U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

93–889PDF 2015

DEPARTMENT OF ENERGY OVERSIGHT: 

OFFICE OF ENERGY EFFICIENCY 

AND RENEWABLE ENERGY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MARCH 24, 2015 

Serial No. 114–12 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

FRANK D. LUCAS, Oklahoma 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

DANA ROHRABACHER, California 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

JIM BRIDENSTINE, Oklahoma 

RANDY K. WEBER, Texas 

BILL JOHNSON, Ohio 

JOHN R. MOOLENAAR, Michigan 

STEVE KNIGHT, California 

BRIAN BABIN, Texas 

BRUCE WESTERMAN, Arkansas 

BARBARA COMSTOCK, Virginia 

DAN NEWHOUSE, Washington 

GARY PALMER, Alabama 

BARRY LOUDERMILK, Georgia 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

ALAN GRAYSON, Florida 

AMI BERA, California 

ELIZABETH H. ESTY, Connecticut 

MARC A. VEASEY, Texas 

KATHERINE M. CLARK, Massachusetts 

DON S. BEYER, JR., Virginia 

ED PERLMUTTER, Colorado 

PAUL TONKO, New York 

MARK TAKANO, California 

BILL FOSTER, Illinois 

SUBCOMMITTEE ON ENERGY

HON. RANDY K. WEBER, Texas, Chair 

DANA ROHRABACHER, California 

RANDY NEUGEBAUER, Texas 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

THOMAS MASSIE, Kentucky 

BARBARA COMSTOCK, Virginia 

DAN NEWHOUSE, Washington 

LAMAR S. SMITH, Texas 

ALAN GRAYSON, Florida 

ERIC SWALWELL, California 

MARC A. VEASEY, Texas 

DANIEL LIPINSKI, Illinois 

KATHERINE M. CLARK, Massachusetts 

ED PERLMUTTER, Colorado 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

March 24, 2015 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Randy K. Weber, Chairman, Subcommittee on 

Energy, Committee on Science, Space, and Technology, U.S. House of Representatives ........................................................................................................... 7 

Written Statement ............................................................................................ 8 

Statement by Representative Alan Grayson, Ranking Minority Member, Subcommittee on Energy, Committee on Science, Space, and Technology, U.S. 

House of Representatives .................................................................................... 9 

Written Statement ............................................................................................ 10 

Statement by Representative Lamar S. Smith, Chairman, Committee on 

Science, Space, and Technology, U.S. House of Representatives ..................... 11 

Written Statement ............................................................................................ 12 

Witnesses: 

The Honorable David Danielson, Assistant Secretary, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy (DOE) 

Oral Statement ................................................................................................. 14 

Written Statement ............................................................................................ 17 

Mr. Nick Loris, Herbert and Joyce Morgan Fellow, Heritage Foundation 

Oral Statement ................................................................................................. 34 

Written Statement ............................................................................................ 36 

Ms. Ruth McCormick, Director of Federal and State Affairs, Business Council 

for Sustainable Energy (BCSE) 

Oral Statement ................................................................................................. 49 

Written Statement ............................................................................................ 51 

Dr. Veronique de Rugy, Senior Research Fellow, Mercatus Center, George 

Mason University 

Oral Statement ................................................................................................. 63 

Written Statement ............................................................................................ 65 

Discussion ................................................................................................................. 82 

Appendix I: Answers to Post-Hearing Questions 

The Honorable David Danielson, Assistant Secretary, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy (DOE) ................. 98 

Appendix II: Additional Material for the Record 

Statement by Representative Eddie Bernice Johnson, Ranking Member, Committee on Science, Space, and Technology, U.S. House of Representatives .... 118 

Document submitted by The Honorable David Danielson, Assistant Secretary, 

Office of Energy Efficiency and Renewable Energy, U.S. Department of 

Energy (DOE) ....................................................................................................... 119 

(1) 

DEPARTMENT OF ENERGY OVERSIGHT: 

OFFICE OF ENERGY EFFICIENCY 

AND RENEWABLE ENERGY 

FRIDAY, MARCH 24, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:41 p.m., in Room 

2318 of the Rayburn House Office Building, Hon. Randy Weber 

[Chairman of the Subcommittee] presiding. 
2 
3 
4 
5 
6 
7 

Chairman WEBER. Subcommittee on Energy will come to order. 

Without objection, the Chair is authorized to declare recesses of 

this Subcommittee at any time. 

Welcome to today’s hearing titled ‘‘Department of Energy Oversight: Office of Energy Efficiency and Renewable Energy.’’ 

I recognize myself for five minutes for an opening statement. 

Good afternoon, and as I have already said, welcome to today’s 

Energy Subcommittee hearing. We are going to examine the Department of Energy’s Office of Energy Efficiency and Renewable 

Energy, or EERE. Today, we will hear from the Department and 

a broad panel of expert witnesses on the value of the research, development, demonstration, and commercialization activities in 

EERE, and the impact DOE’s clean energy programs have on the 

energy market and the United States economy. 

EERE is the lead federal agency for clean energy research and 

development, with programs in transportation, renewable energy, 

and energy efficiency. This office is clearly a top priority for the 

Obama Administration, with this year’s budget request coming in 

at $2.7 billion, which is an increase of over $800 million from enacted levels. That is a whopping 42 percent increase in one year. 

With our national debt at $18 trillion and rising, and mandatory 

spending caps guiding budgets on everything from energy to national defense, this kind of spending obviously deserves rigorous 

oversight from Congress. It is clear that EERE’s budget is simply 

unaffordable. While every other federal program has had to adjust 

to spending caps and work within modest spending goals, EERE’s 

budget has continued to increase. Despite a budget that has already grown by 58 percent in the last decade, and received over 

$16 billion, with a B, in stimulus funds, the Obama Administration 

continues to request more year after year. It is time to adjust 

EERE’s budget to reality. By continuing to grow EERE spending, 

the Department of Energy’s approach to energy research and development has also become more and more unbalanced. EERE’s budget dwarfs that of the other applied offices at DOE. The $2.7 billion 

budget request for fiscal year 2016 is more than four times the 

budget request for fossil energy R&D, five times the request for nuclear energy R&D, and 16 times the request for electricity and energy reliability R&D. In fact, the proposed budget for EERE is 

more than double the budgets for nuclear, fossil, and electricity 

R&D combined. 

Finally, the work prioritized by EERE is far too focused on increasing the use of today’s technology, not conducting the fundamental research to lay the foundation for the next technology 

breakthrough. Many EERE programs are focused on reducing market barriers for existing technology or funding R&D activities already prioritized by the private sector. For example, in EERE’s Vehicle Technologies program, $40 million is requested for ‘‘cost-share 

projects within—with industry’’ within the ‘‘SuperTruck 2’’ initiative. Funding for SuperTruck 2 is intended to improve the hauling 

efficiency of heavy-duty, Class 8 long-haul vehicles by 100 percent 

by the year 2020. But the freight industry and auto manufacturers, 

both billion dollar industries, already have the means and motivation to develop innovative technology to increase energy efficiency. 

Investing in technology to decrease costs is just good business 
8 

sense, and American industry does this every day, with or without 

federal funds. And I might add, on the trucking freight business, 

I used to do some freight hauling as one of my businesses. Unless 

you can decrease the weight of a pound, we are in for a long wait. 

Instead of duplicating work that could be done in the private sector, the Department should prioritize basic research and development with broad application to all forms of energy, and energy efficiency. Models developed in the Office of Science’s ASCR program, 

the subject of an Energy Subcommittee hearing earlier this year, 

can be used to study and improve techniques in manufacturing, renewable power, and energy efficiency, enabling the private sector 

to develop and bring new technology into the market without 

American tax dollars. 

I want to thank Assistant Secretary Danielson and all our witnesses for testifying to the Committee today, and I look forward to 

a review of EERE’s programs and a discussion about the impact 

DOE’s clean energy programs have on the economy. As some of our 

witnesses will point out today, subsidizing one form of energy over 

another through federal programs is damaging to the energy market, it increases costs for the American people, and actually is often 

counterproductive to new the technology development. Investment 

in the next generation of energy technology must be balanced, technology-neutral, and responsible. By funding basic research and development, the Department of Energy could build a foundation for 

the private sector to bring new innovative technologies to market, 

and to grow the American economy. 

With that, I yield back. And, Mr. Grayson, you are recognized. 

[The prepared statement of Mr. Weber follows:] 

PREPARED STATEMENT OF SUBOMMITTEE CHAIRMAN RANDY WEBER

Good morning and welcome to today’s Energy Subcommittee hearing examining 

the Department of Energy’s Office of Energy Efficiency and Renewable Energy, or 

EERE. Today, we will hear from the Department and a broad panel of expert witnesses on the value of the research, development, demonstration and commercialization activities in EERE, and the impact DOE’s clean energy programs have on the 

energy market and the U.S. economy. 

EERE is the lead federal agency for clean energy research and development, with 

programs in transportation, renewable energy, and energy efficiency. This office is 

clearly a top priority for the Obama Administration, with this year’s budget request 

coming in at $2.7 billion, an increase of over $800 million from enacted levels. 

That’s a whopping 42 percent increase in one year. 

With our national debt at $18 trillion and rising, and mandatory spending caps 

guiding budgets on everything from energy to national defense, this kind of spending deserves rigorous oversight from Congress. 

It is clear that EERE’s budget is simply unaffordable. While every other federal 

program has had to adjust to spending caps and work within modest spending goals, 

EERE’s budget has continued to increase. Despite a budget that has already grown 

by 58% in the last decade, and received over $16 billion in stimulus funds, the 

Obama Administration continues to request more year after year. It’s time to adjust 

EERE’s budget to reality. 

By continuing to grow EERE spending, the Department of Energy’s approach to 

energy research and development has also become more and more unbalanced. 

EERE’s budget dwarfs that of the other applied offices at DOE. The $2.7 billion 

budget request for Fiscal Year 2016 is more than four times thebudget request for 

fossil energy R&D, five times the request for nuclear energy R&D, and 16 times the 

request for electricity and energy reliability R&D. In fact, the proposed budget for 

EERE is more than double the budgets for Nuclear, Fossil, and Electricity R&D 

combined. 
9 

Finally, the work prioritized by EERE is far too focused on increasing the use of 

today’s technology, not conducting the fundamental research to lay the foundation 

for the next technology breakthrough. Many EERE programs are focused on reducing market barriers for existing technology or funding R&D activities already 

prioritized by the private sector. 

