into the energy and climate solutions toolbox toolbox we usually focus on exciting new technologies like high powered wind turbines thin film solar cells are carbon capture and sequestration today's hearing however is about the left eye catching but equally important lucian's that improve energy efficiency demand side management better building  appliance standards lighting retrofit and the host of other technologies and policies that enable us to use electricity more intelligently the department of energy projects that u electricity demand will grow by thirty percent by twenty thirty there are two ways to meet this rising demand megawatts and nega watts the first approach is the one we are familiar with simply building more and more power plants the second uses a fission see measures to do more with less and it's based on the reality that the cheapest and the cleanest power plant is the one that we never have to build a recent study by mckinsey and company concluded that in twenty thirty a fission c measures can cut us global warming pollution by nearly fifteen percent of current levels at a profit the ten northeastern states participating in the red cap and auction in trade system have found that by auctioning one hundred percent of the pollution allowances and investing the proceeds in efficiency measures they can achieve their climate goals at virtually no additional cost to consumers kept in auction in trade provides the resources to make a fission c policies work while a fission c cuts pollution at the lowest possible cost these solutions help us to work smarter and not h investing in efficiency is not just a cost effective energy and climate solution it will also pay major dividends in new jobs and economic growth america's efficiency industry already produces close to a trillion dollars in annual revenues one recent study found that aggressive investment in efficiency policies could result in the creation of thirty two million new jobs and nearly four trillion dollars in revenue by twenty thirty by putting america in the vanguard of the efficiency revolution we can create high quality green jobs at home while exploiting high quality green technology in the world unfortunately increasing america's energy efficiency is not as straightforward as it may seem as we will hear from eyewitnesses many efficiency improvements can already be achieved today at a profit but are not being implemented because of market barriers for this reason simply putting a price on carbon is not enough focused policies must be used to reward efficiency and to eliminate perverse incentives like those that couple utilities profits with the amount of electricity which they sell progressive states like california and new york along with the innovative companies like p g any and m r s go and organizations like the regulatory assistance project have taken the lead in tackling these challenges we are grateful to have representatives of these government business and nonprofit leaders on our witness panel today they can help show us the way forward as congress considers cap auction in trade legislation to combat global warming it will be critical to include policies that support efficiency we have already taken an important step by enacting a new vehicle in appliance efficiency standards under the energy independence and security act but there is more that we can do and we must do if we are to cut global warming pollution as quickly and as deeply as the science says we must it is imperative that climate legislation be designed to capture see gains immediately by making the potential of energy efficiency a reality we can save the planet while simultaneously saving consumers money and spurring job growth and meeting our nation's rising energy demand at the lowest possible cost n b a coach pat riley once said a particular shot a way of moving the ball can be a player's personal signature but efficiency a performance is what wins the game for the team if we are going to beat this energy climate and economic challenge aggressively increasing america's energy efficiency must be at the center of our game plan so with that the opening statement of the chair is concluded and and i recognize the gentleman from wisconsin the ranking member of the committee this is sensible thank you very much mr chairman at the outset let me say that we're due for a string of five votes and i have in the other meeting that will be about eleven thirty so i kind of apologize for not coming back when the hearing resumes but we have no control over what goes on across the street improving energy efficiency is one of the most important steps that can be taken to confront climate change and i'm pleased that the chairman has scheduled this meeting as we all know reducing c o two emissions while protecting the health of the economy as a  some may think this goal is not achievable but i think that through significant advances in technology we can make significant reductions in greenhouse gases while still growing the economy some of this technology is not yet available a good example of this is carbon capture and sequestration which is still on the drawing board but has the potential to make tremendous reductions in greenhouse gas emissions in the future then some advances are needed in renewable technologies to make them more cost competitive another potent technology is nuclear power which is ready now and can generate power without any greenhouse gas emissions whatsoever both of these technologies have the potential to reduce emissions in the long term however it is energy efficiency that gives us the best chance to produce emissions reductions in the short term studies show that even simple improvements in energy efficiency standards create significant reductions in greenhouse gas emissions not only that but increased energy efficiency also stands to create significant reductions in the power bill whether you're a big industry a small business a homeowner even a renter improvements and efficiency will help the  the cost of power is rising and because of this there is clearly free market pressure to adapt energy efficiency in fact the rising cost of power is without doubt the best possible argument for improving energy efficiency i also believe that in some cases the government can encourage efficiency through supportive research and development and sort of certain tax credits industry