[Senate Hearing 116-368]
[From the U.S. Government Publishing Office]


                                                     S. Hrg. 116-368

                 THE LATEST DEVELOPMENTS AND LONGER-TERM 
                    PROSPECTS FOR GLOBAL ENERGY MARKETS, 
                    WITH A SPECIAL FOCUS ON THE UNITED  
                    STATES, FROM THE PERSPECTIVE OF THE 
                    INTERNATIONAL ENERGY AGENCY

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 5, 2020

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

        Available via the World Wide Web: http://www.govinfo.gov
        
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
40-914                      WASHINGTON : 2021                     
          
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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
            Tristan Abbey, Senior Professional Staff Member
                 Renae Black, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
           Nicole Buell, Democratic Professional Staff Member
                     Darla Ripchensky, Chief Clerk
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

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

                                WITNESS

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

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Birol, Dr. Fatih:
    Opening Statement............................................     4
    Written Testimony............................................     8
    Responses to Questions for the Record........................    34
Manchin III, Hon. Joe:
    Opening Statement............................................     2
Murkowski, Hon. Lisa:
    Opening Statement............................................     1

 
  THE LATEST DEVELOPMENTS AND LONGER-TERM PROSPECTS FOR GLOBAL ENERGY 
     MARKETS, WITH A SPECIAL FOCUS ON THE UNITED STATES, FROM THE 
             PERSPECTIVE OF THE INTERNATIONAL ENERGY AGENCY

                              ----------                              


                        THURSDAY, MARCH 5, 2020

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 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 as we are gathering to hear our friend, Dr. Fatih 
Birol, who is the Executive Director of the International 
Energy Agency (IEA), speaking to the latest developments and 
longer-term prospects for global energy markets with a special 
focus on the United States.
    Dr. Birol, I want to just personally thank you. You have 
come before the Committee for so many years, and when we 
invited you this year, I think we were trying to tee it up with 
other international conferences in the country. Due to the 
Coronavirus, that conference has been canceled, but you were 
able to keep your commitment to join us again. Know how much we 
appreciate not only your effort in being here but really the 
guidance that you have provided this Committee. It has been 
instructive as we have worked to develop our Energy Innovation 
bill that is currently on the Floor. Know that I credit you and 
your team with so much of the good and helpful information that 
has allowed us to get to this point.
    I also want to thank you for inviting me to serve as an 
Honorary Member of IEA's Global Commission for Urgent Action on 
Energy Efficiency. I had an opportunity at the invitation of 
Dr. Birol to serve as part of that Commission. We had our 
initial meeting in December. For me, it was particularly eye 
opening to see and understand the different challenges, but 
really the many, many opportunities that exist around the world 
when we think about the first fuel, efficiency being that first 
fuel. So I am pleased to be included with that and will look 
forward to the report which is due out this summer.
    Again, your perspective before the Committee is very timely 
today considering where we are with the American Energy 
Innovation Act. Our bill incorporates dozens of innovation-
related provisions that we have discussed in your previous 
appearances before the Committee and this includes advanced 
nuclear, carbon capture, energy efficiency and energy storage. 
As I mentioned to you just a few moments ago, your input and 
your testimony last year really helped us shape this package 
and, as always, you have been a great resource for the 
Committee throughout our legislative process.
    We have seen how technological innovation can move the 
needle in world energy markets. You only have to look back a 
few years to understand how the shale revolution has changed 
our energy mix and impacted energy markets around the world, 
not to mention how it has helped substantially reduce our 
nation's greenhouse gas emissions. With the provisions included 
in our bill, we hope to repeat the success of hydraulic 
fracturing and horizontal drilling and develop new technologies 
that will further lower emissions and make energy more abundant 
and more affordable.
    We recognize that America's commitment to innovation is in 
part responsible for our dominant position in global energy 
markets. Energy dominance is really more than a catch phrase. 
It has to be more than a catch phrase. It is the trajectory of 
the U.S. influence in world energy markets. It should also be 
an aspiration, one that we should seek to build as we prepare 
for a future of higher, not lower, global energy demand. We 
know what is happening with that trajectory.
    Dr. Birol, the work that you do at IEA provides valuable 
insights that inform our energy policy. More often that not, 
something that you have said or a report that IEA has released 
is referenced in our hearings. So we thank you for your 
commitment to providing clear and data-driven information. I 
look forward to hearing more today about the latest 
developments in the world energy markets, those driven by 
geopolitical events and, most recently, those that are the 
result of the spread of the Coronavirus. We look forward to 
hearing about IEA's latest World Energy Outlook and everything 
else that you and your team have been working on.
    Again, thank you for making this a priority on your 
schedule. This is one of the hearings that I look most forward 
to every year. I am pleased that you are back before us.
    With that, I turn to my colleague, Ranking Member Manchin.

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

    Senator Manchin. Thank you, Chair Murkowski, and as you 
said, we have a lot going on right now. We are in the midst of 
an energy bill deliberation. I want to thank you on behalf of 
all of us and reiterate what Chair Murkowski has said, welcome 
back and thank you for making the effort to be here.
    The last time you testified before the Committee, Doctor, 
it was at the beginning stages of developing the legislation 
package on energy innovation and your testimony helped us 
tremendously to work together and look at an all-in energy 
policy. We are all-in on renewables, but we knew we needed to 
do a lot more if we wanted to start cleaning up, truly making a 
difference in the greenhouse gas emissions, and that is what we 
took under consideration.
    So here we are a year later in the middle of considering 
our bipartisan American Energy Innovation Act which would be 
the first in the United States of America, the first 
comprehensive energy policy update in 13 years. I said 13 years 
ago the iPhone was just coming out. There have been ten 
iterations of the iPhone in that period of time, and we have 
not changed anything in our policy of how we use energy and 
what direction we are going to be going.
    According to the International Energy Agency's most recent 
World Energy Outlook, global energy demand grew by 2.3 percent 
in 2018, the largest annual increase since 2010. The United 
States, China and India together account for 70 percent of this 
energy demand growth, and energy-related carbon dioxide 
emissions hit another historic high in 2018, the highest annual 
increase since 2013. I am sure your figures, if we made some 
mistakes here you will correct me and I gladly accept that 
correction. I agree wholeheartedly with IEA's conclusion that 
meeting rising energy demand while cutting emissions is a 
formidable task, but we have the opportunity to make that task 
easier if we set the right conditions for energy innovation and 
investment.
    The American Energy Innovation Act does just that. It gives 
a significant boost to the development of a broad range of 
energy technologies that provide affordable, reliable energy 
and reduces greenhouse gas emissions. The U.S. is in a very 
strong position. The IEA reports that the U.S. is expected to 
become a net oil exporter soon after 2020 and that North 
America will become the world's second largest oil exporter by 
2030. By 2025 total U.S. oil and gas output is predicted to 
overtake total oil and gas production from Russia.
    This is good news, but there is still the risk of 
volatility and disruptions that we must continue to consider. 
One need only look to the attack last fall at the Saudi Arabia 
oil facility which caused oil prices to spike or the impact of 
the Coronavirus on the transportation of oil. Due in large part 
to increase U.S. shale output from states like mine in West 
Virginia, the U.S. is estimated to produce more natural gas 
than the whole of the Middle East between now and 2040. It is 
unbelievable in that short of a turnaround. Most of that is 
destined to export. I am proud that West Virginia gas exported 
as liquified natural gas supports increased flexibility in the 
global gas trade, which helps to underpin confidence in global 
gas supply.
    Another thing the IEA highlights, and this came up last 
year too, is that Asia is investing in coal so much that 90 
percent of the coal-fired capacity built in the last two 
decades is in Asia. This results in affordable energy to 
millions. If 60 percent of the existing global coal fleet is 20 
years old or less, then we need carbon capture, utilization and 
storage (CCUS) technology to help reduce the greenhouse gas 
emissions. My EFFECT Act, which is included in the American 
Energy Innovation Act, would invest in the full suite of carbon 
capture, utilization and storage technology, which IEA 
acknowledges are important for achieving global emissions 
goals.
    Without question, energy efficiency and renewable 
generation are also critical for addressing climate change, but 
the IEA report finds that there is faltering momentum behind 
global energy efficiency improvements which would reduce global 
energy intensity by more than three percent each year. 
According to the IEA, a significant increase in efficiency 
improvements is the single most important action that we can 
take to help reach global sustainability goals. Particularly as 
electrification progresses, energy efficiency measures, as well 
as increased renewable resource investment, are important tools 
to decrease our energy sector's carbon footprint.
    We are on our way. Last month, the IEA reported that the 
U.S. had the largest energy-related emissions decline of any 
country, but we still have a long way to go.
    With that, I appreciate your being here and I look forward 
to hearing from you.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator.
    Dr. Birol, again, welcome to the Committee. We welcome your 
remarks this morning. Know that your full statement will be 
included as part of the record, but the opportunity to have the 
back and forth is certainly something that we look forward to. 
Welcome.