For example, in EERE’s Vehicle Technologies program, $40 million is requested 

for ‘‘cost-share projects with industry’’ within the ‘‘SuperTruck 2’’ initiative. Funding 

for SuperTruck 2 is intended to improve the hauling efficiency of heavy-duty, Class 

8 long-haul vehicles by 100% by 2020. But thefreight industry and auto manufacturers—both billion dollar industries—already have the means and motivation to develop innovative technology to increase energy efficiency. Investing in technology 

todecrease costs is just good business sense—and American industry does this every 

day, with or without federal funds. 

Instead of duplicating work that could be done in the private sector, the Department should prioritize basic research and development with broad application to all 

forms of energy, and energy efficiency. 

Models developed in the Office of Science’s ASCR program—the subject of an Energy Subcommittee hearing earlier this year—can be used to study and improve 

techniques in manufacturing, renewable power, and energy efficiency, enabling the 

private sector to develop and bring new technology into the market without American tax dollars. 

I want to thank Assistant Secretary Danielson and all our witnesses for testifying 

to the Committee today, and I look forward to a review of EERE’s programs and 

a discussion about the impact DOE’s clean energy programs have on the economy. 

As some of our witnesses will point out today, subsidizing one form of energy over 

another through federal programs is damaging to the energy market, increases costs 

for the American people, and is often counterproductive to new technology development. 

Investment in the next generation of energy technology must be balanced, technology-neutral, and responsible. By funding basic research and development, the Department of Energy could build a foundation for the private sector to bring innovative new technologies to market, and grow the American economy. 

Mr. GRAYSON. Thank you, Chairman Weber, for holding this 

hearing. And thank you to our witnesses for appearing here today. 

America is mired in a long-term negative energy trade balance. 

According to the most recent figures from the Energy Information 

Administration, our energy trade deficit as of the fourth quarter of 

2013 was $203 billion, and it has been that way literally for decades. We must import to make up the difference, and the question 

is how much longer are we going to be able to spend our fortune 

that way. 

Every year for the past two generations, energy imports have 

cost us hundreds of billions of dollars. Unfortunately, there are also 

massive hidden costs that aren’t reflected in the prices that Americans actually pay for energy. One recent study estimates that the 

United States has spent about $8 trillion from 1976 through 2010, 

merely defending access to oil supplies in the Persian Gulf, not producing, not acquiring, not even transporting, but simply defending 

our access to oil. That is $25,000 for every man, woman and child 

in America. Continuing to pursue a business-as-usual energy policy 

clearly costs not only American dollars, but also American lives. 

We can’t just drill our way out of that problem. 

Because the price of oil is set globally, a disruption of oil from 

the Middle East could severely spike U.S. oil prices no matter how 

much of it we are able to pull from our own ground. That is why 

reducing dependence on oil, and not just foreign oil, is a key strategic objective for both the United States economy and the U.S. 

Military. We can and we must end this strategic energy deficit. We 

can create a domestic energy infrastructure that is reliable, resilient and far less dependent on volatile regions around the world. 
10 

Towards these ends, the Department of Energy’s Office of Energy 

Efficiency and Renewable Energy, which we are here to talk about 

today, helps to make that future come faster. Their sustainable 

transportation technology program focuses on improving energy efficiency in vehicles, and developing new alternative fuels from domestic resources. Research investments made by this program have 

reduced electric vehicle battery costs by 70 percent since 2008. 

They have also reduced the manufacturing costs for automotive 

fuel cells by more than 50 percent just since 2006. Research and 

development in biofuels has helped to reduce the production cost of 

cellulosic ethanol by more than $6 a gallon, to around $3.20 per 

gallon today, making it cost-competitive with gasoline. 

Beyond reducing our dependence on oil, these programs improve 

energy efficiency in buildings and appliances, and they are providing major economic and environmental benefits to U.S. taxpayers as well. Efficiency standards enacted by the Department of 

Energy since 2009 are projected to save consumers hundreds of billions of dollars in their utility bills through 2030, and this agencysupported research in advanced lighting technology has helped to 

reduce LED costs by 90 percent since 2008. The renewable energy 

sector has also benefitted immensely from the agency-supported research and development. Since 2010, photovoltaic systems costs 

have been cut in half. DOE’s SunShot Program, which has the goal 

of making solar energy costs competitive with conventional sources 

by 2020, is already more than 60 percent of the way to achieving 

that cost target. Overall, third party evaluators outside of the government estimate that from 1976 to 2008, these investments of $15 

billion have resulted in an estimated economic benefit to the 

United States of $388 billion, a net return of more than 24 to 1. 

That is a very impressive track record, whether it is in government 

or in business, and it is one that we should continue to support. 

Private investors in the energy sector are beginning to move from 

project-level loans to holding company loans, which means renewable energy industries may be starting at long last to take off. This 

development is encouraging, but we must realize that there is no 

Exxon Mobil, or for that matter, an Intel or a Pfizer in the renewable energy sector. There is no one with the capability to spend billions on research that the government is spending now. There remains a unique government role in supporting the advancement of 

new technologies at a sufficient pace to meet our national economic, environmental and energy security needs. And that is why 

I look forward to this hearing to hear more about that today. 

The results from this agency’s programs are tangible. They are 

having a direct positive impact on peoples’ lives and, therefore, I 

want to thank Dr. Danielson and his office for their productive 

work, and for the information that they provide for us here today. 

And thank you again, Mr. Chairman. 

And with that, I yield the balance of my time. 

[The prepared statement of Mr. Grayson follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE ON ENERGY

MINORITY RANKING MEMBER ALAN GRAYSON

Thank you, Chairman Weber, for holding this hearing, and thank you to our witnesses for appearing here today. 
11 

America is mired in a long-term negative energy trade balance. According to the 

most recent figures from the Energy Information Administration, our energy trade 

deficit—as of the fourth quarter of 2013—was $203 billion. 

Every year, for the past two generations, energy imports have cost us hundreds 

of billions of dollars. Unfortunately, there are also massive hidden costs that aren’t 

reflected in the prices Americans actually pay for energy. One recent study estimates that the U.S. has spent about $8 trillion from 1976 

through 2010, merely defending access to oil supplies in the Persian Gulf. Not producing, not acquiring, not transporting—but defending access to oil. That’s $25,000 

for every man, woman, and child in America. Continuing to pursue a business-asusual energy portfolio clearly costs not only American dollars, but American lives. 

We can’t just drill our way out of this problem. 

Because the price for oil is set globally, a disruption of oil from the Middle East 

could severely spike U.S. oil prices no matter how much of it we are able to pull 

from the ground. That’s why reducing dependence on oil, not just ‘‘foreign oil,’’ is 

a key strategic objective for both the U.S. economy and the U.S. military. 

We can, and we must, end this strategic energy deficit. We can create a domestic 

energy infrastructure that is reliable, resilient, and far less dependent on volatile 

regions of the world. 

Toward these ends, the Department of Energy’s Office of Energy Efficiency and 

Renewable Energy, or ‘‘EERE,’’ which we are here to talk about today, helps make 

that future come faster. EERE’s Sustainable Transportation technology program focuses on improving efficiency in vehicles, and developing new alternative fuels from 

domestic resources. 

Research investments made by this program have reduced electric vehicle battery 

costs by 70% since 2008. They have also reduced the manufacturing costs for automotive fuel cells by more than 50% since 2006. 

Research and development in biofuels has helped reduce production costs of cellu- losic ethanol by more than $6 per gallon, to around $3.20 per gallon today, making 

it cost-competitive with gasoline. 

Beyond reducing our crippling dependence on oil, EERE’s programs to improve energy efficiency in buildings and appliances are providing major economic and environmental benefits to U.S. taxpayers as well. 

Efficiency standards enacted by the Department of Energy since 2009 are projected to save consumers hundreds of billions of dollars in their utility bills through 

2030, and EERE-supported research in advanced lighting technology has helped reduce LED costs by 90% since 2008. 

The renewable energy sector has also benefited immensely from EERE-supported 

research and development. Since 2010, photovoltaic system costs have been cut in 

half. DOE’s SunShot program, which has the goal of making solar energy cost-competitive with conventional sources by 2020, is already more than 60% of the way 

to achieving its cost target. 

Overall, third-party evaluators estimate that from 1976 to 2008, EERE invest- ments of $15 billion have resulted in an estimated economic benefit to the United 

States of $388 billion—a net return of more than 24 to 1. That is an impressive 

track record, and it is one we should continue to support. 

Private investors in the energy sector are beginning to move from project-level 

loans to holding company loans, which means renewable energy industries are starting to take off. While this development is encouraging, we must realize that there 

is still no ExxonMobil, nor, for that matter, an Intel or Pfizer, in the renewable energy sector. There remains a unique government role in supporting the advancement of new technologies at a sufficient pace to meet our national economic, environmental, and energy security needs. And that is what I look forward to hearing 

more about today. 

The results from EERE’s programs are tangible, and they are having direct, positive impacts on people’s lives. 

I want to thank Dr. Danielson and his Office for their productive work, and for 

the information that they provide here today.Thank you again, Mr. Chairman, and 

with that I yield the balance of my time. 

Chairman WEBER. Thank you, Mr. Grayson. 

I now recognize the Chairman of the Full Committee, Mr. Smith. 

Chairman SMITH. Thank you, Mr. Chairman. 

Today, the Subcommittee on Energy will examine the Department of Energy’s Office of Energy Efficiency and Renewable Energy, commonly referred to as EERE. The Department describes 

EERE as, ‘‘The U.S. Government’s primary clean energy technology 
12 

organization.’’ EERE’s goals sound worthy enough. It seeks to reduce the use of fossil fuels, lower emissions, and speed up the adoption and decrease the cost of clean energy technology in transportation, renewable power and energy efficiency. However, while the 

EERE is billed as leading clean energy research and development, 

there are fundamental concerns with EERE’s approach to advancing energy technology. EERE’s activities demonstrate that it is 

heavily invested in forcing the Administration’s preferred technology on the American people. When the government picks winners and losers in the energy technology marketplace, the American people pay the price. 

The Solar Energy Technologies Program within EERE offers a 

ready example. This program’s goal is to reduce the cost of solar 

power until they are cost-competitive with electricity from fossil 

fuels. It aims to achieve this goal by 2020. But because the program is focused on cost, not technology, EERE spends taxpayer dollars to market and deploy existing solar technology. Instead of research on the fundamental science behind solar energy, or development of new solar technology, EERE spends taxpayer dollars on 

‘‘permitting, financing, and customer acquisition.’’ It essentially 

puts promoting energy companies over research and development. 

Addressing these issues may help the solar industry market their 

product, but that is short-sighted and doesn’t really make solar energy more competitive in the long term. 

The Department of Energy should perform groundbreaking scientific research and develop on new technologies, not spend American tax dollars to promote what is already commercially available. 