standards setting is also useful how do i do not support is the government artificially imposing improved efficiency through mandates regulation and rules if the government tries to mandate or regulate efficiency the most it will become a tax that will hold down economic growth in fact one study that forecasts enormous reductions in emissions also comes with an enormous price tag that raises questions as to whether reductions are even worth it while i'm glad the select committee is talking about energy efficiency it seems that most of the testimony we expect to hear today will be nothing more than a call for more regulation that's a mistake we all may agree that improved efficiency holds tremendous promise there appears to be great differences in our beliefs and how to get there i think that the pressure of energy prices will lead people to adopt energy efficiency on their own accord which would result in cheaper energy prices and cheaper energy is something all of us can support thank you that as we enter the summer driving and home cooling season we are here today to discuss the positive impacts that energy efficiency can have on our economy and our environment there is rightly much attention being paid right now to gas prices but home electricity costs eat into family budgets too and as the temperature rises so does the power bill for families trying to keep their homes at a reasonable temperature the energy star program has labeled appliances and empower consumers to take the edge off their power demand earlier this year congress passed groundbreaking legislation to further this effort however the macro benefits of sweeping energy efficiency measures require that we go further quite simply widespread efficiency in every sector of the economy is the fastest simplest and most immediate it immediately achievable way to reduce demand save money and cut greenhouse gas emissions and more than that i would say that energy savings by efficiency are the only truly impact free  form of generating or recovering a kilowatt or a calorie of energy whatever unit you choose by simply being smarter about the appliances we use the materials we use in construction and making slight adjustments to our patterns of use we can make an impact which has a ripple effect that is orders of magnitude larger than the individual actions we take to conserve energy without forcing major changes to our way of life by taking one action and implementing aggressive streamlining measures we can forego billions of tons billions of tons of greenhouse gas emissions generate billions of dollars in economic opportunity and create a stimulating effect and economic resurrection that is truly efficient and i'm proud that my state of new york a leader on this issue does represent represented by deputy secretary secretary dakotas and i look forward to his testimony as well as the rest of the panel's views and great gentleness time has expired there are going to be a series of roll calls on the floor of the house the bells announcing that can be heard in the background make that begin with opera's witness mr paul dakota he is the deputy secretary of energy for the state of new york where he heads up the state's efforts to advance renewable energy and energy efficiency programs we welcome you thank you  morning chairman markey ranking member members sensenbrenner and members of the committee on behalf of governor paterson i welcome the opportunity to present this testimony to the select committee and energy independence and global warming and look forward to working with the committee to ensure development of leading and effective climate policy it is now widely accepted that energy efficiency is one of the lowest cost options available for reducing greenhouse gas emissions many states throughout the country now have had almost thirty years of experience administering energy efficiency programs all with similar results providing conclusive evidence of the low cost of energy efficient see relative to new power generation and of the economic and environmental benefits associated with reducing electricity use through energy efficiency improvements so the question is not should we be supporting and investing in energy efficiency it is instead to determine how we can do this most effectively with rapid penetration of existing commercially available technologies in the near term and steady in continued development of better more adaptable and cheaper technologies over the longer term we need both an energy efficiency and a carbon reduction policy a portfolio of low carbon options on the demand side and the supply side will most definitely be necessary as well as policies that address sectors beyond electricity new york has a long standing history of supporting energy efficiency that dates back nearly four decades new york's energy efficiency efforts began in the late one nine hundred sevent with federal funding provided to the states through the energy policy and conservation act of one thousand nine hundred seventy five in the state energy conservation program administered by the u s department of energy while the funding was small relative to need new york was able to develop a diverse portfolio of programs serving residential business and governmental customers new york's energy efficiency programs directed at the electric utility sector hundred eighty four at the time demand side management programs were viewed by the state's public service commission as potential alternatives to continued investment in new central station power generation by the late one nine hundred eighty s utilities in the york were reporting significant peak demand and electric energy reductions by one thousand nine hundred three d s m spending by investor owned utilities reached two hundred eighty million dollars which is equivalent to about four hundred million dollars today a dramatic increase from the twenty five million dollars spent in one thousand nine hundred four additional demand side management spending by the state's energy authorities raised the state's annual investment in energy efficiency in one thousand nine hundred three to about three hundred thirty million dollars which is about four hundred seventy million dollars in today's dollars while the transition to a wholesale electric market competition in  six the responsibilities for administering energy efficiency programs in new york was