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77–605—PDF 2011

S. HRG. 112–675 

ALTERNATIVE ENERGY TAX INCENTIVES: 

THE EFFECT OF SHORT-TERM EXTENSIONS ON 

ALTERNATIVE TECHNOLOGY INVESTMENT, 

DOMESTIC MANUFACTURING, AND JOBS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY, NATURAL RESOURCES, 

AND INFRASTRUCTURE 

OF THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

DECEMBER 14, 2011 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

RUSSELL SULLIVAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

SUBCOMMITTEE ON ENERGY, NATURAL RESOURCES, AND INFRASTRUCTURE

JEFF BINGAMAN, New Mexico, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JOHN F. KERRY, Massachusetts 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

THOMAS R. CARPER, Delaware 

JOHN CORNYN, Texas 

CHUCK GRASSLEY, Iowa 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

(II) 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Bingaman, Hon. Jeff, a U.S. Senator from New Mexico, chairman, Subcommittee on Energy, Natural Resources, and Infrastructure, Committee 

on Finance ............................................................................................................ 1 

Cornyn, Hon. John, a U.S. Senator from Texas .................................................... 2 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 4 

WITNESSES 

Sherlock, Dr. Molly, Analyst in Economics, Congressional Research Service, 

Washington, DC ................................................................................................... 5 

Coleman, Will, partner, Mohr Davidow Ventures, Menlo Park, CA ................... 6 

Wyrsch, Martha, president, Vestas-American Wind Technology, Portland, 

OR .......................................................................................................................... 8 

Soanes, Paul, president and CEO, Renewable Biofuels, Houston, TX ................ 10 

Thorning, Dr. Margo, senior vice president and chief economist, American 

Council for Capital Formation, Washington, DC .............................................. 12 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Bingaman, Hon. Jeff: 

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

Prepared statement .......................................................................................... 29 

Coleman, Will: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 31 

Cornyn, Hon. John: 

Opening statement ........................................................................................... 2 

Prepared statement .......................................................................................... 46 

Grassley, Hon. Chuck: 

Opening statement ........................................................................................... 4 

Prepared statement .......................................................................................... 48 

Sherlock, Dr. Molly: 

Testimony .......................................................................................................... 5 

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

Soanes, Paul: 

Testimony .......................................................................................................... 10 

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

Thorning, Dr. Margo: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 69 

Wyrsch, Martha: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 85 

COMMUNICATIONS

American Public Transportation Association (APTA) ........................................... 93 

Biotechnology Industry Organization (BIO) .......................................................... 95 

Council of the North American Insulation Manufacturers Association .............. 104 

Geothermal Energy Association ............................................................................. 106 

National Association of Home Builders ................................................................. 111 

National Association of the Remodeling Industry (NARI) ................................... 121 

National Biodiesel Board ........................................................................................ 123 

Page

IV 

National Hydropower Association .......................................................................... 127 

National Rural Electric Cooperative Association .................................................. 133 

Novozymes North America Inc. .............................................................................. 140 

Residential Energy Efficient Tax Credit Industry Coalition ................................ 143 

Solar Energy Industries Association (SEIA) ......................................................... 146 

Window and Door Manufacturers Association (WDMA) ...................................... 154 

(1) 

ALTERNATIVE ENERGY TAX INCENTIVES: THE 

EFFECT OF SHORT-TERM EXTENSIONS ON 

ALTERNATIVE TECHNOLOGY INVESTMENT, 

DOMESTIC MANUFACTURING, AND JOBS 

WEDNESDAY, DECEMBER 14, 2011 

U.S. SENATE,

SUBCOMMITTEE ON ENERGY, NATURAL

RESOURCES, AND INFRASTRUCTURE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 9:43 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Jeff Bingaman 

(chairman of the subcommittee) presiding. 

Present: Senators Carper, Wyden, Kerry, Grassley, Cornyn, and 

Thune. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, A U.S. SENATOR FROM NEW MEXICO, CHAIRMAN, SUBCOMMITTEE ON 

ENERGY, NATURAL RESOURCES, AND INFRASTRUCTURE, 

COMMITTEE ON FINANCE 

Senator BINGAMAN. Why don’t we try to get started here? We are 

2 or 3 minutes early, but we have been advised there is going to 

be a vote or two votes beginning at around 10:45. So we would like 

to get going and get as much of the hearing done as possible before 

those votes. 

Good morning. Today’s hearing examines ‘‘alternative energy tax 

incentives: the effect of short-term extensions on alternative technology investment, domestic manufacturing, and jobs.’’ 

Given the impending expiration of various tax provisions related 

to alternative energy and energy efficiency, this hearing is very 

timely. At least 10 important provisions expire in a little over 2 

weeks. And in 2012, there will be an expiration of five other significant energy provisions. Allowing those incentives to expire will 

have, in my view, a negative impact on the country’s ability to develop alternative energy resources. 

In the past 5 years, alternative energy in the United States has 

gone from a halting, uncertain industry to a young but rapidly 

growing sector of the economy. We can attribute part of this success to several years of predictable and consistent government incentives, but, overall, incentives for alternative energy are still primarily short-term, and manufacturers and developers and investors routinely face significant uncertainty surrounding Federal policy. 

2 

One example of how inconsistent Federal policy affects the energy industry is the production tax credit. This credit supports a 

variety of alternative energy production, including wind, geothermal, refined coal, and nuclear. It has been allowed to lapse 3 

times since originally enacted. Each time, the installation of new 

wind energy dropped precipitously the following year, the first time 

by 93 percent, the second time by 73 percent, and the third time 

by 77 percent. 

So, fossil fuel provisions offer an excellent example of a successful Federal support structure. Predictable long-term incentives and 

aggressive research efforts have helped to build a global industry. 

More recently, they have aided in discovering and accessing vast 

new deposits of oil and gas, and those efforts have paid off. 

Our oil import dependence peaked in 2005 and is set to continue 

to decline in coming decades. The natural gas production continues 

to expand so much that the Department of Energy is now considering at least six natural gas export permits. 

Despite the success of these conventional energy resources, several reasons exist for the U.S. to maintain and expand policies to 

aggressively diversify its energy resources. These include price stability, energy security, economic growth, and environmental concerns. 

In my view, we should be employing an all-of-the-above strategy 

for developing all energy resources, and we should be crafting focused and efficient tax policies that will help us get there. 

So we will look today at the frequent short-term extensions and 

expiration of alternative energy tax incentives; second, try to understand how they have affected the alternative energy industry in 

the United States, the build-out of manufacturing facilities, supply 

chain issues, and employment; and finally, what needs to be done 

on energy tax provisions to continue transitioning our economy to 

a clean energy economy. 

[The prepared statement of Senator Bingaman appears in the appendix.] 

Senator BINGAMAN. Let me call on Senator Cornyn for his comments. 

OPENING STATEMENT OF HON. JOHN CORNYN, 

A U.S. SENATOR FROM TEXAS 

Senator CORNYN. Thank you, Mr. Chairman, for holding today’s 

hearing. I want to thank the witnesses for being here today to 

share with us their expertise and perspectives. 

I know we are going to hear today a lot about the need to provide 

industry with certainty and predictability when it comes to the tax 

code and job creation and looking at the costs and benefits of Federal policy. 

Given that too many Americans remain out of work, I want to 

take the opportunity just to mention one subject which is energyrelated, but it is not directly related, and that is the shovel-ready 

Keystone pipeline project, which does not need any tax incentives, 

but it is in need of a presidential permit. 

This project means, not only additional energy security for the 

United States, but thousands of jobs and revenue to communities, 

States, and to the Federal Treasury. 

3 

In my State, in Texas, we believe in an all-of-the-above energy 

policy. We know that the backbone of any successful economy is a 

stable and secure supply of affordable energy. We are blessed with 

a diverse array of energy sources and industries providing solid 

employment in Texas, while supplying the Nation. 

We are, not surprisingly perhaps, the leading crude oil producing 

State in the Nation. Our State’s 27 refineries can process more 

than 4.7 million barrels of crude per day, and they account for 

about one-fourth of total U.S. refining capacity. We are also the 

Nation’s leading natural gas producer and also lead the Nation in 

wind-powered generation capacity. 

Unfortunately, when you look at the message being sent from 

Washington and received across the country, it is a mixed message 

and a confusing message when it comes to national energy policy, 

particularly domestic oil production, blaming the industry for high 

gasoline prices and accusing them of sitting on resources while, at 

the same time, arguing that tax incentives lead to over-production 

and should be discontinued, and delaying permits for new drilling, 

particularly in the Gulf of Mexico, while telling Brazil that the U.S. 

will be their best customer. 

To obtain some basis and some facts necessary for an intelligent 

discussion of targeted tax incentives for energy, I requested a 

memo earlier this year from the Congressional Research Service. 

That memo looked at only the targeted tax incentives, and its findings are worth summarizing here, which I will do briefly. 

During 2009, 77.9 percent of U.S. primary energy production can 

be attributed to fossil fuels, 77.9 percent, while 10.6 percent was 

provided by renewable resources. Of the Federal tax support to energy in 2009, an estimated 12.6 percent supported fossil fuels, 

while 77.4 percent supported renewables. In other words, while the 

majority of U.S. primary energy production came from fossil fuels, 

the majority of energy tax revenue losses were associated with provisions designed to support renewables. 

