[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





                    DEPARTMENT OF ENERGY OVERSIGHT:
                      OFFICE OF ENERGY EFFICIENCY
                          AND RENEWABLE ENERGY

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 24, 2015

                               __________

                           Serial No. 114-12

                               __________

 Printed for the use of the Committee on Science, Space, and Technology


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



       Available via the World Wide Web: http://science.house.gov

                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

93-889 PDF                     WASHINGTON : 2015 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001















              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                   HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma             EDDIE BERNICE JOHNSON, Texas
F. JAMES SENSENBRENNER, JR.,         ZOE LOFGREN, California
    Wisconsin                        DANIEL LIPINSKI, Illinois
DANA ROHRABACHER, California         DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas              SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL                    ERIC SWALWELL, California
STEVEN M. PALAZZO, Mississippi       ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
RANDY HULTGREN, Illinois             ELIZABETH H. ESTY, Connecticut
BILL POSEY, Florida                  MARC A. VEASEY, Texas
THOMAS MASSIE, Kentucky              KATHERINE M. CLARK, Massachusetts
JIM BRIDENSTINE, Oklahoma            DON S. BEYER, JR., Virginia
RANDY K. WEBER, Texas                ED PERLMUTTER, Colorado
BILL JOHNSON, Ohio                   PAUL TONKO, New York
JOHN R. MOOLENAAR, Michigan          MARK TAKANO, California
STEVE KNIGHT, California             BILL FOSTER, Illinois
BRIAN BABIN, Texas
BRUCE WESTERMAN, Arkansas
BARBARA COMSTOCK, Virginia
DAN NEWHOUSE, Washington
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia
                                 ------                                

                         Subcommittee on Energy

                   HON. RANDY K. WEBER, Texas, Chair
DANA ROHRABACHER, California         ALAN GRAYSON, Florida
RANDY NEUGEBAUER, Texas              ERIC SWALWELL, California
MO BROOKS, Alabama                   MARC A. VEASEY, Texas
RANDY HULTGREN, Illinois             DANIEL LIPINSKI, Illinois
THOMAS MASSIE, Kentucky              KATHERINE M. CLARK, Massachusetts
BARBARA COMSTOCK, Virginia           ED PERLMUTTER, Colorado
DAN NEWHOUSE, Washington             EDDIE BERNICE JOHNSON, Texas
LAMAR S. SMITH, Texas





















                            C O N T E N T S

                             March 24, 2015

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Randy K. Weber, Chairman, 
  Subcommittee on Energy, Committee on Science, Space, and 
  Technology, U.S. House of Representatives......................     7
    Written Statement............................................     8

Statement by Representative Alan Grayson, Ranking Minority 
  Member, Subcommittee on Energy, Committee on Science, Space, 
  and Technology, U.S. House of Representatives..................     9
    Written Statement............................................    10

Statement by Representative Lamar S. Smith, Chairman, Committee 
  on Science, Space, and Technology, U.S. House of 
  Representatives................................................    11
    Written Statement............................................    12

                               Witnesses:

The Honorable David Danielson, Assistant Secretary, Office of 
  Energy Efficiency and Renewable Energy, U.S. Department of 
  Energy (DOE)
    Oral Statement...............................................    14
    Written Statement............................................    17

Mr. Nick Loris, Herbert and Joyce Morgan Fellow, Heritage 
  Foundation
    Oral Statement...............................................    34
    Written Statement............................................    36

Ms. Ruth McCormick, Director of Federal and State Affairs, 
  Business Council for Sustainable Energy (BCSE)
    Oral Statement...............................................    49
    Written Statement............................................    51

Dr. Veronique de Rugy, Senior Research Fellow, Mercatus Center, 
  George Mason University
    Oral Statement...............................................    63
    Written Statement............................................    65

Discussion.......................................................    82

             Appendix I: Answers to Post-Hearing Questions

The Honorable David Danielson, Assistant Secretary, Office of 
  Energy Efficiency and Renewable Energy, U.S. Department of 
  Energy (DOE)...................................................    98

            Appendix II: Additional Material for the Record

Statement by Representative Eddie Bernice Johnson, Ranking 
  Member, Committee on Science, Space, and Technology, U.S. House 
  of Representatives.............................................   118

Document submitted by The Honorable David Danielson, Assistant 
  Secretary, Office of Energy Efficiency and Renewable Energy, 
  U.S. Department of Energy (DOE)................................   119

 
                    DEPARTMENT OF ENERGY OVERSIGHT:
                      OFFICE OF ENERGY EFFICIENCY
                          AND RENEWABLE ENERGY

                              ----------                              


                         FRIDAY, MARCH 24, 2015

                  House of Representatives,
                             Subcommittee on Energy
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:41 p.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Randy 
Weber [Chairman of the Subcommittee] presiding.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Weber. Subcommittee on Energy will come to order. 
Without objection, the Chair is authorized to declare recesses 
of this Subcommittee at any time.
    Welcome to today's hearing titled ``Department of Energy 
Oversight: Office of Energy Efficiency and Renewable Energy.''
    I recognize myself for five minutes for an opening 
statement.
    Good afternoon, and as I have already said, welcome to 
today's Energy Subcommittee hearing. We are going to examine 
the Department of Energy's Office of Energy Efficiency and 
Renewable Energy, or EERE. Today, we will hear from the 
Department and a broad panel of expert witnesses on the value 
of the research, development, demonstration, and 
commercialization activities in EERE, and the impact DOE's 
clean energy programs have on the energy market and the United 
States economy.
    EERE is the lead federal agency for clean energy research 
and development, with programs in transportation, renewable 
energy, and energy efficiency. This office is clearly a top 
priority for the Obama Administration, with this year's budget 
request coming in at $2.7 billion, which is an increase of over 
$800 million from enacted levels. That is a whopping 42 percent 
increase in one year. With our national debt at $18 trillion 
and rising, and mandatory spending caps guiding budgets on 
everything from energy to national defense, this kind of 
spending obviously deserves rigorous oversight from Congress. 
It is clear that EERE's budget is simply unaffordable. While 
every other federal program has had to adjust to spending caps 
and work within modest spending goals, EERE's budget has 
continued to increase. Despite a budget that has already grown 
by 58 percent in the last decade, and received over $16 
billion, with a B, in stimulus funds, the Obama Administration 
continues to request more year after year. It is time to adjust 
EERE's budget to reality. By continuing to grow EERE spending, 
the Department of Energy's approach to energy research and 
development has also become more and more unbalanced. EERE's 
budget dwarfs that of the other applied offices at DOE. The 
$2.7 billion budget request for fiscal year 2016 is more than 
four times the budget request for fossil energy R&D, five times 
the request for nuclear energy R&D, and 16 times the request 
for electricity and energy reliability R&D. In fact, the 
proposed budget for EERE is more than double the budgets for 
nuclear, fossil, and electricity R&D combined.
    Finally, the work prioritized by EERE is far too focused on 
increasing the use of today's technology, not conducting the 
fundamental research to lay the foundation for the next 
technology breakthrough. Many EERE programs are focused on 
reducing market barriers for existing technology or funding R&D 
activities already prioritized by the private sector. For 
example, in EERE's Vehicle Technologies program, $40 million is 
requested for ``cost-share projects within--with industry'' 
within the ``SuperTruck 2'' initiative. Funding for SuperTruck 
2 is intended to improve the hauling efficiency of heavy-duty, 
Class 8 long-haul vehicles by 100 percent by the year 2020. But 
the freight industry and auto manufacturers, both billion 
dollar industries, already have the means and motivation to 
develop innovative technology to increase energy efficiency. 
Investing in technology to decrease costs is just good business 
sense, and American industry does this every day, with or 
without federal funds. And I might add, on the trucking freight 
business, I used to do some freight hauling as one of my 
businesses. Unless you can decrease the weight of a pound, we 
are in for a long wait.
    Instead of duplicating work that could be done in the 
private sector, the Department should prioritize basic research 
and development with broad application to all forms of energy, 
and energy efficiency. Models developed in the Office of 
Science's ASCR program, the subject of an Energy Subcommittee 
hearing earlier this year, can be used to study and improve 
techniques in manufacturing, renewable power, and energy 
efficiency, enabling the private sector to develop and bring 
new technology into the market without American tax dollars.
    I want to thank Assistant Secretary Danielson and all our 
witnesses for testifying to the Committee today, and I look 
forward to a review of EERE's programs and a discussion about 
the impact DOE's clean energy programs have on the economy. As 
some of our witnesses will point out today, subsidizing one 
form of energy over another through federal programs is 
damaging to the energy market, it increases costs for the 
American people, and actually is often counterproductive to new 
the technology development. Investment in the next generation 
of energy technology must be balanced, technology-neutral, and 
responsible. By funding basic research and development, the 
Department of Energy could build a foundation for the private 
sector to bring new innovative technologies to market, and to 
grow the American economy.
    With that, I yield back. And, Mr. Grayson, you are 
recognized.
    [The prepared statement of Mr. Weber follows:]

