According to the Department's 
website, it has yet to award or obligate roughly $872 from the 2009 
stimulus bill, even though more than four years have passed since it 
was signed into law.
    a. Please summarize all funding that has not been awarded or 
obligated as of the date of this hearing.
    Answer. 28 In the table below, expired funds are no longer 
available and will be or have been returned to Treasury in accordance 
with the Dodd Frank Act. As part of the Dodd Frank Act, DOE requested 
and received a Presidential waiver for $96M. These funds have no 
expiration date, and are only available to cover modification costs on 
existing Loan Program Section 1705 ARRA loans.
    Prior Year Deobligations (PYDs) are considered expired and will be 
cancelled on September 30, 2015. Cancelled PYDs will be returned to 
Treasury. As reflected in the change from February to March, the PYD 
total will continue to increase as work is finished under cost and 
closed out, awards are terminated for failure to meet project 
milestones, etc.


    b. Please explain what the Department plans to do with the funding 
that has not been awarded or obligated.
    Answer. With the exception of the $96M of presidentially-waived 
credit subsidy balances the other funds will be or have been returned 
to Treasury.
    c. Is the Department considering returning some or all of that 
funding to the Treasury? If no, please explain why not.
    Answer. With the exception of the $96M of presidentially-waived 
credit subsidy balances the other funds will be or have been returned 
to Treasury.
    Question 29. Full time Employees--Please list the Department's 
total number of full time employees in 2008, as compared to today. 
Please include a breakdown of FTEs by office, showing any changes 
between 2008 and today.
    Answer. The Department is providing information on the number of 
full time employees as requested to the Committee with this submission.
    Question 30. To what extent, if any, is the Department of Energy 
involved with the President's/National Export Initiative and the Trade 
Promotion Coordinating Committee? Are high-level department officials 
ever asked to attend meetings of these organizations or otherwise offer 
their expertise and input?
    Answer. The Department of Energy is a member of the Trade Promotion 
Coordinating Committee (TPCC), which includes multiple subcommittees 
focused on specific sectors. DOE participates in semi-annual meetings 
among TPCC agency principals. At these meetings, DOE is typically 
represented by the Assistant Secretary for Policy and International 
Affairs. The DOE Assistant Secretary for Nuclear Energy co-chairs the 
Subcommittee on Civil Nuclear Energy, and the DOE Assistant Secretary 
for Energy Efficiency and Renewable Energy co-chairs the Subcommittee 
on Renewable Energy and Energy Efficiency. DOE also participates at the 
staff level in the TPCC Environmental Technology Working Group as well 
as the Infrastructure Working Group.
    In the Executive Order that launched the National Export 
Initiative, the President established an Export Promotion Cabinet 
(EPC), and the Secretary of Energy is a member of the EPC. Because the 
EPC and TPCC have substantial overlap in membership, meetings at the 
principals level tend to be held jointly. At these meetings, DOE is 
typically represented by the Assistant Secretary for Policy and 
International Affairs.
    DOE participates in trade promotion activities through the TPCC and 
the National Export Initiative implemented under the EPC, and DOE often 
provides energy-related technical expertise to support cross-agency 
activities, including commercial advocacy and review of export 
promotion strategies for specific countries or specific industries. 
Export credit agencies such as OPIC and the Export Import Bank are also 
active in the TPCC, and DOE provides these agencies with direct 
technical assistance through its energy programs and national labs.
    Question 31. Does the Department of Energy collaborate with the 
State Department's Bureau of Energy Resources? If so, to what extent 
and in what specific ways?
    Answer. The Department of Energy collaborates with the State 
Department's Bureau of Energy Resources (ENR) on a number of shared 
initiatives, including the International Energy Agency, International 
Renewable Energy Agency, Energy and Climate Partnership of the Americas 
and the U.S.-Iraq Joint Coordinating Committee on Energy. DOE has 
responsibility for providing expertise on energy policies, 
technologies, and markets, and analyzing energy security implications, 
whereas ENR provides leadership on the nexus of energy and foreign 
policy matters and the energy implications of U.S. diplomatic 
objectives. DOE leads a number of direct interactions with energy 
ministry counterparts with key energy producing and consuming 
countries, and ENR provides leadership on foreign policy and 
geostrategic implications. DOE supports overall ENR-led economic and 
foreign policy dialogues, and offers expert energy policy and technical 
input to ENR-led foreign policy initiatives.
    Question 32. Does the Department provide any expertise, funding or 
other support to oil and gas projects in other countries-- through the 
Office of Policy and International Affairs or any other office? If so, 
which projects in which countries?
    Answer. The Department of Energy does not provide funding for the 
development of oil and gas projects in other countries, as that is the 
private sector's role. DOE does provide technical expertise and shares 
best practices with foreign countries. DOE also engages in R&D 
cooperation in those instances where doing so can advance DOE 
programmatic objectives.
    DOE's Office of Policy and International Affairs (DOE/PI), often in 
conjunction with DOE/Office of Fossil Energy (DOE/FE), holds workshops 
and roundtables on investment climate issues relating to oil and gas, 
but not on specific oil exploration and drilling projects. DOE/PI also 
has helped facilitate studies, and sponsor or provide support for 
conferences/workshops on such issues as unconventional resource 
exploration and development, shale gas cooperation, and safe operation 
and maintenance of natural gas systems. DOE/PI also holds regular 
bilateral meetings with key energy producers and consumers, 
facilitating sharing of market trends, technology trends and best 
practices to promote safe, responsible development of oil and gas, 
among other energy resources, with the goal of strengthening all 
nations' contribution to world supplies and enhancing U.S. energy 
security.
    DOE/FE provides technical expertise and support to countries that 
wish to develop their resources through the following:

   Engages in bilateral meetings, sharing technology, 
        experience, and best practices to promote safe, responsible 
        development of oil and gas resources in other countries and 
        regions, which contributes to world supplies and enhances U.S. 
        energy security;
   Holds regular bilateral meetings with the participation of 
        the private sector to share expertise and help U.S. companies 
        to do business in other countries;
   Conducts methane hydrates research collaboration under 
        international agreements with Japan, India, and South Korea; 
        and
   Supports, through the International Energy Agency, a high-
        level forum on best practices for unconventional gas 
        development.

    DOE/OE provides technical expertise and support to strategic 
countries that wish to enhance/protect their critical energy (oil/gas) 
infrastructure through the following:

   Engages in bilateral meetings, sharing technology, 
        experience, and best practices to improve the reliability, 
        survivability, security, and resiliency of strategic countries' 
        energy sectors, which enhances U.S. energy security and 
        contributes to global oil/gas supplies; and
   Provides, through its headquarters personnel and the 
        National Laboratories, technical expertise and assistance such 
        as: training, system effectiveness assessments, modeling and 
        simulation, and technical exchanges.

    Question 33a. Administration Policy--In the second paragraph of 
your written statement, you note that ``the President's approach is 
working.''
    You claim that oil and natural gas production have gone up every 
year during this Administration. Has that been the case for the last 
two years, 2011 and 2012, on the federal lands and waters under the 
President's control?
    Question 33b. Administration Policy--In the second paragraph of 
your written statement, you note that ``the President's approach is 
working.''
    Next you claim that generation from wind, solar, and geothermal 
have doubled. Can you give us the percentages, to show ``doubling'' 
really means for each of those resources, as a percentage of total 
electricity generation?
    Answer 33a. While the U.S. Energy Information Administration (EIA) 
estimates that the overall production of crude oil (including lease 
condensate), natural gas, and natural gas plant liquids on federal and 
Indian lands and waters each decreased in fiscal year (FY) 2011 and FY 
2012, there are different trends in offshore versus onshore federal 
production.
    Production of crude oil on federal onshore lands has increased for 
both FY 2011 and FY 2012. Crude oil production on Indian lands, 
administered by the federal government, also increased in FY 2011 and 
FY 2012. Production of crude oil from offshore federal waters decreased 
in both FY 2011 and FY 2012. Production of natural gas on federal lands 
decreased in FY2011 and remained virtually unchanged in FY 2012. 
Production of natural gas from federal waters decreased in both FY 2011 
and FY 2012. Production of natural gas plant liquids on federal onshore 
lands increased in both FY 2011 and FY2012 and decreased in both years 
from federal offshore waters. EIA's estimates are based on sales data 
processed by the Department of the Interior's, Office of Natural 
Resources Revenue as of March 15, 2013. Data are available for fiscal 
years only.
    Answer 33b. In the beginning of his administration, President Obama 
set out to double renewable generation from wind, solar, and geothermal 
resources. This goal was to double the collective electricity 
generation of all three resources, not the generation of each nor the 
percentage of total generation of each. In January 2009 when the 
President took office, the United States produced 71,843 gigawatt-hours 
(GWh) of electricity from wind, solar, and geothermal technologies. In 
January 2012, U.S. renewable generation reached and surpassed the 
doubling target; wind, solar, and geothermal technologies produced 
145,302 GWh of electricity. Recently, the President has established a 
new goal of doubling electricity production from wind, solar and 
geothermal by 2020.
    Question 33c. You state that ``carbon emissions'' are at their 
``lowest level.in nearly two decades.'' What percentage of that 
decrease would you attribute to the economic downturn, the very slow 
recovery, and/or the shale gas revolution?
    Answer 33c. In the latest annual report by the Council of Economic 
Advisors, the emissions reduction from 2005 to 2012 were broken into 
three broad areas and given the following weights: slower economic 
growth than trend growth (52 percent), cleaner energy from switching to 
both natural gas and renewables (40 percent), and accelerated energy 
efficiency (8 percent) relative to trend. These are based on the 2005 
values of the carbon content of energy, energy efficiency, and GDP. The 
business-as-usual projections are based on published forecasts or 
historical trends.
    Question 34. ATVM/Fisker--On the evening of April 18, Bloomberg 
posted an article with the headline, ``Fisker Spent $660,000 on Each 
$103,000 Plug-In Car.'' The article states that, ``Fisker was allowed 
to keep using money from its Energy Department loan after violating its 
terms multiple times, according to a report released April 17 by 
PrivCo, a New York-based researcher specializing in closely held 
companies.''
    Question 34a. Is the PrivCo report accurate, in that ``Fisker was 
allowed to keep using money from its Energy Department loan after 
violating its terms multiple times.''?
    Answer 34a. The referenced article is based on an inaccurate April 
17, 2013 PrivCo report.
    Specifically, in the report's timeline of alleged events of 
default, every date listed comes after the Department had already 
stopped disbursements to Fisker in June 2011.
    Question 34b. The Department's Loan Programs Office website claims 
that its Fisker loan resulted in 2,000 jobs ``created/saved.'' Is that 
figure accurate? How many employees does Fisker currently have?
    Answer 34b. The ATVM statute does not require applicants to submit 
estimated jobs figures during the application process. However, the 
Loan Programs Office requests this information from applicants. Such 
estimates are not verified and do not include indirect jobs or the 
economic activity created throughout the supply chain. LPO represents 
these figures supplied by the borrower.
   Responses of Daniel B. Poneman to Questions From Senator Landrieu
Plutonium Disposition
    Question 1. Former Senator Slade Gorton, who was a member of the 9/
11 Commission, wrote in an op-ed last month that every dollar diverted 
away from plutonium disposition delays the effort to get rid of 
plutonium and every delay is potentially more time for the material to 
be stolen. He also wrote that eliminating the plutonium and other 
fissile material ensures the highest nuclear security, because the 
material can never be stolen and used by terrorists. As an added 
benefit, the tens of millions of dollars a year it takes to guard this 
dangerous material will be saved. Would you agree with Sen. Gorton and 
why?
    Answer. The United States recognizes the importance of eliminating 
surplus fissile materials and is firmly committed to disposing of 
surplus weapons-usable plutonium.
    Question 2. In June 2010, President Obama at a joint press 
conference with Russian President Medvedev stated, ``And to prevent 
terrorists from acquiring nuclear weapons, we came together at our 
Nuclear Security Summit, where our two nations made numerous 
commitments, including agreeing to eliminate enough plutonium for about 
17,000 nuclear weapons.'' How are you going to honor the commitment 
President Obama made to Russian President Medvedev and fully fund 
NNSA's Office of Fissile Materials Disposition and the MOX Project?
    Answer. The United States remains committed to achieving the 
important nonproliferation mission associated with the disposition of 
excess weapon-grade plutonium and to our agreement with Russia. 
However, considering the unanticipated cost increases associated with 
the MOX fuel approach and the current budget environment, the 
Administration is conducting an analysis to determine whether there are 
options to complete the mission more efficiently.
    Question 3. The plutonium agreement with Russia is one of the few 
agreements that seems to be working with the Russians, without the 
complaints and bluster that we've seen with other agreements, and the 
acrimony we've seen in U.S.-Russia relations over the past 2 years. Why 
pause the MOX program, which underpins this very successful agreement, 
the Plutonium Management and Disposition Agreement?
    Answer. As mentioned in response to your previous question, the 
United States remains committed to achieving the important 
nonproliferation mission associated with the disposition of excess 
weapon-grade plutonium and to our agreement with Russia. However, 
considering the unanticipated cost increases associated with the MOX 
fuel approach and the current budget environment, the Administration is 
conducting an analysis to determine whether there are options to 
complete the mission more efficiently.
    Question 4. Could you explain the decision to move the Next 
Generation Nuclear Plant (NGNP) program under the umbrella of Reactor 
Concepts Research Development and demonstration? Could you also explain 
the shift laid out to move funding away from NGNP within the larger 
RCRD&D budget? In addition, could you give a more precise accounting of 
what funds under RCRD&D will be dedicated to the NGNP project?
    Answer. In FY 2014, the Next Generation Nuclear Plant (NGNP) 
Demonstration Project activities are being refocused from development 
and deployment towards longer term research. Consistent with these 
actions NGNP is eliminated as a separate subprogram and the ongoing 
research activities will be funded alongside other Advanced Reactor 
Concepts research. The Department will continue materials and fuels 
research and development to address technical uncertainties with high 
temperature reactor technology. This consolidation with RCRD&D and 
continued research reflects the synergy with the areas of uncertainty 
that crosscut other advanced reactor concepts. The plans for FY 2014 
call for $20,000,000 of the requested $31,000,000 to be devoted to 
continuing fuels and graphite research for high temperature gas-cooled 
reactors broadly.
    Management of the research efforts under the Advanced Reactor 
Concepts and the research performed under the Advanced Small Modular 
Reactors R&D has been consolidated into the Office of Advanced Reactor 
Technologies and is expected to gain efficiencies and improve 
prioritization in addressing those issues facing advanced non- light 
water reactor concepts, including high temperature metals, 
instrumentation and controls, and supporting reactor and energy 
conversion technology.
   Responses of Daniel B. Poneman to Questions From Senator Barrasso
    Question 1. The Consolidated Appropriations Act for FY2012 
specifies that ``No later than June 30, 2012, the Secretary [of Energy] 
shall submit to [Congress] a revised excess uranium inventory 
management plan for fiscal year 2013 through 2018.'' Over nine and a 
half months after this deadline and over six and a half months into FY 
2013 DOE has still not submitted a revised excess uranium management 
plan. A. When will DOE submit to Congress the revised plan? Will DOE 
submit to Congress the revised plan before June 30, 2013? B. What is 
the reason for the delay?
    Answer. Upon completion of appropriate reviews the report will be 
submitted to Congress.
    Question 2. On April 18, 2013, Fuel Cycle Week reported that ``DOE 
may barter uranium inventories in order to supplement the funding from 
Congressional appropriations'' for cleanup in Paducah. Is DOE 
considering transferring, bartering, or selling any additional uranium 
that DOE has not already disclosed to the public? If so, please explain 
in detail:

    a. the quantities of uranium DOE will dispose of;
    b. in what manner DOE will dispose of this uranium;
    c. at what time DOE will dispose of this uranium;
    d. to whom DOE will transfer, barter, or sell this uranium; and
    e. the steps DOE will take to ensure that all DOE uranium 
disposition (including dispositions already known to the public) will 
not have an adverse material impact on the domestic uranium mining and 
conversion industries taking into account the sale of uranium under the 
Russian HEU Agreement and the Suspension Agreement.