Many today will argue for extensions of valuable tax incentives 

for their type of energy, and I think the time has come to evaluate 

tax policy based on value to the taxpayer. I am going to quote my 

good friend Senator Carper here, who last week said we need to 

ask the question, ‘‘Are we getting the best bang for our buck from 

all of them, and which ones should we extend, modify, or eliminate?’’ Who says bipartisanship is dead in Washington? I agree 

with Senator Carper. 

I hope today’s hearing continues a serious discussion and examination of the various credits and deductions in the Internal Revenue Code. It is no secret, as the President’s own bipartisan fiscal 

commission documented in excruciating detail, our current tax code 

is a never-ending maze, full of twists and turns that can only confuse and befuddle even the experts. It is in dire need of reform, and 

nothing—nothing—should be off the table. 

When examining renewable incentives, it is important to consider to what extent other policies already exist to assist alternative energy industries, such as renewable electricity mandates 

and fuel quotas. 

Finally, what about the challenges that exist with or without the 

tax incentives, such as the limitation on our Nation’s grid for variVerDate Nov 24 2008 20:43 Jan 16, 2013 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 R:\DOCS\77605.000 TIMD
4 

able sources of energy, and how are incentives utilized for overcoming risk? For example, there are fundamental differences in an 

independent oil and gas producer purchasing a lease to explore for 

a resource and a company building a wind farm or solar installation for electricity use where power purchase agreements are made 

to sell the electricity generated. 

In my view, these questions should not be separate from the discussion about extenders, because they are essential to protecting 

the taxpayer-funded investment in these projects. 

Thank you very much, Mr. Chairman. I look forward to hearing 

from the witnesses. 

[The prepared statement of Senator Cornyn appears in the appendix.] 

Senator GRASSLEY. Mr. Chairman, could I have 1 minute? 

Senator BINGAMAN. You can. Senator Kerry may want a minute, 

and Senator Carper may want a minute. I do not mind if each of 

you takes a minute. 

Senator GRASSLEY. I have to go to the floor. 

Senator BINGAMAN. Go right ahead. 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. I would like to explain that I will not be at 

this meeting because of the balanced budget amendment on the 

floor and then because of our oversight hearing in the Judiciary 

Committee with the FBI. 

But I want to put a long statement in the record and just simply 

say that both political parties believe that we ought to be doing 

things related to getting jobs. And one of the things that I am the 

author of is the wind energy tax credit of 1992, and it does not expire until next year. But effectively, it expires, as far as the jobs 

are concerned, March to June of this year, in my State of Iowa, for 

instance. 

When I sponsored this bill almost 20 years ago, I did not have 

the slightest idea we would have companies coming from other 

countries to locate in Iowa to make component parts. But we would 

have 3,000 to 4,000 jobs in jeopardy if we do not extend the wind 

energy tax credit a long time before it expires next December 31. 

And that is not my only interest, because you know my interest 

in biofuels, but I just wanted to make clear why I could not be here 

and emphasize the job aspect of this. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Senator Grassley appears in the appendix.] 

Senator BINGAMAN. Thank you very much. 

Senator Kerry, did you want to make a very short statement, 

too? 

Senator KERRY. Mr. Chairman, I will come back. I need to go 

away and come back, and then I will say a few words about it so 

I do not tie it up right now. But thank you very much anyway. 

Senator BINGAMAN. Thank you. 

Let me introduce our five excellent witnesses here. Dr. Molly 

Sherlock is an Analyst in Economics with the Congressional Research Service and has done a lot of analysis in this area. Will 

5 

Coleman is a partner with Mohr Davidow Ventures, which is a venture capital firm. Martha Wyrsch is the president of VestasAmerican Wind Technology. Thank you for being here. Paul Soanes 

is the president and CEO of Renewable Biofuels, which is based in 

Houston, TX or near Houston, TX. Dr. Margo Thorning is the senior vice president and chief economist at the American Council for 

Capital Formation. Thank you for being here. 

Why don’t we just have you proceed in that order? And, if you 

could each give us about 5 minutes, making the main points you 

think we should understand about this set of issues, then we will 

have some questions. 

Dr. Sherlock, go right ahead. 

STATEMENT OF DR. MOLLY SHERLOCK, ANALYST IN ECONOMICS, CONGRESSIONAL RESEARCH SERVICE, WASHINGTON, 

DC 

Dr. SHERLOCK. Thank you. Good morning. Chairman Bingaman 

and Ranking Member Cornyn and members of the subcommittee, 

on behalf of the Congressional Research Service, I thank you for 

the opportunity to appear before you today. 

There are three main themes I will address in today’s testimony. 

First, I will identify energy-related tax incentives scheduled to expire at the end of 2011. Second, I will discuss the negative effects 

temporary tax incentives may have on the renewable energy industry. Finally, I will outline characteristics of an economically efficient and effective energy tax policy. 

A number of clean energy industries benefit from tax incentives 

scheduled to expire. Since 2009, renewable energy investors have 

had the option to receive a 1-time grant from the Treasury in lieu 

of production or investment tax credits. This incentive is available 

to projects that begin construction before the end of this year. 

After the grant option expires, the renewable energy production 

and investment tax credits will remain available. The production 

tax credit for wind, however, is scheduled to expire at the end of 

2012. Also expiring are several provisions that support renewable 

and alternative fuels. The $.45 per gallon tax credit for ethanol is 

set to expire, as is the $1 per gallon tax credit for biodiesel. 

Finally, several tax provisions that support enhanced energy efficiency are scheduled to sunset this year. After 2011, taxpayers 

making energy efficiency improvements to their homes will no 

longer qualify for a tax credit. Other incentives scheduled to expire 

include a credit for energy-efficient appliance manufacturers and a 

credit for builders of energy-efficient new homes. 

The second point you asked me to address today is related to the 

impact of temporary tax incentives on renewable energy industries. 

In theory, temporary tax incentives might provide economic stimulus or help new technologies achieve scale. In practice, very few 

temporary tax incentives, after becoming part of the Internal Revenue Code, are actually allowed to expire. Nonetheless, the frequent threat of expiration and potential for policies to lapse can 

have negative consequences for the industries these incentives are 

designed to support. 

Take, for example, the production tax credit for wind. The PTC 

has been extended 7 times since being enacted in 1992. Prior to 

6 

three of these extensions, the credit was allowed to lapse. Lapses 

in the PTC have been associated with substantial declines in new 

wind development. 

With uncertainty surrounding the fate of the PTC, some projects 

were stalled or put on hiatus. Project developers may be left on 

standby, waiting for the credit to be reinstated before moving forward. Wind development that occurs in fits and starts can create 

bottlenecks in the turbine manufacturing process, which might 

delay projects and increase overall costs. 

Clean energy manufacturers may also be reluctant to make permanent investments when tax credits supporting demand for their 

product remain in flux. Biodiesel markets also experience declines 

in production following the expiration of tax incentives. Between 

2005, when the tax credits for biodiesel were introduced, and 2008, 

biodiesel production steadily increased. Biodiesel production began 

to decline in 2009, and, after the tax credit for biodiesel expired at 

the end of that year, the decline continued into 2010. 

The tax credit for biodiesel was reinstated at the end of 2010, 

and, in 2011, biodiesel production is up. However, it should be 

noted that the markets for wind and biodiesel are influenced by a 

number of factors, tax incentives being just one. Natural gas prices 

and State-level Renewable Portfolio Standards influence wind development. Biodiesel markets are affected by the price of regular 

diesel and mandates for renewable fuels. 

Finally, I would like to note some characteristics of economically 

efficient energy tax policy. First, cost-effective incentives are those 

that encourage changes in behavior rather than those that reward 

current practices. 

Second, incentives made available to a broad range of technologies avoid picking winners. Technological neutrality will remove a bias against newly emerging technologies. 

And finally, energy tax policy does not exist in a vacuum. Tax 

policies may interact with or be redundant to other policies supporting energy. This issue has been raised with respect to tax incentives for renewable fuels under the renewable fuels standard. 

Thank you again for inviting me to appear today. I am happy to 

respond to your questions. 

[The prepared statement of Dr. Sherlock appears in the appendix.] 

Senator BINGAMAN. Thank you very much. 

Mr. Coleman, go right ahead. 

STATEMENT OF WILL COLEMAN, PARTNER, 

MOHR DAVIDOW VENTURES, MENLO PARK, CA 

Mr. COLEMAN. Thank you, Chairman Bingaman, Ranking Member Cornyn, and distinguished members of the committee. I appreciate the opportunity to be here today. 

I am Will Coleman, a partner at the venture capital firm Mohr 

Davidow. Since 1983, we have funded over 250 companies in information technology, life sciences, and energy. We were one of the 

earlier mainline venture funds to begin investing in energy and 

have since invested in a range of sectors, including biochemicals, 

solar, and battery materials, among others. 

7 

As early-stage investors, we invest in companies from startup to 

initial commercialization, and we have seen the challenges of building and scaling businesses in energy. 

