[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
GROWING THE DOMESTIC ENERGY SECTOR SUP-
PLY CHAIN AND MANUFACTURING BASE: ARE
FEDERAL EFFORTS WORKING?
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND
INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MAY 23, 2023
__________
Serial No. 118-39
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Published for the use of the Committee on Energy and Commerce
govinfo.gov/committee/house-energy
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
56-125 PDF WASHINGTON : 2024
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COMMITTEE ON ENERGY AND COMMERCE
CATHY McMORRIS RODGERS, Washington
Chair
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
ROBERT E. LATTA, Ohio Ranking Member
BRETT GUTHRIE, Kentucky ANNA G. ESHOO, California
H. MORGAN GRIFFITH, Virginia DIANA DeGETTE, Colorado
GUS M. BILIRAKIS, Florida JAN SCHAKOWSKY, Illinois
BILL JOHNSON, Ohio DORIS O. MATSUI, California
LARRY BUCSHON, Indiana KATHY CASTOR, Florida
RICHARD HUDSON, North Carolina JOHN P. SARBANES, Maryland
TIM WALBERG, Michigan PAUL TONKO, New York
EARL L. ``BUDDY'' CARTER, Georgia YVETTE D. CLARKE, New York
JEFF DUNCAN, South Carolina TONY CARDENAS, California
GARY J. PALMER, Alabama RAUL RUIZ, California
NEAL P. DUNN, Florida SCOTT H. PETERS, California
JOHN R. CURTIS, Utah DEBBIE DINGELL, Michigan
DEBBBIE LESKO, Arizona MARC A. VEASEY, Texas
GREG PENCE, Indiana ANN M. KUSTER, New Hampshire
DAN CRENSHAW, Texas ROBIN L. KELLY, Illinois
JOHN JOYCE, Pennsylvania NANETTE DIAZ BARRAGAN, California
KELLY ARMSTRONG, North Dakota, Vice LISA BLUNT ROCHESTER, Delaware
Chair DARREN SOTO, Florida
RANDY K. WEBER, Sr., Texas ANGIE CRAIG, Minnesota
RICK W. ALLEN, Georgia KIM SCHRIER, Washington
TROY BALDERSON, Ohio LORI TRAHAN, Massachusetts
RUSS FULCHER, Idaho LIZZIE FLETCHER, Texas
AUGUST PFLUGER, Texas
DIANA HARSHBARGER, Tennessee
MARIANNETTE MILLER-MEEKS, Iowa
KAT CAMMACK, Florida
JAY OBERNOLTE, California
------
Professional Staff
NATE HODSON, Staff Director
SARAH BURKE, Deputy Staff Director
TIFFANY GUARASCIO, Minority Staff Director
Subcommittee on Oversight and Investigations
H. MORGAN GRIFFITH, Virginia
Chairman
MICHAEL C. BURGESS, Texas KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky Ranking Member
JEFF DUNCAN, South Carolina DIANA DeGETTE, Colorado
GARY J. PALMER, Alabama JAN SCHAKOWSKY, Illinois
DEBBIE LESKO, Arizona, Vice Chair PAUL TONKO, New York
DAN CRENSHAW, Texas RAUL RUIZ, California
KELLY ARMSTRONG, North Dakota SCOTT H. PETERS, California
KAT CAMMACK, Florida FRANK PALLONE, Jr., New Jersey (ex
CATHY McMORRIS RODGERS, Washington officio)
(ex officio)
C O N T E N T S
----------
Page
Hon. H. Morgan Griffith, a Representative in Congress from the
Commonwealth of Virginia, opening statement.................... 1
Prepared statement........................................... 4
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, opening statement..................................... 18
Prepared statement........................................... 20
Hon. Cathy McMorris Rodgers, a Representative in Congress from
the State of Washington, opening statement..................... 22
Prepared statement........................................... 24
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 28
Prepared statement........................................... 30
Witnesses
Diana Furchtgott-Roth, Director, Center for Energy, Climate, and
Environment, The Heritage Foundation, and Adjunct Professor,
George Washington University................................... 33
Prepared statement........................................... 35
Jeremy Harrell, Chief Strategy Officer, ClearPath................ 48
Prepared statement........................................... 50
Ellen Hughes-Cromwick, Ph.D., Senior Resident Fellow, Climate and
Energy Program, Third Way...................................... 61
Prepared statement........................................... 63
Answers to submitted questions............................... 76
Kenny Stein, Vice President for Policy, Institute for Energy
Research....................................................... 78
Prepared statement........................................... 136
Submitted Material
Inclusion of the following was approved by unanimous consent.
List of documents submitted for the record....................... 113
Letter of May 9, 2023, from Mr. Griffith to David Howell, Acting
Director and Principal Deputy Director, Office of Manufacturing
and Supply Chains, Department of Energy........................ 114
Email of May 9, 2023, from Lauren Eriksen, Clerk, Subcommittee on
Oversight and Investigations, House Committee on Energy and
Commerce....................................................... 116
Letter of May 19, 2023, from Ali Nouri, Assistant Secretary,
Office of Congressional and Intergovernmental Affairs,
Department of Energy, to Mr. Griffith.......................... 117
Report by the Boston Consulting Group on behalf of Breakthrough
Energy and Third Wave, ``Impact of IRA, IIJA, CHIPS, and Energy
Act of 2020 on Clean Technologies,'' April 2023................ 119
GROWING THE DOMESTIC ENERGY SECTOR SUPPLY CHAIN AND MANUFACTURING BASE:
ARE FEDERAL EFFORTS WORKING?
----------
TUESDAY, MAY 23, 2023
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:30 a.m., in
room 2322 Rayburn House Office Building, Hon. Morgan Griffith
(chairman of the subcommittee) presiding.
Members present: Representatives Griffith, Burgess,
Guthrie, Duncan, Palmer, Lesko, Crenshaw, Armstrong, Cammack,
Rodgers (ex officio), Castor (subcommittee ranking member),
DeGette, Schakowsky, Tonko, Ruiz, Peters, and Pallone (ex
officio).
Also present: Representatives Pence and Dingell.
Staff present: Kate Arey, Digital Director; Sean Brebbia,
Chief Counsel, Oversight and Investigations; Lauren Eriksen,
Clerk, Oversight and Investigations; Christen Harsha, Senior
Counsel, Oversight and Investigations; Tara Hupman, Chief
Counsel; Peter Kielty, General Counsel; Emily King, Member
Services Director; Chris Krepich, Press Secretary; Karli
Plucker, Director of Operations (shared staff); Austin Flack,
Minority Junior Professional Staff Member; Waverly Gordon,
Minority Deputy Staff Director and General Counsel; Liz Johns,
Minority GAO Detailee; Will McAuliffe, Minority Chief Counsel,
Oversight and Investigations; Christina Parisi, Minority
Professional Staff Member; Andrew Souvall, Minority Director of
Communications, Outreach, and Member Services; and Caroline
Wood, Minority Research Analyst.
Mr. Griffith. The Subcommittee on Oversight and
Investigations will now come to order.
The Chair now recognizes himself for 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. H. MORGAN GRIFFITH, A REPRESENTATIVE
IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA
Welcome to today's hearing of the Subcommittee on Oversight
and Investigations. Our country's national security and
economic prosperity depends on stable access to the products
and materials our energy producers need. Unfortunately, we
currently depend on international rivals such as China and
Russia for much of these energy supply chain inputs.
According to a recent report by the Heritage Foundation, of
the 35 minerals identified as ``critical'' by the Department of
the Interior in 2021, the United States is 100 percent reliant
on imports for at least 20 of them.
Additionally, the same report reveals that, while China
only possesses about 36 percent of the world's rare earth
element reserves, it controls more than 70 percent of the
world's extraction capabilities and 90 percent of worldwide
processing capacity.
Last year, the White House drew attention to the fact that
China controls 87 percent of the global market for magnets,
which are used for everything from electric vehicle motors to
electronics, and all manner of power-producing turbines.
The Biden administration has extolled the billions of
dollars in grants and incentives in the Infrastructure
Investment and Jobs Act and the Inflation Reduction Act as a
key component of our national strategy to secure our energy-
sector supply chains and support a domestic manufacturing base.
However, as Department of Energy Inspector General Teri
Donaldson testified before this subcommittee just a few weeks
ago, this speedy spending spree carries risks, such as funding
flowing through new programs that may lack appropriate internal
controls and the push to get money out the door without
adequate oversight of who that money is actually going to.
This committee has led the way in expressing our concern
and inquiring into how the Department is vetting the entities
competing for its large awards.
Last December, Chairwoman McMorris Rodgers and I sent a
letter to Secretary of Energy Jennifer Granholm requesting more
information regarding the Department's selection of Microvast
as an awardee under its Battery Materials Processing and
Battery Manufacturing and Recycling Funding Opportunity.
Microvast's selection raised concerns regarding Chinese
Communist Party influence. Just last night, our committee was
informed that the DOE has decided not to proceed with this
award.
Others have expressed concern about the nature of
partnerships and joint ventures between United States companies
and Chinese companies, as these entities attempt to take
advantage of the Inflation Reduction Act's tax credits and
other incentives.
In just one example, in my home State, the Commonwealth of
Virginia, our Governor, Glenn Youngkin, withdrew our State from
the process of incentivizing Ford Motor Company's proposed
electric vehicle battery factory because of Ford's subservient
role in a partnership with a Chinese company.
Today we will take a closer look at some of our Federal
policies and programs designed to address reliance on foreign
adversaries for important energy-sector products and materials
and scrutinize whether they are really serving their purported
goals.
While I appreciate the Department of Energy's efforts to
update the Committee on its new, quote, ``Research, Technology,
and Economic Security,'' end quote, measures and the
opportunity to discuss this issue briefly with Secretary
Granholm a couple of weeks ago, many questions remain on
awardee vetting.
I commend the Department for its increased scrutiny of the
Microvast award and appreciate them backing up on that,
retracting that.
I had originally hoped to have the Department of Energy
Office of Manufacturing Director to join us today for this
hearing. He could have delivered this good news in person.
Unfortunately, they have refused to come before us, citing
inadequate notice, despite receiving an invitation to testify
on May the 9th. This in and of itself makes me wary of the
Department's vetting. Since they are supposed to be doing this
work on an ongoing basis, I would have expected 2 weeks to be
more than enough time for the Office to provide a well-informed
witness who could articulate the program goals and the award
review processes.
And if he is here without letting us know, we are prepared
to receive their testimony. Even though not in attendance
today, this conversation is too important to postpone.
First, the subcommittee welcomes Mrs. Diana Furchtgott-
Roth--I hope I got that close--director of the Center for
Energy, Climate, and Environment at the Heritage Foundation and
adjunct professor at the George Washington University.
We are also joined by Mr. Jeremy Harrell, chief strategy
officer at ClearPath.
Dr. Ellen Hughes-Cromwick, senior resident fellow for Third
Way's Climate and Energy Program, will also be testifying.
And finally, we will have Mr. Kenny Stein, vice president
for policy at the Institute for Energy Research.
Again, we are disappointed by the Department's decision not
to attend but do thank the witnesses who are here for sharing
their ideas.
I look forward to today's discussion and hope that we can
further the conversation on reshoring and near shoring of our
essential supply chains.
[The prepared statement of Mr. Griffith follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Griffith. With that, I yield back.
And I now recognize the ranking member of the subcommittee,
Ms. Castor of Florida, for her 5-minute opening statement.
OPENING STATEMENT OF HON. KATHY CASTOR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Ms. Castor. Well, thank you, Mr. Chairman.
Good morning. There is a good-news story emerging across
America as a result of the landmark Inflation Reduction Act,
the Bipartisan Infrastructure Law, and the CHIPS and Science
Act. It is a story of cleaner, cheaper energy, money back into
the pockets of Americans at a time that they really need it.
It is a story of new jobs, new factories, new
opportunities, magnets for private-sector capital and
investment.
It is a critical story of American competitiveness as China
has control of too many of the critical supply chains and
building blocks of clean energy.
It is a story of empowerment of our partners at the State
and local level to help them build healthier communities.
I believe in America and American workers. I know we can
outcompete any nation in the world, and the Inflation Reduction
Act, the Bipartisan Infrastructure Law, and the CHIPS and
Science Act are helping to level the playing field as China has
made much larger investments in critical minerals, vehicles,
often doing so at unfair advantage.
Boosting America's competitiveness should not be a partisan
issue, and outside of the Congress, it is not. The
announcements of new American factories for batteries, electric
cars and trucks, solar manufacturing are so numerous now that
it is difficult to keep up with them.
Since the enactment of the Inflation Reduction Act, we have
seen the creation of about 142,000 jobs, over $240 billion in
new investment in American communities across 31 States.
These are good-paying jobs in growing industries that will
power the country's future and help us cut climate pollution
substantially.
These investments will create even more jobs and unleash
new technologies and domestic clean energy supply chains to
give our neighbors a brighter future.
Actually, most new factory announcements are happening in
areas that are represented by Republicans who voted against the
Inflation Reduction Act and the Bipartisan Infrastructure Law.
But that is OK. What is important is that we are rebuilding
American manufacturing, spurring innovation, and creating
resilient supply chains for critical minerals like lithium, for
example, that's essential to manufacturing advanced energy
storage in batteries.
The Department of Energy, as we heard from Secretary
Granholm about 11 days ago, is ramping up its efforts to lead
an energy-secure, sustainable economy. DOE is doing the hard
work necessary to close the gap that emerged over decades due
to underinvestment in America's industrial base. Over the past
few decades, China has made large investments to take an early
lead in the global energy supply chain in clean energy.
But smart, long-term investments in American ingenuity are
how we will catch up and remain competitive for generations to
come. America can be the world leader in clean and renewable
energy, new electric cars and trucks, and in industrial
manufacturing to lower costly climate pollution that is
wreaking havoc on our communities back home.
And our allies want us to succeed because all the people
across the world are grappling with the harms and the rising
cost of climate change. That is why President Biden is
committed to expanding our partnerships with our allies.
Just this past weekend, Australia and the United States
committed to enhance cooperation designed to advance ambitious
climate and clean energy action this decade at home and abroad.
The framework intends to coordinate policies and
investments to support the expansion and the diversification of
responsible clean energy and critical mineral supply chains,
accelerate the development of markets for established and
emerging technologies, meet the growing energy and adaptation
needs in the Indo-Pacific, and enhance the region's role as a
driver of resilient and sustainable global prosperity.
