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S. HRG. 110–1121 

GREEN JOBS FROM ACTION ON GLOBAL 

WARMING 

FIELD HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

AUGUST 14, 2007–SAN JOSE, CA 

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

( 

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

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

JOSEPH I. LIEBERMAN, Connecticut 

THOMAS R. CARPER, Delaware 

HILLARY RODHAM CLINTON, New York 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

JAMES M. INHOFE, Oklahoma 

JOHN W. WARNER, Virginia 

GEORGE V. VOINOVICH, Ohio 

JOHNNY ISAKSON, Georgia 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming1

LARRY E. CRAIG, Idaho 

LAMAR ALEXANDER, Tennessee 

CHRISTOPHER S. BOND, Missouri 

BETTINA POIRIER, Majority Staff Director and Chief Counsel 

ANDREW WHEELER, Minority Staff Director 

1Note: During the 110th Congress, Senator Craig Thomas, of Wyoming, 

passed away on June 4, 2007. Senator John Barrasso, of Wyoming, joined 

the committee on July 10, 2007. 
(III) 

C O N T E N T S 

Page 

AUGUST 14, 2007 

OPENING STATEMENTS 

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

WITNESSES 

Cinnamon, Barry, CEO, Akeena Solar President, California Solar Energy 

Industries Association .......................................................................................... 4 

Prepared statement .......................................................................................... 6 

Hanemann, W. Michael, Chancellor’s Professor, Department of Agriculture 

and Resource Economics, and Goldman School of Public Policy Director, 

California Climate Change Center at UC Berkeley, University of California, 

Berkeley ................................................................................................................ 8 

Prepared statement .......................................................................................... 10 

Musk, Elon, Chairman of Tesla Motors ................................................................. 12 

Prepared statement .......................................................................................... 14 

Unger, Bill, Partner Emeritus at Mayfield Fund Environmental Entrepreneurs ................................................................................................................ 15 

Prepared statement .......................................................................................... 17 

Klafter, Bruce S., Senior Director, Environment, Health and Safety, Applied 

Materials ............................................................................................................... 26 

Prepared statement .......................................................................................... 27 

Zimmerman, Patrick R., Ph.D., Chief Technology Officer, C–Lock Technology . 31 

Prepared statement .......................................................................................... 33 

Collins, Kevin R., President and Chief Executive Officer, Evergreen Energy 

Inc. ......................................................................................................................... 35 

Prepared statement .......................................................................................... 37 

(1) 

GREEN JOBS FROM ACTION ON GLOBAL 

WARMING 

TUESDAY, AUGUST 14, 2007 

U.S. SENATE, COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, San Jose, CA. 

The committee met, pursuant to notice, at 11 a.m. Santa Clara 

County Building, 70 West Hedding Street, San Jose, CA, Hon. Barbara Boxer (chairman of the committee) presiding. 

Present: Senator Boxer. 

OPENING STATEMENT OF SENATOR BARBARA BOXER, U.S. 

SENATOR FROM THE STATE OF CALIFORNIA 

Senator BOXER. The hearing will come to order. I want to welcome the panel here. I am very pleased to have you all here. I’m 

very excited about what you’re going to tell me and I guarantee you 

that that information will be given to my colleagues as we move 

forward with important legislation. 

Global warming is the greatest environmental threat faced by 

mankind—is this working yet? Yes? No? How about that? Better? 

Global warming is the greatest environmental threat that we 

face. We have now arrived at a time in our history when human 

activities related to green house gas emissions could bring dangerous consequences. In July I traveled to Greenland with nine 

other colleagues to view the rapid melting of the enormous Greenland ice sheet. 

If the Greenland ice sheet were to melt, the sea level would rise 

23 feet. This would have disastrous consequences, particularly for 

California and the California bay delta. Do we have a map here, 

Michael? 

This map—and, Michael, why don’t you point out—this map 

shows what a 23 foot sea level rise would mean to this area of California. It would inundate Highway 880 which runs from here to 

Oakland. 

It would flood the bay delta nearly all the way to Sacramento. 

Places like the San Francisco Airport and entire neighborhoods 

would go under water. The costs of these kinds of impact are enormous and greatly exceed the cost of controlling emissions. As Sir 

Nicholas Stern, the internationally renowned former chief World 

Bank economist had said, the dollars to fight global warming now 

will save us $5 later. 

In fact, most cost projections show that while fighting global 

warming would cost funds to support it, gross domestic product will 

continue to increase just a little bit more slowly. For instance, EPA 
2 

has determined that if the legislation offered by Senators 

Lieberman and McCain were to be enacted, U.S. GDP would increase by 112 percent by 2030 instead of by 113 percent, a net decrease of 1 percent estimated growth. 

In fact, I believe even these projections may be too pessimistic. 

I believe that we cap carbon emissions and fight global warming 

we would be better off for it in every way including economic 

growth. 

You know, I’ve been around for a while, started my career in 

local government, sat on the air pollution board in San Francisco, 

and everyone said oh, my God, if we get clean cars and we have 

to clean up our cars, economic growth will halt. The fact is none 

of that ever proved to be true. The fact is if you can’t breathe you 

can’t work. The fact is we ignore the environment at our peril if 

we truly want economic growth and that’s why this has been so far 

ahead of the government because they get this point. 

I believe the fight against global warming is a win win. Why? We 

increase our energy efficiency. We increase our energy independence. We increase our global competitiveness, by creating clean energy technology which we can export to the rest of the world. 

The International Energy Agency estimates that the world will spend over $20 trillion on new energy technology by 2030. Let me 

reiterate that. The world will spend over $20 billion on new energy 

technology by 2030. I just visited Gloom Energy. If any of you have 

ever seen this place it just changes the way we think about the future. 

It gives you tremendous hope because it’s a brilliant idea of how 

we’re going to face our future. It really is in many ways a leapfrog 

technology. It’s a technology that’s going to help us till we get to 

the final solution of our energy needs. 

These technologies can either be clean technologies that we create or dirty technologies. They can either be developed or made in 

the United States or elsewhere. Well, the world doesn’t want to buy 

dirty technology. The word has already decided that. If it would be 

nice if our administration decided that as well. I certainly hope 

that we’re all moving in this direction, not in the way that I had 

hoped in terms of the speed with which people come to grips with 

it, but I think there’s an inevitability that we can see right here 

in Silicon Valley. 

We can see where venture capital is going. It’s going into these 

energies these clean energies. By capping carbon emissions we 

have done here in California we will stimulate investment in these 

clean technologies. If we just say technology is the situation which 

our president says, I agree with him, but we have to add something 

to it, and that is we’re going to incentivize these technologies by 

making sure there are caps in place. 

Otherwise, the capital on it is just not going to flow in a steady 

stream to indicating them. If you look at California we see 

Cleantech investments. Again, we’re in the Silicon Valley making 

such investment, more than a billion dollars spent on such investment, and that’s just the beginning. 

According to University of California Berkeley professor Michael 

Hanemann, who’s here with us today, carbon reduction can be a 

net boon to the economy. According to Professor Hanemann, if Cali-
3 

fornia takes eight specific steps to fight global warming, the result 

would be a net increase of gross State product of $60 billion and 

create 20,000 in the new jobs. Companies that are here today, companies I’m very proud of, can help create good new green jobs for 

Americans. 

That is why I approach global warming with hope, not fear, actually excitement because I believe if we get started, this is going to 

have a life of its own, and again, it’s a total win win situation. 

You know, if somebody said to me, ‘‘Senator, what if you’re 

wrong?’’ What if I’m wrong? It’s not about me. It’s about the scientists. They have totally agreed on this. This isn’t, you know, 

something that I’m doing because it’s an easy task. It’s a hard task. 

People don’t like to think 20, 30, 40, 50, 60 years ahead. We have 

enough problems just finding a babysitter. 

This isn’t something that politicians embrace because it’s tough 

to get people excited about an issue that’s hitting us years down 

the road. But the fact is if we start doing this it will take on a life 

of its own. Even if the scientists are wrong, which I do not believe 

they are wrong, but even if they are wrong what have we done? 

We’ve created a cleaner economy. People save money. You can read 

breathe the air, all of the wonderful salutary effects that will come 

from fighting global warming. 

So that’s the great news. This isn’t like a situation where you 

have the disease and the cure is worse than the disease. People say 

you take this medicine, the good news is, you know, you’ll are be 

cured of cancer but you’ll die of a heart attack. 

This isn’t the case with global warming. To fight global warming 

you have all these benefits that go along with it, and if we act soon, 

we have a chance to avoid the worst effects of global warming, and 

in doing so we’ll strengthen our economy, create new jobs for millions of Americans. 

At 60 California Congress have said, and this is important, folks, 

the most expensive thing we can do is nothing, is nothing. So anyone who advocates turning away from this issue because it’s complex or you can’t get people interested in it, anyone, any political 

leader that does that just doesn’t deserve to stay in office. 

It’s as simple as that. It’s just simple because this is the change 

of our generation and we have to step up to the plate. I just became 

a grandma again, so I had my first 12 years ago, my second grandson about a month ago, and I’m looking at this little child, outside 

of the fact that he’s a genius and you can also see it in his eye, 

I realize that when he’s a 40-year-old guy he’s going to really start 

thinking about what I did and my moment of truth. You know, I 

just want to thank all of you who are on this panel today because 

you are really in the trenches and you get this and your testimony 

that you give today—this is quite an official hearing, and your testimony is going to be printed and distributed and read, and I will 

be sure it gets to everyone on my committee, but more than that, 

to the leadership, to the Administration, and to everyone else. 

So I am very, very pleased to now turn it over to the panel but 

I’m going to give a quick, very brief introduction, not even talk 

about all the merits you bring, just your title, and give people an 

idea who’s on the panel. Barry Cinnamon, chief executive officer of 

Akeena Solar, Michael Hanemann, who I spoke about, and those 
4 

are the people who don’t believe in global warming. They visit me 

as moments like this. 

Michael Hanemann you’ve heard about, Department of Agriculture and resource economist at University of California Berkeley; Elon Musk, chairman of Tesla Motors; Bill Unger, partner 

emeritus at Mayfield Fund; Bruce Klafter, senior director, Environment, Health and Safety, Applied Materials; Pat Zimmerman, director and chief of Atmospheric Science School of Mines and Technology; Kevin Collins, president and CEO of Evergreen Energy. 

So we’re going to hear the testimony. I may have a question or 

two. Then we’ll go to the news conference where I’ll answer questions from the media and hope that my friends here will follow me 

just in case they follow the questions. 

We may or may not need that. So maybe, Jen, if you could let 

me know that we’re going ahead on each topic, and we’ll just leave 

it at this. So Mr. Cinnamon, chief executive officer of Akeena Solar, 

please go ahead. 

STATEMENT OF BARRY CINNAMON, CEO, AKEENA SOLAR 

PRESIDENT, CALIFORNIA SOLAR ENERGY INDUSTRIES ASSOCIATION 

Mr. CINNAMON. Very good. Thank you, Senator Boxer, for the opportunity to testify before this committee. I share your passion for 

solving these problems. 

I founded one of the leading solar installation companies in the 

United States, Akeena Solar, and I’m also president of the California Solar Energy Industry Association representing the solar industry in California. So I look forward to giving you a hands-on 

perspective of the job creation benefits of renewable technologies. 

Clean energy is indeed a win win win. 

Senator BOXER. Is his microphone on? Could you hear it on the 

back? They cannot hear it in the back. 

Mr. CINNAMON. Is indeed a win win win. We win for the economy, we win for the environment, and we win by solving our energy problem. 

I’ve divided my remarks into three categories, jobs created by 

Akeena Solar, jobs created by our industry in California, and jobs 

created on a national basis. The jobs created by companies like 

Akeena Solar are tangible and not subject to speculation. At the 

end of July, Akeena Solar employed 159 full-time and 11 part-time 

people. 

Of these 170 people, 9 are in New Jersey, which is the second 

best solar State in the country behind California, and the remaining 161 people are spread out over seven offices we currently have 

in California, and we’re doubling and tripling on an annual basis, 

so that trend will continue. 

The nature of this job is not what many people would expect 

when we look into solar power. Only 63 percent are on the operational side. Of these 62 jobs only 36 percent are of our work force 

are actually rooftop installers. The rest of the jobs are operational 

jobs or highly paid engineers, technicians, documentation specialists, as project managers, and we have another 59 employees in 

sales, marketing, finance, and administration. 
5 

The peril’s vague, and many of these are good, solid, white collar 

jobs. Although I do not have a any specific data on the indirect jobs 

that we create, I do think that it is certainly consistent with the 

job multiplier that was calculated in the UC Berkeley study cited 

below. 

As we do our work, our employees are substantial consumers of 

construction materials, solar panels, vehicles, parts, supplies, and 

subcontractors coexist, so keeping a lot of other companies in business, and our employees are local members of the community and 

spend their salaries around town. Anecdotally, the hot dog vendor 

has certainly seen a very big jump in business from our lunchtime 

crowd. 

This job multiplier effect continues for California. In 2005 

Akeena Solar in conjunction with the California Solar Energy Industries Association authored a white paper entitled ‘‘The Economics of Solar Power For California.’’ The lesson that we learned from 

that certainly extends throughout the country. 

One of the key findings of this white paper was that the renewable energy industry is a powerful job creation engine. California 

investments in solar since 2001 have helped stimulate the development of a huge new high technology industry. 

Several studies have attempted to quantify the economic benefits 

of solar energy resources. Among these studies it was concluded 

that have dollar invested in new solar generation would result in 

an additional 50 cents of economic activity compared to producing 

the same power through conventional means. 

Included within this increased technology activity are more jobs 

for Californians. Each megawatt of solar generation would produce 

an additional 40 person years of employment. Professor Dan 

Kammen of UC Berkeley also studied the incremental economic 

benefits associated with renewables. 

His study estimated that 1.6 to 2.2 additional jobs, just call it 

two jobs, is created per megawatt of solar installed over the life of 

a facility, compared to jobs created by conventional electrical generation. Assuming a 20- to 25-year facility life, this results in very 

similar numbers to the California association results when additional 40 person years of employment per megawatt installed. 

Why does the solar industry produce more jobs and more economic benefits than comparable spending on conventional electrical 

supplies? Simply because the majority of the costs for national gas, 

fire, and power production are fuel. California obtains only 15 to 

17 percent of its gas supplies with in-State sources. 

So we’re buying that fuel from out of state sources. In contrast, 

installing solar generation requires skilled local labor and many 

components are made and manufactured locally. 

To put this in perspective—— 

Senator BOXER. Mr. Cinnamon, I’m going to ask you to wind up 

because each person has 5 minutes. We need to—if you could sort 

of summarize. 

Mr. CINNAMON. I’ll summarize it very quickly. 

Senator BOXER. We gave everyone 5 minutes. 

Mr. CINNAMON. Great. You may have heard that solar power is 

cost effective. Well, in fact, it is cost effective. It costs us less than 

19 cents a kilowatt hour to generate the power. 
6 

When we add the extra economic benefits of the strong domestic 

job creation, instead of increasing pain as a forum of fossil fuel, it 

becomes an economic imperative to move as quickly as we can for 

these new energy sources. Thank you. 

[The prepared statement of Mr. Cinnamon follows:] 

STATEMENT OF BARRY CINNAMON, CEO, AKEENA SOLAR, PRESIDENT, CALIFORNIA

SOLAR ENERGY INDUSTRIES ASSOCIATION

INTRODUCTION

Thank you for the opportunity to testify before this committee. As a result of my 

work in the solar industry since the 70s, founder of one of the leading solar installation companies in the U.S., and president of the California Solar Energy Industries 

Association, I look forward to providing the Committee with a real hands-on perspective of the job creation benefits of renewable technologies. I have divided my remarks into three categories—jobs created by Akeena Solar, jobs created by our industry in California, and jobs created on a national basis. 

AKEENA SOLAR JOBS

First, the direct jobs created at Akeena Solar are tangible and not subject to speculation. As of the end of July, Akeena Solar employs159 full time and 11 part time 

people. Of this 170, 9 are based in New Jersey (the second best solar state in the 

country), and the remaining 161 are spread out over the seven offices we currently 

have in California. 

101 of these jobs, or 63 percent, are on the operation side of the business. However, only 62 of these jobs, or just over 36 percent of our workforce are actual rooftop installers. The balance of our operational jobs are for highly paid engineers, 

technicians, documentation specialist and project managers. The balance of the 59 

employees at Akeena Solar are in sales, marketing, finance and administration. 

Although I do not have any specific data on the indirect jobs that we create, I 

do think that it is certainly consistent with the job multiplier that was calculated 

in the UC. Berkeley study noted below. As we do our work our employees are substantial consumers of construction materials, solar panels, vehicles, parts, supplies 

and subcontractor services. Additionally, our employees are members of the community and spend much of their salaries locally. Anecdotally, the hot dog vendor down 

the street from our office has certainly seen a jump in business from our lunchtime 

crowd. 