The federal government should invest in basic research that could 

open the door for widespread use of solar and other renewable energy technology in the future. For example, energy storage research 

and development at the Joint Center for Energy Storage Research 

hub in the Office of Science explores new energy storage possibilities through basic scientific research. This energy storage research 

could have a groundbreaking impact not just on the solar industry, 

but also on all forms of energy. 

The President’s budget proposal for EERE includes a 42 percent, 

or $809 million, increase in spending. This is almost three times 

the requested increase for the Office of Science. In Congress, we 

have the responsibility to ensure the efficient and effective use of 

American tax dollars. We can’t afford to impose expensive and inefficient technology on the energy market. We do not have unlimited 

resources, so we will have to make choices about where to make 

the best investment for the American people. By investing in basic 

research that benefits all forms of energy, we can make energy less 

expensive, and that benefits consumers and helps the United 

States achieve energy independence. 

[The prepared statement of Mr. Smith follows:] 

PREPARED STATEMENT OF FULL COMMITTEE CHAIRMAN LAMAR S. SMITH

Good morning. Today, the Subcommittee on Energy will examine the Department 

of Energy’s Office of Energy Efficiency and Renewable Energy, commonly referred 

to as ‘‘E-E-R-E.’’ The Department describes EERE as, ‘‘The U.S. Government’s primary clean energy technology organization.’’ 
13 

EERE’s goals sound worthy enough. It seeks to reduce the use of fossil fuels, 

lower emissions, and speed up the adoption and decrease the cost of clean energy 

technology in transportation, renewable power and energy efficiency. 

However, while the EERE is billed as leading clean energy research and development, there are fundamental concerns with EERE’s approach to advancing energy 

technology. EERE’s activities demonstrate that it is heavily invested in forcing the 

Administration’s preferred technology on the American people. 

When the government picks winners and losers in the energy technology marketplace, the American people pay the price. The Solar Energy Technologies Program 

within EERE offers a ready example. This program’s goal is to reduce the cost of 

solar power until they are cost-competitive with electricityfrom fossil fuels. It aims 

to achieve this goal by 2020. 

But because the program is focused on cost, not technology, EERE spends taxpayer dollars to market and deploy existing solar technology. Instead of research on 

the fundamental science behind solar energy, or development of new solar technology, EERE spends taxpayer dollars on ‘‘permitting, financing, and customer acquisition.’’ It essentially puts promoting energy companies over research and development. 

Addressing these issues may help the solar industry market their product, but 

that is short-sighted and doesn’t really make solar energy more competitive in the 

long term. 

The Department of Energy should perform groundbreaking scientific research and 

develop new technologies, not spend American tax dollars to promote what is already commercially available. The federal government should invest in basic research that could open the door for widespread use of solar and other renewable energy technology in the future. 

For example, energy storage research and development at the Joint Center for Energy Storage Researchhub in the Office of Science explores new energy storage possibilities through basic scientific research. This energy storage research could have 

a groundbreaking impact not just on the solar industry, but alsoon all forms of energy. 

The President’s budget proposal for EERE includes a 42 percent, or $809 million, 

increase in spending. This is almost three times the requested increase for the Office of Science. 

In Congress, we have the responsibility to ensure the efficient and effective use 

of American tax dollars. We can’t afford to impose expensive and inefficient technology on the energy market. We do not have unlimited resources, so we will have 

to make choices about where to make the best investment for the American people. 

By investing in basic research that benefits all forms of energy, we can make energy less expensive, and that benefits consumers and helps the U.S. achieve energy 

independence. 

Chairman SMITH. Mr. Chairman, before I yield back, let me 

apologize to our witnesses, I have a Judiciary Committee markup 

that is ongoing right now, and I am going to have to shuttle back 

and forth between the most important hearing going on today, 

here, and an obligation to attend the Judiciary Committee. So I 

will yield back. 

Chairman WEBER. Thank you, Chairman. We appreciate you. 

Let me introduce our witnesses. 

Our first witness today is the Honorable David Danielson, Assistant Secretary of the Office of Energy Efficiency and Renewable Energy for the United States Department of Energy. Previously, he 

served as program director for Department of Energy’s Advanced 

Research Projects Agency Energy, where he developed and led research and development programs. Before working at the Department of Energy, Dr. Danielson was a clean energy venture capitalist at General Catalyst Partners, and was a cofounder of the 

New England Clean Energy Council. Dr. Danielson received his 

Ph.D. in materials science and engineering from the Massachusetts 

Institute of Technology, and his Bachelor’s Degree in materials 

science and engineering from the University of California at Berkeley. Dr. Danielson, we are glad you are here. 
14 

Mr. Nick Loris—our second witness today is Nick Loris, a Herbert and Joyce Morgan Fellow for the Heritage Foundation. Mr. 

Loris specializes on energy, environmental and regulatory issues. 

He has been published and quoted in such publications as the Wall 

Street Journal, the New York Times, the Washington Post, Investor’s Business Daily, and the Baltimore Sun. Before being named 

a Morgan Fellow, Mr. Loris was a policy analyst specializing in energy and environmental issues. Mr. Loris received his Masters in 

economics from George Mason University, and his Bachelor’s Degree in economics, finance and political science from Albright College. Mr. Loris, welcome. 

Our third witness is Ms. Ruth McCormick, the Director of Federal and State Affairs for the Business Council for Sustainable Energy. Ms. McCormick has over 25 years of experience in energy and 

environmental policy development. Prior to joining the council, Ms. 

McCormick represented the Western Regional Council, a coalition 

of businesses in the western United States. In addition, Ms. McCormick served as the legislative director for House Energy and Commerce Committee member Congressman Nielson. Ms. McCormick 

is a graduate of the University of Uhah—Utah. I can do this. 

And Dr. Veronique, you told me it was okay, de Rugy. Am I saying that right? 

Dr. DE RUGY. de Rugy. 

Chairman WEBER. de Rugy, okay, good. A senior—is our next 

witness, a Senior Research Fellow for the Mercatus Center at 

George Mason University, with a focus on the U.S. economy, the 

federal budget, homeland security, and tax competition and financial privacy. In addition, Dr. de Rugy writes regular columns for 

Reason Magazine and the Washington Examiner, and she blogs 

about economics and National Review Online’s The Corner. Previously, Dr. de Rugy has been a Resident Fellow at the American 

Enterprise Institute, a policy analyst at the Cato Institute, and a 

Research Fellow at the Atlas Economic Research Foundation. Before moving to the United States, she oversaw academic programs 

in France for the Institute for Humane Studies Europe. Dr. de 

Rugy received her MA in economics from the Paris Dauphine University, and her Ph.D. in economics from the Pantheon-Sorbonne 

University. Welcome, Doctor. 

In order to allow time for discussion, we ask the witnesses to 

please limit your testimony to five minutes. And without objection, 

your entire written statement will be made a part of the record. 

And I now recognize Dr. Danielson for five minutes to present 

his testimony. Doctor. 

TESTIMONY OF THE HON. DAVID DANIELSON, 

ASSISTANT SECRETARY, 

OFFICE OF ENERGY EFFICIENCY AND 

RENEWABLE ENERGY, 

U.S. DEPARTMENT OF ENERGY (DOE) 

Dr. DANIELSON. Thank you, Chairman. Chairman Smith, Chairman Weber, Ranking Member Grayson, and distinguished Members of the Subcommittee, thank you for the opportunity to appear 
15 

before you today to discuss the Office of Energy Efficiency and Renewable Energy, EERE, at the U.S. Department of Energy. 

EERE supports cutting-edge American innovation to dramatically reduce U.S. reliance on foreign oil, cut energy costs for American families and businesses, avoid the damaging economic and 

health impacts of energy-related pollution, and enable the U.S. private sector to create good-paying American jobs through innovation. EERE’s efforts in three critical energy sectors—sustainable 

transportation, renewable power, and energy efficiency—supportthe 

research, development and demonstration activities that are needed to make clean energy technologies directly cost-competitive without subsidies. 

While clean energy markets grew to approximately $300 billion 

globally last year, with trillions more in market opportunity in the 

years ahead, the energy industry significantly underinvested in 

R&D compared to other industries. The strategic importance of energy to American economic growth and security means that government has a necessary and needed role to make the appropriate investments in cutting-edge energy innovation to seize this clean energy opportunity. 

My experience as an MIT-trained scientist and engineer, a venture capitalist in the energy sector, and as one of the founders of 

ARPA–E, has given me unique insights into what is required for 

the U.S. energy innovation ecosystem to be successful. From this 

experience, I have developed five core questions that serve as the 

guiding principles by which EERE prioritizes its investments in energy innovation. These questions include the following. One: Impact. Is this a high-impact problem? Two: Additionality. Will EERE 

funding make a large difference relative to investments being made 

by the private sector? Three: Openness. Are we open to new ideas, 

and the most promising new energy innovations? Four: Economic 

benefit. Will EERE funding result in enduring U.S. economic impact? And five: Proper role of government. Is this investment a 

proper role of government, or something best left to the private sector to do on its own? 

EERE has shown that smart, targeted investments in clean energy innovation can have a healthy return on investment for taxpayers. As just one example of many, over a 30-year period, EERE 

funded R&D on advanced combustion engines resulted in a net 

benefit of about $70 billion, representing a benefit-to-cost ratio of 

53 to 1, at a seven percent discount rate. 

In terms of our fiscal year 2016 budget request, in fiscal year 

2016, EERE is requesting from Congress $2.7 billion across our 

three sectors to continue these successes, and to enable the United 

States to remain a global leader in innovative new clean energy 

technologies. The $793 million request for our sustainable transportation portfolio would help consumers and businesses use less 

energy to move business and freight, and replace conventional fuels 

with cost-competitive, domestically-produced, sustainable alternative fuels. And we are making significant progress. In 2014, the 

five-year SuperTruck program exceeded its goal of developing a 

suite of cutting-edge new long-haul trucking technologies to enable 

a 50 percent improvement in freight efficiency one year ahead of 

schedule. Our fiscal year 2016 budget request will enable EERE to 
16 

continue our focus on cutting-edge R&D, and advanced combustion 

and lightweight vehicles, developing new technologies that can diversify our fuel mix with drop-in biofuels, and enabling plug-in 

electric and fuel cell vehicles to become cost-competitive. In our renewable power portfolio, EERE’s request of $645 million 

will build on our R&D goal to enable the a development of multiple 

cost-effective renewable power technology options for every region 

of the country to diversify our power sector. Our fiscal year 2016 

request will continue our SunShot Initiative’s progress in making 

solar energy directly cost-competitive by 2020. Our request will 

also support the Frontier Observatory for Research in Geothermal 

Energy, or FORGE, a first-of-a-kind field laboratory, to address the 

key R&D challenges required to enable cost-effective advanced geothermal power, in addition to continued R&D efforts to reduce the 

cost of wind power, marine and hydrokinetic power, and hydropower. 

