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THE FEDERAL GREEN JOBS AGENDA 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 19, 2012 

Serial No. 112–152 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

CLIFF STEARNS, Florida 

Chairman 

LEE TERRY, Nebraska 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

CORY GARDNER, Colorado 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

KATHY CASTOR, Florida 

EDWARD J. MARKEY, Massachusetts 

GENE GREEN, Texas 

DONNA M. CHRISTENSEN, Virgin Islands 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 4 

Hon. Diana DeGette, a Representative in Congress from the State of California, opening statement .................................................................................... 6 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 7 

Prepared statement .......................................................................................... 9 

Hon. Tim Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 11 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 11 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 12 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 12 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 13 

WITNESSES

Molly Sherlock, Specialist in Public Finance, Government and Finance Division, Congressional Research Service ................................................................. 36 

Prepared statement .......................................................................................... 38 

Answers to submitted questions ...................................................................... 120 

David W. Kreutzer, Research Fellow in Energy Economics and Climate 

Change, The Heritage Foundation ..................................................................... 49 

Prepared statement .......................................................................................... 51 

Answers to submitted questions ...................................................................... 123 

W. David Montgomery, Senior Vice President, NERA Economic Consulting ..... 61 

Prepared statement .......................................................................................... 63 

Answers to submitted questions ...................................................................... 126 

Kenneth P. Green, Resident Scholar, American Enterprise Institute ................ 76 

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

Report, dated February 2011, ‘‘The Myth of Green Energy Jobs: The 

European Experience’’ .................................................................................. 83 

Answers to submitted questions ...................................................................... 128 

Michael Breen, Vice President, Truman National Security Project .................... 92 

Prepared statement .......................................................................................... 94 

Answers to submitted questions ...................................................................... 134 

SUBMITTED MATERIAL

Article, dated June 18, 2012, ‘‘‘Clean energy’ is money wasted,’’ by Charles 

Lane, Washington Post, submitted by Mr. Stearns .......................................... 15 

Report, dated June 4, 2012, ‘‘Clean Energy: Revisiting the Challenges of 

Industrial Policy,’’ Brookings Institution, submitted by Mr. Stearns .............. 17 

(1) 

THE FEDERAL GREEN JOBS AGENDA 

TUESDAY, JUNE 19, 2012 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:22 a.m., in room 

2322, Rayburn House Office Building, Hon. Cliff Stearns (chairman 

of the subcommittee) presiding. 

Members present: Representatives Stearns, Murphy, Burgess, 

Blackburn, Gingrey, Scalise, Gardner, Barton, Upton (ex officio), 

DeGette, Schakowsky, Green, and Waxman (ex officio). 

Staff present: Sean Bonyun, Deputy Communications Director; 

Todd Harrison, Chief Counsel, Oversight and Investigations; Kirby 

Howard, Legislative Clerk; Ben Lieberman, Counsel, Energy and 

Power; Andrew Powaleny, Deputy Press Secretary; Krista 

Rosenthall, Counsel to Chairman Emeritus; Alan Slobodin, Deputy 

Chief Counsel, Oversight and Investigations; Sam Spector, Counsel, Oversight and Investigations; Alex Yergin, Legislative Clerk; 

Alvin Banks, Democratic Investigator; Tiffany Benjamin, Democratic Investigative Counsel; Brian Cohen, Democratic Investigations Staff Director and Senior Policy Advisor; and Alli Corr, Democratic Policy Analyst. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, everybody, and welcome to the Subcommittee on Oversight and Investigations hearing on the Federal 

Green Jobs Agenda. 

My colleagues today will examine the Federal investment in 

green energy and the employment and economic returns that were 

generated by this investment. 

When the Federal Government invests taxpayers’ dollars in the 

energy sector, we must make sure we oversee the returns on these 

investments. In 2008, then-Presidential Candidate Barack Obama 

promised that as President he would invest $150 billion in renewable energy programs that would create 5 million well-paying jobs, 

nonexportable jobs, in 10 years. 

It is hard to know exactly how much the Obama administration 

has spent to promote, prop up, and subsidize its green energy agenda, and even harder yet to accurately put a number on the green 

jobs created as a direct result of this substantial investment. 

We know that the President’s American Recovery and Reinvestment Act of 2009, the Stimulus Act, included approximately $90 

2 

billion in direct spending and tax credits for green energy and associated programs. 

In December of 2009, President Obama signed the Consolidated Appropriations Act, which appropriated $8 million to the Bureau of 

Labor Statistics, BLS, to determine the number of green jobs in the 

United States. The BLS report, ‘‘Employment in Green Jobs, 

Goods, and Services,’’ was released on March 22, 2012. 

The overly broad and seemingly all-encompassing definition of 

what constitutes a green job used by the BLS, combined with a 

gimmick accounting method that green job counters appear to have 

used, resulted in the conclusion that a total of 3.1 million green 

jobs exist in America today. 

The President would like us to believe that he is on his way to 

keeping his green jobs promise, but the truth is we’re nowhere near 

that today. 

Numerous media outlets have scrutinized the BLS report and 

concluded that many of the jobs being counted as green jobs are not 

green, are not new, and were not in need of saving. Many of these 

jobs have been around for decades and were never in need of a 

green jobs subsidy in the first place. These green jobs include 

tenured professors, bus drivers, trash collectors, and steel mill 

workers. 

In fact, when the BLS made its proposed definition of a green job 

available for public comment, it received the following feedback. A 

trade association stated, for example, that, ‘‘It is our determination 

that the green jobs label is an artificial construct that is being imposed subjectively, used politically, and will in the end be about as 

successful as trying to collect fog in a cardboard box.’’ A State government agency, for example, stated, ‘‘If we overstate or generalize 

green too much, the resulting data becomes meaningless.’’ 

The Recovery Act led to an influx of money into green programs. DOE’s Loan Program Office has given out nearly $35 billion, including to recipients such as Solyndra. Many are now bankrupt, 

and thousands of people have been laid off. In fact, last week, a Department of Labor report revealed that nearly 1,900 people lost 

their jobs with the shuttering of Solyndra, 800 more than cited by 

the previous media accounts. 

At the same time, Molly Sherlock, in the prepared testimony that 

she has provided to the committee, has confirmed much of what the 

committee investigation of the 1603 program had uncovered, this 

includes the fact that the 1603 grant ‘‘as an incentive is of greater 

value to investors. It is also more expensive from the government’s 

perspective.’’ 

The Obama administration supports extending a costly program, 

yet continues to stress that job creation is not one of its goals, statutory or otherwise. Dr. Sherlock notes that a recent attempt at estimating the economic impact of the 1603 program ‘‘does not attempt to estimate how many jobs were created by the section 1603 

grant program.’’ DOE’s report notes that some projects supported 

by the 1603 program award most likely would have progressed 

without the award. 

Just how many of these free riders are we talking about? To provide some perspective, Sherlock notes that one early analysis of the 

1603 grant program estimated that roughly 25 percent of the wind 

3 

capacity installed in 2009 was directly motivated by the grant. Of 

wind projects that received the grant in 2009, roughly 39 percent 

were dependent upon the grant. Consequently, Sherlock notes the 

possibility of job numbers substantially lower than even those estimated by the Department of Energy and Secretary Chu. 

To learn more about the economic and employment effects of the 

Obama administration’s green energy agenda, we will hear testimony today from Dr. Molly Sherlock from the Congressional Research Service; Dr. Ken Green from the American Enterprise Institute; Dr. David Kreutzer from the Heritage Foundation; and Dr. 

David Montgomery with NERA Economic Consulting; and Michael 

Breen of the Truman National Security Project. 

I welcome our witnesses today, and with that I respectfully offer 

the ranking member an opening statement. 

[The prepared statement of Mr. Stearns follows:] 

4 


82298.001

Opening Statement of the Honorable Cliff Stearns 

Chairman, Subcommittee on Oversight and Investigations 

Committee on Energy and Commerce 

"The Federal Green Jobs Agenda" 

June 19, 2012 

(As Prepared/or Delivery) 

Today we will examine the federal investment in green energy and the employment and 

economic returns generated by this investment. When the federal government invests taxpayer 

dollars in the energy sector we must make sure we oversee the returns on these investments. 

In 2008, then-presidential candidate Barack Obama promised that as president he would 

invest 5150 billion in renewable energy programs that would create five million well-paying, 

non-exportable jobs in ten years. It is hard to know exactly how much the Obama administration 

has spent to promote, prop-up and subsidize its green energy agenda and even harder yet to 

accurately put a number on the green jobs created as a direct result of this substantial investment. 

We know that the president's American Recovery and Reinvestment Act of2009 included 

approximately 590 billion in direct spending and tax credits for green energy and associated 

programs. 

In December 2009, President Obama signed the Consolidated Appropriations Act, which 

appropriated $8 million to the Bureau of Labor Statistics (BLS) to determine the number of 

green jobs in the U.S. The BLS rcport, "Employment in Green Goods and Services" was 

released on March 22, 2012. The overly broad and seemingly all-encompassing detInition of 

what constitutes a green job used by the BLS combined with the gimmick accounting methods 

that green job counters appear to have used resulted in the conclusion that a total of 3.1 million 

green jobs exist in America today. The president would like us to believe that he is on his way to 

keeping his green jobs promise but the truth is that we're nowhere ncar there. 

Numerous media outlets have scrutinized the BLS report and conclude that many of the 

jobs being counted as green jobs are not green, are not new and were not in need of saving. 

Many of these jobs have been around for decades and were never in need of a green energy 

subsidy in the tIrst place. These "green" jobs include tenured professors, bus drivers, trash 

collectors, and steel mill workers. 

In fact, when the BLS made its proposed definition of a green job available for public 

comment, it received the following feedback: a trade association stated, for example, that "it is 

our determination that the 'green jobs' label is an artificial construct that is being imposed 

subjectively, used politically and will, in the end, be about as successful as trying to collect fog 

in a cardboard box." A state government agency, for example, stated "if we overstate or 

generalize "green" too much, the resulting data become meaningless." 

Page I of2 
5 


82298.002

The Recovery Act led to an influx of money into green programs. DOE's Loan Programs 

Office has given out nearly $35 billion, including to recipients such as Solyndra. Many are now 

bankrupt, and thousands of people have been laid off. In fact, just last week a Department of 

Labor report revealed that nearly 1,900 people lost their jobs with the shuttering of Solyndra, 800 

more than cited by previous media accounts. 

At the same time, Molly Sherlock, in tbe prepared testimony that she has provided to the 

committee, has conJinned much of what the committee investigation of the Section 1603 had 

uncovered. This includes the fact that the 1603 grant "as an inccntive is of greater value to 

investors, it is also more expensive from the government's perspective." 

The Obama administration supports extending a costly program, yet continues to stress 

that job creation is not one of its goals, statutory or otherwise. Dr. Sherlock notes that a recent 

attempt at estimating the economic impact of 1603 "does not attempt to estimate how many jobs 

were created by the Section 1603 grant program." DOE's report notes that some projects 

supported by a 1603 award most likely would have progressed without the award. 

Just how many of these free riders are we talking about? To provide some perspective, 

Sherlock notes that one early analysis of the 1603 grant program estimated that rougbly 25% of 

the wind capacity installed in 2009 was directly motivated by the grant. Of the wind projects 

that received tbe grant in 2009, roughly 39% were dependent on the grant. Consequently, 

Sherlock notes tbe possibility of job numbers substantially lower tban even those estimated by 

DOE. 

To leam more about the economic and employment effects of the Obama 

administration's green energy agenda, we will bear testimony from Dr. Molly Sherlock witb the 

Congressional Research Service, Dr. Ken Green from the American Enterprise Institute, Dr. 

David Kreutzer with the Heritage Foundation, Dr. David Montgomery with NERA Economic 

Consulting, and Michael Breen of the Truman National Security Project. 

### 

Page 2 of2 
6 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

From your opening statement I am going to assume that you are 

holding this hearing today because of your deep concern that we’re 

not creating enough green jobs and that the Republican majority 

wants to figure out how to make the Obama green jobs agenda 

work better so that we can create more green jobs in our economy. 

In fact, Mr. Chairman, if this hearing represented a fair assessment of how the Obama administration’s green jobs agenda and an 

honest discussion of how to improve those programs, I would be in 

full support. However, I’m sorry to say, instead of that, I think we 

will probably only hear complaints and opposition to President 

Obama’s programs. You would never know that many of these programs were passed with bipartisan support or that they began 

under President Bush or earlier administrations, again with bipartisan support. 

Somehow, it seems to me, having sat on this committee for many 

years, that the Republicans only came up with their vehement opposition to a government role in green energy when President 

Obama was elected. Now, every time the Obama administration 

tries to make a good decision on how to shift our economy to clean 

domestic energy, we hear nothing but attacks and complaints. 

But at the same time, and you could tell I was being sarcastic 

at the beginning, because I haven’t seen any bipartisan legislation 

or, for that matter, partisan legislation, to create green jobs programs, to improve the programs that we have, or to try to use oversight facilities to build better programs. And, frankly, I think this 

partisanship is what our constituents are sick of and what they 

would like to see eliminated. 

The witness list for this hearing provides all the evidence we 

need to determine whether it is truly designed as a fact-finding exercise. There are four different witnesses to describe how the government’s estimates of green jobs and green job creation are wrong, 

useless, or inaccurate, but we don’t have a single government witness to respond to these criticisms. Nobody from DOE, nobody from 

Treasury, nobody from EPA, and even though they’ve been attacked here, nobody from the Bureau of Labor Statistics. This does 

not seem to me, as someone who’s been on this subcommittee for 

16 years, an appropriate way to conduct government oversight. 

The programs we’re talking about today, like the section 1603 

tax grant, the Department of Energy weatherization program, and 

the DOE loan program, have improved the lives of citizens around 

this country, creating jobs, heating homes, and providing resources 

to this Nation’s energy innovators. The district or State of every 

Member of this committee has benefited from the Federal Government’s investment in clean energy. 

Republican and Democratic Members, including Chairman 

Upton, have written to DOE in support of companies seeking funds 

for renewable energy projects. And if there’s a way we can make 

these better, I’d be eager to know that, because they’re creating 

jobs around the country. 

7 

Now, because I’m also concerned about clean job creation, last 

week I had a day where I toured clean-tech companies in Denver. 

One of the places I went was Coolerado, which is a manufacturer 

of efficient and quiet air conditioners, using indirect evaporative 

cooling technology. As well as being a really innovative technology, 

Coolerado has now 40 employees today, up from 11 employees 5 

years ago, and revenue has grown over 500 percent of that during 

that time. 

I also went to RavenBrick on my clean-tech tour. What they do 

is they produce a smart window technology, sort of like Polaroid 

glasses for windows, and they began with construction of an automated plant in Denver which is going to increase employment from 

just a handful of employees now to 200 in 2015. 

And so not only do we have tremendous opportunity in all kinds 

of these industries for increase in job creation, but these attacks by 

Congress on clean energy in general and clean tech threaten these 

jobs because they cut down investment, and they cut down consumer confidence and investor confidence. 

And so maybe if looking in our districts doesn’t prove the case, 

we should look at our competitors. The Chinese overnment, as we 

know, is making major strategic investments in renewable energy. 

And because of these investments, China’s market share has grown 

dramatically from 6 percent of the solar market in 1995 to 54 percent in 2010. 

We should not be complicit in ceding the future green market to 

our foreign competitors. So I’m very pleased that we’re working on 

clean-energy development. I’m pleased we’re working on green jobs. 

I think we can do more. I think we should do more, but the last 

thing we should do is politicize this whole discussion. Thank you. 

Mr. STEARNS. I thank the gentlelady. 

I recognize the distinguished full committee chairman, the gentleman from Michigan, Mr. Upton. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Thank you, Mr. Chairman. Today we are going to 

scrutinize the Obama administration’s green jobs agenda. 

After borrowing and spending billions upon billions of dollars, 

and after 40 consecutive months with a national unemployment 

rate higher than 8 percent, I have no doubt that the American people would welcome any jobs, whether you call them green, blue, or 

any other shade of the rainbow. 

The American Recovery and Reinvestment Act was touted by the 

President as the most sweeping economic recovery package in history. According to him, it aimed to make investments to put Americans to work, doing the work that America needs done. 

Unfortunately, despite spending nearly a trillion dollars, the 

stimulus failed to achieve its promised job creation and new questions are being raised about programs funded by the stimulus. This 

committee is dedicated to ensuring that taxpayer dollars are used 

wisely, an objective that cannot be achieved without fully understanding whether a program is successful before investing additional taxpayer dollars. 

8 

There’s no better measure of a stimulus program’s success than 

its record at job creation, a metric that the American people are focused on as they watch the stubbornly high unemployment figures 

emerge virtually every month. That’s why we were so surprised 

when both the Department of Treasury and the Department of Energy confirmed to the committee that a multibillion-dollar stimulus 

program with section 1603 grants for renewable energy does not 

even include job creation among its primary objectives. 

The number of long-term jobs that DOE estimates may have 

been created by this program, both direct and indirect, are appallingly low, given the sheer amount of Federal dollars invested in the 

underlying projects. I say ‘‘may have been created,’’ because DOE 

itself has cast tremendous doubts on the inherent accuracy of the 

computer model generated estimates. 

Yet in spite of these very serious questions, the President has 

proposed a budget that borrows more and spends more on the 1603 

program, not to mention an array of other projects benefiting renewable energy developers. Our Nation cannot afford to double 

down on costly policies with unproven results, and that’s why this 

hearing is so important, bringing witnesses to discuss the green 

jobs agenda and determine what it has cost taxpayers and what it 

has delivered or failed to deliver in return. 

Thanks for being here today, and I yield the balance of my time 

to Mr. Murphy. 

[The prepared statement of Mr. Upton follows:] 

9 


82298.003

Opening Statement of the Honorable Fred Upton 

Chairman, House Committee on Energy and Commerce 

Oversight and Investigations Subcommittee Hearing on 

"The Federal Green Jobs Agenda" 

June 19,2012 

(As Preparedfor Delivery) 

Today we arc here to carefully scrutinize the Obama administration's green 

jobs agenda. After borrowing and spending billions upon billions of dollars and 

after 40 consecutive months with a national unemployment rate higher than eight 

percent, I have no doubt that the American people would welcome any jobs, 

whether you call them green, blue, or any other shade of the rainbow. 

The American Recovery and Reinvestment Act was touted by President 

Obama as "the most sweeping economic recovery package in history." According 

to the President, it aimed to make investments "to put Americans to work doing the 

work that America needs done." Unfortunately, despite spending nearly $1 

trillion, the stimulus failed to achieve its promised job creation and new questions 

are being raised about programs funded by the stimulus. 

The Committee is dedicated to ensuring taxpayer dollars are used wisely, an 

objective that cannot be achieved without fully understanding whether a program is 

successful before investing additional taxpayer dollars. There is no better measure 

ofa stimulus program's success than its record at job creation, a metric the 

American people are focused on as they watch the stubbornly high unemployment 

figures emerge each month. 

That's why we were so surprised when both the Department of Treasury and 

the Department of Energy confirmed to the committee that a multi-billion dollar 

stimulus program, the Section 1603 grants for renewable energy, does not even 

include job creation among its primary objectives. 

The number of long-term jobs that DOE estimates may have been created by 

this program, both direct and indirect, are appallingly low given the sheer amount 

offederal dollars invested in the underlying projects. I say "may have been 

created" because DOE itself has cast tremendous doubts on the inherent accuracy 

of its computer model-generated estimates. 
10 


82298.004

Yet, in spite of these very serious questions, the President has proposed a 

budget that borrows more and spends more on the 1603 program, not to mention an 

array of other projects benefitting renewable energy developers. Our nation cannot 

afford to double down on costly policies with unproven results. That's why this 

hearing is so important, bringing witnesses to discuss the green jobs agenda and 

detennine what it has cost taxpayers and what it has delivered, or failed to deliver, 

in return. 
11 

Mr. STEARNS. Mr. Murphy is recognized for 1 minute. 

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. MURPHY. Thank you, Mr. Chairman. When President Obama 

was elected, and I remember—I recall quite clearly, in his 2011 

State of the Union address, he talked about his emphasis on clean 

coal. Recognizing that over half of our electric energy is from coal, 

I’m still waiting for that promise of green energy to come true. 

With regard to Presidential earmarks for companies like 

Solyndra, we have spent more, subsidized more, and it has cost us 

more jobs. In this Nation, where we have an abundance of coal and 

also natural gas, instead of following through on the promise of 

clean coal and natural gas, this administration has not only abandoned that promise, but blocked it. 

New regulations are not cleaning up coal plants but shutting 

them down. Twenty percent of the energy generated by coal plants 

will be lost, which will result in an increase of home and factory 

electric bills by 30 to 40 percent. And the estimates are we will lose 

between 160- to 200,000 jobs per year. And in the area of natural 

gas, there’s no fewer than 10 Federal agencies now creating more 

barriers instead of helping. 

I still believe in the genius of the American spirit, of our science 

and creativity and our tenacity to create jobs and work towards 

clean coal technology, and I hope that’s the promise of this administration we follow up on. 

I yield back. 

Mr. STEARNS. The gentleman yields. 

We recognize the gentlelady from Tennessee for 1 minute. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

In preparation for the hearing, we did a little research. BLS has 

identified 333 industries that contribute to green goods and services. These industries have reportedly created a combined 3.1 million green jobs. However, after reviewing the list, it appears that 

this administration’s well-documented policy of picking winners 

and losers is once again out in full force, as there is a wide discretion into what constitutes a green job. This is what we found. 

According to BLS, automobile manufacturing of EPA’s smart-way 

certified vehicles, such as natural gas vehicles, supports green jobs. 

However, the construction of gas pipelines that transports the fuel 

to the EPA-certified vehicles does not constitute a green job. 

Shellfish farming creates and sustains green jobs. Shellfish fishing does not. Semiconductor and related device manufacturing supports green jobs. Semiconductor machinery manufacturing does 

not. Manufacturing Energy Star certified light bulbs, such as CFLs 

that contain mercury, supports green jobs. However, manufacturing batteries only supports green jobs if the batteries are mercury free. We have some discrepancies, and we look forward to 

looking into it. 

12 

I yield back. 

Mr. STEARNS. The gentlelady’s time has expired. 

The gentleman from Texas, Dr. Burgess, is recognized for the remaining time, which I think is a little less than 1 minute. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Sure. Well, we are just so glad the witnesses are 

here today. 

Apparently green jobs is as hard to define as a shovel-ready 

project. Other subcommittees have heard testimony. Mrs. 

Blackburn commented on this. The Bureau of Labor Statistics testified before an Oversight and Government Reform subcommittee 

that someone who sweeps the floor of an energy facility may be 

classified as a green job. Someone who drives a hybrid bus for the 

city has a green job. 

Purveyors of used goods, since apparently all the goods are being 

recycled, are considered having green jobs. Even an oil lobbyist, if 

he or she advocates on environmental issues, is deemed working in 

the green field. Clearly we’ve got a lot of explaining to do about 

this program. 

The stimulus, as we all know, failed to deliver on the promise. 

It’s up to this committee to get to the bottom of it. I’m glad we have 

the witnesses here to help us sort through that, and I’ll yield back. 

Mr. STEARNS. I thank the gentleman, and we recognize the distinguished ranking member, the gentleman from California, Mr. 

Waxman, for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Mr. Chairman, today’s hearing is about the administration’s effort to invest in energy and clean-energy jobs, and I 

commend the Obama administration for its focus on developing 

America’s green job economy. Funding loan programs for renewable 

energy, encouraging use of energy efficiency technology in our electric grid, and investing in energy efficiency, these investments have 

made a big difference in the short term and will pay big dividends 

in the long term. 

In the short term, DOE expenditures and loan guarantees under 

the Recovery Act have supported 100,000 jobs. In the long term, 

these investments are helping move the economy toward a new, 

clean-energy industry. The environmental case for a shift to green 

energy is indisputable, and the economic reasons are just as strong. 

Last year, the American Energy Innovation Council, a business 

group that includes Microsoft Chairman Bill Gates, the CEOs of 

Xerox and General Electric, and the former CEO of Lockheed Martin, recognized the Federal Government’s vital role in promoting 

clean energy, and here’s what they said: 

‘‘If the U.S. fails to invest in new technologies and create new 

markets and new jobs that will drive the transformation and revitalization of the 5 trillion global energy industry, we will have lost 

an opportunity to lead in what is arguably the largest and most 

pervasive technology sector in the world.’’ 

13 

I agree with these business leaders. America must invest in 

building a better clean-energy future. We need to do this for environmental and public health reasons, and we need to do it for economic reasons. 

Unfortunately, this Congress is moving in the wrong direction. 

House Republicans are voting for more oil and coal at the expense 

of renewable energy. House Republicans overwhelmingly deny the 

scientific evidence of climate change, and House Republicans continue to vote to roll back environmental protections. This Congress 

has earned its title as the most anti-environmental Congress in 

history. 

Mr. Chairman, a report I released yesterday found that nearly 1 

in 5 of the 1,100 legislative roll call votes thus far in this Congress, 

247 votes, were votes to undermine environmental protection. In 

2011 and in the first half of 2012, the House has voted 109 times 

on legislation that would enrich the oil and gas industry. This includes 45 votes to weaken environmental, public health, and safety 

requirements applicable to the oil industry, and 38 votes to prevent 

deployment of clean-energy alternatives. 

This is the wrong path. We have to address this Nation’s energy 

and environmental issues or future generations will lose out. 

We have to accept findings of the National Academy of Sciences 

that ‘‘climate change is occurring, is very likely caused primarily by 

human activities, and poses significant risks to humans and the environment,’’ a statement that the Republicans voted to deny. 

We were elected to address the challenges this Nation faces head 

on. We can’t simply stick our heads in the sand and hope these 

problems go away. We can’t simply hope the climate change stops 

on its own. This Nation needs a strong, green jobs and green energy plan to ensure that its children have a strong future. 

The Obama administration has moved in this direction and I 

commend them for their effort. We should be working with the 

President, not seeking to obstruct his agenda at every turn. 

I have a minute left, and I yield it to Ms. Schakowsky. 

Mr. STEARNS. Ms. Schakowsky is recognized for the balance of 

the time. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you. I look forward to our hearing 

today, which I believe provides an excellent opportunity to evaluate 

our energy priorities and to chart the way forward in a manner 

that will stimulate job growth, improve our air and water quality, 

promote public health and save lives. 

More than 60,000 jobs have already been created as a result of 

the 1703, 1705 and ATVM programs. Industries that have benefited from these programs include solar, wind, and geothermal, and 

States from Hawaii to Maine have reaped the benefits. Those investments have spurred private investment on unprecedented levels for alternative energy projects. 

The argument from fossil fuel supporters that we can’t afford to 

invest in green energy is incredibly hypocritical. We’re going to 

14 

spend $40 billion on subsidies to Big Oil in the next decade, and 

yet these are the highest revenue-earning companies in the world. 

So I look forward to hearing the testimony today, and I thank 

the gentleman for yielding. 

Mr. STEARNS. I thank the gentlelady. 

Before we go on, I would like to put into the record, by unanimous consent, which I consulted with the minority, a Washington 

Post opinion piece that appeared today, ‘‘Clean Energy is Money 

Wasted,’’ by Chuck Lane. And also I would like to put in the record 

the Brookings Institution report earlier this month, which was 

cited by Mr. Lane called, ‘‘Clean Energy: Revisiting the Challenges 

of Industrial Policy.’’ 

By unanimous consent, so ordered. 

[The information follows:] 

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Obama's 'clean energy' strategy is money wasted - The Washington Post 

Back to Previous page 

'Clean energy' is money 

wasted 

By Charles Lane, Published: June 18, 2012 

In blackjack, doubling down is a high-risk, high-reward move. 

If you think you can win, based on the first two cards dealt, 

you bet 100 percent more - but you also pay for the privilege 

by agreeing to take one, and only one, additional card. 

Doubling down is also the semi-official metaphor of President 

~ 

Obama's energy 

last week: 

strategy, 

"My plan 

as we 

would 

know 

end 

from 

the 

his 

government 

~ 

subsidies to oil companies that have rarely been more profitable - let's double down on a clean-energy 

industry that has never been more promising." 

Blackjack pros like doubling down; it's a chance to profit from newly acquired relevant information. Whether 

that logic applies to the U.S. government's energy bets, however, is a different story. What we've learned so far suggests that the president should fold his cards. 

U.S. energy subsidies - spending, tax breaks, loan guarantees - increased from $17.9 billion in fiscal 2007 

to $37.2 billion in fiscal 2010, according to the Energy Department. Yet fossil fuels' overwhelming market 

advantages have produced a litany of clean-energy failures, from electric cars to SllI¥ru:!ra. 

The subsidies ostenSibly address several issues - dependence on foreign oil, job creation, international 

economic competitiveness and environmental degradation - but without clear priorities, much less rigorous 

cost-benefit analysis. Unintended consequences and political influence abound. 

The best-laid plans are vulnerable to unforeseen market developments - such as the boom in oil and 

natural gas "frlldiDll" over the past decade, which Obama has now embraced. 

To the extent that it's coherent at all, the federal energy "portfolio" represents a return to industrial policy - governmental selection of economic winners - which was fashionable in the 19705 and 19805, before it 

collapsed under the weight of its intellectual and practical contradictions. 

As such, current clean-energy programs are no likelier to payoff than President Jimmy Carter's Synthetic 

Fuels Corp., which blew $9 billion, or President George W. Bush's $1.2 billion program for hydrogen 

vehicles. 

This isn't just my opinion or the finding of some right-wing think tank. Rather, all of the above comes from 

a ~ by three certifiably centrist Brookings Institution scholars, Adele Morris, Pietro S. Nivola and 

Charles L. Schultze; Schultze was a senior economic adviser to Presidents Kennedy, Johnson and Carter. 

The researchers pick apart clean-energy subsidies rationale by rationale. 

Like his predecessors of both parties, Obama argues that the subsidies can help reduce dependence on 

foreign oil. But even with 100 percent self-sufficiency, we would be vulnerable to price shocks in the global 

http://www.washingtonpost.com! ... ions!obamas-clean-energy-strategy-is-money-wasted/2012/06/18!gJQADIplmV_print.html[7/31/20132:48:34 PM] 
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Obama.s 'dean energy' strategy is money wasted ~ The Washington Post 

market for this fungible commodity. Many technologies favored by current policy - wind, solar, geothermal - replace coal and natural gas, in which the United States is already self-sufficient. 

Obama also cites the need to compete with other countries in developing the energy industries "of the 

future." The Brookings scholars argue that higher living standards depend on growing productivity, not the 

global market share of U.S. industries. Their authority for this is Nobel Prize economist palll Krugman's 

1994 essay in Foreign Affairs, "Competitiveness: A Dangerous Obsession." 

Having China or someone else develop clean-energy technology might be to U.S. advantage; let them pay 

the inevitable start-up costs; then we can adapt the discoveries to our own needs. 

Heck, if we want to reduce the most emissions at the least cost, it might be wise to import the means of 

doing so. 

As for job creation, clean-energy subsidies shift demand for labor; they don't increase it. "I'm not aware of 

a single peer-reviewed economic study that shows these programs create jobs in the long run, and on a 

net basis," Morris told me. Solyndra and its 1,861 vanished jobs proves her point. Fracking probably created more permanent positions. 

Reducing carbon emissions and other environmental goals represent the best rationale for government 

intervention in the energy market. Market prices for fossil fuels do not capture all costs of consuming them. 

Also, the private sector underinvests in basic research that might, someday, lead to new commercially 

viable energy sources. 

Higher gas taxes or a tax on carbon could efficiently limit pollution, if those steps weren't politically toxic. 

Basic research funding is, indeed, part of Obama's strategy, but it should be more focused and insulated 

from politics, the Brookings scholars argue. 

If government does double down on clean energy, it's the federal budget that will end up busted. 

lanec@washpost.com 

Read more from Opinions: The Post's View: Wind power The Post's View: A viable clean-energy bill at last? 

Henry A. Waxman, Sherwood Boehlert, Edward J. Markey, Wayne Gilchrest: Carbon emission policy could 

slash debt, improve environment 

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Buy a link here 

http://www.washingtonpost.com/ ... ions/obamas-ciean-energy-strategy-is-money-wasted/2012/06/18/glQADlpLmV_print.html[7/31/2013 2:48:34 PM] 
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82298.079

BROOKINGS THE CLIMATE AND ENERGY 

ECONOMICS PROJECT 
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CLEAN ENERGY; 

REVISITING THE CHALLENGES OF INDUSTRIAL POLICY 

JUNE 4,2012 

ADELE C. MORRIS 

The Brookings Institution 

PIETRO S. NIVOLA 

The Brookings Institution 

CHARLES L. SCHULTZE 

The Brookings Institution 
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82298.081

I. INTRODUCTION 

"We're in a competition all around the world, and other countries -- Germany, China, South 

Korea -- they know that clean energy technology is what is going to help spur job creation and 

economic growth for years to come. And that's why we've got to make sure that we win that 

competition. I don't want the new breakthrough technologies and the new manufacturing taking 

place in China and India. I want all those new jobs right here ... in the United States of 

America, with American workers, American know-how, American ingenuity." 

President Barack Obama 

May 6, 2011 

Remarks at Allison Transmission Headquarters, Indianapolis, Indiana 

Governments in most industrial countries have stepped up their promotion of clean energy 

technology in recent years. No longer a laggard, the U.S. government increased energy 

subsidies from $17.9 billion in fiscal year (FY) 2007 to $37.2 billion in FY 2010, according to the 

U.S. Energy Information Administration (EIA). I The total includes a mix of direct expenditures, 

tax expenditures, the subsidy associated with loan guarantees, and research, development and 

deployment (RD&D) spending. 

The Energy Improvement and Extension Act (EIEA), passed in late 2008, and the American 

Recovery and Reinvestment Act of 2009 (ARRA) account for much of the increase. The EIEA 

expanded or extended tax credits for renewable energy, energy-efficient appliances, plug-in 

electric vehicles, and liquid biofuels. ARRA, a broad fiscal stimulus package, included $35.2 

billion to the Department of Energy (DOE) and added $21 billion in energy tax incentives over 

the life of the legislation. 2 Using ARRA authority, cumulatively from September 2009 through 

November 2011, DOE underwrote $35.9 billion in loan guarantees for a range of energyrelated technologies. 3 

Figure I displays the U.S. spending stream on energy-related research and development over 

the last decade. The graph shows the dramatic impact of the ARRA package. 

I U.S. Energy Information Administration, "Direct Federal Financial Interventions and Subsidies in Energy in Fiscal 

Year 2010," August I. 2011. htwllwww.eia,gov/analysis/requests/subsidy/ 

2 $11 billion went to grants to state and local governments for weatherization and other programs and $600 

million in new research funding. 

3 U.S. Department of Energy (DOE), Loan Programs Office website, accessed November 29, 20 II. 

https·/IIpo.energy g,ov/1p.!:E' id=45. The overall value of loans guaranteed by DOE is much larger than the 

appropriations necessary to account for the value of the subsidized interest rate on the guaranteed loan. 
20 


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Figure I. U.S. Energy-Related R&D Spending 2000-20 I 0 (in millions of $20 10)4 

$9,000 ,----------------

$8,000 +-------------------

$7,000 -t---------------- \--

$6,000 +----------------------.-... --.-.----.. --.... -.... --

$5,000 +--------------

$4,000 +--------------~ .. 

$3,000 

$2,000 

$1,000 

$0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

III Other Tech and 

III Other Power and 

III Hydrogen and Fuel 

III Nuclear 

III Fossil Fuels 

III Energy Efficiency 

Public investments of these magnitudes, targeted at specific industries, arguably constitute an 

industrial policy, albeit a sectoral one, unlike the earlier proposals of the 1980's -that is, a 

government strategy to steer resources toward select producers or technologies. The rationale 

and efficacy of these clean-energy expenditures call for scrutiny. 

Proponents offer numerous reasons for scaling up particular energy technologies at the 

taxpayer's expense. One set of reasons involves the need to remediate market failures that 

have not been corrected by other policies. For example, dean-energy technologies are said to 

emit fewer greenhouse gases than do traditional sources per unit of energy produced. The 

United States does not have an economy-wide policy to control greenhouse gases, most 

notably, one that puts a price on CO2 that reflects the environmental harm associated with use 

of fossil fuels. 

A far more effective policy than subsidies for dean energy research, development and 

demonstration would be a tax or a cap-and-trade regime that would put an appropriate price 

on carbon and other greenhouse gases. 5 Properly implemented, this alternative approach 

would help level the playing field for greener energy sources, for it would require emitters to 

pay prices that reflect the costs their emissions impose on society. The enhanced efficiency 

4 International Energy Agency, Detailed Country RD&D Budgets. Data downloaded November 29, 2011 from 

http://wds.jea orglWDSIReportFoldersIReportFolders.aspx. 

5 A carbon tax and a cap-and-trade program are theoretically very similar. We favor a carbon tax based on our 

assessment of the likely actual implementation. 

2 
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that would result has been widely recognized by economists. 6 True costs would flow to 

purchasers of goods and services that require energy, suitably inducing conservation. Emitters 

would have incentives to invest in equipment and new production techniques, use alternative 

fuels, and seek other methods to reduce emissions. And America's innovators would channel 

their efforts into inventing, scaling up, and marketing competitive forms of clean energy. 

However, because existing market signals do not suffice to encourage climate-friendly 

technologies, carefully targeted federal funding seems warranted. But as we explain later, it is 

ironically only after incorporating the social costs of energy into market prices that many clean 

energy subsidies will succeed in deploying new technologies. 

Some clean energy technologies, such as electric vehicles and biofuels, are also said to wean the 

economy from its inordinate dependence on oil, which is both volatile in price and supplied in 

part from unstable foreign sources. Like environmental damage, the security risks of relying on 

oil are not fully embedded in its price, and therefore, the argument goes, policies to reduce its 

use could be efficiency-enhancing. 

A second set of reasons for sustaining clean-energy subsidies is less about correcting inefficient 

market outcomes than about tilting the market toward U.S. interests. In this view, strategic 

investments in clean energy technologies would increase U.S. firms' market share of a growing 

industry and thus help American firms and workers win a larger portion of global business. 

Although the projected market growth of cleaner energy derives from the international 

community's efforts to protect the environment, the objective here is economic. Proponents 

imply that capturing a larger market share would boost long-term U.S. "competitiveness" and 

create jobs in American firms that manufacture the exportable products. 

Are these justifications sound! And even if convincing in theory, what happens in practice! 

That is, can the American political process successfully carry out the envisioned strategy! 

Section 2 of this paper reviews the history of industrial and energy technology policy since the 

1 970s. Section 3 examines the environmental and energy- independence rationales, and Section 

4 analyzes claims about the potential role for government backing of dean energy to ensure 

U.S. competitiveness and save or create jobs. Section 5 explores the administrative and 

political challenges of implementing an efficient clean-energy research and development 

portfolio. and Section 6 sketches our recommendations. 

2. INDUSTRIAL AND ENERGY TECHNOLOGY POLICY, THEN AND NOW 

Industrial Policy in the 1970$ and 1980$ 

The years between the mid-I 970s and the mid-I 990s were a troubled time for most of the 

world's advanced economies. Inflation averaged higher than in earlier postwar years, and 

productivity growth slowed. The era saw two deep recessions. These conditions spawned a 

new economic doctrine that purported to explain the malady and sought to offer a remedy: 

6 For example: Greenstone, Michael and Adam Looney, A Strategy for America's Energy Future: Illuminating Energy's 

Full Com, The Hamilton Project. The Brookings Institution, May 20 II. 