    Answer. The Department has not made any decision to transfer 
uranium in exchange for cleanup services at its Portsmouth or Paducah 
sites in excess of those amounts contemplated in the May 15, 2012 
Secretarial Determination (May 2012 Determination), which specifically 
considered the following transfers for cleanup services:

          Up to 2,400 metric tons of uranium (MTU) per year of natural 
        uranium to DOE contractors as compensation for cleanup services 
        at the Gaseous Diffusion Plant sites at Paducah, Kentucky, or 
        Portsmouth, Ohio, in quarterly transfers of up to 600 MTU for 
        the period 2012 through 2021.

    The May 2012 Determination found that these transfers will not have 
an adverse impact on the domestic mining, conversion or enrichment 
industries. The Department's uranium transfers in 2013 are proceeding 
consistent with the May 2012 Determination. DOE will comply with all 
laws and regulations, including section 3112(d) of the USEC 
Privatization Act, if applicable. As required by section 312 of the 
Consolidated Appropriations Act, 2012, DOE will provide notice to 
Congress of uranium transfers in exchange for accelerated cleanup 
services at a Federal site and such notice will include all information 
required by that section.
    Question 3. You testified that DOE has received about 200,000 
public comments related to the DOE commissioned study on LNG exports. 
Roughly what percentage of all the public comments duplicate, in whole 
or in part, other public comments on the study?
    Answer. DOE received over 188,000 initial comments and 
approximately 2,700 reply comments. DOE reviewed each comment and 
placed every comment received in the LNG Study docket which is posted 
on DOE's website. The initial comment table consists of 399 rows, with 
each row consisting of comments DOE assessed to be unique. The reply 
comment table consists of 375 rows, which DOE assessed to be unique. In 
total, DOE assessed there to be 774 unique comments, which totals to 
less than 1 percent of all comments received.
    Question 4a. About two weeks ago, it was reported that Fisker 
Automotive laid off about 160 employees or 80 percent of its staff. In 
2010, DOE awarded a $529 million loan to Fisker Automotive. I 
understand that DOE cut off the loan to Fisker at about $193 million 
and that Fisker is now on the verge of bankruptcy. There is 
approximately $4 billion of unobligated appropriations for the ATVM 
loan program. I understand that DOE hasn't awarded any new ATVM loans 
over the last two years. As of January 29, 2013, there weren't any 
active ATVM loan applications.
    Given the unprecedented cuts to the Federal budget, isn't it time 
congress rescind the $4 billion in ATVM loan money?
    Answer 4a. DOE has supported a broad range of companies, including 
large mature companies and start up ventures, and a broad set of 
projects, including advanced technology vehicle manufacturers and 
suppliers. DOE is committed to administering the program as effectively 
and efficiently as possible. As the Loan Programs Office is not a 
policy making program, it has not formed a view on this topic.
    Question 4b. Wouldn't you agree that our country has much higher 
priorities than the ATVM loan program--such as reducing the Federal 
deficit and debt?
    Answer 4b. As the Loan Programs Office is not a policy making 
program, it has not formed a view on this topic.
    Question 5. The Office of Legacy Management is responsible for 
monitoring and cleaning up contaminated sites throughout the country. 
Many of these sites are in the West and a number of sites are on Indian 
reservations, including the Wind River in Wyoming. The President's 
Budget for FY 2014 requests a $7.38 million or 4.4 percent increase for 
the Office of Legacy Management. Meanwhile, the President has requested 
hundreds of millions of dollars in new spending on so-called clean 
energy programs. Is the Office of Legacy Management still a priority 
for the Administration? If so, why isn't that reflected in the 
President's Budget for FY 2014?
    Answer. The President's Budget for FY 2014 for DOE provides for the 
Office of Legacy Management (LM) to continue monitoring closed former 
inactive uranium milling sites and other sites for which LM is 
currently responsible. This would include groundwater monitoring and 
data analysis at the former Riverton uranium milling site on the Wind 
River Reservation in Wyoming. In addition, the Administration's budget 
request includes funding for a cooperative agreement with the Northern 
Arapaho Tribe to continue to provide drinking water to residents in the 
vicinity of the Riverton site, as well as a recently established 
agreement with the Wind River Tribes to support independent data 
collection and community outreach.
    Question 6. On February 19, 2013, DOE announced the availability of 
the Data Summary Report conducted in August of 2012 at the Uranium Mill 
Tailings Radiation Control Act site in Riverton, Wyoming. I understand 
that the Report shows that groundwater contamination at this site 
increased after the 2010 historic flood event of the Little Wind River. 
DOE has said it will provide an analysis of this data in the annual 
Verification Monitoring Report which will be available later this year. 
A. When specifically does DOE plan to release the Monitoring Report? B. 
What steps will DOE take to ensure that the Monitoring Report is 
distributed widely throughout the Riverton community?
    Answer. DOE anticipates completing the Monitoring Report by the end 
of FY 2013 that analyzes and interprets the data from the additional 
studies that were conducted after the 2010 historic flood on the Little 
Wind River in Riverton. Preliminary results indicate groundwater 
contaminant levels are returning to pre-flood concentrations. In 
addition, DOE increased its technical staff to manage the work at the 
former Riverton uranium milling site by hiring a hydrologist familiar 
with the area's groundwater who is a graduate of the University of 
Wyoming.
    DOE will ensure that the report is widely distributed including 
making it available on its website, providing copies in a reading room 
at the Riverton Public Library, and sending copies to at least 10 
organizations including the Northern Arapaho and Eastern Shoshone 
Tribes, the Wyoming Department of Environmental Quality, and the U.S. 
Nuclear Regulatory Commission. In addition, press releases may be 
prepared, and interviews provided to the press, television news, and 
radio reporters.
    Question 7. The President's Budget for FY 2014 states that: 
``Environmental remediation of NPR-3 facilities will continue to 
facilitate the sale/disposition of the property in a manner consistent 
with an approved property sale/disposition plan. Final disposition of 
the property is estimated to occur in FY 2015.'' A. Has DOE completed a 
sale/disposition plan for the property? If not, when will DOE complete 
the sale/disposition plan? B. Will DOE make the sale/disposition plan 
available to the public?
    Answer. The Department has completed the draft Naval Petroleum 
Reserve No. 3 Disposition Decision Analysis and Timeline. The draft is 
currently undergoing Departmental and Office of Management and Budget 
review. As soon as all required concurrences are received, the Decision 
Analysis will be transmitted to Congress. At that time the Decision 
Analysis will also be available to the public.
    Question 8. DOE has a very small program called the Experimental 
Program to Stimulate Competitive Research (EPSCoR). I understand that 
nine of the ten largest energy producing states, including Wyoming, are 
EPSCoR states. Would you provide a state-by state listing of the amount 
of R& D funding made available to each state from DOE during the most 
recent three years for which such information is available?
    Answer. A table showing DOE's EPSCoR funding for those states and 
territories that received EPSCoR funding in FY 2011, FY 2012, and 
current FY 2014 planned funding is as follows:



    The FY 2014 Request column represents current estimates, reflecting 
multi-year grants that will be incrementally funded. In addition to the 
states and territory listed above, the following other states and 
territories were also eligible for EPSCoR funding: Arkansas, Guam, 
Hawaii, Iowa, Mississippi, Missouri, Nebraska, Nevada, South Carolina, 
U.S. Virgin Islands, Utah, and Vermont. Also, Iowa, Tennessee, and Utah 
will lose their eligibility in FY 2013, but any current awards will 
continue through completion. FY 2011 funding in Illinois supported a 
detailee providing technical assistance to the EPSCoR program. Illinois 
is not eligible for EPSCoR awards.
    Each of these states is also eligible for funding through other 
mechanisms, including funding opportunity announcements for research 
across the Office of Science and other DOE programs, and in many cases, 
these states receive significantly more non-EPSCoR funding from DOE 
than the EPSCoR amounts shown in the above table.
   Responses of Daniel B. Poneman to Questions From Senator Cantwell
    Question 1. While the FY 2014 budget request for the Department of 
Energy is generally strong, I do have a significant concern about the 
proposed Electricity Systems Hub.
    While I know Dr. Moniz has yet to be confirmed, I was encouraged by 
his testimony last week, when he voiced his explicit support for 
investment in DOE's smart grid program, given the centrality of grid 
modernization to a host of DOE missions and national energy policy 
goals.
    Dr. Moniz also recognized the vital, direct role that DOE has 
played in accelerating energy storage R&D, as well as the Department's 
efforts to demonstrate and validate the performance of new storage 
technologies-key to encouraging utility and financiers' investment in 
the sector.
    I am disappointed that this proposed budget follows the same path 
as last year's budget request: funding for smart grid R&D as well as 
energy storage in DOE's Office of Electricity (OE) seems to fall far 
short of the national need.
    While a number of Senators and I have also supported the concept of 
an Electricity Systems Hub, we have cautioned the Department against 
doing so at the expense of these underlying programmatic activities.
    Please explain the Department's plan for ensuring sufficient 
funding for these underlying smart grid and energy storage R&D program 
activities, and expand on DOE's vision for an Electricity Systems Hub. 
How does establishing the Hub at the expense of other grid programs 
help advance a 21st century grid?
    Answer. The FY 2014 request of $169 million for DOE's Office of 
Electricity Delivery and Energy Reliability includes critical 
investments that will continue progress towards enhancing the 
capabilities of a modern power grid. Strategic decisions were made to 
prioritize the request to provide a balanced portfolio of programs and 
projects, including investments in enhanced capabilities to better 
respond to energy disruptions, cybersecurity technologies and 
capabilities for the energy sector, and modeling and analysis to 
enhance reliability and resiliency. The FY 2014 request also reflects 
ongoing efforts to leverage grid-related investments across the 
Department, other Federal agencies, and the industry to maximize cost 
effectiveness and results.
    Investing in the Electricity Systems Hub will focus on the seam 
between transmission and distribution--a pinch point of grid 
modernization where power flows, information flows, policies, and 
markets intersect--tackling the critical issues and barriers associated 
with achieving a seamless grid and facilitating the numerous changes 
that are happening system-wide. The Hub activities will accelerate 
adoption of new technologies within a policy and regulatory framework 
that allows efficient utilization of assets and capital investment, 
including minimizing consumer costs for grid modernization. Regional 
diversity in resources, markets, and policies also presents unique 
challenges that are best addressed through an integrated systems 
approach. A concerted effort at the Hub will enable many grid 
activities at the Department to come to a focal point and provide a 
platform for demonstrating and testing new technologies and concepts, 
including those in energy storage and smart grid.
    Question 2. DOE's FY 2014 Budget Request includes funding for U.S. 
participation in BELLE II, an international high energy physics project 
located in Japan. The United States has been one of the key partners in 
this project for several years, with support from the Office of 
Science's High Energy Physics Program. This is an important year for 
the project and the U.S. role in it, since it marks the transition from 
prototyping to actual constructing of the upgraded BELLE II detector. 
This transition is noteworthy from a budgetary standpoint; with the 
commencement of the construction phase, BELLE II is now classified as a 
new project start and, as such, U.S. participation would be suspended 
under another Continuing Resolution. I am concerned that this 
interruption could cause further harm to the reputation of the United 
States as a reliable partner in the international science community, in 
the same way that past interruptions to our funding for other ``big 
science'' projects have. What could be done from the DOE side to ensure 
that the United States would be able to honor its commitments to BELLE 
II and other international projects in the event of another Continuing 
Resolution?
    Answer. The Office of Science is working with the Pacific Northwest 
National Laboratory (PNNL), the DOE project lead, to develop a 
mitigation plan that is consistent with the relevant laws and 
appropriations committee guidance, and will closely coordinate our 
plans with Japan's KEK laboratory that is hosting BELLE-II.
    The mitigation actions could include the development of advanced 
prototypes, preparing acquisition plans, and conducting project reviews 
in advance of the approval of a new start. We will not allow the 
expenditure of capital equipment funds without the approval of a new 
start from Congress and the appropriations authority to obligate funds 
for that purpose.
    Question 3. Last week, Energy Secretary Ernest Moniz provided a 
response to my question about technology transfer and giving the labs 
greater flexibility in this important area. I understand there is a 
need to investigate this issue more fully, but I am concerned that 
historically these issues have lingered without resolution. I would 
like your assurance that progress will continue. To ensure resolution, 
will you commit to working with the National Lab Director's Council 
(NLDC) to develop an approach that is supported by the NLDC to resolve 
outstanding issues, especially enhancement to ACT and enablement of 
technology maturation?
    Answer. The Department will continue to look for ways to improve 
the laboratories' ability to conduct the technology transfer mission. 
DOE has recently modified its requirements for advanced payments from 
non-Federal sponsors. The Department has also created a Licensing Guide 
in order to provide prospective licensees with an understanding of the 
terms and conditions found in most DOE laboratory intellectual property 
license agreements.
    The Department initiated a pilot program, Agreements for 
Commercializing Technology (ACT) that allows for greater flexibility 
when negotiating a contract with a non-Federal customer wanting to fund 
work at a DOE laboratory. DOE is currently monitoring the progress and 
results of this pilot. Currently six national laboratories-Brookhaven, 
Oak Ridge, Pacific Northwest, Idaho, Lawrence Livermore, and the 
National Renewable Energy Laboratory-have been participating in the ACT 
pilot.
    The ACT pilot is in a very early stage. Several pilot sites are 
working on ACT agreements, but so far, only the Pacific Northwest 
National Laboratory has completed an ACT agreement. It is not yet 
evident whether ACT will be successful and become a preferred approach 
when working with a DOE laboratory. We will continue to collect 
feedback from representatives from each of the ACT pilot sites and the 
NLDC. ACT enhancements will be considered in greater detail after the 
results of the pilot have been analyzed and in the context of 
applicable Federal laws and regulations.
    Regarding enabling technology maturation, Cooperative Research and 
Development Agreements (CRADA) allow laboratories to partner with 
industry, universities, and state and local government organizations to 
increase the Technology Readiness Level (TRL) of selected technologies. 
The laboratories are also able to use royalties from licensing their 
technologies to fund technology maturation activities. The Department 
is also exploring other ways to support technology maturation at the 
laboratories.
    Question 4. Within a few years, 90 percent of Hanford site will be 
cleaned up. As cleanup finishes, the Tri-Cities community is looking to 
diversify its economy. To that end, Congress provided the Energy 
Department with the authority to transfer nuclear defense properties 
over to economic development. DOE completed a Comprehensive Land Use 
Plan in 1999 and a 2008 update identified nearly 10 percent of the 
Hanford Site that could be used for industrial development in the 
future.
    (a) Does the Department view this Comprehensive Plan, which 
Congress required as part of the National Defense Authorization Act of 
fiscal year 1997, as the blueprint for its decisions on future land 
uses at Hanford?
    Answer. Yes.
    (b) President Obama issued a ``Memorandum on Disposing of Unneeded 
Federal Real Estate'' on June 10, 2010 that may have clouded important 
authority that Congress provided the Department of Energy in Sections 
3154-3155 of the National Defense Authorization Act of fiscal year 
1994. Does the Department believe that it currently still has all of 
these authorities that Congress granted and the ability to use them, 
particularly those in Section 3155(a)?
    Answer. Yes. The Department has the ability to use the 
discretionary authorities provided under sections 3154 and 3155. Under 
Section 3154 the Secretary may lease real and related property at a 
facility to be closed or reconfigured, and under 3155(a), the Secretary 
may transfer unneeded personal property at DOE facilities to be closed 
or reconfigured.
     Responses of Daniel B. Poneman to Questions From Senator Flake
    Question 1. Administrator Jackson, signed a ``joint Federal Agency 
Statement Regarding Navajo Generating Station.'' Among other things, 
the Secretaries and the Administrator committed to forming an NGS 
Working Group. Has that Group been formed? If so, what is the status of 
the working group discussions? If not, why have the Agencies delayed in 
forming the group?
    Answer. In January 2013 the Joint Federal Agency Working Group was 
formed and began meeting on the items delineated in the Joint Federal 
Agency Statement. These meetings have been held on numerous occasions 
via electronic audio and visual links. The working group has shared the 
knowledge and background of the individual agencies and begun 
developing joint efforts.
    Question 2. In the joint agency statement, the Department of Energy 
(DOE) committed to ``reviewing current and expected future agency 
resources (grants, loans, and other applicable resources) for potential 
use towards pollution control, renewable energy development water 
delivery, or other regional needs, and seeking funding to cover 
expenses for plant pollution control or other necessary upgrades for 
the Federal portion of NGS.'' Does DOE's budget include any funding or 
other resources for the implementation of EPA's BART proposal? If so, 
please describe the nature of those commitments.
    Answer. In Goal 4 of the Joint Federal Agency Statement, DOE did 
agree to explore resources available to support plans developed for the 
Navajo Generating Station (NGS). The Agencies and the owners of the NGS 
are still in the stage of defining the scope of potential actions. 
Comments are due in August 2013 on the EPA BART proposal. Following 
those comments EPA will finalize the scope and timeline for action. 
Without those significant clarifications on the scope, specific actions 
are not clear enough to justify budget requests from any of the Federal 
partners. Future plans and actions by the NGS owners and further 
engagement with the Federal Agencies will allow DOE to determine its 
appropriate role in supporting the joint agency efforts.
    Question 3. In the joint agency statement, DOE committed to 
``support, through funding or other means,'' Phase 2 of the National 
Renewable Energy Laboratory's analysis of Navajo Generating Station. 
Please describe how DOE's budget proposal reflects that commitment.
    Answer. The Joint Agency Working Group has begun planning of the 
Phase 2 analysis. One section of the scope has been sponsored by the 
Bureau of Reclamation. This has helped to inform the deliberation now 
underway among the NGS owners. The remaining scope will be developed 
after the EPA has made a final determination on the BART ruling. Since 
the scale and timing of the Phase 2 analysis is not possible to define 
at this time, no funding request has been generated.
    Question 4. What is the status of NREL's Phase 2 analysis of NGS?
    Answer. The Joint Agency Working Group has been developing a draft 
scope of work for inclusion in a possible Phase 2 analysis. At the 
current time the first actions in this scope have been sponsored by the 
Bureau of Reclamation to look at options for the owners of the Navajo 
Generating Station. As the requirements of the EPA are finalized, the 
scope of future efforts will be defined and planned for scope, schedule 
and costs.
    Question 5. Since January 4, 2013, has DOE met with any of the NGS 
stakeholders including CAP water deliver customers to discuss 
alternatives to NGS? If so, what was the nature of those conversations?
    Answer. Since the scope of the specific requirements which will be 
implemented at Navajo Generating Station have not been finalized 
through the EPA regulatory process, DOE has not made any efforts for 
our staff to describe the Joint Federal Agency Working Group or asked 
for comments from any members of the public. We did host a meeting with 
CAP board members and management in our offices. Our general plan is to 
hold meetings with public audiences as a Joint Work Group. Early plans 
have been developed for hosting such meetings in Arizona later in 2013.
    Question 6. In the Energy Efficiency and Renewable Energy (EERE) 
budget justification, DOE explains that its proposal seeks to make 
``clean energy technologies directly cost competitive, without 
subsidies, with the energy technologies we use today.'' DOE further 
states, ``We are now in the unique position where a wide array of 
technologies--from solar power, wind power, and plug-in electric 
vehicles, to solid-state lighting and cellulosic biofuels--are within 
5-10 years of being directly price-competitive without subsidies.'' 
Consistent with that analysis, does DOE's budget proposal provide for 
rescinding those subsidies in 5 or 10 years? If so, how has OMB scored 
those rescissions?
    Answer. DOE's budget request does not include any policy proposals 
concerning subsidies for clean energy technologies. DOE will continue 
to share the results of its technology development and demonstration 
programs to inform future Administration policies.
    Responses of Daniel B. Poneman to Questions From Senator Manchin
    Question 1. In your comments in front of the committee, you stated 
that the administration has a ``$6 billion investment on CCPI and 
carbon sequestration projects.'' However, that's a little disingenuous, 
as we haven't actually spent that much money. A lot of those projects 
have either not gone forward yet--like FutureGen--or have been 
withdrawn.
    While I'm happy that we're not spending money on projects that 
we've decided aren't going to work, such as in the case of the projects 
that are being withdrawn, but it's a little disingenuous to say that 
we've spent that money no Clean Coal.
    So my question is this: how much money has this administration 
actually spent--not ``authorized to spend'' but actually spent--on 
Clean Coal research?
    Answer. Clean coal technologies encompass a number of programs 
within the Department of Energy, including deployment of current 
generation technologies; development of next generation technologies; 
and investments in basic research through our Office of Science, and 
ARPA- E.

   The CCPI program is a multi-billion dollar, competitive 
        demonstration program that has been implemented in three 
        rounds. The program provides government funding to advanced, 
        clean coal projects that represent technological advances over 
        current commercial technology. The CCPI program financially 
        supports projects selected with appropriated dollars, which 
        also leverage investments from industry. The CCPI program has 
        spent $568 million on 12 projects, leveraging an investment 
        from industry of $9.767 billion. In addition, $826 million 
        have been obligated and committed to our industrial partners 
        over the next few years to complete the four active CCPI 
        projects, for a total investment of $1.4 billion.

   The FutureGen program has outlayed $92 million of the total 
        obligation of $1.048 billion obligated to the project, 
        leveraging an industry investment of $717 million.

   The Industrial Carbon Capture & Sequestration (ICCS) program 
        has obligated and outlyed $677 million on 51 projects, 
        leveraging an industry investment of $560 million. 
        Approximately $810 million that has been obligated and 
        committed to our industrial partners remains to complete the 39 
        currently active projects, for a total investment of $1.5 
        billion.

   In addition to the above three programs, this Administration 
        has obligated roughly $1.8 billion in clean coal research 
        through the Office of Fossil Energy, and an additional $100 
        million through our Office of Science, and ARPA-E.

