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58–299 2010

S. HRG. 111–729 

PROMOTING A CLEAN ENERGY ECONOMY 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 27, 2010 

Printed for the use of the Joint Economic Committee 

( 

(II) 

JOINT ECONOMIC COMMITTEE 

[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress] 

HOUSE OF REPRESENTATIVES 

CAROLYN B. MALONEY, New York, Chair 

MAURICE D. HINCHEY, New York 

BARON P. HILL, Indiana 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Maryland 

VIC SNYDER, Arkansas 

KEVIN BRADY, Texas 

RON PAUL, Texas 

MICHAEL C. BURGESS, M.D., Texas 

JOHN CAMPBELL, California 

SENATE 

CHARLES E. SCHUMER, New York, Vice 

Chairman 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

MARK R. WARNER, Virginia 

SAM BROWNBACK, Kansas, Ranking Minority 

JIM DEMINT, South Carolina 

JAMES E. RISCH, Idaho 

ROBERT F. BENNETT, Utah 

ANDREA CAMP, Executive Director 

JEFF SCHLAGENHAUF, Minority Staff Director 

(III) 

C O N T E N T S 

MEMBERS

Hon. Carolyn B. Maloney, Chair, a U.S. Representative from New York .......... 1 

Hon. John Campbell, a U.S. Representative from California .............................. 3 

Hon. Michael C. Burgess, M.D., a U.S. Representative from Texas ................... 4 

Hon. Kevin Brady, a U.S. Representative from Texas ......................................... 5 

WITNESSES

Mr. Anthony E. Malkin, President, Malkin Holdings, New York, New York ..... 7 

Dr. Michael Greenstone, 3M Professor of Environmental Economics, Massachusetts Institute of Technology, Cambridge, MA; Director, The Hamilton 

Project, The Brookings Institution, Washington, DC ........................................ 9 

Dr. E. G. (Skip) Ward, Associate Director, Offshore Technology Research 

Center, Texas A&M University, College Station, Texas ................................... 11 

SUBMISSIONS FOR THE RECORD

Prepared statement of Representative Carolyn B. Maloney, Chair .................... 38 

Chart titled ‘‘Oil Expenditures’’ ....................................................................... 40 

Prepared statement of Representative Kevin Brady ............................................ 41 

Prepared statement of Mr. Anthony E. Malkin .................................................... 43 

Prepared statement of Dr. Michael Greenstone .................................................... 83 

Prepared statement of Dr. E. G. (Skip) Ward ....................................................... 94 

Questions dated July 27, 2010 from Senator Jim DeMint to Dr. Michael 

Greenstone ............................................................................................................ 103 

Question dated July 27, 2010 from Senator Jim DeMint to Mr. Anthony 

E. Malkin .............................................................................................................. 105 

Questions dated July 27, 2010 from Senator Jim DeMint to Dr. E. G. (Skip) 

Ward ...................................................................................................................... 106 

Document dated August 27, 2010 transmitting Dr. Michael Greenstone’s responses to Senator Jim DeMint .......................................................................... 107 

Document dated August 11, 2010 transmitting Mr. Anthony E. Malkin’s 

response to Senator Jim DeMint ........................................................................ 110 

Document dated August 16, 2010 transmitting Dr. E. G. (Skip) Ward’s responses to Senator Jim DeMint .......................................................................... 111 

Document dated August 27, 2010 transmitting Dr. Michael Greenstone’s responses to Representative Michael C. Burgess, M.D. ....................................... 113 

(1) 

PROMOTING A CLEAN ENERGY ECONOMY 

TUESDAY, JULY 27, 2010 

CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE, Washington, DC. 

The committee met, pursuant to call, at 10:05 a.m. in Room 216 

of the Hart Senate Office Building, The Honorable Carolyn B. 

Maloney (Chair) presiding. 

Representatives present: Maloney, Hinchey, Cummings, Snyder, Brady, Burgess, and Campbell. 

Senators present: Bingaman. 

Staff present: Andrea Camp, Gail Cohen, Colleen Healy, Kinsey 

Kiriakos, Jessica Knowles, Jane McCullough, and Ted Boll. 

OPENING STATEMENT OF THE HONORABLE CAROLYN B. 

MALONEY, CHAIR, A U.S. REPRESENTATIVE FROM NEW YORK 

Chair Maloney. The meeting will come to order. I would like to 

recognize myself for my opening statement. I welcome my colleagues and the panelists. 

I am pleased to hold today’s hearing on promoting innovation in 

the clean energy sector. This is the second in a series of hearings 

held by the Joint Economic Committee on the role that innovation 

has in fueling employment and growth. 

Innovation in the clean energy sector will improve productivity, 

enhance job creation, and improve the quality of life. 

This hearing is timely for a number of reasons: 

The Senate plans on discussing energy legislation this week; 

The nightly news and the camera footage of the Gulf oil spill remind us of the human and environmental cost of the spill; 

While our economy is still raw from the devastating job losses experienced in the Great Recession, it is obvious that more robust 

growth is needed to reduce the unemployment rate. Innovation in 

the energy sector can help fuel growth in the future. 

Innovation in the clean energy sector can also strengthen the 

economy by making it less vulnerable to economic downturns. 

While the United States has weaned itself from dependence on oil 

in many sectors, progress to reduce our dependency on oil to meet 

transportation needs has been particularly slow. 

At a hearing last May, Dr. James Hamilton testified that the oil 

price run-up in 2007–2008 was an important factor that contributed to the Great Recession. He testified that the run-up in oil 

prices caused a plunge in auto sales, deterioration in consumer sentiment, and a slowdown in consumer spending and problems in 

2 

housing, especially in the exurbs where commuting costs can rise 

significantly with gasoline price increases. 

Continued reliance on oil leaves the economy vulnerable to sharp 

increases in oil and gasoline prices and could potentially derail the 

economic recovery that we are now experiencing. 

It appears that when oil expenditures reach 4 percent of GDP, 

the U.S. is at risk of falling into a recession. And that is what our 

chart shows—that in every major recession except one, oil price 

played a major role. 

[The chart titled ‘‘Oil Expenditures’’ appears in the Submissions 

for the Record on page 40.] 

Currently the share of GDP spent on oil is 3.5 percent, much 

higher than in 1993 when the share of GDP spent on oil was 1.8 

percent, but better than the 6.8 percent in mid-2008. 

Innovations in the clean energy sector can reduce our vulnerability to oil price rises. These innovations may arise from a variety 

of different sources: 

New technologies to produce energy; 

New forms of energy, production of existing fuels, or energy in 

a cleaner or a more efficient manner; or 

New ways of reducing our consumption of energy. 

In our hearing last month on innovation, witnesses testified that 

federal spending on basic research in universities can provide the 

spark that ignites regional economic growth and job creation. 

Universities, with help from venture capitalists, have emerged 

both as producers of ideas and active players in the innovation 

chain, creating start-ups that are among the most successful small 

businesses. But witnesses at our last hearing also testified that 

there is not enough funding or research in the energy sector. 

Congress and the Administration have recently increased our 

country’s commitment to clean energy. The Recovery Act invested 

more than $90 billion in clean energy, including investments in energy efficiency, advanced vehicles, clean energy equipment manufacturing, and mass transit and high-speed rail. 

Additionally, the America COMPETES Act, passed by the House 

on May 28th, supports innovation and basic research by creating 

new clean energy consortiums in a public-private partnership. 

America COMPETES also provides a much-needed form of funding for game-changing innovation through the reauthorization of 

the Advanced Research Projects Agency for Energy, and directs the 

agency to help ensure that these promising technologies are shared 

with the private sector. This is roughly funded at $200 million. 

Federal investments can be especially effective when the funds 

are combined with private sector investments. Just two weeks ago, 

the Chair of the Council of Economic Advisers, Christina Romer, 

testified before this Committee that $46 billion in public funding in 

the Recovery Act encouraged an additional $100 billion in investment by the private sector in projects related to clean energy. 

I am especially pleased that my fellow New Yorker, Mr. Anthony 

Malkin, is here to testify about energy efficiency retrofits he is undertaking in one of our greatest cultural icons, the Empire State 

Building. 

3 

New lighting, windows, and heating and cooling systems reduce 

the amount of energy tenants use while improving the quality of 

their space. 

I am eager to discuss with our panel how Congress can ensure 

that these needed investments in a clean energy economy will 

occur, leading us to a stronger economy with good jobs and a cleaner planet. 

I welcome all of the panelists and I look forward to your testimony, and I recognize Mr. Campbell for five minutes. 

[The prepared statement of Representative Maloney appears in 

the Submissions for the Record on page 38.] 

OPENING STATEMENT OF THE HONORABLE JOHN CAMPBELL, 

A U.S. REPRESENTATIVE FROM CALIFORNIA 

Representative Campbell. Thank you, Madam Chairman. 

I was not actually going to make an opening statement, but in 

the absence of the Ranking Member right now, I will make just a 

couple of comments. 

I believe it is true that certainly innovation and some forms of 

clean energy can add to economic growth and productivity, but only 

if those things increase productivity and are accretive to the economy. 

So I do not think it is fair or correct to say that any clean energy 

development, or anything in this area, is going to add to economic 

growth. If we in fact promote forms of energy which cannot be 

baselined, and which can only be occasional uses of energy, and 

which are very expensive and actually either through government 

subsidies or otherwise require that the economy pay more for the 

same energy than it did before and still has to keep the baseline, 

I do not see how that is actually going to be providing any sustainable productivity or economic growth. 

And, in fact, if you require the economy to pay more for something that they are already getting for less without some other accretive benefit, then I am not sure where that does anything but 

actually cost jobs and hurt the economy. 

That being said, there are certainly plenty of areas of energy development—such as nuclear—where there have been tremendous 

advances in technology, where we can actually do it all, where we 

can actually create cleaner energy that is more domestically 

sourced, and that is as cheap or cheaper than the energy sources 

that we have today. 

So I hope that when we as a government and as a society look 

at this, that we discriminate between those forms of energy that 

actually can accomplish the objective while creating economic 

growth and jobs, and not necessarily force ourselves to be dealing 

with those forms of energy that perhaps are not going to be as economically beneficial as others. 

With that I will yield back. 

Chair Maloney. Thank you very much. We are very pleased 

that Senator Bingaman is here. He is recognized for five minutes. 

Senator Bingaman. Madam Chair, I have no opening statement. I am here to hear the witnesses. Thank you. 

Chair Maloney. Would you like, Mr. Burgess? 

4 

OPENING STATEMENT OF THE HONORABLE MICHAEL C. 

BURGESS, M.D., A U.S. REPRESENTATIVE FROM TEXAS 

Representative Burgess. I thank the Chairwoman for the recognition. I want to welcome our witnesses here today. I am certainly anxious to hear your testimony, Dr. Ward, a Texan. I am 

certainly grateful that you are on the panel. We know it will be an 

even-handed approach since there is a Texan in the group. 

Promoting our economy and increasing energy resources are two 

of the most important issues facing our country today. Alone, these 

two issues are important, but when combined the increased energy 

resources will help revive our economy and in turn increase economic output, and ultimately the bottom line is, add jobs to the 

economy—which is the key issue right now. 

I have personally spent a great deal of time focused on this in 

my home District in North Texas. We have terribly hot summers. 

Right now I think the projected heat index is well over 100 degrees. 

Two weeks ago I brought together experts in north Texas to discuss 

energy efficiency, and clean energy production for the future. 

It is an annual event that I hold every summer, because regardless of which side of the discussion we find ourselves, whether it 

is from the standpoint of global warming, or the standpoint of national security, or we just worry that we are going to run out of 

oil one day, the common ground is energy efficiency. And no one— 

no one— wants to be in favor of wasting energy. 

New technologies to reduce energy wastage will move us towards, say, an electrical automobile fleet. This was actually surprising for me, met with some degree of optimism in North Texas. 

You know, we love our trucks. We love our Dooley pickup trucks, 

but nevertheless people are willing to look at other alternatives, 

particularly for a vehicle that would primarily be involved in commuting. 

The questions that I will have for the panel today are about the 

availability of clean energy sources and their costs. Achieving energy security and increasing renewable, less carbon-intensive energy sources are important to our country’s energy discussion. 

However, there are important questions: 

How can we promote clean energy sources like wind, energy, 

solar, and thermal, and other methods, without increasing consumer cost? 

What is a realistic amount of clean energy to expect in the future? And what energy efficiencies can we achieve until more renewable sources are available? 

