[Senate Hearing 110-37]
[From the U.S. Government Publishing Office]
S. Hrg. 110-37
PROPOSED BUDGET FOR FISCAL YEAR 2008 FOR THE DEPARTMENT OF ENERGY
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE PRESIDENT'S PROPOSED FY 2008 BUDGET FOR THE
DEPARTMENT OF ENERGY
__________
FEBRUARY 7, 2007
Printed for the use of the
Committee on Energy and Natural Resources
______
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon CRAIG THOMAS, Wyoming
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana RICHARD BURR, North Carolina
MARIA CANTWELL, Washington JIM DeMINT, South Carolina
KEN SALAZAR, Colorado BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
Jonathan Epstein, Professional Staff Member
Elizabeth Abrams, Republican Professional Staff Member
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 1
Bodman, Hon. Samuel, Secretary, Department of Energy............. 6
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 4
Murkowski, Hon. Lisa, U.S. Senator from Alaska................... 2
Sanders, Hon. Bernard, U.S. Senator from Vermont................. 1
Smith, Hon. Gordon H., U.S. Senator from Oregon.................. 3
APPENDIX
Responses to additional questions................................ 55
PROPOSED BUDGET FOR FISCAL YEAR 2008 FOR THE DEPARTMENT OF ENERGY
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WEDNESDAY, FEBRUARY 7, 2007
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:40 a.m., in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Why don't we go ahead and get started?
Thank you very much, Mr. Secretary, for being here, we
appreciate it. Let me compliment you and your staff for
bringing the Department's budget material to the Congress in a
timely fashion, an organized fashion. We appreciate that.
Today's hearing will examine the fiscal year 2008
Department of Energy budget proposal. There are obviously many
good elements in there, such as the strong commitment to the
Office of Science, to keep our Nation globally competitive,
commitment to bio-fuels and solar energy research in order to
diversify our energy portfolio. There are some proposals that I
think we need to spend additional time on, here in this
committee, to understand them. One, of course, I've indicated
before, is the Global Nuclear Energy Partnership, and I may
have a question on funding there.
The administration has also proposed doubling the capacity
of the Strategic Petroleum Reserve; I've got some concerns
about the priority of that at this point, and obviously there
are some issues related to the implementation of the Energy
Bill that we passed in 2005, which we're anxious to ask some
questions on, as well.
But let me defer to Senator Domenici, and any comments he
has, and then we'll hear your statement, Mr. Secretary.
[The prepared statements of Senators Sanders, Murkowski,
and Smith follow:]
Prepared Statement of Hon. Bernard Sanders, U.S. Senator
From Vermont
Chairman Bingaman, Ranking Member Domenici, submission of any
Administration's budget to Congress represents the beginning of one of
our most fundamental responsibilities--determining how the taxpayer
dollars will be spent. A budget speaks to the priorities of our country
and fortunately, we have the opportunity--really the responsibility--to
put forward a budget that will better reflect the needs of the American
public than does the budget our President just submitted.
We all know that the President's budget puts forward his policy
wish-list, all cloaked in budget gimmicks, and this year there were
some real doozies. When it comes to energy policy, my favorite is that
the President still has us opening up the Arctic National Wildlife
Refuge for oil and gas drilling. If he doesn't know to focus on other
issues, someone should fill him in.
It is time to truly commit to funding those energy programs that
will help us transition to a green economy, for the threat of global
warming demands nothing less. While there was some positive movement in
this regard in the budget, it was not nearly enough. I appreciate the
Committee holding today's hearing, which will help us to better
understand the Administration's proposal. Additionally, I look forward
to working with my colleagues over the coming months to make
significant improvements to the Department of Energy's budget for 2008.
______
Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska
Mr. Secretary let me start out by saying there is much in this
budget that I support and I thank you for many of the spending choices
you have made. I know this is a tight budget year and you had to make
difficult choices given the narrow latitude that OMB undoubtedly gave
you in overall funding. But I believe the Department is ignoring some
exciting energy research and development possibilities in both the
renewables and fossil fuel areas.
Just last month a Department study showed that geothermal energy
from granite could produce 10% of the nation's energy needs by 2050.
Another study recently identified 150,000 megawatts of near-term
geothermal energy in the West that is uptapped. In my home state of
Alaska, the Department last year had a major success in helping fund
the first low-temperature geothermal project at Chena Hot Spring. We
thank you for the tiny $1.5 million grant that made that success
possible. But there is no geothermal money to follow up on that success
by scaling up the low-temperature compressors to larger power outputs,
or perhaps to use the same technology to tap biomass potential
(although there is an increase in the biomass budget).
There is no money for small hydro development, and none for ocean
energy, although there are exciting examples of new wave, tidal and
current technology on the drawingboards, just needing federal
demonstration grant assistance to prove its commercial applicability.
Look at the East River project in New York. Just last month there was a
report that ocean energy has the conservative potential to supply 252
million megawatts of power--6.5% of the nation's total energy needs--if
it can just be helped over the hump to economic commercialization.
In small hydroelectric, including low-head hydro, there is a
tremendous possibility for increased renewable energy production, if
there were additional federal assistance, especially an expansion of
the Production Tax Credit to cover more forms of small hydroelectric
than just small irrigation hydro projects.
Even though the Energy Policy Act of 2005 that I worked on with
Sen. Akaka authorized continued funding for methane gas hydrates
research--supposedly $30 million in FY '08--there is no funding in your
budget for it. Methane hydrate work was not just a ``congressional add
on'' but was clearly supported by the Department as an existing
research subject just two years ago--this nation probably having enough
hydrates to fund its energy needs for 1,000 years, if the technical and
environmental challenges can be overcome.
I wonder whether there is still funding in the Office of Fossil
Fuels for heavy oil research. Alaska knows we have vast heavy, viscous
oil deposits at Prudhoe Bay, but even at today's high prices we could
use some additional federal research to help perfect better find ways
to produce that oil economically.
You are proposing an increase in funding for carbon sequestration
demonstration projects, which I support. But in the Energy Policy Act
of '05 we specifically listed the Williston Basin in the Dakotas and
Cook Inlet in Alaska as two places we requested you do demonstration
projects, to show the feasibility of carbon sequestration as part of an
enhanced oil recovery project in certain geologic types of oil fields.
That would have both taken carbon out of the atmosphere and helped
increase oil recovery, perhaps to the tune of 670 million barrels of
oil in Cook Inlet alone, according to one of the Department's own
studies. But when you issued the first grant you ignored congressional
intent and awarded elsewhere. That I can live with, but it does make me
wonder about the project rating process followed at the National Energy
Technology Laboratory since the Alaska project was considered very
sound by industry, itself.
And in EPACT '05 we included Title V, Indian energy assistance to
help Natives and tribes develop energy resources on their lands. You
still have shown no interest in even starting to fund that section of
the bill.
And in a purely parochial matter, the Department over the past six
years has operated an Alaska Energy Office. It has never received more
than $7 million annually, but it has worked on some exciting projects:
how to supply rural villages with innovative power in places where
diesel-generated power costs up to 70 cents per kilowatt. How to
harness coal while sequestering carbon and enhancing oil recovery from
oil fields. How to turn coal into nitrogen and other elements through
gasification. How to get heavy oil out of the ground. How to develop
gas hydrates without unlocking vast amounts of greenhouse gases. How,
most recently, to get power to the citizens of Southcentral Alaska now
that existing supplies of natural gas are becoming more scarce and
expensive. These are not just important questions for Alaska, but for
the nation's energy future. I do wish the department was able to
support funding for the office since, even facing bureaucratic
struggles, it has done exceptional work during its short life.
Energy is the lifeblood of my state. Energy production is our
leading economic engine and also one of our leading costs. Alaskans on
average pay 50% more for electricity than the national average. I would
hope the Department would continue both renewable, alternative and
fossil fuel research that could help to end that competitive
disadvantage.
______
Prepared Statement of Hon. Gordon H. Smith, U.S. Senator From Oregon
Mr. Chairman, I appreciate your convening this hearing on the
Department of Energy's fiscal year 2008 budget request. I also want to
welcome Secretary Bodman here today.
Unfortunately, the members from the Pacific Northwest are once
again confronting the latest in a string of proposals from the Office
of Management and Budget that would raise electricity rates in the
Pacific Northwest. This latest proposal, which mandates that BPA's
secondary revenues in excess of $500 million annually would be used to
prepay debt, is nothing more than a rate increase in disguise.
Despite language in the budget that talks about engaging the region
in a dialogue on this proposal, it is clear that OMB expects BPA to
implement this prepayment arrangement, and has built revenues into the
budget assumptions from this proposal beginning in fiscal year 2008.
While the numbers are difficult to discern in the budget documents, it
is my understanding that OMB expects over $646 million in additional
Treasury receipts over five years as a result of this prepayment
requirement.
I remain opposed to this requirement to pre-pay debt, which is bad
public policy for numerous reasons. Northwest residents are still
paying for the west coast energy crisis of 2000-2001. BPA's rates today
are already about 45 percent higher than they were in 2000, as a result
of huge price spikes during the crisis.
While the economy of the Northwest has rebounded from the recession
of 2000-2001, the unemployment rate in Oregon remains above the
national average. Even with these regional economic challenges, BPA has
made its treasury payments, and has actually prepaid over $1.8 billion
in Treasury debt over the last six years. The difference is that rates
were not raised to achieve these prepayments arbitrarily.
I have been working with my colleagues for several years now to
reduce BPA's operating costs, and to bring rate relief to BPA's
customers. This proposal would negate all of those efforts to bring
down retail rates and retain energy-intensive industries in the
Northwest. A preliminary analysis by BPA customers indicates that this
will result in rate increases between 5.5 and 11 percent.
This proposal, which OMB claims can be done administratively, is
inconsistent with congressional directives for the treatment of
revenues and the rate setting requirements in BPA's governing statutes.
Under the Transmission System Act of 1974, the BPA Administrator is to
set rates at the lowest possible rates to consumers consistent with
sound business principles. Also, rates are to be set in the aggregate
with all other revenues of the Administrator to pay when due the bonds
issued by the federal Treasury.
Earmarking a portion of BPA's revenues sets a bad precedent, and
fails to take into consideration ongoing uncertainties surrounding
river operations for fish, the appropriate level of carry-over
reserves, or BPA's ability to meet its scheduled Treasury payments.
This year, the proposal is for revenues from surplus sales over $500
million. What's to keep that number from being lowered in future
budgets?
As a self-financing agency, BPA must be able to consider all its
revenues when setting rates and establishing its Treasury repayment
probability. It must also have the flexibility to respond to operating
mandates and market conditions over time. I am concerned about the
impact of this proposal on BPA's reserves. During the energy crisis,
BPA used over $600 million in reserves to buy power to meet its
contractual obligations.
Finally, from a nationwide perspective, it is my view that the
Administration should be attempting to lower electricity and other
energy costs across the nation, not to raise them. As U.S. companies
struggle to compete in a global economy, they are already hampered by
rising electricity prices and natural gas prices that are the highest
in the industrialized world.
This proposal sends a terrible message to energy-intensive
industries. In essence, the federal government would rather wring more
money out of ratepayers for deficit reduction than pursue lower energy
rates that would help keep U.S. businesses competitive.
I do want to express my appreciation to the Administration for its
decision not to continue pursuing legislation that would require third-
party financing arrangements to be counted against BPA's statutory debt
ceiling. That will help ensure that BPA can use these financing
arrangements to maximize its statutory debt and to provide for needed
transmission upgrades.
Another aspect of the Department's proposed budget that is of great
concern to me is the lack of any funding for wave and tidal energy
technologies under the renewable energy budget. I support the
technologies that are scheduled to receive funding, including biomass,
solar, wind, geothermal and hydropower. However, I believe the
Department is ignoring the growing interest in wave energy,
particularly on the contiguous West Coast, Alaska and Hawaii.
These innovative technologies are renewable, non-emitting resources
that can help meet our nation's growing demand for electricity. In
Oregon, it would be possible to produce and transmit over two hundred
megawatts of wave energy without any upgrades to the existing
transmission system on the coast. Already a number of preliminary
permits have been filed at the Federal Energy Regulatory Commission for
wave energy facilities off the Oregon coast.
These facilities would be virtually invisible from shore, and could
provide predictable generation that could be easily integrated with
other electricity resources. In addition, according to a January 2005
report issued by the Electric Power Research Institute, ``with proper
siting, converting ocean wave energy to electricity is believed to be
one of the most environmentally benign ways to generate electricity.''
As with many emerging renewable technologies, wave and tidal energy
are more costly than traditional generation using fossil fuels. Yet,
for our environment and our energy security, we must provide incentives
that will encourage the development and commercialization of these
resources.
I look forward to hearing testimony, Mr. Secretary.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW
MEXICO
Senator Domenici. Senator Bingaman, Mr. Chairman, first I
apologize for being late and coming in the back door. I thought
I would come in and catch the Secretary in the back, since you
and I have been trying to get him to change a few things, I
thought it might be easier to do it that way, but he didn't
budge. Right, slipping up on his back side, but it didn't work.
Again, Mr. Secretary, I want to thank you for coming to the
committee. I'm very pleased that the 2008 budget continues to
focus on energy security and our investment in science and
innovation. Obviously, there are some holes, as there will be,
and as we work through the year, we'll try to fill some and
you'll try to think that you've done it better, but if we
continue to work together, we'll come out with a pretty good
year, I think.
This budget also increases funding for many of the programs
in the Energy Policy Act of 2005. I'm just sure that
implementing the environmental and the Energy Policy Act is the
most significant near-term step that we can take in
strengthening our Nation's energy security. Every time we turn
around, there is somebody telling us that they're glad we did
something in that Energy Act that is moving us in the right
direction.
This work is essential, and I'm committed to working with
you to provide the resources necessary to fully implement that
Act.
I do, however, have a major concern with this budget and
its impact on the National Laboratories in our home State. I'm
troubled by the reduction in funding for the NNSA weapons
program, and all the NNSA labs and overall weapons funding will
go down at Los Alamos, by about 6 percent, and Sandia by about
8. Those numbers are troubling to me, because as you know, I've
fought to integrate the Nation's weapons labs and science
infrastructure into a more cohesive research unit. I hope
you'll work with us to advance our capabilities in this area,
because I believe that we can do better than that, under the
budget process available to us.
I would like to move on to discuss the budget proposal on
loan guarantees authorized in title XVII of the Energy Policy
Act. I'm pleased that this budget allows for $9 billion in loan
guarantees for clean energy and innovative technologies. This
is a step in the right direction, but Mr. Secretary, I'm
convinced that a much bigger step is needed to make a real
difference in the development of clean energy technologies.
When Congress created this loan guarantee program in the
EPAct of 2005, we envisioned a significantly more ambitious
scope of loan guarantees. This program provides incentives for
clean energy projects enumerated in section 1703 that are
critical to the fight against pollution, or global emissions of
greenhouse gases. Implementation of this program at the scale
envisioned in the 2005 bill could be a significant step toward
addressing the challenge of global climate change, with little
or no cost to the Federal Treasury, and I think you know that.
Let me now turn to one other area of tremendous potential,
in addressing climate change. I want to commend you for
considering investment, and the considerable amount you have
put into nuclear energy. I believe that these nuclear power
initiatives hold great promise for our efforts to reduce
greenhouse gas emissions.
Our nuclear energy, science and technologies is increased
in this budget by over 58 percent, to $875 million over the
2006 level. Nuclear energy research and development programs
have increased by 114 percent over the fiscal year 2007 level,
to $568 million. Nuclear power 2010 has increased 75 percent
from fiscal year 2006; this program will complete the two early
site permits. I don't think we know very much about the early
site permitting process, but it is a godsend if it works, and
I'm very glad you put money in, in case it works.
The program will complete two early site permits, Senator
McClure, you've been talking about that for a long time, early
site permits, Senator McClure who is not here today.
Senator Craig. I'm honored.
Senator Domenici. You're honored?
Senator Craig. I'm honored to be called Senator McClure.
Senator Domenici. Excuse me, Senator McClure, I have you on
my mind. If he only knew why.
As I was saying, the program will complete two early site
permits and two generic combined construction and operating
license demonstrations for new nuclear power plants.
Finally, the budget provides for the implementation of a
new program authorized in EPAct 2005 to offer risk insurance
for the construction of six nuclear power plants.
Each of these initiatives is important to the construction
of 32 nuclear power plants that have been proposed.
Now, I want to give you some numbers, and then I will be
quiet. But I've been talking about nuclear power, and I want to
tell everyone what they really mean in terms of climate change.
If all of these plants are built, they will displace 270
million metric tons of CO2 each year. When those
plants have been operating for 5 years, it is estimated that
they will have totally displaced the amount of CO2
produced by the 230 million cars on the roadways of America.
Can we talk about nuclear power as a large part of the solution
to climate change without talking about a solution to nuclear
waste? Obviously it does not make sense to attempt a serious
discussion of addressing greenhouse emissions without moving
toward a solution of nuclear waste.
I wish you well, and hope we can move with some solutions
in that area. I ask that the remainder of my remarks be made a
part of the record. Thank you very much for your cooperation
and thank you, Mr. Chairman.
The Chairman. Thank you very much.
Secretary Bodman, why don't you go right ahead with your
statement, and then we'll have some questions.
STATEMENT OF HON. SAMUEL BODMAN, SECRETARY, DEPARTMENT OF
ENERGY
Secretary Bodman. Thank you. I have a brief statement, and
then a formal statement that I would like to be included as a
part of the record, sir.
The Chairman. We'll include your full statement in the
record, go ahead with any opening statements you'd like.
Secretary Bodman. Let me begin by noting the very good
relationship, Mr. Chairman, that I've enjoyed having with you,
and with the ranking member over the last couple of years since
I took on this job. I hope to strengthen that good
relationship, and build on it, so that all of us at DOE can
work with this committee, in order to improve our Nation's
energy security.
As you heard in the State of the Union address, President
Bush announced several new energy initiatives that really will
shape our Department's work over the next couple of years.
The President has announced the goal of reducing American
gasoline consumption by 20 percent over the next 10 years.
First, by requiring that 35 billion gallons of renewable,
alternative fuels be included, and replace a like amount of
gasoline over the next 10 years. That would be a 15 percent
reduction. And second, by reforming and modernizing the CAFE
standards, or the fuel efficiency standards, for automobiles
and extending the same rules that applied to light trucks and
SUVs, to automobiles. That would account for the balance, or
another 5 percent.
Together, we believe that these measures will help reduce
our dependence on unstable regimes, it'll also check the growth
of carbon emissions. In addition, the President proposed
doubling the size of the Strategic Petroleum Reserve, as you've
already noted; we think that that is important to help protect
our Nation from the vagaries of world oil markets.
We look forward to working with the Congress, and other
parts of the administration, other departments, to accomplish
these important goals.
Now, let me just take a moment to mention a few of the
highlights in our $24.3 billion budget request of Congress. To
maintain America's economic prosperity by encouraging
scientific innovation, the President last year, proposed the
American Competitiveness Initiative. I know that is something
that really came out of work that you, Mr. Chairman, did along
with Senator Alexander, who used to be on this committee, and I
take it has moved on to other assignments.
Our budget proposes $4.4 billion--an increase of about $300
million over the 2007 request--to fund basic research in the
physical sciences, and to support science and technology
education programs. Something that is, frankly, close to my
heart, and I hope to the committee's.
We're also requesting $2.7 billion to accelerate the
Advanced Energy Initiative, which was also announced last year.
Through this initiative, we will continue to develop the most
promising clean energy technologies, including clean coal,
biomass, solar energy, wind power, hydrogen research and new
technologies, as has been mentioned in nuclear energy.
The President and I believe that nuclear power must play a
significant role in the future energy needs, particularly the
future electricity needs of our Nation. Our budget requests a
total $400 million, including $10 million from the Defense
Nuclear Nonproliferation part of the NNSA for the President's
Global Nuclear Energy Partnership. That is an international
effort to expand the availability of safe, proliferation-
resistant, nuclear power.
To make the expansion of nuclear energy possible, we must
address the matter of nuclear waste. The budget requests $495
million for the continued development of a geologic waste
depository at Yucca Mountain, Nevada.
For the NNSA, the budget proposes $6.5 billion for weapons
activities, which includes funding our complex 2030 Program.
The idea of that is to create a smaller, more efficient weapons
complex that is better able to respond to changing global
security challenges. Also, within the NNSA, we request $1.7
billion to support our Defense Nuclear Nonproliferation
Activities.
One of the most important responsibilities concerns our
commitment to public health and safety. Our fiscal year 2008
budget proposes $5.7 billion to clean up hazardous, radioactive
waste left over from the Manhattan Project and the cold war.
I'm proud to note that we have completed the cleanup of 81
sites through the end of fiscal 2006, as well as three sites in
Ohio--Fernald, Columbus, and Ashtabula--which have been
completed during this fiscal year. We're quite pleased and
proud of that.
Mr. Chairman, there are many other productive and promising
initiatives underway at our Department. I look forward to
discussing them with you during the question and answer
session. Thank you.
[The prepared statement of Secretary Bodman follows:]
Prepared Statement of Hon. Samuel W. Bodman, Secretary,
Department of Energy
Chairman Bingaman, Ranking Member Domenici, and members of the
Committee, I am pleased to be with you this morning to present the
President's FY 2008 budget proposal for the Department of Energy.
Before I discuss the details of our budget proposal, I would like
to briefly mention the President's energy initiatives announced during
the State of the Union. As you know, President Bush asked Congress and
America's scientists, farmers, industry leaders and entrepreneurs to
join him in pursuing the goal of reducing U.S. gasoline usage by 20
percent in the next ten years. We have named this our ``Twenty in Ten''
plan and I urge your support for this ambitious plan. For too long, our
nation has been dependent on oil. America's dependence leaves us more
vulnerable to hostile regimes, and to terrorists who could cause huge
disruptions of oil shipments, raise the price of oil, and do great harm
to our economy.
America will reach the President's ``Twenty in Ten'' goal by
increasing the supply of renewable and alternative fuels by setting a
mandatory fuels standard to require 35 billion gallons of renewable and
alternative fuels in 2017; nearly five times the 2012 target now in
law. In 2017, this will displace 15 percent of projected annual
gasoline use. We have also proposed to reform and modernize Corporate
Average Fuel Economy (CAFE) standards for cars and extending the
current light truck rule. In 2017, this will reduce projected annual
gasoline use by up to 8.5 billion gallons, a further 5 percent
reduction that, in combination with increasing the supply of renewable
and alternative fuels, will bring the total reduction in projected
annual gasoline use to 20 percent.
This plan will also strengthen America's energy security by
stepping up domestic oil production in environmentally sensitive ways,
and by doubling the current capacity of the Strategic Petroleum Reserve
(SPR) to 1.5 billion barrels by 2027.
Coupled with the Advanced Energy Initiative (AEI) and the American
Competitiveness Initiative (ACI), which were launched a year ago, these
proposals offer a strong plan to strengthen America's energy security,
and I encourage members of the Committee to join us in pursuing these
proposals.
HIGHLIGHTS OF THE FY 2008 DEPARTMENT OF ENERGY BUDGET
The strength and prosperity of America's economy is built on the
security of our nation and the reliability of energy sources. Since
2001, the Administration has invested $158 billion through the
Department of Energy (DOE) to help drive America's economic growth,
provide for our national security, and address the energy challenges
that face our nation. The Department of Energy's fiscal year (FY) 2008
budget request of $24.3 billion stays on course to address the growing
demand for affordable, clean and reliable energy; preserve our national
security; and enable scientific breakthroughs that will have
significant impacts on our quality of life and the health of the
American people. The FY 2008 budget was developed to meet those goals.
With a total investment of $24.3 billion in FY 2008, the Department
will seek to advance the President's American Competitiveness
Initiative aimed at ensuring U.S. technological competitiveness and
economic security, and implement the Advanced Energy Initiative which
seeks to accelerate the research, development and deployment of clean
energy technologies to diversify our nation's energy supply. These
efforts, combined with investments to meet our commitment to protect
the United States as stewards of our nation's nuclear weapons stockpile
and to environmental cleanup, will foster continued economic growth and
promote a sustainable energy future.
This budget, while focused on delivering results to meet the
nation's priorities, also serves as the roadmap for the future of
America's energy security. It is a budget poised to support the
President's pro-growth economic policies and spending restraints. In
addition, the FY 2008 budget request was shaped to reflect the
Department's five strategic themes consistent with the President's
Management Agenda to improve performance and accountability across the
Department of Energy. They are:
Promoting America's energy security through reliable, clean,
and affordable energy;
Strengthening U.S. scientific discovery, economic
competitiveness, and improving quality of life through
innovations;
Ensuring America's nuclear security;
Protecting the environment by providing a responsible
resolution to the environmental legacy of nuclear weapons; and
Enabling the Mission through sound management.
To highlight, the FY 2008 budget for the Department of Energy
emphasizes investments that will:
Advance the American Competitiveness Initiative.--Last year
President Bush launched the American Competitiveness
Initiative--(ACI)--to encourage innovation throughout the
economy and to give America's children a firm grounding in math
and science. The FY 2008 budget investment of $4.4 billion from
the Department, an increase of approximately $300 million from
the FY 2007 budget request, increases basic research in the
physical sciences, builds the large-scale scientific facilities
essential for U.S. world leadership, supports thousands of
scientists and students--our current and future scientific and
technical workforce--and encourages entrepreneurship and
technology discovery. Scientific and technological discovery
and innovation are the major engines of increasing
productivity--indispensable to ensuring growth, job creation,
and rising incomes for American families in the technologically
driven twenty-first century. The investment is essential if the
United States is to maintain its world-class, scientific
leadership and global competitiveness.
Accelerate the Advanced Energy Initiative.--At a request of
$2.7 billion, $557 million above the FY 2007 budget request of
$2.1 billion, the President's Advanced Energy Initiative (AEI)
will continue to support clean energy technology breakthroughs
that will help improve our energy security through
diversification and could help to reduce our dependence on
foreign oil. The FY 2008 budget for AEI includes funding for
the advancement of renewable energy technologies such as
biomass, wind, and solar energy, as well as hydrogen research
and development. Also, AEI's diverse energy portfolio includes
accelerating the development of clean coal technology,
including building a near-zero atmospheric emissions coal plant
known as FutureGen. AEI also includes funding for nuclear
energy technologies, including the Global Nuclear Energy
Partnership, and basic science research that supports
developments in many of the aforementioned technologies as well
as fusion energy research.
Expand the Resurgence of Nuclear Energy.--Nuclear energy is
an important source of energy in the United States and is a key
component of the AEI portfolio. Nuclear energy is clean, safe,
and reliable, and already supplies about 20 percent of the
nation's electricity. Recognizing the potential of nuclear
energy, the President announced in February 2006 the Global
Nuclear Energy Partnership (GNEP). GNEP seeks to bring about
significant, wide-scale use of nuclear energy through the
development of better, more efficient and proliferation-
resistant nuclear fuel cycles while reducing the volume of
nuclear waste requiring ultimate disposal. GNEP will also help
reduce the threat of nuclear proliferation around the world. In
addition, it helps address the Department's long-term nuclear
waste disposal challenges. A total of $405 million ($10 million
in Defense Nuclear Nonproliferation) is requested in this
budget for GNEP, which is an increase of $155.0 million above
the FY 2007 budget request of $250 million.
We can not forget that expansion of nuclear power is only
possible if we continue to develop a responsible path for
disposing of spent nuclear fuel. Therefore, $494.5 million is
requested in FY 2008 for the continued development of a
geologic waste repository at Yucca Mountain, Nevada. Not later
than June 30, 2008, the Department intends to complete and
submit a License Application to the Nuclear Regulatory
Commission for authorization to construct the repository. GNEP
has important implications for the permanent repository at
Yucca Mountain. The increased efficiency in recycling spent
nuclear fuel would ensure that even with expanded use of
nuclear energy, the U.S. would need only one geologic
repository. GNEP is consistent with the Yucca Mountain Project
and extends its benefits beyond the twenty-first century.
Transform Our Nuclear Weapons Complex.--The FY 2008 budget
reconfirms the Department of Energy's steadfast commitment to
the national security interests of the United States through
stewardship of a reliable and responsive nuclear weapons
stockpile and by advancing the goals of global non-
proliferation. Through the National Nuclear Security
Administration (NNSA), the Department directs $6.5 billion in
this request for Weapons Activities, a $103 million increase
from the FY 2007 request, to meet the existing requirements for
stewardship of the Nation's nuclear weapon stockpile,
technologies and facilities, as well as to continue to
revitalize the nuclear weapons complex with the goal of a much
smaller size by 2030. This effort, called ``Complex 2030,'' is
structured to achieve President Bush's vision to create a more
efficient Nuclear Weapons Complex of the future that is able to
respond to changing national and global security challenges.
Reduce the Risk of Weapons of Mass Destruction Worldwide.--
The Department has provided $1.7 billion in this request for
Defense Nuclear Nonproliferation, for a comprehensive set of
programs to meet our commitment to detect, prevent, and reverse
the proliferation of Weapons of Mass Destruction (WMD) in close
cooperation with our partners around the world. This program is
an Administration priority and while the funding amount shows a
3 percent decrease, this reflects accelerated completions in FY
2007. Further, the request provides significant out-year growth
to fulfill our international agreements and accelerate our work
to reduce the risk of WMD threats. Among many advances, the FY
2008 budget for example will further our work in the Megaports
program by initiating the installation of radiation detection
equipment at the Port of Hong Kong.
Meet Our Commitments to Public Health and Safety and the
Environment.--During my first days at the Department of Energy,
I announced safety as my top priority and the number one
operating principle of the Department. To implement this
vision, we created a new Office of Health, Safety and Security.
As I said at the time, ``As Secretary of Energy, ensuring the
safety of workers across the DOE complex is my top priority and
this new office will go a long way in strengthening our safety
and security organization. We must be world class not only in
how we carry out our mission, but in the safe, secure, and
environmentally responsible way in which we manage operations
at our facilities across the country.'' The organization's FY
2008 budget request of $428 million, builds on a number of
actions the Department has taken over the past two years to
increase safety of DOE workers.
The FY 2008 budget includes $5.7 billion for the Environmental
Management program to protect public health and safety by
cleaning up hazardous, radioactive legacy waste left over from
the Manhattan Project and the Cold War. Past investments have
resulted in the completed clean up of 81 sites through the end
of FY 2006, including Rocky Flats, Colorado, and a total of 86
sites by the end of FY 2007, including the Fernald site in
Ohio, which was completed in January 2007. This budget allows
the program to continue to make progress towards cleaning up
and closing sites and focuses on activities with the greatest
risk reduction.
As the Department continues to make progress in completing
clean up, the FY 2008 budget request of $194 million for Legacy
Management supports the Department's long-term stewardship
responsibilities and payment of pensions and benefits for our
former contractor workers after site closure.
The GNEP strategy complements the Department's Civilian
Radioactive Waste Management program, which is working to
address the problems of long-term nuclear waste disposal in an
environmentally sound manner. The program office is working to
construct a permanent repository for spent nuclear fuel at
Yucca Mountain. Funding of $494.5 million is proposed in FY
2008 to support the development of a repository that will
protect public health and safety in ways that are both
environmentally and economically viable. The funding also
supports the submission, not later than June 30, 2008, of a
comprehensive License Application to the Nuclear Regulatory
Commission for authorization to construct the repository.
In light of the increased number of sophisticated cyber attacks
directed at all facets of our communities, from military to
civilian to private users, the Department is taking significant
steps to secure the virtual pathways and mitigate the threat
from cyber intrusions. Implementing these steps will be
seamless and will not interrupt the availability of information
systems resources while preserving the confidentiality and
integrity of the information and their contents. A budget
request of $170 million in FY 2008 supports the Department's
efforts to defend against emerging, complex cyber attacks.
Through these efforts, the Department will be in a better
position to effectively manage and monitor cyber risk across
the complex. In FY 2008, DOE will increase support on a
Department-wide basis to deploy new cyber security tools and
cyber security management activities to detect, analyze, and
reduce the threat across the complex.
PROMOTING AMERICA'S ENERGY SECURITY THROUGH RELIABLE, CLEAN, AND
AFFORDABLE ENERGY
The FY 2008 budget request addressing energy and environmental
security is an essential component of the Department's strategic goals.
This priority is reflected in the increase of $506 million or 20
percent of the Department's energy programs compared to the FY 2007
budget request. These investments in research, development and
deployment could strengthen America's energy security, environmental
quality, and economic vitality through public-private partnerships that
expand the use of cost-effective energy efficient technologies; enable
and accelerate market adoption of clean, reliable and affordable energy
technologies; and support the implementation of the President's
National Energy Policy. Additionally, the energy programs at DOE are
working with the basic research and scientific community to focus on
development of technology components that could enable and catalyze the
rapid development, commercialization and deployment of next generation
energy technologies.
