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[Senate Hearing 107-413]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 107-413
 
                THE BUSINESS OF ENVIRONMENTAL TECHNOLOGY
=======================================================================

                                HEARING

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION
                               __________

                             AUGUST 1, 2001
                               __________

    Printed for the Committee on Small Business and Entrepreneurship

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

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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                      ONE HUNDRED SEVENTH CONGRESS

                              ----------                              
                 JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan                 CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     CONRAD BURNS, Montana
JOSEPH I. LIEBERMAN, Connecticut     ROBERT F. BENNETT, Utah
PAUL D. WELLSTONE, Minnesota         OLYMPIA J. SNOWE, Maine
MAX CLELAND, Georgia                 MICHAEL ENZI, Wyoming
MARY LANDRIEU, Louisiana             PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         MIKE CRAPO, Idaho
MARIA CANTWELL, Washington           GEORGE ALLEN, Virginia
JEAN CARNAHAN, Missouri              JOHN ENSIGN, Nevada
    Patricia R. Forbes, Democratic Staff Director and Chief Counsel
               Emilia DiSanto, Republican Staff Director
               Paul H. Cooksey, Republican Chief Counsel

                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Kerry, The Honorable John F., Chairman, Committee on Small 
  Business and Entrepreneurship, and a United States Senator from 
  Massachusetts..................................................     1
Bond, The Honorable Christopher S., Ranking Member, Committee on 
  Small Business and Entrepreneurship, and a United States 
  Senator from Missouri..........................................    35
Edwards, The Honorable John, a United States Senator from North 
  Carolina.......................................................    38

                           Witness Testimony

Bentley, Jeff, chief operating officer, Nuvera Fuel Cells, Inc., 
  Cambridge, MA..................................................     8
Bedogne, Ralph, vice president, Finance and Government Relations, 
  Engineered Machined Products, Escanaba, MI.....................    26
Kennard, Byron, executive director, the Center for Small Business 
  and the Environment, Washington, D.C...........................    39
Dreessen, Thomas, chief executive officer, EPS Capital 
  Corporation, Doylestown, PA....................................    44
Patterson, Ed, president, Natural Environmental Solutions, Inc., 
  St. Louis, MO..................................................    49
Renberg, Dan, member, Board of Directors, Export-Import Bank of 
  the United States, Washington, D.C.............................    66
Stolpman, Paul, director, Office of Atmospheric Programs, U.S. 
  Environmental Protection Agency, Washington, D.C...............    74

          Alphabetical Listing and Appendix Material Submitted

Bedogne, Ralph
  Testimony......................................................    26
  Prepared Testimony.............................................    29
Bentley, Jeff
  Testimony......................................................     8
  Prepared Testimony.............................................    11
Bond, The Honorable Christopher S.
  Opening Statement..............................................    35
  Prepared Statement.............................................    37
Dreessen, Thomas
  Testimony......................................................    44
  Prepared Testimony.............................................    47
Edwards, The Honorable John
  Opening Statement..............................................    38
Kennard, Byron
  Testimony......................................................    39
  Prepared Testimony.............................................    41
Kerry, The Honorable John F.
  Opening Statement..............................................     1
  Prepared Statement.............................................     4
Patterson, Ed
  Testimony......................................................    49
  Prepared Testimony.............................................    51
Renberg, Dan
  Testimony......................................................    66
  Prepared Testimony.............................................    69
Snowe, The Honorable Olympia J.
  Prepared Statement.............................................    56
Stolpman, Paul
  Testimony......................................................    74
  Prepared Testimony.............................................    76

                THE BUSINESS OF ENVIRONMENTAL TECHNOLOGY

                              ----------                              

                       WEDNESDAY, AUGUST 1, 2001

                              United States Senate,
          Committee on Small Business and Entrepreneurship,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 9 a.m., in room 
428-A, Russell Senate Office Building, The Honorable John F. 
Kerry (Chairman of the Committee) presiding.
    Present: Senators Kerry, Bond, Edwards, and Snowe.

   STATEMENT OF THE HONORABLE JOHN F. KERRY, A UNITED STATES 
                   SENATOR FROM MASSACHUSETTS

    Chairman Kerry. The hearing will come to order. Thank you 
all very much. I appreciate everybody being here and I look 
forward very much to this hearing and I apologize to the 
witnesses who were prepared to come previously and who on short 
order switched their schedules. Unfortunately, the Senate is 
not always the most orderly process and we live with these 
changes ourselves and I apologize and I am very, very grateful 
to all of you for being able to switch your schedules and come 
in today. Thank you for doing that.
    I personally am very excited about this hearing. It is 
going to have to be conducted under some relatively tight 
constraints because I have to be at a markup for the State 
Department authorization bill in the Foreign Relations 
Committee where I have personal pending business and that will 
start at 10:30, so I am going to have to excuse myself at that 
time.
    But the reason I am excited about this hearing, and I think 
it is a very important one, is that we are embroiled in a 
longstanding debate in this country about the environment. 
Historically, many politicians have been prepared too easily 
and too quickly to pit good public policy, good environmental 
policy, against the economy, against common sense economic 
choices.
    The fact is that there are literally thousands of 
extraordinarily successful small businesses in this country 
that are growing into big businesses, in many cases that have 
proven again and again that this is a phony conflict, that this 
is a tension that doesn't have to exist if we are smart about 
it, and sensitive, and we create good public policy. The fact 
is that small business can thrive. Big businesses can save tens 
of thousands, hundreds of thousands, and even millions of 
dollars by adopting good policies and we can do well 
economically even as we do good for the country.
    So I thank the Administration and all of our witnesses for 
coming here today to focus on the important connection between 
small business, job creation, and environmental protection. 
Over the past 30 years, we have taken some very significant 
steps in the country to safeguard the environment. We have 
enacted the National Environmental Policy Act, the Clean Air 
Act, the Clean Water Act, the Endangered Species Act, the Safe 
Drinking Water Act, Superfund, and other principal 
environmental protections.
    Now, I will acknowledge, and sometimes some of my friends 
in the environment don't like this, but I will acknowledge that 
sometimes, as in any bureaucracy, the bureaucracy has a way of 
getting in front of the intent of Congress, or even the sort of 
common sense application of the law, and sometimes we have bad 
results because young bureaucrats are excessively zealous 
enforcers; they don't apply common sense and they reach too 
far, or they try to apply a one-size-fits-all rule in a way 
that just doesn't make sense when distinguishing between a very 
large corporate entity versus a very small entity.
    I believe that we can work through those kinds of problems. 
But the bottom line is that we have created a broad legal 
mandate in this country for environmental protection, and in 
doing so, we created a demand for new technologies. For the 
first time, industry and government demanded environmental 
assessment, waste management, remediation of contaminated 
properties, emissions reduction technologies, clean energy, 
improved efficiency, and a slew of other environmental 
services, and the private sector responded to that new demand 
through the creation of innovative technologies.
    I would remind people that there is no inherent automatic 
marketplace for Abrams tanks or for B-1 bombers or for other 
matters of our defense industry, but we have huge companies and 
tens of thousands of Americans working in those industries. 
Why? Because we defined a threat, we put a certain amount of 
money into the definition of that threat, and the private 
sector responded and so we find a certain component of our 
economy therefore thriving in response to that created demand.
    The environment is no different. We define a threat. If we 
were to put a certain amount of our revenue toward the 
remediation of that threat or dealing with that threat, the 
private sector would have the opportunity to respond and we 
would be the better for it.
    Let me provide an example of some of the hysteria and some 
of the positive benefits that come out of this equation. In 
1990, Congress enacted amendments to the Clean Air Act that 
mandated cuts in sulfur dioxide emissions from power plants and 
refineries. We all know the negative impact of sulfur dioxide--
heart disease, respiratory illness, premature death, and so 
forth. Its environmental impacts range from reduced visibility, 
acid rain, forest crop ecosystem damage, and so forth. There 
was no question that we would benefit from lower sulfur 
emissions, but the question and controversy focused on the cost 
of those sulfur emission reductions.
    At the outset, industry told us with certainty that meeting 
the cost of reductions would be roughly $10 billion, and EPA, 
on the other side, estimated that the cost would approach about 
$4 billion. Well, to our credit, we did put the requirements in 
place. The actual cost has turned out to be approximately $2 
billion, which is half of the EPA's estimate and one-fifth of 
the industry's estimates. One of the principal reasons that 
these costs fell so far below projection was because no one 
took the time or worked through the difficulties of predicting 
how innovation, like catalytic systems and conversions and 
other technologies, would cut compliance costs.
    So as we look at past experience, we learn that 
implementing environmental safeguards in our future, whether it 
is further cuts in air and water pollution or protection of the 
public in many other ways, that we can use energy more 
efficiently and generate renewable, reliable and domestic 
energy and push the technology curve in ways that will 
significantly alter the outcomes of cost and significantly 
increase the revenue flow to companies in this country. This is 
a vital lesson for us to learn; an important principle for us 
to apply as we go forward.
    When a market demands progress, change and evolution will 
flow and small firms play a key role in making that happen. In 
1999, the Small Business Administration investigated this role 
and found the following: ``Small businesses are sources of 
constant experimentation and innovation. They are an integral 
part of the renewal process in defining market economies. They 
have a crucial role as leaders of technological change and 
productivity growth. In short, they change the market 
structure.'' Now, I am going to put the rest of my text in the 
record as if read in full because I want to try to adhere to 
the standard here to keep this on time.
    But the bottom line is this: We do not need to be trapped 
in a false prison publicly with respect to this dialog. We 
don't have to fear what we do best in this country, which is 
innovation and entrepreneurial activity. If we can encourage 
that kind of activity, with a sense to the marketplace, that it 
will be sustained and that we are serious, we will see, I 
believe, an explosion within the small business community of 
this country of people pursuing their efforts to privately meet 
the demand that they recognize is there and that is supported 
through the Federal dollars that would be available to help 
encourage the technology and the movement in those directions.
    If we do that, we can again be the world leader in some of 
these alternative and renewable possibilities as well as other 
sectors of the technology field. The United States should not 
be lagging behind Germany or Japan or any other country in the 
world, given our technological prowess and the capacity of our 
universities and our basic research playing field, and I think 
it is important for us to begin to recommit to that and that is 
what these hearings are about.
    We also want to look in these hearings a little bit at how 
we undo this tension between a small entity and good 
environmental policy. I mean, how do we make it possible for 
people to not feel that the bureaucracy is their enemy but 
rather to have a more user-friendly cooperative process. Anyone 
who wants to share any thoughts on those lines, we also welcome 
them because we really want to explore fully all of the 
possibilities here.
    [The prepared statement of Chairman Kerry follows:]
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    Chairman Kerry. So I thank the panel for being with us. We 
have Mr. Byron Kennard, the executive director of the Center 
for Small Business and the Environment in Washington; Mr. Jeff 
Bentley, COO of Nuvera Fuel Cells, Inc., in Cambridge, 
Massachusetts; Mr. Thomas Dreessen, CEO, EPS Capital 
Corporation from Pennsylvania and Export Council for Energy 
Efficiency in Washington; Mr. Ed Patterson, president of the 
Natural Environmental Solutions, Inc., St. Louis, Missouri; and 
Mr. Ralph Bedogne, vice president of Finance and Government 
Relations, Engineered Machined Products, Escanaba, Michigan.
    Gentlemen, if you would each keep your comments in summary 
form, your full text will be placed in the record as if read in 
full and I look forward to your testimony. Why don't we begin 
over here, Mr. Bentley, with you and we will run right down the 
line.

