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37–982PS 2008

REVISITING THE INDUSTRIAL

TECHNOLOGIES PROGRAM (ITP):

ACHIEVING INDUSTRIAL EFFICIENCY

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND

ENVIRONMENT

COMMITTEE ON SCIENCE AND

TECHNOLOGY

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

SEPTEMBER 25, 2007

Serial No. 110–56

Printed for the use of the Committee on Science and Technology

(

Available via the World Wide Web: http://www.science.house.gov

(II)

COMMITTEE ON SCIENCE AND TECHNOLOGY

HON. BART GORDON, Tennessee, Chairman

JERRY F. COSTELLO, Illinois

EDDIE BERNICE JOHNSON, Texas

LYNN C. WOOLSEY, California

MARK UDALL, Colorado

DAVID WU, Oregon

BRIAN BAIRD, Washington

BRAD MILLER, North Carolina

DANIEL LIPINSKI, Illinois

NICK LAMPSON, Texas

GABRIELLE GIFFORDS, Arizona

JERRY MCNERNEY, California

LAURA RICHARDSON, California

PAUL KANJORSKI, Pennsylvania

DARLENE HOOLEY, Oregon

STEVEN R. ROTHMAN, New Jersey

JIM MATHESON, Utah

MIKE ROSS, Arkansas

BEN CHANDLER, Kentucky

RUSS CARNAHAN, Missouri

CHARLIE MELANCON, Louisiana

BARON P. HILL, Indiana

HARRY E. MITCHELL, Arizona

CHARLES A. WILSON, Ohio

RALPH M. HALL, Texas

F. JAMES SENSENBRENNER JR.,

Wisconsin

LAMAR S. SMITH, Texas

DANA ROHRABACHER, California

ROSCOE G. BARTLETT, Maryland

VERNON J. EHLERS, Michigan

FRANK D. LUCAS, Oklahoma

JUDY BIGGERT, Illinois

W. TODD AKIN, Missouri

JO BONNER, Alabama

TOM FEENEY, Florida

RANDY NEUGEBAUER, Texas

BOB INGLIS, South Carolina

DAVID G. REICHERT, Washington

MICHAEL T. MCCAUL, Texas

MARIO DIAZ-BALART, Florida

PHIL GINGREY, Georgia

BRIAN P. BILBRAY, California

ADRIAN SMITH, Nebraska

PAUL C. BROUN, Georgia

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

HON. NICK LAMPSON, Texas, Chairman

JERRY F. COSTELLO, Illinois

LYNN C. WOOLSEY, California

DANIEL LIPINSKI, Illinois

GABRIELLE GIFFORDS, Arizona

JERRY MCNERNEY, California

MARK UDALL, Colorado

BRIAN BAIRD, Washington

PAUL KANJORSKI, Pennsylvania

BART GORDON, Tennessee

BOB INGLIS, South Carolina

ROSCOE G. BARTLETT, Maryland

JUDY BIGGERT, Illinois

W. TODD AKIN, Missouri

RANDY NEUGEBAUER, Texas

MICHAEL T. MCCAUL, Texas

MARIO DIAZ-BALART, Florida

RALPH M. HALL, Texas

JEAN FRUCI Democratic Staff Director

CHRIS KING Democratic Professional Staff Member

SHIMERE WILLIAMS Democratic Professional Staff Member

ELAINE PAULIONIS Democratic Professional Staff Member

ADAM ROSENBERG Democratic Professional Staff Member

ELIZABETH STACK Republican Professional Staff Member

STACEY STEEP Research Assistant

(III)

C O N T E N T S

September 25, 2007

Page

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

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

Opening Statements

Statement by Representative Nick Lampson, Chairman, Subcommittee on

Energy and Environment, Committee on Science and Technology, U.S.

House of Representatives .................................................................................... 6

Written Statement ............................................................................................ 7

Statement by Representative Bob Inglis, Ranking Minority Member, Subcommittee on Energy and Environment, Committee on Science and Technology, U.S. House of Representatives ............................................................... 7

Written Statement ............................................................................................ 7

Prepared Statement by Representative Jerry F. Costello, Member, Subcommittee on Energy and Environment, Committee on Science and Technology, U.S. House of Representatives ............................................................... 8

Witnesses:

Mr. Frederick L. Moore, Global Director, Manufacturing and Technology,

Dow Chemical Company

Oral Statement ................................................................................................. 9

Written Statement ............................................................................................ 11

Biography .......................................................................................................... 15

Mr. Paul N. Cicio, President, Industrial Energy Consumers of America

Oral Statement ................................................................................................. 16

Written Statement ............................................................................................ 17

Biography .......................................................................................................... 18

Mr. Lawrence W. Kavanagh, Vice President, Manufacturing and Technology,

American Iron and Steel Institute

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

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

Biography .......................................................................................................... 22

Mr. Malcolm E. Verdict, Associate Director, Energy Systems Laboratory,

Texas A&M Engineering Program, Texas Engineering Experiment Station

Oral Statement ................................................................................................. 22

Written Statement ............................................................................................ 24

Biography .......................................................................................................... 28

Discussion

ITP Funding and Past ITP Efficacy ................................................................... 28

ITP Research and Development Limitations ..................................................... 30

Corporate Welfare Concerns ............................................................................... 30

ITP Return on Investment .................................................................................. 31

Natural Gas Prices ............................................................................................... 32

Dow Energy Efficiency Efforts ............................................................................ 32

ITP Energy Savings ............................................................................................. 33

Charging Industry for Assessments ................................................................... 33

The Chemical Industry in the U.S. .................................................................... 35

Need for Control System Improvements ............................................................ 36

Page

IV

Appendix: Additional Material for the Record

Section-by-Section: Discussion Draft of the Industrial Energy Efficiency Research and Development Act of 2007 .................................................................. 40

The Industrial Energy Efficiency Research and Development Act of 2007 .......... 41

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REVISITING THE INDUSTRIAL TECHNOLOGIES PROGRAM (ITP): ACHIEVING INDUSTRIAL EFFICIENCY

TUESDAY, SEPTEMBER 25, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY AND ENVIRONMENT, COMMITTEE ON SCIENCE AND TECHNOLOGY, Washington, DC.

The Subcommittee met, pursuant to call, at 2:05 p.m., in Room

2318 of the Rayburn House Office Building, Hon. Nick Lampson

[Chairman of the Subcommittee] presiding.

2

3

HEARING CHARTER

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

COMMITTEE ON SCIENCE AND TECHNOLOGY

U.S. HOUSE OF REPRESENTATIVES

Revisiting the Industrial

Technologies Program (ITP):

Achieving Industrial Efficiency

TUESDAY, SEPTEMBER 25, 2007

2:00 P.M.–4:00 P.M.

2318 RAYBURN HOUSE OFFICE BUILDING

Purpose

On September 25, 2007, the Subcommittee on Energy and Environment will hold

a hearing on the Department of Energy (DOE) Industrial Technologies Program

(ITP), and prospects for improving the energy efficiency and environmental performance of the country’s most energy-intensive manufacturing processes through technological advancement and industrial process assessments. The hearing shall provide background for legislation in this area. A copy of the discussion draft and section by section is attached.

The hearing will examine the successes and limitations of the Industrial Technologies Program, and how the program can be improved to increase industrial energy efficiency and environmental performance in the U.S. industrial sector. It will

also look at which areas of research and development should be enhanced and explored by the ITP and the Industrial Assessment Centers, and what cost-effective

opportunities does a further enhancement of industrial efficiency program offer.

The Subcommittee will hear testimony from four witnesses offering perspectives

from the U.S. industrial sector, industry trade associations, and university-based energy auditing centers. The witnesses will also comment on the need and timeliness

of this legislation, and make recommendations for improving the legislative language.

Witnesses

• Mr. Malcolm Verdict, C.E.M., is an Associate Director of the Energy Systems Laboratory within the Texas Engineering Experiment Station (TEES),

the engineering research arm of the Texas A&M University System in College

Station, Texas. TEES has operated one of the Department of Energy’s twentysix Industrial Assessment Centers since 1986. Previously he held positions at

the Alliance to Save Energy, the Texas Public Utility Commission, and the

Texas Governor’s Energy Management Office.

• Mr. Fred Moore is the Global Director of Manufacturing and Technology for

Dow Chemical’s Energy Business. He is responsible for the production of

power, steam, and other utilities for Dow, and for development, support and

application of Energy technology globally and with Dow’s major joint ventures. Mr. Moore will be testifying in his position as the Chairman of the Energy Efficiency Task Force of the National Association of Manufacturers.

• Mr. Lawrence Kavanagh is the Vice President of Manufacturing and Technology for the American Iron and Steel Institute (AISI). Prior to joining AISI

in 1991, Mr. Kavanagh was general manager of engineering for Davy International’s Automation Services Division where he was responsible for engineering, project management, installation and testing for Davy’s steel plant

equipment installations around the world.

• Mr. Paul Cicio is the President at Industrial Energy Consumers of America.

Mr. Cicio’s background includes over 20 years of public affairs and commercial experience in the energy and environment sector, primarily with The Dow

Chemical Company where he was responsible for Dow’s energy policy and legislative initiatives.

4

Background

An expanding economy, growing population, and rising standard of living create

rapidly growing demands for energy, making energy conservation a key national

goal. In the U.S. industry is responsible for more than one-third of all energy consumed, the large majority of which is consumed by certain heavy industries such

as chemical, glass and metals production, mining, petroleum refining, and forest and

paper products. These industries require very large amounts of energy per unit of

production, making them particularly susceptible to high energy prices. These and

other energy-intensive industries are ideal candidates on which to focus energy efficiency efforts and apply new technologies that not only increase efficiency, but also

raise productivity, reduce wastes, and trim costs.

While the U.S. industrial sector has become much more efficient over the past 30

years, there are still ample opportunities to achieve efficiency gains. However, energy-intensive industries face enormous competitive pressures that make it difficult

to make the necessary R&D investments in technology development. Energy-intensive industries tend to exhibit relatively low levels of R&D spending, and are often

unwilling to accept the risks associated with undertaking complex capital-intensive

technology development and implementation. Without a sustained commitment by

the private and public sectors to invest in technology R&D and adopt new technologies, the ability to close the gap between U.S. energy supply and demand will

be greatly limited.

The Industrial Technologies Program (ITP) works to improve the energy intensity

of U.S. industry through coordinated research and development and dissemination

of innovative energy efficiency technologies and practices. The ITP invests in highrisk, high-value cost-shared R&D projects to reduce industrial energy use and process waste streams, while stimulating productivity and growth. Competitive solicitations are the principal mechanism used by ITP to contract for cost-shared R&D. Solicitations reflect the priorities of the Program and selection of projects follows

merit-based criteria that emphasize projected energy, environmental, and economic

benefits. In addition, ITP makes available information and resources on other financial assistance and research opportunities and case studies from past ITP projects.

The ITP portfolio details over 1,000 technology development projects in which ITP

has been involved.

The Industrial Technologies Program claims numerous successes. ITP-sponsored

technologies have won 31 ‘‘R&D 100 Awards’’ between 1991 and 2005, and ITPsponsored R&D has yielded 156 patents since 1994. While DOE R&D has yielded

many energy efficient technologies ready for market entry, the ITP in particular is

considered one of the most effective DOE programs at transferring technologies,

with over 170 technologies reaching the commercial market. An estimated 13,000

U.S. manufacturing plants have been improved through the ITP technology delivery

effort. Nearly five quadrillion Btu of energy (equal to approximately $23 billion) of

energy savings are attributed to the program since its inception, with 366 trillion

Btu saved in 2004 alone.

The ITP also sponsors 26 University-Based Industrial Assessment Centers (IACs)

that provide no-cost energy assessments primarily to small and medium-sized manufacturers. Assessments are conducted by teams of faculty and students, and involve

examinations of potential savings from energy efficiency improvements, waste minimization and pollution prevention, and productivity improvement. The average expected savings per assessment are fifty to seventy thousand, with much larger savings possible with large operations. Companies are in turn encouraged to replicate

accomplishments and share results.

By operating through university engineering programs the IACs serve as a training ground for the next-generation of energy and industrial engineers. Roughly 240

students receiving training through the program each year. When budgets for the

program were higher 38 IACs operated around the country, compared to the 26 in

operation today. The approximately $4 million funding for IACs is relatively small,

especially given the significant economic benefits of reducing industrial energy consumption.

Brief Budget Overview

Constantly changing market conditions, energy prices, and business concerns affect the ability and willingness of industry to pursue energy efficiency opportunities.