My State of Texas is a leader in clean energy. In fact, if Texas 

were its own country—which some people have talked about—we 

would be the world leader in wind energy. And indeed, it was our 

clean energy governor, George W. Bush, in the mid-1990s who put 

the regulatory framework in place in Texas which has made Texas 

one of the largest producers of clean energy in the world. 

The Barnett Shale is a huge reserve of natural gas and an alternative for tight shale formation in my district. It provides an economic boon, as well as a source for fuel for our economy. But it 

does pose specific challenges. Whether it’s the oil industry encroaching upon civilization, or civilization encroaching upon the oil 

industry, it has led to some tension in my district, and the resource 

5 

must be developed in a sensible fashion which is sensitive to the 

fact that there are people now living nearby to the fields of production. 

In 2009, Texas produced more megawatts of wind energy in the 

country—wind energy, and added more megawatts of this energy 

than any other state, but we also have the situation where we have 

to bring that energy to the place where the people live. And so the 

siting of new transmission lines becomes an issue in an area that 

has increased in population. 

So with those above-mentioned sources accounting for such a 

small amount of energy consumption, how realistic is it for our government to rely on these sources for providing large numbers of 

employment in our country in helping our economy? 

Encouraging the use of clean energy sources is a laudable goal. 

It cannot only revive our economy, but help boost it. But the discussion I hope to hear today is what are the realistic expectations 

for us to have in the short term? And what can Americans be doing 

to promote the expansion of clean energy use and energy efficiency 

to achieve what we need with existing resources? 

Thank you, Madam Chairwoman. I will yield back the balance of 

my time. 

Chair Maloney. Thank you very much. 

Mr. Hinchey. 

Representative Hinchey. Well, Madam Chairman, thank you 

very much. I don’t have an opening remark, either, but I want to 

thank you very much for holding this session today. This subject 

is critically important, and it is something that we have to deal 

with. 

As you know, we have already passed somewhat of a significant 

bill in the House of Representatives. It was not quite as strong as 

what some of us would like to have seen passed, but it is something that really needs to be done. And we certainly hope that before the end of this year, before the end of this Congress is over, 

that this legislation is going to be passed in the Senate, or something very much like it, so we can get some progress advanced 

here. 

So this issue is critically important, and critically important in 

a variety of ways: the situation in the gulf of Mexico, and the circumstances of global warming. These are critically important 

issues that need to be addressed by this Congress. I am very anxious to hear what you have to say, and to engage in the interaction 

of questions and answers about these issues. 

So, Madam Chairman, thank you very, very much. 

Chair Maloney. Thank you. Mr. Brady. 

OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A 

U.S. REPRESENTATIVE FROM TEXAS 

Representative Brady. Well, Madam Chairman, I thank you 

for holding this hearing on energy matters at this time. And I welcome the panelists to what I hope will be a substantive discussion 

of energy supply and environmental issues. 

I find the submitted testimony very encouraging in this regard. 

And, Dr. Ward, thank you for joining us as our guest. 

6 

To observe our Administration’s energy decisions is to wonder 

whether it has any comprehension of the future energy supply 

challenges our country faces. The ill-conceived Gulf drilling moratorium flies in the face of everything common sense tells us about 

our precarious energy future and what we should be doing about 

it today. 

The drilling moratorium is already killing good-paying American 

energy jobs, sending rigs overseas, and with them our workers, 

equipment, capital, and eventually America’s traditional energy infrastructure. 

Given the global nature of energy production, these rigs will not 

be returning any time soon. What is more, President Obama has 

not even responded to our invitation to travel to Houston, Texas, 

to meet face to face with the energy workers and small businesses 

whose livelihoods are at risk due to the moratorium. 

Yet, the President will be traveling to Houston on August 9th to 

raise campaign cash for the Democratic Party. We have asked him 

for just an hour of his time, or maybe even just 15 minutes of his 

time to meet with our workers and businesses, but as of today, just 

silence from the White House. 

Mr. President, can you spare any time at all for these Americans 

whose jobs you are killing and sending overseas? Where are your 

priorities? 

Neither the White House nor Congress seems to understand that 

the current relative lull in energy demand results from a weak 

economy. It does not mean we have the luxury of halting largescale energy projects and betting our future on small-scale alternatives that we all support but that are not yet ready to affordably 

meet America’s energy needs. 

The Gulf of Mexico accounts for 19 percent of the Nation’s total 

proven oil reserves, and 30 percent of total U.S. production. Solar 

and wind technologies together account for less than 1 percent of 

the Nation’s energy supply. 

In 2008, the Gulf of Mexico’s Outer Continental Shelf had the 

largest amount of new oil-field discoveries in the United States, 

which increased our proven reserves while oil reserves fell for the 

Nation as a whole. 

By all means, let’s help renewable energy develop its full potential. But let’s not foolishly thwart the growth potential of our established energy industry which provides the affordable bridge to 

America’s green future. 

After 50,000 wells have been drilled in the Gulf’s Federal Outer 

Continental Shelf, and nearly 4,000 in deep water without a substantial spill, how can anyone jump to the conclusion that the BP 

accident points to an imminent systemic threat, and then shut off 

all deep-water drilling? 

And who would bet America’s economy on subsidized wind and 

sun energy when there are private companies investing billions of 

dollars to develop deep-water oil and gas reserves off our shores? 

Does this make any sense? And where is the cost/benefit analysis? A recent study by IHS Global Insight found last week that 

if policies were adopted by Congress or the White House that effectively prevent independent oil companies from participating in future Gulf offshore development, the employment loss would reach 

7 

300,000 American jobs, and the loss of local, state, and federal revenues would total $147 billion in losses over the next decade. 

And that is because independent energy producers hold majority 

interests in 81 percent of all producing leases in the Gulf of Mexico, 

nearly half of those in the deep water. This week, rather than the 

House of Representatives hastily rushing through legislation with 

far-reaching impacts on jobs, energy prices, and energy security, it 

would be much wiser to bring together science, industry, and government in partnership to develop a thoughtful, safe, and prosperous path forward to Gulf exploration and development. 

Our National economy, already suffering with 9.5 percent unemployment in a subpar recovery, cannot be harmed further with the 

devastating drilling moratorium and hasty legislation that kills 

jobs and makes us even more dependent on foreign oil. 

Madam Chairman, I will submit the rest of my statement for the 

record, but we look forward to the discussion today on the path forward. Thank you. 

[The prepared statement of Representative Brady appears in the 

Submissions for the Record on page 41.] 

Chair Maloney. Thank you. Thank you very much. Senator 

Bingaman has informed me that he must leave shortly, but he particularly wanted to hear the testimony of Mr. Malkin, who has 

been a leader in existing building energy efficiency retrofits. I do 

want to call on Mr. Malkin first to speak while the Senator is here 

so he can hear him. 

Mr. Malkin is coordinating the team that is in the process of retrofitting the Empire State Building, upgrading and restoring it, 

and making it more energy efficient, and he is the President of 

Malkin Holdings. 

Mr. Malkin, you are recognized for five minutes. 

STATEMENT OF MR. ANTHONY E. MALKIN, PRESIDENT, 

MALKIN HOLDINGS, NEW YORK, NEW YORK 

Mr. Malkin. Thank you very much. 

My name is Anthony E. Malkin. I am the President of Malkin 

Holdings, and I run the Empire State Building. Seated behind me 

are Empire State Building team leaders Paul Rode of Johnson Controls and Dana Schneider of Jones Lang LaSalle. Other members 

in our work are the Clinton Climate Initiative and the Rocky 

Mountain Institute. Duane Desiderio of the Real Estate Roundtable, of which I am a member, is also present behind me. 

At the Empire State Building, we created the first replicable, 

nonproprietary, open source, quantitative process to give transparent economic justification to energy efficiency retrofits in the existing built environment. 

Our work is guaranteed by the balance sheet of Johnson Controls 

to reduce our watt and BTU consumption by 38.4 percent. Our contract only guarantees 90 percent of our projected savings, so our actual savings will be in excess of 40 percent. Our payback period is 

three years. 

It is estimated that, in American cities, 85 to 95 percent of all 

buildings that will be here in 2035 are here today. Building new 

and efficiently will not move the needle on energy consumption. 

8 

Only addressing the existing built environment will make a difference. 

Let’s use New York City as an example: 80 percent of the energy 

consumed is consumed by buildings; 20 percent of the buildings 

consume 80 percent of energy consumed by buildings. Therefore, 64 

percent of all energy consumed in New York City is consumed by 

20 percent of the buildings. 

If the 20 percent of buildings in New York City that consumes 

64 percent of all energy deployed our program to the same effect, 

total energy consumption in New York City will be reduced by 25 

percent. In the process, many jobs are created, skills are taught, 

and local economies are stimulated. 

That is the equivalent of creating surplus power through alternative generation right in the middle of New York City, carbon 

free. But generating our savings is 3 to 5 times per watt less expensive than alternative energy generation by wind, solar, or geothermal. Until the cost of a watt of alternative energy generation 

equals the cost of a watt of savings, we must focus on savings. You 

get the same carbon reduction with better economics and no additional infrastructure cost. 

Creating this excess power allows for a number of options: 

Shut down the sources of power; 

Create carbon credits for trading; and/or 

Reduce the size of investment in the smart grid for distribution of new sources of power. 

What can government do? 

Treat the reduction of the consumption of energy, treat that reduction as the production of energy through alternative, low-carbon 

output sources. 

Allow for the sale of tax credits, accelerated depreciation, and expensing of capital expenditure to help fund and reduce the net cost 

of such work. 

These financial incentives will encourage building owners to 

make investments that address broad, intelligent policy objectives. 

Focus on the big energy consumers first. The Empire State 

Building consumes the equivalent of 40,000 single-family homes in 

energy. The focus on the community model for creating residential 

energy savings has been misplaced. Focus on the big energy consumers with big systems to effect fast and rewarding change. 

Develop national standards for energy consumption reporting. To 

understand energy consumption, we must share consumption data. 

Individual cities and states are already approaching this issue 

independently. We need one set of standards rather than a series 

of conflicting standards. 

Change EnergyStar from a database of relative measurement to 

a reporting and rating program based on actual consumption data. 

Empire State Building has earned an EnergyStar rating of 90, with 

only half our work completed. That means we are more energy efficient than 90 percent of comparable buildings of any age. But 

EnergyStar is only a relative rating system which does not provide 

a return on investment measurement or argument. 

Understand limitations. We need a framework which recognizes 

realities and differences by building types, system, uses, and geographical locations. Allow for life cycle analysis instead of wasteful 

9 

edicts. Inform your policy with our practice. Significant savings are 

within tenant-controlled spaces, and legislation cannot merely impose on landlords but must address users as well. 

Reward successes and encourage first movers. The real estate industry is inherently competitive. Owners and lenders who are early 

movers should be rewarded. This will differentiate them and encourage others to catch up and contribute to the health of the real 

estate industry. 

We are the future. We are not motivated by ‘‘doing the right 

thing,’’ but by making money. I look forward to answering your 

questions and finding ways in which the Empire State Building can 

inform government policy with the practices we have developed. 

I encourage you to visit our website: esbsustainability.com, and 

come see the $2 million installation we just unveiled yesterday in 

our observatory, which is viewed by 4 million people a year from 

this point forward, all about the process we have created and its 

broad impacts. 

Thank you, very much. 

[The prepared statement of Mr. Anthony E. Malkin appears in 

the Submissions for the Record on page 43.] 

Chair Maloney. Thank you very much. I would now like to introduce another distinguished witness, Dr. Michael Greenstone. He 

is the 3M Professor of Environmental Economics at MIT, and he 

is also a Senior Fellow in Economic Studies and Director of the 

Hamilton Project at the Brookings Institute. Previously he served 

as Chief Economist for the President’s Council of Economic Advisers under President Obama. 

Welcome, Dr. Greenstone. You’re recognized for five minutes. 

STATEMENT OF DR. MICHAEL GREENSTONE, 3M PROFESSOR 

OF ENVIRONMENTAL ECONOMICS, MASSACHUSETTS INSTITUTE OF TECHNOLOGY, CAMBRIDGE, MA; DIRECTOR, THE 

HAMILTON PROJECT, THE BROOKINGS INSTITUTION, WASHINGTON, DC 

Dr. Greenstone. Thank you, Chair Maloney, and Members of 

the Committee, for inviting me to testify today. 

I am grateful for the opportunity to speak about two challenges 

that our country faces: the stagnation in economic opportunity and 

the risk posed by our continued reliance on fossil fuels. 

The key purpose of my testimony is to discuss how energy research and development, or R&D, can enable us to begin to confront these dual challenges. 

