THE GLOBAL CLEAN ENERGY RACE

HEARING
BEFORE THE

SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION

SEPTEMBER 22, 2010

Serial No. 11119

(
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON

62591

2010

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SELECT COMMITTEE ON ENERGY INDEPENDENCE

AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
F. JAMES SENSENBRENNER, JR.,
EARL BLUMENAUER, Oregon
Wisconsin, Ranking Member
JAY INSLEE, Washington
JOHN B. SHADEGG, Arizona
JOHN B. LARSON, Connecticut
GREG WALDEN, Oregon
HILDA L. SOLIS, California
CANDICE S. MILLER, Michigan
STEPHANIE HERSETH SANDLIN,
JOHN SULLIVAN, Oklahoma
South Dakota
MARSHA BLACKBURN, Tennessee
EMANUEL CLEAVER, Missouri
JOHN J. HALL, New York
JERRY MCNERNEY, California

PROFESSIONAL STAFF

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MICHAEL GOO, Staff Director

SARAH BUTLER, Chief Clerk
BART FORSYTH, Minority Staff Director

(II)

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CONTENTS
Page

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement ....................................................
Prepared Statement .........................................................................................
Hon. F. James Sensenbrenner, Jr., a Representative in Congress from the
State of Wisconsin, opening statement ..............................................................
Hon. Emanuel Cleaver, a Representative in Congress from the State of Missouri, opening statement .....................................................................................

1
3
5
6

WITNESSES
Mr. Michael Liebreich, Chief Executive, Bloomberg New Energy Finance ........
Prepared Statement .........................................................................................
Ravi Viswanathan, General Partner, New Energy Associates ............................
Prepared Statement .........................................................................................
Tom Carbone, Chief Executive Officer, Nordic Windpower .................................
Prepared Statement .........................................................................................
Mark Fulton, Global Head of Climate Change Investment Research, Deutsche
Bank ......................................................................................................................
Prepared Statement .........................................................................................
Answers to Submitted Questions ....................................................................

7
10
17
20
25
28
34
37
113

SUBMITTED MATERIALS

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Hon. Edward J. Markey, letter from Ernst & Young, September 20, 2010 ........
Hon. Edward J. Markey, copy of report from Ernst & Young, Renewable
Energy Country Attractiveness Indices 2010 ...................................................
Hon. Edward J. Markey, copy of report from Ernst and Young, Cleantech
matters; the electrification of transportation: from vision to reality 2010
Ignition Sessions summary report ......................................................................

(III)

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THE GLOBAL CLEAN ENERGY RACE

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WEDNESDAY, SEPTEMBER 22, 2010

HOUSE OF REPRESENTATIVES,
SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING,
Washington, DC.
The committee met, pursuant to call, at 10:07 a.m., in room
2325, Rayburn House Office Building, Hon. Edward J. Markey
(chairman of the committee) presiding.
Present: Representatives Markey, Cleaver, and Sensenbrenner.
Staff present: Jonathan Phillips.
The CHAIRMAN. Welcome to the Select Committee on Energy
Independence and Global Warming.
For generations now, Americas universities, national laboratories, and innovative companies have fueled the technology breakthroughs that have put America in the lead and kept Japan, Europe, and other economic competitors in the rearview mirror. Americas ability to combine innovative brains with can-do brawn has
meant higher standards of living, a huge middle class, and increased economic opportunity for millions of our citizens. This is
our competitive advantage. This is what makes our country a
mecca for entrepreneurs and ambitious workers the world over.
Our technology incubators are still pumping out the innovations,
but our entrepreneurs and workers are increasingly being blown off
the road. Governments around the world recognize the opportunity
of the clean energy economy and are seizing it. The world will need
to invest $26 trillionthat is trillion with a Tover the next two
decades in order to meet our energy needs.
Developing the clean technologies to serve that market is the scientific challenge of the generation. Harnessing the industrial might
to manufacture those technologies and market them to the world
is the economic opportunity of the generation.
Last year, I went to China with Mr. Sensenbrenner and with the
Speaker, and we viewed the wind turbines spilling out of factories.
I returned home warning of these economic missiles pointed at the
heart of the U.S. economy.
Today, the clean energy investment auditors are here to share
the dismal scorecard. Twice as much money was invested in clean
energy in China as was invested in the United States last year. A
decade ago, China made 1 percent of the worlds solar panels.
Today, it makes nearly half of them. The $15 billion worth of solar
panels China exported last year was more valuable than Americas
corn, beef, and chicken exports combined.
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China is no longer coming; they are here. They ate our lunch,
and they are moving on to our dinner. And China is not alone. Germany, Japan, South Korea, and other countries recognize that
dominating the $1 trillion market of tomorrow requires foresight
and public investment today. They are throwing the kitchen sink
of policies at clean energy, renewable energy requirements, financing assistance, tax incentives, government procurements, carbon
pollution limits.
Here in the U.S., the longest-term Federal incentive for clean energy expires in 2 years. Senate Republicans have steadfastly stood
in the way of any and all long-term policies to support the manufacture and deployment of clean energy in this country. It is notable that we have entrepreneurs willing to invest in U.S. clean manufacturing at all in such an unpredictable environment.
Some of Chinas clean energy incentives may be illegal violations
of international trade agreements. Feeling that the future of Americas clean energy sector is under threat, the United Steelworkers
Union recently submitted a petition to the U.S. Trade Representative. The case alleges that China has used hundreds of billions of
dollars in subsidies and other illegal trade practices to undermine
foreign competitors and dominate the sector.
I am very concerned about Chinas use of unfair trade practices
to bolster the competitiveness of its industries, and I urge prompt
action to address violations found through the U.S. Trade Representatives investigation.
But we must not move forward recklessly on this trade dispute
with China. In the end, competition is good. Competition is one of
the chief reasons that the price of a solar panel has fallen by half
in the last 2 years. Competition will ultimately make solar energy
competitive with grid electricity in this decade, but this competition
must be fair. It must allow American workers to play on the field.
It must make it possible for us to export these technologies to other
countries, especially to China. And that is why the U.S. Trade Rep
must do the job that is necessary in order to protect American
workers.
So if we do not act decisively to provide the long-term and shortterm incentives to make America the best place to invest clean energy dollars, someone else will. So lets get real. We will trade our
addiction to Middle Eastern oil with an addiction to Asian or European clean energy technologies.
From the Manhattan Project to the Apollo program to medical research to the Internet, government investments have and will continue to make America the place where the next great technological
breakthroughs happen. The only question that remains is whether
American industry and workers will ride this technological wave.
The stakes could not be higher.
[The prepared statement of Mr. Markey follows:]

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5
Let me now turn and recognize the ranking member of the select
committee, the gentleman from Wisconsin, Mr. Sensenbrenner.
Mr. SENSENBRENNER. Thank you very much, Mr. Chairman.
In todays hearings, I expect a slew of experts to tell us what we
already know. If we mandate that electric companies use wind energy, it will drive private investment into the wind sector. Of
course it will. What investor wouldnt want a guaranteed market?
If we mandate that everyone drives cars with square tires, we will
drive investment there, too. But that doesnt mean that we should.
Choosing winners and losers doesnt work. Europe proved as
much with regard to clean energy investment. In Europe, government subsidies drove investment toward renewable energy sources.
That investment and all associated jobs dried up as soon as the
subsidies lapsed.
Just a few years ago, President Obama held Spain as the model
for encouraging investment in solar energy. Today, Spanish unemployment is over 20 percent. Is that really the model we want to
follow? Europe proved that jobs associated with clean energy investment will last only as long as the government pays for them.
Democrats couldnt get cap and tax through Congress, so now
they are trying to circumvent voters and accomplish the same thing
through the EPA. Their argument, that if we dont force investors
to spend their money here they will spend it abroad, is wrong.
The reality is that the technologies the Democrats want to mandate will drive the cost of our energy up, which will drive more
manufacturing jobs overseas. Given the choice between, one, forcing investment toward todays political darlings or, two, supporting
sustainable, market-tested businesses, I am going to choose the latter every time.
During the coming months, the American economy will be at the
mercy of several environmental regulations from the Obama administration. These regulations will not generate jobs. They will
generate significant costs for the businesses that create jobs.
EPAs endangerment finding, which would allow the EPA to regulate greenhouse gas emissions, is the most widely followed and
probably the most onerous example. Unless Congress stops it, these
regulations will put EPA in charge of the U.S. economy.
The EPA would target more than 1.3 million commercial sources
which the EPA defines to include office buildings, small businesses,
schools, churches, prisons, and similar structures. The EPA estimates that an endangerment finding that doesnt include legally
suspect tailoring rules would cost small entities more than $55 billion. The Heritage Foundation says that it would lead to $7 trillionwith a Tin lost economic activity between 2010 and 2029
and would kill almost 3 million manufacturing jobs by 2029.
One administration official told the Wall Street Journal that,
under the endangerment finding, the EPA was going to have to
regulate in a command and control way, which will probably generate even more uncertainty.
This is not the only economic threat posed by the Obama administration. The President is proposing tax increases on energy as a
part of his latest $50 billion stimulus plan. One expert estimates
that these new energy taxes would cost over 154,000 jobs by the

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6
end of 2011, more than $341 billion in lost economic output, and
more than $68 billion in lost wages nationwide.
EPA has termed another set of onerous regulations boiler MACT.
These regulations will set emission standards for hazardous air
pollutants. The Council of Industrial Boiler Owners released a
study last week that showed exactly how much damage the boiler
MACT regulations will inflict upon the economy. For every $1 billion spent on upgrade and compliance costs, up to 16,000 jobs and
$1.2 billion in U.S. GDP will be threatened.
With regulations like these, the entire American economy is
threatened. With unemployment hovering around 10 percent,
America does not need more job-killing regulations. America needs
Congress to focus on creating jobs and economic growth.
In our economic system, it is private investors who take risks. Financial success is the potential reward. If investors believe that renewable energy sources are the future, then I encourage them to
invest in these markets. It is not, however, in Americas interests
to mitigate investor risk by guaranteeing them a market.
It makes sense that a Democratic Congress that responded to our
economic collapse by socializing losses will now seek to shift the
risk of investing from private businesses to the government.
In todays hearing, the majority is effectively arguing that government should bet on winners and losers so investors do not have
to. The model is backwards and reflects a fundamental disagreement on American capitalism. While I will gladly work with Democrats to lower taxes and other disincentives for investment, I cannot support a model that I believe is at odds with how our economy
works.
I thank the Chairman and yield back the balance of my time.
The CHAIRMAN. I thank the gentleman.
The chair recognize the gentleman from Missouri, Mr. Cleaver.
Mr. CLEAVER. Thank you, Mr. Chairman. I will continue to quote
you about the Chinese eating our lunch and beginning on our dinner. I think that is exactly what is happening.
Mr. Chairman, in the 1870s, Thomas Edison invented the light
bulb. It is a unique creation here in the United States, and those
light bulbs have been a part of the industrial component of the U.S.
economy since the 1870s.
General Electric will discontinue manufacturing the light bulbs
that we know as incandescent bulbs at the end of this month and
the United States will now purchase the CFLs from abroad, mostly
from China. The glass tubes that are twisted, which helps in reducing the amount of energy needed, about 75 percent less energy, requires a lot of hand labor, and that hand labor, of course, is infinitely cheaper in China. So a unique American invention is now
being manufactured almost exclusively in China and all of the people in this hearing room will in the future purchase these new
CFLs after they have been imported from China.
I think that should be a wake-up call, if there is one needed, and
it is my hope that this hearing this morning will allow some additional information to be brought forth that will inspire the great ingenuity that has made America what it is to continue and recapture particularly those things that began on these shores.
I yield back the balance of my time.

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7
The CHAIRMAN. Thank you, Mr. Cleaver.
Now we will turn to our first witness, who is Michael Liebreich.
He is the Chief Executive of Bloomberg New Energy Finance. He
is an experienced venture capitalist and entrepreneur who has
helped build more than 25 companies.
We welcome you. When you feel comfortable, please begin.
STATEMENTS OF MICHAEL LIEBREICH, CHIEF EXECUTIVE,
BLOOMBERG NEW ENERGY FINANCE; RAVI VISWANATHAN,
GENERAL PARTNER, NEW ENTERPRISE ASSOCIATES; TOM
CARBONE, CHIEF EXECUTIVE OFFICER, NORDIC WINDPOWER; AND MARK FULTON, GLOBAL HEAD OF CLIMATE
CHANGE INVESTMENT RESEARCH, DEUTSCHE BANK

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STATEMENT OF MARK LIEBREICH

Mr. LIEBREICH. Good morning, Chairman Markey and gentleman

of the committee, ladies and gentlemen. First, thank you for inviting me here today.
By way of background, I founded New Energy Finance in 2004
to help investors and policymakers understand the economics of
clean energy. I built a team of 140 experts around the world before
we were bought at the end of last year by Bloomberg, the financial
information provider.
I will divide my remarks into two sections.
The CHAIRMAN. Is the microphone on there? Can you try to turn
on that microphone? Is it on?
Great. Thank you.
Mr. LIEBREICH. It is on.
If you can pull up the slides.
I will divide my remarks into two sections. First, when the slides
arrive, I will provide an up-to-date picture of investment activity
around the world. Secondly, I will comment more generally on the
related issues of jobs, policy, and international competition.
If we can move to the first slide.
As you can see from my first slide, global investment in new
forms of clean energy surged from under $50 billion in 2004 to over
$170 billion just 4 years later. These figures exclude traditional
forms of lower carbon energy, large-scale hydro, natural gas, and
nuclear, though I would be the first to agree that these will play
a significant role in the energy system of the future.
In 2009, the volume of investment dropped by 7 percent to $162
billion as the sector was hit by the financial crisis. At one point,
valuations of clean energy stocks were down from their peak by
around 70 percent before recovering some of their losses. It is
worth noting that they are still double what they were in 2003, a
compound return over the last 7 years of just under 10 percent per
annum.
The impact of the crisis on the industry could have been worse,
and it will be tempting to think that the green stimulus programs
around the world were the major factor in staving off disaster.
However, although we identified a total of $184 billion of such
funds allocated for clean energy alone, the fact is that in 2009 only
9 percent of it reached companies and projects in need.

