[Senate Hearing 116-246]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-246

                  PROSPECTS FOR GLOBAL ENERGY MARKETS, 
                INCLUDING THE ROLE OF THE UNITED STATES_
           PERSPECTIVES FROM THE INTERNATIONAL ENERGY AGENCY

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                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 28, 2019

                               __________


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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
35-557                     WASHINGTON : 2020                     
          
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       MARIA CANTWELL, Washington
STEVE DAINES, Montana                BERNARD SANDERS, Vermont
BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
JOHN HOEVEN, North Dakota

                      Brian Hughes, Staff Director
                     Kellie Donnelly, Chief Counsel
  Brianne Miller, Senior Professional Staff Member and Energy Policy 
                                Advisor
                Sarah Venuto, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                Renae Black, Democratic General Counsel
                David Gillers, Democratic Senior Counsel
                            
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from 
  West Virginia..................................................     2

                                WITNESS

Birol, Dr. Fatih, Executive Director, International Energy Agency     4

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Birol, Dr. Fatih:
    Opening Statement............................................     4
    Quote from the launch presentation of WEO-2012, London, 11/
      12/12......................................................     7
    Written Testimony............................................    10
    Responses to Questions for the Record........................    39
Manchin III, Hon. Joe:
    Opening Statement............................................     2
Murkowski, Hon. Lisa:
    Opening Statement............................................     1

 
 PROSPECTS FOR GLOBAL ENERGY MARKETS, INCLUDING THE ROLE OF THE UNITED 
       STATES--PERSPECTIVES FROM THE INTERNATIONAL ENERGY AGENCY

                              ----------                              


                      THURSDAY, FEBRUARY 28, 2019

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:06 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Lisa 
Murkowski, Chairman of the Committee, presiding.

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

    The Chairman. Good morning. The Committee will come to 
order.
    This is the second hearing of the week, so we are moving 
along aggressively, which is a good thing. We are here this 
morning to consider the perspective of the International Energy 
Agency (IEA) on global energy markets.
    It has been a busy couple of weeks here. We have done some 
scene-setting hearings. We have covered the energy and minerals 
sectors, we have discussed the outlook for domestic policy, we 
have looked to the future of innovation, and we have examined 
the very real and persistent cyber threats to our critical 
infrastructure.
    This morning we are very, very pleased to welcome back to 
the Committee Dr. Fatih Birol, who is the Executive Director of 
the IEA. He has had an opportunity to be before this Committee 
on numerous occasions. I am always, always, very pleased with 
the opportunity that we have to ask you your views, your 
perspectives and for the information that you are able to 
provide to all of us for this global outlook for the year.
    The IEA is one of the world's premier organizations for 
energy information, insight, and analysis. So, again, the 
opportunity to discuss the agency's new World Energy Outlook is 
greatly appreciated.
    The good news for us right now is I think we are in a 
pretty good place. Over the past decade, the United States has 
transformed into a dominant player in global energy markets. 
Breakthroughs in hydraulic fracturing and horizontal drilling 
have allowed the United States to avoid building LNG import 
terminals up and down our coasts and instead export to our 
friends and our allies.
    We ended the arbitrary prohibition on domestic crude oil 
exports a few years ago. Since then, we have watched our 
exports take off and OPEC's power start to decline, all while 
prices remained at low to moderate levels.
    New technologies have substantially reduced our nation's 
greenhouse gas emission levels, and that points to our most 
reasonable path forward on climate change, which is lowering 
the cost of clean technologies--as opposed to burdensome new 
taxes, or endless regulations.
    We have also continued our strong commitment to research 
and development which allows the United States to be a 
technology driver with an impact that reaches far beyond our 
borders. As more of the world electrifies, we have an 
opportunity to build a supply that is more resilient, more 
affordable, and more reliable.
    I was pleased as I looked at the Outlook, Dr. Birol, that 
you take a very, very close look at the global power sector for 
these trends. And key to so much of this is the 
interconnectedness of our energy systems. No longer do we need 
to wonder what is happening on a pipeline or wind turbine in a 
remote part of the world. We have sensors that can provide its 
status almost instantly. And while this technology is 
remarkable and transformative, it is also critical to ensure 
that worldwide networks are protected against the evolving 
cyber threats and other vulnerabilities as interconnectedness 
grows in the energy sector.
    I am certainly among those who look to the IEA on energy 
policy, and what I find, what I hear from IEA helps ensure that 
our policies here are well-considered. I appreciate that the 
agency has branched into sectors beyond oil and gas, which had 
been that focus historically. I would also note that IEA's 
membership has now grown to 30 countries, each with dynamic and 
diverse energy portfolios.
    So again, Dr. Birol, it is wonderful to have you here, we 
appreciate your leadership. We all know that Paris is a long 
way away. We appreciate that you take the time to come here to 
Washington, DC, and particularly that you accept our invitation 
to speak before the Energy and Natural Resources Committee. You 
provide a very valuable perspective to the Committee. This is a 
hearing that I look forward to each year. And again, I welcome 
you.
    With that, I turn to my colleague and Ranking Member, 
Senator Manchin.

              STATEMENT OF HON. JOE MANCHIN III, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. Chair Murkowski, thank you for convening 
the Committee today, and Dr. Birol, thank you so much for 
joining us.
    I have been so impressed with the energy scene-setting 
hearings we have held in recent weeks, and hearing your view 
from the International Energy Agency is a great way to round 
those out for us.
    I also want to thank you for your focus on CCUS as an 
important part of our energy future. Both the Chairman and I 
come from energy producing states that have helped lead the 
U.S. to energy independence.
    West Virginia's coal and coal miners have done a lot of the 
heavy lifting for this country's economy, and West Virginia 
continues to be an energy exporter. Additionally, the Marcellus 
and Utica shale plays in West Virginia and Appalachia, more 
generally, have been key drivers in our nation's ability to 
further establish ourselves as a global energy leader. Of 
course Alaska, in turn, has long been a leader in oil and gas 
production. So the Chairman and I both believe that the U.S. 
needs to continue to lead in sustainable energy production as 
well as develop the energy technologies that incentivize other 
nations to reduce emissions to address the climate crisis.
    It has been some time since the Senate took a hard look at 
where we stand in terms of the power sector as it relates to 
climate change, so I am excited that Senator Murkowski and I 
will be holding a climate hearing next week to discuss where 
things stand here in the U.S. and globally. And this is most 
timely for you to be here today. Energy is often looked to as 
being at the heart of the climate debate, so I am very happy 
Dr. Birol is here to give us the global picture on energy 
needs.
    As we have discussed at previous hearings, breakthrough 
technologies will help us reliably meet our energy needs in the 
future while decarbonizing our energy system, and that is an 
all-of-the-above conversation. It can't just be about one fuel 
type, renewables or otherwise. If we are being realistic, we 
need to pursue solutions across the board. And the United 
States as a leader in energy production has a unique role to 
play in developing and commercializing innovative technology 
solutions. We need to prioritize advancing technologies like 
carbon capture that we can employ both here at home and 
overseas.
    According to the IEA in 2017, China and India used coal for 
67 and 74 percent of their electricity, respectively. Under 
current policies, that will be 51 and 57 percent by 2040. While 
I understand both countries are taking steps to reduce 
emissions and add more renewable generation, fossil fuels are 
still a part of their future in all three of the scenarios that 
IEA models in its most recent report. In other words, no matter 
how you slice it, coal is going to be part of the energy mix 
for decades to come around the world. So innovation in carbon 
capture, advanced nuclear, storage, energy efficiency, and 
other technologies are going to be key.
    I also want to touch on a topic that I believe you can 
speak to which concerns my colleagues and me deeply, that is 
the use of energy as a geo-political weapon by countries such 
as China and Russia.
    Russia has for years relied on their energy resources to 
exert influence and exact concessions. Central and Eastern 
Europe are relying on Russia for approximately 75 percent of 
their gas import needs. Russia, in turn, uses that reliance for 
political coercion and influence, and that is why I oppose the 
Nord Stream 2 pipeline.
    Meanwhile, China is buying up energy and natural resources 
around the world, from large parts of Africa, Latin America, to 
Asia, to right here in the United States. For certain 
commodities, China has become the price setter and exerts 
enormous influence. When it comes to using energy and natural 
resources for manipulation or influence, it sometimes feels 
like we are short-sighted while Russia and, particularly, China 
are playing the long game. We have to get back in the game and 
lead in order to promote American energy independence and serve 
as a bulwark against Russia and China's aggression.
    I very much appreciate you making the trip to be here today 
for your third annual visit to share your views on the global 
energy markets and the role of the United States.
    With that, Chairman Murkowski, I look forward to hearing 
from our witness today.
    The Chairman. Thank you, Senator Manchin.
    I have introduced Dr. Birol as head of the IEA, the 
Executive Director. We all have a little bit of a background 
and a biography contained within our background memo, so I 
won't read it in detail.
    But I do think that it is important to note that in 
addition to his tenure there at IEA, the background, the 
experience that he brings to these issues, not only before us 
in the Committee here, but really, around the world, Dr. Birol 
has been named by Forbes magazine as among the most influential 
people on the world's energy scene. He was recognized by the 
Financial Times in 2017 as Energy Personality of the Year. What 
a great title.
    [Laughter.]
    Energy Personality of the Year. We are honored, truly 
honored, to have you here again--your leadership at IEA and 
your willingness to share so much of it with us.
    Typically, we ask our witnesses to try to limit their 
testimony to about five minutes, and their full statements are 
incorporated as part of the record. But because you are the 
sole witness this morning, we certainly give you discretion to 
share with us this morning the time that you need to present on 
the outlook for 2019 and then we will move to questions and 
your responses.
    So, again, Dr. Birol, welcome.