    Budget authority is ``spent'' in two steps: obligations and 
outlays. The Department has obligated roughly $5.85 billion, which 
supports the statement made in my testimony. However, as is standard 
project management practice, the Department outlays funding only after 
projects meet specified milestones.
    Question 2. In your comments, you state that research into geologic 
carbon sequestration is very important. Yet we've cut the budget for 
this research by $54 million dollars at a critical point in the 
development of these technologies. Specifically: these projects, which 
have been in moving steadily forward for ten years, are critical to the 
safe injection and storage ofCO2, and are just entering the 
injection and environmental monitoring stage. If we stop now, all of 
that research will have been for naught.
    My question is this: I understand we have a limited amount of 
funds, but if these projects are so critical, why are we cutting 
funding to projects like CO2 storage at a time when they are just 
getting started? Especially when we're doubling down on Energy 
Efficiency and Renewable Energy (EERE), with a $2.7 billion budget 
request there? Are you saying that we can afford to increase funding 
for EERE by almost one billion dollars, but we can't afford to spend 
five percent of that increase on geologic sequestration?
    Answer. The FY 2014 budget request prioritizes research and 
development (R&D) activities on carbon capture technologies which have 
greater potential to reduce the cost and energy penalty of carbon 
capture and storage. The FY 2014 request for carbon storage continues 
to support the Program's existing field projects, which are focused on 
large volume development tests of storage technologies, injection 
techniques, and monitoring at selected geologic site locations, as well 
as its existing R&D activities.
    Question 3. The Pay-TV industry--cable tv, satellite TV, etc.--has 
been working to address their energy impact. For example, they're 
working to reduce the energy usage of the cable boxes that people have 
in their houses, the so called ``set-top boxes''.
    I want to voice support for what this industry has done to address 
this issue: set-top box energy efficiency. The industry proactively 
developed a consensus agreement that will save their customers money, 
deliver immediate energy savings, and still encourage innovation and 
competition.
    However, there has been some pushback from the DOE that--despite 
the industry efforts to be figure out a commonsense solution--they're 
going to regulate them anyway.
    I fear that any DOE regulation would harm the Agreement's progress, 
increase consumer costs, and slow innovative applications that benefit 
consumers. Voluntary Agreements have become and internationally 
approved approach, with counterpart agreements in Europe and Australia. 
What is the Department doing to support, and not undermine, this 
industry initiative?
    Answer. The Department encourages the development of market-based 
solutions that are a result of a consensus from all relevant parties, 
and has recently finalized several rules through consensus agreements. 
In the case of set-top boxes, DOE had a rulemaking in process, which it 
suspended for a six-month period in 2012 following a request from Pay-
TV, consumer electronics industries, and energy efficiency advocates to 
provide these stakeholders time to negotiate a voluntary agreement. The 
Department is now proceeding with the rulemaking, with DOE issuing an 
initial Notice of data availability (NODA) analysis on February 28, 
2013, that presents DOE's initial analysis estimating the potential 
economic impacts and energy savings that could result from promulgating 
a regulatory energy conservation standard for set-top boxes. DOE has 
not yet proposed an energy conservation standard for set-top boxes, and 
any future proposed standard would not be binding on products for 
approximately five years after the publication of the final rule, in 
addition to the time that would be required to complete the rulemaking 
process. DOE welcomes the voluntary agreement industry has developed, 
but also notes that it is without the support of a subset of the 
participants originally involved in the negotiation.
    DOE has an obligation to ensure standards maximize the economically 
justified, technically feasible energy savings potential identified by 
a thorough analysis and as part of a notice and comment rulemaking. 
However, DOE recognizes that there are multiple paths forward to ensure 
that the maximum economic benefits and energy savings from increasing 
the efficiency of set-top boxes are achieved, and DOE strongly 
encourages and will consider any non-regulatory consensus agreement as 
an alternative to a regulatory standard.
    Question 4. Can you explain to me why new project areas such as 
Grid Modernization and Advanced manufacturing are being placed under 
the purview of Energy Efficiency and Renewable Energy (EERE)? Neither 
of these areas seem to match the traditional purview of that office.
    For example, while I understand a portion of the focus of the Grid 
Modernization task is the effective integration of intermittent 
renewables and energy storage into the grid, but those are end use 
technologies and have little to do with the operation of our very 
complex electric grid. Shouldn't the Office of Electricity Delivery and 
Energy Reliability, whose expertise is the inner workings of the 
electric grid, seem like a natural fit for Grid Modernization? Or, if 
they're going to be doing all the work, why isn't the money in their 
budget instead of EERE's?
    Answer. The Department of Energy (DOE) Office of Electricity 
Delivery and Energy Reliability (OE) drives grid modernization and 
resiliency in energy infrastructure. OE leads the Department of 
Energy's efforts to ensure a resilient, reliable, and flexible 
electricity system. OE accomplishes this mission through research, 
partnerships, facilitation, modeling and analytics, and emergency 
preparedness. The grid energy storage program is a program within OE 
that will have impact across the grid.
    The Office of Energy Efficiency and Renewable Energy (EERE) 
conducts research, development, demonstration and deployment programs 
in the areas of renewable electricity generation, sustainable 
transportation, and energy-savings for homes, buildings and 
manufacturing to strengthen U.S. energy security, environmental 
quality, and economic vitality.
    EERE is pursuing its Clean Energy Manufacturing Initiative (CEMI) 
anchored by its Advanced Manufacturing Office and with strong 
involvement and dedicated funding through several EERE Technology 
Offices. CEMI is focused on the urgent economic opportunity in U.S. 
clean energy manufacturing. The goals of this effort are both to 
increase U.S. competitiveness in the production of clean energy 
products and to boost U.S. manufacturing competitiveness across the 
board by increasing manufacturing energy productivity.
    Many EERE-funded technologies are approaching direct cost-
competitiveness with conventional energy technologies in the market. 
These end-user technologies include rooftop photovoltaics (PV), 
electric vehicles and automated building controls. However, mass 
deployment of these behind-the-meter technologies will be inhibited if 
they are not compatible with the grid. In the fiscal year 2014 budget, 
EERE proposed a cross-cutting grid integration program totaling $80 
million that is not a new line but identifies $30 million each from its 
solar and buildings program and $20 million from its vehicles program. 
The aim of this program is to ensure that emerging solar, electric 
vehicles and automated building controls can be seamlessly integrated 
together and compatible with the grid.. EERE and OE coordinate on grid 
integration issues to ensure that renewable generation and end use 
efforts under EERE can successfully interface with OE's grid activities
    Question 5. I think we can all agree that we need to develop our 
energy sources in the most efficient way possible. And I think you all 
know that I feel we should take advantage of all the energy sources 
that each one of our states has available.
    Well, the National Energy Technology Laboratory has released a 
study that shows we can almost triple the amount of oil we can get out 
of existing oil formations, form 24 billion barrels to over 60 billion 
barrels, if we just have a small research and development (R&D) 
program, and if we incentivize oil producers to us best practices inhow 
they develop these fields. There are even old oil fields in my state of 
West Virginia that we can get oil out of . . . about 100 million 
barrels worth!
    These types of programs are just like the Department of Energy 
research that brought us the shale gas revolution: programs that focus 
on near term technologies which just need a bump to get across the 
finish line.
    My question to you, Deputy Secretary, is: Why don't we have 
research programs that will make better use of our energy sources, like 
increasing the amount of oil& gas that we can recover from existing 
fields. I'm not sure I understand how we can spend $2.8 billion dollars 
on renewables and energy efficiency. Does the DOE, MR. Deputy 
Secretary, have any plans that you are aware of to take advantage of 
low-hanging fruit research opportunities? And if not, why?
    Answer. The Department's2011 report--Improving Domestic Energy 
Security and Lowering CO2 Emissions with ``Next Generation'' 
CO2 Enhanced Oil Recovery (CO2-EOR)--stated that 
about 60 billion barrels of additional economically recoverable oil 
could be provided by ``Next Generation'' CO2-EOR. As a 
component of our carbon storage R&D, DOE is conducting research 
activities aimed at developing and applying the ``next generation'' of 
CO2-EOR technologies to get more oil out of existing 
domestic oil fields more efficiently while permanently sequestering 
CO2. The on-going projects focus primarily on developing and 
testing new technologies at laboratory scale. This year, we will 
solicit for pilot-scale performance testing and integration of ``next 
generation'' of CO2-EOR technologies at carbon capture and 
storage project sites.
    Question 6. My staff informs me that during the briefing you held 
earlier this week a big show was made of how bio-refineries--
particularly those for ethanol--were far enough along that we no longer 
needed to fund them. Your staff pointed to the zero'ing out of the 
``biorefinery'' program. But now that we have your budget justification 
document, as of 7:25 his morning, I see that you have merely re-named 
the program ``bioenergy'' and that the budget has actually increased. 
Why the smoke and mirrors? And will the department be looking at the 
combination of coal and biomass to make liquid transportation fuels, 
which has shown to be a cost competitive means of producing biomass 
derived fuels RIGHT NOW?
    Answer. The Office of Energy Efficiency and Renewable Energy 
(EERE), through the Bioenergy Technologies Office (previously Office of 
Biomass Programs), has successfully completed a decade of research, 
development, and demonstration (RD&D) of pioneering technologies for 
the production of cellulosic ethanol. Through pilot scale validation of 
state of the art technologies, the modeled cost of mature commercial 
production of cellulosic ethanol has proven to be cost competitive with 
gasoline. This means that after the initial build out of the cellulosic 
commercial industry it is expected that cellulosic ethanol will cost 
$2.15/gal ($3.20 gallon of gasoline equivalent). In addition, we expect 
the first commercial cellulosic ethanol biorefinery in U.S. history to 
fully come online this year. It will transform municipal solid waste 
and yard waste into cellulosic ethanol and clean energy, while 
commercial cellulosic biorefineries built by two other companies are 
expected to be online shortly thereafter, in 2014. Together, these 
three facilities will have the capacity to produce more than 50 million 
gallons of renewable fuels annually. It should be noted that advanced 
biofuels includes cellulosic ethanol, as well as renewable gasoline, 
diesel and jet fuels which will allow for the replacement of the entire 
barrel of oil. The FY 14 request will not fund additional ethanol 
research and development, but rather is focused on bringing the cost of 
production down on the remaining suite of products required to displace 
petroleum.
     Responses of Daniel B. Poneman to Questions From Senator Scott
Plutonium Disposition
    Question 1. How can the Administration reconcile a ``slowdown'' to 
the program that could ultimately kill the MOX project, and 
simultaneously pledge to uphold our agreement with the Russians?
    Answer. The United States remains committed to achieving the 
important nonproliferation mission associated with the disposition of 
excess weapon-grade plutonium and to our agreement with Russia. 
However, considering the unanticipated cost increases associated with 
the MOX fuel approach and the current budget environment, the 
Administration is conducting an analysis to determine whether there are 
options to complete the mission more efficiently.
MOX Project
    Question 2. How much will the slowdown of the MOX project affect 
its cost and schedule?
    Answer. As mentioned in response to your first question, the United 
States remains committed to achieving the important nonproliferation 
mission associated with the disposition of excess weapon-grade 
plutonium and to our agreement with Russia. However, considering the 
unanticipated cost increases associated with the MOX fuel approach and 
the current budget environment, the Administration is conducting an 
analysis to determine whether there are options to complete the mission 
more efficiently. Cost and schedule impacts will be a central component 
in determining next steps for fulfilling our plutonium disposition 
commitments.
    Question 3. What are NNSA's estimates on how much it would cost to 
shut down the MOX project?
    Answer. NNSA does not have a current estimate of the cost to 
shutdown the MOX project.
    Question 4. How much is the study expected to cost and where will 
the money come from-NNSA, NE, EM or elsewhere?
    Answer. The Administration is conducting an analysis of plutonium 
disposition options, which is being funded primarily through NNSA.
    Question 5. When is the study expected to be completed?
    Answer. The Department intends to use the analysis in order to 
inform the FY 2015 budget.
    Question 6. What are the other alternatives and are they consistent 
with the US-Russia agreement?
    Answer. The analysis includes continuing the current path of 
disposing of plutonium as MOX fuel as well as other technically and 
financially feasible options. The U.S.-Russia Plutonium Management and 
Disposition Agreement (PMDA) allows for other disposition paths if 
agreed to by both parties.
    Question 7. Will the US-Russia Agreement have to be amended if the 
Obama Administration shuts down the MOX project to use an alternative?
    Answer. The United States remains committed to achieving the 
important nonproliferation mission associated with the disposition of 
excess weapon-grade plutonium and to our agreement with Russia. The 
U.S.-Russia Plutonium Management and Disposition Agreement (PMDA) 
allows for other disposition paths if agreed to by both parties.
    Question 8. What assurance do we have that Russia will be amenable 
to something other the MOX process?
    Answer. The U.S. will continue to engage Russia while conducting 
the options analysis and will work to continue progress in implementing 
the PMDA.
    Question 9. What national security assessments will be made if the 
MOX project is ultimately shut down?
    Answer. The Department has not cancelled the MOX project, and we 
cannot prejudge the outcome of the options analysis.
    Question 10. What options have been previously reviewed and 
eliminated and what has changed since the time of those studies that 
these same options should be considered again? What new serious options 
exist today that have not already been evaluated?
    Answer. As previously mentioned, the United States remains 
committed to achieving the important nonproliferation mission 
associated with the disposition of excess weapon- grade plutonium and 
to our agreement with Russia. However, considering the unanticipated 
cost increases associated with the MOX fuel approach and the current 
budget environment, the Administration is conducting an analysis to 
determine whether there are options to complete the mission more 
efficiently. The options include continuing the current path of 
disposing of plutonium as MOX fuel as well as other technically and 
financially feasible options. Previous reviews of the Administration's 
plutonium disposition strategy will be taken into account in this new 
analysis. Some options are being analyzed that have been considered in 
the past; however, the new analysis will take into consideration new 
data and changes in the operating plans of DOE facilities.
    Question 11. How does the Administration intend to comply with the 
agreement with the State of South Carolina for the permanent 
disposition or removal of plutonium in the state?
    Answer. The Department understands our commitments under current 
legislation, and we will look to ensure compliance with the law as we 
analyze plutonium disposition options.
    Question 12. What will be the costs of complying with the agreement 
with the State of South Carolina and of non-compliance?
    Answer. Beginning in 2016, current law stipulates ``economic 
assistance'' in the form of fines and penalties of $1 million per day 
up to $100 million per year, subject to appropriations.
    Question 13. Does the Administration have a contingency for the 
removal of all the plutonium in the state of South Carolina?
    Answer. The Department understands the provisions of current law, 
and we will look to ensure compliance with the law as we analyze 
options.
    Question 14. If the MOX project is cancelled, will NNSA remove the 
plutonium from SRS, and if so, to where? How much will it cost to 
package, transport, safeguard and store this sensitive material?
    Answer. The Department understands the provisions of the current 
law, and we will evaluate the costs associated with meeting 
requirements as the path forward is determined.
    Question 15. If the plutonium storage facilities at Pantex are 
getting full, or, as the DOE IG found earlier this year may not be able 
to safely hold plutonium for much longer due to the age and condition 
of the storage bunkers, what is NNSA's plan for the plutonium at SRS 
and Pantex?
    Answer. Although aged, the storage facilities at Pantex are safe 
and continue to be maintained by NNSA as mission critical assets. 
Additionally, a recent DOE IG study focused its concerns on bunkers 
which comprise a portion of the facilities used for plutonium storage 
at Pantex. As part of ongoing efforts to develop NNSA's plutonium 
strategy, we are evaluating effective ways to safely store plutonium.
    Question 16. How many taxpayer dollars have been spent to date on 
DOE's rulemaking regarding set-top box energy conservation 
requirements?
    Answer. To date, DOE has spent a total of approximately $2.9 
million in contract funding and approximately $300,000 on Federal 
salary and benefits on the development of energy conservation standards 
and test procedure development for set-top boxes. This includes the 
development of the test procedure that is used to measure the energy 
efficiency of the set-top boxes. These test procedures are necessary as 
a foundation to both voluntary and regulatory programs.
    Question 17. How many taxpayer dollars does DOE anticipate spending 
during the lifecycle of this rulemaking process?
    Answer. A typical energy conservation standards rulemaking takes 
about 3 years to accomplish and costs approximately $3 to $5 million to 
complete, depending on the complexity of the rulemaking being 
performed. DOE is still early in the rulemaking process for set-top 
boxes, and acknowledges that funding of the process is subject to 
annual appropriations.
    Question 18. Has DOE contracted any of this rulemaking out to third 
parties? How much has been spent on the contractors?
    Answer. Yes, DOE has contracted approximately $2.9 million for 
energy conservation standards analysis and test procedure development 
for set-top boxes to date. The analysis was provided to industry and 
others and supported the voluntary agreement discussion. Test procedure 
development and finalization is necessary for both voluntary agreements 
and mandatory regulations. Contractors represent one way for DOE to 
access the expertise it needs to advance a rulemaking for the timeframe 
DOE requires that expertise.
    Question 19. In terms of carbon dioxide emissions savings, what 
percentage of the United States' total carbon dioxide emissions do you 
anticipate DOE's set-top box energy conservation standards will save?
    Answer. DOE has not proposed an energy conservation standard for 
set-top boxes, so it is not yet possible to estimate the carbon dioxide 
savings that could occur from an energy conservation standard at this 
time. If DOE were to propose an energy conservation standard, the 
proposed rulemaking would include an estimate of the potential carbon 
dioxide savings.
    Overall appliance and equipment standards are saving consumers 
significant amounts on their energy bills and helping avoid significant 
emissions of carbon dioxide. Based on a recent study by Lawrence 
Berkeley National Laboratory\3\, Federal energy conservation standards 
promulgated through 2011 saved consumers an estimated $42 billion on 
their utility bills and carbon emissions reductions attributed to the 
standards were realized at 176 million metric tons in 2011.
---------------------------------------------------------------------------
    \3\ Lawrence Berkeley National Laboratory, Energy and Economic 
Impacts of U.S. Federal Energy and Water Conservation Standards Adopted 
From 1987 Through 2011, http://ees.lbl.gov/pub/energy-and-economic-
impacts-us-federal-energy-and-water-conservation-standards-adopted-
1987-0
---------------------------------------------------------------------------
    Question 20. What percentage of total global carbon dioxide 
emissions do you anticipate DOE's set- top box energy conservation 
standards will save?
    Answer. DOE has not proposed an energy conservation standard for 
set-top boxes. If DOE were to propose an energy conservation standard, 
the proposed rulemaking would include an estimate of the potential 
carbon dioxide savings.
    Question 21. If industry is willing to achieve the same cost and 
energy savings throughout a voluntary agreement, is it still DOE's 
intention to proceed with a federal rulemaking process?
    Answer. DOE strongly encourages and will consider any non-
regulatory agreement as an alternative to a regulatory standard. DOE 
recognizes that voluntary or other non- regulatory efforts by 
manufacturers, utilities, and other interested parties can result in 
substantial improvements to energy efficiency or reductions in energy 
consumption. In fact, as part of its rulemaking activities to consider 
a regulatory efficiency standard, DOE prepares a regulatory impact 
analysis. The regulatory impact analysis evaluates non- regulatory 
alternatives to standards, in terms of their ability to achieve 
significant energy savings at a reasonable cost, and compares the 
effectiveness of each one to the effectiveness of the proposed 
standards.
    Question 22. Considering the American taxpayers are funding this 
federal rule making process, how do additional layers of government 
red-tape ultimately benefit the taxpayers considering the industry has 
agreed to set-top box energy efficiency standards at no cost to the 
taxpayer?
    Answer. DOE's statutory requirement is to maximize energy 
efficiency that is technologically feasible and economically justified 
(42 USC 6295 (o) (2)). DOE's appliance standards program ensures that 
taxpayers are receiving cost-effective energy savings as justified by a 
thorough analysis of alternatives to determine which option conforms to 
this statutory requirement.
    DOE's appliance and equipment standards program seeks to deliver 
significant benefits to consumers across the country across a wide 
variety of products. Overall appliance and equipment standards are 
saving consumers significant amounts on their energy bills and helping 
avoid significant emissions of carbon dioxide. Based on a recent study 
by Lawrence Berkeley National Laboratory\5\, Federal energy 
conservation standards promulgated through 2011 saved consumers an 
estimated $42 billion on their utility bills and carbon emissions 
reductions attributed to the standards were realized at 176 million 
metric tons in 2011.
---------------------------------------------------------------------------
    \5\ Lawrence Berkeley National Laboratory, Energy and Economic 
Impacts of U.S. Federal Energy and Water Conservation Standards Adopted 
From 1987 Through 2011, http://ees.lbl.gov/pub/energy-and-economic-
impacts-us-federal-energy-and-water-conservation-standards-adopted-
1987-0
---------------------------------------------------------------------------
    Responses of Daniel B. Poneman to Questions From Senator Schatz
    Question 1. The Departments of Defense and Energy have enjoyed a 
fruitful relationship working together to advance energy technology 
research and development that promises to promote their shared interest 
in energy security. Since their 2012 memorandum of understanding, the 
departments have partnered on a number of activities, including 
biofuels research, lightweight materials manufacturing vehicle 
electrification, advanced combustion engines and energy storage. These 
energy investments will have lasting benefits by helping the military 
reduce its fuel consumption while advancing America's long-term mission 
to move away from its outsized reliance on oil.
    How does the President's fiscal year 2014 budget support the 
continuing efforts in the Departments of Defense and Energy to 
cooperate with each other in pioneering new energy technologies that 
advance their shared interests in energy security?
    Answer. The President's fiscal year 2014 budget includes a request 
of $45 million for collaboration between the Department of Defense 
(DoD) and Department of Energy (DOE) on the development of advanced 
biofuels that meet military specifications for jet fuel and diesel. If 
approved, the Defense Production Act will be used as the mechanism to 
make these funds available for first-of-a-kind integrated bio-
refineries that convert biomass into jet fuel and diesel. Leveraging 
the terms of a memorandum-of- understanding, along with funds, the DOE 
will provide expertise in advanced bioprocessing technologies, 
assessments of technical and financial risks, and experience in 
managing merit reviews and project selections for pilot- and 
demonstration-scale biorefineries.
    DOE and DoD are collaborating on the Smart Power Infrastructure 
Demonstration for Energy Reliability and Security (SPIDERS) project, 
along with the Department of Homeland Security and utility partners, to 
design and demonstrate three microgrids. A microgrid is a localized 
grid that can connect and disconnect from the electric grid to operate 
autonomously, providing reliable power to critical facilities in 
emergencies. The demonstrations will take place at military bases in 
Hawaii and Colorado. DOE is contributing $9 million towards the 
approximately $35 million project, with the final DOE funding increment 
provided in FY 2014. The SPIDERS project's objectives include 
demonstrating the microgrid's ability to protect critical assets from 
loss of power due to cyber attack, to integrate renewables and other 
distributed energy generation to power critical assets in times of 
emergency, and to sustain critical operations during prolonged power 
outages
    The DOE Vehicle Technologies Office (VTO) has been collaborating 
with the Army Tank-Automotive Research, Development, and Engineering 
Center (TARDEC) through the Advanced Vehicle Power Technology Alliance 
(AVPTA) to share technical information, avoid duplicative effort, and 
where there is mutual benefit, undertake joint technology development 
projects. In fiscal year 2013, the two organizations are jointly 
funding approximately $11M in projects for breakthrough techniques for 
dissimilar material joining, computer aided engineering for electric 
drive batteries, and lubricant formulations to enhance fuel efficiency.
    The Advanced Research Projects Agency-Energy (ARPA-E) has and plans 
to continue coordinating broadly with organizations throughout the 
Federal government and the private sector. These coordination efforts 
have been especially strong with DOD, which has allowed both ARPA-E and 
DOD to leverage and advance their missions. These engagements span a 
wide range of approaches that include follow-on DOD investments in 
successful ARPA-E projects, holding a government-industry networking 
session at ARPA-E's Annual Energy Innovation Summit, inviting DOD 
speakers to present at ARPA-E University webinars, and ARPA-E including 
a U.S. Air Force officer on detail as a member of its Technology-to-
Market team. More specifically, some notable engagements include:

   ARPA-E AMPED--DOD HESM.--ARPA-E's Advanced Management and 
        Protection of Energy-storage Devices (AMPED) program is 
        providing new technical options for the DOD Hybrid Energy 
        Storage Module (HESM) program. The AMPED program seeks to 
        significantly improve diagnostics to increase the performance 
        of energy storage systems across multiple energy storage 
        technologies. By working with ARPA-E, DOD will be able to build 
        on ARPA-E's achievements in this area and avoided investing in 
        duplicative efforts. ARPA-E and DOD are each contributing 
        approximately $30 million over a three to six-year period to 
        their respective efforts.
   ARPA-E BEETIT--Navy NAVFAC.--ARPA-E received funding from 
        the Department of the Navy to further advance up to five of 
        ARPA-E's Building Energy Efficiency Through Innovative Thermo-
        devices (BEETIT) performers. This work aims to lower energy use 
        for things such as air conditioners on military bases as well 
        as ultimately civilian applications.
Defense Nuclear Nonproliferation Budget
    Question 2. The Department of Energy plays a critical role in 
America's efforts to curtail the spread of dangerous fissile material. 
The National Nuclear Security Administration supports a number of 
programs intended to safeguard U.S. nuclear facilities and help our 
partners and allies around the world secure their nuclear material. Yet 
the President's fiscal year 2014 budget reduces funding for DOE's 
Defense Nuclear Nonproliferation programs. Including for important 
efforts like the Global Threat Reduction Initiative. How will the 
President's fiscal year 2014 budget allow the Department of Energy to 
sustain its important nonproliferation work at the current reductions?
    Answer. The top-line reduction in funding for GTRI is mainly the 
result of the successful completion of our four year surge in nuclear 
material removals, is consistent with the four-year plan, and reflects 
funding requested in FY 2013 for removal efforts that occur in early FY 
2014. The FY 2014 request for GTRI's reactor conversion subprogram is a 
requested funding increase, supporting the establishment of a reliable 
domestic production capability for the critical medical isotope 
Molybdenum-99 (Mo-99) without the use of HEU. Decreases in radiological 
material protection are partially off-set by increases in cost-sharing 
from our volunteer domestic protection partners. The schedule for 
program completion has been adjusted by nine years, from 2035 to 2044.
    Responses of Daniel B. Poneman to Questions From Senator Portman
Domestic Source of Enriched Uranium
    Question 1. The United States must have the technology for a fully 
domestic source of enriched uranium to support our nuclear weapons 
program and the Navy nuclear reactors program. Secretary Chu, Assistant 
Secretary Lyons, and Ernie Moniz have testified to that fact before 
this committee. Do you agree with that sentiment?
    Answer. Yes. The United States requires unobligated enriched 
uranium for national security missions. Unobligated enriched uranium 
can only be produced by using domestic uranium and domestic technology 
that is unencumbered by peaceful use restrictions. For this reason, the 
Department supports the development of advanced domestic uranium 
enrichment technology, which supports NNSA's national security and 
nonproliferation mission in several critical strategic ways.
    Question 2. International treaties prevent us from purchasing 
enriched uranium from foreign-owned companies for military purposes. Is 
that your understanding?
    Answer. For defense purposes the United States may only use 
enriched uranium that is produced using domestic uranium and domestic 
technology not subject to peaceful uses restrictions.
    Question 3. The budget includes a 40 percent cut (from $238 million 
to $142 million) to the ongoing decontamination and decommissioning of 
the Portsmouth Gaseous Diffusion Plant. Will this reduction in funding 
allow the Department to maintain the Secretarial commitment for 
accelerated clean-up that was made public back in 2009?
    Answer. The FY 2014 budget request supports workforce continuity 
and continues efforts to identify efficiencies to accelerate cleanup at 
the site.
    Question 4. AMO manages important R&D programs that address 
technology needs at various stages of development. AMO also offers 
technical assistance programs to promote investment in energy efficient 
technologies and practices in the industrial sector. Can you please 
provide a complete list of every authorization for the Department of 
Energy's Advanced Manufacturing Office, and the date that each of these 
authorizations expire?
    Answer. Generally, the following public laws have been cited 
providing authorization for Advanced Manufacturing Office (AMO) 
activities.

   P.L. 95-91, ``U.S. Department of Energy Organization Act'' 
        (1977)
   P.L. 102-486, ``Energy Policy Act of 1992''
   P.L. 109-58, ``Energy Policy Act of 199''
   P.L. 110-140, ``Energy Independence and Security Act of 
        2007''
   P.L. 112-210, ``American Energy Manufacturing Technical 
        Corrections Act'' (2012) Specific provisions, with the 
        corresponding U.S. Code citation are provided below along with 
        any applicable time limitation. Excerpts of the statutes are 
        also provided for additional reference:

   42 USC Sec.  13501(a)--The Secretary shall establish a 5-
        year National Advanced Materials Program . . . Such program 
        shall foster the commercialization of techniques for 
        processing, synthesizing, fabricating, and manufacturing 
        advanced materials and associated components. At a minimum, the 
        Program shall expedite the private sector deployment of 
        advanced materials for use in high performance energy efficient 
        and renewable energy technologies in the industrial, 
        transportation, and buildings sectors that can foster economic 
        growth and competitiveness. The Program shall include field 
        demonstrations of sufficient scale and number to prove 
        technical and economic feasibility.
   42 USC Sec.  13502(a)--The Secretary shall establish a 5-
        year National Advanced Manufacturing Technologies Program . . . 
        Such program shall foster the commercialization of advanced 
        manufacturing technologies to improve energy efficiency and 
        productivity in manufacturing.
   42 USC Sec.  13453(a)--The Secretary shall conduct a 5-year 
        program . . . on advanced pulp and paper technologies. Such 
        program shall include activities on energy generation 
        technologies, boilers, combustion processes, pulping processes 
        (excluding de-inking), chemical recovery, causticizing, source 
        reduction processes, and other related technologies that can 
        improve the energy efficiency of, and reduce the adverse 
        environmental impacts of, pulp and papermaking operations.
   42 USC Sec.  13456(a)--The Secretary . . . shall--(1) pursue 
        a research, development, demonstration and commercial 
        application program intended to improve energy efficiency and 
        productivity in energy-intensive industries and industrial 
        processes; and (2) undertake joint ventures to encourage the 
        commercialization of technologies developed under paragraph 
        (1).
   42 USC Sec.  16191(a)--The Secretary shall conduct programs 
        of energy efficiency research, development, demonstration, and 
        commercial application . . . Programs under this part shall 
        include . . . advanced technologies to improve the energy 
        efficiency, environmental performance, and process efficiency 
        of energy-intensive and waste-intensive industries; advanced 
        control devices to improve the energy efficiency of electric 
        motors. and technologies to improve the energy efficiency of 
        appliances and mechanical systems for buildings in cold 
        climates, including combined heat and power units and increased 
        use of renewable resources, including fuel.
   42 USC Sec.  17111(b)--The Secretary shall establish a 
        program under which the Secretary, in cooperation with energy-
        intensive industries\7\ and national industry trade 
        associations representing the energy-intensive industries, 
        shall support, research, develop, and promote the use of new 
        materials processes, technologies, and techniques to optimize 
        energy efficiency and the economic competitiveness of the 
        United States' industrial and commercial sectors.
---------------------------------------------------------------------------
    \7\ For the purpose of this provision ``energy-intensive 
industries'' is defined as an industry that uses significant quantities 
of energy as part of its primary economic activities, including--
information technology, consumer product manufacturing, food 
processing, materials manufacturers, and other energy-intensive 
industries, as determined by the Secretary. (See, 42 USC 17111(a))
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   42 USC Sec.  17244(a)--The Secretary shall carry out a 
        program, to be known as the Renewable Energy Innovation 
        Manufacturing Partnership Program . . . to make assistance 
        awards to eligible entities for use in carrying out research, 
        development, and demonstration relating to the manufacturing of 
        renewable energy technologies.
   42 USC Sec.  12005(b)(1)--The Secretary shall solicit 
        proposals for demonstration and commercial application projects 
        for renewable energy and energy efficiency technologies . . . 
        Such projects may include projects for--(i) the production and 
        sale of electricity, thermal energy, or other forms of energy 
        using a renewable energy technology; (ii) increasing the 
        efficiency of energy use; and (iii) improvements in, or 
        expansion of, facilities for the manufacture of renewable 
        energy or energy efficiency technologies.
   42 USC Sec.  16197--Not later than 18 months after May 8, 
        2008, the Secretary shall make grants to nonprofit 
        institutions, State and local governments, cooperative 
        extension services, or institutions of higher education (or 
        consortia thereof), to establish a geographically dispersed 
        network of Advanced Energy Technology Transfer Centers, to be 
        located in areas the Secretary determines have the greatest 
        need of the services of such Centers.  42 USC Sec.  6312(a)--It 
        is the purpose of this part to improve the efficiency of 
        electric motors and pumps and certain other industrial 
        equipment in order to conserve the energy resources of the 
        Nation.
   42 USC Sec.  13451(a)--The Secretary shall conduct a 5-year 
        program . . . on cost effective technologies to improve energy 
        efficiency and increase the use of renewable energy in the 
        buildings, industrial, and utility sectors. Such program shall 
        include a broad range of technological approaches, and shall 
        include field demonstrations of sufficient scale and number to 
        prove technical and economic viability.
   42 USC Sec.  17111(c)(1)--As part of the program, the 
        Secretary shall establish energy efficiency partnerships 
        between the Secretary and eligible entities to conduct research 
        on, develop, and demonstrate new processes, technologies, and 
        operating practices and techniques to significantly improve the 
        energy efficiency of equipment and processes used by energy-
        intensive industries . . . 
   P. L. 112-210, Section 7(b)(2)--The Secretary, in 
        coordination with the industrial sector and other stakeholders, 
        shall conduct a study of the following: (A) The legal, 
        regulatory, and economic barriers to the deployment of 
        industrial energy efficiency in all electricity markets.
   42 USC Sec.  6345(a)(1)--The Combined Heat and Power 
        Application Centers of the Department of Energy are 
        redesignated as Clean Energy Application Centers.
   42 USC Sec.  6348(a)(1)--The Secretary shall make grants to 
        industry associations to support programs to improve energy 
        efficiency in industry.
   42 USC Sec.  6349(b)(1)--The Secretary shall, to the extent 
        funds are made available for such purpose, make grants to 
        States which, consistent with State law, shall be used for the 
        following purposes: (A) To promote, through appropriate 
        institutions such as universities, nonprofit organizations, 
        State and local government entities, technical centers, 
        utilities, and trade organizations, the use of energy-efficient 
        technologies in covered industries. (B) To establish programs 
        to train individuals (on an industry-by-industry basis) in 
        conducting process-oriented industrial assessments and to 
        encourage the use of such trained assessors. (C) To assist 
        utilities in developing, testing, and evaluating energy 
        efficiency programs and technologies for industrial customers 
        in covered industries.
          (c)(3)The Secretary shall establish an annual award program 
        to recognize utilities operating outstanding or innovative 
        industrial energy efficiency technology assistance programs.
   42 USC Sec.  15811(b)--The Secretary may enter into 
        voluntary agreements with one or more persons in industrial 
        sectors that consume significant quantities of primary energy 
        for each unit of physical output to reduce the energy intensity 
        of the production activities of the persons.
   42 USC Sec.  16193(b)--The [National Building Performance] 
        Initiative shall integrate Federal, State, and voluntary 
        private sector efforts to reduce the costs of construction, 
        operation, maintenance, and renovation of commercial, 
        industrial, institutional, and residential buildings.
   42 USC Sec.  6350--
          (a) Not later than 18 months after October 24, 1992, the 
        Secretary, after consultation with utilities, major industrial 
        energy consumers, and representatives of the insulation 
        industry, shall establish voluntary guidelines for--(1) the 
        conduct of energy efficiency audits of industrial facilities to 
        identify cost-effective opportunities to increase energy 
        efficiency; and (2) the installation of insulation to achieve 
        cost-effective increases in energy efficiency in industrial 
        facilities.
          (b) The Secretary shall conduct a program of educational and 
        technical assistance to promote the use of the voluntary 
        guidelines [established].
   42 USC Sec.  17111(e)--The Secretary shall provide funding 
        to institutions of higher education-based industrial research 
        and assessment centers, whose purpose shall be--(1) to identify 
        opportunities for optimizing energy efficiency and 
        environmental performance; (2) to promote applications of 
        emerging concepts and technologies in small- and medium-sized 
        manufacturers; (3) to promote research and development for the 
        use of alternative energy sources to supply heat, power, and 
        new feedstocks for energy-intensive industries; (4) to 
        coordinate with appropriate Federal and State research offices, 
        and provide a clearinghouse for industrial process and energy 
        efficiency technical assistance resources; and (5) to 
        coordinate with State-accredited technical training centers and 
        community colleges, while ensuring appropriate services to all 
        regions of the United States.

