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35–764 PDF 2007

S. HRG. 110–94

SMALL BUSINESS SOLUTIONS FOR COMBATING

CLIMATE CHANGE

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 8, 2007

Printed for the use of the Committee on Small Business and Entrepreneurship

(

Available via the World Wide Web: http://www.access.gpo/gov/congress/senate

(II)

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JOHN F. KERRY, Massachusetts, Chairman

CARL LEVIN, Michigan

TOM HARKIN, Iowa

JOSEPH I. LIEBERMAN, Connecticut

MARY LANDRIEU, Louisiana

MARIA CANTWELL, Washington

EVAN BAYH, Indiana

MARK PRYOR, Arkansas

BENJAMIN L. CARDIN, Maryland

JON TESTER, Montana

OLYMPIA J. SNOWE, Maine,

CHRISTOPHER S. BOND, Missouri

NORMAN COLEMAN, Minnesota

DAVID VITTER, Louisiana

ELIZABETH DOLE, North Carolina

JOHN THUNE, South Dakota

BOB CORKER, Tennessee

MICHAEL B. ENZI, Wyoming

JOHNNY ISAKSON, Georgia

NAOMI BAUM, Democratic Staff Director

WALLACE HSUEH, Republican Staff Director

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CONTENTS

Page

OPENING STATEMENTS

Kerry, The Honorable John F., Chairman, Committee on Small Business

and Entrepreneurship, and a United States Senator from Massachusetts .... 1

Snowe, The Honorable Olympia J., a United States Senator from Maine ......... 7

TESTIMONY

Horowitz, Daniel, Assistant Administrator, Office of Policy, U.S. Small

Business Administration ..................................................................................... 11

Wehrum, William L., Acting Assistant Administrator, Office of Air and

Radiation, U.S. Environmental Protection Agency ........................................... 17

Boxer, The Honorable Barbara, a United States Senator from California

and Chair of Senate Committee on Environment and Public Works .............. 25

Kennard, Byron, executive director, Center for Small Business and the

Environment ......................................................................................................... 40

Barber, James J., president and chief executive officer, Metabolix .................... 48

Lynch, Christopher J., director, Environmental Management Assistance

Program, Pennsylvania Small Business Development Centers, the Wharton

School, University of Pennsylvania .................................................................... 54

Goldstein, Dr. David B., co-director, National Resources Defense Council’s

Energy Program ................................................................................................... 60

Hauge, Scott G., vice chair of Advocacy, National Small Business Association,

and president, Small Business California .......................................................... 68

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Barber, James J.

Testimony .......................................................................................................... 48

Prepared statement .......................................................................................... 50

Responses to post-hearing questions from Senator Bond ............................. 97

Additional comments ........................................................................................ 98

Bond, Christopher S.

Post-hearing questions posed to James Barber and subsequent responses 97

Boxer, The Honorable Barbara

Testimony .......................................................................................................... 25

Prepared statement .......................................................................................... 27

Goldstein, Dr. David B.

Testimony .......................................................................................................... 60

Prepared statement .......................................................................................... 62

Hauge, Scott G.

Testimony .......................................................................................................... 68

Prepared statement .......................................................................................... 71

Horowitz, Daniel

Testimony .......................................................................................................... 11

Prepared statement .......................................................................................... 14

Responses to post-hearing questions from Senator Kerry ............................ 90

Responses to post-hearing questions from Senator Lieberman .................... 92

Kennard, Byron

Testimony .......................................................................................................... 40

Prepared statement .......................................................................................... 43

Page

IV

Kerry, The Honorable John F.

Opening statement ........................................................................................... 1

Post-hearing questions posed to Daniel Horowitz and subsequent

responses ....................................................................................................... 90

Post-hearing questions posed to William L. Wehrum and subsequent

responses ....................................................................................................... 93

Lieberman, The Honorable Joseph I.

Post-hearing questions posed to Daniel Horowitz and subsequent

responses ....................................................................................................... 92

Post-hearing questions posed to William L. Wehrum and subsequent

responses ....................................................................................................... 93

Lynch, Christopher J.

Testimony .......................................................................................................... 54

Prepared statement .......................................................................................... 56

Preston, Steven C.

Responses to post-hearing questions from Senator Snowe ........................... 100

Snowe, The Honorable Olympia J.

Opening statement ........................................................................................... 7

Post-hearing questions posed to Administrator Steven C. Preston and

subsequent responses ................................................................................... 100

Wehrum, William L.

Testimony .......................................................................................................... 17

Prepared statement .......................................................................................... 19

Responses to post-hearing questions from Senator Kerry ............................ 93

Responses to post-hearing questions from Senator Lieberman .................... 93

COMMENTS FOR THE RECORD

Clevey, Mark H., vice president for entrepreneurship, Small Business Association of Michigan, Entrepreneur Development Center ....................................... 104

Crabtree, Michael C., chairman and CEO, IdleAire Technologies Corporation . 108

Gatto, Stephen J., chairman and CEO, BioEnergy International LLC .............. 110

Kruse, Andrew J., executive vice president/co-founder of Southwest

Windpower ............................................................................................................ 117

Sklar, Scott, president, the Stella Group, Ltd. (with attachments) .................... 119

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SMALL BUSINESS SOLUTIONS FOR

COMBATING CLIMATE CHANGE

THURSDAY, MARCH 8, 2007

UNITED STATES SENATE, COMMITTEE ON SMALL BUSINESS AND

ENTREPRENEURSHIP, Washington, DC.

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

428A, Russell Senate Office Building, The Honorable John F. Kerry

(Chairman of the Committee) presiding.

Present: Senators Kerry, Snowe, and Thune.

OPENING STATEMENT OF THE HONORABLE JOHN F. KERRY,

CHAIRMAN, SENATE COMMITTEE ON SMALL BUSINESS AND

ENTREPRENEURSHIP, AND A UNITED STATES SENATOR

FROM MASSACHUSETTS

Chairman KERRY. Good morning. We will come to order. Welcome to the hearing on small business solutions for combating climate change. I appreciate the Administration being here with two

witnesses, one from Policy and Planning in the Small Business Administration and the other from the Environmental Protection

Agency.

Let me just say as an opener that this issue is getting a fair

amount of national lip service now, but, regrettably, we are light

years away from taking the kind of steps that are really necessary

to deal with the issue.

Senator Boxer is going to be here a little bit later. She was delayed. When she does arrive, we will make arrangements for her

to testify.

Last night, I was at a board meeting of the H. John Heinz Center for Science, Economics and the Environment, and some of the

top scientists of our country, people who have been deeply involved

in helping both sides of the aisle to look at this issue and understand it were there. I must say, having just finished writing a book

on this subject, which is coming out in a few weeks, we sort of

thought we—when I say ‘‘we,’’ my wife and I—were state-of-the-art

and up to speed on everything. But, in fact, things are moving so

rapidly that even between the publication date of the book we have

done and today, events have cascaded and started moving faster.

We have something called ‘‘feedback.’’ As in anything in life, you

do something and somebody else gives you some feedback on it.

And in the matter of science, feedback is Mother Nature’s way of

expressing what is going on as a consequence of certain things that

have happened.

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In Alaska, for instance, Ted Stevens has now changed his position on global climate change and believes we ought to have CAFE

standards. The reason he has come to that conclusion is because

he has seen the feedback. The feedback in Alaska is that fishermen

who used to be able to drive their snowmobiles out on the ice and

go for 20 miles can no longer do so, because at about the 7-mile

mark, it turns to mush, and their vehicles plunge into the ocean.

So that is gone for them. A whole village is being moved at a cost

of several hundred million dollars because of the now incessant

damage being done, because there is no longer enough ice to protect it from storms. The storms come closer, and the village gets

hurt. That is feedback.

There is a lot of other feedback taking place. I was really quite

stunned last night to learn from some of these scientists that Russian scientists have now estimated that more than 4,000,000 billion—that is million billion—tons of methane are frozen worldwide.

Methane has 20 to 30 times the greenhouse effect of CO2. Its uncontrolled release would have a runaway effect that would accelerate the warming of the planet.

The problem is that the ice is now melting—and it is melting.

Jim Hansen of NASA tells us that over the course of the next 30

years, the Arctic ice sheet will disappear—will disappear, folks.

That is not an if, and, or but. That is a ‘‘will disappear.’’ The ice

currently is a reflector of long-range waves. And the ice reflects,

and it feeds back, and you get long-range waves that go back up

in the atmosphere. But as the ocean is exposed more, as the ice disappears, it does not reflect. It goes into the ocean, and then the

ocean warms. And so you accelerate. This is feedback. The more

the ocean is exposed, the more you accelerate the warming, the

more you wind up with an increase in climate change impact, the

result of which is that you now have an increased level of shrinkage of the Greenland ice sheet. That should be sending shudders

through most Americans—and everybody in the world—because

unlike the Arctic ice sheet, which is floating in the ocean and,

therefore, the displacement remains essentially the same in terms

of its melting and its impact on the sea level, the Greenland ice

sheet is on rock, and as it melts, it goes into the ocean and adds

to the volume causing it to rise.

That ice sheet is of a significant enough size that if it were to

melt or slide off or break off in some significant portion, you could

have a sea level increase of anywhere from 16 to 23 feet, in which

case say good-bye to Boston Harbor, New York Harbor, most of

Florida and so on and so forth; much of Washington, DC; because

the Potomac River comes up, and so forth. There are computer formulations that show exactly what that impact would be, and people

should take the time to go look at them.

But what is really scary, what I was not aware of, even, is the

degree to which these scientists are now worried about the thaw

taking place in the tundra across the arctic region. And as that

melting takes place, permafrost melts, and methane is released. So

despite our best intentions, there is an enormous potential for this

20 to 30 times impact of gas to have an impact on global climate

change.

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I might add that there is other feedback that we are getting. For

instance, the acidification of the ocean has already increased by 30

percent, with substantial potential impacts on the marine food

chain. We know that if CO2 concentrations over the oceans increase

to 600 parts per million, which is possible by the end of this century, then you could have a phytoplankton, coral, oyster reef, crab,

and other crustaceous species beginning to lose the integrity of

their supporting skeletal structures, and there is an actual demonstration of this which they can show in various ways. In addition, we see the destruction of nearly 4 million acres of mature

white spruce forest on the Kenai Peninsula in Alaska, which is

happening now because the spruce bark beetles have been taking

over during the past decade. Why is this important? Because in

Alaska, they could not survive previously because the temperature

was such that they would not make it through the winter. So the

warming has had an impact on the spread of disease-bearing beetle

larvae that can now survive in these warmer temperatures. Plus,

they mature faster, and they now complete the 2-year life cycle in

1 year. This is feedback.

So I am not going to go into all the examples of feedback, but

I am just going to tell you folks that I am so disturbed by the lack

of urgency in the Federal Government and this Administration to

deal with this issue. In New England, everywhere, but Maine has

seen a reduction in the production of maple syrup. It is a big industry. Maine has not had it yet because Maine’s temperature has not

yet felt the impact. But New Hampshire, Connecticut, Massachusetts, and Vermont have all felt it. And the result is a significant

reduction in the production of syrup. Why? Because of the warmer

temperature.

So there are a lot of impacts here. There is going to be a lot of

feedback building up, and the bottom line is that we really have

a responsibility to be serious about this. The long-term implications, according to all scientists, are very dramatic. If you get to

the tipping point, there is no coming back.

We are told we have a 10-year window. I am going to beat this

until it is dead. I mean, we cannot let go of this. A 10-year window.

That is what scientists tell me. When I sit in front of a guy like

Bob Hansen or Bob Corell or some of these guys and they tell me

10-year window, we better listen.

Now, what is the downside if those of us who care about global

climate change are wrong? You know, what happens? What is the

downside? The downside is we have the world’s leading technologies and clean and alternative fuels. We create new jobs. We

have better health. We have fewer kids with asthma, less particulates in the air. We have better security because we are less dependent on fuel from other countries. And what is the downside if

they are wrong, the people who are still in the flat-Earth caucus?

The downside is catastrophe.

So which side of the ledger do you want to be on, folks? And

what is clear is that this is not a draconian process that will force

you to give up your lifestyle or you have to lose quality of life or

any of that. You do not have to do any of that.

So Nicholas Stern has put out a very sound, well-respected economic report for the British Government, which shows clearly that

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the downside of not doing things is 5 to 20 times more expensive

than the downside of doing it. And in the end, you may spend 1

percent of GDP to fix it now, versus a huge percentage in responding to the damages if we do not take these steps.

I think this is such a no-brainer, and we are not doing it. We

have to reduce carbon in the atmosphere. There is no other choice.

We have to become carbon neutral, even carbon friendly in what

we are doing. And small businesses—this is where we get to the

essence of this hearing today—are critical in terms of helping to do

this. I remember being part of the first hearings on global climate

change with Al Gore when he was a Senator in 1987. Then in 1990,

we went down to Rio to be part of the Earth Summit Conference,

and it has been a long road since then. I was in Kyoto. I have been

to The Hague, to Buenos Aires, part of the COP conferences. I have

watched other countries look at us and say, ‘‘Well, if the United

States does not do it, why should we?’’ And so China is about to

build one pulverized coal plant per week. Folks, if that happens, it

is ‘‘Katy Bar the Door.’’ But there is no serious international effort

going on right now to bring people to the table.

I do not know how many of you read the TXU deal report the

other day. The environment community got together with those

folks. Now, they have done pretty well, but they are still going to

build three plants that are still going to add 26 million tons of CO2

to the atmosphere instead of 11. And it is a big step forward because we do not have a prayer of getting China or India or other

people or even these small businesses that we need to get to respond unless we take the lead. The old clean hands doctrine of the

law: If you do not come to the table with clean hands, it is pretty

hard to win the equities.

So we are going to have to take these steps, and as I said, I am

working with a lot of people outside of the Senate now. We are

going to have a hearing in the Commerce Committee with some of

the leading CEOs in the country of Dupont and GE and others who

have embraced the notion that we have to have a carbon cap. You

know, it is one thing for a big Fortune 500 company to step up to

bat and say we are going to do this. Obviously, it is another thing

for a small business to figure out how can it contribute and what

role can it play here. And there are clearly several different kinds

of roles.