Finally, in our energy efficiency portfolio, EERE’s request of $1.03 billion emphasizes cutting-edge R&D and next-generation efficient building technologies, including high-efficiency, low-cost 

heating and cooling technologies. We will also increase support for 

next-generation manufacturing R&D to lower energy costs for 

American manufacturers, and create American leadership in the 

next generation of emerging energy-related advanced manufacturing technologies. 

As just one example of these advanced manufacturing technology 

R&D investments, in January we launched the Institute for Advanced Composites Manufacturing Innovation, a public-private consortium of 122 leading U.S. manufacturers and research organizations that will focus on advanced composites, foundational materials that are three times as strong and twice as light as the lightest metals. 

As EERE invests in high-impact research, development and demonstration programs to make clean energy solutions more affordable, accessible, and reliable, we remain fiercely committed to being 

a good steward of taxpayer investments. Over the past two years, 

EERE has implemented a new active project management approach under which we hold all of our projects accountable to annual go/no-go milestones, and under which we are more aggressively discontinuing projects that are not achieving key milestones 

to protect taxpayer interests. 

In closing, EERE looks forward to working with this Committee 

to make necessary and appropriate investments in clean energy innovation, to continue to make our organization effective and accountable to Congress and to taxpayers, and to ensure that the 

United States wins the global clean energy race. 

Thank you. 

[The prepared statement of Dr. Danielson follows:] 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 

Chairman WEBER. Thank you, Dr. Danielson. 

Mr. Loris, you are recognized for five minutes. 

TESTIMONY OF MR. NICK LORIS, 

HERBERT AND JOYCE MORGAN FELLOW, 

HERITAGE FOUNDATION 

Mr. LORIS. Thank you. Chairman Weber, Ranking Member Grayson, and distinguished Members of the Subcommittee, thank you 

for this opportunity to discuss the Department of Energy’s Office 

of Energy Efficiency and Renewable Energy. 

My name is Nick Loris, and I am the Herbert and Joyce Morgan 

Fellow at the Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing 

any official position of the Heritage Foundation. 

Often overlooked in the criticism of policies that pick winners 

and losers in energy markets is the proper scrutiny of all the 

spending programs within EERE. The given logic for many of these 

initiatives is that a gap exists between basic research and economic 

viability, and thus, more taxpayer dollars must be spent to attract 

private investment. The reality though is that the market demand 

for transportation fuel and electricity are incentive enough to spur 

competition and innovative breakthroughs. Globally, these are 

multitrillion dollar markets. If any renewable technology captures 

a mere slice of that market, it would stand to make billions, if not 

tens of billions of dollars in profit annually. Breaking into this market is not a problem of the so-called valley of death where good 

ideas are unable to attract substantial investment. It is a valley of 

wealth waiting to be had. 

The objectives of this office may be laudable, but it is simply not 

the role of the Federal Government to reduce cost and lower risk. 

When the government attempts to drive commercialization, it circumvents the competitive process that appropriately assigns risk 

and reward, and disregards how markets efficiently allocate resources. Take, for instance, the bioenergy technologies program 

that aims to make advanced biofuels cost-competitive with conventional gasoline at $3 per gallon. Why is that an objective in the 

first place, and how does the government know that $3 will be the 

magic price point at which alternative fuels become competitive? As 

we all know, markets are very unpredictable. And even if somehow 

$3 does change the market for alternative fuels, businesses are 

much better equipped and flexible to deal with the changing economic circumstances. Most importantly, the private sector should 

be responsible for taking on that risk and innovating to lower costs. 

The same holds true for the electricity sector. For instance, the 

budget justification for the SunShot initiative states a goal of reducing the price for utility scale solar to 6 cents per kilowatt hour 

without subsidies, and that will result in rapid, large-scale adoption of solar across the United States. The problem is that the 

SunShot initiative in and of itself is a huge government subsidy by 

spending hundreds of millions of taxpayer dollars to reduce the cost 

of solar. And if 6 cents per kilowatt hour results in rapid solar deployment, that is great, but that should be a business decision. 

Government has no business trying to make projects cost-competitive or improving a technology’s reliability to make it more enticing 
35 

for private financiers. Furthermore, the government is not very 

good at it, compared to those industries that actually have skin in 

the game. How many times have we heard from the DOE that an 

economically viable alternative energy source was just around the 

corner, and decades later and billions of taxpayer dollars squandered, the technology is still just around that corner. 

Another goal for this office is improving energy efficiency. Programs like the Advanced Manufacturing Office sound nice and like 

an easy sell to constituents, but manufacturers already know that 

energy is a significant cost, and will find ways to reduce energy 

consumption in order to gain a competitive advantage. Companies 

will make these investments if they believe the technology is promising, worth the risk, and the best use of their investment dollars. 

Instead, the Advanced Manufacturing Office provides nothing 

more than corporate welfare. For instance, past grant recipients 

have been some of the world’s largest companies and massive energy users, including GE, Dow Chemical, and Boeing. These are 

not companies that need help from the taxpayer. 

Now, when it comes to energy efficiency, one area that makes 

more sense as a government function is to reduce energy use within the federal government. The government as an energy consumer 

does not face the same incentive structure, nor do they always 

weigh trade-offs like families and businesses do. But the Federal 

Energy Management Program should be carried out in a technology-neutral manner to ensure the purpose is actual energy savings to save taxpayer dollars, not meet a political agenda. 

All of this is not to say, however, that innovative technologies 

cannot emerge from federal spending, but there is a stark difference between how successes like the Internet became commercially viable versus attempts to commercialize specific energy technologies. Government projects that have become commercial successes, such as the Internet, computer chips and GPS, were not initially intended to meet a commercial demand, but instead, national 

security needs. Entrepreneurs saw an opportunity and created the 

commercially viable products that we enjoy today. The objective for 

Congress and the federal government should be to fund that basic 

research that meets national objectives, and create the proper 

pathway for DOE lab researchers to push that basic research out 

to the market, and for the private sector to tap into that expertise 

at our national labs. 

To conclude, America doesn’t need a man-on-the-moon-style mission for energy because the government has a diverse mix of energy 

supplies to competitively price energy, and provide families and 

businesses with choice. True reforms that lay the groundwork and 

lay the framework for renewable energy technologies to succeed 

and achieves—achieve the goal that EERE sets will not come from 

more government spending, but instead, free market reforms that 

create a competitive economic environment. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Loris follows:] 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 

Chairman WEBER. Thank you, Mr. Loris. 

Ms. McCormick? 

TESTIMONY OF MS. RUTH MCCORMICK, 

DIRECTOR OF FEDERAL AND STATE AFFAIRS, 

BUSINESS COUNCIL FOR SUSTAINABLE ENERGY (BCSE) 

Ms. MCCORMICK. Thank you for the opportunity to testify today. 

My name is Ruth McCormick, and I am the Director of Federal and 

State Affairs for the Business Council for Sustainable Energy. The 

Council is a broad-based industry trade group, representing companies and associations in the energy efficiency, renewable energy, 

and natural gas industries. 

Over the past several years, the United States has seen real 

market penetration of a wide range of sustainable energy technologies and resources, and we have witnessed the results of policies and research and development that work, but to continue the 

momentum of growth in these sectors, and to receive their co-benefits, long-term, stable policies will be needed to level the playing 

field and to provide market access. And the United States needs to 

continue to invest in energy research, development and demonstration to increase the efficiency of our energy generation and use, 

and to spur new innovations. This is important both for domestic 

economic growth and for U.S. competitiveness in global energy 

markets. 

I would like to focus my testimony in two areas. First, I would 

like to share some of the findings from the recently released 2015 

edition of the Sustainable Energy in America Fact Book. The fact 

book was researched and produced by Bloomberg New Energy Finance, and commissioned by the Business Council for Sustainable 

Energy. It is intended to be a resource for policymakers with upto-date market information. 

The second area I would like to discuss is the valuable and effective role that federal investments in the energy sector have played, 

and should continue to play, in the availability of new innovative 

energy technologies and practices. 

The fact book points to the dramatic changes underway in the 

U.S. energy sector. The data shows that traditional energy sources 

are declining, and natural gas, renewable energy, and energy efficiency are on the rise. These changes are increasing the diversity 

of the country’s energy mix, improving our energy security, cutting 

energy waste, increasing our energy productivity, and reducing air 

pollution and greenhouse gas emissions. While technology costs 

have fallen, market barriers and grid integration challenges continue to hinder greater use of clean energy technologies. To continue the momentum of growth, long-term, stable policies will be 

needed to level the playing field and to provide market access to 

new technologies. 

Electricity markets are evolving, and the U.S. power sector, long 

organized around large, centralized systems, is considering distributed power options such as combined heat and power, waste heat 

to power, small scale renewables, and fuel cells. Other changes are 

also occurring in the U.S. energy sector, including the introduction 

of smart grid technologies for improving grid management, and a 
50 

growing role for dispatchable resources such as natural gas plants, 

hydropower, and demand response. 

Many market structures do not yet fully recognize the benefits 

of some of the technologies, such as energy storage, or best practices, which allow for increased flexibility of the grid. For this reason, BCSE strongly supports the continued funding of basic and applied research for clean energy technologies. This must be balanced 

with work on commercialization, market transformation, and other 

efforts to ensure that products do not sit on laboratory or university shelves, but are transferred to the private sector to achieve the 

intended public benefit. 

There are strong analytical findings that show the overall return 

on federal investments in this area. For example, 3 decades of investment in extraction of natural gas from shale has led to low natural gas prices, saving households and businesses money, attracting new industrial manufacturing opportunities in the United 

States, and helping to create U.S. jobs. As a result of energy efficiency policies and investments, total energy use in the United 

States is down 2.4 percent since 2007, while gross domestic product 

has grown eight percent. The cost of solar PV models has fallen 

more than 80 percent since 2007. Thirty-two percent of new electric 

generating capacity came from solar in 2014, and the industry now 

employs nearly 175,000 workers, more than tech giants Google, 

Apple, Facebook and Twitter combined. These are just a few examples. The energy sector involves technologies that have been transformed over the course of more than a century, and it is critical 

that the U.S. Government continue to invest in advancements. 

Council members look forward to working with this Committee 

and the federal government to ensure that public investments in 

these sectors are highly leveraged, effective and efficient in carrying out the intended policy aims. 

Thank you. 

[The prepared statement of Ms. McCormick follows:] 
51 
52 
53 
54 
55 
56 
57 
58 
59 
60 
61 
62 
63 

Chairman WEBER. Thank you, Ms. McCormick. 

Dr. de Rugy. 