Even before the Great Recession’s arrival, there were legitimate 

concerns about U.S. competitiveness. Between 1979 and 2007, real 

earnings for high school graduates with no further education declined by 12 percent. Earnings for high school dropouts declined by 

16 percent over the same period. 

Further, between 1990 and 2005, our world market share of 

high-tech exports dropped from 20 percent to 12 percent, while China’s more than doubled, rising to 19 percent. At the same time, our 

need for access to reliable and affordable petroleum constrains our 

foreign policy objectives, especially our national security ones. This 

is the essence of our energy security challenge. 

10 

Further, climate scientists tell us that warming in the climate is 

unequivocal and very likely due to burning of fossil fuels such as 

petroleum. The global consequences of climate change for health 

and economic growth are projected to be quite negative. 

Two interrelated factors increase the odds of such dramatic 

changes in temperature will occur. First, fossil fuels like coal and 

petroleum are the cheapest sources of energy available today and 

are likely to remain inexpensive in the future relative to alternative sources of energy. 

Second, due to their low levels of income, developing economies 

will continue to pursue cheap energy sources in the coming decades. 

Our nation needs a new solution to these dual challenges of U.S. 

competitiveness and fossil fuel dependence. I believe a new program of energy R&D should be part of it. Such a program offers 

the prospect of innovation that will produce industries of the future 

and good jobs for our nation. 

Why is R&D so important? Our economic progress is driven by 

invention and application of new technologies. And R&D spending 

develops and drives these new technologies. However, the private 

sector rightly focuses on applied projects where the payoff is likely 

to accrue only to them. 

In contrast, government can sponsor the kind of basic research 

projects that seek wide-ranging scientific understanding, and these 

basic research projects can affect entire industries rather than individual firms. 

Two of the most notable vehicles for supporting R&D in the 

United States are the National Institutes of Health, the NIH, and 

the National Science Foundation, the NSF. 

NIH-funded scientists have won over 93 Nobel Prizes, and 15 of 

the 21 most important new drugs discovered between 1965 and 

1992 were developed using NIH-funded research. NSF-funded basic 

research has produced meaningful advances, including bar codes, 

Doppler Radar, and web browsers. These advances have created 

entirely new industries that have helped to make us a world leader. 

In contrast, funding for energy research has often been focused 

on the deployment of existing technologies, rather than the development of new ones. Deployment is a task that is better left to the 

private sector. 

Further, energy research funding decisions have not been as single-mindedly based on peer review in contrast with the approach 

that prevails at the NIH and NSF. 

How much does the United States currently spend on R&D? As 

the chart shows, the Federal Government’s contribution to R&D 

spending as a share of GDP has been declining over the last several decades, from its Cold War peak of about 2 percent, or more 

than 2 percent, to less than 1 percent today. 

The next chart depicts the time series of federal R&D in the energy sector. In 2009, federal R&D spending on energy totalled just 

$1.7 billion, or a little more than 1/100ths of 1 percentage point of 

GDP. 

11 

Let me put this in some context. That $1.7 billion figure is just 

55 percent of the $3.1 billion that we currently spend on subsidizing employee parking through the Tax Code. 

It is also instructive to compare U.S. spending with other countries. Our rate of energy R&D spending puts the United States in 

last place among the 12 OECD countries that spent the most between 2004 and 2008. 

The Hamilton Project—so let me conclude. The Hamilton Project, 

an Economic Policy Group at Brookings that I direct, is commissioning a series of discussion papers on ways to improve the Nation’s R&D program, and we will unveil them in 2011. 

In the meantime, I would like to suggest five broad principles for 

reforming energy R&D policy: 

Number one, federal energy R&D funding should be increased 

substantially from its woefully inadequate current levels. 

Two, energy R&D funding should follow the NIH and NSF’s 

model and be free of political influence. 

Three, federal R&D funding should be focused on basic research 

not applied research or deployment. 

Four, the use of innovative funding mechanisms such as prizes 

should be given consideration. 

And number five, energy R&D should include funding for 

projects to demonstrate that new technologies can be implemented 

on a commercial scale. 

Let me conclude. In pursuing a new energy R&D program, there 

are difficult political issues that must be confronted. Perhaps chief 

among them is the identification of a source of enhanced funding 

in this tight budget environment. 

At the same time, we cannot stick with the status quo. It is imperative that we begin to confront the issues of competitiveness 

and fossil fuel dependence that have hampered our progress over 

the last several decades. 

Thank you very much for the opportunity to testify before you 

today. I would be happy to answer any questions that you may 

have. 

[The prepared statement of Dr. Michael Greenstone appears in 

the Submissions for the Record on page 83.] 

Chair Maloney. Thank you very much. And I would now like 

to introduce Dr. E.G. Ward. He is the Associate Director of the Offshore Technology Research Center at Texas A&M University. His 

responsibilities include planning, coordinating, and administering 

of the OTRC research program to meet industry and government 

technical needs in areas associated with deep-water offshore oil and 

gas development. Prior to joining Texas A&M, he worked for Shell 

Oil Company managing the design of Shell’s deep-water structures, 

and conducting research in ocean engineering. 

I would like to welcome all of you, and I would like to call on 

Mr. Brady to begin the questioning after Dr. Ward’s testimony. 

STATEMENT OF E. G. (SKIP) WARD, PH.D., ASSOCIATE DIRECTOR, OFFSHORE TECHNOLOGY RESEARCH CENTER, TEXAS 

A&M UNIVERSITY, COLLEGE STATION, TEXAS 

Dr. Ward. Thank you, Madam Chairman. 

12 

It is indeed an honor and a privilege to be able to address you 

all this morning. I appreciate the opportunity. 

I think we would all agree that a robust drilling program must 

continue to maintain and increase our domestic oil production for 

America’s continuing energy needs, even while alternative energy 

sources are being developed for our future. 

Many consider the moratorium to be a six-month long period 

during which the Macondo well disaster will be studied, safety 

practices and regulations will be modified and improved, decisions 

regarding cleanup and mitigation and containment issues will be 

addressed, and then the drilling and production will go back to the 

same levels as before the disaster. 

However, in the face of the six-month moratorium and the uncertainties as to when drilling can actually resume, and under what 

conditions and circumstances and regulations, drilling rigs are beginning to leave the Gulf of Mexico. Two rigs have already announced their departure, and I expect there will be more. 

What I would like to address this morning is the aspect of the 

moratorium that has not been considered to date, and that is the 

impact on longer term Gulf of Mexico production as rigs leave as 

a result of the moratorium. 

I will focus on oil, but my remarks are equally applicable to offshore natural gas production. 

Consider two factors. When a rig leaves the Gulf of Mexico to 

work overseas, it will not do so on a six-month contract. It will go 

to Angola, Brazil, or some other place probably on a two- to fiveyear contract. So the effective time when these rigs are not drilling 

in the Gulf of Mexico, exploring, producing, maintaining ongoing 

production will be two to five years, not six months from the moratorium. 

The second thing to consider is that the production rate from an 

oil well begins to decline as soon as it starts to produce. Reservoir 

management is undertaken to help slow this decline, but it is inevitable and eventually the reservoir is depleted, no more economic 

production can be sustained, and new reservoirs must be found and 

produced to keep the oil flow going. 

So let’s ask how fast the Gulf of Mexico wells decline. The MMS 

has derived estimates based on their study of historical production 

in the Gulf that the decline rate is on the order of 12 or 13 percent 

per year. This figure does include ongoing maintenance drilling. 

And so for a no-drilling case, which I would like to pursue, I am 

going to assume the effective rate is actually about 15 percent. 

Others have estimated that the actual decline rate is much higher than even that, at 20 to 30 percent. I will use 15 percent and 

I’ve shown in my testimony some sensitivity cases for up to 20 percent. 

So let’s look at the case where the moratorium results in all rigs 

leaving the Gulf or being unable to drill for a two-year period. 

What’s the impact on production? 

In 2010 before the moratorium, the Gulf of Mexico produced 1.6 

million barrels of oil a day. That is 585 million barrels a year. 

By the end of 2012, assuming that no drilling occurs in the two 

years till then, the production would drop to about 1.1 million barrels a day—a 30 percent reduction. 

13 

In that two-year period (2011–2012), 450 million barrels of oil 

would have to be imported just to make up for this production that 

was lost. The import value at $70 a barrel would be over $30 billion. There would be 1,500 additional shuttle tanker transits in the 

Gulf required to bring that imported oil into the Gulf, creating further oil spill hazards. 

And finally, when the rigs returned in late 2012, what would it 

take to get production back from the then-1.1 million barrels of oil 

a day to the 2010 value of 1.6 million barrels a day that existed 

before the moratorium? 

A very large Gulf of Mexico oil and gas production can produce 

up to 200 thousand barrels of oil per day. So would it take three 

of these major productions to get us back to where we are today? 

No. It would take about four years to bring those projects online. 

And during that period, the production rate would drop another 

half a billion 500 thousand barrels per daydollars a year, so it 

would take five very large projects to catch up to where we were 

in 2010. 

So the six month moratorium really has the potential to cause 

lasting impacts to our ability to produce oil. 

Let me sum up. No one knows how many rigs will leave and for 

how long, but the potential production decline that could result 

from the moratorium can have long-lasting impacts on our domestic production. 

There are many negative impacts of the moratorium that have 

been discussed elsewhere, including unemployment, new safety 

concerns, economic losses for both industry and governments, and 

increased dependence on foreign oil. 

However, much has been learned from the Macondo disaster to 

date, and these lessons learned, plus the recommendations that 

were included in Secretary Salazar’s report to the President that 

are now being implemented in Notices to Lessees, and the oil spill 

containment system that industry has recently announced, provide 

a strong basis to allow drilling to resume now while continuing to 

further improve safety against these very rare events. 

Chair Maloney. The gentleman’s time has expired. Could you 

wind it up? 

Dr. Ward. I have finished. Thank you. 

[The prepared statement of Dr. E. G. (Skip) Ward appears in the 

Submissions for the Record on page 94.] 

Chair Maloney. Thank you very much. But one way we can 

produce more energy is by preserving more. I was impressed really 

by your statement, Mr. Malkin, that you were bringing down the 

Empire State Building’s energy consumption by over 40 percent. 

That is a very impressive accomplishment with not only financial 

savings to the building, but also improving the environmental benefits for others, and also freeing more energy for other uses. 

Can you elaborate more on what you are working to accomplish? 

And how can we get other owners of commercial buildings to follow 

the same type of lead that you are taking in New York? And what 

does this mean for energy in terms of New York City if other large 

buildings would follow your lead and conserve that much energy, 

releasing it for other uses? Can you elaborate how we can get more 

buildings involved, and the benefits to energy saving overall? 

14 

Mr. Malkin. Yes. Thank you. First of all, I would like to just restate the facts which I had said earlier to make sure they set in. 

I wanted to get in within my five minutes, but literally according 

to the Mayor’s Office of Long-Term Planning in New York City, 20 

percent of the buildings in New York City consume 64 percent of 

all of the energy consumed in New York City. That includes railroads, buses, subways, taxis, all energy. 

So a 40 percent reduction in watts and Btu consumption by those 

20 percent of buildings would in fact be the equivalent of generating 25 percent of all of the power consumed in New York City 

right in the middle of New York City. 

New York City is particularly energy dense. So the reality is, in 

a city like Phoenix, it’s probably more—and if you look at Phoenix 

as an SMSA, as opposed to just the city proper, it’s probably more 

about 60 to 65 percent. But even in small towns in America, the 

majority of all energy consumed is consumed in buildings. That’s 

point one. 

Point two, this is the first quantitative approach ever developed. 

And that was the groundbreaking work which we started with 

Johnson Controls, Jones Lange LaSalle, and the Rocky Mountain 

Institute, in an airplane hangar in Eagle, Colorado, back in 2007. 

There has been no quantitative approach up to this time, and we 

did launch and announce it in April of 2009. But when we 

launched it in April of 2009, it was with a contract signing for work 

which we had already done in private and in secret. We did it in 

private and in secret because we were afraid that one of the outcomes might be that we would prove you could not have an economic justification for energy efficiency retrofits, and it would only 

be possible through regulation and additional expenditure without 

economic result. 

There are other people already copying what we are doing, strictly from an economic perspective. As I mentioned to you in confidence, there will be a large 2-million-square-foot building in New 

York which will make the announcement that it is already well underway with this project in September of this year. There are two 

large corporate headquarters in New York where this work is preliminarily underway. 

And the key, I believe, is to look at the real estate industry, a 

very large and vibrant and job-creating industry in America, as a 

source of electricity, as a source of power, as opposed to just a consumer. And, to try to coordinate the efforts of the real estate industry with appropriate government incentive and interaction, and legislation, to band together and produce this power in an organized 

fashion by focusing on, first of all, commercial applications. We consume 40,000 households’ worth of energy at the Empire State 

Building. 

