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S. HRG. 111–1191 

BUSINESS OPPORTUNITIES 

AND CLIMATE POLICY 

HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

MAY 19, 2009 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys 
(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

ARLEN SPECTER, Pennsylvania 

JAMES M. INHOFE, Oklahoma 

GEORGE V. VOINOVICH, Ohio 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

MIKE CRAPO, Idaho 

CHRISTOPHER S. BOND, Missouri 

LAMAR ALEXANDER, Tennessee 

BETTINA POIRIER, Staff Director 

RUTH VAN MARK, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

MAY 19, 2009 

OPENING STATEMENTS 

Boxer, Hon. Barbara, U.S. Senator from the State of California ........................ 1 

Bond, Hon. Christopher S., U.S. Senator from the State of Missouri ................. 2 

Udall, Hon. Tom, U.S. Senator from the State of New Mexico ............................ 4 

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ........................ 4 

Lautenberg, Hon. Frank R., U.S. Senator from the State of New Jersey ........... 5 

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware ................... 49 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 55 

WITNESSES 

Holliday, Charles O. Jr., Chairman and Chief Executive Officer of E.I. DuPont De Nemours and Company, Inc. ................................................................ 6 

Prepared statement .......................................................................................... 8 

Stiles, Mark W., Group President and Senior Vice President, Trinity Industries, Inc. ............................................................................................................... 13 

Prepared statement .......................................................................................... 15 

Warner, Cynthia J., President, Sapphire Energy ................................................. 23 

Prepared statement .......................................................................................... 25 

Healey, Tim, Director of Regulatory Affairs, Lange-Segmann Company ........... 40 

Prepared statement .......................................................................................... 42 

Lowenthal, Richard, Chief Executive Officer of Coulomb Technologies .............. 62 

Prepared statement .......................................................................................... 64 

Krouse, Wayne F., Chairman and Chief Executive Officer of Hydro Green 

Energy, L.L.C. ...................................................................................................... 75 

Prepared statement .......................................................................................... 78 

Taylor, Richard W., Chief Executive Officer of Imbue Technology Solutions, 

Inc. ......................................................................................................................... 89 

Prepared statement .......................................................................................... 91 

Armstrong, Jack, Construction Initiative Leader, North America, BASF Corporation ................................................................................................................. 120 

Prepared statement .......................................................................................... 122 

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BUSINESS OPPORTUNITIES AND CLIMATE POLICY 

TUESDAY, MAY 19, 2009 

U.S. SENATE, COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, Washington, DC. 

The committee met, pursuant to notice, at 10 a.m. in room 406, 

Dirksen Senate Office Building, Hon. Barbara Boxer (chairman of 

the Committee) presiding. 

Present: Senators Udall, Inhofe, Voinovich, Bond, Lautenberg, 

Carper, Klobuchar, and Merkley. 

OPENING STATEMENT OF HON. BARBARA BOXER, 

U.S. SENATOR FROM THE STATE OF CALIFORNIA 

Senator BOXER. The hearing will come to order. Welcome, everybody. We are very happy you are here. Our schedule is such that 

we expect to vote shortly. So my intention is to have us each make 

a 2-minute opening statement at maximum and then put the rest 

of our statement into the record so that we can get right to our witnesses. 

So, I would ask unanimous consent that all statements be placed 

in the record and I will start with mine. 

Today we will hear testimony on just a sampling of the business 

opportunities that we can expect when we act to cut the carbon pollution that causes global warming and we do it in the right way. 

Our witnesses today will provide on-the-ground examples of the 

way the American people will benefit from the clean energy policy 

that drives an economic recovery, creates jobs and helps to break 

our dangerous dependence on foreign oil. 

So when you hear my colleagues on the other side say this is the 

worst time to ever do this, it is going to cost a lot, it is going to 

be terrible, I have a real opposing view because I have lived a long 

time and I have seen all of this. 

When we passed the Clean Air Act, they said the same thing. 

Every time California stepped forward to clean up our environment, and even this recent move where they said we are going to 

take the lead on cutting global warming pollution—and at noon we 

are going to find out at the White House that they have followed 

California’s leadership—we have always been told oh, the sky is 

falling and everything is going to be terrible. 

The truth is that when you clean up the environment, you create 

good, clean, green jobs. We are seeing it in California today where 

we have a horrible recession. With our housing problems, we are 

about No. 2 in the Country in terms of our foreclosures. We have 

got all of these issues that have hit us in the financial sector, but 
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yet we see 400 new solar companies springing up and venture capitalists just waiting for the Congress to act. 

I am a very upbeat, optimistic person. I think the fact that you 

have got this economic recession converging onto this need to do 

something about global warming, I think that will equal American 

leadership and American Jobs. 

In closing, I would say to all of you who have not read Thomas 

Friedman’s book Hot, Flat, and Crowded, I highly recommend it because, in the most beautiful prose, he says what I just said but in 

a much better way. The country that leads on this will be the economic leader in this century. 

With that, I would turn to the Ranking Member, Senator Bond. 

OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, 

U.S. SENATOR FROM THE STATE OF MISSOURI 

Senator BOND. Thank you very much, Madam Chair. My sym- pathies to you and the Californians with the $42 billion deficit that 

you have incurred. 

We want to hear today from the experts who believe that global 

warming legislation can be profitable. In some instances, the problem is that the profit will come from the suffering of others, from 

the pain of energy taxes and the lost jobs through global warming 

legislation. There are some who want us to feel the pain of higher 

prices to produce carbon savings. And from the pain of many will 

come the profit of some. 

When energy prices are so high, high costs will finally become 

competitive. What some try to forget is that consumers, families, 

farmers and workers and will suffer under higher energy prices. All 

will face the pain at the pump, the light switch, the checkout 

counter and the unemployment line. 

I am very proud to have a Missouri witness, Mr. Tim Healey. 

Tim’s family founded and ran fertilizer distributor LangeStegmann in St. Louis. He will tell us how high natural gas prices 

the last few years led to record fertilizer prices for farmers. Many 

fertilizer producers could not pass on enough high prices and closed 

down. I have a chart that shows that more than a dozen fertilizer 

plants have closed in the last 10 years to move their operations and 

their jobs to lower cost countries like China and the Persian Gulf. 

Global warming legislation can impose the same costs. Higher farm 

prices, food prices and jobs lost to China. 

Some would say that the savior to this suffering is green jobs. 

I support helping to create green jobs when it makes economic 

sense. We can, and should, do more to encourage renewable power, 

biofuels, clean energy technology, algae conversion. But we will create far too few green jobs to make up for crushing higher energy 

prices. 

Phil Angelides of the Apollo Alliance wrote in Roll Call yesterday 

that Michigan produced more than 3,000 new clean energy jobs. 

That is a nice number but that is less than 1 percent of the 

400,000 manufacturing jobs Michigan lost. 

I have laid all this out in a report I did called Yellow Light on 

Green Jobs that I will submit for the record. 

Senator BOXER. Without objection, Senator Bond. 

[The referenced chart follows:] 
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Senator BOND. Expected taxpayer subsidies are very expensive and Federal subsidies of $100,000 per green job plus the costs of 

the taxpayer subsidies for some of the energy generated by solar 

and wind are too high. 

Thank you, Madam Chair. 

Senator BOXER. Thank you very much. I will see our Republican 

Governor today and I will send your best wishes and he would tell 

you that our budget problems date way back. It has nothing to do 

with global warming legislation which is creating jobs in our State. 

But, once again, the party of no puts forward its arguments and 

we will hear a lot more of that. 

We are going to go to Senator Udall. 

OPENING STATEMENT OF HON. TOM UDALL, 

U.S. SENATOR FROM THE STATE OF NEW MEXICO 

Senator UDALL. Thank you very much, Madam Chair. 

Let me just say welcome to all of our witnesses and a special 

welcome to Cynthia Warner, the President of Sapphire Energy. I 

would also like to thank the Chair for inviting Sapphire to testify. 

I know that Sapphire is based in California but I think you do 

much of your work in New Mexico. This is an area that I will say 

we are very interested in in New Mexico in terms of renewable energy and using some of the lands that we have in New Mexico that 

have the ability to produce renewable energy. You talk about 

desert land and you talk about a hot climate and salty and brackish water. We have it all and we have it in a pretty significant 

quantity in certain parts of our State. 

We really look forward to working closely with you and developing this resource because it is something that I think is not only 

important for New Mexico, it is important for the Nation. 

So, welcome here and I would yield back any time so that we can 

get directly to our witnesses. 

Thank you, Madam Chair. 

Senator BOXER. Thanks so much, Senator. 

Senator Voinovich. 

OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, 

U.S. SENATOR FROM THE STATE OF OHIO 

Senator VOINOVICH. Thank you, Madam Chairman. 

Climate change is a complex issue that requires examination 

from a variety of perspectives. In this regard I would note that, 

while hearings on green jobs and climate science are helpful, they 

do not provide numbers with an adequate forum to examine the 

various policy options available to address climate change. 

Reports of an aggressive Senate agenda for the consideration of 

mark up legislation now in the House has caused me great concern. 

And I am glad, Madam Chairman, that we talked about this prior 

to the hearing, that you intend to have robust hearings here in this 

Committee of any bill that comes over from the House. 

Senator BOXER. Yes. Many, many workshops. 

Senator VOINOVICH. I would hope that beyond the workshops we 

have more than one mark up as we did last time and that we do 

get a lot more information about the impact that this legislation 

will have on the entire economy. 
5 

Given our knowledge of the previous bills, we would expect that 

the potential costs to consumers to be high for Congressman Waxman’s proposal. Many people now engaged in this debate downplay 

the impacts that climate change will have on our economy. Although the green jobs movement advanced by the environment establishment is trying to convince us that rationing energy resources will save the world and our economy, there is no credible 

analysis that support these claims. 

One of the things that people fail to realize is that eight-tenths 

of 1 percent comes from solar. One point 4 percent comes from 

wind power. The rest of it comes from other sources of energy in 

this Country. 

The other thing that has been failed to be mentioned is that the 

‘‘green industry,’’ in terms of kilowatt hours, is a subsidy of about 

$24 per kilowatt as compared to a lot lower costs for other sources 

of energy. 

We understand that the industry has to get started and once 

they get going, maybe the price is going to come down. But to give 

us this impression that all of a sudden the green jobs are going to 

make up for the ones that we are going to lose from cap-and-trade 

legislation, which I am sure is going to happen, does not make 

sense. 

A lot of people tell me, George, do not worry about it. It is all 

going to be taken care of. It is going to work out. Well, if I am 

somebody that has been put out of work, or I am a person in Cleveland who is on fixed income, and I see my energy costs increase 

like they did for natural gas, I have some real concern about this 

legislation and its impact on me and the economy and on jobs. 

Senator BOXER. Thanks, Senator. 

Senator Lautenberg. 

OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 

U.S. SENATOR FROM THE STATE OF NEW JERSEY 

Senator LAUTENBERG. Thanks, Madam Chairman. 

People are appropriately concerned about how we work our way 

out of this recession that we are in. I and many around here believe that there are job opportunities in what we are calling the 

green environment. I think the title mystifies people to the tune of 

disbelief. They just do not see it. We have to make sure that we 

show the examples very clearly of what the benefits can be to our 

health and what we can do in terms of sharing with the public at 

large a look at how a green opportunity is a valuable one. 

I recently visited a company is West Hampton, New Jersey called 

Lighting Sciences. It employs 48 New Jerseyans and 110 people 

across the Country. It makes a high efficiency LED bulb. These 

lights consume much less energy than standard bulbs, do not contain mercury, lead or other toxins, and LEDs pay for themselves 

in a short amount of time, saving money on energy bills for businesses. 

Having built and run a pretty good sized company, I can tell you 

savings like that do add up and will allow business to invest and 

expand and hire more workers. And in this economy, helping businesses expand and hire more workers should be our primary mission. 
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I have great respect for our colleague from Ohio. He is always 

bringing to our attention the fact that higher costs are not something that would like they would help us out of a recession. But 

there are opportunities. I say to my friend, there are opportunities 

out there and we have to work very hard and I am pleased that 

our witnesses here are prepared to talk about business opportunities and the environment. 

Madam Chairman, I ask that my full statement be included in 

the record. 

Senator BOXER. Absolutely. Will do. 

[The referenced material was not received at time of print.] 

Senator BOXER. Now we will turn to our panel. I have been told 

that the votes have been pushed back a bit so we should be able 

to get through this panel. We are very, very proud that you have 

all agreed to be here. We really are. We thank you so much for taking your time. 

Charles Holliday, Jr., Chairman and Chief Executive Officer of 

DuPont. Welcome, sir. 

STATEMENT OF CHARLES O. HOLLIDAY, JR., CHAIRMAN AND 

CHIEF EXECUTIVE OFFICER OF E.I. DUPONT DE NEMOURS 

AND COMPANY, INC. 

Mr. HOLLIDAY. Thank you, Chairman Boxer and distinguished 

Committee members. 

I am here as Chairman of DuPont, a $30 billion revenue, 207- 

year-old American-grown company; but also as a member of the 

U.S. Climate Action Partnership. I appreciate the fact that you are 

holding these hearings focusing on the important need to address 

climate change and seize the opportunity for American companies 

to grow in the U.S. 

