[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]



                    CLEANER, CHEAPER ENERGY: CLIMATE
                      INVESTMENTS TO HELP FAMILIES
                             AND BUSINESSES

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

 
                                HEARING

                               BEFORE THE

                        SELECT COMMITTEE ON THE 
                             CLIMATE CRISIS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                            DECEMBER 9, 2021

                               __________

                           Serial No. 117-12


                            www.govinfo.gov
   Printed for the use of the Select Committee on the Climate Crisis
   
   			        __________	
   			        
   			U.S. GOVERNMENT PUBLISHING OFFICE

46-989			       WASHINGTON : 2022   			
   			        
   
   
   
   
   
   
                 SELECT COMMITTEE ON THE CLIMATE CRISIS
                    One Hundred Seventeenth Congress

                      KATHY CASTOR, Florida, Chair
SUZANNE BONAMICI, Oregon             GARRET GRAVES, Louisiana,
JULIA BROWNLEY, California             Ranking Member
JARED HUFFMAN, California            GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia         BUDDY CARTER, Georgia
MIKE LEVIN, California               CAROL MILLER, West Virginia
SEAN CASTEN, Illinois                KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado                 DAN CRENSHAW, Texas
VERONICA ESCOBAR, Texas              ANTHONY GONZALEZ, Ohio
                                 ------                                
                Ana Unruh Cohen, Majority Staff Director
                  Marty Hall, Minority Staff Director
                        climatecrisis.house.gov
                            C O N T E N T S

                              ----------                              

                   STATEMENTS OF MEMBERS OF CONGRESS

                                                                   Page
Hon. Kathy Castor, a Representative in Congress from the State of 
  Florida, and Chair, Select Committee on the Climate Crisis:
    Opening Statement............................................     1
    Prepared Statement...........................................     3
Hon. Garrett Graves, a Representative in Congress from the State 
  of Louisiana, and Ranking Member, Select Committee on the 
  Climate Crisis:
    Opening Statement............................................     4

                               WITNESSES

The Honorable Miranda A.A. Ballentine, Chief Executive Officer, 
  Clean Energy Buyers Association, and Clean Energy Buyers 
  Institute
    Oral Statement...............................................     7
    Prepared Statement...........................................     8
Dr. Uday Varadarajan, Principal, RMI; and Precourt Energy 
  Scholar, Sustainable Finance Initiative at Stanford University
    Oral Statement...............................................    16
    Prepared Statement...........................................    18
Alexander Herrgott, President and CEO, The Permitting Institute
    Oral Statement...............................................    22
    Prepared Statement...........................................    25
Amy Meyers Jaffe, Research Professor and Managing Director, 
  Climate Policy Lab, The Fletcher School at Tufts University
    Oral Statement...............................................    28
    Prepared Statement...........................................    30

                       SUBMISSIONS FOR THE RECORD

Letter from the Solar Energy Industries Association outlining the 
  steps the solar industry has taken to ensure forced labor is 
  not used in the supply chain, and their recommendations for 
  growing U.S. solar manufacturing, submitted for the record by 
  Ms. Castor.....................................................    54
Report from Rewiring America, Energy Bill Security for American 
  Households through Electrification, submitted for the record by 
  Ms. Castor.....................................................    55
Issue Brief from Resources for the Future, Cost Analysis and 
  Emissions Projections under Power Sector Proposals in 
  Reconciliation, submitted for the record by Ms. Castor.........    55
Issue Brief from Resources for the Future and the REBA Institute, 
  Evaluation of Power Sector Emissions Reduction Pathways, 
  submitted for the record by Ms. Castor.........................    55

                                APPENDIX

Questions for the Record from Hon. Kathy Castor to Hon. Miranda 
  A.A. Ballentine................................................    56
Questions for the Record from Hon. Kathy Castor to Uday 
  Varadarajan....................................................    59
Questions for the Record from Hon. Kathy Castor to Amy Meyers 
  Jaffe..........................................................    64


                        CLEANER, CHEAPER ENERGY:



                      CLIMATE INVESTMENTS TO HELP



                        FAMILIES AND BUSINESSES

                              ----------                              


                       THURSDAY, DECEMBER 9, 2021

                          House of Representatives,
                    Select Committee on the Climate Crisis,
                                                    Washington, DC.
    The committee met, pursuant to call, at 1:34 p.m., in Room 
210, Cannon House Office Building, Hon. Kathy Castor 
[chairwoman of the committee] presiding.
    Present: Representatives Castor, Bonamici, Brownley, 
Huffman, McEachin, Levin, Casten, Neguse, Escobar, Graves, 
Palmer, Carter, Miller, Crenshaw, and Gonzalez.
    Ms. Castor. The committee will come to order.
    Without objection, the chair is authorized to declare a 
recess of the committee at any time.
    As a reminder, members participating in the hearing 
remotely should be visible on camera throughout the hearing, 
and as with in person meetings, members are responsible for 
controlling their own microphones. They can only be muted by 
staff due to inadvertent background noise.
    And I would like to remind members that, per the guidance 
of the Attending Physician on July 27, members, staff, and all 
others physically present in an indoor U.S. House of 
Representatives space, including this hearing room, are 
required to wear masks unless seeking or under recognition by 
the chair.
    In addition, statements, documents, or motions must be 
submitted to the electronic repository, to 
[email protected].
    Finally, members or witnesses experiencing technical 
problems should inform committee staff immediately.
    Good afternoon, everyone, and welcome to our hearing, 
Cleaner, Cheaper Energy: Climate Investments to Help Families 
and Businesses.
    I will now recognize myself for 5 minutes for an opening 
statement.
    Investing in clean energy will make America healthier and 
more resilient and unleash incredible economic benefits for 
American families, such as reducing the cost of energy, 
lowering electric bills, reducing costs of traveling, and 
creating millions of family sustaining jobs. By investing in 
clean electricity, energy efficiency, and electric appliances 
and vehicles, we will lower energy prices for families and 
businesses alike and cushion Americans from the volatile prices 
of fossil fuels. The bipartisan infrastructure law made 
progress, and the Build Back Better Act will take us farther.
    For decades, Americans have powered their homes, cars, and 
businesses almost exclusively through burning fossil fuels. But 
these fuels come at a cost to our health, to the pocketbooks of 
working Americans, including rising property insurance rates 
due to climate fueled storms, droughts, and wildfires. Whether 
it is price spikes at the gasoline pump or utility bills, 
rising energy costs can strain budgets of working families.
    There are many factors behind the current costs of energy. 
The impacts of the ongoing COVID-19 pandemic, global oil market 
dynamics, repercussions of natural disasters, and increased 
U.S. natural gas exports all have a hand in driving up prices.
    But we are taking action. The Build Back Better Act will 
put more money into the pockets of working Americans rather 
than excessive oil company and electric utility profits. 
Households could save about $500 every year just on energy 
costs by embracing renewables, electric vehicles, home 
weatherization, and electric appliances.
    The Build Back Better Act also will ensure that these 
savings reach all Americans, by making grants and loans 
available to rural communities and directing investments to 
environmental justice communities.
    The Build Back Better Act also will help more Americans 
make the switch to money saving, and fun to drive, electric 
cars and trucks. Thanks to lower maintenance and fuel costs, 
families can save up to $10,000 over the life of a vehicle by 
driving an electric car, compared to a gas powered one. These 
savings are double for rural drivers who often go longer 
distances and spend more on maintenance. And with the 
bipartisan infrastructure law, EV drivers will have more places 
to charge their electric cars and trucks, thanks to a historic 
investment to build up to 500,000 charging stations across 
America by 2030.
    At home in Tampa on Monday, leaders of the Electrical 
Workers Union cheered the new investments because they have 
developed apprenticeship training for workers to build the 
charging stations and electric grid enhancements, and they are 
ready for new careers and higher wages.
    The Build Back Better Act also will help cut air pollution 
and reduce the financial costs of fossil fuels that cost us up 
to $870 billion a year in lost income and healthcare costs. It 
will improve the lives of the 70 million people of color who 
live in counties with failing pollution grades, exposing them 
to deadly threats like asthma and cancer. The Build Back Better 
Act invests in environmental justice for these Americans, 
directing at least 40 percent of investments to the communities 
most affected by pollution.
    And as winter arrives, it is crucial to help more families 
save money through electrification. When it comes to heating 
homes, the EIA forecasts that families who use fossil fuels 
could see large increases on their heating bills: 54 percent 
for propane, 43 percent for home heating oil, and 30 percent 
for gas. In contrast, families who use electricity for heat are 
only expected to see a 6 percent jump. That is because the 
price of electricity, unlike the price of gas, remains 
comparatively stable, and it is just one more reason why 
Congress must continue to make electrification easier and more 
accessible to American families.
    Rising fuel prices are only further proof that we must 
accelerate the transition to clean energy as quickly as 
possible. We cannot remain stuck in the past. It is time to 
look to the future as we invest in the clean technologies that 
will help lead us into the 21st century and solve the climate 
crisis. So I look forward to today's discussion.
    At this time, I will yield 5 minutes to the Ranking Member, 
Mr. Graves, for his opening statement.
    [The statement of Ms. Castor follows:]

                Opening Statement of Chair Kathy Castor

                 Hearing on ``Cleaner, Cheaper Energy:
         Climate Investments to Help Families and Businesses''

                 Select Committee on the Climate Crisis

                            December 9, 2021

                        As prepared for delivery

    Investing in clean energy will make America healthier and more 
resilient--and unleash incredible economic benefits for American 
families, such as reducing the costs of energy, lowering electric 
bills, reducing the cost of traveling, and creating millions of family-
sustaining jobs. By investing in clean electricity, energy efficiency 
and electric appliances and vehicles, we will lower energy prices for 
families and businesses alike and cushion Americans from the volatile 
prices of fossil fuels. The Bipartisan Infrastructure Law made 
progress, and the Build Back Better Act will take us farther.
    For decades, Americans have powered their homes, cars, and 
businesses almost exclusively through the burning of fossil fuels. But 
these fuels have come at a cost to our health and to the pocketbooks of 
working Americans, including rising property insurance rates due to 
climate fueled storms, droughts, and fires. Whether it's price spikes 
at the gasoline pump or on utility bills, rising energy costs can 
strain the budgets of working families. There are many factors behind 
the current costs of energy. The impacts of the ongoing Covid-19 
pandemic, global oil market dynamics, repercussions of natural 
disasters, and increased U.S. natural gas exports all have a hand in 
driving up prices.
    We are taking action. The Build Back Better Act will put more money 
in the pockets of working Americans rather than excessive oil company 
and electric utility profits. Households could save about $500 dollars 
every year just on energy costs by embracing renewables, electric 
vehicles, home weatherization and electric appliances. The Build Back 
Better Act also will ensure these savings reach all Americans, by 
making grants and loans available to rural communities and directing 
investments to environmental justice communities.
    The Build Back Better Act also will help more Americans make the 
switch to money-saving (and fun-to-drive) electric cars and trucks. 
Thanks to lower maintenance and fuel costs, families can save up to 
$10,000 dollars over the life of the vehicle by driving an electric car 
compared to a gas-powered one. These savings are doubled for rural 
drivers, who often go longer distances and spend more on maintenance. 
And with the Bipartisan Infrastructure Law, EV drivers will have more 
places to charge their electric cars and trucks--thanks to a historic 
investment to build up to 500,000 charging stations across America by 
2030. At home in Tampa on Monday, leaders of the Electrical Workers 
union cheered the new investments, because they have developed 
apprenticeship training for workers to build charging stations and 
electric grids enhancements, and they are ready for new careers that 
pay great wages.
    The Build Back Better Act also will help cut air pollution and 
reduce the financial costs of fossil fuels that cost us up to $870 
billion dollars a year in lost income and health care costs. It will 
improve the lives of the 70 million people of color who live in 
counties with failing pollution grades, exposing them to deadly threats 
like asthma and cancer. The Build Back Better Act invests in 
environmental justice for these Americans, directing at least 40% of 
investments to the communities most affected by pollution.
    As winter arrives, it's crucial to help more families save money 
through electrification. When it comes to heating homes, the EIA 
forecasts that families who use fossil fuels could see large increases 
on their heating bills: 54% for propane, 43% for home heating oil, and 
30% for gas. In contrast, families who use electricity for heat are 
only expected to see a 6% jump. That's because the price of 
electricity, unlike the price of gas, remains comparatively stable. And 
it's just one more reason why Congress must continue to make 
electrification easier and more accessible for American families.
    Rising fuel prices are only further proof that we must accelerate 
the transition to clean energy as quickly as possible. We cannot remain 
stuck in the past. It's time to look to the future--as we invest in the 
clean technologies that will help us lead in the 21\st\ century and 
solve the climate crisis.
    I look forward to today's discussion.

    Mr. Graves. Thank you, Chair Castor. And I want to thank 
our witnesses for being here today.
    It has been interesting the past few months as we have seen 
gasoline prices skyrocket. We have seen the President of the 
United States send a letter to the Federal Trade Commission 
blaming it on energy companies. We saw Senator Warren send 
letters blaming it on natural gas exports. And in the same 
breath, effectively, we have seen folks like Jake Sullivan, the 
National Security Advisor for the White House, asking the OPEC 
nations, asking Russia and Saudi--OPEC plus nations, Russia, 
Saudi Arabia, Iran, and other countries to actually increase 
their oil production.
    And, of course, that is similar to a message that we saw 
out of Senators Schumer, Markey, Cantwell, and Menendez a few 
years ago when they sent a letter to the then-President of the 
United States asking him to have other countries increase 
production of energy.
    Folks are sitting here pointing at different reasons as to 
the high energy cost and complaining about the high energy 
cost, yet in legislation that just passed the House of 
Representatives weeks ago, there is a provision in there that 
imposes a $10,000-a-mile-a-year fee on pipelines, which is the 
safest way to transport energy, a bill that--the same bill 
increases the regulatory burden. The same bill increases the 
royalty rate, or tax, that these companies are going to have to 
pay. And folks are around scratching their heads and pointing 
fingers as to why energy prices are going up?
    It is pretty clear why energy prices are going up. The 
President of the United States has shut down the Keystone 
Pipeline, yet opened up the Nord Stream 2 pipeline for Russia 
to send Russian gas into Europe.
    The President of the United States has put a pause on 
domestic energy production that a court had to step in and say 
you can't do this, there is a thing called the law. These are 
the reasons why energy prices are going up.
    Everybody is out there pointing fingers. We have seen the 
Securities and Exchange Commission and other Federal Government 
agencies--they have no expertise in energy, none--out there 
telling companies that they are going to be pushing these ESG 
objectives and requirements that are going to be forcing these 
companies to effectively get off of conventional fuels.
    We have seen comments out of our Department of Treasury and 
others saying that they don't want to make any investments in 
oil and gas. We have seen none. And we have even seen, out of 
the President's own budget, a provision for the Corps of 
Engineers that says we don't want to do anything, make any 
investments that will actually reduce the cost of consumption.
    Finally, Madam Chair, there was a report out of the Senate 
Democrats--excuse me--the Senate Democrats' committee that--
Climate Committee that said that the policies that Democrats 
are pushing are going to increase cost of energy. They 
acknowledged it. They said it in the report.
    Madam Chair, this is what we are seeing today. The United 
States actually achieved energy independence in November of 
last year. We achieved energy independence, to where, as Ms. 
Jaffe is going to be speaking about today, she talks about 
how--a theory that Russia and Saudi Arabia's actions were the 
ones that are causing energy prices to go up or at least go up 
a few months ago.
    Well, if we are energy independent, we are insulated from 
actions of other countries. Yet the very actions, the very 
initiatives of members of this committee and this 
administration, just as folks are saying we can't depend upon 
Russia and China because they are going to--excuse me--Russia--
because they are going to be exerting influence and causing 
prices to spike, all folks are doing now is trying to trade 
Russia for China and make us dependent upon them for our energy 
resources.
    Madam Chair, these policies don't make sense, they don't 
add up, and all they are doing is increasing global emissions, 
increasing our dependence upon foreign energy sources like that 
from Vladimir Putin, who clearly doesn't share America's 
values. All it is doing is exporting jobs and increasing the 
cost of energy, that has a greater impact on those among us 
that can least afford it. It doesn't make sense for any 
objective that we share. None. It is not in America's interest.
    Yet rather than recognizing errors were made, mistakes were 
made, and stepping back, we are watching people double and 
triple down on these flawed strategies that are increasing 
global emissions, increasing costs, sending jobs overseas, and 
subjecting us to greater leverage from countries like Russia. 
It is mind boggling to me.
    Madam Chair, one of the key things that we have got to 
address, if we are going to be successful in moving into clean 
energy future, is that chart right there. That is the process, 
the regulatory maze, that people have to go through in order to 
try to actually execute.
    I had a number of conversations with Mayor Mitch Landrieu, 
former Mayor of New Orleans, who is going to be the 
infrastructure czar. I told him the biggest challenge in front 
of him is trying to get through that. It is not just about 
building roads and bridges that currently take between 7 and 10 
years in the regulatory process, Madam Chair. It is about 
trying to do clean energy projects and energy transmission. We 
have got to address this.
    Madam Chair, I look forward to working together with you 
and committee members to advance our shared goals of reducing 
energy costs, of charting a clean energy future, and ensuring 
Americans have a place to go to work.
    I yield back.
    Ms. Castor. Without objection, members who wish to enter 
opening statements into the record may have 5 business days to 
do so.
    Well, welcome to our panel of witnesses. These are industry 
leaders and energy policy experts who are going to share how 
the Build Back Better Act's climate investments will help 
reduce electricity bills and transportation costs, how we are 
going to address volatile fossil fuel prices, and help 
transition to a clean energy economy.
    The Honorable Miranda Ballentine is the Chief Executive 
Officer of the Clean Energy Buyers Association. Ms. Ballentine 
leads a group of nearly 300 energy customers, seeking to 
procure clean energy across the United States, including 
service providers, businesses, and nonprofits.
    Previously, Ms. Ballentine served as the Assistant 
Secretary of the Air Force for Installations, Environment, and 
Energy during the Obama administration, as well as the Director 
of Sustainability for Global Renewable Energy for Walmart.
    Dr. Uday Varadarajan is the Principal in the Carbon Free 
Electricity Practice at RMI and a Precourt Energy Scholar at 
the Sustainable Finance Initiative at Stanford University, 
where his work focuses on how to use cutting-edge data and 
financial, policy, and regulatory analysis to help drive a just 
transition to clean energy.
    Previously, Dr. Varadarajan served as a Program Examiner in 
the Office of Management and Budget, where he helped oversee 
the $2 billion budget for the Department of Energy's Energy 
Efficiency and Renewable Energy Program.
    Alex Herrgott is the President and CEO of The Permitting 
Institute, which advocates for changes to the infrastructure 
permitting process. Previously, he was the Executive Director 
of the Federal Permitting Improvement Steering Council, as well 
as the Associate Director for Infrastructure at the White House 
Council on Environmental Quality during the Trump 
administration.
    And Amy Myers Jaffe is a Research Professor and Managing 
Director of the Climate Policy Lab at the Fletcher School at 
Tufts University. She was formerly the David M. Rubenstein 
Senior Fellow for Energy and Environment and Director of the 
Program on Energy Security and Climate Change at the Council on 
Foreign Relations.
    Previously, Ms. Jaffe served as Executive Director for 
Energy and Sustainability at the University of California 
Davis, where she led research on low- and zero-carbon fuels and 
transportation policy.
    Ms. Jaffe is the author of ``Energy's Digital Future: 
Harnessing Innovation for American Resilience and National 
Security.''
    Without objection, the witnesses' written statements will 
be made part of the record.
    With that, Ms. Ballentine, you are now recognized for 5 
minutes for your testimony. Welcome.

  STATEMENTS OF THE HONORABLE MIRANDA A.A. BALLENTINE, CHIEF 
   EXECUTIVE OFFICER, CLEAN ENERGY BUYERS ASSOCIATION, CLEAN 
ENERGY BUYERS INSTITUTE; DR. UDAY VARADARAJAN, PRINCIPAL, RMI, 
 PRECOURT SCHOLAR, SUSTAINABLE FINANCE INITIATIVE AT STANFORD 
  UNIVERSITY; MR. ALEXANDER HERRGOTT, PRESIDENT AND CEO, THE 
    PERMITTING INSTITUTE; AND MS. AMY MYERS JAFFE, RESEARCH 
   PROFESSOR AND MANAGING DIRECTOR, CLIMATE POLICY LAB, THE 
              FLETCHER SCHOOL AT TUFTS UNIVERSITY

       STATEMENT OF THE HONORABLE MIRANDA A.A. BALLENTINE

    Ms. Ballentine. Thank you.
    Good afternoon. Chair Castor and Ranking Member Graves, and 
to all of the members of the Select Committee on the Climate 
Crisis, thank you for the opportunity to testify on the Build 
Back Better Act's clean energy provisions.
    I want to start by thanking you all for your service to 
your constituents and to our nation as a whole and, for this 
committee in particular, to all of mankind, frankly.
    My name is Miranda Ballentine. I am the Chief Executive 
Officer of the Clean Energy Buyers Association. I have spent 
two decades leading large clean energy buyers' strategies 
globally, including Walmart and the United States Air Force 
when I was the Assistant Secretary for Installations, 
Environment, and Energy. But, today, I am testifying on behalf 
of CEBA's 280 business members, over half of whom are large 
clean energy customers, and our membership really significantly 
contributes to America's prosperity. Our members have about 14 
million employees and contribute about $7 trillion in annual 
revenues.
    And a few weeks ago, we set out a really bold aspiration, 
which is a 90 percent carbon-free U.S. electricity grid by 
2030. And the Build Back Better Act is a key step on the path 
to this bold aspiration.
    So my bottom line point today is that the clean energy 
investments in the Act are good for business, they are good for 
energy electricity prices for customers in particular, and they 
are good for the economy.
    So I am going to make two key points in my opening remarks, 
and then I will look forward to taking your questions.
    So, first, American businesses support the clean energy 
provisions in the Build Back Better Act. And the second key 
point that I will make today is that energy customers and 
energy markets matter and matter to decarbonizing the grid in a 
way that is good for our economy and good for all Americans.
    So let's start with the first one. American businesses 
support the clean energy provisions in the Build Back Better 
Act. Last January, if you will recall last January, there were 
just a few things going on in our country. Despite that, three 
dozen iconic American brands asked the Federal Government to 
take action on clean energy policy. These were companies like 
Walmart, like the Walt Disney Company. These are companies like 
Johnson & Johnson, for whom there was a lot going on last 
January.
    Fast-forward to today and we have 160 investors and 
companies of all sizes who have supported the BBBA and the 
Investment Jobs and Infrastructure Act.
    Two dozen CEBA members have demonstrated their public 
support for the clean energy provisions in the Act, including 
companies like General Motors, Amazon, Google, PepsiCo.
    Why are they doing this, you might ask. Well, these 
American businesses know that investments in clean energy can 
resuscitate our economy.
    Let me give you just a few examples. Expanding organized 
wholesale markets to every region of our country can save 
energy customers $11 billion on their energy bills--$11 
billion--by expanding wholesale markets. Thus, we really 
support the $40 million dedicated--appropriated to DOE in the 
Act to provide states with assistance for their wholesale 
market electricity work.
    Second, a national transmission grid could reduce energy 
prices by a further 2 percent. Every billion dollars that we 
invest in transmission creates $2 to $3 billion in direct 
customer benefit, and can create 7,000 jobs directly in 
construction on transmission, as well as 1,500 other related 
jobs. Likewise, clean energy investments create thousands of 
jobs in diverse geographies across the country.
    So my second key point is that energy customers and energy 
markets matter. And with the right legislative and regulatory 
support, markets can accelerate a carbon-free energy system 
that benefits all Americans.
    Sixty percent of Fortune 500 companies have public climate 
and clean energy goals. 1,100 companies are committed to 
science-based greenhouse gas reduction targets. 340 global 
businesses have committed to 100 percent renewable energy. And 
we have only scratched the surface of the demand.
    Since 2008, corporate energy customers have driven 44 
gigawatts of new wind and solar, and last year's 10.6 gigawatts 
was the equivalent of 40 percent of all new capacity--all new 
carbon-free capacity last year.
    How are we doing?
    All right. So I would conclude, bottom line is 
decarbonizing our power system is a key component of 
decarbonizing our economy. The U.S. must lead. We applaud the 
efforts of this Congress to take steps to do so, and we urge 
the Senate to also pass this bill without delay.
    So, again, thank you for the opportunity to be here, and I 
look forward to your questions.
    [The statement of Ms. Ballentine follows:]

                    Statement by Miranda Ballentine

     Chief Executive Officer of the Clean Energy Buyers Association

                               Before the

              House Select Committee on the Climate Crisis

                            December 9, 2021

INTRODUCTION
    The Clean Energy Buyers Association (CEBA) thanks the Committee for 
the opportunity to share our perspective: the clean energy investments 
in the Build Back Better Act (BBBA) are good for business, good for 
markets, good for consumer energy prices, and good for the economy.
    CEBA\i\ activates a community of 280 members--representing over $7 
trillion in annual revenues and over 14 million employees--to deploy 
market and policy solutions for a carbon-free energy system. Most of 
our members are institutional energy customers of every type and size--
corporate and industrial companies, universities, and even cities.
    Our vision is customer-driven clean energy for all.
    CEBA is pro-market, pro-community, and pro-carbon-free energy. 
Energy customers have deployed over 44 gigawatts (GWs) of renewable 
energy since 2008, which is over a quarter of all wind and solar 
capacity in the United States, driving down air pollution and lowering 
energy costs for American businesses and families. Last year alone, 
voluntary energy customers contracted for 10.6 GW \ii\ of clean 
energy--the equivalent of 40% of all new carbon-free capacity installed 
in 2020.
    Energy customers face intractable barriers to procuring clean 
energy: lack of organized wholesale markets, need for expansion of 
transmission, lackluster investments in clean energy technology 
incentives, and underfunded research and development of emerging clean 
technologies. BBBA makes important investments in each of these areas 
that will result in powerful outcomes for our economy and community:

      Expanding organized wholesale markets to every region of 
the country could save energy customers $11 billion per year, thus we 
support the BBBA's $40 million appropriated to DOE to provide states 
with assistance to form, participate in, expand, or improve organized 
wholesale electricity markets.
      A national transmission grid could reduce energy bills by 
2%. Likewise, every $1 billion invested in large-scale transmission 
infrastructure creates $2-3 billion in customer benefits, about 7,000 
construction jobs, and about 1,490 new related jobs. Therefore, the 
BBBA's 30% transmission Investment Tax Credit, $1.5Billion in grants 
for upgraded lines, $100 million for planning and $800 million in 
siting authorities grants is a first step in the right direction.
      Clean energy could create thousands of new, 
geographically diverse jobs across the supply chain. The BBBA's roughly 
$200 billion in clean energy tax incentives will spur private sector 
investment across a range of clean energy technologies, including 
investments in renewables, advanced nuclear, carbon capture and 
sequestration, and clean hydrogen.
      BBBA also makes important investments to bring the 
benefits of the clean energy economy to rural America. These 
communities also should benefit from lower utility bills and have the 
opportunity to develop clean energy infrastructure.