3 
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industrial policy. It largely arose outside the mainstream of professional economics, gathering 

support among union leaders and Democratic-leaning thinkers and policymakers. The term 

meant different things to different people, but enthusiasts accepted several underlying 

propositions about the faltering economy: 

• The share of national output produced by high valued-added American manufacturing 

industries was declining. 

• America was losing its leadership in cutting-edge technology and suffering the decline of 

critical older industries. 

• These developments transpired because the private market was directing investment to the 

wrong industries, compounded by a mismatch between the skills of dislocated workers and 

the skills required in growing industries. 

• To remedy these problems, wrote two influential advocates, "U.S. companies and the 

government should develop a coherent and coordinated industrial policy whose aim is to 

raise the real income of our citizens by improving the patterns of our investments rather 

than by focusing only on aggregate investment levels." 7 

Industrial-policy adherents contemplated considerable expansion of the federal government's 

role in the private economy. They believed that in consultation with industry, the federal 

government could improve investment in new technologies and protect waning manufacturers 

like steel and automobile companies. In lieu of large direct subsidies, the promotional schemes 

proposed during the I 980s offered a range of indirect measures to nudge private investment in 

the "right" direction. The measures included tax breaks, subsidized loan facilities, trade policies 

(induding "voluntary" import quotas, export loans, and other trade actions to obtain better 

market-shares abroad). For declining industries, some changes in union work rules and wages 

were countenanced as preconditions for federal assistance. 

Beginning in the 1 970s and continuing into the I 980s, Japan's formidable growth in output and 

exports was imputed to that country's supposed strategic government policies, which were 

suspected of buoying her prosperity at the expense of ours. The machinations of the Ministry 

of International Trade and Industry, some thought, explained Japan's outstanding economic 

success during the I 980s. Japan, supposedly, had implemented a smart industrial policy. 

As output and employment rebounded from the severe recession of 1982, U.S. productivity 

growth returned to the higher level of the 19505 and 19605, and Japan's economic performance 

ceased being exemplary; thus, the allure of industrial policy dimmed by the mid-I 990s. 8 

However, since its inception, stubborn economic problems have occasionally revived the notion 

that the government should playa strategic role in the allocation of private investment. 

U.S. Energy Technology Policy 

The energy sector has long been an object of industrial boosterism. While policymakers have 

had some successes, the history of the Department of Energy's (DOE) RD&D projects has been 

7 Ira Magaziner and Robert Reich, Minding America's Business Harcourt Brace Jovanovich, New York, 1982, p.4 

'The U.S. government has bailed out individual firms (e.g., Chrysler in 1979, and GM, Chrysler, and financial 

institutions in 2009) but has arguably never had an economy-wide industrial policy. 

4 
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82298.085

checkered since the early I 970s. For example, after the first Mideast oil shock in 1973, various 

alternative fuel programs were proposed. They proved problematic. President Carter and 

Congress. for example, created the Synthetic Fuels Corporation that was envisaged to spend up 

to $88 billion ($200 billion in 2007 prices) and to produce an ambitious two million barrels a 

day by 1992. 9 Some plants were completed at a cost of $9 billion (2007 dollars) but they never 

operated commercially.lo The Clinch River breeder reactor project cost taxpayers $1.7 billion. 

It was abandoned in 1983; none of the subsidized reprocessing plants became commercial 

operations. II Some more recent federal efforts to fund energy technology have seen similar 

failures and false starts. For example, from 2004 to 2008 the federal government sank $1.2 

billion into hydrogen vehicle programs that so far have resulted in no commercial deliverables. 12 

Budget analysts and technical experts have debated the policy implications of this experience. 

The Congressional Budget Office (CBO) annually identifies options for spending cuts. Its 20 I I 

report includes a 75 percent reduction in DOE funding for energy technology development, 

with the cuts concentrated on funding for later stages of development. demonstration projects, 

and the deployment of new technologies. 13 In contrast, a 200 I National Academy of Sciences 

(NAS) report reviewing DOE research and demonstration projects takes what appears to be a 

more upbeat view of their value. 14 The report examined costs and benefits of two categories 

of DOE programs (17 energy efficiency programs and 22 fossil energy programs) over the 

period 1978 to 2000. NAS concluded that the projects yielded returns of about $40 billion 

dollars while spending $17 billion. About $30 billion in benefits came from energy-efficiency 

projects and $10 billion from fossil fuel projects. 

Despite the large net benefits, the report suggests that the overall investment portfolio has not 

been sound. Just three of the energy efficiency programs produced 75% of the benefits. Taken 

as a whole, the fossil fuel programs merely broke even. The highest benefit-cost ratios 

predictably came from initiatives related to residential and commercial construction. an industry 

not known for rapid energy-saving and environmental innovation. In contrast, DOE's efforts to 

commercialize large capital-intensive technologies like coal liquefaction have been beset by cost 

overruns and low net benefits. The report notes that this tendency is not confined to DOE 

projects. however. 15 

Clean E.nergy after the Financial Crisis 

, Mufson. Steven. "Before Solyndra, a History of Failures." The Washington Post. November 13. 20 II. p. 84. 

10 See Linda Cohen and Roger Noll, The Technology Pork Barrel. The Brookings Press. 1991 and Peter Z. Grossman. 

"The History of U.S. Alternative Energy Development Programs, September 16,2008. Searle Center on Law. 

Regulation. and Economic Growth; Lyons. Richard D .. "Corporation for Alternative Energy Sources Set Up". 

May21, 1980. 

II Congressional Budget Office (CBO). Comparauve Analysis of Alternative Financing Plans for the Clinch River Breeder 

Reactor Project, September 20. 1983. 

12 Mufson, op. cit. 

Il CBO. Reducing the Deficit: Spending and Revenue Options. pp. 101-102. March 2011. 

http'Uwww,cbo govlftpdocsl120xx/doc 12085/03-1 Q-ReducingTheDeficit,pdf. 

" National Academy of Sciences (NAS). Energy Research at DOE: Was It Worth It?, The National Academies Press. 

2001. 

15 NAS. op. cit. p. 63. 

5 
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82298.086

Inspiration for recent clean-energy assistance reflects environmental concerns but also some of 

the old economic arguments of the I 980s. For example, once again we hear claims that aiding 

the development of certain technologies can ameliorate unemployment, stimulate growth, and 

stem the "offshoring" of manufacturing. The thought is that clean energy investments can 

improve the pace of the current weak recovery and raise the long run growth of national 

income, productivity, and U.S. competitiveness by driving resources toward a fast-growing 

sector of the world economy. 

The desire is understandable. In late 2007, the U.S. and most other advanced countries 

suffered the largest drop in gross domestic product (GDP) since the Great Depression. After 

two years of declining output, GDP growth gradually began to improve, but the recovery has 

been sluggish and marked by particularly slow employment growth. Unemployment in the 

United States rose to 10 percent of the labor force and after two years of recovery is still 

above 8 percent. The persistence of high unemployment and the record increase in the 

fraction of the labor force out of work for at least six months has put pressure on public 

officials to try to generate more jobs. At the same time, legislation to control greenhouse gas 

emissions with a cap-and-trade program failed in the Senate in 2009, and there is no prospect 

of a climate policy initiative in the current Congress. 

Thus, advocates of a clean-energy agenda not only hope that it will help address global warming 

and somehow promise greater "energy security," but also deliver thousands of "green jobs." 16 

Indeed, the latter motif permeates ads in which sponsors tout their technologies more as jobgrowth strategies than as answers to the environmental shortcomings of fossil fuels. The claims 

find a receptive audience among those concerned about America's high unemployment and long 

term competitive edge. We explore those claims in Section 4 below. 

Of course, the jobs projections for clean energy industries are not without counter-claims from 

their incumbent competitors. Fossil fuel producers cite their sector's strong performance in a 

weak economy. With propitious policies, they suggest, increased access to fossil reserves could 

create over a million jobs over the next ten years. 17 The producers point to the recent boom 

in natural gas made possible through three-dimensional seismic technology, horizontal drilling, 

and hydraulic fracturing. This development presumably exemplifies the kind of innovation that 

can drive American competitiveness as much or more than can unproven and expensive 

renewables. And, it is argued, there is great potential for job creation in policies that further 

exploit North American resources like Canadian oil sands, and in building a proposed Keystone 

XL pipeline. The push for government support is not just limited to clean-energy firms, but 

comes from almost every other kind of energy business as well. 

3. MARKET FAILURE: PUBLIC GOODS, POLLUTION AND OIL DEPENDENCE 

16 For example: Pollin R., H. Garrett-Peltier, J. Heintz, H. Scharber, K. Batten and B. Hendricks, "Green Recovery: 

A Program to Create Good Jobs and Start Building a Low-Carbon Economy," Center for American Progress, 

September 2008. hqp:!lwww.americanprogress orglissuesl200a/09lpdflgreen recovery.pdf. 

17 American Petroleum Institute, hqp:llenergytomorrow.orgljob-creation#ltype!all, accessed November 29, 20 II. 

6 
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82298.087

Environmental and Public Goods Rationales 

Perhaps a more persuasive case for clean-energy spending follows from the absence of emission 

charges on greenhouse gases. Currently. regulation under the Clean Air Act controls toxic and 

smog-related air pollutants. such as mercury and sulphur dioxide. The United States does not 

have an equivalent program to reduce greenhouse gas (GHG) emissions. Emerging Clean Air 

Act rules can mitigate some GHG sources. but the legal authority is not well-suited to GHGs. 

in part because the command-and-control rules are unlikely to result in prices that reflect the 

full social costs of emitting activities. including their environmental damage. Inasmuch as 

traditional energy sources are underpriced and thereby retain a competitive edge. the 

substitutes for them-many of which are infant industries-could warrant government policy 

to level the playing field. 

Another market failure arises from the under-investment of firms in research and development 

activities that may produce positive spillovers for other firms and society generally. This 

phenomenon - under-provision of public goods - is not unique to the energy or 

environmental arenas. but in this case there is an interplay between the dual inefficiencies that 

poses novel policy questions. Jaffe and his co-authors (2005) examine the market failures of 

technology development and how they interact with market failures in the form of 

environmental pollution.'s These observers note that technology policy is a poor substitute for 

directly pricing the external costs of emitting activities. but they emphasi1:e that clean-energy 

technology policy can be worthwhile under certain conditions: namely. a market wherein 

carbon is properly priced. In Section 6 below. we offer conclusions about the economically 

justifiable role for federally funded RD&D in which we draw on this and related work. 

Macroeconomic Risks from Oil Dependence 

Another frequent justification for government intervention in energy markets is framed in 

terms of national security. energy security. or energy independence. Nearly forty years ago. 

Richard M. Nixon proclaimed that "our national goal" should be "to meet our own energy 

needs without depending on any foreign sources."" Even today it is hard to find a leading U.S. 

politician who does not accept more or less the same quixotic notion. 

The only fuel the U.S imports in vast quantities is oil, so energy security as it relates to imports 

is really about oil. The degree to which oil dependence justifies government investments in 

clean energy technology is debatable. First. nearly 90 percent of U.S. oil demand is met by 

domestic wells and those of suppliers outside the unstable Middle East. chiefly Canada and 

Mexico which sell America more oil than do either Saudi Arabia or Hugo Chave1:'s Vene1:uela. 

Second. the net benefits of importing less oil as a share of total consumption and using less oil 

,. Jaffe. A .. R. Newell, and R. Stavins. "A Tale of Two Market Failures: Technology and Environmental Policy," 

Ecological Economics 54 (2005) pp 164-174. 

" President Nixon. launching Project Independence in November 1973. quoted in John I. Moore. Continuing Energy 

Crisis in America (Washington. D.C.: CQ Press, 1975). p. 2. 

7 
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in total are unclear. 20 The oil market is global. Even if Americans purchased none from abroad, 

they would remain vulnerable to any perturbation in the international market because they 

would still have to pay the world's price. In addition, the key inefficiencies from oil dependence 

derive from macroeconomic disruptions and market power by oil exporters. Policies that drive 

down oil consumption in periods without disruptions or significant monopoly pricing could 

burden consumers while not directly correcting market failures. 

Third, the vulnerability of the U.S. economy to oil price fluctuations depends critically on 

policies outside the energy sector. Two kinds of significant macroeconomic costs arise from oil 

price spikes: (I) the simple loss of national income from a large jump in oil prices sustained for 

any length of time; and (2) the effects of large oil price shocks on inflation and output arising 

from "imperfections" and rigidities of the macroeconomic system. Experience from the past 

four decades shows that easily the most effective policy to reduce potential macroeconomic 

social costs from periodic oil supply shocks is the Federal Reserve's determination to respond 

promptly to any current or prospective inflationary threat. This means that even fairly large oil 

price increases are now much less likely to set off a wage price spirals. 

Finally, the issue of oil dependence and energy security is largely confined to the transportation 

sector. In the United States, most oil goes into the tanks of motor vehicles in the form of 

gasoline or diesel fuel. So renewables such as solar, wind, geothermal, and other electricity 

technologies contribute next to no "energy independence." These alternate sources are 

substitutes for coal or natural gas, both of which are burned in power plants and both of which 

are either produced domestically or supplied by America's NAFTA partners. So even if 

increasing U.S. self-sufficiency in energy were desirable, it does not follow that subsidies for 

electricity powered by renewable sources advances the goal. 

In sum, while a case can be made that subsidizing clean energy policy might help address market 

failures, the case may be narrower than some assert, and turning theory into sound practice is 

no simple feat. 

4. CLEAN ENERGY: COMPETITIVENESS AND JOBS 

Champions of industrial policy for clean energy technologies submit that it serves the country's 

strategic economic interest. Such a policy, after all, would presumably spur export-led growth 

and employment. Without primacy in these industries, the advocates fear, the U.S. economy 

will become less competitive. Americans would forfeit larger market shares to foreign 

competitors, who would grow dominant thanks, presumably, to their own strategic 

investments. Framing their claims positively, the proponents argue that clean energy, promoted 

by subsidies and favorable regulations, will bolster the U.S. manufacturing sector and add to the 

nation's economic welfare overall. 

20 For more see Pietro S. Nivola with Erin E. R. Carter, "Making Sense of 'Energy Independence'" in Carlos Pascual 

and Jonathan Elkind, eds .. Energy Security: Economics, Politics. Strategies. and Implications (Brookings, 20 I 0), pp: 105-

118 

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Japan's success as an industrial exporter in the I 970s and I 980s was sometimes suspected of 

enhancing that country's prosperity to the detriment of the United States. Today, China is the 

focus of similar concern. China's booming alternative-energy industries, and the specter that 

they might come to dominate world markets, are deemed a long-range threat to American 

leadership and living standards. To those who share this apprehension, the answer is to go 

head-to-head with Chinese manufacturers and match them in kind with government assistance. 

Clean E.nergy and U.s. Competitiveness 

Let us first consider the supposed imperative of matching the Chinese, Germans or others in 

their quest to be "Number One" in clean energy technologies. In a 1994 essay, Paul Krugman 

wrote, "The idea that a country's economic fortunes are largely determined by its success on 

world markets is a hypothesis, not a necessary truth; and as a practical, empirical matter, that 

hypothesis is flatly wrong.,,21 He makes the empirical case that improvements in U.S. living 

standards derive from the growth rate of domestic productivity -- not market share relative to 

competitors. 

Krugman notes that, while the term "competitiveness" is meaningful when applied to individual 

firms, it makes little sense when applied to the economic relationships among countries. CocaCola and Pepsi struggle for market share, and one succeeds only to the disadvantage of the 

other. By contrast, international trade consists of transactions that are, by definition, mutually 

advantageous to the trading partners. Over the long haul, American living standards Improve, 

rather than deteriorate, through freer trade. Growth of productivity and real incomes in 

countries with whom we trade redounds to our benefit, even if some individual domestic firms 

and workers may suffer in the short or intermediate term. 

Advocates for taxpayers' investments to promote U.S. competitiveness often appear to 

misunderstand how trade affects U.S. output and employment. In periods of sustainable noninflationary prosperity and high employment, supported by a competent and flexible monetary 

policy, losses of employment in sectors that are losing business to cheaper imports will tend to 

be offset by gains in other sectors through an appropriate adjustment in monetary policy. In a 

normal year the U.S. experiences about 14 million hires from new entrants to the labor force 

and people changing jobs, and a little under 13 million job separations, from retirements, quits, 

layoffs, and other causes (the difference is the growth in the labor force). In the churning there 

are losses and gains for individual workers. But overall. international trade tends to reallocate 

rather than add or subtract overall jobs in the economy. And if another country expands its 

exports by keeping its exchange rate with the U.S. dollar artificially low, that will increase the 

pace of job reallocation in this country, with the accompanying adjustment costs. But with 

appropriate monetary and fiscal policy it will not, except temporarily, worsen unemployment. 

likewise, temporary subsidies to exporting firms won't improve the long run growth of 

exports. 

But what if policies can be devised that enable U.S. firms to get a leg up on foreign competitors, 

develop the intellectual property, and thereby gain the advantage of being a "first mover"? 

21 Krugman. P., "Competitiveness: A Dangerous Obsession", foreign Affairs. March/April 1994. 

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Wouldn't that be a boon for the American economy by raising the profits of American firms 

and, in the current "jobless" recovery, reducing unemployment? Not necessarily. Firms already 

have the incentive to develop profitable technologies and use patent protection to maximize 

their payoffs. The question is whether there is a public-policy case for subsidizing these 

companies both to render them more profitable and maybe also yield a beneficial economic 

spillover. In theory, that outcome might be possible if, thanks to the government's support, 

U.S. companies could monopolize world markets at the expense of foreign rivals. Writing in 

1993, Krugman explored this possibility thoroughly. He concluded that even if a so-called 

strategic trade policy could be crafted, and if that policy indeed could maximize the monopoly 

power of American firms (a big "if'), such a strategy would add less than one percent to U.S. 

national income. 21 

Finally, is there an indisputable first-mover advantage! It is just as plaUSible to imagine greater 

gains from following instead of leading. Going first runs risks. Why not mainly let others incur 

them! After all, the alternative--pushing home-grown technologies at taxpayers' expense--

offers no guarantee that the eventual products ultimately won't be manufactured somewhere 

else. 

The case for consigning clean-energy development to domestic manufacturers, many of which 

may be high-cost producers, can disappoint on environmental grounds as well. Minimizing the 

cost of abatement is central to achieving environmental goals. If other countries develop 

lower-cost clean energy, more of it will be adopted, here and abroad. Indeed, from the 

standpoint of environmental quality, the willingness of other nations to subsidize their clean-tech 

industries, thereby lowering the costs of clean energy, may ultimately enhance, not lower, U.S. 

welfare. 

Recent anti-dumping cases brought by American firms are moving these very issues to the fore. 

The firm SolarWorld, along with a coalition of American solar manufacturers, claims that 

Chinese manufacturers are able to dump photovoltaic panels in the U.S. market because China 

is unfairly subsidizing its own solar industry. The counter-argument, however, is that the 

Chinese may actually be doing U.S. consumers a favor by artificially lowering the costs of solar 

power. 23 

Clean E.nergy and Green Jobs 

Now let us consider the proposition that engineering clean energy programs will generate 

employment. The debate churns with gray literature studies and counter-studies about how 

many American jobs could be created or lost by various policies. Of course, energy policies 

can affect the fortunes and employment levels in individual industries. But will such policies 

boost employment overall? 

21 Krugman, Paul "What do Undergrads Need to Know About Trade", American Economic Review. May 1993. 

" Cho, Jennifer, "Foul or Fair: U.S. Solar Firms Debate China Solar Subsidies," Forbes, December 6, 20 II. 

accessed December 7, 20 II at http://www.forbes comlsites/jenniferkhol20 11I12106Ifoul-or-fair-u-s-solar-firmsdebate-china-solar-subsidiesl. 

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As mentioned above, during periods of normal high employment, energy policies that divert 

capital, labor, and materials from other industries claim resources that would otherwise go to 

providing other valued goods. A similar logic applies to employment in sectors that produce 

clean-energy technology, a potential export industry. The essential reality of international trade 

is that it changes the composition of jobs, not the total number, at least in the long run. 

Because output per worker in export industries-such as those that might produce clean hightech energy products-may be higher on average than in import-competing industries, 

promoting the former is likely to subtract jobs from the latter. In sum, again, a net gain in 

employment from subsidizing dean-energy exporters may well prove elusive. 

Clean Energy and the Great Recession 

The U.S. at present is not at or near full employment. It is recovering slowly from a recession 

brought on by a severe financial crisis the likes of which have not been seen in ninety years. 

Might promoting green jobs and clean technology spur growth amid the current economic 

stagnation? 

The implications for policy could, indeed, be different in periods with substantial idle labor and 

under-utilized industrial capacity. During periods of high unemployment, funding energy-related 

projects that create jobs which meet the definition of "green" is naturally less likely to disrupt 

jobs elsewhere in the economy. But the relevant question here is: How does spending related 

to energy stack up against other forms of fiscal stimulus, all things considered? 

The goal of stimulus spending and tax relief is to shore up aggregate demand in a recession (or 

a tepid recovery). Afterward, natural forces of growth are supposed to kick in. The 2009 

stimulus legislation professed to do exactly that. The Obama administration described the 

legislation as "timely, targeted, and temporary." "Timeliness" and "temporary" matter because 

resources are slack only during the downturn. If the spendout is too slow, it is not countercyclical. If the spending persists long into an economic upturn, the effect risks creating 

inflationary pressures-and a spike in interest rates. "Targeted" matters because different 

forms of tax cutting and spending programs absorb slack resources, including unemployed 

workers, differently. Some types of stimulus have a stronger and faster multiplier effect than 

others. 

By these three criteria, ARRA's $32 billion for Department of Energy (DOE) programs falls 

short. Take the nearly $16 billion of the stimulus for research. Research is intrinsically iIIsuited for a fiscal stimulus. It falters on timeliness grounds. A major research or 

demonstration project is unlike, say, a "shovel ready" highway project. Research programs 

require detailed proposals, competitive contract selection, and negotiations over the scope of 

work. Research also is not ideal for purposes of mobilizing the resources that are most likely to 

be idle or slack in a recession. Productive research projects are hard to scale up quickly, for 

they often run into a limited supply of skilled labor and of other specialized input costs. 

Moreover. obviously research demands skills that the neediest unemployed workers typically 

lack. A stimulus replete with research initiatives is unlikely to put money into the pockets of 

people who need it most-and whose marginal propensity to consume would be high if the 

money were forthcoming. 

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82298.092

The imperative that stimulus spending be temporary also does not accord with a wellstructured research portfolio. The point of public support for basic research activities is that 

the market alone tends to underfund them. Government should fill the gap, but the choice of 

projects to back ought to be based on other criteria-the long-range merits of the research 

activity per se, not how it fits in the business cycle. If there is an exception to this elementary 

rule, it is that extending federal research dollars in an economic downturn can help compensate 

for a temporary shortfall of research support by sub-federal entities such as state-funded 

universities. But even here, it is hard to see how funding "research" can create or save many 

jobs, at least not in the near-term. 

Programs designed to promote the sustained commercialization of new technologies are 

seldom effectively counter-cyclical, either. Guaranteed loans for expanding commercial 

operations will help only those firms that are nearly competitive. Otherwise the loan guarantee 

is a subvention for potentially inefficient investments. In a recession, a temporary increase in 

risk-aversion by lenders may occur, and can strengthen the case for a federal role. But 

regardless of the macroeconomic conditions, will the loan guarantee reduce long-term costs 

and make the firm competitive124 According to the Government Accountability Office (GAO), 

the energy loan-guarantee system has suffered from competing objectives that are baked into 

the program. The GAO criticized DOE for its slow progress in making guarantees, but it also 

faulted DOE for its ad hoc program implementation (as well as inconsistent treatment of 

individual applicants, favoring some and disadvantaging others). 25 

S. INDUSTRIAL POLICY IN PRACTICE 

All of which leads us to examine a little more fully the practical difficulties facing policymakers in 

the real world of American government as they struggle to choose and sustain the right 

enterprises. 

Identifying plaUSible candidates might be a more dependable process if the commercial 

prospects of emerging technologies could be accurately predicted. Too often, however, the 

predictions have foundered. Decades ago the government launched robust programs to 

develop nuclear breeder reactors and to facilitate synthetic fuels. 

These did not appear to be fanciful schemes in the contexts of their times. But they proved to 

be premised on unreliable forecasts. In the first instance. experts were anticipating continued 

explosive growth of domestic demand for electricity. (Instead, demand, especially for baseload 

capacity, settled onto a much slower trajectory.) In the second, the forecasters assumed that 

the price of petroleum would not plunge far below $40 a barrel, over $100 a barrel in today's 

money. (Instead, it collapsed by the mid-I 980s.) Similar unexpected twists have bedeviled 

"The relevant costs are the firm's long run marginal costs. 

2S GAO, "RECOVERY ACT: Status of Department Energy's Obligations and Spending", GAO-II-483T, March 17, 

2011. pp. 9,10. 

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82298.093

attempts to foretell the potential market for various forms of cleaner energy. When prices 

tumble, as they do periodically, the government's best-laid plans get stranded. 

The caprice of the marketplace frustrates energy planning. So does the fact that public 

decisions regarding which producers to favor are all but impossible to insulate from political 

pressures. For the sake of argument, let us suppose that technocrats in highly competent 

government agencies were able to foresee and then objectively compare the lead-times for 

commercializing the multiple options under consideration. With that knowledge, one might 

think, only the most viable green businesses would be tapped to receive public funds. The 

power of the purse, however. lies with Congress-and the irresistible temptation there is to 

distribute resources widely and often injudiciously, not to concentrate them on just a few 

worthy targets. 

Following the energy shocks of the I 970s, the Carter administration mounted the most 

concerted and sustained campaign to enact national energy laws that, it was hoped, would 

moderate the use of fossil fuels. especially oil. Scrambling to build the coalitions needed to pass 

these measures. Congress heard from stakeholders of nearly every conceivable kind seeking a 

piece of the action. The queue of claimants even included opponents of school integration. 

who lobbied to graft anti-busing amendments onto bills on the grounds that these would 

conserve fuel. 26 In the end. not every supplicant got its appetite satisfied, of course. but the 

prospect of federal subsidies and dispensations had clearly invited a feeding frenzy by interest 

groups. many of whom would keep circling Washington for decades. 

The political dynamics have been similar in nearly every subsequent effort to refine the nation's 

desultory energy agenda. Thanks to extensive logrolling. proposed legislation before Congress 

during the past decade has been rather indiscriminately stuffed with loans, loan guarantees, 

grants. procurement mandates. and tax advantages for seemingly all comers-small businesses, 

green-building retrofitters. railroads, bicyclists, and electric vehicle manufacturers, as well as 

renewable energy suppliers that include ethanol plants and planters. biodiesel producers. 

developers of hydrogen technology. and nuclear power. 27 Even coal producers seek to qualify 

as a clean energy source on the theory that coal-fired electricity generators might someday be 

equipped for carbon sequestration. 

In short, the American political system seldom sticks to sponsoring and sheltering only genuine 

industrial winners. green or otherwise. For as the late Senator William Roth of Delaware 

observed years ago. "The trouble with picking winners is that each Congressman would want 

one for his district."28 

Further complicating the situation is the role of new players who may learn to game a regime of 

subsidies or preferential regulations in unexpected ways. An example: "Tax equity" financiers 

26 See. Pietro S. Nivola. The Politics of Energy Conservotion (Brookings. 1986). Chap. I 

27 See. as an illustration, the endeavor in 2007. Congressional Research Service, "Omnibus Energy Efficiency and 

Renewable Energy Legislation: A Side-by-Side Comparison of Major Provisions in House Passed H.R. 3221 and 

Senate Passed. H.R. 6." September 4. 2007. 

" Quoted in Pietro S. Nivola. 'More Like Them? The Political Feasibility of Strategic Trade Policy." Brookings 

Review, vol. 9, no. 2 (Spring 1991). p. 19. 

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82298.094

profit by charging homeowners slightly below-market electricity prices in exchange for installing 

residential solar PV systems for which a 30% tax credit applies. Some environmentalists hail the 

development as buying down the up-front cost of solar systems and making firms, homeowners, 

and the environment better off. 29 Critics contend, however, that "solar-backed securities," 

which bundle the returns from such investments into assets sold to third parties. drive demand 

for Chinese PV panels. risk creating a new financial bubble and encumber properties with 

uncertain effects on housing markets. 30 Whatever the case. policymakers should not be 

surprised if the consequences of industrial subsidies can wind up in unanticipated places or take 

unintended forms. 

6. WHAT SHOULD BE DONE? 

The functional equivalent of an industrial policy. explicit or de facto. is unlikely to spur an 

efficient or large scale conversion of the U.S. economy toward cleaner energy. "Getting prices 

right" is the first step. an essential precondition. The likes of a robust carbon tax or cap-andtrade regime. however. may not necessarily rule out certain supplementary measures. provided 

they are judiciously designed. 

For reasons described earlier. efficient prices alone are unlikely to generate efficient levels of 

basic research and development by private firms. As a consequence. analysts have argued that. 

alongside an appropriate. predictably rising price on GHGs. there is a place for government 

programs that serve to complement private investments in research and demonstration. 31 

DOE's present model calls for considerable improvement 

First. inasmuch as DOE remains in the business of promoting technologies. we believe the 

agency should embrace only those that can demonstrably help meet the challenge of 

environmental externalities. principally climate change. In pursing this central objective. 

policymakers should back approaches that will minimize the cost of achieving environmental 

goals by addressing environmental and technology market failures. With this mission in mind. a 

stronger investment portfolio for clean energy could evolve. 

What complicates attaining the goal. of course. is that political conditions in the United States 

could frustrate sensible carbon pricing for years. Thus DOE's policy portfolio arguably ought to 

support the kinds of research and investments that would have been taken by firms in the 

presence of an effective carbon price. It would both sponsor basic research and. until Congress 

gets around to setting a meaningful price on carbon. encourage investments analogous to those 

that firms would undertake if carbon were properly priced. In other words. federal RD&D 

" "Solar Service Companies Make Solar Affordable and Accessible," Climate Progress website. 

http://thinkprogress.orglromm/20 I 1/0611 5/245 944/solar-service-companies-make-solar-affordable-and-accessible/. 

30 Rodgers, T. "Subsidizing Wall Street to Buy Chinese Solar Panels," The Wall Street}ournal, December 8. 20 II, p. 

A21. 

31 See: Congressional Budget Office, Evaluating the Role of Prices and R&D in Redudng Carbon Dioxide Emissions. 

September,2006; Environmental and Technology Polides for aimate Mitigation, Carolyn Fischer and Richard G. 

Newell; Induced Technological Change and aima!e Policy, February 200;, Lawrence H. Goulder, Pew Center on 

Global Climate Change, Washington DC • October 2004 

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82298.095

efforts would invest in technologies with the lowest expected cost of abatement and the 

highest probability of market penetration. 

But this does not appear to be current policy. Instead, of the nearly $40 billion in loan 

guarantees in the stimulus package, over 43 percent went to two sectors with some of the 

highest costs of carbon abatement and the lowest projected market shares: solar power and 

electric vehicles. In the most recent data available, DOE awarded 38 loan guarantees, 23 of 

them for solar power (19 generation, 4 panel manufacturing) and 9 others spread among wind, 

geothermal, biofuels, and electrical transmission, plus 6 to auto companies for fuel-efficient 

vehicles and electric vehicles. 

The disproportionate emphasis on funds for solar power does not square with projections of 

its likely deployment. For example. EIA projects solar power to comprise only about 5 percent 

of all non-hydro renewable electricity and less than one percent of all renewable electricity by 

2035.32 That implies a very small fraction of all electric-power generation by 2035. In addition, 

$8.3 billion in loan guarantees (over 23 percent of the total) went to a single company to 

deploy two new nuclear power projects. 33 The most cost-effective technology category in the 

200 I NAS report, energy efficiency, received less than one percent of the loan guarantees. Of 

course, what matters is the overall spending portfolio outside the unusual context of the 

stimulus package, but allocations such as those in the ARRA's loan program illustrate our point 

that resources should instead be directed towards investments that support innovations which 

minimize the cost of environmental protection. 

Second, funding decisions ought to be insulated-as much as possible-from rent-seeking by 

interest groups, purely political distortions, and the parochial preferences of legislators. The 

National Institutes of Health and the National Science Foundation, who use peer reviews to 

screen proposals for research and clinical grants, are among the few federal operations to have 

achieved such independence- they are potential models. 

Deutsch (20 I I) has addressed interestingly the problem of political demands on DOE. 34 To 

mitigate influences that reduce the effectiveness of energy RD&D, Deutsch suggests establishing 

an Energy Technology Corporation to select, manage and fund a limited number of federally 

supported technology demonstrations. The President would appoint a Board of Directors, and 

the Senate would confirm them. Congress would vote a ten year appropriation, and managers 

would be free from executive or congressional interference in project selection, program 

management, and salary determination. After ten years, an independent review would assess 

the corporation's success and recommend next steps. Such an arrangement could be less 

routinely buffeted by politics than DOE's current system. 

Third, we agree with Jaffe and his colleagues who recommend "continuous, systematic, 

quantitative assessment" of technology funding with standardized data so that the relative 

" EIA. Annual Energy Outlook 20 II, Release date April 20 II, 

http://www.eia.govlforecasts!aeolsource renewable am. 

33 DOE. Loan Programs Office. op. cit. 

34 Deutsch. John. An Energy Technology Corporation Willimprave the Federal Government's Effon to Accelerate Energy 

Innovation, The Hamilton Project, The Brookings Institution, May 20 II p. II. 

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effectiveness of alternative policy approaches can be compared over time and used to improve 

the program. 35 

Lastly, the choice of policy instruments to advance technologies (tax credits, loan guarantees. 

grants, and so on) can have a major impact on cost-effectiveness and the extent of unintended 

consequences. 36 A detailed examination of the relative merits of the various tools is beyond 

the scope of this paper, but it should be part of a reform agenda. 

J5 Jaffe et ai, op. cit. p. 60. 

" For example, a modeling study showed that tax credits for energy efficient household capital produced 1120 of 

the carbon emissions reductions that a similar-sized carbon tax produced. McKibbin, W .. A. Morris. and P. 

Wilcoxen, "Subsidizing Energy Efficient Household Capital: How Does It Compare to a Carbon Tax?" The Energy 

Journal. Vol 32. 20 II. 

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82298.097
36 

Mr. STEARNS. With that, we welcome again our witnesses. As you 

know, the testimony you are about to give is subject to Title 18, 

section 1001, of the United States Code. 

When holding an investigative hearing, this committee has a 

practice of taking testimony under oath. Do any of you have objection to testifying under oath? It appears not. 

The Chair then advises you that under the rules of the House 

and rules of the committee, you are entitled to be advised by counsel. Do you desire to be advised by counsel during your testimony 

today? If not, please rise, and we will swear you in. Raise your 

right hand. 

[Witnesses sworn.] 

Mr. STEARNS. We now welcome each of you to give a 5-minute 

summary of your written statement. 

STATEMENTS OF MOLLY SHERLOCK, SPECIALIST IN PUBLIC 

FINANCE, GOVERNMENT AND FINANCE DIVISION, CONGRESSIONAL RESEARCH SERVICE; DAVID W. KREUTZER, RESEARCH FELLOW IN ENERGY ECONOMICS AND CLIMATE 

CHANGE, THE HERITAGE FOUNDATION; W. DAVID MONTGOMERY, SENIOR VICE PRESIDENT, NERA ECONOMIC CONSULTING; KENNETH P. GREEN, RESIDENT SCHOLAR, AMERICAN ENTERPRISE INSTITUTE; AND MICHAEL BREEN, VICE 

PRESIDENT, TRUMAN NATIONAL SECURITY PROJECT 

Mr. STEARNS. And, Dr. Sherlock, we’ll start with you. 

STATEMENT OF MOLLY SHERLOCK 

Ms. SHERLOCK. Thank you, good morning. Mr. Chairman and 

members of the subcommittee, I am Molly Sherlock, a specialist in 

public finance in the Congressional Research Service of the Library 

of Congress. In this role I research and evaluate the economics of 

Federal tax policy, including energy tax policy. Thank you for the 

opportunity to provide testimony on these issues. 

I have been invited here today to discuss tax provisions that support renewable electricity. Specifically, I have been asked to address two issues related to renewable energy tax incentives: first, 

the cost of these provisions; and, second, the potential for these 

policies to create jobs. Before addressing these issues, I will briefly 

summarize the renewable energy tax incentives that are currently 

available, as well as those that have recently expired. 

Historically, the primary tax incentives for renewable electricity 

have been the Renewable Energy Investment Tax Credit, or ITC, 

and the renewable energy production tax credit, or PTC. The ITC 

was first enacted in 1978. Currently, the ITC provides a 30 percent 

tax credit for investments in various renewable energy technologies, including solar. 

The PTC was introduced in 1992. The PTC is a per-kilowatt hour 

incentive paid out over 10 years for the production of electricity, 

using certain renewable energy resources, including wind. Two new 

tax-related provisions for renewable energy were introduced as part 

of the American Recovery and Reinvestment Act of 2009. 

Under section 1603 of the Recovery Act, in lieu of either the ITC 

or the PTC, renewable energy investors were eligible to receive a 

37 

one-time grant from the U.S. Treasury. As of the end of 2011, the 

section 1603 grant option is not available for new projects. 

The Recovery Act also provided 2.3 billion in advanced energy 

manufacturing tax credits, all of which were competitively awarded 

in 2010. 

Regarding the cost of these programs, the Joint Committee on 

Taxation, or JCT, has estimates that the renewable energy ITC 

cost $500 million in 2011. Over the 2011 to 2015 budget window, 

revenue losses for the ITC are projected to be 2.5 billion. 

The PTC was estimated to cost 1.4 billion in 2011 with projected 

revenue losses from the PTC estimated to be 9.1 billion over the 

5-year budget window. The PTC is scheduled to expire at the end 

of 2013 for wind and at the end of 2013 for other eligible technologies. 

In 2011 the Treasury Department paid out 4.7 billion in grants 

under the section 1603 program. From 2011 to 2015, estimates suggest that a total of 17.2 billion will be paid out in section 1603 

grants. From the perspective of the U.S. Treasury, the cost of the 

section 1603 grant program likely exceeds the foregone revenues 

associated with the underlying tax credit. 

The Obama administration’s fiscal year 2013 budget proposes to 

extend the PTC for wind and the section 1603 grant program for 

1 year. The JCT has estimated that this would cost $5.7 billion. 

Studies that look at jobs in therenewable energy industry tend 

to highlight jobs supported rather than jobs created. Jobs supported include jobs on projects that may have received a grant, 

even if the project would have taken place absent the grant option. 

An estimate of the number of jobs created by the section 1603 

grant program can be provided by referring to estimates of the installed capacity that was actually motivated by the grant, as opposed to grant recipients for projects that would have moved forward without the grants. 

In my written testimony, I provide an illustrative example that 

uses estimates of the installed capacity directly motivated by section 1603 to illustrate the differences between jobs supported as opposed to jobs created. 

While job creation may be one of the policy objectives of the renewable energy tax incentives, such policies are often designed to 

achieve other policy objectives in addition to job creation. The section 1603 grant program, for example, was designed to compensate 

for weakness in tax equity markets during the financial crisis. Tax 

incentives for renewable electricity may also address environmental 

concerns and support growth in the renewable energy industry. 

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

happy to respond to your questions. 