This budget includes President Bush's Advanced Energy Initiative
(AEI) which aims to reduce our dependence on foreign sources of oil and
transforming our national energy economy by promoting development of
cleaner sources of electricity production. For too long, our nation has
been dependent on oil. America's dependence leaves us more vulnerable
to disruptions to domestic production like hurricanes, to hostile
regimes, and to terrorists--who could cause huge disruptions of oil
shipments, raise the price of oil, and do great harm to our economy. In
concert with the President's Twenty In Ten initiative to reduce U.S.
gasoline usage by 20 percent in the next ten years, or by 2017, a total
of $2.7 billion is requested in FY 2008 to support the AEI. These funds
support a diverse portfolio of energy research and development (R&D)
and deployment programs designed to help meet the energy challenges of
the 21st century. Highlights of the request include the following
components of the President's AEI:
The President's Biofuels Initiative.--The President's goal
to make cellulosic ethanol cost-competitive by 2012 is the
focus of the biomass program. Biomass is the key renewable
resource supported by the Department because it is a promising
renewable option for producing liquid transportation fuels in
the near term, thereby reducing our dependence on imported oil.
In FY 2008, the Department is investing $179 million to support
the goals of the initiative.
The President's Hydrogen Fuel Initiative.--This budget
request includes $309 million (an increase of $19.5 million
above the FY 2007 request) for the President's Hydrogen Fuel
Initiative and completes the President's commitment of $1.2
billion over five years for this initiative. Increased funding
is proposed to expand research in several areas, including:
hydrogen production from renewables; materials for hydrogen
storage; fuel cell stack components; and a new R&D effort on
cost-effective manufacturing technologies to help industry
build a competitive, domestic hydrogen and fuel cell supplier
capability.
Vehicles Technologies and FreedomCAR.--This year's request
emphasizes plug-in hybrid vehicle component technologies by
increasing the requested research support to $81 million. These
technologies offer the potential to make significant additional
improvements in petroleum reduction beyond that achievable with
standard hybrid configurations. By utilizing energy drawn from
the nation's electricity grid at off-peak times to charge high
energy batteries, these technologies will be able to operate in
an electric vehicle mode for expanded distances, potentially
meeting most drivers' needs for commuting and short distance
driving.
The President's Solar America Initiative (SAI).--Launched in
FY 2007, SAI is designed to achieve cost competitiveness for
photovoltaic (PV) solar electricity by 2015. With a request of
$148 million in FY 2008, SAI seeks to achieve its mission
through public-private partnerships with industry,
universities, national laboratories, states, and/or other
government entities.
The FY 2008 budget request also supports renewable energy and
energy efficiency R&D that could help reduce the overall demand for
natural gas and lower emissions in the electricity sector. The FY 2008
request for the Wind Energy program includes $40 million to continue
wind energy research to reduce costs and overcome barriers to large-
scale use of wind power. The FY 2008 budget also includes $19 million
to continue the accelerated development of Solid State Lighting
technologies that have the potential to reduce commercial building
lighting electricity consumption by 50 percent and could revolutionize
the energy efficiency, appearance, visual comfort, and quality of
lighting.
Our energy portfolio also recognizes the abundance of coal as a
domestic energy resource and remains committed to research and
development to promote its clean and efficient use. Coal in the U.S.
accounts for 25 percent of the world's coal reserves. The foundation of
the Department's clean coal research program is the FutureGen project,
which will establish the capability and feasibility of co-producing
electricity and hydrogen from coal with near-zero atmospheric
emissions. The Administration remains strongly committed to FutureGen
and is requesting $108 million in FY 2008, consistent with the project
plan to keep the project on schedule for start-up in 2012. An
additional $246 million is requested within the Coal program to support
research and development on technologies needed to realize the concept.
Funding for the Coal program will be partially derived from
transferring $166 million in prior year balances from the Clean Coal
Technology appropriation to the Fossil Energy Research and Development
appropriation. These prior year balances are no longer needed for
active Clean Coal Technology projects and will be used to support
FutureGen ($108 million) and the Clean Coal Power Initiative ($58
million). Better utilization of these fund balances to support
FutureGen and related technologies will generate real benefits for
America's energy security and environmental quality. Using fund
balances and new appropriations, in 2008 the Clean Coal Power
Initiative will issue a solicitation for demonstration of technologies
focusing on carbon sequestration.
As part of the greenhouse gas mitigation strategy, the Department
continues to develop low cost carbon sequestration technology for both
new and existing coal plants. To that end, the Department includes $79
million in FY 2008 for sequestration research and development,
including initiating work on four large-scale sequestration field
tests, each of which will inject about one million tons per year of
carbon dioxide. The carbon sequestration program, together with
FutureGen and other supporting research, will assure the timely
development of this technology that will be capable of eliminating 90
percent of carbon emissions from new coal fired plants.
Consistent with the FY 2006 and FY 2007 budget requests, the FY
2008 budget request continues to shift resources away from oil and gas
research and development programs, which have sufficient market
incentives for private industry support, to other energy priorities.
The decision reflected strategic consideration by assessing the
program's technical effectiveness and comparing it to other programs
which have achieved more clearly demonstrated and substantial benefits.
Federal staff, paid from the program direction account, will work
toward an orderly termination of the program in FY 2008.
The Energy Policy Act of 2005 established a new mandatory oil and
gas research and development (R&D) program, called the Ultra-Deep and
Unconventional Natural Gas and Other Petroleum Research program, that
is funded from federal revenues from oil and gas leases beginning in FY
2007. These R&D activities are more appropriate for the private-sector
oil and gas industry to perform. Therefore the FY 2008 budget proposes
to repeal the program through a separate legislative proposal.
To further assure against oil supply disruptions that could harm
our economy, this budget also proposes $168 million to begin expanding
the Strategic Petroleum Reserve to an ultimate capacity of 1.5 billion
barrels by 2027 as announced by President Bush in his State of the
Union address. DOE will begin filling the Reserve to its current
capacity of 727 MB by immediately purchasing oil for the Reserve in FY
2007, and also placing the Department of the Interior's federal royalty
in-kind oil into the Reserve in FY 2007 and FY 2008. The FY 2008 Budget
requests funds to expand the capacity of the SPR to the one billion
barrel capacity authorized by current law and funds to conduct National
Environmental Policy Act work to expand to 1.5 billion barrels. The
Administration will, through a separate legislative proposal, seek the
necessary authority to increase the authorized capacity of the Reserve
from one billion barrels to 1.5 billion barrels.
The Energy Policy Act of 2005 authorized the establishment of a new
Loan Guarantee Program. This budget request includes $8.4 million to
operate a Loan Guarantee Office. This program will centralize loan
guarantee services for the Department to ensure all processes and
criteria are applied uniformly in accordance with established
requirements, procedures, guidelines, regulations and manage the
assessment of all loan guarantee applications submitted to the
Department in compliance with Title XVII of the Energy Policy Act of
2005. Section 1703 of that Act authorizes the Department to provide
loan guarantees for renewable energy systems, advanced nuclear
facilities, coal gasification, carbon sequestration, energy efficiency,
and many other types of projects. The budget proposes an FY 2008 loan
volume limitation of $9 billion. Of this amount, the Department will
seek to guarantee approximately $4 billion in loans for central power
generation facilities (for example, nuclear facilities or carbon
sequestration optimized coal power plants); $4 billion in loans for
projects that promote biofuels and clean transportation fuels; and $1
billion in loans for projects using new technologies for electric
transmission facilities or renewable power generation systems.
Reliable energy information plays a critical role in promoting
efficient energy markets and informing the public and policy makers.
This budget requests a total of $105 million for the Energy Information
Administration to improve energy data and analysis programs, reflecting
a 17 percent increase over the FY 2007 budget request.
NUCLEAR ENERGY
A staple in our energy portfolio, nuclear energy has the potential
to drive our 21st century economy to produce vast quantities of
economical hydrogen for transportation use without emitting greenhouse
gases and to generate heat and clean water to support growing industry
and populations worldwide. In FY 2008, a total of $874.6 million is
requested for nuclear energy activities. Included in the total is $395
million for the Advanced Fuel Cycle Initiative to support the Global
Nuclear Energy Partnership (GNEP). GNEP is a comprehensive strategy to:
enable an expansion of nuclear power in the United States and around
the world; promote nuclear nonproliferation goals; and help resolve
nuclear waste disposal issues. An additional $10 million is requested
within the nuclear nonproliferation budget to support safeguards
technology development as part of the far-reaching GNEP strategy.
GNEP will build upon the Administration's commitment to develop
nuclear energy technology and systems and enhance the work of the
United States and our international partners to strengthen
nonproliferation efforts. The GNEP strategy will accelerate efforts to:
Provide abundant energy without generating carbon emissions
or greenhouse gases;
Recycle used nuclear fuel to minimize waste and reduce
proliferation concerns;
Safely and securely allow developing nations to deploy
nuclear power to meet their energy needs;
Assure maximum energy recovery from still-valuable used
nuclear fuel; and
Reduce the number of required U.S. geologic waste
repositories to one for the remainder of this century.
Through GNEP, the United States will work with key international
partners to develop new recycling technologies. Recycled fuel would be
processed through advanced burner reactors to extract more energy,
reduce waste and consume plutonium, dramatically reducing proliferation
risks. As part of GNEP, the U.S. and other nations with advanced
nuclear technologies would offer developing nations a reliable supply
of nuclear fuel in exchange for their commitment to forgo enrichment
and reprocessing facilities of their own, alleviating a proliferation
concern.
GNEP would also help resolve America's nuclear waste disposal
challenges. By recycling spent nuclear fuel, the heat load and volume
of waste requiring permanent geologic disposal would be significantly
reduced, delaying the need for another repository in addition to the
one at Yucca Mountain for the remainder of this century.
To support the near-term domestic expansion of nuclear energy, the
FY 2008 budget seeks $114 million for the Nuclear Power 2010 program to
support continued cost-shared efforts with industry to reduce the
barriers to the deployment of new nuclear power plants in the United
States.
The technology focus of the Nuclear Power 2010 program is on
Generation III+ advanced light water reactor designs, which offer
advancements in safety and economics over older designs. If successful,
this seven-year, $1.1 billion project (50 percent to be cost-shared by
industry) could result in a new nuclear power plant order by 2009 and a
new nuclear power plant constructed by the private sector and in
operation by 2014.
The Energy Policy Act of 2005 authorized the Secretary to enter
into standby support contracts for six new advanced nuclear reactors.
The program will allow DOE to offer standby support/risk insurance to
protect sponsors of the first new nuclear power plants against the
financial impact of certain delays that are beyond the sponsors'
control. This program would cover 100 percent of the covered cost of
delay, up to $500 million for the first two new reactors, and 50
percent of the covered cost of delay, up to $250 million each, for up
to four additional reactors. This risk insurance offers project
sponsors additional certainty and incentive to provide for the
construction of a new nuclear power plant by 2014. In FY 2008, the
Department will receive and evaluate applications for standby support
contracts from sponsors of new nuclear power plants.
The FY 2008 budget request includes $36 million to continue to
develop next-generation nuclear energy systems known as ``Generation IV
(GenIV)''. These technologies will offer the promise of a safe,
economical, and proliferation resistant source of clean, reliable,
sustainable nuclear power with the potential to generate hydrogen for
use as a fuel. Resources in FY 2008 for GenIV will be primarily focused
on long-term research and development of a gas-cooled very-high
temperature reactor, the reactor technology of choice for the Next
Generation Nuclear Plant (NGNP) project.
strengthening u.s. scientific discovery, economic competitiveness, and
improving quality of life through innovations in science and technology
Today our nation's ability to sustain a growing economy and a
rising standard of living for all Americans depends in part on
continued advances in science and technology. Scientific and
technological discovery and innovation are engines of increasing
productivity and are indispensable to ensuring economic growth, job
creation, and rising incomes for American families in the
technologically driven 21st century.
The FY 2008 Office of Science budget request of $4.4 billion or 7
percent above the FY 2007 request is designed to sustain the planned
doubling of Federal support for physical sciences research by FY 2017
under the American Competitiveness Initiative. Given the large-scale
nature of Office of Science facilities and the thousands of scientists
and researchers receiving DOE support for their research and education,
sustained and predictable budgetary trajectories are essential to
preserve America's vitality in science and avoid an attrition of U.S.
scientific talent.
DOE's Office of Science has played a central role over the last 50
years in supporting and sustaining institutional research in the
physical sciences in the United States. Among Federal agencies, it is
the largest supporter of basic research in the physical sciences,
providing over 40 percent of such funding. The Office of Science is the
main builder and operator of large-scale scientific facilities and
instruments that are increasingly important to physical sciences
research and maintains and operates ten major national laboratories
that have been seedbeds of scientific discovery, technological
innovation, and economic progress. Office of Science funding also plays
an indispensable role in training, educating, and sustaining the
nation's scientific workforce. Each year, Office of Science facilities
meet the needs of a diverse set of 20,000 researchers. Thousands of
university researchers--professors, ``post-docs'', and undergraduate
students--also rely, each year, on Office of Science support. Roughly
half of the researchers at Office of Science-run facilities come from
universities, and about a third of Office of Science research funds go
to institutions of higher learning.
The Office of Science is also the main federal sponsor of basic
research aimed at achieving the scientific breakthroughs necessary to
meet our nation's growing energy challenge by developing alternative,
carbon-free or carbon neutral sources of energy to enhance our energy
security and protect the global environment.
Many scientists believe there is a real promise that biotechnology
may transform the field of energy production--providing
transformational breakthroughs that will enable the cost-effective,
homegrown production of biofuels that can eventually meet much of our
transportation energy demand and substantially reduce net carbon
dioxide emissions. Today the Genomics: GTL program supports advanced
biotechnology tools and techniques to probe for biological and
biologically inspired solutions to Department mission challenges in
energy, carbon sequestration, and environmental remediation. The FY
2008 request includes $75 million for three innovative Bioenergy
Research Centers that will bring together multi-disciplinary teams of
some of the nation's leading researchers in a mission-driven laboratory
setting to probe plants and microbes at all levels (molecular,
cellular, system) in an effort to crack nature's code and achieve the
breakthroughs that will make biofuel production cost-effective on a
national scale.
The capacity to create new, stronger, more durable, or more energy
efficient materials--``smart'' materials that respond to the
environment, improved catalysts for oil refining, better batteries,
more efficient windows, to name only a few applications--increases as
we gain the tools and expertise to manipulate matter at the atomic
level. These scientific advances contribute to improving our way of
living. This year, the Office of Science will continue this work by
completing construction of the last Nanoscale Science Research Center
in FY 2008, and the FY 2008 request provides $20 million each for
operations at the Office's five Nanoscale Science Research facilities.
In addition, construction continues on the Linac Coherent Light Source,
the world's first x-ray free electron laser, which will enable us to
observe chemical reactions at the molecular level in real time. Project
engineering and design funds are also provided for the proposed
National Synchrotron Light Source II, which would provide unique
capabilities for probing structural biology and nanostructures and
observing materials under extreme conditions.
Computational power gives scientists the capability to explore
complex systems and simulate experiments that would be impossible to
perform in a laboratory. With the FY 2008 budget request, the Office of
Science performance goal is attainment of roughly one petaflop, which
is a million billion operations per second, of computational capability
to sustain the Department's position as world leader in civilian
computing power. The Advanced Scientific Computing Research request
increases by $21.5 million over the FY 2007 request.
Progress in energy-related and use-inspired basic science builds on
the foundation of discovery in more fundamental science. These
investigations into the very nature and origins of our universe expand
the horizons of our knowledge, providing insight into who we are and
where we come from. Within the $4.4 billion request for Science, $146.5
million is provided for operations of the Relativistic Heavy Ion
Collider (RHIC), which enables us to glimpse conditions of the very
early universe, and $79.2 million is for the Continuous Electron Beam
Accelerator Facility (CEBAF), which provides insight into the quark
structure of matter.
Within high energy or particle physics, research promises to
radically transform our understanding of the structure of matter,
space, and time. Within the Office of Science budget request, $158
million is provided for operations of the Tevatron at Fermilab for
collider and neutrino physics programs. In addition, the request
provides $62 million to support the research of U.S. scientists at the
Large Hadron Collider in CERN, which will be the world's most powerful
accelerator. R&D support is maintained for the International Linear
Collider, to maintain a strong U.S. role in the development of this
potential next-generation accelerator, which promises to further
illuminate the nature of matter at terascale energies.
In the Asia-Pacific Partnership, we are a vital member of the
international effort to promote the development and deployment of clean
energy goods and services among our Pacific-Rim partners; Australia,
China, Japan, India and South Korea. To date, the partnership has
launched nearly a hundred projects that advance energy efficiency,
clean development and common standards on which new clean energy
technology and programs can be built. This partnership has created a
forum where American companies can learn, compete, and innovate, in a
region with extraordinary economic growth, energy demands and market
potential. The $15 million requested to support the partnership will be
in concert with contributions from private-sector and international
partners.
Finally, on November 21, 2006, the U.S. Department of Energy signed
an agreement with China, the European Union, India, Japan, the Republic
of Korea and the Russian Federation to build the international fusion
energy project known as ITER. Under this arrangement of international
scientific cooperation, these nations will collaborate to construct an
experimental reactor that will put the world on a path toward
harnessing fusion energy--the fuel that powers the stars--for the
production of plentiful, environmentally friendly, carbon-free energy.
The request provides $160 million for the U.S. contribution to this
international effort.
ENSURING AMERICA'S NUCLEAR SECURITY
The President, in his first days in office, was faced with the new
and challenging realities of national security in the 21st century. The
War on Terror has substantially and fundamentally reshaped the national
security programs and activities in the Department. This budget of
$24.3 billion for the Department is an important component of the
President's strategy to address some of these very important issues
facing our nation. Within the $24.3 billion request in FY 2008, $9.4
billion or 39 percent is proposed to support DOE's contribution to the
Federal government-wide effort to ensure the security of our nation.
The National Nuclear Security Administration (NNSA) continues
significant efforts to meet Administration and Secretarial priorities
leveraging science to promote national security. The FY 2008 budget
proposes $9.4 billion to meet defense and homeland security-related
objectives. The budget request maintains current commitments to the
nuclear deterrence policies of the Administration's Nuclear Posture
Review. To implement those policies for the long term, NNSA has
established a new planning scenario, ``Complex 2030'', to guide the
transformation of the complex. The FY 2008 budget also continues to
fund a high profile strategy to mitigate throughout the world the
threat of weapons of mass destruction, and provides for the nuclear
propulsion needs of the U.S. Navy. Key investments include:
Transforming the nuclear weapons stockpile and
infrastructure while meeting Department of Defense
requirements, through the Reliable Replacement Warhead and
other Complex 2030 initiatives;
Conducting innovative programs in the nations of the former
Soviet Union and other countries to address nonproliferation
priorities;
Supporting naval nuclear propulsion requirements of the U.S.
Navy;
Maintaining comprehensive security for facilities, employees
and information implementing and sustaining upgrades throughout
the complex;
Providing nuclear emergency response assets in support of
homeland security;
Reducing the deferred maintenance backlog and achieving
facility footprint reduction goals; and,
Providing corporate management and oversight for NNSA
programs and operations.
The United States continues a fundamental shift in national
security strategy to address the realities of the 21st century. The
Administration's Nuclear Posture Review (NPR) addressed a national
security environment in which threats may evolve more quickly and be
less predictable and more variable than in the past. The NPR recognizes
the need to transition from a threat-based nuclear deterrent with large
numbers of deployed and reserve weapons, to a deterrent consisting of a
smaller nuclear weapons stockpile with greater reliance on the
capability and responsiveness of the Department of Defense (DoD) and
NNSA infrastructure to respond to threats. The NNSA infrastructure must
be able to meet new requirements in a timely and agile manner while
also becoming more sustainable and affordable. The Department of Energy
has created a plan for a revitalized nuclear weapons complex called
``Complex 2030.'' This significantly more agile and responsive complex
will allow further reductions in the nuclear stockpile by providing an
industrial hedge against geopolitical or technical problems and will
reduce security costs by consolidating nuclear materials. The FY 2008
President's Budget contains some of the resources required for
transformation of the Complex in ongoing base program activities that
are already underway and contributing to Complex 2030 objectives. The
Administration is still studying plans and funding projections for
other parts of the effort.
The FY 2008 budget request of $6.5 billion for Weapons Activities
includes all programs to meet the immediate needs of the stockpile,
stockpile surveillance, annual assessment, and life extension programs.
On November 30, 2006, the Nuclear Weapons Council determined that the
Reliable Replacement Warhead (RRW) program was feasible as a means for
sustaining the long-term safety and reliability of the nation's nuclear
deterrent force. This shift in strategy from a Life Extension Program
to a RRW program will require substantial planning and resource
realignments by the Departments of Defense (DoD) and Energy. The
Campaigns are focused on long-term vitality in science and engineering
and on R&D supporting current and future stockpile stewardship and DoD
requirements. A number of these NNSA programs and facilities also
support scientific research users from other elements of the
Department, Federal government, and the academic and industrial
communities. Within the Nuclear Weapon Incident Response programs, a
new National Technical Nuclear Forensics R&D and operations program is
established, as well as a stabilization program through leveraged
Render Safe R&D development of first generation equipment in support of
homeland security. NNSA's Safeguards and Security activities are also
encompassed within the request for Weapons Activities. The Defense
Nuclear Security program supports the physical security needs at NNSA
sites. These activities increase by 17 percent to sustain base program
increases associated with the FY 2003 DBT upgrades, and a revised
schedule for 2005 Design Basis Threat implementation at NNSA sites.
Cyber Security activities, protecting information and information
technology infrastructure, increase by over 15 percent. This will
provide for the first step in a major five-year effort focused on
revitalization, certification, accreditation and training across the
NNSA complex.
Preventing weapons of mass destruction from falling into the hands
of terrorists and rogue states is one of this Administration's top
national security priorities. The FY 2008 request of $1.67 billion for
nuclear nonproliferation activities strongly supports the international
programs that are denying terrorists and rogue states the nuclear
materials, technology and expertise needed to develop or otherwise
acquire nuclear weapons. NNSA continues unprecedented efforts to
protect the U.S. and our allies from threats, including $265 million
for cutting-edge nonproliferation research and development for improved
technologies to detect and monitor nuclear proliferation and nuclear
explosions worldwide. There are additional major efforts focused on
potential threats abroad. For example, in the area of nuclear material
protection and cooperation the program has completed security upgrades
for Russian navy nuclear fuel and weapons storage at the end of FY 2006
and will complete security upgrades for Rosatom facilities by the end
of FY 2008. Also by the end of FY 2008, the program will complete
security upgrades at the nuclear warhead sites of the Russian Strategic
Rocket Forces and the 12th Main Directorate. To help complete the
shutdown of three Russian nuclear reactors still producing 1.2 metric
tons of plutonium per year and to replace them with conventional fossil
fuel power plants, this budget request includes $182 million for the
Elimination of Weapons Grade Plutonium Production program.
The budget includes a request of $334 million for the U.S. Mixed
Oxide Fuel Fabrication Plant project at DOE's Savannah River Site in
South Carolina. This facility will dispose of 34 metric tons of U.S.
surplus plutonium and facilitate complex-wide consolidation of nuclear
material. The project is awaiting Congressional authorization to
proceed to construction. Various programs funded by NNSA's Defense
Nuclear Nonproliferation appropriation support the President's
Bratislava Nuclear Security Cooperation initiative (about $293 million)
including security upgrades at Russian nuclear warhead sites, and also
support the Global Partnership against the Spread of Weapons of Mass
Destruction ($537 million) to meet the U.S. commitment to the G8
nations. In coordination with the Office of Nuclear Energy, the budget
request also includes $10 million to support the Global Nuclear Energy
Partnership (GNEP), which is focused on advanced safeguards technology
development that is crucial to the ultimate success of the GNEP
initiative.
NNSA continues to support the United States Navy's nuclear
propulsion systems. The FY 2008 request of $808.2 million is an
increase of 1.6 percent over the FY 2007 request level. The funding
increase assists the Naval Reactors program to ensure the safe and
reliable operation of reactor plants in nuclear-powered submarines and
aircraft carriers and fulfills the Navy's requirements for new nuclear
propulsion plants that meet current and future national defense
requirements.
protecting the environment by providing a responsible resolution to the
ENVIRONMENTAL LEGACY OF NUCLEAR WEAPONS PRODUCTION
The Federal Government must address the legacy of our past and our
responsibility to the American taxpayers to provide a clean, safe and
healthy environment to live in. A total of $6.34 billion is dedicated
in FY 2008 to support the three key pillars that set the framework for
the Department to reach that goal. The first pillar is to continue our
environmental cleanup ($5.7 billion) of contaminated Cold War sites
across the country. The second pillar is to continue to provide site
post-closure management and to carry out our responsibilities ($194
million) to our former contractor workers. The third pillar completes
the framework by working to construct a permanent nuclear waste
repository at Yucca Mountain ($494.5 million) to address long-term
nuclear waste disposal and for authorization of which the Department
will submit a License Application to the Nuclear Regulatory Commission
not later than June 30, 2008. And it goes without saying that my core
principle of safe operations throughout the Department will be applied
with vigor within this framework.
To deliver on the Department's cleanup obligations stemming from 50
years of nuclear research and weapons production during the Cold War,
the Environmental Management program (EM) continues to focus its
resources on the highest health and safety risks, such as treatment of
over 90 million gallons of radioactive liquid waste stored in decades
old tanks; disposition of thousands of metric tons of special nuclear
material (surplus weapons-grade uranium and plutonium), spent nuclear
fuel, and solid waste stored in older facilities that do not meet
today's environmental requirements; and remediation of contaminated
soil and groundwater. Up through FY 2007, DOE has completed cleanup of
86 of 108 legacy nuclear waste sites, with another three site cleanup
completions--the Pantex Plant in Texas; Lawrence Livermore National
Laboratory-Site 300 in California, and the Inhalation Toxicology Lab in
New Mexico--planned for completion in FY 2008.
In FY 2008, the budget includes $5.7 billion to continue cleanup,
giving priority to those activities that offer the greatest risk
reduction while staying focused on completing cleanup and closing
sites. This is a reduction from the FY 2007 request of $173 million,
which in part reflects completion of some sites, but also reflects hard
choices that must be made. Safety remains the utmost priority. EM is
committed to applying my safety principles and will continue to
maintain and demand the highest safety performance to protect the
workers and the communities where EM operates.
In keeping with the principles of reducing risks and environmental
liabilities, the FY 2008 request of $5.7 billion will support the
following priority activities:
Stabilizing radioactive tank waste in preparation for
treatment (about 31 percent of the FY 2008 request);
Storing and safeguarding nuclear materials and spent nuclear
fuel (about 17 percent of the FY 2008 request);
Dispositioning transuranic, low-level and other solid wastes
(about 16 percent of the FY 2008 request);
Remediating major areas of our sites and decontamination and
decommissioning excess facilities (about 26 percent of the FY
2008 request).
One of the significant cleanup challenges the EM program faces is
the construction of the Hanford Waste Treatment and Immobilization
Plant (WTP), which will treat highly radioactive tank waste at Hanford.
WTP has encountered significant technical and project management
problems, which have caused the project to slow down while the problems
were addressed. With the help of senior professionals from private
industry, academia and other Government agencies, EM has undertaken an
intensive review scrutinizing key elements of the project, including
the technology, cost and schedule, project management, project
controls, and earthquake seismic criteria. In December 2006, the
Department approved a revised, validated baseline of $12.3 billion for
WTP. The Department believes WTP is now back on a sound technical and
project management footing, and is ready to move forward.
Despite numerous accomplishments and successfully accomplishing
site completions, the EM program has experienced setbacks in achieving
its vision of accelerated cleanup. At the core of these setbacks are
optimistic planning assumptions that have not materialized, combined
with new scope and requirements that were not anticipated. As a result,
EM estimates the lifecycle cost of the program could increase by $50
billion. EM continues to take steps to address challenges and improve
the effectiveness and efficiency of its operation. The Department
remains committed to completing this important and necessary mission.
After the Environmental Management program completes cleanup of
sites throughout the DOE complex, post closure stewardship activities
are transferred to the Office of Legacy Management (LM). Post closure
stewardship includes long-term surveillance and maintenance activities
such as groundwater monitoring, disposal cell maintenance, records
management, and management of natural resources at sites where active
remediation has been completed. At some sites the program includes
management and administration of pension and benefit continuity for
contractor retirees. In FY 2008, $194.2 million is requested to carry
out legacy management functions. The majority of the funding is for
long-term stewardship activities and pension and post-retirement
benefits for former contractor employees at the Rocky Flats, Colorado,
and the Fernald, Ohio, closure sites.
Over the last 50 years, our country has benefited greatly from
nuclear energy and the power of the atom. We need to ensure a strong
and diversified energy mix to fuel our nation's economy, and nuclear
power is an important component of that mix. Currently more than 50,000
metric tons of spent nuclear fuel is located at over 100 above-ground
sites in 39 states, and every year reactors in the United States
produce an additional approximately 2,000 metric tons of spent fuel. In
order to ensure the future viability of our nuclear generating
capacity, we need a safe, permanent, geologic repository for spent
nuclear fuel and high-level nuclear waste at Yucca Mountain. The FY
2008 budget of $494.5 million sets us on the path to meet that goal.
The funding will support the development of a repository including:
Filing and defending a high quality License Application at
the Nuclear Regulatory Commission (NRC) based on a simpler and
safer approach to handling spent nuclear fuel and operating the
repository not later than June 30, 2008;
Continuing the planning and design for facilities required
for the receipt of spent nuclear fuel and high-level waste for
emplacement in the repository;
Making critical infrastructure upgrades at Yucca Mountain to
ensure worker, regulator, and visitor safety and operational
efficiency; and
Continuing critical interactions needed to support national
transportation planning activities and issuance of the Nevada
Rail Alignment Environmental Impact Statement.
Designing, licensing and constructing a permanent geologic
repository for spent nuclear fuel and high level waste will resolve the
challenge of safe disposal of these materials and make construction of
new nuclear power plants through the President's Global Nuclear Energy
Partnership (GNEP) more feasible, helping to expand our energy options
and secure our economic future. In addition, a repository is necessary
to support nuclear nonproliferation goals, contributing to national
security objectives.
In late 2006, the Department announced its plans to submit a
License Application for the repository to the NRC by June 30, 2008, and
to initiate repository operations in 2017. This opening date of 2017 is
a ``best-achievable schedule'' and is predicated upon enactment of
pending legislation. This proposed legislation addresses many of the
uncertainties, currently beyond the control of the Department, that
have the potential to significantly delay the opening date for the
repository. The legislative proposal that the Administration submitted
to Congress in 2006 and will resubmit in this Congress addresses
significant funding reform and regulatory issues that, if enacted,
would allow the Department to secure the necessary fiscal resources
needed for program success and clears the path for the program to move
forward expeditiously.
CONCLUSION
I appreciate the opportunity to appear before you to present the FY
2008 budget proposal for the Department of Energy. I will be happy to
take any questions that members of the Committee may have.
The Chairman. Thank you very much.
Why don't we do 5-minute rounds here, and if people have
other questions, we'll do a second or third round.
Let me start, and ask a question about this loan guarantee
program. Senator Domenici referred to it. That's in the energy
bill that we passed in 2005. One of our real frustrations, and
perhaps one of yours, Mr. Secretary, is the difficulties we've
had in seeing this loan guarantee program get up and
implemented. My understanding is that the Department did not
assign anyone to work on this, because there had not been
specific funding provided in the appropriations bill for that.
I guess the first question would be, isn't this the kind of
thing that could have been pursued right after the enactment,
right after the signing of that legislation? I don't know how
tight your budget is over there, but I would think you could
find the funds to commit some people to this kind of activity,
early on.
Secretary Bodman. Mr. Chairman, we requested $1 million
during fiscal 2006 reprogramming, so that we could start the
process of staffing this. We have three people who work on it
now, and who have done the work so far, but we need many more
than that in order to manage this kind of a program. That
request for reprogramming was denied, for whatever reason it
was denied, and we have therefore been operating during 2007
with the same level of funding, namely zero, that we had
before.
We have done our best, given the fact that there has not
been any funding for this, even though we have requested it.
We are hopeful that we will receive such support as a
result of the continuing resolution, but that remains to be
seen.
I can tell you that we have started down the path by asking
for preliminary indications of who is interested; this is
without trying to get a complete body of work done, and we have
had over 100 responses. Trying to respond to 100 responses is
going to take some manpower and some womanpower to be able to
do that, and we are hopeful of being able to do it.
I would also add, as I have explained to you during my
visits with you, that I used to work in this general area,
evaluating these kinds of projects. This is very tough to do.
It's tough to be right, and I would rather be right, and I
would rather be correct in setting up this office, so that it
works effectively for the future--than I would worry about the
number and the quantity of programs that we are able to
support.
We've laid out a program to recruit people, they've
expressed interest, we've had people ready to go, and frankly
they have backed off a bit, given the fact that we don't have
funding for it. As soon as we get that, we will proceed.