STATEMENT OF JEFF BENTLEY, CHIEF OPERATING OFFICER, NUVERA FUEL 
             CELLS, INC., CAMBRIDGE, MASSACHUSETTS

    Mr. Bentley. Good morning and thank you very much for 
allowing me to testify. I am Jeff Bentley, the chief operating 
officer of Nuvera Fuel Cells in Cambridge, Massachusetts. 
Nuvera is a designer and developer of fuel cell technologies 
for companies providing clean energy solutions to stationary 
power and transportation markets.
    Nuvera employs about 130 people in the United States and 45 
people in our office in Milan. Our suppliers and partners 
include U.S. companies like DuPont, Corning, Caterpillar, 
Engelhard, and Chevron, to name a few, and we also work with 
leading international companies, such as RWE, the second 
largest utility in Germany, and Mitsui, one of the largest 
Japanese trading companies. We hope to commercialize fuel cell 
technology to make the world a better place to live.
    If you are unfamiliar with the technology or the Nuvera 
story, 10 years ago, Nuvera's senior staff worked at Arthur D. 
Little, a technology consulting firm. In 1997, we created a 
breakthrough. We were able to, in a very ungainly device, 
create 100 watts of electricity, enough to light one light 
bulb, using gasoline. This was a breakthrough because it meant 
that you could have an electric car with zero pollution that 
runs on regular gasoline--no major fuel infrastructure changes, 
no problems with vehicle range, and zero emission driving. News 
of the breakthrough was communicated worldwide as the critical 
link to someday realizing the commercial benefits of fuel cells 
and transportation.
    I would like at this point in time to extend my sincere 
gratitude and appreciation to the U.S. DOE. They have been and 
continue to be one of our strongest supporters. They were there 
in 1992 when I approached them for funding for studies. They 
were there in 1997, along with the National Labs from Illinois 
and New Mexico at our breakthrough, supplying technology as 
well as insights. DOE continues to support Nuvera's 
groundbreaking technology development in fuel cells.
    Turning back to fuel cells, how they work is pretty simple. 
They take hydrogen. They separate protons and electrons. The 
protons make water. The electrons drive an electric motor, a 
light bulb, or anything that requires electric energy. A fuel 
cell stack can, in fact, power a home. A fuel cell stack about 
1-foot long can be integrated into a unit that is about the 
size of your home heater and power your home and, if designed 
correctly, also provide all of the energy for hot water and 
heating.
    A significant challenge to realizing this technology has 
always been finding ways to produce hydrogen for the fuel cell. 
There is a global infrastructure for gasoline and for natural 
gas, but not for hydrogen. Early on, Nuvera recognized this 
potential fatal flaw and went on to develop a fuel processor 
which converts gasoline or natural gas or renewable ethanol 
into hydrogen for a fuel cell. This enables fuel cells to 
operate wherever you have a gas pump, wherever you have a 
natural gas pipeline, wherever you have ethanol, such as the 
Midwest and now California, or where you have a propane tank.
    Today, Nuvera designs and develops fuel cells and fuel 
processors into devices that range from 1 kilowatt to over 50 
kilowatts, and we are integrating our proprietary technologies 
into power plants for transportation and for stationary power. 
In the United States, we intend to apply these for critical 
power for telecommunications applications.
    Fuel cells are one of the most exciting environmental 
technologies today because they do have a real ability to use 
energy more efficiently and address global warming. This is 
certainly recognized by our customers and partners in Europe 
and Japan and we are hoping it becomes more realized in the 
United States, as well. Even major oil companies like Shell and 
BP are taking steps to address global warming, and fuel cells 
represent the best technology to more efficiently and cleanly 
generate electricity.
    Bringing the discussion a little closer to home, fuel cells 
offer a viable alternative to generating clean, deployable, 
dependable energy onsite for residences, for commercial 
buildings, and remote applications. You can see here on the 
screen the progression we have made since 1999 in reducing, 
again, ungainly equipment into packages that will fit inside a 
home to power a home or a small business.
    As far as commercial prospects are concerned, our near-term 
business plan is to export integrated fuel cell power systems 
to Europe and Japan. Why? Because both of those countries are 
further advanced than the United States in terms of 
environmental consciousness and the support of their government 
in terms of deployment of fuel cells.
    Fuel cells are a revolution, not an evolution, and as a 
result, small businesses like Nuvera have a key role because of 
our ability to innovate. We are a small company seeking to 
bring innovation to stationary power and transportation, two of 
the biggest sectors in the economy. We are committed to 
advancing the development of technologies.
    I indicated before DOE's enormous role in helping us get 
started. I would also like to recognize the Department of 
Commerce Advance Technology Program. They funded a high-risk 
program and that is now embedded into a system that we are 
shipping to Europe, exporting to Europe and Japan, and also, 
the DOE has helped us work with the State of Illinois and 
others to use ethanol in fuel cells, gaining a double 
advantage.
    So I would urge you to continue the U.S. Government's work 
with companies like Nuvera to help us commercialize the 
technology. Some of the specific recommendations that I have 
help us to remove regulatory barriers that impede the use of 
fuel cells in utilities; help fund high-risk R&D, as you have 
in the Department of Energy and the NIST ATP; provide 
incentives for the use of renewable fuels and fuel cells--you 
get a double win if you are using a renewable fuel in a high-
efficiency system; and finally, help the U.S. Government be a 
pathfinder by applying fuel cell.
    The ungainly device that we used to demonstrate our 100-
watt device is now on its way to the Smithsonian, and in its 
place we have on test a device that, instead of 100 watts, 
produces 90,000 watts, 90 kilowatts, in the same size. So we 
have made tremendous progress since 1997 and the U.S. 
Government has been a big part of that and we look forward to 
continuing to work with them.
    Chairman Kerry. Thank you very much, Mr. Bentley. That is 
very interesting. I look forward to following up with you.
    [The prepared statement of Mr. Bentley follows:]
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    Chairman Kerry. Mr. Bedogne.

   STATEMENT OF RALPH BEDOGNE, VICE PRESIDENT OF FINANCE AND 
   GOVERNMENT RELATIONS, ENGINEERED MACHINED PRODUCTS, INC., 
                       ESCANABA, MICHIGAN