While these investments will revitalize American research,
development, and manufacturing capabilities, they will also
give other countries the ability to buy essential clean energy
materials and products from America.
My Republican colleagues have consistently raised concerns
about investing in America's future to ensure our continued
energy security, build a competitive edge, bring outsourced
manufacturing jobs back to the United States, and compete with
China.
Many of them opposed the legislation that is investing in
America at the same time. It does not make any sense. So let's
turn the page and work together to invest in American workers
and competitiveness, including the new jobs in partnership with
the Department of Energy.
Otherwise we will continue to fall behind and miss yet
another opportunity to build a clean economy and lead the world
in doing so.
Thank you, Mr. Chairman, and I yield back.
[The prepared statement of Ms. Castor follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Griffith. The gentlelady yields back.
I now recognize the chairwoman of the full committee, Mrs.
McMorris Rodgers for her 5-minute opening statement.
OPENING STATEMENT OF HON. CATHY McMORRIS RODGERS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON
Mrs. Rodgers. Thank you, Chair Griffith.
We should all agree that our country must have a stable,
secure supply chain for people to power our homes and
businesses, fill up our gas tanks, and find opportunities for a
better life.
We cannot be energy secure if we are at the mercy of our
adversaries. China, for example, has been crystal clear of its
ambitions to rival the United States for economic supremacy and
dominate the entire value chain for new technologies.
The threat of losing ground to China grows more intense as
President Biden rushes to force America to run on entirely
renewable energy as part of his rush-to-green agenda.
As the Subcommittee on the Environment, Manufacturing, and
Critical Materials discussed last month, this forced, rushed
transition hands China even greater control of our energy
supply chain.
According to a recent International Energy Agency report,
China dominates every stage of electric vehicle battery
production downstream of mining.
China also possesses 97 percent of the world's solar wafer
capacity.
The Biden administration has stated that it will address
this problem, at least in part, through the tax breaks,
financial awards, and expanded loan authority part in the
Infrastructure Investment and Jobs Act, IIJA, and Inflation
Reduction Act, IRA.
Heavily subsidizing renewable energy and shoveling money in
the form of financial awards out the door is not the solution.
These policies undermine our energy security and financially
burden Americans already struggling with a high cost of living
and would leave us even more reliant on China.
The Department of Energy created three new offices,
including the Office of Manufacturing and Energy Supply Chains,
or MESC, which is in charge of several IIJA and IRA programs.
As Chair Griffith said, we have posed a lot of questions
about the Department of Energy's proposed award to Microvast, a
company whose production is based in China.
Yesterday evening, the Department informed the committee
that it has decided not to proceed with the $200 million award
to Microvast. While the Department did not provide a reason for
this decision, the development reinforces our concerns about
the process for vetting applicants for these substantial
awards.
The Department's refusal to participate in the hearing is
even more concerning in light of this development.
I am concerned that the Department may be entertaining
other problematic awards and only decided not to proceed with
this after our congressional scrutiny. The Department's refusal
to appear today does nothing to alleviate our fears, and this
refusal to answer questions from the American people's elected
representatives is completely unacceptable.
On May 9th, this subcommittee formally invited Acting
Director David Howell to appear before us at this hearing. The
Department refused to have Acting Director Howell or any
witness appear on this date. In its official response, the
Department told the committee that it had already furnished two
witnesses to the committee.
I will include in the record the committee's May 9th
invitation to Acting Director Howell and DOE's response, dated
May 19, refusing our invitation.
Mr. Griffith. Without objection.
[The information appears at the conclusion of the hearing.]
Mrs. Rodgers. The Department of Energy not only refused to
provide transparency to this committee, but they are refusing
to be transparent to the American people who deserve every
assurance that their tax dollars are not being funneled to
China.
We will continue to demand transparency and accountability
from the administration to guard against Federal waste of funds
through poor investments and further dependence on our
adversaries.
Since day one of the 118th Congress, my colleagues and I
have led to celebrate American innovation and our energy
dominance to build a better and more secure future for those we
serve. Today's hearing is just another step towards that goal.
We are asking the tough questions to make sure the Biden
administration's spending spree on rush-to-green programs is
not weakening our manufacturing sector or supply chain
security.
We are disappointed that the Department and Acting Director
David Howell decided not to participate in today's hearing,
especially given DOE's poor judgment regarding the Microvast
grant.
I am grateful, however, to our witnesses for appearing
today to lend their expertise to help focus our efforts on our
energy sector and identify the threats posed by foreign rivals
and enhance our international competitiveness.
I look forward to today's discussion.
And I yield back.
[The prepared statement of Mrs. Rodgers follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Griffith. The gentlelady yields back.
I now recognize the ranking member of the full committee,
Mr. Pallone of New Jersey, for his 5-minute opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Today the subcommittee is examining Federal efforts to grow
the domestic energy sector supply chain and manufacturing base.
Last Congress, Democrats acted and delivered for the
American people by passing the landmark Inflation Reduction Act
and the Bipartisan Infrastructure Law. Together these laws make
unprecedented investments that bolster the energy sector and
finally make it possible to combat the worsening climate crisis
and revitalize American manufacturing and competitiveness.
Thanks to these two laws, we are finally investing in
America's future by bringing good-paying jobs back to the
United States and unleashing American manufacturing and
innovation.
Revitalizing the domestic energy supply chain is a core
part of these efforts. It is critical because our Nation has
fallen behind in producing the critical minerals needed for the
clean energy transition.
The Inflation Reduction Act invests in building domestic
supply chains for critical minerals for renewable energy. These
investments will also ensure that the critical minerals we use
are produced with high environmental standards and protections
for workers that our foreign competitors lack or often ignore.
The Inflation Reduction Act and Bipartisan Infrastructure
Law make investments that restore the competitive edge to
American manufacturers and innovators so that we can not only
catch up but surpass countries like China on renewable energy
manufacturing and technology.
The Department of Energy is leading the charge on these
efforts by leveraging decades of research and development,
commercialization, and investment experience. DOE is well
positioned to make targeted investments to revitalize
communities and rebuild domestic manufacturing.
As one example, DOE's recent loan to Syrah Technologies
supports domestic mineral processing in Louisiana that is
critical to manufacturing lithium ion batteries, which are
critical components in electric vehicles and energy storage.
These types of investments are going to be essential in our
efforts to lead the world in the clean energy transition.
But our unprecedented investments will not have the
greatest impact without proper controls in place, and that is
why Democrats included statutory oversight provisions in both
laws to ensure these programs are in the best position to
succeed.
Just yesterday it was reported that the Department of
Energy ended the negotiations of Microvast, a battery
manufacturer that applied for Federal money and had been
scrutinized for ties to China. While we do not--we do not know
the details behind this decision, it shows that the DOE is
taking its stewardship of taxpayer money very seriously.
In fact, to conduct even more rigorous vetting of
applicants, last year DOE established a research, technology
and security issues group specifically tasked with assessing
risk of loans and award applicants, including those with
foreign ties.
And this group uses not only DOE expertise but also draws
on the expertise of other agencies, including the Committee on
Foreign Investment in the United States, to thoroughly vet
applicants for Federal backing.
Now, you would think the Republicans would be applauding
DOE's efforts. For years my Republican colleagues have bemoaned
the state of American manufacturing and warned that China was
pulling ahead. Yet not one Republican member of the committee
supported either the Inflation Reduction Act or the Bipartisan
Infrastructure Law.
In fact, my Republican colleagues spent last Congress
opposing these bills at every turn and now are attempting to
undermine them however they can. The fact that no DOE official
is testifying today before the committee is not DOE's fault. It
is the Republican majority's fault. The DOE letter that Chair
Rodgers referenced outlines the back-and-forth communications
on this hearing. It is clear Republicans were planning to hold
this hearing in June and were working with DOE to get that
scheduled when all of a sudden the date changed earlier this
month to today.
So it is a shame that DOE was not given adequate notice,
and instead we are left with a rushed hearing on this important
topic.
Republicans talk about wanting to outcompete China, but
they all opposed the very laws that are going to help us do
just that.
So hope we can have a real hearing in the near future where
we can hear from DOE about the important safeguards they are
already putting in place to protect the taxpayers' investment
and rebuild our economy for a clean future.
And with that, Mr. Chairman, I yield back.
[The prepared statement of Mr. Pallone follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Griffith. The gentleman yields back.
That concludes Member opening statements. The Chair would
like to remind Members that, pursuant to committee rules, all
Members' written opening statements will be made a part of the
record.
We do ask that Members provide those opening statements to
the Clerk promptly.
We want to thank our witnesses for being here today and
taking time to testify before the subcommittee. You will have
the opportunity to give an opening statement followed by a
round of questions from Members.
We invited several witnesses to today's hearing, including
David Howell, Acting Director and Principal Deputy Director,
Office of Manufacturing and Energy Supply Chains, Department of
Energy. We did not expect him, but if he is here, we are
prepared.
Seeing that he is not here, unfortunately, it is true that
Acting Director Howell and DOE declined our request, and as Mr.
Pallone said, maybe we can get him in another day, but it does
seem to me that if this is what your job is, you ought to be
able to answer questions without more than 2 weeks of
preparation.
But whatever, we do have witnesses that we are very
thankful for for being here today with us.
Diana Furchtgott-Roth, director, Center for Energy, Climate
and Environment--and you all can go ahead and step forward, the
other witnesses--of the Heritage Foundation, and adjunct
professor, George Washington University.
Jeremy Harrell, chief strategy officer, ClearPath.
Ellen Hughes-Cromwick, senior resident fellow for Climate
and Energy Program, Third Way.
And Kenny Stein, vice president for policy, Institute for
Energy Research.
We appreciate you being here today, and I look forward to
hearing from each of you.
As you all are aware, this committee is holding an
oversight hearing, and when doing so, we have the practice of
taking testimony under oath.
Do any of the witnesses have an objection to testifying
under oath?
[No response.]
Mr. Griffith. Seeing no objection, we will proceed.
The Chair also advises that you are entitled to be advised
by counsel pursuant to House rules. Do you desire to be advised
by counsel during your testimony today?
[No response.]
Mr. Griffith. Seeing that no one wishes to be represented
by counsel, would each of you rise and raise your right hand,
please?
[Witnesses sworn.]
Mr. Griffith. Each one responded in the affirmative.
Seeing that the witnesses did answer in the affirmative,
you are now sworn in and under oath, subject to the penalties
set forth in title 18, section 1001 of the United States Code.
With that, we will now recognize Ms.--and help me with the
pronunciation--``Furgott-Roth.''
Did I get close?
Ms. Furchtgott-Roth. Absolutely. Furchtgott-Roth.
Mr. Griffith. Furcht, Furcht. I left out the R. I
apologize.
Ms. Furchtgott-Roth. No, no.
Mr. Griffith. Furchtgott-Roth, for 5 minutes to give an
opening statement.
STATEMENTS OF DIANA FURCHTGOTT-ROTH, DIRECTOR, CENTER FOR
ENERGY, CLIMATE AND ENVIRONMENT, THE HERITAGE FOUNDATION, AND
ADJUNCT PROFESSOR, GEORGE WASHINGTON UNIVERSITY; JEREMY
HARRELL, CHIEF STRATEGY OFFICER, CLEARPATH; ELLEN HUGHES-
CROMWICK, Ph.D., SENIOR RESIDENT FELLOW, CLIMATE AND ENERGY
PROGRAM, THIRD WAY; AND KENNY STEIN, VICE PRESIDENT FOR POLICY,
INSTITUTE FOR ENERGY RESEARCH
STATEMENT OF DIANA FURCHTGOTT-ROTH
Ms. Furchtgott-Roth. Thank you very much.
Chairman Griffith, Chairman Rodgers, Ranking Member Castor,
Ranking Member Pallone, distinguished Members, I am honored to
testify before you.
America is energy independent due to vast resources of oil
and natural gas that have been discovered and produced through
innovative technology.
However, should EPA finalize recent proposed regulations on
tailpipe emissions and power plant emissions without major
changes, America would become less energy independent and more
dependent on China for wind turbines, solar panels, and
electric batteries, as well as associated components.
As the world has seen from Russia's cutoff of natural gas
supplies to Europe, it is not prudent to rely on an unfriendly
country for a vital resource, such as energy, because
restrictions can raise energy prices and carry disastrous
economic and social consequences.
America can develop an energy-sector supply chain and
manufacturing base that is less subject to control or
disruption by foreign adversaries. American can increase
domestic oil and natural gas production and quickly build the
associated infrastructure to transport these resources, such as
pipelines and LNG terminals.
The Biden administration has learned nothing from the
recent actions of Russia and the 1970s actions of OPEC. The
administration is pushing a futile climate plan that is only
guaranteed to harm Americans and America while strengthening
belligerent China.
The plan will make Americans poorer, hungrier, and less
likely to be housed and more unhealthy. Electricity prices will
rise, gasoline prices will rise, and cars that people now enjoy
will be unaffordable. Even prices of used cars--and over 60
percent of car sales are used cars--will rise.
Deaths on the road will rise because old cars do not have
new safety features, and people will not be able to afford new
cars or more recent models of used cars.
Ultimately, the test for any policy is the price that it
exacts to achieve its aims. These EPA rules will not achieve
their aims, yet they will exact a toll on the livelihoods and
well-being of poor and middle-income people because the price
of things they depend on will rise.
The policy is a model of futility.
Congress intended to use the tax credits and the deductions
in the Inflation Reduction Act to go to American companies, to
provide livelihoods for Americans, and to increase American
independence.
But this is not happening. Chinese firms are partnering
with American companies to get tax credits. Ford and
Contemporary Amperex Technology Co., Limited, know as CATL,
have a joint enterprise in Michigan. Beijing will be able to
control both the technology and the factory operations at the
$3.5 billion plant.
CATL could decide to pause its Michigan plant any time due
to political tensions between the United States and China.
China dominates battery technology, accounting for over 70
percent of global electric vehicle battery production capacity,
and CATL is the largest producer, profiting from close
relations with the Chinese Communist Party.
Similar workarounds can be seen with EV tax credits. EVs
are supposed to have a certain share of domestic production to
get the credit. That is what all of you put in the law.