The Chairman. Well, let me just follow up by saying that
this continuing resolution, as I understand it, has the $4
billion that Senator Domenici referred to, of authority to
limit--it says that you're limited to issuing loan guarantees
in the total amount of $4 billion. It also says that you need
to promulgate a rule before you can issue any loan guarantees.
Secretary Bodman. Yes, sir.
The Chairman [continuing]. And that you need to do that
within 6 months. I guess, an obvious set of questions is: is
there any work been done to promulgate such a rule? Is this
something which you're ready to do, once this continuing
resolution is enacted? Or do you have a period of staffing up
after this continuing resolution is enacted, before we can even
begin to promulgate a rule? I mean, what I'm concerned about,
frankly, is that the Bush administration's going to be leaving
town before we issue any----
Secretary Bodman. No, I understand. I'm concerned about
that myself. But I repeat, we have done work on a rule, that
that is something the General Counsel of the Department, David
Hill, has focused time and attention to. We are aware of it.
What, exactly, the schedule will be, I don't know, but I would
be happy to take that question for the record, and give you a
more thoughtful response, rather than trying to estimate it
here on the fly.
The Chairman. I would appreciate it. I think that would
give us some indication--we had a conference last week on bio-
fuels; several of the people who testified said they had filed
pre-applications.
Secretary Bodman. Right.
[The information follows:]
Section 20320(b) of Public Law 110-5, enacted February 15, 2007,
requires that DOE issue final regulations for the Title XVII loan
guarantee program before issuing any loan guarantees under that
program. Section 20320(c) states that the final regulations must be
issued within six months of the date of enactment, i.e. by August 15,
2007. The Department is presently preparing a Notice of Proposed
Rulemaking (NOPR) which will propose regulations for the implementation
and operation of the Title XVII program, and which will solicit
comments from all interested parties. In conformance with P.L. 110-5,
the NOPR will propose programmatic, technical, and financial
eligibility criteria, due diligence requirements, and procedures and
policies for the loan guarantee program. The Department anticipates
issuing the NOPR in April 2007, and anticipates a 45-day public comment
period on the NOPR. The Department will work to meet the August 2007
deadline for issuing a final rule, although that deadline is
aggressive, and whether the Department will meet it will be dependent
on a number of different factors, including many factors external to
DOE.
The Chairman. But they had obvious concern as to when, if
ever, these were going to be acted upon, or when a real
application would be requested from them. So, the level of
frustration, I think, has been growing on this, and I've used
more than my time, so I'll defer to Senator Domenici.
Senator Domenici. Senator, I don't think you've used too
much time, so I wouldn't hold you to time because this is
really a shame. I had somebody bring us the bill we drew, that
you and I and others worked so hard on. If you go through it,
you'll find that there were plenty of active mines, if we were
looking to fill this bill with projects, we could have put them
at 20 places. The projects for ethanol, projects for this,
projects for that, and we could have provided loan guarantees
at 40 places, and we could have done all of these kinds of
things that we used to do, when you were putting projects in a
bill, and calling for their fulfillment.
We thought that we were going to quit doing that, and put
one section in a bill. It couldn't be more important to this
bill, that that whole section, the section is called, listen,
``Incentives for innovative technologies.'' Now, there's no
other place in this bill where we promote incentives for
innovative technologies in the way we do in this section. It
states in it all of the kinds of things we're trying to do as a
Nation. To break through in technology, break through in coal,
break through in the things the President announced in his
speech.
It says how they can get done by way of capital being
furnished by the Federal Government. We have been fighting
now--today is 18 months, I looked it up--this bill is 18 months
old. We don't have an office, a formal office yet, and we don't
have any personnel out there looking to give capital to people
who want to build things that are new and different as part of
this war that we're involved in, in breaking that stranglehold
of the gasoline and crude oil.
Now, Mr. Secretary, I'm not going to take long. I'm just
going to tell you that we have fought like crazy, and we get a
piddley little $4 billion in the CR, you come along and I think
in your budget you've given us $8 billion? Nine billion
dollars, and everybody says, ``Aw, that's wonderful.'' Let me
tell you, you just sit down with a few experts and ask them,
``What are we going to probably fund?'' With $8 billion or $9
billion, if you're talking about the spectrum across America,
where they're going to be asking, is nothing. You're going to
have to find a way to do three or four times that amount, and
do it right. Now we've gotten you the money, there's no excuse,
and I don't say you were ever looking for an excuse, the White
House was looking for excuses. They didn't want to do it. OMB
didn't want to do it. But Mr. Portman told me--is that his
name?
The Chairman. Portman.
Secretary Bodman. That's his name, yes, sir.
Senator Domenici. He didn't want to be blamed for this, he
just said, ``Please, I'm not to blame.'' Well, I said, ``Maybe
it's because you came too late, but your OMB is to blame.''
``Well, I will undo it, and fix it where we can do it,'' said
he. So, and, this doesn't cost the Treasury any money, I remind
everybody. The way the bill's drawn, they participate in a law
where they've got to pay for these by way of putting up their
own money as the part of the guarantee. I don't think we could
have a better deal to break the stranglehold of old technology,
trying to run a modern competition.
I beg you, Mr. Secretary, to get on with implementing this
section.
The Chairman. Let me next go to Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman. I want to
commend you for holding this hearing so quickly after the
release of the President's fiscal year 2008 budget on Monday.
I also add my welcome to Secretary Bodman, and to tell him
I really appreciate the timely manner in which your budget has
been done. I look forward to working with you, and I want to
ask you, Secretary, and to tell you that I'm pleased to see the
Department has established an office of loan guarantee to
oversee the loan guarantee applications that were in title XVII
of the Energy Policy Act of 2005 that we're talking about.
There were also two loan guarantees, programs in title XV,
sections 1510 and 1516, that were for biomass, municipal solid
waste, and sugarcane-ethanol. But, I don't see them in a
budget. They're not mentioned in the innovative technology loan
guarantee program.
My question to you is: what can you tell me about where I
might find these loan guarantees from title XV?
Secretary Bodman. I may be mistaken, but I believe they are
available under title XVII, sir.
Senator Akaka. Well, let me be sure that I understand, and
I'm glad you mentioned that. Title XV loan guarantees for
sugarcane, biomass and MSW----
Secretary Bodman. Right.
Senator Akaka [continuing]. Are eligible under title XVII?
Secretary Bodman. Right.
Senator Akaka. Loan guarantee program, called Innovative
Technology Loan Guarantee Program. Are they covered under that
program? You just said yes.
Secretary Bodman. I believe so, yes sir.
Senator Akaka. Oh, terrific.
That fiscal year 2008 loan volume limitation of $9 billion
is enough to cover the title XV and title XVII loan guarantees,
is that enough?
Secretary Bodman. I can't answer that, in all sincerity,
Senator, until I see them. I have not seen the pre-
applications, we've had 100 expressions of interest; for the
reasons that I mentioned before, we simply have not had the
wherewithal to start. We've created the office, but in order to
staff it and run it and function it requires some financial
resources, which have not been forthcoming. Hopefully they will
be, and then I can answer your question more effectively.
Senator Akaka. Well, I really appreciate your
clarification. As you know, these loan guarantees are important
to diversify fuel sources, and for advance technology
businesses in my State, and others.
Secretary Bodman. Yes, sir.
Senator Akaka. As you may know, Senator Murkowski and I
share an interest in the methane hydrates program, which was
reauthorized in EPAct. Last fiscal year, the program was zeroed
out, and again in this fiscal year, it's not funded.
Now, given the President's commitment to reducing our
dependence on foreign oil, and the expected long-term decrease
in the supply of natural gas, what does it take to keep our
investment going?
Secretary Bodman. I believe, sir, that you're talking about
a hybrid----
Senator Akaka. Gas.
Secretary Bodman [continuing]. Battery development?
Senator Akaka. This is methane hydrates.
Secretary Bodman. Oh, hydrates, methane hydrates.
Senator Akaka. It is gas technology, right.
Secretary Bodman. I'm sorry, methane hydrates; forgive me,
I misunderstood you.
That falls in the category of oil and gas development, and
this President believes that given the current prices of $60
oil, or $7.5 per MCF natural gas, that there's plenty of
incentive for developers to proceed. I agree with you that one
might make an exception for the methane hydrates, which do
require a research effort in order to make it more effective,
but that is something that this administration views as plenty
of incentive to proceed with whatever work needs to be done.
Senator Akaka. Thank you, my time is expired.
The Chairman. Senator Thomas.
Senator Thomas. Thank you, Mr. Chairman, welcome, Mr.
Secretary.
In some ways it seems like we're going back to the same
game we played last year. We talk a lot about alternative
fuels, which we should, and they'll make a real difference in
the world. We need in the short time, however, to make fossil
fuels cleaner and more efficient. Please explain why fossil
fuel energy funding for national research is being decreased,
rather than increased.
Secretary Bodman. Same answer; the position of this
administration has been that there's plenty of incentive in the
system now. There's a great sense of commitment to coal, and
there is significant commitment in this budget for clean coal
technology. We've offered up, I think, a billion dollars of
loan guarantees that were done, or tax credits that were done.
There will be another $600 million done this next year, during
this fiscal year, so there have been significant commitments to
coal technology, clean coal technology, and then there's the
FutureGen Project where we have increases as well.
Senator Thomas. We haven't seen much impact. Section 413 of
the Energy Policy authorizes Federal cost-sharing for IGCC in
the West. We needed to pursue that with LNG terminals in highly
populated areas. The Federal Government needs to support these
areas. Why doesn't the budget request funding for section 413
implementation?
Secretary Bodman. It's strictly a matter of priority,
Senator, I can't give you the specifics on that. If you'd like,
I'd be happy to give you a more thoughtful response, but I can
tell you that it's a matter of priority, where we put our
money.
So, it's a matter of trying to put money in the most
effective places that will simultaneously improve our energy
and national security on the one hand, and deal with greenhouse
gas emissions on the other.
[The information follows:]
The western integrated coal gasification demonstration project
authorized under EPACT section 413 will be eligible for funding under
the next round of the Clean Coal Power Initiative (CCPI). The CCPI
program, which is run by the Office of Fossil Energy, expects to issue
the next solicitation for demonstration scale projects in FY 2008.
Senator Thomas. Yeah, I can't think of anything more
efficient than going where the coal is, and getting it to where
the market is, by transferring it into a clean product. That's
exactly what we're talking about. DOE has manufactured $257
million for themselves out of this program, Clean Coal
Initiative; $108 million for CCT into FutureGen, and the
remainder will go back to the Treasury.
Now, I don't understand the disregard for this
congressional intent to work on this very important, close-
range thing of converting coal to another source to get to the
market.
Secretary Bodman. We believe that we are honoring the
intent of Congress, the deal with coal as an important
component----
Senator Thomas. Have you got any loans, or incentives going
to coal conversion?
Secretary Bodman. We have, I just mentioned that we have,
when you say--to coal conversion?
Senator Thomas. Yes.
Secretary Bodman. No, sir. That would fall in the same
category that we just have been visiting with your colleagues
on the committee about.
Senator Thomas. But we're not doing it.
Secretary Bodman. Senator, we are not doing it because I
don't have a loan guarantee office set up and funded.
Senator Thomas. I know. I suggest that you do.
Secretary Bodman. We have asked for it. It's in the budget
proposal for 2008, as I mentioned. We attempted to get in 2006
a reprogramming so I could set up the office, and it was denied
by Congress. I don't know how to try any harder than I have
tried.
Senator Thomas. We have it in our policy, our energy
policy, to do that.
Secretary Bodman. Yes, sir.
Senator Thomas [continuing]. It would seem to me, you'd
find a way, within this large administration of yours, to be
able to do that.
Finally, we want to convert some more of those coal,
specifically to interstate pipelines and electrical
infrastructure. How much money is requested for those kinds of
items?
Secretary Bodman. There is money requested for the support
of our electricity office, which has responsibility for siting
and developing the right-of-way for transmission of both
electricity, as well as for other forms of energy. There is
funding in the bill for that within the electricity office.
Senator Thomas. Well, in closing, I'd still think that we
have to give more attention to the energy that we now have
available to fill the need between now and when we get the
alternatives. It seems like all of the emphasis goes on these
famous alternatives for the future, and not very much for the
things that we know how to do, and could do, immediately, to
fill this 10-year deal.
So, I hope that you'll get some more----
Secretary Bodman. I take your point, I will certainly do
that. Thank you.
Senator Thomas. Thank you.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much. We have
limited time, necessarily, but I appreciate, Mr. Secretary,
your being here to answer questions.
Let me make just a quick comment. I'm a strong supporter of
the renewable sources of energy, and the alternative sources of
energy: bio-fuels, wind, solar, hydrogen-fuel cells--we need to
work very hard on all of those issues.
I'm concerned about the recommendations with the PMA's, and
purchased power; some of them hearken back to the philosophy of
some, previously, who would like to sell the PMA. Some parts of
the country have constituents, including mine, that benefit
from the grand bargain that was made a long, long time ago,
saying that you play host to certain long-term floods, and you
can use hydropower in a region with low-cost power,
permanently. I have no problem with that; in fact, I support
that, and don't propose that it be changed. So, the PMA issues
in the budget are difficult, and we need to change those.
My colleague from Wyoming raised the question of fossil
energy, and particularly coal. We need to find a way to produce
electricity from zero-emission coal-fired generating plants, we
need to be able to effectively go from coal to liquids, and
find ways to sequester emissions and all of those issues. My
colleague raised a valid point: we have some Clean Coal
Technology funding that is going to be rescinded--I know there
are other coal issues in the proposal--but I do think Senator
Thomas raised an important point about that. Wind research,
down a bit, I think it ought to be up.
Having said all of that, I want to ask you a more general
question--not so much about this budget, because this budget
represents a menu of things, and I'm trying to figure out where
we're headed. We're talking about where we have plans for where
you want to be 50 years from now with respect to nuclear
warheads and the design of new warheads, safer and so on and so
forth. We talk about 50 years from now, what the circumstance
will be with the Social Security trust fund, and all of those
issues.
So, where are we going to be 40 or 50 years from now, with
respect to energy use? What would be the predominant energy use
for vehicles in this country? What will be the predominant
energies for the production of electricity, and so on? How will
we do that? Does the Department have a destination in mind? If
so, I'd like to understand that. So, as we put together a menu,
we develop a national goal.
The reason I ask the question is I'm a big supporter of
hydrogen fuel cells in the future, of conversion of our vehicle
fleet to hydrogen fuel cells. But you can't get there with baby
steps. You've got to decide, all right, here's the destination,
and here's the way we move toward that destination. I know the
President supports that, but his recommendations have been very
timid, in fact, rather than big and bold.
So, what do you see 40 and 50 years from now, with respect
to the menu of energy use that we aspire to achieve?
Secretary Bodman. First, let's talk about electricity
generation. We're talking about doubling the demand for
electricity over the next 20-25 years in this country. My view
is that we can't accomplish that without having nuclear power.
We can't accomplish it, certainly, in an environmentally
friendly way, without having nuclear power. We have to--simply
have to--find ways of developing nuclear power. We're working
on every way that I know how, that we know how, in order to
accomplish that.
I do believe that coal will play an important role in the
future. But that will depend upon the sequestration of carbon
dioxide. We've got seven partnerships that we have funded, that
are part of the research program of this Department. Those are
ongoing to work in seven different geographic locations
throughout the country. We are hopeful that we will then make a
determination of where can we sequester carbon dioxide, and
where we can effectively use coal.
Senator Dorgan. But is this just an inquiry about whether
we can use technology to get to a zero emission plant, using
coal? Or is it a destination? It's a major effort to decide to
do that.
Secretary Bodman. It's a major effort.
Senator Dorgan. All right.
Secretary Bodman. We've got $1 billion committed to the so-
called FutureGen Project. We've had requests from, I think, 15
different communities. The Department has winnowed those down
to four; two in Illinois, and two in Texas, that we are working
on that were selected, and we will then be working on a joint
basis, I think it's roughly three-quarters Government funding,
one-quarter private industry. We're finding a lot of interest--
nine companies are now a member of this, and so this is our
goal. It is research, however, and it is something that we have
to demonstrate that we can do.
The goal of FutureGen is to create a process that will
convert the energy that is in coal into a stream of hydrogen.
You can then either burn the hydrogen, to create electricity,
or you can use the hydrogen directly as a fuel in vehicles.
I am personally committed to do that kind of work, and I
don't know how to do it any faster than we're doing it.
Senator Dorgan. I asked a very broad question, and I
understand this isn't an appropriations hearing, but the menu
of choices for spending on all of these issues ought to relate
to relate to some destination that we all have in mind: where
are we headed? And how are we going to get there?
Secretary Bodman. Right.
Senator Dorgan. As opposed to just shopping around, you
know, it seems to me that you ought to decide, ``Here's the
goal,'' out there, at some distance, and then move toward it. I
think that is a substantial increase in nuclear, try to see if
we can do zero emission coal-fired plants, or use fossil fuel--
--
Secretary Bodman. That's correct.
Senator Dorgan [continuing]. In an environmentally-friendly
way. We haven't talked about vehicles, but let me ask the
question: could you send to this committee, your analysis, your
broader analysis, in response to my very general question?
Where do you see us 40 and 50 years from now? What are we
aiming for? What's the destination that you would persuade this
committee to try to aspire to achieve? Would you be willing to
do that?
Secretary Bodman. I would be happy to do that.
[The information follows:]
Predicting ``where we are going to be 40 or 50 years from now with
respect to energy use'' is indeed a challenge. Who in 1957 could have
predicted that between that time and 50 years hence we would have put
men on the moon and brought them safely back to Earth; the internet;
cell phones in the place of the single black telephone that most
households had; color televisions with access to hundreds of channels
instead of the three or four that could be accessed on the single black
and white TV most households had, not to mention TV remote controls;
computers, including laptops, as ubiquitous now as ``record players''
were back then and so on? In February 1957, it would be another eight
months before the Space Age officially began with the successful launch
of Sputnik by a country called the Soviet Union. In 1957, polio had
been conquered for only three years. I might note that in 1957, it
would be another 16 years before the beginning of the Middle East Oil
Embargo and another 20 years before the Department of Energy would be
created.
With that backdrop, let me offer some thoughts about where we need
to be in the next 40-50 years and what the Department is doing now to
get there. First, we need to increase our energy supply options and
reduce dependence on oil through reliable, clean, and affordable energy
sources. These options include biofuels and other advanced liquid
fuels, renewable energy from solar and wind, advanced nuclear power,
zero-emission fossil electricity generation, and potentially fusion
energy. Second, we need to create a more flexible, reliable, and high
capacity U.S. energy infrastructure including a modernized electrical
grid, liquid fuels system, and future hydrogen fuel system. And lastly,
we need to make dramatic improvements in energy efficiency.
Underlying these needs for advances in energy production, delivery,
and use are crosscutting and enabling science and technology
opportunities and challenges. Fortunately, our own Office of Science is
leading the Department's effort to address many of the elements
required for a decades-to-century energy security strategy. A key
strategy used by the Office are workshops, in partnership with DOE's
applied program offices, that engage the broader scientific and
technical community to help identify research directions to address
these cross-cutting and enabling opportunities and challenges.
The first of many such ``Basic Research Needs'' Workshops was held
in October, 2002. It took aim at the overarching challenge of applying
the latest `nano-, bio- and info-' science discoveries to
revolutionizing production and use of energy. Enabled by the
President's American Competitive Initiative, the Office of Science
continues to move forward in addressing many of the major research
challenges that lay before us. Let me give you just a few examples of
our efforts as we look towards the nation's future energy solutions:
The first energy technology-specific workshop was on Hydrogen
Production, Storage, and Use, and was held in May 2003, after
the President announced the Hydrogen Initiative in his 2003
State of the Union address. This workshop identified
fundamental research needs and opportunities in hydrogen
production, storage, and use with a focus on new, emerging, and
scientifically challenging areas that have the potential to
significantly impact the science and technologies for a
``hydrogen economy.'' In such a world, by the middle of the
twenty-first century, an ample and sustainable supply of clean
burning hydrogen could become the universal energy carrier.
To tackle energy challenges at the smallest scales, the Office
of Science cosponsored a workshop--with the interagency
National Nanotechnology Initiative--on Nanoscience Research for
Energy Needs in March 2004. This workshop identified nine
energy research targets including: highly selective catalysts
for near-zero waste and near-100% efficient manufacturing
processes, harvesting solar energy with 20% power efficiency
and 100 times lower cost, solid-state lighting that uses a
fraction of the power used by conventional lighting, low cost
fuel cells, batteries, and supercapacitors from nanostructured
materials. Advancements in nanoscale science has great
potential to impact the development new and revolutionary
energy technologies and bring significant improvements in
energy efficiency and manufacturing processes.
One of the challenges we face with renewable energy
technologies like wind and solar is that they are intermittent.
The key to baseload electricity generation from wind and solar
is energy storage--to level the phased nature of these energy
sources and meet off-cycle demands. In April of this year, the
Office of Science is holding a workshop on the Basic Research
Needs for Electrical Energy Storage to identify key basic
research directions that could provide revolutionary
breakthroughs needed for meeting future requirements for
electrical storage. Advanced energy storage technologies will
have a significant impact on efficient utilization of
electricity generated from these renewable sources and others
and bring greater reliability of the U.S. electric grid.
Two additional types of large-scale, environmentally-friendly,
energy technologies the Department is pursuing for future base-
load power sources are advanced nuclear fission and fusion
energy. DOE's Office of Nuclear Energy is partnering
internationally through the Global Nuclear Energy Partnership
(GNEP) to develop advanced nuclear fission reactors and the
technologies necessary to move towards a closed nuclear fuel
cycle. The Office of Science is a partner in ITER, an
international fusion research project to demonstrate the
scientific and technology feasibility of fusion power. Several
workshops held over the past three years have identified
critical research and development directions for a path forward
in both fission and fusion energy, including the April 2004
workshop on Advanced Computational Materials Science:
Application to Fusion and Generation IV Fission Reactors and
the Basic Research Needs for Advanced Nuclear Energy Systems
held in July, 2006. Advanced nuclear power and fusion power
both hold the promise of an abundant fuel supply with zero air
emissions.
Advanced grid technologies to take advantage of new power
technologies and move towards an improved future grid system
are also being developed at DOE. Superconducting grid
technology, for example, has a huge potential for increasing
grid capacity, reliability, and efficiency to meet the growing
demand for electricity over the next century. Superconducting
technology also was the subject of a May 2006 workshop held by
the Office of Science together with DOE's Office of Electricity
Delivery and Energy Reliability. The results of this workshop
support the idea that such grid technologies, together with
fission and fusion power plants, could form a strong backbone
by mid-twenty-first century for the U.S. grid or even a global
grid.
I hope that these examples give you a sense of where we could be 50
years from now. Of course, we expect our basic research and applied
technology programs, especially Presidential initiatives such as the
Advanced Energy Initiative and the Twenty in Ten Initiative, to provide
key energy innovations during the next 50 years including in the areas
of alternative fuels such as cellulosic ethanol and other biofuels,
advanced vehicle technologies such as plug-in hybrids, and advanced
solar energy technologies. Just as most Americans in 1957 could
probably not come close to envisioning the huge advances that would be
evident in 2007, so, too, we today can probably only just begin to
imagine what scientific advances will have in store for Americans 50
years from now.
Secretary Bodman. I would remind you that we will be
dependent on free markets to make determination as to which is
more cost-effective. Which approach is more environmentally
effective? There will be uncertainties, as we start to talk
about forecasting, something going on 50 years from now. I will
tell you what our hopes and our aspirations are.
Senator Dorgan. Well, Mr. Secretary, we make markets, in
many ways, by certain choices that we decide to follow. I'd be
very uncomfortable with the notion, ``Well, whatever the market
suggests, that's where we'll head.'' Let's decide where we're
going to head, based on our choices, and you'll bring market
prices down, based on investment and choices the Federal
Government will make. But, that's a discussion we'll have at a
different time, I guess.
The Chairman. Senator Craig.
Senator Craig. Thank you very much, Mr. Chairman.
Mr. Secretary, again, thank you for being with us. Some
preliminary comments.
Senator Dorgan's frustration, and mine, are not dissimilar.
It's bringing us together to look at something we can do in the
immediate sense that dovetails quite responsibly with what the
President has proposed in his State of the Union remarks to
reduce our dependency, and to get something moving in a timely
fashion that demonstrates that capability.
Having said that, and reviewing your budgets, you and I
spent a little time last year talking about Bonneville power,
and secondary revenues, and we're not going to spend any time
doing it this year, OK? OMB puts it back in, you shouldn't make
apologies any more, we'll just take it out, OK?
You have to have certain marks to get your budget in line,
so you put AWAR in it as a revenue stream--I wish it were; it
probably won't be. We put Bonneville in as a revenue stream; it
won't be. We'll take those out. We'll no longer have a
discussion about it. Nor should any apologies be made. I
understand what OMB does to your budget, and we'll leave it at
that.
I'll not go any further into loan guarantees, you've heard
the frustration of this committee, and it is significant. If
something has not yet been done, nor has there been the
necessary programming to accomplish it.
There is a difference, in my opinion, between research and
loan guarantees. Much of what is in the application of the 120
entities that have come forth, requesting a grand total of $50
billion--or somewhere in that range--is it research in many
ways that has already been done? Some of this is to come off
the shelf and go to a commercial level through a loan
guarantee. That is significant.
As it relates to where we would like to take this country,
with all of the new technologies, and all of them being very
clean: if there is any climate change title in EPAct, it's
title XVII. And yet, 18 months later, we talk about climate
change, we effectively have not been able to muster up whatever
it takes, with you pointing fingers at OMB, or we pointing
fingers at you, or you pointing fingers at us, to get on with
the business at hand.
Long-term research is one thing. Being able to take
research that is nearly completed, move it to the market,
refine it through the process of loan guarantee, stand it up in
a commercial value, is--in my opinion--a significantly
different thing. I'll leave it at that. I share the
frustrations of the chairman and the ranking member, my
colleague from Wyoming. I'll leave it at that, Mr. Secretary.
Nuclear energy: I smile at the budget level in general.
Clearly, we need to continue to drive in that area, and we'll
be very supportive, I think, of those efforts. We may rearrange
them a little differently than you've proposed them, but I
think we're in sync as it relates to that.
I guess my greatest disappointment, Mr. Secretary, in
overall budgets or menus is in the hydro, geothermal, nuclear
energy programs, nuclear university energy programs that have
largely been zeroed out. I hope Congress can fix that
shortcoming.
Secretary Bodman. May I make a comment, Senator?
Senator Craig. Please.
Secretary Bodman. On that, I just would ask that, in
looking at the support for universities for nuclear engineering
departments at universities, that the committee look at the
totality of the support that is coming from the Energy
Department. If you all are inclined to fund the various
initiatives that we have there, a big part of the work--or a
significant part of the work--would be done at universities in
GNEP.
Senator Craig. No, I appreciate that.
Secretary Bodman. It's important to look at, if you would,
the totality of it. Because there is plenty of reason to
suggest that we have an increase in support for universities,
even though the report, the funding for fellowships,
scholarships, and so forth, has been reduced, or has been
zeroed out.
Senator Craig. Thank you.
Mr. Chairman, let me conclude with this comment. Last week,
really one of the grand old gentlemen of foreign policy was
here on the Hill to speak to the Senate Foreign Relations
Committee. Usually when Henry Kissinger speaks, we all listen
closely--sometimes he's a little hard to understand, and maybe
that's why we listen a little more closely. But usually, we
listen closely because he's a pretty wise fellow, who has a
fairly broad perspective of the world, and can bring it to us
in a way that we readily understand, and that in a bipartisan
way, we generally appreciate.
Let me refer to a comment he made in the text of his
broader comments. He said--and he's speaking of the current
debate on the floor, the current frustration of the American
public, on our foreign policy in Iraq. And he says, ``They are
there,'' meaning our troops, ``as an expression of American
national interest to prevent the Iranian combination of
imperialism and fundamentalist ideology from dominating a
region on which the energy supplies of the industrial
democracies depend.''
This country is caught up in a very critical debate at this
moment. Underlying all of it is a great dependency on an energy
supply flowing from a region of the world that is increasingly
unstable.
Part of what we did in 2005, and what we're doing today, is
to offset some of that dependency. I have yet to feel the sense
of urgency, the sense of wartime mentality that it takes us to
make these quantum leaps forward. A focusing of our resources,
and our talents, in a way that makes these things happen sooner
rather than later.
I hope stability continues in that region while we crawl
toward some form of energy independence. We are not running
toward it, we are not racing toward it. Our only salvation will
be stability in the world until we get there. So, I would hope
that the work of this committee, your work, and the work of
this administration expresses a sense of urgency that has yet
to be felt by most of us who are involved in this issue.
Thank you.
The Chairman. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
Mr. Secretary, welcome. You heard Senator Craig's comments
with respect to Bonneville, and I think he said it very well
for me and Senator Smith, and our whole, you know, region. We
are just not going to accept Bonneville being used as some sort
of payday loan program for the administration; that's really
what this is all about. Since you and I have had this vigorous
debate in the past, I wanted to bring you a set of numbers that
I thought perhaps you could look at in the days ahead.
We, of course, believe that Bonneville is paying its bills.
We are responsible consumers and businesses; we pay our bills.
In fact, we pay our bills and more. Bonneville has repaid
almost $1.8 billion of debt in advance of what is due. This
includes over $342 million in fiscal year 2006. So, since you
were here last year, advancing the proposal that all of us in
our congressional delegation--all of the Republicans, all of
the Democrats have opposed--Bonneville has repaid an additional
$342 million in debt, ahead of schedule.
So, I would just hope that you would see, once again, the
intense feelings in our region on this, shared by every
Republican, and shared by every Democrat. We will have further
dialog on it.
Secretary Bodman. I am aware of the intense feelings, sir.
Senator Wyden. Very good.
Let me ask you a question, and I'm just trying to sort it
out. As you know, our part of the world is making a big effort
to strengthen our economic sector as it relates to family and
wage jobs, and pulp and paper is a very big industry in my
State. And they are quite concerned about the cuts in funding
for the programs that relate to industrial efficiency.
So, then we came upon a document. We were just going
through your materials--and I'll get this to you, it's a U.S.
Department of Energy document--and in it you say, in the next
24 months, there are going to be efforts to do energy-efficient
assessments in China. So, what we're trying to figure out, is
how does it make sense to cut the efforts that we so badly need
in key industries in our country, like pulp and paper, and then
somehow start new programs that will benefit those that we are
up against in very tough global markets?
Secretary Bodman. My understanding, sir, is that the
request for industrial technologies, the funding requested for
2008 is the same amount that we requested last year, $46
million. We are working with China, in terms of trying to
develop their attitudes and approaches on energy efficiency, as
well as the cleanliness with which they're using coal, which is
one of the dominant sources of energy in China.
We are trying to do both, but I don't view it as cutting
something here versus the efforts we're making in China. We're
trying to do both.
Senator Wyden. What I think is troubling to our key
industries, is that the industry-specific program, and that's
why I cite----
Secretary Bodman. The industry-specific program in the
paper industry, sir?
Senator Wyden [continuing]. Is cut to--yeah, there's a cut
in forest and paper products.
Secretary Bodman. I simply don't know about it, and I'd be
happy to respond to you on that.
[The information follows:]
The Office of Energy Efficiency's Industrial Technologies Program
(ITP) has historically worked with the eight most energy-intensive
manufacturing industries to research, develop, and implement advanced
technologies that save energy, cut costs, and reduce emissions. While
these activities have proven successful in reducing overall industrial
energy consumption, the industrial landscape is evolving rapidly and
industry is facing tougher challenges such as rising fuel prices,
supply volatility, and global climate change. In order to more quickly
introduce research and development (R&D) benefits to the industrial
market and accelerate new technology deployment, ITP is focusing its
technology research to be more broadly applicable to the U.S.
industrial base. Thus, R&D funds in the Fiscal Year 2008 budget request
will partially shift from specific industry areas to more crosscutting
and higher impact energy-intensive processes, common to the industrial
sector as a whole.
ITP has identified four critical technology areas (Reactions &
Separations, High Temperature Processes, Energy Conversion Systems, and
Fabrication & Infrastructure) for research that are essential to
traditional energy intensive industries that have been targeted by the
program and applicable to a much broader array of industry members.
These technology areas were identified using ITP industrial analyses,
industrial stakeholder roadmaps, and other feedback.
Senator Wyden. Let me just read you the cuts in the
specific programs for our industries; forest and paper
products, steel, aluminum, metal casting, glass, chemicals,
mining--each of those is cut. We could have a debate about the
overall level, but I would just hope that once again, you could
work with us on a bipartisan basis. Because when our
industries--and all of us share these concerns, we're doing so
much heavy lifting to be energy-efficient--to look at these
documents and say, ``Well, we're going to have a new effort in
China,'' when pulp and paper is such a concern in our country,
I hope we can revisit it.