As the role of energy in industry changes, the ITP should have the resources to sustain and expand operations, adapt, and reshape its strategy where needed. However,

the budget in recent years has decreased dramatically. The Fiscal Year 2007 budget

request for Industrial Technologies was $45.6 million, an $11.3 million reduction

from the Fiscal Year 2006 Appropriation. By comparison, appropriated levels as reVerDate 11-MAY-2000 15:43 Feb 28, 2008 Jkt 037982 PO 00000 Frm 00008 Fmt 6633 Sfmt 6621 C:\WORKD\E&E07\092507\37982 SCIENCE1 PsN: SCIENCE1
5

cently as Fiscal Year 2000 were as high as $175 million. These funding levels reflect

a dramatic shift in priorities away from industrial efficiency R&D.

The following represent a small portion of organizations that support, or have

benefited from working with, the program:

AMMEX—The Alliance Materials Manufacturing Excellence

NAM—National Association of Manufacturers

ACEEE—American Council for an Energy Efficient Economy

ACC—American Chemistry Council

3M Company

Abbott Laboratory

Bayer Healthcare

Boeing

Caterpillar

Dow Chemical Company

DuPont

Texas Instruments

Solutia

Georgia Pacific

GlaxoSmithKline

Kaiser Aluminum

Industrial Assessment Centers are located at Colleges and Universities around

the country such as: Texas A&M University, University of Washington, Iowa State,

University of Michigan, West Virginia University, Georgia Institute of Technology,

University of Florida, and University of Miami.

6

Chairman LAMPSON. This hearing will come to order. Good afternoon, and welcome to this hearing on the Department of Energy’s

Industrial Technologies Program, the discussion draft of my bill,

the Industrial Energy Efficiency Act of 2007.

I want to thank our distinguished panel, all of you, for joining

us today. We look forward to hearing your perspectives about your

experiences with the Industrial Technologies Program as we seek

to highlight and enhance its important work.

The program carries out this mission through a coordinated program of research and development and dissemination of technologies and operating practices. The Industrial Technology Program leads the Federal Government’s ongoing effort to improve energy efficiency and environmental performance of the Nation’s industrial sector in partnership with industry and universities. These

efforts not only improve the bottom line of a wide variety of industries but enhance the quality of life for American workers, families,

and communities that they serve.

Unfortunately, we have seen the budget for this program drop

fairly rapidly in the last few years. The Administration’s fiscal year

2008 budget request for the program is a fraction of the fiscal year

2001 appropriation.

Today our witnesses will identify opportunities to improve this

important program. And my region of the country has a significant

stake in this issue, to say the least. Many energy-intensive industries, especially chemical manufacturing and petroleum refining

are located east of Highway 35 in Texas. That is a big area, but

these industries face several challenges to their continued economic

strength, and many other businesses in my area depend upon the

health of these core industries.

There is significant pressure to reduce the emissions and energy

use associated with their processes, while keeping costs low enough

to maintain the region’s attractiveness to industry. And that is a

tall order when costs for natural gas, one of the primary industrial

feedstocks, are among the highest in the country.

Texas has the highest percentage of large energy-intensive industries, eight percent of the U.S. total. Texas consumes 20 percent of

the energy used by U.S. industry, and over half of the energy used

in Texas is consumed by the industrial sector.

It is said that the cheapest energy is the energy you don’t have

to use at all. With energy costs as high as they are, increasing efficiency through technology advancement is key to keeping these

core industries located in the United States.

Clearly, increasing energy efficiency is in everyone’s interest and

the Industrial Technology Program is an important avenue for

achieving this important economic, national security, and environmental goals.

So I look forward to the testimony and the recommendations of

our witnesses, and now I would like to recognize our distinguished

Ranking Member, Mr. Inglis, of South Carolina, for his opening

statement.

[The prepared statement of Chairman Lampson follows:]

7

PREPARED STATEMENT OF CHAIRMAN NICK LAMPSON

Good afternoon. Welcome to this hearing on the Department of Energy’s Industrial Technologies Program and the discussion draft of my bill, the Industrial Energy Efficiency Act of 2007.

I would like to thank our distinguished panel of witnesses for joining us today.

We look forward to hearing your perspectives and about your experiences with the

Industrial Technology Program as we seek to highlight and enhance its important

work.

The program carries out this mission through a coordinated program of research

and development, and dissemination of technologies and operating practices.

The Industrial Technology Program leads the Federal Government’s on-going effort to improve energy efficiency and environmental performance of the Nation’s industrial sector in partnership with industry and universities. These efforts not only

improve the bottom-line of a wide variety of industries, but enhance the quality of

life for American workers, families, and communities they serve.

Unfortunately, we have seen the budget for this program drop rapidly in the last

few years. The Administration’s FY 2008 budget request for the program is a fraction of the FY 2001 appropriation.

Today our witnesses will identify opportunities to improve this important program. My region of the country has a significant stake in this issue.

Many energy-intensive industries, most especially chemical manufacturing and

petroleum refining, are located east of Highway 35 in Texas. These industries face

several challenges to their continued economic strength, and many other businesses

in my area depend upon the health of these core industries.

There is significant pressure to reduce the emissions and energy use associated

with their processes, while keeping costs low enough to maintain the region’s

attractiveness to industry. That’s a tall order when costs for natural gas, one of the

primary industrial feedstocks, are among the highest in the country.

Texas has the highest percentage of large energy-intensive industries, eight percent of the U.S. total. Texas consumes 20 percent of the energy used by U.S. industry. Over half of the energy used in Texas is consumed by the industrial sector.

It is said that the cheapest energy is the energy you don’t have to use at all. With

energy costs as high as they are, increasing efficiency through technology advancement is key to keeping these core industries located in the U.S.

Clearly, increasing energy efficiency is in everyone’s interest and the Industrial

Technology Program is an important avenue for achieving this important economic,

national security, and environmental goal. I look forward to the testimony and recommendations of our witnesses.

Mr. INGLIS. Thank you, Mr. Chairman. Thank you for holding

this hearing to discuss the importance of improving industrial energy efficiency.

Industry as I understand it consumes about one-third of all the

energy used in the United States. We pump more energy into our

factories than we do into our vehicles. Increasing U.S. industrial efficiency will have many payoffs. It will reduce emissions, drive

down energy costs, enabling domestic companies to compete internationally, and transfer energy cost savings to the consumer.

The Department of Energy’s Industrial Technologies Program

has a successful track record of helping U.S. manufacturers translate research and development into efficient, cost-saving technologies.

I look forward to hearing from the witnesses today, discussing,

in discussing ways that the Industrial Technologies Program can

further enable our nation’s industries in their achievement of energy efficiency while remaining economically competitive.

Thank you, again, Mr. Chairman. I yield back.

[The prepared statement of Mr. Inglis follows:]

PREPARED STATEMENT OF REPRESENTATIVE BOB INGLIS

Thank you, Mr. Chairman, for holding this hearing to discuss the importance of

improving industrial energy efficiency.

8

Industry consumes about one-third of all energy used in the United States. We

pump more energy into our factories than we do into our vehicles. Increasing U.S.

industry efficiency will have many payoffs: reduce emissions, drive down energy

costs enabling domestic companies to compete internationally, and transfer energy

cost savings to the consumer.

The Department of Energy’s Industrial Technologies Program (ITP) has a successful track record of helping U.S. manufacturers translate research and development

into efficient, cost-saving technologies. I look forward to hearing from our witnesses

today, and discussing ways the ITP can further enable our nation’s industries to

achieve energy efficiency while remaining economically competitive.

Thank you again, Mr. Chairman. I yield back.

Chairman LAMPSON. Thank you, Mr. Inglis. And I ask unanimous consent that all additional opening statements submitted by

Subcommittee Members be included in the record. Without objection, so ordered.

[The prepared statement of Mr. Costello follows:]

PREPARED STATEMENT OF REPRESENTATIVE JERRY F. COSTELLO

Mr. Chairman, thank you for calling today’s hearing to receive testimony on the

Industrial Technologies Program (ITP) and legislation to support research and development of new industrial processes and technologies.

The Science and Technology Committee continues to examine energy reform, the

globalization of science technology, and the competitiveness of our universities and

America’s overall economy. The ITP has a significant positive impact on these issues

by working with U.S. industry and our university students to improve industrial energy efficiency and environmental performance.

As our nation continues to be impacted by high energy costs and environmental

challenges, consumers and businesses are faced with few if any cost effective options

to immediately address these problems. The ITP invests in high-risk research and

development to improve industrial energy efficiency while stimulating productivity

and growth. The ITP enjoys wide successes in R&D awards. Their research and development has resulted in more than 150 patents with over 170 technologies that

have reached commercial markets. The ITP also sponsors 26 university-based assessment centers, which provide energy assessments to small and medium-sized

businesses.

Congress continues to focus on energy reform and ways to curtail our dependence

on foreign oil while maintaining a sound environment and national economy. As I

have said before, one way to accomplish this goal is through the use of coal-to-liquid

fuels.

The United States has an abundant supply of coal, and I firmly believe coal-toliquids, particularly in combination with carbon capture and storage (CCS) and

other technologies, is part of the solution to achieving U.S. energy independence,

continued economic prosperity and improved environmental stewardship.

Coal-to-liquids plants using CCS can produce fuels with life cycle greenhouse gas

emission profiles that are as good as or better than that of petroleum-derived products.

In order for CCS technology to become commercially viable, the Federal Government must show it is committed to funding the necessary research, development,

and demonstration (RD&D) projects. Today, we are taking an enormous step forward in this goal as we examine legislation to establish a program in cooperation

with energy industries and universities to conduct research, development, demonstration, and commercial applications.

Mr. Chairman, as you know, I have been a strong advocate for federal coal initiatives and programs. I intend to continue to work with my colleagues on both sides

of the aisle to ensure we continue to advance technologies, including clean coal technology, to overcome the technical and economical challenges for coal-based power

plants. I look forward to hearing from the witnesses regarding their thoughts on

these issues.

These actions will affect American students, U.S. competitiveness, and our overall

economy.

There have been several committee hearings in the House and Senate to discuss

CCS technology. I am glad we are having today’s Subcommittee hearing because

With that, again, thank you Chairman Lampson—I look forward to hearing from

our witnesses.

9

Chairman LAMPSON. It is my pleasure to introduce the excellent

panel of witnesses that we have with us this afternoon. Mr. Fred

Moore is the Global Director of Manufacturing and Technology for

Dow Chemicals energy business. He is responsible for the production of power, steam, and other utilities for Dow and for development, support, and application of energy technology globally, and

with Dow’s major joint ventures. So he is also the Chairman of the

Energy Efficiency Task Force of the National Association of Manufacturers.

Mr. Paul Cicio is the President of the—good Italian name, like

Lampasona—is the President of the Industrial Energy Consumers

of America. Mr. Cicio’s background includes over 20 years of public

affairs and commercial experience in the energy and environmental

sector, primarily with the Dow Chemical Company, where he was

responsible for Dow’s Energy Policy and legislative initiatives.

Mr. Lawrence Kavanagh is the Vice President of Manufacturing

and Technology for the American Iron and Steel Institute, or AISI.

Prior to joining AISI in 1991, Mr. Kavanagh was the General Manager of Engineering for Davey International’s Automation Services

Division, where he was responsible for engineering, product management, installation and testing for Davey steel plant, equipment

installations around the world.

And Mr. Malcolm Verdict is an Associate Director of the Energy

Systems Laboratory within the Texas Engineering Experiment Station, TEES, in the Engineering Research Arm of Texas A&M,

where my daughters went to school, in College Station, Texas.

TEES has operated one of the Department of Energy’s 26 industrial assessment centers since 1986. Previously he held positions at

the Alliance to Save Energy, the Texas Public Utility Commission,

and the Texas Governor’s Energy Management Office.

And we want to welcome each and every one of you, and thank

you very much for being here. You will each have five minutes for

your spoken testimony, and you will notice that little black box in

the middle. It works like a traffic signal. When it becomes red, I

would appreciate your stopping and yielding to the next person.

Your written testimony will be included in the record for the hearing, and when all four of you have completed testimony, then we

will begin questions. Each Member will have five minutes to question the panel.

And Mr. Moore, we will begin with you.

STATEMENT OF MR. FREDERICK L. MOORE, GLOBAL DIRECTOR, MANUFACTURING AND TECHNOLOGY, DOW CHEMICAL

COMPANY

Mr. MOORE. Good afternoon, Mr. Chairman and Members of the

Subcommittee. My name is Fred Moore, and I am the Director of

Manufacturing and Technology for Energy with the Dow Chemical

Company. In that capacity I am responsible for assuring that Dow’s

use of energy is as efficient as possible.

I am here today in my capacity as Chairman of the Energy Efficiency Task Force of the National Association of Manufacturers

(NAM), the largest industrial trade association in the U.S. NAM

represents more than 14 million men and women in the manufacturing economy producing $1.5 trillion in revenues last year. We

10

are pleased to offer our views on DOE’s ITP Program and how to

achieve greater industrial energy efficiency.