But a giant loophole exists for leased vehicles. The
Treasury has ruled that commercial vehicles do not have to meet
domestic requirements to get the credit, and leased vehicles
count as commercial. People can lease EVs rather than buying
them and take advantage of the $7,500 of tax credits in lower
lease payments, just as they would pay lower auto loan car
payments if the EV had the required domestic content.
This tax treatment benefits the Chinese because they
produce the EVs.
All of you should make sure that the tax credits intended
for domestic manufacturers of batteries and EVs, as you wrote
it in law, are used by American companies and not Chinese
companies, and roll back agency regulations and guidance that
allow foreign companies to benefit.
The U.S. energy sector supply chain cannot produce all the
resources to handle the regulatory push to transition wholesale
to renewable energy resources and electrification without
substantial increases in prices, which disproportionately hurts
poor people.
Many thanks for allowing me to testify today.
[The prepared statement of Ms. Furchtgott-Roth follows:]
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Mr. Griffith. I appreciate your testimony.
I now recognize Jeremy Harrell for his 5-minute opening
statement.
STATEMENT OF JEREMY HARRELL
Mr. Harrell. Thank you, Mr. Chairman, for the opportunity
to testify today.
The U.S. has a national security imperative to take on
China and Russia in technological innovation and energy
exports. These adversaries are deploying vast resources around
the world to advance their geopolitical aims and dominate the
global energy sector.
Here are a few alarming facts. Between 2017 and 2022,
Russian and Chinese nuclear reactor designs captured 87 percent
of nuclear construction globally through their state-owned
enterprises.
The U.S. and our allies have sanctioned the Russian oil and
gas sector post-Ukraine invasion, but the Russian nuclear
industry has largely dodged those sanctions. They remain the
only source of large volumes of HALEU, the fuel needed for many
of our advanced technologies, and have been supplying more than
20 percent of the fuel for our current fleet.
The U.S. is also 100 percent reliant on imports for 12 of
the 50 critical minerals essential to our economy and national
security, and China was the leading producer of 30 of those 50.
There are countless other examples.
The U.S. strategy that sinks our R&D capabilities with
targeted free market incentives and proactive trade policies is
needed to put the U.S. back in the leadership role.
Our Nation must double down on recent public- and private-
sector momentum to produce more and innovate faster. By
securing a clean, affordable, resilient energy future
domestically, the U.S. can also lead on energy exports and
global emissions reductions.
To achieve those goals, Congress can do three things.
First, modernize permitting. The single largest mover of
private-sector investment is regulatory certainty. Never has
the phrase ``time is money'' been more appropriate.
Developers can only build new energy infrastructure as fast
as Federal, State, and local governments can permit them, and
right now that is not fast enough.
Fortunately, fixing our outdated system is the top of the
congressional agenda. Reform must flip the permitting paradigm
from one that favors stopping a project to one that expedites
the approval for projects with a net benefit.
Six years to permit a CO2 storage site, 15 years
to greenlight a new interstate transmission line, or 4 years to
license a new nuclear reactor design, let alone permit the
construction, are simply not fast enough. A system that
promotes good outcomes, both economic and environmental, is the
only way to build at the pace and scale required to meet
America's needs.
Second, we must capitalize on the Energy Act of 2020, the
Bipartisan Infrastructure bill, and the CHIPS and Science Act
to more effectively bolster our energy supply chains and
commercialize new technologies.
The U.S. will not beat China in its own belt-and-rolled
model, nor should it. The U.S. is a more attractive development
partner because of our values and our expertise, not because we
can outsubsidize the competition.
Targeted Federal policy should empower American
entrepreneurs, accelerate American innovation, and foster
private-sector investment into American industries.
The DOE and our national labs can play a significant role
with proper program implementation. For example, the bipartisan
demonstration programs need to be additive, not duplicative to
private-sector investment.
The program should support cutting-edge and capital-
intensive technology that power and industrial sector leaders
may not do alone. This means ensuring proper use of taxpayer
resources all the way to project delivery, investing in
industries where the U.S. could develop a leading edge, and
ensuring the maximum benefit goes to the American supply chain.
Carbon capture is a great example. Forty percent of
projects in development globally are in the United States. We
have the lead on other countries through a combination of
engineering expertise, technical leadership, and bipartisan
policy, like the 45Q tax credit along with the DOE Carbon
Capture Demonstration Program.
Going forward, the U.S. can parlay this leadership edge
into a project network here that supports grid reliability and
American manufacturing, while exporting to coal- and gas-
reliant trading partners.
And third, let's foster more global market opportunities
for American technologies. The economic opportunity for the
U.S. is remarkable. More than 52 countries could have markets
for new nuclear alone, representing a roughly $380 billion-per-
year market opportunity by 2050.
Getting domestic policies right will help scale up a new
clean tech and drive down costs. Our country must then
prioritize market access abroad, the removal of trade barriers,
and better leverage agencies, like the International
Development Finance Corporation, to compete against our rivals
but with market-based tools.
For example, Romania broke a financing agreement with China
in 2020 and then penned a roughly $9 billion deal to build two
new reactors with the support of the U.S. EXIM Bank.
In conclusion, the U.S. has an opportunity to lead the
global market, but without a more focused and nimble Government
partner, American entrepreneurs could lose to China. By
modernizing permitting, capitalizing on recent bipartisan
policy wins, and improving our export markets, we will be on a
more clear path towards global energy supply chain leadership.
I look forward to your questions. Thank you.
[The prepared statement of Mr. Harrell follows:]
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Mr. Griffith. Thank you.
I now recognize Ellen Hughes-Cromwick for her 5-minute
opening statement.
STATEMENT OF ELLEN HUGHES-CROMWICK, Ph.D.
Dr. Hughes-Cromwick. Good morning, Chairman Griffith,
Ranking Member Castor, and members of the subcommittee. It is
such a honor to be here today.
My name is Ellen Hughes-Cromwick, and I am representing the
Climate and Energy Program at Third Way. As a team of
researchers and policy experts, we design and advocate policies
that drive innovation and deployment of clean energy
technologies.
I have worked at Ford Motor Company as their chief
economist, and I have also served as associate director of the
University of Michigan Energy Institute and as chief economist
of the U.S. Department of Commerce during the Obama
administration.
Recently I co-led a study commissioned by Third Way and
Breakthrough Energy, which analyzed U.S. competitiveness across
all of the supply chain segments for 10 clean energy
technologies. This focus of research helped us to identify
areas of opportunity for U.S. businesses and industry and to
measure gaps that could hinder the economic opportunity that
can be garnered from these activities.
Indeed, there is emerging evidence that the Bipartisan
Infrastructure Law, the CHIPS and Science Act, and the
Inflation Reduction Act are fostering investments in and a
reshoring of the clean energy supply chain and the associated
manufacturing base.
My testimony today addresses several aspects of this by
reviewing evidence from announcements and actions being taken
by businesses in response to the laws. I will highlight the
results from the study on U.S. competitiveness that indicates
further expansion in the domestic supply chains for clean
energy technologies.
The Bipartisan Infrastructure Law, CHIPS and Science Act,
and the Inflation Reduction Act are beginning to result in the
substantial number of investments across a host of clean energy
technologies. As an example, there is already data showing
substantial investments in battery cells, critical minerals, EV
assembly, and solar, just to name a few.
We are at the beginning stages of the law's deployment of
funding in incentives. It is important to monitor and track
investment and job announcements and to engage business and
industry representatives in order to monitor and evaluate the
impact of the law's investments on economic growth and job
creation.
Finally, sustainable business, viable restructuring of the
supply chain for manufacturing will take time. As my experience
at Ford Motor Company showed, companies engage in purchasing
strategies that extend over a period of time, 3 to 5 years.
Indeed, it takes 3 to 5 years to bring a product to market.
And the length of that supply chain in restructuring will
take time, and that is why the laws extending for a 10-year
period map directly to what companies need to do, i.e., execute
a 10-year business plan. This is not something that happens
overnight.
Thanks to these laws, the U.S. is now making progress in
many areas, and policy stability is very important. That allows
companies to engage in a stable business plan development over
an extended period of time.
Thank you very much for your time today, and I look forward
to discussion.
[The prepared statement of Dr. Hughes-Cromwick follows:]
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Mr. Griffith. I appreciate the gentlelady's testimony and
now recognize Mr. Stein for his 5-minute opening statement.
STATEMENT OF KENNY STEIN
Mr. Stein. Mr. Chairman, thank you for the opportunity to
testify at this hearing.
Vast subsidies for politically favored industries are
rarely a wise use of taxpayer funds. Politicians are very bad
at identifying the productive technologies or foreseeing future
economic trends.
This means industrial policy is distortive and often leads
to inefficient and wasteful resource allocation. Industries
chase Government money and mandates rather than catering to
customers or working to innovate for the future.
The copious suite of subsidies crammed into the misnamed
Inflation Reduction Act, as well as the spending in the
Infrastructure Investment and Jobs Act meant to support green
energy, share these usual deficiencies.
However, the IRA particularly goes further than merely
misguided industrial policy because the industries singled out
for the most generous subsidy--namely wind, solar, and
batteries--are not domestic industries.
The inputs and components that will build the subsidized
green energy system envisioned by the IRA and the IIJA will
come from foreign countries, especially China, which thoroughly
dominates both the solar and batteries industries and is a
major part of the wind industry.
The IRA thus discards even the usual justifications for
industrial policies, such as supporting domestic industry or
security. This green industrial policy actually seeks to
destroy domestic energy and replace it with foreign energy.
The problem with wind, solar, and batteries is that they
require an enormous amount of materials to build. For example,
a typical electric car requires six times the mineral inputs of
a conventional car, mainly due to the battery module, and an
onshore wind plant requires nine times more mineral resources
than a gas-fired plant.
Since 2010, the average amount of minerals needed for a new
unit of power generation capacity has increased by 50 percent
as the share of renewables and new investment has risen.
Unlike oil and natural gas, which are found and produced
around the world, the production of the main green minerals is
quite concentrated. In 2019, for example, the top three
extractors of copper, nickel produce more than half of global
production, and the top three extractors of cobalt, rare
earths, and lithium produce 75 to 85 percent of global
production.
But this mining concentration actually pales in comparison
to the concentration of processing where China dominates. China
now processes the majority of the world's nickel, cobalt,
lithium, graphite, manganese, and rare earths, which are all
key inputs to wind turbines, solar panels, and batteries.
For several of these categories, such as graphite,
manganese, and rare earths, China actually accounts for 80 to
100 percent of global production.
China's dominance goes beyond the processing itself. China
also controls the manufacturing and production of many green
energy products: around 80 percent of lithium-ion batteries
cell production, 80 to 90 percent of anode and cathode
production, and between 60 and 80 percent of polysilicon
wafers, crystalline silicon cells, and solar modules.
What all of this means is that green energy is truly made
in China. Now, the IRA did include some incentives to try and
produce many of these inputs domestically, but the process of
opening a new mine stretches for many years, if not decades,
and that assumes all goes well with the permitting and approval
process, which has not been the case under the Biden
administration.
The processing of these minerals is also very dirty and an
energy-intensive business, which is part of why so much of it
is already done in China, where what minimal environmental
standards may exist are easily ignored and cheap coal-powered
electricity is on offer.
Trying to build these processing facilities in the United
States will inevitably be stymied by the National Environmental
Policy Act or other environmental regulations.
Now, some final assembly of imported Chinese components
will probably happen in the U.S. in order to game IRA's subsidy
eligibility, but that facade cannot hide what is really going
on. Green energy will not be made in the United States any time
soon, and to subsidize green energy today is to subsidize
China.
For decades, the primary goal of American energy policy has
been security of supply to ensure that the United States can
rely on itself for energy supplies in the event of conflict or
crisis. Just in the last 5 years, we have just about achieved
that energy security that had been so elusive.
The U.S. is a net exporter of oil, natural gas, coal, and
refined products. Yet the avowed goal of the IRA is to throw
away that hard-earned security and replace our entire energy
system with inferior green alternatives sourced from overseas.
To put this in context, at the peak in 2001, the United
States relied on the Middle East for 23 percent of our oil
needs. That was viewed as a national security crisis.
The U.S. currently imports 74 percent of our rare earth
needs from China, with other major green minerals needs over 50
percent. The entire solar and battery supply chains are
controlled by China. There is no prospect of that changing in
the near future, whatever the wish of the politicians.
And even longer term, there are few past examples of
successful industrial policy. Yet we are still intentionally
seeking to increase our reliance on these Chinese energy
sources.
The IRA energy subsidies are pushing the United States
towards more expensive and less reliable electricity while also
discarding America's security in favor of dependence on China.
And for all the money appropriated in the IIJA for
transmission and electric vehicle charging, the energy sources
that spending is meant to support will not be made in the
United States anytime soon, if ever.
Green energy is made in China, and the more that the U.S.
comes to rely on these green energy sources, the more we are
relying on China.
Thank you, and I look forward to your questions.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Griffith. I thank the gentleman.
Thank you all for your testimony.
We will now move into the question-and-answer portion of
the hearing, and I will begin the questions and recognize
myself for 5 minutes.
Ms. Furchtgott-Roth, you brought up Ford and CATL, and I
brought up in my opening that that was a part of what was going
on in Virginia. Virginia was looking at doing an incentive
package, realized that it was really just an American shell
over a Chinese company, and Governor Younkin backed out of
doing any incentive plan, and they went to Michigan.
That being said, in my opening I referred to it as Ford
being subservient in the partnership to the Chinese CATL
company, the Chinese company called CATL.
Do you agree with my assessment that Ford is subservient to
CATL in that deal?
Ms. Furchtgott-Roth. Well, CATL has a tremendous amount of
power because it operates the plant. Ford officially owns the
plant, but CATL operates it. So it has a tremendous amount of
power.
Mr. Griffith. Well, in reality Ford is just the shell. It
owns the physical building but does not own any of the
technology. We are not training any American companies. We are
not creating any American companies that will suddenly have
this battery capacity.
And I believe you pointed out in your statement as well
that CATL reserves the right, if there are any tensions between
China and the U.S., that they can pull out at their discretion.
Is that not correct?
Ms. Furchtgott-Roth. That is correct, and they would also
be able to bring in their own workers if they wanted to do
that, just as they are bringing their own workers to projects
they have in Africa and Latin America.
Mr. Griffith. So we may not even get very many American
workers out of it. It may be Chinese workers brought in. Is
that what you are telling me?
