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72–921PDF 2012

AN OVERVIEW OF THE 

DEPARTMENT OF ENERGY 

RESEARCH AND 

DEVELOPMENT BUDGET 

FOR FISCAL YEAR 2013 

HEARING 

BEFORE THE

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

THURSDAY, MARCH 1, 2012 

Serial No. 112–65 

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

( 

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

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. RALPH M. HALL, Texas, Chair 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

DANA ROHRABACHER, California 

ROSCOE G. BARTLETT, Maryland 

FRANK D. LUCAS, Oklahoma 

JUDY BIGGERT, Illinois 

W. TODD AKIN, Missouri 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

PAUL C. BROUN, Georgia 

SANDY ADAMS, Florida 

BENJAMIN QUAYLE, Arizona 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

E. SCOTT RIGELL, Virginia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

ANDY HARRIS, Maryland 

RANDY HULTGREN, Illinois 

CHIP CRAVAACK, Minnesota 

LARRY BUCSHON, Indiana 

DAN BENISHEK, Michigan 

VACANCY 

EDDIE BERNICE JOHNSON, Texas 

JERRY F. COSTELLO, Illinois 

LYNN C. WOOLSEY, California 

ZOE LOFGREN, California 

BRAD MILLER, North Carolina 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

MARCIA L. FUDGE, Ohio 

BEN R. LUJA ́ N, New Mexico 

PAUL D. TONKO, New York 

JERRY MCNERNEY, California 

JOHN P. SARBANES, Maryland 

TERRI A. SEWELL, Alabama 

FREDERICA S. WILSON, Florida 

HANSEN CLARKE, Michigan 
(III) 

C O N T E N T S 

Date of Hearing 

Page 

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

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

Opening Statements 

Statement by Representative Ralph M. Hall, Chairman, Committee on 

Science, Space, and Technology, U.S. House of Representatives ..................... 13 

Written Statement ............................................................................................ 14 

Statement by Representative Eddie Bernice Johnson, Ranking Minority Member, Committee on Science, Space, and Technology, U.S. House of Representatives ........................................................................................................... 15 

Written Statement ............................................................................................ 16 

Witnesses: 

Dr. Steven Chu, U.S. Secretary of Energy 

Oral Statement ................................................................................................. 18 

Written Statement ............................................................................................ 19 

Discussion ................................................................................................................. 22 

Appendix 1: Answers to Post-Hearing Questions 

Dr. Steven Chu, U.S. Secretary of Energy ............................................................ 52 

Appendix 2: Additional Material for the Record 

Analysis of Impacts of a Clean Energy Standard as Requested by Chairman 

Bingaman, November 2011 ................................................................................. 123 

Charts Submitted by Representative Rohrabacher .............................................. 155 

(1) 

AN OVERVIEW OF THE 

DEPARTMENT OF ENERGY 

RESEARCH AND DEVELOPMENT BUDGET 

FOR FISCAL YEAR 2013 

THURSDAY, MARCH 1, 2012 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, DC. 

The Committee met, pursuant to call, at 9:36 a.m., in Room 2318 

of the Rayburn House Office Building, Hon. Ralph Hall [Chairman 

of the Committee] presiding. 
2 

RALPH M. HALL, TEXAS EDDIE BERNICE JOHNSON, TEXAS 

U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

2321 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON. DC 20515-6301 

(202) 225-6371 

An Overview of the Department of Energy Research and 

Development Budget for Fiscal Year 2013 

Thursday, March 1,2012 

9:30 a.m. to 12:00 p.m. 

2318 Rayburn House Office Building 

Dr. Steven Chu, Us. SecretaryaJEnergy 
3 

U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HEARING CHARTER 

An Overview of the Department of Energy Research and Development Budget 

for Fiscal Year 2013 

Thursday, March 1,2012 

9:30-12:00 

2318 Rayburn House Office Building 

On Thursday, March 1,2012, the Committee on Science, Space, and Technology will hold a 

hearing entitled "An Overview of the Department of Energy Research and Development 

Budgetfor Fiscal Year 2013." The purpose of the hearing is to examine energy policy. and 

budget priorities related to the President's Fiscal Year (FY) 2013 budget request, including 

activities within the DOE offices of Science, Energy Efficiency and Renewable Energy, 

Advanced Research Projects Agency-Energy, Fossil Energy, Nuclear Energy, Electricity 

Delivery and Energy Reliability, and the Loan Guarantee Program Office. 

Dr. Steven Chn, Us. Secretary of Energy. Dr. Chu was confrrmed as the 12th Secretary of 

Energy on January 20, 2009. Prior to his appointtnent Dr. Chu was the Director of DOE's 

Lawrence Berkeley National Laboratory, and a professor of Physics and Molecular and Cell 

Biology at the University of California. He is the co-winner of the 1997 Nobel Prize for 

Physics. 
4 

Department (~f Energy (DOE) Spending 

(dollars in millions) 

FY11 FY12 FY13 

Program Actual Enacted Request 

Office of Science 

Advanced SCientific 

Computing Research 410.3 4409 455.6 

BasIc Energy Sciences 1638.5 16881 17996 

Biological and 

Environmental Research 595.2 609.6 625.3 

Fusion Energy Sciences 3673 401.0 398.3 

Higil Energy Physics 775.6 790.9 776.5 

Nuclear PhysiCS 527.7 547.4 526.9 

Office of Science' 4897.3 4873.6 4992.1 

Energy Efficiency and 

Renewable Energy (EERE) 

Hydrogen and Fuel Cell 

Technologies 95.8 103.6 80.0 

Biomass and Biorefinery 

Systems 180.0 199.3 270.0 

Solar Energy 2596 289.0 310.0 

Wind Energy 78.8 93.3 95.0 

Geothermal Technology 37.0 37.9 65.0 

WaterPower 29.2 58.8 20.0 

Vehicle Technologies 293.2 328.8 0 

Building Technologies 207.3 219.2 310.0 

Advanced Manufactunng*' 1059 115.6 290.0 

Energy Efficiency and 

Renewable Energy (EERE)' 1771.7 1809.6 2337.0 

Nuclear Energy'" 806.0 858.7 770.4 

Electricity Delivery and Energy 

Reliability R&D 102.1 99.1 103.4 

Fossil Energy R&D 434.1 346.7 420.6 

ARPA·E 179.6 275.0 350.0 

Loan Guarantee Program Office 179.5 6.0 9.0 

Totals: 8370.3 8268.7 8982.5 

*T otal program funding: mawr am.! 1100-S8:T accounb at SC and .I::ERL are no! shown 

FY13 Request 

versus 

FY12 Enacted 

$ % 

14.7 3.3 

111.5 6.6 

15.7 2.6 

(27) (07) 

(144) (1.8) 

(205) (3.7) 

118.5 2.4 

(236) (22.8) 

70.8 35.5 

210 73 

1.7 1.8 

271 71.5 

(38.8) (660) 

91.2 27.7 

90.8 41.4 

1744 150.9 

527.4 29.1 

(88.3) (10.3) 

4.3 4.3 

73.9 21.3 

75.0 27.3 

3.0 50.0 

713.8 8.6 

**lnduslrial Technologies Prcogram renamed as Advanced Manufacturing Office in FY 2013. 

*"'* Total Office ofNucleaf Energy: includes F3Cilit) \1anagcmcnt and Idaho Safeguards and Security 

2 
5 

BACKGROUND 

The Department of Energy (DOE) funds a '" ide range of research. development. demonstration. 

and commercial application activities. DOE's primary mission is to "advance the national 

economic. and energy security of the United States: to promote scientific and technological 

innovation in support of that mission: and to ensure the environmental cleanup of the national 

nuclear weapons complcx:· 1 In order to fulfill its mission. DOE operations are guided by five 

strategic themes: energy security. nuclear security. scientific discovery and innovation. 

environmental responsibility. and management excellence. 

The overall FY 2013 budget request for DOE is $27.2 billion. which represents a $855.5 million 

or 3.2 percent increase over FY 2012 levels. Approximately one third of this amount is dedicated 

to programs within the Committee on Science. Space. and Technology's jurisdiction. The 

balance of DOE's funding is allocated to the National Nuclear Security Administration (NNSA). 

to maintain our stockpile of nuclear weapons. and Defense and Non-Defense Environmental 

Management (EM) programs. to manage the cleanup of nuclear weapons production and 

government-sponsored nuclear energy research. 

DOE R&D PROGRAMS AND OFFICES 

Office of Science 

The total FY 2013 budget request for the Office of Science (SC) is $5.0 billion. a $118.4 million 

or 2.4 percent increase over the FY 2012 levels. The mission of the Office of Science is the 

delivery of scientific discoveries. capabilities. and major scientific tools to transfonn the 

understanding of nature and to advance the energy. economic. and national security of the United 

States. In support of this mission. SC supports basic research in the following areas: advanced 

scientific computing. basic energy sciences. biological and environmental research, fusion 

energy sciences, high energy physics. and nuclear physics. SCs operations take place in three 

main areas: selection and management of research (47 percent of SCs FY 2013 budget request): 

operation of world-class. state-of-the-art scientific facilities (38 percent): and design and 

construction ornew facilities (14 percent). 

SC also supports several ongoing interagency initiatives such as the Networking and Information 

Technology Research and Development program: the National Networking Initiative: the United 

States Global Change Research Program: and the Climate Change Technology Program. SC 

provides approximately 45 percent of Federal support of basic research in the physical sciences 

and key components of the Nation's basic research in biology and high-end computing. 

Office of Science budget and activities are divided into the following six major program arcas: 

Basic Energy Sciences (BES) requests $1.8 billion. an increase of$111.5 million (or 6.6 

percent) over FY 2012 levels. BES supports basic research into the fundamental building blocks 

necessary for advancing new energy technologies. and maintains world-class research facilities 

to develop new knowledge and facilitate advances in areas such as materials science and 

chemistry. BES requests funding for ongoing operation oft\\'o existing Energy Innovation Hubs: 

: Ail DOE mission statement quotes come from the cited ofiice's \\ebsite, 

3 
6 

$24.2 million for the fourth fiscal year of the Fuels from Sunlight Hub. administered by the 

Chemical Sciences. Geosciences. and Bioscicnces subprogram: and $24.2 million for the second 

year of the Batteries and Energy Storage Hub. administered by the Materials Sciences. and 

Engineering subprogram. 

In order to realize significant research gains and advance new research methodology. in 2009 

BES initiated the creation of Energy Frontier Research Centers (EFRCs.) EFRCs are 

individually funded between $2-5 million per year to conduct focused research from a small 

tcam to solve ··grand challenges·· associated with disruptive scientific advances. DOE requests 

continued funding for all 46 existing EFRCs in FV 2013. 

Biological and Environmental Research (BER) would receive $625.3 million in the 

Presidenfs budget. which is $15.7 million (2.6 percent) over FY 2012 funding. BER examines 

fundamental biological systems. climate. and environmental sciences. Specifically. BER 

researches genomics. drivers of climate change. and deeper environmental issues. The request 

also includes support for the three DOE Bioenergy Research Centers. the Joint Genome Institute. 

and Environmental Molecular Sciences Laboratory. 

The majority of the requested increase is directed to the Climate and Environmental System 

Science subprogram. which increases $11.6 million (17.1 percent). This funding will support a 

··next-generation ecosystem experiment. begun in 2012. focused on the relationship between 

climate change and Arctic permafrost ecosystems and will initiate a new activity exploring the 

relationship between climate and tropics ecology :.2 -

The budget would provide $455.6 million for Advanced Scientific Computing Research 

(ASCR). an increase of$14.7 million (3.3 percent) over FY 2012 levels. Within ASCR. the two 

primary suhprograms face different funding profiles for FY 2013. The Mathematical. 

Computational. and Computer Sciences Research subprogram would receive an increase of 

$28.1 million (18.1 percent) to focus on the challenge of data-intensive science and develop the 

computational capacity for future super-computing needs. The High Performance Computing 

and Network Facilities subprogram request decreases by $13.3 million (4.6 percent) from FY 

2012 enacted levels. The budget request includes $68.5 million to continue investigating the 

potential for an exascale computing system aimed at increasing computational capacity by a 

thousand-fold. 

The request for Fusion Energy Sciences (FES) is $398.3 million. a decrease of$2.7 million (0.7 

percent) below FY 2012 funding. FES supports research to improve fundamental understanding 

of matter at very high temperatures and densities needed to develop fusion energy. The 

contribution to the international ITER project. a partnership to demonstrate the first fusion 

prototype. is $150 million. an increase 01"$45 million (42.9 percent) above FY 2012 enacted 

funding. 

The FY 2013 funding request for High Energy Physics (HEP) is $776.5 million. a $14.3 million 

(1.8 percent) decrease from the enacted FY 2012 level. HEP probes the basic relationship 

between space and time. the elementary constituents of matter and energy. and the interactions 

'Department of Energy. FY 2013 Congressional Budget Request. Volume 4. p. 148. 

4 
7 

between them. This effort is concentrated on three scientific frontiers: the energy frontier. the 

intensity frontier. and the cosmic frontier. 

Nuclear Physics (NP) would receive $526.9 million. a decrease of $20.4 million (3.7 percent) 

below FY 2012 funding. This program supports research to discover and understand various 

fonns of nuclear matter. It also supports the production and development of techniques to make 

isotopes that are in short supply for medical. national security. environmental. and other research 

appl ications. 

Energy Efficiency and Renewable Energy 

The mission of the Office of Energy Efficiency and Renewable Energy (EERE) is to "strengthen 

the United States' energy security. environmental quality. and economic vitality in public-private 

partnerships." EERE supports this mission statement by: "Enhancing energy efficiency and 

productivity: bringing clean. reliable and affordable energy technologies to the marketplace: and 

making a difference in the everyday lives of Americans by cnhancing their energy choices and 

their quality of life." EERE participates in many crosscutting activities with other departments. 

as well as within DOE offices. including collaborations with the Office of Science. the Advanced 

Research Projects Agency - Energy. Office of Electricity. Fossil Energy. Federal Energy 

Management Program. and the Loan Guarantee Program Ot1lce. 

The Administration's budget request of$2.3 billion for EERE represents a $527.4 million (29.1 

percent) increase over FY 2012 levels. This reflects the President's continued emphasis on 

increasing spending to develop clean energy technologies. Additionally. EERE requests 

statutory language allowing the Secretary of Encrgy to transfer up to $ I 00 million to the Defense 

Production Act Fund. 

The proposed funding for the Solar Energy program is $310 million. an increase of$21 million 

(7.3 percent) over FY 20 I 2 levels. This request continues to support the Administration's 

"SunShof' initiative. A primary component of this initiative is EERE's "Dollar-a-Watt" 

program to make solar energy cost-competitive with fossil fuels without subsidies. To achieve 

this goal. solar generation needs to reach a five to six cents/kWh equivalent installed price for 

solar photovoltaics (PV) energy by 2020. or reduce the installed cost of solar electricity b) 

approximately 75 percent from current costs. In order to achieve the SunShot goals. the budget 

requests additional emphasis on late-stage technology development activities. Market 

transformation activities receive an increase of $1 0.2 million (32 percent) and the manufacturing 

and SunShot validation subprogram receives a $25.3 million (30 percent) increase above FY 

2012 levels. 

The FY 20]3 funding request for the Wind Energy program is $95 million. an incrcase of $1. 7 

million (1.9 percent) over FY 20 I 2 enacted levels. The request focuses funding on activities to 

develop off.,hore wind technology. and aims to address financial. regulatory. technical. 

environmental. and social issues associated with offshore wind. 

The FY20 I 3 Biomass and Biorcfinery Systems budget request is $270 million. an increase of 

$70.7 million (35.5 percent) over the FY 2012 level. This program aims to develop and 

transform domestic. renewable. and abundant biomass resources into cost-competitive. high 

perfonnance biofuels. biopower. and bioproducts through targeted planning. research. 

5 
8 

development and demonstration. DOE is seeking legislative authority to transfer funds under the 

Defense Production Act to coordinate EERE biofuel activities with the Navy and U.S. 

Department of Agriculture. The FY 2013 also includes an increased focus on bio-oil and 

downstream process technologies to produce final biofuel products. 

The proposed funding level for the Geothermal Technology program is $65 million. an increase 

of$27.1 million (71.7 percent) over FY20J2. The funding increase is almost exclusivcl) 

dedicated to the Enhanced Geothermal Systems (EGS) subprogram. The subprogram will focus 

on EGS reservoir creation and monitoring technologies at [GS field test sites and will evaluate 

EGS stimulation techniques. 

The Administration's budget request provides a total of$20 million for the Water Power 

program. which is a $38.8 million (66 percent) decrease from FY 2012 enacted levels. The 

program funds incremental hydropower development and demonstrates marine and hydrokinetic 

(Ml'IK) technologies. According to the budget. the reduction in funding is due to progress in 

multiyear research projects intended to improve conventional hydropower. The program will 

focus on !'vIHK technologies and developing open water testing for MHK devices. 

The Hydrogen and Fuel Cell Technologies (HFCT) program requests $80 million: a $23.6 

million or 22.8 percent decrease from FY 2012 levels. The budget states that the decrease 

reflects previous year progress on fuci cell technologies. FY 2013 efforts will be directed to 

deploying fuel cells with industry and government partners. 

The budget request for the Huildings Technologies Program (BTP) is $310 million. a $174.4 

million (41.4 percent) increase over FY 2012 levels. BTP supports efforts to improve the energy 

efficiency of new and existing homes and buildings primarily through advanced building 

technologies. controls. systems, and whole-building design: demonstration of integrated 

approaches for construction: bringing transformational tools to the market place; supporting the 

ENERGY STAR program; supporting the adoption. training. and enforcement of building codes: 

and promulgating and finalizing efficiency standards as required by law. The Energy Efficient 

Buildings Systems Design flub is administered by BTP. 

BTP also supports the President's Beller Buildings Initiative. which aims to achieve a 20 percent 

improvement in commercial building energy efficiency by 2020. The program will expand 

demonstration and testing activities associated with retrofitting commercial and residential 

buildings. In addition to ongoing research. development. and demonstration (RD&D) activities, 

BTP Equipment and Buildings Standards requests an additional $40 million in part to initiate six 

new conservation standards rulcmaking. 

The Vehicle Technologies Program (VTP) requests $420 million. an increase of $91.2 million 

(27.7 percent) over the FY 2012 level. VTP is centered 011 achieving the President's goal to 

place one million electric vehicles on the road by 2015. The FY 2013 increase reflects an 

increased emphasis on advanced battery technology and manufacturing to reduce system cost. 

VTP will also focus on improving Heating Ventilation Air Conditioning system technologies. 

The Advanced Manufacturing Office (AMO. formerly the Industrial Technologies Program). 

request is $290 million, an increase of$174.4 million (150.9 percent) over FY2012 levels. The 

6 
9 

mission of AMO is to research. develop and demonstrate at a "convincing scale new cncrgyefficient manufacturing processes and materials technologies to reduce the energy intensity and 

life-cycle energy consumption ofmanufacture~ products and promote a corporate culture of 

continuous improvement in energ~ efficiency"" for existing manufacturing tilcilities. 

In FY 2013. AMO's Systems Integration activities would increase over $1 00 million to develop 

and demonstrate manufacturing processes. DOE requests $20 million for the second year of the 

Critical Materials Energ: Innovation Hub to explore new technologies in order to increase the 

supply or reduce critical materials demand for energy efficiency and renewable energy 

technologies. AMO additionally seeks statutory authority to transfer funds under the Defense 

Production Act to reduce cost and accelerate the availability of certain technologies for both 

commercial and defense applications. 

The Advanced Research Projects Agencv -Energv 

The Administration requests $350 million in FY 2013 for the Advanced Research Projects 

Agenc) Energy (ARPA-E). an increase of$75 million or 27.3 percent over FY 2012 levels. In 

FY 2013. ARPA-E will emphasize (I) $184 million for Transportation Systems. including 

batteries and systems for electric vehicles and development of market competitive fuels using 

domestic resources such as natural gas: and (2) $130 million for Stationary Power. including 

challenges associated with "power electronics. solar. wind. osmotic power. smart grid 

technologies. natural gas. geothermal. and waste heat capture."'" 

Established in 2007 by the America COMPETES Act (P.L.II 0-69), ARPA-E is statutorily 

charged with developing energy technologies that result in "(il reductions of imports of energy 

from foreign sources: (ii) reductions of energy-related emissions. including greenhouse gases; 

and (iii) improvement in the energy efficiency of all economic sectors." Initially provided with 

$400 million in American Recover} and Reinvestment Act (ARRA) (P.L.111-5) funding. 

ARPA-E did not receive a direct appropriation in FYIO, though it did receive a $15 million 

transfer from the Office of Science. 

In FY 2011, ARPA-E was provided $180 million in funding. of which $130 million for 60 

projects has thus far been awarded. The six program areas funded in FY 201] included Plants 

Engineered to Replace Oil (PETRO). High Energy Advanced Tehrmal Storage (HEATS), Rare 

Earth Alternatives in Critical Technologies (REACT). Gr<;:en Electricity Network integration 

(GENl). and Solar Agile Delivery of Electrical Power Technology (Solar ADEPT). In FY 2012. 

ARPA-E plans to issue funding opportunity announcements (FOA) for Hybrid Energy Storage 

Modules (HESM), natural gas for transportation. Small Business Innovation Research (SBIR). 

and a FOA open to any transformational energy technology. 

Fossil Energv R&D 

The DOE Office of Fossil Energy (FE) supports R&D focused on coal (including clean coal 

technologies). gas, and petroleum and also supports the Federal governmenfs Strategic 

Petroleum Reserve. The President's total budget request for FE is $650.8 million. Of that. FE's 

R&D budget is $420.6 million. an increase of $73.9 million (21.3 percent) above FYI2 enacted 

.1 DOE FY 2013 Congressional Budget Request, Volume 3. p. 131. 

, Deparlmenf of r'nergy. nelailcil /iudgel Request lolume ~. p. 417. 

7 
10 

levels. The FY 2012 level of$533.7million included a rescission of5187 million resulting from 

termination of a major carbon capture and sequestration (CeS) demonstration project funded in a 

previous fiscal year. The base budget request for FE R&D. before accounting for this rescission. 

represents a decrease of5105.2 million. or 19.7 percent. 

Coal R&D is funded at $275.9 million. the bulk of which focuses on advancing carbon capture 

and sequestration (CCS) efforts. FY 2013 Carbon Capture subprogram efforts are dedicated to 

achieving FE's goal to accomplish post-combustion carbon dioxide capture at no more than a 35 

percent increase in electricity costs. The program is also identifying technologies to acquire 

commercial value of sequestered carbon through Carbon Capture. Utilization. and Sequestration 

activities to improve the economic viability of CCS technology. The Carbon Storage subprogram 

is mostly focused on maintaining funding for regional carbon sequestration partnerships to stud) 

the viability of long-term geologic storage in various formations. 

The Clean Coal Power Initiative (CCPI) does not request additional funding to support CCS 

demonstration projects. In FY 2013. CCPI will continue to monitor the progress of the current 

portfolio of demonstration projects funded through ARRA. The Hydrogen from CoaL Coal to 

Coal Biomass to Liquids. and Solid Oxide Fuel Cells subprograms are all proposed to be 

eliminated. 

The Natural Gas Technologies R&D program request is $17 million. $12 million of which is 

proposed for a new interagency R&D initiative by DOE. the Environmental Protection Agency. 

and the U.S. Geological Survey to "understand and minimize the potential environmentaL health. 

and safety impacts of shale gas development through hydraulic fracturing ... including the key 

research recommendations received from the Subcommittee of the Secretary of Energy Advisory 

Board:'s 

The FYI3 budget request proposes to terminate Unconventional Fossil Energy Technologies 

programs, including the elimination of$50 million for the Ultra-Deep and Unconventional 

Natural Gas Other Petroleum Resources Research PrOb'Tam. 

Nuclear Energy 

The primary mission of the Office of Nuclear Energy (NE) is to '"advance nuclear power as a 

resource capable of meeting the Nation's energy. environlncntaL and national security needs by 

resolving technical. cost, safety. proliferation resistance. and security batTiers through research. 

development. and demollstratioll as appropriate" 

The FY 13 budget request for NE is $770.4 million. a $88.3 million (10.3 percent) decrease 

below FY 2012 levels. NE's primary R&D programs are Nuclear Energy Enabling Technologies. 

or NEET. (565.3 million); Light Water Reactor Small and Modular Reactor Licensing Technical 

Support ($65 million): Reactor Concepts RD&D ($73.6 million): and Fuel Cycle R&D ($175.4 

million). The primary NE research accounts total $382.4 million, a $68.5 million or $15.2 

percent decrease from FY 2012. The majority of this decrease is proposed to come out of the 

Reactor Concepts program (-$41.2 million). speci fically activities related to the ~cxt Generation 

Nuclear Plant (NGNP) (-$19.2 million). advanced small modular reactors (-$9.5 million). and 

advanced reactor concepts (-$9.5 million). 

5 Department of Energy Budget Highlight,. p. 51. 

8 
11 

The budget request consolidates funding previously provided in the Energy and Water 

Development Appropriation "Other Defense Activities" account into the NE funding linc. Thus, 

the budget requests $95 million for securit) at NE's primary national research facility, Idaho 

National Laboratory. as part ofNE. rather than part of "defense activities:' 

The Fuel Cycle R&D program includes $59,7 million for (he third year of the Used Fuel 

Disposition Research and Development subprogram, which examines issues associated with 

managing the back end of the nuclear fuel cycle. The subprogram intends to carry out key 

recommendations put forth in the Bfu~ Ribbon Commission on America'5 :Vuciear Future Report 

10 Ihe Seerelmy olEner&'y- such as researching and developing storage, transponation, and 

disposal technologies for spent fuel and nuclear waste, To assist ..... ith this research, NE requests 

$10 million be appropriated from the Nuclear Waste Fund for activities associated with the 

disposal of high-level radioactive waste. as required by the Nuclear Waste Policy Act 

In FY 2013, NE requests $24,6 million for the Energy Innovation Hub for :\1odeling and 

Simulation known as Consortium for Advanced Simulation of Light Water Reactors (CASL), 

CASL is creating a "vinual reactor model" of an operating nuclear reactor to "simulate reactor 

behavior and improve the safety and economics of reactor operations by simulating proposed 

solutions to reactor power production increases and reactor life and license extensions:,6 

EJectricitv Deliverv and Energv Reliabilitv 

The mission of the Office of Electricity Delivery and Energy Reliability (OE) is to "lead national 

cffons to modernize the electric grid; enhance security and reliability of the energy 

infrastructure; and facilitate recovery from disruptions to energy supply:' Research and 

Development within OE is funded at $103.4 million in the President's FYI3 budget request 

This reflects an increase of $4.3 million (4.3 percent) over FYl2 levels. 

OE's R&D programs focus on clean energy transmission and reliability, sman grid R&D, energy 

storage, and cyber security for energy delivery systems, OE concentrates on potential strains on 

the electric system as electric generation shifts towards low-carbon energy sources. specifically 

associated intermittency problems from wind and solar generation, OE aims to support these 

objectives through advanced grid modeling and extensive technological breakthroughs in energy 

storage, The President requests $20 million for the creation of an Electricity Systems Hub to be 

administered by OE. The new Huh would "address the critical issues and barriers associated 

[with] modernization of tile electric grid:'" 

Loan Guarantee Program Office 

Title 17 of the Energy Policy Act of 2005 authorizes DOE to make loan guarantees to encourage 

early commercial use of new or significantly improved technologies in energy projects, Projects 

supported must avoid, reduce, or sequester air pollutants or anthropogenic emissions of 

greenhouse gases; employ new or signifIcantly improved technologies; and offer a reasonable 

prospect of repayment of the principal and interest on the guaranteed obligation, 

6 Depar1ment of Energy FY 2013 Congressional Budget Request Volume 3, p, :;40. 

7 J)()£ Budget Highlights. p. 32 

9 
12 

According to the budget request. the Loan Guarantee program has awarded over $16 billion in 

loan guarantees for 26 renewable en erg) projects. and has made additional commitments that 

have not yet closed totaling over $10 billion. The FY 2013 budget requests $38 million for 

administrative operations .. to foclis on portfolio management and monitoring activities on the 

existing portfolio as well as originating nev\ loan guarantees to utilize remaining loan authority 

in the nuclear power. front-end nuclear. fossil. and renewable and energy efficiency sectors .. ·

B 

The Administration proposes to offset requested spending with an equivalent amount offec 

collections for a net-zero budget request. 

'Ibid. p. 52. 

10 
13 

Chairman HALL. Okay. The Committee on Science, Space, and 

Technology will come to order. And I say good morning and welcome to today’s hearing entitled ‘‘An Overview of the Department 

of Energy Research and Development Budget for Fiscal Year 2013.’’ 

In front of all of us here are packets containing the written testimony, biography, and Truth-in-Testimony disclosure for today’s 

witness, the Secretary of Department of Energy, Dr. Steven Chu. 

And we are honored of course to have you, sir. 

I want to welcome everyone here today for the hearing on the 

President’s fiscal year 2013 budget request for the Department of 

Energy, and in particular I want to extend a warm welcome to you, 

Mr. Secretary, for appearing before the Committee yet again this 

year. We may occasionally have strong disagreements, but we 

thank you for your service and for your willingness to appear before this Committee. 

This is the President’s fourth budget submission in Congress, so 

its general priorities, and my concerns with them, should come as 

no surprise. As in the years past, the budget calls for massive increases in green energy programs while flat-lining or cutting programs devoted to basic research and the advancement of the domestic production of reliable and affordable sources of energy, such 

as oil, natural gas, coal, and nuclear. The lack of balance in this 

approach is disappointing, and I hope and expect that Congress is 

going to reject it. 

Last year, I used a gambling term to highlight my concern with 

the President’s budget, specifically the extent to which President 

Obama ‘‘doubled-down’’ on his energy and climate agenda in light 

of the continued struggling economy, trillion-dollar deficits, rising 

gas prices, and fuel supply concerns driven by Middle East turmoil. 

All of these issues remain today, and some, such as the price of 

gas, have been further exacerbated. After a year in which American taxpayers saw their money wasted in high-profile failures of 

government-backed, so-called clean energy companies, it is surprising that DOE now uses that same term, ‘‘double-down,’’ to describe the Department’s budget proposal. In this context, I think I 

can at least understand the Administration’s use of a gambling 

metaphor to describe its plans for risking taxpayer dollars. 

Last year, the centerpiece of the President’s energy policy proposal to Congress was enactment of a Clean Energy Standard to 

mandate the purchase of certain types of ‘‘clean’’ electricity. At the 

time the President announced it, the cost of his proposal was not 

clear, so I asked DOE’s Energy Information Administration to calculate projected costs under various scenarios. The best estimate 

scenario found that nationwide electricity prices would increase almost 30 percent by 2035, and gross domestic product would be reduced by approximately $100 billion annually. A comparable analysis requested by the Senate yielded similar results. 

In light of the data from DOE, the President continues to push 

for a mandate that Americans purchase more expensive electricity, 

while other countries seek to make energy cheaper for their citizens. This is especially disappointing and should again be soundly 

rejected by Congress, as was the previous proposal to increase the 

cost of energy through a cap-and-trade scheme. Meanwhile, gasoline prices approach record highs, placing additional energy costs 
14 

on consumers, causing pain not only at the pump but also in every 

other sector of the American economy that depends upon affordable 

fuel to deliver goods and services. 

In response, the President ironically calls for an ‘‘all-of-theabove’’ energy strategy but continues to propose policies that in reality show his lack of concern with gasoline prices. His Administration continues to actively take steps that place upward pressure on 

oil prices. He delayed offshore drilling permits and blocked production of the Outer Continental Shelf and the Alaska National Wildlife Refuge. He thwarted construction of the Keystone Pipeline. He 

proposed through EPA and other agencies costly new regulations. 

And he proposed eliminating or cutting R&D programs aimed at 

advancing domestic production and supply of oil and natural gas 

resources. 

Had the President moved forward with the ‘‘all-of-the-above’’ energy policies, he would understand that producing America’s natural resources makes a difference—just as American ingenuity 

makes a difference. It may take the American public to convince 

the President to approve the pipeline and expand domestic production. I hope today’s hearing provides an opportunity to address 

these topics further. 

I now recognize Ranking Member Ms. Johnson for her statement. 

[The prepared statement of Mr. Hall follows:] 

PREPARED STATEMENT OF CHAIRMAN RALPH M. HALL

I want to welcome everyone here today for this hearing on the President’s Fiscal 

Year 2013 budget request for the Department of Energy, and in particular I want 

to extend a warm welcome to Secretary Chu for appearing before the Committee yet 

again this year. We may occasionally have strong disagreements, but we thank you 

for your service and your willingness to appear before this Committee. 

This is the President’s fourth budget submission to Congress, so its general priorities—and my concerns with them—should come as no surprise. As in years past, 

the budget calls for massive increases in green energy programs while flat-lining or 

cutting programs devoted to basic research and the advancement of the domestic 

production of reliable and affordable sources of energy, such as oil, natural gas, coal, 

and nuclear. The lack of balance in this approach is disappointing, and I hope and 

expect Congress will reject it. 

Last year I used a gambling term to highlight my concern with the President’s 

budget, specifically the extent to which President Obama ‘‘doubled-down’’ on his energy and climate agenda in light of the continued struggling economy, trillion-dollar 

deficits, rising gas prices, and fuel supply concerns driven by Middle East turmoil. 

All of those issues remain today, and some—such as the price of gas—have been 

further exacerbated. After a year in which American taxpayers saw their money 

wasted in high-profile failures of government-backed, so-called clean energy companies, it is surprising that DOE now uses that same term, ‘‘double-down,’’ to describe 

the Department’s budget proposal. In this context, I think I can at least understand 

the Administration’s use of a gambling metaphor to describe its plans for risking 

taxpayer dollars. 

Last year, the centerpiece of the President’s energy policy proposal to Congress 

was enactment of a Clean Energy Standard to mandate the purchase of certain 

types of ‘‘clean’’ electricity. At the time the President announced it, the cost of his 

proposal was not clear, so I asked DOE’s Energy Information Administration to calculate projected costs under various scenarios. The best estimate scenario found that 

nationwide electricity prices would increase almost 30% by 2035, and gross domestic 

product would be reduced by approximately $100 billion annually. A comparable 

analysis requested by the Senate yielded similar results. 

In light of this data from DOE, the President continues to push for a mandate 

that Americans purchase more expensive electricity, while other countries seek to 

make energy cheaper for their citizens. This is especially disappointing and should 
15 

again be soundly rejected by Congress, as was his previous proposal to increase the 

cost of energy through a cap-and-trade scheme. 

