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S. HRG. 111–1212 

CLIMATE CHANGE AND ENSURING THAT AMERICA 

LEADS THE CLEAN ENERGY TRANSFORMATION 

HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

AUGUST 6, 2009 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys 
(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

ARLEN SPECTER, Pennsylvania 

JAMES M. INHOFE, Oklahoma 

GEORGE V. VOINOVICH, Ohio 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

MIKE CRAPO, Idaho 

CHRISTOPHER S. BOND, Missouri 

LAMAR ALEXANDER, Tennessee 

BETTINA POIRIER, Staff Director 

RUTH VAN MARK, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

AUGUST 6, 2009 

OPENING STATEMENTS 

Boxer, Hon. Barbara, U.S. Senator from the State of California ........................ 1 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 2 

Bond, Hon. Christopher S., U.S. Senator from the State of Missouri ................. 4 

Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee ................... 6 

Lautenberg, Hon. Frank R., U.S. Senator from the State of New Jersey ........... 10 

Barrasso, Hon. John, U.S. Senator from the State of Wyoming .......................... 11 

Merkley, Hon. Jeff, U.S. Senator from the State of Oregon ................................ 12 

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ........................ 12 

Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland ................ 15 

Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode Island ......... 17 

Crapo, Hon. Mike, U.S. Senator from the State of Idaho, prepared statement . 143 

WITNESSES 

Wellinghoff, Hon. Jon, Chairman, Federal Energy Regulation Commission ...... 18 

Prepared statement .......................................................................................... 21 

Responses to additional questions from: 

Senator Cardin .......................................................................................... 29 

Senator Klobuchar ..................................................................................... 31 

Sandalow, Hon. David B., Assistant Secretary for Policy and International 

Affairs, U.S. Department of Energy ................................................................... 34 

Prepared statement .......................................................................................... 36 

Responses to additional questions from: 

Senator Cardin .......................................................................................... 39 

Senator Klobuchar ..................................................................................... 42 

Response to an additional question from Senator Whitehouse .................... 46 

Strickland, Hon. Tom, Assistant Secretary for Fish, Wildlife, and Parks, U.S. 

Department of the Interior .................................................................................. 47 

Prepared statement .......................................................................................... 49 

Krupp, Fred, President, Environmental Defense Fund ........................................ 77 

Prepared statement .......................................................................................... 79 

Responses to additional questions from: 

Senator Cardin .......................................................................................... 99 

Senator Klobuchar ..................................................................................... 102 

Fehrman, Bill, President and CEO, MidAmerican Energy Company ................. 106 

Prepared statement .......................................................................................... 108 

Responses to additional questions from Senator Klobuchar ......................... 131 

(1) 

CLIMATE CHANGE AND ENSURING THAT 

AMERICA LEADS THE CLEAN ENERGY 

TRANSFORMATION 

THURSDAY, AUGUST 6, 2009 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

Washington, DC. 

The full committee met, pursuant to notice, at 10 a.m. in room 

406, Dirksen Senate Building, Hon. Barbara Boxer (chairman of 

the full committee) presiding. 

Present: Senators Baucus, Inhofe, Lautenberg, Cardin, 

Whitehouse, Merkley, Voinovich, Barrasso, Bond, and Alexander. 

OPENING STATEMENT OF HON. BARBARA BOXER, 

U.S. SENATOR FROM THE STATE OF CALIFORNIA 

Senator BOXER. The hearing will come to order. Very happy to 

see all of you here. 

Today’s hearing will focus on ensuring that America leads the 

clean energy transformation as we address the threat posed by climate change. I want to welcome our witnesses who will share their 

insights and expertise on this critical subject. 

We are facing two historic challenges in America today, a deep 

economic recession and the threat of unchecked global warming. 

During this hearing, we will examine the ways in which Federal 

initiatives are already addressing both of these challenges and 

about additional steps we can take to provide incentives for clean 

energy development to transform the American economy. 

This country can and should be a leader of the clean energy revolution. Clean energy and climate legislation provides the certainty 

that companies need and the signal businesses are looking for to 

mobilize capital and harness the greatest source of power we have 

in this great country, American ingenuity. Clean energy legislation 

is jobs legislation. By creating powerful incentives for clean energy, 

it will create millions of new jobs in America, building wind turbines, installing solar panels on homes, and producing a new fleet 

of electric and hybrid vehicles. 

Every time we have one of these hearings, the Republicans and 

the Democrats put different studies into the record proving their 

point, so I want to again refer to the Pew Charitable Trust study 

that shows that the creation of jobs in the clean energy sector is 

the one bright spot in our economy, the major bright spot in our 

economy, and noting that a charitable organization, I believe, does 

come to the table without bias. 
2 

Legislation that provides powerful incentives for the development 

of clean energy technologies will put America to work and unleash 

U.S. investment to create innovative technologies and whole new 

industries right here in America, reduce our dependence on foreign 

oil, and protect our children from pollution. 

So I do look forward to hearing all of our witnesses today about 

how we can work together to rise to the clean energy challenge and 

to transform our economy. 

Senator Inhofe. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA 

Senator INHOFE. Well, thank you, Madam Chairman, and thank 

you for holding this hearing. 

I think it might be a good time, since we are going to go into August recess, to kind of assess what we have learned from these 

hearings. Madam Chairman, since I turned the gavel over to you, 

this committee has held over 30 hearings on global warming, with 

testimony from numerous experts and officials from all over the 

country, all over the world. These hearings explored various issues 

associated with cap-and-trade, and I am sure my colleagues 

learned a great deal from them. 

But over the last 2 years it was not from these hearings, at times 

arcane and abstract policy discussions, that we got to the essence 

of cap-and-trade; it was the Democrats who cut right to the chase. 

It was the Democrats, over the last 2 years, who exposed what capand-trade really means for the American people. 

We learned, for example, from President Obama that, under a 

cap-and-trade, electricity prices would necessarily skyrocket. 

We learned from Democrat Representative John Dingell that capand-trade is a tax, and a great big one. 

We learned from Democrat Representative Peter DeFazio that ‘‘a 

cap-and-trade system is prone to market manipulation and speculation without any guarantee of meaningful greenhouse gas emission 

reductions. A cap-and-trade has been operating in Europe for 3 

years and is largely a failure.’’ 

We learned from Democrat Senator Dorgan that the cap-andtrade system, ‘‘the Wall Street crowd can’t wait to sink their teeth 

into a new trillion dollar trading market in which hedge funds and 

investment banks would trade and speculate on carbon credits and 

securities. In no time they will create derivatives, swaps, and more 

for that new market. In fact, most of the investment bankers have 

already created carbon trading departments. They are ready to go. 

I am not.’’ Now, I am quoting Senator Dorgan in the case. 

We learned from Democrat Senator Maria Cantwell that capand-trade programs might allow Wall Street to distort a carbon 

market for its own profits. 

We learned from the EPA Administrator, Lisa Jackson, that unilateral United States action—she was referring to the bill that is 

on the table now—to address climate change through cap-and-trade 

would be futile. She said, in response to a question from me, that 

U.S. action alone would not impact CO2 levels. 
3 

We learned from Democrat Senator John Kerry there is no way 

the United States of America, acting alone, can solve this problem, 

so we have to have China, we have to have India. 

We learned from Democrat Senator Claire McCaskill that ‘‘if we 

go too far with this, that is, cap-and-trade, then all we are going 

to do is chase more jobs to China and India, where they have been 

putting up coal-fired plants every 10 minutes.’’ 

In sum, we have a slew of hearings in three unsuccessful votes 

on the Senate floor—well, actually, I would say four, because we 

rejected the Kyoto Treaty in the beginning. The Democrats taught 

us that cap-and-trade is a great big tax and will raise electricity 

prices on consumers, I would have to say in a regressive way. In 

rich Wall Street, traders send jobs to China and India, all without 

any impact on global temperature. 

So off we go into the August recess secure in the knowledge that 

cap-and-trade is riddled with flaws and that Democrats are seriously divided over one of President Obama’s top domestic policy 

priorities. We also know that, according to a recent polling, the 

American public is increasingly unwilling to pay anything, as the 

polling has shown, to fight global warming. But all this does not 

mean cap-and-trade is dead and gone; it is very much alive, as 

Democratic leaders, as they did in the House, they are eager to distribute pork in unprecedented scales to secure the necessary votes 

to try to pass this thing. 

So be assured of this, we will mark up legislation in this committee, pass it, and then it will be combined with other bills from 

other committees, and we will have a debate on the Senate floor. 

Throughout the debate on cap-and-trade, we will be there to say 

that, according to the American Farm Bureau, the vast majority of 

agriculture opposes it. According to GAO, it will send jobs to China 

and India. According to the National Black Chamber of Commerce, 

it will destroy over 2 million jobs. According to the EPA and the 

EIA, it will not reduce our dependency on foreign oil. According to 

EPA, it will do nothing to reduce global temperature. 

And, when it is all said and done, the American people will reject 

it and we will defeat it. 

Thank you, Madam Chairman. On that happy note, I will—— 

[Laughter.] 

[The prepared statement of Senator Inhofe follows:] 

STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA

Madam Chairman, thank you for holding this hearing today. This is the last hearing on climate change before the August recess, so I think it’s appropriate to take 

stock of what we’ve learned. 

Madam Chairman, since you assumed the gavel, this committee has held over 30 

hearings on climate change. With testimony from numerous experts and officials 

from all over the country, these hearings explored various issues associated with 

cap-and-trade, and I’m sure my colleagues learned a great deal from them. 

But over the last 2 years, it was not from these, at times, arcane and abstract 

policy discussions that we got to the essence of cap-and-trade. No, it was the Democrats who cut right to the chase; it was the Democrats over the last 2 years who 

exposed what cap-and-trade really means for the American public. 

We learned, for example, from President Obama that under his cap-and-trade 

plan, ‘‘electricity prices would necessarily skyrocket.’’ 

We learned from Representative John Dingell (D–Mich.) that cap-and-trade is ‘‘a 

tax, and a great big one.’’ 
4 

We learned from Representative Peter DeFazio (D–Ore.) that ‘‘a cap-and-trade 

system is prone to market manipulation and speculation without any guarantee of 

meaningful GHG emission reductions. A cap-and-trade has been operating in Europe for 3 years and is largely a failure.’’ 

We learned from Senator Dorgan (D–N.D.) that with cap-and-trade, ‘‘the Wall 

Street crowd can’t wait to sink their teeth into a new trillion-dollar trading market 

in which hedge funds and investment banks would trade and speculate on carbon 

credits and securities. In no time they’ll create derivatives, swaps and more in that 

new market. In fact, most of the investment banks have already created carbon 

trading departments. They are ready to go. I’m not.’’ 

We learned from Senator Cantwell (D–Wash.) that ‘‘a cap-and-trade program 

might allow Wall Street to distort a carbon market for its own profits.’’ 

We learned from EPA Administrator Lisa Jackson that unilateral U.S. action to 

address climate change through cap-and-trade would be futile. She said in response 

to a question from me that ‘‘U.S. action alone will not impact world CO2 levels.’’ 

We learned from Senator Kerry (D–Mass.) that ‘‘there is no way the United States 

of America acting alone can solve this problem. So we have to have China; we have 

to have India.’’ 

We learned from Senator McCaskill (D–Mo.) that if ‘‘we go too far with this,’’ that 

is, cap-and-trade, then ‘‘all we’re going to do is chase more jobs to China and India, 

where they’ve been putting up coal-fired plants every 10 minutes.’’ 

In sum, after a slew of hearings and three unsuccessful votes on the Senate floor, 

the Democrats taught us that cap-and-trade is a great big tax that will raise electricity prices on consumers, enrich Wall Street traders, and send jobs to China and 

India—all without any impact on global temperature. 

So off we go into the August recess, secure in the knowledge that cap-and-trade 

is riddled with flaws, and that Democrats are seriously divided over one of President 

Obama’s top domestic policy priorities. 

And we also know that, according to recent polling, the American public is increasingly unwilling to pay anything to fight global warming. 

But all of this does not mean cap-and-trade is dead and gone. It is very much 

alive, as Democratic leaders, as they did in the House, are eager to distribute pork 

on unprecedented scales to secure the necessary votes to pass cap-and-trade into 

law. 

So be assured of this: We will markup legislation in this committee, pass it, and 

then it will be combined with other bills from other committees. And we will have 

a debate on the Senate floor. 

Throughout the debate on cap-and-trade, we will be there to say that: 

According to the American Farm Bureau, the vast majority of agriculture groups 

oppose it; 

According to GAO, it will send our jobs to China and India; 

According to the National Black Chamber of Commerce, it will destroy over 2 million jobs; 

According to EPA and EIA, it will not reduce our dependence on foreign oil; 

According to EPA, it will do nothing to reduce global temperature; 

And when all is said and done, the American people will reject it, and we will 

defeat it. 

Thank you, Madam Chairman. 

Senator BOXER. Thank you. You really started my day off. Such 

excitement. 

Senator INHOFE. But that is not the first time. 

Senator BOXER. No. 

Senator INHOFE. That is what you do to my days. 

Senator BOXER. I know. I am sorry. I apologize. 

Senator Voinovich—Senator Bond was here first. I am sorry, 

Senator. 

OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, 

U.S. SENATOR FROM THE STATE OF MISSOURI 

Senator BOND. Oh, thank you very much, Madam Chair. I want 

to continue to brighten your day as we talk about clean energy and 

climate change. 
5 

There have been a lot of charges that have been thrown around 

that Republicans are not willing to do anything. I want to point out 

that the Republicans are the party of yes when it comes to supporting clean energy, American energy, and affordable energy. We 

support harnessing the largest source of clean energy we have, nuclear power. The single greatest source of zero carbon, zero air pollution, base-load energy is nuclear power. 

Nuclear power will create tens of thousands of productive jobs, 

and that is in contrast to the so-called green jobs of wind and energy, which can only be bought with up to $100,000 of taxpayer 

subsidy [unintelligible] to produce, intermittently, power that we, 

as taxpayers, get the privilege of subsidizing at the rate of about 

$20 a megawatt hour, when it blows, of course. 

Unfortunately, President Obama seems more interested in Iran’s 

right to peaceful nuclear energy than expanding American nuclear 

energy. Republicans support clean hybrid and electric plug-in vehicle technology. Just last week we celebrated a new electric truck 

assembly plant in Kansas City, Missouri. We had on the mall totally electric plug-in vans with the private sector partners, including AT&T, Coca Cola, Frito-Lay. Madam Chair, your Pacific Gas & 

Electric, and my Kansas City Power & Light are going to be running these totally electric power zero emission vans. 

In Missouri, I am also working with our research in the universities and the Danforth Plant Science Center to develop economical 

ways of producing biomass to generate electricity with less emissions. We are using algae combined with carbon dioxide to produce 

transportation fuel, as we have discussed here. 

But I also support, as my fellow Republicans do, harnessing the 

American oil and gas lying off our shores and under our lands. Environmentally friendly drilling technology allows for oil drilling in 

an ocean that was safe enough to withstand Hurricane Katrina. 

And we do it without the pollution that is produced in other countries, which are now producing the oil and gas that we need, and 

from the best information we have, are going to continue to need 

for at least the next 20 years. 

Government estimates are that we have 144 billion barrels of oil 

waiting for us offshore if we only go ahead and tap it. In the American West, The Rand Corporation estimates America has over 1 

trillion barrels of recoverable oil. That is more than 2,000 years of 

imports from Saudi Arabia. Government estimates, 200-year supply 

of American coal and a 95-year supply of natural gas. 

Allowing ourselves to use America’s abundant supplies of energy 

will promote another Republican core belief, and that is affordable 

energy. Abundant supplies of American energy will help keep 

prices down, will help families stretch their family budgets and 

keep good paying jobs. We will oppose proposals from the other side 

of new energy taxes which will cost us jobs and hurt America while 

helping our competitors in China and India. 

We oppose intentionally hurting the American people with higher 

prices or putting a price on carbon, as environmentalists and some 

on the other side like to say. Instead, Democrats propose to impose 

pain on the American people, to force them to use less energy, 

which will not do anything for the climate. We support allowing 

America to harness its own abundant, clean, affordable energy. 
6 

Finally, the reports of cap-and-trade legislation that the Chair 

intends to introduce will omit key details vital to determining its 

impact on families and workers. That troubles me a great deal, 

Madam Chair. If families are going to have to pay higher utility 

bills, farmers pay higher production costs, drivers face more pain 

at the pump, and workers face greater job loss, depending on how 

the cap-and-trade legislation allocates its tradeable allowances, we 

ought to be considering that over the August recess. I think the 

American people deserve to know how legislation will affect their 

energy bills and jobs. We can’t leave these allocation provisions 

blank, with placeholders, if we are going to give Americans a fair, 

honest, and open, transparent view of the legislation. 