[The prepared statement of Ms. Sherlock follows:] 

38 


82298.007

• 

~ Congressional 

=;;::: ~ ReseC!rch < ~ Servlce--------------------

Renewable Energy Tax Incentives and Green Jobs: 

One Page Summary of Testimony 

Statement of Molly Sherlock, Specialist in Public Finance, Congressional Research Service 

Before 

House Energy and Commerce Committee, Subcommittee on Oversight and Investigations 

June 19,2012 

The Subcommittee requested that this testimony discuss two issues related to renewable energy tax 

incentives: I) the cost of these provisions; and 2) the potential for these policies to create jobs, As 

background, this testimony briefly summarizes lax incentives that support renewable electricity, 

The primary tax incentives for renewable electricity have historically been the renewable energy 

investment tax credit (lTC) and the production tax credit (PTC). Two new tax-related provisions for 

renewable energy were introduced as part of the American Recovery and Reinvestment Act of 2009 

(ARRA; P.L. 111-5). Under ARRA, renewable energy investors were eligible to receive a one-time grant 

from the U.S. Treasury (the "Section 1603" grant program) in lieu of either the fTC or PTe. The PTC is 

scheduled to expire at the end of 2012 for wind, and at the end of20 13 for other eligible technologies. 

The Recovery Act also provided $2.3 billion in advanced energy manufacturing tax credits, all of which 

were allocated in 20 I O. As of the end of20 II, the Section 1603 grant option is not available for new 

projects. 

The Joint Committee on Taxation (JCT) has estimated that the lTC, PTC, and the Section 1603 grant 

program will cost nearly $29 billion over the 20 I I to 2015 budget window. Of this total cost, the Section 

1603 grant program comprises the majority offoregone revenue, at an estimated $17.2 billion, while the 

PTC and ITC cost $9.1 billion and $2.5 billion, respectively. As the PTC is scheduled to expire and the 

Section 1603 grant program is closed to new projects, extending either would result in additional revenue 

losses. 

Studies that examine jobs in the renewable energy industry tend to highlight jobs supported, rather than 

jobs created. Further, such jobs estimates do not generally account for potential job losses in competing 

industries. An estimate of the number of jobs created by the Section 1603 grant program can be provided 

by referring to estimates of the installed capacity that was actually motivated by the grant, as opposed to 

grant recipients for projects that would have moved forward without the grant. However, there may be 

substantial uncertainty surrounding these types of job creation estimates. 

While job creation may be one of the policy objectives of renewable energy tax incentives, such policies 

are often designed to achieve other policy objectives in addition to job creation. 

i-570U ZI)(/,H'.(r~.gop 
39 


82298.008

~ 

~ Congressional 

,:;;=;;;;;;;;;;:;;;~~ ReseC!rch ~ Servlce--------------------

Statement of Molly Sherlock 

Specialist in Public Finance 

Congressional Research Scrvice 

Before 

House Energy and Commerce Committee 

Subcommittee on Oversight and Investigations 

June 19.2012 

on 

Renewable Energy Tax Incentives and Green Jobs 

Mr. Chairman and Members of the Subcommittee, I am Molly Sherlock, a Specialist in Public Finance in 

the Congressional Research Service of the Library of Congress. In this role, I research and evaluate the 

economics of federal tax policy, including energy tax policy. Thank you for the opportunity to provide 

testimony on these issues. I should note that CRS takes no position on legislation. 

I have been invited here today to discuss tax provisions that support renewable electricity. Specifically, I 

have been asked to address two issues related to renewable energy tax incentives: 1) the cost of these 

provisions; and 2) the potential for these policies to create jobs. Before addressing these issues, I will 

brieHy summarize the renewable energy tax incentives that are currently available, as well as those that 

have recently expired, 

Tax Incentives for Renewable Electricity 

Tax incentives tor renewable energy were first introduced in the late 1970s. J Over the past three decades. 

various provisions in the tax code have been used to support renewable energy, Renewable energy tax 

inccntives that are currently available, as well as those that were introduced as part of the American 

Recovery and Reinvestment Act of 2009 (P,L. 111-5), are reviewed below. 

I This testimony addresses tax incentives f()f renewable electricity. Since the !ate 1970s, Congress has enacted various tax and 

nlllHax inct:ntives that support renewable transportation fuels, such as ethanol, biodiescl, and cellulosic biofueJs. The incentives 

for renewable fuels are beyond the scope o1'thi8 testimony. 

COllxre::..'>iOlllll I<es€!urch Service u1u'u'.crS.gliZ) 
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Investment Tax Credit 

The investment tax credit (ITC) for renewable energy was first enacted in 19782 The 1978 version of this 

incentive was scheduled to expire in 1982. Prior to the scheduled expiration date, the provision was 

further extended through 1985. Since the mid-1980s, the renewable energy ITC has been modified and 

extended several times.' For most technologies, the ITC is set to expire at the end of20 16. 

Currently, several renewable energy technologies qualify for the ITC. A 30% tax credit is available for 

investments in solar energy property, fuel cells, and small wind systems. Geothermal systems, 

microturbines, and combined heat and power (CHP) property can qualify for a 10% tax credit.' There is a 

permanent 10% ITC for solar and geothermal that will remain available after the 30% rate expires at the 

end of2016. 

Production Tax Credit 

Since being enacted in 1992, the renewable energy production tax credit (PTC) has been the primary 

federal incentive supporting wind power. While the PTC is a temporary tax provision, in the past, it has 

regularly been extended. 5 Under current law, the PTe for wind-produced electricity will expire at the end 

0[2012. Since the PTC is based on electricity produced during the first 10 years a qualifying renewable 

energy facility is in operation, under current law, tax credits may be claimed until 2022. 

Several other technologies also qualify for the renewable energy PTC, including closed-loop and openloop biomass, geothermal energy, landfill gas, municipal solid waste, certain hydroelectric, and marine 

and hydrokinetic technologies'" The PTC expiration date for qualifying technologies other than wind is 

the end of 20 13. 

Other Tax Incentives for Renewable Energy 

A number of other specially targeted tax incentives are available for renewable energy. Technologies that 

qualify for the renewable energy ITC or PTC also qualify for accelerated depreciation under the Modified 

Accelerated Cost Recovery System (MACRS). The cost of investments in most renewable energy 

property is recovered over a five-year period.' 

2 A of U.S. energy tax policy can be found in CRS Report R41227, Energy Tax Policy: Historical Perspectives on and 

Tax E"IJenditures, by Molly F. Sherlock. 

J The investment tax credit for solar was allowed to lapse at the beginning of 1986, before being retroactively extended through 

the end of 1988. The credit ... vas again extended in 1989 and 1991. In 1992, the 10% investment tax credit was made permanent 

f(Jr solar and geothermal. Legislation in 2005 temporarily increased the renc\vable energy investment tax credit for solar from 

10% to 30%. Subsequent legislation in 2006 and 2008 extended this 30% rate through the end of2016. 

4 Currently, PTC~eligible propc!iy can elect to receive a 30% ITC in lieu of this PTC This option is available through 2012 for 

\-vind, and through 2013 for other PTC>cligible technologies. 

'i The PTe has been extended seven times since 1992. In three of these cases. the PTe was allowed to lapse prior to being 

cxt..:nded retroactive!y. 

"Open~loop biomass. geothermal energy. landfill gas, municipal solid waste, hydroelectric. and marine and hydrokinetic 

technologies qual it), for a tax credit that is half of the amount available to other qualifying technologies. 

"I (\.:rtain biomass is treated as seven~year property under MACRS. Accelerated depreciation for renewable energy 

property is a permanent of the tax code. The depreciation period for other energy property also varies by property type, 

but is generally in tht' 15 to 20 year range. 
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Congressional Research Ser'lJice 

Further, renewable energy bene tits from a number of other tax provisions that are not industry-specitic. 

For example, investments in renewable energy may be eligible for temporary bonus depreciation 

deductions! and those producing electricity using renewable energy resources may quality for the Internal 

Revenue Code (IRC) Section 199 domestic production activities deduction: 

Tax Provisions for Renewable Energy in the American Recovery and Reinvestment Act 

The American Recovery and Reinvestment Act of2009 (ARRA; P.L. 111-5) introduced two new taxrelated provisions for renewable energy. '0 First, under ARRA, investors eligible for the renewable energy 

PTC or ITC could elect to receive a one-time grant from the Treasury in lieu of these tax benetits. Second, 

ARRA provided funds for an advanced energy technology manufacturing tax credit. Many of the 

beneticiaries of this program were in the renewable energy sector. 

Under ARRA, property that was generally eligible for the PTC could instead elect to receive a 30% ITC. 

This option is scheduled to remain available until the current PTC expires at the end of2012 for wind, 

and at the end of 20 13 for other technologies. 

In addition. under A RRA, in lieu of either the PTC or lTC, renewable energy investors could elect to 

receive a one-time grant from the U.S. Treasury." This provision--commonly referred to as the "Section 

1603 grant"-was intended to compensate for weak tax-equity markets." Initially, the Section 1603 grant 

program was made available for property either placed-in-service or under construction in 2009 and 2010. 

The construction start date was extended through 2011 as part of the Tax Relief: Unemployment 

Insurance Reauthorization, and Job Creation Act 01'2010 (P.L. I I 1-312). As of the end of2011, the grant 

option is not available for new projects, but grants are still being paid Ollt to qualifying projects as these 

projects come online. I) 

The advanced energy manufacturing tax credit (IRC § 48C) was also established in ARRA. This provision 

allowed the Treasury to award up to $2.3 billion in tax credits for qualitied advanced energy 

manufacturing projects. These tax credits were competitively awarded. Selection criteria for projects, as 

laid Ollt in ARRA, included: I) commercial viability; 2) job creation; 3) pollution or greenhouse gas 

emissions reduction; 4) potential for technological innovation; 5) cost-effectiveness; and 6) time to 

completion. 14 

a For more information on bonus depreciation. sec CRS RepOIt RL31852, Section 179 and Bonus Depreciation Expensing 

AIIOI·I'C/f1Ces· Current Lm1" Legislalive Proposals in [he I J 2t11 Congress, and Economic Effects. by Gal)l Guenthec 

() For more information on the Section 199 production activities deduction, st:e CRS Report R41988, The Section 199 Production 

AClh'llic,\.' Deduction: Background and Analysis, by :vIolly F. Sherlock. 

iv For intonnation on all encrgy~related provisions in ARRA, sce CRS Report R40412. Energy Provisions in the American 

Recovery and Reinvestment Act 0/2009 (P.L. 1 1 1~5), coordinated by Fred Sissine. 

II See CRS Report R41635, ARRA Section 1603 Grants in Li!!11 a/Tax Credits for Renewable £nergy: Overvie.v, Ana~vsis, and 

Policy Options, by Phillip Brown and Molly F. Sherlock. 

i2 Before the recession, large-scale renewable energy proje~ts relied on tax-equity markets to convert tax credits into cash. Tax~ 

equity markets dried up during the recession, making it harder lor many market participants to fully realize the value of 

renc\vable energy tax benefits. 

I.) Tnx cr~dits tor wind are scheduled to remain available for one year, through the end of2012. Currently available credits for 

other technologies are scheduled to expire in 2013 or 2016. 

1-1 Section 1302 or ARRA. 
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In January 2010, all of the $23 billion available for advanced energy manufacturing tax credits were 

awarded to 183 projects." There were a number of technically eligible projects that were not awarded tax 

credits through the competitive process. Specifically, the DOE and Treasury identified 235 technically 

eligible projects requesting a total of$5.8 billion in tax credits for which funding was not available." 

While the advanced energy manufacturing tax credit was available for a range of technologies, 

renewables accounted for an estimated 69% of credit recipients, in 20 I 0. '7 Manufacturers of solar 

photovoltaics (PV) and wind turbines and related equipment were among the largest recipients. 

The Cost of Renewable Energy Tax Incentives 

The Joint Committee on Taxation (JCT) projected that the renewable energy ITC cost $0.5 billion in 2011 

(see Table 1). Over the 20 II to 2015 budget window, projected foregone revenue from claims of the ITC 

is $2.5 billion. Prior to 2011, JCTestimates of annual revenue loss from the renewable energy ITC were 

less than $100 million." The majority of the foregone revenue for the ITC (roughly 90%) is attributable 

to investments in solar energy property. Recent increases in solar investment have led to increases in the 

revenue cost of tax credits for solar. Federal incentives, including tax credits, as well as market factors, 

such as the reduced price for solar panels, have been cited as reasons for recent increases in solar 

investment. !9 

The JCT has estimated that the renewable energy PTC resulted in $1.4 billion of forgone revenue in 2011 

(see Table 1). Over the 20 II to 2015 budget window, the JCT estimates that the renewable energy PTC 

will cost $9.1 billion.2o Ofthis $9.1 billion in revenue cost, roughly 75% (or $6.8 billion) is for credits 

paid for the production of electricity using wind. 

Five-year accelerated depreciation for renewable energy investments is scored as a tax expenditure by the 

JCT. In 2011, an estimated $0.3 billion in federal revenue was foregone due to this provision (see Table 

1). Over the 2011 to 2015 budget window, the JCT estimates that five-year accelerated depreciation l'or 

renewables will cost $1. I billion. 

In January 20 I 0, all $2.3 billion in advanced energy manufacturing tax credits were awarded to 183 

projects. The actual cost of the advanced energy manufacturing tax credit program will likely be less than 

the $2.3 billion in tax credits awarded. This is because some credit recipients may have limited profits, or 

credits may be carried forward outside of the budget window. When ARRA was enacted, it was estimated 

that the program would have a I O-year revenue cost of $1.6 billion." Over the 2011 to 2015 budget 

i5 A full !i5t ofa\vards was included in a White House press release, available at: http://www.whitehouse,gov/the-pressortice/presidcnt-obama-awards-23-bi!lion-new-clean-tcch-manufacturing-jobs. 

It) Testimony of Senior Advisor to the Secretary of Energy Matt Rogers, in U.S, Congress, Committee on Ways and Means, 

Hearing on Energy Tax Incentives Driving the Green Job Economy, hearings, liith Cong" 20d sess., April 14,2010 (Washington, 

DC: GPO, 2010), Testimony available online at 

http://energy.gov !sitesfprodlf1les!ci prod/documents!Final_ T estimony%286%29. pd f. 

j1 U.S. I:nergy Information Administration (E1A), Direct Federal Financial Interven/ions and Subsidies in Energy in Fiscal Year 

20JO. Washington. DC, July 2011. available at: http://\v\vw.eia.gov!analysis!requests!subsidy/pdf/subsidy.pdf. 

IX Past JeT tnx expenditure tables are available online at: http://www.jct.gov/pub!ications.html?func .... select&id=5. 

1'1 See Solar Energy Industries Association and GTM Research. Us. Solar Market Insight Report QI 2012, June 2012. 

http;!!w\V\\,seia.org/, 

2{) This cost likely would have been higher ansent the Section 1603 grants in lieu of tax credit program discussed below. 

21 U.S. Congress, Joint Committee on Taxation, General Explanation o/Ta""( Legis/atioll Enacted in the I 1/(11 Congress, 

committee print, 111 th Cong .. March 2011. JCS-2-J J. Between 2010 and 2015, JeT estimates suggest forgone revenues 01'$1.8 

(continued ... ) 
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window, the JeT estimates that foregone revenues associated with claims of the advanced energy 

manufacturing tax credit will be $1.4 billion (see Table 1), 

In 20 II, $4.7 billion in grants was paid out under the Section 1603 grants in lieu of tax credits program 

(see Table 1). As of March 15,2012, more than $11.0 billion had been paid out under the Section 1603 

grant program that was enacted in 2009,22,23 Through the end of2017, it has been estimated that another 

$11,5 billion will be paid out in Section 1603 grants," bringing the total estimated cost of the program to 

nearly $22.6 billion, 

Table I. Projected Cost of Renewable Energy Tax Incentives 

billions of dollars 

2011 2012 2013 2014 2015 2011·2015 

Renewable Energy Investment Tax 0.5 0.5 0,5 0,5 0.5 2,5 Credit (ITC) 

Renewable Energy Production Tax 

Credit (PTC) 

Wind 1.1 1.3 1.4 1.5 1.5 6.8 

Open-Loop Biomass 0.3 OJ OJ 0.3 0.2 1.7 

Other Eligible T echnofogies (ii) (ii) (ii) (ii) (ii) 0,6 

5-Year Cost Recovery for Renewable OJ 0.3 0.2 0.2 0.1 1.1 

Energy Property 

Advanced Energy Manufacturing Tax 0.7 0.4 0.2 0,1 (i) 1.4 

Credit 

Section 1603 Grants in Ueu of Tax 4.7 4,1 3,9 3.2 1.2 17.2 

Credltsa 

Source: Joint Committee on Taxation and Department of Treasury 

Notes: An (i) indicates a positive revenue loss of less than $50 million. An (ii) indicates that the revenue cost was listed as 

less than $50 million per year for each eligible technology (other than wind and open-loop biomass). Additional 

information on the estimated annual cost is not available. Columns and row may not sum due to rounding and due to 

limited information for provisions with annual revenue cost of less than $50 million. 

a. The cost of the Section 1603 grants in lieu of tax credits represents an ouday, whereas the cost of tax incentives 

indicates foregone revenue. 

As noted above, a primary purpose of the Section J 603 grant program was to compensate for perceived 

weakness in tax equity markets, By providing taxpayers investing in renewable energy with a grant, the 

demand for tax equity to monetize tax credits would be reduced." 

( ... continu~d) 

billion due to advanced energy manufacturing tax credit awards, 

n A frequently updated list of Section 1603 grant awards can be found on the Treasury Department's website, available at: 

http://w\v\e\' .treasul)' .gov linitiati ves!rccovery/Pages/1603 .aspx. 

23 This includes $1.7 billion paid out in 2009, $3.3 billion paid out in 2010, $4.7 billion paid out in 2011, and $1.3 billion paid out 

through March IS, 20lL 

24 Sec Analytical Perspectives, Budget of the United States Government, FY2013, available at: 

http://www. whitehouse,gov lomb/budget! Analytical_ Pcrspccti yes. 

2~ When taxpayers investing in rene\vable energy project have insufficient tax liability to offset credits, taxpayers may turn to tax-

(continued.,.) 
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In practice, the Section 1603 grant is often more valuable than the underlying tax credits. Grants are 

received as a one-time payout from the Treasury when renewable energy property is placed in service. 

Thus, taxpayers investing in renewable energy do not need to have taxable income in the current year to 

benefit from the incentive, nor is there a need to turn to tax-equity markets for taxpayers with limited tax 

liability. Further, investors in projects that believe the PTC over ten years will be more valuable than the 

one-time grant can elect to receive the PTC.'6 Finally, since the incentive is of greater value than the 

underlying tax credits, additional marginal projects that would not have been financially viable with the 

tax credit option might have become economically feasible given the grant. 27 While the grant as an 

incentive is of greater value to investors, it is also more expensive from the government's perspective. 

The Obama Administration supports extending the PTC and the Section 1603 grant program. The JCT has 

estimated that extending the PTC and the option to elect the fTC in lieu of the PTC for wind through 

2013, extending the Section 1603 grant in lieu of tax credit program through 2012, and converting the 

Section 1603 grant into a refundable tax credit for 2013 through 2016, as proposed by the Administration, 

would cost an estimated $5.7 billion over the 2012 to 2022 budget window." Extending the PTC alone for 

one year, through 2013 for wind and 2014 for other eligible technologies, would cost an estimated $4.1 

billion over the 10-year budget window.'9 

Renewable Energy Tax Incentives and Jobs 

Since 2009, generation of electricity using wind and solar resources has increased. Between 2009 and 

2011, net electricity generation using wind increased by more than 60%.30 Net electricity generation using 

solar more than doubled over that same time period 31 Electricity generated using wind and solar 

resources remains a small share of overall electricity generation, but increased from 2.8% to 3.8% 

between 2009 and 2011. 

(".continued) 

equity markets. developing partnerships that provide cash in exchange for tax credits. Requiring renewable energy investors to 

monetize tax benefits in tax equity markets reduces the value of the incentive that flows directly to project developers. 

Mark Bolinger. Ryan Wiser. and Naim Darghouth. "Preliminary Evaluation of the Section 1603 Treasury Grant Program for 

Renewable PO\ver Projects in the United States," Energy Polk)" vol. 38, no. 11 (November 2010), pp. 6804-6819. 

27 One estimate suggests that between 20% and 25% of the wind capacity installed in 2009 was directly motivated by the Section 

1603 grant. This research also found that more than 60% of wind power projects that elected the grant in 2009 were likely to havc 

moved forward without the grant option. See Mark Bolinger. Ryan Wiser, and Nairn Darghouth, Preliminary Evaluation o/the 

/mpocl oflhe Section! 603 Treusw:v Grant Program on Renewable Energv Deployment in 2()09, Ernest Orlando L3'.NfenCe 

Berkeley Nation.11 Laboratory. LI3NL~31&8E. April 2010. 

19 Sec U.S. .1oint Committee on Taxation. Estimated Budget Effects Of The Revenue Provisions Contained In the 

President's Year 2013 Budgel Proposal, committee print, 112th Cong .. March 21. 2012, JCX-27-12, available at: 

http://w\V\\.jct.gov/publications.html?func=startdown&id=4413. The Treasury estimated that this provision ·would cost $4.3 

billion ovcr the same time period. Both the JCT and the Treasury estimates include outlay efiects. The Treasury estimates that 

outlays resulting from extending the Section 1603 grant program will be SI.3 billion. while the JeT estimates that outlays from 

extending the Section 1603 grant program under this proposal will be $4.7 billion. 

Committee on Taxation, Estimated Budget Effects ojS. 2204, the "Repeal Big Oil Tev:. ,S'ubsidies Act" 

COJ',siclenlli1'n Floor March 26. 2012, committee print, 112th Cong., March 23. 2012. JCX-29, 12. 

availablc at: http://www.jct.gov/publications.html?fullc=startdown&id=4415. 

l() In 2009. 73.9 million megawatt hours ofclectricity werc generated using wind. By 2011, that figure was 119.7 million 

megawatt hours. Data on annual electricity production can be found in Energy Information Administration (E1A), Electric Pmt-'er 

\/unthly. t\.·1ay 29. 2012. Available at: http://www.eia.gov/elcctricity/monthly/. 

11 In 2009.0.9 million mcgavvaH hours of electricity \vere generated using solar. By 20 I L that figure was 1.8 million megawatt 

hours. 
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While both the solar and wind industries are supported by renewable energy tax incentives, identifying 

the number of jobs that were created as a result of specific tax incentives is challenging. Most renewable 

energy jobs studies look at jobs within a particular industry or jobs that were supported by, rather than 

created by, certain incentives. 

Methodology for Jobs Studies 

When interpreting the results of jobs studies, it is helpful to understand what types of jobs were included 

in the analysis. Direct employment includes "jobs created in the design, manufacturing, delivery, 

construction/installation, projects management and operation and maintenance of the different 

components of the technology, or power plant, under consideration."" Indirect employment measures jobs 

created at various stages in the supply chain, such as the manufacture of raw materials. Indirect jobs may 

also inc lude related service jobs in the banking or legal sectors, for example. Finally, induced employment 

refers to general economic activity resulting from spending by direct and indirect employees (e.g., 

spending on food and housing). 

Oftentimes, jobs studies are based on models. Input-output (1-0) models arc widely used to estimate 

employment in various industrial sectors. 1-0 models are intended to model the entire economy and the 

various interactions between different industries. Within specific industries, 1-0 models can be calibrated 

using data on individual projects such as nameplate capacity, location, year of construction, and project 

cost. Depending on the sophistication of the specijic model, 1-0 models can be designed to estimate net 

job creation economy-wide resulting from added activity in a certain industry.33 That is, if growth in the 

wind sector leads to loss of coal-sector jobs, the net job creation when coal-related job losses are 

considered would be less than the gross job creation in the wind industry. 

Jobs and the Recovery Act's Section 1603 Grant Program 

In April 2012, the National Renewable Energy Laboratory (NREL) released a report providing analysis of 

jobs supported by the Section 1603 grant program.'4 In looking at supported jobs, NREL does not attempt 

to estimate how many jobs were created by the Section 1603 grant program." Instead, the report 

estimates the number of direct, indirect, and induced jobs that were supported by wind and solar projects 

that received the Section 1603 grants from 2009 through November 11,2011. During this period, $9.7 

billion in grants was paid out to 24,711 projects. 

1) Max: Wei. Shana Patadia, and Daniel M. Kammen. "Putting Renewab!cs and Energy Efficiency to Work: How Many Jobs Can 

the Clean Energy Industry Generate in the U.s,'?," Energy Policy, vol. 38. no. 2 (2010). pp, 920-921, 

H ~1ax Wei, Shana Patadia, and Daniel M, Kammcn. "Putting Rcncwab!es and Energy EHiciency to Work: How Many Jobs Can 

the Clean Energy Industry Generate in the U,S.?," Energy Poffey. vol. 38, no. 2 (2010), Pl'. 919-93 J provides additional details 

on the usc 01'1-0 models in clean energy job creation studies, 

Daniel (lian Porro, and Marshall Goldberg. Preliminary Ana(vsis of the Jobs and Economic Impacts ofRenelvahle 

TreaslIr.y Gram Prograrn, National Renewable Energy I.aboratory, NREL!TP-6A20~ 

1, Page 3 of the NREL report states: 

I n this analysis. no attempt was made to estimate the number of projects or amount of capacity that \vould 

have been built without a ~1603 grant. \vhich would be necessary in order to quantify the portion of the total 

johs and associated economic impacts attributable to the § 1603 program; thus~ we report the estimated 

number of jobs. earnings, and economic output supported by total investment (§ 1603 investment and non- * 1603 investment) in the projects examined. It is clear that some portion of the jobs. earnings, and economic 

output supported by these projects can be directly attributable to the * t 603 program, but the authors make no 

attempt to estimate that portion in this analysis. 
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Congressional H.esearch Service 8 

NREL used an 1-0 model to estimate jobs supported by the Section 1603 grant program.'6 The specific 

model used in the NREL study is able to estimate supply-chain impacts within the industry, and therefore 

estimate indirect employment associated with projects that received Section 1603 grants, The model used 

in the NREL study, however, does not account for job displacement or reduced economic activity in other 

industrial sectors. Thus, the jobs estimates provided in the NREL study are gross estimates, and do not 

include potential job losses in other industries that might have resulted as economic resources were 

redirected to wind and solar. 

In sum, NREL concluded that the Section 1603 grant program supported between 52,000 and 75,000 

direct and indirect jobs per year during the construction phase (see Table 2). During the operational 

phase, NREL estimated that the Section 1603 grant program supported 5,100 to 5,500 direct and indirect 

jobs per year. These figures represent jobs supported by grants paid through November 10, 20 II. 

Table 2. Estimates of Jobs Supported and Created by the Section 1603 Grant Program 

Average Jobs per Year 

Construction Phase 

Jobs Supported by the Section 1603 Grant (NREL's Results) 

Direct Jobs 

Indirect Jobs 

Induced Jobs 

Direct + Indirect 

T ota! (Direct + Indirect + Induced) 

9.400 

43,000 - 66,000 

32,000 - 49,000 

52,000 - 75,000 

84,000 - 120,000 

Estimate of Jobs Created by the Section 1603 Grant - Illustrative Example 

Direct Jobs 

Indirect Jobs 

Direct + Indirect 

3.666 

16,770 - 25,740 

20,280 - 29,250 

Operational Phase 

910 

4,200 - 4,600 

4,600 - 4,900 

5, I 00 - 5,500 

9,700 - 10,000 

355 

1,638-1,794 

1,989 - 2,145 

Source: National Renewable Energy Laboratory (NREL) and CRS calculations based on the methodology presented in 

Mark Bolinger, Ryan Wiser, and Nairn Darghouth, Preliminary Evaluation of the Impact of the Section 1603 Treasury Grant 

Program on Renewable Energy Deployment in 2009, Ernest Orlando Lawrence Berkeley National Laboratory, LBNL·3188E, 

April 2010. 

Notes: Potential jobs created by the Section 1603 grant are calculated as 39% of the estimated jobs supported, as 

reported in the NREL study. Induced jobs are not included in the potentia! job creation section as such estimates are less 

reliable than those presented for djrect and indirect jobs. These figures are provided for illustrative purposes, and may 

vary according to factors described in the text. 

One way to estimate the number of jobs created by the Section 1603 grant program would be to use 

estimates of the installed capacity that was actually dependent on the grant. as opposed to grant recipients 

for projects that would have moved forward without the grant. One early analysis of the Section 1603 

grant program estimated that roughly 25% of the wind capacity installed in 2009 was directly motivated 

10 The mode! used in the NREL study known as the .IEDI model. 
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Congressional I~esearch Service 

by the gran!." Of the wind projects that received the grant in 2009, roughly 39% were dependent on the 

grant. Using this methodology, an estimate of the number of jobs potentially created by the Section 1603 

grant program is the number of jobs supported by the Section 1603 grant program mUltiplied by 39%, or 

an estimate of the share of projects took place in direct response to the grant option." If further research 

on the proportion of projects that moved forward because of the Section 1603 grant program becomes 

available, this figure may be revised. 

The potential jobs created by the Section 1603 grant program, as reported in Table 2, may understate 

actual job creation for a couple of reasons. First, the 39% ratio was derived using only wind projects. If 

solar projects are more likely to be motivated by the Section 1603 grant option, or if solar projects are 

more labor intensive, the 39% ratio would understate job creation for solar projects. 39 Second, the 39% 

ratio was based on wind projects completed in 2009. Many of the projects that took place in 2009 had 

been planned in earlier years, prior to enactment of the Section 1603 grant program at the beginning of 

2009. It is likely that a larger proportion of the projects installed in 2010 were directly motivated by the 

Section 1603 grant, as there was a longer lead time to allow for planning knowing that the grant option 

would be available. The estimates of jobs created by the Section 1603 grant program remain gross 

estimates. and still do not account for potential job losses in other industries.'o 

An alternative methodology for estimating the number of jobs created by the Section 1603 grant program 

is to use an investment elasticity approach. An investment elasticity measures the percentage change in 

investment divided by the percentage change in the user cost of capital. Empirical evidence suggests 

relationship between investment and investment tax incentives is inelastic. implying that induced 

spending is less than the value of the subsidy that is being given." As an illustration, an investment 

elasticity of -\ would lead to increased investment in renewable energy 000% (most empirical evidence 

suggests an investment elasticity of less than I in absolute value, making this a generous estimate)." 

Since moving from the PTC or ITC to a grant option provides a marginal subsidy that is less than the total 

value of the subsidy, this methodology suggests that the job creation estimates in the illustrative example 

in Table 2 may overstate actual job creation. 

'1 A total 01'9,747 megaviatts of wind capacity was installed in 2009. Of this, 6,200 megawatts in \vind capacity applied for the 

grant option, By examining the specific financial circumstances for individual projects, it was estimated that roughly 3,766 

megawatt" or wind powcr elected the grant without needing the grant, while 2,433 megawatts of wind capacity installations were 

granhicpendent. Sec Mark Bolinger, Ryan Wiser, and Nairn Darghouth, Preliminary Evaluation of the Impac( a/the Secfion 

J603 Treasury Grant Program on Renewable Energy Deployment in 2009, Ernest Orlando Lawrence Berkeley National 

Laboratory. LBNL-3188E, April 2010 . 

. HI This methodology is used in Mark Bolinger, Ryan Wiser_ and Nairn Darghouth. Preliminary Evaluation of the impact of the 

Section 1603 Treasur.y Grant Program on Renewable F:nergy Deployment in 2()09, [mest Orlando Lawrence Berkeley National 

Laboratory. LB~L-3188E. April 2010. 

19 In NRFl;s 2012 study of job creation, solar PV received 13% of total Section 1603 funds and comprised 5% of the generation 

capacity> Of the jobs direct estimated to have been supported in NREL's 2012 study, 41 % were for solar during the construction 

phase, while 16% were for solar during the operational phase (the NREL 2012 study onjob creation looked only at wind and 

solar) . 

.:() It is also possible that falling prices for wind turbines and solar panels Jed to increased installations ofrenewable electricity 

capacity in recent years. Falling prices would have made more projects financially viahle with tax credits only. but also would 

ha\ C' made more marginal projects attractive given the grant option . 

.. i For fUlihcr discussion. see CRS Report R41034, Business II/vestment and Employment Tax incentives to Stimulate the 

EconomJ" by Thomas L. Hungerford and Jane Q, Gravelle. 

41 The 30% is derived as follows. A demand function is given as Q=AVe

. Demand after the investment subsidy is given as 

Q*=AP*-~. Assuming an investment subsidy of30%, P is multiplied by (1 ~ 0,3). Dividing Q* by Q, and solving for the 

percentage change in Q (or investment), investment is found to increase by 30% \\ ith an investment elasticity of -I, 
48 


82298.017

Congressional Resenrch Seroice 10 

What Other Metrics Could be Used to Evaluate Renewable Energy Tax Incentives? 

While "job creation" may have been one of the policy objectives of the Section 1603 grant program and 

the advanced energy manufacturing tax credit, job creation was not necessarily the primary policy 

objective, Congressional intcnt when enacting the Section 1603 grant program was to provide incentives 

for energy resources that address the environmental concerns associated with fossil fuels, and to support 

continued growth in the renewable energy industry during the economic downturn,43 In contrast to the 

Section 1603 grant program, the potential for job creation was one ofthe selection criteria in the advanced 

energy manufacturing tax credit program, Other selection criteria for the advanced energy manufacturing 

tax credit included reduced emissions. technological innovation, and time to completion,44 

To fully evaluate renewable energy tax incentives, it is important to carefully consider the policy's 

objectives, In the case of renewable energy, tax incentives have been promoted as a tool for addressing 

environmental concerns, enhancing energy security, and as compensation for thc unpriced costs 

associated with the use of electricity generated using fossil fuels. In this sense,job creation may be an 

ancillary benefit of supporting growth in the renewable energy sector, 

Thank you again for inviting me to appear today. I am happy to respond to your questions, 

-.\3 The JeT published the following rationale for the Section 1603 grant program: 

The Congrt:% believes that incentives for the production of electricity from renewable resources will help 

limit the environmental consequences of continued reliance on pov,'cr generated using fossil fuels. The 

Congress understands that some investors in renev.,'able energy projects have suffered economic losses that 

prevent them from benefitting from the renewable energy production credit and the energy credit. The 

Ccngr!;;':ss further believes that this situation, combined with current economic conditions, has the potential to 

jeopardize investment in renewable energy facilities. The Congress there believes that, in the short term, 

allowing rene\\'abk energy developers to elect to receive direct grants in lieu of the renewable electricity 

production tax credit and the energy credit is necessary for continued grovI'1h in this important industry. 

See U.S. Congress, Joint Committee on Taxation, General Explanation a/Tax Legislation Enacted in the I 11th Congress. 

committee print. 1111h Coog .. March 2011. JCS-2-11. pp, 109-110, 

H See U.S. Congress. Joint Committee on Taxation. General 10:planatiol1 o/Tax Legis/alion Enacted in the fIlth Congress, 

committt.!c print, liith Congo. March 2011. JCS·2·1I, p. 129. 
49 

Mr. STEARNS. Dr. Kreutzer, just pull the thing a little closer to 

you, and just put the mike up. That’s super. Thank you. 

STATEMENT OF DAVID W. KREUTZER 

Mr. KREUTZER. OK. Chairman Stearns, Ranking Member 

DeGette and other members, thank you for inviting me to address 

the subcommittee on the issue of green jobs. My name is David 

Kreutzer. I am Research Fellow in Energy Economics and Climate 

Change at the Heritage Foundation. The views I express in this 

testimony are my own and should not be construed as representing 

any of the Heritage Foundation. 

I would like to address several aspects concerning green jobs and 

the economy. First, counting jobs is an unsatisfactory measure of 

economic policy. A more direct measure, such as national income, 

gives us a better picture. 

Second, measures of job creation or income creation should be 

done on a net basis. Studies of green jobs created by regulatory 

burdens or subsidies consistently ignore the offsetting job losses the 

regulations or subsidies impose on the economy. 

One study of the impact of regulation on the coal-fired power industry, cited by EPA Administrator Lisa Jackson, showed the more 

burdensome a regulation was, the greater would be the employment increase. For instance, a regulation whose compliance cost 

was 100 times greater created 100 times as many new jobs. 

A study done for the Wind Energy Association and another done 

by the renewable—excuse me, the National Renewable Energy Laboratory, came to similar conclusions regarding subsidies. As my colleague John Fleming noted, these studies always start with step 

two. That is, they assume the money just appears. They skip the 

part where taxpayers have to finance subsidies, or stockholders and 

ratepayers have to pay for retrofitting power plants. 

Of course, in reality, the money comes out of somebody else’s 

pockets, which reduces their spending and the job-creating impact 

that their spending would have had. 

I would like to spend the remainder of my few minutes discussing the Bureau of Labor Statistics’ Green Jobs Report. The 

headline number that has been mentioned here already several 

times is that the U.S. economy has 3.1 million green jobs. What 

many do not know is what jobs were included to get that 3.1 million total. 

For instance, there are over 13,000 green jobs in the septic tank 

and portable toilet servicing industry. That total is 33 times the 

400 green jobs in the solar utility industry and almost three times 

the number of jobs in all renewable power utilities combined. 

Even wind power utilities, with 2,200 green jobs, rank well below 

septic tank servicing and barely above the 1,900 green jobs in hog 

farming. That the 3.1 million green jobs total is used as an argument in favor of subsidizing renewable energy is grossly misleading. 

For instance, the solar power industry has received subsidies of 

some sort for most of the last 30 years. Simple division shows that 

the subsidies have created about one job per month at most in the 

solar utilities industry. According to the BLS figures, 35,800 or 

50 

fully 80 percent of the jobs in the power utility industry are in the 

nuclear sector. 

The numbers make no more sense in the manufacturing sector 

where the single largest contributor of green jobs is the steel mill 

industry, half of whose jobs are counted as green. And I want to 

emphasize this is not the steel fabricating industry, but rather the 

part of the industry that makes the raw steel. 

The 30,000 plus green jobs in the pulp paper and paper-board industry is 50 percent higher than the number of green jobs in turbine and power transmission equipment manufacturing, which 

manufacturers turbines for steam, gas and hydro, in addition to 

turbines for wind power. 

The BLS calculations for the service sector seem almost comedic. 

There are over 160,000 green jobs in school and employee bus 

transportation. There are over 116,000 green jobs in trash collection. There are over 106,000 green jobs in used merchandise stores. 

Those three categories combined have more than doubled the green 

jobs of engineering services and architectural and related services 

combined. 

Though bus driving, trash collecting, steel and paper making are 

all important jobs, they have little to do with green policy and are 

not what most people think of when policymakers talk about a 

green energy future. 

In summary, green job counts are poor measures of the effectiveness of green subsidies and mandates. That said, the studies that 

have been done are consistently biased towards green subsidies 

and mandates because they ignore the significant job losses that 

these mandates and subsidies will cause in other parts of the economy. 

And, finally, the BLS green jobs study is absolutely worthless as 

any sort of measure of the policy effectiveness or importance of 

green industries to our overall economy. 

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

Mr. STEARNS. Thank you. 

[The prepared statement of Mr. Kreutzer follows:] 

51 


82298.018

214 Massachusetts Avenue, NE • Washington DC 20002 • (202) 546-4400' heritage.org 

CONGRESSIONAL TESTIMONY 

The Federal Green Jobs Agenda: 

What the Job Counts Actually Tell 

Us 

Testimony Before 

The Committee on Energy and Commerce 

Subcommittee on Oversight and 

Investigations 

United States House of Representatives 

June 19, 2012 

David W. Kreutzer, Ph.D. 

Research Fellow in Energy Economics and Climate 

Change 

The Heritage Foundation 
52 


82298.019

My name is David Kreutzer. I am Research Fellow in Energy Economics and Climate 

Change at The Heritage Foundation. The views I express in this testimony are my own, 

and should not be construcd as representing any official position of The Hcritage 

Foundation. 