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

    Dr. Birol. Chairman Murkowski, Ranking Member Manchin, 
distinguished members of the Committee, thank you very much for 
the support once again. It's a great honor for me and for my 
agency to appear before you today.
    Madam Chair, as you mentioned, I had the opportunity to 
come and brief you and your Committee several times during the 
first term of my service as Executive Director. I came several 
times, and I have just started the second term as Executive 
Director of International Energy Agency. I hope that I will 
have the opportunity to come and brief you to support your 
efforts here.
    I also thank you very much, Madam Chair, for coming to 
Paris, being an honorary member of our Global Commission for 
Urgent Action on Energy Efficiency together with ministers, 
business leaders, political leaders around the world. It's very 
much appreciated and we are looking forward to seeing you in 
July this year, again, in Paris to have a final meeting of that 
Commission.
    Now I am very happy that I will share with you some of the 
developments in the global energy markets and the role of 
United States. I have prepared my remarks, of course, a few 
weeks ago as I was going to appear in front of such an 
important forum, but in the meantime, we have a very important 
development, Coronavirus. So just perhaps a few remarks on 
Coronavirus. It is affecting, as we all know, first of all, the 
human health. It's a major public health issue with significant 
impact on many countries and also significant impact on the 
economy. International economic institutions, one after 
another, revising down their economic growth expectations, but 
energy will be disproportionately affected from the 
Coronavirus. It is unlike the classical economic shocks--it 
will be affected disproportionately. The main reason being is 
that in addition to the economic activity going down, mobility 
is negatively affected.
    For example, aviation makes only hardly one percent of the 
global economy, but close to ten percent of the global oil 
demand. And it is very, very negatively affected. So we will 
see is significant implications on oil markets, oil demand 
growth, coal, gas and others and, Madam Chair, we plan to 
release our Annual Oil Market report in several weeks, next 
Monday, but we are going to release what we expect from the oil 
markets 2020 this Monday in Paris what are our expectations 
there.
    These are, this Coronavirus, a major issue but it is, of 
course, a temporary issue. Looking at the fundamentals, we see 
the fundamentals of oil demand is still strong and global 
demand will continue to increase. And in terms of the United 
States, a few years ago I came here and I said, soon United 
States will be the top oil producer which is the case now, as 
the Ranking Member just mentioned. Now what we have seen at the 
end of last year, the United States became a net oil exporter 
and this will continue. The United States will import a lot--
export a lot of oil and we expect these export levels in five 
years will reach at least one million barrels per day, a 
significant increase and major input to the global oil markets.
    Having said that, why we celebrate this is it is important 
for the global oil markets, oil security. You should also note 
that the Middle East will still remain an important oil 
exporter. So it is the reason, I think, we have to look at the 
global markets and we should understand it. While the United 
States becomes the number one oil producer and a major oil 
exporter, the Middle East will be still important as an oil 
exporting region to the, especially to Asia and as such, 
developments in Middle East will be important.
    I can mention it too, developments of crucial importance. 
One is the attack on Saudi Arabia facilities, the terrorist 
attack on Saudi Arabia facilities in the recent times, and the 
second, the discussions around the Hormuz Strait. I think both 
of these events tells us that the oil security still does 
matter, even in the period of oil abundance, and therefore the 
stocks that we have, oil stocks we have, the core mission of 
the IEA, oil security is very important. As such, the U.S. 
Strategic Petroleum Reserves of still critical importance for 
U.S. and for the global oil security.
    Natural gas, again, very good news for United States. As 
again, Ranking Member Manchin said, records after records. 
2018, only in 2018, the production increased about three TCF, 
which is the largest increase of any country in the history in 
terms of gas, oil, gas production growth. Gas production 
growth, three TCF, big increase in 2018 and 2019 another 
increase, ten percent. Now this is good for the United States, 
but good for others. I give you one example. In Europe, many, 
many importers of pipeline gas from a major gas exporter since 
they have a new option now, another option, they sit at the 
table and they renegotiated existing contracts with the 
pipeline gas exporting country and they brought the gas prices 
down equivalent to $8 billion. They benefited from the 
availability, the option of the U.S. LNG.
    So this is very important. Even they didn't, some of them 
didn't, import one BCM of U.S. LNG. The fact that there is an 
alternative makes their hand stronger, and they have 
renegotiated their contracts and brought the prices down. And I 
can tell you that our numbers show that in such a short period 
of time, in the last six months, the United States became the 
number one LNG importer nation for Europe. So this is a very 
important good news for Europeans and the rest of the world to 
what the United States provides.
    In terms of renewables, also good news around the world and 
in the United States with solar and wind growing very strongly. 
In United States the share of solar and wind today combined, 
second largest compared to, for example, EU which is the region 
which puts a lot of efforts there. But when you look on a state 
level, 15 states in United States have higher solar and wind 
share than the EU, European Union, averages today.
    Solar and wind are good but they have one significant 
challenge, what do we do if there is no sun? What do we do if 
there is no wind? And everybody wants 24/7 electricity. So 
integration of solar and wind is very important and securing 
the electricity supply is of crucial importance. Therefore, we 
also need, fixed electricity generation technology and to 
integrate the solar and wind in the best way to our electricity 
systems.
    Here I have one concern, Madam Chair, which is the station 
in United States and in many advanced economies, station of 
nuclear power. The nuclear power in advanced economies are not 
getting, in my view, the attention and recognition they need to 
because they are providing baseload electricity and without 
emitting carbon dioxide emissions. And in advanced economies 
today, they provide about one-fourth of the electricity 
generation but if we do not change our policies, their 
contribution will decline very, very quickly. And but on the 
other side of the coin, we also see that the other countries, 
such as China, are building nuclear power plants one after 
another and our numbers show that in less than seven years of 
time, China will overtake the United States as the number one 
nuclear power capacity in the world. And therefore, it is very 
important to, in my view, to provide lifetime extensions to 
nuclear power plants as they are the cheapest source of clean 
electricity generation and also look at the options of new 
technologies such as in small modular reactors.
    I want to finish by a couple of good news, if I may, Madam 
Chair. I am also the Chair of the Davos World Economic Forum on 
Energy Board. It is the 14th year I have attended in a row. I 
attended those meetings. I have never seen environmental 
issues, especially climate change, becoming such a dominant 
topic there and everybody was talking emissions are still 
increasing. But the International Energy Agency has found out 
that, in fact, 2019 emissions did not increase. They remained 
flat. Good surprise for many of us and here when we look at 
which countries were leading the decline and which countries 
were leading the increase of their emissions, we have seen that 
the United States was the country which had the largest decline 
in emissions. So this is something that we all need to see as a 
positive development.
    A concern, another concern like nuclear is energy 
efficiency. It is unfortunately the political commitments of 
the government's industry is not there as much as we would like 
to see and I am very happy that the, this Committee puts high 
priority on energy efficiency so we have thought that the 
energy efficiency is international political momentum and it is 
the reason we built the Global Commission for Urgent Action on 
Energy Efficiency bringing several political leaders around the 
world, business leaders and thought leaders. And I am very 
happy that, once again, Chairman Murkowski is an honorary 
member of this effort.
    Now, United States, when I say, when I think of United 
States and energy since years and years, I would associate the 
United States and energy with one word, innovation. Innovation 
is very important and you have groundbreaking work of several 
national laboratories and there are some, several, in fact, 
good moves and I want to highlight two of them and finish here. 
One of them is the Energy Storage Grand Challenge. The storage 