I would wonder how we can even hold legislative hearings on legislation without reviewing its key provision. And I would urge the 

Chair not to try to force the committee to do so. 

I thank you very much, Madam Chair, for giving me this opportunity. 

Senator BOXER. Senator Bond, I totally agree with you that, 

when we mark up, we will know exactly what the—— 

Senator BOND. Will we know before the recess? 

Senator BOXER. Before? Today? No. We won’t see that until after. 

We are going to have many, many more hearings before we mark 

up. 

Senator BOND. OK. Will we know those provisions when they are 

developed? 

Senator BOXER. Of course. 

Senator BOND. OK. That is what we—— 

Senator BOXER. Absolutely. 

Senator BOND. OK. 

Senator BOXER. Senator Alexander. 

OPENING STATEMENT OF HON. LAMAR ALEXANDER, 

U.S. SENATOR FROM THE STATE OF TENNESSEE 

Senator ALEXANDER. Thanks, Madam Chairman. Thanks for the 

hearing, and I look forward to the witnesses. They know a lot 

about the subject matter we are discussing. And I like the title 

clean energy revolution. 

Senator Bond has accurately described a Republican proposal 

that we believe is consistent with the views of a lot of Democratic 

Senators as well; 100 nuclear power plants in the next 20 years, 

clean plug-in vehicles. I believe we can electrify half our cars and 

trucks—I learned that from one of the witnesses here today—during the next 20 years. Offshore exploration for natural gas, that is 

low carbon. And then some mini Manhattan projects on the things 

that we need to figure out, like capturing carbon from existing coal 

plants. By my computations, if all that were fully implemented, we 

would reach the Kyoto goals by 2030 without a cap-and-trade, and 

do it in a low cost way. 

My questions today are going to have to do with a separate part 

of the bill that is coming over toward us from the House of Representatives. There is a renewable electricity standard that requires States to create 20 percent of their electricity by 2020 from 

a narrowly defined group of renewable energies—wind, solar, geothermal, and new hydro. It is a continuation of what I would call 
7 

a national windmill policy that we have had since 1992, when we 

began to almost theologically subsidize the building of giant wind 

turbines as a way of powering our country. 

So if the title of our hearing is clean energy revolution, my question, then, to the witnesses and to others is, Why don’t we have a 

clean energy standard? Why do we leave out, for example, nuclear 

power, which produces 70 percent of our carbon-free electricity 

today? 

I congratulate Mr. Sandalow for actually mentioning nuclear 

power in his testimony, which is rare for witnesses from this Administration. We had a very good meeting, several of us did, that 

Senator Carper had with Dr. Chu earlier this week about what he 

hopes to do about nuclear power, and he said what we believe, that 

it is safe, that we have ways to deal with the waste, and he wants 

to get it going. 

So if this is so important that we need to encourage wind, why 

don’t we encourage nuclear power? And, for the record, I would like 

to include this chart of comparisons, two different options to make 

another 20 percent of the United States carbon-free. The Administration has said that it wants—and it is mentioned in the testimony today—let’s make 20 percent of our electricity from wind. 

OK. Well, why not, at the same time, try to make 20 percent of our 

electricity from nuclear? Both are pollution-free and carbon-free, 

and here are the comparisons. 

To do it with nuclear, you would need 100 new reactors, about 

the number we have today. To do it with wind, you would need 

180,000 1.5 megawatt turbines, covering an area the size of West 

Virginia. Nuclear produces 20 percent of our electricity today; wind 

1.3 percent. Nuclear is a base-load power. Maybe what we need is 

a base-load clean energy standard and a renewable clean energy 

standard. Wind, of course, is intermittent; it is only available when 

the wind blows. Nuclear is available about 90 percent of the time, 

on the average, that is why we call it base-load; wind is available 

about a third of the time. 

In our part of the country, Tennessee, it is only available about 

19 percent of the time, and the only wind farm in the Southeast 

shows the net effect of the renewable electricity standard is to force 

us to pay more to buy wind from South Dakota, when we would 

rather be using it for nuclear or conservation or buying scrubbers 

for our coal plants. 

The 100 nuclear reactors would be built mostly on existing sites; 

wind would require thousands of miles of new transmission lines. 

We would have to pay for that. The subsidy costs for nuclear to 

build 20 percent of our electricity from carbon-free would be about 

$17.5 billion over 10 years, including the nuclear production tax 

credit. For wind, it would be 10 times that, $170 billion over 10 

years, which is the production tax credit. 

The Chairman mentioned green jobs. There would be more under 

building 100 nuclear power plants, a lot more, than there would be 

under building even 180,000 wind turbines, according to the Department of Energy statistics. Nuclear plants last 80 years; wind 

turbines 20. We have 47,000 abandoned mines in California. What 

if we add 180,000 abandoned wind turbines in the United States? 
8 

The cost of building both is about the same, according to the National Academies, and the visual impact is 100 square miles for nuclear, 25,000 square miles for wind. 

So my question will be why not have a clean energy standard or 

a base-load standard that includes nuclear? 

Madam Chairman, I would like to ask permission to include this 

chart, following my remarks. 

Senator BOXER. It will be done, sir, yes. 

Senator ALEXANDER. Thank you very much. 

[The referenced document follows:] 
9 
10 

Senator BOXER. Senator Lautenberg. 

OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 

U.S. SENATOR FROM THE STATE OF NEW JERSEY 

Senator LAUTENBERG. Thanks very much, Madam Chair. We are 

never quite where the Chair is, chairman or chairwoman, but this 

is a Chair of all abilities and talents. 

We are glad to see the witnesses. 

Today’s hearing is our sixth in the past month on the need to 

fight global warming by building the economy of the future. During 

these hearings, we have heard from business and industry leaders 

that the U.S. needs to act fast to catch up to other countries that 

are leading the way on clean energy. Right now, for example, 

China is investing 10 times more of its gross domestic product on 

clean energy than the United States. 

We have also heard from military leaders that global warming is 

a serious threat to our national security. As many as 800 million 

people are going to face water or crop land scarcity in the next 15 

years, setting the stage for conflict and breeding the conditions for 

terrorism, according to the CIA’s National Intelligence Council. 

During today’s hearing, we are going to hear more about sciencebased options. We have to reduce emissions, create jobs, and to 

grow our economy. 

Last month, the House passed the landmark bill that would fundamentally shift how America uses energy and confronts the challenges that we have. All eyes are now on this committee to see if 

we are going to do our part. We have got to reward innovative companies and workers that are building the clean energy economy 

and make polluters pay for the damage that they are doing to our 

planet. 

We must reduce greenhouse gas emissions by 20 percent by 2020 

to get on the track that we need to ultimately have by 2050. That 

is a science-based achievable goal. And, in fact, the major new report by McKinsey & Co. found that the United States can reduce 

energy use by 23 percent by 2020 simply by becoming more energy 

efficient. 

We also need to invest in research and development to create 

jobs in the short-term and give our country the tools to compete in 

the long term. Right now, the House bill only devotes 1.5 percent 

of the allowances to research and development, but a Fortune 500 

company like J&J, Johnson & Johnson, spends about 12 percent of 

its revenues on R&D. We need to improve the House bill to make 

sure that we provide the investments necessary to match our technology with our goals. 

If we accomplish these objectives, factories that are now dark 

and empty can find new life building wind turbines, geothermal 

heat pumps, solar panels, or any of the thousands of components 

that generate renewable energy. 

I hear our colleague from Tennessee, Senator Alexander, continue to ask why not more nuclear, and I think the question is a 

fair one. I remember when nuclear was a dirty word around here, 

and now we have seen applications come in from people who want 

to make the investment, and I think certainly we have to look at 

that more seriously. 
11 

Just look at what has happened in my State of New Jersey. More 

than 2,000 clean energy companies now call New Jersey home. 

They employ more than 25,000 people. 

So, Madam Chairman, when we return to Washington in September, we need to take what we have learned from these hearings, get to work building our clean energy future, and I hope that 

we will have had sufficient debate and volume of air pass so that 

we can take that air into renewable energy. Thank you very much. 

Senator BOXER. Thank you very much, Senator. 

Senator Barrasso. 

OPENING STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM THE STATE OF WYOMING 

Senator BARRASSO. Thank you, Madam Chairman. 

Madam Chairman, unemployment has now hit 9.5 percent in 

America. The Administration admitted again this week that unemployment will continue to rise. It will continue to rise despite promises that the President’s $787 billion stimulus bill would prevent 

unemployment from reaching even 8 percent and would create or 

save 3.5 million jobs. 

Vice President Biden has said the Administration misread the 

economy. He is correct. Misreading the economy is a serious mistake, given the billions we borrowed from China to pay for that 

stimulus bill. The people depending on this Administration to restore the job market paid the price. 

Now some in the majority in Congress want to move at breakneck speed to pass a 1500-page cap-and-trade scheme. With the 

failure of an economic stimulus package to create the promised 

jobs, should America believe that the 1500-page cap-and-tax bill 

will work? Supporters are putting a lot on the line by advocating 

the largest energy tax in the history of America. The burden of the 

bill will fall on the backs of working Americans in a time of high 

unemployment. And they are not being deliberative about this, 

they are rushing to do it. 

In an article in Investors Business Daily, Drew Thornley asks 

why the urgency. Why not more time for thorough cost-benefit 

analysis? Why hurriedly push a bad bill just to get something 

passed? Why no acknowledgment that the countries that take the 

best care of their environment are the richest? Thornley also asks 

why not tap more of our Nation’s abundant natural fuels in ways 

that are as, or more, environmentally friendly than other nations? 

Cap-and-tax advocates have tried to sell the American people on 

the idea that we can be energy secure by having less energy, but 

making it more expensive. They claim this approach will create 

jobs all across America, leaving no worker behind. They also claim 

that this cap-and-trade strategy will wean America off foreign 

sources of energy. They claim it is critical for our national security, 

and they claim it will make us competitive in the world. 

In response, I would simply ask the question, Why are Saudi 

Arabia and our Middle Eastern countries so vital to the world’s energy mix? The answer, they have vast deposits of the world’s oil. 

If America had the same amount of oil as Saudi Arabia and coal 

reserves that surpass any country in the world, would we be in a 
12 

better position to win the energy race with China and India? The 

answer is yes. 

Well, we have that in America. We have oil reserves contained 

in oil shale throughout the West that rivals Saudi Arabia’s deposits. We also have oil in Alaska, Louisiana, Montana, North Dakota, 

California, and Wyoming. Do the authors of cap-and-trade want to 

tap into that? No. 

We have coal reserves in the West, Midwest, and the South that 

have been referred to as the Saudi Arabia of coal. These are in the 

States like Kentucky, Ohio, Illinois, West Virginia, Montana, and 

my home State of Wyoming. Do the authors of cap-and-trade want 

to truly tap into that? No. 

America has that and more. We also have the uranium, the 

wind, the solar, the geothermal, the biomass, the hydro power. We 

have it all, and we can develop it in a responsible way. 

What puts us in a better position to win the energy race with 

India and China? Well, the answer is American energy. The authors of cap-and-trade don’t want to develop all-American energy 

resources; they want to start the energy race with China and India 

two laps behind, as opposed to three laps ahead. 

The more energy America can produce, the stronger the American economy will be. Energy development creates jobs; not just 

green jobs, but real red, white, and blue jobs. We need to keep all 

the American jobs we can, we need them all, and the solution rests 

on our shores. 

Thank you, Madam Chairman. 

Senator BOXER. Thank you, Senator Barrasso. 

Senator Merkley. 

OPENING STATEMENT OF HON. JEFF MERKLEY, 

U.S. SENATOR FROM THE STATE OF OREGON 

Senator MERKLEY. Thank you very much, Madam Chair. 

It is a delight to have you all here today. As I was looking over 

your testimony, it is clear there is a central message: that we have 

here in the United States, right now, the technology, the resources, 

the know-how to build a clean energy economy; that economy will 

create jobs; it will cut our dependence on foreign oil; and it will reduce pollution. This sounds like a triple win. I look forward to 

hearing the details from all of you. 

Thank you. 

Senator BOXER. Thank you, Senator. 

Senator Voinovich. 

OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, 

U.S. SENATOR FROM THE STATE OF OHIO 

Senator VOINOVICH. First of all, I would like to say thank you for 

this hearing and echo the words of my friend from Tennessee, that 

if you look at where we get our energy in this country, we are only 

getting about eight-tenths of 1 percent from solar, about 1.4 percent from wind. And what we need to look at is nuclear; we need 

to look at coal. 

It seems to me if we really wanted to reduce our emissions in 

this country, we would move very quickly on the nuclear and move 

very quickly to find technology that would capture and sequester 
13 

carbon so that we could continue using coal. We know that those 

people overseas are going to use it. And I think the Senator from 

Missouri made a good point when he said that in terms of oil, we 

need to find more and use less. 

The public interest and private sector communities agree that 

the crucial factor that will determine whether we have an effective 

climate policy is the extent to which the policy will encourage the 

development and deployment of needed technology. Yet, regulation 

without sufficient available technology will result in high costs for 

American consumers while offering little hope that developing nations will answer the call to reduce their emissions. 

Tackling the climate change problem is not something we can do 

alone. I agree that the U.S. should be a leader. But while carbon 

caps or taxes are difficult to sell to the developing world, access to 

new technology is not. That is why, Madam Chairman, I have introduced a bill to create a new committee in the Asia-Pacific partnership designed to enhance and focus international cooperation on 

clean energy technology development and commercialization. The 

bill is designed to help speed the widespread adoption of these 

technologies and provide an additional foreign to engage rapidly 

growing economies on the production and use of clean and efficient 

energy technologies. 

That technology development is needed in the areas of carbon 

capture and sequestration, energy efficiency, and alternative 

sources of generation, such as nuclear, renewables, and alternative 

motor fuels and hybrids. That is without dispute. 

But the Waxman proposal does not address these technological 

needs in a manner that is consistent with the bill’s mandates. Recognizing the disconnect between what technology can delivery and 

the bill’s objectives, the authors include numerous provisions to 

mask the strain this compliance burden will have on the economy, 

that, if all these provisions don’t work out as planned—and Government programs rarely work out as planned—the costs could be 

enormous. 

EIA’s recent analysis offers a devastating critique of a proposal 

whose efficacy hinges upon a string of assumptions that defy political, practical, and technological realities. The analysis shows a 

range of impacts that may accompany the bill’s implementation 

under a variety of technology and offset available assumptions. Notably, even in scenarios where low carbon technologies are deployed 

at paces that energy experts agree are implausible, there are significant economic costs. 

But if offsets and the growth of new technology are more limited, 

the legislation could devastate the economy through increases in 

electricity prices of up to 77 percent, gasoline prices up to 33 percent, and natural gas up 75 percent, resulting in a cumulative hit 

to the GDP of $3.6 trillion by 2030, non-discounted. 

Senator Baucus recently said let’s face it, the bill we now consider is ‘‘a tax bill.’’ I agree. It is not possible to look at putting a 

price on carbon in any other way. The Government is imposing a 

mandate with the intention of increasing prices to achieve a certain 

outcome. Accordingly, the costs associated with the bill should be 

considered with the seriousness that any tax measure is given. 
14 

Against this backdrop, I would say that I do support efforts to 

reduce greenhouse gas emissions. But our policy approach must be 

reasonable, and by that I mean it must ensure economic stability 

by not causing fuels switching, rapid rate increases, or economic 

dislocation. And this is contingent upon achievable requirements, 

that is, requirements that are consistent with the development and 

deployment of sources of low carbon energy. During a time when 

the national unemployment rate is at 9.5 and the national debt is 

$11 trillion, our first responsibility, folks, is to do no harm to the 

economy. 

My goals are to keep this Nation’s economy and that of Ohio on 

a sure footing while decreasing emissions. Climate change requires 

a long-term solution whose strategy is fully capable of accommodating the time necessary to reduce emissions in a manner that is 

consistent with low carbon technology development and deployment. We can greatly move the process forward if our policy approach embraces realistic goals, while providing the necessary resources and incentives to develop and deploy clean energy technologies. 

[The prepared statement of Senator Voinovich follows:] 

STATEMENT OF HON. GEORGE V. VOINOVICH, 

U.S. SENATOR FROM THE STATE OF OHIO

Madam Chairman, the public interest and private sector communities agree that 

the crucial factor that will determine whether we have an effective climate policy 

is the extent to which that policy will encourage the development and deployment 

of needed technology. Yet regulation without sufficiently available technology will 

result in high costs for American consumers while offering little hope that developing nations will answer the call to reduce their emissions. 