Meanwhile, gasoline prices approach record highs, placing additional energy costs 

on consumers, causing pain not only at the pump but also in every other sector of 

the American economy that depends upon affordable fuel to deliver goods and services. In response, the President ironically calls for an ‘‘all-of-the-above’’ energy strategy but continues to propose policies that in reality show his lack of concern with 

gasoline prices. His Administration continues to actively take steps that place upward pressure on prices. He delayed offshore drilling permits and blocked production in the Outer Continental Shelf and the Alaska National Wildlife Refuge. He 

thwarted construction of the Keystone Pipeline. He proposed through EPA and other 

agencies costly new regulations. And he proposed eliminating or cutting R&D programs aimed at advancing domestic production and supply of oil and natural gas 

resources. Had the President moved forward with ‘‘all-of-the-above’’ energy policies, he would 

understand that producing America’s God-given natural resources makes a difference—just as American ingenuity makes a difference. It may take the American 

public to convince the President to approve the pipeline and expand domestic production. I hope today’s hearing provides an opportunity to address these topics further. 

I now recognize Ranking Member Johnson for her opening statement. 

Ms. JOHNSON. Thank you very much, Mr. Chairman, and thank 

you for calling this hearing. And let me thank Secretary Chu for 

being willing to come. I am always delighted to be in the presence 

of a Nobel Laureate because I know I can learn a lot. 

I am just trying to figure out how to start this. I will be the first 

to say that on balance I am not particularly happy with this budget 

request. I think that too many worthwhile programs will be cut 

while others will not be increased enough. Still, I applaud the Administration for making tough decisions and prioritizing in a time 

of fiscal austerity. It is undoubtedly a painful but useful exercise. 

And in better times, these programs would receive the funding they 

need. 

However, I cannot help but lament the fact that we find ourselves in this position to begin with and I feel that Congress has 

to accept its share of the blame. We in Congress could acknowledge 

the immense challenges in energy that lobby for us and have the 

foresight to know that increased investment across the energy technology spectrum, from basic to applied research and demonstration, 

will pay untold dividends for future generations. We could recognize the role that truly fundamental discovery-driven research and 

large user facilities play in positioning the United States at the 

center of mankind’s quest to better understand our universe. 

Instead, unfortunately, this Congress seems content to put DOE 

in a corner and tell it to figure out how to do more with less. We 

say we want to run government more like business. Well, businesses need revenue or they don’t grow, they don’t innovate, and 

they don’t succeed. We could start to raise the needed revenue by 

pulling back the unnecessary tax breaks and subsidies enjoyed by 

the most profitable and wealthiest companies and individuals in 

this country and we could use those resources to invest in our scientific talent and infrastructure and in development of new, cleaner, more efficient, and cheaper energy technologies. 

I am under no illusion that change will come overnight. We are 

just beginning to chip away at the multigenerational energy problem, the scale and complexity of which few of us can grasp. But we 

have to start now if we want to make a positive impact for future 

generations. We can begin by giving up on the notion that the en-
16 

ergy market has ever been or ever will be a free market. In a perfect world, consumers would be empowered with the knowledge and 

resources to make informed choices about their energy use, and investors would be willing to take bigger risks on companies that are 

driven to create the cleanest and most efficient technologies. But 

we are just not there yet. Until we see more competition from 

emerging sectors, the energy markets will not be free. 

Some of my colleagues on the other side of the aisle decry DOE’s 

investment of clean energy technologies—in clean energy technologies—as somehow skewing the market by picking winners and 

losers and crowding out private investment. Yet the very energy industries my colleagues hold out as exemplars of the free market— 

oil, gas, nuclear, and coal—are the ones that have benefitted most 

from the government largesse, and curiously, the ones they hold 

out as most deserving of continued taxpayer-funded research. 

From high efficiency gas turbines to coal plants to nuclear reactors developed at federal labs with federal dollars to the directional 

drilling and hydraulic fracturing practices that have led to the 

shale gas boom of today, we have seen how government research 

can pay off, but it required decades of federal investment, the overwhelming majority of which was focused on fossil and nuclear energy. These technologies have kept energy costs low to consumers 

and our industrial base and allowed the economy to grow to what 

it is today. But it is time to level the playing field and introduce 

real competition to the markets. And that is where the priorities 

set by this budget request come into play. We have to find the 

greatest value for the taxpayer’s dollar, and today, it is in the 

emerging energy technology sectors that can most benefit from government support. We have seen how federal dollars can be the seed 

capital for private sector innovation and how even small government investments can be leveraged to provide scientific breakthroughs and technological advances that private industry by itself 

cannot—or at least will not—accomplish. 

We also know well that without federal sponsorship of fundamental research in physical sciences, America will fall behind in 

these fields. These are investments in people and ideas that have 

paid off in the past, and I hope that we can demonstrate the foresight to know that they will continue to pay off in the future. 

Thank you and I yield back. 

[The prepared statement of Ms. Johnson follows:] 

PREPARED STATEMENT OF RANKING MEMBER EDDIE BERNICE JOHNSON

Thank you, Chairman Hall, for calling this hearing today to review the Administration’s fiscal year 2013 budget request for the Department of Energy’s civilian research programs. And, thank you, Secretary Chu, for joining us today to provide 

your perspective on how these proposals were developed, and insight into the President’s vision for both the Department and the role of energy in our economy. 

I will be the first to say that, on balance, I am not particularly happy with this 

budget request. I think that too many worthwhile programs would be cut, while others will not be increased enough. Still, I applaud the Administration for making 

tough decisions and prioritizing in a time of fiscal austerity. It is undoubtedly a 

painful but useful exercise, and in better times these programs would receive the 

funding they need. However, I cannot help but lament the fact that we find ourselves in this position to begin with, and I feel that Congress has to accept its share 

of the blame. 
17 

We in Congress could acknowledge the immense challenges in energy that lie before us, and have the foresight to know that increased investment across the energy 

technology spectrum—from basic to applied research and demonstration—will pay 

untold dividends for future generations. We could recognize the role that truly fundamental discovery-driven research and large user facilities play in positioning the 

U.S. at the center of mankind’s quest to better understand our universe. 

Instead, unfortunately, this Congress seems content to put DOE in a corner and 

tell it to figure out how to do more with less. We say we want to run government 

more like business. Well, businesses need revenue or they don’t grow, they don’t innovate, and they don’t succeed. We could start to raise the needed revenue by pulling back the unnecessary tax breaks and subsidies enjoyed by the most profitable 

and wealthiest companies and individuals in this country. And we can use those resources to invest in our scientific talent and infrastructure, and in development of 

new, cleaner, more efficient and cheaper energy technologies. 

I am under no illusion that change will come overnight. We are just beginning 

to chip away at a multi-generational energy problem, the scale and complexity of 

which few of us can grasp. But we have to start now if we want to make a positive 

impact for future generations. 

We can begin by giving up on the notion that the energy market has ever been, 

or will ever be, a free market. In a perfect world, consumers would be empowered 

with the knowledge and resources to make informed choices about their energy use, 

and investors would be willing to take bigger risks on companies that are driven 

to create the cleanest and most efficient technologies. But we are just not there yet. 

Until we see more competition from emerging sectors, the energy markets will not 

be free. 

Some of my colleagues on the other side of the aisle decry DOE’s investment in 

clean energy technologies as somehow skewing the market by picking winners and 

losers and crowding out private investment. Yet, the very energy industries my colleagues hold out as exemplars of the free market—oil, gas, nuclear and coal—are 

the ones that have benefitted most from government largesse and, curiously, the 

ones they hold out as most deserving of continued taxpayer-funded research. 

From high-efficiency gas turbines for coal plants, to nuclear reactors developed at 

federal labs with federal dollars, to the directional drilling and hydraulic fracturing 

practices that have led to the shale gas boom of today, we have seen how government research can pay off. But it required decades of federal investment, the overwhelming majority of which was focused on fossil and nuclear energy. 

These technologies have kept energy costs low for consumers and our industrial 

base, and allowed the economy to grow to what it is today. But, it is time to level 

the playing field and introduce real competition to the markets, and that is where 

the priorities set by this budget request come in to play. We have to find the greatest value for the taxpayer dollar, and today it is in the emerging energy technology 

sectors that can most benefit from government support. 

We have seen how federal dollars can be the seed capital for private sector innovation, and how even small government investments can be leveraged to provide scientific breakthroughs and technological advances that private industry by itself cannot accomplish. We also know well that without federal sponsorship of fundamental 

research in the physical sciences, America will fall behind in these fields. These are 

investments in people and ideas that have paid off in the past, and I hope that we 

can demonstrate the foresight to know that they will continue to pay off in the future. 

Thank you, and I yield back. 

Chairman HALL. I thank you, Ms. Johnson. 

And if there are Members who wish to submit additional opening 

statements, your statements can be added to the record at this 

point or whenever you want to. 

At this time, I would like to introduce our witness, Dr. Steven 

Chu, who serves as the Secretary of Energy. Dr. Chu is currently 

serving as the 12th Secretary of Energy. He is a distinguished scientist and has devoted his scientific career to the search for new 

solutions to our energy challenges. 

Prior to his service as Secretary, Dr. Chu was a Director of 

DOE’s Lawrence Berkeley National Lab and was a Professor of 

Physics in molecular and cell biology at the University of California 
18 

Berkeley. He is a co-winner of the 1997 Nobel Prize for physics. 

That is quite an honor. 

As our witness should know, testimony is limited to five minutes, 

after which the Members of the Committee will have five minutes 

each to ask questions. We have for you flexibility as you need because it is an honor to have you here. We know your schedule and 

we thank you for your time. So at this time we will recognize you 

for as much time as you require. And thank you for being here. 

STATEMENT OF MR. STEVEN CHU, 

SECRETARY, U.S. DEPARTMENT OF ENERGY 

Secretary CHU. Thank you, Chairman Hall, for those kind remarks. And also Ranking Member Johnson, Members of the Committee, thank you for the opportunity to discuss the Department of 

Energy’s fiscal year 2013 budget request. 

To promote economic growth and strengthen security, President 

Obama has called for an ‘‘all-of-the-above’’ strategy that develops 

every source of American energy. The President wants to fuel our 

economy with domestic sources of energy while increasing our ability to compete in the clean energy race. The Department’s Fiscal Year 2013 budget request of $27.2 billion is guided by the President’s vision, our 2011 Strategic Plan, 

and our inaugural Quadrennial Technology Review. It supports 

leadership in clean energy technologies and invests in science and 

innovation to promote economic prosperity. Decades ago, the Energy Department support helped develop the technologies that have 

allowed us to tap into America’s abundant shale gas resources. 

Today, our investments can help advance technologies that will 

unlock the promise of renewable energy and energy efficiency. The budget request invests approximately $4 billion in our energy programs. It advances progress in areas from solar to offshore 

wind to carbon capture, and utilization and storage, to smart grid 

technologies. It will also help reduce America’s dependence on foreign oil, which every day places a crushing burden on families and 

on our economy. As the President and I have said, there is no silver 

bullet and there are no easy answers, but we can and must pursue 

a serious, long-term, all-of-the-above approach that diversifies our 

energy mix, protects consumers from the high price of gas, harnesses American resources, and creates jobs here at home. That is 

exactly what this budget does. 

The budget request also invests $770 million in a nuclear energy 

program to help develop the next generation of nuclear power technologies, including small modular reactors. It includes funding for 

continued nuclear waste R&D, which aligns with the recommendation of the Blue Ribbon Commission on America’s Nuclear Future. 

As we move to a sustainable energy future, America’s fossil energy resources will continue to play an important role in our energy 

mix. The budget request includes $12 million as part of a larger 

R&D initiative by the Departments of Energy, Interior, and EPA 

to understand and minimize the potential environmental health 

and safety impacts of natural gas development through hydraulic 

fracturing. The budget also promotes energy efficiency to help 

Americans save money by saving energy, and it sponsors R&D on 
19 

industrial materials and processes to help U.S. manufacturers cut 

costs. 

To maximize our energy technology efforts in areas such as batteries, biofuels, and electric grid technologies, we are coordinating 

research and development across our basic and applied research 

programs and ARPA–E. Competing in the new energy economy requires our country to harness all of our resources, including American ingenuity. 

To help keep the United States at the forefront of science and technology, the budget request includes $5 billion for the Office of 

Science to support basic research that could lead to new discoveries 

and help solve energy challenges. These funds support progress in 

materials science, basic energy science, advanced computing, and 

more. They also provide America’s researchers and industries with 

state-of-the-art tools. 

The budget request continues to support Energy Frontier Research Centers, which aim to solve specific scientific problems to 

unlock new clean energy development. It also supports the five existing Energy Innovation Hubs and proposes a new Hub in electricity systems. Through the Hubs, we are bringing together our 

Nation’s top scientists and engineers to achieve game-changing energy goals. Additionally, the budget request includes $350 million for ARPA– 

E to support research projects that could fundamentally transform 

the way we use and produce energy. ARPA–E invests in high-risk, 

high-reward research projects that, if successful, could create the 

foundation for entirely new industries. Eleven projects that received a total of $40 million from ARPA–E over the last two years 

have done such promising work that they now have attracted more 

than $200 million in combined private sector funding. Taken together, our research initiatives will help rev up America’s great innovation machine to accelerate energy breakthroughs. In addition 

to strengthening our economy, the budget request also strengthens 

our security by providing $11.5 billion for the National Nuclear Security Administration. 

The budget request makes strategic investments to promote our 

prosperity and our security. At the same time, we recognize the 

country’s fiscal challenges and are cutting back where we can. We 

are committed to performing our work efficiently and effectively. 

We are also breaking down barriers to make it easier for businesses to move technologies from our national labs to the marketplace, which can help the United States seize technological leadership. 

Countries around the world recognize the energy opportunity and 

are moving aggressively to lead. This is a race we can win, but we 

must act with fierce urgency. 

Thank you, and now I am pleased to answer your questions. 

[The prepared statement of Secretary Chu follows:] 

PREPARED STATEMENT OF MR. STEVEN CHU, 

SECRETARY, U.S. DEPARTMENT OF ENERGY

Chairman Hall, Ranking Member Johnson, and Members of the Committee, thank 

you for the opportunity to appear before you today to discuss the President’s Fiscal 

Year 2013 Budget request for the Department of Energy. 
20 

To promote economic growth and strengthen national security, President Obama 

has called for ‘‘an all-out, all-in, all-of-the-above strategy that develops every source 

of American energy—a strategy that is cleaner and cheaper and full of new jobs.’’ 

The President wants to fuel our economy with domestic energy resources while increasing our ability to compete in the global clean energy race. 

Although the United States has reclaimed the title of world leader in clean energy 

investments, we are at risk of falling behind again unless we make a sustained federal commitment to supporting our domestic clean energy economy. To compete 

globally, America has to do more than invent technologies; we also have to produce 

and sell them. Our country faces a stark choice: we can create jobs making and exporting the energy technologies of tomorrow or we can cede leadership to other 

countries that are investing in these industries. As President Obama reiterated in 

his State of the Union address, passing a Clean Energy Standard is a vital step that 

Congress can take to broaden our clean energy market and promote U.S. leadership. 

Making the most of America’s energy resources is a pillar of the President’s economic blueprint to build an economy that lasts. The Energy Department also supports other key elements of the President’s agenda including leading in innovation; 

reducing our dependence on oil; cutting costs for families, businesses, and manufacturers through energy efficiency; and reducing nuclear dangers worldwide. 

Guided by the President’s vision, the Department’s 2011 Strategic Plan and our inaugural Quadrennial Technology Review, our FY 13 budget request of $27.2 billion invests in the following priorities: 

• Accelerating the transformation of America’s energy system, and securing U.S. 

leadership in clean energy technologies; 

• Investing in science and innovation to promote our Nation’s economic prosperity; and • Keeping Americans safe by enhancing nuclear security through defense, nonproliferation, and environmental cleanup. 

These priorities will be enabled through a continuing commitment to fiscal responsibility and management excellence. 

Leading in the Energy Technologies of the 21st Century 

Last year, a record $260 billion was invested globally in clean energy, and trillions of dollars will be invested in the coming decades. To seize this market and job 

creation opportunity, the President’s budget request invests in programs that advance research, development, manufacturing and deployment of the energy technologies of the future. 

Decades ago, support from the Energy Department helped to develop the technologies that have allowed us to tap into America’s abundant shale gas resources. 

Today, our investments can help us advance technologies that will unlock the promise of renewable energy and energy efficiency. The budget request invests approximately $4 billion in our energy programs. It 

supports the Department’s SunShot initiative to make solar energy cost-competitive 

with any other form of electrical energy, without subsidy, by the end of the decade. 

It advances technological progress in areas ranging from offshore wind to carbon 

capture, utilization and storage to smart grid and energy storage. And it helps reduce our dependence on oil by developing the next generation of biofuels and accelerating research in advanced batteries and fuel-efficient vehicle technologies. 

Leadership in nuclear energy technologies is also essential to our ability to compete globally. The budget request invests $770 million in the nuclear energy program to help develop the next generation of nuclear power technologies, including 

small modular reactors. It also includes funding for continued R&D on the storage, 

transportation and disposal of nuclear waste, which also aligns with the recommendations of the Blue Ribbon Commission on America’s Nuclear Future. 

As we move to a sustainable energy future, America’s fossil energy resources will 

continue to play an important role in our energy mix. President Obama is committed to developing our oil and gas resources in a safe and sustainable manner. 

Last year, our oil import dependence was at its lowest level in 16 years, oil production reached its highest level in eight years. and natural gas production set a new 

record. Building on this progress, the Energy Department’s budget request includes 

$12 million as part of a $45 million priority research and development initiative by 

the Departments of Energy, the Interior, and the Environmental Protection Agency 

to understand and minimize the potential environmental, health, and safety impacts 

of natural gas development through hydraulic fracturing (fracking). 

The budget request also promotes energy efficiency to create jobs and to help 

Americans save money by saving energy. It supports home weatherization and calls 
21 

for passage of the HOME STAR program to provide incentives to homeowners to 

make energy efficiency upgrades. It also invests in research and development to improve building efficiency and supports the President’s ‘‘Better Buildings’’ Initiative 

to catalyze private sector investment in commercial building efficiency. Finally, the 

budget request sponsors R&D on industrial materials and processes to help U.S. 

manufacturers cut costs and improve their global competitiveness. 

To maximize our energy technology efforts, the Department is breaking down silos 

and coordinating research and development across our program offices. Modeled 

after our SunShot initiative, we’re bringing together our basic and applied research 

programs and ARPA–E to harmonize their work in areas including batteries, 

biofuels and electric grid technologies. 

And to encourage manufacturing and deployment of clean energy technologies, the 

President has called for renewing and extending proven tax incentives including the 

Production Tax Credit, the 1603 cash payment in lieu of tax credit program and the 

Advanced Energy Manufacturing Tax Credit, known as 48C. 

As industry, Congress, and the American people make critical energy decisions 

and require greater understanding of domestic and international energy markets, 

it’s important that we adequately fund the Energy Information Administration, the 

nation’s premier source of independent statistical information about energy production and use. That is why the budget request includes $116 million for EIA. 

Unleashing U.S. Innovation to Create Jobs and Lead in the Global Economy 

Competing in the new energy economy will require our country to harness all of 

our resources, including as the President said, the ‘‘one critical, renewable resource 

that the rest of the world can’t match: American ingenuity.’’ A key part of our country’s success has been our leadership in science and technology, but we can’t take 

that leadership for granted. According to the National Science Foundation’s 2010 

Science and Engineering Indicators report, from 1996 to 2007 the average annual 

growth of R&D expenditures in the United States was about five to six percent, 

compared to more than 20 percent in China. 

To help keep the United States at the forefront of science and technology, the 

budget request invests in cutting-edge research that could spur new jobs and industries. This includes $5 billion for the Office of Science to support basic research that 

could lead to new discoveries and help solve our energy challenges. These funds support progress in materials science, basic energy science, advanced computing and 

more. They also provide America’s researchers and industries with state-of-the-art 

tools to help take their work to the next level. 

The budget request continues to support Energy Frontier Research Centers. The 

Energy Frontier Research Centers are working to solve specific scientific problems 

to unlock new clean energy development. So far, the EFRCs have published more 

than 1,000 peer-reviewed papers and filed more than 90 patent applications or patent/invention disclosures. Researchers are reporting multiple breakthroughs in 

areas ranging from advanced battery technology and solar energy to solid-state 

lighting and nuclear power. 

The budget request also supports the five existing Energy Innovation Hubs and 

proposes a new Hub in electricity systems. Through the Hubs, we are bringing together our Nation’s top scientists and engineers to achieve game-changing energy 

goals. The Hubs continue to make progress. For example, the Modeling and Simulation for Nuclear Reactors Hub has released the first versions of its software that, 

upon completion, will simulate a virtual model of an operating physical reactor. The 

Fuels from Sunlight Hub has filed multiple invention disclosures and published scientific papers. And the Energy Efficient Building Systems Hub is developing advanced building modeling tools and has built one of the country’s first 3-D building 

design labs. 

Additionally, the budget request includes $350 million for the Advanced Research 

Projects Agency for Energy, known as ARPA–E, to support research projects that 

could fundamentally transform the ways we use and produce energy. ARPA–E has 

invested in roughly 180 high-risk, high-reward research projects that, if successful, 

could create the foundation for entirely new industries. These companies and research teams are working toward a prototype of a battery that has double the energy density and one-third the cost of batteries in 2010, bacteria that use carbon 

dioxide and electricity to make fuel for cars, grid scale electricity storage and other 

potentially game-changing breakthroughs. Eleven projects that received $40 million 

from ARPA–E over the last two years have done such promising work that they 

have now received more than $200 million in combined private sector funding. 

Taken together, our research initiatives will help rev up America’s great innovation machine to accelerate energy breakthroughs. 
22 

Nuclear Safety and Security 

In addition to strengthening our economy, the budget request also strengthens our security by providing $11.5 billion for the Department’s National Nuclear Security 

Administration. NNSA plays a key role in achieving President Obama’s nuclear security objectives. 

As the United States begins the nuclear arms reduction required by the New 

START treaty, the science, technology, and engineering capabilities within the nuclear security enterprise will become even more important to sustaining the U.S. nuclear deterrent. The budget request includes $7.6 billion for Weapons Activities, a 

five percent increase over the FY 2012 enacted levels. This increase provides a 

strong basis for transitioning to a smaller yet still safe, secure, and effective nuclear 

stockpile. It also strengthens the science, technology, and engineering base of our 

enterprise. The budget request also includes $1.1 billion for the Naval Reactors program to ensure the safe and reliable operation of reactors in nuclear-powered submarines and aircraft carriers and to fulfill the Navy’s requirements for new nuclear 

propulsion plants that meet current and future national defense requirements. 

Additionally, the budget request supports NNSA’s critical work to prevent nuclear 

terrorism—one of the most immediate and extreme threats to global security and 

of one President Obama’s top priorities. It includes $2.5 billion to implement key 

nuclear security, nonproliferation, and arms control activities. It supports efforts to 

detect, secure, and dispose of dangerous nuclear and radiological material around 

the world. And it will help the Department to fulfill its role in accomplishing the 

President’s goal of securing all vulnerable nuclear materials worldwide in four 

years. Finally, the budget request includes $5.7 billion for the Office of Environmental 

Management to continue progress cleaning up the Nation’s Cold War nuclear sites. 

Fiscal Responsibility and Management Excellence 

The Department of Energy’s FY 13 budget request makes strategic investments 

to promote our country’s future prosperity and security. At the same time, we recognize the country’s fiscal challenges and our responsibility to invest in much-needed 

programs while cutting back where we can. That is why the President’s budget request eliminates $4 billion in inefficient and unnecessary fossil fuel subsidies. 

Given the urgency of the challenges we face, the Department is committed to performing our work efficiently and effectively. We are streamlining our organization 

to improve performance and save taxpayer money. For example, the Department 

achieved approximately $330 million in strategic procurement savings in FY 11. We 

are taking several other steps such as reducing the size of our vehicle fleet, cutting 

back travel costs, and consolidating Web sites. 

We are also breaking down barriers to make it easier for businesses to move technologies from our national labs to the marketplace, which can help the United 

States seize technological leadership and create jobs. For example, we’ve started a 

program which makes it easier, quicker, and less costly for start-up companies to 

sign option agreements to license national lab technologies. And to make it easier 

to work with the labs, we’ve reduced the advanced payment requirement and 

streamlined the Cooperative Research and Development Agreement contract and approval process. 

Throughout American history, the Federal Government has played a critical role 

in supporting industries that are important to our prosperity and security, from 

aviation and agriculture to biotechnologies and computer technologies. We should 

continue to do so today to lead in the new clean energy economy. Countries in Europe, Asia, and throughout the Western Hemisphere recognize the energy opportunity and are moving aggressively to lead. This is a race we can win, but we must 

act with fierce urgency. 

Thank you, and now I am pleased to answer your questions. 

Chairman HALL. Sir, I thank you for your testimony. 

And I remind members that Committee rules limit questioning 

to five minutes. We try to stay as close to that as we can. 

The Chair at this point will open the round of questions. And I 

recognize myself for five minutes. 

Mr. Secretary, two years ago the Obama Administration unilaterally shut down the Yucca Mountain project and threw U.S. nuclear 

waste management policy into disarray. President Obama created 

a ‘‘Blue Ribbon Commission’’ at the same time his Administration 
23 

dismantled the existing Nuclear Waste Management program. I 

ask a question of you and I want you to answer yes or no because 

I know how very great you are strengthening a yes or weakening 

a no or vice versa. You are capable—I do ask—and if you can’t give 

me a yes or no answer, tell me you don’t want to. 

Did you tell the Blue Ribbon Commission they could not consider 

Yucca Mountain in their report? 

Secretary CHU. That was not in the charge of the Blue Ribbon 

Commission. 

Chairman HALL. Well, now, you are not answering me yes or no. 

Can you do that if you can? I am going to assume that you did. 

To date, taxpayers have spent—is that okay? 

Secretary CHU. That was not—— 

Chairman HALL. I don’t want to suppress you. If you can tell me 

no as quick as you can say yes, why, I would like to hear it. 

Secretary CHU. It was not in the charge of the Blue Ribbon Commission. 

Chairman HALL. Okay. All right. To date, taxpayers have spent 

over $15 billion to study and prepare Yucca Mountain to serve as 

a repository and you know that. You know all about it. Additionally, since the creation of the Blue Ribbon Commission, the taxpayers’ liability for not accepting ownership of radioactive waste by 

2020 increased 21 percent to almost $21 billion. With the massive 

investment and decades of study already completed on Yucca 

Mountain, why refuse to allow the Blue Ribbon Commission to 

even entertain the idea or even to consider that Yucca Mountain 

could be a part of America’s nuclear waste policy management? 

Secretary CHU. The Blue Ribbon Commission was not designed 

as a siting commission. It was designed to look broadly at the back 

end of the fuel cycle. I think it was an extraordinary committee 

with able leadership, General Scowcroft and Representative Hamilton, and it came up with a number of recommendations that we 

hope Congress will consider very seriously. We in the Department 

of Energy have established a taskforce to look at these recommendations. 

Chairman HALL. Well, regardless of whether Yucca Mountain 

has a future—and apparently it doesn’t—do you think there is a 

value in completing the scientific and technical review of the 

science suitability and making the results public to where people 

themselves can make their own decision on it whether you were 

right or wrong? 

Secretary CHU. Right now, the decision is before the courts and 

we are awaiting the decision. Of course, in the meantime we are 

looking at the recommendations of the Blue Ribbon Commission because I think everybody agrees that the backend of the fuel cycle 

needs the attention of the country and we need solutions. 

Chairman HALL. Last year, when you testified in this Committee, I asked you what impact the President’s Clean Energy 

Standards would have on energy cost. And that is for American energy consumers who have to make that payment. You committed 

to having the Energy Information Administration examine the economic impact of the Clean Energy Standard, which they did at my 

request. And I thank you for that. 
24 

And I ask unanimous consent to insert this into the hearing 

record. And without objection, it is so ordered. 

[The information may be found in Appendix 2.] 

Chairman HALL. Are you aware that that exercise and the findings of EIA—are—you are aware of that, aren’t you? 

Secretary CHU. I am aware of many of the findings of EIA. I 

can’t say that I remember exactly everything that they said. 

Chairman HALL. Well, this is yours or your people—— 

Secretary CHU. Right. 

Chairman HALL [continuing]. And you produced this. 

Secretary CHU. That is correct. 

Chairman HALL. Let me provide this. Then let me help you. Let 

me provide just a brief summary of the results. Under the Clean 

Energy Standards similar to what President Obama proposed and 

as you outlined to me last year, the report found these things: 

household electricity will increase by $115—that can’t be $115 per 

person per year in 2025 and by $211 per person in 2035. Nationwide expenditures on electricity will increase by $41 billion in 2025 

and by $77 billion in 2035. Nationwide manufacturing employment 

would decline by a million jobs in 2025. And in his State of Union 

Address, the President reiterated his calls for Congress to mandate 

this Clean Energy Standard that we have here. 

Why is the President pursuing a policy to increase electricity cost 

on Americans? Can you give me an answer for that? Or you may 

not agree that he is, but I think the facts cry out that he is costing 

us and not drilling whether you like the word of how fossil fuels 

cause some problems, and of course they cause some problems. I 

am part of that problem because I was here when we wrote the 

Clean Air Act and we put the EPA in there to have a balancing 

figure, and that gave the EPA the strength that they are using now 

to push energy people around. And I resent that and I think everybody on this Committee resents it. 

I just—do you agree that any clean energy mandate, no matter 

how flexible it is, will increase the cost of electricity? 

Secretary CHU. First, let me respond to what you said about the 

President. The President by no means wants to increase the energy 

bills in America. He is very committed to making available both affordable and clean energy. What the EIA studies do typically is 

they look at existing technologies. They cannot—and they are acting responsibly and they do this for that reason. They cannot presume that there will be technological advances in the future so 

they say this is what we see today based on today’s technologies. 

But having said that—may I—— 

Chairman HALL. Sure. I am over my time but go ahead. 

Secretary CHU. I will try to be very brief. Having said that, it is 

the Department of Energy’s mission to bring down these costs and 

it is our goal. And we feel that it is only a matter of when, not if, 

clean energy will be as competitive as any form of energy. 

Chairman HALL. That may be so. I can’t argue the future with 

you, but I know about the past and I know how energy people feel 

and I know that energy States are being punished and the people 

are losing. 

My time is up. Recognize Ms. Johnson. 
25 

Ms. JOHNSON. Thank you very much, Mr. Chairman. I would like 

to make this statement prior to my question and would like to note 

that while I do not object to Chairman Hall submitting for the 

record his analysis of the Clean Energy Standard, I do want to 

make it clear that it is one of several such analyses of the CES that 

should be considered. 

I am concerned that this analysis was designed from the start to 

show a worst-case scenario for the impacts of Clean Energy Standard on the economy, leaving out a number of critical factors that 

would have painted a more comprehensive and accurate picture of 

CES as it would actually be implemented. I urge my colleagues and 

the public to review some of the more rigorous and comprehensive 

analyses such as those directed by outside stakeholders and Senate 

Energy Committee Chairman Bingaman before coming to a conclusion about the role new energy technologies will play in the future. 

I might have some questions of the Secretary on this topic and 

make additional comments and the statement for the record, but 

thank you. I will now begin my questions. 

The Department of Energy’s Quadrennial Technology Review 

sought to set priorities within the Department’s portfolio. It finds 

that energy technologies addressing the transportation sector have 

been historically underfunded as compared to stationary energy. Do 

you believe there should be a different balance between transport 

and stationary energy within the DOE portfolio? 

Secretary CHU. Yes, very much so. In fact that was one of the 

conclusions of our Quadrennial Technology Review. Given the high 

price of gasoline, we said what can we do in the Department of Energy to advance technologies to reduce the cost of transportation for 

every American family? And so we were aligned with the idea that, 

first, we wanted alternatives. Diversification means that you are no 

longer solely dependent on oil for transportation. We were going to 

invest—we were going to be investing in technologies that can improve the gas mileage, again, but keeping costs the same or even 

reducing costs but increasing the gas mileage of automobiles that 

would also make our cars competitive internationally. We were 

going to be doing biofuels investments and battery investments. 

I am very happy to say that a company the Department of Energy invested in two days ago made an announcement that they 

now have a battery that has doubled the energy capacity with the 

same manufacturing costs. It is going to be—it is validated by a 

third party and so this is going to be great news because that 

means we can reduce the cost of plug-in hybrids, electric vehicles, 

and can imagine a day in the near future where you might see a 

$20,000 car all electric, the operating cost—it would save American 

families over $1,000 a year to have such a car. 

Ms. JOHNSON. Thank you. How does the fiscal year 2013 budget 

address these findings that energy for the transport sector has 

been underfunded compared to electricity? 

Secretary CHU. Pardon? Could you repeat that again? 

Ms. JOHNSON. The budget—how does it address—— 

Secretary CHU. Oh, fine. Fine, thanks. 

Ms. JOHNSON. Yes. 

Secretary CHU. It appears in several ways—first, in energy efficiency and renewable energy technologies. We have a lot of effort 
26 

in batteries there. Our ARPA–E program is investing in very, very 

innovative, short-term, two-year funding for batteries. Office of 

Science is investing in the more fundamental aspects of science, the 

kind of science that when done at Argonne National Laboratories 

10 years ago has worked its way into today’s current batteries, but 

we want to fund science that five years and 10 years from today 

will further reduce the cost of batteries. We also fund biofuels so 

that next-generation biofuels can be competitive without subsidy 

with oil at, let us say, $80 a barrel. This would be very exciting. 

Ms. JOHNSON. Thank you very much. 

I yield back, Mr. Chair. 

Chairman HALL. I thank you, Ms. Johnson, and I will have an 

answer for you when we take our second group as to your surprise 

at my position. 

Recognize Mr. Sensenbrenner for five minutes. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

Mr. Secretary, thank you for coming here. 

When President Bush left office, the average price of gas was 

$1.85. Now, it is at $3.65 and going up, a doubling of gas prices 

under the Obama Administration’s watch. The President has said 

that he is going to look for every single area we can make an impact and help consumers in the month ahead. You said yesterday 

in another Congressional hearing in answer to a question by Congressman Nunnelee whether your overall goal was to lower the 

price of gasoline. And you said no. Now, I somewhat want to expand on the Chairman’s statement that energy States are being 

punished. I think all American consumers are being punished, and 

as the price of gas goes up, money that can be invested in our already fragile economy is taken out of consumers’ pockets. Did you 

want to retract what you said yesterday and help everybody working on at least slowing this spike in the price of gas and then lowering it? 

Secretary CHU. We very much want to not only slow the price 

but reverse the price increase in gasoline. If one reads my entire 

statement, it was very consistent with that. As I said in my opening remarks, we definitely feel the pain that every American and 

every business feels when the price of gasoline goes up. We have 

been focused in my time as Secretary of Energy and the President’s 

time since taking office on trying to first do what we can with the 

tools we have available to decrease the prices. And the tools we 

have available in the Department of Energy are that we want to 

diversify our energy supplies because—— 

Mr. SENSENBRENNER. Well—— 

Secretary CHU [continuing]. We want to increase the production 

of oil—— 

Mr. SENSENBRENNER [continuing].Okay, but—— 

Secretary CHU [continuing]. And gas but also diversity——— 

Mr. SENSENBRENNER [continuing]. You know, meanwhile the 

price of gas has gone up by 100 percent on your watch. And this 

is unacceptable. And I remember four years ago, the President, 

some of his supporters were complaining about the price of gas 

going up in the last year of the Bush Administration. Before you 

got your present job, you made a statement that you wanted to see 

the price of gas reach the prices that exist in Europe, and those are 
27 

somewhere between $7 and $9 a gallon depending upon what country you are in. Can you retract that statement now, or is that still 

your goal and the goal of the Administration? 

