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[Senate Hearing 112-105]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-105

   PROPOSED BUDGET FOR FISCAL YEAR 2012 FOR THE DEPARTMENT OF ENERGY

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   TO

RECEIVE TESTIMONY ON THE U.S. DEPARTMENT OF ENERGY'S BUDGET FOR FISCAL 
                               YEAR 2012

                               __________

                           FEBRUARY 16, 2011

                       Printed for the use of the
               Committee on Energy and Natural Resources

                                 _____

                  U.S. GOVERNMENT PRINTING OFFICE
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
DEBBIE STABENOW, Michigan            RAND PAUL, Kentucky
MARK UDALL, Colorado                 DANIEL COATS, Indiana
JEANNE SHAHEEN, New Hampshire        ROB PORTMAN, Ohio
AL FRANKEN, Minnesota                JOHN HOEVEN, North Dakota
JOE MANCHIN, III, West Virginia      BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Chu, Hon. Steven, Secretary, Department of Energy................     3

                                APPENDIX

Responses to additional questions................................    53

 
   PROPOSED BUDGET FOR FISCAL YEAR 2012 FOR THE DEPARTMENT OF ENERGY

                              ----------                              

                      WEDNESDAY, FEBRUARY 16, 2011

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:32 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. Why don't we get started here. Today's 
hearing will examine the President's proposed fiscal year 2012 
budget for the Department of Energy. I'd like to welcome 
Secretary Chu, thank him for testifying today. I also want to 
just alert folks that we have a short business meeting that we 
will try to interrupt the proceedings to conduct when we get 12 
members. So I've advised the Secretary of that, and we will not 
interrupt his testimony, but we will interrupt the questions 
portion of the hearing.
    The President's proposed an overall budget for the Federal 
Government that reflects his desire for fiscal restraint, but 
he's made a strong statement that energy is a priority for his 
administration even within this constrained picture. The 
Department of Energy budget before the committee today 
represents a significant investment in our Nation's ability to 
compete in global clean energy markets, whether it is making 
solar energy cost competitive with other electricity sources or 
maintaining our Nation's lead in innovative nuclear power plant 
designs using small modular reactors.
    There can be no doubt about the seriousness of the 
competitive challenge that we face in energy. I'd like to call 
everyone's attention to the 2 charts that we've got over here. 
The first chart shows that we actually spend less than China on 
energy R and D per unit of gross domestic product. China's 
investing heavily in manufacturing and deploying wind, solar, 
and nuclear power plants. These investments are already 
translating into global sales and domestic Chinese jobs in an 
area where the United States once led the world.
    The second chart which is put up there shows that our 
investment in energy research and development is far below 
other areas of our Nation's research and development. The 
proposed fiscal year 2012 DOE budget for energy R and D brings 
us up from the 2007 figure of $1.8 billion to $4.8 billion, but 
still remains well below other areas of research.
    So I compliment the Secretary for successfully advocating 
for a budget that contains much that I support. I hope the 
Senate can fully fund many of the research and development 
initiatives proposed, as well as that for the Energy 
Information Administration.
    I do have a few concerns that I would like to mention and 
I'll pursue in the question period. First, the budget proposes 
to sell 500 million of oil from the Strategic Petroleum Reserve 
with very little in the way of justification that I could find. 
Second, the budget has a series of cuts to R and D in the 
Department of Energy's fossil energy programs. While I strongly 
believe in the clean energy objectives of the administration 
and this budget request, I believe that fossil energy sources 
can be made much cleaner by the application of appropriate 
research and development, and that needs to be a priority as 
well.
    In any case, we face a long period of transition from our 
dependence on fossil fuel, so continuing research related to 
advanced coal technologies and natural gas and unconventional 
sources of fossil energy is a sensible part of an overall 
energy strategy. We can discuss that further. I do not want any 
shortcomings in this area to obscure the fact that the majority 
of calls made in this budget request for the Department of 
Energy in my view are the right calls.
    So again, thank you, Mr. Secretary, for being here.
    Let me call on Senator Murkowski for her statement.
    Senator Murkowski. Thank you, Mr. Chairman. I am glad to be 
with you this morning. I also welcome the new members to the 
committee. We had an opportunity to welcome them one by one. 
Hopefully, today we'll see everybody together so we can get to 
a business meeting.
    I think it is a testament to the good work that goes on in 
this committee that when members were making their choice, at 
least on the Republican side, what I heard was they wanted to 
come to this committee, not only because of the importance of 
the work, but how this committee has conducted itself over the 
course of the years, and I thank you for your leadership.
    I think it is appropriate that our first official hearing 
today is with Secretary Chu regarding the Department of Energy 
proposed budget. I think that we should all agree, that while 
the challenge of providing our Nation with abundant, 
affordable, clean domestic energy is great, there is an endless 
number of technologies that might some day lead us to these 
goals, and during this Congress I'm sure that this committee 
will have a chance to consider the many different proposals for 
new programs that might very well be good ideas if time and 
money were unlimited. But I think we all know that is not the 
case today, that's not the world that we are operating in, when 
our time and our money are now scarce.
    Just like every other member of this committee, I'm 
concerned about our Federal spending, I'm concerned about the 
debt, I'm concerned about the deficit. To rein in Federal 
spending, we need to look at every program and at every agency. 
I think this Department of Energy is no exception.
    This year's budget includes approximately $30 billion in 
spending for DOE, which is roughly 25 percent more than just 5 
years ago. This is on top of a tremendous amount of funding for 
DOE within the 2009 stimulus bill. Nearly all of those funds 
have now been obligated, but DOE has also reported one of the 
slowest spendouts of any Federal agency. As of yesterday, the 
Department's own web site showed that more than $21 billion, or 
65 percent, of its stimulus funding remains to actually be 
spent.
    To put this into perspective, $21 billion would have been 
almost 90 percent of DOE's total budget just 3 years ago. That 
does not factor in the $3.5 billion that was taken away from 
DOE last Congress to help pay for Cash for Clunkers and the 
States aid bill.
    This brings up one of my disappointments with this budget 
request, that even though DOE has grown significantly in recent 
years and even though it still has billions of dollars in 
stimulus funds, it is once again in line for a sizable 
increase. Now, I share the desire to promote clean energy 
technologies, but, given the very urgent need that we have to 
make tough budget decisions, I think that we need to draw a 
distinction between the programs that we want to fund and the 
programs that we need to fund, and I'm not entirely convinced 
that this budget request will move us in that direction.
    Finding policies that will move us toward our energy goals 
within the budget constraints that we face is an enormous 
challenge, but it is certainly not insurmountable. One of the 
best ways that we can ensure that we do make continued progress 
on items within the budget and the legislation that comes 
before us is to make sure that they're fully paid for. When it 
comes to energy policy, one of the best ways that we can do 
that is to harness our own abundant resources and then apply 
the revenues to help develop more advanced technologies.
    Mr. Chairman, I think we have some great members on the 
committee. We have some fresh ideas coming in. I look forward 
to the dialog that we will have as a committee and working with 
the Secretary to advance the energy goals of this country.
    Thank you.
    The Chairman. Thank you very much.
    Secretary Chu, why don't you go right ahead and take 
whatever time you think is appropriate.

  STATEMENT OF HON. STEVEN CHU, SECRETARY, U.S. DEPARTMENT OF 
                             ENERGY

    Secretary Chu. Thank you, Chairman Bingaman, and also thank 
you, Ranking Member Murkowski. Members of the committee: I want 
to thank you for the opportunity to appear before you today to 
discuss the President's fiscal year 2012 budget request for the 
Department of Energy. President Obama has laid out a plan for 
the United States to win the future by out-innovating, out-
educating, out-building the rest of the world, while at the 
same time addressing the deficit.
    Many countries are moving aggressively to lead in clean 
energy. We must rev up the great American innovation machine to 
create jobs, win the energy race, and secure our future 
prosperity. To that end, President Obama has called for an 
increased investment in clean energy research, development, and 
deployment. In addition, he has proposed a bold but achievable 
goal of generating 80 percent of America's electricity from 
clean energy sources by 2035. A clean energy standard will 
provide a clear long-term signal to industry to bring capital 
off the sidelines and into the clean energy sector. It will 
grow the domestic market for clean energy sources of energy, 
creating jobs, driving innovation, and enhancing national 
security. By drawing on a wide range of energy sources, 
including renewables, nuclear, clean coal, natural gas, it will 
give utilities the flexibility they need to meet our clean 
energy goal while protecting consumers in every region of the 
country.
    The Department of Energy's fiscal year 2012 budget request 
for $29.5 billion supports these goals and strengthens the 
Nation's economy and security. Through programs to make homes 
and buildings more energy efficient, we will save money for 
families and businesses by saving energy. In addition, the 
budget supports the research, development, and deployment of 
renewable sources of energy, the modernization of the electric 
grid, and the advancement of carbon capture and sequestration 
technologies and it helps reduce our dependence on oil by 
developing the next generation of biofuels and accelerating 
electric vehicle research and deployment.
    We're also requesting a new credit subsidy that will 
support approximately $1 billion to $2 billion in loan 
guarantees for renewable energy and energy efficiency 
technologies. We're also requesting $100 million in credit 
subsidies for a new better buildings pilot loan guarantee 
initiative for universities, schools, and hospitals.
    To jump-start the nuclear industry, the budget requests up 
to $36 billion in loan guarantee authority, while also 
investing in advanced nuclear technologies, including small 
modular reactors.
    To spur innovation, the President's budget invests in basic 
and applied research and keeps us on a path to doubling funding 
for key scientific agencies, including the Department's Office 
of Science. The budget invests $550 million in Advanced 
Research Projects Agency for Energy, known as ARPA-E. The 
administration also seeks an additional $100 million for ARPA-E 
as part of the President's wireless innovation and 
infrastructure initiative. This investment will allow ARPA-E to 
continue the promising early stage research projects that aim 
to deliver game-changing clean energy technologies. ARPA-E's 
projects are generating excitement both in the Department and 
in the private sector.
    For example, through a combined total of $24 million from 
ARPA-E six companies have been able to advance their research 
efforts and show the potential viability of cross-cutting 
technologies. This extremely valuable--and I might add that 
they were able to then go out, after doing this research, and 
secure private funding at a ratio of 4 to 1, 4 times more 
private funding. This additional valuable early support enabled 
those companies to achieve R and D milestones that in turn have 
attracted $100 million in private sector funds for the 
projects. This is precisely the innovation leverage that is 
needed to win the future.
    Another key piece of our research effort is the energy 
innovation hubs. Through the hubs, we're bringing together our 
Nation's top scientists and engineers to achieve similar game-
changing energy goals, but where a concentrated effort over a 
longer time horizon is needed to establish innovation 
leadership. The budget requests $146 million to support these 3 
existing hubs and to establish 3 new hubs in the areas of 
battery and energy storage, smart grid technologies, and 
systems and critical materials.
    The energy innovation hubs were modeled after the 
Department of Energy's bioenergy institutes, which have 
established an outstanding 3-year track record.
    Finally, the budget continues to support the energy 
frontier research centers, which are mostly university-led 
teams working to solve specific scientific problems that are 
blocking clean energy development. When you think of the EFRCs, 
think about a collaboration of teams of scientists such as 
Watson and Crick unlocking the secrets of DNA. When you think 
of ARPA-E, think of visionary risk-takers launching new 
technologies and starting companies out of their garages. When 
you think of the hubs, think of large mission-oriented research 
efforts such as the Manhattan Project, the development of radar 
at MIT's Radiation Laboratory during World War II, and the 
research in America's great industrial laboratories in their 
heyday.
    To reach our energy goals, we must take a portfolio 
approach to R and D, pursuing several research strategies that 
have proven to be successful in the past. But I want to be 
clear. This is not a kitchen sink approach. This work is being 
coordinated and prioritized with a 360-degree view of how the 
pieces fit together. Taken together, these initiatives will 
help America lead in innovation.
    In addition to strengthening our economy, the budget 
request also strengthens our security by providing $11.8 
billion for the Department's National Nuclear Security 
Administration. The request of $7.6 billion for weapons 
activities provides a strong basis for transitioning to a 
smaller, yet still safe, secure and effective nuclear 
stockpile, without additional nuclear testing. It also provides 
much-needed resources to strengthen science, technology, and 
engineering capabilities, and to modernize the physical 
infrastructure of our nuclear security enterprise.
    To support the President's goal of securing all vulnerable 
nuclear material around the world in 4 years, the budget 
invests $2.5 billion in the Defense Nuclear Nonproliferation 
Program.
    Through our investments, we're laying the groundwork for 
the Nation's future prosperity and security. At the same time, 
we're mindful of our responsibility to the taxpayer. We're 
cutting back in multiple areas, including eliminating 
unnecessary fossil fuel subsidies, reducing funding for fossil 
fuel energy programs and reducing funding for the hydrogen 
technology program. We're streamlining operations. We're making 
some painful cuts, including ending the operation of the 
Tevatron Accelerator and freezing salaries and bonuses for 
hard-working national lab employees, site and facility 
management contractor employees.
    The United States faces a choice today: Will we lead in 
innovation and out-compete the rest of the world or will we 
fall behind? To lead the world in clean energy, we must act 
now. We can't afford not to.
    Thank you and I'm pleased to answer any questions you may 
have.
    [The prepared statement of Secretary Chu follows:]

 Prepared Statement of Hon. Steven Chu, Secretary, Department of Energy
    Chairman Bingaman, Ranking Member Murkowski, and Members of the 
Committee, thank you for the opportunity to appear before you today to 
discuss the President's Fiscal Year 2012 budget request for the 
Department of Energy.
    In his State of the Union address, President Obama laid out a plan 
for the United States to win the future by out-innovating, out-
educating and out-building the rest of the world, while at the same 
time addressing the deficit. The President's budget request invests in 
much-needed programs while cutting back where we can afford to.
    Many countries are moving aggressively to develop and deploy the 
clean energy technologies that the world will demand in the coming 
years and decades. As the President said, this is our generation's 
``Sputnik moment.''
    We must rev up the great American innovation machine to win the 
clean energy race and secure our future prosperity. To that end, 
President Obama has called for increased investments in clean energy 
research, development and deployment. In addition, he has proposed a 
bold but achievable goal of generating 80 percent of America's 
electricity from clean sources by 2035.
    A Clean Energy Standard will provide a clear, long-term signal to 
industry to bring capital off the sidelines and into the clean energy 
sector. It will grow the domestic market for clean sources of energy--
creating jobs, driving innovation and enhancing national security. And 
by drawing on a wide range of energy sources including renewables, 
nuclear, clean coal and natural gas, it will give utilities the 
flexibility they need to meet our clean energy goal while protecting 
consumers in every region of the country.
    The Department of Energy's FY 12 budget request of $29.5 billion 
supports these goals and strengthens the nation's economy and security 
by investing in the following priorities:

   Supporting groundbreaking basic science, research and 
        innovation to solve our energy challenges and ensure that the 
        United States remains at the forefront of science and 
        technology;
   Leading in the development and deployment of clean and 
        efficient energy technologies to reduce our dependence on oil, 
        accelerate the transition to a clean energy economy and promote 
        economic competitiveness; and
   Strengthening national security by reducing nuclear dangers, 
        maintaining a safe, secure and effective nuclear deterrent and 
        cleaning up our Cold War nuclear legacy.

    While we are investing in areas that are critical to our future, we 
are also rooting out programs that aren't needed and making hard 
choices to tighten our belt. Additionally, we are improving our 
management and operations so we function more efficiently and 
effectively.
               leading in the global clean energy economy
    As the President said in his State of the Union address, investing 
in clean energy will strengthen our security, protect our planet, and 
create countless new jobs here at home. The Department's budget request 
invests $3.2 billion in energy efficiency and renewable energy 
programs.
    Through programs to make homes and buildings more energy efficient, 
including a new ``Better Buildings Initiative'' to make commercial 
buildings 20 percent more efficient over the next decade, we will save 
money for families and businesses by saving energy. That is money that 
can be re-invested back into the economy. In addition, the budget 
supports the research, development and deployment of renewable sources 
of energy like wind, solar and geothermal. It supports the 
modernization of the electric grid and the advancement of carbon 
capture and sequestration technologies. And it helps reduce our 
dependence on oil by developing the next generation of biofuels and 
accelerating electric vehicle research and deployment to support the 
President's goal of putting one million electric vehicles on the road 
by 2015. This includes a $200 million competitive program to encourage 
communities to invest in electric vehicle infrastructure.
    We're also focused on moving clean energy technologies from the lab 
to the marketplace. Over the past two years, the Department's loan 
programs have supported more than $26 billion in loans, loan 
guarantees, and conditional commitments to guarantee loans for 23 clean 
energy and enhanced automotive fuel efficiency projects across the 
country, which the companies estimate will create or save more than 
58,000 jobs. Building on this success, we are requesting new credit 
subsidy that will support approximately $1 billion to $2 billion in 
loan guarantees for innovative renewable energy and energy efficiency 
technologies. These deployment efforts build on the substantial 
investment made in the clean energy sector by the Recovery Act, and are 
supplemented by tax incentives that have also played an important role 
in bringing clean energy projects to market, such as the 48C 
manufacturing tax credits and the 1603 cash grants in lieu of 
investment tax credits, which the 2012 budget also expands. We are also 
requesting $100 million in credit subsidy for a new ``Better Buildings 
Pilot Loan Guarantee Initiative for Universities, Schools, and 
Hospitals,'' which will guarantee up to $2 billion in loans to support 
energy efficient retrofits.
    Nuclear energy also has an important role to play in our energy 
portfolio. To jumpstart the domestic nuclear industry, the budget 
requests up to $36 billion in loan guarantee authority. It also invests 
in the research and development of advanced nuclear technologies, 
including small modular reactors.
                   supporting groundbreaking science
    To spur innovation, the President's budget request invests in basic 
and applied research and keeps us on the path to doubling funding for 
key science agencies, including the Department's Office of Science. As 
Norm Augustine, former Chairman of Lockheed Martin and former Under 
Secretary of the Army, has said, under-funding R&D in a time of 
austerity is like removing the engine of an aircraft to reduce its 
weight.
    That is why the budget request increases support for the 
Department's comprehensive research strategy to accelerate energy 
breakthroughs.
    Through $5.4 billion for the Office of Science, we're expanding our 
investment in basic energy sciences, advanced scientific computing and 
biological and environmental sciences--all key areas for our future 
economic competitiveness.
    The budget invests $550 million in the Advanced Research Projects 
Agency-Energy, also known as ARPA-E. The Administration also seeks an 
additional $100 million for ARPA-E from the Wireless Innovation Fund to 
support wireless clean energy technologies. This investment will allow 
ARPA-E to continue the promising early-stage research projects that aim 
to deliver game-changing clean energy technologies. ARPAE's projects 
are generating excitement both in the Department and in the private 
sector. For example, through a combined total of $24 million from ARPA-
E, six companies have been able to advance their research efforts and 
show the potential viability of their cutting-edge technologies. This 
extremely valuable early support enabled those companies to achieve R&D 
milestones that, in turn, have attracted more than $100 million in 
private sector funds to the projects. This is precisely the innovation 
leverage that is needed to win the future.
    Another key piece of our research effort is the Energy Innovation 
Hubs. Through the Hubs, we are bringing together our nation's top 
scientists and engineers to achieve similar game-changing energy goals, 
but where a concentrated effort over a longer time horizon is needed to 
establish innovation leadership. The Department has established three 
Energy Innovation Hubs in the areas of energy efficient buildings, 
modeling and simulation for nuclear reactors and fuels from sunlight. 
The budget requests $146 million to support the three existing Hubs and 
to establish three new Hubs in the areas of batteries and energy 
storage, smart grid technologies and systems, and critical materials. 
The Energy Innovation Hubs were modeled after the Department of 
Energy's BioEnergy Institutes, which have established an outstanding 
three-year track record.
    Finally, the budget continues to support the Energy Frontier 
Research Centers, which are mostly university-led teams working to 
solve specific scientific problems that are blocking clean energy 
development.
    The Energy Innovation Hubs, ARPA-E, and EFRCs represent three 
complementary approaches to advance groundbreaking discovery. When you 
think of the EFRCs, think about a collaborative team of scientists such 
as Watson and Crick unlocking the secrets of DNA. When you think of 
ARPA-E, think about visionary risktakers launching new technologies and 
start-up companies out of their garages. When you think of the Hubs, 
think of large, mission-oriented research efforts such as the Manhattan 
Project, the development of radar at MIT's Radiation Laboratory during 
World War II and the research in America's great industrial 
laboratories in their heyday.
    We don't know where the big energy breakthroughs are going to come 
from. To reach our energy goals, we must take a portfolio approach to 
R&D: pursuing several research strategies that have proven to be 
successful in the past. But I want to be clear--this is not a ``kitchen 
sink'' approach. This work is being coordinated and prioritized, with a 
360-degree view of how these pieces fit together. Taken together, these 
initiatives will help America lead in science and technology 
innovation.
                      nuclear safety and security
    In addition to strengthening our economy, the budget request also 
strengthens our security by providing $11.8 billion for the 
Department's National Nuclear Security Administration. The five-year FY 
12 to FY 16 request of nearly $65 billion for NNSA reflects the 
President's nuclear security priorities, as well as his commitment to 
modernize the U.S. nuclear weapons enterprise and sustain a strong 
nuclear deterrent for the duration of the New START Treaty and beyond.
    The request of $7.6 billion for Weapons Activities provides a 
strong basis for transitioning to a smaller yet still safe, secure and 
effective nuclear stockpile without additional nuclear testing. It also 
provides much-needed resources to strengthen science, technology and 
engineering capabilities and to modernize the physical infrastructure 
of our nuclear security enterprise.
    The President has identified the danger of terrorists getting their 
hands on nuclear weapons or the material to build them as the greatest 
threat to global security. To support the President's goal of securing 
all vulnerable nuclear material around the world in four years, the 
budget invests $2.5 billion in the NNSA Defense Nuclear 
Nonproliferation program. This is part of a five-year, $14.2 billion 
commitment for the program.
    The budget also requests $1.2 billion to support the Navy's nuclear 
powered submarines and aircraft carriers. And it provides $6.1 billion 
to protect public health and safety by cleaning up the nation's Cold 
War nuclear legacy.
                         fiscal responsibility
    Through our investments, we are laying the groundwork for the 
nation's future prosperity and security. At the same time, we are 
mindful of our responsibility to the taxpayer.
    We are cutting back in multiple areas, including eliminating 
unnecessary fossil fuel subsidies, reducing funding for the Fossil 
Energy program and reducing funding for the hydrogen technology 
program. We're streamlining operations to reduce administrative costs. 
And we're making some painful cuts, including ending operation of the 
Tevatron accelerator and freezing salary and bonuses for hard-working 
National Laboratory, site and facility management contractor employees.
    Finally, we continue to make progress on a management excellence 
agenda to improve our operations.
    The United States faces a choice today: will we lead in innovation 
and outcompete the rest of the world or will we fall behind? To lead 
the world in clean energy, we must act now. We can't afford not to.
    Thank you, and now I am pleased to answer any questions you may 
have.
                highlights of the fy 2012 budget request
    In his State of the Union address, President Obama said that 
America faces ``our generation's Sputnik moment'' and that we need to 
out-innovate, out-educate and outbuild the rest of the world to capture 
the jobs of the 21st century. ``In America, innovation doesn't just 
change our lives. It's how we make our living.'' Through innovation in 
promising areas like clean energy, the United States will win the 
future and create new industries and new jobs. To lead in the global 
clean energy economy, we must mobilize America's innovation machine in 
order to bring technologies from the laboratory to the marketplace. The 
Department of Energy (DOE) is on the front lines of this effort. To 
succeed, the Department will pursue game-changing breakthroughs, invest 
in innovative technologies, and demonstrate commercially viable 
solutions.
    In addition to energy advances that spark economic growth, national 
security remains fundamental to the Department's mission. Through 
bipartisan ratification of the New START treaty with Russia, America 
and its global partners are leading by example in implementing the 
focused expansion of domestic and international activities to reduce 
the threat of nuclear weapons, nuclear proliferation, and unsecured or 
excess weapons-usable materials. The National Nuclear Security 
Administration (NNSA) supports the international effort to secure all 
vulnerable nuclear materials around the world within four years. The 
NNSA also fulfills the President's commitment to modernize the nation's 
nuclear stockpile until a world without nuclear weapons can be 
realized.
    The Department's Fiscal Year (FY) 2012 budget request is $29.5 
billion, an 11.8 percent or $3.1 billion increase from FY 2010 current 
appropriation levels. The FY 2012 request 6 supports the President's 
goals to increase America's competitiveness by making strategic 
investments in our nation's clean energy infrastructure and to 
strengthen our national security by reducing the global threat of 
nuclear materials. The President has called for advancing research on 
clean energy technologies and manufacturing, doubling the share of 
electricity generated from clean energy supplies by 2035, and putting 
one million electric vehicles on the road by 2015. The Department's 
request prepares for a multiyear effort to address these interconnected 
objectives and prioritizes research and development of renewable energy 
technologies to expand sustainable energy options for the United 
States.
    The FY 2012 budget builds on the intense planning, execution, and 
oversight of the $35.2 billion from the American Recovery and 
Reinvestment Act of 2009. By the end of FY 2010, the Department 
successfully obligated $32.7 billion of Recovery Act funds, including 
all funding that was set to expire. In developing the FY 2012 budget 
request, the Department has taken these investments into account and 
will oversee execution of these funds with value to the taxpayer in 
mind. Recovery Act investments are focused on: energy conservation and 
renewable energy sources ($16.8 billion), environmental cleanup ($6 
billion), loan guarantees for renewable energy and electric power 
transmission projects ($2.4 billion), grid modernization ($4.5 
billion), carbon capture and sequestration ($3.4 billion), basic 
science research ($1.6 billion), and the Advanced Research Projects 
Agency--Energy ($0.4 billion). The Department's Recovery Act activities 
are strengthening the economy by providing much-needed investment, 
saving or creating tens of thousands of jobs, cutting carbon pollution, 
and reducing U.S. dependence on oil.
    The President's FY 2012 Budget supports three strategic priorities:

   Transformational Energy.--Accelerate the transformation to a 
        clean energy economy and secure U.S. leadership in clean energy 
        technologies.
   Economic Prosperity.--Strengthen U.S. science and 
        engineering efforts to serve as a cornerstone of our economic 
        prosperity and lead through energy efficiency and secure forms 
        of energy.
   Nuclear Security.--Enhance nuclear security through defense, 
        nonproliferation, naval reactors, and environmental cleanup 
        efforts.

    As the President has articulated, innovation is essential to 
America's economic competitiveness. To meet the challenge of `our 
generation's Sputnik moment,' the Department supports a coordinated 
strategy for research and development across all of its programs. With 
every initiative the Department undertakes, sound science is at the 
core. In FY 2012, we will increasingly emphasize cross-cutting 
initiatives to link science throughout the Department, specifically 
with energy and national security programs in order to deliver results 
to the American taxpayer. In the Office of Science, the Department 
requests $5.4 billion, a 9.1 percent or $452 million increase over the 
FY 2010 current appropriation levels, to support an elevated focus on 
the advancement of the United States' leadership in fundamental 
research. Advanced Research Projects Agency--Energy (ARPA-E) is 
building on established gains since its initial funding in FY 2009 
through the Recovery Act to perform transformational research and 
create gamechanging breakthroughs for eventual market adoption. The FY 
2012 budget request includes $550 million for ARPA-E to sustain 
investment in new energy technologies.
    Energy Innovation Hubs play a key role in solving specific energy 
challenges by convening and focusing top scientific and engineering 
talent to focus on those problems. The Hubs bring together 
multidisciplinary team of researchers in an effort to speed research 
and shorten the path from scientific discovery to technological 
development and commercial deployment of highly promising energy-
related technologies. The Department is proposing to double its 
commitment to this research approach by requesting three new Hubs to 
focus on batteries and energy storage, critical materials, and Smart 
Grid technologies and systems. The Department will continue funding the 
three Energy Innovation Hubs introduced in FY 2010 to focus on 
developing fuels that can be produced directly from sunlight, improving 
energy efficient building systems design, and using modeling and 
simulation tools to create a virtual model of an operating advanced 
nuclear reactor. Complementing the Hubs, the Department plans in FY 
2012 to continue coordination with the Office of Science's Energy 
Frontier Research Centers, which exemplify the pursuits of broad-based 
science challenges for energy applications.
Energy Security: Promoting America's Energy Security through Reliable, 
        Clean and Affordable Energy
    In his State of the Union address, the President outlined clearly 
to the American people his roadmap for transforming our nation's energy 
economy to meet the demands of future generations. ``Instead of 
subsidizing yesterday's energy, let's invest in tomorrow's,'' he said. 
To meet the President's challenge, the Department must recruit the 
sharpest research minds and build on its aggressive discovery agenda 
across all programs to achieve breakthroughs on the most pressing 
energy challenges facing the United States.
    In his address, President Obama laid out a goal for clean energy 
sources to account for 80 percent of America's electricity by 2035. In 
FY 2012, the Department requests funds to help achieve this 
Presidential objective and address many of the energy delivery 
challenges facing American families and energy providers.

   Applied Research, Development and Deployment.--Meeting the 
        President's goal of making America the first country to have 
        one million electric vehicles on the road by 2015, the 
        Department will research cost competitive methods to develop 
        electric vehicles, increase the adaptability and capacity of 
        the grid to enable vehicle charging, incentivize communities to 
        invest in electric vehicles and infrastructure and send these 
        vehicles to the nation's roadways. The Department will also 
        launch competitive manufacturing research for breakthrough 
        technologies in energy efficiency diagnostics and retrofits to 
        help business owners around the country save money on energy 
        costs.
   Loan Guarantees.--The Loan Programs Office (LPO) is a vital 
        tool for promoting innovation in the energy sector across a 
        broad portfolio of clean and efficient energy technologies. In 
        FY 2012, the Department is requesting credit subsidies to 
        support approximately $1 to $2 billion in loan guarantees for 
        renewable energy deployment and up to $36 billion in additional 
        authority to loan guarantees for nuclear power projects. The 
        Department will also continue to streamline and prioritize the 
        issuance of loan guarantees to leverage private sector 
        investment in clean energy and energy efficiency projects that 
        will save and create jobs.
   Better Buildings Initiative.--Last year, commercial 
        buildings consumed roughly 20 percent of all energy in the U.S. 
        economy. Improving energy efficiency in our buildings can 
        create jobs, save money, reduce our dependence on oil, and make 
        our air cleaner. The President's Better Buildings Initiative 
        will make commercial buildings 20 percent more energy efficient 
        over the next decade through initiatives that include: re-
        designing the current tax deduction for commercial buildings 
        and upgrades to a credit that is more generous and that will 
        encourage building owners and real estate investment trusts 
        (REITs) to retrofit their properties; improving financing 
        opportunities for retrofits through programs including a new 
        Better Buildings Pilot Loan Guarantee Initiative for 
        Universities, Schools and Hospitals, for which the Department 
        of Energy requests $100 million in credit subsidy to guarantee 
        up to $2 billion in loans for energy efficiency retrofits for 
        these facilities; creating a $100 million Race to Green 
        competitive grant program for state and municipal governments 
        to implement innovative approaches to building codes, 
        performance standards, and regulations so that commercial 
        building efficiency will become the norm in communities across 
        the country; and calling on CEOs and university presidents to 
        join the Department of Energy and other Federal partners in a 
        Better Buildings Challenge to make their organizations leaders 
        in saving energy. The Better Buildings Initiative builds on our 
        investments through the Recovery Act and our continued 
        commitment to passing ``HOMESTAR'' legislation to encourage 
        American families to make energy saving upgrades in their 
        homes.
   Electricity Reliability and Energy Management.--Reliable, 
        affordable, efficient, and secure electric power is vital to 
        expanding economic recovery, protecting critical 
        infrastructures, and enabling the transition to renewable 
        energy sources. The FY 2012 request invests $238 million to 
        bring the next generation of grid modernization technologies 
        closer to deployment and commercialization, to assist states 
        and regional partners in grid modernization efforts, and to 
        facilitate recovery from energy supply disruptions when they 
        occur. The request includes a new Smart Grid Technology and 
        Systems Hub that will address the total electricity system, 
        covering applied science, technology, economic, and policy 
        issues that affect our ability to modernize the grid. The FY 
        2012 request also plans an expansion of the Home Energy Score 
        program that provides homeowners with information on how their 
        homes can be more energy efficient and guidance for saving on 
        home energy costs. This is in addition to the President's 
        support for passage of the Home Star rebate program in 2011.

    Investing in energy efficiency, renewable energy generation, and 
grid modernization are fundamental steps necessary for creating a clean 
energy economy. We must also invest in the improvement of existing 
sources of energy that will provide a bridge between current and future 
technologies. These technologies are already a major segment of the 
energy mix and will play a critical role in providing a solid 
foundation that will make possible the creation of a new energy 
economy.

   Leadership in Nuclear Energy.--Nuclear energy currently 
        supplies approximately 20 percent of the Nation's electricity 
        and 70 percent of the Nation's clean, non-carbon electricity. 
        The request for the Office of Nuclear Energy includes $380 
        million for research and development, in addition to key 
        investments in supportive infrastructure. In addition, the 
        Department is engaging in cost-shared activities with industry 
        that may help accelerate commercial deployment of small modular 
        reactors. The request includes funding for costshared design 
        certification and licensing activities for small modular 
        reactors, the deployment of which holds promise for vastly 
        increasing the generation of clean energy on a cost competitive 
        basis. The Department will also promote nuclear power through 
        the Loan Guarantee Program, which is requesting up to $36 
        billion in additional loan guarantee authority in FY 2012.
   Advanced Fossil Energy.--Experience in Carbon Capture and 
        Storage--The world will continue to rely on coal-fired 
        electrical generation to meet energy demand. It is imperative 
        that the United States develop the technology to ensure that 
        base-load electricity generation is as clean and reliable as 
        possible. The Office of Fossil Energy requests $452.9 million 
        for research and development of advanced coal-fueled power 
        systems and carbon capture and storage technologies. The Budget 
        focuses resources within the fossil energy program on 
        activities that can reduce carbon pollution and have potential 
        benefits for both the existing fleet and new power plants --
        specifically, post-combustion capture R&D and geologic carbon 
        storage R&D.
   Ending Tax Subsidies to Fossil Fuel Producers.--In 
        accordance with the President's agreement at the G-20 Summit in 
        Pittsburgh to phase out subsidies for fossil fuels so that we 
        can transition to a 21st century energy economy, the 
        Administration proposes to repeal a number of tax preferences 
        available for fossil fuels. Tax subsidies proposed for repeal 
        include, but are not limited to: the credit for oil and gas 
        produced from marginal wells; the deduction for costs paid or 
        incurred for any tertiary injectant used as part of a tertiary 
        oil recovery method; the ability to claim the domestic 
        manufacturing deduction against income derived from the 
        production of oil and gas and coal; and expensing the 
        exploration and development costs for coal.
Economic Security: Sharpening America's Competitive Edge through a 
        Clean Energy Economy
    To meet ``our generation's Sputnik moment'' and promote economic 
competitiveness, the U.S. must demonstrate leadership in clean energy 
technologies. ``We'll invest in biomedical research, information 
technology and especially clean energy technology--an investment that 
will strengthen our security, protect our planet, and create countless 
new jobs for our people,'' said President Obama before Congress in the 
State of the Union address. President Obama outlined his comprehensive 
vision to lead our nation's clean energy economy and provide economic 
security to Americans. As the Administration seeks to reduce federal 
government spending, the Department recognizes its role and has 
tightened its expenditures in several areas such as oil and natural 
gas. The FY 2012 budget request acknowledges the Department's missions 
to achieve these imperative goals while setting forth a clean energy 
economy for entrepreneurs and manufacturers to reclaim their 
competitive edge in clean energy innovation.
    The Department plans to promote economic security by building on 
the progress made through the over $32 billion in grants and contracts 
under the American Recovery and Reinvestment Act of 2009, which made 
historic investments in the nation's economy and has put the country on 
target to double renewable energy generation by 2012. The Recovery Act 
helped create tens of thousands of jobs and, combined with the FY 2012 
request, will help the Department accelerate the transition of our 
nation to a clean energy economy.
    The President's FY 2012 Budget supports the plan to rebuild our 
economy through clean energy research and development by:

   Expanding ARPA-E to spur innovation.--The President's 
        request proposes $550 million for the Advanced Research 
        Projects Agency--Energy (ARPA-E) program, plus an additional 
        $100 million for the program from the Wireless Innovation and 
        Infrastructure Initiative for a total of $650 million. ARPA-E 
        performs transformational and cutting edge energy research with 
        real-world applications in areas ranging from grid technology 
        and power electronics to batteries and energy storage. The 
        budget also supports programs with significant promise to 
        provide reliable, sustainable energy across the country, such 
        as the SunShot initiative aimed at making solar energy cost 
        competitive. With focused investment in manufacturing 
        innovation and industrial technical efficiencies, the 
        President's proposal will move private sector capital off the 
        shelves and into the marketplace.
   Targeting investments for future economic growth.--To secure 
        a competitive advantage in high-tech industries and maintain 
        international leadership in scientific computing, we will 
        invest in core research activities for energy technologies, the 
        development of general biological design principles and new 
        synthetic molecular toolkits to improve understanding of 
        natural systems, and core research activities to advance the 
        frontiers of high performance computing. Underlying these 
        investments in research is the education and training of 
        thousands of scientists and engineers who contribute to the 
        skilled scientific workforce needed for a 21st century 
        innovation economy.
   Doubling the number of Energy Innovation Hubs to solve key 
        challenges.--Innovation breakthroughs occur when scientists 
        collaborate on focused problems. The FY 2012 budget request 
        proposes three new Energy Innovation Hubs that will bring top 
        American scientists to work in teams on critical energy 
        challenges in areas such as critical materials, batteries and 
        energy storage, and Smart Grid technologies. These will join 
        three existing Hubs that focus on fuel generation from 
        sunlight, building efficiency, and nuclear reactor modeling and 
        simulation.
   Integrating Research & Development.--The Department has 
        identified areas where coordinated work by discovery-oriented 
        science and applied energy technology programs hold the 
        greatest promise for progress in achieving our energy goals. 
        The Energy Systems Simulation to increase the efficiency of the 
        Internal Combustion Engine (ICE) will produce a set of modern, 
        validated computer codes that could be used by design engineers 
        to optimize the next generation of cleaner, more efficient 
        combustion engines. An initiative on extreme environments will 
        close the gap between actual and ideal performance of materials 
        in nuclear environments. And the Department's Exascale 
        Computing initiative will allow the Department to take the lead 
        in developing the next generation of scientific tools and to 
        advance scientific discoveries in solving practical problems.
   Pursuing the passage of HOMESTAR.--Enactment of this program 
        will create jobs by providing strong short-term incentives for 
        energy efficiency improvements in residential buildings. The 
        HOMESTAR program has the potential to accelerate our economic 
        recovery by boosting demand for energy efficiency products and 
        installation services. The program will provide rebates of 
        $1000 to $3000 per household to encourage immediate investment 
        in energyefficient appliances, building mechanical systems and 
        insulation, and whole-home energy efficiency retrofits. This 
        program will help middle-class families save hundreds of 
        dollars a year in energy costs while improving the comfort and 
        value of their most important investment--their homes. In 
        addition, the program would help reduce our economy's 
        dependence on fossil fuels and support the development of an 
        energy efficiency services sector in our economy.
   Extending access to tax credit and tax grant programs.--Two 
        provisions of the American Recovery and Reinvestment Act have 
        been extraordinarily successful in spurring the deployment of 
        renewable energy projects and building advanced manufacturing 
        capabilities: Section 48C Advanced Energy Manufacturing Tax 
        Credit program and the Section 1603 Energy Cash Assistance 
        program. The Administration is pursuing an additional $5 
        billion in support for the Section 48C program, which, by 
        providing a 30% tax credit for energy manufacturing facilities, 
        will continue to help build a robust high-technology, U.S. 
        manufacturing capacity to supply clean energy projects with 
        U.S. made parts and equipment. The Section 1603 tax grant 
        program has created tens of thousands of jobs in industries 
        such as wind and solar by providing up-front incentives to 
        thousands of projects. The Administration is seeking a one-year 
        extension of this program.
   Promoting efficient energy use in our everyday lives.--
        Currently, weatherization of more than 300,000 homes of low 
        income families has been achieved, providing energy cost 
        savings and financial relief to households. The FY 2012 request 
        of $320 million continues residential weatherization, while 
        increasing the focus on new innovative approaches to 
        residential home weatherization.
National Security: Securing Nuclear and Radiological Materials, 
        Maintaining Nuclear Deterrence, and Advancing Responsible 
        Legacy Cleanup
    A pillar of President Obama's national security agenda for the 
United States is to eliminate the global threat posed by nuclear 
weapons and prevent weapons-usable nuclear material from falling into 
the hands of terrorists. As part of this agenda, the Administration and 
Congress worked tirelessly toward the December 2010 bipartisan 
ratification of the New Strategic Arms Reduction Treaty (New START) 
with Russia, which cuts the number of strategic nuclear weapons each 
country can deploy to 1,550. After signing this agreement in April 
2010, President Obama said, ``In many ways, nuclear weapons represent 
both the darkest days of the Cold War, and the most troubling threats 
of our time. Today, we've taken another step forward . . . in leaving 
behind the legacy of the 20th century while building a more secure 
future for our children. We've turned words into action. We've made 
progress that is clear and concrete. And we've demonstrated the 
importance of American leadership--and American partnership--on behalf 
of our own security, and the world's''.
    The Department's National Nuclear Security Administration (NNSA), 
through work with global partners and efforts to secure vulnerable 
nuclear materials, achieved significant milestones during FY 2010 and 
FY 2011 to reduce the risk of proliferation and leverage science to 
maintain our nation's nuclear deterrence. Additionally, the 
Environmental Management program made progress advancing responsible 
nuclear cleanup from the Cold War. The Department's FY 2012 request 
seeks to build upon these successes and advance the President's nuclear 
security agenda.
            Reduce the Risk of Proliferation
    In 2009, President Obama committed the United States to an 
international effort to secure vulnerable nuclear material worldwide in 
four years. To solidify international support for this effort, and to 
address the threat of nuclear terrorism, the President convened leaders 
from 47 countries at the Washington Nuclear Security Summit in April 
2010. The Summit resulted in a Communique which stated, ``Nuclear 
terrorism is one of the most challenging threats to international 
security, and strong nuclear security measures are the most effective 
means to prevent terrorists, criminals, or other unauthorized actors 
from acquiring nuclear materials.''
    The FY 2012 budget for the NNSA Defense Nuclear Nonproliferation 
program will help advance further work that is needed to meet the goals 
of President Obama and the Nuclear Security Summit, recognizing the 
urgency of the threat and making the full commitment to global 
cooperation on nonproliferation. The budget provides $2.5 billion in FY 
2012, and $14.2 billion through FY 2016 to detect, secure, and dispose 
of dangerous nuclear and radiological material worldwide. This request 
is a decrease of 5 percent, or $138 million, from the FY 2011 request, 
which reflects completion of accelerated efforts to secure vulnerable 
nuclear materials within the President's stated timeframe. The decrease 
also reflects our decision to await agreement between the United States 
and Russia on detailed implementation milestones prior to requesting 
additional U.S. pledged funding to support Russian plutonium 
disposition. The FY 2012 budget request follows through on securing 
vulnerable materials and supports efforts to design new technologies in 
support of treaty monitoring and verification, which will contribute to 
implementation of New START. The budget also broadens cooperative 
nonproliferation initiatives with foreign governments and international 
organizations in support of the President's objective of a world 
without nuclear weapons. The budget continues the provision of security 
upgrades at selected sites, both within the United States and in 
foreign countries, to address outsider and insider threats, and 
accelerates the pace of research reactor conversions from use of 
highly-enriched uranium fuel to lowenriched uranium fuel.
            Leverage Science to Maintain Nuclear Deterrence
    The FY 2012 budget request advances the Department's commitment to 
the national security interests of the United States through 
stewardship of a safe, secure and effective nuclear weapons stockpile 
without the use of underground nuclear testing. The 2010 Nuclear 
Posture Review Report calls for the United States to reduce nuclear 
force levels. As the United States begins the reduction required by New 
START, the science, technology and engineering capabilities and 
intellectual capacity within the nuclear security enterprise become 
more critical to sustaining the U.S. nuclear deterrent. NNSA continues 
to emphasize these capabilities, including functioning as a national 
science, technology, and engineering resource to other agencies with 
national security responsibilities. Through the NNSA, the Department 
requests $7.6 billion for the Weapons Activities appropriation, an 8.9 
percent, or $621 million, increase from the President's FY 2011 
request. It also is an 18.9 percent, or $1.205 million increase from 
the FY 2010 enacted appropriation. This increase reflects an investment 
strategy that provides a strong basis for transitioning to a smaller 
yet still safe, secure and effective nuclear stockpile without 
additional nuclear testing, strengthening the science, technology and 
engineering base, modernizing the physical infrastructure, and 
streamlining the enterprise's physical and operational footprint. These 
investments will further enable the Nuclear Posture Review's 
comprehensive nuclear defense strategy, based on current and projected 
global threats that rely less on nuclear weapons, while strengthening 
the nation's nuclear deterrent through completing major stockpile 
system life extensions, stabilizing the science, technology and 
engineering base, and modernizing the infrastructure.
    The Naval Reactors program ensures the safe and reliable operation 
of reactor plants in nuclear-powered submarines and aircraft carriers, 
constituting 45 percent of the U.S. Navy's combatants. The FY 2012 
request for Naval Reactors of $1.2 billion, is an increase of $83.2 
million or 7.8 percent over the FY 2011 request and $209 million or 
18.1 percent above the FY 2010 enacted appropriation. Funding for this 
program is ramping up for reactor design and development efforts for 
the Ohio Class Replacement Submarine ($121 million), refueling of the 
Land-Based Prototype ($99.5 million), and recapitalization of the naval 
spent nuclear fuel infrastructure for the Spent Fuel Handling 
Recapitalization program ($53.8 million) at the Naval Reactors Facility 
located at the Idaho National Laboratory.
            Advance Responsible Environmental Cleanup
    The FY 2012 budget includes $6.13 billion for the Office of 
Environmental Management (EM), to protect public health and safety by 
cleaning up hazardous, radioactive legacy waste from the Manhattan 
Project and the Cold War. This funding will allow the program to 
continue to accelerate cleaning up and closing sites, focusing on 
activities with the greatest risk reduction. Acceleration of cleaning 
up sites where funding would have immediate impact was established as 
the overarching objective of the $6 billion in Recovery Act funding. EM 
will use the remaining $309 million of Recovery Act funding during FY 
2012 as it completes footprint reduction and near-term completion 
cleanup activities.
    As the Department continues to make progress in completing 
environmental cleanup, the FY 2012 budget request of $170 million for 
the Office of Legacy Management supports the Department's long-term 
stewardship responsibilities and payment of pensions and benefits for 
former contractor workers after site closure.
         department of energy fy 2012 program office highlights
Office of Science: Invest in the Building Blocks of American Innovation
    The Department of Energy's Office of Science (SC) delivers 
scientific discoveries and major scientific tools to transform our 
understanding of energy and matter and advance the energy, economic, 
and national security of the United States. SC is the largest Federal 
sponsor of basic research in the physical sciences, supporting programs 
in areas such as physics, chemistry, biology, environmental sciences, 
applied mathematics, and 15 computational sciences. In FY 2012, the 
Department requests $5.4 billion, an increase of 9.1 percent over the 
FY 2010 current appropriation, to invest in basic research. The FY 2012 
request supports the President's Strategy for American Innovation, and 
is consistent with the goal of doubling funding at key basic research 
agencies, including the Office of Science. The FY 2012 Office of 
Science budget request supports the following objectives from the 
Strategy, including:

   Unleash a clean energy revolution
   Strengthen and broaden American leadership in fundamental 
        research
   Develop an advanced information technology ecosystem
   Educate the next generation with 21st century skills and 
        create a world-class workforce

    In FY 2012, SC continues to support fundamental research for 
scientific discovery, but today our country needs to move strongly to 
solve our energy problems. Therefore, the central theme of this year's 
budget in SC is research in new technologies for a clean energy future 
that address competing demands on our environment. These efforts, 
coordinated with the DOE applied technology programs and with input 
from the scientific community and industry, will emphasize research 
underpinning advances in non-carbon emitting energy sources, carbon 
capture and sequestration, transportation and fuel switching, 
transmission and energy storage, efficiency, and critical materials for 
energy applications.
    In the area of advancing non-carbon energy sources, the FY 2012 
budget request will provide for new investments in the science of 
interfaces and degradation relevant to solar photovoltaics, basic 
actinide chemistry research related to advanced nuclear fuel cycles, 
and research in materials under extreme environments relevant to 
extreme nuclear technology environments, and genomics-based research on 
biological design principles and synthetic biology tools to underpin 
bio-based energy solutions. Carbon capture and sequestration research 
will focus on novel molecular design for materials and multiscale 
dynamics of flow and plume migration, respectively. SC will initiate an 
energy systems simulation research effort focused on predictive 
modeling of combustion in an evolving fuel environment in support of 
the Department's efforts in transportation and alternative fuels. Also 
underpinning transportation and fuel switching, as well as energy 
storage, the FY 2012 request will support an Energy Innovation Hub for 
Batteries and Energy Storage. The Fuels from Sunlight Hub, established 
in FY 2010, as well as the Energy Frontier Research Centers and DOE 
Bioenergy Research Centers also continue. Research in enabling 
materials sciences will support needs of future electricity 
transmission systems and novel building materials to improve building 
efficiencies.
    The FY 2012 budget request also provides for foundational science 
in condensed matter and materials physics, chemistry, biology, climate 
and environmental sciences, applied mathematics, computational and 
computer science, high energy physics, nuclear physics, plasma physics, 
and fusion energy sciences; and provides for research facilities and 
capabilities that keep U.S. researchers at the forefront of science. 
The FY 2012 request supports targeted increases in areas such as 
computational materials and chemistry by 16 design, nanoelectronics, 
and advanced scientific applications and integrated 
applicationhardware-software co-design for exascale, which position the 
U.S. to secure a competitive advantage in high-tech industries and 
maintain international leadership in scientific computing. Underlying 
these investments is the education and training of thousands of 
scientists and engineers who contribute to the skilled scientific 
workforce needed for the 21st century innovation economy.
    The Office of Science supports investigators at about 300 academic 
institutions and from all of the DOE laboratories. Over 26,000 
researchers from universities, national laboratories, industry, and 
international partners are expected to use the Office of Science 
scientific user facilities in FY 2012.
Advanced Research Projects Agency--Energy: Transformational Research 
        and Development
    The FY 2012 budget request includes $550 million for the Advanced 
Research Projects Agency--Energy (ARPA-E), plus an additional $100 
million for the program from the Wireless Innovation and Infrastructure 
Initiative for a total of $650 million. ARPA-E was launched in FY 2009 
to sponsor specific high-risk and high-payoff transformational research 
and development projects that overcome the long-term technological 
barriers in the development of energy technologies to meet the Nation's 
energy challenges, but that industry will not support at such an early 
stage. An essential component of ARPA-E's culture is an overarching 
focus on accelerating science to market. Beyond simply funding 
transformational research creating revolutionary technologies, ARPA-E 
is dedicated to the market adoption of those new technologies that will 
fuel the economy, create new jobs, reduce energy imports, improve 
energy efficiency, reduce energy-related emissions, and ensure that the 
U.S. maintains a technological lead in developing and deploying 
advanced energy technologies.
Office of Energy Efficiency and Renewable Energy: Investing in 
        Breakthrough Technology and a Clean Energy Future
    The Office of Energy Efficiency and Renewable Energy (EERE) 
supports research, development, demonstration, and deployment 
activities on technologies and practices essential for meeting national 
security goals by reducing dependence on oil, meeting environmental 
goals by minimizing the emissions associated with energy production and 
use, and stimulating economic growth and job creation by minimizing the 
cost of energy services. The EERE portfolio emphasizes work areas where 
the potential impact is largest, where Federal funds are most critical. 
It balances investments in high-risk research with partnerships with 
private firms that speed the translation of innovations into practical 
business opportunities. The diverse set of technologies supported helps 
ensure that the U.S. has many options for meeting its energy goals. 
Program management is designed to identify the best groups in the 
country to address these challenges and supports work in universities, 
companies, national laboratories, and consortia.
    The FY 2012 budget request of $3.2 billion, the increase of 44.4% 
over the FY 2010 current appropriation, is aimed at accelerating 
innovation and change in the Nation's 17 energy economy. The request 
includes programs associated with meeting the President's goals of 
investing in the next generation of clean energy technologies, vehicles 
and fuels, and energy efficiency measures that reduce energy use in 
Federal agencies and the industrial and building sectors.
            Clean, Renewable Energy Generation
    The FY 2012 budget request continues to work to transform the 
Nation's energy infrastructure by investing over $1,164.9 million in a 
variety of renewable programs including solar ($457.0 million), wind 
($126.9 million), water ($38.5 million), hydrogen ($100.5 million), 
biomass ($340.5 million), and geothermal ($101.5 million). Research, 
development, and deployment of these technologies will reduce the 
production of greenhouse gas emissions and revitalize an economy built 
on the next generation of domestic production. The request includes the 
solar SunShot program which will invest in transformative research 
focusing on achieving radical cost reductions in photovoltaic modules, 
balance of systems, and power electronics.
            Energy Efficiency
    The Department implements a number of efforts to increase energy 
efficiency in homes, transportation, and industry. The FY 2012 budget 
requests $1,805.3 million to accelerate deployment of clean, cost-
effective, and rapidly deployable energy efficiency measures in order 
to reduce energy consumption in residential and commercial buildings, 
and the industrial and Federal sectors. The Department will invest 
$470.7 million in the Building Technologies program and $33.0 million 
for the Federal Energy Management Program. Federal assistance for 
state-level programs such as State Energy Program ($63.8 million), 
Tribal ($10.0 million) and Weatherization Assistance Program ($320.0 
million) will continue to help citizens implement energy efficiency 
measures, lower energy costs and greenhouse gas emissions, and build a 
technical workforce. ($319.8 million) for Industry will provide a 
balanced portfolio of advanced R&D and pursuit of near-term low cost 
opportunities with the objectives of increasing U.S. competitiveness, 
enhancing clean energy manufacturing, and improving energy 
productivity. There will be a focus on next generation manufacturing 
processes and materials, activities for clean energy manufacturing, and 
refocused efforts for Industrial Technical Assistance to achieve 
greater results with less funding through more effective leveraging of 
funding for deployment partnerships. A new Energy Innovation Hub on 
critical materials will be competed through the Industrial Technologies 
program. The FY 2012 request also includes $588 million to accelerate 
research, development and deployment of advanced vehicle technologies, 
working in concert with biomass RD&D to reduce the use of petroleum and 
greenhouse gas emissions.
    Better Buildings Initiative for Commercial Energy Savings.--The 
President's Better Buildings Initiative is focused on achieving a 20 
percent improvement in commercial buildings' energy use by 2020. The 
initiative will include many new components to achieve this goal. The 
following are supported in the Department's FY 2012 request: launch of 
the Race to Green competitive grant program for states and municipal 
governments to encourage higher standards for commercial energy 
efficiency, which is funded within the Buildings Technologies Program; 
a new pilot loan guarantee program to support energy efficiency 
retrofits for buildings that serve as community assets; and increased 
R&D funding for building technologies. The Department intends to work 
with the business and academic communities to make their organizations 
leaders in saving energy.
Office of Electricity Delivery and Energy Reliability: Enabling a Clean 
        Energy Economy
    The Office of Electricity Delivery and Energy Reliability (OE) is 
responsible for leading national efforts to modernize the electric 
grid, enhance the security of energy infrastructure, and facilitate 
recovery from disruptions to the energy supply. The Department's FY 
2012 budget request for OE of $238 million, a 38% increase over the FY 
2010 appropriation, represents a clear and determined effort to 
accelerate the transformation of one of the Nation's key enablers of a 
clean energy economy--the electricity delivery system.
    The U.S. electricity delivery system was built on technology that 
was developed early in the 20th century and designed for the demands 
and challenges of that era. Today, this aging and often congested 
system is facing many new and complex challenges that require 
considerable improvements in the physical and technological components 
of the system. In order to alleviate the stress on the system from 
increasing demand for electricity and to enable greater use and 
integration of renewable and distributed resources, all while 
maintaining the reliability, security, and affordability of electric 
power, research and development breakthroughs and new energy management 
approaches are critical in the areas of transmission and distribution, 
energy storage, and cyber security.
    OE's FY 2012 budget request provides $193 million for research and 
development in these critical areas to bring the next generation of 
grid technologies closer to deployment and commercialization. The 
increased investment reflects the President's vision and OE's role in 
competing in a worldwide technological race. As such, with $20 million 
in FY 2012, OE will establish a new Energy Innovation Hub, or in the 
words of President Obama, one of ``the Apollo projects of our time.'' 
The Smart Grid Technology and Systems Hub will bring together a 
diverse, multi-disciplinary group to develop an integrated approach to 
enhancing smart grid technologies and systems. OE will also expand its 
advanced modeling capabilities to include other system layers in order 
to provide a more in-depth system understanding. The energy storage 
program will expand to aggressively support the deployment of grid-
scale energy storage technologies with new demonstrations, and the 
cyber security program will continue to focus on the development and 
integration of secure control systems.
    The budget request continues to support Permitting, Siting, and 
Analysis (PSA) with $8 million to develop and improve policies, state 
laws, and programs that facilitate the development of electric 
infrastructure needed to bring new clean energy projects to 19 market, 
and to provide technical assistance to states and regions. It also 
supports Infrastructure Security and Energy Restoration (ISER) with 
$6.2 million to enhance the reliability and resiliency of critical 
energy infrastructure and to facilitate recovery from energy supply 
disruptions.
Office of Environmental Management: Meeting Commitments and Making 
        Progress
    The mission of the Office of Environmental Management (EM) is to 
complete the safe cleanup of the environmental legacy brought about 
from over six decades of nuclear weapons development, production, and 
Government-sponsored nuclear energy research. This cleanup effort is 
the largest in the world, originally involving two million acres at 110 
sites in 35 states, dealing with some of the most dangerous materials 
known to man.
    EM continues to pursue its cleanup objectives within the overall 
framework of achieving the greatest comparative risk reduction benefit 
and overlaying regulatory compliance commitments and best business 
practices to maximize cleanup progress. To support this approach, EM 
has prioritized its cleanup activities:

   Activities to maintain a safe and secure posture in the EM 
        complex
   Radioactive tank waste stabilization, treatment, and 
        disposal
   Spent nuclear fuel storage, receipt, and disposition
   Special nuclear material consolidation, processing, and 
        disposition
   High priority groundwater remediation
   Transuranic and mixed/low-level waste disposition
   Soil and groundwater remediation
   Excess facilities deactivation and decommissioning

    The FY 2012 budget request for $6.13 billion will fund activities 
to maintain a safe and secure posture in the EM complex and make 
progress against program goals and compliance commitments by reducing 
the greatest risks to the environment and public health, using science 
and technology to reduce lifecycle costs, and reducing EM's geographic 
footprint by 90 percent by 2015. EM continues to move forward with the 
development of the capability for dispositioning tank waste, nuclear 
materials, and spent (used) nuclear fuel. The budget request includes 
the construction and operation of three unique and complex tank waste 
processing plants to treat approximately 88 million gallons of 
radioactive tank waste for ultimate disposal. It will also fund the 
solid waste disposal infrastructure needed to support disposal of 
transuranic and low-level wastes generated by high-risk activities and 
the footprint reduction activities.
    EM carries out its cleanup activities with the interests of 
stakeholders in mind. Most importantly, EM will continue to fulfill its 
responsibilities by conducting cleanup within a ``Safety First'' 
culture that integrates environment, safety, and health requirements 
and controls into all work activities to ensure protection to the 
workers, public, and the environment, and adheres to sound project and 
contract management principles. EM is also strengthening its project 
and planning analyses to better assess existing priorities and identify 
opportunities to accelerate cleanup work. Working collaboratively with 
the sites, EM continues to seek aggressive but achievable strategies 
for accelerating cleanup of discrete sites or segments of work. In 
addition, functional and cross-site activities such as elimination of 
specific groundwater contaminants, waste or material processing 
campaigns, or achievement of interim or final end-states are being 
evaluated.
    After the EM program completes cleanup and closure of sites that no 
longer have an ongoing DOE mission, post closure stewardship activities 
are transferred to the Office of Legacy Management (LM). LM also 
receives sites remediated by the U.S. Army Corps of Engineers (Formerly 
Utilized Sites Remedial Action Program) and private licensees (Uranium 
Mill Tailings Radiation Control Act, Title II sites). Post closure 
stewardship includes long-term surveillance and maintenance activities 
such as groundwater monitoring, disposal cell maintenance, records 
management, and management of natural resources at sites where active 
remediation has been completed. At some sites the program includes 
management and administration of pension and post-retirement benefits 
for contractor retirees.
Loan Programs Office: Helping Finance Clean Energy Deployment
    Innovative Technology Loan Guarantee Program.--To encourage the 
early commercial deployment of new or significantly improved 
technologies in energy projects, the Department requests up to $36 
billion in loan guarantee authority for nuclear power facilities and 
$200 million in appropriated credit subsidy to support an estimated $1 
to $2 billion in loans for renewable energy system and efficient end-
use energy technology projects under section 1703 of the Energy Policy 
Act of 2005. The additional loan guarantee authority for nuclear power 
projects will promote deployment of new plants and support an 
increasing role for private sector financing. The additional credit 
subsidy will allow for investment in the innovative renewable and 
efficiency technologies that are critical to meeting the 
Administration's goals for affordable, clean energy, technical 
leadership, and global competitiveness.
    The FY 2012 budget also requests $38 million to evaluate 
applications received under the eight solicitations released to date 
and to ensure efficient and effective management of the Loan Guarantee 
program. This request is expected to be offset by collections from 
borrowers authorized under Title XVII of the Energy Policy Act of 2005 
(P.L. 109-8).
    Advanced Technology Vehicle Manufacturing Program.--The Department 
requests $6 million to support ongoing loan monitoring activities 
associated with the program mission of making loans to automobile and 
automobile part manufacturers for the cost of re-equipping, expanding, 
or establishing manufacturing facilities in the United States to 
produce advanced technology vehicles or qualified components, and for 
associated engineering integration costs.
    Better Buildings Pilot Loan Guarantee Initiative for Universities, 
Schools, and Hospitals.--To spur investment in energy efficiency 
retrofits for buildings which serve as assets to our communities, the 
Department requests $100 million for loan guarantee subsidy costs to 
support up to $2 billion in loan authority for universities, schools, 
and hospitals. This pilot program is one component of the President's 
Better Buildings Initiative and would fund cost-effective technologies 
and measures to assist universities, schools, and hospitals save on 
energy usage and associated energy costs. The Department also requests 
$5 million for administrative expenses to carry out the program. The 
request is subject to the enactment of legislation authorizing this 
program.
Office of Nuclear Energy: Investing in Energy Innovation and Technical 
        Leadership
    The Department is requesting $852.5 million for the Office of 
Nuclear Energy (NE) in FY 2012--a decrease of 0.6 percent from the FY 
2010 current appropriation. NE's funding supports the advancement of 
nuclear power as a resource capable of meeting the Nation's energy, 
environmental, and national security needs by resolving technical, 
cost, safety, proliferation resistance, and security barriers through 
research, development, and demonstration as appropriate.
    Currently, nuclear energy supplies approximately 20 percent of the 
Nation's electricity and over 70 percent of clean, non-carbon producing 
electricity. Over 100 nuclear power plants are offering reliable and 
affordable baseload electricity in the United States, and they are 
doing so without air pollution and greenhouse gas emissions. NE is 
working to develop innovative and transformative technologies to 
improve the competitiveness, safety and proliferation resistance of 
nuclear energy to support its continued use.
    The FY 2012 budget supports a balanced set of research, 
development, and deployment (RD&D) activities. This program is built 
around exploring, through its R&D: technology and other solutions that 
can improve the reliability, sustain the safety, and extend the life of 
current reactors; improvements in the affordability of new reactors to 
enable nuclear energy to help meet the Administration's energy security 
and climate change goals; development of sustainable nuclear fuel 
cycles; and minimization of risks of nuclear proliferation and 
terrorism.
    NE is requesting $125 million for Reactor Concepts Research, 
Development and Demonstration. This program seeks to develop new and 
advanced reactor designs and technologies. NE is also requesting $67 
million for the Light Weight Reactor SMR Licensing Technical Support 
program, which will support cost-shared design certification and 
licensing activities for two light water reactor-based designs. Small 
modular reactors are a technology that the Department believes has the 
promise to help meet energy security goals. Work will continue on R&D 
for the Next Generation Nuclear Plant to support demonstration of gas-
cooled reactor technology in the United States. The program also 
supports research on Generation IV and other advanced designs and 
efforts to extend the life of existing light water reactors.
    The FY 2012 request includes $155 million for Fuel Cycle Research 
and Development to perform long-term, results-oriented science-based 
R&D to improve fuel cycle and waste management technologies to enable a 
safe, secure, and economic fuel cycle. The budget also requests $97.4 
million to support the Nuclear Energy Enabling Technologies program, 
focused on the development of cross-cutting and transformative 
technologies relevant to multiple reactor and fuel cycle concepts. The 
Crosscutting Technology Development activity will focus on a variety of 
areas such as reactor materials, creative approaches to further reduce 
proliferation risks, and establishing advanced modeling and simulation 
capabilities to complement physical experimentation. The Transformative 
Nuclear Concepts R&D activity supports, via an open, competitive 
solicitation process, investigator-initiated projects that relate to 
any aspect of nuclear energy generation ensuring that good ideas have 
sufficient outlet for exploration. Modeling and Simulation Energy 
Innovation Hub, supported within this program, will apply existing 
modeling and simulation capabilities to create a ``virtual'' reactor 
user environment to simulate an operating reactor and is a prime 
example of the type of crosscutting, transformative activity that will 
enhance many research areas within NE. NE will also continue its 
commitments to investing in university research, international 
cooperation, and the Nation's nuclear research infrastructure--
important foundations to support continued technical advancement.
Office of Fossil Energy: Sustaining American Energy Options through 
        U.S. Ingenuity
    The FY 2012 budget request of $521 million for the Office of Fossil 
Energy (FE) will help ensure that the United States can continue to 
rely on clean, affordable energy from traditional domestic fuel 
resources. The United States has 25 percent of the world's coal 
reserves, and fossil fuels currently supply over 80 percent of the 
Nation's energy.
    The Department is committed to developing technologies and 
providing technologybased options having public benefits including 
enhanced economic, environmental and energy security impacts. In FER&D, 
the emphasis, in keeping with Presidential priorities, is in supporting 
long-term, high risk initiatives targeted at carbon capture and storage 
as well as advanced energy systems and on cross-cutting research.
    In addition, $122 million of FE's $521 million request will be to 
provide for national energy security through the continued operations 
of the Strategic Petroleum Reserve. The budget proposes to sell $500 
million of SPR oil in order to provide operational flexibility in 
managing the Reserve.
The National Nuclear Security Administration: Leading Global Partners 
        on Nonproliferation by Securing Vulnerable Nuclear Materials; 
        Reaffirming Commitment to Stockpile Modernization
    The National Nuclear Security Administration (NNSA) continues 
significant efforts to meet Administration and Secretarial priorities, 
leveraging science to promote U.S. national security objectives. The FY 
2012 President's budget request for NNSA is $11.8 billion; an increase 
of 5.1 percent from the President's FY 2011 Request. The five-year FY 
2012-2016 President's Request for the NNSA reflects the President's 
global nuclear nonproliferation priorities and his commitment to 
modernize the U.S. nuclear weapons complex and sustain a strong nuclear 
deterrent, as described in the 2010 Nuclear Posture Review (NPR) 
Report, for the duration of the New START Treaty and beyond. The NNSA's 
defense and homeland security-related objectives include:

   Ensure that the U.S. nuclear deterrent remains safe, secure 
        and effective while implementing changes called for by the 2010 
        NPR and the New START Treaty
   Broaden and strengthen the NNSA's science, technology and 
        engineering mission to meet national security needs
   Transform the Nation's Cold-War era weapons complex into a 
        21st century national security enterprise
   Work with global partners to secure all vulnerable nuclear 
        materials around the world and implement the President's 
        nuclear security agenda expressed in the May 2010 National 
        Security Strategy and the Nuclear Posture Review report
   Provide safe and effective nuclear propulsion for U.S. Navy 
        warships

    The FY 2012 budget request of $7.6 billion for the Weapons 
Activities appropriation provides funding for a wide range of programs. 
Requested activities include providing direct support for the nuclear 
weapon stockpile, including stockpile surveillance, annual assessments, 
life extension programs, and warhead dismantlement. Science, Technology 
and Engineering programs are focused on long-term vitality in science 
and engineering, and on performing R&D to sustain current and future 
stockpile stewardship capabilities without the need for underground 
nuclear testing. These programs also provide a base capability to 
support scientific research needed by other elements of the Department, 
the federal government national security community, and the academic 
and industrial communities. Infrastructure programs support facilities 
and operations at the government-owned, contractor-operated sites, 
including activities to maintain and steward the health of these sites 
for the long term and construct new facilities that will allow the 
United States to maintain a credible nuclear deterrent. The unique 
nuclear security expertise and resources maintained by NNSA are made 
available through the National Laboratories to other Departmental 
offices, agencies and to the Nation for security and counterterrorism 
activities.
    The Weapons Activities request is an increase of 8.9 percent over 
the President's FY 2011 Request. This level is sustained and increased 
in the later outyears. The multi-year increase is necessary to reflect 
the President's commitment to maintain the safety, security and 
effectiveness of the nuclear deterrent without underground nuclear 
testing, consistent with the principles of the Report on the Plan for 
the Nuclear Weapons Stockpile, Nuclear Weapons Complex, and Delivery 
Platforms (known as the ``1251 Report'') and the Stockpile Management 
Program as stipulated in Sections 1251 and 3113(a)(2) of the National 
Defense Authorization Act of Fiscal Year 2010. Increases are provided 
for direct support of the nuclear weapon stockpile, for scientific, 
technical and engineering activities related to maintenance assessment 
and certification capabilities, and for recapitalization of key nuclear 
facilities. The President's Request provides funding necessary to 
protect the national resource of human capital at the national 
laboratories through a stockpile stewardship program that exercises and 
retains these capabilities.
    The FY 2012 request for Defense Nuclear Nonproliferation (DNN) is 
$2.5 billion; a decrease of 5.1 percent from the President's FY 2011 
Request. This decrease reflects completion of long-lead procurements 
for the Mixed Oxide Fuel Fabrication Facility (MOX) and Waste 
Solidification Building (WSB). It also reflects our decision to await 
an agreement between the U.S. and Russia on detailed implementation 
milestones prior to requesting additional U.S.-pledged funding to 
support Russian plutonium disposition. The Administration prioritizes 
U.S. leadership in global nonproliferation initiatives as directed 
through the National Security Strategy and has advanced this agenda 
through commitments from global partners during the 2010 Nuclear 
Security Summit. In addition to the programs funded solely by the NNSA, 
Defense Nuclear Nonproliferation programs support interagency and 
international efforts to protect national security by preventing the 
spread of nuclear weapons and nuclear materials to terrorist 
organizations and rogue states. These efforts are implemented in part 
through the International Atomic Energy Agency, the G8 Global 
Partnership against the Spread of Weapons and Materials of Mass 
Destruction, and the Global Initiative to Combat Nuclear Terrorism.
    DNN supports the President's goal to secure vulnerable nuclear 
materials around the world within four years. The Global Threat 
Reduction Initiative's emphasis in FY 2012 is to convert domestic and 
international nuclear reactors from weapons-usable highly enriched 
uranium fuel to low-enriched uranium fuel (LEU); while preserving our 
capability to produce the critically needed Molybdenum 99 isotope. The 
FY 2012 President's request for International Nuclear Materials 
Protection and Cooperation reflects selective new security upgrades to 
buildings and sites in accordance with the President's goal to secure 
vulnerable nuclear materials around the world within four years, as 
well as enhancements and sustainability support for previous work. The 
Fissile Materials Disposition program continues domestic construction 
of the MOX Fuel Fabrication Facility scheduled to come online in 2016; 
and design for the pit disassembly and conversion capability to provide 
it with plutonium oxide feedstock.
    The President's request of $1.2 billion for Naval Reactors is an 
increase of 7.8 percent over the President's FY 2011 Request. The 
program supports the U.S. Navy's nuclear fleet, comprised of all of the 
Navy's 72 submarines and 11 aircraft carriers, which constitute 45 
percent of the Navy's combatants. The U.S. relies on these ships every 
day, all over the world, to protect our national interests. The budget 
provides funding increases for the Ohio Class Replacement submarine to 
design and develop required submarine reactor plant technologies. R&D 
is underway now, and funding during this Future Years Nuclear Security 
Program is critical to support the long manufacturing spans for 
procurement of reactor plant components in 2017, and ship construction 
in 2019. Resources are also requested in FY 2012 to support design work 
for the recapitalization of the spent nuclear fuel handling 
infrastructure and refueling of the Land-based prototype.
    The Office of the Administrator appropriation provides for federal 
program direction and support for NNSA's Headquarters and field 
installations. The FY 2012 request is $450.1 million; a 0.4 percent 
increase over the President's FY 2011 Request. This provides for well-
managed, inclusive, responsive, and accountable organization through 
the strategic 25 management of human capital, enhanced cost-effective 
utilization of information technology, and integration of budget and 
performance through transparent financial management practices. The 
increase reflects additional federal oversight for construction of the 
Pit Disassembly and Conversion project, the Uranium Processing 
Facility, and the Chemistry and Metallurgy Research Replacement 
Facility.