I've got 20 seconds to follow up on the question Senator
Dorgan talked about and just give you an opportunity to share
your views. I think this country wants the Congress, again, on
a bipartisan basis, to be far bolder, and far more aggressive,
in terms of our energy future. And I think we can do a lot, lot
more, really, because this is a national security issue.
What do you see as the boldest features of the President's
energy proposal? What are the features, in your view, that
really push all of us together to a more secure energy future?
Secretary Bodman. The boldest proposal relates to replacing
15 percent of our gasoline with renewable energy, or
alternative forms of energy, but it's, in effect, renewable
energy, and to do that in 10 years. That's a major project. It
will involve in all likelihood, the development of cellulosic
ethanol, which we haven't done yet, to make it cost-
competitive. The cost of manufacturing methanol or a fuel, a
replacement fuel today, is about $1.10 a gallon, the cellulosic
ethanol is about $2.20 a gallon, so we've got to cut the cost
in half, it's a major undertaking. Part of this budget requests
funding for that endeavor.
We're also--having had efforts in the past where we have
worked with industry--and I think, sir, as a venture
capitalist, long before I had the brilliant idea of coming to
Washington to help run the Government, and I will tell you that
this is the first time in the 43 years that I have followed
venture capital, and have been having some interest in it, that
the venture capital community of this country are putting big
money into energy. They're putting it into ethanol, cellulosic
ethanol, they're putting it into photovoltaics, they're putting
it into wind energy. I am very encouraged by the new companies
that are being started and also by the efforts that these
higher prices have stimulated, a lot of economic activity.
Senator Wyden. My time is up, I would only say, Mr.
Secretary, we all are pleased to see what the private sector is
doing, and you're absolutely right about venture capital. I
just think the Government is way behind the private sector, way
behind the American people, and we could be doing more, and I
look forward to that discussion.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Corker.
Senator Corker. Mr. Secretary, thank you for this
presentation. Mr. Chairman, for the time. I want to applaud
your efforts on clean coal technology, I come from a State with
TVA, with Oak Ridge, with an abundance of coal, we have
companies there pursuing clean coal technology, and I want to
thank you for your pursuit and what you're doing in that
regard.
I was interested in the comments that Senator Craig made,
and Senator Wyden, and I would like to, if possible, spend some
time with your staff, I know I'm new on this committee--both
talking a little bit about the intricacies of what we're doing
energy-wise, and I hope you'll make them available, the tax
credits that we're actually using to stimulate investment, and
then the loan program that's been so highly discussed. I was
baffled that a million-dollar reprogramming effort would slow
down an $8 billion loan program. A staff member sort of made me
aware of how that works here in Washington; I'm sure that'll be
rectified soon. But I'd like to talk a little bit about--we
talk about the ``no cost'' of that, because of the way it's
designed--but I'd like to talk to a staffer if I could, a
little bit----
Secretary Bodman. Of course.
Senator Corker [continuing]. The intricacies of that, and
so if you all could make that available.
Secretary Bodman. Be happy to make that available, we'll
contact your staff.
Senator Corker. Perfect, perfect.
Secretary Bodman. Make arrangements for that.
Senator Corker. To be parochial, and get back to Tennessee,
Oak Ridge is a tremendous asset to our country, and certainly
to our State, and I'm convinced that Oak Ridge is going to be a
big part of our energy security, homeland security into the
future. I know that there's a huge push to make them a super
computing entity that really can help our Nation, on many
fronts, and I know that they have a program right now with the
Cray computers to, in essence, go to a lease-to-own program, I
noticed that the funding that is put in this budget to help
make that happen is actually below the 5-year profile.
Typically, lease-to-own efforts like this take place over a 3-
year period, I don't know if you know the specifics of that,
but it looks like we may, in efforts to cause our budget to not
look as extraordinary as it might be, it looks like we might be
slow-walking that effort. I don't know if you might respond to
that.
Secretary Bodman. Well, we're certainly not--I can't
comment on the specifics of Oak Ridge. I can tell you that the
science budget--which is where the support for the
supercomputing effort comes from--is very important to the
Department. We've got a very significant increase in the
funding that's there, that will be forthcoming if the Congress
passes this 2008 budget. I don't understand why we would have
the focus on efforts broadly--Oak Ridge is one of the leaders
that we have in the country in supercomputing, so I'd be happy
to try to take that question on the record, sir.
[The information follows:]
While many of our lease-to-own agreements for high performance
computers have been for three-year terms, there is no ``one-size-fits-
all'' term for managing these unique resources. Our recent experience
with the Power 3 at National Energy Research Scientific Computing
Center (NERSC) has proven that the three-year rule can be extended when
circumstances show it is prudent. The Department has determined that
the Leadership Computing Facility (LCF) at Oak Ridge National
Laboratory (ORNL) is better suited to a five-year term for a number of
reasons. First, the challenges of petascale computing and the thousands
of multi-core processors contained therein are significant. This will
be the research community's first real experience with this
dramatically different computing environment. The research community
will need sufficient time with this machine to effectively utilize its
potential and prepare to push beyond one petaflop to the next
generation of machines. Second, the Defense Advanced Research Projects
Agency (DARPA) High Productivity Computing Systems (HPCS) program is
expected to begin to deliver that next generation of machines in the FY
2012 timeframe. The Department is convinced that the ORNL LCF machine
will continue to be a vital tool for leadership computing for at least
the next five years, making the five year term a reasonable and
responsible management decision.
Senator Corker. Well, I appreciate that, and I think with
my newness on the committee, we'll just set aside some time
with your staff to go through those details, and thank you very
much for your testimony.
Secretary Bodman. Thank you.
Senator Corker. Thank you.
The Chairman. Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman.
Mr. Secretary, thank you for being here.
Secretary Bodman. Yes, sir.
Senator Menendez. I look at the budget, and I certainly
appreciate the increase in funding for the Office of Science, I
think that's a positive thing. I look at the administration
taking, what I believe is a small step, in the right direction,
with increases in energy efficiency and renewable energy
relative to last year's request, and I think the Congress is
taking a bigger step in the CRs, so I hope we can continue that
momentum.
I want to join in Senator Craig's comments about a need of
the sense of urgency as it relates to our pursuit of energy
independence. I think we need a greater sense of urgency, and I
want to also associate myself with Senator Wyden, in terms of
the boldness of the type of energy programs that we pursue in
order to achieve energy security in the country.
But, for the purposes of today's hearing, I just want to
ask you about what I do believe is one of the big losers in the
energy budget--something that, certainly in my home State of
New Jersey is an incredibly important program, and that's the
weatherization program. Here's a program that helps people that
are most in need of help: people in the lower levels of
economic opportunity in society. It helps the elderly, poor
families with children, disabled; it makes sure they're warm in
the winter; it saves money on their energy bills; it saves
energy as a Nation; and I think it's one of the finest examples
of how Government can help people while making society a whole
lot better off. I think your own Department said it best in the
flyer that it has, which says, ``Weatherization works.''
Weatherization works.
Now, last year, the administration tried to cut this
program by a third, Congress rightly rejected that cut. This
year the administration wants to cut it more, by 41 percent.
So, Mr. Secretary, let me try to get a couple of things
straight. In your budget justification, you state that the
weatherization program saves households about $274 a year, is
that correct?
Secretary Bodman. I think it costs about $2,500 per
household to do the weatherization, and it's roughly a 10
percent return.
Senator Menendez. OK, as I look at the justification
figures that the budget has, it says $274, but your fact sheet
says $358 per year, creates an energy savings of $358 per year.
Secretary Bodman. I can't respond--I'd be happy to
reconcile that, sure.
Senator Menendez. Well, we'd love to know.
[The information follows:]
For an up-front investment of $3,000 from the Weatherization
Assistance Program, household first-year savings on energy bills is
$358, on average. The $274 figure for first-year energy savings does
not reflect the most recent forecast of fuel prices and was based on an
earlier evaluation. The return on investment over the lifetime of the
energy-saving measures is approximately $4,600, and the benefit-cost
ratio is 1.53.
The cost-effectiveness of investing in Weatherization refers to the
economic return relative to all of the Department of Energy's research
and development (R&D) programs and technology investments, for each
Federal dollar invested. Investments in energy efficiency and renewable
energy R&D have multiplicative returns, such as improvements to
appliances and the building envelope, that benefit the entire American
population.
Senator Menendez. We'd love to know what the difference is.
Secretary Bodman. Sure.
Senator Menendez. Because obviously it's part of a
justification for the program itself.
Now, as I understand it, that $274 figure came from the Oak
Ridge National Lab Survey of the years 1993 through 2002, is
that right?
Secretary Bodman. I just was handed a paper that suggests
that we've had over 5.5 million American households participate
in the program, and the average cost savings have been $358 per
household.
Senator Menendez. OK, that's what the flyer says.
Secretary Bodman. That's the same number you have.
Senator Menendez. So, that's good, because I think,
ultimately, what it goes to show is that this is a program that
is cost-efficient, and as you say, weatherization works.
Now, the reason I bring this up--in addition to the
additional cut beyond last year's effort to cut--at the hearing
last year, I asked you about the weatherization program, and
you told me, ``It's not a particularly good rate of return,'' I
didn't understand that then, and I don't understand it now, I
don't know if that's still your view. Because, as I look at it,
Oak Ridge tells us that it's a $3.71 to every $1 spent by the
Federal Government, a cost-benefit ratio. And when I look at
it, I see, in the budget justification, I don't quite
understand how we could say it's not efficient. If you look at
a few different factors, one of them is annual carbon
emissions, weatherization does better in 2030 than both
hydrogen and biomass, under your own budget justification--two
programs that see enormous increases in the budget.
Another is oil import reduction. Weatherization saves us
100,000 barrels of oil per day by 2030; it sounds pretty good
to me. There's only one program that actually saves
significantly more, and that's the vehicle technology, so when
you look at all of the consumer savings that takes place,
helping those who have some of the biggest struggles in our
society, as it relates to staying warm, and at the same
context, you see all of these different indicators from your
own budget justification, speaking that it exceeds other
programs that get huge increases. Why are we not funding the
weatherization program at the level we should be?
Secretary Bodman. It's strictly a matter of priority,
Senator. I think it's a question that I carry around in my
head, that we're spending $2,500 or $3,000 per household, and
that we're getting a return of roughly 10 percent on our money.
If you look at that on an after-tax basis, you know, it cuts
it----
Senator Menendez. Your justification says you get $3.7
dollars for every $1 you invest; that's far beyond a 10 percent
rate of return.
Secretary Bodman. No, sir. I mean, if it costs you $3,000,
$3,500, and the savings are roughly $300, it costs you ten
times as much as you are receiving. I don't know where the
number, 3- or 4-to-1, comes from.
Senator Menendez. Well, we're happy to go through it with
your Department. I mean, Congress rejected it last year, I hope
it rejects it this year. Otherwise we're going to tell 40,000
families in this country, ``You can spend another freezing
winter paying exorbitant fuel bills, simply because we don't
believe this is a high enough rate of return,'' when in all of
these different categories, the weatherization program exceeds
beneficial outcomes, compared to others that have enormous
increases.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Thank you, Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
And, thank you, Secretary, for being here.
Mr. Secretary, I do appreciate you being here, I know that
these hearings on the budget aren't the easiest, and it's tough
as we try to work through the priorities.
I will admit a little bit of disappointment in your
explanation to Senator Akaka about the lack of funding for the
gas hydrates, the methane hydrates research. A couple of years
ago, we had an opportunity before this committee to present a
legislation that Senator Akaka and I had worked about, and
there was a great deal of excitement about the prospect of
literally a thousand years of energy being supplied to this
Nation through the prospect of gas hydrates. That technology is
not advanced. Just because the price of natural gas is higher
than what we were sitting at 2 years ago, doesn't mean that we
shouldn't be encouraging that technology to advance.
I listened very carefully to your comments, Senator Thomas,
about the frustration that, perhaps, as we move toward the
alternatives and the renewables, in this transition time from
the more traditional fuels, we're not getting the help and the
assistance that we might need with the traditional fuels. We're
focusing on the alternatives and the renewables.
Well, there are areas within alternatives and renewables--
in my opinion, geothermal, ocean energy--where we're saying,
right off the bat, ``You're a loser category, we're not going
to help with the funding for these projects,'' so we're in this
transition, and we're not giving the assistance that we might
possibly be considering for the more traditional fuels, and
we're not doing adequate measure to advance us in that next
generation of technology.
So, there's a frustration here, as we try to prioritize--
it's difficult, but it's necessary. I would just put in, again,
a pitch for the assistance that we had requested and received
under the Energy Policy Act for the gas hydrates, as well as
the more renewable alternatives that we're looking at with
geothermal--great potential. Great potential for ocean energy.
It's difficult as we look at that and say, ``Well, there's not
going to be anything in the budget for that, for the short
term.''
I need to ask you a very specific question. Again, a couple
of years ago, we were very excited, very enthusiastic about the
prospects of bringing Alaska's natural gas online to meet the
country's needs here, we were successful in passing that
legislation, the State of Alaska is working through issues now,
but in looking at the budget and the funding for fiscal year
2008, there is no funding for the Alaska Gas Pipeline
Coordinator's Office.
This is going to be critical, and key, as we advance the
prospect of this. Am I missing something in the budget? Is it
there in some other area? What can we expect in terms of
assistance on the gas line coordinator's office?
Secretary Bodman. I think that the unfortunate situation is
that, in Alaska, they have not gotten their act together to
deal with this. We have not--to my knowledge--I think it's not
there. The reason that it's not there is that we don't see the
need for spending money on something that there isn't call for.
Senator Murkowski. Well, that's a tough message to take
home to the State, where they are working to try to put
together a deal. If the legislature is successful, and the new
Governor presents a plan that is going to work, a project that
is going to work, and that is approved within the next, say, 9
months or so. If we don't have a Federal Pipeline Coordinator's
Office in play, working the permits, working all of the other
aspects that they have hoped to be doing, then it's going to be
the Federal end that will be behind. There needs to be a
coordination between what's going on with the State, as well as
the Federal end, and we're going to miss a whole cycle if we
don't fund this office in fiscal year 2008.
Secretary Bodman. We will try to respond if they can get
this done in the next 6 to 9 months, I would be very pleased.
Senator Murkowski. I would be, as well.
One last question for you, Mr. Secretary, and this relates
to Indian Energy Assistance.
Secretary Bodman. Yes.
Senator Murkowski. Also in the Energy Policy Act, we called
for aid for the Native tribes to help develop energy resources
on their native lands. Apparently, the Department is not
seeking to fund this in the Act. There's great potential out
there, as well in areas where they very seriously could use
some assistance.
Secretary Bodman. No, I'm sure they----
Senator Murkowski. Why this lapse?
Secretary Bodman. I'm sure they could, and it's purely a
matter of priority. Not every title in the Energy Policy Act is
something that we have pursued--that's one of those that fell
off the table.
We have, however, funded through our environmental
management activity, and through the Renewable Energy Office
and the Department of Energy, tribal activities. We have tried
to get ourselves better organized--the Assistant Secretary of
Congressional and Intergovernmental areas of responsibility,
Jill Sigal, heads up an internal group within the Energy
Department--we're trying to serve, and do a better job of
serving the tribes. But it has not been something that we felt,
in terms of the Energy Policy Act, that ranked up there with
other priorities.
Senator Murkowski. Thank you, Mr. Chairman. I think we
should give Senator DeMint a little extra time. Thank you.
The Chairman. The normal course would be to go to Senator
Cantwell at this time; can you wait another 5 minutes?
Senator Cantwell. Thank you, Mr. Chairman.
Secretary Bodman, it's good to see you, and----
Secretary Bodman. Good to see you again.
Senator Cantwell. Good to see your--I think that was humor
this morning--about the brilliant idea of coming to Washington,
or maybe it was very sincere.
Secretary Bodman. Oh, it was meant to be humorous.
Senator Cantwell. Well, we're glad, we're glad you're
sticking with it.
Let me ask you a couple of questions, obviously my
colleagues from the Northwest articulated our ``Groundhog Day''
frustration with revisiting, again, the BPA privatization by
the administration, and I don't have to remind you, but maybe
remind other people that this kind of impact to the Northwest,
we believe, is in the hundreds of millions of dollars, and
basically a rate increase, if it went through.
Do you think the Agency, and the administration really does
have the--after looking at this for an hour--do you really
think that the administration has the legal authority to do
this? On its own?
Secretary Bodman. I don't know the answer to that question.
I do think that it is a--you and I had this discussion a year
ago, as I remember, it is a little bit like ``Groundhog Day'',
in that sense. I do think it's a prudent business practice, and
paying down the debt, as long as you're not losing it, I think
makes sense. I know your views on it, and I know the views of
your colleagues on that subject.
Senator Cantwell. Obviously we do have a different
philosophy, and I have so many questions I want to ask you, so
I won't belabor that, other than to say I think we provided you
with information that says that the administration doesn't have
the legal authority to do this, only Congress does. And so I
was curious as whether you----
Secretary Bodman. Let me ask--I don't know any more than I
knew about it last year, and I will be happy to give you a more
thoughtful response, as to whether we have the legal authority
to do this.
[The information follows:]
The legal authority for the Administration's position is thoroughly
set forth in the following letter and memorandum dated June 23, 2006,
from Department of Energy General Counsel David R. Hill to Senators
Burns, Cantwell, Craig and Smith.
Senator Cantwell. Thank you.
I would like a response, as well, on your budget. I
appreciate the Hanford Cleanup Budget, and would like to focus
on how that is a priority for the Nation. Certainly it is of
regional interest to Washington State. The tank waste cleanup
budget, though, I think over a 3-year period of time now, has
seen about a 25 percent cut, and even your own budget talks
about 70--roughly 67 tanks are believed to have leaked about 1
million gallons of waste into the soil, and that continued
leakage could cause, obviously, incredible damage to the
Columbia River.
So, why the 25 percent cut over several years' period of
time? Why not move this tank waste while we're waiting for the
vitrification plant? Why not move this tank waste into the
double-shelled tanks that exist?
Secretary Bodman. My understanding, Senator, is that all of
the liquid that can be pumped, that can be moved, has been
moved, and is moved into the double-shelled tanks. That the
part that remains is sludge, and the goal is trying to move
this and trying to build more double-shelled tanks in order to
accommodate the sludge that's there. It would cost the
Government a half a billion dollars and 8 to 10 years to build
enough tanks in order to accommodate that. Hopefully by that
time, we will have gotten the low active waste facility up and
going, and we would be moving ahead with the program that we
now have.
Senator Cantwell. But, could we get in writing how much
capacity are in the double-hulled tanks? Could we get that in
writing from the Agency?
Secretary Bodman. Sure.
Senator Cantwell. Because, obviously the Tri-Party
Agreement under this current proposal is not going to be lived
up to, and so I know you're saying you think these numbers are
better to continue on the vitrification plant. I'm looking at
the million gallons that's leaking into the groundwater
contamination, going toward the Columbia River, and obviously
looking at this challenge. So, I think getting more specifics
is very important to the Northwest.
Secretary Bodman. I'd be happy to provide that to you.
[The information follows:]
CAPACITY OF DOUBLE-HULLED TANKS AT HANFORD FOR STORAGE OF HIGHLY
RADIOACTIVE WASTE
Hanford has 28 double-hulled tanks for storage of highly
radioactive waste. These tanks, known as double-shell tanks, have a
total capacity of 32,260,000 gallons. The tanks currently contain
27,000,000 gallons of waste. Not all of the empty space can be filled
with waste retrieved from the single-shell tanks, as some of it is
needed for other purposes, including 1,200,000 gallons as emergency
space, should one of the double-shell tanks start to leak, and
1,760,000 gallons of space spread among nine tanks, that cannot be used
because doing so would mix incompatible waste types. Therefore, the
currently available space is 2,300,000 gallons. Some of this available
space is needed to accommodate transfer and receipt of waste in the
tank farms and to operate the waste evaporator. Operation of the waste
evaporator is important as it reduces the waste volume by boiling off
excess water. Five million gallons of liquid waste currently stored in
the double-shell tanks will be processed through the waste evaporator
in order to free up an additional two million gallons of double-shell
tank space to support single-shell tank retrievals.
Waste retrieval has been completed on six single-shell tanks.
Retrievals are in progress at three. single-shell tanks, and double-
shell tank space should be adequate to complete waste retrieval from
these three tanks, and nine more, for a total of eighteen single-shell
tanks that will be retrieved by the time the Waste Treatment Plant
starts operation.
Senator Cantwell. A couple of other questions. I think you
heard a theme from my colleagues here this morning about the
credibility of the President's State of the Union Address, and
then the budget itself, in backing that up, and prioritization.
So, I have a couple of questions for you.
One, would you recommend that the President sign an RPS,
similar to what Senator Bingaman has proposed? A Renewable
Portfolio Standard reduction, or basically using 15 percent of
our energy from renewables on the electricity grid: would you
recommend the President sign that?
Secretary Bodman. I wouldn't. It seems to me that that is
something that's best handled at the State level. The State of
Texas, when this President was the Governor of Texas had a very
high RPS, locally developed standard. Some States have very
good access to renewable fuels, others don't.
Senator Cantwell. I obviously disagree on that.
One other question, if I could.
Secretary Bodman. OK, sure.
Senator Cantwell. But, I really appreciate your indulgence
in these questions.
Secretary Bodman. Sure.
Senator Cantwell. The other issue as it relates to this
committee on a bipartisan basis--2005 legislation supported
much higher tax breaks and incentives for renewables with the
administration's support, either a 5- or 10-year extension on
renewable energy tax credits. We don't see that in the budget,
either. So, I'm talking about a longer horizon, shifting the
playing field away from the very mature fossil fuel industry to
the renewables, and an MIT technology guy, and as you just
said, you're amazed at how much investment's going in there,
but yet we still are only giving them about a 2-year horizon.
Does the administration support changing the tax credits to
give them longer horizons? The committee, on a bipartisan
basis, has supported a 10-year horizon for some of those
renewables; would the administration support that? Or even a 5-
year?
Secretary Bodman. I think that the administration is
unlikely to support either. I can't say that categorically,
because I don't know, I haven't questioned it. But I do think
it's a matter of the budgetary impact, and you make that kind
of a commitment that, you then extend it well out into the
future. That's the reason for the more conservative standard
for renewable fuel incentives.
Senator Cantwell. Thank you, Mr. Secretary, I'm sure we'll
have a hearty debate about these issues.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator DeMint.
Senator DeMint. Thank you, Mr. Chairman.
And, thank you, Mr. Secretary.
I'm about to lose my voice, so I'll have to be brief.
I want to thank you, personally, for how responsive you've
been to our questions and the meetings we've requested, and the
professional way you go about your job. I've just got a few
questions, maybe more global. You know I have a particular
interest in the Savannah River site in South Carolina.
Secretary Bodman. Yes, sir.
Senator DeMint. But, my questions are more national.
Just, as it relates to budget, and our recent debate on
earmarks. A number of the agencies had let us know that
congressional earmarks diverted their attention from national
priorities, and we have made the pledge here in the Congress to
eliminate unauthorized earmarks. But, there's still talk that
report language has earmarks that our administration and
different agencies are going to feel pressured to honor.
I just wanted to ask you, do you feel empowered at this
point to apply your budget toward national priorities, and to
ignore unauthorized report language earmarks that relate to
your Agency?
Secretary Bodman. Yes, sir.
Senator DeMint. That's all I needed to hear.
Let me ask a broader question. I've got a lot of questions
about the Savannah River site, and Savannah is a sister site to
other sites in other parts of the country. But, as you know,
there are multiple missions at this site, and others. It seems
that every year we go back through the same process of not only
fighting for budgets for the different missions, but actually
fighting and arguing about if these missions really are a
priority, and if they're going to continue.
It seems that what we're missing is a national vision for
these sites, waste cleanup, recycling, as you in a recent
letter committed to our Governor about salt-waste processing.
But next year, we're likely to be debating again--which of
these we will continue, which is a priority--and it would seem
that DOE at this point needs to maybe help lead us with what is
a national vision for all of these different missions, and at
which sites are they going to be, so that when we, at least,
argue about budget, we're arguing within the parameters of a
national vision for our energy and alternative fuels, and
recycling, and waste cleanup. The way we're doing it now, it
seems so piecemeal, that we fund something and the next year
we're not sure if we're going to fund it. I'm afraid in the
process we're wasting a lot of money, losing a lot of time. Is
there that goal within your Department to put all of the pieces
together in a grand vision, and relate it back to these sites?
Secretary Bodman. There is the desire to do that. There are
limits as to how far we can go in terms of looking out into the
future. Those limits are largely imposed by our friends at OMB,
who look hard at whatever financial commitments we're making
into the future.
I do think that the Department has, in making the judgments
on this particular budget, used a so-called ``risk-adjusted
approach'' where we have looked at where the risks are, and the
largest risks are at Savannah River, at the Idaho facility, and
at Hanford. That's where the priority was. It doesn't mean
we've eliminated funding elsewhere, that's where the largest
risks are. We are trying to adjust the focus there.
I would say this to you, Senator. This government has a
major problem with respect to its long-range planning. We do 1-
year budgets, we do it one at a time. I'm looking at changes in
the committee, here--2, or 3 years from now, for sure, you'll
have a different Secretary here who will be making judgments.
We do this one at a time. And having a game plan that we all
live by is something that our Government has a terrible time
doing. But I agree with you, it's a desirable thing.
Senator DeMint. Well, the Congress has that problem with
short-term thinking, too. But I know, if I could just leave you
with one thought, and you know from your time in the business
world, if you do your planning based on what you can afford,
and pay for, you often miss the big opportunities. Many times,
if that vision is clearly established, and laid out, and
priorities are made clear, that tends to drive what we're
willing to spend, and how we pay for it. I think Congress needs
that leadership from the Energy Department right now. If we
know it's a national priority, and we know you know how to make
it work, I think we're much more likely to come up with the
funding.
Secretary Bodman. We will try to do a better job.
Senator DeMint. And we will, too. Thank you, sir.
The Chairman. Senator Salazar.
Senator Salazar. Thank you very much, Chairman Bingaman,
and Ranking Member Domenici.
And, welcome Secretary Bodman. First, let me say that I
continue to be thankful to the attention that you and the
President have paid to the National Renewable Energy Lab in
Colorado, and was thankful for the President's statement, also,
with respect to energy in the State of the Union.
My question today has to do with the follow-up, relative to
the resources that we're putting behind the technological and
alternative fuels efforts, to try to get us to the goals that
the President articulated in the State of the Union.
Secretary Bodman. Right.
Senator Salazar. I would like you--with all due respect,
Mr. Secretary--to respond to the proposed changes in funding
for the National Renewable Energy Lab which I--on first blush--
have found quite troublesome.
The reduction that I have seen with respect to NREL shows
that, with respect to wind energy, which is one of the big
things happening across the country, and in the West, we are
proposing a 26 percent change--a 26 percent decrease over the
funding from last year. And then with respect to the total EERE
programs, there is a decline of 3.6 percent from last year.
I look at the numbers in the budget--they don't quite match
up to the vision and the program that the President articulated
in his State of the Union, or that we have talked about in
terms of the robustness of the effort that we need here. I
think, at the end of the day, you and I both very much agree
that this is one of the most important things that we could do
to protect this country.
Secretary Bodman. Well, it is. I have not looked at the
NREL budget, so I don't know what it is. I've looked at the
EERE budget, and that's up by 5 percent. I would be happy to
give you a response at some point in time in the future about
the NREL budget, in particular. I do believe that we are
properly funding the efforts at EERE, in terms of their focus
on renewable energy.
Senator Salazar. If you could do that later on, Secretary
Bodman, I would appreciate it, just in terms of the impacts of
the budget, related to NREL.
Secretary Bodman. Yeah.
[The information follows:]
The Department of Energy's Fiscal Year 2008 budget request
indicates a reduction in funding for the National Renewable Energy
Laboratory (NREL), but these numbers do not tell the whole story.
Throughout every fiscal year, NREL has the opportunity to compete for
additional funds for new research for specific projects. A conservative
approach is taken when formulating the budget request. The Office of
Energy Efficiency and Renewable Energy only designates the minimum
amount of funding for known, ongoing operations--not the estimated
value of new research that NREL may conduct. Unfortunately, this
creates the appearance that funding going to NREL will be lower. In
fact, actual funding to NREL has historically been higher than the
original budget estimate. For example, in Fiscal Year 2006 NREL
ultimately received $9 million more than the estimate shown in the FY
2006 request.
Senator Salazar. The other thing I would ask you to also
focus on--and it may be part of the conversation that we have
with respect to the continuing resolution, but there are some
major aspects of the NREL capital construction program that are
necessary in order for us to get to the level of alternative
fuel production that we want to get to in this country.
Secretary Bodman. Right.
Senator Salazar. They include the Integrated Bio Refinery
Research Facility, the capital requirements for the Science and
Technology Facility, and the Research Support Facility. Those
are facilities that I know you became familiar with----
Secretary Bodman. Right.
Senator Salazar [continuing]. When you were at NREL last
year. So, I would ask for an update with respect to those three
facilities.
Let me ask one more quick question while I have my
remaining time here. We are in the midst this morning of
another hearing in another committee, the Agricultural
Committee on the 2007 Farm Bill. There are major initiatives
within the Farm Bill related to alternative fuels, including
investments of several hundred millions of dollars into
cellulosic ethanol, and certain assumptions that are being made
there.
In your view, does our budget here for the Department of
Energy do everything that it possibly can do to unlock those
keys which--do we still need to find the key to unlock the
answers to get to commercialization of cellulosic ethanol?
Secretary Bodman. Are we doing everything we could do? No.
Are we doing what is reasonable? Have we made a reasonable
tradeoff among the various areas for which I'm responsible? I
think we have. I do know that there is an effort to coordinate
what we're doing in our efforts particularly at NREL on
cellulosic ethanol, with what the Ag people are doing. One of
our former staff members' deputies is now over at Agriculture,
and he has done a very good job at coordinating with us. So,
we're trying to do a better job.
If you asked me, are we doing everything that I could
imagine doing? The answer is no. Are we doing what I think is
reasonable--have we made reasonable tradeoffs? I think we have.
Senator Salazar. OK, but at a committee hearing that
Senator Bingaman put together on biofuels, I think the experts
from around the country were telling us that it's impossible
from their point of view for us to achieve the 30 billion
gallon RFS that the President articulated in the State of the
Union. What, quickly, is your view on that, and can this budget
help us get to that, or is it impossible, given the budget
constraints that we have in this budget?
Secretary Bodman. No, I think we can get there. The morning
after the State of the Union address, I actually accompanied
the President to visit the DuPont Company, up in Wilmington,
Delaware and to look at the results of a solicitation that was
done 3 years ago. We jointly funded with DuPont efforts to
create a bio-refinery to manufacture cellulosic ethanol.
Totally different than anything going on at NREL. They reported
great progress. I have to tell you, I felt much better having
left there; I was much more encouraged by that experience.
I would also tell you, before you came in, sir, I mentioned
I did start out life as a venture capitalist. I have a 40-plus
year history of watching that industry, and this is the first
time in my 40 years of observing the industry that we have seen
serious money--billions of dollars--going in from the venture
capitalists, to the creation of cellulosic ethanol, as well as
other raw materials. It's a big deal.
It's going to be Government, we're working hard on it, the
Ag Department is working hard on it, but my guess is--like a
lot of other things--the solution will probably come from the
private sector, by taking some of the technology that we've
developed. DuPont, for example, bases a lot of their work on
what goes on at NREL. They work with the refining facilities
there.
Senator Salazar. Well, I appreciate it. I see my time is
up, and I don't want to infringe on my colleagues. But thank
you so, so much, for your comments.
The Chairman. Thank you very much. We'll have a few more
questions; I know Senator Domenici's coming right back.
Let me ask you about a couple of issues, Mr. Secretary. One
is this 35 billion goal that the President has established for
35 billion gallons of renewable fuel by 2017.
Secretary Bodman. Right.
The Chairman. We had a conference last Thursday on
biofuels, and several of the witnesses said, in their view, the
maximum amount of biofuels that could be reasonably produced
from corn was about 15 billion gallons per year. That was----
Secretary Bodman. I agree with that.
The Chairman. OK. Dr. Dan Arviso, who's head of your
renewable energy laboratory----
Secretary Bodman. Right.
The Chairman [continuing]. Was asked how much he thought
could be produced from cellulosic sources by 2017, and he said
that their most ambitious, or optimistic, projection was that
it would be 6 billion gallons. So, I added the 15 and the 6,
and I didn't get to 35.
Secretary Bodman. Right.
The Chairman. How do you see us getting to the 35?
Secretary Bodman. Well, first of all, I don't know. We're
talking about 10 years, Mr. Chairman. I do believe that you
will see efforts--there are scores of private companies that
have been funded and are working in the private sector that are
funded by some of my former colleagues in that industry, and
they're very upbeat, and encouraging.