TESTIMONY OF DR. VERONIQUE DE RUGY, 

SENIOR RESEARCH FELLOW, 

MERCATUS CENTER, 

GEORGE MASON UNIVERSITY 

Dr. DE RUGY. Good afternoon, Chairman Weber, Ranking Member Grayson, Members of this Subcommittee. My name is 

Veronique de Rugy. I am a Senior Research Fellow at the Mercatus 

Center at George Mason University where I study tax and budget 

issues. 

So for decades now, policymakers have tried to expand the federal role in developing alternative energy technology and move the 

economy away from oil, gas and coal. While I agree that we 

shouldn’t subsidize fossil fuels, we should not subsidize green energy either. I would like to highlight three reasons for that. 

First, even with the best of intentions, nobody knows which particular energy sources will make the most sense down the road. 

This level of uncertainty is not unique to the energy industry. 

Every industry faces similar issues of innovation in a rapidly 

changing world. In most industries, the policy solution is to allow 

the decentralized market efforts of entrepreneurs and early adopting consumers to figure out the best route to the future. 

Second, government efforts to push markets in certain directions has real cost. Some of these costs are very visible, such as the $5 

billion spent since 2009 on the Weatherization Assistance Program, 

which was found to be incredibly wasteful by federal auditors, riddled with corruption and questionable work, all this at the expense 

of taxpayers. But not all these costs are visible either. For instance, 

government subsidies to particular technology or industries can 

also delay the development of superior alternatives that don’t receive subsidies, and that is because when the government invests 

in an area, it tends to shift resources in the private sector and the 

capital market away from unsubsidized projects, towards subsidized project, and that independently of the merits of the project. 

Third, the federal government’s track record for picking winners 

in industries and technology is very bad. The Department of Energy has subsidized more than its share of failed projects. Also, the 

projects that do not fail often we find are subsidizing companies 

that did not need the help in the first place, and tend to be very 

well connected politically. The Department of Energy’s 1705 Loan 

Program is a good example of the gap that exists between what the 

program’s proponents claim it will achieve, and what it actually 

achieves. So I am going to focus on 1705, but actually, my findings 

pretty much apply to every other government programs that we are 

talking about here. 

These policies were put in place under the claim that renewable 

energy companies do not have access to sufficient credit to support 

new projects. However, when you look at the data, nearly 90 percent of the loans went to companies that were backed by giant, 

well-connected companies like NRG Energy Company and Goldman 

Sachs. It is very hard to imagine that these projects and these companies would not have access to capital, absent the 1705 loan. This 
64 

program is also a good example of government favoring two distinct 

interest groups at the expense of taxpayers. First, in this case it 

is a loan guarantee, the lenders who shift the risk away from them, 

if they pick a program that ends up defaulting. Second, interest 

group, the companies that borrow at very beneficial terms and 

rates, especially compared to their competition. But while banks 

and companies that receive the guarantee get the upside of the program, taxpayers bear the risk and shoulder the burden when companies such as Solyndra and Abound Solar go under and default 

on their loans. 

So while the data on 1705 Loan Program speaks for itself, the 

problem is actually much bigger. Like most government interventions, these programs create serious and systemic distortions in the 

market. These distortions create the conditions for businesses to 

maximize profits by pleasing political interests, rather than by 

pleasing consumers. This is called cronyism and it entails enormous and most often unseen economic costs. The tragedy is that 

despite the evidence, lawmakers don’t get rid of these programs. 

They are more likely to respond to pressure from vested interest 

than to taxpayers who are unlikely to realize how much they pay 

directly and indirectly for it. 

To conclude, I don’t pretend to know what America’s energy future will look like, and while I am all in favor of green energy, we 

have over six decades of research on government decision-making 

that shows that the sensible solution is often to leave these activities outside of the purview of government. It is not a loss, but a 

gain for government. Not only will it prevent the type of government failures we have been talking about, it will also allow government to focus on its core competency, providing public goods, and 

protecting human and property rights. 

Thank you. 

[The prepared statement of Dr. de Rugy follows:] 
65 
66 
67 
68 
69 
70 
71 
72 
73 
74 
75 
76 
77 
78 
79 
80 
81 
82 

Chairman WEBER. Thank you, Dr. de Rugy. 

We are going to start with the questions portion. I will recognize 

myself for five minutes. 

Dr. Danielson, the Administration often explains EERE’s large 

budget by describing the office in three major categories, and I 

think you went through them, transportation, renewable power, 

and energy efficiency. By the way, I own an air conditioning company, I have for 34 years, so I am—energy efficiency is something 

that we deal with frequently, power requirements and those types 

of things. But even after dividing the EERE budget into these 

three categories, each category exceeds the allocation for nuclear or 

fossil energy research and development. Now, Dr. de Rugy made 

the comment that no one knows going into the future with certainty what is going to be the best form of energy, and while, you 

know, our crystal—my crystal ball doesn’t work, apparently the 

battery is ran down, didn’t have enough energy, I have to say the 

nuclear is probably a good possibility. So each category exceeds the 

allocation for nuclear or fossil energy research and development in 

the fiscal year 2016 budget request, with transportation actually 

funded at $793 million, renewable power funded at $645 million, 

and energy efficiency at $1 billion in the proposal. By contrast, fossil energy R&D is $560 million, nuclear energy R&D is $482 million, and each individual account in EERE is more than either one. 

In fact, the proposed budget for EERE is almost two times, as I 

said in my opening statement, more than the budgets for nuclear, 

fossil and electricity R&D combined. 

Do you think, and you—I mean you say that those three offices 

combined, as it were, you heard the figures, do you think this represents a balanced, all-of-the-above approach to energy research 

and development, and do you believe these EERE programs are 

more valuable to the American economy than research on our electric grid, fossil energy or nuclear energy R&D? And I will let you 

answer. 

Dr. DANIELSON. Well, thank you, sir. Thanks for that question. 

It is an important one. 

We and I do believe this is a reasonably balanced agenda as you 

look across the different sectors the DOE invests in. You have 

pointed out that fossil energy is at $842 million, nuclear energy at 

$907 million. Sustainable transportation is about $793 million, 

which is comparable to those numbers. That set of offices is where 

we do most of our work that relates to the transportation sector, 

which is where our foreign oil dependence is. 

Chairman WEBER. Okay, but aren’t you quoting the figures for 

the whole office, not just the R&D portion? 

Dr. DANIELSON. Yes, I am quoting for the whole office. 

Chairman WEBER. Okay, but we are wanting to compare the 

R&D portions of that spending. 

Dr. DANIELSON. Okay, so in terms of R&D, I think maybe a better way to look at it is that the sustainable and transportation office is around $793 million. It is an important area to emphasize 

in that our transportation sector is where our dependence on foreign oil is. If you look at renewable energy, which is where we are 

addressing the power sector, and technology and the power sector, 

that is at $645 million. The nuclear energy office exclusively ad-
83 

dresses the power sector, and so I think comparing the renewable 

energy number and the nuclear number is a reasonable thing to do. 

And then we are the only office that is addressing efficiency in the 

built environment, which is a sector that is not addressed by the 

other offices. And if you take out some specific unique deploymentoriented programs such as the Weatherization Assistance Program, 

or Federal Energy Management Program and our Appliance Standards Program, that is at about $600 million of research and development. 

So I do believe this is a well-balanced portfolio. The Secretary is 

always very clear that we are funding all-of-the-above in the context of a low-carbon future, and in addition, that we are not looking 

to prescribe market share, we are looking to innovate across the 

board and let the market determine what the market share will be. 

Chairman WEBER. Well, let me get to my second question. Considering that the budget has grown, as I said earlier, 58 percent 

in the last decade, what successes would you—what reasons would 

you point to to tell us why the office needs to grow another 42 percent? 

Dr. DANIELSON. Well, we are at a unique time in the history of 

a number of the technologies in the EERE portfolio where, after 

decades of long-term investment, we have gotten to the point where 

direct cost competitiveness is in our sights in the next, you know, 

5, 10, 15, 20 years for a number of these technologies. And we are 

also seeing significant investments overseas to try to gain advantage in these areas, and so—— 

Chairman WEBER. I don’t mean to cut you off. I get that but, of 

course, obviously, with our deficit and the way the economy is now, 

then we ought to really, really be focused on as much cost-cutting 

as we are about to have some super expenses. 

Mr. Loris, would you agree with his thoughts on the fact that 

the—this is an above—you know, all-of-the-above approach? 

Mr. LORIS. I would agree in the sense that it is an all-of-theabove approach to reduce costs, and it is not a proper role of the 

government, and we should have the same scrutinies of the Office 

of Fossil Energy, the Office of Nuclear Energy to get rid of all of 

these things. 

Chairman WEBER. Okay. Ms. McCormick? 

Ms. MCCORMICK. I think this is—— 

Chairman WEBER. Turn your—there you go. 

Ms. MCCORMICK. I agree with Dr. Danielson, this is a critical 

time for these industries. We have seen significant cost reductions, 

and now is not the time to let those go. 

Chairman WEBER. Irrespective of an $18 trillion deficit? 

Ms. MCCORMICK. Well, things will have to be balanced. I think 

that we are looking for stable and consistent funding so that these 

industries can continue this momentum of growth. 

Chairman WEBER. Okay. Dr. de Rugy, how about you, do you 

agree with Dr. Danielson? 

Dr. DE RUGY. I mean I actually think—I agree that—with Nick 

that it is not the role—the proper role of the federal government, 

and a lot of the time when we talk about the benefit of a given program, it is because we actually don’t look at the net cost. We don’t 

look at the jobs that are actually lost, the impact on competition. 
84 

We don’t look at, you know, we don’t look at a lot of things, so 

these benefits are—happen as if they have happened in a vacuum. 

Chairman WEBER. All right. Thank you for that. I am past my 

time. I am going to yield to the Ranking Member, Mr. Grayson of 

Florida. 

Mr. GRAYSON. Thank you. I have never worked in an air conditioning business. I had the burden of actually being in an economist for a few years, and before that studied economics, a further 

burden that I share with some of you apparently. 

So let us start with Dr. de Rugy. You mentioned that one of the 

legitimate functions of government is the creation of public goods. 

What is a public good? 

Dr. DE RUGY. Public good is something that the private sector 

wouldn’t produce, and that would benefit everyone. 

Mr. GRAYSON. And why is it the private sector doesn’t produce 

public goods? 

Dr. DE RUGY. Usually because the cost is too high, and no one 

is willing to invest in it. 

Mr. GRAYSON. Well, also because not a single commercial entity 

can internalize all of the generated profit, isn’t that correct? Isn’t 

that the essence of a public good? 

Dr. DE RUGY. Yes. 

Mr. GRAYSON. All right, so isn’t knowledge a public good? 