Tackling the climate change problem is not something we can do alone. I agree 

that the U.S. should be a leader. But while carbon caps or taxes are difficult to sell 

to the developing world, access to new technology is not. This is why I introduced 

a bill to create a new committee in the Asia Pacific Partnership designed to enhance 

and focus international co-operation on clean energy technology development and 

commercialization. The bill is designed to help speed the widespread adoption of 

these technologies and provide an additional forum to engage rapidly growing economies on the production and use of clean and efficient energy technologies. 

That technological development is needed in the areas of carbon capture and sequestration; energy efficiency; and alternative sources of generation, such as nuclear, renewables, and alternative motor fuels and hybrids is without dispute. But 

the Waxman proposal does not address these technological needs in a manner that 

is consistent with the bill’s mandates. Indeed, the requirements and mandates in 

the Waxman proposal are completely severed from what technology is able to deliver 

and will harm our competitive position in the global marketplace. Indeed, what we 

now consider is the most environmentally stringent climate change legislation proposed to date. 

Recognizing the disconnect between what technology can deliver and the bill’s objectives, the authors include numerous provisions to mask the strain this compliance 

burden will have on the economy. Yet, if all these provisions don’t work out as 

planned (and government programs rarely work out as planned), the costs could be 

enormous. 

EIA’s recent analysis offers a devastating critique of a proposal whose efficacy 

hinges upon a string of assumptions that defy political, practical and technological 

realities. The analysis shows a range of impacts that may accompany the bill’s implementation under a variety of technology and offset availability assumptions. Notably, even in scenarios where low carbon technologies are deployed at paces that 

energy experts agree are implausible, there are significant economic costs. But if offsets and growth in new technologies are more limited, the legislation would devastate the economy through increases in electricity prices of up to 77 percent, gasoline prices of up to 33 percent, and natural gas prices of up to 75 percent, resulting 

in a cumulative hit to GDP of $3.6 trillion by 2030 (non-discounted). 
15 

Reducing greenhouse gas emissions will require a technological revolution centered on the way we produce and use energy. That cannot be done without costs. 

But instead of accepting the economic impacts of reducing greenhouse gases and 

moving forward in a responsible manner, the authors and proponents of this legislation prefer to hold a basic economic principle—that there are no free lunches—in 

suspense. You can’t get something for nothing; our economy is reeling right now because this principle has been ignored, and it is something we can no longer afford 

to do. 

And while the impacts might not be as high as outlined above, it is disingenuous 

to claim that this bill’s mandates can be met for the cost of a postage stamp a day. 

Senator Baucus, Chairman of the Senate Finance Committee, recently stated in an 

interview that the bill we now consider is ‘‘a tax bill.’’ I agree. It’s not possible to 

look at putting a ‘‘price on carbon’’ in any other way—the Government is imposing 

a mandate with the intention of increasing prices to achieve a certain outcome. Accordingly, the costs associated with this bill should be considered with the seriousness that any tax measure is given. 

Against this backdrop I’ll say that I do support efforts to reduce greenhouse gas 

emissions. But our policy approach must be reasonable, and by that I mean it must 

ensure economic stability by not causing fuel switching, rapid rate increases or economic dislocation. This is contingent upon achievable requirements, that is, requirements that are consistent with the development and deployment of sources of low 

carbon energy. During a time when the national unemployment rate is at 9.5 percent and the national debt is over $11.5 trillion, our first responsibility is to do no 

harm to the economy. 

My goals are to keep Nation’s economy, and that of Ohio, on a sure footing while 

decreasing emissions. Climate change requires a long-term solution whose strategy 

is fully capable of accommodating the time necessary to reduce emissions in a manner that is consistent with low carbon technology development and deployment. We 

can greatly move the process forward if our policy approach embraces realistic goals 

while providing the necessary resources and incentives to develop and deploy clean 

energy technologies. 

Senator BOXER. Thank you. 

Senator Cardin. 

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 

U.S. SENATOR FROM THE STATE OF MARYLAND 

Senator CARDIN. Thank you, Madam Chair. 

Let me thank our witnesses today. 

I would ask unanimous consent that my entire statement can be 

placed in the record. 

Let me just summarize by saying clean energy is important for 

this country for many reasons. We know it is important for national security as we become energy self-sufficient here in America. 

It is important for our environment. We know the impacts of global 

climate change and carbon emissions. 

But it is also important for our economy. This is where the 

growth in jobs will be in America. GE understands that, Honeywell 

understands that, Motorola understands that, DuPont understands 

that, and they are prepared to move forward with new technologies 

in energy creating jobs here in America and saving jobs here. 

The difficulty is we have to have a level playing field, and we 

don’t have a level playing field today because for dirty energy we 

don’t calculate the true costs. We don’t put into the cost equations 

the health dangers that are created by the pollution. We don’t put 

into the equations the environmental damage that is being done, 

the clean up that will be required in cleaning up our air and cleaning up our water. And we don’t put in that the fact that there are 

built-in subsidies today for dirty energy that new technologies 

clean energy does not enjoy. 
16 

That came home to me, Madam Chairman, when BP Solar, a 

company located in Frederick, Maryland, doing very well in solar 

energy, was planning an expansion in Frederick. But because of 

the economic incentives, they took that expansion to Spain rather 

than America, and we lost those jobs because we were not as aggressive as we should have been in moving forward, as other countries are doing today. We don’t want to be left behind. 

Let me just point out I come from a proud manufacturing State. 

Maryland, and particularly Baltimore, has a rich history as a manufacturing hub, and we want to have a future in manufacturing in 

our community. And when I take a look at the turbine propellers, 

the motors, the towers, the transmission lines that are going to 

need to be developed, it is an opportunity for us to save and expand 

manufacturing jobs in America by expanding clean energy technologies. So I am bullish on clean technology for clean energy. I 

think that is where we are going to be having the job growth in 

America. 

I was proud to be a supporter of President Obama’s American 

Recovery and Reinvestment Act. This committee worked very hard 

on that Act. Madam Chairman, you were critically responsible for 

many of the provisions that were included in that Act that dealt 

with moving forward with our infrastructure, including our infrastructure to improve technology for clean energy. 

Now, if I might, just yesterday, the Department of Energy announced $2.4 billion of grants from the recovery fund supporting 

the development and manufacturing and the next generation of 

batteries in electric vehicles. Now, part of those funds are going to 

go to a General Motors in White Marsh, Maryland. Now, here is 

a facility that has a future, but now has a much brighter future 

in keeping jobs in Maryland. We have lost manufacturing jobs in 

my State. That recovery bill is going to create jobs in my State and 

a good future for the people of Maryland. 

And, by the way, we are going to develop the type of battery 

power and electric power so that we can have the next generation 

of vehicles in America that can compete anywhere in the world and 

help us with an energy policy that makes sense for our country. It 

is good for our environment, and it is also, by the way, good for our 

economy. 

Thank you, Madam Chairman. 

[The prepared statement of Senator Cardin follows:] 

STATEMENT OF HON. BENJAMIN L. CARDIN, 

U.S. SENATOR FROM THE STATE OF MARYLAND

Competition and innovation have always been a driving force behind the American economy. Our market based economy, coupled with sound and thoughtful business regulation, has fostered invention and created a profitable domestic market for 

entrepreneurs, across business sectors, to work within. 

However, somewhere along the line we let the opportunity to play an early leadership role in clean energy technology development and production pass us by. 

This is largely due to a national energy policy that has not fostered competition 

and innovation the way American business policy does for other sectors of the economy. 

Our Nation’s energy policy has subsidized the fossil fuel industry for years creating an unfair advantage in the marketplace for dirty fuels over clean energy alternatives. Some would argue that this has helped keep energy costs low. However, the 

market price for so-called ‘‘cheap’’ fuels, like coal and gasoline, does not take into 
17 

consideration the full cost of these fuels, be it to the environment, to the public’s 

health or the taxpayer. 

The full cost of dirty fuels is realized by consumers indirectly in the form of higher healthcare cost because of increased incidence of respiratory and pulmonary diseases associated with breathing dirty air, which in turn raises insurance premiums. 

We pay for it in our water bills because of coal and oil extraction’s impacts on water 

quality that ultimately needs to be treated. We also pay for subsidies, cheap land 

leases, and environmental remediation through our taxes. If the energy production 

playing field were leveled, differences in cost would hardly be a factor in this debate. 

While Congress continues to debate the merits of creating thousands of jobs in 

a new, clean energy economy, American companies like General Electric, Honeywell, 

Motorola and DuPont stand at the ready to produce clean technologies once the U.S. 

market becomes a viable place to market their clean technologies. 

I am not impressed by big oil funded studies claiming incentives for clean energy 

development will cost America jobs. I can tell you that Maryland is losing jobs because we have NOT made clean energy a national priority. 

In May 2007 BP Solar’s headquarters, located in Frederick, Maryland, employed 

2,000 workers in my State. A year after breaking ground on the second expansion 

of their Frederick headquarters, BP Solar altered its plans. The company decided 

to scale back its Maryland operations and move its manufacturing facility to Spain 

where government programs create greater incentives for renewable energy companies to do business. 

While Europe, China, Japan, the Middle East and other parts of the world increase their investment in clean energy technologies it seems abundantly clear that 

the next frontier of technological innovations is going to be in clean energy development, and we can either help our country lead the way or watch the world pass 

us by. 

For many regions of the country, particularly in the rust belt and the manufacturing plants of the Midwest, the economic downturn has been going on a lot longer 

than just the last few years. Manufacturing of clean energy components ranging 

from wind turbine propellers, motors and towers to solar photovoltaics, glass, 

frames, mounts, conduit and transmission lines are just some of the products that 

will need to be mass produced as we move toward a clean energy economy. 

Fortunately, there are positive signs that legislation passed early this year is 

helping move us toward a clean energy economy now. Yesterday, the Department 

of Energy announced that $2.4 billion in Recovery Act funds aimed at supporting 

the development and manufacturing of the next generation of batteries and electric 

vehicles was sent out. This is welcome news to Baltimore County, Maryland, where 

workers at General Motors’ White Marsh facility, which has had its share of struggles in recent years, will employ workers to produce critical clean transportation 

technologies. 

Existing facilities in Michigan, Pennsylvania, Ohio, Indiana and in Maryland 

(Baltimore in particular) that are relics of a bygone manufacturing era can be retrofit to build clean energy products and bring life back to old manufacturing communities. That is why the United Steelworkers, with whom I met in my office a few 

weeks ago, support clean energy legislation that creates and protects new manufacturing opportunities for the United States. They also see the opportunity to build 

clean energy products not just for the U.S. market but for the world. 

Addressing the challenge of global climate change is a Herculean task. So is righting the American economy. The urgency to do both, however, can provide the spark 

needed to transform the Nation to a clean energy economy. 

Thank you, Madam Chairman, for holding this hearing, and I look forward to the 

testimony of our witnesses. 

Senator BOXER. Thank you, Senator. 

Senator Whitehouse. 

OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, 

U.S. SENATOR FROM THE STATE OF RHODE ISLAND 

Senator WHITEHOUSE. Thank you, Madam Chair. You have assembled a very distinguished panel of witnesses, and I think I may 

be the last person between us and them, so I don’t want to go on. 

But I do want to emphasize very briefly some of the points that the 

distinguished Senator from Maryland made. 
18 

The first is how very important it is that we reset our economy 

toward a clean energy future. The consequences of failing to do 

that are manifold. There are national security consequences, economic consequences, jobs consequences, quality of life consequences, environmental consequences, and they are all going to 

become very real for our children and grandchildren if we fail to 

act. 

But the second and related point that I want to leave us with is 

that I don’t believe that our present status quo is some ideal state 

of nature from which any variation is an anomaly or an interference. The status quo right now is riddled with Government hand 

on the levers of our economy. It just happens to put those hands 

in places that benefit dirty, polluting industries. And to move Government’s hand in a way that supports a better clean energy future 

is not a disturbance in the state of nature that some of my colleagues appear to presume the status quo represents; it is actually 

just making better decisions with the same Government power we 

use right now. 

Right now, Government’s hand provides incentives to pollute. 

Right now, Government’s hand creates a failure in this country to 

meet the international market that exists for clean energy incentives and investment. Right now, Government’s hand lays subsidies 

all over dirty fuel. So, really, all we are doing is resetting something that we have just set in the wrong place, rather than taking 

an ideal market and adding Government interference, and I just 

think that is a kind of basic fact we need to acknowledge in this 

debate. 

I appreciate the hearing and will be delighted to get to the witnesses. 

Senator BOXER. Thank you, Senator, very much. 

So now we turn to our panel. The title of today’s hearing, in case 

we forgot, is Climate Change and Ensuring That America Leads 

the Clean Energy Transformation. 

We will hear first from Hon. Jon Wellinghoff, Chairman, Federal 

Energy Regulatory Commission, otherwise known as FERC. 

STATEMENT OF HON. JON WELLINGHOFF, CHAIRMAN, 

FEDERAL ENERGY REGULATION COMMISSION 

Mr. WELLINGHOFF. Thank you, Chairman Boxer. If I could have 

my full written remarks placed in the record, I will summarize 

from them. 

Senator BOXER. Yes. 

Mr. WELLINGHOFF. Chairman Boxer, Ranking Member Inhofe, 

and members of the committee, thank you for the opportunity to 

speak here today. 

The Federal Energy Regulatory Commission and many States 

are using their existing authorities to remove barriers to the development of low carbon renewable resources to encourage greater efficiency in the electric system. These efforts are helping to reduce 

the emissions produced by the generation of electricity. 

Our Nation, however, has a much greater ability to reduce emissions from the usage of electricity. Studies indicate we could add 

hundreds of gigawatts of renewable energy resources by 2030. In 

addition, a study issued last week by McKinsey & Company indi-
19 

cated that on an economy-wide basis, energy efficiency alone could 

reduce our overall energy usage by nearly 25 percent. 

A major reason why low carbon renewable resources and energy 

efficiency are not used more extensively is that greenhouse gas 

emissions are, in economic terms, an externality. For example, energy marketplace takes little or no account of the fact that certain 

types of coal production currently cause significant emissions of 

greenhouse gases, while resources such as wind turbines and energy efficiency do not. 

Climate change legislation can change this. This legislation is a 

way to recognize in the energy marketplace the effect of greenhouse gases. Doing so will encourage more energy efficiency and 

the use of low carbon renewable resources, allowing us to reduce 

our greenhouse gas emissions while maintaining our quality of life. 

Let me describe some of the Commission’s efforts to reduce barriers to renewable energy development. 

The Commission has limited the charges imposed on wind generators and other variable resources for deviating from the amount 

of energy they schedule to delivery to the grid, because these resources often have limited ability to control their output. While we 

have also approved rates to fund the development of transmission 

facilities needed to deliver resources such as hydroelectric power 

from Canada and wind power from the upper Midwest and from 

Montana and Wyoming. However, I would note it is highly unlikely 

that all of the transmission facilities needed to deliver the output 

of renewable resources will be constructed without additional Federal planning, siting, and cost allocation authority. 

The Commission also is supporting the development of emerging 

hydrokinetic energy technologies, which use the power of ocean 

waves, tides, river currents to generate electricity. In April 2009, 

the Commission and the Department of Interior signed an agreement clarifying each agency’s jurisdictional responsibilities for leasing and licensing renewable energy projects on the U.S. Outer Continental Shelf. This agreement will facilitate the development of 

offshore hydrokinetic projects, as well as wind and solar projects. 

Similarly, we have signed agreements with the State of Washington and the State of Oregon to coordinate the review of 

hydrokinetic projects in the waters off those States. 

In addition, the incorporation of consumer energy use management, also called demand response, into the operation of the electric grid will reduce both consumer costs and carbon footprint of 

our electric supply. The Commission has required the country’s regional transmission organizations and independent system operators to make filings that will ultimately reduce barriers to demand 

response. The Commission also recently issued a national assessment of demand response potential after the year 2019. 

That assessment found the potential for peak electricity demand 

reductions across the country is as much as 188 gigawatts, up to 

20 percent of our national peak demand. These savings, if realized, 

can reduce carbon emissions by over a billion tons annually. 

Finally, Congress recently tasked the Commission to adopt smart 

grid standards. Last month, the Commission identified several priorities for the development of standards for smart grid technologies. The Department of Energy and the National Institute of 
20 

Standards and Technology also have major roles in the development of smart grid and we are working closely with those agencies 

and with States in collaboratively fostering our deployment of 

smart grid technology. 

In conclusion, the Commission is using its statutory authorities 

aggressively to eliminate barriers to renewable resources and consumer energy use management, and to encourage greater efficiency 

in the electric energy system. But those efforts and the efforts of 

other Federal and State agencies, while helpful, are not enough to 

prevent the growing accumulation of greenhouse gases in our atmosphere. Climate change legislation is the key to altering this 

trend. This legislation will also set an example for the leadership 

of other countries and help our Nation change from an importer of 

energy to an exporter of energy technology. Congress should enact 

this legislation now. 