I believe that addressing climate change may be the single, 

greatest opportunity to reinvent American industry and put us on 

a more sustainable path than we face today. Yes, leadership has 

the potential to create real economic growth by providing the certainty companies need to increase their investment and accelerate 

the development and deployment of low carbon solutions, creating 

good jobs for American workers. 

That leadership can help the nations of the world all come together to adopt low carbon energy technologies that will create 

these massive new markets for large companies like DuPont and 

smaller companies. We need to be sure that American companies 

are leaders in this. 

I think it is very useful to think about this subject as two buckets. In bucket No. 1 are more energy efficient and effective solutions. In bucket No. 2 are expanded and new sources of low carbon 

energy. 

Turning first to efficiency, as you drive through almost any subdivision here in the U.S. you will see DuPont Tyvek wrapped 

around a home. That is a very efficient, cost effective way to conserve energy. A typical two-story house in the Midwest that uses 

Tyvek can reduce their energy use by 20 percent from this one step 

alone. What we see is that there are clear opportunities on technologies that are here today. We must break down the barriers to 
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deploy them and develop them more completely and we need to create those jobs here in the U.S. to do that. 

In the second bucket I described, there are new sources of energy. There are two examples from DuPont, both from the biofuels 

area. We are working on ethanol that can be made from corn cobs 

and switch grass. We are building a $40 million power plant in the 

State of Tennessee that will be operating by year end. 

Our second biofuel is biobutanol, which has some advantages 

over ethanol because it can be mixed freely with gasoline and has 

higher energy content per unit weight. We need to be sure that we 

provide the environment so that those projects can be developed 

here in the U.S. 

I have one last perspective that I would like to share with the 

Committee that is based on my 35 years of doing business in DuPont. This climate change issue is very complex. We believe the 

science is clear and you need to take action. But exactly what is 

going to happen and exactly when it is going to happen no one 

knows for sure. Therefore, we believe there will be very legitimate 

debate, very important work for your Committee, to debate how 

much you limit the impacts of climate change versus how much you 

adapt to it. That should be done with great vigor and you should 

work on that carefully as a Committee and I think that is very 

good use of your time. 

What I do not think you should debate is the need to create those 

jobs here in the U.S. for American companies and what it takes to 

be sure that not only the development is done here, but the jobs 

are created and the activities deployed here. 

Now let me be extremely blunt and say it is a lot easier to go 

to Singapore, Hong Kong or China today and get immediate government support for a clean energy project than it is in my own 

Country. Let me give you three specific examples. 

If I wanted to bring a new clean energy technology project out, 

I could get approval in the three countries I described in less than 

100 days. At the same time, I could also go to those governments 

and find support for our action that would take down the amount 

of up front cash we have which would allow us to go faster and bigger. And third, what we will find is fast track approval for the permitting process, by no means relaxing the standards, but speeding 

things through. 

I urge your Committee to look at ways we can be just as competitive as the three entities I described, to make sure those new jobs 

come here, not just for American companies, but you can attract 

Japanese and German and Brazilian companies to do the same 

thing. I urge you to focus on that opportunity. I think it is the 

greatest opportunity we face as a Country. 

Thank you very much. 

[The prepared statement of Mr. Holliday follows:] 
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Senator BOXER. Thank you so much and I hope that your words 

resonate far through this U.S. Senate. You say this is a great, 

great opportunity. 

Mr. Stiles, we welcome you, Senior Vice President of Trinity Industries. We look forward to hearing from you. 

STATEMENT OF MARK W. STILES, GROUP PRESIDENT AND 

SENIOR VICE PRESIDENT, TRINITY INDUSTRIES, INC. 

Mr. STILES. Thank you, Madam Chairman, and Senators. 

It is a pleasure to be here today as we testify about the business 

opportunities for renewable energy as far as Trinity Industries sees 

it. 

We are a multi-industry company. We operate in 13 States. We 

have one of our largest barge building facilities in Caruthersville, 

Missouri. We have a number of our highway products businesses 

in Illinois and Ohio. We are in 10 other States. 

One of the things that I think is extremely important for us 

today, and to echo Mr. Holliday’s remarks, is that the jobs that are 

created here are real jobs. We have lost jobs in the businesses we 

are in. We are in the rail car business, the barge business, the concrete and aggregate business. We are so tied to what goes on in 

this economy and the manufacturing portion of what is going on. 

We are one of the multi-industry manufacturers that are still left 

in this Country. 

A number of years ago, when we started building wind towers, 

it was looked at as a ‘‘science project.’’ But we participate in this 

business now. In 2003, we built no wind towers. Now, we are the 

largest manufacturer of wind towers in the U.S. We provide those 

wind towers for General Electric, Suzlon, Acciona, Gamesa, Impsa 

and Mitsubishi. Those companies are operating in the U.S. We do 

not want to lose jobs to foreign countries as well because it does 

not take them as much investment or take as much red tape, so 

to speak, to get their permits and start. 

The fact is that our people are productive and efficient. We use 

almost 100 percent recycled steel to build these products. We can 

compete as long as we are on level playing fields and these are real 

jobs that are being created. We have several hundred jobs in these 

businesses and we have put them in facilities that have previously 

been shut down from other businesses. 

There has been a drastic drop in the production of the rail car 

industry in the U.S. and one of the things that we have done is be 

able to take advantage of building these wind towers in these facilities. These towers, you will see, that is 15 feet across, it weighs 

close to 30 tons, when it is finished it is going to be 200 feet tall, 

it is going to have 150 tons in it, all of those things are made from 

flat plate steel. That is American steel, American workers, American facilities that were shut down. 

One of the main reasons I think I was asked to be here today, 

and I am pleased to do it, is because in Newton, Iowa, there was 

a Maytag facility, and Senator Bond and Senator Voinovich both 

mentioned this, there were 4,000 jobs in Newton, Iowa working for 

Maytag. Those jobs are gone. They did not go overseas. They went 

to another State, as I understand it. 
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We are not Maytag. We do not provide that many jobs. In fact, 

there are only about 100 there now. We expect to go to 250. But 

they are good jobs with good benefits and what the people in Newton, Iowa have said is we did not have anything before you came. 

We worked with Governor Culver there in Iowa to get this facility started. Recently President Obama was there for Earth Day. 

We were very pleased to show him the plant. He asked me what 

the main problem was. The main problem was that a year ago 

there were 24 credit facilities that were out operating for wind 

tower development and there are only four at this time. The money 

that Congress is trying to put forward needs to get down to the developers. GE, one of our biggest customers, will tell you flat out 

that they have not had a turbine order since last August. And the 

opportunities are there. 

Transmission must be addressed. I want to say that when you 

stop and you look at this, these jobs that are created are in steel 

manufacturing, the people that collect the scrap that makes the 

steel, the transportation, the railroads that ship the steel, the fitters, the welders, the machinery operators, and the maintenance 

people. There are schools that are being set up all over this Country now to learn how to maintain wind turbines. There are the 

transmission jobs. There are hundreds of jobs, thousands of jobs, 

literally being created. But the money has to get down to the bottom, to the people that are developing these things. 

What I will tell you is that we had facilities that have been idled 

in Oklahoma, Georgia, Texas and in a number of other States. We 

have taken facilities in Illinois and Iowa and rebuilt them from 

what they were. These are real jobs and the money needs to get 

there. 

We believe that there is a future for the renewable energy business. There is some subsidy going on, as you said, for the wind and 

solar business, but the fact is that we are going to have to work 

ourselves out of the dependence on foreign oil in order to become 

a competitive Country and stay that way. 

Thank you very much. 

[The prepared statement of Mr. Stiles follows:] 
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Senator BOXER. Thank you so much. 

Now, I am really very pleased, C.J. Warner, President of Sapphire Energy, headquartered in San Diego, California. Beautiful 

San Diego, California. Using algae to convert sunlight and carbon 

dioxide into renewable fuels. Sapphire’s jet fuel has been successfully tested in a Boeing 737. We are very happy to see you here. 

STATEMENT OF CYNTHIA J. WARNER, PRESIDENT, SAPPHIRE 

ENERGY 

Ms. WARNER. Thank you very much. 

I really appreciate the opportunity speak with you about Sapphire Energy. We are a very exciting new company with a great 

new technology. We were established in 2007. We have 107 employees and we work in California and New Mexico. Our goal is ambitious. It is to become the world’s leading producer of renewable 

fuels. 

At Sapphire, we have established four benchmarks to guide our 

work. First, is to produce ‘‘drop in’’ transportation fuels that are 

compatible with today’s existing energy infrastructure including today’s vast network of refineries, pipelines and terminals and the 

existing fleet of cars, trucks and jets. Second, is to produce fuels 

that can be grown on marginal desert lands and in brackish or in 

saltwater. Third, is to produce fuels with a low carbon impact. And 

fourth, is to produce fuels that are scalable in the near term and 

cost competitive in the long term. 

I am very pleased to say that we are well on our way to meeting 

these benchmarks. We have developed a product that is renewable. 

It is produced right here in the U.S. It has a low carbon footprint. 

It has no adverse environmental side effects. It is price competitive 

and it fits seamlessly into our existing energy infrastructure. That 

product is algae-based fuel, which we call green crude. I have a vial 

of it right here. And if looking at crude samples is something that 

you are familiar with, it looks a lot like West Texas Intermediate 

except it has a little bit more of a green tinge to it. 

[Laughter.] 

Ms. WARNER. Algae is uniquely suited to serve as the foundation 

for a new generation of transportation fuels. It is one of most nature’s most efficient photosynthetic organisms. It has a short growing cycle. It does not require usable farm land or potable water. 

The environmental benefits are dramatic. The production of algae 

consumes enormous amounts of CO2, both from industrial gas and 

from the atmosphere. The production of one gallon of green crude 

will consume about 30 pounds of CO2. 

This provides a two for one benefit, by using CO2 emitted by a 

facility, such as a coal fire power plant, as a feedstock for production of transportation fuel. In essence, the carbon gets used twice. 

When I explain the benefits of algae-based fuel, people sometimes ask jokingly if I have been drinking too much of the green 

Kool-Aid. It sounds too good to be true. But algae-based fuel is not 

science fiction fantasy. It is real. 

Just last year, Sapphire successfully produced 91 octane gasoline 

and 5 months ago we participated in a test flight with a Boeing 727 

twin-engine aircraft. The flight was an incredible success. The 

algae-based jet fuel met all requirement standards and it actually 
24 

burned 4 percent more efficiently than the petroleum based fuel. 

The test pilot said that the engines performance was textbook. 

This was a great demonstration that our products are not inferior, green compromises. They are premium fuels with desirable 

qualities, such as high diesel cetane numbers and low levels of undesirable qualities such as sulfur. Our unrefined algae could command a significant price premium over light sweet crude. 

In terms of production, we do currently operate an R&D facility 

in La Jolla, California and a 100-acre development facility in Las 

Cruces, New Mexico. Soon, we will open an additional 300 acres of 

processing capacity in New Mexico. Over here you can see depicted 

our various facilities. We will continue to expand as production expands itself. 

We plan to meet very ambitious milestones. It is illustrated in 

our commercialization time line over here: producing 1 million gallons of fuel per year by 2011, more than 100 million by 2018 and 

1 billion gallons by 2025. This is really exciting. 

The clear advantages of algae has gone on elsewhere, spawning 

more than 90 other algae-based companies in the past 2 or 3 years. 

All told, it is realistic that by 2050, algae-based fuel can replace 

more than 25 percent of today’s conventional petroleum usage. 

This will create thousands of green collar jobs all across the 

Country. In San Diego alone, algae is already responsible for 500 

jobs, $25 million in wages and $63 million in economic output. 

Local analysts’ predict that Sapphire’s Las Cruces-based facilities 

will produce nearly 750 direct and indirect jobs in rural New Mexico. 

The Algae Industry Trade Association recently estimated that, 

over the next three or 4 years, the production of algae-based fuel 

will create almost 12,000 direct jobs and another 30,000 indirect 

jobs. 

Sapphire’s commercial success is closely tied to the important 

work that this Committee has undertaken. Our business model 

works best if the Country is on a path to energy efficiency, reducing greenhouse gas, and promoting domestic renewable fuel resources. Accordingly, we have been working with this Committee to 

ensure that cap-and-trade legislation provides a proper carbon accounting for algae-based fuel. 

In conclusion, Sapphire Energy believes that the business opportunity presented by climate policy can be transformational. By getting ahead of the curve, we can produce a new generation of transportation fuels for the world that are low carbon, produced right 

here in the U.S. and that generate renewed economic growth and 

new green collar jobs. 

Thanks and I look forward to answering your questions. 

[The prepared statement of Ms. Warner follows:] 
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Senator BOXER. Thank you so much for that. 

And now, last but not least, Tim Healey, Director of Regulatory 

Affairs at Lange-Stegmann. Welcome. 

STATEMENT OF TIM HEALEY, DIRECTOR OF REGULATORY 

AFFAIRS, LANGE-STEGMANN COMPANY 

Mr. HEALEY. Thank you very much, Chairman Boxer, Ranking 

Member Bond, Senator Carper, Senator Voinovich, Senator Lautenberg and Senator Udall for the opportunity to testify today about 

the impacts of climate change policy such as cap-and-trade and the 

carbon tax on our business and our customers. 