Dr. DE RUGY. Knowledge is a public good, but—actually, no. No. 

We have a lot of investment—private investment in knowledge, 

and—— 

Mr. GRAYSON. Well—— 

Dr. DE RUGY. —private investment in energy too. 

Mr. GRAYSON. That is true, but you cannot internalize inside one 

company the benefit that comes from knowledge, and that includes 

scientific knowledge, doesn’t it? 

Dr. DE RUGY. But the government is very bad at actually knowing anything, and one of the reasons is because there is no cost and 

benefit, there is no profit and losses, which is the way, as we know, 

since Friedrich Hayek, actually the market disperses the knowledge across millions of actors in the most efficient way. 

Mr. GRAYSON. Well, that sounds more like ideology than economics to me—— 

Dr. DE RUGY. That is actually—— 

Mr. GRAYSON. —Dr. de Rugy. 

Dr. DE RUGY. Well, actually, it is interesting because—— 

Mr. GRAYSON. And I am very familiar with the work of—— 

Dr. DE RUGY. —Larry Summers has said that this insight of 

Hayek is the most important economic insight of the 20th century, 

so I don’t think—— 

Mr. GRAYSON. All right, well, you agree with me that one company cannot, for instance, internalize the benefit that comes from 

conservation? That is a benefit that is spread across dozens if not 

hundreds of different companies, even in our economy, and probably thousands in the world economy. Isn’t it true that scientific 

knowledge in the form of better conservation cannot be internalized 

and, therefore, it is a public good? 

Dr. DE RUGY. I don’t agree. 

Mr. GRAYSON. Mr. Loris—— 
85 

Dr. DE RUGY. Actually, we see—— 

Mr. GRAYSON. —what about you? 

Mr. LORIS. I wouldn’t agree either. I think there—— 

Mr. GRAYSON. Really? 

Mr. LORIS. —are plenty of opportunities for the private sector to 

invest in conservation and make a profit from it. 

Mr. GRAYSON. So you wouldn’t even concede that the government 

should generate public goods as Dr. de Rugy did in her opening 

statements? 

Mr. LORIS. I think the proper role for—is to focus on more of the 

things that the Office of Science does, which is—— 

Mr. GRAYSON. Answer my question please. 

Mr. LORIS. Could you repeat the question? 

Mr. GRAYSON. The question is would you concede that the government does, in fact, have a role in creating public goods, or you 

wouldn’t even believe then scientific research should be done to create those public goods? 

Mr. LORIS. I think it would depend on the circumstance. 

Mr. GRAYSON. Well, the circumstance—— 

Mr. LORIS. Which public good are you talking—— 

Mr. GRAYSON. —is the creation of a public good in the form of 

scientific knowledge. 

Mr. LORIS. Scientific knowledge, sure. 

Mr. GRAYSON. Yes. Okay, good. 

All right, now, what about externalities. Tell me what an externality is. 

Mr. LORIS. An externality is, you know, something that is not 

captured by the production of a good, such as pollution, or external 

benefits coming from the production of a good as well. 

Mr. GRAYSON. All right, so would you agree with me that it is 

a legitimate basis for scientific research by the government to address the market inefficiencies that are caused by externalities like 

pollution—— 

Mr. LORIS. No. 

Mr. GRAYSON. —which is caused by fossil fuels and not by most 

renewable energy? 

Mr. LORIS. No, I don’t think the most efficient way to internalize 

a negative externality is through government programs—— 

Mr. GRAYSON. I didn’t ask you whether it was the most efficient 

way, I asked you whether that was legitimate. 

Mr. LORIS. No, I don’t—not spending money on scientific research to internalize negative externalities, no, I don’t believe that 

is a—— 

Mr. GRAYSON. Well, again, I feel like I am hearing more ideology 

than I am economics at this point. 

Back to you, Dr. de Rugy. Would you agree with me that a barrier to entry is a legitimate form of a market imperfection that 

could be addressed by the government? 

Dr. DE RUGY. Well, very often the government is responsible for 

putting up—— 

Mr. GRAYSON. Oh, my goodness, can I just—— 

Dr. DE RUGY. —barriers to entry. 

Mr. GRAYSON. —have the question answered? 
86 

Dr. DE RUGY. Well, usually, if a government—if a private sector 

has a monopoly and the government tries to break it—— 

Mr. GRAYSON. What is a barrier—— 

Dr. DE RUGY. —I think—— 

Mr. GRAYSON. —to entry, Dr. de Rugy? 

Dr. DE RUGY. It is—the barrier—like you have a company that 

has a monopoly and a—and prevents other companies to getting in 

because the costs are too high for these companies to compete. 

Mr. GRAYSON. Okay. So lack of capital is a barrier to entry, is 

it not? And that lack of capital is addressed by scientific research 

done by the government—— 

Dr. DE RUGY. Actually—— 

Mr. GRAYSON. —isn’t that correct? 

Dr. DE RUGY. Actually, this is an excuse used by the government, 

and there are many, many instances to justify their program, and 

when you actually look at the supposedly market failure that the 

government identifies, there is none. And the private sector is the 

best one use—is the best player to actually come up with solutions 

to whatever lack of capital. Look at the—— 

Mr. GRAYSON. All right, your excuse is other people’s reason—— 

Dr. DE RUGY. —export/import bank—— 

Mr. GRAYSON. —and progress, but let us finish with this since my time is almost running out. We spend $6 trillion each year on 

energy, we being the human species, humanity. We spend $6 trillion a year. Now, let us suppose, hypothetically, that someone could 

spend $200 billion and create free energy forever. You will agree 

with me that that would be an enormous rate of return, would it 

not? Yes? 

Dr. DE RUGY. If—— 

Mr. GRAYSON. Mr. Loris? Yes? 

Dr. DE RUGY. It would be. 

Mr. GRAYSON. Enormous rate of return. 

Dr. DE RUGY. Yes. 

Mr. GRAYSON. Right, Dr. de Rugy? Enormous rate of return, 

right? Can you identify for me anybody now operating in the renewable energy sector that could come up with $200 billion and do 

that? 

Dr. DE RUGY. But you are assuming that, for instance, if there 

is a market failure, which I don’t concede there necessarily is in 

the energy market, that actually it a necessary and sufficient condition for the government to invest. The way the government invests because the decisions are driven by politics—— 

Mr. GRAYSON. All right, Mr. Loris—— 

Dr. DE RUGY. —is actually—— 

Mr. GRAYSON. —would you like to answer my question? 

Mr. LORIS. I think there are six trillion reasons for the renewable 

energy sector to capture opportunities, and they don’t need any 

more. 

Mr. GRAYSON. Can you identify for me a single company in the renewable energy sector that could raise $200 billion, even if it was 

to eliminate the cost of energy forever, one company? 

Mr. LORIS. I don’t know the answer to one company, but I know 

you have a lot of companies like BP and major fossil fuel producers 

that invest in renewable opportunities to capture—— 
87 

Mr. GRAYSON. Which puts those—— 

Mr. LORIS. —those opportunities too—— 

Mr. GRAYSON. —out of business if they actually did that research. 

Mr. LORIS. Largely—— 

Mr. GRAYSON. All right, thank you. 

I yield back. 

Chairman WEBER. The gentleman yields back. 

And now recognize the gentleman from Washington, Mr. 

Newhouse. 

Mr. NEWHOUSE. Thank you, Mr. Chairman. Appreciate it. And 

thank you all for being here and helping us look at the Department’s request for the budget for EERE, and a very interesting 

conversation. 

Could I ask a question of you, Dr. Danielson? I come from the 

Pacific Northwest where we are blessed with—I would say a diverse mix of energy, including hydro, wind, nuclear, gas, also utilize energy efficiency. We are also a leader in modernizing our electric grid with the forward-thinking utilities and world-class research that—institutions like the University of Washington, my 

alma mater, Washington State, and also the Pacific Northwest National Laboratory, which all worked together to develop test beds 

to take research from the lab to demonstrate new innovative technologies. 

The Secretary appeared before us, I believe it was in February. 

He discussed the DOE’s grid modernization which is very much in 

line with what we are trying to do in the State of Washington. So 

could you clarify for me the EERE programs which will advance 

the grid modernization, and how those investments will benefit 

states like mine? 

Dr. DANIELSON. Well, thank you for that question, Congressman. 

And congratulations on PNNL’s 50th anniversary recently. 

Mr. NEWHOUSE. Thank you. 

Dr. DANIELSON. There are some key areas where we are making 

innovation investments as it relates to grid modernization. One 

area is in the area of predicting solar and wind resources much 

more accurately, so using advanced modeling and simulation to develop tools that would actually allow utilities to know how much 

wind and solar are coming and when, which would allow them to 

much more effectively operate the grid. 

We are also, you know, one of the most exciting and important 

emerging opportunities we have as it relates to the grid is the dramatic reduction in cost of distributed energy technologies. So Americans, more and more, have the opportunity to actually generate 

their own power on-site, whether it is photovoltaic power, combined 

heat and power from combustion to fuel cells. And also with the 

emergence of advanced information technologies over the last couple of decades, we now have the opportunity to set up a truly 

transactive market where, instead of having a modern—a grid system that only has a few hundred or a thousand generators controlled, we can actually empower the consumer to interact with the 

grid in a real-time way, and so that is something we are spending 

a lot of time and effort and innovation in is enabling that market— 
88 

that transactive market so that homes can transact with the grid 

in a cost-effective way. 

Mr. NEWHOUSE. Could I also ask you to help us understand why 

this is all a role of government, and why the electric industry, 

which owns a lot of the grid, is not modernizing on its own? And 

maybe that relates to some of that what we have already been talking about. 

Dr. DANIELSON. When I get together with folks from across the 

utility industry, from the solar industry, from Public Utility Commissions, they all realize and recognize that the most cost-effective 

way to get to a low-carbon future will likely involve distributed energy, but making that transition is difficult. And so we have a Grid 

Modernization Laboratory Consortium where Pacific Northwest 

National Lab is the lead, where we are working with utilities to 

help them understand what those least-cost approaches are going 

to be, and how can they make the best transmission and distribution investments to enable the most cost-effective, reliable, resilient 

grid going into the future. 

Mr. NEWHOUSE. Thank you, Doctor. 

My time is getting short, so quickly, I am going to ask you about 

the energy storage R&D that is scattered throughout several areas. 

Let us see, it is the Office of Science, the Joint Center of Energy 

Storage Research, the ARPA–E, Energy Storage Program at the Office of Electric Delivery and Energy Reliability, Vehicle Technical 

Program—Technologies Program, Solar Energy Program, Hydropower Program. There is—the list goes on. So how many battery 

and energy storage programs can there be found within the agency, 

and can you tell me that we are sure that the highest priority is— 

research is funded so that we avoid duplication? 