Ms. Furchtgott-Roth. We do not know how many new American
jobs we are going to get out of it, and prices----
Mr. Griffith. But it is not likely to be the management
jobs, is it?
Ms. Furchtgott-Roth. No.
Mr. Griffith. No. What are some of the risks that American
companies should be mindful of if they are looking for any kind
of a partnership with the Chinese company?
And that being said, is there any Chinese company that we
could work with where they would not demand control and the
ability to pull out if there were tensions between the U.S. and
China?
Ms. Furchtgott-Roth. One big problem is that China has been
known to take the intellectual property of other countries.
There is no reciprocity when it comes to trade between China
and the United States. China makes sure that if an American
company invests in a company in China, that the Chinese own a
large stake of that company.
We do not want to be turning over intellectual property to
China. We do not want to be dependent on China for solar
panels, components, wind turbines, electric batteries, and
components of these.
We have plenty of oil and natural gas, and that produces
less expensive electricity, less expensive gasoline, and less
expensive cars. And we need to be looking at what benefits the
American public, what benefits poor people, what benefits
middle-income people who put us in these positions here.
Mr. Griffith. Mr. Stein, you noted in your testimony that,
as these supply chains are currently configured, most of the
spending from the IRA will be spent on Chinese-made inputs and
will end up enriching Chinese companies.
Can you elaborate on how any sort of nondomestic company
might attempt to gain the IRA requirements?
And what should the DOE's Office of Manufacturing be on the
lookout for so that when the next Microvast comes along, or I
would submit maybe even CATL, that we have our ability to say,
``Whoa, whoa. We are not going to do that. Let's back out''?
Mr. Stein. Sure. Well, the plant that has just been
discussed about Ford is a perfect example. It is a Chinese
company that really runs that plant. They're using Chinese
products, and it technically can qualify for the battery tax
credits because there is officially an American owner.
And you can see that especially in battery production
because of the way the tax credit is structured. It is based on
your megawatt production.
The national requirements--that was in the electric vehicle
tax credit, you know, the sourcing requirements in that--but in
the other parts of tax credits, and particularly wind and
solar, there are plus-ups sometimes for sourcing requirements,
but there is still an ongoing tax break that is available to
anybody, and since the supply chains for these products are
dominated by China, those are Chinese companies that are going
to be fueling all of these projects.
Mr. Griffith. But I thought the idea behind the bill was to
get American companies onboard, and it sounds like you agree
with my assessment that at least in the Ford-CATL arrangement,
that Ford is subservient.
Yes, they have the building, but CATL can pull out at any
time and take their technology back to China. Is that correct?
Mr. Stein. Exactly. Yes, the intellectual property is
entirely owned by a Chinese company that, frankly, is
answerable to the Communist Party.
Mr. Griffith. Yes. Mr. Harrell, do you have any
recommendations you believe that this committee could pursue on
the DOE authorities that would help to achieve actual domestic
manufacturing objectives as opposed to the subservient role of
just having an American nameplate on the outside of the
factory?
Mr. Harrell. Yes, absolutely. The Department of Energy has
to do more to ensure investments are deployed in a manner that
protects our national interest.
We need to be protecting and enforcing IP protections,
especially if Federal taxpayer resources are involved.
We need to be vetting projects from the very beginning, not
just at the award but all the way to project delivery.
We need to be tracking board membership and voting rights
and trying to figure out is there a Chinese investor influence
over the development of the company, even if they have met
those other barometers.
And ultimately, the CHIPS and Science Act had some language
that Republicans and Democrats supported to identify risk of
foreign influence.
Mr. Griffith. Right.
Mr. Harrell. And so we have to do more. Otherwise we are
affecting----
Mr. Griffith. I appreciate it. My time is up.
I yield back.
I now recognize Ms. Castor of Florida, the ranking member
of the committee.
Ms. Castor. Thank you, Mr. Chairman.
Thanks to all of our witnesses for being here.
The Inflation Reduction Act and the Bipartisan
Infrastructure Law are really helping us to ramp up U.S.
production of critical minerals, essential materials. These
investments are intended to build more resilient critical
energy infrastructure in America, lower energy costs, create
good-paying jobs across the country, and it is great to see so
many new announcements of factories and jobs opening.
This is especially important because America fell behind in
domestic manufacturing over a long period of time, and now we
have got to catch up quickly.
And while it might take us time to fully catch up, Dr.
Hughes-Cromwick, you express optimism. You said in your
testimony here we are at the dawn of a new time. We are just at
the beginning.
How should we, from your point of view, expect these
industries to develop over time?
In which areas do you see potential in the coming years?
What can we expect?
Dr. Hughes-Cromwick. Thank you for that question.
What our research has shown as we studied the U.S.
competitiveness across the supply chain segments for 10 clean
energy technologies is that the U.S. has already established a
competitive advantage in several supply chain segments.
However, in order to generate significant gains in economic
activity and jobs, the policy stimulus that you passed into law
over the last 2 years will provide a significant support to
ensure that that transformation takes place during the next 10
years.
We found in our study that the U.S. has competitive
leadership in many manufacturing industries. When we went
through a period of globalization, our companies did not lose
their competitive edge in manufacturing.
Rejuvenating that across these clean energy technologies
will generate significant market value. Indeed, our study
showed that, for those supply chain segments for which we have
the ability to build a durable competitive advantage or we now
have an existing competitive advantage, that $130 trillion of
market activity between 2020 and 2050 will be realized.
We will also have significant export opportunities in
certain supply chain segments, and that export growth will be
absolutely critical for the vibrancy of our industrial base
here and our company growth.
So very much focused on how the laws have impacted
companies and why we are seeing--it is almost drinking from a
firehose every day--a series of investments. The crowding in of
investment is taking place before us. Now we are just at the
beginning of this really incredible journey.
Ms. Castor. Well, and you--you have experience coming from
Michigan in the auto industry, I assume, and you know, we have
always been so proud that we have been the world leader in
manufacturing cars and trucks, exported them to the world, but
there is real risk right now. China is kind of eating our lunch
on electric vehicle exports.
And if we do not hop to it, do you think that we would
suffer that industrial--that important industrial base?
The manufacturing supply chains, especially in the Midwest
but across the country, could suffer, and then certainly the
investments in these clean technologies, EV cars and trucks,
should help us level the playing field.
What do you think?
Dr. Hughes-Cromwick. It is so important that the U.S.
remain a leader in the automotive industry. It has generated
significant economic activity and job gains. For every job at
an auto plant, the Automotive Alliance innovators--and I am not
sure if I got that exactly right--they estimate an additional
10 jobs created in the economy.
We have always been a leader, and we need to be a leader in
electric vehicles because the industry is moving in that
direction.
And furthermore, going to that new technology will open up
additional competitive gateways for the U.S. We are leaders in
software development. We are leaders in after-sales services
and the ability to provide additional safety features in
electric vehicles that we could not really do in an internal
combustion engine vehicle.
We need that for consumers, and I think that this kind of
support that is in the Inflation Reduction Act will guarantee
that we not only be a leader but that we will see a significant
improvement in economic growth here in the U.S.
Ms. Castor. I share your optimism. I believe in America and
American workers, and we can do this.
Thank you very much. I yield back.
Mr. Griffith. The gentlelady yields back.
I now recognize the chairwoman of the full committee, Mrs.
McMorris Rodgers, for her 5 minutes of questions.
Mrs. Rodgers. Thank you, Mr. Chairman.
The Department of Energy will implement 71 new programs,
significantly expand 19 others under the recent legislation,
hundreds of billions of dollars. I am concerned about the
Department's ability to effectively examine all the
applications for funding and their inability to prepare a
witness for this hearing does not inspire a lot of confidence
or trust as to how they plan to distribute billions of dollars.
We learned just last night that the Department of Energy
announced it is not moving forward with a $200 million award to
Microvast, a company with significant ties to the Chinese
Communist Party.
We sought more information from the Department on this
award since December, spoke with the Department about
testifying as early as April and posed questions about the
vetting process during a May 17th briefing with the DOE.
Surprisingly, the administration communicated its decision
to pull this award the night before this hearing which they
have refused to participate in and answer questions under oath.
On May 11th, Secretary Granholm appeared before this
committee and provided no indication that there were problems
with this award, despite Chair Griffith posing question on the
review process and concerns with ties to the CCP.
Now that the Department has officially decided not to move
forward, it decided not to send anyone to provide answers about
this development. I understand that the Department claimed it
could be ready for a hearing in June. I certainly hope so. The
American people deserve every assurance possible from the
Department of Energy that taxpayer dollars are not being spent
to embolden China.
Mr. Harrell, you note in your written testimony that
ClearPath has developed an interactive dashboard to track
progress across the Department's major demonstration projects
to assist with accountability and oversight.
I would say that the Department's refusal to attend today
does not facilitate accountability.
Do you have any other recommendations for the Department on
how they can move forward in implementing IIJA in a way that is
going to ensure accountability?
Mr. Harrell. Thank you, Congresswoman, for the question.
And, yes, I think that a lot more needs to be done at the
up-front part. These target investments can have a huge impact,
especially if they are used to derisk first-of-a-kind
technology.
So the Advanced Reactor Demonstration Program is a good
example, but we need to ensure that those investments are
benefited in U.S. supply chains. We need to be protecting U.S.
IP, and we need to be tracking these projects from start to
finish.
The initial award--and the Microvast example is a great
example. They made a conditional commitment effectively, and
then you go through the contract and then you go through the
project delivery. We need to be ensuring that anyone who is
receiving Federal resources to bring new technologies and
commercialize new technologies here in the U.S. are meeting the
obligations to protect U.S. national security and economic
interests from start to finish.
Mrs. Rodgers. Thank you.
You also note in your testimony that 15 percent of the
active loan applications for the Department's Loan Programs
Office are for nuclear projects.
Would you offer any recommendations for the Department of
Energy to make good on investments under the Loan Programs,
either for nuclear projects or in general?
Mr. Harrell. Yes, it is a great question. The Loan Program
can be an exciting tool to reduce risk and drive investment in
first of a kind technologies. I think one thing that
particularly Jigar Shah, who is running the program now at the
Department, has done is to ensure more technology diversity.
Like under the Obama administration most of those awards went
to renewable projects.
We need to be looking at high Cap X projects, new, first of
a kind technologies, things like advanced nuclear NCUS, and so
it is one tool in the toolbox that may not make sense for
everyone, but it is a way particularly to de-risk a private
sector investment in high capital projects.
Mrs. Rodgers. Thank you.
Ms. Furchtgott-Roth, you noted in your written testimony
that Chinese firms are attempting to partner with American
companies to try to get the tax credits.
Do you anticipate that it will become more difficult to
untangle these business agreements and decipher the national
security risk of granting financial awards to American
companies partnering with Chinese ones and determining
eligibility for tax credits as Chinese companies try to exploit
both tax credits and financial assistance?
Ms. Furchtgott-Roth. Yes, and this will make us more
dependent on China, and it will create products that are more
expensive for Americans and harder for poor and middle-income
people to afford. That is what we need to be focusing on.
Are all of these donations--all of these grants--are all
these Government grants doing good for the American people or
not?
Are they lowering prices of electricity, or are they
raising them?
I am concerned they are raising prices of electricity
because it is more difficult to integrate all of these
different renewables into the grid, and electric vehicles are
more expensive than internal combustion engine vehicles.
So all right, we are giving all these grants, but what are
we doing for the people who sent us here?
Mrs. Rodgers. Thank you.
I believe those are the questions that we must answer.
I yield back.
Mr. Griffith. The gentlelady yields back.
I now recognize the gentlelady from Colorado, Ms. DeGette,
for her 5 minutes of questions.
Ms. DeGette. Thank you, Mr. Chairman.
I guess I am kind of a little confused over here because
the topic of this hearing is ``Growing the Domestic Energy
Sector Supply Chain and Manufacturing Base: Are Federal Efforts
Working?''
And, of course, last year we passed the IRA and the
Bipartisan Infrastructure Law, which is the largest-ever
investment in the country's fight against climate change, and
it is--part of what it does is it is attempting to correct
decades of underinvestment in domestic manufacturing, critical
mineral supply chains, and renewable energy research that are
necessary to lead the clean energy transition.
And then we hear that the DOE has reviewed one of these
contracts and said, ``No, you know, our due diligence shows we
should not do it.''
Then the Republicans say, ``Well, no, you know, they should
have come in here and said why they did that.''
I was here when we did the Solyndra hearings, and the
criticism was that they did not exercise enough oversight on
these contracts.
So I would think as we--as we implement these laws, then
strong oversight is important, but just to--just to sit back
and say, ``Well, China is way ahead of us so we just should not
do anything,'' I think that is kind of what my colleagues on
the other side of the aisle are saying, but I do not think they
mean to say that.
I think what we need to do is we do need to lean in. We
need to make sure these contracts are solid, and we need to
find domestic sources.
So, Dr. Hughes-Cromwick, I want to ask you. Against that
backdrop, do you think that the programs created through the
Bipartisan Infrastructure Law and Inflation Reduction Act
actually are providing the right incentives for clean energy
companies to create domestic supply chains?
Dr. Hughes-Cromwick. Thank you for that question.
Indeed, what we have seen and what our research shows is
that there is a significant response in the form of private
investment, and that that private investment will stand up our
competitiveness across many of these clean energy technologies.
In my view, that is clear evidence that we have put on the
table a series of policy provisions and levers that allow for
that response in the private sector.
So the market economy is responding to this in a way that
is very substantive, and if we sit back and do nothing, we will
not be competitive, because our competitors are growing these
technologies quickly, and it is really beholden to all of us
for our market economy and our capitalist system to provide the
nudge in order to accelerate this deployment.
And what the laws have done is quite interesting. It has
helped to reduce the cost of production for many of these clean
energy industries and various supply chains--as much as 60
percent of a cost reduction for some of these clean energy
technologies--and as a result the deployment acceleration is
quite substantial.
Ms. DeGette. And we are never--we are never going to catch
up with China on this and overcome them unless we make these
investments both through the Government and also through our
private--our partners in private industry. Is that not right?
Dr. Hughes-Cromwick. I completely agree with that.
Ms. DeGette. We cannot just--we cannot just--Yes.
Dr. Hughes-Cromwick. We have an implicit kind of industrial
policy if we do nothing.
