[Senate Hearing 116-340]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 116-340

                INTERNATIONAL EFFORTS TO INCREASE ENERGY 
                  EFFICIENCY AND OPPORTUNITIES TO ADVANCE 
                  ENERGY EFFICIENCY IN THE UNITED STATES

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

                                 HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 22, 2019

                               __________
                               
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                       Printed for the use of the
               Committee on Energy and Natural Resources

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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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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
            Chester Carson, Senior Professional Staff Member
               Spencer Nelson, Professional Staff Member
                Sarah Venuto, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
      Brie Van Cleve, Democratic Senior Professional Staff Member
                           
                           
                           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

                               WITNESSES

Motherway, Dr. Brian, Head of Energy Efficiency, International 
  Energy Agency..................................................     4
Bresette, Daniel, Executive Director, Environmental and Energy 
  Study Institute................................................    23
Layke, Jennifer, Global Director for Energy, World Resources 
  Institute......................................................    30
Tew, W. Scott, Executive Director, Center for Energy Efficiency & 
  Sustainability, Ingersoll Rand.................................    41

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bresette, Daniel:
    Opening Statement............................................    23
    Written Testimony............................................    25
    Responses to Questions for the Record........................    85
Layke, Jennifer:
    Opening Statement............................................    30
    Written Testimony............................................    32
    Responses to Questions for the Record........................    99
Manchin III, Hon. Joe:
    Opening Statement............................................     2
Motherway, Dr. Brian:
    Opening Statement............................................     4
    Written Testimony............................................     7
    Responses to Questions for the Record........................    75
Murkowski, Hon. Lisa:
    Opening Statement............................................     1
Tew, W. Scott:
    Opening Statement............................................    41
    Written Testimony............................................    43
    Responses to Questions for the Record........................   107

 
 INTERNATIONAL EFFORTS TO INCREASE ENERGY EFFICIENCY AND OPPORTUNITIES 
           TO ADVANCE ENERGY EFFICIENCY IN THE UNITED STATES

                              ----------                              


                       TUESDAY, OCTOBER 22, 2019

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:08 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, everyone. The Committee will 
come to order.
    Today is all about efficiency.
    Back in May, we met to examine opportunities to advance 
renewable energy and energy efficiency here in the United 
States, and today we are going to take that just a step further 
to look at the efforts to increase efficiency internationally 
and what best practices we can potentially utilize here at 
home.
    Efficiency is a key ingredient to good energy policy. As we 
work to make energy more affordable, I think the first place we 
should look is to ensure that we are using energy in the best 
and the most efficient way. By reducing energy use, we reduce 
energy costs which matters to every family and business. We can 
improve reliability through technologies that reduce load when 
demand is high, lessening the likelihood of brownouts or 
blackouts. Efficiency, of course, can also play a major role in 
reducing greenhouse gas emissions by reducing energy 
consumption. So whether we are talking about impacting the 
lives of low-income and rural communities, or ways to address 
the impacts of climate change, energy efficiency is a big piece 
of that puzzle.
    I am pleased that we have Dr. Brian Motherway, the Head of 
Energy Efficiency at the International Energy Agency (IEA), 
joining us this morning. IEA has placed an increased focus on 
efficiency. I was pleased to be asked to be an honorary member 
of their new Global Commission for Urgent Action on Energy 
Efficiency, and that is something that I thank you for this 
opportunity but again to focus on not only what we are doing 
but best practices globally.
    We all know that efficiency presents an amazing 
opportunity, but really, we know that it is an opportunity but 
how do you turn it into a reality? There are many international 
efforts that are underway to share policies and best practices 
for advancing clean energy, and expanding research and 
development into innovative technologies. Hopefully we will 
hear a little bit more this morning about the ``Three Percent 
Club.'' This is a coalition of countries and businesses that 
are committed to increasing global energy efficiency by three 
percent annually.
    Here at home, energy efficiency remains one of the easiest 
steps that we can take, and its benefits can be significant.
    The Alliance to Save Energy reports that 25 million 
American households have reduced or foregone medical or food 
purchases to pay energy bills, and households earning less than 
200 percent of the federal poverty level spend on average 16.3 
percent of their income on energy costs.
    As we were looking at our background memo for Committee 
members, in the very first sentence in our briefing memo, it 
states here in the United States energy efficiency measures 
have helped reduce energy use by 50 percent relative to what it 
would have been had the 1980's energy use pattern continued, 
saving each American an average of $2,500 per year on their 
energy bills. That is significant.
    Even small changes in using energy more efficiently can 
make a big difference. I like to cite some of the things that 
we see in my state. A little community called Yakutat, which is 
in the northern end of the Southeast panhandle, with a 
population between 500 and 800 people depending on the fishing 
season, but the elementary school there made a change out to 
more efficient lighting. It doesn't sound like that big of a 
deal, but they are able to save about $70,000 a year which for 
them in that community translates to a teacher's salary. When 
you look at what the benefit is and then the payback to that 
community has already been completed. So lots of good examples 
out there.
    We have a lot to discuss this morning, so I just want to 
briefly introduce our panel of expert witnesses as I wrap up.
    I mentioned Dr. Motherway. So again, thank you for 
traveling across the Atlantic to join us here this morning. We 
are also joined by Dr. Daniel Bresette, the Executive Director 
of the Environmental and Energy Study Initiative (EESI); Ms. 
Jennifer Layke is the Global Director for Energy at the World 
Resources Institute (WRI); and Mr. Scott Tew is the Executive 
Director of the Center for Energy Efficiency and Sustainability 
at Ingersoll Rand.
    We will have good conversation this morning as we talk 
about how we advance energy efficiency here in this country and 
globally.
    With that, I turn to my friend and my colleague, Senator 
Manchin.

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

    Senator Manchin. Thank you, Senator Murkowski, for holding 
the hearing today on energy efficiency. I would also like to 
welcome and thank all of you for being here and enlightening us 
on what is going on and what we need to do.
    We have been focusing on climate solutions in this 
Committee and we need a variety of solutions to make the 
differences that we need, but energy efficiency really is the 
low-hanging fruit and I think we have all acknowledged that.
    Multiple studies have shown that energy efficiency is 
cheaper than investing in any other type of new generation. It 
is truly the cheapest kilowatt out there.
    It is also readily available. There are lots of 
opportunities to improve efficiency in buildings, industry and 
transportation, and it is a jobs creator. In energy efficiency, 
jobs grew in my home State of West Virginia by nearly five 
percent last year to 1,600 jobs. That is important for a state 
like mine where we are losing some of our more traditional 
energy jobs. Nationwide, 2.35 million people work in energy 
efficiency, over twice the number employed in fuel, gas and 
coal jobs. I am hoping the discussion today will focus on the 
role of energy efficiency and economic competitiveness in our 
global fight to address climate change. Energy efficiency 
improvements starting in the 1970s have helped us produce more 
economic output with less energy.
    That increase in energy productivity is a shot in the arm 
for U.S. competitiveness. Today, energy use, per dollar of 
gross domestic product, has fallen by more than half compared 
to 1980. That means we produce twice the GDP for the same 
energy, saving each American an average of $2,500 per year on 
their energy bills and also making the overall economy 
stronger.
    This is a clear example of why energy efficiency is a win-
win. It increases productivity, creates jobs and helps us 
expand overall economic activity. In fact, the International 
Energy Agency found that if cost-effective and technically 
available energy efficiency measures were fully deployed, the 
global economy could double in size by 2040. That is a big 
number, double in size by 2040, while seeing only a marginal 
increase in energy consumption.
    I am glad that we have Dr. Motherway here to discuss these 
findings. The U.S. should be leading the pack in energy 
productivity including helping emerging economies in the world 
enjoy the same benefits, like reduced energy costs, access to 
modern conveniences like dishwashers and air conditioning, 
things we have taken for granted for many years now.
    As I have mentioned, energy efficiency is also a tool to 
help us reduce emissions, a very significant tool, and I know 
our witnesses are going to discuss that today.
    Senator Murkowski and I took a trip to several Arctic 
nations earlier this year and what struck me is that for those 
nations, climate change is not political, it is a fact. We are 
the only Arctic nation that uses climate change as a political 
divide, the only one, and they have much more diverse political 
challenges than we do.
    Our Committee has been forward leaning this year in having 
experts here testify on the facts around the changing climate 
because we may not all agree on the approach to take, but we 
should be starting from the same place with a baseline of 
facts. That is the only way we can really start working 
together on solutions.
    I think that commonsense climate solutions, like energy 
efficiency, should be our common ground. We should be counting 
energy efficiency as among the nation's most abundant natural 
resources that we can leverage to increase the prosperity of 
all Americans. I hope the panel can help us identify barriers 
and opportunities to accelerate investment in efficiency.
    I think this Committee has demonstrated a commitment to 
energy efficiency. So far, we have reported 12 bills that would 
increase energy efficiency in buildings, manufacturing, 
industrial and transportation sectors. Two of those bills are 
focused on the Federal Government, because we are the largest 
energy user in the country. That is great material for a robust 
energy efficiency title in an energy innovation bill, and I 
hope to work with my colleagues and my Chairwoman on that.
    In the meantime, I look forward to hearing from all of you 
to increase energy efficiency.
    Thank you, Madam Chairman.
    The Chairman. Thank you, Senator Manchin.
    Let's go ahead and begin the testimony here this morning. I 
have introduced each of you.
    We would ask that you try to keep your comments to about 
five minutes. Your full statements will be incorporated as part 
of the record, but we would like to have plenty of opportunity 
for the questions afterward.
    Dr. Motherway, if you would like to begin. Again, thank you 
for joining us from across the seas. Welcome to the Committee.