I am here today to focus on two topics: first, how uncertainty 

about the future of current tax provisions is impacting investment 

in the energy sector and, second, how the energy industry is facing 

a growing innovation gap that requires a more stable and supportive environment if our country is to remain competitive. 

Tax policy has always played a significant role in the evolution 

of the energy industry, from the establishment of the percentage 

depletion allowance 80 years ago to, more recently, the establishment of a series of tax incentives for the deployment of renewable 

energy. 

As global demand continues to strain conventional resources, 

most of our Nation’s competitors have recognized that new technologies are becoming increasingly strategic. The current production and investment tax credits in the U.S. have been instrumental 

in mobilizing private capital to invest in clean energy. Over the last 

5 years, wind and solar have been the fastest-growing energy 

sources. Over that time, the cost of solar modules has dropped 80 

percent. And in just the last 3 years, wind costs have dropped 30 

percent. In comparison, the cost of coal, oil, and even natural gas 

has risen significantly over the last decade. 

Despite the growth of renewable technologies, these sectors are 

still in their infancy. We are rapidly approaching the point where 

several alternative technologies could compete on a level playing 

field in the absence of subsidies. However, we are not there yet. 

The current situation for renewables is emblematic of the broader flaws in our approach to energy tax policy, for two reasons. 

First, uncertainty over extension of current clean energy provisions 

is undermining short- and long-term investment just as some of 

these technologies are beginning to reach commercial viability; and, 

second, the current tax code does not support ongoing innovation 

in substantially new technologies that would continue to drive 

down the costs in both emerging and conventional energy sectors. 

Unlike in oil and gas, where the current credits are almost all 

permanent and provide investors and corporations with enough certainty to make long-term investments, almost all the credits for the 

renewable sector are set to expire in the next few years. 

The lack of certainty is a major challenge for developers, manufacturers, and investors. The project development process can take 

3 to 4 years for proven energy technology that has already been 

demonstrated to work in the field, but even longer for new innovative technologies. For these kinds of technologies, 3 to 5 years of 

development and demonstration are typically required before they 

even begin to develop a commercial project, and often 7 to 10 years 

before large-scale commercialization begins. So it takes a long time. 

This is why investors need certainty and otherwise will choose to 

invest in areas with more permanent structures. And so the current provisions need a longer horizon. 

At the same time, as a technology investor, I believe the goal 

should not be to prop up industries to keep them competitive indefinitely, but rather to support the innovation and scaling necessary for them to be competitive in the long term without supVerDate Nov 24 2008 20:43 Jan 16, 2013 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 R:\DOCS\77605.000 TIMD
8 

ports. Therefore, I believe it is also time to consider some new approaches that will improve the efficiency of the current energy tax 

code. 

Our competitiveness as a Nation depends on harnessing technology innovation, which has been credited with three-quarters of 

the Nation’s growth since World War II. We need to focus on 

unlocking this innovation in both renewables and conventional energy sources. This requires new inventions and that these inventions achieve economies of scale to compete. 

Our tax policy needs to better address these scaling challenges. 

Fortunately, there are some relatively simple ways to reform the 

tax code to be more efficient and flexible, while encouraging investment in new and improved technologies across all of the energy 

sectors. 

One such approach, as I detailed in my written testimony, would 

be a volume-based credit for individual companies that would support early manufacturing of new technologies and then roll off as 

these technologies hit commercial scale. This approach would simplify the code and eliminate the long-term dependence on incentives that has plagued many energy tax provisions. 

In concluding, let me end with a note of urgency. Tax credits are 

a central tool in the American policy framework to incentivize innovation. If we do not get them right, it is not just that we forego 

a better way of doing things, we may, in fact, cripple America’s 

ability to compete. 

Our economic strength over the next several decades will depend, 

not just on how effectively we harness existing resources, but also 

on how we choose to cultivate newer sources of energy. The focus 

must shift to accelerating the rate of innovation, continuing to reduce the cost to taxpayers, and establishing long-term regulatory 

certainty for investors to unlock private investment in innovative 

companies. 

We have the talent, the capital markets, and the capacity to lead 

in energy technology. I hope this committee will move forward 

quickly on some of these important reforms, and I look forward to 

the opportunity to work with you in the coming months. 

[The prepared statement of Mr. Coleman appears in the appendix.] 

Senator BINGAMAN. Thank you very much. 

Ms. Wyrsch, go right ahead. 

STATEMENT OF MARTHA WYRSCH, PRESIDENT, 

VESTAS-AMERICAN WIND TECHNOLOGY, PORTLAND, OR 

Ms. WYRSCH. Thank you, Chairman Bingaman, Ranking Member 

Cornyn, and members of the subcommittee. My name is Martha 

Wyrsch, and I am president of Vestas-American Wind Technology, 

the North American arm of Vestas Wind Systems. On behalf of 

Vestas’s 3,000 employees in the United States, thank you for the 

opportunity to discuss tax policies to support renewable energy. 

Wind energy is a success story, and it is one that Congress can 

be very proud of. The section 45 production tax credit, or the PTC, 

has been a successful tool in driving a new energy economy in 

America. 

9 

Wind energy now represents a manufacturing base that employs 

tens of thousands of workers across the U.S. in high-wage, highskill jobs with medical and retirement benefits. 

Vestas is the global leader in designing, manufacturing, and supplying wind turbines. We have been doing business in the United 

States for more than 30 years, supplying more than 11,000 wind 

turbines in 26 states. Since 2008, we have invested over $1 billion 

in four U.S. manufacturing plants and now employ more than 

1,800 Americans in these factories. 

The domestic content of wind turbines in the United States has 

grown from 25 percent to over 65 percent, and, in Vestas, it is even 

higher. Our presence is felt in nearly 40 States, with four technology facilities, more than 100 wind parks, and through our relationships with our suppliers. 

If the PTC is not extended immediately, the U.S. wind industry 

will face very serious challenges. Without an extension, we at Vestas will have to make tough decisions on our employment and investments beyond 2012. 

A report released earlier this week by Navigant Consulting, titled ‘‘Impact of the Production Tax Credit on the U.S. Market,’’ estimates over 37,000 domestic jobs in the wind industry could be 

lost if the PTC is not extended. 

Predictable, long-term tax and energy policies are critical to continued growth of wind energy as a low-cost, reliable, domestic 

source of electricity. I strongly urge the immediate extension of the 

PTC to ensure the continued development of wind energy and the 

domestic manufacture of wind turbines. 

As a former natural gas and electric utility executive, I have seen 

firsthand how policy measures, particularly the tax code, can impact energy generation. Congress has long incentivized energy technologies, and many of those incentives are permanent in the tax 

code. Wind and other renewables have received tax incentives in 

recent years, but the policies have been short-term. This has made 

it difficult for companies and investors to plan and make long-term 

investment decisions. 

Since 1999, the PTC has been set to expire 7 times. As a result, 

the industry has seen a boom-and-bust cycle of development, with 

significant drops in installations in years following the PTC expiration, and the cycle is shown in a chart on page 2 of my written testimony. 

From 2008 to 2011, the U.S. experienced an enormous increase 

in wind energy development due to the longer-term extension of 

the PTC. According to the American Wind Energy Association, average investments in domestic wind energy have been between $10 

billion to $15 billion per year since 2008. 

But nothing is more unsettling to a business than the lack of regulatory and fiscal certainty. Although the PTC does not expire until 

the end of 2012, the impact is being felt now. The development 

cycle of a wind farm from conceptualization to operation averages 

about 3 years. 

Suppliers require significant lead time to ensure they have produced quality parts for wind turbines. When orders are slowing 

down due to a looming expiration of the PTC, our business suffers. 

10 

Today there are essentially no firm plans to build wind farms in 

the United States past 2012, and, instead, developers are turning 

their wind energy investment dollars to other countries. 

Thanks to the support of many on this committee, wind energy 

is becoming an American industry. However, our future is in jeopardy, and the impact of allowing the PTC to expire or extending 

it at the last hour is much greater than in previous years, because 

our presence today is so much larger than it has been in the past. 

So, again, I ask you, please move quickly to extend the PTC, and 

thank you for the opportunity to provide this testimony. 

[The prepared statement of Ms. Wyrsch appears in the appendix.] 

Senator BINGAMAN. Thank you very much. 

Mr. Soanes, go right ahead. 

STATEMENT OF PAUL SOANES, PRESIDENT AND CEO, 

RENEWABLE BIOFUELS, HOUSTON, TX 

Mr. SOANES. Mr. Chairman, Ranking Member Cornyn, and members of the committee, thank you for the invitation to appear today, 

and thank you for your leadership in securing energy independence 

for our Nation and your support of the biodiesel industry. 

By way of introduction, my name is Paul Soanes. I am president 

and CEO of Renewable Biofuels. We own and operate the largest 

biodiesel plant in the country, a 180-million-gallons-per-year facility in Port Neches, TX. 

I am here today to testify to three points. First, it is essential 

that Congress act and act now to extend the blenders tax credit. 

This tax credit provides price certainty to our industry and provides an important incentive to fuel blenders and refiners to use 

our product. 

Secondly, as the market develops, we would ask Congress to consider alternatives to the present system that can further enhance 

the production of domestic biodiesel and provide energy independence for our Nation. In this regard, we refer to the production tax 

credit alternative that is being proposed by Senators Cantwell and 

Grassley, which essentially would promote the development of domestic biodiesel production and American jobs, as the production 

credit would only be available for biodiesel produced within the 

U.S. 