    The Chairman. Thank you very much.
    We do have a quorum of 12 members or a few more than that, 
so let me go ahead with our business meeting, as I indicated we 
would, before we start asking you any questions, Mr. Secretary.
    [Whereupon, at 9:48 a.m., the hearing was recessed and the 
committee proceeded to other business.]
    [Reconvene at 9:53 a.m.]
    The Chairman. Mr. Secretary, let me start with questions, 
and we'll go back to the regular hearing. You described in your 
opening statement there the innovation hubs in a general way. 
Could you be a little more--elaborate a little more on what 
these accomplish that ongoing research is not able to 
accomplish in your opinion?
    Secretary Chu. Sure. Let me be specific. Let's start with 
the transmission and distribution hub. Typically when we make 
grants in the past we made specific grants to improve the smart 
grid, improve devices within the smart grid. But if you look at 
where the gains can be made, it would be in actually 
integrating the entire system.
    The system we have to evolve to is a system where you need 
to manage two-way flows, you need to integrate the fossil fuel 
generation in a way that's automatic. Just in case wind dies 
down or if clouds go over the sky and there's a lull in 
transmission of renewable energy sources, you have to 
automatically ramp up as quickly as possible these fossil fuel 
sources. The integration of that has only just begun if you 
look at the wide range of technologies that have to be 
developed.
    So a hub like this will be emphasizing looking across all 
the board to actually get an integrated system of transmission 
and distribution, which also has to integrate into the 
generation and the use of energy and the two-way flows. That's 
one example.
    Batteries. We invest a lot in batteries. Again, it's the 
same thing. There's a specific idea of a battery, but the thing 
that really matters is--if I take a subset, automobile 
batteries for electric and plug-in hybrid vehicles, those 
batteries, it's not just the battery technology, the cell 
itself, but it's actually the integrated system, how it's 
packaged, if it's integrated into something that actually takes 
out the heat and manages the heat. This is the thing that 
really matters in a car.
    Again, if you look at the individual proposals we're doing, 
it all looks good. But if you look at what the competition is 
doing--for example, Toyota has recently announced that one 
advanced battery technology they want to develop--this is for a 
lithium-air battery or zinc-air; these are the kind of 
batteries used in your hearing aids. We're investing that 
similarly in university research groups and other groups and 
companies, but Toyota is putting 50 engineers in order to bring 
this to market, get them rechargeable, as a concerted effort, 
which includes the integration, the packaging into the car.
    So an individual group doesn't have the wherewithal to do 
that. So we're saying, OK, so you look at the broad portfolio 
of things and get a team to, say, deliver the goods that 
actually can be installed in a car. It's a very competitive 
world out there.
    Finally, the materials hub. There are critical materials. 
We know that the world right now is mostly dependent on China 
for rare earth materials. So if you look at how we can get 
substitutes for rare earths, new technologies, or use the rare 
earths in a much smarter way so you use less of them.
    There are other critical materials having to do with 
higher-temperature steels that would be useful in improving the 
efficiency of nuclear reactors and traditional gas and goal 
power plants. These things are--the plants of the future will 
be higher efficiency. These materials are again something 
looking broadly, how do you actually connect all the dots.
    So this is exactly the vision we have, that also happened 
in World War II in the radar, where the scientists and 
engineers get together and they say, we have to deliver the 
full package, we've got to get it in the airfields, on ships, 
on airplanes. It's that concerted effort to actually do the 
basic research, but also to make sure it's deliverable in a 
very timely manner. It's a very competitive world out there and 
that is why we think we need these hubs.
    The Chairman. Thank you.
    Let me ask about a somewhat parochial issue here. At the 
beginning of this month we had very severe cold weather in my 
State of New Mexico and in Texas. There were rolling 
electricity blackouts. We had an interruption in natural gas 
service to about 30,000 New Mexico residents for several days.
    We're going to have a field hearing next week in 
Albuquerque to look at this. The Federal Energy Regulatory 
Commission I think has initiated a staff inquiry into what went 
wrong and what could be done to prevent this in the future.
    Does the Department of Energy have a role in responding to 
or investigating this kind of an energy emergency, and is there 
anything that you folks are doing or could do to be of help to 
us in understanding how to avoid this in the future?
    Secretary Chu. The answer, the short answer, is yes, we do 
have a role. If there's interruptions in power, if there are 
things like you spoke about, also hurricanes, we are the agency 
that tries to coordinate. The energy delivery systems are 
private sector enterprises, but we have a responsibility to 
coordinate the restoration, to decide which areas to bring on 
as fast as possible, the most critical areas. So we have that 
responsibility and certainly we take that job very seriously.
    The Chairman. Good. We might urge that you have--we're not 
calling anyone from the Department of Energy as such at this 
hearing next Monday, but we are calling representatives from 
FERC to testify. But you might see if someone from your 
Department might monitor what goes on there.
    Secretary Chu. In terms of natural gas, I think that's more 
FERC's domain. We're mostly electricity, but we'll be happy to 
send----
    The Chairman. We're looking at both because the natural gas 
producers say the problem was that they didn't get electricity 
and the electricity companies say the problem was they didn't 
get natural gas. So we're trying to figure out who's to blame.
    Senator Murkowski.
    Senator Murkowski. It does sound like a government 
operation.
    Mr. Secretary, I want to ask you about the Strategic 
Petroleum Reserve. The budget proposes a $500 million non-
emergency sale of SPRO oil. There's no explanation. I guess I'm 
a little curious about this, because we're sitting here more 
than 50 percent dependent on foreign sources of oil. We're not 
seeing any new permits being issued for domestic offshore 
production here. Given what is going on in North Africa, in the 
Middle East, from Tunisia to Egypt to Algeria to Iran and all 
that is happening, why is it appropriate at this particular 
juncture for the United States to reduce our stocks of 
emergency crude?
    Secretary Chu. Yes, I'd be glad to respond to that. I think 
what we're asking for is a reduction. We have an issue with one 
of our reservoirs and there's one cavern that has some 
integrity issues, and we're draining that and backfilling other 
storage locations. But we're concerned of an overfill in those 
storage locations.
    So what we want--we don't want to lose this crude. So we 
are trying to manage that. In addition, I think the scale is 
also very important. We're talking about--we're required by 
law, both the government resources and the private sector, to 
have a 90-day supply of oil. The government portion of that 
would be 75 days. So what we feel is going to be a temporary 
reduction will reduce the total supply, emergency supply, by 1 
day as we work through the cavern issues.
    Senator Murkowski. But from what you said, we have some 
issues with integrity of the reservoir itself. So that could be 
a longer-term issue that we're dealing with or perhaps a more 
costly issue as we work to address the challenges?
    Secretary Chu. Right. It's the reservoir, meaning the 
caverns, the underground caverns where we store those.
    Senator Murkowski. Right.
    Secretary Chu. So there are some integrity issues with one 
of them. So we are working to do this.
    Also, right now, because we're in this economic downturn, 
severe recession, for the moment the reserves--we're expecting 
a flat or even declining use of oil. Now, as that goes up we 
certainly have to adhere to the responsibilities and we would 
like that to be essentially full. So it's a temporary 
situation.
    Senator Murkowski. I'd like to learn a little bit more 
about what's going on within these caverns, and we can have a 
follow-up conversation on that.
    Let me ask you about the comments that you made as it 
relates to a clean energy standard. Of course, the President 
discussed this in his State of the Union. But looking at the 
budget, it appears that some resources will be advantaged over 
others. If you just look at it from a budget perspective, wind 
is getting a 60 percent plus-up, solar almost 88 percent 
increase, biomass is at about a 57 percent plus-up, geothermal 
135 percent, massive budget increases in terms of their 
categories.
    But you look to some of others: hydropower, which is one 
that we pay particular attention to in Alaska, cut by 20 
percent; nuclear power decreases slightly at .6 percent; 
nuclear waste is not addressed; all funding for natural gas 
technologies are zeroed out.
    When we're talking about how the administration might look 
to design a CES, if that's the direction that we go, the 
question is will it be a technology-neutral standard. I'm 
hoping that the answer to that is yes, but when you look at 
these budget categories it seems to me that within the 
administration you are picking those areas through the budget 
process that you would like to see enhanced and also choosing 
to not promote in certain other areas.
    Can you address that?
    Secretary Chu. Sure. First, the clean energy standard is 
meant to be technology-neutral. Any technology that will 
advance the goal of producing energy in a clean, sustainable 
way is on the table. So there are certain regions that like 
solar, if they like wind, if they--hydro, with improved 
turbines to get more output from existing dams--those should 
all count in clean energy. Natural gas has partial credit. 
Clean coal, coal with carbon capture and sequestration, would 
also count.
    So in that respect, that standard, which creates a 
marketplace, it creates certainty for industry and for the 
investment community, so they say, OK, if you build a clean 
coal power plant, if you build a nuclear plant, if you build 
solar or wind, that you have a market. So that's one part of 
it.
    Now, if you look, the other part of the question is you're 
now referring to our technology investments. If you look at the 
history of the United States, there are mature technologies and 
then there are technologies that we need to have further 
developed. In the beginning, the late 1800s, the beginning of 
the first half of the 20th century, oil and gas got 
considerable help from the Federal Government to grow those 
things.
    We consider those mature technologies today. But if you 
look at, for example, the solar industry, we feel that there 
could be dramatic improvements in photovoltaics and solar 
thermal. Quite frankly, it's a world race in order to get to 
those improvements. Whether it's going to be by the end of this 
decade or perhaps a few years further, there's a significant 
chance that solar energy will be competitive without any 
subsidy with fossil fuel. The country or the companies that 
develop that technology will have a worldwide market.
    So we see these as putting investments in the new 
technologies that we think ultimately will be the technologies 
of the future. The other ones we will need and there's no doubt 
we will need oil, we will need gas, we will need coal going 
forward. There's no doubt about that. But we consider those 
more mature technologies.
    Senator Murkowski. Mr. Chairman, my time has expired. I 
know we're going to have an opportunity to discuss this 
further, but it does appear, just looking at the budget 
categories, that the administration is clearly picking those 
winners and designating those losers.
    Thank you, Mr. Chairman.
    The Chairman. Senator Coons.
    Senator Coons. Thank you.
    Secretary Chu, I just wanted to say I was very pleased with 
the broad direction this budget submission takes. I think the 
strategy for American innovation documents a fairly compelling 
vision, and I'm interested to dig into some of the details of a 
number of the different programs here.
    I support ARPA-E getting a significant increase and think 
it has shown, both in its strategy and its focus, a real 
innovative approach. I'm concerned about how, beyond investing 
in basic research and then in early applied work, 
commercialization gets ramped up. I was very pleased to see the 
48
    [c] program, the loan guarantee programs, be part of your 
request and Treasury's request.
    Please help me understand how electric vehicle deployment 
and offshore wind deployment, which I think are neither early 
stage lab bench nor, obviously, fully commercialized 
technologies, how your proposals are going to help ramp them up 
quickly and what they're going to do to make sure that they're 
sustainably supported in the budget?
    Secretary Chu. As I said before, the electric vehicles, I 
see this as a worldwide race. Right now we have electric 
vehicles. We anticipate by 2015 to have a real penetration. We 
think we can achieve a million vehicles. But we want to go much 
further than that. I think we need to develop electric vehicles 
that can go 3 to 500 miles on a single charge overnight, and at 
a price and a performance that would be competitive with 
internal combustion engines.
    We think that this goal is within reach. There are a number 
of very innovative ideas that the Department of Energy is 
funding that can greatly reduce the cost, greatly increase the 
safety and, above all, the energy density by a factor of 3 to 
5, 300, 500 percent improvement.
    We know that industry will achieve 100 percent improvement 
to 50 percent improvement within a couple years. In fact, it 
was an idea that was funded by the Department of Energy, done 
by a national lab, Argonne National Lab, patented, the first 
patent application in the year 2000, there's a bevy of patents, 
now being licensed by General Motors for the next generation 
Volt battery. These are all very, very good stories.
    But further--so another few years down the road, we see 
great things. So we're very focused on that, not only on 
batteries for vehicles, but batteries for energy transmission 
and storage, so we can use all our sources of energy much more 
effectively.
    Senator Coons. How will the proposals here help offshore 
wind deployment, in particular the credit subsidy cost and the 
loan guarantee program?
    Secretary Chu. So wind is a fairly mature technology, but 
offshore wind, as you indicated, is not. In order to be 
financially competitive and to get the investments it needs, 
offshore wind has to be much more reliable because of many 
things. The initial costs are more, but even more important in 
my mind, these things have to operate, the large turbines have 
to operate, perhaps 15, 20 years without major overhauls. That 
reliability is something we need to work for, work toward.
    What we are investing in is what do we need in order to 
enhance the reliability of these very large turbines, because 
in choppy seas you cannot service these turbines. But the flip 
side of that is the wind resources offshore are better, they're 
steadier, they're higher category wind sources, and they're 
closer to the population centers. So if you go 15 to 20 miles 
offshore in the Eastern seaboard and the Great Lakes, you have 
something that's not directly in anyone's back yard and you 
have a steady wind source.
    So the advantages of offshore are tremendous. But we need 
technology development.
    Senator Coons. Last, if I could, you've got a whole suite 
of energy efficiency initiatives here: the better buildings 
initiative, the race to green, Home Star, which is already 
being deployed in Delaware. Talk to me about how a different 
approach here is a model for how you're going to make 
significant advancements in efficiency and how that's going to 
help business competitiveness?
    Secretary Chu. Sure, be glad to. The idea here is we 
believe very strongly that if you have--if you make modest 
capital investments--and in the end these are going to be 
hopefully capital investments where you borrow a long-term 
loan--that you can then make investments so that out-of-pocket 
expenses, including payment of loans, is actually saving you on 
a month to month, year to year basis, so that these investments 
paying back over a 20-year period, the length of time of these 
energy improvements, can actually save money.
    So we're targeting in this new better buildings, it's a 
pilot program. You look at universities and schools and 
hospitals, that we can give them the necessary capital in order 
to make these investments. We want to also prove that these are 
real moneymakers and real energy savers. It's very important to 
demonstrate numerous times that making investments in energy 
efficiency, including the interest on the loan and even the 
discount for that, is something which is a net moneymaker. So 
we're also working with Sean Donovan in HUD to enable one to 
develop mechanisms of financing, long-term financing, that can 
enable people, both people in their homes and businesses, in 
order to get this energy savings and make our infrastructure 
run much more efficiently. That money saved goes directly back 
into the economy.
    Senator Coons. Thank you, Mr. Secretary.
    The Chairman. Senator Portman.
    Senator Portman. Thank you, Mr. Chairman.
    Secretary Chu, thanks for being with us today. I would note 
that your budget increase since 2010, which is essentially 
where we are in the CR this year, is about a 12 percent 
increase. Being on the Budget Committee and talking to other 
agencies, that's not the case with all, as you know. Certainly 
in this budget environment we face, I am pleased to see you 
talking about streamlining operations and some of the tough 
decisions you've made on freezing salaries of certain employees 
or contractors, and I hope you will continue to focus on that.
    I would share the chair's concern and the ranking member's 
concern on some of the priorities in the budget, particularly 
on the fossil fuel side, because, given not just our budget 
problems, but our economic problems, we need to be sure that 
we're able to continue to rely on relatively inexpensive fossil 
fuels to keep our economy moving forward and create jobs.
    You talked about revving up the great American private 
sector to address energy needs in your testimony. I couldn't 
agree with you more. You used the example of Toyota putting 50 
engineers against a project and in essence saying the U.S. 
Government needs to counter that. We also need to be sure that 
the private sector is incentivized to do that, which goes to 
our regulatory environment and other issues.
    So I, having talked to you privately, I know you have an 
interest in being sure that the picking and choosing by 
government doesn't displace that private sector ingenuity and 
innovation. I hope that continues to be the case.
    On nuclear power, you did list it this morning on your list 
of clean energy sources. I was pleased to see that and 
encouraged that you seem to be interested in moving forward. I 
would hope we could expedite the regulatory regime there. 
That's not something that I see addressed adequately in this 
budget, and obviously the loan guarantees is critical to get 
out so that we can catch up, frankly, on the nuclear power 
production in this country.
    I have a specific concern, as you know, on the source of 
fuel for nuclear power, which is the enriched uranium. You and 
I have talked about the Piketon plant and the American 
Centrifuge project, which is the only manufacturer of that 
enriched uranium in the U.S., U.S.-owned, for a nuclear Navy 
and also for nuclear power plants.
    I would ask you a question about that if I could. There is, 
of course, a loan guarantee application pending and I'm very 
concerned that it's taken a few years to move that forward. As 
you know, we're at a very critical juncture there.
    One of the issues is going to be what the credit subsidy 
is. I'm assuming that there will at some point be an 
understanding on the technology and on the financing side of 
this from the company's point of view. But still, we have a 
credit subsidy issue.
    If you could talk to me just for a second about how you 
determine that credit subsidy and whether national security is 
one of the issues that's considered. As you know, this will be 
the only source in the United States for tritium, which is 
critical to our nuclear weapons arsenal, and whether that is 
considered in the credit subsidy calculation.
    Secretary Chu. OK, there were a number of topics you 
covered, so let me go back to just----
    Senator Portman. You don't have to hit them all.
    Secretary Chu. Let me try, at least the nuclear part. I 
mean, the specifics of the loan guarantee, of course, you know 
I can't comment on. But over globally, I share your view that 
the United States should have an in-country technology, and we 
are anxious to make sure that we have a technology that is 
intellectual property and it's done in the United States and 
it's intellectual property we own, it's not black box. So we 
share your view that that's very important to our national 
security.
    In terms of the specifics of the credit subsidy, that is 
something--officially, that is in the bailiwick of the OMB. 
When we do our due diligence, we try to structure the deal to 
protect the taxpayer as much as we can, so that we make sure 
that the loan is a sound loan and that if something should go 
south the U.S. Government can get back a lot of the assets. But 
the exact credit subsidy we can make recommendations only, but 
they have the final word.
    Senator Portman. Do you believe national security should be 
a consideration?
    Secretary Chu. It should be, absolutely, in particular 
technologies like the enrichment of uranium, I agree. But I'm 
not sure how--but the credit subsidy part is something the OMB, 
they should be able to factor that in as well.
    So with regard to fossil, we had to make some tough 
decisions, but part of the guidance on the fossil energy--I 
agree with you, the fossil energy will be part of our future, 
but if you look at the Recovery Act and our base budget, for 
example, clean coal technologies and in sequestration, the 
demonstration of sequestration, multiple sites in the United 
States. We already know over a decade or more of experience at 
certain sites around the world it's proved to be safe storage 
for long periods of time.
    But we have to go further in demonstrating in U.S. 
geological sites that at scale it's also safe. That's something 
that private industry will not do and we're stepping up to the 
plate, and that's part of our program.
    In terms of the demonstration----
    Senator Portman. But the budget reduces funding for carbon 
sequestration.
    Secretary Chu. Right. That's right. The other part has to 
do with helping demonstrate technologies, especially 
technologies near commercial scale. So in the Recovery Act and 
our base budget we made about $4 billion of commitments in the 
last 2 years, I would say matched by the private sector with 
$11 billion. So that's very, very significant.
    We felt because of that that the demonstration and 
deployment part of this has got a good start. So we're focusing 
on the next generation of technologies, which we believe can 
dramatically reduce the prices relative to the demonstrations 
that are being planned or are about to go into operation today. 
So we made that difficult choice.
    Senator Portman. My time is up. I look forward to following 
up with you on sequestration.
    Thank you, Mr. Chairman.
    The Chairman. Senator Franken.
    Senator Franken. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here today. It's good to 
see you again. I understand you were in Minnesota last week and 
I apologize I wasn't able to join you. But I'm glad you had a 
chance to sit and talk with Minnesota leaders in energy 
technology and innovation.
    In looking through this budget proposal, I'm happy to see 
that the administration has prioritized innovation and 
renewable energy. Those are my priorities as well, and I'd like 
to ask you a few questions in some pretty specific areas.
    At the risk of sounding parochial, but I think this has 
wider implications and it speaks to the loan guarantee 
programs, and I know that you may not be able to speak 
precisely to these particular instances. But one of the 
countries represented at the roundtable that you were at in 
Minnesota was Sage Electrochromatics. Sage has developed these 
energy-efficient windows, as you know, which work on solar 
voltaic cells to--they darken during the summer to keep the 
heat out and they lighten up during the winter to bring the 
energy in. Actually, they lead the world in this technology, 
and they're looking to expand its facility in Farabow, 
Minnesota, which will create 150 high-tech manufacturing jobs.
    Now, Sage got a $72 million loan guarantee under the 
section 1703 program, but, as you know, this requires the 
company to pay a credit subsidy fee to offset the government's 
risk for issuing the loan guarantee. For Sage, this costs an 
estimated $15 to $25 million and is standing in the way of 
expanding the plant.
    I'd like to get this credit subsidy fee waived for Sage so 
that the project can move forward. In this budget proposal, the 
administration is requesting $200 million from Congress to 
cover credit subsidy fees for 1703 loan guarantees. I was 
wondering whether the Department would consider making this 
retroactive for companies like Sage which are ready to go for 
creating jobs?
    Secretary Chu. I'm not sure about the authorities we might 
have for making it retroactive. I think this is mostly in 
Congress. But let me speak more broadly to the issue here. I'm 
very familiar with the Sage product and, quite frankly, it was 
tested and Lawrence Berkeley National Lab, the lab that I was a 
director of, was part of that, an integral part of that 
testing. We think it's a good thing.
    But I don't want to talk specifically about Sage.
    Senator Franken. I understand.
    Secretary Chu. The most important thing I want to say is, 
in the new budget proposal that was limited to renewable 
energy, but we are asking that it be broadened so it would also 
include energy efficiency.
    Senator Franken. Right.
    Secretary Chu. Energy efficiency, you can either make clean 
energy or you can save energy, and we think they're equally 
valuable. In many instances, saving energy is a low-cost option 
to make our infrastructure run much more efficiently.
    So the new request in our 1912 budget is actually to allow 
credit subsidies for energy efficiency, as well as renewable 
energy.
    Senator Franken. That's good. I like that.
    I think I want to move on to the ARPA-E program, which is 
so critical for new technologies. ARPA-E reminds me of DARPA, 
the Defense Advanced Research Program Agency, which created the 
Internet. How did that work out? That was good, right?
    Secretary Chu. I've been told the Internet has had a 
profound influence on the American economy.
    Senator Franken. OK. So what I worry about--I saw recently 
that a group funded by ARPA-E licensed its new battery 
technology to General Motors for use in the Chevy Volt. In the 
years ahead, technologies like this are vital to help us reduce 
carbon emissions and use less oil.
    I was glad to see that the President requested $550 million 
for ARPA-E. Unfortunately, some in the House have proposed 
funding only $50 million for the rest of 2011. My question is, 
if we are to extrapolate and follow the House-proposed ARPA-E 
budget for fiscal year 2012, what would you anticipate the 
impacts to be on development of new technologies and on the 
companies that would eventually sell them to the commercial 
market?
    Secretary Chu. It would be a very significant setback. As 
you know, the ARPA-E is a new program that was started a year 
and a half ago. What already is mentioned--as I mentioned 
before, the investments in the first round companies that we 
have now a year, year and a quarter, year and a half of 
experience, has been remarkably good. We give $3 or $4 million, 
$2 million, to a company, they go around and do the necessary 
research. With those new research results, they are able to 
raise money in the private sector. That's a significant 4 to 1 
ratio.
    This is exactly what we want to do. We want to leverage the 
precious Federal dollars to really stimulate industries to 
create these new things, so that we will remain a leader in 
innovation in the energy technologies.
    At a budget of $50 million, a lot of these spectacular 
people that we have been able to recruit over the last year--
these are people who've come out of industry, people who've 
come out of academia, who are in the prime of their creativity, 
who are--and it's been noted--many of these people are truly 
outstanding scientists and engineers who are willing to 
sacrifice their own lives and families and income to come work 
for the Federal Government. Those people, some of them will 
just simply have to go home. It will deflate a lot of things, 
because if you don't give them money to manage this they'll 
say: What am I doing here? I'll go back to MIT, I'll go back to 
Intel, I'll go back to wherever.
    So to use the technical word, it'll be a real downer, and 
the opportunities to the United States in order to get what 
industry widely regards and venture capital widely regards as a 
very exciting program--
    Senator Franken. I'm in total agreement and it would be a 
bummer. If we are going to out-innovate the rest of the world, 
ARPA-E is so important. I just would ask people to think about 
what would have happened if we hadn't had DARPA and DARPA had 
never created the architecture for the Internet, what the loss 
of that would have been. So thank you very much for your 
testimony.
    Secretary Chu. Thank you.
    The Chairman. Senator Lee.
    Senator Lee. Thank you so much for joining us today, Mr. 
Secretary.
    I want to start with the President's ambitious goal of 
achieving 80 percent clean energy resources by the year 2035. 
Can you talk to me for a minute about what you anticipate will 
be the distribution among clean energy resources at that point, 
meaning as we examine that universe that will comprise the 80 
percent of our total power needs what percentage of it is 
likely to be from nuclear, from wind, solar, hydroelectric, 
geothermal, and so forth?
    Secretary Chu. OK. First let me start with where we are 
today. We're roughly 40 percent, 20 percent nuclear. Hydro is 
6.5, 7 percent. Wind is 3 or 4, let's say 4 percent now 
contribution. Solar is smaller. Geothermal is half a percent, a 
third of a percent. Remember, we're giving partial credit to 
natural gas. So if you look at strictly carbon-free sources, 
we're at 30. But then you get to 40 with partial credit.
    So the goal is ambitious, but it's actually quite 
reasonable if you think of it, especially in the time scale, 
because the time scale to 2035 is very important because we 
have to work very hard to drive down the costs of clean coal. 
It's not only clean coal, but the carbon capture and 
sequestration will be needed in all fossil fuel generation--
gas, also stationery sources of carbon. So it is very important 
that we develop those technologies.
    To get large-scale deployment and get the investment, a 10 
to 15&ear time scale is just too short. So that's why it was 
2035.
    Nuclear, a similar sort of thing. If you want to say, I 
want to build a nuclear power plant, and you begin now to think 
about it, 10 years is too short. 15 years in my opinion is too 
short. But by the time you're at 20 years or 25 years, that 
gives you a lot of headroom.
    I think we're anticipating that nuclear at 20 percent, we'd 
like to grow that. The clean energy standard, by the way, gives 
the marketplace the certainty that clean energy production will 
be needed. So what nuclear faces today is it needs to establish 
a track record, you can build the reactors in a timely manner 
on budget, on time, and that over the long haul, because when 
you invest in a nuclear power plant that's a 70-year 
investment, perhaps over longer, that over that period of time 
you will have a market.
    So we see that as a great stimulus, but it won't 
automatically shift there. We see it increasing a little bit. 
We see natural gas increasing. We also, quite frankly, see 
renewables, solar and wind increasing. Geothermal will be 
increasing where it's appropriate. But we see all of them 
increasing.
    Senator Lee. But do you have an anticipated breakdown of 
where the 80 percent will come from? I mean, will half of that 
be from nuclear?
    Secretary Chu. I think less than half will be from nuclear. 
Again, it really depends going forward on what happens, 
especially in the solar technology field, because we anticipate 
the price--most industry--people in the industry believe that 
the price of solar energy will drop by 50 percent within this 
decade, and where again we have an initiative to see that it 
drops by 75 percent.
    If it drops by 75 percent, solar can be a huge factor.
    Senator Lee. How are you dealing with the fact that, as 
great as the developments in these areas, the areas of wind and 
solar may be and have already been, how do you deal with the 
fact that they can't really provide what we call baseload 
power?
    Secretary Chu. In fact, that's what one of our hubs is 
doing. Again, you need a diverse supply of energy. You need 
energy on demand. If you look, for example, at what northern 
Europe is doing, in certain countries, let's say Ireland, 
they're already 20 percent wind, 80 percent fossil. In order to 
get to 20 percent wind, you need to have a generating capacity 
of 40 percent. What they have done is they have looked up a 
system so they integrate very intimately the fossil fuel plants 
with the wind and very short-term predictions--hour, half 
hour--and automatic controls enable them--and they claim that 
it does not decrease the efficiency of the fossil fuel plant.
    So we have to integrate all those things.
    Senator Lee. With regard to nuclear, would you agree that 
it's a good thing to have available domestic sources of 
uranium?
    Secretary Chu. Yes.
    Senator Lee. Were you consulted by your counterpart at 
Interior, Secretary Salazar, in his efforts to effectively halt 
the mining operations? Some of the Nation's very best uranium 
mining operations can be found in southern Utah and northern 
Arizona. Yet those have been largely halted by Secretary 
Salazar. Did they consult you prior to doing that?
    Secretary Chu. No, he didn't. But I'd be glad to work with 
Secretary Salazar. I'm sure he has very good reasons and we 
would be glad to work with him on that.
    Senator Lee. Thank you.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Good morning, Secretary Chu. Always a pleasure to see you, 
and thanks for your leadership. It's been consistent, it's been 
clear, on this whole area of opportunities, which is clean 
energy. I was encouraged by the pledge the President made in 
the State of the Union last month. I'm also very pleased to 
hear that you and Secretary Salazar are working together to 
make sure that we can deploy renewable energy on our public 
lands in an appropriate way.
    I also understand that you're working even more closely 
with the Department of Defense to help them transition their 
energy systems to cleaner, more efficient, and safer 
technologies. That has a certain harmony since the DOE is an 
offshoot or a sibling, maybe a child, of the DOD, for those who 
know the history there.
    We're going to have to have a really concerted effort, as 
you well know, to reach these clean energy goals and a lot of 
important pieces have to be put together to help us arrive at 
that place. One example of such a project--and you won't be 
surprised, I'm going to be a little Colorado-centric here in my 
question--is the Energy Systems Integration Facility, which is 
at the National Renewable Energy Laboratory in Colorado. My 
opinion is it's needed because it's the only R and D facility 
that can model, develop, and validate the complex integrated 
systems that are required to move clean energy technology onto 
the grid, as you just shared in that regard your thoughts with 
Senator Lee. Also, there will be applications into the DOD 
needs when it comes to their installations and their forward 
operating bases. As I understand it, ESIF will also ensure that 
we keep our current high standards of grid efficiency and 
reliability.
    Can you tell me what's being done to expedite the ESIF 
project, and how soon do you think we can get ground broken?
    Secretary Chu. Yes. As you know, we can't start a project 
until we accrue all the funds necessary. What has happened 
because of the cost, we've been sort of piggybacking 2-year 
budgets. The last budget, 2011, should enable us to ground-
break. But right now, as you well know, the 2011 budget is a 
continuing resolution and so we hope that somehow Congress can 
see the wisdom in allowing that project to go forward.
    But that's the hangup at the moment, is the last 
installment before we actually can start the project.
    Senator Udall. I don't want to be a contrarian, but I did 
want to throw out this point, that I think ESIF's an ongoing 
project, which means it isn't subject to the CR and therefore 
would not need the final appropriation to start construction.
    Secretary Chu. I can go back and look at--I'd be willing to 
go back and look at it. But I've been informed by my people 
that the last--again, it is an ongoing thing, but there was an 
allocation in the 2011 budget for that.
    Senator Udall. I'll keep pushing. We'll work with all of 
your experts and the appropriators and everybody else who's 
involved. There's enormous opportunity here.
    Let me also comment that I think this budget has done what 
we've got to do across the entire Federal budget, which is set 
some priorities, reduce here, increase there. In particular, 
the focus on innovation, R and D, in the new emerging 
technologies versus the more mature technologies really makes 
sense to me from where I sit.
    I don't know if you've talked more about the SunShot 
program, but in my remaining time I wanted to point out that it 
looks like there's a $7 million cut in the proposed budget. 
It's almost a 10 percent reduction. I just was curious how we 
can simultaneously give a vital new role and responsibilities 
to the NREL solar team while at the same time propose that we 
give them fewer resources to accomplish a pretty ambitious 
goal?
    Secretary Chu. My recollection--I don't know. I can get 
back to you on that. Certainly the SunShot goal is something we 
have spent a lot of time thinking about. It's something that we 
really believe will help propel the innovation in the United 
States so that we can become not only competitive, that we can 
be a dominant force in the technologies for solar power.
    So we have pulled a lot of things into the budget. It's a 
very coordinated attempt as well that cuts across the energy 
technologies area, energy efficiency, renewable energy. It also 
cuts across ARPA-E and the Office of Science. We brought in an 
outstanding engineer who happened to be just elected to the 
National Academy of Engineering this year, a person in his 40s. 
Again, that's the caliber of people that we are now being able 
to attract to this. He's leading the charge on how to 
coordinate all these things to drive the cost down and to do 
the research, including research in manufacturing technologies. 
We're talking about fully installed costs. We're not just 
talking about modular costs.
    So it's something we're very excited about and it really 
will--it will be one of the landmarks, if successful, in the 
President's pledge to out-innovate, out-compete. This is going 
to be important.
    We actually have gathered money up and said we're funneling 
it into this for that Sunshot. So I think it's going the other 
way. We're actually increasing the budget for that program.
    Senator Udall. Thank you, Secretary Chu.
    The Chairman. Senator Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman.
    Dr. Chu, good to see you again. Thank you for your trips 
out to our State, multiple trips. We appreciate that very much. 
As you know, we're doing exciting things in energy development, 
and we work very hard to support energy development across the 
board. You know that. You've seen it, both in terms of what 
we're doing through our universities, what we're doing through 
our State programs, like our oil and gas research fund, our 
lignite energy research fund, our renewable energy programs, 
biofuels, wind.
    All of those--and I know you've had a chance to observe 
them and learn a little bit about them. But the concept that 
we've employed is let's develop all of our energy resources, 
both traditional and renewable; let's try to do it in a way 
where we create partnerships and synergies between them; let's 
do it in a way where we incentivize new technologies to not 
only produce more energy, more dependably, more cost-
effectively, with better environmental stewardship; and let's 
build a legal, tax, and regulatory environment where we create 
as much certainty as possible, so that we encourage private 
investment because companies, investors, know the rules of the 
road.
    That's the approach we've taken, and we're seeing growth 
both in traditional sources, oil and gas, coal, clean coal 
technologies, and the renewables as well, the biofuels, the 
wind, solar, biomass, and so forth.
    So when I look at your budget--and this follows some of the 
comments made by Senator Murkowski and probably Senator Portman 
as well--you really seem to be stepping into this situation 
where you're picking winners and losers. But if we're going to 
create--and every source of energy has its strengths and every 
one, each one, has its weaknesses as well. You really seem to 
be choosing, rather than this concept of let's bring them all 
up together, create more jobs, grow this economy, and work 
toward a clean energy environment where the new technologies 
drive better environmental stewardship in all of the different 
subsectors of the energy category, oil and gas, coal, 
traditional sources, as well as renewables.
    So why are you going that direction, rather than really 
trying to bring all of them up together, based on what you see 
going on in our State and other places, where it's been very 
successful?
    Secretary Chu. Sure. It's very much along the lines that 
Senator Murkowski was talking about. It's actually for the same 
reason why we're decreasing the investments of onshore wind and 
saying, what do we need to do to promote offshore wind, because 
we feel that onshore wind is becoming a mature technology. So 
in those areas where you have very mature technologies that are 
proven, they're profitable, some very profitable, we feel that 
they don't need that assistance.
    The clean energy standard doesn't actually pick any winner, 
so that's different. We again want to differentiate between 
investments in technology development R and D that could help 
improve things.
    Now, in our investments in R and D, for example this 
materials hub, we are very keen on developing new alloys of 
metal or metal-ceramic alloys that can go to higher 
temperatures. That will be extremely useful in things like new 
generations of efficient cogen plants for gas, as well as 
nuclear. But it's a research and then finally research and 
development opportunity.
    So we want to invest in things which will give the United 
States the competitive edge, primarily in areas where we do not 
see the private sector, just as we do not see the private 
sector picking up in sequestration experiments that we think is 
a vital part of what we need. So we say, OK, in that case 
there's a real government role.
    But the clean energy standard proposal itself doesn't 
actually pick a winner or a loser. If it looks like natural gas 
can be competitive, natural gas gets to play in the field. Each 
region--the energy issues are regional. Some areas like 
renewables and wind and have great solar resources. Other areas 
think that nuclear power would be a good proposal. So it 
doesn't--the clean energy standard specifically doesn't pick 
the winners. You're talking about our investments.
    But our investments are R and D investments in technology.
    Senator Hoeven. Right, but I would submit to you that to 
develop a lot of the energy sources that you want to develop in 
these areas you're going to have to create these partnerships 
and synergies, and you can't just invest in certain subsectors. 
You're going to have to work with all of them.
    Sequestration is a great example. You're going to need oil 
and gas research in the nontraditional methods to truly develop 
sequestration if you want to put CO2 down a hole and 
bring up tertiary oil recovery. That's one example.
    Secretary Chu. I think the oil and gas industry could be 
extremely helpful in helping us in sequestration, not only--
enhanced oil recovery is not really sequestration. It's using 
the carbon dioxide to squeegee more oil out.
    Senator Hoeven. But it makes it economically viable, and 
that's vital, right?
    Secretary Chu. They recover the carbon dioxide and use it 
for more EOR.
    But I think the technology--but I agree with you that the 
technology that the oil and gas industry has would be vitally 
useful, and I'd love to work with them in putting up monitoring 
of where the carbon dioxide goes, because there is a real 
opportunity there. So I would ask that you encourage the oil 
companies to partner with us in that.
    But again, it's something--these are technologies--we're 
investing in the things that are going to make us competitive 
in the next year and the following year and the years to come. 
We see a worldwide market out there and a worldwide 
competition.
    Remarkably, I might add that there are 2 partnerships in 
carbon capture and sequestration with an American company, AEP 
and Duke Energy, with 2 companies in China, Hunang Group and 
ENN. The sequestration experiments are actually being done in 
China--the capture experiments, rather. So China also sees an 
economic opportunity here.
    So I think we want to invest in that research that will 
actually--we want to see it made in America. Let me be blunt 
about all this stuff, because again that's something very 
important to the future prosperity of this country.
    Senator Hoeven. I know I'm out of time. Thank you, Mr. 
Chairman.
    The Chairman. Thank you.
    Senator Hoeven. I look forward to more discussion on that 
subject.
    The Chairman. Senator Sanders.
    Senator Sanders. Thank you very much, Mr. Chairman.
    Secretary Chu, let me just thank you very much. Your job is 
a difficult one. You're dealing with contentious issues. You're 
taking on very powerful special interests. I think in the last 
2 years you have done an extraordinary job, and I thank you 
very much for what you've done.
    One of my concerns is that we are in the midst of a 
horrendous recession. Unemployment is extremely high. As 
chairman of the Green Jobs Subcommittee, we had a hearing 
yesterday just dealing with sustainable energy. What we 
discussed is the fact that China now manufactures roughly half 
of the world's wind and solar energy products, while at the 
same time the United States, we've lost 42,000 factories in the 
last 10 years.
    So our manufacturing capabilities are crumbling. China is 
exploding. There is a great fear out there that a lot of these 
technologies--solar, wind--that were developed in the United 
States are slowly but steadily moving to China.
    Now, how do we rebuild those technologies here in the 
United States? How do we have factories producing the wind 
turbines, the solar panels that we need? How does your budget 
reflect those goals?
    Secretary Chu. Thank you for that question. First, I will 
agree with you there is a race out there. The country and 
companies that develop the clean energy technologies that will 
be needed in the future or the energy transmission and 
distribution technologies, the highest voltage transmission 
lines, the most efficient plants, the most efficient 
infrastructure, that country can not only have great advantage 
at home because they run more efficiently, they don't waste as 
much money, but they have a world market out there.
    This is why the President, in these very tough budget 
times, has chosen to not decrease the Department of Energy's 
budget, but to actually increase it in very, very hard budget 
times. There was a difficult choice made. I agree with you 
wholeheartedly. Especially in the last 10 years, U.S. 
manufacturing has nosedived.
    So it's not only that we invest the things here with our 
great research universities and national labs, but we also do 
the innovation here. We don't want it invented in the United 
States and manufactured in China.
    Senator Sanders. You know that there was a very sad story 
in Massachusetts. There was a major----
    Secretary Chu. Oh, yes.
    Senator Sanders. You saw that. They shut down and they 
moved to China, for a variety of reasons. But I think you are 
cognizant of that, and we're going to work together to rebuild 
our manufacturing base and we're going to focus on sustainable 
energy.
    Secretary Chu. Right, absolutely. Now, I go back to the 
clean energy standard. This creates a market, a market 
certainty, to drive investment. Quite frankly, if you look, 
talk to any manufacturer around the world, whether it's wind 
turbines or solar energy, there is a key--any company, whether 
it's in Spain or Germany or Denmark or China, they would prefer 
to set up local supply chains for wind turbines in the country 
that they're going to be used. The way to develop local supply 
chains, which means local manufacturing, is that you have to 
create a market.
    So it's very important. So that is--the clean energy 
standard creates that market. You develop the local supply 
chains. You bring back the manufacturing capability in the 
United States. ``Made in America'' is something that we have 
been very proud of for over a century, and we have to get back 
the quality manufacturing back in the United States. The clean 
energy standard creates a market draw for that.
    Senator Sanders. I couldn't agree with you more.
    Let me just ask you another question or 2. As you're aware, 
I strongly support solar energy. We've authored a bill called 
the 10 Million Solar Rooftops. I believe that this bill 
complements your SunShot initiative, which aims to make solar 
cost-competitive with fossil fuels. We're making significant 
progress as the cost of solar panels goes down.
    I look forward to working with the Department to 
incorporate some elements of your initiative into a new version 
of 10 Million Solar Rooftops, in particular focusing the 
competitive grants in my bill on helping to cut the cost of 
solar energy by making local permitting more efficient.
    Can you talk a little bit about how standardization of 
permitting could help reduce costs of solar energy 
installations?
    Secretary Chu. Yes, absolutely. I think you have to break 
down the barriers in the local communities, the cities and 
municipalities. Right now in many places around the country, I 
should say most places around the country, the local towns or 
cities or districts would say, oh, you want to put a solar 
thing on your rooftop? It requires a structural inspection of 
your roof to make sure it doesn't fall down. It requires 
licensing agreements, things of that nature.
    So we're doing 2 things. First, as part of our SunShot 
initiative we want to develop those technologies that greatly 
reduce the load, the weight load, going from very thin glass 
backings to plastic backings, so you don't have to puncture the 
roof.
    But the other thing we want to do is to work with the local 
communities so that, for example, you don't--there are not long 
delays. I've heard some stories where if you want to put a 
solar panel on your roof you have to go and stand in line and 
personally--it's a department of motor vehicle experience, I am 
told, that you're sitting on line for several hours to get a 
permit. We don't require this for a water heater.
    So what we'd like to do is to help the local--this is the 
local community jurisdiction, this is State jurisdiction. But 
we would like to help them streamline those things.
    Senator Sanders. I think that that is terribly important.
    The last point that I want to make, Mr. Chairman, is to 
tell you Vermont has been a leader in the Nation, as you know, 
in terms of energy efficiency. We are getting out the 
weatherization money that came from the Department I think very 
rapidly and effectively. I can tell you many wonderful stories 
where older people are now living in homes which are much more 
energy efficient, saving a lot of money on their fuel bills and 
saving energy consumption in general.
    We are also beginning to make some significant progress in 
moving toward sustainable energy. I know the stimulus bill is 
much maligned, but as a result of the money coming into the 
State of Vermont you drive around the State now, you see a lot 
more solar panels, significant solar installations. Some 
businesses are getting almost all of their electricity from 
solar. We're going to move forward on wind.
    So I think we're making some progress. We look forward to 
working with you. Thank you for what you're doing.
    The Chairman. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    Secretary Chu, welcome back to the committee. As you know 
and others have mentioned, the President's budget calls for a 
significant increase over 2010 spending levels. I know you 
still have unspent stimulus money and Senator Murkowski made 
reference to that. I remember us having a discussion in the 
committee with the stimulus money earlier about how can you 
spend all of that money. Your own inspector general has 
identified major problems with how the money has been spent--
bills paid to contractors for labor charges when no labor had 
been done; materials that had not been installed, and on and on 
and on and on.
    I still have a lot of concerns about that stimulus money, 
how it's been spent and the justification for additional budget 
at this time.
    In your response to Senator Murkowski, you justified 
massive increases in funding for renewables because you said 
they were not mature technologies yet. The budget cuts 26 
percent from clean coal investments. Clean coal is something 
that the President even referenced in the State of the Union. 
So my question then is, is clean coal a mature technology in 
your perspective?
    Secretary Chu. No, clean coal is not a mature technology. 
As I tried to explain, the investments in the Recovery Act, 
inappropriately maligned, is tremendous investments in clean 
coal technologies during that period. The clean air base 
budget, $4 billion have been obligated to those. That's a lot 
of money to obligate to those technologies. So we believe clean 
coal--in fact, the capture of carbon from all the stationary 
sources is part of the technologies the world will need in the 
coming years, and we want the United States to have a 
leadership position in this, because coal will be around. It's 
not only the United States, but China and India and Russia have 
tremendous coal reserves that they will use, and there will be 
a market for that internationally.
    So we think that it is a vital part of that. With regard to 
the Recovery Act, we've obligated 100 percent of the funds. 
I've read that inspector general's report and, look, on balance 
it is actually not a bad report at all. It talked about some 
lagging in funding, but it noted that the Department of Energy 
itself--many of these had to do with other programs, but the 
Department of Energy itself was doing everything it could in 
its power in order to do that. We had a spend-rate plan and, as 
you know--for example, many of the programs, you would have to 
have a request for proposals, you assign that money, it's 
awarded to particular companies or States or whatever, and then 
what happens is those orders go down, and what really starts 
the ball rolling is then all of a sudden you've got a contract 
out there. They're starting the work. You have to go through a 
selection process. The jobs get going and people get hired, and 
what you're talking about is the eventual billing of that. But 
the construction jobs start, they get paid, and then the last 
thing you do is bill.
    We are not that far from our initial 2009 claim. If you 
look at what we were thinking we were going to be at a spend 
rate, we're pretty close to that. So I think there are a few 
hiccups, but overall it's been actually a good performance.
    Senator Barrasso. It does show how difficult it is with the 
amount of money that needed to be spent to really be careful 
with the taxpayer dollars, because there are clearly abuses 
with this program.
    I do want to follow up on Senator Lee's question about that 
80 percent clean energy by 2035. The budget included massive 
increases for renewables. How has the Department calculated the 
amount of--or have you calculated the amount of new 
transmission lines that are going to be needed, as well as the 
amount of land needed, to meet this goal with renewables like 
wind and solar, and how are you going to be dealing with that?
    Secretary Chu. This is a coordinated effort. The Department 
of Energy has a central role in this, but there are other 
players--FERC, Interior, Agriculture. We are very interested in 
developing these transmission lines. We think that the 
transmission lines and the coordination, because the 
coordination is the real issue. There are regional transmission 
sectors, there are vertically integrated utility companies, 
there are transmission line companies.
    Each company and each State tries to solve the problem 
within the control of what their jurisdictions are, the best 
they can. Also, when you build a new source of energy you try 
to solve that problem as best you can. But what is really 
needed is an overall coordination. So we are working very hard, 
and we've recently had a series of meetings going forward to 
try to get the private sector to get coordinated. We view 
ourselves as part of the grease, if you will, to say, OK, if 
you coordinate you can stop what one Western Governor referred 
to as the spaghetti of transmission lines, rather than a right-
sized transmission line which is rational, if you could step 
back and say in certain Western States it makes much more sense 
to right-size it, to allow you to put up a tower, maybe string 
one or 2 lines, but it has the capacity for 4 lines.
    So this is something we think there is a plan in the 
Western States and the Eastern States, and so we think that 
this is very important. With transmission lines, we see an 
incredible opportunity to bring the overall cost of energy down 
because you can tap the right sources.
    Senator Barrasso. Thank you. Thank you, Mr. Secretary.
    Mr. Chairman, 2 additional questions I'd like to submit in 
writing if I could, because my time is up. One is on the Rocky 
Mountain Oilfield Testing Center and the other is about the 
Department's loan guarantee program.
    Thank you, Mr. Secretary. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Manchin.
    Senator Manchin. Thank you very much, Mr. Chairman.
    Mr. Chu, Dr. Chu, thank you for being here. The State of 
West Virginia, as you know, is an energy State. We're a net 
exporter of power. What you might not know is that we use a 
little bit of everything. We have an energy portfolio bill 
that's realistically looking at what we can do in our State to 
be independent and also be a net exporter. We have one of the 
largest wind farms east of the Mississippi.
    So we have basically diversified ourselves and done as much 
as possible. But we find it very difficult to continue on 
because of the EPA's intervention and their very onerous 
position that they've taken on permitting and being able to 
supply the energy the Nation needs.
    I think the question I would ask first of all, from the 
administration's point of view and maybe from your point of 
view also the highest priority, how would you rate that? Would 
it be the independence, for us to be independent from foreign 
oil, or to develop renewable energy policy?
    Secretary Chu. The highest priority is, as the President 
said, is neither of those. It's really to make sure that we put 
in place an infrastructure that will ensure the prosperity of 
all Americans going forward this year, next year, and in the 
decades to come. The energy charge and our responsibility is to 
be an essential role in ensuring that prosperity.
    So within that, I think it may be a false choice to say 
it's either this or that. We want--part of that prosperity is 
we want to be independent from importing foreign oil. It's 
roughly $400 billion a year, and that's why we said we have to 
improve the mileage standards, the efficiency of our 
automobiles. We have to continue to develop biofuels and 
electrification of vehicles, especially for personal 
transportation.
    So all of those things we think can deal significantly with 
that issue.
    Senator Manchin. I mean, we could be using the existing, 
like from coal to liquids, which we get very little help, very 
little direction, from the administration to do that, to make 
us less dependent on foreign oil.
    We're fighting a war, the longest war in history, because 
of our dependency and the unstableness of the Middle East 
because of our dependency. It continues to go on and on and on. 
Yet, basically through the budget process all of the advantages 
have been given to the renewables, which is fine. I mean, we're 
fine with that.
    But I think if I can ask you this question. If you looked 
at the cost of energy in China right now, who has cleaned our 
clock on manufacturing, has theirs increases as much as ours 
has in this Nation as far as the baseload power?
    Secretary Chu. Yes, their energy costs are going up. Let me 
first mention something about coal to liquids. There are new 
technologies that we're really interested in doing. Coal to 
liquids, including carbon capture and sequestration, with the 
addition of biomass, has a real advantage here. A recent study 
of the National Academy of Sciences and National Research 
Council entitled ``America's Energy Future'' had an entire 
section on coal to liquids with carbon capture and 
sequestration and biofuels. Right now the technology with 
carbon sequestration of the excess carbon dioxide has better 
life cycle costs than the life cycle carbon emission of oil.
    But if you begin to blend in biomass at 30 percent, 40 
percent, it actually becomes a net decrease in the carbon 
dioxide in the atmosphere, including the tailpipe emission. So 
the Academy report actually says: Wait a minute; this is--you 
normally think coal to liquids, the old process----
    Senator Manchin. Has the EPA read that report?
    Secretary Chu. I'm sure it has.
    Senator Manchin. They sure haven't acted on it.
    Secretary Chu. But this is coal to liquids with carbon 
capture and sequestration. It also makes very clean fuels. Then 
once you start blending in biofuels, it becomes a real plus. It 
becomes carbon-neutral, including tailpipe emissions.
    So for that reason, the Department of Energy is very eager 
to promote that type of research.
    Senator Manchin. The only last thing I would say is that 
you described onshore wind as being mature than offshore wind. 
How is onshore wind more mature than solar when they both 
basically have been in the same timeframes?
    Secretary Chu. That's a good question. If you look at the 
development of and what I would call the technological headroom 
of wind versus solar, what wind has been doing--and it's made 
spectacular improvements over the last decade, 2 decades, going 
to very large turbines, much more efficient construction, 
things of that nature--and you project forward where they're 
going to really be improving, they're going to be improving by 
going to taller turbines and increasing the reliability of 
those turbines.
    There's a few niche markets where there are new designs. 
But we think that the headroom in wind is less than the 
technological headroom of what we see coming down and the ideas 
being generated in solar.
    But now, having said that, there could be--we're rooting 
for wind as well. We think that if you can get carbon composite 
materials done inexpensively that have the longevity, the new 
gearbox is direct drive, there's a lot of things. So I see a 
future of continuing improvement.
    But the most improvement again is going back to the 
reliability. So we're focused on what can--we have precious 
dollars in our budget. What can we do to improve the 
reliability? In offshore, where there's less experience, salt 
water does a lot--salt water, salt air, does a lot of corrosive 
things, and so there are materials issues there.
    So again, we have to make difficult choices. We don't have 
an infinite budget. We have much less than that. So we have to 
make tough choices.
    Senator Manchin. Thank you. I have other ones, but maybe 
hopefully a second round, or I'll submit.
    The Chairman. Senator Risch.
    Senator Risch. Thank you, Mr. Chairman.
    Mr. Secretary, welcome, good to see you again. Thank you 
for coming today.
    First of all, the good news. I want to thank you again for 
the approval of the guarantee for the enrichment facility that 
actually is up and moving, the Eagle Rock facility in Idaho 
Falls, Idaho. As you know, as has been discussed here, it's 
really critical to national security and to us as Americans to 
have that there. So thank you for that.
    However, moving on from that, put me in the same category 
as the vice chairman and Senator Portman, and I think to some 
degree Senator Manchin was critical of the priorities. I'm one 
that really believes that we really need to pay more attention 
to those that brought us to the dance. That's in the immediate 
future the fossil fuel is something that is very important to 
the American people, and second the nuclear industry is so 
important to us. With all due respect, I don't think your 
budget reflects the importance of those priorities. Certainly 
the vision that you have for the future on solar and battery-
operated cars and things like that is all well and good, but 
we've got immediate problems in this country.
    So let me take this down to a real pragmatic basis. Today 
we're sitting here in February 2011 and my constituents are 
asking me, how come gas is over $3 a gallon and diesel's over 
3.50 a gallon? What's going to happen a year from now, February 
2012, when your phone rings and you pick up the phone and he 
says, this is the President and I've got a little election 
coming up here in a few months and, gosh, the White House 
switchboard is getting a lot of calls about $4 gasoline and 
4.75 diesel? You're the Secretary of Energy. What are you doing 
about this and can you turn the spigot up for me so I can get 
reelected again? What are you going to tell him?
    Secretary Chu. The Secretary of Energy has some 
authorities, but we do not--we cannot control the price of a 
world commodity. What we can do is to decrease our use of oil. 
The United States uses about 25 percent of the oil of the 
world, and if we use it in the most efficient way possible and 
if we develop a diverse supply of alternates like biofuels and 
electrification, which allows us to generate electricity any 
number of ways, including nuclear, that they can offload our 
use of oil, because we're such a significant user of oil, if we 
drop our use from 25 to 20 percent of the world market this 
will actually have a very positive effect on the prices. It 
will drive the prices down.
    So what we try to do is say, how can we decrease our use of 
oil, go to higher efficiency, get alternatives that diversify 
our energy supply, so that we will not be subjected to those--
or at least minimize those price spikes that can occur.
    Now, on the long term, if you just look at what is on the 
horizon, I don't know what will happen a year from now or 2 
years from now, but 5 and 10, 20 years from now, I think you 
and I both will see the handwriting on the wall. You see 
developing countries rising in prosperity, generating auto 
industries--the largest carbon manufacturer in the world is now 
China--for the home market. So India is going to be coming 
along. You see the multinational oil companies, the Shells and 
Exxon Mobils and Chevrons and BPs and companies of that ilk, 
where they feel that their future accessibility will be 
increasingly in deep offshore and Arctic. So you see a rising 
demand. You see going to more expensive sources. So in the long 
term--
    Senator Risch. Mr. Secretary, I appreciate that, but I 
think you're going to need to polish that answer a little bit 
if you get that call, because he's going to be looking for 
something a lot more immediate than the long-term, 20-year 
picture that you're talking about.
    My constituents are concerned. I mean, they go out and fill 
their car with gas once a week or what have you and they are 
really concerned. You're the Secretary of Energy and I 
understand your answer that you're not responsible for a world 
commodity, but as the Secretary of Energy you're going to have 
to answer some questions about this, because I understand you 
say you don't know what's going to happen a year from now, but 
certainly you're reading the trade publications and everyone 
else that talk about China's thirst, India's thirst, the fact 
that our production goes down day by day by day.
    I mean, this is not getting any better, and a year from now 
it isn't going to be any better, and the President is going to 
be looking to you for some immediate answers.
    Secretary Chu. I agree, it's not getting any better. The 
production in the United States has been declining since the 
middle 1970s. Even though we're getting better at finding oil 
and we're getting better at extracting the amount of oil in the 
ground, the fraction of oil in those reserves, the long-term 
position is we have to do something about that and we have to 
do it. That's why we're so keen on controlling the expansion of 
the use of oil in the United States.
    So we are doing everything we can, as I outlined before. 
This is not 10-year, 15-year plans. This is today we're doing 
these things.
    Senator Risch. Thank you, Mr. Chairman. I hope you'll 
polish the answer a little better. Thank you.
    The Chairman. Thank you very much.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you, Secretary Chu, for being here this morning and 
for being one of those scientists who is willing to sacrifice 
to commit to serving the country in your role as Secretary. So 
very much appreciate that.
    I apologize for having to leave for part of your testimony, 
but it was an appropriate leave because I went over to the 
Alliance to Save Energy's great Energy Efficiency Day. Their 
slogan for this year is ``Energy Efficiency, the First Fuel of 
the 112th Congress.'' So I was very pleased to see the focus in 
the budget on energy efficiency. As we all know, it's the 
fastest, cheapest way to achieve our energy needs.
    One of the things that I wondered about, however, was the 
President's proposed clean energy standard, because it wasn't 
clear to me that what he is proposing includes energy 
efficiency as a qualifying resource. Even 2 years ago when this 
committee did our energy standard we included energy efficiency 
as one of the potential savings. So can you talk about, first, 
what your understanding is of what's being proposed for that 
clean energy standard and what the role of energy efficiency 
ought to be in a clean energy standard?
    Secretary Chu. Sure. The outline of the clean energy 
standard, which we the administration will need to work out the 
details with Congress if there is enthusiasm, which I hope 
there will be, does not include energy efficiency. It really 
has to do with energy generation. Having said that, I agree 
with you 100 percent that energy efficiency is the cheapest, 
best way to save money as well as reducing our dependency on 
foreign oil versus all the other things that we hold near and 
dear to our heart.
    Energy efficiency is a very big deal, and there should be 
similar incentives and encouragement to encourage families and 
businesses, you name it, to save energy. The most important 
thing is to demonstrate that saving energy really means saving 
money and to really get that out in the thinking.
    Most people think if you're going to invest in energy 
savings, well, that's a good virtue, but it's going to cost. We 
think it's not going to cost. If done right, it will actually 
save money, and that money gets reinvested into the business, 
reinvested in the United States.
    So we think just because it was not included in CES, the 
clean energy standard, does not mean that--it is part of this 
effort to actually make the United States prosperous, and it's 
very much part of the plan, but it's just been separated out 
from the clean energy standard.
    Senator Shaheen. So should we have an energy efficiency 
standard?
    Secretary Chu. A lot of the jurisdictions on energy 
efficiency standards are local, State and local jurisdictions. 
So I don't think we can--we can make recommendations on how 
much insulation should be in a home. We can make 
recommendations like that. We can facilitate the information, 
where money could be best invested to save the maximum amount 
of money and energy.
    We also have appliance standards, which are actually 
remarkable in the sense that those appliance standards--
normally, if you don't have a standard what industry wants to 
do is, it's a competitive world out there, they want to drive 
down costs.
    Senator Shaheen. Right.
    Secretary Chu. But they do not necessarily want to drive 
down what we call life cycle costs. You buy a refrigerator and 
you own it for 15 or 20 years; what will happen? What we have 
found is, we looked at before standards were put in place and 
after standards were put in place, and if it's a reasonable 
standard that nudges industry and their engineers to do the 
right thing, we found a remarkable event. For example, in 
refrigerators those standards have actually made industry 
design refrigerators that saved America many billions of 
dollars over the last--starting with California, but since 
middle 1975, in a trajectory that they would not have done on 
its own.
    So those things are actually an enormous asset to 
Americans, because these refrigerators of today--the 
refrigerators of today are large in size, they're 22 cubic 
feet, they're frost-free, and if you look at the inflation-
adjusted price of that and compare it to when I was a kid of an 
8 or 10 cubic foot refrigerator where there's a freezer inside 
and every month or so I had to chip away the ice, they're more 
efficient and on an inflation-adjusted price they're cheaper, 
and they're bigger.
    Senator Shaheen. I totally agree with you, Mr. Secretary. 
You don't have to convince me. I'm trying to figure out how we 
convince everybody else.
    Secretary Chu. I think that's part of my job, is to 
actually show America that you can actually save lots of money 
with no loss of life style or any of those things. I think this 
is a great opportunity. With those highly efficient products 
you have a world market as well.
    Senator Shaheen. Thank you. My time is up.
    The Chairman. Senator Coats.
    Senator Coats. Thank you, Mr. Chairman.
    Mr. Secretary, thank you. I'm sorry I couldn't be here. We 
all have to balance more than one committee. But I have looked 
at your statement and looked at some of the information that's 
been provided.
    Given where we currently are from a fiscal standpoint here 
in the United States, I think the handwriting's on the wall 
that there are a lot of things we would like to do, but we're 
not able to afford to do them. So I was surprised when the 
number came out under the President's budget request that 
there's a significant, in fact $3.12 billion, increase over 
this fiscal year's budget.
    Obviously, this is true for a lot of the agencies. My 
question is, I think the handwriting's on the wall here that 
these numbers are not going to be available to you. I see the 
projections here about the significant increases in a whole 
number of programs.
    From 2010--I don't have the 2008 comparisons for what's 
been increased over the last 2 years--but just on energy 
efficiency, 45.6 percent plus-up there. As you go through the 
various categories, I know there are some offsets, but overall 
we're looking at a budget which is probably not going to be 
realized.
    So my question to you is, does the Department, and you and 
the Department, have a plan B, a plan B which is going to have 
to deal with a much lower number? How are you going to 
prioritize where to spend that money? What kind of management 
decisions are you going to have to make in terms of personnel, 
in terms of commitment of resources?
    I'm very skeptical about government's ability to 
successfully pick winners and avoid the losers. The market 
always gets in the way of those decisions.
    So we're at a very difficult time, and that's going to put 
a lot of responsibility on your and every agency, every Cabinet 
department, in terms of finding, coming in at that lower 
number. So have you analyzed that in terms of where would we go 
if what appears to be the reality of the funds that are going 
to be available for this next fiscal year don't come in 
anywhere near where it's projected?
    Secretary Chu. Sure. First, I think in the budget presented 
by the President there were some tough decisions made and, as 
the President pointed out, this is----
    Senator Coats. Yes, but the overall is a very significant 
increase.
    Secretary Chu. That's right. There are 2 agencies that got 
increases, Education and Energy, because it was felt--and every 
other agency had decreases or held the same. The overall budget 
was flat and he was calling for a 5-year--just stopping the 
increases for 5 years.
    So now, so that's something that was--since the Eisenhower 
Administration, that was the first time a President has 
proposed a budget like that, and for the outgoing years. So 
difficult choices were made.
    We think that, the administration thinks, the President 
thinks, that the reason why Education and Energy were receiving 
increases during these very tough budget times--and I agree 
with you, I recognize that in the coming 4, 5, 6 years that 
there will be huge demands to show fiscal restraint and to try 
to get back to a balanced budget. I absolutely agree with that 
and it's important.
    But the reason we're making those investments is this is 
about the future, next year and the following year and the 
years that follow, that to put America in the best competitive 
position this is what we need to do.
    I'm reminded of a friend of mine, Norm Augustine. He was 
the chair and CEO, former chair and CEO of Lockheed Martin.
    Senator Coats. A friend of mine also, and a wise man.
    Secretary Chu. Yes, great. So I served on that committee, 
``Rise Above the Growing Storm,'' with him, and since that time 
he has become a friend. He became the chair of my advisory 
board at Lawrence Berkeley National Lab. He's on the Secretary 
of Energy's advisory board. A very wise man.
    He said: In times of fiscal austerity--and we are in those 
times today--from his experience at Lockheed Martin, the last 
thing you want to do is to decrease your research and 
development budget. It's like you were designing an airplane, 
the plane is overweight and what do you do? You don't take off 
an engine to reduce the weight problem. So it's difficult 
choices.
    Now, if in the wisdom of Congress it turns out that we 
won't get our full budget, I would be glad to work with 
Congress, and we do have a priority of things. But again, this 
really is about winning the future, and that's why those tough 
decisions were made and the other agencies got significant 
cuts.
    Senator Coats. I understand that about winning the future 
and I think that is where investment ought to go, particularly 
at the basic research level, not necessarily the applied 
research level, because again I have great skepticism over the 
political process's ability to make the right selection.
    I had the opportunity to live and serve in Germany for 4 
years and they made political decisions about how much 
mandatory wind and sun had to be produced by a certain fixed 
date, and a lot of places found that the sun didn't shine as 
much as they thought or the wind blow as hard as they thought. 
Then the political process always raises its ugly fist, because 
it turned out that most of the politicians representing various 
geographic areas of the country had to get their share, even 
though the statistics showed that from a wind standpoint it 
blew a lot harder in somebody else's district than it did down 
south and the sun is showing more down south than it is up 
north. But everybody had to get their panels and their money 
for solar and wind. It seems to me that the political process 
often intercedes in a way that distorts the correct application 
of the funds.
    So I'm not here to tell you how to fix that or deal with 
that. I just think the 2 points I want to make is, it's likely 
that you'll be called on to do less--to do more with less, and 
if so hopefully there is a plan in place and a set of 
priorities that you can share with us in terms of where you 
think that is best applied.
    Second, to the extent that we can get the decision process 
out of the political process--and I'm not just saying out of 
your Department; I'm also pointing the finger at us--and get 
the needed dollars of research that will be investments for the 
future settled in a non-political, more market-directed way, 
which as you know capital follows--it will follow subsidies. We 
can make decisions even though the market, even those putting 
up private money, think that's the wrong decision or have 
reservations; it'll follow the subsidy, and then dries up, 
potentially dries up capital where it could have been applied 
more efficiently.
    In any event, I look forward to working with you on this 
committee and everyone on this committee, the chairman and 
others, and helping work through that process. Thank you.
    The Chairman. We've all had a chance to ask 5 minutes of 
questions. Let me go back around for those who are still here 
and see if they have additional questions.
    Senator Coons.
    Senator Coons. Thank you, Mr. Chairman.
    First, I just was interested in a previous exchange about 
the promise of coal mixed with biomass and wondered what role 
you think advances in catalysis and catalytic science might be 
able to make in achieving that sort of intermediate stage 
deployment of a blend of sort of coal to liquid fuels and 
biofuel, and how the AFRCs or the innovation hubs might plan a 
role in connecting national labs to research universities to 
that work? It's something the University of Delaware is 
particularly strong in and I'm interested in seeing deployed if 
possible.
    Secretary Chu. Catalysis is a major part, if not one of the 
crucial aspects, of the ability to convert biomass and the 
ability to decrease the energy penalties in converting one form 
of energy into a cleaner form of energy, separating out the 
carbon dioxide and sequestering it. That's again talking about 
the technological possibilities.
    We see catalysis as a real technological possibility so 
that we can do some of these gasification, liquification to 
transportation fuels that works toward our energy independence, 
diversify our supply, and where we can then create wealth using 
American resources. So that's why we're so keen on it, because 
if you do this in conjunction with the carbon sequestration of 
the excess carbon dioxide it's a winner all around--
environmentally, it's a winner in terms of our energy 
independence, and it's a winner in terms of wealth creation in 
the U.S.
    But it's science, it's research, and that's why we're so 
focused on doing that research that can see if it has a shot. 
Now, once the research is done, I would agree with the remarks 
of the last Senator that the private sector then would be in a 
position to make those investments.
    Again, the clean energy standard is very important because 
it goes toward promoting--you have a market for these products 
and the business community has some certainty.
    Senator Coons. How valuable do you see the proposal for a 
new offshore transmission line that would cover basically the 
whole mid-Atlantic to the rapid deployment of offshore wind, 
and how do some of these proposals help advance that?
    Secretary Chu. That's a good concept. I'm supportive of it. 
What I like about it especially is that if you begin to connect 
the mid-Atlantic States from, let's say, North Carolina to on 
up north to New Jersey, and even the New England States--well, 
you've got to go around Long Island, so the first part is just 
from New Jersey on south--that creates a way of distributing 
the power so that the wind energy can be distributed much more 
effectively, more of it can be utilized, and so you can start 
to port energy into places where it is needed, where in many of 
these areas there's a spot market for energy, and all of sudden 
if you're paying not 5 cents for a wholesale price of 
electricity or 6 cents per kilowatt hour, if you're paying 50 
or 500 cents per kilowatt hour, you can port it up there.
    So it will make the energy infrastructure much more 
efficient and it will overall lower the price of electricity. 
So I'm very keen on it. We'll see. There are a number of 
private companies looking at this very hard.
    Senator Coons. I think that's critical, as you discussed 
before, to creating the kind of draw that will sustain 
manufacturing here.
    My last question. I was interested in the advanced 
manufacturing technology consortia which your Office of Science 
is participating in. Many of us are concerned about how do we 
advance not just the basic science for deployment, but 
manufacturing related to energy in the United States. Given the 
previous question, given the budget realities, if there was one 
particular investment or program you wanted to highlight today 
that you think has the best chance short-term of helping 
advance manufacturing, what would you draw our attention to in 
today's budget submission?
    Secretary Chu. It's a mixture of advanced manufacturing of 
batteries and photovoltaics. I think again I see a lot of space 
where the research--and this again is research. If you can 
develop a new method of taking molten silicon, creating very 
thin wafers, and taking it off that substrate and then directly 
making it into solar cells, you've radically changed the 
manufacturing process in a very fundamental way.
    I liken it to the radical change in making glass. If you 
look at a building of 200 years ago, it's this wrinkly sort of 
glass and very expensive. Then all of a sudden someone figured 
out how to float glass on another surface, another liquid 
surface, and gravity just makes it flat and cheap, and that had 
a profound influence on the manufacturing of glass and drove 
down costs.
    So we are looking very hard. It's not just research in 
materials, but research in manufacturing, that can transform 
the way we make things. Again, in this competitive world that 
is part of what we need to do in order to bring back this high-
quality manufacturing, which has been a very strong leg in the 
American enterprise and the American economy.
    So a lot of our research is actually research in new ways 
of manufacturing which could transform the world.
    Senator Coons. I want to close by just echoing the comments 
of some other Senators. I'm grateful for your service and 
appreciate the direction you're taking the Department. Thank 
you.
    The Chairman. Senator Lee, did you have additional 
questions?
    Senator Lee. Mr. Secretary, I assume you're aware of the 
current debate surrounding FERC's proposed rule on transmission 
cost allocation. Has the administration taken a close look at 
this, including on whether and to what extent FERC has 
authority to issue this and what the effect might be on 
customers?
    Secretary Chu. Yes, we're looking at that and I'm aware of 
the controversy. I think it is--people have different opinions 
on how to do this. Typically in the past the transmission--if 
you generated a new fossil fuel plant, a solar farm, a wind 
farm, you name it, the transmission costs for the hook-over 
were generally borne by the people who were producing the 
source of energy. That was effective in the days when energy 
was produced, generated locally and distributed locally, 
because it made a lot of sense. If you have a power plant, 
you're not reaching out 500 miles, 1,000 miles somewhere. You 
are actually making that power plant to satisfy local needs.
    Now, having said that, if you look toward the future and 
what's going to be happening, to take full advantage of the 
wind resources, take full advantage of nuclear sources, which 
are mostly the capital expense--the fuel is a few percent of 
the cost; it's the capital expense of the power plant. Once you 
make these huge capital investments--wind, solar, nuclear, are 
capex-intensive--you want to keep them running as long as 
possible and you want to port that energy.
    So then all of a sudden overall you can actually drive down 
the cost to consumers and to businesses by being able to say, 
can this energy go across the jurisdictions, across the 
regional areas, across the utility companies? Again, if you 
look at the auctioning that's going on now in the market, 
especially in the eastern section of the United States, if you 
have a very small area you can get price spikes, incredibly 
price spikes in demand. All of a sudden, demand goes up and the 
cost can increase dramatically, from 10, 15 cents, 5 cents a 
kilowatt hour to, as I said, 50, 100, 500 cents.
    Having a transmission system that allows you to make 
interchanges will mean that the energy assets of the United 
States could be used to distribute it and so you don't have 
these huge little spikes in prices. So I think this is 
something--if you have a closed market and you're a merchant 
supplier, you might like to see that. So what we're driving at 
is the best possible way to satisfy all the stakeholders in 
this, but ultimately it's the businesses and the people of the 
United States and how do you drive down the cost. We're using 
transmission as a tool.
    Senator Lee. Are you satisfied that FERC's current 
statutory authority is sufficient to enable it to do that?
    Secretary Chu. I don't think it's sufficient in the sense 
that it doesn't have the teeth that we have in gas lines. But 
in terms of the costing, this is something that I think--these 
are mostly, almost exclusively private enterprise, and so the 
government's role is, one, we need to help all the stakeholders 
come together and say what is in the best interests of the 
United States and the best interests of its industries and its 
consumers.
    Senator Lee. So perhaps acting as a facilitator rather than 
regulator?
    Secretary Chu. Right now, especially in the Department of 
Energy, we see ourselves as facilitators, to try to get the 
best possible plan going forward over not only the short-term, 
but transmission and distribution is really a long-term issue.
    Senator Lee. OK. Shifting gears really quickly, recognizing 
I'm almost out of time, I wonder why you appear to be moving in 
a direction in which you're devoting less attention rather than 
more to hydropower, notwithstanding the fact that hydropower 
currently supplies, if I'm not mistaken, about two-thirds of 
our renewable energy resources and about 7 percent of our total 
electricity production in this country, and it's also an area 
in which many of the resources for hydropower are under the 
jurisdiction, the control one way or another, of the Federal 
Government.
    Does that strike you as something you might want to 
reconsider?
    Secretary Chu. I think hydropower--I agree with you, 
hydropower is a very good energy resource. In fact, it is the 
fastest way to turn on electricity instantly in generation. I 
think without building new reservoirs and new dams, just 
putting in more efficient turbines, which are friendlier to 
fish that migrate, but more efficiency, or putting in turbines 
in water control projects that are built for flood control, but 
we don't--to generate that--I think there is still a lot of 
potential for hydropower, not in the traditional sense of a new 
dam, but in the sense of using what we have and the reservoirs 
that we have already.
    Senator Lee. Or marine generation, tidal power.
    Secretary Chu. Yes.
    Senator Lee. Are you looking at that also?
    Secretary Chu. We are looking at marine, underwater 
currents, tidal power. All those things are things that we are 
looking at.
    Senator Lee. Thank you.
    The Chairman. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    I have a parochial question, notwithstanding some of the 
earlier discussions. New Hampshire is at the end of the 
pipeline for oil, and yet we are very heavily dependent on oil. 
So that means cost to heat our homes for using oil is more 
expensive in New Hampshire and Maine than in much of the rest 
of the country.
    One of the things that we do have is a lot of forests, so a 
lot of biomass. New Hampshire is the second most heavily 
forested State in the country. I was pleased to see that DOE's 
budget proposal increased funding for biomass and biorefinery 
systems, but I noticed that most of the money is going into 
liquid biofuels.
    There's been a fair amount of interest in New Hampshire and 
I think also in some of the other New England States in 
combined heat and power to fund--to support district heating 
systems. In fact, in 2007 I think Congress authorized a program 
within DOE to help communities with setting up those kinds of 
district heating systems with combined heat and power.
    So do you see doing anything in that area in this new 
budget, and how can we help incentivize some of those 
communities who are interested in building these kinds of 
systems and just need a little bit of incentive to get that 
going?
    Secretary Chu. OK, sure. There are 2 issues. One is that 
when you use biomass in New England, Vermont, New Hampshire, 
Maine, those areas where heating costs and fuel costs, 
especially fuel oil, is very high, we see that it can play a 
very important role, and that if you manage the forest in a 
sustainable way, so that as you use trees you plant trees and 
in the long term that's a sustainable use of the forest, I 
think that should be part of a clean energy standard, quite 
frankly.
    Senator Shaheen. Me too.
    Secretary Chu. Get 100 percent credit, if you will, for 
taking in a managed way, so you sustain. When you chop down, 
you replant. Europe does this in spades and we too can do this. 
So that's one thing. We support that. We are looking at ways in 
our biofuels programs, inexpensive ways of concentrating the 
material so that you can transport it, pelletizing, other 
things. Ideally, for the transportation field you would want to 
convert it into a liquid form. But that's one area where we are 
doing research.
    There are very inexpensive ways of taking lumber residues, 
residues from paper mills, you take that and you port it; also 
old dead trees, trees where you can transport it in a much more 
economic way. But I think the biggest incentive was let it 
count as clean energy, part of the portfolio.
    Senator Shaheen. I certainly agree with that, and 
hopefully, if we adopt a clean energy standard, it will include 
biomass as part of that. But again, as you're looking at your 
budget and focusing on those liquid biofuels, do you see any 
opportunities in the biomass for combined heat and power?
    Secretary Chu. Yes. I think--just recalling, there's a 
little bit of work being done on the issue. As you blend in 
traditional fossil fuel sources with biomass, as you go to 
higher and higher fractions, there are issues having to do with 
the conventional boilers. There are residues----
    Senator Shaheen. Right.
    Secretary Chu. So to that extent, yes. Again, on the more 
research and development side of things, how do you enable or 
design it to use that biomass in a way that doesn't sort of 
gunk it up, so to speak. So that's one of the issues, so that 
you can go, not from 10 percent, but to 20 to 30 percent and 
higher.
    Senator Shaheen. There are some boilers already on the 
market in Europe, Denmark in particular----
    Secretary Chu. Right.
    Senator Shaheen [continuing]. That can take care of that 
problem.
    Secretary Chu. We're following what Denmark is doing very 
closely because they are the leader in that, the higher and 
higher fractions of blending biomass with conventional fossil 
fuel.
    Senator Shaheen. Thank you.
    The Chairman. Mr. Secretary, thank you very much. We 
appreciate your testimony, and please keep us informed as to 
what we need to be doing. Thank you.
    Secretary Chu. Thank you.
    [Whereupon, at 11:42 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