 STATEMENT OF DR. BRIAN MOTHERWAY, HEAD OF ENERGY EFFICIENCY, 
                  INTERNATIONAL ENERGY AGENCY

    Dr. Motherway. Thank you very much, Chairman Murkowski, 
Ranking Member Manchin, Senators and fellow panelists. It's a 
privilege and an honor to be with you today to talk about the 
topic that we see as very important for reasons that the 
opening remarks of the Chairman and the Ranking Member have 
already said very eloquently are why energy efficiency is so 
important to money, energy, environment and wider social and 
economic goals.
    As you may be aware, the International Energy Agency is 
working with governments amidst a growing recognition around 
the world of the need for stronger progress in energy 
efficiency. And, of course, this is the context for the recent 
establishment of the Global Commission for Urgent Action on 
Energy Efficiency, which was mentioned, which we see as a very 
important, high-level examination of opportunities to 
accelerate progress on energy efficiency.
    And Chairman Murkowski, we're very pleased and honored that 
you have generously agreed to be an honorary member of that 
committee. We believe its work will be very significant for 
energy efficiency's future around the world.
    As has been mentioned, energy efficiency is already making 
major contributions in a number of domains, including energy 
security, cost reduction, environmental protection, as well as 
enhancing competitiveness and resilience around the world. But 
our analysis shows that globally, progress in energy efficiency 
is slowing down which is of great concern to us. Energy 
efficiency policy action is not keeping up with wider pressures 
and social trends that are pushing energy demand up. And for 
us, this represents a significant lost opportunity, especially 
when we know that more can be achieved.
    As the Ranking Member mentioned, we have undertaken 
analysis that shows that we could more than double our rates of 
annual energy efficiency improvement, if the only thing we did 
was use technologies that are already existing and fully cost-
effective today. And if we did double that rate of improvement 
and got back on track to around three percent annual 
improvement a year, in the next few decades we could see the 
global economy double in size while using, effectively, the 
same amount of energy that we use today which, in turn, would 
make lives better all over the world, giving people lower 
energy bills, reduced greenhouse gas emissions and greater 
energy security.
    We're very pleased that our analysis, looking at how to get 
back on track at three percent, is inspiring discussions around 
energy efficiency around the world. And for our part, we look 
at how policy can make a difference, and we look around the 
world at some of the best policies. And let me, please, just 
mention a couple that I think are of interest.
    Many countries use regulatory approaches to policy. It's a 
very common approach such as building codes, standards for 
vehicles or appliances. They are effective in reducing consumer 
costs. They drive innovation, and they can enhance industry 
competitiveness.
    One example I would mention is in Japan, the so-called Top 
Runner Program, which covers a range of products from passenger 
cars to refrigerators and everything in between. Performance 
standards are dynamic so that every few years the best in 
class, the most efficient technology, becomes the standard for 
everybody to meet, therefore driving innovation and efficiency 
over time which it leads to greater international 
competitiveness for Japanese companies as well as giving 
consumers access to efficient and highly cost-effective 
equipment.
    Higher standards are also driven through voluntary 
approaches, not least here in the U.S. where public and private 
organizations have come together to agree to new efficiency 
levels, for example, for television set top boxes and internet 
routers. Elsewhere, in many countries, voluntary engagement is 
used in industry as well where sectors agree to set themselves 
cost-effective energy efficiency improvement targets.
    We also see the widespread use of market-based approaches 
and market instruments to drive innovation and mobilize action. 
Many European states, for example, have utility obligation 
programs where energy providers are given energy efficiency 
targets to meet. They are given freedom to choose where to 
focus and that drives innovation and lowers costs. Many U.S. 
states have used similar approaches very effectively as well. 
Many governments focus on homes and how to make them more 
efficient.
    One interesting example here in the U.S. is Alabama Power's 
Smart Neighborhood Program supported by the Department of 
Energy which is a public-private collaboration linking very 
efficient, high technology homes via a community-scale 
microgrid. The result is desirable, modern, sustainable and 
resilient homes and neighborhoods.
    In my view, we are entering now a new epoch for energy 
efficiency, driven by the fast pace of innovation in digital 
technologies. Such technologies allow us to think about 
efficiency in new, more dynamic system-wide ways. For example, 
here in the U.S. many states have very successful programs that 
reduce stress on electricity grids by incentivizing consumers 
to reduce their consumption at peak times. What is new now, 
driven by technology, is that this can be done easier, cheaper 
and more effectively and the demand side can be more flexible 
and can help not only reduce cost but also make the best use of 
clean energy resources.
    In our view then, this means that efficiency is no longer 
just about the end use of energy in devices but also about how 
to optimize the whole energy system, and this new modernized 
way of thinking about energy efficiency will open up many new 
opportunities.
    So in closing, I just want to stress that the IEA looks at 
all fuels and all technologies. We are the world's policy 
advisor across the entire energy system, and we see energy 
efficiency as a top priority. We support governments by 
analyzing trends, sharing best practices and encouraging 
exchange and collaboration. When we look at best policy 
practices around the world, we see that there is--with good 
design and good implementation, policies can succeed in 
bringing many benefits to economies and citizens through 
engaging the market, driving innovation and lowering costs for 
all.
    And a key lesson we find around the world is there is 
always more potential. There's always a greater opportunity for 
more efficiency. And, of course, this is why we think the 
Global Commission for Urgent Action will play such an important 
role.
    So Chairman, Ranking Member, Senators, colleagues, thank 
you very much for the opportunity to present my testimony 
today, and I hope it has been of some value to you.
    Thank you.
    [The prepared statement of Dr. Motherway follows:]
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    The Chairman. Thank you, Dr. Motherway. We look forward to 
our questions.
    Mr. Bresette, welcome.

STATEMENT OF DANIEL BRESETTE, EXECUTIVE DIRECTOR, ENVIRONMENTAL 
                   AND ENERGY STUDY INSTITUTE

    Mr. Bresette. Good morning. Thank you for the opportunity 
to discuss energy efficiency and its potential to reduce 
greenhouse gas emissions and make our transition to a 
decarbonized clean energy future more affordable and 
accessible.
    I'm the Executive Director of the Environmental and Energy 
Study Institute which declared 31 years ago that addressing 
climate change is a moral imperative. Today we're fully engaged 
in the climate policy debate and committed to working with this 
Committee to find solutions to the terrible problem of a 
rapidly warming planet.
    The urgency of climate change requires immediate action at 
home and abroad. Energy efficiency provides the easiest source 
of measurable emissions reductions. It is the secret weapon 
against climate change because we already have what we need to 
do. Every kilowatt-hour saved today will make future 
commitments easier to attain. The missing piece is the 
magnitude of our commitment which falls short of the enormity 
of the challenge.
    Congress should reassert U.S. leadership in global efforts 
to reduce emissions. For those concerned that a burden could 
fall unfairly on domestic interests, I suggest instead that we 
will have more authority to lead if we do ourselves what we ask 
of others. This starts with energy efficiency as it pertains to 
federal buildings. There is a backlog of energy efficiency 
measures worth over $8.6 billion that would reduce emissions, 
often by leveraging private sector capital at no taxpayer 
expense. That list of idle projects could start disappearing 
tomorrow if Congress passed the Murkowski/Manchin Federal 
Energy and Water Management Performance Act that this Committee 
approved last month. The contributions of emissions from 
buildings is under appreciated. The building sector accounts 
for about 40 percent of U.S. greenhouse gas emissions and about 
30 percent of energy used in commercial buildings is wasted.
    The Federal Government's current commitment to climate 
change action falls short, but state and local governments are 
rising to the challenge and reducing U.S.-sourced emissions by 
adopting updated building energy codes. Congress should support 
building energy codes as a key pathway to net zero construction 
by 2050 by passing the Portman/Shaheen Energy Savings and 
Industrial Competitiveness Act to encourage states and local 
governments to go beyond the model building energy code and 
train code officials to improve compliance.
    One area of innovation of interest to EESI is energy 
efficiency financing which could be administered by special 
entities like green banks. States and local governments have an 
abundance of creativity but are often constrained by a lack of 
capital to initiate financing for underserved or hard to serve 
populations or establish credit enhancements to leverage 
private sector capital. Pending before Congress are bills that 
would support financing such as the Chairman's proposal to 
expand eligibility of the Department of Energy's existing loan 
guarantee program and Portman/Shaheen which includes the SAVE 
Act to ensure homeowners realize a return on energy efficiency 
investments.
    EESI knows that many costs incurred in the race to address 
climate change could unfortunately impact people and 
communities least able to access the benefits of a decarbonized 
clean energy economy. Rural Americans, on average, pay about 40 
percent more for energy than those in urban areas. We must do 
all we can to avoid this negative outcome.
    EESI's experience with on-bill financing programs offered 
by municipal utilities and electric cooperatives shows how 
cost-effective retrofits facilitated by low interest loans can 
reduce upfront costs of improvement and lower monthly energy 
bills. Participants, including those with lower incomes or who 
live in disadvantaged communities, gain more affordable and 
sustainable housing. The policy implications are far-reaching, 
including lower emissions, healthier homes and even beneficial 
electrification of heating equipment and personal vehicles.
    EESI works today with many utilities and cooperatives to 
implement on-bill financing. For example, in Juneau, Alaska, a 
non-profit community partnership is collaborating with local 
government and stakeholders to deploy financing for high-
efficiency heat pumps. Many homes in greater Juneau have oil or 
electric resistance heaters and suffer from air leakages and 
insufficient insulation. Together with cold climate heat pumps 
and basic weatherization, on-bill financing could lower utility 
bills for Alaskan families and help Juneau meet its climate 
goals. EESI's experience suggests that this program design 
could be deployed overseas, especially where credit is scarce 
and incomes are low. In addition to unlocking savings, these 
programs finance measures that offer resilience benefits like 
better thermal performance of walls and windows.
    Lastly, I would like to step back and make a broader point. 
Energy efficiency offers benefits, but it works best as an 
element in a full set of clean energy solutions. I encourage 
the Committee to consider energy efficiency along with policies 
to stimulate advancements in renewable energy, transmission and 
grid modernization, storage and other clean energy 
technologies. In addition, climate adaptation and resilience 
legislation is complementary to these efforts to safeguard the 
energy system and critical infrastructure from disasters and 
extreme weather.
    It is commonly said that energy efficiency should come 
first. Yes, but it should not go alone.
    Thank you for the opportunity to discuss how energy 
efficiency can deliver near-term, achievable emissions 
reductions. I'm happy to answer questions and provide 
additional information for the record.
    Thank you.
    [The prepared statement of Mr. Bresette follows:]
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    The Chairman. Thank you, Mr. Bresette.
    Ms. Layke, welcome.