I am Tim Healey, Director of Regulatory Affairs for LangeStegmann Company. Lange-Stegmann is a fertilizer wholesale distributor, selling fertilizer for agricultural applications. We have 42 

employees. The company has been in business since 1926. LangeStegmann also owns Agrotain International, which manufacturers 

and markets nitrogen fertilizer additives that make urea nitrogen 

more efficient and reduce greenhouse gas emissions to the environment. 

We are concerned about the increased costs that will be associated with the manufacture and transportation of fertilizer. The 

manufacture of nitrogen fertilizer is very energy intensive. Natural 

gas is the feedstock for ammonia, the basic building block for all 

nitrogen fertilizers and this accounts for 70 to 90 percent of the 

production costs of ammonia. 

Climate change legislation may cause the power industry to 

switch fuel in order to meet greenhouse gas emission goals established by Congress. Switching to natural gas will cause an increase 

in demand with the only incentive to increase supply being price. 

When the price of fertilizer increased as it did from January 

2007 to the apex in the third quarter 2008, our small company, and 

by the way we have a very strong financial statement, had to increase our line of credit by 50 percent in order to continue to purchase fertilizer. This additional line of credit came at a very steep 

cost to us: 1.5 points in up front fees, a 50 percent increase in the 

interest rate and soft costs (appraisals, audits and legal fees) exceeding $70,000. Our customers had to increase our lines of credit 

as well, with similar additional costs. Fertilizer dealers who were 

unable to increase their lines of credit simply closed their doors. 

In addition to increased fertilizer costs from natural gas prices 

and borrowing costs, we will experience increased costs to operate 

our facility. A cost of $30 per ton of a carbon dioxide equivalent 

would have increased our electric bill over last year by a minimum 

of $90,000, our natural gas bill by a minimum of $33,000, and our 

mobile equipment fuel bill by $16,000. To a small business such as 

Lange-Stegmann Company, the increased energy costs of approximately $140,000 per year, coupled with higher input and transportation costs, will be crippling to the company. These types of impacts will be multiplied by businesses nationwide at a staggering 

cost to our economy. 

Farmers cannot afford to pay more for fertilizer inputs. Farmers 

felt some pain last year but were able to offset higher input costs 

because crop prices were also higher. The same scenario does not 

apply this year because crop prices are considerably lower. In the 
41 

autumn of 2008, very little fertilizer was sold due to historically 

high fertilizer prices and declining crop prices. 

The U.S. cannot unilaterally enact legislation regarding carbon 

taxes, fees or cap-and-trade program and expect to reduce overall 

greenhouse gas emissions while expecting our industries to remain 

globally competitive. 

Rather than penalizing Americans through a cap-and-trade system or a carbon tax, we recommend legislation that encourages the 

development and adaptation of energy efficient products and processes. During these tough economic times, our economy cannot bear 

the significant costs associated with unilateral implementation of a 

massive cap-and-trade program or a costly carbon tax. Such a program will significantly raise costs on our manufacturers, retailers, 

growers and, ultimately, the consumers who will be forced to pay 

higher prices for food, fuel and other products. 

Thank you very much. 

[The prepared statement of Mr. Healey follows:] 
42 
43 
44 
45 
46 

Senator BOXER. I want to thank our witnesses. We will each 

have 5 minutes for questioning. 

Mr. Healey, let me start with you. I want to make sure I understand your issue. You need natural gas to make your product. Is 

that correct? 

Mr. HEALEY. Natural gas is required to make urea nitrogen, yes. 

Senator BOXER. OK. Right. Don’t you think, because as a capitalist you believe in competition, you are sitting next to a woman 

here is going to offer us other ways to generate the fuel we need, 

et cetera. You are sitting next to gentlemen here who are telling 

us this is an opportunity. I guess what I am asking you is, if there 

is more competition for natural gas in the future, would that not 

keep the price down? If there is more competition? 

Mr. HEALEY. If there is more competition, there is going to be 

more demand and that could raise the price. 

Senator BOXER. Competition raises the price? Or more supply? 

More supply? 

Mr. HEALEY. Competition for the supply. 

Senator BOXER. Well, what if there is more supply? 

Mr. HEALEY. If we could guarantee it, and keep the price 

down—— 

Senator BOXER. Is it not true that more supply in a capitalistic 

system, is important for you to keep your prices down? Is that correct? 

Mr. HEALEY. Yes. 

Senator BOXER. OK. More supply of what you need. I think that 

means you want to have more opportunities out there for people to 

use other things other than natural gas. If everybody relies just on 

natural gas, you have got a problem. But if there is other ways for 

people to get their needs fulfilled, I think you are in much better 

shape. 

Let me turn to, I guess I would ask Mr. Holliday and Mr. Stiles 

this question. I believe our Country has some of the most innovative companies and workers in the world. I think the three of you, 

as you spoke, and I am sure Mr. Healey is very innovative as well, 

so all of you represent innovation. If we pass legislation limiting 

carbon pollution, what do you think it will mean for U.S. companies’ ability to compete internationally? 

As I look around the world, everybody is moving toward a low 

carbon future. Here in America, we see our President doing it. We 

tried to do it last year here but we have a lot of no, no, no, no, no, 

no. So, what does it mean if we have good legislation, let us say 

cap-and-trade, that gives you the flexibility? What do you think it 

would mean for us to complete internationally? Will it make you 

stronger? Will it make you weaker? What do you think? 

Mr. HOLLIDAY. Chairman, I will speak first and then turn to my 

colleagues. I think clearly we see other countries will follow the 

leadership, which is a question that must be on your mind. If we 

make the changes, but China and India do not make the changes, 

will we be disadvantaged? And if they do not make the changes, 

we would be. I think they will follow. 

The questions I had from many Chinese leaders I met with 2 

months ago is: Is the U.S. going to act? Because they were getting 

ready to seize the job. Fifty percent of the solar sales today are 
47 

made in China. They want to grow that market. So, I think the 

issue back to us is to be sure, as I described in my testimony, that 

we provide the environment so that not only is the development 

done here—we have the greatest scientists in the world in the U.S., 

bar none, we will do the best development—then we have to make 

sure the manufacturing is put in place here so that we create the 

jobs here and not just create the technology. That is a big challenge, I think, for your Committee. 

Senator BOXER. And you believe that if there is good legislation 

passed limiting carbon that will be an incentive to move this 

quicker? 

Mr. HOLLIDAY. I think that is absolutely right. That is step one. 

That is essential to get the whole train moving. And then you need 

to think about how we do, just like Singapore and Hong Kong do, 

as I described, to be the most attractive place for everybody to 

build those plants. 

Senator BOXER. So, Mr. Stiles, as we hear from you, you have 

shown us that you are building wind towers. You have shown us 

the innovation that we talk about and putting people to work in 

clean industries to power our Nation. Do you think that legislation 

limiting carbon, if it is drawn up right, will help your business create more manufacturing jobs in this Country? 

Mr. STILES. Senator, you said earlier that we are innovative people. We are. I believe we are a very entrepreneuristic company. I 

will tell you that I think that everything has to be done in moderation and, if there is a good piece of legislation, there is proven move 

in it, then positive results are going to occur. 

I think as a manufacturing company, and there is not many of 

us left, quite frankly, as long as there is a level playing field and 

we do not have to be subjected to subsidies from foreign countries, 

and at the same time do not kill off everything that we have, I 

mean, do not forget that when we are building wind towers, we are 

also hauling coal in rail cars and tank barges and chemicals and 

those things, I think that as we move into this and move into the 

changes that we have to do for our climate, we have to protect the 

jobs that we can. But if we prove and move those and keep a level 

playing field, I think it is going to be very positive for the Country. 

Senator BOXER. So, what I hear you both saying is, if it is good 

legislation, it is a real positive. If it is well thought out and well 

drafted. 

OK, Senator Bond. 

Senator BOND. Thank you, Madam Chair. 

You asked Mr. Healey about lower demand. If I remember my economics correctly, if the demand goes up and the supply stays the 

same, the price goes up. We have already seen plastics manufacturers, fertilizer manufacturers moving overseas because they do not 

have the same red tape, they do not have the same demand that 

we do in the U.S. We have gone to natural gas too much, in my 

opinion, for generating electricity, which has raised the price and 

hit the farmers. 

Now, a unilateral carbon tax puts us further at disadvantage. I 

would agree with Mr. Holliday that we need to bring other countries along and develop the technology. But it seems to me that we 

need to cut red tape. Unfortunately, folks on the other side of the 
48 

aisle have been the ones who have said no to more expiration and 

production of natural gas in the U.S. 

Mr. Healey, would that help if we could produce the natural gas 

that we have in the U.S.? 

Mr. HEALEY. Yes, Senator. It would help tremendously. 

Senator BOND. Ms. Warner, I strongly support your algae production. I have seen it in Missouri. The Danforth plant science center 

and many others have shown, and we want to compete with you 

to be the most effective producer of algae-based green crude. You 

take the carbon from a coal fire plant and convert it directly into 

your fuel; therefore, while you still release the carbon, it is used 

twice. You are saying it commands a higher price. I assume that 

you do not require very great tax subsidies to make this viable. Is 

that correct? 

Ms. WARNER. That is correct. Our planning basis is to compete 

directly with the price of crude as it goes. So, we just want to have 

a level playing field during the period of time that we are developing and make sure we are treated the same as other renewable 

options. 

Senator BOND. I am all for that. Mr. Stiles, we are delighted to 

have your barge manufacturer in Caruthersville but, unfortunately, 

the red tape and the environmental restrictions have cut down significantly on our river transportation and I believe that rail transportation is certainly more efficient than truck transportation of 

bulk materials, but to me the river transportation which you support is probably the most economical and energy efficient way to 

move bulk products. What do you see as the future of river transportation? 

Mr. STILES. Well, Senator, thank you very much and we have appreciated your help in Caruthersville. The Mississippi River lock 

system has got to be upgraded and maintained if we are going to 

have a good viable barge—— 

Senator BOND. Would you repeat that? With emphasis? With 

feeling? 

[Laughter.] 

Mr. STILES. Senator, we have never met and you did not set me 

up for this, but I will tell you that the Mississippi River barge and 

lock system has got to be upgraded because barge transportation 

in that part of the Country is by far the lowest cost and mode of 

transportation in any facilities or any locations that are in the 

Country. 

In order for it to be manageable though, you have to have things 

to move and right now there are just not a lot of things moving. 

Senator BOND. You might also include in your prayer to start 

reusing the Missouri River for barge transportation which would 

serve the Upper Midwest and unclog highways with the polluting 

trucks and lessen the pressure on rails. 

Mr. STILES. Senator, I am an equal opportunity prayer. I pray for 

everybody right now. 

[Laughter.] 

Senator BOND. I think we all need it. Not only leadership. 

Mr. Holliday, I appreciate your leadership at DuPont. In one of 

our reports on green jobs, one of the most effective ways to reduce 

carbon emissions is first, through energy conservation. I believe 
49 

that energy conservation is one that reduces costs. Do you have 

any time line on how quickly a homeowner can recoup the price of 

putting your—— 

Mr. HOLLIDAY. Tyvek. 

Senator BOND. Tyvek. How long is required before the reduction 

in heating costs pays for the installation? 

Mr. HOLLIDAY. It varies by place in the Country, but about 5 

years. It is a very good investment for the homeowner if he is 

thinking long term at all. And somehow we have got to get them 

incentives to think that way. There are other new technologies 

coming out, such as a system that will retain heat during the day 

and release it at night, which also could be very effective. 

Senator BOND. Well, that, and commercial buildings. I also appreciate your work in batteries for battery-driven cars. We happen 

to be the battery capital in Missouri so if you want to work with 

us we would be happy to do that. 

Mr. HOLLIDAY. Your companies in Missouri are very good customers for our thin membranes that go in those batteries and we 

appreciate it. 

Senator BOND. Thank you, Madam Chair. 

Senator BOXER. Thank you, sir. 

I have a special request, if it is OK. Since Senator Carper has 

got to run to a health care meeting, he has asked, because he has 

a very special constituent here, if he could have 2 minutes out of 

order and then I will go to Senator Lautenberg. If that is OK. 

OPENING STATEMENT OF HON. THOMAS R. CARPER, 

U.S. SENATOR FROM THE STATE OF DELAWARE 

Senator CARPER. Thank you, Madam Chair. 

I thought the special guest would be Chad Holliday. But after listening to Cynthia Warner’s testimony, she can be a special guest, 

too. I am just really delighted that you are here, Chad, and I want 

to welcome you. 

We have got three things going at once and Senator Nelson on 

the Finance Committee wants to work on health care reform 24/7 

which is real important as well. 

I just wanted to come by and thank you for the leadership you 

have provided at DuPont, not just for DuPont, but really for a 

whole bunch of folks. We especially appreciate your leadership on 

the U.S. Climate Action Partnership. DuPont has been one of the 

founding members. 

I have a statement that I would like to leave for the record. 

Senator BOXER. Sure. 

Senator CARPER. Thank you for being a very good example, individually and collectively, DuPont. 

Thank you. 