    Mr. Bedogne. Thank you very much. As you mentioned, Senator 
Kerry, the business--we are in a different element. We actually 
deal with diesels, and there is a perception out there that 
diesels are dirty and diesels do pollute, and they do add to 
the pollution. But we have been able to develop some technology 
that has helped that.
    My written comments, which are part of a handout, summarize 
in detail a number of points we as small businesses face. I 
would like to elaborate on a few of those. First, it needs to 
be well understood by this Committee and the general public 
that small businesses can contribute and do contribute daily on 
cutting-edge technological solutions facing our Nation. One of 
the main reasons for this is that our large business partners 
have and continue to be preoccupied in the diverse activities 
that are required to run their core business. This has allowed 
smaller businesses like EMP to capitalize on the opportunity of 
adding value to our customers' products. This value-added 
business development principle has been our mantra since the 
beginning of EMP and obviously it has worked, and I will show 
you as our growth demonstrates.
    As larger companies are required to meet very specific 
environmental and conservation regulatory limits, their focus 
is on finding viable and affordable solutions to these issues. 
This is not to say that the larger companies are not doing new 
product development. On the contrary, in our business of diesel 
engine manufacturing, our customers continue to develop new 
engine platforms on a regular basis. But what EMP has been able 
to offer through our engineering and product development is 
that process of quickly designing or redesigning technologies 
for these next-generation platforms in a timely and cost-
effective manner.
    One important component for our success has been the 
capable staff at the Federal levels who have identified 
innovative research and development ideas and concepts that 
concur with ours. A specific example, as you mentioned, is the 
U.S. Army, the National Automotive Center, located in Warren, 
Michigan, under the direction of General Caldwell and Dennis 
Wynne. New and innovative ideas and concepts are tested and 
implemented in a speed we as small businesses have to react to, 
without layer upon layer of documentation and paperwork. With a 
fleet of over 250,000 medium- and heavy-duty vehicles at the 
NAC, anything that can improve engine performance and 
efficiencies affects the bottom line, and then it can be 
tested, as it is now, for commercialization, and that is what 
has been very unique in the last 2 or 3 years of our, I will 
call it, adventure with the agencies and departments. Everyone 
is talking about, let us bring this to market, which we as 
small businesses rely on. We are not here to get a line of 
revenue to just subsidize our research and development.
    Another staff is located at the Office of Heavy Vehicle 
Technologies at the DOE, and this is under the direction of Tom 
Gross and Jim Eberhardt. Identifying our capabilities, much 
like a bank or a company does proper due diligence, the OHVT 
was able to quickly decide that EMP could do this technology 
and was capable of doing it. In less than 6 months, using DOE 
funds, Argonne National Lab as the steering committee, and our 
technology of an advanced oil filtration system, we were able 
to bring to a test facility the proven technology and we are 
now ready to commercialize.
    Historically, programs that have helped us--and I say that 
in a past tense because we have continued to grow and we will 
continue to grow--programs like STTR and SBIR programs 
occasionally come under budget scrutiny. EMP is an example of 
how sound business practices along with innovative research and 
new product development can work. Using SBIR funding as a 
conduit for proof of concepts is appropriate for small 
businesses and they also fuel larger businesses. We shouldn't 
stall innovation. We need to work together with some of these 
larger businesses because it is a proven opportunity for us.
    I think the playing field is set when we require larger 
businesses to percent cost share. This was something that came 
out of discussions in the government the past 3 or 4 years, and 
cost share eliminates those abuses. If I am going to put in 50 
percent of $1.6 million, that means I am going to bring it to 
market. I am not going to use it just for the sake of having 
this revenue flow.
    That cost share requirement should alleviate a number of 
ownership issues, also, with patents and some obtrusive 
negotiations that we have to deal with. If we own the 
technology, it should be our technology. The government should 
get credit and should be on the same page with us when we bring 
it to market.
    Smaller companies can spend as much on contractual review 
and negotiations as they can on testing, and that is obtrusive 
because sometimes we can't bring innovative ideas when we are 
spending most of our time and money going over contractual 
review. I think a real simplistic idea--a business principle 
that can be brought up--is why not have a boilerplate agreement 
across all agencies, across all departments that fit, so we are 
not doing something for the DOE that is different from the DOD 
that is different than the DEQ. Those things make some sense.
    I have some slides on my company overview, but I think it 
is important that we hear some others. You have those in the 
permanent record, and I will be more than willing to answer 
questions. But I think the important thing is that we, as a 
small company, have grown since our president, Brian Larche's, 
inception of this facility out of the ashes of a larger 
business leaving our community. In the 1980's when cash cows 
were moved to larger metropolitan areas, our little town in 
Escanaba, Michigan, in the Upper Peninsula, of less than 15,000 
people, he took an idea and a concept with less than $250,000 
worth of sales and has increased those sales to $150 million 
this year and over 450 employees. We have not stopped doing 
research and development.
    Research and development has been the key to our success, 
and that success is based on the fact that we are bringing new 
and innovative ideas. One idea that can add to the parasitic 
loss and the efficiencies of diesel engines is the electronic 
and controllable water pumps, and these are being tested and 
bench tested and are on trucks at the National Automotive 
Center today.
    Chairman Kerry. Mr. Bedogne, that is very interesting, and 
I appreciate your idea. It is a good idea. We should follow up 
on that in questions.
    [The prepared statement of Mr. Bedogne follows:]
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    Chairman Kerry. Senator Bond has joined us. I have an 
urgent phone call I need to take. Do you want to comment now 
and make an opening statement?

        STATEMENT OF THE HONORABLE CHRISTOPHER S. BOND, 
             A UNITED STATES SENATOR FROM MISSOURI

    Senator Bond. I would love to. I will just cover for you 
until you get back.
    Chairman Kerry. You have made a career out of that. Thank 
you, sir.
    [Laughter.]
    Senator Bond. I have learned from an expert. In any event, 
my thanks to the witnesses for being here today. Please accept 
my apologies for arriving late. I was hosting a breakfast on 
problems of maintaining good information among governmental 
agencies, and those of you who have dealt with governmental 
agencies may appreciate the need for that. In about 35 minutes, 
I have to join a markup on some very important health 
legislation that is coming out of the Health, Education, Labor, 
and Pensions Committee.
    But this is a fascinating subject and hearings today for 
me. I believe the development, sale, and use of environmental 
technologies is a tremendous opportunity for small business. It 
is going to be good for the environment.
    Mr. Bedogne talked about the small town in Michigan, 15,000 
that got hit with the big companies leaving. You hit a nerve. 
My hometown of Mexico, Missouri, is 12,000 people and the major 
industries there, basic industries have been bought out. The 
employment is declining. We are looking at bringing a soy 
diesel processing plant, among other things, perhaps set up as 
a cooperative with soybean producers to make soy diesel, and I 
know you are working in the diesel area. I hope that soy diesel 
can be used.
    We have also worked with the Missouri Soybean Association 
to get soy diesel used by the Army in training, because they 
used to use petroleum-based or diesel smoke to mimic 
battlefield conditions. We are working to get them to use soy 
smoke, environmentally much more friendly. The only danger is 
that the soldiers may want french fries instead of focusing on 
their efforts.
    [Laughter.]
    Senator Bond. But we are very excited today that we have a 
Missouri small business who is going to be testifying. The 
business uses one of my, I think, exciting new areas of 
interest, biotechnology. Mr. Patterson has developed a natural, 
nontoxic, biodegradable product extracted from bioengineered 
seaweed that can remove pollutants from the air, a product 
sprayed into industry plant emissions to cut the release of 
volatile organic compounds. It is really exciting.
    This past weekend, I visited Carthage, Missouri, and there, 
a small company, a joint venture, Renewable Environmental 
Solutions, was breaking ground on a plant. I happened to get a 
grant through the EPA for a process that will take all the 
waste from chicken and turkey processing plants, and I will 
skip describing what that waste is--they refer to it 
euphemistically as low-value organic material--and turn it into 
natural gasses that can fuel the operation plus turn out 200 
barrels of sweet crude grade oil a day plus other environmental 
byproducts that, if this all works together, can have a 
tremendous impact on the environment, first of all, and even 
provide energy.
    So we in Missouri are very excited about the developments 
that are going on, and they are going on through small 
entities. We know that, No. 1, Mr. Bentley has said that one of 
the problems is environmental, is sometimes regulation. My 
colleagues earlier this spring heard a Missouri small business 
testify that the company was shut out of an EPA rulemaking on 
ozone-depleting chemicals. The EPA did not conduct the proper 
small business impact on the rule and they did not know this 
regulation would prevent the small business in my State from 
developing new environmentally-friendly products.
    EPA at the time was very proud that they had managed to 
keep the regulation secret before they proposed it. Well, Mr. 
Chairman, as you know, I have proposed the AAA, Agency 
Accountability Act, to help ensure that agencies give open and 
full consideration to small business before issuing a 
regulation that we think could help.
    I also look forward--I hope I will be able to stay for the 
testimony of the Administration witnesses. I will have 
questions for them. Your colleague has called a markup on the 
Health Committee today that, when they buzz me, I am going to 
have to go join. But the EPA has a lot of experience in funding 
research and the Energy STAR program is an important part of 
our Nation's effort to promote energy policy.
    I think that the Vice President's National Energy Policy 
has very strong and clear commitments to advance the 
environmental technologies, increase energy supply, and 
encourage cleaner, more energy efficient use. I think the 
Administration is on the right track with a sound energy 
policy. By bringing together the resources of the EPA, DOE, and 
the ingenuity of small business, there is an incredible 
potential to raise awareness of the Nation's energy needs and 
serve the vital resources and protect the environment.
    Mr. Chairman, I thank you very much for holding this 
hearing to give these tremendous efforts and these exciting 
technologies the opportunity to be shared with our colleagues. 
So with that, thank you.
    Chairman Kerry. Thank you, Senator Bond.
    [The prepared statement of Senator Bond follows:]
    [GRAPHIC] [TIFF OMITTED] T8870.026
    
    Chairman Kerry. We were in the middle of testimony. Senator 
Edwards, do you want to make any statement?
    Senator Edwards. I have a brief statement which I would 
like to make, if that is OK with the Chairman.
    Chairman Kerry. Absolutely.

   STATEMENT OF THE HONORABLE JOHN EDWARDS, A UNITED STATES 
                  SENATOR FROM NORTH CAROLINA

    Senator Edwards. Thank you, Mr. Chairman, very much. First 
of all, thank you for holding this hearing. The importance of 
the small business economy, we are all aware of, and the need 
to promote environmental technology make this hearing 
particularly timely. Small business is the backbone of our 
national economy, which we all know, and we need to do 
everything in our power to promote their growth.
    I would like to talk today about one particular 
environmental technological innovation involving dry cleaning. 
Toxic and flammable solvents are used in 95 percent of the 
35,000 small dry cleaning businesses in our country. Dry 
cleaned clothes are the primary source of toxins entering our 
home, endangering our health. These solvents often leak from 
storage tanks, spill on the ground. They contaminate property 
where businesses are located. They are a part of the large 
number of brownfields that we have in this country.
    There is a scientist in North Carolina named Dr. Joseph 
Simone who has developed an environmentally-friendly 
alternative to these solvents. He and his graduate students 
developed the process that cleans clothes using liquid carbon 
dioxide and special detergents, and this method has been 
commercially available since February 1999. Several machines 
are in operation around the country. The EPA has issued a case 
study declaring that this is a viable alternative for dry 
cleaning. R&D Magazine named Dr. Simone's technology one of the 
100 most innovative technologies that can change people's lives 
in this country.
    This new technology is becoming increasingly recognized as 
a safer, cleaner alternative to traditional dry cleaning, but 
it is still expensive to use. I think we need to do everything 
we can to encourage the use of these kinds of technologies as a 
way to improve our health and to protect our environment.
    Today, I will be introducing legislation that will provide 
new and existing dry cleaners a 20-percent tax credit, 40 
percent for those who are in enterprise zones, as an incentive 
to switch to environmentally friendly and energy efficient 
technology. The idea is that this legislation will encourage 
the use of these new technologies and reduce the use of 
chemicals that are hazardous to the health of all of us. It 
will also help prevent contamination of our drinking water, 
protect the land on which these dry cleaners exist, and the 
legislation is supported by groups such as the Sierra Club and 
the Physicians for Social Responsibility.
    Mr. Chairman, when these environmentally-beneficial 
technologies are available, commercially available, it makes 
sense to provide modest incentives for people to use them. That 
is the purpose of this legislation. I hope we will be able to 
get it through this Committee and through the Senate so that we 
can encourage the use of these kind of environmentally-friendly 
technologies, which I think are not only important to small 
businesses, but important to the environment and the health of 
all Americans.
    Mr. Chairman, thank you for the time.
    Chairman Kerry. Senator Edwards, thank you very much. That 
sounds very exciting. I mean, that is exactly the kind of 
innovative effort that often needs to break into the 
marketplace and it needs some help from good policy to do so. I 
congratulate you on that, and I think it is terrific.
    Senator Edwards. Thank you.
    Chairman Kerry. Mr. Kennard, thank you, sir, for letting us 
interrupt you for a moment.