STATEMENT OF JENNIFER LAYKE, GLOBAL DIRECTOR FOR ENERGY, WORLD 
                      RESOURCES INSTITUTE

    Ms. Layke. Thank you, Chairman Murkowski, Ranking Member 
Manchin and members of the Committee for the opportunity to 
testify here today at this hearing. It's an honor to be here.
    I'm Jennifer Layke, Global Director for Energy at the World 
Resources Institute, a research organization working at the 
intersection of development and environment to improve people's 
lives.
    Energy efficiency is a matter of economic competitiveness. 
It is the lowest cost energy source that we have. From my 
current work at WRI and from my work, private sector work on 
energy efficiency, the evidence is clear, we can easily end, we 
must cost-effectively reduce our energy waste if our economy is 
to continue to grow at its potential.
    The steps are known and the technologies are proven. Three 
things immediately can make our journey more effective.
    First, we need to ensure the Department of Energy delivers 
on its statutory obligation to review and update performance 
standards for equipment and appliances. I can't state strongly 
enough the importance of these energy performance standards. 
Households today save approximately $500 annually as a result. 
The Administration should not be rolling back our progress on 
commonsense technology improvements.
    We must look, secondly, at the more wide-reaching 
provisions of bills like S. 2137, the Portman/Shaheen bill, 
passed out of the Committee last month. I urge the Full Senate 
to take up this bill.
    We must, thirdly, continue to accelerate the investment 
into efficient technologies of the future, that includes 
reintroducing Senate bill 224.
    Let me share a few observations on critical areas where the 
U.S. may be out of step with the global opportunity and action.
    The building sector is one such area. In my written 
testimony I provide examples of mandatory building energy 
performance codes. And along with building labeling, these can 
be very effective at stimulating the market. China is moving 
swiftly toward requiring building performance standards, Tokyo 
already cap and trades its building performance and we have the 
opportunity to look at more innovative, systematic approaches 
to building performance.
    Many of these investments pay back within five to seven 
years and offer better cash flow for their owners and 
occupants, yet many building owners and homeowners are forced 
to purchase inefficient equipment because there is no mechanism 
to allow them to overcome the first cost barrier--the fact that 
sometimes, efficient equipment may cost more. Can you imagine 
our economy if we were not offering low interest loans and 
leasing for automobiles?
    My second focus is on industrial efficiency and equipment 
manufacturing. In 2018, Senators Kennedy and Carper introduced 
Senate bill 224, the American Innovation and Manufacturing Act. 
This bill would provide American manufacturers the policy 
certainty they need to make cooling and refrigeration product 
investments that shift away from hydrofluorocarbons. This 
phasedown is already agreed to internationally by the Montreal 
Protocol under the Kigali Amendment and the U.S. market must 
move in alignment with this international effort. I urge 
Senator Cassidy, as a co-sponsor of that bill, to reintroduce 
the legislation to Congress as soon as possible.
    Let me offer an example of how this plays out. Right now, 
there are 675 multinational companies that WRI and the larger 
coalition of organizations are working with. One hundred thirty 
of those are in the United States. They've committed to 
science-based targets to improve their own performance 
alongside the science and what's required. These companies will 
be measuring and managing their carbon footprint and the 
equipment they buy will not just be judged on the quality and 
the price, it will be judged on the carbon performance. U.S. 
technology must be able to compete in this race for the future.
    But this Committee is also interested in the energy 
efficiency efforts around the world. The American Council for 
an Energy Efficient Economy releases a scorecard, and in 2018 
the United States ranked tenth alongside Canada but behind 
China and behind Taiwan. Many of the leaders are European 
countries that have had strong policy drivers for efficiency. 
The U.S. can connect this global energy efficiency effort and 
Senator Murkowski, thank you for joining the Commission and 
helping support this interaction between the U.S. efforts and 
global efforts. WRI is doing the same. We joined with the IEA 
and many other partners around the Three Percent Club. I hope 
we have an opportunity to discuss that further. It's a global 
effort--15 countries and over 40 organizations are supporting 
that effort.
    We also work on buildings through our building efficiency 
accelerator and in conjunction with the United For Efficiency 
under the Sustainable Energy for All banner, we're working to 
ensure that the building sector has access to the latest 
technology. In fact, the doubling of energy efficiency 
improvement is somewhere that the U.S. is off track, the 
Business Council for Sustainable Energy reports, along with 
BNEF, that our productivity declined in the United States, 
energy productivity declined by 0.4 percent last year.
    Yesterday, I spent with the FERC Chairman Chatterjee, who 
convened stakeholders at the University of Kentucky to discuss 
today's electricity system and the challenges and 
opportunities. Utilities, regulators, policymakers, technology 
advocates spoke about the opportunities for clean, affordable, 
reliable electricity, yet energy efficiency was not mentioned 
as part of that agenda.
    It is critical that we provide Americans with an integrated 
set of solutions and technologies, both on the supply and the 
demand side, and increasingly these two areas overlap.
    We look forward to opportunities to work with you all and 
the Congress and the Administration to ensure that Americans 
are unburdened from high energy cost.
    [The prepared statement of Ms. Layke follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]	
    
    The Chairman. Thank you, Ms. Layke.
    Mr. Tew, welcome.

   STATEMENT OF W. SCOTT TEW, EXECUTIVE DIRECTOR, CENTER FOR 
       ENERGY EFFICIENCY & SUSTAINABILITY, INGERSOLL RAND

    Mr. Tew. Thank you, Chairman Murkowski and Ranking Member 
Manchin, and good morning to all of the members of the 
Committee. It's a pleasure to be here with you today.
    My name is Scott Tew, and I lead the development of 
Ingersoll Rand's global positions with regard to energy, energy 
efficiency, climate and sustainability. Through our climate-
based businesses, Thermo King and Trane, we heat, cool, and 
automate homes and buildings and keep transported food and 
perishables safe and fresh. We're also playing a key role in 
the evolution of innovation as a catalyst for energy 
efficiency.
    As our planet continues to face the ongoing challenges 
brought about by urbanization, resource constraints, workforce 
dynamics and, of course, climate change, Ingersoll Rand and 
Trane and Thermo King are developing and unleashing solutions 
that help. We've been at this a very long time.
    When our company was founded nearly 150 years ago, Ulysses 
S. Grant was President. The great State of Alaska was still 88 
years from officially becoming a state. With time has come 
experience and we believe, also, credibility and at the heart 
of everything we do is a commitment to efficiency and 
sustainability, a greater purpose that allows us to make a 
positive impact on the world.
    At Ingersoll Rand we set and deliver on energy efficiency 
and climate commitments. We delivered our first-generation 
commitments well ahead of time. In 2014, we set out to reduce 
the greenhouse gas refrigerant footprint of our products by 50 
percent by the year 2020. Our efforts, though, actually yielded 
a 53 percent reduction, two full years ahead of schedule. We 
also pledged in 2014 to reduce our operational greenhouse gas 
footprint by 35 percent and, again, we were able to reduce that 
impact by an even greater number, 45 percent, also two years 
ahead of schedule. We're also on pace to fulfill a pledge to 
invest $500 million in product-related innovations by 2020.
    We have much to be proud of, but also much work remains to 
be done. To that end, we recently launched a 2030 commitment 
with new environmental targets. Here are three of them. One, we 
plan to transform our global supply chain. Two, we plan to 
reduce our customer's carbon footprint by one gigaton of 
carbon, something we call the Gigaton Challenge. It is the 
largest customer facing climate commitment ever made by a 
company. In case you're wondering, a gigaton is equivalent to 
the annual emissions of Italy, the UK and France combined. It's 
large. Number three, we're increasing the opportunity for all 
by strengthening the economic mobility and bolstering the 
quality of life, not only of our workforce but also in the 
communities where we have major investments.
    From our advantage as a leader in the business of 
sustainability, we believe there are a few key points to keep 
in mind as policymakers, regulators and industry work together 
to identify future energy efficiency solutions.
    First, energy efficiency is good for business. It's good 
for consumers, it's good for the health of the climate and 
that's why energy codes and appliance standards remain the 
bedrock of an effective building energy policy in developed 
economies like the U.S. Improvements in appliance standards for 
air conditioning and equipment now mean that our products use 
35 percent less electricity, providing the same cooling 
capacity with no tradeoffs. These policies not only save 
consumers money and reduce greenhouse gas emissions, they also 
allow us to manage the energy use of our products which, in 
turn, modernizes the energy infrastructure. Ultimately, U.S. 
leadership on energy efficiency standards means that we can 
focus our innovation for North America while seeking 
opportunities to bring those technologies to countries 
developing their own standards elsewhere.
    The second point I'd like to highlight is that future 
building policy must recognize system interactions within 
buildings and the environment. So while there will always be a 
place for robust energy codes and appliance standards, we have 
to begin thinking beyond energy performance of components at 
the individual product level because that's where the biggest 
opportunity for energy savings will come from in the future.
    Great care must be taken when it comes to crafting codes 
and standards so that solutions that improve overall efficiency 
at the systems level, remains available to consumers. The 
potential opportunity does not stop at the building system 
level either, buildings can be assets in our infrastructure. 
Building management systems can respond to signals from the 
grid and can automate any connected subsystems at the component 
level. That is the essence and the calculus of energy 
efficiency, determining the desired energy outcomes for 
improvement, assigning metrics to measure their progress and 
implementing policies that encourage solutions.
    Looking ahead, the work remains challenging but incredibly 
exciting. I'm privileged to work in this industry that 
continues to transform the planet, our communities and lives 
for the better.
    Thank you again, Chair Murkowski, for allowing me to make 
my comments.
    [The prepared statement of Mr. Tew follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]	
    