Secretary CHU. That is not my goal. But let me—— 

Mr. SENSENBRENNER. Then will you retract the statement? 

Secretary CHU. Everything I have done as Secretary of Energy 

is to first try to lower the prices by—we have invested in ways to 

increase production. We have invested in other ways in batteries 

and biofuels and energy efficiency to help the American public. 

Mr. SENSENBRENNER. Well—— 

Secretary CHU. But—— 

Mr. SENSENBRENNER [continuing]. You know, there have been 

bans on offshore drilling, we have the President vetoing the Keystone XL pipeline, gas is subject to the law of supply and demand, 

and as economies get better, they use more energy. And there have 

been obstructions in increasing the supply that can be refined and 

sold to American consumers. 

Secretary CHU. First, let me also point out that when the President took office, the economy was in freefall. When the world goes 

into a terrible recession, that has a downward effect on gasoline 

prices. The price of oil—and the most clear correlation is between 

gasoline prices is—— 

Mr. SENSENBRENNER. Well, with all due respect, Mr. Secretary, 

the economy is not that healthy, employment is down in the United 

States in the last three years, unemployment is still higher than 

it was in January of 2009. You know, I have seen a trend that production will be increased on private land but not on federal land. 

And when is this Administration going to end the lockup increasing 

production on federal land? That will increase the production as 

well. The President did say he was going to put everything on the 

table and it seems to me that there are still a lot of items under 

the table that can increase production and maybe reduce the price 

of gas that this Administration is turning its back on. When is that 

going to change? 

Secretary CHU. Let me first finish my answer from the previous 

question. The economy was in freefall. In a severe recession, the 

price of gasoline goes down. The economy is coming back slowly. It 

is very—we are doing—— 

Mr. SENSENBRENNER. Well, the economy is coming back slowly, 

but the price of gas has gone up 100 percent in the last three 

years, and that is going to retard the economy coming back faster 

and more people getting jobs and more investment in creating jobs 

in the private sector. You know, all this doesn’t add up. And, you 

know, I admire you for getting a Nobel Prize in physics. I don’t 

think you would do very well in getting one in economics. 

And my time is up and I yield back the balance of my time. 

Chairman HALL. You are doing such a good job I yield to you another minute if you need it to let him answer some of these things. 

Mr. SENSENBRENNER. I will be happy to let him answer. 

Secretary CHU. As I said before, the economy is rising. The President is very concerned; I am very concerned about the high price 

of gas. We are very concerned as gasoline prices and oil prices increase that that can have a dampening effect on the economy. That 

is why we are so focused on this and that is why the tools we 
28 

have—that I have in the Department of Energy are focused on 

what we can do both in the near-term future, but also in the midand long-term future. The President has said very clearly that 

there is no single silver bullet, and that is why we applaud the rising production of gasoline and natural gas. That is why we are 

working with industry to see how we can get natural gas to be used 

for part of our transportation needs, and all those other—— 

Mr. SENSENBRENNER. Well, sir, you know, with all due respect, 

there is a silver bullet and it is going right in the wallet of the 

American consumer with the doubling of the price of gas on this 

Administration’s watch. That has got to stop and I haven’t seen 

you withdraw either your 2008 statement or the answer that you 

gave to Congressman Nunnelee yesterday. Thank you. 

Chairman HALL. The gentleman’s time has more than expired. 

The Chair recognizes Ms. Fudge for five minutes. 

Ms. FUDGE. I thank you, Mr. Chairman. 

And thank you so much, Mr. Secretary, for being here today. 

Mr. Secretary, in my home State of Ohio, manufacturing is a 

major industry and we have many unemployed workers, as you 

might imagine, whose skills are not being used. I see that you have 

a $150 million increase for the Advanced Manufacturing Office. 

Could you please tell me what kinds of technologies will be developed with the extra money and how it will help spur economic 

growth and employment in manufacturing States such as Ohio? 

Secretary CHU. Sure. One of the things—let me give you one example in Advanced Manufacturing. We know that composite materials—these are carbon composite materials in particular—can play 

an incredible role in a lot of technologies, from airplanes to automobiles to just lighter-weight stronger materials. So we have a carbon composite facility that allows industries—U.S. industries—to 

come in and try different things in this facility, new manufacturing 

methods to lower the cost. 

Ms. FUDGE. Where is the facility? 

Secretary CHU. This is actually in Oak Ridge. 

Ms. FUDGE. Go ahead. 

Secretary CHU. Okay. Oak Ridge National Laboratory. So that is 

just one example of what we are trying to do in advanced manufacturing, again going directly to the goal of the Department of Energy and the goal of every action I have taken since I have become 

the Secretary of Energy, which is to help make more efficient automobiles, make them more efficient so the American consumers can 

purchase these automobiles and have less of a gasoline bill. And 

that is what we are doing as much as we can, all the tools to lower 

the prices—not to lower the prices but to help—we certainly want 

to lower the prices of gasoline, but we also want to have people use 

less. 

Ms. FUDGE. Thank you. 

Mr. Secretary, Ohio has experienced at least 11 earthquakes in 

less than a year. The Ohio Seismic Network believes that they are 

tied to wastewater injection wells. I understand that the 11 earthquakes in Ohio are not necessarily related to the hydraulic fracturing technology but to the disposal of all the high volumes of hydraulic fracking wastewater going into injection wells. It is my understanding that compared to conventional oil and gas develop-
29 

ment, hydraulic fracturing will require significantly larger quantities of water. Is that true? And if so, how will all of this water 

be disposed of if not in injection wells? 

Secretary CHU. Well, we certainly are looking very carefully at 

the role of any sort of liquid and fluid injection into rocks and what 

their role might be in seismic events. We certainly have a lot of expertise in that. We feel that one does not want to triple—most of 

the seismic events are events that are so small in magnitude that 

people cannot feel them, but we certainly are very, very concerned 

and we are doing research into the extent that wastewater injection or any fluid injection into rocks could trip off a more significant event. And so this is one of the things that we do in the Department of Energy is to do research so that one could extract the 

gas and the gas liquids from fracking, but we do it in an environmentally safe way. And so we are committed on that path. 

Ms. FUDGE. So to go back to the question, are you saying you are 

studying how to dispose of the waste, or what are you saying? 

Secretary CHU. Well, there are two questions. The question is 

what is the role—as you noted in your opening statement—what is 

the role of fluid injection in triggering seismic events? And what 

can we do? So first, we need to establish what the role is. There 

is a very thoughtful piece written by a staffer, Professor Mark 

Zoback, on this, who was actually part of our Secretary of Energy 

Advisory Board Subcommittee, on trying to develop ways so we can 

extract natural gas with fracking in an environmentally responsible way. And so I think—I recommend you read that paper because it looks at what are the issues and also what is actually happening vis-a-vis water injection into the ground. 

Ms. FUDGE. Mr. Secretary, I will have to get with your office on 

that. 

But just in an effort to be considerate of the time of my colleagues, Mr. Chairman, I will yield back. 

Chairman HALL. I thank the gentlelady. 

Mr. Rohrabacher, California, for five minutes. We will have a 

vote on the Floor in a little bit and we will comment on that when 

you finish, Mr. Rohrabacher. 

Mr. ROHRABACHER. Yes, thank you very much. 

Secretary Chu, I saw that NASA in their budget request included 

funding to restart the plutonium–238 production to—and this is 

powering deep space projects. I also noticed there is not a corresponding item in the DOE’s budget request. Now, is plutonium 

production going to be restarted at NASA, and what is your expectation that NASA will cover all the costs of this program? 

Secretary CHU. I think we are working with NASA on that. The 

plutonium, as you noted, is used as an energy source for deep space 

missions. The probes are so far away solar power is not viable. And 

so we are working, too, with NASA on how the generation of that 

energy source—— 

Mr. ROHRABACHER. Well, if we are going to have a long-term 

space strategy, we need to make sure that this isn’t lost in the 

shuffle because that is an important factor in having a successful 

deep space program. 

Let me ask you about the reactor program. I am very concerned 

that it seems that the spending that I have here—and I am sub-
30 

mitting this, Mr. Chairman, these charts for the record at this 

point. Mr. Chairman, submitting this for the record. 

Chairman HALL. Without objection. 

[The information may be found in Appendix 2.] 

Mr. ROHRABACHER. And it seems to indicate that we are spending money or you are proposing to spend money in a way that 

when it comes to reactors, nuclear reactors, that instead of going 

with the new reactors, the high-temperature reactors like Toshiba’s 

S4s or GE’s Prism or General Atomic’s EM2, that instead what we 

are doing is focusing more resources and higher percentage resources on older light-water reactor-type technologies. Even though 

they are smaller modular reactors, it is still light-water stuff that 

is 50-year-old technology. Now, why are we doing that? Why are we 

not focusing on developing this new technology that could actually 

eat the waste and eliminate some of these problems about Yucca 

Mountain and everything, but instead spending our money on old 

technology? 

Secretary CHU. Well, the small modular reactors I wouldn’t call 

specifically as old technology. 

Mr. ROHRABACHER. Well, as long as it is based on light water, 

it is an old concept. 

Secretary CHU. The reason we are doing this is because there is 

a recognition that many of the power sites in the United States 

could not accommodate—and around the world—could not accommodate large reactors on the scale to 1 to 1.5 gigawatts. The electrical infrastructure would not accommodate that. And there is a 

race among countries. South Korea has already approved one of the 

small modular reactors in South Korea. But we are very concerned. 

This is something again that will help American industry because 

we believe these small modular reactors—— 

Mr. ROHRABACHER. Secretary, you and I both agree on that. The 

only—what we are disagreeing on is whether or not the money that 

is going into these small modular reactors is going to go into a 

high-temperature version or a light-water version of the reactor. 

And I am—I—for the life of me I can’t understand when the hightemperature gas-cooled reactors, the reactors that we have here— 

as I say, Toshiba and both GE and General Atomics, these are— 

companies have—this is available. Why aren’t we backing the companies up on the new stuff rather than light-water reactors? I 

mean—anyway, you get my point and I hope you would seriously 

look into that and consider a restructuring of that priority. 

One last area and I have only got one minute left. I am very concerned that we are not having an honest discussion on energy with 

this Administration. And I am talking about you, sir. I am talking 

about generally what we have—and I sat through the State of the 

Union. The President was taking both sides of every issue. And, 

you know, it is all of the above and then we know that just a few 

days before he said it is going to be all of the above to us, he was 

nixing, you know, the Keystone Pipeline. And I think we need to 

have a much more honest discussion on this. The American people 

are suffering right now. We got—we are not going to help manufacturing in these States that we just heard about if all the consumer 

money is being drained away and spending it on gasoline. And we 
31 

are not going to have more gasoline until we have more production 

of gas and oil. 

And I have got 20 seconds left, so let me just say I noticed you are requesting $12 million to look at fracking. I hope it is not—that 

this is not what it appears to be from the rest of the Administration, $12 million that is spent on how to find out ways of stopping 

fracking, because fracking is what is going to bring down the cost 

of oil and gas and going to permit manufacturers to sell their products because people have money in their pocket rather than just 

putting it in the gas station. So I am hoping that that is not the 

case, but it seems to me, Mr. Chairman, everything indicates what 

we heard from the EPA and hopefully not with this $12 million expenditure that you are requesting that this Administration is committed not to opening up new oil and gas but to try and find ways 

of stopping it, getting those guys who are producing our oil and 

gas. And that needs to—we need to have an honest discussion of 

what our priorities really are. And I don’t think we are getting it 

and again, not from you, but, frankly, from the President of the 

United States on this. 

Thank you very much, Mr. Chairman. 

Chairman HALL. The gentleman yields back. We do have a vote 

on. We have about eight minutes. The Committee will stand in recess until five minutes after the conclusion of the last vote. I hope 

everybody comes back. And we will try to be a little more honest—— 

[Recess.] 

Chairman HALL. Thank you for your patience. 

And the Chair now recognizes Mrs. Bonamici for five minutes. 

Ms. BONAMICI. Thank you very much, Mr. Chairman. 

Thank you, Mr. Secretary, for your service and for recognizing 

and mentioning the importance of reducing our dependence on foreign oil and fossil fuels. I was pleased to see that your testimony 

discusses ARPA–E, and you mentioned the innovative work being 

done in the area of battery design. Well, I am proud that one of 

those projects is taking place in Oregon, how there is a company 

called ReVolt Technology, and ReVolt has brought this innovative 

zinc-air battery research and also jobs to our community. And we 

have seen firsthand the importance of the ARPA–E program. And 

I see that the Administration has proposed increasing ARPA–E 

funds by $75 million, and I wonder if you could elaborate on the 

importance of this increased funding in enabling us to continue 

building on these new technologies such as the new generation battery technologies that will help Americans move away from fossil 

fuel consumption. 

Secretary CHU. Sure. The design of ARPA–E was very focused. 

A short-term company or research group comes in with a specific 

idea. The tenure of these grants is something on the order of two 

years, very short-term, modest amounts of money to just push it 

over the edge. Very promising technologies, but we also designed 

in the America Competes Act that we wanted ARPA–E to really 

look for game-changing events, not incremental progress but gamechanging events. And after two years, it ends and you get private 

sector funding or it gets picked up by someone else. And so that 

has proven to be very successful, as I note in my testimony. A 
32 

small amount of money has been leveraged—$40 million has already been leveraged to private sector investments of over $200 

million. And we expect going forward that that number will even 

grow. 

Ms. BONAMICI. Thank you. And I agree that it is a good investment. 

And also you speak about the need to invest in clean and renewable energy and ensuring that we have that access to clean renewable domestic energy as a matter of both national and economic security. Now, there is also some promising work being done in Oregon about the development of wave energy technology, and I know 

that is true with other coastal areas as well. So in addition to providing another means of energy production, we have also seen the 

research and development and manufacturing benefits. 

So it is critical that when we talk about domestic renewables, we 

also include in these discussions the encouraging developments 

around wave technology. And I wonder if you could address that 

issue as well. 

Secretary CHU. We certainly we are looking at all forms of new 

technologies. Kinetic wave technology is one; geothermal is another 

one. So it is not just restricted to solar and wind. And then the 

wind technologies, we think that on-land wind is being established, 

so we are concentrating on how those technologies can work in a 

marine environment, again because it is the research that we are 

really pushing. 

Ms. BONAMICI. Sure. And—terrific. I just want to follow up. I just 

had a discussion with someone about the wave energy buoys with 

wind turbines on top, so I think we just really need to look at all 

options for making sure we have renewable sources of energy. So 

thank you for your work. 

And Mr. Chairman, I will yield back the balance of my time. 

Chairman HALL. The gentlelady yields back. 

Dr. Broun, Georgia, five minutes. 

Dr. BROUN. Thank you, Mr. Chairman. 

Mr. Secretary, I believe that the Federal Government should not 

be picking winners and losers in the marketplace. It seems to me 

that DOE has repeatedly proven that this Administration is 

clueless when it comes to making good business investments and 

that it also tends to side with political crony companies. Unfortunately, the Department’s political favors come with more than a 

billion-dollar price tag that will have to be paid for by American 

taxpayers. 

Time and time again, we have seen companies like Abound Solar, 

Beacon Power, A123 Batteries, and of course Solyndra receive millions and billions of dollars just to drop jobs. In addition to those 

465 million that went to Tesla Motors to make a luxury electric car 

with a sticker price of $100,000, worst kind of corporate welfare. 

In the President’s Energy budget, the few people to be able to afford those cars would receive a $10,000 tax subsidy. How can President Obama justify asking for more than a half a billion dollars in 

additional funding for his preferring green programs? 

Secretary Chu, you tell me why you think your department deserves more taxpayer money to blow through given your abysmal 
33 

track record. What grade would you say you deserve for the management of the DOE resources over the last three years? 

Secretary CHU. Well, I would give myself a pretty good grade, because if you look at what we have done and what we have supported and the breakthroughs that have occurred during this tenure, I think it speaks very well. As I said before, the battery research has been going extremely well, way ahead of what we 

thought was the schedule. We are very focused on a lot of the grid 

technologies on solar technologies. And as another example of the 

Bioenergy Research Centers, which were started in the previous 

Administration, have done extremely well and we are continuing 

funding for those. A lot of the inventions and technologies are now 

being licensed by companies and they are entering the pilot productions. So there are many successes in the technologies that the Department of Energy has supported. And the private sector, American industries are picking up these technologies. 

Dr. BROUN. So what grade would you give yourself, A to F? 

Secretary CHU. Oh, I don’t know. 

Dr. BROUN. What grade would you give yourself? 

Secretary CHU. There is always room for improvement, maybe an 

A minus. 

Dr. BROUN. Sir, I give you a D minus or an F. Somebody who 

makes a 69 on a test fails. Now, you do have some successes. I appreciate the loan to the Georgia Power Company to put in place the 

two new reactors there at Plant Vogtle, the first reactor that has 

been authorized in over 30 years. We need to have the ability to 

put in place nuclear reactors very quickly. I would like to see a 

template so that if a company followed that template, they could 

just go ahead with the construction that the government would 

oversee it just to make sure it was being followed, but they 

wouldn’t have to spend millions or billions of dollars in just trying 

to get approval from the Nuclear Regulatory commission, particularly as anti-nuclear as this Administration has been. 

But you all have had failure after failure after failure. Sir, I am 

not sure why we should give you any more money because I think 

you have failed. Like I say, I believe you have got a D minus or 

an F at best. 

I yield back, Mr. Chairman. 

Chairman HALL. Gentleman yields back. Mr. Secretary, just for 

your knowledge, if you have ever been asked that question before, 

you are entitled to know how the Chairman did when asked that 

question. One time I made four Fs and a D, and my dad punished 

me for spending too much time on one subject. 

All right. Who do we recognize? Recognize Mr. Luja ́n. 

Mr. LUJA ́ N. Mr. Chairman, thank you very much. 

And Dr. Chu, in your prepared testimony you state that with the 

New START Treaty, the science, technology, and engineering capabilities within the nuclear security enterprise will become even 

more important to sustaining the U.S. nuclear deterrent. President 

Obama, during his State of the Union this last year, said ‘‘today 

the discoveries taking place in our federally financed labs and universities could lead to new treatments that kill cancer cells but 

leave healthy ones untouched.’’ He goes on to say that, ‘‘We 
34 

shouldn’t gut these investments in our budget. Don’t let other countries win the race to the future.’’ 

I would like to focus on this theme of nurturing the scientific engineering capabilities of the NNSA laboratories. With the 2013 

budget request, NNSA’s budget will have increased about 10 percent from 2011, yet over the same two-year time frame, the budget 

of Los Alamos National Laboratory will have decreased by about 10 

percent. This is about a $300 million decrease in just two years and 

choked the scientific and engineering capabilities at our lab. Because of these budget cuts, the lab has requested a voluntary reduction and forced incentive program with the goal of eliminating 

400 to 800 jobs. This reduces the true source of scientific and engineering capability, the men and women who have served the Nation there who have the experience and training that is difficult 

and expensive to replace. 

And finally, a recent National Academies’ report, one that distrustful oversight by NNSA, in which individual transactions are 

reviewed at every step, is harming the vitality and long-term viability of the science and engineering capability at the NNSA labs. 

When you combine all of this distrustful and harmful oversight 

with the significant loss of personnel and reduction of funding over 

multiple years, you get a very damaging set of events that could 

do permanent harm to the lab and my district in the northern part 

of New Mexico. 

So, Mr. Secretary, I have a lot of respect for you, but I have a 

lot of concern as to what has happened with Los Alamos. As I look 

at the budget, it looks like Los Alamos took a much greater hit 

than any of the other labs, and quite honestly, almost as much as 

the other labs combined. So, Mr. Secretary, what I am looking for 

is some assurance and some long-term commitment, one, to see 

how we can fix the arbitrary hits that look—that were targeted to 

Los Alamos, as well as a commitment to Los Alamos National Laboratory. 

Secretary CHU. Well, certainly, Los Alamos National Laboratory 

is an excellent laboratory, but within our budget constraints going 

forward, we do have to make hard decisions, but certainly Los Alamos is going to be an essential part of the future of the NNSA laboratories. Those hard decisions need to be made, but we feel that 

they have not only a very rich past but also an outstanding group 

of scientists and engineers in that laboratory and will be a vital 

part of the NNSA mission. 

Mr. LUJA ́ N. I appreciate it, Mr. Secretary, and I look forward to 

hopefully meeting with you soon with Senator Bingaman. I know 

a request has gotten in with yourself and Mr. D’Agostino and we 

look forward to having those conversations about the commitment 

to Los Alamos. 

And Mr. Chairman, I want to quickly turn to all of this conversation and attacks on President Obama with increasing gas prices. 

You know, report after report shows that production is up under 

this Administration. Under President Barack Obama, production is 

up. The Republicans in this Congress voted against an amendment 

that I offered on the Floor of the House and in Committee, in the 

Natural Resources Committee, when there was a provision in front 

of us to increase production in the Gulf. 
35 

My amendment was real simple. It said during tough economic 

times, let us make a commitment—because I know how to count; 

my dad taught me how to count very young—and we knew the bill 

was going to pass. But what we asked our colleagues from the 

other side of the aisle was if we are going to pass this bill, let’s at 

least commit to keep any new production in the United States for 

American consumption and to be refined in the United States. I 

couldn’t get one of my colleagues from other side of the aisle to support that amendment. Ranking Member Markey offered something 

similar as well, which was defeated overwhelmingly. 

Last year, there were many individuals that provided testimony 

in the Senate talking about the problems with speculation. Mr. 

Tillerman, the boss of ExxonMobil, admitted last week that the 

price—and this was back in 2011, early 2011 or in May—that the 

price of oil based purely on supply and demand should be $60 to 

$70 a barrel. The reason it is above $100 a barrel, Tillerman explained, is due to the oil majors using futures contracts to lock into 

high prices. And we see article after article—the Commodities Future Trade Commission plans to issue a report next month talking 

about these problems. If we are serious about doing something 

now, we should tap the reserves we have and crack down on speculation, Mr. Chairman. And I think that enough is enough with the 

rhetoric. Let us do something real. We can get this done together, 

and there is support from all sides. 

And with that, Mr. Chairman, I yield back. 

Chairman HALL. I accept your yielding back and I admire you as 

a good Member and as a member of a great family of public servants from your State. I don’t agree with you very much on your 

analysis of the President, though, and you don’t expect me to, do 

you? 

Mr. LUJA ́ N. Mr. Chairman, I think that is why we are friends. 

As the good Governor King from New Mexico used to say, some of 

my friends are for it and some of my friends are against it, and 

I will support my friends. 

Chairman HALL. There you go. 

I now recognize a very patient—probably might be the best Member over here who looks around and scolds me when I go over and 

I am trying not to do that. But I recognize Ms. Adams for 10 minutes. 

Mrs. ADAMS. Thank you, Mr. Chair. 

Chairman HALL. Well, I am trying to get along with you. 

Mrs. ADAMS. I appreciate it. 

Secretary Chu, I sit here and I listen and that is what I do probably most intently because of my background as a law enforcement 

officer. I tend to listen to all the words being said. So I am going 

to ask you some questions and I would just appreciate a simple yes 

or no. All right? We don’t need to do a back-and-forth or anything 

like that. I listen with great intent. As the Chairman asked you if 

Yucca Mountain was completely left out of the equation during the 

Committee, you said not in the charge. Would that not mean, yes, 

it was left out? 

Secretary CHU. The intent of Yucca Mountain was—— 

Mrs. ADAMS. I—again, yes or no. It is just simple questions. 

Secretary CHU. Yes or no—— 
36 

Mrs. ADAMS. Okay. Let’s move on to something a little bit easier 

since these are your words. I heard Chairman Sensenbrenner ask 

you some questions and I just wanted to know for the record do you 

still agree with your statement back in 2008, ‘‘Somehow, we have 

to figure out how to boost the price of gasoline to the levels in Europe.’’ Do you agree with your statement you made in 2008 or have 

you changed your mind? Yes or no? 

Secretary CHU. We are working—I am working to decrease the 

price in—whatever tools we have—— 

Mrs. ADAMS. Secretary Chu, do you stand by your statement, yes 

or no, in 2008? 

Secretary CHU. I do not want to raise the price of gasoline; I 

want to lower the price of gasoline. And all my actions as Secretary 

of Energy—— 

Mrs. ADAMS. Did you not say last Tuesday to Congressman Alan 

Nunnelee’s question that it was not the goal—overall goal of the 

Administration to lower gas prices? 

Secretary CHU. That is incorrect. What I had said if you would 

read the full statement—what I said was we are working very hard 

to lower the gasoline prices with the tools the Administration has, 

but in addition to that, specifically in the Department of Energy, 

we are trying to diversify the supply so that that will help the 

American consumers—the American families who are feeling terrible pain to actually—— 

Mrs. ADAMS. Well, currently, in—— 

Secretary CHU [continuing]. Have other choices. 

Mrs. ADAMS. You are right; they are feeling the pain and I hear 

about it when I go back to my district. We have got hardworking 

taxpayers who will put more money into their gas tanks. Would 

you not agree that when the fuel costs go up, everything goes up 

for our American people, everything from food to electricity to everything? Would you agree with that? Yes or no? 

Secretary CHU. I would agree that when the price of oil and the 

price of gasoline and diesel go up, that affects our economy in a 

very deep way, and that is why when—— 

Mrs. ADAMS. And it affects every aspect of Americans’ lives. 

Secretary CHU. And we are—that is why we are so focused on 

developing alternatives—— 

Mrs. ADAMS. Well, then, you said earlier—and again, I am listening; I am trying to write as quickly—not to lower gas—you were 

talking about gas prices, not to lower it, then certainly we want to 

lower it, but we want people to use less. So when you go back to 

your 2008 comments about having it rise up to the levels of Europe 

and then you go back to two days ago when you made your comment about it was not the Administration—the goal—overall goal 

of the Administration to lower gas prices. Then today, when you 

are in here saying not to lower—but certainly you want it to be 

lower, but you want people to use less. Doesn’t that go back to the 

original statement that in 2008 when you said somehow we have 

to figure out how to make gasoline prices—boost the price of gasoline to the levels of Europe? 

Secretary CHU. It absolutely does not go back to that statement. 

As you look at all my actions and all that we are trying to do in 

the Department of Energy—— 
37 

Mrs. ADAMS. Well, that is just it. I have looked at your actions. 

I have looked at your actions and I have seen where taxpayers’ 

money—hard-earned taxpayer money in this economy was sent to 

Solyndra when everyone, all the emails that—everything that I 

have seen showed that there was a problem. Yet we have gas 

prices on the rise and I heard my colleague say 100 percent. I have 

at least figured out it is over 89 percent. And I have a Secretary 

who is in one Committee saying one thing, two days later telling 

me a different statement, but back in ’08 basically along the same 

lines of what you were saying two days ago. 

So I appreciate your comments, Secretary, but the actions and 

the words are not going together, and I am really concerned that 

your 2008 comments and statements are coming to fruition for the 

American people, and that worries me. I know from talking to people back home their electricity has gone up, their gasoline has gone 

up, and they are concerned that this Administration is not taking 

that seriously. So I would like for you to take that back with you 

to the Administration. People are hurting, and they want this Administration to do the right thing. 

We have sent them bill after bill, to the Senate. to allow for the 

drilling of our own resources. We have sent them and the Administration has denied the Keystone Pipeline. These are things that 

would help the American people today—today, Secretary Chu. 

And I yield back. 

Chairman HALL. The gentlelady yields back. 

Recognize Mr. Tonko, the gentleman from New York, for five 

minutes. 

Mr. TONKO. Thank you, Mr. Chair. And Mr. Chair, allow me to 

associate my comments with those of Representative Luja ́n, who I 

thought was spot on about the issue. 

And Secretary Chu, welcome and thank you for responding in 

professional capacity and enduring. 

Secretary Chu, I understand the Administration made some 

tough choices in this budget, and I have a question related to one 

of those tough choices, cuts that impact our Brookhaven National 

Lab, an important facility in New York State. I understand the 

number of operating hours of the Relative Heavy Ion Collider, or 

RHIC, will be cut in half compared to the facility’s operating hours 

this year. Even this year, it will not be running to full operating 

capacity. As you know, this is an important research facility for the 

nuclear physics community. And in addition to the reduced operation time, the funding reduction will also impact facility maintenance and upgrades to ensure its long-term productivity. We have 

a long-term investment in this facility and I know these are tough 

times, but I do not believe we should jeopardize our ability to continue use of important research tools like the RHIC. This does not 

send a positive message to our students and scientists who rely on 

access to these community facilities to do their research. 

So my question would be what plans are there at the Department to ensure that the continuity of the research being done by 

students and researchers there can be maintained under reducing 

operating hours? 

Secretary CHU. Well, as you pointed out, RHIC, the Relativistic 

Heavy Ion Collider, is an important part of our Nuclear Physics 
38 

portfolio, but as you also pointed out, we face tough decisions and 

the tough decisions on all the worthy projects we have to fund. And 

so we will have to look at these things very carefully, but certainly 

the past discoveries of RHIC are applauded and I have met their 

very exciting team. But again, it is one of these very hard things. 

We haven’t made specific plans on specifically going forward, but 

all the things and all the benefits and all the opportunities of RHIC 

do get weighed with all the other things. But, you know, we have 

a budget deficit, and we also have to act responsibly. 

Mr. TONKO. Um-hum. Well, it seems unlikely that we would be 

able to afford to build a new facility to do this work, so should we 

not be maintaining the RHIC and other unique DOE facilities to 

make the most of our investment? I would hope—I hear what you 

are saying, but I would hope that we could see the dividends that 

come because of this investment and how critical they are to our 

innovation into the future. 

Secretary CHU. I am not sure how to—because is there a question that I can respond to? 

Mr. TONKO. Well, you know, some have suggested, well, we 

might be able to build a new facility to do this work but I would 

think that would deny the efforts made to date and the outstanding 

track record that exists there. 

Secretary CHU. I am not sure who said that or anything but I 

think we want to use the facilities we have and as we contemplate 

new facilities, I mean, these are tough budget times. So we—again 

I am not sure who made that statement but I don’t think this is 

being seriously considered but I can certainly get back to you on 

that. 

Mr. TONKO. Okay. And again thank you for the thoughtful dialogue. I think it is what we need these days with so many complex 

issues. And I just think that it needs—and can be done—in an atmosphere of respect. So thank you for responding in sound professional and thoughtful—— 

Secretary CHU. Right. 

Mr. TONKO [continuing]. Manner here this morning and afternoon. 

Thank you, Mr. Chair. I yield back. 

Chairman HALL. And I thank you for yielding back a minute, 

very thoughtful of you and appreciate it. 

The Chair recognizes Mr. Hultgren, State of Illinois. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

Mr. Secretary, in 2006 you testified before the Rising Above the 

Gathering Storm panel. You said, ‘‘In funding ARPA–E, it is critical that its funding not jeopardize the basic research supported by 

the Department of Energy’s Office of Science. The Committee’s recommendations are prioritized and its top recommendation in the 

area of research is to increase the funding for basic research by 10 

percent per year over the next seven years.’’ Mr. Secretary, you 

said that. That is your quote; those are your words that you said. 

So I want to take a look at the charts that we are going to put up 

on the screen breaking down your budget request, and I believe the 

Committee can also put a copy up so everybody can see it here. 

This is a chart that we put together. It is maybe a little bit difficult to see, but I will walk through it with you quickly. It shows 
39 

your request for percentage changes in various programs on the 

vertical axis, and on the horizontal axis it shows the range of research activities from basic research, which is on the right below 

the line, to applied research bordering on State industrial policy on 

the left. Those numbers show a pretty clear story. Fundamental 

science research is cut and the President’s industrial policy is 

boosted. How can you with a straight face tell me that you haven’t 

funded the President’s pet projects in industrial policy at the expense of fundamental research? 

Secretary CHU. Well, as your chart shows, we are seeking a 2.4 

percent increase in the Office of Science. The Office of Science is 

what we call our basic research program within the Department of 

Energy. The request is for roughly $5 billion. ARPA–E is just a beginning new program and their request was for a much smaller 

amount, $350 million. And so if one puts into perspective those two 

budgets, we still remain very committed to funding the Office of 

Science, which is our more basic research program. 

Mr. HULTGREN. Well, again, I think as you go through the ones 

on the right and going further to the right I see Fermilab, which 

is very important to me, I have heard my colleagues on the other 

side of the aisle also talking about research facilities being slashed, 

Fermilab, eight percent cut. Other pet projects again getting that 

increase. But again this discrepancy of almost a 30 percent increase versus two percent versus ¥8 percent. I don’t know how you 

justify that with your own statement that says you were looking to 

increase basic scientific research, which is our national laboratories 

by 10 percent per year, and yet here you are cutting it by eight percent. 

Secretary CHU. Well, you are now talking about the Fermilab 

specific request budget. What we are trying to work through is a 

plan to go forward in terms of the long baseline experiments and 

also what we are trying to work out and how to go forward in the 

Deep mine in South Dakota. And so again if you—you can look at 

percentage increases or you can look at absolute dollars, and when 

we look at the absolute dollars of the Office of Science, we have increased that budget and I am very, very supportive of increasing 

that budget. ARPA–E, again, it is very small compared to the Office of Science. 

Mr. HULTGREN. Well, I want to work with you on making sure 

that we follow through on that. What I see with some of the 

projects there specifically dealing with South Dakota is it is on life 

support right now. I mean it is barely enough to keep it operational. And then with—we were talking about this with Dr. 

Holdren last week. The steps of this budget—it is on crutches right 

now and we are breaking the crutches away from that project with 

this budget. I am fearful of that because I really think we are going 

and taking something valuable away to our kids and our grandkids 

the great opportunities that we have had to pursue science and 

basic scientific research. We are failing our future if we undercut 

that with these projects. 

I am passionate about Fermilab, but I am passionate about other 

laboratories that I don’t represent as well and want to see that 

same commitment there. I recognize the fiscal year 2013 budget is 

constrained with so many pressures, discretionary spending caps, 
40 

but this imbalance seems to represent a definite and indefensible 

trend to retrench on discovery science and promote more applied 

research. You neglect to balance the portfolio, which leaves the fundamental discovery science in disarray. 

And I just wonder is this the proper direction for the Department 

when investments in basic scientific research really underpin the 

Nation’s science and technology enterprise? 

Secretary CHU. Well, very quickly, I would say I agree with you. 