    Responses of Hon. Steven Chu to Questions From Senator Bingaman
                     re-enrichment of uranium tails
    Question 1. Mr. Secretary, do you support a competitive procurement 
process in re-enriching any high assay tails in possession by the DOE?
    Answer. Any determination by the Department to re-enrich its higher 
assay tails would include careful consideration of several factors, 
among them an appropriate contracting approach, the economic benefits 
to the taxpayer and the potential market impacts of processing and 
selling the higher assay tails. Other significant factors for 
consideration include the condition of the material, the costs 
associated with enrichment at the time of disposition, and the 
suitability of the containers in which the tails are stored for 
transportation.
                      additional blend down of heu
    Question 2. Has DOE been involved in discussions with the Russian 
Government, or is it aware of any such discussions, relating to the 
additional U.S. purchase of down-blended Russian highly enriched 
uranium following completion of the current program in 2013? What is 
the status of such discussions and what time span and SWU volumes are 
envisioned?
    Answer. Senior DOE officials have informed Russian officials on 
several occasions over the past calendar year of our desire to pursue 
further HEU elimination after the current HEU Purchase Agreement 
expires in 2013. Although Russia has indicated firm opposition to 
extending the HEU Purchase Agreement beyond 2013, NNSA plans to include 
discussions of additional Russian HEU downblending options as part of 
our broader dialogue on U.S.-Russian nuclear nonproliferation and 
commercial partnerships. These discussions would examine the potential 
time span and SWU volume of a follow-on agreement.
                         small modular reactors
    Question 3. For Fiscal Year 2012, the Department is proposing a 
program to work with industry to help license small light water modular 
reactors. How long a program does the Department envision before being 
able to successfully license these designs before the NRC?
    Answer. The FY 2012 request envisions a five-year program costing 
$452 million to support certification and licensing activities by 
vendors and utility partners for SMR deployment projects. The 
Department expects that SMR vendors will have sufficiently learned from 
interaction with the Nuclear Regulatory Commission (NRC) and that 
continued support by DOE will not be necessary after the five-year 
program.
    Question 4. The budget proposes a 100 percent increase for the 
Equipment Standards and Analysis activity to expand and accelerate the 
analysis, establishment and enforcement of product energy efficiency 
standards.
    Congress will be considering legislation similar to the bill 
considered last year, S. 3925. The bill would enact consensus 
agreements negotiated between product manufacturers and energy 
efficiency advocates and establish new or increased standards for: 
furnaces, heat pumps, central air conditioners, room air-conditioners, 
refrigerators, freezers, clothes washers, clothes dryers, dishwashers, 
drinking water dispensers, hot food holding cabinets, electric spas, 
pool heaters, and service-over-the-counter refrigerators.
    Generally, what would be the impact on the schedule and budget of 
the Equipment Standards and Analysis activity, and what schedule and 
budget adjustments would be made, if legislation along these lines were 
to be enacted?
    Answer. If legislation to adopt the negotiated consensus agreements 
between manufacturers and energy efficiency advocates is enacted, many 
of the Department's appliance and equipment standards schedules would 
be accelerated. Moving forward the Department would revisit its 
prioritization of these newly covered products for FY 2012 and beyond. 
With these potential rulemakings, DOE does not foresee any essential 
changes to the budget.
    The majority of equipment standards that stakeholders proposed in 
the consensus standard levels are included in S. 398, Implementation of 
National Consensus Appliance Agreement Act of 2011 (INCAA), and are 
scheduled for completion by June 30, 2011. This includes the 
rulemakings for furnaces, central air conditioners, central air 
conditioning heat pumps, room air conditioners, and clothes dryers 
which all have court ordered deadlines. DOE is striving to meet this 
schedule regardless of the outcome of proposed legislation. If 
legislation is enacted to adopt negotiated consensus agreements as 
statutory standards for these covered products, the impacts would be 
minimal because these rulemakings are scheduled to be completed in FY 
2011.
    The rulemakings for dishwashers and residential clothes washers are 
scheduled to continue into FY 2012. If legislation is enacted to adopt 
negotiated consensus agreements as statutory standards for these 
covered products, then DOE could have additional resources in FY 2012 
to pursue other rulemakings.
    Potential standards for drinking water dispensers, hot food holding 
cabinets, electric spas, heat pump pool heaters, and service over the 
counter refrigerators have not gone through DOE rulemaking processes in 
the past. If legislation is enacted that prescribes standards for these 
products, DOE would revisit its prioritization of newly covered 
products for FY 2012 and beyond.
    Question 5. As with last year's appliance standards bill, the 
legislation expected to be considered this year directs the Department 
to conduct four studies, on: video game consoles, motor market 
assessment, efficiency standards compliance, and direct current 
electricity supply in buildings.
    Very approximately, what do you estimate each of these studies 
would cost to conduct, and would the cost be covered from existing 
program funds?
    Answer. As described below, the Department expects the four studies 
to cost approximately $8 million to complete. To cover these costs, DOE 
would need to re-prioritize its list of products that it is considering 
for coverage based on these new initiatives and the funding 
implications caused by these new actions.
    The proposed legislation directs DOE to conduct a video game 
console energy efficiency study. Such a study would address 
manufacturer characteristics and market shares, existing regulatory and 
nonregulatory efficiency improvement initiatives, trends in product 
markets and characteristics, and identification of energy saving 
technologies. DOE estimates a study of this magnitude would cost 
approximately $500,000 to complete and the cost would be covered from 
existing appliance and equipment standards program funds.
    The proposed legislation also directs DOE to conduct a study of 
compliance with energy standards for appliances, which would include 
running a testing verification program for covered products and 
equipment. DOE estimates this study, including the purchasing and 
laboratory testing needed to support any recommendations, would cost 
approximately $5,000,000 to complete and the cost would be covered from 
existing appliance and equipment standards program funds.
    Furthermore, the proposed legislation directs DOE to conduct a 
motor market assessment and commercial awareness program. While DOE's 
appliance standards program is currently working on a motor market 
assessment for certain types of motors currently subject to rulemakings 
under DOE's regulatory programs, the proposed legislation would 
significantly expand the scope of the current study. Additionally, it 
would require DOE to establish a national program to increase awareness 
of the energy and cost-savings opportunities of using more efficient 
motors. DOE estimates this study and administration of such a program 
would cost approximately $2,000,000. The Department would consider 
whether to request funds for the administration of such a program in 
future budget requests.
    Lastly, the proposed legislation directs DOE to conduct a study of 
using direct current (DC) electricity supply in buildings. DOE would 
need to investigate the various end uses of the electricity used in 
buildings and the details of the wiring in various types of buildings. 
DOE estimates this study would cost approximately $500,000 to complete 
and the cost would be covered from existing EERE's solar technologies 
program funds.
    Question 6. Please briefly describe the steps that have been taken 
by this Administration to enhance enforcement of equipment energy 
efficiency standards.
    Answer. The Department of Energy has established a new program to 
systematically enforce-for the first time-federal energy conservation 
standards that have been in place for decades. The Department has also 
ramped up testing of ENERGY STAR appliances to verify products' energy 
efficiency claims. The Department created a new Office of Enforcement 
within the Office of the General Counsel that, with the support of the 
Building Technologies Program, has been proactive-issuing enforcement 
guidance, revising DOE's regulations to improve the effectiveness of 
its enforcement efforts, and bringing numerous enforcement actions 
against entities who fail to comply with DOE's rules and efficiency 
standards. Since we began our efforts, manufacturers have newly 
certified more than 600,000 products as meeting our energy efficiency 
standards. To date, the Department has collected nearly $550,000 in 
civil penalties and removed 70 products from the market that did not 
meet DOE's energy conservation requirements. More details can be found 
at http://www.gc.energy.gov/enforcement_news.htm. The Department's goal 
is to establish a practical, systematic, and fair enforcement program 
that will allow DOE to enforce the federal standards effectively and 
ensure a level playing field in the marketplace, without unduly 
burdening regulated entities. Effective enforcement of the Department's 
energy standards will save energy and costs for American consumers and 
create incentives to reward those businesses that incur the risks and 
the costs needed to create more efficient products.
    Question 7. Has DOE been involved in discussions with the Russian 
Government, or is it aware of any such discussions, relating to the 
additional U.S. purchase of down-blended Russian highly enriched 
uranium following completion of the current program in 2013? What is 
the status of such discussions and what time span and SWU volumes are 
envisioned?
    Answer. Senior DOE officials have informed Russian officials on 
several occasions over the past calendar year of our desire to pursue 
further HEU elimination after the current HEU Purchase Agreement 
expires in 2013. Although Russia has indicated firm opposition to 
extending the HEU Purchase Agreement beyond 2013, NNSA plans to include 
discussions of additional Russian HEU downblending options as part of 
our broader dialogue on U.S.-Russian nuclear nonproliferation and 
commercial partnerships. These discussions would examine the potential 
time span and SWU volume of a follow-on agreement.
    Question 8. I see that you plan to sell about 6 million barrels of 
oil from the SPR, generating about $500 million.
    Could you explain any operational benefits to SPR management from 
such a sale?
    Answer. A sale of approximately six million barrels would relieve 
the over filling issues that existed at several SPR caverns. For 
example, the caverns need spare capacity and operational flexibility to 
allow site personnel to perform casing inspections on all caverns in 
order to comply with a recent Texas Railroad Commission requirement. 
The sale would create the space needed to do the mandatory cavern 
inspections and workovers.
    Question 9. If this sale is intended to improve operations of the 
SPR, could you explain why the revenue from the sale is directed to the 
federal treasury, rather than the SPR petroleum account? (I note that 
this gives the appearance that the sale is intended as a revenue raiser 
to the federal treasury.)
    Answer. Past emergency and test sales proceeds were used to 
repurchase crude oil for the SPR to replace the oil sold. However, the 
SPR is currently at capacity and no repurchase of crude oil is planned. 
The purpose of the six million barrel sale is to provide operational 
flexibility in managing thi Reserve including alleviating unplanned 
overcapacity at some SPR caverns. The sale provides an opportunity to 
free up space in overfilled caverns in order to perform mandatory 
cavern inspections and workovers. Reducing the volume of inventory in 
the overfilled caverns also alleviates concerns associated with cavern 
maintenance and on-site crude oil movements.
    Question 10. Could you talk about why the Department recommends 
repealing the Department's authority to use Royalty-in-Kind oil to fill 
the SPR? This strikes me as a legislative issue that is firmly within 
the jurisdiction of this Committee, and I'm not sure that it's 
appropriate for such a policy measure to be included in a budget and 
appropriations discussion.
    Answer. The Secretary of the Interior cancelled the royalty-in-kind 
program in 2009 and it is no longer an option for DOE.
    Question 11. I recognize that HHS, not DOE, manages the Low Income 
Home Energy Program. But since you are here--can you explain why the 
Administration has proposed a 50% cut for FY2012 (from $5.1 billion to 
$2.57 billion). State programs will have to reduce the number of 
households served by about 3 million. EIA reports that the average cost 
of home heating is expected to decline from $1033 during the winter of 
2008-2009 to $990 for this winter heating season. However, that is a 
4.1% decline in costs for home heating and is clearly disproportionate 
to a 50%. cut in funding.
    Answer. The Department of Energy does not implement the Low Income 
Home Energy Program and defers to HHS for response.
    Question 12. I am very pleased with the emphasis on efficiency and 
clean energy in your budget--particularly the ``Better Buildings 
Initiative''. We look forward to working with you on this initiative. 
How do you envision the program working? How will you select the 
universities, schools, and hospitals for energy retrofits? How will you 
measure the energy savings?
    Answer. The Better Buildings Initiative is a Presidential priority. 
It will leverage the lessons learned from other federal and state 
programs, as well as years of research and experience in energy 
efficiency. As envisioned, the Program has five important components 
including a new tax incentive for commercial building upgrades, 
financing programs, competitive grants to state and local governments 
who implement innovative approaches to building codes, regulations and 
performance standards, and a challenge to the private sector and 
universities to make facilities more energy efficient. Those meeting 
the challenge would have their organizations recognized and supported 
with technical assistance.
    Universities, schools, hospitals and other commercial buildings are 
currently encouraged to participate in existing programs such as DOE's 
Commercial Building Energy Alliances as well as the Energy Star Program 
which promotes consumer recognition of highly efficient products and 
provide public recognition of highly efficient buildings.
    DOE envisions that savings data will be gathered from the 
Initiative partners and allies who will report their energy savings 
accomplishments and financial results as part of the reporting and 
recognition requirements of the program.
    Question 13. There has been an increasing awareness of the 
connection between energy and water and we are beginning to understand 
the water availability may be a constraint on both conventional 
renewable energy development in the future.
    Can you please give us an overview of how the connection between 
energy and water is being addressed within the Department's programs?
    Answer. The nexus of water conservation and energy use continues to 
be an area of interest across the Department, and one we are addressing 
through research activities and standards. In particular, energy 
efficiency technologies and practices often contribute to reductions in 
both energy and water use. As such, both our Buildings Technologies 
Program and Industrial Technologies Program have activities impacting 
water conservation. Within the Building Technologies Program, water 
conservation activities are included under the Appliance Standards 
Program. In accordance with the Energy Policy and Conservation Act of 
1975, as amended, DOE administers a program of energy conservation 
standards for consumer products and certain commercial equipment and 
water conservation standards program for residential dishwashers, 
residential and commercial clothes washers, and products and plumbing 
equipment. The standards for residential dishwashers and residential 
and commercial clothes washers include both water and energy 
conservation requirements. The standards for plumbing products and 
equipment set water consumption requirements only.
    In addition, certain water use assessments and conservation 
measures can be implemented in parallel with the types of energy use 
assessments and efficiency measures performed and promoted by the 
Department through the Industrial Technologies Program's Save-Energy-
Now initiative, and could immediately benefit those industrial partners 
already benefiting from the existing DOE energy programs. These onsite 
energy saving assessments for industrial facilities include a boiler 
assessment, which considers water chemistry and water use in steam 
boilers. Other portions of assessment cover steam transport systems and 
pumps, both of which can directly affect water consumption and use in 
the plant. Improvements in any of these systems generally will result 
in water efficiency improvements as well.
    ARPA-E is also currently addressing the issue of water use in 
energy production and incorporates water issues into the development 
and management of its programs whenever practicable. One example of how 
ARPA-E is actively addressing the energywater connection in its current 
programs is in the Electrofuels program. ARPA-E is engaging with one of 
its performers to model its Electrofuels system in order to understand 
the water demand per gallon of fuel produced. In ARPA-E's FY2012 budget 
request, water plays a prominent role. ARPA-E plans to include water 
use as a performance metric in any embedded efficiency programs it 
might run. ARPA-E is also interested in the possibility of using water 
to produce energy in new ways. One possibility ARPA-E is considering is 
the electrical generation potential from osmotic power at the locations 
where freshwater rivers meet saltwater oceans.
    In addition, DOE's Office of Electricity Delivery and Energy 
Reliability is coordinating an energy-water initiative in support of 
interconnection-wide transmission planning. Funded with $4 million in 
the American Recovery and Reinvestment Act funds, this work focuses on 
the western interconnection and Electric Reliability Council of Texas 
(ERCOT). In the West especially, water resources play a critical role 
in generation availability. This is the first time that water resources 
are being comprehensively considered in an interconnection-wide 
electric transmission planning process.
    Further methods of reducing water needs for energy production are 
explored in the Office of Fossil Energy. The program is completing 
research to improve management of produced waters from oil and gas 
operations, currently the largest byproduct of fossil energy 
production. Another area of research relates to the water increase when 
applying carbon capture and storage (CCS) technologies to new and 
existing plants. Current research shows that the application of CCS 
could effectively double the water usage at some plants. Research is 
directed towards new methods and processes such as the use of membranes 
to separate CO2, and higher-efficiency integrated gasification combined 
cycle (IGCC) systems that use less water compared to conventional 
pulverized coal power plants.
    Question 14. There has been an increasing awareness of the 
connection between energy and water and we are beginning to understand 
the water availability may be a constraint on both conventional 
renewable energy development in the future.
    How can we be assured that the Department will continue to address 
these issues as it moves forward with its various priorities?
    Answer. Clearly energy efficiency is a top priority for the the 
Department and through efficiency measures we will continue to support 
both energy and water conservation efforts. As you know, improving our 
standards is a priority of mine, and provides assurance that water and 
energy consumption will be addressed in the future.
    Question 15. There was language included in the 2011 Defense 
Authorization law supporting the development of the Energy Parks 
Initiative within DOE. What progress has been made to date?
    Answer. On February 17, 2011, DOE announced the establishment of a 
task force on asset revitalization to facilitate a discussion among the 
DOE, communities around DOE sites, nonprofits, tribal governments, the 
private sector and other stakeholders to identify reuse approaches as 
environmental cleanup efforts at DOE sites reach completion. The task 
force will explore opportunities to reutilize DOE site assets for 
beneficial purposes, which may include clean energy development, 
environmental sustainability projects, open space or other uses.
    Question 16. What are the Department's plans to reuse assets and 
excess property at sites across the defense complex?
    Answer. On February 17, 2011, DOE announced the establishment of a 
task force on asset revitalization to facilitate a discussion among the 
DOE, communities around DOE sites, nonprofits, tribal governments, the 
private sector and other stakeholders to identify reuse approaches as 
environmental cleanup efforts at DOE sites reach completion. The task 
force will explore opportunities to reutilize DOE site assets for 
beneficial purposes, which may include clean energy development, 
environmental sustainability projects, open space or other uses.
                           superconductivity
    Question 17. Japan and Korea continue to make heavy investments in 
superconductivity, yet the Department has deleted support for 
superconductivity deployment and demonstration for fiscal year 2012. 
Will there be any support within the Department or government--wide for 
such activity to ensure we remain competitive in this technology?
    Answer. The Department's Office of Electricity Delivery and Energy 
Reliability (OE) is winding down its involvement in high temperature 
superconductivity (HTS) wire research because, after investing over 
$600 million over the past 20 years, the Department believes that the 
HTS wire research has reached a point that provides meaningful 
technical value and that second generation HTS wire technology can be 
successfully transitioned to the U.S. manufacturing base. While this 
program is phasing out, there are other activities within DOE related 
to superconductivity. OE is continuing to support the several ongoing 
demonstrations of prototype high temperature superconducting (HTS) 
equipment, which was funded through the American Recovery and 
Reinvestment Act. These innovative systems include a grid-scale HTS 
fault current limiter, HTS power cable and HTS fault current limiting 
transformer.
    In addition, DOE's Advanced Research Projects Agency-Energy (ARPA-
E) is funding a project for the development of an advanced HTS magnetic 
energy storage system that could store significantly more energy than 
current superconducting magnetic energy storage (SMES) systems at a 
fraction of the cost. If successfully developed in this project, HTS-
based SMES will allow this technology to become cost competitive for 
delivering megawatt hours of stored electricity to address the 
renewables ramping challenge. In the area of advanced materials 
technology research and development, DOE's Office of Science Energy 
Frontier Research Center for Emergent Superconductivity is performing 
basic research to discover new superconductors. The Office of Science 
also supports basic research on synthesis, advanced characterization, 
and theory to understand fundamental phenomena related to 
superconductivity. In addition, the FY 2012 request for OE has proposed 
a Smart Grid Technology and Systems Hub, which can leverage 
crosscutting technologies and capabilities developed under the 
superconductivity program to impact this and other energy applications.
    I am also aware of superconductivity work going on at other 
agencies. For example, the Department of Homeland Security is examining 
the feasibility of a HTS fault current limiting power cable. And at the 
Department of Defense, the Navy is developing innovative applications 
for military usage, and the Air Force is supporting basic research on 
superconductivity and also has some investments in superconducting 
devices through the Small Business Innovation Research program.
    Responses of Hon. Steven Chu to Questions From Senator Murkowski
                          taxes vs. subsidies
    Question 1. Do you draw any distinction between the amount of taxes 
that a company pays to the government, and the amount of taxpayer 
dollars that the government directs to companies or individuals in the 
form of subsidies? In the Department's view, are tax decreases and 
government subsidies functionally equivalent to one another?
    Answer (a). The Administration's approach to tax reductions and 
subsidies was stated in the State of the Union Address, ``the only way 
to tackle our deficit is to cut excessive spending wherever we find 
it--in domestic spending, defense spending, healthcare spending, and 
spending through tax breaks and loopholes.''
    Answer (b). The Administration does, however, make a distinction 
between broad-based tax decreases like the ones contained in the Tax 
Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 
2010, which the President signed into law following a historical 
bipartisan compromise, and tax breaks for special interests, such as 
the Fossil Fuel Preferences that the President's Budget proposes to 
eliminate.
                                stimulus
    It has been two years since the President signed the 2009 stimulus 
bill into law. The Department of Energy received more than $35 billion 
through that Act, but has consistently lagged behind nearly every other 
federal agency in actually having those funds spent. According to the 
Department's website, just 34 percent of its stimulus have actually 
been outlaid.
    Question 2. Can you explain why some programs that still have 
significant stimulus balances would receive additional funding under 
the budget request? An example: weatherization's budget would increase 
by 46 percent, when DOE's own website shows that it has more than $2.6 
billion in ARRA funds obligated but unspent.
    Answer. Under the American Reinvestment and Recovery Act 2009, the 
Weatherization Assistance Program (WAP) received $5 billion to provide 
weatherization services to over 600,000 to low-income families. 
According to a 2010 report from Oak Ridge National Laboratory, families 
save an average of $400 a year on their energy bills as a result of 
WAP. To date, the weatherization program has paid out over $2.7 billion 
(54%) and helped more than 400,000 low-income families nationwide 
improve the energy efficiency of their homes and help them save money 
on their energy bills. Moreover, in the first quarter of 2011, WAP 
funding supported thousands of jobs.
    All recipients of Recovery Act funds plan to spend their funds by 
Spring 2012. However, many states such as Wisconsin, Idaho and Ohio, 
among others, have already spent the majority of their funds and will 
need base budget funding by FY12 to retain their state program and 
high-trained weatherization workers.
    Question 3. What are the top 3 impediments that have slowed down 
the Department's progress in outlaying ARRA funds?
    Answer. From the first day after the Recovery Act was signed into 
law, DOE has been focused on moving the money out the door quickly to 
create jobs and spur economic recovery. Under the Recovery Act, the 
Department of Energy received $35.2 billion in direct appropriations, 
$32.7 billion in grant and contract authority and $2.5 billion in loan 
guarantee credit subsidy. This represents nearly a 5-fold increase in 
normal energy base budget operations.
    In just 18 months, DOE used competitive process to select projects, 
signed under contract and now manage over 5,000 clean energy recipients 
across the nation. The Recovery Act allowed DOE to break down silos 
across the complex and pride ourselves along the way with the highest 
standard of transparency and accountability. Most importantly, we are 
partnering with the private sector to make a meaningful down payment on 
the nation's clean energy future.
Additional Resources Required to Stand Up Operations
    As noted above, the Recovery Act represented a nearly five-fold 
increase over the Department's base energy budget. The funding levels 
for many programs represented a dramatic year-on-year increase, 
creating major scale-up challenges. Additionally, DOE had to not only 
expand existing programs (in some cases nearly 20 fold), but also build 
new programs (e.g. Advanced Research Projects Agency--Energy (ARPA-E), 
Energy Efficiency Community Block Grants (EECBG), Loan Guarantee 
Program Section 1705, Smart Grid Investment Grant Program, Smart Grid 
Demonstration Program). Beyond this challenge, DOE had to carry out the 
Recovery Act with unprecedented transparency and accountability. In 
order to scale up operations while at the same time avoiding waste, 
fraud and abuse, DOE, as well as State and local governments had to 
bring on additional human resources to stand up operations.
    Within DOE, the Recovery Act staff had to establish clear 
milestones and schedule for nearly 144 programs. The Recovery team 
built out a master plan defining key deadlines: for issuing notices of 
funding opportunities, for applications to be due, for the completion 
of review processes, for announcements to be made, for environmental 
clearances to be in place, for contracts to be completed, and for 
projects to start. The master plan defined a timeline and a tempo 
necessary to deliver against the goals of delivering on time. The 
master plan also specified the resources required to get through each 
stage for each project and, in March 2009, highlighted the need for 
unprecedented collaboration across offices within the Department. All 
told, more than 4,600 reviewers spent almost 80 person-years reviewing 
Recovery Act applications. These extra resources created the capacity 
to deliver at scale. As a result, some grant and loan processes that 
had taken 2 years were shortened to six months, with no loss of rigor.
Compliance Requirements
    The Recovery Act imposed new compliance requirements for DOE 
programs. Applying Davis-Bacon Act (DBA) provisions required a complex 
wage-setting process and imposed new compliance reporting. Working 
through environmental reviews required DOE to develop a new approach to 
categorical exclusions (CX) to speed processing. Jobs reporting imposed 
new challenges on funds recipients. We had to develop streamlined 
approaches to make it easier for recipients to comply with 
FederalReport.gov reporting, National Environmental Preservation Act 
(NEPA), DBA, Buy American, and National Historic Preservation Act 
requirements.
    In order to complete all of the compliance requirements stated 
above, DOE established:

   Recovery Act Call Center: DOE expanded clearinghouse call 
        center operations during the Recovery Act to field calls 10 
        hours a day. To date, the Recovery Act call center has handled 
        over 50,000 calls on topics ranging from funding opportunity 
        announcements, applications, reporting requirements and 
        compliance practices, among others.
   Templates: DOE has shared lessons learned with recipients 
        through sample NEPA, Historical Preservation and Buy American 
        document packages and templates to help expedite the review 
        process.
   Guidance: The Department issued program guidance as early as 
        possible to explain new Recovery Act compliance requirements 
        and outlining applicability on their projects.
   Categorical Exclusions: In cases where it was appropriate 
        and environmentally responsible to do so, the Council on 
        Environmental Quality encouraged the use of CXs. CXs are the 
        least time consuming form of NEPA review. DOE has made these CX 
        determinations publicly available on its NEPA website.
   Regular Interagency Collaboration: DOE worked closely with 
        other federal agencies to ensure proper application of federal 
        requirements. For example, DOE worked closely with Department 
        of Labor on DBA determinations and the Advisory Council on 
        Historic Preservation (ACHP) and the National Conference of 
        State on Historic Preservation Issues.
Invoicing
    Many of DOE's Recovery Act recipients are first-time recipients of 
government funding and were unfamiliar with the government's invoicing 
and payment process. To expedite payments, DOE has run invoicing 
``webinars'' for recipients not familiar with the government process; 
communicated and closely tracked each of our recipient's monthly 
financial and performance targets; and offered technical assistance to 
States and other recipients who are not spending funds on pace to meet 
outlay targets.
    Question 4. How many employees has the Department hired to 
implement ARRA? How many of those individuals remain employed by the 
Department today? How long will those individuals continue to work for 
the Department? Has the hiring of any employees to work on stimulus-
related accounts prevented the Department from hiring, even 
temporarily, any full-time employees for any other offices or programs 
within DOE?
    Answer. The Recovery Act represented a nearly five-fold increase 
over the Department's base energy budget. Most of DOE's Recovery funded 
programs were new initiatives designed to reinvest in America's future 
and provide for long-term benefits to the American economy. We ran 
competitive review and selection process for over 10,000 applications.
    In total, we stood up two new program office and signed agreements 
with over 5,000 direct recipients. We are now overseeing over 15,000 
clean energy projects across the nation that our direct recipients are 
developing. In order to scale up operations while at the same time 
avoiding waste, fraud and abuse, the Department brought on over 500 
Recovery Act hired employees across DOE headquarters, site offices and 
service centers. Many of these Recovery Act hires were temporary in 
nature (typically 2 years) to overcome the burden of standing up 
Recovery Act implementation. However, now that Recover Act programs 
have moved to more routine operations, nearly 50% of these specific 
Recovery Act hires have gone on to other jobs. Moreover, many have 
accepted positions in the private sector, with clean energy firms that 
are now able to hire as a result of the economic activity spurred by 
the Recovery Act.
    These Recovery Act hires have not prevented the Department from 
hiring full-time employees for other offices as Recovery Act funds can 
only be used to pay salaries for work on Recovery Act issues.
                                 alaska
    Question 5. Alaska boasts some of the most exciting possibilities 
in the nation for renewable energy from hydropower both conventional 
and hydrokinetic--to geothermal and wind. Despite this potential, last 
year the Department terminated the Arctic Energy Office. This was a 
huge disappointment for Alaska and DOE is missing a real opportunity to 
perfect new technology in cold climate conditions. Does the Department 
have any plans to devote additional resources to test or develop 
renewable energy projects in Alaska in the coming year?
    Answer. The Department is committed to continuing its support for 
renewable energy and energy efficiency technologies in Alaska. The 
Department's devotion of resources includes funding an on-site 
renewable energy expert from the National Renewable Energy Laboratory's 
(NREL), direct funding through the American Recovery and Reinvestment 
Act, and work with the U.S. Coast Guard to convert some of its facility 
heating from diesel fuel to biomass.
    NREL has been funded by the Department to help develop Alaska's 
renewable energy and energy efficiency potential by joining forces with 
developers, state government, Native corporations, and tribal and 
community leaders to assist them in making smart decisions about 
deploying sustainable energy technologies and preparing for a 
cleanenergy driven economic transition. NREL's technical training, 
energy planning assistance, education, and outreach activities, led by 
Project Manager Brian Hirsch from the satellite Arctic Energy office in 
Anchorage, are providing the catalyst for transforming the way Alaska 
uses energy.
    NREL's Clean Energy in Alaska initiative currently includes the 
following activities:

          1. Supporting the Cold Climate Housing Research Center's 
        Sustainable Northern Shelter near net zero residential building 
        program, the Alaska Center for Energy and Power's monitoring 
        program for wind-solar-diesel hybrid power systems and stranded 
        renewables analysis, and the Chaninik Wind Group's high 
        penetration winddiesel project;
          2. Providing technical assistance to the state, numerous 
        village utilities, private industry tidal and in-stream 
        hydrokinetic developers, Native corporations, and others;
          3. Technical assistance on the Fire Island Wind Project;
          4. Publishing a report on ``Renewable Energy and Energy 
        Efficiency Opportunities and Challenges in Alaska;''
          5. Chairing the Alaska Emerging Energy Technologies Fund 
        Advisory Committee;
          6. Participating on the Denali Commission's Energy Advisory 
        Committee, and bringing private industry to Alaska for 
        renewable energy investment and local job creation;
          7. Working closely with the state of Alaska on woody biomass 
        heating for diesel displacement throughout rural Alaska.

    In addition to providing technical training, energy planning 
assistance, education, and outreach activities through NREL and its 
onsite Project Manager, the Department has supported the state of 
Alaska with direct funding under the American Recovery and Reinvestment 
Act. Funding has been provided to the State Energy Program ($28 
million), Weatherization Assistance ($18.5 million), and Energy 
Efficiency and Conservation Block Grants ($12 million to tribes and 
$16.5 million to the state of Alaska). Through these formula and 
competitive grants, SEP, WAP and EECBG facilitate the adoption of 
renewable energy and energy efficiency technologies to address energy 
challenges in local communities nation-wide and reap the economic 
benefits of energy savings. These programs represent a federal 
investment in the ideas and innovations of state and local governments, 
empowering communities to design programs that meet their energy needs 
while working towards national goals of energy independence and a 
transition to clean energy economy. In the FY12 budget proposal, the 
programmatic formula would provide Alaska with $1,648,134 for WAP and 
$222,000 for SEP.
    In addition to funding from the aforementioned state and local 
programs, DOE has been active in supporting renewable energy deployment 
projects in Alaska in numerous ways, including the following:

          1. Fort Yukon/Council of Athabascan Tribal Governments, 
        biomass development--$1.2 million
          2. Haida Corporation, Reynolds Creek Hydroelectric--$1.1 
        million
          3. Kootznoowoo Inc, Thayer Lake Hydroelectric--$1.1 million
          4. Chaninik Wind Group, Village energy smart grid and wind-
        diesel hybrid systems--$750,000
          5. Chickaloon Village, Energy Efficiency and Renewable Energy 
        feasibility study--$244,000
          6. Native Village of Eyak, Wind energy resource assessment--
        $248,000
          7. Cook Inlet Tribal Council, Weatherization apprenticeships 
        and Building feasibility-$253,000
          8. Central Council of Tlingit and Haida Indians, 
        Weatherization--$200,000
          9. University of Alaska Fairbanks-Alaska Center for Energy 
        and Power, Geothermal for Pilgrim Hot Springs--$4.6 million
          10. University of Alaska Fairbanks-Alaska Center for Energy 
        and Power, EPSCoR Wind-Diesel Applications Center--$3 million
          11. Naknek Electric, Geothermal--$12.4 million

    Another DOE-led initiative that is being implemented by both NREL 
and the National Energy Technology Laboratory is conversion of US Coast 
Guard facility heating from diesel fuel to biomass where available. The 
current focus within Alaska has been the USCG Kodiak base, the largest 
in the country, as well as bases in Sitka, Juneau, Ketchikan, and 
Cordova. This effort, when fully implemented, may provide enough demand 
to establish wood pellet markets in southeast and south-central Alaska 
from local supply for local consumption. NREL is working with USDA, the 
US Forest Service, the Alaska Energy Authority, and private industry on 
establishing this wood pellet manufacturing industry in Alaska.
                            methane hydrates
    Question 6. In the 2005 Energy Policy Act, Congress demonstrated 
its support for research and development into methane hydrates. In S. 
1462, the energy bill approved by this Committee last year, we 
reiterated that support with additional funding authorizations. The 
President's FY 2012 budget request, however, calls for just $10 million 
in methane hydrate research funding. Why isn't the Administration more 
supportive of this type of research, especially given the favorable 
results of an Alaska North Slope drilling project in 2009 which 
demonstrated that hydrates can flow into production? What does DOE hope 
to accomplish with the requested level of funding?
    Answer. The $10 million request in the Office of Science's Basic 
Energy Sciences (BES) program is commensurate with the Administration's 
fiscally responsible FY 2012 budget request and supports basic research 
associated with methane hydrates. BES funding will support basic 
experimental research and advanced simulation on how hydrates are 
formed, including the subtle, intermolecular forces that govern the 
structure and properties of hydrates; the multi-phase behavior of 
hydrate-sediment systems; and the stability of hydrates in the natural 
environment.
                                gasline
    Question 7. Do you feel that the federal government has done and is 
doing everything it can to encourage a successful open season which 
will lead to construction of an Alaska Gas Pipeline project as rapidly 
as possible?
    Answer. The Federal government is doing all it can to encourage a 
successful Open Season. The Federal Coordinator, an independent agency, 
has the lead authority for coordination of Federal actions regarding 
the development of the Alaska Natural Gas Pipeline and is therefore the 
appropriate agency to provide updates on the status of the project. The 
Federal Energy Regulatory Commission (FERC) has the lead responsibility 
for setting the regulations for the Open Season process. The Department 
of Energy has been authorized by Congress to provide a loan guarantee 
when a commercial project has been identified, but holds no direct role 
in the Open Season process.
                      strategic petroleum reserve
    The Department's budget request assumes a $500 million, non-
emergency sale of SPR oil. To follow up on questions asked during 
Tuesday's hearing:
    Question 8. Does DOE have any alternative options outside of 
selling the oil in Bayou Choctaw Cavern 20?
    Answer. The proposed sale would afford operational flexibility in 
managing the reserve. No decision has been made about which caverns 
will be used to comprise the six million barrels of crude oil to be 
sold or the quantity of crude oil to be taken from each cavern. The 
Bayou Choctaw Cavern 20 situation is just one example of the need for 
operational flexibility in managing the reserve. The 7.5 million barrel 
capacity Cavern 20 currently holds 3.2 million barrels-4.3 million 
barrels has already been removed and distributed to other SPR caverns 
as a precaution. Consequently, many SPR caverns have been overfilled 
and may be better candidates from which to comprise the six million 
barrels to be sold. There are no other currently available options for 
adjusting the volume of oil in the Reserve.
    Question 9. Does DOE plan to repurchase an equivalent volume of 
oil? If so, when?
    Answer. DOE has no plans for repurchase. The purpose of the sale is 
to ``free up'' a small amount of space to provide operational 
flexibility in managing the reserve. The receipts from the sale will 
not be used for the SPR. The receipts from the sale will be deposited 
into a general fund receipt account of the Treasury and therefore will 
not be available for expenditure by DOE.
    Question 10. Does DOE intend to devote the revenues from the sale 
of oil to any specific purpose or program, or will those revenues be 
returned to the Treasury?
    Answer. The 2012 Budget (SPR Petroleum Account appropriation 
language) proposes that the funds generated in the sale be deposited in 
a general fund receipt account of the Treasury and therefore will not 
be available for expenditure by
    Question 11. How often is DOE authorized to conduct non-emergency 
sales of SPR oil?
    Answer. In the absence of Congressional direction, there is no 
legal authority under the Energy Policy and Conservation Act (EPCA) 
(P.L. 94-163, as amended) for DOE to conduct non-emergency sales of SPR 
oil, except through the conduct of a test sale. Test sales or exchanges 
of no more than 5 million barrels per test are authorized by section 
161(g) of EPCA (42 USC 6241(g)), but there is no statutory restriction 
on how often they may be conducted.
    In the 1990s, Congress directed non-emergency sales from the SPR 
for reasons of budget savings. The President's FY 2012 budget proposes 
a non-emergency sale from the SPR for operational reasons related to 
the overfilling of several SPR caverns. Implementation of the 
President's FY 2012 Budget proposal, requires new statutory authority 
as proposed in the SPR legislative language included in the 2012 
Budget.
    Question 12. Is there a minimum amount of oil in the SPR that must 
be maintained in order for DOE to conduct non-emergency sales of oil?
    Answer. In the absence of Congressional direction, there is no 
legal authority under the Energy Policy and Conservation Act (EPCA) 
(P.L. 94-163, as amended) for DOE to conduct non-emergency sales of SPR 
oil, except through the conduct of a test sale. Test sales or exchanges 
of no more than 5 million barrels per test are authorized by section 
161(g) of EPCA (42 USC 6241(g)), but there is no statutory restriction 
on how often they may be conducted. There is no statutory limitation 
regarding a minimum amount of oil that must be maintained in the 
Reserve to conduct a non-emergency sale.
                    spr + royalty-in-kind authority
    Question 13. Has the abolishment of the Royalty-in-Kind program 
within the Interior Department had any effect, direct or indirect, on 
the statutory mandate for DOE to expand the SPR to one billion barrels?
    Answer. No. Prior to the Department of the Interior cancelling the 
royalty-in-kind program, the SPR had completed fill to its capacity of 
727 million barrels. The President's FY 2011 budget requested 
cancellation of $71 million of prior year funds for expansion to one 
billion barrels and Congress enacted the request.
    Question 14. When does DOE forecast its compliance with the mandate 
to expand SPR to one billion barrels?
    Answer. The Energy Policy Act of 2005 directed the DOE to expand 
the SPR to its authorized level of one billion barrels, as 
expeditiously as practical, without incurring excessive cost or 
appreciably affecting the price of petroleum products to consumers. The 
Administration will review its policy related to 1 billion barrel 
expansion.
                        ultra-deepwater program
    Question 15. What is the status of approval of the 2011 Annual Plan 
for the Ultra-Deepwater and Unconventional Natural Gas program 
authorized in Section 999 of EPACT '05?
    Answer. The Unconventional Resources Technology Advisory Committee, 
one of two Federal advisory committees required by the Energy Policy 
Act of 2005 (EPAct 2005) to review the draft annual plan, provided its 
written comments in October 2010. The members of the other Federal 
advisory committee, the Ultra-Deepwater Advisory Committee (UDAC) were 
appointed in February 2011. The UDAC held its first meeting to begin 
its review of the Draft 2011 Annual Plan on February 23, 2011. Written 
comments, as required by EPAct 2005, are expected by the end of April 
2011. Upon receipt of all written comments, the 2011 Annual Plan will 
be made final, transmitted to Congress, and published in the Federal 
Register.
    The research program established pursuant to EPAct 2005 Section 
999A has been refocused to emphasize greater focus on quantification of 
risk and environmental sustainability, especially as related to ultra-
deepwater and unconventional natural gas (shale gas).
    Question 16. How many projects are currently being managed under 
the Section 999 program for ultradeepwater and unconventional natural 
gas research and development?
    Answer. There are currently 79 active projects being managed under 
the Section 999 program for ultra-deepwater and unconventional natural 
gas research and development. An additional 8 are anticipated to be 
awarded in 2011. To date, 12 projects have been completed for a total 
of 99 projects for Fiscal Years 2007-2009.
    Question 17. In the wake of the Deepwater Horizon incident, what is 
your view of the role of the Section 999 program, as it exists under 
current authorities and funding levels, in terms of increasing safety 
and well integrity through ultra-deepwater research and development?
    Answer. Following the explosion of the Macondo well in the Gulf of 
Mexico on April 20, 2011, the Program Consortium was instructed to 
refocus the Section 999A Ultra-Deepwater research so that at least 50% 
of the funds are invested in quantification of risk and environmental 
sustainability. This change will be manifested in the 2010 research 
portfolio and the 2011 Annual Plan.
    This shift in research emphasis is based on the recognition that 
technological improvements in the efficiency and cost-effectiveness of 
producing oil and gas from deepwater fields and unconventional 
reservoirs, while important, must only be applied when potential 
negative environmental impacts are well defined and the appropriate 
plans and technologies are in place to either prevent or mitigate these 
impacts. While previous Annual Plans have focused primarily (although 
not entirely) on technologies focused on efficiency and cost, the 
ultra-deepwater projects in 2010 and the annual plan going forward in 
2011 will focus on quantifying potential environmental risks and 
developing technologies to address them.
    Question 18. Has the Sec. 999 program focused on or required 
inclusion of safety, well integrity, and environmental sustainability 
elements in its work?
    Answer. Although all projects included in the program satisfy 
certain aspects of safety and environmental sustainability a greater 
emphasis on quantification of risk and environmental sustainability has 
been placed on projects to be selected as part of the 2010 research 
program and solicitations subject to the 2011 Annual Plan. The Program 
Consortium was instructed to refocus the Section 999A Ultra-Deepwater 
research so that at least 50% of the funds are invested in 
quantification of risk and environmental sustainability. This change 
will be manifested in the 2010 research portfolio and the 2011 Annual 
Plan.
    This shift in research emphasis is based on the recognition that 
technological improvements in the efficiency and cost-effectiveness of 
producing oil and gas from deepwater fields and unconventional 
reservoirs, while important, must only be applied when potential 
negative environmental impacts are well defined and the appropriate 
plans and technologies are in place to either prevent or mitigate these 
impacts. While previous Annual Plans have focused primarily (although 
not entirely) on technologies focused on efficiency and cost, the 
ultra-deepwater projects in 2010 and the annual plan going forward in 
2011 will focus on quantifying potential environmental risks and 
developing technologies to address them.
    Question 19. In the last 4 years the federal government has 
invested just over $92 million in the ultradeepwater and unconventional 
gas program. How much have public and private partners brought forward 
in matching funds during that time?
    Answer. For the projects selected in years 2007-2009, a total of 
$45.6 million of matching funds have been provided for the $92.8 
million of government funds provided for those projects, $11.7 million 
for Ultra-Deepwater research, $26.5 million for Unconventional 
research, and $7.4 million for Small Producers research.
    Question 20. Of the 99 projects the Sec. 999 program has funded, 
how many involve universities and how many universities have received 
program awards?
    Answer. A total of 65 projects involve universities as lead or 
partners in 22 states. Of this, a total of 48 awards have been made 
directly to universities as the lead. This represents a total of $53.9 
million for projects involving universities of which $33.5 million was 
awarded directly to universities.
                           energy efficiency
    Question 21. The President's FY 2012 budget request calls for 
funding his new Better Buildings Initiative to achieve a 20 percent 
improvement in commercial buildings' energy use by 2020. The budget 
materials describe this new initiative as ``including many new 
components to achieve this goal.'' One such component appears to be for 
a $100 million loan guarantee program for universities, schools, and 
hospitals, plus an additional $5 million for administrative costs.
    The Administration appears to be seeking $100 million in 
appropriations to cover the subsidy cost amount, like the Section 1705 
loan guarantee program created in the Stimulus bill for renewable 
technologies. Q21. The Administration appears to be struggling to 
administer the existing Section 1703 (under which the project developer 
pays the subsidy costs) and the Section 1705 loan guarantee programs, 
as well as the loan guarantee program for Advanced Technology Vehicle 
Manufacturing (ATVM). In fact, last Congress, the Department's 
implementation was so slow that $3.5 billion of the Section 1705 funds 
was taken away from the DOE loan program to pay for ``Cash for 
Clunkers'' and State assistance. The ATVM program has issued just one 
small conditional loan in the past 10 months and nearly two-thirds of 
the program's loan authority remains unused. How can DOE reasonably be 
expected to administer yet another loan guarantee program? How much 
additional personnel would be needed to handle this new program?
    Answer. The Title XVII Loan Program Guarantee was authorized in 
2005 and funded in 2007, yet had not issued a single loan until this 
Administration. Since the spring of 2009, the Loan Programs has 
supported over $40 billion in total government supported financing, 
including capitalized interest, in loans and loan guarantees to 42 
clean energy projects with total project costs of over $63 billion. 
Cumulatively, project sponsors expect these projects to produce nearly 
38 million megawatt hours yearly--enough to power over two million 
households--and to fund almost 68,000 jobs\1\ across 38 states. LPO 
estimates that the existing conditional commitments for projects may 
utilize all of our remaining credit subsidy appropriations under the 
Section 1705 program.
---------------------------------------------------------------------------
    \1\ Breakdown by program is as follows (based on Sponsor 
estimates): 1703: 5,210 construction, 1,340 permanent; 1705: 16,783 
construction, 3,995 permanent; ATVM: 8,200 created, 38,960 saved.
---------------------------------------------------------------------------
    DOE anticipates that the $100 million in credit subsidy for a new 
``Better Buildings Pilot Loan Guarantee Initiative for Universities, 
Schools, and Hospitals'' could support up to $2 billion in loan 
guarantees to support energy efficient retrofits, depending on the 
exact parameters of the authorizing legislation and governing rules. 
The Department looks forward to working with Congress to develop the 
elements of a successful program.
    Question 22. The President's FY 2012 budget request calls for 
funding his new Better Buildings Initiative to achieve a 20 percent 
improvement in commercial buildings' energy use by 2020. The budget 
materials describe this new initiative as ``including many new 
components to achieve this goal.'' One such component appears to be for 
a $100 million loan guarantee program for universities, schools, and 
hospitals, plus an additional $5 million for administrative costs. The 
Administration appears to be seeking $100 million in appropriations to 
cover the subsidy cost amount, like the Section 1705 loan guarantee 
program created in the Stimulus bill for renewable technologies.
    In addition to this new $100 million loan program, the President is 
calling for an ``aggressive reform of existing tax and other incentives 
for commercial building retrofits and proposing a new competitive grant 
program.'' How will these be paid for, beyond the $100 million that the 
President is asking Congress to appropriate? Please break down the 
costs and the funding.
    Answer. The Better Buildings Initiative is a Presidential priority. 
It will leverage the lessons learned from other federal and state 
programs, as well as years of research and experience in energy 
efficiency. This program is part of the Department of Energy's proposed 
budget request and program plans for FY2012 which has just been 
transmitted to Congress. Specific activities included in the Better 
Buildings Initiative including a new tax incentive for commercial 
building upgrades, financing programs, competitive grants to state and 
local governments who implement innovative approaches to energy 
efficiency building codes, regulations and performance standards, and a 
challenge to the private sector and universities to make facilities 
more energy efficient. Those meeting the challenge would have their 
organizations recognized and supported with technical assistance.
    Question 23. The President is requesting an almost 50% increase in 
funding from FY10 levels for the Weatherization Assistance Program 
(WAP). As you know, this program received $5 billion in the American 
Recovery and Reinvestment Act (ARRA or Stimulus). I understand there 
have been several instances of waste, fraud and abuse. In fact, DOE's 
Inspector General has initiated several investigations into the use of 
WAP funds under ARRA. It is troublesome, then, that Congress is being 
asked to increase funding to this program that clearly has suffered 
from lack of oversight.
    Has all of the $5 billion in stimulus money for this program been 
spent? If not, how much is left? DOE's website shows that the agency 
has more than $2.6 billion obligated but still unspent from the 2009 
stimulus bill for this program.
    Answer. Under the Recovery Act, the Weatherization Program received 
$5 billion to provide weatherization services to over 600,000 to low-
income families. These weatherization services include the repair of 
heating and cooling systems, electrical systems, and electrical 
appliances, while at the same time ensuring health and safety. 
According to a 2010 report from Oakridge National Laboratory, families 
save an average of $400 a year on their energy bills as a result of the 
weatherization program. This is significant given that the total 
heating and cooling costs average 10 percent or more of a low-income 
family's income per year, compared with just 3 percent for the average 
American home.
    To date, the weatherization program has paid out over $2.7 billion 
(54%), and helped more than 400,000 low-income families nationwide 
improve the energy efficiency of their homes and help them save money 
on their energy bills. Moreover, in the first quarter of 2011, WAP 
funding supported thousands of jobs. Many of these workers are former 
construction workers or contractors that were hit hard by the downturn 
in the housing market. The weatherization program expects to weatherize 
over 600,000 homes by Spring 2012.
    Question 24. Please describe actions that DOE will be taking with 
regard to the IG's recommendations stemming from these reports.
    Answer. The Department of Energy works closely with the Inspector 
General on the audit and inspections it carries out. Their work has 
been an integral part of the Department's monitoring and oversight 
efforts, and we are committed to continuing to work with the Inspector 
General (IG) to address any substantive issues that they identify. 
Moreover, DOE will continue to work in real-time with the Inspector 
General to implement recommendations as the IG report is being written.
Guidance
    Based on IG findings and recommendations, Weatherization Assistance 
Program (WAP) has reviewed and updated a variety of guidance documents, 
including but not limited to monitoring and oversight, grant guidance, 
reporting, eligibility provisions, and health and safety measures. 
Moreover, WAP also developed new guidance documents based on IG 
findings, including but not limited to Davis Bacon, Historic 
Preservation, privacy of recipients' services, and policy procedures, 
such as call-backs.
Monitoring
    In addition to issuing additional guidance on monitoring (amending 
Weatherization Program Notice 01-6), we've also worked hard to identify 
and resolve risks associated with individual recipients. We used risk 
scores for individual Recovery Act recipients to prioritize our 
oversight and monitoring efforts. We further established a Recipient 
Risk Management System that considers 48 distinct risk indicators to 
inform management, procurement, and oversight staff of potential risks 
associated with individual Recovery Act recipients and sub-recipients. 
As part of this effort, we are also receiving real-time alerts on 
potentially problematic developments related to our recipients, which 
we share with the Inspector General, as appropriate.
    In addition to weekly and monthly desktop reviews with recipients, 
Weatherization project officer also conduct frequent site visits 
corresponding to the value of the award and risk level. In general, 
frequency is as follows:

   Grants over $90 Million (Quarterly)
   Grants between $90 Million--$40 Million (Three visits)
   Grants under $40 Million (Semi-Annual)

  Note: More visits may be done depending on specific situation or need 
        of recipients.
Staff Focused on Targeted Areas
    To ensure sufficient level of oversight and outreach with 
recipients, Weatherization has hired additional, targeted staff such 
as:

   Training and Technical Assistance Team
   Expanded WAP policy and guidance team
   A Buy American specialist
   Davis Bacon specialists

    Question 25. The budget request notes that this proposed increase 
is for ``key activities of weatherization formula grants and 
innovations in weatherization within the Weatherization Assistance 
Program.'' Given that the WAP has been around for 33 years, what are 
these innovations?
    Answer. The FY2010 Appropriations Bill's Conference Report* 
provided $30 million from within available funds for the development of 
a pilot project that would increase the leverage of Federal funding 
through the formation of partnerships between the Department and 
traditional and/or nontraditional weatherization providers. *(Official 
title: ``Conference Report to Accompany H.R. 3183, Report 111-278,'' at 
page 105 under Weatherization Assistance).
    In order to address this Congressional directive, DOE introduced a 
competitive funding opportunity, a new Weatherization Innovative Pilot 
Program (WIPP), to select the applications that met these goals of 
increased leverage and the formation of new innovative partnerships. 
The first round of WIPP grantees included organizations that have not 
historically been a part of the Department's Weatherization Assistance 
Program, including private companies, non-profit organizations, 
universities, city governments, and national partners like Habitat for 
Humanity and YouthBuild USA. WIPP projects will help build the local 
capacity of new weatherization providers and will allow DOE to 
rigorously test the cost-effectiveness of a range of new weatherization 
approaches that have the potential to accelerate efforts to build an 
efficient and sustainable weatherization and retrofit market. Projects 
include:

   New technologies, such as solar, efficient hot water 
        systems, and in-home energy devices, that hold the promise of 
        increased energy savings and cost-effectiveness
   Innovative financing, loans, and revolving funds to increase 
        leveraging of federal funds
   Healthy homes approaches that streamline health 
        interventions with weatherization and produce better energy and 
        health outcomes
   Volunteer-based national organizations that have legacies of 
        strong corporate funders and in-kind donations, which both 
        increase the level of non-federal funds into the program and 
        decrease direct labor expenses

    Additional funding for the WIPP program will help DOE to achieve 
the program's goals of leveraging federal grant dollars 3-to-1 with 
non-federal funds, attracting new partnerships with both traditional 
and non-traditional weatherization providers, and increasing 
effectiveness through more efficient delivery of services and higher 
energy and dollar savings for clients. http://apps1.eere.energy.gov/
news/progress_alerts.cfm/pa_id=384
    See the full list of selected awardees: http://www.eere.energy.gov/
wip/pdfs/grantees_selected_wipp_awards.pdf
    Description of 16 funded WIPP Projects, which is generally 
indicative of the type of things we would like to fund in 2012: http://
www1.eere.energy.gov/wip/wipp_projects.html
                                nuclear
    Question 26. The budget request calls for $550 million for ARPA-E 
plus an additional $100 million for wireless technologies, yet the 
COMPETES Reauthorization Act only authorizes ARPA-E at $306 million for 
FY2012. I understand all $400 million provided to ARPA-E by the 
Recovery Act two years ago has now been obligated and awarded, but 
since these programs are forward funded we won't see the results for 
several years. Given that it took ARPA-E two years to obligate and 
award $400 million, and that was in part due to the timeline required 
under the Recovery Act, can ARPA-E really obligate and award $650 
million in programs in the next fiscal year?
    Answer. ARPA-E is confident in its ability to obligate and award 
all of the funds in its budget request in the next fiscal year. ARPA-E 
implemented a process for the development and creation of programs that 
features extensive technical community engagement, topical workshops, a 
three-stage peer review process that allows for rebuttals to reviewer 
comments, and rapid contract negotiation, as shown in the figure 
below.*
---------------------------------------------------------------------------
    * Figure has been retained in committee files.
---------------------------------------------------------------------------
    Despite its depth of engagement and multi-stage evaluation, this 
model affords a timeline from conception to execution that is greatly 
accelerated--typically six to eight months. This allows ARPA-E to 
respond rapidly to newly emerging technological discoveries in its 
creation of new programs.
    ARPA-E's embedded dedicated legal and procurement teams allow it to 
achieve a rapid pace of transferring awards from announcement to 
signing cooperative agreements--usually about two to three months--a 
pace that is uncommon in the public sector. ARPAE successfully 
responded to the challenge of awarding Recovery Act funds in just 17 
months--with only a fraction of current staffing levels and having to 
start a brand new agency from scratch--through the creation of an 
innovative process, careful resource allocation, and the efforts of a 
bright, determined team.
    ARPA-E can now do in one year what previously took seventeen months 
because we have fully ramped up and can ``hit the ground running'' with 
new funds. The current, expanded ARPA-E team--with its previous 
experience of creating and managing the seven existing programs, 
awarding and obligating the Recovery Act funds, and establishing 
policies and practices--has the capacity to obligate and award the 
entire FY2012 appropriated amount on schedule.
    Question 27. Section 302 of the Nuclear Waste Policy Act of 1982, 
as amended, authorizes the Secretary of Energy to establish a Nuclear 
Waste Fund through the collection of fees from the nuclear industry for 
the construction of a geologic repository for high-level radioactive 
waste and spent nuclear fuel storage. The Act expressly identifies the 
Yucca Mountain site as the sole permanent repository to be considered. 
The Act also directs the Secretary to propose an adjustment of the fee 
if the amount collected is insufficient or in excess of the amount 
needed to meet the cost of the construction of the repository. With the 
attempted withdrawal of the Yucca Mountain license application and the 
proposed termination of the only expressly identified permanent 
repository, do you believe that the fees collected and deposited in the 
Nuclear Waste Fund are in excess of the amount needed to meet the 
repository's costs? Do you believe an adjustment of the fee is in 
order?
    Answer. The Nuclear Waste Policy Act establishes a fee of one tenth 
of a cent per kilowatt-hour of electricity generated and sold that must 
be paid by nuclear utilities and deposited in the Nuclear Waste Fund. 
The Act also requires that the Secretary of Energy annually review the 
adequacy of this fee. If the Secretary determines that either 
insufficient or excess funds are being collected, the Secretary must 
transmit a proposed fee adjustment to Congress.
    The Department completed its most recent annual review of the 
adequacy of the Nuclear Waste Fund fee in November 2010. The review 
concluded that there is no reasonable basis to conclude that the 
current fee is generating either insufficient or excess funds to cover 
the costs of the Department's obligation to dispose of the Nation's 
high-level nuclear waste and spent nuclear fuel. A copy is available on 
the U.S. Department of Energy website at: http://www.gc.energy.gov/
documents/Secretarial_Determination_WasteFee.pdf
    Although the Department has determined that a geologic repository 
at Yucca Mountain is not a workable option and should be terminated, 
the Department has repeatedly affirmed the Government's commitment to 
meeting its obligation to dispose of high level waste and spent nuclear 
fuel.
    The Department is committed to reviewing the fee annually and to 
making its review publicly available. If the Department concludes in 
the future that either insufficient or excess revenues are being 
collected to meet this obligation, the Department will promptly propose 
an appropriate adjustment of the fee to Congress.
    Question 28. The new Light Water Reactor--Small Modular Reactor 
Licensing Technical Support program anticipates a cost of $452 million 
over five years. Do you expect this program to run longer than five 
years or do you believe two SMR designs will have made it through the 
licensing process in that time frame?
    Answer. The Department does not expect the program to run longer 
than five years. The program is designed to help improve the timeline 
for the commercialization and deployment of these relatively mature 
technologies and the Department expects that adequate progress will 
have been made on the most critical steps of the licensing process in 
that time frame. The Department expects that SMR vendors will have 
sufficiently learned from interaction with the Nuclear Regulatory 
Commission (NRC) and that continued support by DOE will not be 
necessary after the five year program.
    Question 29. Please provide more detail on the types of 
technologies you expect the new Nuclear Energy Enabling Technologies 
program to develop and support. Why is it necessary to have a new, 
separate program from the Reactor Concepts and Fuel Cycle programs to 
achieve these goals?
    Answer. The mission of the Nuclear Energy Enabling Technologies 
(NEET) program is to conduct research and development to deliver 
crosscutting technologies that directly support and enable the Office 
of Nuclear Energy's (NE) broad research and development portfolio and 
to encourage the development of transformative, ``outside-the-box'' 
innovations in nuclear energy science and engineering.
    The Transformative component of NEET is open to the full range of 
nuclear energy technology and is not specific to any on-going mission 
activities. It is designed to provide a mechanism for identification 
and development of creative, new, emerging technologies via an open, 
competitive solicitation process. The effort will support 
transformative projects that have the potential for making significant 
leaps forward in advanced nuclear technology development in all aspects 
of the civilian nuclear energy program.
    The NEET program will also conduct crosscutting research and 
technology development relevant to the various reactor and fuel cycle 
concepts within the scope of NE research and development (R&D) programs 
that offer substantially improved economic and safety performance. NEET 
will be able to coordinate efforts on common issues and avoid 
duplication of efforts in technology development in separate programs. 
The NEET program is intended to carry out research that is beyond the 
scope of individual NE R&D programs, lead and coordinate research that 
is needed by several NE R&D programs, and identify and deliver enabling 
technologies to achieve critical steps in technology deployment. The 
activities undertaken in this program complement those within the 
Reactor Concepts Research Development & Demonstration and the Fuel 
Cycle R&D programs by providing a mechanism for pursuing broadly 
applicable R&D in areas that may ultimately benefit specific reactor 
and/or nuclear fuel concepts. Reactor and fuel cycle designs are 
currently limited by technologies at the subsystem and component level, 
and NEET research is aimed at providing new options to the system level 
designs.
    Through coordinated R&D, this program will ensure that resulting 
technologies and solutions are scalable to individual reactor and fuel 
cycle applications (e.g., development of high-temperature resistant 
materials and radiation-hardened electronics, proliferation risk 
assessment of different nuclear fuel cycle options, etc.). This R&D 
will ultimately result in lower costs for needed capabilities across NE 
R&D programs, better use and coordination of expertise and leveraged 
facilities across the enterprise, and assurance that the best 
technologies are available for nuclear energy deployments when needed.
    Examples of the types of technologies expected in NEET crosscutting 
areas include the following:

   New, innovative reactor materials concepts for fuel cladding 
        and structural materials well beyond those currently considered 
        by most industrial interests will be explored to provide alloys 
        with improved performance over traditional materials. Improved 
        performance may include a 5- to 10-fold increase in strength, 
        or increased maximum operating temperature by over 200 Celsius 
        (C), with a service period of at least 80 years.
   Advanced manufacturing technologies that could provide 
        simplified, standardized, and labor-saving outcomes for 
        manufacturing and civil works processes (both technologies and 
        methods) for new nuclear component manufacturing and plant 
        fabrication will be investigated. For example, concrete 
        installation is one of the most costly (up to $1 million per 
        day) and time-consuming aspects of building a new nuclear power 
        plant. Potentially, the use of high-strength concrete or steel-
        concrete composite wall construction could significantly reduce 
        construction cost and schedules.
   Advanced instrumentation and sensors that could: (1) operate 
        in the temperature regimes and harsh environment (e.g., 1000C 
        gas environment, liquid metals) that preclude the cross-
        compatibility of existing instrumentation, (2) directly measure 
        primary process parameters that would otherwise be inferred or 
        measured from a distance with a corresponding loss in precision 
        and increase in uncertainty, (3) minimize measurement drift 
        that can support longer intervals between maintenance and 
        service outages, as envisioned for advanced reactors, and (4) 
        include electronics that are, or can be made to be, radiation 
        tolerant due to their proximity to the nuclear reactor core and 
        back end of nuclear fuel cycle process.
   Advanced modeling and simulation tools are being developed 
        that will provide a greater understanding of the long-term 
        performance of fuels both in the reactor during operations and 
        once discharged (useful to regulators, designers, and 
        operators). For example, the Advanced Multi-Physics (AMP) code 
        being developed at the Oak Ridge National Laboratory models 
        fuel at the ``pin'' level in three dimensions with very high 
        temporal and spatial resolution. The AMP code is presently 
        being considered for use in the virtual reactor model being 
        developed by the Energy Innovation Hub for Modeling & 
        Simulation of Nuclear Reactors.