    The Chairman. Thank you, Mr. Tew, and thank all of you. We 
appreciate your comments, and I look forward to the discussion.
    I am going to defer my questions and turn to Senator 
Gardner for the first round here.
    Senator Gardner. Thank you, Madam Chair. Thank you for the 
opportunity to ask questions, I truly appreciate the deferral.
    To the members of the panel here, thank you very much for 
being here today. Chairman Murkowski, Ranking Member Manchin, 
thank you very much for doing this hearing today.
    As we all know, the United States has made great strides 
when it comes to addressing our emissions and our energy use. 
Energy efficiency is not only good for our environment, but it 
is good for our consumers as well. The average American has 
saved almost $2,500 per year on their energy bills because of 
the achievements we have made, but more needs to be done, more 
can be done.
    I am proud to have joined both the Chairman and Ranking 
Member in introducing the Federal Energy and Water Management 
Performance Act of 2019 which formally authorizes the Federal 
Energy Management Program so we can leverage the knowledge and 
expertise of the Department of Energy to help other federal 
agencies increase their energy efficiency.
    I am also proud to have teamed up with Senator Coons to 
reintroduce legislation that I have been working on for the 
past several Congresses, the Energy Savings Through Public-
Private Partnerships Act of 2019, which will encourage the use 
of energy savings performance contracts (ESPCs) in federal 
buildings. Using the ESPC model will allow private companies to 
use their own money and resources to make energy efficiency 
upgrades to federal buildings at no cost to the taxpayer. In 
exchange for making energy efficient upgrades, those private 
companies receive a portion of the money saved as a result of 
the increased efficiency. This could save billions of dollars, 
creating thousands of private sector jobs, all resulting in 
greater energy efficiency and lower emissions.
    One of the things that we have talked about over the past 
several months has been this statistic that we came across that 
goes back roughly 15 or 20 years. Over that course of time, 50 
percent of the emissions reductions achieved by the United 
States have been achieved through gains in energy efficiency. 
So nearly half of our emissions reductions have been achieved 
through energy efficiency. That's greater than renewable energy 
emission reductions or fuel switching emission reductions 
combined.
    Now I am under the understanding that most of those savings 
came from efficiencies in the generation process. So I guess I 
would just ask, and I don't know who the appropriate one on the 
panel is to ask this. If that is the case, if we have made such 
significant strides in energy efficiency through the generation 
side of things, how can we export that knowledge, those 
technologies, those efficiency gains in the United States to 
China, to India, other areas where they obviously have not 
created those kinds of efficiencies? And what would that mean 
from a global emissions reduction standpoint in real time? I 
don't know who wants to take a shot at that?
    Dr. Motherway.
    Dr. Motherway. Thank you very much, Senator, for your 
comments. And I must say, I'm very pleased to hear how much 
dynamic action is going on in the U.S. at the moment around 
energy efficiency, and I commend the Senators for the range of 
activities.
    The U.S. has made tremendous strides in energy efficiency 
in the last couple of decades, and you cite the numbers to 
support that. And I think there are tremendous opportunities to 
export technologies, but also, the kind of business models you 
spoke about in terms of performance contracting and financial 
innovations and all that goes with that.
    And for me, certainly, the next phase will be driven by how 
digital technology makes that more possible in terms of 
measuring savings, giving customers and suppliers security.
    And I must stress that the number you cite in terms of the 
gains, in terms of emission reductions from the last couple of 
decades being nearly half from efficiency, the same will be 
true in the next couple of decades. According to our analysis, 
in the next two decades efficiency has the potential to provide 
almost half the total emission reductions available from the 
energy sector entirely.
    And I think the opportunities for export will be driven by 
certainly what we see that the global interest in energy 
efficiency and the available solutions has never been higher. 
So I must totally agree with your point that the opportunities 
are very strong.
    Senator Gardner. Thank you.
    Yes, Ms. Layke.
    Ms. Layke. Thank you, sir.
    I am encouraged by the conversation of this, sort of, 
integration of both supply and demand side. This is one of the 
areas where, I think, there's tremendous opportunity.
    And let me point to the long tradition that the United 
States has had in multilateral and bilateral cooperation 
efforts both through the EPA, through the Department of Energy 
and through the Department of State. There are existing efforts 
underway with the Department of State, for example, to look at 
grid modernization in India. Those types of programs and the 
cooperation that the U.S. Government can have in enabling 
capacity building for these kinds of technological advancements 
is one of the things that we've done very well in the United 
States.
    I, myself, began my career working on multilateral ozone 
protection efforts the United States worked on with China and 
with other countries to ensure the phaseout of CFCs in that 
first generation. Similar programs could help advance digital 
technology and modern the grid infrastructure.
    Senator Gardner. Thank you.
    Dr. Motherway, going back to your point. Your projections 
show that, I don't know, the next several years that global 
energy emission reductions will be achieved at least half by 
and through energy efficiency. Is that how you said that?
    Dr. Motherway. That's correct, yes, just under half we 
expect in the next two decades can come from energy efficiency.
    Senator Gardner. Great. Thank you very much.
    Thank you, Madam Chair, thank you.
    The Chairman. Senator Manchin.
    Senator Manchin. I am also going to defer to my friend from 
New Mexico, Senator Heinrich.
    Senator Heinrich. Thank you, both.
    I want to first make the point that one of the frustrations 
that all of my constituents seem to have is that Congress is 
not getting a lot done, and I think that is an accurate 
estimation.
    This Committee has been a relative exception, and we have 
seen legislation marked up on economy-wide energy efficiency. 
We have seen federal building upgrade legislation. We have seen 
energy storage legislation.
    I hope all of us will take this hearing as an opportunity 
to go back and push on Senate leadership to get those bills on 
the Floor, because we can get an awful lot done based on the 
good work that has gone on from our Chair and our Ranking 
Member on this Committee.
    Mr. Bresette, so much of this discussion, especially around 
economics, comes down to the tension between short-term 
economics and long-term economics. I remember when the light 
bulb standards were first being debated on the Floor of the 
body on the other side of the Capitol, the U.S. House. A number 
of our colleagues came to the defense of the economics of their 
constituents but in a somewhat misguided way trying to protect 
the incandescent light bulb. I just pulled up a little search 
of what the life-cycle costs now are of incandescent versus 
LEDs and for 25,000 hours at the equivalent of 60 watts, the 
lumen equivalent, an incandescent will cost you $180, and an 
LED will cost you $30. In effect, what we are doing for those 
folks who are pushing the protection of incandescent over newer 
technologies is locking people in to a higher cost of energy 
per month, six times higher, actually.
    We need to find those mechanisms that provide a way to 
finance the difference between the short-term economics and the 
long-term economics. You mentioned on-bill financing as a way 
to do that. Do all of you support that kind of approach and 
what do you think of other mechanisms, be they property 
assessment mechanisms or others?
    Mr. Bresette. Thank you, Senator.
    Yes, I think generally speaking, that's, kind of, the magic 
of financing. It reduces the emphasis on the upfront cost and 
that allows the beneficiary to focus on the long-term benefits.
    You know, it's easy to focus on what's immediate. And when 
the immediate stops being the cost and it starts being the 
benefits which accrue from day one, that's really the magic of 
financing. On-bill financing that ESI works on is typically 
targeted at rural utilities. That seems to be where there's a 
lot of interest. But there are lots of other financing 
mechanisms.
    You mentioned property assessed clean energy (PACE), that's 
a good one. Many states have revolving loan funds for larger 
commercial projects or multifamily projects. There are also 
deferred payment programs. These are leveraged, sort of, mostly 
like consumer credit programs. And then there's also 
performance contracting which is, at its heart, a financing 
mechanism.
    Senator Heinrich. Yes.
    Mr. Bresette. I think one thing that you would notice is 
that those programs are all fairly targeted to that end user, 
right, to that customer. A performance contract may not work 
for a homeowner. On-bill financing might not work for, you 
know, given technologies or maybe where PACE would come in.
    But financing is really important. As financing importance 
has increased, I think that's been driven, at least in part, by 
an awareness that rebates are limited. A lot of the program 
development in financing and in rebates, of course, is done by 
the utility sector.
    Senator Heinrich. Right.
    Mr. Bresette. And rebates are a finite resource. Financing 
has the ability to constantly be recycled and to spread those 
benefits wider.
    Senator Heinrich. We have seen the Administration recently 
roll back the efficient light bulb standards. Do any of you 
think that that is smart policy?
    [Witnesses nod, no.]
    Senator Heinrich. Moving on.
    Space cooling.
    Senator King. Let the record note, silence.
    Senator Heinrich. Yes, thank you.
    Space cooling is a huge and growing issue, and it is 
growing, in part, because people in very warm, tropical 
climates rightfully expect now the kind of lifestyle and basic 
work environment that we have enjoyed in this country for a 
long time.
    It is also growing because places like Washington, DC, are 
seeing more and more days above 90 degrees every decade that we 
move forward. So this is going to be a really critical place.
    We have somebody in the private sector. We have Dr. 
Motherway, who knows this issue very well. What are the role of 
technologies that are not traditional cooling such as heat 
pumps in solving this issue, and I am curious, Mr. Tew, if your 
organization supports the Kigali Amendment to the Montreal 
Protocol?
    Mr. Tew. Thank you for the question, Senator.
    And so, a few questions there that you asked. One is about 
heating and cooling. Obviously, it is a big deal. Buildings 
represent 39 percent of electricity use, a large portion of 
that is heating and cooling. And heating and cooling should no 
longer be viewed as a luxury item, to your point.
    It's not about just tropical locations. We sell systems in 
Alaska just like we sell in tropical locations.
    Kigali is important. Kigali is important for several 
reasons. One is it's about next generation refrigerants, and 
it's about phasing down the ones that are not climate friendly. 
Seventy-five nations have already ratified the Amendment.
    We think it's important here for one big reason. It really 
would help us move past a patchwork quilt of standards at a 
state level. So we need U.S. policy and ratification to help us 
do that.
    To your other point about the connection between heating 
and cooling and electricity use, it's also climate connection 
as well, as you know. Indirect emissions from the energy used 
to power heating and cooling represents roughly 12 percent of 
emissions in the U.S. So it's significant. It's also overlooked 
many times. We go after the shiny objects, and many times we 
don't focus on the built environment that already exists in 
buildings like this one.
    And as we just mentioned, the financing. We fixed a lot of 
the financing through ESPCs, performance contracts, and other 
ways. The ROI is there as well, the return on investment, over 
time.
    So I think we've addressed and checked most of the boxes. 
It's not only good for business and good for building owners, 
it's also good for the environment.
    The Chairman. Thank you, Senator Heinrich.
    Dr. Motherway, you mentioned, and we are all talking about, 
the extraordinary potential of efficiency, but your recognition 
of the fact that these gains that we have been making in 
efficiency, we are starting to see slow down. Obviously that 
should concern all of us. If we are recognizing that this is 
the easiest thing to do, the first place we should go, and yet 
we are slowing down in these gains.
    And you note that IEA, one of the things that you do is 
analyze these trends. So you are seeing it happen.
    A couple questions for you.
    First, as you are looking at these trends, are we seeing 
this slow down only in the United States or is this happening 
around the globe with other countries as well, or are we 
slowing while everybody else is continuing to move on forward? 
And then, a bigger question. You note the various ways that we 
advance policy whether it is through regulatory, mandatory 
standards, voluntary or market-based driven and you cite the 
example of the Japanese. I think the Japanese as a culture are 
probably more amenable to being told ``this is what we will 
require.'' In this country, as Senator Manchin has pointed out, 
we are still arguing over the light bulbs here in terms of 