The same two people behind me would be responsible for doing 

four or five single-family homes. Instead, they are responsible for 

doing the Empire State Building. So concentrate on the big energy 

consumers, number one. 

Number two, really one should look at the same sort of tax credits and tax benefits which oil and gas drilling, wind, solar, and geothermal have always enjoyed as energy producers. But put some of 

15 

that money into energy conservation. That is a very good source of 

financing for this sort of work. 

The third thing I would say is, you have to create openness and 

sharing of energy consumption data. Real estate people love attention and hate scrutiny. Everything that we are doing is wide open 

for scrutiny. And we are hoping to create a competitive atmosphere—we are succeeding in creating a competitive atmosphere 

amongst brokers and tenants who are choosing to come to us because we are helping them with their own objectives of controlling 

costs. Salaries, rent, and utilities are the three highest costs of 

businesses in America. We are working on that third one. 

Chair Maloney. Thank you very much. My time has expired. 

Mr. Brady. 

Representative Brady. Well thank you to the panel. Mr. 

Malkin, your testimony is impressive. I know commercial buildings 

have dramatically increased their energy efficiency over the last 

several decades, but you bring a perspective on the cost/benefit 

analysis that is very, very helpful. 

Dr. Greenstone, thanks for making the point on the need for 

R&D. If you could—I didn’t find it in your testimony, but if you 

have any information comparing federal R&D spending versus private-sector R&D spending, especially in renewable that would be 

helpful. I find a number of companies are doing research that people are not even aware of that is creating, I think, some hope for 

us moving forward. Any information you have along that line 

would be very helpful. 

And, Dr. Ward, your point about what happens with this drilling 

moratorium in the here-and-now, clearly we have two rigs that already announced they are going to Egypt and the Congo. Many 

more rigs are contemplating leaving and will not return any time 

soon. 

Each rig takes with it at least 1,000 to 1,500 American jobs. And 

then the vendors and suppliers who supply those rigs are hurt. And 

your point is, if I read it right, is that along with those losing rigs, 

and jobs, and equipment, and our American businesses, that we 

end up, in fact, importing more oil by more risky means of transmission than receiving it from the Gulf today. And, that the Gulf 

also is sort of the buffer to OPEC, that the amount of oil it produces keeps us from being held hostage to foreign countries that 

can drive up prices and really cripple our U.S. economy. 

Can you go back to the point you made? What is—how much less 

oil will we be producing? Not counting natural gas, which is again 

I think the best bridge to an affordable green energy future for 

America, it really is the backstop for wind and solar and other renewables and allows them to grow and yet keep reliability, but 

what is the production? How much less energy will we be producing in the United States if this very poorly thought of moratorium continues? 

Dr. Ward. If the moratorium results in rigs leaving for two 

years, the reduction in the Gulf of Mexico will decline by 450 million barrels a year. 

Representative Brady. And that’s what percent? That’s 

about—— 

Dr. Ward. About 30 percent of the Gulf production. 

16 

Representative Brady [continuing]. So we will lose a third of 

our most critical portion of oil development? 

Dr. Ward. That’s correct. 

Representative Brady. And if it goes longer, it is how much? 

Dr. Ward. If it goes longer, the 450 I believe goes up to about 

over a billion barrels of oil in five years. 

Representative Brady. So we would lose, at that point, twothirds of our production. 

Dr. Ward. Correct. 

Representative Brady. You were invited by the Interior Department to peer-review their original drilling moratorium—— 

Dr. Ward. Not to review, but to contribute to the report. 

Representative Brady [continuing]. Contribute to it. You made 

a number of safety suggestions, but you and a number of others in 

that group did not support the drilling moratorium, saying it would 

not make the Gulf safer, and would have a dramatic economic impact. 

Can you—— 

Dr. Ward. That’s correct. 

Representative Brady [continuing]. Can you talk about that a 

moment? 

Dr. Ward. Yes. There were a number of safety recommendations 

that dealt principally with procedures, both from the standpoint of 

planning wells, executing wells, the regulatory environment that 

would give more scrutiny to ongoing wells. I think it is pretty generally recognized that the procedures and design of the BP well are 

not ones that are practiced by the wide majority of industry. 

And I think the rarity of blowouts, as disastrous as they are, certainly belie that point. 

Representative Brady. Coming from the university setting, as 

an academic one of the points that you made then and made today 

in your testimony is that stopping the production here in the U.S. 

does not make the shore safer by increasing—— 

Dr. Ward. The imports. 

Representative Brady [continuing]. The imports. 

Dr. Ward. Right. 

Representative Brady. And using the tankers. You have actually increased the risk of oil spills in the Gulf. 

Dr. Ward. Of near-shore oil spills in particular, yes. 

Representative Brady. Is there any other point about your testimony? I know we always keep a strict five-minute rule. Any other 

point you wanted to make today on the impact on jobs or pricing 

in the future? 

Dr. Ward. Well certainly one only has to look at recent hurricane interruptions in production between 2004 and 2008 to see the 

rapid and significant price increase that occurs when oil is curtailed in the Gulf of Mexico. So I think it is a fairly rapid response. 

Representative Brady. All right, thank you, Dr. Ward, and 

thanks for traveling here today. 

Dr. Ward. Thank you. 

Chair Maloney. Thank you. Mr. Hinchey. 

Representative Hinchey. Dr. Greenstone had a comment. 

Chair Maloney. Yes, excuse me. 

17 

Dr. Greenstone. I just wanted to comment on this last point 

about the impact of the moratorium on prices. I looked this up in 

the U.S. Energy Information Administration Report, and according 

to them by September the moratorium will have contributed to a 

1/100th of 1 percentage point reduction in global petroleum production. And I think, as difficult a political decision as it is to have 

a moratorium, and I think there are good arguments on both sides, 

I think the notion that it would somehow affect global prices for petroleum I think is not well founded. 

Representative Brady. I guess we will see where that goes, 

huh? 

Chair Maloney. Thank you. Mr. Hinchey. 

Representative Hinchey. Madam Chairman, thanks very 

much for this hearing. And thank you, gentlemen, for everything 

that you have said. We really need to be dealing with this issue 

much more effectively. 

Mr. Malkin, I thank you very much for all the talk that you gave 

about energy efficiency. I am delighted to hear that the City of 

New York is doing the kinds of things that you talk about. That 

is very positive. Very progressive. And it is going to make a big difference. 

Twenty percent of the buildings are using up more than 40 percent of the energy there? That’s something—— 

Mr. Malkin. 20 percent are using 64 percent. 

Representative Hinchey [continuing]. 64 percent—20 percent 

using 64 percent. That is absolutely shocking. And it is something 

that really needs to be overcome. And I am sure it is not unique. 

It is probably the same in every city all across the country and a 

lot of other places all around the world. So energy efficiency is critically important. 

The whole system that we have to deal with also is the bringing 

about of the practical use of energy effectiveness in other ways. 

One of the most effective things that we could do, it seems to me, 

would be utilizing solar energy. We have more energy coming out 

of the sun every single day all around this planet, much more than 

is used right now. 

So this is something that really needs to be dealt with. We are 

paying much too much attention to oil and gas and the standard 

forms of energy. One of the things we have here is $18 billion that 

we spend in subsidies for the oil and gas industry in the United 

States every single year. 

If we were to take half of that, just take half of that away from 

them and put it into energy research and development, we would 

be doing something that would be very, very significant. So I would 

appreciate it if we could talk a little bit about that and how it 

needs to be done. 

Dr. Greenstone, one of the things that you really surprised me 

with was the fact that almost a dozen countries around the world 

are engaged in more research and development in the energy operations in those countries than here in the United States—simple 

countries like South Korea, Finland, France, Spain, Italy, Canada, 

Germany, Sweden, Mexico, the Netherlands, and of course Japan, 

the most. And China is not included in that, but China is doing an 

awful lot, and they are doing it in different ways. 

18 

So I think the main issue that we should be dealing with is alternative energy. And the main form of alternative energy is solar energy. Yes, there’s wind energy. There’s a whole lot of things that 

can be done positively with that. Countries like the Netherlands 

are generating huge amounts of energy through wind forms, and 

there are some other countries that are engaged in that as well. 

But what would you suggest that we do with regard to the development of solar energy, that simple form of energy that flows down 

on this planet every single day—huge, huge amounts of energy, 

much more than we are ever using? Why aren’t we doing it? 

I mean, this government frankly, as you pointed out, beginning 

in, when was it, something around 1980 I think, was it, that sharp 

decline in the use of—— 

Dr. Greenstone. In the early ’80s, yes. 

Representative Hinchey [continuing]. The early ’80s. Well, 

maybe you could talk a little bit about that and tell us what we 

need to be doing, and how we should be doing it more effectively. 

Dr. Greenstone, if you would start? 

Dr. Greenstone. Yes, I think, Congressman Hinchey, these are 

excellent comments you made and I just want to try and amplify 

a few of them. 

I think the basic problem is that fossil fuels—fossil fuel, petroleum and coal, remain the cheapest source of energy that we have 

right now. And until we undertake a serious program of research 

and development, that will remain to be the case. 

And so to your point, the sun is a wonderful source of energy. 

And I think if we devoted the kind of substantial increase in funding for research and development into solar energy, that could well 

cause solar to be cost competitive with the fossil fuels that are the 

source of both our energy security and our climate problems. 

Representative Hinchey. Mr. Malkin. 

Mr. Malkin. I sit before you importantly as a capitalist. We invest in the oil and gas business. We have owned refineries. We’re— 

I’m also relatively green, as it were, looking forward. 

We’ve got to deal with the national priorities of this country, and 

we’ve got to deal with energy independence. Solar has a role. Solar 

is still three to five times as expensive as energy savings. So my 

thinking is, we’ve invested in solar as well and done very well on 

that. But my thought is there’s a mix here. There’s a cocktail that’s 

required: conservation, maintaining baseload, and bringing on the 

alternatives. 

There’s got to be the correct mix. So I think that there are good 

policies in place for solar right now, and there are big leaps being 

made. The biggest and most important thing you could do to sustain the development for solar, the technological development, is 

maintain a consistent and straightforward and understood set of 

programs in the U.S. Federal Government that extend over a fiveyear period, not a one- to two-year period, so that people can justify 

long-term planning and capital expenditure. 

The exact same thing for energy conservation. The same way the 

oil industry and gas industry has benefitted for so long because of 

the knowledge that these programs and policies and subsidies were 

in place and could be relied upon when you’re making long-term 

capital expenditure decisions. The big projects in the Southwest for 

19 

solar that will be coming are very large. They’re billion dollar 

projects. They need to have a firm regulatory framework underfoot. 

Chair Maloney. The gentleman’s time has expired. Mr. Brady 

is recognized for the purpose of a request. 

Representative Brady. Thank you, Madam Chairman. I would 

seek unanimous consent to have Senator DeMint submit questions 

for the record. 

Chair Maloney. No objection. 

Representative Brady. Thank you. 

[Questions dated July 27, 2010 from Senator Jim DeMint to Dr. 

Michael Greenstone appear in the Submissions for the Record on 

page 103.] 

[Question dated July 27, 2010 from Senator Jim DeMint to Mr. 

Anthony E. Malkin appears in the Submissions for the Record on 

page 105.] 

[Questions dated July 27, 2010 from Senator Jim DeMint to Dr. 

E. G. (Skip) Ward appear in the Submissions for the Record on 

page 106.] 

[Document dated August 27, 2010 transmitting Dr. Michael 

Greenstone’s responses to Senator Jim DeMint appears in the Submissions for the Record on page 107.] 

[Document dated August 11, 2010 transmitting Mr. Anthony E. 

Malkin’s response to Senator Jim DeMint appears in the Submissions for the Record on page 110.] 

[Document dated August 16, 2010 transmitting Dr. E. G. (Skip) 

Ward’s responses to Senator Jim DeMint appears in the Submissions for the Record on page 111.] 

Chair Maloney. Mr. Campbell. 

Representative Campbell. Thank you, Madam Chair. 

I am going to try and ask each one of the three of you in the 

order in which you said something. 

Mr. Malkin, I think I heard you say that your technology in the 

Empire State Building in New York is producing a payback in 

three years? 

Mr. Malkin. Yes. 

Representative Campbell. That is phenomenal from any—— 

Mr. Malkin. It is phenomenal, and it is documented. 

Representative Campbell [continuing]. So really you don’t 

need an incentive, or a subsidy, or whatever, for that kind of payback. Won’t the private sector just jump all over that? 