         Prepared Statement of Subommittee Chairman Randy Weber

    Good morning and welcome to today's Energy Subcommittee hearing 
examining the Department of Energy's Office of Energy Efficiency and 
Renewable Energy, or EERE. Today, we will hear from the Department and 
a broad panel of expert witnesses on the value of the research, 
development, demonstration and commercialization activities in EERE, 
and the impact DOE's clean energy programs have on the energy market 
and the U.S. economy.
    EERE is the lead federal agency for clean energy research and 
development, with programs in transportation, renewable energy, and 
energy efficiency. This office is clearly a top priority for the Obama 
Administration, with this year's budget request coming in at $2.7 
billion, an increase of over $800 million from enacted levels. That's a 
whopping 42 percent increase in one year.
    With our national debt at $18 trillion and rising, and mandatory 
spending caps guiding budgets on everything from energy to national 
defense, this kind of spending deserves rigorous oversight from 
Congress.
    It is clear that EERE's budget is simply unaffordable. While every 
other federal program has had to adjust to spending caps and work 
within modest spending goals, EERE's budget has continued to increase. 
Despite a budget that has already grown by 58% in the last decade, and 
received over $16 billion in stimulus funds, the Obama Administration 
continues to request more year after year. It's time to adjust EERE's 
budget to reality.
    By continuing to grow EERE spending, the Department of Energy's 
approach to energy research and development has also become more and 
more unbalanced. EERE's budget dwarfs that of the other applied offices 
at DOE. The $2.7 billion budget request for Fiscal Year 2016 is more 
than four times thebudget request for fossil energy R&D, five times the 
request for nuclear energy R&D, and 16 times the request for 
electricity and energy reliability R&D. In fact, the proposed budget 
for EERE is more than double the budgets for Nuclear, Fossil, and 
Electricity R&D combined.
    Finally, the work prioritized by EERE is far too focused on 
increasing the use of today's technology, not conducting the 
fundamental research to lay the foundation for the next technology 
breakthrough. Many EERE programs are focused on reducing market 
barriers for existing technology or funding R&D activities already 
prioritized by the private sector.
    For example, in EERE's Vehicle Technologies program, $40 million is 
requested for ``cost-share projects with industry'' within the 
``SuperTruck 2'' initiative. Funding for SuperTruck 2 is intended to 
improve the hauling efficiency of heavy-duty, Class 8 long-haul 
vehicles by 100% by 2020. But thefreight industry and auto 
manufacturers--both billion dollar industries--already have the means 
and motivation to develop innovative technology to increase energy 
efficiency. Investing in technology todecrease costs is just good 
business sense--and American industry does this every day, with or 
without federal funds.
    Instead of duplicating work that could be done in the private 
sector, the Department should prioritize basic research and development 
with broad application to all forms of energy, and energy efficiency.
    Models developed in the Office of Science's ASCR program--the 
subject of an Energy Subcommittee hearing earlier this year--can be 
used to study and improve techniques in manufacturing, renewable power, 
and energy efficiency, enabling the private sector to develop and bring 
new technology into the market without American tax dollars.
    I want to thank Assistant Secretary Danielson and all our witnesses 
for testifying to the Committee today, and I look forward to a review 
of EERE's programs and a discussion about the impact DOE's clean energy 
programs have on the economy.
    As some of our witnesses will point out today, subsidizing one form 
of energy over another through federal programs is damaging to the 
energy market, increases costs for the American people, and is often 
counterproductive to new technology development.
    Investment in the next generation of energy technology must be 
balanced, technology-neutral, and responsible. By funding basic 
research and development, the Department of Energy could build a 
foundation for the private sector to bring innovative new technologies 
to market, and grow the American economy.

    Mr. Grayson. Thank you, Chairman Weber, for holding this 
hearing. And thank you to our witnesses for appearing here 
today.
    America is mired in a long-term negative energy trade 
balance. According to the most recent figures from the Energy 
Information Administration, our energy trade deficit as of the 
fourth quarter of 2013 was $203 billion, and it has been that 
way literally for decades. We must import to make up the 
difference, and the question is how much longer are we going to 
be able to spend our fortune that way.
    Every year for the past two generations, energy imports 
have cost us hundreds of billions of dollars. Unfortunately, 
there are also massive hidden costs that aren't reflected in 
the prices that Americans actually pay for energy. One recent 
study estimates that the United States has spent about $8 
trillion from 1976 through 2010, merely defending access to oil 
supplies in the Persian Gulf, not producing, not acquiring, not 
even transporting, but simply defending our access to oil. That 
is $25,000 for every man, woman and child in America. 
Continuing to pursue a business-as-usual energy policy clearly 
costs not only American dollars, but also American lives. We 
can't just drill our way out of that problem.
    Because the price of oil is set globally, a disruption of 
oil from the Middle East could severely spike U.S. oil prices 
no matter how much of it we are able to pull from our own 
ground. That is why reducing dependence on oil, and not just 
foreign oil, is a key strategic objective for both the United 
States economy and the U.S. Military. We can and we must end 
this strategic energy deficit. We can create a domestic energy 
infrastructure that is reliable, resilient and far less 
dependent on volatile regions around the world.
    Towards these ends, the Department of Energy's Office of 
Energy Efficiency and Renewable Energy, which we are here to 
talk about today, helps to make that future come faster. Their 
sustainable transportation technology program focuses on 
improving energy efficiency in vehicles, and developing new 
alternative fuels from domestic resources. Research investments 
made by this program have reduced electric vehicle battery 
costs by 70 percent since 2008. They have also reduced the 
manufacturing costs for automotive fuel cells by more than 50 
percent just since 2006. Research and development in biofuels 
has helped to reduce the production cost of cellulosic ethanol 
by more than $6 a gallon, to around $3.20 per gallon today, 
making it cost-competitive with gasoline.
    Beyond reducing our dependence on oil, these programs 
improve energy efficiency in buildings and appliances, and they 
are providing major economic and environmental benefits to U.S. 
taxpayers as well. Efficiency standards enacted by the 
Department of Energy since 2009 are projected to save consumers 
hundreds of billions of dollars in their utility bills through 
2030, and this agency-supported research in advanced lighting 
technology has helped to reduce LED costs by 90 percent since 
2008. The renewable energy sector has also benefitted immensely 
from the agency-supported research and development. Since 2010, 
photovoltaic systems costs have been cut in half. DOE's SunShot 
Program, which has the goal of making solar energy costs 
competitive with conventional sources by 2020, is already more 
than 60 percent of the way to achieving that cost target. 
Overall, third party evaluators outside of the government 
estimate that from 1976 to 2008, these investments of $15 
billion have resulted in an estimated economic benefit to the 
United States of $388 billion, a net return of more than 24 to 
1. That is a very impressive track record, whether it is in 
government or in business, and it is one that we should 
continue to support.
    Private investors in the energy sector are beginning to 
move from project-level loans to holding company loans, which 
means renewable energy industries may be starting at long last 
to take off. This development is encouraging, but we must 
realize that there is no Exxon Mobil, or for that matter, an 
Intel or a Pfizer in the renewable energy sector. There is no 
one with the capability to spend billions on research that the 
government is spending now. There remains a unique government 
role in supporting the advancement of new technologies at a 
sufficient pace to meet our national economic, environmental 
and energy security needs. And that is why I look forward to 
this hearing to hear more about that today.
    The results from this agency's programs are tangible. They 
are having a direct positive impact on peoples' lives and, 
therefore, I want to thank Dr. Danielson and his office for 
their productive work, and for the information that they 
provide for us here today. And thank you again, Mr. Chairman.
    And with that, I yield the balance of my time.
    [The prepared statement of Mr. Grayson follows:]

              Prepared Statement of Subcommittee on Energy
                  Minority Ranking Member Alan Grayson

    Thank you, Chairman Weber, for holding this hearing, and thank you 
to our witnesses for appearing here today.
    America is mired in a long-term negative energy trade balance. 
According to the most recent figures from the Energy Information 
Administration, our energy trade deficit--as of the fourth quarter of 
2013--was $203 billion.
    Every year, for the past two generations, energy imports have cost 
us hundreds of billions of dollars. Unfortunately, there are also 
massive hidden costs that aren't reflected in the prices Americans 
actually pay for energy.
    One recent study estimates that the U.S. has spent about $8 
trillion from 1976 through 2010, merely defending access to oil 
supplies in the Persian Gulf. Not producing, not acquiring, not 
transporting--but defending access to oil. That's $25,000 for every 
man, woman, and child in America. Continuing to pursue a business-as-
usual energy portfolio clearly costs not only American dollars, but 
American lives.
    We can't just drill our way out of this problem.
    Because the price for oil is set globally, a disruption of oil from 
the Middle East could severely spike U.S. oil prices no matter how much 
of it we are able to pull from the ground. That's why reducing 
dependence on oil, not just ``foreign oil,'' is a key strategic 
objective for both the U.S. economy and the U.S. military.
    We can, and we must, end this strategic energy deficit. We can 
create a domestic energy infrastructure that is reliable, resilient, 
and far less dependent on volatile regions of the world.
    Toward these ends, the Department of Energy's Office of Energy 
Efficiency and Renewable Energy, or ``EERE,'' which we are here to talk 
about today, helps make that future come faster. EERE's Sustainable 
Transportation technology program focuses on improving efficiency in 
vehicles, and developing new alternative fuels from domestic resources.
    Research investments made by this program have reduced electric 
vehicle battery costs by 70% since 2008. They have also reduced the 
manufacturing costs for automotive fuel cells by more than 50% since 
2006.
    Research and development in biofuels has helped reduce production 
costs of cellulosic ethanol by more than $6 per gallon, to around $3.20 
per gallon today, making it cost-competitive with gasoline.
    Beyond reducing our crippling dependence on oil, EERE's programs to 
improve energy efficiency in buildings and appliances are providing 
major economic and environmental benefits to U.S. taxpayers as well.
    Efficiency standards enacted by the Department of Energy since 2009 
are projected to save consumers hundreds of billions of dollars in 
their utility bills through 2030, and EERE-supported research in 
advanced lighting technology has helped reduce LED costs by 90% since 
2008.
    The renewable energy sector has also benefited immensely from EERE-
supported research and development. Since 2010, photovoltaic system 
costs have been cut in half. DOE's SunShot program, which has the goal 
of making solar energy cost-competitive with conventional sources by 
2020, is already more than 60% of the way to achieving its cost target.
    Overall, third-party evaluators estimate that from 1976 to 2008, 
EERE investments of $15 billion have resulted in an estimated economic 
benefit to the United States of $388 billion--a net return of more than 
24 to 1. That is an impressive track record, and it is one we should 
continue to support.
    Private investors in the energy sector are beginning to move from 
project-level loans to holding company loans, which means renewable 
energy industries are starting to take off. While this development is 
encouraging, we must realize that there is still no ExxonMobil, nor, 
for that matter, an Intel or Pfizer, in the renewable energy sector. 
There remains a unique government role in supporting the advancement of 
new technologies at a sufficient pace to meet our national economic, 
environmental, and energy security needs. And that is what I look 
forward to hearing more about today.
    The results from EERE's programs are tangible, and they are having 
direct, positive impacts on people's lives.
    I want to thank Dr. Danielson and his Office for their productive 
work, and for the information that they provide here today.Thank you 
again, Mr. Chairman, and with that I yield the balance of my time.