You know, one is to be the innovators, to expand the SBIR and

SBIC programs and excite people to be able to enter this marketplace and help provide the technologies, the alternatives. The other

is that they themselves are going to have to take steps to reduce

their own emissions and to find ways to be part of the solution.

This is how critical this fight is. Senator Snowe and I have joined

together to introduce legislation that would require a cap on emissions, with a 65-percent reduction by the year 2050. Senator Boxer

and Senator Bernie Sanders and others, picking up from Senator

Jeffords, are looking at about 80 percent, and that is legitimate because the science says it has to be somewhere between a 60 and

80-percent reduction by 2080, although this methane issue creates

an even larger challenge for us.

So buy-in from big business can get us halfway there, but we are

going to need a concerted effort from America’s small businesses in

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order to help get us home on this issue because they employ half

of all the private sector workers and produce half of the GDP of

this country.

Right now, small business investors are beginning to show that

they recognize this. In 2004, $1.4 billion in venture capital found

its way to clean-tech startup companies. These companies are not

only working to help save the planet, they are growing the economy

and they are creating new jobs. This morning, we will hear from

Jim Barber, whose company, Metabolix, turns corn sugar and

switchgrass into natural plastics. Today, plastic and chemical production consumes nearly 10 percent of the oil we use. So there are

alternative ways to be able to do what we are doing, produce what

we produce, live the way we live, without having to rely on oil and

fossil fuels.

I believe that we are at the beginning of the end of the oil era,

and the question is how fast we are going to move to the new era,

whatever it is going to be defined as. Nobody should be afraid of

it. We have done that before in this country. We started with whale

oil produced in Nantucket. Most of Great Britain was lit by whale

oil. And then we went to wood and coal and finally to a mix of

hydro and nuclear, alternatives and renewables and so on and so

forth. We have been through these transitions, and it is clear we

are going to have to go through one now.

Jim Barber is reducing America’s dependence on fossil fuel, but

his company is going to create 120 new jobs when he opens up his

first commercial plant—in partnership, I might add, with Archer

Daniels Midland in Clinton, Iowa, later this year. There are thousands of stories similar to Jim’s that demonstrate how the entrepreneurial spirit of America can reverse the damage that has been

done. But innovation alone is not going to get us there. There are

25 million small businesses in this country, 25 million business

owners that are focused on keeping their doors open and putting

food on the table for their families and growing their businesses.

Climate change sometimes seems like a distant threat compared to

rising health care costs or staying competitive. But even so, small

business owners are telling us that energy costs are a concern.

The National Small Business Association recently conducted a

poll of its members asking how energy prices affected their business decisions. Seventy-five percent said that energy prices had at

least a moderate effect on their businesses, with roughly the same

number saying that reduced energy costs would increase their profitability. Despite these numbers, only 33 percent of those small

businesses have invested in energy efficient programs. So where is

the disconnect?

If high energy costs are driving profits down and implementing

energy savings programs will lead not only to greater profitability

but also lower greenhouse gas emissions, why aren’t American

business owners falling over themselves to plug the leaks? That is

where we ought to be going.

We need to do a better job of reaching out to America’s small

businesses to demonstrate to them that the savings are real, that

the win for their bottom line is a win for the long-term health of

the planet. And we need to provide the resources through public

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and private commitments to help business owners with the upfront costs of implementing these programs.

Representatives from the Environmental Protection Agency and

Small Business Administration are here to testify on how committed the Administration is to helping small business join this

fight. We will hear from Chris Lynch, who is doing terrific work for

the Pennsylvania Small Business Development Centers helping

small businesses become energy efficient, and he will share with us

some of the factors behind that success.

I really hope we can get this word out. I would just close by saying one thing to you. We were talking with these scientists last

night, and they were talking about how our architects and many

of our professionals in America are still training and working professionally in 20th-century structure. I will give you an example:

building design. Today, driving in here, I was looking at all the

construction that is going on in Washington. How many of those

buildings are going to have green roofs? How many of those buildings have been built to the most modern specs with respect to energy savings? Most architects are still not embracing that.

My wife was deeply involved in the greening of Pittsburgh, which

became the greenest city in America, until Portland took up the

challenge and has now surpassed it. Other cities are beginning to

see this.

In Texas, Texas Instruments was about to move to China, and

they were given a challenge. The workers said, ‘‘Well, if our jobs

go overseas, what do we do?’’ Well, we have to compete. How do

we keep the costs down? So they challenged their engineers and architects and said, ‘‘If you can design a plant that saves us the

equivalent of what we will save by going to China, we will stay

here.’’ Well, they went and did it. And guess what? They did it by

removing pipes that bend so you save in the friction and can move

fluid through the building more efficiently, by taking the building

down a tier and making it two stories instead of three, by being

more efficient in distribution—I was in a building in Boston the

other day, the Biogen building, which has shades that are computer driven, that change as the sun moves. Those save them enormous amounts of energy.

If you go to Japan and you get on an escalator, it stops when you

get off; it starts when you get on.

You walk out of a building in Europe, the lights go out in the

hall. You move, the lights go up.

We do not do that. We are the most energy-inefficient country in

the world, and our businesses are paying for it. We actually reward

electric companies with more money paid for more electricity used.

So I am telling you folks, there are all kinds of painless things

that we have to start doing. I know this is a long and perhaps a

little bit rambling opening, but, we have to put this stuff on the

table. We have got to get it out to the businesses of America. There

is money to be saved here. There is money to be made here. There

is a quality of life to be improved here. And it is stupid for us not

to be connecting the dots and making all of this happen.

Senator Snowe.

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OPENING STATEMENT OF THE HONORABLE OLYMPIA J.

SNOWE, A UNITED STATES SENATOR FROM MAINE

Senator SNOWE. Thank you, Mr. Chairman, and I will be very

brief. But I do want to commend you for holding this hearing,

which is the first ever for this Committee to explore ways in which

small business can play a pivotal role in combating climate change.

And I also want to applaud the advocacy and the leadership of the

Chairman on this issue and his longstanding commitment and contributions to global warming and environmental issues in general.

Clearly, I think we are witnessing, hopefully, a sea change in

public and political acceptance of the scientific realities regarding

this major global challenge that we are confronting. And I think a

number of political challenges remain, obviously, within this Congress. But I think there is no question that we have to drive this

train through this year, and hopefully we can succeed in the legislation that I have joined Senator Kerry on with respect to a 65-percent reduction in carbon dioxide emissions by 2050, which is a rigorous, realistic approach by any measurement and by the standards that many scientific experts say that is necessary to accomplish to avert a further increase in temperatures that would

achieve that tipping point to which Senator Kerry referred.

There is no question about the incalculable impact of climate

change and global warming, as Senator Kerry outlined. I think the

question now is: Do we have the political critical mass necessary

to effect a change that is essential to contribute to leadership on

a global level? And I have been part of an international commission

with a colleague in England on this question to develop a global

consensus on this, outside of Kyoto because obviously the United

States is not a signatory to Kyoto. So is there another way to effect

that change and develop a template so that we can proceed?

We had the U.N. report that was issued recently, and Columbia

University, as well, issued one 2 weeks ago. And I think the bottom

line is the same, that we have a massive challenge, and we have

a major impact, a major effect of global warming. I think there is

no doubt about that.

Last year was the warmest year, at least in reporting temperatures, in the history of the United States. The last 25 years have

been some of the warmest in the history of the United States. So

we know the direction.

I applaud you, Mr. Chairman, for focusing on how small business

can play a fundamental and crucial role, because I not only think

that they can play a major role, but I think it can be profitable in

doing so. And I want to welcome, in particular, Dr. David Goldstein, who has written a book, ‘‘Saving Energy, Growing Jobs,’’ and

in showing the path that there are stumbling blocks, but no matter, I think that if businesses understand the investments that can

be made, there is no question that it can be profitable both from

an environmental standpoint, but also from a monetary standpoint

as well. So I am very pleased that he is able to be here today to

contribute to the dialog about tax incentives, and I think that is

good, and that is one of the issues that I have been pursuing here

in the Congress. I did back in the Energy Act of 2005, and today

I am introducing, along with Senator Kerry and Senator Feinstein,

an extension of those tax incentives, because that is a way in which

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I think we can encourage energy efficiency investments in new

buildings and in the retrofitting of old buildings that will reduce

energy consumption, and at the same time ultimately create jobs.

And so we want to make sure that there is some permanency to

these tax incentives so there is reliability and certainty, and that

is certainly true for industry, and it certainly will be true for small

businesses.

There are many examples of small businesses that are engaged

in making energy efficiency investments. In fact, in the State of

Maine, we have Lyman Morse Boatbuilding in Thomaston, Maine,

that are using tax incentives, the very tax incentives that were

part of the 2005 Energy Policy Act, to construct an energy-efficient

building. And we want to make sure we can encourage more small

businesses to invest in green building practices because it does reduce energy consumption and increases and enhances their profitability.

We know that the Energy Policy Act directed the SBA, along

with the EPA and other agencies, to develop a small business clearinghouse, which would develop options for small businesses to become more energy efficient. We need to discern here today if there

is any progress being made within this clearinghouse and what

needs to be done to give a level of urgency to a number of these

initiatives that can well make a difference, because small businesses clearly are the laboratories for innovation and creativity.

And that is where it is all going to spark the entrepreneurial spirit

that is going to be so essential to helping us combat global climate

change.

Another example in the State of Maine is Oakhurst Dairy. It is

an 86-year-old business that recently announced it converted a

fleet of 100 trucks and trailers to a biodiesel fuel blend. And the

Oakhurst president, Stanley Bennett, sent me a letter last week

and he said, ‘‘We firmly believe that doing the right thing environmentally is almost always the right thing to do for your business.’’

And I ask unanimous consent to include his letter in the record,

Mr. Chairman.

Chairman KERRY. Without objection.

[The letter follows:]

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Senator SNOWE. And, finally, as we engage in this debate, we

must be mindful of the potential solutions that we must consider

the full economic impact on small businesses as well, because according to the SBA Office of Advocacy, the compliance with environmental regulations costs small businesses 364 percent more

than it does for larger industry. So in developing the solutions, I

think we do have to keep in mind that small businesses are obviously not as resilient as large companies, and so we have to avoid

a one-size-fits-all mentality and come up with a range of solutions

that can be economically and environmentally effective.

I look forward to hearing from the panel, both this panel and the

next one, regarding what we can do to create these initiatives, and

hopefully we start today with the reintroduction of the EXTEND

Act, which is going to continue these tax incentives to make investments in more energy-efficient buildings, because I do think that

that is a major step, and small businesses can play, I think, a profound role in that regard. But also what the clearinghouse can accomplish in meeting some of these requirements, as well, that will

help the greater energy efficiencies to create greater profitability

and ultimately the goal that we all seek to accomplish, and that

is, reducing greenhouse gas emissions, which is, I think, the fundamental goal of this Committee in terms of how we can use small

business in that endeavor. Engaging the small business community

is a major step in reducing our carbon footprint for the future.

So thank you, Mr. Chairman.

Chairman KERRY. Thank you very much, Senator Snowe. Thanks

for your support and cooperation and partnership in this effort, and

I appreciate your leadership very, very much.

Mr. Horowitz and Mr. Wehrum, thank you for being here with

us. We appreciate it. Why don’t you start off, Mr. Horowitz, and we

look forward to your testimony.

STATEMENT OF DANIEL HOROWITZ, ASSISTANT ADMINISTRATOR, OFFICE OF POLICY, U.S. SMALL BUSINESS ADMINISTRATION

Mr. HOROWITZ. Thank you. Good morning, Chairman Kerry, Senator Snowe. Thank you for inviting the U.S. Small Business Administration to provide remarks related to the Energy Policy Act

of 2005.

The Energy Policy Act calls for the SBA and other Federal agencies to provide information on the benefits of becoming more energy

efficient to small businesses across America. SBA appreciates the

opportunity to update the Committee on its efforts, along with our

Federal agency partners, to inform small businesses on the benefits

and opportunities for becoming, promoting, and developing products for energy efficiency.

I am Dan Horowitz, Assistant Administrator for the Office of Policy, appearing on behalf of Administrator Preston.

Under President Bush’s leadership, America is changing how it

generates electricity by investing in clean coal technology, wind

and solar power, and clean, safe nuclear power. Since 2001, the

Federal Government has invested more than $12 billion to develop

cleaner, cheaper, and more reliable energy sources. This Administration is also increasing funding for research and development

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into alternatives to oil and gas, including advanced batteries for

plug-in and hybrid cars, biodiesel fuels, and hydrogen fuel cells.

New technologies like these have the potential to provide reliable

energy at competitive prices.

The Department of Energy, Environmental Protection Agency,

Department of Commerce, and the SBA have all made progress in

developing a governmentwide program building on the ENERGY

STAR Small Business Program. The goals of the program are: one,

to assist small business in becoming more energy efficient; two, to

sell their ENERGY STAR qualifying products to the Federal Government; three, to identify financing options for energy efficiency

upgrades; and, four, to establish a Small Business Energy Clearinghouse with the technical information and advice necessary to

help increase energy efficiency and reduce energy costs.

The ENERGY STAR Small Business Program, managed by the

EPA and DOE, has been positioned as a clearinghouse for information related to energy efficiency that may be needed by small businesses. Small businesses have access to a wealth of information on

a wide variety of topics related to energy efficiency through the

ENERGY STAR Small Business Program. In particular, the Web

site offers information on eligibility for Federal tax credits and a

directory of energy efficiency programs so that small businesses

can learn about utility-sponsored programs and available rebates

for energy efficiency products.

The clearinghouse, when complete, will be accessible through the

SBA’s Web site with links and content provided by the EPA, DOE,

and the Department of Commerce. However, already in 2006,

Americans, with the help of the ENERGY STAR Program, saved

$14 billion on their energy bills, and at the same time reduced

greenhouse gas emissions.

In addition to ENERGY STAR, SBA and EPA worked together

to reach out to small trucking companies with financial assistance

to encourage the capital investment of fuel-efficient products. On

November 14, 2006, SBA began making loans available to help

small trucking companies finance the purchase of SmartWay Upgrade Kits. These kits include products that will help save the

small firms money in reduced fuel costs, while helping the environment by reducing greenhouse gas emissions.