    Question 30. The Office of Electricity proposes a significant 
increase to $238.22 million in FY 2012 (+41%). With this proposed 
increase in funding, will the Department also examine the potential 
impact of regulations, such as those contemplated by EPA, on the 
nation's grid reliability? According to news reports you recently told 
a renewable energy conference that there will be ``massive'' closures 
of coal plants in the United States within the next 5 to 8 years. Do 
you believe those closures will have any have any impact on the 
reliability of the electrical grid, or the cost of energy paid by 
consumers? What role do you believe EPA regulations will play in 
provoking those closures?
    Answer. The Office of Electricity Delivery and Energy Reliability 
is working collaboratively with other Federal agencies, including EPA, 
as well as States, and the electric generation industry to evaluate the 
potential impact of EPA's proposed regulations. These regulations are 
just one of many factors that are expected to lead to an increase in 
the number of retirements of existing generation facilities over the 
next 3-8 years.
    The business decision surrounding if, or when, an electric 
generation facility is retired is not easily predicted. There are a 
range of factors that are expected to result in coincidental 
retirements including age of existing facilities, build out of new 
generation, load forecasts, and cost of compliance with environmental 
requirements. In addition, this decision making process will be unique 
for each utility. For example, the factors considered by a rate-based 
vertically integrated utility are quite different than those considered 
by merchant facilities. Determining which facilities will retire, and 
when, is not possible at this time. Similarly, any impact on the cost 
to consumers may only be evaluated when more specific information 
becomes available. Any increase in cost would at least partially be 
offset by State and Federal energy efficiency programs.
    As site-specific retirement information becomes available, 
reliability analyses will become possible. These analyses are often 
conducted as part of the supporting information when a facility is 
proposed for retirement. If reliability issues are identified, a 
variety of alternatives are considered. When potential conflicts arise 
between achieving timely environmental protection contemplated in EPA's 
proposed regulations and maintaining electric reliability, DOE will 
work with EPA, States and the appropriate utilities to ensure electric 
reliability is maintained.
    Question 31. The Office of Electricity proposes a significant 
increase to $238.22 million in FY 2012 (+41%). A full $60.8 million is 
to be directed to clean energy transmission and reliability. DOE's 
budget materials further explain that the Department proposes to 
examine system requirements to integrate renewables into the grid. As 
you know, FERC recently release a long-awaited study on grid 
reliability that was conducted by the Lawrence Berkley Laboratory. How 
does DOE's proposed effort differ from what has already been completed 
by the Lab?
    Answer. On January 20, 2011, FERC issued for public comment a 
study, conducted by Lawrence Berkeley National Laboratory (LBNL), which 
examined what is known as the frequency response of the bulk power 
system. Frequency response measures how the electric system performs in 
responding to a sudden loss of generation that could cause reliability 
problems such as blackouts.
    This report presents a systematic approach to identifying metrics 
that are useful for operating a reliable system with increased amounts 
of variable renewable generation, building on existing industry 
practices for frequency control after unexpected loss of a large amount 
of generation. It introduces a set of metrics (or ``tools'') for 
measuring the adequacy of frequency response within an interconnection. 
These metrics take advantage of new information gathering and 
processing capabilities for wide-area situational awareness that DOE is 
working with system operators to develop.
    The Transmission Reliability and Renewables Integration activities 
within the Clean Energy Transmission and Reliability program includes 
research that is focused on developing advanced technologies and 
applications that enhance real-time operational decision-making by 
enabling wide-area measurement and situational awareness. This includes 
the information technologies, software programs, and reliability/
analysis platforms (or ``technology tools'') needed by system operators 
and reliability coordinators to monitor, track, predict, and respond to 
maintain grid reliability. These technologies, for example, could allow 
operators to monitor the parameters (or metrics) identified in the LBNL 
frequency response report.
                              reliability
    Question 32. Section 202(c) of the Federal Power Act grants the 
Department of Energy the authority to order an electric generation 
facility to operate in an emergency to preserve the reliability of 
electricity service and serve the public interest. Is an electric 
generation facility required to operate under this authority if the 
operation of the facility violates an environmental law (including but 
not limited to, the Clean Air Act, Federal Water Pollution Control Act, 
Solid Waste Disposal Act, the Safe Drinking Water Act, Endangered 
Species Act, and Comprehensive Environmental Response, Compensation and 
Liability Act or analogous laws or regulations promulgated by any 
federal state or local authority)?
    Answer. The Department is aware of only one instance where there 
was a possible conflict between an emergency order issued under FPA 
section 202(c) and environmental statutes. That involved Mirant 
Corporation and its wholly owned subsidiary, Mirant Potomac River, LLC. 
In that instance, DOE worked closely with United States Environmental 
Protection Agency (EPA) and state authorities to achieve both 
electricity reliability and protection of the environment. Under such 
circumstances it is the responsibility of the executive branch to 
administer all statutes in a manner that promotes their underlying 
policy goals and carefully balances any potential conflicts.
    On August 21, 2005, Mirant ceased operation of the Potomac River 
Generating Station (Plant) in response to a letter from the Virginia 
Department of Environmental Quality (DEQ) requesting that Mirant 
undertake such action necessary to ensure protection of human health 
and the environment in the area surrounding the Potomac River 
Generating Station. In response to Mirant's decision, the District of 
Columbia Public Service Commission filed an Emergency Petition and 
Complaint requesting the Secretary of Energy to find that an emergency 
exists under subsection 202(c) of the FPA and to issue an order 
directing Mirant to continue operation of the Plant. The basis for the 
petition was that the shutdown of the Plant ``...will have a drastic 
and potentially immediate effect on the electric reliability in the 
greater Washington, D.C., area and could expose hundreds of thousands 
of consumers, agencies of the Federal Government and critical federal 
infrastructure to curtailments of electric service, load shedding and, 
potentially, blackouts.'' The structure of the electricity transmission 
system at that time placed the Plant in a uniquely important position 
with regard to maintenance of electric reliability for downtown 
Washington.
    After extensive investigation and analysis of the electric supply 
situation in the Central D.C. area, and in consultation with EPA and 
the DEQ, on December 20, 2005, the Secretary of Energy issued DOE Order 
No. 202-05-3, pursuant to FPA section 202(c), ordering the limited 
operation of the Plant. The order found ``that an emergency exists 
because of the reasonable possibility an outage will occur that would 
cause a blackout, the number and importance of facilities and 
operations in our Nation's Capital that would be potentially affected 
by such a blackout, the extended number of hours of any blackout that 
might in fact occur, and the fact that the current situation violates 
applicable reliability standards.''
    In issuing the order, the Secretary was cognizant of the concerns 
that were expressed concerning the potential adverse environmental 
consequences of operating the Plant, and of the national interest in 
attainment of the NAAQS that have been established under the Clean Air 
Act. To address those concerns, the order sought to harmonize 
environmental protection interests to the extent reasonable and 
feasible by ordering Mirant to operate in a manner that provided 
reasonable electric reliability, but that also minimized any adverse 
environmental consequences from the operation of the Plant.
    On June 1, 2006, EPA entered into an Administrative Compliance 
Order by Consent (ACO) with Mirant pursuant to the Clean Air Act. The 
ACO provided specific operating parameters and procedures for Mirant to 
follow in ``Non-Line Outage Situations'' and ``Line Outage 
Situations.'' In a June 2, 2006, letter order to Mirant, DOE directed 
Mirant to operate the Plant in accordance with the ACO in Non-Line 
Outage situations.
    On January 31, 2007, the Secretary of Energy issued DOE Order No. 
202-07-2, extending the emergency order. The Secretary made two 
noteworthy additions to the Ordering Paragraphs contained in the 
original December 20, 2005 order. These additions were:

          A. During any period in which one or both of the 230 kV lines 
        serving the Central D.C. area is out of service, whether 
        planned or unplanned, Mirant will operate the Potomac River 
        Generating Plant to produce the amount of power (up to its full 
        capacity) needed to meet demand in the Central D.C. area as 
        specified by PJM for the duration of the outage.

                  1. In the event of a planned outage, Potomac River 
                units will generate that amount of electricity 
                specified by PJM to meet demand.
                  2. In the event of an unplanned 230 kV line outage, 
                Potomac River units will generate that amount of 
                electricity specified by PJM to meet demand as soon as 
                possible.

                  When producing electricity pursuant to this 
                paragraph, Mirant shall utilize pollution control 
                equipment and measures to the maximum extent possible 
                to minimize the magnitude and duration of any 
                exceedance of the NAAQS. Compliance with the ACO shall 
                constitute compliance with this requirement.

          B. During periods when the two 230 kV lines serving the 
        Central D.C. area are not out of service, Mirant shall keep as 
        many units in operation, and shall take all other measures to 
        reduce the start-up time of units not in operation, for the 
        purpose of providing electricity reliability, but without 
        causing or significantly contributing to any exceedance of the 
        NAAQS or causing serious risk of danger to the Plant or 
        unreasonable risk to Plant personnel. Pursuant to DOE's June 2, 
        2006 letter to Mirant, Mirant will operate the Plant in 
        accordance with paragraph B of Part IV of the ACO, and any 
        other applicable terms of the ACO.

    Thus, the Department in recognizing the ACO and tailoring its order 
to avoid to the maximum extent possible any adverse environmental 
effects, and EPA in recognizing the vital importance of reliable 
electricity service to the Central D.C. area (and the adverse 
environmental effects of a blackout) when fashioning the ACO, 
demonstrated how the executive reconciled potentially conflicting 
statutory goals. The Department's order expired when upgrades to the 
regional transmission system made it no longer necessary.
    Question 33. If DOE retains such authority, and a generation 
facility is required to operate by DOE in conflict with any environment 
laws, would the facility operator be subject to civil or criminal 
liability?
    Answer. As the Department's experience in the Mirant matter 
described above demonstrates, the Department believes the appropriate 
course to pursue in such a case is to harmonize the working of 
applicable federal regulatory regimes when invoking the Department's 
authority under section 202(c) of the Federal Power Act. Given the 
absence of any provision of section 202(c) of the Federal Power Act 
explicitly describing the relationship of its requirements to those 
imposed by the other federal statutes referred to in the question, 
administering whatever federal regulatory statutes may be applicable to 
a given facility in a way that harmonizes potentially differing effects 
seems the only sensible way to carry out these laws.
    Question 34. As you know, this Committee addressed cyber security 
issues last Congress in S.1462, the American Clean Energy Leadership 
Act, in which we provided additional authorities to both DOE and FERC. 
Other Senate Committees have also been working on the cyber issue but 
would prefer to give overarching authority to the Homeland Security 
Department. I understand that the Administration prefers a 
comprehensive approach to cyber security as opposed to the sector 
specific plan we approved in the Energy Committee. Does the 
Department's proposed decrease in cyber security funding reflect a 
preference by the Administration that cyber security efforts be 
concentrated in another Department?
    Answer. No. In fact, the Department cannot achieve its mission to 
modernize the electric grid without the development and integration of 
cyber security solutions to meet the stringent performance requirements 
of the mission-critical systems that manage, monitor, and control the 
reliable delivery of energy to the nation. The decrease in funding 
compared to FY 2010 reflects a one-time allocation for a 
Congressionally-directed activity, as well as the successful completion 
of several industry-led projects. The FY 2012 request supports the 
Department's activities, which are specifically designed to address the 
unique cyber security challenges of the energy sector as detailed in 
the 2011 ``Roadmap to Secure Energy Delivery Systems''. The 2011 
Roadmap is an updated version of the 2006 ``Roadmap to Secure Control 
Systems in the Energy Sector'' which has led to the development and 
deployment of several critical cyber security solutions, including more 
secure supervisory control and data acquisition (SCADA) systems, a 
secure SCADA communications protocol to secure data communications 
between remote substations and utility control centers, and software 
tools to help utilities ensure that SCADA systems and applications are 
properly configured against cyber attacks. These tools also help 
utilities ensure compliance with the North American Electric 
Reliability Corporation cyber security requirements.
    While there are a number of public and private sector entities 
working on cyber security solutions for traditional IT business and 
network systems, these solutions are not appropriate or adequate to 
meet the cyber security needs for energy delivery systems for a number 
of reasons. Energy delivery systems must be designed to control real-
time physical processes that deliver continuous and reliable power to 
support national and economic security. As such, they require security 
solutions that meet unique performance requirements and operational 
needs. For example, electric control systems must operate 24/7/365 with 
extremely high availability; data communications in substations require 
time-critical responses of less than 4 milliseconds for protective 
relaying; and technologies to provide wide-area situational awareness 
for transmission lines require data communications links with time 
delays of less than a second. Further, when vulnerabilities are found, 
patching the system is difficult and sometimes not possible. Because 
system upgrades could cause power outages if not implemented properly, 
they are planned weeks or months in advance through pilot 
implementations on backup systems before deployment on production 
systems. Pre-deployment testing of any security solution or update is 
essential to validate system performance. Also, power system sensing 
and control devices are widely dispersed across large geographic 
regions, and often located in populated areas where they are vulnerable 
to physical tampering. Finally, cyber security solutions for the energy 
sector must ensure the timely and proper operation of cyber-physical 
devices (e.g., opening a digital relay or changing settings on 
transformers). Thus, cyber attacks on energy delivery systems can cause 
power outages, as well as physical damage to expensive electric grid 
components like generators that can take many months to replace. The 
Stuxnet worm-designed to attack a specific control system-was 
discovered last summer. Stuxnet underscores the seriousness of targeted 
cyber attacks on energy control systems, and emphasizes the need for 
research that provides cyber security protections tailored to the 
unique requirements of the energy sector.
    Question 35. In the budget request, the Office of Electricity is 
slated for a significant increase of 41.4 percent for $238.22 million 
in FY 2012. Within this office, the Research and Development arm is 
slated to receive the lion's share at $192.8 million to support 
research into smart grid (+$13.5 million), clean energy transmission 
(+23.4 million), energy storage (+43.4 million), and cyber security (-
8.9 million). Just this month, the Department announced it was 
launching a new Cyber Security Initiative, calling cyber security 
``vital to the development of a modern electric grid.'' Why are you 
supporting a decrease of funding in this critical area, particularly in 
light of DOE's new initiative and given the fact that both Smart Grid 
($4.4 billion) and clean energy transmission ($6 billion loan guarantee 
program before the $3.5 billion rescission and $20 million for 
transmission planning) received substantial Stimulus funding?
    Answer. The decrease in funding from FY 2010 reflects a one-time 
allocation of funds in 2010 to support the creation of the 
congressionally-directed National Electric Sector Cybersecurity 
Organization, or NESCO, as well as the successful completion of several 
industry-led projects. The FY 2012 request will continue to sustain the 
Department's work with the energy sector, academia, and national 
laboratories to address the unique cyber security challenges of the 
energy sector. As new advanced digital computing and communications 
devices are developed and deployed (i.e., Smart Grid) and the threat 
continues to evolve, adapt, and become more persistent, it is critical 
that industry and government continue to work together to develop and 
deploy resilient systems that can survive an intentional cyber event 
without loss of critical functions as set forth in the 2011 ``Roadmap 
to Secure Energy Delivery Systems.''
    Question 36. According to the Administration, the nation already 
receives 40 percent of its electricity from clean energy resources by 
2035. The White House explained to my staff that to get to this 40 
percent figure they're counting nuclear (20%), half of our natural gas 
(so 10%), hydropower (7%) and the remaining renewable resources (3%). 
With that calculation then, we're really talking about a 40 percent 
standard by 2035, correct?
    Answer. The Administration believes that the simplest way to define 
the clean energy share is to divide total clean generation by total 
electricity sales. This leads to the 40% initial share, and it puts the 
2035 goal in the context of our current energy system. With this 
definition, the President has proposed an 80% share by 2035-40 
additional percentage points above the current share.
    Question 37. Which agency is best suited to run this new program--
DOE or FERC?
    Answer. The administration of a CES program, if enacted by Congress 
would require strong support from DOE and FERC as well as other 
relevant agencies such as the EPA. The designation of a lead agency is 
a policy decision, and one that the Administration looks forward to 
working with Congress on.
    Question 38. How do you propose figuring out the baseline 
calculations for this new mandate? How do you propose treating existing 
sources of clean energy?
    Answer. Baselines should be calculated using EIA data. The 
treatment of existing sources of clean energy is a policy decision, and 
one that the Administration looks forward to working with Congress on.
    Question 39. How do you envision this new Clean Energy Standard 
interacting with the renewable energy mandates already in existence in 
29 states plus the District of Columbia?
    Answer. A federal CES would be an independent program. As the 
Administration envisions the Clean Energy Standard working, there is no 
implied interaction or interference with state RPS programs, and states 
could continue to operate these programs as appropriate.
                               smart grid
    Question 40. Last Congress, the Stimulus bill provided $4.4 billion 
in smart grid funding. The President's budget request calls for even 
more money in the smart grid arena ($45 million) plus a new Smart Grid 
Innovation Hub. Has all the Smart Grid stimulus funding been dispersed 
to date? How much additional funding is needed for the new Innovation 
Hub? As you know, FERC has yet to approve interoperability standards 
for smart grid. How is the lack of such standards hindering 
development?
    Answer. All Smart Grid-related stimulus funds were obligated by 
September 30, 2010. While it took time as 342 awards were put in place, 
the projects, aimed at improving grid reliability and efficiency, are 
now in full swing. 97 percent of the funds were competitively awarded, 
and resulted in significant private sector investment. Recipients 
contributed a cost share of almost $5.6 billion, more than matching the 
Federal investment. In contrast to the research and development work 
funded by annual appropriations, the Recovery Act-funded primarily 
focused on deployment of Smart Grid technologies.
    In addition to the Smart Grid R&D activities, the FY 2012 request 
includes $20 million for the Smart Grid Technology and Systems Hub for 
the first year, with a goal to continue funding research activities for 
an additional four years. The Hub will invest in research and 
development to address high-level challenges to the modernization of 
the grid.
    Although the Federal Energy Regulatory Commission (FERC) was 
charged in the Energy Independence and Security Act of 2007 with 
adopting standards as they deem necessary to advance the Smart Grid, 
their exact role in discharging that duty is still evolving. The lack 
of such standards directly from FERC, however, has not been a hindrance 
to the Smart Grid interoperability and standards work going on in the 
Smart Grid Interoperability Panel led by the National Institute of 
Standards and Technology. Significant development has taken place on 
addressing important gaps, an overarching framework for standards 
development, and cyber security, as well as interoperable standards 
that are providing guidance and direction for utilities, industry, and 
State and local regulators.
                               renewables
    Question 41. The President has proposed an 80 percent standard to 
increase deployment of clean energy resources by 2035. Hydropower 
currently makes up approximately 7 percent of total electricity 
generation and two-thirds of renewable electricity generation. Clearly, 
in order to meet the President's goal, increased deployment of 
hydropower resources--including conventional, marine and hydrokinetic 
and pumped hydro storage--will play a critical role. Yet, DOE's FY 2012 
budget proposes a cut to its waterpower program of over 20 percent from 
FY 2010 levels to $38.5 million. At the same time, all the other 
renewable programs--wind (+60.6%), solar (+87.8%), geothermal (+ 
135.5%) and biomass (+57.5%)--are slated for substantial increases. 
What is the reason for this clear disparity? In light of the 
President's ambitious goal, how can you support funding cuts for the 
country's leading renewable resource?
    Answer. The FY 2012 budget request does not represent lowered 
expectations for water power technologies. In fact, the Department of 
Energy is optimistic about the opportunities to further develop 
emerging marine and hydrokinetic energy technologies and to increase 
generation from our nation's hydropower resources. The FY2012 request 
builds upon the significant investment the Recovery Act made in 
conventional hydropower activities and will advance work to support the 
development of cost-competitive water power technologies. The $38.5 
million requested for water power research in FY2012 is sufficient to 
perform this work and accelerate the market adoption of these 
technologies.
    The Water Program is completing a comprehensive set of resource 
assessments, and undertaking detailed techno-economic assessments of 
emerging technologies, which will help us to effectively determine the 
opportunities and costs associated with these technologies. These 
important analyses will help the Department determine what funding 
levels are necessary and appropriate to realize water power's potential 
and are a responsible use of taxpayer dollars.
    For conventional hydropower, the Department's current goals are to 
facilitate the deployment of new sustainable hydropower generating 
capacity, including timely and low-cost upgrades at existing 
hydroelectric facilities, the powering of non-powered dams and 
constructed waterways, and assessing the potential for new small 
hydropower deployment. The Department also works with other federal 
agencies, such as the Army Corps of Engineers and the Department of the 
Interior's Bureau of Reclamation, to support the development of 
environmentally sustainable hydropower by increasing energy generation 
at federally-owned facilities and exploring opportunities for new 
development of low-impact hydropower.
    Question 42. If the country is to move toward greater clean and 
renewable energy generation, particularly with increased variable 
renewable energy generation, then energy storage will be needed. As you 
know, pumped hydro storage is a proven, existing, grid-scale energy 
storage technology with almost 22,000 MW of installed capacity in the 
U.S. and with over 30,000 MW of new projects under consideration. 
Pumped hydro storage already provides significant grid reliability 
benefits and assists with integration issues throughout the system. The 
President's budget contains items for energy storage research and 
project deployment. Can you discuss whether and how pumped hydro 
storage projects can benefit from these programs? The Department's 
budget materials note that DOE will start on new methods for 
identifying promising locations for pumped hydro--something I have 
called for in my Hydropower Improvement Act. What other initiatives 
will the Department pursuing to increase deployment of pumped storage 
resources? Will you be examining the FERC licensing process at all?
    Answer. The Department's energy storage research efforts support a 
diversified storage portfolio with large (compressed air energy storage 
and pumped storage hydropower (PSH)) and medium-to-small (batteries, 
flywheels, etc.) grid-scale technologies, which operate on various 
time-scales and power levels, that will be needed to make the power 
system more robust and efficient.
    The Department recognizes the value of pumped storage hydropower 
and has taken several steps to spur deployment of new PSH in the U.S. 
DOE convened a pumped storage technology summit meeting in September 
2010, to address issues and barriers related to PSH development. 
National and international industry experts, manufacturers, developers, 
and other stakeholders from diversified fields relevant to pumped 
hydropower were present. This meeting identified several key issues and 
outlined prospective actions to advance PSH development through 
competitive solicitations to be released in FY2011. Going forward, the 
Department will also demonstrate the full value of pumped storage 
through improved modeling, which will include the beneficial effect of 
PSH on further renewable energy system deployment and effective 
integration into the power system. DOE is also evaluating the 
complimentary role of PSH with other storage technologies. For example, 
DOE, in collaboration with the Bonneville Power Administration, is 
engaged in a study to explore the synergies between PSH, battery 
storage, and wind forecasting for better integration of wind power on 
the grid. DOE also hopes to release a Funding Opportunity Announcement 
in FY11 to capture opportunities to cost-effectively increase the 
capacity and generation of renewable electricity from conventional 
hydropower resources in the United States. Potential areas of support 
include investments in sustainable small hydropower, PSH, and 
environmental mitigation technologies.
                                 solar
    Question 43. The FY 2012 budget request supports an ambitious 
program, deemed the SunShot Initiative, to reduce the cost of an 
installed solar photovoltaic system to price parity to fossil-based 
electricity. The goal is to achieve a dollar-a-watt installed price for 
Solar PV electricity before the end of the decade. What is the current 
average national installed price for Solar PV? How does that compare to 
the average installed price for wind, hydropower, biomass, geothermal, 
coal, nuclear, and natural gas? How much does the Administration 
estimate this new initiative will cost?
    Answer. The goal of the SunShot Initiative is to reduce the total 
costs of solar energy systems by about 75 percent so that they are cost 
competitive with other forms of energy without subsidies before the end 
of the decade. This would equate to an installed cost of approximately 
$.05-06 per kilowatt-hour. At this price, DOE believes that solar 
energy has the potential to supply 15-18% of U.S. electricity by 2030, 
without energy storage. This will increase American economic 
competiveness and help the U.S. regain leadership in the global market 
for solar energy.
    To compare different technologies, one must look at the levelized 
cost of energy (LCOE) as this number reflects all cost factors 
including capital, financing, taxes, fuel and operating costs. 
According to analysis by DOE's Office of Energy Efficiency and 
Renewable Energy (EERE), current LCOE for residential photovolatics 
(PV) is estimated to be at $0.33; the LCOE of commercial PV is 
estimated at $0.28; and the LCOE of utility-scale PV is estimated at 
$0.14.
    According to analysis by EERE, the LCOE for land-based wind is 
estimated at $0.09; small hydropower is estimated at $0.09; and 
geothermal (hydrothermal) is estimated at $0.10. Energy Information 
Agency data is used for pricing on other technologies.
    Meeting the SunShot goal will require investments in research, 
development, and demonstration that are closely linked with the efforts 
of ARPA-E and the Office of Science (SC). The current FY12 budget 
request of $457 million covers the costs of this ambitious program for 
EERE, and addresses the competitiveness gap that now exists. The EERE 
efforts are supported by an SC request of $8 million in FY 2012 to 
support new scientific research focused on understanding the 
fundamental mechanisms of the degradation of photovoltaic materials 
during use and ARPA-E projects that focus on ``out-of-the-box'' 
transformational energy research that industry by itself cannot or will 
not support due to its high risk. The SunShot Initiative goals will be 
reached within the decade.
    Question 44. Last Congress, Senator Sanders introduced S. 3460, the 
Ten Million Solar Roofs Act, to allow states to use federal loans to 
provide rebates, loans and other incentives to consumers to purchase 
solar energy systems. How would the Administration's SunShot Initiative 
interplay with the Ten Million Solar Roofs Act if that legislation were 
enacted?
    Answer. The goal of the SunShot program is to reduce the cost of 
solar technologies to be competitive with conventional generation 
without subsidies by the end of the decade. This would equate to a 75% 
reduction in installed cost or approximately $1/WattDC for utility 
scale systems. Meeting this goal will require addressing costs due to 
permitting, interconnection, and inspection delays; so-called ``soft'' 
balance-of-system costs that are predominantly due to local and state 
regulation. These costs are a significant and rising part of total 
system costs, and addressing them is central to SunShot objectives. S. 
3460 provides for a competitive grant program to fund activities that 
support the purchase and installation of solar technologies at today's 
prices which are not yet competitive with commercial power. Preference 
for these grants would be provided to States, Indian tribes, and local 
governments that have established and maintained, or agreed to commit 
to establish and maintain, standards and policies conducive to 
distributed generation, including interconnection and net metering.
                reverse auction for cellulosic biofuels
    Question 45. Through the Biomass and Biorefinery R&D program, the 
administration requests $150 million for a reverse auction for 
cellulosic biofuels. Many within the industry have called for this 
funding, but some observers believe it will have minimal effect on 
cellulosic production--that it's more effective at increasing 
production from existing plants, rather than helping ensure that plants 
are built in the first place. Can you explain how the reverse auction 
would work? Where do you project cellulosic biofuel production will be 
this year, before the auction, and where do you project it would be 
after the auction has been completed? Is this a one-time request, or 
does the Department intend to make additional requests in future years?
    Answer. The Cellulosic Ethanol Reverse Auction will add a market-
based outlet for cellulosic ethanol demonstration plants. Specifically, 
a reverse auction will solicit bids from potential producers of 
cellulosic biofuels with a 750% decrease in greenhouse gas emissions. 
Those producers submitting the lowest bids would be awarded the 
production incentives. This is motivated by our detailed analysis, 
which demonstrates that we need to create a strong market signal for 
cellulosic ethanol and other advanced biofuels to solidify investment 
towards commercialization and meet the RFS targets. The auction will 
not increase any biofuels production from current biofuels facilities 
producing starch-based ethanol or biodiesel.
    The auction will incent the production of cellulosic biofuels, 
which are ``new'' products requiring new production facilities. DOE 
anticipates it will support additional auctions if the cost benefit 
analysis validates the value of continued funding requests.
                               geothermal
    Question 46. The Department proposes to increase funding for 
geothermal activities by 135.5 percent to $101.53 million. I've been a 
long-supporter of geothermal research and authored Section 635 of the 
2007 Energy Independence and Security Act (EISA) that authorized the 
U.S. Department of Energy (DOE) to provide grants for the installation 
of geothermal projects in high-cost areas nationwide. There are 
numerous opportunities for geothermal projects in my home state, as 
well as throughout the West. With additional geothermal funds, will the 
Department commit to finally funding Section 635 of EISA?
    Answer. Following up with Senator Murkowski's staff, DOE confirmed 
that the Senator was referring to EISA Section 625, High Cost Region 
Geothermal Energy Grant Program.
    The DOE Geothermal Technologies Program (GTP) is implementing EISA 
Section 625 by including in its Funding Opportunity Announcements 
(FOAs) a program policy factor for projects in high electricity cost 
regions as an additional consideration in the selection process for 
applications that have met merit review standards. High cost regions 
have been, and will continue to be, important areas for geothermal 
development. This is especially true where the geothermal resource can 
offset expensive diesel generators and other high-cost fuels.
    The Program currently supports four projects in the State of Alaska 
as authorized under Section 625 and other sections of EISA, using 
funding appropriated under the Recovery Act. These projects include:

------------------------------------------------------------------------
              Awardee                        Title           DOE Funding
------------------------------------------------------------------------
Hattenburg, Dilley, and Linnell,    Identifying Fractures   $313,858
 LLC                                 with Geochemical
                                     Techniques
------------------------------------------------------------------------
University of Alaska                Pilgrim Hot             $4,274,792
                                     Springs(Innovative
                                     Exploration
                                     Technologies)
------------------------------------------------------------------------
Naknek Electric  Association        Implementation of a     $12,376,568
                                     Demonstration EGS
                                     Project at Naknek,
                                     Alaska
------------------------------------------------------------------------
The Trabits Group                   Development of an       $2,154,238
                                     Improved Cement for
                                     Geothermal Wells
------------------------------------------------------------------------

    In FY 2012, the Program will continue to focus on expanding access 
to geothermal energy nationwide and include the policy factor for high 
electricity cost regions in its FOAs.
                critical minerals report and permitting
    Question 47. In December of last year, DOE issued an excellent 
report on minerals critical to clean energy. That report lays out a 
great deal of work that must be done to re-establish recycling and 
production capabilities here in the United States. Some of that work, 
however, falls outside the jurisdiction of DOE.
    Focused on the length of time it takes to permit new, domestic 
mines. The DOE report notes that the U.S. ranks dead last in this 
category worldwide, and that it can take up to a decade to obtain 
approval in the United States but only 1-2 years in Australia, for 
example. We absolutely must protect the environment, but I believe that 
goal is best met through competent implementation of the laws we have 
on the books--not by delaying projects, stranding private capital, and 
hoping domestic mineral development efforts are abandoned. Those 
tactics are short-sighted, counterproductive, and ultimately result in 
similar mines operating in areas of the world with far less stringent 
environmental protections.
    The DOE is scheduled to release an update of this report by the end 
of 2011. Is it possible to have that version jointly written by DOE and 
the Interior Department, with specific steps laid out that DOI not only 
can take, but will take, to address these permitting deficiencies?
    Answer. DOE's 2010 Critical Materials Strategy highlighted three 
pillars to address the challenges associated with critical materials in 
the clean energy economy. We anticipate that the updated 2011 report 
will expand on the discussion of these three pillars.
    First, substitutes must be developed. Research leading to material 
and technology substitutes improves flexibility to meet the material 
demands of the clean energy economy. Second, recycling, reuse and more 
efficient use can significantly lower world demand for newly extracted 
materials. Research into recycling processes coupled with well-designed 
policies will help make recycling economically viable over time. 
Finally, diversified global supply chains are essential. To manage 
supply risk, multiple sources of material are required. This means 
encouraging other nations to expedite alternativesupplies and exploring 
other potential sources of material (such as existing mine tailings or 
coal ash) in addition to facilitating environmentally sound extraction 
and processing here in the United States.
    Within this larger context, we do intend to discuss domestic 
production of rare earths in our 2011 report. Production within the 
United States is important for at least two reasons. First, the United 
States' considerable reserves of some critical materials could add 
significantly to total global production and to greater diversity in 
the global supply of these materials. Second, U.S. technology and best 
practices developed during mine operations can help promote safe and 
responsible mining in other countries, further contributing to supply 
diversity and the sustainable development of resources. With regard to 
mining in the United States, it is important to point out that permits 
are not the only requirements that can extend the time required to open 
a mine. The substantial capital investment required for rare earth mine 
development can also lead to delay.
    DOE will work with interagency colleagues (including DOI, USDA, 
EPA) whereappropriate in the development of the updated 2011 report and 
will recognize the significant role that DOI plays in domestic natural 
resource management.
                            loan guarantees
    Question 48. When the money under Section 1705 of the Loan 
Guarantee Program runs out, do you view Section 1703 as conducive to 
helping smaller renewable energy technologies?
    Answer. We are currently focused on ensuring that the Section 1705 
program draws to a successful close. Once that program ends, we look 
forward to using existing authorities including Section 1703, to 
promote commercial deployment of innovative renewable energy 
technologies.
                          hydrogen/fuel cells
    Question 49. Generally, please describe the advances that have been 
made in hydrogen and fuel cell technologies over the past 15 years. 
Please include a description of how costs have come down, how 
efficiency has increased, and any role the federal government has had 
in those developments.
    Answer. Hydrogen and fuel cell technologies have made significant 
advances over the last 10 to 15 years (in cost, durability, efficiency, 
platinum loading, etc.), due in large part to funding provided by the 
federal government. For example, DOE-funded research and development 
(R&D) has, in separate projects:

   Reduced the cost of automotive fuel cells by more than 80% 
        since 2002, from $275/kW to $51/kW (projected for high volume 
        manufacturing)\2\
---------------------------------------------------------------------------
    \2\ U.S. DOE Hydrogen Program Record 10004, http://
www.hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf; costs are based 
on projections to high-volume manufacturing (500,000 units/ year)
---------------------------------------------------------------------------
   Contributed to a more than order of magnitude reduction in 
        platinum loading (from 4 mg/cm2 to less than 0.2 mg/
        cm2), which corresponds to reducing the amount of 
        platinum in a typical fuel cell electric vehicle from more than 
        300 grams to less than 20 grams\1\, \3\
---------------------------------------------------------------------------
    \3\ See for example, Ian Raistrick, U.S. Patent 4876115 (1989), 
``Electrode assembly for use in a solid polymer electrolyte fuel cell'' 
(www.freepatentsonline.com/4876115.html)
---------------------------------------------------------------------------
   Enabled significant reductions in the cost of high 
        temperature stationary fuel cells; for example from roughly 
        $20,000/kW in 1996 to about $4,000/kW in 2010\4\, \5\
---------------------------------------------------------------------------
    \4\ `International Status of Molten Carbonate Fuel Cell (MCFC) 
Technology, R. Bove, A. Moreno, S. McPhail, JRC Scientific and 
Technical Reports (2008)
    \5\ `US DOE MCFC and PAFC R&D Workshop Summary Report (2010); 
'Molten Carbonate and Phosphoric Acid Stationary Fuel Cells: Overview 
and Gap Analysis'', Technical Report NREL/TP-560-49072 (2010)
---------------------------------------------------------------------------
   Increased fuel cell efficiencies by more than 30% at both 
        higher current densities and lower platinum loadings, from 
        roughly 42% in 1999\6\ to 55% in 2010\7\
---------------------------------------------------------------------------
    \6\ Mahlon S. Wilson et al., ``PEMFC Stacks for Power Generation,'' 
in: Proceedings of the 1999 U.S DOE Hydrogen Program Review, http://
www1.eere.energy.gov/hydrogenandfuelcells/pdfs/26938aa.pdf
    \7\ M. K. Debe et al., ``Advanced Cathode Catalysts and Supports 
for PEM Fuel Cells,'' Mark K. Debe et al., ``Advanced Cathode Catalysts 
and Supports for PEM Fuel Cells,'' in: FY 2010 Progress Report for the 
DOE Hydrogen Program, U.S. Department of Energy, Washington, DC, 2010, 
pp. 790. http://www.hydrogen.energy.gov/pdfs/progress10/v_e_1_debe.pdf
---------------------------------------------------------------------------
   Reduced the cost of electrolyzer stacks by more than 80% 
        over the last decade, from more than $2,500/kW to roughly $460/
        kW when projected at high volumes\8\
---------------------------------------------------------------------------
    \8\ M. Hamdan, ``Low cost, high pressure hydrogen generator'', DOE 
Annual Merit Review presentation, 2008, http://www.hydrogen.energy.gov/
pdfs/review08/pd_10_hamden.pdf
---------------------------------------------------------------------------
   Demonstrated 152 fuel cell electric vehicles and 24 hydrogen 
        stations, achieving 2.8 million miles, up to 59% efficiency 
        (more than twice the efficiency of conventional gasoline 
        engines), and a driving range of more than 250 miles;\9\ and 
        independently validated an additional vehicle to be capable of 
        430 miles on a single fill of hydrogen\10\
---------------------------------------------------------------------------
    \9\ K. Wipke, et al., ``Controlled Hydrogen Fleet and 
Infrastructure Analysis,'' 2010 Annual Merit Review Proceedings, 2010, 
www.hydrogen.energy.gov/pdfs/review10/tv001_wipke_2010_o_web.pdf.
    \10\ K. Wipke, et al., ``Evaluation of Range Estimates for Toyota 
FCHV-adv Under Open Road Driving Conditions,'' Sandia National 
Laboratories and the National Renewable Energy Laboratory, August 2010, 
http://www.nrel.gov/hydrogen/pdfs/toyota_fchv-
adv_range_verification.pdf
---------------------------------------------------------------------------
   More than doubled the durability of fuel cells, 
        demonstrating the ability to achieve 2,500 hours (75,000 miles) 
        of durability in vehicles on the road with less than 10% 
        degradation\8\
   Reduced the cost of producing hydrogen from a number of 
        pathways, such as reducing the cost of hydrogen production from 
        distributed natural gas from $5.00 per gallon gasoline 
        equivalent (gge) in 2002 to $3.00/gge in 2005.\11\
---------------------------------------------------------------------------
    \11\ Distributed Hydrogen Production from Natural Gas, Independent 
Review, October, 2006, http://hydrogen.energy.gov/pdfs/40382.pdf; and 
Hydrogen Program Record # 5035, ``Cost Analysis of Hydrogen Production 
from Natural Gas, 2003--2005,'' http://hydrogen.energy.gov/pdfs/
5035_cost_analysis_production.pdf.

    The R&D efforts of the Department's Fuel Cell Technologies Program 
have resulted in nearly 200 patents, 30 products becoming commercially 
available, and industry currently pursuing development of more than 50 
emerging technologies.\12\ These R&D gains have directly enabled 
companies such as Proton OnSite to sell more than 1,400 electrolyzers, 
Quantum Technologies to sell more than 2,000 hydrogen storage tanks, 
and 3M manufacture more than 800,000 fuel cell membrane electrode 
assemblies to date.
---------------------------------------------------------------------------
    \12\ Pathways to Commercial Success: Technologies and Products 
Supported by the Fuel Cell Technologies Program, 2010, http://
www1.eere.energy.gov/hydrogenandfuelcells/pdfs/pathways.pdf
---------------------------------------------------------------------------
    Question 50. Has the hydrogen and fuel cell program at DOE 
generally met the targets established for it?
    Answer. DOE's hydrogen and fuel cells programs have generally met 
their targets and milestones. Past accomplishments include:

   Reduced the cost of automotive fuel cells, projected at high 
        volumes, by 30% since 2008 and 80% since 2002 (from $275/kW in 
        2002 to $51/kW in 2010)\13\
---------------------------------------------------------------------------
    \13\ DOE Program Record 10004, http://www.hydrogen.energy.gov/pdfs/
10004_fuel_cell_cost.pdf
---------------------------------------------------------------------------
   Demonstrated improved durability of fuel cell systems in 
        vehicles operating under real-world conditions from 950 hours 
        in 2006 to 2,500 hours (approximately 75,000 miles), which 
        exceeds the 2009 target of 2,000 hours\14\
---------------------------------------------------------------------------
    \14\ K. Wipke, et al., ``Controlled Hydrogen Fleet and 
Infrastructure Analysis,'' 2010 Annual Merit Review Proceedings, 2010, 
www.hydrogen.energy.gov/pdfs/review10/tv001_wipke_2010_o_web.pdf.
---------------------------------------------------------------------------
   Developed a non-platinum group metal catalyst with mass-
        transport corrected activity exceeding the DOE 2010 target of 
        130 Amps/cm3 at 0.8 volts\15\
---------------------------------------------------------------------------
    \15\ P. Zelenay, ``Advanced Cathode Catalysts,'' 2010 Annual Merit 
Review Proceedings, 2010, http://www.hydrogen.energy.gov/pdfs/review10/
fc005_zelenay_2010_o_web.pdf.
---------------------------------------------------------------------------
   Developed a 5- to 10-kW solid oxide fuel cell system for 
        combined heat and power applications, with a 24% increase in 
        system power density, which enabled a 33% reduction in stack 
        volume and a 15% reduction in stack weight;\16\ this system's 
        high volume cost has been projected to be $729/kW, which 
        surpasses the 2011 target of $750/kW
---------------------------------------------------------------------------
    \16\ ``Development of a Low Cost 3-10 kW Tubular SOFC Power 
System,'' 2010 DOE Hydrogen Program Annual Progress Report, http://
hydrogen.energy.gov/pdfs/progress10/v_g_2_bessette.pdf.
---------------------------------------------------------------------------
   Reduced the modeled cost of hydrogen production from natural 
        gas at high volume, meeting the 2005 target of a gasoline-
        competitive price of $3.00/gallon of gasoline equivalent\17\
---------------------------------------------------------------------------
    \17\ Distributed Hydrogen Production from Natural Gas, Independent 
Review, October, 2006, http://hydrogen.energy.gov/pdfs/40382.pdf; All 
production costs are based on projections to high-volume production; 
centralized production costs do not include delivery and station costs.
---------------------------------------------------------------------------
   Reduced the cost of producing hydrogen through several 
        production pathways, including distributed electrolysis 
        ($4.90--$5.70/gge) and centralized electrolysis from wind 
        ($2.70--$3.50/gge)\18\
---------------------------------------------------------------------------
    \18\ Current (2009) State-of-the-Art Hydrogen Production Cost 
Estimate Using Water Electrolysis, NREL, September 2009, http://
hydrogen.energy.gov/pdfs/46676.pdf.
---------------------------------------------------------------------------
   Improved hydrogen-from-coal technologies-hydrogen flux rates 
        of greater than 400 scfh/ft\2\ have been observed for best 
        alloy membranes, and baseline alloy membranes show stable 
        performance for 200 scfh/ft\2\ during lifetime reactor testing, 
        meeting the Program's 2010 technical targets for flux\19\
---------------------------------------------------------------------------
    \19\ S. Dillich, ``Hydrogen Production,'' 2010 Annual Merit Review 
Proceedings, 2010, www.hydrogen.energy.gov/pdfs/review10/
pd00a_dillich_2010_o_web.pdf
---------------------------------------------------------------------------
   Operated integrated laboratory-scale, hydrogen from nuclear 
        power, high-temperature electrolysis unit for 45 days achieving 
        5,650 liters per hour peak output at 12 kWe input\20\
---------------------------------------------------------------------------
    \20\ S. Herring, ``FY 2009 Laboratory-Scale High Temperature 
Electrolysis System,'' 2009 Annual Progress Report, http://
hydrogen.energy.gov/pdfs/review09/pd_14_herring.pdf.
---------------------------------------------------------------------------
   Reduced the projected cost of hydrogen delivery by achieving 
        a 30% reduction in projected tube trailer costs, 20% reduction 
        in projected pipeline costs, and a 15% reduction in projected 
        liquid hydrogen costs\21\
---------------------------------------------------------------------------
    \21\ R. Farmer, ``Fuel Cell Technologies Program Overview,'' 2010 
Annual Merit Review Proceedings, 2010, www.hydrogen.energy.gov/pdfs/
review10/pln005_farmer_2010_o_web.pdf.
---------------------------------------------------------------------------
   Identified several promising new materials for high-
        capacity, low-pressure, on-board hydrogen storage systems, 
        which have provided more than 50 percent improvement in storage 
        capacity since 2004, with some materials achieving nearly 10 
        percent material-based capacity by weight; R&D conducted to 
        modify the performance characteristics of these materials has 
        demonstrated potential for room temperature storage in sorbent 
        materials (which would normally require cryogenic temperatures) 
        and has increased the rates at which hydrogen is released from 
        materials (including increasing the release rate from one 
        material by a factor of 60 For the amount of this material that 
        stores roughly 5 kg of hydrogen, the rate increase was from 
        0.02 grams of hydrogen per second to approximately 1.4 grams of 
        hydrogen per second, close to the 2015 and Ultimate Full Fleet 
        system target rate of 1.6 grams of hydrogen per second for an 
        80 kilowatt automotive fuel cell system.\22\,  \23\,  \24\
---------------------------------------------------------------------------
    \22\ L. Simpson, ``Overview of the DOE Hydrogen Sorption Center of 
Excellence'' 2010 Annual Merit Review Proceedings, 2010, 
www.hydrogen.energy.gov/pdfs/review10/st014_simpson_2010_o_web.pdf.
    \23\ http://www.hydrogen.energy.gov/pdfs/5037_h2_storage.pdf
    \24\ http://www.hydrogen.energy.gov/pdfs/
9014_hydrogen_storage_materials.pdf
---------------------------------------------------------------------------
   Developed and demonstrated a novel ``cryo-compressed'' tank 
        concept, achieving system gravimetric capacity of 5.4 percent 
        by weight (wt %), which exceeds the Program's 2010 system 
        target of 4.5 wt %, and a volumetric system capacity of 
        approximately 31 g/L\25\
---------------------------------------------------------------------------
    \25\ ``Hydrogen Storage Sub-Program Overview,'' 2007 Annual 
Progress Report, DOE Hydrogen Program, 2007, p. 337, 
www.hydrogen.energy.gov/pdfs/progress07/iv_0_introduction.pdf.
---------------------------------------------------------------------------
   Reduced the cost of gas diffusion layers in one project by 
        more than 60% through improved materials and manufacturing 
        processes\26\
---------------------------------------------------------------------------
    \26\ J. Morgan, ``Reduction in Fabrication Costs of Gas Diffusion 
Layers,'' 2010 Annual Merit Review Proceedings, 2010, 
www.hydrogen.energy.gov/pdfs/review10/mn002_morgan_2010_o_web.pdf.
---------------------------------------------------------------------------
   Deployed 152 fuel cell vehicles and 24 hydrogen fueling 
        stations to validate R&D advances under real world conditions-
        these vehicles have traveled over 2.8 million miles and the 
        fueling stations have produced or dispensed over 150,000 kg of 
        hydrogen. The Program validated the status of these 
        technologies, including:

    --Vehicular fuel cell efficiency of up to 59 percent
    --Vehicular fuel cell system durability of 2,500 hours (nearly 
            75,000 miles), with less than 10% degradation
    --Vehicle range of more than 250 miles between refueling\27\ 
            (another vehicle, which is not part of the Program's 
            demonstration activities, was independently validated to be 
            capable of 430 miles on a single fill of hydrogen)\28\
---------------------------------------------------------------------------
    \27\ K. Wipke, et al., ``Controlled Hydrogen Fleet and 
Infrastructure Analysis,'' 2010 Annual Merit Review Proceedings, 2010, 
www.hydrogen.energy.gov/pdfs/review10/tv001_wipke_2010_o_web.pdf.
    \28\ K. Wipke, et al., ``Evaluation of Range Estimates for Toyota 
FCHV-adv Under Open Road Driving Conditions,'' Sandia National 
Laboratories and the National Renewable Energy Laboratory, August 2010, 
http://www.nrel.gov/hydrogen/pdfs/toyota_fchv-
adv_range_verification.pdf

   Developed online resources to disseminate hydrogen safety 
        information and facilitate the process of permitting hydrogen 
        installations, including: The Hydrogen Safety Best Practices 
        Manual, the Technical Reference on Hydrogen Compatibility of 
        Materials Manual, the Regulators' Guide to Permitting Hydrogen 
        Technologies, the Hydrogen Safety Bibliographic Database, the 
        Hydrogen Incidents and Lessons Learned Database, and the 
        Permitting Hydrogen Facilities Compendium
   Launched the ``Increase Your H2IQ Public Information 
        Program''\29\ which includes radio spots, podcasts, and print 
        materials; and disseminated hydrogen and fuel cell course 
        materials to over 8,000 middle school and high school 
        teachers,\30\ and developed 25 university courses and 
        curriculum modules.
---------------------------------------------------------------------------
    \29\ ``Increase Your H2IQ,'' www1.eere.energy.gov/
hydrogenandfuelcells/education/h2iq.html.
    \30\ M. Spruill, ``H2 Educate! Hydrogen Education for Middle 
Schools,'' 2010 Annual Merit Review Proceedings, June 2010, http://
hydrogen.energy.gov/pdfs/review10/ed017_spruill_2010_p_web.pdf.