    Chairman Weber. Thank you, Mr. Grayson.
    I now recognize the Chairman of the Full Committee, Mr. 
Smith.
    Chairman Smith. Thank you, Mr. Chairman.
    Today, the Subcommittee on Energy will examine the 
Department of Energy's Office of Energy Efficiency and 
Renewable Energy, commonly referred to as EERE. The Department 
describes EERE as, ``The U.S. Government's primary clean energy 
technology organization.'' EERE's goals sound worthy enough. It 
seeks to reduce the use of fossil fuels, lower emissions, and 
speed up the adoption and decrease the cost of clean energy 
technology in transportation, renewable power and energy 
efficiency. However, while the EERE is billed as leading clean 
energy research and development, there are fundamental concerns 
with EERE's approach to advancing energy technology. EERE's 
activities demonstrate that it is heavily invested in forcing 
the Administration's preferred technology on the American 
people. When the government picks winners and losers in the 
energy technology marketplace, the American people pay the 
price.
    The Solar Energy Technologies Program within EERE offers a 
ready example. This program's goal is to reduce the cost of 
solar power until they are cost-competitive with electricity 
from fossil fuels. It aims to achieve this goal by 2020. But 
because the program is focused on cost, not technology, EERE 
spends taxpayer dollars to market and deploy existing solar 
technology. Instead of research on the fundamental science 
behind solar energy, or development of new solar technology, 
EERE spends taxpayer dollars on ``permitting, financing, and 
customer acquisition.'' It essentially puts promoting energy 
companies over research and development. Addressing these 
issues may help the solar industry market their product, but 
that is short-sighted and doesn't really make solar energy more 
competitive in the long term.
    The Department of Energy should perform groundbreaking 
scientific research and develop on new technologies, not spend 
American tax dollars to promote what is already commercially 
available. The federal government should invest in basic 
research that could open the door for widespread use of solar 
and other renewable energy technology in the future. For 
example, energy storage research and development at the Joint 
Center for Energy Storage Research hub in the Office of Science 
explores new energy storage possibilities through basic 
scientific research. This energy storage research could have a 
groundbreaking impact not just on the solar industry, but also 
on all forms of energy.
    The President's budget proposal for EERE includes a 42 
percent, or $809 million, increase in spending. This is almost 
three times the requested increase for the Office of Science. 
In Congress, we have the responsibility to ensure the efficient 
and effective use of American tax dollars. We can't afford to 
impose expensive and inefficient technology on the energy 
market. We do not have unlimited resources, so we will have to 
make choices about where to make the best investment for the 
American people. By investing in basic research that benefits 
all forms of energy, we can make energy less expensive, and 
that benefits consumers and helps the United States achieve 
energy independence.
    [The prepared statement of Mr. Smith follows:]

      Prepared Statement of Full Committee Chairman Lamar S. Smith

    Good morning. Today, the Subcommittee on Energy will examine the 
Department of Energy's Office of Energy Efficiency and Renewable 
Energy, commonly referred to as ``E-E-R-E.'' The Department describes 
EERE as, ``The U.S. Government's primary clean energy technology 
organization.''
    EERE's goals sound worthy enough. It seeks to reduce the use of 
fossil fuels, lower emissions, and speed up the adoption and decrease 
the cost of clean energy technology in transportation, renewable power 
and energy efficiency.
    However, while the EERE is billed as leading clean energy research 
and development, there are fundamental concerns with EERE's approach to 
advancing energy technology. EERE's activities demonstrate that it is 
heavily invested in forcing the Administration's preferred technology 
on the American people.
    When the government picks winners and losers in the energy 
technology marketplace, the American people pay the price. The Solar 
Energy Technologies Program within EERE offers a ready example. This 
program's goal is to reduce the cost of solar power until they are 
cost-competitive with electricityfrom fossil fuels. It aims to achieve 
this goal by 2020.
    But because the program is focused on cost, not technology, EERE 
spends taxpayer dollars to market and deploy existing solar technology. 
Instead of research on the fundamental science behind solar energy, or 
development of new solar technology, EERE spends taxpayer dollars on 
``permitting, financing, and customer acquisition.'' It essentially 
puts promoting energy companies over research and development.
    Addressing these issues may help the solar industry market their 
product, but that is short-sighted and doesn't really make solar energy 
more competitive in the long term.
    The Department of Energy should perform groundbreaking scientific 
research and develop new technologies, not spend American tax dollars 
to promote what is already commercially available. The federal 
government should invest in basic research that could open the door for 
widespread use of solar and other renewable energy technology in the 
future.
    For example, energy storage research and development at the Joint 
Center for Energy Storage Researchhub in the Office of Science explores 
new energy storage possibilities through basic scientific research. 
This energy storage research could have a groundbreaking impact not 
just on the solar industry, but alsoon all forms of energy.
    The President's budget proposal for EERE includes a 42 percent, or 
$809 million, increase in spending. This is almost three times the 
requested increase for the Office of Science.
    In Congress, we have the responsibility to ensure the efficient and 
effective use of American tax dollars. We can't afford to impose 
expensive and inefficient technology on the energy market. We do not 
have unlimited resources, so we will have to make choices about where 
to make the best investment for the American people.
    By investing in basic research that benefits all forms of energy, 
we can make energy less expensive, and that benefits consumers and 
helps the U.S. achieve energy independence.

    Chairman Smith. Mr. Chairman, before I yield back, let me 
apologize to our witnesses, I have a Judiciary Committee markup 
that is ongoing right now, and I am going to have to shuttle 
back and forth between the most important hearing going on 
today, here, and an obligation to attend the Judiciary 
Committee. So I will yield back.
    Chairman Weber. Thank you, Chairman. We appreciate you.
    Let me introduce our witnesses.
    Our first witness today is the Honorable David Danielson, 
Assistant Secretary of the Office of Energy Efficiency and 
Renewable Energy for the United States Department of Energy. 
Previously, he served as program director for Department of 
Energy's Advanced Research Projects Agency Energy, where he 
developed and led research and development programs. Before 
working at the Department of Energy, Dr. Danielson was a clean 
energy venture capitalist at General Catalyst Partners, and was 
a cofounder of the New England Clean Energy Council. Dr. 
Danielson received his Ph.D. in materials science and 
engineering from the Massachusetts Institute of Technology, and 
his Bachelor's Degree in materials science and engineering from 
the University of California at Berkeley. Dr. Danielson, we are 
glad you are here.
    Mr. Nick Loris--our second witness today is Nick Loris, a 
Herbert and Joyce Morgan Fellow for the Heritage Foundation. 
Mr. Loris specializes on energy, environmental and regulatory 
issues. He has been published and quoted in such publications 
as the Wall Street Journal, the New York Times, the Washington 
Post, Investor's Business Daily, and the Baltimore Sun. Before 
being named a Morgan Fellow, Mr. Loris was a policy analyst 
specializing in energy and environmental issues. Mr. Loris 
received his Masters in economics from George Mason University, 
and his Bachelor's Degree in economics, finance and political 
science from Albright College. Mr. Loris, welcome.
    Our third witness is Ms. Ruth McCormick, the Director of 
Federal and State Affairs for the Business Council for 
Sustainable Energy. Ms. McCormick has over 25 years of 
experience in energy and environmental policy development. 
Prior to joining the council, Ms. McCormick represented the 
Western Regional Council, a coalition of businesses in the 
western United States. In addition, Ms. McCormick served as the 
legislative director for House Energy and Commerce Committee 
member Congressman Nielson. Ms. McCormick is a graduate of the 
University of Uhah--Utah. I can do this.
    And Dr. Veronique, you told me it was okay, de Rugy. Am I 
saying that right?
    Dr. de Rugy. de Rugy.
    Chairman Weber. de Rugy, okay, good. A senior--is our next 
witness, a Senior Research Fellow for the Mercatus Center at 
George Mason University, with a focus on the U.S. economy, the 
federal budget, homeland security, and tax competition and 
financial privacy. In addition, Dr. de Rugy writes regular 
columns for Reason Magazine and the Washington Examiner, and 
she blogs about economics and National Review Online's The 
Corner. Previously, Dr. de Rugy has been a Resident Fellow at 
the American Enterprise Institute, a policy analyst at the Cato 
Institute, and a Research Fellow at the Atlas Economic Research 
Foundation. Before moving to the United States, she oversaw 
academic programs in France for the Institute for Humane 
Studies Europe. Dr. de Rugy received her MA in economics from 
the Paris Dauphine University, and her Ph.D. in economics from 
the Pantheon-Sorbonne University. Welcome, Doctor.
    In order to allow time for discussion, we ask the witnesses 
to please limit your testimony to five minutes. And without 
objection, your entire written statement will be made a part of 
the record.
    And I now recognize Dr. Danielson for five minutes to 
present his testimony. Doctor.

             TESTIMONY OF THE HON. DAVID DANIELSON,

                      ASSISTANT SECRETARY,

                OFFICE OF ENERGY EFFICIENCY AND

                       RENEWABLE ENERGY,

                U.S. DEPARTMENT OF ENERGY (DOE)

    Dr. Danielson. Thank you, Chairman. Chairman Smith, 
Chairman Weber, Ranking Member Grayson, and distinguished 
Members of the Subcommittee, thank you for the opportunity to 
appear before you today to discuss the Office of Energy 
Efficiency and Renewable Energy, EERE, at the U.S. Department 
of Energy.
    EERE supports cutting-edge American innovation to 
dramatically reduce U.S. reliance on foreign oil, cut energy 
costs for American families and businesses, avoid the damaging 
economic and health impacts of energy-related pollution, and 
enable the U.S. private sector to create good-paying American 
jobs through innovation. EERE's efforts in three critical 
energy sectors--sustainable transportation, renewable power, 
and energy efficiency--supportthe research, development and 
demonstration activities that are needed to make clean energy 
technologies directly cost-competitive without subsidies.
    While clean energy markets grew to approximately $300 
billion globally last year, with trillions more in market 
opportunity in the years ahead, the energy industry 
significantly underinvested in R&D compared to other 
industries. The strategic importance of energy to American 
economic growth and security means that government has a 
necessary and needed role to make the appropriate investments 
in cutting-edge energy innovation to seize this clean energy 
opportunity.
    My experience as an MIT-trained scientist and engineer, a 
venture capitalist in the energy sector, and as one of the 
founders of ARPA-E, has given me unique insights into what is 
required for the U.S. energy innovation ecosystem to be 
successful. From this experience, I have developed five core 
questions that serve as the guiding principles by which EERE 
prioritizes its investments in energy innovation. These 
questions include the following. One: Impact. Is this a high-
impact problem? Two: Additionality. Will EERE funding make a 
large difference relative to investments being made by the 
private sector? Three: Openness. Are we open to new ideas, and 
the most promising new energy innovations? Four: Economic 
benefit. Will EERE funding result in enduring U.S. economic 
impact? And five: Proper role of government. Is this investment 
a proper role of government, or something best left to the 
private sector to do on its own?
    EERE has shown that smart, targeted investments in clean 
energy innovation can have a healthy return on investment for 
taxpayers. As just one example of many, over a 30-year period, 
EERE funded R&D on advanced combustion engines resulted in a 
net benefit of about $70 billion, representing a benefit-to-
cost ratio of 53 to 1, at a seven percent discount rate.
    In terms of our fiscal year 2016 budget request, in fiscal 
year 2016, EERE is requesting from Congress $2.7 billion across 
our three sectors to continue these successes, and to enable 
the United States to remain a global leader in innovative new 
clean energy technologies. The $793 million request for our 
sustainable transportation portfolio would help consumers and 
businesses use less energy to move business and freight, and 
replace conventional fuels with cost-competitive, domestically-
produced, sustainable alternative fuels. And we are making 
significant progress. In 2014, the five-year SuperTruck program 
exceeded its goal of developing a suite of cutting-edge new 
long-haul trucking technologies to enable a 50 percent 
improvement in freight efficiency one year ahead of schedule. 
Our fiscal year 2016 budget request will enable EERE to 
continue our focus on cutting-edge R&D, and advanced combustion 
and lightweight vehicles, developing new technologies that can 
diversify our fuel mix with drop-in biofuels, and enabling 
plug-in electric and fuel cell vehicles to become cost-
competitive.
    In our renewable power portfolio, EERE's request of $645 
million will build on our R&D goal to enable the a development 
of multiple cost-effective renewable power technology options 
for every region of the country to diversify our power sector. 
Our fiscal year 2016 request will continue our SunShot 
Initiative's progress in making solar energy directly cost-
competitive by 2020. Our request will also support the Frontier 
Observatory for Research in Geothermal Energy, or FORGE, a 
first-of-a-kind field laboratory, to address the key R&D 
challenges required to enable cost-effective advanced 
geothermal power, in addition to continued R&D efforts to 
reduce the cost of wind power, marine and hydrokinetic power, 
and hydropower.
    Finally, in our energy efficiency portfolio, EERE's request 
of $1.03 billion emphasizes cutting-edge R&D and next-
generation efficient building technologies, including high-
efficiency, low-cost heating and cooling technologies. We will 
also increase support for next-generation manufacturing R&D to 
lower energy costs for American manufacturers, and create 
American leadership in the next generation of emerging energy-
related advanced manufacturing technologies.
    As just one example of these advanced manufacturing 
technology R&D investments, in January we launched the 
Institute for Advanced Composites Manufacturing Innovation, a 
public-private consortium of 122 leading U.S. manufacturers and 
research organizations that will focus on advanced composites, 
foundational materials that are three times as strong and twice 
as light as the lightest metals.
    As EERE invests in high-impact research, development and 
demonstration programs to make clean energy solutions more 
affordable, accessible, and reliable, we remain fiercely 
committed to being a good steward of taxpayer investments. Over 
the past two years, EERE has implemented a new active project 
management approach under which we hold all of our projects 
accountable to annual go/no-go milestones, and under which we 
are more aggressively discontinuing projects that are not 
achieving key milestones to protect taxpayer interests.
    In closing, EERE looks forward to working with this 
Committee to make necessary and appropriate investments in 
clean energy innovation, to continue to make our organization 
effective and accountable to Congress and to taxpayers, and to 
ensure that the United States wins the global clean energy 
race.
    Thank you.
    [The prepared statement of Dr. Danielson follows:]
   