transferred to the new york state energy research and development authority or nicira and they certain has been administering efficiency programs along with research and development programs in cooperation with the new york power authority and long island power authority since one thousand nine hundred eight under the system benefits charge program the level of annual energy bill savings has grown to almost half a billion dollars annually the program is saving approximately thirty one hundred gigawatt hours of electricity and the level of annual greenhouse gas reduction is equivalent to removing forty thousand cars four hundred thousand cars from new york's roadways that's about two million tons annually and for every one dollar invested in efficiency in new york the program save two dollars in avoided energy costs last year new york embarked on its fifteen by fifteen initiative the goal of which is to red ce electricity use by fifteen percent from forecast levels for the year two thousand and fifteen fifteen by fifteen represents a dramatic acceleration of new york's energy efficiency commitment and results in more than offsetting annual electricity load growth in the state in two thousand and nine the state's energy authorities alone have budgeted close to half a billion dollars for energy efficiency the investor owned utilities new funding from the fifteen by fifteen initiative could easily add an additional four hundred million bringing the total annual funding close to a billion dollars new york's energy efficiency policies have been framed justified and developed with full recognition that energy efficiency is one of the lowest if you could summarize sure regarding the cap and trade programs which is one of the questions that was asked new york is actively participating and leading in the regional greenhouse gas initiative the proceeds from the sale of the options will be used for low cost carbon abatement technologies including energy efficiency but it will also extend to other assigned commissioner in california at the california public utilities commission overseeing the energy efficiency programs we believe that the california program which is currently funded at one billion dollars annually is the world's largest energy efficiency program but i was happy to hear from my colleague that we may be in close competition now with new york that we welcome on expanding our programs i'm going to quickly cover today three items first an overview of what are the programs in california second some discussion of how we are trying to integrate our energy efficiency efforts into california's global warming law and third to offer my thoughts on what could be done in terms of bringing together energy efficiency and federal climate change legislation if i could have the first slide very quickly this is just an overview that california has adopted as a formal policy in california what we call a loading order and this loading order places energy efficiency as the top priority it requires that there be investment in all cost effective energy efficiency as the resource of first choice we've come to this policy as a result of thirty years of investments both through our utilities as well as building standards and appliance standards next slide please this is a slide that tries to graphically show what has been our experience in california on energy efficiency you can see before nine hundred seventy we were similar to the rest of the nation dramatic increases  electricity in the early one nine hundred seventy s that's when we began our programs and you can see that we have been successful in keeping our per capita consumption constant while the rest of the country has grown very significantly but let me tell you the economic story which is what is very very important in looking at our state's gross state product we generate nearly twice as much growth state product per kilowatt hour than the u s average and we have tripled our growth state product in the last thirty years so we believe that this emphatically demonstrates that you do not need to sacrifice economic growth and development when you undertake energy efficiency next slide please this is another way that we are demonstrating how we're getting the energy savings that's the question that we are often asked where does it come from in california it's to do three principal area down on the bottom you'll see the savings again over the thirty year history from our appliance standards the second area in green is this savings over the same thirty year period from our building standards and then the top which you can see is very significant are the efforts that my agency oversees with regard to utility programs these combination of codes and standards and utility programs supply approximately fifteen percent of california's total lector if the supply it is a very significant a very successful way of meeting our electricity needs moreover we have a very aggressive program to be measuring and verifying to make sure that we are obtaining the savings because we use them in lieu of building power plants and transmission lines and that is an absolutely necessary component of the programs next slide this is  what we're doing right now and where the period of two thousand for through two thousand and thirteen the programs that my agency is overseen relying upon and the utilities in the state we're going to be eliminating the need for ten new power plants we are eliminating nine million tons of carbon dioxide emissions and then very importantly we are looking at ten billion dollars in net savings you heard from new york that you get an approximately for every dollar you spend on energy efficiency you're saving two dollars that's our experience energy efficiency is one of the most important if not the most important economic development programs we have in california let me turn quickly  to how we are looking at integrating a b thirty two energy efficiency in a b thirty two we have all of our state agencies energy agencies in california issued a decision earlier this year in which we have now made a unanimous recommendation that energy efficiency be the foundation upon which we rely for meeting our global warming efforts in california we have made the recommendation that requires that there be a state wide mandate to pursue all cost effective energy efficiency in california we are looking at approaching