DEPARTMENT OF ENERGY OVERSIGHT:

OFFICE OF ENERGY EFFICIENCY

AND RENEWABLE ENERGY
HEARING
BEFORE THE

SUBCOMMITTEE ON ENERGY

COMMITTEE ON SCIENCE, SPACE, AND

TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION

MARCH 24, 2015

Serial No. 11412

Printed for the use of the Committee on Science, Space, and Technology

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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma
EDDIE BERNICE JOHNSON, Texas
F. JAMES SENSENBRENNER, JR.,
ZOE LOFGREN, California
Wisconsin
DANIEL LIPINSKI, Illinois
DANA ROHRABACHER, California
DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas
SUZANNE BONAMICI, Oregon
MICHAEL T. MCCAUL
ERIC SWALWELL, California
STEVEN M. PALAZZO, Mississippi
ALAN GRAYSON, Florida
MO BROOKS, Alabama
AMI BERA, California
RANDY HULTGREN, Illinois
ELIZABETH H. ESTY, Connecticut
BILL POSEY, Florida
MARC A. VEASEY, Texas
THOMAS MASSIE, Kentucky
KATHERINE M. CLARK, Massachusetts
JIM BRIDENSTINE, Oklahoma
DON S. BEYER, JR., Virginia
RANDY K. WEBER, Texas
ED PERLMUTTER, Colorado
BILL JOHNSON, Ohio
PAUL TONKO, New York
JOHN R. MOOLENAAR, Michigan
MARK TAKANO, California
STEVE KNIGHT, California
BILL FOSTER, Illinois
BRIAN BABIN, Texas
BRUCE WESTERMAN, Arkansas
BARBARA COMSTOCK, Virginia
DAN NEWHOUSE, Washington
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia

SUBCOMMITTEE

ON

ENERGY

HON. RANDY K. WEBER, Texas, Chair

DANA ROHRABACHER, California
ALAN GRAYSON, Florida
RANDY NEUGEBAUER, Texas
ERIC SWALWELL, California
MO BROOKS, Alabama
MARC A. VEASEY, Texas
RANDY HULTGREN, Illinois
DANIEL LIPINSKI, Illinois
THOMAS MASSIE, Kentucky
KATHERINE M. CLARK, Massachusetts
BARBARA COMSTOCK, Virginia
ED PERLMUTTER, Colorado
DAN NEWHOUSE, Washington
EDDIE BERNICE JOHNSON, Texas
LAMAR S. SMITH, Texas

(II)

CONTENTS
March 24, 2015
Page

Witness List .............................................................................................................

Hearing Charter ......................................................................................................

2
3

Opening Statements
Statement by Representative Randy K. Weber, Chairman, Subcommittee on
Energy, Committee on Science, Space, and Technology, U.S. House of Representatives ...........................................................................................................
Written Statement ............................................................................................
Statement by Representative Alan Grayson, Ranking Minority Member, Subcommittee on Energy, Committee on Science, Space, and Technology, U.S.
House of Representatives ....................................................................................
Written Statement ............................................................................................
Statement by Representative Lamar S. Smith, Chairman, Committee on
Science, Space, and Technology, U.S. House of Representatives .....................
Written Statement ............................................................................................

7
8
9
10
11
12

Witnesses:
The Honorable David Danielson, Assistant Secretary, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy (DOE)
Oral Statement .................................................................................................
Written Statement ............................................................................................
Mr. Nick Loris, Herbert and Joyce Morgan Fellow, Heritage Foundation
Oral Statement .................................................................................................
Written Statement ............................................................................................
Ms. Ruth McCormick, Director of Federal and State Affairs, Business Council
for Sustainable Energy (BCSE)
Oral Statement .................................................................................................
Written Statement ............................................................................................
Dr. Veronique de Rugy, Senior Research Fellow, Mercatus Center, George
Mason University
Oral Statement .................................................................................................
Written Statement ............................................................................................
Discussion .................................................................................................................

14
17
34
36

49
51

63
65
82

Appendix I: Answers to Post-Hearing Questions

The Honorable David Danielson, Assistant Secretary, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy (DOE) .................

98

Appendix II: Additional Material for the Record

Statement by Representative Eddie Bernice Johnson, Ranking Member, Committee on Science, Space, and Technology, U.S. House of Representatives ....
Document submitted by The Honorable David Danielson, Assistant Secretary,
Office of Energy Efficiency and Renewable Energy, U.S. Department of
Energy (DOE) .......................................................................................................
(III)

118
119

DEPARTMENT OF ENERGY OVERSIGHT:

OFFICE OF ENERGY EFFICIENCY
AND RENEWABLE ENERGY
FRIDAY, MARCH 24, 2015

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON ENERGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:41 p.m., in Room
2318 of the Rayburn House Office Building, Hon. Randy Weber
[Chairman of the Subcommittee] presiding.

(1)

7
Chairman WEBER. Subcommittee on Energy will come to order.
Without objection, the Chair is authorized to declare recesses of
this Subcommittee at any time.
Welcome to todays hearing titled Department of Energy Oversight: Office of Energy Efficiency and Renewable Energy.
I recognize myself for five minutes for an opening statement.
Good afternoon, and as I have already said, welcome to todays
Energy Subcommittee hearing. We are going to examine the Department of Energys Office of Energy Efficiency and Renewable
Energy, or EERE. Today, we will hear from the Department and
a broad panel of expert witnesses on the value of the research, development, demonstration, and commercialization activities in
EERE, and the impact DOEs clean energy programs have on the
energy market and the United States economy.
EERE is the lead federal agency for clean energy research and
development, with programs in transportation, renewable energy,
and energy efficiency. This office is clearly a top priority for the
Obama Administration, with this years budget request coming in
at $2.7 billion, which is an increase of over $800 million from enacted levels. That is a whopping 42 percent increase in one year.
With our national debt at $18 trillion and rising, and mandatory
spending caps guiding budgets on everything from energy to national defense, this kind of spending obviously deserves rigorous
oversight from Congress. It is clear that EEREs budget is simply
unaffordable. While every other federal program has had to adjust
to spending caps and work within modest spending goals, EEREs
budget has continued to increase. Despite a budget that has already grown by 58 percent in the last decade, and received over
$16 billion, with a B, in stimulus funds, the Obama Administration
continues to request more year after year. It is time to adjust
EEREs budget to reality. By continuing to grow EERE spending,
the Department of Energys approach to energy research and development has also become more and more unbalanced. EEREs budget dwarfs that of the other applied offices at DOE. The $2.7 billion
budget request for fiscal year 2016 is more than four times the
budget request for fossil energy R&D, five times the request for nuclear energy R&D, and 16 times the request for electricity and energy reliability R&D. In fact, the proposed budget for EERE is
more than double the budgets for nuclear, fossil, and electricity
R&D combined.
Finally, the work prioritized by EERE is far too focused on increasing the use of todays technology, not conducting the fundamental research to lay the foundation for the next technology
breakthrough. Many EERE programs are focused on reducing market barriers for existing technology or funding R&D activities already prioritized by the private sector. For example, in EEREs Vehicle Technologies program, $40 million is requested for cost-share
projects withinwith industry within the SuperTruck 2 initiative. Funding for SuperTruck 2 is intended to improve the hauling
efficiency of heavy-duty, Class 8 long-haul vehicles by 100 percent
by the year 2020. But the freight industry and auto manufacturers,
both billion dollar industries, already have the means and motivation to develop innovative technology to increase energy efficiency.
Investing in technology to decrease costs is just good business

8
sense, and American industry does this every day, with or without
federal funds. And I might add, on the trucking freight business,
I used to do some freight hauling as one of my businesses. Unless
you can decrease the weight of a pound, we are in for a long wait.
Instead of duplicating work that could be done in the private sector, the Department should prioritize basic research and development with broad application to all forms of energy, and energy efficiency. Models developed in the Office of Sciences ASCR program,
the subject of an Energy Subcommittee hearing earlier this year,
can be used to study and improve techniques in manufacturing, renewable power, and energy efficiency, enabling the private sector
to develop and bring new technology into the market without
American tax dollars.
I want to thank Assistant Secretary Danielson and all our witnesses for testifying to the Committee today, and I look forward to
a review of EEREs programs and a discussion about the impact
DOEs clean energy programs have on the economy. As some of our
witnesses will point out today, subsidizing one form of energy over
another through federal programs is damaging to the energy market, it increases costs for the American people, and actually is often
counterproductive to new the technology development. Investment
in the next generation of energy technology must be balanced, technology-neutral, and responsible. By funding basic research and development, the Department of Energy could build a foundation for
the private sector to bring new innovative technologies to market,
and to grow the American economy.
With that, I yield back. And, Mr. Grayson, you are recognized.
[The prepared statement of Mr. Weber follows:]
PREPARED STATEMENT

OF

SUBOMMITTEE CHAIRMAN RANDY WEBER

Good morning and welcome to todays Energy Subcommittee hearing examining

the Department of Energys Office of Energy Efficiency and Renewable Energy, or
EERE. Today, we will hear from the Department and a broad panel of expert witnesses on the value of the research, development, demonstration and commercialization activities in EERE, and the impact DOEs clean energy programs have on the
energy market and the U.S. economy.
EERE is the lead federal agency for clean energy research and development, with
programs in transportation, renewable energy, and energy efficiency. This office is
clearly a top priority for the Obama Administration, with this years budget request
coming in at $2.7 billion, an increase of over $800 million from enacted levels.
Thats a whopping 42 percent increase in one year.
With our national debt at $18 trillion and rising, and mandatory spending caps
guiding budgets on everything from energy to national defense, this kind of spending deserves rigorous oversight from Congress.
It is clear that EEREs budget is simply unaffordable. While every other federal
program has had to adjust to spending caps and work within modest spending goals,
EEREs budget has continued to increase. Despite a budget that has already grown
by 58% in the last decade, and received over $16 billion in stimulus funds, the
Obama Administration continues to request more year after year. Its time to adjust
EEREs budget to reality.
By continuing to grow EERE spending, the Department of Energys approach to
energy research and development has also become more and more unbalanced.
EEREs budget dwarfs that of the other applied offices at DOE. The $2.7 billion
budget request for Fiscal Year 2016 is more than four times thebudget request for
fossil energy R&D, five times the request for nuclear energy R&D, and 16 times the
request for electricity and energy reliability R&D. In fact, the proposed budget for
EERE is more than double the budgets for Nuclear, Fossil, and Electricity R&D
combined.