The Office of Science is a very important part of our program, and 

we want to see that budget grow and increase and it does form the 

underpinnings of everything that leads to it, including all the 

underpinnings of the companies that are using discoveries in the 

Office of Science and in energy—clean energy, renewable energy, 

ARPA–E. And the Office of Science does form the basis of all that. 

Mr. HULTGREN. Well, I hope we can follow through on that and 

see—I think we are seeing that clearly there is money there, and 

there is money that doesn’t have to be taken away from some of 

this basic scientific research and we can bulk up that amount. 

Mr. Secretary, I do thank you for your service, and I do appreciate the ability to be able to discuss things, but it really does seem 

clear to me that this is an anti-science budget aimed at pushing 

short-term political agendas. I really do believe it is going to hurt 

our long-term economic competitiveness, our scientific enterprise, 

and our country. 

With that I yield back. 

Chairman HALL. Gentleman yields back. 

Chair recognizes Mrs. Lofgren, lady from California, five minutes. 

Ms. LOFGREN. Well, thank you very much, Mr. Chairman. 

And Dr. Chu, it is good to see you as well. 

You know, in 1995 when I was a brand new Member of the 

House of Representatives, there was a very conservative Republican Congressman for the East Bay, Congressman Bill Baker. I am 

sure you remember Bill, and he recruited me and other people into 

an effort to pursue the National Ignition Facility at the Lawrence 

Livermore lab. And even though Bill is no longer a Member of Congress, that bipartisan support for the project has continued to this 

very day. And as you know, the project, the National Ignition Facility, has a key role to play in terms of our stewardship, and it is 

the lead effort in inertial confinement fusion. Are you aware, Dr. 

Chu, that if you look at the NNSA budget rules that will be applied, the bottom line for NIF is that if this budget remains as it 

is, they will essentially have to close and ‘‘mothball’’ next year? 

Secretary CHU. No, I don’t believe that is true. Certainly, we do 

not want that to happen. They have—it is—construction has been 

completed. They are entering—over the last year entering into very 

exciting—— 

Ms. LOFGREN. Two shots a day. 

Secretary CHU [continuing]. Exciting experimental stage and we 

are looking forward to when they can actually prove that you can 

get what we call ignition, that more energy is going to come out 

than went in. 

Ms. LOFGREN. Well, if I can, Dr. Holdren was here a couple of 

weeks ago. I asked him the same question, and he was honest 
41 

enough to say he didn’t know. And he called me back afterwards 

to follow up, and he agreed that the funding and mothballing the 

experiment after we spent over $4 billion on the capital, equipment, and to get to where we are would not be a smart thing to 

do. I called out—I mean the labs are not allowed to call us and 

lobby, but they do have to answer us when we call out there. And 

I was told that the net result would be mothballing NIF if this 

budget is retained by the lab. 

And so I am looking at ITER, which is—you know, we are 10 

percent of that effort and it is a long ways away if ever from getting—so we are proposing to increase their budget by $45 million; 

at the same time we are going to shut down NIF and hundreds of 

American scientists will be laid off while we are sending money to 

this international effort that may never get started. How could that 

be—how can that be a smart decision? 

Secretary CHU. Well, first, let me—my knowledge of what is happening with the NIF program, it is—as you pointed out, this is a 

very important part of our NNSA budget. It enables us to more 

deeply understand the physics we need to understand going forward for our nuclear security. And so I know of no plans. To the 

best of my knowledge, and we can get back to you on this, the 

funding is adequate for NIF to continue because we need that facility. It has just been constructed. 

Ms. LOFGREN. I know that. I was at the opening, as were you. 

Secretary CHU. Right. And under no circumstances do we have 

plans to mothball a facility that is working and just been constructed. 

Ms. LOFGREN. Well, if I may, Mr. Chairman, I believe—I mean 

obviously I wouldn’t have raised this if I hadn’t been led to believe 

that that is in fact the case. So what I would like to do if I may 

is follow up with you. If necessary, we will do a bipartisan effort 

to defund the ITER contribution and redirect it to this effort if we 

need to. And I have already been talking to my friends on the other 

side of the aisle. I think we would have a bipartisan effort if we 

have to do that. But perhaps we can pursue this further off-calendar. 

I wanted to do a quick question on the advanced computing. 

There is a reduction of 4.6 percent in the High-Performance Computing and Network Facilities subprogram. I am not sure how that 

is going to work. Can you explain the impact on the whole program 

from that reduction? 

Secretary CHU. What we are doing—there has been a growth 

phase. We think high-performance computing is one of the keys to 

what the Department of Energy does, because high-performance 

computing enables industry to actually—— 

Ms. LOFGREN. We are for it. 

Secretary CHU [continuing]. Skip design cycles very much—— 

Ms. LOFGREN. Absolutely important. 

Secretary CHU. We are laying plans to do to the next step. For 

example, the high-performance computer at Oak Ridge, the Jaguar 

computer, will go from probably like several petaflops where it is 

today to perhaps as much as 20 petaflops. In the meantime, we are 

laying plans to go to exascale, because we think this simulation 
42 

high-performance computing is showing repeatedly it can help U.S. 

industry avoid design engineering steps. 

Ms. LOFGREN. No, I get all of that. The question, though, is what 

is the impact of the proposed decrease, the 4.6 percent decrease? 

Is it not a problem? And also is the exascale proposal put forward 

by the Berkeley lab, is that funded in this budget? 

Secretary CHU. The exascale—I mean an exascale is being developed in the Department of Energy. 

Ms. LOFGREN. Right. 

Secretary CHU. We haven’t made any determination about where 

it is going to go. And indeed we are working with industry because 

as we improve the petaflop scale computers we have in the Department of Energy, we are also looking and getting positive feedback 

from industry to actually partner—— 

Ms. LOFGREN. Right. 

Secretary CHU [continuing]. With industry to develop radically 

new technologies for this next—— 

Ms. LOFGREN. I wonder, Mr. Chairman, I know my time is up, 

but if we could just ask Dr. Chu what the impact of the 14 percent—4.6 percent decrease would be, which was my original question. 

Secretary CHU. Right. We can get back to you on the details. 

If the Chairman will allow me just 20 seconds on ITER? 

Chairman HALL. I don’t know how I could keep you from it. 

Secretary CHU. Well—— 

Chairman HALL. Yes, the Chair will make that—I went a 

minute-and-a-half over. Be my guest. 

Secretary CHU. I just wanted to respond—to point out—— 

Chairman HALL. Sir, you are entitled to—— 

Secretary CHU. Okay, thank you. 

Chairman HALL [continuing]. Testify. 

Secretary CHU. That the ITER project, over 80 percent of the 

funds will be spent in the United States and on contracts in companies and national laboratories in the United States. And it is an 

international obligation we have and so—and we don’t see it as actually in conflict with NIF. 

Ms. LOFGREN. Well, I have supported ITER in the past, but it is 

premised on a robust scientific effort here in the United States. 

And if the information I have is correct that we would be 

mothballing NIF, I could no longer support, you know, increasing 

our funding to EDER. And it is decades away from beginning operation. So you know, there are plenty of scientists who have told me 

without regard to the budget that they no longer have confidence 

that the project is even going to succeed because of the political 

support and the budget problems. But that is a separate question. 

I thank the Chairman for letting me have a little more time. 

Chairman HALL. The gentlelady yields back. 

Mrs. Biggert, Illinois, five minutes. 

Mrs. BIGGERT. Thank you, Mr. Chairman. As usually happens, 

the last two members have skirted around the issues that I wanted 

to ask questions about but not quite the same. 

The budget repeatedly highlights President Obama’s commitment 

to doubling the budget of key basic research programs at the Office 

of Science, along with NIST and NSF. But the budget request for 
43 

the Office of Science is proposed to increase by only 2.4 percent, 

and at that rate, it is going to take about 30 years to double the 

budget and doesn’t account for inflation. Meanwhile, the programs 

such as EERE and ARPA–E are proposed to increase by 29 percent 

and 27 percent. Do you think, then, that funding for the Office of 

Science really is a low priority for DOE? 

Secretary CHU. No, it is not a low priority. It is a priority. It is 

a high priority. As you well know, I spent my life doing fundamental science, and I know the value of fundamental science and 

what it leads to. 

Mrs. BIGGERT. Okay. Then—and then going to the Exascale Computing Initiative and it is a joint program between science and 

NNSA—— 

Secretary CHU. NNSA. 

Mrs. BIGGERT [continuing]. And it seems that there appears to 

be an uncertainty regarding the funding for the NNSA’s matching 

participation with no firm number in the budget request, and I 

hope that the Administration is committed to this joint venture and 

all the progress that the United States has made in supercomputing. But does the Department—do you think that that budget— 

that they are going to commit to a certain budget? And does the 

Department intend to deliver its exascale report to the Hill soon? 

Secretary CHU. Well, we—the Department of Energy is very committed to developing exascale computing because we see clearly all 

the advantages it will give not only the scientific community, but 

the industrial base in the United States. The NNSA, as you well 

know, is under significant budget strain. Our first responsibility in 

NNSA is to tend to the nuclear security of the United States and 

we hope that they can continue participation. But we do remain 

committed to making sure that we lead in exascale computing. 

Mrs. BIGGERT. But you don’t have any figures yet—— 

Secretary CHU. No. 

Mrs. BIGGERT [continuing]. For NNSA. 

Secretary CHU. But the Department does think that exascale 

computing is one of the frontiers that the United States should certainly invest in. 

Mrs. BIGGERT. Okay. And then the 2012 appropriations had—for 

the study, and do you—— 

Secretary CHU. Yes. 

Mrs. BIGGERT [continuing]. Know when that will be? 

Secretary CHU. I can get back to you on exactly when—— 

Mrs. BIGGERT. Okay. 

Secretary CHU [continuing]. They expect it delivered. 

Mrs. BIGGERT. All right. Then just one other quick question—the 

budget request, $10 million from a Nuclear Waste Fund in fiscal 

year 2013, what is the purpose of this request and what is it going 

to be used for? 

Secretary CHU. Yes. First, we have commenced this study within 

the Department to look at the recommendations of the Blue Ribbon 

Commission. And also we would love to work with Congress in 

those recommendations as well. One of the things that the Blue 

Ribbon Commission felt was very important is we have out of our 

200—we have roughly 104 operating nuclear reactors, but there are 
44 

a number of sites where the reactors are no longer operating and 

yet we still have spent fuel there. 

Mrs. BIGGERT. Okay. 

Secretary CHU. And what we wanted to do was to begin to have 

the spent fuels put in dry cask storage with an envelope and get 

it licensed by the Nuclear Regulatory Agency so that they can be 

safely transported out of those now-dormant reactor sites because 

of all the security and issues that—at least to consolidate those few 

sites. 

Mrs. BIGGERT. Okay. Then one more quick question. And this 

is—involves Keystone. I am really worried about the fact that we 

are not going to have Keystone, and I cannot understand how we 

would let this go. And right now the Canadians are over in China 

negotiating with them to send the oil there. And I think that is 

such a mistake when we are trying to reduce our dependence on 

foreign oil and particularly the hostile countries that provide it. 

And we would just let this go when we—I know that you have already talked about working on the bottom part of this and going 

forward with that, and yet we have no resolution or the Administration has vetoed it. 

Secretary CHU. The Administration did not veto it. When Congress said you have to make a decision at this time, the State Department said we have to look at the environmental impacts at this 

time. And so it has not been vetoed. The Administration and we 

in the Department of Energy have applauded the fact and it was 

well known that the first bottleneck in this—— 

Mrs. BIGGERT. And that was taken care of. 

Secretary CHU. It is being taken care of by several companies 

cushing to Houston and Louisiana. The second bottleneck is between Chicago and cushing. Those plans are also underway—— 

Mrs. BIGGERT. I understand that. 

Secretary CHU [continuing]. And it is very important to clear up 

these domestic bottlenecks because then we can continue to develop 

the oil in North Dakota—— 

Mrs. BIGGERT. If we have—if we will have the oil by the time 

that all these things are cleared up. 

Secretary CHU. Well, as I said, you know, the—you know that 

the same Keystone people are now working with, for example, the 

State of Nebraska on the crucial parts of the pipeline being built 

in the United States, which are going forward. 

Mrs. BIGGERT. Thank you. 

Thank you very much. Yield back. 

Chairman HALL. I thank the gentlelady. 

Recognize Mr. Miller, gentleman from North Carolina, for five 

minutes. 

Mr. MILLER. Thank you, Mr. Chairman. 

Secretary Chu, I congratulate you for your modesty in not wearing your Nobel medallion to appear today. I am not sure it would 

have made any difference in how you were treated, but if it had 

been me, I think I probably would have worn it. 

There have been—well, one of the most spectacularly successful 

government programs is DARPA, not just doing research that nobody else would have done but getting transformational research to 

the marketplace. One of the proposals of the Augustine report, Ris-
45 

ing Above the Gathering Storm, there was bipartisan support for in 

this Committee. Chairman Boehlert supported it, Bart Gordon supported it, was ARPA–E, a program modeled after DARPA for energy to do the kind of research that otherwise would not get done 

because it is more likely than not that any given research would 

be fruitless. But the research that did work out could change 

things in a dramatic way. 

But there is also criticism that ARPA–E projects duplicate other 

research at the front end of their research and that it crowds out 

private sector funding at the back end, and it is hard to get things 

to the marketplace unless there is some overlaps, some kind of 

handoff to private sector funding. How do you identify—and also it 

is kind of hard to find research in which nobody has done any research to see that as a promising area of research. How do you 

identify the research that ARPA–E will do? Do you duplicate research that is being done or has been done by the private or by the 

public sector? And then how do you make that pass-off to private 

sector development? Do you crowd out public investment? 

Secretary CHU. Well, thanks for the question. First, there is a big 

distinction between the research that ARPA–E funds and the research, for example, that the Office of Science funds. The Office of 

Science funds research that lays foundational science that could 

lead to energy innovations. ARPA–E is focused on very short-term 

grants, typically two years, and modest amounts of money that can 

push something over the top. In some of those grants, they go to 

universities. Other grants go to small startup companies where 

there is a melding of public and private dollars. But we also tried 

to identify those things where a small starting company would not 

have the resources to take a next step. And in many cases—in most 

cases what we try to do—or a large company says, all right, you 

know, this is too much to swing for the fences, but if we are willing 

to get some assistance from ARPA–E, we will try these dramatic 

attempts. 

And that was the philosophy of DARPA and that is the philosophy of ARPA–E, something where you could not possibly imagine, 

for example, some way of—a global positioning satellite system. It 

is a great triumph of DARPA to look very far into the future and 

say, you know, it might be possible to use this system in military 

applications, but it now turns out to have fantastic commercial applications. But in ARPA–E, those things that we fund are these 

very short-term—now. There are certain spaces. We identified in 

ARPA–E, for example, power electronics. These are the electronics 

that convert high voltage to low voltage or DC to AC or AC to DC. 

For whatever reason, the university system wasn’t investing in 

power electronics to build up a base of that. And if you talk to any 

companies, they would love to hire people trained in power electronics. We identify power electronics as a real growth industry. 

About 30 percent of electricity goes through some sort of power 

electronics today, but in 15 years or so we are expecting 80 percent 

to go. The industry wants this and we are helping companies develop power electronics and we are also trying to get universities 

to fund power electronics faculty. 

So the ARPA–E funding in power electronics says if we can make 

a transistor—not a silicon transistor but like a silicon carbide, we 
46 

have entered in funding with a company making fantastic power 

electronics, very high voltage, high current so you can regulate 

power much more efficiently, much more inexpensively. Again, we 

see this as a great opportunity for American prosperity because 

these things are things we think the United States should be leading in. And again, it is a very identified target. 

Mr. MILLER. Thank you, Mr. Chairman. My time is expired. 

Chairman HALL. I thank the gentleman. Now, probably you save 

the best for the last normally, but I don’t ever like to say anything 

until the last at my age for today I am talking about. 

I recognize you, Mr. Harris, and I am going to ask for a minute 

or so to visit with Ms. Johnson. Okay with you? 

Mr. HARRIS. Certainly. Anything you want, Mr. Chairman. 

Listen, thank you, Dr. Chu. And I—you know, I share the—what 

my colleague from North Carolina says. I appreciate a Nobel Prize 

winner coming in front of us, especially one in physics. I told you 

before I never understood it. I was a physiologist, not a physicist. 

You know, I respect that. But that does give us—and I know from 

personal experience that sometimes scientists like that kind of get 

a little tunnel vision. To someone with a hammer, everything looks 

like a nail. 

You talked about breakthroughs and of course that should be 

what I think the Department of Energy is all about. I am going to 

ask you a question. Would you agree with me that the biggest energy breakthrough in the last three years and one month has been 

that the cost of natural gas is one-half of what it was when the 

President took office, yet the price of gasoline is twice as high so 

that in fact there is a breakthrough that has led to a hugely important energy source. Would you agree that that really is—to someone looking objectively, that is really the largest breakthrough that 

has occurred in energy in this country? 

Secretary CHU. I would agree that that it certainly has been a 

breakthrough but it had a long birth period. 

Mr. HARRIS. Sure, but I mean the halving of a price—— 

Secretary CHU. Um-hum. 

Mr. HARRIS [continuing]. In one energy source while another 

source is doubled now and we think is still going up—and by the 

way, you know, I thank you—I hope that your bias from before 

when you were Secretary and said we should have European-style 

prices, I hope you had an epiphany, you and the President and 

that, in fact, that is probably not a good thing now. But let’s look 

at what the Department does. The Department’s budget next year 

has one-fifth of one percent of its spending on natural gas, one-fifth 

of one percent. It is smaller than the increase in solar spending. 

Would you say that the Administration kind of missed the boat on 

this natural gas phenomenon that really some people look at and 

say is the future and the real breakthrough in American energy? 

Secretary CHU. Well, I agree with you that the ability to capture 

natural gas from shale rock was wonderful—is wonderful. The Department of Energy funded this from about 1978 to 1992. 

Mr. HARRIS. And how much in the last three years? 

Secretary CHU. Well, right now, what we are doing is we are 

going to the next new thing in gas. We are funding methane hydrates. This is in collaboration with industry but we also have 
47 

helped bring Japan on board because we think methane hydrates 

might be another form. It is too early to tell. Just as we funded 

drilling and hydraulic fracturing many, many years ago when industry did not think it was viable—— 

Mr. HARRIS. Sure. What is your budget level on methane hydrates? 

Secretary CHU. It is very small but we—— 

Mr. HARRIS. Okay. So it is even less than one-fifth of one percent? 

Secretary CHU. Yes. 

Mr. HARRIS. So this huge new energy source, the real breakthrough, the Department is spending one-fifth of one percent. All 

right. Well, your time is precious. I appreciate that. You can’t 

spend all your time on everything, so I am going to ask you about 

this email—this June 2011 email where a Solyndra employee described what they learned from Bank of America financiers involved in that Prologis loan negotiation. A quote from the email is, 

‘‘on three occasions this week, he thought that the deal was dead 

but Secretary Chu’’—so he being the financier—‘‘but Secretary Chu 

personally pulled it off. Chu shared with the team that this deal 

went to higher levels in the Obama Administration to gain approval than any other transaction in the Loan Guarantee Program 

and that he personally committed to seeing it through to successful 

conclusion.’’ Now, is that kind of true? I mean is what that person 

says kind of a realistic summary of what went on? And of course 

remembering that Prologis at that time was going to contract with 

Solyndra at a time when Solyndra was renegotiating its whole deal 

with the government and in fact got, you know, was secondary in— 

you know, that whole—and you know the whole deal. Is that a 

pretty accurate summary, that you were personally involved at a 

level different from other deals? 

Secretary CHU. I strongly supported the Prologis loan application 

because I thought it was a wonderful way of financing in a measured way—financing—letting warehouses use their rooftop 

space—— 

Mr. HARRIS. Sure. Was there a breakthrough new technology involved? 

Secretary CHU. No. 

Mr. HARRIS. No, there was no breakthrough. And this was how 

big a loan guarantee? 

Secretary CHU. Well, it was going out in stages. 

Mr. HARRIS. Yeah, and what was the total? Wasn’t it over a billion dollars? 

Secretary CHU. Pardon? 

Mr. HARRIS. Was it over a billion dollars? 

Secretary CHU. No, it was not a billion. 

Mr. HARRIS. And how—so how much total? 

Secretary CHU. I think $750 million. 

Mr. HARRIS. Oh, I am sorry, only three-quarters of a billion. 

Okay. So what specific actions did you take with regards to this 

loan different from the actions you took on other loans? Because, 

again, this is not breakthrough technology. And you know, I have 

been a supporter of ARPA–E. I think that is where the Department 

ought to be concentrating. So when it—so when things happened 
48 

with Solyndra which, again, Solyndra is not breakthrough technology. Let’s be honest. You know, hydrofracturing is breakthrough 

technology. Solyndra really was just, you know, a little bit better 

than what we have had. So what it appears has happened is that 

your time, which is of basic science, I would think would be saying, 

look, let’s make some really innovative changes in energy. Instead, 

it appears to have been taken up to forward a deal where Solyndra 

is involved, where, you know, the objective person would look and 

say, you know, it looks kind of like what you are doing is you are, 

you know, saving Solyndra from an embarrassment to the Administration by in fact interjecting yourself into the Prologis negotiation 

at a different level than you have interjected yourself into any 

other one. And again that is what this person says. 

Secretary CHU. That is untrue. I—— 

Mr. HARRIS. Which part? 

Secretary CHU. Solyndra—the fact that Solyndra had a minor, 

minor role in that—in fact, I was quite the opposite. I wanted 

Prologis. It was an innovation in a business model, as you know, 

can really revolutionize things. My concern was that we thought 

that—I thought that this was a very, very good business model to 

put wholesale generation of electricity on warehouse rooftops. My 

concern actually was to not having anything to do with the future 

of Solyndra—it was completely different. In fact, I voiced concerns; 

shouldn’t we be looking for alternatives to Solyndra for the first little bit? And so it was quite the opposite from what might be portrayed. 

Mr. HARRIS. Did you attempt to stop the negotiation between 

Prologis and Solyndra? 

Secretary CHU. No. That was between two companies. But what 

I did raise is my concern that I wanted Prologis to go forward and 

was concerned if Solyndra could supply those things. But again the 

good news is that solar modules are essentially a commodity—and 

as the prices are going down—and the good news about this, again, 

is that the price of solar modules has dropped fourfold in the last 

three years. 

Mr. HARRIS. But Mr. Secretary, the cost is still far more because 

one of the statements—and Mr. Chairman, I will wrap it up—one 

of the statements in your testimony is that one goal is to bring 

down solar energy prices by the end of the decade to be the cheapest source of electricity. 

Secretary CHU. As cheap as any other source of energy. 

Mr. HARRIS. Correct. Now, Secretary Chu, at 2.50 a million BTU 

for natural gas, you really think that solar by the end of this decade, the point where you were unwilling to invest in natural gas, 

you still think that is the best investment we can do to keep our 

energy prices low in this country? You think you can achieve that 

at 2.50 a million cubic foot? And again since we are going to control 

it, it is not going to be at the vagaries of an international market 

to some extent. 

Secretary CHU. Well, if you look at projections made by, for example, the EIA or projections made by Bloomberg New Energy Finance, they are projecting the price of natural gas-generated electricity be something on the scale of 5.5, 6 cents a kilowatt hour. 
49 

Mr. HARRIS. Do you know what their projection is for natural gas 

last month? Their last projection from 2010 was where natural gas 

prices—— 

Secretary CHU. I know what the Bloomberg New Energy Finance’s projection for the cost of electricity from the generation of 

natural gas. That was first quarter 2012 and that is the one—the 

number—— 

Mr. HARRIS. I will let you in on it. A year and a half ago, they 

projected—this is how good we are at projecting prices. They 

thought it was going to be $5 a million cubic foot. It is $2.50. 

Secretary CHU. Right. 

Mr. HARRIS. The Administration, at many different levels, is just 

behind the curve on this. But I respect you and I thank you for 

being here and I just hope that you take the view that natural gas 

is important enough to invest in it. 

Thank you very much. 

And thank you. I am sorry I ran way over, Mr. Chairman, but 

thank you for your indulgence. 

Chairman HALL. Well, at least you waited a long time to do it. 

Thank you for good questions, and thank you for your answers. 

And I indicated in an opening statement that I was going to answer Ms. Johnson but I know when I am overmatched. I am going 

to put something in the record if she doesn’t object to it. It is the 

primary scenario and the analysis I am asking to put in the record 

was by Senator Bingaman. It was in the Senate and shows electricity prices would rise nationally by 21 percent in 2035 and regionally by as much as 69 percent. That is one person in one body’s 

idea on it. And without objection, I want to put this into the record. 

It is so ordered. 

[The information may be found in Appendix 2.] 

Chairman HALL. And I want to thank you very much. I don’t 

sound like I appreciate you near as much as I do, but you have answered our questions and we have agreed and disagreed. You said 

that the pipeline wasn’t cancelled but its head is down in the water 

and it’s down there bubbling and it is going to drown if—you give 

me hope that he is going to reconsider and I am—between the two 

of us here, I am going to make you a prediction if you don’t mind, 

and you can hold me to it. I think this President is going to listen 

to the American people and I hope he does. I think he is political 

enough to. I predict he is going to recapture this pipeline for us because it is the thing that he ought to do and the people are going 

to demand it. And I think he is going to do that. 

I also think where he knocked out ANWR—and that is 60 years 

of energy—quickly did that and it has been going down every since, 

really and truly that is a hard, cold fact. I predict that we are going 

to—he is going to open up some drilling because the people are 

going to demand it, and the President is very political. I think he 

is going to answer. I predict that he is going to. Now, I owe you 

a beer or a dinner or whatever if my predictions are wrong, but 

maybe you will owe me one if I am right, okay? 

Secretary CHU. I would be glad to share a beer with you. 

Chairman HALL. All right. I thank you, of course, for your very 

valuable testimony and Members for their questions. 
50 

And Members of the Committee might have additional questions 

for you, Mr. Secretary, and we will ask you to respond to those in 

writing. And the record will remain open for two weeks for additional comments from Members. 

I thank all of you for your patience. Thank you, Ms. Johnson, for 

your good work and your good questions. And once again, Mr. 

Chairman, thank you and God bless you. Thank you, sir. 

Secretary CHU. Thank you. 

Chairman HALL. We are adjourned. 

[Whereupon, at 12:04 p.m., the Committee was adjourned.] 
51 

ANSWERS TO POST-HEARING QUESTIONS
52 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. Steven Chu, 

U.S. Secretary of Energy 

Questions Submitted by Chairman Ralph M. Hall, 

Committee on Science, Space and Technology 
53 

u.s. HOUSE OF REPRESENTATIVES 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

Questions for the Record 

An Overview of tile Department of Energy Research and Development Budget 

For Fiscal Year 2013 

Thursday, March 1,2012 

9:30 a.m. to 12:00 p.m. 

2318 Rayburn House Office Building 
54 

QUESTION FROM REPRESENTATIVE HALL 

Q I. President Obama recently said we could replace "up to 17 percent of the oil we import for 

transportation" with algae. 

a. What is the approximate equivalent cost of a gallon of algae-based fuel right now, 

and how long does DOE believe it will take to be economically competitive with oil? 

A I a. In addition to cellulosic biomass materials, algae can be a sustainable feedstock to replace 

petroleum-based fuels like diesel and jet fuels. DOE is currently sponsoring research and 

development (R&D) at labs and universities and is building first-of-a-kind pilot facilities 

with Sapphire and Algenol to validate feasibility. However. current costs need to be 

reduced by 3 to 5 times to be economically competitive. Economic competitiveness 

depends on both technology readiness (including how well the scale and continuous 

operations risks are addressed) and the cost of capital to construct and operate based on a 

reasonable rate of return on investment. Because there is no industry consensus on many 

of these factors, the projected costs of algal biofuels can vary dramatically. 

Many factors go into cost per gallon of algal biofuels analyses, including but not limited 

to: 

(1) The type offacility envisioned (i.e. open reactors versus closed 

photobioreactors versus heterotrophic reactors; briny water versus 

freshwater; evaporative harvesting versus dissolved air flotation 

harvesting; dry extraction versus weI extraction; trans-esterification versus 

hydro treating conversion); 

(2) The envisioned scale of the algae production and conversion facility; 

2 
55 

(3) The annual areal productivity of the cultivated algae; 

(4) The appropriate values of any co-products (i.e. fish/shrimp meal) or coservices (i.e. CO2 credit, wastewater remediation) generated alongside 

algal biofuels as additional revenue streams; and 

(5) The type of desired fuel end product, such as hydrotreated renewable jet 

(HRJ) fuel or biodiesel. 

Just as the cost projections vary, the estimates of the time to commercial readiness vary 

depending on the type of algae process. For a heterotrophic algae process that is based on 

well-characterized continuous fermentations, the time line to being economically 

competitive against oil on a technology readiness basis is expected to be shorter than an 

open pond or closed photoreactor based process. Individually, each of these producers 

may find niche opportunities that allow them to offer fuels on a cost-competitiveness 

basis due to certain co-products or co-services credits. DOE believes it will take more 

than 10 years for algal biofuels to be economically competitive with oil at the 1-5 billion 

gallon scale envisioned by the Energy Independence and Security Act (EISA) of2007 

Renewable Fuel Standard. 

b. Please provide a description, including activities and funding, for DOE-supported 

research on algae-based fuel over the last forty years. 

Alb. DOE-supported applied research on algal biofuels began in the 1970's with the Office of 

Fuels Development's Aquatic Species Program (ASP), which focused on the production 

of biodiesel from lipid-producing microalgae. The research thrusts during the ASP 

included studies on applied biology, algae production systems innovations, and resource 

3 
56 

il\aiiahililic's .lI1al:se,;, JilL result, ['rOIll Ih" I X Y"<lr, or the ,\SI' arc' slI!1l111ari/,Ld in thc' 

:::lJ-l-pag" \RI-:!, Report ( I 1'-5XIl-:;'; IlJ[l), tilkd "'\ Luok Hack at th" l S :kpanmelll 01' 

Encrgy's i\LJuatic Specics Program: Biodics<:i li'ul11 ,,\I:cac''', , 

DOF's Biol11.1s, Program r,I1\:\\<;d il;-; RD&D c1h'rlS (ll! algal hioruds III 2UOS hy 

cl,rm:ning kadlllg n:scan:hcrs and wllll11crcial ,ntities at the l\millilal .-\Igal Biofllds 

Tcc!mo],,!'\ Rnadmap \\ orksl1l11" Thl' \\"{111sl10p iJighli[!hted anal\'sis g'II" alld 

lcdlllolog\ dCI"dopmel11 (lPPorllll1itics that m;n: the subjects or a c(l!11pctiti\'e solicitation 

on an R&D C{lllsorti1l111 rckased ill FY:::O(lt) \\"ilh S-lli million dollar,; ol'DOE in\"(;stmcnt 

from the American Rcilm;,;llm:nl ami l~ccIl\ ny ACL The a\\ardcl;. the "Itional ,,\lliancc 

for AlilalKcd Biofllel;; and l1ioprlltiucls ('\ ,\ABfl 1 algal' colls(lniulll. is led by the 

Don:ild )),lllfnrlh Planl Science, In:;lillllc and (n!lsi,ts "r llllrllidiscipJirur\ researchers 

!"rnm '37 difli:n:nt t',S, inslillltil'lls \\ Itn an: {(lCllsing on alg.tI bioJog" cuiti\"aliol1. 

hancstill!,!. extractioll. cOlm:rsillll and end-usc. 

The [{CCO\',,':- :\ct also allc)\\ed the llinm:lSs Program to im cst in three algae pilot a:1U 

uelllon,;tr.ItiOlHcak irnegratcd hiordincri..:,;- Sapphire I',lk'r"y Inc" ,\Igcnol LI.C. and 

Soiaz,me Inc .. at 1)( W funding ,hare' ,,1' ~,~(J million, s:~ millioll. and S:::::: million. 

rcspcc:ti\cly, Sapphire !(xlises un un l'pen p<1I1d based appr"adl tll culti\'atc algae. \\hik 

:\lgcnol i~ pursuing a cin.'-C'd plh1lobiorcacior. Both cOlllpanjl..'s U~C photo;.:ynthl..'tlc alga~. 

as opposed 10 So1<1/ym<:. which is pllrsl!in~ ;r h<:lcnllfopilic krnlCnlati,lJl approach, 

4 
57 

From FY20 J 0 through FY20 I J, the DOE Biomass Program supported additional R&D 

projects, of which 31 were reviewed at the Algae Platfonn Peer Review. For these 

projects, the requested infonnation is summarized below in Table J. 

During this time, a number of other DOE projects on algae were funded from the DOE 

Office of Fossil Energy, DOE ARPA-E, and DOE Office of Science, including beneficial 

C02 reuse in oil producing algae, genetic pathways identification for algae hydrocarbon 

production, and dewatering technologies. 

Table 1. Summary of DOE Biomass Program Active Algae Projects from FY2010 to FY2011 

PrOject Title 

Presenter Periormmg Project Type ApprOXimate 

OrgamzatlOn DOE Share 

NMBB An Algal Biofuels Los Alamos $49M 

Jose Olivares National Consortium Consortium Laboratory 

Algal Biofuels via Innovative $1.5M 

Harvesting and Aquaculture Jeff Kanel Renewable Algal Feedstock 

Systems Energy Logistics 

Large-Scale Production of Fuels S9M 

and Feed from Marine Microalgae Jeff Obbard Celiana Consortium 

Sustainable Algal Biofuels Arizona State $6M 

Consortium John McGowen University Consortium 

Consortium for Algal Biofuels S9M 

Commercialization Paul Falkowski CABCornrn Consortium 

Research for Developing University of Congressionally Sl.9M 

Renewable Biofuels from Algae George Oyler Nebraska Lincoln D~ected Funding 

Algal Biofuel Pathway Baseline Analysis & less than $1M 

Costs Andy Aden NREL Sustainability 

Algae Life Cycle Assessment with Ed Frank Argonne National Analysis & Less than $1M 

GREET Lab Sustainability 

Development of Renewable Less than $1 M 

Biofuels Technology by University of Feedstock Mark Hildebrand California - San Transcriptornic Analysis and Diego Production 

Metabolic Engineering of Diatoms 

5 
58 

Improving cost effectiveness of less than SlM 

algae-lipid production through K.C.Das University of Feedstock 

advances in nutrient delivery and Georgia Production 

processing systems 

Production of higher alcohols liquid Less than 51 M 

biofuel via acidogenic digestion Peter van Walsum University of Conversion and chemical upgrading of Maine 

industrial biomass streams. 