this in three ways the first is our reskill the largest independent privately held energy services company in the country we welcome you sir whenever you're ready please and thank you mr chairman and distinguished members of the committee thank you for providing me this before you this morning on their old efficiency policies in climate legislation i also want to commend you mr chairman markey for your leadership role in energy efficiency and energy independence no one in congress has taken an largest privately held independent energy services company to provide energy savings what's known in the industry performance contracting services in north america with over five hundred employees seen fifty two offices located so i would united states and nation can save at least twenty percent of those that energy and possibly thirty percent of our usage and we say that and we say that because for the last thirty years that we have been in this then the total you asked productivity improvement is equal to or over nine b million barrels per day or the equivalent of three point four billion barrels per year now if we assume at the cost assume that we have a simple payback of seven years then an investment of two point four trillion dollars would be right wired you know to achieve this saves then if we take it one step further and  be one point two billion  so therefore as we move forward in our national energy policies or you believe that succeed really important that congress should include energy efficiency as a neutral goal and as the more important aspect of any climate change legislation and the reason behind it because it's the most economic and it has the most immediate impact in our society they legislation which are farther include energy efficiency renewable senders that include and use saving star guess specific targets where each and every year this will accelerate the implementation of energy efficiency equipment and the federal government to require all retail sellers sellers otherwise elect the twenty percent reduction in energy use and a corresponding twenty percent reduction in emission carus in addition emission allowances should be held in trust for the public good we are auction will be distributed we recommend that at least fifty percent of the loss of the proceeds be dedicated to energy efficiency event investments if we make this national commitment to energy efficiency we can accelerate the realisation of energy savings by buying down projects let's say from ten years to seven years and then expand the opportunity and hopefully get from the twenty percent level the thirty percent level  investing in energy efficiency and the congress can reduce overall energy costs for individual customers business and if you do shows this investments we also reduce energy demand and as i pointed out emissions and substantially chairman markey ranking member sensenbrenner members of the select committee i'm honored to be here on behalf of peta corporation to share our experience and perspective on the role of energy efficiency policies and legislation when we look at the options for addressing climate change it's clear to us that energy efficiency has to be a front line response the potential greenhouse gas reductions from energy efficiency are substantial the technology is in almost all cases available today and the investments are highly cost energy efficiency programs and procedures in fact aggressively pursuing energy efficiency could increase overall economic productivity i'm not going to go into details on the mckinsey study which others have mentioned  business interests is critical this includes eliminating the traditional link between earnings and energy sales and it removes the disincentive to promote energy efficiency by also establishing multi year program periods w aggressive goals combined with financial incentives for energy efficiency savings regulators can drive utilities to aggressively pursue savings in partnership with their customers another important strategic lever is establishing building codes and appliance standards provide the foundation for all other energy efficiency efforts and serve as a catalyst for new technology programs another strategy is providing incentives and reforming tax policies to facilitate deployment of new highly efficient smart technologies in distributed generation the industry is poised to make approximately nine hundred billion dollars in transmission and distribution infrastructure investments over the next twenty years we should look to ensure that these investments are channels to help build the grid of the future one that is self sufficient and also that facilitates utility customers being more efficient comprehensive climate change legislation can also use allowance allocation in our revenue to advance energy efficiency and dismantle market and regulatory barriers for example the lieberman warner bill uses allowances and auction revenues in this manner the billing kluges numerous incentives for states manufacturers and consumers to aggressively pursue energy efficiency examples include targeting of auction revenues to buy down costs of new efficient and technologies and providing allowances to serve load serving entities for the amount of electricity their customers say the bottom line is that energy efficiency is the deepest untapped reservoir of cost savings avoided era missions and greenhouse gas reductions available in our nation today any prudent climate strategy must look to fully harvest this resource as quickly as possible thank you again for the opportunity to be here today assistance to public officials on public electric utility regulation we welcome you as a coward but go ahead thank you chairman markey i appreciate the opportunity to speak with you today about the critical role that and use energy efficiency can play to reduce greenhouse gas emissions contain the cost of climate legislation and protect the environment the most important message i can deliver today is that the national that national climate legislation absolutely must be designed to call forth to the greatest degree possible low cost and efficiency investment a message you've heard now from i think all of us today the good news is that this actually can be done the challenging news is that most climate legislation including most cap and trade legislation is badly do zines to deliver efficiency have seen