The SBA will distribute information on energy efficiency issues

through its existing distribution network, including Small Business

Development Centers, Women’s Business Centers, and SCORE

chapters, along with other Federal agencies, including the Federal

Emergency Management Agency, the Department of Agriculture,

and the Department of Commerce. Federal agencies will also have

access to such information via the clearinghouse.

The EPA will handle telephone requests from small businesses

for information through its ENERGY STAR hotlines, which is 888–

STAR–YES. This program will enhance the Administration’s support of America’s entrepreneurs by helping them reduce their energy costs, thereby allowing them to grow their businesses and

bring more jobs to the Nation’s economy.

Thank you again for the chance to discuss the role of SBA in the

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ciency with the Committee. I will be pleased to answer any questions you might have.

[The prepared statement of Mr. Horowitz follows:]

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Chairman KERRY. Thank you, Mr. Horowitz.

Mr. Wehrum.

STATEMENT OF WILLIAM L. WEHRUM, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

Mr. WEHRUM. Good morning, Chairman Kerry, Senator Snowe.

Thanks for the opportunity to testify on behalf of the EPA. Small

businesses are key partners in our Nation’s efforts to promote economic growth and protect the global climate, and I am happy to

highlight EPA’s efforts with small businesses and voluntary partnership programs.

At EPA, we manage a suite of programs that are cost-effectively

reducing greenhouse gas emissions through energy efficiency as

well as other clean energy strategies. These programs are delivering tremendous results across the country and are projected to

contribute significantly to the reductions necessary to meet the

President’s greenhouse gas intensity goal in 2012.

We have long recognized that energy efficiency offers one of the

lowest-cost solutions for reducing our energy bills, improving our

energy security, preventing air pollution, and addressing the important issue of global climate change. The good news is that small

businesses are smart businesses and they are embracing the value

of sound energy management.

Over the last 15 years, the ENERGY STAR Program managed

jointly by EPA and the Department of Energy, has become a guidepost for energy efficiency for businesses and consumers. Overall,

Americans with the help of ENERGY STAR saved $12 billion on

their energy bills in 2005, while avoiding the greenhouse gas emissions equivalent to those of 23 million vehicles.

ENERGY STAR assists small businesses in two ways. First, it

helps small businesses that manufacture and sell energy-efficient

products get those products recognized in a crowded marketplace

where they might otherwise go unnoticed.

Second, the ENERGY STAR Small Business Program helps small

businesses reduce their own energy use, lower costs, and decrease

greenhouse gas emissions.

Small businesses have diverse sets of energy issues. Restaurants,

auto dealerships, convenience and grocery stores, hotels, and retail

establishments all have very different energy use profiles, different

challenges, and different opportunities. Furthermore, a large number of small businesses are home based. To address this diversity,

ENERGY STAR provides tailored assistance and training for each

of these small business types. The resources available to small

businesses through ENERGY STAR are numerous, including online

energy tracking, recorded and live training, Web resources, expert

advice, information on tax credits and rebates, a toll-free hotline,

award opportunities, and much more. With the help of ENERGY

STAR, small businesses are effectively managing their energy use,

saving money, and protecting the environment.

In addition to ENERGY STAR, EPA offers several other voluntary programs. The SmartWay Transport Program promotes fuel

conservation and diesel emissions reductions, resulting in potential

fuel savings of up to 150 million barrels of oil annually. SmartWay

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reaches out to trucking companies of all sizes to participate in the

program, including small businesses.

In November of 2006, in partnership with EPA, the SBA

launched a loan program to help small trucking companies finance

the purchase of SmartWay Upgrade Kits. These kits include a variety of technologies to help save fuel and decrease emissions.

SmartWay is also collaborating with the Owner-Operator and Independent Drivers Association to reach out to the owner-operators

and encourage greater awareness of energy-saving strategies.

Beyond this important work with voluntary partnership programs, EPA is also actively responding to the provisions of the Energy Policy Act of 2005. Just as public awareness of the ENERGY

STAR label has increased from 40 percent in 2000 to 65 percent

in the year 2006, a similar increase in awareness has occurred in

the small business community. The National Small Business Association 2006 Energy Survey independently reported that 60 percent

of small businesses surveyed indicated they are familiar with the

ENERGY STAR and its technical support program.

ENERGY STAR also educates small businesses about proper

maintenance for heating, ventilation, and air conditioning equipment. Through our pamphlet ‘‘Putting Energy into Profits: ENERGY STAR Guide for Small Businesses,’’ as well as our Web site

and a monthly electronic partner update, we provide guidance,

checklists, and tips related to HVAC issues.

In addition, we run two annual consumer education campaigns

on heating and cooling tips. They reach an estimated audience of

over 45 million viewers.

EPA, together with the SBA, has also made progress in developing a governmentwide program building on the ENERGY STAR

Small Business Program. EPA has participated in meetings with

DOE, SBA, and a number of key small business associations to discuss a clearinghouse for information related to energy efficiency.

EPA looks forward to the outcome of these productive discussions.

In closing, EPA recognizes the important role of small businesses

in helping our Nation address the challenges of global climate

change and energy independence. Our voluntary programs have

been instrumental in helping this large and diverse segment of our

economy gain recognition for their energy-saving products and become more energy efficient. The response of small businesses continues to grow.

We thank you for the opportunity to be here today. I look forward to answering any questions. And I will just add that we have

provided for you some materials developed in support of our Small

Business Program, and I hope that they will be a resource for you

as you continue to consider these important issues.

[The prepared statement of Mr. Wehrum follows:]

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Chairman KERRY. Thank you, and I look forward to following up.

I have some questions for you, as does Senator Snowe. But Senator

Boxer is now here, and what I want to do is ask her to testify from

up here rather than there, if she would.

Let me just welcome her. She is now the Chair of the Environment and Public Works Committee. She is very, very focused on

this issue, has shown tremendous leadership in it, is the sponsor

of one of the principal bills looking for 80-percent reduction by

2050, and has been a terrific partner in helping to work with us.

So we are really pleased she could come today, and thank you for

being here to testify.

STATEMENT OF THE HONORABLE BARBARA BOXER, A UNITED

STATES SENATOR FROM THE STATE OF CALIFORNIA, CHAIR,

SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC

WORKS

Senator BOXER. Senator Kerry, Mr. Chairman, Senator Snowe,

Ranking Member, I am just really so pleased to be here with you,

and I want to thank both of you for your work on global warming.

I think your bill is also one of the principal bills, and as I have told

both of you, we are going to all work together to really move this

issue forward. And it takes focus, and we just have to move every

day closer toward the day that we do produce a bill that we can

put on the President’s desk.

I also want to take a moment to welcome Scott Hauge of Small

Business California. We go back a very long time, Scott, and I am

just so happy to see you here and, of course, continuing to fight to

protect the environment.

Small Business California was one of the first business groups to

support the passage of California’s landmark global warming bill,

AB 32. And here is the thing, I think, Senator Kerry and Senator

Snowe, that you know: Supporting strong global warming legislation is good for business, and that is why it is so great that you

are doing this from the Small Business and Entrepreneurship Committee, and it is adding so much to the dialog.

We know global warming is one of the most pressing issues of

our time. Every day we learn more and more. We all talked about

the Intergovernmental Panel on Climate Change. Senator Snowe

and I talked to a gathering of parliamentary leaders from all over

the world to tell them that there is hope on the horizon now, that

we can do something. We know there is a 90-percent certainty humans are causing most of the warming.

That report was followed by the U.N. Foundation report, which

essentially underscored those findings, and we know that, left unchecked, global warming will lead to increased extreme weather

events, to sea level rises, to more flooding and hurricanes, changes

in our weather patterns that could reduce water supplies. Those

are just a few of the effects if we do not address this issue.

When you talk about the kind of environment we need for our

businesses to flourish, clearly the kind of environment we will get

if we do nothing about, global warming will not enable anyone to

flourish. So I think it is very clear that this Committee has to focus

on this.

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I believe there is an overwhelming consensus that global warming is happening. Yes, there are a few naysayers, but there are just

a few. But there always are a few. When science comes out and

they say, for example, that there is a tie-in between tobacco use

and lung cancer, there are always a few people who doubt it. There

are a few people who doubt that HIV causes AIDS. But we need

to move forward when we have a consensus, and that is what we

are doing in this Senate.

But there are still those who say, yes, we think it is happening,

but it is too costly to our economy. But, again, I think we need to

challenge that because if you look at the Stern report, for example,

you realize that by doing nothing, there is a tremendous cost to our

economy and every dollar we put in now to reverse the global

warming impacts will yield $5 in return.

Many in business and the investment community are waking up

to the business opportunities that will result from reducing greenhouse gas emissions. And we have seen big business come together,

and we have had them before the Environment Committee. But we

also see now that the can-do entrepreneurial spirit that resides in

America’s small businesses is really being tested here, and I believe

these businesses will be nimble enough to adjust rapidly to a lowcarbon, low-fossil fuel economy.

Since small business consumes more than half the electricity and

natural gas that is used for commercial purposes, reductions from

small businesses can make a difference. So small business can be

part of the solution and can be leaders in energy efficiency, which

at the end of the day cuts costs. We need to help small business

undertake more energy-efficient projects which will also, again, increase their bottom line and increase our competitiveness.

Mr. Chairman, you and I, as well as Senator Snowe, have made

many visits to places like the Silicon Valley and other areas where

venture capital is leading the way in both of your States. And we

see now that there are tremendous opportunities here. Imagine if

we can lead the way in the world with these new technologies,

these green technologies. Think about China; think about India.

We know they are looking to us. We cannot sit back and wait for

them to do the right thing. That is ridiculous. We need to do the

right thing, and our small businesses can do the right thing, and

we can all prosper at the end of the day.

So I would ask that the rest of my testimony be placed in the

record because I see my time is winding down. But I would just say

this to you, Mr. Chairman and Ranking Member Snowe: You are

positioned in a very important way, both with this Committee and

also the Commerce Committee, to be full partners with the Environment Committee and the Energy Committee so that we can

really get our heads together and get moving. And I believe that

just like in California, where small business led the way in passing

landmark legislation, they can do it on the national level, and we

should approach global warming with not fear, but determination

and hope. And if we do it right, it could turn into a huge opportunity for our small businesses.

Thank you so much for this chance to stop by.

[The prepared statement of Senator Boxer follows:]

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Chairman KERRY. Well, we are delighted, Senator. We love your

passion on this issue, and we really look forward to and are grateful for your leadership because you have directed the Environment

Committee to make this its lead priority.

Senator BOXER. Thank you.

Chairman KERRY. People may not believe it, but next to the war

on terror, folks, this is the biggest priority that we face, and we

have to treat it accordingly.

Senator SNOWE. Mr. Chairman, I just want to compliment Senator Boxer, who chairs the Environment Committee, because I

think her leadership is going to be critical in that endeavor, and

also for the innovative approach you adopted recently by having an

open mike for Members of the Senate to testify, in which you had

a third of the U.S. Senate testify on global warming.

Senator BOXER. We did.

Senator SNOWE. So thank you very much for giving the level of

urgency that this issue rightfully deserves.

Senator BOXER. Thank you both.

Chairman KERRY. We appreciate it. Thank you very, very much.

Mr. Wehrum, thank you for your testimony, and Mr. Horowitz

also. There is no question that the ENERGY STAR Program is a

good program. It serves a valuable role in promoting energy efficiency for consumers. It certainly has increased awareness in the

country of the ENERGY STAR label.

I think the question is: Are we really sufficiently committed to

it? Is it all that it could be? And are we doing all that we can? I

would ask you, Mr. Wehrum, you received $50 million in appropriations for 2006, but the President requested only $44 million for it

for this next year. Can you explain why the President is looking

to devote fewer resources for a successful energy-reducing program?

Mr. WEHRUM. Yes, Chairman Kerry. I would say three things.

One, ENERGY STAR is an enormously effective program and

will continue to be an enormously effective program. The goal of

the program all along since its inception has been to foster partnerships with our private sector and other partners that we have in

the program.

Chairman KERRY. Do you believe we are at a level of those partnerships that is acceptable, that is what we ought to have?

Mr. WEHRUM. We are doing very well, and I would say we——

Chairman KERRY. That is not what I asked you. Are we at the

level that we could be and ought to be with respect to the challenge

of this issue?

Mr. WEHRUM. There is always more opportunity, Mr.

Chairman——

Chairman KERRY. Then why are we cutting the program?

Mr. WEHRUM. Well, the first reason is I do believe we are making

progress in mainstreaming these issues. ENERGY STAR has been

about win-win solutions where, done correctly, significant energy

savings and, therefore, cost savings can be achieved. At the same

time, great benefits to the environment, including reductions in the

growth of and outright reductions in greenhouse gas emissions can

also be achieved.

30

The second thing I will say is that part of the reduction in the

2008 budget reflects a greater emphasis on international action.

The President’s budget in 2008 asks for $5 million, for example, to

support the Asia Pacific Partnership, and a key aspect of the Asia

Pacific Partnership is to support infrastructure development and

real projects, and they call for sustainable development and energy

efficiency. And ENERGY STAR is a significant component of our

international efforts that way.

The third thing I would say is that times are tough budget-wise,

and we at the EPA, along with our colleagues at the other departments and agencies, are doing what we can to help promote fiscal

responsibility and contribute to our ability to reach a balanced

budget, and we are trying very hard to do that.

Chairman KERRY. Well, it seems to me it is sort of penny-wise,

pound-foolish in the end because of the savings that it would mean

to those companies, the increased profits and then the increased

revenues.

Mr. WEHRUM. Mr. Chairman, there is great opportunity, and as

the Administrator said yesterday in testimony, we are all about results, and we think this is an enormously successful program and

will continue to be an enormously successful program. And I am

personally quite proud to have the opportunity to work with the

folks who run this program and developed the program. It is

among the best of what EPA and the Government has to offer, and

I think we do a great job.

Chairman KERRY. Well, what percentage of the ENERGY STAR

Program is dedicated to energy small business?

Mr. WEHRUM. On the specific dollars, we spend about $1 million

a year directly on our small——

Chairman KERRY. Percentage.