is extremely important especially with the renewables, and I 
would like to commend Secretary Brouillette here for the 
announcement of the energy storage grant, Grand Challenge 
Comprehensive Program, to accelerate the development for the 
next generation of energy storage.
    Finally, about coal, in fact many people think that we are 
at the end of a coal era and the more we talk on the coal, send 
tweets left and right, that coal is disappearing. It is, in 
fact, completely wrong, Madam Chair. Between 2000 and 2018 
global coal consumption increased about 65 percent, is a big 
increase 65 percent. And this reminds me that if I have to, 
there are many technologies at the IEA, we look at all the 
technologies. In fact, if I have to pick out one technology 
form which is the most critical technology if I had a magic 
touch to make this technology mature and have a big market 
share, this is carbon capture, utilization and storage. I 
couldn't think of any other technology which could be so 
crucial, you know, and enhanced energy security, make the 
energy affordable for the citizens but at the same time they 
use the greenhouse gas emissions.
    So therefore, the U.S. efforts on the 45Q is an example for 
here and we expect the United States to be leading, hopefully, 
with other countries around the world such as Norway, such as 
U.K., Netherlands and others will lead the force in the carbon 
capture, utilization and storage. And I will expect in 2020 
more and more announcements will be made in terms of new 
projects.
    So, Madam Chair, I wanted to thank you once again for 
inviting me here. We at the IEA, we believe that the problems 
are so huge in terms of energy and environment and climate 
change that we need all fuels, all technologies to be on board 
and I, as much as I read, your energy bill is very much in line 
with to get all fuels, all technologies, including innovation 
at the heart of it. And I wanted to congratulate you, together 
with your Ranking Member, for this bipartisan bill, Madam 
Chair, and I thank you very much for your attention.
    [The prepared statement of Dr. Birol follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Dr. Birol. I know that Senator 
Hoeven needs to run, so I am going to turn to him first. Thank 
you.
    Senator Hoeven. Thank you, Madam Chair and Ranking Member. 
I appreciate it very much. Dr. Birol, thank you for being here. 
You mentioned the importance of baseload power and you 
mentioned the important role that coal plays in providing 
baseload power both here in the United States and around the 
globe and the work that is being done in carbon capture and 
sequestration (CCS). I would invite you to come to North 
Dakota, because we are very actively working on carbon capture 
and sequestration. We already do it and we are working to do 
more of it and get it to a commercially and economically viable 
point and believe, as you said, then that is the technology 
that will be adopted not only around the country but around the 
globe.
    You mentioned, actually, the increasing use of baseload 
coal around the world and, in fact, I think Japan has plans to 
build 22 coal-fired electric plants. So my question to you is, 
what is it that Japan sees that we don't as we are seeing coal 
plants retired in this country and not providing fair 
compensation for capacity value in order to keep those plants 
so that we have that baseload power while we are developing 
this carbon capture technology?
    Dr. Birol. Thank you very much, Senator Hoeven. I think in 
the United States the main issue is the economics of it. The 
natural gas prices are very, very low in the United States and 
the renewables are also getting attention. But having said 
that, again, in North Dakota or elsewhere your efforts for 
pushing CCUS is extremely important for today and also maybe 
more important for tomorrow, and this will make a very good 
marriage between the environmental concerns and energy 
security. So it is, and I said, if I have to pick out one 
technology out of perhaps 120 technologies we look at at the 
IEA, this will be the most important technology.
    And I wanted to congratulate you as the Senator from North 
Dakota for recognizing this very important technology, sir.
    Senator Hoeven. Thank you, Doctor, I appreciate it very 
much.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Hoeven. Sorry to make you 
a few minutes late there, but I am glad you had an opportunity 
for the question.
    I want to acknowledge another individual who has been 
helpful with us as we have worked on so many of these issues. 
We have the Assistant Secretary for International Affairs, Ted 
Garrish, and some of his team with us here this morning. I know 
he is listening with interest, but in working on many of these 
issues as they relate to our global partners, it is good to 
have you with us this morning, Ted.
    I will turn to Senator Manchin now.
    Senator Manchin. Doctor, thank you.
    A couple things I just want to go over because you have hit 
so many important things, and we will have time to talk a 
little bit and I really appreciate it. Energy efficiency really 
bothers me. We know, we all know, that is a low-hanging fruit. 
We can do more to change the greenhouse gas emissions just by 
energy efficiency, cheaper, quicker, faster than anything else 
we can do. But you also pointed out in 2018 global energy 
efficiency improved by only 1.2 percent. It is the slowest rate 
since 2010, barely half of the average rate from 2010 to 2017 
and energy efficient improvements have also stalled around $240 
billion globally with little or no growth from 2017 to 2018.
    These numbers fall far short of what you all have 
anticipated. Why do you see this diminishing investment and 
improvements in energy efficiency, and what policies could we 
do or does the world need to do or maybe we could lead in 
changing that?
    Dr. Birol. Thank you very much, Senator Manchin. Now we are 
seeing that the less and less governments are interested to put 
energy efficiency policies or courts or standards. Let me give 
you one example, India, very important country. Economy is 
booming, 1.3 billion people and one of the major drivers of 
energy demand growth. Do you know what is the main driver of 
electricity demand growth in India? There is one single very 
important driver which is the air conditioners by far. It is 50 
degrees in the summer and when the income level of the citizens 
go up, one of the first things they do is to buy an air 
conditioner. In United States today about 90 percent of the 
households have air conditioner. In India, it is less than five 
percent, and with the increasing economy levels they buy air 
conditioner. There's no problem here.
    The problem is the following: For every air conditioner in 
India in order to provide the same comfort like in United 
States, they need to use three times more electricity because 
of lack of energy efficiency standards. Three times. They 
provide the same comforts, but with two different air 
conditioner boxes because we do have the right standards for 
manufacturing those air conditioners. It is the reason 
International Energy Agency is working hand-in-hand with the 
Indian government to put the right efficiency standards so that 
the air conditioner boxes are manufactured that way. But India 
is not the exception. Many countries it is like that. The 
policies are not, unfortunately, enacted.
    Now what also doesn't help?
    Senator Manchin. Is it because there are no incentives?
    Dr. Birol. Exactly, I was about to come to that.
    Senator Manchin. No incentives.
    Dr. Birol. There is no financial incentive. There is no 
financial----
    Senator Manchin. There are no penalties.
    Dr. Birol. Exactly.
    And what is happening is that, in fact, in many of those 
countries, electricity prices are subsidized, very, very cheap. 
They don't need to feel to save electricity and this is the 
reason the prices need to be right in order to give the right 
signal.
    Senator Manchin. Is the government listening to you at all?
    Dr. Birol. Many governments don't do it and some 
governments are reforming the price structures but some still 
don't and some of them even heavily subsidizing the energy 
prices.
    Senator Manchin. Doctor, if I could, given our time, I am 
going to stay here for a while and ask you some more questions, 
but real quickly, the Coronavirus, is it affecting world 
markets? Do you see the effect of the Coronavirus on world 
markets right now, and do you see it getting better if we find 
vaccines or basically the concerns that people have are they 
going to be worsening before it gets better?
    Dr. Birol. So, Mr. Senator, I am--I don't have much medical 
information about this.
    Senator Manchin. I am not saying that. I am just saying 
what are you seeing in market moves right now?
    Dr. Birol. The market is going to definitely be affected 
negatively, especially oil market, but not only coal and gas 
markets as well and----
    Senator Manchin. All shipping products, all shipping?
    Dr. Birol. We are revising down our oil numbers. I am going 
to announce it Monday morning in Paris at the press conference, 
but I am afraid the impacts are already severe because, mainly 
because, the transportation sector is heavily affected.
    Senator Manchin. I was afraid of that. Under China's One 
Belt One Road, they have taken steps to lock up most all the 
minerals, critical minerals, that it takes for our EVs, 