STATEMENT OF BYRON KENNARD, EXECUTIVE DIRECTOR, THE CENTER FOR 
      SMALL BUSINESS AND THE ENVIRONMENT, WASHINGTON, D.C.

    Mr. Kennard. Thank you, and I thank you and Senator Bond 
for your leadership on behalf of the small business community. 
It is much appreciated.
    The Center for Small Business and the Environment was 
founded in the belief that many environmental problems can be 
solved through innovations that increase efficiency and 
resource productivity. As Senator Kerry has pointed out, most 
such innovations come from small organizations, not large ones, 
and this connection provides a basis for collaboration that 
profits small business and helps protect the environment.
    For example, a solar water heater can dramatically reduce 
the utility bill of a cafeteria or a laundry or any small 
business that uses a lot of hot water. Now, chances are, these 
water heaters, like many other energy efficient and micropower 
technologies, were conceived and designed by a small business 
innovator, manufactured by a small manufacturer, and marketed 
by a small business. Then to complete the cycle, it is also 
likely that such technologies will be installed and serviced by 
other small businesses.
    I hope this example conveys some sense that small 
businesses are also the beneficiaries as well as the innovators 
of technologies that are efficient and innovative. In this 
connection, I would like to comment on the President's National 
Energy Plan. We are urging the energy planners to add a special 
focus on small business to the energy plan, something that it 
does not have now.
    We think that small business has special problems and 
opportunities in the energy area. Small businesses are often 
most at risk from rising energy costs and uncertain power 
supplies. A restaurant can be damaged by a rolling blackout and 
its refrigeration lost and employees laid off. They operate on 
low-profit margins, and so interrupted service can be a real 
disaster.
    There are also special opportunities for small business in 
the energy area. We see energy efficiency and micropower as 
particularly attractive for small businesses. Small businesses 
are, by nature, decentralized. Micropower technologies, like 
the solar water heater I mentioned, are decentralized 
technologies. Micropower fits small business like a glove.
    The big issue I think that needs to be addressed, is this: 
We don't know how much energy small business as a whole 
consumes, but it has got to be vast. There was one study by E 
SOURCE done in 1997 that concluded that more than half of all 
commercial energy in North America was used by small 
businesses, but that doesn't include small business 
manufacturers, and as you may know, 85 percent of the 
membership of the National Association of Manufacturers are 
small and medium businesses. So small manufacturers have got to 
be significant users of energy, although nobody, so far as we 
know, has estimated the total amount used.
    What about energy use by home-based businesses? 
Approximately 12 million Americans are now operating businesses 
out of homes, basements and garages.
    The flip side of this immense energy consumption of small 
business is its potential for energy efficiency, and lower 
energy consumption means lower bills. So there is a big 
motivation for small businesses to become energy efficient.
    Small business energy upgrades pay for themselves over 
time, and can be put into effect quickly. It doesn't take 2 or 
3 years to upgrade a small business. It can be done virtually 
overnight with very simple technologies, such as improved 
lighting, better thermostats, occupancy sensors in bathrooms, 
offices, and storerooms. These things can save small business a 
lot of money. One energy efficient exit sign can save $20 a 
year, and most small businesses, of course, have more than one.
    Finally, reduced energy use by small businesses would 
prevent the release of millions of tons of carbon dioxide into 
the atmosphere. This would also reduce air pollution from power 
plants and conserve natural resources.
    As you pointed out, small businesses are the heart and soul 
of every American community and they need reliable and 
affordable energy supplies to keep their doors open. But just 
as important, small business people need a clean and healthy 
environment in which to live and work. Unlike big businesses, 
small businesses cannot leave town whenever they feel like it. 
The plant cannot be closed and moved elsewhere. Small business 
people are part and parcel of local communities where they 
breathe the air, drink the water, and raise their children. 
Thank you.
    Chairman Kerry. Thank you very much, Mr. Kennard.
    [The prepared statement of Mr. Kennard follows:]
    [GRAPHIC] [TIFF OMITTED] T8870.027
    
    [GRAPHIC] [TIFF OMITTED] T8870.028
    
    [GRAPHIC] [TIFF OMITTED] T8870.029
    
    Chairman Kerry. Mr. Dreessen.

  STATEMENT OF THOMAS DREESSEN, CHIEF EXECUTIVE OFFICER, EPS 
CAPITAL CORPORATION, DOYLESTOWN, PENNSYLVANIA, ON BEHALF OF THE 
     EXPORT COUNCIL FOR ENERGY EFFICIENCY, WASHINGTON, D.C.

    Mr. Dreessen. Mr. Chairman and Members of the Committee, 
thank you for the opportunity to testify before you today 
regarding opportunities for small business and the impact of 
environmental regulations. I am Tom Dreessen, a small business 
entrepreneur who owns several energy service companies called 
ESCOs that operate both domestically and internationally.
    The ESCO industry is very unique in that it is mostly made 
up of entrepreneurs like me that develop, finance, and 
implement energy efficiency projects of all technologies and we 
risk repayment for our services based on actual achievement of 
savings. We are essentially performance contractors that 
deliver actual measured emissions reductions through measured 
energy savings on the projects that we implement.
    Our business model is a win-win proposition for the 
business owners themselves by getting savings and for the ESCO 
community and for all of the small contractors and service 
providers and product manufacturers that we use in our 
projects, because our projects are paid from savings, so it is 
a win-win strategy for the end-use customer, as well. So we 
deliver these emissions and environmental benefits at no cost 
to the public at all. It comes right out of the projects and 
the savings and the costs that they were already paying to the 
utility providers in most cases.
    I am or have been a board member on three of the five 
founding organizations of the Export Council for Energy 
Efficiency, called ECEE, and consequently, I appear before you 
today wearing three hats: First, as a small business 
entrepreneur; second, as a representative of the U.S. ESCO 
industry; and third, as a spokesman for ECEE. So it is quite a 
charge that I have today, but my comments will consequently 
cover both domestic and international issues because of that 
experience.
    Given the very limited time, I cannot appropriately cover 
the merits of energy efficiency, but I hope all the Committee 
Members recognize and embrace its many domestic and 
international benefits. Three of those major benefits are 
environmental, economic, and a source of electric capacity.
    From an environmental perspective, energy efficiency 
reduces the demand for burning fossil fuels, which conserves 
the nonrenewable resources of oil, coal, and natural gas, and 
thus dramatically reduces greenhouse gas emissions and air 
pollution, resulting in cleaner air, water, and lower social 
welfare costs.
    Economically speaking, the simple fact is that energy 
efficiency results in reduced energy costs to consumers, like 
small businesses, allowing them to not only repay the 
investment to achieve the energy efficiency, but also to have 
lower operating costs to better compete in a world economy.
    As a source of electric capacity, energy efficiency, 
studies have shown, if properly funded, has the potential to 
displace up to 130,000 megawatts of domestic electric capacity 
by the year 2020, which represents about one-third of the 
amount of increase that will be needed by that time, and at a 
benefit of getting this additional electricity through 
efficiency versus through new generation is that it provides 
less reliance on foreign sources and an increase to national 
security.
    Mr. Chairman and Members of the Committee, it is important 
to note that ESCOs and similar companies like ESCOs that 
develop, finance, and implement energy efficiency projects and 
technologies are predominately small contractors and 
consultants from the highly skilled engineering and financing 
industry. Therefore, as a representative of this small 
industry, I feel it is appropriate for me to offer the 
following two recommendations for your consideration today.
    On the domestic front in the United States, I recommend 
that a Federal environmental incentive payment be provided to 
energy consumers, including small businesses, who implement 
energy efficiency that achieves measured reductions of energy 
savings. Incentive payments should be based on the actual 
measured energy units reduced from energy efficiency measures 
installed. A possible implementation mechanism for funding the 
incentive payments could be a Federal public benefits fund, 
which I strongly support, with the environmental payment being 
included as one of its uses of proceeds. Small energy 
efficiency businesses would be able to use this incentive 
payment to stimulate energy efficient investment and promote 
the related environmental benefits as offsets against 
environmental regulation and compliance. Thusly, environmental 
regulations serve as an incentive for energy consumers to 
achieve savings and reduce emissions to achieve compliance.
    On the international front, given the economic and 
environmental benefits, along with the insatiable demand for 
U.S. energy efficiency technologies overseas, it is recommended 
that a minimum of $100 million be funded over the next 3 years 
for use by small energy efficiency companies like ESCOs and 
other energy companies to develop, finance, and implement 
energy efficiency projects in the international markets. The 
funding could be provided through ECEE, which has provided 
market access for many small companies to large emerging 
markets, such as China, Brazil, India, and Mexico, but we 
certainly want to stress the fact of keeping the administrative 
requirements down and actually getting that market access to 
the marketplace.
    A second recommendation, a more immediate need is to 
restore ECEE's $1 million operating budget for next year, which 
after six successful years of operation was eliminated by DOE 
in its fiscal year 2002 budget. They work predominately for 
small businesses in foreign governments of our competitors in 
Japan and Europe. They spend far more than the United States in 
supporting the development efforts of their local small energy 
efficiency businesses in foreign markets. I have had direct 
access and tried to compete against them, and it is 
unbelievable, the amount of monies that are funneled to them 
through their governments, the small efficiency companies. This 
makes the need for Federal funding to small U.S. energy 
efficiency companies of higher importance to the vitality of 
our economy and, indeed, the world.
    In summary, providing new financial support for energy 
efficiency improves the environment, increases national 
security for reducing reliance on imports of scarce resources 
while increasing high-skilled jobs, social welfare, and 
economic growth both domestically and internationally. Thank 
you for the opportunity to testify today and I am happy to 
address any questions that you may have.
    Chairman Kerry. Thank you very much, Mr. Dreessen. Very 
interesting. I know we will want to follow up on it a little 
bit.
    [The prepared statement of Mr. Dreessen follows:]
    [GRAPHIC] [TIFF OMITTED] T8870.030
    
    [GRAPHIC] [TIFF OMITTED] T8870.031
    
    Chairman Kerry. Mr. Patterson.