    Question 5. The Administration's Clean Energy manufacturing 
Initiative leaves some people with the impression that AMO is 
refocusing its efforts on a narrow set of technologies not applicable 
to the broader industrial sector. Can you please provide a detailed 
description of the Clean Energy Manufacturing Initiative?
    Answer. The Clean Energy Manufacturing Initiative (CEMI) is a 
strategic integration and commitment of manufacturing efforts across 
the Office of Energy Efficiency and Renewable Energy (EERE). CEMI has 
two overall objectives:

          1. Increase U.S. competitiveness in the production of clean 
        energy products: Strategically invest in technologies that 
        leverage American competitive advantages and overcome 
        competitive disadvantages, and
          2. Increase U.S. manufacturing competitiveness across the 
        board by improving energy productivity: Strategically invest in 
        technologies and practices to enable U.S. manufacturers to 
        increase their competitiveness through energy efficiency, 
        combined heat and power, and take advantage of low-cost 
        domestic energy sources.

    This initiative facilitates engagement with a wide array of 
relevant stakeholders, including Federal agencies, research 
institutions, and private sector partners to map out and implement a 
strategy to ensure that U.S. manufacturers are competitive in the 
global marketplace.
    Additionally, CEMI breaks down silos among the relevant offices 
within EERE and the Department. The initiative includes manufacturing 
efforts for different technologies that are funded through individual 
EERE program offices. For example, the Advanced Manufacturing Office's 
Innovative Manufacturing Projects; as well as the Solar Energy 
Technologies Office's Solar Manufacturing Technology (SolarMat), are 
part of the larger CEMI effort.
    Question 6. Does the Clean Energy Manufacturing Initiative mark a 
departure from the broader portfolio of technologies AMO has 
historically promoted?
    Answer. The Clean Energy Manufacturing Initiative (CEMI) does not 
mark a departure from the broad portfolio of technologies that the 
Advanced Manufacturing Office (AMO) has historically promoted. AMO is 
focused on improving the efficiency of several energy intensive 
industries, improving the efficiency of industry through broadly 
applicable industrial technologies and practices, and advancing cross-
cutting manufacturing and materials innovation. CEMI has been developed 
to improve our coordination and our ability to engage stakeholders 
across the country in efforts to improve industrial efficiency and 
advance manufacturing.
    Question 7. In this age of austerity, we need to make sure that the 
dollars Congress allocates are spent wisely and efficiently. One way to 
make sure that this happens is for the government to consult with its 
private sector partners. What is the Department's strategy for engaging 
industry stakeholders to help the Advanced manufacturing Office (and 
other offices, for that matter) establish the direction of its R&D 
programs, prior to funding solicitations (RFPs) from being released?
    Answer. The Department of Energy remains committed to making sound 
investments in advanced energy technologies that are critical to the 
future of American competitiveness. For example, the Department 
responded directly to recommendations from a July 2012 report by the 
Advanced Manufacturing Partnership's Steering Committee and the 
President's Council of Advisors on Science and Technology with 
proposals to establish several clean energy manufacturing institutes to 
bridge the gap between research and development and the marketplace. 
The ``Report to the President on Capturing Competitive Advantage in 
Advanced Manufacturing'' recommendations include creating a fertile 
environment for innovation through robust support for basic research; 
increasing funding for the research and development of top cross-
cutting technologies that are vital to advanced manufacturing; 
establishing a network of Manufacturing Innovation Institutes (MIIs) as 
a public-private partnership to foster regional ecosystems in advanced 
manufacturing technologies, particularly for the more than 300,000 
small and medium- sized enterprises, which often lack adequate 
technical resources; deepening university and industry collaboration; 
building excitement for and interest in manufacturing careers; and 
developing a high-skilled workforce through hands-on ``training 
centers'' and course development for universities and community 
colleges.
    The Department's Clean Energy Manufacturing Initiative (CEMI) also 
demonstrates a commitment to consult with private sector partners. CEMI 
is a new initiative focused on growing American manufacturing of clean 
energy products and boosting U.S. competitiveness through major 
improvements in manufacturing energy productivity. A key component of 
CEMI will be a series of regional summits to gather input on 
manufacturing priorities, technology barriers, and opportunities for 
growing clean energy manufacturing competitiveness.
    CEMI will also be launching new public-private partnerships focused 
on improving U.S. clean energy manufacturing competitiveness. For 
example, the U.S. Council on Competitiveness is partnering with the 
Department to convene a series of dialogues among government, small 
business, industry, research institutions and labor leaders to help 
develop and recommend strategies for growing the U.S. clean energy 
manufacturing sector.
    In general, EERE convenes with a wide cadre of stakeholders to 
identify R&D priorities relevant to domestic energy systems and taking 
into account international supply chains. Prior to developing funding 
opportunity announcements, EERE seeks feedback from groups including 
industry associations and trade groups, financial institutions, 
nonprofit organizations, foundations, think tanks, universities and the 
national labs, as well as intergovernmental stakeholders. With the 
inclusion of these regular interactions with stakeholders, our R&D 
strategy for the current fiscal year fits within the Quadrennial 
Technology Review, which received significant input from the private 
sector.
    Question 8. Is there an institutional process for receiving 
industry and other stakeholder input at AMO?
    Answer. Yes, consistent with DOE and other Federal Agency 
practices, AMO employs a range of mechanisms to collect stakeholder 
input, primarily public workshops, meetings with stakeholders and 
Requests for Information (RFIs).
    Question 9. Can you describe how this process works? Please 
describe the types of entities which are involved and their input is 
requested and received.
    Answer. The Department of Energy (DOE) has held public workshops 
and meetings with stakeholders covering a wide variety of topics 
depending on the purpose, ranging from technical matters specific to 
individual industries to general issues that broadly impact the 
manufacturing sector. The meetings and workshops incorporated feedback 
from a diverse array of stakeholders into DOE's understanding of the 
manufacturing challenges facing different industries and how to focus 
its resources to achieve the greatest potential impact. Many of these 
workshops have taken place in advance of a Funding Opportunity 
Announcement (FOA) to ensure that DOE has thoroughly considered and has 
a comprehensive understanding of the areas in which it seeks to invest 
its appropriations.
    Recently, AMO engaged over 250 industry and academic experts 
through a series of workshops, each focused on a particular 
foundational technology. The workshops discussed the status of each 
technology and related R&D, technical challenges, market barriers, 
emerging applications, manufacturing costs and challenges, and the 
potential benefits of continued development.
    In addition, AMO has been a primary member of the Advanced 
Manufacturing Partnership (AMP), a private sector-led national effort 
to revitalize American manufacturing launched by the President in June 
2011 that has involved substantial stakeholder engagement and feedback. 
The Advanced Manufacturing National Program Office (AMNPO), hosted by 
the National Institute of Standards and Technology, coordinates federal 
agencies with manufacturing-related missions. AMO has been an active 
participant in AMNPO activities including planning, implementing, and 
writing reports from workshops. AMO staff led discussion sessions and 
helped compile feedback from over 850 stakeholders in the manufacturing 
community obtained through four regional ``Designing for Impact'' 
workshops hosted by the AMNPO and participated in the review of the 78 
responses to a formal Request for Information (RFI) released by the 
AMNPO in 2012.
    In FY 2014 AMO plans to release an RFI or host a workshop prior to 
the release of any FOAs. The intended purpose of these activities is to 
gain additional insight into industry's need for support of high-risk 
and high-reward concepts for R&D. Once the RFI process or workshop is 
complete and the comments analyzed, the FOA concept will be further 
refined and approved for the development and publication process. 
Through these pre-FOA processes, AMO has consistent procedures in place 
to obtain stakeholder feedback to help guide its investments.
    Question 10. What was the degree to which the AMO received industry 
input on the creation of the Clean Energy Manufacturing Initiative?
    Answer. The Clean Energy Manufacturing Initiative (CEMI) is a 
strategic integration of manufacturing efforts across the Office of 
Energy Efficiency & Renewable Energy's (EERE) technology offices, 
including the Advanced Manufacturing Office (AMO), focusing on American 
competitiveness in the production clean energy products and through 
improvements in industrial energy productivity. In developing the Clean 
Energy Manufacturing Initiative, EERE held multiple meetings with a 
range of industry stakeholders, including workshops and roundtables in 
Colorado and Washington, D.C. Following the Initiative launch in March 
2013, the first nine months of the Clean Energy Manufacturing 
Initiative are planned to include extensive stakeholder engagement to 
further define the Initiative's goals and high-impact efforts that 
represent the most effective means by which to reach the Initiative's 
goals of manufacturing competitiveness. These engagement activities 
include Regional Summits; a Dialogue Series with the Council on 
Competitiveness; incorporation of manufacturing competitiveness into 
technical workshops; and individual outreach activities.
    Question 11. Can you please provide a complete list of 
authorizations for DOE's Research Partnership to Secure Energy for 
America (RPSEA), and the date that each of the authorizations expire?
    Answer. The Energy Policy Act of 2005 (EPAct) authorized the 
Secretary of Energy to establish a research program (Program) for 
ultra-deepwater and unconventional natural gas and other petroleum 
resources, including the technology challenges of Small Producers, and 
research by the National Energy Technology Laboratory.
    Title IX, Subtitle J, Section 999B of EPAct authorized the 
Secretary to contract with a non- profit consortium to administer 
portions of the research program while maintaining ultimate 
responsibility for and oversight over all aspects of the Program. The 
consortium selected to administer portions of the research program was 
Research Partnership to Secure Energy for America (RPSEA). RPSEA's 
contract with the Department of Energy began in 2007, and RPSEA will 
continue to support this work until the sunset of the authority under 
Subtitle J, as established under Section 999F, on September 30, 2014.
    Question 12. Is there an institutional process for receiving 
industry and other stakeholder input at RPSEA?
    Answer. Section 999D of the Energy Policy Act of 2005 (EPAct) 
authorizes the establishment of two Federal advisory committees to the 
Secretary of Energy that are subject to the Federal Advisory Committee 
Act (FACA). The FACA sets a very high standard for transparency and 
inclusivity. EPACT Section 999B(e)(2)(B) directs the Secretary of 
Energy to submit the annual operating plan for the research program to 
these two Federal advisory committees, and requires these committees to 
provide written comments regarding the plan by a date established by 
the Secretary. To date, this process has been used for the annual 
operation plans for 2007 through 2013. During September and October 
2013, this process will be used for the eighth and final annual plan 
for 2014. Of note is the requirement (Section 999B(e)(2)(A)) that that 
the Secretary solicit written recommendations in the form of a draft 
annual plan from the consortium contracted by the Department of Energy 
pursuant to Section 999B(c)(1) to administer a portion of the research 
program.
    Question 13. Can you describe how this process works? Please 
describe the types of entities which are involved and their input is 
requested and received.
    Answer. The process for receiving industry and other stakeholder 
input on the annual plan includes a combination of activities led by 
Research Partnership to Secure Energy for America (RPSEA) in the form 
of advisory groups, and activities led by the Secretary of Energy in 
the form of Federal advisory committees established pursuant to the 
Federal Advisory Committee Act.
    From its diverse natural gas and oil membership, RPSEA organizes a 
series of advisory groups to provide input and direction to its overall 
recommendations for its draft annual plan. This process includes 
program level and technical level advisory groups, and small producer 
and environmental advisory groups. These groups meet multiple times to 
review goals, project ideas, and review and recommend projects to the 
Secretary of Energy.
    For example, in its 2009 draft annual plan, RPSEA reports that for 
the development of its recommendations for ultra-deepwater research, 
RPSEA's program advisory group and technology advisory groups combined 
met 29 times with 591 participants involving over 2,800 hours of time 
and effort to focus the 120-plus project ideas for 2007 and 2008 down 
to 26 ideas representing approximately $30 million dollars in research 
and development.
    Question 14. Companies in the cable, satellite and telephone 
industry have developed voluntary standards to improve the efficiency 
of set-top boxes. What has the Department done to evaluate this 
Agreement, and what are its conclusions?
    Answer. The Department encourages the development of market-based 
solutions that are a result of a consensus from all relevant parties, 
and has recently finalized several rules through consensus agreements. 
In the case of set-top boxes, DOE had a rulemaking in process, which it 
suspended for a six-month period in 2012 following a request from Pay-
TV, consumer electronics industries, and energy efficiency advocates to 
provide these stakeholders time to negotiate a voluntary agreement. The 
Department is now proceeding with the rulemaking, with DOE issuing an 
initial Notice of data availability (NODA) analysis on February 28, 
2013, that presents DOE's initial analysis estimating the potential 
economic impacts and energy savings that could result from promulgating 
a regulatory energy conservation standard for set-top boxes. DOE has 
not yet proposed an energy conservation standard for set-top boxes, and 
any future proposed standard would not be binding on products for 
approximately five years after the publications of the final rule, in 
addition to the time that would be required to complete the rulemaking 
process. DOE welcomes the voluntary agreement industry has developed, 
but also notes that it is without the support of a subset of the 
participants originally involved in the negotiation.
    DOE has an obligation to ensure standards maximize the economically 
justified, technically feasible energy savings potential identified by 
a thorough analysis and as part of a notice and comment rulemaking. 
However, DOE recognizes that there are multiple paths forward to ensure 
that the maximum economic benefits and energy savings from increasing 
the efficiency of set-top boxes are achieved, and DOE strongly 
encourages and will consider any non-regulatory consensus agreement as 
an alternative to a regulatory standard.
    Question 15. What is the Department doing to promote voluntary 
market solutions that save consumers money and deliver energy savings?
    Answer. Through partnerships with other Federal agencies, industry, 
manufacturers, and researchers, DOE validates and provides 
informational materials on energy efficient products and appliances, 
energy management techniques, and building science research best 
practices. These voluntary market partnerships are proven to achieve 
significant energy and money savings by improving the efficiency of 
homes and buildings across our nation. DOE promotes voluntary market 
solutions by assuming leadership roles in initiatives and by 
encouraging industry and sector alliances, energy efficiency workforce 
certifications, decision and design tool deployment and technology, and 
research and development programs.
    The Better Buildings Alliance (BBA) is an example of a program that 
continues to achieve success through voluntary partnerships with 
industry. The BBA has grown to include more than 200 members, 
representing over 10 billion commercial square feet across seven key 
market sectors: retail, food service, commercial real estate, public, 
hospitality, healthcare, and higher education. Members agree to 
participate in at least one Alliance activity each year and share their 
successes with their peers, while DOE commits to connect members with 
technical resources, and provide a platform for peer exchange. BBA 
challenges have led to the development of highly-efficient air- 
conditioning units for commercial buildings through the Rooftop Unit 
Challenge. Building off of this success, BBA has expanded the 
challenges to energy efficient lighting for parking garages and low-
cost wireless meters. Each effort helps launch energy efficient 
technologies and techniques into the marketplace delivering energy 
savings solutions to the consumer and the building owner.
   Responses of Daniel B. Poneman to Questions From Senator Heinrich
    Question 1. Section 1001 of the Energy Policy Act of 2005 
established a technology commercialization fund (TCF) where 0.9 percent 
of the amount made available to the Department of Energy for applied 
energy research, development, demonstration, and commercial application 
for each fiscal year are ``to be used to provide matching funds with 
private partners to promote promising energy technologies for 
commercial purposes.'' The only available public information indicates 
that about $14 million was spent shortly after EPAct05 implementation 
(2007-2008), but there is no information about subsequent spending and 
activities. Assuming that DOE spends roughly $3 billion per year on 
``applied energy RD&D'' programs (nuclear, fossil, and EERE), then the 
EPAct-required 0.9 percent annual spending would amount to about $27 
million per year. Please provide an update on annual funding and 
activities of this fund since 2005. What are the department's current 
plans to carry out the intent of congress for this fund and ensure its 
full implementation?
    Answer. DOE's Technology Transfer Policy Board surveyed the DOE 
laboratories to assess activities from FY 2008 through 2012 related to 
commercialization of energy technologies. The survey asked for 
information on all CRADA projects that promoted energy technologies for 
commercial purposes and where DOE funds were matched by a combination 
of private partner funds and in-kind contributions, meaning projects 
that fall under a definition of technology commercialization.
    The survey found that such qualifying CRADA projects exceeded the 
0.9 percent threshold required, in some cases significantly, in every 
year but FY 2010. The survey results are summarized in a table showing 
overall funding for applied energy RD&D, CRADA funding, and CRADA 
funding as a percent of applied Energy RD&D. The information follows:



      
    Even though CRADA funding in 2010 is slightly less than the 0.9 
percent requirement, the percentage of CRADA funding from 2008-2012 is 
well above the requirement. The Department will continue to track those 
projects across the Department that qualify as Technology 
Commercialization projects and report our results annually.
    Question 2. I understand the position of Technology Transfer 
Coordinator created by Section 1001(a) of EPAct05 is currently vacant, 
what are the department's plans to fill this position?
    Answer. Per EPAct05, the Technology Transfer Coordinator is 
appointed by the Secretary, so this decision will be addressed after 
the new Secretary is confirmed. In the interim, Technology Transfer 
Policy Board members across the Department's organizational elements 
continue to support the Department's technology transfer mission.
    Question 3. As part of the FY13 National Defense Authorization Act, 
Section 3165 established a pilot program for the purpose of 
accelerating technology transfer from the national security 
laboratories to the marketplace. What are the department's plans to 
implement this program?
    Answer. NNSA Technology Transfer activities will utilize this pilot 
program to create outreach opportunities. It will be used to promote 
and advertise technologies developed within the NNSA weapons programs 
that are of interest to the industrial and academic communities. NNSA 
will collaborate with these organizations for eventual 
commercialization. NNSA laboratories have a long relationship with 
Technology Ventures Corporation of Albuquerque, NM, working with Sandia 
National Laboratories, to develop technology transfer programs over the 
years. NNSA will work with Technology Ventures to seek out and utilize 
opportunities at new and unique venues to present developed 
technologies to the public. NNSA has been in the process of surveying 
laboratory technology transfer organizations for support and input to 
ideas for implementation. Activities that are underway will continue 
toward development of an outline for implementation and approval. The 
Pilot Study must be approved by the Technology Transfer Coordinator, 
however, and at present this position is vacant, which affects final 
implementation of the program.
    Question 4. The department's Strategy for the Management and 
Disposal of Used Nuclear Fuel and High-Level Radioactive Waste suggests 
that the first pilot interim storage facility could be in operation in 
2021. What specific activities and funding levels are proposed in the 
budget for fiscal year 2014 to support development of the first pilot 
interim storage facility?
    Answer. The President's fiscal year 2014 budget request includes 
$60 million in the area of used fuel disposition, with $30 million 
dedicated to research and development and $30 million for waste system 
design and planning.
    Waste system design and planning activities will support the 
development of a pilot interim storage facility through the following 
activities: development of a consent-based siting process in 
consultation with stakeholders; outreach to state and tribal groups 
along potential transportation routes; preliminary logistical studies 
looking into the infrastructure and capability requirements of taking 
delivery of used fuel from shutdown reactor sites; and developing high-
level design concepts. Research and development activities that also 
support the development of a pilot interim storage facility include 
studies on the performance of used nuclear fuel in storage for extended 
periods and the performance of fuel in long-distance transportation. 
These research and development activities are budgeted to cost $12.8 
million, bringing the total activities to support development of the 
pilot interim storage facility to $42.8 million in fiscal year 2014, in 
anticipation of authorizing language from Congress.
    Question 5. The Blue Ribbon Commission calls for a consent-based 
approach that will likely require considerable engagement with 
communities and states that may be interested in hosting an interim 
storage facility. Does the department's strategy for siting nuclear 
waste storage facilities include providing federal grant funding 
directly to states in FY 2014 or in future years to assist them with 
their own assessments and evaluations?
    Answer. Prior to the passage of legislation, the Department is 
undertaking only generic, or non- site specific activities, including 
research into generic geologies for disposal, high-level waste 
management system planning, and transportation equipment design and 
certification. The Department is also laying the groundwork for the new 
management entity to be able to execute a consent-based siting process, 
by gathering lessons learned from previous efforts in the United States 
and around the world and by beginning to engage stakeholders from state 
and community groups on how a consent-based process should work. Full 
participation from the full range of stakeholders is critical to the 
success of any consent-based process.
    Question 6. The department's Strategy for the Management and 
Disposal of Used Nuclear Fuel and High-Level Radioactive Waste suggests 
a permanent geologic repository would be in operation in 2048. What 
specific activities and funding levels are proposed in the budget for 
fiscal year 2014 to support the development of a permanent geologic 
repository?
    Answer. The Department is undertaking a number of activities in FY 
2014 to support the development of a geologic repository. Many 
activities being undertaken to support development of a pilot interim 
storage facility are also applicable to the development of a 
repository, including transportation planning and outreach, development 
of a consent- based siting process, and development and certification 
of transportation equipment. These activities total approximately $10 
million in the President's budget. In addition, the Department will 
conduct research and development activities related to disposal in the 
areas of generic geological formations, including alternative natural 
systems and engineered barriers, and deep borehole disposal, totaling 
$17.2 million.
    Question 7. As I understand it, disposal of defense wastes 
alongside commercial wastes is DOE's current policy in accordance with 
the 1985 decision to use a single repository for both commercial and 
defense high-level wastes. The Blue Ribbon Commission recommended a 
reassessment of this policy. What are the department's plans and likely 
time frame to reassess the issue of ``co-mingling'' wastes in a 
repository?
    Answer. The Administration's Strategy noted that the commingling of 
commercial and government-managed wastes would be the subject of 
analysis going forward. Consistent with this, the Department is 
undertaking preparatory technical evaluations now to prepare for a 
reassessment of the commingling policy. Specifically, the Department is 
looking to entire current and projected inventory to determine whether 
and what types of used fuel lend themselves to disposal in specific 
geological formations--whether salt, granite, clay, shale, or deep 
borehole disposal. This study will also include an examination of 
government-managed used fuel and high-level radioactive waste. This 
study is expected to be completed in 2013 to facilitate future 
decision-making.
    Question 8. The possibility of producing electric power from fusion 
energy has been suggested since the 1950s. Fusion holds the promise of 
a carbon-free energy source with a virtually unlimited supply of fuel. 
However, I'm concerned the Office of Science's budget doesn't 
adequately support a domestic fusion research program. Are we in danger 
of losing our leadership role in fusion research and graduate training 
programs?
    Answer. The Administration is requesting $458 million for the 
Fusion program in FY 2014, which represents the largest percentage 
increase of any Office of Science research program compared to the FY 
2012 appropriation. Domestic facilities and research are supported in 
the FY 2014 budget and can continue to be highly impactful on the world 
stage. While some reductions in domestic research are proposed in the 
FY 2014 budget, measures are also being developed that will enable U.S. 
researchers to stay at the forefront of the field. With over 240 full 
time equivalent graduate student researchers to be supported under the 
FY 2014 budget, support for workforce training is strong. We are making 
sure that U.S. scientists are consistently afforded the opportunity to 
engage in world-leading scientific challenges. Many of opportunities 
exist to leverage expertise and resources domestically, and Fusion 
Energy Sciences (FES) partnerships with the Basic Energy Sciences and 
Advanced Scientific Computing Research programs and with the National 
Science Foundation are supported in this budget proposal. FES is also 
developing a strategy to coordinate the research of the two leading FES 
facilities to best position the U.S. as ITER activities proceed. We 
must also ensure that we pay attention to investments in new fusion 
facilities overseas with capabilities that U.S. facilities do not and 
will not have. To this end, the FY 2014 budget supports international 
partnerships to leverage U.S. strengths, enable us to work in an 
international environment in preparation for ITER's research program, 
and yield influential research enterprises. Together, these investments 
will position the U.S. to sustain its international leadership in 
fusion energy science.
Supply of Medical Isotopes
    Question 9. I understand the world is presently facing an unstable 
supply of medical isotopes, primarily molybdenum-99, which is used to 
diagnose heart disease and cancer in tens of millions of patients per 
year. The National Nuclear Security Administration's Global Threat 
Reduction Initiative (GTRI) cooperative agreement program helps to 
develop and implement technologies to minimize the civilian use of HEU. 
GTRI's assistance provides a 50-50 private/public cost share, capped at 
$25 million. However, the startup costs for a medical isotope plant 
could be in excess of $100 million, meaning the $25 million cap limits 
U.S. government support to less than 25 percent of project costs. 
Moreover, any commercial source may be in competition with foreign, 
government-owned research reactors, which could create and uneven 
playing field and discourage investment in new domestic production. 
Given the importance of molybdenum-99, does the Department support an 
increase in the $25 million cap on startup costs to allow for a full 
50-50 partnership with industry?
    Answer. The National Nuclear Security Administration's (NNSA) 
Global Threat Reduction Initiative (GTRI) has established cooperative 
agreements with four U.S. entities to accelerate the development of 
four independent non-HEU-based technology pathways to produce Mo-99. 
These cooperative agreements have been implemented under a 50--50 cost 
sharing arrangement, up to a maximum government contribution of $25 
million.
    Government subsidies to many of the current Mo-99 producers creates 
a challenge for new Mo-99 producers especially those utilizing non-HEU 
based production technologies. To ensure a reliable supply of Mo-99, 
the market needs to transition to a full-cost recovery model. NNSA's 
objective is to accelerate existing commercial projects, and not to 
subsidize the initial capital investment to the point of causing a 
negative market impact in the long-term. Thus, NNSA does not support an 
increase to the government's maximum contribution beyond the current 
$25 million cap.
    In addition to providing up to $25 million in support to its 
cooperative agreement partners, NNSA is leading the U.S. government 
actions aimed to transition the global production of Mo-99 to full cost 
recovery, with the aim to create an economic environment conducive to 
fully sustainable commercial Mo-99 production well into the future.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