CALIFORNIA SOLAR JOBS

In 2005 Akeena Solar, in conjunction with the California Solar Energy Industries 

Association, authored a White Paper entitled ‘The Economics of Solar Power for 

California.’ One of the key findings of this White Paper was that the renewable energy industry is a powerful job creation engine. 

California’s investments in solar generation since 2001 have helped stimulate the 

development of a significant new high technology industry. Continued state support 

for the solar industry is cruc al if the industry is to grow to the point that it is selfsupporting. Importantly, investments by consumers and the state in solar generation will produce greater benefits for the California economy than will investments 

in the gas-fired CCGT and CT plants that they replace. 

Several studies have attempted to quantify the economic benefits of the accelerated development of solar resources. The California Solar Energy Industries 

Associat on has used an input-output model (E3AS) developed by The Goodman 

Group (TGG). The E3AS software estimates the regional economic impacts of a new 

technology by tracing the industries involved through successive rounds of supply 

linkages. At each step, the program traces the portion of the inputs required from 

each industry that are supplied within the regional economy being modeled. The 

study concluded that each $1 invested in new solar generation would result in an 

additional $0.50 of economic activity in California, compared to producing the same 

power through conventional means. Included within this increased economic activity 

are more jobs for Californians: each megawatt of solar generation would produce an 

additional 40 person-years of employment. 

Professor Dan Kammen of U.C. Berkeley has also studied the incremental economic benefit associated with renewable energy. In an April 2004 review of the 

available studies on the jobs created by photovoltaic generation, Dr. Kammen cites 

estimates of 1.6 to 2.2 additional jobs created per MW of PV installed, over the life 
7 

of a facility, compared to the jobs created by conventional electric generation. Assuming a 20- to 25-year facility life, this results in very similar numbers to Cal 

SEIA’s result of an additional 40 person-years of employment per megawatt installed. 

Why will the solar industry produce more jobs and more economic benefits than 

comparable spending on conventional electricity supplies? The majority of the costs 

of natural gas-fired power production are fuel costs. California obtains only 15 percent to 17 percent of its gas supplies from in-state sources, so most of the spending 

for fuel does not benefit the California economy. In contrast, installing solar generation requires skilled local labor, and many solar components are manufactured in 

the state. If the state provides long-term support for the solar industry, suppliers 

will be encouraged to locate plants in the state, close to a. major long-term market. 

RENEWABLE ENERGY JOBS

In 2008 Renewable Energy (RE) contributed to 6 percent of the U.S. energy market. Of this 6 percent solar PV held a 1 percent market share. There were 194,000 

RE jobs in 2006 which powered a $39.2 B industry while creating an additional 

446,000 jobs directly and indirectly. Most of these jobs that were created were scientific, technical, professional and skilled positions. Additionally, 95 percent of the 

jobs were in the Private Sector. 

In 2006 Solar PV accounted for 6,800 jobs, $1 B in revenue and helped create an 

additional 15,700 jobs directly and indirectly. The following diagrams outline the 

growth of renewable energy jobs and revenue between 2006 and 2030. 

U.S. Estimated Revenue in 2030 

Renewable Energy Photovoltaics 

Base Case ............................................................................................... $95 Billion $14 Billion

Moderate Case ........................................................................................ $227 Billion $30 Billion 

Advanced Scenario .................................................................................. $1,305 Billion $48 Billion 

Management Information Services & American Solar Energy Society 

U.S. Estimated Jobs in 2030 

Renewable Energy Photovoltaics 

Base Case ............................................................................................... 1.305 Million 200,000 

Moderate Case ........................................................................................ 3.138 Million 450,000 

Advanced Scenario .................................................................................. 7.935 Million 750,000 

Management Information Services 8 American Solar Energy Society 

In an aggressive scenario RE Jobs would increase 1,700 percent from 2006 to 2030 

and at the same time the revenue would increase by 1,400 percent. The increase 

in jobs and revenues would have a significant positive impact for each state as displayed below: 

Benefits to States 

(1) New Investments 

(2) Total Industry Sales 

(3) Industry Profits 

(4) Creation of Direct/Indirect Jobs 

(5) Specific jobs created by occupational skill 

(6) Stimulation of the manufacturing Sector 

(7) State & Fed Tax Revenues 

(8) Technology development and spinoffs 

(9) Revitalization of depressed regions 

One of the greatest benefits of RE and PV is the potential to revitalize depressed 

regions of employment. Nowhere has this been more effective than in Eastern Germany. Through state assistance, federal aid and EU funding for regional development Eastern Germany has utilized the manufacturing of solar power technology to 

become a model for economic rehabilitation. For example, the Eastern German state 

of Thuringia has more than 15 companies that cover the entire PV Value Chain. 

One company, Solon, has 150 employees producing 60 MW of panels each year on 
8 

6 production lines that run off 3 shifts a day/24 hours a day. The boom of RE in 

Germany has spurred the employment level to increase 36 percent in 2 years. 

While Germany has been very successful in RE in the past, the U.S. has even 

greater potential due to higher demand, more opportunity and better resources, for 

example better solar radiation. One state very similar to Eastern Germany is Ohio. 

In the last 10 years Ohio manufacturing jobs have decreased by 23 percent. In fact, 

the total share of U.S. jobs decreased in Ohio from 4.6 percent to 4.0 percent. 

Through the wide scale deployment of RE and specifically Solar PV states like Ohio 

would be able to secure well paying, highly skilled employment that would not be 

subject to foreign outsourcing. 

CONCLUSION

Generating electricity from clean, renewable sources is the future. Our early investments in this future are already paying off in the form of cleaner and less expensive energy. 

You may have heard that solar power is not cost effective. That statement is certainly not true for rooftop solar power. The typical small residential solar power system costs $24,000 and will generate 4,300 kwh of electricity per year, virtually 

maintenance free for 30 years. These energy costs work out to about 19 cents per 

kwh. I am confident that most of the California residents in here today pay much 

more than that for electricity—probably closer to 34 cents! Wth current incentives 

for solar power, these costs work out to about 11 cents per kwh—less than a third 

of the top marginal electricity costs in California. 

When we add the extra economic benefits of strong domestic job creation—instead 

of increasing payments to foreign countries for fossil fuels—it becomes an economic 

imperative to move as quickly as we can to these new energy sources. 

SOURCES

Akeena Solar and the Califomia Solar Energy Industries Association, ‘‘The Economics of Solar Power for California.’’ August 23, 2005 

(Daniel M. Kammen, Kamal Kapadia, and Matthias Fripp (2004), ‘‘Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Generate?’’ 

(RAEL Report, University of California Berkeley, Energy & Resources Group, April 

13, 2004).). 

Platts Renewable Energy Report, ‘‘Renewable Energy Report’’, June 12, 2006 

Management Information Services, Inc., ‘‘Economic and Jobs Impacts of the Renewable Energy and Energy Efficiency Industries: U.S. and Ohio,’’ July 2007. 

Senator BOXER. Thank you so much. Now W. Michael 

Hanemann, Chancellor’s Professor, Department of Agriculture and 

Resource Economics, University of California at Berkeley. Welcome, sir. 

STATEMENT OF W. MICHAEL HANEMANN, CHANCELLOR’S 

PROFESSOR, DEPARTMENT OF AGRICULTURE AND RESOURCE ECONOMICS, AND GOLDMAN SCHOOL OF PUBLIC 

POLICY DIRECTOR, CALIFORNIA CLIMATE CHANGE CENTER 

AT UC BERKELEY, UNIVERSITY OF CALIFORNIA, BERKELEY 

Dr. HANEMANN. Senator Boxer and other members of the committee, I greatly appreciate the opportunity to appear before you 

today. I’m a professor of environmental economics and policy at the 

Goldman School of Public Policy at UC Berkeley. The first point I 

want to make is that government action needs to be taken. Voluntary measures, while helpful, are not going to solve the problem. 

From an economic perspective greenhouse gas emissions are an example of an externality, like other forms of pollution, and voluntary 

measures by those who emit the pollutant will be insufficient. 

The second point is that global warming is more complex than 

other problems of pollution which is Congress has dealt with in the 

past, and will require a broader set of policy measures. 
9 

Many economists have tended to view global warming through 

the prism of the Nation’s highly successful experience in dealing 

with sulfur dioxide in the 1990 Clean Air Act. Through the cap and 

trade system introduced under Title IV we achieved a 50 percent 

reduction in emissions that cost substantially less than we anticipated. 

Because of its success, this has been seen by some economists as 

a precise template for dealing with the greenhouse gas emissions. 

I disagree. While I believe that emission trading needs to be part 

of the policy mix, trade by itself it won’t solve the problem of greenhouse gases. A broader approach is required with a more specific 

purpose on technology innovation and adoption. 

How did title 4, emission trading, solve the problem of SO2? 

Owners of power plants responded by changing operations, by 

modifying combustion, for example, by end of pipe treatment, installing scrubbers to remove emissions. 

What should be noted is the strategies not used. Energy conservation and demand management played essentially no role in 

the reduction of SO2. Renewal managing played no role. New combustion technologies played no role. What was done involved known 

and mature technologies. 

With greenhouse gases this is a different situation. There’s no 

low CO2. There’s no post combustion scrubber that can be applied 

to existing demands. This is not a mature technology. Renewable 

sources of energy will have to play an important role. 

Maybe nuclear will play a role. The point is that we’re the electricity generation—the focus of greenhouse reduction has to be on 

new technology and its cost effective incorporation in design. 

Moreover, with greenhouse gases we can’t solve the problem by 

focusing just on electricity generation. Electricity generation accounts for about two-thirds of the SO2 emissions in the United 

States. But only about one-third of the greenhouse gas emissions, 

and in California only one-fifth of greenhouse gas emissions is due 

to other sources, among which transportation looms large. 

So these other sources, too, technology innovation, will play a 

major role, for example, through innovations such as hybrid vehicles and ethanol fuel. Greenhouse gases differ from SO2 also in the 

timeframe. As you know, Governor Schwarzenegger set two policy 

goals for California, by 2020 to reduce our emissions back to what 

they were in 1990, and by 2050 to reduce our emissions 80 percent 

below their level in 1990. 

We have those two policy objectives as we understand. The shortterm objective is to deploy existing near-term technologies to roll 

back emissions to their level in 1990. The long-term objective is to 

stimulate innovation and investment in new technologies for a 

major decarbonization of the future economy. 

As the greenhouse gases that are on—unlike SO2, innovation will 

play a central role. Another important difference is energy conservation in behavioral change. I’d like to mention quickly one statistic, that in the United States electricity use per capita since 1975 

has grown by about 50 percent. In the western states it has grown 

by about two-thirds. In California it has not grown at all. 

We believe that an important factor here is the regulation of energy efficiency in appliances by the California Energy Commission. 
10 

So this brings me in concluding to focus on the economics that we 

now sense, reduction. You mentioned the report that he published 

in January 2006 showing that meeting—that programs would lead 

to a net growth in gross State product and in jobs. 

In August 2006 he issued a supplementary report which shows 

how to meet the full 19—the full goal of reducing emissions back 

by 2020 to their level in 1990, and he included in addition to those 

regulatory programs the concept of emission trading to achieve the 

rest of the target and assist in whereby some of the profits from 

some issuance of the permits will cloud back to—he showed an 

even larger economic gain, an increase of $74 billion in gross State 

product, and 89,000 new jobs. 

To summarize, first I should point out his analysis was restricted 

to California, which is certainly different in certain respects from 

the national economy. 

But I want to emphasize in closing the key features of this analysis in California are certain to carry over nationally. In fact, the 

finding that greenhouse gas emission reduction contributes to economic growth in three important ways. 

First, energy efficiency puts money in consumers’ pockets, and 

that leads to economic growth and creation of jobs. Second, policies 

that enable firms to invest in new technologies that stimulate innovation and benefit—innovation is the most important long-term 

source of growth of income and employment in the United States. 

Third, as you know, policies that promote energy efficiency reduce our dependence on imported fuels, which itself has a cost in 

terms of economic security. 

Just with three areas where I think California has a distinct advantage. One is information technology and particularly a distributed sensing and collection of information such as smog dust. The 

second is energy and efficiency which California has pioneered. The 

third is the Cleantech exemplified by Mr. Cinnamon and Mr. Musk, 

who’s now about to testify. Thank you for your consideration. 

[The prepared statement of Dr. Hanemann follows:] 

STATEMENT OF W. MICHAEL HANEMANN, CHANCELLOR’S PROFESSOR, DEPARTMENT OF

AGRICULTURAL & RESOURCE ECONOMICS, AND GOLDMAN SCHOOL OF PUBLIC POL- ICY, DIRECTOR, CALIFORNIA CLIMATE CHANGE CENTER AT UC BERKELEY, UNIVER- SITY OF CALIFORNIA, BERKELEY

Senator Boxer and other members of the Senate Committee Environment and 

Public Works Committee, I greatly appreciate the invitation to appear before you 

today. 

I am a professor of environmental economics and policy and Director of the California Climate Change Center in the Goldman School of Public Policy. Since the 

Center was established four years ago, my colleagues and I have been working on 

various aspects of climate change and its implications for California, including the 

potential adverse impacts to California’s economy, society and ecology, and also the 

policies that California needs to adopt to reduce our greenhouse gas emissions in 

an effective manner and at a tolerable cost. 

Climate change and global warming are the greatest environmental policy challenges that we face today not only because of the scale and magnitude of the problem but also because of its complexity and novelty. However, climate change is also 

a great opportunity because it inevitably will force a substantial change in how we 

generate and use energy throughout our economy, and this will require major technological innovations. If this is done right, with the right policies in place, and also 

with a degree of good fortune, it can become a source of economic growth for California and for the United States. 

Thc first point to be made is that governmental action needs to be taken. Voluntary measures, while helpful, are not going to solve the problem. From an eco-
11 

nomic perspective, greenhouse gas emissions are an example of an externality, like 

other forms of pollution, and voluntary measures by those who emit the pollutant 

will be insufficient to yield the required reduction in pollution. 

The second point is that is that, as noted above, global warming is more complex 

than other problems of pollution which Congress has dealt with in the past, and it 

will require a broader set of policy measures. 

In my observation, many economists have tended to view global warming through 

the prism of the nation’s highly successful experience in dealing with sulfur dioxide 

(S02) under ’Title IV of the Clean Air Act Amendments of 1990. Through the cap 

and trade system introduced under Title IV, we achieved a 50 percent reduction in 

emissions at a cost substantially less than had been anticipated. Because of its success, this has been seen by some economists as a precise template for dealing with 

greenhouse gas emissions. I disagree. While I believe that emission trading needs 

to be part of the policy mix in dealing with greenhouse gases, by itself it will not 

solve the problem of greenhouse gases: a broader approach, with a more explicit 

focus on technology innovation and adoption, is required. 

How did Title IV emission trading solve the problem of S02? The emissions cap 

was applied to individual generating units, and they responded in several ways. 

Owners of power plants responded by changing operations—by modifying combustion, switching from high- to low-sulfur coal, and by changing the order of dispatch 

across different facilities—and by end of pipe treatment, installing scrubbers to remove emissions post-combustion. What should be noted is the strategies not used. 

Energy conservation and demand management played essentially no role in the reduction of SO2. Renewable energy sources played no role. New combustion technologies played no role. What was done involved known and mature technologies. 

There was some experimentation and innovation in plant operation, but technological innovation in the sense we normally think of played no role in the events 

post 1990. 

With greenhouse gases there is a very different situation. There is no low CO2

coal; fuel switching with biomass is a possibility but this can only be done on a limited scale and this is not a mature technology. There is no post-combustion scrubber 

that can readily be applied to an existing coal-fired generating unit. There is the 

potential of carbon capture and sequestration, but this is not a mature technology 

in electricity generation. Renewable sources of electricity will play an important 

role. Maybe nuclear will ultimately play an important role, especially if the disposal 

problem can be solved effectively. With electricity generation per se, the focus for 

greenhouse gases is clearly on new technology and its cost-effective incorporation in 

the design of new power plants. 

Moreover, with greenhouse gases, unlike SO2, we cannot expect to solve the problem by focusing on electricity generation alone. Electricity generation accounts for 

about 2⁄3 of all SO2 emissions in the United States. With greenhouse gases, by contrast, electricity generation accounts for only about 2⁄3 of emissions and in California 

it accounts for only 2⁄3 of emissions. The majority of emissions are due to other 

sources, among which transportation looms very large. For these other sources, too, 

technological innovation will play a major role, for example through innovations 

such as hybrid vehicles or cellulosic ethanol for vehicles. 

Greenhouse gases differ from SO2, also in the time frame of the problem. As you 

know, Governor Schwarzenegger has set two policy goals for California: by 2020 to 

reduce our greenhouse gas emissions back to their level in 1990, and by 2050 to reduce our emissions 80 percent below their level in 1990. The second goal—at least, 

a reduction roughly of that order of magnitude and on that timeframe—needs to be 

met by all of the developed countries if a severe and dangerous increase in the global atmospheric concentration of CO2 is to be avoided. This will require profound innovation to permit as substantial restructuring of energy use in the modem economy. 