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In the U.S., investment fell off a cliff in the aftermath of the Lehman collapse. On an annualized basis, it was only this year that
it started to climb again as the American Recovery and Reinvestment Act funds started to flow.
The worlds providers of concessionary finance, the IFC, European Investment Bank, Brazils BNDS, and so on, were much
quicker in responding to the crisis, increasing their lending from
just $7 billion in 2007 to $21 billion in 2009. The role of these multinational institutions and development banks has often been overlooked, and these figures do not include the Chinese banks. Their
provision of cheap finance to manufacturers and developers has
been a major factor in driving surging investment there.
By 2009, China is absorbing nearly three times the level of clean
energy investment as the U.K., the U.S., or Spain. In just the past
5 months, the China Development Bank has provided $27 billion
in concessionary finance to Chinese wind and solar companies.
Chinas leaders have supported the sector not only by providing
cheap finance but also by creating domestic demand on a grand
scale, setting local content rules, maintaining tariffs on foreign imports, as well as, of course, maintaining an undervalued currency.
Before we become too pessimistic about the state of clean energy
in the U.S., we should recall that it remains by far the worlds
leading venue for investment. Even in clean energy technologies
U.S. companies spend more as a percentage of revenue on research,
and the U.S. stock markets continue to attract public offerings
from companies around the world.
However, there is no question that the period 2007 to 2009 saw
Asia take over from the Americas as the number two region of the
world for clean energy investment; and when we compile the figures for 2010, we will see that Asia has eclipsed Europe to take a
global lead.
Now, if I might turn my attention briefly to the question of U.S.
policy, those who deride the U.S. for inaction are not correct. Not
only do 30 States have clean energy portfolio standards, but there
are also significant national programs, such as the renewable fuel
standard, increasingly stringent CAFE standards, and substantial
Federal R&D programs. Our research shows that ARRA, in particular its grants and loan guarantees, played a material role in
keeping the flow of funding going during 2009 and 2010.
What is missing is the sort of consistent policy framework that
has driven the development of clean energy, first in Denmark, Germany, and Spain, then China, and now the other major economies.
In 2008, the South Korean President, Mr. Lee Myung-Bak, presented a plan to cut the countrys carbon emissions by 30 percent
from business-as-usual without jeopardizing growth. The Korean
government will be investing 2 percent of gross domestic product
over the next 5 years, and leading Korean industrial companies
have responded by announcing investments of over $80 billion between now and 2020.
Contrast this with the U.S., where the industrys production and
investment tax credits have in the past been allowed to expire
every 2 years. A highly effective ARRA program may not get extended, and in California proposition 23 is targeting the repeal of
AB32. Alone amongst the major economies, U.S. negotiators had

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to make a commitment under the Copenhagen Accord to cut carbon

emissions without national legislation in place to deliver it.
It was Winston Churchill who said the Americans will always do
the right thing once they have exhausted all the alternatives. I
have no doubt that the U.S. will at some point wake up to the strategic necessity and growth opportunity offered by a shift to clean
energy. I only hope other countries will not in the meantime have
established an unassailable industrial lead.
Many thanks for your patience in listening to me.
[The statement of Mr. Liebreich follows:]

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17
The CHAIRMAN. Thank you very much.
Our next witness is Dr. Ravi Viswanathan. He is a general partner at New Enterprise Associates, where he focuses on energy and
growth equity investments.
We thank you for being here, Doctor. Whenever you feel comfortable, please begin.

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STATEMENT OF RAVI VISWANATHAN

Mr. VISWANATHAN. Chairman Markey, Ranking Member Sensenbrenner, members, thank you very much for inviting me here. It
is truly an honor.
I appear before you here today as a general partner of New Enterprise Associates, or NEA. NEA is, by assets under management,
the largest venture capital firm in the country, with $11 billion
under management. Through our 30 years of history, we have
funded over 650 companies and have had over 160 of them go public. Our 50 largest companies have created over $65 billion in revenues and have created hundreds of thousands of jobs in this country. Today we have a global footprint, with offices in India and
China and roughly 20 percent of our committed capital targeted at
emerging markets.
In the past, the U.S. VC industry has played a pivotal role in developing industries such as biotechnology, computing, medical devices, semiconductors, telecommunications, and the Internet. We
deploy our capital in rapidly expanding companies which have the
highest potential for long-term economic growth and job creation.
According to the National Venture Capital Association, U.S. VCbacked company revenue has equated to more than 22 percent of
U.S. GDP; and over the past 3 years alone VC-backed companies
have accounted for three times more job creation than the private
sector taken as a whole.
Today, the energy technology industry represents one of the most
compelling investment opportunities in the history of venture capital. I serve as the co-head of our energy practice, overseeing more
than 30 portfolio companies here in the U.S. that have raised a
total of $2 billion in capital. Our portfolio includes investments in
sectors such as solar, wind, nuclear, advanced battery, smart grids,
electric vehicles, and energy efficient building materials.
Regarding the current U.S. clean tech landscape, the U.S. has
long been the home of great innovation in clean energy technology,
which continues to present a compelling opportunity for both entrepreneurs and venture capitalists.
Though the U.S. continues to be the home of the worlds best
clean energy innovation, the U.S. has lost its leadership to China,
Japan, and Germany in clean energy manufacturing deployment
and is challenged and threatened by emerging economies such as
India, South Korea, Malaysia, and the Philippines. I can say that
from firsthand knowledge, as I spend about a third of my time in
Asia trying to understand how these economies are doing what
they are doing in clean energy.
These nations have outpaced the U.S. in recruiting, incenting,
and developing domestic manufacture of solar, wind, and battery
technology. We are not the market leader in producing and supplying this high-growth industry and have ceded our historic lead-

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ership in manufacturing of these key technologies to other nations.
As one example, the U.S. market share for solar manufacturing has
fallen from 45 percent in the mid-1990s to roughly 5 percent today.
Prior to the Recovery Act, this paradigm of developing innovative
technology in the U.S. and exporting manufacturing to poor nations
has been driven primarily by a significant imbalance between U.S.
and foreign tax policies and incentives.
Contrary to popular belief, low labor costs have not been the
most important variable in this equation. Up-front manufacturers
incentives, long-term tax holidays, and end-market incentives have
been frequently as important, if not more important, variables influencing U.S. companies as to where they should establish their
manufacturing facilities.
Incentives from foreign nations have often totaled as much as 40
or 50 percent of the costs of a new manufacturing project. In addition, healthy demand side incentives such as national renewable
energy standards, feed-in tariffs, and direct government loans and
tax credits for the deployment of clean energy technology have
made relocating U.S. manufacturing facilities overseas even more
attractive.
Without competitive incentives for companies to stay in the U.S.,
this Nations best manufacturers have had no choice but to look
overseas to remain competitive in their industries. The result has
been a loss of both direct and indirect jobs, a loss of intellectual
property, and a loss of economic growth here in the U.S. for one
of the fastest-growing global industries of the 21st century.
In describing this trend, I must remind the committee that venture capitalists and entrepreneurs are by definition optimists. I believe the U.S. can be a leader in clean energy manufacturing and
deployment, and I have witnessed this firsthand. We are not giving
up on the American entrepreneur, and I hope you wont either.
I am grateful to this committee and the current administration
for recognizing the need to level the playing field for U.S. clean energy manufacturers. With the help of the tax policies and incentives put forth in the Recovery Act, this Nations best energy technology companies are expanding their domestic capacity, reopening
and retrofitting closed factories, rehiring and retraining new workers, and rebuilding local economies depressed by the great recession.
One of the most important policies in restoring American competitiveness in clean energy is the section 48C Advanced Manufacturing Tax Credit, providing a 30 percent tax credit for investments in facilities that manufacture clean energy products such as
solar panels and wind turbines.
This program awarded $2.3 billion in tax credits to over 100 companies in 43 States and was oversubscribed with requests of over
$8 billion in projects. Four of our most promising companies were
awarded this credit and were able to expand manufacturing here
in the U.S., creating jobs, thanks to your efforts in the Recovery
Act.
One of these companies was Suniva, one of our companies. They
were able to expand their solar manufacturing from 33 megawatts
to 170 megawatts in Norcross, Georgia, hiring an additional 60

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workers and creating more than 100 construction jobs in an economically suppressed suburb of Atlanta.
This Congress has put forth very important legislation which
puts a price on carbon. Putting a price on carbon by definition will
reduce risk for all energy markets, decreasing the cost of capital
and increasing investment in renewable energy. We believe this is
an important policy for the U.S. to continue to attract capital to
fuel the energy needs of our 21st century economy.
Growing a strong domestic clean energy manufacturing industry
requires competitive supply and demand side incentives and policies. In order for the U.S. to be truly energy independent in a world
with clean, cheap, renewable energy, we need to reinvigorate our
manufacturing base. We cant substitute our dependence on foreign
oil with batteries, solar cells, or wind turbines made overseas.
As I have discussed, one of the most important pieces of the Recovery Act was the section 48C Advanced Manufacturers Tax Credit. In addition, demand side incentives such as the 1603 grant program for clean energy deployment have been critical to sustaining
a healthy clean energy economy for U.S. manufacturers. We need
to make these tax credits permanent and refundable, as put forth
by Members of this Congress.
In addition, we need to focus on scaling up and commercializing
this countrys best technologies through public-private partnerships. Countries such as Germany, Japan, and China have all dedicated funds to scale up the commercialization of their technologies.
We also need an effective national renewable electricity standard
and energy efficiency standard with an incentive system for utilities to move forward without delay. Today, 30 States have already
adopted Statewide renewable energy standards, but those policies
are at risk should the Federal Government fail to act with certainty to adopt a national standard.
In closing, we have never seen a greater opportunity to put capital to work in support of U.S. entrepreneurs. We believe this is the
greatest economic opportunity for our industry, for our entrepreneurs, and for our country.
Thank you very much for inviting me today. I look forward to
your questions.
[The statement of Mr. Viswanathan follows:]

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25
The CHAIRMAN. Thank you, Doctor, very much.
Our next witness is Tom Carbone. He has had extensive experience in the renewable energy sector. He currently serves as the
CEO of Nordic Windpower, the largest technology developer and
manufacturer of two-bladed utility scale wind turbines. He is also
chairman of the Princeton Energy Group, a California-based developer of global renewable energy projects.
Welcome, Mr. Carbone.

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STATEMENT OF TOM CARBONE

Mr. CARBONE. Thank you, Chairman Markey and Congressman

Cleaver. We share your passion on the topic today of The Global
Clean Energy Race.
My name is Tom Carbone. I am chairman of Nordic Windpower,
an early stage technology developer and manufacturer of very
unique wind turbines for Community and Wind Energy products.
This consists of on-site wind power and small-scale wind farms,
typically less than 20 megawatts, but could be as large as 100
megawatts, locally connected to the distribution voltage, close to
the load.
Our products and people are focused on making Nordic Windpower a leader in this segment. Our proven two-bladed technology
provides for less weight, higher reliability, ease of installation and
operation, and, most of all, the lowest cost of energy compared to
traditional designs.
Our story is about technology that was born in Sweden, a company that was started in the U.K., and today we are a U.S. corporation focused on a very interesting and growing segment within
our domestic wind business.
We formed the company in late 2007 as a U.K. limited corporation. We have headquarters in Berkley, California, an assembly facility in Pocatello, Idaho, and an engineering unit in the U.K. Last
year, we incorporated Nordics parent in the U.S. as a Delaware
corporation.
We employ approximately 40 peoplethat is double what we had
at the start of this yearand we will double our employment again
within the next 912 months. There are many more people employed within our supply and installation partner chain. Each of
our one megawatt wind turbines provides enough clean electricity
for the annual consumption of 250 to 300 American homes and reduces 300 tons of CO2 emissions.
We acquired the turbine technology in Sweden, which was the result of a long-term R&D prototype program which was sponsored
by the Swedish government, universities, and private entities at a
cost of about $75 million. We have invested well over $10 million
in further improving that technology for local market needs.
Since late 2007, we have completed three rounds of financing
from venture capitalists in the U.S., the U.K., and Europe, for a
total committed capital investment of about $58 million.
We are the beneficiaries of two Recovery Act provisions. In July,
2009, the company secured a $16 million DOE loan guarantee
which was part of a $25 million project to manufacture and commercialize this one megawatt wind turbine in the U.S.