    We support the flexible, market-based, complementary suite of 
investments in BBBA that can empower energy customers to unleash an 
economic boom in clean energy and help us reach CEBA's aspiration of a 
90% carbon-free electricity system in the United States by 2030.
    This testimony lays out three key points.

      First, American businesses support the clean energy 
provisions in the BBBA because they are good for business, good for our 
communities, and good for our economy.
      Second, energy customers and energy markets matter and 
are key to driving affordable, clean energy for all Americans.
      Third, to solve the climate crisis, we must focus on 
decarbonizing our power system.

1.  Businesses support federal action on climate and clean energy under 
        the Build Back Better Act
    Investments in clean energy can resuscitate the economy and society 
by creating vital tax revenue to support communities, growing the 
workforce by training and employing tradesmen and women, and can begin 
to address the disparate impacts of pollution and climate change on 
disadvantaged communities.
    Businesses have leveraged their brand voices and influence to 
advocate for federal action on climate change since the start of 2021 
while continuing to accelerate Environmental, Social, and Governance 
(ESG) efforts within existing operational and strategic priorities. 
Leading up to the 26\th\ Conference of Parties (COP), over 778 
businesses representing $2.7 trillion in annual revenue and 733 
investors managing more than half of the world's assets called on 
governments to raise climate ambition and implement meaningful climate 
policies.\iii\
    In support of both the BBBA and the Investment Jobs and 
Infrastructure Act (IIJA), over 160 investors and companies of all 
sizes have urged U.S. lawmakers to support climate and energy 
investments to combat the climate crisis and put us on a path to 
achieving key decarbonization milestones.\iv\ Members of the CEBA 
understand the importance of this critical moment and have demonstrated 
public support through the organization and individual advocacy 
efforts.\v\ We have all of the tools and solutions to initiate 
meaningful solutions right now to help address extreme events ravaging 
communities, create new well-paying employment opportunities through 
ever-growing energy sector, and to improve U.S. economic 
competitiveness.

The clean energy provisions in the Build Back Better Act are good for 
        business.

    Achieving a net-zero U.S. economy by 2050 hinges on having 
sufficient time for the sectors where it is hardest and most 
costly.\vi\ Ensuring the power sector decarbonizes as quickly as 
possible enables the clean electrification \vii\ of other 
sectors.\viii\ In the power sector, 11 independent recent studies,\ix\ 
including by the Clean Energy Buyers Institute,\x\ show that it is 
possible to cost-effectively achieve at least 80% clean electricity by 
2030 with existing technologies, and with significant net benefits. The 
BBBA makes investments in the power sector that could get the U.S. up 
to 76% \xi\ clean electricity when combined with broader federal 
actions, some of which are advanced by BBBA, and by state actions.
    Tax credits are the cornerstone of clean energy deployment in the 
BBBA and modeling by Resources for the Futures (RFF) shows these 
investments alone could incentivize up to 69% carbon-free electricity 
by 2030.\xii\ The roughly $200 billion in clean energy tax incentives 
will spur private sector investment across a range of clean energy 
technologies, including investments in renewables, advanced nuclear, 
carbon capture and sequestration, and clean hydrogen. Capital 
expenditures will decrease power sector emissions, reduce technology 
deployment costs, put new steel in the ground, create thousands of new, 
geographically diverse jobs across the clean energy supply chain, and 
serve as a catalyst for future investments in emerging technologies.
    These investments are essential to accelerating the pace of 
deployment, but alone, tax incentives won't ensure the scale and pace 
needed. To create the enabling conditions for faster and cheaper clean 
technology deployment that mobilizes innovation, private capital, and 
the demand of energy customers, we need to also leverage technology 
research and development (R&D), expand and improve organized wholesale 
markets, and accelerate transmission buildout to develop a national 
transmission grid.
    The Clean Energy Buyers Institute partnered with RFF to analyze the 
most impactful policy pathways to power sector decarbonization. In 
addition to finding that a well-designed, bipartisan Clean Energy 
Standard (CES) is the most impactful way to reduce emissions in the 
power sector to greatest benefit, it also found that expanding 
wholesale markets and supporting significant transmission expansion are 
substantially helpful in reducing the cost, accelerating the pace, and 
enhancing the beneficial outcomes of the transition which include 
nearly $100 billion in net annual benefits in 2035. The study's 
preliminary findings show that expanding organized wholesale markets to 
all regions of the country would save energy customers an additional 
estimated $11 billion a year, and that the creation of a national 
transmission macrogrid by 2035 would reduce customer rates by roughly 
2%.\xiii\ The BBBA creates important investments that support both 
markets and transmission enablers of a lower-cost transition to clean 
energy.
    Organized wholesale energy markets currently serve two-thirds of 
energy customers.\xiv\ They are operated by various independent, non-
profit entities, often referred to as regional transmission 
organizations (RTOs), that allow open, non-discriminatory access to the 
nation's transmission system.
    In parts of the country with organized wholesale energy markets, 
clean energy is deployed at a higher rate and carbon emissions are 
dropping faster.\xv\ For example, according to a November 2021 
assessment, regions with competitive wholesale power markets reduced 
their power sector CO2 emissions by about 35% from 2005 
levels, while regions without wholesale power markets reduced their 
power-sector CO2 emissions by about 27% over the same 
period.\xvi\ Moreover, regions with wholesale power markets deployed 
almost 80% of all utility-scale wind and solar generation capacity, 
despite only accounting for about 67% of all existing power plant 
capacity, of all types.
    RTO markets save energy customers money \xviii\ by efficiently 
using existing resource fleets and reducing the need for additional 
resources. RTOs have reduced production costs by increasing trade, 
better coordinating power plants, and driving efficiency improvements 
at plants.\xix\ One study estimates, nationwide, organized wholesale 
markets saved approximately $3 billion per year in production costs 
from 1999-2012.\xx\ Organized wholesale markets, such as those operated 
by the Midcontinent Independent System Operator and PJM now save up to 
$4 billion each annually.\xxi\ Recent regional studies evaluating the 
cost benefits of expanding organized wholesale markets into the West 
and Southeast found substantial net benefits as well.\xxii\
    Power grids are more resilient in parts of the country with 
organized regional electricity markets because regional grid operators 
have visibility across multiple utility territories. Risk of systemic 
disruptions are more effectively mitigated by pooling diverse resources 
and controllable demand across broader regions so that neighboring 
regions are better set up to assist each other.
    American businesses and consumers demand a new paradigm--one that 
encourages both clean energy and economic competitiveness by leveraging 
markets. CEBA applauds the House for including language that would 
establish the ``Organized Wholesale Electricity Markets Technical 
Assistance Grants'' program, appropriating $40 million to the U.S. 
Department of Energy to provide states, on a voluntary basis, with 
dedicated technical assistance and grants to evaluate forming, 
participating in, expanding, or improving organized wholesale 
electricity markets.\xxiii\
    Well-planned transmission is crucial to least-cost decarbonization. 
As the grid decarbonizes, substantive and comprehensive action is 
required to ensure the nation's transmission system can reliably and 
cost-effectively deliver carbon-free energy to all customers.
    Due to ineffective, inadequate, and slow planning processes, as 
well as outdated siting procedures and cost-allocation methods, U.S. 
transmission expansion has not kept pace even with current demand 
despite major studies showing we need 2-3 times current transmission 
capacity by 2035 for decarbonization.\xxiv\ Every $1 billion invested 
in large-scale transmission infrastructure creates $2-3 billion in 
customer benefits,\xxv\ about 7,000 construction jobs, and 1,490 new 
related jobs.\xxvi\ Inadequate transmission infrastructure results in 
procurement challenges for customers in regions of the country where 
transmission is constrained, with congestion increasing prices and 
limiting project interconnections.
    Expanding transmission will enhance grid operations to meet energy 
customer demand by integrating clean energy resources, increasing grid 
resilience and reliability, and facilitating electrification 
initiatives. Transmission also enables markets to deploy generation 
over large areas, which optimizes renewable energy resources that are 
best managed and delivered across diverse geographic regions. For 
example, 15 states \xxvii\ between the Rocky Mountains and the 
Mississippi River account for 88% of the nation's potential wind 
capacity and 56% of potential solar capacity, but those states are only 
projected to account for 30% \xxvii\ of the national electricity demand 
by 2050. Constructing new high-voltage, interregional transmission 
lines as part of a macrogrid will enable the movement of electricity 
from clean energy sources to major load centers.
    Provisions in BBBA that specifically address the bottlenecks and 
inefficiencies in transmission planning, siting and construction, 
include:

      1. Inter-regional planning. The $100 million to plan, 
site, and build an interconnected, national transmission ``back-bone'', 
referred to as a ``macrogrid,'' will benefit customers by increasing 
grid reliability and efficiency, accelerating decarbonization goals, 
and creating cost savings.
      2. Transmission Investment Tax Credit (ITC) and grants. 
Implementing a 30% transmission ITC can incentivize the construction of 
new lines where development otherwise would not occur due to challenges 
with cost allocation for interregional projects. An ITC can benefit 
customers by accelerating transmission projects that expand access to 
cheaper, zero-carbon energy and increase reliability. The $1.5 billion 
in transmission grants in the bill would provide for new and upgraded 
lines as an important down payment toward dramatically expanding our 
transmission system and unlocking private sector capital.
      3. Siting. Interstate siting is one of the biggest 
barriers to getting transmission projects built. The House allocated 
$800 million to provide grants to transmission siting authorities to 
study and analyze the impacts of transmission projects, examining 
alternative transmission siting corridors, and for economic development 
activities for communities that may be affected by the construction and 
operation of a transmission project.

    Additional programs make the BBBA a comprehensive approach to 
decarbonizing the electricity system. We need to make investments now 
to foster innovation and commercialize the technologies to get full 
decarbonization. The BBBA includes $30 billion for clean technology 
funding, including $1 billion for the Department of Energy (DOE) 
Research, Design, Development, and Demonstration (RDD&D) activities and 
$29 billion to support the rapid deployment of low- and zero-emission 
technologies.
    Furthermore, BBBA makes important investments to bring the benefits 
of the clean energy economy to rural America. These communities also 
should benefit from lower utility bills and have the opportunity to 
develop clean energy infrastructure. Twelve percent \xxix\ of U.S. 
electricity load is serviced by rural cooperative utilities and the 
BBBA uses a broad array of tools to support rural electric customers 
and spur rural clean energy economic development.
    Finally, to bring increased clean energy onto the grid and reduce 
carbon emissions, we need to modernize the permitting process, 
including improving agency coordination to accelerate the environmental 
review process, while making certain that we do not compromise 
environmental protection and community participation. Combined, the 
BBBA advances the most comprehensive and substantial set of investments 
intended to unleash clean energy to date.
 2.  Energy Customers Matter
    Energy customers have prioritized directly procuring clean energy 
as a key component of broader climate and energy goals since 2008. 
Leveraging their voice and demand for clean energy, organizations of 
all types have become agents of change by innovating to address market 
barriers hindering access to clean energy, creating new procurement 
structures, advancing emerging technologies, and advocating for 
policies that support the acceleration of clean energy.
    Today, 60% of Fortune 500 companies have a public climate or clean 
energy goal.\xxx\ Over 340 global businesses have committed to 100% 
renewable energy,\xxxi\ and over 1,100 companies \xxxii\ are committed 
to a science-based target aligned with 1.5 degrees Celsius. Financial 
markets are also increasingly interested in Environmental, Social and 
Governance (ESG) as financial regulators, investors, and asset owners 
turn their focus to more deliberate evaluation of the risks posed by 
climate change and prioritization of sustainable investing.
    Clean energy has become a commonsense decision for many 
organizations. Because of clean energy's cost effectiveness, strong 
stakeholder demand, and greater interest in ESG impacts, Wood Mackenzie 
estimates that there is at least 85 GW of unmet demand in the U.S. from 
the largest existing energy customers to 2030.\xxxiii\ As market demand 
for clean energy continues to swell, energy customers are battling 
intractable barriers that impact their ability to leverage markets to 
meet business goals and accelerate decarbonization of the U.S. energy 
system.
    The biggest barrier to customer-driven clean energy is whether 
there is a market to transact in at all. Eighty percent of the 44 GW of 
new utility-scale wind and solar contracts driven by customers were in 
the organized wholesale markets that serve two-thirds of the nation's 
electricity customers. Where those markets don't exist, customers must 
negotiate time-consuming, and often less cost-competitive bilateral 
deals or utility tariffs in order to access clean energy.
    In addition to customers being able to source clean energy, the 
grid needs to decarbonize for all customers, which is a function of the 
constellation of policies driving down clean energy costs and 
incentivizing faster deployment, including through foundational 
approaches like leveraging organized wholesale markets and transmission 
expansion, and technology R&D. The BBBA provides transformative 
investments across these priorities.
 3.  Decarbonizing the power sector is critical
    To achieve a zero-carbon global economy by 2050,\xxxiv\ the 
International Energy Agency calls for a 60% decline in emissions from 
the power sector globally by 2030.\xxxv\
    The United States must lead. We are the largest historical emitter 
of greenhouse gases, the second largest GHG emitter globally, and the 
electricity sector in the United States is the second largest source of 
greenhouse gas emissions. Commercial and industrial customers account 
for over 60% of electricity consumption.
    Clean energy is cost-effective. A recent study \xxxvi\ found that 
the U.S. grid can achieve a 90% carbon-free generation mix by 2035 
without increasing customer cost or undermining system reliability; 
what's missing is unified, predictable, durable, and ambitious 
deployment policy. The suite of approaches under Build Back Better Act 
(BBBA) would change that. As global investments in clean energy surpass 
a record-breaking $500 billion,\xxxvii\ the BBBA clean energy and 
climate provisions are an opportunity to usher in a historic wave of 
investment and innovation to accelerate emissions reductions swiftly 
through clean energy deployment.
    Throughout history, our country has relied on energy infrastructure 
investments to lift us out of crises. President Roosevelt's New Deal 
saved the U.S. from economic collapse and brought electricity to rural 
America through investments in public works projects. More recently, 
the American Recovery and Reinvestment Act rapidly put 2.3 million 
Americans to work, spurred innovations that dramatically reduced the 
costs of clean energy technologies, and leveraged private sector 
investments, raising the GDP by $500 billion within one year.\xxxviii\
    We applaud the efforts of this Congress to address climate change, 
accelerate clean energy and empower customers to lead the transition 
through the Build Back Better Act. We urge the Senate to preserve the 
House allocations to the clean energy provisions and pass the Build 
Back Better Act without delay.

                               ENDNOTES:

    \i\ Clean Energy Buyers Association: www.cebuyers.org.
    \ii\ Clean Energy Buyers Association. 2021. Clean Energy Buyers 
Association Deal Tracker. https://cebuyers.org/deal-tracker/
    \iii\ Lubber, M. and Schauble, B. 2021, November 19. COP26 is over. 
Now it's up to investors, companies, and governments to raise their 
climate ambition. Ceres. https://www.ceres.org/news-center/blog/cop26-
over-now-its-investors-companies-and-governments-raise-their-climate
    \iv\ Ceres. 2021, October 27. `There is no time to waste': Dozens 
of companies, investors urge Congress to act now on climate. Ceres.
https://www.ceres.org/news-center/press-releases/there-no-time-waste-
dozens-
companies-investors-urge-congress-act-now
    \v\ As of December 3, 2021, 24 CEBA member companies have released 
individual statements or signed letters of support of the clean energy 
provisions in the BBBA: Adobe, Amazon, Apple, Autodesk, Bank of 
America, Bp America Inc., Cummins, Ebay, Facebook/Meta, General Motors, 
Google, Hewlett Packard (HP), Johnson Controls, Mars Incorporated, 
Microsoft, Nestle, PepsiCo, Salesforce, Stonyfield Organic (Stonyfield 
Farm), Trane Technologies, VF Corporation, Volt Energy Utility, 
Walmart, Workday.
    12 companies have publicly supported the CEBA statements on the 
Build Back Better Act and Infrastructure Investment and Jobs Act's 
clean energy and climate provisions, including: Amazon Web Services, 
Ebay, Electric Power Supply Association, Environmental Defense Fund, 
First Solar, Google, Iron Mountain, LevelTen Energy, Primergy Solar, 
Wells Fargo, WeWork, World Wildlife Fund.
    \vi\ The Net-Zero America Project which analyzes five different 
pathways to reach economy-wide net-zero emissions by 2050 finds, 
``Building a net-zero America will require immediate, large-scale 
mobilization of capital, policy and societal commitment, including at 
least $2.5 trillion in additional capital investment into energy 
supply, industry, buildings, and vehicles over the next decade. 
Consumers will pay back this upfront investment over decades, making 
the transition affordable.'' Net Zero America. October 2021. Net-Zero 
America: Potential Pathways, Infrastructure, and Impacts. Princeton 
University. https://netzeroamerica.princeton.edu/the-report
    \vii\ A meta-analysis of 11 clean energy studies found agreement 
that decarbonization of the power sector amplifies electrification-
based emission reductions across other sectors. Achieving 70-80 percent 
clean electricity by 2030 is necessary to reach the GHG reduction 
target of 50-52 percent below 2005 levels by 2030 and be on track to 
achieve zero-emissions by 2050: Esposito, Dan. September 2021. Studies 
Agree 80 Percent Clean Electricity by 2030 Would Save Lives and Create 
Jobs at Minimal Cost. Energy Innovation. https://energyinnovation.org/
publication/studies-agree-80-percent-clean-electricity-by-2030-would-
save-lives-and-create-jobs-at-minimal-cost/
    \viii\ A recent special report from the United Nations 
Intergovernmental Panel on Climate Change finds the world needs to cut 
its planet-warming emissions by about half by 2030 relative to a 2005 
baseline: IPCC. 2018, Summary for Policymakers. Global Warming of 
1.5+C. An IPCC Special Report on the impacts of global warming of 1.5+C 
above pre-industrial levels and related global greenhouse gas emission 
pathways, in the context of strengthening the global response to the 
threat of climate change, sustainable development, and efforts to 
eradicate poverty. https://www.ipcc.ch/sr15/chapter/spm/
    \ix\ A meta-analysis of 11 cross-sector studies finds 80% clean 
energy by 2030 would add 500,000-1,000,000 net new jobs per year, 
prevent 85,000-317,000 premature deaths and save $1-5 trillion in 
health costs through 2050: Energy Innovation. 7 September, 2021. 
Studies Agree 80 Percent Clean Electricity by 2030 Would Save Lives and 
Create Jobs at Minimal Cost.
https://energyinnovation.org/publication/studies-agree-80-percent-
clean-electricity-by-2030-would-save-lives-and-create-jobs-at-minimal-
cost/
    \x\ Research between CEBI and RFF, Summary for Policymakers 
released in July 2021, finds that a clean energy standard achieving 80% 
clean energy by 2030 increases rates by an average of 4%, compared to a 
3% rate increase in 2035 to be on track for 100% by 2050 but 
significantly higher to achieve 100% clean energy by 2035: Clean Energy 
Buyers Institute (formerly Renewable Energy Buyers Institute) and 
Resources for the Future. July 2021. Evaluation of Power Sector 
Emissions Reduction Pathways.
https://cebuyers.org/wp-content/uploads/2021/07/Evaluation-of-Power-
Sector-
Emissions-Reduction-Pathways-Summary-for-Policymakers.pdf
    \xi\ Rhodium group found a combination of investment and 
regulations can achieve CO2 emission reductions of 69-76% 
below 2005 levels in 2031: Larsen, J., King, B., Kolus, H., and 
Herndon, W. 23 March, 2021. Pathways to Build Back Better: Investing in 
100% Clean Energy. Rhodium Group. https://rhg.com/research/build-back-
better-clean-electricity/
    \xii\ Roy, N., Burtraw, D., and Rennert, K. 7 October, 2021. Cost 
Analysis and Emissions Projections under Power Sector Proposals in 
Reconciliation. Resources for the Future. https://www.rff.org/
publications/issue-briefs/cost-analysis-and-emissions-
projections-under-power-sector-proposals-in-reconciliation/
    \xiii\ Clean Energy Buyers Institute (formerly Renewable Energy 
Buyers Institute) and Resources for the Future. July 2021. Evaluation 
of Power Sector Emissions Reduction Pathways. https://cebuyers.org/wp-
content/uploads/2021/07/Evaluation-of-Power-Sector-Emissions-Reduction-
Pathways-Summary-for-Policymakers.pdf
    \xiv\ Federal Energy Regulatory Commission. November 2015. Regional 
Transmission Organizations. https://www.ferc.gov/sites/default/files/
2020-05/elec-ovr-rto-map.pdf
    \xv\ As of 2018, renewable energy generation reached 100 gigawatts 
in wholesale energy markets, which represents roughly 80% of US total 
installed variable renewable energy capacity. See 2018 Renewable Energy 
Grid Integration Data Book: U.S. Department of Energy. 2018. 2018 
Renewable Energy Grid Integration Data Book. https://www.nrel.gov/docs/
fy20osti/74823.pdf
    Additionally, about 73% of large-scale battery storage power 
capacity in the United States, is installed in states covered by 
independent system operators (ISOs) or regional transmission 
organizations (RTOs): U.S. Energy Information Administration. July 
2020. Battery Storage in the United States: An Update on Market Trends. 
https://www.eia.gov/analysis/studies/electricity/batterystorage/pdf/
battery_storage.pdf
    Additionally, according to Advanced Energy Economy, ``removing 
market barriers would allow these advanced energy technologies to 
inject $65 billion into wholesale markets'': Advanced Energy Economy. 
May 2019. Wholesale Market Barriers to Advanced Energy--and How to 
Remove Them. https://info.aee.net/wholesale-market-barriers-to-
advanced-energy
    \xvi\ Rhodes, J., Kiesling, L., and Davidson, F. November 2021. 
Assessment of the Emissions Performance of Wholesale Electricity 
Markets. Energy Choice Coalition. https://
static1.squarespace.com/static/5c60a6ff809d8e61723abdd4/t/
619536b70740600220a236d0/
1637168824983/ECC-Assessment+of+Emissions_11182021.pdf
    \xvii\ Id.
    \xviii\ Current RTOs provide participants between $2-4 billion in 
annual savings each (See MISO Value Proposition: MISO, 2021. MISO Value 
Proposition. https://www.misoenergy.org/about/miso-strategy-and-value-
proposition/miso-value-
proposition/; PJM Value Proposition: PJM. 2019. PJM Value Proposition. 
https://www.pjm.com/-/media/about-pjm/pjm-value-proposition.ashx SPP. 
27 April, 2021. SPP reports $2.14B in annual savings for members, 
unveils new mission and vision to board of directors. SPP.
https://www.spp.org/newsroom/press-releases/spp-reports-214b-in-annual-
savings-for-members-unveils-new-mission-and-vision-to-board-of-
directors/).
    Prospective studies on benefits of RTO participation find 
production cost savings in the range of 3% to 9%. (The Brattle Group. 
April 2019. Potential Benefits of a Regional Wholesale Power Market. 
https://www.brattle.com/insights-events/publications/potential-
benefits-of-a-regional-wholesale-power-market-to-north-carolinas-
electricity-customers/).
    The State-led Market Study led by Utah's Department of Energy and 
neighboring western states found an RTO expanding the west could save 
participants $2 billion annually in gross benefits by 2030: Energy 
Strategies. 2021. Insights and Experience. https://www.energystrat.com/
new-insights-experience
    Studies on the formation of an RTO in the southeast could achieve 
cumulative savings of $384 billion by 2040: Energy Innovation. August 
2020. Economic And Clean Energy Benefits Of Establishing A Southeast 
U.S. Competitive Wholesale Electricity Market. https://
www.powermag.com/wp-content/uploads/2020/08/economic-and-clean-energy-
benefits-of-establishing-a-southeast-u-s-competitive-wholesale-
electricity-market_final.pdf
    \xix\ James Bushnell, Erin T. Mansur, and Kevin Novan. 23 February, 
2017. Review of the Economics Literature on US Electricity 
Restructuring. University of California Davis and Dartmouth College 
Tuck School of Business.
    https://
mansur.host.dartmouth.edu/papers/
bushnell_mansur_novan_literature_elec_restructuring.pdf
    \xx\ Chen, J and Hartman, D. 10 November, 2021. Why wholesale 
market benefits are not always apparent in customer bills. R Street 
Institute. https://www.rstreet.org/2021/11/10/why-wholesale-market-
benefits-are-not-always-apparent-in-customer-bills/
    \xxi\ MISO. 2021. MISO Value Proposition. https://
www.misoenergy.org/about/miso-strategy-and-value-proposition/miso-
value-proposition/
    PJM Value Proposition: PJM. 2019. PJM Value Proposition.
https://www.pjm.com/about-pjm/˜/media/about-pjm/pjm-value-
proposition.ashx;
    \xxii\ Western States could save $2 billion annually: Energy 
Strategies. 30 July, 2021. State-Led Market Study: Market and 
Regulatory Review Report.
https://static1.squarespace.com/static/59b97b188fd4d2645224448b/t/
6148a03ea5c43d63b2873506/1632149569046/Final+Roadmap+-
+Market+and+Regulatory+Review+Report+210730.pdf
    Colorado: joining an RTO could reduce customer rates 5%: Howland, 
E. 3 December, 2021 Colorado utilities could cut costs 5% by joining an 
RTO, PUC finds, as Western market momentum builds. Utility Dive.
https://www.utilitydive.com/news/colorado-utilities-PUC-rto-report-
power-
markets/610918/?utm-source=Sailthru&utm-medium=email&utm-
campaign=Issue:%202021-12-
03%20Utility%20Dive%20Newsletter%20%5Bissue:38381%5D&utm-
term=Utility%20Dive
    SE Maximizing Cost Savings and Emission Reductions: Power Market 
Options for the Southeast United States found that an RTO in the SE 
could save $5 billion annually: Clack, C., Choukulkar, A., Cote, B., 
and McKee, S. 28 September, 2021. Maximizing Cost Savings and Emission 
Reductions: Power Market Options for the Southeast United States. 
Vibrant Clean Energy.
https://www.vibrantcleanenergy.com/wp-content/uploads/2021/09/VCE-SEEM-
Modeling_final.pdf
    \xxiii\ See Section 30453 of H.R. 5376, the Build Back Better Act.
    \xxiv\ MIT researchers show that coordinating power system planning 
and dispatch regionally, along with a doubling of transmission 
capacity, reduces the cost of zero-carbon electricity by as much as 46% 
compared to a state-by-state approach. Brown, P., and Botterud, A. 20 
January, 2021. The Value of Inter-Regional Coordination and 
Transmission in Decarbonizing the US Electricity System. Joule https://
www.sciencedirect.com/science/article/abs/pii/
S2542435120305572?dgcid=author
    The National Academies offer deep decarbonization scenarios that 
would allow the U.S. to reach net zero or net negative CO2 
emissions by 2050. The central case estimates that expanding 
interregional transmission by a 2.5-fold increase over 2020 
transmission levels would increase the share of wind and solar to 60% 
of total generation. National Academies of Sciences, Engineering, and 
Medicine. 2021. Accelerating Decarbonization of the U.S. Energy System.
https://www.nap.edu/resource/25932/interactive/
    Princeton University researchers identified a need for 3-5 times 
more transmission capacity to reach net-zero emissions by 2050: 
Princeton University. Net Zero America. October 2021. Net-Zero America: 
Potential Pathways, Infrastructure, and Impacts. Princeton University. 
https://netzeroamerica.princeton.edu/the-report
    \xxv\ Brinkman, G., Novacheck, J., Bloom, A., and McCalley, J. 
October 2020. Interconnections Seam Study. National Renewable Energy 
Laboratory.
https://www.nrel.gov/docs/fy21osti/78161.pdf
    \xxvi\ Researchers from Iowa State University found that $80 
billion in transmission spending would create 562,000 construction jobs 
and a net gain of 3,083 jobs nationally across the energy sector. 
Swenson, D. July 2018. Economic Impact & Job Creation Relative to 
Large-Scale, High Voltage Transmission Infrastructure. Iowa State 
University.
http://www2.econ.iastate.edu/prosci/swenson/Publications/
The%20Interconnection%20Seam%20Study%20Amended%20Title.pdf
    \xxvii\ Wimsatt, K. and David Gardiner and Associates. 29 July, 
2019. Transmission: A Key Aspect of New Climate Policies. Americans for 
a Clean Energy Grid.
https://cleanenergygrid.org/transmission-key-aspect-new-climate-
policies/
    \xxviii\ David Gardiner and Associates. January 2018. Transmission 
Upgrades & 
Expansion: Keys to Meeting Large Customer Demand for Renewable Energy. 
A Renewable America. https://windsolaralliance.org/wp-content/uploads/
2018/01/WEF-
Corporate-Demand-and-Transmission-January-2018.pdf
    \xxix\ NRECA. 22 October, 2021. Electric Co-op Facts & Figures.
https://www.electric.coop/electric-cooperative-fact-sheet
    \xxx\ World Wildlife Fund. 02 June, 2021. Power Forward 4.0: A 
progress report of the Fortune 500's transition to a net-zero economy.
https://www.worldwildlife.org/publications/power-forward-4-0-a-
progress-report-of-the-fortune-500-s-transition-to-a-net-zero-economy
    \xxxi\ RE 100. 2021. RE 100 Member List. https://www.there100.org/
re100-members
    \xxxii\ Science Based Targets. 2021. Companies Taking Action.
https://sciencebasedtargets.org/companies-taking-action
    \xxxiii\ Wood Makenzie. 20 August, 2019. Corporates usher in new 
wave of US wind and solar growth.
https://www.woodmac.com/our-expertise/focus/Power--Renewables/
corporates-usher-in-new-wave-of-u.s.-wind-and-solar-growth/
    \xxxiv\ A recent special report from the United Nations 
Intergovernmental Panel on Climate Change finds the world needs to cut 
its planet-warming emissions by about half by 2030 relative to a 2005 
baseline: IPCC. 2018, Summary for Policymakers. Global Warming of 
1.5+C. An IPCC Special Report on the impacts of global warming of 1.5+C 
above pre-industrial levels and related global greenhouse gas emission 
pathways, in the context of strengthening the global response to the 
threat of climate change, sustainable development, and efforts to 
eradicate poverty. https://www.ipcc.ch/sr15/chapter/spm/
    Rhodium Group also states that, under optimistic assumptions, the 
electric power sector is projected to maintain emissions in the range 
of 46%-50% below 2005 levels in 2030 without additional action: Larsen, 
J., King, B., Kolus, H., Herndon, W. 23 March, 2021. Pathways to Build 
Back Better: Investing in 100% Clean Energy. Rhodium Group. https://
rhg.com/research/build-back-better-clean-electricity/
    \xxxv\ International Energy Agency. 2020. World Energy Outlook 
2020. IEA.
https://www.iea.org/reports/world-energy-outlook-2020/achieving-net-
zero-emissions-by-2050
    \xxxvi\ Goldman School of Public Policy. June 2020. 2035 Report: 
Electricity.
https://www.2035report.com/?utm_medium=email&_hsmi=2&_hsenc=p2ANqtz-
_nsf6UuQfub_okag8lAO3F-GO-oXf1rhZpXEhjh4RdqfOxBMs14KwyiFMybtArc0D5TNvO-
YCGub8TavKJt9aEBqoo5w&utm_content=2&utm_source=hs_email
    \xxxvii\ BloombergNEF. 19 January, 2021. Energy Transition 
Investment Hit $500 Billion in 2020--For First Time. https://
about.bnef.com/blog/energy-transition-
investment-hit-500-billion-in-2020-for-first-time/
    \xxxviii\ White House Office of the Press Secretary. 25 February, 
2016. FACT SHEET: Seven Years Ago, the American Recovery and 
Reinvestment Act Helped Bring Our Economy Back from the Brink of a 
Second Great Depression.
https://obamawhitehouse.archives.gov/the-press-office/2016/02/25/fact-
sheet-seven-years-ago-american-recovery-and-reinvestment-act-helped