There are thus, two policy objectives for greenhouse gases, short-term and longterm. The short-term objective is to deploy existing and near-term technologies to 

roll back emissions to their level of 1990. The long-term objective is to stimulate innovation and investment in new technologies for a major decarbonization of the future economy. 

In short, for greenhouse gases, unlike SO2, innovation will play a central role if 

we are to meet the short- and long-run policy objectives. 

Another important difference for the short-term policy objective is energy conservation and behavioral change. As noted earlier, these played essentially no role 

in the reduction of SO2 but they will be crucial for meeting California’s 2020 goal 

for greenhouse gas reduction. 

In this context I would like to draw your attention to California’s remarkable success in promoting energy conservation through the regulatory programs of the Cali-
12 

fornia Energy Commission (CEC), which was established 30 years ago. Over that 

period of time, electricity use per capita in the United Stales has increased by about 

50 percent; in the Western states, it has increased by about 2⁄3. In California, however, it has not increased at all. My colleague Professor Max Auffhammer in the 

Department of Agricultural & Resource Economics at Berkeley and I are currently 

conducting a study to pinpoint the reasons for this striking divergence; it seems 

clear that at least part is attributable to California’s unique history in regulating 

appliance efficiency through the CEC: it is an example of regulation-induced innovation. 

This brings me to the economics of greenhouse gas reduction. As pan of a larger 

study on Managing Greenhouse Gas Emissions in California, co-directed with my 

colleague Professor Alex Farrell and issued in January 2006, my colleague Professor 

David Roland-Holst conducted a study of the economic cost to the California economy of reducing greenhouse gas emissions in California. The January 2006 analysis 

focused on a set of emission reduction regulations which together accounted for 

about half of the 2020 reduction target. In August 2006, he released an updated 

analysis accounting for all of the 2020 emission reduction target; it combines the 

regulatory strategies in his earlier report with an emission trading system covering 

the remainder of the economy and bringing about attainment of the full 2020 target. 

His analysis uses the BEAR model, currently the most disaggregated and sophisticated computable general equilibrium model of the California economy. His August 

2006 report finds that that meeting the 2020 cap can stimulate the state’s economy. 

He projects the cap to boost annual Gross State Product (GSP) in 2020 by $60 billion and create 17,000 new jobs. if the emissions trading system is implemented so 

as to create direct incentives for innovation, by using revenues from the sale of 

emission permits to finance innovation, he estimates the gains to be even larger: 

$74 billion in GSP and 89,000 new jobs. 

His analysis is restricted to California, which is different in certain respects from 

the national economy. But, some key features of his analysis for California are certain to carry over to the national economy, in particular his finding that greenhouse 

gas emission reduction contributes to economic growth in that important ways: 

(1) Energy efficiency increases consumer purchasing power and puts money into 

the economy, stimulating job growth and incomes. 

(2) Policies that enable firms to invest in new technologies stimulate innovation, 

which is the most important long term source of growth in income and employment. 

(3) Policies that promote energy efficiency also reduce our dependence on imported 

fuels that are an important threat to our economic security. 

Thank you for your consideration. 

Senator BOXER. Thank you so much—really appreciate—you covered a lot of ground in five minutes. Thank you. 

Mr. Elon Musk, chairman of Tesla Motors. I’ve had the pleasure 

of riding along in your cars and I’m looking forward to hearing 

from you. 

STATEMENT OF ELON MUSK, CHAIRMAN OF TESLA MOTORS 

Mr. MUSK. Thank you. In addition to being the chairman and 

principal owner of Tesla Motors, I’m also chairman of Solar City, 

which is a complementary endeavor, energy generation to the energy consumption of Tesla Motors car. So I’ll talk in terms of those 

two companies because I think those are very appropriate, which 

is that by pursuing green technologies we not only save the environment but we actually support and grow the economy. 

If we fail to go in that direction our economy will be harmed and. 

Tesla Motors’ initial product is a sports car. It’s an expensive sport 

car, but it allows us to enter the market at the high end where we 

can do low unit volume and a high price just as new—whether it’s 

a software or a laptop at higher price and lower unit volume because as we ensure the technology we’re able to bring out the technology and make it available to a larger and larger segment of the 

population. 
13 

It also helps refute some of the misapprehensions about electric 

vehicles. This is a first-class car. It goes 0 to 60 in under 4 seconds. 

It has a range, in fact, just driving around the Bay Area we’ve got 

the range as high as 267 miles on a single charge. 

It’s fully guaranteed. In fact, it’s been crash tested. The Roadster 

is the only production electric car that has done that. We’re moving 

quite quickly beyond the Roadster to more mass market vehicles. Model number 2, where anyone for a price of around $50,000 for 

a four-door five-passenger sedan and the model 3 will go even beyond that lower price and higher quality. We’re also working on 

providing electric drive train technology to the conventional car 

business to the marriage suppliers which we think will further accelerate the adoption of electric vehicles. 

In terms of jobs we’ve grown from two employees in 2003 to almost 300 today in 4 years. We expect to add another 400 employees 

with our New Mexico plant and we expect to really just double and 

triple the employee volume year over year beyond that time. 

We expect eventually to have several direct jobs and with some 

appropriate multiplier on indirect jobs in the future. 

Getting to Solar City, you have to address both the consumption 

and the production of power. I think my prediction is that by the 

middle of the century a majority of our power will be solar. A combination of photovoltaic as well as thermal. 

So if in the case of Solar City it’s growing extremely quickly. It’s 

creating a tremendous number of jobs, a range of jobs; engineering, 

but also green color jobs. These are jobs that people can obtain who 

don’t necessarily have a college degree, and it’s the—Solar City will 

pay between 15 and $22 an hour for somebody who doesn’t even 

have a college degree, two to three times the minimum wage, opportunities for advance employment that can be applied in other 

areas. 

So in less than a year in operation Solar City has created a 160 

new jobs and plans on hiring 1,200 new jobs over the next 2 years. 

Those are direct jobs. As I said, there’s an opportunity to go from 

installer to team lead to regional supervisor, and this is just in 

California. 

We continue to expand to other states. So as your committee and 

the Congress as a whole consider legislation to address energy policy, I urge you and Congress to adopt policies that will continue to 

offer new technologies like Tesla Motors and the other companies 

that are represented here today. It’s very important that we have 

these incentives. I’m a huge proponent of subsidies or special advantages or anything, that sort of thing. I’m a believer in the free 

management under ordinary circumstances. We have consumption 

of the common good. That’s the fundamental issue. The common 

good is the environment as over see to the atmosphere—you see 

similar problems in fisheries where the consumption for the common good, willing to let go and fish out of the sea, it’s destructive 

to everyone. 

So if we properly recognize the cost of to the economy and the 

atmosphere and at the gas pump and at the power plant then it— 

there would be no issue. 

There would be no—but we don’t—— 

[The prepared statement of Mr. Musk follows:] 
14 

STATEMENT OF ELON MUSK, CHAIRMAN OF TESLA MOTORS

Madame Chairman (and Members of the Committee), welcome to Silicon Valley 

and thank you for the opportunity to testify before the Committee today on the Subject the creation of so-called ‘‘green jobs’’ in the high tech and industry. As the 

Chairman of two clean tech companies that are focused on combating global warming, I enjoy a front row seat from which to view the rapid creation of new jobs and 

in one case—a wholly new industry. 

While the number of jobs created by Tesla Motors, Solar City and other players 

in the Clean Tech arena is impressive, and the rate of job growth is even more so, 

perhaps the most striking aspect of the jobs we are creating is embodied in their 

diversity. As has often been the case in Silicon Valley, we have created a wealth 

of new jobs for holders of advanced technical and management degrees. However, 

the truly notable aspect of the Clean Tech revolution is its ability to create high 

quality ‘‘green collar’’ jobs in addition to those high end technical positions. Tesla 

Motors and Solar City are both exemplars of this phenomenon. 

As I believe you are aware, Tesla Motors’ initial product is a high-performance 

electric sports car called the Roadster. However, the intent is to build electric cars 

of all kinds, including low-cost family vehicles. As our unveiling of the Tesla Roadster has demonstrated, reports of the death of the electric car have been greatly exaggerated. The Roadster defies all conventions associated with environmentally 

friendly cars, particularly those of a purely electric nature. 

My apologies for the brief commercial, but to understand what is possible, I must 

present the key facts of the vehicle: 

• 0 to 60 mph in 3.9 seconds 

• 135 MPG equivalent 

• Over 200 mile driving range on a single charge 

•Fully DOT-compliant crash tested, with airbags, crash structures, etc. 

The Tesla Roadster is designed to beat a gasoline sports car like a Porsche or a 

Ferrari in a head-to-head showdown, but it has more than twice the energy efficiency of a Prius. In other words, it is a great sports car without significant compromises. Now, some may question whether this really does any good for the world. 

Are we really in need of another high-performance sports car? Will it actually make 

a difference to global carbon emissions and our oil dependence? 

Well, the answers are no and not much. However, that misses the point. Almost 

any new technology initially has high unit cost before it can be optimized. This is 

no less true for electric cars. Tesla’s strategy is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market 

as fast as possible to higher unit volume and lower prices with each successive 

model. 

Tesla’s second model will be a large four door family car starting at $50,000 and 

the third model will be a smaller, more affordable four door. In keeping with a fastgrowing technology company, all free cash flow is plowed back into R&D to drive 

down the costs and bring the follow-on products to market as quickly as possible. 

When someone buys the Roadster sports car, they are actually helping to pay for 

the development of the low cost family car. 

Since the Tesla Motors’ birth in 2003, the company has grown from 2 employees 

to over 300, with a headquarters and R&D center here in Silicon Valley, a vehicle 

development center outside of Detroit and plans to break ground on a vehicle assembly plant (in New Mexico) that will employ an additional 400 employees later this 

year. While the early employees of the company were, not surprisingly, engineers 

and technical experts, as we have move into a manufacturing phase, we will be aggressively adding high quality high paying hourly jobs. It is worth noting that every 

one of our employees enjoys a full benefits package, is an equity shareholder in the 

company and will share in the success of the enterprise. 

Vehicle manufacturing is a supplier intensive business and so while the aforementioned direct employment numbers are impressive enough, it is safe to say that the 

indirect job creation that Tesla is and will continue to catalyze, while difficult to 

quantify can safely be assumed to be a Significant multiple of the direct labor pool. 

Our second company, SolarCity, is focused on bringing solar power to every home 

and business and in so doing it is measurably reducing the carbon footprint of the 

growing number of communities where SolarCity operates. By creating a trusted 

brand and bringing cost-reducing innovations to the market, SolarCity has become 

the largest residential solar installer in California. 

In contrast to Tesla Motors Solar City is neither a manufacturing company nor 

a developer of high technology. Rather, it is a service company focused on the installation of residential solar systems. Since solar installation is a labor intensive enterprise and because the number of systems installed drives the success of the enter-
15 

prise as a whole, Solar City’s success to date and as future prospects are fundamentally dependent on the creation of a high quality ‘‘green collar’’ labor pool. In other 

words, the more jobs that SolarCity can create, the more the company will succeed. 

In less than a year of operation, SolarCity has created 160 new jobs and has plans 

to hire an additional 1200 well-paid ‘‘green collar’’ workers by We end of 2009. 

These ‘‘green collar’’ jobs are high-quality jobs that enable individuals with limited 

experience and limited advanced education and training to learn a skilled trade and 

develop valuable skills and experience. These jobs pay well ($15-22/hour), include 

benefits and stock options and offer the opportunity for career advancement: from 

installer to senior installer to team lead to regional supervisor. As SolarCity extends 

its business from California across the country, the company and the industry will 

prosper in direct relation to the number of jobs that the company can create. 

As your committee and the Congress as a whole consider legislation to address 

Climate Change and Global Warming in the fall, I am hopeful that you will to drive 

for policies and legislation that will support the continued development of promising 

new technologies like Tesla Motors’ performance electric cars and to encourage companies that are applying new business models to expand renewable energy generation like Solar City. You can do so by encouraging incentives for consumers to adopt 

these technologies—in particular by creating tax policies that pull larger unit volumes into the market and help to accelerate our ability to get to economies of scale 

and effort on the supply side. You can also encourage job training programs that 

will increase the available labor pool for the green work force that our continued 

success will demand. 

In conclusion, I believe that we are just now beginning to understand the promise 

of job and wealth creation that is embodied in the drive to develop the alternative 

technologies and business models that will address the tern crises of petroleum dependence and global warming. But I am certain beyond a shadow of a doubt that 

if we as a nation commit to supporting these industries we will be laying the 

groundwork for America’s economic prosperity and competitive advantage for decades to come. 

Thank you for your time. I will be happy to address your questions. 

Senator BOXER. Thank you so much. 

Mr. Unger, Bill Unger, partner emeritus at Mayfield Fund. 

STATEMENT OF BILL UNGER, PARTNER EMERITUS AT 

MAYFIELD FUND ENVIRONMENTAL ENTREPRENEURS 

Mr. UNGER. I’m also a member of Environmental Entrepreneurs, 

which is an 800 member organization of CEOs and investment professionals that believe that a good economy is also a good environmental policy. One of the things that venture capital industry is 

most proud of is job creation and the role we play in it. In 2006 

venture back companies since 1970 provided 10.4 million jobs and 

these job companies had revenues of $2.3 trillion. 17.6 percent of 

total GP in this country. 

Since 1970 for every $28,000 invested we created one job. I say 

we. I shouldn’t say—we provided counsel to help them do it. But 

how does this really happen? First I think it’s the wealth of technology generated in our national laboratories and our universities. 

These with other public and private institutions are national resources. 

Really, they’re treasures. I’m on the advisory board at Berkeley, 

college of engineering, also at Illinois. There’s clearly more work 

going on than we can take advantage of today. 

DARPA and NIH have played a crucial role in nurturing technology development with microventure capitalists. We help on the 

front end in nurturing technology. Then we can bring them to the 

marketplace. 

The United States is no longer the world leader in two important 

clean energy fields. We’re third in installing behind Denmark and 
16 

Spain. We’re third in photovoltaic power installed behind Germany 

and Japan. 

These are technologies that were developed in our national laboratories. Taxpayer dollars paid for this and we need to need to be 

first again. There’s many other examples of that in the country. 

Since the energy crisis of the 1970’s total Federal spending on 

energy research is down. Some of this is made up by the venture 

capital industry and by other funded research. But by and large, 

we’re still operating with quite a handicap. 

We can regain this market share. In 1998 the semiconductor industry was doomed because the Japanese were going to eat our 

lunch and the game was over. Some groups helped turn that 

around. We can do that again. 

The second reason is the public and private investments in biotechnology and software have been very strong and there’s a spillover effect of this in the Cleantech. So we’re able to benefit from 

that Cleantech even though energy source is down. 

We can also measure the people who were entrepreneurs in the 

1980s and 1990s and are now going into Cleantech. So we have a 

wonderful pool of experienced entrepreneurs and experienced technologists who want to apply themselves to this next industry. 

There isn’t anyplace in the world, much less in the United 

States—certainly the United States has more of these capabilities 

than anyplace else in the world, and we should be taking advantage of it. 

So it’s a great story. Last year there was $2.9 billion invested in 

Cleantech, which is up 75 percent from 2005. It’s now the third 

largest venture sector, bigger than some—I cannote this, bigger 

than medical devices. The analysis from UC Berkeley that we all 

read from the professors who do this concluded that if renewable 

energy sector generated more jobs per megawatt of power installed 

per unit of energy produced and dollar of investment than the fossil 

fuel-based energy sector. 

Our analysis shows that for every $100 million invested generates 2,700 new jobs. If we invest the $14 to $19 billion we expect 

to be invested over the next 4 years that will create 400 to 500,000 

new jobs. The National Venture Capital Association actually—their 

numbers would say it would create over 600,000 new jobs during 

that time. 

There are still barriers which have been said by other folks and 

I don’t need to repeat them, we have to head off a climate crisis, 

though, and we can’t treat that lightly. We need consistent policy. 

We need to have some even playing field so that the long-term subsidies in traditional energy generating industries and the trade 

barriers do not unfairly impact us. We like a level playing field. 

So as with and the other strategies mentioned before, we know 

you hear a lot about that, and I would only gather we would like 

to see the states not prohibited from being more aggressive, whatever the national energy policy turns out to be. 

There are people who say move slowly and incrementally on this 

turn it or the action is unnecessary. Those who say the market 

forces are enough without government mandate we believe are incorrect. The problems are much too big and much too urgent. We 
17 

need to have both. We should not be the people our parents warned 

us about who pass the buck. 

You can have this kind of economy and address global warming. 

We have all the capital and entrepreneurial skills to do this. We 

need the government to work together with private sectors. We 

need government leadership today to stand up to do this. 

We are the country that showed what could be accomplished in 

World War I and World War II, the Manhattan project, the Marshall Plan, and the space program are all examples when others 

would have held back. 

We succeed when we do this. We need to be the people we’ve 

been waiting for. If we do this, we will be the people that our children will say give a better world to their children. 