  STATEMENT OF ED PATTERSON, PRESIDENT, NATURAL ENVIRONMENTAL 
              SOLUTIONS, INC., ST. LOUIS, MISSOURI

    Mr. Patterson. Good morning, Senator Kerry. I thank you and 
Senator Bond for giving me the opportunity to express my views 
today.
    Natural Environmental Solutions is a year-old biotech 
company based in St. Louis, Missouri, with four employees. We 
recently participated in Missouri's first roundtable meeting to 
develop initiatives to further our State's ability to help 
attract and grow biotech companies. NES is an environmentally-
friendly company dedicated to solving our air pollution 
problems.
    We manufacture a product that is derived from seaweed and 
other sea plants. It is nontoxic, biodegradable, and safe for 
human and animal alike. We utilize genetically-coated microcell 
technology to clean the air, water, and land. The applications 
for this product grow daily as we talk to members of other 
industries.
    Because this product is not a masking agent, but removes 
the hydrocarbons and gasses from the air, we took the next step 
and tested it for the removal of VOCs within Performance Roof 
Systems, Incorporated, an asphalt manufacturing company located 
in Kansas City, Missouri. Like companies from other industries, 
they gather volatile organic compounds from the manufacturing 
line and incinerate them utilizing natural gas. Although this 
process is effective, it is extremely costly and increases our 
national consumption of natural gas.
    We tested our material by spraying it directly on the VOCs 
within the exhaust stack and turned off the incinerators. Our 
results, conducted by an independent lab in Columbus, Ohio, 
confirmed that we exceeded the EPA guidelines for clean air 
within the roofing industry by removing 90 percent of the VOCs. 
This one small plant could heat 1,000 homes per year with the 
gas saved and decrease the VOC removal cost by 50 percent. 
There are 200 plants within the United States in this industry 
alone. The asphalt roofing industry uses $80 million worth of 
gas per year.
    As a small business, we would like to bring this 
environmentally friendly product to market. The testing 
required and red tape associated with dealing with regulatory 
agencies are two of our biggest obstacles. As with any new 
technology, we have found the first obstacle is to change the 
mindset of the scientific community. Each corporation we talk 
with has an environmental engineer who has never heard of our 
technology and frequently is extremely doubtful. They all 
demand testing and expect our firm to pay for it. As with 
anything new, you have some people willing to test immediately 
and others who prefer to take a wait and see approach. These 
companies all fear of being shut down for noncompliance of 
permits, even though our results meet the standards.
    Although Missouri has attracted $22 million of venture 
capital funds, they will not look at a product like ours 
because it does not have a patent. The inventor of this process 
will not file a patent because he does not want to disclose the 
process for making it work. This process took 18 years to 
develop and we feel confident it cannot be cross-engineered.
    We need to have alternate funding for companies that fall 
in a gap from conventional methods of financing. Whether by 
Federal or State grants, guaranteed bank loans, tax credits, or 
all of the above, we need help financing our testing. We also 
need to have incentives in place to help companies subsidize 
the cost of changing their manufacturing equipment to utilize 
new technology instead of using natural gas.
    Performance Roof Systems, Incorporated, is ISO-9000 
certified and must follow Chapter 643 within the air law of 
Missouri. To change to another source, you have to obtain a 
construction trial permit, and their red tape to do so is quite 
expensive. Simply put, we need to obtain an operating permit 
exemption to further test our system and we have not been able 
to find out how to do this through city or State offices. We 
make calls to explore our options, but no one calls us back. 
Our goal is to be put on the EPA's recommended product list and 
we need help to do so.
    We are excited to promote life sciences within Missouri 
because St. Louis, Kansas City, and rural areas all prosper by 
promoting this industry. By utilizing our technology, the 
environmentalists achieve their goals of clean air. 
Manufacturing companies reduce their costs and America will 
drastically reduce consumption of natural gas. Everyone wins.
    Our products remove VOCs and carbon dioxide from the air by 
engulfing it within microcells. Scientists around the world are 
concerned about the CO2 gasses in the upper 
atmosphere changing weather conditions. We feel we have the 
technology to eliminate these gasses from the air and rectify 
these problems, but we need funds for testing in order to prove 
it will work.
    I am enclosing a letter from the president of Performance 
Roof Systems, who is a board member for the Roofing 
Manufacturers Association, with his concerns.* We agree with 
Senator Bond that we need a bipartisan approach to develop or 
bring to market technology needed to overcome the environmental 
challenge of the next century. Thank you for your time today.
---------------------------------------------------------------------------
    * See letter on page 58.
---------------------------------------------------------------------------
    Chairman Kerry. Thank you very much, Mr. Patterson.
    [The prepared statement of Mr. Patterson follows:]
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    Chairman Kerry. I thank all the witnesses for keeping their 
testimonies to the time. It affords us an opportunity to have a 
dialog and that is very helpful.
    Senator Snowe, would you like to make any comment before we 
proceed to questions?
    Senator Snowe. No, that is fine, thank you. I do have a 
statement.
    Chairman Kerry. Your statement will be placed in the record 
as if placed in full.
    Senator Snowe. Thank you.
    [The prepared statement of Senator Snowe follows:]
    [GRAPHIC] [TIFF OMITTED] T8870.036
    