STATEMENT OF DR. FATIH BIROL, EXECUTIVE DIRECTOR, INTERNATIONAL 
                         ENERGY AGENCY

    Dr. Birol. Thank you very much, Madam Chair.
    Chairman Murkowski, Ranking Member Manchin, distinguished 
members of the Committee, thank you very much for this great 
opportunity and honor for me and for my agency to appear in 
front of you.
    I am since almost two decades with the International Energy 
Agency and I appear in front of this Committee as the Chief 
Economist before you have invited me, Madam Chair. But I am the 
head of the Agency since three years, almost, and then I had 
the pleasure to be here each of the past three years and to 
share with you our views. And I benefited from that discussion 
very much. Thank you very much, Madam Chair.
    Perhaps more information about the IEA. This year is our 
45th anniversary. We are 45 years old, and we were founded by 
Henry Kissinger in the State Department just over here with 16 
other countries. In fact, after this very meeting I will go to 
the State Department for some celebration for our 45th 
birthday.
    Now, I thought the following, Committee. First, I will 
share with you some of the trends in the global energy markets 
because even though the United States is perhaps the most 
important energy country in the world, today no country is an 
energy island. So I want to highlight what's happening in the 
world. And second, some observations about the U.S. role in the 
global energy picture.
    First of all, I start with general trends. We see that the 
global energy demand is growing strongly, mainly driven by 
Asia, but also Africa, Latin America with the increase in 
income levels, increase in population, urbanization, 
modernization because energy means better lives and energy 
means more comfort, more productivity. We see a growth across 
the world, and this is solid growth.
    Particularly, natural gas is growing very, very strongly, 
driven by Asia. And when I say Asia, one country is very 
important here which is China. The China effect we have seen in 
the oil markets some ten years ago, we are seeing now in the 
natural gas markets. As we speak now, China is overtaking Japan 
as the largest gas importer of the world, and most of this gas 
imports will be in the form of LNG. So gas is growing and LNG 
will have a very important part of it.
    Second, oil. We also see the global oil demand is growing 
very strong. Some observers look at the changes in the 
automotive sector and calling the end of the oil era which we 
believe is not right because, first of all, global oil demand 
growth is not driven by the cars, it is driven by trucks, 
aviation and petrochemical industry. And on top of that the 
share of cars in the world oil consumption is about 18 
percent--82 percent everything else put together and cars are 
only 18 percent.
    We also see that the increasing share of electric cars 
around the world, it is making some dent on the global oil 
demand growth but looking at other factors, it is going very 
strongly global oil demand, in any case, one million barrels 
per day.
    Having said that, looking at the production side to that 
where the oil production come from. It will come in the U.S. 
part, the exclusive part of the United States, but I have one 
major concern, namely the growing geopolitical tensions around 
the world, especially in those countries where the significant 
amount of oil production is coming from.
    I am, Madam Chair, since 13 years I am attending the Davos 
meetings at the World Economic Forum, and I have another hat. I 
am the Chair of the Energy Board of Davos World Economic Forum 
and this year I have never seen that the geopolitics, the 
overarching team on the energy sector. Geopolitical 
developments with Russia, with the trade tensions around the 
world, what's happening in the Middle East Gulf countries, some 
Gulf countries, Iran, Venezuela. When we look at all these 
issues, including Brexit, if I may say so, geopolitical 
tensions are everywhere and, as such, we think that the supply 
disruptions is a very important area that we need to pay 
attention to.
    These geopolitical tensions plus the possible hurricanes 
and the others that we experience in this country and abroad 
tells us that the main thing in strategic oil stocks is still a 
critical issue, we believe. We have to think about the rainy 
days and not only looking at the current station.
    A few things on the wind and solar. After gas and oil, wind 
and solar are growing everywhere across the world mainly 
because of the one particular reason--they are getting cheaper 
and cheaper and they are also, in many cases, subsidized by the 
governments and their share are increasing.
    And as a result of that, we are also having some benefits 
in terms of environmental benefits, but also some challenges 
because, as we all know, solar and wind are intermittent energy 
sources. If there is no sun, we don't have electricity. If 
there is no wind, we don't have electricity, if we do not take 
the necessary measures.
    So therefore with the increasing share of renewables, we 
also need to pay attention to flexibility of our electricity 
systems, including those such as nuclear power, gas, coal and 
hydropower and others.
    A few words on coal, Senator Manchin also mentioned, now 
many people say also, we came to the end of the coal age but 
when we look at the numbers, we don't see the same picture. In 
the last two years, leading scientists tip decline of coal 
globally. We have seen an increase in the global coal 
consumption. And China alone is very important in this equation 
because China, today, consumes half of the global coal. So 
about 50 percent of coal in the world is consumed by China, the 
other half, everybody else put together.
    So to sum up the global picture--oil, gas, coal--they are 
all growing still in the global energy scene, but the 
renewables are making strong inroads, especially in the 
electricity generation.
    A few words about the United States and starting from oil. 
We expect that, thanks to shale revolution, United States will 
be providing 70 percent, 7-0 percent of the global oil 
production growth between now and 2025. And the impact of this 
cannot be overemphasized on the prices, on the energy security 
and on the geopolitics of finance which means about almost 
three-fourths, almost three-fourths of the global oil 
production will come from the United States only. And this is 
something very important to underline.
    And in terms of natural gas, I mentioned to you that 
globally there is a demand for natural gas. We expect that the 
about one-third of the global gas production will come again 
from the United States.
    Maybe more importantly, two-thirds, two-thirds of the LNG 
exports worldwide comes from the United States between now and 
2025. This is extremely important.
    Now, Madam Chair, some seven years ago when I was a Chief 
Economist, I had made the World Energy Outlook and made the 
international press release and in that seven years ago I said, 
``United States will overtake Saudi Arabia as the number one 
oil producer.'' My colleagues will give a copy of this. It was 
in the Wall Street Journal cover page.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED] T5557.020
    