[The prepared statement of Mr. Unger follows:] 

STATEMENT OF BILL UNGER, PARTNER EMERITUS AT MAYFIELD FUND, ENVIRONMENTAL ENTREPRENEURS (E2) 

Good morning Committee Chair Boxer, Ranking Member Inhofe and Members of 

the Committee, I am Bill Unger, a Partner Emeritus at Mayfield Fund, a venture 

partnership investing in technology companies since 1970, and a member of Environmental Entrepreneurs (E2), a volunteer organization of business and investment 

professionals who believe that good environmental policy is good economic policy. I 

now spend only a part of my time investing in for profit companies, and more of 

my time as a board member of several non-profit organizations, such as CARE USA, 

YouthNoise, The Anita Borg Institute for Women and Technology, as an Advisor to 

and member of E2. I also serve on the advisory boards of the Colleges of Engineering at The University of California at Berkeley and The University of Illinois at Chicago. I appreciate the opportunity to be here today to share my views as a venture 

capitalist, and as a member of E2, on the creation of new jobs created in ‘‘Cleantech’’ 

related industries, including jobs created by measures taken in response to threat 

of Global Warming. In particular, I would like to show how the economic and employment growth of the Cleantech sector is related to a national carbon policy. 

Some history of the Venture Capital industry’s impact on our economy will set the 

stage. One of the achievements the venture capital industry is most proud of is our 

role in job creation. For example, the U.S. semiconductor industry, as of the year 

2000, employs 210,000 people in high-wage manufacturing jobs, and had sales totaling $102 billion in the global market in 2000 (50 percent of total worldwide sales). 

In 1999, this sector was the largest value-added industry in manufacturing in the 

U.S.—larger than the iron, steel and motor vehicle industries combined. 

The 2005 employment data show a heavy concentration of venture capital supported jobs in the software industry as well, with nearly 860,000 jobs—almost 90 

percent of the total jobs in the sector. Venture-backed companies recorded $210 billion in sales in 2005, which represents more than 36 percent of the industry’s total 

revenues generated that year. 

In 2006, venture backed companies provided 10.43 million U.S. jobs and these companies had revenues of $2.3 Trillion. The revenue represents 17.6% of US GDP. 

Data from the National Venture Capital Association, (this entire study is at http:// 

www.nvca.org/pdf/NVCAlVentureCapital07l2nd.pdf.) shows that at the end of 2006, one ongoing job existed in venture backed companies for every $28,463 invested in venture capital since 1970, or about 3,500 jobs for every $100M invested 

by the Venture Capital industry. (Investment in the 5 years preceding the jobs and 

revenue measurement date is not included because its effect on 2006 statistics 

would be minimal.) Furthermore in 2006, these companies generated $7.87 in revenue for every dollar invested. This is very impressive for an industry that typically 

invests less than 0.2% of GDP each year. 

Looking just at the biotech world, for every dollar of venture capital invested, 

$4.43 in revenue was being produced in 2006 ($83 Billion total). As with VC in general, most of these investee companies failed. For every $76k of investment, one ongoing job existed in 2006 (and these are typically high-paying jobs). This refers only 

to the investment economic effect of biotech investment. 

Publicly funded research, especially through such entities as DARPA and the NIH 

have played a crucial role in manning technology development to the point where 

the Venture industry, which likes to invest in product development, can fund companies to bring valuable new products and solutions to the market place. At 
18 

1 According to the Cleantech Capital Group, $7.4B was invested from 1999 through Q2 2005. 

Q3 2005 was $.425B. Q4 2005 was $.502B and 2006 was $2.9B for a total of $11.1B. 2 Cleantech Venture Network; PricewaterhouseCoopers/National Venture Capital Association 

Money TreeTM Report (CVN; MoneyTree). (2007). http://www.pwcmoneytree.com/exhibits/ 

MoneyTreel4Q2006lFinal.pdf. 

Mayfield Fund, we funded companies such as Atari, Silicon Graphics, Compaq, 

3Com, Genentech, Amgen and over 100 hundred other public companies that are examples of this kind of success. In 1990 Mayfield led the second round investment 

in Sandisk. There were few cell phones by today’s standards, no digital cameras, no 

MP3 players, no Blackberries; a slower, simpler time. All these markets and more 

were enabled by Flash Memory technology created by the founding team. I suspect 

there are few of us here who haven’t purchased a device with the Sandisk name 

on it, or a device with Sandisk memory in it. Mayfield was the founding investor 

in Millennium Pharmaceuticals, which was the pioneering company in genetic design of pharmaceuticals based on an individual’s reaction to disease at the molecular 

level. In the early 1990’s, Mayfield funded Heartstream, the manufacturer of the 

defibrillator machines found now in virtually even-public building and every airport. 

When this company was started, it took a special truck, a suitcase sized $10,000+ 

machine, and specially trained technicians to save a life. Today you can buy one on 

Amazon.com for $1100. 

Mayfield Fund and the Venture industry have seen the unfolding of the semiconductor, software, medical device biotechnology, computer, networking and communications industries, creating millions of jobs and trillions of dollars in revenue. 

Cleantech has some important similarities to these success stories, and some differences. Cumulative venture investment in the Cleantech sector of venture investing from 1999 through 2006 totaled $11.1 billion1 So though it is early times in 

Cleantech investing, by historical standards we think there are encouraging signs 

for economic growth and job creation. 

2006 was a banner year for the cleantech industry—with total venture investments surpassing those of the medical devices, telecommunications, and semiconductor sectors—all of which it had trailed in 2005. Venture investments in cleantech 

firms in North America totaled $2.9 billion, a 78 percent increase over the same 

total in 2005, and a 243 percent increase since 2001. This total also represented 11 

percent of all North American venture capital investments for the year ($27.0 billion),2 making cleantech the third largest venture capital category—after only software and biotechnology. 
19 

3 Ibid CVN; MoneyTree. 

4 Environmental Information Technology (IT) and Enabling Technologies had also been considered cleantech categories by the Cleantech Venture Network until October 2006. 5 Cleantech Venture Capital: How Public Policy Has Stimulated Private Investment, May 30, 

2007 http://www.e2.org/jsp/controller?docId=12959 6 ‘‘DOE Selects Six Cellulosic Ethanol Plants for up to $385 Million in Federal Funding’’ 

http://www.energy.gov/news/4827.htm 

In fact, since the economic downturn of 2000-2001, cleantech is one of the few 

U.S. industries to experience real growth in venture investments. While U.S. venture capital investments as a whole were off by 33 percent in 2006 compared to 

2001, investments in American cleantech companies were up 243 percent in that 

time—more than two and a half times the growth rate of the next strongest industry (electronics/instrumentation) over that period.3

So let’s define Cleantech. The cleantech industry encompasses a broad range of 

products and services, from alternative energy generation to wastewater treatment 

to more resource-efficient industrial processes. Although some of these industries 

are very different, all share a common thread: they use new, innovative technology 

to create products and services that compete favorably on price and performance 

while reducing humankind’s impact on the environment. To be considered 

‘‘cleantech,’’ products and services must: • Optimize use of natural resources, offering a cleaner or less wasteful alternative 

to traditional products and services; • Have their genesis in an innovative or novel technology or application; • Add economic value compared to traditional alternatives. 

The eleven cleantech categories, as defined by the Cleantech Venture Network, are4: 

• Energy Generation • Energy Storage • Energy Infrastructure • Energy Efficiency • Transportation • Water & Wastewater • Air & Environment • Materials • Manufacturing/Industrial • Agriculture • Recycling & Waste 

Some findings from the E2 Cleantech Report of 20075 show real progress: 

FINDING 1: GROWTH IN CLEANTECH ACCELERATED IN 2006, WITH SIGNIFICANT ACTIVITY

IN THE PUBLIC MARKETS

In 2006, cleantech became the third-largest North American venture capital investment category (11 percent of all venture investments), behind software and biotechnology. Total North American venture capital invested in cleantech companies 

reached $2.9 billion in 2006, an increase of 78 percent over the $1.6 billion invested 

in 2005. 

A significant increase in investments during the second and third quarters of 

2006 was driven by capital targeted for companies moving into production. Cilion, 

Altra, Bloom Energy, Renewable Energy Group, and Nanasolar—all of which represent new renewable energy technology or biofuels—collectively accounted for more 

than $600 million in investment in 2006. But this boom can also pose challenges: 

Companies with new technologies have difficulty accessing capital for manufacturing build-outs. While established technologies such as corn ethanol can rely on 

debt financing, the first thin film solar or cellulosic ethanol facilities cannot as readily access debt financing because of the higher risks associated with first production 

facilities. These companies are forced to either raise additional equity capital and/ 

or look to government assistance. As part of the 2005 Energy Act, the Department 

of Energy granted six cellulosic facilities special financing of up to $385 million to 

help build their first production facilities that, in aggregate, should reach 130 million gallons per year.6

Cleantech is now an established investment category in the public markets. There 

are multiple stock indices including the Cleantech Capital Indices (CTIUS), 

WilderHill’s ECO, Ardour Capital’s Alternative Energy Indexes (e.g. AGINA, 

AGIGL), and Clean Edge’s CELS and CLEN indexes. The 45 public companies that 

make up the Cleantech Index (CTIUS) have an aggregate market capitalization of 

over $300 billion. The performance of CTIUS over the past two years has been 

strong. In the two years through April 23, 2007, CTIUS has risen 38.9 percent, from 
20 

7Kammen, D., Kapadia, K., & Fripp, M. ‘‘Putting Renewables to Work: How Many Jobs Can 

the Clean Energy Industry Generate?’’ Energy and Resources Group/Goldman School of Public 

Policy at University of California, Berkeley. (2004). http://rael.berkeley.edu/files/2004/ 

Kammen-Renewable-Jobs-2004.pdf. 

850 to 1180.6. This growth outpaced that of the S&P 500 Index (+28.6%), the 

NASDAQ Index (+29.9%), and the Dow Jones Industrial Average (+26.1%) over that 

period. After Sunpower and Suntech went public in late 2005, no fewer than seven 

photovoltaics companies (Canadian Solar, First Solar, PowerFilm, Akeena Solar, 

ReneSola, Trim Solar Limited, and Solarfun Power Holdings) went public in 2006. 

Recent IPOs in the biofuels sector have included Aventine Renewable Energy, Pacific Ethanol, Verasun, and U.S. BioEnergy. Perhaps because of this robust IPO 

market and the increase in publicly traded companies, the past two years in 

cleantech investing has moved from a specialty area of investment to one with broad 

participation from all major venture capital firms. 

FINDING 2: ENERGY PRICES, ENTREPRENEURIAL TALENT, AND ADVANCES IN

TECHNOLOGY ARE INDUSTRY FACTORS ACCELERATING GROWTH

Several important factors accelerated cleantech’s growth in 2006: 

• Sustained high oil prices have driven investor interest in alternative fuels. Most 

alternative fuel business plans are designed to compete with oil prices above $40 

to $45 per barrel. 

• As the cleantech market matures, it is attracting entrepreneurial management 

talent from other venture sectors—especially from information technology and biotechnology. These experienced entrepreneurs make it both easier to attract investments and more likely the company will develop into a viable business. 

• Advances in technologies have been the basis for many new companies, including nano-materials used in thin-film solar and new chemistry in battery technologies. 

FINDING 3: PUBLIC POLICIES AT THE NATIONAL AND STATE LEVEL HAVE ACCELERATED

CLEANTECH GROWTH

National and State policies have provided early foundations for many cleantech 

sectors, although investors do not expect those policies to continue in the long term. 

While the federal government has ramped up its efforts to promote ethanol, the current boom is primarily the result of states rapidly phasing out the MTBE gasoline 

additive and replacing it with ethanol. Venture activity in corn and cellulosic ethanol was a significant portion of investment growth in 2006, and investment in renewable electricity has been driven primarily by state renewable portfolio standards. Policies that provide long-term certainty are the most successful at driving 

business investment. 

FINDING 4: CLIMATE CHANGE IS BEGINNING TO INFLUENCE GROWTH IN CLEANTECH

Many of the biggest news stories of the past few years have been tied directly to 

extreme weather phenomena—from disastrous hurricanes to record droughts, 

wildfires, heat waves, and melting polar icecaps. The public has grown increasingly 

aware of environmental issues, judging by public opinion polls showing rising public 

concern about global warming and energy security. Investors, sensing the level of 

public interest in these stories—and therefore an opportunity in the market—are 

beginning to invest in industries that reduce human impacts on the ecosystem. Climate change policies will play a key role in the growth of cleantech as it becomes 

increasingly apparent that products and processes that reduce greenhouse gases will 

see increased demand. 

FINDING 5: CLEANTECH CAN CREATE THOUSANDS OF NEW JOBS

Analysis from the University of California at Berkeley7 concluded ‘‘the renewable 

energy sector generates more jobs per megawatt of power installed, per unit of energy produced, and per dollar of investment than the fossil-fuel-based energy sector.’’ E2’s own analysis found that every $100 million in venture investment generates an average of 2,700 new jobs. We estimate additional U.S. cleantech investment between 2007 and 2010 will be between $14 billion and $19 billion, resulting 

in 400,000 to 500,000 new jobs. If one uses the data from the National Venture Capital Association of 3,500 jobs per $100 million, the job figure could be as much as 

665,000 jobs. 

Lots of good news for the industry, and much remains to be done. In spite of the 

many steps that have been taken in support of the cleantech industry, barriers still 
21 

remain, keeping it from growing fast enough to head off the climate crisis. The most 

common barriers are inconsistent policy, long term subsidies for conventional industries, and trade barriers. 

Although government agencies play key regulatory roles in some venture backed 

industries, they have generally been even handed (in the case of the FDA and Biopharmaceutical approvals) or an agent of change for the future (in the case of the 

breakup of ATT in the 1970s), creating competition to the benefit of the economy, 

consumers and employees. The energy industry is different as the existing infrastructure protects the existing companies and the status quo. For example, customers do not directly choose the source of their electricity. Their electric utility 

company makes that choice for them. 

We did a survey of investors in Cleantech, and among the investors we surveyed, 

the most often cited complaint about the current regulatory environment surrounding cleantech was the inconsistency and unpredictability of policies affecting 

the industry. In an open-ended question about industry barriers, 37 percent of our 

survey respondents volunteered their strong desire for a long-term, predictable approach to policymaking in this arena. As one investor noted, ‘‘If the federal policy 

is unclear or inconsistent, it introduces an element of risk that detracts from the 

attractiveness of a potential investment. If a federal policy is supportive and appears stable, it makes the investment more attractive.’’ It appeared to be the group 

consensus that a less than perfect—but predictable—policy would be preferred over 

a better policy that comes and goes and can’t be relied on. 

Take the wind energy sector as an example. The renewable energy Production Tax 

Credit (PTC) is equally important to the success of the wind energy industry, which 

faaces both economic and technical hurdles in competing with traditional fossil 

power sources. But unlike the VEETC and the ethanol import tariff, which have remained in place for many years, the PTC has suffered a yo-yo like fate, lapsing and 

being renewed approximately every two years—to the consternation of investors and 

companies, who find themselves unable to plan ahead in such an uncertain environment. As a result of this policy uncertainty, the wind industry has experienced a 

dramatic boom-bust cycle, as the figure below demonstrates. 

Another barrier that investors mentioned regularly in the survey (27 percent of 

the investors surveyed discussed it) is the fact that cleantech products aren’t playing 

on a level playing field with traditional alternatives. These respondents believe that 

conventional technologies (e.g. fossil fuels) regularly receive large government sub-
22 

8 ‘‘Tax Incentives for Petroleum and Ethanol Fuels.’’ U.S. Government Accountability Office. 

(September 25, 2000). http://www.gao.gov/archive/2000/rc0030lr.pdf. 9This group has since been joined by ConocoPhilips, the third largest U.S. oil company and 

second largest U.S. oil refiner, with a market capitalization of $116 billion. 10 ‘‘Major Businesses and Environmental Leaders Unite to Call for Swift Action on Global Climate Change.’’ (Press Release). United States Climate Action Partnership. (January 22, 2007). 

http://www.us-cap.org/media/release.pdf. 

sidies that give them a price advantage, even though these technologies have been 

mainstream for decades. (According to the U.S. Government Accountability Office, 

the petroleum industry alone received as much as $150 billion in tax incentives between 1968 and 2000.8) One investor suggested ‘‘corporate welfare for larger companies provides a hidden subsidy to non-cleansed, companies. Provide equal subsidies 

for all technologies, or provide none. Let market forces decide the best application 

of innovation.’’ 

While the relatively modest subsidies and incentives that the cleantech industry 

receives always receive intense scrutiny, the large, long-term subsidies that conventional industries are given are more often taken for granted. Investors were not, 

however, arguing for large incentives to prop up the industry. As Bill Reichert, Managing Director of Garage Technology Ventures said, ‘‘The investment has to make 

sense independent of the public policy or the subsidy or the environmental fad of 

the month.’’ 