great attention to delivering price signals and on supply side investments but much less attention to cost containment through a fission saying so one of the key questions facing congress is going to be how can cap and trade systems designed to accelerate investments in energy efficiency my written testimony addresses four points which i'll touch on here first echoing the comments of the other panelists energy efficiency is the low cost equivalent of the carbon scrubber for the electric power sector and the most important resource we need to look to as the bridge fuel to a low carbon power sector in coming decades secondly the cap and trade architecture used in the acid rain program and copied in other systems like the european carbon trading system is frankly not optimal for carbon management it focuses on smokestacks and b awarding carbon allowances to emitters on the basis of historic pollution they cost consumers more than they should and they missed crucial opportunities to enhance and use the fish and i've i worked with their regulators quite a lot and i often asked them what did the acid rain program do to advance energy efficiency and most of the time they just sort of looked at me quizzically and and then they say well it didn't do anything for energy efficiency cap and trade wasn't designed to deliver energy efficiency in customer locations it was designed to change behavior a power plant but energy efficiency happens that customer location so if we're going to use cap and trade for carbon we are going to have to change the architecture of cap and trade to do a much better job for efficiency my third point is about prices really a timely topic in today's economy and as the others have said the fish unsee is the best cost containment strategy we can think of as part of cap and trade now adding a carbon price signal to the price of electricity is directionally correct but trying to reduce emissions through price alone is going to be much more costly and it will actually save less carbon than a cap and trade program that builds efficiency in stew its architecture and relies less on price pressure this is a point that's often overlooked by regulatory economists but i can tell you mr chairman that it has not been overlooked by the governors and legislators in the ten reggie states that actually studied the issue and tried to design a cap and trade program people are surprised to learn how hard it is to reduce power sector carbon through price signal whether delivered through carbon taxes or through auction at the consumer level demand as we know is highly an elastic and higher power prices alone are not go reduce demand enough to meet our carbon goals we have the same problem for different reasons that the generator level it requires a very high carbon price to make a meaningful change in greenhouse gas emissions through the redispatch of the existing us generation fleet this is true in coal regions and in gas region and every study of the upper midwest found that carbon prices that would be high enough to double the wholesale price of power would lower emissions by only four percent studies in california right now are finding that even at ninety dollars a ton carbon prices cause very little change in california's dispatch fortunately there's a way out of this high cost approach a crucial design a crucial fact is that the same dollar cost in rates efficiency programs will save five to seven times more carbon and would result from carbon taxes or credit markets alone we need to integrate that kind of thinking into the design of cap and trade program how can we do this to suggest the experience of the red states provides a great lesson for us after studying this issue extensive way states realize that the best results for consumers and the environment would be to auction allowances and invest the money in energy efficient congress if you could summarize once congress has the opportunity to build on this experience through a national performance based efficiency allocation in which a significant fraction of national allowances would be awarded to states or entities appointed by states on the basis of their performance over time in reducing emissions from their own historic well the hearing is reconvened and again i apologize to our witnesses and hopefully we will get a little bit of a break right now in the us all of our witnesses if congress  use a mission allowances option revenues under a cap option in trade programs or promote patients he measures would it be better to channel allowances of funds through the states directly of as i indicated in my testimony i thought that he might be best for the federal government to set up the program and the minister the distribution of those funds but if i were to choose between the as i said in my statement i think there should be a large performance based allocation to states and the method of distribution has to be carefully managed frankly because we really don't we really do being introduced under the direction of supervision of state bodies yet i would say either the state or the utilities load serving in  needs under the supervision of state yes i would suggest that the fund the be provided directly to the states to ensure proper oversight and they could use their discretion to appropriate portions of the funding to the utilities i say this as a former state official and that's the reason why i think crafting this carefully is important number one number two i believe the allocation should be performance based so that the states are confronted constantly with  the reality that if they siphon the money off for other purposes then next year's allocation is going to be affected i like that idea if it's before most base then they have an incentive to make sure that the money well we certainly would be happy to accept the money i would say i would require at least two prerequisites for the state whoever it is or the utilities within the state to get the money the first is that the state itself on some level and it could be decided who it is whether it's public service commission or the state energy office or the governor but that there is an actual plan that the state have on not just for spending the money that year but a longer term strategic plan on where they're moving with energy efficiency and then the second requirement that i would have is that there is some program with some