Thirdly, we see significant value in having stable energy policy 

coexist with stable tax policy. In that regard, we applaud Congress 

for passing the renewable fuel standard in the 2007 law, which created a specific mandate for the use of biodiesel within America and 

provided producers with a dedicated demand and with market certainty, which is essential for the continued development of the 

biofuels industry. 

Returning to the specific topic of today’s hearing, the impact of 

tax incentives on production, I would draw your attention to the 

chart on my left-hand side. As you can see from the chart, from 

2005 to 2009, when the industry enjoyed a consistent extension of 

the blenders tax credit, biodiesel production grew from 28 million 

gallons in 2004 to 678 million gallons in 2008. 

In 2010, the blenders tax credit lapsed before being reinstated at 

the end of the year, but the impact of that was dramatic. We saw 

11 

a 40-percent reduction in production from 2009 to 2010, with over 

90 percent of independent producers either mothballing or shutting 

down their facilities, with a massive loss of jobs and investor confidence in the sector. 

This brings us full circle to 2011, where, for the first year, the 

industry could rely on both implementation of the renewable fuel 

standard through RFS–2, which provided market certainty, and the 

blenders tax credit, which was extended, providing price certainty. 

The result was, the industry experienced unprecedented growth 

and is on track to produce over 1 billion gallons of biodiesel production in 2011, a 300-percent increase from the 2010 levels. 

The experience of RBF during this time period mirrors that of 

the industry. In 2010, we produced at less than 5 percent of the 

plant nameplate rating, and we had to opportunistically source 

sales and manage through the 2009–2010 bust cycle in the biodiesel industry. 

In 2011, we are on track to produce in excess of 62 million gallons of biodiesel, a 700-percent increase from our production levels 

in 2009. We have increased our workforce 3-fold, and we are investing additional capital to improve our production capability, quality 

of our product, and feedstock variability. 

What this graph does not show you is what has yet to occur, 

which is what would happen if the blenders tax credit is not extended for 2012. In our view, history is the best predictor of the future, and we believe that, if the blenders tax credit is not extended, 

you will see activity similar to 2010, and you will see an erosion 

of market demand and investor confidence in the sector, and a significant mothballing and shutdown of domestic biodiesel or the biodiesel industry. 

The looming expiration of the blenders tax credit is already having an impact. Orders for 2012 are almost nonexistent and are significantly down from our 2011 orders, and there is very little market confidence, with obligated parties preferring to take a wait-andsee approach on the expiration of the blenders tax credit before deciding to either purchase their fuel requirements or defer their 

RFS–2 obligations. 

In closing, the biodiesel industry is young and needs continued 

tax support to mature and consolidate its growth over recent years 

and to attract additional capital for blending infrastructure and for 

next-generation production facilities. 

The industry is like a child in the sense that it requires some 

nurturing before it can be self-sufficient. If Congress does not act 

to extend the blenders tax credit in a timely manner, it will have 

a significant negative impact on American production capability, 

which will result in a loss of jobs as production is curtailed and/ 

or mothballed, and will put at risk the worthwhile goals of the 

2007 Energy Independence and Security Act. 

Thank you, Mr. Chairman and Ranking Member Cornyn, for convening today’s hearing, and I would welcome an opportunity to address any questions you might have. 

[The prepared statement of Mr. Soanes appears in the appendix.] 

Senator BINGAMAN. Thank you very much. 

Dr. Thorning, go right ahead. 

12 

STATEMENT OF DR. MARGO THORNING, SENIOR VICE PRESIDENT AND CHIEF ECONOMIST, AMERICAN COUNCIL FOR 

CAPITAL FORMATION, WASHINGTON, DC 

Dr. THORNING. Thank you, Chairman Bingaman, Ranking Member Cornyn, members of the committee, for the chance to appear 

before you. 

The main focus, I think, for Federal policymakers needs to be on 

restoring strong economic and job growth. Two and a half years 

after the beginning of the recovery, there are still 13.3 million people unemployed. GDP is growing at only 2 percent, which is too 

slow to significantly reduce unemployment. The budget deficit is 

still 9 percent of GDP. CBO estimates that by 2020, if we do not 

change the current trend, our debt will be 80 percent of GDP. 

Energy is essential to U.S. economic growth. In the recent past, 

each 1 percent increase in GDP is accompanied by a .2 percent increase in energy use. As energy becomes more expensive, restoring 

economic growth will be even more difficult. 

Since 2001, residential electricity prices have risen by 37 percent. 

Since 2006, residential electricity prices are up by about 13 percent. Renewable energy tends to be more expensive than conventional energy. States with RPS mandates have electricity prices 

that average 25 to almost 30 percent higher than those without an 

RPS mandate. 

Adopting a Federal mandate for a clean energy standard will 

raise energy prices by 20 to 27 percent, according to a new Energy 

Information Administration analysis, by the year 2025 relative to 

the baseline forecast. GDP declines in all the cases EIA analyzed 

over the forecast period, and unemployment is lower. Under the 

CES standard, average unemployment is significantly reduced. 

Renewable energy received 76 percent of all the Federal tax subsidies and credits in the year 2010, and, of course, fossil fuel got 

about 13 percent. The tax policy should be relatively neutral, most 

economists think. Tax provisions such as accelerated depreciation, 

the foreign tax credit, section 199, LIFO, are available to all industries and, as such, they are not considered subsidies. 

In contrast to the disappointing results from the many initiatives 

funded in recent years by the U.S. taxpayer for renewable energy, 

several recent economic analyses suggest that increased access to 

domestic oil and gas, both offshore and onshore, including shale gas 

and transportation, could strongly boost U.S. economic recovery 

and manufacturing and job growth. 

Fossil fuels, as has been noted, provide 78 percent of U.S. primary energy production, and their expansion can have a positive 

impact on strong economic growth. 

The best use of taxpayer dollars for renewable energy is probably 

for R&D rather than for deployment. By subsidizing the deployment of renewable energy, Federal spending is larger, and consumers and industries are forced to spend more on energy and thus 

have less for other purchases or for productive investment. 

So the costs, I think, tend to exceed the benefits. Greenhouse gas 

reduction globally is going to depend on efforts in developing countries to slow their own growth. What we do here, as I show in figure 3 in my testimony, will have a very small impact in terms of 

reducing global GHG growth. 

13 

Expansion of our domestic oil and gas industry is already reducing our dependence on foreign oil. 

Finally, there was an article in the Washington Post Monday 

that maybe some of you saw, a very small article about the—the 

title was ‘‘Poor People are Bracing for Cuts in Home Heating Assistance.’’ The Federal budget is so tight, so straitened, that funding for LIHEAP has been cut from, I think, about $4.9 billion a 

year to $4.4 billion a year. So low-income people who are plagued 

by the higher electricity bills that I mentioned earlier are going to 

be hurt, because our Federal budget simply is not able to provide 

the same level of support as before. 

So my question is: What is the best use of the taxpayer dollar? 

Would it be better to be providing support for unemployed, poor 

people who are having trouble paying their heating bills or funding 

deployment of very expensive renewable energy? 

Thank you. 

[The prepared statement of Dr. Thorning appears in the appendix.] 

Senator BINGAMAN. Well, thank you very much. Thank you all 

for your excellent testimony. Let me start out with some questions. 

Dr. Sherlock, let me ask your view. One of the issues that Senator Cornyn referred to, I believe Dr. Thorning did as well, is that 

77 or 76 percent of the Federal tax incentives are going to renewables, or did in 2009 and 2010. 

I guess I would have two questions. First, what do those numbers look like if you take out ethanol? And second, what do they 

look like if you do not look at those particular years where there 

was substantial funding, as I recall it, for renewables as part of the 

stimulus package, if you look at a longer time period? 

Dr. SHERLOCK. On the first point, if you remove renewable fuels, 

the share of tax incentives that supported renewable electricity in 

2009 was 14.6 percent. So that declines from 77.4 percent to 14.6 

percent. 

Senator BINGAMAN. That is leaving out ethanol and other 

biofuels, is that right, or just ethanol? 

Dr. SHERLOCK. Yes. 

Senator BINGAMAN. But mainly ethanol. 

Dr. SHERLOCK. But mainly ethanol. Ethanol is the big factor. 

And if you remove the incentive, such as the section 1603 grant 

that was a temporary incentive enacted under the Recovery Act, 

that figure would fall even further. I do not have the precise number in front of me, but it would fall again by about half. 

Senator BINGAMAN. Let me ask Ms. Wyrsch: the way I am understanding your position, the wind industry’s position, your top priority is extending the production tax credit rather than extending 

the 1603 program. Is that accurate, and, if so, could you explain 

that? 

Ms. WYRSCH. Yes, Senator. The 1603 program has been a real 

benefit to the wind industry and certainly has helped spur additional growth. But extending 1603 does not get us past the end of 

2012. 

In other words, what we would like and need is a program that 

takes us beyond that 2021 deadline and moves projects along, because, as I said, the 3-year timeline for a project is a horizon that 

14 

we have to pay attention to. An order of turbines is about a 12- 

month horizon. 