Thank you again for the opportunity to testify today. I would be 

happy to answer any questions you may have. 

[The prepared statement of Mr. Wellinghoff follows:] 
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Senator BOXER. Thank you so much. 

Our next speaker will be Hon. David Sandalow, Assistant Secretary for Policy and International Affairs at the U.S. Department 

of Energy. Welcome. 

STATEMENT OF HON. DAVID B. SANDALOW, ASSISTANT SECRETARY FOR POLICY AND INTERNATIONAL AFFAIRS, 

U.S. DEPARTMENT OF ENERGY 

Mr. SANDALOW. Thank you, Chairman Boxer, Ranking Member 

Inhofe, and members of the committee. Thank you for the chance 

to testify today. 

I have traveled to China twice in the past 2 months. During 

those trips, I have seen the impressive investments that country is 

making in clean energy. Chinese companies are investing in advanced clean coal technologies. They are developing huge wind 

farms. They are building ultra-high voltage long distance transmission lines, and they are launching electric vehicle programs in 

13 major cities. 

In Europe, sustained investments in clean energy have helped 

create widespread economic opportunities. Denmark, with a land 

area less than West Virginia and a population smaller than Chicago’s, is the world’s leading producer of wind turbines. The Danish 

wind turbine manufacturing industry employs more than 20,000 

people and earns more than $4 billion each year. 

Germany and Spain are the world’s top installers of solar photovoltaic panels, accounting for nearly three-quarters of the global 

market, worth $37 billion last year. 

In Brazil, more than half of the gasoline supply has been replaced with ethanol made from sugar cane, and more than 80 percent of the cars sold in Brazil last year were flex fuel. 

Madam Chairman, the world is on the cusp of a clean energy 

revolution. Whether the United States is a leader or laggard in 

that revolution depends on decisions we as a Nation make in the 

months and years ahead. 

The Obama administration has started to lay a strong foundation. The American Recovery and Reinvestment Act provides more 

than $80 billion of clean energy investments, expected to create 

hundreds of thousands of new jobs. This includes $11 billion to 

make our electric grid more efficient, $5 billion to weatherize low 

income homes, and $3.4 billion to accelerate deployment of carbon 

capture and storage technologies. 

In May, President Obama announced the largest improvement 

ever in the fuel efficiency of the vehicle fleet, and just yesterday, 

as Senator Cardin has described, President Obama announced $2.4 

billion of investments in American battery and electric vehicle industry, which will result in thousands of jobs while reducing our 

dependence on oil. 

But these steps will not be enough. Transforming our energy 

economy will require comprehensive energy legislation to drive sustained American investment over a period of decades. As my boss, 

Energy Secretary Steven Chu, has said, we must get in the game 

and play to win. 

We should start with energy efficiency. Today, American families 

and businesses are burdened with energy waste. A McKinsey 
35 

study, cosponsored by DOE and released last week, identifies potential efficiency opportunities available that could reduce fossil 

fuel emissions by the year 2020 by more than 10 percent, while 

saving the economy $700 billion. Let me repeat that. While saving 

the economy $700 billion. 

As we work to improve this efficiency, we should also work to enhance our renewable resources. A recent DOE report concluded 

that with major national commitment to clean energy, wind could 

provide 20 percent of electricity by 2030. Our solar resources are 

also extraordinary. 

The challenge we face is to harness these resources and grow our 

economy in the 21st century. Renewable energy presents a once in 

a generation business opportunity. 

Now, as we accelerate this new industrial revolution, coal will remain an important part of our energy mix. We should also make 

full use of this domestic asset, but do so in ways that allow us to 

meet our energy needs, minimize environmental impacts, contribute to national security, and compete in global markets. Carbon 

capture and storage technologies offer an important path to achieving those multiple goals. 

Today, nuclear power provides 20 percent of our electricity and 

70 percent of our carbon-free electricity. The Obama administration 

is committed to restarting the domestic nuclear power industry. It 

is working on $18.5 billion in loan guarantees for nuclear power 

plants. A cap-and-trade mechanism as part of comprehensive legislation provides important advantages for nuclear power in the competition against other energy sources that emit greenhouse gases. 

Natural gas is another fuel with great potential to aid the transition to a clean energy economy. In the past several years, due to 

technological advances, our recoverable reserves of natural gas 

have more than doubled in this country. 

Now, last month the House passed historic comprehensive clean 

energy legislation. The Obama administration strongly supported 

House passage of the bill, which would help position the United 

States as a global leader in clean energy. Your chamber now holds 

the pen, and the Administration looks forward to working with you 

to swiftly enact strong legislation that will reward efficiency and 

clean energy innovation. Working together, we can enact legislation 

that ensures economic recovery, creating millions of good new jobs, 

while laying the foundation for a clean energy future. 

I ask that my entire statement be put in the record and thank 

you, Madam Chairman, for the opportunity to participate in this 

hearing. 

[The prepared statement of Mr. Sandalow follows:] 
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Senator BOXER. Thank you so very much. 

Next we will hear from Hon. Thomas Strickland, Assistant Secretary for Fish, Wildlife, and Parks, U.S. Department of Interior, 

speaking on behalf of Interior Secretary Ken Salazar. 

STATEMENT OF HON. TOM STRICKLAND, ASSISTANT SECRETARY FOR FISH, WILDLIFE, AND PARKS, U.S. DEPARTMENT OF THE INTERIOR 

Mr. STRICKLAND. Thank you, Chairman Boxer, Ranking Member 

Inhofe, and members of the committee. On behalf of Secretary 

Salazar, I am pleased to be here to speak about the work underway 

at the Department of Interior to transform our energy economy to 

one based on clean and renewable natural resources. I thank you, 

and the Secretary does, for your leadership on this important issue. 

We are entering a new day for energy production and use in the 

United States, a time of increased renewable energy from domestic 

sources and more efficient use of energy from all sources. Together, 

these are the foundation of a clean energy era that will improve the 

environment and create jobs. As President Obama has said, there 

is a choice before us: we can remain the world’s leading importer 

of oil or we can become the world’s leading exporter of clean energy. 

The Department of Interior has the responsibility of managing 

approximately 20 percent of America. These lands not only contain 

some of our most treasured landscapes and historic sites, but also 

some of our most productive energy areas. 

Up until recently, the focus of this energy production has been 

on conventional energy resources, including oil, gas, and coal. To be 

sure, the continued development of these resources is essential to 

our energy security. But we also have enormous potential for renewable energy development on our public lands. And under the 

leadership of President Obama and Secretary Salazar, we are aggressively pursuing these opportunities. 

We have prioritized the development of renewable energy on our 

public lands and the OCS. Bureau of Land Management has identified over 20 million acres of public land with wind energy potential 

in 11 western States and over 29 million acres with solar energy 

potential in 6 southwestern States. There are also over 140 million 

acres of public land in western States and Alaska which yield thermal resource potential as well as significant biomass potential on 

Federal lands. 

These public lands have the potential to produce a total of 2.9 

million megawatts of solar, enough to power eight times the total 

number of U.S. households, 206,000 megawatts of wind, enough to 

power 62 million homes; and 39,000 megawatts of geothermal energy. There is also significant wind and wave potential on our offshore waters. The National Renewable Energy Lab, a Department 

of Energy national laboratory, has identified more than 1,000 

gigawatts of wind potential off the Atlantic coast and more than 

900 gigawatts of wind potential off the Pacific coast. 

The American business community is responding, as Mr. 

Sandalow indicated. On June 23, 2009, Department of Interior announced five limited leases to construct meteorological towers in 

support of offshore wind energy development off the coasts of New 
48 

Jersey and Delaware, the first of their kind ever offered by the 

Federal Government. Companies are also investing in solar facilities in the Southwest and wind and geothermal energy projects 

throughout the West. 

At the same time we are concentrating on the development of our 

renewable energies, we are also maintaining our production of oil 

and gas. Currently, the Outer Continental Shelf acreage produces 

15 percent of America’s domestic natural gas and 27 percent of our 

oil. 

In sum, we have abundant clean renewable energy resources on 

public lands and off our coasts, which taken together will provide 

a substantial portion of our energy portfolio by 2020 and beyond. 

Renewables are not the only way to reduce our carbon emissions. 

We can store carbon both in the ground and in plants, and the Department is actively pursuing the work necessary to make that 

technology a reality through geologic carbon sequestration and biological carbon sequestration. Under congressional leadership in the 

2007 Energy Policy Act, the Department is developing the methodologies and standards to accompany these efforts on a commercial scale. 

The BLM is working with the Department of Energy on regional 

partnerships that promote carbon sequestration demonstration 

projects and promoting these efforts on public lands. The BLM is 

currently active in two demonstration projects, a deep saline sequestration project in Farmington, Utah, and an enhanced coal bed 

methane project in New Mexico’s San Juan Basin. 

Saving America’s treasured landscapes through landscape scale 

conservation efforts will be one of the major contributors our public 

lands will make to the carbon reduction efforts. The carbon reduction potential produced by the biological sequestration of carbon 

plants and soils taking up and storing carbon in many ecosystem 

types, including but not limited to forest, grasslands, and wetlands, 

has not yet been fully quantified but could be virtually endless. We 

have a number of demonstration projects, in fact, throughout the 

country focused on these particular efforts. 

The experience of our land managers in pursuing these projects 

is part of our broader ecosystem responsibilities, and that should 

be useful to the committee as you develop an offset program that 

credits verifiable carbon reductions that are associated with environmentally sound land management policies on private lands. 

In conclusion, Madam Chairman, a problem as complex as climate change takes the coordinated efforts of all the branches of the 

Federal Government, cooperation with States and localities, and 

collaboration with leaders from around the world. The Department 

of Interior is prepared to play a leading role in this effort. 

I would also like permission to have my written remarks added 

to the record. 

Senator BOXER. Without objection, we will. 

[The prepared statement of Mr. Strickland follows:] 
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Senator BOXER. Thank all of you. You know, when Senator 

Inhofe went through what happened since we changed the gavel 

here from Senator Inhofe to myself, he left out a couple of things 

that I wanted to make sure we looked at. One was the Supreme 

Court ruling that carbon is a pollutant covered by the Clean Air 

Act, and the subsequent action by the EPA, very important action, 

that built on the work of the Bush administration that we knew, 

through hearings, had been there, which is to take the first steps 

toward an endangerment finding. And under the Clean Air Act, we 

have got to protect our families from pollution. 

So here we are at a circumstance where the Supreme Court ruled 

that carbon is in fact covered by the Clean Air Act. The first steps 

to the endangerment finding have been made. 

The other thing that happened that Senator Inhofe didn’t mention is we did change Presidents. 

So now you have a circumstance where you have a court, the 

highest court in the land, saying once there is an endangerment 

finding, clearly, we have to act, and we have a President who believes that this is an economic opportunity. 

So my question to any of the three of you that would like to engage in it is this. One way or another, we are going to have to lessen the carbon in the atmosphere. It is either through the Clean Air 

Act or through some flexible legislation that we are all looking at. 

The House has passed a version of it which gives tremendous flexibility. 

Now, my colleagues on the other side, I think I wrote it down, 

one of them said, it is a tax and cap scheme. I don’t know of any 

taxes in it whatsoever and, as far as I know, there will be lots of 

tax credits in it to help our consumers. 

So my question is, one way or another, we are going to have to 

address carbon pollution. Do you feel the flexibility that we could 

put together in a well crafted bill would make it better for businesses and our consumers and create more jobs? 

Mr. SANDALOW. Without question, Madam Chairman. And I 

would just start by focusing on the energy efficiency opportunities 

that this country faces. Right now, American families and businesses are burdened with energy waste. It is like trying to run a 

race with an iron ball chained to your foot. There is so much that 

we can do as a Nation to improve our competitiveness simply by 

using energy more efficiently. The study that several of us have referred to says that we can save $700 billion a year in the next decade. That is not a small amount of money. 

I was talking recently to a glass manufacturer who described to 

me how his company has made glass that would save lots of energy, but he can’t move it because of the structure of the real estate 

markets. He can’t sell this glass, which costs a little bit more, because contractors have an incentive only to put in low bids. So that 

is the type of problem that we need to overcome with things like 

codes that are in the bill that came out of the House in order to 

solve this problem of all the energy waste in our country. 

Senator BOXER. Anybody else wish to comment? 

Mr. WELLINGHOFF. Madam Chairman, I would add to that. I 

think one of the most important things about cap-and-trade is, in 

fact mechanism, and I think we need to move to market mecha-
56 

nisms to solve our problems, but to do that we need to ensure that 

those markets are structured correctly. So I think that that is what 

we are attempting to do, is correctly structure the market in ways 

that we internalize the externalities to ensure that the market will 

make the right selections. 

Mr. STRICKLAND. And I would just add, Madam Chairman, that, 

as part of the whole calculus to make all this work, we need to 

have adequate sources of renewable energy, and we believe we 

have that now in a variety of areas. Again, in the public lands, we 

have a huge backlog of applications for solar projects. We used 

some of the Recovery Act money to establish four offices through 

the Southwest to accelerate the process of these solar applications 

and enable Secretary Salazar to put forth regs for the development 

of wind on the Outer Continental Shelf, which is a huge potential 

resource. 

Senator BOXER. OK. I also wanted to point out that, under the 

analysis of the House bill, it is projected that 161 new 1,000-megawatt nuclear power plants would result from that bill as a result 

of putting a price on carbon there through the market. Senator Alexander urges the building of 100 new nuclear power plants, and 

we believe that would cost ratepayers $70 billion a year. So I believe that anyone who is very fervently for nuclear power should 

be for this type of global warming legislation, because it will spur 

more nuclear power and ratepayers will be assisted through tax 

credits. 

So I am confused as to why some of the proponents of nuclear 

power are missing this point, and I guess I would like to ask Mr. 

Wellinghoff if he has seen that analysis, because you get more nuclear power plants, it costs the ratepayers far less, and most of the 

nuclear power companies I know are supporting this legislation. 

Mr. WELLINGHOFF. Yes, Madam Chairman. I haven’t seen that 

specific analysis, although I think I have seen some reports of it. 

And, again, I think it comes back to market mechanisms. To the 

extent that you make fossil fuel generation more expensive and nuclear power less expensive, then ultimately it is going to drive 

those technologies into the market. 

Senator BOXER. Thank you. 

Senator Inhofe. 

Senator INHOFE. Thank you, Madam Chairman. 

First, before I start out, I have some unanimous consent requests 

to make. Last week, you inserted in the record a statement refuting the study by the Spanish Professor Alvarez on the green job 

study, and I would like to insert into the record that study and also 

his response to your statements about that. 

Senator BOXER. Sure. And we will put ours back in there as well 

so they can be side-by-side. 

Senator INHOFE. And then we will put one in, too. 

Senator BOXER. Yes. 

[The referenced document follows:] 
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Senator INHOFE. Also, since you made the statement it is not a 

tax, I would like to insert into the record the statement by the 

Chairman of the Finance Committee and a member of this Committee, Senator Baucus, who says it is a tax measure, it is a tax 

bill, and the House bill referred to the Committee will be automatically referred to the Finance Committee as a tax bill into the 

record. 

Senator BOXER. Sure. There are tax credits in it, yes, Senator. Go 

ahead. 

Senator INHOFE. OK. 

[The referenced statement was not received at time of print.] 

Senator BOXER. We are going to start this clock regardless of who 

puts what in the record. I took it out of my time, so go right ahead. 

Senator INHOFE. Let me just ask the three of you. One of the consistent things that we keep coming up with, it goes all the way 

back to when Vice President Gore had Tom Wigley ask him the 

question, he said that if we were to pass the Kyoto Treaty, and for 

our discussion purposes, the Kyoto and all the bills that were offered in 2003, 2005, and 2008 are essentially cap-and-trade bills. 

Wigley came out with the response that what would happen if all 

developed nations would live by the emission requirements of 

Kyoto. He said it would reduce the temperature by not more than 

seven one-hundredths of one degree Celsius. Then we had, just the 

other day, Chip Knappenberger, an environmental scientist in the 

New Hope Environmental Services, came out with the same thing. 

He came out with it would reduce it by one-tenth of one degree. 

Then Lisa Jackson said it wouldn’t reduce it at all. 

So I want to ask each panel member do you think, if we were 

to pass the Markey bill as it is today, that it would have the effect 

of reducing the CO2 worldwide? Real quickly. 

Mr. SANDALOW. I do, Senator Inhofe. I think the analyses you are 

citing assume that America won’t lead and that America won’t innovate. As I travel around the world, what I hear is the rest of the 

world is waiting for the United States to take strong steps and 

eager to follow American leadership in this area, and so many others. And I also believe in American entrepreneurial spirit and our 

ability, once entrepreneurs get strong signals from this city, to 

move forward. 