   
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    
    Chairman Weber. Thank you, Dr. Danielson.
    Mr. Loris, you are recognized for five minutes.

                  TESTIMONY OF MR. NICK LORIS,

                HERBERT AND JOYCE MORGAN FELLOW,

                      HERITAGE FOUNDATION

    Mr. Loris. Thank you. Chairman Weber, Ranking Member 
Grayson, and distinguished Members of the Subcommittee, thank 
you for this opportunity to discuss the Department of Energy's 
Office of Energy Efficiency and Renewable Energy.
    My name is Nick Loris, and I am the Herbert and Joyce 
Morgan Fellow at the Heritage Foundation. The views I express 
in this testimony are my own, and should not be construed as 
representing any official position of the Heritage Foundation.
    Often overlooked in the criticism of policies that pick 
winners and losers in energy markets is the proper scrutiny of 
all the spending programs within EERE. The given logic for many 
of these initiatives is that a gap exists between basic 
research and economic viability, and thus, more taxpayer 
dollars must be spent to attract private investment. The 
reality though is that the market demand for transportation 
fuel and electricity are incentive enough to spur competition 
and innovative breakthroughs. Globally, these are multitrillion 
dollar markets. If any renewable technology captures a mere 
slice of that market, it would stand to make billions, if not 
tens of billions of dollars in profit annually. Breaking into 
this market is not a problem of the so-called valley of death 
where good ideas are unable to attract substantial investment. 
It is a valley of wealth waiting to be had.
    The objectives of this office may be laudable, but it is 
simply not the role of the Federal Government to reduce cost 
and lower risk. When the government attempts to drive 
commercialization, it circumvents the competitive process that 
appropriately assigns risk and reward, and disregards how 
markets efficiently allocate resources. Take, for instance, the 
bioenergy technologies program that aims to make advanced 
biofuels cost-competitive with conventional gasoline at $3 per 
gallon. Why is that an objective in the first place, and how 
does the government know that $3 will be the magic price point 
at which alternative fuels become competitive? As we all know, 
markets are very unpredictable. And even if somehow $3 does 
change the market for alternative fuels, businesses are much 
better equipped and flexible to deal with the changing economic 
circumstances. Most importantly, the private sector should be 
responsible for taking on that risk and innovating to lower 
costs.
    The same holds true for the electricity sector. For 
instance, the budget justification for the SunShot initiative 
states a goal of reducing the price for utility scale solar to 
6 cents per kilowatt hour without subsidies, and that will 
result in rapid, large-scale adoption of solar across the 
United States. The problem is that the SunShot initiative in 
and of itself is a huge government subsidy by spending hundreds 
of millions of taxpayer dollars to reduce the cost of solar. 
And if 6 cents per kilowatt hour results in rapid solar 
deployment, that is great, but that should be a business 
decision. Government has no business trying to make projects 
cost-competitive or improving a technology's reliability to 
make it more enticing for private financiers. Furthermore, the 
government is not very good at it, compared to those industries 
that actually have skin in the game. How many times have we 
heard from the DOE that an economically viable alternative 
energy source was just around the corner, and decades later and 
billions of taxpayer dollars squandered, the technology is 
still just around that corner.
    Another goal for this office is improving energy 
efficiency. Programs like the Advanced Manufacturing Office 
sound nice and like an easy sell to constituents, but 
manufacturers already know that energy is a significant cost, 
and will find ways to reduce energy consumption in order to 
gain a competitive advantage. Companies will make these 
investments if they believe the technology is promising, worth 
the risk, and the best use of their investment dollars.
    Instead, the Advanced Manufacturing Office provides nothing 
more than corporate welfare. For instance, past grant 
recipients have been some of the world's largest companies and 
massive energy users, including GE, Dow Chemical, and Boeing. 
These are not companies that need help from the taxpayer.
    Now, when it comes to energy efficiency, one area that 
makes more sense as a government function is to reduce energy 
use within the federal government. The government as an energy 
consumer does not face the same incentive structure, nor do 
they always weigh trade-offs like families and businesses do. 
But the Federal Energy Management Program should be carried out 
in a technology-neutral manner to ensure the purpose is actual 
energy savings to save taxpayer dollars, not meet a political 
agenda.
    All of this is not to say, however, that innovative 
technologies cannot emerge from federal spending, but there is 
a stark difference between how successes like the Internet 
became commercially viable versus attempts to commercialize 
specific energy technologies. Government projects that have 
become commercial successes, such as the Internet, computer 
chips and GPS, were not initially intended to meet a commercial 
demand, but instead, national security needs. Entrepreneurs saw 
an opportunity and created the commercially viable products 
that we enjoy today. The objective for Congress and the federal 
government should be to fund that basic research that meets 
national objectives, and create the proper pathway for DOE lab 
researchers to push that basic research out to the market, and 
for the private sector to tap into that expertise at our 
national labs.
    To conclude, America doesn't need a man-on-the-moon-style 
mission for energy because the government has a diverse mix of 
energy supplies to competitively price energy, and provide 
families and businesses with choice. True reforms that lay the 
groundwork and lay the framework for renewable energy 
technologies to succeed and achieves--achieve the goal that 
EERE sets will not come from more government spending, but 
instead, free market reforms that create a competitive economic 
environment.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Loris follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    
    Chairman Weber. Thank you, Mr. Loris.
    Ms. McCormick?

                TESTIMONY OF MS. RUTH MCCORMICK,

             DIRECTOR OF FEDERAL AND STATE AFFAIRS,

         BUSINESS COUNCIL FOR SUSTAINABLE ENERGY (BCSE)

    Ms. McCormick. Thank you for the opportunity to testify 
today. My name is Ruth McCormick, and I am the Director of 
Federal and State Affairs for the Business Council for 
Sustainable Energy. The Council is a broad-based industry trade 
group, representing companies and associations in the energy 
efficiency, renewable energy, and natural gas industries.
    Over the past several years, the United States has seen 
real market penetration of a wide range of sustainable energy 
technologies and resources, and we have witnessed the results 
of policies and research and development that work, but to 
continue the momentum of growth in these sectors, and to 
receive their co-benefits, long-term, stable policies will be 
needed to level the playing field and to provide market access. 
And the United States needs to continue to invest in energy 
research, development and demonstration to increase the 
efficiency of our energy generation and use, and to spur new 
innovations. This is important both for domestic economic 
growth and for U.S. competitiveness in global energy markets.
    I would like to focus my testimony in two areas. First, I 
would like to share some of the findings from the recently 
released 2015 edition of the Sustainable Energy in America Fact 
Book. The fact book was researched and produced by Bloomberg 
New Energy Finance, and commissioned by the Business Council 
for Sustainable Energy. It is intended to be a resource for 
policymakers with up-to-date market information.
    The second area I would like to discuss is the valuable and 
effective role that federal investments in the energy sector 
have played, and should continue to play, in the availability 
of new innovative energy technologies and practices.
    The fact book points to the dramatic changes underway in 
the U.S. energy sector. The data shows that traditional energy 
sources are declining, and natural gas, renewable energy, and 
energy efficiency are on the rise. These changes are increasing 
the diversity of the country's energy mix, improving our energy 
security, cutting energy waste, increasing our energy 
productivity, and reducing air pollution and greenhouse gas 
emissions. While technology costs have fallen, market barriers 
and grid integration challenges continue to hinder greater use 
of clean energy technologies. To continue the momentum of 
growth, long-term, stable policies will be needed to level the 
playing field and to provide market access to new technologies.
    Electricity markets are evolving, and the U.S. power 
sector, long organized around large, centralized systems, is 
considering distributed power options such as combined heat and 
power, waste heat to power, small scale renewables, and fuel 
cells. Other changes are also occurring in the U.S. energy 
sector, including the introduction of smart grid technologies 
for improving grid management, and a growing role for 
dispatchable resources such as natural gas plants, hydropower, 
and demand response.
    Many market structures do not yet fully recognize the 
benefits of some of the technologies, such as energy storage, 
or best practices, which allow for increased flexibility of the 
grid. For this reason, BCSE strongly supports the continued 
funding of basic and applied research for clean energy 
technologies. This must be balanced with work on 
commercialization, market transformation, and other efforts to 
ensure that products do not sit on laboratory or university 
shelves, but are transferred to the private sector to achieve 
the intended public benefit.
    There are strong analytical findings that show the overall 
return on federal investments in this area. For example, 3 
decades of investment in extraction of natural gas from shale 
has led to low natural gas prices, saving households and 
businesses money, attracting new industrial manufacturing 
opportunities in the United States, and helping to create U.S. 
jobs. As a result of energy efficiency policies and 
investments, total energy use in the United States is down 2.4 
percent since 2007, while gross domestic product has grown 
eight percent. The cost of solar PV models has fallen more than 
80 percent since 2007. Thirty-two percent of new electric 
generating capacity came from solar in 2014, and the industry 
now employs nearly 175,000 workers, more than tech giants 
Google, Apple, Facebook and Twitter combined. These are just a 
few examples. The energy sector involves technologies that have 
been transformed over the course of more than a century, and it 
is critical that the U.S. Government continue to invest in 
advancements.
    Council members look forward to working with this Committee 
and the federal government to ensure that public investments in 
these sectors are highly leveraged, effective and efficient in 
carrying out the intended policy aims.
    Thank you.
    [The prepared statement of Ms. McCormick follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
    
    Chairman Weber. Thank you, Ms. McCormick.
    Dr. de Rugy.