9
Finally, the work prioritized by EERE is far too focused on increasing the use of
todays technology, not conducting the fundamental research to lay the foundation
for the next technology breakthrough. Many EERE programs are focused on reducing market barriers for existing technology or funding R&D activities already
prioritized by the private sector.
For example, in EEREs Vehicle Technologies program, $40 million is requested
for cost-share projects with industry within the SuperTruck 2 initiative. Funding
for SuperTruck 2 is intended to improve the hauling efficiency of heavy-duty, Class
8 long-haul vehicles by 100% by 2020. But thefreight industry and auto manufacturersboth billion dollar industriesalready have the means and motivation to develop innovative technology to increase energy efficiency. Investing in technology
todecrease costs is just good business senseand American industry does this every
day, with or without federal funds.
Instead of duplicating work that could be done in the private sector, the Department should prioritize basic research and development with broad application to all
forms of energy, and energy efficiency.
Models developed in the Office of Sciences ASCR programthe subject of an Energy Subcommittee hearing earlier this yearcan be used to study and improve
techniques in manufacturing, renewable power, and energy efficiency, enabling the
private sector to develop and bring new technology into the market without American tax dollars.
I want to thank Assistant Secretary Danielson and all our witnesses for testifying
to the Committee today, and I look forward to a review of EEREs programs and
a discussion about the impact DOEs clean energy programs have on the economy.
As some of our witnesses will point out today, subsidizing one form of energy over
another through federal programs is damaging to the energy market, increases costs
for the American people, and is often counterproductive to new technology development.
Investment in the next generation of energy technology must be balanced, technology-neutral, and responsible. By funding basic research and development, the Department of Energy could build a foundation for the private sector to bring innovative new technologies to market, and grow the American economy.

Mr. GRAYSON. Thank you, Chairman Weber, for holding this

hearing. And thank you to our witnesses for appearing here today.
America is mired in a long-term negative energy trade balance.
According to the most recent figures from the Energy Information
Administration, our energy trade deficit as of the fourth quarter of
2013 was $203 billion, and it has been that way literally for decades. We must import to make up the difference, and the question
is how much longer are we going to be able to spend our fortune
that way.
Every year for the past two generations, energy imports have
cost us hundreds of billions of dollars. Unfortunately, there are also
massive hidden costs that arent reflected in the prices that Americans actually pay for energy. One recent study estimates that the
United States has spent about $8 trillion from 1976 through 2010,
merely defending access to oil supplies in the Persian Gulf, not producing, not acquiring, not even transporting, but simply defending
our access to oil. That is $25,000 for every man, woman and child
in America. Continuing to pursue a business-as-usual energy policy
clearly costs not only American dollars, but also American lives.
We cant just drill our way out of that problem.
Because the price of oil is set globally, a disruption of oil from
the Middle East could severely spike U.S. oil prices no matter how
much of it we are able to pull from our own ground. That is why
reducing dependence on oil, and not just foreign oil, is a key strategic objective for both the United States economy and the U.S.
Military. We can and we must end this strategic energy deficit. We
can create a domestic energy infrastructure that is reliable, resilient and far less dependent on volatile regions around the world.

10
Towards these ends, the Department of Energys Office of Energy
Efficiency and Renewable Energy, which we are here to talk about
today, helps to make that future come faster. Their sustainable
transportation technology program focuses on improving energy efficiency in vehicles, and developing new alternative fuels from domestic resources. Research investments made by this program have
reduced electric vehicle battery costs by 70 percent since 2008.
They have also reduced the manufacturing costs for automotive
fuel cells by more than 50 percent just since 2006. Research and
development in biofuels has helped to reduce the production cost of
cellulosic ethanol by more than $6 a gallon, to around $3.20 per
gallon today, making it cost-competitive with gasoline.
Beyond reducing our dependence on oil, these programs improve
energy efficiency in buildings and appliances, and they are providing major economic and environmental benefits to U.S. taxpayers as well. Efficiency standards enacted by the Department of
Energy since 2009 are projected to save consumers hundreds of billions of dollars in their utility bills through 2030, and this agencysupported research in advanced lighting technology has helped to
reduce LED costs by 90 percent since 2008. The renewable energy
sector has also benefitted immensely from the agency-supported research and development. Since 2010, photovoltaic systems costs
have been cut in half. DOEs SunShot Program, which has the goal
of making solar energy costs competitive with conventional sources
by 2020, is already more than 60 percent of the way to achieving
that cost target. Overall, third party evaluators outside of the government estimate that from 1976 to 2008, these investments of $15
billion have resulted in an estimated economic benefit to the
United States of $388 billion, a net return of more than 24 to 1.
That is a very impressive track record, whether it is in government
or in business, and it is one that we should continue to support.
Private investors in the energy sector are beginning to move from
project-level loans to holding company loans, which means renewable energy industries may be starting at long last to take off. This
development is encouraging, but we must realize that there is no
Exxon Mobil, or for that matter, an Intel or a Pfizer in the renewable energy sector. There is no one with the capability to spend billions on research that the government is spending now. There remains a unique government role in supporting the advancement of
new technologies at a sufficient pace to meet our national economic, environmental and energy security needs. And that is why
I look forward to this hearing to hear more about that today.
The results from this agencys programs are tangible. They are
having a direct positive impact on peoples lives and, therefore, I
want to thank Dr. Danielson and his office for their productive
work, and for the information that they provide for us here today.
And thank you again, Mr. Chairman.
And with that, I yield the balance of my time.
[The prepared statement of Mr. Grayson follows:]
PREPARED STATEMENT OF SUBCOMMITTEE ON ENERGY
MINORITY RANKING MEMBER ALAN GRAYSON
Thank you, Chairman Weber, for holding this hearing, and thank you to our witnesses for appearing here today.

11
America is mired in a long-term negative energy trade balance. According to the
most recent figures from the Energy Information Administration, our energy trade
deficitas of the fourth quarter of 2013was $203 billion.
Every year, for the past two generations, energy imports have cost us hundreds
of billions of dollars. Unfortunately, there are also massive hidden costs that arent
reflected in the prices Americans actually pay for energy.
One recent study estimates that the U.S. has spent about $8 trillion from 1976
through 2010, merely defending access to oil supplies in the Persian Gulf. Not producing, not acquiring, not transportingbut defending access to oil. Thats $25,000
for every man, woman, and child in America. Continuing to pursue a business-asusual energy portfolio clearly costs not only American dollars, but American lives.
We cant just drill our way out of this problem.
Because the price for oil is set globally, a disruption of oil from the Middle East
could severely spike U.S. oil prices no matter how much of it we are able to pull
from the ground. Thats why reducing dependence on oil, not just foreign oil, is
a key strategic objective for both the U.S. economy and the U.S. military.
We can, and we must, end this strategic energy deficit. We can create a domestic
energy infrastructure that is reliable, resilient, and far less dependent on volatile
regions of the world.
Toward these ends, the Department of Energys Office of Energy Efficiency and
Renewable Energy, or EERE, which we are here to talk about today, helps make
that future come faster. EEREs Sustainable Transportation technology program focuses on improving efficiency in vehicles, and developing new alternative fuels from
domestic resources.
Research investments made by this program have reduced electric vehicle battery
costs by 70% since 2008. They have also reduced the manufacturing costs for automotive fuel cells by more than 50% since 2006.
Research and development in biofuels has helped reduce production costs of cellulosic ethanol by more than $6 per gallon, to around $3.20 per gallon today, making
it cost-competitive with gasoline.
Beyond reducing our crippling dependence on oil, EEREs programs to improve energy efficiency in buildings and appliances are providing major economic and environmental benefits to U.S. taxpayers as well.
Efficiency standards enacted by the Department of Energy since 2009 are projected to save consumers hundreds of billions of dollars in their utility bills through
2030, and EERE-supported research in advanced lighting technology has helped reduce LED costs by 90% since 2008.
The renewable energy sector has also benefited immensely from EERE-supported
research and development. Since 2010, photovoltaic system costs have been cut in
half. DOEs SunShot program, which has the goal of making solar energy cost-competitive with conventional sources by 2020, is already more than 60% of the way
to achieving its cost target.
Overall, third-party evaluators estimate that from 1976 to 2008, EERE investments of $15 billion have resulted in an estimated economic benefit to the United
States of $388 billiona net return of more than 24 to 1. That is an impressive
track record, and it is one we should continue to support.
Private investors in the energy sector are beginning to move from project-level
loans to holding company loans, which means renewable energy industries are starting to take off. While this development is encouraging, we must realize that there
is still no ExxonMobil, nor, for that matter, an Intel or Pfizer, in the renewable energy sector. There remains a unique government role in supporting the advancement of new technologies at a sufficient pace to meet our national economic, environmental, and energy security needs. And that is what I look forward to hearing
more about today.
The results from EEREs programs are tangible, and they are having direct, positive impacts on peoples lives.
I want to thank Dr. Danielson and his Office for their productive work, and for
the information that they provide here today.Thank you again, Mr. Chairman, and
with that I yield the balance of my time.

Chairman WEBER. Thank you, Mr. Grayson.