As the investors in our survey noted, cleantech products are frequently at a competitive disadvantage compared to conventional products. In addition to receiving 

significant subsidies, conventional products generally waste more natural resources 

and emit more pollution than cleantech products, thus imposing a cost on society 

that is not reflected in their price tags. In order to help level the playing field the 

prices of products need to better reflect their true economic costs to society, thereby 

sending a signal to consumers about the real effects of their choices. 

Congress needs to consider an integrated set of policies which will both address 

climate change and will stimulate private investment to provide the solutions. I will 

briefly mention three important policies: 

1. Mandatory National Carbon Cap 

A mandatory, comprehensive national cap on greenhouse gas emissions, coupled 

with an emissions trading market, would immediately place a value on the release 

of carbon dioxide and other greenhouse gases, rewarding those companies that already operate in a clean and efficient manner, and forcing those companies that do 

not to improve their performances. More importantly, any changes that industry 

would make to reduce its environmental footprint and come into compliance with 

the cap would be done efficiently. By establishing an economy-wide cap on greenhouse gases—without specifying specific technologies or strategies—the market 

would naturally find the most cost-effective responses, whether by purchasing emissions credits, becoming more efficient, or altering the materials or processes used. 

Thus it should come as no surprise that 59 percent of respondents in our survey 

(17 of 29) said a national mandatory cap-and-trade system would be critical or important in influencing their investment decisions. 

When ten major U.S. corporations9 joined forces with four environmental advocacy 

groups in January to form the U.S. Climate Action Partnership (USCAP) and called 

on Congress to quickly pass legislation to tackle global climate change, it became 

clear that a significant, growing portion of U.S. businesses believe a carbon cap is 

necessary for U.S. competitiveness. USCAP, whose corporate members have a combined market capitalization of over $850 billion and whose non-profit groups have 

well over one million members worldwide, specifically called for a mandatory capand-trade program, along with an accelerated technology research, development and 

demonstration program, and diplomatic efforts to convince other countries to follow 

suit.10 As of July, USCAP had grown to 29 members organizations. 

The unprecedented action of business leaders, including those from the utility industry, proactively and voluntarily seeking government regulation has been repeated several times since the January 2007 press conference. In March 2007, under 

the leadership of CERES, more than 50 major institutional investors with combined 

funds under management exceeding $4 trillion signed a statement asking Congress 

to impose clear, consistent climate change regulations to help them mitigate climate 

change risks. Because ill addition to making them more competitive globally, a national carbon standard would allow American companies to avoid having to navigate 

a chaotic maze of state-by-state climate policies. ‘‘Without national policies, the competitiveness of American business will be compromised. We don’t think we can 
23 

11 Herbst, M.’’ Investors Call on Congress to Go Green.’’ Business Week. (March 20, 2007). 

http://www.businessweek.com/bwdaily/dnflash/content/mar2007/ 

db20070320l535194.htm?chan=top+newsltop+ness+indexltop+story. 12Davies, F. ‘‘Silicon Valley Leaders: Political Climate Right for ‘Green Tech.’ ’’ San Jose Mercury News. (March 15, 2007). http://www.mercurynews.com/search/cil5440875. 13 ‘‘Green Technologies: An Innovation Agenda for America.’’ TechNet. (2007). http:// 

www.technet.org/resources/GreenTechReport.pdf. 14 Richtel, M. ‘‘Start-up Fervor Shifts to Energy in Silicon Valley.’’ The New York Times. 

(March 14, 2007). http://www.nytimes.com/2007/03/14/technology/14valley.html?ex= 

1176609600&en=678b72b953a2ae32&ei=5070. 

wait,’’ said Fred Buenrostro, Jr., CEO of CalPERS, the country’s largest public pension fund.11

One week prior to the March 2007 CERES announcement, a bipartisan group of 

Silicon Valley venture capitalists and entrepreneurs testified in Congress about the 

need for greater federal tax incentives and research funding in cleantech. With a 

sense of urgency, they also recommended consolidating all federal energy research 

into a National Institute of Energy that could support public-private partnerships, 

in the model of the medical sciences’ National Institute of Health. ‘‘We are in a crisis, and we have to translate this crisis into opportunity. Missing this moment 

would be horrible.’’ said Aart de Geus, CEO of Synopsys, an electronic design automation company.12 These business leaders are also part of a bipartisan group of dozens of technology company CEOs known as TechNet, which also advocates establishing a national 9renewable portfolio standard, a national renewable energy credit 

marketplace, and a system of long-term, declining incentives for clean technologies.13

2. National Renewable Energy Standard 

California’s experience over the past few decades demonstrates that, far from 

hurting an economy, well-designed cleantech regulations—such as California’s advanced energy efficiency and air quality regulations—can actually stimulate innovation, leading to new economic growth. Knowing that, it becomes clear why 65 percent of the investors we surveyed (19 of 29) said a national renewable energy standard would be a critical or important factor in their investment decisions. In the increasingly carbon-constrained world in which we live, improving the performance of 

our renewable energy technologies through innovation will be extremely important—not only for our environment but for our economic competitiveness as well. 

A national renewable energy standard could be a major contributor in driving this 

innovation in next-generation clean energy technologies. 

3. More Public R&D Investment 

While growth of the clean technologies would benefit from programs that increase 

demand (for example a cap-and-trade system or renewable portfolio standard), the 

industry still needs strong investment in basic R&D. Since the energy crises of the 

1970s, federal spending on energy research is down significantly, with private investments making up some, but not all, of the difference. Fortunately for the 

cleantech industry, public and private investments in complementary industries 

such as biotechnology, semiconductors, and software have been quite strong in recent years, and there is a high degree of technical knowledge spillover from these 

industries to cleantech sectors. In fact, some of the same people who were involved 

in startup companies in those other industries in the 1990s are now getting involved 

in ethanol and photovoltaics companies, among others.14

Still, the success of the cleantech industry should not depend on spillover from 

its cousin industries, or from private investment alone. Public investment in 

cleantech research is also crucial, for several reasons: 

• In its magnitude alone, it can accelerate the pace of research innovation and 

development. 

• It helps to reassure private investors that this area is important to the public, 

is worth investing in, and will receive real public support. As one investor in our 

survey said, public support from individual states ‘‘sends a message to entrepreneurs, investors and others that the state intends to create a business environment that is supportive of cleantech.’’ 

Public investment in basic R&D is still necessary to growing new industries of the 

future. The investors participating in our survey noted that a cleantech product 

must be able to stand on its own merits, and while they would not invest in a company solely on the basis of government support or subsidies, many noted that government investments are important and would encourage a higher level of private 

investing. For instance, 59 percent of respondents (17 of 29) said that a government 

program that matched private investment dollars would be critical or important to 

their investment decisions. One investor even noted that his fund’s specific investing 
24 

15 ‘‘Senate Bill No. 1368.’’ California Energy Commission. (September 29, 2006). http:// 

www.energy.ca.gov/ghgstandards/documents/sb1368lbilll20060929lchaptered.pdf. 

strategy is to ‘‘leverage publicly funded research at labs and universities, so greater 

investment on the federal level in that research would be beneficial, as long as it 

is focused on commercial outcomes.’’ 

THE IMPORTANCE OF IMPLEMENTATION

Aside from the policies themselves, the manner in which they are implemented 

is crucial to their success. For instance, it’s very important that when a carbon cap 

(or renewable energy standard or other program) is enacted nationwide, that measure should not preempt states from going even further. If particular states or regions want to enact more stringent carbon caps, or more aggressive renewable portfolio (or fuel) standards this will only improve the country’s environmental health 

and competitiveness in the cleantech marketplace—it would cost other regions nothing. 

The consistency and reliability of the federal policies that are enacted is another 

important factor. As mentioned earlier, 37 percent of the investors participating in 

our survey (11 of 30) responded to an open-ended question about the barriers facing 

the industry by stating the necessity of having predictable, long-term policies in 

place. This is a strong concern of many stakeholders in the industry. Given that 

many cleantech companies must compete against subsidized conventional alternatives, having supportive policies stripped away unexpectedly can wreak havoc on 

them. This is plainly evident in the wind installations and production tax credit. Entrepreneurs and investors both need to have the ability to plan ahead beyond the 

end of the current fiscal year. 

There are questions often asked when these topics are discussed, I will try to anticipate a few of these. 

1. It seems like investment and activity in Cleantech is growing and healthy, so 

why should the government intervene? 

Because we are in a crisis. A dramatic decrease of carbon released into our climate has to happen quickly. Without intervention, our auto industry has made no 

progress at all in increasing mileage and decreasing emissions in decades, while 

Japan and the European community already meet or exceed the 35 mpg standards 

proposed for the United States to meet by 2018 (the most aggressive proposal)! This 

has helped neither the environment, nor the American auto industry. While California has passed legislation requiring power it buys to be generated through clean 

technology, there are those in Congress who would like to see this overturned, as 

it is more aggressive than what other states might demand. California’s Greenhouse 

Gases Emission Performance Standard Act (SB1368) that became law on January 

1, directs the California Energy Commission to set greenhouse gas emissions standards for the baseload electricity used by the state (whether generated in-state or imported from out of state).15 The law effectively prevents the state from signing any 

long-term procurement contracts for traditional coal-fired power, or any electricity 

that comes from sources that emit more than a clean, efficient natural gas power 

plant. (However, the law doesn’t explicitly ban any particular form of energy generation—electricity from coal plants with carbon sequestration, for example, would still 

be able to be sold in the state.) 

While almost no electricity from coal is currently generated inside California, the 

state still imports a fair amount of coal-generated power from outside its borders— 

and at last count, dozens of new coal power plants were being planned for construction in western states, many with the aim of selling their power in the growing California electricity market. But SB1368 sends a strong signal to western energy markets, aiming to discourage these large, long-term investments in highly polluting 

technologies. As a result, cleaner production technologies, like geothermal, wind, or 

small hydro, will receive a significant competitive advantage in the state. 

2. Is this just a bubble that will blow away and things will return to normal? 

No, the world has changed. In the last 10 years over 400 million people have 

emerged from poverty in India and China. They want cars, refrigerators. They want 

to travel and have air conditioning when it is too hot. They want to live like us, 

and to do that they need to have as much energy as we use. Meanwhile, the industrialized world continues to use as much energy as ever. Competition for resources 

has irrevocably changed the game. 

3. Will this mean that the government picks winners and losers? 

No, it does not. The government did not tell automobile manufacturers how to increase mileage when the first CAFE standards were set. Nor did it tell refrigerator 
25 

16World Wind Energy Association. (2007). http://www.wwindea.org/home/ 

index.php?option=comlcontent&task=view&id=167&Itemid=43 

manufacturers how to reduce their energy consumption (since those standards were 

set in the 1970’s, energy use in refrigerators has dropped 75%, the equivalent of not 

building 100 to 300 power plants). But the government did tell them they HAD to 

meet performance standards, and they did. We recommend a declining carbon cap 

coupled with federal R&D in a variety of technologies. Let the market have a flatter 

field for competition. 

4. Does this mean that every company wins with a carbon cap strategy? 

Not at all. Change has always been a constant, the components of the Dow Jones 

Index continually have turned over since it’s creation over 100 years ago and our 

economy thrives by creating industries that add jobs and that add value. Some companies will resist change and those that are better at adapting will replace them. 

The result will be a net increase in economic output and jobs and a more competitive U.S. This has always been so. Industries that expect or need the government 

to protect them from change cannot compete in the modern world (if in fact they 

ever could in any era, today there are no Railroad, Steel or Airline stocks in the 

Dow). 

5. Should the U.S. link its carbon policy to decisions by China and India? 

Only if we want to slow ourselves down. Our contribution to Global Warming is 

significant and needs to be reduced. California decided that an early start on climate would make the state more competitive vis-a`-vis the rest of the U.S. The U.S. 

will be in a better position to sell cleantech to China and India if we get our country 

moving first. As we continue to show that our policies create a more robust economy 

and a cleaner environment, they will rush to join us. They already have a significant appetite to buy cleantech products and services, and they are now buying some 

of them from countries other than us. The U.S. is no longer the world leader in two 

important clean energy fields—it ranks third in installed wind power production behind Denmark and Spain,16 and third in photovoltaic power installed behind Germany and Japan. We can regain market leadership with a simple policy of a declining carbon cap coupled with federal R&D is a variety of technologies. 

6. What else should we be doing? 

We need to be the people the world has been waiting for, the people our children 

will say made the decisions that gave their children a safer and healthier place to 

live. We should not be the people who pass the buck, the people our parents warned 

us about. 

Senator BOXER. Mr. Unger, thank you so much. I so agree with 

the view and so far, everyone, I just think that you really put it 

into the perspective that we need to think about it as, you know, 
26 

we all need to make a living and we all need to take care of our 

families, but we need to also do something that gives back. 

Otherwise, it’s useless. I think the beauty of this is we’re showing that we can do both. We can do well and we can do good for 

society. You should be proud of that and I think—and you are and 

I think you need to say that more, and don’t be inhibited because 

you need to challenge others who have the ability to join with you. 

Then it’s just unstoppable. 

Bruce Klafter, a senior director, environmental health at Applied 

Material, welcome. 

STATEMENT OF BRUCE S. KLAFTER, SENIOR DIRECTOR, 

ENVIRONMENT, HEALTH AND SAFETY, APPLIED MATERIALS 

Mr. KLAFTER. Thank you, Senator Boxer. I have the corporate responsibility and sustainability for my company. I welcome the opportunity to be here today. I thought it would be instructive for you 

and the committee to learn a little bit about how an established 

Silicon Valley company is attacking some of the problems we’re discussing today. 

It’s becoming a very substantial business for us and our contention is that the same economic engine that’s been fueling the boom 

here in Silicon Valley can be extended into tackling problems like 

global warming and I think it holds tremendous promise. 

We’ve already seen this business take off tremendously for us 

and wanted to give you a little context about this. Applied Materials is a 40-year-old company. We’re celebrating our 40th anniversary this year. We’re the global leader in nanomanufacturing technology. We have portfolio of products that are used to fabricate 

semiconductor devices. We are also now providing equipment that’s 

used to manufacture low E low maintenance glass, thin film photovoltaic panels, and a variety of other products. 

As what we call an infrastructure company, a company that produces manufacturing equipment, we can play a vital role in commercializing some of the technologies that you’re hearing about because the key to proliferating them is the ability to manufacture 

them at a reasonable cost. 

That’s been our value proposition for 40 years and that’s what 

we’re trying to do right now. We recently reorganized some of our 

company and announced the formation of an energy and environmental solutions group which contains some of the working groups 

that are working in these particular areas. 

So just a couple of words about the products we’re making. The 

one that we announced last year in September 2006 was a thin 

film photovoltaic factory production line. We’re providing entire factory product lines to customers around the world to manufacture 

photovoltaic thin film. 

So this is not traditional crystalline silicon that you see on roof 

tops that Mr. Cinnamon’s company installs and so on. This is a different type of product, related technology converting sunlight into 

electricity. We’re going to move into other areas of EV or photovoltaic in the future as well. 

We announced, again, this strategy in September of 2006 and 

just at the time that’s passed since that point we’ve already announced seven contracts worth over $500 million in Spain, Ger-
27 

many, China, Taiwan, and elsewhere, so you mentioned in your introductory remarks the importance of establishing product that we 

can export around the world providing solutions to global citizens. 

That’s exactly what we’ve been able to establish in this short a 

time. We hope to enter into contracts with U.S. customers as well. 

We’d like to see manufacturing of this product in the United States 

but we’ve already established tremendous tracks around the world 

and I share Mr. Cinnamon’s observations about the fact that Germany and other countries have been leading the way. 

We need to establish U.S. presence in this industry as well. Now, 

the focus of our discussion today is green jobs. Just in that time 

and also understand we’ve been laying strategy—the foundation of 

it for some time. 

But approximately 10 percent of our global workforce now, that’s 

about somewhere between 14,000 and 15,000 individuals, 10 percent of that workforce is now employed in the energy environmental solutions area, so well over a thousand people. As the others mentioned, these are all very high paying, very good jobs. 

We have engineers who are optimizing the process. We have engineers who are laying out the factory line. We will have engineers 

and technicians that will travel around the world to install these 

production lines and help our customers make them work and optimize the output from those lines. 

We expect to see from each one of these factories that we set up 

additional jobs created. Our estimate is that while this is a fairly 

highly automated type of process, there will be at least 150 or more 

jobs in each one of these factories that are set up. As these are 

scaled up from 40 or 50 megawatts of annual production perhaps 

to a gigawatt, where you put several of these factory production 

lines together, you’ll have hundreds of jobs in each one of these locations. 

Our hope is this will become a distributed type of manufacturing 

process where we are not shifting products around the world to see 

them where we need to consume them. 

The other thing I wanted to point out today in the time I have 

that we shouldn’t overlook the fact that responsible corporations 

around the world are also customers of these technologies. We are 

turning on our own 28 kilowatt solar installation in Austin, Texas 

next week. That has to be the largest commercial installation in 

Austin at the present time, and later this year we’ll begin installing a two megawatt installation in Sunnyvale, California which we 

believe is the largest corporate installation in the United States. 