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The loan guarantee is a critical form of financing for Nordic
Windpower and for our future development; and it gives us the
wherewithal to create jobs, invest in the supply chain, invest in
tooling to become more efficient and to offset some of our technology development costs. It is a loan. We have to pay it back. To
date, we have not closed on this loan, but we are working diligently
with the DOE to expedite the closing of the loan, which, as I said,
is critical to our development.
It is our view that this program could be improved by adopting
some of the existing application due diligence and closing processes
that already exist within our government, within other agencies
such as U.S. OPIC and USDA, particularly to address the needs of
small business enterprises like ourselves.
We are also the recipient of $3 million in Advanced Energy Manufacturing Tax Credits, the 48C program that Dr. Viswanathan
mentioned. This money will be used to expand and re-equip our
manufacturing facility. This incentive will have a positive impact
on our cash flow in the future when we have a tax liability.
My point is to date we have not deployed one dollar of the Recovery Act provisions, but we intend to and are grateful for the awards
that we have.
Regarding our location decisions, when we started in 2007 we determined that there were three principal markets, the U.S., Europe, and China. It is our view that China was saturated with
nearly 100 domestic suppliers and JVs that are competing predominantly on low cost and low margin and secondarily on quality and
reliability. This market could be especially challenging for an entry
foreign company like ourselves.
We saw limited opportunities for new entrants into the slowergrowing European on-shore wind markets.
Thus, the strength of the U.S. markets growth and potential for
success was an obvious entry point for Nordic Windpower and in
particular the community wind sector, which was relatively
unaddressed by the major wind turbine manufacturers.
The company is in the process of establishing and relocating to
a new center of U.S. operations in the Midwest wind belt. We expect that employment at that new location will increase to 250 over
the next 5 years and will require at least $18 million in investment.
To say the least, wind turbine manufacturing is capital intensive,
where significant amounts of cash can be tied up in the supply
chain for working capital and in equipment to manufacture these
units. As such, at an early stage company like ours, a large emphasis is on near-term effective cash value of incentives being offered
at the local, State, and Federal level.
We started to deliver and install wind turbines this year, and we
expect to deliver and service over 100 wind turbines over the next
2 years, totaling nearly $120 million in sales revenue. Our 5-year
plan includes new product introductions and shipments of more
than 750 units.
We will deliver and install our sixth N1000 wind turbine this
year at Fort Wachuka in Arizona. This is the first utility scale
wind turbine on a U.S. Army base. We have two wind turbines supplying power, one to a school in Indiana and another to a munici-

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pality; and I would like to mention that three of our wind turbines
were exported and installed in a project in Latin America with the
made-in-America stamp of quality on them.
In closing, I would like to provide some recommendations, if I
may. My recommendations are based on three programs that exist
today or are contemplated that have already benefited from a considerable amount of time and bipartisan cooperation. My recommendations are intended to make the programs more effective
for innovative U.S. energy companies like ours so that we can compete more effectively.
Number oneand you have heard it from Dr. Viswanathan
pass the Federal Renewable Electricity Standard, the RES. The
American Wind Energy Association estimates that a quarter of a
million jobs will be created by this.
The CHAIRMAN. If you could, Mr. Carbone, try to summarize
quickly. You will get a chance to expand in the question and answer period.
Mr. CARBONE. Two more recommendations: Extend the Recovery
Act 1603 program and allow for the 48C manufacturing tax credit
to be refundable so that early stage companies like ours could use
them today, as opposed to in the future when we have a tax liability.
Thank you.
[The statement of Mr. Carbone follows:]

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34
The CHAIRMAN. Our final witness is Mr. Mark Fulton. He is the
manufacturing director and global head of climate change investment research and strategy at Deutsche Bank. He has nearly 30
years of experience as an economist and a strategist.
We welcome you, sir.

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STATEMENT OF MARK FULTON

Mr. FULTON. Chairman Markey, Ranking Member Sensenbrenner, and members of the Select Committee on Energy Independence and Global Warming, thank you for the opportunity to
provide testimony on the global clean energy race.
In my role in the assessment management division of Deutsche
Bank, I coordinate a research team that looks at the investment
opportunities that climate change and associated clean energy technologies offer around the world. Since we in asset management
started issuing educational white papers on these themes in 2007,
the basis of our investment thesis has been demographic pressures
on resources and environmental externalities as identified from scientific sources, combined with energy security and economic opportunity, which has led to government policy response at all levels,
creating new technologies and industries as companies respond.
As we sit here today, the U.S. Federal and indeed State governments are at a crucial crossroad in their policy stance on clean energy, whether to take action to deepen and extend policies or will
they fall behind other countries around the world. The stakes are
high in terms of energy security, new jobs and industries and the
climate. Certainly in a U.S. context, policy at Federal, State, and
local levels are all important.
This year in the United States has been a challenging one for
those looking to invest in these new clean energy industries on a
longer-term basis. Uncertainty abounds. At the Federal level, given
political complexities, there has been no energy or climate bill
passed out of the Senate to complement the comprehensive approach taken by the House of Representatives in passing the American Clean Energy and Security Act that directly tackled climate
issues and provided significant funding to clean energy and energy
efficiency. At the same time, the most comprehensive climate and
clean energy provisions of any State are under threat from Californias Proposition 23, which seeks to suspend the States Global
Warming Solutions Act and would have a significant impact.
Working for investors as an asset manager, these uncertainties
are discouraging to capital deployment in the U.S. in the long term.
We have formulated a simple but fundamental framework for assessing regulatory environments around the world which we call
TLCtransparency, longevity, and certainty. Investors need transparency in policies to create understanding and a level playing
field. Longevity means policy has to match the time frame of the
investment and stay the course. Certainty refers to knowing that
incentives are financeable. In tech terms, TLC should result in a
lower cost of capital for projects while still delivering a fair and
market-related return to capital.
For instance, I believe that U.S. renewable policies could include
more elements of TLC. State-level renewable portfolio standards
set targets for near deployment. However, in most cases, these do

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35
not have enforcement measures nor penalties to ensure they are financed. Renewable energy projects have therefore relied much in
the short term on the complementary Investment Tax Credit and
Production Tax Credit equity programs to get financed. Due to lack
of longevity, this has produced an on-off pattern in renewable deployment.
Since the financial crisis, the tax equity market has not been
strong and so the American Recovery and Reinvestment Act of
2009 introduced the Section 1603 Treasury cash grant. This indeed
has been successful in generating projects in the past year, especially when combined with the Advanced Energy Manufacturing
Tax Credit to encourage domestic production. But these programs
sunset in 2011, and the renewable project pipeline is already under
pressure as the tax equity market still struggles. As outlined in a
paper released on September 16th by U.S. PREF, this puts over
100,000 jobs at risk. The Department of Energys sections 1703 and
1705 loan guarantee programs for early and later stage clean energy projects also sunsets in 2011.
Looking around the world, we see many countries embodying
TLC in their climate and energy policies and achieving capital deployment. As a German bank, we have knowledge of the German
experience in particular.
In a recent paper, we looked at the major elements of a strong
policy regime. In the passage of the EEG in 2000, which was updated in 2009, Germany established a feed-in tariff regime that
supports the EU-mandated goal of 20 percent renewable energy as
a share of electricity by 2020. This embodies TLC for investors. The
results have been 300,000 jobs, renewable energy as a 13 percent
share of electricity and rising, a rapid fall in solar PV costs in particular leading to lower tariffs on the digression schedule with a
forecast of grid parity by 2013.
In summary, to build a secure, vibrant, 21st century clean and
green energy sector, U.S. policy has to engage in TLC in some policy package. The fully comprehensive approach, such as embodied
in the American Clean Energy and Security Act, is certainly a fundamental framework with strong elements of TLC. However, that
is clearly open to a great deal of debate.
In the Senate, a number of bills have been proposed. Indeed,
even without a carbon market, a comprehensive and strong national renewable electricity standard complementing State RPS,
combined with long-term financial incentive programs that have
longevity and a clean energy bank looking at loan guarantees, as
well as continued focus on energy efficiency, would be very encouraging. I happen to believe that State-level feed-in tariffs, if they
spread, would be positive.
We would also like to note Congressman Inslees national feedin tariff proposal in the Renewable Energy Jobs and Security Act.
In closing, I thank the Select Committee on Energy Independence and Global Warming for this opportunity to testify and share
our perspective. I applaud the committees commitment to addressing these important energy and climate issues. This is not just a
matter of good policy for the United States, but it is a global movement happening that is creating economic activity in a race to

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scale, an so there is a question of urgency in whether U.S. citizens

will share in the new wealth being created.
Right now, by extending what is already working in the Section
1603 Treasury cash grant and the Advanced Energy Manufacturing
Tax Credit, Congress can help to underpin a growing industry and
create or preserve valuable jobs.
Thank you.
[The statement of Mr. Fulton follows:]

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40
The CHAIRMAN. Thank you, Mr. Fulton, very much.
Now I am going to turn and recognize the gentleman from Missouri, Mr. Cleaver, for as much time as he may consume in his
question and answer period.
Mr. CLEAVER. Thank you, Mr. Chairman.
Let me apologize to the panel. I have two other committee hearings that started at 10 oclock, Homeland Security and Financial
Services. One is here, and one is in another building. So I apologize. This is, to me, extremely important.
Mr. Carbone, thank you for being here. Thank you for the great
work your company is doing.
This is a somewhat convoluted question, but large Chinese windmills are selling for about $685 per megawatt of capacity. In the
United States, it is about $825 per megawatt of capacity. So the
Chinese are able to sell it infinitely cheaper. That is probably because ofand they probably violate some WTO rules. But, in addition to that, they are getting government-backed loans to do the
work. And when you combine thatand they are doing land deals.
There is a chance that China could suffer the same fate that hit
us in December of 2007 at the beginning of the recession, which is
the collapse of the real estate market. So their plants are connected
to land deals and the government is backing the loans.
Do we have to wait on a potential collapse, do you think, in the
Chinese economy before we have a chance to catch up, or is there
something that we can do to not only catch up but to supersede the
Chinese?
Mr. CARBONE. Thank you for the question, Congressman Cleaver.
In our view, and in particular my view, in our analysis it was
difficult for us to export to China from the United States with our
wind turbine. Although a large amount, the majority, of our parts
are sourced here in the United States, a fair amount of the value
is today imported. That was the result of a very constrained local
market here in terms of the supply chain in 2008 and 2009 when
we had a large booming business. It caused us to go offshore. We
are currently domesticating a big part of our supply.
Since we have gone global with our supply chain, we are finding
very competitive domestic supply for wind turbine components.
There is capacity. I am sure that has driven down the supply.
My figures are a bit different than yours in terms of what is the
wind turbine package to a wind farm here in the U.S. Our pricing
and the pricing of our competitors are in excess of 1.2 to 1.5 million. We have seen Chinese supply coming at about 1 million a
megawatt installed. However, we have also seen that it is more
than just the product, it is the process and the people behind that
products and how these products are serviced over the 20 years
that they are expected to operate.
So I think today there is competitiveness within the U.S. supply
chain. It is actually improving, these incentives we are talking
about today, particularly the ones that Nordic is trying to employ.
It will increase our productivity and, therefore, our competitiveness.
It will be a fight for sure with Chinese wind turbines and Korean
wind turbines coming to the U.S., to our shores, but I think it is

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41
a good fight. It is the one that we really, I think, have the opportunity to combat.
Mr. CLEAVER. Let me ask any or all of one question: If you were
sitting here and necessarily engaging in a debate with some good
people who think differently, who would say that we cant expend
large amounts of taxpayer dollars at this time because we need to
concentrate on reducing or eliminating the deficit, so every discussion that surfaces is going to have that as a background, do we
spend money to make sure that we are a 21st century nation, or
do we forget that and deal with the deficit?
I am just curious about what any of you would say that in that
hypotheticalno, it is not a hypothetical. It is a very real debate.
Mr. CARBONE. Maybe I could jump in on that first.
Yes, I think, given the choice, reducing the deficit has to be a priority.
Mr. CLEAVER. Even if we fall further behind?
Mr. CARBONE. No. Let me finish my statement.
Mr. CLEAVER. Go ahead.
Mr. CARBONE. I think what we need, though, is the market signals. We need a Renewable Electricity Standard to actually provide
a standard market signal and let the marketslet the supply base,
let the turbine manufacturers, let the solar companies respond to
it competitively. In my mind, that would be a much stronger signal,
particularly a long-term policy signal.
Mr. LIEBREICH. I think, first of all, it is very difficult to have that
discussion with somebody if they havent first agreed that there is
a benefit to this shift towards cleaner energy and towards, in a
sense, energy that comes out of technology rather than energy that
comes out of the ground. So that is first. So that is my caveat before I start.
Mr. CLEAVER. Well, that ends it, pretty much.
Mr. LIEBREICH. Well, it certainly hinders the discussion with
some folks. But there are a lot of people who actually are in the
middle camp, where they see the need, they see China forging
ahead, Korea is about to start, Europe, and actually do see the
need to take action.
And then the issue that you raised specifically around the deficit
is one that I think one can deal with, because I think there are
ways of designing policy that dont just require checks to be written
by either Federal or State governments. So renewable portfolio
standards, if they had the appropriate teeth, would actually
achieve a lot of that.
It is not necessary just to incentivize, just to pay money for the
good energy. You can actually mandate a volume and then let the
market decide how to fulfill that. But if you go that route, then it
does have to have teeth. There is no point in having a renewable
portfolio standard that can be bought out at such a low price that
it is essentially ineffective.
There are other areas where there are barriers to switching to
clean energy. There are other areas where some of the externality
costs of the alternatives ought to be priced in.
So I think that the important thing is to go through the policy
and look at ways of doing it that dont hit the budget. If you believe
it is important, then that is the challenge ahead.