Mr. WEHRUM. That is 1 in 50, so that is, you know——

Chairman KERRY. A tiny percent.

Mr. WEHRUM. Two percent, but——

Chairman KERRY. Small business is 50 percent of the businesses

in the country in terms of energy use.

Mr. WEHRUM. Well, the other part of the answer, Mr. Chairman,

is that the small business part of our program benefits from many

of the other efforts that are underway in the program at large.

With regard to developing the ENERGY STAR brand, promoting

development of energy-efficient products, you know, our efforts specifically to small businesses are very, very important, and we take

them quite seriously. But those efforts leverage off the broader efforts within the ENERGY STAR Program.

Chairman KERRY. Not unless people have the technical assistance and the knowledge of it. I mean, a lot of small business people

are working head-down, straight-ahead, 6 a.m. in the morning until

11 p.m. at night. It is a long day. It is a tough ordeal. And they

do not have a lot of time. They are not necessarily tuned into the

Web. They do not know what is going on with ENERGY STAR.

There needs to be a kind of proactive effort to help a lot of those

folks be aware. Many of them are immigrants. Many of them are

new to business. A lot of them are startups of two or three people,

or whatever, and they are just not aware of these things. But there

could be big savings to them.

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Mr. WEHRUM. Mr. Chairman, we agree completely, and the

money that we specifically spend on the small business aspect of

the program goes at exactly the issues that you just talked about.

For instance, one of the documents that we have provided to you

is the ENERGY STAR Guide for Small Businesses. We make this

widely available as a published document. It is available on the

Internet. And you are exactly right, many folks do not have access

to the Internet or do not have the time to access the Internet. But,

nevertheless, that is quite a valuable resource.

Chairman KERRY. Does the EPA proactively work in joint venture with the Small Business Administration to reach out to small

businesses?

Mr. WEHRUM. Yes, Mr. Chairman, we do.

Chairman KERRY. What is the format for that?

Mr. WEHRUM. Much of the focus of late has been to satisfy our

mutual obligations under the Energy Policy Act. That law called for

the SBA to lead an effort to create a clearinghouse for information,

and I am sure my colleague has some thoughts on this. We feel like

as a Government, and especially through the ENERGY STAR

Small Business Programs, we have done a lot of what that law, I

think, envisions as being helpful in setting up that clearinghouse.

But we have spent time working with our SBA colleagues and others within the Government to figure out what it means to put the

clearinghouse together.

And setting aside ENERGY STAR, we do have other programs,

as I mentioned in my testimony. A good example is the SmartWay

Program, which is directed at reducing fuel utilization and increasing efficiency of over-the-road trucks. And we worked very successfully with SBA late last year to put together a loan guarantee program directed at small businesses to help make financing more

readily and easily available to small owner-operators or those that

operate small fleets in order to take advantage of these energy efficiency opportunities.

Chairman KERRY. You mentioned the President’s greenhouse

goal by 2012. What is that goal by 2012 for greenhouse gas?

Mr. WEHRUM. An 18-percent reduction in greenhouse gas intensity.

Chairman KERRY. Which gets you to where?

Mr. WEHRUM. I do not have that figure in front of me. It slows

the growth of greenhouse gas emissions between now and 2012.

Chairman KERRY. But an 18-percent reduction by 2012—is that

what you said?

Mr. WEHRUM. Yes, Mr. Chairman.

Chairman KERRY. What is there in the current approach that

suggests, since it is voluntary, that that is achievable?

Mr. WEHRUM. We take the Administration’s commitment to that

objective quite seriously, and, in fact, there is a governmentwide effort to track progress against that goal. And, in fact, much of the

work that is done within EPA and, I believe, our primary contribution—one of our primary contributions to the governmentwide climate effort is to get real results against that goal.

My testimony and my colleague’s testimony pointed out what we

believe are some of the measurable results just from ENERGY

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ticipants. That can be expressed in a lot of different ways. The figure we often use is what is that equivalent to in terms of automobiles. It is 23 million vehicles.

Chairman KERRY. But there is nothing historically—I mean—

with all due respect, that kind of just talks around it. In the 22

years I have been on the Commerce Committee, we have been

struggling with emissions, and we have been struggling with emissions nationally. Our emissions are only going up. We are not reducing. We set voluntary goals in 1992. President George Herbert

Walker Bush signed the Voluntary Framework, and it has done

nothing but go up. There has never been a reduction over the

course of that time. The demand levels across the country show

nothing but an increase.

Why do you think USCAP—are you familiar with USCAP?

Mr. WEHRUM. Yes, Mr. Chairman.

Chairman KERRY. Why do you think these leaders of major corporations are coming out and saying we need a mandatory cap?

Why are they ahead of the EPA?

Mr. WEHRUM. As on many important and complex issues, there

is a diversity of views right now.

Chairman KERRY. Well, these are not your—I mean, these are

American CEOs of big companies. I doubt that—you know, most of

them probably voted for George Bush, but they all believe that we

need a cap because you have to do this mandatorily.

Mr. WEHRUM. Well, Mr. Chairman, the Administration’s policy is

that mandatory measures are not appropriate, but the policy——

Chairman KERRY. Why? Why would they not be appropriate if

you have to achieve a certain goal?

Mr. WEHRUM. Because since the President set out the goal—and

the goal is just one of four significant, four major prongs of the Administration’s strategy. But since that objective was set by the

President, we have been tracking progress against it. In fact, we

have been exceeding on a pro rata basis what we otherwise need

to achieve in terms of energy savings to meet the greenhouse gas

intensity targets. So we have great confidence we are going to meet

and probably exceed the target that has been set out by the President.

The President’s goal has been to reduce the growth of greenhouse

gas emissions in this country and, as appropriate, seek to stop the

growth and reverse the growth. But the ‘‘as appropriate’’ goes to

the other three prongs of the strategy. The other three prongs include substantial investment in continued scientific research, basic

scientific research, and EPA does have a role in that as well. And

substantial investment in technology development. You mentioned

in your opening remarks that next-generation technologies and

spurring those technologies is an important part of this debate and

this effort, and we agree with that completely and spend something

on the order of $3 billion per year as an administration on development of next-generation technology. And as I have alluded to in my

comments today, aggressive action on the international front is a

big part of our strategy, and we have been working hard at that.

I personally have been involved in many important aspects of that

effort.

Chairman KERRY. On the international front?

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Mr. WEHRUM. Yes, Mr. Chairman.

Chairman KERRY. I want to turn to Senator Snowe, but can you

just articulate what the Administration is doing on the international front?

Mr. WEHRUM. Sure, and I will give you a couple good examples

based on my personal experience. The EPA administers a program

called Methane to Markets. It is an international partnership program that currently has 19 member countries, and I happen to be

the Chair of the Steering Committee of that effort.

The goal of Methane to Markets is to leverage the experience, the

substantial experience that we have developed domestically to

identify and reduce emissions of methane from primarily agricultural sources, coal mines, landfills, and oil and gas development

and distribution.

We have had domestic programs in each of those areas for many

years now, and we have had great success. So the idea of Methane

to Markets is to leverage off of our experience and success and provide our technology, provide our know-how to the world at large,

and seek to have projects implemented across the world to reduce

methane emissions, because, again, as you pointed out in your

opening remarks, methane is a very powerful greenhouse gas, and

focused efforts on reducing methane can have that much more of

an effect in reducing greenhouse gas emissions and in our case contributing to our goal of reducing greenhouse gas intensity between

now and 2012.

That is one example of many, Mr. Chairman.

Chairman KERRY. Well, you know, it may well be that that is

taking place. I will tell you that in my conversations—and most recently we had the Global Legislators for a Balanced Environment

here, with delegations from China and India and Great Britain and

all over the world. They met just downstairs in Senate Caucus

Room 325, and to listen to them, they think we are one of the largest parts of the problem. They have no sense of our participation

globally. They have no sense that this Administration is doing any

of this or that it is making any difference. They see us as 25 percent of the world’s pollution and not part of the solution.

Mr. WEHRUM. Mr. Chairman, I will just say there is substantial

effort on the part of the Administration and the U.S. Government

is directed at effective activity on the international level. Methane

to Markets is one example. The Asia Pacific Partnership, which I

mentioned previously, is another great example where we are seeking to get six countries on the Pacific Rim to invest significantly

in sustainable development, which will have in part the effect of

helping manage greenhouse gas emissions and the global climate

change issue.

Chairman KERRY. I will come back to that afterwards.

Senator Snowe.

Senator SNOWE. To come back to the ENERGY STAR Program,

is it true that you only have one employee that works on this program?

Mr. WEHRUM. Senator Snowe, specific to the small business component, we have two FTEs committed to it. So the equivalent of

two employees. Again, I think it is very important to emphasize

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tage of and leverage off of many other components of the program

where substantially greater resources are invested. And, again, a

good example is development of the ENERGY STAR brand and the

promotion and the defense of that brand. We spend a tremendous

amount of time and effort making sure the brand has value, making sure the brand is recognized and promotes the goals of the

partnership. And small businesses, they benefit directly from that

and substantially from that effort.

Senator SNOWE. So how many small businesses have benefited

from it? Do you have the numbers?

Mr. WEHRUM. I do not have that number in front of me. I would

be happy to get that to you for the record.

Senator SNOWE. Well, I think the key here is that you have 25

million small businesses in America, so we have enormous potential. And when you are looking at the surveys, one was done by the

National Small Business Association and said that 75 percent of

small businesses believe that energy efficiency can make a significant contribution, yet only 33 percent have successfully made investments in that regard.

If you look at the other statistics, 40 percent of small businesses

are still not familiar with the ENERGY STAR product label and

technical support programs that are available. As I said, only a

third or more have taken steps to reduce their energy costs and

making the investments necessary.

So we have enormous potential here, and I am not sure that we

are accomplishing the maximum in getting this message out and

making the outreach to the 25 million small businesses who are

out there that can ultimately make a difference. I mean, if they

make an investment in reducing their energy infrastructure that is

efficient, they can reap savings of more than 50 percent. That fact

has been demonstrated time and again.

This is a good example of a program that can be enormously

helpful to small business and also to our environment.

Mr. WEHRUM. Senator, we could not agree more, and we believe

there is great opportunity. That is how we see it. Progress, tremendous progress, has been made; 60-percent brand recognition within

the small business community is remarkable. That rivals many

other national brands on the retail level, and we think that is a

real strong indicator of the success of this program.

Senator Kerry pointed out that small businesses have particular

challenges as compared to the larger businesses and industrial concerns in this country, and that is exactly right. A big part of what

we try to do in the small business part of the ENERGY STAR program is identify those key differences and challenges that small

businesses face and then try to find effective ways to deal with it.

So time, as the Chairman pointed out, is a very real challenge for

small businesses. There are only so many hours in the day, and

many small businessmen just do not have time to surf the Web and

time to read even the materials that we make available.

Money is always an issue, and particularly a challenge. Getting

relevant information, getting technical support——

Senator SNOWE. Well, do you ever get feedback from small businesses about the program and what their needs are?

Mr. WEHRUM. We do——

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Senator SNOWE. I will ask the same of Mr. Horowitz, but are we

getting feedback?

Mr. WEHRUM. We do, Senator. We work very closely with a wide

variety of businesses and business associations. A good example is

the auto dealers. In fact, I just, a couple months ago at the Washington Auto Show, announced a partnership with the National

Auto Dealers Association, which is largely comprised of small businesses, but not completely, to leverage our combined resources to

really promote energy efficiency and ENERGY STAR in the retail

automobile industry. It is a great opportunity. That is an energyintensive small business industry because of the lighting and the

ventilation, HVAC requirements to run these kinds of establishments. They saw a great opportunity, and we saw a great opportunity, and that is just one good example of where feedback and

working together has allowed us to make real inroads into that

particular segment in the small business community.

Senator SNOWE. Mr. Horowitz, can you shed some light on the

SBA’s role in this regard? In the 2005 Energy Policy Act, we elaborated on the requirements to buildupon the ENERGY STAR Program and to help small businesses. Can you tell me how successful

we have been in meeting all of the goals that have been enumerated in the act in 2005 to help small businesses become more energy efficient? And, also, specifically on this clearinghouse, too, exactly what role is that playing? How many small businesses are

tapping into it? And has it been successful?

Mr. HOROWITZ. Senator Snowe, I would like to be completely

clear, forthright, and upcoming. I have been at the SBA 5 weeks,

so I have limited knowledge on this issue.

That being said, having reviewed the——

Chairman KERRY. Is that why they sent you up here today?

[Laughter.]

Mr. HOROWITZ. I am also a former House Committee staffer from

the House Committee on Small Business, so I am aware of these

issues somewhat as well.

Chairman KERRY. So which way do you want it? Do you know

everything or——

[Laughter.]

Mr. HOROWITZ. I am aware of them from a congressional staff

point of view, and now I am responsible for fulfilling these needs

and requirements on the agency level.

That being said, the SBA is required under the Energy Policy Act

of 2005, in consultation with DOE and EPA, to develop and coordinate the program building on the ENERGY STAR Program. The

four key points in the act are straightforward. There is a need for

the Small Business Administration to finalize the clearinghouse

and put it online. There are several people working on it. Information is readily available, and this hearing has provided a catalyst

for making that a priority.

Senator SNOWE. Did you know there was not?

Mr. HOROWITZ. I do not. I do know that now I am responsible

for it, and I will make it happen.

Senator SNOWE. Well, I think that is the essence of the problem

we are facing. Unfortunately, it affects small businesses. It is not

unique to this program. It has unfortunately become more the

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norm within the Federal agencies, frankly. But the SBA is supposed to be the leader and the voice for small businesses across

this country, and to provide a level of urgency, but also a sense of

impetus for implementing these programs and reaching out and

helping them. So that was 2005 when we passed the act, and here

we are today in 2007, and basically the clearinghouse, for example,

has not been implemented. And, frankly, I think we need to have

submitted to the Committee and all the five goals under this requirement in the act, I would like to have a response from SBA in

terms of, you know, what progress has been made or has not been

made on these requirements and this commitment.