Dr. DANIELSON. Thanks for that question. It is an important one. 

Just in the last few years, the Department of Energy has set up 

internal Tech Teams that have representatives from each of the offices of relevance, and in areas like grid storage or energy storage. 

And so we are actually very tightly coordinated, and if you look at 

each and every one of those efforts, they are distinct, they are synergistic, and they do not overlap. And so both in terms of our energy storage work that is related to electrified transportation, 

which is the primary role of our Vehicle Technologies Office, and 

then when you look at grid storage, that is a little bit more spread 

around the Department, including primarily the Office of Electricity, but also our Water Power Program does research in hydropower, which is not done in the Office of Electricity. And so it is 

a—spread around in a way that I think is perhaps unfortunate and 

not transparent, but it is highly coordinated. 

Mr. NEWHOUSE. Good. Good. I appreciate that. 

Mr. Chairman, I yield back the negative amount of my time. 

Chairman WEBER. Thank you, Mr. Newhouse. We will carry that 

over for next hearing. 

The Chair now recognizes the gentleman from Illinois, Mr. Lipinski. 

Mr. LIPINSKI. Thank you, Mr. Chairman. If we did that, it would 

really shorten things up, you know. So I had better get going. 

I believe that the work that EERE does is critical to achieving 

a sustainable energy future and growing our nation’s energy econ-
89 

omy. We see that the technologies developed at EERE provide a 

more robust energy portfolio, reduces our impact on the environment, and enables a growing U.S. clean energy industry. So I am 

glad to see the 2016 budget request is doing more to support clean 

energy innovation and make the United States a leader in the 

clean energy marketplace. 

So a couple of questions, I want to see how many of these I can 

get to about some of the things the EERE is doing. And I am going 

to start with a question for Dr. Danielson. We saw that Paris just 

temporarily had a ban on half the cars from driving, in response 

to smog problems. Transportation contributes to almost 1/3 of emissions in the United States. Electric vehicles can enable more environmentally friendly transportation, and at Argonne National Lab, 

which is in my district, they are working to develop new battery 

technologies that will enable cheaper, longer-range electric vehicles. Can you describe the biggest challenges to widespread use of 

electric vehicles, and how strong funding for EERE is helping to 

improve vehicle technologies? 

Dr. DANIELSON. Well, thanks for that question. You know, the 

biggest—the longest pole in the tent as it relates to electric vehicles 

having a cost-competitive situation versus traditional vehicles is 

really in the battery cost. And as you mentioned, our Argonne National Laboratory has been an absolute powerhouse in terms of developing new advanced lithium-ion battery technologies. Indeed, 

they have developed basically a battery that is twice as good as any 

other battery out there, and early versions of the material they 

have developed are now getting into the market. But I am very optimistic. You know, right now, if you look at the technology we 

have, we are at about $300 per kilowatt hour. Something like a 

100-mile electric vehicle would pay back at that price over five 

years. A plug-in hybrid of 40 miles electric range would pay back 

at about $200 per kilowatt hour, and a 300-mile electric vehicle 

would require a battery cost of about $125 per kilowatt hour. So 

we are at about $300 per kilowatt today, but with continued investments in innovation, using the cutting-edge scientific facilities at 

Argonne, in addition to an applied set of researchers that we are 

supporting there, and we have since the 90s, we are confident that 

we are going to get to that cost goal in the 2020 time frame. 

Mr. LIPINSKI. Very good. I want to move on to the role of DOE 

commercialization. In your testimony, Ms. McCormick, you mentioned that you don’t think DOE’s mission stops at the laboratory 

bench. And I thank you for recognizing the importance of getting 

innovative technology transitioned to the marketplace. 

I want to ask, can you describe why federally-funded technology 

transition programs are critical to bridging the valley of death between lab and market, and I just want to mention the—I know Lab 

Corps is starting up, which I think is going to be very helpful, but 

can you talk about the important role of the federal government 

here? 

Ms. MCCORMICK. Yes, thank you. The Business Council for Sustainable Energy represents a broad range of energy technologies, so 

the answer to that question is unique to each industry. It is a little 

bit different for each one, depending on where they are and what 

they do. But I am hearing pretty universally from the technologies 
90 

within our coalition about the need for the government to be a neutral player to help industries as they break into these markets, and 

some of these issues related to things like grid integration or some 

of these soft costs that are mentioned, for example, for some industries like the solar industry, because they do not have a financial 

vested interest in the electricity grid. They can sometimes share 

best practices from the states, and learn and share that information to other states and to other players across the country. So I 

think that the Department of Energy is uniquely positioned to provide that kind of technical assistance, and provide the ability for 

these technologies to break into the market, because the electricity 

sector is a regulated industry, and it has layers of regulation; the 

federal level, the state level, is it not an open free market, and 

there are reasons for that. And so the Department of Energy can 

offer a lot of assistance to these technologies that are not legacy 

technologies, but are newer and more innovative. 

Mr. LIPINSKI. Thank you. 

With my few seconds left, I just—I have a question for the record 

about hydrogen and what EERE can do with that. As the author 

of the H–Prize Act, I am very happy to see that moving forward 

right now. So with that, I will yield back. 

Chairman WEBER. Is the gentleman requesting that question be 

read into the record or made a part of the record? 

Mr. LIPINSKI. I—are we going to have five days to submit? 

Chairman WEBER. Yes, absolutely, without a doubt. 

Mr. LIPINSKI. Yes. 

Chairman WEBER. Okay, thank you. 

Chair now recognizes the gentleman from Kentucky, Mr. Massie. 

Mr. MASSIE. Thank you, Mr. Chairman. 

First off, I want to let you know I drive an electric car, although 

I suspect the electrons providing the electromotive force this morning to get me here came by virtue of the combustion of fossil fuels. 

So I have a Friends of Coal license plate on my electric car. I also 

live in a house that has a 13 kilowatt solar array on it, and I am 

very interested in these things. I tell republicans that you can dislike the subsidies, I dislike the subsidies, but you shouldn’t hate 

solar panels because they are rocks that make electricity, and that 

is a pretty virtuous rock. 

But let me ask you about this, and I have some experience in 

this. Mr. Danielson, if you wanted to install another megawatt of 

production capacity in our country, would it be cheaper to do it in 

a solar form or on 100 households with 10 kilowatt arrays? 

Dr. DANIELSON. You know, I don’t know the direct answer to that 

question. So the big difference that—I would have to just do the 

calculation, would be is that your—— 

Mr. MASSIE. Is it cheaper to put a whole bunch of these up on 

roofs—on the roofs of houses? To climb up on the roofs—— 

Dr. DANIELSON. Okay. 

Mr. MASSIE. —drill holes in your roof, risk falling off, like I have 

done, so I am very familiar with this, or to just build a solar farm— 

a centralized—— 

Dr. DANIELSON. Thank you for that clarifying question. 

Mr. MASSIE. Okay. 
91 

Dr. DANIELSON. The—it is cheaper to build a centralized solar 

power plant per kilowatt hour, per megawatt than it is for a distributed—— 

Mr. MASSIE. It is—— 

Dr. DANIELSON. —but what I would like to point out is that it 

is a different—we are—it could be a different value, that if you are 

putting a rooftop system in, you are avoiding the retail rate, whereas if you have a centralized system, it is putting power into the 

grid—— 

Mr. MASSIE. Right. 

Dr. DANIELSON. —at a wholesale rate. 

Mr. MASSIE. And you get out of some taxes, I suppose. But the 

grid has to be designed for the worst case, not the best case or the 

average case, right? So—— 

Dr. DANIELSON. Okay. 

Mr. MASSIE. —because solar power is so variable, it still really 

doesn’t do anything for design—for redesigning the grid. I suspect 

it will always be the case that it is cheaper to put in a larger facility than to go up on your roof and drill holes and do all these distributed installations. So why is our government so fixated on subsidizing the installation of all these distributed systems, which 

can’t even begin to approach the cost-effectiveness of a more centralized system? 

Dr. DANIELSON. Well, this is something that we are looking to 

tackle with our Grid Modernization Laboratory Consortium is to 

look at long-term planning and system-level costs so that, you 

know, if you are able to put quite a bit of distributed solar out 

there, could that reduce your cost of building out more distribution 

or more transmission. And so, you know, we would want to make 

sure to do that analysis from a system-level cost basis. 

Mr. MASSIE. Right. Okay. Well, I want to ask another question 

because, again, you have to design for the worst case, and without 

a better battery, you are basically not going to improve the situation. You talked about your five criteria; impact, additionality, 

openness, economic benefit, proper role of government. Can you 

motivate a $7,500 subsidy for a $100,000 car in those five terms? 

Specifically, I am talking about the federal tax credit for cars—electric cars that—luxury vehicles that cost $100,000. What is the price 

elasticity for a $100,000 luxury vehicle, and how many more—has 

the government gone back to study how many more of those have 

been sold, and what the economic benefit to all of society is because 

of that tax credit? 

Dr. DANIELSON. So on your first question related to the application of the five core questions of EERE, we don’t administer the 

subsidy programs, so those questions wouldn’t—I didn’t develop 

those—— 

Mr. MASSIE. Okay. 

Dr. DANIELSON. —I developed those with innovation programs in 

mind. And then can you repeat your second question? 

Mr. MASSIE. Well, I am concerned about, is that an efficient way 

to achieve goals, to subsidize a luxury good? 

Dr. DANIELSON. Well, what we have seen in the development of 

many technologies, including clean energy technologies, is that, you 

know, this is something I saw when I was in the business world, 
92 

is that innovative new technologies often find application in first 

markets where customers are willing to pay. For example, 35 years 

ago photovoltaic started in satellites. Now we have reduced the cost 

by 99 percent, and so now they are getting into the grid market. 

So I think an expensive electric vehicle, let us say such as what 

Tesla makes, is a first market adopter chance to get the EV industry going and drive volume—— 

Mr. MASSIE. So I will point out—— 

Dr. DANIELSON. —and drive—— 

Mr. MASSIE. —for economic benefit or additionality that all of those subsidies add up to about $500 million, which is two percent 

of their market cap. So I find it hard to believe that it wouldn’t 

have happened without that subsidy. 

While I have a little bit of time left, I want to ask when was the 

car invented? 

Dr. DANIELSON. Geez, I don’t know the exact—— 

Mr. MASSIE. At least 100 years ago? 

Dr. DANIELSON. Yeah. Yeah. 