electric vehicles. Can you explain to me what your concerns 
would be? Our concerns, what we see, is basically that a lot of 
these raw materials coming from very poor countries, China 
taking advantage of a lot of people and then, kind of, 
enslaving a lot of people to produce these minerals. There has 
to be some conscious sourcing going on somewhere because here 
we are wanting to expand and that is great, but we are 
expanding at a cost to someone in the world. Is there a balance 
to be had or how do we control this?
    Dr. Birol. It's a very, in my view, it's a very valid 
concern, Senator. I can tell you that for years and years when 
we talk about energy security, we talked of oil security and 
geopolitical tensions. Now, in addition to that, we are seeing 
that electric cars planted in the markets, the critical 
materials of crucial importance and as it was the case in the 
oil markets, many, many years, it's not like that. The critical 
materials are concentrated on a very few number of countries so 
therefore, when we talk about the electric vehicles we 
shouldn't forget where the material is coming from and it is 
not unfortunate, as it happens so it is not diversified, the 
right dose of critical materials come, but more concentrated. 
So I think it is important to keep an eye on that.
    Senator Manchin. Thank you, Doctor.
    The Chairman. Thank you, Dr. Birol.
    I know you have indicated you don't have any medical expert 
insight here, and I will just ask one final question about the 
impact of the Coronavirus on the energy markets and just what 
that means globally. You had said that the impact is temporary. 
If we are in a situation where come summer we are still dealing 
with outbreaks globally, how do you account for this disruption 
beyond more than just a temporary view? You are going to be 
releasing your report on Monday. We will be anxious to look at 
that. But I am assuming that that will be a revised assessment 
or a revised review based on what we have seen in just these 
past couple months. Would you be looking to, again, revise or 
update if the situation is still very much on edge in just a 
few months this summer?
    Dr. Birol. Definitely so, Madam Chair. What we are going to 
do on Monday is we will have a base case, how do things look 
like now, but we will, exactly in line with what you have just 
said, we will have also a worse case because we may well see 
that this station may go global beyond China and this may well 
affect the energy markets, especially the oil markets 
substantially.
    Let's not forget that China, last year, was responsible for 
more than 80 percent of the global oil demand growth and China 
is now at the epicenter of this issue and China is, if we think 
about this, China is the number one trade partner of more than 
100 countries around the world. There will definitely be 
several waves coming here. It will be a big challenge for all 
of us, for the entire economy, but disproportionate for the 
energy sector and with the energy sector, oil markets.
    The Chairman. Okay, we will wait until Monday.
    Let me ask what IEA is working on right now with regards to 
different ways that the oil and gas industry can reduce its 
environmental footprint? In my home state we are actually 
viewed as cleaner producers, if you will. We do not flare our 
gas. We reinject it into the fields.
    Because of the challenges of Arctic development, the 
footprint is a small footprint, and we have worked with 
extremely high standards as they relate to emissions and just 
overall impact. But setting aside the carbon dioxide emissions, 
I hate to use the term low-hanging fruit because I think it is 
overused, but what more can we be doing within this sector to 
address the issues of climate change, but again, just reducing 
that overall environmental impact within the oil and gas 
sector?
    Dr. Birol. Thank you very much, Madam Chair.
    First of all, I wanted to say that the, we will need oil 
and gas several years to come. Some people confuse it, but 
energy is a good thing. Emissions are a bad thing.
    The Chairman. Good. Repeat that again.
    Dr. Birol. We need energy so this is very important. So 
while we need oil and gas several years to come, we should also 
recognize that there is a clean energy transition and the clean 
energy transitions are important and no oil and gas company 
will be unaffected from the clean energy transitions. So what 
they should do, they can do at least two things. One, low-
hanging fruit here, in my view, is the following. Today, 15 
percent of the global emissions come from the own operations of 
those companies. They can reduce these emissions easily. And 
when I say, without those emissions, the main--is, maintain 
emissions. Maintain emissions can be at low cost or at no cost 
can be substantially reduced. So this is the big homework for 
those companies, and for me it's a litmus test--how serious 
they are to this issue. This is one.
    Second, those companies, oil and gas companies, have a lot 
of big engineering skills. They have run major large-scale 
projects. They may well be also drivers of technologies. They 
are not mature today yet, such as the, again, carbon capture, 
utilization and storage. This can well be an important asset 
protection strategy for those companies and with their 
engineering skills, project management experiences and in many 
cases, deep pockets, they can be well in the side of 
accelerating some technologies which need to mature as soon as 
possible such as carbon capture and storage, hydrogen, among 
others, Madam.
    The Chairman. I thank you for that. When we think about the 
issue of flaring and the fact that we are a decade into this 
shale gale that we still see the amount of flaring that we do.
    Senator Cortez Masto, you are next on the list.
    Senator Cortez Masto. Thank you, thank you, Madam Chair. 
Welcome, it is great to see you again, Dr. Birol.
    You said in your testimony that you anticipate oil markets 
to be disproportionately affected by the spread of the 
Coronavirus. I know, just yesterday, I saw a report in IHS 
Markit that said the Coronavirus has caused global oil demand 
to drop 3.8 million barrels per day below the same period last 
year resulting in the largest recorded drop in demand within a 
financial quarter.
    And so, my question to you is, how are the IEA member 
countries preparing for the spread of the Coronavirus and its 
impact on the energy sector and where can the U.S. Federal 
Government be helpful in providing support?
    Dr. Birol. Thank you very much.
    We are going to announce our results of our annual 
expectations on Monday, the impact of Coronavirus on the oil 
markets as well as coal, gas markets and other energy sources. 
But why I said it has disproportionately affected LNG markets 
from Coronavirus is the following: There are two reasons. One, 
the economies affected once, but within the economy, you look 
at the sectors of the economy, the biggest hit is on the 
aviation sector. It's very bad, both domestic and international 
flights. Aviation makes up less than one percent of the global 
GDP but close to ten percent of global oil consumption, and it 
is really going down substantially.
    Senator Cortez Masto. Dr. Birol, and excuse me, I just have 
five minutes to ask questions. No, I appreciate that. I heard 
that in your opening remarks.
    Dr. Birol. Yeah.
    Senator Cortez Masto. I guess my question is once the 
report comes out, and I understand Monday----
    Dr. Birol. Yes.
    Senator Cortez Masto. You are looking to put the global 
impacts----
    Dr. Birol. Yes.
    Senator Cortez Masto. But knowing the impacts, what is the 
plan after that? Are you going to be anticipating with the 
other member countries then, a plan to address those impacts? 
That is my question. And do you need help or assistance from us 
at a federal level here?
    Dr. Birol. Definitely. We will be working with the United 
States and other 29 member countries, how we can prepare 
ourselves if there are unexpected consequences. But today, the 
major impact will be on the oil prices will experience a 
downward pressure.
    Senator Cortez Masto. Right.
    Dr. Birol. And in the case of United States, if this 
downward pressure continues for a long time, it may have impact 
on the shale production. This would be a key challenge.
    Senator Cortez Masto. Let me add something else because I 
know that many solar panels that are used and utilized in the 
U.S. for installation are purchased from Southeast Asia 
companies that tend to source their key raw materials from 
China. In fact, roughly 90 percent of the silicon wafers used 
in the United States originate in China. So I would anticipate 
that the Coronavirus is going to have an impact on the supply 
chain for solar panels. Is that something that will be in your 
report as well and will you be talking at that level of detail?
    Dr. Birol. I will be talking about it as well, but I can 
tell you that as far as the solar panels, and you are 
completely right, a big chunk of the solar panels around the 
world is either directly manufactured in China or financed by 
the Chinese companies and other Southeast Asian countries. But 
currently there is oversupply of solar PV panels and if the 
station is getting under control in a short period of time, we 
will not see any problem because there is a surplus of solar 
panels in the world. But if it continues over one year, we may 