    [GRAPHIC] [TIFF OMITTED] T8870.037
    
    [GRAPHIC] [TIFF OMITTED] T8870.038
    
    Chairman Kerry. Mr. Patterson, let me just follow up 
quickly, simply because your testimony was last, with respect 
to a number of questions. First of all, your product is tested 
very well, but nevertheless, you have not been able to attract 
financing, et cetera. Do you need more tests notwithstanding 
that you have exceeded the EPA's guidelines?
    Mr. Patterson. Yes.
    Chairman Kerry. Why is that?
    Mr. Patterson. Well, for instance, while we did independent 
testing and we exceeded the EPA guidelines, you need to get 
permits in Missouri to begin trials in other facilities. For 
instance, there is a roofing manufacturer called Tamko in 
Joplin, Missouri. I have contacted them. They have heard about 
our testing. They would like to have us test it and they have 
the instrumentation in place to do it, but it is going to cost 
$30,000 to have this independent testing done and they expect 
us to pay for it.
    Chairman Kerry. Well, let me ask you this. Obviously, 
testing and meeting public approval standards is a component of 
R&D. It is a component of product development.
    Mr. Patterson. Correct.
    Chairman Kerry. You have not sought R&D capital, is that 
correct?
    Mr. Patterson. Well, we are trying to pursue that at this 
time.
    Chairman Kerry. Have you been in touch with the SBA itself?
    Mr. Patterson. Yes. I am actually trying to look for SBIR 
loans. Quite frankly, that is a very lengthy process that we 
are just getting involved in.
    Chairman Kerry. Several of you, in each of your answers, 
have sort of articulated a sense of frustration, if not 
indirectly at least implicitly, but I think it is pretty 
direct, in the process. The process is annoying to you. I think 
several of you have articulated that the red tape somehow gets 
in the way. Part of the purpose of these hearings is for this 
Committee to be able to start to think about if there is a more 
appropriate balance and what we might be able to do to try to 
eliminate some of the red tape and facilitate the process.
    I have heard from companies all across the country that 
part of the problem in bringing new energy efficient products 
to market is the regulatory process. Now, when you get 
specific, you run up against the hurdle, obviously, of trying 
to guarantee that you are still protecting the public 
adequately, which is our responsibility also, and balancing it 
with the need to move more rapidly and be more user friendly.
    Can you give us, each of you or any of you, some thoughts 
about places where very quickly that could be done. For 
instance, I think it was you, Mr. Bedogne, who suggested the 
boilerplate contract. I mean, that is a fast way, obviously, 
and I would think a sensible way, to be able to, in certain 
size of deals, move the process more rapidly.
    I think each of us here hates bureaucracy. I mean, 
bureaucracy is the enemy of everybody. It doesn't have a party 
label on it. It is a terrible problem and we would love to 
facilitate a solution. So could you deal with that a little bit 
in each context? Mr. Patterson first.
    Mr. Patterson. Well, I would think that if you can go to 
your regional EPA office, whatever region you are in, and 
submit, quite frankly, independent testing that proves that you 
meet the guidelines, that there should be some sort of way to 
quicken the process.
    Chairman Kerry. You are saying the testing you are being 
required to do is duplicative?
    Mr. Patterson. Basically, it is duplicative because the 
companies themselves are being afraid to be shut down for 
noncompliance of permits as well as the results. I have talked 
to the State's Attorney General's office and their feeling was, 
if you meet the guidelines, that they will not prosecute, 
period. So we are not so much in fear of being prosecuted by 
them, but if you don't have the right permits in place, EPA can 
shut down any of these plants, and that is their biggest fear.
    Chairman Kerry. So you think the permitting process itself 
needs to be facilitated?
    Mr. Patterson. Streamlined, absolutely, and especially for 
a process like this, where we have the owner of this company in 
the roofing market per se saying, we would like to use this 
product because we are going to save 50 percent on our gas 
costs. So we are meeting all the guidelines it seems like 
everybody wants.
    Chairman Kerry. I understand. Mr. Dreessen, do you want to 
address that?
    Mr. Dreessen. It is a little difficult for me because the 
proposals that I am making are fairly new and there are no 
existing programs. There is a lot of funding being provided for 
international efforts, and what I try to do--one of the things 
I am interested in in that $100 million is to remove barriers 
for U.S. energy service companies to get U.S. technologies and 
products into the marketplace, and there are a lot of barriers 
out there and the major one is project financing. There is a 
lot of it. We have got Ex-Im Bank, we have got a lot of 
agencies, U.S. agencies that are out there doing that. The 
unfortunate thing is, they are not structured to meet the needs 
to where any energy efficiency companies can access it.
    Chairman Kerry. I am very interested to hear you say that 
because earlier this year, in the end of January, I made a 
proposal that we should create a trading partner/environmental 
development fund which the key developed countries ought to be 
making available. I believe this serves several purposes.
    First, it would help build the consensus for the benefits 
on the upside of the trading regime that we are working under, 
which is frayed, at least at the edges now, if not more 
seriously. That would help us to deal with both the 
environmental and then, subsequently, the labor component here 
at home.
    Second, it advances the interests of all of our small 
businesses and all of our technologies in the country by 
helping to put them out into the marketplace in an aggressive 
way.
    Third, obviously, the final benefit is that less developed 
countries then are participating within the global climate 
change and other kinds of environmental concerns we have, and 
in a positive way that helps to satisfy demand here. So I think 
it is a win-win-win and it obviously is very much similar to 
what you are recommending today.
    Mr. Dreessen. Exactly. One of the fundamental issues, if it 
could ever be changed, is almost all of our funding mechanisms 
that we have in the United States as far as financing require 
that repayment is made in hard currency. For those of you who 
don't understand, that is a huge barrier in doing anything in a 
developing country where then that exposes them to the 
devaluation of the local currency. It is a huge barrier. It 
really makes the financing not even available. They are not 
even interested in it.
    Chairman Kerry. Let me interrupt the flow of questions, if 
I can, for a moment. Senator Bond has to go to another markup 
and I want him to be able to welcome and say a few words about 
the next panel, even though it will be a few moments before 
they come up.
    Senator Bond.
    Senator Bond. Thank you very much, Mr. Chairman. I really 
appreciate the chance. I was going to very briefly say how much 
we appreciate Mr. Stolpman from EPA and Mr. Renberg from the 
Ex-Im Bank. I know they have a great deal to do, and some of 
the international aspects that Mr. Dreessen was talking about 
will be addressed there.
    I have just mentioned some of the things that EPA is doing 
in Missouri on the thermal depolymerization. I spent all 
weekend trying to learn how to say that. I gave it a shot. If 
you ever hear of it again, remember, you heard it here first. 
But we appreciate the small business witnesses and the 
government witnesses. I will have some questions for the 
governmental witnesses that I will probably have to submit for 
the record. I would rather have them offer their questions 
first.
    But let me turn in questions first to Mr. Patterson. You 
talked about the regulatory burdens, and we are trying to work 
with you to help. Do you have any suggestions in what you have 
seen of how EPA or the State Department of Natural Resources 
could be of more assistance to businesses like yours to 
identify and overcome the regulatory hurdles?
    Mr. Patterson. I would think that the permit process could 
possibly be streamlined, No. 1.
    No. 2, within the State of Missouri, it seems that when you 
start talking about trying to change anything regarding the air 
and the air pollution, they are very hesitant to look at any 
new technology or change anything, period. It is almost as 
though they are afraid to change. So I guess I would like them 
to be a little bit more open minded.
    Senator Bond. All right. Mr. Bentley, you mentioned 
regulatory barriers. When I came in, you were talking about how 
the regulatory hurdles are a significant hindrance. What kind 
of hurdles have you encountered specifically and how can we 
help to overcome those?
    Mr. Bentley. Well, I would go back to my comment that we 
are trying to innovate in two very large industries, power 
production and in transportation. In power production, of 
course, there are incumbents who have a stake in the wire 
lines, the generating facilities, and others, and we are trying 
to bring micropower, the same concept that was discussed on the 
panel discussions, we are trying to bring micropower, which is 
a game changer to large generating companies and large 
utilities.
    The problem is, you have to connect at some point to their 
facilities and what you need is a common set of standards for 
that interconnection so that they can't be used as barriers by 
the incumbents and also safety. We have a pretty high 
technology device that involves the use of hydrogen, so you can 
imagine that every local fire marshal might have an opinion on 
that.
    So on both counts, both on safety and interconnection, 
there needs to be Federal action to harmonize how you 
interconnect with the utilities and how safety for fuel cells, 
in particular, a new technology, is dealt with. This has 
happened before in things like natural gas vehicles and others 
where there has been a national effort to coordinate 
regulations and it has been very successful.
    So I would recommend that FERC or the Department of Energy 
or also the Department of Commerce, they all have efforts 
ongoing now to try and harmonize those interconnect standards. 
The Europeans and the Japanese are further ahead on that basis 
and so they have taken some of the risk--it takes the 
commercial risk out of implementing these technologies if you 
have surety about implementing them on a local level.
    Senator Bond. Thank you. Let me ask the same question of 
Mr. Bedogne. How can we help with the----
    Mr. Bedogne. I am going to be candid here, if I may.
    Senator Bond. Oh, you might as well because it is Wednesday 
morning and what better.
    Mr. Bedogne. First and foremost, I am a businessman and I 
act like a businessman. Our company acts like a businessman. I 
don't look at the opportunities that avail us through small 
business grants as corporate welfare. I look at it as 
opportunities for us to expand our technology. In order for us 
to do that, we have to prove that we can bring this to market 
and we can actually make this technology work. It costs us 
money to do that. So we had to spend our own money and our own 
time and resources.
    The thing that worked for us is that we didn't start at the 
Federal Government level. We started right at the local 
government, and the local government has resources available to 
us that were beyond my understanding of ``resource''. I mean, I 
am not an expert on finding out all the areas that I needed to 
go to, so those people helped me, and I will talk to Mr. 
Patterson after this to give him some ideas of where to go to 
find this, but that is where I started.
    Then from the State, we have a very--and our State went 
through some major problems in the 1980's. As businesses left, 
we had to redevelop and bring people back and they really 
focused on job creation and that job creation was funded 
through research and development for new product development.
    There is one thing that I see that the Government can help 
us with is help give us the credit, if you will, for research 
and development. Canada gives you dollar for dollar if you 
create jobs. We need to get a little more aggressive on how we 
create jobs, and if it is coming out of products that work, we 
do have some opportunities that are here, that were just 
discussed here that are cutting edge, but it takes years for 
things to come out.
    We chose to be very focused and we went to the Market 
Segment where it was going to cause the most concern on the 
part of the public. If diesels were polluting here, we could 
help prevent that. We could help improve the efficiencies of a 
diesel and improve the efficiencies of that engine, cut back on 
the consumption of power and also through EGR meet the exhaust 
emission to help trap the particulates. So there was some 
cutting-edge technology that we chose, but it was something 
that we funded and we got help through the State, local, and 
then the Federal Government.
    I do think that the Government needs to be accessible to 
small business so we can can react. I mean, we move. Quickly, 
nimbly. We will decide. If we need to buy a test piece, we will 
buy it if it makes good business sense. We don't buy it for the 
purpose of having another piece of equipment. It is going to 
improve our bottom line.
    I think if the Government sometimes would act that way and 
say, OK, we are going to bring this, much like the Argonne 
National Lab deal with DOE, we moved in 6 months where a normal 
other transaction or a dual-use takes 2 years. Then the budget 
cycle says, ``well, you are going to get funded in October for 
our research and development, and remember, we spent just as 
much as the Government did.'' We were going to get funded in 
October. Well, they approved the grant in January. The funding 
doesn't come through. We are spending all our money in that 
first year, and if the budget is cut, the small business hurts.
    So there are areas that need to be streamlined. Don't 
reinvent the wheel, please. But I think you need to go in and 
have people like us give you some advice on how we can 
streamline it, and I think the regulatory issues are a concern, 
our customers are dealing with that. The Caterpillars and the 
John Deeres and the Navistars International are dealing with 
that in a very proactive way to improve that. We are helping in 
that, though, with opportunities to assist in technology.
    Senator Bond. Well, we appreciate very much your 
willingness to give us that guidance. If you use a little more 
soy diesel, people won't complain about the diesel smoke so 
much. But we do have things that we work on on this Committee, 
SBIR, STTR, those other programs that are designed to provide 
that assistance, but the information you give us can be very 
helpful.
    Mr. Chairman, I thank you and I will leave it to you to 
carry on.
    Chairman Kerry. Thank you very much, Senator Bond.
    Senator Bond. We will look forward to reading the rest of 
the testimony of the witnesses. I thank you and apologize for 
leaving.
    Chairman Kerry. Thank you very much.
    Senator Snowe.
    Senator Snowe. Thank you, Mr. Chairman. I want to thank the 
panel here today for, I think, some very illuminating 
testimony. I gather that there is no doubt about the fact that 
the Government can play a key role in providing incentives in 
some way or providing a supportive role in encouraging small 
business to develop these technologies that are environmentally 
friendly and energy efficient. Would you all agree that 
government can play a role?
    [Chorus of yes in response.]
    Senator Snowe. Beyond the regulatory burdens, what about 
tax incentives? I mean, as a Member of the Senate Finance 
Committee--both Senator Kerry and I are both Members of the 
Finance Committee and we had a hearing recently on various tax 
incentives and proposals to encourage the development of 
technologies that are energy efficient.
    Mr. Bentley, I know that there is legislation that I have 
cosponsored with Senator Lieberman on fuel cells, providing a 
$1,000 tax credit for every kilowatt. What would you say about 
that kind of approach? Would that be helpful?
    Mr. Bentley. Again, it is Wednesday morning, so I guess 
candor is the order of the day, Senator Snowe. I have watched 
in previous efforts to commercialize fuel cells the use of tax 
incentives as a mechanism and I have seen that as somewhat of a 
barrier in that it reduces the pressure on companies to become 
more cost competitive quickly. So while there is a role for 
incentives, I think the danger becomes that those incentives 
replace the inexorable drive that you have to have as a small 
or large business to take these new technologies and knock the 
costs down to where they can compete with traditional 
technologies.
    So our company does not propose that tax incentives are a 
big part of the commercialization effort. We have seen the U.S. 
Government as being more effective in taking the risk out of 
R&D. So we do differ with some of the other companies in the 
fuel cell area, and I would just point to history to say that 
those programs in the past have, I think, impeded the drive to 
become more cost effective.
    Senator Snowe. That is interesting. So you are saying for 
example that it would be preferable to have the money for 
venture capital money for research and development, to 
encourage that.
    Mr. Bentley. We have found that the Department of Energy 
and the Department of Commerce, in particular, have a pretty 
solid staff of people who understand new technology. It is 
complex. The ability to make poor choices is there, certainly. 
But a good sustained effort, in particular in those two areas, 
where you have a legion of technical managers who stay with 
these programs for 4 or 5 years, can result in some high-impact 
R&D. So I am much more a believer in the front end.
    Chairman Kerry. Are you talking about the STTR and SBIR?
    Mr. Bentley. Well, actually, I am speaking more about the 
programs like the Department of Energy Office of Transportation 
Technologies and the ATP within the Department of Commerce. 
Those are the two I am most familiar with, where they really do 
have people who understand the technology and get the 
technology.
    So dollar for dollar, I would vote that new technologies--
of course, we are on the cutting edge. It is hard to get 
capital for high-risk technologies and that is where the 
Government, the Federal Government, has played a role here. I 
think as you move more toward commercialization, companies and 
investors have to pick up some of the risk.
    Senator Snowe. Mr. Bedogne.
    Mr. Bedogne. I agree. I think that if the Government can 
offset our research and development, we can create jobs. I 
think you should tie it back to jobs. I think if you are going 
to create jobs to not only improve the communities that you 
serve or that you live in, you are winning for everybody.
    The issue we have is that we will spend the money for 
research and development, and as we had some comments before 
the hearing, we did not stop. Even though our sales are down 
about 20 percent, the economy is starting to percolate back in 
our industry, but for the past 6 months, we didn't cut back on 
research and development because we need to stay in touch with 
that.
    I think you could look at some States that have been 
innovative. Michigan has a very obtrusive single-business tax. 
But if you create jobs, you get a reduction in that single-
business tax, which has pretty much funded our research and 
development facility. We built a 35,000-square foot facility 
that cost about $1.6 million, and over the next 10 years, 
because of the jobs we created out of that new product 
development or the new products, we get a tax credit. I think 
the same could work on R&D. We are the ones that are doing the 
R&D, not that the organizations that we all alluded to aren't. 
We are.
    There was one comment on small businesses as far as energy. 
We chose to use geothermal energy. We live in the Upper 
Peninsula. It is cold. It snows a lot. We have an abundant 
source of water. My proper due diligence is that I look at it 
as an opportunity. If it makes good business sense, we do it. 
Then if I can get a credit or tax break for it, it is a win. 
That is just the way we do business.
    So I went back and I looked at--you know, geothermal was 
hot in the 1980's. It was if you put a geothermal and saved 
money, you could get a credit for it. Well, it was sometime in 
1990, it was next, and so we didn't get a credit. But we spent 
$600,000 on a dehumidification and air conditioning because it 
made business sense to do that. It would be nice to get that 
credit back for energy efficiency.
    Senator Snowe. Would others care to comment? Yes, Mr. 
Kennard?
    Mr. Kennard. I might say about Senator Edwards' proposal 
for tax credits for dry cleaners to get new technology, the dry 
cleaning industry is a mom-and-pop industry. They don't have a 
lot of cash reserves. There is this superior new technology 
available that doesn't use PERC, that is better for workers, 
better for consumers, better for the environment, but it is 
expensive. It costs like maybe $50,000.
    So a tax credit of the sort he described would certainly 
encourage a lot of small businesses to buy that new technology 
and enable them to do it. My understanding actually is that in 
that industry, there are a lot of people trying to decide what 
to do, should they go with the new stuff, and so a tax credit 
would, I think, encourage them to go ahead and commit to a 
superior technology.
    Mr. Dreessen. I would like to add, although our energy 
services business, we don't really deal in new technologies. We 
only implement proven technologies because we are on the hook 
for the performance of them. However, having said that, I do 
support the R&D. I think that is something we have to do to 
stay ahead of the world on our technologies, but I also do it 
on the basis of a co-
investment, because I think if both parties don't have money in 
the deal, it is a simple business logic, then it becomes when 
things start becoming difficult, the one without the money 
tends to be less interested.
    But one of the common themes, I guess, and I had offered in 
my testimony was an environmental incentive payment, and I 
think the common theme again is that payments, any benefit 
incentive payments, should be based on the delivery of results 
and the payment of the benefits incentives should be aligned 
with when the benefits are delivered.
    I think that is a common theme that I think we believe in 
and I think everybody else here does, and I am afraid that 
using tax credits as a motivation creates barriers to when a 
customer could receive those benefits. I mean, there are timing 
issues. Then there are complexities with tax laws that change. 
There are just all kinds of additional barriers as opposed to 
just a straight incentive, whether it is on employees or 
whatever. But the more you can make that benefit received align 
with when they deliver whatever the benefit to the environment 
is, the better off you are.
    Mr. Patterson. I tend to agree. I think the environmental 
incentive payments make a lot of sense, at least for a company 
as a startup. Tax incentives might be of use to the individuals 
that we are going to sell this product to. If they have to 
change over their manufacturing lines in order to change from 
using natural gas, either a tax incentive or some other sort of 
incentive really needs to be in place.
    Senator Snowe. Thank you very much. Thank you, Mr. 
Chairman.
    Chairman Kerry. Senator Snowe, thank you very, very much.
    I want to thank the Members of this panel. We are a little 
bit truncated because of the pressure, and I apologize for it.
    Mr. Bedogne, Senator Levin apologizes personally that he 
isn't able to be here because of another hearing. That is the 
tension always here. He is very grateful to you for coming and 
offering your testimony.
    Chairman Kerry. Let me just say to each of you, this is 
very, very helpful to us. I know that it is a short time in 
terms of the panel, but we are going to leave the record open. 
There may well be questions from colleagues. I know I have some 
questions I want to submit in writing to amplify on the record. 
I will leave the record open for about 10 days. I ask you if 
you could supplement the testimony in response to some of the 
questions.
    We are going to try to build on this. This will not be the 
only hearing we are going to have. We are going to try to come 
up with a concrete set of proposals, if we can, and follow up 
on it. So I am very grateful to each of you for your testimony 
today. Thank you.
    Chairman Kerry. If I could ask the second panel to come 
forward, Mr. Paul Stolpman and Mr. Dan Renberg.
    Mr. Renberg, you are the first seated. You are going to 
start.