    Ms. Castor. Thank you very much.
    Next, we will go to Dr. Varadarajan. Dr. Varadarajan, you 
are recognized for 5 minutes for your testimony.

                   STATEMENT OF DR. UDAY VARADARAJAN

    Dr. Varadarajan. Thank you, Chairwoman Castor, Ranking 
Member Graves, and distinguished members of the select 
committee, for inviting me to testify and for your ongoing 
leadership in focusing on the climate crisis.
    I am a Principal at RMI, which was founded in 1982, and is 
an independent, nonpartisan nonprofit dedicated to transforming 
global energy use to help create a clean, prosperous, and 
secure low-carbon future. And I am grateful for the chance to 
speak with you today about RMI's work to assess the potential 
impacts of climate investments in the Build Back Better Act on 
families and businesses across the country.
    I wanted to start by noting that, indeed, this winter, more 
than half of American households could see energy bills rise by 
30 percent or more because of skyrocketing natural gas and oil 
costs. Now, I think it is important to note this isn't an 
isolated incident, and this has happened many, many times 
before. Just this February, in Texas, we saw a cold spell that 
led to daily gas supply suddenly falling by half, and led to 
huge blackouts, and about a $47 billion spike in electricity 
costs over 1 week, as much as Texas usually pays over 3 to 6 
years on generation.
    These kinds of volatile and rising energy costs pose a real 
threat to the health and financial well-being of families 
across the country.
    And to put a finer point on it, in 2019, the country's 
lowest income households, about 18 million, spent an average of 
about $1 out of every $6 on energy costs, a rate that is nearly 
10 times that of households with above-average income. And, in 
fact, nearly half of all Americans pay more annually in energy 
bills than they do in Federal income taxes. So energy really 
matters.
    In the near term, what can we do about this? Well, in the 
near term, things like science rapidly strengthening the energy 
assistance programs that we have in place, like LIHEAP, or 
through internationally coordinated releases of strategic oil 
reserves, as the Biden administration is pursuing, are 
important steps that can mitigate this harm. But that is not 
the long-term solution.
    In the long run, the only way to ease the burden of 
volatile fossil fuel and energy costs on American families is 
to make the shift to better buildings and vehicles that use 
cleaner and cheaper energy sources with more stable energy 
prices. Such a shift could involve the use of wind and solar, 
complemented by battery storage, that offer energy price 
stability and can create durable energy savings for American 
households, all while reducing greenhouse gas emissions.
    The Build Back Better Act could help American families and 
businesses do just this. They could really help the United 
States reduce greenhouse gas emissions from the supply of 
electricity and save Americans billions of dollars on their 
electricity bills and be less dependent on fossil fuels, whose 
changing prices disproportionately impact low-income 
households.
    So how does it do this? First, one of the best ways to 
reduce both high energy burdens, and especially for low-income 
households, as well as the disproportionate negative health 
impacts they face by burning fossil fuels inside their homes, 
is through comprehensive upgrades to their homes and 
apartments, health and safety repairs, investments in 
efficiency and electrification.
    The Build Back Better Act includes incentives for exactly 
these investments, particularly for low-income households, such 
as the high efficiency electric home rebates, two thirds of 
which must be directed to low-income and tribal households. Now 
a seond way in which the Build Back Better Act helps to 
mitigate these burdens is through new and improved financial 
mechanisms such as the extension improvement on existing clean 
energy tax credits. These changes can allow customers of 
electric utilities across the country save money if their 
utilities and their regulators, in some cases, make the choice 
to switch to clean energy.
    Now, we wanted to understand how this could actually work 
for households that were the most vulnerable to volatile fuel 
prices. So we analyzed the electricity costs paid by customers 
of those utilities that are most dependent on fossil fuels 
today. These are regulated utilities, rural cooperatives, that 
serve 92 percent of the counties facing challenges with 
persistent poverty and publicly owned utilities.
    Together, these utilities own about 80 percent of the 
remaining coal power in the U.S., and we asked how the Build 
Back Better Act could impact them. And what we found is that 
the incentives in the Build Back Better Act, if they became 
law, along with existing policies, could allow customers of 
these utilities to see annual savings of up to $11 billion a 
year by 2030, if these utilities choose to use the incentives 
that are being offered to them and to reduce their use of 
fossil fuels and build in clean generation and, at the same 
time, reduce their greenhouse gas emissions by 67 percent.
    And, moreover, we found that these savings are concentrated 
in households and regions with the highest energy burden.
    So, in short, increasingly expensive fossil fuel burdens 
fall on customers with high costs. But the Build Back Better 
Act makes shifting to clean energy easier, reducing costs to 
customers while providing help to the regions that most need 
it.
    Thank you.
    [The statement of Dr. Varadarajan follows:]

                   Testimony of Dr. Uday Varadarajan

    Principal, RMI and Precourt Energy Scholar, Sustainable Finance 
                   Initiative at Stanford University

           Before the Select Committee on the Climate Crisis

  ``Cleaner, Cheaper Energy: Climate Investments to Help Families and 
                              Businesses''

                               2021-12-09

Introduction
    This winter, more than half of American households will see their 
energy bills rise by 30% or more \i\ due to skyrocketing natural gas 
and oil costs. Rising energy costs pose a real threat to the health and 
financial well-being of families, especially the 4.8 million low-income 
households in the United States that missed an energy bill payment in 
2020.
    Rapidly strengthening energy assistance programs such as the Low 
Income Home Energy Assistance Program \ii\ that aid households with a 
high energy burden (share of household income that goes to energy 
expenditures) is an important step to mitigate this threat and protect 
low-income families from energy shutoffs--at least in the near term.
    However, the long-term solution to easing the burden of volatile 
energy costs on American families is to shift to cleaner, cheaper 
energy sources. Cleaner energy sources such as wind and solar 
complemented by battery storage offer energy price stability and could 
create durable energy savings for American households. The Build Back 
Better Act as passed by the House expands and improves financial 
incentives such as clean energy tax credits \iii\ to accelerate the 
transition to clean energy resources, reducing energy bills and 
negative health impacts for families across the country.
Build Back Better
    The Build Back Better Act will help the United States reduce its 
greenhouse gas emissions from the supply of electricity, save Americans 
billions of dollars on their electricity bills, and be less dependent 
on volatile fossil fuels whose changing prices disproportionately 
affect low-income households. The most significant drivers of the 
overall cost and emissions reductions are three changes to the tax 
code. First, the Act extends and expands clean energy tax credits, 
allowing any carbon-free generation resource installed over the next 
ten years to benefit from a $25/megawatt-hour production tax credit. 
Next, the Act provides incentives to improve the reliability and 
resilience of the electric grid by introducing a 30% investment tax 
credit for battery storage and transmission. Finally, the Act allows 
both tax credits to be available via direct pay,\iv\ which enables 
electric utilities of all kinds to fully utilize the tax credits 
without delay to maximize cost reductions for their customers. As a 
result, utilities can use the Build Back Better tax credits to reduce 
the carbon they emit by deploying a diverse set of clean energy 
technologies, while providing low-cost and reliable electricity 
service.
    In addition, the Act features several provisions aimed at ensuring 
that energy cost relief and clean energy investment benefits low-income 
and fossil-dependent communities. For example, the Act provides funding 
for the USDA to help rural electric cooperatives reduce the debt burden 
and facilitate their reinvestment in clean energy--thereby helping 
bring down energy bills for the 92% of the U.S. counties with 
persistent poverty that are served by cooperatives. On the investment 
side, clean energy projects built in low-income or fossil-dependent 
communities are eligible for tax credit enhancements funded by the Act, 
ensuring that these communities are able to share in the wealth created 
by the transition to clean energy.
Build Back Better Reduces Emissions and Lowers Energy Bills
    To assess the potential magnitude of the emissions reductions and 
savings made possible by the Act, RMI analyzed the impact of existing 
clean energy incentives as augmented Build Back Better provisions on 
the economics of the regulated, cooperative, and publicly owned 
utilities that own and operate nearly 80% of the remaining coal plants. 
Using publicly reported utility data sourced from RMI's Utility 
Transition Hub \v\ and federal agencies, RMI calculated the effective 
``crossover'' points at which adding more generation from renewable 
energy can save utility customers money relative to current utility 
operations. We also accounted for increasing costs of capacity from 
battery storage to enhance system reliability as renewable energy usage 
increases. Finally, RMI incorporated Build Back Better Act policies 
like expanded clean energy tax credits, low-cost refinancing, and debt 
relief for electric cooperatives. We assumed that with these policies, 
clean energy replaces fossil generation once it becomes cost-effective 
to do so, with savings calculated from the difference in energy costs 
between renewables and fossil generation. RMI calculated emission 
reductions by measuring the Build Back Better Act against a baseline 
that begins with the reported emissions from power plants in 2019.
    The numbers are clear--clean energy and the Build Back Better Act 
will save billions of dollars over the next decade and significantly 
reduce greenhouse gas emissions by enabling utilities to accelerate 
their transition to cleaner, cheaper resources:

      Utility customers will see annual savings of $11 billion 
per year annually by 2030 from the transition to clean energy,\vi\ and
      The combined impact of the Act with existing policies and 
the declining costs of clean energy can make it economic for these 
utilities to reduce their GHG emissions by 67%--or 658 Million Metric 
Tons of CO2 annually--relative to their 2019 emissions by 2030, 
lowering emissions by as much as 4.2 Billion Metric Tons of CO2 
cumulatively from 2022-2030.\vii\

    And with a grid powered by clean electricity, the electrification 
and decarbonization of other sectors will follow. In short, the savings 
and emissions reductions presented in this analysis refute the myth--
one that has garnered a great deal of airtime during the federal budget 
debate--that transforming our electricity sector will be too expensive 
for customers.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


Build Back Better Empowers Households to Act to Reduce Their Energy 
        Burden
    One of the best ways to reduce both the higher energy burdens borne 
by low-income households and the disproportionate negative health 
impacts caused by burning fossil fuels inside homes \viii\ is through 
funding comprehensive building upgrades--health and safety repairs, 
efficiency, and electrification at the same time. The Build Back Better 
Act includes incentives for such investments, particularly for low-
income households, such as the High Efficiency Electric Home Rebates, 
two-thirds of which must be directed to low-income and tribal 
communities, and the Home Energy Performance-Based Whole-House Rebates 
and Training Grants. The full benefits of all of these programs must be 
made accessible to those most burdened by high energy and housing costs 
and suffering the impacts of substandard homes. As examples, the same 
changes to allow refundability and direct pay proposed for the 
renewable energy tax credits under section 25D should be extended to 
the residential efficiency tax credits under section 25C, and the new 
construction tax credits under section 45L should not reduce the basis 
for the Low-Income Housing Tax Credits when used together for highly 
efficient affordable housing projects. These provisions would improve 
both air quality and human health while improving living standards and 
saving households money.
Build Back Better Protects Vulnerable Families
    Replacing expensive fossil generation will not only reduce 
emissions and helps meet ambitious US climate commitments, but it will 
also save Americans money on their electricity bills. Such savings are 
important for all Americans facing rising fuel costs but are especially 
crucial for households that experience high energy burden.
    In 2019, the country's 18.2 million lowest-income households spent 
an average of one out of every six dollars on energy costs,\ix\ a rate 
nearly ten times that of households with above-average income. In fact, 
nearly half of all Americans pay more annually in energy bills than 
they do in federal income taxes.\x\ This issue is all too relevant 
today, as we've just seen the average energy burden from electricity 
expenditures has increased \xi\ for the first time since 2014. Reducing 
this energy burden will provide these families substantial relief.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    In fact, the Act's savings are concentrated in households in 
regions with the highest burden. According to RMI's analysis, the five 
utilities with the highest potential annual savings from Build Back 
Better serve households with an average energy burden in the top 
quartile across all utilities.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In short, increasingly expensive fossil fuels burden customers with 
high costs that can rise with little warning. The Build Back Better Act 
makes shifting to clean energy easier, reducing costs to consumers 
while providing help to the regions that are most in need.

References Page

    \i\ https://www.eia.gov/outlooks/steo/report/WinterFuels.php
    \ii\ https://www.acf.hhs.gov/ocs/low-income-home-energy-assistance-
program-liheap
    \iii\ https://www.utilitydive.com/news/550b-clean-energy-climate-
spending-build-back-better-credit-renewable-congress/609151/
    \iv\ https://rmi.org/simple-tax-changes-can-unleash-clean-energy-
deployment/
    \v\ https://utilitytransitionhub.rmi.org/
    \vi\ Levelized annual savings by 2030 for FERC-reporting utilities 
and extrapolated across the entire electricity sector with Build Back 
Better Act compared to 2019. Sources: RMI Utility Transition Hub, FERC, 
EIA, NREL
    \vii\ Annual emissions reduced for FERC-reporting utilities with 
Build Back Better Act compared to 2019. Sources: RMI Utility Transition 
Hub, FERC, EIA, NREL
    \viii\ https://rmi.org/uncovering-the-deadly-toll-of-air-pollution-
from-buildings/
    \ix\ https://www.canarymedia.com/articles/energy-equity/build-back-
better-act-would-reduce-burden-of-household-energy-costs
    \x\ https://www.canarymedia.com/articles/energy-equity/build-back-
better-act-would-reduce-burden-of-household-energy-costs
    \xi\ https://utilitytransitionhub.rmi.org/portal/

    Ms. Castor. Thank you very much.
    Mr. Herrgott, you are recognized for 5 minutes to present 
your testimony. Welcome.

                STATEMENT OF ALEXANDER HERRGOTT

    Mr. Herrgott. Chair Castor and Ranking Member Graves, my 
name is Alex Herrgott, and I serve as the President of The 
Permitting Institute, or TPI. We are a nonpartisan, nonprofit 
organization focused on simplifying the permitting process so 
that we can both protect our nation's resources and build the 
critical infrastructure America needs.
    While we are based here in Washington, DC, TPI's most 
important work happens in the field and across the country 
where most critical project approvals occur. Our team of 
scientists, engineers, and attorneys recruited from Federal 
agencies, including recent additions of senior permitting 
officials from the Biden administration, have a long track 
record of success in balancing infrastructure needs with 
creative solutions to deliver improved environmental and 
community outcomes during the permitting process.
    We are the real-world, project-delivery practitioners 
behind the scenes in both the private and public sector who 
have written 2,000-page environmental impact statements and the 
additional 2,000 pages of appendices and technical reports. We 
have been in the trenches, written the laws, and worked 
alongside agency staff to untangle the web of permitting 
confusion caused by overlapping and conflicting requirements 
across dozens of Federal and state agencies, a hundred 
permitting laws, and the resulting maze of regulations, 
executives orders, and judicial precedent that govern 
infrastructure development.
    Our mission is to strengthen the partnership between 
government and impacted communities and industry. We deploy a 
collaborative, practical, problem solving approach that has 
successfully guided many of the largest wind, solar, 
transmission, and coastal restoration projects in the U.S., 
saving years and billions in costs.
    TPI members, and members of your committee, know all too 
well that funding is only the first step in delivering the 
improvements promised in the Infrastructure Investment and Jobs 
Act. But to be clear, to build back better, we first must be 
able to build, and currently that is not the case.
    TPI strongly supports recent permitting reforms, along with 
new training and siting and assistance grants to states, 
cities, and Tribes, but these will yield only modest benefits 
for those who are invested in a cleaner, cheaper energy future, 
a status quo that diminishes or, at best, delays the impact of 
any new funding currently being discussed in Congress.
    Developers across all sectors, while still experiencing the 
same chronic obstacles and process delays, they see consistency 
in policy, predictability in process, and some basic 
accountability for appropriate reviews; not guaranteed outcomes 
or yeses, just a decision in a reasonable amount of time. 
Unfortunately, this is a human-based system spread across 
sometimes 50 different decision makers and chains of command, 
each with their own requirements that are rarely aligned.
    To achieve real progress, Congress must tackle the 
underlying sources of bureaucratic gridlock. Permitting reform 
has been the central focus of Republican and Democrat 
administrations, yet compromise remains elusive.
    Americans are already experiencing the cost of inaction. 
Rising energy costs and volatility in our energy markets 
continues as we transition from those conventional to renewable 
resources, as the other witnesses have mentioned. With much of 
the much--the needed infrastructure still in the earliest 
planning stages, they still now face a maze of permitting 
obstacles that developers report are responsible for adding an 
additional 20 to 30 percent on total project costs.
    These costs are ultimately passed on to the public in the 
form of higher taxes and escalating utility rates. In this 
system, no one wins: not the environment, not the stressed U.S. 
electricity grid, and definitely not the ratepayers.
    Project developers, including many of our members, stand 
ready to pursue $600 billion to $800 billion in private 
investment for new wind, solar, transmission, hydrogen, 
storage, and carbon capture. The reality, however, is the 
benefits of projects initiated today won't be realized for 7 to 
10 years because of the current permitting system.
    It could be hydropower plants that are routinely challenged 
in court, citing conflicting statutory and regulatory 
requirements, a growing list of proposed offshore wind projects 
and other onshore on Federal lands stalled by the constantly 
evolving rules governing species and wetlands protections.
    One egregious example is a $3 billion investment in a clean 
energy transmission line that began the permitting process more 
than a decade ago. The project was finally approved 4 years 
ago. However, it is now entangled in court proceedings because 
one hand did not know what the other hand was doing within the 
same Federal agency.
    This is not a Republican or Democrat issue. This is a 
process issue. The lack of a predictable permitting process is 
the enemy of progress, and that uncertainty is keeping hundreds 
of billions of dollars of new investments on the sidelines.
    Beyond those existing permitting obstacles, new 
infrastructure investment must now also contend with the 
regulatory whiplash with contradictory regulations being 
proposed and issued every couple years. Projects currently 
undergoing review, years into the process, are left in a no 
man's land trying to figure out what to do, while agencies 
provide no guidance regarding decision making in the meantime.
    TPI is working to bridge the disconnect between erratic 
policy shifts and the real-world consequences on the ground. We 
are building a large coalition of diverse entities, committed 
to achieving a balance between progress and protection. The key 
is greater coordination efficiency, not limits on stakeholder 
participation or shortcuts to laws and regulations. More 
comprehensive and lasting permitting reform efforts in the past 
have been blocked by the notion that faster always means fewer 
protections to the environment. That is simply false.
    Congress should embrace reforms that expand state, local, 
and Tribal partnerships, such as TPI State Permitting Council 
initiative that builds trust, communication, and coordination 
between state and Federal regulators. We also recommend this 
committee take a hard look at achievable compromise on 
legislative reform initiatives such as the BUILDER Act, which 
clarifies the appropriate role for Federal reviews at state 
levels.
    And to conclude, if we agree that a project development 
cycle of 7 to 10 years, regardless of the energy source, is 
simply too long, we must move past fringe talking points and 
political posturing and take the next steps together. We have 
no other choice. By doing so, we will unlock the opportunity to 
modernize and expand our energy infrastructure, while expanding 
the supply of U.S.-sourced critical minerals essential to make 
these projects a reality. These efforts will safeguard 
communities, protect the environment, while simultaneously 
securing new domestic sources of affordable energy and the jobs 
bringing American industry back to life.
    Thank you very much.
    [The statement of Mr. Herrgott follows:]

                Written Testimony of Alexander Herrgott

              President and CEO, The Permitting Institute

  U.S. House of Representatives Select Committee on The Climate Crisis

   Cleaner, Cheaper Energy: Climate Investments to Help Families and 
                               Businesses

                       Thursday, December 9, 2021

                               1:30 p.m.

                    210 Cannon House Office Building

    Chairman Castor and Ranking Member Graves, my name is Alex Herrgott 
and I am president of ThePermitting Institute (``TPI''). TPI is a 
Washington DC-based non-profit, non-partisan organization, whose 
purpose is to modernize America's aging infrastructure while protecting 
our environmental, cultural, and historic resources.
    I appreciate the opportunity to discuss targeted actions Congress 
can take to increase the efficiency and certainty of the permitting 
process, while enabling construction of affordable, reliable, and 
resilient energy infrastructure. Permitting confusion, redundancy, and 
uncertainty increase the cost of energy and our dependence on foreign 
nations--including our adversaries--thereby diminishing America's 
global competitiveness.
    The unfortunate reality is that the permitting reforms in the new 
bipartisan infrastructure law will yield only modest benefits for the 
transportation, coastal restoration, broadband, energy, and water 
infrastructure and resources project developers.
    Those developers will experience 99% of the same chronic obstacles 
and process delays. To achieve real progress, Congress must address the 
bureaucratic gridlock blocking new investment.
    Permitting uncertainty is diminishing and delaying investment 
returns across all infrastructure sectors, most notably the expansion 
of conventional and renewable energy and transmission development.
    Volatility in energy markets continues to increase as the country 
transitions its energy supply. The mismatch between planned electric 
generation--often delayed by a 7 to10 year development timeline--and 
electric generation retirement are causing supply and demand issues 
that are, in part, responsible for rapid increases in domestic and 
global energy prices.
    An equally big deal is the $600-$800 billion in private investment 
for new wind, solar, transmission, hydrogen, storage, and carbon 
capture waiting on the sidelines for clarity and certainty. These ``big 
deal'' numbers are further informed by an April 2021 report by Grid 
Strategies LLC, released during a Department of Energy event, that 
shows 22 ``shovel-ready'' transmission lines stalled in various phases 
of the permitting process, with no resolution in sight.
    TPI urges this Committee to focus future comprehensive permitting 
reform efforts broadly and dispassionately on all sources of 
bureaucratic obstructions blocking accelerated deployment of new clean 
energy projects. The alternative is a status quo that benefits no one.
    Accordingly, project developers and TPI members are hesitant to 
invest. They know that projects initiated today will not be able to 
commence operations and realize their investment cost recovery for 7 
to10 years at the earliest. As this summary timeline articulates, our 
nation's permitting system does not solve problems, it creates them.
    To illustrate the problem, for major infrastructure projects, it 
takes:

      2-to-3 years of project design, engineering, permitting, 
planning, and financing
      2-to-4 years of formal permitting process submission and 
review--a timeline that pushes orders for equipment, steel, concrete, 
and labor contracts years into the future
      2-to-3 years of construction--this assumes permitting 
approvals are granted and supply chain orders are aligned

    Despite these challenges, I am here today to highlight significant 
opportunities for progress and to help remove obstacles impeding 
infrastructure project timelines. TPI provides guidance early in the 
process and throughout a project's development--helping our members 
identify issues years ahead of the current timeline. We minimize risk 
of delays and avoidable costs by working with all parties to identify a 
streamlined path to completion while protecting our natural resources.
    Still, TPI members, and members of this committee, know all too 
well that energy projects are routinely stymied at various phases of 
project development by disconnected and fragmented federal and state 
review processes. Permitting is often marred by contradictory and 
redundant rules, timelines, and policies that cause delays, cost 
overruns, and in some cases, project abandonment.
    Chronic permitting problems are exacerbated by the lack of 
bureaucratic accountability. Our broken system allows agencies to sit 
on applications for years, even decades in some cases, with no 
certainty of eventual project approval. TPI does not maintain that 
federal agencies owe project developers a yes, but we believe federal 
agencies owe project developers an answer--yes or no--in a reasonable 
timeframe.
    While the focus in most permitting timeline discussions often 
centers on the National Environmental Policy Act (``NEPA''), NEPA is 
just one process among more than 60 possible federal permits that may 
be required for a project, spread across 13 federal agencies, not 
including myriad state and local permitting obligations.
    Many otherwise ``shovel-ready'' infrastructure projects spend years 
in bureaucratic gridlock. Developers routinely find themselves 
struggling through the informal pre-permitting, planning, and 
application process--again, often for years--with extensive ongoing 
submission and review cycles before NEPA reviews formally commence. 
Consider these examples:

      Proposed energy projects on federal lands continue to 
face constantly evolving rules governing species and wetlands 
protections.
      Some federal agencies have identified new formal or 
informal policies over the past several years to frontload biological, 
cultural, and historical survey requirements prior to formally starting 
the review process--pushing the official starting point even further 
into the future. In some cases, project pre-planning increases 
efficiency and substantial discussion early in the process, but in 
others it can conceal the full duration of the permitting review 
process and leave developers with no final federal to challenge.
      One egregious example is a $3 billion investment in a 
clean energy transmission line that began the permitting process more 
than a decade ago. The project endured seven years of review and was 
finally deemed ``complete'' by the federal government four years ago. 
However, it is now entangled in court proceedings because one hand did 
not know what the other was doing--within the same federal agency.
      Multiple offshore wind projects, including Skipjack, 
Mayflower, and Bay State, even after becoming a clear priority for the 
Biden Administration, have yet to receive a preliminary permitting 
timetable from federal agencies, even for those projects statutorily 
required to have a permitting timetable.
      Over the last few years, several exploration, copper, 
lithium, molybdenum, nickel, and other mineral projects essential for 
battery storage and EV deployment have been stalled by internecine 
squabbling among federal agencies and litigation. This includes a 
proposed road in Alaska that would have moved critical and ``renewable 
energy'' minerals from remote parts of the state to industrial centers.
      Several hydropower permits and operating authorizations 
have also been challenged in court, citing conflicting statutory and 
regulatory requirements among as many as 10 federal agencies.