Energy efficiency is an imperative for the American manufacturers, as well as every other sector of our economy. NAM affirmed

the importance of energy efficiency with the release of its competitiveness model energy legislation earlier this year. As a nation we

must begin to think of the energy we don’t use as our first fuel of

choice.

Natural gas prices differ widely around the world from 75 cents

per million BTUs in the Middle East to the winter forecast for the

U.S. of $9 per million BTUs. Our inability to pass on these energy

costs in the price of our products results in manufacturing being

the shock absorber for high and volatile fuel prices.

We are the leading edge of demand destruction in the face of

high energy prices. The demand destruction is just a stare-all term

for job loss. Nearly three million high-paying manufacturing jobs

have been lost since the run-up in natural gas prices in 2000.

What are we doing about this? In Dow we are relentless in our

drive to reduce the amount of energy it takes to produce each

pound of product. Between 1995, and 2005, we improved our energy efficiency by 22 percent, saving nearly 900 trillion BTUs. That

is enough energy to power all the residential and commercial businesses in California for an entire year. And we saved nearly $4.5

billion in the process.

Dow is committed to achieve another 25 percent improvement in

energy efficiency by 2015. To underscore the impact of energy efficiency on our nation’s energy security, if our entire economy in the

U.S. would achieve a similar goal, assuming normal GDP growth,

we could displace the oil equivalent of all of our current imports

from the Persian Gulf.

We have learned much from our work with DOE’s ITP Program.

In addition to being an active participant in their Save Energy

Now Program, we hosted 13 DOE energy assessments at our nine

largest sites in the U.S. in the last two years. These joint assessments identified nearly four trillion BTUs per year of savings, with

an annual amount of roughly $30 million.

In fact, just last week the Department of Energy helped us optimize one of our pumping systems at our Texas City Plant in Texas.

That literally allowed us to begin saving $200,000 a year in energy

costs that day. It was almost as easy as flipping a switch.

If ITP can identify additional opportunities for us, imagine what

it can do for the thousands of small and medium-sized companies

that have neither the internal expertise nor the resources of Dow.

That is why NAM and the DOE recently signed a Memorandum of

Understanding (MOU) to work together to promote energy efficiency among its 12,000-member companies. It is our joint responsibility to help them. In order to succeed, we need a strong ITP

Program, because it brings together the collective expertise of business, of government, and others such as NAM to multiply its impact.

You have asked how to strengthen the program. Please consider

the following suggestions. It should expand to focus on co-generation, combined heat and power, and waste heat recovery. It should

increase its dialogue in involvement with a manufacturing comVerDate 11-MAY-2000 15:43 Feb 28, 2008 Jkt 037982 PO 00000 Frm 00014 Fmt 6633 Sfmt 6601 C:\WORKD\E&E07\092507\37982 SCIENCE1 PsN: SCIENCE1
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pany representatives to insure that the activities meet the needs

of the manufacturing sector.

Funding should be restored to late 1990 levels to allow re-staffing of the program. Programs that reach out to small and medium

manufacturers should be coordinated with other governmental activities to minimize redundancy and maximize synergy. And last,

there should be close coordination with EPA’s Energy Star Program

to make best use of their tools.

Energy efficiency has for too long been the Rodney Dangerfield

of energy policy. It gets no respect. Through our collective efforts

we can assure that energy efficiency gets the respect it deserves.

Thank you, and I look forward to answering any questions.

[The prepared statement of Mr. Moore follows:]

PREPARED STATEMENT OF FREDERICK L. MOORE

The Dow Chemical Company, on behalf of the National Association of Manufacturers (NAM), appreciates the opportunity to submit these written comments concerning the Department of Energy (DOE) Industrial Technology Program (ITP).

High U.S. energy prices have spurred a significant amount of private sector action

on energy efficiency. Many companies, for example, have established energy efficiency programs. In our experience, in order to be successful, a corporate energy efficiency program requires top-level commitment; an integrated approach; and a continuous effort to identify, evaluate, and prioritize among energy efficiency opportunities. To help companies achieve energy efficiency improvements, several third-party

initiatives are underway, including the recent creation of the NAM Energy Efficiency Task Force.

The country currently faces significant energy challenges in the form of energy

security and climate change. Given these dual and interrelated problems, promotion

of energy efficiency represents the consensus first step toward a comprehensive policy solution. However, a sole reliance on private sector action is not going to solve

the inter-linked problems of energy security and global climate change. A partnership between the private and public sectors will be required to promote energy efficiency, the development of renewable and alternative energy, and the development

and deployment of energy-saving technologies. The DOE ITP program represents

the kind of government program that is necessary to help US manufacturers identify opportunities for energy savings through efficiency. We believe this very valuable program should be strengthened in order to promote energy efficiency across

the manufacturing sector.

The Dow Chemical Company

Dow was founded in Michigan in 1897 and is one of the world’s leading manufacturers of chemicals and plastics. We supply more than 3,300 products to customers

in 175 countries around the world, including hundreds of specialty chemicals, plastics, crop protection products, and pharmaceutical raw materials essential to life.

Dow is an energy-intensive company. Dow uses energy, primarily natural gas liquids, as a feedstock to make our products. We also use energy to drive the chemical

reactions necessary to turn our feedstock materials into useful products, many of

which lead to net energy savings.

Dow is committed to sustainability. Our ambitious 2015 sustainability goals underscore this commitment to reduce our energy and climate ‘‘footprint,’’ and to assist

other manufacturers and the public to do likewise.

Dow has invested in a comprehensive energy efficiency program, and we have

achieved impressive results. Between 1995 and 2005, we reduced our energy intensity (i.e., energy use divided by production output) by 22 percent. We are not stopping there. We have committed to reduce our energy intensity by an additional 25

percent from 2005 to 2015. Such an improvement, if replicated across the country,

would be extremely beneficial.

For example, if the U.S. reduced its energy intensity by 25 percent between 2005

and 2015, and assuming GDP grows at the expected three percent rate, we would

eliminate the oil equivalent of all the Persian Gulf imports today.

Our financial investment in energy efficiency has been rewarded several times

over in terms of energy savings. We believe our experience with energy efficiency

can serve as an example for other companies and the general public.

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Aside from financial rewards, our energy efficiency program has also helped reduce our absolute levels of greenhouse gas emissions, and we are committed to do

even better in the future. Our aggressive focus on energy intensity has contributed

to, since 1990, a reduction of over 20 percent in absolute greenhouse gas emissions—below the reduction target set in the Kyoto Protocol.

Energy Efficiency at Dow

Dow is using its expertise to minimize its energy and climate ‘‘footprint’’ and to

develop products that enable its downstream customers to do likewise.

The Dow Chemical Company is a recognized industry leader in energy management. Energy efficiency has been part of our heritage since the very early years of

our company, when Dow helped pioneer the use of industrial combined heat and

power, also known as co-generation. In conventional power plants, a significant portion of the energy is lost (usually through cooling towers or flue gas) in the process

of electricity generation. In contrast, co-generation captures more of the heat, utilizing less fuel, which has a significant impact on greenhouse gas emissions and improved air quality relative to conventional utility power. Co-generation typically

uses 20 to 40 percent less fuel than separate steam and power generation because

energy is captured and used that would otherwise be wasted.

In recent years, through a company-wide focus on energy efficiency, we have dramatically reduced our energy intensity—and exceeded an aggressive, long-term corporate energy efficiency goal mentioned previously. Figure 1 shows how our $1 billion investment in energy efficiency has returned around $4.5 billion in energy savings.

Dow’s experience in energy efficiency has convinced us that we can help others

realize these benefits, too. Indeed, energy efficiency is a universal tool. It should be

the tool of choice, irrespective of whether one’s motivation is to save money, reduce

GHG emissions, or reduce dependence on foreign energy. It is the cheapest and most

renewable ‘‘fuel’’ of all.

Dow’s energy efficiency and conservation initiative relies strongly on our structured approach to resource conservation and energy intensity reduction. At the core

is the sustained commitment and support of Dow’s corporate leadership. The overall

Energy Efficiency and Conservation effort within Dow is driven by a Global Energy

Efficiency Leader, who has full responsibility and accountability for implementing

and managing an aggressive global energy conservation plan. The energy conservaVerDate 11-MAY-2000 15:43 Feb 28, 2008 Jkt 037982 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 C:\WORKD\E&E07\092507\37982 SCIENCE1 PsN: SCIENCE1
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tion leader sponsors technology center and site energy efficiency teams and networks throughout the company to identify energy saving opportunities, develop

long-term energy improvement plans, and implement projects.

In addition, each business unit at Dow is responsible for aligning its goals and

plans to the corporate goal on energy efficiency. Focal points within each business

unit are responsible for driving energy efficiency within their respective technologies. Energy efficiency is further driven by the energy conservation teams at our

13 largest energy-consuming sites, which account for over 90 percent of Dow’s energy usage. These local teams actively engage employees in energy efficiency improvement projects at their sites and drive an energy efficiency mindset and culture

at the local level.

The ITP: Promoting Energy Efficiency

Outside of Dow, the company also partners with, and/or supports, government and

other organizations in their efforts to promote energy efficiency among all consumers. Dow is an active participant in the U.S. Department of Energy’s ‘‘Save Energy Now’’ industrial energy efficiency campaign. Save Energy Now is sponsored by

the DOE Industrial Technology Program. Dow was one of the first six companies

selected for a DOE Energy Savings Assessment (ESA) because of its interest and

past success in setting an example in energy management.

In the past two years, the company has hosted thirteen energy assessments at

nine of its largest U.S. manufacturing facilities. These assessments have included

steam, process heating, and pumping systems. These joint assessments identified

additional energy saving opportunities:

• The total energy savings potential found in the assessments was more than

3.75 trillion Btu per year, valued at more than $30 million per year.

• At the end of August, seven of the plants have reported implementing energy

savings valued at more than $6.1 million.

• Additionally, $3.4 million worth of energy savings projects are underway.

• Finally, $4.7 million worth of energy savings projects are scheduled to be

done.

Further, Dow collaborated with the DOE to pilot conducting a series of Industrial

Best Practices training sessions via webcast, also well as hosting, in-depth DOE

Steam Systems Assessment training sessions in Texas and Louisiana, drawing not

only Dow engineers but also surrounding industrial community members, enabling

other companies to benefit from energy saving assessment tools and strategies. We

are continuing that collaboration on other projects, such as the Superior Energy Performance Partnership, whose purpose is to develop a more consistent framework for

achieving greater energy efficiency in all U.S. manufacturing plants. The goal of the

Partnership is to reduce, by 25 percent, the energy intensity of U.S. industry over

the next ten years. Meeting this goal would save 8.4 quadrillion Btu per year, which

is equal to the annual energy consumption of the State of California.

It is useful to provide an illustration of the value of the ITP. Last December, one

of Dow’s combined heat and power (CHP) units, known as Power 6, participated in

the Energy Savings Assessment sponsored by the Department of Energy’s ‘‘Save Energy Now’’ program. The three-day activity was facilitated by an expert consultant,

and focused on steam system optimization and energy conservation. The assessment

yielded a list of opportunities that were evaluated by the Operations and Technology

Center teams.

Several of the opportunities were implemented and led to significant energy savings. DOE is launching a recognition program to reward plants who have implemented significant savings through the energy assessment. Power 6 has achieved

the highest award level—Energy Champion—by saving over 250,000 million Btu

and/or over 15 percent total energy savings.

If a company like Dow, that has a successful track record in energy efficiency, can

benefit so much from the ITP program, then what about the thousands of small and

medium-size companies that have neither the internal expertise nor the resources?

This is where the unique collaboration between the National Association of Manufacturers (NAM), government, and other organizations can help take industrial energy efficiency to the next level. The U.S. industrial sector is responsible for 33 percent of total U.S. energy consumption. The opportunities for energy efficiency are

enormous.

The NAM is the largest industrial trade association in the United States. The

NAM represents the more than 14 million men and women employed in the manufacturing economy, producing $1.5 trillion in revenues last year. Through its membership, the NAM has access to a large number of U.S. manufacturers, and has the

14

means to both communicate and market to candidate companies on the availability

of energy efficiency resources. In support of the NAM’s agenda to establish a national commitment to reduce energy intensity of the U.S. economy through strategic

goal-setting, public-private partnership and consumer education, the NAM created

its Energy Efficiency Task Force.

The NAM further affirmed the importance of energy efficiency with the release

of its comprehensive model energy legislation earlier this year, the Energy Security

for American Competitiveness Act (ESAC), which treats energy efficiency as a virtual

domestic energy source that can displace imports. The NAM recently signed a

Memorandum of Understanding (MOU) with the DOE to promote increased industrial energy efficiency among NAM member companies. The purpose of this MOU

is to establish a working arrangement between the U.S. Department of Energy

(DOE) Office of Energy Efficiency and Renewable Energy’s Industrial Technologies

Program (ITP) and the NAM. The NAM and the EPA’s Energy Star Program are

working on a partnership. The NAM continues to work on this project with NGO

partners, such as the Alliance to Save Energy (ASE) and the American Council for

an Energy Efficient Economy (ACEEE).

