    [Senate Hearing 118-317]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-317

                   FEDERAL ELECTRIC VEHICLE INCENTIVES INCLUD-
                    ING THE FEDERAL GOVERNMENT'S ROLE IN
                    FOSTERING RELIABLE AND RESILIENT ELECTRIC
                    VEHICLE SUPPLY CHAINS

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

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                JANUARY 11, 2024

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

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

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    55-845                      WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    JOE MANCHIN III, West Virginia, Chairman
    RON WYDEN, Oregon                    JOHN BARRASSO, Wyoming
    MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
    BERNARD SANDERS, Vermont             MIKE LEE, Utah
    MARTIN HEINRICH, New Mexico          STEVE DAINES, Montana
    MAZIE K. HIRONO, Hawaii              LISA MURKOWSKI, Alaska
    ANGUS S. KING, JR., Maine            JOHN HOEVEN, North Dakota
    CATHERINE CORTEZ MASTO, Nevada       BILL CASSIDY, Louisiana
    JOHN W. HICKENLOOPER, Colorado       CINDY HYDE-SMITH, Mississippi
    ALEX PADILLA, California             JOSH HAWLEY, Missouri

                          Renae Black, Staff Director
                          Sam E. Fowler, Chief Counsel
                    Zahava Urecki, Professional Staff Member
                 Richard M. Russell, Republican Staff Director
                  Justin J. Memmott, Republican Chief Counsel
              Valerie Manak, Republican Professional Staff Member

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
      Virginia.......................................................     1
    Barrasso, Hon. John, Ranking Member and a U.S. Senator from
      Wyoming........................................................     8
    Wyden, Hon. Ron, a U.S. Senator from Oregon......................    13

                                   WITNESSES

    Turk, Hon. David M., Deputy Secretary, U.S. Department of Energy.    15
    Adeyemo, Hon. Adewale O., Deputy Secretary, U.S. Department of
      the Treasury...................................................    28

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    Adeyemo, Hon. Adewale O.:
        Opening Statement............................................    28
        Written Testimony............................................    30
        Responses to Questions for the Record........................    96
    Barrasso, Hon. John:
        Opening Statement............................................     8
        Bloomberg article entitled ``Hertz to Sell 20,000 EVs in
          Shift Back to Gas-Powered Cars'' by David Welch and Richard
          Clough, published January 11, 2024.........................    10
        Better Business Bureau profile of Sunnova Energy Corporation.    37
    Bryce, Robert:
        Statement for the Record.....................................   110
    Cortez Masto, Hon. Catherine:
        Chart entitled ``Building America's Clean Energy Future''....    74
    GreenMet:
        Statement for the Record.....................................   123
    Heinrich, Hon. Martin:
        Forbes article entitled ``In 2023, The United States Started
          Building Big Again, Thanks to Biden's Inflation Reduction
          Act'' by Jack Conness, published December 26, 2023.........    40
        Axios article entitled ``A Manufacturing Investment
          Supercycle Is Starting'' by Neil Irwin, published June 16,
          2023.......................................................    47
        Chart entitled ``211,350 Clean Energy Jobs Since Passage of
          the Bipartisan Infrastructure Law and Inflation Reduction
          Act''......................................................    52
        Chart entitled ``Building America's Clean Energy Future''....    53
    Hoekstra, Peter and Joseph J. Cella:
        Statement for the Record.....................................   125
    Institute for Energy Research:
        Statement for the Record.....................................   130
        Report entitled ``The Economic and Strategic Importance of
          Domestic Mineral Production: Unlocking the Value of
          America's Homegrown Mineral Resources''....................   134
    King, Jr., Hon. Angus S.:
        Chart comparing cost of ownership of electric vehicles versus
          gas-powered vehicles.......................................    62
        Chart entitled ``The Inflation Reduction Act Is Accelerating
          U.S. Battery Manufacturing''...............................    64
    Manchin III, Hon. Joe:
        Opening Statement............................................     1
        Chart depicting Inflation Reduction Act critical mineral
          sourcing percentage requirements...........................     4
        Chart depicting Inflation Reduction Act deadlines for
          removing China from vehicle supply chains..................     6
    National Mining Association:
        Statement for the Record.....................................   171
    Nunes, Ashley:
        Letter for the Record........................................   107
    Turk, Hon. David M.:
        Opening Statement............................................    15
        Written Testimony............................................    17
        Responses to Questions for the Record........................    82
    Wyden, Hon. Ron:
        Opening Statement............................................    13
    Zero Emission Transportation Association:
        Statement for the Record.....................................   185

    FEDERAL ELECTRIC VEHICLE INCENTIVES INCLUDING THE FEDERAL GOVERNMENT'S
    ROLE IN FOSTERING RELIABLE AND RESILIENT ELECTRIC VEHICLE SUPPLY CHAINS

                                  ----------

                           THURSDAY, JANUARY 11, 2024

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:00 a.m., in
    Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin
    III, Chairman of the Committee, presiding.

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

        The Chairman. The Committee will come to order.
        First, we want to thank all of you for being here. We want
    to thank David for coming, David Turk, from DOE, and we have
    Adewale Adeyemo, he will be with us virtually. Unfortunately,
    he has COVID, but he is still able to participate and we really
    appreciate his efforts of doing that. It is going to be very
    helpful for all of us.
        We are here to talk about a familiar subject to members on
    this Committee--the electric vehicle supply chain. Before we
    begin, I want to start, again, by thanking all of those who are
    participating, all of those who made this possible. I
    appreciate--Adewale, again, I hope you are feeling better and
    that you are back in operation soon. I know you and David Turk
    have important responsibilities implementing the laws passed by
    Congress to secure the EV supply chain.
        We should all be concerned when an Administration tries to
    implement a law that Congress did not pass. And when it comes
    to EVs, this Administration is implementing the Build Back
    Better approach they wanted, not the Inflation Reduction Act
    that we passed. The Inflation Reduction Act had three
    purposes--reduce our debt, secure our energy and produce it
    cleaner in America than anywhere else, and bring back
    manufacturing of the building blocks that run our country and
    made us the superpower of the world. Some may believe I just
    have a vendetta, which I don't, against EVs. I don't own an EV.
    I don't intend on buying an EV. But I think they are a
    wonderful vehicle. I just think that we got way ahead of our
    skis on this.
        The transportation sector is responsible for 29 percent of
    the greenhouse gas emissions in the country, more than any
    other sector, with light duty vehicles making up 58 percent of
    those emissions. Globally, transportation makes up about 15
    percent of total greenhouse gas emissions. Alternative-fueled
    vehicle technologies, like EVs, hydrogen vehicles, and hybrids,
    can play an important role in lowering these emissions while
    providing an opportunity for the United States to maintain our
    status as an automotive powerhouse, which we have always been;
    re-shore our manufacturing base, which we have let go; and
    create good-paying jobs, which we all need. My problem is not
    with EVs. My problem is with the Administration's crusade to
    convert everyone over to an EV regardless of where the battery
    came from or what the law actually says. The United States is
    the birthplace of Henry Ford, and the revolutionary Model T.
    Vehicle manufacturing is a building block of our great nation.
    There has never been a time when we couldn't produce the
    engines, transmissions, axles, and every other essential
    component of a car. I remember waiting in line for gas in the
    1970s to go to work because of OPEC. And I will be damned if I
    am going to have to wait for a battery from China.
        Just like how Putin weaponized Russia's oil and gas
    resources to try to scare off Europe from supporting Ukraine,
    Xi Jinping and the Chinese Communist Party are more than
    willing to use EV batteries and the critical minerals inside
    them as leverage to put Americans and the free world at risk.
    China has already started to do so with recently announced
    export controls of certain critical minerals. China has truly
    cornered the market on EVs and is responsible for 74 percent of
    the world's cathode production, 92 percent of the anode
    production--that's the positive and negative of a battery--and
    76 percent of the lithium-ion battery production. They control
    anywhere from 60 to 100 percent of minerals processing,
    depending on the mineral. But it doesn't have to be that way.
    America and free trade agreement partners have the capacity to
    produce this for ourselves. For example, our free trade
    agreement partners, combined, are mining more lithium, nickel,
    and cobalt than China, and 20 to 40 percent of the global
    processing capacity for these minerals belong to either a U.S.
    ally, one of our FTA partners, or exist in our own country, and
    that is before we develop the mining and processing facilities
    in the queue. Figures like these show why correct
    implementation of the Inflation Reduction Act and the
    Bipartisan Infrastructure Law is so vital coupled with
    comprehensive and common-sense permitting reform. These bills
    were carefully designed to help us win back our vehicle supply
    chains, and create new domestic jobs. Unfortunately, it seems
    that the Administration is so hell-bent on implementing their
    radical climate agenda--quicker than needed--for political gain
    that they are willing to bend and break the law and watch our
    manufacturing base continue to fall behind.
        What I'm saying here is nothing I haven't said to the
    President. I think we have a respectful disagreement on how it
    is being implemented. We should all be proud of the bill that
    we have, it is most transformative. The IRA is the most
    transformative bill that we have ever done in my lifetime. Let
    me give you some examples: First, in proposed guidance, the
    Administration has cut the IRA critical mineral sourcing
    percentage requirements in half, which is a blatant violation
    of the numbers Congress wrote directly into the law. These were
    written into the law. That is in the bill. This is what they
    are operating on, half of that. They are operating on half of
    it, but we should be expediting all of our efforts in trying to
    make sure that we hit these numbers versus receding back to
    their numbers and depending on foreign supply chains.
        [Displayed chart follows:]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. They are also pretending the battery
    component manufacturing is the same as critical mineral
    processing. Extraction and processing is different than
    manufacturing, and it is stated in the bill--manufacturing has
    to be done in North America to get the $3,750. They are
    proposing fake ``critical minerals free trade agreements,''
    such as with Indonesia. Indonesia is controlled by China. You
    can't make that up. You can't think that Indonesia is going to
    be a free trade agreement country. They don't have control of
    it. These are the things that we are talking about. And we are
    hoping that we will all come back to our senses, Democrats and
    Republicans, working together on this to get back to what the
    bill was intended to do.
        And, most recently, with their proposed rules on Foreign
    Entities of Concern, the Administration is delaying the
    deadlines we wrote into the IRA to remove China completely from
    the battery supply chain. If we don't do it sooner than later,
    it's going to be something we will be dependent on for a long
    time. As shown in the chart behind me, under the weakened
    Foreign Entity of Concern rules, vehicles that contain battery
    minerals and components from China and other adversaries can
    qualify for years longer than allowed in the bill.
        [The chart referred to follows:]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. This is in the bill: 2024, deadline from the
    Inflation Reduction Act--no extraction or processing of
    critical minerals by Chinese entities or other foreign entities
    of concern, December 31, 2024. They now have written into their
    proposed rules, December 31, 2026, or later. This says no
    battery manufacturing by Chinese entities or foreign entities
    of concern. That was supposed to be December 31, 2023, which
    gave them a year. Now they are 2026 or later for certain anode
    and cathode components. Who knows? That's all temporary rules.
    You cannot operate that long on temporary rules because they
    weren't designed for that.
        The Biden Administration did not write the bill, and quite
    frankly, it seems like some of the people implementing the law
    have not really read it or don't understand what our intentions
    were. The tax code Congress writes is not a set of voluntary
    guidelines, but that happens to be how some in the
    Administration are treating it, and the EV credit is just one
    of several concerning examples. If the Administration does not
    correct course and implement the IRA programs the way that we
    wrote them, their unlawful rules are bound to get struck down
    in court, which will create tremendous uncertainty for both
    automakers and consumers, and for all the investments that are
    coming to all of our states. Every one of us are benefiting
    from this bill. I will support any entity that goes to court to
    correct the illegal liberalization of this law with an amicus
    brief to set the record straight on the bill Congress actually
    wrote. It won't be hard to support it because it is just as
    plain as you can read it, it's in the bill. I am willing to go
    and do whatever it takes to make sure that we get back on
    track.
        Now, let me be clear, just because the Administration has
    broken a lot of the laws implementing certain aspects of the
    IRA, it does not change how proud that we all should be of the
    law that we actually passed. There is no question the IRA is
    doing what we hoped it would do in many respects. And it will
    do so much more if this Administration follows the law of the
    land. The IRA raised $687 billion in revenue, invested $384
    billion in energy security while also improving our
    environment, invested another $64 billion in health care, and
    with the balance, we paid down $239 billion of debt. These are
    things that you never hear anybody talk about. Today, we are
    producing more energy than ever before in America. You don't
    hear anybody bragging about that. We have been more independent
    today than we ever have been in the history of the United
    States. Thirty-seven trillion cubic feet of natural gas, 4.7
    billion barrels of oil, record amounts of solar power and
    battery storage, and we are continuing to innovate to make our
    energy even cleaner. We are transitioning the proper way by not
    giving up anything of our energy dominance. That is what makes
    us the superpower of the world.
        The IRA is bringing more investments to this country than
    ever before and it is happening in states all across the
    nation--red and blue states. I don't understand red and blue
    states, I just understand American states, but we are all
    benefiting from it, no matter what your political preference
    is, and DOE will play a critical role in supporting all of this
    with programs that provide financial assistance for battery
    materials, processing, manufacturing, and recycling projects in
    the United States, and loans and loan guarantees for every part
    of the EV supply, from mining to manufacturing, through the
    Loan Programs Office. In fact, electric vehicles and battery
    makers announced $52 billion in investments in North American
    supply chains before the Administration started loosening these
    rules. That was before, based on how the bill was written, but
    if they keep bending the rules, we are going to lose the
    momentum and we cannot afford to let happen.
        Mr. Turk and Mr. Adeyemo, let me just end by thanking you
    both, again, for appearing here today to correct and help us
    through this. You have always taken the time to hear me out on
    these issues, and while we have different perspectives, I have
    the utmost respect for both of you. I look forward to a
    constructive conversation today about how we can achieve a more
    reliable supply chain for American EVs.
        And with that, I will turn to the Ranking Member, Senator
    Barrasso, for his comments.