Senator INHOFE. We are running out of time here. 

I think that this is an honest difference of opinion because we 

have all the statements from people, from the officials in India and 

China and elsewhere, that say, no, we are not going to do it. But 

again, anyone else want to respond to that question? 

Secretary Strickland, do you think it is going to reduce the overall CO2 if we pass this thing? 

Mr. STRICKLAND. I am not a scientist, Senator, as you know, and 

I don’t have the scientific background to be able to offer my own 

independent judgment. I support the position of the Administration 

with respect to the goals of that. 

Senator INHOFE. We have heard, time and time again, that 

America possesses just 3 percent of the world’s oil reserves and 

that we use 25 percent of the world’s oil. Yet, that 3 percent number refers only to the Nation’s 21 billion barrels of proven reserves. 

Now, to prove reserves, you have to drill, and if you can’t drill, then 
64 

you can’t prove the reserves. Eighty-three percent of America’s Federal onshore lands are either inaccessible or restricted due to our 

policies here. Eighty-five percent of the offshore continental United 

States is still off limits. 

Now, a more honest assessment combines our 21 billion of proven 

reserves—Senator Barrasso talked about this—with the MMS, the 

BLM, the USGS estimates of undiscovered technically recoverable 

oil resources. That shows American oil resources equal to 149 billion barrels of oil, or 7 times the number cited by the Democrats, 

and those are conservative Government estimates. 

And he would say don’t forget coal that is methane hydrates and 

oil shale. The Rand Corporation estimates up to 1.1 trillion recoverable barrels of oil from oil shale in the Green River formation, Colorado, Utah, Wyoming. To put that into perspective, 1.1 trillion 

barrels equals more than 2,000 years’ worth of imports from Saudi 

Arabia. 

So I think it is clear that we have these resources, and I would 

say this. In the statement that you made saying there are two alternatives—this is your statement, Secretary Strickland—you said 

either we can remain the world’s leading importer of oil or we can 

become the world’s leading exporter of oil. I think there should be 

a third one, and that is develop our own resources. We are the only 

country in the world that doesn’t develop our own resources. 

I guess the question I would have is do you agree with these 

analyses? Do you think we ought to develop our own resources? 

Let’s start with you, Secretary Strickland. 

Mr. STRICKLAND. It is the position of the Administration—and 

Secretary Salazar supports this position, as do I—that we should 

actively and aggressively develop our conventional energy resources. And since this new Administration came into office, January 21, our first day at Department of Interior, we have offered just 

under 2,000 parcels for lease, 2.3 million acres. There were bids 

brought in on 845,000 acres. 

I accompanied Secretary Salazar to New Orleans for one of the 

OCS bids in the spring. We have another bid coming up in August 

with respect to additional offshore lands. We are actively looking 

at the whole OCS in its entirety. We believe there is substantial 

opportunity to continue to develop conventional oil and gas. We believe we need a balance. We also think there has been an undervalued and underdeveloped alternative in renewable resource on 

our public lands up to this point, so we are moving quickly to try 

and bring some balance, but that is not at the expense of our conventional commitment. We agree there are additional opportunities. 

Senator INHOFE. Secretary Strickland, I really appreciate that response. In fact, I agree with your response. It is an all of the above 

response and I appreciate it. Thank you very much. 

Thank you, Madam Chair. 

Senator BOXER. Thank you, Senator. 

Senator Lautenberg. 

Senator LAUTENBERG. I want to ask a question in response to the 

requests we hear for further development of our own resources. 

Mr. Sandalow, if we develop more of our oil and energy resources 

as they are defined today, do we help global warming be reduced? 
65 

Mr. SANDALOW. The most important steps we can take to fight 

global warming, Senator, are to improve energy efficiency, to innovate with new renewable energy sources, to bring in low carbon 

sources. Developing our own fossil resources in an environmentally 

responsible manner in a comprehensive way is important for 

achieving a number of objectives, but the most important thing we 

can do to fight global warming in the short term are energy efficiency and then renewable energy investments. 

Senator LAUTENBERG. Energy efficiency. So, therefore, as we contemplate touching the abundance of oil and gas in our country, we 

therefore do not automatically control the growth of global warming. And I think we ought to stop going through this charade and 

step up to the plate and say, look, perhaps we can find some more 

oil, and we want to reduce our cost for living, etcetera, et cetera, 

but I would ask you this. 

Leading scientists say that the United States must cap emissions 

by at least 20 percent by 2025, and this study that I talked about 

before showed that we can reduce our energy use by 23 percent by 

2020 at little or no cost, using energy efficiency. How crucial is it 

to our long-term objective of reducing carbon emissions in our 

world that we get on the glide slope of at least 20 percent by the 

year 2020? 

I would ask you, Mr. Sandalow. 

Mr. SANDALOW. In my view, Senator, it is very important to get 

started. It is important to get started and take the steps needed 

to send the right incentives to businesses and families around this 

Nation. There are such huge opportunities here, and what we just 

need is a consistent and clear policy structure. 

Senator LAUTENBERG. Mr. Wellinghoff. 

Mr. WELLINGHOFF. I would agree, and I agree with the statements of Secretary Sandalow. It is absolutely essential that we 

start on this, and energy efficiency really is the key, because it is 

the lowest cost resource that we have available in this country, and 

that is why it is important to move this into markets and to allow 

buy a market mechanism like cap-and-trade to have things like energy efficiency rise to the top of our energy resource stack. 

Senator LAUTENBERG. The International Energy Agency says 

that achieving science-based emissions reductions will require an 

annual global investment—annual global—of $400 billion a year on 

energy research and development. The GAO estimates that the 

U.S. Government spends just $1.4 billion per year on energy R&D. 

How much should our Government be investing in research and development to meet our share of this reduction goal? 

Mr. SANDALOW. Thank you for the question, Senator. Our country, in the past several decades, has under-invested in energy research, and under-invested very dramatically. This is one of Secretary Chu’s top priorities at the Energy Department, is to increase 

our investment in this area in clean energy R&D, in bringing the 

best minds in this country into clean energy research. If we do 

that, we can solve these problems. 

Senator LAUTENBERG. Mr. Wellinghoff. 

Mr. WELLINGHOFF. Well, in addition to research, we really need 

to do development deployment, and that is really what we are 

doing at FERC, is trying to develop and deploy the things that we 
66 

need to do to get these strategies in place, such as renewables and 

energy efficiency. So both are important, R&D and D&D are important as well. 

Senator LAUTENBERG. But we are talking about sums of money 

to be invested. Do you agree that we have been far short of what 

we have to do to—— 

Mr. WELLINGHOFF. Yes, absolutely. 

Senator LAUTENBERG. So one of the things that we have established, Madam Chairman, is that at least we are discussing global 

warming like it is real, and not just somebody’s fictional view of 

what is happening in our world. Thank you. 

Senator BOXER. Thank you, Senator Lautenberg. 

Senator Alexander is next. 

Senator ALEXANDER. Thanks, Madam Chairman. 

The Chairman mentioned the relative cost of nuclear and wind. 

The National Academies made a very interesting report this week 

on our energy future. They said that the relative cost of building 

a comparable amount of nuclear and wind would be about the 

same. You would have to build 180,000 wind turbines to equal 100 

new reactors, and that wouldn’t include the cost of transmission, 

which must be hundreds of new transmission towers, or maybe 

thousands, for the wind turbines, and it doesn’t include the cost of 

backup power, since, after you build the wind turbines, you still 

have to have nuclear, coal, or something else for when the wind 

doesn’t blow. 

The Senator from Rhode Island mentioned the hand of Government subsidizing dirty energy. That is not true in terms of electricity. The biggest subsidies by far go to wind, which is 19 times 

per kilowatt hour times the subsidy for nuclear, much more for coal 

per kilowatt hour, and 30 times even all other renewables. 

Mr. Strickland, your Department is sort of the custodian of our 

national landscape, and we are celebrating 100 years of protecting 

it. What are you going to do about 180,000 new wind turbines that 

are 50 stories tall, many of them in the West, and thousands of 

miles of transmission lines? And the solar thermal plants that are 

being built—well, to equal one nuclear plant, it would take a solar 

power plant 30 square miles; that is 5 miles on each side. And they 

tell us in the Southeast to use biomass, and I figured that we 

would have to continuously forest and area the size of the Great 

Smoky Mountains to equal one nuclear reactor, and we would have 

hundreds of trucks roaring in and out every day carrying the stuff. 

Some conservationists are talking about a renewable energy 

sprawl. Are you developing any policies to deal with that? 

Mr. STRICKLAND. Senator, we are. Right now, the BLM is looking 

at solar and involved in a programmatic EIS to look at just that 

very point that you make. Rather than just let this develop haphazardly with individual projects that come in, let’s look at where 

they are best located that takes into account some of these environmental issues as well as transportation issues. We are looking at 

transportation corridors in the same way we are working with local 

and State governments out in the West. We are working closely 

with the Western Governors’ Association. So the idea is to try and 

take into account the very points you make. 
67 

The environmental considerations, I am responsible for a big part 

of the enforcement of the Endangered Species Act. There are real 

issues that we will process and work through. 

Senator ALEXANDER. Well, we wouldn’t want to destroy the environment in the name of saving the environment. 

Mr. Sandalow, did I remember right—I hope I did—that you 

wrote or told me one time that you thought that, with a concerted 

effort over 20 years, we might be able to electrify half our cars and 

trucks without building a new power plant? 

Mr. SANDALOW. That is correct, Senator. 

Senator ALEXANDER. I am hopeful—— 

Mr. SANDALOW. I just wanted to add I am congratulating you for 

all your work on this topic. I know you bought the first plug-in vehicle in the Washington, DC, area, and I want to congratulate you 

on that. 

Senator ALEXANDER. Well, thank you for that. Did I remember 

right, also, did you ever make a computation about how much that 

might reduce our reliance on foreign oil? 

Mr. SANDALOW. It can dramatically reduce our reliance on oil, 

Senator, yes. I don’t have the numbers at the tip of my tongue, but 

it is quite significant. 

Senator ALEXANDER. You are dealing with policy over there, and 

I have already congratulated Secretary Chu for his interest in nuclear power, but what I am struggling with is why do we have a 

renewable energy standard? Why don’t we have a clean energy 

standard? The hearing is not about renewable energy, it is not 

about a national windmill policy; it is about clean energy. So why 

are we picking and choosing and subsidizing—why do we have a 

mandate? The Chairman said that we are going to build a lot of 

nuclear plants, but we don’t have a mandate to do that. We have 

mandates in effect, and we are proposing more, that basically require Tennesseans and people in the Southeast to buy wind from 

South Dakota, which makes no sense, or to force us to put 50-story 

wind turbines on our ridge tops, which are our most treasured and 

sacred places. We don’t want to see them. When the wind doesn’t 

blow, it doesn’t make any sense. 

So why don’t we have a clean energy standard or why don’t we 

have a base-load clean energy standard and a renewable energy 

standard? Wouldn’t that produce a lot more pollution-free, carbonfree electricity more rapidly? 

Mr. SANDALOW. Well, Senator, the bill that was passed out of the 

House contains a very powerful mechanism for doing roughly what 

you are describing—— 

Senator ALEXANDER. But it excludes nuclear power. 

Mr. SANDALOW. Well, it includes a cap-and-trade mechanism, 

and the cap-and-trade mechanism—— 

Senator ALEXANDER. I am asking you about a mandate. We have 

a mandate for wind and solar, really, mainly wind is the practical 

effect. Why not do the same for base-load power? 

Mr. SANDALOW. I guess, Senator, the bill, as a whole, accomplishes the objectives that you are promoting here. That is the 

point that Senator Boxer has already made. 

Senator ALEXANDER. So we don’t need the renewable mandate, 

then. 
68 

Mr. SANDALOW. I think it is a helpful part of the overall mix. 

And Senator, I think there is going to be discussion in this chamber, and all ideas should be brought forward on this. 

Senator ALEXANDER. Thank you, Madam Chairman. 

Senator BOXER. Thank you, Senator. 

Now, let me see my list here. Senator Merkley is next. 

Senator MERKLEY. Thank you very much, Madam Chair. 

Thank you for your testimony. As I hear the discussion about 

what we can achieve through increased energy efficiency and the 

amount of renewable energy that can be produced—and often it is 

couched in the time line of 2030. I think some of the statistics that 

were mentioned, Mr. Wellinghoff, I believe you said we can produce 

hundreds of gigawatts of renewable energy by 2030; Mr. Sandalow, 

I believe you said that wind could do 20 percent of our energy demand by 2030. Isn’t it possible to take these factors and weave 

them into a coherent strategy to eliminate our dependence on foreign oil? 

Mr. WELLINGHOFF. Senator, yes, I believe it is, and I think part 

of it is what the dialogue between Secretary Sandalow and Senator 

Alexander, with respect to moving toward electrification of our 

transportation system; that really is the key. If we want to move 

off of foreign oil, we have to electrify that transportation system 

and ensure that we have the clean, reliable electric energy to provide that energy for the transportation system. But I think it is 

very doable, yes. 

Mr. SANDALOW. I would strongly agree with Chairman 

Wellinghoff and just highlight the announcements made yesterday. 

More than $2.4 billion of grants under the Recovery Act to promote 

exactly this. I think it has the potential to be transformational in 

terms of our country’s reliance on oil. This is the future. 

Senator MERKLEY. Mr. Strickland, do you want to add to that? 

Mr. STRICKLAND. No, I totally agree with that, and I think that 

heretofore, just within the Department of Interior, there had not 

been active efforts to look at our public lands, inventory them, put 

a regulatory framework in place to accelerate permitting so that we 

could actually access and develop those renewable resources that 

are there, as well as the transmission piece, which Chairman 

Wellinghoff was speaking to. We need to get these pieces in place, 

the basic infrastructure, to help facilitate the development of our 

renewable resources, which are just there. 

Senator MERKLEY. So I think I just heard three yeses to the 

question of could these be woven together, energy efficiency and renewable energy, to eliminate our dependence on foreign oil. I think 

it would be really helpful to have the Administration lay out just 

such a more detailed strategy, because it is a huge challenge to this 

country to be dependent upon a few nations for foreign oil. It is a 

huge cost to be spending $2 billion a day on foreign oil, and we 

could create a lot of jobs by spending that money here in the 

United States. 

And then we really have a vision that we could lay out to the 

American people of a triple win, triple win on national security, on 

creating jobs here, and a triple win, the third being reducing the 

carbon dioxide in our atmosphere and good stewardship of our 

planet, leadership and stewardship of our planet. 
69 

So I just want to encourage you all to work to try to present that. 

The year 2030 is well into the future, but maybe when the numbers are crunched and we see what could be produced by all the 

investments being made, it could be done in a much shorter period. 

I wanted to specifically pursue the comments about the electrification of our passenger transportation, and I applaud Senator 

Alexander for his work in this area. I have heard statistics along 

the lines that if we were to have all of our cars produced in the 

near future able to go 30 miles on simply electricity, and have 

braking systems, regenerative braking systems to recapture the energy loss when you slow down a very heavy vehicle, that we could 

reduce by 80 percent the carbon dioxide generated by car transportation. 

Are these numbers in the right area, or do you have better numbers? And would it be feasible to have an aggressive strategy in 

which we basically say, at some date in the future, indeed, every 

new car produced in America will have to go 30 miles on electricity, 

have regenerative braking, and attempt to really drive the huge 

savings in fuel, which contributes to the national security issue, 

and in the reduction of carbon dioxide? 

Mr. SANDALOW. There is no question that the savings can be very 

substantial, Senator Merkley. That is for two reasons. First, electric motors are much, much more efficient than standard internal 

combustion engines; and second, they allow us to tap in to low carbon energy sources such as wind or solar or nuclear. So the carbon 

emissions from a fleet that is electrified is going to be much less. 

You mentioned 2030. Around that time, maybe I will be a grandfather, and I think someday my grand-kids are going to look at my 

kids and say, what, you mean you didn’t plug in cars when you 

were young? I think they are going to think that is as odd as not 

having cell phones today. 

Senator MERKLEY. Any other comments or thought about that effort? 

Mr. WELLINGHOFF. Yes, Senator Merkley. I think your numbers 

are correct. 

There are actually two very good studies that have been done on 

this issue, one by the Pacific Northwest National Labs and another 

by EPRI and the NRDC jointly that looked at what the carbon reductions would be both for automobiles and then what the overall 

carbon reductions would be if we moved to an electric transportation system. So definitely there would be very large reductions in 

carbon, and it has been shown that it is all feasible utilizing electricity to move that direction. 

Senator MERKLEY. Thank you all very much. 

Senator BOXER. Thank you. 

Senator Barrasso. 