    Each of these examples--and there are hundreds more--points to the 
urgent need to repair the outdated and chaotic permitting system that 
keeps the country from meeting our growing infrastructure needs.
    Most major U.S. infrastructure investments in energy, including 
wind, solar, hydrogen, carbon capture, hydro, and geothermal, as well 
as broadband, electricity transmission, oil and gas pipelines, supply 
chain port expansion, and export development are entirely supported by 
U.S companies and investors in the private sector. Energy and 
infrastructure investors require predictability and prompt decision 
making when putting capital at risk. Unfortunately, investors are too 
often treated as adversaries pitted against federal regulators rather 
than as partners in rebuilding our nation.
    Despite bipartisan agreement that the country's permitting process 
is broken, outside stakeholders, each prioritizing their narrow 
interests, are inhibiting additional reforms. But there is a path 
forward.
    Lawmakers should build on and expand the reforms enacted over the 
past decade. Perhaps the most notable accomplishment was the creation 
of the Federal Permitting Improvement Steering Council (FPISC), a 
voluntary program for project developers charged with identifying best 
practices and implementing basic project management practices across 13 
federal agencies. The extension of this Council is appreciated by TPI 
members. However, the FPISC dashboard currently hosts only 20 active 
multiyear projects of the largest and most complicated efforts in the 
country--a number that must grow substantially. FPISC's leadership, 
particularly Executive Director Christine Harada, is preparing the 
Council to grow. The Council has accepted 8 new projects in 2021, six 
wind farms, one solar project, one transmission line.
    Additionally, thanks for the new bipartisan infrastructure bill, 
the ``One Federal Decision'' (OFD) framework enhances coordination 
among agencies with the goal of completing NEPA review in an average of 
two years for major surface transportation projects. Unfortunately, if 
a project doesn't meet the limited and precise FPISC or OFD criteria, 
coordinating support is limited. This reality leaves hundreds of 
developers proposing $600-$800 billion in new energy infrastructure 
suffering through the status quo. Currently, there are no new enacted 
reforms supporting these important projects.
    TPI commends Congress for passing, and President Biden signing, 
bipartisan infrastructure legislation. However, the Administration is 
rescinding longstanding permitting efficiencies without proposing new 
rules help guide efficient permitting. The Administration must reverse 
course on this flawed approach.
    These changes are resulting in extended delays and creating a 
chilling effect on new infrastructure investment. TPI members 
appreciate the sector specific and narrowly targeted permitting reforms 
included in the new infrastructure bill, but they still face growing 
confusion from the constantly evolving federal rules and reviews.
    TPI is concerned that the dividends from ``build back better'' are 
7 to 10 years away, at the earliest. That extended timeline does not 
account for permits challenged in court and shows the need for Congress 
to step up to the plate and fix the permitting process.
    While we have not yet seen the specifics of the Phase II NEPA 
rulemaking the Administration plans to unveil later next year after 
Phase I is finalized early next year, our concern is that it will place 
renewable and traditional energy infrastructure and generation projects 
at great risk.
    When combined with other new proposed rulemakings and regulatory 
actions previously listed, it is difficult to find the win for new 
transmission lines and pipelines, solar installation, wind buildout, 
broadband deployment, and the expansion of critical minerals production 
to provide domestic sourcing for the manufacturing supply chain for 
these projects.
    Recent reforms have showed limited results in reducing average 
permitting timeframes. It is critical to note that those reduced 
average timeframes are just the tip of a massive permitting iceberg. 
They do not capture all associated phases of the project development 
life cycle, the years of early engagement prior to formally commencing 
review under NEPA, or the years that can follow the Record of Decision. 
In short, these reforms improved permitting processes but also 
illuminated how many more opportunities remain to address the root 
cause of permitting delays and obstruction.
    The negative consequences of only addressing parts of the statutory 
and regulatory process in separate, mutually exclusive, reform 
exercises are easy to see. On average, project developers report that 
20 to 30 percent of total project funding is wasted by delays. The 
resulting cost overruns create an enormous disconnect between the 
funding Congress provides and private sector invests, and the ultimate 
delivery of the infrastructure America needs.
    The cost of these pauses and restarts are rarely considered by 
lawmakers but estimates of the financial impact for major energy 
infrastructure projects begin at $50 million per month in lost revenue. 
Add $32 million per month in lost retainers on heavy machinery, 
architects, engineers, and construction crews who either sit stagnant 
or are reassigned to active jobs. Finally, tack on another $50 million 
in annual costs as project sponsors adapt to shifting permitting goal 
posts requiring additional studies and mid-project redesigns, broken 
contract penalties, interest on purchased materials along with 
financial consequence of delays. That cost is ultimately passed down to 
citizens, either through taxes, tolls, or increased rates and usage 
fees.
    Greater efficiency DOES NOT mean fewer environmental protections. 
TPI is building a large coalition of diverse entities committed to a 
balance that respects the environment while increasing efficiency.
    We are working with developers in every affected industry sector, 
officials at all levels of government, Tribes, non-government 
organizations, and community leaders to identify permitting ``wins''.
    Congress can fix permitting problems by starting small with the 
creation of temporary initiatives to test new policies in the field 
under conditions ideal for compromise. One very achievable near-term 
step is to create a seven-year expedited permitting pilot program for a 
discrete list of the most critical projects, with focus on coordinating 
across all regulatory entities. Granting such an essential, yet 
temporary, new authority will create room to experiment with innovative 
and expedited permit authorizations. Outcomes can be scrutinized and 
studied by Congress for feasibility, then converted into more lasting 
reforms across all sectors.
    Congress should also take a hard look at legislative reform 
initiatives such as the Builder Act, which clarifies the appropriate 
role for federal reviews at the state and local levels. To that end, 
TPI is working to expand the permitting-council model to state and 
tribal governments, emulating the success achieved in Arizona earlier 
this year. New state coordinating offices bridge the information and 
communication gap between state and federal regulators. States, local 
governments, and Tribes often have numerous overlapping permitting 
responsibilities and they are rarely coordinated efficiently. State, 
local, and tribal permitting requirements are often best addressed in 
the field where the project is located, equipped with critical 
firsthand knowledge and expertise about local resources. State 
permitting councils will allow local governments to bring the federal 
government to the table early in the process.
    To be clear, opportunities for progress are directly in front of 
us. The creation of FPISC and improvements offered in the ``One Federal 
Decision'' framework were just the first steps.
    Meaningful next steps to modernize and expand our energy 
infrastructure require that Congressenact comprehensive reforms that 
extend beyond NEPA to eliminate avoidable delays at all phases of a 
project.
    A project development cycle of 7-to-10 years is simply too long. 
Working together, we can advance permitting reforms to build 21\st\ 
Century infrastructure that safeguards communities, protects the 
environment and cultural resources, creates jobs, and brings prosperity 
to every corner of America.

    Ms. Castor. Thank you.
    Next, we will go to Ms. Jaffe. You are recognized for 5 
minutes. Welcome.
    Ms. Jaffe, check your audio, please.
    Ms. Jaffe. Oh, goodness. Sorry.
    Ms. Castor. There we go.
    Ms. Jaffe. Okay.
    Ms. Castor. Go ahead and start.

                  STATEMENT OF AMY MYERS JAFFE

    Ms. Jaffe. Thank you very much.
    Good afternoon, Chairwoman Castor, Ranking Member Graves, 
and the distinguished committee members of the Select Committee 
on the Climate Crisis. My name is Amy Myers Jaffe. Together 
with Dean Kelly Sims Gallagher, I lead U.S. and global climate 
policy research at the Fletcher School at Tufts University.
    I have written several books on energy, including one on 
the link between the oil price cycle and global financial 
crises and, more recently, one on digital energy innovation.
    I thank you for this opportunity to speak before the 
important committee today. And I thank Ranking Member Graves 
for referencing my testimony. I am glad to hear that he and 
perhaps other members of the committee are concerned about the 
undue influence of OPEC and Russia on global energy markets; 
that we don't want to have our own foreign policy, whether that 
is our climate negotiations at Glasgow or other kinds of 
strategic policies, held hostage.
    We also similarly want to make sure that we are competing 
in global markets effectively with China. I think those are 
concerns that are bipartisan concerns, and I am going to talk 
about them today.
    So the first thing we have learned on energy independence, 
which I have a nice little diagram in my testimony, is that if 
we provide extra oil supply, but oil demand is rising 
exponentially, we can still wind up with increased imports to 
the United States and instability in oil prices globally. And 
so really, truly, the best tool we have in our arsenal is 
demand management, and that in the past has been the CAFE 
standard, having our vehicles be more efficient. That helps 
families because they can buy less fuel to do the same trip.
    And when we think about electric cars, we need to think 
about that same level of efficiency. Electric motors convert 
the vast majority of the energy that is stored in the battery, 
between 60 to 85 percent, into useable energy that moves the 
wheels and takes the car forward. By contrast, even a good 
internal--combustion engine is much less efficient. It converts 
only 40 percent of the gasoline fuel into useable energy, and 
then an additional amount of that energy is wasted in the form 
of your heating a drivetrain. And so we wind up actually only 
using about 20 percent of the energy from the fuel we burn in 
our car.
    So, in effect, electric cars are a much more efficient 
technology. And, over time, the advent of electric cars in the 
United States and globally are going to remedy the influence 
that producing countries can have, undue, on global energy 
markets. That is a critical tool we have in our toolbox.
    In the short term, we know what we have to use. We need 
inventories, we need diverse supply, we need backup systems. 
But longer term, we also know that public transit is an 
important part of making sure that every American has access to 
mobility and can't be held hostage to the cost raise that could 
be made on the international market.
    And one of the things we know is that--which we learned 
sadly in COVID--is that, actually, of our most underserved 
communities, that 20 percent of low-income families don't even 
have access to an automobile and need services from public 
transit.
    So when we think about build back better, we are talking 
about targeting exactly the needs we need to take to reduce the 
volatility we see in energy markets today.
    Thank you very much.
    [The statement of Ms. Jaffe follows:]

           BEFORE THE SELECT COMMITTEE ON THE CLIMATE CRISIS

                 UNITED STATES HOUSE OF REPRESENTATIVES

             ``CLEANER, CHEAPER ENERGY: CLIMATE INVESTMENTS

                   TO HELP FAMILIES AND BUSINESSES''

                            December 9, 2021

                            Amy Myers Jaffe

                Research Professor and Managing Director

         Climate Policy Lab, Fletcher School, Tufts University

    Good afternoon, Chairwoman Castor, Ranking Member Graves, and 
members of the Committee. My name is Amy Myers Jaffe and I lead U.S. 
and global climate policy research at the Fletcher School at Tufts 
University. I have written several books on energy, including one on 
the link between the oil price cycle and global financial crises and 
more recently, one on digital energy innovation. Thank you for this 
opportunity to speak before this important committee.
    I want to begin this afternoon by discussing what has caused recent 
energy price fluctuations. Unfortunately, it is not unusual for global 
energy prices to fluctuate sharply based on sudden changes in temporary 
market conditions. Notably, from 2005 to 2008, oil prices rose sharply, 
peaking at $147 a barrel in July 2008 and then dropped sharply in 2009 
following the global financial crisis. Although tensions in the Middle 
East contributed to oil's rise in the 2000s, detailed analysis of the 
period concluded that markets had experienced a ``demand shock'' driven 
by a sudden surge in demand for commodities due to unexpectedly strong 
economic expansion of the Chinese economy following massive 
urbanization and a construction boom in the runup to the 2008 Beijing 
summer Olympics. A similar run up in oil prices took place in 2014 when 
prices reached $100 a barrel, as regional conflicts in Libya and 
elsewhere removed several million barrels a day suddenly. Oil prices 
collapsed in 2015 following a price war instigated by OPEC. U.S. 
natural gas prices have also fluctuated due to sudden surges in winter 
demand and production disruptions such as hurricanes in the U.S. Gulf 
of Mexico. For example, natural gas prices reached $15 per million BTU 
in 2005, in the aftermath of Hurricanes Rita and Katrina.
    The COVID-19 pandemic has caused extreme energy market 
disequilibrium. The global collapse in demand as a result of pandemic 
related lockdowns sent prices sharply lower, which then were given more 
momentum by a price war initiated by Saudi Arabia. The problem was so 
severe in March 2020 that oil producers struggled to find storage tanks 
to place their unwanted oil in. Oil prices fell to $16 in April 2020. 
US gasoline prices followed suit, reaching under $2 a gallon at that 
time. Oil companies and oil producing countries were forced to curtail 
drilling to alleviate the glut of unwanted oil. In the United States, 
domestic oil and natural gas producers also had to cut back rig 
operations as a result of the pandemic. In January 2020, there were 
nearly 700 rigs operating. By September, the oil rig count had 
collapsed 75% to under 200 rigs. Natural gas drilling also faltered, 
with rig counts falling by over 40%.
    But eventually as demand made a sudden recovery in 2021, notably in 
the United States as economic growth skyrocketed at a pace of 6% 
increase in GDP, oil prices began to rise sharply. OPEC, led by Saudi 
Arabia, and Russia took advantage of the sudden imbalance of energy 
global supply and demand to create artificial price hikes to their 
geopolitical and financial advantage. A primary driver behind major oil 
producing countries actions in recent months to create extreme energy 
price volatility was to try to convince political leaders in major 
economies to abandon plans to address climate change ahead of the 
Glasgow climate talks. Their motivation is clear. It is because those 
major oil exporting countries stand to lose geopolitical power and 
financial gain in the short run from successful global climate 
agreements. Their actions are not surprising but do harm to their own 
populations who are already subject to devastating extreme summer heat 
and localized flooding, and in the case of Russia, severe fires and 
permafrost melting in Arctic region.
    It is a large stretch of the imagination to say that these 
fluctuations that have been part of a structural and long-established 
boom and bust cycle in the oil and gas sector going back to the 1960s 
are currently the fault of the transition to cleaner energy. If 
anything, the addition of alternative energy helps us diversify our 
sources of energy, thereby reducing the market power of foreign oil 
producing countries within the OPEC plus cartel. Sadly, the energy 
transition has been slow to take hold, despite the crisis in rising 
global greenhouse gas emissions that are driving climate change. Global 
climate policies have not substantially removed oil and gas demand yet; 
both demand for oil and gas and emissions are rising this year. Greater 
ambition towards climate action at the next two upcoming climate 
gatherings could lead more quickly to a decline in oil and gas use 
globally, depending on the suite of policies selected to implement 
deeper decarbonization. Still, at least for this year, and probably 
next year as well, energy transition risk to oil is more theoretical 
than tangible. Global oil and gas demand did not collapse last year due 
to the energy transition, and it didn't recover suddenly this year 
because of the energy transition. While it is true that intermittency 
in wind power temporarily affected Northern European markets last 
summer and a drought which curtailed hydroelectric power exacerbated 
energy shortages in China earlier this year, those events might have 
been more easily overcome if the economic recovery from COVID-19 
lockdowns had happened more gradually or if Russia had proceeded with 
providing its customary levels of energy instead of strategically 
manipulating markets ahead of its troop buildup on the border of 
Ukraine.

What are the best options for short term solutions

    The solutions to temporary fluctuations in energy market conditions 
are well known. The U.S. Strategic Petroleum Reserve (SPR) (and similar 
strategic stocks in the world's largest economies) were created to 
prevent a major oil exporter or group of exporters to threaten energy 
shortages to influence the foreign policy of oil consuming nations. 
Addressing climate change is an important element to US foreign policy. 
The Biden Administration correctly acted to tap the SPR, in conjunction 
with other major countries including China, India, the U.K. and Japan 
tapping their reserves at the same time, to prevent this geopolitically 
motivated manipulation of global energy markets. Congress has 
authorized the sale of 58 million barrels from the SPR by 2025. In 
light of current conditions, it did not make sense to delay the sales 
of this oil to 2024 or 2025. Selling a higher volume now provides a 
double benefit. It brings American consumers and the global economy 
immediate price relief, helping curtail inflation and preventing 
further financial strain on low-income economies already reeling from 
the pandemic. It also means the U.S. treasury benefits from selling oil 
when prices were high instead of waiting several years when prices 
could be significantly lower. The strategic stock sales announcement 
has helped push speculators out of the futures markets, reducing for 
now any undue upward momentum such speculation was driving.
    There are other levers that have been successfully used in the past 
to ease winter fuel shortages in the United States that should be 
considered. Temporarily waiving the Jones Act, which prohibits 
deliveries between U.S. locations to be carried on non-U.S. vessels, 
could ease bottlenecks in energy supply movements within the U.S. With 
limited supply of U.S. flagships, it can be difficult and expensive to 
find a vessel to ship fuels from one part of the country to another. 
Waiving the Jones Act temporarily has been used in the past to 
facilitate getting the energy American families need in times of 
shortages. The United States currently exports 5.5 million barrels a 
day of refined products, such as gasoline, heating oil, diesel fuel, 
and propane, to global markets. If that product is needed inside the 
United States, policy makers should act to facilitate that. Waiving the 
Jones Act would be one way to do this. Beefing up the U.S. Energy 
Administration's emergency preparedness work with industry leaders and 
states to identify and clear up supply bottlenecks and hasten inventory 
stores in preparation for winter would be another. In addition, rising 
costs of credits used to meet the Environmental Protection Agency's 
renewable fuel standards is adding to the price of ethanol used to 
blend for gasoline at the pump. The Administration could temporarily 
suspend the ethanol compliance credit program to ease the supply 
pressures. This is not to say that the aims that underpin the Jones Act 
or the EPA's ethanol programs are not important, just that temporary 
adjustments can have an outsize influence on removing bottlenecks from 
fuel availability and promoting easy distribution to Americans who need 
it most.

Preparing for the future

    Given the financial losses stacked up from investment in oil and 
gas since 2015, investors and banks are more cautious about lending to 
drillers moving forward. Uncertainty about future market dynamics also 
contributes to hesitancy. However, a recent preliminary review by the 
Federal Reserve Bank of Dallas found that American oil and gas 
companies have been able to access bond markets at the same costs and 
availability this year than in the past. The U.S. rig count currently 
stands at 569, up almost 50% from last November, but still below 
February 2020 levels.
    Years of study on energy security have identified various 
mechanisms to smooth anomalies in energy markets and ease shortfalls in 
supply. But it is important to note that strategies that focus solely 
on increasing supplies without addressing underlying drivers of excess 
demand will be ineffective. For example, even when U.S. oil production 
was surging strongly, it was the implementation of corporate average 
vehicle efficiency standards (CAFE) that limited internal U.S. demand 
and created the pathway for surpluses that could be exported to our 
allies and international markets, influencing global supply and 
pricing. Figure 1 illustrates the impact of CAFE standards on U.S. 
petroleum net exports trends by plotting how trends would have looked 
had the efficiency standards not been implemented (green line vs red 
line).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Better performance in energy efficiency, both in vehicles and in 
buildings and industry, lowers demand, potentially reducing the chances 
of energy shortfalls but also automatically reducing the burden of any 
rise in energy costs to consumers and businesses because it takes less 
energy to do the same task. Electric motors in vehicles are more 
efficient than traditional internal combustion engines. Electric motors 
convert the vast majority of their electric energy (60% to 85%) into 
usable power (e.g. movement). An internal combustion engine is much 
less efficient, converting only 40% of its gasoline fuel to usable 
energy. When losses in the form of heat in the drivetrain are 
considered, gasoline combustion vehicles only use around 20% of the 
energy from burning fuel into moving the car.
    Just as vehicle efficiency standards have eliminated a measure of 
the potential increases in U.S. oil demand, promotion of EV sales in 
the United States would also reduce U.S. oil demand, increasing the 
chances that any lower investment in drilling for oil would be matched 
by similar decreases in the need for that oil. Virtually no oil is used 
in generating electric power in the United States.
    The EV tax credit for new electric vehicles, Section 136401, and 
the tax credit for used electric vehicles for households of a certain 
means, Section 136402, and for commercial vehicles, Section 136403, in 
the Build Back Better legislation are important tools to accelerate 
wider EV adoption and thereby reduce demand for gasoline in a way that 
will contribute to lowering road fuel costs for all Americans. Many 
countries around the world have used credits of some sort to promote EV 
sales successfully, improving urban air quality and lowering carbon 
emissions while stimulating new jobs. The more individuals that make 
the switch to EVs, the lower the undue market influence OPEC Plus oil 
exporters will have in geopolitics and the stability of global 
financial markets. The U.S. government can play a strong role in 
launching higher U.S. production and adoption of EVs by electrifying 
federal vehicles and the U.S. postal fleet, saving money on vehicle 
maintenance and fuel requirements through operational efficiency. These 
steps are important actions that have already been taken in other 
growing economies and should be considered a minimum competitive 
standard for an economy as diverse and preeminent as ours.
    Some critics have raised concerns about the burden EVs will place 
on the U.S. electric grid. The U.S. power generation sector uses a wide 
variety of fuels including natural gas, renewables, hydroelectric, 
nuclear power, and coal. As the grid shifts to cleaner power sources, 
technology solutions will lower energy costs by reducing the costs of 
backup power for renewables, which in many locations can be produced 
more cheaply than traditional energy. We are also seeing new software 
solutions that can modulate demand management to shed electricity load 
at critical times to reduce surges in prices.
    Many types of solutions already exist and have been deployed in 
different geographies. The recently passed Infrastructure bill 
incentivizes demonstration of some of these solutions, including 
battery storage, distributed energy solutions, advanced small modular 
nuclear reactors, and hydrogen conversion. But the scale of what is 
needed would be best addressed in broader climate specific legislation 
that can further target deployment in a manner that can best achieve 
cost reductions over time through scale economies and learning by doing 
cost reductions. Between 2015 and 2020, the cost for 60-cell 
monocrystalline solar photovoltaic modules fell by 60%. Onshore wind 
costs declined a further 26% over the last five years, following sharp 
declines in previous decades. Offshore wind costs have fallen by 50% in 
key locations since 2014, with experts predicting a further 50% drop by 
2050.
    To keep the lights on and energy prices low, backup systems and 
system redundancies are needed no matter what energy fuel is used. It 
is a myth that gasoline is not affected in a power blackout. It takes 
electricity to run the vast gasoline distribution system in the United 
States, including wholesale terminals and retail stations that cannot 
deploy any supply without electricity. The final findings from the 
Texas electricity crisis were that firms did not have sufficient levels 
of natural gas inventories on hand to keep the grid afloat once the 
freeze curtailed ongoing natural gas production. More rechargeable 
battery storage or stored hydrogen that could have been run through a 
fuel cell might have eased the problem, not made it worse. We know how 
to backup energy generation capacity. What's needed now is a national 
effort to lower than costs of doing so. Europe and China are investing 
hundreds of millions of dollars to get there. The United States could 
lead.
    The United States needs to capitalize on its current private sector 
technological edge to become the leading purveyor of the hardware and 
software that is going to revolutionize electricity markets in the 
coming decades. Projections are that global energy use in the form of 
electricity will rise to 50% by 2050, up from 20% today. The United 
States needs to invest more heavily in energy innovation and grid 
modernization in stay out front of that energy trendline. Our aged and 
failing grid puts us behind other major economies. U.S. companies have 
leading technologies in solar, micro-grids, and virtual power plants 
that allow firms to buy surplus energy capacity from rooftop solar 
panels, electric cars and battery storage systems and then sell it back 
to the grid when extra power is needed to avoid soaring prices or 
brownouts. There are automated software solutions that can program in 
power demand management practices to balance grid supply and demand 
more effectively, reducing waste and lowering costs to consumers. For 
example, Google is pioneering such technologies that would help 
residences modulate their electricity use tapping automation to better 
match availability of renewable energy output. Data assisted, digital 
technologies, properly regulated, also portend a greater ability to 
reduce energy use from daily transactions via smart appliances and 
equipment, optimized e-commerce deliveries, and improved supply chain 
management. We need to make the public expenditures in grid 
modernization, broadband, and technology promotion to make these 
technologies available at affordable cost to benefit all Americans and 
to create export products that will support American jobs.
    Another key to lowering energy costs for average Americans is to 
improve availability and reliability of mass transit systems. Roughly 
16% of all oil used in the United States goes to commuting by car. 
Traffic congestion is responsible for billions of gallons of wasted 
fuel (3.5 billion gallons in 2019). With a quarter of Americans still 
telecommuting, transit authorities need to reorganize routes and 
services to prioritize providing affordable transportation to essential 
workers who cannot do their jobs remotely. Collapse of public transit 
would have an extremely detrimental impact on families and on 
sustainability in cities, raising energy costs for workers.
    The Build Back Better Act includes $9.75 billion in grants to 
enhance access to affordable housing and improve mobility for lower-
income individuals and residents of disadvantaged communities. One very 
important element in the bill is support to transit authorities to 
expand areas of service and high frequency of service including rapid 
bus systems. Forward looking localities are experimenting with on-
demand oriented services facilitated by big data and user smart phones 
to increase ridership and to modernize reliability. Fare free and 
reduced fare services are another tool small cities have used to 
improve mobility accessibility. Grants to promote zero-emissions bus 
service in disadvantaged communities lower oil use and bring positive 
health impacts. Investment in public transit is an essential tool 
lowering energy costs through reduced fuel use, lower congestion, and 
greater urban accessibility.