This MOU supports a variety of activities, which aim to assist manufacturing facilities to initiate and implement energy management programs, adopt clean energy

efficient technologies, and achieve continual energy efficiency and intensity reduction improvements. NAM and DOE will also coordinate in measuring and documenting the energy savings achieved in NAM member company manufacturing facilities as impacted by the energy efficiency campaign supported by the parties and

other partners to the extent the information is available. This MOU represents a

non-binding expression of intent between the parties to work together to promote

energy efficiency in manufacturing.

As we face the interrelated issues of energy security and climate change, we must

increasingly rely on the energy we do not use as the fuel of choice. Energy efficiency

is the well we must tap for this resource.

High global oil prices affect the economy as a whole. Natural gas prices differ

widely around the world, from 75 cents per million Btu in the Middle East to a forecast of nearly $9.00 for this coming winter in the U.S. Since we often can’t pass on

our energy costs in the price of our products, manufacturers become the shock absorber for volatile and high natural gas prices.

Manufacturing is the leading edge of demand destruction in the face of high energy prices. And demand destruction is just a more palatable economic term for job

destruction. Figure 2 shows how high energy costs have contributed to over three

million high paying manufacturing jobs being lost since the run up in natural gas

prices began in 2000.

15

The Energy Efficiency Task Force, chaired by Dow, is partnering with DOE, EPA

EnergyStar, the Alliance to Save Energy, the American Council for an Energy Efficient Economy, and other energy efficiency organizations to make use of readily

available tools which will help manufacturers identify and address cost-effective energy efficiency opportunities.

The partners are providing their specific expertise and services to access, communicate, and market to a large number of U.S. manufacturers, and deliver a consolidated catalog of tools, technologies, and a menu of options for future direction in

energy management. NAM will utilize a website portal to access the right energy

efficient technology, a consolidated library of tools, and roadmaps to implementing

effective energy management programs.

Through marketing and outreach efforts, the partners plan to reach a greater

number of small and medium-sized manufacturers; help them progress toward

greater energy efficiency; and establish systems and technology improvements capable of delivering immediate and sustaining long-term energy savings.

Recommendations for Congress and the Administration

The ITP program offers a wide range of important benefits to the manufacturing

sector:

• The program provides training for the next generation of manufacturing energy efficiency engineers through the Industrial Assessment Program. Graduates of this program have a proven track record of being able to perform in

jobs much more quickly than students without the experience. These students

also become sensitive to identifying and implementing energy efficiency opportunities.

• The program has the ability to convene representatives from a wide range of

companies to work on manufacturing issues as a whole, without raising antitrust concerns.

• The program’s cooperative RD&D efforts have been valuable to industry by

allowing industry and government to work together to target research that

meets the needs of manufacturing industries, resulting in near-term impacts.

Dow and NAM support the ITP, which is currently the only federal program that

supports manufacturing research.

To strengthen the program, we recommend the following:

• Expand the program to focus on co-generation, CHP and recycled energy as

important opportunities.

• Develop closer relationships to manufacturing company representatives to ensure that ITP activities meet the needs of the manufacturing sector.

• Program funding should be restored to late-1990s levels to allow re-staffing

of the program.

• The program should be coordinated with NIST MEP Centers and DOE CHP

Regional Application Centers to maximize synergies between program offerings and minimize redundancies.

Conclusion

U.S. manufacturers are doing a great deal to improve their energy efficiency performance. High U.S. energy prices are a driver, as are the dual problems of energy

dependence and rising GHG emissions. But a sole reliance on private sector action

is not going to solve these problems. A partnership between the private and public

sectors will be required to promote energy efficiency, the development of renewable

and alternative energy, and the development and deployment of energy-saving technologies.

Public policy plays an important role, and Congress must enact measures to reduce demand, increase supply, and promote alternatives. The first order of business

should be to promote energy efficiency. The DOE ITP program represents the kind

of government program that is necessary to help U.S. manufacturers identify opportunities for energy savings through efficiency. We believe this very valuable program should be strengthened in order to promote energy efficiency across the manufacturing sector, increase our energy security, and reduce GHG emissions.

BIOGRAPHY FOR FREDERICK L. MOORE

Fred Moore is the Global Director of Manufacturing & Technology for the Energy

business in Dow. He is responsible for the safe and reliable production of power,

steam, and other utilities for Dow globally, which represents more than 10 percent

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of Dow’s asset base. In his Technology role, he is responsible for development, support and application of Energy technology globally and with Dow’s major joint ventures.

Fred is a graduate of Purdue University and began his career with Union Carbide

in 1975. In subsequent years, he has held technical roles and managerial roles in

a number of businesses, functions, and locations in the U.S. and Canada. In addition to his manufacturing experiences in North America, he has been a corporate

media spokesperson for environmental matters, lobbied at the State and Federal

levels of government, served on a joint venture board of directors, been chairman

of or served as board member of several state and industry trade association groups.

Chairman LAMPSON. Thank you, Mr. Moore.

Mr. Cicio.

STATEMENT OF MR. PAUL N. CICIO, PRESIDENT, INDUSTRIAL

ENERGY CONSUMERS OF AMERICA

Mr. CICIO. Good afternoon, Chairman Lampson, Ranking Member Inglis. Thank you for the opportunity to be here.

The Industrial Energy Consumers of America (IECA) is a national, non-profit, non-partisan trade association whose membership are exclusively energy-intensive industry companies. The manufacturing sector competes globally, where energy-intensive industries reducing energy consumption is essential. We either continually reduce our energy consumption per unit of product, or we

cease to be competitive. And while energy efficiency is highly valued by the industrial sector, other energy issues weigh heavy on

us and can overshadow the benefits of energy efficiency.

Since 2000, the manufacturing sector has lost 3.1 million jobs,

specifically 18 percent of all manufacturing jobs. To our knowledge

this is the first time in U.S. history where we have lost manufacturing jobs despite robust economic growth for the last four years.

High relative energy costs, particularly natural gas costs and now

rising electricity costs, have been a significant factor for these energy-intensive industries, and we are fearful that if Congress does

not increase availability and affordability of domestic energy, more

manufacturing plants will move offshore.

Manufacturers are also wary of the direct and indirect costs of

Congressional efforts to cap greenhouse gas emissions. Greenhouse

gas emission concerns have already incentivised power generators

to increase their consumption of natural gas by 19 percent since

2000, which has driven up the cost of natural gas and electricity

for all consumers. And we are concerned that without resolving

these issues more manufacturing jobs will be lost.

While the industrial sector represents 32 percent of U.S. energy

consumption, we have demonstrated absolutely remarkable performance in energy efficiency. Since 1990, the industrial sector

total energy consumption increased by one percent, and we increased the total industrial value of shipments by almost 32 percent. The ITP Program has been an important part of that success

story.

Improvement in energy efficiency has also played an important

role in reducing greenhouse gas emissions. In the industrial sector,

the direct and indirect greenhouse gas carbon emissions, in 2006,

are below the 1990, levels. Residential carbon emissions are up 31

percent, commercial, up 34, transportation, up 25, electricity production, up 32 percent. So the performance of the industrial sector

has been remarkable.

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There is no sector in the economy that is more supportive of energy efficiency than our sector. The Industrial Technology Program

gets high marks from the IECA member companies. Given the relatively modest federal money dedicated to the program, the benefits to the industrial sector and to the United States economy are

significant. In our view we simply need to do more of the same, including restoring higher levels of funding. We do support higher

levels for cost-sharing research, demonstration, and deployment of

technology and continue to expand programs like Save Energy

Now.

The industrial sector needs R&D in areas that provide long-term,

cost-effective solutions, particularly for the high-risk, high-value,

long-term process technology. Examples of R&D interests of our

members deal with control systems, optimization of energies in

steam generation, process heaters, heat recovery technology, and

alternative energy fuels and feedstocks.

Lastly, IECA member companies wish to be sure this Subcommittee knows how much they value the Save Energy Now Program. Save Energy Now is a superb program because it helps companies accelerate finding high-quality energy reduction projects

through plant assessments and uses existing technology, existing

products, and existing knowledge to reduce energy consumption.

The 200 assessments completed in 2006, found over $500 million

in potential energy savings, and the DOE spent only $3 million on

the specific program. A tremendous investment for federal dollars.

Thank you.

[The prepared statement of Mr. Cicio follows:]

PREPARED STATEMENT OF PAUL N. CICIO

Good afternoon Chairman Lampson and Ranking Member Inglis. Thank you for

the opportunity to testify before this important subcommittee and on this very timely topic.

The Industrial Energy Consumers of America (IECA) is a national non-profit nonpartisan cross-industry trade association whose membership is exclusively from the

energy intensive manufacturing sector and is dedicated to a broad array of energy

and environment related issues.

The manufacturing sector competes globally. For energy intensive industries, reducing energy consumption per unit of product produced is essential. We either continually reduce our energy cost per unit of product or we will cease to be competitive.

While the industrial sector represents 32.2 percent of the U.S. energy consumption we have demonstrated remarkable performance in energy reduction. Since 1980

the industrial sector total energy consumption increased by only one percent while

increasing total industrial value of shipments by 53 percent.

Improvement in energy efficiency has also played an important role in reducing

GHG emissions. The industrial sector direct and indirect carbon dioxide emissions

in 2006 are slightly below the 1990 level while GHG emissions from the residential

sector increased 31.4 percent; commercial +34.6 percent; transportation +25 percent

and electricity + 31.7 percent.

Energy is used as both fuel and feedstock and can represent as high as 70 percent

of the cost of producing some products. For perspective, the industrial sector contains about 226,000 manufacturing sites. However, there are about 6,800 sites that

use greater than $2 million of energy annually and consume about 53 percent of

all energy in the industrial sector.

The Industrial Technology Program gets high marks from IECA member companies. Given the relatively modest federal money dedicated to the program, the benefits to the industrial sector and the U.S. economy are significant.

In our view, we simply need to do more of the same. IECA supports greater

spending on R&D programs that provide cost sharing research, demonstration and

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deployment of technology and continuing to expand programs like ‘‘Save Energy

Now.’’

The industrial sector needs R&D in areas that provides long-term cost-effective

technology solutions, particularly for high-risk high-value long-term technology. Examples of R&D areas of interest are: energy management systems that include control and data acquisition; control system improvements and optimization in the

areas of steam generation, process heaters; heat recovery technology; and alternative energy sources for fuels and feedstock.

Lastly, IECA member companies wish to be sure this Subcommittee knows how

much they value the ‘‘Save Energy Now’’ program. ‘‘Save Energy Now’’ is a superb

program because it helps companies accelerate finding high quality energy reduction

projects through plant assessments and uses existing technology, product and

knowledge to reduce energy consumption.

Thank you.

BIOGRAPHY FOR PAUL N. CICIO

Paul N. Cicio has been the President of the Industrial Energy Consumers of

America (IECA) since its founding six years ago. IECA is a non-profit trade association created to promote the interests of manufacturing companies for which the

availability, use and cost of energy, power or feedstock play a significant role in

their ability to compete in domestic and world markets. Membership represents a

diverse set of energy intensive industries including: plastics, cement, aluminum,

paper, food processing, brick, chemicals, fertilizer, insulation, steel, glass, industrial

gases, pharmaceutical and brewing.

Mr. Cicio is well know in Washington circles as a consumer advocate for the industrial sector on issues related to natural gas supply, natural gas price manipulation, electricity, energy efficiency and climate change policy. He has testified four

times before the U.S. House of Representatives; twice before the U.S. Senate; and

twice before the Federal Energy Regulatory Commission. He has also intervened at

the Commodity Futures Trading Commission.

In 2006, the Secretary of the Interior appointed Mr. Cicio to the U.S. Department

of Interior Outer Continental Shelf Policy Advisory Committee. And in 2007, the

Secretary of Energy appointed him to the National Coal Council, an advisory council

to the Secretary. In both appointments, Mr. Cicio became the first energy consumer

advocate.

Previous to IECA, Mr. Cicio was employed by The Dow Chemical Company where

he held a number of diverse responsibilities including: hydrocarbons and energy

global issues management and Federal Government affairs, hydrocarbons and energy senior commercial manager, marketing manager, district sales manager, product sales manager and field sales. He retired from Dow Chemical with almost 30

years of service.

Chairman LAMPSON. Thank you, Mr. Cicio.

Mr. Kavanagh.