              TESTIMONY OF DR. VERONIQUE DE RUGY,

                    SENIOR RESEARCH FELLOW,

                        MERCATUS CENTER,

                    GEORGE MASON UNIVERSITY

    Dr. de Rugy. Good afternoon, Chairman Weber, Ranking Member 
Grayson, Members of this Subcommittee. My name is Veronique de 
Rugy. I am a Senior Research Fellow at the Mercatus Center at 
George Mason University where I study tax and budget issues.
    So for decades now, policymakers have tried to expand the 
federal role in developing alternative energy technology and 
move the economy away from oil, gas and coal. While I agree 
that we shouldn't subsidize fossil fuels, we should not 
subsidize green energy either. I would like to highlight three 
reasons for that.
    First, even with the best of intentions, nobody knows which 
particular energy sources will make the most sense down the 
road. This level of uncertainty is not unique to the energy 
industry. Every industry faces similar issues of innovation in 
a rapidly changing world. In most industries, the policy 
solution is to allow the decentralized market efforts of 
entrepreneurs and early adopting consumers to figure out the 
best route to the future.
    Second, government efforts to push markets in certain 
directions has real cost. Some of these costs are very visible, 
such as the $5 billion spent since 2009 on the Weatherization 
Assistance Program, which was found to be incredibly wasteful 
by federal auditors, riddled with corruption and questionable 
work, all this at the expense of taxpayers. But not all these 
costs are visible either. For instance, government subsidies to 
particular technology or industries can also delay the 
development of superior alternatives that don't receive 
subsidies, and that is because when the government invests in 
an area, it tends to shift resources in the private sector and 
the capital market away from unsubsidized projects, towards 
subsidized project, and that independently of the merits of the 
project.
    Third, the federal government's track record for picking 
winners in industries and technology is very bad. The 
Department of Energy has subsidized more than its share of 
failed projects. Also, the projects that do not fail often we 
find are subsidizing companies that did not need the help in 
the first place, and tend to be very well connected 
politically. The Department of Energy's 1705 Loan Program is a 
good example of the gap that exists between what the program's 
proponents claim it will achieve, and what it actually 
achieves. So I am going to focus on 1705, but actually, my 
findings pretty much apply to every other government programs 
that we are talking about here.
    These policies were put in place under the claim that 
renewable energy companies do not have access to sufficient 
credit to support new projects. However, when you look at the 
data, nearly 90 percent of the loans went to companies that 
were backed by giant, well-connected companies like NRG Energy 
Company and Goldman Sachs. It is very hard to imagine that 
these projects and these companies would not have access to 
capital, absent the 1705 loan. This program is also a good 
example of government favoring two distinct interest groups at 
the expense of taxpayers. First, in this case it is a loan 
guarantee, the lenders who shift the risk away from them, if 
they pick a program that ends up defaulting. Second, interest 
group, the companies that borrow at very beneficial terms and 
rates, especially compared to their competition. But while 
banks and companies that receive the guarantee get the upside 
of the program, taxpayers bear the risk and shoulder the burden 
when companies such as Solyndra and Abound Solar go under and 
default on their loans.
    So while the data on 1705 Loan Program speaks for itself, 
the problem is actually much bigger. Like most government 
interventions, these programs create serious and systemic 
distortions in the market. These distortions create the 
conditions for businesses to maximize profits by pleasing 
political interests, rather than by pleasing consumers. This is 
called cronyism and it entails enormous and most often unseen 
economic costs. The tragedy is that despite the evidence, 
lawmakers don't get rid of these programs. They are more likely 
to respond to pressure from vested interest than to taxpayers 
who are unlikely to realize how much they pay directly and 
indirectly for it.
    To conclude, I don't pretend to know what America's energy 
future will look like, and while I am all in favor of green 
energy, we have over six decades of research on government 
decision-making that shows that the sensible solution is often 
to leave these activities outside of the purview of government. 
It is not a loss, but a gain for government. Not only will it 
prevent the type of government failures we have been talking 
about, it will also allow government to focus on its core 
competency, providing public goods, and protecting human and 
property rights.
    Thank you.
    [The prepared statement of Dr. de Rugy follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    
    Chairman Weber. Thank you, Dr. de Rugy.
    We are going to start with the questions portion. I will 
recognize myself for five minutes.
    Dr. Danielson, the Administration often explains EERE's 
large budget by describing the office in three major 
categories, and I think you went through them, transportation, 
renewable power, and energy efficiency. By the way, I own an 
air conditioning company, I have for 34 years, so I am--energy 
efficiency is something that we deal with frequently, power 
requirements and those types of things. But even after dividing 
the EERE budget into these three categories, each category 
exceeds the allocation for nuclear or fossil energy research 
and development. Now, Dr. de Rugy made the comment that no one 
knows going into the future with certainty what is going to be 
the best form of energy, and while, you know, our crystal--my 
crystal ball doesn't work, apparently the battery is ran down, 
didn't have enough energy, I have to say the nuclear is 
probably a good possibility. So each category exceeds the 
allocation for nuclear or fossil energy research and 
development in the fiscal year 2016 budget request, with 
transportation actually funded at $793 million, renewable power 
funded at $645 million, and energy efficiency at $1 billion in 
the proposal. By contrast, fossil energy R&D is $560 million, 
nuclear energy R&D is $482 million, and each individual account 
in EERE is more than either one. In fact, the proposed budget 
for EERE is almost two times, as I said in my opening 
statement, more than the budgets for nuclear, fossil and 
electricity R&D combined.
    Do you think, and you--I mean you say that those three 
offices combined, as it were, you heard the figures, do you 
think this represents a balanced, all-of-the-above approach to 
energy research and development, and do you believe these EERE 
programs are more valuable to the American economy than 
research on our electric grid, fossil energy or nuclear energy 
R&D? And I will let you answer.
    Dr. Danielson. Well, thank you, sir. Thanks for that 
question. It is an important one.
    We and I do believe this is a reasonably balanced agenda as 
you look across the different sectors the DOE invests in. You 
have pointed out that fossil energy is at $842 million, nuclear 
energy at $907 million. Sustainable transportation is about 
$793 million, which is comparable to those numbers. That set of 
offices is where we do most of our work that relates to the 
transportation sector, which is where our foreign oil 
dependence is.
    Chairman Weber. Okay, but aren't you quoting the figures 
for the whole office, not just the R&D portion?
    Dr. Danielson. Yes, I am quoting for the whole office.
    Chairman Weber. Okay, but we are wanting to compare the R&D 
portions of that spending.
    Dr. Danielson. Okay, so in terms of R&D, I think maybe a 
better way to look at it is that the sustainable and 
transportation office is around $793 million. It is an 
important area to emphasize in that our transportation sector 
is where our dependence on foreign oil is. If you look at 
renewable energy, which is where we are addressing the power 
sector, and technology and the power sector, that is at $645 
million. The nuclear energy office exclusively addresses the 
power sector, and so I think comparing the renewable energy 
number and the nuclear number is a reasonable thing to do. And 
then we are the only office that is addressing efficiency in 
the built environment, which is a sector that is not addressed 
by the other offices. And if you take out some specific unique 
deployment-oriented programs such as the Weatherization 
Assistance Program, or Federal Energy Management Program and 
our Appliance Standards Program, that is at about $600 million 
of research and development.
    So I do believe this is a well-balanced portfolio. The 
Secretary is always very clear that we are funding all-of-the-
above in the context of a low-carbon future, and in addition, 
that we are not looking to prescribe market share, we are 
looking to innovate across the board and let the market 
determine what the market share will be.
    Chairman Weber. Well, let me get to my second question. 
Considering that the budget has grown, as I said earlier, 58 
percent in the last decade, what successes would you--what 
reasons would you point to to tell us why the office needs to 
grow another 42 percent?
    Dr. Danielson. Well, we are at a unique time in the history 
of a number of the technologies in the EERE portfolio where, 
after decades of long-term investment, we have gotten to the 
point where direct cost competitiveness is in our sights in the 
next, you know, 5, 10, 15, 20 years for a number of these 
technologies. And we are also seeing significant investments 
overseas to try to gain advantage in these areas, and so----
    Chairman Weber. I don't mean to cut you off. I get that 
but, of course, obviously, with our deficit and the way the 
economy is now, then we ought to really, really be focused on 
as much cost-cutting as we are about to have some super 
expenses.
    Mr. Loris, would you agree with his thoughts on the fact 
that the--this is an above--you know, all-of-the-above 
approach?
    Mr. Loris. I would agree in the sense that it is an all-of-
the-above approach to reduce costs, and it is not a proper role 
of the government, and we should have the same scrutinies of 
the Office of Fossil Energy, the Office of Nuclear Energy to 
get rid of all of these things.
    Chairman Weber. Okay. Ms. McCormick?
    Ms. McCormick. I think this is----
    Chairman Weber. Turn your--there you go.
    Ms. McCormick. I agree with Dr. Danielson, this is a 
critical time for these industries. We have seen significant 
cost reductions, and now is not the time to let those go.
    Chairman Weber. Irrespective of an $18 trillion deficit?
    Ms. McCormick. Well, things will have to be balanced. I 
think that we are looking for stable and consistent funding so 
that these industries can continue this momentum of growth.
    Chairman Weber. Okay. Dr. de Rugy, how about you, do you 
agree with Dr. Danielson?
    Dr. de Rugy. I mean I actually think--I agree that--with 
Nick that it is not the role--the proper role of the federal 
government, and a lot of the time when we talk about the 
benefit of a given program, it is because we actually don't 
look at the net cost. We don't look at the jobs that are 
actually lost, the impact on competition. We don't look at, you 
know, we don't look at a lot of things, so these benefits are--
happen as if they have happened in a vacuum.
    Chairman Weber. All right. Thank you for that. I am past my 
time. I am going to yield to the Ranking Member, Mr. Grayson of 
Florida.
    Mr. Grayson. Thank you. I have never worked in an air 
conditioning business. I had the burden of actually being in an 
economist for a few years, and before that studied economics, a 
further burden that I share with some of you apparently.
    So let us start with Dr. de Rugy. You mentioned that one of 
the legitimate functions of government is the creation of 
public goods. What is a public good?