Mr. MASSIE. And it is fundamentally the same architecture. So 

why are we doing car research? When we do electric or vehicle battery research or fuel cell vehicles, you mentioned, shouldn’t we be 

doing research on fuel cells and batteries and not the vehicle itself 

or the application to the vehicle? I mean after all, the batteries 

that are in the car that you mentioned came literally from a laptop, 

so why is it more virtuous if it is a vehicle when we know, in general, we need battery technology? Shouldn’t we be focused on basic 

research instead of trying to iterate on something that—whose 

basic architecture was settled 100 years ago? 

Dr. DANIELSON. Well, one thing I will point out is that the preponderance of the work we do at EERE is applied research, and 

early stage applied research. And so it is really cutting-edge innovation. It is not basic research in the sense that it is just exploratory and really intending to create knowledge—we are actually 

trying to develop technologies. And so I did want to emphasize 

that. But when we do analyses and look at what the impact can 

be, there is a lot of room for improving the efficiency of the combustion engine. There is a lot of room for improving the materials that 

a car is made of to make it much more lightweight. And we also 

see great opportunity in fuel cells and electric vehicles, and we are 

looking to innovate in these areas and help achieve cost reduction 

in these technologies, but it is ultimately going to be the market 

that will decide which of these get into the market. 

Mr. MASSIE. All right, my time has expired. 

Chairman WEBER. Gentleman yields back. 

The gentleman from Texas, Mr. Veasey, is recognized. 

Mr. VEASEY. Thank you, Mr. Chairman. I appreciate that. 

And I wanted to ask about wind energy, particularly to Dr. Danielson. Dr. Danielson, you may know that in Texas, we are basically the king of wind. We have about 20 percent of the capacity 

nationwide coming out of our state. Most of that was done with tax 

credits and different things like that. Some of that was actually 

done when Mr. Weber and I were serving in the Texas legislature 

together, and so we are very proud of what it means to our economy, and would hate to see our economy, you know, wrecked by 
93 

any policy that would reverse the progress that we have made in 

delivering wind to our state, and the—and what that has meant for 

the entire country. 

And I wanted to ask you in particular about wind, and what sort 

of research that you guys are doing to make wind even more efficient. Like one of the things that I would like to see with wind, for 

instance, is, if you have ever been out to west Texas, you will know 

that it takes up a lot of space. It takes up a lot of landmass. What 

are we doing to make it to where wind or wind turbines can be 

moved in various locations, and maybe made even more efficient to 

deliver the same amount of capacity as they currently do? 

Dr. DANIELSON. Well, thanks for that question. You know, one of 

the areas that we—is our primary research and development focus 

in wind is in wind plant optimization. So you find that when—if 

you have a wind turbine all by itself, it performs in a certain way. 

When you bring it into a farm, you typically get 30 percent reduction in the power output because of the way that the turbines 

interact with each other. And you also find that some turbines are 

getting a lot of turbulence from the turbine in front of them, and 

they will break in a shorter period of time than others. And so we 

have a consortium around our national laboratories focused on taking advantage of high-performance computing capabilities and advanced modeling simulation in the area of fluid dynamics to try to 

figure out how do you put together a wind farm, and how do you 

control it in a way that you can get that 30 percent back. So if you 

could get 30 percent more energy out of a windfarm without putting any more hardware on the ground, that is a significant cost 

reduction to drive wind towards direct cost-competitiveness nationwide. 

Mr. VEASEY. One of the things that often surprises people when 

I visit one of the windfarms down in Midland, where they obviously 

produce a lot of oil too, I was asking the guy that was working out 

there at the windfarm about the generator at the bottom of the 

windmill, and he was explaining that, he said they actually use 

oil—a renewable oil, almost like a refined oil, like a 40-weight that 

you would use to change the oil in your car, they use this in the 

bottom of the windmill in order to, I guess, keep the generator 

going and to keep everything lubed. How much petroleum products 

are they—does wind currently use in order to make the windmills 

run properly? 

Dr. DANIELSON. Thank you for that question. I actually don’t 

know the answer to that question, but I would be more than happy 

to take it for the record and find an answer to that question. 

Mr. VEASEY. Okay. Well, thank you. I appreciate that. And I 

did—I had a question for Ms. McCormick too. I just wanted to 

know just about some federal research investments in wind technologies that are impacting the growth right now in the wind energy sector. 

Ms. MCCORMICK. Well, I do know that the wind industry is requesting and is supporting some of the funding that the Department of Energy is proposing for studying the impact on wildlife, so 

that they have some specific clarifications that they are looking for 

in the DOE budget, but obviously that is an issue that the industry 

is interested in seeing further research on. 
94 

Mr. VEASEY. Okay. 

Thank you, Mr. Chairman. I am going to give back some of the 

time that we lost a little bit earlier. 

Chairman WEBER. Well, good. Will you credit that to the gentleman from Washington’s account? 

Mr. VEASEY. I will do that. 

Chairman WEBER. Okay. 

Mr. VEASEY. Yes. 

Chairman WEBER. Thank you. 

Mr. VEASEY. Happy to. 

Chairman WEBER. And the gentleman from Colorado, Mr. Perlmutter, is recognized. 

Mr. PERLMUTTER. Thank you, Mr. Chairman. And thank you to 

the panel for appearing today. Thank you for your testimony. 

Obviously, Dr. Danielson, I just want to congratulate you at 

EERE and the Department of Energy for its part—its role in really 

reducing the cost of photovoltaics, wind turbines, biomass efforts, 

because I would say that I am about competition, and the more 

competition that we have among energy sources the better off we 

are going to be. And we are seeing a reduction in demand, so that 

may be the efficiency side of EERE. We see other sources in terms 

of photovoltaics, wind, biomass, fusion, nuclear, all as competitive 

pieces, and now we see a giant drop in the price of oil which, in 

the past, has been difficult for the energy sector as a whole because 

it wiped our domestic energy, you know, whether it was oil and 

gas, fossil fuels, coal, or renewables. Our renewable energy efforts, 

can it withstand this drop in oil prices, Dr. Danielson? 

Dr. DANIELSON. Well, thanks for that—— 

Mr. PERLMUTTER. Will people continue to participate in this? 

Dr. DANIELSON. Thanks for that question. You know, it is actually the shale gas boom that is creating a more competitive environment in terms of natural gas power generation. And so there is 

no doubt that if those prices remain where they are, that other 

forms of energy, renewables or any other, nuclear, are going to 

have an even lower price point to compete with to be competitive. 

But there are benefits to diversity in any energy system. There are 

many folks out there co-ops, for example, who operate their own 

grids who see value in the lack of a fuel cost associated with renewables, so as they are building out a portfolio of, let us say, natural 

gas-powered assets, they want to include renewables in that portfolio as a way to mitigate risk against price changes in natural gas, 

for example. 

Mr. PERLMUTTER. And I guess I would ask the economists on the 

panel. Mr. Loris, you, Dr. de Rugy, I mean I guess I am taking it 

as an axiom that more competition is better than less. Would you 

agree with me on that? 

Mr. LORIS. Well—— 

Dr. DE RUGY. More competition—yeah, go ahead. 

Mr. LORIS. Go ahead. 

Dr. DE RUGY. Go ahead. 

Mr. LORIS. Please. 

Dr. DE RUGY. Yeah, no, more competition is good, but the problem with—— 

Mr. PERLMUTTER. It was a yes or no. 
95 

Dr. DE RUGY. Yes. 

Mr. PERLMUTTER. Okay. 

Mr. LORIS. Yes. 

Dr. DE RUGY. More competition is good. 

Mr. PERLMUTTER. Okay. So, Dr. de Rugy, I want to—you know, 

we are talking about the politics, and we are in the Congress of the 

United States of America, this is politics here, okay, because different people have different desires for different things. And so I 

am speaking today as an elected official. I used to be a bankruptcy 

lawyer handling big Chapter 11 bankruptcies, so I got to see the 

dark side of business and take them apart. In connection with subsidies and incentives, do you know how much in way of incentives, 

either by oil depletion allowances or other kinds of deductions, we 

give to the oil and gas industry? 

Dr. DE RUGY. I don’t know the exact amount. 

Mr. PERLMUTTER. It is about $13.4 billion, which is pretty 

much—if you take all the tax deductions available to the renewable 

energy sources, they are pretty equivalent. I think they are about 

the same, solar and wind. It may be in a perfect world we shouldn’t 

provide any incentives to either one, but I am a guy who thinks 

I want more energy sources, not less, I want more competition, not 

less, and if I am going to subsidize one, I am going to support the 

other so that we can get the best of both worlds. Does that makes 

sense to you, or is that—— 

Dr. DE RUGY. Well, at least—— 

Mr. PERLMUTTER. —am I mistaken? 

Dr. DE RUGY. At least you are consistent. 

Mr. PERLMUTTER. Good. 

Dr. DE RUGY. And see, I don’t want subsidies on the fossil fuels 

that I don’t want on green energy, so—— 

Mr. PERLMUTTER. Okay. The Chairman asked a question about, 

you know, our debt, and I serve on the Financial Services Committee as well, so it is the banking, stock market, housing, economy. And, you know, the one thing that I know from the last eight 

years having served on that, we had a surplus at the end of the 

Clinton Administration, Revenues exceeded expenses, and then we 

had two tax cuts, two wars, and a crash on Wall Street that is the 

bulk of the debt that this country has incurred. It wasn’t the cost 

of EERE or any of the energy, or any of the other things. The bulk 

of it was these massive things and tax cuts, wars and crash. Would 

you agree with me on that? 

Dr. DE RUGY. Yeah, you—yes. Too much spending—— 

Mr. PERLMUTTER. Okay. 

Dr. DE RUGY. —for sure. 

Mr. PERLMUTTER. Okay. Mr. Chairman, I appreciate the opportunity to serve on this committee, and I yield back. 

Chairman WEBER. The gentleman yields back. 

And we appreciate the witnesses and their testimony. In closing 

today’s hearing, I do want to say that I hope we draw attention to 

the fact that there has been a huge 42 percent increase requested 

by the Administration in the budget which, in today’s hard economic times, is going to be very, very tough, so I hope we have 

served to at least outline and discuss that back and forth. Thank 

you for your valuable testimony. Thank you for sitting through our 
96 

questions. Thank the Members for their questions. The record will 

remain open for two weeks for additional comments and written 

questions from Members. 

The hearing is adjourned. 

[Whereupon, at 4:02 p.m., the Subcommittee was adjourned.] 
(97) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
98 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. David Danielson 
99 
100 
101 
102 
103 
104 
105 
106 
107 
108 
109 
110 
111 
112 
113 
114 
115 

(117) 

Appendix II 

ADDITIONAL MATERIAL FOR THE RECORD
118 

PREPARED STATEMENT OF COMMITTEE RANKING MEMBER

EDDIE BERNICE JOHSNON
119 

DOCUMENT SUBMITTED BY DR. DAVID DANIELSON
120 

Æ