Mr. Malkin. You know, I wonder how many oil industry investments would be made if they had to do it on their own without 

some form of subsidy on just a three-year—I would suggest that, 

and having been in the industry I can tell you, we—a little quicker 

than that. 

But I would tell you that—— 

Representative Campbell. I understand you would like it because you could sell more, with a two-year payback, I get that. 

Mr. Malkin [continuing]. The important thing is—by the way, 

this is nonproprietary. We do not own it. We created this in partnership with a bunch of other organizations. It is absolutely free. 

It is open source. You don’t have to deal with any particular products. 

20 

I would suggest as follows: For an even playing field that you 

should look at energy conservation just as another form of energy. 

And put that into the mix. That is really my thought. I don’t look 

at it as a panacea, but I certainly look at it as a giant force of 

change once it has been quantitatively organized. 

Representative Campbell. And I am from Southern California, 

so I am sure in a more temperate climate that payback is not going 

to be quite the same. 

Mr. Malkin. No, actually it will be different because it will be 

different steps. There are 67 different energy efficiency measures 

which we looked at iteratively. We chose 8 at the Empire State 

Building. They will differ by virtue of climate, building type, building use. 

Representative Campbell. Okay. 

Mr. Malkin. And it is all on a relative basis. You may in fact 

find that the savings that you would find have nothing to do with 

heating, but have more to do with air conditioning, have more to 

do with lighting, but the important thing is there is a variety. 

Representative Campbell. Okay, fair enough. 

Dr. Greenstone, the thing about research, I have spent most of 

my career in the car business and I was involved with the General 

Motors electric car back in the ’90s, and I can tell you everyone, 

by now, thought there would be a breakthrough in battery technology, and it has not come in spite of billions of dollars of research 

both from the government, both under President Clinton and President Bush, and in the private sector. 

So the research, I think you would agree, does not guarantee obviously a breakthrough. So what I wanted to ask you is, if we were 

to have a substantial increase in energy research done by the government, what would you charge them with doing? What would you 

ask them? What would you tell them to look into? Where do you 

think the breakthrough is closest, or the most practical, or the area 

in which we could get the most productivity? 

Dr. Greenstone. Thanks for the question, Congressman Campbell. As you rightly point out, research does not have guarantees. 

It proceeds in fits and starts. I do not think when the NSF was 

funding what became web browsers anyone had in mind that it 

would produce web browsers, and the myriad industries and very 

high-paying jobs that have fallen out of that. 

I think what we will have to do is convene a panel of experts, 

as is done at the NIH and NSF, who are only concerned with advancement of knowledge, and not concerned—and free of political 

influence—and try and focus research on where the highest returns 

are. And I think they could be given the charge of trying to find 

the lowest cost, low carbon source of energy and/or ways to sequester carbon. 

You know, I would give a broad mandate and keep an eye on 

costs and kind of let science proceed as best it can. 

Representative Campbell. Okay. 

Dr. Greenstone. I also wanted to respond to one thing that 

came up in your excellent question of Mr. Malkin. I completely 

agree that for too long our energy policy has been focused on providing subsidies for deployment of particular technologies, be they 

oil—— 

21 

Representative Campbell. Dr. Ward, what I want to ask you 

is, your focus has been obviously on the drilling and so forth in the 

Gulf, and again coming from the car industry as I have, there’s 130 

million vehicles on the road in the United States now that run— 

virtually all of them run on some form of refined petroleum product. 

Even most of the new technologies that are out there, if everybody goes to a plug-in electric five or six years from now, those 

plug-in electrics will largely run on a refined petroleum product. 

Even if we went to fuel cells, the most practical use of the fuel cell 

runs on a refined petroleum product. 

So my point is simply that we are going to—no matter what we 

develop for a long period of time, 10, 20, 30 years, we are going to 

need a lot of refined petroleum in this country under almost any 

scenario, are we not? 

Dr. Ward. Yes, that is true. 

Representative Campbell. And developing that domestically 

would be better than importing it? 

Dr. Ward. Right. As Congressman Brady said, that is the bridge 

to these future energy alternatives. 

Chair Maloney. The gentleman’s time has expired. 

Mr. Cummings. 

Representative Cummings. Thank you very much. 

I was listening to you all’s testimony and, Mr. Malkin, I too am 

impressed with what you have said about your work in New York. 

As I was sitting here, I was just thinking that, you know, in a City 

like Baltimore where I am from, many cities are cash-strapped 

today and they are trying to figure out ways to save money. 

I am just curious. How do you see that playing like, for example, 

the things that you do, with government buildings and buildings 

that are run by cities? I mean, that is maybe a way to knock out 

two birds, at least two birds, with one stone: save money and at 

the same time save energy? I was just wondering. 

Mr. Malkin. Absolutely. We have actually had the City of San 

Francisco and the City of Philadelphia, in particular, and the City 

of London come and visit us at the Empire State Building so they 

can look at what we are doing and incorporate it into not only their 

buildings themselves but into the policies in the building codes 

which govern what happens in their cities. 

There is no question that you will get two benefits. Every city 

has a capital-expenditure-based program. Every city is constantly 

reinvesting in its capital, and largely buildings are a big part of 

that. 

So there is a big opportunity to combine these expenditures with 

integrated energy efficiency retrofits. The incremental cost is tiny, 

and the paybacks are very significant. And I think it would be very 

beneficial. 

Representative Cummings. And long-lasting. 

Mr. Malkin. Once you get your payback, that savings continues 

forever. I would like to just point out, by the way, that coal, nuclear, gas, and hydro are really the sources for the grid, not oil. Oil 

is really a transportation fuel. So my Tesla is powered off of the 

grid, and not by petrochemicals. 

22 

Representative Cummings. Dr. Greenstone, one of the things 

that you talk about in your testimony is how addressing this whole 

energy situation can—or not addressing it—affects infant mortality 

and all kinds of other problems. We just got a report in Maryland 

where African American babies, their infant mortality rate is going 

up; Whites are coming down. We just got that in yesterday. Could 

you talk about that a little bit? 

Dr. Greenstone. Thanks for the question, Congressman Cummings. 

In some research I’ve shown that very hot days increase the rate 

of infant mortality. So to the extent our continued reliance on fossil 

fuels will continue—will produce more and more hot days, that will 

lead to higher rates of infant mortality. And I think it underscores 

that we have been baking into the system through our reliance on 

fossil fuels changes in climate that are going to disrupt the way we 

live and impose economic costs both through health costs that 

you’ve outlined, and reduced agricultural yields, and a series of 

other negative changes in our environment. 

And if we do not undertake changes in our reliance on fossil 

fuels, we are going to be subjecting ourselves to those costs. 

Representative Cummings. And how would you say we should 

ensure that say, for example, jobs produced by a clean energy economy are American jobs and not just another industry that moves 

overseas? I mean we’ve got a lot of people out of work. And one of 

the things that I am doing in my District on August 7th is, we are 

bringing in young people who have either dropped out of school, or 

are trying to figure out where to go, and trying to direct them into 

areas like—first of all, getting their GEDs, and trying to get them 

into community colleges—but we are also trying to tell them where 

the jobs are going to be. 

These are young people and we want to get them into some kind 

of careers. It would be a shame if we produce these energy-reducing jobs, and then they just get shipped overseas because I am trying to figure out where these people are going to work. 

Dr. Greenstone. So there is no question, Mr. Congressman, that 

there is an international competition for jobs. We are seeing that 

every day. And one thing that, you know, decades of economic research have shown is that where ideas are created, there is stickiness. And so to the—— 

Representative Cummings. There’s whatness? 

Dr. Greenstone [continuing]. Stickiness. And so let me elaborate on that. So to the extent that we can fund a program of basic 

R&D that produces new ideas and new industries, while some of 

those jobs in those industries will go overseas, many of them will 

stay behind in the United States. 

And that is I think the strongest part of the argument for the 

need for a clean energy revolution to further our economic competitiveness. 

Representative Cummings. Thank you, Madam Chair. 

Chair Maloney. Thank you. And Mr. Burgess. 

Representative Burgess. I want to thank the Chair for the recognition. 

Mr. Malkin, your story is nothing short of fascinating. As I mentioned, I do an energy efficiency summit in my District, and I have 

23 

done that every year since my wife and I built a new house, and 

I wanted to put solar panels on but the technology was not there, 

and they are terribly expensive, and my wife, who is the architect, 

said maybe we can just do this with off-the-shelf efficiency technologies: foam insulation, efficient attic systems so important in a 

Texas summer, the high-efficiency air conditioners. 

So I guess my question is: You mentioned you can do the equivalent of 40,000 households, but we also have a lot of power out there 

in those households. And, while not everyone is going to build a 

new house, there are off-the-shelf retrofits that can be done on the 

existing housing stock. And every summer when we do this efficiency summit, I am impressed by the local builders who show up 

and talk about the things that can be done, the energy audit, finding the places in your home where the energy is not being utilized 

appropriately. 

Presumably you have done that with your building in New York? 

Is that correct? 

Mr. Malkin. I have done it with my building in New York, and 

I have done it with my home. And the interesting thing is that the 

paybacks in my home really to do the comparable work, because of 

the systems involved and the fact that it is an existing home and 

happens to be 100 years old, far, are far longer than with commercial. 

My emphasis is: Go to where the money is. And the money right 

now, the low-hanging fruit is concentrated in buildings, big buildings: hospitals, office buildings, retail facilities. 

I don’t mean to say forget about homes altogether, but I do mean 

to say I think it is misdirected to focus on HomeStar when 

BuildStar or other things which address the commercial real estate 

industry could have a much more immediate, very near-term effect 

on our total energy demand, and can free up power and source of 

power for other uses. 

I would emphasize, by the way, I would not want to bog this 

down with too much data, but the folks at Johnson Controls and 

Jones Lange LaSalle are readily available to testify at any time, 

and they have got all the data on this. 

Representative Burgess. I hope we will call them. 

You mentioned 67 things to do for energy efficiency. In the Empire State Building you concentrated on 8. Can you give us, in the 

interest of time, the top 2? 

Mr. Malkin. I think the two most interesting things that we 

have done, one is we are taking 6,514 windows which are 

thermopane or duopane, installed 12 or 15 years ago, out of the 

building to a facility in the building with 5,000 square feet where 

we take them apart, clean them, put in a mylar sheet, reseal them 

with krypton argon gas. We take their energy efficiency from an R– 

2, energy resistance to transfer of energy, from an R–2 to an R– 

8. 

We re-use 96 percent of the components: the frames, the glass. 

We reinstall them the next night in another floor. Through that 

process, we are greatly reducing the heat and cool transfer and reducing our load. 

The second thing which I think is very interesting is we have a 

DDC system which is 100 percent, 24/7, 365 days a year operating 

24 

every variable air volume damper, every fan, every pump, every radiator. It’s all linked. So we are not only curing the number one 

complaint in an office building, ‘‘too hot/too cold,’’ but we are finetuning the building so that it runs at peak efficiency. And if it ever 

slips out of commissioning, you know it immediately, as opposed to 

every five years when you check. 

Representative Burgess. I’m anxious to hear about the other 

six, but in the interest of time I do need to ask Dr. Greenstone, on 

the—of course we passed a cap-and—or they passed a cap-andtrade bill in the House, I guess I should say. It was an absolutely 

dreadful bill. 

But when Al Gore came and talked to our Energy and Commerce 

Committee—and he did this twice—he talked about maybe it was 

time for a new paradigm and we get rid of the income tax, and the 

payroll tax, and just have a carbon tax, or an energy tax. 

Have you looked into that at all? Replacing our existing tax codes 

with just purely an energy tax? 

Dr. Greenstone. Congressman Burgess, I have not looked into 

replacing the income tax with a carbon tax. I think what is probably worth highlighting, though, is it is possible to design a carbon 

tax, or we can call it a cap-and-trade system, where the costs are 

minimized to American families. 

Representative Burgess. It may be possible—I’m going to interrupt you—it may be possible, but we did not do it in that bill. 

Let me just ask you this, because you mentioned about X prices, 

or national prizes. H.R. 5505 is an X Prize for dealing with nuclear 

waste. Now if we want Mr. Malkin to have his Tesla charged with 

noncarbon electricity generating, and it just seems like nuclear 

power would be the way to go. Any interest in us pursuing something like that? 

Dr. Greenstone. I think it is important to pursue research and 

development into nuclear energy. It’s got to be at the top of the list. 

Representative Burgess. I would appreciate you looking at 

H.R. 5505 and giving me feedback on what you think. 