STATEMENT OF MR. LAWRENCE W. KAVANAGH, VICE PRESIDENT, MANUFACTURING AND TECHNOLOGY, AMERICAN

IRON AND STEEL INSTITUTE

Mr. KAVANAGH. Thank you, and good afternoon. I work at the

American Iron and Steel Institute, but today I am representing the

Alliance for Materials, Manufacturing Excellence, or AMMEX.

AMMEX consists of manufacturers in aluminum, chemicals, glass,

forest products, metal casting, and steel and other organizations

concerned about energy use and competitive manufacturing. So my

remarks are in that larger context today.

A little bit of background. The Inter-Governmental Panel on Climate Change says that we need to reduce CO2 emissions by 50 percent by 2050 to keep global warming below two degrees. Two degrees is kind of the threshold above which bad stuff happens and

below which everything is okay. So if you look at the chart that is

in my testimony, it shows the improvements in energy use and CO2

emissions that materials manufacturers have made over time, and

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a lot of that was done in cooperation with DOE and the gentleman

to my right has already quoted the figures and facts extensively.

So the energy usage gains that we have been able to make make

sense because all processes are mature, and we have been working

on lowering energy use for some time.

However, it also shows, and this is the key point, that to make

any significant change in energy use and CO2 emissions going forward, new processes are required. There is just not enough left in

today’s processes because we are relatively energy efficient already.

Not to get to the big gains that are required or will be required in

a carbon-constrained economy.

So whether you call these breakthrough, game changing, or

transformational technologies, new process development is the only

path to meeting society’s needs regarding energy use and CO2

emissions.

AMMEX supports an ITP Program establishing a public, private

R&D focused on new process development over the long-term, and

our estimates indicate the same as has been already mentioned

that a funding level of the late ’90s period of $125 million or so is

a good place to start.

Federal dollars coupled with industry dollars is a very powerful

combination, and not only addresses the technical challenges we

face, but by placing this joint funding at universities, it also addresses our crucial and expanding need for the next generation of

scientists and innovators in our industries.

We also recognize there is a need for near-term and incremental

work, and this part of the program should address censors, motors,

steam, pumps, and the like, and it should also invite the participation of new stakeholders that may have more room for improvement in the near term than materials manufacturing.

In summary, it is necessary that we realize we could not

incrementalize to the type of energy savings necessary to manufacture in the carbon-constrained world. High-efficiency motors and

light bulbs will simply not be enough to come close. Reducing energy use and CO2 emissions are everyone’s responsibility, the public and the private sector. And the way to meet this challenge is

to create a jointly-funded R&D program to transform industrial

processes into ones that use less and diverse forms of energy while

emitting little or no CO2.

Thank you.

[The prepared statement of Mr. Kavanagh follows:]

PREPARED STATEMENT OF LAWRENCE W. KAVANAGH

Chairman Lampson, Ranking Member Inglis, and other Members of the Subcommittee, thank you for inviting me here to speak today.

My name is Lawrence Kavanagh and I am Vice President—Manufacturing and

Technology at the American Iron and Steel Institute. I am here today on behalf of

the Alliance for Materials Manufacturing Excellence or AMMEX. The organizations

that are AMMEX members include the basic materials manufacturing sector [aluminum, chemicals, forest products, glass, metal casting, steel] in the U.S. economy

along with several stakeholders in materials manufacturing, such as the Northeast

Midwest Coalition, the National Association of State Energy Officials and the American Council for an Energy-Efficient Economy.

The member organizations of AMMEX have been partners with the Department

of Energy’s Industrial Technology Program since its inception. ITP is a true publicprivate partnership. DOE and materials manufacturers jointly fund cutting-edge research that addresses the needs of the Nation and materials manufacturers. All

20

projects have the shared goals of reducing energy consumption, reducing environmental impact and increasing competitive advantage of U.S. materials manufacturers.

By reducing the energy intensity of materials manufacturers and accelerating the

delivery of new technology, ITP has helped make U.S. materials manufacturers

more competitive in global markets, preserving and creating good-paying jobs in the

process. The program is unique because we select only projects with ‘‘dual benefits’’—a public benefit such as reduced emissions or petroleum use, justifying the

federal funding; and an industry benefit such as a more efficient process, justifying

the industrial funding.

By reviewing the chart above, one can see that materials manufacturers have

greatly reduced energy use since 1990 because of their co-investment with DOE.

Materials manufacturers have become very efficient for the processes they operate

today and in order to make the type of gains in the future that have been seen since

1990, new process development is required. Research and development efforts into

new processes will open up large energy savings and carbon dioxide mitigation opportunities.

AMMEX fully supports the Bill’s focus on the development and deployment of new

process technologies.

U.S. materials manufacturing continues to face challenges resulting from increased cost and decreased availability of traditional energy supply resources. These

challenges have stimulated innovation in the materials manufacturing sector in

order to create significant energy improvements and to diversify the energy supplies. While the innovations of the past have brought the materials manufacturing

sector a long way, the sector cannot go further without new innovations. In order

to do this, the materials manufacturing processes must be transformed, i.e., new

processes and new innovations must be developed which will use much less energy

and which will be able to utilize diverse forms of energy.

To accomplish these goals, the Federal Government and industry will need to embark upon a co-funded effort to broaden and accelerate inherently high-risk research, development, and deployment of new materials manufacturing processes

that utilize diverse energy sources. This effort will also allow the materials manufacturing sector to lessen dependence on natural gas and oil resources and conventional electricity sources—thus benefiting consumers through contribution to a stable energy market.

Dramatic increases in industrial energy prices and growing global competition

threaten the vitality and the future of U.S. materials manufacturing. Unless this

trend is reversed, American manufacturing jobs in these key industries will increasingly move overseas. Manufacturers have responded to such challenges in the past

21

by applying the power of innovation to create new products and processes that sustain the foundation of the U.S. economy.

Secondarily, proposed changes within the DOE Industrial Technologies Program

are also supported by AMMEX members:

• The broadening of the stakeholder group to include data centers and food

processors is important as it may offer opportunities for incremental energy

savings in the near-term

• The establishment of a cross-cutting portfolio that includes lightweight materials research, inclusive of those made by AMMEX members [e.g., advanced

high strength steels, aluminum, metal castings, composites, glasses and others]

• The establishment of a cross-cutting portfolio that includes nano-manufacturing so long as it recognizes that materials made by AMMEX members are

in fact nano-materials.

AMMEX remains concerned with the recent funding levels of ITP. In the years

1990–96 the program consisted largely of ‘‘industry specific funding’’ and averaged

$100 million annually. Both the House and Senate appropriations bills would increase the total funding for ITP to $58 million. However, this amount remains far

less than historical levels for the program, and far less than what is necessary to

go after the sizable benefits associated with new process development. As the Committee further examines ITP, we request your assistance in:

• Increasing funding for ITP to at least $125 million.

• Retaining a balanced portfolio of research from the point of view of research

application, i.e., that the portfolio includes both industry specific R&D in at

least aluminum, chemicals, forest products, glass, metal casting and steel;

and cross-cutting research.

• Retaining a balanced portfolio of research from the point of view of research

impact, i.e., that 50 percent or more of the funding go to research into new

process development [where the energy savings potential in industry is highest].

We would be happy to provide input to the Committee detailing the above points.

The U.S. also faces serious shortages in the science and engineering manpower

that is needed to keep America’s competitive edge in world markets through technology innovation and timely application. From the President’s State of the Union

Address to the Protecting America’s Competitive Edge Act in Congress, the Nation

is awakening to the need for a re-energizing of our commitment to technology education.

We have proposed to the Committee an effort to both rebuild America’s materials

manufacturing industries and revitalize our science and engineering institutions. It

builds a new public-private partnership to support these twin goals. It will ensure

that the U.S. materials manufacturing industry will remain vital and competitive

through:

• Accelerating technology innovation to ensure the future competitiveness, resource efficiency and sustainability of our domestic materials manufacturing

industry;

• Building the vital intellectual infrastructure, in American universities and

laboratories, that will work in partnership with the materials manufacturing

industry; and

• Maintaining the healthy American materials manufacturing base, which is

vital to our national security.

Our proposal would accomplish these goals by:

• Establishing an industry co-funded research program that develops the innovative, breakthrough technologies that will sustain our competitiveness, while

realizing national goals in energy and resource efficiency;

• Supporting materials manufacturing research programs at universities and

research institutions across the country;

• Establishing a program that accelerates the adoption of technology innovation

in the marketplace; and

• Assisting industrial facilities in identifying opportunities for greater energy

efficiency, improved product quality and reduced environmental impacts.

22

On behalf of my partners in the AMMEX coalition, I thank you for the opportunity to appear before you today. We look forward to continuing to work with the

Committee as you move forward on potential legislation.

BIOGRAPHY FOR LAWRENCE W. KAVANAGH

Mr. Kavanagh is responsible for AISI’s activities concerning how steel is made

today, how steel will be made in the future and how steel competes with other materials, and alignment of these tasks with AISI’s overall goal of making steel the ‘‘material of choice.’’ These include oversight of a) various manufacturing committees

whose main goals are extensive operations benchmarking and the development and

sharing of best practices, problem-solving and the identification of ‘‘technical needs’’

which would lower cost, advance safety, etc.; b) collaborative research and development among steel makers, suppliers, universities and labs designed to improve process control, performance and/or climinate technical barriers to market growth; c)

programs to evaluate how steel performs vs. competing materials in order to assess

where we have advantages/disadvantages with the goal of developing projects to

widen our lead/narrow the gap as appropriate.

Prior to joining AISI in 1991, Mr. Kavanagh was General Manager, Engineering

for Davy International’s Automation Services Division [now doing business as

Kvaerner and VAI]. In this capacity, Mr. Kavanagh was responsible for all phases

of project execution—estimating, sales support, specification, engineering, project

management, field start-up and acceptance testing for Davy’s steel plant equipment

installations around the world.

Mr. Kavanagh is a graduate of the University of Notre Dame [BSEE] and the

‘mini-MBA’ program at George Mason University. He is an active/former board

member of various community service and research organizations.

Chairman LAMPSON. You are welcome. Thank you.

Mr. Verdict.

STATEMENT OF MR. MALCOLM E. VERDICT, ASSOCIATE DIRECTOR, ENERGY SYSTEMS LABORATORY, TEXAS A&M ENGINEERING PROGRAM, TEXAS ENGINEERING EXPERIMENT

STATION

Mr. VERDICT. Chairman Lampson, Ranking Member Inglis, and

Members of the House Subcommittee on Energy and Environment,

I would like to thank you for this opportunity to testify on the U.S.

Department of Energy’s Industrial Assessment Centers, which provides technical assistance for small and medium-sized manufacturers and industrial facilities, utilizing university, faculty, and students from 26 universities around the Nation.

My name is Malcolm Verdict, and I appear before you this afternoon representing the Texas Engineering Experiment Station located in College Station, Texas. The Texas Engineering Experiment

Station, known as TEES, is a statewide engineering research agency of the State of Texas. We are located on the Texas A&M campus

where our engineering programs educate over 9,000 undergraduate

and graduate engineering students every year.

We have run an industrial assessment center for the past 21

years and have seen first-hand the tremendous positive benefits it

has had on industry and our young engineering students. I would

like to address three main points this afternoon for the Committee.

First, the many valuable contributions of the program, some of its

current limitations, and recommendations to build upon its past

successes.

First, the Industrial Assessment Centers (IAC) have made significant, long-term contributions to industry and to the education

of participating engineering students. The program is very unique

within DOE since it directly involves engineering students in close

23

partnership with industry. Engineering faculty and undergraduate

students conduct on-site assessments. These are typically one-day

visits and provide written recommendations to the owners and operators for saving energy and reducing pollution.

The many valuable benefits from this program include; one, providing cost-effective recommendations for reducing energy and pollution and increasing their productivity. Two, enabling small and

medium-sized manufacturers in industry to compete in a highlycompetitive global economy. Three, providing real world energy-related job experience for engineering students, and finally, creating

valuable new industrial partnerships for the participating universities.

Some significant IAC Program successes include over 13,500 assessments have been made involving over 3,000 engineering students. Participating facilities save on average $5,500 per year with

a payback often less than 12 months. U.S. companies have saved

more than 700 million in energy and productivity gains according

to the Department of Energy. In fact, enough energy has been

saved to power the city of Boston, Massachusetts. And more than

1.5 million industrial jobs have been created through this program.

Mr. Chairman, giving you a good Texas example, the Texas Tile

Manufacturing Company in Houston, Texas, is but one great example of the many valuable benefits with DOE Program provides its

clients. With high energy prices, inefficient energy practices, increased foreign competition, and located within the EPA-designated, non-attainment area, this manufacturer was an ideal IAC

Program candidate. In 2006, our Texas A&M team conducted an

on-site assessment and identified over $250,000 in energy savings

and enabled the firm to find an additional $100,000 in savings

while implementing all of the team’s recommendations.