               OPENING STATEMENT OF HON. JOHN BARRASSO,
                       U.S. SENATOR FROM WYOMING

        Senator Barrasso. Well, thanks, Mr. Chairman. Thank you for
    holding this hearing on federal subsidies for electric cars.
    These government handouts are the centerpiece of the disastrous
    so-called Inflation Reduction Act. Just about everything that
    President Joe Biden claimed about the IRA is false. And Mr.
    Chairman, I am happy that you showed those signs, which point
    out the lawlessness of the Biden Administration when it comes
    to the law. What the IRA really stands for to me is
    ``irresponsible, reckless, and alarming.''
        So let's start with the cost. According to a Goldman Sachs
    analysis, the electric car subsidies in the IRA will cost an
    estimated $393 billion. That analysis is 28 times more than
    what the Congressional Budget Office estimated. Our national
    debt is now $34 trillion, and thanks to the IRA, we are about
    to spend hundreds of billions of dollars that we don't have to
    subsidize electric cars that the great majority of Americans do
    not want. This is especially true in Wyoming, where electric
    cars simply cannot compete with conventional vehicles. The fact
    is, electric car subsidies go primarily to the State of
    California, where nearly 40 percent of all electric cars in
    America are being sold. So hardworking families in my home
    State of Wyoming and the Chairman's home State of West Virginia
    and other states represented significantly by members of this
    Committee, really, are getting stuck subsidizing wealthy people
    from California. The IRA is a shakedown.
        It is also becoming very clear that President Biden hasn't
    thought through the consequences of his so-called energy
    transition. His efforts to force-feed Americans electric cars
    is going to cause greater instability--greater instability--in
    our nation's electric system. There is a group we refer to as
    NERC. It is the North American Electric Reliability
    Corporation. It has warned of increased risks from the
    premature closure of coal and natural gas power plants. The
    Biden Administration does not seem to care. The Biden
    Administration is working to shut down even more of these power
    plants while promoting a huge new source of demand on the grid,
    which is, of course, electric cars. Just consider that fully
    charging a single electric car consumes the same amount of
    electricity needed to power an entire house during times of
    peak demand. Does the President have any clue that his math is
    not working?
        No one really believes that two-thirds of the new cars sold
    in America in 2032 are going to be electric. The Biden
    Administration's fixation on these electric cars amounts to
    wishful thinking on his part. But despite generous subsidies,
    the demand for electric cars is stagnating. Car dealers are
    opting out of selling them and opting out of servicing them.
    Compared to owners of conventional cars, owners of electric
    cars are paying higher repair costs, higher insurance rates,
    and by the way, they are getting less resale value. The
    headline today, Mr. Chairman, and I ask unanimous consent to
    put this in the record, is from Bloomberg. We talked about
    resale values. Hertz reports today they are going to sell
    20,000 EVs in its shift back to gas-powered cars. So much for
    the Biden economy.
        The Chairman. Without objection.
        [The article referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. So the first paragraph of this, ``Hertz
    Global Holdings plans to sell a third of its U.S. electric
    vehicle fleet and reinvest in gas-powered cars due to weak
    demand and high repair costs for its battery-powered options.''
    The American public is seeing exactly the same thing, and they
    are getting hit with similar bills.
        The damage that the IRA will do to America's automotive
    sector is potentially catastrophic. In the first nine months of
    2023, Ford Motor Company alone lost $3.1 billion on electric
    cars. Losses like that cannot go on for long. Perhaps worst of
    all, the IRA plays right into the hands of the Chinese and
    other foreign companies. You have heard the expression ``follow
    the money.'' Well, if you want to follow the IRA money, the so-
    called Inflation Reduction Act, you are going to need a
    passport, because the money is going all over the world. Mr.
    Chairman, as you have repeatedly pointed out, the Biden
    Administration has allowed electric car subsidies to flow to
    foreign companies in countries that are hostile to American
    interests. Recently, the Chinese car maker BYD topped Tesla as
    the world's largest electric car manufacturer. In Europe, that
    company outsold Tesla in the last quarter of 2023. BYD's goal
    is to be the biggest electric car manufacturer in Europe by the
    year 2030. The Administration has said it welcomes Chinese
    companies as big players in renewable and electric car markets.
    This is a terrible mistake. The IRA will push us away from the
    fuels and technologies where America has the lead and push us
    toward the minerals and technologies that are currently
    controlled by China.
        We need to change course. President Biden wants to
    subsidize and regulate our way to greater energy security and
    lower emissions. He wants to force the nation to adopt a single
    technology that only works in certain zip codes. This is a
    recipe for failure. We need to return to a pro-America, all-of-
    the-above energy strategy. We also need a comparable all-of-
    the-above vehicle strategy, a strategy that includes more
    efficient internal combustion engines, hydrogen fuel cells,
    compressed natural gas, and hybrid vehicles. These are
    technologies that can increase consumer choice while also
    reducing emissions.
        Thank you, Mr. Chairman.
        The Chairman. Thank you.
        One note: the bill prevented all Chinese cars from getting
    any credits in the United States. We did that.
        Senator Barrasso. Our enemies are getting the money.
        The Chairman. Senator Wyden

                 OPENING STATEMENT OF HON. RON WYDEN,
                        U.S. SENATOR FROM OREGON

        Senator Wyden. Thank you very much, Mr. Chairman, and as
    Chair of the Senate Finance Committee, which has jurisdiction
    over the climate tax credits, like the new clean vehicle
    credit, I am glad that we are continuing what we began in early
    summer 2021. You and I remember the history--you invited me and
    Senator Murkowski to come to West Virginia and we began the
    efforts to get it right. And I want to make sure that some key
    points really get out that address the heart of what we did.
        Our colleague from Wyoming, my friend and neighbor, Senator
    Barrasso, said something about all-of-the-above. Well, starting
    in 2012, Senator Manchin and I began the effort to build the
    foundation of our energy policy on what Senator Manchin and I
    called technological neutrality, which was one better,
    colleagues, because it ensured the competitiveness of our
    energy system, while at the same time, giving everybody a
    chance to be inventive and creative, because nobody knew what
    the big energy sources would be 20 years down the road. And
    then Senator Manchin and I, because I remember the expression
    on his face when I asked him about technological neutrality
    because we hadn't really gotten into that early in 2012--I said
    the other thing we need to do is to say the more you reduce
    carbon, the bigger your tax savings. And Senator Manchin
    swallowed hard and said, yeah, does that include carbon capture
    and nuclear and the like? I said, you're darn right it does. So
    I want it understood that that was the foundation of what
    actually became law--market oriented, no mandates, private
    sector, and we were still focused on climate.
        Now, let me just make a couple of quick points on EVs. The
    issue with respect to EVs, Senator Manchin and I realized back
    then it was going to be an issue of climate, jobs, and matters
    like supply chains. And what we have sought to do with
    Secretary Adeyemo, and we worked, I think, in a very
    constructive kind of way, and we have been able to show that
    climate, jobs, and secure supply chains, they are not mutually
    exclusive. Smart policies can get you progress in all three
    areas. And working with Mr. Adeyemo, I think we have achieved
    that. Now, we understand--and the Chairman is talking about
    this--we have continued work to do to make sure of the
    relationship between the Department of Energy and Treasury so
    that we continue to make progress. We are committed to doing
    that, but the fact is, we are making progress. The automakers
    already are making changes in the supply chains, making sure
    that we are getting real improvement. We are seeing buildout of
    charging stations and progress there.
        So we are going to continue in the spirit of what we did in
    2012, when we said technological neutrality, folks. It is an
    improvement on even all-of-the-above because it's more science-
    oriented, creates incentives for everybody to see in a federal
    system. So this is an exciting bit of progress that we are
    discussing. Senator Manchin made mention of some of the
    announcements--over $150 billion of investment in electric
    vehicles and batteries, big economic win. We have more to do,
    and I look forward to working with my colleagues. And I also
    note that Senator Barrasso is a valuable member of the Finance
    Committee, and we will be able to continue those discussions.
        The Chairman. Senator Barrasso.
        Senator Barrasso. Yes, Mr. Chairman, the comment that you
    made about the IRA not allowing tax credits for Chinese
    electric vehicle purchases, but the IRA, and this will be part
    of my questioning today, does allow leased Chinese electric
    vehicles to qualify, and to me this is a massive loophole.
        The Chairman. I agree with you a thousand percent, and
    that's what we are trying to stop.
        So with that, we turn to our witnesses now for their
    opening remarks. We have the Honorable David Turk, Deputy
    Secretary of Energy, and we have the Honorable Wally Adeyemo, a
    friend to all of us who we know very well and work very close
    to, from the Department of the Treasury.
        So we will start with David Turk.

                   STATEMENT OF HON. DAVID M. TURK,
              DEPUTY SECRETARY, U.S. DEPARTMENT OF ENERGY

        Mr. Turk. Chairman Manchin, Ranking Member Barrasso,
    Chairman Wyden, and other members of the Committee, thank you
    for the opportunity to be with you all today.
        For decades, the United States has sat idle while our
    global competitors have taken control of critical supply
    chains. Chairman, you raised some numbers. I will share a few
    other numbers here as we begin the discussions. China currently
    processes--and I really want to underscore processing, the
    processing stranglehold that China has right now--65 percent of
    the world's lithium and cobalt. It is 100 percent when you look
    at graphite that China processes right now. Now, thanks to
    President Biden and the landmark Bipartisan Infrastructure Law
    and the Inflation Reduction Act--and I want to give a
    particular thanks to this Committee, the Chairman, in
    particular, but this whole Committee for your leadership on
    those historic pieces of legislation--we are fighting back.
    Chairman, you mentioned that the IRA is the most transformative
    bill. I would say the BIL and the IRA together are the most
    transformative bills we have ever had in our country when it
    comes to supply chains, diversifying, and increasing the
    reliability and the resilience of those supply chains.
        Already we have made multi-billion-dollar grant cost-share
    investments in battery manufacturing all across our country,
    $16 billion of conditional commitments through our loan program
    at the Department of Energy, and powerful tax incentives are
    just starting to kick in. And these tools that you have given
    us are working. Since President Biden took office, we have
    leveraged over $157 billion in private investments in the EV
    supply chain--$157 billion of private investment so far, over
    340 new or expanded facilities, again, all across our country,
    and 136,000 estimated new direct jobs. And that is just the
    direct jobs from this investment. There are an additional
    hundreds of thousands of indirect jobs because of this
    investment in this strategy. Domestic EV sales have quadrupled
    since President Biden took office. If you look at the 2022
    numbers and compare that to 2023, we have had a 50 percent
    increase in our electric vehicle sales in our country.
        Ranking Member Barrasso, you spoke about affordability. We
    now have models, including the Chevy Bolt that's under $20,000,
    and a full EV version. I asked the team to take a look at
    existing gas prices and electricity prices and what is the
    difference in terms of how you fuel up, whether you fuel up an
    internal combustion or an EV. Right now, the average across our
    country is $46 to fuel up if you have an internal combustion
    engine. That number is $15--$15--if you charge up at home, the
    average across our country. And thanks just to the investments
    we have been able to make so far with these historic pieces of
    legislation, domestic lithium production in our country is
    expected to increase 13-fold by 2030. Domestic graphite
    production will increase 25-fold. And those are the results for
    the investments we have only made so far. There is so much more
    to come.
        Let me spend a few minutes sharing what this targeted
    strategic industrial strategy means for three specific
    communities, all of which are receiving DOE support. First, St.
    Gabriel, Louisiana. Koura is a company that opened a
    fluorochemical plant in St. Gabriel in 1991. In October 2022,
    they announced expansion to produce lithium
    hexafluorophosphate. Every EV battery needs this. China
    currently dominates the market. The U.S. produces zero right
    now. Koura will be the first U.S./American manufacturer. They
    received $100 million in a grant from DOE, again, a cost-share
    that is leveraging twice, three times, the amount on the
    private-sector side. And St. Gabriel will have 80 new jobs
    because of this strategy, because of this investment.
        Second, St. Louis, Missouri. St. Louis has been a leader in
    phosphates for nearly 150 years. In August last year, ICL broke
    ground on a $400 million battery manufacturing plant, producing
    enough cathode active materials for 1.3 million EVs, $197
    million in DOE investments, leading to 150 new jobs in the St.
    Louis community.
        And third, Weirton, West Virginia. As our Chairman knows, a
    former steel town that was once the fifth largest steel
    producer in our country. Unfortunately, that plant closed down
    20 years ago and a third of the population moved away. Thanks
    to this historic legislation, thanks to the Chairman's
    leadership with these historic pieces of legislation, in
    November, Boston Metal was selected for $50 million in a grant
    to manufacture critical materials for fuel cells, translating
    to 200 new jobs in Weirton. And Form Energy broke ground last
    year on a $760 million iron air battery manufacturing plant
    that will create an additional 700 jobs for that community.
        And we are only getting started. Let me conclude by again
    thanking this Committee for your leadership in giving us these
    historic tools. And thank you for your continued partnership as
    we use all these tools to improve the resilience and
    reliability of our supply chains to accelerate our clean energy
    progress, to support hundreds of thousands of family-supporting
    jobs all across our country, and for revitalizing our
    communities. We look forward to seizing all these opportunities
    together. Thank you, Chairman.
        [The prepared statement of Mr. Turk follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. And now we will turn to Secretary Adeyemo.