whether or not we should have options. I guess the question to 
you is, how do we raise the profile of energy efficiency so 
more people are excited about it, like they are other energy 
technologies?
    We are always talking about the latest, greatest, 
innovative thing and we keep the words like ``shiny object'' 
out there. Why haven't we been able to make energy efficiency 
be that cool thing that we are all trying to do?
    So two prongs here. Is everybody, kind of, slowing down on 
the efficiency side? And then, recognizing that, what more can 
we do to reverse this trend that you are seeing?
    Dr. Motherway. Thank you, Chairman.
    So yes, the slowdown is global. Patterns change in 
different parts of the world, but everywhere we see a 
decreasing rate of progress.
    I want to stress that the world is becoming more efficient 
each year. We are still extracting more value from the energy 
we use every year, but in 2015 the rate of improvement was 
almost three percent. In 2018, it was 1.2 percent. So we're 
going in the right direction, but at a much slower pace than we 
were previously. And then, compared to what we could be doing. 
It is a global phenomenon.
    It's driven in many countries by increasing economic 
growth, increasing economic activity. People are getting access 
to more energy services. Cars are becoming bigger. Homes are 
becoming bigger. These are all bringing benefits to people's 
lives. These are good things.
    But energy efficiency policy now needs to work even harder 
than before to have its impact in the face of these trends 
and----
    The Chairman. So it is not just that we have gone after the 
low-hanging fruit. So much of this is being driven by the 
demand for energy, just writ large?
    Dr. Motherway. Yes.
    And there are certain factors such as we see certain 
sectors, intensive industrial sectors, growing faster than the 
general economy, but it's not that we are running out of things 
to do to make the world more efficient, it's more driven by the 
wider trends.
    And I take your point in terms of I confess to having spent 
several decades failing to make efficiency exciting or sexy, 
but I'll keep trying. And I think we've heard a lot of very 
good points made here by the Committee and by my colleagues on 
the panel that the average person doesn't think about 
efficiency. They do not say, ``I want to be efficient.'' ``I 
want to buy something efficient.'' They want good services. 
They want nice appliances, nice homes. They want low bills. 
Often, they do want to make their environmental contributions. 
So I think we all need to stress the wider context for 
efficiency in terms of its role in enhancing economies, making 
economies more resilient, making neighborhoods more resilient 
and, of course, lowering bills and lowering environmental 
impacts.
    So I think we need to focus on how people think about these 
things, how they make their decisions and stress that 
efficiency is an ingredient in a wider project of social and 
economic development.
    The Chairman. It comes back to education.
    I will yield my time and turn to my colleague here, Senator 
Manchin.
    Senator Manchin. Thank you, Madam Chairman.
    To anybody, but I think, Dr. Motherway, it might be more to 
you. How many people in the world do not have any electricity 
or energy would you say, of the seven plus billion? Do you have 
a rough idea on that or?
    Dr. Motherway. It's about a billion people.
    Senator Manchin. A billion that do not.
    Okay, and how many under energize or first-generation 
energy recipients?
    Dr. Motherway. I would say, one way or the other, the 
majority of people around the world do not have the full access 
to all the energy that----
    Senator Manchin. The reason I am asking the question, I 
think back to my grandparents and my grandparents coming here 
at the turn of the century, the 20th century. And I remember my 
grandmother talking about the first time she got a washing 
machine or a refrigerator. I can assure you she wasn't worried 
about how she got it. She wasn't worried about how it was 
produced, how much pollution was being emitted when she got it. 
She was just tickled to death to have it.
    I was in India and all the rural areas, and you see mostly 
the females during the day, gathering up manure to heat it, I 
mean to bake it and then use it as fuel. If they are able to 
flip the switch or chain on something, they don't care either. 
How do we incentivize these nations?
    If we had a more matured country that could have shown us, 
they already have technology that even though we are going to 
be first generation, we are using it in the cleanest fashion?
    I am thinking, how do we get India? How do we get some of 
Asia, some of the developing nations now, to use some of the 
technology that we have had? How do we do that? What kind of a 
policy? Do you need a trading policy? You don't want to use a 
carrot and a stick, but you have to have the carrot, if you 
don't incentivize them to use a new technology.
    I will give you a perfect example. If we'd had scrubbers, 
low NOX boilers and baghouses for mercury back in 
the 1930s, we could have started out in pretty good fashion. 
That did not happen until 2000, 2010. And I don't know if the 
world can stand us to go through another cycle with billions of 
people coming on board using old technology. I think that is it 
in a nutshell.
    Any comments you might have along that which are, and how 
to make it, or to make it sexier, not just the facts of what we 
are dealing with?
    Dr. Motherway. I couldn't agree more, Senator, and I think 
you put it very well. I think one interesting example is the 
topic of cooling which is something we talk about a lot because 
it's effectively the fastest growing demand for electricity 
globally. And the simple reason is here in the United States, 
nine out of ten households have air conditioning where in 
India, it's less than one in ten.
    And, of course, as they become richer----
    Senator Manchin. Now look at what China is doing. They are 
using more now. They are using 70 percent in the last few years 
for air conditioning.
    Dr. Motherway. Absolutely.
    And I think we realize if India were to follow the same 
path in terms of installing very large amounts of inefficient 
air conditioning, the economic and environmental costs would be 
enormous.
    And I think that's where your point about the new 
generation of technologies is really important, not just much 
more efficient air conditioners, but also, more efficient 
buildings, much cleaner electricity systems.
    In particular what I would stress is countries that haven't 
fully developed or rolled out these technologies have an 
opportunity to leapfrog other parts of the world including many 
of our countries because they can move to much more efficient 
equipment. But also, as I mentioned, digital technology is 
making things much more easy to control, to measure, to 
monitor. It's really rolling out a new generation of 
technology.
    And I think, I see great opportunities to countries like 
the U.S. to be involved in that global conversation in terms of 
rolling out expertise and helping others learn from its 
experience.
    Senator Manchin. But I am saying, how do you incentivize 
it?
    You might want to talk about that, Ms. Layke and then also 
Mr. Tew, it comes right down your alley, I think.
    Ms. Layke. Thank you for the opportunity to respond.
    There are three things that, I think, we can learn from.
    First, the topic or the theme of energy efficiency is 
helpful to embed in other characteristics. People are looking 
for opportunities to improve their lives. They're looking for 
the best technologies. They're looking for solutions, whether 
you are in Africa or you're in the United States, you're going 
to be, you're drawn to those technologies that you believe have 
the highest value to you.
    So how do we demonstrate that? We can label. ENERGY STAR 
labeling has worked very well in the United States.
    We can talk about the attributes and we can create 
competition in the market to incentivize these types of things.
    Right now, in India and around the world, there's a Global 
Cooling Prize, for example, where manufacturers and small 
startups and universities are looking at heating and cooling 
and how to begin to build a new generation of technologically 
sound solutions that can help across income spans. So how does 
that household in India afford this?
    But the other area that we could work on is things like 
integration. So, zero-carbon buildings. Thinking about how you 
take both the energy supply and the energy demand and you put 
that together in a way. That's the appeal of an automobile 
powered by a battery, that it could potentially become your 
backup in your home. Those are the types of solutions that 
allow energy efficiency to move forward.
    We have been working on a zero-carbon building and 
announced in September a partnership to look at opportunities 
for zero-carbon buildings around the world. I do believe this 
is one opportunity to reframe the building space as both an 
opportunity for supply and demand to come together to create 
energy efficient performance.
    Mr. Tew. And I'll just make a comment, Senator.
    You make good points about India and other developing 
countries. A lot of studies say that a billion new air 
conditioners will be put in service over the next decade. 
Currently, the infrastructure in the developing countries, in 
particular, maybe our own, can't support a billion new air 
conditioners unless we begin approaching efficiency at a 
systems level, to Jennifer's point.
    We've got to think about more than just the incandescent 
light bulb, it has to be the full system. How efficient is the 
home, is the commercial building? How efficient is the grid 
that it will pull from? And it all has to be attacked and not 
just at a component level, but also at the systems level. I 
think that's just really important to consider.
    Senator Manchin. Thank you, Madam Chairman.
    The Chairman. Senator King.
    Senator King. Thank you.
    Fascinating subject and panel.
    I want to go back to something that Senator Heinrich talked 
about, because I think it is really important. A lot of these 
decisions are individual and the big problem for individuals is 
capital and the big issue is financing.
    I just got a new iPhone. And it was financed, essentially, 
in my phone bill. I did not pay any upfront costs; therefore, I 
really didn't think too much about it. I wanted the new phone, 
and so it folded right in. Maybe I am not a very good consumer, 
but it worked. The point is, I think, on-bill financing, we 
have really got to emphasize that.
    Ms. Layke, you mentioned a five- to seven-year payback. For 
most corporations, that is not good enough.
    I used to be in the energy efficiency business, and my 
clients wanted 1.5- to 2-year payback because they are 
allocating scarce capital within the corporation and they are 
looking for a short payback, particularly in the world of 
quarterly results.
    I would urge you, perhaps this would be a question for the 
record, to give us your best wisdom on financing techniques, 
particularly as they apply to individuals. Corporations are 
pretty sophisticated with how they can do financing.
    The other piece is interest rates. I used to work with an 
automobile dealer, and they said that the biggest determinant 
of car sales was interest rates which really surprised me. 
Interest rates go down, car sales go up because people are 
concerned about what their monthly payment is.
    Please give us some thought on this because one of the big, 
at least in the northern tier states, one of the big issues is 
heat pumps which are very efficient, very good change, but they 
are expensive. The capital investment is high. So give me some 
thoughts on that.
    Another thought is you mentioned, Mr. Tew, at the end of 
your comments the grid itself. The grid, itself, is grossly 
inefficient.
    I just looked this morning at the New England grid. At four 
o'clock this morning it was 9,000 megawatts. At 4:30 this 
afternoon, it's going to be around 15,000 megawatts. That is a 
66 percent swing.
    If we can have techniques such as time-of-day pricing, 
electric vehicles, energy storage in the home during the day, 
so you draw down your energy at night, use it during the day in 
terms of things like space heating, we can drastically increase 
the efficiency of the grid.
    We always talk about generation. But in Maine, anyway, the 
transmission and distribution cost equals the generation cost. 
In fact, it is somewhat higher.
    So that is not, it is not a climate change issue, but it is 
certainly a cost issue because if you can use the current grid 
more efficiently, everybody's price per kilowatt-hour goes down 
because the cost of the grid is spread over the number of 
kilowatt-hours. I urge you to consider time-of-day pricing.
    Mr. Bresette, is that something you guys have looked at or 
some other incentive to even out that very dramatic curve?
    Mr. Bresette. Yes, for sure.
    And also as some of the technologies that my fellow 
panelists have talked about, you know, especially with respect 
to electric vehicles. Electric vehicles become more commonplace 
in residential settings, then you have this battery on four 
wheels that can be used to absorb power at different times of 
the day and then deploy it as a storage device.
    Can I make three quick comments with respect to financing?
    Senator King. Please.
    Mr. Bresette. The first is you hit the nail exactly on the 
head. Monthly payments are critical.
    Senator King. Could you say that again? I would like that 
to be in the record.
    [Laughter.]
    Mr. Bresette. Okay.
    Senator King, you hit the nail right on the head. Monthly 
payments are a huge thing. That's how people tend to, how 
individuals tend to think about what they can afford. Right?
    Senator King. Right.
    Mr. Bresette. That's why, you know, there are--that's why 