Ms. DeGette. That is right.
Dr. Hughes-Cromwick. Let the growth happen as it will,
but----
Ms. DeGette. OK. I do not mean to stop you, but I need to
ask Mr. Stein a question because in his written statement--or
in your written statement, Mr. Stein, you said, quote, ``Vast
subsidies for politically favored industries are rarely a wise
use of taxpayer funds.'' Is that right? You said that?
Mr. Stein. Yes.
Ms. DeGette. Well, so what do you think then? Our country
currently provides vast subsidies to the oil and gas industry.
Do you think we should eliminate those also?
Mr. Stein. Well, I am personally----
Ms. DeGette. Yes or no will work.
Mr. Stein [continuing]. Personally in favor of eliminating
the corporate taxes entirely. So.
Ms. DeGette. OK. So you think, yes, we should eliminate
them for oil and gas.
Mr. Stein. Yep, yep.
Ms. DeGette. Thanks. I appreciate that.
I yield back.
Mr. Griffith. The gentlelady yields back.
I now recognize the gentleman from Texas, Mr. Burgess, Dr.
Burgess, for his 5 minutes of questioning.
Mr. Burgess. Thank you, Mr. Chairman.
Mr. Stein, let me just ask you the same question that Ms.
DeGette just asked the other witness. Do you think in the
recently passed legislation that the right incentives are being
provided?
Mr. Stein. Well, this is the problem with industrial
policy, is that the right incentives, the incentives that
Democrats in Congress want to provide, are not being provided.
I do not think that that is necessarily the best thing for
the economy as a whole, particularly because the things that
are being subsidized, as I mentioned in my written testimony,
the wind and solar electricity generation, make electricity
prices more expensive. Even with the subsidies, it is very
consistent in the States and countries that you see more wind
electricity generation, especially, you see higher electricity
prices.
And that is only destined to go up, and that is because
there is a cost to unreliability. And that is not normally
thought of as a dollar number, but it does. You have to have
backups. You have to build more transmission.
It gets very expensive to try and make wind and solar
provide the kind of close-to-stable electricity that Americans
expect in a developed country.
Mr. Burgess. Well, you are right about Americans expecting,
because we had some experience with that a couple of years ago,
and it was very painful.
Now, the statement was also made in the question of the
previous witness that these laws passed in the last Congress
reduced the cost of production. Is that accurate?
Does it really reduce the cost of production, or does it
just increase the subsidization so that the bottom line, in
fact, reflects a lower cost?
Mr. Stein. Well, perhaps it lowers the cost to the specific
company that is building a factory, but the overall cost to the
economy, ultimately that money is coming from taxpayers. It is
not being used somewhere else. There is cost to the economy as
a whole in that.
And then when you are subsidizing something that perhaps
somebody would not normally buy or would not normally use, they
might use something that is cheaper or more useful, but because
there is a subsidy available, some are using less efficient
products.
That ultimately, again, economywide, is a cost, and you
have to think about that. There are costs to subsidies.
Mr. Burgess. Well, absolutely. Now, it came up earlier in
one of the questions that China demands control. Let me stay
with you, Mr. Stein.
China also demands the technology transfer. Is that not
correct?
Mr. Stein. Yes. China is very aggressive, particularly with
industries that it designates as strategic, and the energy
sector is a strategic sector.
For example, when Tesla wanted to build a factory in China,
the Chinese demanded an enormous amount of control. They
demanded to look at their IT, and they also engage in
industrial espionage on a grand scale. The Government uses
these companies, particularly not just state-owned companies.
There are many notionally private companies that have party
members on the board, and those companies ultimately, they have
spies within them that are committing industrial espionage.
It is a whole-of-government approach to industrial
espionage.
Mr. Burgess. So and then there is a subsequent cost to the
American taxpayer for the loss of that. Technology transfer
does not happen in an economic vacuum, does it?
Mr. Stein. Sure. Ultimately, you know, something that may
have been invented or even paid for partially with Federal
Government money, it is then taken to China and they use
cheaper labor or cheaper energy to produce something and
undercut the pricing of U.S. companies, ultimately enriching
China and enriching their Government.
Mr. Burgess. Yes, I think there was a story about a battery
that was developed in this country in the late 1990s, early
2000s that subsequently got transferred to China, again, to the
detriment to the American taxpayer who paid for the technology
to develop that magnet.
Let me ask you, Mr. Harrell, if I could, about the supply
chain risks that are being talked about. FERC and Department of
Energy held a joint conference in December to discuss supply
chain challenges related to the power system.
How is Department of Energy following up on the key
challenges and risks associated with that globally distributed,
highly interconnected supply chain?
Mr. Harrell. Yes. It is a great question, Congressman, and
it really underscore the need for more firm, flexible baseload
resources, particularly as we focus on American manufacturing.
So we see as time goes by, and particularly in electricity
markets like in the Midwest, we are about to lose a bunch of
our baseload assets. So we need to invest more in advanced
nuclear and geothermal and gas or coal or carbon capture and
efforts to get that baseload generation that, frankly, is
necessary for happy manufacturing.
Like that type of infrastructure does not work well when it
mothballs or is getting ramped up and down, and it is less
efficient and more expensive to consumers because it increases
cost of production.
Mr. Burgess. Thank you, Mr. Chairman. I yield back.
Mr. Griffith. The gentleman yields back.
I now recognize Mr. Tonko for his 5 minutes of questioning.
Mr. Tonko. Thank you, Mr. Chair.
We know that if we fail to act on climate change, the
consequences will be disastrous. The scientific literature is
clear that if we do not respond effectively to climate change,
we will be a poorer, sicker, and less competitive Nation.
So we need to continue our investments in clean energy
infrastructure to secure a brighter future. This means taking a
long-term view of our critical mineral needs and finding ways
to meet those needs ethically and sustainably.
We also need to provide consistent signals to industry that
America is, indeed, looking to the future, not dwelling in the
past. And while my Republican colleagues have suggested that we
are moving too quickly, I question whether they support the
transition at all.
It is true that today we are behind China in several key
industries, but if we never get into the race by investing to
build and reshore domestic supply chains, we will always remain
behind our foreign competitors in the energy technologies that
will be used all around our world in the years ahead.
There will be challenges, for certain, as we work to build
an economy that is less polluting and more energy independent,
and I am, indeed, willing to have honest discussions about
those challenges and how we can overcome them.
But I am entirely unwilling to throw my hands up and do
nothing because my Republican colleagues say it is too hard to
do perfectly.
So, Dr. Hughes-Cromwick, what is the effect on companies'
long-term investment decisions when Congress sends mixed
signals about support for the loan and grant programs at DOE?
Dr. Hughes-Cromwick. Thank you for that question.
What the consequences focus and really center on is the
instability of business planning for companies. If we have
policy volatility or we continue to be overly dependent on
OPEC-Plus, we will have an industry across these clean energy
technologies that will not develop and expand at the pace
necessary.
So, net, the cost is a setback, really, for our industry
growth if we don't proceed with the policy stimulus that is in
the laws that you have passed.
Mr. Tonko. Thank you.
And again, Dr. Hughes-Cromwick, what are the key challenges
that you see standing in the way of bringing energy supply
chains to the United States?
And what can Congress do to overcome them?
Dr. Hughes-Cromwick. I do think that what we see in the
provisions of these laws provide substantial growth opportunity
between now and 2032. Certainly there is--and I am not an
expert in permit reform, but that will be a key area that we
have to address. It is a gap that can constrain our ability to
grow and take advantage of the provisions in the laws that you
have passed.
So permit reform will be absolutely essential as we look
ahead over the next several years.
Mr. Tonko. And in your written statement, you wrote that
demand-side support is important for building United States
energy supply chain independence.
Could you explain what you mean by demand-side support and
provide some examples of why this support is important in
conjunction with supply chain investment?
Dr. Hughes-Cromwick. By demand side support, I am referring
to impetus or stimulus for purchases of clean energy products
like electric vehicles. When companies are restructuring
because of a new technology, they need to have some certainty
around the stability of demand over time.
And, again, for electric vehicles, the product development
and to the point of job one when an EV rolls off the assembly
line can be as much as 3 to 5 years. They are using new
technology--battery packs, battery cells, battery modules, new
electric motors--and so that does take a period of time.
And having a stable demand outlook that undergirds the
business planning is absolutely critical.
Mr. Tonko. Thank you.
I do hope my Republican colleagues can move past their
aversion to moving decisively on clean energy, because we can
achieve a clean energy transition that is dominated by
American-made technologies.
But it starts by backing America's innovators and its
entrepreneurs and adopting a can-do attitude across the aisle.
Before I yield back, Mr. Chair, I ask unanimous consent to
enter this document by the Third Way and Breakthrough Energy
that is entitled ``Impact of IRA, IIJA, CHIPS, and Energy Act
of 20220 on Clean Technologies.''
Mr. Griffith. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Tonko. With that, I thank you and I yield back.
Mr. Griffith. The gentleman yields back.
I now recognize Brett Guthrie for his 5 minutes of
questions.
Mr. Guthrie. Thank you very much.
Thank you. Thanks, Ms. Hughes-Cromwick. My dad worked for
Ford Motor Company. We are all proud of that. It is a great
industry, one of America's and the world's great companies.
So my question, you mentioned and I just want to follow up
what you said. You said it takes about 3 to 5 years to launch a
new product. That is probably pretty optimistic.
My experience has been about 5 to 7, and usually they are
doing one or two products at a time. They rotate them so they
are not reforming the whole company in a 3-to-5-year period.
And so if it takes, say, 5--3 to 5--even if I assume 3, can
Ford Motor Company change two-thirds of its fleet in the next 9
years?
Dr. Hughes-Cromwick. I am not working at Ford Motor Company
at present. So I am not privy to their business planning.
Mr. Guthrie. Do you think from just your experience in the
automotive industry, do you think an automotive company can
completely change its car models' makeup in 9 years?
Dr. Hughes-Cromwick. Ford Motor Company has announced that
they are targeting nearly 50 percent of electric vehicles by
2030.
Mr. Guthrie. OK.
Dr. Hughes-Cromwick. And they are feathering in this
additional production over this extended period of time between
now----
Mr. Guthrie. OK. So 50 percent. So of all the cars made in
America, 15 million about, cars and light trucks; so 10 million
would be two-thirds, so 50 percent would be 5 million.
And so if we made 5 million electric cars--that is
industrywide, not Ford--in 2033, that means we would make about
8 million because two-thirds by law, by rule, according to law,
would have to be electric. So that means we would make about 8
million cars and trucks in America in 2032.
You lived in Michigan in 2009, did you not?
Dr. Hughes-Cromwick. Yes, I did.
Mr. Guthrie. And we made 9 million cars in American in
2009.
Dr. Hughes-Cromwick. Yes.
Mr. Guthrie. Was that a pretty time for Michigan?
Dr. Hughes-Cromwick. Yes, in fact, I do have a model that
is a scrappage model that attempts to estimate that turnover
and also using what the companies have announced in terms of
their product cycles.
Mr. Guthrie. Are any of them saying they can do two-thirds
of their fleet in 9 years?
Dr. Hughes-Cromwick. They are moving very aggressively to
convert to the production of electric vehicles. As I mentioned,
Ford has a target for 2030, and we have also seen GM's, General
Motors' target.
And we do have the opportunity to arrive at something
around 9 million units of production by 2030. That would then
open up because once you----
Mr. Guthrie. Well, I have got to get to another question. I
am sorry.
But you said ``target'' and ``goals,'' and that is what
Secretary Granholm said when she was here, and I just want to
say that when you put something in a rule, it is not a target
or a goal. It is the force of law, and so people have to start
investing towards that. Banks have to make amendments towards
that.
So let's say we get 4 or 5 years down the road and it says,
``OK, we cannot get to 10 million. We might get to 5 million.''
I mean, hearing on the supply chain, the supply chain is
completely out of sync, and that is the problem you get to when
you--you do not nudge. I think you said ``nudge.'' I think this
is more of a push and a shove, and we want to move--and for our
friend Mr. Tonko, we want to move to a cleaner environment. I
am all for it, but what we are trying to figure out is how do
we get there without completely disrupting our automotive
industry.
So my one question. I had another one, but I want to ask
you this: Are you concerned at all about Ford's relationship
with CATL?
Do you think that fits the spirit of the IRA?
Dr. Hughes-Cromwick. I am not familiar with the agreement
with CATL. So I cannot really comment.
Mr. Guthrie. OK. Well, since you cannot, I am going to go
to Mr. Harrell because I had one other question.
So I am on a NATO committee, just met with some of our
European friends, and I will tell you there are a lot of them
extremely concerned about the decisions they made and made
themselves dependent on Russia and what has moved forward.
And so my question is, what lessons can we learn from
Europe as we try to shove ourselves into this new energy world?
Mr. Harrell. Congressman, it is a great question and really
relevant given the aftermath of the Ukraine invasion.
It was a lesson both of energy security and the need for
affordable baseload power as a whole. We saw issues where
effectively manufacturing had to be ramped down in Europe
immediately after the invasion, and sanctions went in place on
Russian oil and gas.
Our European friends, unfortunately, are very reliant on
those resources. We have done a lot to try to export to meet
those needs, but essentially they had to mothball half of their
steel and paper production in Germany. Some of that is the
result of them shutting down nuclear and going deeper in
renewables.
They have now had to ramp up coal, and emissions are going
up in China, and so we need to be focused on how we support our
energy----
Mr. Guthrie. I want to move forward.
We have got to remember China's battery technology is
because they import oil and gas. We do not have to import oil
and gas in our country. We are energy independent if we develop
it.
China has to import oil and gas. So it is a national
security issue for them because they know if they attack
Taiwan, they might get embargos of oil and gas.
And so China is not doing it for cleaning the environment.
As a matter of fact, they are putting the efforts into
increasing the grid for their battery technology by using coal
plants, a new coal plant, and we talk about this all the time,
every 2 weeks.
They are securing lithium around the world, minerals around
the world. So we just need to know that that is what is going
on with what China is doing, instead of trying to emulate their
development.
My time has expired, and I yield back.
Mr. Griffith. I thank the gentleman for yielding back.
I now recognize the ranking member of the full committee,
Mr. Pallone, for his 5 minutes of questions.
Mr. Pallone. Thank you, Chairman.