    More work needs to be done to advance the development and use of 
these technologies in the marketplace. The President's FY2012 Budget 
request for Hydrogen and Fuel Cell Technologies will support activities 
that address a variety of near-, mid- and longer-term applications and 
technologies. For example, in FY 2012, fuel cell R&D will focus on 
achieving a catalyst specific power of 5.7 kW per gram of platinum 
group metal in 2012 compared to 2.8 kW per gram in 2008.
    Question 51. Has the hydrogen and fuel cell program at DOE been 
successful in attracting private investment in these areas?
    Answer. The Department's Fuel Cell Technologies program has been 
successful in attracting private investments for R&D and demonstration 
activities. Awards made by the program require at least 20% cost share 
from non-federal sources for applied research and development projects 
and at least 50% cost share for demonstration activities. The overall 
cost share for the program in Fiscal Year 2010 was 25%, resulting in 
$46 million of leveraged funds. In addition, the program provided $43 
million for the deployment of up to 1,000 fuel cells under the Recovery 
Act of 2009, which was matched by an additional $54 million by 
industry. In fact, one company receiving Recovery Act Funding ordered 
100 additional fuel cell forklift trucks funded 100% privately.
    In one major demonstration project with energy companies and 
automobile companies, the Department spent $135 million since 2005, 
which was matched with an average of more than 50% cost share by 
industry, bringing the total direct private investment to $152 million.
    In addition to direct private investment as cost share for DOE 
funded projects, the research and development efforts of DOE's Fuel 
Cell Technologies Program have resulted in significant industry 
investment through nearly 200 patents developed, 30 products brought to 
commercial availability, and current industry development of more than 
50 emerging technologies.\31\
---------------------------------------------------------------------------
    \31\ http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/
pathways.pdf
---------------------------------------------------------------------------
    Question 52. Where does the United States rank globally--especially 
compared to Europe and Asia--in the development of fuel cell and 
hydrogen technologies?
    Answer. The United States continues to lead in the development of 
fuel cell and hydrogen technologies. Department of Energy funding has 
already enabled fuel cell cost reductions of more than 80% since 2002 
and 30% since 2008;\32\ and continues to focus on research and 
development to further improve technology and enable domestic 
leadership. The Department has invested more than $2 billion over the 
last decade in fuel cell and hydrogen technologies.\2\, \3\ Europe and 
Asia are planning similar levels of investment through 2016, focused on 
deployment and demonstration of fuel cells and related 
infrastructure.\4\
---------------------------------------------------------------------------
    \32\ http://www.hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf
    \2\ DOE Hydrogen Program Budget,'' http://hydrogen.energy.gov/
budget.html
    \3\ Dr. Shailesh D. Vora, ``Office of Fossil Energy Fuel Cell 
Program-Solid State Energy Conversion Alliance (SECA): Clean, Economic 
Energy for a Carbon Constrained World,'' National Energy Technology 
Laboratory, July 2010, www.netl.doe.gov/publications/proceedings/10/
seca/Presentations/Vora%20_Presentation.pdf.
    \4\ http://iphe.net/docs/Resources/
IPHE_FINAL_SON_press_quality.pdf)
---------------------------------------------------------------------------
    One external estimate indicates that there are more than 630 active 
companies and laboratories in 47 states involved in fuel cell and 
related fuels industry, investing an estimated $1B a year.\5\ According 
to a 2010 report global investments in fuel cell companies (in venture 
capital and private equity) grew from $155 million in 2007 to $242 
million in 2009.\6\ Out of the top ten venture capital and private 
equity investors in hydrogen and fuel cell technologies worldwide, the 
highest cumulative investment over the last decade ($825 million) was 
from the United States.\6\
---------------------------------------------------------------------------
    \5\ http://www.fuelcells.org/StateoftheStates.pdf
    \6\ http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/49492.pdf
---------------------------------------------------------------------------
    Question 53. Under the Department's FY 2012 request, how much 
funding would be applied to hydrogen and fuel cell technologies, and 
how much funding would be applied to electrification-related 
technologies?
    Answer. Under the FY12 Budget request, the Hydrogen and Fuel Cell 
Technologies Program would receive a total of $100,450,000. The budget 
request also includes $433.5 million for electrification related 
technologies through the Vehicle Technologies Program.
    Question 54. Secretary Chu stated that funding for hydrogen and 
fuel cell technologies is being slashed because the Department intends 
to ``focus on technologies deployable at large scale in the near 
term.'' At least four major manufacturers--Honda, Toyota, GM, and 
Daimler--are currently working on fuel cell vehicles, however, and many 
expect their cars to be commercially available by 2015. Could cutting 
funding for this program--and putting more money into electric vehicles 
instead--send the wrong signal and have a chilling effect on future 
investments into hydrogen and fuel cell technologies?
    Answer. The Department's strategy is to sustain a balanced research 
and development (R&D) portfolio, with emphasis on nearer-term 
priorities, such as batteries, advanced vehicle technologies, and 
technologies for renewable power and energy efficiency. Fuel cell 
electric vehicles (FCEVs) are still part of the portfolio of options 
under development. DOE's funding for battery R&D will also be 
beneficial for fuel cell electric vehicles (FCEVs) which rely on 
batteries in addition to fuel cells.
    The Department will continue its critical efforts in hydrogen and 
fuel cell R&D, which have already reduced the cost of fuel cells by 
more than 30% since 2008 and 80% since 2002.\33\ DOE's hydrogen and 
fuel cell program has also resulted in approximately 200 patents, 30 
products becoming commercially available, and industry currently 
pursuing development of more than 50 emerging technologies.\34\ The 
FY12 budget sustains DOE's core R&D efforts which will continue to 
advance the technologies and improve the likelihood of a successful 
rollout by automobile manufacturers in the coming years.
---------------------------------------------------------------------------
    \33\ 33 http://hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf
    \34\ http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/
pathways.pdf
---------------------------------------------------------------------------
                 president's goal for electric vehicles
    Question 55. What percentage of the overall vehicle fleet would 1 
million electric vehicles represent in 2015?
    Answer. According to projections in the Energy Information 
Administration's Annual Energy Outlook 2011, one million plug-in 
vehicles would represent 0.42% of the U.S. light-duty vehicle fleet in 
2015. However, it is important to note that the one million vehicles 
initiative is considered a milestone for growth of the advanced 
technology vehicle market, rather than an end point. Significant 
additional market penetration is required to fully address petroleum 
consumption and greenhouse gas reductions across the nation's vehicle 
fleet.
    Question 56. How much oil consumption would 1 million electric 
vehicles displace per year?
    Answer. The Department of Energy's Vehicle Technologies Program 
estimates that one million electric-drive vehicles would save 11.5 
million barrels in 2015. This estimate compares the fuel consumption of 
one million electric-drive vehicles to one million conventional 
vehicles in 2015 and assumes the electric-drive vehicles are a 50-50 
mix of batteryelectric vehicles and plug-in hybrid electric 
vehicles\35\. Additionally, it is important to note that one million 
electric-drive vehicles is only a small percentage of the nation's 
vehicle fleet (currently over 240 million vehicles) and represents a 
milestone for growth of the advanced technology vehicle market, rather 
than an end point. Significant additional electric-drive vehicle market 
penetration in the coming decades would result in significant 
additional oil savings.
---------------------------------------------------------------------------
    \35\ 2015 stock vehicle listed as 22 miles per gallon in the 2011 
Energy Information Agency Annual Energy Outlook (table 59), plug-in 
hybrid assumed to have a 40 mile all-electric range.
---------------------------------------------------------------------------
    Question 57. What is the total amount of federal subsidy and 
outlay--including all spending at DOE, the proposed communities 
deployment program, the per-vehicle tax credits, loan programs, and 
other federal assistance--that those 1 million electric vehicles are 
projected to receive?
    Answer. Aside from the $7,500 tax credit, the first one million 
electric vehicles sold will not receive Federal funds. Department of 
Energy funds are not specifically targeted to subsidize the first 
million vehicles. However, the Department's vehicle-related programs, 
such as activities funded through the American Recovery and 
Reinvestment Act, the Vehicle Technologies Program, and the Advanced 
Technology Vehicle Manufacturing Loan Program, support advanced vehicle 
technology development, demonstration, and commercial deployment. These 
efforts focus on a broad range of technologies including not only 
batteries and power electronics needed for electric-drive vehicles but 
also advanced combustion, materials technologies, and fuels 
technologies that support the transformation of the nation's entire 240 
million vehicle fleet. Electric drive R&D funds are not solely focused 
on reaching the 1 million vehicle goal; instead R&D is focused on 
removing technical barriers to broad market acceptance.
                      vehicle techologies program
    Question 58. In recent years, light duty vehicles have received far 
more funding from this program than have medium-and heavy-duty trucks. 
Please provide a breakdown of funding for the Fiscal Year 2012 request. 
How much funding would light-duty vehicles receive? How much funding 
would heavy-duty vehicles receive?
    Answer. With the President's fiscal year (FY) 2012 budget request 
of $588 million, the Department of Energy's Vehicle Technologies 
Program plans to continue its support of a broad range of advanced 
vehicle technologies including electric drive, advanced combustion, 
fuels, and materials technologies that are applicable to light-, 
medium-, and heavy-duty vehicles. Of the total request amount, $200 
million would support a new competitive grant program to help 
communities accelerate the deployment of electric vehicles and electric 
charging infrastructure. The remaining $388 million would support work 
specifically related to light, medium, and heavy-duty vehicles, as well 
as work that crosscuts vehicle classes, including enabling technologies 
and outreach, deployment, and analysis activities.
    The precise division of FY 2012 funds for work supporting different 
vehicle classes will depend on the selection of projects under a 
recently closed FY 2011 solicitation and new solicitations planned for 
FY 2012. It is important to note that the program's support of light-
duty vehicle technologies generally reflects their significant 
contribution to highway transportation energy use, compared to other 
vehicle classes: light-duty vehicles account for 76% and heavy trucks 
account for 19% of U.S. highway transportation energy use (buses and 
medium trucks account for the remaining 5%).
    Question 59. Will natural gas vehicle technologies receive any 
funding through this year's Vehicle Technology Program request, or any 
other program within the Department?
    Answer. The Vehicle Technologies Program (VTP) has no plans to fund 
additional work projects on natural gas engines in fiscal year (FY) 
2012 or FY 2011. In FY 2010, VTP awarded $5 million in new projects for 
work on natural gas engine and vehicle platform integration and this 
work will continue during the next several years. These funds are being 
partly matched by the California Energy Commission and the California 
South Coast Air Quality Management District for a total of more than 
$12 million, in addition to recipient cost share.
                    ev community deployment program
    Question 60. The utility NRG Energy has announced it will deploy 
electric vehicle charging stations in Dallas and Houston using its own 
money, and is considering expanding to other markets in the near 
future. A lot of companies--from the Best Buys of the world to 
Walgreens--seem to be realizing that they have an economic incentive to 
install chargers to help draw in customers.
    Given that most consumers are expected to charge their vehicles at 
home or at work, how necessary is it for the federal government to 
provide significant additional funding--beyond the existing tax 
credit--for public charging infrastructure?
    Answer. Although it is anticipated that consumers will most often 
charge their plug-in electric vehicles at home or at work, it is 
critical that adequate public charging infrastructure exist in order to 
promote consumer acceptance of grid-connected vehicles. The presence of 
this infrastructure will alleviate concerns over range-anxiety, 
positively impacting the number of consumers who consider purchasing 
electric-drive vehicles. Additionally, public charging infrastructure 
will expand the practical operating area of electric vehicles, allowing 
the benefits to be realized more broadly than with residential and 
workplace charging alone. Adequate public charging infrastructure is a 
key enabler for the adoption of grid-connected vehicles, and federal 
funding to support deployment will greatly accelerate the transition of 
our nation's vehicle fleet away from its reliance on petroleum. While 
commercial entities may establish some charging infrastructure, 
government should work to leverage those activities.
    Question 61. How would communities be selected to receive grants 
under the Department's proposed program?
    Answer. Communities would be selected through an open and 
competitive process and selection criteria would be included in the 
Funding Opportunity Announcement, which will be publicly available. 
While the specific selection criteria have not been finalized, we 
envision the following factors as being key to a successful 
application:

   Does the community have credible plans to overcome 
        permitting barriers?
   Has the community engaged the right partners and key 
        stakeholders to be successful?
   Has the community proposed innovative incentives to promote 
        adoption?
   How is the community using local and private funds to highly 
        leverage the available Federal funds?
   Does the total number of charging points proposed represent 
        a very high value for the funding?

    Question 62. How will you prevent this program from crowding out 
investment, and replacing private dollars with federal funding?
    Answer. This program would not crowd out investment and replace 
private dollars with Federal funding; rather, it would highly leverage 
non-Federal funds and encourage stakeholder involvement and investment 
at the local level. Among the considerations for selecting communities 
for award would be the way in which they use local and private funds to 
highly leverage the available Federal funding.
     atvm (advanced technology vehicle manufacturing) loan program
    Despite initial reports that it was greatly oversubscribed, just 
one small conditional loan has been offered in the past 10 months, and 
nearly two-thirds of the ATVM loan program's authority remains unused.
    Question 63. Will you explain what exactly is happening with the 
Advanced Technology Vehicle Manufacturing, or ATVM, Program?
    Answer. On July 13, the Department announced the conditional 
commitment of a loan to Severstal for $730 million. To date, the 
Advanced Technology Vehicle Manufacturing Loan program has made six 
loans or conditional commitments to vehicle manufacturers or parts 
suppliers so far totaling over $9 billion. Approximately $4 billion of 
the credit subsidy remains for future loans awarded under the Advanced 
Technology Vehicle Manufacturing Loan Program. We anticipate offering a 
number of additional conditional commitments under the program in the 
near future.
    Question 64. Why did the past year feature so few new loans?
    Answer. There are several reasons why the ATVM program had fewer 
loans in 2010. First, the statute requires a nexus between a component 
maker's products and an advanced technology vehicle. Traditional 
business practices do not ordinarily entail long term contracts for 
such components well in advance of production, nor the earmarking of 
components for specific car models. Even some major traditional 
suppliers could not meet this requirement. Second, the past year (2010) 
represented a recovery in the automobile market over the disastrous 
economy of 2009. Suppliers are generally financed by Original Equipment 
Manufacturers (OEMs) who were cutting production and experiencing cash 
flow problems in 2009, but increased production in 2010, thus providing 
the financing which suppliers rely on. Third, several major OEMs 
struggling through bankruptcy needed time to meet all the necessary 
eligibility requirements for the program. Finally, as major OEMs 
announced new advanced technology product offerings, the competitive 
environment became much more difficult for OEM start-ups and many 
failed to qualify for or pursue ATVM loans.
    Question 65. Please provide a breakdown of how the ATVM program's 
$20 million administrative budget was spent in Fiscal Year 2010, and is 
being spent during Fiscal Year 2011.
    Answer. In FY 2010, the ATVM Loan Program obligated $1.4 million 
for federal salaries and expenses and $17.4 million for contractor and 
other expenses including legal advisors, financial advisors, market 
advisors, and technical reviews provided by DOE labs. In FY 2011, the 
ATVM Loan Program is projected to obligate $2 million for federal 
salaries and expenses and $10 million for contractor and other 
expenses.
    Question 66. In the President's budget request, this program's 
administrative costs are trimmed to $6 million to ``support ongoing 
loan monitoring activities.'' Do you anticipate originating and/or 
closing any new loans this year? When do you believe the ATVM program 
will have exhausted its statutory $25 billion in loan authority?
    Answer. The FY 2012 budget request anticipated the ATVM program to 
have awarded the bulk of the authority by the end of FY 2011. 
Therefore, by FY 2012, the program expected to be in the role of 
primarily monitoring the loans completed through FY 2011. Since that 
time, GM has generated sources of capital that permit it to finance its 
own technical work and others have been affected by the factors 
articulated in Q64 above. We are working to process all pending 
applications as fast as possible.
                                 china
    Question 67. In November, you likened clean energy to a ``race'' 
and suggested we were on the verge of falling behind other countries 
including China. While China is working on a range of clean energy 
technologies, it would be helpful to understand their broader energy 
policies. How does China approach oil, natural gas, coal and mineral 
development, both within its borders and abroad? How does China 
approach hydropower? Is China building new coal plants without carbon 
capture and sequestration technology, and if so, at what rate?
    Answer. China is investing heavily in its energy sector. 
Increasingly, Chinese energy investments are characterized not just by 
their size, but by the high quality of the technologies deployed. The 
Chinese government is focused on promoting energy innovation as a core 
part of its economic development strategy. Furthermore, China is 
seeking to develop its energy industry by investing both domestically 
and abroad.
Oil
    According to the Energy Information Administration (EIA), China is 
the second largest oil consumer behind the United States, with oil 
accounting for 19 percent of its total energy mix. China used to be a 
net exporter of oil in the 1990s, but by 2009, was the world's second 
largest net importer of oil, again behind the United States. Currently, 
China is reliant on imports for just over half of its oil consumed 
domestically, a share that has been trending upwards due to the peaking 
of production of its largest domestic onshore oil fields in the 
northeast. China has set up a strategic petroleum reserve (SPR), 
starting construction in 2004. On the demand-side, China has begun to 
introduce price reforms to manage demand. It launched a fuel tax on the 
retail sale of gasoline in 2008 and has also liberalized the pricing 
system of gasoline to better reflect crude oil prices in the 
international market. In 2010, the government announced it would levy a 
new 5 percent ad valorem resource tax on upstream hydrocarbons in 13 
provinces.
Natural Gas
    Natural gas accounts for approximately 4 percent of China's energy 
consumption, but demand for it and its share in the consumption mix is 
increasing. Demand for natural gas is projected by EIA to more than 
triple by 2035. In an effort to move away from heavy coal use and 
reduce fossil fuel emissions, China is seeking to double the share of 
natural gas to 8.3 percent of the total energy mix by 2015 under its 
new five-year plan. In order to meet increased demand, China's National 
Energy Administration estimates China will import 90 billion cubic 
meters of gas a year by 2015, in addition to producing 170 billion 
cubic meters domestically. China is also thought to have rich reserves 
of ``unconventional'' gas, which is buried in shale or coal rock 
formations. Unconventional natural gas has yet to be produced 
commercially on a large scale in China. In an effort to gain the 
technical expertise to develop its own unconventional gas resources and 
acquire additional natural resources overseas, Chinese national oil 
companies (NOCs) have purchased shares of unconventional gas deposits 
in other countries, including the United States.
Coal
    According to EIA, coal comprises 71 percent of China's total energy 
consumption and 80 percent of its electricity production. It is both 
the largest producer and consumer of coal. China's coal reserves are 
third largest in the world behind the United States and Russia. Despite 
vast coal resources, China became a net importer of coal for the first 
time in 2007. Over the past two years, it has steadily increased its 
imports of coal from countries like Russia, Indonesia and Australia. 
China is seeking to boost the productivity and efficiency of both its 
coal mine operations and coal-fired power plants. Coal mining is a 
highly fragmented industry in China, with tens of thousands of small, 
inefficient coal mines operating with unsafe worker conditions. Over 
the past few years, China has undertaken the process of closing down 
thousands of small, mostly illegal, coal mines. Small, inefficient 
coal-fired power plants have also been the target of closures as part 
of China's broader goal to reduce economy-wide energy intensity. 
Although these plant closures are offset by new coal-fired capacity 
coming online, the new power plants tend to be larger in scale and 
boast some of the highest thermal efficiencies in the world. China is 
starting to export the technologies from such efficient coal power 
plants to other countries, most notably India. China is investing 
heavily in Carbon Capture and Storage (CCS) R&D, and there are pilot 
CCS plants up and running in Beijing, Tianjin and Shanghai. Data 
collected by DOE's National Energy Technology Lab (NETL) shows that 
China added about 458 GW of new coal plant capacity from 2005--2010, 
with a planned addition of 209 GW over the 2013-2016 period. U.S. 2009 
coal capacity was 314 GW, with NETL projecting virtually no new U.S 
coal after 2018 until the end of its reference case in 2035 following 
the completion of several planned CCS demonstration plants.
Minerals
    China currently has the largest share of discovered rare earth 
reserves in the world at 36 percent and produces over 95 percent of 
global rare earth raw materials in the form of rare earth oxides. Rare 
earth deposits and mines are distributed widely in China, but three 
mines--in Baotou, Sichuan, and Jiangxi--together make up nearly all of 
China's total deposits. China has had ongoing R&D efforts on rare 
earths since the 1950s, including two key national research programs 
and four state laboratories that form part of the country's desire to 
accelerate high-tech development. Industry consolidation is beginning 
to accelerate with the goal of creating three to five ``national 
champions'' in addition to curbing illegal trade. The Chinese 
government has acknowledged and approved a pilot project for the 
country's rare earth reserve mechanism which may be launched next year. 
Chinese state-owned enterprises also show an interest in acquiring 
foreign mining companies with significant rare earths operations in 
North America and Australia.
Hydropower
    China has a significant number of hydropower projects under 
construction or in development that will not only help meet growing 
energy demand, but also help China meet its target of achieving 15 
percent of its primary energy mix through non-fossil sources by 2020. 
China has relatively extensive experience in this sector, it has a well 
developed domestic industry, and it has extensive hydro resources. 
According to media reports, the Chinese government aims to have 380 GW 
of installed hydroelectric capacity in 2020, compared to 210 GW 
installed currently. China's most famous hydropower project is the 
Three Gorges Dam located in Hubei Province on the Yangtze River. 
China's hydropower companies are expanding overseas to build dams in 
Latin American, Southeast Asia and Africa.
                white house office of energy and climate
    Question 68. Carol Browner recently had her last day at the White 
House, and it's still unclear if a new czar will be named to take her 
place. The White House Office of Energy and Climate is not listed in 
this year's budget, but it wasn't listed in previous years, either. Do 
you anticipate that office will continue to exist? If so, what do you 
estimate its budget will be for Fiscal Year 2012? Do you believe it has 
a useful, constructive influence on U.S. energy policy?
    Answer. This question should be directed to the White House.
    Responses of Hon. Steven Chu to Questions From Senator Stabenow
                           electric vehicles
    Question 1. Michigan and the rest of the United States need to out-
innovate, out-educate, and outbuild the rest of the world. Already, 
Michigan is leading the nation in manufacturing plug-in electric 
vehicles, advanced batteries, and their component parts. To leverage 
that success, I introduced the Charging America Forward Act, which will 
make plug-in electric vehicles more affordable for consumers and 
businesses and encourage American innovation and manufacturing of 
advanced vehicles. I'm pleased that the Budget includes my proposal to 
change the existing $7,500 tax credit for electric vehicles into a 
rebate that will be available to all consumers immediately at the point 
of sale.
    How will this proposal help meet the President's goal of putting 
one million advanced technology vehicles on the road by 2015?
    Answer. Changing the existing $7,500 tax credit to a point of sale 
benefit is expected to significantly encourage electric drive vehicle 
adoption. By providing the benefit at the point-of-sale, the cost 
reduction is applied immediately and consumers will not have to wait 
until filing their tax return to receive the benefit. This initial-cost 
reduction is likely to positively affect consumers' purchase decisions.
                      vehicle technologies program
    Question 2. I applaud the President's budget request for the 
Vehicle Technologies Program. Last year, this committee passed a bill 
that I introduced known as the Advanced Vehicle Technology Act, which 
helped to ensure that the Vehicle Technologies Program is working with 
companies of all sizes and not just focused on one type of vehicle 
technology.
    Could you please explain how this funding increase will be used and 
on which technologies the program will be focusing on? Will this 
include medium and heavy-duty hybrid and electric vehicles as well?
    Answer. The Vehicle Technologies Program (VTP) will continue to 
work across a broad range of technologies, including electric-drive 
advanced combustion, fuels technology, and materials technologies, that 
benefit all vehicle classes (light-, medium-, and heavy-duty). 
Specifically, the funding increases included in the fiscal year 2012 
budget request would support the following:

   Within the VTP Outreach, Deployment, and Analysis activity:

    --Implement a new competitive grant program to assist community-
            based partnerships accelerate electric vehicle deployment; 
            up to 30 awards would support highly-leveraged local 
            efforts to streamline permitting processes, invest in 
            electric charging infrastructure, develop and implement 
            local incentive programs to encourage electric vehicle 
            adoption, and develop and implement workforce training 
            related to electric vehicle deployment.
    --A new effort to explore ways to reduce fuel consumption and 
            greenhouse gas emissions of the nation's existing vehicle 
            fleet by reducing the miles traveled and developing/
            deploying cost-effective, fuel-efficient aftermarket tires.

   Within the VTP Batteries and Electric Drive activity:

    --A new Battery Readiness Initiative intended to (1) move mature 
            battery technology closer to market entry through design 
            and development of preproduction prototypes; (2) support 
            the market entry of materials through scale-up, pilot 
            production, and commercial sampling; and (3) accelerate the 
            development of computer-aided engineering tools. This new 
            focus will provide a systematic, coordinated development of 
            electric drive system technology to meet performance 
            targets and realize drastic cost reductions.
    --Significantly expanded activities in the research and development 
            of advanced power electronics and electric machines to meet 
            performance targets and realize drastic cost reductions, as 
            well as reduce the use of rare earth materials in electric 
            motors and support long-term research to develop novel, 
            low-cost magnetic materials with no rare earth content.

   Within the VTP Vehicles and Systems Simulation and Testing 
        activity, expand codes and standards work to address identified 
        areas of concern such as vehicle charging, smart chargers, and 
        vehicle-to-grid interfaces; expand research and development to 
        improve efficiencies of vehicle HVAC systems and reduce thermal 
        loads, improving on-road electric vehicle efficiency by as much 
        as 20%; and develop, evaluate, and demonstrate advanced 
        wireless electric vehicle charging that can address consumer 
        convenience, safety, and grid management issues.
          section 136 and the 1705 doe loan guarantee programs
    Question 3. Mr. Secretary, as you know the Advanced Technology 
Vehicle Manufacturing Loan Program, and the Department of Energy Loan 
Guarantee Program have both been a big priority for me. To date, the 
Advanced Technology Vehicle Manufacturing Program has approved several 
loans and has created approximately 35,000 jobs nationwide, including 
thousands of jobs for my home state of Michigan.
    While I appreciate this great work, I have also been hearing from 
companies that are currently working with the department that say the 
process takes too long, and that the hurdles for receiving a loan are 
even higher than if they had gone through the private sector. Clearly, 
this is not what we intended when these programs were designed.
    Can you provide us with an update on when we can expect more loans 
to be finalized? Can you provide suggestions for ways to improve these 
programs?
    Answer. On July 13, the Department announced the conditional 
commitment of a loan to Severstal for $730 million. There are a number 
of applications under review in the Section 136 program. DOE is 
reviewing these applications as quickly as possible.
    DOE reviews each loan guarantee application against a common set of 
criteria outlined in each solicitation and the programmatic statutory 
and regulatory requirements. All projects must meet the basic 
eligibility criteria, at a minimum, including the statutory requirement 
of a ``reasonable prospect of repayment.'' In order to ensure that 
taxpayer monies are properly safeguarded, the Department uses best 
practices, similar to those private sector lenders would use in 
reviewing such deals. It is important to keep in mind that these 
transactions are large and complex and that no two deals are alike. In 
the private sector, the due diligence associated with such transactions 
is measured in months, not weeks. We are committed to processing 
applications as quickly as possible, while ensuring that taxpayer funds 
are properly safeguarded.
                    industrial technologies program
    Question 4. I see that the Industrial Technologies Program received 
a significant increase and will be refocusing on innovation in 
industry.
    Can you please describe in greater detail what the program will now 
be doing and in what ways it will be working with industry to improve 
energy efficiency?
    Answer. As noted in the preface to this question, the Industrial 
Technologies Program (ITP) will seek to continue elevating and 
advancing innovation in industry. To that end, ITP will prioritize 
research development, demonstration and deployment (RDD&D) of a 
strategically selected set of new manufacturing technologies and 
materials needed to ensure that U.S. producers lead the world in modern 
production technologies. These technologies can reduce manufacturing 
costs, energy use, and pollution while simultaneously improving product 
quality and business competitiveness. This will ensure that U.S. 
companies can be fully competitive in the production of clean energy 
technologies, such as advanced photovoltaics, lighting devices, sensors 
and controls, batteries, wind system components and other devices 
essential for meeting US energy and efficiency goals. The overarching 
goal of ITP is to develop a suite of advanced manufacturing 
technologies and practices that provide pathways for doubling the 
energy productivity of U.S. industry and enable the associated carbon 
reductions by 2020.
    Investments in these advanced manufacturing technologies both 
revitalize existing industries and support the development of new 
products in emerging industries such as clean energy.
    New directions proposed for FY 2012 include an expanded emphasis on 
advanced manufacturing techniques that lead to dramatic increases in 
energy productivity such as use of ionic liquids, membrane separations, 
and continuous monitoring and optimization of processing. ITP intends 
to provide support for a new critical materials energy innovation hub.
    ITP will seek to also build and strengthen its highly successful 
program for helping business learn about and adopt strategies that can 
lead to striking gains in the energy productivity of existing 
facilities. At its core, that program seeks to foster a new corporate 
culture of energy efficiency and carbon management through a 
combination of workforce development, technical assistance and energy 
management standards setting efforts.
    Moving forward, ITP intends to promote continuous energy 
improvement for manufacturers throughout the supply chain. This push 
will include the provision of software tools, training and technical 
resources to companies both directly and through partners like state 
energy offices and utilities. ITP will also support this effort through 
its Superior Energy Performance program-a market-based, American 
National Standards Institute (ANSI)-accredited energy management 
certification program. Collectively, ITP's activities are designed to 
build: 1) demand for energy efficiency savings, 2) supply of energy 
efficiency services, and 3) a supportive market environment.
                    energy innovation hub-batteries
    Question 5. One of the things that I was very happy to see proposed 
was a new innovation hub for batteries and energy storage. As you know, 
advanced battery manufacturing has created hundreds of permanent jobs 
in my home state through companies like LG Chem, Dow Kokam, Johnson 
Controls, and A123 Systems. Each company was able to receive support 
through the Recovery Act's Advanced Battery and Component Manufacturing 
Program. This program has helped the U.S. to go from producing only 2% 
of the world's advanced batteries to 40% of the world's advanced 
batteries.
    Given all the work that we have been doing in this area, can you 
describe how this new innovation hub will work?
    Answer. The Battery and Energy Storage Hub will help retain and 
grow U.S. leadership in advanced batteries. Today's electrical energy 
storage devices can benefit from further improvements in performance, 
from energy and power capacities, rates of charge and discharge, 
calendar and cycle life, to abuse tolerance. Many of the fundamental 
performance limitations are rooted in the constituent materials making 
up the storage system and in the fundamental physics and chemistry that 
govern the transport and storage of energy in the material. The 
research challenges are inherently multidisciplinary.
    The Batteries and Energy Storage Hub will support the research and 
development needed to fill the gaps in scientific understanding that 
prevent technological breakthroughs in both grid and mobile 
applications. The Hub will expand our scientific base for synthesis of 
novel nanoscale materials with architectures tailored for specific 
electrochemical performance, develop new methodologies to characterize 
materials and dynamic chemical processes at the atomic and molecular 
level, and expand our competencies in simulation and prediction of 
structural and functional relationships using leading computational 
tools.
    The Hub's ultimate technological goals are development of radically 
new concepts for producing storage devices from materials that are 
abundant and have low manufacturing cost, high energy densities, long 
cycle lifetimes, and high safety and abuse tolerance for a broad range 
of energy storage applications. The breadth and depth of the scientific 
challenges associated with these goals will require that the Hub 
integrate premier scientific talent from the disciplines of chemistry, 
physics, materials sciences, biology, and engineering. The Hub is 
likely to develop strong collaborations with industry to overcome 
engineering and manufacturing challenges. The Hub will facilitate 
expansion of domestic manufacturing of high-tech energy storage 
technology for both grid-level and transportation applications.
                     cr rescission of arra funding
    Question 6. Many businesses and non-profits across my state and the 
country are extremely concerned about the Continuing Resolution 
currently being debated in the House. Many of these organizations are 
worried about the provision to rescind the unobligated balances from 
the American Recovery and Reinvestment Act of 2009 (Public Law 111-5). 
In fact, many grantees working on clean energy projects are concerned 
that the rescission would unintentionally take away funds that have 
been committed by contract, but not yet spent or disbursed by the 
agency, potentially interrupting projects that are currently in 
underway with local businesses.
    Is it safe to presume that an executed assistance agreement counts 
as ``obligated'' funds?
    Answer. An assistance agreement that has been signed by both the 
Department of Energy (DOE) and the recipient constitutes an obligation. 
There would be significant legal consequences if DOE attempted to 
rescind obligated dollars--indeed it is possible that attempting to 
rescind obligated dollars would cost the government more than simply 
complying with the obligations. With rare exceptions, Congress has 
rescinded funds that were obligated to DOE instruments, and thus this 
would be uncharted territory.
    For financial assistance agreements, DOE does not include a 
provision allowing DOE to deobligate funds, nor do our financial 
assistance regulations permit us to do so without cause. As a matter of 
law, the Government can only terminate a financial assistance 
agreement, in order to deobligate funds, on one of the following 
grounds:

          1. A finding that the recipient ``materially fail[ed] to 
        comply with the terms and conditions of an award''.
          2. A mutual agreement by DOE and the recipient; or
          3. A written notification from the recipient announcing its 
        intention to terminate the award.\36\
---------------------------------------------------------------------------
    \36\ The specific rules that apply to termination of financial 
assistance differ slightly depending on the nature of the recipient, 
but the categories described above apply to all three. See 10 C.F.R. 
Section 600.161 (nonprofits); section 600.243 and 600.244 (state and 
local governments); and section 600.351 (for-profits).

    Thus were there an attempt simply to ``rescind'' the obligated 
funds, it would not alter the legal obligation to make payment. We 
believe refusing to make payment of obligated financial assistance 
funds would lead to litigation. Moreover, many of our financial 
assistance has associated private cost share and the recipient would be 
entitled to submit a settlement for costs incurred as a result of the 
termination (e.g. purchase orders, legal fees, etc).
     Response of Hon. Steven Chu to Question From Senator Barrasso
    Question 1. Your budget zeroes out the base funding stream for the 
Rocky Mountain Oilfield Testing Center (RMOTC) in Wyoming. This is 
similar to last year's proposal. Last year's budget justified the cuts 
as phasing out subsidies for fossil fuels. RMOTC provides small 
businesses and inventors great facilities to test and develop new 
technology. Casper College uses the facility for renewable energy 
classes for technician training and education programs. There is also 
geothermal testing and demonstration at RMOTC. I am concerned that the 
Department of Energy is pulling the rug out from under this program, 
without a transition plan. Last year the Administration required the 
facility to operate as a user facility without providing the roadmap or 
tools to implement that requirement. This year's budget says ``RMOTC 
will identify and analyze options for becoming a self-sustaining user 
facility.''
    In January 2011, RMOTC laid off 27 contract employees. It is 
turning away potential testing partners. RMOTC is a valuable asset. 
Whatever the long-term plan--100 percent remediation, selling it to a 
private entity, or transitioning to a user facility--the Department 
needs a plan so the taxpayer gets maximum value for the asset.

          a. Does the Department have an approved plan for RMOTC to 
        operate as a user facility or for long-term remediation?

    Answer. The Department prepared a Report to Congress in 2007 
entitled Environmental Liabilities Study of the Rocky Mountain Oilfield 
Testing Center, November 2007. That study places the environmental 
liabilities at RMOTC in excess of $100 million. A small portion of 
remediation has been completed to date. The FY 2012 budget request 
proposes that the Department develop a plan for the sale or disposition 
of NPR-3. In this plan, disposition options and strategies will be 
analyzed and further engineering design will be conducted to more 
precisely determine environmental remediation costs and schedules.
    Funding for testing at RMOTC will be supplied by the entity 
conducting the testing; no appropriation is requested. Funding of 
geothermal and other renewable energy technology testing is expected to 
follow a similar path.

          b. How will the Department provide the necessary flexibility 
        to support projects that are 100% fully reimbursable?

    Answer. The Department intends to develop a disposition plan by the 
end of FY 2012 that will include a determination of the final use of 
the property. Maximizing the value of this asset will be a major factor 
in the determination of the final disposition of this property.
    In the interim, the Department is investigating creative methods to 
provide RMOTC with the proper business support systems and agreements 
with partners to maximize the use of non-appropriated funds in a manner 
that will allow RMOTC to operate as a viable and successful testing 
center. The Department, recognizing that RMOTC's resources allows it to 
test energy technologies broader than oil and gas, is also 
investigating collaborative funding with renewable energy programs 
where applicable.
     Responses of Hon. Steven Chu to Questions From Senator Johnson
    Question 1. The President and the Department of Energy have made an 
important commitment to a forward-looking energy policy that invests in 
clean energy research, development and deployment. I am especially 
interested in the continuing role of biofuels in meeting our clean 
energy goals. How does the Administration's budget request support 
increasing the amount of biofuels in the overall mix of transportation 
fuels.
    Answer. The Administration's budget request for Office of Biomass 
Programs in FY 2012 is $340M. Within this request DOE will continue 
work on biorefinery deployment projects. The portfolio includes a 
diversity of feedstocks, conversion technologies, products, refinery 
scales, and project maturity. These projects will contribute to the 
2014 Biomass Program goal of 100 million gallons per year of biofuel 
production. Research and development will continue to reduce costs in 
processing steps associated with advanced biofuels, with an emphasis on 
hydrocarbon biofuels such as diesel and green gasoline, and including 
algae as a feedstock. In addition, research conducted in collaboration 
with the Office of Science will be initiated to enhance the 
biomanufaturing sector, including fuels and products that enable 
economics of the biorefinery. Lastly, the Administration has requested, 
$150M to support a reverse auction incentive program, authorized under 
Section 942 of the EPAct 2005, Pub. L. 109-58 (August 8, 2005). The 
purpose of the program is to:

          (1) accelerate deployment and commercialization of biofuels;
          (2) deliver the first one billion gallons of annual 
        cellulosic biofuel production by 2015;
          (3) ensure biofuels produced after 2015 are cost competitive 
        with gasoline and diesel; and
          (4) ensure that small feedstock producers and rural small 
        businesses are full participants in the development of the 
        cellulosic biofuels industry.