We have seen efforts by larger companies, and DuPont will
have--they claim--a semiworks up and built within the next
couple of years. They're working with a partner, I'm sure they
would like to have a loan guarantee--to get back to one of your
previous points--but they will be working with a partner to try
to get that up and going.
We're talking about 10 years. Ten years in the high
technology business is an eternity. Trying to forecast these
things is very tough. I think this can be done. I have great
regard for Dan Arviso, he's a very capable man. I wouldn't want
to question whatever he told you. But I believe that the
combination of alternatives--this is not just ethanol, or not
just cellulosic ethanol--it is biodiesel, it is biobutanol.
Butanol is a better feed additive to gasoline than ethanol. It
has advantages, in that it doesn't take up water, and therefore
it can be pumped around the country. I think it also counts
hybrid and battery technology that will help.
There are different ways of looking at this, and I think
that it's not unreasonable to assume that this thing can be
met. I would be kidding you if I were to say anything other
than this is a stretch goal. It's going to keep all of us on
our toes, but I think it's worth doing.
The Chairman. Let me ask, also, a question about your
proposed increase--400 percent increase for funding for GNEP.
Secretary Bodman. Yes, sir.
The Chairman. I'm a little unsure, and I think we're
probably going to have to have a hearing here, later on this
spring, maybe, and look at this issue. Last year, the
Department's justification for GNEP talked about phasing out
old recycling technologies. This year, the Department's asking
for engineering design funds for spent fuel treatment and
recycling facilities.
Secretary Bodman. Right.
The Chairman. As I understand it, there have been no
breakthroughs in fuel recycling science and technology in the
last year, so the Department is now proposing to design a
recycling facility. I'm just not clear--are we abandoning
current recycling technologies? Or, are we proposing to build
facilities based on current recycling technologies?
Secretary Bodman. The latter. The people at Argon
Laboratory, out in Chicago, have developed bench-scale
separation technologies to separate out the transuranic
elements--plutonium, americium, curium and, I think, neptunium,
whatever the fourth one is--from spent fuel. So, they've done
it at the bench-scale.
The goal is to, therefore, get this scaled up, and to make
it real. That's what all this money is for. When people say
that we are not--whatever your first summary was, that, as you
looked back, that we, last year the justification was that we
were----
The Chairman. The statement was that we were going to be
phasing out old recycling technologies.
Secretary Bodman. I have no idea what that means.
The Chairman. Yeah, I didn't either. I think what we need
is a better fix on how expensive this is going to be, how long-
term this is going to take--we're starting to spend real money.
Secretary Bodman. Oh, I know.
The Chairman. Under your budget here----
Secretary Bodman. I understand.
The Chairman. We're getting it up to a level here, where
Congress needs to know what it's investing in, in a little more
specificity.
Secretary Bodman. We would be happy to provide that for
you, sir.
[The information follows:]
There have been successes this past year in the areas of fuel
recycling. We have made substantial progress relating to the advanced
separations and recycling technologies proposed for use as part of the
Global Nuclear Energy Partnership (GNEP) initiative. The Department's
national laboratories have repeatedly demonstrated, in laboratory
settings, the final process step of the separation of the transuranics.
Separation of transuranics from spent nuclear fuel, would allow for
their reuse in fuel elements in an advanced recycling reactor.
Additionally, the Department has initiated end-to-end testing of
advanced separations technologies to further validate the transuranics
processing steps and to provide data leading to an even larger-scale
demonstration of separations technologies.
In response to the reference to phasing out old technology, the
Department is not proposing to build facilities based on the PUREX
process, which separates pure plutonium from spent nuclear fuel and is
currently in use by the international community. Instead, we are
proposing to use advanced technologies that allow spent nuclear fuel
recycling without separating pure plutonium. Many of the individual
steps from processes already demonstrated on a large scale can be
selectively used by incorporating advanced separations processes
without separating plutonium.
The Department's FY 2008 budget request would allow the
continuation of vital research and development activities, including
the expansion of ongoing modeling and simulation efforts. The FY 2008
budget request also supports continuation of conceptual design
activities for the advanced fuel research facility and the design of
the nuclear fuel recycling center and advanced recycling reactor.
International activities are also planned to accelerate in FY 2008 and
efforts on a proliferation resistant nuclear reactor suitable for use
in developing economies would be initiated. The FY 2008 budget request
supports these activities all of which will inform my decision on the
path forward for GNEP and for continuing our critical advanced fuel
cycle development.
Secretary Bodman. I think it is fair to say that this is
going to be a multi-decade problem. This is not going to yield
to something that's going to happen in 3, 4, or 5 years. This
is going to be 10-years-plus to accomplish GNEP.
There are four parts of it--it is recovery of the
transuranics from the spent fuel. It is the creation--taking
those transuranics, and converting them into a fuel element
that can be used in a fast reactor. It is the creation of that
fast reactor, and it is, fourthly, the reprocessing of the
spent fuel from the fast reactor.
The goal of all of this is to create a mechanism, such that
we can produce the energy, use the energy that is already
stored in the spent fuel, but in a different chemical form.
That's what the goal is, and to do it in a proliferation-
resistant fashion. So that, in a summary, is what we're trying
to accomplish. The challenges are substantial. It is a research
program.
The Chairman. As I indicated, we'll probably have to have
an additional hearing on this. I appreciate your explanation.
Senator Domenici.
Senator Domenici. Thank you very much, Mr. Chairman.
I wish some of the Senators that were here earlier could
participate in the discussion about how do we do what some of
them have said we ought to do. I have some questions on
unconventional fuels, like oil shale, that I want to get in.
But, Mr. Secretary, I think the committee's activity today
and questions leaves you with a challenge that I would put
forth, and if you think it has merit, maybe you can do it. If
you think it's wasteful, just tell us.
But, I think the questions that are raised by a couple of
Senators who say, ``We need a bigger goal, we need a `shoot the
moon' idea,'' they didn't use that word, I did. But that's what
they're saying. I think they're mistaken, because I don't think
we're going to solve our energy problem with one technology,
and one fix. I think the problem is going to require--it might
be a little bit too spread out, but I think it's going to
require something like that.
I wonder if you might challenge your Department, or add
somebody to it, and put down on paper, and submit to us for the
record what the war on energy, on using oil, what is it, in
terms of what we are doing? Because, I think you'll find, if
somebody inventories it--we're doing a lot of things.
Secretary Bodman. Yes, sir.
[The information follows:]
The Department of Energy is indeed engaged in many, many activities
designed to increase America's energy security and reduce our
dependence on foreign sources of energy, particularly petroleum and
petroleum products. We currently import almost two-thirds of our oil.
Last October, I released the Department's Strategic Plan, and
Energy Security was listed as the Plan's number one strategic theme.
Another of the Plan's strategic themes is Scientific Discovery and
Innovation, and I would like to outline for the Committee some of the
important and wide-ranging activities in these two areas. I agree with
your assertion that we are not ``going to fix our energy problem with
one technology, with one fix.''
Probably the most important aspect of increasing our energy
security is increasing our diversity of supply. This is especially
critical in terms of the transportation sector, where petroleum
accounts for more than 95 percent of the fuel consumed. DOE is
investing in both energy efficiency and alternative fuels technologies
to reduce the energy-intensity and increase the fuel-flexibility of
America's economy while maintaining and improving our environment. We
are making tremendous strides in two transportation sector-related
areas: fuels and vehicles.
In the area of fuels, the Department is moving ahead to transform
the nation's domestic biomass resources into affordable biofuels and to
make cellulosic ethanol cost competitive by 2012. Achieving this goal
could allow market penetration of significant amounts of ethanol that
could help reduce our dependence on oil. Biomass is a critical
renewable resource, as it is the only renewable option for producing
liquid transportation fuels in the near term and reducing our
dependency on imported oil. Because we cannot increase our use of corn
grain indefinitely, we need to increase our use of cellulosic ethanol--
which can be made from a variety of non-food or energy crops like
switchgrass, agricultural residues like corn stover, various straws and
hulls, as well as forest resources. Although it requires a more complex
refining process, cellulosic ethanol contains more net energy and
results in lower greenhouse gas emissions than traditional corn-based
ethanol. On February 28, I announced that DOE will invest up to $385
million for six cellulosic ethanol biorefinery projects over the next
four years. On May 1, I announced that DOE will provide up to $200
million over five years to support the development of small-scale
cellulosic biorefineries. DOE believes that these cost share projects
will lead to commercial demonstration of advanced biorefineries that
use cellulosic feedstocks to produce ethanol and co-produce bioproducts
and electricity.
In the area of vehicles, DOE's Vehicle Technologies program is
seeking to enable personal and commercial highway vehicles to become
more fuel efficient. Technology research includes lightweight
materials, advanced batteries, power electronics and electric motors
for hybrid and plug-in hybrid vehicles, and advanced combustion engines
and fuels. These technologies contribute to reducing America's use of
oil. For instance, advanced passenger vehicle diesel engines have the
potential to achieve significant efficiency gains with near-zero
emissions. We continue to focus on expanding efforts to promote the
adoption and use of petroleum-reducing fuels, technologies and
practices.
While all of these technologies show great promise in reducing our
dependence on foreign oil, the Administration and DOE believe that we
must maintain and indeed expand our ``insurance policy'' that helps
protect us from severe energy supply interruptions. Accordingly, we
have maintained the level of our Strategic Petroleum Reserve and we are
in fact significantly increasing the amount of oil stored in it in
accordance with our statutory obligations under the Energy Policy Act
of 2005 to increase the inventory of the Reserve to one billion
barrels. Additionally, we have proposed to increase the overall
capacity and inventory to 1.5 billion barrels.
I would be remiss if I did not emphasize the importance of our
Scientific Discovery and Innovation strategic theme. We are entering a
new era of increasingly rapid changes in the pace of discovery and
innovation. These changes present both opportunities and challenges,
requiring a new U.S. commitment to science and innovative approaches
for accelerating the realization of benefits from our research
enterprise. We must remain vigilant as other nations invest heavily in
science and technology in an attempt to match our economic productivity
and compete with U.S. industry.
The Department of Energy has a laboratory system second to none in
the world, and I would like to offer two examples of the kind of work
that our labs do which contributes to U.S. efforts to become less
dependent on foreign sources of oil. First, through a partnership
between Chevron Energy Technology Company and DOE's Los Alamos National
Laboratory (LANL) in New Mexico, new technologies developed at LANL are
being transferred into commercial application that are being used to
enhance oil and gas production. For the oil industry, methods to
communicate down the well had been generally unreliable due to
corrosive conditions. Los Alamos National Laboratory's wireless
communication technology, INFICOMM, is being adapted for use in oil and
gas wells. The wireless communication allows data rates up to a million
times faster than conventional techniques, so that real-time, broadband
production data can be obtained. The wireless communication system
allows production data to be sent from remote wells to a platform or a
flow station without the need for batteries or other power. This
initial agreement has led to a cooperative research and development
agreement between Chevron and LANL to advance energy security. The
agreement has led to further technology development used in acoustic
sensing and fluid flow characterization through a pipeline.
In another area where DOE's lab system has been instrumental in
contributing to reducing our reliance on foreign oil, our efforts to
develop cellulosic ethanol as a viable commercial motor fuel have been
supported by work of the National Renewable Energy Laboratory (NREL) in
Golden, Colorado. A new genus and species discovered by NREL scientists
has the potential for widespread use in the biomass industry.
NREL packaged its discovery into an enzyme technology that has the
potential to improve productivity for biorefineries. This technology,
E1 Thermostable Endoglucanase (E1), allows manufacturers to create
industrial chemicals at a greatly reduced temperature, as well as at a
greatly accelerated process, which translates into cost savings for the
biomass industry. This platform technology is designed to utilize a
renewable technology based on enzymes to convert organic materials into
sugars, for further development of ethanol/fuel, as well as other
chemicals and products.
NREL entered into a license agreement with Genencor International
for the E1 suite of patents. This license agreement between NREL and
Genencor provides an opportunity for the biotechnology industry to
begin production from plants and other renewable resources, which
promote both environmental and industrial sustainability in addition to
being cost competitive with those synthesized through traditional
chemistry.
These examples are representative of the efforts DOE is undertaking
on an ongoing basis to reduce our reliance on imported oil. As you
know, our FY08 Budget documents provide additional details of these
efforts.
Senator Domenici. The problem is, nobody knows it, and once
they know it, they forget it by the next week, and they're
looking for some more. We don't have to worry about that,
because we're just working at it--you and I, and Jeff and
others, are just busy at it. But, I think it might be
worthwhile, trying to put a plan together saying what we are
doing.
You tell us, every time we meet, you mention things that I
am not aware of, like you mentioned that we have three plants
with such-and-such that are going to do such-and-such.
Secretary Bodman. Oh, the bio-centers, sir?
Senator Domenici. Right.
Secretary Bodman. Yes.
Senator Domenici. I don't know enough about them to
participate in a discussion with you. That's my fault, not
yours. But those are big-time things. They would fit into a map
and narrative of: what is it we are doing? What is the goal,
and what are we doing? I think it's pretty good.
Secretary Bodman. I--thank you, I agree with you. I think
it's pretty good, too.
Senator Domenici. Do you think it's worth evolving it out?
Secretary Bodman. Sure, we'll be happy to. That's frankly
what we attempted to do in the budget.
Senator Domenici. It's too cumbersome.
Secretary Bodman. A lot of what we say will be related to
the budget, but we'll try to do it.
Senator Domenici. I think it's just got to be smaller.
Secretary Bodman. Yes.
Senator Domenici. It's got to be less verbose, and it's got
to be a little more artistic in the sense of people looking at
it and saying, ``This is the American Energy Program.'' I think
if you don't do it, it's--other Departments claim pieces of it.
I'm glad you're working with the farmers, the people at
Agriculture, because there's no question, there can and may
still be a big fight--whether they should do a $100 billion
loan program, or whether we should be doing it--and I'm glad
you know that's a problem.
Secretary Bodman. Yes, sir.
Senator Domenici. I'll be a couple of more minutes.
Now, having said that, let me ask you this. The Department
of Energy estimates that technologically recoverable oil shale
in the United States is roughly equivalent to three times Saudi
Arabia's oil in their reserves. Section 369 of the Energy Bill,
which we keep referring to, again, has a very interesting
proposition. It directs you to accelerate the commercial
development of this conventional fuel. Are you aware of that?
Secretary Bodman. Yes, sir.
Senator Domenici. You're working on it. First question:
explain your progress in facilitating the commercial
development of these resources, and what you believe is the
greatest impediment to the commercial development of
unconventional fuels. When do you believe the United States
will have a commercial oil shale program, and how can this
process be expedited?
Secretary Bodman. Well, we do this, first of all, without
incentives for oil and gas. That is the standard by which we
operate, and therefore we do have a number of private companies
that are working--Shell, in particular, has got a very exciting
program. I think you visited out there, if I'm not mistaken.
Senator Domenici. Yes, sir.
Secretary Bodman. I think their goals and aspirations are
very consistent with what you just said. That's why they're
there. I think their commitment to a process for the recovery
of oil is a multi-year research program, but one that they're
very committed to. One that they claim pays off at roughly the
$30-$35 a barrel level. So when you ask what the impediments
are--the impediments are, this is a very, very tough
environment in which to operate. Because heretofore it has
involved, basically, a mining operation, where you dig the
stuff up. That proved to be a very expensive way to do
business.
What is now being undertaken is to do it underground, and I
think there is reason to believe that they can do it.
Senator Domenici. Oh, Mr. Secretary, stop there. You see,
what I'm thinking is, if you wrote up what America is doing, to
try to solve our problem, under the rubric of trying to produce
conventional fuels.
Secretary Bodman. Right.
Senator Domenici. But some people think we should stop
trying that and go some other way--I don't think we should stop
if some can be developed that are usable, and I think this is
one--let them push, that is, the private sector, but you be as
accommodating as you can under the law, and you count this as
something we are doing. It's an American effort that some
people in the world will look at, and say, ``My, they may make
it,'' right? It's right up there near Canada, where they're
making it up----
Secretary Bodman. Sure.
Senator Domenici [continuing]. Using tar sands.
Secretary Bodman. Sure.
Senator Domenici. But, you have no inhibitions about Shell,
or anybody else, working on those leases. You do take the
language seriously, where we had said, in the law, that you, as
Secretary, are to accelerate commercial development. You take
that seriously?
Secretary Bodman. Yes, I do.
Senator Domenici. My last point is, could you look at
whether working with the United States military might help
matters, with reference to shale? If we passed a little statute
that gave the Defense Department authority to purchase long-
term contracts, to purchase tar sands oil, diesel, that met
their needs. If they could have authority to make contracts, it
would seem to me that eliminates one of the real problems that
Shell has.
Secretary Bodman. I have visited with the Secretary of the
Air Force--their interest in using coal-based liquids to run
one of their aircraft. They also have an interest in making use
of, gasifying, the coal and then converting it over using this
Fischer-Troppes process that the South Africans developed. My
concern is the length of time that they feel that they can
commit to.
So, you're right, I think that that's a good subject, and
in order to do that, we need to get the people who are funding,
you need to get an investment banker who knows about these
kinds of projects who are funding them, and to get some sense
of how long the commitment must be, in order to get the project
financed.
Senator Domenici. Thank you.
Secretary Bodman. So, I think you have a good idea.
Senator Domenici. Thank you, Senator.
The Chairman. Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman.
Mr. Secretary, Hawaii has the highest electricity rates in
the country, and in response, we have become one of the largest
markets for solar energy in the country. As our demand for
electricity continues to rise, we increasingly must turn toward
renewable energy there.
Secretary Bodman. What's your electricity cost, Senator, if
I could ask you? Do you know?
Senator Akaka. You know, I haven't paid my bill in Hawaii
in a while.
Secretary Bodman. In a while, forgive the question.
Senator Akaka. But it is 27 cents per kilo----
Secretary Bodman. Per kilowatt hour?
Senator Akaka. Yes.
Secretary Bodman. Wow, that's very high, that's for sure.
Senator Akaka. Yes.
Secretary Bodman. So, solar energy works.
Senator Akaka. Solar energy is something that would
certainly help the cause there.
Secretary Bodman. Sure.
Senator Akaka. Yet, the budget presented by the Secretary
significantly decreases funding for renewable energy
technologies. In particular, when our government should be
increasing investment in new technologies like solar energy,
the administration has decided to keep funding flat.
My question to you is, according to the President's Solar
America Initiative, the second year of the program was expected
to be funded at $175 million--why did the administration decide
to curb this program after only 1 year?
Secretary Bodman. I don't know the specific program that
you refer to, but it is supposed to be flat, at least,
according to the figures I have. We've got a hundred, roughly
$150 million that we had asked for in 2007, and we have asked
for the same amount in 2008, if that's what you refer to in
your----
Senator Akaka. Yes.
Secretary Bodman [continuing]. Your suggestion was that we
had originally said that the 2008 number should be $175
million?
Senator Akaka. That's correct.
Secretary Bodman. I don't know the answer to that. I can
tell you I believe that this is enough, such that we can
accomplish that which we need to accomplish, in terms of
funding the development of photovoltaic technology. Here again,
I feel that it's very important to observe what is going on in
the private sector. I will tell you that a lot of people are
coming out of the memory business in Silicon Valley and are
starting their own PV businesses. That's a major source of
activity to the venture capital community in Silicon Valley.
I think you're going to find a lot of interest, and you're
going to find it at the kind of prices you're talking about.
You'll find a lot of takers, I would think, in California, in
terms of the industrial activity there.
I can't give you any more on this, other than we think,
between what they're doing, what's going on in other private
companies, in other parts of our country, together with this
$148 million, that that's quite a sizable--and that's largely
at NREL, out at the Renewable Energy Laboratory out in
Colorado. It's a very substantial commitment.
Senator Akaka. Well, let me quickly, then, ask you a
question about hydrogen.
I'm pleased to see the increase of $19.5 million in fiscal
year 2008 requests for hydrogen fuel initiative in, what we
call, EERE.
Secretary Bodman. Yes.
Senator Akaka. The budget states that increased funding is
supposed to expand research, in several areas for hydrogen,
such as hydrogen production from renewables. Can you explain
how much of the increase across all parts of the DOE budget, is
allocated to renewable production of hydrogen, not just the
portion from EERE?
Secretary Bodman. I have the figures--I happen to have the
figures here in the 2008 budget. The total is $306 million--
that's how much money is in the budget, that has been proposed
by the President. Of that, two-thirds, $213 million, is in
EERE, and the balance is in the creation of hydrogen using
nuclear energy. In nuclear energy, the advanced fuel cycle,
that's $22 million, the fossil energy is $11 million, and the
Office of Science has been focusing almost $60 million. That
would also fall into the category of renewable energy.
All of that is up some, almost $20 million from the request
for last year. It is up $60 million, $70 million from 2006.
It's a substantial increase.
Senator Akaka. Yes. Well, I appreciate that.
Let me close by asking you, and for the record, if you
could provide what the budget proposals for the budget of
hydrogen from non-renewable sources, and I--just for the
comparison--I would really appreciate that.
Secretary Bodman. From non-renewable sources?
Senator Akaka. Yes. It's for comparison purposes. I just
wanted some information about that.
Secretary Bodman. OK. I'd be happy to do it.
[The information follows:]
Funding requested in the Department's FY 2008 budget for hydrogen
production as part of the Hydrogen Fuel Initiative includes $12.45
million for fossil-based activities. The request also includes $22.6
million for nuclear-related hydrogen production. The remaining $272.5
million in the request funds all other activities, including renewable-
based hydrogen production ($40.0M), basic science, hydrogen storage and
fuel cell research and development, and technology validation.
Senator Akaka. Yes.
Thank you very much, Mr. Chairman.
The Chairman. Senator Thomas.
Senator Thomas. Two very quick ones.
Thank you, Mr. Chairman.
Mr. Secretary, the budget eliminates funding for the
improvement to existing electric-producing plants. Half of our
electricity, of course, is already produced there. Does this
elimination sign that the DOE's giving up on improving the
generation that's already in place?
Secretary Bodman. No, it's just a question of where we
wanted to put the moneys that we were spending this year. We
haven't given up on improving the cost of producing electricity
using current technologies.
Senator Thomas. Well, if you took the money away, you're
giving up the improvement budget, right?
Secretary Bodman. In that sense, but I don't expect them to
give it up. I don't expect them----
Senator Thomas. I'm asking if you are going to help them.
The answer is no.
Secretary Bodman. The answer is no.
Senator Thomas. Very specifically, the Rocky Mountain
Oilfield Testing Center----
Secretary Bodman. Yes, sir.
Senator Thomas [continuing]. Is a Department facility, who
runs and uses it. Every year, I've had to earmark it to get it
in there. Do you intend to have money for that?
Secretary Bodman. That is not in the budget, sir, no.
Senator Thomas. So, what does that mean?
Secretary Bodman. It means that it is not in the budget. It
means that we do not feel that, at these prices, one needs to
provide incentive for the oil and gas business.
Senator Thomas. Well, of course, the fact is that the
system generates its own funds that go into the Treasury.
Secretary Bodman. Yes, sir.
Senator Thomas. So, that it can support itself.
Secretary Bodman. Well, then if it can support itself, then
it can support itself, and it doesn't need money from me.
[Laughter.]
Senator Thomas. All right. I don't think that's a very good
answer for a function within your Department.
Secretary Bodman. I will be happy to look at that more
carefully, and provide you a more thoughtful answer, that you
would consider to be better than the one I just I just gave
you.
Senator Thomas. I think you have a good chance to make a
better one, yes.
Secretary Bodman. All right, sir.
[Laughter.]
Senator Thomas. Thank you.
[The information follows:]
Yes, the Department does request funding annually for the Rocky
Mountain Oilfield Testing Center (RMOTC) in the budget process.
However, the RMOTC budget request is not part of Fossil Energy's Office
of Oil and Natural Gas request. Rather, the RMOTC budget request is
included with the budget for the operation of Naval Petroleum Reserve
No. 3 (NPR-3), which is part of the larger Naval Petroleum and Oil
Shale Reserve (NPOSR) request. For FY 2008 we are requesting $10.110
million for RMOTC and NPR-3 operations. Projected revenues for FY 2008
are $4.4 million.
The Chairman. Thank you, Mr. Secretary. Thank you very
much. You've been very patient with us, and I think we've all
asked the questions we can think of, if there are other
questions that members have, or statements they want to put in
the record, we would have them submitted by the end of
tomorrow, and we appreciate your time, and your continued
interaction with the committee.
Secretary Bodman. Thank you very much, Mr. Chairman. I
appreciate it.
The Chairman. Thank you.
[Whereupon, at 11:40 a.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of Secretary Bodman to Questions From Senator Bingaman
ENERGY POLICY ACT (EPACT 2005) FUNDING
Question 1. EPACT 2005--Secretary Bodman, similar to last year our
staff has completed their analysis of Department funding of the Energy
Policy Act of 2005, would your staff please review this and make
comments or corrections?
Answer. The Energy Policy Act contains authorizations for a variety
of initiatives. As the Administration noted in the July 15, 2005,
letter to the conference committee on H.R. 6, the House and Senate
versions include authorization levels that set unrealistic targets and
expectations for future program-funding decisions. Furthermore, many of
the activities in the FY 2008 Budget support more than one
authorization. Therefore a one-to-one correspondence between the Budget
and authorizations in the Energy Policy Act would necessarily be
incomplete and a matter of judgment. In formulating the FY 2008 Budget,
the Administration has proposed funding levels to advance its energy
policy priorities and objectives and successfully implement EPACT 2005.
The Administration will continue to plan for efficient implementation
of EPACT 2005 through budget requests in future years.
Question 2. Section 1001 EPACT Technology Transfer, P.L. 109-58:
(a) Where is the technology transfer coordinator as mandated by law?;
(b) Where is the 0.9 percent set aside to promote technology transfer
as mandated by law?; and, (c) Where is the report as mandated by law?
Answer. Under the direction of the Under Secretary for Science, the
Department has a working group studying implementation of the statutory
requirements of section 1001 of EPACT 2005, including alternatives for
the coordinator position and supporting organizational structure. Based
on input from the working group, the Department will be in a position
to determine the steps to be taken under section 1001 including the
preparation of an implementation plan.
Question 3. Section 1102(c) EPACT, P.L. 109-58: 0.3 percent set
aside for education--where is it as mandated by law?
Answer. Our initial estimate of the Department's spending on
science education and training programs indicated that we currently
spend more than 0.3 percent of the Department's R&D budget on the
education activities authorized in EPAct or previous authorities. We
are currently in the process of quantifying our figures for both total
Department funding for research, development, demonstration and
commercial application activities, and total Department funding for
authorized education activities. The Department is in the process of
collecting this information from the laboratories and will provide
those figures to you as soon as they are available.
In addition, although Section 1102(a) is titled the ``Science
Education Enhancement Fund,'' the legislative language does not
establish a fund. DOE's General Counsel advises that the language does
not require DOE to establish a fund. General Counsel advises that so
long as DOE uses at least 0.3 percent of the applicable appropriated
funds for the authorized education activities, the Department is in
compliance with section 1102 of EPAct.
SOLID STATE LIGHTING
Question 4a. Why did the Department keep it level at $19 million
for the Fiscal Year 2007 amount when nearly every other conservation
account increased?
Answer. Over the last five years, the Department has steadily
increased funding for SSL RD&D. Funding for solid state lighting
research has more than doubled since FY 2003 and the Department's FY
2008 budget request reflects the resources needed to maintain this
activity at a high level of output. As authorized by EPACT 2005, we
launched the Next Generation Lighting Industry Alliance and attracted
world-class scientists to our cost shared R&D. We have also launched an
ENERGY STAR product certification process which is on track to be
completed by March 2007 resulting in SSL products receiving an ENERGY
STAR label by fall of 2008.
Question 4b. Solid State Lighting nearly accounts for 20 percent of
our electricity needs
Why did the Office of Science hold a workshop on solid state
lighting and not develop a follow on initiative as it has done with
other measures such as solar, hydrogen and nuclear energy?
Answer. Nearly one dozen workshops have taken place or are planned
in the ``Basic Research Needs'' series, including specialty workshops
on the needs of the hydrogen economy, solar energy utilization,
advanced nuclear energy, superconductivity, solid-state lighting, 21st
century transportation fuels, electrical energy storage, earth sciences
and sequestration of energy wastes, advanced materials for energy
applications, and catalysis. Together, these workshops have helped
clarify the distinct yet synergistic roles of the Office of Science and
the DOE technology offices. Consistent with other budget priorities,
the Office of Science is now considering ways to smoothly integrate the
large number of workshop topics into the portfolio of the Basic Energy
Sciences program. This is expected to occur over the next year or two.
NUCLEAR ENGINEERING EDUCATION
Question 5a. For FY2007, 23 bipartisan senators signed a letter to
the Senate Energy and Water Appropriations subcommittee supporting this
important program.
Why did you terminate a program that has trained undergraduate and
graduate students since the Atomic Energy Act was implemented?
Answer. In FY 2006, university engineering programs reached the
highest level of enrollment in more than a decade. Increased enrollment
allowed the Department to meet its goal set for the University Reactor
Infrastructure and Education Assistance Program. The Administration has
not requested funding for the University Reactor Infrastructure and
Education Assistance program because the program's recruitment targets
have been met, and DOE believes that limited budget dollars are better
spent conducting essential research at universities. In this vein, the
Office of Nuclear Energy continues to provide significant funding for
university research and development. Specifically, the FY 2008 budget
request includes approximately $62 million for university research and
development ,which is a 21% increase over the FY 2007 request. This
money goes to fund research and development at universities to
complement DOE's Advanced Fuel Cycle Initiative, Generation IV, and
Nuclear Hydrogen Initiative programs.
Question 5b. Do you believe the Department has a unique
responsibility under the Atomic Energy Act in acting as a steward for
training nuclear engineers and helping maintain university training
reactors?
Answer. Section 31a of the Atomic Energy Act states, in pertinent
part, that ``[t]he Commission is directed to exercise its powers in
such manner as to insure the continued conduct of research and
development and training activities in the fields specified . . . by
private or public institutions or persons, and to assist in the
acquisition of an ever-expanding fund of theoretical and practical
knowledge in such fields.'' Accordingly, DOE has a stewardship
responsibility in the nuclear energy field and this is why the Office
of Nuclear Energy (NE) continues to support Nuclear Engineering and
related university programs. The scholarship and grant program has been
replaced with a competitive, program sponsored research program; the
Nuclear Energy Research Initiative. In this approach, support for
universities can increase as nuclear energy programs grow and
universities will be directly contributing to NE successes.
Question 5c. I would like the Departments comments to the six
recommendations found in recent American Nuclear Society's report
``Nuclear Human Element''.
Answer. With regard to the first recommendation DOE believes that a
detailed Nuclear Science and Engineering workforce study to determine
the aggregate demand for nuclear engineering graduates over the next 5-
10 years would be useful, but should be undertaken by a non-Department
of Energy entity funded by the nuclear industry. A comprehensive study
of the workforce has not been done previously, although a few studies
have been conducted for segments of the nuclear industry.
The second recommendation concerning the revision of the University
Program along the lines of the ``Chicago Framework'' to make it more
research driven, mission oriented and peer-reviewed is precisely what
the Department plans to do within the Nuclear Energy Research
Initiative program. The Chicago meeting was sponsored by NE to gather
the collective input of the nuclear community and we have taken the
recommendations offered in Chicago and plan to include them in a
revised and expanded Nuclear Energy Research Initiative program.
DOE believes that the third recommendation for maintaining a
separate line item for University Programs can be better accomplished
by imbedding university research and infrastructure to support that
research within our mission related research and development programs
such as Advanced Fuel Cycle Initiative/Global Nuclear Energy
Partnership, Generation W and the Hydrogen Initiative.
The reports fourth recommendation that Congress increase funding
commensurate with the levels authorized under the Energy Policy Act of
2005 may be achieved over time as NE's nuclear research programs grow.
NE's funding for university research will exceed $50 million in fiscal
year 2007 and would be in excess of $60 million in our proposed fiscal
year 2008 budget.
The fifth recommendation that Congress should enact and fund the
Department's Office of Science-administered ``Nuclear Science
Education'' program included in S. 2127, the ``PACE Energy Act,'' and
S. 3936, the ``National Innovation Competitiveness Act,'' may
duplicate, in the case of nuclear engineering, many of the initiatives
under the Nuclear Energy Research Initiative program. Also, the Office
of Science already funds research activities at laboratories and
universities in areas related to the Department of Energy's missions.
Those activities receiving funding have been through a robust proposal
and peer-review process, and such support results in high quality
science that in turn attracts outstanding students to the field. The
model used by the Office of Science is consistent with the
recommendations resulting from the Chicago Framework.
DOE disagrees with the final recommendation to have an interagency
working group on the Nuclear Science and Engineering convened that
would provide high-level guidance on the overall structure of the NE's
University Program, as well as the technical thrusts of its
solicitations. NE intends to target university efforts towards its
specific research and development needs that are determined by other
merit based reviews involving the entire Department and other agencies.