I now recognize the Chairman of the Full Committee, Mr. Smith.
Chairman SMITH. Thank you, Mr. Chairman.
Today, the Subcommittee on Energy will examine the Department of Energys Office of Energy Efficiency and Renewable Energy, commonly referred to as EERE. The Department describes
EERE as, The U.S. Governments primary clean energy technology

12
organization. EEREs goals sound worthy enough. It seeks to reduce the use of fossil fuels, lower emissions, and speed up the adoption and decrease the cost of clean energy technology in transportation, renewable power and energy efficiency. However, while the
EERE is billed as leading clean energy research and development,
there are fundamental concerns with EEREs approach to advancing energy technology. EEREs activities demonstrate that it is
heavily invested in forcing the Administrations preferred technology on the American people. When the government picks winners and losers in the energy technology marketplace, the American people pay the price.
The Solar Energy Technologies Program within EERE offers a
ready example. This programs goal is to reduce the cost of solar
power until they are cost-competitive with electricity from fossil
fuels. It aims to achieve this goal by 2020. But because the program is focused on cost, not technology, EERE spends taxpayer dollars to market and deploy existing solar technology. Instead of research on the fundamental science behind solar energy, or development of new solar technology, EERE spends taxpayer dollars on
permitting, financing, and customer acquisition. It essentially
puts promoting energy companies over research and development.
Addressing these issues may help the solar industry market their
product, but that is short-sighted and doesnt really make solar energy more competitive in the long term.
The Department of Energy should perform groundbreaking scientific research and develop on new technologies, not spend American tax dollars to promote what is already commercially available.
The federal government should invest in basic research that could
open the door for widespread use of solar and other renewable energy technology in the future. For example, energy storage research
and development at the Joint Center for Energy Storage Research
hub in the Office of Science explores new energy storage possibilities through basic scientific research. This energy storage research
could have a groundbreaking impact not just on the solar industry,
but also on all forms of energy.
The Presidents budget proposal for EERE includes a 42 percent,
or $809 million, increase in spending. This is almost three times
the requested increase for the Office of Science. In Congress, we
have the responsibility to ensure the efficient and effective use of
American tax dollars. We cant afford to impose expensive and inefficient technology on the energy market. We do not have unlimited
resources, so we will have to make choices about where to make
the best investment for the American people. By investing in basic
research that benefits all forms of energy, we can make energy less
expensive, and that benefits consumers and helps the United
States achieve energy independence.
[The prepared statement of Mr. Smith follows:]
PREPARED STATEMENT

OF

FULL COMMITTEE CHAIRMAN LAMAR S. SMITH

Good morning. Today, the Subcommittee on Energy will examine the Department
of Energys Office of Energy Efficiency and Renewable Energy, commonly referred
to as E-E-R-E. The Department describes EERE as, The U.S. Governments primary clean energy technology organization.

13
EEREs goals sound worthy enough. It seeks to reduce the use of fossil fuels,
lower emissions, and speed up the adoption and decrease the cost of clean energy
technology in transportation, renewable power and energy efficiency.
However, while the EERE is billed as leading clean energy research and development, there are fundamental concerns with EEREs approach to advancing energy
technology. EEREs activities demonstrate that it is heavily invested in forcing the
Administrations preferred technology on the American people.
When the government picks winners and losers in the energy technology marketplace, the American people pay the price. The Solar Energy Technologies Program
within EERE offers a ready example. This programs goal is to reduce the cost of
solar power until they are cost-competitive with electricityfrom fossil fuels. It aims
to achieve this goal by 2020.
But because the program is focused on cost, not technology, EERE spends taxpayer dollars to market and deploy existing solar technology. Instead of research on
the fundamental science behind solar energy, or development of new solar technology, EERE spends taxpayer dollars on permitting, financing, and customer acquisition. It essentially puts promoting energy companies over research and development.
Addressing these issues may help the solar industry market their product, but
that is short-sighted and doesnt really make solar energy more competitive in the
long term.
The Department of Energy should perform groundbreaking scientific research and
develop new technologies, not spend American tax dollars to promote what is already commercially available. The federal government should invest in basic research that could open the door for widespread use of solar and other renewable energy technology in the future.
For example, energy storage research and development at the Joint Center for Energy Storage Researchhub in the Office of Science explores new energy storage possibilities through basic scientific research. This energy storage research could have
a groundbreaking impact not just on the solar industry, but alsoon all forms of energy.
The Presidents budget proposal for EERE includes a 42 percent, or $809 million,
increase in spending. This is almost three times the requested increase for the Office of Science.
In Congress, we have the responsibility to ensure the efficient and effective use
of American tax dollars. We cant afford to impose expensive and inefficient technology on the energy market. We do not have unlimited resources, so we will have
to make choices about where to make the best investment for the American people.
By investing in basic research that benefits all forms of energy, we can make energy less expensive, and that benefits consumers and helps the U.S. achieve energy
independence.

Chairman SMITH. Mr. Chairman, before I yield back, let me

apologize to our witnesses, I have a Judiciary Committee markup
that is ongoing right now, and I am going to have to shuttle back
and forth between the most important hearing going on today,
here, and an obligation to attend the Judiciary Committee. So I
will yield back.
Chairman WEBER. Thank you, Chairman. We appreciate you.
Let me introduce our witnesses.
Our first witness today is the Honorable David Danielson, Assistant Secretary of the Office of Energy Efficiency and Renewable Energy for the United States Department of Energy. Previously, he
served as program director for Department of Energys Advanced
Research Projects Agency Energy, where he developed and led research and development programs. Before working at the Department of Energy, Dr. Danielson was a clean energy venture capitalist at General Catalyst Partners, and was a cofounder of the
New England Clean Energy Council. Dr. Danielson received his
Ph.D. in materials science and engineering from the Massachusetts
Institute of Technology, and his Bachelors Degree in materials
science and engineering from the University of California at Berkeley. Dr. Danielson, we are glad you are here.

14
Mr. Nick Lorisour second witness today is Nick Loris, a Herbert and Joyce Morgan Fellow for the Heritage Foundation. Mr.
Loris specializes on energy, environmental and regulatory issues.
He has been published and quoted in such publications as the Wall
Street Journal, the New York Times, the Washington Post, Investors Business Daily, and the Baltimore Sun. Before being named
a Morgan Fellow, Mr. Loris was a policy analyst specializing in energy and environmental issues. Mr. Loris received his Masters in
economics from George Mason University, and his Bachelors Degree in economics, finance and political science from Albright College. Mr. Loris, welcome.
Our third witness is Ms. Ruth McCormick, the Director of Federal and State Affairs for the Business Council for Sustainable Energy. Ms. McCormick has over 25 years of experience in energy and
environmental policy development. Prior to joining the council, Ms.
McCormick represented the Western Regional Council, a coalition
of businesses in the western United States. In addition, Ms. McCormick served as the legislative director for House Energy and Commerce Committee member Congressman Nielson. Ms. McCormick
is a graduate of the University of UhahUtah. I can do this.
And Dr. Veronique, you told me it was okay, de Rugy. Am I saying that right?
Dr. DE RUGY. de Rugy.
Chairman WEBER. de Rugy, okay, good. A senioris our next
witness, a Senior Research Fellow for the Mercatus Center at
George Mason University, with a focus on the U.S. economy, the
federal budget, homeland security, and tax competition and financial privacy. In addition, Dr. de Rugy writes regular columns for
Reason Magazine and the Washington Examiner, and she blogs
about economics and National Review Onlines The Corner. Previously, Dr. de Rugy has been a Resident Fellow at the American
Enterprise Institute, a policy analyst at the Cato Institute, and a
Research Fellow at the Atlas Economic Research Foundation. Before moving to the United States, she oversaw academic programs
in France for the Institute for Humane Studies Europe. Dr. de
Rugy received her MA in economics from the Paris Dauphine University, and her Ph.D. in economics from the Pantheon-Sorbonne
University. Welcome, Doctor.
In order to allow time for discussion, we ask the witnesses to
please limit your testimony to five minutes. And without objection,
your entire written statement will be made a part of the record.
And I now recognize Dr. Danielson for five minutes to present
his testimony. Doctor.
TESTIMONY OF THE HON. DAVID DANIELSON,
ASSISTANT SECRETARY,
OFFICE OF ENERGY EFFICIENCY AND
RENEWABLE ENERGY,
U.S. DEPARTMENT OF ENERGY (DOE)

Dr. DANIELSON. Thank you, Chairman. Chairman Smith, Chairman Weber, Ranking Member Grayson, and distinguished Members of the Subcommittee, thank you for the opportunity to appear

15
before you today to discuss the Office of Energy Efficiency and Renewable Energy, EERE, at the U.S. Department of Energy.
EERE supports cutting-edge American innovation to dramatically reduce U.S. reliance on foreign oil, cut energy costs for American families and businesses, avoid the damaging economic and
health impacts of energy-related pollution, and enable the U.S. private sector to create good-paying American jobs through innovation. EEREs efforts in three critical energy sectorssustainable
transportation, renewable power, and energy efficiencysupportthe
research, development and demonstration activities that are needed to make clean energy technologies directly cost-competitive without subsidies.
While clean energy markets grew to approximately $300 billion
globally last year, with trillions more in market opportunity in the
years ahead, the energy industry significantly underinvested in
R&D compared to other industries. The strategic importance of energy to American economic growth and security means that government has a necessary and needed role to make the appropriate investments in cutting-edge energy innovation to seize this clean energy opportunity.
My experience as an MIT-trained scientist and engineer, a venture capitalist in the energy sector, and as one of the founders of
ARPAE, has given me unique insights into what is required for
the U.S. energy innovation ecosystem to be successful. From this
experience, I have developed five core questions that serve as the
guiding principles by which EERE prioritizes its investments in energy innovation. These questions include the following. One: Impact. Is this a high-impact problem? Two: Additionality. Will EERE
funding make a large difference relative to investments being made
by the private sector? Three: Openness. Are we open to new ideas,
and the most promising new energy innovations? Four: Economic
benefit. Will EERE funding result in enduring U.S. economic impact? And five: Proper role of government. Is this investment a
proper role of government, or something best left to the private sector to do on its own?
EERE has shown that smart, targeted investments in clean energy innovation can have a healthy return on investment for taxpayers. As just one example of many, over a 30-year period, EERE
funded R&D on advanced combustion engines resulted in a net
benefit of about $70 billion, representing a benefit-to-cost ratio of
53 to 1, at a seven percent discount rate.
In terms of our fiscal year 2016 budget request, in fiscal year
2016, EERE is requesting from Congress $2.7 billion across our
three sectors to continue these successes, and to enable the United
States to remain a global leader in innovative new clean energy
technologies. The $793 million request for our sustainable transportation portfolio would help consumers and businesses use less
energy to move business and freight, and replace conventional fuels
with cost-competitive, domestically-produced, sustainable alternative fuels. And we are making significant progress. In 2014, the
five-year SuperTruck program exceeded its goal of developing a
suite of cutting-edge new long-haul trucking technologies to enable
a 50 percent improvement in freight efficiency one year ahead of
schedule. Our fiscal year 2016 budget request will enable EERE to