I mean, if 40 percent are not even familiar with the ENERGY

STAR label or the technical support available, we have a long ways

to go in reaching out to millions of small businesses across this

country. And we fail to do so at a time at which I think it is an

imperative, not to mention the fact they can be instrumental in

many ways to helping us combat this problem.

Mr. HOROWITZ. We will get back to you with those answers.

Senator SNOWE. Well, it is not encouraging, frankly. That is the

fundamental concern that I have. And I understand that you are

new in your position, but, nevertheless, that should not be the

issue here today.

Mr. HOROWITZ. Correct.

Senator SNOWE. It should be carrying over the policies that have

already been in place. And so I think that that is unfortunate here.

Mr. HOROWITZ. Well, I do not want to say that the SBA has not

been doing anything in this regard. That would be far from the

truth. The SmartWay trucking initiative was a great example of

partnership between the agencies of something that has been done

that specifically targets small businesses to help them realize the

possibilities of energy efficiency. This has allowed the small business firms to get loans under the 7(a) program, to get the upgrade

kits, and do such things as put a 400-pound generator on the back

of their cab or their truck, so instead of idling at a truck stop on

the side of the road burning diesel fuel, they are allowed to run off

the electrical generator, thus not burning fossil fuel. Now, this is

a potential to save 1 billion gallons in diesel across the board. That

is, I think, a significant opportunity.

We have to continue to work to make sure that such partnerships such as the Owner-Operator Independent Drivers Association

(OOIDA) has the opportunity to make sure that their members and

the other members of similar associations provide that information

to the truckers and the owners of the small firms.

Senator SNOWE. What is the relationship between EPA and SBA

on the ENERGY STAR Program? How well do you work together?

Has there been a standardized relationship in the ENERGY STAR

Program, for example? We have the clearinghouse and all of these

initiatives that were passed in 2005.

Mr. WEHRUM. Senator, ENERGY STAR itself is a program implemented in partnership between EPA and the Department of Energy. SBA does not have a primary role in developing——

Senator SNOWE. No, I understand that. But how well do you

work with SBA on this issue?

Mr. WEHRUM. I think we work together very well.

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Senator SNOWE. Because the primary goal of the 2005 provisions

were to buildupon the ENERGY STAR Program, so I just did not

know what level of communication existed.

Mr. WEHRUM. Our staffs have been working together quite well

and with great frequency, and, in fact, with growing frequency. We

within the ENERGY STAR Program see the relationship as a great

opportunity, a great opportunity for us to leverage the efforts of the

Federal Government and use the resources of SBA to further

spread the word about what we are doing with ENERGY STAR

and making important information and resources more widely

available. So it is a relationship we think is important, we are trying to foster, and I think we will continue to grow, and the clearinghouse is a great opportunity for us to have a common goal and

a common project to accomplish all those ends.

Mr. HOROWITZ. On the SBA side of it, following the Energy Policy Act, there has been a concerted effort by the SBA to gather materials from the ENERGY STAR products and the other programs

within the Department of Energy and the Department of Commerce and provide them through the regional district offices and

through our affiliates, the SCOREs, the SBDCs, and the Women’s

Business Centers, across the country.

So the opportunity is there to provide the material on the Main

Street level so that small business people see it whenever they are

in the various locations of the SBA and our affiliates, in addition

to the Web-site-based clearinghouse.

Senator SNOWE. Thank you.

Thank you, Mr. Chairman.

Chairman KERRY. Thank you very much, Senator Snowe.

Let me emphasize that we would really like the information provided that Senator Snowe asked for, and we will leave this record

open in order to submit some questions in writing from the Committee that we want to follow up on.

Before we move to the next panel, I have a few more questions,

if I could ask them.

Following up on what Senator Snowe just asked you, Mr.

Wehrum, you said something about the resources that we apply to

the ENERGY STAR Program, but you pointed out the two people

who are effectively working on it with respect to small business. If

I understand it correctly, most of what the EPA does with respect

to the ENERGY STAR Program is either done over the phone or

on the Internet, fundamentally. Isn’t that accurate? I mean, the information is provided and made available to people, but you are not

providing energy audits, for instance, or technical assistance.

Mr. WEHRUM. Mr. Chairman, it is difficult to quantify. It is very

true that we emphasize——

Chairman KERRY. It is not hard to quantify that. I mean, the answer is you are not providing audits.

Mr. WEHRUM. And that is exactly right. That is——

Chairman KERRY. Is that accurate?

Mr. WEHRUM. That is exactly right.

Chairman KERRY. What is hard to quantify about that?

Mr. WEHRUM. But the question is, do we provide other means of

disseminating information and provide technical support beyond

the telephone and the Internet, and the answer is surely yes, and

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that is what is difficult to quantify. We work very closely, as I

pointed out before, with a wide variety of companies and small

business associations, and that gives us great leverage. That gives

us great access——

Chairman KERRY. Well, I want to get a better quantification.

Mr. WEHRUM. Sure.

Chairman KERRY. I want to give some questions to you that really try to break this down so we can see what is really happening,

because what we get from small businesses is that, you know, not

much actually touches them somehow.

Now, let me give you an example. Chris Lynch of the Pennsylvania SBDCs is going to testify in the next panel about this technical assistance issue. He will testify that six out of the eight ENERGY STAR Awards given out nationally to small businesses in

2006 went to his clients in Pennsylvania, and he provides those audits.

So I guess, you know, given the success of the EPA program in

Pennsylvania, doesn’t that sort of scream to you to say, Wow,

maybe we ought to be able to augment this by providing a lot of

audits?

Mr. WEHRUM. Well, I think that success is a great example of

what we can accomplish through these relationships and leveraging

relationships.

Chairman KERRY. Did you accomplish it or did Chris?

Mr. WEHRUM. Oh, Chris. No doubt about it. But——

Chairman KERRY. So why can’t you augment that, replicate it?

Don’t you see the urgency of this?

Mr. WEHRUM. It is absolutely urgent, and, again, this is a just

a great example of what we are trying to accomplish where—you

know, one of the basic strategies of ENERGY STAR is that the

Government, the Federal Government, should not be doing all the

work, that we should be able to incentivize and energize other interested parties, including in this case small business associations

and small businesses, to pick up the issue and help carry it along.

And this is just a great example of that. We have worked great

with Mr. Lynch’s organization, and that has paid off in the form

of—I mean, the awards are just evidence of the fact that it has

paid off on the ground. And we try to replicate that, and we are

working hard to replicate that across the country.

Chairman KERRY. Well, they are all resource-starved, I can tell

you that. And as Senator Snowe pointed out, when you look at this

gap between the 75 percent and the 33 percent receiving it, if I

were sitting in your seat, I would say I want to close that gap.

Mr. WEHRUM. Absolutely. Great opportunity, Mr. Chairman.

Chairman KERRY. Where is the proposal to close it?

Mr. WEHRUM. We work hard every day on those issues. And

we——

Chairman KERRY. Mr. Horowitz, let me ask you a question. You

say that the SBA and its collaborating agencies have made

progress in developing a governmentwide program to assist small

businesses in becoming more energy efficient. That is what we

mandated in the Energy Policy Act of 2005. Can you be a little

more specific about what you mean by that progress? Define it for

us.

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Mr. HOROWITZ. Well, I think the ENERGY STAR Program is evident of the massive amount of work——

Chairman KERRY. Is that all you mean, just the ENERGY STAR

Program?

Mr. HOROWITZ. Well, the SBA——

Chairman KERRY. It is not your program. That is theirs.

Mr. HOROWITZ. Correct. Well, consulting with the Office of General Counsel of the SBA, reading the Energy Policy Act, the SBA’s

role is to provide a conduit for small businesses to access that information, to make it more readily available for them.

Now, there are two ways we can do that: One is through the Web

site that allows them to—we want to collate the information across

the DOE, Department of Commerce, and the EPA so that small

businesses have an easy-to-find, one-stop shop. Second is to take all

the printed material, such as what you have on your table, and disseminate it to the Regional and District offices of SBA as well as

our affiliates, the SBDCs, the Women’s Business Centers, and the

SCORE offices.

Chairman KERRY. And that is what is happening now, that information is being disseminated?

Mr. HOROWITZ. It has not yet begun.

Chairman KERRY. It has not yet begun.

Mr. HOROWITZ. No.

Chairman KERRY. OK. Let me ask you further: Who is the designated official or is there a designated entity within SBA to lift

on this issue?

Mr. HOROWITZ. There has not been one; thus, it is my responsibility to take that up and to make sure——

Chairman KERRY. So, thus far, there is no sort of major Administration policy with respect to a small business global climate

change initiative?

Mr. HOROWITZ. Well, I do not believe that would necessarily be

the case. I——

Chairman KERRY. Well, what is——

Mr. HOROWITZ. Sitting——

Chairman KERRY. You just said that——

Mr. HOROWITZ. Becoming aware of the information—pardon me.

Becoming aware of the information that the EPA has been working

on such as——

Chairman KERRY. I am saying SBA. Within the SBA.

Mr. HOROWITZ. I understand.

Chairman KERRY. The Small Business Administration.

Mr. HOROWITZ. There is no one person that has been designated

to be that person that I am aware of. Thus, it has become my responsibility.

Chairman KERRY. What is your designation? You are the——

Mr. HOROWITZ. Assistant Administrator for Policy and Planning.

I will make certain it gets done.

Chairman KERRY. Well, I think Senator Snowe and I will probably have a conversation with Administrator Preston and try to see

what we can do to augment this effort within SBA. It seems to me

there is just a huge opportunity for proactivity being missed here

that is pretty critical.

Mr. HOROWITZ. Very much so.

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Chairman KERRY. And for joint venturing. At any rate, I will

leave the rest of the questions for the record.

Senator Snowe, do you have any additional questions?

Senator SNOWE. No, I do not, Mr. Chairman, but I agree.

Chairman KERRY. Thank you both. Appreciate it. We will have

panel two come up.

Did the EPA and SBA leave? Have they left? Oh, you are here.

SBA is here. Well, good. I am glad you are here. The EPA is not,

however. I think they might have benefited by listening. One person from EPA is here.

Well, thank you, members of this panel. Byron Kennard, Executive Director for the Center for Small Business and the Environment, a leader in the movement to bring small businesses to the

table in the search for solutions to global warming. I appreciate

your being back here before the Committee. You were here previously.

Jim Barber, President and CEO of Cambridge-based Metabolix,

which is, as I said, a small business applying tools of biotechnology

to create a new generation of versatile, sustainable, bio-based, biodegradable natural plastics and chemicals.

Chris Lynch, Director in the Environmental Management Assistance Program, Pennsylvania Small Business Development Centers.

David Goldstein, Co-Director of the Natural Resources Defense

Council Energy Program. I might add that Dr. Goldstein helped negotiate the agreement that led to the National Appliance Energy

Conservation Act back in 1987, and many other things, so we appreciate all of you being here very, very much.

Scott Hauge, Vice President, National Small Business Association, and founder of Small Business California, which was already

mentioned by Senator Boxer. We appreciate your good work in

these efforts.

So thank you all for being here. We look forward to your testimony. If you can try to compress it into 5 minutes, that would be

helpful. Then we can have more time for some exchange.

Mr. Kennard, do you want to begin? Can you press the mike on?

There is a little button on the mike. Make sure the light is on, and

then bring it close to you. Just pull it right toward you.

Mr. KENNARD. Is that working now?

Chairman KERRY. That is great.

STATEMENT OF BYRON KENNARD, EXECUTIVE DIRECTOR,

CENTER FOR SMALL BUSINESS AND THE ENVIRONMENT

Mr. KENNARD. Thank you, Chairman Kerry and Senator Snowe.

Congratulations on holding this hearing. You are making vitally

important connections between small business and climate change

that have not been made by policymakers thus far. Why is this so?

Largely because small business has not had a seat at the table

where environmental and energy policies are determined. That has

to change. Here is why.

Small businesses may be disproportionately harmed by extreme

weather events associated with global warming. They do not have

the financial reserves to bounce back from such disasters. Look at

the impact of Hurricane Katrina on small businesses in the Gulf

Coast region where they constituted the backbone of the economy.

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But there is a positive connection here, too. Every single small

business in the Nation can profit by making its workplace more energy efficient.

According to EPA’s ENERGY STAR Small Business Program,

small firms can save between 20 and 30 percent on their energy

bills through off-the-shelf, cost-effective energy upgrades. The job—

it is not rocket science—consists of installing the same few simple

devices like programmable thermostats over and over again in millions of small business workplaces.

Now, small business is one-half of the economy. This means onehalf of the economy could be quickly and profitably made more energy efficient. And there are devices to help this happen. My favorite is called On-Bill Financing about which you will hear more from

other panelists, but basically this makes energy efficiency for small

businesses as easy as falling off a log. It is described in my written

submission.

The other critical connection between small business and climate

is innovation. When it comes to producing technical solutions to the

problem, entrepreneurs and small businesses are way out ahead of

everybody else. They are ahead of the Government, they are ahead

of the environmentalists, they are ahead of the regulators. The entrepreneurs are out there doing their thing.

Now, many of these clean-tech companies are now thriving and

creating abundant new jobs. We call these fast-growing businesses

‘‘green gazelles.’’ The technologies being produced by green gazelles

are increasingly cost-effective. What is more, investment in them is

soaring both here and abroad. Last year a record $71 billion was

invested worldwide in renewable energy. Venture capitalist John

Dorr, who invested early in Google and Amazon, recently declared,

‘‘Going green may be the biggest economic opportunity of the 21st

century. It is the mother of all markets.’’

Vinod Khosla, another renowned venture capitalist who co-founded Sun Microsystems, was asked why he is investing so heavily in

clean tech. ‘‘Because,’’ he said, ‘‘the best brains in the country are

no longer working on the next pharmaceutical drug or the next Silicon Revolution. They want to work on energy.’’

So envision this: A huge swarm of entrepreneurs tackling the

problem from all directions and in countless ways. To me, these entrepreneurs are heroes, providing leadership of a high order,

unique, indispensable, and ultimately transformational.