    Dr. Birol. And as we expected, as of next year, they are 
now, the U.S. is in the same level of production with Saudi 
Arabia and Russia. By 2020, U.S. is definitely, by far, the 
number one oil producer of the world. This is an incredible, 
incredible development as the IEA seven years ago was spot on 
said and it was a very daring expectation at that time.
    But the most important message I want to give here to you 
and to the world is the following. Many people think that this 
is we now slow the impact of shale revolution. This is not 
exactly right. What I believe this is only the first wave of 
the shale revolution impact. The full impact of the shale 
revolution is yet to be seen.
    It is now coming because the first wave of oil and gas 
shale was mainly used domestically to replace the imports for 
the petrochemical industry, for other power generation it is 
used there. And the second wave of production is going to be 
used to export U.S. oil and gas several nations around the 
world and this will have a major impact on the established oil 
and gas market order around the world. And I believe this 
impact will be not limited to energy only, it will go beyond 
energy.
    A few other thoughts, Committee members, on renewables. I 
think the achievements of the United States in terms of 
renewables may be a bit behind the shadow of shale oil and 
shale gas. In the United States, the renewables are also 
growing very strongly. In the year 2010, the share of 
renewables in the U.S. electricity generation was 10 percent 
and as of today it is about 18 percent. There's very strong 
growth there mainly driven by wind and solar and this is very 
good news, but there is a lot of potential to increase even 
further.
    We are also seeing that in the United States the 
electricity networks are also getting some attention from the 
policymakers as the transmission system in the United States is 
a bit segmented now and it results in some bottlenecks. And we 
hope that these bottlenecks will be treated appropriately by 
using the right technologies and there is more connection 
between the different parts of the United States.
    Now, coal. It is, it will be very wrong not to see what is 
happening in the coal markets around the world. Coal is still 
the second largest energy carrier after oil in the world. And 
in terms of the power sector, it is number one source of 
electricity generation, especially big load is coming from 
Asia.
    And more importantly, in United States or in Europe the 
coal plants, the power plants, are very old. They are about 40-
42 years old. They are aged, so they are coming to the end of 
their lifetime, many of them.
    But in Asia, there is a huge coal fleet and it is very 
young. It is 11 years old. So it means investments were made 
there and the utilities, the countries, would not change their 
plans before those investments are paid back. And it is across 
Asia, very young fleet. And of course, the question is how do 
we, how do we find the solution while they provide much needed 
electricity for the poor segments of the population there and 
providing input to the economic growth, how do we address their 
environmental impacts?
    Now for me, the magic word here is carbon capture, 
utilization and storage (CCUS). If you ask me, Madam Chair, if 
I have to pick out one technology, advanced technology, which 
is vital for our planet, it is difficult to choose. They are 
all very important, but for me, CCUS is extremely important, as 
in all of our expectations in the future, we see fossil fuels 
still have a large share and we can make use of CCUS.
    The problem is not with, we don't have any problem with 
energy. We have a problem with emissions. And that is a very 
good thing. It brings us better lives, growth to our economies, 
but emissions is the problem and CCUS can definitely address 
this problem.
    And here I would like to thank the U.S. Administration and 
your Committee and legislators for the 45Q business model that 
you came up with which provides a very nice business model in 
United States and also around the world.
    I am traveling to many, many countries around the world. 
The critical importance of CCUS is more and more recognized and 
your leadership here would be extremely important pushing the 
45Q that it may need some fine tuning here and there, but it's 
an extremely important model.
    Now, to finish I wanted to talk another important 
technology for me, for the International Energy Agency, I 
believe and for the world which is nuclear power.
    I believe nuclear power should be seen as a key asset in 
the United States. United States has been the leader of nuclear 
energy for almost 60 years together with Japan, France and 
other countries. However, I think we are at a very critical 
juncture of the nuclear industry in the United States now. If 
you do not change the policies as far as nuclear energy is 
concerned, our numbers show that in less than ten years of 
time, China will overtake the United States as the number one 
nuclear power in the world. This is very important for the 
electricity sector, but I think it may have well other 
implications beyond electricity sector as well.
    Today, nuclear power generates about 20 percent, one-fifth, 
of the U.S. electricity, but if we do not change our policies 
in the United States this share will go down to seven percent 
only. And this will have implications for the electricity 
security as the nuclear power provides baseload electricity 
generation and very flexible, but also the carbon footprint of 
the U.S. electricity generation and therefore the change of the 
policies is very important.
    And there, I'm sure, there are many measures that you and 
the Administration are thinking about. But for me, the very 
first priority would be extending the lifetimes of the existing 
nuclear power plants and to have them with us as long as the 
safety considerations allow.
    And of course, in the longer-term looking at advanced 
nuclear technologies such as the SMRs, small modular reactors, 
will be of crucial importance to help the U.S. leadership 
continuing in the nuclear domain.
    So, Madam Chair, these are some thoughts about the global 
energy picture, the U.S. success stories in oil and gas, also 
renewables, but some challenges in terms of the coal markets 
and at the same time, nuclear energy.
    Thank you very much, Madam, for your kind consideration.
    [The prepared statement of Mr. Birol follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Dr. Birol.
    Again, very, very, very interesting. There is so much to 
ask about. So many good conversations here. So let me begin.
    Your observations here as they relate to oil where the 
United States is in terms of meeting that growing global demand 
there. Your comment that the U.S. will be providing 70 percent 
of the oil production growth between now and 2025. I guess the 
question to you is, in anticipating that, are we seeing the 
level of investment that we need to have here in the United 
States in order to be able to meet that?
    From a policy perspective, obviously what we did several 
years ago in lifting the oil export ban, that has had a 
significant impact on what we have seen with increased 
production and our participant on that world market. So, 
specific to the adequacy of the investment and then from a 
policy perspective, is there more that we should be doing here?
    Obviously from Alaska's perspective we are trying to do as 
much as we can in meeting the demand with increased 
opportunities within the federal lands, within the National 
Petroleum Reserve. And then just last year, in moving forward 
on the 1002 area in the coastal plain. That is still a long way 
out from production. We won't have that online by 2025. So can 
you speak to those aspects, please?
    Dr. Birol. Thank you very much, Madam Chair.
    The U.S. oil production is becoming more and more cost-
effective as a result of improvements in the technology. It is 
now cheaper and easier to produce compared to, for example, 
five, seven years ago. So therefore, with the current prices, 
we don't see any major problem that the U.S. oil production 
will be profitable in most of the provinces in the United 
States.
    Where is the challenge? In my view, the challenge will be 
how do we bring the oil to the international markets, namely 
the pipeline capacity? This is extremely important. We are 
aware that there is a lot of efforts now to improve, to 
enhance, the pipeline capacity to bring the oil to the 
international markets. And if those efforts are successful, it 
will increase the U.S. oil industry's ability to respond to the 
changes in the international oil markets because to produce oil 
is important but it is one thing.
    The second thing is to send for the other nations that they 
need that oil and for that you need the pipeline capacity to 
increase. There's a lot of effort there but these efforts need 
to be, in our view, enhanced and the bureaucratic hurdles, in 
our view, need to be softened, eased in order to give licenses 
for those efforts.
    Other than that, we don't see any major risk to observe 
substantial increase of U.S. oil coming to the markets.
    When it comes to Alaska, Madam Chair, 2025 is too short to 
see substantial amount of oil coming from Alaska to the 
markets, but we know that there are huge resources there and 
with the improving of technology one may well expect beyond 
those dates the Alaskan oil goes to the customers as well.
    I'm a believer of the economic facts. The economic facts 
are stubborn. The oil resources are there. Oil demand is going 
worldwide. I am sure, sooner or later, that oil will go to the 
customers around the world from Alaska.
    The Chairman. Well, we are working on it as quickly as we 
can. I appreciate that.
    I've got many, many more questions, but I am going to 
respect colleagues here and move to Senator Manchin.
    Senator Manchin. Thank you, Madam Chairman. Very quickly, 
thank you so much again and your enlightening statement, the 
opening statement. So many things are going on.
    We are trying to decarbonize, if you will, by using 
everything in a pragmatic way. You are telling me that no 
matter what we do in the United States of America, Asia has a 
younger coal fleet. They are going to basically run that coal 
fleet out for a minimum of 20 to 30 years. Is that the 
timeframe?
    I would ask first of all: Most of the coal fleet we have 
left in the United States has used scrubbers, low 
NOX boilers, and baghouses for mercury. We have 
taken most of the particulates and the harmful effects of the 
particulates out. CO2 is what we have not been able 
to perfect through CCUS.
    The coal fleets that are young and new over in Asia, do 
they have at least what we have been striving for with sulfur, 
NOX and MATS? Have they--so all the China and India 
fleet coming on. So, they are building new, young, new fleets. 
Are they using this technology?
    Mr. Birol. Thank you very much, sir.
    First of all, yes, efforts are, of course, very, very 
important to get efforts coming from, hopefully, from the rest 
of the world. But you're completely right, we have in the 
world, about 2,000 gigawatts of coal fleet and the bulk of it 
is in Asia today.
    Senator Manchin. Right.
    Dr. Birol. And it is being--every day.
    And to be honest with you, not all the countries building 
coal plants have their scrubbers, the so-called, the filters 
and on top of that, perhaps more subtle but maybe more 
importantly, some of them, even though they don't have the 
scrubbers, they don't use them during the generation of the 
electricity. For some reasons which is not well known to us to 
build it to equip the power plant to something to use it during 
the electricity generation something, yes. So this is what we 
are seeing.
    Senator Manchin. But they are not using the scrubbers or--
--
    Dr. Birol. Not all the time.
    Senator Manchin. Because of the cost, right?
    Dr. Birol. Exactly. Cost issues is----
    Senator Manchin. So this is what I have a hard time with.
    We have a global climate concern. We should have an 
alarming concern, but unless we get the rest of the globe to 
participate, how do we incentivize them? How, as the IEA, are 
you able to raise the flag that they should be participating? 
All these new coal-fired plants should use the latest in 
technology. For us to use carbon capture and sequestration, we 
have to do something because the cost is prohibitive right now 
if you don't have any enhanced revenue coming out of the ground 
when you sequester.