confidence for measuring and verifying that you're actually getting the savings in the energy efficiency i misstate we love to get money but if we're really going to get energy efficiency we want it to be successful and i think those two are required i would agree with both of those conditions and add further that i think that the risk of misappropriating the funds is less now than it might have been in the past and i think that's because the  getting children so they don't get into it who doesn't want to stop children from smoking everybody the public would demand it except all this money gets looted when the money so it gets down to just be a shadow of what it is and that would be one of the concerns obviously you know it's something that there's no trophy on the wall it's stuff that never happened because you were smart you know it doesn't smoke and she's not consumed you know to build a big groundswell around that as you can tell from the size of the audience  since i missed the testimony i hope i don't ask questions of already been answered and if i do please show a little patience my underlying question here is how quickly can we scale back fossil fuel consumption and c o two emissions with efficiency measures one of the one of the ways to measure that would be if we could offset the rising cost of energy by implementing fission c standards or implementing a fission c measures in our state and i'd like to know if anyone thinks that that's possible starting with from my home state of california it is possible the great thing about energy efficiency is we have the text knowledge ease we have the knowledge this is not an r and d program that we're going to get the results five ten years from now i just returned from a  trip to china last month on energy efficiency and china is very interested in energy efficiency and they are ramping up very quickly at the provincial level to do it it is a matter of thinking it through making sure that you've got you know it set up in a way that you're delivering it but energy efficiency once i believe there's the policy the leadership and the funding point so if we get a little bit serious about this and get the first one in the state governments behind it with some kind of the some of the money back into the consumer i think we can get up to want to do profound of the annual consumption that's why  and then you have the commercial the industrial institutional sex and the federal government for example tremendous potential in each and every facility we go we say thirty to forty percent i think one minute we were in elmendorf air force base we invested a fifty million dollar project and we did a complete energy savings retrofit we estimated it will save them three percent the project is up and running for the last two years and we save them over forty percent of the energy say and so tremendous potential in the institutional sector for energy savings so it's it can it can happen well one of the things that a that i've been hearing and i understand to be true is that the buildings produce more than but even though as simple as the lighting retrofit if you know that's the lighting retrofit the lawn in the united states and you go from think and then sort of resonance they say it's as much as ten to fifteen billion dollars to get invested in this are going to have to have some incentive that is that is correct and that's why we say some of this money goes back into the state so whichever administrative body has control and simply buy back the  programs that are designed to do exactly what you described to to pay down the cost of some of these investments facilitate a faster payback and to get over some first time hurdles for example a lot of commercial buildings are built by people who are just going to flip them and not own them or who won't pay the costs because those are charged the tenets for leed certified buildings and it's been very effective i would like to add also that that i would concur that i think electric and gas efficiency programs could save in the order of at least a half to one and a half percent per year i also believe i believe this is the experience in california and i know it is in the york because we've been offering efficiency programs for nearly three decades now there is a industry that's been developed  that is poised and ready and waiting to take on a competitive market for energy efficiency and it's really quite a robust market it's disparate in different states but i've seen the industry grow from infancy to what it is today and it is quite a growth bust market i'm i'm posing in my time as chairman i wouldn't use the word imposing you have exceeded your time but the brilliance of your questions about ten million would be natural gas is that basically in the ballpark correct so that's about forty one million of the forty seven million and then the remained your equivalent of oil would be nuclear power it's  sector commercial industrial in home where do you see the biggest potential that is out of the body seven million barrels of oil equivalent which one of those categories is where the biggest ga forty seven million barrels of oil equivalent how much of that is in the residential it's about twenty percent about it saying about eleven million well know about ten million about ten million in that sector ten million in the residential sector you think you can reduce it down to eight million that is correct and probably actually i think it's a little bit higher it's somewhere between twenty to thirty percent or there is a that carbon right climate change legislation enacted by congress is going to has the potential to cause significant price increases that we hope can we can do well i think we have to create a performance based allocation of significant fraction of carbon credits that would be available to every state and would be available to states in proportion to the degree to which they meet their own state baseline so indiana isn't competing with california indiana in order to earn allowances under a performance based system has to be indiana's past performance  a large part of that might be the carrots in the stick type of an approach you know if we have all this allowance money how we send it back to the state provided that they get they are doing something mandated or bribe states to do it because if you don't accomplish that then fundamentally you're not