Introduction 

Jobs seem to be the mctric by which most. ifnot all, policy is measured in Washington. 

So it is worth reminding ourselves what is good about a job. The bencfit of a job is not 

the effort expcnded or the need to get out of bed Monday morning, rather it is the 

compensation received by the employee and the value of the labor's product to the 

employer. For ajob to be a good thing, the eompensation must be high enough to induee 

the employee to provide the labor. At the same time, the compensation cannot be larger 

than the value of the labor's contribution to output or the employer will go bankrupt. A 

job that violates either of the above conditions will be a form of either slavery or welfare. 

It should be noted that both employer and employee can be better off when output per 

worker is higher. This is the foundation of economic growth-increasing output per 

worker. The increase is generated by greater and more effective investment in both 

human and physical capital. Though markets are not perfect, policies that ignore the 

signals provided by markets do so at great peril. 
53 


82298.020

Where Signals Were Ignored 

In October of 20 10, the director of the Department of Energy's Loan Program Office, 

David Frantz, gave an update of the department's loan-guarantee programs funded by the 

American Recovery and Reinvestment Act. 1 The criteria he outlined highlight the 

problems with allocating capital via the political process. Two of the criteria presented 

were mutually exclusive. The first criterion was funded projects should be commercially 

viable. The second was that those seeking funding must demonstrate the projects cannot 

get private financing. For many economists, the inability to get private financing would 

be the definition of not being commercially viable. 

Government loans and loan guarantees alter the paths of capital alloeation toward loans 

with greater political rates of return relative to actual financial rates of return. In the 

slides presented that October, Mr. Frantz listed four projects for which the loan processes 

had been finalized. It is illuminating to review the paths those projeets have taken since 

receiving loans. 

• The first, Solyndra, received a loan guarantee for $535 million in the fall of2009. 

In the spring of 20 I 0, it failed to complete its initial public offering after an 

independent audit questioned the ongoing viability of the firm.2 Then, in the fall 

of 201 0, the firm closed one of its manufacturing facilities and laid off 180 

workers. 3 In the fall of 20 II Solyndra filed for bankruptcy and laid of all but a 

handful of its remaining employees. 

'u.S. Department of Energy, "Loan Guarantee Program Status Update," October 29, 20 to, at 

http:. 'WlVW uschall/her. com'/sires:de{c1II11i(iles:issues!environll/el1ll(iiesiLG P%]O( fpdate%]() Cham her 102 

910 Finalpd[(April 10,2011). 

20avid Freddoso, "Obama's Big Green Gamble: Solyndra," The Washington Examiner, July 14,2010, at 

hltp:wasi1ingloncxaminer.commode:651.J6,i (April 10,2011) 

'Ronnie Greene and Matthew Mosk, "Green Bundler With the Golden Touch," The Hl!tJinglan Post, March 

30,201 I, at b.!1JL:; lVlvwhu(Tinglallposl.com 2011.0J 30I green-hundler-",ilh-lhe-goldenIOlld! 11 1i.J11i63 hlllli (April 10,2011). 

2 
54 


82298.021

• The second, Beacon Power, received a $43 million loan guarantee in July of2009. 

Beacon Power also filed for bankruptcy in the fall of 20 11.4 

• The third, First Wind Holdings, received a $117 million loan guarantee in March 

of 20 I 0 but withdrew its initial public offering in October of 20 1 O. 5 

• The fourth was Nevada Geothermal Power's Blue Mountain geothemlal project. 

Since Mr. Frantz's slide show, the price of Nevada Geothermal Power has fallen 

more than 90 percent to $0.04 per share. 6 

Counting Green Jobs 

Perhaps frustrated with the public's unwillingness to absorb the higher energy costs that 

climate legislation would impose, proponents of such climate policies offered them 

instead as job-creation policies. However, imposing restrictions and regulations on 

energy use does not increase economic growth, income, or employment. They lead to 

less of all three. This is not just the conclusion of economists at conservative think tanks. 

In September of2009, a panel of economists from the Brookings Institution, the 

Environmental Protection Agency, the Congressional Budget Office, the Energy 

Information Administration, and The Heritage Foundation presented their different 

findings on the economic impact of cap-and-trade policies. Though not all of the 

economists directly addressed employment, none ofthe economists argued that cap-and4 Reuters News Service. "Beacon Power bankrupt; had U.S. backing like Solyndra," October 31, 2011, 

accessed at http://www.rcuters.com!article/2011!1 0/31 lus-bcaconpower-bankruptcyidliSTRE79T39320111031 (June 14,2012). 

5Steven Syre, "First Wind IPO Sputters Suddenly," The Boston Globe, October 29,2010, at 

hllp. arlic!es.bosiOllcom 20 I 0-1 0-29'bllsiness293321 05 I ipo-lIwrket-ipo-expectalions-stock (April 10, 

2010). 

6 Bloomberg/Business Week Stock Quote, accessed at 

http://invcsting.bus;nessweek.com/rcscarchlstocksicharts!charts.asp·'t;cker=NG P:CN (June 14, 2012). 

3 
55 


82298.022

trade would stimulate the eeonomy. Instead, the debate was over how much the economy 

would be harmed. 7 

There have been published studies that purport to show increased employment from 

environmental regulation and subsidies for alternative energy. These studies consistently 

ignore the job-destroying impacts of the policies. As my colleague John Fleming phrases 

it, they always start with step two. That is, they count the jobs from the subsidy spending 

or from spending that is necessary to meet regulations, but they skip the part of how to 

get the money and ignore the offsetting job losses that occur when the funds for this 

spending are extracted from other parts of the economy. 

A few of the better known examples of this flawed analysis are: A study from the 

Political Economy Research Institute (PERI) that has been cited by EPA Administrator 

Lisa Jackson; a study done for the American Wind Energy Association (A WEA); and 

study prepared by the National Renewable Energy Laboratory (NREL).8 

The PERI study is notable for its implication that the more burdensome and costly is a 

regulation, the more jobs it creates. For instance, a rule that imposed compliance costs of 

$100 billion would create 100 times as many jobs as a rule witb $1 billion in compliance 

costs. This absurd conclusion arises because the PERI study made no accounting of the 

'''Cap and Trade: Comparing Cost Estimates," Heritage Foundation event, September 21, 2009, at 

http: .. ,,"l"l'. heritage. Ol'g' Events/2009,09'Cap-and- Trade-Comparing-Cost-Estilnates. 

8 James Heintz et aI.. "New Jobs-Cleaner Air: Employment Effects Under Planned Changes to the EPA's 

Air Pollution Rules," Ceres and the Political Economy Research Institute, February 2011. Navigant 

Consulting, "Impact of the Production Tax Credit on the U.S. Wind Market," Navigant reference 152362, 

December 11,2011. Daniel Steinberg et aI., "Preliminary Analysis of the jobs and Economic Impacts of 

the Renewable Energy Projects Supported by the § 1603 Treasury Grant Program." National Renewable 

Energy Laboratory, Technical Report NRELlTP-6A20-52739, April 2012. 

4 
56 


82298.023

impacts of lost expenditure in other parts of the economy or of the impacts of higher 

electricity costs. 

The A WEA study traces the flow of the production tax credit and the NREL study traces 

the flow of the Section 1603 grant funds. Again. they start at step two. as though the 

grants and credits are funded by some source of free money. To their credit. the authors 

of the NREL study acknowledge that their report does not measure the net jobs impact 

and that there is an opportunity cost to the expenditure. However. that caveat was 

generally lost in the promotion of the study's findings. 

Using similar logic to the three studies above. it could be claimed that a crime lord's bank 

robbing creates jobs. He hires some thugs. creating jobs and income for them. He also 

has to give the thugs some guns, so the gun manufacturers see an employment increase, 

as do the suppliers to the gun makers and the suppliers to those suppliers, etc. There are 

also jobs in the production process for making the ski masks the robbers wear, the jobs 

producing and servicing the getaway car. the jobs at the motel where the thugs lie low, 

etc. 

In this example, we ignore the losses to the bank and its depositors, the increased security 

costs that crime imposes on banks, the impact of higher interest rates on borrowers (that's 

one ofthe ways banks cover losses from robberies), and every other negative impact of 

bank robbing. and then conclude bank robbing is an unambiguous gain for the economy. 

5 
57 


82298.024

The BLS Green Jobs Count 

On March 22, 2012, the Bureau of Labor Statistics (BLS) issued a news release to report 

the results of their green jobs count. Their total of 3.1 million green jobs has been cited 

as reason to continue subsidies and mandates to promote green energy. However, 

digging just a little into the actual numbers shows that the BLS green-jobs count has 

absolutely no policy relevance at all. 

There are at least two reasons for this lack of relevance. First, the count is a snapshot and 

gives no indication of trends or growth rates. But the second reason is more fundamental 

and would eliminate the usefulness of the count regardless of how many times it is 

repeated-the definition of a green job is so broad as to make any green-job total 

meaningless. The BLS counts Salvation Army employees, school bus drivers, and even, 

according to the acting administrator's testimony, oil-industry 10bbyists.9 It is not clear 

that the report would have been much less usefu I had the definition of a green worker 

been anybody who wore green clothing on St. Patrick's Day. 

It is not simply the types of jobs that are counted in the BLS report, but the relative 

numbers of them in the different categories as well. According to the BLS, there are 400 

green jobs in the solar utility industry. So, if this number is used to support subsidies to 

solar power, we would have to conclude the more than three decades of support for solar 

power has generated about one job per month in the solar utility industry. Including the 

"U.S. House of Representatives Committee on Oversight and Government Reform, hearing "Addressing 

Concerns about the Integrity of the U.S. Department of Labor's Jobs Reporting," Panel 2, June 6, 2012, 

accessed http://oversight.h911se.gov/hearing/addressing-concerns-about-the-integritv-ol:the-u-s-departmentof-labors-jobs-rep0l1ing/ (June 15, 2012). 

6 
58 


82298.025

huge number of school bus drivers in the total does not strengthcn the argument for 

renewable subsidies. 

Adding all the green jobs from solar to those in the wind, biomass, and other renewable 

power utilities (excluding hydroelectric) gives a total of 4,700 green jobs. This is less 

than one-seventh the number of green jobs in the nuclear power industry (35,800). 

Since nuclear power generation emits no particulates or oxides of sulfur or nitrogen (or 

carbon dioxide) it should be considered a green energy source. However, no new plants 

have been both licensed and built in the past 30 years. Though two construction 

operations licenses have recently been issued, the green jobs noted above are associated 

with current power generation. So those jobs are clearly not the result of any green 

energy or green jobs programs. Plus, the Obama Administration has stalled and nearly 

killed Yucca Mountain without offering an alternative for nuclear waste disposal. 

Without resolution to the waste disposal problem, revival of nuclear power and its 

associated jobs will be severely limited.!O 

Another set of comparisons illustrates the problem with using the BLS green-jobs total as 

justification for more green policies. The total green jobs in wind power utilities (2,200) 

is barely more than the number in hog and pig farming (1,900) and is decidedly less than 

the 13,313 green jobs in the septic tank and portable toilet servicing industry. 

10 Jack Spencer, "Blue Ribbon Commission on Nuclear Waste: Missing Opportunity for Lasting Reform," 

Heritage Foundation Backgrounder No. 2600, August 22, 20 II, 

http://www . heritage.org/resea rch/reports/20 I I /08/b I ue-ribbon-coIn 111 i 5S ion-on -nue lear-waste-In j S5 j nl:-

or portun i ty -Ie,.. -last j n g -re form 

7 
59 


82298.026

In the manufacturing sector the largest single contributor (aggregating at the 4-digit 

NAICS code level) of green jobs is the steel mill industry with 43,658 green jobs. Fully 

50 percent of jobs producing primary steel, iron, and alloys are counted as green. In 

addition, pulp, paper, and paperboard mills account for 30,473 green jobs, which are 

more than the 20,360 green jobs in the turbine and power transmission equipment 

manufacturers (a category that includes manufacturers of wind, gas, hydro, and steam 

turbines). So the cheerful claims about the large number of green jobs in manufacturing 

must also be discounted. 

In the service sector, both engineering services and architectural and related services have 

total green jobs (100,847 and 71,891) and percentages of green jobs (11.6 and 17.8) that 

are excceded by used merchandise stores (106,865 and 85.2 percent), school and 

employee bus transportation (160,896 and 88 percent), and waste collection (116,293 and 

83.8 percent). If the BLS is measuring what we can expect to see in the clean-energy 

future, then more of us will be working at thrift stores, on trash trucks, and driving buses 

than will be designing high-tech equipment and buildings. 

Conclusion 

The studies allegedly showing job creation from renewable-energy subsidies and the BLS 

green jobs report are grossly misleading when used to support renewable or green energy 

programs. In the case of the former, they ignore the significant offsetting job losses from 

8 
60 


82298.027

the subsidies and regulations. In the latter case, the definition of "green" is so broad as to 

be useless for addressing policy questions. 

******************* 

The Heritage Foundation is a public policy, research, and educational organization 

recognized as exempt under section 501(c)(3) of the Internal Revenue Code. It is 

privately supported and receives no funds from any government at any level, nor does it 

perform any government or other contract work. 

The Heritage Foundation is the most broadly supported think tank in the United States. 

During 20 I I, it had nearly 700,000 individual, foundation, and corporate supporters 

representing every state in the U.S. Its 2011 income came from the following sources: 

Individuals 

Foundations 

Corporations 

78% 

17% 

5% 

The top five corporate givers provided The Heritage Foundation with 2% of its 20 II 

income. The Heritage Foundation's books are audited annually by the national accounting 

finn ofMcGladrey & Pullen. A list of major donors is available from The Heritage 

Foundation upon request. 

Members of The Heritage Foundation staff testify as individuals discussing their own 

independent research. The views expressed are their own and do not reflect an 

institutional position for The Heritage Foundation or its board of trustees. 

9 
61 

Mr. STEARNS. And Dr. Montgomery. 

STATEMENT OF W. DAVID MONTGOMERY 

Mr. MONTGOMERY. Thank you. I also want to thank the committee for the invitation to testify today. 

My name is David Montgomery. I’m a senior vice president of 

NERA Economic Consulting, and likewise my testimony today represents my own conclusions, may not necessarily be shared by all 

of my colleagues. 

The question I was asked to address is how is it possible to create jobs by means of burdensome regulations and programs that replace less costly energy with more costly energy? I agree with the 

key points that were made by Dr. Kreutzer, so I will summarize 

that part of my testimony very quickly. 

Green job studies would be harmless, except they create the appearance of creating—of increasing the total number of persons employed in the U.S. economy. That’s where they go wrong because 

they do that only by telling half the story, and, as Dr. Kreutzer described, they ignore what these workers would have been doing 

otherwise. 

I don’t think you will find anyone to deny this. Everyone knows 

that this is the game in calculating green jobs, and it’s not just 

green jobs. This half-truth is found in almost every green jobs 

study, but it’s also found in most of the claims from industry about 

how many jobs they create, simply a question of what else would 

they—all of these claims ignore what else it is that the workers 

would have been doing, and that’s the critical question for what the 

opportunity cost is to the economy. 

The second point is that some studies do find job benefits using 

a comprehensive model; that is, they do take into account what it 

is that workers would have been doing otherwise. But they get to 

their conclusion about job benefits by assuming the conclusion, 

which is basically that government agencies know better than businesses and consumers what is in their own private economic interests. 

For that I would cite in particular EPA’s most recent regulatory 

impact analysis of the economic benefits of fuel economy standards. 

But here I would make a further note because it’s not—in addition 

to being highly paternalistic, these analyses are based on excessive 

certainty. They’re all forecasts. Job impact studies are all forecasts 

of what’s going to happen in the future. 

In several of its recent regulatory impact analyses, EPA has 

based its favorable conclusions about the costs and benefits of regulation on one set of official forecasts of future energy prices. One 

thing that I think we can also agree on is that government agencies have a consistent track record of being wrong on what future 

energy prices are going to be. 

But EPA never tested what the outcome for consumers would be 

if they offered—if the official gas prices were wrong. This requires 

a broader scenario analysis, which could reveal that taking away 

the freedom of consumers to make choices based on their own diverse opinions, by taking that choice away, EPA actually imposes 

a uniformity that leaves the economy unhedged against the possibility, for example, that oil prices might fall. After all, natural gas 

62 

prices just fell dramatically after everyone was sure they would 

never do that. 

In reflecting on my testimony last night, I realized, though, that 

I had left out the most important part. The jobs are not an appropriate measure of the merits of energy and environmental policies. 

The BLS’—the report is valuable in an ironic way because it 

pushes the obsession to counting jobs to an extreme. 

The valid reason for environmental regulations is not job creation. We should be concerned about the current level of unemployment, but environmental regulations and energy subsidies make no 

contribution to solving it. They are more likely to move and employ 

people from one job to another, and they don’t address the underlying causes of unemployment. 

Job creation is a little irrelevant to them. The reason for environmental regulation is to deal with externalities, cases in which the 

market is not sufficient to get the maximum benefit for society. 

And in order to get that maximum benefit for society regulations 

like ambient air-quality, standards need to be set at levels that balance benefits for health in the environment against the other goods 

that must be given up to provide those benefits. 

Part of the cost of environmental regulations is the labor that’s 

diverted from other productive activities, so jobs are part of the 

cost. They need to be paid attention to, but on that side of the ledger. I’m much more skeptical that economic justification can ever be 

found for the complex of energy subsidies and mandates that now 

masquerade as energy—environmental and energy security policies. 

But if it’s to be found, it won’t be in treating these programs as 

engines of job creation or new economy, but by evaluating whether 

they provide energy security and environmental benefits worth 

more than their cost. And even more important, by comparing the 

current policies that pick the winners among technologies based on 

political and bureaucratic evaluations, with policies that address 

the alleged environmental and energy security issues directly, and 

create a level playing field for all the solutions. 

So my conclusion from the job estimates tell us nothing about 

any of the matters that have to be considered in an attempt to design energy and environmental policy that makes the largest contribution to our national welfare. 

Thank you, Mr. Chairman. 

Mr. STEARNS. Thank you. 

[The prepared statement of Mr. Montgomery follows:] 

63 


82298.028

Prepared Testimony of 

W. David Montgomery, Ph.D. 

before the 

Snbcommittee on Oversight and Investigations 

Committee on Energy and Commerce 

United States Honse of Representatives 

Hearing on the Federal Green Jobs Agenda 

Jnne 19, 2012 

Mr. Chairman and Members of the Subcommittee: 

I am honored by your invitation to appear today to testify on the Federal Green Jobs agenda. I 

am Senior Vice President ofNERA Economic Consulting, and my work for over 40 years has 

addressed economic issues in energy and environmental policy. I have published many papers in 

peer-reviewed journals dealing with design and economic impacts of those policies, and I was 

honored by the Association of Environmental and Resource Economists with their 2004 award 

for a "publication of enduring quality." J taught environmental economics at the Califol11ia 

Institute of Technology and economic theory at Caltech and Stanford University. My testimony 

today will address the question of whether it is possible to create new jobs by issuing more 

regulations, mandating or subsidizing the introduction of uneconomic "green" technologies, and 

relabeling existing jobs as "green." My statements in this testimony represent my own opinions 

and conclusions and do not necessarily represent (he views of other consultants at NERA. 

Introduction 

A recent report from the Bureau of Labor Statistics describes employment "in businesses that 

produce goods and provide services that benefit the environment or conserve natural resources," It 

concludes that "GGS jobs accounted for 2.4 percent of total employment in 20 I O. The private 
64 


82298.029

sector had 2.3 million GGS jobs and the public sector had 860,300.'" 

Several points are striking. Since this calculation is based on classifying industries as producing 

"green" goods and services, it includes jobs that exist because of normal market demand for such 

goods and services as outdoor recreation and organic produce as well as those that are attributable 

to government "green jobs" programs. Thus the numbers do not tell us anything directly about 

claims that environmental regulations and energy technology mandates, subsidies and incentives 

have or will create large numbers of new jobs. Although many public sector jobs were involved in 

provision of public goods like national parks, almost 300,000 of the state and federal jobs were in 

the administration and enforcement of environmental regulations. The report itself notes that this 

was the largest single category. 

The report is presented as a simple statement of numbers, but their meaning is subject to a great 

deal of interpretation. Therefore, I would like to address several potential misinterpretations before 

they become too firmly entrenched in readers' minds. 

The most misleading interpretation would be to leap from the statement that green jobs represented 

2.4% of public and private employment in 2010 to the conclusion that unemployment would have 

been 2.4 percentage points higher without green jobs. Nothing could be further from the truth. 

Like other green jobs studies that claim to estimate jobs created by specific government programs, 

the report does not address the question of what the individuals counted in the BLS report would 

have been doing if it were not for government energy and environmental programs and regulations. 

It is clear that many would have been doing exactly the same thing, because all the BLS study does 

is relabel existing jobs. 

I BLS News Release, Thursday, March 22, 2012 USDL-12-0495 

2 
65 


82298.030

But some of the activities cited in the BLS discussion of its data exist for one or more of these 

reasons: 

• Regulatory programs that mandate installation ofpoliution control equipment or other 

investments and operating costs to reduce emissions or energy use 

Mandates, subsidies and other incentives to produce and use energy sources classified as 

"Green" 

• Increased employment in government agencies and contractors to write and administer 

regulations or provide services classified as "Green" 

A number of studies of green jobs released over the past few years would have us believe that these 

governmental actions and activities do cause net increases in employment and offer that as a 

rationale or defense of their adoption. 

I have discussed examples of green jobs studies in previous testimony,2 and my conclusion in each 

case was that the job estimates told only half, or less, of the story. In this testimony I mention some 

key points from those discussions and cite two additional examples, one taken from testimony in a 

hearing on Green Jobs held by a Senate subcommittee last year and one from the Regulatory 

Impact Analysis for the MATS rule just issued by EPA. 

What is common to all these claims of job growth due to government regulation and subsidization 

is that they leave out of their calculations all the jobs lost in the rest of the economy because of 

regulatory costs and higher energy costs. 

2 R. Pollin. H. Oarret-Peltier, J. Heintz, and H. Scharber. "Oreen Recovery." Political Economy Research Center and 

Center for American Progress, September 2008 and j, Heintz et. aI., New Jobs - Cleaner Air: Employment Effects 

Under Planned Changes to EPA's Air Pollution Rules. Ceres and PERI, February 2011. 

3 
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82298.031

What Is Wrong with Green Job Studies? 

The critical error in calculations of green jobs created by regulation, subsidies or mandates is their 

failure to balance the jobs lost in the rest of the economy against those that may be gained as a 

result of the specific projects or expenditures in the studies. For example, in testimony last year 

before Senate Environment and Public Works Committee's Subcommittee on Green Jobs and the 

New Economy, a representative of the UA W1 claimed that 

.... ,the regulation of mobile sources has been a "win-win" that results in greater oil 

independence for our nation; a cleaner, healthier environment for ourselves and our 

children; and an increased number of jobs in the auto sector. The simple equation for 

understanding how this job creation occurs is that the new technology required to meet 

tailpipe emissions standards represents additional conlenl on each vehicle, and bringing 

that additional content to market requires more engineers, more managers, and more 

construction and production workers. 

What her statement leaves out is the conclusion of every study of these standards, including those 

done by EPA, that past tailpipe emission standards imposed a net cost (even after their claimed 

health benefits are taken into account) on the economy.4 

There is no paradox in the observation that a regulation that increases jobs in one industry can 

impose net costs on the economy as a whole. They are one and the same thing. More "content" 

and more labor hours required for each vehicle produced raise the cost of the vehicle. Any jobs 

created in the auto industry come directly from the pockets of consumers who must pay those 

higher prices for new vehicles. Moreover, unlike design changes that respond to consumer demand, 

) Barbara Somson, Legislative Director, International Union, United Automobile, Aerospace & Agricultural Implement 

Workers Of America (UAW) on the subject of Clean Air Act And Jobs before the Senate Committee on Environment 

and Public Works Subcommittee On Clean Air and Nuclear Safety And the Subcommittee on Green Jobs and the New 

Economy united States Senate March 17,2011 

'The Benelits and Costs of the Clean Air Act from 1990 to 2020 - EPA Washington, D.C., March 2011; Prepared 

Testimony ofW. David Montgomery, Ph.D. before the Subcommittee on Clean Air and Nuclear Safety and 

Subcommittee on Green Jobs and the New Economy Committee on Environment and Public Works United States 

Senate Hearing on Clean Air Act and Jobs March 17, 20 I I. 

4 
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82298.032

this added cost does not improve the transportation services or amenities provided new cars in any 

way. (Indeed, many of the cumulative tailpipe emission standards degraded performance and 

imposed additional costs on consumers over and above the increase in sticker prices). As Ms 

Somson pointed out, the purpose of the standards was to improve air quality: whether they 

represented a win-win depended entirely on whether the health benefits of the tailpipe standards 

outweighed their out of pocket costs to consumers. 5 Setting standards purely for the sake of saving 

consumers money assumes that regulators have better insight into consumer preferences and 

superior ability to forecast future oil prices, and thus are entitled to impose their views on entirely 

private choices of consumers. 

Ms Somson also failed to mention the other counterproductive effects of standards applied to new 

vehicles - by raising prices of new vehicles they reduce sales and delay turnover of the fleet, 

which has been the most effective mechanism for reducing total fuel consumption and emissionsand by forcing changes in size and design of vehicles that have reduced the value to consumers of 

the vehicles for which they pay higher prices. Thus it is not even a zero-sum game between 

consumers and auto workers - the cost imposed on consumers by emission and fuel economy 

standards for vehicles is larger than the benefit to auto workers. So even as a welfare program for 

auto workers. these standards are inefficient compared to straight transfers of cash. 

There is a paradox in this example. Ms Somson did recognize that" ... greater fuel efficiency 

allows consumers to spend less on fuel, which frees up that money to be spent on other goods and 

services." That, of course. is the point that needs to be investigated - where does the money come 

from? Thus Ms, Somson was right on the general point but has the direction wrong - when 

Sin l11y earlier testil11ony, I discussed how the EPA's own analysis (Benefits and Costs of the Clean Air Act, 2011. op 

cit) reveals that the tailpipe el11ission standards for ozone did not provide benefits greater than their costs. 
68 


82298.033

regulations increase the total cost of buying and using a vehicle, consumers have less money to 

spend on other things, scarce resources of labor and capital used to produce more costly vehicles 

are not available to produce other things, and overall the productive potential and real output of the 

economy are reduced, And since unlike fuel economy standards, tailpipe emission standards 

provide no compensating savings in auto operating costs whatever, they are also a net cost to the 

economy. 

EPA also has estimated job benefits by using a one-sided calculation of only the jobs required to 

comply with its regulations. I have taken a description of the EPA analysis from a study done by 

my colleagues at NERA.6 

The consequences of the MATS Rule are not just limited to the electric sector. The electric 

sector has to invest significant capital to comply with the MATS Rule. This capital and 

other added spending for compliance will induce lower industrial output (because the cost 

of power, natural gas, and other commodities will increase) and hence drive down income 

for workers. Although the investments also will create jobs installing the retrofits and 

building new power plants, the net effect of complying with the MATS Rule will be an 

increase in the costs of electricity and natural gas, and will produce a drag on the economy 

as a whole. EPA did not evaluate the MATS Rule using a macroeconomic model so they 

could not produce a net impact on jobs; instead they cited an estimated 46,000 short-term 

jobs and 8,000 long-term utility jobs created.' 

Similar calculations of job benefits of air regulations affecting electric utilities were done by the 

Political Economy Research Institute. 8 Any study that estimates only the jobs created by a policy 

is grossly misleading. PERI's study at least tries to work around this truth by mentioning the loss 

of a small number of jobs associated with operation of retired coal-fired powerplants, but these are 

the smallest part of the story. Why PERI did not include the decline in coal production and coal 

mining employment that goes along with replacing coal-fired generation with other energy 

6 Dr. Anne E. Smith, Dr. Paul Bernstein, Scott Bloomberg, Sebastian Mankowski, and Dr. Sugandha Tuladhar An 

Economic Impact Analysis of EPA's Mercury and Air Toxics Standards Rule 1 March 2012 

7 Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards, p. 6-1. 

s PERI 201 I, op. cit. 

6 
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82298.034

sources is a mystery. But this too is only a small part of the story. The impol1ant story is that 

consumers will have less real income to spend, because of increases in the cost of electricity and 

of all other goods that are produced by means of electricity. Worker productivity will rise more 

slowly, as investment is diverted away from productivity-enhancing investments, so that wages 

that employers can afford to pay will fall relative to what they otherwise would have been. 

Energy-intensive U.S. industries will lose market share to overseas industries not subject to these 

requirements, and will therefore shrink in size. These impacts will lead to job losses in all the rest 

of the economy, as the effects of more costly energy ripple through the economy. 

NERA's analysis of the rule used a comprehensive model that embeds the electric sector in the 

entire economy that incorporates all these effects, and accounts for the labor and capital resources 

used to retrofit existing powerplants and build new ones to replace those forced to retire. The effect 

of requiring these compliance investments, which create no net increase in electricity generation, is 

to divert capital away from other, productivity-enhancing investments. As a result, labor 

productivity is reduced and total worker compensation falls. The return to capital investment also 

falls, since the same total amount of investment is producing fewer marketed goods and services 

(the same amount of electricity and less of everything else). When these two sources of income 

fall, and there is no offsetting increase in national income from other sources such as an increase 

in the value of exports and a favorable movement in the terms of trade GDP and total real 

personal income must also fall. 

The green jobs studies only recognize the first category of effects, counting only the number of jobs 

directly involved in those construction activities and sometimes the "indirect" jobs created in 

industries supplying components and materials. Any comprehensive analysis must ask the question 

7 
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82298.035

of where these resources come from, and when that question is asked the task becomes one of 

determining whether the activity from which the resources are drawn in producing greater or less 

value than that to which the resources are assigned. 

In order to shed some light on this issue, our practice at NERA is to characterize the net change in 

wage income throughout the economy in terms of"job equivalents." That is, we divide the total 

reduction in wage income nationwide by average compensation per worker to indicate how many 

workers at the average wage it would take to earn this much income. This calculation is intended 

only to indicate the magnitude of labor market impacts in terms that are comparable to the job gains 

or losses in other studies. and it shows in the case of the MATS rule that the likely change in labor 

compensation is large compared to the job gains estimated by EPA. 

Techllology malldates alld subsidies 

Thus far, I have discussed how claims that regulations create additional jobs in the economy are 

invalid, principally because they fail to account in any way for the jobs lost elsewhere in the 

economy. The same is true of studies that allege job benefits from mandates, subsidies and other 

incentives like loan guarantees to promote specific energy technologies. These studies have exactly 

the same problem, in that they add up the jobs involved, for example, in producing and installing 

wind generators and the components and raw materials that go into them (they also tend to make 

the factual error that the generators, components and raw materials will be produced in the United 

States. which they generally are not). In the process, they lose sight of the fact that these resources 

- labor, capital, and materials are no longer available for producing other goods and services. 

And when the energy sources supported by mandates and subsidies require more resources to 

produce the same number of Btus of energy than existing alternatives, the nct effect of replacing 

8 
71 


82298.036

less costly energy with more costly is to reduce the resources available for producing other goods 

and services. The higher cost of favored form of energy may be concealed from consumers by 

means of subsidies and tax breaks, but the cost simply reappears elsewhere in their budgets most 

often in the form of higher taxes now or in the future to pay for the government's support of 

uneconomic technologies. 

Although there may be the same number ofworkcrs employed either way, the net result of 

diverting resources to produce the same thing in more costly ways is that the economy will be 

producing less goods and services and real personal income will fall. Thus studies of job creation 

through programs to create "green industries" and a "new economy" suffer from exactly the same 

problem of telling only half the story. 

There is a way to reach the conclusion that regulations and subsidies can improve the performance 

of the economy, and that is to assume it. Some studies, though not typically "green jobs" studies 

that look no further than the "green" activity, do start with the assumption that consumers and 

businesses are not capable of making decisions that are in their own economic interest - including 

studies that claim fuel economy standards will make consumers better off by forcing them to 

purchase higher levels of fuel economy justified by official government forecasts of gasoline prices 

and new vehicle costs. 

The problem with this assumption is that there is no clear evidence that consumers do make 

erroneous choices, only that simple engineering models of the cost of vehicles do not take into 

account all the attributes that consumers value. And there is overwhelming evidence that 

9 
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82298.037

government forecasters have never gotten future fuel prices right, and fuel economy standards take 

away from consumers the option of basing purchases on their own diverse opinions. 

Jobs not a good measure of economic benefit 

Any analysis that aspires to be objective must take into account the extent to which "green jobs" 

are offset by the number of other jobs that the regulations would destroy elsewhere in the 

economy or from which workers would be diverted into activities supported by technology 

subsidies and mandates. Calculating these "net" jobs accurately is frustrated by the problem of 

how "jobs" are counted. There are many different kinds of jobs, with different skills, working 

conditions. and most importantly pay. 

The entire job debate is confused by the lack of a clear definition of a "green job," and the BLS 

report furthers that confusion. For example. how would one classify ajob supporting coal-fired 

power with carbon capture, or nuclear generation? The indirect jobs contained in the PERI 

calculations and in the BLS report include, for example, steel workers producing materials that 

go into pollution control equipment and turbines. But when a slab comes out of a steel mill, it 

could equally well be fabricated into a part for a scrubber or a part for a coal-fired boiler. So 

when investment switches from building new coal- fired powerplants to building scrubbers, 

some number of steel workers find themselves in "green jobs" even though no one is doing 

anything different in the mill (and some lose their jobs because of higher energy costs and 

foreign competition). Regardless of these definitional concerns, however, the fact remains that 

workers in aggregate will face lowered earnings potential under a policy that pulls investment 

away from expansion of capacity to produce tinal goods and services and raises energy costs. 

The net effect of lower productivity also ultimately translates into overall losses in average 

10 
73 


82298.038

household spending power, and into reductions in GDP relative to what they would be if no 

such policy were in place. 

Talk of "jobs" diverts attention from the important problem of how much workers earn to a 

largely irrelevant activity of counting heads. The question that we address in NERA's modeling 

of economic impacts is whether the balance of the many economic effects of EPA regulations is 

to increase or decrease total labor income in the United States, and the answer is that total labor 

income wi \I decrease. 

Net versus direct jobs 

Misleading studies that leave out the opportunity cost of resources devoted to a specific project 

have been around for a long time. A respected regional economist9 has pointed out that proper 

use of such models requires that both the positive and negative impacts ofa proposed policy must 

be addressed. He gives an example of how looking only at positive impacts biases the results to 

find that any government expenditure will create additional jobs. A study by KPMG found that 

expanding a Chicago convention center would create a net 6000 new permanent jobs. When an 

academic economist redid the study using all the same assumptions as KPMG except for taking 

account of jobs displaced by the expansion and increased local taxes to pay for the project, she 

t(llll1d a nct loss of348jobs. Mills points out that the most common mistake in these job studies 

is assuming that the project is paid for by money from outside the region where it is built. He 

comments that "the zero-sum character of outside money multipliers should be taken into account 

in federal spending programs" because payment for those projects comes from within the U.S. 

economy. PERI and EPA make the same error by examining only industries that receive the 

orders for pollution control and new generating equipment and ignoring where the investment 

9 Edwin Mills, "The Misuse of Regional Economic !VIodels," CatoJournal, XII:I, 1993. 

II 
74 


82298.039

comes li'om and how other industries are affected. 

The Luddite Fallacy 

There is another basic fallacy in chasing down which industry has the highest number of jobs per 

dollar of output, as in PERl's claims that energy efficiency has 2.5 times as many jobs per dollar 

as oi I and gas. I call it the Luddite fallacy, remembering the radicals during the early industrial 

revolution in England who went around smashing machines because of their belief that machines 

put laborers out of work. What we have learned over the ensuing two centuries is that capital 

deepening increasing the amount of capital per worker - is a major driver of economic growth 

and of increasing productivity, and that having more output per worker is the reason that living 

standards of workers have risen so dramatically in the past 100 years. Indeed, we measure 

productivity increase as the rate of increase in output per worker. 

Studies like those done by PERI conceal their glorification of low labor productivity by talking 

about favoring industries that employ more workers per dollar of output. But driving the 

economy toward industries with more workers per dollar of output is a choice to favor industries 

with lower labor productivity over industries with greater labor productivity. Reducing average 

labor productivity translates directly into lower output and slower economic growth, since the 

basic equation for economic growth is that growth in income is the product of the rate of increase 

in labor productivity times the rate of growth in the labor force. Moreover, since wages are set 

by the marginal productivity oflabor. shifting to industries with lower labor productivity leads 

directly to lower wages per worker. 

Jobs are simply not a relevant measure of economic benefits. Indeed. the more workers it takes 

to produce something, the more it will cost and the less of it the nation will be able to afford. 

12 
75 


82298.040

There is an opportunity cost to diverting the labor force to producing pollution control equipment 

and replacing useful electric powerplants. Labor is a scarce resource and diverting labor to less 

productive activities harms workers first, by causing wages (0 fall, and further limits what the 

economy overall can produce. 

Conclusion 

In content, the BLS study is a mere curiosity, a feel-good report that some businesses are doing 

nice things, but it could be misused in misleading ways to support the completely erroneous 

conclusion that environmental regulations and energy subsidies are a cure for unemployment. 

My proposed remedy for this, and many other confusions created by the great Green Jobs 

debate, is that all economists should adopt a self-denying resolution, to refuse ever to produce an 

estimate of job gains or losses for any change in regulatory or technology policy. The quality of 

public debate would be immensely improved if we simply dropped this way of measuring 

effects of specific policies. 

13 
76 

Mr. STEARNS. Dr. Green, welcome. 

STATEMENT OF KENNETH P. GREEN 

Mr. GREEN. Chairman Stearns, Ranking Member DeGette, thank 

you, and members of the subcommittee, thank you for inviting me 

to testify today. 

I am Kenneth Green. I’m a resident scholar at the American Enterprise Institute and I can, in fact, define a green job. That is one 

of these jobs that I hold, since all of my jobs, of course, have been 

green jobs, and my family has been Green for many generations 

now. 

So as with the others, my testimony reflects my views only and 

should not be construed as reflecting the views of any organization 

I may affiliate with. 

I have appended a study with my testimony on the subject of 

green jobs conducted in 2011, and I would request that that be 

added to the official record when my testimony is submitted. 

Mr. STEARNS. By unanimous consent, so ordered. 

Mr. GREEN. Thank you. Much of my commentary will derive from 

that study and the research that went into it. 

Three fallacies underpin the green jobs agenda. The first fallacy 

is that there is a compelling reason for the government to reorder 

the private sector economy to make things more green more quickly. The second fallacy is that the government can intervene in the 

economy and create new jobs on net. And the third fallacy is that 

bureaucrats make good venture capitalists. 

I will take them in order. In the United States and in virtually 

every other developed country, we have seen the same trends play 

out while people engage in ordinary nongreen jobs using nongreen 

technology to pursue development. At first they degrade their environment, but as they meet their basic needs, they clean up their 

environment. 

Hence, environmental improvement in the United States has 

been spectacular in virtually all parameters. Our air and water pollution levels are bare fractions of what they were. The burden of 

persistent chemicals in the environment is down. Deforestation was 

reversed. Wildlife is largely protected, and the U.S. leads the world 

in reduction of emissions of greenhouse gases without, I might 

point out, either being part of an international coalition or having 

national legislation. 

To be sure, some of these improvements are driven by regulations, particularly local regulations. But what made them possible 

was the underlying reality, which is free market economies naturally seek to use less energy and resources per unit of production 

simply out of a desire to make a profit, and the democratic market 

economies follow a predictable cycle of environmental repair as people are free to express their values for environmental quality. 