ADVANCED FUEL CYCLE INITIATIVE
Question 6a. The administration proposes a 400 percent increase in
the AFCI program over FY 2006 appropriated levels which the Department
is currently operating under yet we have not any form of programmatic
milestones and timelines for the program as a whole.
When will the Department be able to provide the Committee with
cost, scope and schedule data so staff can track the program no
differently than we track the Waste Treatment Plant or the National
Ignition Facility?
Answer. The Department is developing a Global Nuclear Partnership
Program Management Plan (GNEP PMP) that outlines high-level
programmatic milestones, cost schedules, and timelines for GNEP. In
addition, DOE plans to further engage industry to provide additional
input for consideration leading, to an informed Secretarial decision by
June 2008. We anticipate that the plan will be available in time to
inform a Secretarial decision by June 2008.
Question 6b. When will the Department provide an end-to-end cost
and time to completion of the three phases of the project: (1) the
advanced fuel treatment center; (2) reprocessing (recycling)
demonstration; and, (3) the breeder (burner) reactor?
Answer. The Department has developed preliminary milestones and
timelines based on the GNEP Technology Development Plan and industry
engagement on both a nuclear fuel recycling center (sometimes referred
to as the Consolidated Fuel Treatment Center (CFTC) (reprocessing)) and
the advanced recycling reactor (Advanced Burner Reactor) to develop a
better end-to-end cost and timetable to complete these projects.
Currently, the plan is to seek industrial participation to provide a
conceptual design study and a business case analysis. Under the current
schedule, the Department anticipates having the results of these
efforts from industry in time to inform a Secretarial decision by June
2008.
For the Advanced Fuel Cycle Facility (AFCF), the Department plans
to use its national laboratories and industry to develop a conceptual
design level cost, scope, and schedule in time to inform a Secretarial
decision by June 2008.
Question 6c. Nominally, the physics of a reprocessing/fast reactor
require one fast reactor for every three light water reactors. We have
not even commercially built a generation III+ reactor in the United
States. Is it reasonable to assume industry will be able to build
commercial fast reactors when they have not even demonstrated the
economics of generation III+ reactors?
Answer. Yes, it is reasonable to believe industry can build
commercial fast reactors as there are mature domestic and international
designs of fast reactors that could be modified to meet GNEP
requirements. Information provided as input to the Department's request
for Expressions of Interest indicated that industry could have a fast
reactor that meets the GNEP requirements operational in the 2020-2025
timeframe. France, Japan, and Russia have all announced their intention
to have commercial fast reactors in operation in the 2020-2025
timeframe.
Contributions through international collaborations paired with the
advanced modeling and simulation tools, currently in development, could
greatly decrease the time needed to improve and revise reactor designs.
Those efforts are targeted at enabling commercial fast reactors to be
cost competitive with commercial light-water reactors for electricity
generation. The Department believes that while economics will drive
industry's decision on construction and operation of fast reactors,
once first of a kind costs are spent, the business case for fast
reactors that consume transuranic elements from spent fuel can make
them competitive with light water reactors.
Question 6d. One of your department's analysts, recently presented
a paper in which he calculated that the cost of implementing the GNEP
program over a 100-year period would be $2.7/MWh greater than the cost
of direct disposal for a baseline scenario. This would work out to a
cost increment of hundreds of billions of dollars over a 100-year
period. Overall, he concluded that ``most of the scenarios presented
indicate a cost advantage for direct disposal,'' with the highest
increment being $4/MWh.
Given that no commercial entity will pursue construction of any
GNEP facility with such a large cost penalty compared to the once-
through cycle with direct disposal, government subsidies (or
``incentives'') will be required to attract the interest of commercial
entities in GNEP. Do you support the use of such subsidies, or are you
will to let the market decide whether GNEP is viable on a level playing
field?
Answer. DOE's goal is to encourage the nuclear industry to become
fully engaged in GNEP and provide us with credible business plans or
models that support the notion of a private or government-private
partnership to recycle SNF.
Question 6e. On your stated goal of no separated plutonium, in the
Notice of Intent published in the Federal Register in January, it is
stated that ``DOE envisions that a nuclear fuel recycling center and an
advanced recycling reactor could begin operation before DOE has fully
completed its research and development of the transmutation fuel
recycling at an advanced fuel cycle research facility. During this
interim period, DOE may use a nuclear fuel recycling center to separate
light-water reactor SNF and support the fabrication of fast reactor
driver fuel which would be consumed in the advanced recycling reactor.
This fuel could be made of uranium and plutonium, but would likely not
contain other transuranics.''
To produce conventional fast reactor driver fuel, the ``nuclear
fuel recycling center'' would have to engage in a process very similar
to PUREX to produce separated plutonium. The fuel elements would
necessarily contain more than 10% plutonium, and therefore would be
Category I items according to DOE's material categorization. Therefore,
the nuclear fuel recycling center and the advanced recycling reactor
would both be Category I facilities.
Assuming that the throughput of the nuclear fuel recycling center
is 2000 MT per year, it would separate 20 MT of plutonium annually,
roughly doubling the current plutonium separation worldwide.
Given these considerations, how can this GNEP proposal meet your
nonproliferation goal?
Answer. With regard to GNEP non-proliferation goals, GNEP plans to
use separations technology different from PUREX that does not result in
separated plutonium. In the long term, the vision is to move the world
away from Light Water Reactor Mixed-Oxide fuel and replace it with an
advanced ``actinide fuel'' which has a mixture of uranium and
transuranic elements and therefore can only be used in fast reactors
which would be located in Fuel Cycle States.
Question 6f. FY 2008 budget includes work on a decision package for
you to announce a public-private partnership for building a nuclear
fuel-recycling center and a prototype advanced recycling reactor. When
in 2008 will this be ready? Will this plan propose building just two
facilities?
Answer. The Department is planning to support a Secretarial
decision in June 2008 on the path forward for GNEP. To support that
decision, the Department is planning to engage industry on conceptual
design and engineering analysis for a nuclear fuel recycling center and
an advanced recycling reactor. At the same time the Department is
continuing conceptual design efforts at the national laboratories for
an advanced fuel cycle research facility to better understand cost and
schedule. Consequently, the Secretarial decision could propose three
facilities. The Secretarial decision may propose any of a number of
paths to meet the goals and objectives of GNEP.
Question 6g. You have already provided funds for 11 potential sites
for building GNEP facilities. Have you provided additional funds to
these communities in your FY08 budget?
Answer. The siting studies called for in the FY 2006 Energy and
Water Development Conference Report will be completed with FY 2007
funding and therefore DOE did not propose using any of the FY08 budget
funding in these communities.
Question 6h. How far along is GNEP in completing bilateral
agreements with other nations on global nuclear cooperation?
Answer. The first GNEP bilateral Action Plan between the United
States and the Russian Federation was completed and submitted to
Presidents Bush and Putin on December 15, 2006. The first U.S./Russian
GNEP workshop is scheduled for March 13-14, 2007, in Russia. GNEP
bilateral Action Plans between the United States and Japan and the U.S.
and France are being discussed with a goal of completion in 2007.
Question 6i. You have proposed $10 million for NNSA to begin work
on GNEP. What is this for?
Answer. The $10M identified for NNSA would support key GNEP
nonproliferation activities including work on advanced safeguards and
monitoring and small proliferation-resistant reactors. NNSA would
participate in the design and development of a nuclear fuel recycling
center, an advanced recycling reactor, and an advanced fuel cycle
research facility. NNSA would also support international
nonproliferation activities in a manner that is consistent with U.S.
policy.
Question 6j. Do you believe that advanced fuel cycle technologies
reducing volume, thermal output and radio-toxicity will allow Yucca Mt.
to accommodate all of the spent fuel generated in the U.S. this
century? (This assertion came from their new brochure ``Recycling Spent
Nuclear Fuel'' pg. 2)
Answer. Yes, the Department believes that the recycling of SNF
envisioned by GNEP could reduce the volume, thermal output and
radiotoxicity of waste requiring disposal in a geologic repository,
such as Yucca Mountain, and thereby significantly defer the time at
which a second repository would be needed. High-level waste comprises
only approximately 5% of the SNF that requires disposal in a geological
repository. GNEP would separate the 5% of the SNF and place it in a
form acceptable for disposal in a geologic repository.
OIL AND GAS R&D
Question 7. For the third year in a row the Department proposes to
zero out oil and gas research and development when the price of oil and
gas is climbing and 90 percent of all domestically produced oil and gas
in the lower 48 is through small independent producers.
Question 7a. Does the Department believe zeroing out these programs
will not affect the small independent producers who cannot afford large
research programs like the majors?
Answer. Oil and gas are mature industries and both have every
incentive, particularly at today's prices, to enhance production and
continue research and development of technologies on their own. There
is no need for taxpayers to subsidize oil companies in these efforts.
Although independent operators may not fund technology development
directly, the service industry that supplies them with equipment funds
significant development of applicable technologies. The Department
expects the service industry to continue to provide technological
innovations for use by major and independent producers.
HYDROGEN
Question 8. The administration says in their budget request they
will complete the $1.2 billion commitment to the Hydrogen Program yet
it does not have final achievable goals until 2014 to field a
commercially acceptable fuel cell vehicle--where does this leave you
all meeting this 2014 milestone after only five years of funding?
Answer. While the President's funding commitment was for five years
(FY 2004--FY 2008), the Administration anticipated continued support in
line with meeting long-term goals. The Hydrogen Fuel Initiative is on
track to develop the critical technologies that will enable hydrogen
and fuel cell technology readiness in 2015 and the potential for
commercial viability by 2020 (i.e., fuel cell vehicles and the hydrogen
infrastructure to support them). Commercialization is entirely
determined by the private sector participants, who, under partnership
agreement with the Department, have committed to commercialize
technologies as soon as a business case can be made.
WEATHERIZATION AND LIHEAP CUTS
Question 9. Mr. Secretary--I am very concerned about the
Administration's $98.5 million budget cuts for the low income
weatherization program (FY08 $144 million compared to $245.5
appropriated in 2006) We had this conversation last year and I regret
that we are having it again. Not only are federal funds being reduced
but the cut will result in the loss of $30 to $50 million in matching
funds from states, utilities and non-profits. The National Association
of State Community Services Programs estimates that approximately
40,000 low-income families will be denied weatherization assistance if
this cut is approved.
And when you combine the DOE cuts with the Administration's
proposal to cut (HHS) LIHEAP funding from $3.2 billion in FY 2006 to
$1.8 billion you are truly sending a message that low-income families
cannot expect any help in controlling their energy costs and saving
energy.
How do you justify this 41% reduction in the weatherization
program?
Note: Last November, you, along with Senator Domenici sent a letter
to Bodman and Portman expressing your opposition to a proposed transfer
of the weatherization program from DOE to HHS (to be managed along with
the LIHEAP program). Such a transfer would likely have resulted in
lower aggregate funding for both programs. OMB stopped the transfer
proposal but it appears they are going ahead with the funding cuts).
Answer. Weatherization is the largest-funded program in EERE, at
the expense of other research, development and deployment programs. In
order to address this country's energy challenges with the urgency it
deserves, we have chosen to prioritize investments in energy efficiency
and renewable energy R&D that have multiplicative returns, such as
improvements to appliances and the building envelope that affect the
whole American population, rather than additive returns not associated
with technological R&D that target a single segment of the population,
albeit an important one.
Moreover DOE is not seeking to transfer the Weatherization
Assistance Program to the Department of Health and Human Services. This
information is included in a letter sent February 6, 2007 responding to
your previous inquiry.
In addition, the expected benefits of each EERE program are shown
in our Congressional justification materials. A summary is present on
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table
shows that the Weatherization and Intergovernmental Program has the
lowest or near lowest expected benefits in all three benefit categories
(consumer expenditure savings, carbon emissions reductions, and avoided
oil imports). Details of our modeling efforts that produce these
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
IMPACT OF THE CR
Question 10. May I have your assurance that, even as we debate and
I hope defeat, the proposed FY2008, you will maintain Weatherization
funding at the FY06 level in the Continuing Resolution and ensure that
this program remains the valuable energy efficiency deployment program
that it should be?
Answer. Under the Continuing Resolution for FY 2007, the Department
will carefully weigh the costs and benefits of allocating resources to
Weatherization and other programs in the EERE portfolio.
EPACT EFFICIENCY PROGRAMS
Question 11. Mr. Secretary, I was pleased to see that you have
requested some additional funding for building technologies, including
building energy codes and appliance efficiency standards.
Do you intend to implement the EPACT provisions relating to
building efficiency in FY2008? For example sec 124--providing grants to
states to set up energy efficient appliance rebate programs, sec 125
for energy efficient public buildings, and sec 128 providing incentives
to the states to adopt and enforce building codes?
As you know, the energy used to operate the buildings in the US
accounts for about 40 percent of total annual energy consumption and
43% of GHG emissions. The buildings we are constructing today will be
around for another 50 years. The most up-to-date model energy codes
have been adopted in only a handful of states (Residential: WA, CA, UT,
IA, LA, OH, PA. Commercial: WA, OR, CA, UT, IA, IL, OH, PA, VT, ME, VA,
NC, GA, FL).
I believe we should have a sense of urgency about improving
building efficiency. This is an area where federal funds for outreach
and training, as well as technology transfer can really make a
difference.
Answer. The Department is implementing numerous activities that are
consistent with EPACT authorities identified in your question.
Specifically, the Department has many activities which provide both
financial and technical assistance to state and local government to
accelerate the adoption of energy efficient technologies and practices,
including the State Energy Program (SEP) which provides financial
assistance through formula and competitive grants to States. As you
mentioned, outreach, training, and technology transfer are essential to
accelerating market transformation. Consistent with that approach, the
Department has requested funding in FY 2008 for building energy codes
program which will provide both financial and technical assistance to
states to adopt and implement energy efficient building codes.
Question 12. Please provide for the record a summary of DOE's
activities to improve residential and commercial building efficiency in
new and existing buildings.
Answer. The Buildings Technologies Program (BT) researches and
deploys new technologies to make homes and commercial buildings more
affordable, energy efficient, and better performing. It is implementing
an integrated and aggressive plan required to achieve cost-neutral Zero
Energy Homes by 2020, and Commercial Buildings by 2025. This plan also
includes the acceleration of market adoption of these technologies and
practices.
The Department is accelerating the adoption of clean and efficient
domestic energy technologies through such activities as ENERGY STAR,
Rebuild America, and Building Energy Codes. ENERGY STAR activities
work to remove technical, financial and institutional barriers to the
widespread awareness, availability, and purchase of highly efficient
appliances, compact fluorescent lighting products, windows and
otherproducts. DOE ENERGY STAR is beginning to encompass advanced
technology; for example, DOE recently issued a solid state lighting
specification for ENERGY STAR. The Building Technologies Program
jointly administers, with EPA, Home Performance with ENERGY STAR
energy efficient home contracting project for existing homes. This
project assists existing home owners make their homes approximately 30%
more energy efficient through partnerships with state energy offices,
utilities and non-governmental organizations. The project has completed
about 22,000 homes thus far.
Our Rebuild America activities remove technical, financial and
institutional barriers to the widespread awareness, availability and
application of highly efficient buildings including building design,
construction, retrofit and operations practices in commercial buildings
such as schools and hospitals. The Building Energy Code activities will
support the development and implementation of energy efficient building
codes which increases the construction of more energy efficient
buildings. Recently the Department issued building energy codes that
are 30% more stringent than American Society of Heating, Refrigeration
and Air Conditioning Engineers (ASHRAE) 90.1-2004 and the International
Energy Conservation Code (IECC) (2004). The Department is supporting
efforts to encourage states and localities to adopt these aggressive
higher levels.
The Department of Energy's research activities to improve
efficiency in new residential building is coordinated through the
Building America Program. These activities support efforts to develop
strategies to integrate solar energy technologies and practices along
with energy efficient designs and technologies into buildings with the
goal of designing net zero energy buildings. To date, the. Building
America Program has researched and developed Best Practices for 30%
whole house energy savings in new homes for all U.S. climates evaluated
against The Building America benchmark (Building America Benchmark,
version 3.1, November 2003, National Renewable Energy Laboratory).
Building America also provides research information for the ENERGY
STAR new homes program. These activities have resulted in more than
30,000 research homes and over 700,000 high efficiency homes being
built in the past 10 years.
To improve the efficiency of commercial buildings, the Building
Technologies Program is partnering with ASHRAE to develop Advanced
Energy Design Guides for new commercial buildings that are 30% more
efficient than the ASHRAE 90.1-2004 building code. We have completed
the guides for small offices and retail stores. Advanced Energy Design
Guides for schools, warehouses and lodging will be completed in FY 2007
and FY 2008.
Question 1. General idea: Why isn't DOE following its own policy of
integrating cleanup with restoration? DOE's guidance regarding natural
resource damage assessments, (Damage Assessment and Environmental
Restoration Activities at DOE Facilities, October 1993, pp.40-41),
states, ``Whether a decision to prepare an NRDA [natural resource
damage assessment] is made or not, the information derived from
properly conducting the ecological risk assessment portion of the RI/FS
[remedial investigation/feasibility study] which is part of cleanup
process] can and should be used to address NRDA concerns to improve
remedial action decisionmaking.'' How is DOE currently using the NRDA
process at LANL to improve remedial action decisionmaking?
Answer. The state regulator (New Mexico Environment Department) has
issued a Consent Order (March, 2005) for cleanup activities at LANL
that requires the Department to evaluate releases of hazardous
constituents and to cleanup up those releases that pose a health risk.
This Consent Order requires the Department to extensively sample the
environment to identify contaminants and determine their impacts
primarily through risk assessment techniques, including ecological risk
assessments The Consent Order has been described by the New Mexico
Environment Department as a comprehensive ``fence-to-fence'' legally
binding order. The Department believes that the extensive sampling and
cleanup action underway at LANL under this order may reduce or
eliminate the potential for natural resource damages in the vicinity of
LANL. Further, the Department believes that once sufficient data are
collected under the Consent Order, it would be appropriate to conduct a
Natural Resource Damage Assessment (NRDA). The Department has entered
into discussions with the State of New Mexico, Native American Pueblos,
and the Federal trustee representatives to form a Natural Resource
Trustee Council for LANL. The purpose of the Council would be to ensure
that protection and restoration of natural resources are integrated
throughout the cleanup and to determine what assessments or sampling,
if any, may be needed in addition to that conducted under the Consent
Order. The Department intends to follow the integrated approach during
the cleanup effort at LANL.
Question 2. General idea: Why isn't DOE taking advantage of cost
savings that result from integrating cleanup and restoration? This
policy also states that integration of NRDA and remediation activities
should lower the total costs of a hazardous substance release to the
public (p.43). For example, integration should lead to,the restoration
of natural resource services sooner than a sequential approach, whereby
natural resource damage are addressed only after the RUFS process is
completed. Sooner restoration means less total damages, since NRDA
damages accrue over time. Also, integrating the two processes will help
ensure the selection of remedial actions that reduce the potential for
natural resource damages, thereby minimizing the United States'
liability for NRDA. How is DOE taking advantage of these potential cost
savings at LANL?
Answer. The purpose of the DOE Policy of integrating the cleanup
and restoration is to assure that there is enough sampling and analyses
done so that the selected remedy will be effective, and will meet all
requirements. The cost savings that is referred to, is the cost that
would be incurred, if the final remedy were not effective, based on
incomplete (or inappropriate) sampling and analysis. The ongoing
sampling and analysis programs that the Department funds at Los Alamos
National Laboratory are designed to assure that the ``nature and
extent'' of contamination is fully understood, and informs the remedy
selection. In 2005, after a lengthy negotiation process, the Department
entered into an Order on Consent (Consent Order) with the State of New
Mexico, under the Resource Conservation and Recovery Act (RCRA). This
Order is very prescriptive, regarding sampling and analyses, and does
meet the intent of DOE's policy to integrate cleanup and restoration.
Because the cleanup is under RCRA authority, the state of New Mexico is
the regulator, not the Environmental Protection Agency, which has lead
regulatory authority under Comprehensive Environmental Response
Compensation and Liability Act (CERCLA) cleanups. DOE believes that
once sufficient data has been collected under the Consent Order, it
would be appropriate to conduct a Natural Resource Damage Assessment
(NRDA). It appears that an NRDA would be premature at this time.
Question 3. General idea: Is it possible that the cost savings from
integration would cover the cost of NRDA, thereby conserving taxpayer
dollars? It is my understanding that conducting a NRDA process is
generally less expensive than conducting the remediation process, often
by orders of magnitude. How much money does DOE estimate will be needed
to conduct full remediation at LANL, and how does that compare to how
much it will cost to conduct NRDA? Couldn't the cost savings from
integration of the cleanup and restoration processes cover the cost of
the restoration process?
Answer. The Natural Resources Damage Assessment (NRDA) process
refers to the process of developing the correct sampling and analysis
program that, in turn, would determine the extent of damages to natural
resources, and would inform the scope for additional natural resource
damage restoration. At the Los Alamos National Laboratory, the
requirements for sampling and analyses are prescribed in the 2005 Order
on Consent. The current planning estimates that the lifecycle cost of
the LANL cleanup will be in excess of 1 billion dollars. The cost of
the NRDA, if needed, cannot be estimated at this time.
ORPHANED AND ABANDONED WELLS
Question 4. Does the President's budget include funding for this
important program? If not, why not?
Answer. The Department of Energy has not requested funding for
section 349 of EPACT. The Departments of the Interior and Agriculture
have primary responsibility for onshore oil and gas permitting on
Federal land and are responsible for ensuring that industry complies
with permit stipulations, including the proper plugging and abandonment
of wells, and for cleaning up wells where the responsible party cannot
be identified.
NUCLEAR MEDICINE
Question 5. For nearly 60 years, the Department of Energy has
funded essential, fundamental nuclear medicine research. There is no
funding elsewhere for this research. However, my understanding is that
under this Administration there has been a significantly reduced level
of funding. As you know, we anticipate providing more funding under the
CR for the Office of Science.
Please tell me about the availability of funding for continuation
or transition of this vital research.
This program has an amazing track record and if the Department of
Energy does not allocate funding for this research in FY 2007 valuable
research will not be conducted, and we will lose the researchers we
need to ensure breakthroughs continue.
Answer. The Department appreciates your interest in nuclear
medicine research. Currently, with the help of the National Academy of
Science, the Department and the National Institutes of Health are
conducting a study on ``State of the Science in Nuclear Medicine'' to
gain perspective on the future of this program.
INDIAN ENERGY--TITLE V OF EPACT
Question 1a. Indian lands contribute 11% of the nation's onshore
oil and natural gas production, and 11% of its coal production. Indian
lands also contain a large number of untapped renewable energy
opportunities. In recognition of this, congress established an Office
of Indian Energy at DOE in Title V of the Energy Policy Act. Yet, the
2008 budget provides no funding for this Office. Instead, it merely
continues a preexisting tribal energy program at a reduced funding
level ($1.0 million proposed cut).
During last year's budget process you indicated that DOE was
searching for a suitable candidate to run the office. A year later,
there is no indication that DOE is attempting to comply with Title V of
EPACT. Is there a timetable for getting the Office of Indian Energy up
and running?
Answer. Since last year, the Department did meet with several
potential candidates for the position of Director of the Office of
Indian Energy Policy and Programs. However, as I have testified there
are a number of requirements and provisions in the Energy Policy Act of
2005 (EPACT) that we have not funded because they are lower priority
than activities included in the President's Budget, and establishing
the Office of Indian Energy Policy and Programs as directed under Title
V is one of them.
While there is no ``timetable,'' we have taken several steps to
properly manage and monitor Tribal issues at the Department in a
consistent way. The Department has solicited input from interested
tribal governments and tribal organizations on how it is envisioned
that a new office would interact with the DOE missions, and how this
office can improve on the current organizational structure. In
addition, to assist us in coordinating our Tribal policies among
various DOE programs, we have created a Tribal Energy Steering
Committee comprised of representatives from all major program offices
to address cross cutting Tribal issues.
Question 1b. You also represented last year that DOE was
establishing a Tribal Energy Steering Committee. Has this group had any
effect in helping Tribes access support from other DOE energy programs
to promote Indian energy development and help increase electricity
access on Indian lands?
Answer. The Tribal Energy Steering Committee (``Committee'') has
served as an important vehicle to address cross cutting Tribal issues.
Composed of representatives from all of the major program offices that
have interactions with tribes, the Committee has improved the
communications about Tribal issues within the Department. This has
allowed program offices to work together to assist tribes in a way that
has not happened before. For example, the Committee worked together to
provide technical assistance to a Tribal Colleges and Universities
symposium. Also, the Committee worked with each program office's tribal
constituents to ensure that all interested tribes had an opportunity to
respond to drafts of the EPACT section 1813 report on energy rights-of-
way across tribal lands. The Committee has also been an important
sounding board to evaluate the effectiveness of the Department's
American Indian and Alaska Natives Tribal Government Policy in order to
ensure that the Department is properly carrying out its obligations in
working with sovereign Indian nations. Lastly, because several tribal
organizations have expressed an interest in meeting with the Committee
to present tribal perspectives on issues of mutual interest, we will be
making arrangements to meet with these tribal organizations.
Question 2. Section 979 of EPACT directs DOE to establish a
research, development, and demonstration program that helps to address
energy and water related issues affecting communities across the
nation. Is there any funding for implementing Section 979 in the FY2008
budget? If not, why not? Please describe in detail any current activity
within DOE related to the subject matter of Section 979, which may be
ongoing as a result of funding provided in prior years.
Answer. The Department of Energy is evaluating options for both the
management and implementation of Section 979 of EPACT and as such, the
FY2008 budget does not contain funding for this program.
In FY 2005, in accordance with Congressional direction, the
Department provided $12,400,000 to support a research and demonstration
program to study energy-related issues associated with water resources
and sustainable water supplies for energy production, including
$1,984,000 to initiate planning and creation of a water-for energy
technology roadmap; $3,472,000 for water technical assistance;
$2,976,000 to continue the arsenic removal research in conjunction with
the American Water Works Research Foundation; and $3,968,000 in support
of desalination research consistent with the Water Purification
Technology Roadmap in partnership with the Bureau of Reclamation. The
Department also provided $496,000 for a report to Congress on the
interdependency of energy and water focusing on the threat to national
energy production resulting from limited water supplies, utilizing the
multi-laboratory Energy-Water Nexus Committee. This report was sent to
Congress on January 12, 2007.
In addition, in response to the FY 2006 Congressional direction
accompanying the FY 2006 Energy and Water Development Appropriations
Act, the Department funded $12,375,000 for energy and water resource
management, including: $6,930,000 for advanced concept desalination and
arsenic treatment in partnership with American Water Works Research
Foundation and WERC: A Consortium for Environmental Education and
Technology originally known as the Waste-management Education and
Research Consortium; $1,980,000 for water supply technology
development; and $3,465,000 for water management decision support
including demonstration programs in partnership with the New Mexico
Office of the State Engineer and international water partnerships.
STRATEGIC PETROLEUM RESERVE
Question 1. The most serious recent oil disruption was during
Hurricanes Katrina and Rita, and the more pressing shortages were for
refined product rather than crude oil. Could you explain how storing
more crude oil in the hurricane-prone Gulf Coast makes our supply more
secure?
Answer. When Hurricane Katrina came ashore on the Gulf Coast, it
closed refineries, terminals, pipelines, and knocked out electrical
power all along the coast. The first problem to surface was the
inability of still operable refineries located throughout the South and
Midwest to obtain feedstock. The Strategic Petroleum Reserve was able
to satisfy the shortage by direct loans of oil to refiners from our
Bayou Choctaw facility. However, that site has a small inventory and
has a very limited drawdown capability. The new Reserve site in
Richton, Mississippi is located about 85 miles inland from the Gulf,
outside of the reach of truly devastating hurricanes. The design of the
site provides for a pipeline connection with Capline, the large
diameter pipeline delivering oil to refineries along the Mississippi
River throughout the Midwest. The connection will be north of the area
where electric power would be expected to be seriously disrupted by
hurricanes. Furthermore, the site will have a direct pipeline linkage
with a large refinery in Pascagoula and provide marine distribution to
service the refineries southeast of New Orleans which are now
vulnerable to crude oil disruptions.
Question 2. Have you conducted a study to determine what kind of
price effect we should expect from a doubling of the reserve?
Answer. We have not conducted a study on the price effect of
doubling the Strategic Petroleum Reserve. We anticipate filling the
Reserve at about 100,000 b/d and this rate should have a negligible
effect on market prices.
Question 3. Has the Department considered having an ``escape
value'' so that the reserve would not be filled during times of
escalating oil prices, potentially adding further upward price
pressure?
Answer. The Department intends to comply fully with the acquisition
procedures for the Strategic Petroleum Reserve oil required by Section
160 of the Energy Policy and Conservation Act, 42 U.S.C. 6239, as
amended by Section 301(e) of the Energy Policy Act of 2005, 42 U.S.C.
6240. Those procedures, contained in a Final Rule issued on November 8,
2006 (71 F.R. 65376), were written to assure that the Department gives
due consideration to virtually every aspect of markets before it begins
an acquisition. We take very seriously the proviso of section 301(e) of
the Energy Policy Act of 2005 that the Department should minimize the
costs to the Department of the Interior and the Department of Energy
and avoid adversely affecting current and future prices and supplies,
and inventories of oil.
Question 4. Has the Department considered offering any guidelines
on when reserve oil should be released?
Answer. The authority to drawdown and sell oil from the Strategic
Petroleum Reserve is reserved to the President upon a finding of a
``severe energy supply interruption'' and is not delegated. The Energy
Policy and Conservation Act defines ``a severe energy supply
interruption'' and no President has constrained his discretion to
interpret the definition to respond to any specific event. However, the
Administration has been very clear that it will not use the Reserve to
control oil prices.
Responses of Secretary Bodman to Questions From Senator Domenici
SOLID STATE LIGHTING RESEARCH
Question 1. As you know, Sandia National Laboratories is a world
leader in solid state lighting technologies. In May 2006, the Office of
Science released a report entitled Basic Research Needs for Solid-State
Lighting which was based on a workshop sponsored by Basic Energy
Sciences. The report notes in its executive summary that solid state
lighting has the potential to drastically reduce energy use for
producing artificial light, and that achieving efficiencies approaching
100 percent are conceivable. However, several ``grand challenges'' will
require basic research to achieve this potential in reality.
Why then does the FY 2008 budget include no funding for basic
research in solid-state lighting?
Answer. The FY 2008 budget includes increases in the Materials
Sciences and Engineering subprogram in the physical behavior of
materials, in synthesis and processing, and in materials chemistry that
address fundamental condensed matter and materials physics underpinning
aspects of solid-state lighting. In particular, there is funding for
new activities in inorganic and organic light-emitting materials, with
emphasis on novel materials or concepts, including nanophotonics and
other nanoscale material assemblies and architectures; in the design
and synthesis of nanoscale materials; and in the design and synthesis
of biomolecular organic materials for electronic applications. The
total requested for these activities is $6,000,000.
TECHNOLOGY TRANSFER COORDINATOR
Question 1. Section 1001 a the Energy Policy Act of 2005 directs
the Department to appoint a technology transfer coordinator, and to
create a technology commercialization fund using 0.9 percent of the
amount made available to the Department for applied energy research,
development, demonstration, and commercial application. The section
also requires the Department to produce a report on its plan to execute
these requirements, along with regular updates on its progress in this
area.
When will the Department appoint a technology transfer coordinator
as required by the statute?
Answer. Under the direction of the Under Secretary for Science, the
Department has a working group studying implementation of the statutory
requirements of section 1001 of EPACT 2005, including alternatives for
the coordinator position and the supporting organizational structure.
Based on input from the working group, the Department will be in a
position to determine the steps to be taken under section 1001 and
prepare an implementation plan for my consideration.
Question 2. Why does the FY 2008 budget fail to describe how the
Department will and [sic] use the Technology Commercialization Fund?
Answer. The Department has not made specific allowances for the
technology transfer fund in the FY 2008 request pending appointment of
a technology transfer coordinator and development of an implementation
plan.
SCIENCE EDUCATION ENHANCEMENT ACT
Question 1. Section 1102 of the Energy Policy Act of 2005 requires
the Department to establish a Science Education Enhancement Fund,
comprised of not less than 0.3 percent of the amount made available to
the Department for applied energy research, development, demonstration,
and commercial application. The intent of the provision was to create a
centralized fund that would be administered by a single Department
official specializing in science education.
When will the Department establish a centralized Science Education
Enhancement Fund as directed in statute?
Answer. The Department of Energy's General Counsel advises that
Section 1102 does not require establishment of a ``centralized'' Fund.
General Counsel advises that so long as DOE uses at least 0.3 percent
of the applicable appropriated funds for the authorized education
activities, the Department is in compliance with section 1102.
Question 2. How will the Department use the Fund to support science
education and outreach programs at the National Laboratories?