Extremophilic Microalgae: Less than $1 M 

Advanced Lipid and Biomass Brent Peyton Montana State Feedstock 

Production for Biofuels and University Production 

Bioproducts 

Pacific Northwest AnalYSis & Less than 51M 

Macroalgae GIS AnalysiS Gun Roesijadi National 

Laboratory 5ustainabiJity 

Microalgae Analysis Mai1< Wigmosta PNNL AnalysiS & Less than $1 M 

Sustainabimy 

Algae-Based Biofuels Integrated Less than S 1 M 

Assessment Framewoi1<: Deborah Newby INL Analysis & 

Development, Evaluation, and Sustainabillty 

Demonstration 

Collaborative: Algae-based Richard Skaggs PNNL Analysis & Less than S1M 

Integrated Assessment Framework Sustainability 

National Analysis & Less than 51M 

US-Israel Algal Biofuels (NREL) Robert Baldwin Renewable 

Energy Lab Sustainability 

Pond to Wheels Algae Biodiesel Howard Passell Sandia National Analysis & Less than SlM 

Ufe Cycle Assessment Labs Sustainability 

New technology: Improving Brookhaven 

Less than SlM 

Microalgal Oil Production Based Feedstock 

on Quantitative AnalYSis of Jorg Schwender National Production 

Metabolism Laboratory 

Microalgae HarvestinglDewatering Deborah Newby INL Feedstock Less than $lM 

and Drying LogistiCS 

Efficient use of algal biomass National Less than 51 M 

residues for biopower production Eric Jarvis Renewable Feedstock 

with nutrient recycle Energy Production 

Laboratory 

Pond Crash Forensics Todd Lane Sandia National Feedstock Less than SlM 

Laboratories Production 

Human Health Risk Assessment of Less than $lM 

Algal Production Systems: Toxins 

and Toxic Components, Harmful Chris Yeager SRNL Analysis & 

VOCs,Metal Sustain ability 

SpeciationlBioconcentration, and 

Pathogenic Microorganisms 

6 
59 

Associated with Large-Scale Algae 

Cultivation Systems 

Human Health Risk Assessment of Less than $lM 

Algal Production Systems: Toxins 

and Toxic Components, Harmful Los Alamos VOCs, Metal Enid (Jeri) National Analysis & 

SpeciationlBioconcentration, and Sullivan Laboratory Sustainability 

Pathogenic Microorganisms 

Associated with Large·Scale Algae 

Cultivation·LANL WBS#9.S.1.7 

Algal·Based Renewable Energy Desert Research Congressionally $1.5M 

for Nevada Christian Fritsen Institute Directed Funding 

Development of Pollution Congressionally Less than $1 M 

Prevention Technologies Juergen Polle Brooklyn College Directed Funding 

explOiting aquatic flowering plants $2.8M 

(duckweed) as a source of Rob Martienssen Cold Spring Congressionally 

bioenergy Harbor Laboratory Directed Funding 

Developing new altemative energy Old Dominion Congressionally less than $1M 

in Virginia: BIa-diesel algae Patrick Hatcher University Directed Funding 

US·Canada Algal Biofuels Feedstock Less than $1 M 

Partnership Philip Pienkos NREL Production 

Modeling and Visualizing Atgae Less than $ 1 M 

Siotuel ProduCtion Potential in Howard Passell Sandia Nationat Analysis & 

Canada labs Sustainability 

Canada Algal Coliabcration·PNNL Jon Magnuson PNNl Conversion less than S1M 

Interface 

c. Please also describe the focus and objectives associated with the $14 million in algae 

R&D ftmding proposed by the President in February. 

A I c. DOE issued a competitive funding opportunity announcement, titled "Advancements in 

Sustainable Algal Production'· (ASAP) to accelerate efforts to increase the scalability of 

algae production, Awards made as a result of this Funding Opportunity Announcement 

(FOA) will support achieving the Biomass Program's mission to transfonn the nation's 

renewable biomass into sustainable and cost-competitive biofuels. Projects will be funded 

with up to $14 million ofFY2012 appropriations. Upon successful completion ofgo/nogo evaluations and contingent upon both the availability of funds and the continued 

7 
60 

alignment of project scope to DOE priorities, select projects may receive additional funds 

to continue past the initial performance periods. 

The ASAP FOA outlines two Topic Areas: (1) Innovative technologies to reduce water 

and nutrients, and (2) Regional Algal Feedstock Testbed (RAFT) Partnerships. The 

RAFT Partnerships are to carry out the following functions: (l) develop user facilities 

that serve as engines for algal technology innovation and validation, and (2) create 

regional, long-term cultivation data necessary to understand and validate algae biomass 

production. 

In addition to the $14 million to fund competitively selected projects from the ASAP 

FOA, the FY2012 budget includes an additional $15.3 million for algae research, 

development and demonstration activities. These funds support additional algae 

technology development and analytical efforts being conducted by the DOE National 

Laboratories, an innovative algal harvesting technology being pursued by a small 

business based in Kingston, Tennessee that was originally selected under the DOE 

SBIRlSTTR Phase III Xcelerator initiative, a project anticipated to be selected from an 

R&D solicitation for innovations in Photosynthetic Biorefineries that leverages NSF 

funding, and a project anticipated to be selected under the recent Bio-Oil Stabilization 

and Commoditization Funding Opportunity Announcement (FOA) aimed at improving 

the infrastructure compatibility of algal bio-oils with existing refineries. 

In FY 2013, the Biomass Program requested appropriations to support the issuance of a 

new FOA aimed to improve algal strain robustness and productivity, as well as to 

improve algal harvesting/dewatering efficiency. These R&D objectives were identified as 

8 
61 

barriers in the National Algal Biofuels Technology Roadmap document. The need for 

continued innovations in these particular areas is confirmed by research reports, as well 

as initial resource, techno-economic, and Iifecyc1e findings. 

9 
62 

QUESTION FROM REPRESENT A TIVE HALL 

Q2. In response to a question regarding DOE's issuance ofa loan guarantee to Prologis, you 

were asked if there was a "breakthrough new technology involved" to which you 

responded "no." You later stated you "thought it was a very, very good business model 

to put wholesale generation of electricity on warehouse rooftops" and Prologis was an 

"innovation in a business mode!." 

Please describe in detail why the private sector would not back the "very, very good 

business model" such as that proposed by Prologis, and why taxpayer dollars should be 

risked deploying established and widely available technologies. 

A2. Project Amp is mostly supported by private sector financing unguaranteed by DOE. 55 

percent of all of the projecrs costs will be borne by private equity and 20 percent of the 

debt will be unguaranteed. Therefore, approximately 2/3rds of the project's costs will be 

provided by the private sector. 

The DOE loan guarantee was awarded to Project Amp under authority provided by Sec. 

406 of the American Recovery and Reinvestment Act of2009 which amended Title XVI! 

of the Energy Policy Act of2005. The amendment, Sec. 1705, established a temporary 

program for the rapid deployment of renewable energy and electric power transmission 

projects, notwithstanding Sec. 1703. While the Sec. 1705 portfolio of loans supports a 

mixture ofinnovate and commercial technologies, the program has facilitated the rapid 

deployment of renewable energy and electric transmission projects consistent with 

statute. 

Project Amp's financing structure requires each of its phases to meet stringent credit 

requirements. It also continuously enhances the credit of the project through the crosscollateralization of all of the installations selling power to investment grade utilities. The 

10 
63 

successful example of Project Amp will serve as a springboard for future utility-scale 

distributed solar development. 

11 
64 

QUESTION FROM REPRESENTATIVE HALL 

Q3. The first recommendation from the Blue Ribbon Commission on America's Nuclear 

Future was to pursue a "consent-based siting process." On March 6,2012, the Nye 

County, NV Board of County Commissioners-the local government authority where 

Yucca Mountain is located-sent you a letter requesting consideration to host a 

permanent repository for high-level radiological waste. Further, a recent poll suggested 

62 percent of Nevadans would support the use of Yucca Mountain for research purposes. 

Given the consent of the local stakeholders, will you commit to working with the Nye 

County Board of Commissioners to open Yucca Mountain, as a part of a consent-based 

process? Does DOE consider Yucca Mountain a potential interim storage site option? If 

not, why not? 

A3. The Administration is giving full consideration to the BRC recommendations as we work 

to define a path forward. The Administration will be providing additional information 

later this year, and will work with Congress to implement a new strategy to manage our 

nation's used nuclear fuel and nuclear waste. 

12 
65 

QUESTION FROM REPRESENTATIVE HALL 

Q4. Your testimony stated that the President's budget eliminates $4 billion in "inefficient and 

unnecessary" subsidies to the oil and gas industry. 

a. How much of the $4 billion you reference is estimated to come from the "Section 

199" provision that allows deductions for domestic manufacturing? Please also 

describe and quantify the tax provisions that comprise the remainder. 

A4a. Eliminating the manufacturing tax deduction for oil/gas for FY 2013 would account for 

$574 million of$4.753 billion in tax savings identified in the President's Budget. 

For FY 2013 all the oiVgas tax changes (and their revenue impacts) are: 

I. Repeal Enhanced Oil Recovery Credit (0) 

2. Repeal Credit for Oil and Gas Produced from Marginal Wells (0) 

3. Repeal Expensing of Intangible Drilling Costs ($3,490) 

4. Repeal Deduction for Tertiary Injectants ($7) 

5. Repeal Exception to Passive Loss Limitations for Working Interests in Oil and 

Natural Gas Properties ($9) 

6. Repeal Percentage Depletion for Oil and Natural Gas Wells ($612) 

7. Repeal Domestic Manufacturing Tax Deduction for Oil and Natural Gas Companies 

($574) 

8. Increase Geological and Geophysical Amortization Period for Independent 

Producers to Seven Y ears. ~ 

TOTAL FOR 2013 ($ million) ($4,753) 

b. Is the oil and gas industry uniquely eligible for the Section 199 deduction, or are other 

sectors of the economy eligible as well? If the latter, approximately what percentage 

of the overall cost of the deduction is claimed by the oil and gas industry, versus all 

other sectors of the economy? 

A4b. The deduction applies to all qualifying manufacturing industries. Eliminating this 

deduction for oil and gas companies would increase tax revenues by $574 million for that 

year. 

13 
66 

c. If all companies that undertake domestic manufacturing are eligible for this 

deduction, does the Administration support eliminating the deductions to all 

companies, or just those involved in oil and gas? 

A4c. The proposed elimination of the domestic deduction for manufacturing activities applies 

only to fossil fuel industries. It would remain intact for all other qualifying industries. 

14 
67 

QUESTION FROM REPRESENTATIVE HALL 

QS. The Keystone XL Pipeline would deliver an estimated 830,000 barrels of oil per 

day to U.S. refineries, greatly alleviating pressures that contribute to current high 

gas prices. Unfortunately the President rejected the pipeline in January, citing 

environmental concerns. Specifically, the President's statement rejecting 

construction ofthe pipeline said that "Congressional Republicans prevented a full 

assessment of the pipeline's impact, especially the health and safety of the 

American people, as well as our environment." This objection appears to be 

centered on the technical question of whether the pipeline can be built safely. 

To this end, please describe DOE's involvement in sharing input and advice 

related to the President's decision to reject construction of the Keystone XL 

Pipeline. Please also provide your current assessment of the pipeline's impact on 

the health and safety of the American people, as well as the environment. Are 

there any potential environmental or technical issues associated with the pipeline 

that cannot be addressed? 

AS. DOE provided information to the State Department concerning the potential 

impact of the Keystone XL pipeline proposal on U.S. oil imports from Canada 

and other countries, use of Canadian oil within each of the five Petroleum 

Administration for Defense Districts (PADDs) and world-wide greenhouse gas 

emissions. DOE's input is referenced in the draft and final Environmental Impact 

Statement (EIS). DOE did not assess the potential environmental or technical 

issues associated with the pipeline and does not have any analytical judgments on 

those matters, which are properly the purview of an EIS and within the purview of 

the State Department. 

15 
68 

QUESTION FROM REPRESENTATIVE HALL 

Q6. In his State of the Union address, President Obama said "This country needs an all-out, allof-the-above strategy that develops every available source of American energy." 

Three days later, the Administration announced it was blocking the development of oil 

shale on over a million acres of Federal lands. The land had been opened for development 

by the Bush Administration and is estimated to contain more oil than Saudi Arabia's 

proven reserves, but was declared off-limits by the Obama Administration. 

Please explain why oil shale is not part of the Administration's "all-of-the-above" strategy, 

and how the strategy can be reasonably described as "all-of-the-above" when such 

immense resources are excluded? 

A6. Oil shale holds the potential to be a significant component of our Nation's energy portfolio, 

but a number of economic, technical, and environmental questions need to be addressed 

before commercial-scale development takes place on Federal lands. The Department of the 

Interior has issued a series of leases for oil shale research, development, and demonstration 

projects on Federal lands. As these projects progress, we hope to better understand the 

feasibility and impacts of large-scale oil shale development. This information will be used 

to inform decisions about future commercial leasing. 

16 
69 

QUESTION FROM REPRESENTATIVE HALL 

Q7. President Obama recently gave a speech on gas prices in which he said "I have directed 

my administration to look for every single area where we can make an impact and heIp 

consumers in the months ahead." Please reconcile this statement with the Administration's 

proposal to eliminate $50 million in R&D funding aimed at expanding safe production of 

oil and gas. This program (known as the Ultra-Deepwater and Unconventional Natural Gas 

and Other Petroleum Resources), supports development of next-generation technologies 

important to ensuring domestic production of oil and gas is maintained and even increased. 

The program was highlighted by the Secretary of Energy Advisory Board (SEAB) as an 

effective program that should be enhanced and supported. 

If the President truly wants to support "every single area" that could lead to lower gas 

prices and increased energy production, why is he proposing to eliminate this R&D 

program? 

A7. Mandatory R&D funding from EPAct Sec. 999 is too inflexible a mechanism to adequately 

address environmental and safety concerns in the dynamic and rapidly evolving hydraulic 

fracturing space. The Administration has sought to refocus this funding to support research 

with significant potential public benefits, including activities consistent with high priority 

Secretary of Energy Advisory Board recommendations. 

17 
70 

QUESTION FROM REPRESENTATIVE HALL 

Q8. After a year of investigation, details surrounding the Solyndra loan guarantee are still 

coming to light. Publicly released documents show you personally intervened to advance a 

loan guarantee to Prologis Last June, as Solyndra's extreme financial difficulties were 

becoming apparent. Prologis' loan guarantee provided an avenue to advance its "Project 

Amp" which coincidentally purchased solar panels from Solyndra. 

In an email between a Solyndra employee and its financiers, the Solyndra employee stated 

"on three occasions this week he thought that the [Project Amp] deal was dead, but 

Secretary Chu personally pulled it off. Chu shared with the team that this deal went to 

higher levels in the Obama Administration to gain approval than any other transaction in the 

Loan Guarantee Program and that he personally committed to seeing it through to a 

successful conclusion." 

8a What specific actions did you take regarding this loan guarantee that you did not for others, 

and why did you give special treatment to the Prologis Project Amp proposal? 

A8a. Secretary Chu's decision to support Project Amp was not related to Solyndra or any other 

solar panel manufacturers that may eventually supply this project. The reason for Secretary 

Chu's interest in Project Amp should be clear: it is the largest rooftop solar undertaking in 

U.S. history; it is expected to generate enough renewable electricity to power over 88,000 

homes; it will support over one thousand jobs across the country; and it has the potential to 

revolutionize the way rooftop solar is deployed in the United States. Congress directed the 

Department to support just such projects under the Recovery Act's Sec. 1705 loan program. 

DOE has not been alone in its support of Project Amp. Through the use of DOE's Financial 

Institution Partnership Program (FIPP), Project Amp was able to attract private sector 

support from Bank of America Merrill Lynch. NRG Energy, one of the Nation's largest and 

most respected electric power companies, has committed to fund (with Prologis) the equity 

required during the first 18 months of the project. 

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71 

While Solyndra was an early partner with Prologis and was a potential panel supplier for a 

small initial phase of Project Amp, DOE was not involved in Prologis' decision to purchase 

panels from Solyndra. Moreover, this arrangement ultimately was intended to represent only 

approximately 15MW of the 733 MW of Project Amp and was contemplated long before 

the Project Amp application was submitted to DOE. Similarly, the Department's interest in 

Project Amp was not in any way diminished when Solyndra filed for bankruptcy and 

Prologis decided not to use Solyndra panels for the first phase of the project. Once Prologis 

notified DOE of its proposed change, the Department lent Prologis its full support, bringing 

the new information to DOE's Credit Review Board expeditiously, and the Board confirmed 

its recommendation to support the Project. 

Secretary Chu did participate in high-level policy discussions around the Amp transaction 

regarding the transaction's consistency with the Recovery Act's policy objectives. While the 

proposed transaction included a five-year draw period, the transaction that closed has a fouryear draw period, aligning the transaction more closely the Recovery Act's objectives. This 

change was the result of interagency policy discussions at the principal level. 

8b. Please describe the differences associated with the level of involvement of senior DOE and 

White House political officials in the Prologis loan process, and explain why this deal 

involved officials at higher levels in the Obama Administration that any other in the Loan 

Guarantee Program. 

A8b. The role of senior DOE officials in the Project Amp transaction was consistent with that of 

the other transactions completed under the Sec. 1705 program. While not evcry transaction 

required senior-level attention to policy matters, those that did were given the appropriate 

19 
72 

attention. As previously mentioned, Project Amp was one of the projects that required 

senior-level attention to policy maners, given the proposed tenor of the loan's draw period. 

20 
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QUESTION FROM REPRESENT A TIVE HALL 

The budget repeatedly highlights President Obama's commitment (0 doubling the budget of key 

basic research programs at the Office of Science along with that ofNIST and NSF. However, the 

budget request for the Office of Science is proposed to increase by only 2.4 percent. At that rate, 

it would take almost 30 years to double the budget, and that doesn't even account for inflation 

that would occur during that time. Meanwhile, DOE's green energy programs, such as EERE 

and ARPA-E, are proposed to increase by 29 percent and 27 percent, respectively. 

Q9a. Why is funding for the Office of Science such a low priority relative to other DOE R&D 

programs? 

A9a. The $4.99 billion dollar FY 2013 request for the Office of Science represents a strong 

commitment by the Administration to maintain our Nation's investments in basic 

scientific research as part of the ongoing commitment to doubling the combined budget 

for these three agencies. The FY20 13 requests for the Office of Science, EERE, and 

ARPA-E reflect the Administration'sjudgment that there is exceptional potential for 

near-term breakthroughs in clean energy technologies, and the Budget balances these 

priorities in a manner that is consistent with the Budget Control Act of 20 11. 

Q9b. In testimony before this Committee in 2006 you said U[i]n funding ARPA-E, it is critical 

that its funding not jeopardize the basic research supported by [DOE's] Office of Science. 

The [National Academy of Sciences] recommendations are prioritized and its top 

recommendation in the area of research is to increase the funding for basic research by 

10 percent per year over the next seven years." 

Do you still agree with the NAS panel recommendation that the Office of Science should 

be the top research priority within DOE, and that ARP A-E funding should not jeopardize 

Office of Science funding? Ifso, how do you explain the lack of balance in the 

President's request? 

A9b. Since FY 2006, budget requests and appropriations have led to significant growth for the 

Office of Science from $3.6 billion to $5.0 billion (a 39 percent increase), which 

demonstrates the priority placed on basic research across two Administrations and several 

Congresses. These sorts of sustained investments in basic research are essential to the 

Nation's long term prosperity. The Department places a strong emphasis on coordination 

21 
74 

of its basic and applied research programs to ensure that new breakthroughs in basic 

science drive new technologies and that scientific research is informed by the barriers 

encountered by technology developers. The Department's FY 2013 budget as a whole 

constitutes a strong commitment to DOE"s research programs; it balances opportunities 

in basic and applied research. ARPA-E's $350 million budget is 7 percent of the Office 

of Science budget. and I do not feel ARPA-E is jeopardizing our basic research funding. 

22 
75 

QUESTION FROM REPRESENTATIVE HALL 

QIO. The FYI3 budget request proposes $45 million in new spending for an interagency effort 

(with EPA and USGS) to study the impacts of hydraulic fracturing. The budget provides 

very little description of what this funding is intended to be used for. 

a. Please provide a detailed description of what specific issues DOE intends to examine with 

the requested funding. Please also describe DOE's plans regarding transparency, peerreview, and stakeholder input associated with the proposed hydraulic fracturing research. 

AIOa. On April 13. 2012 DOE, the Environmental Protection Agency, and the Department of the 

Interior's U.S. Geological Survey signed a Memorandum of Agreement formalizing a 

multi-agency collaboration on unconventional oil and gas research. Through this 

collaboration, a robust Federal F&D plan is being developed, taking into account the 

recommendations of the Secretary of Energy's Advisory Board (SEAB) Natural Gas 

Subcommittee. DOE's role in this initiative will focus on priorities identified by the 

interagency collaboration in a research plan to be formed over the next nine months 

within its area of core research competencies, including wellbore integrity. flow and 

control; green technologies; and systems engineering, imaging and materials. 

b. Please detail, by activity description and funding level, activities in the 

President's DOE budget request aimed at expanding supply and production of 

natural gas. 

A lOb. The President's DOE budget request includes $17 million for Natural Gas Research. This 

research is aimed at ensuring the safe and environmentally sustainable production of 

natural gas from shale formations ($12 million) and conducting work on gas hydrates ($5 

million). 

23 
76 

QUESTION FROM REPRESENTATIVE HALL 

QI). As Secretary of Energy, do you support construction of new coal-fired power plants in the 

absence of significant carbon controls? 

A II. The decision to propose new coal-fired power plants is best made by utility companies in 

response to market conditions that make it favorable to do so. The approval of a project 

with or without carbon controls is the decision of the regulatory and permitting authorities, 

and others in the States that have jurisdiction over such projects. 

24 
77 

QUESTION FROM REPRESENTATIVE HALL 

Q12. DOE's coal research activities are almost exclusively focused on developing carbon 

capture and sequestration technology, the goal of which is to limit the increase in the cost 

of electricity to 35% above traditional pulverized coal plants. How much specific nonees R&D is proposed in the Administration's FY 2013 coal R&D budget? 

a. What is DOE doing to lower the cost of coal-fired electricity? 

A12a. The cost of coal-fired electricity is ultimately a function of significant market factors. The 

focus of the Department's coal R&D is on integration of CCUS technologies with different 

types of power plant configurations (pulverized coal, IGCC, oxy-fuel combustion). 

However, the Department does conduct research and development (R&D) on advanced 

clean coal technologies that will bring costs down over time. The Department also 

conducts demonstration projects that allow first-of-a-kind clean coal technologies to be 

utilized on a commercial scale. These activities have been shown to reduce costs over the 

long run, and allow for more efficient, cleaner, and more affordable technologies to be used 

in the marketplace. 

b. Does DOE's Office of Fossil Energy FY 13 budget request include any coal R&D 

that will help utilities comply with recent and forthcoming EPA regulations? 

A12b. The Office of Fossil Energy (FE) is conducting research on advanced technologies for 

new plants that will help meet all environmental regulations. However, many of these 

technologies are specific to gasification-based and oxy-combustion processes and are not 

applicable to existing coal-fired power plants. 

There is no specific funding in the budget related to R&D that will help existing plants 

comply with recent regulations. The recent EPA regulations, including the Mercury and 

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78 

Air Toxics Rule (MATS), and the Cross-State Air Pollution Rule (CSAPR), have been 

designed to include compliance options that arc commercially available technologies. 

Many of these technologies, including Flue Gas Desulphurizalion, and more recently, 

Activated Carbon Injection, were funded in the past by FE and developed with 

communication between EPA and DOE. Forthcoming regulations, focused on cooling 

water intake structures and coal ash, are also being developed with compliance methods 

that include commercially available technology. The development and implementation of 

EPA rules has always been subject to the availability of appropriate technology solutions, 

and DOE will continue to support this methodology. 

26 
79 

QUESTION FROM REPRESENTATIVE HALL 

QI3. RWI, a leading scientific and policy research center in Germany, conducted a study of the 

German push for renewable energy, analyzing the costs and effect onjob creation. The 

report concludes: 

"Although Germany's promotion of renewable energies is commonly 

portrayed in the media as setting a 'shining example in providing a harvest 

for the world,' we would instead regard the country's experience as a 

cautionary tale of massively expensive environmental and energy policy 

that is devoid of all economic and environmental benefits." 

The report further warns that poiicymakers, including in the US, should scrutinize 

Germany's experience. Your testimony stated America is "at risk offalling behind again 

[in clean energy investments] unless we make a sustained federal commitment to 

supporting our domestic clean energy economy." 

a. [s the biggest risk really that we might ;'fall behind," or is a greater risk that we 

fail to learn from the mistakes of countries like Germany regarding renewable 

energy subsidies, especially with national debt approaching $16 trillion? 

A\3a. \"hile implementation of Germany's feed-in tariff program has resulted in a slight 

increase in electricity prices, it has also led to a decrease in the cost of solar photovoltaic 

installations, while supporting domestic jobs and increased domestic energy production. 

The economic stakes are high, and the U.S. may risk falling behind our global 

competitors who are seizing the economic opportunity by investing more heavily and 

establishing market policies that convey a strategic advantage. One recent energy 

investment analysis report estimates that the annual global clean energy market is worth 

$260 billion, up 32% from 2009, and that it is expected to grow significantly. 

b. Has DOE conducted any sort of analysis or scrutiny of the German program or 

others in Europe? Ifnol, why not? Ifso, please provide summarize the findings 

and lessons learned. 

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80 

A 13b. DOE closely tracks the efforts of other countries related to the research, development, 

and deployment of energy technologies, for possible domestic application. While the 

German experience with subsidies for solar photovoltaic (PV) technologies offers lessons 

ofinterest to U.S policymakers, it is important to nole that u.s. federal mechanisms for 

renewable energy deployment do not make use of the feed-in tariff (FIT) model that 

underlies German support for renewable energy deployment. As such, the German 

experience is not directly comparable to U.S. efforts to promote renewable energy. 

Additionally, Germany is a high-latitude country with a sub-optimal solar resource. 

Despite this constraint, Germany's subsidy program has resulted in higher market 

penetration and a lower installed cost of solar PV, independent of subsidies2

, than in the 

U.S., which has a significantly more favorable resource base. Though German financial 

support for renewables has resulted in modest increases in electricity prices, it has also 

resulted in increased domestic jobs in the manufacturing, installation, and maintenance 

sectors. 

'''Tracking the Sun IV; An Historical Summary of the Installed Cost ofPhotovoltaics in the United States from 

1998 to 2010," Lawrence Berkeley National Laboratory, September 2011. 

28 
81 

QUESTION FROM REPRESENTATIVE HALL 

Q14. The Manhattan Institute recently released a new study titled: "'The High Cost of 

Renewable Electricity Mandates. " The study analyzed electricity rates in states with 

mandates as well as states without mandates. It found "a pattern of starkly higher rates in 

most states with RPS mandates compared with those without mandates. The gap is 

particularly striking in coal-dependent states-seven such states with RPS mandates saw 

their rates soar by an average of 54.2 percent between 2001 and 2010, more than twice 

the average increase experienced by seven other coal-dependent states without 

mandates." 

The study goes on to say that "Put another way, the higher cost of electricity is essentially 

a de facto carbon-reduction tax, one that is putting a strain on a struggling economy and 

is falling most heavily, in the way that regressive taxes do, on the least well-off among 

residential users." 

Still, the Administration is intent on forcing a very similar mandate at a national level. 

Do you agree with the basic findings of this study -namely that electricity rates will go 

up if Americans arc forced to buy electricity from more expensive sources? If not, why 

not? 

A14. The President has not set an energy policy focused on a federal Renewable Portfolio 

Standard (RPS). Instead, the President has proposed a Clean Energy Standard (CES) to 

keep our energy supply clean, affordable, and secure. A CES is a flexible, market-based 

approach with annual targets for electricity from diverse, domestic sources, including 

renewable energy as well as nuclear power, efficient natural gas, and clean coal. The 

policy would enable businesses and entrepreneurs to detennine the best way to achieve 

the targets, ensuring that clean energy is produced wherever it makes the most economic 

sensc. By establishing a market for domestic clean energy technologies, this policy 

would move billions of dollars of capital off of the sidelines and into investments that 

drive innovation and create jobs. The Administration is confident that a well-designed 

CES would promote innovation and investment in the clean energy economy while 

ensuring that all consumers throughout the country, regardless of income, continue to 

enjoy access to affordable, reliable electricity. 

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With respect to a renewable portfolio standard, the Energy Information Administration 

(EIA) has, over the past few years, analyzed several legislative proposals for such 

policies. Through these analyses, EIA has found that numerous policy details can 

significantly influence the impact of the policy on key indicators such as the price of 

electricity, generation mix, cost to consumers, cost to industry, and even achievement of 

the targeted generation share. These key parameters include the existence and level of 

any limits on the price of renewable energy credits; exemptions for certain classes of 

utilities or exclusion of certain generation ITom requirements of the program; the ability 

to "bank" early compliance credits; and the existence of "credit multipliers," "set-aside" 

targets, and tiered compliance systems that incentivize specific technologies within the 

suite of eligible technologies. Because of the importance of policy design, it is impossible 

to characterize the impacts of a federal RPS policy in the abstract. 

The cited Manhattan Institute study shows results that are significantly at odds with prior 

studies on price impacts of State RPS policies. This study suffers from numerous 

methodological weaknesses, including but not limited to a failure to properly account for 

factors other than RPS policy that may affect differences in electricity prices among 

States and over time. In addition, it appears to attribute to RPS policy changes in price 

that occurred in certain states prior to the existence of any RPS policy and/or any 

significant RPS targets; failing to identify any plausible mechanism by which an RPS 

policy could affect prices prior to its introduction into law or prior to any significant 

generation requirements above baseline renewable generation levels. 

30 
83 

QUESTION FROM REPRESENTATIVE HALL 

Q15. Has the Obama Administration considered the negative consequences the President's antienergy policies would have on independent petroleum producing small businesses? 

a. Has the Department of Energy examined how much additional tax burden would be 

shouldered by those independent producers under the President's proposals to 

eliminate tax deductions? Ifnot, will you conduct such an analysis? 

A 15a. The Administration believes that to foster the clean energy economy of the future and 

reduce the Nation's reliance on fossil fuels that contribute to climate change, it is 

appropriate to repeal tax provisions that preferentially benefit fossil fuel production. Oil 

and gas subsidies are costly to the American taxpayer and do little to reduce energy prices. 

Removing these lower-priority subsidies would reduce greenhouse gas emissions and 

generate $38.6 billion of additional revenue over the next 10 years. This $38.6 billion 

represents only a small percentage of domestic oil and gas revenues - about one percent 

over the coming decade. These terminations free up resources to invest in clean energy 

development and production, which is critical to the Nation's long-term economic growth 

and competitiveness. 

b. How would this impact the ability for those companies to hire additional 

employees and provide abundant and affordable energy? Has DOE considered the 

impact on total energy production due to higher taxes? 

A ISb. The Administration believes that to foster the clean energy economy of the future and 

reduee the Nation's reliance on fossil fuels that contribute to climate change. it is 

appropriate to repeal tax provisions that preferentially benefit fossil fuel production. Oil 

and gas subsidies are costly 10 the American taxpayer and do little to reduce energy prices. 

Removing these lower-priority subsidies would reduce greenhouse gas emissions and 

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generate $38.6 billion of additional revenue over the next 10 years. This $38.6 billion 

represents only a small percentage of domestic oil and gas revenues - about one percent 

over the coming decade. These terminations free up resources to invest in clean energy 

development and production, which is critical to the Nation's long-term economic growth 

and competitiveness. 

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QUESTION FROM CONGRESSMAN HALL 

Q 16. The Department is requesting appropriations language for the Energy Efficiency and 

Renewable Energy account allowing you to transfer "up to $100,000,000 to the Defense 

Production Act Fund for activities of the Department of Energy pursuant to the Defense 

Production Act of 1950." What additional activities would this transfer authority allow 

that DOE cannot undertake under existing statutory authority? 

A 16. The authority allows the Department of Energy (DOE) to transfer funds to the Defense 

Production Act Fund to be dispersed for activities with mutual benefit to the respective 

missions of DOE's Energy Efficiency and Renewable Energy (EERE) program and the 

Department of Defense (DoD). This arrangement provides a streamlined approach for 

both Departments to issue joint solicitations and appropriately fund contracts that will 

result in first. demonstration of innovative technology, and then second, provide 

production capacity for products with defense applications. The Defense Production Act 

provides for strengthening the domestic production of components, technologies, or 

industrial resources, such as biofuels, that the DoD determines are critical for the 

execution of the national security strategy of the United States. 

DOE is seeking the authority to fund vendor demonstration of production capability for 

innovative biofuels, suitable for use by defense aircraft and ships. As part of a 

partnership with the Defense Department, DOE would fund work for development and 

scale-up activities to develop and demonstrate the biomass technology to make these 

fuels. 

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QUESTION fROM CONGRESSMAN HALL 

Q17. The Office of Energy Efficiency and Renewable Energy (EERE) Advanced 

Manufacturing Office is requesting $100 million in new funding to "demonstrate 

manufacturing processes." 

a. Please describe what specific manufacturing process demonstration projects DOE 

will fund and how applications will be reviewed and selected. 

A 17a. DOE projects funded through the Advanced Manufacturing Office (AMO) are selected 

through an open and competitive process using criteria tailored to help achieve the key 

objectives of the program. For example, plans for AMO's Manufacturing Demonstration 

Facilities (MDFs) solicitation include asking applicants 10 propose topic areas that will 

have broad-reaching and/or transformational impact to reduce energy use, demonstrate the 

use of materials for energy technologies, create new products and processes, and support 

the domestic manufacturing base. 

While DOE has not yet issued a solicitation for the MDFs, the objectives established for 

this initiative describe an MDF as a collaborative, shared infrastructure focused on 

manufacturing research, development, and demonstration (RD&D) in different technical 

focus areas. In addition, MDFs will enhance opportunities for U.S. manufacturers to 

develop, use, and demonstrate energy efficient, rapid, flexible manufacturing technologies. 

In operation, the MDFs will provide the manufacturing community, particularly small- to 

medium-size enterprises, with access to physical and virtual tools as well as expertise for 

prototyping new technologies and optimizing critical manufacturing processes. 

Through the Innovative Manufacturing Initiative (IMI), another RD&D program, AMO is 

currently completing a competitive selection for industry-led cost-shared technology R&D 

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and demonstration projects within broadly identified priority technology domains such as 

Reactions and Separations; High Temperature Processing; Waste Heat Minimization and 

Recovery; and Sustainable Manufacturing. Also included as possible research domains in 

this first !M! solicitation are Innovative Materials topic areas potentially including Thermal 

and Degradation Resistant Materials; Highly-Functional, High-Performance Materials; and 

Lower Cost Materials for Energy Systems. Industry response to the IMI solicitation was 

widespread and diverse. AMO received more than 1,400 total Letters of Intent through this 

solicitation. 78% of responses from industry were from small enterprises (fewer than 500 

people). Only a small percentage of these Round One proposals will be funded. Awardees 

are expected to be announced publicly. 