when you go to a car dealership to buy a new car, the last 
thing you talk about is financing. Right? You talk about what 
color it is. You talk about the interior. You talk about 
pinstriping. You talk about all sorts of stuff. And then at the 
very end, someone is like, oh, and how are we going to pay for 
this today? It's almost a forgone conclusion for people with 
acceptable credit. And for people who don't have acceptable 
credit, there are options, but they're still able to finance 
it, maybe not a new car, but something.
    The second point I'd like to make is you mentioned simple 
payback. The one reason why simple payback often comes up in 
conversations of energy efficiency is because it's difficult to 
evaluate what an actual return on investment of energy 
efficiency is. Simple payback is a shortcut in a lot of ways. 
And until we have a better way to really evaluate the benefits 
of energy efficiency over time, it's always going to be 
subjected to a simple payback requirement. And that really puts 
it at a disadvantage.
    In the residential setting, we're always talking about 
simple payback whether it's with codes or with financing or 
whatever it is. But what's the simple payback of a new 
bathroom? What's the simple payback of a granite countertop? 
What the simple payback of a deck?
    Those things don't get, simple payback doesn't get applied 
to those home improvements because there's a recognition of 
what the effects of those improvements have on the property's 
value.
    For energy efficiency, that's very difficult to do. 
Applying new insulate or installing new insulation in walls is 
very difficult to evaluate. And that's why I mentioned the SAVE 
Act in my opening remarks and in my testimony because that 
would help homeowners realize an actual rate of return on their 
investment.
    And then the fourth thing is with respect to individuals. 
Not only are individuals difficult when it comes to financing, 
but residential retrofits, the existing homes, every home is an 
existing home. And an awful lot of them were built before there 
were building energy codes. And every one of those homes is a 
huge challenge. You have to have contractors in. You have to 
have a policy framework.
    Senator King. The people are not going to do that if they 
have to pay an upfront capital cost.
    Mr. Bresette. Absolutely, absolutely.
    And if you have contractors coming back and you have 
auditors and you have all of these decisions that you have to 
make and there's confusion about well, I just installed this 
great furnace or this great air conditioner and now you want me 
to do air sealing. I'm not sure why I need to do that now. It's 
really complicated.
    And where we really need to make a lot of progress is 
allowing retrofits to happen alongside financing with good 
consumer information, things like ENERGY STAR but also home 
labeling, disclosure at the time of sale so that people are 
making decisions about residential energy efficiency the same 
way they make others.
    Senator King. To go back to the beginning, and I am out of 
time, but I hope you all will see this as the beginning of this 
discussion, not the end, and supply us with some thinking, 
particularly on the issue of financing.
    And then finally, I know I am out of time, we can't forget 
China and India. This has to be, I mean, if we are going to 
deal with climate change, we have to talk about those 
countries.
    And they are right, I would say, to have the same kind of 
level of amenities that we have. We can't tell them you can't 
air condition or you can't have a second car. But how do we 
help internationally to guide them to be more efficient, 
because otherwise everything we do is just not going to meet 
the demands of the world climate situation.
    Thank you. Thank you, Madam Chair.
    The Chairman. Thank you, Senator King.
    Senator Cantwell.
    Senator Cantwell. Thank you, Madam Chair, and thanks for 
holding this important hearing.
    To Senator King's last point, we have been involved in 
U.S./China clean energy initiatives that were helping the 
Chinese establish better building codes because, I think, at 
that point 50 percent of all buildings that were going to get 
built in the next ten years were going to be built in China. If 
they are not energy efficient, then they are going to be using 
way more supply than needed.
    I want to thank the Chair and the Ranking Member for 
including language in the energy bills you have been moving 
through on energy efficiency in buildings. We spend something 
like $430 billion a year, and it is something like 40 percent 
of our total energy use is in buildings.
    And so, while I appreciate the conversation we have been 
having about consumers and homes, there is this huge 
opportunity with just buildings writ large. And I think that 
there are better ways to try to get those retrofits to happen, 
including some of the language that we have in the legislation 
that is moving through Congress. I hope we can push some of 
those things over the goal line.
    In fact, I remember the Chair coming to Seattle and 
visiting McKinstry, and it was a great opportunity because we 
went to one of their control rooms and we were basically 
watching them monitor energy expenditures in the North Shore 
School District which was way far north from Seattle, but we 
were watching their energy consumption and they were basically 
monitoring it so they could drive down the cost of our school 
systems.
    So we are big believers in the modernization that we think 
can happen. We think, I personally believe, this is like what 
we did for automobiles. We need to do for buildings what we did 
for automobiles and that is, drive that level of efficiency.
    On that point, besides the legislation on smart buildings 
we have been considering, as you guys look at a global view of 
this, what other initiatives do you think are spurring this 
kind of development?
    A report in the U.S. showed that there is a feedback loop 
that this sector of clean energy business retrofitting has 
proven to their customers that you are just going to get 
whatever savings, 20 percent savings, and you are just going to 
be able to then put that back into your competitiveness as 
business and a sector. So they are getting a lot of uptake on 
that. But are there other models that you see around the globe 
that are working that we should be pursuing on smart buildings?
    Dr. Motherway. Thank you, Senator.
    I agree with the area of your focus, and I will say that 
one of the opportunities for energy efficiency is it is a 
global conversation because all countries are facing very 
similar issues, the same pressures and using the kind of same 
technologies and policy instruments to move things forward.
    And referring to a couple of comments. I do believe that 
this system thinking is really important. The concept of smart 
buildings, not just about being inefficient in themselves, are 
efficient in themselves, but being part of a whole energy 
system, you know, helping balance grids, reducing costs on the 
network, also helping deploy clean energy resources and things 
like that.
    So there are new technology opportunities emerging very 
quickly. And I would urge anyone to think about it in that more 
systems way. I think the conventional way of thinking about 
energy efficiency, about the use in that one building or that 
one appliance, it needs to change and it's starting to change 
in different parts of the world.
    And I do think financing is clearly very important. I would 
just make one point which is certainly nobody will upgrade 
their home without a good financing package, but my suspicion 
is that most people won't upgrade their home even with a good 
financing package because it's not like a car, where I get 
something new in the driveway. It can be invisible stuff in the 
wall or a changed furnace which I don't really notice the 
difference until I get my energy bill a couple of months later, 
that we still need to address how it's marketed.
    And so, but also the practical challenges. Maybe it's cost 
neutral for somebody, but they have to move out of the house 
for a month or maybe they're getting different advice from 
different people. So government really has a role in, kind of, 
building these markets on both the supply and demand side.
    When new solutions are being rolled out, people are seeing 
it in their neighborhoods, and they're saying I want what they 
have, so, that kind of building scale.
    That's where, I think, I would commend the work of this 
Committee and the work of the government here with a focus on 
government buildings, in the sense that they can lead by 
example because then people can see it working, the supply 
chain of contractors and specifiers and architects and 
engineers starts to grow. So that kind of leading by example, I 
think, is a really important area.
    Senator Cantwell. Anyone else?
    Mr. Bresette. Yes, completely endorse the systems approach, 
thinking about buildings as machines and not just big boxes 
full of things is really the right way to do it.
    You know, one thing that's happening, you mentioned 
building codes and Washington State is a leader when it comes 
to building codes. The International Energy Conservation Code 
is under development right now, and there's a lot of 
conversation in that context about what the role of buildings 
will be.
    You know, buildings right now, maybe they're in a moment of 
transition. In the future buildings will become more integrated 
in the grid. We've talked about, sort of, systems and we've 
talked about how storage will be, but also there are proposals, 
for instance, to make buildings electric vehicle (EV) ready 
because in the future we won't fuel our vehicles at gas 
stations the same way we do now. We'll fuel them in buildings, 
whether they're commercial buildings and homes. And so, I 
think, thinking ahead to how buildings will be used in the 
coming decades with the understanding that the buildings we're 
building today will be around with us for some time.
    Senator Cantwell. I know my time is expired. I also want to 
thank the Chair for visiting the Bullitt Center which, I think, 
is probably one of the smartest system-built buildings in the 
world, and Spokane is building an entire block of net-zero 
buildings. The same kind of system approach. So definitely a 
lot of upside for business here.
    Thank you, Madam Chair.
    The Chairman. It is just a reminder that there is a lot of 
really good and innovative things that are happening.
    If people can get inside and see them--like the McKinstry, 
it was fabulous. In Alaska we have the Cold Climate Housing 
Center. Senator Manchin has been there. To be able to walk 
through and see how you can make a home and a building 80 
percent more efficient in a cold environment is pretty cool and 
captivates the imagination.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Madam Chair and Ranking 
Member for this great conversation, because it is important and 
this is our future.
    But we have to be smart about it. We have to be investing 
in it at all levels from federal, state, local and the private 
sector and that, I see, has been the biggest challenge is 
getting everybody on board with the future that we really 
should be embracing and it starts with our smart communities 
because this is the very reason why we need to be really 
technically sophisticated.
    When we bring on 5G, when we are connecting all of our 
communities, hopefully through broadband, and there are no 
underserved communities, this is the benefit, what we are 
talking about today. And this is one piece of it. So I am 
excited about it.
    But I do think to really get us all moving in the same 
direction, that there is a role for the Federal Government to 
play and I am curious. You guys are talking about it now, but 
part of it is the incentives, right? Part of it is this carrot 
and stick, but most of it is the carrot, is how do we 
incentivize our communities to get them to continue to invest 
in this future at all levels?
    That is one of the reasons why I have the Renewable Energy 
Extension Act. And the bill extends the Clean Energy Investment 
Tax Credit for solar, fiber optic solar, fuel cells, small 
wind, micro turbines, combined heat and power and geothermal 
heat pumps that are set to phase down after the year. And I 
would invite my colleagues to join me as well. But this is 
really how we incentivize and start moving in this direction.
    And I am curious. We have talked about some of those 
incentives, but what else can we do because I also think it is 
important we get the private sector on board and that includes 
individuals, right, that are living, whether you are going to 
work during the day in a building that should be energy 
efficient and demanding it is at your workplace or even in your 
home. What else can we do?
    Here is the reason why I am asking. I come from Nevada. 
Particularly in Southern Nevada, it gets really hot and we rely 
on our air conditioning units. I know we have talked a little 
bit about that. What people don't realize, and I was born and 
raised there and this was astonishing to me, just before Earth 
Day this year Climate Central, which is an independent 
organization that conducts research and surveys on climate 
change, released its list of U.S. cities that are warming the 
fastest and Las Vegas ranked number one. It has warmed 5.76 
degrees since 1970. And if you've ever been to Las Vegas in the 
summer, it already hits 115 to 120 degrees.
    And so, I am curious about your thoughts on what more can 
we do at the Federal Government level and in industry be doing 
to help families and businesses weather such extreme 
temperatures, particularly when we are talking about heat and 
not just relying on air conditioning to be the answer to 
address those concerns?
    I will open it up to the panel.
    Ms. Layke. Thank you, Senator.
    The important element of heat is that we have non-technical 
solutions that can also help alleviate heat island effects in 
cities whether that's cool surfaces, white coatings, other 