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Mr. VISWANATHAN. Congressman Cleaver, I think it is a very fair
discussion on wanting to reduce the deficit. What I would say if I
were in your shoes and discussing it with these other folks is that
it comes down to a few things. It comes down to job creation, global
competitiveness, and energy independence. If we have these incentives, jobs will be created here. If you dont have these incentives,
for sure they are going to be created elsewhere.
Here is what the frightening scenario is, and I can say this from
traveling in Asia: These economies, they have speed and capital
and scale and they are exercising that in the manufacturing side.
Now that they are getting leadership positions on the downstream
part of these clean energy technologies, they are doing something
that we hadnt anticipated them doing, and they are going upstream and they are starting to innovate. Once they start innovating, then our bulwark, our strength, our fortress which we have
had for hundreds of years, which is innovation, starts getting compromised.
So I think with while the short term is obviously to focus on the
deficit, I would encourage everyone to start thinking about intermediate and longer term, because that trend, empirical data suggests it is happening. It is happening in solar, it is happening in
wind, it is happening in batteries, it is happening in electric vehicles. So that is the fear that my partners in our industry face when
we look at these global factors.
Mr. FULTON. I would echo what I have heard. One obvious point
about the budget, it has got a lot of numbers in it. Tax spending,
it is a huge animal. And it is really up to the United States to decide where it wants to spend and tax within that balance as it
brings the deficit down and how important it feels that being on
the front end of the clean energy race really, in terms of its longterm competitiveness. So it is a question of priorities. And we believe that this is a strong priority.
I think the second point, bringing up what Michael said, was
that there are different ways to construct incentive programs. Some
run through the budget, some run directly into the rate pay base.
And essentially a lot of the European do not run through the budget. So then there is a question of, do you think that is the best
thing, an electricity base.
So there are ways of constructing these incentives. You can do
it, as long as you do it with TLC is our point, fine, tends to get
it done. And if you dont get longevity that is run through the
budget, then of course that is an issue.
Mr. MARKEY. Does the gentleman need more time? He can continue.
Mr. CLEAVER. Well, of course there is no TLC up here on the
Hill. I agree, we have got to make some choices if we are going to
do this. But my fear is, while we are struggling with the choices,
we fall further behind. And nothing moves swiftly here. And I
guess, I am not looking for you to solve this dilemma, but you have
helped craft, I think for me at least, an argument.
What do you say, thoughI mean, Mr. Sensenbrenner my friend
left. He had another commitment. But if this is always presented
as some kind of new way to tax the public, you poison the public
to the need to move and move swiftly to create.

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Mr. Fulton.
Mr. FULTON. Well, I think it is interesting, actually, we talk a
lot about costs, but there is still a big debate about how to measure
those costs. So at a very narrow level we look at the so-called cash
costs of deploying, say, solar against coal. But of course what we
the wider debate is what are the externalities? What are the real
costs of those technologies, of those fuel sources? And that is when,
of course, it gets more difficult because we are talking about economist externalities. But when you start loading in the externalities,
if you happen to believe in the environmental impacts, health impacts and so on, then you get very different numbers as to what
is yielding.
I think the second point I would like to say is that we hear a
lot about how this is just a lot of subsidies and keeping the market
going when it should just be doing it itself. I think the point is that
we particularly see these, as I would like to call them, incentives
to scale. Essentially, these are new industries scaling up. Every
new industry, really big industry, you go look at history, gets some
help from government when it is scaling, generally. And so we
know fossil fuel industries around the world, by the way, have between 3- and 500 billion in subsidies, which is calculated by the
IEA. So it is not a level playing field anyway.
And secondly, what I would say to you is, if you think about it,
what we are trying to do is incentivize the scaled deployment of
these new industries. And as we do that and their learning curve,
their costs come down. And we are hearing that. The Germans believe that as they incentivize the reply side response of solar PV
and we have seen the crash in prices, which they are now reflectingthen we are going to see grid parity against the fossil fuels
within 3 to 5 years maximum.
So we keep talking about, oh, always subsidized. No. These are
incentives to scale, to develop industries to make the clean economy work. And you are right, at the end of the day, the next 5
years, I think the next 5 years are very crucial because grid parity
is sort of coming as these industries build. And during that process
have you incentivized your own manufacturing base and own
economies to participate in that?
Mr. CLEAVER. Mr. Liebreich.
Mr. LIEBREICH. I have had a minute or 2 to reflect on how we
can perhaps help you to persuade Mr. Sensenbrenner to approve
some of the measures that you might want to. And I think that I
would probably start by talking about the risk to the U.S. economy
is not going to be defined by the odd program here or there and
a few billion more or less of this or that grant program or loan
guarantee. The issue that really is at stake here is whether the
U.S. is going to be a price taker on energy in its economy for the
next 2 decades, 50 years, 100 years.
If you go back in history, while the U.S. was a net exporter, was
producing enough energy domestically for its own demands, that
was not an issue. And what has happened, as U.S. oil has depleted
and imports have gone up and up, the U.S. is a price taker on energy. And this has been at the root of a number of different episodes of economic instability which have actually destroyed enor-

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mous numbers of jobs along the way, and it is because the U.S. is
a price taker on energy fundamentally.
Now, you move to these technologies, and I thinkand the analysis that we do and my fellow panel members will confirmthat
these energy technologies will become cheaper in the long term
than fossil fuels. And so the U.S. has an opportunityso the world
will shift to these technologies. It wont be fast. We are talking decades, sometimes perhaps many decades, but this is the shift that
will happen.
And then the question is, is the U.S. going to be a price taker
on those technologies? You used the example of compact fluorescent
light bulbs, LEDs. We are going to be buying those from Taiwan.
Are we going to be a price taker on our own electricity power and
on our main fuel sources because we have not developed these here
in the U.S.?
And I think there is an opportunity. I think this is the real debate. And so if you can win that debate about whether the U.S. has
to lead in these technologies, then the discussion with Mr. Sensenbrenner and his colleagues perhaps is about how to do that, rather
than about the desirability of doing that. And the evidence that
perhaps could contribute to that is evidence around the economics
of this stuff.
The last 5 years has been very unusual because, first of all, the
amount of demand that suddenly arrived in the industry overwhelmed the supply chain. From 2004 through to 2008, the price
of clean energy went up, not down. The long-term history is it
comes down. There is an experience curve. This stuff is driven by
developing technology, developing logistics, developing supply
chain, developing skills, developing financing mechanisms, and so
on, and the price comes down.
And the last 2 years we have seen that really, we have seen the
costs come down in a way that has caught up with those trends.
And I think that when you start to delve into the fact that you
have fossil fuels getting more expensive and you have fossil fuels
causing accidents like what we have seen, the tragedy in the Gulf
Coast that we just all lived through, and then you contrast that
with the costs coming down, and you can provide data on that, this
is something that yields to analysis.
Then I think that maybe the debate moves on from whether we
have this program or that, and is this just tax and spend, or is this
just a subsidy and will it just stop? And the fact that Spains solar
program blew up because it was poorly constructed, Spains wind
program certainly didnt and Germanys solar program didnt and
Chinas solar and wind program certainly didnt and Brazilian ethanol programs certainly didnt. There are plenty of examples one
can bring to bear that back up this thesis that this is the future
of the energy industry. And America really needs to get into the
price giving and not the price taking position.
Mr. CLEAVER. Thank you very kindly.
Mr. MARKEY. We thank the gentleman very much. And I think
that the gentleman from Missouri in his questions has laid out and
your answers have helped to lay out the challenge for America.
And a couple of you mentioned this challenge to AB 32 in California. You mentioned that there is now an attempt to repeal the

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clean energy laws of California. And therein lies our challenge, because that attempt to repeal the clean energy laws in California is
being financed by the Koch brothers, Tesoro, and by Valero, three
companies with oil refineries in Texas. So Texas is financing
Texas refineries are financing an effort to repeal California clean
energy laws. And so what is at stake there? Who are the winners
if the Koch brothers, Tesoro, and Valero win? The winners are
those three companies and China. Those are your two big winners
up on the scoreboard.
The losers, of course, are anyone who was interested in creating
a domestic renewable energy industry here in the United States
with the potential to create hundreds of thousands of millions of
jobs.
Mr. Fulton, can you talk about what is at stake in California in
terms of this battle over AB 32 and what it represents if that law
is actually repealed by these oil refineries in the United States financing that effort?
Mr. FULTON. Yeah. It is a suspension, as you know, until California reaches 5.5 percent unemployment for a number of quarters,
which we havent seen for a long, long time. But technically it is
a suspension, but people would suspect it would last for quite a
while.
And we actually quote the U.C.-Berkeley paper that has looked
at this. The U.C.-Berkeley paper that has looked at this very comprehensively I think is very instructive. But essentially I think one
of the points, apart from the fact that it would have a very significant on what is going on in California itselfand of course there
is a lot of talk about how AB 32 then spills over into all of Californias other green lawsbut, essentially, everyone would assume
that that would put a very major stop on the clean and green development in California. And I think, as was pointed out, the signal
effect within the United States, and you could even say globally,
might be quite significant because California has always been seen
as a leader, a global leader to some extent, in this whole
Mr. MARKEY. And why would three oil refiners in Texas want to
stop that law in California?
Mr. FULTON. Well, I am not an oil expert, but I assume they feel
that that is something that would be good for them. I dont know.
Mr. MARKEY. I guess you dont have to be Dick Tracy to figure
out why they would be opposed to it. The oil refining industry
clearly has a stake in putting an end to this clean energy revolution. Not all of them. There are some that are willing to make the
transition. But these three companies are clearly intending on
keeping us dependent upon imported oil on the one hand, and not
putting in place a domestic policy that challenges China in terms
of the manufacturing of the new technologies that inevitably are
going to be deployed here in the United States, if for no other reason than States have put on the books their own laws that are
going to require renewable energy to be deployed, and local governments increasingly as well.
Mr. Viswanathan, you mentioned AB 32 as well I think in your
statement?
Mr. VISWANATHAN. I didnt. But I think my comment is I would
echo everything you have said. I think it would be disastrous. If

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you look at what has happened in innovation, and my colleagues
have eloquently pointed out about how costs would come down. So
the whole field of material science, which is the underpinnings of
a lot of these technologies, has grown up. It used to be science
projects in universities. We spun them out of universities, we
helped scale them. And guess what happened? That happened 3 to
5 years ago. In that period of time, you had an economic meltdown,
you had capital that fled the system, you had China with their
commitment and resolve take over. And so you keep getting body
blows, and this is yet another one.
So this really doesnt help us at all in what we are trying to do,
which is take these technologies which have actually come of age.
And this is when you want to press fast-forward and get into that
next level. You know, these negative incentives can be disastrous.
Mr. MARKEY. Do any of the rest of you wish to comment on how
disastrous a repeal of the California clean energy laws would be?
Mr. Liebreich.
Mr. LIEBREICH. I could comment on how disastrous it would be.
I think, again, we dont need to be Dick Tracy to know it would be
disastrous, because California is seen not just as a U.S. leader in
essentially capping its energy use per capita, but it is also actually
a global leader.
But I want to comment on I think one aspect of this, which is
that even with money from oil companies, it wouldnt be threatening. There would be no chance of success if they were not tapping into a strain of concern and skepticism amongst a proportion
of the population. And so I think havingexcept that it would be
catastrophic, it is something that definitely will set the industry
back considerably. Perhaps some thoughts on what could be done
to create a protection against that, because I think that the debate
has become too much about subsidies or not.
Mr. MARKEY. Just so I can say this. You know, the Koch brothers
also finance Tea Party activities. And it does tap into something
that is quite deep, because 70 percent of Tea Party members do not
believe in evolution. So to the extent to which they dont believe in
evolution and they dont believe in clean energy, I guess they are
tapping into something. The question is, are they tapping into anything that is valid scientifically? And if they pour millions of dollars into that effort, do they drive an ultimate result that is completely at odds with everything that we know scientifically and
technologically that we should be advancing as a strategy in our
country?
So I understand what you are saying, that you are tapping into
something. But I just want to define that they are also creating the
thing that they are tapping into, which is this defiance of 150 years
of scientific breakthroughs in our society.
Mr. LIEBREICH. I agree. I have speculated privately as to whether
there is a correlation between those who deny evolution to those
who dont believe in climate change to those who dont believe we
can ever change to new energy sources.
Mr. MARKEY. Well, if the same source of funding is providing the
public debate on those issues, then while you are looking at the
people who are reflecting what they are reading, what they are
hearing, the questions that are raised, you have to understand that