Senator BARRASSO. Thank you, Madam Chairman. I would like 

to defer to Senator Voinovich. 

Senator BOXER. Senator Voinovich. 

Senator VOINOVICH. Thank you, Senator Barrasso. 

I introduced a bill with Byron Dorgan called NESA, the National 

Energy Security Act, and one of the reasons I did that is because 

of the fact that I have been concerned for a long time that we 

haven’t harmonized our energy, our economy, our environment, and 
70 

our national security; and if the public knew how vulnerable we 

were today in terms of oil, they would be shaking in their boots. 

It seems to me that today over 60 percent of our oil is coming 

from overseas, and about 60 percent of that is coming from the 

OPEC nations. We send about 240 billion to 300 billion overseas 

to countries that produce this oil. We have no idea of the environmental impact that that is having. 

So I thought to myself on many occasions what we should be 

doing as a Nation, from a public policy, security, energy, and so 

forth, is that we should take advantage of all of the natural resources that we have, Mr. Strickland; and I talked with former 

Senator Salazar about this, in terms of our own oil. 

At the same time, we should be as aggressive as anyplace in the 

world to find a way that we use less oil so that perhaps, in a dozen 

years, we would be out there as the country that is least reliant 

on foreign sources of oil and the country that uses oil the least. 

Then we would be, I think, in terms of competitiveness, right up 

there where we should be. 

So I am glad to know that you are moving forward, and I wish 

the President, when he talks about the issue of becoming oil independent, should talk about the fact that not only are we going to 

use less, but we are going to go after those areas where we can responsively find oil. And I would like you to look at that bill. It is 

sponsored by many generals, admirals who are concerned; it talks 

about finding more, using less; it talks about 2050, that 85 percent 

of our vehicles would be electrified; it talks about the fact, Mr. 

Wellinghoff, that we need the grid. And EPRI says that we are 

going to need $165 billion to do the grid, and we need the grid not 

only for wind and solar, but we need it for the rest of the energy 

that we produce here in the country. 

The other thing that I want to comment on is the issue of—in 

your testimony, you talked about a major reason why low carbon 

renewable resources and energy efficiency are not used more extensively, that the cost of greenhouse gas emission is not reflected in 

the price of energy. To summarize your approach, if we simply tax 

energy more so it costs more and never build another coal or nuclear plant, then people would use less and switch to less reliable 

sources. 

Now, that is something that I have a hard time understanding. 

I think you once said that we didn’t have to build. If we did solar 

and wind, we wouldn’t have to have nuclear or we wouldn’t have 

to have coal, or we might not have to have gas. And it just defies 

logic, and I would be interested, Mr. Sandalow, in your comment 

on this. We get 50 percent of coal, 20 percent gas, 20 percent nuclear, and the rest of it is renewable somewhere, as I mentioned 

in my earlier remarks. Eight-tenths of 1 percent solar, 1.4. I have 

talked to the best experts in the world, and they said that you have 

to do all of that. But if you think that some day down the road we 

are going to take care of our energy needs with solar and with 

wind is just plain naive. What is your reaction to that? How can 

you say something like that when the facts are different? 

Mr. WELLINGHOFF. Senator Voinovich, that is not exactly what I 

said. What I said was, depending upon our ability to look at a number of scenarios with respect to the market and how the market 
71 

will operate, it may be possible to bridge to a low carbon energy 

future utilizing a combination of our renewable resources, which 

would include solar, wind, geothermal, hydrokinetics, biomass, and 

energy efficiency and demand response and natural gas. 

If you look at that in combination, I think everyone would agree, 

every expert I have seen and talked to would agree that it is feasible, depending upon how we structure our markets. 

Senator VOINOVICH. Fifty years from now, 100 years from now? 

I mean, let’s get serious. 

Mr. WELLINGHOFF. Certainly a transition, there is no question 

about it. But we need to look at things like natural gas, for example. In this country, we have probably over 100 years’ worth of natural gas. Secretary Sandalow indicated that we have now revised 

our coal figures. There is probably 100 years or less of coal. If we 

look at the two and compare them, natural gas, when you burn it, 

puts out half the carbon that coal does. From that perspective, ultimately, it would seem to me to make more sense to emphasize a 

bridge with natural gas, combined with energy efficiency and renewable resources, than it would to a bridge with carbon-intensive 

coal. So from that standpoint—— 

Mr. VOINOVICH. I am out of time, but I want to make one point, 

OK? You are talking about natural gas. We encouraged our electricity to go to natural gas. Our gas prices went up to the top. We 

lost millions of jobs in this country because of the high natural gas 

cost. I had people in my office, Bayer manufacturers move jobs 

from the U.S. because of our high natural gas cost. When we did 

that policy, we didn’t pay attention to the impact it had on our 

economy. So all these things relate to each other. You can’t do this 

thing in a cocoon. 

Mr. WELLINGHOFF. And I am not suggesting that we do. Our natural gas supply resource base has been increased by more than 50 

percent in the last 3 years. We found vast amounts of new natural 

gas that we never knew existed before. We need to look at that, 

consider that as how it can fit in to the bridge of getting into a low 

carbon society. 

Senator BOXER. Thank you very much, Senator Voinovich. 

Senator Cardin. 

Senator CARDIN. Again, thank you, Madam Chair. 

I want to thank the witnesses for their testimony. 

I think we all agree with Senator Voinovich that there is not one 

source that is going to solve our problems for energy in America, 

that we have to look at all the different sources. But I would point 

out I think it is naive not to look at renewables and doing a better 

job with renewables in trying to reach our goal of energy security, 

of having energy reliable sources for our economy and leading on 

global climate change and reducing our carbon footprint. 

Several of you have mentioned what is happening in other countries. Secretary Sandalow, you specifically mentioned that. I guess 

my concern is whether America is going to wake up one day and 

find the innovations that we came up with, that were developed 

here in America, perhaps even with Government support, are all 

of a sudden being used in other countries and literally purchased 

by other countries, making us once again dependent upon energy 

developed in other parts of the world for our own energy needs. 
72 

I will give you just one example. We are developing in Baltimore 

algae-based ethanol. It has promise. If it works, it could be a tremendous source of energy, and its carbon footprint is negative. 

That is a new technology. There are going to be companies that are 

going to move ahead on it, whether they are here in America or in 

another country. 

I worry that we may not be doing enough to keep this technology 

here in America with the jobs for the use of that technology based 

in America, rather than based in another country. A lot of this is 

going to be very fungible, and we are going to be able to import 

energy. I don’t want to import energy; I want to have the energy 

produced right here in America. 

I do applaud, again, the American Recovery and Reinvestment 

Act, the stimulus package. We wanted that to have a major impact 

on this issue, and what the Department of Energy did yesterday 

was a major step forward on electric cars and batteries. But I do 

worry that we may be missing the opportunity for allowing our 

markets to develop the jobs here in America. 

Your response? 

Mr. SANDALOW. Senator Cardin, in my view, your concern is very 

well founded and borne out by some of our recent history. The technology behind the photovoltaic cell was developed here in Bell 

Labs, and now other countries have the lead in manufacturing that 

technology. The technology behind the Prius battery was developed 

with U.S. Government support and is now mainly commercialized 

elsewhere. We need strong policies in order to make sure that we 

develop the technologies of the future here and that we keep them 

here. 

Programs like the one announced yesterday, programs like the 

bill that was passed out of the House are absolutely essential to 

making sure that the United States leads the clean energy revolution. 

Senator CARDIN. I think Americans would be surprised to learn 

that the Prius technology was developed in America. I hear from 

my neighbors all the time about the Prius. Well, we helped develop 

it. The problem is we didn’t keep the technology here; we let it 

slide. Now we are getting back to it. We are getting back to it. I 

think we are taking the right steps right now. But I just hope we 

have the staying power in order to accomplish the goal that all of 

us wants to see, America being energy independent in an environmentally friendly way. 

Secretary Strickland, I want to get you on the management of 

public lands for one moment. Public lands are critically important 

for energy production in America. Can you just tell us where we 

are as far as the use of public lands for renewable energies and 

where you see us as far as I hope changing that equation, using 

more of our public lands for renewables? 

Mr. STRICKLAND. Senator Cardin, I think we are in our very 

early stages in terms of using public lands in terms of the potential 

for renewable energy. It was just this spring that regulations were, 

for the first time, put in place to provide for the development of offshore wind in the Outer Continental Shelf. Now, there was one 

project, at least, the Cape Wind project, that had gone forward 

with kind of some interim regs. At least the application for that 
73 

project had gone forward. So we are very much in our infancy, but 

we are very much moving quickly to put the infrastructure in 

place. 

With respect to solar, much the same. We have limited proposals 

for solar up until recently. Now we have a huge backlog of private 

sector interest in developing solar on our public lands. As I mentioned a few moments ago, we used some of our Recovery Act dollars to the Department to put four offices in place throughout the 

Southwest to help deal with that backlog so we can get these 

projects through the permitting system, and those that meet the 

standards for environmental review and otherwise make sense and 

can attract the capital will come online. 

So we are early on in this effort, but there is huge potential. 

Senator CARDIN. Madam Chair, I just want to urge the committee—I think it would be good for our committee to have information as to the amount of public lands that are being devoted to 

renewable versus traditional mineral extractions. I would urge you 

to ask for that information. 

Senator BOXER. Senator, I would be glad to organize a committee 

letter, and whoever would like to sign it, we will make it an official 

request. 

Senator Barrasso. 

Senator BARRASSO. Thank you very much, Madam Chairman. 

Mr. Wellinghoff, you said in April that there is no need to build 

new coal or nuclear power plants in the United States. You also 

said the renewables like wind, solar, and biomass will provide 

enough energy to meet base-load capacity and future energy demands. You later said that base-load capacity is going to become 

an anachronism. Ten Senators sent a letter to the President in response to your comments. We were troubled that the Nation’s top 

power industry regulator would make what I believe were reckless 

and unrealistic comments. 

I am going to ask, Madam Chairman, that that letter be submitted as part of the record. 

[The referenced letter was not received at time of print.] 

Senator BARRASSO. Secretary Salazar recently testified before the 

Energy Committee, and you talk about Senator Cardin’s questions 

about the amount of public land being used for renewables. Secretary Salazar testified that 138,000 acres of land—138,000 acres 

of land—would be needed to build a wind farm with the capacity 

to replace one coal-fired power plant. Well, that is roughly three 

and a half times the size of Washington, DC. 

But there are hundreds of coal-fired power plants in the United 

States, and I guess the question comes down to are we willing to 

set aside an area three and a half times the size of the District of 

Columbia for a wind farm to replace each one of these coal-fired 

power plants. 

How do you do the math on that? 

Mr. WELLINGHOFF. First of all, Senator Barrasso, I did respond 

to a question by Senator Voinovich which was very similar to your 

question, that initially I would like to clarify. I did not say that we 

would not need those types of facilities, either coal or nuclear. 

What I did say was that, in fact, under appropriate market scenarios, I believe it is possible to construct a combination of renew-
74 

able resources which would include not just wind but also geothermal. We are finding, for example, much more geothermal than 

we ever knew existed. There are literally hundreds of gigawatts of 

geothermal in geopressure wells in Texas that we did not know existed or had the technology to extract. We are finding literally hundreds of gigawatts of hydrokinetic resources available in our rivers 

and streams and offshore in the oceans and wave energy, as well 

as biomass and other renewables. 

But add to that the 23 percent energy efficiency that McKinsey 

talks about in their study. Add to that the 188 gigawatts of demand response that we found in our study. Combine that with our 

100 years of natural gas that we have in this country. There is a 

scenario, I believe, in a market construct that could be a least cost 

scenario for this country where we could in fact move to a lower 

carbon transition utilizing just those resources. That is what I said. 

So, in that context, I think there are challenges with wind and 

the land that it takes to put that wind up, but I think also Secretary Salazar said there are estimates of 800 to 1,000 gigawatts 

of wind off the Atlantic Coast. Again, we have plenty of land out 

there in the ocean to take care of the area that we need to ultimately develop that wind. So I think we do have the resources, and 

I think we do have the land area potentially to develop it if we look 

at all the resources and how they can be combined together. 

Senator BARRASSO. So in terms of Senator Cardin’s question 

about how much land is being used for the renewables onshore that 

he just asked for that number, you may want include some of those 

offshore issues as well. Thank you. 

Mr. Strickland, if I could, the President of the American Farm 

Bureau testified before this committee. When he was here, he said 

there would be winners and losers in the agriculture community 

based on Waxman-Markey. You are from the West, the Rocky 

Mountain West in Colorado. Western ranchers whose operations, 

you know, are heavily dependent on the use of Federal lands for 

livestock forage have very limited offset opportunities under this 

bill. 

The ranchers are constrained in the types of grazing practices 

that they can use on Federal land, and Federal lands themselves 

don’t really qualify for offset opportunities. So the majority of the 

West if Federal land; half of Wyoming, a great portion in Colorado. 

I am concerned about how the agriculture community in the intermountain West could possibly survive under Waxman-Markey, 

given what the President of the American Farm Bureau has had 

to say. 

Why is western agriculture put, to me, at a disadvantage, and do 

you have any solutions for your Department? 

Mr. STRICKLAND. Well, in terms of the issues that we deal with 

relative to access to public lands for agricultural purposes, we see 

that as a continued important value and critical to the economy of 

the West, so we don’t believe that that is at issue or at risk here. 

We also believe that there are outstanding opportunities for carbon 

sequestration, biological carbon sequestration that involves collaboration and cooperation with the agricultural community. 

In fact, Senator Inhofe, I know, has been a leading proponent of 

conservation partnerships, and just earlier this week, Senator 
75 

Inhofe, I was out in Montana and I met with a Montana rancher 

who has sold an easement to his ranch to keep it in agricultural 

production; yet, it helps facilitate very important wildlife values on 

the front range of the Rockies in Montana. So very clear examples 

of how we can partner between the public and private sector to advance environmental values, and I think there are opportunities 

along those lines to look at biologic sequestration and to work with 

the agricultural community so that those kinds of uses of the land 

are seen as part of the solution. 

Senator BARRASSO. Thank you. 

Thank you, Madam Chairman. 

Senator BOXER. Thank you, Senator Barrasso. 

Senator Whitehouse. 

And then we are going to move to our next panel. 

Senator WHITEHOUSE. Thank you very much. 

Secretary Strickland, first of all, thank you for your service as a 

United States attorney. We former U.S. attorneys need to stick together. Also, please pass our regards to our friend and colleague, 

Secretary Salazar. 

You just mentioned wildlife. I understand that the wildlife adaptation amendments that have accompanied previous Senate legislation in the climate change area are gathering broad bipartisan and 

multi-regional support. Is that your observation as well? 

Mr. STRICKLAND. It is, Senator. That is a very important role, 

frankly, we believe for the Department of Interior, obviously, Department of Agriculture with Forest Service lands as well. But the 

adaptation challenges and issues and responsibilities that we have 

with our public lands and more broadly to protect wildlife and to 

deal with the real world impacts of climate change impacts on land 

and species is extremely important, and I know you have shown 

great interest and leadership on this and we would like to work 

with you on this. 

Senator WHITEHOUSE. Very good. Thank you. 

Chairman Wellinghoff, years ago I practiced before the Federal 

Energy Regulatory Commission in an era when electric utilities 

were far more vertically integrated. Since then, we have seen them 

break out into transmission companies, transcos; generation companies, gencos; distribution companies, discos; and I would like 

your thoughts on whether we should be trying to incent the electric 

utility industry to move toward conservation companies as well, 

conscos, where their conservation efforts can become a profit center 

for them in ways that will offset the diminished sales that are associated with conservation. 

Mr. WELLINGHOFF. I think we absolutely should, Senator. In fact, 

the FERC is doing that at this point in time. We are incenting both 

distribution utilities and private third parties to become much 

more involved in both energy efficiency and demand response by 

incorporating into the wholesale organized markets in this country, 

the ITOs and the ISOs, tariffs that allow demand response and energy efficiency to be actually bid up into those wholesale markets. 

To the extent we can have those markets open and allow for the 

demand side, as well as the supply side, to participate in them, it 

will encourage both distribution utilities and third parties that will 

aggregate customers and reduce their loads and bid that into those 
76 

markets to reduce the overall costs and improve the efficiency of 

the markets. 

Senator WHITEHOUSE. That is a good price signal into the market 

under existing market structure. My question went more to whether we should try to—there have been efficiencies in the market 

that have been captured by the disaggregation into transmission, 

distribution, and generation. 

Mr. WELLINGHOFF. Right. 

Senator WHITEHOUSE. Should we also be thinking about pursing 

a similar disaggregation so that the conservation portion of a utilities portfolio actually has to be separate, and therefore more distinct and competitive and go beyond just a market signal into the 

existing market? 