going to change the mindset of utilities it's the first step and the new second step is my colleague interest i apologize for that all that's not already explained to the listening public but you don't mean it but but i think if you think about a mindset of an industry that for over one hundred years has made money by selling go in the united states or in their state to build a conventional coal plant and they can put it in the base they will make a profit there is great uncertainty still  they know they can get that coal point they can make a profit they know how to build coal plants there is still great unfamiliarity with how to run energy efficiency programs on the scale of an equivalent of a power plant  do in terms of here's one line in the bill that's going to get energy efficiency at the level we need to have a different deal with it it's going to be a series of fairly complex different things to think through i mean i would say in addition to everything else i've heard a statement and whether it's another law one energy or in the climate change that literally does say energy efficiency is number is the number one top priority policy or among them that we're one of the things that excites me the most about global warming is the opportunity for us to create jobs and prosperity in our own country if we follow a sensible path and mr miss going to mentioned that in china i think you're the one  mentioned it you were there and they're very excited about energy efficiency where do you think we are with regard to technology that we could export to china or other countries of the world creating jobs here in this country of visa vi where they would be to create industries that would take those jobs away from us  let we have the intellectual capital you know to help them substantially as a matter of fact our company we get at least once a month an invitation to do a partnership with some chinese company they are looking for knowledge i think we can especially with a product where we finance the projects because that's one of the products that we have where we finance the particular energy savings projects and then we get to do that the savings will be there than twice the energy we are using so the potential for them for energy efficiency substantially more than us well just speaking to the jobs question i think that there are enormous number of jobs to be had by accelerating energy efficiency in the united states most of them will be jobs to ploy an energy efficiency in the united states as opposed to producing products that we will ship to the rest of the world i just didn't want to overlook the fact that there is this is a very big potential area of job growth economy wide too to implement all the measures that my colleagues here have been talking about well what i hope is that we have technology we can ship overseas that would help them make their buildings more efficient or a bit especially what i want to avoid is having them do the reverse of course innovations in technology on energy efficiency frankly are happening in california i had the opportunity to do a tour of still a condo only about six weeks ago and there's a company that is starting up making for example zero net energy cement they took the brightest of the brains and said here's what we're going to do here are the parameters we want to have a product that has as close to zero net carbon emissions as possible want to have a product that performs as well or better in terms of quality we want to have a product that right out of the box is cheap and what is the existing product on the market and we want to have it scal because we know we need to be using it throughout the world they have been able to literally now develop a process that's close to zero net energy production for cement another companies working on dry wall that you put in the building so we're we're really seen and these are also setting up some factories in california to produce the products so i think it's another example we can be creating the jobs and we can be creating the industry and we in the united states have the opportunity to be the world leaders in doing this today at that briefly we have a green collar workforce training program in new york that's fairly well funded in partnership with the colleges and universities in new york to train the next generation of workers in green energy technology and efficiency you know the community colleges yes it is yes and it's  in its recognition and its certification of employees and we coupled that with a research and development program that new york runs which is developing and working with industry to create that technology that they are trained on and as a technology is developed and we have workforce training and certification deploy those technologies through our energy efficiency programs exactly the point in mind that you made that we need to be the state  you this one is for mr klein of i've noticed with p g and e that the company is fairly receptive to image interview efficiency measures which will reduce the need to put in new power plants and i think that's basically the business model if you can avoid putting in new power plants you're going to make money you're going to make more money in a sense so how how effective a message is that to other utilities to get to get them onboard with that i mean it seems like ultimately if you give up all all of the the power the energy supply needs that you're going to be a distribution company and  transmission company rather than a than a generation company is that i think you described a model correctly with the addition that if we're going to avoid transmission organization for for the electric utility industry has has created a new institute for energy efficiency so i think there is increasing interest and wanting to know more i think that one of the issues you identified is that if companies extrapolate it means that they never build generation then they don't want to shrink necessarily so they're needs to be  we compete for customers with irrigation districts for example who are in the same requirements and provide the same services but on the whole i would say it's not a big problem thank you eternity as we look back in history and they come to this hearing and they say there it was there in that one minute that those five people on their one minute all you needed to know about the future about