    Dr. Birol. Yes.
    So we are talking with all these governments from Indonesia 
to China, China to India and for them the first thing, very 
important, is the cost of electricity. Then they think and they 
make a point that because they are developing nations, but the 
obligations of our planet is definitely nothing to compromise 
there.
    Senator Manchin. Right.
    Dr. Birol. So the scrubbers are very important for the aid 
of pollution in those cities and many of the major problems in 
those countries----
    Senator Manchin. Well, the air that we see in China. And 
the other thing I would say is that storage is important as far 
as our renewables.
    Is our wind and solar more efficient than China's and other 
places around the world? Do we have a more efficient renewable 
energy than others? And how close are we to the storage? As we 
know, it is intermittent.
    Dr. Birol. Yes.
    Senator Manchin. And when the wind blows, we have 
electricity. When the sun shines, we have electricity. When it 
doesn't, we don't.
    If we are overproducing in net periods of time, do you see 
storage coming on to where we will be able to be more efficient 
in those arenas?
    Dr. Birol. Yes.
    First of all, you are right, the U.S. wind generation is 
much more efficient than the global averages, you're completely 
right there. But in terms of storage being commercially viable 
and used in a large scale, we are not yet there but there's a 
lot of R&D, research and development, coming around the world 
to make it commercially viable and use it in large scale. 
Because without the storage the benefits of solar and wind are 
not fully utilized. As you rightly mention, they are 
intermittent and they have a major challenge.
    Senator Manchin. Finally, my last question.
    If the United States wants to be a leader in reducing its 
carbon footprint, should it not use its trade policies, or so-
called tariffs that we use in different types of opportunities 
that come to our markets, as an incentive to use the technology 
that we develop?
    Dr. Birol. The United States, today, is the leader of the 
global energy technology research and development. You have 
wonderful national laboratories around this country, and I 
believe there may be different ways of incentivizing them. It 
can move from putting tariffs or the value like you did, like 
the 45Q which is recent----
    Senator Manchin. Right.
    Dr. Birol. ----to some regulations that can change from 
technology to technology.
    But wherever I go, Mr. Senator, I give the 45Q as a gold 
star example to the rest of the world how the fossil fuel--of a 
country can marry with the environmental objectives in a market 
friendly way. So there are some examples.
    Senator Manchin. Thank you.
    Thank you, Madam Chairman.
    The Chairman. Thank you.
    Senator Cassidy.
    Senator Cassidy. Dr. Birol, I always enjoy your 
conversations.
    What do you foresee for deepwater oil production? I am from 
Louisiana, so the Outer Continental Shelf is very important.
    Dr. Birol. It is definitely very important. I talk about 
the shale today as it is the big news around the world but 
also, of course, the offshore with the decreasing cost of 
deepwater, offshore technologies it will be growing world both 
for the United States and beyond, including Louisiana.
    Senator Cassidy. Have we reached that price point now where 
it is profitable to resume or to et cetera?
    Dr. Birol. I think we need to see that either the cost 
needs to go down, maybe tomorrow, or the process remain a 
little bit higher levels in order have a very decent profits 
there. But we are almost there. We are close to the break-even 
points.
    Senator Cassidy. Now you hear about energy but you spoke a 
lot about carbon. One thing that seems to empirically have 
occurred when the EU began their cap and trade system and we 
began to regulate greenhouse gas emissions, there appears to be 
a lot of carbon leakage to China and India.
    You are nodding your head, yes.
    Dr. Birol. Yes.
    Senator Cassidy. And when you speak about their energy 
growth, it suggests to me that there will continue to be some 
carbon leakage, i.e., energy intensive manufacturing moving to 
China. Any thoughts on that?
    Dr. Birol. Yes, definitely.
    The EU is putting climate change as a top priority in their 
energy and maybe economic policies and they are making a lot of 
efforts to reduce their CO2 emissions, but the 
CO2 emissions coming from, I don't know, from Paris 
or from Jakarta or from Ipswich or from Ottawa it is the same 
impact on everybody----
    Senator Cassidy. Now if they are not using--according to 
Mr. Manchin's question--if the coal-fired plants in China and 
India are not using scrubbers, whereas in Germany they are, it 
suggests to me that if we have carbon leakage from the EU, the 
United States to China, we actually end up with more global 
greenhouse gas emissions than we would if the industry stayed 
resident in the country of origin. Is that a fair statement?
    Dr. Birol. Yeah, I think it is going in the right 
direction. But what I mean is the following, we should do 
whatever we can do. But whatever we can do in Germany or the 
United States is not enough to reduce the CO2 
emissions at the appropriate level.
    Senator Cassidy. No, I realize that. But my question is if 
we put in a policy that merely causes a company to move energy 
intensive enterprises to China, it sounds from your statements, 
that we will end up net worse, globally, because China does not 
use the same environmental standards/techniques as do we.
    Dr. Birol. It may well be the case but I should tell you 
that India, China, Indonesia, they are also trying to reduce 
emissions but the main driver there comes from, not from their 
concern about the climate change. They're concerned about the 
local pollution in the cities which at the end of the day may 
have to reduce the CO2 emissions as well.
    But in any case, we have seen, for example last year, 
global CO2 emissions once again increased and the 
main driver of that increase came from Asia.
    Senator Cassidy. And again, carbon leakage would contribute 
somewhat to that. Just the point I----
    Dr. Birol. Definitely.
    Senator Cassidy. Definitely.
    Dr. Birol. Oh, yeah.
    Senator Cassidy. Let's see if I have any more time. I sure 
do.
    Next, you mentioned as well the CC, the carbon capture and 
sequestration. Do you see any use of captured CO2 
being economic, any use of it being economically viable in the 
short- or medium-term?
    Dr. Birol. Yeah. First of all, I believe carbon capture, 
utilization and storage is perhaps the most critical technology 
we have now if we want to find a peaceful marriage between the 
global fossil fuel resources and our environmental objectives. 
And here we can both do two things, to capture the carbon and 
store it or use the carbon.
    Many countries are working to get money using carbon. 
There's a lot of research and development going there to put 
money on carbon, to make money out of carbon.
    Senator Cassidy. Do you see anything that is close to 
bearing fruit?
    Dr. Birol. It is not yet there to be very frank, but 
there's a lot of work going on.
    But I should also highlight that the scrubbers are mainly 
used to reduce the local pollution and the CCUS is used to 
reduce the carbon, the so-called CO2 emissions. So 
there are two important technologies addressing two important 
and long-term problems.
    Senator Cassidy. Real quickly.
    So I am also gathering the degree to which the United 
States increases LNG exports to China allowing them to use 
cleaner burning LNG is the degree to which we can have a 
positive impact upon their global greenhouse gas emissions. 
Again, is that a fair statement?
    Dr. Birol. Exactly.
    So what we have seen in the United States, for example, a 
big chunk of the major achievement of the United States in 
terms of historical drop-off CO2 emissions was due 
to using a lot of----
    Senator Cassidy. And that is despite methane leakage 
because you mention methane leakage.
    Dr. Birol. Yes. It can happen also in China as well if the 
U.S. LNG replaces China's coal which is very, very likely. But 
the pure condition here is, as I mentioned, is the methane 
issue.
    So it is very important that we produce natural gas in a 
responsible way to minimize, if not nullify, the methane 
venting and flaring, and the United States and other countries 
are taking measures in order to minimize the methane emissions 
there.
    Senator Cassidy. I am a minute over. I thank you, Madam 
Chair.
    The Chairman. Thank you, Senator Cassidy.
    Senator King.
    Senator King. My first question will surprise you, Madam 
Chairman.
    The Chairman. Go ahead.
    Senator King. Thank you very much. I apologize for being 
late. I was in an Armed Services Committee meeting.
    Are we headed for a place where natural gas, because of 
exports and the technology of LNG, is a worldwide commodity 
like oil? And if so, what does that imply for the domestic 
prices of natural gas here in this country where it is produced 
in great quantities?
    Dr. Birol. So, Mr. Senator, we are seeing natural gas is 
entering a golden age in the United States and globally because 
not only from the United States, but also from Australia, from 
Qatar, substantial amount from Canada, I just came from Canada, 
substantial amount of natural gas is coming to the markets.
    And this is having two types of impacts. Number one, it is 
providing flexibility to the customers around the world. They 
can choose whatever the exporters they have, which conditions 
and this brings the prices down. Second, increasing natural gas 
production in the United States and elsewhere also puts 
downward pressure on the natural gas prices which is also very 
good news which is good for the heating bills of the families 
for electricity cost. So therefore, natural gas is good news 
overall, except for the countries who are pipeline exporters 
today.
    Senator King. My concern is--and maybe you just said that 
in your last phrase, I am not sure.
    My concern is if we get to a place where we are exporting 
natural gas in much larger quantities than we are today, and it 
becomes a worldwide commodity. China increases its utilization, 
which could be almost infinite. Doesn't that inevitably put 
pressure, upward pressure, on prices which would reflect 
themselves in domestic prices?
    What I am getting at is I am afraid of exports affecting 
the low price in the U.S., which is one of our few advantages 
in terms of things like manufacturing.
    Dr. Birol. I don't expect this to happen in a big manner, 
Mr. Senator. That may be different, some fluctuations, but the 
U.S. gas resources are so huge that even the prices we are 
talking about now it is enough to increase the production. 
There's a lot of resources now.
    Senator King. So it is supply and demand. You believe that 
the supply is so large that----
    Dr. Birol. I can give you one example, sir.
    When the shale gas revolution started, we hit a lot of 
shale gas resources. And in the last ten years we used a lot 
from those resources, normally should go down because we use 
from those resources, but we have discovered in the United 
States also, a lot of resources. And now, as of today, the 
shale gas resources in the United States are seven times higher 
than 2010. So even though we also use because we have 
discovered with the new technologies, more resources.
    So we have huge resources and I wouldn't worry of the shale 
or natural gas price spikes in the United States. That may be 
volatility, but the increase of the price is because of the 
exports.
    Please do not forget that the exports, the revenues coming 
from exports will also inject U.S. dollars to the country's 
economy as well.
    Senator King. Well, I hope you are right. And I think what 
I hear you saying is that in the short- and medium-term, you do 
not see a risk to domestic prices.
    But didn't that happen in Australia? I thought I had seen 
data that Australia's domestic prices went way up when they 
significantly increased their exports.
    Dr. Birol. The main reason there is some of the shale gas 
resource states in Australia put a ban on the shale gas 
production because of, as they said, environmental----
    Senator King. So they restricted the supply?
    Dr. Birol. Exactly, exactly.
    And the ban because of environmental reasons, they say, 
didn't allow them to produce gas there.
    Senator King. Quick question.
    We tend to think of ourselves as being the repository of 