                 STATEMENT OF HON. ADEWALE O. ADEYEMO,
           DEPUTY SECRETARY, U.S. DEPARTMENT OF THE TREASURY

        Mr. Adeyemo. Thank you, Mr. Chairman.
        Chairmen Manchin and Wyden, I should say and Ranking Member
    and members of the Committee, thank you for having me today. I
    look forward to discussing Treasury's efforts to implement
    recently passed legislation in ways that help American
    companies build an effective supply chain to support our
    transition to a clean energy economy and improving our energy
    security.
        The Inflation Reduction Act and the Infrastructure
    Investment and Jobs Act jump-started the United States' ability
    to compete in the global market for electric vehicles. As you
    know, the People's Republic of China has, for over a decade,
    pursued non-market policies and practices to further state-led
    industries targeting, and has channeled enormous amounts of
    financial support into the development of an EV sector, seeking
    to help Chinese firms establish a dominant position in the
    global EV marketplace. China's targeted government intervention
    and investment in clean energy totaled over $500 billion in
    2022 alone, nearly four times the investment in the U.S., and
    more than 1.5 times the U.S. and European Union investment
    combined. Today, China produces over half the world's EVs and
    even a larger share of EV batteries. Critical minerals, as you
    all know, have been central to China's EV sector development
    strategy.
        While China is ahead of us on EVs today, by enacting the
    IRA and the Bipartisan Infrastructure package, you have given
    the United States the ability to not only compete, but to lead
    an effort to build an alternative global supply chain. Of
    course, because our domestic system is different than China's,
    our path to building a resilient domestic EV production base is
    also going to be different. Instead of directing industries,
    the IRA and Bipartisan Infrastructure Law provide incentives to
    support the private sector in building the EV ecosystem from
    manufacturing and procurement to adoption and charging.
    Importantly, these incentives foster competition in our
    economy. Because of the IRA and Bipartisan Infrastructure Law,
    America's manufacturers are responding. It is why we have seen
    manufacturing investment for clean vehicles, batteries, and
    critical minerals double since enactment of these packages.
        American workers across the country are witnessing
    firsthand the new economic opportunities. Since the passage of
    the IRA, we have seen $157 billion in private-sector investment
    announcements around EVs and batteries here in the United
    States, investments in communities all over the country, not
    just on the West Coast or the East Coast, the middle of the
    country, and in the South. Across America, we have seen these
    investments. Investments related to clean energy are being made
    disproportionately in communities with historically lower
    wages, lower college graduation rates, and higher rates of
    poverty. An important distinction between our strategy and
    China's is that we are not undertaking this transition alone.
        While our investments benefit American manufacturers,
    workers and consumers, we recognize that for this project to be
    successful, we need our allies to help build resilient supply
    chains that improve our energy security. That's why our early
    efforts to build critical mineral agreements have centered on
    allies with whom we share values and national security
    interests. We know too well the impact that Russia's
    weaponization of natural gas has had on Ukraine and on crude
    oil markets and the price at the pump here in the United
    States. While gas prices have fallen 35 percent since the peak
    in 2022, over the long term, it is clear that we need to
    improve our energy security with clean energy, and we cannot
    afford for our allies to go from being overly reliant on Russia
    for natural gas to being reliant on China for batteries. In
    both instances, we are left vulnerable to weaponization of
    trade as a geopolitical tool.
        That is why building our EV supply chain is critical to our
    energy security. It will not happen overnight, as you all know,
    but the investments that have been made in recent months and
    years will pay dividends for decades to come. In time, these
    investments will transform into the domestic supply chain that
    will power numerous electric vehicle models expected over the
    next decades. A main beneficiary of these investments is the
    American worker. Manufacturers have already announced nearly
    200,000 direct EV-related jobs in the United States over the
    past eight years. The recently announced EV and electric
    vehicle battery manufacturing investments are expected to
    create more than 800,000 additional jobs in the broader
    economy. We expect growth in manufacturing, instruction,
    engineering and electrical work, and more. These well-paying
    jobs will bring new economic opportunities to communities
    across the country. And as such, the clean energy transition
    will benefit American consumers, workers, and communities.
        In the year ahead, Treasury plans to continue its work to
    support building out the EV supply chain in a way that benefits
    American companies, workers, and consumers while also
    collaborating with our allies. I look forward to discussing the
    details on how we will do this today with you, and look forward
    to continuing our partnership with the Department of Energy and
    our partners in the interagency.
        Thank you.
        [The prepared statement of Mr. Adeyemo follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Adeyemo.
        And now, we are going to start our questioning, and I will
    begin.
        Do you have a quick question?
        Senator Wyden. If that would be all right. I know that
    you----
        The Chairman. I know you have to go to the committee,
    right?
        Senator Wyden. We are working on this tax agreement.
        The Chairman. Go ahead. Ask your question.
        Senator Wyden. Thanks so much. I have just one, and I want
    to thank the Chairman and Senator Heinrich on this.
        Mr. Secretary, it has been a pleasure to work with you and
    Mr. Turk. We have seen the major automakers already making
    changes in their supply chains to ensure vehicles qualify for
    the new Clean Vehicle Tax Credit. And this, in our view, is in
    response to the supply chain requirements that were in the IRA.
    My one question to you is, can you tell us how Treasury's rules
    help to implement the statute's provision here so that we can
    make sure that the new Clean Vehicle Tax Credit helps us with
    supply chains, helps us with climate, helps us with jobs? How
    do the rules you are working on help to implement the statute
    that we wrote?
        Secretary Adeyemo.
        Mr. Adeyemo. Yes, Senator, thank you for the question and
    thank you for your leadership in drafting the IRA. What we have
    seen in our conversations with automakers is that they feel as
    if the standards set in the IRA in terms of clean vehicles and
    the 30D standards are tough. And that's why we have seen, as we
    introduce the Foreign Entity of Concern Rule, that it went from
    over 40 cars being eligible to only 13. What the automakers
    have also said is that they are achievable standards that we
    can use to make sure that they are domesticating the supply
    chain. And by making sure that any car that receives the 30D
    credit has to be built here in North America, it means that it
    is going to be built within our economy, we are building supply
    chain here.
        And in addition to 30D, 45X and a number of the other
    credits will mean that not only are the cars built here, but
    the batteries will also be built here in America using American
    innovation and ingenuity--American workers. American
    manufacturing has led the world for decades, and because of the
    way that you designed the IRA, it has put us in a position
    where we create incentives, both for American consumers who
    want to buy EVs, but also for American manufacturers, including
    auto manufacturers to be able to compete with China by lowering
    the cost of the supply chain that they will need to do so. Over
    the last year alone, the automakers have talked about the work
    that they are doing to bring that supply chain back to America
    and to our FTA partners. And because of the work that we are
    doing alongside our colleagues, the Department of Energy, we
    are making that easier every day.
        Senator Wyden. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you.
        We will get back to our regular schedule here.
        Mr. Adeyemo, I am deeply concerned that Treasury is
    allowing taxpayers to claim Inflation Reduction Act credits in
    the current tax year based on proposed rules and not final
    rules. I cannot think of any other federal agency that operates
    this way. And here is my comparison: if FERC proposes a policy
    change or EPA proposes a regulation or DOE proposes a grant
    program, only once the proposal is final does it actually come
    into effect. So do you agree it is abnormal to rely on proposed
    rules for programs that are already in effect, like the IRA tax
    credits, and is Treasury using proposed rules to avoid legal
    challenges?
        Mr. Adeyemo. Senator, thank you for the question.
        And no, it is normal for us to that when it comes to the
    tax code. You are sitting next to Chairman Wyden, who works
    with us on a regular basis on tax issues that are similar to
    this one, and outside of the IRA context, whenever you have a
    tax policy, we often will propose rules and allow taxpayers to
    rely on those proposed rules while we collect comments and
    finalize those rules----
        The Chairman. I hate to interrupt you, sir. If you can
    just--what period of time do you consider proposed rules before
    acting on permanent rules? Right now, you are proposing until
    2027 and beyond. We have never seen anything like this.
        Mr. Adeyemo. Senator, we have a proposed rule out there for
    comment. And what we have asked for is that stakeholders like
    you provide us with comments that will then put us in a
    position to revise and provide a final rule as soon as
    possible. Our goal is to try and finalize these rules as
    quickly as possible to give taxpayers as much certainty as
    possible.
        The Chairman. You can understand our concerns on this
    because you filed for 2026-2027. Taking two or three years to
    get input before you make a final rule is going to put an awful
    lot of people who are making investments in our country in
    jeopardy if they base it off the way the bill was written. That
    is my concern, sir. And we have talked about this. We can go
    into more detail.
        I want to go to Mr. Turk right now. Some U.S. automakers
    and producers have said there is just no way that we can make
    these EV batteries without China. And it makes no sense to me
    at all, since most of this technology started here in America,
    and then was taken to China and other foreign countries of
    concern. So do you agree with some automakers that it's okay
    for U.S. tax credits to benefit these countries of concern,
    such as China, whether it be Russia, whether it be North Korea,
    whether it be Iran or another such as that we share no values
    with?
        Mr. Turk. So I think we can absolutely do it without China.
    Just to give you a few numbers, we talked about the fact that
    graphite, right now, the processing, is 100 percent in China.
    Just from the investments, the tools that you have given us so
    far that we have used, right now our projection is that 16
    percent of the graphite that will be used in passenger vehicles
    in the U.S. by 2027 will be U.S. That goes from basically zero
    to 16 percent just with the investments we have made so far.
        The Chairman. Yes.
        Mr. Turk. And we have got a lot more grant funding. We have
    got a lot more loan----
        The Chairman. Why do you think that the numbers were cut in
    half, that these numbers were cut in half then? Why do you
    think they defied the law? Are you trying to accelerate because
    you think we can't do it quickly enough, so you have to
    decelerate this to 20 percent or half?
        Mr. Turk. Well, I think the way we look at it, and we work
    incredibly closely with our Treasury colleagues and other
    colleagues across the interagency, it is the tax incentives,
    but it is also the grant funding through the Bipartisan
    Infrastructure legislation. It's our loan program. The Defense
    Department has some funding as well to help on critical
    minerals that they are using for a graphite mine in Alaska
    right now. So it's all of these tools together trying to get
    our percentages up as quickly as we can, understanding, as you
    mentioned in your opening and I mentioned in my opening, we
    have not had an active policy----
        The Chairman. Right.
        Mr. Turk [continuing]. Or tools in our tool belt to do
    anything about this----
        The Chairman. Let me say one more thing on this if I can.
    My problem is this: The people that are making the investments
    think this is what they have to hit, knowing now where foreign
    competition can come in unfairly and undercut them. That's
    where I think the lawsuits are going to come in and it's going
    to be horrendous for us to be able to fight this and the
    uncertainty.
        Let me switch to something else. I have spoken to you both
    numerous times about the concerns about misclassification of
    certain battery component production as critical minerals
    processing rather than manufacturing. The difference between
    sourcing and processing versus manufacturing is very clear. We
    wrote it very clear in the bill, so my question would be, why
    is there a discrepancy between the two definitions?
        Whoever wants to speak up----
        Mr. Adeyemo. I will start. I think what we did was we
    worked very closely with our partners at DOE to develop the
    definition, and we borrowed, in large part, from the definition
    that was in the Bipartisan Infrastructure Law for several
    reasons, one being that we wanted to provide as much certainty
    as possible.
        The Chairman. We wrote in--I am so sorry, Mr. Adeyemo--we
    wrote specifically what the definition was in the bill, not the
    Bipartisan Infrastructure bill, but in the IRA. And you all
    went back and used the language to solidify what you wanted to
    do, how you wanted to do it, or how you wanted to let them
    morph together. Sourcing and processing are completely
    different than manufacturing. Okay? And manufacturing is
    supposed to be in North America--$3,750 for one, $3,750 for the
    other. That's the problem.
        Mr. Adeyemo. Well, Senator, as I mentioned earlier, what we
    have done is, we put out a proposed rule. Our goal is to take
    feedback from you and other stakeholders on that proposed rule.
    What I am trying to explain is why we went with the proposal
    that we did, and our goal was to provide certainty to the
    marketplace by trying to make sure that we provided them with
    one definition of processing and manufacturing that was
    similar. We worked closely with our partners at DOE to develop
    that. We look forward to taking your feedback and feedback from
    other stakeholders as we move from a proposed rule to a final
    rule.
        The Chairman. Well, we are going to continue to work
    together to try to get back to the definition written into the
    bill and it not having it being interpreted differently.
        With that, we will turn to Senator Barrasso.
        Senator Barrasso. Thanks, Mr. Chairman.
        Mr. Adeyemo, let me just continue. You know, I understand
    that under the IRA, leased electric cars--and the Chairman
    agreed with me when I mentioned this earlier--are not subject
    to foreign source content requirements, to consumer income
    limits, or to vehicle price limits--leased cars, is that
    correct?
        Mr. Adeyemo. So leased vehicles are treated differently
    than purchased vehicles, Senator.
        Senator Barrasso. So I am correct. All right. So that means
    that somebody making over a million dollars a year, under this
    Administration, in your plan, could lease a $100,000 electric
    car that contains lots of minerals from China and still benefit
    from a $7,500 tax credit. Do you believe that is a good use of
    taxpayer money?
        Mr. Adeyemo. Senator, that's not true over time. The way
    that the provision works for 45W is that it will come down as