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it all goes back to these oil refiners that are financing these effortsand not necessarily to advance the goals of denial of evolutionbut, rather, to use those people as a way of then killing
things that they believe might interfere with their own economic
objectives, which is the continuation of massive importation of oil
into the United States from the Middle East that they have the opportunity to refine. So I dont thinkagain, that is a complex formula. I think every American, every thinking American actually
supports that.
Mr. LIEBREICH. But one could get into a discussionI actually
trust that people are smart aboutnot entirely smart, but they will
figure out who is doing the talking. But I want to move
Mr. MARKEY. See, here is the problem. As you know, there are
new Supreme Court decisions that actually allow for a masking of
who is financing much of what is going to be going on in America.
So you have almost the worst-case scenario, you know, where the
people who have an agenda are also increasingly able to mask their
agenda under the guise of raising other issues that dont go to their
own economic interests here, which would be oil being imported
which they have the opportunity to refine and to spew it out into
the atmosphere.
So I just want to make it clear that the political terrain is not
such that it makes it transparently easy for the voter to understand, in fact, what is at stake as these issues are being publicly
debated. So, please continue.
Mr. LIEBREICH. So what I wanted to suggest is that there is,
however, a powerful constituency that one could try tothat one
could try to develop to oppose that, the money that is being spent
on the repeal campaign, and that is Californias technology community and also those whopeople need to understand that this is the
way to create jobs and wealth and prosperity, so to counter this
idea that all it is is about increasing taxes and giving away money
to technologies that dont work.
And the particular constituency that I think has not been
brought into this whole discussion is around the telecoms, the IT
industry, the industry of innovation around the electrical system
more broadly. Because if we are going to integrate these large
quantities of clean energy, then there are all sorts of other industries, particularly around telecoms and information technology,
who are going to benefit enormously. And, to a certain extent, they
are sitting on the sidelines and not getting involved in the discussion. And I think that the people in California and elsewhere dont
necessarily understand just how many jobs are required if we start
building out the grid and we start integrating these technologies
very broadly into our lives.
We saw what happened with the Internet which, again, it was
funded originally through government spending, the development
of it. It then went viral in the economy, and it created hundreds
of thousands and then millions of jobs in very unpredictable ways,
ways that could not have been predicted when the first grant appropriations were made to experiment with or to build out the first
implementations.

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So I think there is a constituency that needs to be educated as
a counterweight to those who suggest that we should do nothing
and simply cut taxes and walk away from this problem.
Mr. MARKEY. I think you point outand I thank you for doing
soyes, the Internet was funded by the federal government, it was
called DARPANET originally, but a strategy had to be developed
in order to deploy it into the society as a whole. And I was the
chairman of the Telecommunications Subcommittee. So that was a
three-bill strategy.
Bill number one was to create an 18-inch satellite dish industry,
which the cable industry opposed because they didnt want the
competition. But that put pressure on the cable industry to deploy
even greater capacity.
Second, was moving over 200 megahertz of spectrum in 1993
that created the third, fourth, fifth, and sixth cellphone license in
the United States. They all went digital and went to under 10
cents a minute. The two incumbents, who for this purpose would
be the oil refineries in a telecommunications setting, they went
both analogue and 50 cents a minute with a phone the size of a
brick in 1993.
And the third bill became the Telecommunications Act of 1996,
which moved us from dial-up to broadband, which moved us from
black rotary phones to BlackBerries.
By 1998 there is a new company called Google that can be started and HULU and YouTube and EBay, all highly anticipatable, not
in terms of what they actually do, but with this incredible additional broadband, yeah, we are going to create a couple of million
new jobs.
That was my strategy back in the 1990s. I knew what I wanted
to accomplish, but you needed new public policies because the incumbent two companies werent going to move rapidly in that direction. It is always good to have a monopoly or duopoly in any
marketplace; you can divvy it up 50 percent apiece, which is a good
business if you can get it.
So we need to do the same thing here, and we need to do the
public education that explains how these new jobs are going to be
created for a new economy. And, of course, they are going to be created, but they will in China. They are going to be created, but they
will in Germany. They are going to be created, but they will be in
other parts of the world, and we will inevitably wind up importing
them into our country. That is our challenge.
So I have a chart here that I would like you each to comment
upon, because I think it gets to the point that each of you have
been making. This is a chart put together by 1366 Technologies,
which is a photovoltaic company up in Lexington, Massachusetts.
And what it does is it charts the price of photovoltaics, the installed cost of electricity per kilowatt hour in 1978 at $5 a kilowatt
hour, down to about 22, 23 cents a kilowatt hour today. And it assumes annual production growth of 35 percent and an 18 percent
learning-curve for photovoltaics, cost based on an 18 percent capacity factor and a 7 percent discount rate. So you can see that it is
almost like a Moores law of photovoltaics, and it keeps moving inexorably lower in terms of its costs. And they project that by the
year 2020, it will be at the cost of coal, if not sooner. Mr. Fulton

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and others have pointed that out. It could be sooner. And, that once
you hit the cost of coal, it could almost, by 2020, because of the developing world and their need to install new energy technologies,
could become 7 percent of all electricity generation in the planet.
Now, again, you have to have a little bit of vision here on this
subject, because when we were basically moving over the spectrum
for the third, fourth, fifth, and sixth cellphone license, our goal was
of course not just to lower the price here in America, but to create
a new global industry. Who would think that in 2010 there would
be cellphones in villages of Africa and Asia and South America that
would be the markets?
Well, you first have to have a policy that develops the products
that can then open up these markets, and these countries could
jump the wire-line revolution and go right to cellphones, which is
what happened.
Well, the same thing can happen here with photovoltaics. You
dont have to build out that entire electricity grid. So that is kind
of the vision.
Do any of you want to comment onthis is Professor Emanuel
Sachs at MIT. He is the guy who developed the technology that
was used by Evergreen Solar Company. And now this new technology, he believes, is 40 percent more efficient than previous technology, dramatically more efficient than even is Evergreen photovoltaic technology.
Does anyone want to comment on this vision and where we can
go and how we can have a domestic production capacity rather
than inevitably importing it from China?
Mr. Fulton.
Mr. FULTON. It might sound technical, but I think you can even
make it look more aggressive than that, because
Mr. MARKEY. He is too conservative in terms of this revolution.
Mr. FULTON. There is in particular something that the German
Environment Ministry, when they were looking at how much the
entire cost, they did something called the effect of the merit-order
run of a load curve of electricity. So what they talked about was
the fact that solar PV comes in at the peak load when gas peak
is usually running, and gas peak is the most expensive form of
electricity on the grid. Normally we look at average cost. But if you
look at the gas peakers, if you replace the gas peakers, then you
have a very big effect.
Now, the German Environment Ministry estimated that the
whole of the feed-in tariff was entirely paid for by the cost of replacing the gas peak
Mr. MARKEY. What is a feed?
Mr. FULTON. In simple terms it saysit is a standard offer document, about two pages long.
Mr. MARKEY. It is a stand off document? I just asked you to
please explain it in English and you said stand off.
Mr. FULTON. A standard offer. So what it means is that everyone
gets the same bit of paper in front of them; whether you are a utility or an independent power producer or whoever you are, you get
a two-page document. You know what you are getting, what tariff
you are getting. So essentially the tariffs are set by the govern-

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ment, but in consultation with the market in terms of costs. They
are reviewed.
And in the German system, there is a digression over time, and
the digression is actually targeted at what they believe will be grid
parity. Therefore, the signal that is given to the industry: You had
better be off that curve, because we are not paying you to get off
the curve; we are paying you to get on the curve. And that is why
I call them incentives of scale.
There is a strong signal, this is a temporary incentive to get to
scale, get your costs down, and they try to influence the direction
of the digression of the cost curve.
Mr. MARKEY. Does this tell us, Mr. Fulton, that we had better
have a strategy?
Mr. FULTON. That is what I think I said.
Mr. MARKEY. To reduce these technologies here? Because once
something hits 7 percent of global energy electricity, once something reaches 7 percent of global electricity production, that is a
great economic opportunity. And it will only grow as each year goes
by.
And right now, in your opinion, you know, do we have a program
in place that will keep these companies here in the United States,
given the facthere is the interesting thing: that last year 45 percent of the solar technology in the world was produced in China
and they exported 95 percent of it. They did not deploy it in China.
They exported 95 percent of it. So this gets to the U.S. Trade Representative, this gets to what the steelworkers are talking about.
This gets to whether or not we have an aggressive enough acrossthe-board strategy to make sure that we are protecting our own potential domestic production capacity here so that it winds up with
Americans with these jobs. Could you expand on that?
Mr. FULTON. Very briefly. I think I said the next 5 years I think
are very important for the grid parities on solar and wind. And essentially this is when industries are being built right now. And you
know, as I said, we feel that U.S. policy lacks TLC at the moment
and therefore we could see more done.
Mr. MARKEY. TLC, again, stands for?
Mr. FULTON. Transparency, Longevity, and Certainty.
Mr. MARKEY. Dr. Viswanathan.
Mr. VISWANATHAN. This is one of our favorite charts. You are exactly right, it is Moores law for photovoltaics. It is the fundamental
thesis on which we invest in solar, which is a significant portion
of our portfolio.
The point I would make is, you are exactly right. Basically, we
are very close to grid parity, very close being the next few years.
If we have the right incentives, we will get there in the U.S. And
we are at that stage when this is where the incentives kick in. It
is in the labs, it is going into deployment. If we dont have those
incentives, what will happen is you will have lines coming from all
of those points, and they are going to go to different countries
China, Taiwan, Korea. And that is what is scary.
Having said that, this chartif you show it to our competitors
globallyscares them, because they cannot come down that curve.
They can only come down in certain ways because they fundamentallythat, from 1978 to today, is innovation.

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Mr. MARKEY. And that is America.
Mr. VISWANATHAN. And that is America.
Mr. MARKEY. This is our innovation.
Mr. VISWANATHAN. Exactly.
Mr. MARKEY. These are the breakthroughs made largely in the
United States. So here we are, the innovators, creating these huge
technological breakthrough historical moments, and the other countries are taking note of it, putting in place policies, some of them
protectionist, so that they can capture the opportunity that we created out of our universities.
Mr. VISWANATHAN. And to build on what Mr. Fulton said and
also a response to Mr. Cleavers question, the incentives we are not
saying is permanent. It is a few years until we get into that large
orange-red band, and then grid parity takes off and you dont need
the incentives. So I think that is the fundamental tenet that needs
to be reinforced over and over.
Mr. MARKEY. And by the way, let me just say this. There were
huge subsidies that had to be built into the system in order to
build an electricity grid in the United States, especially out to rural
America. It was subsidized. It was largely subsidized by urban
Americans taking care of suburban and rural Americans. In telecommunications there was a huge subsidy program so we could
have a telecommunications program in the United States, and it
was largely subsidized by urban Americans who subsidized suburban and rural Americans so they could have the same phone service that those in the cities had. But it was a huge multi-multibillion-dollar subsidythat still continues to this day, by the way,
still continues the subsidy, of rural America for telecommunications, for example.
So I think people are kidding themselves if they think there
hasnt been an ongoing industrial policy in the United States to ensure that the electricity, the solar I mean, and the telecommunications revolution was available. It still exists. It is multibillions
per year.
So then when we turn to this new technology revolution, the
crocodile tears come down from, in many instances, the very companies that got subsidized to be created, in the way that the telecommunications companies didnt want a third, fourth, fifth, and
six license to be put out there, in the same way that the existing
companies are saying, Why would we want broadband? We already have a monopoly. We already have all the customers that
exist in America. Why would we want other independent companies? And hundreds of them moved into this space once we had
this broadband revolution. Why would we want those people in as
well?
So we have to work it through in order to explain to the American people that there are millions of jobs here that we can create
in the United States, because technology always triumphs. Technology always triumphs. This is going to happen. It is only a question of whether we as a country are going to start out where we
are going to be forced to wind up anyway, in terms of the importation of these technologies into our country, or the development, the
creation of the jobs here in the United States that will then export