Indeed, there is evidence that we are far past the point of diminishing returns on many environmental regulations, and we should 

be seeking ways to reform them so that they impose less burden 

on our economy rather than looking to pile on still more in the 

name of a green agenda. 

The second fallacy is that government intervention in markets 

can improve them to the point where they create more jobs. Well, 

77 

to create a job at point A, the government must, as my other panelists have pointed out, must take money from the productive economy at point B. The government doesn’t have money, its own 

money, so it has to take the money out of the economy. 

Since the government also has—imposes costs to operate, they 

must take a cut of the money that passes through their hands on 

the way from point A to point B. And since they tend to create 

union-wage jobs rather than competitive market-wage jobs, at the 

end of the day the result is less jobs on net. 

The third fallacy is that bureaucrats can direct taxpayer capital 

to uses rejected by private venture capitalists, and through special 

knowledge, only privy to them, pick the technologies that will win 

in the marketplace of the future and find consumer demand. 

Government certainly has a role, a legitimate role to play in 

funding basic R&D. The military is particularly good with this, in 

producing technologies that later have commercial potential. But 

evidence suggests government is a very poor venture capitalist 

when it comes to investing in R&D, and even worse in trying to 

help self-proclaimed technologies of tomorrow cross over the valley 

of death, which all the technologies that we have today somehow 

manage to get over without much help from government. The landscape is positively littered with the debris of the President’s green 

technology investment programs, with billions of dollars of taxpayer money thrown into businesses that were of dubious potential 

from the start. 

According to one list published in May of this year, failed efforts 

included: Solyndra, Beacon Power, Ener1, Range Fuels, Solar Trust 

of America, Spectrawatt, Evergreen Solar, Eastern Energy, 

Unisolar, Bright Automotive, Olson’s Crop Service, Energy Conversion Devices, Sovello, Siag, Solon, Q–Cells, and Mountain Plaza. 

I could go—there’s another list in my testimony of companies teetering on the brink of bankruptcy, and these include Abound Solar, 

A123 Systems, Brightsource Energy, Fisker Automotive, First Solar 

and more. 

Now, I was asked to quickly discuss how the green job agenda 

is played out in other countries that have tried it, I’ll start in 

Spain. In March of 2009 researchers at the Universidad Rey Juan 

Carlos calculated that from 2000 to 2009 Spain spent about 

$800,000 to create each green job, and the cost of wind energy jobs 

was $1.5 million. That meant that in the general economy, for 

every green job created, 2.2 jobs were foregone or destroyed. 

In Italy, a study performed by the Bruno Leoni Institute found 

that because green jobs are so expensive to create there, for every 

job in the green sector created, 5 to 7 jobs would have been foregone in the general economy, and 60 percent of those jobs created 

were temp jobs. 

In the U.K., they found the value of 3.7 jobs foregone in the general economy for every green job created, and this was using the 

government’s own model of job creation and loss based on tax revenues and monetary flows. 

In conclusion, the idea that we need the government to engineer 

our massive reorganization of the private sector economy in the 

name of greenness, the idea that government can create jobs on net 

in the economy, and the idea that bureaucrats make good venture 

78 

capitalists are fallacious and pursuing them is likely to do more 

harm than good. 

The experience of Europe, which has preceded us in embracing 

these fallacies, is uniformly negative, causing increased prices for 

power, industry flight, and increasingly high levels of energy poverty. The green agenda has been shown to be itself unsustainable 

and rife with corruption and cronyism. 

Thank you again for the opportunity to testify. I look forward to 

your questions. 

Mr. STEARNS. Thank you. 

[The prepared statement of Mr. Green follows:] 

79 


82298.041

A ~ 

--1 Amaican Ellterp1"ise Institute 

for Public Polk:y Research 

Statement before the Committee on Energy and Commerce 

Subcommittee on Oversight and Investigations 

The Federal Green Jobs Agenda 

Dr. Kenneth P. Green 

Resident Scholar 

American Enterprise Institute 

June 19,2012 

The views expressed in this testimony are those of the author alone and do not 

necessarily represent those of the American Enterprise Institute. 

Testimony 0/ Dr. Kenneth P. Green - June 19, 2012 1 
80 


82298.042

Chairman Upton, Ranking Member Waxman, Members of the Subcommittee: 

Thank you for inviting me to testify today. My testimony represents my personal views only, 

and should not be construed as the official position of any other persons or organizations I may 

affiliate with. I have appended a study on the subject of Green Jobs that I authored in 2011. 

Much of my commentary derives from that study, and the research that went into it. 

Three fallacies underpin the green job agenda: The first fallacy is that there is a compelling 

reason for the government to re-order the private-sector economy to make things more 

"green," more quickly; the second fallacy is that the government can intervene in the economy 

to create new jobs on net; and the third fallacy is that bureaucrats make good venture 

capitalists. 

I will take them in order. 

In the United States, and in virtually every other developed country, we have seen the very 

same trends play out while people engaged in ordinary non-green jobs, using non-green 

technologies to pursue their development: at first they degrade their environment, but as they 

meet their basic needs, they clean up their environment. 

Environmental improvement in the United States has been spectacular in virtually all 

parameters. Our air and water pollution levels are bare fractions of what they were; the burden 

of persistent chemicals in the environment is down; deforestation was reversed; wildlife is 

protected; and the US leads the world in reducing the emissions of greenhouse gases without, I 

might add, being part of either an international coalition or even having national greenhouse 

gas control legislation. 

To be sure, some of these improvements were driven by regulations, particularly local 

regulations, but what made them possible was the underlying reality that free-market 

economies naturally seek to use less energy and resources per unit of production, and 

democratic market-economies follow a predictable cycle of environmental repair. Our existing 

regulatory regime and our efficient market-economy will see us into a green future: no 

government re-ordering of the energy economy is necessary. 

Indeed, there is evidence that we are far past the pOint of diminishing returns on many 

environmental regulations, and we should be seeking ways to reform them so that they impose 

less burdens on our economy rather than looking to pile on still more. 

The second fallacy is that government intervention in markets can improve them, to the point 

where they create more jobs. To create a job at point A, the government must take resources 

Testimony of Dr. Kenneth P. Green - June 19, 2012 2 
81 


82298.043

out of the productive economy at point B. The government must take a cut of the money that it 

transfers to finance its operations, and government tends to create jobs at elevated unionsector wages rather than competitive private sector wages. The result is, invariably, less jobs on 

net. 

The third fallacy is that bureaucrats can direct taxpayer capital to uses rejected by private 

venture capitalists, and through special knowledge, pick technologies that will win in the 

market and find consumer demand. 

Government certainly has a legitimate role in funding basic research and development - military 

R&D has a particularly good record at producing technologies that have commercial potential 

down the line. 

But evidence suggests government is a very poor venture capitalist when it comes to investing 

in applied R&D, and even worse in trying to help self-proclaimed "technologies of tomorrow," 

cross over the so-called "Valley of Death." The landscape is positively littered with the debris of 

the President's "green technology" investment programs, with billions of dollars of taxpayer 

money thrown into businesses that were of dubious potential from the start. 

According to one list published in May of this year, failed efforts included: Solyndra, Beacon 

Power, Enerl, Range Fuels, Solar Trust of America, Spectra watt, Evergreen Solar, Eastern 

Energy, Unisolar, Bright Automotive, Olson's Crop Service, Energy Conversion Devices, Sovello, 

Siag, Solon, Q-Cells, and Mountain Plaza. 

Companies teetering on the brink include: Abound Solar, A123 Systems, Brightsource Energy, 

Fisker Automotive, First Solar, Nevada Geothermal, SunPower, Nordex, The Bard Group, 

Amonix, NRG Energy, Alterra Power, Enel Green Power, and Sun power Corp. 

Testimony of Dr. Kenneth P. Green - June 19,2012 3 
82 


82298.044

Now, I was asked to discuss how the green jobs agenda has played out in other countries that 

have tried it. 

I'll start with Spain. 

In March of 2009, researchers at the Universidad Rey Juan Carlos calculated that from 2000 to 

2009, Spain spent about $815,000 dollars to create each "green job," rising to $1.5 million per 

wind industry job. 

The study showed that far from creating jobs, 2.2 jobs were destroyed (or not-created) for 

every "green job" created. 

Now to Italy, where a study performed by the Bruno Leoni Institute, found that because green 

jobs were so expensive to create, for every job created in the green sector, 5 to 7 jobs would 

have been created in the general economy. And at least 60% of the green jobs were 

temporary. 

In the United Kingdom, a report by consultancy Verso Economics found that for every job 

created in the UK in renewable energy, 3.7 jobs were foregone in the general economy. 

In conclusion, the ideas that we need the government to engineer a massive re-organization of 

the private sector economy in the name of "green-ness;" the idea that the government can 

create jobs on net in the economy; and the idea that bureaucrats make good venture capitalists 

are fallacious, and pursuing them is likely to do more harm than good. 

The experience of Europe, which has preceded us in embracing these fallacies, is uniformly 

negative, causing increased prices for power, industry flight, and increasingly high levels of 

energy poverty. The green agenda has been shown to be unsustainable, and rife with 

corruption and cronyism. 

I thank you again for this opportunity to testify, and look forward to your questions. 

Testimony of Dr. Kenneth P. Green -June 19,2012 4 
83 


82298.045

American /:o"'nterprise Institute for Public Policy Research 

No.1· February 2011 

The Myth of Green Energy Jobs: 

The European Experience 

By Kenneth P. Green 

Green is the new black, in both the United 

SWtC5 find Europe, Vmua!ly everyone on 

the left has thrown on the green reints, green 

shirt.'>, and green cloak of what we are assured 

1$ the future of !Jfe on earth as we kno-w it. 

Preskk'nt Obarml regularly references the green 

cnlnorny m lw; spe('che~. The Obama/Blden 

l\\::w Energy fllf Amenta document released m 

20(18 focu.'cs on .wecn lob~, green fechnology, 

glee!) l1ldnufactllfing, green b\likltng~, and even 

green vercram. In a speech ro the Democratic 

National Committee m September 2010, 

Ohama boasted, "We'd been falling behind and 

now we me back at the foretronr of [rescarch and 

developmentJ. We made the largest investment 

In green energy 111 our hiscury S,) that we could 

,Ulrt budding ·dar raneh Hnd wind turbmes all 

around the country"l 

In ;m Augllsr 1 3 ~peech, Vice President Joe 

Rtden ,d~() s,mg the praiscs of grel'nness: "It's not 

enuugh to Just H:scue the ccunomy, we have to 

rebuild It hetter~'---i'lnJ that work begins with 

gIving American m;lOufacturers the resources to 

produce thc clean, green energy technology that 

will be the foundatlnl1 of our 2 bt century 

P. Circ:t'rl (kgreen@aeu)fg) is a reshkm 

i'l.E! 

economy. With the launch today of 52.3 hillion 

111 Recovery Act tax credits for green manufac~ 

tun::rs, we are going to rmnp up manufKturing 

of green energy materials in this country, while 

crearmg thnusands of new Joh~ right here in nul' 

own backyard. From WInd and <;nlar power to 

electnc vehicle technology, OLir recovery is gOIng 

to be fueled by the Recovery Act incentives we 

are offering husinesses toJay thdr will he the 

engme of our economy romorrow."z 

Former speaker Nancv Peio,'l (D-CA) also 

supports rhc- green cause, A blurb describing a 

Key points in this Outlook: 

• The Ohama ;:tdminisrrauon, Irs allies 

economic growth. 

• Experiments with renewable energy in 

Europe have led to job joss, higher energy 

prices, and corruption, 

20~,862.SROD 
84 


82298.046

speech Pelosi gave to the Stanley School in Waltham, 

Massachusetts, hegins, iiFor a brighter and more prosrcr~ 

aus future, we must invest in a green infrastructure, a 

green L'Conl)my, and green schools to create a workforce 

of good~paying green collar American jobs.'" 

Governments do not "create" iobs; the 

willingness of entrepreneurs to invest their 

capital, paired with consumer demand for 

goods and services, does that. 

Of course, Senator Horry Reid (D-NV) was not left 

out, At a Senate Democratic Green Jobs Summit in 

2009, Reid boasted of his green accomplishments: 

"We have maJe unprecedented investments in dean, 

n::ncwahle t.'r1ergy and new, green jobs that can never be 

outsnurceJ. In 2007 we passed a landmark energy bill 

that led to the development of clean, renewable fuels 

here at horne, and the creation of critical American 

manufacturing johs. We raised fucl~cfficiency standards 

for rhe first tilne in a generation, and set new energyefficiency standards for lighting) appliances, and federal 

office buildings and vehicles. In the economic recovery 

pbn we passed this year, we invested $67 billion to develop 

(!com encrbl)', and $500 million more 1:0 train a new igreencl)llar' workforct-'--Alncricans who each day will make our 

nation more energy efficient and cnerb-'Y independent." 

So, at le.1sr on the left, it is unanimous: the world's 

future is green: green energy powering green technologies, creating green houses, buildings, ems, and jobs, 

jobs, jobs. But is this thinking based on realistic eco~ 

nOlrlics, realisric understanding about green technology, 

or realistic expectations of the growth potentia! of the 

green mm'cmcnt( This C)uriDOi<. examines whether the 

g<-wcnH11cnt create::> jobs through subsidies of any sort 

and then looks at the trouhling European experience 

wlth green energy and job creation. 

Green Energy and Green Jobs 

To understand the fallacy of the government creating 

green jobs through subsidies and regulations, we have 

tn reter tll the wriring of French economist Frederic 

Bastiat. Back in 1800, Basti"t explained the fallacy 

that Undl'rllCs such thinking in an essay about the 

unseen costs of such efforts. tIc called it the "broken 

w!ndow" fallacy. 

- 2-

The fallacy works as follows: imagine SOme shop~ 

keepers get their windows broken by a rock-throwing 

child. At first, people sympathize with the shopkeepers, 

until someone claims that the hroken windows really 

are not that bad. After all, they "create work" for the 

glassmaker, who might then be able to buy more food, 

benefiting the grocer, or buy more clothes, benefiting 

the tailor. If enough windows are broken, the gbssmaker 

might even hire an assistant, creating a job. 

Did the child therefore do a public service by breaking the windows: No. We must also consider what [he 

shopkeepers would have done with the money they 

used to fix their windows, had those windows not 

been broken. Most likely, the shopkeepers would have 

plowed that money back into their store; perhaps they 

would have bought more stock frum their suppliers or 

hired new employees. 

Were the windows not broken, the town woulJ still 

have had jobs created by the shopkeepers' alternate 

spending, plus the shopkeepers would have had the 

value of their onginal windows. Because the value of rhe 

\vindows was destroyed, however, they-and the village 

as a whole-·have been made poorer. 

It is well understood, among economists, that 

governments do not "create" jobs; the willingness 

of entrepreneurs to invest their capital, paued with 

consumer demand for goods and services, does that. 

All the government can do is subsidize some industries 

while jacking up costs for others. In the green case, 

it is destroying jobs in the conventional energy 

sector-and most likely in other industrial sectorsthrough taxes and suhsidies to new green companies 

that will use taxpayer dollars to undercut the competi~ 

tion. The subsidized jDbs "created" arc, by definition, 

less efficient lIses of capital than market-created 

johs. That means they are less economically pro~ 

ductivt· than the jobs they displace and contribute 

less to ecOnOtnlC growth, Finally, the good produced 

by government-favored jobs is inherently a ncm~ 

economic good that has to be maintained indefinitely, 

often without an economic revenue model. as in 

the case of roads, rail systems, mass transit, and 

probably windmills, solar-power installations, and 

other green technologies. 

To understand how this works in practice, I now 

turn to European cotmtries that went hog wild for 

renewables, while singing the praises of green jobs: 

Spain, Italy, Germany, Denmark, the United Kingdom 

(UK), and the Netherlands. 
85 


82298.047

Spain 

Spdin has long bt'en considered a leader in the drive 

tl) renewable power. Indeed, Obama singled out Spain 

as an example in a 2009 speech. The president said, 

"We have enormous commercial tics between our 

two countries and we pledged to work diligently to 

strengthen them, particularly around key issues like 

renewable energy and transportation, where Spain has 

been a worldwide leader and the United States I think 

has enormous potential to move forward."4 

BUl the story of Spain's green~joh leadership took a 

series of hits shortly after the president's speech. In 

March 2009, researchers Gabriel Calzada Alvarez and 

colleagues at the Universidad Rey Juan Carlos released a 

study cxaminmg the economic and employment effects 

of Spain's aggressive push infO rcnewablcs, What they 

found confounds the usual green-job rhetoricS 

• Since 2000, Spain spent €571,l38 on each 

green job, including subs!dlCS of morc than 

€1 million per job in the wind industry. 

• The programs crcelting those jobs destroyed nearly 

110,500 jobs elsewhere in the economy (2.2 jobs 

... lcstmYl..'d for t~very green job crcateJ). 

• The high COSll)f electricity !Dainly affects production costs and levels of employment in metallurgy. nonmetallic mining and food processing, 

and heverage and tobacco industries. 

• Each "green" megawatt installed destroys ),28 

johs elsewhere in the economy on average. 

• These costs do not reflect Spain)s particular 

approach but rather the nature of schemes to 

promote renewable energy sourCes. 

Spain has found its foray into renewable energy to 

rc unsustainable. BUJOmberg reports that Spain slashed 

suhsidies for new solar power plants,6 As analyst 

Andrc\v McKillop observes in the Energy Tribune: 

In Spain, where subsidies to the country's massive 

windfarms and their dependent industries is esti~ 

mated to have attained 8S much as 12 billion Euros 

in 2009, either directly or through "feed-in tariff" 

subsidy for power sales, government proposals target 

- 3-

at least a 30(X) cut in suhsidies. Major wind energy 

producer finns, stich as Gamesa, have begun cut~ 

ting their workforces, \vhile trying to find sales Ol!t~ 

side Europe. helped by a weaker Euro. In addition 

and due to Spain's highly exposed deficit finance 

status, making it a target for market speculators 

hetting its bond mtes must rise, the Spanish 

government is also likely to cut financial backing 

to existing renewable energy power plants, built 

with an expectation of guaranteed prices and 

government subsidies for 25 years.7 

And then, there is the matter of corruption. As 

Bloomberg Businessweek reports, HAn audit of solar~ 

power generation from November 2009 to January 

2010 found that some panel operators were paid for 

doing the 'impossible'--producing electricity from 

sunlight during the night."B Further, it appears that 

the solar power producers Hmay have nm diesel~ 

hurning generators and sold the output as solar power, 

which earns several times more than electricity from 

fossil fuels." Nineteen people have been arrested in 

Spain)s "clean energy" sector on charges ranging from 

bribery, to unsavory land deals. to issuing licenses to 

friends and family, to simple construction fraud. As the 

Guardian reports, "When Spain's National Commission 

for Energy decided to inspect 30 solar gardens. it found 

only 13 of them had been built properly and were 

actually dumping elcCfriciry into the netv.'Ork."9 

Italy 

A similar situation has played out in Italy) also a 

leader in wind and solar-power deployment. A stuoy 

performed by Luciano Lavecchia and Carlo Stagnaro 

of Italy's Bruno Leoni Institute found an even 

worse situation: 

Finally, we have compared the average stock of 

capital per worker in the RES [Renewable Energy 

Systems] with the average stock of capital per 

worker in the industry and the entire economy, 

finding an average ratio of 6.9 and 4.8, respectively. 

To put it othcrvvise, the same amount of capital 

that creates one job in the green sector, would 

create 6.9 or 4.8 if invested in the industry or 

the economy in general, respectively-although 

differences exist between RES themselves, with 

wind power morc likely to create jobs than 
86 


82298.048

[photovolraic] power. This fact is particularly 

relevant because we didn't even consider the 

non~trjviaJ value of the renewable energy produced, 

but we focused on pure subsidies. If we had con~ 

sidered the energy value, the average stock of 

capital per worker would result even higher. 

Since suhsidies arc forcibly taken away from the 

econornic cycle, and '-'lilocated for political pur~ 

p~)ses, it b especIally Important to have a clear 

\'lsion of what consequences they beg. IO 

The researchers also found that the vast rnajority of 

green jobs created were temporary; "Using what we see 

as inflated estimates, from various sources, of already~ 

existing green jobs, we take between 9,000 and 26,000 

jnbs in wind power, and between 5,500 and 14,500 in 

rhorovolt<:lie energy, as our starting point. From there, 

we have c,-,kubted thm thanks to the subsidies Rome 

has pmmiseJ, the IllllTlber of people \vorking in the 

grt'en economy will rise to an aggregate total of betwecn 

50,000 to 112,000 by 2020. However, most of rhose 

jobs--at least 60%-···\1"ill be for installers or other 

temporary work that wi II disappear once a photovoltaic 

ranel, or a wind tower, is operative. "11 

And like Spain, Italy has experienced rampant corrup~ 

tion in the renewable sector. Rather than hJving numer~ 

ous individuals defrauding the govemment, howcver, the 

mafla is myolved. As Nick Squires and Nick Meo report 

in rhe Telegraph, "Attracted by the prospect of generous 

gram':> designed to boosr the use of altemative energies, the 

slH':dllcd 'cco Mafia' has begun fraudulently creaming off 

milltons of curos from both thc Italian govcrnment and 

the European Union."12 They go on to report: 

Eight people were alTested in Opemtion HEolo/' 

naml~d <,fter Aeolus, the ancient Greek god of 

winds, on charges of bribing officials in the coastal 

town of Mazara Je! Vallo with gifts of luxury cars 

and indiVidual bribes of 00,000-70,000. 

Pollee wiretaps showed the extcnt of the mafia's 

infiltratlOn of thc wind energy scctor when they 

intercepted an alleged mafioso relling his wife, 

"Not one turbine blade will be built in Mazara 

unlcss I agree to it." 

In another operation last November, codenamed "Gone With the Wind," fifteen people 

were arre'itcJ on suspicion of trying to embezzle 

- 4-

lip to €30 million in European Union funds, 

Among those arrested on fraud charges was 

the president of Italy's National Wind Energy 

Association, Oreste Vigorito. 

Wind and solar power have raised 

household energy prices by 7.5 percent in 

Germany, and Denmark has the highest 

electricity prices in the European Union. 

Germany 

Germany's foray into renewable energy started in earnest 

in 1997, when the European Union adopted a goal of 

generating 12 percent of its, electricity from renewable 

sources. 1 \ Germany's method for achieving such targets 

was the institution of a feed~in law, which required 

utilities to purchase different kinds of renewable energy , 

at different rates. In a study of the effects of Gennany's 

aggressive promotion of wind and solar power, Manuel 

FronJel noted that the German feed-In law required 

utilities to buy solar power at a rate of fifty-nine cents pcr 

kilowatt-hour, far above the normal cost of conventional 

electricity, which was between thrce and ten cents. 

Feed-in subsidies for wind power, he observed, werc 

300 percent higher than conventional electricity costs.1 4 

NceJJcss to say, this massive subsidizing of wind and 

solar power attracted a lot of investors: after all, if the 

government is going to guarantee a market for several 

Jecades, and set a price high enough for renewable 

producers to make a profit from, capital \vill flow mto 

the market. Germany became the second-largest 

producer of wind energy after the United Steltes, <lnd 

its investment in solar power was aggressive as well. 

But according to Frondd, things did not work out as 

Germany's politicians and environmentalists said they 

would. Rather than bringing economic benefits in tcrms 

of lower~cost energy and a proliferation of green~energy 

jobs, the implementation of wind and solar power raised 

household energy rates by 7.5 percent. Further, while 

greenhouse gas emissions were abated, the cost was aston~ 

ishingly high: over $1,000 per ron for solar power, and 

over $80 per ton for wind pCW·iCC Given that the carbon 

price in the Europcan Trading System was about $19 per 

ton at the time, greenhouse gas emissions from wind and 

solar were not great investments. 
87 


82298.049

Fronde! concludes that "German renewable energy 

policy, and in particui8r the adopted feed'in tariff 

scheme, has failed to harness the market incentives 

needed to ensure a viable and cost~effective introduc~ 

tlon of renewable energies into the country's energy 

rortfolio. To the contrary, the government's support 

mechanisms have in many respects subverted these 

incentives, resulting in massive expenditures that 

show little lonwterm promise for stimulating the 

economy) protecting the environment, or increasing 

energy security. In the case of photovoltaics, Germany's 

subsidization rcgiml' hCl~ reached a level that by far 

exceeds average wages, with per-worker subsidies as 

high as 175,000 €(US$240,000)." He adds: 

In conclusion, government policy has failed to 

harness the market incentives needed to ensure a 

viable and cost~effective introduction of renewable energies into Germany's energy portfolio. 

To the contrary, Germany's principal mechanism 

of supporting renewable technologies through 

feed~in tariffs imposes high costs without any 

of the alleged positivl~ impacts on emissions 

rcJuctiuns, employment, energy security) or 

technologic;]l innovation. Policymakers should 

thus scrutinize Germany's experience, including 

in the US, where there are currently nearly 

400 federal and star.e programs in place that provide financial incentives for renewable energy. 

Although Germany)s prommion of renewable 

energies tS commonly portrayed in the media as 

setting a "shining example in providing a harvest 

for the world" (Tlte GU1lrdian 2007), we would 

instead regard the country's experience as a 

Glutionary tale of massively expensive environ, 

mental Jnd energy policy th::lt is devoid of 

economic 8nJ environmenwl benefits. 

As with Spain and Italy, Gennany is finding it hard to 

continue to subsidize wind and solar power at existing 

levels. In May, the German p~lrliament cut back the subsJdy for domestic rooftop solar photovoltaic systems by 

16 percent, with free,standing systems cut by 15 percent. I S 

Denmark 

Denmark is yet another country that has made wind 

power a hallmatk of its enetgy policy. Ohama praised it 

for its aggressive wind~po\Ver program, telling an Earth 

- 5-

Day audience in Iowa that "America produces less than 

3 percent of our electricity through renewable sources 

like wind and solar~less than 3 percent. Now, in 

comparison, Denmark produces almost 20 percent of 

their electricity through wind power."16 The US Enetgy 

Information Administration tells America)s children 

that "Denmark ranks ninth in the world in wind power 

capacity) hut generates about 20% of its electricity from 

wind."l? That sounds impressive, but is it true! 

Green programs in Spain destroyed 2.2 jobs 

for every green job created, while the capital 

needed for one green job in Italy could create 

almost five jobs in the general economy. 

Not according to CEPOS, a Danish think tank, which 

issued a 2009 report entitled \'\lind Energy, the Case of 

Denmark. 18 The CEPOS study found that tathet than 

generating 20 percent of its energy from wind, "Denmark 

generates the equivalent of about 19% of its electricir.y 

demand \vith wind turbines, bur wind power contrihutes 

far less than 19% of the nation)s electricity demand. The 

claim that Denmark derives about 20% of its electricity 

from wind overstates matters. Being highly interrnittent, 

wind power has recently (2006) met as little as So,.{) of 

Denmark's annual electricity consumption with an 

average over the last five years of 9.7%." 

The CEPOS study teveflled that Denmatk can only 

produce and consume a<; much wind power a<; it docs due 

to a convenient circumstance: neighl:xxing countries 

have a lot of hydro power that can quickly and effectively 

balance the flow of electricity on its energy ~,'rid, allowing 

it to export surplus wind capacity. "Denmark manages to 

keep the electricity systems balanced due to having the 

benefit of its particular neighbors and their electricity mix. 

Norw<1Y and Sweden provide Denmflrk, Germany and 

Netherlands access to significant arnounts of fast, short 

term balancing reserve, via interconnectors. They effectIvely act as Denmark's 'electricity storage bZttteries.' 

No[\vegian and Swedish hydropower can be rapidly turned 

up ;md down, and Norway's lakes effectively 'store' some 

portion of Danish wind pmver. Over the last eight years 

\Xlest Denmark has exported (couldn't usc), on average, 

57% of the wind power it generated and East Denmark an 

average of 45%. The cOlTelation between high wind out, 

put and net outflows makes the case that there is a large 

component of wind energy in the outflow indisputable." 
88 


82298.050

Finally, rhe CEPOS study f"unJ that Danish consumers arc the ones who take it on the chin. Denmark's 

electricity prices are the highest in the entire European 

Union. And the greenhouse gas reduction benefits? 

Slim to none, since the exported wind power replaces 

hydro power, which docs not produce slgnificant green~ 

house gas emissions. The wind power consumed in 

Denmark does displace some fossil-fuel emissions, but 

at some cost: $124 ref ton, nearly six times the price on 

the European Trading System. 

Regarding green jobs, CEPOS found "that the effect 

of the govcmment subsidy has been to shift employment 

from rnorc productive employment in other sectors to 

less proJuctive employment in the wind industry. As a 

cons'equence, Danish GDP is approximately 1.8 billion 

DKK ($270 million) lower than it would have been if 

the \vinJ sector \\'\)[k force was employed elsewhere," 

Not surprisingly, Denmark is also finding renewable 

~~u"ver unsustamablc dnJ is backing away from the 

f,,'chno!ngy. As Andrew Gilligan reporrs in the 

Telef:.,rrat)h, the Damsh Hate~owned power industry 

will no longer build onshore wind turbines, and 

consumers ;:ue complaining about high energy rates 

and environmental despoliation. "Earlier this year, 

a new nJtional anti,wind body) Neighbours of Large 

\Vind Turbines, was crcated. More than 40 civic groups 

have become members. 'People are fcd up with having 

their property devalued and sleep ruined by nl)isc 

from large wind turbines,' says the association's pres!, 

dent, Boye Jensen OJshcrrcd. 'We receive constant 

Gllls from ciVIC groups that want to join.1»19 

The United Kingdom 

Our Commonwealth cousins across the pond have also 

embraced the Hgreen power means green jobs" theory. 

The UK (Scl)tland particularly) has pursued an ambi~ 

(lOUS wind~powcr agen(b, 

runner prime minister Gordon Brown told a Labor 

Party confcrencl:\ hI am asking the climate change committee to report by October on the case for, by 2050 nor. 

a 60% reduction in our carbon emissions) but an 80% 

cut and I want British companies and British workers to 

seize the opportunity and lead the world in the transformation to a low carbon economy and I believe that we 

can create in modern green manufacturing and service 

one rnillion new jobs."20 

Ed Miliband, current leader of the opposition, is also 

big on wind, ;:mnouncing, "With strong government 

- 6-

hacking, the UK is consolidating its lead in offshore 

wind energy. We already have more offshore wind 

energy than any other country, we have the biggest 

wind farm in the world about to start construction, and 

now we'll sec the biggest turbine blades in the world 

made here in Britain. .. Our coastline means the ofr 

shore wind industry has the potential to employ tens of 

thousands of workers by 2020."21 

Parry does not seem to he a factor in green-job boost~ 

ing. Prime Minister (and Conservative Party leader) 

David Cameron, discussing a deal to work on wind tur~ 

hines with India, said, "The inno\'ation and creativity 

of business won't JUSt help us save the planet, but is 

expected to create millions of jobs and billions of revenue in the green goods and services markct."22 

Referring to offshore wind) Cameron is equally bull~ 

ish: "I want us to be a world leader in offshore wind 

energy," he said, announcing a national infrastructure 

plan. "We arc making these investments so rhat major 

manufacturers will decide that this is the place they 

\vant to Cllmc and build their offshore wind turhines. 

This investment is good for jobs and growth, and good 

for ensuring WE' have clean energy,"23 

Alas, the UK and Scotland have fared no better than 

the other countries discllssed above in th(,~ir pursuit of 

the new grecn-energy/green;jobs economy, as a recent 

report by consultancy Verso Economics points out,24 

The study is particularly interesting because its method~ 

010&0' is touted as superior to the methodology used in 

the Spanish and Italian studies, Verso uses what ccono~ 

mists refer to as ~~inplit/OlJtput" tables to estimate the 

number of johs that were foregone in the LJK general 

economy in favor of the green jobs "created" through 

government subsidies, 

Vetso's conclusion aligns neatly with those of rhe 

Spanish anJ Italian studies discussed above: 

• "The report's key finding is that for every job crc~ 

ated in the UK in renewable energy, 3.7 jobs are 

lost. In Scotland there is no net benefit from gov~ 

emment support for the sector, and probably a 

small net loss of jobs." 

• 'The main policy tool used to promote rcncwahlc 

energy generation is the Renewables Obligation, 

which effectively raises the market price paid for 

electricity from renewable sources. This scheme cost 

electricity consumers £1.1 [billion] in the UK and 

around £100 [million] in Scotland in 2009/10." 
89 


82298.051

• "Thi::. repon uses the ScottIsh Government's 

own macroeconomic model for Scotland to 

as~ess the impact of identified costs on jobs. A 

similar model was used by the Scottish Gov~ 

ernment to measure the opportunity cost of the 

cut in Ithe va!uc~added tax} implemented in 

2008-09. Based on this, policy to promote 

renewable energy in the UK has an oppOrtu~ 

nity cost of 10,000 direct jobs in 2009/10 and 

1,200 Jobs in Scotland." 

• "In conclusion, policy lO prornote the renewable 

electricity sector in hoth Scorland and the UK is 

economically damaging. Government should 

not see this as an economic opportunity, theref~)re, hut should fl)CUS debate instead on whether 

these costs, and the damage done to the envi~ 

ronment, arc worth the candle in terms of cli~ 

mate change mitigation,"Z5 

While the UK and Scotla~d may have avoided the 

problems of corruption that afflicted Spain and Italy, 

they learned something that the warmer countries did 

nor: wind turbmes can freeze in winter. Not only do 

they cease to put out rower in very cold weather, they 

actually neeJ to be heated. As reporte-r Richard Little~ 

j( )hn roinrs out In the UK Daily Mail, "Over the past 

three weeks, with demand for rower at record levels 

because: of the freezing weather, there have been days 

when the contribution of our forests of wind turbines 

has been precisely nothing. It gets bet teL As the tem; 

perature hZls plummeted, the turbines have had to be 

heated to r'revent them seizing up. Consequently, they 

have been consuming more electricity than they genen·.ue. Even on a good Jay they rarely work above a 

quarter of their theoretical capacity. And in high 

winds they have to he switched off altogether to pre~ 

vcnt damagc.'126 

The frozen turbine problem has also occurred in 

Canada. As Greg Weston of the Tdegraph-Joumal 

explained in February 2011, "A $200-million wind 

tum in northern New Brunswick is frozen solid, cutting off a supply of renewable energy for NB Power. 

The 25-ki1ometre stretch of wind turbines, 70 kilometres northwest of B(lthurst, has been shut dmvn for 

several wecks Jue to heavy ice covering the blades. 

(:JDF Suez Energy, the company that owns and oper~ 

arcs the site, is working to return the \-vindmHls to 

working order, a spokeswoman says."27 

7 

The Netherlands 

The Netherlands is yet another country that went big 

for wind powcrj it is the world's third~largest producer 

of offshore wind power. And while no data arc available 

ahout green jobs in the Netherlands, there is evidence 

that it will not be producing many through its green 

power plants. The new conservative government has 

radically reversed course and is slashing subsidies to 

wind and solar power, 

According ro the journal Energy Debate, the Dutch 

government has lost its faith in windmills. The new 

government in the Netherlands has taken exception to 

the massive subsidies required EO build and operate wind 

farms---and, in this case, to the expected export of €4,-) 

billion in subsidies to a German company (Bard Engi~ 

neering) rhat would have huilt, owned, and operated 

those wind farms, The new prime minister of the 

Netherlands, Mark Rutte, is rcported to have said, 

"Windmills turn on subsidies.u2S 

On Novemher 30, 2010, the government unveiled 

its new renewables pbn, slashing annual subsidies 

from €4 billion to €1. S billion. And not only are 

the subsidies cut back, what remains will he reJi~ 

rected well away from wind power. As Energ)' 

Debate explains: 

In the new system (somewhat misleadingly called 

SDE-plus), which will take effect halfway 

through 2011, the government will allocate sllb~ 

sidies in an entirely different, and rather compli~ 

cated way. Suhsidies are made available in four 

"stages" (on the basis of first~come) first~served), 

1) In the first stage, a government subSIdy of 

9 eurocents per kWh (or 79 cents per m1 for gas) 

is offered, but only to producers of technologies 

that have "deficlts" of less than 9 eurocents. 

Based on the figures from ECN, these are: biogas 

("green gas"), hydropO\ver, power from waste 

processing installations, and gas from fermenra~ 

tion processes. 

2) If there is still money left after this first stage, 

the second stage will be opened up, in which a 

subsidy of 11 curocents per kWh (or 97 cents per 

m.l) will be offered. This stage will be open to 

producers of onshore wind power and fertiliser~ 

hased gas, 
90 


82298.052

3) Again, if there is money left, there will be a 

third st8ge with subsiJies of 13 cents per kWh or 

114 cents per m '). This will be open to producers of 

hyJropower and small-scale biomass, 

4) The f()[lrth and last stage (i5 cents per kWh or 

132 cents per ml) will be open to electricity produced from all~purpose fermentation processes. 

Not included in any of the four categories, because 

they are roo expensive, are solar power, large-scale 

biomass and, indeed, offshore wind power.29 

Another change in the Dutch attitude toward 

r~newables is how ro pay for the subsidies, In the past, 

subsidies came from the general budget. Moving for~ 

warJ, consumers will see a surcharge on their energy 

~ills. The new direct billing could cool the public's 

ardor for additional building of "green energy.!> 

According to reports, the new government was 

planning un a nuclear pmver renaissance to generate 

clt'ctricity, and one could certainly argue that such a 

plan would generate "green jo\)s."JO t"{owever, in the 

\vake of the tragic Japdnes~ earthquake and tsunami in 

March 2011 f such a plan \\'il1 also undergo <l great deal 

of scrutiny. 

The irony here is rich, The Dutch) who have been 

enamored of wind power for hundreds of years,JI may 

have finally had enough tilting at windmills. If even 

they cannot make it workf one has to wonder if any~ 

one can. 

Conclusion 

Both economic theory <lnd the experience of European 

countries thelt have attempted to build a green~enC'rgy 

economy that will create green jobs reveal that such 

thinking is deeply fallaciolls. Spainf Italy, GermanYf 

Denmark, the UK, and the Netherlands have all tried 

and Lliled to accomplish positive outcomes with 

renewable energy. Some will suggest that the United 

States is different, and that US planners will have the 

wisdom to make the green economy \vork here. But 

there is no gcrring around the fact that you do not 

improve your economy or create jobs by breaking 

windows, and US planners are no more omniscient 

than thost.:: in Europe. 

1 would like [() thank AEI rC.'iearcil (l$$isram Hiwa Alaghebandian 

frr her valuable a.'iSiSWllCe with this Outlook. 

- 8 -

Notes 

1, White House, "Remarks by the President at DNC 

Event," news release, September 16,2010, www.whitehollsc.gov 

/thc-press-office/20 1 Oj09/16/rcmarks-presidem -dnc-event 

(accessed January 27, 2011). 

2. White House, "Statement from Vice President Biden nn 

Launch of$2.3 Billion Recovery Act Green Manufacturer Credit 

Pro&1fam," news release, August 13, Z0..-"9, \\,\'1w.whitchousc.gov 

/the-pre&voffice/sraternent-vice-president-biden-lmlm:h-23-billionrecovery-act-bJTeen-manufactureHa (accc.'iSeJJanuary 27, 2010. 

3. Nancy Pelosi, remarks to the Stanley Elementary School, 

Waltham. Massachusetts, March 10, 2008. 

4. \Vhite House, "Remarks by President Obama and Presi~ 

dent Zapatero of Spain after Mecring," news release, October 13, 2009, \Vww.whitehouse.gov/the~press~office/Remarks-byPresident-Obama-and~Presidenr-Zapatero-of-Spain-after-meering 

(acce~,ed january 27, 2011). 