    the cost of the vehicle comes down making it----
        Senator Barrasso. But it's true today. I don't want to hear
    that it's not true over time. Today it's true, is that right?
    $100,000 car, somebody making a million dollars a year still
    gets the tax credit?
        Mr. Adeyemo. Today, the leased vehicle credit is the same
    as the 30D credit. But Senator, what I was trying to explain
    was that the way that the bill was designed was to make the
    purchase credit more valuable in order to incentivize the
    domestication of the supply chain. That's why we are seeing the
    movement of the supply chain back to the United States and our
    allies, because over time our car companies, like Ford and GM,
    know that they are going to be----
        Senator Barrasso. Well, the Chairman of the Committee has
    made clear that the way the bill is designed and the way that
    it is being implemented are very different right now, and this
    is one of these abusive areas that I think the American people
    say, hey, we are subsidizing very rich people, who are liberal,
    who have these elitist views on the West Coast, they are
    getting big payoffs because they are into this kind of thing,
    when these cars don't work other places.
        Mr. Turk, you testified before the Committee in February
    2023. At the time, the Chairman and I both raised concerns
    about the Department's grant negotiations with Microvast, a
    China-based battery company. In response, the Department did
    its homework and canceled its award negotiations with
    Microvast. It appears that the Department has again failed to
    do its homework, or even a quick Google search, for that
    matter, when last September the Department finalized a $3
    billion loan guarantee with Sunnova, a solar company. At the
    time, Sunnova had an F rating--an F rating. Mr. Turk, this is
    the F rating, Better Business Bureau, Sunnova, $3 billion grant
    from the Department. The Better Business Bureau actually has
    stripped Sunnova of its accreditation. They are still not
    accredited. In 2019, Sunnova was found to be operating
    illegally after not fulfilling its duties to customers under
    Puerto Rican law.
        [Poster documenting Sunnova's Better Business Bureau rating
    follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. According to media reports, a Sunnova
    salesman sold an elderly man a $60,000 solar system after the
    man told the salesman that he was in hospice and dying. That's
    how you get an F rating. The elderly man died soon after.
    Sunnova then, what did they do? Well, they placed a lien on his
    mobile home, which prevented his family from selling the
    property. A Texas woman said that her 80-year-old mother was
    blind, bed-bound, partially deaf, on dialysis, with congestive
    heart failure. So what did Sunnova do? Oh, they sold that
    elderly woman a 25-year, $86,000 contract. That's how you get
    an F rating. The mother died three months later. These are but
    a small fraction of the deeply troubling complaints against
    this company, Sunnova. A company that the Department of Energy
    has granted a $3 billion loan guarantee to.
        Can I have your commitment that the Department will go
    back, do its homework, and reconsider this flawed decision to
    award Sunnova a $3 billion loan guarantee?
        Mr. Turk. Well, thank you, Senator, for the question. Let
    me just say, we are continuing to do our homework and make sure
    that we have improvements throughout our processes. You
    mentioned Microvast. We have put in place and we are improving
    and strengthening what we call our RTES, our Research,
    Technology and Economic Security effort, to take advantage of
    public information, intelligence information, and expertise
    that we have at our Department and in our labs, to make sure
    that we are doing the scrutiny that the public, the taxpayers,
    deserve and demand. So we are continuing to improve that
    process.
        This is a program under our loan program. This is a
    conditional commitment right now. And so, we are continuing to
    do our due diligence, continuing to do our homework. We are
    looking for ways to make sure that solar PV technology is
    accessible to everyone, including low-income folks, and that's
    what this loan is about. And we are using the leverage of this
    loan, all our due diligence, to make improvements to make sure
    that we have the highest standards going forward. So that is
    the process we are in right now with Sunnova, with these
    discussions and the conditional commitment.
        Senator Barrasso. Well, it has been a finalized $3 billion
    loan guarantee already. I think you did the right thing with
    Microvast, pulling back. It should have been done beforehand.
    You shouldn't need a Committee here, and a Chairman and a
    Ranking Member pointing out how bad this company is before the
    Administration goes back and says, well, maybe we shouldn't
    give them the $3 billion.
        Thank you, Mr. Chairman. I have additional questions for a
    later time.
        The Chairman. Absolutely, Senator.
        Senator Heinrich.
        Senator Heinrich. Thank you, Chairman.
        Secretary Adeyemo, as Congress intended, the Inflation
    Reduction Act incentives are dramatically accelerating the
    ongoing clean energy industrial revolution, I will call it, and
    really supercharging manufacturing in a way that we haven't
    seen in 60 years. You shouldn't take my word for that, but I
    would ask unanimous consent to put a couple of articles in the
    record today. One from Forbes that says in 2023, and this is
    the headline, ``The United States Started Building Big Again,
    Thanks to Biden's Inflation Reduction Act.'' And another from
    Axios, where the headline is, ``A Manufacturing Investment
    Supercycle is Starting.''
        [The articles referred to follow:]
       [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Heinrich. We have seen this in New Mexico with
    three different factory announcements in solar, in wind, and in
    electric vehicle supply chains. And so we have already seen
    hundreds of thousands of jobs created in making batteries,
    solar panels, heat pumps, and other clean energy technologies
    here in the United States. So how would you characterize the
    manufacturing investment landscape both before and after the
    passage of the Inflation Reduction Act?
        Mr. Adeyemo. Well, Senator, thank you for the question.
    Thank you for your leadership with regard to the Inflation
    Reduction Act. And I think that you have done a good job of
    characterizing the sea change that we have seen in America due
    to what I would say are the three historic pieces of
    legislation that Congress has passed--the CHIPS and Science
    Act, the Bipartisan Infrastructure Law, and most importantly,
    the Inflation Reduction Act. And what it has done is, it has
    led to investment in America that is unlocking a manufacturing
    boom that spreads throughout the country, not only in your
    state, but throughout the country in a way that is, in lots of
    ways, giving people access to jobs that are well-paying jobs to
    build the economy of the future and not just an economy that is
    going to matter here in America, but one that will allow
    America to be a leader around the world. Because ultimately,
    what we have learned over the last few years is the importance
    of supply chains. And the investments we are making and
    building the supply chain that goes through America will both
    supply key goods and clean energy to America, improving our
    energy security, but it will also mean that America is at the
    center of the alternative supply chain to China that our allies
    and partners can rely on. These investments will unlock our
    ability to make sure that America's economy doesn't just grow
    next year, but over the next decades, and that is because of
    the passage of legislation like the Inflation Reduction Act.
        Senator Heinrich. So when I was growing up, my mother
    worked in auto manufacturing. She worked at a wheel
    manufacturing plant. And I saw for years how policies and lack
    of policies really created enormous disinvestment in the United
    States. Auto manufacturing declined. And now we are seeing this
    incredible resurgence. The numbers are absolutely remarkable.
    The amount of investment here in the United States is
    remarkable.
        [Displayed charts follow:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Heinrich. When you just look at the State of New
    Mexico, I can think of a 1,500 person announcement of a new
    solar manufacturing plant that is coming, a wind tower
    manufacturing plant that is getting up off the ground that is
    roughly 300 jobs, roughly the same size jobs at an auto
    manufacturing supplier for EVs. What happens to those
    factories, and more importantly, the people who are going to
    work in those factories, if we do what House Republicans have
    suggested and we repeal the Inflation Reduction Act?
        Mr. Adeyemo. So Senator, what happens is, those jobs go
    away. America's manufacturing boom goes away. The investments
    that are being made in America would go away if we were to
    repeal the Inflation Reduction Act. Not only does that happen,
    but it sets us back in not only meeting our climate goals, but
    improving our energy security. One of the most important things
    that was done in the Inflation Reduction Act was the passage of
    the prevailing wage and apprenticeship provision, which means
    that not only are we seeing a manufacturing boom in America,
    but the people who are helping to build those manufacturing
    plants are being paid a living wage because of the legislation
    that you have passed. So it is not only creating new jobs, it
    is creating well-paying jobs all over the country, which are
    going to be critical to making sure that Americans in
    communities all over the country have the ability to build
    opportunities for their family. And if you were to repeal the
    Inflation Reduction Act, it would have a significant impact on
    those communities, on those individuals, and on our long-term
    economic success.
        Senator Heinrich. Secretary Turk, so if those jobs go away,
    does that make us more or less competitive with China?
        Mr. Turk. Absolutely less competitive. We are competing,
    and I would say we are winning. I know in meetings I have with
    international counterparts, they are incredibly jealous----
        Senator Heinrich. Yes.
        Mr. Turk [continuing]. Of the tools we have in the tool
    belt, the private sector investment, in particular.
        We are not doing industrial strategy like other countries,
    we are doing it in a uniquely U.S. way with entrepreneurs and
    companies leading the way. What we are able to do with these
    tools that you have given us--the tax tools, the grant tools,
    the loan tools--is accelerate that and have this all across our
    country in a very intentional way.
        Senator Heinrich. Mr. Chairman, I like winning. Let's do
    more.
        The Chairman. Let me just say for clarity--the bill that we
    put together, and the reason I have so many problems with it,
    and it looks like I am working with both sides, but the bottom
    line is that we put a bill together with Republican input for
    over five years that I have been talking and working with them.
    Because of reconciliation, they weren't able to vote for it.
    But we don't have to divide us any further by implementing
    something that we didn't pass, whether they voted for it or
    not. And our Republican colleagues are benefiting too, but they
    are as upset as I am that we are not following it.
        This is a great bill, absolutely, make no bones about it.
    And we are all going to benefit from it. All we are asking for,
    Deputy Secretary Adeyemo, and to you, Deputy Secretary Turk, is
    to make sure we stay within the confines of how the bill was
    written, and don't bust the budget to where we are spending
    twice as much than we appropriated. The CBO score was $680
    billion, $690 billion, okay? That should stop when we hit that,
    and we have done some good things. Let's go back and
    reappropriate. That is the way it should have been done. And
    that is what we are concerned about.
        With that, we will go to Senator Lee.
        Senator Lee. Thanks, Mr. Chairman, and thanks to our
    witnesses.
        Mr. Turk, I would like to start with you. Last spring, we,
    as a Committee, heard from the CEO of North American Electric
    Reliability Corporation. This, of course, is the grid
    reliability watchdog. And we heard testimony that the U.S.
    faces a looming reliability crisis because of the premature
    retirement of coal-fired power plants. That message was pretty
    loud and clear, as I heard it. And we heard the exact same
    message from the FERC Commissioners. And as my time is somewhat
    limited, I would appreciate here if you could give me a yes or
    no answer on this. Is our current grid infrastructure capable
    of supporting a massive increase in EV usage?
        Mr. Turk. So that's why we are making investments in our
    grid to improve it and make sure we have got the grid that we
    Americans deserve.
        Senator Lee. So it's not, and we need to get there.
        Mr. Turk. So I am quite confident with the tools that we
    have and building out, we are talking about EVs at this
    hearing. The fact that we are going to have a whole bunch more
    batteries out there----
        Senator Lee. Right.
        Mr. Turk [continuing]. That we can determine when those
    batteries are charged, and especially if we get to
    bidirectional charge, that is actually going to be a more
    resilient grid if we incorporate that.
        Senator Lee. Now, California has a new regulation carrying
    the force of law in that state that by 2035 it is going to
    require 100 percent of new vehicles sold to be electric--all of
    them--every single one of them. So under that rule, electricity
    demand is obviously going to skyrocket. One of Utah's largest
    coal plants, the IPP plant in Delta, currently sends about 80
    percent of its generated power to California utilities. Sadly,
    that plant will soon be retired due to California's zero-coal
    agenda. It seems that aside from coal and gas, there are
    currently no affordable, dispatchable, reliable alternatives to
    support the increased power demand from EVs at scale. Would you
    agree with that?
        Mr. Turk. So I would not. We are making investments,
    including through the incentives of the Bipartisan
    Infrastructure legislation, the Inflation Reduction Act, on
    battery storage and other storage options. We are focusing and
    doing an awful lot of research and development, demonstration,
    and deployment on long-term storage. And I think an area that
    has not gotten as much attention is virtual power plants and
    smart demand response. We put out what we call a liftoff
    report, looking at how we get to balance the grids in an
    efficient, cost-effective way and a reliable way going forward.
    And a lot of that comes from balancing supply and demand,
    taking advantage of technologies, including all these new
    mobile batteries that are out there that will be out there in
    even greater scale as we get more EVs. That could be a grid
    enhancement opportunity if we do it right. And that's what we
    are working on.
        Senator Lee. Well, you don't disagree that we are losing
    reliable sources of affordable baseload power. We are not
    adding to the supply of reliable, consistent baseload power at
    the same rate, even as we are putting a lot more demands on the
    grid as we provide these incentives, and in some cases--most
    acutely in the case of California--the mandate about 100
    percent electric vehicles by 2035.
        Mr. Turk. There is no doubt our electricity sector is
    changing. We are investing in a whole range of technologies,
    including in geothermal. If we can get enhanced geothermal at
    scale and at cost, that can be a huge part of our solution on
    generation. Small modular reactors on the nuclear side can be a
    part of it. Balancing the grid with supply and demand using
    these technologies, it is all part of the work that we are
    doing at the Department of Energy to make sure that all
    Americans have reliable electricity and affordable electricity.
        Senator Lee. Look, I love the idea of small modular
    reactors. Love to see it. We have heard about them for years.
    Haven't seen deployment of them, but that's going to have to
    change if we keep heading in this direction. It seems like one
    of the only new sources that we can rely on as more and more