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them to other countries in the world. That is the only question. Not
whether or not there is a Moores law in solar. There is.
Are we going to have a plan to capture it here for our country?
Mr. Carbone.
Mr. CARBONE. Yes. I was just going to say that similar laws were
applied in the wind business as well. If you wind the clocks back
30 years, you see a similar curve. We took advantage, at least in
the early part of this past decade, of the scale that was produced
in Europe here in the U.S. in terms of bringing that price of wind
power through the price of wind turbines, which was the main
driver in the cost models.
Mr. MARKEY. By the way, if you have that chart, I would like to
use that as well. If you have a similar chart to that in wind, I
would like to use that as well, just so that people can see the inexorable inevitability of the triumph of technology, and whether or
not werather than being in denial of whether or not this is going
to happen. And we understand why the Koch brothers and Tesoro
and Valero are. Okay?
But whether or notAdlai Stevenson, someone said to him,
Every thinking voter is with you. And he said, Yeah, but I need
a majority. And the way you need to get a majority is we have
hearings like this. We have a big public debate. So to a certain extent this California referendum is a great opportunity for us as
well. Lets have this debate. Lets see where California wants to be.
And lets also, though, show who is on the other side of the debate,
because they are clearly looking at history in a rear-view mirror.
Mr. Carbone, please continue.
Mr. CARBONE. Just to finish. I think we fully agree, it is technology that will continue to drive us down that curve. Unfortunately, the wind business, a lot of the innovations were not born
here. But today they are. And my company in particular is taking
a different approach with the technology in order to defer the
drive-down of the cost of energy. It is justand it is all technology.
Mr. MARKEY. But America is now catching up in innovation in
wind.
Mr. CARBONE. Absolutely.
Mr. MARKEY. Mr. Liebreich.
Mr. LIEBREICH. First of all, a couple examples just to confirm
this is not an academic exercise, this is real. Italy is pretty much
where at the moment, this year or next, the cost of solar in the
sunnier parts in the south of Italy will be parity with the retail
price of electricity. So in Italy you get to the point where if you
want to put an air-conditioning unit in, you should generate the
electricity from photovoltaic on your own roof. California, perhaps
a few yearsthis is without subsidyCalifornia, perhaps a few
years behind, but not far.
Mr. MARKEY. And what is the difference between retail and
wholesale price for solar?
Mr. LIEBREICH. Well, the price at the moment is absolutely accurate on that chart. It is about 22 cents per kilowatt hour. It depends how sunny and so on. Italy has very high daytime electricity
costs and good sun; therefore, it will get that amongst the first locations. Obviously, wholesale is different. If you are generating
electricity and then putting it into the grid, then you are competing

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with the coal-fired power station or the gas-fired power station, and
then you have to get to a lower price, which is shown on the chart.
Mr. MARKEY. So if you are a Texas oil refiner, it is very sunny
in Texas; it is very sunny at Fort Huachuca, Arizona; it is very
sunny in Florida. Or those ads are going to start to run again,
where a bad day in Florida in winter is when one cloud goes by.
So they advertise all the sun there, and there is a lot more sun
there than in Italy or Germany. So
Mr. LIEBREICH. There are lower electricity prices though.
Mr. MARKEY. Excuse me?
Mr. LIEBREICH. Italy is going to get there first because of slightly
higher daytime electricity prices, which also matter.
Mr. MARKEY. But if you are an oil refiner in Texas that really
wants to just continue to bring in oil from OPEC to refine, all that
sun in Texas, it is going to be scary every day you go out and you
have to put on sun protection. And you are an oil refiner in Texas?
It has got to be a little bityou have to be a little bit apprehensive,
not only about your own personal health but the health of your future in terms of these competitive industries thatyou have to go
to California to slow it down or kill it first, before this epidemic of
new energy technologies reaches Texas in its full-blown, marketbased form that no longer needs subsidies in 5 or 10 years because
you have now created a complete market for it. Do you agree with
that?
Mr. LIEBREICH. Well, it should be scary, because the combination
of solar with electric vehicles or plug-in hybrids is a real large-scale
threat to the current way of doing business, and so it should be.
I do want to raise one other
Mr. MARKEY. You are saying that because 70 percent of all of the
oil which we consume in America goes into gasoline tanks, that
these oil refiners have a stake in making sure we dont have a
plug-in hybrid and an all-electric vehicle revolution, because they
could be using solar- and wind-generated electricity to power these
vehicles and tell OPEC we dont need their oil any more than we
need their sand.
But that wouldnt require oil to be imported from these countries
into refiners in America and reduce our dependence upon imported
oil, change our national security status in terms of where we import this oil from, and the funding that we give to these countries
and other countries.
So there is a huge national security element that goes to the creation of a domestic renewable energy industry that then is providing the lower cost electricity for the plug-in hybrids and all-electric vehicles that we are using.
Mr. LIEBREICH. Indeed. I saw an interview with the Saudi Oil
Minister who was asked about alternative energy and whether he
considers the drive towards clean energy as a threat. And his response was to say, No, we are absolutely happy for it to happen,
because it will never in any way threaten anything we do essentially. And I just thought, well, that is spoken like somebody who
hasnt seen the chart and the trends.
Mr. MARKEY. You would think that a country that is sunny 99
percent of the timeSaudi Arabiaof the times that it is not the
middle of the night.

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Did you ever see Lawrence of Arabia and poor Lawrence is out
there in the middle of the desert? It is very windy in the middle
of the night, apparently, over there in Saudi Arabia in the desert.
So you would think it would be a country that would have some
insight into the power of solar and wind, but they continue to finance, in fact, questions about climate change and questions about
the need to move in this direction as well. Although they could be
the leaders, in fact, in the development of that technology. But they
are not unlike their oil refining brethren here in Texas that is
going to try to slow down this domestic revolution.
Mr. LIEBREICH. Could I, if I may, comment on one other aspect
of this global race which this raises? And that is, there is a caveat
around how we go for those manufacturing jobs. And if you go back
to the analogy of the telecoms industry, which was an enormously
successful industry and created jobs through your efforts and the
efforts of others in creating the frameworks, we do import almost
all of our mobile phones. The manufacturing is not generally domestic U.S., but the license, the technology, the value add, very
much is. And we have an analogous situation where those innovations, many of which were here in the U.S., are embedded in a lot
of the technology that is coming out of China and other parts of
the world.
So I would just urge caution about seeing success as whether we
manufacture cells in the U.S., yes or no, because our research
shows just how integrated the supply chain, the technology licensing, the financing, the search for talent, managerial talent and so
on, it is very, very integrated. And the number one challenge for
the shift to clean energy is to keep going down that curve, which
requires all countries to be progressing and playing to their
strengths.
And so I think, particularly given the drum beat of concern about
China, about its exchange rate, about its potentially illegal support
of its industry, what we mustnt allow to happen is for that to turn
into a tit-for-tat trade war in this sector.
Mr. MARKEY. I agree with that.
Mr. LIEBREICH. And so that is my caveat, because it is important
that we use their cheap manufacturing where that is appropriate.
Mr. MARKEY. But you also agree that we shouldnt be Uncle
Sucker; that we shouldnt allow them to saywhich I think they
are trying to say to usWhy dont we do this? Why dont we take
all of these brilliant innovations that you have in solar, and then
allow us, with our very low-cost workforce, to manufacture it, and
together we will save the world, you coming up with the ideas, we
with making the products. And, by the way, in order to ensure that
that is the case, engage in protectionist activity and subsidies that
are questionable under World Trade Organization rules in order to
create that beachhead of manufacturing capacity in our country
that then makes it very difficult for you to compete.
So we clearly dont want to be left as Uncle Sucker here, investing in all the research, and then not seeing the jobs in America in
its fair proportion to what it should represent given the investment
that we made as a Nation.
You agree with that, Mr. Liebreich?
Mr. LIEBREICH. I would not disagree with that.

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Mr. MARKEY. Thank you. Mr. Fulton.
Mr. FULTON. I just think it is interesting that the Lawrence
Livermore Laboratory and the DOE did some research on the percentage of the domestic share of turbine costs, and it has risen
from 15 percent in 2006 to 60 percent in 2009. So as we have seen
the U.S. wind industry scale, that has brought manufacturing on
shore.
Now, I think there is no doubt that these incentive programs
have played a strong role there, so I dont think it is like America
has to lose out here. The data suggests that America has the
wherewithal, it has the companies, it has got some of the biggest
multinational companies in the world, capable of producing the
best technology, and it looks like they are prepared to look at manufacturing it.
Mr. MARKEY. Do you agree with that, Mr. Carbone?
Mr. CARBONE. That is what I said earlier. It is the race, it is the
fight, it is the good fight.
Mr. MARKEY. Mr. Viswanathan, is there any reason the U.S.
should lose their fight?
Mr. VISWANATHAN. There is no reason. And to just build on what
you said earlier, just take a page out of the semiconductor industry.
The innovation was done here. Intel, some of the greatest companies are here. They have outsourced manufacturing to the fabs in
China and Taiwan. We have ceded nothing in terms of innovation.
All of what is going on in cellphones, videos, et cetera, a lot of that
is emerging. Some of that is coming from Asia, but a lot of that,
the core innovation is coming from here, and that is resulting in
a lot of jobs.
Mr. MARKEY. Mr. Fulton, you contributed to a report published
earlier this month that looked at the claims made by global warming skeptics regarding the fundamental science of climate change.
First of all, why did Deutsche Bank decide to put out that report?
Mr. FULTON. Well, that report actually came out of my research
unit so I take responsibility. Deutsche Banks name is on our research, but it is. Since I work in an asset management division
that has climate change investment, it would be a means of fiduciary not to check, which is that there is climate change. So to me
it is an absolute necessity to be aware of the science and then
aware of the facts.
And if you have an investment thesis and you are wrong, you
have to change that investment thesis. So we went to Columbia
University, to the climate center there, and we said: We are not
scientists, but we know you well. But could you conduct for us a
very fair and balanced look at these skeptics arguments, because
we want to know what is going on in those arguments?
So they were set out in some detail in a 55-page document. And
we asked, Could you give us, as best you could, peer-reviewed answers to that? And that is what they did. And at the end of that,
our conclusion aswe are not scientists, but our conclusion as investors is we felt comfortable with our investment thesis. There is
still a serious threat from emissions in climate change.
Mr. MARKEY. And how has that approach to the issue, and investment in climate and clean energy technology as a result,
evolved over the last several years at Deutsche Bank?

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Mr. FULTON. Well, we have at the moment $5 billion under management related to climate change themes, and that has gone up
and down with the markets. And there is no doubt, since the financial market crisis hit and since the volatilityand I would say the
volatility in policy, because these are policy-related markets. And
it has been more on hold in terms of not what we are doing, but
in terms of investor perception.
So I think we now are again at a very important crossroad. Because at the end of the day, as you are pointing out, unless investors get behind it, where is that trillions of dollars coming from?
So we are lookingthe markets are doing their best at innovating. We have a private equity group as well. So we are trying
to do our best. Everyone is. But at the end of the day, unless we
haveI am afraid to go back to this TLC structurethen while we
are in that scaled deployment phase, which we are in for the
next
Mr. MARKEY. TLC stands for, again?
Mr. FULTON. Transparency, Longevity, and Certainty. Unless we
have that as investors, the cost of capital is going to remain high
and the uncertainty is going to remain there, and you wont see the
adequate flows that you are going to need to really get there. So
I think at the moment a lot of us are saying, okay, lets see how
policy goes in America in particular in the next few months. I think
it is a very important signal.
Mr. MARKEY. Thank you.
Now, Mr. Liebreich, I have a slide that I would like to put up
for a moment. I dont believe that you used this one during your
presentation, but I think it is a very interesting one, if we can get
it up on the screen here.
Could you explain briefly what we are looking at? I think this is
the one that says that U.S. wind manufacturing supply is projected
to ramp up to 14,000 to 15,000 megawatts per year over the next
couple of years but projected demand falls way short of that.
Could you put that up on the screen, please?
Please, could you talk about that a little bit?
Mr. LIEBREICH. Yes. Certainly. Thank you very much. So this is
output from our wind team. The years up until 2009 are historic;
2010 is our estimated out-turn for this year.
Mr. MARKEY. There is a downturn this year in wind?
Mr. LIEBREICH. There is a downturn. Financing activity, which
I showed in the data that I presented in my prepared statement,
slowed down quite dramatically at the end of 2008 here in the U.S.
and into 2009. And, of course, the build rate drops away sometime
after the financing activity.
What we are seeing in the U.S. is that over the longer period,
from 2005 through till 2008, 2009, was that demand outstripped
supply.
There are a number of reasons for this. There are only two domestic manufacturers, GE and a smaller company called Clipper,
before Nordic Winds arrival on the scene, a very welcomed development. And the demand that built up through the incentives,
through the programs that were in place, outstripped that supply,
and the supply was partly held back by the lack of what my colleague Mark Fulton would call TLC.