    Question 2. I am pleased to see the continued emphasis on 
increasing renewable energy in our electricity generation. South Dakota 
has great wind potential and is home to many successful wind projects. 
To meet the true potential for wind in the Great Plains, we also need 
to address our interstate transmission system. Will you elaborate on 
programs in the budget and other efforts aimed at helping us further 
develop and deploy this important domestic energy source?
    Answer. Department of Energy efforts to further develop and deploy 
wind energy are coordinated between the Office of Electricity Delivery 
and Energy Reliability and the Office of Energy Efficiency and 
Renewable Energy's Wind and Water Power Program. These offices are 
coordinating two efforts to better understand the impact of high levels 
of wind deployment--the second phase of the Eastern Wind Integration 
and Transmission Study and the Western Wind and Solar Integration 
Study.
    In addition, within the Office of Electricity Delivery and Energy 
Reliability, the Office of Electricity is funding collaborative 
approaches for long-term transmission planning at the interconnection 
level. These projects will determine the transmission requirements 
associated with a broad range of electricity supply futures, including 
intensive development of renewable resources. With respect to 
developing deployable technology solutions, the Office of Electricity 
is funding efforts to expand wide-area situational awareness (through 
widespread deployment of phasor measurement units and smart grid 
devices) to address operational variability associated with renewables 
and to develop energy storage technologies to meet the challenge of 
wind integration on the grid. In Iowa, for example, a compressed air 
energy storage plant will be able to absorb nighttime wind power from 
the Great Plains and deliver day time peak power.
    The Wind and Water Power Program is working to better understand 
reliability impacts of wind deployment though analysis of wind turbines 
providing frequency response, support from experts at national labs to 
various utilities on wind integration studies, analysis of coordinated 
dispatch and operations between utilities to aid in wind deployment, 
the development and validation of non-proprietary wind generator models 
for use by system planners, efforts to improve wind forecasting and 
increase its use by operators, and efforts to establish methodologies 
for determining the impacts on reserves needed in systems with high 
levels of wind.
    Question 3. I appreciate Department of Energy's support to date for 
the Deep Underground Science and Engineering Laboratory at Homestake.
    Considering the envisioned changes to the model for stewardship of 
the DUSEL between the National Science Foundation and DOE, do you feel 
that there is sufficient support from the Obama Administration and NSF 
leadership to facilitate an expanded DOE role and successful completion 
of DUSEL in the future?
    Answer. The Administration does not plan to build DUSEL but remains 
committed to achieving the science goals of the Office of Science High 
Energy Physics and Nuclear Physics programs. We are assessing options 
for the Long Baseline Neutrino Experiment far detector, as well as 
future dark matter and neutrinoless double beta decay experiments. We 
have asked an independent panel of experts for assistance in making 
this assessment, which will include an alternatives analysis for the 
location of individual experiments.
    Question 4a. How have DOE and NSF been working together to plan for 
a smooth transition into a revised stewardship agreement on DUSEL?
    Answer. Since the decision by the National Science Board to decline 
further funding for construction of the DUSEL facility, DOE and NSF 
have continued to communicate about DOE plans for the Long Baseline 
Neutrino Experiment far detector, as well as future dark matter and 
neutrinoless double beta decay experiments.. NSF is providing 
$4,000,000 to bridge an approximately four month funding gap between 
June to September 2011 to keep the Homestake Mine dry through FY 2011. 
The Office of Science has requested $15,000,000 in FY 2012 for 
continued de-watering and minimal sustaining operations to maintain the 
viability of the Homestake Mine while the DOE assessment is carried 
out. DOE and NSF are continuing to communicate on DOE's plans to carry 
out its assessment.
    Question 4b. Does the FY 2012 budget request reflect inter-agency 
discussions and agreements?
    Answer. The Office of Science and NSF have discussed DOE's 
$15,000,000 FY 2012 request to continue dewatering activities and 
minimal sustaining operations at the Sanford Laboratory while DOE 
assesses cost effective options to carry out experiments planned by the 
High Energy Physics and Nuclear Physics programs.
    Question 5. With regard to DUSEL, do you feel that the $15 million 
you are proposing in FY 2012, despite the NSF's proposal to provide no 
additional funding, is sufficient to maintain progress on this 
important national facility, leveraging the more than $250 million 
invested to date in private, state, and federal funds?
    Answer. The Office of Science requested $15,000,000 in FY 2012 to 
continue dewatering activities and minimal sustaining operations at the 
Homestake Mine in Lead, South Dakota. Before making further 
investments, DOE must assess its plans for the Long Baseline Neutrino 
Experiment far detector, as well as future dark matter and neutrinoless 
double beta decay experiments.
    Question 6. Is DOE prepared to provide any additional funding 
needed in FY 2011 to ensure that no jobs are lost in the near term 
while DOE evaluates its long-term options and plans in high energy 
physics?
    Answer. DOE is not currently planning to provide any additional 
funds toward DUSEL in FY 2011. Before making further investments, DOE 
must assess its plans for the Long Baseline Neutrino Experiment far 
detector, as well as future dark matter and neutrinoless double beta 
decay experiments. That assessment will continue through FY 2011.
    Question 7. Has the National Science Foundation been a strong 
collaborator to date on DUSEL and do you foresee future collaborations 
with them on other high priority nationally reviewed science facilities 
given the difficulties encountered to date?
    Answer. The National Science Foundation and the DOE have a strong 
partnership in high energy physics and nuclear physics.The National 
Science Board declined funding to bridge the NSF supported DUSEL 
Project team between the submission of the DUSEL Preliminary Design 
Report and approval to begin the DUSEL Final Design Report. Since that 
time, NSF has not communicated its intentions to DOE concerning further 
partnering on DUSEL. DOE welcomes continued partnership with the NSF on 
high priority nationally reviewed science projects.
    Question 8. How is DOE prepared to work with the university 
community to ensure that the research needs will still be met with any 
proposed changes to the existing plans for DUSEL?
    Answer. As part of DOE's assessment of the options for the Long 
Baseline Neutrino Experiment far detector and future dark matter and 
neutrinoless double beta decay experiments, reports will be given by 
DOE stakeholders, including the research community, on the science 
impacts of different budget and site location scenarios. Based on the 
findings of this assessment, the Office of Science will seek to develop 
a cost effective plan, which maximizes scientific opportunity for the 
research community.
      Responses of Hon. Steven Chu to Questions From Senator Wyden
    Question 1. President's Export Initiative Q1. When you were here 
last year to testify on the 2011 budget, the President had just 
announced the creation of National Export Initiative, or the NEI, to 
double exports over the next five years. The Administration has put 
forward a plan to boost clean energy exports as put forward in the 
``Renewable Energy and Energy Efficiency Export Initiative,'' which is 
part of the NEI. The key components of the plan appear to be to use the 
resources of the Export Import Bank to help provide financing to 
exporters, to negotiate trade deals to lower tariffs on these products, 
and to help connect U.S. businesses with foreign buyers. Has the Energy 
Department developed specific goals and benchmarks related to this plan 
and to boosting exports of clean energy products to recapture market 
share? Will this plan be sufficient to help our manufacturers compete 
against China in our market and in those overseas? What more should DOE 
and the Administration do?
    Answer (a). DOE co-led the development of the Renewable Energy and 
Energy Efficiency Export Initiative (RE4I) with the Department of 
Commerce's International Trade Administration. The RE4I involves 23 
commitments for new programs, actions, or deliverables from across the 
U.S. Government organized around four pillars: 1) more tailored 
financing options for RE&EE exporters; 2) enhanced market access for 
U.S. RE&EE products and services; 3) increased trade promotion to 
better link buyers and sellers of U.S. RE&EE technologies; and 4) the 
more efficient delivery of U.S. export promotion services to RE&EE 
companies.
    The Renewable Energy and Energy Efficiency Export Initiative (RE4I) 
is a product of coordinated effort among a dozen agencies participating 
in the Trade Promotion Coordinating Committee Working Group on 
Renewable Energy and Energy Efficiency. DOE provides technical 
assistance, data, and analysis to all the interagency partners working 
together to achieve the goals and benchmarks set forth in the REEE 
Export Initiative. DOE has not developed specific RE4I goals and 
benchmarks that apply only to the Department.
    Answer (b). The RE4I will enhance the federal government's capacity 
to promote exports of clean energy technologies made in America. It 
will not enhance domestic demand for those technologies nor stimulate 
more investment in domestic manufacturing, both of which are key to 
competing successfully with suppliers from other countries including 
China. The RE4I is not a substitute for the strong, consistent domestic 
energy policy this country needs to motivate domestic investors to 
innovate and deploy clean energy technologies.
    Answer (c). As co-chair of the TPCC Working Group on Renewable 
Energy and Energy Efficiency, DOE will continue to support the 
Department of Commerce's efforts to lead the implementation of the 
RE4I. DOE's efforts will include active support for trade missions, 
commercial advocacy, and outreach to American companies. Through the 
Clean Energy Ministerial and other international activities, DOE will 
also continue working with counterparts in other countries to create 
market conditions that encourage rapid growth in markets for clean 
energy technologies. In addition, we will continue working with our 
interagency partners to improve the information-sharing U.S. RE&EE 
exporters need to compete effectively in global markets.
    DOE and the Administration will continue to pursue the kind of 
strong, consistent energy policy America needs to compete successfully 
in markets for clean energy technologies. Effective energy policies 
that stimulate domestic demand for clean energy technologies provide 
Americans the stable, domestically-produced clean energy our country 
needs while also developing a manufacturing capacity that can support 
exports to meet demand around the world.
                              buy-american
    Question 2. As far as DOE is concerned, it's OK to count a solar 
panel assembled in the U.S. from 100% foreign parts as made in America, 
but it's not OK to import a solar panel with 50% American parts and 
count that as American. I don't see how it helps convince companies to 
invest in supply chain manufacturing facilities in the U.S. when DOE 
has a policy that they can't get credit for what they make here. DOE 
has the statutory authority to define what's made in America based on 
the public interest. Why is it not in the public interest for companies 
that manufacture or purchase value-added components in the United 
States to get credit for those components? Would you agree to reexamine 
the Department's policy on U.S. content in the solar Buy America 
waiver?
    Answer. The Solar Public Interest Waiver issued by DOE dated 9/30/
2010 was made to be consistent with prior iterations of Buy American 
regulations which used ``substantial transformation'' as the applicable 
standard--specifically those within Title 19 CFR (trade, tariffs and 
Customs duties). It allows for either cells or modules to be 
manufactured in the U.S. to qualify for Buy American. In constructing 
this waiver, DOE specifically considered precedents from other 
industries such as the semiconductor industry. In this case, wafers and 
ingots produced in the United States, but assembled into 
microprocessors abroad, have been considered a sub-component of the 
final product and therefore such microprocessors did not qualify as 
American-made. Applying this precedent to the PV industry would mean 
that only modules manufactured in the U.S. would qualify as American 
made. In the U.S. PV industry, only three companies would currently 
qualify under this determination which could result in reduced market 
competition. For that reason, DOE agreed to expand the definition 
temporarily to include both U.S.-made cells or U.S.-made modules. In 
granting this waiver it was understood that even foreign made cells 
would likely contain significant U.S. content since the U.S. currently 
supplies approximately 40% of the world's supply of polysilicon as well 
as other supply chain components used in conventional PV cells. Further 
expanding the definition, however, to explicitly consider these supply 
chain components would go well beyond established precedent for the 
definition of ``substantial transformation'' and make the policy 
virtually impossible to administer since once the cell is manufactured, 
there is no systematic way to verify the origin of the components. Any 
attempt to use manufacturer reported information would be made more 
difficult since most manufacturers use multiple supply sources, not all 
of which may be located in the U.S.
    Further, DOE believes that decisions to invest in U.S. 
manufacturing are based on a number of factors including IP protection, 
access to a skilled workforce, and proximity to the U.S. market. In 
2010, the U.S. PV market grew approximately 100% most of which we 
believe did not include Government installations which are subject to 
Buy American. We believe that this level of growth will continue and 
will accelerate, and will draw both supply chain as well as cell and 
module companies to the U.S. DOE is also directly supportive of the 
U.S. domestic PV supply chain. As part of the Recovery Act, DOE awarded 
over $1 billion to solar companies under the 48C Manufacturing Tax 
Credit program, many of which were for the manufacturing of PV supply 
chain components.
    DOE recognizes that the U.S. PV industry is highly dynamic and that 
the current policy may need to be revised. As stated in the waiver, the 
Assistant Secretary reserves the right to revisit and amend this 
determination based on new information or new developments. This waiver 
expires in August 2011.
           budget cuts and impact on exports and competition
    Question 3. I am also concerned that no one really thought about 
exports and foreign competition when your budget was put together. For 
example, your new budget cuts funding for fuel cells and wave energy 
technology. Fuel cells are technology where the U.S. still has some 
real technology leadership and genuine export potential. Last year, for 
example, one of our fuel cell companies in Oregon signed a $40 million 
distribution agreement with Korea to sell 800 of their fuel cells 
there, but there's no evidence that DOE thought about exports like 
these, or foreign competition, when it cut the fuel cell program. Wave 
energy is a technology where our competitors are investing hundreds of 
millions dollars in technology development and demonstration and yet 
your budget cuts the program back to less than $18 million.
    If the theme of the President's budget is to ``out-innovate, out-
educate, and out build the rest of the world,'' how is that going to 
happen when your budget slashes funding in some of the very areas, like 
fuel cells and wave energy, where the U.S. has a real opportunity to 
compete in the international market?
    Answer. As the President has stated, ``A decade of deficits, 
compounded by the effects of the recession and the steps we had to take 
to break it, as well as the chronic failure to confront difficult 
decisions, has put us on an unsustainable course.'' The objective of 
the President's budget is to pare down these debts, while investing in 
the areas that position the United States to compete in the global 
economy.
    Meeting these spending cuts requires tough choices and sacrifices. 
The President's budget set as priorities those programs that are poised 
to make an impact sooner and at a larger scale. For example, the 
President's budget provides resources to put one million advanced 
technology vehicles on the road by 2015. The President's budget also 
makes important investments in fuel cells and wave energy technology.
    For hydrogen and fuel cells, DOE's Fiscal Year 2012 budget request 
sustains critical research and development including $45.5 million for 
Fuel Cell Systems R&D and $35 million for Hydrogen Fuel R&D, which we 
believe to be the key to continued U.S. competitiveness and widespread 
commercialization hydrogen and fuel cell technologies. With the 
progress that has been made in fuel cell technology such as reducing 
the projected high-volume cost of automotive fuel cells by 30% since 
2008 and 80% since 2002 (from $275/kW in 2002 to $51/kW in 2010)\37\; 
doubling the durability of fuel cell systems operating in real-world 
conditions to 2,500 hours (with less than 10% degradation; equivalent 
to 75,000 miles of driving); and reducing the high volume cost of 
hydrogen production from natural gas to a gasoline-competitive price of 
$3.00/gallon of gasoline equivalent\38\, the Department has already 
enabled progress to allow leadership of U.S. industry.
---------------------------------------------------------------------------
    \37\ http://hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf
    \38\ http://www1.eere.energy.gov/hydrogenandfuelcells/
accomplishments.html
---------------------------------------------------------------------------
    DOE is optimistic about the opportunities to further develop 
emerging marine and hydrokinetic (MHK) energy technologies, including 
wave and tidal energy technologies. For example, DOE has previously 
funded both the Ocean Renewable Power Company (ORPC) and Verdant Power, 
who may potentially develop tidal current arrays in Canada and China 
respectively. Verdant has signed an MOU with China's Energy 
Conservation Environment Protection Group to develop tidal power in the 
country, the first MOU of this sort between China and a U.S. MHK 
company.
    We believe that the $38.5 million requested for water power 
research in FY2012 is sufficient to continue the program's ongoing 
efforts to advance industry development and export capability of MHK 
technologies. We are currently completing a comprehensive set of 
resource assessments and undertaking detailed techno-economic 
assessments of emerging technologies, which will help us to effectively 
determine the opportunities and costs associated with these 
technologies. These important analyses will help the Department 
determine what funding levels are necessary and appropriate to realize 
water power's potential.
                           investing in jobs
    Question 4. Secretary Chu, your Department is one of the few 
agencies that would get increased funding under the President's Budget. 
If Congress approves this additional proposed funding, what will you do 
to ensure that the additional investment will focus ``in areas that 
show the most promise for job creation'' as the President's Budget 
calls for? [Investing in American Innovation p. 34]
    Answer. As we know, the Recovery Act helped create tens of 
thousands of jobs and, combined with the FY 2012 request, will help the 
Department accelerate the transition of our nation to a clean energy 
economy. These investments are designed to accelerate investment in 
clean energy projects and pull private investment off the sidelines. 
They are jumpstarting a major transformation of our energy system 
including unprecedented growth in the generation of renewable sources 
of energy, enhanced manufacturing capacity for clean energy technology, 
advanced vehicle and fuel technologies, and a bigger, better, smarter 
electric grid.
    The President's FY 2012 Budget supports the plan to rebuild our 
economy through clean energy research and development. Some specific 
areas of focus include:

   Expanding programs that spur innovation.--The President's 
        request proposes for the Advanced Research Projects Agency--
        Energy (ARPA-E) program a FY 2012 request of $550 million. 
        ARPA-E performs transformational and cutting-edge energy 
        research with real-world applications across areas ranging from 
        grid technology and power electronics to batteries and energy 
        storage. The budget also supports programs with significant 
        promise to provide reliable, sustainable energy across the 
        country, such as SunShot, an initiative aimed at making solar 
        energy cost competitive. With focused investment in 
        manufacturing innovation and industrial technical efficiencies, 
        the President's proposal will move private sector capital off 
        the shelves and into the marketplace.
   Doubling the number of Energy Innovation Hubs to solve key 
        challenges.--Innovation breakthroughs occur when scientists 
        collaborate on specific problems. The FY 2012 budget request 
        proposes three new Energy Innovation Hubs that will bring top 
        American scientists to work in teams to research critical 
        energy challenges in areas such as critical materials, 
        batteries and energy storage, and electricity grid 
        technologies.
   Promoting efficient energy.--Currently, over 50 percent of 
        the goal to weatherize 600,000 homes of low -income families 
        has been achieved, providing energy cost savings and financial 
        relief to households. The FY 2012 request of $320 million 
        continues residential weatherization, with more than one-third 
        of the funding devoted to new innovative approaches to 
        residential home weatherization.
                     oil liability for contractors
    Question 5. The President's Budget states ``the Administration is 
committed to holding the oil and gas industry accountable for the risks 
associated with oil and gas production by removing the existing 
liability cap for damages associated with offshore drilling activity.'' 
[p.37] Does this commitment to holding the industry accountable extend 
to holding drilling contractors accountable or are you only proposing 
to hold the primary leaseholders accountable?
    Answer. While the basic thrust of the proposal is clearly stated in 
the budget material, the Department understands that the exact wording 
of the legislative text has yet to be refined for submission to 
Congress. The question you have posed involves the scope and reach of 
the proposal, which will turn on the wording of the text, and we look 
forward to working with the Congress to address such issues.
                     energy storage strategic plan
    Question 1. Last year, the Department provided a report to the 
Committee outlining the Department's research and development 
activities related to energy storage technologies. In light of the many 
applications for energy storage--from electric vehicles to integration 
of intermittent renewables--and the many offices within the Department 
with a direct interest in energy storage, I believe that it is 
imperative that the Department develop an integrated strategic plan for 
research, development and deployment of energy storage technologies. 
Can I have your commitment to produce such a plan?
    Answer. As you know, the Grid Storage Report provided by the 
Department to the Committee in July 2010 outlined a strategy for grid-
level storage projects through a discussion of applications, DOE 
collaborative activities, and focused efforts of specific offices 
within the Department. It has served as a valuable tool in our efforts 
to further improve our internal coordination, and better integrate work 
by the various parts of the Department on this issue.
    As we approach the one-year anniversary of that report, the 
Department plans to revisit the strategy it outlined, and incorporate 
lessons we have learned in the intervening time from the applied 
technology programs, the Office of Science, ARPA-E, and the new Energy 
Innovation Hub on Batteries and Energy Storage. Coordinating this 
strategic planning effort will require direct involvement from senior 
leadership as well as programlevel staff, and an ongoing willingness to 
work across organizational silos. The Department is committed to this 
effort, because the opportunity for improved system reliability, 
reduced energy consumption, and increased economic benefits are very 
large, but will only be realized through coordinated action across the 
Department's multiple programs. We will continue to keep the Committee 
fully informed of our progress.
    Responses of Hon. Steven Chu to Questions From Senator Cantwell
           challenges of commercialization activities at doe
    Question 1. Can you please comment on commercialization efforts 
within DOE generally and on these examples specifically?
    Answer. In order to achieve its mission of addressing America's 
energy challenges through transformative science and technology 
solutions, DOE must be focused on moving its technologies in the labs 
out into the marketplace in order to ensure broad deployment and 
strengthening US competitiveness. It is important to note that the 
commercialization needs of awardees vary both by technology readiness 
level and type of organization (i.e. university, small business, large 
corporation, etc). As such, DOE is facilitating commercialization and 
deployment of clean energy technologies in a number of ways through 
EERE, ARPA-E and SC programs. These efforts include facilitating 
connections to translate technology concepts to a market need, 
developing mentorship opportunities, and engaging with industry experts 
to receive feedback, as well as, provide a venue for industry 
collaboration and partnerships.
    In response to your specific questions:
DOE Loan Guarantee Program
    DOE reviews each loan guarantee application on its own merits 
against a common set of criteria outlined in the program's statute, 
regulations, and each solicitation. All projects must, at a minimum, 
meet the basic eligibility criteria, including the statutory 
requirement that they demonstrate a ``reasonable prospect of repayment. 
This requirement, established by Congress, is important to ensuring 
that taxpayer funds are safeguarded, and DOE takes it very seriously. 
The Department uses best practices, similar to those private sector 
lenders would use in reviewing such deals. It is important to keep in 
mind that these transactions are large and complex and that no two 
deals are alike. In the private sector, the due diligence associated 
with such transactions is measured in months, not weeks.
Fuel Cell Market Transformation
    The Department agrees with the importance of continued investment 
in clean energy technologies, including fuel cells, and recognizes the 
benefit of market transformation activities. In fact, although not 
reflected in the FY 2012 budget request, the Department invested $43 
million under the Recovery Act to enable the deployment of up to 1,000 
fuel cells for early market applications such as forklifts and backup 
power. This additional funding will allow the Department to collect 
data on the performance and cost of fuel cells for early market 
applications, deferring market transformation funds until this data 
becomes available. In the mean time, funding is invested in critical 
research and development to ensure that domestic companies continue to 
develop their technologies. Other mechanisms such as the investment tax 
credit and grants in lieu of tax credit (section 1603) allow companies 
to take advantage of incentives available for commercial deployments.
48C Advanced Manufacturing Tax Credit
    I understand the importance of ensuring that small companies be 
able to monetize the 48C credit in order to take advantage of it. As 
you know small, innovative companies are critical for the U.S. clean 
energy manufacturing sector and we want to make sure we do everything 
in our power to support the growth of this industry. We believe that 
tax policies, can provide highly effective mechanisms to increase the 
amount of investment in the US and increase job growth in these crucial 
markets.
    Fortunately, companies of varying size have been able to take 
advantage of the 48C tax credit. It is important to ensure that small 
companies which may not have large, nearterm tax liabilities are able 
to take advantage of the credit. Our experience with the 48(c) program 
has suggested that those companies were able to successfully monetize 
the credit and bring their plants on line.
    I have to defer questions related to Section 6103 of the Tax Code, 
which limits requests to taxpayers for any new information that was not 
originally provided in the application, to the IRS.
           challenges of commercialization activities at doe
    Question 2. How can their effectiveness be improved? Why is it so 
difficult to get commercialization efforts firing on all cylinders?
    Answer. There are a number of ways that DOE is improving the 
effectiveness of its technology transfer program and commercialization 
efforts. We have re-established the Secretary of Energy's Advisory 
Board (SEAB), which has a strong focus on technology transition and 
deployment. The first full-time Technology Transfer Coordinator (TTC) 
has been appointed to address known concerns. She is also exploring 
additional initiatives to improve the impact and outcomes of the 
technology transfer program. We recognize that a strategic and 
coordinated effort is needed to facilitate and encourage the successful 
commercialization of our scientific discoveries to the private sector. 
We published a Request for Information to provide stakeholders an 
opportunity to voice their concerns, and we are already tackling 
several of the commonly raised issues that affect collaborations and 
transfer of technologies.
                       smart grid innovation hub
    Question 3. I was pleased to see the DOE's intent to establish a 
new Innovation Hub for Smart Grid Technology and Systems. As you know, 
the Pacific Northwest is investing in substantial grid transformation 
activities with important support from Recovery Act grants ranging from 
the Northwest Regional Smart Grid Demo (the nation's largest), the 
Western Interconnection Synchrophasor Project, multiple smart grid 
workforce training grants, and several smart grid investment grants.
    On top of all this, the Pacific Northwest is a leader in renewable 
wind integration. In fact the Bonneville Power Administration's system 
is now home to 3.6 Gigawatts of wind, within BPA's 9 Gigawatt balancing 
area.
    I think a Smart Grid hub, as contemplated in the budget, gives us 
the opportunity to build on this work, in a way that should deliver 
both innovations that improve current grid operations and, more 
importantly, point to new paradigms for the way in which we operate the 
grid.
    A smart, digital power system can deliver more value and greater 
resilience with more efficiency and fewer emissions.
    Can you share how you envision this innovation hub providing 
leadership in shaping our national pursuit of a transformed power 
system for the 21st century?
    Answer. The Smart Grid Technology and Systems Hub would establish a 
U.S. center of excellence where top performers from various disciplines 
will come together to focus on the holistic transformation and 
modernization of the electricity infrastructure that ties the electric 
grid together. Research, development, and demonstration of novel 
technologies and concepts devised from a systems-level approach will 
generate innovations and analyses that lower the risk to the private 
sector and supplement the on-going transformations in the electric 
industry. The flexibilities introduced by these new technologies will 
facilitate the adoption and use of wind, solar, electric vehicles, 
storage, smart meters, and other advanced components. In addition, the 
Hub also represents an investment in human capital that will help build 
the capabilities, expertise and skills to foster the leaders for the 
power systems of tomorrow.
     Responses of Hon. Steven Chu to Questions From Senator Shaheen
    Question 1. I would like to get your thoughts on the President's 
proposed Clean Energy Standard (CES). From what I have seen, the 
proposal doesn't list energy efficiency qualifying as a ``resource'', 
as it does for wind, nuclear and natural gas. I think this is a 
mistake, since the cheapest unit of power is the one we don't have to 
produce.
    Answer. The Administration is committed to unlocking the full 
potential of energy efficiency and intends to use efficiency as an 
important means to achieve the President's clean energy goals, through 
programs such as the Better Buildings Initiative and HOMESTAR as well 
as existing programs to promote energy efficiency in the industrial 
sector. As a starting point in the design process, we believe that a 
CES can be more effective in driving the deployment of clean energy 
technologies if it is focused on the generation side, while a suite of 
complementary energy efficiency measures work to reduce electricity 
demand. We also note that even without crediting energy efficiency as a 
resource, a CES inherently creates a strong economic incentive for 
reducing load through demand-side energy efficiency. However, the 
Administration is committed to working with all interested parties on 
CES legislation and is eager to discuss alternative approaches to 
achieving the twin goals of clean energy deployment and energy 
efficiency.
    Question 2. Several states include efficiency as a resource in 
their own Renewable Electricity Standards (RES). Even more states have 
their own separate Energy Efficiency Resource Standards (EERS). If 
these states recognize the value of efficiency as a ``resource'' 
shouldn't it also be recognized in Clean Energy Standard or a separate 
federal Energy Efficiency Resource Standard?
    Answer. A separate energy efficiency resource standard (EERS) is 
one example of a complementary energy efficiency policy. The 
Administration is open to working with all members of Congress to 
design policies such as these and others that could help realize the 
full potential of energy efficiency.
    Question 3. What role do you see for highly efficient combined heat 
and power (CHP) and waste heat recovery systems in a Clean Energy 
Standard? Aren't these systems just as efficient and ``clean'' as 
natural gas, which is included in the President's CES proposal?
    Answer. Combined Heat and Power (CHP) and waste heat recovery 
systems are both highly efficient on-site energy systems and, as such, 
could be readily integrated into a Clean Energy Standard. The 
Administration is eager to work with interested members of Congress to 
explore the best ways to give clean energy credits in a CES for 
measurable clean electricity generation from such technologies, taking 
into account the increased efficiency of cogeneration systems as well 
as the consumption of electricity onsite.
    Responses of Hon. Steven Chu to Questions From Senator Landrieu
    Question 1. In the President's State of the Union speech, he 
announced a goal of putting one million electric vehicles on the road 
by 2015. In reviewing the budget documents, I understand that the DOE 
is planning to invest $588 million in electric vehicle research to help 
achieve this goal. I generally think moving to electric vehicles is a 
laudable goal, but I think we must be realistic about how quickly we 
can get there.
    I recently read a great article in the Washington Post from January 
28, entitled, ``Cold truths on electric avenues.'' The author 
highlights, that even if we reach the President's goal, it would 
represent just 0.4 percent of the U.S. automotive fleet, yielding no 
substantial reduction in carbon emissions or U.S. dependence on foreign 
oil. Given that the President's budget includes $588 million to help us 
achieve that goal, one would hope we could get more bang for our buck. 
The article recommends that an alternative policy would do more to 
accomplish the Administration's goal faster and at a lower cost--this 
alternative policy is to use a more efficient internal combustion 
engine.
    As you know, Mr. Secretary, there is a company called Next 
Autoworks that has developed a more efficient combustion engine. Next 
Autoworks is currently working its way through the DOE Advanced 
Technology Vehicle Manufacturing (ATVM) loan program authorized by the 
Energy Independence and Security Act of 2007. I am told DOE has been 
reviewing their application for 18 months now.
    Do you agree that using a more efficient internal combustion 
engine, in the short term, can help us reduce our dependence on oil and 
lessen our carbon emissions faster than waiting for electric vehicle 
technology to become accessible to the average consumer?
    Answer. It is true that significant advances in internal combustion 
engines (ICEs) are possible, and it is also true that these 
technologies can be transferred to the market quickly through existing 
manufacturing facilities and capability. In the very short term, 
increasing vehicle efficiency using advanced ICE technology is an 
important pathway to address reducing petroleum consumption and 
greenhouse gas emissions. However, to completely address these issues 
and break our dependence on oil, we must transition to a combination of 
technologies using biofuels and electric vehicles. Advanced ICEs can 
play a role in this transition, as using advanced ICEs in hybrid 
electric vehicles and plug-in hybrid electric vehicles will enable even 
greater fuel savings benefits.
    Question 2. If you agree, it seems DOE has the perfect opportunity 
to help enable the production of a more efficient internal combustion 
engine. As such, why has DOE taken so long to review Next Autoworks' 
application and is there any way this process can be accelerated? Do 
you expect DOE to finalize this application soon?
    Answer. It is Department policy not to comment on specific 
applications. However, we are committed to processing applications 
under our programs as efficiently as possible, while ensuring that 
taxpayer funds are properly protected and that all program requirements 
are met.
    Question 3. In the President's State of the Union speech, he 
announced a goal of putting one million electric vehicles on the road 
by 2015. In reviewing the budget documents, I understand that the DOE 
is planning to invest $588 million in electric vehicle research to help 
achieve this goal. I generally think moving to electric vehicles is a 
laudable goal, but I think we must be realistic about how quickly we 
can get there.
    I recently read a great article in the Washington Post from January 
28, entitled, ``Cold truths on electric avenues.'' The author 
highlights, that even if we reach the President's goal, it would 
represent just 0.4 percent of the U.S. automotive fleet, yielding no 
substantial reduction in carbon emissions or U.S. dependence on foreign 
oil. Given that the President's budget includes $588 million to help us 
achieve that goal, one would hope we could get more bang for our buck. 
The article recommends that an alternative policy would do more to 
accomplish the Administration's goal faster and at a lower cost--this 
alternative policy is to use a more efficient internal combustion 
engine.
    As you know, Mr. Secretary, there is a company called Next 
Autoworks that has developed a more efficient combustion engine. Next 
Autoworks is currently working its way through the DOE Advanced 
Technology Vehicle Manufacturing (ATVM) loan program authorized by the 
Energy Independence and Security Act of 2007. I am told DOE has been 
reviewing their application for 18 months now.
    I understand that about $7.5 billion was provided in the Stimulus 
Act to provide loan guarantees to ATVM awardees. How much of that $7.5 
billion remains and do you expect to award the remaining funds within 
the year?
    Answer. ATVM did not receive any appropriated credit subsidy under 
the Recovery Act. The program was established by Section 136 of the 
Energy Independence and Security Act of 2007, and the FY 2009 
Continuing Resolution (CR), enacted on September 30, 2008, appropriated 
$7.5 billion to support a maximum of $25 billion in loans under the 
ATVM Loan Program. However, the ATVM program did receive $10 million in 
funds under the Recovery Act to cover administrative costs.
    On July 13, the Department announced the conditional commitment of 
a loan to Severstal for $730 million. The ATVM Loan Program has issued 
loans or conditional commitments totaling over $9 billion to six 
advanced technology vehicle manufacturers or parts suppliers. The 
program has approximately $4 billion in credit subsidy remaining. DOE 
is continuing to review a number of applications under the program.
    Question 4. Mr. Secretary, I note that one of the largest cuts on a 
percentage basis is a 45% cut to the Office of Fossil Energy. I am 
concerned about the large cut and the impact it will have on the timely 
review of permits and applications.
    For instance, I want to ask you about a project that would have a 
positive impact on Louisiana jobs and U.S. exports. On September 7, 
2010 Sabine Pass Liquefaction filed an application with the Department 
of Energy's Office of Fossil Energy for authorization to export 
liquefied natural gas (LNG) from its Cameron Parish facility. The 
Department opened a period for public comment on the application 
through December 13, 2010 that was extended through January 11, 2011. I 
joined the bipartisan Louisiana delegation in writing to you on July 26 
of last year, describing the importance of the proposed project to 
creating jobs on site and supporting expanded natural gas production in 
northern Louisiana. As you know, timely regulatory reviews are critical 
to the planning and construction of such a large, capital-intensive 
project.
    Do you expect this large cut to affect the timely review of permits 
and applications? When can we expect the Department to make a final 
decision on the Sabine Pass application?
    Answer. The Administration's FY 2012 budget request provides 
funding for Department of Energy staff positions that perform 
regulatory review functions and issue authorizations in response to 
applications submitted by the private sector requesting authority to 
import and export natural gas and liquefied natural gas from and to the 
U.S.
    There are no statutory or regulatory timelines for the Department 
to issue a decision on the type of application submitted by Sabine Pass 
Liquefaction. This application is the first application that has been 
submitted by a company that is proposing to export domestically 
produced, lower-48 natural gas as LNG. As such, it is a precedent-
setting application, with potential ramifications on any similar future 
applications, and the Department must perform a careful review and 
evaluation in order to determine whether or not the application is 
consistent with the public interest. The Department is currently 
reviewing the application, as well as all comments and interventions 
associated with this application, and we expect to issue a decision 
concerning the public interest determination sometime in the first half 
of CY 2011.
    Question 5. Mr. Secretary, I understand that the Department is now 
in the process of working with industry to form a public-private 
partnership to implement the NGNP project. Can you please describe to 
me the Department's planned process and time frame for accomplishing 
this?
    Answer. The Department of Energy has completed a market research 
survey that asked respondents for feedback on a number of aspects of 
the terms and conditions of various potential federal contracting 
mechanisms. The results of this survey are being factored into a draft 
solicitation for forming a cost-shared public-private partnership for 
the design, licensing and construction of the Next Generation Nuclear 
Plant Demonstration Project. As stated in the Budget, a Secretarial 
decision on the future of the NGNP project is planned for the fourth 
quarter of FY 2011 and will consider technical, financial performance, 
and other issues in determining the appropriate next steps, including 
whether to proceed further on the project. Future funding needs will be 
determined through standard planning and budget development processes 
and will be outlined in future Budget requests.
    Question 6. Mr. Secretary, your Department has made reduction of 
carbon emissions a major priority. The Idaho National Laboratory and 
the NGNP Industry Alliance have estimated that if we applied nuclear 
energy as a substitute for just 25% of the current fossil fuel input to 
the petrochemical, refinery and fertilizer industries in the U.S., 
there is a market for over 300 high temperature gas cooled reactor 
modules--resulting in a very substantial reduction in greenhouse 
gasses. I'm told that for these industries, there's really no other 
foreseeable alternative to fossil fuels than high temperature gas 
cooled reactors. Given these facts, I'm a bit disappointed that 
attention the NGNP project receives in the budget is so very modest. 
Assuming the Department is successful in forming a partnership with 
industry on the NGNP project, is it your plan to substantially grow the 
NGNP budget in future years? If not, why not?
    Answer. The Department's budget request reflects the belief that 
light water reactors, both large and small, offer the quickest path to 
deploying new reactors and achieving clean energy goals. A Secretarial 
decision on the future of the NGNP project is planned for the fourth 
quarter of FY 2011 and will consider technical, financial performance, 
and other issues in determining the appropriate next steps, including 
whether to proceed further on the project. The FY 2012 request for NGNP 
maintains essential research and development activities. Future funding 
needs will be determined through standard planning and budget 
development processes and will be outlined in future Budget requests.
    Question 7. I know that DOD, particular the Air Force, has a major 
initiative in terms of developing alternative sources of liquid fuels--
-in fact, as I understand it, our military is one of, if not the 
largest consumer of liquid fuels in the world. I know that the 
Department of Energy has met with the Department of Defense to 
encourage their support for Small Modular Reactors for electric power 
production. Has your Department had a similar meeting or meetings with 
Defense about the potential of high temperature gas cooled reactors in 
terms of synfuel manufacture and coal liquifaction? Has the Department 
encouraged DOD to become involved in the NGNP project? If not, why not?
    Answer. The Department of Energy (DOE) is currently engaged with 
the Department of Defense (DOD) on the deployment of light water small 
modular reactors for electricity at various defense installations. 
Previous conversations with DOD included discussions on the marrying of 
high-temperature gas-cooled reactors (HTGRs) to the production of syn-
fuels from bio-feedstocks or coal and its potential impact on energy 
and national security. DOE and DOD will continue to assess the 
feasibility of liquid fuel production using nuclear energy as the heat 
source, but no specific project is currently envisioned.
    Question 8. Can you please tell me about the current status of the 
Department's work with the NRC on a licensing regime for high 
temperature gas cooled reactors? How much money is the FY12 budget for 
this activity?
    Answer. Since the Department of Energy (DOE) and the Nuclear 
Regulatory Commission (NRC) submitted the joint Next Generation Nuclear 
Plant Licensing Strategy--A Report to Congress in 2008, significant 
progress has been made. Current efforts are focused on R&D 
collaborations particularly in the area of thermal hydraulic modeling, 
and the resolution of key policy and technical issues affecting high 
temperature gas-cooled reactors (HTGRs). DOE has submitted 8 of 13 
planned white papers to the NRC which address priority licensing 
topics. DOE is also engaged in performing a detailed regulatory gap 
analysis to review existing NRC rules and regulations and identify 
their applicability to HTGRs. The results of the gap analysis and NRC 
disposition of white papers will serve as the basis for a license 
application content guide for HTGRs. The gap analysis is projected to 
be completed 2011. The Department plans to spend $2.2 million on 
licensing efforts in FY2012, which includes providing $1.5 million 
directly to the NRC.
    Question 9. As we all know, the budget for Yucca Mountain was 
eliminated two budget cycles ago, but we are still dealing with the 
ramifications of the decision to pull this the plug on the project. As 
such, DOE's current liability for failing to begin accepting spent fuel 
now stands at $16 billion and that is approximately a $2 billion 
increase over the previous year's estimate. Previously, the liability 
was estimated to be growing at $500 million per year; and now since 
termination of the program, it has doubled the growth of the liability 
to $1 billion per year. As such, what is DOE doing to rectify this 
situation? Have you evaluated the long-term implications of your Yucca 
Mountain termination decision on DOE's liability? What is DOE's 
forecasted liability in 20 years or 60 years if the DOE fails to begin 
accepting spent fuel?
    Answer. For the purpose of appropriately recognizing the 
Government's potential financial liability in the Department's 
financial statements, the Department annually performs an assessment of 
the Government's future potential liability due to the Department's 
delay in beginning the acceptance of spent nuclear fuel in accordance 
with the provisions of the Standard Contracts with the nuclear 
utilities. The most recent estimate of the outstanding liability as of 
the end of fiscal year 2010 was $15.4 billion. The Department based 
this estimate of the future potential liability upon, among other 
things, the costs that utilities have submitted for compensation and 
that the Department has approved for recovery, pursuant to the existing 
settlement agreements with nuclear power plant operators. This estimate 
assumed that the Department would begin acceptance of spent nuclear 
fuel in 2020, as was assumed in the previous year's estimate. While the 
Department believes that the methodology utilized in performing this 
assessment is appropriate for quantifying the Government's total 
potential liability resulting from the delay in performance under these 
contracts with utilities, the Department has no way to determine when 
utilities will actually incur these costs and submit claims for 
reimbursement, or when a Court's judgment may become final and 
unappealable. As a result, the Department is unable to provide an 
annual projection of the potential liability, and the estimates may 
vary substantially from year to year, based upon the prior year's 
actual cumulative experience of payments of claims under settlements or 
judgments.
    The Department's prior statements that each year of additional 
delay in the beginning the acceptance of spent nuclear fuel would 
increase the government's liability by up to $500 million were 
predicated upon a further delay in completing the Yucca Mountain 
repository. The Department has determined that a geologic repository at 
Yucca Mountain is not a workable option. The Secretary has established 
the Blue Ribbon Commission on America's Nuclear Future, and has charged 
the Commission with identifying alternatives for managing the Nation's 
nuclear waste. The Administration will evaluate the information from 
the Commission as it develops a new strategy for nuclear waste 
management and disposal. Forecasts will reflect strategies and 
alternatives as appropriate.
      Responses of Hon. Steven Chu to Questions From Senator Coons
    Question 1. I was disappointed to see the House GOP propose 
sweeping cuts to the ARPA-E program, which would leave it with only $50 
million for the remainder of FY 2011. I think the program is absolutely 
critical to continue to drive innovation and keep America competitive. 
Over the next 5-6 years, how much more do you think we need to invest 
in cutting edge technologies to be competitive in the global clean 
energy market and what would be necessary to be the world's leader?
    Answer. I thank you for your support of ARPA-E. ARPA-E is devoted 
exclusively to funding specific high-risk, high payoff, research and 
development projects to meet the nation's long-term energy challenges. 
ARPA-E fulfills a critical need for transformational energy 
technologies. Given the recent surge in energy investments overseas and 
unparalleled growth in the global demand for energy resources, the next 
few decades must be the most innovative period of U.S. history in order 
to remain competitive in the energy economy of the future. ARPA-E will 
play a key role in fostering that innovation. The magnitude of this 
challenge is enormous, as is the opportunity. Encouraging American 
innovation and maintaining our leadership in research and technology is 
a high priority for the Administration.
    I support the President's request for ARPA-E's budget, and look 
forward to continuing to work with the authorization and appropriations 
committees in Congress.
    Question 2. The proposed DOE budget includes a decrease for the 
ATVM program of 70% for the program in FY 2012, due to the fact that 
credit subsidy scores have come back higher than expected, leading to 
higher than anticipated costs. Do you think this is a critical program 
that should be moved forward? How can we best ensure that it does?
    Answer. The Advanced Technology Vehicles Manufacturing Loan Program 
(ATVM) is a critical program that provides loans to automobile and 
automobile part manufacturers for the cost of re-equipping, expanding, 
or establishing manufacturing facilities in the United States to 
produce advanced technology vehicles or qualified components, and for 
associated engineering integration costs.
    The ATVM Loan Program budget requests from FY 2010-2012 were for 
administrative operations only because the $7.5B credit subsidy 
appropriated in 2009 provided sufficient budget authority. The ATVM 
Loan Program requested $6M for administrative operations in FY12 
compared to $10M requested in FY11 and $20M appropriated in FY10. The 
decrease in FY12 over the FY11/10 levels is due to the fact that the 
ATVM loan program anticipates transitioning from loan origination to 
portfolio management activities.
    The Department is committed to utilizing the funds currently 
appropriated to the ATVM Loan Program to fund solid projects to achieve 
our statutory objectives. On July 13, the Department announced the 
conditional commitment of a loan to Severstal for $730 million. To 
date, over $9 billion in direct loans and conditional commitments have 
been made to six manufacturers, three of which have been exclusively 
focused on plug-in electric and hybrid electric vehicles. In addition, 
we are currently engaged in due diligence on numerous other projects.
    Question 3. I am pleased to see $5 billion for the Advanced Energy 
Manufacturing Tax Credit (Section 48c) in the Department of Treasury's 
budget. I participated in an effort during the lame duck session to try 
and extend the program, and was disappointed that it did not pass. Do 
you know the number and scale of clean energy manufacturing 
opportunities we are missing out on because of this lapse?
    Answer. Department of Energy (DOE) has supported Internal Revenue 
Service (IRS) to award of $2.3 billion in tax credits for 183 clean 
energy manufacturing projects in 43 states under the 48(c) program. The 
manufacturing capacity supported by these grants will produce solar 
panels, wind turbines, geothermal equipment, nuclear plant components, 
and energy efficient building products, putting the US on track to 
significantly increase our capacity to manufacture these high 
technology, clean energy components. These facilities represent some of 
the premier companies in renewable manufacturing.
    The interest was extraordinary and the program was oversubscribed 
by a ratio of more than 3 to 1. The Administration has called on 
Congress to provide an additional $5 billion to expand the program.
    Since, this program was a onetime snapshot of multiple industries 
taking advantage of a program; the data was not comprehensive enough to 
draw a specific conclusion. However, market research suggests that the 
US wind industry is a $16 billion industry, solar is $3-4 billion, and 
building controls and energy efficiency is roughly a $4 billion 
industry. New technologies and advancements are being made every day 
thanks to these 48c investments. Many of these technologies are new, 
innovative, and game changing technology.
    Question 4. The University of Delaware is currently working on a 
proposal to establish a demonstration project for offshore wind off the 
southern coast of Delaware. This project would provide critical 
information for future offshore wind projects, including turbine 
performance and impacts of storms, which will help reduce costs and 
uncertainty, and draw more offshore wind projects to the U.S. Is there 
any funding in DOE's FY 2012 budget for demonstration projects? If not, 
do you expect to eventually offer such a program and when?
    Answer. The Department of Energy's FY 2012 budget request includes 
$63.7 million for offshore wind energy research, development, and 
demonstration. The budget request specifically identifies $12 million 
for partnerships with commercial developers, research consortia, power 
producers, and electric utilities in the development and demonstration 
of first-of-akind offshore wind power projects. DOE anticipates 
selecting demonstration project partners through competitive 
solicitations. The initial scope of DOE's anticipated funding awards to 
these demonstration projects will focus on addressing project 
deployment needs and will support basic technical data reporting 
requirements.

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