5. G<1hriel Calzada Alvarez, Raqucl Merino Jara, Juan 

Ramun Rallo Julian, and Jose Ignacio Garda Bielsa, "Study of 

the Effects of Employment of Puhlic Aid ru Renew<1hle Eneq .• 'y 

Sources" (draft, UruversiJad Rey Juan C('lrlos, March 2009), 

www.juandemariana.orgJpdf/090327-employment-publicaid~rencw8ble.pdf (8ccesS{~d J,muary 27, 2011). 

6. Ben Sills, "Spain Slashes Prices 45% for Ne\v Ground-Based 

Solar Plants, 5% tell' Homes," Bloomberg, November 19, 2010. 

7. Andrew McKillop, "The Bursting of the Green Energy 

Bubbte?" Energy Tribune, June 4, 2010, www.energytribune 

.com/articles.cfm!4264(The~Bursting-of-the-Green~Energy~ 

Bubble (accessed February 1,2011), 

8. Todd White, "Spcll1ish Solar-Panel TraJe Group Calls for 

Fraud Investigation," Bloomberg RusmcssiIJ.Jeck, April 12, 2010. 

9, Giles Trernlett, "Sccmdal Sullies Spain's Clean Energy," 

Guardian, March 22, 2009. 

10, Luciano Lavecchl3 and Carlo Stagnaro, Are Green Jobs 

Rcal}obs? The C(UI:' of lwly (Milan, Italy: lnstituto Bruno Leoni, 

May 2010), http://bruno!eonimedia.servin ... tf"rccdom.net 

/WP/WP-GreenJobs-May20lC.pJf (acc",,~ january 27, 2011). 

11. Carlo St,lg:naro and Luciano Lavecchia, "Clean Jobs, 

Expensive Jobs: Why haly Can't Afford a 'Green Economy,'" 

Wall Styeer Journal, May 11,2010. 

l2. Nick Squires and Nick Mco, "Mafia Ca..,h In on Lucrative EU Wind Farm Handouts-Especially in Sicily," Telegraph, 

September S, 2010. 

13, Konrnd Bauer, "Gennan Rene\vable Energy Policy," Genn,m 

Ener:l">"'Y Agency, October 24, 2007, www.gJccsanfrancisco.com 

/filcadmin/ahk_s<mfrancisco/rxlkumenre/ZOO7 ~ 10_5.:l!ar_L'"klegation 

tl_._.Califomia_Sol<1r_BusinC$.~_Delegation_ VortIaR...Konrad_Bauer 

j41007.p<.lf(acce, .. xl january 27, 201l). 
91 


82298.053

14. ~'b!)uel Fronde!, Nolan Ritter, Chnstoph M. Schmidt, 

and Colin Vance, Econornic Impacts from the Pmmoti(m 

of Rer1L"'tvahle ErlL"l"gies, the German Experience (Gennany: Rheinisch-

\Vc:,>tfalisches Institut fur Wirtschaft Sfon;chung, 2009). 

15. "German Bundestag Approves Solar Incentive Cuts," 

Reuters, May 6, 20lO. 

16. Igor Kossov, ''Transcript: Obama's Earth Day Speech," 

CBS News, April 22, 2009. 

17. US Encrgy Infonnation Administration, "Wind,l1 

http://tont( ). eia.Joc, goy/kids/energy .cfm !pagc=wind_ 

homc-bas!cs-k.cfm (accessed January 28, 2011). 

18. Hugh Sharman, Henrik Mt'yer, an,l Martin Agerup, 

\),./in.-1 Energy: The Case of Denmark (Copenhagen, Dcnmark: 

Center for Po!itiske StuJier, September 2009), www.cepos.dk 

/filcadmin/uscr _upload! Arb vjPDFj\X!imt energy _-_thc_case 

_oCOenmark.pJf (accessed January 28, 2011). 

19. Andrew Gilligan, "An m Wind Bh,\l5 for Denmark's Green 

Erwq.,'Y Revoluti()J1," TeieRmpn, September 12,2010. 

(\lU! Ecde!'wn, "Llhour Conferenc(:: GtlfJon Brown 

S,lYS CO2 Targets Mu:--r Be H,.a/scd to 80% by 2050," Telegraph, 

September 21, 2008. 

21. I·lelene Mulholbnd, "Ed Mi!iband Announces Boost for 

Green Jobs," Guardian, September 17, 2009. 

22. Cathennc Airlie, "UK, India to Create Millions of'Grecn' 

- 9-

Joh.~, Cameron Says," Bloom/mg Businessweel<, Novcrnber 15, 2010. 

23. Fiona Harvey, "Go-Ahead (or Wind to Generate 70,000 

Jobs," Financial Times, October 25, 20lO. 

24. Richard Marsh and Tom Miers, Worth the Candle? 

The Economic Impact of Renewable Energy Policy in Scotland 

and the UK (Kirkcaldy, Scotland: Verso Economics, March 

2011), \-Vww.versoeconomlCs.com/verso~OJ llR-pdf (accessed 

Match 17, 2011). 

21. Ibid. 

26. Richard Littlejohn, "You Don't Need a Weatherman to 

Know \'Vhich Way the Wind Blows," Daily Mail, December 

27, 2010. 

27. Grcg \Y.Jestnn, ;'Ice Buiklup on Wind Turbines Cuts 

Reusable Energy," Vancouver Sun, February 16,2011. 

28. Jose Mario, HThe Dutch Lose Faith in Windmills," 

Energy Debate, Janumy 16,2011. 

29. Ibid. 

30. Michael Gassmann, "Holland's Radical U-Turn lm Climate <lnd Energy Policy," Global Wmming Poky Foundation, 

February 9, 2011. 

31 ,The Netherlands Board ofT ourism and Conventions, 

"The Lmd of the Windmills," May 21, 2007, http,//us.hollmld 

.com/e/7779(rhe°A.120!and%20of'X)20the%20windmills.php 

(accessed Match 17, 2011). 
92 

Mr. STEARNS. Mr. Breen, welcome. 

STATEMENT OF MICHAEL BREEN 

Mr. BREEN. Thank you, Chairman Stearns, Ranking Member 

DeGette, members of the committee, ladies and gentlemen. 

I’m honored to appear before you today to discuss the critical national security importance of clean energy development. I am the 

vice president of the Truman National Security Project, a former 

Army officer in Iraq, and Afghanistan combat veteran. I’m also 

proud to be one of the leaders of Operation Free, a nonpartisan national coalition of veterans who believe that our dependence on fossil fuel poses a clear national security threat to the United States. 

The men and women of Operation Free have walked the burning 

oil fields of Iraq and patrolled the mountain roads of Afghanistan, 

where the fully burdened cost of fuel is $30 a gallon and 1 in 24 

fuel convoys ends in an American casualty. They have seen firsthand why it is an established consensus in the defense community 

that our dependence on oil threatens our national security. 

America sends over $1 billion per day overseas for oil. It should 

not be a surprise, then, that oil is the single largest contributor to 

our foreign debt, outpacing even our trade deficit with China. 

Worse, far too many of those dollars wind up in the hands of regimes that wish us harm. According to the CIA, over 50 percent of 

Iran’s entire oil budget—excuse me, Iran’s entire national budget— 

comes from the oil sector. 

For every $5 rise in the price of a barrel of crude, Iran receives 

an additional $7.9 billion annually. That’s billions of dollars to 

build new nuclear facilities, repair centrifuges, and support terrorist groups that threaten Americans and target our Israeli allies. 

But there’s another consensus emerging in the defense community, 

and it is this: climate change poses a serious threat to our national 

security. 

I know not everyone in this room believes that climate change is 

real, but our national security professionals do. The Pentagon’s 

Quadrennial Defense Review, the military’s most important strategic document, states that climate change is, quote, an accelerant 

of instability and conflict and that climate change and reliance on 

fossil fuels are, quote, prominent military vulnerabilities for the 

Nation. 

The CIA has established The Center on Climate Change and National Security. The Council on Foreign Relations, the Center for 

Strategic and International Studies, the Center for a New American Security, the CNA’s Military Advisory Board, the National Research Council and numerous other nonpartisan organizations have 

all found independently of one another that climate changes poses 

a serious and growing threat to our national security. 

According to a recent study, over 97 percent of climate scientists 

say that man-made climate change is a reality. Now, I’m not a climate scientist, I’m a former front-line combat leader in the U.S. 

Military. And as a combat leader, if 97 percent of my intelligence 

indicated that I would face a lethal danger that would risk the 

lives of my paratroopers, I would be committing unconscionable 

military malpractice if I did not listen and act on that information. 

93 

Fortunately, we see leaders acting in the same vein today in 

Kern County, California, and other places across America. Located 

in the high desert, Kern supplied the crude that fueled much of the 

mid-20th century oil boom. 

Kern County has always been proud to provide American energy. 

That’s why in the 21st century Kern has turned to renewable 

sources, becoming the largest producer of wind and solar energy in 

California by a very large margin. Clean technologies are creating 

jobs in a place where unemployment had been 64 percent higher 

than the national average. 

Two months ago in this very building, I stood with Jeff Duff, the 

CEO of Air-Streams Renewables, a technical school in Kern County 

that trains wind turbine technicians. Air-Streams is proud that 70 

percent of its graduates are veterans. One of Jeff’s students, a 

naval electrician, struggled to find work after leaving the service. 

He left a night job at a mortuary to join Air-Streams and then 

graduated at the top of his class. Now he is serving his community 

by building the energy economy of the future. 

As we debate clean technologies, we often ignore energy’s impact 

on our national security. There will be a lot of emphasis in this 

room today on cost. But the price of fossil fuels includes more than 

searching and extracting and shipping; there are security costs that 

we must recognize. 

Fossil fuels fund extremists and breed dependency on nations 

that don’t share our values. We can let stories like Kern County’s 

be what they are today, promising but not commonplace, or instead 

we can lead by investing in 21st century technologies that keep 

America safe and prosperous. 

Thank you for the opportunity to testify, and I look forward to 

your questions. 

Mr. STEARNS. Thank you. 

[The prepared statement of Mr. Breen follows:] 

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82298.054

Testimony of Michael Breen, Vice-President, Truman National Security Project 

June 19th, 2012 

Chairman Stearns, Ranking Member DeGctte, members of the committee, ladies and gentlemen, I 

am honored to appear before this distinguished panel today to discuss the critical national security 

importance of clean energy development. 

I serve as the Vice President of the Truman National Security Project, a leadership institute 

dedicated to forging strong, smart and principled national security policy for America. As a former Army 

officer and an Iraq & Afghanistan combat veteran, I am also proud to be one of the leaders of Operation 

foree, a non-partisan nationwide coalition of patriotic veterans who stand together in the common belief 

that our dependence on fossil fuel poses a clear national security threat to the United States. 

When I last had the honor of testifying in March, I was invited to discuss the national security 

implications of our nation's dependence on oil as a single source offuel. The dangers of that dependence 

are well known to the veterans of Operation Free. These men and women have walked the burning oil 

fields of Iraq and patrolled the mountain roads of Afghanistan where the fully-burdened cost of fuel on 

the front lines is $30 a gallon', and I in 24 fuel convoys ends in an American casualty." 

America sends over $1 billion per day oversea, for oil. ,', A $10 increase in the price of a barrel of 

oil costs the Department of Defense an estimated $1.3 billion - almost equal to the entire procurement 

budget for the Marinc Corps.'" It should not be a surprise, then, that oil is the singlc largest contributor to 

our foreign debt. outpacing even our trade deficit with China. Worse, far too many of those dollars wind 

up in the hands ofregimcs that wish us harm. 

According to the CIA, over 50% of the Iran's entire budget comes from the oil sector.' For every 

$5 rise in the price of a barrel of crude oil, Iran receives an additional $7.9 billion annually." That's 

billions of dollars to build new nuclear facilities, rcplacc centrifuges and support terrorist groups that 

threaten Americans and target our Israeli allies. 
95 


82298.055

For every $5 rise in the price of a barrel of crude oil, Russia receives more than $18 billion 

annually.'" As ever-rising demand for oil drives the global price ever higher, Russia continues to spend 

windfall oil profits on weapons and ammunition for President Bashar Assad's shock troops in Syria, 

where over 10,000 civilians have reportedly lost their lives fighting for their freedom. 

It is established consensus in the defense community that our dependence on oil is a threat to our 

national security. But there is another consensus emerging in the national security community that also 

bears heavily upon our discussion today. It is simply this: man-made climate change poses a serious threat 

to our national security. 

I know not everyone in this room believes that climate change is real, but our country's national 

security professionals clearly do. The Pentagon's Quadrennial Defense Review, the military's most 

imp0l1ant strategic document, states that climate change is "an accelerant of instability and conflict" and 

that climate change and reliance on fossil fuels are "prominent military vulnerabilities" for the nation.v

", 

The CIA has established a Center on Climate Change and National Security. The Council on Foreign 

Relations, the Center for Strategic and International Studies, Center for a New American Security, the 

CNA Military Advisory Board, the National Research Council and numerous other non-partisan and 

highly-respected organizations have all found, independently of one another, that climate change poses a 

serious and growing threat to our national security. 

A 2007 joint study conducted by CSIS and CNAS found "strong and surprising intersections 

between the two great security threats of the day-climate change and international terrorism waged by 

Islamic extremists." The study went on to conclude that "both threats are linked to energy use in the 

industrialized world, and the solutions to both depend on transforming the world's energy economyAmerica's energy economy in particular."" The connection between our energy posture and the national 

security threats we face could not be more evident. 
96 


82298.056

According to a recent study, over 97% of climate scientists say that man-made climate change is 

a reality.' I'm not a climate scientist-I'm a fonner front-line combat leader in the US military. And as a 

combat leader. if 97% of my intelligence indicated that continuing down the road I was on would pose a 

lethal danger to my mission and the lives of my paratroopers, I would be committing unconscionable 

military malpractice if I decided not to listen, and more importantly, to act. 

Yet, even in the face of overwhelming evidence and the certain consequences that inaction will 

bring, some say that we cannot or should not act. The challenge is too great to be overcome, they c1aimthe pace of progress is too slow, or the costs too high. Fortunately, leaders remember what the nay-sayers 

have forgotten: if government and industry stand together, there is no new market America cannot master, 

and no technological revolution America cannot lead. 

We see that today in Kern County, California. Located in the high desert, Kern supplied the crude 

that made California the oil capital of the United States back in the 1920s, and fueled much of the mid20th century oil boom. Kern County has always been proud to provide American energy. That's why in 

the 21 st century Kern has turned to renewable sources, becoming the largest producer of wind and solar 

energy in the state of California and creatingjobs in a place where unemployment had been 64% higher 

than the national average. 

Two months ago, in this very building, I stood with Jeff Duff, the CEO of Air-Streams 

Renewables. a technical school in Kern County that trains wind turbine technicians. Air-Streams is proud 

that 70% of its graduates are veterans. Jeff told me about one of his students, an electrician in the Navy 

who after being honorably discharged, struggled to find work that used the skills he learned in the 

service. He left a night job at a mortuary to join Air-Streams and graduated at the top of his class. Now. 

he's continuing his service to his nation and his community by building the energy economy of the future. 

As we debate clean technologies, we often ignore energy's impact on our national security. There 

will be a lot of emphasis in this room today on cost. But the price of fossil fuels includes more than 
97 


82298.057

drilling and pumping. There are security costs that we must recognize. Fossil fuels fund extremists, and 

breed dependency on nations that don't share our values. We can let stories like Kern County's be what 

they are today: promising, but not commonplace. Or instead, we can lead-and invest in 21" century 

technologies that keep America safe and prosperous . 

• Report from the Pew Project on National Security, Energy and Climate, "From Barracks to the Battlefield," pg. 16 

(2011). 

" "Casualty Costs of Fuel and Water Resupply Convoys in Afghanistan and Iraq." Army-Technology.com, February 

26th, 2010. http://www.army-technology.com/features/feature 77200/ 

," Powers, Jonathan. "Oil Addiction: Fueling Our Enemies." Truman National Security Project, February 17'h, 2010. 

http://www.trumanproject.org/files/papers/Oil Addiction - Fueling Our Enemies FINAL.pdf 

"CNA Report on "Powering America's Defense: Energy and the Risks to National Security" (May 2009) 

http://www . cna. org/ docu ments/Poweri ngAmericasDefense. pdf 

"CIA World Factbook. "Iran." CIA, February 21", 2012. https:!Iwww.cia.gov!library/publicatior,s/the-worldfa(tbook/geos!i r.html 

'" Powers, Jonathan. "Oil Addiction: Fueling Our Enemies." Truman National Security Project, February 17th, 2010. 

http://www.trumanproject.org!files/papers/Oil Addiction - Fueling Our Enemies FINAL.pdf 

,i. Powers, Jonathan. "Oil Addiction: Fueling Our Enemies." Truman National Security Project, February 17'", 2010. 

http://www.trumanproject.org/files/papers/Oil Addiction - Fueling Our Enemies FINALpdf 

"", Quadrennial Defense Review. Department of Defense, February 2010. 

" Report from CSIS and CNAS, "The Age of Consequences: The Foreign Policy and National Security Implications of 

Climate Change" (February, 2007) http://www.cnas.org/files/documents/publications!CSISCNAS AgeofConseguences November07.pdf 

, Anderegg, William R L; James W. Prall, Jacob Harold, and Stephen H. Schneider (2010). "Expert credibility in 

climate change". Proc. Nat!. Acad. Sci. USA 107 (27): 12107-9. 
98 

Mr. STEARNS. And I will open with my questions. 

Dr. Sherlock, let me ask, we have a slide we would like to put 

up, if you could, and perhaps not everybody can see it, but I will 

give a copy to the ranking member and anybody other—— 

Ms. DEGETTE. I don’t know, where is this slide from? 

Mr. STEARNS. It’s from Dr. Sherlock’s prepared testimony. 

Ms. DEGETTE. OK. 

Mr. STEARNS. And if you look at this slide, and Dr. Sherlock, I 

will have you explain it, you can see that the upper portion of the 

slide is computer generated by the Department of Energy on construction phase jobs that are created and what they project operational jobs being created. And the lower portion is actually what 

actually occurred; is that correct, Dr. Sherlock? 

Ms. SHERLOCK. It’s an illustrative example to demonstrate the 

difference between a job supported as opposed to a potential job 

created. 

Mr. STEARNS. But it’s also to show that the projected, based upon 

a computer model, isn’t it also. And actually what occurred? 

Ms. SHERLOCK. It’s based on NREL’s computer model and then 

based on earlier research using the estimate of 39 percent where 

early estimates show that 39 percent of the wind energy capacity 

installed in 2009 was directly motivated by the grant, rather than 

resulting from other incentives or other factors. 

Mr. STEARNS. Well, let’s take one of the most egregious examples. 

The total direct plus indirect and induced operational phase shows 

that from 9,700 to 10,000 jobs would be created, but the direct 

plus, indirect, actually is 1,989 to 2,145 according to the illustrative 

example estimated by the—I guess, your office; is that correct? 

Ms. SHERLOCK. It is the NREL’s estimates multiplied by the 39 

percent that was found in the earlier Berkeley lab study, yes. 

Mr. STEARNS. To what do you attribute the huge difference, for 

example, between the 10,000 and the 2,000 that was shown on the 

chart? What do you attribute that to? 

Ms. SHERLOCK. The major difference is that a number of projects 

would have gone forward even if the grant were not available. So, 

for example, if only the PTC and the ITC had been available, some 

of the projects that chose to elect to receive the grant would have 

happened in the alternative world that’s not observed, where only 

the tax credits were available, so those projects that would have 

happened in the alternative world are jobs that are supported rather than jobs that are directly created. 

Mr. STEARNS. So the long and short of it, the computer model is 

including a lot of jobs that would have occurred anyway? 

Ms. SHERLOCK. Essentially, yes. 

Mr. STEARNS. How much money so far has been provided under 

section 1603 to fund these large wind projects? 

Ms. SHERLOCK. I don’t have the precise number for wind creation 

in front of me. It’s been about $11 billion out the door total, and 

roughly 90 percent of that has gone to wind. 

Mr. STEARNS. And these are the jobs that resulted from that expenditure on your chart? 

Ms. SHERLOCK. This is wind and solar jobs, yes. 

Mr. STEARNS. Isn’t it true that additional money has come from 

private and other sources without the government? 

99 

Ms. SHERLOCK. Yes, yes, so the government grants 30 percent, 

roughly, and then the rest of that would be from private investments. 

Mr. STEARNS. Anything else you would like to add from this 

chart before we move on? 

Ms. SHERLOCK. I think it’s really important to emphasize when 

you are looking at job studies, when you’re looking, just to make 

sure you’re comparing apples to apples, that when you are looking 

at jobs reported, that’s what you are looking at. And when you’re 

looking to try to have jobs created, that’s what you are looking at. 

So be careful with the language that’s used. 

Mr. STEARNS. You know, the stimulus package that provided this 

1603 program—wasn’t the inducement for instead of getting tax 

credits, you’re going to get sheer payment; isn’t that true? 

Ms. SHERLOCK. Yes, that was the purpose. 

Mr. STEARNS. And isn’t that a stronger incentive for the companies because they can get cash from the government, instead of a 

tax incentive, to be in the 1603 program? 

Ms. SHERLOCK. Yes. There were a number of companies that 

faced financing frictions, weren’t able to find partnerships to turn 

those tax credits into equity. And the tax equity markets may have 

worked well for some of the larger projects, but especially for smaller companies. 

Mr. STEARNS. So basically the government is giving money away 

rather than putting it as a tax incentive. 

Ms. SHERLOCK. It is being paid out as a grant rather than as a 

foregone revenue. 

Mr. STEARNS. OK. Mr. Kreutzer, with regard to the BLS report 

concluding that there are 3.1 million green jobs, is there a coherent 

and rational definition of green jobs, or is it so broad that it is 

meaningless? 

Mr. KREUTZER. Well, it seems to be very, very broad. They do 

give features of a green job that if you do recycling, you know, if 

you are involved in helping the environment and so on, but when 

you look at 50 percent of the jobs in the steel mill industry are 

green, you have to question is there any meaning at all to this. 

You can come up with any definition you want. As I mentioned, 

you could say people who wear green on St. Patrick’s Day have a 

green job, but that doesn’t tell us anything. 

Mr. STEARNS. Or Dr. Green here, he says from generation to generation he’s been working on green jobs. 

For example, are jobs producing energy, nuclear energy, are they 

considered green jobs? 

Mr. KREUTZER. Yes. The vast majority of jobs in the nuclear 

power sector are green, I think it’s over 80 percent. 

Mr. STEARNS. So aren’t the President’s anti-Yucca and otherwise 

anti-nuclear policies actually impeding creation of new green jobs? 

Mr. KREUTZER. Yes. 

Mr. STEARNS. Under his own definition. If the definition of green 

jobs is nuclear energy, and he is out there protesting against—put 

storage in Yucca Mountain, and he also is—his anti-nuclear policies, aren’t they actually impeding green jobs? 

Mr. KREUTZER. According to their definition, yes. 

100 

Mr. STEARNS. Are jobs associated with steel making considered 

green? 

Mr. KREUTZER. About half of them, a little over half. 

Mr. STEARNS. And isn’t the wave of EPA regulations targeting 

steel plants likely destroying the potential for green jobs? 

Mr. KREUTZER. Yes, I guess if you consider them green jobs. 

Mr. STEARNS. Quickly, with regard to claims that the military 

needs to go green, are alternative energy sources necessarily better 

for our military today? 

Mr. KREUTZER. I think there’s a good bit of bait and switch going 

on in the national security fossil fuel debate. First of all, windmills 

don’t do anything to reduce the costs or the number of convoys—— 

Mr. STEARNS. You can’t run a Humvee with a windmill or with 

solar panels. 

Mr. KREUTZER. In addition, the biofuels have lower energy density and would require more convoys to take those fuels to the 

front. Third, we can provide securely petroleum from North America. We could provide two or three times as much petroleum as the 

whole Pentagon uses from the XL pipeline. 

Mr. STEARNS. OK. Well, I’ll just conclude. But, you know, we’re 

hearing austerity from the Department of Defense, and they’re cutting and planning sequestration. But adding the cost of alternative 

fuel, isn’t this a drag on the military and actually diverting funds 

that they could use for our national defense that they are using instead for these alternative fuels? 

Mr. KREUTZER. Yes. And I am absolutely sympathetic to provide 

as much security for the men and women fighting as possible. But 

cloaking, you know, cloaking green jobs—excuse me, green energy—in their heroism I think is a disservice. 

Mr. STEARNS. My time has expired. The gentlelady from Colorado 

is recognized. 

Ms. DEGETTE. Thank you so much, Mr. Chairman. Mr. Breen, I 

appreciated your testimony a lot, and one of the places I went on 

my green energy tour last week in Denver was I went to the Veterans Green Jobs office, which is a national—you’re shaking your 

head. You probably know about that. It’s a national nonprofit designed to help place veterans in green jobs. 

And their business plan shows that they are going to have placed 

600 veterans in these jobs by next year, weatherization jobs as well 

as in high-tech industry. So, they are doing something practical for 

veterans. 

I was a little bit offended, I’ll be honest, by the statement that 

was just made by Dr. Kreutzer about windmills can’t power 

tanks—— 

Mr. STEARNS. Humvees. 

Ms. DEGETTE. I’m sorry, Humvees. And I’m wondering, Mr. 

Breen, if you can just briefly say what you mean, very briefly, that 

it’s in America’s interest to move towards alternative energy. Did 

you mean something as shallow as windmills can’t power 

Humvees? 

Mr. BREEN. Of course not. 

Ms. DEGETTE. What did you mean, Mr. Breen? 

Mr. BREEN. We have two very linked problems in the national security space. One is a dependence on petroleum as a single source 

101 

of fuel for virtually every platform that we use. It’s from Naval to 

ground base. And again, I think there’s a lot of apples to oranges 

comparisons going on in the analysis. Nobody is talking about moving Navy biofuels to a forward operating base. The Navy doesn’t 

have any forward operating bases; let’s be clear on that. 

Second, we have the problem of climate change, an acknowledged 

national security threat of climate change. And taking action on 

that, certainly wind, solar, other technologies, that allow us to use 

our resources cleanly have a lot to do with that. But climate change 

is not the sole reason that, for example, the Air Force is moving 

many of its installations to wind and solar. They want to be able 

to continue military operations if they’re cut off from the civilian 

grid for a variety of reasons, many of which are plausible, such as 

a Chinese cyber attack on the grid, which any cyber expert will tell 

you is more than possible. 

Ms. DEGETTE. Thank you. 

I have a couple of other questions. And I agree with what a lot 

of our witnesses said about the fact that the sole reason for the 

government to invest in any energy policy, including clean energy 

and renewable, is to develop renewable energy. 

Job creation should be a tertiary benefit. It should be the primary benefit. It should flow from this policy to move us away from 

foreign fuels and into domestically developed fuel. 

So I want to ask—first of all, I want to ask you, Dr. Sherlock, 

you talked about the statistics, and I think it is an interesting 

point about would the jobs have been there anyway. 

I want to ask you about if you have reviewed the tax credits related to oil and gas, if those same principles apply about job creation from oil and gas industry tax breaks. 

Ms. SHERLOCK. If the market prices are going to be the motivating factor generating investment in oil and gas resources, then 

that may be the factor driving jobs rather than the tax incentives. 

Ms. DEGETTE. OK. So just because you are giving tax incentives 

to the oil and gas industry doesn’t mean that is necessarily what 

is creating jobs, correct? 

Ms. SHERLOCK. The same holds for those industries. 

Ms. DEGETTE. Right. OK. So that is true for any energy tax credit, right? 

Ms. SHERLOCK. Yes. 

Ms. DEGETTE. OK. Now, I want to ask a couple of questions 

about the government role in energy production in general, both 

from the standpoint of green energy and oil and gas. Several of the 

witnesses have been critical of the job estimates from the section 

1603 renewable energy grant program. So I just want to take a 

step back. 

Mr. Green, do you support any Federal role in supporting green 

and renewable energy, yes or no? 

Mr. GREEN. Yes. 

Ms. DEGETTE. Yes. OK, Mr. Kreutzer? Dr. Kreutzer, excuse me. 

Mr. KREUTZER. No. 

Ms. DEGETTE. No. Dr. Montgomery, yes or no? 

Mr. MONTGOMERY. Yes, on R&D and no on production. 

Ms. DEGETTE. Thank you. And Mr. Breen? 

Mr. BREEN. Yes, of course. 

102 

Ms. DEGETTE. Now, let me turn to oil and gas subsidies. Ms. 

Sherlock—I am about to ask her. 

Ms. Sherlock, your testimony describes the subsidies and tax 

credits that go to traditional fossil fuels. What is the annual value 

of those tax credits? Do you know? 

Ms. SHERLOCK. It depends which incentives are being included, 

whether you are including things like the section 199 deduction 

that’s assigned. 

Ms. DEGETTE. My staff says it was about $2.4 billion in 2010. 

Does that sound about right? 

Ms. SHERLOCK. Yes. 

Ms. DEGETTE. Now, Dr. Green, do you support those tax credits 

and tax breaks for oil and gas, yes or no? 

Mr. GREEN. I am on record repeatedly as opposing all genuine 

subsidies. 

Ms. DEGETTE. So your answer is no. 

Mr. GREEN. No. 

Ms. DEGETTE. Dr. Kreutzer? 

Mr. KREUTZER. This is ‘‘have you stopped beating your wife’’ sort 

of question so I can’t give you yes or no. 

Ms. DEGETTE. Well, do you support the tax credits and tax 

breaks for oil and gas? You said you don’t support them for renewable fuels. Do you support them for oil and gas? 

Mr. KREUTZER. The one that you’re talking about for oil and gas 

applies to renewables. 

Ms. DEGETTE. Yes or no? 

Mr. GREEN. I don’t support genuine subsidies. I don’t call the 199 

a subsidy. 

Ms. DEGETTE. OK. Dr. Montgomery, yes or no? 

Mr. MONTGOMERY. Again, it’s not a question that can be answered yes or no. It’s highly oversimplified and I can’t—— 

Ms. DEGETTE. So you can give a clear answer for the renewables 

but not for the oil and gas, correct? 

Mr. MONTGOMERY. I did give a clear answer that for the renewables I support R&D and the production subsidies. 

Ms. DEGETTE. OK. Let me ask about one more thing. The section 

263(c) tax deduction is a deduction for intangible drilling costs. 

This subsidy allows oil producers to deduct business costs like fuel 

repairs and drilling supplies and then, rather than taking them 

over the life of the investment, oil companies can claim them in the 

first year. 

Dr. Kreutzer, do you support that tax break for oil companies, 

yes or no? 

Mr. KREUTZER. We are in favor of having everything expensed for 

everybody. 

Ms. DEGETTE. OK. So your answer would be no because it is in 

one year. 

Mr. KREUTZER. No, we’re in favor of—yes, we want that and we 

would like to have those. 

Ms. DEGETTE. Dr. Montgomery—Mr. Chairman, you spent a 

minute and 30 seconds. 

Mr. STEARNS. It is the prerogative of the chairman, and I am the 

chair. 

Ms. DEGETTE. Oh, you are going to cut me off sooner? 

103 

Mr. STEARNS. Well, you have had a minute and a half over, OK? 

You are finished. 

All right, Dr. Burgess, you’re recognized. 

Mr. BURGESS. This is a fascinating exchange. I was willing to let 

it continue for a while. 

Ms. DEGETTE. The chairman didn’t want it to. 

Mr. BURGESS. Well, can I just ask a question on the intangible 

drilling costs. I mean, there are other industries that are able to 

deduct the costs of inputs; is that not correct? Dr. Kreutzer. 

Mr. KREUTZER. Yes. The question is whether it’s a capital expense or a, you know, a continuing expense that you would have. 

And I think that distinction is not a helpful one to make, and I 

think it would be better if our whole Tax Code simply had expensing for every dollar that a company spent this year they get to deduct from their revenues before taxes are calculated. 

Mr. BURGESS. Well, let me just go on record as being in agreement with you, and I hope fundamental tax reform is undertaken 

by this Congress in the next term, that we seriously address that, 

because I think it is a serious shortcoming of the Tax Code we have 

now, and we wouldn’t even be having this discussion if it didn’t 

seem like the Federal Government, both Republican and Democrat 

administrations, were trying to pick winners and losers using the 

Tax Code. 

Dr. Kreutzer, you mentioned in an answer to a question about 

the job creation side of the ledger. You also referenced right at the 

end of your answer to that question that it was offset by job losses 

and other parts of the economy. Could you elaborate on that? 

Mr. KREUTZER. Sure. When you take money to spend in one part 

of the economy, it has to come out of somebody else’s pockets. If 

it’s taxed, you take it from taxpayers today; if it’s borrowed, you 

take it from lenders today, and then taxpayers later when you pay 

it off. And the money that the taxpayers are not spending because 

they have to provide the subsidies is money that is not going to be 

creating jobs as the grocers and the butchers and so on that they 

would have created had they had kept the money themselves. 

Mr. BURGESS. And do you have a sense as to the—a number? We 

have been talking today about numbers of jobs created, destroyed, 

enhanced, supported. Do you have a sense of the numbers. 

Mr. KREUTZER. We at Heritage have not done a comprehensive 

study of these green jobs, so I couldn’t give you a number on that. 

We have looked at cap and trade bills in the past where the net 

impact is hundreds of thousands of jobs lost on net. 

Mr. BURGESS. Dr. Green, did you have something you wanted to 

add to that? 

Mr. GREEN. Yes. If you look at the countries where they have 

studied the question, the estimates range between roughly two and 

seven. They cluster in such a way, using different economic models 

suggest that is probably—— 

Mr. BURGESS. Wait a minute. Could you expand a little bit on 

the numbers two and seven? 

Mr. GREEN. Sure. Well, if you look at, as I said in my testimony, 

if you look at Spain and you simply add up—these are not terribly 

complicated, don’t misunderstand. If you simply add up what was 

spent and how many jobs were created by the government’s own 

104 

accounting, and you ask how many private sector jobs that same 

amount of money would have supported in the rest of the economy, 

it is a simple and relatively straightforward division. And Spain 

found, in a study in Spain, it was found that for every green job 

that was created, it cost so much that two jobs, 2.2 jobs were foregone in the rest of the economy. That is, it sucked up the money 

that would have paid for two jobs and only made one. And in Italy 

the number was even higher. In Italy the numbers ranged from 

five to seven jobs, because it was particularly expensive to create 

green jobs in Italy, especially wind jobs. And in the United Kingdom, they found that one green job cost as much to make as 3.7 

jobs. So it’s somewhere between two jobs and probably five jobs. 

Mr. BURGESS. So the green jobs program is in fact a job sink 

which is pulling jobs out of the broader economy? 

Mr. GREEN. Yes, that is correct. 

Mr. BURGESS. Let me ask you a question because you referenced 

the that government doesn’t have a place as being a venture capitalist. This committee had a hearing with Jeffrey Zientz and Jonathan Silver. Jonathan Silver was a deputy secretary at the Department of Energy, and Jeffrey Zientz was with—is now the acting director of Office of Management and Budget, but at the time was 

deputy director of the Office of Management and Budget. And Jeffrey Zeintz, I asked him a question about was it OK that 

Solyndra—at this point Solyndra had just filed its initial bankruptcy filing—and was this a good investment of taxpayer dollars? 

And he was very dismissive of the notion and said, any venture 

capitalist can tell you that sometimes you are going to lose on one 

of these bets. And my counter to him was, but we, the government, 

should not be in the business of venture capitalism because if 

someone loses an investment with a venture capitalist, that is an 

investment that they voluntarily put forward and money that they 

felt they could put at risk. We are now talking about taxpayer dollars in the case of Solyndra, money literally take at the tip of a 

spear from taxpayers under threat of force from the IRS, and we 

invested it in something which really had no hope of ever returning 

on equity. 

Do you have any feelings about that? 

Mr. GREEN. Well yes. You’re exactly spot on, which is the key difference between a private venture capitalist and a government venture capitalist is that the private venture capitalist loses their own 

money and/or money people have entrusted to them and therefore 

they take the consequence. When the government engages in venture capitalism the bureaucrats at the Department of Energy, for 

instance, who are giving out the money, are not losing their own 

money, they’re not using their friends’ money or their investors’ 

money, they’re losing taxpayer money, and there’s no market consequence for them. It is not that people are going to say, ‘‘Wow, you 

pretty much suck at investing, I’m not going to put my money with 

you anymore.’’ Instead, they just go for another round. And so the 

problem is one of incentives and responsibility. 

I wanted to quickly just comment on something Dr. Kreutzer 

said, and that my position I think was misinterpreted on R&D. I 

do believe in basic R&D as a legitimate role of government. GenVerDate Aug 31 2005 10:10 Aug 12, 2013 Jkt 037690 PO 00000 Frm 00108 Fmt 6633 Sfmt 6633 F:\112-15~3\112-15~1 WAYNE
105 

uine subsidies I am against. That is, special treatment I’m against. 

Uniform tax treatment, I’m for. Thank you. 

Mr. STEARNS. The gentleman’s time has expired. 

The gentlelady from Illinois is recognized for 5 minutes. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

The ranking member was asking a question that only Dr. 

Kreutzer had answered. So let me ask Dr.—Mr. Montgomery and 

Mr. Green. It was referring to section 193 tax deduction for tertiary 

well injectants for oil wells and whether or not you support those. 

So, Mr. Montgomery? Dr. Montgomery. Sorry. 

Mr. MONTGOMERY. Thank you. I was hoping to have a chance to 

answer that question. I think I have been quite clear in testimony 

and in presentations at various workshops that it’s my conclusion 

that any subsidy which tilts the playing field in favor of one form 

of energy versus another is bad energy policy and an excessively 

costly way of achieving the goals of energy security, environmental 

protection or—— 

Ms. SCHAKOWSKY. So, no. 

Mr. MONTGOMERY. On the other hand, the Tax Code is very complex. And the simple fact that one particular provision of the Tax 

Code allows an entity to pay less tax than they would have if 

they’re a different provision is one that requires quite detailed 

analysis to figure out whether it’s a subsidy, and I have not done 

that on this provision. 

Ms. SCHAKOWSKY. It is just really interesting to me how the witnesses of the majority have called are very certain when it comes 

to how ill-advised it is to subsidize clean energy, green energy, but 

not so clear when it comes to oil and gas. 

Dr. Green. 

Mr. MONTGOMERY. I’m sorry. I think you’re misstating my testimony. I said that I am opposed to subsidizing—— 

Ms. SCHAKOWSKY. I know. But you haven’t figured this one out. 

Dr. Green. 

Mr. GREEN. Well, I have three degrees. None are in tax preparation. I am not an expert on the Tax Code so I can’t testify in any 

way to the benefit of one or another—— 

Ms. SCHAKOWSKY. But aren’t you talking about that? Isn’t that 

exactly why you are here, to talk about the subsidies? 

Mr. GREEN. In my testimony I spoke about principles, economic 

principles, as to why can we not be certain about a single tax provision? 

Well, I can be fairly certain about very large things, like if I step 

off of a cliff, I’m going to fall downward. The individual Tax Codes 

are not an area in which—— 

Ms. SCHAKOWSKY. No, no. You listed all of the problems with the 

investments in clean energy, and you seemed very certain about all 

of those. 

Let me go on to another question. In general then, section 613 

tax deduction for, quote, percentage depletion of oil and gas wells. 

Dr. Kreutzer? 

Mr. KREUTZER. Yes. I’m not sure that I’ve looked at all of that 

but I think we would be opposed to that. 

Ms. SCHAKOWSKY. And Dr. Montgomery? 

106 

Mr. MONTGOMERY. Yes, I think that the percentage depletion actually has very little effect on oil production because it’s so limited 

in its scope and who can claim it. 