all the research and work that is going on. I believe in your 
previous discussion you talked about the importance of storage.
    Dr. Birol. Yes.
    Senator King. In terms of developing solar and wind and 
other renewables, is significant research going on in other 
parts of the world on storage? It seems to me that is the 
greatest energy question we face right now.
    Dr. Birol. Everywhere, sir.
    It is ranging from the United States to China, China to 
Europe, Europe to Japan. Everybody is after to find the 
economic solution to storage that can be used at the large 
scale so that we can address the limitations of wind and solar. 
But if you ask me whether or not we are there today that it is 
economically viable at the large scale, we are not yet there.
    Senator King. Give me a timeframe. Five years?
    Dr. Birol. Five years, it would be reasonable, but I would 
say between five and ten years.
    Senator King. So we are looking at technological 
breakthroughs.
    Dr. Birol. Exactly, technology breakthroughs, especially to 
bring the cost down because the cost issue today because we 
have also a lot of alternative technologies, established 
technologies such as the gas, such as the coal, such as others 
in order to make them competitive needing to bring the cost 
down and address the other challenges.
    Senator King. Thank you.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator King. Always good 
questions, we appreciate it.
    Senator McSally.
    Senator McSally. Thank you, Madam Chair.
    Dr. Birol, I served in the military, deployed to the Middle 
East five times. For many reasons I have long been an advocate 
for our energy security and energy independence to also be a 
part of our national security, because it is not just about 
energy prices and energy security is so much part of the 
geopolitical environment and where our reliance comes from 
related to these issues. So I think these last years have been 
so significant for us in America and in North America in the 
larger context of the geopolitical dynamics in the world.
    You mentioned in your testimony on page three that there 
are energy security and sustainability challenges we still have 
to overcome. In particular, the Northeastern United States 
needs a more robust gas pipeline infrastructure to maintain 
supply security. I want to talk about this a little bit.
    In 2016, it is my understanding that Massachusetts and New 
Hampshire blocked funding for the Access Northeast Pipeline. 
And in the cold snap of last year, it was reported that they, 
in fact, because of the challenges there, had an import from 
Novatek, a Russian oil company that was actually sanctioned by 
the Obama Administration and there was increased reliance on 
coal during the cold snap last year in the Northeast because of 
their ability to be resilient and provide and fill those gaps.
    It just seems like there is potentially some activism or 
ideological views that are causing policymaking decisions in 
the Northeast that maybe do not have good outcomes related to 
our energy security, national security or other elements.
    Could you just comment on that and what else needs to be 
done in order to better secure our energy security and issues 
related to this?
    Dr. Birol. Thank you very much for your question.
    Before answering your question, if I may, since you worked 
in the Middle East and you follow, I guess, the Middle East 
issues, I would like to make the following point. I mentioned 
that the U.S. is set to become the number one oil producers of 
the world but this is different than the very fact that, for 
example, Saudi Arabia is still the number one oil exporter of 
the world.
    So a lot of exports are still going from the Middle East to 
the rest of the world, especially to Asia where the economic 
growth comes from. Therefore, the oil security is still an 
issue because a price spike----
    Senator McSally. Right.
    Dr. Birol. If it happens, it will affect, including United 
States, all of us.
    Senator McSally. Right.
    Dr. Birol. Therefore, once again, I want to underline the 
critical importance of the strategic stocks we have in this 
country, also, of course, in Japan, Korea and Europe.
    Coming back to your question. I, of course, I don't want to 
intervene in the internal discussions of this very nation, but 
not to have given permission to the pipelines to bring the gas 
from Point A to Point B is, in my view, economically, it 
doesn't make any sense. It doesn't make any sense because 
natural gas is one of the cleanest fuels we ever have and it is 
good for the United States, good for the United States' 
neighbors, U.S. partners around the world. But once again, I 
believe the economic facts are stubborn and at the end of the 
day those problems will be solved.
    As I said, I came from Canada here. It was a problem in 
Canada, but now Canadians are pushing the Canadian LNG and the 
Canadian LNG is now meeting the Asian customers and they solved 
these pipeline problems. I believe it to be the same case 
across the United States because this is where the 
international is and it is every fuel has its own disadvantages 
or challenges. We have to see that. But we do need energy for 
our daily lives, for our economies.
    Senator McSally. Right, thank you.
    I agree with you. I just think to summarize, it is 
important for us to have the pipelines to access the energy 
that we have here.
    Dr. Birol. Exactly.
    Senator McSally. And choosing not to do that, having states 
like Massachusetts rely on Russian imports, does not make any 
sense geopolitically.
    And then also the reliance on coal which is an important, 
resilient factor----
    Dr. Birol. Exactly.
    Senator McSally. ----for our energy is also the result of 
that.
    So, let's not--let's do the right thing for our country, 
for our energy security and for the economic opportunities for 
people. Let's have that drive our decisions and not other 
factors.
    Dr. Birol. I completely agree, madam.
    Senator McSally. Great. Thank you.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator McSally.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you, welcome, thank you so 
much.
    I apologize I was not here earlier; I was in a Banking 
Committee hearing going on at the same time. We seem to do that 
here.
    Let me talk a little bit about electrification of 
industries. We know that electrification can bring countless 
benefits, notably by reducing local pollution, but it requires 
additional measures to decarbonize the power supply in order to 
unlock its full potential. And furthermore, the World Energy 
Outlook for 2018 mentions that some significant parts of the 
energy system, such as long distance road freight shipping and 
aviation, are not electric ready with today's technology.
    Doctor, you have previously stated that in order to 
decarbonize the whole energy system, we are going to have to 
start getting large amounts of wind and other renewables into 
heating, transport, and industrial processes. From your 
perspective, what research needs to be done to ensure that 
these three sectors catch up to the future of electrification?
    Dr. Birol. So thank you very much for this question as 
well.
    I mentioned it to renewable energies, solar and wind, are 
penetrating the energy markets. This is true. But they are 
almost exclusively concentrating on the electricity systems, 
power systems. But we use energy also in the industry sector to 
produce, to manufacture, a lot of goods or we use energy also 
for the heating at home. We use energy for the transportation 
sector. The renewables are very little, if any use here.
    So what are we going to do? So we can do at least two 
things. One, the bulk of the energy use in the industry sector 
are coal or gas and we have to, Mr. Manchin also highlighted, 
the CCUS, carbon capture, utilization and storage is a critical 
technology here and more research and development in this 
country is already being made, but outside as well would be 
very helpful. This is number one.
    Number two. Another way of that, in addition to using the 
fossil fuels in a long-term way to CCUS, we can also see that 
the storage is another thing also highlighted, storage, 
development of storage, making research and development there 
to bring the cost down and making renewables also used in the 
industry sector would be of crucial importance. Therefore, if I 
have to pick up two technologies that I would be very happy to 
see more research and development efforts go to, CCUS and the 
storage will be two candidates from my side.
    Senator Cortez Masto. So what potential do hydrogen fuel 
cells have for the industry?
    Dr. Birol. Hydrogen will also play a very important role, 
especially in the context of, we call that hard to abate 
sectors. Hard to abate meaning mainly the industrial, the iron 
steel sector, the petrochemical sector and others and, in fact, 
this year Japan is chairing the G20 meetings and the Prime 
Minister Abe asked the International Energy Agency to prepare a 
report on hydrogen, how it can help to decarbonize our energy 
system. And we are working very hard on that.
    Hydro energy is also a very promising option. It was done 
many years ago, but it is coming back as a result of the lower 
cost of solar and wind and also diversification of our energy 
mix.
    Senator Cortez Masto. Thank you.
    Recycling of critical minerals has not been economically 
viable to date. It is less expensive to mine raw minerals than 
to recycle with current technology, but mining these materials 
is highly complex and hazardous to both workers and the 
environment. With the demand of these materials growing 
throughout the world, what is your outlook on the potential for 
recycling these critical minerals to meet our manufacturing 
needs?
    Dr. Birol. With the current energy path we don't see a 
major problem with the current level of rare earths we have 
now. The problem is it is concentrated on a few countries 
around the world and it may well be again a secular energy 
supply question.
    But in terms of availabilities, economic availability, we 
don't see a major challenge at the moment.
    Senator Cortez Masto. Thank you.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Cortez Masto.
    I am going to defer to my colleague here for a question. I 
think he is going to have to leave the Committee.
    Senator Manchin. Really quick, I have to go to another 
committee, but Dr. Birol, thank you so much for being here. We 
look forward to staying in touch with you.
    To follow up on Senator Cortez Masto's question on spent 
fuel--nuclear, right now--and you have showed that nuclear, the 
utilization of nuclear power in the United States, is reducing.
    Dr. Birol. Yeah.
    Senator Manchin. And you think that is harming us as far as 
decarbonizing.
    Dr. Birol. Yes, sir.
    Senator Manchin. You said that in your opening statements.
    Is the reason for that because of our inability to dispose 
safely of the waste? Is that what is holding us back or is it 
basically that we are just not promoting it because of cost 
ineffectiveness of new nuclear reactors, if you will?
    Dr. Birol. I would say the second one, Mr. Senator.
    You have lots of very tough regulations in this country. 
It's very good to have safety concerns. It's very good to have 
prepared measures.
    But it is mainly the cost issue today and gas is very 
cheap, natural gas. The renewables are becoming also cheaper 
and cheaper and we have difficulties under the very heavy 
pressure of those existing regulations for the nuclear to be 
profitable. So, therefore, my plea is that we need to find ways 
to appreciate the contribution nuclear has for our electricity 
security and also for the environmental challenges and find 
some ways to----
    Senator Manchin. Your opening statement was very 
enlightening in saying that basically, on a global basis, 
fossil is going to be used and depended upon and not always in 
the cleanest fashion to decarbonize.
    Dr. Birol. Exactly.
    Senator Manchin. So no matter what the United States does, 
we are not making a dent in the atmosphere.
    Dr. Birol. Yeah.
    Senator Manchin. It is basically coming from Asia right 
now. We can't get them up to speed.
    But for us, basically not having our nuclear facilities 
online or coming up, you said, the number one thing if you want 
to decarbonize is carbon capture and utilization. And if the 
world would adapt technology that we could develop and 
basically perfect, that would be the number one source of 
decarbonizing.