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The fact that the production tax credit for wind expired every 2
years meant that companies were reluctant tothe European companies, principally, were reluctant to invest here in the U.S. in
order to meet that demand, because there was so much uncertainty
about the use of those assets.
What is happening now is that there is substantial new investment, and you can see on this chart who is doing the investing.
Now, you can see GE in dark blue and Clipper at the top in light
blue. But the expansion in capacity is coming from Vestas of Denmark, Siemens of Germany, Gamesa of Spain, and Nordex of Germany. And they are coming to the U.S. and they are building manufacturing or assembly plants. This is all measured at the end assembly stage.
The issue is, though, that now there is insufficient demand to fill
those plants. So we are moving from a situation of undercapacity,
supply constraint, to overcapacity, which is very good news for the
cost of turbines, which are coming down. We produced the wind
turbine price index, and we are seeing turbine prices coming down
already by around 20 percent from their peaks in 2009. So we are
going into a period where there is going to be a lower level of installations because of the difficulty of financing in the post-crisis
environment at the same time as
Mr. MARKEY. You are saying that the derivatives-driven financial
meltdown has now had an impact. The fact that we didnt regulate
derivatives accurately, wisely, inside of the financial system now
has a collateral consequence in terms of now receiving financing for
something that obviously has seen a reduction in the overall cost
of producing this new technology.
Mr. LIEBREICH. Well, I dont think I mentioned derivatives.
Mr. MARKEY. I just want everyonewhen you say the catastrophe, we know the catastrophe is that unfortunately, around the
world, people were buying derivatives packed with all kinds of very
poorly structured investment vehicles that were not well understood by the global investment community that unfortunately has
come back to haunt all other industries as well.
And I am not sure Tea Party activists fully understand that
counterparties actually dont have a stake in policing the derivatives global marketplace, since the CEOs of most of these companies who produced the derivatives dont even understand what a
derivative is, except that it was a center of economic profit for
them.
But ultimately the bubble bust, and it is having an impact in
other economic areas as well. I only say that just to point outI
was the chairman over Wall Street for 14 years as well, so I bring
that knowledge in, as well as telecom from the 1990s, just to add
it in as an extra factor of what the consequences are of turning a
blind eye to things that were completely knowable in terms of the
impact that derivatives and subprime mortgages would have upon
not only ours, but the global economy. So I just throw that in as
an editorial comment.
Mr. Liebreich.
Mr. LIEBREICH. So there was a crisis.
Mr. MARKEY. There was a crisis.

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Mr. LIEBREICH. And it did have a substantial impact on this sector, and the sector is still suffering from that. If you step away
from the various support mechanisms, the availability of capital is
much reduced, and the cost of capital in the private markets, the
debt markets, the equity markets, remains stubbornly high even
now, 2 years after.
And so that is why there is such a focus on programs like the
cash grants, because it is impossible otherwise to get the same
level of projects financed. Some projects will get financed, but there
is a chunk that will not happen without the continuance of some
of these programs here in the U.S.
And what we are seeing here in terms of the dotted line that you
see on the chart, which is the line of demand, that is on the assumption that the cash grants continue in place, the Recovery Act
cash grants continue in place. We will see a bad year this year, a
drop to 6 gigawatts of installation, and then bouncing back somewhat. But that bounce-back is in jeopardy if those grants are not
continued.
Mr. MARKEY. So you want a continuation of the grant programs,
the loan programs, the tax programs that are on the books. And
would you also want a national renewable electricity standard to
be put on the books, so that you have a belt-and-suspenders program where there is a policy that is established, combined within
the financing programs that are put in place that help to facilitate
the installation of the renewable energy sources that create a much
moreTLC stands for what again?
Mr. FULTON. Transparency, Longevity, and Certainty.
Mr. MARKEY. Longevity and certainty for the investment community, right? So that is really what we are trying to do here.
I have to keep repeating that in English, because we are going
to have a big public debate in the United States, and TLC means
something completely different than what you mean it to mean. It
means more the way Aretha Franklin used it in the song Respect.
So TLC means something else.
Mr. FULTON. We sort of hope people might relate to it.
Mr. MARKEY. Right. They should. But it is the TLC for the renewable industry, but it includes the grants, the loans, plus the
policy that is put in place that creates an environment where they
get a lot of TLC, right? But it has to be continuous, there has to
be some longevity, and there has to be some predictability to it.
Mr. Liebreich.
Mr. LIEBREICH. So when you say we, we, one, we are an information provider so we dontthat have used that approach. But
certainly the industry and our clients would be 100 percent behind
the push for transparency and longevity.
Mr. MARKEY. Mr. Viswanathan, you are a financer.
Mr. VISWANATHAN. Yes.
Mr. MARKEY. You provide the money.
Mr. VISWANATHAN. Yes.
The CHAIRMAN. So, lay out for us what you need to see put in
place so that we have this more predictable investment climate
that leads to the reduction in cost and ultimately withdrawal of the
need to have the public financing programs be put in place.

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Mr. VISWANATHAN. Certainly. I think exactly what you had said,
Mr. Markey. We would like a continuation of these programs, 48(c),
1603. We would like the 48(c) also to be refundable, as Mr. Carbone
said, especially given a lot of these innovations are happening in
startups that are starved for cash and we need to incentivize them.
I think the loan guarantee program has been very successful and
there is a lot of good coming out of it. We need to have that in
place.
We need to have a national electricity standard and energy efficiency standard. If you look at some of our peers across the globe,
in China they have multiple of these incentives. They have a stimulus for clean energy, they have a renewable energy standard, they
have a feed-in tariff, they have an energy development fund. All of
these things are going to be very, very helpful as we build that
clean-tech economy.
The CHAIRMAN. But your firm is still putting up billions of dollars in the clean energy sector. Why is that, if you see all these pessimistic signs on the road as well? Why are you still investing so
many new billions of dollars into the clean energy sector?
Mr. VISWANATHAN. Well, that is a very good question. There are
two ways to answer it. Because we fundamentally believe in all of
the things you said in terms of your chart. Having said that, if all
of these stop, you will see investment dry up from our community,
because we cannot do it ourselves.
The scale that is needed is so massive that you will see innovation dollars dry up, and then that will have a spiraling effect on
the actual innovation that is trying to get to market.
The CHAIRMAN. Okay. Now, could we pull up Mr. Liebreichs
slide number 9, please, so that we could have a little bit of discussion about that.
So this is Venture Capital new investment in clean energy by
sector, the top 15 countries. The United States is in the lead, looking over at its shoulder at number 2, 3, 4, 5 and 6 in the world.
That is a reason to be optimistic.
Mr. Carbone, can you take a look at that chart and tell us why
that is happening, and are you optimistic that it can continue?
Mr. CARBONE. Well, while Michael provides information and Ravi
provides the money, we initially consume the money but we hope
to make the money as well.
The CHAIRMAN. Great.
Mr. CARBONE. Yes, I would have to say, and we showed in our
chart as well, that this money is for the most part financing innovation and technology development, and a lot of those early stage
startup companies are actually starting here in the U.S. And actually our company is one of them, and Mr. Viswanathan is actually
one of the investors in our company as well.
We initially were invested in by U.K. and European-based investors, and just recently in the rounds of financing we did late last
year, we were able to attract investment from the U.S. community
and actually establish ourselves here in the U.S. So we are part of
that, somewhere, a small part, but part of that top bar on this
chart.
The CHAIRMAN. Thank you.

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So, Mr. Liebreich, thank you so much for providing these great
graphs. It is very, very important for us to understand it.
Mr. Fulton, last month your colleague at Deutsche Bank, Kevin
Parker, was quoted in a Reuters article. Here is what he said.
They are asleep at the wheel on climate change, asleep at the
wheel on job growth, asleep at the wheel on this industrial revolution taking place in the industry. You just throw up your hands
and say, we are going to take our money elsewhere.
Now, this is your companys global head of asset management.
Can you give us some context here, what Mr. Parker was talking
about? This is testimony ultimately before the United States Senate as they were trying to pass a climate and clean energy bill that
ultimately was stopped by, I hate to say it, but it is basically the
oil Senators from Oklahoma and the coal Senators from Kentucky,
the Republicans that basically just stop it over there. So, again, we
continue to have this tension that exists.
Can you talk a little bit about what Mr. Parker was making reference to?
Mr. FULTON. Well, I cant talk for him directly, but I think as I
understand it, what we are saying, what he is saying and what I
believe is that it is very simple. The U.S. Congress has not passed
anything this year and it has been an important year. So that is
just a fact. We dont have a climate or energy bill coming out into
law, so, as I say, that is just fact.
In terms of capital deployment, again, I think the point is that
particularly in the longer term, where is capital going to go in the
next 5 to 10 years? And unless the United States has this policy
package and structure that is going to encourage that flow, it is not
going to take place.
The CHAIRMAN. It is not going to take place. Now, I understand
that none of you are international trade lawyers, but I would like
to get your views on the United Steelworkers petition to the U.S.
Trade Representative regarding Chinas violations of trade rules in
the clean energy sector.
As I mentioned in my testimony, I believe that we very much
need a climate of intense Darwinian paranoia inducing competition
in the renewable energy sector so that we can drive down the cost
of each of these technologies as quickly as possible. But if China
is violating international trade laws, our domestic workers and domestic industry as a whole are put at an obvious disadvantage.
I would like to ask each of you how important this issue is in
terms of leveling the playing field so that all countries feel that
they have a stake in this competition to create a manufacturing
sector that induces the paranoia that lowers the cost for production
as quickly as possible.
Mr. Fulton, and right across, you can each disclaim any knowledge of international trade law.
Mr. FULTON. Yes, indeed I do disclaim any knowledge of international trade law and obviously would make the point that we
have to wait and see what is determined in that situation.
I would make one comment about Chinas policy. It is very comprehensive. We have heard from other participants. They are tackling this issue at many, many levels. We even note that they will

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have been talking about looking at carbon markets domestically in
China.
So one thing I would say is I think sometimes people say the
Chinese may not be doing anything. Well, the Chinese are certainly
taking action here. The question is if it happens to be contravening
WTO, which I dont know, then that is up to the WTO.
The CHAIRMAN. Mr. Carbone.
Mr. CARBONE. Yes, my knowledge on the situation isnt entirely
what it should be, what you would like to have. But I think there
is a relationship, we discussed some of it here earlier, between
technology development, manufacturing, the financing of it and the
deployment of it.
I am not sure, because I havent educated myself enough to really understand what the U.S. steelworkers are trying to accomplish
and what in particular technologies are they really trying to tackle
here.
The CHAIRMAN. Thank you.
Mr. Viswanathan.
Mr. VISWANATHAN. Yes, I would build on what you said about
leveling the playing field, and that is what this whole discussion
has been. A lot of it has been around incentives and spurring that
innovation. But the flip side of that is making sure we have policies
where if there are trade violations, we figure out what it is and
make sure we have policies so globally no country can arbitrage the
system to get away with it.
The CHAIRMAN. Mr. Liebreich.
Mr. LIEBREICH. Again, I will make the caveat that I am not an
international trade lawyer. But on the economics of it, I think that
first of all, the big opportunity for U.S. wind turbine manufacturers
is not exporting to China. Likewise, I suspect that Chinese manufacturers are going to find it easier to export to some of the other
markets where their technology might be more appropriate. So
their technology is not as productive, the yields are not as high and
so on.
I was recently in Brazil and came across a number of representatives of Chinese wind turbine manufacturers. So the battle between
U.S. wind technology and Chinese wind technology might well be
happening elsewhere in the world.
I think in terms of the case, if you look at some of those elements, it will be very difficult, without knowing, without claiming
to be a lawyer, very difficult to prevail in terms of cheap loans and
so on. It is hard to distinguish some of those programs from some
of the programs here.
One element of what China is doing gives me great cause for economic concern, and that is anything to do with restricting the export of rare Earth minerals has to achieve a different status of attention, I believe, from all of the normal trade law and tradethe
tit-for-tat and the to-and-fro around trade. We can deal with that
through WTO.
Rare Earth minerals are different because there are no other
substantial sources on this planet that have been developed, that
have been found.
The CHAIRMAN. Outside of China. Which minerals are you referring to?

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Mr. LIEBREICH. We are talking about some of the exotic dysprosium and some of the doping minerals that you need to make permanent magnets in some of the solar technologies, and the permanent magnets that go into the most advanced sorts of wind turbines to reduce their weight and increase their power outputs.
These are essential technologies also around the smart grid. We
are not going to have a smart grid without rare Earth minerals.
So I think that we should be prioritizing, ensuring that there is a
global and open market for these minerals, perhaps over some of
the more eye-catching issues around cheap loans where one can get
into an argument about who is doing what to whom and take our
eye off the ball.
The CHAIRMAN. So you are saying that we need to ensure the
raw materials are there so that other countries have the capacity
to participate in this global competition, because the denial of access to the rare materials makes it impossible, really, for a level
playing field to be created.
Mr. LIEBREICH. Indeed. If the manufacturers in the rest of the
world cant have access to the rare Earth minerals or the products
that they go into, the magnets and so on, then it is going to put
those countries at a very, very substantial disadvantage.
The CHAIRMAN. Yet the Department of Energy is actually considering loan guarantees for U.S. rare Earth production, which is
something that I also think is very important; that we begin to recognize that as something that should be specially focused upon in
terms of rare Earth minerals here in the United States and the extent to which we are also financing that development as well.
Mr. Liebreich, could you put the Recovery Act in context for us
a little bit? How important was that legislation last February of
2009 in making sure that we did not see a precipitous drop-off, almost catastrophic in terms of the deployment of wind and solar and
geothermal and biomass technologies in the United States?
Mr. LIEBREICH. Well, there are two parts to that answer. The big
part to the answer is that it played a very substantial role, and had
that act not been passed, we would not see the level of installations
and also the level of factory openings and job creation that we are
seeing now.
The caveat, the small part of the answer is that there was actually a period where the industry was actually waiting, because they
were waiting for that act to be first passed and then for it to be
clarified and so on. So the stimulus for a period acted as an antistimulus. And I say that only because we are through that period
and I say it only for the record that it was actually a difficult period. We saw the end of 2008, the beginning of 2009, a drop that
is perhaps more precipitous as companies waited to see whether
they would qualify, what the detailed rules would be.
The CHAIRMAN. What did it mean for you, Mr. Carbone, that the
stimulus bill passed?
Mr. CARBONE. Actually little this year, but a lot next year, if we
get it passed.
The CHAIRMAN. A lot next year. So it is giving you an investment
climate.
Mr. CARBONE. Absolutely. We have customers lined up, actually
TLC, who are looking for that certainty.