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continue our focus on cutting-edge R&D, and advanced combustion
and lightweight vehicles, developing new technologies that can diversify our fuel mix with drop-in biofuels, and enabling plug-in
electric and fuel cell vehicles to become cost-competitive.
In our renewable power portfolio, EEREs request of $645 million
will build on our R&D goal to enable the a development of multiple
cost-effective renewable power technology options for every region
of the country to diversify our power sector. Our fiscal year 2016
request will continue our SunShot Initiatives progress in making
solar energy directly cost-competitive by 2020. Our request will
also support the Frontier Observatory for Research in Geothermal
Energy, or FORGE, a first-of-a-kind field laboratory, to address the
key R&D challenges required to enable cost-effective advanced geothermal power, in addition to continued R&D efforts to reduce the
cost of wind power, marine and hydrokinetic power, and hydropower.
Finally, in our energy efficiency portfolio, EEREs request of
$1.03 billion emphasizes cutting-edge R&D and next-generation efficient building technologies, including high-efficiency, low-cost
heating and cooling technologies. We will also increase support for
next-generation manufacturing R&D to lower energy costs for
American manufacturers, and create American leadership in the
next generation of emerging energy-related advanced manufacturing technologies.
As just one example of these advanced manufacturing technology
R&D investments, in January we launched the Institute for Advanced Composites Manufacturing Innovation, a public-private consortium of 122 leading U.S. manufacturers and research organizations that will focus on advanced composites, foundational materials that are three times as strong and twice as light as the lightest metals.
As EERE invests in high-impact research, development and demonstration programs to make clean energy solutions more affordable, accessible, and reliable, we remain fiercely committed to being
a good steward of taxpayer investments. Over the past two years,
EERE has implemented a new active project management approach under which we hold all of our projects accountable to annual go/no-go milestones, and under which we are more aggressively discontinuing projects that are not achieving key milestones
to protect taxpayer interests.
In closing, EERE looks forward to working with this Committee
to make necessary and appropriate investments in clean energy innovation, to continue to make our organization effective and accountable to Congress and to taxpayers, and to ensure that the
United States wins the global clean energy race.
Thank you.
[The prepared statement of Dr. Danielson follows:]

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Chairman WEBER. Thank you, Dr. Danielson.
Mr. Loris, you are recognized for five minutes.
TESTIMONY OF MR. NICK LORIS,
HERBERT AND JOYCE MORGAN FELLOW,
HERITAGE FOUNDATION

Mr. LORIS. Thank you. Chairman Weber, Ranking Member Grayson, and distinguished Members of the Subcommittee, thank you
for this opportunity to discuss the Department of Energys Office
of Energy Efficiency and Renewable Energy.
My name is Nick Loris, and I am the Herbert and Joyce Morgan
Fellow at the Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing
any official position of the Heritage Foundation.
Often overlooked in the criticism of policies that pick winners
and losers in energy markets is the proper scrutiny of all the
spending programs within EERE. The given logic for many of these
initiatives is that a gap exists between basic research and economic
viability, and thus, more taxpayer dollars must be spent to attract
private investment. The reality though is that the market demand
for transportation fuel and electricity are incentive enough to spur
competition and innovative breakthroughs. Globally, these are
multitrillion dollar markets. If any renewable technology captures
a mere slice of that market, it would stand to make billions, if not
tens of billions of dollars in profit annually. Breaking into this market is not a problem of the so-called valley of death where good
ideas are unable to attract substantial investment. It is a valley of
wealth waiting to be had.
The objectives of this office may be laudable, but it is simply not
the role of the Federal Government to reduce cost and lower risk.
When the government attempts to drive commercialization, it circumvents the competitive process that appropriately assigns risk
and reward, and disregards how markets efficiently allocate resources. Take, for instance, the bioenergy technologies program
that aims to make advanced biofuels cost-competitive with conventional gasoline at $3 per gallon. Why is that an objective in the
first place, and how does the government know that $3 will be the
magic price point at which alternative fuels become competitive? As
we all know, markets are very unpredictable. And even if somehow
$3 does change the market for alternative fuels, businesses are
much better equipped and flexible to deal with the changing economic circumstances. Most importantly, the private sector should
be responsible for taking on that risk and innovating to lower costs.
The same holds true for the electricity sector. For instance, the
budget justification for the SunShot initiative states a goal of reducing the price for utility scale solar to 6 cents per kilowatt hour
without subsidies, and that will result in rapid, large-scale adoption of solar across the United States. The problem is that the
SunShot initiative in and of itself is a huge government subsidy by
spending hundreds of millions of taxpayer dollars to reduce the cost
of solar. And if 6 cents per kilowatt hour results in rapid solar deployment, that is great, but that should be a business decision.
Government has no business trying to make projects cost-competitive or improving a technologys reliability to make it more enticing

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for private financiers. Furthermore, the government is not very
good at it, compared to those industries that actually have skin in
the game. How many times have we heard from the DOE that an
economically viable alternative energy source was just around the
corner, and decades later and billions of taxpayer dollars squandered, the technology is still just around that corner.
Another goal for this office is improving energy efficiency. Programs like the Advanced Manufacturing Office sound nice and like
an easy sell to constituents, but manufacturers already know that
energy is a significant cost, and will find ways to reduce energy
consumption in order to gain a competitive advantage. Companies
will make these investments if they believe the technology is promising, worth the risk, and the best use of their investment dollars.
Instead, the Advanced Manufacturing Office provides nothing
more than corporate welfare. For instance, past grant recipients
have been some of the worlds largest companies and massive energy users, including GE, Dow Chemical, and Boeing. These are
not companies that need help from the taxpayer.
Now, when it comes to energy efficiency, one area that makes
more sense as a government function is to reduce energy use within the federal government. The government as an energy consumer
does not face the same incentive structure, nor do they always
weigh trade-offs like families and businesses do. But the Federal
Energy Management Program should be carried out in a technology-neutral manner to ensure the purpose is actual energy savings to save taxpayer dollars, not meet a political agenda.
All of this is not to say, however, that innovative technologies
cannot emerge from federal spending, but there is a stark difference between how successes like the Internet became commercially viable versus attempts to commercialize specific energy technologies. Government projects that have become commercial successes, such as the Internet, computer chips and GPS, were not initially intended to meet a commercial demand, but instead, national
security needs. Entrepreneurs saw an opportunity and created the
commercially viable products that we enjoy today. The objective for
Congress and the federal government should be to fund that basic
research that meets national objectives, and create the proper
pathway for DOE lab researchers to push that basic research out
to the market, and for the private sector to tap into that expertise
at our national labs.
To conclude, America doesnt need a man-on-the-moon-style mission for energy because the government has a diverse mix of energy
supplies to competitively price energy, and provide families and
businesses with choice. True reforms that lay the groundwork and
lay the framework for renewable energy technologies to succeed
and achievesachieve the goal that EERE sets will not come from
more government spending, but instead, free market reforms that
create a competitive economic environment.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Loris follows:]

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Chairman WEBER. Thank you, Mr. Loris.
Ms. McCormick?
TESTIMONY OF MS. RUTH MCCORMICK,
DIRECTOR OF FEDERAL AND STATE AFFAIRS,
BUSINESS COUNCIL FOR SUSTAINABLE ENERGY (BCSE)

Ms. MCCORMICK. Thank you for the opportunity to testify today.

My name is Ruth McCormick, and I am the Director of Federal and
State Affairs for the Business Council for Sustainable Energy. The
Council is a broad-based industry trade group, representing companies and associations in the energy efficiency, renewable energy,
and natural gas industries.
Over the past several years, the United States has seen real
market penetration of a wide range of sustainable energy technologies and resources, and we have witnessed the results of policies and research and development that work, but to continue the
momentum of growth in these sectors, and to receive their co-benefits, long-term, stable policies will be needed to level the playing
field and to provide market access. And the United States needs to
continue to invest in energy research, development and demonstration to increase the efficiency of our energy generation and use,
and to spur new innovations. This is important both for domestic
economic growth and for U.S. competitiveness in global energy
markets.
I would like to focus my testimony in two areas. First, I would
like to share some of the findings from the recently released 2015
edition of the Sustainable Energy in America Fact Book. The fact
book was researched and produced by Bloomberg New Energy Finance, and commissioned by the Business Council for Sustainable
Energy. It is intended to be a resource for policymakers with upto-date market information.
The second area I would like to discuss is the valuable and effective role that federal investments in the energy sector have played,
and should continue to play, in the availability of new innovative
energy technologies and practices.
The fact book points to the dramatic changes underway in the
U.S. energy sector. The data shows that traditional energy sources
are declining, and natural gas, renewable energy, and energy efficiency are on the rise. These changes are increasing the diversity
of the countrys energy mix, improving our energy security, cutting
energy waste, increasing our energy productivity, and reducing air
pollution and greenhouse gas emissions. While technology costs
have fallen, market barriers and grid integration challenges continue to hinder greater use of clean energy technologies. To continue the momentum of growth, long-term, stable policies will be
needed to level the playing field and to provide market access to
new technologies.
Electricity markets are evolving, and the U.S. power sector, long
organized around large, centralized systems, is considering distributed power options such as combined heat and power, waste heat
to power, small scale renewables, and fuel cells. Other changes are
also occurring in the U.S. energy sector, including the introduction
of smart grid technologies for improving grid management, and a

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growing role for dispatchable resources such as natural gas plants,
hydropower, and demand response.
Many market structures do not yet fully recognize the benefits
of some of the technologies, such as energy storage, or best practices, which allow for increased flexibility of the grid. For this reason, BCSE strongly supports the continued funding of basic and applied research for clean energy technologies. This must be balanced
with work on commercialization, market transformation, and other
efforts to ensure that products do not sit on laboratory or university shelves, but are transferred to the private sector to achieve the
intended public benefit.
There are strong analytical findings that show the overall return
on federal investments in this area. For example, 3 decades of investment in extraction of natural gas from shale has led to low natural gas prices, saving households and businesses money, attracting new industrial manufacturing opportunities in the United
States, and helping to create U.S. jobs. As a result of energy efficiency policies and investments, total energy use in the United
States is down 2.4 percent since 2007, while gross domestic product
has grown eight percent. The cost of solar PV models has fallen
more than 80 percent since 2007. Thirty-two percent of new electric
generating capacity came from solar in 2014, and the industry now
employs nearly 175,000 workers, more than tech giants Google,
Apple, Facebook and Twitter combined. These are just a few examples. The energy sector involves technologies that have been transformed over the course of more than a century, and it is critical
that the U.S. Government continue to invest in advancements.
Council members look forward to working with this Committee
and the federal government to ensure that public investments in
these sectors are highly leveraged, effective and efficient in carrying out the intended policy aims.
Thank you.
[The prepared statement of Ms. McCormick follows:]