    Dr. Birol. Exactly.
    Senator Manchin. And then nuclear would be the number two 
source to rapidly decarbonize?
    Dr. Birol. Yeah.
    Senator Manchin. As we develop technology for storage and 
using our renewables or hydrogen coming on, that is something 
in the future, but you are talking right now to stop the global 
warming that is going on. Is that accurate?
    Dr. Birol. Exactly. This is, we have so big challenges in 
terms of emissions because every time there comes a report or a 
government statement, government target, that we need to reduce 
emissions immediately, but when we look at the numbers, we see 
that the emissions are increasing.
    There is a growing disconnect between those targets and 
what is happening in the real life. And this disconnect is 
very, very worrying and to be honest with you, we are not in a 
position to pick up our favorite technology today. We need all 
these technologies, renewables, CCUS, nuclear power, energy 
efficiency, if we are serious to address those challenges.
    But the renewables are only making good inroads, but I 
believe it is CCUS and nuclear in the United States that need 
special attention if you want nuclear as a part of the U.S. 
power generation mix, which I believe, very important for the 
electricity security of the United States and also for the 
leadership of the United States globally.
    Senator Manchin. Thank you.
    The Chairman. I appreciate that, agree.
    Senator Hoeven.
    Senator Hoeven. Thank you, Madam Chairman.
    Greetings, Dr. Birol.
    One of the things that I would like to get your input on is 
how we get natural gas to markets. In North Dakota we drill for 
oil, in the Bakken and other shale plays and so forth.
    Today, we produce 1.4 million barrels a day of oil, 1.4 
million barrels a day, and that is going up. And so, we don't 
drill for natural gas. We are not actively trying to produce 
natural gas, but every time we drill another oil well, we 
produce more natural gas.
    So our challenge is capturing it and, you know, either 
processing it locally or shipping it off to markets, but our 
problem is getting it to markets. For example, whether it is 
Asia or the European market, we are constrained because of the 
difficulty of building LNG facilities on the West Coast--
California, Oregon, Washington State, British Columbia--or 
getting a pipeline to the West Coast to move it most 
efficiently.
    We are in a situation where we are producing more and more 
natural gas, but our challenge is to get it to market. So it 
is, you know, it would be very low cost. It would be a 
tremendous opportunity for us to export and get value. It is 
not only a very good economic proposition for the United States 
and for states like mine, but it is also a national security, 
geopolitical security issue, right? In other words, us selling 
energy to our allies rather than our adversaries, be that 
Russia or somebody else, right?
    What can we do to convince people that we need to have 
access for pipelines and other means to export our natural gas? 
It is in the national interest of our country, the national 
economic interest and the national security interests of our 
country.
    Dr. Birol. Yes.
    Senator Hoeven. How do we do that?
    Dr. Birol. Thank you very much, Mr. Senator.
    I think your problem is many countries around the world 
would consider as a ``sweet problem'' because many countries 
are dying to have natural gas for their energy mix. You have 
natural gas, but you are not able to export it.
    Senator Hoeven. Correct.
    Dr. Birol. So this is really such a pity because, as I said 
in the beginning, Asia is gas hungry. Asia is gas hungry and 
the amount of gas they need is huge, large amounts. There's a 
huge market out there and that market will be desperate to look 
for the U.S. natural gas in terms of LNG.
    I think the missing link between you and Asian gas markets 
is the pipeline capacity. So this is what needs to be done is 
the, to have the right investment framework there and to tell 
the investors how lucrative those returns would be and to tell 
them that there's a huge amount of demand for your natural gas 
waiting in Asia.
    Senator Hoeven. It is not an investor issue. I think the 
investors--I know the investors would step up right now and 
build the infrastructure. The challenge is the approval 
process. How do we win the argument so we can get approval to 
build? The capital is there. I mean, the price of natural gas 
in our state, it is not zero, it is probably negative because 
what do they do with it?
    Dr. Birol. It comes anyway.
    Senator Hoeven. They can't flare it off. They have to 
capture it. There is a cost to it. And if they can't market it, 
what do they do with it?
    There is, I think, any number of investors that would 
build, put the investment forward right now to build the 
pipelines. The problem is getting the approvals.
    Dr. Birol. Yeah.
    When I said the investment framework was essential I also 
meant the, all these administrative processes which are 
sometimes too slow and it makes the investors losing their 
appetite for the steps they are going to make. And it is the 
case in many countries around the world, but maybe a bit too 
much in some other parts of the world which would lead to a 
loss of money, loss of economic value in the exporting 
countries.
    And when you think about what is being lost, it's not only 
the money, but U.S. providing the security, energy security, 
around the world.
    Senator Hoeven. Right.
    Dr. Birol. In terms of providing flexibility in the gas 
markets, it is not only losing money, but losing from the 
energy security in the world.
    Senator Hoeven. Right.
    How do we convince people that this is a winning 
proposition? It is a winning proposition as we are talking 
about economically, it is a winning proposition in terms of 
national security and our global security interests, and it is 
a winning issue from an environmental standpoint, you know, 
with natural gas.
    Dr. Birol. Exactly.
    Senator Hoeven. And the infrastructure to move it most 
efficiently, cost-effectively, is also the most environmentally 
sound.
    Dr. Birol. Yeah.
    And definitely, we're talking about the CO2 
emissions in the world and when I said Asia is waiting for the 
U.S. natural gas, it is in most cases, it will end up with 
reducing the global CO2 emissions which is a net 
benefit for the world.
    But of course, what needs to be done is to find ways to 
ease up those administrative steps and bureaucratic hurdles 
through administrative measures.
    Senator Hoeven. Well, absolutely.
    I mean, if you are going to commit to billions in capital 
it takes to build that kind of pipeline, you probably want to 
know that you are going to be able to build it, don't you?
    Dr. Birol. Exactly. Definitely, definitely.
    The Chairman. Thank you, Senator Hoeven.
    We are talking about, when you say that the missing link 
here in addressing the Asian market is pipeline capacity----
    Dr. Birol. Yes.
    The Chairman. ----there are some who are not bothering with 
that, and I want to talk about Russia here for a moment. I am 
glad that my colleague and co-chair of the Arctic Caucus is 
with me today, because it is an issue that I think we are just 
closing our eyes to here in the United States and that is what 
is going on with Russia and how Russia is working to meet the 
Asian demand for natural gas.
    There is a lot of discussion. I think everybody over here, 
Senator Manchin just mentioned his opposition to the Nord 
Stream 2 pipeline, we focus a lot on the sanctions against 
Russia in these, you know, asking our European friends and 
allies to join us with this. Again, a lot of discussion there.
    Well, up in the top, up in the Yamal Peninsula right now, 
Russia is going ``hucklety-buckle'' and they are producing in a 
way, bringing on these resources that I think has really been 
quite remarkable. And they are not building a pipeline across 
Siberia. What they are doing is they are putting that natural 
gas into LNG tankers. These are tankers that are being built by 
South Korea. They are ice strengthened, so they can go through 
the Northern Sea. They are going down--they are coming right 
through the Bering Strait, you know, 20, 30, 40 miles from 
Alaska--going down and meeting the demand in Korea. They are 
working with Japan to supply Japan with natural gas. Nobody is 
raising the hue and cry about well, wait a minute, where are 
the Russian sanctions when it comes to oil over here?
    In Alaska, we are still quite a few years away. We have 
been struggling to get an agreement for a pipeline through 
Alaska that could take our natural gas to Tidewater and supply 
that Asian market. Our market has never been in the Lower 48. 
It has always been Asia. Well, we are working to gain these 
partnerships. We have made good headway, not only with Korea, 
Japan, Vietnam, Russia, certainly with Russia with the past 
Administration.
    But if you can, give me some of your observations here. You 
mentioned a little bit about Russia's role, but how has the 
stepped-up activity in Russia, particularly coming off the 
Yamal Peninsula, how has the increased LNG production in the 
Arctic impacted the global energy markets as well as the 
Russian sanctions here? Because I am trying to get some 
attention to the Arctic issues.
    Dr. Birol. Yes.
    The Chairman. And I think we just, kind of, have a tendency 
to either stick our head in the sand or stick our head in the 
snow on this one. And Russia is not sitting around waiting, and 
neither are some of our other Arctic neighbors. In fact, our 
non-Arctic neighbors--China, Japan, Korea--are having 
discussions about this as we speak. They are more involved in 
the Arctic right now than we are.
    Dr. Birol. This is an excellent, excellent question. Thank 
you very much, Madam Chair.
    Let me put it this way, there are two important current and 
possible customers of Russia--Europe and Asia. In Europe, many 
countries since long time came to the conclusion that they need 
to reduce the Russian gas imports because of the energy 
security. But what is happening is just opposite. At the end of 
2018 the share of Russian gas in the European gas consumption 
reached a record high, about close to 40 percent mainly in 
addition to pipelines, as you mentioned LNG coming from Russia 
to you. It is a very important trend. Forty percent of the 
European gas, close to 40 percent, comes from Russian pipelines 
and now with LNG.
    This is--Russia or in other countries political intentions 
for any business to rely on one single partner is, in my view, 
a risky way to go.
    Plus, European domestic gas production is in a decline now. 
There are a couple of fields which are in a decline. Therefore, 
European gas imports will increase very rapidly.
    Now the question is, new imports will come from, again, 
from Russia or from other countries. This is a historical 
moment. It is the reason why I tried to say in the beginning of 
my remarks, in my view, if the U.S. Government, U.S. 
Administration, uses in a wise way, we may well see the full 
impact of shale starting now. And how we see it, we see that 
the U.S. shale comes to the markets in a big time and also 
competes with the Russian and other gas exporters.
    Some people say that the U.S. gas, U.S. LNG, is more 
expensive than the Russian pipe, but I say the following. We 
have calculated, Madam Chair, let's assume one major European 
economy who has no LNG facility. If this country decides to 
build an LNG facility, it will give this country a very 
important negotiation power with the contracts they have with 
the partner exporter, such as Russia. And because they will 
say, if you don't bring the prices down, I have LNG for sale, I 
will import LNG. And we have calculated that if they improve 
their LNG contracts only one percent of the gas prices as a 
result of having another option in their hand, it would be 
enough to finance a major LNG facility for 30 years. So 
therefore, to have the LNG facility there would be very 
important to negotiate with Russia and others to bring the 
prices down. This is number one.
    Number two. Many countries, some OPEC members and Russia 
wants to bring the oil prices up higher levels. If the oil 
prices go up, most of those contracts to Europe are indexed oil 
prices. Those gas prices will go up and in the United States, 
as one of the Senators mentioned here, most of the gas in the 
United States is associated gas. Since the oil prices go up, 
oil production will go up. Therefore, the shale production, 