    other sources of reliable, affordable baseload power are taken
    off the grid. But you know, we have got to be concerned about
    it.
        Now, the Biden Administration makes the case for widespread
    EV adoption, and this is an important function to have if we
    are going to go in that direction. Now, fossil fuels like coal,
    gas, and so forth power the mining and transportation of raw
    materials for electric vehicles, for the manufacturing of the
    components for electric vehicles, for the transportation of the
    assembled electric vehicles, for the charging of the battery
    throughout the life of the electric vehicles, and for the
    eventual disposal of the electric vehicles. It would be
    reckless and irresponsible to force Americans to purchase these
    vehicles--which are significantly more expensive, on average,
    than their internal combustion engine counterparts--and then
    leave them without a way of charging them. It would be reckless
    to do all of that and not take into account the environmental
    impacts of all of those things.
        Do you have data that you track on the total environmental
    impact of these requirements and of the electric vehicles they
    produce? I mean, are we actually doing the environment a net
    favor?
        Mr. Turk. So we are a very data-driven, science-oriented
    department with our national laboratories. And I completely
    agree with you, we should do a very rigorous environmental
    assessment of all the technologies. And I think one of the
    exciting parts of the tools that you all in Congress have given
    us is that we have got incentives for hydro, we have got
    incentives for nuclear, including small modular reactors, we
    have got incentives for carbon capture utilization and storage
    to clean up existing assets. Transportation right now is our
    biggest source of greenhouse gas emissions, so we have to have
    solutions. We have to take that head-on. And you mentioned the
    affordability--I think what's going on right now, and it is
    underappreciated by many, is EVs right now are becoming more
    and more affordable. Right now, we have got a Chevy Bolt model
    out there that is under $20,000. That is incredible. J.D.
    Power, actually, when you compare internal combustion and EVs,
    models for models, apples to apples, EVs are actually cheaper
    when you take into account the fueling and the reduction in
    maintenance costs.
        Senator Lee. Right. Look, I am out of time, but these are
    things we have got to look for. I would love to see an analysis
    from you of the total environmental impact and of efforts you
    are taking to make sure that we don't have a significant lag
    between the added demand on the grid that we are creating and
    our actual supply of functioning affordable baseload power
    sources.
        Thank you.
        The Chairman. Thank you, Senator.
        Senator Padilla.
        Senator Padilla. Thank you, Mr. Chair.
        I have great news for everybody this morning, particularly
    my colleagues on the other side of the aisle who have expressed
    their concerns regarding our reliance on foreign critical
    minerals, specifically lithium, not just in today's hearing,
    but in recent years. Last month, DOE announced the results of
    the most comprehensive analysis to date quantifying the
    domestic lithium resources in California's Salton Sea region.
    This analysis, conducted by Lawrence Berkeley National
    Laboratory, found that with expected technology advances, the
    Salton Sea's regional total resources could produce more than
    3,400 kilotons of lithium, enough to support over 375 million
    batteries for electric vehicles. The announcement confirms what
    we have long known in California--the Salton Sea region has
    significant potential as a domestic source of the critical
    minerals needed for these batteries.
        Question number one, for Mr. Turk. What is DOE doing to
    support responsible development at the Salton Sea so that we
    can begin increasing our domestic supply of lithium?
        Mr. Turk. Well, thank you, Senator, for mentioning this
    phenomenal asset that we have in our country in California, the
    Salton Sea. The analysis that you mentioned is really
    groundbreaking. Just to put it in perspective, the 375 million
    batteries for electric vehicles, the Salton Sea, itself, if we
    can get the costs to where they need to and make sure that we
    are doing this right from an environmental justice perspective,
    that is more than the total number of vehicles currently on
    U.S. roads, just to give you a sense of scale of this one
    asset, this one resource that we have.
        So we are working across the board throughout the
    Department of Energy--everything from reducing the cost of the
    technology to get this brined and make sure it is done in the
    right way and to make sure that this is available for our
    domestic processors, our manufacturers, and the whole supply
    chain going forward. We are using our loan program, where we
    are using all the tools that we have got in the tool belt, and
    really appreciate the partnership with you, Senator, to make
    sure that we are connecting all those dots as quickly as we
    possibly can for economic benefit but also decarbonization
    benefit as well.
        Senator Padilla. Let me also ask you, how important is it
    for this Committee to support and incentivize geothermal energy
    research and development to not only provide a reliable source
    of power generation, but also to shore up our domestic supply
    of lithium and other critical minerals like zinc?
        Mr. Turk. So I think geothermal is one of the most exciting
    technologies and opportunities that we have out there. Most
    people think of geothermal in the traditional sense of
    geothermal--if you have got a hot spring nearby, you take
    advantage of that and you get some benefit from that. What is
    particularly exciting is something called enhanced geothermal,
    where you use drilling technology. And we have done an awful
    lot of drilling in our country and perfected a lot of
    technologies and reduced those costs. If we can train that
    drilling technology, and there are companies, and we are doing
    some things through the Department of Energy focused exactly on
    this. You drill deeper, you do it cheaply, and then you have
    electricity production because it is higher temperature coming
    up.
        So if we can get that technology at a cost level, that is
    24/7 baseload power in a very environmentally responsible way
    without the carbon emissions. Incredibly exciting. We have got
    work to do. That's what we are doing, including through our
    FORGE facility that is testing some of these technologies in
    the western part of the United States.
        Senator Padilla. Yes, but if we could pull this off, this
    would be massive.
        Mr. Turk. Huge.
        Senator Padilla. We already have a significant amount of
    quality geothermal energy, which we refer to in the renewable
    energy space as ``renewable gold.'' Right?
        Mr. Turk. Absolutely.
        Senator Padilla. In my time remaining, I wanted to bring up
    another topic for the Deputy Secretary. The Administration has
    laid out a goal of deploying 500,000 chargers by 2030.
    Effective implementation of Section 30C is critical to
    realizing this and broader climate goals. While more than half
    of all Americans say they are at least thinking about buying an
    EV, the lack of reliable charging infrastructure, particularly
    in rural areas, remains the number one limitation to the
    widespread adoption of electric vehicles. If we are able to
    meet our climate goals, Treasury must provide certainty around
    Section 30C requirements.
        Deputy Secretary Adeyemo, Senator Cortez Masto and I
    recently wrote a letter to Treasury on this issue. How does
    Treasury intend to leverage 30C to scale up investment in the
    decarbonization of the transportation sector?
        Mr. Adeyemo. Senator, getting this right is critical to
    building out the type of charging stations that will be
    necessary to support the electric vehicles that are becoming
    abundant throughout the country. We are committed to getting
    out guidance to states and local governments in the coming
    weeks, not months, in order to make sure that people have the
    information they need to make these investments because we know
    they are critical to your communities.
        To pick up on your question to Deputy Secretary Turk, I
    recently visited the Torres Martinez Tribe and saw the Salton
    Sea. And I think one of the things that your question reminds
    us all of is that some of the investments that could be made
    through the Inflation Reduction Act can transform communities
    that have often been left behind and left out for too long.
    That's why we are encouraged to see that the more than $200
    billion of investments that have been made because of the
    Inflation Reduction Act have been made in communities that tend
    to be above the national average in terms of poverty and below
    the national average in terms of college education. But we know
    that in order for all of this to work, we need to build out an
    infrastructure, and 30C is critical to that, and we are
    committed to getting out guidance very soon so your
    constituents, and constituents all over the country can take
    advantage of this tax credit.
        Senator Padilla. Thank you very much.
        Yes, Salton Sea, Mr. Chair, is probably exhibit A on multi-
    benefit, whether it is critical materials, water resilience and
    reliability, public health improvements, and the area of
    quality job creation. I invite you to come visit. Thank you.
        The Chairman. I would love to do it. I will be there.
        Senator Hawley has graciously given up his spot for Senator
    Cassidy.
        Senator Cassidy. And I thank Senator Hawley. And I want all
    my colleagues to hear this: Senator Padilla, I will bet you,
    and I will offer you turtle soup from Commander's Palace, if
    you get that facility in Salton Sea permitted within two years.
    I am going to win that bet because part of the problem is we
    can't get permitting for this sort of activity, and the idea
    that Californians are going to kill a bunch of desert turtles--
    if they do, ship them to Commander's and I will make your soup
    for you. Okay?
        [Laughter.]
        Senator Cassidy. But I am going to win that bet, brother.
        Senator Padilla. We will see about that.
        Senator Cassidy. Let us work together on improving that.
        And Mr. Turk, I always feel like you are straightforward
    with us. I appreciate that. You look a little older since you
    were first sworn in, but that is part of being on the dark
    side. Listen, since we are talking about the Salton Sea, what
    about doing a DOE analysis of the Smackover Formation in
    Louisiana for lithium? It's in Arkansas. Louisiana actually has
    experience and embraces extraction. And that would be economic
    development for the same group that Senator Padilla spoke of as
    well as the Secretary, for those who, frankly, could have some
    economic development. So I think we have some money in the
    Bipartisan Infrastructure bill for that. If you all could
    explore that, that would be fantastic.
        Mr. Turk. Happy to talk to you and happy to explore that. I
    think there are a lot of exciting opportunities out there. One
    of the things I am most excited about, and thanks for the nice
    words as well, I do feel older, as my kids remind me of on a
    daily basis.
        [Laughter.]
        Mr. Turk. We have got an effort in our Fossil Energy and
    Carbon Management Office to work on some analysis, do some real
    research with our labs on the mine of the future. How can we
    take all the technology that we have learned over many, many
    years, apply it to extract responsibly--responsibly in an
    environmental way and responsibly for the communities in which
    those mines are located and do it with a smaller footprint? I
    think it is incredibly exciting, but happy to look into the
    particular project that you mentioned.
        Senator Cassidy. That's great.
        Now, related, not to this Committee, but to what you just
    said, there is a DOE--and by the way, this will be a little bit
    off topic, but it is related to what you just said. There is, I
    am told, a DOE review of LNG export facilities, a decision to
    unilaterally revise the climate criteria in terms of their
    approval, looking at life cycle emissions within the U.S., but
    ignoring the fact that if U.S. LNG replaces coal being burned
    in China or in Germany, the positive benefits for global
    emissions are incredible--incredible. Whatever increased life
    cycle emissions you find here in the U.S. by scrutinizing
    closely, it is overwhelmingly overwhelmed by replacing coal
    burning in other countries. Now, you just mentioned being
    driven by science. Would you agree with the statement I just
    made?
        Mr. Turk. So as you know, Senator, and I know it's off
    topic, but happy to talk about this and happy to have a further
    conversation with you on our authorities for liquefied natural
    gas. It is a public interest determination. And so, we are
    required by Congress to take into account national security,
    take into account economic implications, take into account
    environmental and climate change implications, and we should
    take into account the full life cycle--the emissions at the
    front end and the emissions on the back end--and do a really
    thorough analysis. And that is what we do every time we have an
    application come in.
        Senator Cassidy. But if the fact that the Department of
    Energy is unilaterally seeking to revise this, and when
    arguably it is in favor of our national security to help Europe
    wean off of Russian gas, it is improving the world's climate
    condition when we replace coal with natural gas. Natural gas
    has 50 percent more energy content relative to CO2
    positions without the SOX and NOX and
    particulate matter, and it helps our economy by creating jobs
    for the American people as well as an overall larger GDP for us
    all. I am not sure where the impetus comes for this unilateral
    revision, except that the Administration has had a pattern of
    doing whatever they can to slow-walk LNG export facilities.
        Mr. Turk. So let me say two things. One, we take
    applications as they come and review them thoroughly, as
    diligently and quickly as we possibly can. Each application is
    different. Some are easier. Some are more challenging along
    those lines.
        Senator Cassidy. Now, that's different than what I am
    describing. I am describing----
        Mr. Turk. Secondly----
        Senator Cassidy. Yes.
        Mr. Turk. And then secondly, I think we feel the
    responsibility for the public interest determination in
    everything we do to continuously update and improve our
    analysis to make sure we are taking into account all the
    factors that you mentioned to make sure we are looking----
        Senator Cassidy. I am about out of time, but I will just
    say that there is a paralysis by analysis when, quite
    intuitively, everything I said, and quite demonstratively,
    everything I just said is absolutely true. The fact that DOE is
    going to go through a multi-year process of redoing it once
    more suggests that the paralysis actually is the desired result
    of the analysis. I actually think you are a very reasonable
    person. I think this is being driven by the political arm. And
    that political arm is going to sacrifice U.S. national
    security, U.S. economic interests for the family and for the
    country, and climate reductions worldwide.
        With that, I yield.
        The Chairman. Senator King.
        Senator King. Thank you, Mr. Chairman.
        I think it's important to sort of set the context of this
    hearing. We are talking about all these various details of
    these programs, but why are we here? We are here because the
    overarching crisis is the climate. Just in the last ten days,
    two massive storms on the East Coast made an enormous impact
    and an enormous cost. I have seen it. And it's happening in my
    state, all along the coast, all along the Eastern Seaboard.
    This is--there is just no question that this is the most
    significant problem that we face, and history will not judge us
    well if we don't confront it. And I believe the Inflation
    Reduction Act did confront it in very significant ways.
        Can we fix it? Can we improve it? Absolutely. Can we work
    on how it is being implemented? Absolutely, but what worries me