We hope that we’ll be leapfrogged in the future, but we’re very 

happy to make a substantial investment in that type of technology 

ourselves. So thank you very much. 

[The prepared statement of Mr. Klafter follows:] 

STATEMENT OF BRUCE S. KLAFTER, ON BEHALF OF APPLIED MATERIALS, INC. 

Honorable members of the Committee, Senator Boxer, Senator Inhofe, my name 

is Bruce Klafter. I am Head of Corporate Responsibility and Sustainability for Applied Materials, Inc., and am based in our Santa Clara, California, headquarters. 

Applied Materials. is the global leader in nanomanufacturing technology solutions 

with a broad portfolio of innovative equipment, service and software products for the 

fabrication of semiconductor chips, flat panel displays, solar photovoltaic cells, flexible electronics and energy efficient glass 
28 

Founded in 1967, Applied Materials creates and commercializes the nanomanufacturing technology that helps produce virtually every semiconductor chip and flat 

panel display in the world. The company recently entered the market for equipment 

to produce solar arrays and energy efficient glass. To support our customers, Applied Materials employs approximately 14,000 people throughout the world (8,000 

in the United States). In fiscal year 2006, Applied Materials recorded net sales of 

U.S. $9.17 billion. We are pleased to offer this testimony to the Committee and hope 

that an explication of Applied Materials green business strategy will be instructive 

to the Committee’s understanding of the tremendous opportunities created by taking 

action on global warming. 

GREEN MEANS GROWTH

Applied Materials is making significant investments of capital and other resources 

into developing and growing substantial new lines of business focused on ‘‘green’’ 

technology. By ’’green’’ technology, we are referring to a variety of equipment, products and services that enable generation of energy from renewable sources, help our 

customers use energy as efficiently in their operations and that prevent or minimize 

the greenhouse gases generated in those same operations. Our new Energy and Environmental Solutions Group reflects our view that ‘‘going green’’ creates jobs and 

economic opportunity. 

It is also our view that the United States Congress has an important role to play 

in crafting legislation that promotes development of innovative, advanced green 

technologies, that encourages businesses and consumers to employ those technologies and that creates conditions favorable to the domestic manufacture and distribution of green products. As one of the leading high-technology companies in Silicon Valley and the world, we have long worked with Congress and federal agencies 

to help to fuel the amazing job creation engine that high tech has become. Green 

jobs are a natural extension of the high-tech job phenomenon with the added benefit 

of making direct and important contributions to addressing some of the most pressing problems facing the world today. Applied is involved in several green technologies: 

Photovoltaics.—Photovoltaics, or more commonly, direct conversion of sunlight to 

electricity, has long represented a great opportunity for the world to access clean, 

renewable energy. Solar energy generation produces no pollution and requires little 

or no maintenance. It can be distributed throughout the grid, and offers the most 

power during peak demand periods. By alleviating peak power demand, solar energy 

lowers the number of conventional power plants needed, and reduces strain that 

causes transmission failures. Despite these advantages, solar currently generates a 

very small fraction of total energy generation in the United States. 

As worldwide energy demand continues to rise, the overall solar equipment market is expected to grow from approximately $1 billion in 2006 to more than $3 billion in 2010, according to industry estimates. Just last week, one analyst predicted 

the thin-film PV market could grow to $7.2 billion by 2015. Notably, these estimates 

do not include additional opportunities for service-related growth, so the real economic impact will be a much larger number. Applied Materials intends to capture 

and accelerate this growth by dramatically lowering the cost to produce solar cells, 

thereby allowing widespread generation of this clean, renewable energy. 

Glass Coatings.—Collectively, buildings in the United States consume 68 percent 

of all electricity. Direct energy purchases for household and vehicle use constitutes 

approximately one-third of the energy demand in the United States. Our Glass 

Coating Products Group aims to make a dent in those demands, window by window. 

We design and manufacture equipment that coats architectural glass (the kind 

seen commonly in homes, offices, as well as commercial and industrial buildings) 

with ‘‘low eminence’’ (Low-E) materials. Low-E materials are high-quality metal/ 

oxide films on glass that reduce the flow of heat into and out of buildings. Low-E 

glass improves efficiency of buildings heating and cooling while still allowing light 

to pass through the windows (solar gain). 

Our Low-E glass coating equipment, manufactured in North America and Europe, 

has contributed to reducing the cost of energy-efficient glass 10-fold over the last 

decade, bringing new building technology to many consumers for whom costs have 

previously been prohibitive. These high-quality films on architectural glass have facilitated energy efficiency improvements in buildings worldwide. 

Today our installed base of this equipment in glass manufacturing plants has enabled the application of energy efficient films on more than 20 billion square feet 

of architectural glass. The savings in energy enabled by our films and equipment 

is roughly equivalent to the oil contained in 57 large oil tankers. Stated another 

way, the total energy saved through installation of windows coated using Applied 
29 

Materials technology equates to the amount of energy it would take to heat 30000 

homes for one year. 

In developing economies such as China and India, our equipment was the first 

of its kind installed in architectural glass factories that are making the Low-E glass 

used in buildings and in areas where extreme temperatures are the norm. More 

than 100 Applied Materials employees work in Fairfield, California, manufacturing 

our glass coating equipment. More than 80 percent of these systems are exported 

to Asia and other markets through the Port of Oakland. These regions represent important markets for exports of American equipment. While these export success stories are good news, it is important to note that these factories are not being built 

in the United States. We believe this can change if the right mix of public policies 

is put in place. 

Automotive Glass.—In addition to providing technologically advanced solutions for 

lowering energy demands in buildings, our Glass/Web products increase energy efficiency in hundreds of thousands of automobiles. Known in the automotive world as 

Solar Infrared Reflective glazing, or SIRR, coated automotive glass reflects more 

than 60 percent of the sun’s thermal heating potential from the car interior. This 

improves fuel consumption and comfort, by reducing the need for air conditioning 

without reducing visible light. This translates into a savings in vehicle tailpipe 

emissions and greater fuel economy. 

Our aim is to improve market access to SIRR glass for automobiles and Low-E 

glass for buildings. As energy conservation becomes more important to society and 

regulatory initiatives develop, our technology will enable integration of these important technologies in buildings and cars. 

ECONOMIC IMPACT

Applied formally announced its solar strategy in September, 2006 and in the 

space of just 10 months the company has entered into seven contracts worth over 

$500 million and representing over 200MW of annual thin-film PV production. 

Within Applied Materials, approximately 10 percent of Applied’s global workforce of 

14,000 employees is involved in the production or servicing of our green products. 

Throughout Silicon Valley, hundreds of jobs are already tied to solar and more are 

added all the time. It is worth noting that the business will generate a wide variety 

of well-paid jobs requiring different skills and experience: design engineers; engineers optimizing the production process itself; engineers designing the factory layout; installation teams; service technicians; and a wide variety of jobs such as sales 

and account teams, marketing, etc. Distributed solar energy always involves local 

distribution and installation and Applied Materials’ customers will establish partnerships with many PV integrators and installers, each of whom will employ technicians and many others. 

Externally, green products drive economic development and jobs as well For example, a newly announced plan to build a new 40-megawatt facility in Bielefeld, 

Germany, to become operational by mid-2008, would add 150 long-term jobs (and 

this does not include the construction jobs). Our own internal analyses for operation 

of a 60–MW thin-film fab estimate 160 employees per fab. The economics of producing solar power collectors favor manufacture close to the market, which means 

there could be dozens of these plants in almost every region of the country. If the 

right set of policies are in place to stimulate demand by commercial and residential 

customers, solar demand will drive this investment. 

Estimates of the job-generating impact of just PV vary, but all are significant. According to the Solar Energy Industry Association, for example, extending the solar 

tax credit could bring 55,000 new American jobs and more than $45 billion in economic investment. According to a study by Dr. Roger H. Bezdek of Management Information Services, Inc., and the American Solar Energy Society, US private-sector 

employment in photovoltaics last year was approximately 7,000 direct jobs and 

16,000 indirect jobs. Depending on the public policy environment for PV technology, 

this sector could grow to anywhere from 200,000 to 750,000 employees by 2030. 

These are significant numbers and involve mostly high-paying jobs. 

Similarly, a recent paper from the IC2 Institute at the University of Texas in Austin cites research showing ‘‘renewable energy generates more jobs in its construction 

and manufacturing sectors, per megawatt of installed power capacity, than does fossil fuel generation. Specifically for PV generation, far more jobs are produced constructing PV facilities than are produced by the construction and operation of coal 

and natural gas-fired plants.’’ 

At this point, it is instructive to compare the United States with the world leader 

in renewable technologies—Germany. Germany has about one-fourth the GDP and 
30 

population of the United States, yet renewables employ 20,000 more workers than 

in all of the United States (approximately 214,000 there vs. 194,000 here). 

Applied is intent on leading others to make investments in solar photovoltaic energy. Earlier this year we announced our plan to install a 2.0 megawatt (mW) system on our main R&D campus in Sunnyvale, California. This will be one of the largest PV installations on an existing corporate campus in the United States, if not 

the largest and involves a multi-million dollar investment. In addition, Applied has 

already installed a 28 kW system at our manufacturing facility in Austin, Texas. 

The Austin installation is one of the largest commercial PV systems to date. Our 

plans are an illustration of how policy can influence decisionmaking—we were able 

to make the California installation substantially larger because there are financial 

incentives in California that scale to the output of a system. The incentives in 

Texas, by contrast, are minimal. With action by Congress, hopefully solar and renewable policy nationwide can be enhanced. 

POLICY RECOMMENDATIONS

First and foremost, Applied urges the extension and expansion of a robust solar 

investment tax credit. Although the Senate’s energy bill did not include tax provisions, the House did include tax provisions in its bill and we hope the Senate-House 

conference report will include a tax title. We would like to see a combination of the 

best elements from both chambers, which would include an eight-year extension of 

both the residential and commercial investment credits and a removal of the $2,000 

residential cap. Importantly, the solar tax credits should be able to offset fully any 

AMT (alternative minimum tax) liability. 

Although it benefits other renewables far more than solar, we generally favor a 

national renewable portfolio standard and would like to see inclusion of a solar ‘‘setaside’’ or triple credit for solar in any RPS scheme. This would be a temporary 

measure that would disappear as the industry matures and achieves commercial viability. 

The creation of ARPA–E in the America COMPETES Act is another welcome step 

forward. We would hope that at least some portion of the increased funding toward 

STEM (science, technology, engineering and mathematics) education be directed toward solar energy because we face a serious shortage of talent in this industry. 

Moving forward, we would strongly support Senator Menendez’s bill S. 1016, the 

Solar Act. This measure would establish national standards for the interconnection 

and net metering of solar energy systems, based on the most progressive state 

standards to date. The legislation would require utilities to credit their customers 

at retail electric rates for supplying excess solar power to the grid. The bill would 

also establish that ownership of renewable energy credits (RECs) resides with the 

solar system owner for purposes of selling or trading to meet a state or federal renewable portfolio standard. 

On the international trade front, we strongly encourage the US Trade Representative to continue its efforts to negotiate a sectoral agreement that would reduce or 

eliminate tariffs on environmentally friendly goods. Such an agreement could do for 

‘‘green’’ what the Information Technology Agreement has done for IT products. 

CONCLUSION

Applied Materials is convinced that the issues of climate, energy and environmental stewardship are serious challenges, but we are equally convinced of our ability to tackle these challenges successfully. We are confident that our technology, ingenuity and inventiveness will turn these challenges into an economic win for the 

United States and that Silicon Valley will again lead the way. 

Senator BOXER. Thank you, sir. I think it’s an important point 

to walk the walk and to utilize these new amazing technologies. I 

just—right before I came here I did two stops. The second stop was 

at Sun Microsystems where they showed me their conservation program. 

They took a lot of campuses and they consolidated them. That’s 

the first thing they did, and then this amazing innovation of the 

way they cool their huge servers onsite as opposed to cooling the 

room. 

So they—as the heat comes out they cool it immediately at the 

site and they have saved already 50 percent of their energy bill. 

Imagine the numbers we’re talking about here. As we get to the 
31 

point where now they’re telling us some of their customers are complaining the cost to run the computers is now almost more than the 

cost of the computer itself. 

So the energy factor in all of this, you all know this, this is what 

you’re dealing with. This is the potential that the solar folks are 

going to go after. What they have done, I just hope you will go visit 

them because, actually, they want to become the model, and I gave 

them a little conservation award. 

The fact that they have figured out a way to reduce their cost 

by half, and they’ve just sort of gotten started and they installed 

all this new type of equipment. It’s pretty remarkable in less than 

a year so you might want to run over there. 

But your point, Mr. Klafter, is right. We need not only to invent 

these technologies, we need to start using them here, to have your 

technologies be sold elsewhere and not here doesn’t make much 

sense, does it? OK. 

So moving along, Mr. Pat Zimmerman, director of the Institute 

of Atmospheric Sciences at the School of Mines and Technology, 

welcome, sir. 

STATEMENT OF PATRICK R. ZIMMERMAN, PH.D., CHIEF 

TECHNOLOGY OFFICER, C–LOCK TECHNOLOGY 

Dr. ZIMMERMAN. Thank you, Senator Boxer, for the opportunity 

to testify today. I have a good example of what even the 

preregulatory phase of a cap and trade system has done. As of August 1, I resigned my position as director of the Institute of Atmospheric Sciences as a professor of the Department of Atmospheric 

Sciences to become the chief technology officer for C–Lock Technology. 

C–Lock Technology is a wholly owned subsidiary of Evergreen 

Energy that was created based on patented technology that I developed at the Institute of Atmospheric Sciences. Our technology is focused on creating a framework that will accurately quantify greenhouse gas emissions. 

Quickly, it will minimize transaction cost. It’s very transparent. 

It increases the ease of independent third party verification, and it 

provides offsets that can be mixed from various sources to maximize liquidity. All that is designed to minimize transactional cost 

so rewards go directly to the people and businesses that create offsets. 

So today I’m going to talk a little bit about some of the things 

that need to be done in order for businesses like this to do well. 

Of course, these businesses create many jobs, from my own job to 

the graduate students that I hire at the university to further scientific research to jobs in rural communities. 

The focus of C–Lock initially was on agriculture. We calculate 

that if a cap and trade—when a cap and trade program is fully implemented that roughly a billion dollars a year can be injected into 

rural economies and create something like $6 to $7 of additional 

benefits all along the value chain. 

These are jobs in places that traditionally have had low paying 

jobs. Earlier in my career, I was a scientist at the National Center 

for Atmospheric Research where our work focused on the interactions between biology and radiation balance of the atmosphere, 
32 

and it was an exciting job. It was important to lay the groundwork 

for understanding climate change. 

But when I got the opportunity to move to South Dakota and 

apply cutting edge science and transform it into technology that 

people can use every day, to move South Dakota from its extractive 

agrarian past to a technology driven future, I jumped at the 

chance. 

There’s a few things we need. The first thing we need is we need 

credit for early action. What’s holding up the market now is that 

people are waiting. They’re waiting for the rules. I think that an 

incentive to move forward regardless of what the rules will be will 

be important. 

Those incentives can come as a form of, say, a tax incentive, so 

that if you buy credits that—that meet certain criteria for they’re 

independently verified, they’re scientifically sound, and make a real 

difference in the atmosphere, will you be sure that some of that investment won’t be lost regardless of future rules. That would create 

a real improvement. 

Second, we need some sort of uniformity. Right now 38 states 

have implemented greenhouse gas rules. They’re all slightly different. People who buy credits don’t know are these credits compatible with your registry or California’s registry or—and so Federal 

legislation is needed to provide that framework. 

Third, we need to resolve issues of ownership. In South Dakota, 

Wyoming, and Montana much of the land is owned by Federal Government and it’s leased by independent operators. 

Many of those operators have come to me and said can I earn 

carbon credits for doing reclamation projects that decrease erosion, 

that plant trees that are going to remove CO2 from the atmosphere 

now. I can’t give them an answer. 

So we need Federal policy on leased lands that dictates that improvements that are made by the land owner or the lessee belong 

to the lessee or maybe they’re shared, but we need something in 

writing. We’ve got to apply those offsets if the ownership is not 

clear. 

But the fundamental framework for all of this has to be sciencebased. It has to be scientifically sound. It has to be credible. There 

should never be a farmer who’s interviewed who says, ‘‘Yes I’ve 

been doing no till for 30 years and now I get a chance to be paid 

for doing no till, so I’m going to keep doing it.’’ 

Now, that doesn’t mean that you can’t design a system that will 

encourage that farmer to stay in a management practice that continues to store CO2. In fact, the agricultural sector is vital because 

all of the technology that we’ve talked about today, the thing that 

we can do right now to remove CO2 from the atmosphere that we 

need to do right now to keep climate from moving to a state of relatively stable equilibrium to another state of another different climate regime, we need to keep CO2 from accumulating. Agriculture 

can do that right now. U.S. agriculture can do that better than almost any agricultural system in the world because almost 60 percent of our land mass is managed, whereas the global average is 

only 7 percent. 
33 

1 Assuming half of the farmers and ranchers participate and prices of at least $5/T of carbon 

doxide equivalent for the next 20 to 30 years. 