    Dr. de Rugy. Public good is something that the private 
sector wouldn't produce, and that would benefit everyone.
    Mr. Grayson. And why is it the private sector doesn't 
produce public goods?
    Dr. de Rugy. Usually because the cost is too high, and no 
one is willing to invest in it.
    Mr. Grayson. Well, also because not a single commercial 
entity can internalize all of the generated profit, isn't that 
correct? Isn't that the essence of a public good?
    Dr. de Rugy. Yes.
    Mr. Grayson. All right, so isn't knowledge a public good?
    Dr. de Rugy. Knowledge is a public good, but--actually, no. 
No. We have a lot of investment--private investment in 
knowledge, and----
    Mr. Grayson. Well----
    Dr. de Rugy. --private investment in energy too.
    Mr. Grayson. That is true, but you cannot internalize 
inside one company the benefit that comes from knowledge, and 
that includes scientific knowledge, doesn't it?
    Dr. de Rugy. But the government is very bad at actually 
knowing anything, and one of the reasons is because there is no 
cost and benefit, there is no profit and losses, which is the 
way, as we know, since Friedrich Hayek, actually the market 
disperses the knowledge across millions of actors in the most 
efficient way.
    Mr. Grayson. Well, that sounds more like ideology than 
economics to me----
    Dr. de Rugy. That is actually----
    Mr. Grayson. --Dr. de Rugy.
    Dr. de Rugy. Well, actually, it is interesting because----
    Mr. Grayson. And I am very familiar with the work of----
    Dr. de Rugy. --Larry Summers has said that this insight of 
Hayek is the most important economic insight of the 20th 
century, so I don't think----
    Mr. Grayson. All right, well, you agree with me that one 
company cannot, for instance, internalize the benefit that 
comes from conservation? That is a benefit that is spread 
across dozens if not hundreds of different companies, even in 
our economy, and probably thousands in the world economy. Isn't 
it true that scientific knowledge in the form of better 
conservation cannot be internalized and, therefore, it is a 
public good?
    Dr. de Rugy. I don't agree.
    Mr. Grayson. Mr. Loris----
    Dr. de Rugy. Actually, we see----
    Mr. Grayson. --what about you?
    Mr. Loris. I wouldn't agree either. I think there----
    Mr. Grayson. Really?
    Mr. Loris. --are plenty of opportunities for the private 
sector to invest in conservation and make a profit from it.
    Mr. Grayson. So you wouldn't even concede that the 
government should generate public goods as Dr. de Rugy did in 
her opening statements?
    Mr. Loris. I think the proper role for--is to focus on more 
of the things that the Office of Science does, which is----
    Mr. Grayson. Answer my question please.
    Mr. Loris. Could you repeat the question?
    Mr. Grayson. The question is would you concede that the 
government does, in fact, have a role in creating public goods, 
or you wouldn't even believe then scientific research should be 
done to create those public goods?
    Mr. Loris. I think it would depend on the circumstance.
    Mr. Grayson. Well, the circumstance----
    Mr. Loris. Which public good are you talking----
    Mr. Grayson. --is the creation of a public good in the form 
of scientific knowledge.
    Mr. Loris. Scientific knowledge, sure.
    Mr. Grayson. Yes. Okay, good.
    All right, now, what about externalities. Tell me what an 
externality is.
    Mr. Loris. An externality is, you know, something that is 
not captured by the production of a good, such as pollution, or 
external benefits coming from the production of a good as well.
    Mr. Grayson. All right, so would you agree with me that it 
is a legitimate basis for scientific research by the government 
to address the market inefficiencies that are caused by 
externalities like pollution----
    Mr. Loris. No.
    Mr. Grayson. --which is caused by fossil fuels and not by 
most renewable energy?
    Mr. Loris. No, I don't think the most efficient way to 
internalize a negative externality is through government 
programs----
    Mr. Grayson. I didn't ask you whether it was the most 
efficient way, I asked you whether that was legitimate.
    Mr. Loris. No, I don't--not spending money on scientific 
research to internalize negative externalities, no, I don't 
believe that is a----
    Mr. Grayson. Well, again, I feel like I am hearing more 
ideology than I am economics at this point.
    Back to you, Dr. de Rugy. Would you agree with me that a 
barrier to entry is a legitimate form of a market imperfection 
that could be addressed by the government?
    Dr. de Rugy. Well, very often the government is responsible 
for putting up----
    Mr. Grayson. Oh, my goodness, can I just----
    Dr. de Rugy. --barriers to entry.
    Mr. Grayson. --have the question answered?
    Dr. de Rugy. Well, usually, if a government--if a private 
sector has a monopoly and the government tries to break it----
    Mr. Grayson. What is a barrier----
    Dr. de Rugy. --I think----
    Mr. Grayson. --to entry, Dr. de Rugy?
    Dr. de Rugy. It is--the barrier--like you have a company 
that has a monopoly and a--and prevents other companies to 
getting in because the costs are too high for these companies 
to compete.
    Mr. Grayson. Okay. So lack of capital is a barrier to 
entry, is it not? And that lack of capital is addressed by 
scientific research done by the government----
    Dr. de Rugy. Actually----
    Mr. Grayson. --isn't that correct?
    Dr. de Rugy. Actually, this is an excuse used by the 
government, and there are many, many instances to justify their 
program, and when you actually look at the supposedly market 
failure that the government identifies, there is none. And the 
private sector is the best one use--is the best player to 
actually come up with solutions to whatever lack of capital. 
Look at the----
    Mr. Grayson. All right, your excuse is other people's 
reason----
    Dr. de Rugy. --export/import bank----
    Mr. Grayson. --and progress, but let us finish with this 
since my time is almost running out. We spend $6 trillion each 
year on energy, we being the human species, humanity. We spend 
$6 trillion a year. Now, let us suppose, hypothetically, that 
someone could spend $200 billion and create free energy 
forever. You will agree with me that that would be an enormous 
rate of return, would it not? Yes?
    Dr. de Rugy. If----
    Mr. Grayson. Mr. Loris? Yes?
    Dr. de Rugy. It would be.
    Mr. Grayson. Enormous rate of return.
    Dr. de Rugy. Yes.
    Mr. Grayson. Right, Dr. de Rugy? Enormous rate of return, 
right? Can you identify for me anybody now operating in the 
renewable energy sector that could come up with $200 billion 
and do that?
    Dr. de Rugy. But you are assuming that, for instance, if 
there is a market failure, which I don't concede there 
necessarily is in the energy market, that actually it a 
necessary and sufficient condition for the government to 
invest. The way the government invests because the decisions 
are driven by politics----
    Mr. Grayson. All right, Mr. Loris----
    Dr. de Rugy. --is actually----
    Mr. Grayson. --would you like to answer my question?
    Mr. Loris. I think there are six trillion reasons for the 
renewable energy sector to capture opportunities, and they 
don't need any more.
    Mr. Grayson. Can you identify for me a single company in 
the renewable energy sector that could raise $200 billion, even 
if it was to eliminate the cost of energy forever, one company?
    Mr. Loris. I don't know the answer to one company, but I 
know you have a lot of companies like BP and major fossil fuel 
producers that invest in renewable opportunities to capture----
    Mr. Grayson. Which puts those----
    Mr. Loris. --those opportunities too----
    Mr. Grayson. --out of business if they actually did that 
research.
    Mr. Loris. Largely----
    Mr. Grayson. All right, thank you.
    I yield back.
    Chairman Weber. The gentleman yields back.
    And now recognize the gentleman from Washington, Mr. 
Newhouse.
    Mr. Newhouse. Thank you, Mr. Chairman. Appreciate it. And 
thank you all for being here and helping us look at the 
Department's request for the budget for EERE, and a very 
interesting conversation.
    Could I ask a question of you, Dr. Danielson? I come from 
the Pacific Northwest where we are blessed with--I would say a 
diverse mix of energy, including hydro, wind, nuclear, gas, 
also utilize energy efficiency. We are also a leader in 
modernizing our electric grid with the forward-thinking 
utilities and world-class research that--institutions like the 
University of Washington, my alma mater, Washington State, and 
also the Pacific Northwest National Laboratory, which all 
worked together to develop test beds to take research from the 
lab to demonstrate new innovative technologies.
    The Secretary appeared before us, I believe it was in 
February. He discussed the DOE's grid modernization which is 
very much in line with what we are trying to do in the State of 
Washington. So could you clarify for me the EERE programs which 
will advance the grid modernization, and how those investments 
will benefit states like mine?
    Dr. Danielson. Well, thank you for that question, 
Congressman. And congratulations on PNNL's 50th anniversary 
recently.
    Mr. Newhouse. Thank you.
    Dr. Danielson. There are some key areas where we are making 
innovation investments as it relates to grid modernization. One 
area is in the area of predicting solar and wind resources much 
more accurately, so using advanced modeling and simulation to 
develop tools that would actually allow utilities to know how 
much wind and solar are coming and when, which would allow them 
to much more effectively operate the grid.
    We are also, you know, one of the most exciting and 
important emerging opportunities we have as it relates to the 
grid is the dramatic reduction in cost of distributed energy 
technologies. So Americans, more and more, have the opportunity 
to actually generate their own power on-site, whether it is 
photovoltaic power, combined heat and power from combustion to 
fuel cells. And also with the emergence of advanced information 
technologies over the last couple of decades, we now have the 
opportunity to set up a truly transactive market where, instead 
of having a modern--a grid system that only has a few hundred 
or a thousand generators controlled, we can actually empower 
the consumer to interact with the grid in a real-time way, and 
so that is something we are spending a lot of time and effort 
and innovation in is enabling that market--that transactive 
market so that homes can transact with the grid in a cost-
effective way.
    Mr. Newhouse. Could I also ask you to help us understand 
why this is all a role of government, and why the electric 
industry, which owns a lot of the grid, is not modernizing on 
its own? And maybe that relates to some of that what we have 
already been talking about.
    Dr. Danielson. When I get together with folks from across 
the utility industry, from the solar industry, from Public 
Utility Commissions, they all realize and recognize that the 
most cost-effective way to get to a low-carbon future will 
likely involve distributed energy, but making that transition 
is difficult. And so we have a Grid Modernization Laboratory 
Consortium where Pacific Northwest National Lab is the lead, 
where we are working with utilities to help them understand 
what those least-cost approaches are going to be, and how can 
they make the best transmission and distribution investments to 
enable the most cost-effective, reliable, resilient grid going 
into the future.
    Mr. Newhouse. Thank you, Doctor.
    My time is getting short, so quickly, I am going to ask you 
about the energy storage R&D that is scattered throughout 
several areas. Let us see, it is the Office of Science, the 
Joint Center of Energy Storage Research, the ARPA-E, Energy 
Storage Program at the Office of Electric Delivery and Energy 
Reliability, Vehicle Technical Program--Technologies Program, 
Solar Energy Program, Hydropower Program. There is--the list 
goes on. So how many battery and energy storage programs can 
there be found within the agency, and can you tell me that we 