[The prepared statement of Senator Carper follows:] 

STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR

FROM THE STATE OF DELAWARE

Thank you, Madam Chairman, for convening this hearing to discuss business opportunities in light of forthcoming climate change policies. I would like to welcome 

DuPont CEO Chad Holliday. Albert Einstein once said that ‘‘In the middle of every 

difficulty lies an opportunity.’’ As you will hear today—clean energy provides real 

opportunity. 
50 

I applaud the leadership of the businesses here today—I especially would like to 

applaud the leadership of DuPont, which is based in my State of Delaware. 

DuPont’s investments in clean energy technology will ensure they are a global leaders in the energy tech revolution, while creating new jobs in States like mine. 

Not only has DuPont been providing Americans clean energy jobs, but the company has also reduced its own pollution through maximizing energy efficiency since 

the 1990s. Through energy efficiency, DuPont has held its energy use flat while increasing production. Its efforts reduced their greenhouse gas emissions by more 

than 70 percent, and actually saved the company $3 billion. 

Clean energy does create jobs. This is a story we are hearing throughout Delaware—a State participating in a regional approach to reduce climate pollution. 

Through one offshore wind project—we expect 1,200 direct and indirect jobs to be 

created in Delaware during construction—and approximately 300 jobs for operation 

and maintenance. 

Our economy cannot survive dependent on old, dirty fossil fuels—we must break 

free of our dependence. We have a choice—do we give our businesses certainty and 

lead the world in clean energy technology—or do we become dependent on foreign 

energy technology and lose jobs to our competitors overseas? 

Senator BOXER. Thank you very much. And thanks for your work 

on health care. Please figure it out for all of us. 

Senator Lautenberg. 

Senator LAUTENBERG. Madam Chair, I think that Senator Udall 

may have been here a step earlier if that is how we are doing it. 

Or are we doing it by seniority? 

Senator BOXER. Oh, I should have actually called on Senator 

Udall. 

Senator LAUTENBERG. Too much barge traffic on the Mississippi. 

[Laughter.] 

Senator BOXER. I should have called on Senator Udall. But it is 

up to you and Senator Udall. 

Senator LAUTENBERG. Well, that is very kind. Thank you. 

Senator BOXER. I apologize, Senator Udall. 

Senator LAUTENBERG. Ms. Warner, your testimony is very exciting. It is kind of really more of a new idea than other alternatives 

that we talked about. What is left over after the fuel is consumed 

in the algae mix? What kind of a discharge do we get, and is there 

any residual environmental question that has to be answered? 

Ms. WARNER. In terms of the fuel itself, it is essentially identical 

to the petroleum-based fuel that we use today, so there is an emission that we control in the same way that we control petroleumbased emissions. We use catalytic converters in vehicles and it 

would be identical equipment, et cetera. 

There is also a biomass product which is co-produced with the 

algae. It is basically the husks of the plant in addition to the oil 

that we extract. That biomass actually contains proteins and other 

energies. So we have various alternatives. We can use it for animal 

feed. We can use it to actually create fertilizer which we give back 

to the algae and fully recycle. We can also use more sophisticated 

technologies like anaerobic digestion or biomass to liquids actually 

to fully utilize the energy and recycle the CO2 that comes from that 

straight back to the algae. 

Senator LAUTENBERG. So there is kind of an infrastructure support change of some significance, I would assume, not to suggest 

that the value of having a relatively easy source, as you describe 

it, to add to our alternative fuel reserve. It is interesting and I appreciate the fact that you brought that to us. 

Ms. WARNER. Thank you. 
51 

Senator LAUTENBERG. Mr. Holliday. You are almost in New Jersey with your company. Your company is a forward-looking company and it always has been. You are a member of the U.S. Climate Action Partnership which supports an 80 percent reduction in 

greenhouse gas emissions by 2050. I guess the question is: Do I 

have to stay here that long? Scientists say it is equally important 

to achieve the short-term emission reductions of 20 percent by 

2020. How does DuPont feel about that target? Cutting down 20 

percent by 2020? 

Mr. HOLLIDAY. We do have three plants in New Jersey and we 

appreciate the opportunity to serve you there. We fully support the 

20 percent reduction as a first step and we support the 50 percent 

reduction by 2050. It is important, though, that we start the process now to make that happen. We believe the efficiency of my first 

bucket that I described in my testimony is the way you are going 

to get most of that accomplished. It will not be the major, new technologies, but finding ways to put those efficiency technologies to 

use right away. 

Senator LAUTENBERG. And to those who are doubters and do not 

think that we are going to be able to benefit from the healthy atmosphere that we live in and at the same time to succeed in doing 

more business and employing more people? 

Mr. HOLLIDAY. Sir, we have had, in DuPont, since we started on 

this drive to reduce our own emissions, we have reduced our emissions by 72 percent. Every project earned greater than 12 percent, 

which was our cost of capital in the company. So there are really 

good efficiency projects out there. But people need to have a long 

enough time line because it may take 5 or 7 years to get the payback on that. 

Senator LAUTENBERG. Mr. Stiles. The House of Representatives 

currently is considering a bill to regulate greenhouse gas emissions 

and we hope to pass a climate change bill out of this Committee 

very soon. How might you be affected by a law that regulates 

greenhouse gases? 

Mr. STILES. Senator, it is a very interesting question. The businesses that we are in, the manufacturing businesses, basically do 

not have any emissions of that sort. In the facilities that we do, 

where we paint or where we have galvanizing, we have the best 

available current technology as it is, so it really, other than some 

new products that you would have to produce, hopefully it would 

be business, there is not a lot of impact on our manufacturing businesses. 

Senator LAUTENBERG. I would ask you the same, Ms. Warner, if 

I might. 

Ms. WARNER. Right. Thank you, Senator. What I would say is if 

it is great legislation, it will be good. The whole point is, if the legislation is actually pushing us toward greater efficiency and encouraging more renewable fuels, then it will be good for us. And 

specifically for algae, the legislation needs to take into account that 

algae, in essence, is taking on CO2 from an emitter and that emitter needs to be able to get credit for that so that we can have an 

incentive, or actually they can have an incentive, to sell it to us. 

And for us, in particular, I think the legislation needs to take into 
52 

account that we are a renewable fuel and we need to be treated 

similarly to the other renewable fuels. 

Senator LAUTENBERG. Thank you. Thank you, Madam Chair. 

Senator BOXER. Thank you very much, Senator Warner. I am 

sorry. Oh, gosh, I keep going back to Senator Warner. You think 

I wish that he was still here? I do. 

[Laughter.] 

Senator BOND. Well, I can see how you could do that. 

Senator BOXER. I am sorry, Kit. I, I did not mean—— 

Senator BOND. I am trying to do my best. 

[Laughter.] 

Senator BOXER. I am so sorry about that. 

Senator BOND. He was speaking the same language. 

Senator BOXER. He was speaking the same language but he came 

to a different conclusion on global warming. 

Senator BOND. I know. I tried to help him. 

[Laughter.] 

Senator BOXER. Senator Voinovich. I am so sorry, everybody. 

Senator VOINOVICH. Maybe it is because I am retiring at the end 

of 2010 that you might think of Warner. 

[Laughter.] 

Senator VOINOVICH. We talked about the issue of the cost of increase in natural gas, not only to your business, Mr. Healey, but 

also Mr. Holliday to your business. I contend that, because of environmental policies here where we encouraged utilities to burn natural gas instead of coal and other sources, that we drove up the 

demand for natural gas. 

As a result, the price went up and as a result of the price going 

up, and also some environmental policies that made it more difficult for us to go after natural gas in this Country, demand goes 

up and the supply is not there. You have increased costs. 

I think that it is really important that we make clear that some 

of the decisions that we make do impact on industries and it is my 

understand that in your industry, that back before 2000, you were 

exporting a lot of chemical products all over the world and today 

we are a net importer of chemical products. 

I know in my State I used to go to the Cather [phonetically] in 

Dusseldorf because we had so many plastic jobs. We do not go to 

Dusseldorf anymore. We have lost hundreds, maybe thousands of 

jobs, in Ohio because of that. 

The point I am making is the cost of energy does impact on your 

businesses and the fact is—are all of you concerned that if we had 

something that would drive up your electric costs or make it more 

expensive to buy gasoline? Are those not considerations that you 

have to take when you are supporting some of this legislation? 

Mr. HOLLIDAY. You are absolutely correct. The Gulf Coast natural gas was $2 per unit forever. Then all of a sudden we saw 

spikes to $12 and $14, which is why you see the red on the chart 

behind you around fertilizer plants. It impacted all of us. 

That is why we think it is very important that we have a 

planned approach that your Committee could put forward to have 

the alternative fuels so there is other examples and everybody does 

not go just to natural gas. That would be the wrong thing for jobs 

in this Country. 
53 

Senator VOINOVICH. I also observed that many of the companies 

in U.S. cap are going to make money out of cap-and-trade. I mean 

they are in the business: GE, you are in the business, a lot of people are going to make money. 

The question I have for all the witnesses is: If we would pass 

cap-and-trade legislation, would that make it unnecessary for us, 

particularly in the area of subsidies for wind and solar in this 

Country, in other words, could we back off from all of the subsidies 

that we are putting in these industries because the cap-and-trade 

would force some of the renewable portfolio standards people from 

going forward and doing things that maybe they would not have 

wanted to do without the cap-and-trade? How important are the 

subsidies? 

Mr. HOLLIDAY. I think, as my fellow witnesses have described, if 

you are starting any new industry, whether it be fuel from algae 

or our biobutanol or cellulose-based ethanol, you need something to 

get you moving if you are going to move fast. So I think some incentives, like other governments are giving, would be important if 

we want to make sure those industries develop here. Those industries will develop somewhere. If we give the incentives, we make 

sure the jobs are here and the commercialization is here. That is 

what is really important. 

Senator VOINOVICH. I would just like to make one other point because I am running out of my time here. Was it you, Mr. Holliday, 

or you, Mr. Stiles, that said it is easier to get something done in 

China and Singapore than it is here? 

Mr. Holliday, OK. I know that in China they are putting on two 

coal-fired plants per week. And it is IGCC technology. In the U.S., 

the Sierra Club and other environmental groups have killed about 

45 proposed coal-fired plants and China has been able to put them 

on. It is not a matter, in terms of the government. They do not 

have the non-governmental agencies that we have here in this 

Country. You are saying it is easier to do. Yes, because it would 

be easier here, too, if we did not have people saying, oh this is bad, 

even though China is putting them on two every week. Any comment? 

Mr. HOLLIDAY. I think, as your Committee decides the technologies that you want to see developed in the Country, I think you 

need to put into place a regulatory process that you can make sure 

those occur here on the scheme you want. 

Mr. STILES. Senator, you were talking about the subsidies. The 

Government for a long time has been doing things to encourage different businesses. There has been accelerated depreciation for a 

number of years, and that has helped our barge business and our 

rail car business and it certainly does not hurt the wind business. 

But, if we are going to get away from the dependence on foreign 

oil to generate electricity in our homes or for natural gas to drive 

those prices up, there has to be some incentives to start. Now I believe it has to stop at some point in time. But there are so many 

problems with wind and with solar getting started because of 

transmission that if the Government does not get involved, then I 

believe that the foreign countries will produce the turbines like 

they have in the past and the wind towers like they have in the 

past and we will be importing them here because basically there 
54 

was no one building wind towers in this Country 7 or 8 years ago. 

That is just an FYI for you. 

Senator VOINOVICH. So the subsidies have to continue? 

Mr. STILES. Not for a long time, sir, but I believe they have to 

continue until you have the amount of renewable energy that is 

being produced in order to relieve the other energy sources that we 

are relying on. 

Senator VOINOVICH. Now, we said that about ethanol. 

Senator BOXER. Some people think that the big oil companies get 

a heck of a lot of subsidies and tax breaks and all the rest. So, I 

would not get into that topic because there is nobody that does not 

ask us to help them. 

Senator Udall. 

Senator UDALL. Thank you, Madam Chair. 

Mr. Holliday, you have said a couple of times in your testimony 

we should start now, we should embark on setting these goals in 

law and develop a Federal climate policy. Yet, your company has 

already been out front. I mean, you have gone, I think you used 

the number that you have reduced your emissions by 72 percent. 

So you have seen something out there that maybe other businesses 

have not seen. You are doing this whether there is a requirement 

or not. 

Could you explain your thinking? Why are you taking the action 

you are taking? 

Mr. HOLLIDAY. I think our situation was a bit unique. We were 

involved in making CFCs, which impact the ozone layer. We saw 

it very early on in the 1980s and started to understand environmental science and saw this coming. So we got very proactive about 

it. Again, we are a 207-year-old company. We are planning our 

300th birthday already. So we wanted to start taking the actions 

early on to do that. 

I think what you have got is a golden opportunity, if I could. You 

start funding the technologies right now, to get them in place, put 

the legislation and the reductions in place in 2012 or thereafter, 

you can create the jobs now and have the technology so that there 

will not be this big bump in the economy. 

Senator UDALL. You see this as a great business opportunity for 

the United States of America, to develop jobs here and to create 

economic opportunities here? You have talked about the international situation and how we are in a very competitive situation. 

Yet you believe that by aggressively going out and setting some 

targets that we can become a leader in this area. 

Mr. HOLLIDAY. I believe that is absolutely right. From meeting 

with the Premiere of China, the Executive Vice Premiere and the 

Head of the Ministries, I know they are focused on the same thing. 