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Chairman WEBER. Thank you, Ms. McCormick.
Dr. de Rugy.
TESTIMONY OF DR. VERONIQUE DE RUGY,
SENIOR RESEARCH FELLOW,
MERCATUS CENTER,
GEORGE MASON UNIVERSITY

Dr. DE RUGY. Good afternoon, Chairman Weber, Ranking Member Grayson, Members of this Subcommittee. My name is
Veronique de Rugy. I am a Senior Research Fellow at the Mercatus
Center at George Mason University where I study tax and budget
issues.
So for decades now, policymakers have tried to expand the federal role in developing alternative energy technology and move the
economy away from oil, gas and coal. While I agree that we
shouldnt subsidize fossil fuels, we should not subsidize green energy either. I would like to highlight three reasons for that.
First, even with the best of intentions, nobody knows which particular energy sources will make the most sense down the road.
This level of uncertainty is not unique to the energy industry.
Every industry faces similar issues of innovation in a rapidly
changing world. In most industries, the policy solution is to allow
the decentralized market efforts of entrepreneurs and early adopting consumers to figure out the best route to the future.
Second, government efforts to push markets in certain directions
has real cost. Some of these costs are very visible, such as the $5
billion spent since 2009 on the Weatherization Assistance Program,
which was found to be incredibly wasteful by federal auditors, riddled with corruption and questionable work, all this at the expense
of taxpayers. But not all these costs are visible either. For instance,
government subsidies to particular technology or industries can
also delay the development of superior alternatives that dont receive subsidies, and that is because when the government invests
in an area, it tends to shift resources in the private sector and the
capital market away from unsubsidized projects, towards subsidized project, and that independently of the merits of the project.
Third, the federal governments track record for picking winners
in industries and technology is very bad. The Department of Energy has subsidized more than its share of failed projects. Also, the
projects that do not fail often we find are subsidizing companies
that did not need the help in the first place, and tend to be very
well connected politically. The Department of Energys 1705 Loan
Program is a good example of the gap that exists between what the
programs proponents claim it will achieve, and what it actually
achieves. So I am going to focus on 1705, but actually, my findings
pretty much apply to every other government programs that we are
talking about here.
These policies were put in place under the claim that renewable
energy companies do not have access to sufficient credit to support
new projects. However, when you look at the data, nearly 90 percent of the loans went to companies that were backed by giant,
well-connected companies like NRG Energy Company and Goldman
Sachs. It is very hard to imagine that these projects and these companies would not have access to capital, absent the 1705 loan. This

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program is also a good example of government favoring two distinct
interest groups at the expense of taxpayers. First, in this case it
is a loan guarantee, the lenders who shift the risk away from them,
if they pick a program that ends up defaulting. Second, interest
group, the companies that borrow at very beneficial terms and
rates, especially compared to their competition. But while banks
and companies that receive the guarantee get the upside of the program, taxpayers bear the risk and shoulder the burden when companies such as Solyndra and Abound Solar go under and default
on their loans.
So while the data on 1705 Loan Program speaks for itself, the
problem is actually much bigger. Like most government interventions, these programs create serious and systemic distortions in the
market. These distortions create the conditions for businesses to
maximize profits by pleasing political interests, rather than by
pleasing consumers. This is called cronyism and it entails enormous and most often unseen economic costs. The tragedy is that
despite the evidence, lawmakers dont get rid of these programs.
They are more likely to respond to pressure from vested interest
than to taxpayers who are unlikely to realize how much they pay
directly and indirectly for it.
To conclude, I dont pretend to know what Americas energy future will look like, and while I am all in favor of green energy, we
have over six decades of research on government decision-making
that shows that the sensible solution is often to leave these activities outside of the purview of government. It is not a loss, but a
gain for government. Not only will it prevent the type of government failures we have been talking about, it will also allow government to focus on its core competency, providing public goods, and
protecting human and property rights.
Thank you.
[The prepared statement of Dr. de Rugy follows:]

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Chairman WEBER. Thank you, Dr. de Rugy.
We are going to start with the questions portion. I will recognize
myself for five minutes.
Dr. Danielson, the Administration often explains EEREs large
budget by describing the office in three major categories, and I
think you went through them, transportation, renewable power,
and energy efficiency. By the way, I own an air conditioning company, I have for 34 years, so I amenergy efficiency is something
that we deal with frequently, power requirements and those types
of things. But even after dividing the EERE budget into these
three categories, each category exceeds the allocation for nuclear or
fossil energy research and development. Now, Dr. de Rugy made
the comment that no one knows going into the future with certainty what is going to be the best form of energy, and while, you
know, our crystalmy crystal ball doesnt work, apparently the
battery is ran down, didnt have enough energy, I have to say the
nuclear is probably a good possibility. So each category exceeds the
allocation for nuclear or fossil energy research and development in
the fiscal year 2016 budget request, with transportation actually
funded at $793 million, renewable power funded at $645 million,
and energy efficiency at $1 billion in the proposal. By contrast, fossil energy R&D is $560 million, nuclear energy R&D is $482 million, and each individual account in EERE is more than either one.
In fact, the proposed budget for EERE is almost two times, as I
said in my opening statement, more than the budgets for nuclear,
fossil and electricity R&D combined.
Do you think, and youI mean you say that those three offices
combined, as it were, you heard the figures, do you think this represents a balanced, all-of-the-above approach to energy research
and development, and do you believe these EERE programs are
more valuable to the American economy than research on our electric grid, fossil energy or nuclear energy R&D? And I will let you
answer.
Dr. DANIELSON. Well, thank you, sir. Thanks for that question.
It is an important one.
We and I do believe this is a reasonably balanced agenda as you
look across the different sectors the DOE invests in. You have
pointed out that fossil energy is at $842 million, nuclear energy at
$907 million. Sustainable transportation is about $793 million,
which is comparable to those numbers. That set of offices is where
we do most of our work that relates to the transportation sector,
which is where our foreign oil dependence is.
Chairman WEBER. Okay, but arent you quoting the figures for
the whole office, not just the R&D portion?
Dr. DANIELSON. Yes, I am quoting for the whole office.
Chairman WEBER. Okay, but we are wanting to compare the
R&D portions of that spending.
Dr. DANIELSON. Okay, so in terms of R&D, I think maybe a better way to look at it is that the sustainable and transportation office is around $793 million. It is an important area to emphasize
in that our transportation sector is where our dependence on foreign oil is. If you look at renewable energy, which is where we are
addressing the power sector, and technology and the power sector,
that is at $645 million. The nuclear energy office exclusively ad-

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dresses the power sector, and so I think comparing the renewable
energy number and the nuclear number is a reasonable thing to do.
And then we are the only office that is addressing efficiency in the
built environment, which is a sector that is not addressed by the
other offices. And if you take out some specific unique deploymentoriented programs such as the Weatherization Assistance Program,
or Federal Energy Management Program and our Appliance Standards Program, that is at about $600 million of research and development.
So I do believe this is a well-balanced portfolio. The Secretary is
always very clear that we are funding all-of-the-above in the context of a low-carbon future, and in addition, that we are not looking
to prescribe market share, we are looking to innovate across the
board and let the market determine what the market share will be.
Chairman WEBER. Well, let me get to my second question. Considering that the budget has grown, as I said earlier, 58 percent
in the last decade, what successes would youwhat reasons would
you point to to tell us why the office needs to grow another 42 percent?
Dr. DANIELSON. Well, we are at a unique time in the history of
a number of the technologies in the EERE portfolio where, after
decades of long-term investment, we have gotten to the point where
direct cost competitiveness is in our sights in the next, you know,
5, 10, 15, 20 years for a number of these technologies. And we are
also seeing significant investments overseas to try to gain advantage in these areas, and so
Chairman WEBER. I dont mean to cut you off. I get that but, of
course, obviously, with our deficit and the way the economy is now,
then we ought to really, really be focused on as much cost-cutting
as we are about to have some super expenses.
Mr. Loris, would you agree with his thoughts on the fact that
thethis is an aboveyou know, all-of-the-above approach?
Mr. LORIS. I would agree in the sense that it is an all-of-theabove approach to reduce costs, and it is not a proper role of the
government, and we should have the same scrutinies of the Office
of Fossil Energy, the Office of Nuclear Energy to get rid of all of
these things.
Chairman WEBER. Okay. Ms. McCormick?
Ms. MCCORMICK. I think this is
Chairman WEBER. Turn yourthere you go.
Ms. MCCORMICK. I agree with Dr. Danielson, this is a critical
time for these industries. We have seen significant cost reductions,
and now is not the time to let those go.
Chairman WEBER. Irrespective of an $18 trillion deficit?
Ms. MCCORMICK. Well, things will have to be balanced. I think
that we are looking for stable and consistent funding so that these
industries can continue this momentum of growth.
Chairman WEBER. Okay. Dr. de Rugy, how about you, do you
agree with Dr. Danielson?
Dr. DE RUGY. I mean I actually thinkI agree thatwith Nick
that it is not the rolethe proper role of the federal government,
and a lot of the time when we talk about the benefit of a given program, it is because we actually dont look at the net cost. We dont
look at the jobs that are actually lost, the impact on competition.