Conclusion

    The energy transition is a global phenomenon now gaining momentum 
given the urgency of the climate crisis. To quote from my book, 
Energy's Digital Future, ``The genie is already out of the bottle on 
these [smart, clean energy] technologies. There is no benefit to 
allowing traditional energy incumbents to push the United States to go 
backward to save jobs. This is a formula to transfer those jobs to 
other countries that will be glad to fund or overtake U.S. intellectual 
property and move promising technologies forward, first in their own 
countries and later in the form of export products. These products 
would then go back to the United States as imported goods for American 
use made by workers in other countries . . . This time around, 
maintaining U.S. innovation culture will be just as important to 
maintaining America's power and influence globally as it has been in 
past eras of rapid technological change. The United States can decide 
not to lead on the technologies that will be needed to arrest climate 
change, but that means other countries will.''

    Ms. Castor. Thank you very much.
    And I want to thank all of our witnesses for your very 
insightful and informative testimony.
    I am going to start by recognizing Representative Casten 
first for 5 minutes. You are recognized.
    Mr. Casten. So thank you very much. And before the clock 
starts, my conflict has been shuffled, so I am happy to go 
first, but I don't want to impinge on you if you would like to 
go.
    Ms. Castor. Please go ahead and set the table.
    Mr. Casten. All right. Thank you.
    Ms. Ballentine, it is such a pleasure to see you and have 
all your expertise here. Learned so much from you through the 
years. And I mention that in part because I want to apologize 
because I am going to start at a second grade reading level 
because I don't want to lose any of my colleagues.
    If I am looking right now, I am just googling on my phone, 
Henry Hub spot price of natural gas, $3.76 per million BTU. The 
price of coal has surged. It is about $133 a ton. If I am doing 
the math right, that is almost $650 per million BTU. And I 
can't find a spot price for sunlight and wind.
    Am I correct in assuming that the price of sun and wind is 
zero per MMBtu?
    Ms. Ballentine. You are correct.
    Mr. Casten. Thank you. I was glad I didn't look at that 
wrong.
    The price of power is averaging about $49 a megawatt hour 
right now. So it sounds to me like if we built solar and wind 
panels, that we are using zero cost fuel and turning it into 
something worth $49, we would generate a return on investment. 
Do I have that about right?
    Ms. Ballentine. I am going to trust you on that.
    Mr. Casten. Well----
    Ms. Jaffe. 7 to 12 percent return.
    Mr. Casten [continuing]. Yeah. Thank you very much.
    Ms. Jaffe. You would earn a 7 to 12 percent return.
    Mr. Casten. I appreciate that. Okay. So, now, if I--I think 
the price of solar and wind right now is running a thousand 
dollars a kilowatt, maybe, installed, something in those 
neighborhoods. And the last time I looked, transmission and 
distribution, the full system--is a weird way to look at it, 
but I did a little piece of math--roughly $1,500 per delivered 
kilowatt, when you sort of run through the whole system. 
Ballpark-ish?
    I see some heads nodding. Okay.
    So almost basically more than half of the capital cost we 
have to amortize in the system is the transmission system. And 
I quite agree, I think, with all our witnesses, that permitting 
is a real problem, and it is a big chunk of that cost.
    We did have, in the American Jobs Plan that the President 
proposed, a Standard Office of Transmission. Unfortunately, we 
didn't get that in a bipartisan package, and we can't do policy 
under reconciliation. But I would hope on a bipartisan 
consensus, we can streamline that permitting process in some 
future bill.
    My first question, though, for you, Ms. Ballentine, is--we 
run about 7 percent losses in the system on the transmission 
and distribution grid. And so if more than half of the cost of 
the system, that is going to lower our cost of energy, because 
I think we just said 12 percent return--great--that exceeds 
GDP, let's do it. But if more than half of that cost to the 
system is in the transmission system, and we are losing 7 
percent of it on the way from the generator to the load, are we 
doing enough to make sure that we are first building generation 
closest to the load where we can avoid those losses, or are 
there other things we should be thinking about in that regard?
    Ms. Ballentine. So I would answer your question directly 
that we are not doing enough in two regards. You are right, we 
should be looking at building generation close to load. No 
question about it. However, as we know, that zero marginal 
cost--wind, solar, geothermal, hydropower, you know, there is a 
whole suite, not just wind and solar, of zero marginal cost 
renewable energy sources, they are not evenly distributed 
across the country.
    Mr. Casten. Sure.
    Ms. Ballentine. So we have to invest in advanced 
transmission as well. It is a critical piece of the pie. And 
today, in our connection cues are slowing down electrons 
getting from where projects can be built to where customers' 
loads are.
    Mr. Casten. Yeah.
    Ms. Ballentine. We need two to three times the transmission 
that we are going to have today, and every bit of investment 
that is in this Act is going to help that.
    Mr. Casten. Well, I quite agree. And thank you for raising 
the point. And I just want to make sure, and as my colleagues 
know, I am a big fan of the Federal Energy Regulatory 
Commission. I hope that they can streamline some of these 
permitting processes and make sure that we build the 
transmission where it should go in a streamlined fashion but 
also fix those downstream market issues.
    Ms. Jaffe, I want to start again--and I apologize, this is 
so simple--all else equal, if demand goes down, does price go 
up or down?
    Ms. Jaffe. If demand goes down, price goes down.
    Mr. Casten. Awesome. So if we reduce the demand for natural 
gas by building solar and wind, if we reduce demand for oil, we 
are going to lower the price of gas and oil, right? Do I have 
that about right?
    Ms. Jaffe. That is correct.
    Mr. Casten. Awesome. Mr. Graves will be so delighted. We 
are going to lower the price for consumers across the board. 
This is fantastic news.
    Now, if you could just help us out, Ms. Jaffe, because as I 
look at the last 7, 8 months, it looks like the demand for 
natural gas in the U.S., the demand for oil has not 
dramatically increased, and yet the price has gone up, and 
wellhead counts have fallen and exports have surged.
    Can you explain to us how it is that collapsing wellheads 
and surging exports might account for some of the increase in 
fossil fuel prices over the last 7 months?
    Ms. Jaffe. So I think the way you have described it is not 
really accurate. What actually happened is we had a huge 
unprecedented collapse in demand for both oil and natural gas 
in 2020 because of COVID. Many American companies stopped 
drilling, not having anything to do with Federal policy but 
simply because there was no demand because of COVID, and they 
were losing huge amounts of money. And then because of the 
success of the vaccine rollout, we had a sudden reopening of 
our economy. We had 6 percent growth, which is unprecedented. I 
think a lot of--I can't think of the last time, maybe the 
Fifties, when we had 6 percent growth in the United States.
    And that sudden--resurgence of sudden demand in the United 
States, more people driving their cars, meant that we, together 
with the recovery in the rest of the world, created a situation 
where the cutbacks that we saw in 2020 could not be immediately 
reversed. That gave OPEC power, and they used that power.
    Mr. Casten. Thank you. I am over time.
    I yield back. We could do this conversation for a long 
time, but greatly appreciate all your expertise.
    Ms. Castor. Next, Mr. Crenshaw, you are recognized for 5 
minutes.
    Mr. Crenshaw. Thank you, Madam Chairwoman. Thank you all 
for being here.
    I want to talk about what lowers costs for Americans and 
how to build that infrastructure that does so, because we keep 
hearing that the Build Back Better plan and the infrastructure 
plan that was passed will lower costs for Americans. This is 
repeated so often that it supposedly becomes self-evident, but 
we have to ask how. Because this argument is based on the 
notion that spending more Federal money actually makes these 
projects easier to execute.
    Somebody has to ask, is that actually true?
    Now, you could argue that better infrastructure certainly 
lowers costs, but the infrastructure has to be built. It 
actually has to happen. And as Americans are experiencing the 
highest cost of electricity in the last 20 years, I want to 
know how the Build Back Better agenda will actually reduce 
costs, not just by spending money, but by making projects 
easier to complete.
    So, Mr. Herrgott, we will start with you, please, and thank 
you for being here. During your time at the permitting office, 
what did you find was the single largest threat to getting a 
project completed?
    Mr. Herrgott. Well, I thank you for that question, Mr. 
Crenshaw. I think that there is a bit of a disconnect between 
the world that everyone wants to live in and the one that we 
actually live in. And the one that I live in, and in the Trump 
administration in particular, and although it was little known, 
we pushed some of the largest wind and solar projects in the 
history of our country, right? Some of the largest in the 
world, even though it got me in a bit of trouble.
    But the reality is that it takes 7 to 10 years. For a 
project that starts today, what do we do in that 10 year 
period, especially now that we have supply chain issues that we 
can't actually address. So at the same time that we are talking 
about demand and supply issues and a recognition of where that 
might increase prices, at some point, if you are going to put--
you can't throw good money after bad.
    At some point, we have to have a road map. Whether it is 
wind, solar, transmission, my entity is agnostic. But the 
bottom line is, if people are putting capital at risk on 
whatever energy source that comports with the stated national 
policy and the changing priorities of the whims of elections, 
we have to remove this.
    Because those 20 to 30 percent of costs are things that we 
have to solve and that are not going to solve themselves, and, 
apparently, nobody wants to talk about it in a real way. And 
those kinds of costs are the ones that are borne on utility 
bills. And those are the things that I haven't seen addressed 
by either side, either in the draft versions of the 
infrastructure bill or in the current Build Back Better plan.
    Creating a new office within an agency doesn't solve a 
problem. All right? Calling something shovel-ready without 
making it shovel-ready doesn't do anything for the American 
people.
    Mr. Crenshaw. Right. And that does get to a question I was 
going to ask about the claim that the infrastructure bill took 
care of these process issues. But you are saying it does not?
    Mr. Herrgott. Well, while I was in the administration, I 
drafted something called ``One Federal Decision,'' in a 
recognition that we needed to bring this disparate universe of 
decision makers and have one adult in the room that would 
actually drive the process, no shortcuts to the environmental 
reviews, but that there would actually be, not necessarily yes, 
but a decision given in a reasonable amount of time.
    One Federal Decision was codified in the most recently 
passed bill, but that is only for DOT projects.
    The Federal Permitting Council, which I ran, which is an 
extremely successful tool, and Christine Harada, who currently 
runs it, is exceptional at her job. The problem is it only has 
eight projects, six wind and one transmission. And it is only 
for projects that are $200 million and above.
    Those are very targeted, narrow tools. What do you do with 
the other 2,000 projects that are stated to meet the 2030 
climate goals that are sitting in a period of limbo, with no 
one giving them a hand? And those are on both--those are both 
our faults, frankly.
    Mr. Crenshaw. Last thing I want you to talk about is how 
our court system is weaponized and what we do could do to 
streamline the process which would avoid that.
    Mr. Herrgott. So thank you for that question. There is 
currently about 1,200 cases that are direct contributors to a 
renewable energy future that are currently in active stages of 
litigation. Whether that was the most recent recision of the 
Migratory Bird Treaty Act that makes it now a criminal penalty 
to have an incidental take of even one bird, has paralyzed 
offshore wind development and wind development in Nevada.
    And solar is the same issue, is being impacted by new 
changes to the sage grouse. Not even just the NEPA rules that 
everyone talks about, it is the 60 other permits that are 
required here that have now created an uncertain regulatory 
landscape because project developers have to get everything 
right.
    Those that don't want the project only have to get one 
thing wrong and there is a process foul and they can hold up a 
project for about 2 years, which oftentimes lead, about 30 
percent of the time, to project abandonment.
    And in that case, if we don't solve this issue, we are 
going to continue to have--we are going to continue litigation 
and have courts making science based decisions, adjudicating 
things that should be solved either by Congress or by the 
scientists in the agencies that make these risk-based 
decisions.
    Mr. Crenshaw. We could talk about that for a lot longer--
and we have, you and I--but I am out of time.
    So I yield back. Thank you.
    Ms. Castor. Thank you.
    Next, we will to go Representative Bonamici. You are 
recognized for 5 minutes.
    Ms. Bonamici. Thank you, Chair Castor and Ranking Member 
Graves. And, really, thank you to our witnesses for your 
testimony today.
    We know the financial and social cost of fossil fuels. 
Millions of deaths annually are attributed to burning fossil 
fuels, and without intervention, according to the Fourth 
National Climate Assessment report, warming could contribute to 
an 18 percent increase in ratepayer electric bills by 2040.
    But, fortunately, the Build Back Better Act's climate 
change provisions will reduce costs and reduce health problems.
    So I want to ask Dr. Varadarajan, your RMI modeling that 
you cited in your testimony reveals that the Build Back Better 
Act will help ratepayers see an annual savings of about $11 
billion per year by 2030 as utilities transition to clean 
energy.
    So how will these savings be distributed geographically 
across the country, and how will these savings help lower-
income households and support a just transition? And also, does 
that $11 billion in projected savings depend on enacting the 
Build Back Better Act?
    Dr. Varadarajan. Thank you so much for the question. To 
that last point, we certainly believe that the bulk of those 
savings do indeed depend on the enactment of the Build Back 
Better Act.
    The way in which these savings are distributed is impacted 
by the fact that, you know, we have spoken a little bit about 
how existing tax incentives or existing policies have been 
uneven in leading to clean energy deployment across the 
country, that there have been these barriers to moving forward.
    Well, some of the biggest barriers have been related to the 
way that these incentives have been structured. And in 
particular, these incentives have been structured to make it 
difficult for the customers of municipal utilities, for rural 
customers of rural cooperatives, as well as customers of 
regulated utilities, to benefit from clean energy in the way 
that we hoped they could.
    And one of the things the Build Back Better Act does is 
break down some of these barriers to allow these communities 
that have so far not been able to have access to clean energy. 
And when we look at where these communities are located, they 
are, in fact, very well co-located, they are communities that 
have some of the highest energy burdens in the country.
    So when we look at the utilities, for example, that might--
whose customers may see the greatest savings, some of these 
utilities are utilities in Wisconsin, in Florida, in Indiana, 
in Georgia, and in Virginia, utilities in Alabama. These are 
customers who haven't had the opportunity. And what the Build 
Back Better Act does, is it makes some strategic and important 
shifts in the way that those incentives are structured to bring 
those benefits to those who would benefit the most from them 
over time.
    Ms. Bonamici. Thank you so much. I appreciate that, and I 
appreciate your testimony.
    Ms. Ballentine, in your testimony, you cite an analysis of 
11 studies that confirms the feasibility of reaching 80 percent 
clean energy by 2030 at a minimal cost. To bridge the gap 
between 80 and 100 percent energy deployment, we need to invest 
in major innovative breakthroughs that will reduce emissions in 
hard-to-decarbonize sectors.
    So Build Back Better will help achieve this challenge by 
providing $2 billion for Department of Energy research and 
development and other investments in innovation.
    So for you and Ms. Jaffe, what are the most important 
innovations that we need to materialize for us to exceed the 80 
percent decarbonization? And how will the provisions in Build 
Back Better support clean energy innovation?
    Ms. Ballentine. So I will mention two things. One of the 
most important innovations is probably one of the most boring 
because it is not an innovation. We need to expand wholesale 
organized markets to every region of the country. We often 
forget about the importance of competition to accelerate clean 
energy, and we know that wholesale markets lower costs--
building on Dr. Varadarajan's comments, we know that wholesale 
markets lower costs, and expanding wholesale markets to every 
region of the country will make a big difference.
    Now, in terms of technology, when we think about how we are 
going to decarbonize the grid, how we are going to plan for 
threats in the future that look different than threats in the 
past, whether it is change in weather patterns or whether it is 
determined adversaries that can attack our grid from anywhere 
in the world through cyber, we need to be thinking about our 
grid in a very, very different way.
    We have customers who are also producers now--prosumers, we 
call them. We need a much more agile grid that can respond to 
customers producing their own power and using their own power. 
So we need software and hardware.
    Ms. Bonamici. I want to turn to Ms. Jaffe for the remaining 
20 seconds. Thank you.
    Ms. Jaffe. Innovations?
    Ms. Jaffe. I mean, there is so much potential. To mention 
the question of transmission, there is even an innovation where 
there is a new technology out on the market that would allow us 
to transmit electricity in major wires without the 7 percent 
loss. So a lot of innovation can take place.
    Ms. Bonamici. Great, thank you, and I am out of time.
    I yield back. Thank you, Madam Chair.
    Ms. Castor. Next, we will go to Representative Miller. You 
are recognized for 5 minutes.
    Mrs. Miller. Thank you, Chair Castor, Ranking Member 
Graves. And I appreciate you all for being here today with us.
    While many Americans across the country suffer from rising 
inflation, increasing gas costs, and higher prices on every 
product and service they rely on, the Democrats today want to 
twist the knife in the wound of the American middle class.
    In the build back broke agenda, one of the costliest 
provisions in the entire bill is a tax cut for millionaires and 
billionaires living in high tax states like California and New 
York. This tax break is offset by raising taxes on the middle 
class workers across our country, increasing the cost of their 
necessities and especially their energy.
    No matter how many times we have what seems to be the same 
hearing, discussing the same flawed logic proposed by my 
colleagues across the aisle, we are not fixing the real issues. 
It feels like the movie Groundhog's Day.
    Instead of focusing on viable solutions to lower emissions, 
many of my colleagues only seem to focus on pie-in-the-sky 
fantasies of a world run solely on specific renewable energies.
    We need an all-of-the-above strategy which focuses on key 
baseload energy and affordability, while still being 
responsible stewards of our environment.
    As winter begins to take hold across the country, the 
United States is not prepared to supply our nation with the 
energy it needs to keep the lights on, heaters warm, and water 
running.
    Liberal energy policies have stymied investments, forced 
banks to withhold credit to traditional energy companies, and 
created a never-ending regulatory nightmare, where it takes 
years for new lower-emitting projects to even get started.
    As I say often in the hearings in this committee, I am not 
opposed to renewable energy. I am committed to lowering 
emissions through smart, market-driven forces.
    While I appreciate my colleagues across the aisle 
acknowledging that lowering taxes promotes business growth and 
technology development, their insistence on only lowering taxes 
for their pet industries is a disturbingly--a new trend.
    The build back broke agenda will increase taxes on all 
companies in the United States, whereas the Republican Tax Cuts 
and Jobs Act stopped corporate inversions, the takeover of U.S. 
companies by foreign companies and competitors. The BBB will 
make U.S. companies less competitive, again sacrificing 
American intellectual property and U.S.-owned companies to 
overseas money.
    We must do more to move into this reduced-carbon future the 
right way. Carbon capture technologies will mitigate the 
impacts of traditional energy sources without giving up 
American energy independence, and brings along our energy-
producing communities, like mine in southern West Virginia.
    This committee and this President and his administration 
must commit to commonsense energy policies, not kneeling at the 
feet of radical progressive idealism.
    Mr. Herrgott, would you say that energy projects, whether 
they be pipelines, export terminals, or power plants, that are 
built today are more efficient and less carbon emitting than 
those built decades ago?
    Mr. Herrgott. Yes.
    Mrs. Miller. Can you explain to me, then, if these newer 
projects would emit less emissions, why is there not a push to 
streamline the permitting process to get these projects online 
faster?
    Mr. Herrgott. Well, thank you for that question. Up here 
you see a pipeline chart that is from the administration that 
talks about the 80 steps that need to take place. These are the 
same steps that also afflict transmission. There is no 
difference between the permitting regime that affects clean 
energy transmission and pipelines. And so the reality, however, 
is this still takes 7 years to do.
    Mrs. Miller. That is too long.
    Madam Chairwoman, I yield back my time.
    Ms. Castor. Thank you very much.
    Next, we will go to Representative Brownley. You are 
recognized for 5 minutes.
    Ms. Brownley. Thank you, Madam Chair. Thank you for putting 
this hearing together.
    Ms. Ballentine, I wanted to ask you, we talked a lot 
about--in your opening comments, you talked about how your 
organization certainly supports the Build Back Better plan, et 
cetera. Get that. We have talked about permitting barriers, 
fixing the permitting system. You have talked about the 
transmission infrastructure needs to increase by two to three 
times.
    So what I am interested in knowing is, from your 
membership, what are some of the other--you know, what are some 
of the other issues that Congress should be looking at?
    Ms. Ballentine. Thank you for that question. And I actually 
loved a couple of quotes from your colleague's previous 
remarks. Smart, market-driven forces, all of the above. CEBA 
couldn't agree more with those kinds of comments, so, thank 
you, ma'am, for bringing those to the table.
    The largest barriers to energy customers using their market 
demand to drive carbon-free, low pollution to no pollution, 
low-cost, reliable power, is lack of markets. Eighty percent of 
wind and solar has been deployed in wholesale organized markets 
today. And that is not because 80 percent of load is in 
organized markets. Only about two-thirds of load is in 
organized markets.
    Without competition, without choice, markets can't work, 
and customers can't help. So that is the number one barrier.
    Certainly, getting steel in the ground faster, getting 
projects done faster, is a critical component as well.
    But I would come back again and again to organized markets 
and transmission. We need those two things to make this market 
work.
    Ms. Brownley. Great. And just on a separate point, I have 
been a member who has worked on sustainable aviation fuel, and 
it has been a very interesting journey because the--you know, 
certainly the environmentalists are supportive and the airlines 
industry now, particularly United Airlines, who is really 
leading the way on SAF and are really very much committed to 
it.
    And so we have a blender's tax that hopefully will stay in 
the Build Back Better that will help to develop this market 
because that is what we need. I mean, in the aviation industry, 
that is--for the short term, medium term, this is really our 
only solution in terms of reducing carbon.
    So can you tell me what other things are needed to develop 
that market?
    Ms. Ballentine. So I haven't worked on aviation fuel in a 
number of years. I will say that there is a parallel 
organization that has actually been established at Rocky 
Mountain Institute, called the Sustainable Aviation Buyers 
Alliance, that does very similar work to the Clean Energy 
Buyers Association, and it brings together consumers of 
aviation services to drive demand for low- and zero-carbon 
aviation. So, again, putting these markets to work is a 
critical component.
    Additionally, what we found when I was back in the Air 
Force, was, even though we had certified our aircraft to fly on 
a full range of aviation fuels, our partners and peers around 
the world hadn't. And so when we have our colleagues on our 
bases, we have to have fuel that works in everybody's 
airplanes. So this has to be a global solution.
    Ms. Brownley. Thank you very much.
    And, Ms. Jaffe, I wanted to ask you, I, you know, was 
delighted in your testimony and your comments really about mass 
transit, the need for mass transit, and the ability of mass 
transit to ultimately reduce costs to consumers.
    Several of us sit on the Transportation Committee. We were 
pretty disappointed with the amount of money that ended up in 
Build Back Better towards mass transit. We wanted to--you know, 
we needed--we wanted to repair our roads but not build new 
roads. We wanted to put all of that money into transit systems.
    So based on what we have in Build Back Better, do you think 
it is going to make a dent? I am just curious to know, I mean, 
there is, you know, money in there for electrification of 
transit systems and certainly money in there for lower-income 
areas and some money for mass transit. But what do you think we 
really need to do?
    Ms. Jaffe. Well, you know, there is something in the bill 
that really caught my eye, which is helping transit agencies 
really upgrade evening service and services for the people who 
really need it. And one of the ways we do that is to modernize.
    So that means, you know, being able to use, you know, your 
smartphone apps and being able to connect to people in a way 
that your scheduling transit in a really effective and 
productive way. And that does require to be able to have the 
transit authorities have the funding to be able to do that, and 
I see some of that in the bill. I think that that is important. 
Maybe having that be a bigger part could be a very positive 
thing.
    And, also, just recognizing that when we build highways, 
you know--and I have lived many years in Texas, and you know, 
thanks to Tom DeLay, the traffic in Houston today is much, much 
worse than it has been. Every time they expand the lanes, you 
know, what we learn is it just takes up more and more vehicles, 
and so you get more and more congestion, which means more and 
more ways to fuel, which means more power to OPEC.
    So transit is really an important part of breaking that 
cycle. And, also, you get to the point in big cities where the 
traffic is so bad, you really don't have any choice but to take 
transit because otherwise you can't reliably go anywhere. And 
so it is really an important piece.
    Ms. Brownley. Thank you.
    I apologize, Madam Chair. I yield back.
    Ms. Castor. Thank you.
    Next, we will go to Representative Gonzalez. You are 
recognized for 5 minutes.
    Mr. Gonzalez. Thank you, Chairwoman Castor and Ranking 
Member Graves, for holding this hearing today and for our 
distinguished witnesses for joining us.
    I was told I could go if my questions were intelligent. I 
make no promises.
    There is one thing all large scale energy transitions have 
in common, and it is a great deal of inertia. Under most 
circumstances, energy transitions take decades to achieve. And 
the greater the reliance on one or two energy sources, the 
longer the transition tends to occur. That is a historical 
fact.
    While this simple truth may seem obvious, it does seem to 
go ignored. Overlooked are things such as the scale of the 
shift, any social and economic implications, the lower energy 
density, the replacement fuels, the inherent intermittency in 
renewable energy, and the uneven distribution of renewable 
energy sources.
    Every transition to date has introduced fuels with superior 
energy densities, but the one we are discussing today moves us 
in the other direction.
    Barring some extraordinary unprecedented innovation, I am 
skeptical that we are going to achieve these targets. I say all 
that while believing a world with less carbon-emitting sources 
is highly desirable, and the goal is a noble goal. But I do 
believe we have to recognize that getting there is going to 
require a suite of technologies.
    And if there is one disappointment I have with the hearing, 
frankly, it is I saw the title and I thought we were going to 
have a really deep dialogue about how do we actually fund the 
transition, what the right mix of private and public investment 
are, where those sources need to come into place. And then I 
read the testimonies and it seems like it is basically just a 
selling exercise for Build Back Better, which we all know is a 
partisan bill.
    That said, now to my question.
    Dr. Varadarajan, I would like to start with you because, in 
your testimony, you state cleaner energy sources such as wind 
and solar, complemented by battery, offer energy price 
stability and could create durable energy savings for American 
households.
    I think ``could'' is the operative word in that statement. 
I would like to dive into that with you, because what I am most 
nervous about when I look at Build Back Better and I see the 
mission of many of my Democratic colleagues that focus on wind 
and solar--wind, solar, and battery, is that we end up being 
like Germany, where a perfect case study for examining the ROI 
on subsidizing certain technologies.
    It committed more than $560 billion in wind and solar, yet 
just 42 percent of its electricity from nonhydro renewables. 
Large-scale energy storage remaining inefficient and expensive, 
efficiency rates have plummeted, and electricity prices have 
doubled.
    In the first half of 2020--the first half--Germany's 
electricity prices were 43 percent higher than the European 
average. In response, Germany is actively mining and producing 
a record amount of brown coal and increasing their consumption 
of Russian natural gas. The result, a 21 million ton increase 
in German emissions from electricity in the first 6 months of 
this year.
    So here is the question: Why should we believe the Build 
Back Better proposal won't make the same mistakes as Germany, 
raising household energy costs and increasing our reliance on 
foreign fossil based energy sources?
    Dr. Varadarajan. Well, I think the most important point 
here is that the United States isn't Germany. Germany has the 
solar resources----
    Mr. Gonzalez. But, sir, we are pursuing the same strategy.
    Dr. Varadarajan [continuing]. Germany has the same solar 
resources as Alaska. We have the Saudi Arabia of wind in the 
middle of this country, in the Great Plains states. We have 
resources just in Arizona that are sufficiently good solar 
resources. They could power about a hundred kilometer by a 
hundred kilometer square. Arizona alone can power the grid 
across the United States.
    We are blessed with some of the best solar and wind 
resources in the world, something that Germany and most 
European countries can't even come close to. It is because of 
our prosperity and our incredible--of the lands that we have 
that we are able to do something like this and do it in a way 
that lowers costs over time.
    And, thankfully, technology has changed. Germany made these 
investments when solar was 10 times as expensive as it was. We 
are now able to make these investments when, if I look out at 
the cost of clean energy right now in the United States, if I 
am trying to build some kind of new energy, you know, even 
independent of policy, forgetting about all of that, the lowest 
cost choice on a per-kilowatt-hour basis right now is to build 
solar and wind in most of the country. But not everywhere. I do 
think--and this is a really----
    Mr. Gonzalez. Reclaiming my time for a second----
    Dr. Varadarajan [continuing]. Sure.
    Mr. Gonzalez [continuing]. Because I have a question on 
the--so I agree we are not Germany obviously, right? We have 
areas of the country that have a ton of wind generation 
capacity and others that solar would be beneficial for. But you 
still have to transport it around the country, right? Where I 
live in northeast Ohio, that is not the case. We have a lot of 
cloudy days, and we don't have as much wind.
    So talk to me about how confident you are that we could do 
all this and not have the cost increases, knowing that you are 
going to have to transport it across. And I am seeing I am 
running out of time so maybe I will follow up in writing with 
that.
    Dr. Varadarajan. Be happy to----
    Mr. Gonzalez [continuing]. But I think it is something that 
we should all have on our minds.
    Thank you, and I yield back.
    Ms. Castor. Thank you.
    Next up is Representative Levin. You are recognized for 5 
minutes.
    Mr. Levin. Well, thank you, Chair Castor. I appreciate your 
holding today's hearing on such an important and timely topic.
    As my colleagues have noted, the Build Back Better Act 
represents the single largest investment in climate action in 
our nation's history, and I am really proud of the work of this 
Select Committee in making sure that we are able to pass such a 
transformational bill through the House.
    But today's hearing underscores what I think we already 
know, that the Build Back Better Act will create millions of 
good-paying jobs right here in the United States and reduce 
transportation and energy costs for American consumers, while 
making sure that we can stave off the worst effects of climate 
change. That is why it is so critical that the Senate seize 
this critical opportunity to act on climate and put our nation 
on the pathway to a zero carbon future.
    With that, I will turn to my questions, and I will start 
with Ms. Jaffe. You noted in your testimony how the oil and gas 
industry operates in a boom-bust cycle. As we know, the 
pandemic has put that cycle on overdrive as gas prices dropped 
dramatically last March before rising precipitously earlier 
this year as we began the vaccination campaign.
    However, these dramatic swings in prices are not 
unprecedented. Over the last 15 years, we have seen dramatic 
shifts in energy costs due to global financial downturns, 
regional conflicts, and severe weather events. And while my 
friends across the aisle may allege that policies intended to 
address climate change are the main cause for the current price 
increases, the facts simply say otherwise.
    Rather, it comes down to economics. As COVID-19 emerged 
last year, many operators cut supply dramatically and have not 
been able to meet the rapidly increasing demand since the 
beginning of the vaccination campaign. Compounding this was 
OPEC-plus' failure to reach an agreement on substantial 
production increases, and the fact that domestic supply remains 
relatively low because investors and banks remain worried about 
a full resumption of operations, given the losses that they 
have mounted since 2015.
    At the same time, oil and gas companies are reporting 
record profits, even as they choose not to increase production 
to meet the demand. This has even prompted President Biden to 
ask the Federal Trade Commission to investigate whether these 
oil and gas companies are illegally increasing prices even as 
the price of unfinished gasoline continues to drop.
    And while the U.S. Energy Information Administration 
predicts that we will see gas prices continue to decrease over 
the coming year, if we do not rapidly decarbonize our economy, 
I worry--I worry--that the fossil fuel sector's boom-bust cycle 
will become even more pronounced in the years ahead as both 
greenhouse gas emissions and the frequency of extreme weather 
events continues to rise. The result will be the continuation 
of this never ending roller coaster of supply swings and price 
changes as the American people bear the brunt of unpredictable 
fossil fuel costs and its associated negative environmental 
impacts.
    So, Ms. Jaffe, with that context, in your testimony, you 
noted that transportation electrification can help us reduce 
demand for fossil fuels and keep transportation costs in check 
during the energy transition, which can be helpful for low 
income families that often experience the greater energy 
burden.
    Can you please expand on that statement, and specifically, 
how can investments in electrifying our transportation sector, 
along with parallel investments in electrifying our grid, help 
protect American families, especially low-income households, 
from the volatility of the oil boom-bust cycle?
    Ms. Jaffe. Well, as has also already been stated, you know, 
we are going to have these resources. I mean, the great thing 
about renewable energy is it is inside your border, and it is 
close in. I mentioned but didn't seem to fully come across that 
electric vehicles are just technologically so much more 
efficient in how much they utilize energy and how they utilize 
energy. The fact that gasoline is somehow more energy-dense 
doesn't matter because the vehicle itself is so much more 
efficient.
    But then to add to the point, which I feel I always need to 
make, which is that I have lived in Houston, I have lived in 
northern California with the fires, I have lived in New 
England. And I can tell you, having been through multiple 
hurricanes, that you need electricity to distribute and use 
pump gasoline from a retail level.
    And so, you know, there is no advantage, in a way, to the 
gasoline from a logistical point of view when it comes to 
storms and resiliency and so forth because you need the same 
electricity. Indeed, if you had an electric car and you had a 
system for backup electricity, you were in a community solar 
project or you were somehow able to access electricity, you 
would at least be able to use your car because you would have 
that electricity for your car. And you wouldn't have to worry 
about whether some giant company was able to electrify all the 
retail stations near your house.
    So, you know, we are really moving to what I think will be 
a superior technology, and that is going to benefit everybody.
    Mr. Levin. Well, thank you, Ms. Jaffe. I am over time, but 
I wanted to let you roll. I appreciate very much your reply and 
all our witnesses and my colleagues.
    And I will yield back.
    Ms. Castor. Next up is Ranking Member Graves. You are 
recognized for 5 minutes.
    Mr. Graves. Thank you very much, Madam Chair.
    Mr. Casten, I am hoping to get to second grade level next 
year. I am trying hard.
    So, Ms. Ballentine, I want to make sure I understand 
something, so let me ask you a question. If you are a retailer 
and I am your supplier, and I increase my cost to you, what are 
you going to do with that increased cost you are paying for the 
product?
    Ms. Ballentine. Are you talking energy in particular?
    Mr. Graves. Sure, whatever. Energy is fine, yes, that is 
fine.
    Ms. Ballentine. You pass it on to the customer.
    Mr. Graves. You pass is on to the customer. You pass it on 
to the customer.
    So if the Build Back Better Act imposes a tax of $10,000 a 
mile a year for pipelines, that is an increased cost. And so 
companies are baking that in now. If you are going to increase 
royalty rates, that is an increased cost. Companies are going 
to bake it in, and they are going to pass it on now. So this 
whole thing, trying to disassociate these actions with 
increased energy costs are completely flawed.
    Mr. Herrgott, supply and demand question because I am not 
a--I am still apparently at a lower level----
    Ms. Jaffe [continuing]. Representative, can I weigh in 
here? [Inaudible.]
    Mr. Graves. If you--if you--hang on, Ms. Jaffe. Ms. Jaffe, 
excuse me. I am trying to ask a question.
    So, Mr. Herrgott [continuing]. If you decrease supply by 
pausing through an executive order exploration and production 
activity, you are decreasing supply but you don't have a 
corresponding decrease in demand, what happens?
    Mr. Herrgott. It is going to go up, especially because you 
don't have a----
    Mr. Graves. Prices are going to go up. That is right. And 
that is exactly--the executive order--I am pausing--that is 
exactly what is going on.
    Another question for you, Mr. Herrgott. If something is 
free, as Mr. Casten noted, do you need to put huge subsidies on 
it in the form of ITC and PTC, Investment Tax Credit and 
Production Tax Credit?
    Mr. Herrgott [continuing]. I am a permitting nerd, not a 
politician, all right? But I will tell you, you are correct.
    Mr. Graves. All right. Thanks. I am just trying to 
understand all this stuff.
    So, Mr. Herrgott, the Department of Energy under this 
administration, or the Biden administration, ran several models 
looking at the energy future. Every single--and I hope, if 
anybody listens to anything I say, listen to this.
    The Biden Department of Energy just released a report 
looking at several energy future models. Every single model 
shows an increase in both domestic and global demand for 
natural gas. Every single model.
    As we have talked about in this committee over and over 
again, the United States natural gas delivered to Europe and 
delivered to Asia is anywhere from 41 to 47 percent lower 
emissions profile. Why in the world would we disincentivize 
domestic energy production, domestic jobs, domestic economic 
activity, and yet incentivize Vladimir Putin to do it? I don't 
understand it for the life of me. I just don't.
    Mr. Herrgott, so you are a permitting expert, and you have 
spent a lot of time working on this. Let me ask you a quick 
question.
    If I am doing an environmental project, whether it is a 
solar array, a wind farm, I am trying to do a wetlands 
restoration project in the coast of Louisiana, is there a 
different environmental process--permitting process that if I 
am trying to go build a road through wetlands?
    Is your mic on? Is your mic on?
    Mr. Herrgott. No. It is the same.
    Mr. Graves. Okay. So I hope this is something that we can 
work on, Madam Chair. We have got to tailor the regulatory, the 
environmental process, to the type of project or perceived 
threat that is out there.
    Mr. Herrgott, if we are talking about financing these 
projects, what type of threat does the permitting uncertainty 
pose to the financing?
    Mr. Herrgott. The debt and equity cost and the default 
risk, directly associated with the development risk, associated 
with our failure to solve this, can, in many cases, drive 
project financing costs up 10 to 25 percent. That is real, and 
that is on wind and solar projects as we speak, not on natural 
gas projects because they are highly capital intensive.
    There is a direct relationship between failing to address 
this and the 20 to 30 percent cost that is associated and 
passed on to ratepayers.
    Mr. Graves. So back in April, as an example of these 
delays, back in April, the administration, this administration, 
identified 22 transmission projects that were ready to go. What 
do you think--I mean, just knowing the permitting process, how 
shovel ready are these projects?
    Mr. Herrgott. Well, one of them completed because we worked 
on it. The other 21 projects are still 6 years away. So--and 
that is orphaning any new solar and wind development. We have 
to have the holistic comprehensive strategy. If we are going to 
build the wind and solar, we also have to be committed to doing 
the things we need to build the transmission, and that is just 
currently not happening.
    Mr. Graves. Thank you.
    Ms. Jaffe, I actually did have a question for you, but I am 
running out of time, so I am going to submit it for the record. 
But I do want to ask you about supply and demand of critical 
minerals and how much sense it makes for us to become more 
dependent upon critical minerals for China. So I will submit 
that for the record.
    I yield back.
    Ms. Castor. Next up we will go to Representative Escobar. 
You are recognized for 5 minutes.
    Ms. Escobar. Thank you so much, Madam Chair. And many 
thanks to our panelists for sharing their expertise with us 
today. Very grateful to you all.
    You know, one of the things that is really concerning to me 
is the desire that I have heard from some to sort of pump the 
brakes on a transition that many of us now see as urgent, long 
overdue, long past its time, and, in fact, in some cases, far 
too late. So we have to obviously act with the utmost urgency, 
and we have got to ensure--from my perspective, we have also 
got to ensure that some of the most vulnerable communities are 
able to capitalize on what is an almost guaranteed outcome.
    I mean, we are going to pass Build Back Better. It is going 
to happen. And so I think the best use of our time and 
conversations is to figure out how to best capitalize on that. 
And my priority is ensuring that economically disadvantaged 
communities like mine, that have long been neglected by state 
governments and others, can best capitalize.
    How can some of the poorest families, how can some of the 
poorest communities, really ensure that they are ready for the 
benefits of Build Back Better? And that includes local 
governments, local nonprofits, consumers, the private sector.
    And so I would love to hear from each one of you how you 
think vulnerable communities like the one I represent in El 
Paso, Texas, on the U.S.-Mexico border, can best capitalize and 
prepare so that we can do the best possible by everyone with 
Build Back Better.
    Ms. Ballentine.
    Ms. Ballentine. Thank you. This is a really important and 
beautiful question. And I would like to also recognize that for 
the members of the Clean Energy Buyers Association, energy is 
often the second largest controllable operating expense we have 
for the vast majority of our companies. And our companies 
employ Americans from every community.
    So when we expand organized markets, it lowers costs. When 
we expand transmission, it lowers costs. And those costs are 
passed through. Whether you are a retailer or whether you are a 
pharmaceutical company, they are passed through. Those lower 
costs are passed through.
    And importantly, what we are seeing in communities is these 
large corporations who have sophisticated energy teams, who are 
thinking about low-cost, low-pollution, no-pollution clean 
energy of all types, not just wind and solar but all types of 
renewables; and how can they work with marginalized communities 
to say, what if we oversized our project so that we could be 
the guarantee and get the financing for the project but provide 
low marginal cost, zero-carbon power to local communities, 
marginalized communities? How can we do more than have our 
projects just build jobs? How can we build wealth in 
communities through our projects?
    So I think that is one of the most exciting areas of 
development, because marginalized communities and companies 
share a desire for lowering energy costs.
    Ms. Escobar. Thank you so much.
    Ms. Jaffe.
    Ms. Jaffe. Well, I think there are so many things in the 
bill that would be of assistance. And we have--we have things 
we need to do because, in the end, globally, those things are 
going to take place.
    China is going to build these products, Europe is going to 
build these products, and do we want to be importing all of 
those products from somewhere else or do we want to be having 
the United States economy be competitive?
    And that goes across an entire range of technologies. I 
mean, we were leading in digital. We have got companies like 
Google talking about making home thermostats that would allow 
you to better utilize and smooth out purchases of renewable 
energy automatically.
    There is just so much innovation that is possible to come 
to market, and it needs the support of the infrastructure that 
it takes to get that going.
    Ms. Escobar. Dr. Varadarajan.
    Dr. Varadarajan. Well, thank you for the question. I think 
it is a critical one, because the Build Back Better Act has a 
number of provisions that make it more financially attractive 
both for individuals in low-income communities and for 
investors to make the investments that they would deploy in 
clean energy resources in vulnerable communities.
    Look, this is going to require the communities to know 
about, and get access to, and have the processes in place to be 
able to utilize them. And this is going to take a whole-of-
government effort. It is going to take civil society, it is 
going to take local governments, city governments, and state 
governments to engage to make this happen.
    Ms. Escobar. Mr. Herrgott, I will submit in writing because 
I would love your opinion as well.
    Mr. Herrgott. I concur with that statement. Wholeheartedly.
    Ms. Escobar. Okay. Thank you so much.
    Ms. Castor. Great. Next, we will go to Representative 
Palmer. You are recognized for 5 minutes.
    Mr. Palmer. Madam Chairman--Mr. Herrgott, the topic of this 
hearing is ``Cleaner, Cheaper Energy: Climate Investments to 
Help Families and Help Businesses.'' Does reducing reliability 
help families and help businesses?
    Mr. Herrgott. No, it doesn't.
    Mr. Palmer. Have we experienced in any other part of the 
country a lack of reliability, particularly with turbines?
    Mr. Herrgott. Yes. Baseload renewable is still about 6 to 7 
years away with the kind of storage and technology, especially 
with the supply chain issues and the fact that projects that 
will take 4 or 5 years from now for the lithium, for EVs, 
beryllium, molybdenum, and several others haven't even gotten 
off the ground. So we no longer have the appropriate domestic 
supply chain for critical minerals.
    Mr. Palmer. And from 2011 to 2019, we spent over $2 
trillion on renewables, and they represent about 3 percent of 
the energy production worldwide, and about 4.5 percent here in 
the United States.
    There was a 2021 report that came out on reliability risk 
priorities. Do you have any idea what they ranked as the top 
risk to the reliability of our power grid?
    Mr. Herrgott. It is probably one of the few studies I 
haven't read. I would love to learn.
    Mr. Palmer. Changing resource mix. Cybersecurity 
vulnerabilities were number two, but changing resource mix.
    So what we are doing right now, as we continue this head-
long push toward adoption of renewables, which I think anyone 
who has much engineering background understands that we are not 
going to get there in the timeframe they are talking about.
    We are putting the reliability of our energy infrastructure 
at risk. What we just saw in the North Sea when the winds stop 
blowing, you had that massive spike in natural gas, 
particularly hit the U.K. hard. It occurred about the same time 
that Russia decided to reduce their output, supposedly to build 
their reserves for the winter--which I think was more about 
sending a message about Nord Stream 2--really did harm to 
consumers there.
    Let me ask you this. Does higher prices help families and 
businesses, higher--let me ask it in another way.
    Does it have the potential to harm families when they can't 
adequately heat their homes?
    Mr. Herrgott. Yes.
    Mr. Palmer. And we have seen this in the U.K. with the 
excess winter deaths. We have seen it here in the United 
States.
    Are you aware, Mr. Herrgott, that excess winter deaths kill 
more residents in Vermont than car crashes?
    Mr. Herrgott. I was not aware.
    Mr. Palmer. It is their own report.
    Mr. Herrgott. Yeah.
    Mr. Palmer. In the winter of 2017-2018 in the U.K., they 
estimate that there were 17,000 excess winter deaths. Is that 
acceptable collateral damage for a head long push into 
renewables?
    Mr. Herrgott. No.
    Mr. Palmer. I didn't think you would agree with that 
either.
    I also want to point out another thing about this. For some 
reason, we just can't get our arms around the fact that we have 
got next-gen nuclear that could really pave the way for clean 
energy for the future. We now have the technology to recycle 
spent fuel rods. And ``spent'' is kind of a misrepresentation 
because they retain about 90 percent of their energy.
    Here is the other thing, though. The lifecycle of next-gen, 
next-generation nuclear, is estimated to be 100 years. Can you 
imagine where we will be technologically a hundred years from 
now if we convert to that?
    Natural gas, which I think is still a major part of our 
reducing emissions and providing energy to low-income people 
and the billion people around the world who don't have access 
to adequate energy, their life--a lifecycle for a natural gas 
facility is 60 to 65 years. Do you know what the lifecycle is 
for solar panels?
    Mr. Herrgott. They have to be changed every 4 or 5 years 
and substations accordingly.
    Mr. Palmer. And wind turbines is 20 to 30 years. But after 
about 10 years, they begin to dramatically lose generating 
power. And you can't recycle the solar panels. You can't--
apparently, right now you can't recycle the wind turbine 
blades. We are having to bury them.
    I just want to point out, when you raise prices, 
particularly on low-income people, and for all the rhetoric 
that the Democrats want to have about Build Back Better, it is 
raising prices.
    I keep bringing up to my Democrat colleagues the Pembroke 
Township in Illinois, about 2,100 people, 85 percent Black. The 
average income--the median income is about $16,000 a year. They 
don't have access to natural gas. They are heating their homes 
with propane and with wood. And the Reverend Jesse Jackson and 
Al Sharpton has been trying to get a natural gas pipeline to 
that city, and they have--they haven't been successful so far.
    Let me just add this. It might be actually good news for 
them because natural gas prices are almost double.
    Ms. Castor. I am sorry. You have run out of time. Because 
we have a vote going on, I am sorry, Mr. Palmer, we are having 
to finish up.
    And I will recognize myself for 5 minutes for questions to 
wrap up here today.
    You know, everything that we did in crafting the Build Back 
Better Act was targeted to lowering costs for American families 
and businesses across the board. That is why, when you examine 
Build Back Better, you will see policies relating to energy 
efficiency, more energy-efficient appliances for consumers, 
more energy-efficient buildings, electrifying buildings.
    Electric vehicles now, you see the electric vehicles and 
cars and trucks on the road right now, bypassing the gas 
stations. They are going to be--but we want to make sure they 
are available for consumers all across the country.
    That is why we were totally focused on making sure that 
consumers really felt it in their pocketbooks, and businesses 
could save money and pass those cost savings along.
    But it is not just the cost of electricity. It is also the 
cost of climate. Build Back Better also takes us down a road of 
reducing greenhouse gas pollution that we know impacts our 
health--so let's build in those costs considerations--the cost 
considerations of higher property insurance, because of climate 
fueled disasters, higher flood insurance costs. All of these 
costs put together are central to the strategy of President 
Biden and all of us in building back better and lowering costs.
    So, Dr. Varadarajan, can you speak to us here, help close 
us out today on how Build Back Better investments in both clean 
energy and electrification--we haven't talked a lot about 
buildings here today--how will that work to help families and 
businesses lower costs and give them a little relief in their 
pocketbook?
    Dr. Varadarajan. Thank you so much again. I appreciate the 
opportunity to speak to this.
    At the end of the day, as we look at the Build Back Better 
Act, to the provisions that it contains, what it offers, what 
the majority of the climate action in this bill offers is the 
opportunity, the power, and the freedom for individuals and 
utilities and businesses across the country to make the choice, 
if it is economically sensible to them, to choose lower, 
cheaper, and cleaner energy.
    This is true when it comes to utilities making choices 
about the resources they want to put on their system. At the 
end of the day, every single utility in this country is 
responsible for providing affordable power to its consumers 
that is reliable.
    If a utility chooses to use the powers within this Act that 
give it--make it more attractive for them to build great 
resources like storage, like transmission, to ensure greater 
reliability for their customers, they can do that. If their 
regulators agree or if their communities agree, with the input 
from these key stakeholders, they can make choices they didn't 
have before, to deliver cheaper and more reliable power to 
their customers.
    But it is not just that--and this is a really important 
point--every individual in the country, every household in the 
country, businesses in the country, can also, because of 
additional provisions in this Act that make it easier for 
individuals to make efficiency improvements, to choose 
electrified appliances, to make upgrades to their buildings. 
They can make those choices themselves and take it upon 
themselves to make themselves more energy-independent. And they 
can do this in their homes by building clean energy resources 
like solar, by reducing--by switching to induction ovens that, 
you know, avoid significant harm from NOx and SOx pollution 
that cause asthma to their children.
    These are the types of choices that are available as a 
result of this Act that can ultimately make it possible for 
each individual company and cities and States across the 
country to make the choice to move to cleaner energy in a way 
that reduces their risks and reduces their cost.
    This is the power of the Act. And I think, you know, again, 
when we look at the possibility for cost reductions across the 
economy, the Build Back Better Act is going to more than pay 
for itself ultimately in the reduced costs of climate harm and 
in the reduced cost--health costs associated with reduced 
pollution within the homes and, more broadly, across our 
economy, and in reduced costs to consumers.
    And so I think it is an enormous opportunity. I am looking 
forward to action by all of Congress and by the President to 
put this into action moving forward.
    Ms. Castor. Well, thank you very much. Yes, we are looking 
forward to action. We passed it here in the House. It is 
pending in the Senate. Build Back Better means cleaner, less 
expensive energy for consumers and businesses across America.
    So I would like to thank our witnesses for their testimony 
today.
    And, without objection, I will enter into the record, 
first, a December 2021 letter from the Solar Energy Industries 
Association, outlining the steps the solar industry has taken 
to ensure forced labor is not used in the supply chain, and 
their recommendations for growing U.S. solar manufacturing; 
two, a report released today by Rewiring America, titled, 
Energy Bill Security for American Households Through 
Electrification, which shows how American households with 
efficient heat pumps and electric vehicles will see lower 
heating and driving costs this winter compared to homes with 
fossil heating and traditional vehicles; three, an October 2021 
analysis by Resources for the Future, that shows clean energy 
tax credits included in the Build Back Better Act can achieve 
69 percent clean power generation by 2030, while lowering costs 
for ratepayers by 3 percent; and four, a December 2021 analysis 
by Resources for the Future and the Clean Energy Buyers 
Institute, that shows building a transmission macro grid would 
add an estimated $5 to $10 billion in annual net benefits and 
would reduce national average retail electric rates by 
approximately 1 to 2 percent.
    [The information follows:]