AMO also remains committed to combined heat and power and former Industrial 

Technologies Program demonstration projects currently in its portfolio so long as these 

projects continue to meet their technical milestones. 

b. Manufacturers have significant financial incentives to institute energy efficiency 

improvements that will save them money. Please describe the barriers to 

implementation that limit private industry from undertaking energy efficiency 

improvements that will be demonstmted by this program. 

A17b. There are a number of barriers that can limit private industry from undertaking energy 

efficiency technology development and demonstration. Examples of barriers include: 1) 

taking on increased technical risk without guarantee of return on investment, 2) total 

cost/size of investment required, and 3) the ability to develop a new technology or 

process to a meaningful scale under production-pertinent environments. 

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AMO helps to address those barriers by: I) providing the manufacturing community 

access to expertise for prototyping new technologies and optimizing critical 

manufacturing processes, 2) providing the data necessary to establish the manufacturing 

viability of innovations, and 3) facilitating the efficient use of capital resources (both 

public and private) so that onc set of physical and virtual tools is made available to many 

potential innovators. The provision of these benefits is of particular use to small- and 

medium-sized enterprises that face larger hurdles for access to both physical resources 

and expertise. 

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QUESTION FROM REPRESENTATIVE HALL 

Q18. Section 1007 of the Energy Policy Act 0[2005 (P.L 109-58) gave the Secretary of 

Energy the ability to use "other transactions authority," and Section 3118 of the 

National Defense Authorization Act of2011 (P.L 111-383), extended this authority 

through September 30, 2015. 

Q18 (a) Which offices of the Department has the Secretary delegated this authority? 

A 18 (a) The authority can only be delegated to a Presidentially appointed Senate 

confirmed position/person. The Secretary delegated the authority to the 

Under Secretary of Energy. 

Q 18(b) Provide a list all technology investment agreements (TlAs) DOE has entered 

into to date, beginning with the first TlA finalized in November 2007 with 

Range Fuels for funding to design, construct, and operate an integrated 

biorefinery to produce primary ethanol from lignocellulosic feedstock. 

QI8(c) For each TIA identified above, please provide the following: amount of DOE 

funding; amount of cost-sharing; teclmical objectives; description of the extent 

to which the TlA contributed to broadening if the teclmology and industrial 

base available for meeting DOE's mission needs; and extent to which the TOlA 

has fostered new relationships an practices. 

AI8(b)&(c). Please refer to included table attached. 

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QUESTION FROM REPRESENTATIVE HALL 

Q19. Advanced materials are frequently identified as a challenge associated with developing 

the next-generation of nuclear power plants. What advanced materials research and 

development is DOE proposing in FY 13? 

A19. The Department of Energy (DOE) is proposing to perform advanced materials research 

and development to characterize and provide the required design bases for new materials 

that can withstand the harsher environments of advanced reactors for longer periods of 

operation. This research also aims to develop materials that have better performance in 

accident scenarios. These materials could be used in small modular reactors and hightemperature gas-cooled reactors, as well as liquid metal- and salt-cooled reactors. 

Specifically, these efforts will include the assessment of modem graphites, hightemperature structural alloys, and structural composites needed for construction of critical 

components, such as reactor pressure vessels and piping, core supports and other reactor 

internals, heat exchangers, fuel cladding, and power conversion equipment. These more 

radiation-resistant, advanced materials will allow the reactors to operate at higher 

temperatures and pressures over longer timefrarnes, thereby increasing the efficiency of 

electricity production and the safety of the reactor. This research will also develop and 

validate the bases for improvements in the national codes and standards required for 

eventual regulatory approval of such materials usage in advanced reactors. 

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QUESTION FROM REPRESENTATIVE HALL 

Q20. The Office of Nuclear Energy's budget for 2013 overall will see a 10 percent reduction 

from FY12 appropriated funds. One of the changes that mask this reduction is the $95 

million for Idaho Site-Wide Safeguards and Security Program that has been moved into 

the Office of Nuclear Energy. What was the reason for this proposed move? 

A20. The request to transfer the Idaho National Laboratory (INL) Safeguards and Security 

(S&S) program from the Other Defense Activities (ODA) Appropriation to the Nuclear 

Energy (NE) Appropriation did not impact the overall NE funding request level. It is just 

a coincidence that the total cost of the transfer was similar to the overall reduction in the 

NE Appropriation. 

The Department believes there is merit in transferring the lNL S&S program into the NE 

Appropriation. This transfer is consistent with how the Department requests funds for 

other S&S programs. The request also aligns all NE programs within one appropriation, 

which will allow trade-offs among NE programs without impacting non-NE programs 

within the ODA Appropriation. 

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QUESTION FROM REPRESENTATIVE HALL 

Q21. Please provide an update on the status of the :-.Iext Generation Nuclear Plant (NGNP) and 

the project's overall outlook and upcoming milestones. 

A21. The Next Generation Nuclear Plant (NGNP) Demonstration Project continues to concentrate 

on high temperature reactor research and development (R&D) activities, interactions with the 

Nuclear Regulatory Commission (NRC) to develop a licensing framework, and activities 

related to establishment of a public-private partnership as discussed in the Department's letter 

to Congress on October 17,2011. Ongoing R&D to support development of high temperature 

gas-cooled reactors (HTGR) is focused on qualification ofTRISO coated particle fuel, 

qualification of graphite and high temperature materials to be used in HTGR construction, and 

on computational methods for ensuring the safety and performance of these advanced reactor 

designs. This year the project expects to complete compacting process qualification testing 

for the commercial fuel manufacturing. Post-irradiation examination of the first samples of 

new nuclear grades of graphite tested will be completed by June 30, 2012. Finally, the 

Department is preparing to release a solicitation to obtain analyses, data, and information on 

the long term commercial viability ofNGNP technology. This contact is expected to be 

awarded by the end of this fiscal year. 

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QUESTION FROM REPRESENTATIVE HALL 

Q22. During a Committee hearing on the Blue Ribbon Commission's Report to the Secretary 

of Energy, former NRC Chairman Richard Meserve stated that there are not any barriers 

to constructing a reprocessing facility in the United States. However, the Nuclear 

Regulatory Commission currently lacks the regulatory guidelines for such a facility. 

Please clarify whether or not there is an existing and workable framework at the NRC 

for licensing and building a reprocessing facility. 

a. Is DOE supportive of creating a regulatory framework in which a reprocessing 

facility could be licensed and constructed? If so, how will DOE support moving 

forward with such a project? 

A22. Questions about the NRC's regulatory framework for reprocessing should be directed to 

the NRC. The DOE and the NRC maintain an effective working relationship relative to 

advanced fuel cycle technology R&D. 

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QUESTION FROM REPRESENTATIVE HALL 

Q23. Abound Solar, a recipient ofa $400 million DOE loan guarantee, has laid offa 

substantial portion of its workforce and delayed plans to open a new manufacturing 

facility. Reportedly, Abound Solar has drawn down $70 million of the total loan 

guarantee amount. Please provide the current status of the Abound Solar project, 

including its ability to meet performance milestones included in the contractual terms 

stipulated by the agreement. 

a. How does DOE evaluate the performance of the individual loan guarantees and decide 

whether a recipient is meeting performance expectations? 

A23a. DOE's LPO teams perform extensive due diligence of each applicant and its business 

case prior to loan closing, followed by continual monitoring, review and analysis until the 

loan is repaid in full. This due diligence and review is performed by multi-disciplinary 

teams of engineers, attorneys, accountants, industry consultants and financial analysts, 

with additional expertise called upon as required. 

In some projects, the due diligence and analysis identifies a number of steps in the 

development of the business case considered critical to making and keeping the project 

financially viable, as well as performance indicators that will help DOE loan monitoring 

teams evaluate whether the approved plan remains on track. In some cases, the key steps 

are reflected in specific milestones that must be accomplished by a date certain (e.g., unit 

throughput, process yield, solar cell efficiency level, etc.), while in other cases, DOE staff 

requires regular reporting of performance information (e.g., EBITDA, quality level, sales 

per employee, cost per unit) that is indicative of project health. 

Finally. DOE loan monitoring staff continually factor this information into project 

budgets and dynamic financial forecasting models to ascertain whether changes in the 

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project or business have affected projections of the borrower's ability to repay the loan 

when due. 

Project milestones and financial covenants are typically highly negotiated and tightly 

specified prior to the closing of the loan. In the case of performance indicators and 

financial projections, staff analysts and consultants continually assess actual results and 

new assumptions using projection models to determine whether the approved forecast has 

materially changed. DOE recognizes and expects that business conditions and business 

plans will change during a multi-year project. If an analysis indicates that a previously 

approved business plan is no longer viable, DOE generally requires the borrower to 

revise the plan to DOE's satisfaction. 

b. Given the circumstances surrounding Abound Solar's performance, is DOE allowing it to 

draw down on the remaining $330 million in funding? If so, why? 

A23b. As is the case for all projects within DOE's portfolio, Abound's access to DOE funding 

was predicated on the project continuing to meet required conditions and milestones. 

Among the conditions to DOE's approval of additional funding, Abound was required to 

provide an updated business plan that was acceptable to DOE in its sole discretion. As 

you are likely aware, Abound filed for bankruptcy on July 2, 2012 and funding 

disbursements on the loan had been halted in August 2011. 

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QUESTION FROM REPRESENTATIVE NEUGEBAUER 

Q I. I understand that the budget is proposing to spend $ I 70 million in funding left over from 

prior appropriations to issue new loan guarantees. 

Qla. Is that correct, and ifso, how many new loan guarantees do you expect to issue, what will 

the total amount of those loans be, and what is the expected timing of these awards? 

A I a. As you know, the § 1703 loan program was adopted as part of Energy Policy Act of2005 

to provide financing support to advanced technologies on reasonable terms. The 2012 

appropriations provided an additional $1 70 million in appropriated credit subsidy to 

support § 1703 loan guarantees for innovative renewable energy or efficient end-use 

energy technologies and brought the balance of guaranteed loan volume authority to $1.5 

billion for projects where the credit subsidy cost is funded by the project sponsor. 

Authority to enter into new loan guarantees under § 1705 loan program sunset September 

30,2011 -- a deadline by which projects had to not only complete due diligence and close 

on their loans, but also start construction. Faced with a large volume of projects, but a 

limited number able to meet this mandate, in May 2011 the Department sent letters to 

more than three dozen project sponsors, informing them that they would not qualify 

under § 1705, but could be considered in the future for loan guarantees under the § 1703 

program. As the letter noted, this was not a statement of the quality or worthiness of 

those projects; it was simply a matter of timing. 

Following the completion ofthe Independent Consultants Review by Mr. Herb Allison, 

the Department has developed a process for considering pending applications for the 

available § 1703 funding. On AprilS, 2012, the Department commenced this process by 

sending a letter to project sponsors with pending applications that may qualify for the 

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§ 1703 funding referred to above, asking them if they still wanted to be considered for a 

loan guarantee. 

The exact number of projects and the total dollar value of the loan guarantees in the 

§1703 renewable energy pipeline will depend on the government's assessment of the risk 

level of the projects selected and the sponsors willingness to continue to pursue a loan 

guarantee. 

Q 1 b. I also understand that you recently stated you were receiving "mixed signals" from 

Capitol Hill regarding the future of the loan program. Given the troubled history of this 

program, why should Congress allow that $170 million to be risked? Have you or others 

in the administration at any point considered that perhaps that $170 million would be 

better spent if it went to deficit reduction or higher priority research programs? 

Alb. From solar energy to wind 10 biofuels and more, the global market for clean energy 

technologies reached $260 billion last year and is growing rapidly, according to one 

recent energy investment report, Recognizing the enormous economic opportunities 

ahead, countries like China, Germany, and others around the world have established 

programs to provide government-backed financing for innovative technologies and 

companies. Such support is crucial because private lenders are often unwilling or unable 

to absorb the risks associated with financing truly innovative or advanced technology 

projects at scale until such projects have been proven in the marketplace. 

By any measure, the Energy Department's loan programs have helped the United States 

keep pace in the fierce global race for clean energy technologies. Over the past three 

years, the loan programs have invested in some of the world's biggest, most innovative, 

and most ambitious clean energy projects to date, supporting a balanced portfolio of 

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98 

American clean energy projects that are creating tens of thousands of jobs nationwide and 

are expected to provide power to nearly three million U.S. households. 

In part because of these cutting edge projects and the private sector investment enabled 

through the loan program, the United States has nearly doubled renewable energy 

generation since 2008, and last year U.S. solar installations grew by nearly 110 percent. 

But given how intense the global competition is - China offered $30 billion in 

government-backed financing to solar companies in 2010 alone - we cannot afford to 

stop moving forward. 

Our historic investment in clean energy is paying off, and it will come back (0 us many 

times over - in jobs, in clean energy for our communities, and in leadership in the 

technologies of the 21st century. 

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QUESTION FROM REPRESENTATIVE NEUGEBAUER 

Q2. The Administration has indicated openness to yet again tapping the Strategic Petroleum 

Reserve in an attempt to ease short-term gas prices. However, according to your 

Department' 5 own reports. the Administration' s release of 30 million barrels from the 

Strategic Petroleum Reserve from last June has yet to be replenished. In fact. while sales 

of the reserves last June brought in $3.3 billion. higher prices could now result in us paying 

$4 billion to replenish that oil, costing the American taxpayers an additional $700 million. 

a. Why has the oil not yet been replenished? 

A2a. The 2013 Budget reflects plans to repurchase 27 million barrels of oil for the SPR over a 

five year period beginning in FY 2013 assuming market conditions are favorable. 

b. What conversations have you had with the White House about tapping the SPR 

again? 

A2b. The purpose of the Strategic Petroleum Reserve is to mitigate the impacts of supply 

interruptions. There have been increasing disruptions in the supply of oil to the global 

market over the past several months, which pose a substantial risk to global economic 

growth. In response, major producers have increased their output while drawing prudently 

on excess capacity. Looking ahead to the likelihood of further disruptions in oil sales and 

the expected increased demand over the coming months. we are monitoring the situation 

closely and will work with our partners in the International Energy Agency to take 

appropriate action to ensure that the market is fully and timely supplied. 

c. Has the Administration considered the necessity of replenishing current balances in 

the SPR before hastily releasing more oil. putting us at an even greater risk to 

legitimate emergencies and severe shortages? 

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Ale. The 2013 Budget reflects plans to repurchase 27 million barrels of oil for the SPR over a 

five year period beginning in FY 2013 assuming market conditions are favorable. The SPR 

currently holds 696 million barrels of crude oil, which should be sufficient to mitigate any 

adverse impacts to the United States from a shortage or interruption of energy supplies or 

for the United States to meet its obligations under the international energy program. Based 

on EIA data for 2010, imported oil accounted for less than 50 percent of the oil consumed 

in the United States for the first time in 13 years. 

d. Did your Department estimate price projections that would affect the replenishment 

ofSPR supply following the drawdown? What role did that play in the President's 

decision? 

A2d. The 2011 SPR drawdown was conducted to meet the obligations oflhe United States under 

the international energy program, pursuant 10 section 161(d) of the Energy Policy and 

Conservation Act. 

e. Do you believe that current economic conditions and oil supply represent a true 

emergency or "severe supply interruption?" 

Ale. Absent an actual or imminent supply interruption, there are no plans to release crude oil 

from the SPR. The purpose of the Strategic Petroleum Reserve is to mitigate the impacts 

of supply interruptions. There have been increasing disruptions in the supply of oil to the 

global market over the past several months, which pose a substantial risk to global 

economic growth. In response, major producers have increased their output while drawing 

prudently on excess capacity. Looking ahead to the likelihood of further disruptions in oil 

sales and the expected increased demand over the coming months, we are monitoring the 

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situation closely and will work with our partners in the International Energy Agency to take 

appropriate action to ensure that the market is fully and timely supplied. 

f. How might a depleted SPR affect our ability to respond to potential future disruptions 

in supply? 

A2f. The SPR sold approximately 30 million barrels in 2011, only 4 percent of the Reserve's 

total stocks. The current inventory of 696 million barrels is equivalent to roughly 82 days 

of US imports and provides adequate protection for any near-term oil situation. 

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QUESTION FROM REPRESENT A TIVE LIPINSKI 

Q I. The proposed reduction to the SMR Licensing Technical Support program is small - just 

$2 million - but this program was originally conceived as a 5-year, $450 million 

partnership with private companies. With the first two years significantly below the 

anticipated funding trajectory, I am concerned that these funding shortfalls could tum 

into significant overall cost increases - something we have seen in other complex 

engineering projects. Secretary Chu, do you anticipate being able to meet the 

expectations ofSMR industry partners, and how are we coordinating with them to make 

sure the program stays on track? 

AI. In the FYl2 appropriation, DOE received $67 million for the SMR Licensing Technical 

Support program and believes the program is on track. A Funding Opportunity 

Announcement will be released soon for the program and the Department will start 

executing the complex solicitation review process to establish the joint projects with 

industry. 

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QUESTION FROM REPRESENTATIVE LIPINSKI 

Q2. The cuts to the SMR Advance Concepts R&D program are even more substantial - over 

30 percent. Secretary Chu, what impact will this cut have on research programs, 

especially at our national labs, and on the Department's goal of deploying innovative 

technologies in 15·20 years? 

A2. The impact of the reduced budget will be negligible on the long term scope and pace of 

progress for R&D supporting advanced SMR concepts that could be deployed in the next 15· 

20 years. The program conducts R&D in the areas of materials, safety and licensing issues, 

components and technology development and energy conversion, and is applicable to multiple 

technology options. 

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QUEST!Ol'\ FR()\I REPRLSl::\TAIWE L1PIl'\SKI 

03. Secretary Chu, I am concerned that the proposed hudgct cuts are leading to squamkred 

opportunities "ith hydrogen i"ue! cells, including the II-Prize program. I realize that. hy 

their nature, prize challenges \\'on't always be mel. Ho\\cvcr. I am concerned h)'thc bet 

that the DOE did not appear to put as much dTon in the I-I-Prize program as it did into 

the L-Pri7.c program. Can you contrast these two programs, tell me what you learned 

from the failure orthe first II-prize, and lell me w11: the S I \llI-PriLc purse wasn't reused Ii)!" a second cOl11pdition': 

A3. The Department "alues prize challen,:es including the I'I-Prize to help inccntivizc 

innovation and complement existing i"unding. In filet. significant efforts lIere made with 

the lirst H-Prizc, including a competitive solicitation to select an administration entity 

ami a competition to address one of the key challenges -- hydrogen storage. Through 

stakeholder input. spccilic technical criteria were set. and an independent test facility was 

selected to pCrf0rtl11h.: re\'ie\\ and assessment of Prize linalists. One ofthc key lessons 

learned \\'as the importance of designing a topic that is both innovative and achievable in 

a reasonable lil11cfral11e while ,:cncrating broad interest across the research community, 

Before issuing another I'I-Prize competition, the Department is soliciting leedback from 

stakeholders through a request lor ini()n11ati(11l (RFI), The RFI was released on i'vfarch 

19.201:; for a second I'I-Prize competition. 

The input Irom the RFJ will be llsed to design the challenge topic and will allow a 

suitable and dfcctivc II-Prize challenge to be wnducted in 1'1' :20 1:2 as planned, The 

funds remaining Il'om the original S 1 miilion II-Pri?c (funded 11·0111 f"{ 200R and FY 

:2009 appropriations) will he llsed for this DC\\ wll1jletition, 

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QUESTION FROM REPRESENT A TIVE LUJAN 

In the Energy Policy Act of 2005 a Technology Commercialization Fund was created within the 

Dept. of Energy to promote promising energy technologies for commercial purposes. 

QI (a): What is the status of this fund? 

A I (a): The Department is making the improvement of its innovation and commercialization 

ecosystem a top priority, and Technology Commercialization Fund (TCF) is part of 

the overall plan. The objective is to increase the number of technologies 

commercialized. This goal is consistent with Section 1001 of the Energy Policy Act 

(EPACT) of 2005 which requires that 0.9 percent of the annual amount made 

available for applied energy research, development, demonstration, and commercial 

application be used towards technology transfer and commercialization activities. 

QI (b): Which offices are contributing their 0.9%? 

Al (b): Offices maintaining a technology commercialization fund are Energy Efficiency and 

Renewable Energy, Fossil Energy R&D, and Nuclear Energy. 

QI (c): How is the fund is being managed and by whom? 

Al (c): Consistent with the Act, the Technology Transfer Coordinator works collaboratively 

with each program to assist with planning and discuss execution of technology 

transfer and commercialization activities that fulfill Congressional and Departmental 

objectives. Starting in FY 2012, the Coordinator will also work with the programs to 

develop consistent goals, strategies, and performance criteria to provide 

accountability for technology transfer and commercialization results. At the end of 

each fiscal year, the Coordinator collaborates with all applicable programs and DOE 

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106 

offices in order to complete the required annual report to Congress on progress in 

meeting the goals set forth in the technology transfer execution plan. 

01 (d): How the funds are being utilized? 

Al (d): The Coordinator will propose improvements to existing activities, synergies with 

other Departmental initiatives, and new opportunities. Participating programs will 

maintain their focus on their technological priorities while benefiting from the 

Coordinator and inter-agency expertise .. 

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QUESTION FROM REPRESENTATIVE McNERNEY 

Some members of the fusion community have concerns about cuts to domestic fusion research 

programs in favor of increased support for international programs. 

QI (a): How will funding cuts affect students at the Massachusetts Institute of Technology 

and other facilities working on fusion? 

Al (a): At MIT, there are 29 graduate students currently involved in research on the Alcalor 

C-Mod tokamak. Under the proposed budget, it is expected that up to 13 of these 

students will be able to complete their research using data from experiments 

conducted during FY 2012 and receive their Ph.D. degrees in 2013. An additional 5 

students might be able to complete their research if additional running time on C-Mod 

is possible at the end of FY 2012 or in early FY 2013 within the Congressional 

Request. The remaining II students will not be able to complete their current research 

projects. Where appropriate, the Office of Fusion Energy Sciences will work with 

MIT to find research homes for those students who can best benefit from bridging 

their current research to other facilities. 

Regarding the total impact within the program, we note that in FY2012 325 full time 

equivalent students (well over 400 individuals) are supported through the Office of 

Science to conduct research in the fusion and plasma sciences. The 29 full time MIT 

students represent a little less than 10% of thaI total student population. Overall, 

compared to FY 2012, we estimate there will be a reduction of about 62 full time 

equivalent students engaged in Office of Science supported fusion and plasma 

science. 

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108 

QI (b): How will our long-term understanding of fusion science be affected by a decrease in 

research funding? 

AI (b): Although the proposed budget will present challenges, it will allow the United States 

(U.S.) to continue to have an impactful fusion program. The proposed budget will 

enable a U.S. program that makes significant contributions to resolving vital issues in 

fusion research thereby building the scientific foundation needed to develop a fusion 

energy source. It positions the program to obtain a high level of scientific return of 

our investment in ITER; address gaps in materials sciencerequired for harnessing 

fusion energy; continue to steward the broader plasma sciences, taking advantage of 

cross-agency synergies; and provide opportunities for U.S. scientists to do research 

on billion-dollar-class, new international superconducting facilities where technology 

investments will enable access to a new class of scienti fie questions not available 

within the U.S .. 

QI (c): How could cuts affect the ongoing research at Lawrence Livermore National 

Laboratory? 

AI (c): Total Fusion Energy Sciences funding to LLNL in FY 2012, spread over a number of 

research projects, amounted to $11,129,000. In the FY 2013 Budget Request, LLNL 

funding for materials research and for NSTX collaborations are not affected. 

Research collaborations between LLNL and D1II-D will bc reduced by 9.6%, and 

theory and computation research at LLNL by 14%. LLNL funding in the areas of 

diagnostics, high energy density laboratory plasmas, and laboratory general plasma 

science are scheduled for review in competitive solicitations in FY 2013. 

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QUESTION FROM REPRESENT A TIVE McNERNEY 

Q2. The Department's budget for wind energy technologies includes important objectives to 

increase "the number of certified small wind systems and reduce the cost of energy of 

small and midsize wind turbines used in community and distributed electricity systems to 

compete with the retail electricity rates." These distributed wind turbines contribute to the 

President's clean energy goals. 

a. How does the Department plan to meet these objectives for small and distributed 

wind turbines? 

A2a. While wind technology used in community and distributed applications remains a priority 

for DOE, the Department has recently increased its emphasis on less mature wind 

technologies used in offshore applications, as indicated by FY 2012 plans and the FY 

2013 budget request. DOE does, however, plan to continue to support activities related 

to achieving its goal for small wind technology, which is to increase the number of small 

wind turbine models certified to performance and safety standards from a 2010 baseline 

of zero to 40 by 2020. The FY 2012 milestone associated with this goal is to certify five 

models. Planned activities towards meeting this goal are standards development and 

completing the establishment of the Small Wind Certification Council and four regional 

small wind turbine testing centers. Product certification is essential for providing 

consumers, policy makers, and lenders with transparent, third-party-verified small wind 

turbine performance and safety information. State renewable energy programs are 

establishing lists of 'qualified' small wind turbines for incentive programs based on the 

process for certification developed with support from DOE. 

57 
110 

The Department is also currently supporting research, analysis, and modeling to establish 

near-term cost of energy targets for midsize turbine technology and utility scale 

technology used in distributed applications, with the goal of being competitive with 

national average retail electricity rates. Work activities related to achieving this goal 

include economic analysis, next generation midsize turbine R&D, standards 

development, and technology transfer support. 

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QUESTION FROM REPRESENTATIVE MILLER 

Q I. ARP A-E has been described as covering unique "white spaces" in energy science and 

teclmology that neither industry nor other government programs are willing to fully 

undertake alone, and then accelerating advances to the marketplace as quickly as 

possible. In fact, this is what it was instructed to do by the COMPETES Act. Yet, there is 

some disagreement and confusion about how ARPA-E overlaps with, or builds upon, 

previous private or government efforts, and how it attracts follow-on funding. Some 

contend that any overlap is inappropriate as it "crowds out" private investment or 

duplicates other government programs, and that efforts to attract follow-on investment 

are similarly inappropriate. Yet, it would be difficult, and possibly unwise, for ARPA-E 

to limit its activities to funding only those ideas that have not had any other public or 

private interest, especially given the potential value of later-stage research that is 

necessarily built upon previous work. Furthermore, many important scientific 

breakthroughs and teclmological advances might be overlooked if ARPA-E and its 

performers are not proactive in promoting and demonstrating them to potential investors, 

teclmology developers and customers. Again, these concerns are specifically addressed 

in COMPETES. 

Qla. Does ARPA-E duplicate the efforts of other government programs or "crowd out" private 

investment? How are these "white spaces" identified? 

Ala. ARPA-E coordinates and leverages each of its programs and ensures that ARPA-E 

provides unique value within the rest of DOE. For instance, to improve coordination 

within DOE, ARPA-E has formed a Panel of Senior Teclmical Advisors (PASTA). 

PASTA consists of Assistant Secretaries (or their Technical Appointees) of all the 

relevant applied energy offices as well as the heads of all the relevant offices in the 

Office of Science. In addition, the Director of ARPA-E actively coordinates with the 

Director of the Office of Science, offices and programs falling under the purview of the 

Office of the Under Secretary for Energy, as well as the Under Secretary for Science. 

The Depanment has now formed Integrated Technology Teams along techno-industrial 

lines (i.e. solar; storage; biofuels; carbon capture, utilization & storage; grid) that span the 

Office of Science, Applied Energy Offices and ARPA-E. These teams ensure that each of 

59 
112 

these offices play unique roles, while ensuring that the work is coordinated and the whole 

is bigger than the sum of its parts. 

Before announcing a new program, ARPA-E undertakes a comprehensive process to 

identify a technology "white space" that is not likely being addressed by the private 

sector or other Federal Agencies. ARP A-E technical staff begin by reviewing the 

scientific literature to identify potential program areas. Next, ARPA-E technical staff 

examine the current state of the art, the main players in this space, and the major 

technology challenges. If ARPA-E concludes that a technology white space exists, 

ARPA-E technical staff organize a workshop, bringing in relevant players from industry, 

academia, and government to further refine the concept for a potential program. If the 

workshop is successful, ARPA-E may issue a funding solicitation containing marketbased cost and performance metrics that, if achieved, could displace the prevailing 

technology. 

Applicants are required to disclose in their applications whether they submitted the same 

or similar concepts to ARP A-E, other Federal agencies, or private investors. In addition, 

applicants are required to disclose prior and current sources of funding for the proposed 

research project and related work. Finally, applicants are required to provide a detailed 

explanation for lack of support from existing sources of funding. For example, large 

businesses are required to explain why the proposed project is not being sponsored 

internally. 

During the merit review process, ARPA-E utilizes expert reviewers from industry, 

academia, and government to rate and provide comments on applications. These 

60 
113 

reviewers help ARPA-E to avoid any with projects funded by other Federal agencies and 

private investors. 

Upon the execution of the funding agreement, ARPA-E invites industry representatives to 

participate in its meetings with recipients. These meetings enable a free exchange of 

ideas and encourage collaboration with potential commercialization partners. 

ARPA-E recipients are required to disclose in their quarterly performance reports any 

new funding received from public or private sources. This ensures transparency and 

enables ARPA-E to make appropriate funding determinations. 

Qlb. To be safe, should ARPA-E fund only concepts and performers that have not had any 

previous private sector or government investment, and therefore forego sponsoring 

potentially important research just because the concept or performer have had some form 

of previous investment at some stage of development? How does ARP A-E ensure that it 

is not merely funding what the private sector would otherwise do on its own? 

Alb. ARPA-E supports its statutory mission to accelerate "transformational technological 

advances in areas that industry by itself is not likely to undertake because of technical 

and financial uncertainty." ARPA-E is careful to not fund any specific and discrete 

technical idea that had previously received money from industry. To be clear though, 

some ARPA-E performers have received funding from public or private sector sources 

for research projects that are distinctly different from their ARPA-E project. ARPAE sets market-based cost and performance metrics in technology areas that ifmet could 

displace thc prevailing technology. ARPA-E is technology agnostic and selects among 

competing new technologies based upon their potential to mcet our cost and performance 

metrics. ARPA-E seeks to create competition between performers. 

61 
114 

Applicants are required to disclose in their applications whether they submitted the same 

or similar concepts to ARPA-E, other Federal agencies, or private investors. In addition, 

applicants are required to disclose prior and current sources of funding for the proposed 

research project and related work. Finally, applicants are required to provide a detailed 

explanation for lack of support from existing sources of funding. For example, large 

businesses are required to explain why the proposed project is not being sponsored 

internally. 

Q Ie. Should ARP A-E encourage or discourage follow-on investment in the successful projects 

it sponsors. or should it be passive in that regard and hope that interested investors or 

customers notice? 

Alc. ARPA-E is always pleased when research projects it has funded succeed in securing 

follow-on funding and eventual success in the commercial marketplace. However, 

ARPA-E believes this is a result of the technical progress made by the recipient. ARPAE provides aggressive market-based cost and performance rnetrics. dependable project 

funding, active program management, and technology-to-market assistance, such as the 

Technology Showcase at the annual ARPA-E Energy Innovation Summit. 

However, ARPA-E does not pick winners; rather, ARPA-E creates the competition. It 

funds multiple competitive and parallel approaches to reach the same performance and 

cost target of technology with very aggressive technical milestones and deliverables. 

After the technology is de-risked, ARP A-E then lets the private sector pick thc ones that 

are best for business. A successful project is one that meets the technical milestones and 

deliverables over the course of the award period. ARPA-E sets the bar high and builds 

62 
115 

into funding agreements milestones and deliverables that, ifmet, would not only 

overcome a specific technical barrier but also bring a technology closer to market 

deployment. We believe this makes the technology more attractive for future private 

investment. 

63 
116 

QUESTION FROM REPRESENTATIVE MILLER 

Q2. Please comment on the need for coordinated federal activity in the area of critical 

materials. Would legislation to support inter-agency cooperation help align and leverage 

the important work taking place at DOE and other agencies? 

A2. DOE shares your interest in coordination across the federal government. Federal activity 

in critical materials is coordinated through the White House Office of Science and 

Technology Policy (OSTP). OSTP convenes a critical and strategic mineral supply chains 

workgroup with subgroups that focus on critical materials prioritization, R&D 

prioritization, and information availability and transparency. Each of these subgroups is 

building on relevant work across the government. For example representatives from 

DOE and DOD co-chair the group on critical materials prioritization. Thus, the 

prioritization methods being developed build on the assessment work done by both DOE 

and DOD. A representative from DOE chairs the R&D prioritization group. This group 

is crafting a cohesive R&D roadmap drawing on input from representatives from many 

agencies. 

Q2a. What is in the FY2013 budget to address the country's critical material concerns? What 

type of federal support is necessary to support the development of a domestic critical 

materials industry? 

A2a. DOE's role in supporting a domestic critical materials industry is primarily to 

support innovative research, development and demonstration (RD&D) of new 

technologies and processes. Supporting this research, particularly in a university setting, 

also can lead to the development of human capital. The FY2013 budget includes the 

second year of funding for the Critical Materials Hub, managed by the Energy Efficiency 

64 
117 

and Renewable Energy's (EERE) Advanced Manufacturing Office. The hub's FY2012 

fWlding is $20 million. 

In addition, there are a number of other DOE research programs that incorporate critical 

materials research into their ongoing work. For example, the Materials Discovery, 

Design and Synthesis research supported by the Office of Basic Energy Sciences within 

the Office of Science builds the fundamental knowledge that is the basis for material 

substitutes and new manufacturing process development. Ongoing work by EERE's 

Vehicle Technologies and Wind Technologies Programs more directly support the 

development of substitutes for magnets, motors and generators. With FY2012 funding, 

ARPA-E initiated a new program called Rare Earth Alternatives in Critical Technologies 

(REACT) that seeks to fund early-stage technology alternatives that reduce or eliminate 

the dependence on rare earth materials by developing substitutes for electric vehicle 

motors and wind generators. In addition, ARPA-E's 2012 Open Funding Opportunity 

AnnoWlcement has critical materials as one of its subtopics of intcrest. 

Q2b. While policy signals are essential, givcn the strategic interest in developing domestic 

capabilities, should the federal government also help support the financing of critical 

materials production facilities? 

A2b. The Administration has moved forward on a number of general policies to support 

manufacturing in the past year, which can also support the domestic critical materials 

processing. For example, the Advanced Manufacturing Partnership (AMP) was recently 

established in response to recommendations by the President's Council of Advisors on 

Science and Technology. AMP is helping create a coherent national innovation policy for 

manufacturing. The AMP Steering Committee has developed a set of recommendations 

around three pillars: enabling innovation, securing the talent pipeline and improving the 

65 
118 

business climate. This framework is also applicable to critical materials processing. In 

addition, the President's Framework for Business Tax Reform was issued jointly by the 

White House and the Department of the Treasury in February 2012. This Framework 

emphasizes the importanee of strengthening manufacturing and innovation, stating "as we 

expand manufacturing in the United States, the tax code should encourage doing so in way 

that is sustainable and that puts the United States in the lead in manufacturing the clean 

energy technologies of the future." In many cases critical materials processing is an early 

stage of the supply chain for clean energy manufacturing, which could benefit from the 

support via the aforementioned activities conducted by the Federal government. 