    is when we are talking about trying to undermine these various
    programs--I just wrote down--we are fiddling while the planet
    burns. We are fiddling while the planet burns, and people are
    going to look back and say, yes, you addressed it, but you
    didn't really address it with a sufficient sense of urgency.
    And I think we have to talk about the impact of the climate
    crisis on us. And if you don't want to talk about saving the
    environment, talk about saving taxpayer dollars to deal with
    these Stafford Act responses that we are going to have to be
    undertaking in the next few weeks.
        The other point I wanted to make is that batteries plus
    renewables is baseload power. Batteries plus renewables is
    baseload power. So this idea that you can only have baseload
    power from a plant that is running all the time--no, if you
    have renewables and if you have sufficient batteries, which the
    Department is doing huge amounts of research on, and in fact,
    it is being deployed. I think that is a very important point.
        The other point is about--we have talked about electric
    vehicles--clearly, we are talking about new products to the
    market in the last few years. The price will come down and has
    come down substantially. And I think this chart is very
    informative because what it shows is, this is cost of ownership
    of EVs versus gas vehicles--whole bunch of different, you know,
    everything from a Ford F150, Hyundai, Kia, Volvo, Nissan, Chevy
    Malibu, and a Bolt.
        [The chart referred to follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
        Senator King. And what it shows is, and this includes the
    cost of buying the vehicle. So that is in this calculation, the
    financing cost. So what it shows is that half of these vehicles
    already are cheaper per month. For more than half of these
    vehicles, the EV is cheaper per month, including the capital
    costs. So I think that is really significant. And this is an
    early snapshot. I would venture to say that five years from
    now, it is going to be 90 percent of the EV vehicles are
    cheaper to operate. I have a plug-in hybrid. Yesterday, I put
    in my fifth tank of gas in three years. Just yesterday, my
    fifth tank of gas in three years. My total maintenance cost on
    that vehicle in three years has been $26 for one oil change.
        The advantage to the consumer of these vehicles is
    enormous, and if what these incentives do is increase the
    uptake of the vehicles, which in turn increases the scale of
    their production, which in turn will lower the cost of these
    vehicles to the public, so----
        The Chairman. Senator, can I ask one question?
        Senator King. Yes.
        The Chairman. Does that include the $7,500 credit? In that
    base price? So without the credits, because the credits are
    going to go away eventually.
        Senator King. Yes. And I would say the credits are going to
    go away, and what is going happen is that the scale of
    production, mass production, is going to lower the price.
        The Chairman. Got you.
        Senator King. And in fact, that is already starting to
    happen. My plug-in hybrid Toyota Prius Prime is about the same
    price as a Toyota Camry today. And the cost of operation is
    significantly lower.
        The other piece about this that I think we need to
    emphasize is what is happening as a result of the Inflation
    Reduction Act. This is amazing. This is the expansion of
    battery manufacturing in the United States, largely as a result
    of the Inflation Reduction Act and the work of the Department,
    in terms of research, but what it shows is that this is EV
    demand. This is the projected growth of both announced, under
    construction, and fully commissioned that shows that this is
    the sort of dollars and sense impact of the Inflation Reduction
    Act that is really making a great difference in U.S.
    manufacturing, in jobs, and in bringing the supply chain home.
        [The chart referred to follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Senator King. I have got eight seconds left, Mr. Turk, if
    you could find a question in there somewhere, you are welcome
    to it.
        [Laughter.]
        Mr. Turk. So I will maybe make a few points. On the cost
    perspective, and where we expect cost to go into the future, we
    have seen the battery cost that goes into an EV--and that's a
    huge part of the cost going into an EV--decrease 90 percent
    since 2008. And when we look at where that's going in the
    future, we continue to see dramatic cost reductions. Again,
    that's a huge part of the EV cost, 48 percent additional
    reductions on top of that 90 percent reduction already going
    out to 2030. So that's another data point in terms of the
    trajectory of where we are headed going forward.
        The other nugget I would throw out there is, for those who
    are an EV owner, the average savings you have every year
    because of the lower cost of fueling and the less maintenance,
    is a thousand dollars per year, every year that you save
    because you have an EV.
        Senator King. Thank you, Chairman.
        The Chairman. Thank you, Senator.
        Finally, Senator Hawley.
        Senator Hawley. Thank you, Mr. Chairman.
        Secretary Turk, thank you for being here. Nice to see you
    again. Thanks to both of the witnesses for being here.
        I want to just talk a little bit about who is really
    benefiting from this Administration's climate agenda and from
    these draconian electric vehicle mandates. So Mr. Turk, you
    have already alluded to this. I know you know the answer to
    these questions. Currently, one nation accounts for 60 percent
    of the world's electric vehicle production. That nation is?
        Mr. Turk. China.
        Senator Hawley. Yeah. One nation accounts for 76 percent of
    the world's lithium-ion battery production. That nation is?
        Mr. Turk. China.
        Senator Hawley. Yet, your Administration, this President's
    Administration, the mandates that you have put in place require
    that two-thirds of our new vehicle sales in just the next eight
    years--two-thirds of them--be electric vehicles. Your policies
    are driving us and our supply chains into the hands of our
    greatest geo-strategic enemy, enriching them, enriching their
    government, while forcing Americans to pay for electric
    vehicles that, on average, cost $7,000 more--on average--than a
    traditional vehicle, are more expensive to repair and insure,
    and require more frequent replacements of everything from tires
    to component parts. So Mr. Turk, why is it good for the
    American worker that we force our supply chains to a country
    that is our greatest rival and adversary? And why is it good
    for the American consumer?
        Mr. Turk. So this is exactly why we are using all the tools
    that Congress gave us to diversify our supply chains, from the
    mining piece and especially the processing piece of just where
    China really has the stranglehold. So we are making significant
    progress on lithium, on graphite. You name it, the tools that
    you all have given us to diversify those supply chains and make
    sure that we are getting the benefits of that, our U.S. workers
    are getting the benefits of that. Citizens in St. Louis, I
    mentioned in my opening statement some exciting investments
    that are going on in St. Louis. We want U.S. workers to benefit
    from this supply chain and this revolution, and China is
    absolutely competing. China is going whole hog on EVs and the
    full supply chain of it and they are going to compete and
    outcompete unless we are playing and pushing back and competing
    with them, which is what we are doing.
        Senator Hawley. Okay, here is what I don't understand,
    then. Why is it, if that is the case, why is it that you are
    interpreting the Administration's climate law, the so-called
    Inflation Reduction Act--which I think, frankly, is bad enough
    on its own--but you are reinterpreting it now to allow the tax
    credits to flow to Chinese entities. So now, U.S. tax dollars
    are literally subsidizing Chinese battery makers. Why would we
    want to do that? Why would we want to not only give our
    adversary our supply chains and our jobs, but pay them to take
    them from us? Why does that make any sense?
        Mr. Turk. So I would argue, and certainly want to turn to
    my Deputy Secretary at Treasury, that we are not doing that.
        Senator Hawley. How are you not?
        Mr. Turk. The fact that with the 30D tax credit only 13
    models qualify at this point--now, we hope more diversification
    happens and more models qualify for that tax credit--is a good
    data point that we take this very seriously and we want to have
    these jobs in the U.S. But let me----
        Senator Hawley. Wait, wait, wait, I just want to stay with
    you, Mr. Turk, just because my time is so limited. This is an
    important part, and the Chairman has brought this up, and I am
    glad that he has. This is really, really important. The
    Inflation Reduction Act, which I did not vote for, but
    nevertheless, the Inflation Reduction Act said clearly that
    China--if you are a foreign entity of concern, which includes
    China--you don't get the taxpayer subsidy. You don't get the
    30D subsidy. You don't get the tax break. And yet, your rule
    allows Chinese companies to get the tax break. It loosens up
    the restrictions. So now we are subsidizing our rivals. I just
    don't understand.
        The Chairman has asked you about this repeatedly. I don't
    understand why we would pay Chinese companies to outcompete us.
        Mr. Turk. So I would strongly disagree with that. I spent a
    lot of time working with the team and we worked hand-in-hand
    with our Treasury colleagues on the FEOC--the Foreign Entity of
    Concern--the FEOC standards, and happy to go through the three
    prongs of that, in particular, in terms of what our proposal is
    on the table.
        Senator Hawley. Well, that's the problem, right, is that
    the law, which, again, I didn't support, but the law says just
    no. It says no. And then you come back and say--it's what we
    lawyers like to call a multi-factor balancing test, which is
    usually what courts do when they want to get their way. So they
    will say well, it's complicated. We have got all of these
    different things and the effect of it is--it has been widely
    reported, this is not my opinion--everybody understands that
    what it does is, it allows Chinese companies, so long as they
    are not set up within mainland China, but owned and controlled
    by China, they can now get the tax credit. I just do not
    understand why we would use our tax money to pay the Chinese to
    make these vehicles.
        Mr. Turk. So we are not. Only 13 models, again, have
    qualified for that 30D tax credit. A lot of companies right
    now--automakers are scrambling and they are working urgently to
    make sure that they don't have that----
        Senator Hawley. If your rule had no effect, why would you
    change it? Why wouldn't you just leave the text of the IRA in
    place? The flat bar.
        Mr. Turk. All of this is implementing the legislation that
    has been passed. And happy, again, to get into the details.
    Certainly if----
        Senator Hawley. Last thing I have got because my time is
    expired. I know other Senators are waiting to ask questions,
    but this is important, just about the effect on American
    workers. Just looking at the news reporting on this. The Ford
    CEO says that EVs are going to require 40 percent less labor to
    produce than traditional cars. As production is shifting to the
    United States, this labor on, for instance, batteries, EV
    batteries, is increasingly being done in factories that are
    owned, co-owned at least, by foreign entities, and the wages
    for workers, who are usually not unionized, are substantially
    less than the wages for workers in traditional cars. Now, you
    mentioned my state. In Wentzville, Missouri, for example, we
    have almost 4,000 workers in a GM plant there. That's just one
    plant in just one area of my state. I want--believe me, I will
    take all the jobs you can give me, but I don't want those 3,000
    workers to lose their jobs and to have another couple hundred
    created in some other state in a factory co-owned by a foreign
    company making half the wages. And that seems to be the trade-
    off that you are offering to American workers. That does not
    seem like a good trade-off to me.
        With that, I yield, Mr. Chairman.
        If you want to respond, Mr. Turk, go ahead, but I yield,
    Mr. Chairman.
        Mr. Turk. I would just reiterate the number of jobs--
    136,000 jobs thanks to these tools that you have given us,
    thanks to this President, all across the country, including in
    St. Louis, but all across the country. That is an incredible
    record, and there are incentives, as the Chairman well knows,
    to make sure these are good-paying jobs that we have all across
    the country.
        The Chairman. Senator Hickenlooper.
        Senator Hickenlooper. Thank you, Mr. Chair. And I thank
    both of you for being here and answering these questions.
        Let me start with Mr. Turk. As electric vehicle adoption
    rises, it clearly is going to save costs and reduce local
    pollution. It is going to help address climate change. Electric
    vehicles also create new opportunities to strengthen our
    electric grid, as you mentioned before, including vehicle-to-
    grid applications and the virtual power plants. How is the
    Department of Energy considering the role of electric vehicles
    in enhancing the reliability and resilience of the electric
    grid? And I know you have touched on this, but a little more
    specificity.
        Mr. Turk. Well, thanks for your focus on this, Senator. I
    wish more people were focused on this. It is going to be a
    challenge, but there is a huge opportunity here if we do this
    right. First of all, transportation, as you know, is our
    largest source of greenhouse gas emissions. So if we are not
    going to take transportation emissions head-on, we don't have a
    plan, and we do have a plan with this Administration, thanks to
    the tools you and other Senators have provided us on this. The
    fact that we are going to have so many new batteries out there
    as part of electric vehicles increasing--we are now at ten
    percent--quadrupled during the course of this President's
    Administration in terms of the number of vehicles, electric
    vehicles sold in our country. And that number will only
    increase. We are going to have all these batteries out there.
    That offers up an opportunity. It offers up an opportunity of
    when you time those batteries being recharged and time that
    when we have additional electricity coming in. So balance
    supply and demand.
        What is particularly exciting, and we explored this in what
    we call the liftoff report on virtual power plants, is if you
    can have the two-way charging, that is, you can actually, in
    times of need, take electricity from those millions of
    batteries out there across the U.S. when we need it the most to
    balance the grids, that is an incredibly cost-efficient,
    effective way to do things, again, if we do this right. A lot
    of work we are doing at the Department is exactly on that.
        Senator Hickenlooper. Right, and I appreciate the
    complexity, the challenge, but I also recognize and embrace the
    ultimate benefits. It does take me back to the '80s and the
    '90s, when the Federal Government incentivized directional
    drilling, eventually hydraulic fracturing, and the ways that we
    were able to enhance the recovery of natural gas in a cost-
    effective and highly efficient way. That was the Federal
    Government really investing to try and accelerate a transition,
    a transformation, which, I think, is what you guys are doing at
    this point.
        Mr. Adeyemo, I wanted to talk a little bit about the IRA,
    the successful implementation and the provisions such as the
    45X, the Advanced Manufacturing Production Tax Credit.
    Obviously, you have to prioritize access to these credits. The
    recent guidance--the definition of costs incurred would exclude
    direct and indirect material costs. That means the companies
    working to build a domestic supply chain of critical minerals
    will not be able to access this crucial tax credit. I worry. I
    mean, with the race toward energy security against global
    competitors, you know, how are we, and what is Treasury doing
    to help support a domestic supply chain of these critical
    minerals, and is there an opportunity to support companies