Equally important, the energy savings are helping the Houston

region meet its EPA clean air requirements. It bears repeating that

the IAC Program helps educate students with highly-critical engineering skills needed in the Nation’s next engineering workforce.

Most IAC graduates go on to energy-related jobs in industry, national laboratories, U.S. Department of Energy, and in engineering

teaching careers. In fact, a University of Tennessee study on the

careers of IAC graduates found that 73 percent of those surveyed

held a position at one time related to energy efficiency, and an

amazing 58 percent of these graduates have remained in energy efficiency as a part of their job description throughout their career.

While the Industrial Assessment Centers have made significant,

long-term contributions to industry, it is not achieving its full potential in our opinion. Some examples of program limitations include program management continuity and resources have been

very inconsistent, especially in the last three years. Participation

by only 26 universities leaves some areas of the Nation underserved. The program fails to address other valuable target audiences. The program does not include an energy research component, which limits its opportunities for university, facility, and student educational activities. And there is no clear charter to leverage federal dollars.

Finally, program success metrics do not incorporate the value of

training our nation’s future energy engineers. We believe that the

24

IAC Program, which is already a very good program, could be enhanced. Some suggestions for improvement include recreating an

IAC-like program advisory group within the Office of Industrial

Program, expanding the target audience to include medium-sized

commercial buildings and federal facilities to be run by other programs within DOE. Expanding the geographic coverage by authorizing centers in all 50 states and territories where practical, increasing the educational effectiveness through applied research activities such as regularly involving IAC students as summer interns at national laboratories and in other DOE-funded industrial

and commercial building research activities. And finally, authorizing adequate resources to implement an expanded IAC Program.

Mr. Chairman, I was asked to comment on the Subcommittee

draft legislation entitled Industrial Energy Efficiency Act for 2007.

This draft already addresses many of the items mentioned in my

oral and written testimony. We applaud your efforts to expand

upon this very valuable program and to broaden its impact.

In conclusion, the IACs have been highly successful at helping

reduce industrial energy efficiencies, pollution, and providing cost

savings while providing critical education to the Nation’s engineering students. Congress showed much forethought and wisdom in

creating this program, and the concept is still very relevant today

as our nation faces even greater energy environmental challenges.

In fact, the IAC Program is a perfect trifecta energy environment

and education in my opinion.

After 32 years of success now is the time for improving this great

program to help meet tomorrow’s energy needs and train the next

generation of energy engineers.

Mr. Chairman and distinguished members, again, I thank you

for the opportunity to appear her this afternoon and point out the

importance of the IAC Program to our nation’s energy future and

to share our ideas to increase its effectiveness.

This concludes my remarks, and I am happy to respond to any

questions the Members may have.

[The prepared statement of Mr. Verdict follows:]

PREPARED STATEMENT OF MALCOLM E. VERDICT

Chairman Lampson, Ranking Member Englis, and Distinguished Members of the

House Subcommittee on Energy and Environment:

I thank you for the opportunity to testify on the U.S. Department of Energy’s

(DOE) Industrial Assessment Centers (IACs), which provide technical assistance for

small and medium-sized manufacturers and industrial facilities utilizing university

faculty and students. My name is Malcolm Verdict and I appear before you today

representing the Texas Engineering Experiment Station in College Station, Texas.

The Texas Engineering Experiment Station (TEES), within the Texas A&M Engineering Program, is a statewide engineering research agency of the State of Texas,

serving industry in our region while educating over 9,000 undergraduate and graduate engineering students annually. TEES has a long history of partnering with industries, communities, and other academic institutions to provide practical solutions

that help improve the quality of life, promote clean economic development, and enhance the Nation’s educational systems. We also promote new technology education

and investigate problems in energy, renewables and the environment.

Texas A&M Engineering’s strong commitment to energy efficiency is voiced at all

levels, especially at the top. The Vice Chancellor for Engineering, Dr. G. Kemble

Bennett, recently remarked that efficient energy use must be a national priority and

that university educated energy engineers have a major role to play. Programs like

the IAC produce highly qualified energy engineers with a conservation mindset who

25

can hit the ground running to save energy for the Nation’s manufacturers and others.Congress showed much forethought and wisdom in creating this program in 1976

after the first oil supply disruption, which some of us in this room can still vividly

remember. The IAC concept embraced at that time is still relevant today as the Nation faces even greater energy and environmental challenges. The good news is that

with today’s clean energy technologies, combined with the expertise and dedication

of the graduate engineers from the IAC program, our nation is even better equipped

to meet these challenges than when this program first began. The IACs have been

a critical component in improving energy efficiencies and providing cost savings to

thousands of industrial firms, while at the same time, training hundreds of new,

dedicated energy efficiency experts. In fact, the IAC program is a perfect trifecta—

Energy, Environment and Education.

My testimony draws on my personal experience in energy management programs

and policy since 1978 at the State and federal levels, the 21 years of field experience

of the Texas A&M IAC Center Director, Dr. Warren Heffington, and the 14 years

of experience of Mr. Jim Eggebrecht as our IAC Assistant Director. As you can see,

our personnel represent significant experience and knowledge in this area and are

strong advocates for its importance. I will address three key points this afternoon:

• The many valuable contributions that IACs have made to industry and to the

education of one of America’s most valuable natural resources—engineering

students,

• Current limitations to the IAC program, and

• Recommendations to build upon the successes of the IAC program to help

meet the energy and environmental needs of industrial facilities and others

during the 21st century.

Industrial Assessment Centers within the U.S. Department of Energy’s

(DOE) Industrial Technologies Program (ITP) have made significant, longterm contributions to industry and to the education of participating engineering students since its inception in 1976.

The IAC program is unique within DOE as it directly involves engineering students in a significant manner in partnership with industry. Using standardized procedures, engineering faculty and undergraduate and graduate students from accredited universities provide on-site assessments and written recommendations for energy saving and pollution prevention opportunities. This small but highly effective

DOE program conducts 500–600 energy assessments each year and provides educational opportunities for 250 new energy-efficiency engineers.

The many valuable benefits to industry and to the participating IAC universities

include:

• Providing objective recommendations for reducing energy and pollution and

increasing industrial productivity, using the latest technologies and techniques,

• Enabling small and medium-size manufacturers and industry to compete in

a highly competitive global economy,

• Facilitating real-world experience for students analyzing industrial processes

who are highly sought after upon graduation, and

• Creating valuable new industrial partnerships for participating universities

in their energy engineering programs.

According to DOE, 38 different universities have participated in the IAC program

since its inception and 26 are currently participating. The program name was

changed from the original Energy Analysis and Diagnostic Centers (EADCs) to the

current name to reflect its broader mission. The DOE field manager, Rutgers University, maintains a wealth of program and applied energy conservation technology

information available online in a searchable database by technology, location, paybacks, and types of participating facilities (www.Iac.rutgers.edu).

Illustrative examples of notable IAC program successes include [Source DOE

website]:

• 13,550 assessments have been conducted as of mid-September 2007.

• Participating facilities have saved $55,000 per year on average. Payback on

implementation averages only 12 months, and the savings keep adding up,

year after year.

• Texas A&M recommendations have resulted in local manufacturers spending

over $21 million to implement projects saving $26 million annually.

26

• U.S. companies have saved more than $700 million through efficiency and

productivity improvements.

• Enough energy has been saved to power the city of Boston, MA for one year.

• More than 1.5 million industry jobs have been created and maintained in the

United States.

The Texas A&M Industrial Assessment Center has performed over 500 assessments in companies such as bakeries, print shops, machine shops, light manufacturing, and chemical, petroleum and wood product industries. The Texas Tile Manufacturing Company in Houston, Texas is a good, recent example of the many benefits this program provides its clients. With high energy prices, inefficient energy

practices, increased foreign competition and a location within an EPA-designated

non-attainment area, this vinyl floor manufacturer was a prime IAC candidate.

In 2006, a team from the Texas A&M Industrial Assessment Center identified

over $250,000 in energy savings and enabled the firm to find an additional $100,000

in savings while implementing the team’s recommendations. In all, the majority of

recommendations were implemented within six months of the Texas A&M visit. The

remainder is scheduled for completion this year. Equally important, the energy savings will reduce critical air emissions and help Houston meet the EPA Clean Air

standards.

Illustrative examples of the significant program benefits to engineering students

include:

• Approximately 3,000 students nationwide have participated in the program

with over 200 from Texas A&M University and Prairie View A&M University.

• Real-world engineering experience is provided students in an industrial setting.

• Long-term energy-related careers are frequently launched upon graduation.

It bears repeating that the IAC program educates students with highly critical engineering skills needed in the Nation’s next engineering workforce. Participating

students have done remarkably well after graduation in helping solve our nation’s

energy problems. In fact, the program produces some of the best energy-educated

engineers in the world. Most IAC graduates go on to energy-related jobs in industry,

national laboratories, U.S. DOE, and engineering teaching careers. One of A&M’s

successful graduates is now the Director of the Industrial Assessment Center at the

University of Dayton in Ohio. And, our assistant director, Jim Eggebrecht was an

IAC student engineer as well. A University of Tennessee study on the careers of IAC

graduates found 73 percent of those surveyed held a position at one time related

to energy-efficiency and 58 percent have remained in energy efficiency throughout

their career. (B. Tonn & J. Peretz, Univ. of Tennessee, 2002)

These are just a few examples demonstrating how IACs successfully help industry

save energy and money, while educating students. The program has constantly received high praise from assessment recipients and others familiar with its impact.

As noted recently by one senior former DOE official, the IAC program was one of

the most successful he had seen in his 24-year career dealing with energy efficiency

at the Department.

Although the Industrial Assessment Centers have made significant, longterm contributions to industry by reducing energy use, pollution and energy costs, and providing critical energy engineering skills, it has not

achieved its full potential.

Program limitations include:

• Program management continuity and resources have been inconsistent.

• Participation of only 26 universities leaves some areas of the Nation underserved.

• The program fails to address other viable target audiences such as mediumsize commercial buildings and federal buildings and industrial processes.

• The program does not include an energy research component, which limits opportunities for university faculty and student educational activities.

• There is no clear charter to leverage resources through cost-sharing for assessments and for partnering with others.

• The program does not require the distribution of information on financing resources and local engineering expertise required to implement more complex

recommendations.

27

• Program success metrics do not incorporate the importance of the intrinsic,

long-term value of training our nation’s future energy engineers.

Although it has been very successful, the IAC Program is not achieving its full

potential. Having been around 32 years, it has naturally gone through numerous reorganizations and managers within DOE. Within the last 10 years, the original IAC

program managers have all retired and new internal champions have not emerged.

Also, no official mechanism exists for external feedback on the IAC program.

The small number of participating universities leaves some areas of the Nation

under-served. Existing resources do not come close to meeting demand. For example

within the first four weeks, the Texas A&M IAC had applications for all its available assessment slots for the coming year. Also, there is no mechanism for

leveraging IAC funds with other resources such as utility efficiency and State energy programs which also target industrial end users.

The industrial sector has proven to be a wise choice for targeting energy inefficiencies. The IAC model would also work quite well for commercial building owners.

Buildings represent over 34 percent of our electricity use in the U.S. [E.IA. 2004]

and most buildings need upgrades or operational improvements. Mid-size buildings

[25–50,000 square feet] are good candidates for IAC-like assessments. Likewise,

process energy consumption in the federal sector is over seven percent of the energy

use in federal facilities [Alliance to Save Energy, Leadership by Example]. The ITP

program has no charter to assist the Federal Energy Management Program even

though expertise resides in the Industrial Technologies Program and the IACs.

The demand for motivated, skilled energy engineers has never been greater. The

one DOE mechanism designed to increase the educational opportunities is very limited in its approach. The program does not have an educational charter beyond student participation in industry assessments which restricts valuable opportunities.

Faculty and students could greatly benefit from participating in industrial research

already funded by U.S. DOE. Internships are also excellent programs for students

and industry but are rarely provided.

In addition, the usefulness of the assessment reports is somewhat limited as the

focus is primarily on the energy efficiency recommendations. Adding a program requirement of providing other implementation information such as qualified engineering firms, State and utility industrial programs and financial resources would

help smaller firms with limited staff.

The IAC program effectiveness could be enhanced by improving program

continuity, expanding the target audiences and geographic coverage, increasing the educational value and leveraging federal program dollars.