see some bottlenecks. But it is not as an immediate concern in 
my view as the impact on the oil markets.
    Senator Cortez Masto. Okay, thank you.
    Let me touch on a separate subject, and I have just got 
about a minute here and we talked about this last time you came 
to visit with the Committee, thank you. In the World Energy 
Outlook report, how is the IEA continuing to factor in changes 
in water availability and the potential declining supply of 
water? I know the Chairwoman, this is always a concern of hers 
and she has legislation to address this, this nexus between 
water and energy. We have to make it. We have to constantly be 
talking about it. And I so appreciate the fact that I know the 
IEA considers this.
    I am curious about your thoughts on this as we move 
forward, and how are you continuing to factor the relationship 
between the two?
    Dr. Birol. So water is very important in order to first of 
all generate electricity. Hydropower is one of the most 
important sources of electricity generation and as it happens 
this year, our renewable energy report is focusing on 
hydropower. In my view, when we talk about renewable energy, we 
talk a lot on solar and wind. But hydropower is not very much 
recognized but they made it very quietly, they make a very good 
service to the global electricity generation without emitting 
any emissions.
    So they're a source of electricity generation, water, but 
at the same time in order to generate water you also need 
energy, in many cases, to desalination of the sea water is one 
of the areas of----
    Senator Cortez Masto. Or to generate energy you need water.
    Dr. Birol. Exactly.
    Senator Cortez Masto. I mean, there is a nexus between the 
two and in the West we have a declining supply of water and 
that, I think, is the concern around the world as well----
    Dr. Birol. And also----
    Senator Cortez Masto. ----in some countries.
    Dr. Birol. Exactly.
    Also, I should tell you that the changing in the 
temperatures, the global temperatures, also affects the 
availability of water as well which in turn has implication for 
the energy security. But this nexus is getting closer and 
closer.
    Senator Cortez Masto. Okay, thank you.
    Dr. Birol. Thank you.
    The Chairman. Thank you, Senator Cortez Masto.
    Senator Heinrich.
    Senator Heinrich. Dr. Birol, you mentioned the importance 
of methane capture and I appreciate that because we have seen 
this Administration, we had methane capture rules under the 
previous Administration. They were rolled back by this 
Administration. And for those of us from oil and gas producing 
states, it meant that our states have had to step up and fill 
that gap, losing literally years' worth of time in the process 
which is, I find, very unfortunate. I think we should be 
leading the world in that technology and the implementation of 
it in the United States.
    I do want to ask you about your historical predictive 
analysis when it comes to the growth of distributed renewables, 
particularly wind and solar, because it seems like the dynamic 
there has been consistent for a very long time. The IEA 
projections have, frankly, been very far off, but we can kind 
of look back at the data now and see why. Those projections 
have historically been linear and the growth has not been 
linear, and any mathematician can look at a line and tell you 
the difference between linear growth and exponential growth.
    And then, when you flip that around and look at cost 
reductions, the same holds true. The predictions are linear. 
The cost reductions are exponential. Why should we take those 
predictions seriously when that structural flaw has existed for 
so long?
    Dr. Birol. I thank you very much. I will come to CCS in a 
minute, but talk about our projections. So we do not center, we 
do not make forecasts. What we do is that we make scenarios. We 
take some policy assumptions. With these policies you go there, 
picture, we paint to policymakers. And in fact, putting a 
mirror in front of them. If you don't like these policies, 
please change them. Solar is one of them. With the policies all 
enacted, solar growth is not as strong as it should be so 
therefore, what we are seeing is the----
    Senator Heinrich. But the fundamental nature of that growth 
is not reflected in those predictions. So I am not arguing over 
whether solar is going to grow by four percent or six percent 
next year. What I am saying is that for decades people have 
taken your projections seriously, but those projections are 
based on bad math in the sense that the fundamental shape of 
the curve is wrong. And whether or not those projections in any 
given year are right or wrong, people take them seriously and 
they have been, as a result, I think, misrepresenting the 
fundamental math and the potential for growth. Not the 
potential, the reality of that growth for multiple decades now 
and I think that that does a disservice to the conversation 
that we have around how is the energy sector changing.
    Dr. Birol. I think your notes need to cover, Mr. Senator, 
that for example, this year, talking about this year's World 
Energy Outlook, I will be happy to give you a copy. We are 
saying that the solar is the star of the electricity generation 
which shows exponential growth. So you may want to see and look 
at your notes again.
    Why solar is the star, we say, why we say that solar has 
the exponential growth? Mainly because of the cost reductions. 
Only last year 40 percent of all power plants installed in the 
world was solar as the IEA has already said before anybody 
else.
    Second, our cost assumptions are very much in line with the 
assumptions of the industry, assumptions of the renewable 
energy organizations. They are just the same so there is no 
difference, so therefore, you may want to look at those notes.
    Senator Heinrich. I very much look forward to looking at 
those----
    Dr. Birol. Thank you very much.
    Senator Heinrich. ----because it has taken us a few decades 
to get there.
    Dr. Birol. Thank you. If I may address CCS? Pardon.
    Senator Heinrich. Yes, I do want to ask you about CCS. You 
focus a great deal on CCS. You focus a great deal on nuclear. 
Both of those, I agree, could be incredibly important 
technologies out to the 2050 horizon in terms of decarbonizing 
our energy sector. However, the challenge we have there is the 
cost competitiveness issue. In the United States nuclear is 
shutting down because it is simply not cost competitive in the 
market. I think that is a real problem from a carbon balance 
point of view. CCS, I am not aware of any CCS technology that 
is remotely economically viable. How do we change that?
    Dr. Birol. So it is in fact very much in line with your 
first question, Senator. Solar, I followed the solar since 
almost three decades. When the solar has started it enjoyed a 
significant amount of government support. As it is out of that 
government support, we scale up the solar use----
    Senator Heinrich. But the solar is different because it 
is--you can break it down into very small distributed pieces.
    Dr. Birol. Exactly.
    Senator Heinrich. And when you subsidize very large 
projects, a nuclear power plant for example, you don't see 
those same reductions in cost. So when you have something that 
is very complicated and very large-scale like, for example, 
carbon capture and sequestration, you can subsidize it all day 
long, you don't see the reductions in cost because it is not a 
scalable technology.
    Dr. Birol. I would slightly disagree on the carbon capture 
and storage but let me first talk about the cost you mentioned. 
Today, in the United States, for example, lifetime extensions 
of the existing nuclear power plants is the cheapest source of 
electricity generation, the cheapest, less than $50. So, 
therefore, it is, but existing ones. I'm not talking about 
building new ones, the existing ones. So it is better than even 
just other renewable energy sources.
    Senator Heinrich. We all agree that we should keep those on 
as long as they can be done safely.
    Dr. Birol. Thank you, thank you very much. You all agree 
but----
    Senator Heinrich. However----
    Dr. Birol. Yes.
    Senator Heinrich. That doesn't change the fact that we 
can't build a new one for a cost competitive environment.
    Dr. Birol. You are completely right. You are completely 
right, but I think it is important to value the service that 
the nuclear power plants are providing in terms of electricity 
security and in reducing the emissions. How the United States 
does it, how other countries do it is up to them, but it should 
be valued this or that way.
    Another point on the nuclear power. There are new 
technologies which are smaller, which are more flexible, such 
as small modular reactors and I know that the United States, 
like many other countries around the world are keen to give a 
push to small modular reactors because, Mr. Senator, I'm afraid 
we do not have the luxury to pick up, solve the problem of the 
world, climate change, only with solar. We need solar. We need 
wind. We need, in my view, nuclear power, energy efficiency and 
carbon capture and storage.
    You are completely right. Carbon, to scale up carbon 
capture and storage is not an easy task. But today, let's not 
forget 80 percent, 80 percent of global energy comes from 
fossil fuels. That does not change from one day to another, 80 
percent. And this is despite the exponential growth of solar.