are sure that the highest priority is--research is funded so 
that we avoid duplication?
    Dr. Danielson. Thanks for that question. It is an important 
one.
    Just in the last few years, the Department of Energy has 
set up internal Tech Teams that have representatives from each 
of the offices of relevance, and in areas like grid storage or 
energy storage. And so we are actually very tightly 
coordinated, and if you look at each and every one of those 
efforts, they are distinct, they are synergistic, and they do 
not overlap. And so both in terms of our energy storage work 
that is related to electrified transportation, which is the 
primary role of our Vehicle Technologies Office, and then when 
you look at grid storage, that is a little bit more spread 
around the Department, including primarily the Office of 
Electricity, but also our Water Power Program does research in 
hydropower, which is not done in the Office of Electricity. And 
so it is a--spread around in a way that I think is perhaps 
unfortunate and not transparent, but it is highly coordinated.
    Mr. Newhouse. Good. Good. I appreciate that.
    Mr. Chairman, I yield back the negative amount of my time.
    Chairman Weber. Thank you, Mr. Newhouse. We will carry that 
over for next hearing.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Lipinski.
    Mr. Lipinski. Thank you, Mr. Chairman. If we did that, it 
would really shorten things up, you know. So I had better get 
going.
    I believe that the work that EERE does is critical to 
achieving a sustainable energy future and growing our nation's 
energy economy. We see that the technologies developed at EERE 
provide a more robust energy portfolio, reduces our impact on 
the environment, and enables a growing U.S. clean energy 
industry. So I am glad to see the 2016 budget request is doing 
more to support clean energy innovation and make the United 
States a leader in the clean energy marketplace.
    So a couple of questions, I want to see how many of these I 
can get to about some of the things the EERE is doing. And I am 
going to start with a question for Dr. Danielson. We saw that 
Paris just temporarily had a ban on half the cars from driving, 
in response to smog problems. Transportation contributes to 
almost 1/3 of emissions in the United States. Electric vehicles 
can enable more environmentally friendly transportation, and at 
Argonne National Lab, which is in my district, they are working 
to develop new battery technologies that will enable cheaper, 
longer-range electric vehicles. Can you describe the biggest 
challenges to widespread use of electric vehicles, and how 
strong funding for EERE is helping to improve vehicle 
technologies?
    Dr. Danielson. Well, thanks for that question. You know, 
the biggest--the longest pole in the tent as it relates to 
electric vehicles having a cost-competitive situation versus 
traditional vehicles is really in the battery cost. And as you 
mentioned, our Argonne National Laboratory has been an absolute 
powerhouse in terms of developing new advanced lithium-ion 
battery technologies. Indeed, they have developed basically a 
battery that is twice as good as any other battery out there, 
and early versions of the material they have developed are now 
getting into the market. But I am very optimistic. You know, 
right now, if you look at the technology we have, we are at 
about $300 per kilowatt hour. Something like a 100-mile 
electric vehicle would pay back at that price over five years. 
A plug-in hybrid of 40 miles electric range would pay back at 
about $200 per kilowatt hour, and a 300-mile electric vehicle 
would require a battery cost of about $125 per kilowatt hour. 
So we are at about $300 per kilowatt today, but with continued 
investments in innovation, using the cutting-edge scientific 
facilities at Argonne, in addition to an applied set of 
researchers that we are supporting there, and we have since the 
90s, we are confident that we are going to get to that cost 
goal in the 2020 time frame.
    Mr. Lipinski. Very good. I want to move on to the role of 
DOE commercialization. In your testimony, Ms. McCormick, you 
mentioned that you don't think DOE's mission stops at the 
laboratory bench. And I thank you for recognizing the 
importance of getting innovative technology transitioned to the 
marketplace.
    I want to ask, can you describe why federally-funded 
technology transition programs are critical to bridging the 
valley of death between lab and market, and I just want to 
mention the--I know Lab Corps is starting up, which I think is 
going to be very helpful, but can you talk about the important 
role of the federal government here?
    Ms. McCormick. Yes, thank you. The Business Council for 
Sustainable Energy represents a broad range of energy 
technologies, so the answer to that question is unique to each 
industry. It is a little bit different for each one, depending 
on where they are and what they do. But I am hearing pretty 
universally from the technologies within our coalition about 
the need for the government to be a neutral player to help 
industries as they break into these markets, and some of these 
issues related to things like grid integration or some of these 
soft costs that are mentioned, for example, for some industries 
like the solar industry, because they do not have a financial 
vested interest in the electricity grid. They can sometimes 
share best practices from the states, and learn and share that 
information to other states and to other players across the 
country. So I think that the Department of Energy is uniquely 
positioned to provide that kind of technical assistance, and 
provide the ability for these technologies to break into the 
market, because the electricity sector is a regulated industry, 
and it has layers of regulation; the federal level, the state 
level, is it not an open free market, and there are reasons for 
that. And so the Department of Energy can offer a lot of 
assistance to these technologies that are not legacy 
technologies, but are newer and more innovative.
    Mr. Lipinski. Thank you.
    With my few seconds left, I just--I have a question for the 
record about hydrogen and what EERE can do with that. As the 
author of the H-Prize Act, I am very happy to see that moving 
forward right now. So with that, I will yield back.
    Chairman Weber. Is the gentleman requesting that question 
be read into the record or made a part of the record?
    Mr. Lipinski. I--are we going to have five days to submit?
    Chairman Weber. Yes, absolutely, without a doubt.
    Mr. Lipinski. Yes.
    Chairman Weber. Okay, thank you.
    Chair now recognizes the gentleman from Kentucky, Mr. 
Massie.
    Mr. Massie. Thank you, Mr. Chairman.
    First off, I want to let you know I drive an electric car, 
although I suspect the electrons providing the electromotive 
force this morning to get me here came by virtue of the 
combustion of fossil fuels. So I have a Friends of Coal license 
plate on my electric car. I also live in a house that has a 13 
kilowatt solar array on it, and I am very interested in these 
things. I tell republicans that you can dislike the subsidies, 
I dislike the subsidies, but you shouldn't hate solar panels 
because they are rocks that make electricity, and that is a 
pretty virtuous rock.
    But let me ask you about this, and I have some experience 
in this. Mr. Danielson, if you wanted to install another 
megawatt of production capacity in our country, would it be 
cheaper to do it in a solar form or on 100 households with 10 
kilowatt arrays?
    Dr. Danielson. You know, I don't know the direct answer to 
that question. So the big difference that--I would have to just 
do the calculation, would be is that your----
    Mr. Massie. Is it cheaper to put a whole bunch of these up 
on roofs--on the roofs of houses? To climb up on the roofs----
    Dr. Danielson. Okay.
    Mr. Massie. --drill holes in your roof, risk falling off, 
like I have done, so I am very familiar with this, or to just 
build a solar farm--a centralized----
    Dr. Danielson. Thank you for that clarifying question.
    Mr. Massie. Okay.
    Dr. Danielson. The--it is cheaper to build a centralized 
solar power plant per kilowatt hour, per megawatt than it is 
for a distributed----
    Mr. Massie. It is----
    Dr. Danielson. --but what I would like to point out is that 
it is a different--we are--it could be a different value, that 
if you are putting a rooftop system in, you are avoiding the 
retail rate, whereas if you have a centralized system, it is 
putting power into the grid----
    Mr. Massie. Right.
    Dr. Danielson. --at a wholesale rate.
    Mr. Massie. And you get out of some taxes, I suppose. But 
the grid has to be designed for the worst case, not the best 
case or the average case, right? So----
    Dr. Danielson. Okay.
    Mr. Massie. --because solar power is so variable, it still 
really doesn't do anything for design--for redesigning the 
grid. I suspect it will always be the case that it is cheaper 
to put in a larger facility than to go up on your roof and 
drill holes and do all these distributed installations. So why 
is our government so fixated on subsidizing the installation of 
all these distributed systems, which can't even begin to 
approach the cost-effectiveness of a more centralized system?
    Dr. Danielson. Well, this is something that we are looking 
to tackle with our Grid Modernization Laboratory Consortium is 
to look at long-term planning and system-level costs so that, 
you know, if you are able to put quite a bit of distributed 
solar out there, could that reduce your cost of building out 
more distribution or more transmission. And so, you know, we 
would want to make sure to do that analysis from a system-level 
cost basis.
    Mr. Massie. Right. Okay. Well, I want to ask another 
question because, again, you have to design for the worst case, 
and without a better battery, you are basically not going to 
improve the situation. You talked about your five criteria; 
impact, additionality, openness, economic benefit, proper role 
of government. Can you motivate a $7,500 subsidy for a $100,000 
car in those five terms? Specifically, I am talking about the 
federal tax credit for cars--electric cars that--luxury 
vehicles that cost $100,000. What is the price elasticity for a 
$100,000 luxury vehicle, and how many more--has the government 
gone back to study how many more of those have been sold, and 
what the economic benefit to all of society is because of that 
tax credit?
    Dr. Danielson. So on your first question related to the 
application of the five core questions of EERE, we don't 
administer the subsidy programs, so those questions wouldn't--I 
didn't develop those----
    Mr. Massie. Okay.
    Dr. Danielson. --I developed those with innovation programs 
in mind. And then can you repeat your second question?
    Mr. Massie. Well, I am concerned about, is that an 
efficient way to achieve goals, to subsidize a luxury good?
    Dr. Danielson. Well, what we have seen in the development 
of many technologies, including clean energy technologies, is 
that, you know, this is something I saw when I was in the 
business world, is that innovative new technologies often find 
application in first markets where customers are willing to 
pay. For example, 35 years ago photovoltaic started in 
satellites. Now we have reduced the cost by 99 percent, and so 
now they are getting into the grid market. So I think an 
expensive electric vehicle, let us say such as what Tesla 
makes, is a first market adopter chance to get the EV industry 
going and drive volume----
    Mr. Massie. So I will point out----
    Dr. Danielson. --and drive----
    Mr. Massie. --for economic benefit or additionality that 
all of those subsidies add up to about $500 million, which is 
two percent of their market cap. So I find it hard to believe 
that it wouldn't have happened without that subsidy.
    While I have a little bit of time left, I want to ask when 
was the car invented?
    Dr. Danielson. Geez, I don't know the exact----
    Mr. Massie. At least 100 years ago?
    Dr. Danielson. Yeah. Yeah.
    Mr. Massie. And it is fundamentally the same architecture. 
So why are we doing car research? When we do electric or 