We know that the United States and other countries around
the world are forced to rely on supply chains dominated by
China for critical minerals and manufacturing and that the
United States needs to catch up in this sector to ensure our
energy and economic security.
And that is why Democrats passed the bipartisan
infrastructure bill and the IRA and CHIPS and Science Act.
These have already been mentioned by our witnesses.
But I am concerned that the Republican majority is more
interested in blocking some of these bills than in helping the
U.S. finally become more competitive in the clean energy
sector, and I am interested in making sure that these
investments that we made by these bills continue to provide
real solutions that help us meet our climate goals and ensure
that we outcompete the rest of the world in clean energy
transition.
So my questions are for--are all for Dr. Hughes-Cromwick.
Let me ask you about the impacts of these investments, that
the bills that Democrats, you know, enacted in the last
Congress and, you know, how will the clean energy incentives in
the Inflation Reduction Act, the Bipartisan Infrastructure Law
kickstart progress towards U.S. clean energy independence?
Dr. Hughes-Cromwick. Thank you for that question.
At the end of March 2023, according to the tracker that has
been developed by the Department of Energy, there have been
$100 billion of investments already announced for over 150 new
and expanded minerals, materials processing, and manufacturing
facilities.
That is just one example of the kind of stimulus that has
been spurred by the laws that you passed.
We have also seen and we have on our website a map of the
EV facilities that have been initiated as a result of these
laws.
We are seeing as well hundreds of announcements across
these 10 clean energy technologies that we are tracking,
hundreds of announcements. Just yesterday Ford Motor Company
announced five lithium ion, lithium mining deals.
Yesterday ExxonMobil announced several hundred thousand
acres in Southern Arkansas for a lithium mine.
We are seeing those types of announcements. We had a solar
announcement, I think, early this morning if I am not mistaken,
and they continue to come.
And the reason they are coming is because this is a
business opportunity for our American companies. This is not an
investment that will not bear fruit. Obviously, these companies
are making calculated risks. They have to assess whether or not
this is going to generate ongoing and persistent benefits for
American workers and for the economy.
And as they make that assessment, they are making
investments. That is a clear signal that these incentives are
going to spur this restructuring.
As I mentioned earlier, it takes a period of time for a
supply chain to restructure, and I think the stability of these
laws over a 10-year period will provide an important and
significant platform for that restructuring and opportunity for
our economy to take place.
Mr. Pallone. Well, thank you.
And I know we are running out of time, but obviously I am
concerned that when Republicans passed H.R. 1 through the House
several weeks ago, they were trying to eliminate provisions in
the Inflation Reduction Act that enabled a comprehensive
approach to fighting climate change and building a domestic
clean energy capacity.
And now they have the Default on America Act that would,
you know, cut back agency budgets and work on a lot of this.
So, you know, can you just--maybe just say yes or no? Can
you explain what progress towards clean energy independence we
stand to lose if these emerging programs are undermined?
I guess you cannot yes-or-no that. Thirty seconds.
Dr. Hughes-Cromwick. Yes. We will lose a significant
opportunity, and my concern is that we will lose
competitiveness because we have to retool and move to EVs.
Mr. Pallone. All right. Well, thanks a lot. I----
Mr. Harrell. Congressman, could I add?
Mr. Pallone. Sure.
Mr. Harrell. I think it is important that we--and there is
bipartisan support for a lot of these programs--we do need to
maximize and ensure that these investments are going into the
American supply chain.
And I think it is definitely a worthwhile conversation on a
bipartisan basis for us to talk about how we best maximize
those policies to ensure that it is actually having the
intended benefit.
And so I hope we can come together on that, because I think
it is an immense opportunity for the U.S. to go on offense.
Mr. Pallone. Well, I hope we can come together on a lot of
things. Hope springs eternal, Mr. Chairman.
Thank you.
Mr. Griffith. Thank you.
And the gentleman yields back.
I now recognize Mr. Duncan for his 5 minutes of
questioning.
Mr. Duncan. Thank you.
As subcommittee chairman on Energy, it is kind of
disappointing that the DOE failed to show up today.
You know, the Inflation Reduction Act keeps being touted by
those on the other side. The reality is--and most Americans
know this--inflation has not been reduced despite all of the
Federal money spent, and these are U.S. tax dollars being
spent.
Republicans actually like renewable energy. We just believe
that the free market should and has responded to those
opportunities that keep being thrown out.
But the reality is the administration is picking winners
and losers within the energy sector, and this, Ms. Hughes-
Cromwick, was not a nudge, it was actually a shove by the
Federal Government into one utopian direction that they have
for this Nation and the energy sector.
Look, our energy matrix is complex, but it should not be
dominated by a single set of technologies, no matter how groovy
those technologies may be. Sustainability is very critical, no
doubt, but not at the expense of energy security and stability,
which is what we think about.
You know, energy is two factors. You have got
transportation fuels, and that is fossil fuels and EVs, and you
have got baseload power generation. And as we think about our
infrastructure--and we have to build out if we go the EV route
and continue that way--we are going to have to build out an
infrastructure, a utility power infrastructure in this country.
But we are talking about supply chain issues today. How
much money, Ms. Hughes-Cromwick, do you think that the IRA and
the infrastructure bill put toward transformers, onshoring
domestic supply chains for transformers, capacitors that make
it all work?
How much money do you think was put in for those critical
components?
Dr. Hughes-Cromwick. Thank you for that question.
There is no debate. I believe that we do need additional--
--
Mr. Duncan. How much money was put in into those critical
components?
Dr. Hughes-Cromwick. I am not an expert in the power----
Mr. Duncan. Most of it--I will yield back. I will reclaim.
Most of it was put in pushing for solar panels and wind
generation. Very little was put into the things that actually
will transmit the power to where it is needed to go, and now we
are looking at transmission.
You talk about permitting reform. I do not think you
mentioned pipeline permitting reform, which is so necessary.
Volkswagen came to South Carolina, and they just about did not
come to South Carolina because we do not have firm gas
available for their production of electric vehicles and
batteries in South Carolina beyond 5 years.
So permitting reform has got to happen even for the
electrical vehicle generation and production in this country.
It is part of the process.
So the critical infrastructure ought to include capacitors
and transformers that are needed in this country.
I want to shift real quick to nuclear power because I am
very bullish on it, but before I do, I would like to ask Ms.
Hughes-Cromwick.
You worked at Ford. I asked the Ford guys a couple of years
ago about the end of life of these batteries. Nobody is
thinking about the toxicity of these batteries that go in these
electric vehicles 10 years from now when they have an end-of-
life issue.
Are they going to take them back? Are they going to
reprocess them?
I believe China will take them back and turn around and
reprocess them and sell us new batteries again. So we have got
to think about the end of life because there is a reality for
where those batteries end up.
Do they end up in a landfill? Are they reprocessed? Does
Ford have any liability there for taking those back? And that
is rhetorical.
Mr. Harrell, Congress has provided a clear signal regarding
nuclear fuel supply, right? Unfortunately, DOE has thus far
failed to follow that direction.
How can developers of a nuclear supply chain be confident
that DOE will provide timely support going forward?
That is both for domestic supply for enriched uranium and
also the possibility of reprocessing spent fuel that sits at
121 sites around the country in 39 States that is an asset. I
do not call it a waste. It is an asset that can be reprocessed
and reused.
I would love for you to speak about that.
Mr. Harrell. Congressman, that is a great question, and it
is baffling. I mean, you heard from Secretary Granholm last
week the same thing that she said 6 months ago on the fuel
program that this Congress on a bipartisan basis authorized
that is supposed to both kickstart our supply of new advance
fuels, HALEU, and support investments here.
And so I think Congress is going to have to nudge them even
harder, I think, and push the administration to move forward,
because it is an urgent need. We cannot be relying on the
Russians for either the fuel for our existing fleet that powers
20 percent of our grid in this country or the next generation.
Mr. Duncan. The next generation is where we are focusing
on.
In the last 25 seconds I just want to say H.R. 1 was
looking at returning America to energy dominance, and we have
the resources here in this country to not only meet all of our
domestic needs, but also to be a net exporter.
Natural gas has helped America lower its carbon emissions.
Natural gas is a vital component to make all of this work and
help other countries around the world lower their global
emissions as well--Vietnam, China, Europe, which is reliant.
Some countries are relying on Russia, but now they are
getting off of that. They need U.S. exports of LNG, and they
will lower their carbon emissions versus bringing coal-fired
power plants back online because you made the asinine decision
to take nuclear power out of your baseload generation in
Germany, but yet you are going to run coal.
It is just really crazy. Nuclear power is the future. We
have got to have a domestic supply chain, but we also have to
have the capacitors and the transformers and other things for
our critical infrastructure to make it all work.
And with that, Mr. Chairman, I yield back.
Mr. Griffith. The gentleman yields back.
I now recognize Ms. Schakowsky for her 5 minutes of
questioning.
Ms. Schakowsky. Thank you, Mr. Chairman.
I wanted to focus a bit on jobs, and I would say thanks to
the passage of the bipartisan infrastructure bill, the CHIPS
and Science bill, and the Inflation Reduction Act, it is
estimated that that would create nearly half a million new jobs
by 2030. But already that the Inflation Reduction Act has
created more than 142,000 clean energy jobs.
So it seems to me that I want--I wanted to ask Dr. Hughes--
let me get it right--Cromwick. OK. I got the name right. I am
sorry.
I wanted to ask you how will the Department of Energy's
work and the--how is that going to increase the number of jobs
that are available right now?
Dr. Hughes-Cromwick. Thank you for that question. It is
such a key ingredient to understanding what the opportunity is
for the U.S. economy.
The Department of Energy incentives that were passed in
your laws do provide a significant stimulus for investment, and
those investments are leading to two types of jobs in the
future.
One is just the pure construction of these new facilities,
which is absolutely critical, and those jobs are really now
just starting to be added to many of these communities across
the U.S.
And then we also see ongoing employment at these facilities
over time. So we do expect to see substantial growth.
In terms of the minerals and manufacturing facilities I
mentioned earlier, already they are tracking 60,000 jobs as of
today as a result of those investments.
So the investment will generate the capacity to offer on
those positions for workers, and furthermore, the type of jobs
being created is very positive for our economy. We are seeing
the potential for many jobs for noncollege workers as well as
those with a college degree, and that is absolutely critical
for our economy to be creating jobs across a spectrum of
different opportunities.
Ms. Schakowsky. So but let me ask you this: What can or
should the Congress do to make sure that these workers and
potential workers are adequately trained and able to fulfill
those jobs that seem to be either now available or in the
future available?
Dr. Hughes-Cromwick. You have hit one of the key enablers
for this growth in our economy and job creation. We absolutely
need appropriate workforce development and training.
Now, companies do actually undertake so much training for
their workers, but we need to make sure that those resources
are available for those who want to enter into these different
clean energy industries. So workforce training, workforce
development will be a key enabler.
Ms. Schakowsky. OK, I really do not have any more
questions. Thank you so much.
I yield back.
Mr. Griffith. I thank the gentlelady for yielding back.
I now recognize the gentlelady from Arizona, the vice
chairman of the subcommittee, for her 5 minutes of questioning.
Mrs. Lesko. Thank you very much, Mr. Chairman.
The first question I have is for any of you. JA Solar, a
Chinese-owned green energy giant whose chairman is tied to the
Chinese Communist Party, has leased a lot of land in Phoenix,
Arizona. They plan to construct a $60 million solar panel
factory that I have been told will be poised to benefit from
huge green energy tax credits included in the Inflation Act.
Jin Baofang, chairman and CEO of the Beijing-based company,
said that he had been a CCP member for 40 years.
According to a February 24th, 2023, Forbes article, Chinese
companies in the green energy space are allowed Federal tax
incentives and other benefits to the tune of millions of
dollars, thanks to the Inflation Reduction Act passed by
Congress and signed into law by President Biden last year.
The article says if you are making solar panels or EV car
batteries, the Government will help you. That includes China's
companies.
So my question to any one of you: Does, indeed, the
Inflation Act allow Chinese-owned companies, like JA Solar, to
get tax credits and grants?
Do any of you know?
Mr. Stein. Yes, it certainly does, and part of the problem
is there is no requirement of where those products are coming
from. So they can use all their existing Chinese suppliers and
then get paid by the Federal Government to provide economic
growth to China.
Mr. Harrell. I will add, not knowing the dynamics on JA
Solar in particular, in many cases the investment tax credit is
focused on where the project is going to be placed in
operation, and there are ultimately long-term requirements on
domestic content and things along those lines.
And the Congress should aggressively ensure that the IRS is
not awarding financial incentives if--what that article is
laying out in those particular situations.
Mrs. Lesko. And so my question to Ms. Roth: Do you think
that the purpose of the Inflation Act was to benefit Chinese-
owned companies?
Ms. Furchtgott-Roth. The purpose of the Act was, as
Congress intended it, to benefit American companies, and it is
ending up benefitting Chinese companies and having us more
dependent on China.
And we are in the situation where we are subsidizing the
production of these goods. We are subsidizing the investment,
which is what we could call supply-side investment.
Then we are subsidizing people to buy the goods. We are
giving people credits for investing in solar panels and putting
it in their houses.
And it is the same way with these electric vehicles. We
give them a $7\1/2\ thousand credit to buy an EV, and then we
subsidize the companies for making the EV.
This is no way to have economic growth. No way to have
economic growth. I mean, when Apple created the iPhone, there
was not any subsidies, and people are going around buying
iPhones.
Only 6 percent of vehicle sales last year, new vehicle
sales last year, were electric. There are very, very real
reasons people do not want to buy electric vehicles, including
in some cold climates they just do not work.
So we really need to be thinking about what is good for
Americans.
Mrs. Lesko. Thank you.
I guess my point is we were talking about Ford Motor
Company partnering with this Chinese company, but it was an
American-owned company, and that is why they are getting the
credits. But from what I read, it appears that, even if the
company is Chinese-owned and operating in the United States,
that they would also get the tax incentives.
And so I would ask my Democratic colleagues to consider
some reforms in this because I do not think the intention of
the Acts that were passed last Congress was to benefit Chinese-
owned companies.
In fact, I thought it was the opposite, that we are trying
to incentivize American companies to produce things, and so
that is my concern.