But the path of these heroes is not smooth. As Members of this

Committee know all too well, entrepreneurs are forced to play on

a playing field that is not level. Now facing the dire threat of global

warming, the need to level the playing field is more urgent and

compelling than it ever was. There are lots of ways to do this. In

my written submission I propose the creation of a congressionally

mandated initiative for the SBIR program to make green technology a priority. And we also propose the idea of a transferable

R&D tax credit whereby entrepreneurs who are not profitable can

go to a firm with the strength to commercialize their technology

and strike a deal whereby the larger firm can take advantage of

the tax credit.

In conclusion, small business needs and richly deserves a seat at

the table when proposals to curb global warming are being hamVerDate 11-MAY-2000 12:58 Aug 03, 2007 Jkt 035764 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 C:\DOCS\35764.TXT DianeA PsN: DianeA
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mered out. We call on you, Mr. Chairman and Senator Snowe, and

your colleagues on this Committee to take the lead in making this

happen.

Thank you very much.

[The prepared statement of Mr. Kennard follows:]

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Chairman KERRY. Thank you very much, sir. That is an important statement, and we appreciate it very much.

I might add that Vinod Khosla and John Doerr are people I have

talked to about this. I think we are going to have them in front of

the Commerce Committee at some point. We are working on dates

with them. But they are indeed leading the venture capital field in

that effort, and I like your idea about SBIR.

Mr. Barber, welcome. Good to have you here. It is a little colder

up in Massachusetts, isn’t it?

Mr. BARBER. It has been.

STATEMENT OF JAMES J. BARBER, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, METABOLIX

Mr. BARBER. Thank you very much, Senator Kerry and Senator

Snowe, for this opportunity to meet with you today and talk a bit

about what one small business is doing to combat global climate

change.

Everyone knows by now about our unhealthy addiction to oil and

that our consumption of oil contributes to global climate change

and greenhouse gas emissions. What everyone does not know is

that nearly 10 percent of the oil we use is used for producing plastics and chemicals, that is, products. And just as biofuels provide

a path to reduce global climate change by reducing our use of oil,

so do bioproducts. There are initiatives underway in the United

States, by ourselves and others, to develop bioproduct alternatives

to petroleum-based plastics and chemicals. These bioproduct alternatives will reduce our consumption of petroleum and reduce our

emissions of greenhouse gases.

Metabolix is a small biotech company based in Cambridge, Massachusetts, 60 people today. We were formed 15 years ago, in 1992,

to use bioscience to provide clean, sustainable solutions to our need

for plastics, fuels, and chemicals, and last November we became a

publicly traded company and are now listed on Nasdaq. We have

had some help along the way from the Department of Energy, the

Department of Agriculture, and the Department of Commerce in

the form of research grants, and in 2005, we received the President’s Green Chemistry Award.

We are now building our first commercial plant in Clinton, Iowa,

in a joint venture with Archer Daniels Midland to convert corn

sugar to natural plastic, a bioproduct. Natural plastic is useful in

a wide range of everyday products—I brought a few here—from coffee cups and lids to gift cards to packaging, housewares of all sorts,

bottle caps, plastic bags, many of the sorts of things that we now

find in petrochemical-based plastics.

This first plant will startup next year, 2008, and will produce

110 million pounds per year of natural plastic, a small amount in

comparison to the nearly 100 billion pounds per year of plastic material we make and use in the United States every year, but still

displacing enough oil to fuel over 20,000 cars for a year.

While petroleum-based plastics are significant emitters of greenhouse gases in their manufacture and contribute to global warming, natural plastic will substantially reduce greenhouse gas emissions. In fact, our first plant in Clinton, Iowa, will be powered by

biomass and other forms of renewable energy.

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In Metabolix’s case, our natural plastic bioproduct is totally biodegradable, so unlike any other plastic, natural plastic harmlessly

biodegrades even in wetland and marine environments. Petroleumbased plastics, on the other hand, last virtually forever and are creating a growing solid waste and environmental challenge. Yet natural plastic, like wood that we build our homes of, is very durable

in use and combines durability and biodegradability.

While this is a start, we can do much more as we expand production of natural plastic and so reduce our petroleum usage, greenhouse gas emissions, and waste in the environment. This commercial plant in Iowa is a realization of the opportunity to couple the

biotechnology strength we have here in the United States, much of

it in small companies, with the agricultural resources we have. But

it is only a start.

Beyond our first platform now being commercialized, we have

other exciting developments in the pipeline. Five years ago, we

started working on developing enhanced switchgrass that would

produce natural plastic right within the leaves and stems. And we

now have test plants of switchgrass producing measurable levels of

natural plastic growing in our greenhouse in Cambridge, Massachusetts. The natural plastic produced within the leaves and stems

will be extracted for use in everyday products like you have seen

here, and the remaining biomass will be used for producing cellulosic ethanol or other biofuels and will result in significant cellulosic ethanol cost reduction.

The production of a valuable co-product, natural plastic, along

with switchgrass biomass that can be converted to liquid fuels will

significantly lower the hurdle to economic production of cellulosic

biofuels. And we have earlier stage concepts for bio-based production of large-volume chemical intermediates as well, now made

from petroleum and natural gas.

There is another way you can affect climate change today. We

and others developing and commercializing natural bioproduct alternatives to petroleum-based products are doing so without the

policy initiatives that are speeding adoption of biofuels, such as bioethanol, yet bioproducts will displace oil just as effectively as

biofuels do. We strongly encourage the Congress to consider extending the policy initiatives already in place to encourage and accelerate the adoption of biofuels to accelerate the adoption of bioproducts that displace petroleum uses as well. A barrel of oil displaced is a barrel of oil displaced, whether by biofuels or bioproducts, and there is a great deal to be gained here. Similarly, we encourage the Congress to assure that the greenhouse gas emissions

associated with the manufacture of petroleum-based products are

included in such a way that users are encouraged to adopt bioproduct alternatives.

I believe we have the opportunity to take the global leadership

in this area with your help, and I appreciate your time and consideration this morning.

[The prepared statement of Mr. Barber follows:]

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Chairman KERRY. Thank you very much, Mr. Barber. That is

very interesting.

Mr. Lynch.

STATEMENT OF CHRISTOPHER J. LYNCH, DIRECTOR,

ENVIRONMENTAL MANAGEMENT ASSISTANCE PROGRAM,

PENNSYLVANIA SMALL BUSINESS DEVELOPMENT CENTERS,

THE WHARTON SCHOOL, UNIVERSITY OF PENNSYLVANIA

Mr. LYNCH. Good morning, Chairman Kerry, Ranking Member

Snowe. I am pleased and honored to join you this morning to discuss small business solutions for combating climate change. Specifically, I would like to add to the discussion about energy efficiency

as a solution.

In looking for small business opportunities to help address climate change, small business energy efficiency needs to be at the

top of everyone’s list. Since America’s 25 million small businesses

create more than 50 percent of the GDP, one could also assume

that small business energy consumption is about equal to half of

the total energy used for commercial and industrial purposes. Assuming small business energy usage is 50 percent, national data

indicates that if small commercial and industrial businesses used

energy efficiency to achieve realistic energy consumption reductions

of 20 to 30 percent, then small businesses could help the United

States reduce carbon dioxide emissions 93 to 140 million tons per

year, while at the same time saving themselves an estimated $12

to $18 billion on annual energy costs.

To achieve these kinds of dramatic results, however, there are

two primary challenges I would like to bring to your attention.

First, small businesses have a significant need for technical assistance in order to make wise investment choices. And, second, as you

are well aware, small businesses typically have limited capital.

With regard to technical assistance, the U.S. EPA’s ENERGY

STAR Small Business Program is an excellent destination for information and a limited amount of unbiased technical support, especially for do-it-yourself business leaders. But I think additional

technical assistance is often required. When the Pennsylvania

SBDC Environmental Management Assistance Program launched

an energy efficiency outreach and education campaign in 1997, we

quickly found that information and education alone were often not

enough to see businesses go through with energy efficiency

projects. In response, the Pennsylvania SBDC developed more advanced technical assistance. Starting in about 2003, our energy efficiency services were expanded upon and demand for these services has steadily grown ever since.

In 2004, about 38 percent of our clients requested energy efficiency assistance. The following year, this number increased to 49

percent. Last year, of the 428 businesses assisted by the program,

more than half—a full 60 percent—sought assistance with energy

issues.

Based on approximately 300 energy onsite assessments, we have

consistently found that our recommendations, if fully implemented,

will save SBDC-assisted businesses an estimated 25 to 30 percent

on energy consumption and associated utility costs.

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Now, obviously, implementation usually requires project finance,

and this brings me to my second point: The need for small business

financial incentives to address the scarcity of up-front capital. A

few years ago, we worked closely with the Pennsylvania Department of Environmental Protection to create a micro-grant program

offering a 50-percent cost share up to $7,500 for small business energy and environmental improvements. Demand on this grant program has been very strong, and a significant backlog has developed. In this current fiscal year, with a little over $780,000 available for grants, the Department had to stop accepting applications

after just 10 weeks. Many potential applicants were turned away,

including at least 50 small businesses that the SBDC was working

with in Pennsylvania. But the bottom line is these grants really do

help. Clients of the Environmental Management Assistance Program have been awarded 58 grants, totaling just under $360,000.

These grants have been leveraged to implement projects costing

over $792,000, and, most importantly, it is estimated that these 58

projects alone will ultimately save the businesses more than

$273,000 per year on energy costs.

We are convinced that small business owners have the interest

and the desire to become more efficient users of energy, both to

control their internal operating costs and to become effective partners in reducing greenhouse gas emissions. Additional Government

investment in the right mix of educational and technical and financial assistance tools can help significantly.

Again, thank you for this opportunity to speak with you this

morning, and thank you for your leadership and your inclusion of

the small business community in this debate.

[The prepared statement of Mr. Lynch follows:]

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Chairman KERRY. Thank you very much for your testimony, and

thanks for what you are doing. We appreciate both.

Mr. Goldstein.

STATEMENT OF DR. DAVID B. GOLDSTEIN, CO-DIRECTOR,

NATIONAL RESOURCES DEFENSE COUNCIL’S ENERGY PROGRAM

Dr. GOLDSTEIN. Thank you very much, Chairman Kerry, and

thank you, Ranking Member Snowe, for calling this hearing. I

think the fact that this is being held elevates the issue and is very

important to getting the dialog moving in the right direction.

My testimony is going to argue that setting strict limits on

greenhouse gas emissions can have a large, beneficial effect on

small business.

Surprisingly little research on the effect of environmental protection policies on economic growth has been done, and that is one of

the reasons I wrote the book that Senator Snowe so graciously referred to, ‘‘Saving Energy, Growing Jobs.’’ This book examines the

scientific evidence that is available and supplements it with experiential evidence on how environmental protection policy, and particularly greenhouse gas limitations, can enhance economic growth.

It finds that limiting climate change provides an opportunity to increase economic development and small business growth because

the primary opportunities for reducing greenhouse gas are through

increased end-use energy efficiency. Efficiency cuts costs, as previous speakers have mentioned, and creates jobs. Policies to foster

efficiency spur innovation and competition and produce larger economic benefits, particularly for small business.

There are opportunities everywhere, widespread throughout the

economy, to cut greenhouse gas emissions in a way that increases

profit. But because of formidable and nearly universal failures of

the marketplace, most of these opportunities are going unrealized.

Pollution reduction opportunities with annual rates of return on investment of 30 percent, even 100 percent and more, are not being

exploited in the marketplace.

Government policies have a demonstrated track record of overcoming these failures. California has reduced its greenhouse gas

emissions per capita by about half compared to the rest of the

country over 30 years through growth-enhancing policies that have

been pursued by both Republicans and Democrats in State leadership.

There are many examples of such policies, ranging from performance-based tax incentives for energy efficiency, such as the SnoweFeinstein-Kerry bill introduced today, to reformed regulation for

utility companies such that they profit from promoting customer

energy efficiency. And this is actually a very big deal because the

utilities are the front lines of contact with small business. They

have an account with every small business in the country, and if

they have the right incentives in their regulation, they can provide

information and financial incentives to small business so that they

can take advantage of these opportunities. And, of course, codes

and minimum standards set on a performance basis are also important.

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A misunderstanding of economic theory suggests that new technologies will automatically find their way from invention to acceptance by market leaders to universal applicability. But in the real

world, this does not happen. Government policies of both incentives

and regulation are needed every step of the way to assure that the

economically optimal solution happens, and that is also the

greenest solution.

The failure of the market to take advantages of opportunities to

reduce emissions at a profit creates an even more powerful barrier

to innovation indirectly than it does directly, and that is, if an existing product or service that saves energy at a profit does not sell,

where is the motivation to develop the next generation of technologies? However, with the right incentives, this will be turned

into a virtuous circle. Business A saves money by installing green

technology. This creates a business opportunity for B to sell them

the technology and competition with all of B’s competitors to do it

at increasingly lower costs and with side benefits that often outweigh the value of the energy benefits directly.

One of the ways to do this that is addressed in the Snowe-Feinstein-Kerry bill is to deal with existing homes, which account for

20 percent of greenhouse gas emissions, which is a little bit more

than cars. These emissions can be cut dramatically while improving comfort and safety. The first step in doing so is to provide consumers with the information specific to their own home about what

the opportunities are.

There is an emerging industry of small businesses that train and

certify the technical expertise to do these energy ratings. In the

European Union, where such ratings are required for all buildings,

they are predicting tens of thousands of new jobs just from the ratings industry alone. Now, of course, when people act on the ratings,

that produces construction jobs, which are also a small business opportunity.

In conclusion, mandatory limits on greenhouse gas emissions, if

done right, can enhance market forces and increase innovation and

competition. What does it mean to do it right? What actually works

in the market is an issue of data, not philosophy or ideology. Promoting a purely market-based solution to the climate change problem should be both a conservative issue, a moderate issue, and a

liberal issue. It should attract enthusiastic support from Republicans and Democrats alike.

As I said, greenhouse gas emissions reductions can be achieved

in a market-based way guided by data, and a critical part of this

is energy policies that enhance market forces where they are weak

and rely on them more heavily where they are strong. Economic incentives should complement regulations to maximize innovation to

the benefit of both the environment and the economy. The fact that

large unexploited opportunities for energy efficiency persist in the

economy is evidence that current markets just are not working well

for efficiency. But the success of such policies as performance-based

incentives and regulations shows that these failures can be overcome and markets enhanced to allow small companies and new

startup companies to compete more effectively.