                       Submissions for the Record

                      Representative Kathy Castor

                 Select Committee on the Climate Crisis

                            December 9, 2021

December 8, 2021

Chair Kathy Castor                   Ranking Member Garrett Graves
U.S. House of Representatives        U.S. House of Representatives 
    Select                               Select
Committee on the Climate Crisis      Committee on the Climate Crisis
H2-359 Ford Building                 H2-359 Ford Building
Washington, DC 20515                 Washington, DC 20515

Dear Congresswoman Castor and Congressman Graves:

    I appreciate the opportunity to share with you the steps the Solar 
Energy Industries Association (SEIA) and our members have taken to 
prevent the use of forced labor in the solar supply chain and reduce 
our reliance on solar imports by growing U.S. solar manufacturing.
    SEIA, on behalf of the more than 231,000 American workers employed 
by the domestic solar industry, is committed to ensuring that no 
products made from forced labor should enter the United States and we 
support efforts to address forced labor in China's Xinjiang Uyghur 
Autonomous Region (Xinjiang).
    SEIA has been calling on the industry to relocate supply chains \1\ 
from Xinjiang since October 2020. On December 8, 2020, International 
Human Rights Day, SEIA announced the Solar Industry Forced Labor 
Prevention Pledge \2\ and restated our recommendation to industry 
participants to move their supply chains. Since then, 300 companies 
representing the majority of solar panels sold in the U.S. market have 
signed the pledge.
---------------------------------------------------------------------------
    \1\ https://www.bnnbloomberg.ca/u-s-solar-group-calls-for-pulling-
out-of-xinjiang-over-abuses-1.1511887
    \2\ https://www.seia.org/sites/default/files/
Solar%20Industry%20Forced%20Labor%20Prevention%20Pledge%20Signatories.pd
f
---------------------------------------------------------------------------
    In addition, SEIA has updated its Solar Industry Commitment to 
Environmental & Social Responsibility \3\ to ensure the industry is 
adequately and proactively addressing evolving environmental and social 
responsibility issues. SEIA also partnered with leading experts in 
solar supply chain transparency to establish a comprehensive 
Traceability Protocol.\4\ The protocol will serve as an important 
compliance tool and give solar companies the ability to accurately 
determine the source of key components in a solar panel.
---------------------------------------------------------------------------
    \3\ https://www.seia.org/research-resources/solar-industry-
commitment-environmental-
social-responsibility

    \4\ https://www.seia.org/sites/default/files/2021-04/SEIA-Supply-
Chain-Traceability-Protocol-v1.0-April2021.pdf
---------------------------------------------------------------------------
    Leading solar panel suppliers are already taking steps to ensure 
the traceability of key inputs. Among those steps is to ensure that 
suppliers are relocated in regions where companies can conduct 
independent third-party audits.
    As this issue highlights, there are significant policy benefits 
associated with increasing domestic supply of solar products. Though 
some critical solar components are already made in the United States, 
bolstering our domestic manufacturing capacity throughout the entirety 
of the solar value chain would help promote transparency, reduce the 
need to rely on imported products and create good-paying jobs here at 
home.
    Indeed, SEIA is leading the way to an American solar manufacturing 
future. In May 2019, SEIA modified its bylaws to create a new 
Manufacturing Division and Board of Directors seat dedicated to 
representing domestic solar manufacturing interests. Later that year, 
SEIA hosted a Solar+Manufacturing Summit \5\ attended by nearly 100 
solar leaders from across the nation. This summit served as the basis 
for SEIA's September 2020 Manufacturing White Paper,\6\ which set a 
goal of 100GW of domestic solar and storage manufacturing capacity by 
2030.
---------------------------------------------------------------------------
    \5\ https://www.seia.org/events/solar-manufacturing-summit
    \6\ https://www.seia.org/sites/default/files/2020-09/SEIA-American-
Manufacturing-Vision-2020_FINAL.pdf
---------------------------------------------------------------------------
    As first articulated in SEIA's Manufacturing White Paper, our 
country needs a new approach to growing U.S. solar manufacturing. As we 
have said for many years, and as has been validated time and again, 
tariffs are ineffective at growing solar manufacturing capacity. What 
our industry requires is a suite of long-term federal investments, 
including:

      1. Demand drivers such as a long-term extension of the 
solar investment tax credit with direct pay and related bonus credits 
for meeting certain domestic content thresholds;
      2. Ongoing domestic production support, i.e., the Solar 
Energy Manufacturing for America Act (SEMAA), as our manufacturers and 
their suppliers scale operations in a hyper-competitive global 
environment; and
      3. Incentives for private sector investments in 
manufacturing capacity, i.e., a refundable 48C manufacturing tax 
credit.