Dr. Greenstone. I would be happy to. 

[Document dated August 27, 2010 transmitting Dr. Michael 

Greenstone’s answers to Representative Michael C. Burgess, M.D. 

appears in the Submissions for the Record on page 113.] 

Chair Maloney. Mr. Snyder. 

Representative Snyder. Thank you, Madam Chair. 

I apologize for not being here earlier. I was at an Armed Services 

Committee hearing. I want to ask a two-part question, which all 

three of you may decide you do not want to respond to, and then 

my time will be done and your time will be done, but the first part 

of the question is: 

We talk a lot about competing with the international community 

in terms of R&D and developing new technologies, and it’s all 

about jobs, and who is going to sell what to whom. The first part 

of my question is: As part of that, though, should we not be encouraging Chinese investment in the United States? They are certainly 

willing to manufacture products that are part of new energy 

sources. Why are we not aggressively encouraging them to set up 

manufacturing plants here like we do with other countries and 

25 

other technologies? It seems like it would be a win/win thing for 

both the Chinese and the American people, the American workers. 

And second, it seems like every few weeks there is some article 

about how aggressive the Chinese, the business community and 

government, are about buying up energy type resources and mineral resources around the world. And we read those, and we get 

alarmed. Is not the alarming part of it that American businesses 

are not investing in those areas? Are not the Chinese businesses 

doing what perhaps folks ought to be doing, which is, you’re looking ahead and you think you need more energy. Should you not be 

making investments in countries that have the resources you need? 

Is there not a difference in risk tolerance? 

Why are not U.S. businesses more aggressively going after investments overseas like Africa, recognizing that 50 years from now 

Africa is certainly going to be wanting to buy clean energy sources 

also? And if this is off the wall for all three of you, just defer to 

the next guy and we’ll be done. 

But Dr. Greenstone, any comment? 

Dr. Greenstone. Thank you, Congressman Snyder. I think I will 

take on your first question. 

We have too much labor that is not working right now, and too 

many American workers do not have jobs. And I think it would be 

a great idea to encourage investment from China, and all other 

countries, in the United States. And if we set up factories that are 

owned by others, those would still be jobs that American workers 

can have, and American workers can draw wages and support their 

families and I think that would be an important part of any economic policy. 

Mr. Malkin. I would just like to say to your second question 

that, you know, where China is going, I was in Kenya visiting with 

my family and the roads are being made there, graded by Chinese 

engineers all up and down the country. 

We have got the, what is it, the Corrupt Foreign Practices Act, 

or Foreign Corrupt Practices Act, I forget which it is. They don’t 

have any such restrictions on where their capital goes. 

But I also think that, you know, American capital is wonderful 

because it can be moved where it is best rewarded. And what I am 

trying to emphasize is, less reliance on overseas sources of energy, 

and to look at energy efficiency as a source of energy for our own 

country so we can really define what our requirements are and we 

can have less extension. That is a huge component of what has 

driven me to do what I have done, the work that we put together 

at the Empire State Building, really to make America stronger and 

less reliant on overseas. China is reliant on overseas because it has 

grown fast and does not have the resources to grow its economy. 

Dr. Ward. I think that the oil industry is a great example of the 

research that has been plowed into it, and the jobs that have stuck 

in the United States. The U.S. is a world leader in technology, and 

seen as a leader in implementing that technology throughout the 

world. 

In terms of competing internationally for jobs, I would imagine 

a lot of it gets down to labor costs when you go into the implementation and rolling out of the technology for a mass market. And 

that is a tough one to deal with. 

26 

I will pass on the second one because I think we are all about 

trying to create energy in the United States. 

Representative Snyder. Except that if what we are saying is 

this is about jobs in which we sell products internationally, why 

would we not be saying there is a huge market in Nigeria 30 years 

from now, or 20 years from now, or 10 years from now for solar 

kinds of things? Or clean energy? And yet I think American business right now, when you combine European and American investment in Africa, it is much, much higher than Chinese, but the rate 

of investment today is much greater by the Chinese for reasons 

that seem to be one of risk tolerance more than anything else. 

There is money to be made in Africa. There is money to be made 

making products there to sell to Africa. It is not just, Mr. Malkin, 

to sell, to bring energy back to the United States, that we are falling behind. 

Thank you, Madam Chair. 

Chair Maloney. Thank you very much. I would like to give Dr. 

Greenstone the opportunity to respond to your statement. You ran 

out of time. You were responding to Mr. Malkin’s statement that 

we should be treating savings as energy, and if you would like to 

expand on that concept more, Mr. Malkin, or Dr. Ward, you are 

welcome to. 

Dr. Greenstone. Thank you, Chair Maloney. 

Yes, the point I was going to make is I think for too long our energy research has been focused actually on deployment, or subsidies for particular forms of energy. Sometimes it’s oil. Sometimes 

it’s coal. Sometimes it’s solar. Sometimes it’s wind. Sometimes it’s 

for energy efficiency. However, deployment is really an activity that 

is best left to the private sector. Instead of favoring particular technologies, economic theory is clear, all technologies should be allowed to compete on a level playing field. The lone exception is in 

cases where there are what economists call externalities, like 

greenhouse gas emissions. 

And what all those subsidies do is unlevel the playing field. And 

the thesis of my testimony was that if we take those subsidies and 

turn them into research and development, pure research and development that is focused on basic knowledge that no firm will undertake on their own because it will benefit all kinds of firms, not just 

their own firm, we can address these two challenges that have been 

bedeviling the country for several decades—which is U.S. competitiveness, and our increasing reliance on fossil fuels. 

So switching from deployment to basic R&D I think will offer a 

lot of benefits. 

Chair Maloney. Well, talking about research, in this weeks’ 

Newsweek, the Ford CEO, Alan Mulally was talking about the challenges faced with coming up with a solution with the batteries, and 

he said what we need is a moon shot. We need a total commitment, 

as we had when we sent a man to the moon with government support, to come up with a solution for the batteries. And why is private sector, or government funding in this case, going to fill the 

gap? And why isn’t the private sector investing in this? Once we 

do, I am confident that American businesses and researchers can 

come up with a solution. How does this compare to China, which 

is spending more money on battery research than we are? 

27 

And then to the point that Mr. Cummings made so eloquently— 

once we do come up with the new technologies, too often I hear 

from my colleagues the new technology, the new solar technology, 

has moved to another country to be developed and exported back 

to America. 

Why can’t we hold on to our innovations and our intellectual 

property and create the jobs and the products here in our own 

country? And I welcome Mr. Malkin and Dr. Ward for any comments on it, but do you think we need a moon shot, as the CEO 

of Ford says, for battery development? And once we do develop it, 

what then would keep that technology and jobs here in America? 

Dr. Greenstone. I think we need a moon shot for research and 

development into energy, period. And batteries are obviously a key 

constraint. They constrain the electric vehicles. Storage also constrains the use of solar, due to solar’s intermittency. And, you 

know, if I were in charge of research and development, I would certainly devote substantial resources to the basic understanding of 

how batteries work, and how to advance that. 

As to your more difficult question of how do we ensure that the 

jobs stay here, I think there is no getting around that we have a 

global competition for jobs. We have a global competition for capital. And, as I mentioned earlier, what decades of economic research have shown is when ideas are generated in a particular 

place, they tend to stick in that place. 

And so if we develop the ideas here in the United States, we can 

feel some confidence that the jobs will remain in the United States. 

Chair Maloney. Mr. Malkin, in your—Dr. Ward? 

Dr. Ward. One of the things I would like to bring up on the deployment of technology, though, I don’t think the role of the government should be overlooked, because once a new technology is developed, if it is a very capital-intensive technology to roll out, then it 

takes a stable regulatory environment to ensure that the benefits 

can be realized. 

There is a lot of risk on the private sector. And in addition to 

the stable regulatory environment, perhaps there ought to be some 

accommodation made by the government in terms of tax breaks for 

rolling out new technology. I have seen it be a breaking point on 

technologies that have been developed. 

Everybody wants to be a fast follower, not a bleeding leader. 

Chair Maloney. Again I have heard from my colleagues, where 

tax breaks and incentives have been given to develop technologies 

by businesses in their districts, then they have seen those businesses actually completely move to another country, after receiving 

quite a bit of government support to develop the technology and to 

develop the business. 

So it is a challenge. And that is what I repeatedly hear from my 

colleagues as we discuss jobs. 

I do want to go back to your rather major initiative, Mr. Malkin, 

of retrofitting the Empire State Building, which included private 

and nonprofit sectors. How could a government be most helpful in 

removing obstacles that you encountered in the process? What were 

the type of obstacles that you encountered? How could government 

be more helpful in helping other major buildings convert to save so 

much energy? 

28 

Mr. Malkin. I think there are a few things. 

One, the common theme here is a stable regulatory environment 

and is very important. But I think also a regulatory environment, 

in and of itself, has some merit. What we did was we were able 

to convince the folks at Johnson Controls and Jones Lange LaSalle 

to, on speculation, commit millions of dollars of research, people 

power, men and women power, around a problem. 

And they did it with the prospect of being able to go out and 

market this product. And I think they intelligently did it with the 

prospect of marketing a product which can be used domestically. 

I think that it would be far better for the environment, it would 

be far better for the economic environment I mean, far better for 

businesses, if they knew what was coming at them from a regulatory perspective so that what they choose to do for their own 

profits’ interest is not going to be countermanded or wasted based 

on future regulation. 

I really do believe that what is happening is, particularly for 

large property owners, cities and states are coming up with their 

own regulations. Some of them are very enlightened, but many of 

them are conflicting. And if you are looking for the real estate industry, the commercial real estate industry, and large industries 

devoted around that, lending, construction and the like, the prospect of national codes, if it is going to be out there, it needs to come 

forward. 

Otherwise, we are confronted with having to comply with numerous codes in numerous different jurisdictions, many of which—all 

of which we assume are well intentioned but could be conflicting 

and reduce efficiency in implementation. 

Chair Maloney. Thank you. Dr. Ward? And my time is expired. 

Dr. Ward. I couldn’t agree with that more, in that as new technologies are developed and rolled out, the regulatory environment, 

the government, needs to be brought along with that technology so 

that they are familiar with it, so they know its strengths and weaknesses, and can come up with intelligent regulations for the application of it. You can’t have one get ahead of the other. Thank you. 

Chair Maloney. Thank you. 

Mr. Brady. 

Representative Brady. Thank you. I think whenever you lose 

a customer, especially a long-standing customer, you normally do 

not blame them. You take a hard look at yourself. I think one of 

the reasons companies are choosing to invest and innovate and create jobs overseas is that what used to be a very strong business climate in America has changed. 

Other countries have taken a page from our playbook, lower 

taxes, less regulation, more innovation, better R&D tax credits, encourage innovation, and basically are beating us over the head with 

our own playbook. And until we re-create a strong business climate, and a job creation and innovation climate, we will not see 

those jobs return. 

Dr. Ward, let me ask this from an academic standpoint. Dr. 

Greenstone, in responding to a question, made the assertion that 

fossil fuels contribute to higher infant mortality rates on hot days. 

In other words, oil and natural gas somehow contribute to more 

deaths of babies during hot days. 

29 

In all your scientific work dealing with offshore, onshore oil and 

gas production, is there any scientific basis for that assertion? 

Dr. Ward. Not that I’m aware of. 

Representative Brady. Aren’t oil and natural gas, which we 

are trying to transition from our dependence on that to a more diversified portfolio both in our homes and in our cars and in our industry, which have traditionally been the most affordable, along 

with coal, the most affordable sources of energy, as opposed to 

wind, and solar, biomass, others. Has that changed? 

And if you are looking at affordability, and that infant mortality 

rates are somehow tied to the ability to afford your energy, 

wouldn’t that be more affordable for families than some of the alternative fuels that are being developed today? 

Dr. Ward. Yes. Certainly oil and gas—fossil fuels in general are 

a more affordable means of providing energy in today’s market. 

And if the idea is to provide better environmental systems for 

households and whatnot, that would certainly be the one that 

would be the most affordable until these alternative, cleaner 

sources become more available and affordable. 

Representative Brady. Thank you. Dr. Greenstone also made 

the point that he could assure us there would be no price increases 

in oil here this fall, or apparently in the future. But when we have 

hurricanes coming to the Gulf, until there is assurance that there 

hasn’t been a disruption, oil prices on a world basis tend to go up? 

Dr. Ward. That’s correct. 

Representative Brady. If there’s a hiccup in Nigeria’s production, oil prices tend to go up. Can you, or anyone on this panel, assure us that energy prices will not go up as a result of this drilling 

moratorium? 