So if we do not move, there will be a head ups. And I think there 

is a very narrow window that we need to move. 

Senator UDALL. I think from what Mr. Stiles or one of the other 

witnesses said, China is ahead of us in the manufacture of solar 

right now. And they are creating more jobs. So this is a great opportunity for us and I think you highlight that in your testimony. 

Ms. Warner, your testimony discussed how algae-based biofuel 

consumes large amounts of carbon dioxide in its production, which 

is one of your major costs, I believe. Could you briefly describe how 
55 

a Federal climate policy to reduce greenhouse gases would promote 

the use of algae as a biofuel, not only as a renewable fuel but also 

as a carbon sequestration technology? 

Ms. WARNER. Thanks, Senator Udall. Thank you very much for 

your welcoming words earlier on. 

Senator UDALL. You bet we love having you create jobs in New 

Mexico, of course. 

Ms. WARNER. Well, it is a great place to operate, too. It has a 

lot of sun, which is our energy source. 

Senator UDALL. And a lot of salty water, too, down beneath the 

ground. 

Ms. WARNER. That is right. A lot of salty water. And some real 

hard workers as well, I will add. 

I actually want to build on something that Mr. Holliday was saying because, actually if you think in the big picture about the legislation that we are contemplating, what we really are talking about 

is moving forward in a transformational way early before some of 

these inevitabilities could occur later. When I say inevitabilities, we 

know that the amount of energy that we use today is using up energy at such a rapid rate that the current available sources of energy will eventually diminish to the point that our demand exceeds 

our supply. 

At the same time, the climate change issues continue to get 

worse and worse. And that is a cliff that we are going to fall off 

in terms of energy prices. That will not be good for the economy 

and that will not be good for society. 

So if we are forward-thinking and we start planning and creating 

more renewable energy sources now, when we have time to do it 

and we have time to actually promote the technologies and enable 

them to develop and get up on their feet and be viable and produce 

enough material to actually make a difference in this huge amount 

of energy that we use every day—there has to be a lot to make a 

difference—if we do that now, we will not fall off that cliff someday. 

So if the legislation is wise, it is transformational because it is 

helping us do something now. 

Senator UDALL. Thank you, Madam Chair. 

Senator BOXER. Thanks. 

Senator Inhofe, welcome. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA 

Senator INHOFE. Thank you, Madam Chairman. I apologize, 

being the Ranking Member of the full Committee here, I should 

have been here. But I am in the same position on Armed Services 

and one of these days, we will have to figure out how to do things 

at different times. 

I had a lengthy opening statement which I will just submit for 

the record. But I will read just two paragraphs out of it because 

I want to hear it. 

[Laughter.] 

Senator INHOFE. While House Democratic leaders are attempting 

to mark up their bills this week, they are picking winners and losers by distributing billions of dollars in pollution allowances to favorite industries. Not surprisingly, many of these companies are in 
56 

turn supporting the Waxman-Marchi bill. As former Congressional 

Budget Office Director Peter Orszag said, ‘‘If you didn’t auction the 

permits, it would represent the largest corporate welfare program 

that has ever been enacted in the history of the United States. All 

of the evidence suggests that what would occur is that corporate 

profits would increase by approximately the value of the permits.’’ 

It did not stop there. CBO also found that giving away allowances could yield windfall profits for the producers that receive 

them by effectively transferring income from consumers to firms, 

owners and shareholders. 

[The prepared statement of Senator Inhofe follows:] 

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR

FROM THE STATE OF OKLAHOMA

Madam Chairman, I commend you for having this hearing and I welcome all of 

the witnesses from the various businesses before this Committee today. I’d especially like to welcome Tim Healy from Lange-Stegmann fertilizer company and Jack 

Armstrong with BASF. 

The message I have is very simple and I hope it begins to make sense to my colleagues on the other side as we continue our global warming cap and trade debate 

this year. True innovation, job growth, and business opportunities should stem from 

the open and free market, and not from creation of more taxes and Government 

spending. Yet that is exactly the direction we will go if we pass cap and trade and 

create a new, Government-created market based on carbon, all at the taxpayers’ expense. 

I am not opposed to new green jobs, or any kind of jobs that make sense in the 

global economic market. In fact, my State of Oklahoma knows a thing or two about 

making wind power cost effective. Oklahoma Gas and Electric’s wind energy program has recently been ranked No. 1 in the country by the Department of Energy’s 

National Renewable Energy Laboratory for the price premium it charges for new 

customer-driven renewable power. 

But what I am opposed to is increasing taxes. And cap and trade is, plain and 

simple, a tax. It’s an indirect, hidden, sneaky tax, but it’s a tax. And it’s a tax on 

energy that will raise prices on energy and all goods and services that are produced 

with or use energy. It’s a tax that will fall more heavily on poorer people because 

poorer people spend a higher percentage of their incomes on energy than do wealthier people. And finally it’s a tax that, for every business opportunity it will create, 

it will destroy others, especially in energy-intensive industries, which are concentrated in the States that use coal for electricity. The result is a net loss for jobs 

and the economy. 

I want to commend Senator Bond for his recent report on the cost of green jobs. 

The report very effectively highlights how Government-created green jobs can kill 

existing jobs. 

In the meantime, I also point you to a new study out of Spain, which I understand 

the President has used in many of his speeches as an example of the direction we 

are heading. Spain has real world examples over the past decade of implementing 

these types of policies. It found that for every 4 green jobs created, 9 other jobs were 

lost. Other findings from this study show that Spain spent 571,138 euros on average 

to create each green job. Spanish energy regulators estimate that the rate paid by 

end consumers for electricity must be raised by 31 percent to repay this debt. 

Now as the House moves toward marking up their bill, I am hopeful we will have 

more hearings to discuss these types of substantive issues and how they factor into 

the debate on cap and trade. All sides of the issue should be heard. 

As we have learned though mandates in the past, with the most recent example 

being the RFS and biofuels, all will have unintended consequences. I am hopeful 

as we move forward that we provide real market-based incentives, rather than mandates, caps, and Government subsidies, for new job creation. 

While I understand that today’s hearing is mostly focused on small business and 

startups, I want to comment on this issue of industry support for cap and trade policies. My colleagues on the other side frequently rail against ‘‘big polluters’’ for obstructing passage of cap-and-trade legislation. Yet it is not ironic these many of 

these selfsame ‘‘polluters’’ are supporting and lobbying for passage of cap and trade. 

While House Democratic leaders are attempting to mark up their bill this week, 

they are picking winners and losers by distributing billions of dollars in pollution 
57 

‘‘allowances’’ to favored industries. Not surprisingly, many of these companies are 

in turn supporting the Waxman-Markey bill. 

As former Congressional Budget Office Director Peter Orszag said, ‘‘If you didn’t 

auction the permits it would represent the largest corporate welfare program that 

has even been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits.’’ It didn’t stop there. CBO also found that ‘‘giving 

away allowances could yield windfall profits for the producers that received them 

by effectively transferring income from consumers to firms’ owners and shareholders.’’ 

Now I am all for companies seeking to generate a profit in the market and competition and making a buck, but when it comes on the backs of my consumers in 

an artificially created market that is not economically sustainable, I must object. 

Once again I welcome all the businesses here before the Committee today and I 

look forward to hearing their testimony. 

Senator INHOFE. I have a comment to make about what I think 

is going to happen on this whole issue. But before I do that, Mr. 

Healey, I understand that in the last decade, half of the nitrogen 

industry was shut down as a result of high natural gas prices and 

foreign competition. American farmers, and I get this from my 

farmers in my State of Oklahoma, import 55 percent of their nitrogen needs as a result of this leakage. Do you see this trend continuing and how will this reliance on foreign sources of fertilizer effect American agriculture? 

Mr. HEALEY. If we have continued increases or an unstable price 

in natural gas, we will see more nitrogen plants in the U.S. idle 

and perhaps even close. And once these plants close, the generally 

do not start up again. The price of natural gas here in the U.S. is, 

I think Mr. Holliday said, for a long time it was at $2 per million 

BTUs. Once the price started going above $2 per million BTUs, we 

started seeing fertilizer plants closing. When the price of natural 

gas here in the U.S. gets up to $8, $9, $10 per million BTUs and 

the price overseas at foreign nitrogen manufacturing plants is less 

than $2, it is really tough for American companies to compete, not 

only in the world market but domestically. 

Senator INHOFE. Yes. That being the case, we have huge natural 

gas reserves our there right now. 

Mr. HEALEY. Yes. 

Senator INHOFE. I mean, like never before. The problem is us. It 

is Washington saying what you can and cannot do out there. We 

cannot drill in the places where we have these reserves. I agree 

with what you are saying. I think the best way to bring that down 

is to increase the supply. It is an old concept that no one believes 

in Washington, but it is still there. It is called supply and demand. 

In my State of Oklahoma, we still have three plants, three nitrogen plants, that are still operating. Tell us a little bit about the 

kinds of jobs because I am concerned. I want to keep our three operating. What kind of jobs do these fertilizer plants offer and what 

do they mean to the rural areas that are located in, such as Oklahoma? 

Mr. HEALEY. Well, each nitrogen plant employs about 150 people. 

They are located, basically, in rural areas and the average salary 

at those nitrogen plants in those rural areas is around $74,000 per 

year. When those plants close, that has a terrific impact on the 

local economy. 

Senator INHOFE. Well, Senator Lautenberg asked a question. I 

will ask it a little bit differently. Tell us, what happens to your 
58 

business if cap-and-trade specifically does not pass? To what extent 

is your business reliant on Federal Government mandating of carbon cap? Or is your business model sustainable without that? 

Would anyone like to respond to that? 

One of the things before doing that, because I see my time is rapidly expiring here, I think the answer probably will be yes. It is interesting that we are having this hearing right now. I have no 

doubt in my mind, Madam Chairman, that the House is going to 

pass the bill, and it will come over here and it will not pass here. 

There are not the votes right now for cap-and-trade in the U.S. 

Senate. It is not even close. 

And I would say to you, Mr. Holliday, I mentioned several times 

when we had our hearing on U.S. CAP, you remember that, 

Madam Chairman, we had a hearing on the U.S. CAP and several 

of the companies, I think we had five including DuPont that came 

and testified. I have to tell you, Mr. Holliday, that I spent 25 years 

in the real world. I was building companies. I was sitting on boards 

and all that. If I were on your board, I would be doing exactly what 

you are doing because, as I said during that hearing, you can stand 

to make a lot of money. There are a lot of winners in a mandated 

cap-and-trade system. 

The Wall Street Journal said DuPont has been plunging into 

biofuels, the use of which would soar under a mandatory CO2 cap. 

They called the cap-and-trade seeking corporations a ‘‘pack of climate profiteers.’’ That is not really a dirty word. That is what we 

are supposed to be doing, doing the best we can for our companies 

and our corporations. I think the Competitive Enterprise Institute, 

Fred Smith, said that DuPont would realize more than a 900 percent return on investment. 

I guess the best question to ask you now is what happens if I 

am right and you are wrong in terms of what is going to pass this 

Congress? 

Mr. HOLLIDAY. I think the best way to address your comments 

is that this U.S. Climate Action Partnership was very unique. It 

was NGO’s, it was auto companies, chemical companies, science 

companies, energy companies, and we worked for a year and a half 

to try to deal with exactly this issue. If one profits greatly, that is 

going to come out of the pockets of another. So I think what we 

proposed in our blueprint is a good place for you to start looking 

and work away from. 

Senator INHOFE. But you did not answer the question though. 

What happens if I am right and you are wrong? 

Mr. HOLLIDAY. If you are right that we make a lot of money? 

Senator INHOFE. No. That we do not pass the cap-and-trade that 

would give a lot of people the opportunity to make a lot of money. 

Mr. HOLLIDAY. Cap-and-trade is a term. The details behind it are 

what is critical. 

Senator INHOFE. Thank you. 

Senator BOXER. Thank you. The Senator went 2 minutes over his 

time so I am going to take a minute to make a few comments. 

First of all, I thought I had seen it all. But now Republicans are 

criticizing Democrats for being pro-business. Think about it. 

Second, Senator Inhofe, before he has even seen what we produce 

out of this Committee is predicting the Senate will vote no. Party 
59 

of no. No, no, no, no, no, no. So the whole world passes us by and 

no, no, no. I just think the people of America expect more of us 

than to predict the failure of a bill that we have not even worked 

on. We worked on one last year that did not get the votes and Congressmen Waxman and Marchi are sitting with people and we are 

sitting with people one at a time, so I hope we can, instead of saying, yes, it will pass, or no, it will not pass, is try to work together. 

But that does not seem to be possible. 

To Mr. Healey, I am going to send something over to you that 

will make you smile. Can you smile? Good. 

[Laughter.] 

Senator BOXER. This shows that, because of our energy bill in 

2006 where we opened up for more drilling even though we were 

told no, no on drilling, we opened it up. In the Gulf of Mexico, there 

has been a 25 percent increase of natural gas from the level reported in 2006. So I am going to send this over to you because I 

want you to take a look at that. 

And here is where we going to go from here. Senator Klobuchar 

is going to close out with her questions and then she is going to 

have the gavel because, as you may have read, President Obama 

has reached an agreement with the State of California and the 

auto industry which is really historic because he believes in yes we 

can, not no, no, no. It proved that we can come together around a 

national fuel economy standard. 