    Senator Heinrich. I look forward to coming back to this, 
because I am way over my time. Eighty percent of transportation 
in 1900 relied on the horse and 25 years later, it was 
completely, completely different. Changes over time that are 
not linear can happen very quickly.
    Dr. Birol. But, if I may, today 80 percent, Mr. Senator, it 
was 80 percent 35 years ago the share of fossil fuels in the 
total energy mix. It didn't change in the last 30 years and we 
all, I believe, we need all the technologies at our disposal in 
addition to solar, wind, energy efficiency, CCUS and nuclear. 
And if not the United States, who could lead the world in terms 
of innovation and energy technologies I would say.
    The Chairman. Therein lies the reason for our American 
Energy Innovation Act.
    Thank you, Senator Heinrich.
    Dr. Birol, I wanted to ask about some of our strategic 
energy partners globally. I had a Congressional Staff 
Delegation conduct oversight on the nation's strategic energy 
partnerships with key U.S. allies, including Australia. There 
is going to be a report coming out relatively soon, but it has 
already been reported that the U.S. and Australia have had 
talks to discuss the possibility of Australia leasing space and 
storing oil in the Strategic Petroleum Reserve.
    So just your thoughts on this. Do you share a concern that 
an IEA emergency response truly has to be a global response and 
that the IEA members should share in that burden and just 
speaking more generally to the questions that should be asked 
when others are asking to store oil within the SPR?
    Dr. Birol. Thank you very much, Madam Chair.
    Nowadays in the oil markets we are seeing an abundance of 
oil. This is very good. And if you look at the last one year, 
despite many geopolitical tensions such as the sanctions of 
Iran meant Iran oil exports went down basically to very, very 
low levels. Venezuela more or less disappeared in terms of 
contribution to oil markets. There was an attack on the Saudi 
Arabia. There was the Iranian general who was killed. There's a 
civil war in Libya. Despite all of these things, oil prices 
remained more or less the same. There was no huge increase in 
the oil prices. This mainly is a result of the U.S. and other 
countries bringing a lot of oil to the markets.
    So we are in an abundance period. But there may be bad 
rainy days in the oil markets. The, as I mentioned, Middle East 
still remains a very important part of the world and one 
country, especially one country there is a major concern for me 
and the developments there which is Iraq. Iraq is today the 
second largest producer of OPEC, five million barrels per day 
and the tensions in Iraq are forming.
    But I know that there are also possibilities of technical 
and physical supply disruptions if not today, if not tomorrow, 
maybe the day after tomorrow. So in my view, we still need an 
oil security safety network around the world and stocks are 
critical here.
    To be a member of the IEA currently one of the major 
conditions is to have stocks of a minimum of 90 days. And not--
most of the IEA member countries are fulfilling, overwhelming 
majority of the IEA member countries are fulfilling that 
requirement. From time to time some countries are temporarily 
not able to fulfill that requirement but I know that those 
countries are making huge efforts to get them working with 
other countries such as United States in order to take steps to 
fulfill that requirement. For me, as head of the IEA, I would 
like to see all of the member countries fulfilling their 
requirements without if and how.
    The Chairman. Well, as you know, we are in the process now 
of modernizing our Strategic Petroleum Reserve. The Department 
of Energy reported that the life extension program is about two 
years behind the original projected schedule. So construction 
has not even commenced on this, as I understand it. I guess the 
situation with us right now is we are exporting crude. We still 
need the Strategic Petroleum Reserve. As you have indicated, 
the other IEA countries are seeking to fulfill their 
commitments, but is there anybody else, any of the other 
countries that have anything comparable to our Strategic 
Petroleum Reserve?
    Dr. Birol. You have huge reserves----
    The Chairman. Right.
    Dr. Birol. ----definitely, but also other countries such as 
Japan, for example, or many European countries are keeping 
reserves higher than their 90 days of requirements, Madam 
Chair.
    The Chairman. So they are in a position where they could be 
more, I guess, nimble----
    Dr. Birol. Yes.
    The Chairman. ----in a release, if it was necessary.
    Dr. Birol. But I hope to see the U.S. leadership here also 
in terms of the keeping the required level of strategic 
reserves.
    The Chairman. We agree.
    Senator Cortez Masto, would you have follow-on questions?
    Senator Cortez Masto. I do. I would love to ask one final 
question because I think later in your testimony you talked 
about transitions to renewables and advanced technologies can 
open the door to new energy security challenges. And my 
question is revolving around cybersecurity. Can you address 
that? What should we be doing and what are your concerns when 
it comes to the threats, the cybersecurity threats to the 
energy sector?
    Dr. Birol. It is an extremely important issue, Madam 
Senator. We use electricity more and more in our energy systems 
and the entire economy, social life, is being electrified. So, 
therefore, the vulnerability of our societies to electricity 
cuts today is much more serious than compared to 10, 15 years 
ago. And with the renewables are growing, we are seeing the 
grids, electricity grids are growing and getting longer and 
longer. Therefore, the surface of possible attacks our 
vulnerability is growing and this means, in my view, 
electricity security includes the cybersecurity because we have 
seen that where all of the some, perhaps, low level of 
cyberattacks in some countries around the world with that, 
major impact. But this doesn't mean that this is something we 
have to ignore.
    The International Energy Agency was founded 45 years ago as 
an oil security organization by, led by Mr. Henry Kissinger at 
that time and other leaders around the world. But as much as 
oil security today, electricity security is becoming a key 
issue within the electricity sector, cybersecurity is becoming 
a critical issue. It's a juncture of the energy and, perhaps, 
beyond energy concentrations but as energy organizations, as a 
global energy authority, we believe that electricity security 
is a key issue that the governments need to take note of. And 
we know that there are some corners around the world which may 
well use the cyberattacks in order to paralyze the electricity 
systems; therefore, the social economic life of our member 
countries.
    Senator Cortez Masto. Thank you.
    The Chairman. Thank you, Senator.
    Senator King.
    Senator King. Thank you. I apologize for being late. We 
need new technology to schedule hearings around here. We could 
use artificial intelligence which would help.
    I know that the focus of your testimony has been a lot on 
what is happening in the United States, but I am very 
interested in what is happening in other places. We are doing a 
lot of work in renewables, as you know. It is growing very 
fast, wind, solar. We are doing a lot of work on storage. What 
is happening in the rest of the world because if we are talking 
about a carbon-free future, we can do everything possible here, 
but if it is not happening in other places, it is not going to 
matter. So give me a quick thumbnail of, for example, progress 
in renewables in other parts of the world, Europe, but also 
India and China.
    Dr. Birol. Europe, China, India, everywhere, renewables are 
growing very strong. When I say renewables, mainly solar and 
wind basically. Europe is definitely a leader here, solar and 
wind, by providing policy and financial support but China is 
also playing a key role in terms of solar, both in terms of 
deploying at home, but also as a manufacturer of solar panels, 
wind as well. India is making huge efforts on their modest plan 
which is they have put a program of a target of 175 gigawatts 
of renewable growth which many people thought far too ambitious 
for India, but they are able to reach that target and they are 
putting new targets.
    Why is this happening? For two reasons, in Europe is mainly 
driven to address the climate change challenge. In China and 
India, it is because of the decline in costs but also to 
address the air pollution challenge in the cities. So it is not 
the climate change per se----
    Senator King. It is the immediate--it is the Los Angeles 
smog 30 years later.
    Dr. Birol. Exactly. It is a driver but even that growth 
coming from U.S. but also from Europe, China, India, they 
themselves are not big enough to change the global 
CO2 emissions strides and make them decline.
    Senator King. Because you testified just a few moments ago 
about the increasing electrification everywhere.
    Dr. Birol. Yes.
    Senator King. So we are gaining in renewables, but the 
production is going up.
    Dr. Birol. Exactly. The electricity generation growth is so 
strong that the growth from, strong growth from renewables, it 
is not enough to fill the entire gap. You still see other fuels 
to be part of it such as coal, such as and natural gas. They 
are also growing.
    Senator King. Well, it occurs to me that there are two 