shale gas production, will go up and the prices of gas will go 
down. So the difference between the contracted oil/gas to oil 
index gas prices will go up, U.S. shale prices will go down, 
and economically it will be much more visible.
    Coming back to Asia. I have a completely different picture. 
I see a huge opportunity U.S. LNG making major, major, having a 
major market share in Asia, especially replacing inefficient 
coal plants because the biggest headache today in China, India, 
Thailand in those countries is the air pollution in the cities, 
local pollution in the cities. And natural gas may well be the 
key solution to all of those countries, and they are building 
LNG terminals. China built, only in the last five years, 13 new 
LNG terminals. And United States together with Australia is a 
very good candidate to bring LNG there, also to India, also to 
Japan, of course, to Korea, the other countries in the 
southeast Asia region of the world.
    So there will be a very harsh competition between the 
established exporters such as Russia and the U.S. LNG. And I 
see many great opportunities for the U.S. LNG to have good 
competition, bringing more flexibility to the markets because 
U.S. LNG is much more flexible and much more optional and I see 
that it will be bringing more, make the gas markets much more 
fluid than it is today. And it is the reason many countries are 
now building LNG terminals.
    When we look at the next ten years, we see that the LNG 
trade is at least three times faster developing competitive 
pipeline gas trade. There's a big growth there. And U.S. is the 
number one candidate to fill that gap, Madam.
    The Chairman. I am going to come back to the Arctic, 
because I am still curious about how you see Russia's LNG in 
Asian countries and impacting them. But I didn't stop you, 
because I think what you have outlined is so key to all of 
these discussions.
    I want to have a little more follow-on there, but let me 
turn to Senator King.
    Senator King. First, Madam Chair, I just want to compliment 
you on the passage of the Lands package. I often think we don't 
celebrate enough around here. We always focus on the next 
problem. This Committee and you, as the Chair, had one of the 
most significant legislative achievements in decades in the 
last two weeks, and I just think we ought to take a minute and 
say this is something that was well done and will be important 
for the country for generations.
    The Chairman. And if we were 16, we would all go like this. 
[Snapping fingers.]
    [Laughter.]
    But thank you, I appreciate that.
    Senator King. So I do want to thank you.
    And thank you for your testimony, Doctor. It has been very, 
very illuminating.
    I will just share one little thought which you could put in 
your rhetorical tool box. We are always looking for a silver 
bullet, something that will solve the problem with one 
solution. I have a good friend in Maine who says there is 
rarely a silver bullet; there is often silver buckshot.
    Dr. Birol. Yes.
    Senator King. A lot of solutions.
    And I think one of the things we take from your testimony 
today is that the world energy situation is not subject to a 
silver bullet, although natural gas has an important role to 
play, as you say. But there are all kinds of other pieces of 
this puzzle, and I think that is one of the things that we have 
learned today. And we have to work on all of them.
    Dr. Birol. Exactly.
    Senator King. And I think that is important.
    An example is the Senator from Arizona. It was heartening, 
by the way, to have a Senator from Arizona expressing sympathy 
with the weather plight of New England.
    [Laughter.]
    But the interesting part about that issue which I have been 
very involved with for some years, is that it is a short-term 
problem. And the economic and energy issue is, do you develop a 
billion dollars' worth of pipeline for a two-week problem or is 
that a storage issue, and what other kinds of options are 
there? LNG may be one of the options, storage in the region in 
order to meet the demand that comes in a few week period, 
usually in January.
    It is a very serious problem. It is very serious, because 
it gets priced into our electric rates and we are now 50 
percent dependent upon natural gas.
    So, I don't expect an answer to that, but I think this is 
another kind of storage. It is not day-to-day storage, but it 
is a longer period storage to meet a shortfall.
    Maybe the pipeline capacity is the answer, but it is at 
least worth discussing what is the exact nature of the risk and 
what is the most cost-effective way to solve it?
    If you have any thoughts, I----
    Dr. Birol. Thank you very much, Mr. Senator.
    First of all, if I can wholeheartedly agree with you that 
in the world of energy, unfortunately, we don't have this 
silver bullet. We work on all the fuels, all the technologies 
since 45 years but we have not yet discovered the back door to 
paradise, if I may say so. It's definitely a big challenge.
    But we are, we need to improve the technologies which are 
promising and which needs more help such as CCUS, such as the 
electricity storage you mentioned a few minutes ago. I think it 
will be a combination of all these technologies working 
together to have a more sustainable and secure energy system.
    But it can change from one country to another. Some 
countries, for some reason, don't want to have nuclear. It is 
their choice. Some countries don't want to use renewables. It 
is their choice. But we believe at the IEA we have to make use 
of all of them because there is not even one perfect solution. 
Even natural gas, you say, in fact natural gas is an excellent, 
excellent fuel in terms of addressing the, reducing the local 
pollution, be plant available pressure not so high but natural 
gas, if not produced sustainably, it has some impact on the 
environment as that so both methane leakage going into the 
atmosphere----
    Senator King. And there is a concern. We have the concern, 
and I have the concern in New England. We are now 50 percent 
dependent upon natural gas for our electricity supply. That was 
maybe five percent 20 years ago.
    Dr. Birol. Yes.
    Senator King. There is a danger, as you pointed out, when 
you have one customer.
    Dr. Birol. Yeah.
    Senator King. When you have one energy source, particularly 
if it is a fossil fuel that we have no control whatsoever about 
the price, it is a commodity. There is a risk there where, 
again, diversity of sources seems to me is the best policy.
    Dr. Birol. Exactly.
    And if, I agree with you that there is no silver bullet but 
if there's a magic word in the energy world for me it is the 
diversification. Diversification is always good for the energy 
sources, for your customers, your importers, your exporters.
    Coming back to your question on natural gas. Of course, the 
gas storage is very important to have enough amount of gas 
storage and the adequate level of pipeline capacity answers to 
the problem. But of course, I didn't study your case very 
carefully, but 50 percent reliance on natural gas may be on the 
high side.
    Senator King. Thank you.
    Thank you, Madam Chair.
    The Chairman. Senator Cortez Masto.
    Senator Cortez Masto. Thank you.
    Let me shift gears for a little bit. I am curious. I am 
from a Western state and in the West, water is a very precious 
commodity. So much so I think there is a famous quote that 
says, ``Whiskey is for drinking, water is for fighting.'' And I 
understand, for the first time, the World Energy Outlook 
incorporates a water dimension in the sustainable development 
scenario----
    Dr. Birol. Yes.
    Senator Cortez Masto. ----illustrating how water 
constraints can affect future fuel and technology choices. I 
also understand a sustainable development scenario details the 
energy required to provide universal access to clean water and 
sanitation for countries around the world.
    I am curious, how is the IEA compensating for changes in 
water availability and the potential declining supply of water 
as you conduct your reports and analysis?
    Dr. Birol. Now, first of all, water is extremely important 
for the energy sector. We need water, for example, we talk 
about the shale gas and we need water for shale gas for LNG. We 
need water for biofuels. We need water also when we're talking 
about the power plants, coal plants, nuclear plants. You need 
water to cool down the towers of those power plants. It is a 
very important element for the energy system.
    But we see that the availability of water is becoming a 
question in many places around the world, including the United 
States. Therefore, now water this time comes to energy because 
now energy is used and will be used more and more to desalinate 
the water, desalination of water and use it as tap water, 
useable water. So not only the energy sector needs water but to 
get, to make water, drinkable water and also to be useable 
water, we need energy to desalinate the seawater and make use 
of it.
    But if I look at the trends, the availability of water will 
be a question, at least for the energy sector, for many years 
to come. Not a big problem in the United States, but a growing 
problem, especially in Middle East and Africa.
    Senator Cortez Masto. Well, in the Western states we know 
this, and I appreciate your comments because I think we have 
looked at desalination, and it just does not pencil out right 
now. I think Israel does an incredible job with desalination.
    Dr. Birol. Yes.
    Senator Cortez Masto. But in the Western states, 
particularly those along the border of the Colorado, we are in 
a drought mode. Water is precious. And utilization of that 
water, how we manage that water amongst the states, is 
important moving forward.
    And so, I appreciate the thought now that as we incorporate 
and move forward and look at, not only future fuel in our 
energy portfolio and those technologies, but also water and how 
it is incorporated into this is going to be important whether 
we can move forward or not, particularly whether you are a 
Western state or an Eastern state.
    Dr. Birol. Exactly.
    Senator Cortez Masto. So, thank you, I appreciate that.
    Dr. Birol. Thank you very much.
    The Chairman. Thank you, Senator. I always appreciate when 
we are able to bring back the issue of water.
    In our Energy 2020 that we laid down some years ago, we had 
a little chapter there on the energy water nexus. It was really 
the first time we had had conversation about this and the key, 
as you have mentioned, Dr. Birol, you can't produce energy 
without water and you can't have water without energy. And so, 
understanding that and how it all fits in is so, so key. So the 
fact that you have included it as well.
    I want to ask about a couple different policy initiatives 
that are coming our way in the very short-term.
    The first one is this IMO 2020. The International Maritime 
Organization (IMO) regulation that is going to go into effect, 
literally overnight, capping the amount of sulfur in the marine 
fuel.
    What is your best estimate in terms of the impact that this 
regulation is going to have on the middle distillate market? 
What are we going to see with regards to diesel fuel, jet fuel 
prices? Are we going to see a jump up with that?
    There has not been a lot of discussion about it, and it is 
one of these things where I am afraid we are going to wake up 
on January 1st and people are going to be saying, what just 
happened there? Yet, theoretically, we have been planning for 
it for years now. But your observations, please.
    Dr. Birol. Thank you very much.
    I would be happy to mention this, but also one point on the 
Arctic, I will comment on that, if you don't mind.
    For that, you are right, these regulations from the IMO are 
very serious and there was, in the beginning, a bit of a type 
of panic in the oil industry. But what we are seeing now with 
all of the oil industry around the world, the refineries are 
adjusting themselves to these regulations.
    There may be some temporary price spikes for diesel, jet 
fuel prices, but we think that the market will adjust and we 
don't expect those price spikes will be long lasting and big. 
There will be some adjustment period but refineries are now, 
today, being configurated according to the IMO rules around the 
world and the U.S. is one of the leaders.
    The Chairman. So, you don't think that it would potentially 
be necessary to have, kind of, a phase in period just to avoid 