    trying to build a domestic supply chain of critical minerals--
    think of the Salton Sea--via the IRA tax credits?
        Mr. Adeyemo. Senator, thank you for the question.
        I think the 45X tax credit is probably one of the most
    successful pieces of the IRA because what it is doing is
    driving a manufacturing revolution here in the United States.
    You are right that ultimately, we want to create incentives for
    not only the manufacturing, but also the mining. What we have
    done with 45X is, we set out a rule, but also asked a series of
    questions as to how we can do that. Ultimately, what we are
    trying to get at is making sure that people only get the 45X
    credit if they actually have value-add that is being created.
        The thing we are trying to protect against is that the
    people who buy minerals potentially from abroad would then get
    access to the credit, and that money would flow to companies
    that are outside the United States. So we have asked a series
    of questions within the proposed rule that will hopefully help
    stakeholders who are looking to mine and produce here in the
    United States, who are adding value, to be able to help us
    think about how we can design the rule in its final form to
    make sure that we are creating the right incentives.
    Ultimately, despite what Senator Hawley said, our goal here and
    what we have done is, we have designed these rules in a way
    that is incentivizing American companies. For example, 30D. 30D
    is helping Ford and GM be able to be in a position to not only
    compete with Chinese automakers, but to win, not only here in
    the United States, but around the world. No Chinese automaker
    is taking advantage of 30D. What we have seen to date is that
    the companies that are taking advantage of it are American
    companies who are using it to make the investments that they
    need to be able to build out the cars of the future, which are
    electric vehicles. And we hope that 45X will help reduce the
    cost of those batteries over time. But to your point, we want
    to make sure that they have access to the minerals that will go
    into those car batteries.
        Senator Hickenlooper. Right, and I appreciate that, and I
    think you are certainly working in the right direction and
    establishing those supply chains and making sure that, well, we
    know that the most efficient and the most environmentally
    friendly ways of getting minerals are--that happens in the
    United States, and not as much in other parts of the world at
    this point. So there is a double benefit there.
        Anyway, thank you so much.
        Senator Barrasso. It is magnificent, Mr. Chairman. We are
    sitting here and we have an administrator here, Honorable Mr.
    Adeyemo, what does it say up there? Your battery is running
    low.
        That's the problem, Mr. Chairman.
        The Chairman. Wally, we don't know if it is your battery or
    our battery. That's the problem.
        Senator Barrasso. Your battery is running low, and----
        Senator Hickenlooper. I haven't yielded back to you guys
    yet.
        [Laughter.]
        Senator Barrasso. I wanted to alert him to the situation.
        The Chairman. Can someone--do we have a technician here
    that can help us?
        Senator Barrasso. Mr. Turk, this is the issue. Batteries
    running low. Because you and Senator Lee talked about
    bidirectional charging. And I want you to clarify that, because
    do you mean utilities would be able to draw down a homeowner's
    electric car battery from their garage and drain it to help the
    grid someplace else? Because I am a doctor, I have gone to a
    lot of emergencies. What happens when an owner of an electric
    car has an emergency at three a.m., goes to their garage, and
    they find out their electric car is out of juice because this
    gobbledygook word of bidirectional charging has drawn them
    down?
        Mr. Turk. So first of all, it has to be consumer-driven,
    and consumers should be the ones to take advantage of their
    asset, if they would like to take advantage of their asset
    right now. What is being contemplated right now, and what is
    actually being utilized right now is, when the battery gets
    charged, right, if you can time when your battery gets charged
    to when you have lower electricity, or higher electricity
    generation, that helps balance the supply and demand and helps
    save you money and do things in an efficient perspective. If
    consumers want to, and if we have the technology worked out to
    have the bidirectional charging, just as you suggest, consumers
    can make money off of the fact that they own a battery. Now,
    they would need to take into account exactly your situation,
    right? You'd need to do it in a smart way so that you don't
    have batteries too low that you can take advantage of it if you
    need to in emergency circumstances. And this is what we need to
    work through using the smart folks at our national labs and
    others who are the true experts in this area.
        The Chairman. Senator Murkowski.
        Senator Murkowski. Thank you, Mr. Chairman.
        Interesting hearing. You know, I think we all recognize
    that there is great value in electric vehicles, but I hope what
    you are taking away, Mr. Turk, is this recognition that you
    have got an Administration that is approaching how we deal with
    this with one hand deliberately tied behind our back, and we
    are talking about the critical minerals that go into this. You
    know, I think the Administration is saying the right thing
    about minerals. We like minerals. We recognize that they are
    necessary, but they are not so keen on the issue when it comes
    to domestic mining.
        And you know, I appreciate what you have shared, the
    exchange there with Senator Padilla about the great benefits,
    and you identified this source of lithium, but it's about
    access, because we can identify it, but if we don't permit it,
    if we don't allow for that access, if we don't help support it,
    and we are helping to support access elsewhere, and that is
    where I want to talk a little bit about what we are seeing
    going on right now. It seems like--the Department of Defense is
    really working with us on this, and I appreciate that--but it
    seems like the Administration is taking this approach that it's
    anywhere but China, because we all know, China, we have got to
    move away, got to move away for all the right reasons there.
    But then, when it comes to a country like Mozambique, that does
    not exactly have good labor standards and does not exactly have
    good environmental standards, then, it's all okay.
        So I want to talk to you about that. You have got the
    background when it comes to critical minerals. You demonstrated
    that with your work at IEA. It's great. We get that. Secretary
    Adeyemo, I do not have a question for you this morning. I do
    have one that you are going to get as a QFR. But I want to just
    take one brief second to thank you for closing the loophole
    that was allowing Russia to evade sanctions on our seafoods
    that are such an important part of our market. So thank you.
    You are making a difference there. You always have to remember
    to thank people when they are doing good things.
        So let's talk about my issue with what is going on with a
    fixation to get the resource from somewhere else, somewhere
    else other than here, because we don't really like the fact
    that when you mine, you have to dig a hole. And you look at
    what we are seeing going on with graphite. And you have
    mentioned a couple times in your testimony here today that we
    are going to see domestic graphite production increase 25-fold
    here. Projections show 16 percent of graphite in EVs will be
    produced in the U.S. That's great. I am curious about what that
    timeline is on those assumptions because, again, what we are
    seeing right now doesn't match up. The example that I want to
    share with the Committee is, right now, DOE has awarded more
    than $320 million to a processing plant in Louisiana. My friend
    Bill appreciates that. But they are getting their graphite from
    Mozambique. DOE is now, I don't know that you have actually
    done this, but I understand that you are considering another
    $300 million loan guarantee for that project, which means more
    graphite from Mozambique. USDFC has announced $150 million in
    financing to help expand this Balama mine, and it's this mine
    in a super-unstable region in Mozambique. Unrest is
    significant. ISIS is active. Workers are paid so little that
    they went on an extended strike last year. There is all kinds
    of bad news coming out of there.
        But you have got all that that DOE is supporting from a
    mine in Mozambique to get the graphite to help Louisiana out
    here, so we can process it here, so we can put that stamp that
    says ``Made in America,'' but it is sourced somewhere else. In
    the meantime, what we have seen to help the largest graphite
    find in North America, coming out of Alaska--Graphite One--DOD
    is the only part of this Administration that has made an award.
    We got $37.5 million to help Graphite One move along. So here
    is my dilemma: we are helping to support a foreign mine,
    ultimately benefiting 10 to 20 times more, using U.S. taxpayer
    dollars, than we are providing support to our largest-known
    domestic source of graphite. So we know graphite is big. We
    know we have got a source. We have identified it. But we are
    not helping to facilitate that access. Instead, we are setting
    up support after support after support for Mozambique. I don't
    think that is right. I don't think that balance is right.
        So how can you tell me that the Administration is really
    committed to domestic sourcing when we are not putting our
    resources there?
        Mr. Turk. Well, thanks for the question, Senator. It is
    always good to see you.
        Let me start just with the scale of the challenge, as you
    suggest. Right now, China absolutely dominates the graphite
    processing market, 100 percent. I mentioned the numbers
    earlier, and those are 2027 numbers, with the investments we
    have made so far, and we need to do a lot more. And I will get
    to that in a minute.
        Senator Murkowski. So by 2027, you really think that we
    are----
        Mr. Turk. By 2027, with the investments we have made so
    far----
        Senator Murkowski. A 25 percent increase?
        Mr. Turk [continuing]. It's 16 percent of what we need for
    graphite for passenger vehicles we will be able to take care of
    ourselves in the U.S.
        Senator Murkowski. Natural graphite?
        Mr. Turk. Sixteen percent is not--that is the process piece
    of it with the inputs that come from it.
        Senator Murkowski. Right, right.
        Mr. Turk. But 16 percent is not enough, right? We should do
    more than that. And I completely agree with you----
        Senator Murkowski. Well, and you would agree that it's not
    just about where we process it, it's where we get the stuff?
        Mr. Turk. Completely agree. I was getting to that.
        Senator Murkowski. Okay.
        Mr. Turk. The most secure place of any that we can get is
    here in the United States, right, assuming you do look at the
    environmental standards, you do it in the way that works for
    the communities, the state in which it is located.
        I had a chance to get up to Alaska last year and met with
    the Graphite One leadership.
        Senator Murkowski. And we appreciate that, yes.
        Mr. Turk. I had a chance to actually see the actual site in
    which they are proposing to work. I came away quite impressed
    at what they are doing. I have had conversations with my
    counterparts over at the Defense Department. They are putting
    in money. I think it's about $37.5 million right now of Defense
    Production Act----
        Senator Murkowski. Right.
        Mr. Turk [continuing]. That was given by Congress to help
    get that going. We are particularly excited, and we are trying
    to connect the dots with our loan program. We have got a second
    round of funding coming through our battery manufacturing grant
    program----
        Senator Murkowski. Can I ask on that----
        Mr. Turk. I would absolutely love----
        Senator Murkowski [continuing]. Because we are told, Mr.
    Turk, that what we are seeing, or what we are hearing, is that
    your mine project--the mine project itself is not eligible for
    DOE's loan program. They are only going to consider non-mine
    infrastructure, not the mine itself, and then they talk about,
    well, if a pilot project has been completed. So how does this
    help an operation like Graphite One?
        Mr. Turk. Exactly, and happy to talk in depth with you and
    your staff on this and to work through it.
        Senator Murkowski. Okay.
        Mr. Turk. We are trying to be as creative as possible with
    the tools and the authorities that we have.
        There is one of our loan program efforts right now in
    conditional commitment--$700 million for Rhyolite Ridge in
    Nevada with a domestic supply of lithium carbonate. Love to
    work forward. I have had conversations with the CEO of Graphite
    One. I know our loan program is having conversations. Again,
    the loan program takes applications as they come in. So we are
    more than happy to have conversations and try to figure out
    which of the tools that we have currently will work to
    develop----
        Senator Murkowski. So if I can just ask for one
    clarification, and I know that we have another colleague here
    who is waiting, but is it--can you confirm to me that the mine
    itself, the project itself, is actually eligible for DOE loan
    guarantees or DOE loans?
        Mr. Turk. So happy to have a detailed conversation. We are
    trying to be creative. A lot of times it is the mining and the
    processing piece. Rhyolite Ridge is an example of what we are
    able to do using our authorities. If there is any change in
    authorities we need, we would be eager to work with you and the
    Chairman to try to make sure that we have the tools that we can
    to be maximally helpful.
        Senator Murkowski. Well, and I think----
        Mr. Turk. We are going to need a lot of stuff at scale.
        Senator Murkowski [continuing]. That we need to do that
    because when Chairman Manchin and I were working on those Title
    17 loan guarantees, I think we knew what we wrote in. I think
    we knew that we explicitly wrote in provisions in this
    infrastructure law to include mining. And we didn't think that
    there was any wiggle room there.
        Mr. Turk. The most secure source of these critical minerals
    is here in the U.S., and we should absolutely, responsibly, and
    in an environmental way, with the community's support--and to
    speed up permitting. You mentioned permitting. The Chairman has
    been working on permitting. You both have been working on
    permitting for years and years. Eager to work on that too so we
    can play our part to try to accelerate.
        Senator Murkowski. Well, we have to do more with this, and
    what I am taking away from this exchange is that you can't
    assure me that, in fact, the mine projects are actually
    eligible for the DOE loan.
        Mr. Turk. So----
        Senator Murkowski. So if we do have to get creative, even
    though we think that we were pretty clear in the law itself,
    allow me to work with you, work with the Chairman, to get
    creative to do so, because we cannot--you can't pass the red
    face test when you are putting 10 to 20 times more U.S.
    taxpayer dollars into mining projects in a place like
    Mozambique and telling places like Nevada, Alaska, West
    Virginia, that you might have the resource, but you are not
    eligible for that loan.
        Mr. Turk. Happy to have further conversations. I have had
    great conversations with the CEO of Graphite One. I exchanged
    an email just earlier this week. Happy to follow up with real
    urgency here.
        Senator Murkowski. Good. I appreciate that.
        Thank you, Mr. Chairman.
        The Chairman. Senator Cortez Masto.
        Senator Cortez Masto. Really?
        Let me just say, first of all, thank you both for being
    here. This is--I am a big fan of both pieces of legislation,
    the Bipartisan Infrastructure package, as well as the Inflation
    Reduction Act. It has been a benefit to Nevada and I know you
    both know that.
        This chart shows, literally, not only to Nevada with the
    batteries and EVs and hybrid, and let me just say, hybrid
    vehicles are part of this.
        [The chart referred to follows:]
        [GRAPHIC] [TIFF OMITTED] T5845.036