So now we have a framework that’s based on science. We have 

regulations that make sense. We have solutions to focus on what 

we can do now. Then—— 

Senator BOXER. Sir, I’d like you to wrap it up because we’ve got 

to get to Mr. Collins. 

Dr. ZIMMERMAN. OK. OK. Finally, carbon credits need to be valuable. There needs to be a value associated with these offsets so that 

they create incentives for technological solutions and investments. 

So I think it’s more important to have a carbon floater price than 

it is to have a carbon escape valve. Thank you. 

[The prepared statement of Dr. Zimmerman follows:] 

STATEMENT OF PATRICK R. ZIMMERMAN, PH.D., CHIEF TECHNOLOGY OFFICER, C– 

LOCK TECHNOLOGY

Thank you Chairwoman Boxer, Ranking Member Inhofe, and members of the 

Committee for the opportunity to testify today. My name is Patrick Zimmerman. I 

am the Chief Technology Officer at C–Lock Technology. 

A well-designed Federal greenhouse gas cap and trade system will link economic 

incentives and environmental benefits in ways that will stimulate the economy and 

create thousands of new jobs across all economic sectors. Our new business, C–Lock 

Technology, provides an excellent example. 

C–Lock Technology is a wholly-owned subsidiary of Evergreen Energy—a company with patented technology to refuse low-rank coals to improve heating efficiency 

and significantly reduce pollutants. The pollutant reductions include the removal of 

compounds that affect air quality including sulfur dioxide, oxides of nitrogen and 

mercury, as well as decrease the emissions of carbon dioxide. 

C–Lock Technology utilizes a patented process to quantify, certify and aggregate 

greenhouse gas emission reductions, avoidances and offsets so that they have maximum value to sellers and buyers. The process was developed within the Institute 

of Atmospheric Sciences at the South Dakota School of Mines and Technology 

(SDSM&T). All patents are therefore the property of the State of South Dakota. As 

the inventor of this process, I negotiated an exclusive license to develop commercial 

applications of this technology and recently left my position as Director of the Institute of Atmospheric Sciences at SDSM&T to focus on the C–Lock Technology startup. The new company employs several full-time Ph.D. scientists, technical staff, 

graduate students and undergraduates. In addition it provides opportunities for 

SDSM&T professors and their students to collaborate on projects that accelerate the 

transformation of advanced technical knowledge and cutting-edge science into information and technology that people can use to improve their lives and long-term sustainability, 

C–Lock Teelmology is currently participating in the pre-regulatory phase of the 

U.S. carbon market and is focusing on the opportunities to impact the international 

carbon market created as a result of the Kyoto Protocol. Our company is actively 

participating in the education of undergraduate students, MS students and Ph.D. 

students who will lead the carbon companies of the future. Our industry will need 

professionals with skills in business, financial markets and derivatives, ecology and 

environmental science, 

engineering, mathematics and computer science. It is especially important to note 

that our company will provide opportunities throughout small rural communities for 

individuals with special communication and technical skills to assist farmers, ranchers and businesses with strategies to reduce their emissions of greenhouse gases 

and sequester carbon in crops and soils. 

We have estimated that for eight agricultural states in the Northern great Plains, 

greenhouse gas offsets generated by farmers who engage in agricultural practices 

that store organic matter in soil and trees, and ranchers who implement grazing 

practices that result in carbon dioxide removal and avoid emissions of methane and 

nitrous oxide, could increase the regional income by more than one billion dollars 

per year.1 In addition, activities that reduce greenhouse gas emissions and remove 

carbon dioxide from the atmosphere and transform them into long-lived vegetation 

and organic compounds in the soil also provide important environmental benefits including improved water quality, decreased soil erosion, improved drought tolerance, 
34 

improved habitat, improved resistance to invasive species, and increased rural tourism and recreational opportunities. 

As the policy debate unfolds about the programs to be put in place to reduce 

greenhouse gas emissions, I encourage you to keep in mind the following characteristics to ensure a robust and fair system: 

• First, every economic sector in every state should have the ability to participate. 

• Second, every carbon credit must be scientifically sound and reduce human- induced climate change. Legislation must demand high standards so that greenhouse 

gas emission reductions, avoidances and offsets remain credible. High standards require accurate quantification, independent third-party verification and sound 

science. 

• Third, solutions that can be implemented now must be emphasized—we need 

to buy time as we develop and implement long-term technological solutions. Immediate removal of greenhouse gases is a higher-priority than permanence because we 

might reach the climate tipping-point before we can implement long-term-technology. 

• Forth, solutions should divide the liability amongst many stakeholders to create 

more accountability and stability than those that concentrate it in a specific sector. 

• Fifth, research investments should not favor specific technologies but rather 

should be designed to spark innovation. We cannot afford to pre-select the winners 

now. 

• Sixth, to stimulate the fastest development of long-term solutions carbon credits 

must be valuable. It is a higher priority to maintain a carbon credit price floor than 

a safety valve. 

• Finally, an effective Federal greenhouse gas policy will maximize the U.S. global advantage to provide greenhouse gas offsets now through agriculture and clean 

coal technology. 

Specific Federal issues must he addressed for the greenhouse gas market to move 

from its current pre-regulated phase where markets are inefficient, standards are 

poorly defined prices are low and there is a high perceived risk, into the active market phase where resources flow efficiently from the those with potential liabilities 

to those who can remediate those liabilities in a way that immediately stimulates 

the production of avoidances, offsets and sinks. Agencies must define the ownership 

of carbon credits created on federal lands so that if a rancher implements a re-forestation project on Federally-leased land, the ownership of the carbon credits that 

accrue must be clear for the carbon credits to be marketable. 

There should also be provisions that reduce market uncertainties as a result of 

policy uncertainties. Those who take early action to mitigate their greenhouse gas 

footprint should be rewarded. Rewards should be in the form of the provision of 

market certainty. Early action will provide valuable experience to inform wise 

decision- making In addition, provisions to indemnify and reward early action will 

stimulate greenhouse gas-related job creation. 

Base-lines from which carbon credits are quantified must be anchored to documented improvements from the average business as usual practice. Any other system penalizes those who have taken early actions to minimize their greenhouse gas 

impacts. Agricultural offsets belong in the market system, not the Department of 

Agriculture subsidy system. 

Federal and international greenhouse gas policies need to converge in order to 

maximize the liquidity and income potential of greenhouse gas markets. This will 

increase incentives to generate greenhouse gas reductions, avoidances and offsets, 

and keep market prices high to stimulate technological solutions and create wellpaying jobs. 

The U.S. has a huge advantage over many industrialized nations. More than 60% 

of the U.S. land area is under agricultural management. The global average is just 

7%. It is therefore imperative that we take full advantage of our abundant agricultural resources to stimulate immediate greenhouse gas reductions and offsets while 

future technology becomes viable. This will not only preserve and enhance farm 

jobs, income, and traditions, buy will also stimulate the creation of new economic 

opportunities in rural communities. 

Senator BOXER. That’s very good points all. Thank you so much. 

So our last and certainly not our least speaker is Kevin Collins, 

president and CEO of Evergreen Energy. Following his testimony 

I’ve got a few questions. Now, I need to ask my staff if we’re going 

to go and do that press conference after or we’re not going to go 

into the press conference. Yes, no, or maybe? 
35 

We need to leave at exactly 12:20. So here we go. Mr. Collins, 

welcome. 

STATEMENT OF KEVIN R. COLLINS, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, EVERGREEN ENERGY INC. 

Mr. COLLINS. Thank you, Chairwoman Boxer, for the opportunity 

to testify today. Clean energy including cleaner coal is essential to 

ensure a better environment. Our national security, economic prosperity, including new American jobs. 

Governments, lawmakers, and industries are seeking solutions to 

lower harmful air emissions and reduce greenhouse gas emissions 

while meeting growing energy demand, keeping costs low, and 

achieving results now for the long term. 

Our common goal is to put into place the infrastructure, policies, 

and other steps necessary to achieve success. I’m here today to 

share with you the story about a unique American technology developed in a Stanford University laboratory only 17 miles from 

here and financed by the private sector. 

This technology provides energy, environmental, economic, and 

job creation benefits right now. It reduces CO2 and other emissions. 

It’s a precombustion approach that transform our traditional view 

of the coal-fuel cycle by improving efficiency and environmental 

performance. This technology is available not 5, 10 are or 15 years 

from now, but today. 

The solution is Evergreen Energy’s refined coal that we produce 

and market as K–Fuel. Cleaner coal must be a central part of any 

national energy security policy. The United States has the world’s 

largest known recoverable coal reserves, 270 billion tons, which implies a roughly 200-year supply at current consumption rates. 

U.S. coal reserves contain more energy than all the world’s oil reserves. Today, about 50 percent of the coal consumed in the United 

States comes from western mines, up from almost 0 percent in 

1970. That’s because western coal, one type that works with our K– 

Fuel process, has less sulfur and therefore cleaner than coal from 

the east. 

Wyoming is the country’s largest producing coal State, producing 

over 480 million tons per year or nearly 40 of the U.S. total. The 

K–Fuel process chemically replicates nature by chemically and 

physically transforming coal before it’s burned into a clearing burning fuel. Our proprietary precombustion process uses heat, pressure, and time to remove water and reduce pollutants from lower 

quality coal, thereby raising heat value. 

By increasing the heat value of these low rank coals by approximately 25 percent, efficiency is improved so that less tons of coal 

are consumed to generate the same energy output. This translates 

into less CO2 and other pollutants per kilowatt hour generated. 

By doing so, I believe that Evergreen Energy can rightfully call 

itself one of today’s solutions to the nation’s energy challenges. Refined coal is available today by the ton because we built the world’s 

first coal refinery in Gillette, Wyoming. No doubt the millions of 

dollars spent on this plant have a significant multiplier effect on 

the region. 

Extrapolating these numbers we can reasonably project that construction and operation of these coal refineries will create thou-
36 

sands of new jobs. K–Fuel stands as an example of how the need 

for cleaner energy creates new solutions and new opportunities for 

all Americans, including the potential for new jobs. 

Our 750,000 ton per year plant uses modular equipment that can 

be scaled larger, and Evergreen’s plant designs are targeted to 

produce between 2 to 10 million tons of refined coal per year. 

Successful test burns and sales of refined coal to utilities and industrial coal consumers during the past 18 months have demonstrated lower emissions and higher efficiency. Up to 70 percent 

of the mercury is removed from the coal. We’ve demonstrated lower 

levels of sulfur dioxide and nitrogen oxide emissions. 

Our engineering calculations show that simply by switching fuel, 

K–Fuel reduces CO2 emissions per kilowatt hour generated. Evergreen Energy is planning to further verify CO2 reduction benefits 

achieved by K–Fuel later this year through test burns. 

By using cheap, abundant low-rank coal from areas such as Wyoming’s Powder River Basin, the K–Fuel process adds value and creates markets for these resources. K–Fuel can increase generating 

capacity from derated power plants and provide a more cost effective emission solution by avoiding costly post-combustion control 

technology such as scrubbers. 

K–Fuel can also be used by plants with existing scrubbers to provide improved efficiency and additional emission reduction benefits. 

The K–Fuel process is perhaps the only new energy technology that 

produces rather than consumes large amounts of water. 

In the arid west where water resources are valuable, the industrial grade water that is drawn off the precombustion process may 

have indeed beneficial uses. Evergreen Energy is delivering on the 

need for cleaner coal today, but as we plan for the future we see 

significant marketplace opportunities made possible by the vast reserves of low-rank and low cost coal readily available around the 

world. 

Accompanying this opportunity is significant potential for job creation. We’re in ongoing discussions with several utilities about locating K–Fuel coal refineries next to their power plants, a concept 

we call K–Direct. The combined heat and power approach raises efficiency, reduces costs and emission per kilowatt hour. 

Located next to a power plan a K–Direct coal refinery uses the 

plant’s waste heat as a power source and produces refined coal and 

water for the plant’s use. Naturally, all the benefits of K–Fuel are 

there as well, including the opportunity to restore efficiency to derated power plants and reduce or eliminate the need for new or additional back end control technology. 

Looking ahead, there’s been too much focus on the solutions offered by IGCC, FutureGen, and other advanced coal processes. 

While these are all promising technologies, they are years from 

widespread deployment, and I respectfully raise caution about overreliance on a limited number of futuristic number of clean coal 

technology solutions. 

Cleaner coal solutions exist today. This country must have a balanced portfolio of cleaner coal technology comprised of 

precombustion, combustion, and post combustion technologies that 

will offer solutions today, years from now, and decades in the fu-
37 

1 American Coal Foundation website:http://www.teachcoal.org/aboutcoal/articles/ fastfacts.html 

ture at reasonable cost. These solutions need to be accompanied by 

flexible policies that create balance and equal incentives. 

Senator BOXER. I’m going to ask you—— 

Mr. COLLINS. I’m going to move on rapidly. As leaders and lawmakers you should embrace all energy options, including nuclear, 

renewables, and energy efficiency while recognizing that coal will 

and must remain a significant piece of the portfolio. 

Evergreen does not view this refined coal as the solution, but as 

an important solution that deserves to play a role in the Nation’s 

comprehensive energy strategy. We’re making coal cleaner, we’re 

creating new jobs, and we’re doing it today. 

[The prepared statement of Mr. Collins follows:] 

STATEMENT OF KEVIN R. COLLINS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, EVERGREEN ENERGY INC. 

Thank you Chairwoman Boxer for the opportunity to testify today. My name is 

Kevin Collins. I am the President and Chief Executive Officer of Evergreen Energy 

Inc based in Denver. 

Clean energy, including cleaner coal, is essential to ensure a better environment, 

our national security, and economic prosperity, including new American jobs. Governments, lawmakers, and industries are seeking solutions to lower harmful air 

emissions and reduce greenhouse gas emissions while meeting growing energy demand, keeping costs low, and achieving results now and for the long term. Our common goal is to put in place the infrastructure, policies, and other tools necessary 

to achieve success. 

I am here today to share with you the story about a unique, American technology 

developed in a Stanford University laboratory only 17 miles from here and financed 

by the private sector. This technology provides energy, environmental, economic and 

job creation benefits right now. It reduces CO2 and other emissions. It is a pre-combustion approach that transforms our traditional view of the coal-fuel cycle by improving efficiency and environmental performance. This technology is available not 

5, 10 or 15 years from now, but today. This solution is Evergreen Energy’s refined 

coal that we produce and market as K–Fuel®. Cleaner coal must be a central part of any national energy security policy. The 

U.S. has the world’s largest known recoverable coal reserves—roughly 270 billion 

tons—which implies at current consumption rates a roughly 200 year supply. U.S. 

coal reserves contain more energy than all of the world’s oil reserves1. Today, about 50 percent of the coal consumed in the U.S. comes from western 

mines—up from almost zero percent in 1970. That is because western coal—one type 

that works with our K–Fuel® process-has less sulfur and is therefore cleaner than 

coal from the east. Wyoming is the country’s largest coal producing state, producing 

over 400 million tons per year or nearly 40 percent of the U.S. total. 

The K–Fuel® process simply replicates nature. Evergreen Energy chemically and 

physically transforms coal—before it is burned-into a cleaner burning fuel. Our proprietary pre-combustion process uses heat, pressure, and time to remove water and 

reduce pollutants from lower quality coals, thereby raising heat value. By increasing 

the heating value of these low-rank coals by approximately 25 percent, efficiency is 

improved so that less tons of coal are consumed to generate the same energy output. 

This translates into less CO2 and other pollutants per kilowatt hour generated. By 

doing so, I believe that Evergreen Energy can rightfully call itself one of today’s solutions to the nation’s energy challenges. 

Refined coal is available today by the ton. Evergreen Energy has built the world’s 

first coal refinery in Gillette, Wyoming. The tens of millions of dollars spent on this 

plant no doubt had a significant multiplier effect on the region as a whole. Extrapolating these numbers, we can reasonably project that construction and operation of 

future coal refineries will create thousands of new jobs. 

K–Fuel® stands as an example of how the need for cleaner energy creates new 

solutions and new opportunities for all Americans-including the potential for thousands of new jobs. 

Our 750,000 ton per year plant uses modular equipment that can be scaled larger 

and Evergreen’s plant designs are targeted to produce between two and 10 million 

tons of refined coal per year. 
38 

Successful test bums and sales of refined coal to utility and industrial coal consumers over the past year and a half have demonstrated lower emissions and higher 

efficiency. Up to 70 percent of the mercury is removed from the coal and we have 

demonstrated lower levels of sulfur dioxide and nitrogen oxides emissions. Our engineering calculations show that due to its higher efficiency, K–Fuel® reduces CO2

emissions per kilowatt hour generated simply by switching fuel. Evergreen Energy 

is planning to further verify the CO2 reduction benefits achieved by K–Fuel® later 

this year through test burns. 