So, I am going to be going over there and Senator Klobuchar is 

going to take over here and I am very happy and pleased that she 

is willing to do it. 

With that, Senator, I am going to hand you the gavel. After you 

finish your comments, you can call the new panel up and we will 

move forward. 

Senator KLOBUCHAR. OK. 

Senator VOINOVICH. In other words, we are not going to get any 

more questions of these witnesses. 

Senator BOXER. No. This will be the last round. She has not had 

one round yet. We are just doing one round. And we have a second 

panel, Senator Voinovich, for questions. 

Go ahead. 

Senator KLOBUCHAR [presiding]. Very good. Thank you, Chairman Boxer and thank you to our witnesses for being here. 

My State has one of the most aggressive renewable portfolio 

standards in the Country and we have truly seen the advantages 

of the jobs that can come out of homegrown energy. 

Just picking up on what I have heard in the last few minutes, 

I wanted to say, Mr. Holliday, that I was just recently in China 

and Vietnam and Japan with Senator McCain. I saw first hand 

some of the work that has been going on, and heard about the work 

that has been going on with energy efficiency. I think we had a 

space race many years ago, but it is truly going to be a race for 

energy efficiency. I was trying to think of word that rhymed with 

race that fit this, but it really did not. I think that we are just seeing a modern day version of that and we want to be in the best 

position possible competitively for our Country. 

The second thing is just for the U.S. as we look at this revolution 

with energy technology. One of the things I always like to tell my 
60 

people back in Minnesota is that this is different from the IT revolution. The ET revolution is different. 

First of all, the IT revolution was very focused. It brought benefits to all of us in certain areas of the Country and certain States. 

I see the ET revolution as being much more broad based in terms 

of the jobs that it can bring to our Country, little towns to big 

towns all over this Country. 

Second, the ET revolution, if done right and with the incentives 

for manufacturing, can also have more jobs across demographic 

lines, while the IT revolution was very focused on graduate student 

degrees and Ph.Ds. The ET revolutions, with the production of 

wind turbines or solar panels or other things, I have seen in my 

own State can involve some blue collar and green collar jobs as well 

as jobs for the people with the PhDs. 

I wonder if you would comment on that. 

Mr. HOLLIDAY. From our perspective, I think that you are exactly 

right. I think we are going to need all the different forms of energy 

and more efficiency and I think there are reasons why every State 

can participate and each one will probably have their own niche. 

Senator KLOBUCHAR. The President has called for increased development of biofuels, Mr. Holliday, and I know DuPont’s Pioneer 

Hybrid International facility in Jackson, Minnesota, produces advanced agricultural seeds that will play a critical role in our transition to the new energy economy. I am also aware that DuPont is 

also working on the development of cellulosic ethanol demonstration facility. We have the work you are doing with algae. Can you 

talk, perhaps you and Ms. Warner, about plans to develop the next 

generation of biofuels and how we can do this in a way that will 

reduce greenhouse gas emissions. 

Ms. WARNER. The plans we have I outlined in my testimony and 

I am glad to go into more detail there. We are actually accelerating 

rather rapidly because the technology is proving itself quite quickly. We can see that we can compete with current energy, actually, 

as long as do not have any barriers in our way in terms of permitting and in terms of legislation that does not create a level playing 

field. But we view that we will be making over a million gallons 

per day of biomass and bio-oil, rather, in 2011, which is coming 

rather quickly. 

Senator KLOBUCHAR. One of the things that we have been working on with the EPA is trying to increase the blend level with fuel 

for biofuels. We have the E85. Minnesota has the most pumps in 

the Country. It is corn-based ethanol which we know is going to be 

transitioning to other parts of corn. But we would like to see E12 

and E15 and that we do not lose this biofuel component of this, 

which is so important for our national security and such things. 

Ms. WARNER. Right. The beauty of the algae-based fuel is that 

you can essentially blend it at any percentage that you want to because it is not just chemically compatible, it is chemically identical. 

So there is not a limit as far as that goes. 

Senator KLOBUCHAR. Mr. Holliday, you talked about DuPont’s 

role in promoting the Montreal Protocol Agreement in the 1980s, 

which was one of the more successful international environmental 

agreements. 
61 

I recently introduced my former law professor, Cass Sunnstein, 

as Head of the White House Office of Regulatory Affairs. He has 

compared the debate regarding the Montreal Protocol and the 

Kyoto Protocol and he mentioned DuPont’s role, when he spoke at 

his hearing, in helping to get President Reagan and more than 80 

Senators in the Senate to support the ratification of the agreement 

to phase out CFCs. 

In his account, he mentioned how the Europeans claimed that 

America was engaged in scare-mongering and that the speculative 

science of the benefits of reducing CFCs did not justify the severe 

economic costs. That was back then. 

Mr. Holliday, we find ourselves in a similar place today. However, in the 1980s, President Reagan was able to see that the economic costs of letting the ozone layer disappear were more severe 

than the costs of finding a replacement for CFCs. Can you tell how 

DuPont’s 1994 decision to reduce your greenhouse gases has been 

a positive one for you? 

Also, when you look back in history at the role that DuPont 

played in that debate with that Montreal Protocol, fast forward to 

today with Copenhagen and some of the work that we have to do 

in terms of how we need to have the business community strong 

in support of what we are trying to do here. 

Mr. HOLLIDAY. Thank you for your question. 

Just to put it into perspective, the Montreal Protocol has reduced 

five times more CO2 equivalents in the atmosphere than the Kyoto 

Protocol would have if it was done completely, which it does not 

look like it will be. So the leadership of the U.S. in that step, we 

should take pride as a Country, I think as an example. 

What we had with the Montreal Protocol was certainty. We had 

a timeframe and phase out, what is going to happen, what is going 

to happen in developed countries and developing countries, and 

with that certainty we unleashed more technology than we have 

ever had before. We found six companies working on it, and we 

shared technology cross-license and we had a commercial plant 

within 5 years. 

I think that same kind of thing could be done with certainty in 

your legislation. 

Senator KLOBUCHAR. All right. Thank you very much. Thank you 

to the panel and we are going to be moving on to our second panel. 

This has been very enlightening. We appreciate it. 

As the second panel is coming up, I would just like to ask Mr. 

Lowenthal if he would raise his hand. I wanted to particularly welcome you, sir. We are very proud of your work with Coulomb Technologies and I am going to stay as long as I can and I so appreciate 

your being here. 

If everyone could get seated, please. It looks like we are having 

a large object being installed. This should be good. We are really 

trying to move on to our second panel because we also have votes 

today and we are hoping to get done by around noon. I cannot wait 

to hear what this is. 

OK, I am going to go through who the panelists are today and 

then ask them to get started. We have, first of all, Richard 

Lowenthal, who Senator Boxer already mentioned, who is the CEO 

of Coulomb Technologies, which manufactures charging stations for 
62 

electric vehicles to provide commuters and others with flexible 

transportation options. 

We also have Wayne Krouse, who is the CEO of Hydro Green 

Energy, which uses a new form of underwater turbine to generate 

electricity. These underwater turbines were first installed in the 

Mississippi River at an Army Corps dam in Hastings, Minnesota. 

We have Richard Taylor who is with Imbue Technologies Solutions, which distributes and installs efficient lights that are manufactured in Pennsylvania. And, finally, we have Jack Armstrong 

who is with Leader Construction Markets with BASF which is one 

of the world’s largest chemical companies and manufacturers of 

various products including installation, auto emissions reduction 

technologies and low-friction wind turbine blades. 

Please get started, Mr. Lowenthal. 

STATEMENT OF RICHARD LOWENTHAL, CHIEF EXECUTIVE 

OFFICER OF COULOMB TECHNOLOGIES 

Mr. LOWENTHAL. Thank you very much for having me here 

today. Thank you, Madam Chair and the Senators of the Committee for this opportunity to address you. 

I introduce my friend here. This is one our charging stations designed for the city of San Jose, California. 

[Slide shown.] 

Mr. LOWENTHAL. My responsibility is building companies and we 

do that in Silicon Valley and especially we like to kick off new industries and we see this as an opportunity to help a new industry 

get started. I will say up front that we are speaking in favor of capand-trade legislation. 

We make and sell charging stations for electric vehicles because 

a lot of the people in the U.S. cannot fuel an electric vehicle without some help from us, without infrastructure. We have five times 

as many cars, 247 million cars, but only 53 million home garages 

to charge them in. So, we build infrastructure for EVs. 

In a place like San Francisco, 51 percent of the people park 

curbside at night. So, what we do is we change parking meters into 

combination parking meters and charging stations for EVs. 

Our charging stations all have a way to pay for recurring costs 

and they are all Smart Grid enabled and full integrated with the 

Smart Grid. We provide access to a fuel that is cheap, it is clean 

and it reduces our dependence on foreign oil. 

[Slide shown.] 

Mr. LOWENTHAL. We are creating jobs nationwide that cannot be 

outsourced. We have distributors across the U.S. with local installers. They have to be here. They have to be on the ground. They 

are electricians that can get permits from cities and install our stations. And we are excited about that. 

We have stations in California, Illinois, Florida, North Carolina, 

New York and Hawaii and new places every day. Our stations in 

Chicago charge cars off the sun. Our stations in Hawaii charge cars 

off of windmills. So we have a way to fuel cars that is actually 

quite clean. Next slide. 

[Slide shown.] 

Mr. LOWENTHAL. Electricity as a fuel is cheaper for the consumer 

than gasoline. Gasoline costs us about 10 cents per mile. That is 
63 

with $2.30 gasoline which may soon be a thing of the past. Running your car on home electricity at home rates is about 2 cents 

per mile, so quite a bit cheaper than gasoline, and on a public infrastructure it is about 5 cents a mile to drive a car. So, a little 

bit less, actually less than half the cost, of driving on gasoline for 

the consumer. Next slide. 

[Slide shown.] 

Mr. LOWENTHAL. I want to talk about the story in San Jose 

where we put out our first network. This was an ad hoc cap-andtrade system. The Mayor of San Jose, Mayor Reed, made a statement that he wanted his city to have a clean, zero emission 

streetlight system. So we took that on. 

What we do is we put these charging stations on streetlight poles 

in San Jose. And when you charge there, each time you charge 

your car there, it saves 19 pounds of greenhouse gases. The production of electricity for this costs about 9 pounds of greenhouse gases. 

So there is a net savings is 10 pounds of greenhouse gases every 

time you fuel your car at one of these stations. That is enough to 

pay for the greenhouse gases that are produced by lighting 9 street 

lights. So, through this mechanism, the city of San Jose is getting 

a carbon free streetlight system. Next slide, please. 

In San Francisco, the story was different. We have a network of 

stations there as well. In San Francisco, it was all about greenhouse gas savings and accountability of greenhouse gas savings. So 

we provide reports like these, these are actual active accurate reports from the city of San Francisco, about greenhouse gases saved 

by charging cars at our stations and the City uses that to justify 

further investment in clean fleet. Next slide. 

[Slide shown.] 

Mr. LOWENTHAL. I just want to highlight our growth. We are a 

tiny little company. But the percentages are good. We have 3,000 

percent year-on-year growth, which is easy to say when you are as 

small as we are. We had two people in September 2007. We went 

to 12 in July 2008 and that is when Mayor Reed announced his initiative to have a clean streetlight system. That, you see, increased 

the slope of our growth to 40 people at February of this year. Then 

Mayor Newsome announced his program to measure his fleet in 

San Francisco and, as of today, we are about 95 people in the company. Next slide. 

[Slide shown.] 

Mr. LOWENTHAL. So, I just wanted to say thank you for addressing this issue of global importance. It has caused a lot of growth 

for us to have clean policy decisions and we look forward to continuing that. We are happy to hear the announcements today about 

emissions with cars and incentives for EVs and those things are all 

greatly beneficial to our industry. 

Thank you. 

I would also like to submit for the record a copy of the agenda 

for the legislative action by the Battery Electric Vehicle Coalition 

and highlight its support of EV infrastructure. 

[The referenced material was not receive at time of print.] 

[The prepared statement of Mr. Lowenthal follows:] 
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Senator KLOBUCHAR. Thank you very much. 

Mr. Krouse. It is hard to see you with that big light. 

Mr. KROUSE. It is quite large. 

Senator KLOBUCHAR. I am sure Mr. Taylor will explain. 

STATEMENT OF WAYNE F. KROUSE, CHAIRMAN AND CHIEF 

EXECUTIVE OFFICER OF HYDRO GREEN ENERGY, L.L.C. 

Mr. KROUSE. Thank you, Senator Klobuchar. I want to thank 

Chairman Boxer for having me to the Committee. I also want to 

thank the rest of the Members. 

My name is Wayne Krouse and I am the Founder, Chairman and 

CEO of Hydro Green Energy. I really appreciate the opportunity to 

be here today to discuss clean energy companies like mine and how 

we can contribute to addressing the serious environmental and energy issues that this Country faces, while at the same time creating a large number of jobs for Americans throughout the Country. This will ultimately lead to economic development opportunities now and into the future. 

Hydro Green is a Texas-based renewable energy company in the 

water power industry. And as my written testimony shows, our 

patented power systems generate clean electricity for moving water 

at a variety of application points without the need to build new 

dams. 