        Senator Cortez Masto. It's all across the country. It's not
    just blue states. It's red states. It's everywhere where we are
    creating jobs. We are bringing opportunities. We are bringing
    that supply chain back to the United States. I am hoping, and
    let me just follow up, and I echo what my colleague from Alaska
    said, Senator Murkowski--we are starting at the extraction, the
    mining. That's the key part of all of this--the processing, the
    manufacturing, but this is the perfect example of--we're not
    putting the genie back in the bottle. This is not it. Not
    unless we, the way we implement the legislation and write the
    regs or the way that we get in our own way and either refuse to
    implement new legislation or undo what we have done already.
        But here is why. This is so essential that we have to lead
    in this area. We have to develop our domestic manufacturing. We
    have to make sure that we are doing everything we can so that
    we don't repeat the mistakes of other critical technologies. We
    don't want to cede ground on the global stage. We don't want to
    end up reliant on hostile nations. This is important for
    national security. This is important for jobs. This is
    important to bring that supply chain back here. And by the way,
    the demand is out there. The demand is not going to change. So
    we might as well be flexible and create the new jobs that are
    going to come because of everything that we are doing here.
        Now, with that said, I do have some concerns about how the
    Administration, at times--our intent is put out in this
    legislation. I appreciate that you are trying to figure out how
    to do the guidance. But sometimes the left foot is not walking
    with the right foot. And it is hindering what we are trying to
    do here. One of the areas that we talked about was 45X. And so,
    Deputy Secretary Adeyemo, let me talk to you about that because
    I understood what you said to Senator Hickenlooper. I
    understand what your intent is and what you said, which sounded
    really good, but I know what I am reading in the guidance. Let
    me just give you an example. The Nevada Battery Coalition noted
    that the guidance on 45X from Treasury states this: ``Direct
    material costs as defined in the statute or indirect material
    costs as defined by statute and any costs related to the
    extraction or acquisition of raw materials would not be taken
    into account as production costs.'' And it goes on to say,
    ``the cost of acquiring the raw material used to produce the
    electrode active material, the cost of materials used for
    conversion, purification, or recycling of the raw material, and
    other material costs related to the production of the electrode
    active material would not be taken into account.''
        That signifies to us that critical mineral processing is
    not being taken into account for this particular credit. And
    that is the concern we are all having. And so, I guess I am
    asking you, what you just said is not what this reads. And so
    as we look at implementation, and as attorneys look at this and
    everybody looks at implementing it, it is a little different.
    So how do we fix this or address this?
        Mr. Adeyemo. Senator, thank you for the question and thank
    you for the support. I know we have had conversations about the
    IRA that have been helpful in helping us think through the next
    steps we take. As you know, we have put out for 45X a notice of
    proposed rulemaking. What that means is that ultimately, we
    have put out the guidance in order to get feedback from
    stakeholders and industry in terms of how we improve and make
    changes as we move toward finalization. As I said previously,
    our goal is to make sure that we are giving the credit for
    value-added activities within the process. One of the
    challenges we want to stay away from is making sure that both
    the credit doesn't go to, for example, minerals or things that
    are processed abroad and brought into the United States or that
    they are given to companies that aren't actually adding value.
    Ultimately, if stakeholders feel that we have gotten this wrong
    in terms of the way that we have defined value in terms of 45X,
    we look forward to that feedback. We actually encourage it. We
    ask a number of questions within the rule to help us better
    refine this in order to make sure that----
        Senator Cortez Masto. So can I, and I don't mean to
    interrupt you but I only have so much time here. Let me ask you
    this--based on what you are telling me, there is going to be
    more bureaucracy. When somebody goes to apply for this, they
    are going to have to ask--you are going to ask them several
    questions, including how this production, and the raw material,
    where it came from, and if you guys aren't satisfied that it
    came from a certain company or within the United States, they
    are not going to get it. Is that correct?
        Mr. Adeyemo. No, Senator, I apologize. What I was saying
    was that within the guidance that we put out, which was a
    proposed rule, we asked a number of questions that will help
    inform the final rule that we will put out. We are attempting
    to provide as much clarity for industry as possible, and our
    goal is to put out a final rule that addresses the types of
    questions that you have raised here. So I look forward to
    following up with you and talking to stakeholders in your state
    about this issue so it can inform the final rule that we put
    out that will provide more clarity to stakeholders.
        Senator Cortez Masto. Thank you. I appreciate that.
        I know my time is up. I have to thank both of you. It's not
    an easy task. The pieces of legislation that we have passed are
    game changers for our future. It's not just two years, five
    years, it is ten years down the road. It's changing our energy
    infrastructure moving forward. It is bringing jobs back. Nevada
    is proof of it. It is creating, and it is a positive for our
    economy and revenues in our states. And yes, it addresses our
    national security. We do not want to be reliant on other
    countries. So this is key, and it requires us all to work
    together to make sure we are--at the end of the day, the
    Administration and how we implement it is having a positive
    impact. And I will go back to what Senator Angus King said,
    with the ultimate goal of addressing the climate crisis that we
    are dealing with.
        So thank you. I appreciate you being here.
        The Chairman. Thank you, Senator.
        I have one quick question. I think Senator Hawley has a
    second question also. So I will go with mine and Wally, this is
    for you, okay?
        When the Congressional Budget Office scored the Inflation
    Reduction Act in August 2022, they said the total cost of the
    consumer EV credit would be about $7.5 billion. Yet, in Fiscal
    Year 2024, we would spend roughly $451 million on the credit.
    Recently, your agency announced that so far, 272,000 vehicles
    have been produced and could be eligible for the consumer EV
    credit in 2024 by itself. If they get the full credit of
    $7,500, if they would qualify, that would be two billion
    dollars just in one year. If they only got half of it, they
    would get one billion. You are going to run out of money in
    three and a half to four years, based on the CBO scoring.
        So blowing past the score that was demonstrated, I don't
    know if it's intended that you should amend your proposals to
    match the letter of the law, basically staying within the
    confines of the money that we allotted for the entire bill,
    especially the way the CBO was scored. I don't know what your
    thoughts would be on that, how you have looked at that.
        Mr. Adeyemo. Senator, thank you for that question. While we
    have not talked about it, I do think that one of the most
    important things we did in the Inflation Reduction Act was
    raise additional revenue. And the biggest source of that
    additional revenue was, of course, the IRS, where you provided
    $80 billion of resources. And my view is that we are actually
    going to raise more revenues through the Inflation Reduction
    Act than CBO scored, largely because they undervalued the
    technology investments that we are making at the IRS that are
    leading to additional revenue. We have seen already revenue
    come in from millionaires and billionaires who have previously
    not paid taxes. The IRS has already made these investments and
    we think that will lead to additional deficit reduction over
    time.
        With regard to the EV tax credit, ultimately the way that I
    think about this is, people only get the tax credit if they
    want to buy an electric vehicle. Ultimately, what this is going
    to mean is that there is going to be more demand for electric
    vehicles. That means that it is going to create more jobs
    producing those electric vehicles, which will lead to
    additional revenues for taxpayers as well. I can't tell you
    exactly how much money is going to be spent here in terms of
    the electric vehicle tax credit. That is going to be a factor
    of what happens with regard to demand from American consumers,
    and also to a degree what happens in terms of cost over time.
    And I think the 45X credit is going to bring down cost
    dramatically because of what it does to batteries.
        But what I can tell you we are committed to doing is
    working with you and other Senators as we move from proposed
    rules to final rules to take into account your feedback and in
    making sure that we do what our shared goal is, which is to
    make sure that we build a supply chain in the United States
    that supports electric vehicles and energy security here and
    for our allies and partners going forward.
        The Chairman. My only comment would be that our intention
    was to stay within the CBO scoring of how we paid for it so it
    would not add to our deficit. As you know, we are over $34
    trillion and continue to grow in deficit. And in saying that,
    that I believe I would recommend to every one of my colleagues,
    Republicans, Democrats, that if you want to stop the deficit
    spending that we are doing, then every piece of legislation
    should be based around CBO scoring and the ability to have
    spending authority. So I will give you an example. A bill
    that's basically on ten years of pay-fors and has ten-year
    spending authority, the spending authority should stop
    immediately when the CBO score is hit. If it's hit at three
    years and we thought it should be ten, then we should stop it
    there. That would stop all deficit spending. That's the biggest
    problem that Democrats and Republicans have had for the last
    decade or more. So if you want to know how it has grown the
    debt as quickly as we have--we underestimated, we
    overestimated, we never corrected. We allow you to spend for
    ten years, even though you run out of money in three. That
    means it's deficit spending. We borrow. That has to stop.
        That is my recommendation, as my final year is wrapping up
    here in the Senate, that if you want to get us back on track
    financially, that would help us because something that is so
    popular, we have had this discussion before. When it's this
    popular, and people are demanding it, I will guarantee you, and
    we are all benefiting, Democrats and Republicans, we will come
    back and find additional ways to extend through appropriations
    and different bills. But you can't continue to do what we are
    doing playing a shell game. That's my input, and Secretary, and
    I appreciate, and you and I have had some good frank
    discussions. I would hope that you really look into this as
    seriously as possible and follow the guidelines of the bill.
    That is our intent.
        With that, Senator Hawley.
        Senator Hawley. Thank you, Mr. Chairman.
        Mr. Turk, I just want to come back quickly to this question
    about workers, because I just think it's so important, you
    know, my friends on the other side of the aisle said that they
    believe that the overriding crisis is the climate. I just
    respectfully disagree with that. I think the overriding crisis
    we are facing is the wages and jobs of American workers. And it
    truly is a crisis for many, many American families, who, you
    know, both spouses have to work, even when they both work--I
    will just tell you a story about in Wentzville, Missouri,
    recently, the UAW strike, I was out on the picket line, and I
    was listening to one of the workers there who is my age. I am
    44. He is my age. So he is not a young man anymore. And he was
    telling me that he has to, even working full time and working
    overtime, he can hardly afford--in fact, he said it takes him
    two paychecks to be able to pay for his rent in Wentzville,
    Missouri. You know, this isn't Manhattan. This isn't New York
    City. You know, this is Wentzville, Missouri. This is an
    affordable place. That is the crisis we are facing.
        So in light of that, tell me why this is a good thing. This
    is from an article in Axios. I just want to quote: ``Even as
    battery cell production shifts to the United States, that labor
    will likely be done by non-union workers at factories co-owned
    by foreign companies, and they,'' meaning the workers, ``will
    make less money than workers at traditional power train
    factories.'' The article goes on: ``For example, battery cell
    factories under construction in Kentucky and Tennessee are co-
    owned by Ford and a Korean company. They are starting their
    workers at, on average, $14 an hour less''--$14 an hour less--
    ``than workers who are making engines and transmissions for
    traditional vehicles.'' How is that good for American workers?
        Mr. Turk. So let me start with a thanks for focusing on
    this issue. One of the reasons I got into the government and
    took this job is, I grew up in Illinois, right next to
    Missouri, although in the northwest corner of the state. I was
    just back visiting with my folks over the holidays. Rock Falls
    is the name of the hometown. And it is a steel mill community.
    We have had those in West Virginia and other parts of the
    country as well. And when I was growing up the steel mill was
    basically shutting down. My entire childhood. So I got to see
    very directly what that means to a community. Right? The
    dysfunction that that causes in families, the fact that parents
    can't provide for their kids, et cetera, et cetera, et cetera.
    So this is near and dear to my heart.
        I am honored to work for Secretary Granholm, who was
    Governor of Michigan, who has real-life experience in terms of
    the changes happening in the auto industry and how we can be
    smart, working together, and proactive to make sure we have got
    jobs for folks, high-quality, high-paying jobs. I also think we
    are smart enough in the U.S. I think we are exceptional and we
    can have those high-quality jobs. We can make sure we have got
    affordability for our consumers and we can make sure we tackle
    climate change as well. Transportation is the largest source of
    our emissions in our country, and we need to take that head-on.
        Senator Hawley. I appreciate that answer, Mr. Turk, but you
    haven't really answered my question. I mean, let me read to you
    from another article. This is the Associated Press. And this
    says in quoting someone, this is just a statement of fact. And
    I quote, ``If electric vehicles replace gas-powered ones, most
    UAW workers, for example, at engine and transmission plants
    will lose their jobs, and if lower-paying battery plants aren't
    union, workers won't have anywhere near the same wages and
    benefits.''
        So here, my nightmare scenario is that we repeat--because
    of this Administration's climate agenda--climate fixation, I
    would argue--we repeat and hypercharge the loss of industry we
    saw in the '70s and the '80s and the '90s, and we do it all
    over again. And so the remaining few things that we actually
    produce in this country, like automobiles, we won't produce
    anymore. And we may produce a few things, but even those will
    be co-owned with foreign companies. I mean, you mentioned
    steel. U.S. steel, an iconic American company, backbone of our
    steel production in this country, is apparently about to sell
    to a foreign company. I hope your Administration is going to
    block that sale. I urge the President to block it. He should
    absolutely block it, but for heaven's sake, let's not see what
    remains of our proud and strong auto industry be completely co-
    opted by foreign governments, foreign entities, and U.S.
    workers are left with very little. I mean, that's just a
    nightmare scenario. Wouldn't you agree?
        Mr. Turk. So I am a firm believer in playing offense. And I
    think we are playing offense right now. I think we are being
    intentional. We are being aggressive. We are being purposeful.
    The fact that we have 136,000 new jobs across the country----
        Senator Hawley. I don't think giving tax subsidies to
    Chinese companies is playing offense, Mr. Turk.
        Mr. Turk [continuing]. Including 250 new jobs in Missouri
    because of these investments, because of these targeted,
    directed investments, planning for the future and making sure
    we are winning and competing against China. China is working
    incredibly aggressively to dominate----
        Senator Hawley. And your Administration is helping them now
    by giving them these tax subsidies. And we are losing thousands
    of jobs because of your climate mandates that are forcing our
    production overseas and gutting our workforce. I just, I don't
    understand it.
        Mr. Turk. Everything we are doing in this space, and I am
    happy to go chapter and verse on all the provisions that we are
    working on, is to re-shore, to make sure that these jobs, to
    make sure this economic opportunity is U.S. and our allies
    across the world. We have got a huge economic opportunity here.
    And the last thing we need to do is sit by idly, like what we
    have done in our country for too long. We are stepping up. We
    are playing offense. We are winning right now. My biggest fear
    is that someone puts a brake on it and we are not able to
    compete. Right now, we are competing and we are starting to
    win.
        Senator Hawley. My biggest fear is that the Wall Street
    banks, they make a bunch of money on it because they have all
    invested in these foreign companies, and the foreign companies
    make a bunch of money on it, and we lose thousands of American
    jobs and American workers get their pay cut in half.
        Thank you, Mr. Chairman. Thanks for indulging me.
        The Chairman. Thank you, all.
        Let me just first of all thank both of you. Secretary
    Adeyemo, thank you. I know that you are not up to par right now
    with the COVID, but we look forward to seeing you back in good
    health soon. And David, it is always good to have you here. It
    was very helpful. I think you know our concerns and our
    frustrations to a certain extent. But we all do--I mean, I say
    most of us--recognize that the Inflation Reduction Act has
    tremendous impact on the economy of the United States of
    America and it has taken us through a situation that could have
    been dire with inflation and recessions and unemployment that
    we prevented from happening.
        If we can just get to more of the agreements and get the
    proposed rules versus permanent rules would be very helpful, I
    think it would bring a lot of clarity for investments that are
    being made and people want to make. So I am asking you all to
    work with us on that as closely as you possibly can.
        Members are going to have until the close of business
    tomorrow to submit additional questions. And with that, the
    meeting is adjourned. Thank you both.
        [Whereupon, at 12:03 p.m., the hearing was adjourned.]

                          APPENDIX MATERIAL SUBMITTED

                                  ----------
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                       [all]