Ms. SCHAKOWSKY. So is that a no? You don’t support that tax deduction? 

Mr. MONTGOMERY. I don’t think it’s providing any particular benefit. 

Ms. SCHAKOWSKY. And Dr. Green? 

Mr. GREEN. If it’s a unique subsidy that distorts the market and 

unlevels the playing field, I oppose it. 

Ms. SCHAKOWSKY. I see. And I am sure you are aware that since 

1918 we have been giving subsidies to the oil and gas industry. So 

the history of the United States of America actually making investments in gas and oil, not a new thing. We’ve been doing it for a 

lot of years, and I don’t know if the American Enterprise Institute 

and the Heritage Foundation have opposed those. 

I wanted to ask, Mr. Breen, in your testimony, you talk about a 

2007 study that found strong and surprising intersection between 

the two great security threats of the day: climate change and international terrorism waged by Islamic extremists. Dr. Kreutzer said 

that was somehow a disservice. I wonder how a reliance on oil and 

natural gas benefits these groups and does threaten our national 

security. 

Mr. BREEN. Sure. Thank you. First let me say it’s hard for me 

to understand, leading a coalition of over a thousand Iraq and Afghanistan combat veterans, how we’re cloaking our arguments in 

anything. Frankly, that was strange. 

On the point that you make, the study was conducted by the 

Center for Strategic and International Studies and the Center for 

New American Security, and it found in the most—it basically did 

three different sets of projections from the most conservative climate projection to the most aggressive possible, it found all three 

had very serious national security consequences. 

The link that it found between terrorism, essentially Islamic or 

otherwise, and climate was twofold. First it found that the solution 

to both of those problems was highly linked to our national energy 

policy, which I think is very germane to this hearing. Second, it 

found that climate change was extremely likely, overwhelmingly 

likely in some cases, to act as an accelerant of terrorism. 

For example, climate change causes and accelerates certain natural phenomenon like drought, flooding, famine, pandemic disease. 

All of these things create the conditions of desperation that are 

necessary for terrorist recruitment. For example, after recent flooding in Pakistan, we saw a threefold rise in al-Qaeda’s recruiting 

numbers out of that region. So anytime that you’ve got people who 

are making their living off the land in a very marginal way and 

that living is disrupted, terrorist recruitment tends to go up. 

Ms. SCHAKOWSKY. Thank you. I yield back. 

Mr. STEARNS. The gentlelady from Tennessee is recognized for 5 

minutes. 

Mrs. BLACKBURN. Thank you. And I want to stay with Mr. Breen 

and the national security issue if I can, because I think that looking at our energy security, economic security, national security, is 

something that is vitally important, and I know that you all are 

107 

doing a little bit of work trying to delve into that. So let me you 

about this, and this follows right on to the question Ms. 

Schakowsky had asked you. 

The EPA and their war on coal, is that making this Nation more 

or less secure? 

Mr. BREEN. I’m sorry. I don’t know what you’re referring to when 

you’re talking about the war on coal. 

Mrs. BLACKBURN. Oh, you don’t—— 

Mr. BREEN. I am afraid I don’t, no. 

Mrs. BLACKBURN. Well, the EPA is seemingly developing policies 

that are against all things coal. Now, there are many of us, like 

those of us from my region of the country, that feel clean coal technologies need to be used for electric power generation. So if you 

take coal out, does that make our Nation more or less secure, and 

should coal be a part of an all-of-the-above energy policy for our 

country? 

Mr. BREEN. As we like to say, that there is no single technological solution. There is no silver bullet to solve the climate problem or the energy dependence problem when it comes to transportation fuels. It’s really a silver buckshot solution, if you’ll forgive 

the analogy. So what that means is that—— 

Mrs. BLACKBURN. I appreciate the analogy because I do understand buckshot. 

Mr. BREEN. I’m sure you do. 

Mrs. BLACKBURN. You go right ahead. Those of us in Tennessee 

get that. 

Mr. BREEN. Yes. Sure. Didn’t mean to imply that you didn’t. As 

a lifelong hunter, I certainly do as well. 

Mrs. BLACKBURN. Yes. 

Mr. BREEN. My point being that we support any mix of technologies that sufficiently reduces carbon emissions so that it’s clean 

and that it’s safe. If clean coal meets that standard, great. I’m not 

an expert in whether or not clean coal does meet that standard. 

Mrs. BLACKBURN. What about natural gas? 

Mr. BREEN. Again, if natural gas meets that low carbon standard 

and is safe, sure. But I would refer you to experts who can tell you 

whether or not it does meet that using a life-cycle analysis. 

Mrs. BLACKBURN. Let’s ask some of the experts that are on the 

panel. Would anyone else like to weight in on this, EPA and their 

battle against coal? Go ahead. 

Mr. KREUTZER. It certainly doesn’t make us more energy secure 

to ignore the energy source that we have in greatest abundance, 

which we do not need to import as we export it. 

Mr. GREEN. I think it’s increasingly obvious that the word 

‘‘green’’ here in this case really only means low carbon. Therefore, 

the agenda is one of purely decarbonization and climate change, 

not really of energy security, not really of air pollution, because if 

it were about air pollution or just clean energy, you would have 

uniform support for things like diverse nuclear power, natural gas, 

and so forth. 

And so to repeat what Dr. Kreutzer said, affordability being a 

critical part of keeping our economy going, which is how we fund 

our military, which is how we stay secure in a world that is that 

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tion and use in the United States and that does not make us more 

secure. 

Mr. MONTGOMERY. I guess I would make two observations if I 

could. The first is that it’s by no means clear to me that anything 

the United States does to reduce its greenhouse gas emissions is 

going to actually deal with any of the problems that Mr. Green is 

talking about because of the immense growth of emissions from 

other parts of the world that we don’t control. 

The second part is that if we cared about climate change, what 

we would be doing is discussing a way of putting a price on carbon 

dioxide or putting overall limit on greenhouse gas emissions from 

all sources. We would not be discussing a mixed bag of uneven and 

largely ineffective subsidies for different kinds of favored energy 

that can get votes. 

Mrs. BLACKBURN. I appreciate that. 

Dr. Kreutzer, let me come to you. Let’s talk about jobs, because 

I look at what has happened with this global warming agenda that 

we have had in front of us, and a couple of other members and I 

that are on the dais were over in Copenhagen for that climate summit a couple of years ago. And you just have to wonder what’s 

going on when it comes to jobs, and I know you all have touched 

on that. 

So when you look at this, this administration’s global warming 

agenda and you get to the end of it, would you say it is a net job 

creator or a net job destroyer; and the EPA, their regulations as 

you look at this and study the issue, do you see it on net as a job 

creator or job destroyer? 

Mr. KREUTZER. No. It was not on net a job creator and it’s not 

just the Heritage Foundation that would come to that conclusion. 

We had a panel at Heritage that included economists from the 

Brookings Institution, the Congressional Budget Office and the Environmental Protection Agency back when we were looking at the 

cap-and-trade legislation. None of them found that cap-and-trade 

legislation stimulated the economy. The argument was over how 

much it costs the economy, and there was disagreement on that. 

But no, no serious economists really looked at restricting carbon 

and energy as a job creator. 

Mr. STEARNS. The gentlelady’s time has expired. Mr. Scalise is 

recognized for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. I appreciate you having 

this hearing. Appreciate the panelists for being here. I want to 

start, Mr. Breen, with you. In your statement, you opened by saying it is an established consensus in the defense community that 

our dependence on oil threatens our national security. I’ve heard 

many people in the Defense Department, and I’d agree with them, 

frankly, that our dependence on Middle Eastern oil specifically is 

a threat to our national security. I have heard of no established 

consensus that our dependence on oil is a threat to our national security. Do you have any data that backs this up, that creates this 

established consensus you refer to? 

Mr. BREEN. I rely on the statements of the Secretary of Defense, 

the Chairman of the Joint Chiefs of Staff, and all three service secretaries when I say ‘‘established consensus.’’ 

109 

Mr. SCALISE. I have heard many of them express their concern 

about foreign oil, and I’d make it even more specific to Middle 

Eastern oil, but frankly, I would imagine if you asked the Secretary 

of Defense to count how many billions of dollars that American energy production actually yields to the Federal Treasury to pay for 

our national security to fund the Department of Defense, I hope 

you are not suggesting that if we just shut down our oil manufacturing in the United States that that would be a good thing for our 

national security. Is that what you are saying? 

Mr. BREEN. No, of course not. I’m not saying that the use of oil— 

and I want to be very clear on this point. I’m not saying the use 

of oil is in any way bad for our national security. What I’m saying, 

sir, is dependence on a single source of fuel is a threat. 

Mr. SCALISE. Well, nobody is talking about—I support an all-ofthe-above energy strategy which says that you don’t just depend on 

oil but you absolutely explore for oil, you explore for natural gas, 

you advance coal, you advance nuclear, you advance wind, you advance solar. You do all of the above. But I would hope that you 

would recognize that American energy production is really the key 

to energy independence in this country, and the fact that so many 

areas of American known reserves and even potential reserves are 

shut off by Federal policy, a threat to our national security. 

That’s why I was asking. You say that there is an established 

consensus. That would imply that you’ve got some kind of data to 

back that up and if you do, please get it to me. When I hear people 

talking about concerns and threats to our national security, it’s 

things like Middle Eastern oil dependency that is a real problem. 

But the fact that we produce energy, oil, natural gas and others in 

this country, I haven’t heard anybody in the Defense Department 

implying there is a consensus to the problem because it actually 

funds our national security. 

Mr. BREEN. Sure. As I said, this is a silver buckshot problem, 

first of all. Nobody is suggesting that oil is not part of the solution. 

Mr. SCALISE. No, but your statement is not targeted towards foreign oil. If we open up Keystone tomorrow, which I would hope we 

would do—unfortunately, President Obama chose a radical approach to saying no—but if we opened up Keystone tomorrow, that 

is a million barrels a day we would be getting from a friend that 

we wouldn’t have to be getting from some of these countries that 

don’t like us. I think that would advance our energy security. But 

your statement actually implies the opposite. 

Mr. BREEN. Can I respond to that, sir? 

Mr. SCALISE. Well, do you have any data? I’m looking for data. 

I mean, you are making a statement that there is an established 

consensus about an area that you really haven’t supplied any information to back up. 

Mr. BREEN. There’s data in my submitted written testimony. A 

$10 increase in a barrel of oil costs the Department of Defense an 

estimated $1.3 billion. That’s because oil is a globally—it is because 

it is a globally traded commodity. And so you ask—— 

Mr. SCALISE. My time is running out. I hope you recognize that 

if we produced more of that in America, that would be billions 

more. It would not only mean millions more American jobs, which 

I think is a good thing, some people don’t, but it would also be bilVerDate Aug 31 2005 10:10 Aug 12, 2013 Jkt 037690 PO 00000 Frm 00113 Fmt 6633 Sfmt 6633 F:\112-15~3\112-15~1 WAYNE
110 

lions more dollars that would come into the Federal Treasury that 

would help fund an adequate Department of Defense. That’s money 

that funds our national security. And maybe you don’t see it that 

way. 

I want to ask Dr. Kreutzer, because in your testimony you talk 

about and highlight some of these green energy programs. And I 

know you had talked with Dr. Burgess and others about this loose 

definition of a green job which really is very nebulous at best. But 

you talk about the loan program specifically, and we have had 

hearings in this subcommittee on the Department of Energy’s loan 

program. The director, Dr. David Frantz, has testified. And you 

talk about some of the highlights that the administration has used, 

and there were four in particular that David Frantz had listed. 

And of course, we have all heard about Solyndra, $535 million just 

gone, company went bankrupt. The President said, ‘‘The future is 

Solyndra.’’ 

Mr. KREUTZER. Right. 

Mr. SCALISE. I guess that means he thinks the future is bankruptcy and lost jobs. I sure think we should go a different route. 

But you also go further and talk about Beacon Power, First Wind 

Holdings, Nevada Geothermal. Do you want to expand on what you 

have seen in terms of what you’ve seen that the administration 

highlights as successes in the green energy sector? 

Mr. GREEN. The markets are always seeking out cheaper, more 

effective forms of energy and things that they can make money on. 

If somebody requires a subsidy, that is a pretty good signal that 

they couldn’t make money in the market. And we saw that played 

out. The loan administrator had two criteria that were required to 

get that 1603 loan. And that first one is—not the 1603 but the 

1705. You had to be able to prove you couldn’t get private financing 

and you had to have a market-viable project. Those are mutually 

exclusive. And we saw that play out. 

He gave—this was 2 years ago. The four examples he gave were 

before anybody had gone into—had trouble, were Solyndra, Beacon 

Power, both of whom have gone bankrupt since then. Nevada Geothermal is having trouble. Their stock price is at 4 cents per share. 

And I apologize, I don’t have the fourth one in front of me. 

Mr. SCALISE. First Wind Holdings. 

Mr. GREEN. First Wind Holdings. After they got the loan, they 

had to—they tried to have an initial public offering. But they had 

to withdraw it because of the problems. 

Mr. SCALISE. Appreciate that. Thanks, I yield back, Mr. Chairman. 

Mr. STEARNS. Your time has expired. 

The gentleman from Texas, Mr. Green, is recognized for 5 minutes. 

Mr. GREEN OF TEXAS. Thank you, Mr. Chairman. Sorry I wasn’t 

here. We have an energy subcommittee going on downstairs that 

also has interest in green jobs. I appreciate the opportunity to ask 

questions. 

My district in Houston is the largest petrochemical complex in 

the country, in the center of the world, our Nation’s energy sector. 

Many of the energy companies, both large and small, have invested 

heavily in green technology and renewable energy. Houston is now 

111 

the home of nearly 40,000 green jobs, even though we have a huge 

number of refinery jobs. We have five refineries in our district and 

at least 20 chemical plants. So we are not complaining about whatever color job they have, whether they are green or not. 

Dr. Sherlock, can you speak to the possible consequences of the 

Federal Government’s inconsistent and on-and-off-again support for 

green and renewable energy over the past two decades. 

Ms. SHERLOCK. Especially in industries that have faced expiring 

incentives or incentives have lapsed and then they’ve retroactively 

reinstated, it’s hard to plan, it’s hard to invest. It’s hard to secure 

financing when you just don’t have certainty about what incentives 

are going to be available going forward. 

Mr. GREEN OF TEXAS. Let me give you a benefit, having served 

on this committee for a good while. A lot of the things that were 

part of the Recovery Act were just building on the 2005 energy bill 

or energy law that was passed by a Republican Congress and Republican President. And that is what I am concerned about, the 

stop and start. We actually started some of that. 

In fact, I heard coming in, the testimony—Solyndra—that was 

authorized, those loans were authorized under the 2005 energy 

law. And so granted, there was a bad investment. We should have 

done better, but there are other things that we could be doing. 

Do you believe that looming expiration of the tax credits being 

discussed at this hearing will create uncertainty in the private sector and keep these very companies, some of them in my district, 

from further investing in new technology and creating these jobs? 

Ms. SHERLOCK. Yes. With uncertainty about tax incentives, 

there’s reluctance to invest. 

Mr. GREEN OF TEXAS. Following my colleague from Louisiana, 

coming from our area where obviously we believe in domestic production, I want to ask some questions about national security implications of energy. We cannot continue to depend on hostile nations for a sizable amount of our energy needs, whether it be Iran, 

Venezuela, or some of them use these profits to build weapons and 

arsenals against us and our allies. 

Mr. Breen, how much money does America send overseas to pay 

for overseas energy sources every day? Do you have that information? 

Mr. BREEN. It’s roughly $1 billion a day. Of course it fluctuates 

as the market changes. 

Mr. GREEN OF TEXAS. Now, recently we’ve seen a reversal of importing domestic oil for lots of reasons. Obviously, we are doing better on conservation, which I think is part of whatever solution we 

should have. But we are also producing more domestic energy, and 

particularly liquids that we can use in transportation fuel. Do you 

believe that increasing our domestic energy production would reduce these costs? 

Mr. BREEN. I think increasing our domestic energy production is 

all to the good and would. But let’s remember that this is a globally 

traded commodity we’re talking about. The U.S. demand has been 

static for quite some time, on the very high, but that global demand continues to rise. So I think it’s unrealistic looking down the 

road to think we are going to see lowering oil prices anytime soon. 

112 

Mr. GREEN OF TEXAS. Well, we have seen lowering oil prices in 

the last few weeks and for a number of reasons. Like you said, it’s 

a world price, and I can tell people if I drilled a well in my backyard, believe me, I’d want to have the world price on oil. So in 

Texas, I guess a lot of my fellow Texans can say that. They just 

don’t let me drill in my neighborhood. 

Can you summarize for us ways in which developing and using 

more domestic and renewable energy sources could improve our national security? 

Mr. BREEN. Sure. There are several, and this varies from the tactical all the way to the strategic. Strategically, it comes down to 

cost as the point has been made here a couple of times. Our economic prosperity and the amount of money we spend on defense is 

the underpinning of our national security, right, these things cost 

money. As you see increasing volatility in the oil market, as you 

see prices in the long term I think rise and continuing to rise predictably, having alternative sources for the Department of Defense, 

which is the number one fuel user in the Federal Government, is 

all to the good and developing advanced technologies is all to the 

good. 

Some of these technologies have tactical applications. At the tactical level, there was some mention made earlier of forward operating bases in biofuels, which is a bit of an apples-to-oranges comparison. But at the tactical level we’ve seen the highly successful 

use, under battlefield conditions, of wind and solar projects that 

are designed to keep tactical forward operating bases free from the 

need to resupply generators for fuel. So these have direct battlefield implications. Down to the point of a backpack solar panel that 

India Company, part of the Fifth Marine Corps, is currently using 

in Afghanistan to great effect. 

Mr. GREEN OF TEXAS. OK. Our dependence on energy from hostile nations has dangerous implications for our Nation’s security. It 

makes economic, environmental, and national security sense to 

transition away from these nations and develop newer, smarter, 

and domestic sources of energy, like you said, that helps our military. And I know I only have 3 seconds left. So, Mr. Chairman, 

thank you. 

Mr. BURGESS [presiding]. The gentleman yields back. 

I recognize the other gentleman from Texas, Mr. Barton, the 

chairman emeritus of the committee. 

Mr. BARTON. Thank you, Mr. Chairman. I didn’t—wasn’t here at 

the beginning. I was downstairs on the greenhouse gas hearing in 

the energy subcommittee. So I have scanned the testimony, but I 

have missed the oral questioning so far. So if I ask something that 

is redundant, I want to apologize. 

My first question would be a general question. Do we have an 

agreed-upon definition of what a green job is? I see a lot of shakes 

of head. 

Mr. GREEN. Not that any of us have heard a coherent definition 

of green jobs. Of course it’s very difficult to define a green product 

or a green thing. To do a life-cycle analysis even on a foam cup 

would be tricky. To do it on a person’s job would be impossible. 

Mr. BARTON. Let me give you some examples and you tell me if 

this is a green job. If a farmer grows corn for food 1 year, and the 

113 

next year he on that same land and the same acreage, he grows 

the same crop of corn but he grows it for ethanol, is that a green 

job? 

Mr. KREUTZER. I have no idea. 

Mr. GREEN. I would say it’s probably anti-green, given the effect 

ethanol has. 

Mr. BARTON. All right. What if the farmer the next year switches 

from corn to cotton for fiber. Or a cotton farmer switches to corn. 

Is that a green job? 

Mr. KREUTZER. Yes, I think you’re getting straight to the point 

that it’s very difficult to define, and it is not clear that it is a useful 

exercise in the first place. 

Mr. BARTON. If a truck driver is driving a truck that runs on diesel, and that truck switches from diesel to natural gas, is that a 

green job? 

Mr. GREEN. I think green job proponents would say yes, but only 

because it has a lower carbon footprint. 

Mr. BARTON. OK. What about a logger who cuts down trees in 

the forest and that’s all—he’s always done that. Is that a green job? 

Mr. KREUTZER. Surprisingly, a large fraction of logging jobs, according to the BLS, are considered green. I don’t know that I would 

consider it green. 

Mr. BARTON. So we don’t, we don’t really have a definition of 

what a green job is. I mean, a commodity trader who is trading in 

green energy credits, for global warming credits in the European 

market, would that be a green job? Credits that don’t exist, that 

actually—you know, trees not planted in India or power plants 

not—you know, coal plants not built in India so they take credit 

on the market. 

Mr. KREUTZER. Yes. I am certainly not going to defend that as 

a green job, and I don’t think the BLS looked at any jobs in the 

financial sector as being green. 

Mr. BARTON. OK. Well, I just—when I was briefed on this hearing, it struck me there is such a thing as a green job. I mean, you 

know, if you switch from a source that uses a lot of energy to a 

source that uses less energy, you know, I certainly think somebody 

going to work in a solar factory that didn’t exist, if the solar factory 

stays in business and actually produces solar panels that are sold 

and used, I would say that would be a green job. 

I think somebody working in the wind energy sector that didn’t 

exist, that actually generates electricity that’s actually used, I 

think that is a green job. So I do think there is such a thing, and 

I do think you can create green jobs. But I also think there is also 

a lot of mythology and double-counting about what green jobs are. 

Is there a better way for the Federal Government to create green 

jobs in some of the programs that we talked about today? And if 

so, what would that way be? I will ask Mr. Montgomery that question. 

Mr. MONTGOMERY. Thank you. Yes, I think there clearly is, and 

it’s to focus on what we are trying to accomplish with our energy 

and environmental policies. If what we care about is greenhouse 

gas emissions, the way to deal with that is by addressing greenhouse gas emissions, and the way to determine what we are doing 

is by doing an inventory of our greenhouse gas emissions. We don’t 

114 

learn anything about greenhouse gas policy by trying to calculate 

the number of jobs that are being created by it. 

Likewise, if our objective is to deal with mercury, what we—you 

know, our policy to—you know, if we want to, if we want to create 

green jobs reducing the amount of mercury that’s being released 

into the atmosphere, then our policy needs to address mercury. It 

needs to address it broadly and evenhandedly, not by picking out 

the smallest source and regulating it into nonexistence. And it 

doesn’t matter how many people are involved in doing that—actually it does matter, because the more people it takes to do it, the 

more it costs us, and the less they can do that’s actually producing 

goods and services that people want to consume. 

So I think if we want to create green jobs, if we want to create 

the number of green jobs that is consistent with maximizing the 

economic welfare of the country, we would stop counting them completely and we would focus our policy attention on solving the problems of energy security and environment in themselves. 

Mr. BARTON. I agree. My time has expired, Mr. Chairman. Let 

me just end up with this editorial note. I do think, however you define a green job, at some point in time it has to be a job that is 

sustainable in the marketplace with either no government assistance or minimal government assistance. If you can’t meet that definition over time, then it is not a job at all and shouldn’t be counted. 

With that, I yield back. 

Mr. BURGESS. I thank the chairman emeritus for his observation 

and editorial comments. 

I recognize the gentleman from Colorado, 5 minutes for questions. 

Mr. GARDNER. Thank you, Mr.Chairman, and thank you to the 

witnesses for being here today. 

Dr. Sherlock, I wanted to go back to this estimate of jobs supported and created by the section 1603 grant program that I believe you provided; is that correct? 

Ms. SHERLOCK. Yes. 

Mr. GARDNER. At the bottom it says Notes and it says, ‘‘potential 

jobs created by the section 1603 grant are calculated as 39 percent 

of the estimated jobs supported, as reported in the NREL Study. 

Induced jobs are not included in the potential job creation section 

as such estimates are less reliable than those presented for direct 

and indirect jobs. These figures are provided for illustrative purposes and may vary according to factors described in the text.’’ 

So you’ve got induced jobs, direct and indirect jobs, 39 percent of 

estimated jobs. What does this mean? 

Ms. SHERLOCK. It means that the numbers in the bottom half of 

the table are 39 percent of the numbers presented in the top half 

of the table. I did not provide the induced jobs in the bottom half 

of the table, just because it would be extrapolating an uncertainty 

that I believe was already very uncertain. 

Mr. GARDNER. Very uncertain in terms of the number of jobs created? 

Ms. SHERLOCK. Induced. Induced jobs. When you’re looking at 

jobs, direct jobs, and then extend the model to indirect jobs, and 

then to extend the model again to induced jobs, you’re just adding 

115 

additional variables, additional assumptions, additional degrees of 

uncertainty at each stage in the modeling process. 

Mr. GARDNER. So what is an induced job? 

Ms. SHERLOCK. So an induced job would be because the workers 

who are employed in construction of the solar facility or the wind 

farm go out and spend on groceries,and so because they’re spending 

more on groceries, the grocery store needs to hire more employees. 

So that would be— 

Mr. GARDNER. And so a direct job would be? 

Ms. SHERLOCK. The actual construction work itself. 

Mr. GARDNER. And an indirect job would be? 

Ms. SHERLOCK. The manufacture of the steel that goes into the 

facility. 

Mr. GARDNER. OK. And then this 1603 program, I believe you 

stated in your testimony that it cost $17 billion? 

Ms. SHERLOCK. That’s over the 5-year budget, so yes. 

Mr. GARDNER. So $17 billion 5-year budget, and so these 39 percent of the direct, indirect, and induced jobs cost how much a year? 

Ms. SHERLOCK. Well, this is only looking at jobs in the first couple years of the program, so this would be about 10 billion, roughly. 

Mr. GARDNER. So $10 billion for the first 2 years of the program? 

Ms. SHERLOCK. Roughly. 

Mr. GARDNER. To create 40,000 jobs. 

Ms. SHERLOCK. Depending on which number you’re looking at— 

if you’re looking at the induced, the direct, or the indirect. 

Mr. GARDNER. Which number should I look at? 

Ms. SHERLOCK. It depends what you want to be counting. Do you 

want to count the direct? 

Mr. GARDNER. How many jobs did the 1603 grant create? 

Ms. SHERLOCK. What type of jobs? 

Mr. GARDNER. Jobs. I just want to know how many jobs were created. 

Ms. SHERLOCK. If you’re looking at the direct jobs, this one estimate has direct jobs created at 3,666 in the construction phase and 

direct jobs created at 355. Direct jobs would just be the construction jobs and then the ongoing operations and maintenance jobs. 

But if you wanted to look at supporting jobs in other industries, 

then you’d want to look at the other figures. 

Mr. GARDNER. So for direct jobs, just if we look at the first few, 

this is average jobs per year. It is 355 jobs per year. In 2 years, 

355 jobs created a year, $10 billion? 

Ms. SHERLOCK. That would be jobs per year going forward. So 

these would be jobs that would be retained, average jobs per year 

going forward, yes. 

Mr. GARDNER. For $10 billion. 

Ms. SHERLOCK. Yes. 

Mr. GARDNER. Shifting gears and talking a little bit about some 

of the talk we have had on taxes—and Dr. Sherlock, I will leave 

you out of this. But Dr.Kreutzer, and I will go down the line, if I 

could get this answered, do you believe increasing taxes will result 

in lower costs of energy? 

Mr. KREUTZER. No. 

Mr. GARDNER. Dr. Montgomery. 

Mr. MONTGOMERY. That one I could answer ‘‘no.’’ 

116 

Mr. GARDNER. Dr. Green. 

Mr. GREEN. No. 

Mr. GARDNER. Mr. Breen. 

Mr. BREEN. You’d have to ask an economist. I’m sorry. That’s not 

why I’m here. 

Mr. GARDNER. OK. And then would ask another question about 

the President made a statement in 2008. As a matter of public policy, does it make—he made a statement in 2008 where he said 

under his plan—and he was specifically referring to cap-andtrade—electricity rates would necessarily skyrocket. Do we have— 

you know, we need for our economy to succeed for jobs to grow, we 

need lower cost energy; is that correct? 

Mr. KREUTZER. Yes. It grows better with lower cost energy. 

Mr. GARDNER. Dr. Montgomery. 

Mr. MONTGOMERY. The real growth in our economy is certainly 

dependent on the cost of producing energy. The less it costs to 

produce energy, the more we have left over for doing other things. 

Does it affect jobs? No. I think the best estimate is jobs are going 

to be at full employment in this economy most of the time when 

we are growing, except for temporary hiccups. None of these programs are going to affect that at all. 

Mr. GARDNER. Dr. Green. 

Mr. GREEN. Lower cost energy leads to lower cost goods and services, greater consumption, and therefore greater economic prosperity. And I don’t think there is anybody really who argues 

against that option, that notion. And then when the country is 

growing, of course, we have lower unemployment rates; therefore, 

there are more jobs. 

Mr. GARDNER. Mr. Breen. 

Mr. BREEN. Again, I am sure that at the Bureau of Labor and 

Statistics, there is somebody else you might have called who would 

have been happy to answer the question, but I can’t. 

Mr. GARDNER. So do policies that result in higher energy costs 

hurt the economy? 

Mr. KREUTZER. Yes. If we have policies that make energy costs 

go up, that does not—it makes it more expensive and we’re going 

to get fewer goods. 

Mr. GARDNER. Dr. Montgomery. 

Mr. MONTGOMERY. Not necessarily. It depends on how they do it, 

and I know your time is short. 

Mr. GARDNER. Dr. Green. 

Mr. GREEN. Well, we see this when oil prices spike up, the economy tends to contract. So clearly the relationship is there. Higher 

priced energy, lower economic output. 

Mr. GARDNER. Mr. Breen, I will give you another shot. 

Mr. BREEN. Same answer. 

Mr. GARDNER. Thank you. 

Mr. BURGESS. The gentleman’s time has expired. I think if it is 

OK with everyone, we have dwindled down on the dais here, but 

I would like to recognize Ranking Member DeGette for a follow-up 

question. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

So I just wanted to follow up on a couple of things. The first one 

is I really thought that Mr. Barton actually— too bad he’s not here. 

117 

I thought he made two good points. The first good point is that if 

you are going to create green jobs, they should be sustainable over 

time. Just like any other government support you are going to give 

to any program, whether it is in traditional fuels or anything else, 

it should be viewed as a start-up, not as over-time, say since 1918. 

But the second thing I think we need to figure out, and I think 

that Mr. Barton really made a good point about this, is that if we 

are going to be looking at these renewable energy programs and alternative energy as job creators, we really should kind of nail down 

the types of jobs. And, Dr. Sherlock, that is the point you are making is, we need to really nail down what types of jobs. And to that 

end, Mr. Chairman, maybe you can talk to Chairman Stearns 

about the concept of actually bringing in some of these agencies 

that are defining these jobs in these ways, like the Bureau of Labor 

Statistics and the other agencies, so they can explain to us. Rather 

than just criticizing this in a vacuum, we can find out why they 

are defining some of these jobs as green jobs and others as not 

green jobs. That’s my only suggestion. 

Mr. Breen, I just wanted to ask you, you were trying to answer 

Mr. Scalise’s question about domestic oil versus foreign oil, and did 

that make a difference in terms of our oil independence? And he 

didn’t really let you get your whole answer out, so I thought I’d 

give you this opportunity to complete your answer. 

Mr. BREEN. Thank you. I appreciate that very much. My answer 

is that the problem is one of single-source dependence. If you need 

a single—if you rely on a single globally traded commodity, and 

again, the foreign domestic distinction is somewhat—somewhat 

vacuous, right? This is a globally traded commodity. It, again, is 

dependent on a global market, right? Demand for that commodity 

is increasing faster than production. I think that is very clear. In 

some cases, dramatically faster than production. 

So if you need that one commodity to run all of your military operations, not to mention 97 percent of your domestic transportation 

sector, I think you have a national security problem. And so what 

you ought to be looking for is opportunities to find choice, which 

is very much a free market thing. So that the Defense Department 

or a consumer can go to a pump, and if gas costs too much, they 

can buy something else to power their vehicle. That’s not outside 

the realm of technological or economic possibility. It’s just something that we have to invest in because, like many other technologies, these are emerging technologies.Of course at this point, 

they’re nascent and they’re expensive. But it’s worth investing in 

these things now. 

Ms. DEGETTE. So thank you. That jars my memory. A couple 

months ago—I don’t think Mr. Burgess was there—but I was at a 

conference in Brazil, and one of the things they were talking—you 

weren’t there? No, he wasn’t there. 

Mr. BURGESS. Let the record show I was not on that junket. Different bill. 

Ms. DEGETTE. It actually wasn’t a junket. It was a very interesting conference on Brazil’s energy policy. And one of the things 

that I learned which I hadn’t known before was Brazil has a lot 

of indigenous biofuels. And what they have done is, with their cars 

they have adapted their fuels, their automobile fuels, so that they 

118 

can—and their automobiles, so that they can run on any mixture 

of petroleum and biofuels and ethanol. 

And it was fascinating to me to see, because it is all dependent 

on market forces. So if oil is low, the price is low, they can fuel up 

with oil. If there is some kind of a problem or a—you know, if the 

cartel raises the prices, then they can shift almost entirely to 

biofuels. And I thought that was just really an interesting concept 

and one that supports what you are saying. 

Thank you very much, Mr. Chairman. I yield back. 

Mr. BURGESS. The gentlelady yields back. I thank you for that. 

Let me just ask in the way of a follow-up, have any of you had 

any experience with the RIN program, the Renewable Identification Number program, that has come to this committee’s attention? 

This is a program by the EPA to allow the sale—it reminded me 

very much of cap-and-trade when I heard about it, except it’s an 

agency-derived program that allows the sale of these renewable 

identification numbers in order for people to blend their diesel with 

a certain amount of biofuel. And as it turns out, many of these 

places that are supposedly biofuel production areas, where companies have brought those RIN credits, in fact don’t exist, or a church 

parking lot, or a rummage sale. But they’re not a biofuel producer. 

And it really—Dr. Green, I saw in your bibliography that you— 

and it is quite impressive, very extensive—but you had as one of 

the pieces that you have written, the intractable flaws of the capand-trade scheme, and it jarred my memory about the RIN program and how terribly flawed this was and took all of the glamor 

of mortgage-backed securities and brought it to the renewable energies market. 

Would you care to share with us a little bit about what you wrote 

on that intractable problem with cap-and-trade? 

Mr. GREEN. Sure. Cap-and-trade is actually a venerable way of 

controlling certain kinds of pollution. If you have a localized pollutant, one pollutant to one sector, one jurisdiction, available control 

technologies that are affordable, cap-and-trade is a useful technique. None of that is true for the greenhouse gases. And none of 

that is true, generally speaking, in renewable energy credits, which 

are another form of cap-and-trade. And what you’ve pointed out is 

that because of these complexities, multiple jurisdictions, rivalrous 

rent-seeking groups, and special interests, disparate pollutants 

that are non-equivalent in many ways, you just create a very fertile 

environment for game-playing and for corruption. 

And we’ve seen this with tradeable credits in Europe for carbon 

reduction. We’ll see it wherever it’s deployed, simply because you 

create incentives for people to behave badly, and they’ll behave 

badly. 

Mr. BURGESS. So noted. Well, I want to thank the panelists. It 

has been a very informative morning and certainly appreciate your 

time. 

What do I have to say here? I want to thank the witnesses for 

coming today and for the testimony, and for members for their devotion to this hearing today. The committee rules provide that 

members have 10 days to submit additional questions for the 

record to the witnesses. Without objection, so ordered. 

And this hearing stands adjourned. 

119 

[Whereupon, at 12:13 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

120 


82298.058

• 

~ Congressional 

:;;;: ~ Rese,,!rch < ~ Servlce--------------------

MEMORANDUM 

To: 

From: 

Subject: 

The Honorable Cliff Sterns 

Attention: Brian Kirby Howard 

Molly Sherlock, Specialist in Public Finance, 7-7797 

Question for the Record 

July 25, 2012 

This memorandum responds to a question for the record submitted following the June 19,2012 hearing 

held by the House Energy and Commerce Committee, Subcommittee on Oversight and Investigations, 

The hearing was entitled "The Federal Green Jobs Agenda." 

Question for the Record 

The Section 1603 grant program has been much more expensive than originally anticipated, isn't 

that true? For example, at the time the Section 1603 grant was established, the Joint Committee on 

Taxation (JCT) estimated IO-year revenue losses resulting from the shift from tax credits to grant 

payments at $223 million, substantially less than the $11 billion that have been paid out as of today, 

about three years on, isn't that true? 

a. What accounts for the discrepancy between projected revenue losses and actual 

costs during that time period? 

b. Should the Committee he concerned that JCT's projections of the Section 1603 

grant program's future cost (at least another $11.5 billion) will similarly fall short of 

the actual costs to the federal government? 

The Section 1603 grant program was enacted as part ofthe American Recovery and Reinvestment Act of 

2009 (Recovery Act: P.L. J 11-5).' While Congress was considering the Recovery Act, the Joint 

Committee on Taxation (JCT) presented a revenue score suggesting that allowing grants for specified 

energy property would have an outlay effect of $158 million over 10 years' and a positive (offsetting) 

revenue effect of$153 million over 10 years.3 Thus, the net cost of the grant program "lone was estimated 

at $5 million. Related provisions in that same legislation allowed taxpayers that previously would have 

qualified for the production tax credit (PTC) to instead claim the investment tax credit (lTC). These 

Section 1603 grant program, sec CRS Report R41635. ARRA Section 1603 Grants in Lieu of Tax 

Energy: Overview, Analysis, and Policy Options, by Phi!lip Brown and Molly F. Sherlock. 

:< This outlay effect was provided to the JeT by the Congressional Budget Office (CnO), 

3 Joint Committee on Taxation, JCX~9a09, h«ps:!!www,jcLgoY/publications.html?func=startdown&id=!240. 

COllgrl'''''>JolIlll Resl!tlrch SerI'ict.' 7-570U lltll 1W.LTS.gOl) 
121 


82298.059

Congressional Research Service 

relatcd provisions were estimated to cost $2 I 8 million over the 10 years.' Thus, the total cost of the 

Section 1603 grant program, including provisions that allowed taxpayers to elect the ITC in lieu of the 

PTC, was estimated at $223 million over 10 years. 

The cost estimates provided above are incremental. and thus do not reflect the full cost of the Section 

1603 grant program. When the JCT scores revenue legislation, it looks at the additional cost of the policy 

changes enacted by that legislation. A portion of the cost of the Section 1603 grant program was likely 

offset through reduced PTC and ITC c1aims.s Thus, the JCT scores only reflect the net cost of the 

program, after reductions in costs associated with the ITC and PTe. 

As of June 6, 2012. $11.9 billion dollars had been paid out under the Section 1603 grant program." This 

$11.9 billion figure does not represent the incremental cost of the Section 1603 program, as a number of 

these projects would likely have claimed the renewable energy investment lax credit (fTC) or production 

tax credit (PTC) absent the Section 1603 grant option. Thus, since the federal government would have lost 

revenues by providing tax credits to projects that elected to receive the Section 1603 grant option, the 

incremental cost of the Section 1603 grant program is less than the program's total cost (or outlays under 

the program). 

As explained in the preceding paragraphs, there is a difference between the projected cost of the Section 

1603 grant program prior to enactment and the outlays under the program. This difference can partially be 

explained by the fact that the former is an incremental cost, while the latter is an overall outlay cost. Total 

outlays under the program do not reflect the offsetting revenue effect of reduced claims for the renewable 

energy PTC and ITC. That said, it appears that JCT's cost estimates for the Section 1603 grant program 

were increased when evaluating further extension of the program, as evidenced by higher cost estimates 

associated with proposals to extend the Section 1603 grant program beyond the scheduled 2010 

termination.' For example, the JCT scored a one-year extension of the Section 1603 grant program as 

estimated to cost $3.0 billion, as enacted as part of the Tax Relief, Unemployment Insurance 

Reauthorization, and Job Creation Act of2010 (2010 Tax Act; P.L. 111-312).' More recently, prior to 

consideration of the Close Big Oil Tax Loopholes Act (S. 2204), the JCT estimated that a one-year 

extension of the Section 1603 grant program, through 2012, would result in additional outlays of$l.4 

billion over the IO-year budget window.9 Also included in S. 2204 were proposals that would extend the 

option to elect the lTC in lieu of the PTC. Extending the ITC in lieu of PTC option for wind through 

2013, and offshore wind through 2014, would cost an estimated $1.5 hill ion according to JCT. 'O 

Forward looking estimates of the actual cost of (or outlays associated with) the Section 1603 

grant program are provided in the President's Budget II The President's FY2010 Budget projected 

41hid 

~ The revenue scores as published do not provide any information on how much PTe or lTC claims were projected to fall as a 

result of the Section 1603 program. 