 STATEMENT OF DAN RENBERG, MEMBER, BOARD OF DIRECTORS, EXPORT-
       IMPORT BANK OF THE UNITED STATES, WASHINGTON, D.C.

    Mr. Renberg. Thank you, Mr. Chairman. It is a privilege to 
be here. Having worked for Senator Specter, I know the 
pressures that you are under, so I will abbreviate my 
abbreviated remarks and try to see if I can't get this done in 
about 2 minutes so that you can ask questions.
    Chairman Kerry. Great.
    Mr. Renberg. I am privileged to be here on behalf of the 
U.S. Export-Import Bank, as you know. In fiscal year 2000, over 
all, we authorized $12.6 billion in financing to support $15.5 
billion in sales of U.S. goods and services to foreign markets. 
But significantly for your Committee's perspective, 86 percent 
of our 2,500 transactions involved small businesses, with the 
dollar amount for small business authorizations increasing by 
nearly 10 percent to $2.3 billion. We have a very strong 
environmental exports program and that is why we had offered to 
come up here today to brief you and your colleagues and 
actually just to raise awareness.
    Overall, the U.S. environmental industry produced $197 
billion in revenues in 1999. Environmental exports have doubled 
from the United States since 1993, up to $21.3 billion in 1999, 
and it runs a surplus. It is one of the few industries where we 
are actually running a trade surplus as a Nation.
    Ex-Im Bank's story, I think, has been a good one. In 1994, 
we financed 13 transactions that were environmentally 
beneficial exports, and in the last fiscal year, we were able 
to do 65. Now, some of those involve more than one company, 
numerous sub-suppliers, but it gives you an idea that we are 
experiencing the same kind of growth that the industry is. 
However, we know we could be doing so much more and that is why 
we are up here today.
    The U.S. environmental industry generates less of its 
revenues from exports than companies in, say, Japan and 
Germany, and a recent study attributed this revenue 
differential in part to the fact that the U.S. export industry 
is heavily small and medium-sized businesses and they often 
perceive risks of international business as well as the higher 
costs of developing export sales as impediments to increasing 
their export sales earlier. That is where the U.S. Ex-Im Bank 
can really come in and play a role. We have several enhanced 
financing incentives for environmentally beneficial exports, 
which would include renewables as well as air pollution 
monitoring systems and the like.
    A couple of success stories picked at random, Missouri and 
Massachusetts. I am privileged to be able to say in Senator 
Bond's absence, I guess, that Environmental Dynamics of 
Columbia, Missouri, which is a small business manufacturer of 
advanced water and wastewater treatment technologies, received 
Ex-Im Bank's 2001 Small Business Exporter of the Year Award in 
April at our annual conference. Over the first 22 years of the 
company's existence, their sales were mainly domestic. Then 
they found us, they found our export credit insurance policies, 
and now they have expanded into new foreign markets and they 
have increased their workforce from 38 to 63 employees. The 
only reason they won this year is because there was no 
Massachusetts nominee. I assure you, next year, we will rectify 
that.
    [Laughter.]
    Mr. Renberg. But we have got a potential winner in Krofta 
Technologies in Lenox, Massachusetts. I am not sure if you are 
familiar with them.
    Chairman Kerry. I am familiar with them. Absolutely.
    Mr. Renberg. Great.
    Chairman Kerry. I have been out there and visited them, as 
a matter of fact.
    Mr. Renberg. Maybe we can go back together and see exactly 
how Ex-Im Bank is helping them. Bank of America has offered two 
10-year loans to the Government of the Dominican Republic, with 
our guarantee, to win $7.4 million in orders. This took place 
just last month--actually, now, 2 months ago--and the orders 
were to design and build wastewater treatment plants in three 
cities in this country.
    I know you read in the newspapers about Argentina and 
Brazil and some of the troubling economic issues. We were still 
able, nonetheless, to approve recently a solar transaction, a 
medium-term loan guarantee, just last month which will go to 
rural individual home units. There is a province there where 
50,000 people have no electricity, which I guess is like Los 
Angeles on a good day. But we are able to find reasonable 
assurance of repayment, as the statute requires.
    To just conclude, we are very active in Southeastern 
Europe. I noted Mr. Dreessen mentioned the hard currency issue, 
and one thing I would just mention to him is we are able to 
finance now in Euros and in Rands. Rands, because South 
Africa's Rand can help us penetrate Sub-Saharan Africa. The 
Euro is very helpful in Central and Southeastern Europe. We are 
trying to make whatever inroads we can to help businesses, as 
Mr. Dreessen said.
    I will submit the rest for the record, with your 
indulgence.
    Chairman Kerry. Thank you, Mr. Renberg. I really appreciate 
your sensitivity to that. I was just handed a note that I am 
the only amendment at foreign relations, so I have to be there, 
so----
    Mr. Renberg. You are in the majority now.
    Chairman Kerry. Yes, but a quorum is a quorum, and when you 
have got it around here, they generally take advantage of it, 
so that is the problem.
    [The prepared statement of Mr. Renberg follows:]
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    Chairman Kerry. Mr. Stolpman, thank you for being with us. 
We really appreciate it.