We are presently developing 15 projects in eight States. Our 

projects will cumulatively generate over 500 megawatts of base 

load zero carbon renewable energy. 

Overall, the U.S. has 20,000 megawatts of water power potential 

that could be developed by 2025 without building a single new 

dam. That is enough for 15 million homes—that is million—and replace some 40 coal plants. 

Hydro Green is a startup company. We closed our Series A Fund- ing in 2008 with a $2.6 million investment from the Quercus Trust, 

which is a prominent investor in alternative energy companies. The 

founder of Quercus has committed hundreds of millions of dollars 

to environmental causes and land conservation efforts and we are 

honored and proud to have Quercus as our lead investor. 

I am a chemical engineer by degree and left Exxon Chemicals 

Joint Venture in 2001 to start Hydro Green Energy. Prior to my 

job with Nalco/Exxon Energy Chemicals, I worked as a field engineer for Schlumberger out in the Gulf of Mexico oil fields. So I have 

a little perspective on some of the discussions that were going on 

here today. 

While I might not be as well-known as a certain other Texas 

oilman who is now interested and committed to renewables, I am 

also using my conventional energy background to ensure that 

promising new clean energy technologies are delivered to America. 

Hydro Green is the first company in America with a grid connected 

and FERC-licensed hydrokinetic power station at Army Corps of 

Engineers Lock and Dam No. 2 in Hastings, Minnesota. Our 

hydrokinetic power project was developed in partnership with the 

city of Hastings and began operation this year, the first in the 

Country to do so. 

The project led to the creation of 61 jobs in seven States over a 

2-year period. It was a major milestone for our company and for 
76 

U.S. clean energy policy. We hope that the Hastings project with 

act as a catalyst for growth in the promising new water power 

technology sector, which is the potential to deliver literally tens of 

thousands of megawatts of clean, carbon-free domestic power to 

America’s electricity consumers, including those specifically in the 

Midwest and the Southeast where we have many of our projects in 

development. 

There is a common belief in some locations around the Country, 

on Capitol Hill and in the environmental community, that the U.S. 

water power industry is tapped out. Nothing could be further from 

the truth, as my written testimony will show. And if the Country 

is committed, truly, to reaching the clean energy goals of the 

Obama administration and of the current Congress, water power 

technologies must play a strong role and be given an opportunity 

to develop in a timely and efficient fashion. Currently, they represent between 7 and 8 percent of U.S. energy production on an annual basis. 

I was asked to focus today on job creation that could occur as a 

result of the potential climate policy. The best way I can do that 

is to discuss the job opportunities that we created to date with the 

Hastings project. 

The development of the Hastings project resulted, as I said, in 

61 exciting and high-paying jobs in several States. It also created 

work for those who were out of work or who were soon to be without work due to jobs going overseas. 

These activities that resulted from the Hastings project will be 

replicated on a much larger and more permanent scale as Hydro 

Green develops these other 500 megawatts of projects. We are 

eager to create more employment and economic activity. Our current project pipeline that I discussed a few minutes ago is in position to potentially create as many as 2,000 jobs over the next 3 

years, not only in other parts of the Country but specifically in the 

Midwest and Southeast where we have a number of our projects located. 

These are great jobs. These are engineering jobs, civil engineering, mechanical engineering, marine engineering, structural engineering, computational fluid dynamics engineering. Very well-paying jobs. But in addition to these engineering jobs, there are also 

green collar manufacturing jobs, jobs that may have gone overseas 

and we can now bring them back to help build America’s energy 

future. 

The company currently plans to hire as many as 30 employees 

in 2009. Today, we are a company of three. Two years ago, we were 

a company of one. 

I am here today to state very clearly that policies that you are 

considering, such as the climate change legislation, that recognizes 

and sends a market price signal on carbon, has many benefits and 

that the clean energy technology, particularly their carbon-free profile, it will act as a huge driver for growth and development of the 

clean technology industry in America. 

Recent policies have helped insure our traction in the marketplace, as well as some interest from the investment community. 

Additional policies are needed, though. As the U.S. continues to 

struggle and emerge from the economic crisis, debt finance really 
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still remains on the sidelines and properly drafted legislation will 

help bring some of that back. 

Even the idea of carbon policy being enacted has brought some 

of the major utilities in the U.S. to come to discussions with Hydro 

Green Energy, discussions that may not have taken place just a 

few years ago. 

The Committee knows that America is in a position to lead the 

world in clean energy technology development. Categorically, no 

other country in the world can match American ingenuity and 

creativeness. But only by taking decisive action on the policy in 

front of us can we accomplish these goals. 

Scores of companies like Hydro Green are fighting every day to 

make progress and we hope that the adoption of these particular 

legislations will help accelerate that trend. 

[The prepared statement of Mr. Krouse follows:] 
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Senator KLOBUCHAR. Mr. Taylor, with your light. 

[Laughter.] 

STATEMENT OF RICHARD W. TAYLOR, CHIEF EXECUTIVE 

OFFICER OF IMBUE TECHNOLOGY SOLUTIONS, INC. 

Mr. TAYLOR. Thank you, Madam Chair. I apologize to my fellow 

panelists for the bright light but I am excited to have the opportunity to enlighten the Committee on the benefits of LED lighting 

technology, Light Emitting Diode technology, and how it fits in the 

broader framework in the discussion around carbon cap-and-trade 

legislation. 

My name is Richard Taylor. I am CEO of Imbue Technology Solutions, ImbuTec. We are headquartered in Pittsburgh, Pennsylvania and we provide energy efficient lighting technology products 

and services to commercial, industrial and municipal customers. 

The reason why a discussion about LED lighting is important in 

the context of carbon cap-and-trade legislation is because, as several of the Committee members have pointed out, when you look 

at reducing carbon emissions, one of the most effective ways of 

doing that in the first instance is reducing energy consumption either through the use of energy efficiency technologies or through 

energy conservation. The lighting products that are before you are 

a great example of technology that can have a significant impact 

in that regard. 

There are three reasons why the lights that you are looking at, 

and the other products made by Appalachian Lighting Systems out 

of Elwood City, Pennsylvania, should be of interest to you. 

First of all, they are highly efficient. On average, products produced by Appalachian Lighting Systems reduce energy consumption by 80 percent or more. As you can see, the decorative acorn 

fixture, which is ubiquitous, you are looking at a light that replaces 

150 watt fixture with 32 watts of energy drawn. The parking lot 

light, which still has the shield over it because clearly it would be 

very blinding, it is a fixture that draws 70 watts of power but replaces a light fixture that uses 400 watts of power, actually even 

more than that, 465 watts when you add in the ballast. So you are 

looking at significant reductions in energy consumption that benefit 

American consumers. 

The second reason why these products are important is because 

they are made in America. Most LED lighting products are produced in China or Taiwan, or they are made by manufacturers that 

rely on Chinese or Taiwanese components to make them. Seventyfive percent or more of the components of these products are from 

American companies. And if anyone likes to cook, you know that 

if you are going to make something, the quality of the ingredients 

that go into the product really help to produce a better result. 

What you find with LED technology is that the American components are of a much higher quality component and the enable the 

products to produce as advertised. 

That brings me to the next reason why this is important. It is 

the technology that drives these lighting products that is a quintessential example of American ingenuity. What Appalachian 

Lighting has done is patented the process of dissipating heat in 

these light fixtures. By dissipating heat in the fixtures and allow-
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ing these fixtures to operate cooler, you get dramatically longer life 

out the fixtures. In fact, these fixtures will operate, maintenance 

free, for 20 to 25 years and that is an extremely conservative estimate. 

To give you an example of the impact of these types of products, 

I will share with you an example of a project we recently completed 

converting the lighting in the Allegheny County Jail in Pittsburgh, 

Pennsylvania. As a result of that conversion to LED lighting, and 

this, by the way, is the largest interior LED lighting conversion in 

the Country, Allegheny County reduced its energy consumption by 

83 percent, again with fixtures that will be maintenance free for 

20 to 25 years. Not only does the county benefit from the reduced 

energy consumption, but they also benefit from reduced operating 

expenses because you do not have to buy or stock bulbs and ballast 

and you do not have to pay for the labor to change them out. So, 

long after they realize the return on the investment, which is just 

over 5 years, the county will continue to reap dramatic reductions 

in energy consumption and operational savings. 

When you look at the impact of this type of technology, it has a 

very significant impact throughout the supply chain on American 

jobs. So I use the Allegheny County project as an example. Not 

only did we put Union electricians to work doing the installation, 

there was also a positive impact in the manufacturing of the fixtures themselves. 

When you look at American-made ingenuity, there is an impact 

in the supply chain that really has a geographic diversity as diverse as the composition of this Committee. For example, the circuit boards in these fixtures are produced by The Berquist Company in Minneapolis, Minnesota, lenses produced by Jamestown 

Plastics in Brocton, New York, housing and lenses from Lumax Industries in Altoona, Pennsylvania, Lytech Solutions in Salem, Oregon producer the drivers, the control boards and the LED chipmounting services. Transformers are made by MCI Transformers in 

Babylon, New York. Peres Pattern Company in Erie, Pennsylvania 

produces castings. Housing, reflectors and lenses are made by the 

Warren Company in Erie, Pennsylvania and the LED lighting chips 

themselves are made by the Cree Company in Durham, North 

Carolina. 

This ripple effect throughout the supply chain with expanded use 

of energy efficient technologies has the benefit of not only providing 

significant benefits to the end users, but also has a positive impact 

on job and employment throughout the Country. 

Thank you for the opportunity to be with you. 

[The prepared statement of Mr. Taylor follows:] 
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Senator KLOBUCHAR. Thank you very much, Mr. Taylor. 

Mr. Armstrong. 

STATEMENT OF JACK ARMSTRONG, CONSTRUCTION 

INITIATIVE LEADER, NORTH AMERICA, BASF CORPORATION 

Mr. ARMSTRONG. Good morning, Madam Chairman and members 

of the Committee. Thank you for inviting BASF to talk about business opportunities in the context of climate protection today. 

As a company formed over 140 years ago, BASF Corporation, the 

North American subsidiary of BASF SE, is the largest chemical 

company in the world. We have products that stretch across the 

spectrum of commerce from foam insulations to pigments and coatings and sealants to herbicides and fertilizers, to ingredients for 

cosmetics and nutrition. We have facilities in over 30 States employing over 15,000 people in the U.S. 

In the words of our global chairman, Dr. Jurgen Hambrecht, ‘‘A 

business cannot be successful in the long term if it does not act responsibly toward the environment and society.’’ This is why sustainability is an integral role of BASF’s strategy. 

And in fact, Madam Chairman, BASF products save three times 

more carbon dioxide during their life than is produced by their 

manufacturer and disposal. So, in essence, BASF has a virtual negative carbon footprint. 

Climate change is certainly a global problem requiring global solutions and we support congressional action to address climate 

change and lower greenhouse gas emissions. 

But what I would like to talk about today is about how BASF 

chemistry is used to reduce greenhouse gases and protect our climate, chemistry that reduces nitrous oxide in agriculture, plastics 

and coating for smooth low-friction blades on wind turbines, auto 

emission reduction technologies like catalytic converters, plastics 

and additives for sustainable transportation in roads and bridges. 

My written testimony certainly details work of ours in all of these 

areas. Suffice it to say that each one offers significant growth, not 

only for BASF, but for our customers. And the ultimate beneficiary 

is the environment and certainly the American consumer who 

saves energy and who saves money. 

Many more consumers, though, could save a great deal of money 

by having sustainable building enclosures in their commercial 

spaces and in their residences. By this what I mean are the foundations, the walls, the roof, the ceilings, the floors and doors of a 

structure. This is my particular area of focus at BASF. 

Department of Energy studies have shown that 40 percent of the 

energy we use for air conditioning and heating is lost in buildings 

and homes due to uncontrolled air leakage through just these same 

building enclosures and air duct systems. BASF chemistry improves insulation, sealants, wall and roof systems and coatings on 

doors and windows which aid significantly to keep the cold air in 

in the summer time and the hot air in certainly in the wintertime. 

And these integrated efficient high-performance systems allow 

smaller cooler and heating equipment which can be used less and 

save anywhere from 30 to 80 percent energy. 

Improving energy performance in existing 130 million homes and 

5 million buildings offers perhaps the most immediate, and cer-
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tainly the most cost effective opportunity, for reduction of greenhouse gases by improving energy efficiency. 

Our chemistry solutions got into both new homes and existing 

buildings and certainly many new jobs will be created by the construction and the retrofit, the energy auditing and product manufacturing required to update these many buildings in the building 

stock. 

Some of the new innovations that BASF is commercializing to 

help the Country make the transition to a clean energy future are 

items like: organic solar cells that use organic compounds to trap 

the sunlight and turn it into electric energy; fuel cells that use the 

clean reaction between hydrogen and oxygen to produce energy. We 

just opened a factory in New Jersey; and lithium-ion battery technologies that will power the next generation of electric vehicles. I 

am glad to say that we are in the process of working to open a factory in Ohio for this. 

BASF is certainly proud to take what was once science fiction 

and turn it into commercial reality, demonstrating really that climate protection and social responsibility, combined with economic 

growth, is an achievable goal. A sound chemical industry is certainly mandatory to achieve these ambitious and sustainable targets as it delivers innovative products and solutions to all the consumer segments for efficient growth and development of our society. 