Mr. Harrell, in a hearing in March held by this
subcommittee, I had an exchange with the Department of Energy
Inspector General about the lack of oversight and proper
auditing within some of DOE's grant programs. In fact, she
said--the Inspector General said--that a $56 million grant
program they determined that, after the grants were given out,
they had enough resources to give the grants out, but not
enough resources or manpower to actually audit and make sure
that they were being used properly.
Are you concerned at all that the Department of Energy has
enough manpower to audit now billions of dollars in grants that
have been authorized?
Mr. Harrell. I do. I do have concerns, and I think they are
capable and I think Congress' oversight authority is going to
be really critical to that.
As I mentioned earlier, I think it is really important that
we are enforcing and protecting U.S. IP requirements under law;
that we are tracking projects from the award all the way to the
finish and project delivery.
I think it is a necessity to ensure that we are making sure
that taxpayer resources are being used to catalyze American
industries and ultimately driving our energy security as a
whole.
Mrs. Lesko. Thank you.
And I yield back.
Mr. Griffith. The gentlelady yields back.
I now recognize the gentleman from California, Dr. Ruiz,
for his 5 minutes of questioning.
Mr. Ruiz. Thank you, Mr. Chairman.
Due to the whiplash of extreme weather caused by climate
change from fossil fuel use, significant investments to reduce
pollution are on the horizon for electric vehicles and battery
storage.
The growing demand for these renewable energy sources is
depending on lithium ion, a critical mineral that is essential
to reaching a cleaner economy.
In the fifth largest--the fifth largest lithium deposit in
the world is in my district, in the Imperial Valley's Salton
Sea region known as ``Lithium Valley.''
The United States Geological Survey projects that Lithium
Valley alone could produce 600,000 metric tons annually, which
is six times the current global consumption rate.
Currently the U.S. is--sources most of its lithium from
mines in South America and refineries in China. The future of
domestic lithium production and battery manufacturing for the
United States will be in Lithium Valley, and this will shape
the future of transportation and our electric grid.
However, we must ensure we do it responsibly for the
environment and for the people. At Lithium Valley, lithium is
filtered out from the brine derived from geothermal energy
production in a closed-loop system without needing to excavate
big holes or emit dust.
Furthermore, the counties in Lithium Valley and the
Imperial Valley are the most underresourced, impoverished
counties in California, with the highest poverty rate.
We have a win-win-win opportunity: a win for our Nation's
supply chain and national security; a win against climate
change and for the environment; and win for the people with
local jobs and economic development.
Dr. Hughes-Cromwick, what will it take for the U.S. to
become a leader in lithium production and processing?
Dr. Hughes-Cromwick. Thank you for that question.
Indeed, what we are seeing is a stimulus associated with
the laws that you have passed that will allow for significant
incentive to invest in these lithium deposits.
As I mentioned earlier, ExxonMobil made an announcement
with regard to lithium mining in Arkansas just in the last day,
and we are also seeing Ford Motor Company announce five lithium
mine deals just yesterday.
Mr. Ruiz. One of those is in this Lithium Valley.
Dr. Hughes-Cromwick. And so those investments will begin to
yield as we undertake growth in both the mining and also
refining, as you pointed out.
Mr. Ruiz. Yes. Too frequently communities of color and low-
income families shoulder the burden of pollution and
environmental hazards. Moving to cleaner energy sources with
lower emissions is a step in the right direction.
However, we need to make sure that our investments are not
inflicting new harms on these underrepresented communities.
Dr. Hughes-Cromwick, as we work to stand up these new
industries nationwide, what steps can companies take to
minimize the environmental and health effects of their
industries?
Dr. Hughes-Cromwick. Many of these companies have been
undertaking significant sustainability efforts over several
years. Both environmental and labor standards are absolutely
critical for our very prized global companies that we have and
that have excelled in terms of these measures.
So it is absolutely critical that we focus in on ensuring
that any disadvantaged community----.
Mr. Ruiz. Yes.
Dr. Hughes-Cromwick [continuing]. Has an ability to----
Mr. Ruiz. Yes. Well, you know, the concern is, of course,
in the traditional mining there are a lot of big holes and a
lot of dust emitting that can harm the environment, and when
they are done near these communities, it is a big problem.
That is why these closed-loop filtration processes. It does
not emit dust. It does not dig holes to filter out the lithium.
It is a cleaner and probably one of the cleanest ways of
extracting lithium that we need.
But batteries and disposal of batteries is another issue
because a lot of these dump sites are near front-line
environmental injustice communities.
So how can Congress help to ensure that these investments
are made equitably and deliver for environmental justice
communities that have been harmed by heavy pollution?
Dr. Hughes-Cromwick. And indeed, what we are seeing is a
response, a very positive response to ensure that we uphold
both the environmental and labor standards.
I was not able to answer the question raised earlier, but
we do have significant investments from LPO, the Loan Programs
Office, for recycling, for battery recycling.
And one of our hallmark national laboratories, the Argon
National Lab, is working diligently on efficient ways to
recycle batteries. It is absolutely critical that we continue
that innovation and we are able to yield----
Mr. Ruiz. Well, I would love to follow up with you, if you
do not mind, in my office to have more of an understanding of
these efforts, because we are going to need to do something
about these batteries.
Mr. Griffith. The gentleman yields back.
I thank the gentleman and now recognize Mr. Palmer of
Alabama for his 5 minutes.
Mr. Palmer. Thank you, Mr. Chairman.
Mr. Stein, in listening to your testimony, I want to
reiterate some of the things that you said in response to this
discussion about lithium.
China controls 28 percent of the lithium reserves. Now, we
do have them here, but 67 percent of the lithium is refined in
China. We do not have any refinery capacity here.
And what concerns me is that, contrary to what my
colleagues across the aisle might think, the existential threat
to the United States and to the world really is not climate
change. It is China.
And when I look at what it is going to take, particularly
on the battery side of things, manganese, all of these things
are required for battery production. Manganese, 95 percent is
refined in China. Cobalt, 73 percent; graphite, 70 percent;
lithium, 67 percent; nickel, 63 percent.
In terms of the battery components, the cathode, 77
percent; separator, 74 percent; electrolytes, 82 percent;
anodes, 92 percent; the battery cell, 68 percent. It is all
made in China.
Now, I know in the so-called Inflation Reduction Act that
my colleagues across the aisle like to tout, they had what
appeared to be about 370-something billion dollars in subsidies
for green technology and particularly for batteries.
Goldman Sachs says that is really $1.2 trillion.
Mr. Stein, does it make sense for us to be sending billions
and billions and billions of dollars--I almost sound like Carl
Sagan talking about stars--but we are talking about American
taxpayer dollars going to China to support their industry that
we will be totally reliant on, almost totally reliant on? Does
that make sense?
Mr. Stein. Right. That is the key problem, is that there is
a lot of aspiration that people are talking about 5 or 10 years
from now making these things in the United States, but we do
not make these things in the United States.
Mr. Palmer. Well, I have a New York Times article right
here that says we will not catch up to China in 25 years. I do
not think we will ever catch up with them in this. The only way
we will catch up is if we come up with some other energy
source.
And it gets me back to some of the things that Dr.
Furchtgott-Roth mentioned in her testimony, that the EPA
regulations on tailpipe and power plant emissions will make us
more dependent on China.
And I have said many times in this committee and other
places that the war in Ukraine did not create the energy
crisis. It exposed it.
We spent the last decade and a half neglecting our
hydrocarbon infrastructure, and particularly on the natural gas
side, and if we have not learned anything else from this, from
this war, it should be this one fundamental thing, that no
nation should be relying on an adversarial nation for something
that is critical to its economy and its national security as
energy.
I think Europe has discovered that going from being reliant
on Russia was a bad plan, but relying on China I think would be
worse.
How would you respond to that?
Ms. Furchtgott-Roth. Yes, I would say that it is worse
relying on China, and plus, our natural gas has made our air
much more clean.
With the six criteria pollutants tracked by EPA over the
past 15 years, these have all gone down. So using our own
resources has made us cleaner.
Plus taking U.S. energy-intensive manufacturing and moving
it over to China does not reduce global emissions. They are
making these solar panels, these wind turbines with coal-fired
power plants, where we could be pairing our energy with clean
natural gas.
Mr. Palmer. And the components that we need for solar
panels and for turbines, we will be relying on China for that
and possibly, particularly, the blades on turbines, which it
appears China produces so much of the resins and the plastics
that are required for that.
Mr. Harrell. Congressman, could I add to your question
there?
You know, the permitting regime in this country is what is
really holding our ability back. I am not ready to concede the
race to China, particularly in new technologies, and the single
largest thing that is restricting private-sector investment in
new industries is a permit.
Mr. Palmer. Well, thank you for bringing that up, because
that is part of the negotiations on the debt limit. At least we
are trying to negotiate. The other side is not, but that is a
key, absolutely a key point. Thank you for bringing that up.
I think our permitting, our regulatory regime has done
enormous damage to our economy and to our ability to catch up
with China.
And the thing is people who know anything about the physics
of renewables understand that we are not going to be at net
zero by 2050, and so we are doing enormous harm to ourselves.
We are making ourselves more vulnerable to an adversarial
nation like China by pursuing these things.
I just want to make this point. We have reduced emissions
of the six criteria gases by 86 percent over the last 50 years.
I worked for two international engineering companies, one
of which was Combustion Engineering and their environmental
systems. I know the investment this country has made in
cleaning up our environment, and it has paid off.
With that, Mr. Chairman, I will yield back.
Mr. Griffith. The gentleman yields back.
I now recognize the gentleman from North Dakota, Mr.
Armstrong, for 5 minutes of questioning.
Mr. Armstrong. Thank you, Mr. Chairman.
And I think that is a really important point, what Mr.
Harrell just said. I think it is great that Ford has got five
announcements. I think it is great that Exxon has five
announcements.
But the new EPA rule says we are going to have two-thirds
of new electric cars being sold in the United States by 2032. I
do not know if they will have the permits for those by 2032,
and if they do have the permits, I can almost guarantee they
are going to be involved in some kind of environmental
litigation much farther than 2032.
So in the near term as we continue to do this, we are going
to be overly reliant on China.
By the way, lithium is one of many critical minerals that
we need for the batteries, but I think the projects are
fantastic. We should do more of those things here, but until we
fix our regulatory infrastructure, we are simply not going to.
So for my friends on the other side of the aisle, I do not
think we disagree so much as we disagree on completely
unrealistic timelines.
And when we talk about the challenges that will happen, you
are going to see energy costs go up 3\1/2\, 4\1/2\, 5\1/2\
times. And if you have real, true energy production problems in
North Dakota in February, you are going to see people die.
I mean, we saw what happened in Houston and all of those
different issues.
But, Ms. Furchtgott-Roth, in your testimony you describe
the loophole in the electric vehicle tax credit for leased
vehicles. Can you briefly walk through the loophole and the
implications of determining that leased vehicles are considered
commercial vehicles?
Ms. Furchtgott-Roth. Yes. Under the Treasury guidelines, a
leased vehicle is considered a commercial vehicle, and
commercial vehicles do not have to meet the domestic
requirements for other EVs in order to get the 7\1/2\ thousand
tax credit.
So if somebody wants to lease a Tesla rather than buying a
Tesla or lease a new vehicle that perhaps Ford or GM or
Stellantis are producing rather than purchase it, then they
would be able to take advantage of a lower price. So their
lease payments would be lower.
Mr. Armstrong. And in the new rule the EPA actually cites
these tax credits several times in its assessment of the
appropriateness of the proposed standards and to support the
assertion that the standards are feasible.
In the estimated cost-and-benefit analysis of the rule, the
EPA states that the IRA provides incentives for producers to
expand domestic manufacturing of battery electric vehicles and
domestic sourcing of components and critical minerals.
Do you anticipate foreign manufacturers will attempt to
take advantage of this loophole?
Ms. Furchtgott-Roth. Yes, and these vehicles are
particularly not suited to cold climates such as North Dakota
because the batteries lose 20 to 40 percent of their range.
That is why there's fewer than 500 registered EVs in North
Dakota.
Similarly, South Dakota, Wyoming. Alaska has about 1,200.
Mr. Armstrong. They are going to put an EV charging station
at a rest area between Dickinson and Bismarck, North Dakota,
and I think we should put a 24-hour camera on it because I am
not sure if it will be the biggest single waste of Federal
Government money in history, but it is going to be in the top
10.
Ms. Furchtgott-Roth. The problem is these vehicles are more
expensive and people do not want to buy them. That is why they
are having to be forced to buy them through subsidies both on
the production and the consumption side.
Mr. Armstrong. And, by the way, in communities like Grand
Forks, Fargo, even Bismarck, if you are doing them internally,
they do make some sense. I think two things can be true at
once. This country is going to drive more electric vehicles in
10 years and we are going to need more oil and natural gas in
10 years, which will give me a minute and 36 to ask you about
on May 11th the EPA released draft rules regarding the carbon
emission from coal and natural gas power plants. In your
testimony, you discuss the numerous downstream consequences for
the economy.
Can you walk through the direct impact on the consumer, as
well what will happen to our generation mix or our national
security if these rules stay in place?
You have a minute and 13.
Ms. Furchtgott-Roth. Yes. So the rules require carbon
sequestration of carbon emissions. In other words, these carbon
emissions have to be captured. Ninety percent of them have to
be captured.
We do not have the technology to do this yet, and so this
rule is very unrealistic.
What is particularly interesting is that the natural gas
pipelines that are omitted from this rule are the ones that
support the wind farms. So basically EPA is admitting that
these wind farms cannot run without associated backup natural
gas pipelines, and these are exempted from the EPA's rules.
So they know that the wind farms cannot produce energy on
their own. They need natural gas, and it is actually less
expensive for natural gas pipelines to go continuously than
cycle on and off. So we are raising the price of electricity.
Mr. Armstrong. Mr. Harrell?
Mr. Harrell. Yes, I just wanted to add: We have the
technology to do it, but there is no way we could ever build it
fast enough on the mandates that the EPA is putting out there.
So carbon capture is technologically feasible and is being
done in North Dakota, but the timelines for it and the pipeline
infrastructure you would need for it is completely unfeasible
under the EPA rule.
Mr. Armstrong. Yes. My concern with the rule is very
similar to the Clean Power Plan. The Clean Power Plan, the vast
majority of it never became law, but it still had the effect of
shutting down about a third of the coal plants in the United
States, and we cannot afford that right now.
And with that I yield back.
Mr. Griffith. The gentleman yields back.