Based on the limitations described previously, the IAC program effectiveness

could be improved by the following actions:

• Creating an IAC industry/university advisory group within the Office of Industrial Programs for enhancing program responsiveness and ensuring continuity,

• Expanding the target audience to include medium-size commercial buildings

and federal facilities,

• Expanding the geographic coverage by authorizing centers in all 50 states and

territories where practical and increasing field management resources,

• Providing an information clearinghouse on qualified engineering firms, utility

programs and rebates, State energy office industrial programs and financial

resources as part of the assessment reports,

• Increasing the educational effectiveness through applied research activities

such as regularly involving IAC students as summer interns at national laboratories and involving IAC faculty and students in other DOE funded industrial and commercial building research initiatives, and

• Authorizing adequate resources to implement an expanded IAC scope.

We are aware of a draft Subcommittee bill entitled the ‘‘Industrial Energy Efficiency Act of 2007,’’ which addresses many of the items covered in this testimony.

We applaud your efforts to improve upon the IAC program which has served our

country extremely well.

In conclusion, the IACs have been highly successful at helping reduce industrial

inefficiencies, pollution and providing cost savings while providing critical education

to the Nation’s engineering students. However, the program is not without its limitations. After 32 years of success, it is now time for improvement to meet tomorrow’s energy needs. The current DOE program and the required information provided to industry should be expanded, student educational opportunities should be

28

increased, and the intrinsic, long-term value of the educational benefits should be

more fully recognized.

Mr. Chairman and distinguished Members, I thank you again for the opportunity

to highlight the importance of the IAC program to our nation’s energy future and

to share some ideas to increase its energy, environment and education impacts. I

would be glad to respond to any questions you may have.

BIOGRAPHY FOR MALCOLM E. VERDICT

Mr. Verdict is Associate Director of the Energy Systems Laboratory, a division

within the Texas Engineering Experiment Station and the Texas A&M University

System. Mr. Verdict has over 29 years of energy management program and policy

experience at the State and federal levels. He is currently project manager for numerous building commissioning projects in large public and private buildings, and

works closely with the Laboratory team that created the innovative emissions reduction calculator for energy and renewables.

From 1992 to 2001, he was a senior program manager at the Alliance to Save Energy in Washington, DC and was responsible for their energy efficiency financing,

Home Energy Rating, Federal Energy Productivity, Habitat for Humanity, and Energy Star Home initiatives. He worked closely with DOE to help develop the Presidential Executive Order 13123 ‘‘Greening the Government Through Efficient Energy’’ and drafted many of the Federal Agency energy management requirements in

the Energy Policy Act 2005. He also served on DOE’s Financial Advisory Subcommittee for the International Performance Measurement and Verification Protocol

(IPMVP) and the Greening of the White House (1994) sustainability initiative. In

2004, he was appointed as the Texas State representative to the Western Governor’s

Energy Efficiency Task Force for Clean and Diversified Energy.

Prior to joining the Alliance in 2001, Malcolm was Deputy Director of the Texas

State Energy Conservation Office where he helped create the award-winning $98

million LoanSTAR energy retrofit loan program. Still going strong today, LoanSTAR

has saved Texas taxpayers over $215 million since 1990. Before entering the energy

efficiency field in 1978, Malcolm was a commercial banker in Louisiana.

He holds a Bachelor of Science (BS) from the U.S. Air Force Academy in Colorado

and a Masters in Business Administration (MBA) from Louisiana Tech University.

He is a Certified Energy Manager (C.E.M.) and was selected the ‘‘2005 Energy Manager of the Year’’ by the Association of Energy Engineers. He holds a commercial

pilots license and was a former Air Force fighter pilot in Vietnam.

DISCUSSION

Chairman LAMPSON. Thank you very much, Mr. Verdict. All of

you. Good presentations. We appreciate you all.

I am going to yield the first five minutes to myself as Chairman,

and we will begin our questioning process.

ITP FUNDING AND PAST ITP EFFICACY

I am going to ask a number of questions, if you will. To begin,

I would like for all of you to comment very shortly so I can get

through as much of this as I possibly can.

Over the past several years the funding for the ITP Program has

been on a significant decline; $175 million in 2000, to $55 million

in 2007. What has the trend done to the efficacy of the program,

and what is the appropriate level of funding that we need to be

putting into this bill?

If we just go down the line, if you don’t mind.

Mr. MOORE. Let me start. I find it amazing that we are not even

funding at the level that we were in the late 1990s, at the 175 million funding level. When you think about what our energy bill is,

I think Paul may have mentioned it earlier, but let me just put it

in perspective for Dow.

29

At an average price of $8 for natural gas, my fuel bill just to produce steam and power is $5 billion a year. I think that we are

missing opportunities to drive that down for our manufacturing

sector and impact our energy security for the United States by not

bellying up to the table something in excess of $100 million just

seems kind of silly.

Chairman LAMPSON. What is the right amount?

Mr. MOORE. I would say a good start is the $150 plus million

that we had in the program in the 1990s, late 1990s.

Chairman LAMPSON. Thank you. Mr. Cicio.

Mr. CICIO. Thank you, Mr. Chairman. You need a significantly

well-funded program like we talked about, like in the late 1990s to

do the quality of research on projects on technologies that yield the

best opportunity. Those are the high-risk, long-term, and expensive

research projects, and with a shrinking budget you can’t do those

types of high-quality projects that make a big difference when they

become reality. And that is probably one of the most significant answers to your question of what is the impact of reducing that funding. You cannot do projects that are of the scale and magnitude

that really have the most significant payoffs.

Chairman LAMPSON. Mr. Kavanagh.

Mr. KAVANAGH. What he said. I mean, we—it is exactly right.

Chairman LAMPSON. He didn’t give me an amount, though, and

I got to go, I would go back to him.

Mr. KAVANAGH. To do projects of significance, and I am here advocating that we try to transform our industries, how we make

steel a different way, make aluminum a different way. It takes, you

know, in the ’80s and ’90s when this program was at the 125, 175

level, we were investigating. We had enough momentum when you

put in what industry was matching to really do something and a

lot of the processes we are using today came out of this. Since the

program has been down now for six or seven years, we have been

treading water trying to make due in these investments, and what

we got is a gap. It normally takes eight to ten years to get something from the lab into the plant of significance, and we have got

a six-year window that, you know, we are going to pay a price at

some point in the future because we have not, you know, the pipeline is dry basically.

So that is the consequence.

Chairman LAMPSON. So what is the right amount to put in the

bill?

Mr. KAVANAGH. The right amount to put in the bill is, I have my

testimony 125, but I like the 175 number.

Chairman LAMPSON. You want to give me a number?

Mr. CICIO. Yes, sir. One seventy-five.

Chairman LAMPSON. Mr. Verdict, your turn.

Mr. VERDICT. Sir, I am not sure that I am authorized to give you

a number, but I certainly like hearing some of the numbers that

are being mentioned by some of my colleagues. I would like to give

you some of the real world impacts that this tremendous reduction

has recently.

Recently we have had some very highly-dedicated faculty for a

number of years and all of these centers and some of the program

leaders, and when you see us pulling the rug out from underneath

30

what we consider a very successful program and also reducing the

funding, you see a great deal of disillusionment upon the faculty

as well as the students. And even more importantly is that by not

putting people in the field, we used to have 500 audits per year at

the $7 million level, and that is down to 300 audits per year. What

you really got is a lot of missed opportunities, and that is energy

that is wasted if you are not there with another set of eyes helping

these small and medium-sized firms.

ITP RESEARCH AND DEVELOPMENT LIMITATIONS

Chairman LAMPSON. What are some of the limitations in the current efficiency of the research and development of the ITP? Any

comment on that, limitations? Other than money.

Mr. KAVANAGH. You mean how things are carried out or——

Chairman LAMPSON. Yes.

Mr. KAVANAGH. The way the program is structured and managed, you know, the mechanism for delivering funds to universities

and matching them with industries, that has been in place for 20

years, and we have been in the program for 20 years, and it works.

So our opinion is the structure and delivery mechanism is right. It

is just the focus has to go back to new process development, and

the dollars have to be there to support it.

Chairman LAMPSON. Are there any specific areas of research that

could be enhanced or explored, maybe that would better serve the

industrial sector?

Mr. KAVANAGH. Again, I will jump in. The six industries that are

a part of AMMEX, steel, aluminum, glass, forest products, metal

casting, and chemicals, have identified their priority research areas

going forward to do this type of transformational work, and I would

be happy to send that to you, Mr. Chairman.

CORPORATE WELFARE CONCERNS

Chairman LAMPSON. Please. Okay. How do you address the concern of corporate welfare when discussing the Industrial Technologies Program and other private, public partnerships.

Mr. KAVANAGH. It is a very good question, but it is an easy one

to answer. Again, speaking from our realm of experience within the

AMMEX member industries, for there to be corporate welfare, corporations have to get the welfare. Okay. That doesn’t happen in

this program. The industries don’t receive the money. They put

money in. DOE puts money in. Industry puts money in, and the recipients are places like Texas A&M. Okay.

So the whole idea of corporate welfare as far as this program

goes is a myth.

Chairman LAMPSON. But they do get the benefit, and there will

be——

Mr. KAVANAGH. Yes, but they are co-investing. They are earning

the benefit, aren’t they?

Chairman LAMPSON. Yes, sir. Mr. Cicio.

Mr. CICIO. Mr. Chairman, the corporate welfare issue goes back

to one of the points I had made earlier, that the breakthrough technology in the most important areas are too expensive for any one

31

company, even the size of companies like a Dow Chemical Company, to do all by themselves.

Again, the breakthrough technologies will be the technology of

choice for a period of 20, 25, sometimes 30 years. You are talking

about major breakthrough technology. One company does not have

the money and the time and the risk tolerance to be able to do that

all by itself.

ITP RETURN ON INVESTMENT

Chairman LAMPSON. Thank you. What kind of return on investment can your industries expect from projects conducted with the

ITP Program? You all already said many of the numbers, but the

match that you make, is it typically equal? What are some of the

kinds of matches that you may know of?

Mr. KAVANAGH. The matches range in our industries for a third

to half, depending on the type of research and the risk that is involved.

Chairman LAMPSON. And then some of the returns? Give me

some examples of what kind of return.

Mr. KAVANAGH. Oh, the return goes to how good the projects you

pick. So let me explain it this way. The mechanism that industry

uses to decide what projects to propose and fund is very carefully

done because you are investing company capital that could go into

product development and any other part of the business. So when

you select a research project, there has to be some probability of

success.

Within the steel industry, we have over time developed some 60

different projects, and the level of successful commercialization of

that technology is about one in four. Okay. That is pretty good for

research, especially, we are still learning a lot from the three that

don’t actually result in a commercial process or technology.

So the return for industry as you pointed out before is you get

the benefit of the technology. It is getting the technology to the

plant floor, lowering your costs of operations, improving the quality

of your product, and lowering the energy bill.

Chairman LAMPSON. And ultimately lowering the cost to the consumer, which we are all after. These are the kinds of things that

I think our whole Committee exists for. The more money we invest

and the kinds of programs that give us the kinds of returns that

we are talking about here, the better off we as a nation are. We

have always done that. We seem to have slipped some of late, but

hopefully this and other ways will help us find a way to get back.

Both of you comment, and then I want to turn it over to the

Ranking Member.

Mr. MOORE. I am just going to just make a brief comment, not

so much because I am not really here to testify about the investment aspects but just a concept around DOE and ITP Program and

what they can do around technology.

Today the technology exists to split water via electrolysis or some

other means, produce hydrogen, use a gasification plant to take

coal to syngas and with enough hydrogen cogeneration you can actually produce chemicals with no CO2 emissions. Zero. None. Okay.

What we are missing today is the high enough efficiency in

electrolyzing that water to make hydrogen, or some other mechaVerDate 11-MAY-2000 15:43 Feb 28, 2008 Jkt 037982 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 C:\WORKD\E&E07\092507\37982 SCIENCE1 PsN: SCIENCE1
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nism to do that in order to make that economically competitive on

a global basis. Once we do that it means that you can use non-carbon source fuels like solar or photovoltaic or nuclear or the like and

match them up with a coal-to-olefins technology and basically have

a process that produces all the chemicals we rely on every day of

our lives with no CO2 emissions.

These are the kinds of things where the DOE has come to play

and can come to play in helping fund some of these integrated efforts around fuel diversity, energy diversity, alternate fuels, and

feedstock.

Chairman LAMPSON. Nicely stated. Thank you.

Mr. CICIO. Your question was about what kind of return, that

these companies are looking at when they do cost sharing. And I

am not an expert in this area, but based on what the companies

have told me, that is not nomenclature that they use in their judgment in doing these R&D programs.

Even at cost sharing of 50 percent, these are risky. This is money

that is an outlay that they currently have an alternative, some

other alternative to do something with. Build a production facility,

expand a product line, pay employees more, employee benefits. The

rate of return is not really part of the decision-making and whether

they invest in a DOE project like this or not. It is about are you

going to make a commitment to your future by potentially having

a winning research project that is going to have substantial benefits ten years from now.

So that type of discussion normally doesn’t happen.