So, BASF welcomes the opportunity to work with this Committee 

on legislation that not only protects our climate, but ensures our 

Nation can press forward with its economic recovery. 

Thank you. 

[The prepared statement of Mr. Armstrong follows:] 
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Senator KLOBUCHAR. Thank you very much. 

Senator Voinovich. 

Senator VOINOVICH. Thank you, Madam Chairman. 

Just for the record, I want to make it clear that I am a great 

supporter of green jobs. We have Owens Corning and Solar Industries, unlike many other businesses and you are talking about 

doing something in our State and I appreciate it. 

But I will say that because of, I think, some foolish energy police 

that we had that allowed natural gas prices to skyrocket, that it 

is going to be a long time before the new jobs in Ohio, the green 

jobs, are going to compensate for the jobs that we lost because of 

the high costs of natural gas. 

The last time we considered this kind of legislation, the impact 

on our State would have been a 50 percent cost in electricity, 60 

percent in gas and 41 percent in gasoline. One of the dilemmas we 

have is does green overcome red to the other industries because 

they are less competitive because of increased costs and also in 

terms of costs to the rate payers, the folks out there that are struggling right now to keep going. 

Someone mentioned cap-and-trade in terms of China. They do 

not have cap-and-trade in China, but yet they are moving forward 

with manufacturing in many of these areas. 

For the record, Madam Chairman, I would like to just mention 

that in April of this year, China said the industrialized nations 

should contribute $200 billion a year to help developing nations 

fight global warming. It also said only developed nations should reduce emissions 40 percent of 1990 levels by 2020, which is twice 

what the U.S. has pledged and twice what the Marchi-Waxman bill 

has proposed. 

We have a reality of competition between our Country and other 

countries, the issue of whether or not we are going to be moving 

jobs overseas in the event if we do something that is foolish in 

terms of a cap-and-trade program. 

That is enough of the editorial. 

I have to say that I am extremely impressed with the technologies that you are using in your companies and the progress 

that you have made and I can just sense the excitement that you 

all have. You are great promoters. You are very articulate. 

The question I would like to know is: How important to what you 

have been doing are the subsidies that we have put in place toward 

the beginning of your companies and also to the continued growth 

of your companies? And the second question is: If we do not pass 

the cap-and-trade piece of legislation, what impact would that have 

on the growth of your companies? 

So the first thing is subsidies, the second, if you do not have capand-trade now but you are going forward, how much do the subsidies help? The last question is, say we did not do this, the capand-trade legislation, what impact do you think it would have on 

your businesses? 

Mr. LOWENTHAL. I am ready to take that on, if you would like. 

So, one of the things about our business is that it co-exists with 

the electrical vehicle business. Of course, that is a lot of jobs in 

Ohio, we know. But all of the American auto makers, not only General Motors and Chrysler and Ford but also the young companies 
130 

like Tesla, Fisker and Phoenix, are all developing electric vehicles. 

I sat recently in a roundtable with General Motors where we discussed the need for infrastructure and the conclusion of that meeting was that the existence of an infrastructure will double their 

market size for electric vehicles. 

Senator VOINOVICH. I just want to interject something. One of 

the things that I recognize, and we all recognize, is that we, if we 

are going to talk about a subsidy, is in the grid. 

Mr. LOWENTHAL. Right. 

Senator VOINOVICH. The grid in this Country. We do not have 

the grid and we need to do it and I think if we are going to subsidize, then that is the big thing that overshadows everything that 

you are doing. 

Mr. LOWENTHAL. Very good, Senator. I will address that specifically then. 

So the first answer to your question is that the reason that we 

would like some money early on in this is that the existence of an 

infrastructure allows somebody to buy an electric vehicle who cannot otherwise do so. So, if you live in San Francisco and you park 

curbside and there is no way to charge the vehicle, you cannot buy 

a Chevy Volt. So there is a little chicken and egg problem. Nobody 

wants to put out infrastructure until they see cars, but nobody can 

buy cars without infrastructure. 

This is, frankly, a good place where one-time subsidy can make 

a difference. Our products, in particular, have built into them a 

billing system so ultimately the drivers pay for the energy used 

and it is a sustaining business. But to get it started at the beginning of the electric vehicle industry, we could use some money. It 

would be a great help to us. But we do not want it directly. We 

want our customers to get it. Typically, our cities and businesses 

that want to accommodate electric vehicles. 

With regard to the grid, every one of our stations is Smart Grid 

enabled and what that means is that they will charge these cars 

when the grid has plenty of energy. So we do not have to add increased transmission capacity and we do not have to add increased 

generation capacity. So typically these cars will be charged in the 

middle of the night and because every one of them is directly connected to the grid, the grid manages when the cars are charged. 

Mr. TAYLOR. Senator, for energy efficient lighting technology, 

there is no need for subsidy. This is a cost effective investment 

today. The best way that the Federal Government, however, support this industry is by being a customer. 

Mr. ARMSTRONG. Senator Voinovich, I would say from a BASF 

perspective, investing in new, incubated technologies, whether they 

are fuel cells or whether they are battery technologies to store that 

energy produced by the windmills when it cannot get into the grid, 

some 20 percent gets lost because it cannot go through the grid, I 

would say that many of these are co-share. I know as far as BASF, 

we put some of our money in conjunction with DOE funds. So, it 

certainly is not all handouts and I think that these are important 

technologies to allow them to come into mainstream and overcome 

these frictions and barriers to implementation, certainly. But the 

money certainly should go to the technology and not the company. 
131 

Mr. KROUSE. Senator Voinovich, with respect to the grid and the 

new technologies, as you know, there is a huge difficulty in integrating intermittent renewable technology, such as wind and solar, 

because of that intermittent nature, water power, hydro power, is 

a great zero carbon base load way to integrate those resources, 

they help firm the load curve. DOE did a study in April 2004 that 

said that up to 95,000 megawatts of low-head hydro still exists in 

the U.S. to be developed. 

So when you think in respect to the grid and the incentives that 

might be necessary to get the renewables to market, so to speak, 

yes the incentives are needed and to not provide those incentives 

will suppress the potential growth rate of water power technologies 

but would also suppress the ability to integrate those other renewables into the existing electric infrastructure. 

Senator KLOBUCHAR. OK. Thank you, Senator Voinovich. 

Mr. Lowenthal, could you talk a little bit about the status of developing batteries? I have heard different things about how far 

these batteries can take us and the status of battery development 

in the U.S. versus other countries. 

Mr. LOWENTHAL. Well, battery development tends to start here. 

There are very important, innovative companies like A123 Systems 

in Massachusetts, as an example, that have led the industry in the 

development of lithium-ion batteries and these are the ones that 

are going in many of the cars. The batteries are fine. The message 

that I want to give is that these cars are ready for prime time. 

They are ready to be sold to consumers. 

The one aspect of batteries that is an issue is the cost. The cost 

is loaded, for example, especially by warranty costs. So to the extent that we could get some assistance in helping the auto makers 

warranty their batteries through some kind of guaranty from the 

Federal Government, it would be a great help. 

What General Motors has done with their battery is to put in one 

that is twice as big as otherwise needed, to ensure that they have 

enough battery capacity for the warranty life of the car. That is not 

a very cost-effective strategy. We could use some help there. 

Senator KLOBUCHAR. How long, if we look at 5 years, how many 

electric vehicles do you think will be driving on our roads? Or 10 

years? 

Mr. LOWENTHAL. Well, President Obama has told us there will 

be a million cars in 2015. We do not think that he is far off. That 

is pretty much consistent with Morgan Stanley that did a report 

a year ago about the report of the growth of the EV industry. 

Senator KLOBUCHAR. And how do you think the new fuel efficiency standards being announced today affects the plug-in vehicle 

business? 

Mr. LOWENTHAL. It will be a great help to us because there are 

still vehicles that need to run on gasoline or diesel, so the auto 

makers will compensate for those by delivering more electric vehicles and allowing people that can use an electric vehicle for their 

daily driving to do so. So it will be a great help to the industry. 

Senator KLOBUCHAR. Mr. Krouse, I am pleased that you chose 

Hastings as the site of one of your first power projects in the U.S. 

We are very proud in our State of our roles as leaders of both 

biofuel area and wind fuel and other new energies. We have this 
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very aggressive renewable standard that has helped us a lot. How 

many jobs do you anticipate will created as a result of this facility 

and what sort of job training is necessary when you hire new people to build and maintain these turbines? 

Mr. KROUSE. Well, the policies in the State of Minnesota were 

one of the primary reasons that drew us there in the first place. 

So, they are very important. We have hired people in the city of 

Hastings from a maintenance and operations standpoint on a permanent basis with our company. 

We are also developing projects at a number of other locations 

within the State of Minnesota and those, when you combine manufacturing and ongoing operations, maintenance and the spin-off of 

jobs that are created from electrical suppliers and instrumentation 

vendors, et cetera, could amount easily into the hundreds if not up 

to 1,000 jobs just in the State of Minnesota over time. 

As I mentioned area in the testimony, in that 3-year period, we 

easily could reach into the multiples of thousands for all of our 

projects across the Country. 

Senator KLOBUCHAR. You mentioned in your testimony that you 

thought hydrokinetic power had the potential to produce tens of 

thousands of megawatts of clean power around the Country. Can 

you elaborate on that prediction and what are the impediments to 

making this a reality? 

Mr. KROUSE. Sure. The Electric Power Research Institute, EPRI, 

released a study last year, toward the end of the last year, saying 

that 25,000 megawatts of hydrokinetic with zero head. Hydro 

power could be brought on by 2020 in the U.S. I was recently in 

Vancouver at a small hydro conference, about 3 weeks ago, where 

the person from EPRI had updated their projections and essentially 

listed out the total amount of net energy that could be created 

through these hydrokinetic technologies and all their variety of application points and that ended up being about 429 terawatt hours. 

That is just a gargantuan number. 

In order to get those technologies to the market, we do need to 

have that climate legislation in place. It does send a price signal 

for carbon. Investors in projects, even though they have been on 

the sidelines, we continue to get a growing amount of interest as 

the markets begin to unlock and having that clear signal about 

what the value of carbon is would be very helpful is evaluating economically the project feasibility. 

Right now, it is probably the single greatest unknown in terms 

of trying to evaluate project financial feasibility. 

Senator KLOBUCHAR. Thank you. Mr. Taylor, you mentioned that 

your products are not being sold to the Federal Government. I 

know I have some energy efficient light bulbs in my office that we 

installed. Is it your products or just no lead products? 

Mr. TAYLOR. No, I did not say there were none. But buying more, 

and different than the types of energy efficient light bulbs that you 

are talking about. These products do not contain mercury. In the 

whole discussion about energy efficiency, one of the things that I 

omitted in my testimony is that lighting is the most constant energy load in any commercial facility. 

So impacting lighting or energy consumption around lighting by 

80 percent or greater has a dramatic impact on carbon emission. 
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Not only are you talking about a cost-effective investment, but 

there is the benefit of the reductions in carbon emissions. 

And so as cap-and-trade legislation further encourages in the 

marketplace companies that want to take advantage of carbon 

credits, it further enhances the return on investment and encourages in investing in energy-efficient lighting technologies. 

Senator KLOBUCHAR. OK. Very good. And last question, Mr. Armstrong, do you have some familiarity with the cap-and-trade with 

the EU in Europe? 

Mr. ARMSTRONG. Actually, it is not my area of expertise for the 

European Union. I am sorry. 

Senator KLOBUCHAR. OK. I thought you maybe had participated. 

Your company had in that in some way. 

Mr. ARMSTRONG. No. 

Senator KLOBUCHAR. Now we are trying to make sure that we 

learn from the good things and do not do the bad again. 

Mr. ARMSTRONG. I am glad to say, if I may, Madam Senator, that 

our spray polyurethane foam business is headquartered in Minneapolis, Minnesota. 

Senator KLOBUCHAR. Now everyone has business there. You 

should listen to that, Mr. Lowenthal. 

[Laughter.] 

Mr. ARMSTRONG. And Shakopee, also, our building systems, has 

business there and it is actually our first lead EV building inside 

of our corporation so—— 

Senator KLOBUCHAR. That is right, and where Prince has Paisley 

Park, Mr. Armstrong. I am sure they are both just as famous. 

[Laughter.] 

Senator KLOBUCHAR. So, all right. I wanted to thank all of you. 

It is going to be very important to this debate that business and 

the businesses that have sprung up around new energy, clean energy, green energy, whatever you want to call it, technology, has 

a seat at the table here. So much time, the debate that I have seen 

gets dominated by the debate that we had 10 or 15 years ago. I 

think people have to understand that there are new companies 

coming up. 

I come from a State that believes in science. We gave the world 

everything from the pacemaker to the Post-It note. We have always 

believed in new developments and that this can be a cause of great 

economic opportunity and you have shown it with all of your companies. 

So, I want to thank you for that and have a great day. And bring 

that light with you, Mr. Taylor, and you will get some business. 

Just keep bringing it into every Senator’s office and set it up until 

you get to talk to someone. 

[Laughter.] 

Senator KLOBUCHAR. Thank you. Have a great day. 

[Whereupon, at 12:04 p.m. the Committee was adjourned.] 

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