Thank you very much.

[The prepared statement of Mr. Goldstein follows:]

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Chairman KERRY. Thank you very, very much.

Mr. Hauge.

STATEMENT OF SCOTT G. HAUGE, VICE CHAIR OF ADVOCACY,

NATIONAL SMALL BUSINESS ASSOCIATION, AND PRESIDENT, SMALL BUSINESS CALIFORNIA

Mr. HAUGE. Thank you, Chairman Kerry, Ranking Member

Snowe. Thank you for inviting me to speak today on this vital issue

of climate change and for recognizing the important role that small

business can and should play in any effort to combat it. I would

also like to thank Senator Boxer for her leadership and her kind

comments.

My name is Scott Hauge. I am the owner of a small business in

San Francisco. I am the president of Small Business California,

which is a grass-roots, nonpartisan advocacy group in California, as

well as vice president of Advocacy for the National Small Business

Association, the oldest small business advocacy organization in the

United States.

While I appear today wearing two hats, the respective policy positions are not identical. Regardless of the differences, however, the

two organizations both believe that climate change is real and significant. Small Business California and the National Small Business Association also are steadfast in their shared belief that if

America is serious about confronting the specter of global climate

change, the deficiencies of its national energy policy and the environmental, economic, and security threats posed by its oil dependence, small business must be comprehensively involved in the effort.

As you said, Senator Kerry, small business is half the economy,

and undoubtedly we are responsible for a commensurate amount of

the Nation’s energy consumption as well. It is, therefore, both unfair and unwise to attempt to address this serious issue without

the input and collaboration of America’s small business.

I would like to begin my comments by addressing the role Small

Business California played in the passage of AB 32 in August of

last year, the so-called Global Warming Solutions Act. With the

passage of AB 32, California became the first State in the Nation

to limit statewide global warming solutions. The first general business association to support AB 32 was Small Business California.

Although other business groups lent their support to AB 32 before Small Business California, these organizations were industryspecific or environmentally oriented. This is not to diminish their

role in its passage. It is simply an acknowledgment that the support of SBC went beyond the conventional.

SBC is not an environmental organization. We advocate for the

interest of 3.1 million small businesses in California. We advocated

for the passage of AB 32 because we believed it was right for the

State of California and right for all of small business. I note this

echoes Senator Snowe’s original comments.

SBC thought the passage of AB 32 would help small businesses

in three important ways:

First, AB 32 has the potential to help small firms find ways to

reduce their energy use. Small businesses waste too much energy,

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not because they have made a conscious business decision to do so,

but they do not know how to solve the problem.

Second, the effort to combat global warming and curb emissions

is creating new industries, which is good for nimble and innovative

small businesses. We are confident that the California small businesses will take advantage of these opportunities.

Third, we believe that even those businesses not on the cutting

edge of innovation will find increased business opportunities in the

wake of AB 32’s passage because they provide services that reduce

energy use. For example, heating, ventilating, and air conditioning

contractors all will have opportunities in the maintenance area for

reduced energy. I am proud of the leadership role that Small Business California played.

As I previously outlined, in addition to my role with Small Business California, I am the vice chair of Advocacy for the National

Small Business Association, which recently adopted a comprehensive energy policy. The small business owners at NSBA believe that

the time has come to conclusively address America’s national energy and environmental policies. Utilizing the power of the market,

the effort should focus on technological innovation, the development of viable and cost-competitive clean and renewable energy solutions, and an increase in energy efficiency. The effort also must

avoid placing too onerous a burden on America’s small businesses,

which are particularly vulnerable to increased regulation and tax

obligations and already shoulder a disproportionate share of the

cost of Federal regulations and paperwork.

This national endeavor must not only protect small businesses,

it must also make full use of them. You have heard about green

gazelles from Byron Kennard and Jim, about the potential, and we

think those potentials need to be fully developed.

The need to increase the allocation of Federal research and development to small businesses is clearly illustrated by the Small

Business Innovation Research Program, which helps small business

innovators compete for Federal R&D funds and requires 11 Federal

departments and agencies, including the Department of Energy

and the Environmental Protection Agency, to reserve a portion of

their R&D budgets for small businesses. Small technology firms

with less than 500 employees now employ 54.8 percent of all scientists and engineers in United States industrial research and development. Yet these 6,000 scientists and engineers are able to obtain only 4.3 of the extramural Government R&D dollars. Congress

should buildupon the successes of the SBIR program during SBIR’s

upcoming reauthorization process and increase the percentage of

agencies’ R&D funds reserved for small businesses.

Improving energy efficiency must be a central component of any

national effort to confront climate change in the country’s energy

dependence, and the ENERGY STAR Small Business Program can

play a crucial role. Although the ENERGY STAR Small Business

Program has been highly successful, its full, vast promise is yet to

be realized as its limited budget has hindered its ability to reach

the general small business community. As was mentioned, only 60

percent of the respondents to the NSBA survey were aware of this

program. This lack of visibility must change. The budget of ENVerDate 11-MAY-2000 12:58 Aug 03, 2007 Jkt 035764 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 C:\DOCS\35764.TXT DianeA PsN: DianeA
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ERGY STAR Small Business Program must be increased—now,

this year, and this budget.

With limited funding, electronic outreach is the most cost-effective way for the ENERGY STAR Program to get information to as

many businesses as possible. Online information and technical content about ENERGY STAR should be readily available on SBA,

EPA, and DOE Web sites. The three agencies should integrate and

promote key ENERGY STAR-provided hotlinks directly from their

home pages to the ENERGY STAR Small Business home pages, as

NSBA and Small Business California have done.

Simply making more small businesses aware of the benefits of

improved energy efficiency is not enough, however. More must be

done to help small businesses afford and utilize energy-efficient

products and services. Congress should extend existing tax incentives for the purchase of ENERGY STAR products and establish

additional tax incentives for a larger range of energy-efficient products and services. On-Bill Financing is a proven method of providing improved capital access to small businesses seeking improved energy efficiency, and Congress should work with States to

extend On-Bill Financing and other access to capital to small businesses across the United States.

U.S. small businesses are ready to do more than just talk. Accordingly, it is my pleasure today to announce that for the first

time the National Small Business Association, in partnership with

the ENERGY STAR Small Business Program, will soon challenge

the 150,000 small businesses we reach to reduce their energy use

by 10 percent or more as part of the ENERGY STAR Challenge.

America’s small business community is ready to do its part.

Thank you.

[The prepared statement of Mr. Hauge follows:]

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Chairman KERRY. That is terrific, Mr. Hauge. Thank you very

much. That is a welcome announcement, one that might better

have been made with the Administration standing up with you in

a joint venture. But we obviously welcome the initiative.

I wish that Mr. Wehrum were here from the EPA when you testified that to sort of hear—partly to hear you, but partly also to kind

of get the texture of all of you. In fact, I wish more people could

hear a panel like this and listen to the kinds of things that you are

all saying. It is really so important. And, Mr. Horowitz, I know you

are not at the top of the hierarchy over there, but I assure you we

are going to try to help leverage your ability to be able to affect

this, because you hear this. I mean, you hear what these folks are

saying, that more could be done, that there is not enough money

within the current ENERGY STAR Program, that a lot of people

are being left on the wayside, that there is a big gap that they recognize and are trying to fill it.

How many years have you been working with small business,

Mr. Hauge?

Mr. HAUGE. Twenty-five years.

Chairman KERRY. Twenty-five years. And 25 years as a what?

Mr. HAUGE. Well, I am an owner of a small business, but I

founded the Small Business Network, which is 17 associations with

19,000 businesses in San Francisco, and I founded Small Business

California and have been involved with NSBA for about 10 years.

Chairman KERRY. When did you found Small Business California?

Mr. HAUGE. Twenty-seven months ago.

Chairman KERRY. And you did that to augment the ability to

represent small business interests?

Mr. HAUGE. I felt that there was a need for grass-roots small

business representation in Sacramento. It was sorely lacking.

Chairman KERRY. Do you feel that way about national efforts as

well? Do you think that that is true?

Mr. HAUGE. Well, I think the National Small Business Association does a good job, obviously, but I do think there needs to be a

stronger voice for grass-roots small business people, a nonpartisan

voice for small business people.

Chairman KERRY. It is very important what you just said, ‘‘nonpartisan.’’ I mean, there is no ideology and no party label that

brings you here.

Mr. HAUGE. No. We get both sides.

Chairman KERRY. You are here in order to advocate for small

business.

Mr. HAUGE. Yes.

Chairman KERRY. And in advocating for small business, you

have clearly said today that you believe that recognizing global climate change and responding to it is both good for small business

from a business point of view as well as policy, correct?

Mr. HAUGE. Yes.

Chairman KERRY. What do you say to those who are sitting on

the sidelines and resisting this right now?

Mr. HAUGE. Well, my initial response, when asked about why we

supported AB 32 in California, was somewhat similar to what you

said in your opening comments. We have a choice here. I think

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global warming is pretty much well accepted, so we have a choice.

Do we plan or do we react in crisis? And I think a much smarter

way to go is planning, and obviously on this particular issue, if we

act in crisis, it could be too late.

Chairman KERRY. Mr. Barber, with respect to the natural plastic

that you are producing now, you have done this without any policy

initiative, as you mentioned. You said the absence of a policy initiative has probably handicapped it to some degree, but you are proceeding forward because you think there is ultimately a market

there.

Mr. BARBER. Indeed.

Chairman KERRY. How would a policy initiative or a different

Government framework have affected you?

Mr. BARBER. The products that we are commercializing now have

a natural place in the market, but the adoption of those products,

their pace of adoption, would be affected by the policy framework

in which people make decisions.

In general, there are costs of switching all through a value chain,

and so when an end user, a product manufacturer, decides to adopt

a new product, there are inherent costs in that decision. And so

making that decision in the absence of some encouragement is just

a slower process than it might otherwise be. But I think the history

with the biofuels is a good example to look to.

Chairman KERRY. How about the capitalization? Would that be

affected if the policy of the Government said that we are going to

move in this direction and we are setting a goal and it is mandated, et cetera? I assume capital would move more easily to those

sectors as it did in the late 1970s, early 1980s, when we had a

huge amount of environmental remediation companies in Massachusetts while that Government commitment existed.

Mr. BARBER. Sure, it would. And what it would also do is to

allow that capital to find and support those opportunities that

would most efficiently displace a barrel of oil, as opposed to being

right now channeled only into certain particular avenues of displacement.

Chairman KERRY. Mr. Lynch, in your efforts to reach these companies, what difference—would more money make a difference from

the EPA? Would more focus from SBA make a difference? Could

there be a joint venture that would help with these audits that you

think would reduce costs for small business more significantly?

Mr. LYNCH. I certainly think additional resources to be able to

offer in other States, and even be able to expand our offerings in

Pennsylvania, energy efficiency, onsite technical assistance, and

one-on-one kind of assistance is really important, and the resources

would certainly help.

Chairman KERRY. Do you think we are missing opportunities

right now?

Mr. LYNCH. Oh, absolutely.

Chairman KERRY. Is there a cost to missing those opportunities?

Mr. LYNCH. I think there is as energy prices go up and the National Small Business Association Survey you referenced that found

that 75 percent of small businesses had been at least moderately

to significantly impacted by rising energy prices, when asked the

further question, you know, what are you doing in response to

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these rising costs, how are you coping, 18 percent said that they

had reduced workforce. You know, there is a cost. There is a cost

in terms of jobs when you do not do anything on the energy efficiency side.

Chairman KERRY. There are also unmeasured lost opportunity

costs.

Mr. LYNCH. Absolutely.

Chairman KERRY. Let me cede to Senator Snowe, and then come

back if we need to.

Senator SNOWE. Thank you, Mr. Chairman.

Well, it is a pleasure to listen to this panel. It is a reaffirmation

of the programs and approaches that work, and it is a confirmation

that we need to do much more. And you all have provided collectively and individually some very exciting initiatives that I think

we ought to attempt to build on, frankly.

Sometimes I often think in the hearings we ought to reverse the

panels. I have often thought about that, listening to the last panel

first and then have the Administration officials.

Chairman KERRY. I have had the same reaction for many years

of wanting to be able to do that.

Senator SNOWE. I know. But we appreciate, Mr. Horowitz, that

you are here listening. I think that is very important because as

Senator Kerry and I have been discussing, we need a level of energy and commitment to the programs that now exist and what can

we do more where small business can play a role. And it is not

even in this quarter. We have this problem in terms of resistance

within the Federal bureaucracy toward reaching out to small businesses. It has just been an ongoing problem, and here is another

example. Yes, it has worked well, but it is not the level of energy

and commitment that I think is commensurate with the crisis that

we are facing with respect to this issue and how it can help to create more jobs since small businesses are the job creators in America. It creates three-quarters of the net new jobs in America.

So you would think that the Federal Government would have a

genuine interest to make sure what can we do to save jobs, and ultimately, as one of your testimonies indicated, the way they respond to energy cost increases is to cut jobs. So we have to help

small businesses avert that response. And so, in any event, I appreciate what has been mentioned here today.

Dr. Goldstein, I do again want to welcome you. I know it has

been a long road, and I have to say to my colleague, Chairman

Kerry, that Dr. Goldstein really was a great influence on these energy tax incentives, paved the way back in 1999 as a way in which

to create these incentives that can make a difference, and then ultimately he shared it with the world with his book. And so he has

been an invaluable resource.

Chairman KERRY. I understand you wrote the foreword to that

book. Is that right?

Senator SNOWE. Yes. See how I am touting it?

[Laughter.]

Senator SNOWE. But it is a very good one.

Chairman KERRY. I hear you.

Senator SNOWE. It sure is, and he has provided an abundance,

I think, of information and data that ultimately reinforces some of

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the issues here and what we are now hopefully, being able to address in the Congress.

When you were mentioning on the ratings, Dr. Goldstein, that

was interesting, about the certification of those who would rate

homes for example. And in the new legislation that we have introduced today, not only do we extend many of tax incentives that

were created in the 2005 act, but we have also improved upon

them. And one is to create a new tax incentive for the costs associated with training for the certification process. And hopefully that

will create not only a new industry, but also help to accelerate this

process that makes it more pervasive across this country.