Chairman LAMPSON. Thank you very much.

Mr. Inglis.

NATURAL GAS PRICES

Mr. INGLIS. Thank you, Mr. Chairman. Mr. Cicio, I was struck

by your reference to the price of natural gas, and that is a significant concern. I think you are right, that the more we use it for electrical generation, the more we drive the price up and the more the

plastics industry, especially in places like South Carolina’s fourth

district, become imperiled.

DOW ENERGY EFFICIENCY EFFORTS

And, Mr. Moore, I was very interested in your comments about

the incredible savings that Dow has found. I think you also found

incredible savings in greenhouse gas emissions. Right? I mean,

didn’t I hear that the other night from your CEO about some incredible number?

Mr. MOORE. Actually, if you go back to 1990, largely as a result

of our energy efficiency improvements, our actual greenhouse gases

from 1990, through today are actually down more than 20 percent.

Mr. INGLIS. Yeah.

Mr. MOORE. All of those energy efficiency efforts.

Mr. INGLIS. Yeah.

Mr. MOORE. At the same time that we have grown our company

substantially.

Mr. INGLIS. It is very impressive, so that is very encouraging.

33

ITP ENERGY SAVINGS

You reached significant savings. I think you said $4.5 billion in

savings as a result of the energy efficiency that you have achieved.

Right?

Mr. MOORE. Right.

Mr. INGLIS. So I guess some people would say, and perhaps this

is what the Administration is saying, that Dow did it for very good

reasons, and that is their citizens, your citizens of the world, and

you are in this country, and you are also interested in making

money, which is a wonderful thing. I am all for making money. I

think profit is a great thing, and so $4.5 billion delivered to the

bottom line is a pretty substantial incentive to a company to do

this. And so some would say why have the Department of Energy

help with that if Dow is going to get the benefit. Right?

Mr. MOORE. I think the important thing here is not so much the

benefit that Dow is going to get from the ITP Program. It is the

benefit that literally the thousands of others will get from it. One

might wonder that, you know, I mentioned the Texas city example

where Dow actually found benefit from ITP’s Industrial Assessment Program, but just as important, if not more importantly, that

learning, via the ITP Program, can now be leveraged across ten or

20,000 small and medium-sized manufacturers.

CHARGING INDUSTRY FOR ASSESSMENTS

Mr. INGLIS. Right. And as I understand it, the program has two

parts. Right? I have just learned this from Elizabeth, but it has got

two parts. The R&D and then it has got the assessment part of it.

The R&D as currently used and in place seems to be a decent way

of going, that the Department of Energy spends money, helps create the R&D, and develop new technology.

In the case of the assessment, why would the entity benefit if not

paid, say on a contingency fee basis, to the DOE for the assessment? In other words, right now what you have, right, is the

money, and Mr. Kavanagh, I differ with you about the definition

of corporate welfare there. What you just described is a subsidized

rate. It is like you and I have decided to go out to dinner tonight,

we are going to split the bill, and it is either that we go to Charlie

Palmer’s or we go to Burrito Brothers. And if Elizabeth is going to

pay, we are going to Charlie Palmer’s. Even if I am putting some

of the money in myself, right? Because I am going to get something

out of it. So it is a subsidized rate.

So what I am wondering about is whether, if industry X out

there is going to benefit from this assessment, why not have money

flow back to DOE based on how much they saved to cause DOE to

become a profit center. I am into profit. To have the DOE become

a profit center for the government. We could actually maybe start

paying for things that DOE does by what we collect from our customers that are served by the universities, they are achieving these

savings. Is there a problem with that?

Mr. VERDICT. Sir, if I may attempt to answer that question. It

is a wonderful concept, and I think it provides maybe the right motivation and practicality to be able to actually add a monitoring

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gram, and actually verify the savings like companies have to do

that are in a shared saving, performance savings arrangement. You

would probably drive the program costs out of existence. It barely

survives on being able to do these simple walk-throughs and these

quick returns.

So I think you would end up spending at least in the IAC Program as much money trying to verify the savings as the company

would get back.

Mr. INGLIS. Well, I can see a problem. It would provide some employment for lawyers as well as scientists, however, which would

be helpful as a lawyer, but I can see that as a challenge. In other

words you have to set up some definition. You have to have a contract that sets up definitions about how much energy is being used

now and when you are going to measure it, and therefore, how you

are going to pay.

But I just wonder whether that would solve the Administration’s

concerns, which I assume are these things about corporate welfare,

that you actually get a profit model going and truly have a very

enlightened kind of partnership between government and industry.

Right? Where government can actually benefit.

Mr. KAVANAGH. You have to get down to another level of detail.

I don’t really agree with your dinner analogy, and I will try to explain why. Within the ITP Program we pick projects that serve the

government’s goals as well as the industries’ goals. We don’t pick

projects that only benefit industry. There has got to be some public

good or benefit associated with success.

Mr. INGLIS. Well, there is always going to be public good in reducing energy consumption, because we are all concerned about energy security. So 100 percent of the projects would be for government good.

Mr. KAVANAGH. Well, that defeats the corporate welfare argument, doesn’t it, because——

Mr. INGLIS. No.

Mr. KAVANAGH.—that justifies—should the DOE——

Mr. INGLIS. Because you could go——

Mr. KAVANAGH.—invest in projects for the public good?

Mr. INGLIS. Well, it doesn’t necessarily because there are still

winners and losers. If you have an unlimited budget, yeah, then

you would have everyone in industry getting that benefit. But if

you have only some, then you have some benefiting and others not,

unless you have an infinite budget.

Mr. KAVANAGH. I agree with you there, and that is another important distinction. I can’t speak for the Industrial Assessment

Center side, but on the R&D side, the projects are not undertaken

between the Department of Energy and one company. They are

taken with a sector so the entire sector benefits, and that enhances

the public good because it is replicating the technology throughout

a part of the industry, and at the same time all of that sector is

investing their own dollars as well. Okay.

So it is like you and I are going out to dinner, and we are both

eating. It would be unfair if only I ate. Okay. So that is kind of

the way the program is set up, and in fact, in some of the programs

there is a repayment provision when you develop a technology that

is commercially successful, okay, the companies that invested and

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took the risk get a royalty-free use of it, just like the government,

because it invested and took a risk. But if there is another company out there that was not an investor, okay, and the technology

is commercially available, they have to pay a royalty to use it, and

that royalty then flows back into the treasury to help repay the investment.

Now, that works, and it has been done, but you know, the time

scale that we are talking about for that kind of dramatic process

development takes 8 to 10 years. So it can get messy, which is why

some projects have gone away from the repayment provision. But

in the steel industry we use it, and we are in favor of it.

Mr. INGLIS. My time is well up, and we got a vote on, don’t we?

Chairman LAMPSON. We do. We have a vote on. It is about seven

minutes before the first one. There is a total of three. Five-minute

votes will follow the 15-minute vote, and I would personally like to

head back. If you all can be patient with us while we go and vote,

we will come back.

Mr. INGLIS. Keep going here if you want to. I mean, if you have,

how much time do you have?

Chairman LAMPSON. We have——

Mr. INGLIS. I am happy to yield back at this point.

Chairman LAMPSON. Only 25 people have voted, so I think we

have got a little while, but let me, again, let me try to go through

these somewhat quickly, and if you will keep your answers as succinctly as you possibly can, I would appreciate it. And let me go

to Mr. Moore.

THE CHEMICAL INDUSTRY IN THE U.S.

DOW’s CEO has said that you are investing heavily outside the

United States. Is it too late to save the chemical industry in the

United States?

Mr. MOORE. The simple answer is no, but let me add a little bit

of background in-between.

Across the globe there have been 19 world scale crackers. These

are big, ethylene conversion assets are used in integrated petrochemical complexes that have been announced to be built in the

next decade. Not one of them is scheduled to be built in the U.S.

Then I go and I look at what Dow is doing. Dow is growing, and

it is growing globally, but it is not growing significantly in the U.S.

You can just look at our announced joint ventures with Saudi Arabia, with Saudi Aramco, or in Kuwait as an example. And we are

growing there because they have reliable and competitive-priced

fuel and feedstocks.

Now, chemical industry is not immediately at risk in the U.S. In

fact, it is terribly important to Dow and to most other companies

that operate here. In fact, 50 percent of Dow’s assets are still in

the U.S. They are terribly important. They are critical to our success.

It is terribly important for us to operate them both effectively

and efficiently, and as I noted earlier, the importance of having a

reliable and a secure and a competitive price, fuel and feedstock,

is ultimately tied to our long-term success here in the U.S.

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NEED FOR CONTROL SYSTEM IMPROVEMENTS

Chairman LAMPSON. Mr. Cicio, there are numerous energy-intensive industries, and the ITP does not have the resources to focus

on all of them. So in your opinion where can ITP have the largest

impact, the most bang for the buck?

Mr. CICIO. If I may, when I polled my companies, which is a

broad cross section of these energy-intensive industries, it was

pretty unanimous that there are plenty of areas that almost all

would benefit from. And this gets to the issue of control system improvements, optimization of steam generation. See, lots of manufacturers use steam process heaters, heat recovery technology. These

are basic types of technology that are used to route these industries.

So there is a lot of room for focus on those technologies that

would benefit almost all of them.

Chairman LAMPSON. Thank you. Mr. Verdict, talk about IAC for

just a second. Can you or do you have an estimate for an appropriate level of funding for the IAC Program to meet the demand

that you describe?

Mr. VERDICT. I think at the minimum it needs to go back to

where it was six or seven years ago, but I think there are additional opportunities, and if DOE would run this as a business

model, then they would actually go out and sample the demand. I

think they are going to find there is tremendous demand there for

this product, and I think they are going to find willing partners

even to do some cost sharing. I think you are going to find programs in many states where you have a very active and aggressive

utility funded programs to also be willing to work with the assessment centers.

But we really had no guidance or no authorization to actually try

to match up funding. But there is certainly, just indirectly the demand is far greater than what the current funding levels are.

Chairman LAMPSON. Well, like I said awhile ago, these are exactly the things that I think this Science Committee needs to show

the leadership on if we at all possibly can. I put our country’s resources into things that give us back significant return. Clearly

what you have described here today and helped us understand is

one of those areas.

Yes, sir.

Mr. VERDICT. If I could just add one thing on the educational

benefit. We keep talking about the immediate payback, but once

you train one of these energy engineers, and he stays out there, he

is continually working and improving the processes which he is involved in. It is very, very hard to put a dollar benefit to that, but

we say we were going to add 3,000 in the program over some 31

years. That is really not that many engineers. We really have got

to train a lot more engineers than that, and they are out there with

the first line of defense, with their computers and their meters, and

they are helping save energy, and I think that is the right thing

that some of our Government resources should be doing.

Chairman LAMPSON. I totally agree. Thank you and thank you

all, and we are not going to come back after this vote, so we dismiss the panel. We thank you very, very much. Under the rules of

37

the Committee, the record will be held open for two weeks for

Members to submit additional statements and any additional questions that they may have for the witnesses. You may be receiving

some things from us. We thank you very much for your testimony

today.

The meeting is adjourned.

[Whereupon, at 3:02 p.m., the Subcommittee was adjourned.]

(39)

Appendix:

ADDITIONAL MATERIAL FOR THE RECORD

40

SECTION-BY-SECTION: DISCUSSION DRAFT

Industrial Energy Efficiency Act of 2007

Section 1. Short Title

‘‘The Industrial Energy Efficiency Act of 2007’’

Section 2. Findings

The U.S. Industrial sector accounts for more energy use (32.2 percent) than the

residential, commercial, or transportation sectors. Industries have almost reached

optimal energy efficiencies and new innovations and technologies’ research, development, and demonstration are necessary to increase energy efficiency and diversify

energy and feedstock sources.

Section 3. Industrial Technologies Program

Establishes a program within the Department of Energy to work with energy-intensive industries, industry trade associations, and institutions of higher education

to conduct cost-shared research, development, demonstration, and commercial application activities for new innovations and technologies to enhance industrial energy

efficiency, environmental performance and economic competitiveness of U.S. industrial sector.

Defines the activities of the program to include: research to improve the quality

and quantity of feedstocks recovered from waste streams; to develop alternative resources for use as industrial feedstocks; developing alternative energy sources to

supply heat and power for energy-intensive industries.

Section 4. University-Based Industrial Research and Assessment Centers

Requires the Secretary to operate university-based Industrial Research and Assessment Centers to aid small and medium-sized manufacturers by identifying opportunities to optimize their energy efficiency and improve environmental performance, to serve as clearinghouses for technical assistance resources, and to train students to conduct energy assessments, and to conduct educational outreach in cooperation with other state-accredited technical training centers and community colleges.

Section 5. Authorization of Appropriations

Funding is authorized from FY 2009 through 2013 and has not yet been determined.

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