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The CHAIRMAN. TLC stands for?
Mr. CARBONE. Transparency, Longevity and Certainty.
The CHAIRMAN. Got it. Thank you.
Let me finally move to this question of the renewable electricity
standard. We have to live here in Congress in an acronym-free
world because we are trying to talk to all of these people that Mr.
Liebreich says if they get all the information, you know, in a digestible form, they will make the right decision. But part of our responsibility is to be the translators out of the world of experts.
There is no such thing as a congressional expert compared to real
experts. It is an oxymoron, like jumbo shrimp or Salt Lake City
nightlife. There is no such thing as a congressional expert, except
to the extent we help to translate it into English and other languages spoken in the United States that help to ensure that voters
understand what exactly is at stake.
So, in terms of a renewable electricity standard, how important
do each of you believe that is for a long-term TLC for all of these
technologies that you are talking about?
We will go with you first, Mr. Liebreich.
Mr. LIEBREICH. Sir, I think an aggressive renewable industry
standard in terms of its ambition and also in terms of its penalties
for non-achievement could be the single most important long-term
factor in the development of the market here in the U.S.
But I do say that it has to be ambitious, not something that is
easily achieved. The good things in life tend to be hard to achieve.
And if it doesnt spur changes in investment practices and so on,
then it is not going to be substantial. So, ambitious in scale, and
with penalties that are meaningful.
In other words, of the various companies, utilities cant simply
pay the penalty and go on with business as usual. That, in place
over a long period, setting a long-term target, would be very important.
The single critical thing that has to happen, whether it is
through a feed-in tariff, whether it is through a portfolio standard,
whether it is through any other mechanism, is that it has to create
demand.
We are not going to win this simply by working on the supply
side. We have got to have demand so that the companies that are
being financed and that are producing the technologies know that
they will be able to sell and get revenues here in the U.S., not just
that it will be cheap just to open a factory, but there is somebody
to sell the products from.
So I think it is critically important. The States have shown great
leadership in moving ahead with their own renewable energy
standards. As I mentioned, 30 States have got some sort of standard. And a national standard which builds on that, which goes beyond that, would be very, very helpful.
The CHAIRMAN. As you know, maybe I am going to inform you
of this, but on June 26, 2009, inside of the Waxman-Markey bill,
was language, my language actually, that created a 15 percent renewable electricity standard by the year 2020 in the United States
for all 50 States, not for 30 States, and another 5 percent that
would have to be extracted by the utilities in new energy effi-

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64
ciencies, in the way in which they generate electricity. So it would
be 20 percent by 2020.
Would that meet your standard for challenging the system?
Mr. LIEBREICH. It would most certainly help, there is no question. My own view is if you look at those cost curves, one should
err on the side of being aggressive and ambitious.
The CHAIRMAN. What I am saying to you is if they are all right
and that curve is just going to continue, adding in 20 more States,
setting that goal, we will probably beat that anyway just because
of the market that we open up? So while you are right, AT&T testified before Congress in 1981 that 1 million people would have cell
phones in the United States in the year 2000. One million. A big
goal for AT&T, as a monopoly.
But as I was moving over the third, fourth, fifth and sixth spectrum license, I wasnt going to predict that everyone would have
two devices in their pocket by 2010, and children would have their
own little devices as well that they could be walking around with.
But I kind of have confidence that technology ultimately triumphs,
and once you set this larger goal, actually it will probably be exceeded; as long as you set something that was reasonable, that people will go over it.
Anyway, that is just the way I view it, given my experience in
the cable, satellite, and telecom sector, and I think that is what
will happen if we can get something passed.
Do you agree with that, Dr. Viswanathan?
Mr. VISWANATHAN. I agree very much with that. As Mr. Fulton
said, 30 States have it now, but those policies are in danger unless
the Federal Government adopts a national standard. So I am very
much in favor of that.
The CHAIRMAN. Yes. They are in danger, of course, because oil
refiners in Texas, if they win in California, they are going to go
State by State.
Mr. VISWANATHAN. Exactly.
The CHAIRMAN. And they will be on a path of destruction for a
renewable energy policy being in place in those States. There is no
question about it. So we have to win in California.
Mr. Carbone.
Mr. CARBONE. Number one on my list, Congressman, I am not
sure I would argue whether it should be 15 percent or 17 percent
or 18 percent, I think it should be now. It really should be now.
And then we can get ourselves out of production tax credits, investment tax credits and other things as we get the incentive to scale.
It is more important that we do it now.
The CHAIRMAN. Thank you. I am with you.
Mr. Fulton.
Mr. FULTON. Yes. Yes, well, particularly I echo Michaels point
that it should be ambitious, and if it is going to stand alone it has
to have enforcement and penalty on it or else, again, you need this
whole structure underneath it of incentives. So you can do it in different formats.
The other point I would make is that at a technical level, a national REC market, renewable energy credit market, is probably
more efficient than a pure State-based one. So it has actually a

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65
technical side to it. When you go and talk to the guys that are actually trading these RECs, they actually like a national standard.
The CHAIRMAN. Thank you. And here is the perverse position
that we are in; the Edison Electrical Institute signed off on that
standard in that bill on June 26th, 2009. So that is where American public policy is right now, trapped over in the Senate, with a
minority of Senators coming from and representing the perspective
of oil and coal from Kentucky and Oklahoma, kind of denying the
rest of this country this revolution, while we were still funding in
this bill, by the way, $60 billion for carbon capture and sequestration, research development and deployment.
Sixty billion dollars in the bill, so that the older industries could
move along as well as part of this clean energy revolution. So it
wasnt as though it was just all one side, it was going to be a comprehensive all-of-the-above strategy.
So we are going to wrap up the hearing right here, and we are
going to ask each of you to give us the 1 minute you want the
American public to remember from your presentation as we go forward on this clean energy debate here in the United States.
We are going to go in reverse order of the original testimony so
that you can each give us your summary.
So we will begin with you, Mr. Fulton. Again, if you could move
over to that microphone, we would very much appreciate it.
Mr. FULTON. Again, we would say that creating transparency,
longevity, and certainty in policy structures is crucial to creating
a new clean and green energy sector which will stand the United
States in great stead in the long run. And in doing that, at the moment there is a lot of discussion about national renewable electricity standards, about extending the incentives coming out of the
stimulus package. And all of these should be looked at very carefully at the moment, because this is a critical moment.
The United States needs to get on the job in the next 5 years.
This is when the cost curves are falling. This is when the manufacturing and the industries are being created.
The CHAIRMAN. Thank you. Mr. Carbone.
Mr. CARBONE. Yes, thank you. Look, we are an early-stage company and we will require some support. We have very supportive
customers and investors. But support in the way of real, near-term,
cash-based incentives like a refundable 48(c) manufacturers tax
credit or cash grant in lieu of taxes for our customers or near-term
benefits that will support an early-stage company.
Long-term, renewable electricity standards is really something. It
is a market signal that will absolutely benefit us. We encourage
your bill, the Senate to get on and the President to get on with that
this year.
The CHAIRMAN. Thank you, Mr. Carbone.
Dr. Viswanathan.
Mr. VISWANATHAN. So my firm invests in innovation, and that
has been the hallmark of the United States for decades and it has
led to the creation of massive industries resulting in millions of
jobs. That spilled over into clean tech, which we are very excited
about.
Having said that, we risk losing that competitiveness based on
the commitment and resolve of a lot of the global players, particu-

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66
larly in Asia. To stem that tide, we absolutely need to have some
of the policies we discussed. And, in your words, Mr. Markey, I
would use all of the above.
The CHAIRMAN. Thank you.
Mr. Liebreich.
Mr. LIEBREICH. Sir, I would like to highlight, the world is undertaking this shift to a lower carbon energy future. This is not something that is debatable, this is something that is happening, maybe
in the earlier stages, but it is happening.
That shift will be enormously profound. It will echo not just
through the energy industry, but through the sorts of housing, the
sorts of transportation. All industries will be impacted by the shift
to lower carbon energy. And in so doing, it will create an enormous
wealth of new technologies, a wealth of new jobs, and a wealth of
new wealth.
And I think that the U.S. is at a pivotal point where it has to
decide whether it is going to be a price taker for the next century
on energy, or whether it is going to be a price giver, whether it is
going to be leading that revolution or accepting the technologies
from other players. That is what is at stake.
Then finally, I would also like to highlight the importance of
what is happening for investors. By investors I dont just mean
investment banks or asset management companies. I mean every
American who has a 401(k) or who is saving. And that is, that if
you see what is happening in the world in terms of the trends in
clean energy, then inevitably you conclude that it is riskier to invest in fossil fuels than it is to invest in clean energy. The perception still is the other way around, but the perception is incorrect.
The CHAIRMAN. Thank you, Mr. Liebreich.
Thank each of you for your very important testimony, because we
are at a critical juncture in this clean energy debate. For the last
several years, the opponents of dealing with climate change have
said, Well, what is China going to do? We shouldnt do anything
until China moves. Well, China is moving. China has targeted this
sector. China has a plan.
The United States needs a plan. When the United States has a
plan, the United States wins. If the United States does not have
a plan, we are going to lose. That chart will have China, Germany,
India, country after country, ahead of us in terms of capturing the
full economic benefits of this clean energy revolution. So we really
dont have a choice.
To use this analogy, that is, the telecommunications sector, the
United States Government had to invest in DARPANET. We had
to put up the money initially. When Al Gore was talking about the
Internet, we actually had to pass a bill here in Congress in 1991
to take DARPANET and to turn it into the Internet. That is what
he was talking about.
It was privatized, but it was a public sector investment to create
it, not only here but globally. It was a plan which the United
States had. And because we had a plan, and because we then
privatized it in 1991, we were able to capture the lions share of
the benefits, as long as we then in 1992, 1993, and 1996 passed the
accompanying legislation to make sure it was deployed here in the
United States more rapidly, more quickly, than in other parts of

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67
the world, because then the development of the ancillary ideas
would be here as well.
We need a similar plan here in the energy sector. The rest of the
world is moving. If America put a plan in place, which is what the
Waxman-Markey bill was, a green energy bank, a renewable electricity standard, a 50 percent improvement in the efficiency of all
new buildings by 2016, a dramatic increase in the appliance efficiency standards in our country, it would incentivize our own country to make the breakthroughs. Sixty billion dollars in carbon capture and sequestration for research, development and deployment.
We would be the leader. We would be exporting. We would be the
price maker, not the price taker. We would be telling the rest of
the world, here it is. If you want it, lets have a negotiation over
how we share it with you. Instead, we are now confronted with real
plans, some of them borderline legal, that have been put in place
in other countries, so that they are able to get the lions share.
So I agree with all of you. We need a national renewable electricity standard. We have to put on the books, on a permanent
basis, these incentivesthe tax, the loans, the other programsso
that over a period of time we create the industries. Then we can
pull away the incentives because they have reached grid parity.
Then they dont need the government anymore. They are off and
running and our private sector has been the winner.
So, in the same way that we deployed telephone service across
America, we deployed electricity service across the country, we invested in the Internet in the early years with government money,
you can then pull away. You dont have to do it any longer. Because those people who want to be millionaires and billionaires
move in, and they are going to move a lot faster than the government would ever move.
Whoever makes that breakthrough in photovoltaic will become
the wealthiest person on the planet. They will dwarf Bill Gates.
They will dwarf other billionaires. That is a lot of electricity for a
lot of people around the planet. It is a race to be the wealthiest
person on the planet.
We have to have a strategy so the names come from the United
States. That is our goal. Some of them are sitting at this table. And
that is who they want to be, the people who ultimately, from the
planning, from the financing, then make this stuff and get rich.
That is what it should be all about.
Right now, my goal, Henry Waxmans goal, Nancy Pelosis goal,
is to create a whole new generation of millionaires and billionaires
in our country. And what we are going to need is the venture capital, the banking industry, the technology sector, to get into this
fight. They have to get on the playing field. We cannot have Texas
oil refineries defining the fight. We need these other industries
that are the beneficiaries.
We need the future billionaires to get into this, the people who
believe in the technology sector, so that we have a level playing
field politically, because we are quite confident that our vision is
correct.
Let me just say again, it is not that we leave behind coal, that
we leave behind oil, because we make the investment in them as
well to ensure that they become a cleaner set of technologies as

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well. We need all of the above. That is what our plan has to be,
and then America will win, looking over its shoulder at number
two and three in the world. Thank you all so much for your participation today.
I have a report and a letter on clean energy investment prepared
by the accounting firm of Ernst & Young that I would like to put
into the record, without objection. And hearing no objection, it will
be in the record.
[The information follows:]

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112

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The CHAIRMAN. This hearing is adjourned. Thank you all so

much.
[Whereupon, at 12:30 p.m., the committee was adjourned.]

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