Answer. Consistent with the principles of the Academic
Competitiveness Council (established by Section 8003 of the Deficit
Reduction Act of 2005; it is chaired by Secretary Spellings and I am a
member), the Department is working with other agencies to undertake a
thorough, merit-based review of government-wide education and outreach
efforts to ensure that they are effective and have the ability to
measure their outcomes. The Department will be a much better position
to address your question once this review is complete in the near
future.
HYDROGEN TECHNOLOGY/ADVANCED BATTERY R&D
Question 1. The request for Hydrogen Technology includes over $190
million for fuel cell R&D for vehicle applications. The FY 2008 budget
also includes $42 million for advanced battery R&D for advanced
vehicles such as plug-in hybrids. However, fuel cell vehicles are
significantly further away from commercialization than plug-in
hybrids--perhaps even decades further away.
Why is the Department investing nearly five times as much in fuel
cell R&D than in advanced battery R&D when advanced batteries could
produce significant petroleum savings in a far shorter timeframe?
Answer. The Department's investments in hybrids, plug-in hybrids
and batteries exceeds investment in fuel cell R&D. The FY 2008 budget
request includes $54.5 million to support fuel cell technology for
vehicle applications. Both fuel cell technology and advanced battery
R&D are components of the President's Advanced Energy Initiative (AEI),
which is designed to change the way we power our homes, businesses, and
vehicles. The President's FY 2008 budget includes over $80 million for
hybrid vehicle R&D, $42 million of which supports advanced battery R&D,
such as batteries for plug-in hybrid vehicles. This includes work on
long-life, abuse-tolerant lithium batteries and more advanced high-
power batteries along with power-control systems and components that
are optimized for plug-in hybrids. The $54.5 million to support fuel
cell technology for vehicle applications includes $44.0 million for
Fuel Cell Stack Components R&D, $8.0 million for Transportation Fuel
Cell Systems, and $2.5 million for Manufacturing R&D.
INDIAN ENERGY
Question 1. Mr. Secretary, there are vast untapped energy resources
on American Indian lands. The ODE estimates that 890 million barrels of
oil and 5.6 trillion cubic feet of natural gas are located on American
Indian land. Title V of the Energy Policy Act of 2005 directs the
Secretary of Energy to undertake several activities to help the Indian
nations develop these resources. This has not been done, nor has any
money to implement Title V been requested by DOE for FY2008.
Why was no money requested to carry out Title V of the Energy
Policy Act of 2005?
Answer. Title V is one of a number of requirements and provisions
in the EPACT that we have not funded because it is lower priority than
other activities included in the President's Budget. However, the
Office of Energy Efficiency and Renewable Energy has requested $2.9
million for Fiscal Year 2008 to fund projects for Native American
peoples. From 2002 to 2006, approximately $12.5 million has been made
available to Native American tribes to assess the potential for
development of renewable energy technologies on tribal lands. Overall,
the Department provides approximately $10 million annually to tribal
programs nationwide.
Question 2. When do you anticipate you will create the Office of
Indian Energy Policy and Programs?
Answer. The Department is actively seeking a suitable candidate to
serve as Director of the Office of Indian Energy Policy and Programs.
Until such a candidate is found, I have asked the Under Secretary of
Energy and the Assistant Secretary for Congressional and
Intergovernmental Affairs to closely monitor and manage Tribal issues.
The Department also has solicited input from interested tribal
governments and tribal organizations on how it is envisioned that a new
office would interact with the DOE missions, and how this office can
improve on the current organizational structure. In addition, to assist
us in coordinating our Tribal policies among various DOE programs, we
have created a Tribal Energy Steering Committee comprised of
representatives from all major program offices to address cross cutting
Tribal issues.
Question 3. Please describe your progress in establishing the
Department of Energy Indian Energy Education Planning and Management
Assistance Program.
Answer. Given that the Office of Indian Energy Policy and Programs
has not been established, the Administration has not requested funding
in FY 2008 for the Indian Energy Planning and Management Assistance
Program.
Question 4. Please describe your progress in establishing the
department of Energy Guarantee Program in Title V.
Answer. EPACT contains several loan guarantee provisions. The
Department is proceeding to use the broad authority provided in Title
XVII-Incentives for Innovative Technologies. For this loan guarantee
program, the Department anticipates loan guarantees of $9 billion in FY
2008 and has requested $8.4 million for operating expenses in FY 2008.
ENERGY RIGHTS-OF-WAY DESIGNATION
Question 1. Mr. Secretary, Section 368 of the Energy Policy Act of
2005 directs the Secretary Energy, in collaboration with other
agencies, to designate energy rights-of-way corridors. Please provide
the Committee with an update of your activities under this provision.
Answer. The agencies affected by Section 368 began work shortly
after the Energy Policy Act of 2005 was enacted in August 2005. At that
time, an interagency team was established with the Department of Energy
(DOE) as the lead agency. The Bureau of Land Management is a co-lead,
and the Forest Service, the Department of Defense, the Fish and
Wildlife Service and the States of California and Wyoming are
cooperating agencies. The Coeur d'Alene tribe is also a cooperating
agency. In addition, the Department of Commerce is involved as a
consulting agency. Pursuant to EPACT Section 372(a), a Memorandum of
Understanding (MOU) was signed by the four main agencies in February
2006 with respect to cooperative implementation of Section 368.
There is ongoing involvement from the States, tribes and various
stakeholders as the Federal agencies affected by Section 368 continue
progress of the energy right-of-way corridor designations on Federal
lands. In this regard, the Federal agencies have conducted joint public
scoping meetings concerning the designation of such corridors in each
of the eleven contiguous western states. Currently, agencies are
conducting NEPA activities.
NATURAL GAS AND OIL TECHNOLOGY PROGRAMS
Question 2. Consistent with the President's FY 2006 and FY 2007
budgets, you again propose the elimination of the natural gas and oil
technology programs within the Office of Fossil Energy for FY 2008.
Are there activities currently undertaken by either the Natural Gas
or Oil Technology Programs that you plan to continue if those programs
receive no funding in FY 2008?
Answer. The FY 2008 Budget provides no money for activities
currently undertaken by either the Natural Gas or Oil Technology
Programs. However, prior years' appropriations for Natural Gas and Oil
Technology Programs will be used for the activities specified, which
could extend beyond the year in which funds were appropriated.
ULTRA-DEEPWATER AND UNCONVENTIONAL NATURAL GAS
Question 1. What steps, if any, has the DOE taken to implement this
program?
Answer. DOE has completed all of the milestones required by section
999, including soliciting proposals for the program consortium and
selecting a winning proposal. On December 29, 2006, a contract was
awarded to the Research Partnership to Secure Energy for America to
manage the R&D program. DOE has also established the two Federal
Advisory Committees required by the statute. Through a separate
legislative proposal, the Administration in FY 2008 proposes to repeal
the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum
Resources program. This is consistent with our proposal to end all
Departmental oil and natural gas research and development in FY 2008.
Oil and gas are mature industries and both have every incentive,
particularly at today's prices, to enhance production and continue
research and development of technologies on their own. There is no need
for taxpayers to subsidize oil companies in these efforts.
Question 2. Have any potential applicants demonstrated an interest
in the program?
Answer. Although the private sector consortium, Research
Partnership to Secure Energy for America (RPSEA), is responsible for
issuing solicitations, we presume that a number of organizations are
interested in submitting project proposals for the program.
Question 4. What role, if any, do you believe the DOE should have
in advancing technology for the development of ultra-deepwater and
unconventional fossil fuels?
Answer. Oil and gas are mature industries and both have every
incentive, particularly at today's prices, to enhance production and
continue research and development of technologies on their own. There
is no need for taxpayers to subsidize oil companies in these efforts.
HYDROPOWER
Question 1. Once again, the budget proposes to terminate the DOE
Hydropower program (-$500,000) and transfer the R&D results to
industry. However, the Energy Policy Act of 2005 (Section 931) directs
DOE to conduct a research, development, demonstration and commercial
application program for cost competitive technologies for new and
incremental hydropower capacity. In the FY 2007 Energy and Water
Appropriations bill, $4 million was included for advanced hydropower
R&D, such as the development of ocean energy.
Does the Administration believe that federal R&D work is needed to
develop new hydropower technologies, such as ocean and wave energy?
Answer. The Department completed its hydropower program in fiscal
year 2005, consistent with congressional direction over the previous
years. With regard to new hydropower technologies, at that time the
Department completed an assessment of undeveloped U.S. hydropower
resources, the technologies needed to develop the resources, and the
feasibility of developing the resources. The Department has contributed
the necessary tools to industry to pursue development of these
hydropower resources.
The Department is observing the growth of interest, activity, and
investment in wave and tidal technologies. We recognize that several
states have promising opportunities for harnessing these forms of ocean
and tidal energy, and thus we are monitoring domestic and worldwide
progress in ocean energy technologies in collaboration with the
Electric Power Research Institute and the International Energy Agency.
Some countries with higher resource potential than the United States,
relative to their overall energy needs, are active in ocean and tidal
energy R&D. Ocean, wave, and current technologies are still in their
infancy, with a small number of demonstration systems operating
worldwide. The Department will continue to consider emerging
technologies like these in evaluating its research, development and
deployment programs.
The Department is also supporting a wave energy technology R&D
project via the Small Business Innovation Research Program. The U.S.
Navy also supports ocean energy research.
ENERGY SAVINGS PERFORMANCE CONTRACTING
Question 1. The ESPC program was reauthorized in EPACT 2005.
Has the Administration taken advantage of the ESPC reauthorization
in the Energy bill?
Answer. Yes, the Administration, through the Department of Energy,
is very actively promoting the use of Energy Savings Performance
Contracting (ESPC) across all Federal agencies. Assistant Secretary
Karsner challenged all agencies to increase their use of the program at
the July 2006 Senior Officials meeting, by kicking off an ``ESPC
Blitz'' to bring focus and commitment to these private sector financing
tools, and sought to double volume to help the government stay on track
to meet the new EPACT energy efficiency goals (two percent per year
energy intensity reduction compared with 2003 baseline). The four-month
Blitz resulted in Awards of over $130 million and helped propel 2006 to
over $321 million in awards--the second highest amount of annual
contract awards made in the history of the program. The total 2006
investment will produce cumulative guaranteed energy savings of 48,880
billion Btus over 24 years at no net cost to taxpayers.
Question 2. What are your plans for engaging those agencies that
are not currently using ESPCs to improve their energy performance?
Answer. The President's new Executive Order 13423, Strengthening
Federal Environmental, Energy, and Transportation Management requires
all Agencies to improve their energy performance. We anticipate
continued use of ESPCs to help agencies meet the new, aggressive energy
intensity reduction goal of Executive Order 13423 (three percent per
year compared with 2003 baseline). Our efforts to spur widespread use
of ESPCs include the designation of Energy Champions at a senior level
in all agencies to ensure that these contracts are successfully and
widely implemented. DOE's Federal Energy Management Program provides
training, project facilitation, promotional materials, and program
advocacy to senior agency officials. FEMP is also involved with
specific outreach and support to agencies not actively using the
contract.
ELECTRIC TRANSMISSION AND DISTRIBUTION
Question 1. Last August, the Department released the first National
Electric Transmission Congestion Study, as required by EPAct. The study
identified two areas of critical transmission congestion: southern
California and the eastern coastal area from metropolitan New York
south to Northern Virginia. However, no corridor designations have been
made yet.
When will DOE designate National Interest Electric Transmission
Corridors?
Answer. Section 1221(a) requires the Secretary to issue a report
based on the August 8, 2006 Congestion Study. In that report, the
Secretary, at his discretion, may designate any geographic area
experiencing electric energy transmission capacity constraints or
congestion that adversely affects consumers as a National Interest
Electric Transmission Corridor (National Corridor).
In the August 8, 2006 Congestion Study, the Department invited the
public to comment on the designation of National Corridors. The
Department continues to evaluate these comments, and has not yet
determined whether, and if so, where, it is appropriate to designate
National Corridors. Because there is broad public interest in the
implementation of Section 1221(a), the Department has decided that,
prior to issuing a report that designates any National Corridor, the
Department will first issue a draft designation to allow affected
states, regional entities, and the general public additional
opportunities for review and comment.
Question 2. Why haven't designations been made yet?
Answer. Departmental staff have been reviewing the 400 plus
comments received in response to the August 8 Congestion Study. The
staff is continuing to analyze the data developed in the Congestion
Study and provided by commenters, as it develops a recommendation for
the Secretary as to whether, and if so, where, one or more National
Corridors should be proposed.
power marketing administrations--bpa net secondary revenue proposal
Question 1. The Administration has re-proposed an administrative
action to direct BPA to use any net secondary-market revenues in excess
of $500 million per year to make advance payments to the U.S. Treasury
on Bonneville's bond obligations. This proposal was vehemently opposed
by the Pacific Northwest Senators last year. You carried language in
the 2006 supplemental appropriations bill that prohibited funding for
this initiative. The prohibition is set to expire in April 2007.
Last year, the Administration's proposal to tie up Bonneville's net
secondary market revenues was met with fierce opposition in Congress--
so much so that its implementation was stopped. Do you think the
sentiment in Congress has changed?
Answer. The Administration is hopeful that the sentiment of all the
involved parties is open to working collaboratively to address issues
raised in the budget. The President's budget for FY 2008 allows for and
encourages a regional discussion to address the concerns expressed by
the Pacific Northwest Congressional delegation and Bonneville Power
Administration (BPA) customers. The budget proposal continues to seek
means to extend limited BPA access to capital for regional
infrastructure investment with minimal rate impact.
Question 2. It is my understanding the BPA has voluntarily paid
$1.8 billion in advanced payments to the Treasury on its bond
obligation. It has also invested heavily in its transmission system.
Why then, does the Administration continue to pursue this action--
especially since you concede that ``due to the volatility of energy
prices, these net secondary revenues could be higher or lower depending
on a number of factors, including hydro variability''?
Answer. The $1.8 billion in voluntary advance amortization payments
BPA has made in recent years, as of the end of FY 2006, has enabled BPA
to prudently preserve the availability of its authorized borrowing for
infrastructure investment. Similarly, the budget proposal is about
developing further sound business practices that would use a portion of
any higherthan-historical net secondary revenues, greater than $500
million, to invest back into energy infrastructure in the region and to
pay down debt. Revenues from this source, while highly variable, can be
significant. Without this proposal, the budget projects BPA will reach
its U.S. Treasury borrowing cap in FY 2012; however, if the net
secondary revenue proposal is implemented and combined with other debt
management tools, BPA likely would not reach its borrowing cap until FY
2016.
POWER MARKETING ADMINISTRATION--SEPA/SWPA/WAPA
Question 1. The Administration re-proposes an administrative action
to raise the interest rate for power-related investments incurred by
the PMAs and paid to the Treasury from the ``yield'' rate to the
``agency rate.''
This PMA proposal also faced significant Congressional opposition
last year. Both the FY 2007 Energy and Water Appropriations bill and
the Continuing Resolution (CR) currently under consideration carry a
prohibition on its implementation. The Budget, however, proposes to
make the new interest rate retroactive to the beginning of FY 2007.
Given the significant opposition to this proposal last year, along
with it modest revenue gains (only $2-3 million annually), why does the
Administration continue to pursue this?
Answer. The Administration believes it is prudent to charge the
PMAs (excluding Bonneville Power Administration), a risk-adjusted
interest rate that more accurately reflects the probability of
repayment of the Federal investment in power systems infrastructure and
all costs associated with producing power. Although the PMAs pose a low
risk of default to the U.S. Treasury, the risk is not zero. This is
because the ability of the PMAs to repay the Treasury is dependent on
their ability to collect revenues from the sale of power and related
services. For example, physical catastrophes (e.g. a dam failure),
electricity market volatility, problems with customer credit, or
availability of cheaper energy sources could adversely affect the PMAs'
ability to market their power in the future.
The ``yield'' rate is the rate paid on securities backed by the
full faith and credit of the United States Government. The ``agency
rate'' of interest paid by government corporations and the Bonneville
Power Administration better reflects the risk of default than the
``yield'' interest rate the three PMAs currently use on investments
whose interest rates are not set by law.
Question 2. The Administration re-proposes an administrative action
to raise the interest rate for power-related investments incurred by
the PMAs and paid to the Treasury from the ``yield'' rate to the
``agency rate.''
This PMA proposal also faced significant Congressional opposition
last year. Both the FY 2007 Energy and Water Appropriations bill and
the Continuing Resolution (CR) currently under consideration carry a
prohibition on its implementation. The Budget, however, proposes to
make the new interest rate retroactive to the beginning of FY 2007.
Does the Administration believe it can make this retroactive to the
beginning of FY 2007 even with the prohibition contained in the CR?
Answer. No. The provision in the recently enacted Continuing
Resolution, Public Law 110-5, will delay implementation of this change
until FY 2008. The Administration will seek to apply the new interest
rate on capital investments occurring in FY 2008 and later.
PMA CONTINUING AND EMERGENCY FUNDS
Question 1. The Administration proposes to set the recovery period
for future emergency Purchase Power and Wheeling costs funded through
the PMA Continuing and Emergency Funds from ratepayers within one year
from the time costs are incurred. Currently, PMAs can recover costs
anywhere from one year to as long as five years.
If these funds are being tapped due to an emergency situation, why
put such a severe restriction on the time for repayment? Won't a more
reasonable amount of time help ease the burden of increased rates to
ratepayers?
Answer. The Administration believes that expenses paid through the
Continuing/Emergency Funds, associated with purchasing power and
transmission wheeling services, should be considered annual expenses
and repaid within one year. This proposal does not apply to the use of
the Continuing/Emergency Funds for the purpose of performing emergency
maintenance, or any activities other than the provision of purchase
power and wheeling services. Additionally, while the current power
marketing administration (PMA) repayment processes assure that over
time the Federal Treasury is made whole for all purchase power and
wheeling expenses, with interest when those expenses are deferred into
future years, they do not preclude unplanned impacts to the Federal
budget deficit in the short term. When the PMAs use the Continuing/
Emergency Funds and do not increase revenues to compensate for the use
of those funds in the short term, the budget deficit for the current
fiscal year is negatively impacted. The Administration's proposal would
mitigate these deficit impacts. Finally, it should be noted that the
Administration's budget provides additional authority to the
Southeastern and Southwestern Power Administrations to use power
receipts (offsetting collections) to fund these purchases, and Western
Area Power Administration's budget continues to provide substantial
budget authority in this area. This reduces the need to rely on the
Continuing Funds and Emergency Fund, by allowing the PMAs to fund
purchase power and wheeling expenses through their power receipts. The
Administration is working to implement this budget proposal in a manner
that will treat annual expenses appropriately and mitigate deficit
impacts, while keeping power rate impacts in check.
NUCLEAR POWER 2010
Question 1. Mr. Secretary, the Joint Resolution for FY 2007
provides the Department a significant amount of latitude to meet your
funding priorities. With regard to nuclear power, the Energy and Water
Appropriations Subcommittee also provided an additional $41 million in
funding for nuclear power R&D.
I am very concerned about the Nuclear Power 2010 program. This
program, as you know is a 50/50 cost share effort between reactor
designers and the federal government to develop the detailed
engineering and design plans necessary to submit a successful license
application to the Nuclear Regulatory Commission.
Also, as I understand it, one of the goals of the NP2010 program is
to support the engineering designs for the various reactor types. It is
my impression that in the absence of engineering specifications for the
designs, the vendors are unable to provide reliable pricing information
to their potential customers. Obviously, this is an obstacle to the
customers actually placing orders and making a commitment to build.
Can I count on the Department to make the NP2010 program a priority
in FY 2007 and use the funding flexibility provided in Joint Resolution
to fully fund this initiative?
Answer. The Nuclear Power 2010 Program remains a very high priority
for DOE. The Department will use the funding flexibility provided in
the Joint Resolution to appropriately fund the approved projects of
this important nuclear energy initiative.
Question 2. What is the department doing to accelerate the
completion of the design engineering for reactor types?
Answer. In addition to supporting the reactor vendor activities for
design certification and completion of the reactor design and
engineering required to support the power companies' combined
construction and operating licenses, the Office of Nuclear Energy is
supporting the reactor vendor design scope through a more flexible cost
share ratio each fiscal year under the cooperative agreements that will
allow the reactor vendors to accelerate design work in fiscal year 2007
originally planned in the outyears. As allowed for in the solicitation
and in the negotiated awards, the industry or the government can
provide more than 50 percent cost share during any given fiscal year
provided by the end of the project industry has paid at least 50
percent of the total project costs.
LOS ALAMOS NATIONAL LABORATORY (LANL) RESPONSE TO SECURITY FAILURES
Question 1. Mr. Secretary, Director Anastasio has taken steps to
increase security at LANL by increasing random searches and drug
testing. As I understand it, Los Alamos security now exceeds all other
DOE labs and even DOE Headquarters.
Do you believe the Lab has taken appropriate action and will you
consider applying the same level of security to the NNSA and its other
facilities?
Answer. At this stage, Los Alamos National Security (LANS) is
aggressively tackling the long-standing security issues at the
Laboratory. However, I remain concerned that we may yet see a repeat of
the past practices, where the Laboratory has started off well in fixing
their problems, but gradually loses interest as time passes. DOE and
NNSA will be watching LANS carefully to ensure this is not the case.
All of our sites conduct random searches based upon their unique
site configuration. It is my sense that because of the way in which
LANL security areas are spread out, the Laboratory has a greater need
for outbound searches than other sites.
Drug testing employees is something we are paying close attention
to and I will consider this option for wider use after I hear the
recommendations from the Personnel Security Task Force I established to
identify policy and procedure weaknesses in our current personnel
security program.
LOSS OF PERSONNEL DATA
Question 1. What is the Department doing to encrypt and protect
personal employee data to ensure that information has the same level of
protection that applies to classified information?
Answer. Consistent with the requirements of the Privacy Act and
Office of Management and Budget direction, the Department has issued
direction to all Departmental elements to implement procedures and
controls for the protection of personal employee data. The controls
include removal of sensitive data from computers and devices unless it
is required for business reasons; encryption of all removable disks and
portable computers (laptops) containing the sensitive information;
encryption of emails and attachments containing sensitive information;
delegation of management responsibility for the review of personally
identifiable data; and regular management reviews of the personally
identifiable information which may be retained on the portable
computers and removable media. Additional controls include reporting of
actual or suspected loss of personally identifiable information within
45 minutes of the detection of the loss.
MOX PROJECT
Question 1. What is the Department doing to control costs of this
project and bring the project in on budget?
Answer. The Department is taking a number of actions to ensure that
the MOX facility can be built within its cost and schedule baseline.
The design of the U.S. MOX facility is approximately 85% complete and
is based on existing French facilities that have been operating
successfully for decades. In addition, the Department's contractor has
proven the performance of key process units. Following extensive
environmental and safety reviews, the Nuclear Regulatory Commission has
authorized the Department's contractor to proceed with construction.
This past summer, the Department conducted an External Independent
Review of the MOX project to validate its cost and schedule baseline.
The review involved a thorough examination of technology maturity,
facility design, contractor bases of estimates, project risk, and many
other areas. The EIR resulted in a $359 million increase to the project
baseline and provision made for 28% contingency. The Department will
also incorporate an incentive fee structure in the construction and
operations contract to control cost growth and schedule slippage and
require the contractor to develop cost ceilings (i.e., target costs
tied to incentive fees) that must be agreed to by DOE. The current
baseline of $4.7 B is contingent upon adequate funding support from the
Congress, consistent with the schedule and baseline. Bids received to
date on a number of large construction and long-lead equipment
procurement packages are within the project's cost estimates and well
within the baseline range.
Question 2. If the MOX facility does not go forward as planned,
what impact will this have on the Department's efforts to consolidate
and dispose of special nuclear material in Washington, California,
Idaho, New Mexico, Tennessee and South Carolina?
Answer. The Nuclear Materials Disposition and Consolidation
Coordination Committee (NMDCCC), which was created in 2005, recently
recommended that Pu-239 not intended for use in the MOX Facility be
consolidated at SRS. This decision whether to consolidate Pu-239 at SRS
is dependent on appropriate NEPA review and on compliance with current
law. The current law would require the Department to identify a path
out of the State for Pu-239 before we begin to consolidate. Our current
path includes MOX, Pu Vitrification, and H-Canyon.
I am currently reviewing this recommendation.
BIOFUELS/LOAN GUARANTEES
Question 2. What other steps is the Department taking to facilitate
efforts to accelerate the deployment of this technology?
Answer. In addition to a comprehensive research and development
portfolio, the Department strongly supports the commercialization of
cellulosic ethanol technologies. We conduct cost-shared projects to
accelerate the reduction in the costs associated with feedstock
production, collection, storage and transportation, thereby addressing
a major barrier to realizing cost competitive cellulosic ethanol. We
are leading efforts with industry to further reduce costs by validating
the integrated biorefinery process at the engineering pilot scale. We
expect these efforts to reduce the overall risks of deployment and
improve the likelihood that private sector entities may obtain
financing for commercial scale biorefineries. We also plan to support
at least one public/private cost-shared commercial-scale demonstration
of innovative biorefinery technology that will produce cellulosic
ethanol and provide documentation on both feedstock and conversion
process economics.
Furthermore, a ready infrastructure is necessary to encourage
continued market growth for ethanol fuels. To this end, the Department
is working to enable the availability of retail stations and terminals,
analyze ethanol pipelines and alternative distribution mechanisms, and
support vehicle technologies to ensure there is adequate demand for
ethanol supply.
Question 3. Will you report to us regarding the prospect for
commercial production of cellulose ethanol to begin as early as 2009?
Answer. The cellulosic ethanol industry is beginning to take shape.
Recently, announcements have been made in the press by industry leaders
on construction plans for the first U.S. cellulosic ethanol facilities.
Additionally, winners of DOE's solicitation for cost-shared commercial-
scale demonstrations will soon be announced and are expected to break
ground within 12-18 months, after negotiations of terms of the
agreement. These cellulosic ethanol facilities have the potential to be
operational in the 2009-10 timeframe. Assuming the commercial
operations proceed in line with development plans that have been made
public by private sector participants at this time, we estimate that up
to approximately 130 million gallons may be in commercial production
each year by 2012.
Responses of Secretary Bodman to Questions From Senator Cantwell
Question 1a. Secretary Bodman, the Administration has once again
proposed to confiscate BPA's net secondary revenues, this time for an
estimated $646 million over the next five years. This is money that
would otherwise go to keep Northwest business competitive and keep
electricity rates for Northwest families affordable.
Please provide any analysis that was done on how this proposal
would impact the Northwest economy?
Answer. BPA has not done an analysis on how the proposal would
affect the Northwest economy. BPA is seeking to work with the Northwest
parties to find ways of minimizing rate impacts of the proposal, if
any, and any consequent impacts.
Question 1b. How much would this proposal increase electricity
rates for the typical residential customer?
Answer. In general, we believe that the prepayments in most years
are unlikely to cause a rate increase although it may reduce a BPA rate
decrease. It is difficult to predict how a customer utility would pass
on this impact to retail residential customers because each customer
differs in terms its fmancial situation and its reliance on BPA.
Question 1c. How many Northwest jobs will be lost from this rate
increase?
Answer. BPA has not done any analysis of job impacts of this
proposal. BPA is seeking to work with Northwest parties to find ways of
minimizing rate impacts of the proposal, if any, and any consequent
economic impacts.
Question 1d. How much money will be taken out of the Northwest
economy each year under this proposal?
Answer. The FY 2008 budget includes estimates of expected
incremental revenues associated with the net secondary revenue
proposal. The estimates are included within the gross revenue and net
outlays estimates for BPA for the fiscal years 2008 through 2012. The
incremental revenue estimates are: $91 million for FY 2008; $112
million for FY 2009; $107 million for FY 2010; $116 million for FY
2011, and $107 million for FY 2012, for a total of $533 million for the
FY 2008 through FY 2012 period.
These incremental revenues are expected values, or averages, based
on a range of possible net secondary revenues. BPA's net secondary
revenues vary considerably due to the variability and unpredictability
of the water supply in the Columbia River basin and the volatility of
market prices. Therefore, the actual amounts could be much lower or
higher than these expected values, depending on BPA's actual secondary
revenues.
Finally, any value that might leave the region would eventually be
returned to the region through reduced interest and principal payments
on BPA's current Federal debt as well as increased access to capital
from the Treasury.
Question 2. Secretary Bodman, as you know BPA's authority to set
rates is provided for in several federal statues. These statutes direct
that the BPA Administrator ``shall transmit and dispose of such power
and energy in such manner as to encourage the most widespread use
thereof at the lowest possible rates to consumers consistent with sound
business principles.'' BPA has consistently interpreted this
congressional direction to mean repayment occurs ``over the period that
Congress specified in an appropriations bill or in the term for the
bonds used to finance the project.'' Combined with the ``lowest
possible rates consistent with sound business principles'' standard,
this means that the rates should be no lower, nor higher than necessary
to repay the rates in the period specified. The ``sound business
principles'' means-repayment on the scheduled repayment date and does
not mean prepayment of long-term debt. Otherwise the ``lowest
possible'' portion of the equation would be violated. Given these
existing statutes, please explain the Administration's rational the
legal basis for proposal to expropriate BPA's net secondary revenues.
Answer. The rationale and legal basis for the Administration's
proposal is thoroughly set forth in a letter and attached memorandum
dated June 23, 2006, from Department of Energy General Counsel David R.
Hill to Senators Burns, Cantwell, Craig and Smith.
Question 3. Secretary Bodman, we are pleased that this year's
budget does not include the onerous and counterproductive proposal that
would have counted third-party financing against BPA's borrowing
authority from the U.S. Treasury. BPA has stated that it plans to move
forward immediately to seek third-party financing opportunities. This
will remove the need in the near future for any increase in borrowing
authority. Therefore, based on OMB's assertion that the net secondary
revenue plan is needed in order for BPA to be able to invest in new
transmission projects without hitting the borrowing cap; can you
explain the justification for including it in this year's budget when
clearly hitting the cap is not an issue? Based on OMB's assertion that
the net secondary revenue plan is needed in order for BPA to be able to
invest in new transmission project without hitting the borrowing cap;
can you explain the justification for including it in this year's
budget when clearly hitting the cap is not an issue?
Answer. While hitting the Treasury bonds outstanding cap, is not an
immediate concern, it is the Administration's belief that it is
nevertheless prudent and consistent with sound business principles to
plan to in advance to preserve Bonneville's existing borrowing
authority for as long as possible. The President's 2008 budget proposal
is intended to provide BPA with needed financial and planning
flexibility to invest back into the Northwest's economic energy
infrastructure by paying down existing Federal bonded debt more
quickly. The Administration is concerned about the adequacy of
financing needed for BPA investments in transmission and other
infrastructure needs. It believes that in times of historically very
high net secondary revenues, it is prudent to bank some of these
revenues by making advance bond amortization payments.
The proposal would extend the period before BPA runs out of
available borrowing authority, thus helping BPA fund needed energy and
transmission infrastructure investment. Without this proposal, the
budget projects BPA will reach its U.S. Treasury borrowing cap in 2012;
however, if the proposal is implemented and combined with other debt
management tools, BPA likely would not reach its borrowing cap until
2016.
Question 4. Secretary Bodman, as you may know, the Northwest has
led the nation in building new transmission, investing more than $1
billion in system upgrades since 2001. In fact, the Northwest alone
accounted for a third of all the transmission built nation-wide in
2004. Since, it is a stated goal of the Administration's energy policy
to build more transmission capacity, how does the net secondary revenue
proposal improve investments in transmission infrastructure?
Answer. The budget proposal seeks to extend BPA's limited access to
capital needed for funding future regional infrastructure investment.
Without this proposal, the budget projects BPA will reach its U.S.
Treasury borrowing cap in 2012; however, if the proposal is implemented
and combined with other debt management tools, BPA likely would not
reach its borrowing cap until 2016. If budget estimates are met, the
proposal should provide an additional $646 million over the FY 2008-
2012 time period, which would be available for investments in
transmission system infrastructure.
Question 5. Secretary Bodman, BPA is not only paying down its debt
to the treasury on time, but is doing so ahead of schedule at an above
market interest rate; that is the government is actually making money
by financing Northwest infrastructure investments. If BPA is to pre-pay
its long term debt to the U.S. Treasury as proposed under this plan,
how much would that lower total revenues to the Treasury from BPA?
Answer. As BPA issues new bonds to the Treasury, it does so at
prevailing market interest rates. By law the rate on BPA's Federal
bonded debt is equivalent to the Government Agency Rate, a market
interest rate based on Government corporations' debt. This rate is
typically slightly higher than the Treasury rate to reflect the risk
associated with Government corporations. Because these rates are
indexed to market rates, BPA's Federal debt will inevitably be above or
below prevailing market rates as the market rates move up or down over
time. BPA also has outstanding appropriated debt obligations. The
current average rate on the outstanding appropriations is higher than
the prevailing market interest rates. However, the Administration's
proposal does not anticipate paying appropriations early, only bonded
debt.