By using cheap, abundant low-rank coal from areas such as Wyoming’s Powder 

River Basin, through the K–Fuel® process we add value and create markets for 

these resources. K–Fuel® can increase generating capacity from de-rated plants and 

allow for a more cost-effective emissions control solution than adding costly postcombustion control technology, such as scrubbers. However, K–Fuel® can also be 

used by plants with already installed back-end control technology to provide improved efficiency and additional emissions reduction benefits. 

The K–Fuel® process is perhaps the only new energy technology that produces 

rather than consumes large amounts of water. In the arid West where water resources are increasingly valuable, the industrial-grade quality water that is drawn 

off the precombustion process may have many beneficial uses. 

Evergreen Energy is delivering on the need for cleaner coal today, but as we plan 

for the future, we see significant marketplace opportunities made possible by the 

vast reserves of low-rank, low-cost coal resources readily available around the world. 

Accompanying this opportunity is significant potential for job creation. We are in 

ongoing discussions with several utilities about locating K–Fuel® coal refineries next 

to power plants, a concept we call K-DirectSM. The combined heat and power approach raises efficiency, reducing costs and emissions per kilowatt hour. Located 

next to a power plant, a K-DirectSM coal refinery uses the plant’s waste steam as 

a power source and produces refined coal and water for the plant’s use. Naturally, 

all the benefits of K–Fuel® are there as well, including the opportunity to restore 

efficiency to de-rated power plants and reduce or eliminate the need for new or additional back end control technology. 

As we plan for the future of a carbon-constrained world, Evergreen Energy has 

established a wholly owned subsidiary, C–Lock Technology, which uses a proprietary methodology to measure carbon emission reduction credits. Shortly, you will 

hear more about C–Lock from Dr. Patrick Zimmerman. With K–Fuel®’s carbon 

avoidance profile, we anticipate being a very active participant in the carbon market, 

Looking ahead, there has been too much focus on the solutions offered by Integrated Gasification Combined Cycle, FutureQen, and other advanced coal processes. 

While these are all promising technologies, they are years from widespread deployment—and respectfully raise caution about over-reliance on a limited number of futuristic clean coal technology solutions. Cleaner coal solutions exist today. 

This country must have a balanced portfolio of clean coal technology options comprised of pre-combustion, combustion, and post-combustion technologies—Future 

Gen but also NOW GEN—that will offer solutions today, years from now, and decades in the future at reasonable costs. These solutions need to be accompanied by 

flexible policies that create balanced and equal incentives. 

As lawmakers and leaders you should embrace all energy options including nuclear, renewables, and energy efficiency while recognizing that coal will, and must, 

remain a significant piece of the portfolio. Evergreen Energy does not view refined 

coal as the solution but it is an important solution that deserves to play a role in 

the nation’s comprehensive energy strategy. We are making coal cleaner, we are creating new jobs, and we are doing it today. 

I thank the Committee for the opportunity to appear today and look forward to 

answering your questions. 
39 
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41 
42 
43 
44 
45 

Senator BOXER. Thank you, sir. Let me just start by asking you 

is this actually functioning today? Do you have certain plants? 

Where are these plants? 

Mr. COLLINS. There’s a plant in Gillette, Wyoming. 

Senator BOXER. Have you talked to some of the coal State senators about this innovation? Have you had the opportunity to meet 

with say, for example, Senator Moynovich or Senator Warner? 

Mr. COLLINS. Some of my colleagues have had a chance—— 

Senator BOXER. I think it’s very important that the coal State 

senators understand that we have some movement here. So the 

idea is that you cut the amount of coal used and get more energy. 

You have the same amount of energy for using less coal? Is that 

the notion? 

Mr. COLLINS. You take an unusable resource which is what these 

low-rank coals have, high moisture content, that’s an unusable resource by using heat, time, and temperature we’re able to reduce 

the amount of moisture in that coal, thereby raising the BTU value 

of that coal by about 25 percent. 

Senator BOXER. So 25 percent less coal is used. Is that my understanding? To get the same equivalent amount of energy? 

Mr. COLLINS. If you reduce the amount of water, then it takes 

less energy to burn that fuel. 

Senator BOXER. I see. Got you. I just want to get this right. 25 

percent energy to get the same amount of coal. 

Mr. COLLINS. We are increasing energy content by 25 percent on 

average. 

Senator BOXER. By. 

Mr. COLLINS. By reducing moisture in that coal by taking that 

unusable resource, removing the moisture, and thereby increasing 

the heating value of that coal. 

Senator BOXER. I see. 

Mr. COLLINS. Therefore, it takes less energy to produce electricity 

from that coal. 

Senator BOXER. Got it. 

I have a few questions. Mr. Cinnamon and Mr. Musk, I hope you 

can chime in here. The solar industry is growing by leaps and 

bounds. It would grow even more it would seem to me if we had 

global warming legislation nationally. So if you really were to think 

big on the point that we would do this, that we would follow the 

lead of California and we did enact this kind of legislation, where 

do you see the potential for solar? 

Mr. CINNAMON. OK. There was a study that was done by a management information services in the American Solar Generation Society, base case, moderate case, and advanced scenario, and if we 

were to fully support this industry, the advanced scenario, the photovoltaic business would have 750,000 jobs by 2030 and that would 

be a $48 billion industry. So we can get there. If we don’t, somebody else will. 

Dr. HANEMANN. I think that’s an understatement, quite frankly. 

I actually think that this is closer to a trillion dollar industry, and 

talk a little bit about the timeframe for that, but I actually think 

it’s about at least a trillion dollars’ worth of business to be done 

in photovoltaic. 

Senator BOXER. OK. 
46 

Mr. CINNAMON. I’d have to agree with that. 

Senator BOXER. No argument from you. 

Dr. Hanemann, Mr. Zimmerman pointed out something that I totally agree with. He said based on—you’ve got a base price. Do you 

agree with this in terms of sending a message here if we enact legislation for the safety valve and all of a sudden people may well 

back off their investments? 

Dr. HANEMANN. I think the safety valve as it’s being proposed as 

a price cap would be a hindrance to innovation. I think there are 

other mechanisms that would achieve the same basic objective that 

would be—and those include allowing for borrowing and the idea 

has been suggested for a sort of Federal reserve board. I think having a cap on price and announcing it in advance is a blunt instrument and a bad way to go about providing some degree of security. 

Senator BOXER. Thank you, sir. 

Mr. Musk, a couple of questions. I actually know the answer, 

but—to the first one because when I went to Tesla Motors we 

talked about this. But what I want you to talk about is the fact 

that your cars run on electricity but if you install a solar panel on 

the car you could drive a Tesla Motors vehicle on free zero carbon 

emissions from the sun; is that correct? I would like to ask what 

would that cost—add to the cost to the car to have a solar pack on 

the car? 

Mr. MUSK. Sure. The best way to do that is not to put the solar 

pack on the car, but put it on your house or garage or something 

like that. That would be the most efficient way of doing it. Something like a 10 by 15 foot solar panel really pretty small. 

Senator BOXER. On the house. 

Mr. MUSK. That would then generate about the equivalent of 

about 400 miles a week of travel in the car. So the average is about 

200 miles a week, roughly 30 miles a day, so it’s roughly double 

what your average consumer would do. To get something like that 

installed, $7,000 or $8,000, something like that. 

Senator BOXER. So it’s very possible that we could be driving a 

car and not contributing any—pretty much any carbon, except, of 

course, what it costs to produce the car. 

Mr. MUSK. Putting energy back into the grid. 

Senator BOXER. Pretty remarkable. I have another question for 

you, too. Did you see the movie Who Killed the Electric Car? 

Mr. MUSK. Yes, I did, actually. 

Senator BOXER. Do you understand what happened there? That 

was—how many people in the audience have seen that? Raise your 

hand if you saw it. I had a really bizarre feeling after seeing that. 

Why would GM want to collect every last one of those cars? People 

were begging to keep their cars. 

Mr. MUSK. It’s a combination of factors. That’s the ultimate conclusion of the movie. In part it was a consumer issue and in part 

it was a corporate issue, but I think really at the end of the day 

it made no sense what GM did. How many products have you ever 

seen held at a candlelit vigil for the destruction of a car? 

Senator BOXER. Well, here the manufacturer came out and bulldozed their own product? 

Mr. MUSK. Yes, it’s crazy. 

Senator BOXER. And didn’t let anyone keep one. 
47 

It’s just very—if you haven’t seen the film I strongly recommend 

you see it just because to me it doesn’t make any sense. So if anyone understands it they can let me know. 

Mr. Unger, moving on to you, some argue that an increase in our 

research and development funds, as what you’re involved in, which 

we’re so grateful for, will be enough to foster development of new 

green technology. A recent CEO report found that both research 

and development funds and a mandatory—greenhouse gas emissions will be needed to foster low carbon technologies. 

Do you agree that we need to marry the two? 

Mr. UNGER. I think you have to marry the two. I think that if 

you go back to CAFE standards—I was just reading last night 

when CAFE standards were put on in, I guess—you know, we almost immediately got up to that number. 

Then there was a little dip in the 1980s, and there was an attribution the if the market is left alone it was really the mandatory 

cap that forced that to happen. I think there’s no way, you know, 

to depend only on market forces in something that is—if we’re only 

talking about competition, clearly, I’m going to have an electric car 

sooner or later. It’s going to last me longer and that will be wonderful, but I have a lot of time to make that decision. There are 

other places where I don’t get to make the decision, like I don’t get 

to choose where I buy my power from. 

You know, somebody else decides it. So when you have these 

more complex issues, like who do I get my power from or during 

what period of time do I have to address an issue which may take 

us away from the opportunity to address global warming because 

we’ll reach that tipping point and then maybe we have to have a 

whole new set of technologies to reach it, we need some help to 

drive the incentives. 

I have not seen at least in my lifetime the opportunity to save 

an industry that wasn’t already trying to save itself, whether it’s 

the steel industry, whether it’s the textile industry, whether it’s the 

automobile industry. I think the real issue is that you have to be 

willing to take risks, and I’m biased because I’m a venture capitalist and we get paid for taking risks and yet in my 20 years in 

the business with few exceptions venture capitalists are quite risk 

averse. 

Otherwise, why would so many of us be so successful? Up until 

the bubble burst, nobody ever lost money. What kind of risk is 

that? So here when we really have to take some risks we have to 

address them straightforwardly and find out whether it’s coal or 

whether it’s, you know, an all electric car or a hybrid model or 

what is it, but we have to have an even playing field to get out 

there. Only the government is powerful enough to make that happen. 

Senator BOXER. I think that message is really key to this Administration because they pride themselves on being very pro business 

but they’re not listening to business. They’re not listening to business. That’s what I find so extraordinary. 

Driving me, a lot of things drive me to do this. First, my grandchild. Second, what business leaders are telling me, what scientists 

are telling me, what environmental groups are telling me, every-
48 

one’s telling me the same thing that you just confirmed. We need 

mandatory limits. 

Without that we won’t get those investments we know are going 

to save the day. They will save the day. You—a lot of you on this 

panel are starting to save the day and you need to do it in an environment where you feel comfortable that you can pursue that. So 

I just—I’m urging you, please, all of you who may be able to talk 

to the Jim Thompsons and the George Bushes and Dick 

Chaneys—— 

Mr. COLLINS. I’d like to insert one thing. The wind industry—— 

Senator BOXER. Yes. 

Mr. UNGER. Really from the Sun but via wind, has been a victim 

of inconsistent Federal policy by renewing and not renewing investment credit, if you look at them there’s almost this, you know, up 

expecting, you know, the credit expires and down in terms of the 

amount of business they can do, and make people fear and worry 

about investing in wind energy. We need to avoid that to let people 

like me and the people in my industry have a much longer view, 

we’re willing to tie up our money for five or 10 years. Just try to 

leave the rules a little bit stable. 

Senator BOXER. Right. Then if you wait too long, say the price 

goes up to the sky and it becomes profitable there’s a lead time 

here. We’re not going to be able to have these alternatives at the 

fingertips that we need. 

Mr. Klafter, I wanted to talk to you about that coating glass that 

helps make the buildings more energy efficient, just press you on 

what’s the payback for this if, let’s say, I don’t know if there’s such 

a thing, an average-sized office building. How soon does it pay back 

in terms of the energy efficiency? 

Mr. KLAFTER. I think if you installed that type of technology in 

new construction, the payback is fairly short and the coatings can 

be applied in such a way that it provides benefits both in hot climates and also colder ones so that in colder ones it has insulating 

value and prevents heat loss in the structure. 

I think that some commercial building owners are finding that 

the cost of retrofitting may be a little more tenuous as far as the 

return is concerned, but we would like to see this technology proliferate and start going into all new construction. 

The other thing that we are doing and many other companies 

like ours is also doing additional research on how you can use various types of electronics or electrical devices to change the tinting 

and so on with the flip of a switch, and so on, to provide additional 

benefits. This is where the future is going to be going. 

Senator BOXER. That’s terrific. Is this a substitute, this product, 

for double-pane windows or would it be in addition? 

Mr. KLAFTER. I think it would be in addition to. Again, the type 

of equipment we produce is designed to make it inexpensive to 

apply these types of coatings. A double-pane window alone is kind 

of a lower-tech solution. 

You do see double-pane windows with gases or other things injected between the panes. There are a lot of different solutions. 

There are many companies in this business. The other thing I point 

out about glass is it’s also going to be distributed around the world 

because you’re not going to shift glazing across the globe. You’re 
49 

going to produce it where you need to consume it. So that means 

we’re going to have low heat glass in every country. 

Senator BOXER. Thank you. 

Dr. Zimmerman, can you tell us about the importance of being 

able to calculate emissions of carbon from soil? What’s the relevance of C–Lock technology and similar technology for legislation 

to cap emission of greenhouse gases? 

Dr. ZIMMERMAN. Yes. Over the last hundred years about half of 

the secular trend, half of the CO2 that has accumulated in the atmosphere has come from land use change and agriculture. It took 

100 years of intensive nonsustainable agriculture to get that CO2

in the atmosphere. 

By modifying land use practices, encouraging things like buffer 

strips where there’s high erosion you improve soil quality, you increase the amount of organic matter so it holds more moisture. You 

can actually—some modeling studies of colleagues have shown that 

increasing soil organic matter actually can increase drought tolerance for an entire region. 

So there’s a lot of positive benefits in—both ecologically, and it’s 

something we can do right now to remove CO2 and keep other 

greenhouse gases like methane and nitrous oxide from getting into 

the atmosphere. 

The C–Lock system, what it does basically it uses the information superhighway as a backbone to reach out to communities of 

farmers and ranchers, it uses generic GIS Geographic Information 

System data for climate and so forth, plus land parcel specific data 

from individual ranchers. 

It has verification built into it so it’s really hard to cheat. It 

quantifies what we know. For years soil scientists have been telling 

me, the IPPC and others, soil is so complex we can’t do this. We 

got to wait. The fact is we can do it. 

The issues are almost the same for factories and other gas 

stacks. The other fact is we can quantify what we know and remove what we don’t know, discount the offset on the basis of what 

we know, and the C–Lock system allows us to do it. 

Senator BOXER. OK. Mr. Collins, there are a variety of ways to 

reduce greenhouse emissions from coal. Do you see this as a growth 

industry and is this which you’re investing in technologies like K– 

Fuel? 

Mr. COLLINS. This process reduces CO2. It reduces other greenhouse gas emissions. We see once these plants start getting built 

the thousands of new jobs that would be created by building—— 

Senator BOXER. It can’t be farmed out to other countries. That’s 

the thing. A lot of these plants would be here in the United States. 

I just want to thank you all very, very much. You know, for me 

when I come home it’s a breath of fresh air and now it has again 

been that from everything I’ve done today from this panel it’s 

sometimes lonely back in Washington when you’re from California. 

People don’t understand the ethic that we have here about our environment and the ethic that our corporations bring to the table. 

Not everyone, but most of them, that they do want to do very 

well and they want to do good for society and they’ve found ways 

to do it, that they’ve never seen a clash between a clean environ-
50 

ment and a strong economy. As a matter of fact, we see it in very 

different ways. 

So taking that message back to my colleagues is sometimes very 

difficult. I hope that many of you will make yourselves available to 

testify in Washington. I would say particularly our coal friends who 

are working hard at this, I think we need to make the case to our 

colleagues that there is a way to move forward on coal. There is 

a way to move forward on ag. There’s some people that think we 

can’t say to the Ag industry ‘‘you’re not part of the solution.’’ I 

think we see now that we can all be part of the solution. 

So I hope all of you by shaking your head nodding will tell me 

that you would be willing to come back if I call on you. Yes? I see 

that. Good. I trapped you now. And—because we have a long road. 

We’ve had a breakthrough in the committee. Senators Lieberman 

and Warner have teamed up so we have the first Republican on the 

committee who is ready to pass legislation. 

We have work to do and it’s going to accelerate when we get 

back. Everything that you’ve taught me today I’m going to take 

back to my colleagues, and so I really appreciate your all being 

here. The hearing’s adjourned. 

[Whereupon, at 12:24 p.m. the hearing was adjourned.] 

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