A2c. Many existing DOE programs do not reach far enough back in the supply chain to 

provide support for critical materials development and processing. For example, while 

lithiwn production is essential to electric vehicle battery production, lithiwn development 

and processing activities are not supported by the Department's vehicles or batteries 

programs. Is it appropriate for DOE program offices to support the development of a full 

supply chain, encompassing critical materials? 

A2c. Materials processing and separations are among the priority research topics identified in 

the R&D plan in DOE's 2011 Critical Materials Strategy. Specifically, improving 

separation and processing of critical materials will support the diversification of the global 

supply chains. There are a number of R&D challenges that exist in the area. Many 

traditional separation processes are inefficient and environmentally unfriendly. These 

processes require the use of harsh solvents and reagents, have long processing times and are 

very capital intensive. Improving these processes or developing new, more efficient 

methods would cut costs, reduce energy use, and improve environmental performance 

across the full supply chain. The Office of Science supports some fundamental work that 

66 
119 

informs the development of new processes. In addition, these research topics are of interest 

to DOE's SBIR as well as the upcoming Critical Materials Innovation Hub. 

67 
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APPENDIX 2 
122 

ADDITIONAL MATERIAL FOR THE RECORD
123 

-~l-~ a u.s_ E,;ergy_ Information 

AdministratIon 

----------- ----------------------------

Analysis of In1pacts of a Clean 

Energy Standard 

as requested by Chairman Bingaman 

November 2011 
124 

This report was prepared by the U.S. Energy Information Administration (EtA), the statistica! and analytical agency 

within the U.S. Department of Energy. By law, EtA's data, analyses, and forecasts are independent of approval by 

any other officer or employee of the United States Government. The views in this report therefore should not be 

construed as representing those of the U.S. Department of Energy or other Federal agencies. 
125 

Contacts 

This report, Analysis of Impacts of a Clean Energy Standard, as requested by Chairman Bingaman, was prepared 

under the general guidance of John Conti, Assistant Administrator for Energy Analysis, J. Alan Beamon at 202/586-

2025 (email, joseph.beamon@eia.gov), Director, Office of Electricity, Coal, Nuclear, and Renewable Analysis, and 

Robert Eynon at 202/586-2392 (email, robert.eynon@eia.gov), Leader, Renewable Analysis Team. 

Technical information concerning the content of the report may be obtained from Chris Namavicz at 202/586-7120 

(email, christopher.namovicz@eia.gov),JeffreyJones at 202/586-2038 (email, jeffrey.jones@eia.gov), and Robert 

Kennedy Smith at 202/586-9413 (email.robert.smith@eia.gov). 

Other contributors to the report include: Gwendolyn Jacobs, Scott McKee, Kay Smith, and Peggy Wells. 

u.s. Energy InformatIon Administration 1 Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
126 

Preface 

This report addresses an August 2011 request to the u.s. Energy Information Administration (EIA) from Senator 

Jeff Bingaman, Chairman of the u.S. Senate Committee on Energy and Natural Resources, for an analysis of the 

impacts of a Clean Energy Standard (CES). The request, outlined in the initial letter and later amended (Appendix 

A), sets out specific assumptions and scenarios for the study. 

u.s. Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
127 

Contents 

Contacts .. 

Preface ....... . 

Contents. 

Figures. 

Tables... 

Introduction 

Background ..... 

Alternative Cases. 

Results .... 

BCES case impacts relative to the AE02011 Reference case 

Alternative Case Results 

Appendix A: Request Letters 

Appendix B: Summary Tables ....... 

. ................ i 

. .. if 

.,.iii 

.. "jv 

,.iv 

..... 1 

...1 

.2 

.. 5 

.... 11 

... 18 

.. .......... " ........... 22 

Appendix C: Map of NEMS Electricity Market Module Regions ..... .. .. 26 

U.S. Energy Information AdminIstration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bmgaman iit 
128 

Eigur~ _____________________________________________________ _ 

Figure 1. Total Net Electricity Generation 

Figure 2. Total Non-Hydroelectric Renewable Generation .. . 

Figure 3. Electricity Sector Carbon Dioxide Emissions ................ .. 

Figure 4. BCES Impact on Electricity and Natural Gas Prices (BCES Difference from Reference case) .. 

Figure 5. Total Electricity Expenditures .. _ ......... .. 

Figure 6. Natural Gas Expenditures, Not Including the Electric Power Sector .... 

Figure 7. Annual Gross Domestic Product .. 

.. 5 

.. ........... 6 

...7 

.9 

.. ........ 10 

.. .. 10 

Figure 8. BCES Impact on Employment and Real GDP, Percent Difference (BCES Difference from Reference case).ll 

Figure 9. Total Net Electricity Generation in Alternative Cases, 2025 ... 

Figure 10: Total Net Electricity Generation in Alternative Cases, 2035 .................. . 

Figure 11. Total Non-hydroelectric Renewable Generation in Alternative Cases, 2025 

Figure 12. Total Non-hydroelectric Renewable Generation in Alternative Cases, 2035 

Figure 13. Electric Power Sector Carbon Dioxide Emissions in Alternative Cases, 2025 and 2035 

Figure 14. Impacts on National Average Electricity Prices in Alternative Cases, 2025 and 2035 .. _ ... 

Figure 15_ Impacts on Delivered Natural Gas Prices in Alternative Cases, 2025 and 2035 .. _ ... 

Tables 

Table 1. BCES Clean Energy Goals and Credit Coverage Requirements ........................ _ 

Table 2. Clean Energy Goal and Credit Shares Across Select Cases' ............ . 

Table 3. BCES Regional End-use sector Average Prices (2009 cents/kWh) ........... _ .......... . 

Table 4. Regional Average Electricity Prices in Alternative Cases, 2025 (2009 cents/kWh) ...... . 

Table 5. Regional Average Electricity Prices in Alternative Cases, 2035 (2009 cents/kWh) .. . 

Table 81. The BCES and alternative cases compared to the Reference case, 2025 .. . 

Table B2. The BCES and alternative cases compared to the Reference case, 2035 .. . 

.. ..... 12 

..12 

. _ .. 13 

.. 13 

........... 14 

. ...... 15 

.._17 

........ 2 

.. ......... .4 

. .................. 8 

.. ......... 16 

.16 

.. .. 22 

..24 

iv u.s. Energy Information Admmlstration I Ana!ysis of Impacts of a Clean Energy Standard as requested by Chairman Bmgaman 
129 

Introduction 

This report responds to a request from Senator Jeff Bingaman, Chairman of the U.s. Senate Committee on Energy 

and Natural Resources, for an analysis of a national Clean Energy Standard (CES). The request, as outlined in the 

letter included in Appendix A, sets out specific policy assumptions for the study. 

Background 

A CES is a policy that requires covered electricity retailers to supply a specified share of their electricity sales from 

qualifying clean energy resources. Under a CES, electric generators would be granted clean energy credits for every 

megawatthour (MWh) of electricity they produce using qualifying clean energy sources. Utilities that serve retail 

customers would use some combination of credits granted to their own generation or credits acquired in trade 

from other generators to meet their CES obligations. Generators without retail customers or utilities that 

generated more clean energy credits than needed to meet their own obligations could sell CES credits to other 

companies. 

The design details of a CES can significantly affect its projected impacts. Chairman Bingaman's request sets out a 

base CES specification and several variants. The base CES specification, henceforth referred to as the Bingaman 

CES (BCES) case, has various provisions describing the definition of clean energy, the allocation of credits, and the 

dates when target milestones become binding, as described below: 

All generation from existing and new wind, solar, geothermal, biomass, municipal solid waste, and landfill 

gas plants earns full BeES credits. 

Incremental hydroelectric and nuclear generation from capacity uprates at existing plants and from new 

plants earns full BCES credits. 

Generation from existing nuclear and hydroelectric capacity does not receive any BCES credits. However, 

the total generation from these two sources counts towards the overall clean energy sales goal of the 

policy. Generation from these sources is reflected in the policy through a reduced requirement for 

holding BCES credits. 

Partial BeES credits are earned for generation using specific technologies fueled by natural gas or coal, 

based on a calculated crediting factor that reflects the carbon intensity of each technology relative to that 

of a new supercritlcal coal plant. These technologies include coal plants which capture and sequester 

their carbon dioxide emissions (0.9 BeES credits), natural gas plants that also sequester their carbon 

dioxide emissions (0.95 BCES credits), existing natural gas combined-cycle units (0.48 BeES credits), new 

gas combined-cycle units (0.59 BeES credits), existing gas combustion turbines (0.16 BCES credits), new 

gas combustion turbines (0.45 BCES credits), and integrated gasification combined-cycle (IGCe) coal plants 

without carbon capture (0.15 BeES credits). 

The BeES target for the share of retail electricity sales from clean energy sources starts at 45 percent in 

2015 and ultimately reaches 95 percent in 2050. However, as noted above, the requirement to hold BCES 

credits is generally reduced by generation from existing nuclear and hydroelectric capacity, which counts 

toward the clean energy targets but does not earn BeES credits. 

Table 1 below shows both the overall BCES case clean energy targets and the estimated requirement for 

covering sales with BCES credits given projected generation from existing nuclear and hydroelectric 

U,S. E:nergy Information Administration I AnalysIs of Impacts of a Clean Energy Standard as requested by ChaIrman Bmgaman 
130 

capacity. For example, in the Reference case l projection for 2035, these generation sources account for 

about 24 percent of sales, so the 80-percent clean energy goal requires that 56 percent (80 percent minus 

24 percent) of sales be covered by BCES credits 

BCES clean energy goals increase linearly between the milestones shown in Table 1, with a 2-percentage 

point annual increase between 2020 and 2035 and a I-percentage point annual increase in the first 5 

years of the BCES and between 2035 and 2050. 

There is no sunset date for the requirements, so the 95-percent clean energy goal remains in effect 

beyond 2050. 

All electricity providers are covered by the requirement, regardless of ownership type or size. 

BCES credits can be banked for use in a subsequent year. There is no limit on how many credits may be 

held orfor how long they may be held. 

The BCES operates independently of any State-level policies. The same underlying generation can be used 

to simultaneously comply with the BCEs and any State generation requirements, if otherwise allowed for 

by both Federal and State law. 

Table 1. BCES Clean Energy Goals and Credit Coverage Requirements 

Overall Clean- Percentage of Total Sales that 

Year Energy Goal Must be Covered by BCES Credits 

2015 45% 17% 

2020 50% 23% 

2025 60% 34% 

2030 70% 45% 

2035 80% 56% 

2040 85% 62% 

2045 90% 68% 

2050 95% 74% 

like other EIA analyses of energy and environmental policy proposals, this report focuses on the impacts of those 

proposals on energy choices in all sectors and the implications of those decisions for emissions and the economy_ 

This focus is consistent with EIA's statutory mission and expertise. The study does not account for any possible 

health or environmental benefits that might be associated with the BCEs policy. 

Alternative Cases 

As noted above, Chairman Bingaman also requested that several variations of the base CEs specification be 

analyzed. The first three cases listed, the All Clean, Partial Credit, and Revised Baseline cases, examine several 

alternative treatments for existing nuclear and hydroelectric generation facilities, giving them either a partial or a 

full credit for generation. The Partial Credit case also includes an alternative treatment for the crediting of 

qualifying fossil generation. 

I The reference case in thiS report mcludes some revisIOns to the AE020J J Reference case The primary changes mclude an improved 

representation of interregional capacity transfers for reliabihty pncing and reserve margins Also, capacIty expansIOn deCISions incorporate better 

foresight of future capItal cost trends by mcludmg expectatlons of the commodity pnce index 

u.s. Energy Information AdminIstration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
131 

All Clean case (AC): Generation from existing nuclear and hydroelectric capacity receives full credit. As indicated 

in Table 2, in this case, the requirement to hold BCES credits is equivalent to the overall clean energy goal. 

Partial Credit case (PC): Generation from all natural gas combined-cycle units without carbon capture equipment 

receives one-half credit. Gas combustion turbines and coal plants without carbon capture do not receive credit. 

However, generation from existing nuclear and hydroelectric plants each receive one-tenth of a credit, which 

provides an added incentive to continue operating existing capacity of these types relative to the BCES case. As 

shown in Table 2, the requirements to hold BeES credits are adjusted from the BeES case to account for the 

differing crediting scheme and to maintain the overall goal for clean energy generation. 

Revised Baseline case (RB): Electricity service providers may subtract generation from existing nuclear and 

hydroelectric capacity from their sales baseline when calculating their clean energy requirement. Although the 

requirement for covering sales with BeES credits shown in Table 2 differs slightly from the requirements in the 

BCES case, this case is meant to achieve the same overall goal for clean energy use. Removing generation from 

existing nuclear and hydroelectric facilities from the sales baseline and adjusting the target to compensate for this 

change provides an incentive to continue operating existing nuclear and hydroelectric facilities. 

The next four cases potentially reduce the amount of clean energy stimulated by the CES, either by exempting 

small electricity suppliers from meeting the target ("Small Utilities Exempt"), capping the maximum credit price 

paid by suppliers ("Credit Cap 2.1" and "Credit Cap 3.0"), or decreasing total electricity demand through increased 

efficiency standards ("Standards and Codes"). 

Small Utilities Exempt case (SUE): Electricity suppliers with annual sales lower than 4 million MWh are exempt 

from the clean energy requirements. They may produce and sell BCES credits, but they do not need to hold them. 

As with the Revised Baseline case, the effective sales basis is reduced in this caSe relative to the BeES case; 

however, unlike the BCES case, there is no adjustment to the mandatory target applied to each affected utility. As 

shown in Table 2, the clean energy target as a percent of covered sales in the SUE case is the same as in the BCES 

case. However, as a percent of total sales, the CES in the SUE case is less stringent than in the BCES case. 

Credit Cap 2.1 case (el.I): The price of BCES credits is effectively capped through the availability of u~limited 

alternative compliance credits starting at a price of 2.1 cents per kilowatthour in 2015 and rising 5 percent per year 

above the rate of inflation each year thereafter. Although neither the goal nor the mandatory targets is changed in 

this case from the BCES case, the amount of clean energy generation achieved may be less than the indicated 

goal/target to the extent that alternative compliance credits are used for compliance in lieu of credits from actual 

clean energy generation. 

Credit Cap 3,0 case (C3.0): Unlimited alternative compliance credits are made available starting at a price of 3.0 

cents per kilowatthour in 2015 and rising 5 percent per year above the rate of inflation each year thereafter. 

Although neither the goal nor the mandatory targets are changed in this case from the BCES case, the amount of 

clean energy generation achieved may be less than the indicated goal/target to the extent that alternative 

compliance credits are used for compliance in lieu of credits from actual clean energy generation. 

Standards and Cades case (S+C): Adds additional rounds of efficiency standards for currently covered products as 

well as new standards for products not yet covered. Efficiency levels assume improvement similar to those in 

Energy Star or Federal Energy Management Plan (FEMP) guidelines. The Standards and Codes case corresponds to 

u.s, Energy Information Administration I Analysis of !mpactsof a Clean Energy Standard as requested by Chairman Bingaman 
132 

the Expanded Standards and Codes case that was part of AE02011. More information about the assumptions 

underlying this case can be found in Appendix E of the AE02011. 

With the exception of the SUE case, all of the alternative cases described above share the goal in the BCES case of 

covering 80 percent of total national sales with generation from clean energy by 203S. However, the number of 

credits required in each case varies because of differences in the sales baselines and the number of credits 

assigned to different technologies, particularly with respect to the treatment of generation from existing 

hydroelectric facilities and nuclear plants (Table 2). In the BCES, AC and PC cases all sales are covered by the credit 

program. In the RB case, covered sales are reduced by the generation from existing hydroelectric and nuclear 

plants and, in the SUE case, they are reduced by sales from small utilities. 

Focusing on 2035, in the BCEs case 56 percent of total sales must be covered by credits. As described above, the 

credit share required in the BCES case is below the 80 percent clean energy goal because projected generation 

coming from existing hydroelectric and nuclear plants does not earn credits but still counts towards the overall 

clean energy goal. In the AC case, the share of sales that must be covered by credits equals the overall clean 

energy goal because all generation from hydroelectric and nuclear plants, whether existing or new, earn credits. In 

the PC and RB cases, the share of total sales that must be covered by credits is very similar to that in the BeES case. 

The shares are slightly higher in the PC case because generation from existing hydroelectric and nudear plants 

earns a small share of credits in this case. In the SUE case, the share of total sales that must hold credits is 

significantly lower than in the BeES case because sales from small utilities are not required to hold credits. These 

small utilities account for roughly 25 percent of sales so the overall credit share required is lower by about that 

amount, 

Table 2. Clean Energy Goal and Credit Shares Across Select Cases' 

Overllli Required Clean Energy Target 8S 8 Percent at All Sales SUE as a 

Clean- Percent of 

Energy Covered 

Year GOIII' BeES AC PC RB SUE Sales 

2015 45" 17" 45~, 20% 23% 121> 17% 

2020 50!> 23% 50" 26" 321> 17% 23" 

2025 GOI> 341> 60" 371> 461> 251> 3496 

2030 7o" 451> 701> 481> GOI> 341> 451> 

2035 80" 56% 80" 5.% 74% 42% 56" 

2040 851> 62% 85% 64% 80% 46,. 62% 

2045 90% 68% 901> 70" 87" sal> 68" 

2050 95" 74% 95,. 76% 94% 54,. 74" 

1 Goal is expressed as II percent of all sales, exceptforthe Small Utilities Exempt (SUE) case, where it is expressed as a 

percent of c.overed sales, liS specified in the modified request lenerfor this study (see Appendi~Al_ In 2035, covered 

sales in the SUE CBSe are about 7S percent ofnational sales, reducing the effective clean ene-rty goal to about 60 percent 

moaticnal sales, Fortha C2.1 Bnd C3.0cases, the realized clean energy Coal mByfali below the 80 percent national 

target due tathe USE!: of alternative compliance credits. 

u.s. Energy InformatIon Admmistration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
133 

Results 

BCES case impacts relative to the AE02011 Reference case 

The BCES policy changes the generation mix, reducing the role of coal technologies and increasing reliance on 

natural gas, non-hydro renewable and nuclear technologies (Figure 1, Tables B1 and B2). Coal-fired generation, 

which in the Reference case increases by 23 percent from 2009 to 2035, decreases by 41 percent in the BCES case 

over the same period. Relative to the Reference case, where natural gas generation grows steadily throughout the 

projection period, natural gas generation in 2025 is 34-percent higher and 53-percent higher in 2035. Under the 

BCES policy, non-hydro renewable technologies grow at the fastest rate, increasing from 146 billion kilowatthours 

in 2009 to 601 billion kilowatthours in 2025 and 737 billion kilowatthours in 2035. These totals are 60 percent and 

75 percent greater than the 2025 and 2035 Reference case projections, respectively. 

The BCES case provides different incentives to existing and new nuclear power plants because only the latter earn 

credits. Nearly 65 gigawatts of new capacity are installed by 2035 in the BCES case compared to approximately 6 

gigawatts in the Reference case. Generation from existing nuclear plants does not qualify for credits and, as a 

result, more than 14 gigawatts of this capacity are taken out of service, while less than 2 gigawatts of capacity are 

retired in the Reference case. 

Since fossil-fueled generation that captures and sequesters carbon emissions is given nearly full BCES credit, the 

BCES spurs 47 gigawatts of coal capacity to be retrofitted with carbon capture and sequestration (CC5) equipment 

by 2035. Nearly all of these retrofits occur in the final 10 years of the forecast period, with less than one gigawatt 

of capacity retrofitted by 2025. No new coal plants with CCS are added in the BCES case beyond the small amount 

found in the Reference case. 

Figure 1. Total Net Electricity Generation 

billion kilowatthours 

6.000 

5,000 

4.000 

I 3,000 

2,000 

1,000 

2009 

Ref 

2025 

BCES Ref BCES 

2035 

• coal .petroleum .natural gas :vnuclear .hydropower .non·hydro renewables other 

Source: u.s. EnergylnformationAdmlrustration. NatlonalEnergyModehngSystem. rurn. refhan.d082611b and 

cesblngbkd10D611a. 

u.s. Energy Information AdministratIon ! Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
134 

Among renewable sources, wind and biomass have the largest generation increases under the BeES (Figure 2, 

Tables 81 and 82). Under the BCES policy, 2035 wind generation is more than five times its 2009 level. Total 2035 

wind generation under the BCES is more than double the 2035 level in the Reference case. Biomass generation 

shows robust growth, as well, within the BCES framework. All of the growth in biomass use relative to the 

Reference case is attributable to co-fired generation, which reaches 187 billion kilowatthours in 2025 before 

declining to 156 billion kilowatthours in 2035 as coal-fired plants that co-fire biomass are retired. 

Figure 2. Total Non-Hydroelectric Renewable Generation 

billion kilowatthours 

BOO 

700 

600 

500 

400 

300 

200 

100 

0 II " 

Ref BeES Ref BeES 

2009 2025 2035 

• geothermal • municipal waste .wood and other biomass solar .wind 

Source: U.S. EnergylnformationAdministration. NationalEnergyModelingSystem. runs refhall.d082611b and 

cesbingbk.dl00611a 

Under the BCES, projected annual electricity sector carbon dioxide emissions are 22 percent below the 

Reference case level in 2025 and 43 percent lower in 2035 (Figure 3, Tables 81 and 82). In the Reference case 

electricity-sector carbon dioxide emissions increase modestly over the projection period, reaching annual 

emissions of 2,345 million metric tons of carbon dioxide (MMTC02) in 2025 and growing further to 2,500 MMTC02 

emitted in 2035. Over the 2009-to-2035 period, cumulative CO, emissions are 20 percent lower in the BCES case 

than they are in the Reference case. 

U.S. Energy InformatIon Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bjngaman 
135 

Figure 3. Electricity Sector Carbon Dioxide Emissions 

million metric tons C02 percent difference (BCES - Reference) 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

o 

2005 2009 2015 2020 2025 2030 

_Electricity Sector C02 Emissions - Reference 

-Electricity Sector C02 Emissions - BCES 

..... Percent Difference (BCES-Reference) 

2035 

0% 

-5% 

-10% 

-15% 

-20% 

-25% 

-30% 

-35% 

-40% 

-45% 

-50% 

Source: U.S. EnergylnlormationAdministrallon. National Energy Modeling System. runs refhall.d082611b 

and cesbingbk.d10re11a. 

The BeES has a negligible impact on electricity prices through 2022, but prices rise in later years. (Figure 4, 

Tables B1 and B2). In the early years of the projection period, there is negligible impact on average end-use 

electricity prices, as the requirement to hold BeES credits is modest. As shown in Table 1, the share of total sales 

that must be covered by credits does not exceed 45 percent until after 2030. This is important because, while 

coal-fired plants do not receive BCES credits, efficient combined cycle plants receive 0.48 credits for each 

megawatt hour they generate, more than retailers purchasing their output are required to hold until after 2030. 

This effectively reduces the cost of most natural gas-fired generation until the later years of the projections. 

Electricity prices do grow later in the projections, reaching 21 percent above the Reference case level by 2035 in 

the BCES case. 

Figure 4. BCES Impact on Electricity and Natural Gas Prices (BCES Difference from Reference case) 

2009 doHarsfMcf 

0.9 

O.S 

0.7 

O.G 

0.5 

0.4 

0.3 

0.2 

0.1 

2009 cenis/kWh 

2.5 

20 

15 

10 

05 

00 

0.0 ---."-~~~""-~ .. -~-" -05 

2015 2020 2025 2030 2035 

-Average Delivered Natural Gas Pnc! 

-Average Electncny Price 

percent difference 

25% 

--- Average Delivered Natural Gas Price 

- -- Average Electncity Price 

Source. u.s_Enefgylnfor!'M;bOflAdmmlSlrltIOfl NlltonalEnergyModelingSysltml.run!> rrlhlU.d082611b anl1eesblngOk.l1100s11l 

u.s. Energy Information Administration ! Analysis of Impactsof a Clean Energy Standard as requested by Chairman Bingaman 
136 

While average end-use electricity prices increase nationallv after 2020 in the BeES case, the increase is not the 

same across all regions (Table 3). In 2025, when national average electricity prices in the BCES case are projectec 

to be 3.6 percent above the Reference case level, regional projected prices are below the Reference case level in I 

of the 22 regions including New England (NEWE) and California (CAMX) which already have significant generation 

from eligible clean energy resources. By 2035, prices are below the Reference case level in only one region, MRO 

East (MROE), reflecting the significant share of qualified end-use generation projected to be co-produced in that 

region by facilities producing cellulosic biofuels to comply with the Federal Renewable Fuels Standard. The 

regions with the highest price increases in 2035 (by percent) are the SERC Central Region (SRCE) (69.2-percent 

increase) and the WECC Northwest Region (NWPP) (61.5-percent increase). The two regions with the highest 

increases in terms of cents per kilowatthour in 2035 are NPCC long Island (NYU), where prices increase by 5.2 

cents/kWh and SERC Central (SRCE), where prices increase by 4.2 cents/kWh. 

Natural gas prices also increase in the BeES case, particularly in the early years of the projections (Figure 4, 

Tables B1 and B2). Early in the projection, natural gas prices rise as generation from natural gas increases to 

comply with the BCES and bank credits for future use. As new capacity is built and other clean technologies 

continue to be expanded, the natural gas price premium over the Reference case gradually declines. Natural gas 

price impacts reach their height in 2016, where prices are $0.83/ thousand cubic feet (12 percent) higher than in 

the Reference case. 

Table 3. BeES Regional End-use Sector Average Prices (2009 cents/kWh) 

Region 

ERCT EReOT 

FReC • FRCC All 

MROE • MRO East 

MROW - MRO West 

NEWE - NPCC New 

NYCW NPCC NY'Cf1Nestch",ster 

SRGW SERC Gateway 

SRSE " SERC Southeastem 

SRcE SERC Central 

SRVC " SERC VACAR 

SPNO spp 

SPsO - SPP South 

AZNM WECC Southwest 

CAMX WECC Callfomia 

NWPP - WECC Northwest 

RMPA - WE.CC Rockies 

U.S. Average 

2009 2G25 

Reference 

92 

11.6 10.9 

9.3 1.5 

7.S 6.S 

15.7 13.6 

19.9 16.13 

1S.1 1IL7 

l1.£i 11.9 

12.2 10.7 

9.6 iLl 

8.6 8.5 

7.5 1.3 

7.B 6.5 

!U e.7 

HI 6J) 

It6 8.1 

7.9 7.6 

6.9 7.S 

!Ul 9.5 

13.3 

7Jl 

6.2 

9Jl 

2035 

BCES Refer-enee 

9.0 

12.0 

Hl 

16.7 

17.4 

11.1 

11.7 

9.0 

8.5 

7.2 

6.7 

8.9 

9.4 

BCES 

11.3 

11.3 

u.s. Energy Information Admjnistratlon ! Analysis of Impacts of a C!ean Energy Standard as requested by Chairman Bingaman 
137 

Electricity expenditures increase in the BeES case after 2020 as a result of higher electricity prices (Figure 5, 

Tables B1 and B2). However, because electricity sales decrease later in the forecast period relative to the 

Reference case, the impact on electricity expenditures is smaller than the impact on electricity prices. In 2025 and 

2035, total annual electricity expenditures across all sectors in the BCES case are 2.8 percent and 15.1 percent 

above the projected Reference case level, respectively. Household average annual electricity expenditures 

similarly increase over the projection horizon. In 2025, average household electricity expenditures are $1,198 in 

the BCES case - $36 above the Reference case. This difference increases to $170 in 2035 between the two cases 

($1,366 versus $1,196) 

Figure 5. Total Electricity Expenditures 

billion 2009 dollars 

500 

400 

300 

200 

100 

2015 2020 2025 

Per..:en: Difference {BeES Reference; 

2C~o 

12% 

8% 

0% 2030 2035 

_Reference _CES -Percent Difference (BCES - Reference) 

Source: u.s. EnergylnformalionAdmlnlStratiOn. NationalEnergyModehng System. rurn; refha!l.d082611b and 

cesblOgbk..d100611a. 

Higher natural gas prices also lead to increased natural gas expenditures outside the electricity sector in the 

BeES case (Figure 6, Tables B1 and B2). In 2025, non-electric natural gas expenditures in the BeES case are 3.4 

percent higher than Reference case levels. This differential increases to 6.5 percent by 2035. Natural gas 

expenditures in the electric power sector experience upward pressure from both higher prices and higher 

consumption, but the impact of those changes on ultimate consumers is reflected in their electricity expenditures. 

U.S, Energy Information Administration I Analysis of Impacts of a (lean Energy Standard as requested by Chairman Bingaman 
138 

Figure 6. Natural Gas Expenditures, Not 'nduding the Electric Power Sector 

billion 20()S dollllrs 

200 

160 

120 

80 

o 

CSDlng!>;callJ!l!>11a 

........ Percenl Difference (BeES Reference) 

Inlo'rmlI.!ion,AI:l,,,;nislra!llon. N'!iOflllIEnefgyModellng System. runs refhaU.dIl82611b and 

The IICES case reduces projected real Gross Domestic Product (GOP) relatilll! to the Reference case, with II peak 

difference ill the GOP ievel of less than haif of one percent in 2035 and generally lower impact in earlier years. 

(Figures 7 and 8, Tables III and 82). GDP grows at an average annual rate of 2.67 percent between 2009 and 2035 

in the BCES case, just slightly below the Reference case growth rate of 2.69 percent. 

figllre 7. Annual Gross Domestic Product 

billion 2005 dollars 

30,OOll 

25,000 

20,000 

15,000 

10,000 

5,000 

o 

IIIIReference lIIIElCES 

10 u.s. Energy lnformation Administration ! Analysis oflrnpacts of a Clean Energy Standard as requested by Chairman 8lngaman 
139 

Figure 8. BCES Impact on Employment and Real GOP, Percent Difference (BCES Difference from Reference case) 

1.0% 

0.5% 

00% 

2010 . . 35 

-05% 

-1.0% 

-GOP -Non-Farm Employment 

Source: U.S. EnergylnformationAdmlni51ration. National EnergyModelingSystem. runs relhaU.dOS2611b 

and cesbingt;cdl0rella. 

Alternative Case Results 

As described earlier, EIA also prepared alternative cases that vary certain aspects of the CES policy. This section 

briefly describes the main impacts of these alternative cases. 

As in the BeES case, each of the alternative cases shows reductions in coal generation and increases in natural 

gas, renewable and nuclear generation (Figures 9 and 10). Because each of the alternative cases maintains the 

basic structure of giving renewable generation a full credit and no credits to conventional coal generation, all of 

the cases show renewable electricity generation growth relative to the Reference case. Natural gas and nuclear 

generation levels vary across the cases. The All Clean (AC), Partial Credit (PC) and Revised Baseline (RB) cases all 

show greater nuclear generation than in the BCES case. Each of these cases contains provisions aimed at providing 

some credit to existing nuclear plants which results in greater nuclear generation and lower coal generation. The 

highest nuclear generation occurs in the PC case where it reaches levels 9.7 percent and 62.2 percent greater than 

the BCES case in 2025 and 2035, respectively. This generation is 8.2 percent and 46.3 percent above the Reference 

case levels in those same years. 

The shift away from coal is smaller in the cases with credit price caps, as compliance is achieved by making 

alternative compliance payments. This is particularly true in the Credit Cap 2.1 (C2.1) case where renewable 

generation is the smallest among alternative cases. Both this case and the Small Utilities Exempt (SUE) case, where 

suppliers with sales of less than four million MWhs are exempt from meeting the targets, have the largest coal 

generation as a result of the ability to comply without needing as much clean generation. The role played by fossilfueled technologies that sequester carbon emissions varies across the cases, with larger amounts seen in the AC 

and RB cases that tend to have higher CES credit prices that spur the use of higher-cost technologies. 

Non-hydroelectric renewable generation increases relative to the Reference case in all of the alternative cases, 

but it varies among them (Figures 11 and 12). The lowest level among the alternative cases in 2035 occurs in the 

C2.1 case where utilities rely on making alternative compliance payments rather than increasing clean generation, 

while the highest level occurs in the C3.0 case. In the C3.0 case, the option to make alternative compliance 

payments at a higher rate than in the C2.1 case results in coal generation between the levels in the BCES and C2.1 

cases. However, the credit price levels in the C3.0 case are not high enough to support the high levels of new 

U.S. Energy Information Administration ! Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 11 
140 

nuclear capacity seen in the other alternative cases, leading to a slightly higher level of non-hydro renewable 

generation than occurs in those cases. 

Figure 9. Total Net Electricity Generation in Alternative Cases, 2025 

billion kilowatthoufs 

5000 

4000 

3000 

2000 

1000 

2009 Ref BCES AC PC RB SUE 0.1 C3.0 S+C 

.coal.petroleum -natural gas it nuclear .conventional hydropower. non-hydro renewables 'other 

Source: u.s. Energyln1ormationAdmmlStratlon. NatlonalEnergyModellngSystem, runs refha1Ld082611b, 

cesbmgllKdl00Sll ~ cesbingbkac.dl00S11 •. cesbingllkrb.dl00311 •. cesbngbkpc.dl00S11 •. cesbingllksm.dl00311b. 

cesbmobk!:21.dl 00311b, cesblngbkc30.dl 00311 •. cesbingbkSM100Sll •. 

Figure 10: Total Net Electricity Generation in Alternative Cases, 2035 

billion kilowatthours 

6000 

5000 

4000 

3000 

2000 

1000 

o 

2009 Ref BeES AC PC RB SUE 0_1 C3.0 S+C 

-coal .petroleum _natural gas. nuclear _conventional hydropower .non-hydro renewables t other 

Source: U.S. EnergylnformIl1ionAdmlnl5tration_ National EnergyModebng System, runs refhlliLdOB2611 b. 

cesbingbKdlDD611 .. cesbingbkac.dl00s1 Ia. cesbingbkrb.d100311 •. cesbngbkpcdl0OS11 •. Cesbingbl<sm.dl00Jl1b. 

cesbingbkc21.dl00311b. cesbingbkc30.dl00311 •. cesbingbkScdl00S11. 

12 U.S. Energy Information Admmistration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
141 

Figure 11. Total Non-hydroelectric Renewable Generation in Alternative Cases, 2025 

billion kilowatthours 

1000 

800 

600 

400 

200 

o 

2009 Ref BCES AC PC RB SUE 0.1 C3.0 S+C 

• geothermal -municipal waste .wood and other biomass solar _wind 

Source: U.S. EnergylnformationAdministration. National Energy Modeling System, runs refhall.d082611 b, 

cesbingbk.dl00611a cesbingbkac.dl00611 •• cesbingbkrb.dl 00311 •• cesbngbkpcdl00611a, cesbingbksm.d100311b, 

cesblngbkc21.dl00311b, cesblngbkc30.dl00311a, cesbingbksc.dl00611a. 