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We dont look at, you know, we dont look at a lot of things, so
these benefits arehappen as if they have happened in a vacuum.
Chairman WEBER. All right. Thank you for that. I am past my
time. I am going to yield to the Ranking Member, Mr. Grayson of
Florida.
Mr. GRAYSON. Thank you. I have never worked in an air conditioning business. I had the burden of actually being in an economist for a few years, and before that studied economics, a further
burden that I share with some of you apparently.
So let us start with Dr. de Rugy. You mentioned that one of the
legitimate functions of government is the creation of public goods.
What is a public good?
Dr. DE RUGY. Public good is something that the private sector
wouldnt produce, and that would benefit everyone.
Mr. GRAYSON. And why is it the private sector doesnt produce
public goods?
Dr. DE RUGY. Usually because the cost is too high, and no one
is willing to invest in it.
Mr. GRAYSON. Well, also because not a single commercial entity
can internalize all of the generated profit, isnt that correct? Isnt
that the essence of a public good?
Dr. DE RUGY. Yes.
Mr. GRAYSON. All right, so isnt knowledge a public good?
Dr. DE RUGY. Knowledge is a public good, butactually, no. No.
We have a lot of investmentprivate investment in knowledge,
and
Mr. GRAYSON. Well
Dr. DE RUGY. private investment in energy too.
Mr. GRAYSON. That is true, but you cannot internalize inside one
company the benefit that comes from knowledge, and that includes
scientific knowledge, doesnt it?
Dr. DE RUGY. But the government is very bad at actually knowing anything, and one of the reasons is because there is no cost and
benefit, there is no profit and losses, which is the way, as we know,
since Friedrich Hayek, actually the market disperses the knowledge across millions of actors in the most efficient way.
Mr. GRAYSON. Well, that sounds more like ideology than economics to me
Dr. DE RUGY. That is actually
Mr. GRAYSON. Dr. de Rugy.
Dr. DE RUGY. Well, actually, it is interesting because
Mr. GRAYSON. And I am very familiar with the work of
Dr. DE RUGY. Larry Summers has said that this insight of
Hayek is the most important economic insight of the 20th century,
so I dont think
Mr. GRAYSON. All right, well, you agree with me that one company cannot, for instance, internalize the benefit that comes from
conservation? That is a benefit that is spread across dozens if not
hundreds of different companies, even in our economy, and probably thousands in the world economy. Isnt it true that scientific
knowledge in the form of better conservation cannot be internalized
and, therefore, it is a public good?
Dr. DE RUGY. I dont agree.
Mr. GRAYSON. Mr. Loris

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Dr. DE RUGY. Actually, we see
Mr. GRAYSON. what about you?
Mr. LORIS. I wouldnt agree either. I think there
Mr. GRAYSON. Really?
Mr. LORIS. are plenty of opportunities for the private sector to
invest in conservation and make a profit from it.
Mr. GRAYSON. So you wouldnt even concede that the government
should generate public goods as Dr. de Rugy did in her opening
statements?
Mr. LORIS. I think the proper role foris to focus on more of the
things that the Office of Science does, which is
Mr. GRAYSON. Answer my question please.
Mr. LORIS. Could you repeat the question?
Mr. GRAYSON. The question is would you concede that the government does, in fact, have a role in creating public goods, or you
wouldnt even believe then scientific research should be done to create those public goods?
Mr. LORIS. I think it would depend on the circumstance.
Mr. GRAYSON. Well, the circumstance
Mr. LORIS. Which public good are you talking
Mr. GRAYSON. is the creation of a public good in the form of
scientific knowledge.
Mr. LORIS. Scientific knowledge, sure.
Mr. GRAYSON. Yes. Okay, good.
All right, now, what about externalities. Tell me what an externality is.
Mr. LORIS. An externality is, you know, something that is not
captured by the production of a good, such as pollution, or external
benefits coming from the production of a good as well.
Mr. GRAYSON. All right, so would you agree with me that it is
a legitimate basis for scientific research by the government to address the market inefficiencies that are caused by externalities like
pollution
Mr. LORIS. No.
Mr. GRAYSON. which is caused by fossil fuels and not by most
renewable energy?
Mr. LORIS. No, I dont think the most efficient way to internalize
a negative externality is through government programs
Mr. GRAYSON. I didnt ask you whether it was the most efficient
way, I asked you whether that was legitimate.
Mr. LORIS. No, I dontnot spending money on scientific research to internalize negative externalities, no, I dont believe that
is a
Mr. GRAYSON. Well, again, I feel like I am hearing more ideology
than I am economics at this point.
Back to you, Dr. de Rugy. Would you agree with me that a barrier to entry is a legitimate form of a market imperfection that
could be addressed by the government?
Dr. DE RUGY. Well, very often the government is responsible for
putting up
Mr. GRAYSON. Oh, my goodness, can I just
Dr. DE RUGY. barriers to entry.
Mr. GRAYSON. have the question answered?

86
Dr. DE RUGY. Well, usually, if a governmentif a private sector
has a monopoly and the government tries to break it
Mr. GRAYSON. What is a barrier
Dr. DE RUGY. I think
Mr. GRAYSON. to entry, Dr. de Rugy?
Dr. DE RUGY. It isthe barrierlike you have a company that
has a monopoly and aand prevents other companies to getting in
because the costs are too high for these companies to compete.
Mr. GRAYSON. Okay. So lack of capital is a barrier to entry, is
it not? And that lack of capital is addressed by scientific research
done by the government
Dr. DE RUGY. Actually
Mr. GRAYSON. isnt that correct?
Dr. DE RUGY. Actually, this is an excuse used by the government,
and there are many, many instances to justify their program, and
when you actually look at the supposedly market failure that the
government identifies, there is none. And the private sector is the
best one useis the best player to actually come up with solutions
to whatever lack of capital. Look at the
Mr. GRAYSON. All right, your excuse is other peoples reason
Dr. DE RUGY. export/import bank
Mr. GRAYSON. and progress, but let us finish with this since
my time is almost running out. We spend $6 trillion each year on
energy, we being the human species, humanity. We spend $6 trillion a year. Now, let us suppose, hypothetically, that someone could
spend $200 billion and create free energy forever. You will agree
with me that that would be an enormous rate of return, would it
not? Yes?
Dr. DE RUGY. If
Mr. GRAYSON. Mr. Loris? Yes?
Dr. DE RUGY. It would be.
Mr. GRAYSON. Enormous rate of return.
Dr. DE RUGY. Yes.
Mr. GRAYSON. Right, Dr. de Rugy? Enormous rate of return,
right? Can you identify for me anybody now operating in the renewable energy sector that could come up with $200 billion and do
that?
Dr. DE RUGY. But you are assuming that, for instance, if there
is a market failure, which I dont concede there necessarily is in
the energy market, that actually it a necessary and sufficient condition for the government to invest. The way the government invests because the decisions are driven by politics
Mr. GRAYSON. All right, Mr. Loris
Dr. DE RUGY. is actually
Mr. GRAYSON. would you like to answer my question?
Mr. LORIS. I think there are six trillion reasons for the renewable
energy sector to capture opportunities, and they dont need any
more.
Mr. GRAYSON. Can you identify for me a single company in the
renewable energy sector that could raise $200 billion, even if it was
to eliminate the cost of energy forever, one company?
Mr. LORIS. I dont know the answer to one company, but I know
you have a lot of companies like BP and major fossil fuel producers
that invest in renewable opportunities to capture

87
Mr. GRAYSON. Which puts those
Mr. LORIS. those opportunities too
Mr. GRAYSON. out of business if they actually did that research.
Mr. LORIS. Largely
Mr. GRAYSON. All right, thank you.
I yield back.
Chairman WEBER. The gentleman yields back.
And now recognize the gentleman from Washington, Mr.
Newhouse.
Mr. NEWHOUSE. Thank you, Mr. Chairman. Appreciate it. And
thank you all for being here and helping us look at the Departments request for the budget for EERE, and a very interesting
conversation.
Could I ask a question of you, Dr. Danielson? I come from the
Pacific Northwest where we are blessed withI would say a diverse mix of energy, including hydro, wind, nuclear, gas, also utilize energy efficiency. We are also a leader in modernizing our electric grid with the forward-thinking utilities and world-class research thatinstitutions like the University of Washington, my
alma mater, Washington State, and also the Pacific Northwest National Laboratory, which all worked together to develop test beds
to take research from the lab to demonstrate new innovative technologies.
The Secretary appeared before us, I believe it was in February.
He discussed the DOEs grid modernization which is very much in
line with what we are trying to do in the State of Washington. So
could you clarify for me the EERE programs which will advance
the grid modernization, and how those investments will benefit
states like mine?
Dr. DANIELSON. Well, thank you for that question, Congressman.
And congratulations on PNNLs 50th anniversary recently.
Mr. NEWHOUSE. Thank you.
Dr. DANIELSON. There are some key areas where we are making
innovation investments as it relates to grid modernization. One
area is in the area of predicting solar and wind resources much
more accurately, so using advanced modeling and simulation to develop tools that would actually allow utilities to know how much
wind and solar are coming and when, which would allow them to
much more effectively operate the grid.
We are also, you know, one of the most exciting and important
emerging opportunities we have as it relates to the grid is the dramatic reduction in cost of distributed energy technologies. So Americans, more and more, have the opportunity to actually generate
their own power on-site, whether it is photovoltaic power, combined
heat and power from combustion to fuel cells. And also with the
emergence of advanced information technologies over the last couple of decades, we now have the opportunity to set up a truly
transactive market where, instead of having a moderna grid system that only has a few hundred or a thousand generators controlled, we can actually empower the consumer to interact with the
grid in a real-time way, and so that is something we are spending
a lot of time and effort and innovation in is enabling that market