Dr. Ward. I certainly can’t. And I think that the price situation 

is so inelastic with oil and gas that any little hiccup, or big hiccup, 

certainly has immediate impact on prices. 

Representative Brady. It is one of the reasons I think that we 

are hopeful there won’t be an increase because demand is down. 

World demand is down right now. Will that demand ever increase? 

Will we move back to the point, as economies globally increase, 

where there won’t be sort of like the credit card that’s maxed out, 

you’re out on the edge? That’s been one of the drivers of energy 

prices, one of the reasons, Gulf production, which gives us that 

buffer against that, has been so helpful. 

Dr. Ward. Right. Well I think the United States and every other 

country is very anxious for an economic recovery, and energy usage 

will certainly increase as the economies recover. 

Representative Brady. One of the concerns that have been 

raised on the drilling moratorium is the loss of up to 300,000 jobs 

if we drive Independents from the Gulf. The rigs are already leaving. We have a global environment. Companies do not have to invest in the U.S., they choose to. 

We are already hearing from companies that, as they plan their 

capital budgets, they are looking at investing capital, their precious 

capital, in other countries rather than doing it here in our backyard. 

30 

Does that mean, should we lose that investment, along with the 

rigs and the equipment and the jobs, does that also cause a problem for future production and future jobs in the United States? 

Dr. Ward. Well I think that that is an opportunity that the majors have, but the smaller independents, which are an integral and 

important part of oil and gas production in the United States, do 

not have the luxury to go overseas as easily as a global company. 

We could lose those. 

Representative Brady. Yes, we will lose them. What businesses can survive six months without their main source of revenue? 

Dr. Ward. Not many. I know a number of people in the industry 

that have lost their jobs in the last three months. 

Representative Brady. Thank you, Doctor. 

Chair Maloney. Mr. Hinchey. 

Representative Hinchey. Thank you very much, Madam 

Chairman. 

And thank you, gentlemen. I think this has been a very interesting discussion, and I thank you very much for everything that 

you have been dealing with here. 

I can’t help but be deeply impressed about the energy use efficiency operation that you are engaged in in one of the most important buildings anywhere on this planet, the Empire State Building, 

and all of the things that are going to happen as a result of that. 

I hope that is going to continue, that it is going to be more effective, and apparently the Mayor of the City of New York is closely 

involved in this, and he is working strongly to support it. All of 

that is very, very important. 

I can’t help but—in fact, I have been feeling this way for a long 

time, that solar energy is the most effective, most important, most 

useful way in which we can reduce our dependence upon fossil 

fuels and deal with the rising cost of energy, but also deal with this 

issue of global warming, which is becoming critically important. 

As we know, 2005 was the warmest year that we have experienced on record. And it may be that 2008 or 2009 may be warmer 

than 2005. In any case, this is an important thing that we have 

to deal with. 

In the District that I represent in Upstate New York, a couple 

of years ago we set up a not-for-profit corporation called The Solar 

Energy Consortia. As a result of that, we have generated a significant number of jobs, several hundred jobs, and we have got a number of companies that have come in that we are working with. 

I will just mention two of them and the things that they are 

doing. One of them is developing a solar battery. And this battery 

is in the process of generating energy and being able to hold onto 

this energy for a long period of time. And the essential idea of that 

is to use it in automobiles for transportation. But of course that 

could be expanded very easily and used for a whole host of other 

things in addition to transportation. 

Another company that we have has just set up the manufacturing of solar panels. And this company is the only company in 

eastern New York that is now manufacturing solar panels. And 

that operation is going to be expanding over the course of the next 

few weeks, and well into next year. The estimation is that in the 

31 

process of that one operation they will be hiring something in the 

neighborhood of 400 jobs over the course of the next several 

months, running into next year. 

So I am wondering what you think about that operation. 

Shouldn’t we be focusing our attention on solar energy? Isn’t it the 

most effective and the most efficient? And Dr. Greenspan specifically, you mentioned that there are recommendations of U.S. energy research and development capacity that is going to be unveiled in 2011. And I wonder if you would give us some hints about 

what that unveilment is going to look like in 2011. 

Dr. Greenstone. Thank you for your questions, Congressman. 

I think there is no question that solar has got to be part of the 

suite of sources of energy, including energy efficiency, that should 

be researched carefully. Currently solar is not cost competitive in 

most settings. And I think further research and development could 

change that. 

And as I said, we are going to be coming forward with some specific recommendations. I just tried to highlight five principles in my 

testimony, which they all boil down to increased funding, funding 

that is completely merit-based, funding that is focused on basic research rather than on deployment, or applied research, and attempts at using innovative funding techniques like prizes. And 

then also the support for demonstration of new technologies at 

commercial scale. Those are the broad principles I think that we 

are ready to talk about at this point. 

Mr. Malkin. I think that the use of solar is important, again as 

part of a suite. We have had some very good investments in solar, 

both from production of solar as a utility with Sun Edison, which 

is a company which we recently sold, but also through companies 

which have made the conversion of sunlight to electricity more efficient. That is an investment we still have. 

I think that it is very important with government policy to sponsor innovation. Only through repeated manufacturing will innovation come, breakthroughs come, both through research and the 

manufacturing process in determining where the bottlenecks exist, 

developing the supply chains. 

So I think with wind and solar and geothermal—I don’t want to 

miss the point—energy efficiency is five times less expensive now, 

but they will converge, because alternative energy sources will become less expensive, and the costs of achieving greater efficiency 

will become more expensive as we get rid of the low hanging fruit. 

Representative Hinchey. Dr. Ward. 

Chair Maloney. Yes. 

Representative Hinchey. Dr. Ward. 

Dr. Ward. No comment. 

Representative Hinchey. No? Okay. 

Chair Maloney. No comment. Dr. Greenstone has a comment. 

Dr. Greenstone. Chair, thank you. I think my testimony or my 

comments might have sown a little confusion. I wondered if I could 

have just one minute to clarify them? 

Chair Maloney. Sure. 

Dr. Greenstone. I think I just wanted to respond to one of Congressman Brady’s fine points. I think what Congressman Brady 

has really done is focus everyone’s mind on the important point 

32 

that currently fossil fuels are the cheapest source of energy around. 

There’s no getting around that. 

And if we continue to use fossil fuels, that will save American 

families money, and that is something that everyone is obviously 

supportive of. 

What I think my testimony was not perfectly clear about is: The 

continued reliance on fossil fuels also has a set of costs that are not 

quite visible, in the same way when you pay a utility bill every 

month. And those fossil fuels, what they do is, according to scientists, is they increase global temperature. And that increase in 

global temperature has a series of negative consequences—infant 

mortality being one of them, but there are a series of other ones. 

And I was only trying to highlight that we don’t see those costs in 

quite the same way we do when we pay a utility bill every month, 

but those costs are real nonetheless. 

And I think the second thing I want to clarify, which I feel my 

testimony might have sown a little confusion about, was that my 

statement was not about shutting down drilling in the Gulf forever 

more. My statement was that if we had a moratorium that lasted 

through September, it would not fundamentally alter total production of oil across the globe. And that the impact on prices through 

September, and potentially longer, would be difficult to discern. 

I was not making a statement that if we stopped drilling in the 

Gulf forevermore there would be no impact on world prices. 

Representative Brady. I appreciate that. Because as we know, 

the moratorium will go through November unless changed. But we 

actually—while I disagree with some of the climate change assertions—I think we actually—and, Madam Chairman, the reason I 

appreciate you calling this—I think almost all of us agree we need 

to get to a greener energy future. 

How we make that transition is really sort of the debatable point 

right here, and how we do it in a way that benefits us all. This is 

not a zero sum game. We are going to need energy from all sources 

if we are going to be diversified, and affordable, and clean in the 

future. So we actually, while we may have some differences in how 

we get there, I think the point of your whole hearing is we need 

to get there. 

Chair Maloney. Thank you. Mr. Campbell is recognized. 

Representative Campbell. Thank you, Madam Chair. 

And, Mr. Malkin, when I was doing my last questioning you 

made a comment that will cause me now to make a little bit of a 

view, give you a little bit of my perspective on things, of which all 

three of you are welcome to comment and say I am full of garbage, 

I am dead on right, or somewhere in between. 

But I think there is a distinct difference between energy for mobile sources and energy for stationary sources. And the solutions 

for each are very different. The vast majority of energy for mobile 

sources in the United States today is petroleum based. It’s cars, it’s 

trucks, it’s diesel, it’s gasoline, et cetera. 

The propulsion systems that are alternative to that, rather than 

internal combustion, are electric, which by the way, from the 

standpoint of the efficiency of the propulsion system, driveability of 

the propulsion system, is an excellent propulsion system. The problem is how you get the energy to it. And that is where batteries 

33 

become a barrier right now. And cost. And not just batteries, but 

their cost, their efficiency, and everything else. 

Or in the case of like a fuel cell where you have a whole bunch 

of barriers—cost, and also what kind of fuel; actually the most efficient fuel because the infrastructure is already there to fuel a fuel 

cell today is still gasoline. So you still have that. So that is one set. 

Then on the other set is stationary sources, which we’re not talking about batteries but we’re talking about producing it, and there 

most of the energy is either coal or natural gas based in the United 

States. There’s obviously a lot of hydroelectric and some nuclear. 

But I see the barriers there as being substantially different. 

Because people will say, well, we have to get off dependence on 

foreign oil, therefore we need solar. Well unless you can create a 

battery for a vehicle, solar does not help you with oil because there 

is very little oil that is used to create electricity in the United 

States. 

So what you have got, if you want to displace natural gas or coal 

or both producing electricity, then there already is large hydroelectric, which produces zero emissions and is cheap, and there is 

already nuclear which produces zero emissions and is cheap, and 

those technologies exist, but there are a number of people who 

don’t want to go down that path for one reason or another it seems. 

But the barriers over there seem to me to be considerably less than 

the ones in the mobile source, but that they are, no matter how you 

look at it, very different problems that have some overlap but not 

a significant amount of overlap. 

And depending on what your objective is, whether it is a global 

warming objective, whether it is a dependence on foreign oil objective, whether it is a dependence on a national security objective, 

there are many different objectives people have for moving down 

this course. But as Mr. Brady says, I think we all understand that 

we want to move down this course. But I do think the two things 

have different solutions, and different challenges. 

So with that, I will let you all comment on my little diatribe, if 

you desire. 

Mr. Malkin. Yes. I totally understand from where you are coming, and I guess my comment would be, from what I am expert at, 

if I am expert at anything, is the energy efficiency piece. 

We will free up that fixed base of energy generation. It will free 

up that fixed piece, and you can begin to look at reallocating the 

pool of things that are otherwise used for generating fixed. Get rid 

of some of the higher polluting sources. Start looking at different 

infrastructure for the transportation side. 

And that is absolutely an issue, that we have an infrastructure 

for transportation to use fossil fuels. There are other alternatives, 

but they will require infrastructure, which, by the way, will require 

jobs and will require innovation. 

Representative Campbell. Right. Okay, but I just—until you 

have a battery or something, you can’t transfer that from fixed to 

mobile source until there’s some technological breakthrough somewhere that doesn’t exist right now. 

Dr. Greenstone. Congressman, I think your categorization of 

the problem is spot on. And I think from sitting here, I am not a 

scientist, but it seems like we can see the way to get there on the 

34 

stationary sources. We are not there yet, but we can see the way 

to get there. 

We are a long ways away in terms of dealing with mobile, or 

transportation. And I think that is where a lot of research and development spending should go. And I think Chair Maloney made 

that exact point when it comes to batteries, and I agree with that. 

Representative Campbell. And there have been billions of dollars—and I am not saying it was sufficient—but both from the private sector and the public sector in the last 20 years on batteries, 

and we have not gotten there yet. 

Now was it insufficient? Did we try the wrong way? Did we have 

it wrong—I don’t know. But, you know, it is not because there 

hasn’t been some effort. There has been a significant effort, and a 

significant reward to anybody who makes a breakthrough in the 

last 20 years. We just haven’t gotten it yet. 

Dr. Greenstone. I agree. And when I put together some of these 

statistics in my testimony, I was a little taken aback, frankly, that 

we have made serious investments in R&D, but from an international perspective we are falling way behind. 

Chair Maloney. Thank you. 

Mr. Malkin, you said in your testimony that policy should be informed by practice, and I couldn’t agree more. We don’t just need 

pools of money, we need to really have objective assessments. 

Could you elaborate on how we would go forward with these objective assessments? How could we inform tenants about how much 

they pay per square foot? I know we have a LEED certification in 

New York. Is that working? And then you talked earlier about the 

need to change the EnergyStar assessments to a way that really 

looked at output in a more detailed way. 

