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[Senate Hearing 112-188]
[From the U.S. Government Printing Office]



                                [ERRATA]

                                                        S. Hrg. 112-188
 
                     QUADRENNIAL ENERGY REVIEW ACT

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   TO

RECEIVE TESTIMONY ON THE DEPARTMENT OF ENERGY'S QUADRENNIAL TECHNOLOGY 
   REVIEW (QTR) AND TWO BILLS PENDING BEFORE THE COMMITTEE: S. 1703--
QUADRENNIAL ENERGY REVIEW ACT OF 2011, AND S. 1807--ENERGY RESEARCH AND 
                  DEVELOPMENT COORDINATION ACT OF 2011

                               __________

                           NOVEMBER 15, 2011


                       Printed for the use of the
               Committee on Energy and Natural Resources



                  U.S. GOVERNMENT PRINTING OFFICE
73-106                    WASHINGTON : 2012
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                                [ERRATA]


                            S. Hrg. 112-188

    The referenced hearing held before the Senate Committee on 
Energy and Natural Resourses was inadvertently printed without 
the Questions and Answers for Ernest J. Moniz. In which 
follows:
    Responses of Ernest J. Moniz to Questions From Senator Murkowski
    Question 1. One of the most vigorous debates on energy policy is 
the extent of the subsidies we should offer, and what areas we should 
target with those subsidies. To the extent that the government finds 
funding to allocate to energy, where do you believe we should focus our 
efforts? Where do you believe we can have the greatest impact--basic 
research, commercialization, or some combination of those activities?
    Answer. The innovation system spans invention (research and 
discovery, knowledge creation, prototype generation); translation 
(creation of a commercial product or process); adoption (technology 
deployment and initial use); and diffusion (increasing adoption and use 
at scale).
    The need for energy technology innovation is considerable for our 
economy, for our security, and for environmental stewardship, 
especially for mitigating the risks of climate change. However, energy 
technology innovation has lagged well behind that seen in other 
sectors; that is, while the level of activity is at unparalleled levels 
at the invention and translation stages, the scale-up and widespread 
deployment of clean energy technologies has been modest. If this 
adoption and diffusion is to be accelerated, government will need to 
play a role across the entire innovation chain.
    The government role in filling the innovation pipeline through R&D 
is generally accepted because of the difficulty for individual firms to 
capture the benefits of early stage research. Because of the 
particularly strong role of the government at this stage, the highest 
priority is to continue and indeed expand this government role. The 
PCAST report offered a benchmark for research, development, 
demonstration and deployment (RDD&D) funding that would entail an 
increase of about $10B per year. This could be implemented through 
direct appropriations (a major challenge given the overall budget 
constraints) or through a Congressionally-approved small charge on 
energy production, delivery and/or use. The majority of this funding 
should be directed to RD&D. Public-private partnerships with strong 
industry involvement, some with a regional base, should be employed, 
especially at the demonstration phase.
    The Department of Energy has introduced several new approaches to 
R&D funding: energy frontier research centers, ARPA-E, and energy 
innovation hubs. These are very promising approaches and DOE energy R&D 
funding should increasingly be directed towards programs carried out in 
this manner, whether ARPA-E, Basic Energy Science, or the applied 
energy programs.
    Acceleration of energy technology innovation is more challenging at 
the adoption and diffusion stages in respect to the government role, 
since this is taking the government more into the marketplace. The most 
direct approach for the government is to internalize public policy 
objectives through economic incentives, for example, a price on carbon 
dioxide emissions for mitigating climate change risks or on oil 
consumption for relieving oil dependence. The political barriers to 
such steps are, by observation, considerable. We are likely to require 
``second-best'' approaches (renewable portfolio and CAFE standards, 
market share mandates, loan guarantees,.). There are a myriad of such 
policy instruments and PCAST recommended the QER in large part to sort 
these out based on strong analysis and substantial input from the 
Congress and the private sector. The hope is that the QER process can 
lead to a nonpartisan framework for working across multiple agencies 
and multiple Congressional committees to stimulate market adoption and 
diffusion of clean energy technologies. Ideally the process would also 
led to multi-year Congressional authorizations that would provide 
increased private sector confidence in the stability of the policy and 
budgetary framework.
    The support for the QER coming from this committee's leadership is 
both appreciated and important.
    Question 2. We regularly hear--often from people at the Department 
of Energy--that the U.S. is in a ``clean energy race'' with nations 
like China and Germany. How can we compare what's happening in those 
countries, in terms of technology development and industry growth, to 
find out if we're actually in a ``race'', let alone winning or losing 
it? Does the QTR offer a chance for us to set a baseline by which we 
can compare ourselves to other nations? And how can we go about 
developing the data to make those comparisons?
    Answer. The QTR provides a roadmap for DOE energy technology R&D. 
As such, it does not explicitly make comparisons with technology 
development in other countries, nor does it dwell on deployment 
mechanisms (this is deferred to the QER).
    However, the opportunities for capturing the economic 
competitiveness advantages from the continuing American leadership in 
research is important and should be one factor in setting the R&D 
priorities. To do this, a sophisticated understanding of the innovation 
system and technology status in countries such as China and Germany is 
needed. As one example, China has jumped to the fore in PV module 
production, offering cost-competitive products internationally and 
providing tremendous price pressure on firms in the US and elsewhere 
(including some Chinese PV firms, a number of which are also going out 
of business). One part of the Chinese success was a focus on all parts 
of the supply chain, including development of low cost capability for 
providing production line equipment. Understanding and analysis of such 
developments has not progressed adequately, and yet could provide 
useful information for our own government policies and help guide 
productive investment of US taxpayer dollars in RDD&D. There is 
currently no mechanism for supporting serious studies of this type at 
the DOE, a situation that led PCAST to recommend implementation of a 
social science/economics research program. The program could clarify 
issues such as consumer needs and preferences, market structures, and 
the like. An institution analogous to the National Bureau of Economic 
Research (or possibly even a supplement to it) could provide an 
interesting model for developing the research base.
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