vehicle battery research or fuel cell vehicles, you mentioned, 
shouldn't we be doing research on fuel cells and batteries and 
not the vehicle itself or the application to the vehicle? I 
mean after all, the batteries that are in the car that you 
mentioned came literally from a laptop, so why is it more 
virtuous if it is a vehicle when we know, in general, we need 
battery technology? Shouldn't we be focused on basic research 
instead of trying to iterate on something that--whose basic 
architecture was settled 100 years ago?
    Dr. Danielson. Well, one thing I will point out is that the 
preponderance of the work we do at EERE is applied research, 
and early stage applied research. And so it is really cutting-
edge innovation. It is not basic research in the sense that it 
is just exploratory and really intending to create knowledge--
we are actually trying to develop technologies. And so I did 
want to emphasize that. But when we do analyses and look at 
what the impact can be, there is a lot of room for improving 
the efficiency of the combustion engine. There is a lot of room 
for improving the materials that a car is made of to make it 
much more lightweight. And we also see great opportunity in 
fuel cells and electric vehicles, and we are looking to 
innovate in these areas and help achieve cost reduction in 
these technologies, but it is ultimately going to be the market 
that will decide which of these get into the market.
    Mr. Massie. All right, my time has expired.
    Chairman Weber. Gentleman yields back.
    The gentleman from Texas, Mr. Veasey, is recognized.
    Mr. Veasey. Thank you, Mr. Chairman. I appreciate that.
    And I wanted to ask about wind energy, particularly to Dr. 
Danielson. Dr. Danielson, you may know that in Texas, we are 
basically the king of wind. We have about 20 percent of the 
capacity nationwide coming out of our state. Most of that was 
done with tax credits and different things like that. Some of 
that was actually done when Mr. Weber and I were serving in the 
Texas legislature together, and so we are very proud of what it 
means to our economy, and would hate to see our economy, you 
know, wrecked by any policy that would reverse the progress 
that we have made in delivering wind to our state, and the--and 
what that has meant for the entire country.
    And I wanted to ask you in particular about wind, and what 
sort of research that you guys are doing to make wind even more 
efficient. Like one of the things that I would like to see with 
wind, for instance, is, if you have ever been out to west 
Texas, you will know that it takes up a lot of space. It takes 
up a lot of landmass. What are we doing to make it to where 
wind or wind turbines can be moved in various locations, and 
maybe made even more efficient to deliver the same amount of 
capacity as they currently do?
    Dr. Danielson. Well, thanks for that question. You know, 
one of the areas that we--is our primary research and 
development focus in wind is in wind plant optimization. So you 
find that when--if you have a wind turbine all by itself, it 
performs in a certain way. When you bring it into a farm, you 
typically get 30 percent reduction in the power output because 
of the way that the turbines interact with each other. And you 
also find that some turbines are getting a lot of turbulence 
from the turbine in front of them, and they will break in a 
shorter period of time than others. And so we have a consortium 
around our national laboratories focused on taking advantage of 
high-performance computing capabilities and advanced modeling 
simulation in the area of fluid dynamics to try to figure out 
how do you put together a wind farm, and how do you control it 
in a way that you can get that 30 percent back. So if you could 
get 30 percent more energy out of a windfarm without putting 
any more hardware on the ground, that is a significant cost 
reduction to drive wind towards direct cost-competitiveness 
nationwide.
    Mr. Veasey. One of the things that often surprises people 
when I visit one of the windfarms down in Midland, where they 
obviously produce a lot of oil too, I was asking the guy that 
was working out there at the windfarm about the generator at 
the bottom of the windmill, and he was explaining that, he said 
they actually use oil--a renewable oil, almost like a refined 
oil, like a 40-weight that you would use to change the oil in 
your car, they use this in the bottom of the windmill in order 
to, I guess, keep the generator going and to keep everything 
lubed. How much petroleum products are they--does wind 
currently use in order to make the windmills run properly?
    Dr. Danielson. Thank you for that question. I actually 
don't know the answer to that question, but I would be more 
than happy to take it for the record and find an answer to that 
question.
    Mr. Veasey. Okay. Well, thank you. I appreciate that. And I 
did--I had a question for Ms. McCormick too. I just wanted to 
know just about some federal research investments in wind 
technologies that are impacting the growth right now in the 
wind energy sector.
    Ms. McCormick. Well, I do know that the wind industry is 
requesting and is supporting some of the funding that the 
Department of Energy is proposing for studying the impact on 
wildlife, so that they have some specific clarifications that 
they are looking for in the DOE budget, but obviously that is 
an issue that the industry is interested in seeing further 
research on.
    Mr. Veasey. Okay.
    Thank you, Mr. Chairman. I am going to give back some of 
the time that we lost a little bit earlier.
    Chairman Weber. Well, good. Will you credit that to the 
gentleman from Washington's account?
    Mr. Veasey. I will do that.
    Chairman Weber. Okay.
    Mr. Veasey. Yes.
    Chairman Weber. Thank you.
    Mr. Veasey. Happy to.
    Chairman Weber. And the gentleman from Colorado, Mr. 
Perlmutter, is recognized.
    Mr. Perlmutter. Thank you, Mr. Chairman. And thank you to 
the panel for appearing today. Thank you for your testimony.
    Obviously, Dr. Danielson, I just want to congratulate you 
at EERE and the Department of Energy for its part--its role in 
really reducing the cost of photovoltaics, wind turbines, 
biomass efforts, because I would say that I am about 
competition, and the more competition that we have among energy 
sources the better off we are going to be. And we are seeing a 
reduction in demand, so that may be the efficiency side of 
EERE. We see other sources in terms of photovoltaics, wind, 
biomass, fusion, nuclear, all as competitive pieces, and now we 
see a giant drop in the price of oil which, in the past, has 
been difficult for the energy sector as a whole because it 
wiped our domestic energy, you know, whether it was oil and 
gas, fossil fuels, coal, or renewables. Our renewable energy 
efforts, can it withstand this drop in oil prices, Dr. 
Danielson?
    Dr. Danielson. Well, thanks for that----
    Mr. Perlmutter. Will people continue to participate in 
this?
    Dr. Danielson. Thanks for that question. You know, it is 
actually the shale gas boom that is creating a more competitive 
environment in terms of natural gas power generation. And so 
there is no doubt that if those prices remain where they are, 
that other forms of energy, renewables or any other, nuclear, 
are going to have an even lower price point to compete with to 
be competitive. But there are benefits to diversity in any 
energy system. There are many folks out there co-ops, for 
example, who operate their own grids who see value in the lack 
of a fuel cost associated with renewables, so as they are 
building out a portfolio of, let us say, natural gas-powered 
assets, they want to include renewables in that portfolio as a 
way to mitigate risk against price changes in natural gas, for 
example.
    Mr. Perlmutter. And I guess I would ask the economists on 
the panel. Mr. Loris, you, Dr. de Rugy, I mean I guess I am 
taking it as an axiom that more competition is better than 
less. Would you agree with me on that?
    Mr. Loris. Well----
    Dr. de Rugy. More competition--yeah, go ahead.
    Mr. Loris. Go ahead.
    Dr. de Rugy. Go ahead.
    Mr. Loris. Please.
    Dr. de Rugy. Yeah, no, more competition is good, but the 
problem with----
    Mr. Perlmutter. It was a yes or no.
    Dr. de Rugy. Yes.
    Mr. Perlmutter. Okay.
    Mr. Loris. Yes.
    Dr. de Rugy. More competition is good.
    Mr. Perlmutter. Okay. So, Dr. de Rugy, I want to--you know, 
we are talking about the politics, and we are in the Congress 
of the United States of America, this is politics here, okay, 
because different people have different desires for different 
things. And so I am speaking today as an elected official. I 
used to be a bankruptcy lawyer handling big Chapter 11 
bankruptcies, so I got to see the dark side of business and 
take them apart. In connection with subsidies and incentives, 
do you know how much in way of incentives, either by oil 
depletion allowances or other kinds of deductions, we give to 
the oil and gas industry?
    Dr. de Rugy. I don't know the exact amount.
    Mr. Perlmutter. It is about $13.4 billion, which is pretty 
much--if you take all the tax deductions available to the 
renewable energy sources, they are pretty equivalent. I think 
they are about the same, solar and wind. It may be in a perfect 
world we shouldn't provide any incentives to either one, but I 
am a guy who thinks I want more energy sources, not less, I 
want more competition, not less, and if I am going to subsidize 
one, I am going to support the other so that we can get the 
best of both worlds. Does that makes sense to you, or is that--
--
    Dr. de Rugy. Well, at least----
    Mr. Perlmutter. --am I mistaken?
    Dr. de Rugy. At least you are consistent.
    Mr. Perlmutter. Good.
    Dr. de Rugy. And see, I don't want subsidies on the fossil 
fuels that I don't want on green energy, so----
    Mr. Perlmutter. Okay. The Chairman asked a question about, 
you know, our debt, and I serve on the Financial Services 
Committee as well, so it is the banking, stock market, housing, 
economy. And, you know, the one thing that I know from the last 
eight years having served on that, we had a surplus at the end 
of the Clinton Administration, Revenues exceeded expenses, and 
then we had two tax cuts, two wars, and a crash on Wall Street 
that is the bulk of the debt that this country has incurred. It 
wasn't the cost of EERE or any of the energy, or any of the 
other things. The bulk of it was these massive things and tax 
cuts, wars and crash. Would you agree with me on that?
    Dr. de Rugy. Yeah, you--yes. Too much spending----
    Mr. Perlmutter. Okay.
    Dr. de Rugy. --for sure.
    Mr. Perlmutter. Okay. Mr. Chairman, I appreciate the 
opportunity to serve on this committee, and I yield back.
    Chairman Weber. The gentleman yields back.
    And we appreciate the witnesses and their testimony. In 
closing today's hearing, I do want to say that I hope we draw 
attention to the fact that there has been a huge 42 percent 
increase requested by the Administration in the budget which, 
in today's hard economic times, is going to be very, very 
tough, so I hope we have served to at least outline and discuss 
that back and forth. Thank you for your valuable testimony. 
Thank you for sitting through our questions. Thank the Members 
for their questions. The record will remain open for two weeks 
for additional comments and written questions from Members.
    The hearing is adjourned.
    [Whereupon, at 4:02 p.m., the Subcommittee was adjourned.]

                               Appendix I

                              ----------                              


                   Answers to Post-Hearing Questions


Responses by Dr. David Danielson


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              Appendix II

                              ----------                              


                   Additional Material for the Record



             Prepared statement of Committee Ranking Member
                         Eddie Bernice Johsnon

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

               Document submitted by Dr. David Danielson


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 [all]