Mr. WELLINGHOFF. I am sorry, I didn’t understand that part of 

it, but, yes, I believe we should. The more we can disaggregate and 

unbundle those services and make them more competitive, ultimately, I think the more players will get in, the more entrepreneurs will get in who will have more ideas of how to do it in 

a more robust way and will be able to drive down costs for consumers. Yes, I would agree. 

Senator WHITEHOUSE. Thank you. 

My last question is to Secretary Sandalow, and it relates to nuclear power. Over time, a lot of objection has manifested itself to 

nuclear power, primarily around safety. But the U.S. Navy and the 

European power agencies have demonstrated that nuclear power 

can be managed safely; around cost, because ratepayers—whom I 

was in front of Chairman Wellinghoff’s agency trying to defend— 

were getting creamed by the cost of the nuclear power plants. 

But it appears that as we move more toward modular systems, 

we can manage the cost aspect better; and then the third big piece 

has been disposal, that it creates perhaps the most dangerous hazardous waste that mankind is capable of creating in terms of its 

long-term effects, and we don’t have a means for getting rid of it. 

There is a technology, called traveling wave nuclear technology, 

that appears at least to create nuclear power off of our existing nuclear waste stocks without adding to the nuclear waste stock, and 

becomes a net gain in terms of our nuclear waste threat exposure. 

Are you following that? And if you would like to take it as a question for the record, since I have just run out my time, please feel 

free to do so, but I would like to get the Energy Department’s answer on that. 

Mr. SANDALOW. I am not personally, but we will get back to you 

on that, Senator. 

Senator BOXER. Thank you, Senator Whitehouse, very much, and 

to all my colleagues. 

I found this to be extremely important, and I thought the three 

of you were very direct in answering our questions, and I appreciate it. 

So we are going to follow up with, hopefully, a bipartisan letter, 

and it is going to ask you particularly for the issue of how much 

land is available offshore and onshore for renewable development, 

Mr. Strickland. Then I will also add to that, if you could confirm, 

because I don’t want to ask you any more questions, if you could 

confirm that it is true that 68 million acres of undeveloped offshore 
77 

oil and onshore oil leases are still not in production. Because I 

think that is an important part for all of us that say we need everything. We need to know what leases are out there that haven’t 

been acted upon. If you could confirm that. 

But I just wanted to thank all three of you very much for your 

time and your answers. Thank you very much. 

Senator WHITEHOUSE. Madam Chair. 

Senator BOXER. Yes. 

Senator WHITEHOUSE. Never mind. You have a second panel. We 

will proceed to that. 

Senator BOXER. OK. Thank you. 

So thank you very much. 

Now we will call up our second panel. It is two very important 

witnesses, Fred Krupp, the President of the Environmental Defense Fund; and Bill Fehrman, the President and CEO of 

MidAmerican Energy Company, primarily services Iowa, Illinois, 

and South Dakota. 

Mr. Krupp, are you somewhere out there? Oh, he is trying to get 

through. All right. 

If you can excuse our witness, he needs to get up to the—thank 

you very much. 

Well, Mr. Krupp, we will start with you, and then we will proceed to Mr. Fehrman, or vice versa. Whatever you two would like 

is fine with us. 

STATEMENT OF FRED KRUPP, PRESIDENT, ENVIRONMENTAL 

DEFENSE FUND 

Mr. KRUPP. That is fine. 

Chairman Boxer, I am honored to be here today. The stakes 

couldn’t be higher. On the current path by the end of this century, 

Key West and the Everglades will be under water; the American 

Southwest will be at risk of truly catastrophic droughts; and summers in Michigan will be like summers in Texas today. These are 

just a few of the things that we learned from the authoritative 

science report that the U.S. Government released this past June. 

And yet I am optimistic. My message is simple: we can achieve 

strong emission targets by 2020; we can achieve those targets at 

low cost; and in meeting those targets, we can create new jobs and 

new businesses. 

So my first point, we can achieve strong targets by 2020. This 

has been studied again and again. The EPA has looked at it; the 

Department of Energy has looked at it; so has MIT and McKinsey 

& Company. These teams of experts have used different tools and 

different assumptions, but they all come to the same conclusion: we 

can cut emissions in 2020 by 17 to 20 percent or more below 2005 

levels. 

My second point, we can reduce emissions at low cost. The EPA 

has done an exhaustive analysis of H.R. 2454. The Agency found 

that, between now and 2050, the annual cost to the average household will be less than the cost of a postage stamp, and the poorest 

families will actually have a few more dollars in their pockets. Just 

2 days ago, the Energy Information Administration, the EIA, came 

to the same conclusion. The cost of the House bill will be very low. 
78 

Between now and 2030, the EIA says that the average household 

cost will be about 22 cents a day, about a dime per person. 

Now, my third point is this: lowering our emissions will create 

new businesses and new jobs. One of the most important studies 

of how we can reduce our emissions was done by the respected consulting firm McKinsey & Company. They looked at dozens of ways 

to cut our emissions, and here is what they found. This chart, Exhibit 1, that I would like to introduce for the record. 

Now, in just one of those areas, just one of those bars is coal 

power plants and the technology CCS, where new builds can be 

done with enhanced oil recovery. And I want to just talk about one 

slice of that bar. CCS, of course, means carbon capture and storage. 

It means capturing the carbon dioxide from a power plant or factory and burying it deep underground. There are three main ways 

of capturing carbon dioxide. I am just going to focus on one of 

those, the Choate ammonia process. 

A team of researchers at Duke University has been studying the 

supply chains behind 11 different low carbon solutions. One of 

those solutions is called Choate ammonia technology for capturing 

CO2. You can see here that what Duke found about this supply 

chain. There are dozens of different benefits and workers in the 

work force that will be involved to make the Choate ammonia process work. 

Let me just give you a few examples. We will need more miners, 

steelworkers, chemists, pipe fitters, designers, engineers—every 

type of engineer—construction workers, computer modelers, geologists, and factory workers to make the thousands of different components that will go into the finished products. 

Now, finally, the last exhibit, I would like to show some of the 

specific companies around the country that are poised to play a role 

in creating this technology, companies in Virginia and Texas and 

Arizona, New Mexico, just literally everywhere. And as you can 

see, we are just looking at the component manufacturers of just one 

of hundreds of technologies, and companies all over the country 

that will benefit. 

In conclusion, putting a ceiling on greenhouse gas emissions is 

an act of patriotism twice over—it is the right thing to do for our 

kids and grand-kids, and it is the right thing to do to help America 

lead the clean energy revolution, as it has led every other technological revolution the past century. The time to pass the law is by 

early December so the United States can walk into Copenhagen 

with the strongest hand to create a good treaty. 

[The prepared statement of Mr. Krupp follows:] 
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Senator BOXER. Thank you very much. 

Mr. Fehrman, welcome. 

STATEMENT OF BILL FEHRMAN, PRESIDENT AND CEO, 

MIDAMERICAN ENERGY COMPANY 

Mr. FEHRMAN. Thank you. Chairman Boxer, Senator Inhofe, and 

members of the committee, thank you for inviting me to testify. 

MidAmerican Energy Company is the largest utility in Iowa and 

also serves customers in Illinois, Nebraska, and South Dakota. Our 

generation mix is about 50 percent coal, 20 percent renewables, 20 

percent natural gas, and 10 percent nuclear, and we lead the Nation in utility-owned wind generation. Our parent company, 

MidAmerican Energy Holdings Company, is a subsidiary of Berkshire Hathaway. 

MidAmerican supports reasonable emission reduction goals, and 

we fully commit to taking the necessary productive actions to meet 

these goals at the lowest possible cost to our customers. Controlling 

costs is critical because the slogan ‘‘make the polluters pay’’ hides 

the fact that it is our customers and your constituents who will actually pay for whatever program is implemented. 

Cap-and-trade embraces two concepts. It is the declining caps in 

the Waxman-Markey bill that will force companies to make productive investments to reduce greenhouse gas emissions, much like the 

investments described by the first panel. What we oppose is the 

trade part of cap-and-trade and its allowance allocation methodology. The bill’s market trading mechanism imposes an unnecessary second cost on our customers, the cost of buying unproductive 

emission allowances for every ton of emissions while they also pay 

for the new infrastructure to actually reduce those emissions. We 

don’t need market signals from a trading program to act; we only 

need the compliance targets. 

The bill’s formula for distributing free allowances to utilities 

splits them 50/50 between emissions and retail sales. Free allowances based on retail sales means that utilities with nuclear and 

hydro generation will receive allowances that they do not need. It 

also means that utilities with coal and natural gas generation will 

not receive enough allowances. This inequity will be extremely 

costly for our customers and the customers of our sister utility in 

the West, PacifiCorp. 

Specifically, MidAmerican will only receive 49 percent of the allowances needed to meet the bill’s requirements. This creates a 

shortfall of 11 million allowances in just the first compliance year, 

which, at $25 per allowance, will cost our customers $276 million. 

In addition, another allocation of allowances, to merchant generators, will create an unlevel playing field for regulated utilities 

that make wholesale sales into the same market without allowances. 

These are just some of the inequities created by this Wall Street 

allowance trading scheme in its distribution formula. In our view, 

there is no value added by imposing the cost of a volatile and speculative market-based trading program on a highly regulated industry. The way to remedy this is to give States a choice. Keep the 

caps in place, but permit each State, on a utility-by-utility basis, 

to either participate in the trading program or to develop an alter-
107 

native mechanism for working directly with their regulated utilities 

to meet the caps under a State implementation plan without the 

trading. 

In both cases, the Federal Government would set the standards 

and enforce the penalties for noncompliance as it does for many environmental programs today, and the industry would then be responsible for implementing the program. 

There is precedent for this approach. While not a perfect analogy, 

when Congress, 2 years ago, raised fuel economy standards, it gave 

auto makers a simple, understandable standard and told them to 

comply. No allowances, no offsets, no trading; just a standard and 

a mandate to meet it. 

However, if you remain wedded to the bill’s trading mechanism, 

then all free allowances should be distributed based on emissions, 

like the successful acid rain SO2 cap-and-trade program it is supposed to be modeled on. Under the acid rain program, the free allowances only went to the emitters that actually need them for 

compliance. Under Waxman-Markey, utilities with nuclear and 

hydro generation will receive billions of free windfall allowances 

that they do not need for compliance. 

The acid rain program gave out 90 percent of its allowances to 

emitters, and the allowances were freely distributed over the life 

of the program. Not here. Under that program the proceeds from 

the auctions are redistributed to emitters that have actual compliance obligations. Not here. Under that program, once an emitter 

meets its emission reduction target, i.e., meeting the cap, it has 

met its compliance obligation. Not under Waxman-Markey, where 

a utility could meet its emission reduction target and still be required to purchase millions of additional allowances. 

Changes to the bill must also eliminate the penalty for early action. Utilities around the country have built thousands of 

megawatts of renewable resource in the past decade. Our company, 

for example, has installed around 1300 megawatts of wind since 

2004. Under this bill, our early action reduces our historic emissions and thus reduces our allowance allocations, forcing us to buy 

even more. 

If the goal is to actually reduce emissions, we must advance the 

construction of renewable resources, significantly enhance energy 

efficiency programs, change customer behaviors, develop carbon 

capture and storage, and expand the nuclear power fleet. 

I appreciate the chance to be here this morning, Chairman 

Boxer, and would be glad to answer questions you might have. 

[The prepared statement of Mr. Fehrman follows:] 
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Senator BOXER. Thank you very much, Mr. Fehrman. 

I have so many questions. I want to talk about the speculation 

issue raised, because I was a former stockbroker on Wall Street, so 

I understand what happens when there is speculation, and we have 

all seen it with futures, and there is cause for some concern, and 

that is why I would not support a bill unless it really had very 

tough oversight. 

But I wanted to ask you and Mr. Krupp this question. In the Waxman-Markey bill, they put a floor of $11 on the price. Some 

utilities have come to me and said what about a collar. So I would 

like to ask your response to that, Mr. Fehrman and Mr. Krupp. 

Mr. FEHRMAN. The aspect of a collar would certainly promote upside protection on the cost to the customer. But fundamental, even 

with a collar and the allowance trading program, in and of itself 

still would impose a second cost on customers which we find would 

not be productive, and the reason for this is if a customer is going 

to spend a dollar, we want that dollar to be spent on actually investing in infrastructure to reduce carbon emissions. The need to 

spend a second dollar to buy an allowance to get up to a cap does 

not seem productive or useful for us. So, fundamentally, we would 

want to stay—— 

Senator BOXER. Well, if you are worried about the consumer, I 

am as well, and we are going to make sure our consumers are not 

hurt. 

Mr. Krupp, could you talk about that? Many other utilities do 

support the Waxman-Markey bill, and I understand it is probably 

dependent on their mix and so on. But some are very heavily coal, 

like Duke Energy is very strongly in support of this. So if you could 

talk about the collar, but also this. Get back to the point. The Supreme Court said carbon is covered under the Clean Air Act, so we 

are going to clean up. We have to clean up the pollution to protect 

your customers, my constituents, everybody. And you talked about, 

Mr. Krupp, some of the issues if we don’t do this. So, without getting into that, we are going to have to do it. And it just strikes me 

as unusual that a business person would rather choose a hard cap 

and no ability to get allocations, no ability to get offsets. It seems 

to me that is going to really put costs for them through the roof 

and miss the opportunity at all this job creation, all the money we 

need to do coal sequestration, which I also strongly endorse. 

So, Mr. Krupp, if you could respond. 

Mr. KRUPP. Yes. Thank you. 

MidAmerican is in a very unique position. They have made some 

business decisions that I think, in retrospect, were bad business decisions. They just opened a new 800 megawatt coal-fired power 

plant in 2007. They wholesale 30 percent of their electricity they 

sell to their wholesale market. Under Waxman-Markey, the allocations follow the electrons, so the allocation goes to the people they 

are selling to, the customers. So the best way to protect the customers is to do it by having the allocations go to the LBCs for the 

benefit of their customers. So I think MidAmerican is a very special 

case that reflects a series of decisions that they made. 

Certainly, the proposition you have asked me about specifically, 

a cap but no trade, would be extraordinarily expensive to consumers, because trading gives us the flexibility to hunt down the 
135 

lowest cost options. Trading gives customers and the companies 

that serve them the flexibility to switch fuels, to do carbon sequestration, to open a new wind turbine or a new nuclear power plant, 

and no trading makes just the single utility responsible, and they 

may not have the flexibility to do all these other things, so I don’t 

think—— 

Senator BOXER. Could you comment on the collar idea? 

Mr. KRUPP. The price collar specifically is just another word for 

a safety valve, and the big problem with a safety valve is that it 

busts the integrity of the cap. It means that we are not going to 

guarantee the environmental reductions. We won’t be able to say 

to other nations that we are making reductions; therefore, we want 

you to make reductions, too. 

So the price collar response is a legitimate concern about price, 

but it responds in a way that violates environmental integrity. So 

there are many other things in the Waxman-Markey bill that control costs; the whole cap-and-trade mechanism, the allocation to the 

retail consumers. I understand MidAmerican doesn’t get all the allocation it would like, but the fact that the allocation goes directly 

to the consumers controls prices. And in terms of market manipulation, I stand with you, Chairman Boxer, whatever comes out of this 

committee needs to have jail time for those who manipulate the 

market. There should not be any exotic derivatives; trading should 

be publicly on exchanges. 

Senator BOXER. OK, I would just ask you to look at a collar in 

a slightly different way, because if we know 11 is the low price and 

we know that at that point we can still give the market signal, 

then I don’t know why—and I am not going to go into a debate 

with you—we can’t consider this as one way to put more certainty. 

I am looking at it is all I am saying. 

Senator Inhofe, we will give you an extra 40 seconds too. 

Senator INHOFE. Oh, that is fine. Thank you, Madam Chairman. 

Mr. Fehrman, were you here during my opening statement? 

Mr. FEHRMAN. I was. 

Senator INHOFE. And you heard me quote a long, long list of 

Democrat House and Senate members that strongly reject the 

whole concept of cap-and-trade. That is augmented by Jim Hanson, 

who is probably the strongest voice, historically, for the limitations 

of CO2. He said cap-and-trade is a temple of doom, it would lock 

in disasters for our children and grandchildren. Ralph Nader, capand-trade is not going to work; it is too complex. 

So there are a lot of people who join us in saying this thing isn’t 

going to work, and frankly, it is not going to pass. But you have 

stated, on the Make Polluters Pay, the slogan that they are using— 

and they are very good at these slogans, and you have stated that 

it is your customers and my constituents that are going to pay for 

this. Now, the other side responds and says that the bill’s worker 

adjustment protection and consumer refund provision will offset 

these costs. Would you elaborate on that? 