  STATEMENT OF PAUL STOLPMAN, DIRECTOR, OFFICE OF ATMOSPHERIC 
  PROGRAMS, U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, 
                              D.C.

    Mr. Stolpman. Thank you, Mr. Chairman. Thank you for 
inviting me to this very interesting panel discussion. My name 
is Paul Stolpman at EPA. I am the Director of the office that 
manages many of the voluntary energy efficiency programs and 
also the kind of emissions trading programs you mentioned in 
your opening statement.
    As you know, both the President and Congress on both sides 
of the aisle agree that we can all move ahead together to 
encourage the private sector and small businesses in particular 
to bring innovative technologies to the marketplace, and if we 
do that, it will bring particular benefits to our environment.
    EPA recognizes the great contribution of small businesses 
that they can make in bringing about environmental improvement. 
I am pleased to be able to comment on the ways that EPA helps 
small businesses bring innovative technologies to market, but 
also how we help them use energy efficient technologies in 
their daily business.
    In my oral statement, I am going to try to provide a brief 
summary of my written statement, and I am going to focus on 
three areas at EPA and how they interface with the National 
Energy Policy Report.
    The first area is Energy STAR, which Senator Bond 
mentioned. It is a joint EPA-DOE program. We help small 
businesses that develop and sell energy efficient technologies 
to distinguish their products in the marketplace. The Energy 
STAR label makes it easy for consumers and businesses to find 
and purchase energy efficient products. All businesses 
participating in the Energy STAR program must demonstrate that 
their product meets a third-party objective performance 
criteria. The Energy STAR program allows small businesses to 
leverage the public awareness of the Energy STAR label in 
marketing their products.
    Over 30 product categories now carry the Energy STAR label. 
In the year 2000 alone, over 1,600 manufacturers with Energy 
STAR produced 120 million labeled products, contributing to the 
more than 600 million products that have been introduced into 
the market over the last decade. Small businesses manufacture, 
sell, and service many of these products, such as high-
efficiency windows, reflective roof products, residential 
lighting fixtures, et cetera.
    Second, Energy STAR helps small businesses become more 
energy efficient themselves, allowing greater investment. 
Remember, we heard an investment in groundsource heat pumps. 
They can return the savings from their investments into their 
product development. Close to 3,000 small businesses have 
partnered with EPA in committing to improve their energy 
performance.
    Many more have taken advantage of the resources that EPA 
makes available to them. Energy STAR provides a website where 
small businesses can learn about evaluating their own energy 
performance. They can find energy efficient products. They can 
find contractors, ask questions, and read about other success 
stories in small businesses. Energy STAR also provides guide 
books, hotlines, and many other resources to small industry. 
Each month, about 6,000 new users, new small business users, go 
on our website and about 3,000 of these have already downloaded 
a guide book specifically aimed at small businesses.
    Recognizing the difficulty in reaching the millions of 
small businesses across the country, Energy STAR works with 
many organizations that small businesses trust for reliable 
information. These include agencies such as the Small Business 
Administration and organizations such as the Association for 
Small Business Development Centers, U.S. Chambers of Commerce, 
and the National Restaurant Association. Through these 
relationships, EPA is helping many thousands of small 
businesses across the country to recognize the importance of 
energy efficiency.
    Third, EPA's new green energy program helps small 
businesses advance the use of renewable energy technologies. 
Partners in this program pledge to switch to renewable energy 
for some or all of their energy needs within the next year, and 
I am happy to say that 15 percent of all of our partners in 
that new program are small businesses.
    In closing, Senator, these are just three examples of EPA's 
efforts to help small businesses innovate in the marketplace, 
which in turn brings about substantial reductions in greenhouse 
gases. We likewise encourage small businesses to bring forward 
creative solutions to other environmental challenges and help 
small businesses understand and comply with environmental 
regulations. We look forward to our continuing partnership with 
small businesses and to benefiting from their creativity. Thank 
you, Mr. Chairman.
    Chairman Kerry. Thank you very much, Mr. Stolpman.
    [The prepared statement of Mr. Stolpman follows:]
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    Chairman Kerry. I appreciate your testimony and I 
appreciate your coming up today. It is significant that we have 
a representative here from EPA to discuss small business. If we 
were to turn to the SBA to have had someone here, we would have 
probably had to ask somebody from the Office of Advocacy. I am 
not sure where else we would turn within SBA, which is a 
statement in and of itself.
    You do have a link. There is a link through the website, 
but frankly, we had staff go to the link and try to work 
through it and I think the lack of an energy site for small 
businesses, particularly within the SBA, is a mistake. No. 1, 
and we don't have time to discuss it fully now, but I want to 
put it on the table that SBA needs to have an energy site.
    No. 2, I think the Energy STAR program is a terrific 
program. It is a great beginning. I think you are doing pretty 
well with it, and certainly the numbers, the number of products 
and so forth, is impressive. But, and here is the significant 
``but,'' when you measure that against the numbers of consumers 
and the numbers of small businesses in the country and the 
numbers of opportunities, I think it is really fair to say that 
our outreach is simply not where it ought to be.
    The SBA outreach on this topic specifically is almost 
nonexistent. Let me phrase it this way to be fair. I think it 
is incidental. It is not a main mission, it is incidental, and 
I don't think it should be parenthetical anymore. I think it 
ought to be square, main mission, major effort, because, No. 1, 
you can grow so much small business, and create so many jobs 
through it. But, No. 2, obviously, you have the benefit of 
enhancing participation and the environmental benefits also.
    I hope we can work together to try to figure this out. 
Maybe we will follow up on this, either publicly through a 
hearing process without this kind of pressure, for which I 
again apologize, or privately. We can meet on it and see how we 
can do this, now that we have a new Administrator coming into 
place at the SBA, and ultimately, I think pretty quickly, we 
will have these jobs filled.
    I would like to see how we could really create a much more 
proactive outreach effort, and broadly speaking, how we can get 
consumers across the country to be much more tuned in to what 
Energy STAR is or means. I mean, I think if you asked anybody 
on the street today, it would be the rare person who could link 
the program to something meaningful in terms of their 
purchases. I regret that, but I think that is probably the 
reality. I don't know if you want to comment on that.
    Mr. Stolpman. I actually would like to comment on that, 
because, in fact, we have done customer surveys. Brand 
recognition is dramatically increasing on Energy STAR, in part 
because we are working very closely with companies like Sears 
and Home Depot and others, because a lot of media is now 
running public service ads on Energy STAR. We are getting brand 
recognition in the order of 60 percent at this point in time--
--
    Chairman Kerry. Well, that is good.
    Mr. Stolpman [continuing]. Which is very high. Now, I agree 
with you that more outreach is necessary. It is certainly a 
goal of ours to increase that public awareness, so we look 
forward to working with you, Senator, on that.
    Chairman Kerry. We will follow up with you through staff to 
try to do it. What I want to try to do is see how we could get 
a link with EPA, DOE, and SBA so that there is a real synergy 
there. I think it would be helpful to everybody if that were to 
happen, a sort of automatic referral process that would take 
place for certain kinds of inquiries. Perhaps we could even 
develop some kind of working effort to figure out how we 
respond to the first panel with respect to some of their 
streamlining issues that we really only began to scratch the 
surface. But if we could pursue that, I think that would be 
very helpful.
    I did want to pursue, and I am going to have to put these 
questions into the record--I will just state them publicly and 
we will follow up, Mr. Renberg--I think, again, what you are 
engaged in is terrific and very, very important for us, just 
enormously important for the country. Again--I think, as you 
have noted, there is much further that we can go. We know that 
foreign competitors are receiving a larger percentage of their 
sales from exports from the United States. This is a huge 
growth industry in Asia, Eastern Europe, Latin America, and 
will be on a global basis. So I don't think we want to lag, and 
I don't think you do, either.
    Mr. Renberg. No.
    Chairman Kerry. My sense is, and I think you share this, 
that we could build the relationship between SBA and Ex-Im Bank 
in positive ways that would really bring a lot of small 
businesses to the marketplace--if even through the virtual 
marketplace, through cyberspace in their ability to be able to 
sell in places they have never thought they could. I think 
there is much we could do to augment that, I look forward to 
exploring that further with you.
    Again, thank you for the preparation you put into your 
testimonies. Thank you very much. We stand adjourned.
    [Whereupon, at 10:34 a.m., the Committee adjourned.]
  

                                
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