any potential for price spikes? It sounds like you think that 
we are preparing for this and will be ready.
    Dr. Birol. Definitely. We are preparing around the world. 
There may be some price spikes, but it will be temporary and it 
will not be big.
    In terms of Arctic, I think you are completely right from 
your perspective. Russia is making substantial efforts in terms 
of the LNG from Yamal, but the volumes are not yet that big, 
but they are working on that.
    But in my view, this is a signal for the United States that 
if the U.S. wants to get the market share, to put the market 
share in its pocket, it should move very fast in order to get 
that market share because the volumes might not be very big 
today, but tomorrow it may be bigger and they will be a much 
tougher competitor.
    The Chairman. So you see that as an area of growth for 
Russia. Do you factor that in as you are looking then to where 
the demand for natural gas is coming from? Do you see the 
production in this very remote part of Russia as coming on in a 
significant way?
    Dr. Birol. Yes.
    The Chairman. Or what does your analysis show you at this 
point?
    Dr. Birol. Currently, Madam Chair, not big volumes but I 
can't exclude that it will grow in the future. My advice would 
be to take this challenge seriously and the U.S. LNG should, I 
think, be ready to compete with the possible growth coming from 
Yamal LNG which is small today but may be bigger tomorrow.
    The issues that some of the Senators mentioned today, not 
having enough licenses for building the pipeline capacity, I 
think those decision-makers should see those facts and perhaps 
make their decisions accordingly.
    The Chairman. I appreciate that.
    I thank you for your focus on nuclear and a recognition 
that when it comes to nuclear and leadership, the United States 
had a very, very, very key role and we are standing, almost 
standing, down on that. And I do not, I hesitate to use that 
terminology because it makes it sound pretty dismal, but to 
know that right now 20 percent here in the United States comes 
from nuclear but we are headed down to 7 percent.
    Dr. Birol. Yes.
    The Chairman. Again, when we want to talk about ways that 
we can be meaningfully reducing our emissions in this country 
and around the world, in my view, nuclear energy is that source 
that we should be looking to and making those investments in an 
aggressive way toward the advanced technologies in dealing with 
our waste issues but really being aggressive rather than, kind 
of, pulling back on that now. I am more than a little bit 
concerned that we are placing less value on nuclear here.
    I have been trying to take point on this and move us out, 
but when you look around the world, you mentioned that China is 
moving more aggressively with nuclear. What other nations are 
stepping up? I mean, there have been some very political 
reasons where countries have drawn back after the horrible 
incident in Fukushima, Japan, but we saw some of the European 
nations really pulling back. Do you see that turning at all 
where there is now renewed interest in nuclear? Speak a little 
bit more to your long-term view.
    Dr. Birol. Right.
    Thank you very much for this opportunity.
    Now we see that not only in the U.S. but also in Europe, 
the share of nuclear will go down if there is no policy change. 
And there are two countries going in the other direction, China 
and Russia. China and Russia are building nuclear power plants 
and what will happen if the policies do not change? At least 
two things. One, the U.S. and Europe will lose major 
technological advantage because many countries around the world 
would like to import nuclear technology and China and Russia by 
learning by doing, they are bringing the cost of nuclear down. 
And therefore, they will have more advantage compared to U.S. 
or the European countries to sell their nuclear technology.
    So this is because cost is a major issue and the United 
States, we have, or in Europe, we don't build any nuclear power 
plants, perhaps just a few and we are even the opposite of 
learning by doing, forgetting by not doing. So we are 
forgetting how to do these technologies.
    The Chairman. Yes.
    Dr. Birol. So, therefore, it is, you know, the second one 
is, in my view, you rightly mention, again, Madam Chair, the 
emissions. Nuclear is a technology which reduces the emissions 
in a very, very radical way.
    And in the absence of nuclear, the reaching our 
environmental goals will be much, much tougher. And when we 
look at today, we talk about the United States being also a 
successful country in terms of renewables, but in nuclear 
generating electricity as much as all the other renewable 
sources put together in the United States today. Losing this 
would be, in my view, not a very wise policy.
    So this would be another negative implication and, of 
course, I am only talking about here energy and environment, 
not U.S. but other countries being together on nuclear capacity 
may well have other implications beyond energy and environment.
    The Chairman. You had made the comment that most notably in 
places like Russia, certainly India, while environmental 
concerns are important that affordability, access to 
electricity----
    Dr. Birol. Yeah.
    The Chairman. ----these are the things that are really 
driving, as they are working to build out these countries here.
    Do you think we get to a point with nuclear where it is 
viewed as, not only the environmental choice, but from the 
perspective of the cost and a stability of cost that we are 
going to see greater investments? Obviously China is taking 
that step, but in other countries as well.
    I just see the focus, the global focus on what we are 
dealing with with our emissions, recognizing that, and I noted 
in my opening comments, we were on a pretty good trend here in 
the United States with reducing our emissions. But you know, we 
have bumped back up here. I want to think that that is just a 
temporary bump, and we are going to work to keep reducing them.
    But is this global dialogue about how we reduce our 
emissions, will that begin to have an impact on some of the 
investment and policy decisions or is it still always going to 
be about, what does it cost me to stay warm, to stay cool, to 
keep my lights on?
    Dr. Birol. First, about the nuclear, I think the challenge 
for current nuclear technologies, the first down payment is 
very, very high cost but operation costs are very cheap.
    Since a big chunk of this new investment needs to be done 
in the emerging countries whose the financial means are a 
little limited, it may not be a mushrooming technology in those 
countries.
    Having said that, advanced nuclear technology such as small 
modular reactors (SMRs) can be a very good fit for those 
countries and in the United States and other parts of the world 
there's a lot of work going there. And if we see the commercial 
success in the SMRs, it can be definitely one of the favorite 
options.
    Now, the investments today are going for renewables but at 
the same time for oil, at the same time for gas and coal. It is 
very difficult to say that there is a clear winner today.
    But when we look at the last year, for example, more than 
50 percent of the new power capacity came in the world was 
solar only. Solar was 50 percent, everything else put again, 
another 50 percent and the renewables are getting a lot of 
attention from investment community as well.
    The Chairman. One last question, and it is something that 
nobody has really hit on today. In your outlook you mention 
that the electricity sector, star of the show, is experiencing 
its most dramatic transformation since its creation more than a 
century ago, a lot of focus and attention on that as well and 
acknowledgement that our electricity grid is increasingly 
becoming more digitalized. This allows us to be clearly 
smarter, much more efficient which, again, is important for a 
more flexible grid.
    But it then presents issues that make us realize how 
vulnerable our grid can be to any level of cyberattack. Your 
thoughts on how we balance the real benefits of this 
digitization of our electric sector versus the vulnerabilities 
that are then created. And are there any good examples 
worldwide where some nations are really aggressively taking 
this on in a way that you see is making a difference?
    I know that here this is an issue that we talk about in 
every single committee that I am on, but it is almost like this 
is so big we don't know how to start taking a bite at this 
elephant. And so, looking to others who might be able to show 
some progress here would be interesting to learn from.
    Dr. Birol. This is an extremely important point, Madam 
Chair.
    In the '70s when the IEA was founded, oil security was a 
key issue and it still is. There is no change there. But 
electricity security is becoming a major issue as well for two 
reasons.
    One, the share of solar and wind, they are increasing in 
our electricity system and if we do not take the necessary 
measures, in the absence of solar and wind, we may see 
blackouts. For examples, we have seen one in Australia 
recently. The share of renewables was more than 50 percent in 
that day, there was no electricity and blackout in our country 
like Australia. So this is one electricity security issue.
    The second one is the cybersecurity and this is an area 
which needs the utmost attention of not the energy people, but 
also security people and the necessary measures and the backup 
technologies and backup the security measures need to be taken 
in an area, that again, we are working very hard with the 
regulators, system operators and also security forces so that 
we are prepared for cybersecurity attacks.
    To be very frank with you, we have 30 member countries and, 
if you ask me if any of those countries are fully equipped vis-
a-vis such cyberattacks, I would have hesitations to say yes to 
you for any country we have. It's a major issue and we all know 
that without electricity, hospitals, lifts, nothing will work 
and our system will be completely paralyzed.
    As such, we have as IEA, in addition to oil security we are 
working now on the electricity security as a major issue for us 
too.
    The Chairman. Good.
    Well, next year we will anxiously await your report to see 
what progress you have made on that. It is certainly key.
    Senator Cortez Masto, did you have any other comments or 
questions that you wanted to ask?
    Senator Cortez Masto. No, thank you.
    The Chairman. I want to thank you, Dr. Birol. You have 
been, again, very informative. It has been a very important 
discussion.
    I always leave these hearings taking my notes with me and 
finding myself referring to them throughout the year. But you 
have given us some good reminders here when you start off with 
just the reminder that, you know, no country is an energy 
island. We sure got that.
    But a reminder, too, that the role that the United States 
is playing when it comes to oil and natural gas is not only 
important for us, it is important globally, it is important to 
our partners, to our allies.
    And we have a lot of good news that is there. We have some 
policy considerations that we need to address that relate to a 
limitation of our own capacity here that we can address that 
and help ourselves and help others. I think that that is 
significant.
    You know, we always ask, are there any, whether it is 
silver bullets or silver buckshot, as Senator King reminded us, 
but you have given us some specifics where the United States is 
leading.
    You mentioned the 45Q as a business model out there. You 
have clearly reminded us that if we want to truly work toward a 
diversified portfolio that helps us reduce our emissions, in 
addition to what we are doing with renewables, that nuclear and 
particularly, advanced nuclear, has got to be so much of our 
calculus here.
    We have no shortage of issues to deal with before the 
Committee, but I think as we move forward and lay down our 
priorities here, what you have given us this morning and what 
the agency has provided us with--just the background and the 
factual analysis--is good, it is solid and it allows us to be 
better informed as we move forward with our policies.
    So, again, I thank you in so many ways for your leadership 
on this. And again, thank you for coming to the Energy 
Committee this morning.
    With that, the Committee stands adjourned.
    [Whereupon, at 11:56 a.m. the hearing was adjourned.]

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