I> A frequently updated list of Section 1603 grant awards is maintained by the Treasury, This list can be found online at: 

http://www .treasury .gov!initiatives!recovery/Pagesl 1603 .aspx. 

7 The Section 1603 grant program was extended for one year. through 2011, as part of the Tax Relief, Unemployment Insurance 

Reauthorization. and Job Creation Act 01'20]0 (P.L. 111-312). 

g Joint Committee on Taxation, JCX-54-10. https:ll\vww.jct.gov/publicatlons.html?fuIlc=startdown&id=3715. 

" Joint Committee on Taxation, jCX~29-12, https:!lwww.jctgov/publications.html?func=startdown&id=4415. Since the 

kgislation included an extension of the PTC interaction effects between the PTe and the Section 1603 grant program were 

induded in the PTe estimate. 

10 Ibid. 

! I The Presidt.mt's Budget, including links to previous year budgets, can be found at http://www.whitehouse.govlombmudget. 
122 


82298.060

Congressional Research Service 

$3.1 billion in outlays under the Section 1603 grant program in 20 I O. Actual outlays during 

FY20 I 0 were $4.5 billion." During the first fiscal year during which the Section 1603 grant 

program was available, projected outlays were less than actual outlays, by $1.4 billion. 

The President's FY20 12 Budget projected $4.1 billion in outlays under the Section 1603 grant 

program in 2012. During the nine months of fiscal year 2012 (through June 8, 2(12), outlays 

totaled $3.3 billion. Thus, recent projections made by the Treasury as to the future cost ofthe 

Section 1603 grant program appear relatively accurate.'] Since the program is only available to 

projects that were under construction before the end of2011, it is unlikely that there are a large 

number of projects that plan on taking the Section 1603 grant that were not included in current 

cost projections for the program. 

A II applicants intending on applying for a Section 1603 grant must submit their application to 

betore October 1,2012. Once all applications are received, the Treasury could theoretically 

provide an overall forccast of total outlays associated with the Section 1603 grant program for 

fiscal year 2012. 

12 Figures from the PY20 II Budget are not reported as the data presented in this budget docs not reflect the one-year extension of 

the Section 1603 grant program enacted at the cnd 0[2010. 

11 If there is a surge of grants awarded during the 4th quarter of tis cal year 2012, estimates could again fall short ofactua! outlays 

under the Section 1603 grant program. Were there to be a surge of activity, it seems morc !ikely that this would come in the 1

St 

quarter of FY20 13. as the piaccd~in~service deadline for wind facilities under the Section 1603 grant program is the end of 

calendar year 2012. 
123 


82298.061

Reply to Additional Questions for the Record for the 

Hearing before the Subcommittee on Oversight and Investigations if the Energy and Commerce 

Committee of the U.S. House of Representatives 

"The Federal Green Jobs Agenda" 

Tuesday, June 19,2012 

David W. Kreutzer, Ph.D. 

Research Fellow in Energy Economics and Climate Change 

The Heritage Foundation 

Questions from the Honorable Cliff Steams 

I. Does the Bureau of Labor Statistics Green Goods and Services study confirm the green jobscreating potential of the programs the administration has funded through the stimulus? Or does 

it appear that the President may have spent billions of tax dollars barking up the wrong tree? Is it 

really true that there are 33 times morc green jobs in the septic tank industry than in solar 

utilities? 

Answer: 

The definition of green jobs used by the Bureau of Labor Statistics for its Green Goods and 

Services study is so broad as to provide no useful measure of any policy. In short, it does not 

confirm the jobs-creating potential of the programs funded through the American Recovery and 

Reinvestment Act of 2009 or of any other programs. 

Paragraph 2 of the report's third page reads: 

"The other electric power generation industry, which includes electricity generated from 

biomass, sunlight, wind, and other renewable sources, had 4,700 GGS private sector jobs. Within 

this industry, electricity generated from wind had the highest employment with 2,200 jobs, 

followed by biomass with J, 100 jobs, geothermal with 600 jobs, and solar with 400 jobs:,1 

[Emphasis added.] 

The bottom of the third page of Table 3 shows 13,313 green jobs in the "Septic tank and related 

services" industry. So, according to the BLS methodology and data, there are 33.28 times as 

many green jobs in the "Septic tank and related services" industry as in solar utilities. 

2. The President calls green jobs the jobs of the future. Are they rcally the jobs of the future or a 

repeat of failed energy policies from the 1970s, as referenced in Charles Lane's opinion piece in 

The Washing/on Post on June 18? 

Answer: 

As always, there will be many different types of jobs in the future and some of them may be 

green by any definition. However, the BLS report counts many old and not especially wellI U.S. Department of Labor, Bureau of Labor Statistics, "EMPLOYMENT IN GREEN GOODS AND SERVICES 

20 I 0:' Press Release. Mareh 22, 2012, http://www.bls.goy/news.releaseipdtYggqccw.pdf (acces3ed July 25, 2012). 
124 


82298.062

paying jobs in its "green" category. While we are likely to need septic-tank cleaners, school-bus 

drivers, and used-merchandise retailers for decades to come, it is unlikely that those jobs will be 

the engine of economic growth. 

A separate issue is the economic impact of subsidies for alternative energy producers. A policy 

to subsidize alternative energy technologies to provide more abundant and cheaper energy is 

based on a flawed premise-that there is insufficient motivation for private markets to seek out 

cheaper alternatives. Seeking out cheaper and superior alternatives is what markets do 

constantly. 

For instance, the world petroleum market is worth about $2.5 trillion per year. A technology that 

could capture just one percent of that market would earn $25 billion per year. That is a huge 

motivator and investment repeatedly seeks out such alternatives. Unfortunately, much of the 

current federal energy policy (as well as in the 19705) assumes markets do not seek out viable 

alternatives and new supplies. As a consequence there are subsidies and support schemes for 

finns that were judged not viable by profit-seeking actors in the market. 

3. The President has visited Solyndra as well as many other solar, wind, and other green energy job 

sites. He has mentioned these alternative energy sources in every State of the Union address. In 

contrast, he has made fewer visits to growing fossil energy sites, such as the shale gas facilities in 

Western Pennsylvania Of oil wells in NOlih Dakota. And he has said a lot less about fossil fuels 

in his major speeches except to disparage them as the energy source of the past. How do you 

compare the job growth potential of traditional energy versus green energy? Does it make a 

difference to the overall economy that traditional energy is cheaper than green energy? 

Answer: 

The important question is which leads to greater economic growth. Energy sources that require 

subsidies to be profitable use resources that, in total, are more valuable than the energy produced. 

Therefore, the subsidies will reduce overall economic output. Not all alternative energy requires 

subsidies. Solar power may be the most economical source in places isolated from a power grid 

and where the demand is not for a heavy load. Powering cell phones and laptop computers in 

isolated areas with solar cells may be the best option. However, for most uses in the United 

Stat~s, conventional power-fossil fuel, nuclear, hydro--is less costly than solar or wind power. 

Our job market will not improve by forcing a switch to more expensive energy, even if a 

significant portion of the higher cost is paid by taxpayers instead of ratepayers. 

In spite of the president's claims, hydraulic fracturing technology was developed primarily by 

private investment and initiative. This new technology dramatically increased access to natural 

gas which has reduced its price and made energy-intensive manufacturing much more 

competitive in the U.S. In addition the development of the shale-gas resources in places such as 

Pennsylvania did not require government subsidies. Rather the shale-gas development generates 

royalties and tax revenues. 

This new technology has been extended to petroleum production and is responsible for moving 

North Dakota into second place among the states for petroleum production (behind only Texas). 

Since this petroleum is produced at a cost that is lower than thc price of imported petrolcum, it 
125 


82298.063

not only provides high-paying jobs in North Dakota, but reduces our trade deficit and helps hold 

world petroleum prices down--cspecially when world markets are tight, as they were last winter. 

Cheaper energy helps the economy. Expensive energy doesn't. Expensive energy is not made 

cheaper simply by shifting who pays, which is all subsidies do. 
126 


82298.064

MICHIGAN 

(11AlHMAl\, 

Dr. David Montgomery 

Senior Vice President 

ONE HUNDRED TWELFTH CONGRESS 

~ENRY A. WAXMAN. CAlIFORN!A 

RANKING MEMBER 

<!ongre%% of tfjc Wniteb $tate% 

~OUf5C of 1Rcprcf5entatlbcf5 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 

Majo,,!v 

MmOl!!y,102)225·3641 

July 12,2012 

NERA Economic Consulting 

1255 23rd Street, N.W., Suite 600 

Washington, D.C. 20037 

Dear Dr. Montgomery, 

Thank you for appearing before the Subcommittee on Oversight and Investigations on Tuesday, 

June 19,2012, to testifY at the hearing entitled "The Federal Green Jobs Agenda." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for 10 business days to permit Members to submit additional questions to witnesses, which are 

attached. The format of your responses to these questions should be as follows; (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and then (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Thursday, July 26, 2012. Your responses should be e-mailedtotheLegislativeClerk.in 

Word or PDF format, at Kirby.Howard@maiLhouse.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

(}K;:;p Chairman 

Subcommittee on Oversight and Investigations 

cc; The Honorable Diana DeGette, Ranking Member, 

Subcommittee on Oversight and Investigations 

Attachment 
127 


82298.065

Additional Questions for the Record 

The Honorable Cliff Stearns 

I. Many of the President's green jobs are associated with wind and solar energy and other 

alternatives. But if these alternative energy sources are more expensive than the 

conventional ones they replace, can't this cost jobs? 

A. The nation only has finite resources to produce the goods and services that we all want. 

If the same amount of energy from alternative sources costs more than that from 

conventional sources, that means more resources must be devoted to producing the same 

amount of energy and less will be available to produce the rest of the goods and services 

consumers want. When we see how these costs play out in the rest of the economy, job 

gains in the alternative energy industries favored by subsidies and regulations are offset 

by jobs lost in the rest of the economy and overall real personal income has to decline. 

2. By picking winners and losers in the green field, isn't the administration actually hurting the 

cleantech industry? If the market just decided, then the best and most economically 

sustainable companies would prosper and survive. Instead it is the companies that get 

government assistance that do well in the short-term, even though they may fail in the long 

run, while potentially putting out of business other companies that in the long-run have a 

better shot. 

A. It is hard to think of an example of how the government created a successful industry by 

substituting the judgment of government employees for that of private equity investors to 

choose the companies that will get the last stage of funding to start commercial operation. 

Equity investors using their own money have strong incentives to make accurate and 

critical assessments of both technology and management. This has attracted highly 

skilled, knowledgeable and highly paid analysts to investment finns, and created an 

immense and diverse financial sector whose entire purpose is to make selections and 

discipline the management of new investments. When government steps and allocates 

finance in ways that are directed more by political priorities and constituency service, the 

chances that the best companies will be financed and prosper is much lower. 

B. Moreover, as we saw in the case of Solyndra, giving low cost financing is not enough to 

keep a company in operation if it does not have a product that it can sell at an adequate 

price. Even if the government did pour enough money into selected companies with 

inferior management and products to keep them in operation, their protected status could 

drive others with better products out of the market. This all supports the lesson that if the 

country wants green energy, the only way to get it is to create sustained market demand 

by a policy like a carbon tax that motivates buyers to want products that cost more than 

conventional energy and leave it to the market and private investors to tight out who has 

the best product and lowest cost. Any other approach just costs more and gets less. 
128 


82298.066

Dr. Kenneth Green 

Resident Scholar 

American Enterprise Institute 

1150 17th Street, N.W. 

Washington, D.C. 20036 

Dear Dr. Green, 

July 12,2012 

Thank you for appearing before the Subcommittee on Oversight and Investigations on Tuesday, 

June 19,2012, to testify at the hearing entitled "The Federal Green Jobs Agenda." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for 10 business days to permit Members to submit additional questions to witnesses, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and then (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Thursday. July 26,2012. Your responses should be e-mailedtotheLegislativeClerk.in 

Word or PDF format, at Kirby.lloward(ii1mail.hollse.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

Cliff Stearns 

Chairman 

Subcommittee on Oversight and Investigations 

cc: The Honorable Diana DeGette, Ranking Member, 

Subcommittee on Oversight and Investigations 

Attachment 
129 


82298.067

Additional Questions for the Record 

The Honorable Cliff Stearns 

I. Many on of the other side of the aisle talk of this clean energy future, and that we need to 

focus on the jobs of the future. However, have you seen much evidence that green jobs are 

actually the jobs of the future? 

a. Are most countries really switching to alternative energy? 

While many couutries are pursuing various alternative euergy initiatives with 

regard to wind power, solar power, and biomass, and several European countries 

are now fixated on terminating nuclear power, I am not aware of many countries 

that have made large strides to divorce their energy systems from coal and natural 

gas. 

b. Is it not the case that even China. often cited as an emerging champion in renewable 

energy, is mainly using conventional power to fuel its economic growth? 

Yes, that is my understanding. As the Washington Post reports: 

In wind power, China both produces and consumes. In 2009, it put up about 

a third of the world's new wind turbines. But much of this has been for show. 

A 2008 Citigroup aualysis found that about onc-third of China's wind power 

assets were not in use. Many turbines are not connected to the transmission 

grid. Chinese power companies built wind tnrbines that they didn't use as 

the cheapest way of satisfying - on paper - government requirements to 

boost renewable energy capacity. 

Consider the bigger pictnre: 87 percent of the energy produced in China 

comes from fossil fuels, the vast majority of it from coal, the International 

Energy Agency found in 2010. 

The explosive recent growth in Chinese solar and wind generation equates to 

going from zilch to a small fraction: Wind today generates just 0.05 percent 

of China's energy, and solar is responsible for one-half of one-thousandth of 

1 percent. 

The link to this article is: http://www.washingtonposLcom/opiniol1s/hold-the-accoladeson-chinas-grccn-leap-forwardi20 II/04i19/AFLdZMEE story.html 
130 


82298.068

Additional Questions for the Record 

c. Given the fact that most countries arc continuing to use fossil fuels, would it not make 

more sense for this country to focus on oi I and gas jobs, an industry where U.S. 

companies are the clear leaders when it comes to know-how and technology, as opposed 

to green jobs? 

To the extent that the U.S. inflates its energy costs through restrictive policies on air 

pollution, mining, etc., the U.S. becomes somewhat less competitive compared with 

economies that focus on keeping energy inexpensive. This is particularly true in 

mannfacturing, where energy costs can be a significant share of overall production 

costs. And as you point out, the U.S. has significant competitive advantage in terms 

of oil and gas producing "know-how," as well as the private-sector ecosystem of 

services that allows for rapid exploitation of our resources. There are many jobcreation estimates floating about (all of which have their limitations, but one can not 

argue with success: the national unemployment rate as I write this is 8.2.% The 

unemployment rate in North Dakota is 3%. Oklahoma, is also experiencing a jobs 

boom as it exploits its fossil fuel resources, according to the Institute for Energy 

Research. A report of Oklahoma's growth can be found here: 

http://www. instituteforcnergyresearch.org/20 12/0711 I Ithose-boom ing-sooncrs-plentifulcncrgv-Iow-encrgy-prices-Iow-uncmploymcntl 

I. Furthermore, the U.S. is now the world's largest or 2nd largest natural gas producer. 

We are also the 2nd largest coal producer, and the Chinese are just eating up our coal. 

And finally, our oil production is exploding and Goldman Sachs said we could be the 

world's largest oil producer by 2017. Is this not just more evidence that we should be 

sticking to your strengths? 

I believe that the U.S. should exploit its energy resources for the betterment of the 

public, and that our energy resources should be "managed" by private citizens 

acting in minimally regulated and minimally distorted energy markets. Rather than 

doing that, the government of the United States has adopted a pnnitive agenda 

toward our lowest-cost form of electricity production (coal), and has imposed a 

"slow-walk" agenda on virtually all forms of U.S. energy production on lands 

subject to its control. It has diverted massive quantities of taxpayer dollars toward 

favored forms of energy (wind tnrbines and solar panels) that are less productive, 

less reliable, less efficient and often of foreign manufacture. I believe that many of 

the activities of our government, by distorting energy markets as they have are 

causing misallocations of capital, and higher energy prices for many Americans. 

2. Is there any evidence that these green industries will eventually reach a point where they 

can stand on their own without additional subsidies, or are they a bubble that bursts as 

soon as the government handouts end? 
131 


82298.069

Additional Questions for the Record 

I have seen very little evidence that the new "green industries" are sustainable 

without permanent subsidization. Whether that subsidization is direct, or is the 

result of so-called "clean energy standards," all that I've observed is that in reality, 

when the snbsidies are removed, the new "green industries" suddenly reveal that 

their technologies were not ready for market, or that their operating costs were 

much higher than predicted, and they go bankrupt. Whether they're purchased and 

operated after that, or simply scrapped, is a matter for case-by-case considerations. 

3. To hear the President tell it, China is capturing the future by moving its energy 

production to wind and solar. Is this really the case? How do China's trends in coal use 

compare with those or the U.S.? 

As I mentioned earlier in my responses, the idea that China is "going green," is 

more a myth than a reality. As the Washington post reports: 

In wind power, China both produces and consumes. In 2009, it put up about 

a third of the world's new wind turbines, But much of this has been for show, 

A 2008 Citigroup analysis found that about one-third of China's wind power 

assets were not in use. Many turbines arc not connected to the transmission 

grid. Chinese power companies built wind turbines that they didn't use as 

the cheapest way of satisfying - on paper - government requirements to 

boost rcnewable energy capacity. 

Consider thc bigger picture: 87 percent of the energy produced in China 

comes from fossil fuels, the vast majority of it from coal, the International 

Energy Agency found in 2010. 

The explosive recent growth in Chinese solar and wind generation equates to 

going from zilch to a small fraction: Wind today generates just 0.05 percent 

of China's energy, and solar is responsible for one-half of one-thousandth of 

1 percent. 

The link to this article is: 

htlp:!!www.washingtonpost.com/opinions/ho!d-the-acco!ades-on-chinas-grecn-Ieaplorward/20! I/04119! AFLdZMEE slorv.htm! 

4. What about the environmental consequences of "green energy"? Aren't wind and solar 

land-intensive and don't their construction harm natural habitats? 
132 


82298.070

Additional Questions for the Record 

All forms of energy production alter the landscape to some extent, and have 

environmental footprints. Wind and solar power, bccause they are tapping a highly 

diffuse source of energy must, of necessity, consume vast quantities of landscape. 

They also consume vast amounts of materials that have environmental impacts of 

their own, such as concrete, and large amounts of (imported) rare-earth elements 

produced in China at great environmental harm. As Robert Bryce, a well known 

energy-journalist has observed: 

The math is simple: to have 8,500 megawatts of solar capacity, California 

would need at least 23 projects the size ofIvanpah, covering about 129 

square miles, an area more than five times as large as Manhattan. While 

there's plenty of land in the Mojave, projects as big as Ivanpah raise 

environmental concerns. In April, the federal Bureau of Land Management 

ordered a halt to construction on part of the facility out of concern for the 

desert tortoise, which is protected undcr the Endangered Species Act. 

Wind energy projects require even more land. The Roscoe wind farm in 

Texas, which has a capacity of 781.5 megawatts, covers about 154 square 

miles. Again, the math is straightforward: to have 8,500 megawatts of wind 

generation capacity, California would likely need to set aside an area 

equivalent to more than 70 Manhattans. Apart from the impact on the 

environment itself, few if any people could live on the land because of the 

noise (and the infrasound, which is inaudible to most humans but potentially 

harmful) produced by the turbines. 

Industrial solar and wind projects also require long swaths ofland for power 

lines. Last year, despite opposition from environmental groups, San Diego 

Gas & Electric started construction on the 117-mile Sunrise Powerlink, 

which will carry electricity from solar, wind and geothermal projects located 

in Imperial Connty, Calif., to customers in and around San Diego. In 

January, environmental groups filed a federal lawsuit to prevent the $1.9 

billion line from cutting through a nearby national forest. 

Not all environmentalists ignore renewable energy's land requirements. The 

Nature Conservancy has coined the term "energy sprawl" to describe it. 

Unfortunately, energy sprawl is only one of the ways that renewable energy 

makes heavy demands on natural resources. 
133 


82298.071

Additional Questions for the Record 

Consider the massive quantities of steel required for wind projects. The 

production and transportation of steel are both expensive and energyintensive, and installing a single wind turbine requires about 200 tons of it. 

Many tu rbines have capacities of 3 or 4 megawatts, so you can assume that 

each megawatt of wind capacity requires roughly 50 tons of steel. By 

contrast, a typical natural gas turbine can produce nearly 43 megawatts 

while weighing only 9 tons. Thus, each megawatt of capacity requires less 

than a quarter of a ton of steel. 

The source of this quotation can be found here: 

http://www.nytimes.com/20J I/06/08/opinion/08brYce.html 
134 


82298.072

Response to Additional Question for the Record by Michael Breen 

Pursuant to Hearing Entitled "The Federal Green Jobs Agenda," 

Held June 19,2012 

Submitted to the House Committee on Energy and Commerce, 

Subcommittee on Oversight and Investigations 

July 26, 2012 

The Honorable Steve Scalise: 

Please submit for the record any statements made by the Secretary of Defense, the 

Chairman of the Joint Chiefs of Staff, and all three service secretaries, in which each state, 

as you assert they have, that our dependence on oil is a threat to national security. 

Michael Breen: 

Thank you for allowing me the opportunity to respond to your question for the record. In my 

testimony, I referred to "an established consensus in the defense community that our dependence 

on oil is a threat to our national security." In support of that assertion. I rely upon repeated 

statements by numerous senior national security and defense leaders of every political 

persuasion, including those who hold and/or have held the office of Secretary of Defense, 

Chairman of the Joint Chiefs of Staff, Secretary of the Army, Secretary of the Navy and 

Secretary of the Air Force. 

A selection of those statements follows, including statements made by five Secretaries of 

Defense, two Chairmen of the Joint Chiefs of Staff, the Secretary of the Army, three Secretaries 

of the Navy and three Secretaries of the Air Force: 

"Oil's status as a strategic commodity undermines U.S. national security and weakens the U.S. 

economy. Reducing oil's strategic importance requires breaking its virtual monopoly over 

transportation fue!." 

Official statement of the United States Energy Council, co-authored by the following 

individuals: 

Hon. Norman Augustine- Former Chairman, Lockheed-Martin; Former Under Secretary 

of the Army 

lion. William L. 8all- Former Secretary of the Navy 

Hon. Mary Peters- Former Secretary of Transportation 
135 


82298.073

Geoffrey Bible- Retired Chairman & CEO Altria Group, Inc.; Retired Chairman, Kraft 

Foods Inc. 

Hon. John Block- Former Secretary of Agriculture 

Hon. Harold Brown- Former Secretary of Defense 

General Wesley Clark- Former Supreme Allied Commander Europe 

Hon. William P. Clark- Former Secretary orthe Interior; Former National Security 

Advisor 

General Carlton W. Fulford, Jr.- Former Deputy Commander in Chief, United States 

European Command 

Hon. C. Boyden Gray- Former White House Counsel; Former Ambassador to the EU 

Hon. Alan Greenspan- Former Chairman of the Federal Reserve 

James T. Hackett- Chairman and CEO, Anadarko Petroleum Corporation 

Hon. Stephen Hadley- Former National Security Advisor 

Hon. Jeffrey K. Harris- Former Director of the National Reconnaissance Office 

Hon. Gary Hart- Former Senator from Colorado 

John Hofmeister- Former President, Shell Oil North America 

Hon. J. Bennett Johnston- Former Senator from Louisiana and Chairman of the Senate 

Energy Committee 

Hon. John Lehman- Former Secretary of the Navy 

Mike Leven- President, Las Vegas Sands 

General Barry McCaffrey- Former Director of the White House Office of National Drug 

Control Policy 

Hon. Robert C. McFariane- Former National Security Advisor 

Vice Admiral Dennis V. McGinn- President, American Council on Renewable Energy 

Professor George Olah- Nobel Laureate in Chemistry 

Hon. William Perry- Former Secretary of Defense 

Hon. Governor Tom Ridge- Former Secretary of Homeland Security 

Hon. James G. Roche- Former Secretary of the US Air Force 

Hon. George P. Shultz- Former Secretary o[State; Former Secretary of Treasury 

Hon. R. James Woolsey- Former Director of Central Intelligence; Chairman of the 

Foundation for Defense of Democracies 

"Going forward we are also committed to exploring with Israel cooperative ways that the 

Department of Defense and the Israeli Defense Forces can join together in order to reduce our 

dependencies on oil. DOD is developing alternative fuels, greening out our fleet, testing planes 

with bio-blends, and making bases net neutral on the power grid. Together we must find ways to 

reduce our dependence on oil." 

Leon Panetta, Secretary of Defense, Speech to AIPAC, March 2012 

''The dependence of the U.S. on oil creates serious national security vulnerabilities that, if 

exploited, could result in widespread economic dislocation and increased global instability." 

Robert Gates, Secretary of Defense, Bipartisan Policy Center Crisis Simulation, 2005 

"With respect to energy dependence and independence, you're quite right. The questioner is 

certainly correct. It would be vastly preferable if the United States and our friends and allies 
136 


82298.074

around the world were less dependent on oil from the Middle East. And certainly the 

administration is interested in finding ways that we can be less dependent, and I suspect that over 

a period of time we'll find that we are able to successfully reduce the percentage of oil 

dependence." 

Donald Rumsfeld, Secretary of Defense, C-SPAN Interview, January 8, 2002 

"During World War II, supporting one soldier on the battlefield took one gallon of fuel per day. 

Today, we use over 22 gallons per day, per soldier. We're also more expeditionary than ever. 

These energy needs require a vast yet vulnerable supply chain that our enemies target." 

General Martin Dempsey, Chairman of the Joint Chiefs of Staff~ Speech at the 

Pentagon Energy Security Forum, October 18. 2011 

"We lose soldiers, marines, notably airmen and soldiers, on the roads of Afghanistan going from 

FOB to FOB ... on resupply missions and so forth. So to the extent we can create autonomous or 

semi-autonomous. in telms of energy consumption, power and energy organizations ... net zero in 

terms of their consumption of power and energy, we'll actually save lives, and become a lot 

more agile because we won't be as traditional. linear [with our] line of com municat ions." 

General Martin Dempsey, Chairman of the Joint Chiefs of Staff, Senate Armed 

Services Committee, February 14, 2012 

"Many of us here this morning are acutely aware of the cost and challenge in terms of both blood 

and treasure of providing energy to our forces in Afghanistan today. And recent headlines of 

NATO fuel convoys being attacked only serve to remind us of these vulnerabilities. DOD is 

using 300,000 barrels of oil every day. The energy use per soldier creeps up every year. And our 

number-one import into Afghanistan is fossil fuel. When we consider the estimates of a fully 

burdened cost of diesel fuel approached $400 a gallon and required 1.3 gallons of fuel to use per 

gallon delivered at some forward-operating locations, these benefits start to really add up. This 

translates to fewer Marines maintaining fuel storage and distribution systems, fewer Marines 

dedicating their lives to protect the convoys in the routes used to deliver the fuel, or as this 

conference theme tells us: Saving energy saves lives." 

Admiral Mike Mullen, Chairman of the Joints Chiefs of Staff, Speech at the Energy 

Security Forum. October 13,20 I 0 

"Fuel is a tactical and operational vulnerability in theater; guarding fuel convoys puts our Sailors 

and Marine's lives at risk and takes them away from what we sent them there to do: to fight, to 

engage. and to rebuild. The Department is also exposed to price shocks in the global market 

because too much fuel comes from volatile regions, places that are vulnerable to instability and 

ruled by regimes that do not support our interests. Every time the cost of a barrel of oil goes up a 

dollar, it costs the Department $30 million in extra fuel costs. In FY 12 alone, in large part due to 

political unrest in oil producing regions, the price per barrel of oil is $38 more than was budgeted 

increasing the Navy's fuel bill by over $1 billion. These price spikes must be paid for out of our 

operations funds. That means that our Sailors and Marines are forced to steam less, fly less, and 

train less. The threat of price spikes is increased by the vulnerability of choke points. Energy 

analyst have speculated that if Iran ever succeeded in closing the Strait of Hormuz, the price of 

oil could rise by 50 percent or more in global markets within days." 
137 


82298.075

Secretary of the Navy Ray Mabus, Senate Armed Services Committee, March IS, 

2012 

"In the two years since I came to the department, we have made a vigorous commitment to 

change how we get and how we use energy. We also now put an energy dimension in everything 

the Department of the Navy does. The reason is as clear as it is compelling. Energy security is 

national security. Too much of our oil comes from potentially, or actually, volatile places on 

earth. We would never allow these countries to build the ships or aircraft that we use. But 

through our dependence on oil, we give them a vote in whether those ships can sailor those 

planes fly. Seeking alternative fuels and seeking to use fuel more efficiently makes us better 

warfighters. That's our principal mission, and that's the main reason we're doing this. Most 

importantly, it's going to save the lives of marines, of sailors, of soldiers, and of airmen." 

Secretary of the Navy Ray Mabus, Speech to the Naval Postgraduate School, August 

29,2011 

"The Air Force is proud to be a leader in America's ongoing quest to use energy more efficiently 

through better procedures and new technologies while, at the same time, decreasing energy 

consumption and the nation's dependence on imported oil. Energy availability and security 

impacts all Air Force missions, operations, and organizations, and is necessary for the support of 

Air Force priorities. Energy enables the Air Force to develop and care for airmen and families in 

training and daily living. The Air Force must have reliable energy supplies to meet the demands 

of the overseas contingency operations and protect our nation from emerging threats. Though 

there is no silver bullet solution for reducing energy dependence in day-to-day operations, the 

Air Force is dedicated to integrating energy management across mission areas and implementing 

a portfolio of renewable and alternative energy projects that will enhance the Air Force's energy 

security." 

Michael Donley, Secretary of thc Air Force, Air Force Energy Security Plan, 20 I 0 

"We need new sources of energy electricity, but most importantly we need technologies that 

tackle petroleum and liquid transportation fuels ... One of the greatest threats to our economic 

and national security is the need to secure foreign oil. So, when President Obama confirmed a 

commitment to develop domestically renewable petroleum replaccments from biomass, also 

known as bio-crude, he put a stake in the ground that alternatives are not just good for the 

environment, they're critical to our national and economic security." 

Michael Wynne, Secretary of the Air Force, Op-Ed in the lllifjingion Posl, February 

10,2011 

"We are also working innovatively on the supply side, whether it is putting the largest solar 

panel field to work out at Nellis, or qualifying our aircraft to use synthetic fuel. Synthetic fuel is 

manufactured from coal, natural gas, or biological sources, like corn or algae. While we don't 

plan on being a producer, we have established quality criteria, and a demonstration facility, as we 

want to be good environmental stewards, and also make sure we can fly our aircraft at expected 

performance and range criteria. The labs at W right-Patterson, and the test wing at Edwards are 

leading the way. Airlines and propulsion companies are partnering with us to extend our efforts. 

We hope to do our part to reduce our, and maybe America's, dependence on this more and more 

expensive source of energy, and that is petroleum." 

4 
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Michael Wynne, Secretary of the Air Force, Lefler 10 Airmen Energy Update, July 14, 

2007 

"As long as we're dependent on those fossil fuels, we're dependent on the Middle East. lfwe are 

not victims, we're certainly captives." 

John McHugh, Secretary of the Army 

"But it's more than that -- it's an opportunity to reduce our dependence on foreign oil, yes. But 

for the Army, for the military, it's something even more important. It's about reducing the threat 

to our Soldiers, Sailors, Airmen and Marines. Simply put, we view energy security as 

operationally necessary, as well as fiscally prudent and vital to mission accomplishment. In Iraq 

and Afghanistan, fuel and water comprise about 70 to 80 percent of ground resupply weight. In 

Afghanistan, we suffer one casualty for every 46 resupply convoys. Less energy use means fewer 

convoys, and fewer convoys mean fewer casualties." 

John McHugh, Secretary of the Army, Speech at the GovEnergy Conference, August 

10,2011 

"As a Corps, we have become more lethal, yet we have also become increasingly dependent on 

fossil fuel. Our growing demand for liquid logistics comes at a price. By tethering our operations 

to vulnerable supply lines, it degrades our expeditionary capabilities and ultimately puts Marines 

at risk. To maintain our lethal edge, we must change the way we use energy." 

General James Amos, 35th Commandant of the United States Marine Corps. United 

Slates Marine Corps Expeditionary Energy Strategy and Implementation Plan 

"America's dependence on oil constitutes a significant threat- economically, geopolitically, 

environmentally, and militarily." 

CN A Report, Ensuring America's Freedom of Movement: A National Security 

Imperative 10 Reduce US Oil Dependence, October 2011. Authored by: 

General Paul J. Kern, USA (Ret.), CNA MAB Chairman; Former Commander, Army 

Materiel Command 

Vice Admiral Lee F. Gunn, USN (Ret.), CNA MAB Vice Chairman; Former 

Inspector General, Department of the Navy 

• Vice Admiral Dennis V. McGinn, USN (Ret.), CNA MAB Vice Chairman; Former 

Deputy Chief of Naval Operations 

General James T. Conway, USMC (Ret.), Former Commandant of the Marine Corps 

• Lieutenant General Ken Eickmann, USAF (Ret.), Former Aeronautical Systems 

Center 

• Lieutenant General Lawrence P. Farrell Jr., USAF (Ret.), Former Chief Planner, HQ 

USAF 

• Brigadier General Gerald E. Galloway Jr., USACE (Ret.), Former Dean of 

Academics, U.S. Military Academy 

• General Ronald E. Keys, USAF (Re!.), Former Commander, Air Combat Command 

• Admiral T. Joseph Lopez, USN (Ret.), Former Command, U.S. Navy Europe 

• General Robert Magnus, USMC (Ret.), Former Assistant Commandant of the Marine 

Corps 
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Admiral John B. Nathman, USN (Ret.), Former Commander, Fleet Forces Command 

and Vice Chief of Naval Operations 

General Gordon Sullivan, USA (Ret.), Former Chief of Staff of the U.S. Army 

Lieutenant General Richard C. Zilmer, USMC (Ret.), Fonner Commandant for 

Manpower and Reserve Affairs, USMC; Fonner Commanding General of MultiNational Force-West AI Anbar province, Iraq 

I also offer for your consideration a partial list of relevant speeches, documents, studies and 

reports issued by a wide range of highly respected national security leaders and policy 

organizations, which I will not quote at length here. Note that in many cases, the authors of the 

policy reports listed are themselves former senior national security leaders. 

I SOURCE CITATION and NOTES' 

I Air Force Energy Plan 2010 Pgs.l,3,5 

.Jrmed Forces Journal. "The Fuel Gauge of National Essay on how oil dependence is a threat to the military 

I Security," 2008 

Brookings. "Fueling the "Balance," 2009 Pgs.2 

CNA, "Economic Implications of Disruptions to Overview of global threats to oil supply 

Maritime Oil Chokepoints," 20 II 

CNA, "Ensuring America's Freedom ofiVlovernent," Pgs. xi-xvii, 1-10, 13-18 

2011 

CNAS, "Fueling the Future Force," 2010 Pgs. 3-5, 6-9 

I CNO Roughead, Navy Posture Statement, 20 II Congressional testimony. See section on Energy and 

Climate Change 

I Conaton, "A New Culture: Energy as an Operations Speech to the USAF Energy Forum 11l 

Enabler," 2010 

: CSIS, "Geopolitics of Energy," 2010 Pgs.24-26 

i Gen. Demese~, Pentagon Energ~ Securit~ Forum, 20 II General Dem2se~ on the threat of oil de2endence 

i Defense Science Board Task Force, "More Fight - Less Pgs.1I,17-18 

Fuel," 2008 

Department of Defense, "Operational Energy Strategy," Statement by Deputy Secretary of Defense Will Lynn, 

2011 Pgs. 4-5,7 

i Tom Hicks, Department of Defense Bloggers Interview with Deputy Assistant Secretary of the Navy 

i Roundtable, 20 II for Energy Tom Hicks I Secretary Donie)" "Air force Posture Statement," 2011 Secretary Donl~y and General Schwartz presentation to 

HASC 

I Secretary Donley, "Air Force Posture Statement," 2012 Secretary Donley and General Schwartz presentation to 

HASC 

: Stephen Hadley, "Solve the Next Crisis Before it , Former National Security Advisor Hadley on the threat 

liappens." 20 I I of oil dependence 

Institute of Land Warfare, "US Army Encrgy Security Pgs.5-6 

and Sustainability," 2011 

Deputy Secretary of Defense Lynn, "Operational Energy DOD news briefing addressing energy security and the 

Sirategy," 20 II threat to national security 

, Secretary of the Navy Mabus, Energy Security Forum, Speech on the Navy and energy security 

i 2010 

Secretary of the Navy Mabus, Naval Energy Forum, Speech on the Navy and energy security 

I Page numbers note specific references to the national security threat of single source dependence, the reliance on 

oiL or the impact of energy security on nationa"j security and military policy. 

6 
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82298.078

2009 

Secretary of the Navy Mabus, Senate Armed Services Secretary Mabus testimony before SASC 

Committee. 2012 

Secretary of the Army McHugh, "Army Posture Congressional testimony. See section on Energy 

Statement." 20 I I Security and Sustainability 

Secretary of the Army McHugh. "Army Posture Congressional testimony. See section on Army Energy 

Statement," 20 II : Security 

Secretary of the Army McHugh, GovEnergy Speech at the 20 I I GovEnergy conference in Cincinnati, 

Conference, 20 II Ohio 

Admiral Mullen, Energy Security Forum, 20 I 0 Speech on the threats of oil dependence on national 

security 

Naval War College Review. "The Great Green Fleet." Pgs. 61-62 

201 I 

Secretary Panetta, AIPAC Speech, 2012 Pg.4 

Secretary Panetta, Environmental Defense Fund Speech, Speech to EDF on energy and the environment 

2012 

i Gen. Petraeus, "Suppol1ing the Mission with 

I Operational Energy," 20 I I 

Memo to U.S. forces in Afghanistan regarding energy 

Pew, "From Barracks to the Battlefield," 20 II Pgs. 12-13, 16,72-73 

Pew, "Reenergizing America's Defense," 2010 Pgs. 4-5, 6-9 

~D, "Imported Oil and U.S. National Security," Pgs. xiii, xv, 17-19,43-57,59-75,77-92 

2009. 

Secretary Rumsfeld, C-SPAN Interview, 2002 Interview with C-SPAN. See page 6 for comment on 

energy security 

Strategic Studies Institute, "Addicted to Oil," 2006 Pgs.3,IO-1I 

Strategic Studies Institute, "Defense Energy Resilience;' , Pgs. vii-viii, 33 

2010 

USMC, "Expeditionary Energy Strategy and Commandant's Message, 7-10 

Implementation Plan" 

~:~~etary of the Air Porce Wynne, "Letter to Airmen," Letter to Airmen on energy 

2007 

Thank you again for the opportunity to testify before this distinguished committee.