So a customer will come to us at this time of the year and say, 

‘‘For 2013, we need these turbines for these new power plants that 

we are building,’’ and with the extension of 1603 to, let us say, another year, we would simply be finishing out projects that are currently on the books and already being planned. 

Senator BINGAMAN. So a longer-term extension of the production 

tax credit would be a better way to go than a short-term extension 

of 1603. Is that what I am hearing? 

Ms. WYRSCH. Yes, Senator. It is really critical to us, because the 

production tax credit, of course, focuses on generation of electricity, 

and the tax credit is used as new electricity is generated from those 

wind parks. And so a longer-term extension is required for these 

long-term planning horizons. 

Senator BINGAMAN. Mr. Coleman, let me ask you: I think some 

of the testimony we have heard here—I believe Dr. Thorning’s testimony tries to make the point that some of these technologies are 

not really infant industries anymore. 

Could you offer your thoughts on wind and solar as to how far 

they are from being mature industries that can stand on their own? 

What are we looking at here as far as the length of time that Federal incentives would be required? 

Mr. COLEMAN. I think Ms. Wyrsch can probably speak to the 

wind industry better than I can in terms of the competitiveness of 

that industry long-term. However, I think that we have to look at 

these sectors not as monochromatic individual sectors, but more as 

collections of different technologies that are on different cost 

curves. 

So I think the question is, are we continuing to move down that 

cost curve for wind as a whole and are there additional technologies in the pipeline that are starting to move through, that will 

move that cost base down even lower? 

What we see looking at the early-stage technologies is that there 

are a lot of technologies in the pipeline in both solar and wind, and 

biochemicals and biofuels, across the board, that promise much 

lower cost bases. And so I think we need enough certainty to continue to move the scale in the industry up, and scale will give us 

a lot of those cost directions, but we also need enough long-term 

certainty that early-stage investors will continue to invest in those 

innovations. 

Senator BINGAMAN. All right. Thank you. 

Senator Cornyn? 

Senator CORNYN. I thank each of the witnesses. 

There seemed to be several themes in common with the testimony here. One is that, whatever Congress does, it should not be 

done in fits and starts, but on some basis that would allow for 

planning and predictability. You could probably say that about a 

lot more than just this subject, but I wholeheartedly agree. So anything we can do to provide some predictability and some opportunities for longer-term planning would strike me as a good thing. 

But the other challenge that has not been directly alluded to is 

really the need for a national energy policy that takes into account 

all sources of energy and what the best deployment of scarce tax 

15 

dollars would be to encourage innovation, and to figure out, once 

that innovation has occurred, once an industry is sufficiently mature, I guess is the appropriate term, that it does not need any 

more tax subsidy, that it can operate on the good old capitalist system of risk and reward. 

So I wonder if maybe I should start with you, Dr. Sherlock. At 

what point do you believe that the tax subsidies are no longer appropriate for an energy source, as a general rule? 

Dr. SHERLOCK. As a general rule, tax subsidies can be used to 

support a few different instances when markets may fail to allocate 

economic resources efficiently. One rule is for industries that are 

still scaling up. So those are the so-called infant industries, and 

that is a difficult distinction to make as to when those industries 

have become mature. 

A second point when tax subsidies for an industry may be needed 

is when there is some other form of market failure. So part of the 

economic justification or rationalization for supporting renewable 

energy through subsidies has been to offset some of the pollution 

generated through conventional energy sources. 

So long as we are looking at the market failure from that perspective, there may be an economic justification for supporting renewable energy. 

Senator CORNYN. Mr. Coleman, what, in your view, is—how 

should Congress approach the issue of tax incentives on new and 

emerging energy sectors or capacities? Is it with the idea of providing incentives with just the hope that someday, when the tax incentives are removed, that it might be able to run on its own? 

What I worry about is, how does Congress avoid creating incentives that drive the production of this particular energy source 

which will never be viable on its own? 

Mr. COLEMAN. I think that is part of the challenge of the current 

provisions. We get in a fairly annual debate over whether or not 

the industries are ready to roll off or not. 

Senator CORNYN. That is on a sector or industry-by-industry 

basis, right? 

Mr. COLEMAN. Yes. And I think part of what we are proposing 

in the written testimony is something that is targeted more specifically at companies. You have seen examples of this in the tax code. 

But effectively, what it would do is, it would encourage those companies to get to scale. It would only be provided to those companies 

until they reached a minimum efficient scale around their commercial deployment, and then it would roll off. 

And it would not be a debate about whether or not the industry 

is ready. It would be based on the idea that, once you get to commercial scale, you should be competitive. And in that way, it provides investors the certainty to actually know what kind of credit 

they are going to get and for what duration of time, and it also 

means that the investors, the private investors, are the ones who 

are sitting there saying, this company, this technology, eventually 

has to compete on its own two feet. When will that be? Where is 

the bar, and how do we get there? 

Senator CORNYN. Well, that is something that probably a venture 

capital firm is more nimble at and flexible at than the Federal Government. 

16 

But, Ms. Wyrsch, as you know, Texas, as you said and I said, is 

the number-one electricity producer from wind energy. So this is a 

very important industry in the State. But I would just ask you the 

question. 

I alluded earlier that predictability and planning opportunities 

are really important across the businesses generally, and in this 

sector as well. But at what point should Congress say, or can Congress say, in the wind energy production, that these tax incentives 

would no longer be necessary and we should enter onto a trajectory 

where they would be ultimately phased out and wind energy would 

compete along with other renewable resources? 

Ms. WYRSCH. Texas is a terrific example, actually, of a State that 

has built a base for strong research and development and innovation. And so, as the wind industry has grown and started to become 

a more mainstream source of electricity, we have looked to States 

like Texas to help us ensure that we are effectively getting onto the 

grid, for example, that we are an industry that can compete in that 

marketplace. 

And so, as an example, the wind industry has seen dramatic cost 

reduction, but also significant improvement in the productivity of 

the wind turbine. And so, compared to 10 years ago, a wind turbine 

is about 15 times as productive in terms of electricity output. 

We also have seen costs come down, as was said earlier, by, in 

the last 3 years, over 30 percent and in the last 20 years, significantly, almost 90-percent lower cost. 

So I would tell you that having an industry that has long-term 

support and long-term focus is one that is going to then invest in 

research and development, invest in productivity, and ensure that 

we are there. 

You are asking when we would get to a point where we are at 

a scale and a size where we would not need support, and I will tell 

you the wind industry is not looking for a long-term PTC, but we 

need something that will help us bridge now this period where we 

are very close to being directly head-on-head competitive, but we 

are not quite there. And so, to stop now and stop short, when you 

have a manufacturing base in the United States supporting wind 

energy that was not here before, you have an opportunity to create 

jobs and see new, better wind turbines continue to be developed, 

it would be a mistake for us to stop short, and I think we have to 

take that longer view. 

Senator CORNYN. My time is up, Mr. Chairman. 

Senator BINGAMAN. Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman and Senator Cornyn. 

I think it is a very important hearing and, obviously, especially 

timely given the fact that we are going to have a big debate here 

over the next few days about extending several of the credits. 

My hope is that two would somehow make it through the gauntlet: section 45, the production tax credit, and section 25(c) for the 

residential incentives. But both of you have kind of highlighted a 

number of the tensions in this kind of debate in a very thoughtful 

way. 

Ms. Wyrsch, welcome, great to have you, a constituent from 

home, and we are thrilled to have Vestas as the North American 

headquarters. 

17 

Picking up on what Senator Bingaman and Senator Cornyn have 

been talking about, I mean, at some point, we are going to have 

to sort through these issues to see if we can come up with something resembling a marginally coherent policy. I think that is the 

way I would frame it, and I certainly share Senator Cornyn’s view 

with respect to how the government approaches these things and 

its ability to be nimble here. 

What I have tried to look at in terms of how I have approached 

it on this committee, on the Energy Subcommittee chaired by Senator Bingaman, is to try to see if we can find our way at least to 

a level playing field, because right now we have some energy industries with permanent tax incentives while they compete against 

others that do not, and then we have disparities among technologies even within the renewable energy sector. 

So there is sort of a policy crazy quilt in terms of how we make 

some of these judgments. And I think, to the extent that you all 

can help us think through how to find our way to a level playing 

field, that will be especially constructive. 

I thought, because time is short, I wanted to focus on one area 

for you, Ms. Wyrsch, and you, Mr. Soanes. I think the staff talked 

to you all about this. We have been supportive of the kinds of efforts that you all are talking about, and, at the same time—and 

you heard my colleagues say this as well—you cannot make a case 

for tax credits just going on forever, to just say, through the rest 

of Western civilization, we will have these particular tax credits. 

So the question then becomes, can we find our way to some criteria, some specific criteria, for figuring out how this committee, 

and working with the Energy Committee, can, in effect, wean an 

industry off a particular credit? And the two that come to mind for 

me when we are talking about this would be market share and 

competitive prices. Those would be two that, at least if you said an 

industry reached this place in market share or competitive prices, 

that might start to lay a bit of a direction. 

But tell us, if you would—and this picks up on what Senator 

Cornyn just, I think, touched on—what kind of criteria should the 

Finance Committee use for judging when to make a break and 

wean an industry off a particular tax break or incentive? 