Would any of the panelists like to discuss that? 

Mr. Malkin. I would just say that the number one issue for me 

is that we do have groundbreaking work that we are doing. We are 

only a little more than a year-and-a-half into its implementation. 

And we are now producing the data. And I think that that data 

and the fact that it works, and that the assumptions we had to 

make based on our research are actually now producing real, 

verifiable data. That’s the practice which I think is helpful. 

LEED is a qualitative destination. I agree with green practices. 

We recycle tenant waste. We recycle construction debris. We use 

recycled materials and low off-gassing materials in our buildings, 

but that does not really address the energy piece. And LEED is deficient in that. 

EnergyStar is a terrific product put together by the U.S. Government. It should be upgraded to a new version which gets away 

from a relative measurement and gets into specific rating and disclosure of consumption. 

You cannot get away from the fact that, if everyone consumed 

energy at an equal efficiency rate, everyone’s EnergyStar rating 

would be 50, because it’s a relative measurement. Therefore, it 

doesn’t justify what the economic result will be, the savings you 

will get for the investment you get. And I think there is room for 

that. It is a good model which has done a lot of good but should 

be improved. 

Chair Maloney. Any other statements? Yes, Dr. Greenstone. 

35 

Dr. Greenstone. Chair Maloney, I think I just want to amplify 

a point Mr. Malkin is making about EnergyStar, and actually 

something that relates to today’s hearing more generally. 

One problem in the energy market for consumers is it is not very 

transparent. So when you buy a computer, you know how much it 

costs today to pay to the Dell Corporation; you do not know how 

much it is going to cost to run it over time. I think different computers can have different rates of energy efficiency, just like different televisions do. 

And currently the way that the government tries to provide information in that market is through these EnergyStar ratings. As 

Mr. Malkin has emphasized, those ratings are often qualitative, or 

give you a rank order, but they do not give you the fundamental 

information, which is: Well how much will it cost to run the thing? 

And I think a reform of the EnergyStar program and more generally the provision of information that allows consumers to make 

more informed choices would be a tremendous reform. 

Chair Maloney. Thank you so much. My time has expired. Mr. 

Brady, and it has to be our last round. We only have this room for 

a limited amount of time. 

Representative Brady. No, Madam Chairman, thank you. 

Chair Maloney. No questions? Well I want to thank all of our 

witnesses—Oh, Dr. Ward? 

Dr. Ward. Could I make one more point—— 

Chair Maloney. Sure. Absolutely. 

Dr. Ward [continuing]. In response to Dr. Greenstone’s comment 

about the price of oil in the short term due to the moratorium. 

Probably by September or October not much would be noticeable. 

My concern is that, as rigs leave, and there is much less drilling 

in the Gulf of Mexico in the future years, that is where the real 

hurt will come. Thank you. 

Chair Maloney. I want to thank all of our witnesses for their 

informative and enlightening testimony. We need to make smart 

decisions about how we invest in energy, and your testimony today 

underscores the need to add rigor to our assessment of proposals 

and the need to provide guidance on how these innovations can 

benefit energy consumption and consumers, and help preserve energy. 

I would like to thank everybody for coming, and this meeting is 

adjourned. 

[Whereupon, at 11:52 a.m., Tuesday, July 27, 2010, the hearing 

was adjourned.] 

(37) 

SUBMISSIONS FOR THE RECORD 

38 

PREPARED STATEMENT OF CAROLYN MALONEY, CHAIR, JOINT ECONOMIC COMMITTEE

I am pleased to hold today’s hearing on promoting innovation in the clean energy 

sector. 

This is the second in a series of hearings held by the Joint Economic Committee 

on the role that innovation has on fueling employment and growth. 

Innovation in the clean energy sector will improve productivity, enhance job creation, and improve the quality of life. 

This hearing is timely for a number of reasons: 

• The Senate plans on discussing energy legislation this week. 

• The nightly news and the camera footage of the Gulf oil spill remind us of the 

human and environmental cost of this spill. 

• While our economy is still raw from the devastating job losses experienced in 

the Great Recession, it is obvious that more robust growth is needed to reduce 

the unemployment rate. Innovation in the energy sector can help fuel growth 

in the future. 

Innovation in the clean energy sector can also strengthen the economy by making 

it less vulnerable to economic downturns. 

While the U.S. has weaned itself from dependence on oil in many sectors, progress 

to reduce our dependency on oil to meet transportation needs has been particularly 

slow. 

At a hearing last May, Dr. James Hamilton testified that the oil price run-up in 

2007–2008 was an important factor that contributed to the Great Recession. 

He testified that the run-up in oil prices caused a plunge in auto sales, deterioration in consumer sentiment, a slowdown in consumer spending and problems in 

housing, especially in the ex-urbs, where commuting costs can rise significantly with 

gasoline price increases. 

Continued reliance on oil leaves the economy vulnerable to sharp increases in oil 

and gasoline prices and could potentially derail the economic recovery now underway. 

It appears that when oil expenditures reach 4 percent of GDP, the US is at risk 

of falling into a recession. (See Chart) 

Currently, the share of GDP spent on oil is 3.5 percent, much higher than in 

1993, when the share of oil GDP spent on oil was 1.8 percent, but better than the 

6.8 percent in mid-2008. 

Innovations in the clean energy sector can reduce our vulnerability to oil price 

rises. 

These innovations may arise from a variety of different sources: 

• New technologies to produce energy, 

• New forms of energy, production of existing fuels or energy in a cleaner or more 

efficient manner, or 

• New ways of reducing our consumption of energy. 

In our hearing last month on innovation, witnesses testified that federal spending 

on basic research in universities can provide the spark that ignites regional economic growth and job creation. 

Universities, with help from venture capitalists, have emerged as both producers 

of ideas and active players in the innovation chain, creating startups that are 

among the most successful small businesses. 

But witnesses at our last hearing also testified that there is not enough funding 

or research in the energy sector. 

However, Congress and the Administration have recently increased our country’s 

commitment to clean energy. 

The Recovery Act invested more than $90 billion in clean energy, including: 

• Investments in energy efficiency, 

• Advanced vehicles, 

• Clean energy equipment manufacturing, and 

• Mass transit and high-speed rail. 

Additionally, the America Competes Act, passed by the House on May 28th, supports innovation and basic research by creating new Clean Energy Consortiums in 

a public-private partnership. 

America Competes also seeds game-changing innovation through the reauthorization of Advanced Research Projects Agency for Energy (ARPE-E), and directs ARPAVerDate Nov 24 2008 10:14 Dec 08, 2010 Jkt 058299 PO 00000 Frm 00042 Fmt 6601 Sfmt 6621 C:\DOCS\58299.TXT SHAUN PsN: DPROCT
39 

E to help ensure that these promising technologies are shared with the private sector. 

Federal investments can be especially effective when the funds are combined with 

private sector investments. 

Just two weeks ago, CEA Chair Christina Romer testified before this committee 

that $46 billion in public funding in the Recovery Act encouraged an additional $100 

billion in investment by the private sector in projects related to clean energy. 

I am especially pleased that my fellow New Yorker, Mr. Anthony Malkin, is here 

to testify about the energy efficiency retrofits he is undertaking to one of our greatest cultural icons, the Empire State Building. 

New lighting, windows, and heating and cooling systems reduce the amount of energy tenants use while improving the quality of their space. 

I am eager to discuss with our panel how Congress can ensure that these needed 

investments in a clean energy economy will occur, leading us to a stronger economy 

with good jobs and a cleaner planet. 

I welcome each of you this morning and look forward to your testimony. 

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PREPARED STATEMENT OF REPRESENTATIVE KEVIN BRADY

I welcome the chair’s decision to hold a hearing on energy matters at this time, 

and I welcome the panelists to what I hope will be a substantive discussion of energy supply and environmental issues. I find your submitted testimony very encouraging in this regard. 

To observe our Administration’s energy decisions is to wonder whether it has any 

comprehension of the future energy supply challenges our nation faces. 

The ill-conceived Gulf drilling moratorium flies in the face of everything common 

sense tells us about our precarious energy future and what we should be doing 

about it now. 

The drilling moratorium is already killing well-paying American energy jobs, 

sending rigs overseas and with them our workers, equipment, capital and eventually 

America’s traditional energy infrastructure. Given the global nature of energy production, these rigs won’t be returning anytime soon. 

What’s more, President Obama has not even responded to our invitation to travel 

to Houston, Texas, to meet face to face with the energy workers and small businesses whose livelihoods are at risk due to the moratorium. 

Yet the President will be traveling to Houston on August 9th to raise campaign 

cash for the Democratic Party. We’ve asked him for just an hour of his time, or even 

just 15 minutes of his time, to meet with our workers and businesses. But as of 

today, just silence from the White House. 

Mr. President, can you spare any time at all for these Americans whose jobs you 

are killing and sending overseas? Where are your priorities? 

Neither the White House nor Congress seem to understand that the current relative lull in energy demand results from a weak economy. It doesn’t mean that we 

have the luxury of halting large-scale energy projects and betting our future on 

small-scale alternatives that we all support but are not yet ready to affordably meet 

America’s energy needs. 

The Gulf of Mexico accounts for 19% of the nation’s total proven oil reserves and 

30% of total U.S. production. Solar and wind technologies together account for less 

than 1% of the nation’s energy supply. In 2008, the Gulf of Mexico’s outer continental shelf had the largest amount of new oil field discoveries in the U.S., which 

increased its proven reserves while oil reserves fell for the nation as a whole. 

By all means, let’s help renewable energy develop its potential, but let’s not foolishly thwart the growth potential of our established energy industry which provides 

the affordable bridge to America’s green future. 

After 50,000 wells have been drilled in the Gulf’s federal outer continental shelf 

and nearly 4,000 in deep water without a substantial spill, how could anyone jump 

to the conclusion that the BP accident points to an imminent systemic threat and 

shut off all deepwater drilling? And who would bet America’s economy on subsidized 

wind and sun energy when there are private companies investing billions of dollars 

to develop deepwater oil and gas reserves off our shores? Does this make any sense? 

Where is the cost-benefit analysis? 

A recent study by IHS Global Insight found that if policies were adopted by Congress or the White House that effectively prevent independent oil companies from 

participating in future Gulf offshore development the employment loss would reach 

300,000 jobs—and the loss of local, state and federal revenues would total $147 billion over the next decade. 

That’s because independent energy producers hold the majority interest in 81% 

of all producing leases in the Gulf of Mexico and nearly half of those in the deepwater. 

This week, rather than the House of Representatives hastily rushing through legislation with far-reaching impacts on jobs, energy prices and energy security, it 

would be much wiser to bring together science, industry and government in partnership to develop a thoughtful, safe and prosperous path forward to Gulf exploration 

and development. 

Our national economy, already suffering with 9.5% unemployment and a subpar 

recovery, cannot be harmed further with a devastating drilling moratorium and 

hasty legislation that kills jobs and makes us more dependent on foreign oil. 

Natural gas is a cleaner fuel than oil or coal and can be a suitable substitute for 

both in many applications. As of 2008, the U.S. had experienced the sixth consecutive yearly increase in natural gas discoveries. 

In October of last year, the Energy Information Administration said ‘‘Today, increases in shale gas proved reserves reflect the industry’s rapidly maturing ability 

to apply two technologies to shale formations: horizontal drilling and hydraulic fracturing.’’ 

42 

Why is this important? Not because U.S. oil consumption is rising—it has been 

declining for several years—but because industrialization the world over will continue to increase oil demand. China now is the world’s largest energy consumer. Our 

mindset should be how government can work with industry to develop safe operating standards for an energy source such as unconventional natural gas. It already 

has attained a commercial scale, moved the needle in the right direction on our energy reserves, and is relatively benign environmentally. 

The Administration and Congressional Democrats operate by assertion, not by 

performance metrics, be that with jobs, energy supply, or the environment. The 

work of our witnesses today shows how important it is to apply the proper metrics 

to federal policy and quantify the effects of regulation, good and bad. Dr. Ward’s 

work shows a potential 29% reduction in the cumulative Gulf oil production through 

2016 from an extended drilling moratorium. Dr. Greenstone has shown how environmental regulations can retard industrial growth. He also has found that there is, 

in fact, no consensus on whether the Clean Air Act is responsible for the dramatic 

improvements in air quality that have occurred in the last 30 years. Mr. Malkin 

demonstrates the importance of designing government policy with an understanding 

of how businesses do their financial analysis. 

Gentlemen, our approach to regulating the economy in this country must change. 

I look forward to your advice. 

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