    Importantly, all three categories of federal investments are 
required if we hope to truly compete as a nation in solar 
manufacturing. We need to recognize that the United States is competing 
for private sector investments against not only China but other 
countries as well. Importantly, as we grow our domestic solar 
manufacturing base here at home, we must also recognize that it will 
take time to scale operations and reduce our reliance on imports.
    SEIA is committed to preventing forced labor in the solar supply 
chain, and we would appreciate the opportunity to lend our expertise 
and work constructively with both Congress and the Administration to 
uphold U.S. law and prevent the importation of products made with 
forced labor.
    We are eager to meet with you and members of your respective staffs 
to discuss our efforts to stamp out forced labor. That work will ensure 
a vibrant and safe global supply chain, which will be critical as we 
scale up a domestic manufacturing base. We also would like to discuss 
specific policies to support strong U.S. manufacturing and the massive 
demand for solar in the U.S. that will be needed to expand domestic 
supply chains, create jobs and fuel economic growth.

    Sincerely,
    Abigail Ross Hopper
    President & CEO

                                  +++

ATTACHMENT: Caslisch, S., Grace, R., Daly, G., and Matusiak, A. 
        Rewiring America (2021 December), Energy Bill Security for 
        American Households through Electrification.

This report is retained in the committee files and available at:
        https://www.rewiringamerica.org/policy/energy-bill-security

ATTACHMENT: Roy, N., Burtraw, D., and Rennert, K. Resources for the 
        Future (2021 October), Cost Analysis and Emissions Projections 
        under Power Sector Proposals in Reconciliation.

The brief is retained in the committee files and available at:
        https://www.rff.org/publications/issue-briefs/cost-analysis-
        and-emissions-projections-under-power-sector-proposals-in-
        reconciliation/

ATTACHMENT: Shawhan, D., Witkin, S., et al. Resources for the Future 
        and the REBA Institute (2021 December), Evaluation of Power 
        Sector Emissions Reduction Pathways.

The brief is retained in the committee files and available at:
        https://media.rff.org/documents/Evaluation-of-Power-Sector-
        Emissions-
        Reduction-Pathways-Summary-for-Policymakers.pdf

    Ms. Castor. Without objection, all members will have 10 
business days within which to submit additional written 
questions. For the witnesses, I ask our witnesses to respond 
promptly. And thank you again for joining us at this hearing.
    The meeting is adjourned.
    [Whereupon, at 3:11 p.m., the committee was adjourned.]
    [The information follows:]

                 United States House of Representatives

                 Select Committee on the Climate Crisis

                      Hearing on December 9, 2021

                       ``Cleaner, Cheaper Energy:

         Climate Investments to Help Families and Businesses''

                        Questions for the Record

                    The Hon. Miranda A.A. Ballentine

                        Chief Executive Officer

                    Clean Energy Buyers Association

                     Clean Energy Buyers Institute

                       the honorable kathy castor

  1.  Ms. Ballentine, how would lowering the cost of clean energy help 
companies achieve their climate and clean energy goals?                  


    The Clean Energy Buyers Association's (CEBA) research arm, the 
Clean Energy Buyers Institute (CEBI), in partnership with the Resources 
for the Future (RFF) and the National Renewable Energy Laboratory 
(NREL) conducted a study of the most effective ways to decarbonize the 
electricity system.\i\ The study found that expanding wholesale markets 
and supporting significant transmission expansion are one of the most 
effective and cost-efficient approaches. Organized wholesale markets 
expanded to the West and SE could save consumers additional $11 billion 
per year and a national transmission macrogrid could reduce retail 
bills a further roughly 2%.\ii\ If pursued in combination with a 
national Clean Energy Standard, the study also found that these 
measures could result in close to $100 billion in net annual benefits 
by 2035. A copy of the report is included with this response.
---------------------------------------------------------------------------
    \1\ Clean Energy Buyers Institute (formerly Renewable Energy Buyers 
Institute) and Resources for the Future. July 2021. Evaluation of Power 
Sector Emissions Reduction Pathways. https://media.rff.org/documents/
Evaluation-of-Power-Sector-Emissions-Reduction-Pathways-Summary-for-
Policymakers.pdf
    \2\ Clean Energy Buyers Institute (formerly Renewable Energy Buyers 
Institute) and Resources for the Future. July 2021. Evaluation of Power 
Sector Emissions Reduction Pathways. https://media.rff.org/documents/
Evaluation-of-Power-Sector-Emissions-Reduction-Pathways-Summary-for-
Policymakers.pdf
---------------------------------------------------------------------------
    Companies are committed to addressing the climate crisis by setting 
clean energy goals and significantly contributing to clean energy 
deployment, as evidenced by the 43 GW of clean energy transacted to 
date. Continuing to drive down the cost of clean energy, along with 
increasing access to clean energy, will accelerate their ability to 
decarbonize their operations and their supply chains. Companies lack 
sufficient market options to directly control their clean energy 
procurement options, and where markets do exist, capacity constraints, 
due to lack of adequate infrastructure, causes congestion, which 
increases prices, and often limits their ability to procure the clean 
energy they want. Hence, why expanding wholesale markets and 
transmission is critical to enabling customers to help drive the clean 
energy transition.

  2.  Ms. Ballentine, you mentioned companies passing on energy costs 
  and savings to customers. Can you tell us other ways companies have 
                dealt with volatile fossil fuel prices?

    For many institutions, energy is one of the top controllable 
operating expenses, often second only to labor costs. Fossil fuel price 
volatility and future price uncertainty can wreak havoc on even the 
best business plan.
    Most businesses do everything they can *not* to pass on volatile 
commodity costs to customers, and they first seek ways to mitigate the 
volatility.
    One way to mitigate rising electricity prices is for companies to 
enter into long term power purchase agreements (PPA) for zero-marginal 
cost renewable energy, and they are doing exactly that. Corporate PPA's 
announced in 2020--over 10.2GW--were equivalent to over 40% of all new 
zero-carbon capacity added that year.
    Likewise, before passing through costs to customers, most companies 
would see other paths to lower costs. For example, when electricity 
prices increase, the ROI on energy efficiency projects improve.

   3.  Ms. Ballentine, can you speak further to the question of what 
kinds of technologies could help achieve a zero-carbon energy system?    
                                          

    A combination of zero-carbon generation technologies, plus enhanced 
transmission, plus storage for intermittent zero-carbon generation, 
plus potentially carbon capture on emitting generation sources, plus 
smarter demand response, plus energy efficiency are likely to be 
required to fully decarbonize the grid.
    CEBA supports the Build Back Better Act's investment of $30 billion 
to the Department of Energy for clean technology development and 
deployment.
    There is fascinating research being conducted at the Department of 
Energy's national labs on electric power generation from green 
hydrogen, next generation and smaller scale nuclear, tidal power, and 
biomass gasification. If these innovative technologies meet the 
criteria of a zero-carbon energy system, CEBA welcomes the addition of 
a more diverse clean energy mix. CEBA is technology neutral and defers 
to our members to determine their application and use as several 
factors will warrant one region's or one company's use of certain 
technologies versus another region or company.
    As more attention and investments are directed toward modernizing 
the electric grid, however, we can anticipate further technological 
advances that will improve the transmission efficiency and operations. 
Dr. Uday Varadarajan mentioned some of the advancements in technology 
that have the potential to reduce transmission power loss, improve 
efficiencies, and lower operating costs during his testimony on 
December 9, 2021, in front of the House Select Committee on the Climate 
Crisis.

   4.  Ms. Ballentine, in your testimony, you spoke about some of the 
     transmission investments in the Build Back Better Act and the 
Infrastructure Investment and Jobs Act. How would moving towards a more 
  nationally-connected grid, a MacroGrid, help your companies achieve 
                 their clean energy and climate goals?

    A macrogrid could help CEBA's member companies achieve their clean 
energy and climate goals as it would provide a backbone electrical 
system with significant capacity options to procure clean energy. More 
significantly, the presence of a macrogrid, while important to my 
membership, is a hardening of the electrical grid that would provide 
substantial reliability benefits especially in extreme weather events, 
which are regular occurrences. The macrogrid provides resiliency to the 
system by utilizing neighboring electric supply options and mitigating 
system outages.
    In addition, modeling by Resources for the Future shows that the 
clean energy tax credits in the House-passed Build Back Better Act 
alone could incentivize up to 69% carbon-free electricity by 2030.\iii\ 
The House-passed Build Back Better Act's $180 billion in clean energy 
tax incentives will generate billions in additional private sector 
investment in a broad spectrum of clean energy technologies from more 
investments in renewables, advanced nuclear, carbon capture and 
sequestration to clean hydrogen. These additional investments will 
lower emissions from electric generators, reduce technology deployment 
costs, break ground on new construction projects creating thousands of 
new jobs across the clean energy supply chain, and as further progress 
becomes apparent, catalyze more investment in emerging technologies.
---------------------------------------------------------------------------
    \3\ Roy, N., Burtraw, D., and Rennert, K. 7 October 2021. Cost 
Analysis and Emissions Projections under Power Sector Proposals in 
Reconciliation. Resources for the Future. https://www.rff.org/
publications/issue-briefs/cost-analysis-and-emissions-projections-
under-power-sector-proposals-in-reconciliation/
---------------------------------------------------------------------------
    When these tax incentives are complemented with transmission 
capacity investments now available through the Infrastructure 
Investment Jobs Act, and the potential expansion of organized wholesale 
electricity markets, which is already under consideration in several 
regions, we will have the tools, the technology, and the resources to 
decarbonize the electric grid. We will also enable the private sector 
to fulfill its commitments to meet fully their clean energy and 
decarbonization objectives.

      5.  President Biden just announced a new Executive Order on 
  sustainable procurement, which is a great step forward for creating 
  jobs and reducing carbon pollution. Using the Federal government's 
   procurement power for clean vehicles, clean fuels, and innovative 
 building technologies will help bring new solutions to market so all 
   American can experience the benefits of lower-cost, zero-emission 
 climate solutions. How would 24/7 clean electricity help expand clean 
          energy deployment in communities across the country?

    CEBA applauds federal efforts to achieve 100% carbon-free 
electricity by 2030 as directed in Executive Order (EO) 14057. The 
order provides the ambition and scale needed to use the full 
procurement and purchasing power of the federal government and 24/7 
carbon-free pollution electricity standard sends a strong market signal 
that time and location-matched clean energy is imperative to 
accelerating decarbonization.
    Through power purchase agreements and other tools, energy customers 
have facilitated the deployment of more than 44 gigawatts (GWs) of 
renewable energy since 2008, which is over a quarter of all wind and 
solar capacity in the United States. Voluntary energy customers 
contracted for 10.6 GW of clean energy in 2020--the equivalent of 40% 
of all new carbon-free capacity installed.? Last year through the end 
of the third quarter, voluntary energy customers contracted 
approximately 7.88 GW of new off site, utility scale renewables--
equivalent to 34% of the new generating capacity added (or planned to 
be added) to the grid.
    To fully decarbonize the electric grid, however, we must consider 
the decarbonization impact of energy procurement options more 
intentionally. Energy customers' ambitions have evolved beyond the 
traditional annual matching of clean energy with an invested interest 
in matching consumption with carbon-free energy on a local, temporal, 
and demand-driven basis.
    Advancing the suite of next-generation procurement strategies will 
require a coalition of stakeholders collaborating on the market, 
technology, and data solutions. CEBA looks forward to working alongside 
the committee and other lawmakers to overcome the barriers that 
presently exist and?implementing solutions to accelerate progress 
towards decarbonizing the grid.

    6.  Ms. Ballentine, your members have ambitious clean energy and 
climate goals, and in many cases have partnered with cities on meeting 
those targets. How are your members addressing the situation in states 
 where the state leadership is preventing cities from moving forward? 
      Could you tell us more about your state-level initiatives? 

    As I noted in my testimony, the lack of organized wholesale markets 
and transmission bottlenecks are the largest obstacles to carbon-free 
electricity. Expanding organized wholesale markets to every region of 
the country and expanding transmission capacity would not only 
decarbonize the grid but could also save energy customers $11 billion 
annually.
    While CEBA is focused on advancing policies in the halls of 
Congress and before the Federal Energy Regulatory Commission to 
modernize the electric system, CEBA also works collaboratively with the 
business community and others at the local and regional level to grow 
support from the ground up for competitive organized wholesale markets. 
This work is being done both at the Clean Energy Buyers Institute where 
we are conducting research and developing educational material to 
inform regional, state, and local officials on the benefits of 
organized wholesale markets and other related issues, as well as at 
CEBA where we engage interested parties in policy development at the 
state and regional level.

                        Questions for the Record

                          Dr. Uday Varadarajan

                          Principal, RMI; and

                        Precourt Energy Scholar,

         Sustainable Finance Initiative at Stanford University

                       the honorable kathy castor

     1.  Dr. Varadarajan, how would the Build Back Better Act help 
utilities and communities choose clean power generation strategies that 
                             work for them?

    The proposed Build Back Better Act (BBBA) offers a suite of 
incentives to make it much less expensive for utilities and communities 
to make the choice to shift to clean power--using the technologies and 
strategies that work best for them while maintaining or improving 
reliability. Most important among these are provisions that make clean 
energy tax credits more readily useable by utilities and communities to 
reduce the cost to customers of employing a broader range of clean 
technologies and strategies.
    In more detail, compared to existing tax credits, the BBBA credits 
are more easily monetized, longer in duration, and treat competing 
clean technologies more equitably. As a result, the credits will be 
more flexible in application, expanding the ranks of eligible entities, 
increasing the timeframe for their use, and empowering customers and 
communities to select climate-sustaining solutions that are also 
tailored to local circumstances. This flexibility should boost 
grassroots engagement in furtherance of a clean future and also help 
deliver a better return on fiscal investment for taxpayers.\i\

    The improved BBBA tax credits:

      Reward Performance: BBBA newly provides solar asset 
owners with the option to claim the production tax credit (PTC) that 
has fueled the growth of the wind industry over the past two decades--
and which wind developers have generally chosen in favor of the 
investment tax credit (ITC) currently available to both technologies. 
With BBBA, solar and wind will be eligible under the existing PTC 
through 2026, after which time a new Clean Energy Production Tax Credit 
(45BB) will kick in.

    Unlike the ITC, which is claimed all at once when a project is 
placed in service and is typically calculated on the basis of a ``fair 
market value'' open to dispute, the PTC rewards output, providing a 
credit for each unit of energy generated over the first decade of 
operations. As such, the interests of solar asset owners, taxpayers, 
climate advocates, and ratepayers are aligned in favor of cost 
transparency and demonstrated decarbonization performance.

      Enable Fair Competition: the PTC is not subject to ``tax 
normalization.'' Normalization is a legal restriction within the tax 
code that compels regulated investor-owned utilities (IOUs) to keep a 
portion of benefits of the ITC for investors, the argument being that 
investors must benefit from an ``investment'' credit. Customers are 
allowed only to receive a fraction of the financial value of the credit 
attenuated over the long operating life of their solar assets. In 
contrast, unregulated entities--such as renewable developers--are free 
to pass on the benefits of the ITC to their customers as dictated by 
market competition, a more economically rational way to balance the 
interests of investors and consumers. Put simply, because unregulated 
developers are not subject to normalization restrictions, they can sell 
electricity at lower prices than IOUs, even when technology and capital 
costs are the same. (However, by hindering full and fair competition, 
normalization likely allows third-party developers to demand higher 
prices for solar than would be the case without the constraint. For a 
commodity product like solar generation today, such a barrier to 
competition has no compelling justification.)

    The normalization disadvantage has created a conflict between the 
business interests of IOUs--which sell electricity to nearly 50 million 
households and 7 million business accounts in 49 states--and solar 
deployment. Utility opposition can be explained by how regulated IOUs 
make investment decisions and earn profits. Before an IOU builds a 
power plant, it must prove to its regulator that the investment is 
prudent. Prudency considers cost relative to other ownership options. 
Third-party solar power purchase agreements are unattractive for IOUs, 
which earn profits for their shareholders by investing in and owning 
assets. IOUs therefore lack the financial motivation to accelerate 
solar deployment. In this context, an IOU's financial interests are 
likely best served by resisting the transition to solar.
    The PTC option will provide a route around the normalization 
barrier and accelerate progress toward America's climate goals. Indeed, 
according to modeling from the Rhodium Group, allowing renewables to 
choose between the ITC and PTC would double emissions reductions by 
2031 compared with a straight 10-year extension of the current tax 
credits.\ii\

      Improve Policy Efficiency: BBBA provides for direct pay 
of tax credits. Most clean energy developers and utilities do not have 
the tax liabilities necessary to claim tax credits at their full 
present value. The prevailing solution has been to negotiate 
complicated tax equity workarounds--which reduce the value of the tax 
credits passed down to consumers. Changing these tax credits to permit 
direct pay would enable developers to realize the credit's whole value, 
further lowering the cost of clean energy. The change would also open 
up the credits to investors currently excluded from direct access to 
tax credits, such as not-for-profit and governmental entities.

    Under existing law, companies monetize a cash benefit from the ITC 
and PTC only if they can offset taxes due in that year. Otherwise, the 
credits must be ``carried forward'' for possible future use. RMI 
analysis of financial disclosures shows that in 2019 IOUs had aggregate 
tax liability sufficient to build less than 4 GW of new solar and 
storage per year--roughly enough capacity to replace just one or two 
coal plants.\iii\ Over the last two decades, policymakers have put in 
place ``bonus depreciation'' provisions to incentivize investment to 
fight recessions. These provisions allowed companies to immediately 
deduct as an expense from their pre-tax income very large share--or, in 
some cases, even all--of the investment they make in new capital 
assets. Utilities therefore often do not owe enough in taxes to see a 
current cash benefit from the existing ITC and PTC. Depending on state 
regulatory practices, this inability to monetize can result in a 
financial burden--a carrying cost--for customers or shareholders.\iv\
    A utility can currently opt to purchase clean power from a third-
party developer or partner with tax equity investors--large financial 
institutions that have found a market selling their tax liabilities to 
developers--to realize the benefits from tax incentives for their 
customers. However, the use of tax equity often comes with higher 
financing costs that reduce the amount of tax incentive benefits that 
can be passed on to customers. And, as noted in connection with the 
normalization issue, reliance on third-party capital is at odds with 
the core of the utility business model, which is to deploy utility 
shareholder capital.
    Public power agencies and many cooperative utilities will also 
benefit from direct pay. As not-for-profit entities, these utilities do 
not currently have direct access to clean energy tax credits. Instead, 
they must rely on private-sector developers and investors as 
intermediaries. But these private entities have capital costs well 
above the low-cost debt that not-for-profits and governments can access 
for their fossil investments.
    While IOUs, public power agencies, and cooperatives owned around 
55% of total generating capacity in the US in 2019, their corresponding 
shares of wind and solar were only 15% and 11%, respectively. Direct 
pay can significantly improve the ability of these entities--currently 
responsible for 80% of the emissions from coal in the power sector--to 
deliver cost savings from transitioning to carbon-free electricity.

      Incentivize Critical Reliability-Boosting Technologies: 
BBBA allows stand-alone battery storage and transmission to qualify for 
the up to a 30% ITC with direct pay. Both storage and transmission are 
critical for allowing the grid to absorb a higher penetration of 
variable clean energy while also allowing a much larger and diverse 
group of communities (e.g., along transmission routes and in areas 
where storage is valuable even without collocated generation) to 
benefit from clean energy tax incentives.
      Extend the Duration of Availability of Credits: The new 
BBBA credits--the 45BB PTC for wind and solar and the 48F ITC for wind 
and solar and stand-alone storage--will be available in full through 
the earlier of 2031 or when the US electric sector achieves a 75% 
emissions reduction from 2021, while the ITC for transmission is set to 
be available through 2026. These are longer horizons than have been 
available for clean energy for much of the last decade, which has seen 
the PTC and ITC repeatedly face phase-outs and phase-downs that have 
been relieved by short-term (often 1-year) extensions. The BBBA 
approach will increase investor confidence, counter ``fear of missing 
out'' decision making, and mitigate logistical and construction 
bottlenecks that have been exacerbated by previous phase-out and phase-
down deadlines.

    In sum, BBBA provides far more flexible incentives for clean 
energy, with new and expanded tax credits that

      utilities and customers can choose to claim (or not 
claim) depending on their needs and preferences;
      enable communities to act on their own, by directly 
accessing tax credits through public power entities as well as via 
individual investments in technologies such as stand-alone storage that 
invite modular deployment,
      achieve technology-neutrality with regard to wind and 
solar, and
      sustain existing nuclear plants and also incentivize 
hydrogen technologies and carbon capture and storage, giving utilities 
and communities more options for clean power tailored to local 
conditions. As variable renewable energy penetration increases, such 
``firm'' resources can help maintain grid stability.

 2.  In your view, how will the Infrastructure Investment and Jobs Act 
 promote electric grid reliability and how would the Build Back Better 
                     Act build on that foundation?

    The Infrastructure Investment and Jobs Act (IIJA) provides billions 
of dollars to reduce the grid impact of extreme weather events that are 
increasing in frequency as a result of climate change, including $5 
billion for grid resilience and reliability upgrades and $3 billion for 
smart grid technologies.\v\
    IIJA also includes incentives to build out transmission and 
distribution lines and gives meaningful authority to help federal 
agencies navigate land use disputes that often delay grid improvements. 
Grid expansion that keeps pace with renewable deployments is critical 
for future grid reliability.\vi\
    BBBA will build upon IIJA by adding and expanding tax credits for 
firm clean resources, transmission, and battery storage systems. RMI 
further recommends the inclusion of an ITC tax normalization opt-out 
for transmission and stand-alone storage to allow utilities to fully 
pass on these benefits to customers. Even if third-party ownership of 
such assets is less established than is the case with solar generation, 
the potential for normalization to misalign utility interests and clean 
energy policy goals (while also increasing customer costs) is 
nevertheless without compelling justification.

    3.  RMI's analysis showed that states all across the country can 
 benefit from the clean energy tax credits included in the Build Back 
 Better Act. Could you please explain how consumers in states such as 
Indiana or Ohio can benefit from these clean energy tax credits even if 
 the renewable resources in their states are not quite as abundant as 
  those in other regions of the country? Specifically, if states like 
  Indiana and Ohio build relatively less new clean energy generation 
    within their boundaries, what would make it possible for their 
         residents to experience some of the economic benefits?

    Even in states like Indiana and Ohio that cannot match the 
insolation of the Southwest or the wind energy of the Great Plains, 
clean resources are often already economic to build. In Indiana, for 
instance, the Northern Indiana Service Company plans to retire its 
entire coal fleet by 2028 and replace them with cheap renewables, which 
will reduce carbon emissions by 90%, save customers $4 billion, and 
promote local jobs and economic development.\vii\
    With BBBA, clean energy economics will improve across the country. 
Individual investment decisions will still need to assess resource 
quality, proximity to load, and the value of geographic diversification 
in regional power systems. New clean energy technologies, such as 
offshore wind on the Great Lakes, or hydrogen plants with CCS and 
nuclear small modular reactors (SMRs) on former coal plant sites, may 
also play a role in anchoring new investment in Midwestern states, 
thanks in no small part to the BBBA's more expansive tax credits.
    Because of Indiana and Ohio's current high reliance on expensive 
coal and low renewable penetrations (9% in Indiana and 3% in 
Ohio),\viii\ consumer savings from BBBA's clean energy provision will 
be very large, even if net reductions in in-state shares of generation 
occur. In fact, RMI's analysis found that BBBA tax credits would 
deliver larger ratepayer savings to Indiana than any other state, over 
$800 million per year by 2030. Ohio could see over $100 million in 
savings annually by 2030.\ix\

 4.  Fossil energy production requires extraction that has transformed 
huge swaths of the American landscape and oceans. How do solar and wind 
    energy compare in terms of their use and impact on US lands and 
             waterways to deliver similar energy services?