Let us start, as we always should, with Oregon. 

Ms. WYRSCH. Thank you very much, Senator. I think you have 

articulated two very important measures, certainly, market share 

and price competitiveness. But I think, referring back to Mr. Coleman’s testimony, markets have a very clear view of how businesses 

are doing and whether they are successful and the extent that, as 

an industry, we can be put on that level playing field and have the 

same sorts of tools that other energy industries have. For instance, 

the use of a master limited partnership for investment into wind 

and other renewables would be a tool that would be useful. 

In my past life in the natural gas industry, master limited partnerships provided the kind of market opportunities for us that 

other industries were enjoying and gave us that kind of feedback 

from the marketplace that, yes, they saw us as a long-term bet and 

one that they wanted to invest in. It is one example. 

In the longer term, as you have said and others, having longterm stable energy policy in place that treated all forms of energy 

18 

in a more evenhanded way would be very helpful. But in the shorter term, extending the PTC will at least continue to say, this is an 

industry that is growing, that is providing jobs, and one that we 

want to continue to see stay in place as we develop those longerterm overarching energy policies. 

Senator WYDEN. Mr. Soanes, I guess I have 5 seconds, and then 

I can yield all the time I do not have. 

Mr. SOANES. I would have to endorse the comments of Ms. 

Wyrsch. The biodiesel industry is a young industry, and any young 

industry needs two components to succeed. It needs some degree of 

market certainty and some degree of price certainty. 

The current regulations provide that. You have the RFS–2 providing market certainty, and the pricing certainty comes from the 

extension of the blenders tax credit. 

Extension of the tax credit is needed to influence the buying behavior of customers, who need to go out and invest into blending 

infrastructure and into logistical infrastructure to allow biodiesel to 

form part of their product mix. 

We do not believe the credits will be needed on a long-term basis. 

Biodiesel is already price-competitive with petroleum diesel, but we 

do need the credit to be extended for a short period of time to provide the certainty for customers to go out and invest in necessary 

infrastructure to make biodiesel part of their energy mix, and at 

that point in time biodiesel will stand on its own and be very competitive as a new domestic energy source of this Nation. 

Senator WYDEN. Thank you. 

Senator BINGAMAN. Senator Carper? 

Senator CARPER. Thanks, panel members. Thanks for coming 

today. We have a markup over in our Homeland Security and Government Affairs Committee going on, and so I am bouncing back 

and forth. I missed your testimony, but I have a great interest in 

what you have had to say and appreciate the chance to ask a couple of questions. 

My first question would be to Ms. Martha. It is a favorite name 

in our home. Martha Wyrsch. Do you pronounce your name 

Wyrsch? 

Ms. WYRSCH. Yes. 

Senator CARPER. That is a great name for a wind company, is it 

not? I am probably not the first person to notice that. 

I want to focus for a minute or two, if I can, not on onshore wind, 

but on offshore wind. We have a place in Delaware we are very 

proud of, Rehoboth Beach, and, for a number of years, folks have 

been talking about hoping to deploy an offshore windmill farm 

about 12 miles east of Rehoboth Beach. 

You know the story of Goldilocks. The soup was too hot or too 

cold and just right. The wind about 12 miles east of Rehoboth 

Beach is just right. And some folks have been anxious to deploy offshore wind, and we are interested in helping them to do that. 

As I understand it, not only is Vestas a leader in onshore wind, 

but you are also a leader worldwide in offshore wind. That is correct, is it not? 

Ms. WYRSCH. That is correct. 

Senator CARPER. And, as of today, can you just give us some idea 

how much offshore wind production we have in this country comVerDate Nov 24 2008 20:43 Jan 16, 2013 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 R:\DOCS\77605.000 TIMD
19 

pared to offshore wind which is being harnessed to produce electricity around the world? 

Ms. WYRSCH. As you said, Vestas is the world leader in offshore 

wind, as well as onshore. And in Europe, offshore wind has become 

much more highly developed than it has here in the United States. 

In the United States, because we are still relatively new in the 

wind industry and onshore wind resources are so robust, people 

have been taking advantage of that resource over offshore, because 

offshore is a more expensive resource. 

But I will tell you, in the medium to long term, here in the 

United States, we see great opportunity for offshore wind, and the 

project that you are talking about is one, as you may know, we 

have been working on with the developers there to help them pull 

that project together. 

It is a challenge here, but we see opportunity in the long term. 

Senator CARPER. Well, in the words of Einstein, in adversity lies 

opportunity. 

Ms. WYRSCH. Exactly. 

Senator CARPER. And we are going to pursue it. Could you talk 

a little bit with us today about the difference in investment and 

construction time of an onshore wind project as opposed to an offshore wind project? 

Ms. WYRSCH. An offshore wind project actually takes about the 

same overall time, that 3-year horizon, if you have a willing audience and a willing regulatory regime. 

And so in Europe, when you see an offshore project being built, 

it could take 3 to 5 years, but the actual construction itself is very 

readily done. We have the ships, we have the construction tools 

and the infrastructure to do it. 

The offshore turbine is a different turbine. It is a turbine that 

requires more resilience in that very difficult environment. But 

those products are already available. 

And so, having an audience and a policy environment that supports offshore wind is critical to the development. 

Senator CARPER. All right. Thanks. A couple of months ago, I 

hosted a roundtable with major wind stakeholders. I am pretty 

sure that someone was there from Vestas, and I think his name 

was John Chase. Does that name ring a bell with you? 

Ms. WYRSCH. That does. He is sitting here behind me today. 

Senator CARPER. John, would you raise your hand? Thanks very 

much for joining us. I thought it was just an excellent dialogue, 

and we are grateful for your participation. 

During the discussion, there really seemed to be an overwhelming agreement that, for offshore wind to be successful in this 

country, we are going to need a longer-term extension of the investment tax credit for offshore wind, along with an extension of the 

production tax credit for onshore wind. 

In fact, in the conversation we had that day, the emphasis was 

really on the investment tax credit as even more important in the 

near term than the production tax credit. The reasoning was that, 

because offshore wind is new to us in this country, it has a long 

investment time. Due to permitting and other obstacles, the production tax credit would not help offshore wind investment. 

20 

Having said that, the investment tax credit was believed to encourage investors more. The production tax credit is still needed for 

offshore wind and we are told is vital for domestic wind turbine 

manufacture, and I believe that, which could start producing onshore wind and offshore wind turbines. 

Does your company still support the proposal by Senator Snowe 

and myself? Olympia and I combined on an offshore wind tax credit that is combined with an extension of the production tax credit. 

Ms. WYRSCH. Yes, Senator, we do. 

Senator CARPER. And why? 

Ms. WYRSCH. Because, when you look at offshore, it is a very different value proposition. You have upfront costs that are expensive 

and a longer time horizon. It will be important that the 1603 credit 

for offshore, however, go further out than currently discussed. 

We had a question earlier about the 1603 tax credit, if it were 

to be just extended in the same time frame that we are talking 

about today through another year or 2 years. That would not be as 

helpful to offshore. It needs a longer horizon. 

Senator CARPER. Good. All right. Thanks. 

Mr. Chairman, I think my time has expired. But before I close, 

can I just say Ms. Wyrsch’s name one more time? Martha Wyrsch. 

Ms. WYRSCH. Yes. Thank you. 

Senator CARPER. Great to see you. 

Senator BINGAMAN. Senator Kerry? 

Senator KERRY. Mr. Chairman, thank you very much. Thank 

you, both you and Senator Cornyn, for holding this timely hearing. 

I appreciate it very much. 

I have been picking up little pieces of it back in my office, as I 

have had some meetings, and a lot of questions, obviously, to ask. 

I may submit some for the record. 

But I will ask a question. I want to ask particularly about the 

marketplace. But I want to just highlight—since we get a very 

small amount of time, I think it is important to state that the 1603 

program, I understand, has leveraged about $23 billion in private 

sector investment for some 22,000 projects in every State in the 

country and across a dozen clean energy industries: solar, wind, 

fuel cell, combined heat power, hydropower projects. And to date, 

I understand it has spurred the construction of sufficient new generation capacity that could power more than a million American 

homes, supporting over 290,000 jobs. 

So allowing it to expire, as we have heard from many of the panelists here, just creates havoc in the marketplace, a tail-off in investment, uncertainty in the ability of people to be able to plan. 

And the same is true of the advanced energy manufacturing credit, 

which has also leveraged private sector investment. 

But what I want to try to focus on—a couple of things. One of 

the things—well, there are two things I want to focus on. One is 

competitiveness. I particularly see this and feel this, sitting on the 

Foreign Relations Committee, that the United States is at risk of 

being left out of a $6-trillion market that others are rushing into. 

The fastest-growing segment of the energy market is going to be 

green energy, projected at about $2.3 trillion in the next 15–20 

years. 

21 

Traditionally, the United States has really been in the lead on 

these kinds of things. A lot of the technology that is being used by 

China and other people was all developed here. The Bell Laboratories, 50 years ago, they were the ones who were racing to the 

market with them. It is just a tragedy that is exacerbated by this 

year-to-year big question mark hanging over this industry that cannot plan for the long term. 