types of surfaces that can reflect heat rather than absorb heat 
and green spaces and pairing green space and white surfaces or 
light surfaces can actually, has a demonstrable impact on what 
the perception of heat is in a city on any given day.
    Now, does that help you move from 115 degrees down to it 
feeling like a 90-degree day? Perhaps it doesn't make that 
level of difference, but in many communities where there are 
people living in poverty, India and many other places around 
the world as well as in the arid West, we can also use 
evaporative cooling and other types of systems to help, in 
addition to using traditional air conditioning systems.
    I also want to comment that the importance of cities in 
this, and I applaud your linking the federal agenda to the 
local agenda. We work with cities around the world, or in the 
United States and around the world, and currently cities are 
looking at how to get access to technology for low to medium, 
low to moderate income families and housing. And this is an 
area where cooling is one of the biggest priorities, as well as 
technology and building upgrades.
    The Federal Government has allocated, through 
appropriations, funding in the past through the Department of 
Energy to state energy offices and those types of 
appropriations and programming can be extremely effective and 
important in allowing states to address the local conditions 
and local circumstances of the citizens in those states.
    Senator Cortez Masto. Thank you.
    Anyone else?
    Mr. Tew. Senator, great, great question, especially the way 
it was framed.
    These extremes, they're happening everywhere though. The 
U.S. saw 11 percent higher heating days last year, and about 
equal amount 10.5 percent higher cooling days last year. And 
those are important because of the heat experience we see 
nationwide. That is a direct connection to a pull on the grid 
that is not sustainable over time.
    And so, the approach here, as Jennifer just mentioned, it's 
a systems approach. You mentioned storage. We need all of those 
things. No longer can we just focus at the component level. It 
has to be ground sourced heat pumps connected to storage, 
connected to a cleaner and more efficient grid. All those 
things are important.
    I think financing is certainly a question that we have to 
not attack it just at the component level. It's more about the 
systems solution.
    Senator Cortez Masto. Right. Thank you.
    Yes?
    Mr. Bresette. Let me make a comment too.
    At EESI we think about efficient buildings as resilient 
buildings. A lot of the technologies, whether they're envelope 
technologies or window glazing, they allow a structure to be 
more habitable or hospitable after an event. So when the power 
goes out, an efficient building is one that you can stand to be 
in longer, whether in a hot climate or a cold climate. And then 
also, if every building were efficient there would be less 
strain and stress on the grid. And, of course, that makes the 
grid easier to recover, sort of, after the event, during those 
weeks and days that follow.
    Thank you.
    Senator Cortez Masto. Thank you.
    Thank you, Madam Chair.
    The Chairman. Thank you.
    I know my colleagues have heard me speak to one of my pet 
peeves, but when we think about what happens within our 
buildings and just the efficiency that we lose when we crank 
our air conditioning level to just that perfect 68 degrees so 
that our male colleagues can wear long-sleeved shirts and t-
shirts and a tie and a jacket and leather shoes and socks and 
long pants so that they are comfortable. It costs us a lot more 
money and we could save a lot more money if we changed the 
attire around here. Maybe it is because I come from Alaska 
where, if it is cold out, we are wearing more clothes and we 
wear them inside too. It is the season now where everyone is 
wearing a light down jacket inside, you know.
    I am not making light of this, but I do think that we 
overly complicate some things because of the customs that we 
have adopted as to what is the professional attire here. If we 
wanted to save a little on our air conditioning and reduce our 
consumption and be a little more efficient, we might want to 
think about the temperatures that we keep our buildings at to 
be comfortable. I know that in Japan during the summertime, 
they do not keep the thermostats at 68 degrees. It is much, 
much warmer and they are dealing with that. I am not suggesting 
that you could turn off all the air conditioning in Las Vegas 
when it is 100 degrees plus. I am very cognizant of that, but I 
do think that we get very comfortable in what we are demanding 
rather than acknowledging that maybe we just need to 
accommodate ourselves just a little bit.
    Let me turn to Senator Hoeven. I have a few more questions 
that I wanted to ask about what other countries are doing, but 
we will turn to Senator Hoeven. You can comment about whether 
or not you think it is a good idea that men would no longer 
have to wear all this attire.
    Senator Hoeven. Well, I will tell you, it would be great if 
we didn't have to wear ties and that would be a good start.
    The Chairman. Alright, we are getting there. I have already 
got Senator King----
    Senator Hoeven. I am kind of on board here with you. I like 
that kind of tieless thing that would open the collars, would 
help a little bit in terms of the heating and cooling.
    The Chairman. You guys would be able to think better, you 
know, you don't have----
    Senator Hoeven. I agree with that.
    The Chairman. Yes.
    Senator Hoeven. Yes.
    The Chairman. Go ahead.
    Senator Hoeven. Totally.
    Thanks, Madam Chairman.
    Ms. Layke, in your testimony, I think you referenced the 
All-of-the-Above Federal Building Energy Conservation Act that 
I am working on with Senator Manchin, the Ranking Member of 
this Committee, which would repeal the unworkable ban on 
natural gas and fossil energy used in federal buildings and 
then replace it with a commonsense efficiency approach. We have 
included that in legislation that the Chairman is working on 
which we hope to pass.
    Can you elaborate on why the fossil fuel ban has been 
unworkable and how it actually runs counter to achieving 
greater energy efficiency in federal buildings?
    Mr. Layke. WRI has done analysis on the ability to use and 
create renewable natural gas over time and using excess 
renewable energy that could be used for natural gas. An 
outright ban on natural gas, at this juncture, may foreclose 
options that are needed in certain technologies and approaches 
that are not yet commercially viable or available.
    So we are looking at the long-term and considering options 
for how to best create the transition from where we are today 
to where we need to be in the future. And sometimes that 
requires imagining the stepwise solutions that would allow us 
to get there.
    Senator Hoeven. Can you speak to how forward-looking energy 
intensity reduction targets will drive energy efficiency 
improvements in federal buildings and also how those targets 
encourage innovation and help reduce operating costs, that kind 
of thing?
    Ms. Layke. I'm sorry, Senator, can you repeat the question?
    Senator Hoeven. Sure.
    Talk about how the energy intensity reduction targets will 
drive energy efficiency improvements and also stimulate 
innovation and help reduce operating costs.
    Ms. Layke. Yeah.
    There are three things that are really critical.
    One is that we continue to measure and monitor our ability 
to create the performance levels that we expect, whether that's 
in a federal building, whether that's in a school, a hospital 
and elsewhere. Allowing for that type of data, the aggregation 
and the analysis associated with it, will help us make the 
changes that we need to make and make the investments to get 
the best returns possible. So first, there's a data and 
information requirement and approach.
    The second thing that I would offer is that the energy 
intensity metric allows you to balance the different types of 
energy systems that you have. We've spoken a lot in this 
hearing already about the need for system level thinking, and 
that may mean that you look at those opportunities to gather 
efficiency from different interventions depending on what the 
approach is that you're looking at. An Air Force Base may be 
quite a different place than a Federal office building or 
commercial space.
    So energy intensity gives you the ability to manage and 
intervene with the most cost-effective and technologically 
appropriate solutions.
    Senator Hoeven. Thank you.
    Mr. Bresette, can you discuss programs such as USDA's Rural 
Energy Savings Program, RESP, and tell me a little bit how it 
empowers state and local businesses to improve energy 
efficiency in rural communities?
    Mr. Bresette. Of course, Senator, thank you.
    The program that you mentioned is a program that's offered 
by the U.S. Department of Agriculture. Right now, I think it's 
offering about $100 million, about $75 million of those dollars 
have been loaned out to rural utilities, and those dollars are 
then used to provide low-cost financing to their customers.
    It's done using an on-bill line item so the repayment, 
rather than getting a separate bill in the mail, the repayment 
is made as a line item on your utility bill charge. One of the 
principles of on-bill financing as EESI sees it is that those 
charges should be bill neutral, so you're always saving more 
than what your repayment ought to be. And there's a lot of 
flexibility in the program. RESP, in particular, is very 
flexible. So we're talking about all of the energy efficiency 
improvements that we all know and love in our homes--
insulation, heating and cooling equipment, lighting--but also 
potentially renewable energy deployments, electric vehicle 
chargers, storage installations. It's a pretty flexible program 
so that, you know, investments in the home can be made, sort 
of, with a longer, forward-looking perspective.
    Senator Hoeven. Good, thank you.
    Dr. Motherway, in your testimony you cite an IEA estimate 
that maximizing available energy efficiency opportunities could 
allow the global economy to double by 2040, which is pretty 
remarkable, with essentially the same energy demand as today.
    What infrastructure investments, including tangible assets 
such as more transmission and distribution lines as well as 
digital and smart grid improvements are necessary to achieve 
that? So what infrastructure is it going to take to achieve 
something?
    Both of those, I think, are pretty remarkable. Doubling by 
2040 with the same energy demand, I think both of those are 
certainly attention-grabbing prognostications, Doctor. And so, 
what kind of infrastructure and so forth is it going to take to 
do that? Smart grid improvements, something our Chairman talks 
about quite a bit.
    Dr. Motherway. I think it's a very good question, Senator, 
because as I said earlier in this discussion, energy efficiency 
of the future is different to the past. It's moving away from a 
focus on reducing the energy of any one individual device into 
what we've all spoken about in terms of systems efficiency.
    And the kinds of technologies you talk about and the kind 
of investment you're talking about really creates, what I think 
could be, you know, game-changing opportunities to enhance 
efficiency in a much more cost-effective way and in a much 
faster way than in the past.
    So I think that, to be frank, our numbers of doubling the 
global economy for the same energy use, if anything, is an 
underestimate because that's based purely on technologies that 
exist today and that are cost-effective today. So as innovators 
around the world come up with new ideas and come up, 
particularly in the digital space and in the smart grid space, 
that potential is only going to grow.
    So I think a focus on that system thinking, particularly in 
electricity, thinking about grids, thinking about integrating 
supply and demand in intelligent ways so that you're not just 
optimizing the end use, but you're optimizing the whole system 
as well the future focus should be.
    Senator Hoeven. Well, it is certainly going to take some 
smart guys and smart gals to develop that kind of smart grid. 
Don't you think?
    The Chairman. We are working on it.
    Senator Hoeven. Indeed. Thank you.
    The Chairman. Exciting.
    Senator Hoeven. It is interesting, thank you.
    The Chairman. Thank you, Senator Hoeven.
    Dr. Motherway, you said earlier that perhaps your regret is 
that with all your years of work you haven't been able to make 
energy efficiency kind of cool and sexy. Maybe it is in the 
technology? I mean, we are all talking about, do you have an 
iPhone 10 or an 11, I think I have a 5 or a 2.5 or whatever. 
But we talk about what we are able to access on our apps, and 
certainly young people are really very focused on the 
capabilities that they have at their fingertips now. So maybe 
that is how we make it cool. And by making it cool, then you 
realize as you are looking at this, I am actually saving money, 
I am reducing my carbon footprint. Maybe this technology's time 
could not come until we could do this in a very smart and 
technologically advanced way.
    I wanted to ask a question to you, Ms. Layke, and this is 
regarding your testimony that the United States is number ten 
in terms of where we stack up in leadership on energy 
efficiency--Italy, Germany and France are in the top there. 
When we look to the good ideas in other places, what are these 
nine countries ahead of us doing that we could look to and 
adapt? Is there anything that stands out to you?
    Ms. Layke. Thank you for the question, Madam Chair.
    There are three areas that really drive the energy 
intensity of any country: the transportation system, as we have 
talked about, the industrial infrastructure and the built 
environment. Those are the three major categories or areas 
where energy is used. Electricity and energy being separable, 
some use in primary energy and some use electricity.