I now recognize the gentleman from Texas, Mr. Crenshaw, for
his 5 minutes for questioning.
Mr. Crenshaw. Thank you, Mr. Chairman.
Thank you, everyone, for being here.
I am trying to figure out where to begin here. This is a
conversation about tradeoffs. Like any conversation about
climate policy, it is a conversation about tradeoffs.
And, you know, we look at the IRA, which has been touted as
this amazing thing creating all these jobs and new investments.
Well, you know, of course companies are going to take the
subsidies and make the subsequent investments.
As my colleague earlier pointed out, the true cost of those
subsidies will end up being about $1.2 trillion because they
are tax credits, which means they are not caps. So if more
people take advantage of them, that is what will happen.
Then there is an estimate of about $3 trillion in new
investments, which is, of course, being cheered by radical
environmentalists. Three trillion dollars of investments and
reallocation of capital away from traditional baseload energy
and towards unreliable sources of energy. And there will be
increased prices as a result.
One question I have--maybe you can answer this, Ms. Hughes-
Cromwick--is you estimate a social cost of carbon, right? We
attach a value to that, social cost of carbon.
Dr. Hughes-Cromwick. Yes.
Mr. Crenshaw. Right. It is well established in the
literature. Maybe people debate on what the actual cost is, but
has anyone ever talked about a social cost of energy and
security?
What is the social cost of energy and security? Rolling
blackouts, higher prices, is there a social cost economically
attached to that?
Dr. Hughes-Cromwick. I will say that in some of my analysis
with regard to oil, price volatility has impacted stability in
the U.S. economy. We have been subject to OPEC-Plus for many
years, and they determine the marginal price of a barrel of
oil.
So while we have substantial oil and gas production here in
the U.S., we are still subject to OPEC policy and procedures.
Mr. Crenshaw. OK.
Dr. Hughes-Cromwick. Just today----
Mr. Crenshaw. That is fine. I see you kind of figuring out
how to divert the question there.
All the more reason to produce more of it ourselves, I
suppose is what you are saying.
Dr. Hughes-Cromwick. Even if we produce more, the OPEC-
Plus----
Mr. Crenshaw. And control the market more, yes, I know. I
agree. That is a foreign relations problem. I wish I could
control them.
Dr. Hughes-Cromwick [continuing]. Marginal barrel price.
Mr. Crenshaw. I would love to put them out of business. I
guess we are on the same page there.
There is a social cost of energy and security. It is a
massive social cost. We felt it in Texas because, you know, 30
percent of our capacity is reliance on wind. There has been
almost no investment in baseload energy, whether that is
nuclear or coal or gas, over the last couple of decades.
Plenty of investment, subsidized investment into wind,
which does not work all that well in inclement weather. The
irony of all of this is that we are so concerned about extreme
weather and yet we want to invest trillions more dollars into
weather-dependent energy sources.
I am just trying to figure out if any of this makes any
sense. I mean let's look at the total EV subsidies in the IRA,
almost $400 billion when you actually account for probably what
is going to happen in the next 10 years.
Again, let's just talk about it in terms of cost-benefit.
Sixteen percent of U.S. emissions are derived from passenger
vehicles. Do we actually think that if we gave everyone an
electric vehicle that that 16 percent would even disappear?
No. You are going to say yes?
Dr. Hughes-Cromwick. Are you asking me?
Mr. Crenshaw. Yes, I kind of want to see what you will say.
Sure.
Dr. Hughes-Cromwick. Yes. We have other segments of
transportation, and when we total up all transportation
sectors, including medium- and heavy-duty vehicles, it accounts
for about a third of total emissions, and therefore----
Mr. Crenshaw. I said passenger vehicles in particular. I
did not ask you that question at all. So because we are talking
about subsidizing rich people so they can buy a Tesla. That is
what we are talking about.
And so 16 percent of passenger vehicles, 16 percent of
emissions come from passenger vehicles. It is not even accurate
to say that if we switched those out right now that we would
actually decrease emissions by 16 percent, because they have to
charge somewhere. They have to charge at a charging station
that is powered by coal or gas most likely. That ain't changing
anytime soon because, you know, physics is physics.
And so we just have to question what the heck we are doing,
and so even if we got rid of that 16 percent, what would it do
to our climate in 100 years?
Well, I can tell you if the entirety of the OECD countries,
all developed countries stopped emitting tomorrow and we all
went back into the Stone Age, do you know how much we would
reduce the temperature by the year 2100? Point four degrees
Celsius.
So what do we think this multihundreds of billions of
dollars of investment, what do we think it is going to do for
our climate? This is just a cost-benefit question.
And the answer is almost nothing--not almost, it is
practically nothing. It is so close to nothing it might as well
not even be part of our calculus.
Four hundred billion dollars. How many nuclear plants could
we build with that?
Haul in there, Jeremy.
Mr. Harrell. Quite a few, and that would be zero-emission
electricity that we could use to----
Mr. Crenshaw. Is it reliable?
Mr. Harrell. It is reliable. It is resilient.
Mr. Crenshaw. What an investment that would be.
I yield back.
Mr. Griffith. The gentleman yields back.
I now recognize the gentlelady from Florida, Mrs. Cammack,
for her 5 minutes of questioning.
Mrs. Cammack. Well, Jeremy, since we are kind of on this
track, do you want to finish that train of thought that
Representative Crenshaw teed up for you?
Mr. Harrell. Yes, I was going to say we should be investing
in new nuclear technologies. It contributes to our energy
security. It is reliable. It is resilient, and it is zero
emissions. It is a win-win across the triangle of things that
we need to accomplish in our energy sector: energy security,
affordability, reliability.
Mrs. Cammack. What would you say to the people who have a
narrative in their mind that is a 50-year-old narrative that
nuclear is not safe?
Mr. Harrell. I think there is a more than 50-year track
record of how safe the U.S. industry is as a whole, and our
next generation of technology has had even more passive safety
systems that essentially make them meltdown proof.
Mrs. Cammack. So in your written testimony you said
investments in the energy supply chain should go to industries
in which the United States has a leading edge in.
Do you think that we have a leading edge when it comes to
nuclear?
Mr. Harrell. We do in new technologies if we bring them to
the commercial marketplace. We have a lot of great ideas that
are about to be demonstrated. We need to deploy them, and then
we need to export them abroad.
Mrs. Cammack. How should the DOE and other agencies
distributing the funding for these types of projects determine
which industries have a leading edge and which are the most
promising?
Mr. Harrell. Yes. I think this goes back to some of the
conversation we were having on, like, competition with China. I
do not think we are going to beat the Chinese at their own
game. We need to be looking at industry that we can lead, that
the global energy market is demanding and ultimately try to
leverage our expertise and resources to bring those
technologies to the market and win in the marketplace.
Mrs. Cammack. But a little bit more to the fact that today
we see a political agenda driving policy and decisions being
made at the agencies. Should there be some sort of formula or
baseline data that shows results versus a political agenda?
Do you understand what I am saying?
Mr. Harrell. Yes, absolutely. I mean, these should not be
handouts with no strings attached. I think we need to be
tracking these projects across the way. We need to be
identifying if tax incentives are even meeting their intended
consequences.
In some industries like CCUS it is. Perhaps it is not in
other areas, particularly in solar where incentives existed for
a long time.
Mrs. Cammack. Thank you.
You actually hit on the followup question that I had to
you.
I am going to direct this to you, Ms.----
Ms. Furchtgott-Roth. Diana Furchtgott-Roth.
Mrs. Cammack. You got it. I am just going to say Ms. Roth.
How about that?
Ms. Furchtgott-Roth. Um.
Mrs. Cammack. You know.
In your written testimony you state that many of the
components of batteries will be source processed or
manufactured in China for the foreseeable future. I think we
can all agree on that. I have had a major automobile
manufacturer in my office saying that we need 300 new mines
online just to support the battery capacity that is currently
on the road, and these will be replacement batteries.
Under this administration, certainly, we do not see any new
projects coming online. So what do you say to those who tell us
that EVs are the future?
And how do we address this coming tsunami of critical
minerals that we cannot source because one of our largest
adversaries controls the lion's share of the earth's rare earth
minerals?
Ms. Furchtgott-Roth. Whenever people say something is the
future, they often point to China. They say China has electric
vehicles, so we should have electric vehicles. Europe has
electric vehicles, so we should have electric vehicles.
But we have vast distances in America. People rely on
normal cars to go to work, for farming, for all kinds of
things, and EVs are just not popular as new vehicles. Only 6
percent of new vehicle sales were EVs last year because people
do not want to have to stop to charge them up. They are more
expensive. They do not work in cold weather.
And we should respect the American people who know how to
choose. They want their natural gas stoves, they want their
regular cars, they want their dishwashers to work, they want
their washing machines to work.
And you know, I am pro-choice. I believe people should be
able to choose whatever appliances and cars they want to buy,
including light bulbs.
Mrs. Cammack. Wow, that is a novel concept. I appreciate
you saying that.
And for the remainder that I have, I would like to yield 50
seconds to my friend from the great State of Texas,
Representative Crenshaw, for any followups that he had to close
out.
Mr. Crenshaw. I am good.
Mrs. Cammack. Wow, I give you time. Oh, my goodness.
With that, I yield back. Thank you.
Mr. Griffith. The gentlelady yields back.
Some of you in the audience may have noticed that we have
been going through a series of Republican questioners while
Mrs. Dingell is waiting.
What we do on this committee is, if you are a member of the
subcommittee, you go first. If you are a member of the full
committee, you can waive on and ask questions in any
subcommittee. Mrs. Dingell is waiving on to the committee.
And I now recognize Mrs. Dingell of Michigan for her 5
minutes of questioning.
Mrs. Dingell. Well, thank you, Mr. Chair.
And I actually really wanted to hear what everybody was
saying, and I have come up here because I have nothing but the
greatest of respect for all of my colleagues, but I have got to
defend the workers from my district, to be perfectly frank.
And I heard that there were comments made at the beginning
that--about Ford Motor Company--employs a lot of people in my
district, and it is a company I give a hard time to that the
witness here can tell you they hear a lot from me too.
But first, as it relates to the licensing agreement between
Ford and CATL, the claims that Ford would be subservient to
China is a gross mischaracterization. Ford is investing $3.5
billion to build lithium ion phosphate batteries in America.
Under the agreement, to be clear, a wholly owned Ford
subsidiary will own the plant and manufacture the battery
cells. The LFP battery cell technology will be licensed to Ford
by CATL. There will be no foreign investments and CATL will
receive no American tax dollars.
When production begins in 2026, the plant will provide
2,500--two thousand five hundred--good-paying American jobs. I
am not going to discriminate against anybody, but most of those
are people that I know that are, you know, in the
neighborhoods, et cetera.
And my understanding is CATL will provide limited services
on a contractual basis.
I also want to say, as I sat here, that it is not the law
that two-thirds of the vehicles on the road or sold in 2032
will have to be EVs. It is a notice of proposed rulemaking that
the administration themselves will have said I have raised a
number of issues. I will be commenting on that notice of
proposed rulemaking, and we are not going to get there without
a lot of things having to happen.
I share my colleagues' concerns about China. We should all
be concerned about China's dominance in critical minerals and
manufacturing, but complaining about it does not solve the
problem or address the issue.
We need to make sure we are competitive and staying at the
forefront of innovation and technology in this country, not
seceding it to China. That is part of our problem. We need to
be investing in it.
We, we, Michigan, America put the world on wheels, and I,
by God, am--excuse me--am going to keep--are--having that kind
of dominance, and that is why I am here.
As Democrats we put in place the programs and historic
investments needed to level the playing field. If Ford was not
doing this, the reality is they can import these batteries from
China. They could build them in Mexico or just offer batteries
that cost 30 percent more than the more expensive chemistry.
We have got to really think about what we are doing. We are
hearing a barrage of complaints about programs that help
companies make long-term investments in America, and you keep
saying that DOE is incapable of administrating programs that
are built upon the agency's existing expertise.
It is defeatist mentality. I want to win. So, quite
frankly, stimulating the economy and creating jobs that helps
billionaires and polluters does not accomplish anything. The
investments Democrats have made to the Inflation Reduction Act,
CHIPS and the Science Act, we have got to bring our chip
production back here. None of you can agree we should be so
dependent on other countries' chips and see our plants closed
and our workers not working as we do not have the chips.
We have got to invest in America's future and American
workers, period. And these laws pay for themselves. They take
bold action to respond to climate change, and they level the
playing field with China.
These investments, with help--with helpfulwill strengthen
our domestic supply chain here in America for critical minerals
and build the batteries in clean vehicles. By the way, I
support hydrogen. Every time I say anything, it is not all EV.
We should be looking at hydrogen.
But now that I have gone on a rant, I want to bring some
clarity to this discussion in the minute I have.
Dr. Hughes-Cromwick, can the United States catch up in
critical minerals manufacturing or any part of the energy
supply chain without deliberate investments?
Dr. Hughes-Cromwick. I believe that, based on our analysis
of U.S. competitiveness across 10 clean energy technologies,
including the supply chain segments for each of these, that we
have significant opportunity to excel in that area.
Mrs. Dingell. That does not really answer my question. Do
we need to invest here?
If we want to compete with China, do we--and Chinese
Government invests--do we need to be investing in these
technologies here to keep us at the forefront? Yes or no?
Dr. Hughes-Cromwick. Yes. As my testimony shows----
Mrs. Dingell. Thank you. Simple yes. Simple yes.
Dr. Hughes-Cromwick. Absolutely.
Mrs. Dingell. And what do we risk if we fail to support DOE
in standing up these key programs investing in American
innovation and manufacturing?
Dr. Hughes-Cromwick. Yes.
Mrs. Dingell. What do we risk?
But now I am out of time, but thank you, Mr. Chairman, for
letting me defend my constituents.
Mr. Griffith. Absolutely. I appreciate it.
I ask unanimous consent to insert in the record the
documents included on the staff hearing documents list.
Without objection, that will be the order.
[The information appears at the conclusion of the hearing.]
Mr. Griffith. Seeing that there are no further Members
wishing to ask questions, I would like to thank our witnesses
again for being here today.
And pursuant to committee rules, I remind Members that they
have 10 business days to submit additional questions for the
record, and I would ask the witnesses to submit their responses
to those questions within 10 business days upon receipt of the
questions.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:45 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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