Also, a recent study by the National Renewable Energy Laboratory found that the financial incentives that a country provides 

play a far more significant role than factors like labor costs, when 

a company is deciding where it may go. And China, now the leading manufacturer of solar panels and wind turbines, is about to 

outspend the United States three to one on public clean energy 

projects over the next several years. 

China, Germany, Italy, Australia, India are all attractive to financiers because they have national policies that create long-term 

certainty for investors by supporting renewable energy standards 

and greenhouse gas reductions, and that creates demand. We have 

not created demand. 

So when a Solyndra or an Evergreen or one of these companies 

has a problem, to some large measure that is a reflection of the absence of adequate demand in our marketplace compared to what 

exists in other parts of the world. So I hope we are going to move 

on this, and we ought to be moving on it more than on a 1-year 

and year-to-year basis. 

But let me ask you, Ms. Sherlock, whether it is or is not accurate 

that really one of the things we need more than anything is some 

market price on carbon or some kind of tax policy with respect to 

carbon that would then let the private sector move with a whole 

lot of different determinations about what is of value and what is 

not. And, in the absence of that, we are losing jobs to other countries and market share that we should not be losing, are we not? 

Ms. SHERLOCK. From an economic perspective, placing a tax on 

carbon or having some other form of price on emissions would allow 

technological neutrality for allowing low carbon technologies to 

compete on a level playing field and having whichever technology 

is able to achieve low carbon production at the least cost become 

the technology that would move forward. 

Senator KERRY. We do not really have a level playing field today, 

do we? Do we not have a lot of incentives that still exist for fuels 

that we do not necessarily want to encourage? 

Ms. SHERLOCK. There are incentives across the board for various 

types of energy production incentives and consumption incentives, 

and it does not create a neutral playing field for energy. 

Senator KERRY. Does anybody else want to comment with respect 

to the demand issue and how that affects the choice of where 

money goes? 

Mr. COLEMAN. I might add onto that, which is, we look at it, obviously, as venture investors, from the earliest stages, and I think 

that there are two elements going on in the market here, which 

are, one, the provisions that we have seen over the last 10–15 

years for renewables have driven this growth that we have talked 

about. It is important, but in large part, I think, if you dig below 

the covers on that, what you find is that a lot of it has been deployVerDate Nov 24 2008 20:43 Jan 16, 2013 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 R:\DOCS\77605.000 TIMD
22 

ment of existing technologies and marginal improvements on those 

existing technologies. 

Now, as you get more deployment, you will get this decline in the 

cost curve, but at some point, in order to continue to push those 

cost curves down, to shift those curves, you need new technology, 

and the only way to do that is one of two ways. You either have 

very long-term credits, the way you do in the oil and gas industry, 

where you have permanent credits and early-stage investors can 

plan around those things, or you focus on credits that try to push 

technology into the marketplace. 

So I think we need to be cognizant of that in the way that we 

structure these tax credits. 

Senator KERRY. Well, I appreciate that very much. I know I am 

over time. But I would just say to my colleagues that, 2 years ago 

China produced 5 percent of the world’s solar panels. Today they 

produce more than 65 percent of them, and they have hurt some 

of our companies, obviously, in the process, and the technology they 

are producing was developed here in the United States. 

So, I mean, you cannot tell a story more simply than that. And 

because of our failure to move aggressively to encourage the market incentive and the pricing and the longer-term investment decisions, we are killing ourselves on jobs, and we are hurting ourselves in the marketplace. And I hope we will get our act together. 

And, Mr. Chairman and Ranking Member, I thank you for having this hearing, because this really will define our future. This is 

the biggest single market available to the world, a $6-trillion market, with now 7 billion potential users and growing. 

The market that drove the growth of our Nation in the 1990s 

when every sector of our economy went up and every income level 

went up and we created 23 million jobs, that was a $1-trillion market with only a billion users. That is the difference, 6 to 1, and 7 

to 1 in users. 

But we are handicapping ourselves today because we are not 

making simple decisions on these kinds of credits and these kinds 

of incentives and this kind of competitive picture, and I hope we 

are going to get into the race. 

Thank you, Mr. Chairman. 

Senator BINGAMAN. Thank you very much. 

Let me just ask—perhaps Dr. Thorning is a good person to ask 

on this, or any of the rest of you who have an opinion. 

I recall several years ago when the push was on to retain—I believe it was called section 29 for natural gas, unconventional natural gas production, and there was a lot of opposition to that. We 

maintained it. 

It has been a significant factor, as I understand it, in causing the 

discovery of all of this shale natural gas that has now changed the 

energy environment that we live in and kept the price of natural 

gas so low. 

Am I right that that tax incentive was a significant factor there? 

Are you familiar with that, Dr. Thorning? 

Dr. THORNING. I am not an expert, Senator, on section 29, but 

I think the development of the new technology for hydraulic fracturing for both oil and gas is the main driver for why we are seeing 

the expansion of our natural gas production. 

23 

Senator BINGAMAN. Do you know about this, Dr. Sherlock? Is it 

something you have looked at, or not? 

Dr. SHERLOCK. It is not something I have looked at in the context 

of natural gas. 

Senator BINGAMAN. Let me ask, Mr. Coleman, your proposal to 

have a volume-based credit, as I understand, your ideal approach 

on these renewable credits would be to shift to a volume-based 

credit and keep it in place for some period of time, but then phase 

it out. Is that what I understand, or does the volume-based credit 

have a built-in mechanism for ensuring that it is not going to be 

available to anyone once you get up to a certain level? 

Mr. COLEMAN. It is the latter, which is, you would want to make 

the structure more permanent in nature so that people can actually 

look out 5, 10, 15 years down the road and see that that structure 

will be there, and accessible. 

But, on the other hand, you want to make sure that users of that 

credit do not stay on it forever. And so the point is, there would 

be a built-in mechanism, and it would allow—it would force these 

companies to roll off of that as they hit a certain—— 

Senator BINGAMAN. And how would that work in connection with 

a developer of solar photovoltaic projects? How would that actually 

operate? 

Mr. COLEMAN. Well, the way you would be doing it is, you would 

be focusing on the manufacturing of the equipment itself. So it 

would be on the production of the solar panels or on the wind turbines, and it is distinctly more of a supply-side solution than a 

demand-side solution. 

And the idea would be that you would support a manufacturer 

through some volume of production, and then it would tail off. And 

so that way, that value would trickle through the system, into the 

projects. 

Senator BINGAMAN. But would this still—as you see it, would 

this be an alternative to a production tax credit, or would it be 

something that is focused on manufacturing and you would still 

need a production tax credit in order to actually have projects deployed? 

Mr. COLEMAN. I think, in the short term, you can see that these 

two things would be compatible, that one is more on the supply 

side, on the manufacturing side, and the other is more on the demand side and on the production of electricity side. 

I think, in the long run, if you can get to the point where you 

are producing products that can actually compete in the marketplace without those demand-side supports, then ideally that is 

where you would get to. 

Senator BINGAMAN. Senator Cornyn? 

Senator CORNYN. Mr. Soanes, thank you for being here today. I 

wanted to ask about the interaction between the biodiesel tax credit in addition to the renewable fuel standard. How do those interact 

and affect the biofuels industry? 

Mr. SOANES. They actually interact in a very positive way, and 

the industry needs both of those to be in place on a go-forward 

basis to be sustainable and to continue its growth. 

24 

The renewable fuel standard created a mandate for the use of 

biodiesel in the American market, and that, in effect, acts to create 

market certainty for biodiesel producers in America. 

The blenders tax credit provides pricing certainty for our product 

and encourages end users to purchase the product and allows the 

market to mature in that way. 

So really they go hand-in-fist, and they really need to coexist on 

a go-forward basis for the industry to continue to develop. 

I heard Mr. Coleman’s testimony a moment ago about having a 

volumetric phase-out, and I think that makes sense if you are just 

looking to encourage a technology. But you have to look at beyond 

just encouraging a technology. You have to look at behavior that 

will—you have to look at taxes that also influence the buying behavior of customers. 

So, in the biodiesel industry, the blenders tax credit has acted to 

encourage capital investment in new facilities, but, on a go-forward 

basis, we need the blenders tax credit to be there to encourage our 

end users to make different decisions about how they use biodiesel 

within their own systems and for them to invest the necessary capital to blend the product into their fuel streams. 

The two really go hand-in-hand, and it is more than a volumetric 

issue. 

Senator CORNYN. Your biofuels industry or businesses that have 

regular corporate and business structure like any other business 

but have special concerns that we have been talking about here 

today, how do you view the President’s debt commission, the 

Simpson-Bowles Commission, proposals, for example, to reform the 

tax code by bringing down marginal rates, particularly for domestic 

corporations that have businesses abroad, by eliminating a lot of 

tax expenditures and broadening and flattening the code? 

Have you thought much about how that would relate to the subject we are talking about here today, other than probably making 

you very nervous? 

Mr. SOANES. Senator Cornyn, I am having enough difficulty trying to manage through the boom-and-bust cycle of non-extension of 

the blenders tax credit and truly have not had a chance to think 

through that issue. 