    But the areas that we see that are driving some of those 
countries to the top of the list that the United States still 
needs to consider are around our transportation systems. 
Transportation emissions are now the largest source of 
emissions in the United States, surpassing those of other 
areas.
    And that transportation efficiency is something we haven't 
covered extensively in the hearing today. We'd be happy to 
submit additional ideas, but using and leveraging the 
electrification of transportation is also something that other 
countries are doing more successfully. In Japan, for example, 
electric trains. China is using train technology as well. So 
there are opportunities for us to think about those.
    The second, industry, is that many countries have an 
industrial sector that is newer than the United States. Not in 
Europe but elsewhere. So China, where the ranking is higher 
than ours today, there may be opportunities for us to really 
consider how we do industrial upgrades and industrial system 
improvements. The Chinese have a younger infrastructure. We 
could match that infrastructure if we were making investments 
and if our companies and our corporations had incentives and 
financing to do so.
    The third is around buildings, and we've spoken about 
buildings extensively. In Europe, in particular, many of the 
labeling and performance certifications that are required there 
are enforced and are raised in standard. I think Dr. Motherway 
already laid out that those standards are already increasing in 
efficiency expectations over time so that builders and others 
know what to expect. Ours remain flat and constant and then 
have to go through a revision process which then is negotiated 
over time. So that incline for efficiency can be built into 
policy rather than to be reflective of a certain point in time.
    The Chairman. I appreciate that.
    Senator King, further questions?
    Senator King. Yes, several.
    One, I think it is important, it has been mentioned a 
couple of times, but funding for innovation is really 
important.
    I can remember when the height of energy conservation for 
lighting was high pressure sodium replacing fluorescent. And I 
remember saying to someone at the time, well, that is it. You 
know, we are not going to be able to do any better than this. 
And now, of course, we have LEDs which use virtually no 
electricity. I mean, and that is an amazing change, but it is 
based upon innovation. So funding for research and the NREL lab 
and those kinds of things are very important, because one big 
breakthrough can change the world.
    Second, Mr. Tew, you gave some figures that I didn't fully 
grasp but sounded important about growth of heating costs or 
heating volume and air conditioning last year was 11 and 7. 
Could you flesh out was that in the U.S. or worldwide?
    Mr. Tew. Yes, that was U.S. numbers based on IEA data. It 
was the number of heating days versus cooling days. Last year 
in the U.S. one of the few times this has happened, we had a 
significant increase in both the number of heating days, 11 
percent----
    Senator King. Days that heat is required.
    Mr. Tew. Days where you need heating.
    Senator King. Okay.
    Mr. Tew. And almost an equal amount, 11 percent, increase 
in the number of cooling days, days you would need cooling or 
air conditioning.
    Senator King. But what that means is that we are using more 
energy to keep ourselves comfortable.
    Mr. Tew. Correct. Exactly.
    Senator King. We are moving away from the mean.
    Mr. Tew. Correct.
    Senator King. I think that is very important data. I was 
not aware of that data.
    Finally, speaking of data, I think there is a huge energy 
potential in making data available. I call it the Prius effect. 
When you drive your Prius and you can see that you are doing 80 
miles per gallon instead of 40, you adjust your driving. It is, 
sort of, a contest with yourself. Just having that information, 
I believe, is equal to about ten percent of energy savings.
    So there is tremendous potential. If you had a screen in 
your kitchen that showed exactly what was going on in your 
house in terms of your hot water heater, your furnace, your air 
conditioning and to your point, if you turn your air 
conditioning down one or two degrees, what does that do?
    I think people, if they have that information, they will 
act on it now, you know, they have this vague feeling if I turn 
it down a little, I will save a little.
    But I think technology that will give us, and it is all 
there--smart meters and those kinds of things. I think that is 
a technique, Madam Chairman, that I think would just, giving 
people the information about how much energy they are using and 
how their decisions affect the amount of energy that you are 
using.
    You are all nodding. I presume that means assent.
    Alright, thank you, Madam Chair.
    The Chairman. Senator Cortez Masto.
    Senator Cortez Masto. Let me just make a comment, because I 
actually agree. And I am glad you brought up smart 
transportation because that is something we haven't talked 
about and it is something I have been pushing as well with this 
idea that with the internet connectivity of things, this new 
technology is going to benefit our transportation through our 
communities, getting more people access, but at the same time 
we are going to be able to utilize the technology to bring in 
electric vehicles, electric buses, the infrastructure, charging 
stations, everything that is needed for this new technology.
    I actually had a regional transportation commissioner in 
Southern Nevada put it this way. She said this new technology 
for transportation is the asphalt of the future. It really is.
    I will just reiterate something my colleague just said is 
that data is important for this generation. I think this is a 
way to make it sexy for them is they like this data. They like 
to show that they are being energy efficient.
    We actually have smart transportation systems in parts of 
Nevada. One of them is you can pull a car up to a street light 
and your data on your car will actually read when it is going 
to turn red. And the intent is to give that person that is 
behind the wheel a little comfort knowing that pretty soon it 
is going to turn red or green or red or green and I can go 
because the data is important and data information is important 
for so many different reasons. And I think there is a benefit 
to that.
    So that was my only comment.
    Thank you. This is a great conversation today, and I really 
appreciate all of you being here.
    The Chairman. Yes, it really was.
    I want to ask one final question and this goes back to the 
financing aspect of it because, again, as innovative and 
interesting and cool as it may be, if folks can't afford it up 
front they just, kind of, look with some amount of envy at 
okay, maybe one day I will be there. The ways that we could 
help facilitate access, I think, is going to be important.
    I appreciated the conversation about the on-bill financing. 
I don't remember which one of you mentioned, you know, within 
Senators Shaheen and Portman's bill we have the SAVE Act there. 
We have the loan guarantee program. Are there other financing 
policies that, in your opinion, DOE should be looking to as we 
talk about their efficiency efforts?
    And then, I wanted to ask on that, on the on-bill 
financing, in my home state we recognize that the 
Weatherization Assistance Program has been extraordinarily 
invaluable to families, but it, again, has that upfront cost 
that can be prohibitive for so many. Do you think the on-bill 
financing would work, would have application to that program as 
well as something that we could look to? But what else within 
DOE might we do other than loan guarantee?
    Mr. Bresette.
    Mr. Bresette. Thank you, Senator, Madam Chairwoman.
    Yes, I think that's right and especially in a place like 
Alaska where there's, you have, like I mentioned, oil and 
resistance heat. You can use the financing that's provided by 
on-bill to provide capital for equipment replacements and then 
you always want to do your weatherization measures whether 
that's funded by the Weatherization Assistance Program or 
whether it's financed at a market rate by a local contractor, 
you always want to do air sealing, duct sealing and insulation. 
Those are the three things you always want to do in addition to 
making an equipment replacement.
    Weatherization has served about seven or a little bit more 
than seven million homes. But the need of weatherization is 
much, much more than that, tens of millions of homes are 
qualified for weatherization. And frankly, the appropriations 
are not where they need to be. There are weatherization 
authorization bills that are before Congress, including one, I 
believe, that passed out of this Committee a few months ago. 
It's an incredibly important program. One thing that 
weatherization does as well is it really encourages a local 
network of contractors who are qualified to make these 
improvements. So you have what weatherization does, yes, it 
makes improvements to peoples' homes, but it also ensures that 
in pretty much everywhere in the country, there's a cadre of 
people who are qualified to make those improvements and quality 
installation is very, very important.
    With respect to other things DOE could do, we always want 
to give a shout out to the State Energy Program. A lot of 
really remarkable innovation is done in state energy offices. 
And especially since the stimulus of 2009 to 2012, a lot of 
state energy offices have looked very carefully at financing. 
How do we leverage private capital? How do we craft programs? 
How do we work with partners to reach underserved communities 
or multifamily buildings or segments of the building sector 
that might be a little bit difficult to reach with, sort of, 
traditional programs?
    So I think increased support for state energy programs, 
weatherization, are two good examples of things you could do 
that would have, sort of, a positive tangential effect on 
financing availability.
    The Chairman. Dr. Motherway.
    Dr. Motherway. Thank you, Chair.
    And I think the focus on finance is absolutely correct and 
when you look around the world there are some interesting 
innovative policies emerging in terms of some countries are now 
using bulk procurement to drive down the cost of innovative 
technologies. Some countries are wrapping up the financing with 
the wider deployment at a community scale. So they're trying to 
not treat every upgrade as an individual project which can be 
more expensive but maybe get neighborhoods to work together.
    And as I mentioned earlier, I think public sector 
leadership is often very strong here because it can be the 
first mover to show what can be done.
    When I see finance fail to solve the problem, it's usually 
when it's done in too much isolation and assuming that if all 
that you do is make financing available, then things will work. 
But then, things like training of the installers, helping 
people make the right choices, making sure the right 
technologies are coming on to the market. It needs to be done 
in that wider sense where finance is an absolutely essential 
ingredient but won't solve the problem on its own. And that 
kind of wider capacity building, market development work, 
really is a key to success, I think.
    The Chairman. That is a good point. That is a good point.
    I am reminded. I mentioned earlier the Cold Climate Housing 
Research Center that we have in Alaska. It has made just a 
tremendous, tremendous difference with regards to building more 
energy efficient homes in Alaska and pioneering some 
technologies that, we think, are really, really cool.
    Part of the challenge that they are facing right now as a 
non-profit is reaching outside audiences, yet for the Arctic 
nations who deal with cold climate, having this level of 
expertise and knowledge shared with them is extraordinarily 
important.
    When I asked the question about how, what are other 
countries doing that we can learn from? You know, making sure 
that places like Cold Climate Housing are able to reach that 
broader audience, making sure that the technologies that we can 
put in place in cold places can be equally applicable in hot 
places, as you, kind of, think about, okay, what is the inverse 
here? But making sure that this information is shared. The 
financing is absolutely key, but as you point out there are 
other things. How do we make sure that others know about it? 
How do we make sure that we've got the training, the technology 
sharing?
    So this has been, as I anticipated it would be, a 
fascinating discussion. I think we recognize that this is one 
of those areas that, boy, if there was ever any area in the 
energy space that should be bipartisan, it is like, why 
wouldn't it be efficiency?
    In my view, it is probably the most conservative of 
policies. Don't use something, right?
    [Laughter.]
    How we build on this is so important. And again, the 
opportunity to focus on it, not only in our country, but 
recognizing that we have a big Earth here that we are all 
paying attention to and making sure that everyone is learning 
from this is important.
    I appreciate the opportunity to have this discussion today. 
If there are other bright ideas that any of you have that you 
would like the Committee to consider, please, please, let us 
know because we want to try to do more.
    I don't like the fact that we are sitting here at number 
ten in terms of world leadership when it comes to efficiency. 
Has this been pointed out?
    It should be the easy things. We should not see this trend 
going down for us right now. I want to figure out how we get 
going back to a better place. So we will work on that with your 
assistance.
    To my colleagues, know that this will continue to be an 
important focus for me and for us on the Committee.
    With that, the Committee stands adjourned.
    [Whereupon, at 11:48 a.m. the hearing was adjourned.]

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