Do you think that that will be helpful in that regard?

Dr. GOLDSTEIN. Yes. The concepts in the bill, the tax incentives

bill, are to focus on the very cutting-edge technologies, to take

things from the laboratory to enough commercial practice that they

can be picked up by the world in general. And this has been the

missing piece of American energy policy and, frankly, global energy

policy for the last 20 or 30 years. How do you get the really leading-edge technologies to be bigger than five demonstration projects

and to get to a point where the market can take them seriously,

where small business can rely on the infrastructure that is built up

to respond to the tax incentive and then be able to have these services available for themselves?

So in the case of ratings, we are not talking about small business

as the client. It is homeowners. But small business is the provider

of the service that would be offered.

We really have not done much on retrofitting existing homes in

the last 20 years, but when we have made all-out efforts, we have

been able to get about 90-percent market share in 3 years. So hopefully the tax incentives can spur this creation, again, of a virtuous

circle of self-financing because the energy savings pay for the costs

of the loan to do the home retrofit. Self-financing retrofits that can

make a big impact on technology, as well as energy reductions.

Senator SNOWE. I appreciate that.

Mr. Hauge, you were mentioning the Small Business Innovation

Research Program, and earlier I meant to ask Mr. Horowitz about

this program, because I do think it is another way of helping with

innovative firms. And when you were giving the statistics, it is actually amazing how underutilized this program is with respect to

scientists and researchers. And you said small business technology

firms with less than 500 employees now employ 54 percent of all

scientists and engineers in U.S. industrial R&D, yet these nearly

6,000 scientists and engineers are able to obtain only 4.3 percent

of the extramural research grants.

So I have included in the last SBA reauthorization, incentives for

green initiatives under this program, but clearly we have to do far

more than what we are doing with this program if we are going

to invite more R&D and those who are able to provide it.

Mr. HAUGE. It is particular interesting because most of the R&D

done in this country is done by small businesses, and yet we are

getting such a very tiny percentage.

Senator SNOWE. Actually, it is stunning, the extent to which this

program is underutilized. We did the same thing in the defense authorization bill last year with respect to Federal contracts and enVerDate 11-MAY-2000 12:58 Aug 03, 2007 Jkt 035764 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 C:\DOCS\35764.TXT DianeA PsN: DianeA
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ergy-efficient initiatives as well, because there is another dimension where we are not small businesses have not been given any

advantages in that regard. So we are also kind of focused on those

defense contracts specifically.

But I think this is an excellent idea, and I think we have to continue, as Mr. Kennard mentioned as well, to make sure that that

is passed this year and mandating incentives for green initiatives

under the ENERGY STAR Program, but also to provide tax incentives for those products that are labeled with the ENERGY STAR.

I think that is an excellent idea, and we ought to incorporate that

as well.

Chairman KERRY. A terrific idea, absolutely.

Senator SNOWE. It is. It is a very good idea.

Chairman KERRY. Also, get the SBIR designation thing, maybe

the SBA would just move on it and do it.

Mr. HAUGE. Could I make a quick comment?

Senator SNOWE. Yes.

Mr. HAUGE. To kind of back up, because I want to applaud

NRDC. In California, while we were asked by the Governor to get

involved in this and we took a role, one of the problems small businesses had in the past is dealing with environmental groups, and

to NRDC’s credit, they reached out and worked with us, recognizing the role of small business. And I just want to thank them

for that.

Dr. GOLDSTEIN. I appreciate that, and I think it points out an important point that this hearing brings out, and that is, if you did

a blind reading of the testimony and asked which were the business representatives and which were the environmentalists, you

would have trouble telling the difference. That is, I think, an important take-away message and something we learned from the AB

32 discussion in California, that there are a lot of common interests.

Chairman KERRY. A very good point. That is a very good point.

Senator SNOWE. Well, you know, the whole mandatory cap in

trade and the fact is that the 10 largest companies in America have

now rallied around the mandatory cap in trade program. They

want uniformity across the country with respect to regulations in

the CO2 reductions, which is sort of interesting. See, I think we are

at a crossroads here, and I think this could become the nexus for

doing more in this area, because they want the certainty, the uniformity of regulations across the country; otherwise, we are going

to be dealing with a patchwork of regulations. And our States are

in the Northeast initiative and following California’s lead. So I

think that if there is impetus to do something nationally, which I

think there is, something gets done, hopefully for that bipartisanship that will be essential to that, I think this certainly is another

dimension that I think would be a real catalyst for action.

Mr. Lynch, you mentioned SBDCs, which is also fascinating to

me. They have specifically an Energy Assistance Program within

the SBDC?

Mr. LYNCH. In Pennsylvania.

Senator SNOWE. Yes, in Pennsylvania.

Mr. LYNCH. Yes.

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Senator SNOWE. That is interesting. And so that was self-initiated, I gather.

Mr. LYNCH. Yes. We actually were the beneficiaries of a small

grant from U.S. EPA’s ENERGY STAR Small Business Program

back in 1997 to try to start testing out the idea of providing energy

efficiency assistance in the business development context. And it

was something that we found that there really was an interest and

there was a need. So we have been able to build the program with

State funding since that initial seed funding.

Senator SNOWE. I am curious if you are the only State that does

that. I am not sure that we know of another State that has a specific energy program within SBDC.

Mr. LYNCH. There are a couple of others that have tried working

with the utilities. The Nevada SBDC would be another example.

But in terms of having people on staff who can go out and do onsite

visits and energy audits, I think Pennsylvania is the only State.

Senator SNOWE. Well, I think that is something that we ought

to look at very carefully, because I think that is also an exciting

initiative.

Mr. LYNCH. I think it would be a welcome——

Senator SNOWE. It is an ideal way of reaching out to small businesses in respect of States, frankly.

Mr. LYNCH. Absolutely.

Senator SNOWE. So I think that is an excellent idea.

Mr. Barber, you mentioned what you are doing in this whole renewable with plastics. Tell me, should we consider any competitive

research grants in any way that would help, you know, for R&D,

like in the SBIR Program or something? Would that be a benefit?

Mr. BARBER. There is a certainly a role to play for competitive

research grants here, and the SBIR Program has been one way for

small businesses to access that, and we have on occasion over the

years.

One aspect, though, of the SBIR program specifically is that

those grants, as typically implemented, tend to be rather small.

And given the nature of the kind of research that is necessary to

solve the sort of problems we are talking about here, it typically

requires considerably greater resources than are available in the

SBIRs themselves.

Now, the agencies have certainly offered up other opportunities

to compete for grants. One thing I would point out, though, is that

under the Energy Policy Act, there was specific provision for the

funding of research to develop not only bio-based fuels, but also

bio-based products. And I think the record would show that very

little money has actually moved to the support of development of

bio-based products.

I think there is a great opportunity to do far, far more than has

been done here. As I pointed out in my own remarks, our first

plant is 100 million pounds per year serving a 100-billion-pound

U.S. market, and so there is an enormous opportunity to make an

impact here on greenhouse gas emissions associated with the product side of the ledger as opposed to the fuel side of the ledger.

Products—plastics and chemicals—consume almost 10 percent of

the petroleum we use here in the United States.

Senator SNOWE. Thank you.

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Thank you, Mr. Chairman.

Chairman KERRY. Well, thank you, Senator Snowe. I appreciate

your questions, and you and I are in sync on this. It is—it is frustrating.

Senator SNOWE. It is scary, isn’t it?

[Laughter.]

Senator SNOWE. It is. It is frustrating.

Chairman KERRY. It might be scary at some——

Senator SNOWE. At some point.

Chairman KERRY. But it is pretty positive.

Again, I emphasize that there is such a diversity here sitting in

front of us. Mr. Kennard, did you also have the same kind of experience Mr. Hauge did? How did you come to this?

Mr. KENNARD. I was an organizer of Earth Day. I have been in

the game as long as it was a game. But in 1973, I read a book

called ‘‘Small Is Beautiful,’’ written by E.F. Schumacher, who became my friend and collaborator. And so I have been advocating

scale as a primary concern ever since. Look at the size. Look at the

size.

New things first appear small. They do not first appear big. So

if you are interested in the process by which the economy is renewed, new technology is born, then you want to look at the small

and see, well, what happens there, go back to the source. And that

has been a message I have been preaching for a long time.

But the policymakers and many of the advocacy groups are devoted to the work of large centralized institutions, so this has been

an uphill struggle. What has happened in California, AB 32, which

is most interesting to me, was the new voices of business that were

raised in the debate changed the debate and made victory possible.

You had clean-tech companies and the green small businesses mobilized politically for the first time, and so the debate was no longer

jobs and economy versus the environment. The debate was between

a clean-tech future versus the industrial status quo. And we won.

That should be a lesson that people in Washington, DC, heed.

Chairman KERRY. With respect to the comments I made earlier,

is there any disagreement among any of you about the ability of

the Government to show greater leadership on this issue at this

point in time? Well, let me ask the question differently. I would

like an answer from each of you. Do you believe that greater leadership is necessary now in order to respond to this issue?

Mr. Kennard.

Mr. KENNARD. The best policy results when you have entrepreneurial endeavors working in sync with Government policy. You

need large and small working together in balance, and then you get

a beautiful result.

Chairman KERRY. Mr. Barber.

Mr. BARBER. Indeed, inherently the kind of issue we are talking

about here is one in which the costs are external to the normal

pricing mechanisms in the market. And so the market mechanisms

by themselves will not lead to a response to these kind of problems,

and that——

Chairman KERRY. We have to set up——

Mr. BARBER. That becomes the role of——

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Chairman KERRY. Encourage the market or direct it in a sense.

Entice it.

Mr. BARBER. Indeed, that becomes the role of policy.

Chairman KERRY. Mr. Lynch.

Mr. LYNCH. I also agree that more on the national level needs

to be done to address this significant issue, and ignoring the contributions that small businesses can make, you know, just does not

make any sense anymore. We need to really involve the small business community.

Chairman KERRY. Mr. Goldstein.

Dr. GOLDSTEIN. Chairman Kerry, we desperately need stronger

leadership at the national level on this issue. The role of Government is apparent because you can just look at what different States

have done. If Government did not matter, you would see parallel

paths among all 50 States. But what you see is States like your

own, like California, like New York, where they have made efforts

on energy efficiency, the results are visibly different.

Chairman KERRY. Mr. Hauge.

Mr. HAUGE. Well, I would echo that. In California, there was

leadership, and you saw the resulting legislation that came out of

it. I think that would be very helpful to have that same kind of

leadership in Washington.

Chairman KERRY. I might add that California, I will remind people, is the sixth-largest economy in the world. And if California can

move and embrace that, given the businesses that are there and

the recognition, there is no excuse for a whole bunch of other places

to not be able to move similarly.

This has been very, very helpful. There is a lot on the record. We

are going to leave the record open for 2 weeks. There will be, I am

confident, some questions submitted so that we can build that

record. And I am very grateful to all of you. Your full testimony

will be placed in the record as if delivered in full. All of it is very,

very helpful to us, and we are deeply appreciative for you, many

of you coming back, having testified previously at one time or another.

But thank you for your leadership. Thank you for what you are

doing, and we need to get this job done. So let’s go do it.

Thank you. Thank you, Senator Snowe.

[Whereupon, at 12:20 p.m., the Committee was adjourned.]

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APPENDIX MATERIAL SUBMITTED

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RESPONSE BY DANIEL HOROWITZ TO WRITTEN QUESTIONS FROM SENATOR LIEBERMAN

Question 1. I am unclear how the Environmental Protection Agency and the Small

Business Administration work together to promote the ENERGY STAR program.

Please describe exactly how the collaboration works. Do your respective agencies

reach out to small businesses, or do you rely upon small businesses to contact you

for assistance?

Answer. EPA and SBA staff have held a number of meetings and conference calls

to comply with the requirements of EPAct 2005. As a result of SBA and EPA’s collaboration, EPA now provides a full web page of SBA finance links which is available at http://www.energystar.gov/index.cfm?c=smalllbusiness.sblindex.

Question 2. What is the Small Business Administration’s plan for reaching out to

small businesses about the ENERGY STAR program? Does the SBA have an action

plan? What is it?

Answer. The information within the Energy Star brochures and supporting material is being distributed to each of the SBA’s field offices and those of our affiliates,

These well-produced materials are the best source of information available and

should be readily welcomed by anyone inquiring at any SBA location or that of our

affiliates.

Question 3. I looked on the SBA’s Web site to find information about green initiatives for small businesses, and could not find any links or content about ENERGY

STAR or any other energy saving program. Can you explain why such information

is not prominently available on the SBA’s Web site? Do you intend to fix this omission?

Answer. SBA is in the process of updating it’s Web site at www.sba.gov. When

the upcoming update is complete, the program will be accessible through SBA’s Web

site.

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RESPONSE BY JAMES BARBER TO WRITTEN QUESTIONS FROM SENATOR BOND

Question 1. Your statement says that you have test plants of switchgrass producing measurable levels of natural plastic within its leaves and stems. The natural

plastic that is produced within the leaves and stems will be extracted for use in everyday products, and the remaining biomass will be used for producing cellulosic

ethanol or other biofuels, and will result in significant cellulosic ethanol cost reduction. Is this technology commercial yet?

Answer. No, the technology for this plant-based system is not commercial yet. We

have successfully demonstrated feasibility, and are working on ramping up development efforts to reach field trials.

Ouestion 2. How soon do you think that you can achieve that objective?

Answer. With adequate funding, field trials can be reached in 4 years (2011).

Ouestion 3. Is there anything that we can do to help you with that R&D?

Answer. Metabolix is seeking to partner with the Government to adequately fund

the project. Absent additional support; it will take significantly longer to reach field

trials (8–10 years). Although the project directly addresses national goals, no programs have been funded at the Departments of Energy or Agriculture to support

this type pf project.

The Energy Policy Act of 2005, Sec. 932, funded the biomass program to include

research and development for bioproducts. Your help to convince and or require the

Department of Energy or the Department of Agriculture to fund this R&D would

be most helpful.

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