                Statement of the Alliance to Save Energy
INTRODUCTION
    For more than 35 years, the Alliance to Save Energy has capably 
served as a bipartisan, nonprofit coalition of business, government, 
environmental, and consumer leaders committed to promoting energy 
efficiency worldwide to achieve a healthier economy, a cleaner 
environment, and greater energy security. Founded in 1977 by Senators 
Charles Percy, a Republican from Illinois, and Hubert Humphrey, a 
Democrat from Minnesota, the Alliance has worked tirelessly to improve 
the efficiency of America's energy resources and to make certain that 
energy is not wasted.
    The organization is currently led by Senator Mark Warner as 
Honorary Chairman, and National Grid US President Tom King as Chairman 
of our Board of Directors. Representatives Michael Burgess, Ralph Hall, 
Steve Israel, Adam Kinzinger, Ed Markey, Paul Tonko and Peter Welch, 
and Senators Susan Collins, Chris Coons, Lisa Murkowski, Rob Portman, 
Mark Pryor, Jeanne Shaheen, Mark Udall and Ron Wyden serve as Honorary 
Vice-Chairs. Over 140 companies and organizations support the Alliance 
as Associates.
BACKGROUND
    Rationale for Federal Energy-Efficiency Programs--Wasted energy is 
a costly drag on the U.S. economy, but equally important amid the 
ongoing economic recovery is that investing in energy efficiency--the 
quickest, cheapest and cleanest way to address our nation's growing 
demand for energy--contributes more toward meeting this need than any 
other resource.
    The Alliance fully recognizes the significant challenges facing the 
federal government to reduce spending and spur economic growth. 
However, the organization believes strongly that failing to properly 
fund energy efficiency and research and development programs at the 
Department of Energy's (DOE) Office of Energy Efficiency and Renewable 
Energy (EERE) at robust levels would undermine our national economic, 
environmental and security interests. These programs have resulted in 
exceptional value for American consumers and businesses as a source of 
savings that are spent in other economic sectors, yielding benefits far 
beyond their nominal outlays.
    Over the last 40 years, the United States has made significant 
gains in energy productivity, which is the ratio of output divided by 
energy consumption and is a useful indicator for understanding the 
efficiency of an economy. According to a study conducted by McKinsey & 
Company, the country--with government assistance--could cost-
effectively reduce energy consumption by 23 percent from the business 
as usual case by 2020 through an array of energy efficiency measures, 
saving about 9.1 quadrillion in British thermal units (BTUs) in end use 
energy and yielding approximately 1.2 trillion in gross energy savings.
    If not for U.S. energy productivity gains since the early 1970s, 
our nation would have needed to consume about 50 percent more energy--
with concomitant impacts on energy bills, oil imports, energy 
reliability and security, and environmental quality--to deliver today's 
gross domestic product (GDP). The following Alliance to Save Energy 
figure graphically illustrates the point.
    A record of success--Energy efficiency and research and development 
programs at the Department of Energy's (DOE) Office of Energy 
Efficiency and Renewable Energy (EERE) programs have served as a 
central pillar of sound U.S. energy policy. The savings achieved 
through the research and development of new energy-efficiency 
technologies through EERE programs help these technologies achieve 
widespread use and justify continued investment in them. McKinsey & 
Company estimated that $354 billion in building energy efficiency 
investments during 2009-2020 could yield $685 billion in savings. For 
manufacturing, the National Research Council cited approximated 
potential savings of 14 to 22 percent of total industrial sector energy 
use in 2020. The savings were based on cost-effective technologies that 
yield at least a 10 percent internal rate of return.
    At a time when too many Americans are suffering financial 
hardships, EERE programmatic investments offer real solutions that 
would not only help alleviate their economic pain, but would also deal 
with the short- and long-term problems associated with rising energy 
use.
    Summary of the President's Budget Request--The President's fiscal 
year (FY) 2014 budget request for DOE's Office of Energy Efficiency and 
Renewable Energy recognizes that investments in energy efficiency are 
needed to reduce the burden of energy costs on consumers, make 
businesses more competitive, and create sustainable growth. The budget 
would increase investment and spur innovation in better buildings, 
advanced vehicles, competitive manufacturing, and smarter energy 
systems. In the current tight fiscal climate, greater efficiency will 
boost our long-term fiscal health and economic competitiveness.
    Moreover, the President's call for a doubling of the nation's 
energy productivity by 2030, consistent with the Alliance Commission on 
National Energy Efficiency Policy's Energy 2030 report, is clear 
acknowledgment of the power of energy productivity and its ability to 
address economic, environmental, and national security concerns. The 
addition of $200 million for an energy productivity ``Race to the 
Top''--also in the Energy 2030 recommendations--reaffirms the integral 
role that state energy efficiency policies play in our national energy 
system and thus in reaching our economic, environmental, and security 
goals. The Alliance looks forward to engaging the Administration and 
the Committee in a bipartisan manner to help design the Race to the 
Top, implement effective research and development investments, reform 
efficiency tax incentives, and address other areas in the budget.
    Several recent analyses show that hundreds of billions of dollars 
of investment are needed to reduce the energy waste in our country and 
its hindrance on consumer pocketbooks, economic productivity, the 
environment, and national security. An analysis by the Rhodium Group 
for the Alliance's Commission finds that doubling energy productivity 
would require investment of $166 billion each year through 2030, but 
would avoid $327 billion a year above those costs, save the average 
household $1000 a year, add over a million jobs, and reduce both carbon 
dioxide emissions and oil imports by a third.
CONCLUSION
    While the United States has made significant energy productivity 
progress over the last several decades, the nation cannot afford to 
withhold support for federal investments in energy efficiency. 
Heightened international economic competition; stresses on American 
energy, transportation, and other physical infrastructure; continued 
economic and geopolitical vulnerabilities to energy price shocks 
(despite increased North American oil and natural gas production); and 
multiple environmental challenges associated with energy all indicate a 
necessity to strengthen U.S. efforts to enhance energy productivity. To 
that end, the President's FY 2014 budget for the U.S. Department of 
Energy recognizes that investments in energy efficiency are needed to 
address high energy costs, improve our national energy security and 
reduce the harmful environmental impacts associated with the production 
and use of energy.
                                 ______
                                 
                           Bloomberg Article
         canada seen beating u.s. in $150 billion asia lng race
    Canada is pulling ahead of the U.S. in a contest to be the first 
exporter of liquefied natural gas from the North American shale bonanza 
to Asia's $150 billion LNG market. An LNG terminal being built at a 
cove north of Vancouver financed by a Houston private-equity firm is 
scheduled to begin shipping the fuel across the Pacific Ocean in mid-
2015, eight months before the first continental U.S. plant is slated to 
start. Canada's government has approved twice as much LNG export 
capacity as its southerly neighbor, evincing a friendlier attitude 
toward selling domestic gas to the highest bidder and positioning the 
nation as the go-to source of gas in North America for overseas buyers.
    International energy giants from Exxon Mobil Corp (XOM). to 
Malaysia's Petroliam Nasional Bhd (PET) are considering terminal 
projects in western Canada to supply Asian utilities and factories that 
are paying more than four times the price of U.S. markets. Chevron Corp 
(CVX). said it's focusing all of its North American LNG efforts north 
of the U.S. border because of the more favorable regulatory climate and 
closer proximity to Asia, making exports more profitable for producers.
    ``The smart money is going to Canada'' to export LNG, said Michelle 
Foss, chief energy economist at the Center for Energy Economics at the 
University of Texas' Bureau of Economic Geology. ``They don't have any 
objections to exporting gas and it's closer to Asia, which cuts down on 
shipping costs.''
Project Risks
    Taking gas from the vast fields dotting Alberta and British 
Columbia and super-chilling it to a liquid for ocean-going tankers has 
price risks. LNG terminals can cost tens of billions of dollars to 
construct and take decades to pay returns. That can make a facility 
obsolete should internal North American demand and prices escalate to 
where domestic sales become more profitable than exports, Foss said.
    In addition, Canadian LNG developers counting on the tradition of 
basing sales on world oil prices could be undercut by Louisiana and 
Texas-based producers planning to link contracts to lower-cost Gulf 
Coast gas markets, said Dale Nijoka, global oil and gas leader at Ernst 
& Young LLP. Three gas export projects have received permission to ship 
LNG from Canada's Pacific Coast to destinations such as Japan and 
China, compared to just one in the U.S., on the Gulf Coast, according 
to data compiled by Bloomberg. In the U.S., policymakers and industry 
leaders are divided over how tightly to control gas exports for fear of 
driving up domestic prices for the power-plant and furnace fuel.
Doubling Demand
    ``In the long term, Canada, which carries lower political risk, is 
probably more positively seen than the U.S. projects,'' Asish Mohanty, 
senior LNG analyst at Wood Mackenzie Ltd. in Houston, said in a 
telephone interview. ``The political risk of U.S. LNG is probably going 
to outweigh the benefits.''
    Energy companies chill gas to -160 degrees Celsius (-256 
Fahrenheit) to create a colorless liquid 1/600th of its original volume 
for long-distance shipment aboard tankers twice as long as Seattle's 
Space Needle is high. Worldwide gas demand is expected to more than 
double by 2035 to 6.6 trillion cubic meters (233 trillion cubic feet) a 
year, according to the International Gas Union, a trade group based in 
Vevey, Switzerland and Oslo.
    Global demand will begin to outpace LNG supplies around the end of 
this decade and may exceed production by 100 million metric tons (4.87 
trillion cubic feet) annually by 2025, Chevron Chairman and Chief 
Executive Officer John S. Watson told analysts in New York last month.
`World Class'
    Asia leads the world in the growth of demand for LNG as Pacific Rim 
economies expand power generation and energy-hungry manufacturing 
sectors, Watson said during the March 12 event.
    Kurt Glaubitz, a Chevron spokesman, referred a further query about 
Canada's LNG outlook to comments from Jay Johnson, Chevron president 
for Europe, Eurasia and the Middle East, at the same analyst meeting, 
when Johnson lauded Canada's ``world class'' gas resources.
    ``With such a large resource base, these fields could readily 
support additional LNG trains,'' Johnson said.
    Aaron Stryk, a spokesman for Exxon, declined to comment for this 
story.
    ``Petronas looks towards Canada's stable fiscal and regulatory 
regime as a positive environment for investments of this magnitude,'' 
as well as the country's ``vast'' gas supply and short shipping times 
to Asia, Michael Culbert, chief executive officer of the company's 
Canadian unit, said yesterday in an e-mail.
    The Asia-Oceania region, excluding Australia, imported 8.847 
trillion cubic feet of gas in 2011, the most recent year for which data 
was available, according to the U.S. Energy Department in Washington. 
At the $16.50 per million British thermal units that Japanese importers 
are paying for some supplies, that regional gas market has an annual 
value of $150 billion.
Market Reversal
    As recently as five years ago, explorers and investors from 
ConocoPhillips to billionaire investor George Kaiser were predicting 
the U.S. would need to import LNG to meet domestic demand as output 
stagnated from its aging fields. Dow Chemical Co (DOW)., Chevron and 
Total SA (FP) were among the heavyweights that signed long-term 
contracts for LNG import capacity along the Gulf Coast.
    At the same time, a then-little-noticed revolution in drilling and 
hydraulic fracturing was under way that subsequently vaulted North 
American gas production to a record high, saturating local markets, 
collapsing prices and prompting would-be importers to look overseas for 
an outlet for swelling fuel supplies.
U.S. Delays
    After issuing the first permit to export continental U.S. gas to 
nations without free-trade agreements almost two years ago, the federal 
government suspended reviews of all other applications so it could 
study the potential impacts of overseas sales on domestic energy 
prices. There are now 19 proposed U.S. LNG projects awaiting export 
permits, with the longest on hold for 28 months.
    In contrast, Canada, which has seen a similar surge in gas 
production, issued its third LNG export license in February for a 
project led by Royal Dutch Shell Plc (RDSA) in British Columbia. All 
together, the trio of approved Canadian projects will have the capacity 
to ship 4.66 billion cubic feet of gas a day, more than double the 2.2 
billion cubic feet of capacity that has been permitted in the U.S., 
according to data compiled by Bloomberg.
    Asian energy consumption trends will determine the number of LNG 
terminals that get built in Canada, where the gas endowment is so large 
the government has little reason to restrict exports, Joe Oliver, the 
nation's natural resources minister, said in an interview in Vancouver.
Abundant Supply
    ``We have so much gas in relation to what we need. There are 
estimates that we've got between 100 and 200 years of domestic 
supply,'' Oliver said, pointing five export projects that may move 
ahead. ``If they all do, it's still considerably less than the amount 
that would start to impinge on our domestic needs over the long term.''
    Douglas Channel Energy Partnership plans to begin shipping as much 
as 700,000 tons of LNG annually from a floating plant near Kitimat, 
British Columbia, in mid-2015. The project is a joint venture of the 
Haisla Nation aboriginal community and LNG Partners, a Houston-based 
buyout firm led by Thomas and Glenn Tatham.
    Thomas Tatham is the former chairman and CEO of Deeptech 
International Inc., an offshore energy explorer that also operated what 
once was the largest network of Gulf of Mexico gas pipelines. Deeptech 
sold to El Paso Energy Corp., now part of Kinder Morgan Inc., for $298 
million in 1998, according to data compiled by Bloomberg. Tatham did 
not respond to an e-mail seeking comment.
Cheniere Timing
    Douglas Channel's closest U.S. competitor, Cheniere Energy Inc., 
won't be finished building its first LNG export module until February 
2016, according to a March 20 filing by the Houston-based company with 
the Federal Energy Regulatory Commission in Washington.
    ``The race is on and governments need to recognize that and take 
some steps but industry, really, at the end of the day, is going to 
drive this,'' Jim Prentice, senior executive vice president and vice 
chairman at Canadian Imperial Bank of Commerce, said in an interview in 
Vancouver.
    Watson, whose San Ramon, California-based company is building $85 
billion in Australian LNG export terminals and plans to begin shipping 
LNG from Angola by July, said Canada is a better place than the Gulf 
Coast to liquefy and ship the fuel. He cited western Canada's relative 
nearness to Asian markets and a political environment where objections 
to gas exports are largely absent.
Chevron Focus
    ``One of the things attracting us to Canada is that it's already a 
natural resources exporting country,'' Watson said during a meeting 
with reporters after his presentation to analysts. ``We've decided that 
Canada is going to be the focus of our North American LNG efforts.''
    Chevron agreed in December to buy a 50 percent stake in the Kitimat 
LNG project near the Douglas Channel project. The Horn River and Liard 
gas fields that will supply Kitimat may hold more than 50 trillion 
cubic feet of gas, Watson said, or enough to supply South Korea's 
current level of imports for 29 years.
    BG Group Plc (BG/), a U.K.-based producer of LNG from the Middle 
East and Caribbean, has proposed a gas-export project for Prince 
Rupert, British Columbia. Exxon, the world's largest energy company by 
market value, also has said it's considering LNG exports from the same 
area. Partnerships between AltaGas Ltd (ALA). and Idemitsu Kosan Co 
(5019)., as well as Cnooc Ltd (883). and Inpex Corp. are also studying 
projects. Pricing Contracts A key element of making Canadian LNG 
profitable will be multi-decade contracts indexed to world crude prices 
rather than North American gas, Watson said. Oil-linked prices are the 
only way to ensure enough cash flow to justify the expense and time 
involved in constructing LNG complexes that cost tens of billions of 
dollars, he said.
    The LNG industry has used crude-linked prices since its inception a 
half-century ago in Algeria, Ernst & Young's Nijoka said. Unlike gas, 
oil was a globally-traded commodity with transparent price-discovery 
mechanisms anyone could monitor anywhere in the world, he said.
    Cheniere has bucked the rest of the LNG industry by basing 
contracts on the U.S. benchmark price from the Henry Hub pipeline nexus 
in Erath, Louisiana. The Henry Hub price has averaged $3.46 per million 
British thermal units this year, one- fifth the rate Japanese utilities 
pay for LNG imports from major sources such as Qatar and Indonesia, 
according to data compiled by Bloomberg.
Holding Out
    Gas buyers in Asia and elsewhere probably will migrate to more 
Henry Hub-based pricing as existing long-term, oil-indexed contracts 
expire, Nijoka said. Energy producers will resist as long as they can 
to protect profits, he said.
    ``These companies like the idea of oil-based pricing because it 
gives them a lot more money, but the Asian buyers are pretty shrewd,'' 
Nijoka said.
    Despite the steep discount of U.S. gas to international prices, 
many Asian LNG importers may prefer to retain crude- linked contracts 
to avoid the volatility of domestic U.S. energy markets that can be 
roiled by hurricanes, winter storms and heat waves, said Betsy Spomer, 
senior vice president of business development at BG Group (BG/).
    ``Oil, as an index, has been robust for a long time, primarily 
because it's a truly global commodity that is transparent and can't be 
manipulated,'' Spomer said at an LNG conference in Vancouver earlier 
this year. ``You can't find a coal index that has the same 
characteristics, and does Henry Hub really make sense in Tokyo?''

                                    

      
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