Mr. FEHRMAN. Absolutely. At MidAmerican, we have not had an 

electric base rate increase since 1995, and we are a leader in renewable generation. To Mr. Krupp’s comments about our mismanagement, if you will, of our company, we obviously take exception with that with the fact that we have not had rate increases. 
136 

This bill, when you look at the exorbitant costs that the trading 

component of this would add to our customers for no value, we just 

find it unreasonable for us to take those fees for allowances and 

apply that to our customers, when we would be much better off 

taking those dollars, investing in additional renewables, additional 

non-carbon-emitting resources such as nuclear, and actually reducing our emissions to meet the caps. That is our fundamental issue 

with this bill. 

Senator INHOFE. Thank you, Mr. Fehrman. You mention that you 

oppose the trading part of the cap-and-trade. Can you further explain how purchasing of the allowances and the subsequent trading 

of them will not reduce greenhouse gas emissions, I think you said, 

by one ounce? 

Mr. FEHRMAN. Correct. Again, when you look at the way the 

Waxman-Markey bill is set up, it takes your 2005 emissions and 

applies a declining cap to that level. There are two pieces of the 

costs, there is the cost of compliance, which is actually taking your 

actual emissions and driving it down to the level of the cap; and 

then there is a second component to this bill, which is buying allowances from your very first emission of CO2 up to the cap. That 

cost provides no benefit and no value and doesn’t reduce CO2 in 

any manner. The cost to reduce CO2 is the cost to change our infrastructure and actually reduce emissions. 

Senator INHOFE. Well, I appreciate that. Then I will last ask you 

your view on the carbon capture and storage technology. When 

would it be available, in your opinion, on a commercial scale? 

Mr. FEHRMAN. When we look at carbon capture and technology 

and the opportunities for the advancement of that commercially, 

we find that there is exceptional work going on in the industry, 

there are pilot projects being done, and believe that in a number 

of years, be it 5 years, be it 10 years, that there will perhaps be 

carbon capture and technology applications available. However, we 

would also say, though, that the sequestration of carbon pumping 

millions and millions of tons of carbon into the ground has not been 

studied. We do not know the impacts of that, nor do we know the 

permitting requirements, the litigation around that, what happens 

if it burps, so on and so forth. So there are a number of issues still 

from a business perspective that we need clarity around in order 

to fully understand the impacts of carbon capture and sequestration. 

Senator INHOFE. It seems to me that I believe and several other 

people believe, in fact, the majority of people believe that the technology isn’t here in a lot of these things, on renewables and other 

things, and it would just seem to me—and I covered this in my 

opening statement—that if we have all these resources and we are 

the only country that doesn’t develop our own resources, that we 

ought to be able to use our own resources as that bridge to wherever it goes, whatever timeframe out in the future when the technology is there. So I appreciate very much your witnessing. 

Thank you, Madam Chairman. 

Senator BOXER. Thank you so much, Senator Inhofe. 

Senator Whitehouse. 

Senator WHITEHOUSE. Thank you very much, Madam Chair. 
137 

With respect to the observation the Ranking Member just made, 

that the technology isn’t here, it strikes me that in light of our existing incentives, that is sort of a self-fulfilling proposition. The 

technology isn’t here for some of these technologies because we 

have not met the market in the incentives and investment for their 

development. 

So the technology is in Spain and the technology is in Denmark 

and the technology is emerging in China and the technology is all 

around the world. But I find it unsatisfactory as an ultimate answer that we would observe that the technology isn’t here. That is 

the problem we are actually trying to solve with this piece of legislation. 

I see both heads nodding, and I appreciate it. 

I will confess, Mr. Krupp, that I have been a bit of a skeptic on 

carbon capture and sequestration, carbon capture and storage, as 

you call it. Your testimony says that it is ready to roll. Could you 

elaborate a little bit on that? 

Mr. KRUPP. Sure. 

Senator WHITEHOUSE. Make me a little bit more comfortable 

about the prospects for carbon capture and storage. 

Mr. KRUPP. Absolutely, Senator. The idea that it is ready to roll 

actually wasn’t a phrase original to me, I was quoting an official 

at British Petroleum, noting that in Norway there is massive 

amounts of carbon capture already going on. And to your earlier 

point, the reason it goes on in Norway is there is a price on carbon 

in Norway, so they are avoiding the cost of putting that in the atmosphere. 

This observation that you need a driver is exactly the chicken 

and egg problem that Jeff Immelt of GE has pointed to; until there 

is a driver, there is no reason to capture carbon. Luckily, many 

companies are anticipating regulations in the United States and 

some companies around the world, where there are already regulations, are developing the technologies; Mitsubishi in Japan, Alstom 

in France. In West Virginia, on the Nation’s largest coal-fired 

power plant, Mountaineer, the Alstom company has teamed up 

with AEP to begin installing a Choate ammonia process, as was already demonstrated viable in Wisconsin by Wii Energy. 

So I agree that EPA will have to write regulations and define 

how carbon can be safely kept underground. Fortunately, in the 

last year, the Bush administration and EPA began that task, so 

that process is well underway. I would reassure you, Senator, that 

our Nation does burn a lot of coal. Half of our electricity is generated by burning coal, and we should leave a path open to clean 

up that coal from carbon dioxide, just as we have been able to clean 

it up from sulfur dioxide. 

Senator WHITEHOUSE. And in the same way that I mentioned 

earlier, that the existing arrangement of Government influences on 

the energy market is not a pure state of nature from which variance equals interference, there is also not a natural state, legally, 

on this. 

The U.S. Supreme Court has determined as the law of the land 

that carbon is a pollutant subject to Clean Air Act regulation. That 

really gives the EPA no choice but to take appropriate action under 

its lawful responsibilities to regulate the emissions of carbon. And 
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if we follow that route, which at this point is really a given, since 

the highest court in the land has decreed that this is what shall 

be, the alternative to that is really where we are trying to go with 

the clean energy legislation. 

Would you agree with me that the choice is between a regulatory 

model that would provide for no allowances, no input through the 

legislative process, in any event, versus a legislated solution to get 

to the same result? 

Mr. KRUPP. Well, I would agree, Senator, the choice is between 

having EPA regulate or having Congress legislate, and there is no 

question in my mind that having Congress legislate a robust and 

flexible program can protect consumers and minimize the cost. 

Moreover, if Congress fails to legislate, then the regulatory process 

also includes judicial review and years of delay, which I think 

hurts businesses tremendously because there are many, many investment decisions about what sorts of new power plants to be 

built that right now are on hold because businesses are waiting for 

the rules to be written. Will these rules come out of Congress? Will 

these rules come out of EPA? When will they come out? So I, for 

one, think a legislated solution is preferable. But you are right, 

greenhouse gases will be restricted either way. 

Senator WHITEHOUSE. Madam Chair, thank you very much for 

this hearing. I thank the witnesses for their participation. I think 

we can all agree that businesses do appreciate certainty. Thank 

you very much. 

Senator BOXER. Thank you so much. I think that is very, very 

important. 

Let me just thank both of you. Mr. Fehrman, I am just going to 

put on the record that you operate in South Dakota, right? 

Mr. FEHRMAN. We do. 

Senator BOXER. OK. EPA calculates that the House-passed bill 

allocates to electric utilities in South Dakota a number of emissions 

allowances that greatly exceeds the amount of CO2 emissions that 

utilities in that State emitted in 2008. In 2012, the free allocation 

is 150 percent of the utilities’ emissions; in 2015, the free allocation 

is 144 percent. So MidAmerican customers in South Dakota will 

not need to buy emission allowances. In fact, they could receive an 

economic benefit through the utility rebates. Do you agree with 

that? 

Mr. FEHRMAN. I have not seen the study, but our customer base 

in South Dakota electrically consists of an extremely small number 

of customers, so that portion of your study may actually be true. 

A very significant impact is on our Iowa customers, which we view 

as being in excess of a 20 percent rate increase. So that very well 

could be true in South Dakota. The fact is our population is very 

small there. 

Senator BOXER. But your consumers will be kept whole. As a 

matter of fact, your consumers—I mean, there is a difference between your shareholders and your consumers, but your consumers, 

some of them will actually come away with $40 into the black a 

year. That is important also, that the study showed that the low 

quintile. So I think there is some confusion, I think, between your 

discussion about your consumers versus your shareholders. 
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You said something I just want to make sure I heard you right, 

Mr. Fehrman. I think you said that even if you get enough allowances to meet your cap, you have to keep buying more allowances. 

I don’t think that is accurate. 

Mr. FEHRMAN. No, what I said was there is a portion of cost 

which applies to meeting the compliance target, so if your actual 

emissions are above the cap in 2012, for instance, there is a cost 

to actually bring those emissions down to the cap, either through 

the purchase of allowances—— 

Senator BOXER. Or offsets. 

Mr. FEHRMAN [continuing]. Or offsets, or investing in less carbon 

such as renewables. You also, however, have to buy allowances 

from your very first ton of carbon that you emit to get up to the 

total cap level. 

So in this case, unlike the acid rain program, you have to buy 

allowances to not only come down to the limit, but come up to the 

limit as well, and that is a fundamental difference between this 

program and the acid rain program, which I think that this committee should really try to understand and study so that, as exceptionally working program as SO2 is, this is not the SO2 program. 

Senator BOXER. OK. Well, I just want to say, Mr. Fehrman, I 

really understand your concern, but I just want you to think 

through this. You are either going to have to deal with the EPA 

in a command and control situation, where you have no ability to 

offset the costs that you are going to be hit with in order to protect 

our kids from pollution—I mean, that is just where it is at—or you 

can work with us on a bill that will soften the blow to everyone 

involved. 

And I would just like to say that it is hard for me to understand. 

I know that the organization that you belong to, the Edison Electric Institute, does support Waxman-Markey. And I would put in 

the record the names of all the electric utilities and energy companies, manufacturing, corporate businesses, labor, farm and agriculture communities, civic, who all support the Waxman-Markey 

bill. 

Now, we are working on it; we are looking at ways to make it 

better. We are looking at ways to make it more friendly to the consumer and soften the blow, and all the rest of it. We will do that 

and we will have our bill ready when we get back. 

But I hope you will work with us, sir, rather than just stand out 

there and say no to everything, because I think, from your testimony, where I see you going is for the status quo. But the problem 

for you is the status quo is about to change. Once that 

endangerment finding comes into play, there won’t be any choice 

but for us to say we have to protect our families and we won’t have 

the flexibility. 

We will try and we will do whatever we can, but this kind of a 

bill is going to give us the tools, and I think it is going to make 

your life far more predictable; your consumers will be kept whole. 

We want to work with you, and if you have any specific issues or 

problems, please come and talk to us about it, because I just don’t 

see how you benefit—when I say you, I mean your company, your 

consumers, your shareholders—by just saying let’s not do anything 

or just go to hard cap. You don’t think that is going to help you? 
140 

Mr. FEHRMAN. Well, when you look at our testimony—and I very 

much appreciate your comments. When you look at our testimony, 

I think you will find that we have, No. 1, no opposition to reducing 

CO2. So I want to make that crystal clear. We absolutely agree that 

we can reduce CO2. In fact, we absolutely agree that we can reduce 

it in a manner similar to what is in Waxman-Markey. 

Second, if you read my testimony, we have offered alternatives 

both on a hard cap, and second, on alternatives that would make 

the trading component work better and level the playing field and 

remove the inequities that are in the bill currently. That is our fundamental issue, is that the way the bill is currently set up, it severely penalizes Midwest utilities, and we are not alone in this concern. 

Third, and again in my testimony, we want to work with you. We 

have said in our testimony we will come. 

Senator BOXER. Good. 

Mr. FEHRMAN. We would appreciate workshops. There are people 

out there we know have different views on this than we, but we 

fundamentally believe that we can arrive at a solution that takes 

Waxman-Markey and through the work of the Senate can actually 

deliver similar results at a lower cost to our consumers. 

Senator BOXER. OK. Well, we are extremely interested in working with you on that and we will do so. 

Mr. FEHRMAN. Excellent. 

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Senator BOXER. The last point I want to make is, to get back to 

Mr. Krupp, because I think he is seeing all over the country some 

of the pluses of moving forward. The other point I would make is 

what the status quo does is States are going to move out on their 

own. The western Governors, we have the mayors all involved, we 

have the Northeast RGGI. We have the EPA. So you are going to 

have everybody moving without certainty. 

But I want to talk to you about my State—just put this in the 

record. We are all going through a horrible recession period, and 

my State was hit very hard by a housing downturn and is just 

starting to come back. In the last few years—and I am going to get 

this right—between 1998 and 2007, California’s clean energy economy has been driven by significant investment. It attracted more 

than $6.5 billion in venture capital in the past 3 years alone. So 

we have $6.5 billion invested in the last 3 years alone, and it is 

a result of, they say, public policies and financial incentives for 

clean energy development and energy efficiencies to renewable 

portfolio energy efficient standards. 

We also have a plan for California’s green building, a goal for 

public buildings to be 20 percent more energy efficient by 2015. So 

that goal alone would save our State $100 million annually. We 

have seen 125,390 jobs created in this between 1998 and 2007; 

10,209 new businesses formed in California by 2007 from 1998; and 

again, just the last 3 years, $6.5 billion in venture capital with the 

understanding from the venture capital community that they would 

invest more. The prediction is they would invest more in clean energy jobs in the future than they did in the high-tech communications revolution. So it is extraordinary. John Doerr has so stated. 

We have seen, between 1999 and 2008, in California, 1401 new 

patents. So the unleashing of entrepreneurship is incredible, and it 

has happened because California moved forward and set some 

standards on this carbon, and I just think we can all prosper. 

So I want to say to the two of you thank you very, very much. 

We shouldn’t fear the future, because the future, if we do this 

right, as our President has said, if we do this reform right, we will 

see a whole new platform for economic growth going out into this 

century. We will go to Copenhagen, we will be a leader, and I think 

America is a place where entrepreneurship needs to be unleashed, 

and these financial incentives—that is just going to unleash it. 

And I agree with—I think it was Senator Merkley who said some 

of these dates in the future that we are assuming we are going to 

meet, we are going to whiz by—in other words, we are going to get 

to where we need to go long before the 2030s and the 2050s because of this great entrepreneurship and the skills that we have in 

our country with our people and our workers. 

So thank you both very, very much. Of course, this conversation 

continues on, and I look forward to working with both of you as we 

move forward. Thank you. 

[Whereupon, at 12:29 p.m., the committee adjourned.] 

[An additional statement submitted for the record follows:] 

STATEMENT OF HON. MIKE CRAPO, 

U.S. SENATOR FROM THE STATE OF IDAHO

Madam Chairman, thank you for the opportunity to share a few words. I would 

also like to thank the witnesses for being here with us today. 
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I have stated many times in this committee that Idaho is a leader in clean energy 

and that I am proud of Idaho’s record in this area. 

Nearly 50 percent of Idaho’s electricity comes from hydroelectricity, and Idaho’s 

energy plan aims for a total of 8 percent of non-hydro renewable electricity production by 2015, which is higher than the national average. Development of clean energy is important. 

I am heartened to hear today about DOI’s efforts to promote renewable energy, 

but I am concerned because Mr. Strickland’s testimony today doesn’t address the 

exploration and production of another very important clean energy source: natural 

gas. 

Natural gas is clean burning and is domestically abundant. 

The Colorado School of Mines and DOE estimate that U.S. future natural gas supply is over 2 quadrillion cubic feet, which at today’s rate of consumption is enough 

to meet demand for more than 95 years. 

Additionally, DOI’s Minerals Management Service estimates that the Outer Continental Shelf alone holds 420 trillion cubic feet of natural gas that has yet to be discovered. 

In fact, expanding exploration and production to U.S. offshore areas that were off 

limits until 2008 could result in more than a trillion dollars in Government profits 

and millions of new jobs. Oil and natural gas development in newly opened offshore 

areas is expected to generate $1.7 trillion in Federal tax revenues and almost $600 

million in State and local taxes according to the American Energy Alliance. 

Increased offshore energy production would support 1.2 million jobs annually. 

Also, when we talk about clean energy, I would like to hear more about the potential for nuclear energy. I understand that Mr. Fehrman is knowledgeable in this 

field, and I hope to learn more about his experience and his thoughts on how to 

drive nuclear investment and jump-start the nuclear industry in the U.S. 

I am also interested in hearing Mr. Fehrman’s testimony regarding 

MidAmerican’s alternate, State-driven proposal for emission reductions. After all, 

States often have the best gauge of their own potential and abilities. 

Additionally, PacifiCorp, a subsidiary of MidAmerican Energy Holdings Company, 

provides power to my constituents in Southern Idaho, and I would be interested to 

know how this plan would benefit Idaho. 

As we talk today, I hope to hear about all available means to unlock the tremendous clean energy potential of the United States of America. 

Thank you. 

Æ