areas that involve a tremendous amount of R&D. One is storage 
and the other is potentially a, sort of, rebirth of nuclear 
power. Is there anything going on in terms of international 
cooperation, a kind of air bus of the globe for these kind of 
technologies instead of everybody trying to get to storage? It 
would be a huge win for the whole world if we could get grid-
scale storage and we are putting a lot of money into it here, 
but maybe there would be some advantages in a coalition working 
on this problem?
    Dr. Birol. I think the International Energy Agency is 
trying to put all the interested parties together to push the 
storage. And the United States is an exemplary country here, 
especially just in, generally, the Department of Energy started 
a new major program as well as many European countries and 
Japan. But the cost of storage is still not yet there for the 
commercially viable. We need to----
    Senator King. I understand that. This is an R&D challenge.
    Dr. Birol. An R&D challenge. We need to bring the cost down 
and this will cause future amounts of R&D, and we have seen in 
the past R&D investments pay back. If you think of the shale.
    Senator King. Well, that is the best example.
    Dr. Birol. Exactly.
    Senator King. And by the way there was a lot of federal 
money that went into that R&D.
    Dr. Birol. Yes.
    Senator King. That is why cutting research and development 
in our energy department is a bad idea, but that is not your 
problem.
    Dr. Birol. Yes.
    Senator King. But it strikes me that we are advancing, I am 
worried that we are advancing backward.
    Dr. Birol. Yes.
    Senator King. That we are making huge progress in 
renewables but the growth in energy demand and particularly in 
countries like China and India is still going to swamp the, we 
are still going to be building carbon plants into the 
foreseeable future.
    Dr. Birol. It is, it is. I can give you one example putting 
it outside of the U.S., the context. In Europe, maybe you have 
heard or read, there is a European Green Deal. It's a major 
project in Europe. In 2050 they want to bring the emissions to 
zero. And it is a huge, about a $1 billion project the new 
commission has started. But Europe is today responsible for 
only nine percent of global emissions, 91 percent comes from 
somewhere else.
    Senator King. Right.
    Dr. Birol. Even, forget the bringing the emissions in 2050 
to zero, even if you bring the emissions tomorrow to zero in 
Europe, global temperature trajectories will not change 
dramatically because one ton of CO2 goes into the 
atmosphere----
    Senator King. And that is why when I go to home to Maine, I 
have got to tell people in Maine that we are not only doing our 
part but that other people are as well because otherwise people 
say why should I bother if we are doubling, if we are building 
a coal plant every month in China.
    Dr. Birol. Exactly. So one ton of CO2 going to 
atmosphere from Jakarta or from Paris or from Detroit, it has 
the same effect on everybody.
    Senator King. All the same.
    Dr. Birol. So, therefore, it is very important to have a 
global view here. But of course, what Europe is doing is of 
exemplary nature, being a model, being a source of inspiration 
but we need a global approach here otherwise those efforts will 
not bring the results that we would like to see.
    Senator King. Well, thank you very much for your testimony. 
I appreciate it.
    Thank you, Madam Chair.
    The Chairman. Thank you.
    Speaking to how we can be working together globally. As we 
have discussed, I launched last year the Strategic Energy 
Initiative. This focuses on infrastructure that we need in 
order to connect American commodities with technologies in 
global markets. We have incorporated much of this in the work 
that we have done with advanced nuclear, the critical minerals.
    More broadly, how important do you think the role of export 
credit agencies and development finance institutions are with 
regards to energy investment? We have our partners to use the 
Export-Import Bank, the Development Finance Corporation to 
support strategic energy infrastructure projects around the 
world, whether it is in Asia or in Africa. Can you speak to the 
role of these credit agencies as opportunities? Again, you can 
share the technologies but how you actually get them out there 
on the ground is yet another matter.
    Dr. Birol. Thank you very much, Madam Chair.
    This is, for me, a very key issue, the financing. Where the 
financing will come and under which conditions and which 
technologies to be pushed. As I said before, we are an 
organization of all fuels, all technologies and many countries 
around the world, in Africa, for example and in Asia, Latin 
America, need to have access to financing and having these 
credit agencies, export/import agencies providing incentive, 
providing support for those countries under sustainable, right 
conditions will be of critical importance. So I would very much 
like to support that, Madam Chair.
    The Chairman. Well, that is something that we are trying to 
work on here.
    Senator Manchin had mentioned just very briefly the topic 
of minerals and mineral security. This is a key part of our 
energy bill. When we think about security, when we think about 
supply chain security and what we need to do to ensure that we 
have those minerals building out whatever, whether it is the 
smart grid technologies and the instrumentation or whether it 
is the blades on the wind turbines. Does IEA keep an eye on 
minerals markets, especially those that are viewed as critical 
for energy generation and transmission and storage? Do you 
monitor that and are you seeing any trends that are sending off 
any alarm bells?
    Dr. Birol. We are following it closely and what we are 
seeing is that the clean energy, some of the drivers of clean 
energy transitions around the world need those critical 
materials. While we are happy to see clean energy transitions 
growing strong around the world, we are concerned that in some 
cases, those critical minerals are concentrated only on a few 
number of countries which is not good news for the energy 
security.
    So, therefore, it is important to look at the entire supply 
chain and to note that not only the positive impact of clean 
energy transitions need to be considered but also where the 
source of these critical materials are and which countries, 
outside of the host country are interested to work closely with 
the host countries there and what their plans and strategies 
are.
    The Chairman. Okay. Well, it is good to know that you are 
following that as we are.
    Last question from me is the issue of hydraulic fracturing 
and horizontal drilling. When you talk about the shale 
revolution, when we talk about all the advances that have been 
made in this country just in the past decade here, we recognize 
that so much of this has come about because of the technology 
as it relates to hydraulic fracturing. There is a lot of 
discussion right now in the political world about banning 
fracking.
    How would your testimony look today if these techniques 
were banned in the United States? What would that mean for us?
    Dr. Birol. So I follow this hot political discussion in the 
United States. We always, Madam Chair, give our view in a 
factual manner, in an expert manner.
    The Chairman. Not in a political manner, I know.
    Dr. Birol. Exactly. We don't have political bias here and 
there. We look at the numbers.
    Today, I talked about three things. One is the abundance of 
oil and gas around the world and despite this geopolitical 
tensions in the Middle East, we didn't see oil prices 
skyrocketing. Second, I told you that the many European 
consumers benefited from cheaper natural gas as they were able 
to renegotiate existing gas contracts with the gas pipeline 
exporters. Therefore, good news for the consumers, their 
cheaper energy prices. And third, we are seeing that the 
natural gas in many parts of the world, including the United 
States, by replacing the coal plants, brought the 
CO2 emissions down. And they're all in my testimony. 
If the shale revolution didn't take place, I wouldn't be able 
to put these things in my testimony, Madam Chair.
    The Chairman. I appreciate it.
    Senator Manchin.
    Senator Manchin. Yes, I would love to.
    If we could recap a few things, because as you know, we are 
right in the middle of an energy bill, an energy bill that is 
basically 53 bills we put together and we tried to hit every 
topic, Doctor. We have hit energy efficiency. We have hit 
renewable energy. We have hit energy storage. We have hit 
carbon capture, utilization and storage. We have hit nuclear, 
industrial technologies, vehicles, Department of Energy, 
mineral security, cyber and grid security. We have tried to 
take everything that you told us last year and bring it 
together.
    So like you said, right now in America, in the United 
States of America, power generation, the emissions that we have 
from greenhouse gases from power are 27.5 percent of our 
emissions. Transportation is 29 percent, higher than 
generation. People in my home state and everywhere else believe 
that coal-fired power plants are causing all of our emissions. 
Then we have 22 percent from industry. Then also, we have 11.5 
percent from commercial and residential. So that is the 
building that we are in and all of this and that.
    You have told me the things that are alarming. First of all 