    A 2013 NREL study shows that if powered on solar power alone, the 
United States would need about 22,000 square miles of solar panels--
about the size of Lake Michigan--to generate the entire country's 
electricity.\x\ A similar analysis to generate the entire country's 
electricity from wind turbines showed that they only needed about 1,200 
square miles of wind turbines, or about the size of Rhode Island.\xi\ 
These equate to approximately 0.7% and 0.03% of the total land area in 
the continental United States. And a new analysis by Lawrence Berkeley 
National Lab has found that older estimates of solar density are out of 
date, with solar panel density increasing by over 50% from 2011-2019, 
and energy generation increasing by over 25% over that same time 
period.\xii\
    Critics of renewables often point to these estimates and then 
suggest that fossil fuel generation--which occurs at centralized power 
plant facilities that occupy a much smaller footprint--have a much 
smaller impact on the landscape. But a fair comparison must take into 
account land used for upstream processes like fuel storage, refinement, 
and transportation, and, much more importantly, the ongoing annual need 
for additional land every year for fuel extraction, such as mining and 
drilling, just to maintain existing consumption.
    With this wider frame, the land intensity of renewables compares 
very favorably with fossil energy.
    For example, analysis of U.S. data shows that 1.8 million Gigawatt-
hours (GWh) of electricity from were generated from coal in 2009, which 
required disturbing over 117,000 acres in additional land in the 
process. This means that each additional acre of new land disturbed by 
coal mining ultimately generated 15 GWh of electricity in 2009.\xiii\ 
Fossil gas produced in new wells using hydraulic fracturing in dry 
shale or tight gas formations generally generate a total of between 20-
50 GWh of electricity over the life of the well per acre of land 
disturbed, primarily within the first five years of drilling.\xiv\
    However, unlike coal or gas generation which will need to disturb 
additional lands every year just to maintain production levels, solar 
and wind installations can continue generating electricity on the land 
they occupy indefinitely. Assuming (conservatively) a capacity factor 
of 25.7% and 0.5 acres of land per 3-megawatt wind turbine, a 3-
megawatt wind turbine produces approximately 13 GWh per acre each year. 
However, over a 30-year asset life, a single 3-megawatt wind turbine 
can generate 200 GWh while significantly disturbing just a half-acre of 
land.\xv\ Fixed-tilt solar installations in the US, on the other hand, 
would appear to be much less land-efficient at first glance, as an acre 
of land produces on average 0.4 GWh of electricity per year.\xvi\ But 
that facility can generate 12 GWh over 30 years without the need for 
additional land. Moreover, unlike coal mines, solar facilities can also 
be located on rooftops or other lands that are primarily used for other 
purposes. This means that our estimate likely overestimates the new 
land that needs to be disturbed to generate electricity from solar PV.
    And, of course, acreage devoted to wind and solar can continue to 
produce through successive asset generations, in theory boosting the 
efficiency of land use in perpetuity. Note that we must be careful to 
account for the additional land used for mineral extraction globally to 
construct successive generations of solar and wind farms as well. 
However, as we discuss below, these challenges can be overcome by 
following best practices for recycling and reuse. All in all, the 
renewable nature of these resources indeed implies that in the long run 
they are likely to be far more land-efficient compared to coal or 
fossil gas resources.

    5.  Could you please explain how building electrification would 
 benefit low-income households? How would it protect them from indoor 
            air pollution? How would it reduce energy costs?

    This winter Americans will see home energy bills increase 
significantly, in large part due to spiking natural gas costs.\xvii\ 
The burden will weigh most heavily on the 4.8 million households 
already facing energy insecurity.\xviii\ Fortunately, electrification 
of household heating and cooking, when combined with a switch to 
renewable resources that rely on free fuel from the sun and wind, will 
help insulate low-income households from energy price volatility.
    Electrification will also reduce air pollution from burning gas, 
wood, and biomass, practices that contribute to more negative health 
effects than burning coal in many states.\xix\ Household combustion is 
the main reason that the indoor environment is often more polluted than 
the outdoors.\xx\ In low-income communities where respiratory diseases 
are prevalent, building electrification will have an outsized 
beneficial impact on health outcomes.
    While new all-electric, single-family homes are now less expensive 
to build and operate than new traditional mixed-fuel homes,\xxi\ the 
BBBA adds a suite of incentives to help retrofit older buildings, 
particularly those occupied by low-income households. Particularly 
noteworthy are the High Efficiency Electric Home Rebates, two-thirds of 
which must be directed to low-income and tribal communities, and the 
Home Energy Performance-Based Whole-House Rebates and Training Grants.

     6.  Like all technologies, clean energy technologies can lose 
 efficiency or wear out over time. However, clean energy technologies 
typically have long productive lifespans. The National Renewable Energy 
 Laboratory estimates solar panels maintain productivity for at least 
 20-25 years, and electric vehicles batteries are commonly warrantied 
 for 8-10 years, with NREL data showing batteries can last well beyond 
 that timeframe. When clean energy technologies do have to be retired, 
what opportunities do we have in the United States to reuse and recycle 
critical materials used in the production of clean energy technologies 
                 such as solar panels and EV batteries?

    Based on RMI review of regulatory filings, including numerous 
integrated resource plans (IRPs), the anticipated depreciable life of 
utility-scale solar (and wind) assets is typically 30 years or longer. 
This greater asset utilization (compared with the NREL assumption of 
20-25 years) implies significantly reduced recycling needs.
    When retirement and recycling is necessary, solar panels are about 
80% glass and aluminum by weight, both materials which already have 
extensive recycling supply chains.\xxii\ Copper and silver are also 
significant inputs and can be readily recovered and reused.
    Recycling pathways for wind are admittedly more complicated. 
Turbines are made primarily of either glass or carbon fiber blended 
with epoxy resin, which makes separating the materials difficult for 
recycling. However, innovative processes have been developed to recycle 
current wind turbine materials, such as a recent announcement by GE to 
recycle wind turbines for cement production, as well as new 
technologies under development that would make recycling future wind 
turbines much easier.\xxiii\ And wind manufacturers are stepping up 
their commitments to eliminate turbine waste and shift to recycling.
    Electric vehicle batteries primarily use lithium-ion battery packs. 
Although the recycling industry here is currently in an early stage, it 
is beginning to scale,\xxiv\ driven by projected payback periods of 
under one year for demonstration scale plants (ca. 1,000 tons per year) 
\xxv\ and an expected global annual EV battery recycling need of nearly 
400,000 tons by 2025.
    As innovation progresses, technologies improve, and demand 
increases, recycling costs will fall and recycling production will 
rise. A similar process happened with the current lead-acid battery, 
used in current gasoline-powered cars, where a recycling industry 
scaled up as those batteries became dominant, and we now recycle 98% of 
lead-acid batteries.\xxvi\

                            REFERENCES PAGE

    \i\ https://rmi.org/one-simple-tax-change-could-unlock-critical-
clean-energy-infrastructure/
    \ii\ https://rhg.com/research/build-back-better-clean-energy-tax-
credits/
    \iii\ https://utilitytransitionhub.rmi.org/#top-line-insights
    \iv\ See ``Rebuttal Testimony of Uday Varadarajan on Behalf of 
Environmental Law & Policy Center and Iowa Environmental Council,'' 
before the Iowa Utilities Board, Docket No. RPU-2019-0001 (15 August 
2019).
    \v\ Such is critical as weather-related burdens on utilities are 
expected to grow considerably in coming years. A recent BloombergNEF 
analysis projects $4.1 billion in annual losses to utilities each year 
from climate-driven extreme weather events; see https://www.bnef.com/
insights/28039
    \vi\ https://rmi.org/one-simple-tax-change-could-unlock-critical-
clean-energy-infrastructure/
    \vii\ https://www.nipsco.com/campaigns/future
    \viii\ https://www.eia.gov/state/analysis.php?sid=IN and
https://www.eia.gov/state/analysis.php?sid=OH
    \ix\ https://rmi.org/rmi-reality-check-proposed-clean-energy-
incentives-would-save-electricity-customers-billions/
    \x\ https://www.energy.gov/eere/solar/solar-energy-united-states
    \xi\ https://www.businessinsider.com/wind-turbines-to-power-earth-
2016-9
    \xii\ https://emp.lbl.gov/publications/land-requirements-utility-
scale-pv
    \xiii\ https://www.gem.wiki/The_footprint_of_coal
    \xiv\ RMI analysis based on EIA average natural gas fleet 
efficiency of 0.13 kWh/cf (see https://www.eia.gov/tools/faqs/
faq.php?id=667&t=2), EIA oil and gas well production curves by state, 
play, and county
(see https://www.eia.gov/analysis/drilling/curve_analysis/), and 
estimates of land disturbed by Marcellus shale wells of roughly 28 
acres per well published by the 
Nature Conservancy (see https://
www.energy.gov/sites/prod/files/2014/07/f17/
pittsburg_qermeeting_minney_statement.pdf
    \xv\ These calculations do not account for coal waste facilities, 
manufacture facilities, or transmission.
    \xvi\ https://emp.lbl.gov/publications/land-requirements-utility-
scale-pv
    \xvii\ https://www.npr.org/2021/10/13/1045723713/home-heating-
costs-this-winter-natural-gas-electric
    \xviii\ https://www.futurity.org/covid-19-energy-bills-income-
2505662/
    \xix\ https://rmi.org/uncovering-the-deadly-toll-of-air-pollution-
from-buildings/
    \xx\ https://rmi.org/indoor-air-pollution-the-link-between-climate-
and-health/
    \xxi\ https://rmi.org/all-electric-new-homes-a-win-for-the-climate-
and-the-economy/
    \xxii\ https://www.seia.org/sites/default/files/2020-01/SEIA-
Recycling-Program-
Factsheet-January%202020-web_0.pdf
    \xxiii\ https://www.utilitydive.com/news/ge-announces-first-us-
wind-turbine-blade-
recycling-program-with-veolia/591869/,
https://www.usatoday.com/story/news/factcheck/2021/11/30/fact-check-
recycling-can-keep-wind-turbine-blades-out-landfills/8647981002/
    \xxiv\ https://www.wastedive.com/news/lithium-ion-battery-
recycling-ev-li-cycle-retriev/608778/ Benchmark Mineral Intelligence, 
``Lithium-ion battery supply chain technology development and 
investment opportunities,'' (June 2020).
    \xxvi\ https://www.nature.com/articles/d41586-021-02222-1

                        Questions for the Record

                            Amy Myers Jaffe

               Research Professor and Managing Director,

                           Climate Policy Lab

                The Fletcher School at Tufts University

                       the honorable kathy castor

     1.  Ms. Jaffe, the Build Back Better Act makes it cheaper for 
  Americans' next car to be an electric vehicle. More EVs on the road 
 will reduce demand for oil. How would reducing demand for oil protect 
                   U.S. national security interests?

    For the last five decades, the world has experienced economic 
swings and geopolitical conflicts centered around the oil and gas 
commodity price cycle. In multiple periods historically dating back to 
the 1970s but including more recently, 2006-2009 and 2012-2015, rising 
global economic growth has been accompanied by a sharp rise in the 
price of oil, which in turn, created discontinuities and financial 
crises that have jeopardized U.S. national interests, economic health, 
and the well-being of lower income Americans. On all three fronts--
energy markets, financial markets, and energy geopolitics--the 
geopolitical and economic outcomes of wild energy market oscillations 
have become intolerably high. We have seen multiple global financial 
meltdowns accompanied by rising social and economic inequity. The 
investment cycle in energy production capacity has tended towards a 
pro-cyclical pattern, contributing to greater volatility that 
intersects with geopolitical risk in increasingly cataclysmic ways. In 
2008, oil prices hit $147 a barrel and U.S. economic growth fell 
precipitously. Over 3.6 million American jobs were lost between 
December 2007 and January 2009.
    Attenuating the cycle in global oil demand by decoupling oil use 
from economic growth is the best way to prevent this kind of repeating 
crises from occurring over and over again. Multiple studies have shown 
that countries with lower energy consumption to GDP ratios experience 
less inflation-induced GDP losses. Reducing the oil intensity of the 
U.S. transport sector protects both individual consumers and the 
overall economy.\1\ Achieving fuel diversity by adding more EVs to the 
U.S. transport sector is one major way to reduce the oil intensity of 
the U.S. economy and thereby insulate the U.S. economy from sudden, 
adverse oil price shocks and geopolitical leverage. Energy efficiency 
standards is another way.
---------------------------------------------------------------------------
    \1\ Mahmoud El-Gamal and Amy Myers Jaffe, Oil, Dollars, Debt, and 
Crises, Cambridge University Press, 2010
---------------------------------------------------------------------------
    Continuing to maintain oil intensity in our transportation sector 
gives an opening to oil producing countries to interfere with the U.S. 
election process by undertaking temporary oil market supply cutbacks in 
hopes to boost U.S. gasoline prices to try to influence economic health 
and thereby election outcomes. Oil producers are similarly incentivized 
to try to raise oil prices to discourage U.S. environmental legislation 
by creating a false narrative that environmental regulation will lead 
to rising gasoline prices. Such misinformation confuses the issue 
because, of course, basic supply demand principles are clear: Less 
demand for gasoline will lead to lower prices, not ``cause'' higher 
prices. The less demand there is for oil and the more decoupled road 
fuel is from high dependence on oil, the more elastic the price of fuel 
will be; that is, consumers will have more power to shift among 
different diverse fuel sources. The more decoupled economic activity is 
from oil, the less monopoly power OPEC has in markets.
    EVs are an effective tool to reduce OPEC market power and to 
decouple the U.S. economy from the ill-effects of oil price shocks. 
U.S. oil production is millions of barrels a day too low to meet U.S. 
domestic demand for road fuel. Even if U.S. oil production could 
recover to over 12.9 million b/d seen in November 2019, up from 11.6 
million b/d currently, U.S. domestic oil supply would still fall short 
of covering current U.S. oil demand of roughly 20 million b/d. Adding 
electric vehicles to U.S. fleets would bring U.S. oil demand closer in 
balance with demand. The U.S. currently allows the exports of gasoline 
and diesel fuel. U.S. refined product exports average around 5 million 
b/d/.
    EVs, by reducing U.S. domestic oil demand, would bring U.S. oil use 
and production into closer balance. Exported surpluses increase 
competition globally to lower world oil prices. As other countries also 
increase EV sales, the need for oil globally will also be reduced and 
the oil intensity of the global economy will fall, further adding 
further to energy security and reducing the market power and 
geopolitical influence of OPEC and Russia.
    Recent calculations by UC Davis Institute for Transportation 
Studies (ITS-Davis) highlights the potential of electric vehicles to 
lower U.S. oil use. The study of low carbon transition for cars and 
trucks in the U.S., by Lew Fulton, Marshall Miller, and Qian Wang, 
estimates that EVs could reduce U.S. gasoline consumption from 103.7 
billion gallons of gasoline equivalent (billion GGE) in 2025 to 56 
billion GGE by 2040 or the equivalent of a reduction of one million 
barrels a day of oil equivalent. Diesel use could drop from 50.6 
billion GGE to 29 billion GGE by 2040, or the equivalent of 460,000 
barrels a day of oil equivalent. (See Figure 1 below).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


 2.  There is a global competition to build the vehicles of the future. 
How would incentives for domestic manufacturing of clean vehicles help 
  the United States compete and how would that bolster our ability to 
                    protect our national interests?

    Leading in energy and vehicle innovation ensures that the U.S. 
military and space programs have a technological edge over geopolitical 
rivals and lowers the cost of addressing climate change. It has spurred 
new markets, industries and companies in the United States in recent 
years.
    Without public funding and related political leadership to guide 
optimal outcomes, the United States could fall behind other nations 
that have well-developed, national initiatives such as China and 
Europe. A U.S. failure to address the challenge of the emerging race in 
manufacturing of smart and clean vehicles would be analogous to the 
United States opting to ignore the risks that the Soviet Union's 
superiority in space in 1957 might have threatened America's national 
security. Imagine today if the United States had inferior access to 
satellite and other kinds of sophisticated defense related aerospace 
technologies. That is, in effect, what it would mean if the United 
States does not address China's efforts to dominate the new digital 
energy and vehicles market with its own brand of smart drones, cyber 
surveillance technologies, and automated vehicles and electric networks 
that will not only underpin future economic trade in clean energy 
products, but also boost their relative capability in asymmetric 
warfare technology. The U.S. Pentagon has recognized this future and 
began funding research in automated machines and vehicles in 2004.
    The U.S. Pentagon began funding an effort on the development of 
autonomous vehicles in 2002. Since then a new geostrategic race to 
dominate critical digital technologies for automation and electric 
mobility has begun in earnest. While most Americans think of such 
products as the latest in experimental commercial endeavors by Waymo to 
foster ride hailing services in self-driving cars in places like the 
suburbs of Arizona and efficient drone and electric AV delivery by Nuro 
or UberEats, major militaries are now competing in the spheres of 
autonomous vehicles and drones, tapping artificial intelligence, 
machine learning, and massive data analytics, to gain an edge in 
asymmetric warfare. The U.S. Congress set a goal that by 2015, ``one 
third of the operational ground combat vehicles of the U.S. military be 
unmanned.'' \i\ That deadline has come and gone but now the United 
States faces intense competition in this space from China.
    China's industrial policy is aimed to deliver a range of 
technologies that will dominate the future global economy, including 5-
G networks, solar panels, battery storage, electric and autonomous 
vehicles, drones, and commercial robotics, high performance computing/
artificial intelligence applications, and high-speed rail. Many of 
these technologies are fundamental to superiority of weapons systems. 
Since Beijing first announced its Science and Technology initiative in 
2006, it has launched the world's fastest supercomputer and become the 
world's largest drone manufacturer.
    China's unparalleled size as the world's largest consumer country 
gives the country an economic and strategic advantage. The size of 
China's online shopping industry now totals over $1 trillion. Its car 
market is also the world's largest. China produced 72 percent of the 
world's lithium-ion batteries in 2019, while U.S. manufacturing 
accounted for only 9 percent. China dominates the market for production 
of battery chemicals, cathodes, anodes, and battery cells.
    China hopes to utilize its consumer spending power to attract 
innovative companies and to attain top status in critical strategic 
industries in clean energy. Innovative U.S. companies ranging from 
those that with technologies to 3D print cars to makers of advanced 
materials have shifted to China after failing to find public funding in 
the United States.
    China has been particularly aggressive targeting smart, connected 
vehicles technology including self-driving cars and has engaged in 
espionage against U.S. companies to gain access to American 
technological knowhow. The dual use nature of the technology raises the 
stakes, as well as vulnerability to cyber-attack. U.S. Justice 
Department officials have focused on the problem of intellectual 
property theft, but it is not sufficient to close the door to Chinese 
intellectual property theft. What is needed is an affirmative strategy 
that paves a positive response to how the public sector can promote the 
superiority of America's technological edge and broader the 
participation of more American workers in the process. For its part, 
China is focused on winning the race to install 5-G networks in its 
major cities, in part so it can attract self-driving automotive 
industries that might be reluctant to miss out on the opportunity to 
pilot their wares more quickly at scale. The United States currently 
lags behind.
    Domestic advanced vehicle manufacturing must be part and parcel of 
any effort that the United States makes to maintain its economic, 
military, and diplomatic stature as a global world power. The global 
electric vehicle market, estimated at $162 billion in 2019, and is 
projected to hit $1 trillion by the late 2020s. It is hard to fathom 
how the American car industry can remain globally competitive without a 
large push to participate in this growing sector.
    Recognizing the importance of advanced vehicles to future economic 
competitiveness and security, the European Union, worried about future 
dependence on China for its clean energy future, has committed to a $1 
trillion initiative to create an internationally competitive battery 
supply chain, including mining, recycling, and manufacturing to its own 
shores. France and Germany have announced a $5 billion to $6.7 billion 
consortium of automobile and energy firms to enhance Europe's electric 
car battery manufacturing capability. The European Union will be 
providing public subsidies. Even with the COVID-19 pandemic, European 
leaders are emphasizing European stimulus packages will support the 
planned shift to clean energy. The European Council reaffirmed that the 
roadmap for economic recovery will feature the green transition and 
digital transformation with a ``central and priority role in 
relaunching and modernizing our economy.'' \ii\
    The United States needs a concerted effort to ensure that its car 
industry remains internationally competitive and is producing the 
vehicles that will be demanded in global markets in the coming years. 
Given large interventions in domestic advanced automobile industries by 
governments of all other major economies, it behooves the United States 
to keep pace to avoid the risk of not only further job losses in the 
sector, but also a deterioration of its supremacy in manufacturing and 
utilizing advanced, automated vehicles for national defense purposes.

 3.  Some of the climate investments in the Build Back Better Act could 
   also help us meet our short-term energy needs, such as providing 
    incentives to capture methane emissions from fossil oil and gas 
 production. We're expecting high natural gas prices in many parts of 
    the country this winter. Should Congress encourage oil and gas 
                    companies to stop methane leaks?

    Methane leaks are wasteful and environmentally damaging. It is 
critical that methane leakage into the atmosphere be ended to reduce 
U.S. greenhouse gas emissions, and specifically methane emissions, in 
line with targets set forth at the 2021 Glasgow climate meetings. In 
some cases, methane emissions result from poor maintenance of 
equipment. In other situations, routine flaring and venting stems from 
poor or sloppy corporate planning, where oil fields are brought online 
without consideration of proper coordination to an evacuation strategy 
for the associated gas (eg it is either just assumed it will be ``ok'' 
to flare or vent gases that have no transport access or market uptake 
despite rules to the contrary or companies fail to find an alternative 
solution when there is an unexpected delay in construction transport 
infrastructure).
    Either way, it is inexcusable to literally burn natural gas into 
the sky as a routine operation, regardless of whose fault the 
transportation bottleneck is. The sky should not be used as a garbage 
dump for natural gas to allow private companies to make money producing 
associated oil. Companies are looking increasingly at other options for 
stranded natural gas production such as connecting it to impromptu data 
centers or transportation fuel applications to find outlets for gas 
that is lacking buyers.
    Colorado has already implemented strict regulations on methane 
requiring oil and gas companies to find and fix methane leaks and to 
install technologies to limit or prevent emissions at existing 
operations. PHMSA and Department of Interior should follow suit. 
Companies operating in Colorado have had no difficulty complying with 
these stricter rules, which cover not only production wells but also 
tanks and performance standards for pipelines. Technologies including 
sensors, infrared cameras on drones, and satellite imagery are being 
used by industry to identify sources of leaks. The use of these 
technologies creates jobs and improves environmental practices.
    Methane leakage from oil and gas operations is an important source 
of greenhouse gas emissions in the United States. Methane emissions 
from the energy sector is recorded at 267.6 million metric tons of 
CO2 equivalent in 2019, according to EPA estimates. However, 
recent scientific studies indicate that this estimate is likely too 
low.\iii\ Federally-mandated methane restrictions from the U.S. oil and 
gas sector could reduce the methane emissions equivalent to 920 million 
metric tons of CO2 between now and 2035. Some of that 
methane (roughly 41 million tons annually) could be captured and sold 
to consumers, helping lower energy costs to households and businesses. 
Some of the largest U.S. natural gas companies, such as EQT and Apache, 
are already moving to end methane leakage, meaning their operations 
will already be compliant with any new federal restrictions. It is 
desirable for the rest of the industry to take this path to preserve 
access to European and Asian liquefied natural gas markets where 
requirements for certification of low carbon intensity are becoming 
more prevalent.

    4.  Do you agree that fossil fuel production companies should be 
responsible for preventing pollution from the production infrastructure 
  they build? And should those same companies also be responsible for 
  appropriately decommissioning energy infrastructure they build and 
                 remediating any environmental impacts?

    Taxpayers should never be saddled with the cost of appropriately 
decommissioning energy infrastructure and remediating environmental 
impacts instead of the companies that generated the profit from 
operating that infrastructure.
    Stronger assurance regulations are needed to deal with an 
increasing burden of decommissioning liabilities. Congress should 
support Interior's proposed fitness to operate standard for evaluating 
potential lessees based on companies' environmental and safety records, 
as well as credit worthiness to sustain liabilities that might accrue 
following an accident like the one seen last year in Newport Beach, 
California, involving facilities of a highly leveraged, indebted 
private oil company. All companies should be required to underwrite 
adequate bonding for accidents and decommissioning as part of their 
licensing and permitting process. Increasing bond requirements will 
become increasingly imperative as the energy transition gains pace and 
more fossil fuel facilities reach retirement age. Bankruptcy should not 
be the mechanism oil and gas leaders and their investors use to bypass 
the business costs of winding down operations.

  5.  Why might it make sense to increase royalty rates on oil and gas 
production within federal lands and waters?                              


    U.S. oil and gas development on federal lands is structured on 
concessionary terms where private investors carry the risk of 
exploration and the government is shielded from that risk, collecting 
instead fixed royalties and taxes. Under this system, the investor is 
left with all of the windfall if oil prices rise significantly, but 
equally all of the downside if prices collapse. Currently, U.S. royalty 
rates are 12.5% for onshore leases and $18.7% for offshore leases, 
depending on depth.
    Consideration of the appropriate level of royalty rates is a 
function of a number of factors, including the competitive standing 
within the global market for fiscal terms for exploration and 
production opportunities. U.S. exploration companies consider the 
overall potential internal rate of return (IRR) that can be achieved in 
capital investment across a variety of geographies and locations. The 
size of potential resources, political and currency risk, and the 
competitiveness of overall fiscal terms influence an exploration 
company's decision to select one opportunity over another. Federal 
royalty rates are just one element that determines the attractiveness 
of a U.S.-based resource play to potential drillers.
    To answer the question of whether it might make sense to increase 
royalty rates on oil and gas production within U.S. federal lands and 
waters, the goals to that increase must be considered. Trade-offs 
between competing `intentionalities' need to be considered. An increase 
in royalty rates can be used to achieve the following aims:

     1)  To increase federal government revenue
     2)  To adjust U.S. fiscal terms in alignment with global levels
     3)  To ensure the federal government is better compensated during 
periods of high oil prices and plentiful windfalls
     4)  To discourage development of marginal acreage and incentivize 
capital investment only in the most prospective regions
     5)  To slow down oil and gas development by raising costs to 
investors

    On a commercial basis (not considering other goals), the optimal 
level for royalties on U.S. federal lands should reflect a level (when 
combined with other taxes and charges) that is competitive with fiscal 
terms offered globally. Too high a royalty rate could prompt 
exploration companies to shift capital spending to other countries with 
more competitive terms for exploration. Too low a royalty rate compared 
to international locations means the U.S. federal government is 
``leaving money on the table'' so to speak and has room to increase its 
take. It should be noted that royalties are just one element of 
exploration fiscal terms.\iv\
    In assessing the benefit of changes in the level of royalties for 
oil and gas development on U.S. federal lands, it is important to 
consider the purpose of the change. If the federal government is 
considering a royalty increase to improve revenues from its leasing 
programs but wants to do so in a manner that promotes optimum 
development of core producing areas, it should consider a sliding scale 
approach that varies the royalty rates based on resource potential and 
level of oil prices. A variable royalty rate that would increase in 
times of high oil prices would allow the federal government to garner 
more revenue in a manner that would have less negative impact on the 
level of investment. For example, a higher royalty rate could be borne 
easily in markets where oil prices surpass $70 or $80 a barrel than in 
markets where oil prices are averaging $30 or $40 a barrel. Some 
international fiscal regimes are structured around a sliding scale of 
royalties and taxes that are tied to changing level in oil prices. 
Generally speaking, higher royalty and tax rates for exploration and 
production could also serve to discourage investment in marginal, low 
prospective production regions.

                            REFERENCES PAGE

    \i\ Brown, Meta, ``Driverless Cars, Analytics and Tough Standards 
for 21st Century Innovation,'' Forbes, August 29, 2015,
https://www.forbes.com/sites/metabrown/2015/08/29/driverless-cars-
analytics-and-tough-standards-for-21st-century-innovation/#68cd340445a6
    \ii\ A Roadmap For Recovery: Towards a more resilient, sustainable 
and fair Europe, https://www.consilium.europa.eu/media/43384/roadmap-
for-recovery-final-21-04-2020.pdf
    \iii\ Jeffrey S. Rutherford et al, Nature Communications, August 
2021
https://www.nature.com/articles/s41467-021-25017-4
    \iv\ https://www.boem.gov/sites/default/files/oil-and-gas-energy-
program/Energy-
Economics/Fair-Market-Value/2018-GOM-International-Comparison.pdf

    [Whereupon, at 3:11 p.m., the committee was adjourned.]

                                  [all]