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that transactive market so that homes can transact with the grid
in a cost-effective way.
Mr. NEWHOUSE. Could I also ask you to help us understand why
this is all a role of government, and why the electric industry,
which owns a lot of the grid, is not modernizing on its own? And
maybe that relates to some of that what we have already been talking about.
Dr. DANIELSON. When I get together with folks from across the
utility industry, from the solar industry, from Public Utility Commissions, they all realize and recognize that the most cost-effective
way to get to a low-carbon future will likely involve distributed energy, but making that transition is difficult. And so we have a Grid
Modernization Laboratory Consortium where Pacific Northwest
National Lab is the lead, where we are working with utilities to
help them understand what those least-cost approaches are going
to be, and how can they make the best transmission and distribution investments to enable the most cost-effective, reliable, resilient
grid going into the future.
Mr. NEWHOUSE. Thank you, Doctor.
My time is getting short, so quickly, I am going to ask you about
the energy storage R&D that is scattered throughout several areas.
Let us see, it is the Office of Science, the Joint Center of Energy
Storage Research, the ARPAE, Energy Storage Program at the Office of Electric Delivery and Energy Reliability, Vehicle Technical
ProgramTechnologies Program, Solar Energy Program, Hydropower Program. There isthe list goes on. So how many battery
and energy storage programs can there be found within the agency,
and can you tell me that we are sure that the highest priority is
research is funded so that we avoid duplication?
Dr. DANIELSON. Thanks for that question. It is an important one.
Just in the last few years, the Department of Energy has set up
internal Tech Teams that have representatives from each of the offices of relevance, and in areas like grid storage or energy storage.
And so we are actually very tightly coordinated, and if you look at
each and every one of those efforts, they are distinct, they are synergistic, and they do not overlap. And so both in terms of our energy storage work that is related to electrified transportation,
which is the primary role of our Vehicle Technologies Office, and
then when you look at grid storage, that is a little bit more spread
around the Department, including primarily the Office of Electricity, but also our Water Power Program does research in hydropower, which is not done in the Office of Electricity. And so it is
aspread around in a way that I think is perhaps unfortunate and
not transparent, but it is highly coordinated.
Mr. NEWHOUSE. Good. Good. I appreciate that.
Mr. Chairman, I yield back the negative amount of my time.
Chairman WEBER. Thank you, Mr. Newhouse. We will carry that
over for next hearing.
The Chair now recognizes the gentleman from Illinois, Mr. Lipinski.
Mr. LIPINSKI. Thank you, Mr. Chairman. If we did that, it would
really shorten things up, you know. So I had better get going.
I believe that the work that EERE does is critical to achieving
a sustainable energy future and growing our nations energy econ-

89
omy. We see that the technologies developed at EERE provide a
more robust energy portfolio, reduces our impact on the environment, and enables a growing U.S. clean energy industry. So I am
glad to see the 2016 budget request is doing more to support clean
energy innovation and make the United States a leader in the
clean energy marketplace.
So a couple of questions, I want to see how many of these I can
get to about some of the things the EERE is doing. And I am going
to start with a question for Dr. Danielson. We saw that Paris just
temporarily had a ban on half the cars from driving, in response
to smog problems. Transportation contributes to almost 1/3 of emissions in the United States. Electric vehicles can enable more environmentally friendly transportation, and at Argonne National Lab,
which is in my district, they are working to develop new battery
technologies that will enable cheaper, longer-range electric vehicles. Can you describe the biggest challenges to widespread use of
electric vehicles, and how strong funding for EERE is helping to
improve vehicle technologies?
Dr. DANIELSON. Well, thanks for that question. You know, the
biggestthe longest pole in the tent as it relates to electric vehicles
having a cost-competitive situation versus traditional vehicles is
really in the battery cost. And as you mentioned, our Argonne National Laboratory has been an absolute powerhouse in terms of developing new advanced lithium-ion battery technologies. Indeed,
they have developed basically a battery that is twice as good as any
other battery out there, and early versions of the material they
have developed are now getting into the market. But I am very optimistic. You know, right now, if you look at the technology we
have, we are at about $300 per kilowatt hour. Something like a
100-mile electric vehicle would pay back at that price over five
years. A plug-in hybrid of 40 miles electric range would pay back
at about $200 per kilowatt hour, and a 300-mile electric vehicle
would require a battery cost of about $125 per kilowatt hour. So
we are at about $300 per kilowatt today, but with continued investments in innovation, using the cutting-edge scientific facilities at
Argonne, in addition to an applied set of researchers that we are
supporting there, and we have since the 90s, we are confident that
we are going to get to that cost goal in the 2020 time frame.
Mr. LIPINSKI. Very good. I want to move on to the role of DOE
commercialization. In your testimony, Ms. McCormick, you mentioned that you dont think DOEs mission stops at the laboratory
bench. And I thank you for recognizing the importance of getting
innovative technology transitioned to the marketplace.
I want to ask, can you describe why federally-funded technology
transition programs are critical to bridging the valley of death between lab and market, and I just want to mention theI know Lab
Corps is starting up, which I think is going to be very helpful, but
can you talk about the important role of the federal government
here?
Ms. MCCORMICK. Yes, thank you. The Business Council for Sustainable Energy represents a broad range of energy technologies, so
the answer to that question is unique to each industry. It is a little
bit different for each one, depending on where they are and what
they do. But I am hearing pretty universally from the technologies

90
within our coalition about the need for the government to be a neutral player to help industries as they break into these markets, and
some of these issues related to things like grid integration or some
of these soft costs that are mentioned, for example, for some industries like the solar industry, because they do not have a financial
vested interest in the electricity grid. They can sometimes share
best practices from the states, and learn and share that information to other states and to other players across the country. So I
think that the Department of Energy is uniquely positioned to provide that kind of technical assistance, and provide the ability for
these technologies to break into the market, because the electricity
sector is a regulated industry, and it has layers of regulation; the
federal level, the state level, is it not an open free market, and
there are reasons for that. And so the Department of Energy can
offer a lot of assistance to these technologies that are not legacy
technologies, but are newer and more innovative.
Mr. LIPINSKI. Thank you.
With my few seconds left, I justI have a question for the record
about hydrogen and what EERE can do with that. As the author
of the HPrize Act, I am very happy to see that moving forward
right now. So with that, I will yield back.
Chairman WEBER. Is the gentleman requesting that question be
read into the record or made a part of the record?
Mr. LIPINSKI. Iare we going to have five days to submit?
Chairman WEBER. Yes, absolutely, without a doubt.
Mr. LIPINSKI. Yes.
Chairman WEBER. Okay, thank you.
Chair now recognizes the gentleman from Kentucky, Mr. Massie.
Mr. MASSIE. Thank you, Mr. Chairman.
First off, I want to let you know I drive an electric car, although
I suspect the electrons providing the electromotive force this morning to get me here came by virtue of the combustion of fossil fuels.
So I have a Friends of Coal license plate on my electric car. I also
live in a house that has a 13 kilowatt solar array on it, and I am
very interested in these things. I tell republicans that you can dislike the subsidies, I dislike the subsidies, but you shouldnt hate
solar panels because they are rocks that make electricity, and that
is a pretty virtuous rock.
But let me ask you about this, and I have some experience in
this. Mr. Danielson, if you wanted to install another megawatt of
production capacity in our country, would it be cheaper to do it in
a solar form or on 100 households with 10 kilowatt arrays?
Dr. DANIELSON. You know, I dont know the direct answer to that
question. So the big difference thatI would have to just do the
calculation, would be is that your
Mr. MASSIE. Is it cheaper to put a whole bunch of these up on
roofson the roofs of houses? To climb up on the roofs
Dr. DANIELSON. Okay.
Mr. MASSIE. drill holes in your roof, risk falling off, like I have
done, so I am very familiar with this, or to just build a solar farm
a centralized
Dr. DANIELSON. Thank you for that clarifying question.
Mr. MASSIE. Okay.

91
Dr. DANIELSON. Theit is cheaper to build a centralized solar
power plant per kilowatt hour, per megawatt than it is for a distributed
Mr. MASSIE. It is
Dr. DANIELSON. but what I would like to point out is that it
is a differentwe areit could be a different value, that if you are
putting a rooftop system in, you are avoiding the retail rate, whereas if you have a centralized system, it is putting power into the
grid
Mr. MASSIE. Right.
Dr. DANIELSON. at a wholesale rate.
Mr. MASSIE. And you get out of some taxes, I suppose. But the
grid has to be designed for the worst case, not the best case or the
average case, right? So
Dr. DANIELSON. Okay.
Mr. MASSIE. because solar power is so variable, it still really
doesnt do anything for designfor redesigning the grid. I suspect
it will always be the case that it is cheaper to put in a larger facility than to go up on your roof and drill holes and do all these distributed installations. So why is our government so fixated on subsidizing the installation of all these distributed systems, which
cant even begin to approach the cost-effectiveness of a more centralized system?
Dr. DANIELSON. Well, this is something that we are looking to
tackle with our Grid Modernization Laboratory Consortium is to
look at long-term planning and system-level costs so that, you
know, if you are able to put quite a bit of distributed solar out
there, could that reduce your cost of building out more distribution
or more transmission. And so, you know, we would want to make
sure to do that analysis from a system-level cost basis.
Mr. MASSIE. Right. Okay. Well, I want to ask another question
because, again, you have to design for the worst case, and without
a better battery, you are basically not going to improve the situation. You talked about your five criteria; impact, additionality,
openness, economic benefit, proper role of government. Can you
motivate a $7,500 subsidy for a $100,000 car in those five terms?
Specifically, I am talking about the federal tax credit for carselectric cars thatluxury vehicles that cost $100,000. What is the price
elasticity for a $100,000 luxury vehicle, and how many morehas
the government gone back to study how many more of those have
been sold, and what the economic benefit to all of society is because
of that tax credit?
Dr. DANIELSON. So on your first question related to the application of the five core questions of EERE, we dont administer the
subsidy programs, so those questions wouldntI didnt develop
those
Mr. MASSIE. Okay.
Dr. DANIELSON. I developed those with innovation programs in
mind. And then can you repeat your second question?
Mr. MASSIE. Well, I am concerned about, is that an efficient way
to achieve goals, to subsidize a luxury good?
Dr. DANIELSON. Well, what we have seen in the development of
many technologies, including clean energy technologies, is that, you
know, this is something I saw when I was in the business world,