there are more coal-fired plants in the world being built. 
There is more demand because electricity has a higher demand 
and developing. We have to do something. You have less amount 
of investments into energy efficiency which is the cheapest, 
quickest way to make an impact.
    So the world is moving in a direction. We are moving in one 
direction. How do we bring this together? We can't just say do 
it because we did it. They are going to say, yes, you are on 
your third generation of power plants. We are developing for 
the first generation. We don't care about the cost right now.
    And you are talking about India. India basically is saying 
that well, we are going to subsidize the cost. People are 
getting it for the first time and the first thing they buy is 
an air conditioner which is three times more inefficient as a 
United States' air conditioner.
    All these things are happening and we are trying to set an 
example and we want to keep our economy strong, but we want to 
be a leader and I think we have been. We have reduced emissions 
more than any other nation and we can continue, but we haven't 
had anybody following suit. What do we do? How do you do it 
from the IEA? You come here with the facts and figures. You are 
not coming here with a political agenda.
    We are trying to thread the needle now to take the facts 
that you are giving us to fix things. We want renewables. We 
want EVs. We want all these things but we want them in a manner 
that we can continue to have an economy and also be able to 
lead the world in that direction, but we are not doing a very 
good job of leading because nobody is following right now. The 
sign of a leader is anybody behind you following you.
    Dr. Birol. I think the U.S. is doing a good job in many 
areas as you have rightly mentioned, Senator, but as I said, 
emissions, they don't have a passport. They travel around the 
world. If it comes from Jakarta or--it is same for everybody.
    Senator Manchin. Right.
    Dr. Birol. And one thing I should say, not only emissions 
but the time. For example, even though United States has a lot 
of oil, in my view, what happens in Middle East still is 
important for the United States for the oil security in the 
United States. Another thing, we have just seen what happened 
in China affecting all of us through different channels. So no 
country is an energy island. They are all affecting----
    Senator Manchin. But what gets me is they keep--we keep 
hearing all the time----
    Dr. Birol. Yeah.
    Senator Manchin. ----that we are behind China in developing 
renewables. China is ahead of the United States in developing 
renewables or bringing them to market. But yet, China still has 
and is projected to have more emissions of greenhouse gases for 
the next 30 years than any other nation on earth.
    Dr. Birol. This is, you are right, Senator. China is number 
one. United States is number two in terms of global emissions, 
but again, China being number one, U.S. is number two, other 
countries, number three, it doesn't--it will affect all of us. 
This is the issue definitely.
    Senator Manchin. Well----
    Dr. Birol. What we believe as the IEA, first of all energy 
sector is at the heart of this problem because 80 percent of 
the emissions causing climate change come from the energy 
sector, but at the same time we need energy as I was saying in 
the beginning, energy is a good thing. Emissions is a bad 
thing. So therefore we believe we can solve this problem only 
if we can build a grant coalition, as we say in the IEA, 
bringing governments, industry, investors, the utilities 
together, everybody who is seriously interested to address this 
problem. Without bringing everybody together our chances to 
solve this problem is very, very limited, if any.
    Senator Manchin. Let me ask this question. Are you seeing 
anywhere in the world that has more efficient coal-fired 
burning power plants that we should be adopting? If it is going 
to be used around the world, shouldn't they adopt the cleanest 
version of it? Do you see any version of wind and solar that is 
more efficient and more cost-effective that is being developed 
somewhere else in the world? Are there any examples of 
something that is at a higher level that if we could attain or 
are they looking to the United States for research and 
development and the innovation coming from our country that 
would help this?
    Dr. Birol. I think innovation coming from this country, in 
a few areas, would be extremely important for the rest of the 
world----
    Senator Manchin. Let me tell you about the bill we have 
then.
    Dr. Birol. Yes.
    Senator Manchin. Energy efficiency, we put $3.1 billion in 
this piece of legislation. Carbon capture, utilization is $5.4 
billion. Nuclear $1.4 because our nuclear is going this way 
when it should be going that way.
    Dr. Birol. Exactly.
    Senator Manchin. Okay.
    And then we put $3.8 for cyber and grid security. We also 
put $3.1 billion for renewables. This bill we have looks at 
every part of the energy sector.
    Dr. Birol. I cannot agree with you more. Only one thing I 
can tell you that among all these technologies, they are all 
extremely important, they all need to be pushed but if I have 
to just the right to tell you, one of them stronger than the 
others. It is carbon capture, utilization and storage. It is 
extremely important.
    Senator Manchin. Because they are going to continue to use 
fossil.
    Dr. Birol. Exactly. It didn't change the share of fossil 
fuels in the global energy mix didn't change since three 
decades, 30 years, 80 percent. It will go down, but it will go 
75, it's still there so how to marry----
    Senator Manchin. It is not going to be eliminated.
    Dr. Birol. Exactly. How, exactly, how to marry this 
international climate goals and with the availability of fossil 
fuels is the way is carbon capture. One of the ways is carbon 
capture and storage.
    Senator Manchin. And no matter what we do in renewables, it 
is not going to overtake the amount of fossil that the world is 
going to use.
    Dr. Birol. On the renewables we use mainly in electricity 
generation. As you mentioned, a lot of emissions come from 
industry sector, iron and steel, cement and others.
    Senator Manchin. Yes.
    Dr. Birol. CCUS can be a very good solution to that one as 
well, but your bill is, I mean, this is--International Energy 
Agency is not able to vote----
    Senator Manchin. We might need you to come to our caucus.
    Dr. Birol. Yes, definitely. But it is an excellent one as 
far as I read. I don't know details but----
    Senator Manchin. Well, we will give you a breakdown on the 
whole of things. Anything you think we can----
    Dr. Birol. Thank you very much. Thank you very much, Mr. 
Senator. Thank you.
    Senator Manchin. Okay.
    The Chairman. Senator Cortez Masto.
    Senator King.
    Dr. Birol. Thank you very much. Thank you.
    Senator Manchin. Thank you.
    The Chairman. I just want to close here. As Senator Manchin 
has outlined, we have incorporated so much that we have learned 
from you and tried to create what we think is a very robust 
bill hitting all of these very significant areas within the 
energy sector.
    Last year we were reminded that the three areas of 
importance were advanced nuclear storage as well as CCUS, and 
you have kind of summed up what we need to do for the year 
going forward. I was going to ask the question, if we were 
starting our energy bill all over today, which we are not going 
to do because we need to get this one done after 12 years, but 
what would be your advice for that next bill going forward?
    I think you have already shared it with me. You said, in 
one word, it needs to be about innovation, that the storage 
challenge, if you will, is absolutely key and have, again, 
reinforced the rationale behind carbon capture, utilization and 
storage. And so, I take your guidance there very seriously, 
knowing that this is where we have been headed, but knowing 
that you think that we are on the right track with the focus on 
innovation right now.
    Sometimes I like to distill things in just bumper stickers 
and some time ago I had a bumper sticker made up that was just 
``Energy is Good'' and that was the bumper sticker. I still 
have it. It is still applicable. I only had one made so it is 
not on my car. But now I am thinking that I need to have that 
bumper sticker remade so it is, Energy equals good. Emissions 
equal bad. That we can distill because I think sometimes people 
get confused and think that somehow or other energy is bad 
because energy is necessarily emissions. It doesn't have to be 
that way, and we are working in that direction.
    Energy is good. Energy is what allows us to be the great 
nation that we are, a leader in competitiveness, a leader in 
our commercial economy, a leader in healthcare, a leader in all 
of this. It is because we have accessible, affordable, clean 
diverse sources of energy. And it is good. So let's work on the 
bad part of it which are the emissions. You have given us clear 
guidance with that.
    But again, Dr. Birol, I so thank you for your focus, your 
leadership in these areas and your willingness to give of your 
time to share with the Committee here today.
    Dr. Birol. Thank you very much.
    The Chairman. With that, the Committee stands adjourned.
    [Whereupon, at 11:07 a.m. the hearing was adjourned.]

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