energy efficiency about economic growth cornerstone of our nation's climate strategy and congress has to think about the ways to build energy efficiency attainment into any carbon program including a cap and trade program that congress enacts and that requires thinking creatively about what it takes to motivate the delivery of energy efficiency which is different from the architecture that we have historically used for a carbon cap and trade thank you  to the federal government can start by putting building standards in place minimum standards that states can rise above i think that would be an amazing start because we continue to be  building buildings that for the life of the of the facility are going to be drugs on our vision and much more expensive to retrofit two things first the two to one rule for every dollar you invest in energy efficiency you're saving two dollars you accelerate that up in california are billion dollars a year in energy efficiency that's ten billion dollars over ten years we're saving ten billion dollars that's going into california's economy it is not going overseas at all it's growing our economy that's the message i think that when you secondly please act we need buildings are going up appliances are being bought and that just makes it more difficult to go back and fix things and the code yes thank you and i would echo that in terms of taking action i think if anything came out of this session today it is that there is a  for leadership at the federal level to bring the states together toward clean energy policy and i think it's important to create what we call in new york an energy efficiency ethic so when people make decisions purchase decisions we could change the way they think we could change the way they live we could change the way they work and we could change the way they play well working within private markets to create a profit potential for clean energy technology thank you it was difficult it's very much and  thank all of you for your testimony absolutely fascinating and central this is the most exciting lammers hearing that is going to be conducted in the congress this year but like many other non glamorous subjects here in lies the truth that will create the path to saving the planet and reducing dramatically the amount of energy collar town in malden massachusetts that was a dream of california that almost seemed too good to be true and it turns out it was never did exist there any place else however here the new two for one say my mother used to say always try to work smarter not harder she would say that immediately immediately before she said i'm donating your brain to harvard medical school is a completely on use human organ  that was because i wasn't thinking smart or now we have many utilities in many states whose brains collectively should be donated to have a medical school because this is obviously the way to go  it's proven it's a money maker and yet people still resist it why because it's not the way they've done business in the past and so this is a tremendous opportunity for us we saw  telecommunications revolution that we could go from the one nine hundred ninety six telecommunications act we're not one single home had broadband not one home in america one hundred ninety six but once we got that policy right on a national level we moved to a point where now eleven years later twelve years later broadband is almost ubiquitous and it's deployment companies like amazon google you tube didn't even exist three years ago but only possible because we got the policy right revolutionizing these issues and so that same kind of technological revolution is possible here in the energy sector as well it's all there as mr klein said the technologies are already there they're ready to go but we need the will and the political policies put in place so that we unleash this revolution in a way that isn't just isolated to individual utilities individual states but the that the united states is the leader looking over children number two in three and four in the world as we export these products exploit these ideas all around the planet and so that's what this hearing really represents to me because in a lot of ways a fission see is the whole key to solving the problem of global warming reducing our energy dependence and this is hard to believe creating the new major economic driver in our whole society the job creator the way in which we kind of revolutionize the way in which we look at these issues now is hard for the telephone companies to change you know eighteen t had one point two million employees were all still had our black rotary dial phone why would you want to change it's working out great each one of you was renting for three dollars a month every single month for your whole life a black rotary dial phone that's a good business the utilities loved it and the regulators let him get away with it my mother paid twelve hundred dollars for that renting it for two years a black rotary dial phone but no innovation no new phones no new devices no google no amazon no you tube you know but yet you could always dial that that phone well that's it was still doing an energy that's it was still doing was still relying upon all ways of generating electricity and so who would have thought that in the old days when you go t on the phone and somebody called from another state you know your grandmother was calling in that hand around the pole and saying you've got to talk fast it's long distance because it was going to be so expensive  t made so much money on a long distance call now it's alk long distance like you talking across the street because through new technology and new ways of looking at the issue we lowered the price dramatically all that happened in one technological generation we're going to be able to do the same thing here in energy efficiency and it is going to become the new major engine for economic growth in the united states in the next generation millions of jobs and economic growth export opportunities your insights of valuable we need to get you more allies in this fight but i think ultimately the truth of your testimony will set the congress free and we will be able to pass the  legislation before copenhagen in december two thousand and nine that will make it possible for us to see this revolution and all of its power we thank you for the leadership you've shown this hearing