Senator CORNYN. Well, let me invite you and anyone else on the 

panel, as you reflect on what we have been talking about today— 

any additional thoughts you have about that we would certainly 

welcome, I personally would welcome. 

Dr. Thorning, what principles should guide Congress in examining relevant renewable provisions in the context of fundamental 

tax reform? 

Dr. THORNING. I think the use of cost-benefit analysis should be 

your guiding principle. What are the costs to the U.S. taxpayer of 

continuing the subsidies for renewable energy deployment, and 

what are the benefits? And we know what the costs are: $20 billion 

in incentives in 2010, for example, of which 76 percent was for renewable energy. 

We know that, if we are trying to address the threat of global 

climate change, it is going to take a worldwide effort. And, as my 

figure in my testimony shows, growth in emissions is outside the 

25 

U.S. Therefore, what we do here is not going to make a material 

impact. 

So the environmental benefits of deploying ever more expensive 

renewable energy are, in my view, not equal to the cost to the 

American taxpayer. 

So I think we ought to look at whether spending money in terms 

of R&D to try to develop lower-cost renewable energy is a better 

use of taxpayer dollars. 

I would just like to draw your attention to table 1 in my testimony, which shows the Department of Energy’s estimates of the 

cost of solar and wind compared to conventional fossil fuels. Solar 

and wind tend to be 10 to 20 times more expensive per 1,000 

kilowatt-hours for installing generating capacity. 

So, as you look at whether these credits have really done the job 

and whether they are likely to in the future, I think it is pretty 

clear that we ought to think about phasing them out and trying to 

develop better ways of using renewables to bring the cost down. 

Senator CORNYN. Mr. Chairman, if I can just ask one follow-up 

question. 

Dr. Thorning, of course these credits are being used to advance 

other policies rather than strictly tax policy, and I would bet, based 

on what Senator Kerry said, he and I would have divergent views 

about the subject of his discussion and the need for a cap-and-trade 

program that would price carbon and that sort of thing. 

But how would you recommend that Congress advance its clean 

energy policies but, at the same time, have sensible tax policies 

more broadly? Is it possible to reconcile those goals? 

Dr. THORNING. I think all energy investment ought to be on a 

level playing field, and we should continue to do R&D to try to get 

renewables, which we hope will be a growing share of our energy 

mix in the future, down to where they are cost-competitive. 

With the mandates that are being discussed, the clean energy 

standard, a Federal clean energy standard, will certainly raise energy prices, will make it harder for U.S. manufacturing and job 

growth to occur. 

So I think you need to look at the big picture and look at trying 

to create a level playing field where all technologies have to stand 

on their own feet and compete. 

Senator CORNYN. Thank you, Mr. Chairman. 

Senator BINGAMAN. Senator Thune? 

Senator THUNE. Thank you, Mr. Chairman. I want to thank you 

and Senator Cornyn for holding the hearing today at the subcommittee, and our witnesses for their willingness to testify. 

Let me just make a few observations, if I might, about the importance of alternative energy tax incentives and what they have 

meant in a State like South Dakota. 

Many of the tax incentives that we are discussing today have traditionally enjoyed broad bipartisan support. The production tax 

credit for wind energy, the tax credit for biodiesel, the investment 

tax credit for vehicle refueling property are just a few examples of 

provisions that I have supported in the past, because I believe that 

they have strengthened America’s domestic energy supply. 

While our Nation will remain dependent on fossil fuels in the 

near term, alternative sources of energy clearly should be part of 

26 

an all-of-the-above strategy and approach to achieving America’s 

energy independence. In my State of South Dakota, for example, 

we have seen the positive impacts of tax incentives on the growth 

of the ethanol industry and the jobs associated with that. 

Today, South Dakota has 15 plants which produce over a billion 

gallons of ethanol, about 10 percent of America’s ethanol supply, 

and roughly 40 percent of the corn we grow goes into ethanol production. 

The jobs and economic growth associated with this industry were 

spurred, in large part, by the blenders tax credit. I hope that, once 

the existing blenders credit has expired, we can continue to find 

ways to encourage the production and use of advanced biofuels, especially through incentives for infrastructure which will give consumers more choices at the pump. 

Another example of an energy tax incentive important to my 

State is the wind production tax credit. It is scheduled to expire at 

the end of 2012. South Dakota ranks fourth in the Nation in the 

amount of wind power added in 2010. South Dakota’s wind farms 

now generate enough electricity to power 240,000 homes, and the 

State’s future potential for wind energy is enormous. According to 

the National Renewable Energy Lab, South Dakota wind resources 

could provide 310 times the State’s current electricity needs if they 

were fully exploited. 

But, as the witnesses have stated today, short-term incentives do 

not give businesses the certainty that they need to make long-term 

multiyear investments. Consider the example of Dakota Plains Energy, a business that is based in Aberdeen, SD that is currently in 

the fourth year of development of what will ultimately be a 300- 

megawatt wind farm in Campbell County in north-central South 

Dakota. 

Because the first stage of this wind farm is unlikely to be completed until 2013, after the wind tax credit is scheduled to expire, 

it is becoming increasingly difficult for Dakota Plains to secure financing going forward. And this situation impacts not only wind 

developers, but suppliers, as well, suppliers such as Molded Fiberglas, which is a South Dakota manufacturer of wind turbine 

blades. It will have fewer orders as uncertainty related to the expiration of the tax credit increases. 

Clearly, American businesses need greater certainty in order to 

be able to plan their investments, and that means that Congress 

has to do a better job of enacting long-term tax provisions rather 

than 1- or 2-year extensions. At the same time, however, we need 

to be realistic about our deficit situation. 

As such, I hope that this committee will begin to examine how 

we can reform our energy tax incentives to ensure that taxpayers 

are getting the maximum bang for their tax dollar. This might 

mean phasing out some subsidies that are no longer necessary or 

changing the structure of certain tax incentives to make them more 

efficient. 

I realize that this sort of major overhaul is perhaps best suited 

to a fundamental tax reform effort, but I do not think we can afford 

to wait until that time to begin this process. So I am hopeful that 

our discussion today, Mr. Chairman, at this subcommittee, can 

carry forward into next year at the full committee. 

27 

And let me just, with that observation, if I might, ask a question 

of the entire panel, which has to do with the need for predictability—I think many of you have testified to that today—so that 

businesses can plan multiyear investments. 

I would be interested in knowing from each of you if you would 

be willing to consider reforms to the energy tax provisions that you 

care about the most, even if it meant a somewhat less generous incentive, in exchange for long-term permanency and predictability. 

Mr. Soanes? 

Mr. SOANES. Senator, thank you very much for your comments. 

I would be happy to try to address your question on behalf of my 

company, which participates in the biodiesel industry. 

We see enormous value in having some degree of price certainty 

and market certainty, and we would certainly be supportive of a 

tax policy that provided predictability into the future, even if it 

meant it came with less support. 

The key thing for our industry is that investors need to understand exactly what the pricing mechanisms are in the future and 

exactly what you can rely on as you invest your capital. Having a 

longer-term horizon on what that looks like will encourage investment. 

The other issue that we face is that, in the petroleum industry, 

working capital needs are very, very high relative to ultimate margins. So you look at biodiesel, this year alone, our company has 

manufactured over a quarter of a million dollars worth of product. 

You cannot raise working capital to support that amount of production activity without there being some degree of certainty as to 

what the pricing structure is in the market on a longer-term basis. 

So we would certainly encourage a longer-term extension and 

certainty in tax policy. 

Senator THUNE. Does anybody else care to comment on that? 

Ms. WYRSCH. Senator, Martha Wyrsch, with Vestas Wind Systems. The wind industry would be very interested in working with 

you to look at that longer-term policy that you suggest. We do want 

to emphasize, however, that for us, the PTC is done today, although it does not end until the end of 2012. Business decisions are 

being made today. 

So we would need extensions today to bridge us to that discussion and the time period it will take to complete that. 

Senator THUNE. Thank you. 

Mr. Coleman? 

Mr. COLEMAN. I would just add that I think, from our perspective, long-term predictability is the key. What we are looking for 

as investors is an equitable, very clear code that allows us to figure 

out where to invest on a long-term basis. 

And I think Dr. Thorning mentioned that technology is really 

what has driven this shale gas boom. What is interesting is, that 

technology was something that was developed over 30 years ago 

out of DOE. 

So it has taken a long time to get that into the marketplace and 

for us to invest in new technologies. Whether it is in gas or whether it is in renewables, we need that kind of lead time. 

I think Senator Wyden mentioned that there is this crazy quilt 

of incentives out there, and I think from an investment perspective, 

28 

that is the hardest thing to navigate. So what we are trying to understand is, how do you simplify it? How do you create it so that 

it is a little bit more technology-neutral across the board and allows us to navigate it in a way where we can actually invest with 

some sort of reliability in the long-term? And that requires predictability, but it also requires simplicity and transparency. 

Senator THUNE. Thank you. I see my time has expired, Mr. 

Chairman. I think we have a vote on. So thank you all very much. 

Senator BINGAMAN. Thank you all. I think it has been very useful testimony. We appreciate it. And they have started these votes 

that they had earlier advised us of. So we will conclude the hearing 

with that. Thank you. 

[Whereupon, at 11:12 a.m., the hearing was concluded.] 

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