Figure 12. Total Non-hvdroelectric Renewable Generation in Alternative Cases, 2035 

billion kilowatthours 

1000 

800 

600 

400 

200 

2009 Ref BCES AC PC RB SUE 0.1 C3.0 

• geothermal -municipal waste .wood and other biomass solar _wind 

S+C 

Source: U.S. EnergylnformationAdministration. National EnergyModeling System, runs refhalLd082S11b, 

cesbmgbk.dID0611 .. cesbingbkac.dl 00611 •. cesbingbkrb.dl 003118. cestingblcpc.dlO0611a. cesblngbksm .d1 00311 b. 

cesbingbkc21.dl 00311b. cesbingbkc30.d1oo311a. cesbingbksc.d10D611a. 

us Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 13 
142 

While all alternative cases achieve carbon dioxide emissions reductions in the electric power sector relative to 

the Reference case, there are significant differences across cases (Figure 13). Trends in emissions directly reflect 

the generation mix. The cases with the largest emissions reductions, the RB, PC, and AC cases, achieve between 25 

percent to 31 percent lower emissions in 2025 than in the Reference case. By 2035, their electricity sector carbon 

dioxide emissions fall to levels 60 percent to 63 percent below the Reference case, much larger than the 43 

percent reduction seen in the BCES case. The Jarger emissions reductions in these cases occur because of 

incentives in them to continue operating existing nuclear plants while retiring additional coal plants. The opposite 

occurs in the SUE, C3.0, and C2.1 cases where the exclusion of small utilities from coverage or the credit price cap 

reduce the amount of clean energy needed for compliance. 

Figure 13. Electric Power Sector Carbon Dioxide Emissions in Alternative Cases, 2025 and 2035 

million metric Ions C02 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

2005 2009 Ref BCES AC PC 

;;'2025 -2035 

RB SUE C2.1 C3.0 S+C 

Source: U.S, EnergylnformahonAdministration. NatlonaJEnergyModelingSystem. runs refhalJ,dOB2611b. 

ceSbingbk.d100611 a.. cesblngbkac.d100611 a, cesbmgbkrb.d100311 a. cesbngbkpc.d100611a. cesbrngbksm.d100311 b. 

cesbingbkc21.dl00311 b, cesblngbkc3Q.d100311 B. cesblngbkSc.d1006118 

Each of the alternative cases causes average end-use electricity prices to rise relative to the Reference case by 

2035, but there is a wide range of price changes (Figure 14), As in the BCES case, 2025 electricity price increases 

among the alternative cases are modest. The only case where 2025 electricity prices exceed Reference case prices 

by more than 10 percent is the AC case, where they are 10.3 percent higher. This occurs because the required 

credit share is much higher in the AC case, exceeding the credits given to natural gas combined cycle plants by 

2018, much earlier than in the other cases. In contrast, the only case shown in Figure 14 to have a 2035 average 

electricity price that is not at least 10 percent above the Reference case projected price is the Credit Cap 2.1 case, 

Average 2035 electricity prices among all cases, however, are less than 30 percent higher than Reference case 

prices in that same year. The two cases with the highest percentage increases in 2035 prices are the Revised 

Baseline case and the All Clean case, each having prices that are approximately Z7 percent higher than the 

Reference case. The electricity price in the Standards and Codes case does not reflect the higher level of 

expenditures needed for structures and equipment to meet more stringent codes and standards. 

Electricity prices from the SUE case are not displayed in Figure 14, because EIA is not able to disaggregate the price 

impacts of exempt small utilities from those of larger covered utilities. Average price impacts in this case are 

subject to misinterpretation given that there is likely to be a considerable divergence in the price impacts on 

customers of exempt and non-exempt electricity providers. Price impacts in this case will vary depending on how 

14 u.s. Energy Information AdministratIon I Ana!ysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
143 

the value of the credits earned by clean energy generators serving uncovered small utilities flows through to 

electricity prices. If the credits from these generators generally flow with the electricity to the small utilities they 

serve, the electricity prices to the customers of the exempt providers could actually fall because of revenue they 

earn selling the credits to non-exempt providers. However, the degree to which this might occur is uncertain. 

Figure 14. Impacts on National Average Electricity Prices in Alternative Cases, 2025 and 2035 

percent difference from Reference case 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

BCES AC PC RB C2.1 C3.0 

.2025 '''.:2035 

5+C 

Source: U.S. EnergylnformationAdminislratlon. N.tionalEnergyModeling System, runs refh.ll.d082S1 lb. 

cesbingbk.d10061 1 a cesblngbkac.dl0061 10, cesbingbkrb.dl003l1., cesbngbkpc.dl00611a, cesbingbksm.dl0031lb. 

cesbingbkc21.dl00311 b. cesbingbkc30.dl0031la. cesbingbksc.dl00611a. 

Regional electricity prices also vary widely across cases (Tables 4 and 5). As with the national prices, the 

magnitude of the regional price impacts compared to the Reference case depends on the overall stringency of the 

targets and whether or not the compliance costs are capped. Generally, the largest price increases in percentage 

terms occur in regions where Reference case prices are relatively low (e.g. NWPP) or where prices are below the 

national average in regions that are heavily dependent on coal. As in the BCES case, prices in the MROE region 

decrease across all alternative cases by 2035. The All Clean and Standards and Codes cases cause the greatest 

number of regions (15 out of 22) to experience price increases of more than 25 percent in 2035. However, as 

noted in the discussion of the BCES case results, electricity expenditure impacts in the Standards and Codes case 

are ameliorated by lower levels of electricity use. 

U.S. Energy Information Administration ! Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingamarl 15 
144 

Table 4. Regional Average Electricity Prices in Alternative Cases, 2025 (2009 cents/kWh) 

2009 2025 

Region Ref BeES AC PC RB 0.1 C3.0 S..c 

EReT • EReOT All 10.4 9.2 9.0 10.9 9.1 9.6 9.0 e.9 10.9 

FRce • FRee All 11.6 10.9 lZ.Q '12:7 12,0 12.1 11.3 11.4 12.7 MROE • MRO East 9.3 7.5 7.0 7.7 6.9 7.3 7.2 7.0 7.7 

MROW • MRO West 7.6 6.8 8.0 7.9 8.1 8.0 7.4 7.4 7.9 

NEWE • NPCC New England 15.7 13.6 12.2 1,(S 12:5 ti.7 13.3 12.8 14.6 NYew • NPCC NYClWestchester 19.9 16.8 16.7 18.2 16.7 17,4 16.7 16.3 18.2 

NYU • NPCC Long Island 18.1 16.7 17,4 18.6 17.2 17.3 19.6 

NYUP • NPCC Upstate NY 11.6 11.9 11.2 12.2 11.8 11.5 13.2 

RFCE • RFC East 12.2 10.7 10.8 11.5 10.6 12.0" 12:7 -

RFCM· RFC Michigan 9.6 B.7 9.1 9.3 9.1 6.9' 9.9 

RFCW· RFC West B.6 8.5 9.5 9.7 B.9 B.9 10.1 

SRDA • SERC Delta 7.5 is 7.0 7.1 7.2 7.2 6.5 

SRGW ,SERC Gateway 7.B 6.5 6.8 7.6 6.5 6.6_: SRSE • SERe South.astern 9.1 8.7 8.9 B.9 8.9 8.9 9.0 

SRCE • SERC Central 1.8 6.0 7.2 •. 7 7.3 7.1 G.8 7.1 6.7 SRVC • SERC VACAR B.6 8.1 9~1 8.5 "'9~2 8.9 8.7 B.B 6.5 

SPNO • SPP North 7.9 7.6 8':9 9.1 8.6 9.0 7.6 8.4 9.1 

SPSO • SPP South 6.9 7.8 S.O 9:' 80 'S.5 8.1 8':0' 9,1 

AZNM . WECC Southwest 9.6 9.5 9.5 9:8 10.0 9.8 9.7 9.S 98 CAM)(. WECC California 13.3 13.2 13.2 

NWPP . WECC Northwest 7.0 5.5 4.1 

RMPA • WECC Rockies 6.2 10.2 11.0 

U.S.A"''''Il'' 9.B 9.7 9.4 

Source: u.s. EnergylnfonnationA{iminiStrati01t Naliona1EnergyModeling System, [1m$. refha!t.dOS2811b. ce5binsPk.d100011a, cesbingbkac.dl00s11a, 

ce5blngbkfb.d100311a, eesbingbkpl!d100811a, cesb~.d100311b, Ce5blogbkc21.d100311b. cesbi~c30.d100311a. cesbingbksc.d100s11a. 

Table 5. Regional Average Electricity Prices in Alternative Cases, 2035 (2009 cents/kWh) 

2035 

Region Ref BCES AC PC RB C2.1 C3.0 S+C 

ERCT • EReOT All 10.4 

FRec. FRee All 11.6 

MROE • MRO East 9.3 

MROW • MRO West 7.6 

NEWE· NPce New England 15.7 

NYCW • NPce NYClWestcheste, 19.9 NYU • NPCC Long Islend 1S.1 

NYUP - NPCC Upstate NY 11.6 

RFCE . RFC East 12.2 

RFCM • RFC Michigan 9.6 

RFCW • RFC West B.6 

SRDA· SERe Dena 7.5 

SRGW • SERC Gateway 7.B 

SRSE· SERe Southeastern 9.1 

SRCE· SERC Central 7.B 

SRVC . SERe VACAR B •• 

SPNO • SPP North 7.9 

SPSO • SPP South 6.9 

AZNM • WECC Southwest 9.B 

CAMX • WECC California 13.3 

NWPP • WECC Northwest 7.0 

RMPA • WECC Rockies B.2 

U.S. A"""ga 9.8 

Source: u.s. EnergylnfortMtionAdminiStratiorl. NItiOMIenergyModelingSystem, runs rdhaltl>82S11b, cesbimtm.d10(811a. cesbingtdo;acd100611a, 

et$t)ingbl<rb.d1003111l,cesbl~d100611a,cesbingbksm.dl00311b,cesblngbkt:21.d100311b,cesbingtj(:c30.d100311a.ces~e.d10061ta. 

16 U.S. Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
145 

Natural gas price impacts are significant early in the projection period, but largely moderate by 2035 (Figure 15). 

In 2035, price impacts across cases are generally less than 5 percent, when compared to the Reference case. 

However, impacts on gas prices are generally more significant in the earlier years of the program. By 2025, 

impacts in three cases, AU Clean, Revised Baseline, and Partial Credit, exceed 4 percent, with the Revised Baseline 

case exceeding 8 percent. Cases with reduced need for clean energy generation - the Small Utility Exemption 

case, the Standards and Codes case, and the two credit price cap cases - have more modest gas price impacts in 

the near-term, In 2025, only the Revised Baseline case, where natura! gas generation in 2025 significantly exceeds 

the BCES case level, shows a larger impact on natura! gas prices than the BCES case. 

Figure 15. Impacts on Delivered Natural Gas Prices in Alternative Cases, 2025 and 2035 

percent difference from Reference case 

10% 

8% 

6% 

~ 4% L L 2% 

0% 

BeES AC PC -,% 

.. % 

~ RB • (3.0 5+C 

Source: U.S. EnergylnformationAdmmistration. NationalEnergyModel!ngSystem. runs refhaH.d082611b, 

cesbmgbk.d100611a. cesbingbktlc.dl 006118, cesblngbkrb.d100311 8. cesbngbkpc.d100611 a. cesbingbksm.d100311b. 

cesblngbkc21.d100311 b. cesbingbkc30.d1 00311 a. cesblngbksc.d100611 8.. 

U.S. Energy Information Admn1.istration ! Analysis of Impactsol a Clean Energy Standard as requt!sted by Ch,mman B,ngaman 17 
146 

,Appendix A: Request Lette._r_s __ . 

Mr. IlL)\\,~;:] GTUcr..sp~Cht 

Acting. Administl.tf.\)l 

f.nt:rg)! JnfOfJJWtiun AdminnltldtKm. 

lOCO 1I1dopend,,"ce A YO. ,W 

Washlflgron, DC 2D5 K5 

Dcar Mr. C:mensp..cht: 

llnito1 ~tatts ~rn;lt( 

August 16, 2011 

Over lht: pWit 1l!cwlc~ C01'1;grcs~ hD; wl'll'Jidcroo many diffCI'Cllt legislative. 

proposal~ to dri ... ..:: !hI;!; de,\·tlu?ment amI dep]o:ymmt of dc:an g;n~ating tccb..tl:3"b>gi\:::i .ill 

the powQ' s.ector and :rouce the greenhouse gases J'esulting fn~rn the [tt:m:n:tiuIl ;jf 

cloolriC11y, lJunng the CUIrt.1.lt Longr-:::ss 1 have rocused myattelltl()n ill thi~regard un u 

r(\I'~Y to e,lubli,h» nub,,",,] Cl""n Energ)' 't •• dard (CES) Ihat wo~ld reqdre an 

inc!t~asir:A flen.:em.age of elecLTidly I,.() bl.J: ~f:Jatcd fro:n clC!tn sourccs. 10 this end.. the 

~C1tate C olmnittx on Energy and Ne.nuat Resourc"!i Jut 7orwOlrd a whte paper 'lm:klng 

Fublic input un the dc~j,gn of So CES. A'll the: nCJl:t:;up in the developmeul ofa legislative 

propo:oal, 1 Zltn \.\liling tu r"4u~l Uul1 you cunuuct an snaly~i~ <If the c-=tect'5- of such" 

:n.icj0Il.11 Cl.:::tltI Energy Standard {CJ:S, un:lc:- i1 ~c::rit::s. t:-f different l'icenario ... 

• The cnt:tic> subject to the CES inc!"d.,ll electric "",,,ice p,,,,ider\ tJu,l "oIl 

d,,r,tri;~ity tf) rr.h:ll ~nn"'llmM"!';: The b,,~~ t'\g."ill~twhkh the- clean relluileIn~lt 

S:'lo.lltl bt' calcul:u.cd is ticEmxlas 111 electric utility rct.ailsales in a ~"eu c<:lleu<lar 

'y'eU:'. 

• The ycurly cletln tnetgy tN:-gCfs s[)ou:d ramp linearly fi'01U the current !;tate l',f 

quill itYing de::lJI energy generation h~ un overaJJ tHrget of ;-;((JI!.'tl cleall cnergy in 

2Q35 UK holdjn~ at H()~. indefinitel) neYlIlId 20J1. 

• full or p~rtial clean ""ergy credits should ile awarded 10 geneml"" with a lower 

curbnn-inld1~ity {u. .... rnr:.fl}illrc:iI on }. carhon fiin'l[irir: C't)11i'\!~Ir:l1of:y b1'lsis) tJulll rb<lt cf 

n.ew sup<'J'Critil".at l'.)al g<'ller~lion ("oew !i.lnlbbt:d COl;!;] plunt" liS rlcfincd '.n Ta:'lc 

X.2 ·of "h.~u.'Uf1rj("tS 10 f/J(~ A.rtrtt~r1.{ liner}{v owt(}v/.. 2(}lL 

Jr!q;::,-:·'\1.~t--w,e;ll.gl'w:fi,)J'e('11.$t'f/t1.e')iirS$tm"plIQ11JjJ'4Fi.:44.~cfd(:i',l·.prij). Zet.,) CllU,sS.Oll 

gellcrotlOn :edmologies shJ.uld :'evej'le 1 cr~:HI. f~'r c::ae-'-. MVlh (1Croadt cJcctticity 

s<)l{l, ?ossil gmcratle·n wilh a carbon intensjtyeq'Jal w or grec.ler U'un new 

q..Jfk-"'TLTi.1ical (;,t.l,al ~hould n:Cl:t .... ~ zero credits. Partial credits m:mld be a\ ... ·arded L.1 

f()sl'.il-fu~1 uli1itje5 -'l.enellllin~ wiLh II Ivwt:f ClITcon-irltcnslty th8.11 supcrcriticaJ 00111 

18 u.s. Energy lnformation Admlnis.tratlon j Analys.ls of Impacts of a Clean Energy Standard as reques.ted byChalrman Bmgaman 
147 

prnpmtiol1:-.1 to their lmprov~.1l~'1lt OVl"'J' SU?erc..Titi .. ,'ul ClJul pc:-1\.of\lV'h. 

• Ck";.tn e:tlt:rg)' crooi:a may he '--mnked inc.cfinitc}y. 

• {iem.:r~!ion from existing nuclear and ltydmeieclric utilities ilIDuld be cO'Jnted 

tllwanb Ih. "VeniU hrrgt:\, but they sbouJd lI(>t be awanlt<'. cn:uils. That is, tbe 

S~!l' (lC' all cre(li!.o !!"",:mtil'll und generation from ex:i~tjng :lUo"I~T lIml 

h}'droele;tri~ pl3JltS .'."uJd e~~d. 'Y 2035. 80 percent ahale.; The Ul.r~al JilT 

credited generation would thr:re:ore b~ recluctxl h~' the ~C':'fl~rfttion from e:dstiu.g 

nUdt!".'fT }IDM hyrirodccrric plf1::lts. 

In additiun~ please all~ conduc..i the !ieVtll Ddditionnl u scJ1Sjtjviry 'Ul.~1t iW,Ulji'icu 

hdill'" !ll C{.nslder the effects of changing certain imjlOl1ant policy variables il1lt.c core 

policy: 

Airc}'natt credilitlP flteckani,\,ftts 

!) Aw'tT(j cn-nits to ~H ex.istmg df!' .. 111 gene:ntion. 

2) Dcclid l::Jt:oc:rs.ti.pn from c:xi.!JtinS hydroelectric. atLd IlUC:cur 2erterl.)t1on pIAnt..~ from 

the ba:s.c agaiosl wl:ich a IJtility'~ requirement j, calculi'ltc\J. 

3) ('r",ill technologic'> ft" 1,,110,,",_ 

'Ie'" and ~pnttcd :lUdCllr generation, new a:ld incremeni.lll hydrodccnl( 

gCller ... tior~ ""Ii ....,,,w .. lIle g:m.:ranoll should receiVe 1 c:edit :>er MWh uf 

ret,il eJacrrlcltJi ,old. 

o 'I.wanrl c,i,tine "fmrnl (j.s Cc-mlliiled Cycle ()fGCe.) 1."""0 .. ,,10" "hIlUM 

r«";'1,,0.5 e,<><1;I. per .,rW11 ofrctail el"ctriclty,,,ld. 

• Coni (:qujppocd wilh CaLU.Ull ci1plurc alld l'iLunlBe W. g[l:ul~ that: 9f)% capture 

"m~irm;,:y ,hauld roo:i'/c 0.9 c::edits per M\\'11 of retail eJ"clri';,:;ty sold. 

• :-.Iatuml G" equippd with (;<tIben c8Jl1Ul<: and storage at great", than 95% 

capture efficiency should receive 0.95 ",,,,lit. JeT ~ffi'h af remil electricity 

sold 

• Existing n·.1c1cW" and h)uroc' c::ctri:;:: genel'ators shOUld leceh'e O. J creditE PL'1' 

MWI. of retail .1""lric;:y 'oW. 

4) Exempt aU utilities selling Je,s than 4 million MWh po:: )'Cllr from ~JlUpliar.ce 

wilh !h~ ,(un(\dTu. 

5) ",,\U<:ow c(Jtupli.nn1.::1." ~tll..::rnutely to be achie ..... cd through n paYJllCJu thnv b;:;:g:n.1 all, I 

cents per kilowatt l;o'U( tHld li~(;~ at au iullALiml-.mjuMt);l Hlt; 0," 5~~ ~ year. 

{;) Altow cl.)mplj~nct: ~~ltem.atcly to b<:' achieved through apaYJnem tha', h~g:ns ul 5,:) 

ceJli<; p~r kilowatt nt)L'f and ri5C!:o at an il1fiation .. adjusted rate ot5~~ !1er year. 

U.S, Energy Information Administration i Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 19 
148 

United .5wn:s ,Smarr 

SCl':er.1Wr 30, 2U J 1 

I k I-l ('ward Grnensredlt 

Acting Admin.lf.rt.rator ami O\!puty Administl"3tol' 

Energ:y In_oTTnilllon .I\um:niStt"tim1 

1000 11IdC':JCildcnce Ave. SW 

WaslungtOll, IK 105Mj 

lIpon uU1hcf t::OJlSiderfttion (>flhe design pnr.:uuelt:11J br I:l CI~ Energy Stundard (CaS), 

I would like to :11o(hfy my originru request tor Ill~elingdotel.l AnglL~l16, 2011 Ut; 

followl'i 

flcasc usc the tonowmg set of o'\.>-erall targets :or clean ellel'gy: 

Y~l)I>_C(IJT!l'lill"Ct': 

2015 

?J)?n 

2D25 

2030 

~03:; 

2040 

"045 

"050 

Overull Cl .. r. [;t"'gv T urget 

451~n 

~n% 

60% 

70~11 

80% 

~5Ir" 

90% 

95% 

Th~ 4')v(';mll ('l4':tm Mlr.rSj' ::trgees ~h{'uld bf? ulC't'E".3sed line..1fJY t'letwe' .... J.\ each interiln tilt1l~.t. 

1md held oon~t Ilfk:r 2050. 

Tlll"lQvC1!'111 ch:::atl ..... J.lCll;)' :i1lg-c1!Xu ",.adl unIte uwili:liugN'X1111ll.J;"s I 1!a.'Vt:' ll:qut!'ilt:t.l 

5h{lUtu equul the percen.ttlgc: of the total rctru.1 saies generated by clean C.lcrgy as 

calculated ll.'iitlg the :neUl\I<1lkg} ir.eluded in Ih~ o;gim.1 rcqUt:sL In eN.(.!.h s:cena.n,l the 

total clean er.ergy required til I:-e Aener;uf!d b-M.ed on I,).w~red f.al~~, pta" any n(m.tllTgeled 

clean rmerg;' (c,i,fing DUel our m~ hydro gcuCIlltion. if .pplic.blc), should be c(Jmll to 1h. 

shu.re oral! eleclriciL}, s.D.h:!o. indicllLC1 h the tubh: uhm·e. The 'ml:: t:x.a:rrinn i~ h mond 

sc~o<'lrl() ,#4~ :[1 wr.i.;h uhht1cs with .UUlUal sales (If lesh tlm!J 4,000.000 MWh.at'\;! e,,~pf. 

frem having a (,!mnpliancc ()hli~fi(H), r('l:' ~Cell:lri('l rl-1, the ()\,ero.1l -elron eth~1"gy tmget::. 

should be applied onl)· to the totod retail ~lc.."j. 1Tom utilitlC;l> with aJ"m:.nl retttil sales 

greater :rum 4,000,000 MWh. 

20 U.S. Energy Information AdminIstration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
149 

TInnr YOIl flJr yon anent:or, t{' tbs t'~lIest. 1 :lsi that my !daff he hriefed pt'lOf to the 

rek.w.'C uf lnfilmlah('r:"l. S-houJd y-nu ()r yQUf ~(aff}m' .. e uny 4UCdtlOnli, plooac cnntacT K C\.'U1 

Rcnm .. rl w:th lhe' Sc:nah: Cnmmiw.:c QI'I Energy and NlituIfll RC:)1UlIEL:t::s at (202) 2:24~ 1l':26. 

U.S. Energy Information Administration I Analysis of Impacts of a C!ean Energy Standard as requested by Chairman Bingaman 21 
Table B1. The BeES and alternative cases compared to the Reference case, 2025 

2009 2025 2025 

Partial Revise-d Small Credit Cap Credit Ca

Ref Ref BCE5 All Clean Credit BaseHne Utilities 2.1 3.0 

Generation (billion kilowatthours) 

Coal 1,772 2,049 1,431 1,305 1,387 1,180 1,767 1,714 1,57

Petroleum 41 45 43 44 44 44 45 45 4

Natural Gas 931 1,002 1,341 1,342 1,269 1,486 1,164 1,193 1,24Nuclear 799 871 859 906 942 889 878 857 84

Conventional Hydropower 274 306 322 319 300 321 316 298 31

Geothermal 15 25 28 25 31 24 27 22 2

Municipal Waste 18 17 17 17 17 17 17 17 1

Wood and Other Biomass 38 162 303 289 295 301 241 266 31

Solar 18 18 33 18 35 18 18 1

Wind 71 153 233 251 285 252 179 193 22

Other 18 16 16 16 16 16 16 16 1

Total Generation 3,981 4,665 4,612 4,547 4,503 4,566 4,669 4,640 4,62

Capacity (gigawatts) 

Coal 317 323 278 254 275 252 297 298 28

Petroleum 116 87 86 85 92 86 88 91 9

Natura! Gas 351 382 407 400 383 407 395 384 38Nuclear 101 110 109 115 119 112 111 108 10

Conventional Hydropower 78 79 83 82 78 82 81 79 8Geothermal 

Municipal Waste 

Wood and Other Biomass 17 17 17 17 17 17 17 1

Solar 11 11 17 11 18 11 11 1

Wind 32 53 77 86 97 86 61 67 7

Other (including pumped storage) 24 25 25 25 25 25 25 25 2

Total 1,033 1,095 1,101 1,089 1,106 1,093 1,094 1,087 1,08

22 US Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
Table B1. The BCES and alternative cases compared to the Reference case, 2025 (cont) 

Prit::es {2009 cents/kWh) 

Credit Price 

Electricity Price 

Residential 

Commercial 

Industrial 

Average Delivered Natural Gas Price (2009 

dollars/Mcf) 

Expenditures (billion 2009 dollars) 

Total Electricity Expenditures 

ReSidential Electricity Expenditures Household Electricity Expenditures (Z009 

Dollefs/Hous€hold) 

Natural Gas Expenditures 

Electricity Sector Na tura! Gas Expenditures 

Non-Electricity Sector Natural Gas 

Expenditures 

CES Compliance 

Credits Required (percent of sales) Credits Achieved (percent of sa les) Generation Achieved (percent of sa les) 

Total ElectriCity Sales (billion Idlowatthours)' 

Emissions 

Sulfur Dioxide (short tons) 

Nitrogen Oxide (short tons.) 

Mercury (short tons) 

Carbon Dioxide (mUlion metric tons CO.) 

Macroeconomic 

GDP (billion 2005 dollars) 

Per Capita GOP (thousand 2005 dollars/person) 

Employment, Non-Farm (million) Employment, Manufacturing (million) 

1 fxlcudes sales in Alaska and Hawaii 

2009 

Ref 

0.0 

9.8 

11.5 10.1 

6.8 

7.5 

350 

156 

1,379 

156 

34 

122 

3,556 

5.7 

2.0 

40.7 

2,160 

12,881 

42 

131 

12 

2025 

Ref 

0.0 

9.0 

10.7 

9.3 6.3 

8.1 

373 

157 

1,162 

187 

39 

148 

4,105 

4.1 

2.0 

29.1 

2,345 

20,012 

55 

155 

16 

2025 

Partial Revised Small Credit Cap Credit C

BeES All Clean Credit Baseline Utilities 2.1 3.0 

61 

94 

11.2 

9.5 

6.5 

85 

383 

151 

1,198 

211 

59 

153 

34 

31 33 

44 

4,073 

34 

1.8 

19-4 

1,840 

6.4 

10.0 11.7 

10.2 

7.0 

8.5 

399 

157 

1,237 

212 

57 

155 

60 

59 50 

72 

3,981 

3.3 

1.7 

17.6 

1,704 

5.9 

9.5 

11.3 

9.7 6.6 

84 

387 

162 

1,205 

209 

57 

152 

37 

35 

36 

71 

4,065 

3.2 

1.7 

18.3 

1,762 

83 

9.8 

11.5 

10.0 

6.9 

B.7 

396 

155 

1,227 

227 

70 

158 

46 

34 34 

49 

4,022 

3.3 

1.5 

15.9 

1,623 

2.9 

B.9 

10.7 

91 

5.2 

B.2 

370 

156 

1,158 

197 

48 

149 

25 

25 25 

35 

4.128 

3.8 

1.9 

24.4 

2,118 

3.4 

9.2 

11.0 

9.4 

64 

8.3 

379 

159 

1,181 

201 

51 

151 

34 

25 25 

36 

4,089 

3.3 

2.0 

23.4 

2,082 

4

9

11

9

6

8

3

1

1,1

2

1

4,0

3

1

21

1,9

19,963 19,947 19,951 19,947 19,994 19,990 19,9

56 56 56 56 56 56 

156 156 156 156 156 156 1

16 16 16 16 16 16 

Source: U.S. Energy Information Administration. National Energy Modellng5ystem, runs refha1Ld082611b, cesblngbk.d100611a, 

cesbingbka c.dl006 cesbingbkrb.d2100311a, cesblngbkpc.dl00611a, cesbingbksm,dl00311b, cesbingbkc21.d100311b, cesblngbkc30.dl00311;a, CE'sbingbksc.dl00611a. 

u.s. Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bmgaman 23 
Table 62. The BeES and alternative cases compared to the Reference case, 2035 

2009 2035 Z035 

Partial Revised Small Credit Cap Credit C

Ref Ref BCES All Clean Credit Baseline Utilities 2.1 3.0 

Generation (billion kilowatthours) Coal 1,772 2,184 1,044 747 936 737 1,629 1,619 1,2

Petroleum 41 47 43 43 43 44 45 44 

Natural Gas 931 1,293 1,980 1,840 1,658 2,007 l,l77 1,432 1,5Nuclear 799 868 783 1,114 1,269 999 1,105 932 1,0

Conventional Hydropower 274 314 312 319 300 323 322 322 3

Geothermal 15 42 49 51 55 50 53 50 

Municipal Waste 18 17 17 17 17 17 17 17 

Wood and Other Biomass 38 181 295 243 271 245 323 350 3

Solar 21 24 65 22 66 23 25 

Wind 71 159 351 355 363 327 319 241 3

Other 18 16 16 16 16 16 16 16 

Total Generation 3,981 5,142 4,916 4,811 4,950 4,831 5,131 5,049 5,0

Capacity (gigawatts) 1 

Coal 317 330 260 249 269 249 304 305 2

Petroleum 116 87 83 83 86 83 84 86 

Natural Gas 351 455 496 458 448 483 443 455 4

Nuclear 101 110 155 142 163 127 141 118 1

Conventional Hydropower 78 81 83 82 78 83 83 83 

Geothermal 

Municipal Waste 4 

Wood and Other Biomass 20 20 20 20 20 20 20 

Solar 13 14 33 13 33 13 14 

Wind 32 55 116 120 123 109 105 81 1

Other (including pumped storage) 24 25 25 25 25 25 25 25 

Total 1,033 1,185 1,263 1,222 1,236 1,221 1,228 1,198 1,2

24 U S. Energy InformatIon Admimstration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
Table B2. The BeES and alternative cases compared to the Reference case, 2035 (cont) 

Prices (2009 cents/kWh) 

Credit Price 

Electricity Price 

Residential 

Commercial 

Industrial 

Average Delivered Natural Gas Price (2009 

doUars/Mcf) 

upenditures (bUlion 2009 dollars) 

Total Electricity E:qJenditures 

Residential Electricity Expend!tures 

Household Electricity Expendltures (2009 

Dollars/Household) Natural Gas Expenditures 

ElectriCity Sector Natural Gas Expenditures 

Non-Electricity Sector Na tural Gas Expenditures 

CES Compliance 

Credits Required [perceM of sa Ie:;) Credit5 Achieved (percent of sales) 

Generation Achieved (percent of sales) 

Total Electricity Sales {billion ki1owatthours)l 

Emissions 

Sulfur Dioxide (short tons) 

Nitrogen Oxide (ShOft tons) Mercury (short tons) 

Carbon Dioxide (miJllOn metrh:; tons CO2 ) 

Macroeconomic 

GOP (billion 2005 dollars) 

Per Caotta GDP (thousa nd :1.005 dollars/person) 

Employment, Non-Farm (million) 

ErT'ployment, Manufacturing(million) 

1 Exlcudes sales In Alaska and Hawaii 

2009 

Ref 

0.0 9.8 

11.5 10.1 

6.8 75 

350 

156 

1,379 

156 

34 

122 

3,556 

5.7 

2.0 

40.7 

2,160 

12,881 

42 

131 

12 

2035 

ReI 

0.0 

9.4 

10.9 

94 

6.6 

9.2 

417 

176 

1,196 

227 

55 

171 

4,428 

3.7 

2.0 

2.9.2 

2,500 

25,686 

66 

171 

13 

2035 

Partial Revised Small Credit Cap Credit C

BeES All Clean Credit Baseline Utilities 2.1 3.0 

11.6 

11.3 13.0 11.4 

8.2 

9.7 

480 

201 

1,366 

279 

97 

182 

56 

55 

72 

4,220 

U 

1.4 

145 

1,428 

11.4 11.9 

13.5 

12.0 

8.7 

93 

490 

205 

1,398 

261 

80 

180 

80 

77 

92 

4,085 

1.7 1.0 

11.1 

1,008 

9.9 

il.l 

12.8 

11.2 

8.0 

9.3 

471 

197 

1,342. 

256 

79 

176 

58 58 

93 

4,225 

2.5 

1.1 

13.5 

.86 

13.7 

12.0 

13.5 

121 

8.8 

• .5 

498 

207 

1,409 

277 

94 

183 

74 

52 

70 

4,136 

1.6 

0.' 

11.4 

962 

4.7 

'.5 

11.2 

9.5 

6.6 

8.' 

423 

179 

1,217 

217 

52 

165 

42 

35 

45 

4.435 

3.5 

1.8 

21.4 

1,92:1 

5.6 

10.2 11.9 10.3 

7.3 

• I 

445 

187 

1,276 

230 

5. 

,71 

56 

32 

43 

4,328 

3.6 

1.9 

22.2 

1,950 

1

1

1

4

1

1,3

2

1

4,2

1

1,4

25,562 25,528 25,563 25,610 25,641 25,650 25,6

" H H H " H 

171 171 171 171 171 171 1

13 13 13 13 13 13 

Source: U.S. Energy Information Admi nistration, National Energy Modeling System, runs refhall.d082611b, cesblogbk.dl00611a, 

ce5blngbkrb.d2100311a, cesbmgbkpc dHJ0611a, cesbil1gbksm dl00311b, cesbingbkc21.d 100311b, 

cesbingbkc30 dl00311a, cesbingbksc.dl00611a. 

u.s. Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 25 
_l\::lap. .. 

26 U.S. Energy Information Administration I Analysis of Impacts of a Clean Energy Standard as requested by Chairman Bingaman 
$400 $350 $341.016 

$300 

$250 $200 $150 $100 

$50 

$-

[SMiliions I Department of Energy Nuclear programs 

• High Temp Reactor Programs !fli light Water Reactor Programs 
45.0% 

40.0% 

35.0% 30.0% 

25.0% 20.0% 

15.0% 

10.0% 

5.0% 

0.0% 

FY 2011 

35.9% 

39.7% 

FY2012 Enacted 

Department of Energy Nuclear programs 

• High Temp Reactor Programs (%) • Ught Water Reactor Programs (%) 

42.1% 

FY20J3 Requested 
157 

Æ