92
is that innovative new technologies often find application in first
markets where customers are willing to pay. For example, 35 years
ago photovoltaic started in satellites. Now we have reduced the cost
by 99 percent, and so now they are getting into the grid market.
So I think an expensive electric vehicle, let us say such as what
Tesla makes, is a first market adopter chance to get the EV industry going and drive volume
Mr. MASSIE. So I will point out
Dr. DANIELSON. and drive
Mr. MASSIE. for economic benefit or additionality that all of
those subsidies add up to about $500 million, which is two percent
of their market cap. So I find it hard to believe that it wouldnt
have happened without that subsidy.
While I have a little bit of time left, I want to ask when was the
car invented?
Dr. DANIELSON. Geez, I dont know the exact
Mr. MASSIE. At least 100 years ago?
Dr. DANIELSON. Yeah. Yeah.
Mr. MASSIE. And it is fundamentally the same architecture. So
why are we doing car research? When we do electric or vehicle battery research or fuel cell vehicles, you mentioned, shouldnt we be
doing research on fuel cells and batteries and not the vehicle itself
or the application to the vehicle? I mean after all, the batteries
that are in the car that you mentioned came literally from a laptop,
so why is it more virtuous if it is a vehicle when we know, in general, we need battery technology? Shouldnt we be focused on basic
research instead of trying to iterate on something thatwhose
basic architecture was settled 100 years ago?
Dr. DANIELSON. Well, one thing I will point out is that the preponderance of the work we do at EERE is applied research, and
early stage applied research. And so it is really cutting-edge innovation. It is not basic research in the sense that it is just exploratory and really intending to create knowledgewe are actually
trying to develop technologies. And so I did want to emphasize
that. But when we do analyses and look at what the impact can
be, there is a lot of room for improving the efficiency of the combustion engine. There is a lot of room for improving the materials that
a car is made of to make it much more lightweight. And we also
see great opportunity in fuel cells and electric vehicles, and we are
looking to innovate in these areas and help achieve cost reduction
in these technologies, but it is ultimately going to be the market
that will decide which of these get into the market.
Mr. MASSIE. All right, my time has expired.
Chairman WEBER. Gentleman yields back.
The gentleman from Texas, Mr. Veasey, is recognized.
Mr. VEASEY. Thank you, Mr. Chairman. I appreciate that.
And I wanted to ask about wind energy, particularly to Dr. Danielson. Dr. Danielson, you may know that in Texas, we are basically the king of wind. We have about 20 percent of the capacity
nationwide coming out of our state. Most of that was done with tax
credits and different things like that. Some of that was actually
done when Mr. Weber and I were serving in the Texas legislature
together, and so we are very proud of what it means to our economy, and would hate to see our economy, you know, wrecked by

93
any policy that would reverse the progress that we have made in
delivering wind to our state, and theand what that has meant for
the entire country.
And I wanted to ask you in particular about wind, and what sort
of research that you guys are doing to make wind even more efficient. Like one of the things that I would like to see with wind, for
instance, is, if you have ever been out to west Texas, you will know
that it takes up a lot of space. It takes up a lot of landmass. What
are we doing to make it to where wind or wind turbines can be
moved in various locations, and maybe made even more efficient to
deliver the same amount of capacity as they currently do?
Dr. DANIELSON. Well, thanks for that question. You know, one of
the areas that weis our primary research and development focus
in wind is in wind plant optimization. So you find that whenif
you have a wind turbine all by itself, it performs in a certain way.
When you bring it into a farm, you typically get 30 percent reduction in the power output because of the way that the turbines
interact with each other. And you also find that some turbines are
getting a lot of turbulence from the turbine in front of them, and
they will break in a shorter period of time than others. And so we
have a consortium around our national laboratories focused on taking advantage of high-performance computing capabilities and advanced modeling simulation in the area of fluid dynamics to try to
figure out how do you put together a wind farm, and how do you
control it in a way that you can get that 30 percent back. So if you
could get 30 percent more energy out of a windfarm without putting any more hardware on the ground, that is a significant cost
reduction to drive wind towards direct cost-competitiveness nationwide.
Mr. VEASEY. One of the things that often surprises people when
I visit one of the windfarms down in Midland, where they obviously
produce a lot of oil too, I was asking the guy that was working out
there at the windfarm about the generator at the bottom of the
windmill, and he was explaining that, he said they actually use
oila renewable oil, almost like a refined oil, like a 40-weight that
you would use to change the oil in your car, they use this in the
bottom of the windmill in order to, I guess, keep the generator
going and to keep everything lubed. How much petroleum products
are theydoes wind currently use in order to make the windmills
run properly?
Dr. DANIELSON. Thank you for that question. I actually dont
know the answer to that question, but I would be more than happy
to take it for the record and find an answer to that question.
Mr. VEASEY. Okay. Well, thank you. I appreciate that. And I
didI had a question for Ms. McCormick too. I just wanted to
know just about some federal research investments in wind technologies that are impacting the growth right now in the wind energy sector.
Ms. MCCORMICK. Well, I do know that the wind industry is requesting and is supporting some of the funding that the Department of Energy is proposing for studying the impact on wildlife, so
that they have some specific clarifications that they are looking for
in the DOE budget, but obviously that is an issue that the industry
is interested in seeing further research on.

94
Mr. VEASEY. Okay.
Thank you, Mr. Chairman. I am going to give back some of the
time that we lost a little bit earlier.
Chairman WEBER. Well, good. Will you credit that to the gentleman from Washingtons account?
Mr. VEASEY. I will do that.
Chairman WEBER. Okay.
Mr. VEASEY. Yes.
Chairman WEBER. Thank you.
Mr. VEASEY. Happy to.
Chairman WEBER. And the gentleman from Colorado, Mr. Perlmutter, is recognized.
Mr. PERLMUTTER. Thank you, Mr. Chairman. And thank you to
the panel for appearing today. Thank you for your testimony.
Obviously, Dr. Danielson, I just want to congratulate you at
EERE and the Department of Energy for its partits role in really
reducing the cost of photovoltaics, wind turbines, biomass efforts,
because I would say that I am about competition, and the more
competition that we have among energy sources the better off we
are going to be. And we are seeing a reduction in demand, so that
may be the efficiency side of EERE. We see other sources in terms
of photovoltaics, wind, biomass, fusion, nuclear, all as competitive
pieces, and now we see a giant drop in the price of oil which, in
the past, has been difficult for the energy sector as a whole because
it wiped our domestic energy, you know, whether it was oil and
gas, fossil fuels, coal, or renewables. Our renewable energy efforts,
can it withstand this drop in oil prices, Dr. Danielson?
Dr. DANIELSON. Well, thanks for that
Mr. PERLMUTTER. Will people continue to participate in this?
Dr. DANIELSON. Thanks for that question. You know, it is actually the shale gas boom that is creating a more competitive environment in terms of natural gas power generation. And so there is
no doubt that if those prices remain where they are, that other
forms of energy, renewables or any other, nuclear, are going to
have an even lower price point to compete with to be competitive.
But there are benefits to diversity in any energy system. There are
many folks out there co-ops, for example, who operate their own
grids who see value in the lack of a fuel cost associated with renewables, so as they are building out a portfolio of, let us say, natural
gas-powered assets, they want to include renewables in that portfolio as a way to mitigate risk against price changes in natural gas,
for example.
Mr. PERLMUTTER. And I guess I would ask the economists on the
panel. Mr. Loris, you, Dr. de Rugy, I mean I guess I am taking it
as an axiom that more competition is better than less. Would you
agree with me on that?
Mr. LORIS. Well
Dr. DE RUGY. More competitionyeah, go ahead.
Mr. LORIS. Go ahead.
Dr. DE RUGY. Go ahead.
Mr. LORIS. Please.
Dr. DE RUGY. Yeah, no, more competition is good, but the problem with
Mr. PERLMUTTER. It was a yes or no.

95
Dr. DE RUGY. Yes.
Mr. PERLMUTTER. Okay.
Mr. LORIS. Yes.
Dr. DE RUGY. More competition is good.
Mr. PERLMUTTER. Okay. So, Dr. de Rugy, I want toyou know,
we are talking about the politics, and we are in the Congress of the
United States of America, this is politics here, okay, because different people have different desires for different things. And so I
am speaking today as an elected official. I used to be a bankruptcy
lawyer handling big Chapter 11 bankruptcies, so I got to see the
dark side of business and take them apart. In connection with subsidies and incentives, do you know how much in way of incentives,
either by oil depletion allowances or other kinds of deductions, we
give to the oil and gas industry?
Dr. DE RUGY. I dont know the exact amount.
Mr. PERLMUTTER. It is about $13.4 billion, which is pretty
muchif you take all the tax deductions available to the renewable
energy sources, they are pretty equivalent. I think they are about
the same, solar and wind. It may be in a perfect world we shouldnt
provide any incentives to either one, but I am a guy who thinks
I want more energy sources, not less, I want more competition, not
less, and if I am going to subsidize one, I am going to support the
other so that we can get the best of both worlds. Does that makes
sense to you, or is that
Dr. DE RUGY. Well, at least
Mr. PERLMUTTER. am I mistaken?
Dr. DE RUGY. At least you are consistent.
Mr. PERLMUTTER. Good.
Dr. DE RUGY. And see, I dont want subsidies on the fossil fuels
that I dont want on green energy, so
Mr. PERLMUTTER. Okay. The Chairman asked a question about,
you know, our debt, and I serve on the Financial Services Committee as well, so it is the banking, stock market, housing, economy. And, you know, the one thing that I know from the last eight
years having served on that, we had a surplus at the end of the
Clinton Administration, Revenues exceeded expenses, and then we
had two tax cuts, two wars, and a crash on Wall Street that is the
bulk of the debt that this country has incurred. It wasnt the cost
of EERE or any of the energy, or any of the other things. The bulk
of it was these massive things and tax cuts, wars and crash. Would
you agree with me on that?
Dr. DE RUGY. Yeah, youyes. Too much spending
Mr. PERLMUTTER. Okay.
Dr. DE RUGY. for sure.
Mr. PERLMUTTER. Okay. Mr. Chairman, I appreciate the opportunity to serve on this committee, and I yield back.
Chairman WEBER. The gentleman yields back.
And we appreciate the witnesses and their testimony. In closing
todays hearing, I do want to say that I hope we draw attention to
the fact that there has been a huge 42 percent increase requested
by the Administration in the budget which, in todays hard economic times, is going to be very, very tough, so I hope we have
served to at least outline and discuss that back and forth. Thank
you for your valuable testimony. Thank you for sitting through our

96
questions. Thank the Members for their questions. The record will
remain open for two weeks for additional comments and written
questions from Members.
The hearing is adjourned.
[Whereupon, at 4:02 p.m., the Subcommittee was adjourned.]

Appendix I

ANSWERS

TO

POST-HEARING QUESTIONS

(97)

98
ANSWERS

TO

Responses by Dr. David Danielson

POST-HEARING QUESTIONS

99

100

101

102

103

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Appendix II

ADDITIONAL MATERIAL

(117)

FOR THE

RECORD

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PREPARED

STATEMENT OF COMMITTEE RANKING

EDDIE BERNICE JOHSNON

MEMBER

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DOCUMENT

SUBMITTED BY

DR. DAVID DANIELSON

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