The net secondary proposal anticipates that in years when net
secondary power revenues are above $500 million, BPA would pay bonded
Treasury debt in excess of that scheduled to be paid. BPA has not done
any analysis of Treasury impacts of this proposal.
Question 6. Secretary Bodman, since the Department of Energy first
announced its plans to reorganize by merging the Environment, Safety,
and Health and Security and Safety Performance Assurance Offices, I
have expressed concern and disappointment over the implementation of
this new Office of Health, Safety and Security. I remain unconvinced
that dismantling the office chiefly responsible for overseeing worker
safety and health will actually strengthen worker health and safety. In
the past, I worked with former Assistant Secretary John Shaw to ensure
that the Former Worker Medical Surveillance Program continue to be
funded, providing the medical screening services to the thousands of
workers potentially exposed to hazardous materials during their
employment at Hanford. How will the new HSS Office ensure the Former
Worker Medical Surveillance Program remains in place? What are your
plans to improve and expand occupational safety programs under HSS?
Answer. Senator Cantwell, the Department of Energy did not abolish
any office or function when I created the new Office of Health, Safety
and Security (HSS). In fact, during the first five months after its
creation, HSS has redoubled efforts regarding worker health and safety.
Additionally, HSS has in place a performance-based independent
oversight program that assesses contractor self-assessments, line
management evaluations, and worker performance. HSS identifies
weaknesses in our worker safety and health programs and their
implementation through program reviews and performance testing. The
effectiveness and value of our assessments enables us to take timely
corrective action to address any weakness.
Specifically, with respect to the Former Worker Medical
Surveillance Program (FWP), we are ensuring that the program continues
to provide medical screening to former federal and contractor employees
from all DOE sites and that workers are screened in close proximity to
their residences through regional programs and a supplemental program
to serve workers who no longer live near the sites at which they
worked. The restructuring of the DOE environment, safety, and health
functions at DOE Headquarters did not result in any changes to
operations of the FWP. More than 46,000 individuals have been screened
to date, and DOE intends to screen over 10,000 individuals in FY 2007.
In the past six months, screening has been extended to workers from
multiple small DOE sites not previously served. Individuals from all
sites with abnormal findings are referred for medical follow-up and/or
to the Department of Labor's (DOL) program under the Energy Employees
Occupational Illness Compensation Program Act (EEOICPA).
In FY 2007, the Department has increased interactions with DOL and
the National Institute for Occupational Safety and Health (NIOSH) to
ensure work and exposure history information and test results obtained
during medical screening through the FWP can be effectively used by
these agencies, upon request by the claimant, in adjudicating claims
filed under EEOICPA. The Department will host a meeting in Oak Ridge in
May 2007 during which principal investigators from the FWP projects,
representatives from DOL and NIOSH, and records contacts from DOE sites
will address FWP and EEOICPA-related priorities and ways participating
organizations can best work together to support the current and former
worker community.
With the promulgation of 10 CFR 851, Worker Safety and Health
Program, HSS has undertaken an extensive effort to assist DOE federal
and contractor staff in implementing this worker safety and health
rule. HSS has partnered with the Headquarters Program Offices, the
Office of General Counsel, and the HSS Office of Enforcement to develop
implementation guidance and tools to assist the DOE complex with coming
into compliance with 10 CFR 851. Through the use of workshops,
televideo, and conference calls, we have addressed and resolved
hundreds of issues and used this information in the development of the
Implementation Guide for 10 CFR 851. In addition to the Worker Safety
and Health Rule we have identified the need for developing policy for
the use of Nanoscale materials within the DOE. We have formed a working
group that includes the Office of Science and the National Nuclear
Security Administration which will leverage the knowledge and expertise
of those organizations to assure the proper Nanoscale policy is
developed. We are in the final stages of amending 10 CFR 835,
Occupational Radiation Protection, to improve our assessment of
worker's occupational radiation exposures taking into account new
international standards. The Chronic Beryllium Disease Prevention
Program (10 CFR 850) will be amended to reflect the lessons learned
during the past seven years that this rule has been in place. In all
cases we are better poised to capitalize on the synergy of the various
functions in the new HSS organization and relationships with the DOE
field organizations to develop policy and guidance which will improve
the safety of the entire DOE workforce.
Our long-term plans call for HSS to work with line managers to
provide greater assurance that management systems adequately identify
and analyze hazards and provide appropriate controls to protect the
health and safety of workers. In doing so, we will continue to use the
Integrated Safety Management framework, which has been in place for
more than ten years and has positively contributed to DOE worker
safety. As part of this effort, HSS will coordinate its efforts to
examine the specific types of problems that are being experienced and
recommend specific solutions (e.g., new methods, tools, guides). A
major focus will be on determining the systemic causes of deficient
performance in order to take corrective actions that address root
causes and contributing factors. For example, HSS is supporting the
Human Performance Initiative concept. This Initiative is a systematic
process of discovering and analyzing important human performance gaps,
planning for future improvements in human performance, designing and
developing cost-effective and justifiable interventions to close
performance gaps, implementing the interventions, and evaluating the
results. Its purpose is to minimize the frequency and severity of
adverse events that impact the safety and health of workers, the
public, and the environments.
Question 7a. Secretary Bodman, worker's compensation is a basic
benefit to injured workers that should not be reduced. I've recently
spoken to some Hanford workers about a recent Request for Proposal
(RFP) for an extension of the Flour Hanford Contract with DOE. There
seems to be some confusion with regard to a worker's compensation
clause and whether worker's compensation is considered an allowable
cost to the contractor.
What is the Department's general policy regarding workers'
compensation?
Answer. Federal Acquisition Regulation 28.307-2 mandates contractor
compliance with applicable Federal and State workers' compensation
laws. Pursuant to this regulation, the Department reimburses its
contractors' costs of providing workers' compensation coverage.
DOE policy regarding reimbursement of worker's compensation
programs, as set forth in DOE Order 350.1, Chg. 1, Contractor Human
Resource Management Programs, provides that DOE also may reimburse
contractors for the costs of supplemental benefits (such as paid time
off) to the extent that total benefit payments from all sources do not
exceed 100 percent of an employee's net pay. In addition, any
supplemental benefit program must be part of a total employee benefit
program that meets the tests of allowability established by FAR.31.205-
6.
During discussions last summer and fall to extend the Fluor
Hanford, Inc. contract (as well as the recently extended contract with
CH2M Hill Hanford), the parties agreed that DOE would only reimburse
the contractors for the amount of workers' compensation required by
Washington State law unless such compensation is otherwise required by
an existing Hanford Site labor agreement.
Question 7b. Does the agency intend to restructure this policy in
the near future? Please explain.
Answer. DOE does not plan to change its policy for reimbursement of
site and facility management contractor workers' compensation.
Question 8. Secretary Bodman, as you may know, the HAMMER program
is an important worker safety training tool for Hanford workers. You
have stated that worker safety is a priority of your Department. Yet in
FY 2008, funding for the HAMMER worker safety program has been gutted
for the second year in row. Can you explain how cutting funding for the
HAMMER program entirely is consistent with your Department's policy
objectives? How is your Department ensuring that workers at Hanford are
properly trained and certified?
Answer. The Department's policy has not changed. DOE remains
committed to ensuring that our workers at Hanford are properly trained
and certified. Work cannot be done without appropriate training and
each project includes funds to meet this requirement. Under our
performance-based contacts, it is up to each of the contractors to
decide how best and where to obtain the training as long as it is cost-
effective and meets site-wide requirements. HAMMER has the capability
to provide this service for the Hanford contractor workforce, but the
Department's budget request supports the training essential for cleanup
without specifying precisely how or where.
Question 9. Secretary Bodman, I remain concerned about the decline
in funding for Hanford Tank Farm activities, which has dropped from
$364 million in 2005 and $327 million in 2006 to $273 million in FY
2008. In 2001 the Nuclear Regulatory Commission reported that Hanford's
High Level Waste tanks ``represent immediate concerns'' particularly
because of aging and deterioration. The emphasis on the Waste
Processing Plant, the Nuclear Regulatory Commission pointed out, should
not overshadow the waste tanks because of ``considerable environmental
and public risk posed by continued operation of the tanks with their
associated leakage and potential for collapse and explosion.'' What is
the extent of funding for the Department's high-level waste tank
maintenance and surveillance activities, such as flammable gas
monitoring, structural integrity ascertainment, corrosion controls, and
radiation controls? What is the status of addressing potentially
serious corrosion in the steel liner of one of the Hanford double-shell
tanks?
Answer. The funding for the Department's tank maintenance and
surveillance activities, such as flammable gas monitoring, structural
integrity ascertainment, corrosion controls, radiation controls and
other base operations activities for the tank farms has not declined
during the period identified. The Department's budget in FY 2007 of
$274 million is approximately the same as its FY 2008 budget request of
$273 million.
The Department performs regular video and ultrasonic testing and
although no conclusive report has been developed, corrosion does not
appear to impact tank integrity.
Question 10. Secretary Bodman, you have said that pumping waste out
of the single shell tanks has been discontinued because all pumpable
waste has been pumped and that is left to pump is sludge. Your
Department has confirmed that of the 67 single-shell tanks have leaked
waste or are believed to have leaked. According to your FY 2008 budget
request, these leaks have caused an additional 1 million gallons of
liquid waste to seep in to the soil. Can you confirm whether the
leaking from the 67 single-shell tanks has abated since pumping all of
pumpable waste has been pumped was completed? Can you confirm that
there is no risk of the remaining sludge leaking from the 67 single-
shell tanks? Can you confirm that the waste in the double shell tanks,
some of which are past their useful life, are not and will not leak?
Answer. On March 2004, the Department declared all pumpable liquids
were removed from all single shell tanks (SSTs), limiting any risk for
leakage. The Department continues to empty SSTs. To date, the
Department has completed or essentially completed waste retrieval from
six SSTs and other SST retrieval activities are underway. The
Department has not detected any signs of SST leakage during those
retrievals.
For the Department's RCRA-compliant double-shell tanks (DSTs),
systems are in place in the annulus between the two tank shells to
detect any leakage. No waste leakage has been detected. While there are
no absolute assurances regarding long-term DST integrity, the
Department's ongoing maintenance and monitoring activities effectively
mitigate DST integrity-related risks.
GLOBAL NUCLEAR ENEMY PARTNERSHIP
Question 11. Secretary Bodman, the Department is proposing to spend
$395 million in FY 2008, nearly half of all funds dedicated for nuclear
energy R&D, on spent reactor fuel reprocessing. According to the GNEP
Strategic Plan, DOE seeks to establish a large-scale nuclear
``recycling center'' in the United States that would reprocess spent
reactor fuel from domestic and international sources so as to reduce
nuclear waste volumes and ultimately destroy stocks of weapons usable
materials. According to the Department's Energy Information Agency,
potential nuclear growth is the greatest in the Far East and India.
Based on the GNEP strategic Plan and projected international nuclear
power growth, please estimate how much spent power reactor fuel, and
over what period of time, would be sent to the United States for
reprocessing?
Answer. At this time, no decision has been made regarding whether
or not the U.S. would reprocess spent fuel from sources other than
domestic utilities. It is anticipated that the initial U.S. capacity to
recycle SNF would be approximately the amount generated by the U.S.
commercial power reactors.
Question 12. Secretary Bodman, DOE officials at the sites and the
Hanford Advisory Board (HAB) have indicated that the budget request is
probably not adequate to meet Tri-Party Agreement compliance
milestones. DOE is obligated to submit an adequate compliance budget to
the Office of Management and Budget (OMB), so if this budget is not in
compliance, that means it was cut by OMB. An acknowledgement by DOE
that the budget is not adequate for compliance builds the case for
Congress to add money, which has been the practice for the past few
years. Is the Department's budget request for Hanford cleanup adequate
to ensure compliance with all Tri-Party Agreement milestones--both in
FY 2008 and beyond?
Answer. The Hanford site has experienced significant technical,
management, and regulatory challenges with such projects as the K-
Basins, Waste Treatment Plant, and Plutonium Finishing Plant. The
Department anticipates that these and other challenges may affect its
ability to meet some Tri-Party Agreement milestones in 2008 and beyond.
DOE will continue to evaluate project management and, where necessary,
may seek to use flexibility in the Tri-Party Agreement framework to
negotiate new milestone dates.
Question 13. Secretary Bodman, supplemental technologies are needed
to address low-activity tank waste at Hanford to allow the Waste
Treatment Plant to meet its missions. Bulk vitrification is being
demonstrated, but technology problems have developed and DOE has
stopped funding the demonstration. However, the need for supplemental
technologies is still compelling, and if bulk vitrification is not the
answer, perhaps other supplemental technologies, like steam reforming,
should be funded. The FY-2008 request appears to include no funding for
the demonstration of bulk vitrification to treat low-activity waste at
Hanford. Does the Department plan to fund the demonstration and testing
of promising alternative technologies, like steam reforming, to reduce
the amount of waste that has to be treated in the Waste Treatment
Plant?
Answer. An independent external review panel of subject matter
experts reviewed the Demonstration Bulk Vitrification System (DBVS)
Project last summer. The DBVS Project team is currently addressing
issues raised by that panel, none of which were fatal to the project.
The project team is also preparing DBVS for a DOE Order 413.3-A
Critical Decision (CD)-2 evaluation, which, if successful, will
establish a project baseline. A CD-2 baseline is prerequisite to the
Department requesting additional DBVS funding.
The Department is also funding steam reforming tests, primarily in
support of the Idaho sodium-bearing waste project. The steam reforming
test activities include creating a mineralized waste form, which is the
type of waste form that would be necessary for Hanford low activity
waste (LAW). Other alternative technologies have been evaluated by the
Department both to determine whether more cost-effective technologies
are available without diminishing safety and also to provide treatment
diversity for the various compositions of tank waste. The Department's
decision process regarding which supplemental LAW technology will be
used to complete the LAW mission (for example, bulk vitrification,
steam reforming, or a second WTP LAW facility) will be made in
accordance with the National Environmental Policy Act (NEPA) process
and in accordance with the Tri Party Agreement. A Tank Closure and
Waste Management Environmental Impact Statement is currently being
prepared that addresses supplemental LAW treatment and other Hanford
waste treatment and closure-related matters.
Question 14. Secretary Bodman, the Hanford Waste Treatment Plant is
currently estimated to start up in 2019 and cost in excess of 12
billion dollars. There are concerns that this cost estimate is
incomplete and does not include all facilities to treat Hanford's high-
level radioactive tank wastes. For instance, I understand that the
Hanford Waste Treatment Plant is being designed so that it will only
accommodate 40 percent of the Hanford tank wastes, while the remaining
60 percent are expected to be treated with a supplemental technology,
known as bulk vitrification. Given these circumstances, does the Energy
Department's current estimate include treatment of the residual 60
percent of tank wastes? If so, how many bulk vitrification boxes are
expected to be generated and what are the life-cycle costs for this
project?
Answer. The Waste Treatment Plant (WTP) is designed to pretreat and
vitrify 100% of the high-activity waste. The WTP is planned to vitrify
about 50% of the low activity waste (LAW). In addition, the Department
is evaluating alternative technologies to treat the remaining LAW
fraction of the tank wastes in order to better align the LAW treatment
processes with the waste characteristics. If, as a result of the
ongoing baseline reviews and National Environmental Policy Act process,
bulk vitrification is selected to treat the LAW that will not be
treated in the WTP LAW facility, the Department estimates that
approximately 4,000 boxes of LAW bulk vitrification glass would be
generated.
The Department's estimates for the Office of River Protection
include treatment of all tank wastes. Life-cycle cost estimates that
are specific to the deployment of bulk vitrification at an operational
scale will be generated as part of the Critical Decision (CD-2) process
(formal Departmental approval process of a cost and schedule
performance baseline) if that technology is ultimately selected for
deployment.
Question 15. Secretary Bodman, the Energy & Water Appropriations
Subcommittees have added money the last two years for Hanford
groundwater, specifically for technologies to mitigate the migration of
radioactive contaminants towards the River. This is recognized as
perhaps the ``single greatest'' environmental threat at Hanford, yet
DOE's request apparently fails to provide funding for this technology
development. The central environmental threat at Hanford is seepage of
radioactive contaminants through the groundwater into the Columbia
River. Funding was added the past two years by congressional committees
to address such contaminant migration. What does your budget request do
to continue, and accelerate, efforts to fund new technologies to
mitigate such groundwater contamination at Hanford?
Answer. The Department is requesting a significant increase ($30
million, or a nearly 39 percent increase) in these activities in its
request for the Hanford site. In addition, movement of radioactive
contaminants into the groundwater and migration of contaminated
groundwater to the Columbia River are the highest priorities for the
Technology Development and Deployment Program (TDD). In FY 2006, a $10
million increase directed the Department to analyze contaminant
migration to the Columbia River and to introduce new technology
approaches to solve contamination issues. Subsequently, nine projects
have been selected which are designed to remediate chromium, strontium-
90, uranium, and carbon tetrachloride plumes at the Hanford site. The
projects are designed to assess the viability of alternative treatment
technologies that have the potential for performing better than the
baseline technology currently being utilized. Both FY 2007 and FY 2008
TDD Program funding will be used to test and deploy the new
technologies and approaches developed and assessed in FY2006 and FY2007
to mitigate or reduce contaminate movement toward the Columbia River.
Additionally, Hanford will be increasing focus on the groundwater
remediation systems to address contaminated plumes along the Columbia
River, as well as in the Central Plateau, utilizing the results of the
TDD program.
Question 16. Secretary Bodman, at today's hearing, I asked whether
you would recommend the President sign a 15% Renewable Portfolio
Standard bill send to his desk by Congress. You replied that you would
not recommend the President sign such a bill based on your belief that
RPS statues should be enacted by the states, not by federal law. Could
you please further explain your reasoning? Do you think it is helpful
to have several dozen different state RPS laws, with differing
regulations, in order to achieve our shared goal of increasing
renewable energy production? Would a national interconnection standard
for renewable energy units to connect to the grid be a positive
development?
Answer. The Administration has supported the development of State
Renewable Portfolio Standards because power generation options and
renewable resources vary widely from state to state, because states
hold different views of the types of resources that they would like to
support, and because retail electricity sales are regulated largely at
the state level.
With 21 states moving forward with renewable portfolio standards,
covering over 80% of the population, we have not seen analysis that
indicates the benefits or utility of replacing existing State standards
and regulatory structures with new and undefined National regulations.
Supporting State efforts to meet their renewable goals, especially
through utilization of EPACT authorities for transmission line
development is our preferred approach.
Regarding interconnection standards for renewable energy, the
Department is aware that a lack of standards for interconnection, as
well as for trading of renewable energy credits, presents barriers to
renewable power project development. The Department supports efforts to
address these barriers.
Question 17. Secretary Bodman, at today's hearing, I asked whether
you would recommend the President sign a bill that extended tax
incentives for renewable energy and fuels production. You replied that
you would not recommend the President sign such a bill. Could you
further explain your reasoning? Do you think Section 45 production tax
credits have had any effect on helping bring new renewable energy
production online versus what it would have been without their
existence? Are there any clean energy tax incentives you would support,
and if yes please name them.
Answer. At the time of the Hearing, I indicated that we do not have
a categorical response in the affirmative or negative for each of the
many tax incentives that were signed into law by the President in the
Energy Policy Act, some of which have, of course, been subsequently
extended.
Moreover, the probability of Congress and the Administration
agreeing to changes in the characteristics of existing tax policy, such
as duration, eligibility period, transference and the like, requires,
as suggested, some detailed cost-benefit analyses balancing the desired
objectives of such policies with their respective budgetary impacts.
In that regard, we have begun inquiries with the Department of the
Treasury (which has jurisdiction on these issues), to better understand
and analyze actual growth and pricing impacts and cost-benefits of any
potential changes to the characteristics of such tax policy, such as
duration, eligibility, transferable value, etc.
The context of my earlier response was specific to the question on
renewable energy, and ethanol, in particular. Of course, solar,
geothermal, biomass, and wind technologies all benefit from tax credits
listed under the Energy Policy Act of 2005, such as Section 45
Production Tax Credit; Section 48A Investment Tax Credit, Section 25C
homeowners energy efficiency tax-credit; Section 30B alt fuel/hybrid
vehicles tax credit; and Section 40A biodiesel tax credit.
Question 18. Secretary Bodman, please provide me with a history of
the hydropower research goals, specifically I'd like to better
understand the length of the program, how many taxpayer dollars were
invested in it, and what results it achieved.
Answer. The Department's Hydropower Program was established in
1977. In the 1970s, the Hydropower Program focused on small hydropower
technology assessment and strategic planning. In the 1980's, activities
expanded substantially into a Small Hydropower Loan Program, plus
resource assessment and analysis of environmental, economic, and policy
issues facing new hydropower development. After several years of zero
funding (fiscal years 1988-1990), the Hydropower Program reformed with
a focus on new technology development to improve the environmental
performance of hydropower projects. From 1994 to the present, the
Hydropower Program has been focused largely on Advanced Turbine
research, but it did expand further into new research topics like
integration of hydropower with wind energy. The total funding since
inception was approximately $128 million ($49 million of that was in
fiscal years 1979 and 1980 when the Small Hydro Loan Program was
operating).
Under the Small Hydro Loan Program (1978-1985), 20 new projects
were developed with a total installed capacity of 133 megawatts in 18
states. More than two dozen guidance manuals, resource assessments, and
technical analyses were produced in that early phase of the program,
all related to small-scale hydropower development.
Since the Hydropower Program was restarted in 1990, the major
accomplishments and technology transfers were:
Conceptual designs for four types of advanced hydropower
turbines, of which three are being used by industry today.
Completed laboratory scale prototype testing of the new
design fish-friendly Alden turbine. This design was made
available to industry to be considered for a full scale
demonstration project.
Completed two years of full-scale testing of aerating
Francis turbines at the Osage Project in Missouri. Results of
these tests were made available to industry for consideration
in addressing water quality issues at other locations.
Completed one year of full-scale testing of a second-
generation Minimum Gap Runner turbine at Wanapum Dam in
Washington, with Grant County Public Utility District (PUD) and
Voith Siemens. This turbine design is now available to industry
and being considered for deployment at other hydropower sites.
Developed new biological design criteria and new methods to
measure environmental performance, applicable to new turbines.
Completed a full assessment of the undeveloped hydropower
resources in the United States, providing industry with the
necessary tools to evaluate development of these hydropower
resources.
Produced numerous other research reports on subjects
including mitigation effectiveness of fish passage, dissolved
oxygen, and instream flow requirements.
An advanced fish-friendly hydropower turbine resulting from
the Hydropower Program's advanced turbine research was
installed at the Wanapum Dam in Washington (Grant County PUD).
Testing of this turbine was cost shared between the Department
and Grant County.
Question 19. Secretary Bodman, there is growing worldwide interest
in the utilization of ocean energy, particularly tidal and wave energy.
Has the Department considered funding non-OTEC ocean energy R&D? If
they have, what conclusions has the Department reached about its
potential and a possible federal role?
Answer. The Department is observing the growth of interest,
activity, and investment in wave and tidal technologies. We recognize
that several states have promising opportunities for harnessing these
forms of ocean and tidal energy, and thus we are monitoring domestic
and worldwide progress in ocean energy technologies in collaboration
with the Electric Power Research Institute and the International Energy
Agency. Some countries with higher resource potential than the United
States, relative to their overall energy needs, are active in ocean and
tidal energy R&D. Ocean, wave, and current technologies are still in
their infancy, with a small number of demonstration systems operating
worldwide. The Department will continue to consider emerging
technologies like these in evaluating its research, development and
deployment programs.
The Department is also supporting a wave energy technology R&D
project via the Small Business Innovation Research Program. The U.S
Navy also supports ocean energy research. In addition there may be
opportunities for a Federal agency to satisfy the green power purchase
requirements of the Federal Government mandated by the Energy Policy
Act of 2005.
Question 25. Secretary Bodman, could you please provide EIA's
analysis of how the President envisions reaching his State of the Union
goal of production [of] 35 billion gallons of biofuels by 2017?
Answer. The Energy Information Administration (EIA) has not been
asked to prepare an analysis of the President's Alternative Fuel
Standard proposal. Any such analysis would be sensitive to program
details, such as the list of fuels eligible for the program and the
trigger levels at which the ``safety valve'' mechanisms that are
included in the program would come into play. The analysis would also
be sensitive to assumptions made regarding the availability of imports
of eligible fuels, future yield assumptions for corn and other ethanol
feedstocks, and the rate of progress in reducing the costs of emerging
biofuels technologies, such as the production of ethanol from
cellulosic biomass.
Question 26. Secretary Bodman, how many flex fuel vehicles would
have to be on the road in 2017 in order to consume 35 billion gallons
of biofuels?
Answer. Theoretically, if Flex Fuel Vehicles (FFVs) refueled 100
percent of the time with E85, assuming convenient, ready-access and
wide availability--and never used conventional gasoline--approximately
24 million FFVs (approximately four times the number currently in use)
would need to be on the road by 2017 to achieve the 35 billion gallon
goal. Of course this is not a likely scenario, but it provides a solid
quantitative baseline for all variables, such as consumer awareness of
their vehicles flexible fuel capabilities, relative fuel prices, ease
of access to E-85 dispensers, convenient station locations and relative
vehicle performance. If, hypothetically, FFV owners chose E85 twenty-
five percent of the time, approximately 96 million FFVs could be
needed. To make such choices convenient to consumers, we estimate that
E85 would need to be available between, at least, one fourth to one
half of all gasoline retail outlets. In any scenario, FFV growth is
essential to achieving the President's goal of reducing gasoline
consumption by twenty percent in ten years.
Question 27. Secretary Bodman, the Office of Energy Efficiency and
Renewable Energy received a huge $300 million increase as part of the
FY 2007 continuing resolution. Could you please describe in detail, by
program, how the Department plans to spend these monies and what
results you have to achieve with these onetime funds.
Answer. In accordance with the provisions of H.J. Res. 20, the
Department will submit to the Congress a plan for how the Office of
Energy Efficiency and Renewable Energy plans to allocate the $300
million increase within 30 days of enactment.
Question 29. Secretary Bodman, please describe any advances in
vehicle technologies that have resulted from DOE R&D and have been
passed on to industry since the end of the Partnership for a New
Generation of Vehicles. Do any of these technology advances appear in
cars available to consumers today?
Answer. Partnership for a New Generation of Vehicles (PNGV)
transitioned to the FreedomCAR and Fuel Partnership beginning in 2002.
The automotive industry partner, the U.S. Council for Automotive
Research (whose members are General Motors, Ford and DaimlerChrysler)
continued as a participant and five energy companies joined. In terms
of successful research efforts, the partners make their own decisions
on commercialization independently. The decision for these technologies
to be integrated in the vehicles they manufacture is entirely up to the
automobile industry participants. However, in the partnership agreement
with DOE, U.S manufacturers have committed to commercialize new
technologies as soon as a business case can be made.
Several Department of Energy cost-shared technologies have been
introduced by partners into vehicles and fuels, such as:
Cummins (a diesel engine manufacturer) developed a light-
duty diesel engine that will be manufactured for 2009 model
DaimlerChrysler light-trucks and SUVs.
Research into heavy hybrid technology with Allison
Transmission has accelerated the development of the dual mode
hybrid system that General Motors will offer for sale in its
2008 Chevy Tahoe full size hybrid sport utility vehicle.
DaimlerChrysler and BMW will offer variations of the same
technology in several vehicle applications, such as the 2008
Dodge Durango.
DOE investigated the different effects of sulfur levels on
emission control devices. The data generated by that research
allowed industry and government to reach consensus on the 15
parts per million standard for low sulfur diesel fuel. This
fuel is now available across the country and is enabling the
introduction of clean and efficient light-duty diesel vehicles.
Emission control technologies developed with Cummins appear
on the 2007 Dodge Ram truck that meets the EPA 2010 emission
standards three years early.
Several modeling codes developed by the national labs as
part of the Vehicle Technologies research program to simulate
combustion and emission controls are now being used by industry
to design and optimize their engine systems.
Advanced casting technologies for magnesium and aluminum
that were. developed under FreedomCAR are now used in
production passenger vehicles. The aluminum casting
technologies are used in the production of other consumer
products.
Additional items can be found at: http://www1.eere.energy.gov/
vehiclesandfuels/resources/fcvt_success_stories.html
Responses of Secretary Bodman to Questions From Senator Sanders
WEATHERIZATION
Question 1. I can't articulate to you the depth of my concerns
about this Administration's attempts to cut funding for weatherization.
I fought for weatherization funds for years when I was a member of the
other body and I will continue as a member of this body.
What other programs administered by the Department of Energy are
cutting energy use and energy bills for low-wage workers and fixed-
income retirees this year? Since we know the answer is NONE, I wonder
where the fairness is since low-income taxpayers' payroll taxes are
being used to provide tax incentives to upper-income families to buy
hybrid SUV's.
In response to a question from Sen. Menendez, you indicated that
weatherization does not provide enough of a return on investment for it
to be a priority--and yet you have no information, according to your
budget, about the consumer savings associated with the program. When do
you expect to have such information? And, why would you cut the program
without having that information?
Answer. The Department's budget request presents estimated per-
household consumer savings on page 429 of Energy Supply and
Conservation (Volume 3). Those savings, $274, are estimated first-year
cost savings per-household, using historical results from 1993-2002,
for homes weatherized in 2006, based on energy prices in the 2005 EIA
Annual Energy Outlook. As you are aware, energy costs vary over time,
and we regularly update our estimated consumer savings to reflect
changing energy prices.
Our most recently published fact-sheet, available on our web-site,
updates the per-household first-year cost savings estimate to $358
based on energy prices in the 2006 EIA Annual Energy Outlook.
In addition, the expected benefits of each EERE program are shown
in our Congressional justification materials. A summary is presented on
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table
shows the Weatherization and Intergovernmental Program has the lowest
or near lowest expected benefits in all three benefit categories
(consumer expenditure savings, carbon emissions reductions, and avoided
oil imports). Details of our modeling efforts that produce these
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
Weatherization is the largest-funded program in EERE, at the
expense of other research and development (R&D) programs. In order to
address this country's energy challenges with the urgency it deserves,
we have chosen to prioritize investments in efficiency R&D that have
multiplicative returns such as improvements to appliances and the
building envelope that affect the whole American population rather than
additive returns not associated with technological R&D that target a
single segment of the population, albeit an important one.
The Department administers and invests in programs to continuously
yield technological products, services, appliances, building and
vehicles that improve efficiency each and every year, and thus cut
energy use and bills for all Americans.
NUCLEAR POWER
Question 3a. Nuclear Power 2010, a government-industry cost-share
program to license new reactors, has received more than $186 million
since FY 2001. President Bush has said that Nuclear Power 2010 will be
a $1.1 billion program. On what specifically will the $1.1 billion be
spent?
Answer. The $1.1 billion dollar estimate represents the total
estimated costs for the two New Nuclear Plant Licensing Demonstration
Projects of which the Federal government will cost share 50 percent.
The estimate is the commitment to support the activities to see the 2
combined Construction and Operating License (COL) applications through
to completion but there are additional aspects of the 2010 program not
included in that estimate, such as three Early Site Permits, and the
Standby Support Programs.
These two projects, cost shared with Dominion Energy and NuStart
Energy Development LLC, support activities for industry to apply for
and receive two COLs from the Nuclear Regulatory Commission (NRC) and
for reactor vendors to complete sufficient final designs on two
Generation III+ reactors, the AP 1000 and the Economic Simplified
Boiling Water Reactor (ESBWR) that will enable an industry decision by
2010 to build a new nuclear power plant. Activities include COL
application preparation, support of the NRC review and approval of two
applications, design engineering work in support of the COL
applications, support of NRC design certification of the AP1000 and
ESBWR, site-specific engineering for the COL reference sites, first-of-
a-kind engineering for the two reactors, and final design.
Question 3b. The Department has granted $260 million to a
consortium of utilities and manufacturing companies, called NuStart,
for only one construction and operation license application. On what
specifically have the Nuclear Power 2010 funds been spent? How much has
been given to which companies to do what?
Answer. Since 2001, the Nuclear Power 2010 Program has implemented
feasibility and suitability studies and is supporting three Early Site
Permit Projects, two New Nuclear Plant Licensing Demonstration (or
combined Construction and Operating License (COL) Demonstration)
projects, the COL Guidance and Generic Issues Project, and the Standby
Support Programs. The Nuclear Power 2010 program also supported a
number of economic and infrastructure-related studies, which can be
found on the Department's Nuclear Power 2010 public information website
at http://nuclear.energy.govinp2010/neNP2010d.html.
One of the two New Nuclear Plant Licensing Demonstration Projects
was awarded to NuStart Energy Development, LLC with an original project
estimate of $260 million at the time of award selection in November
2004. The current NuStart project estimate is $322 million. Department
cost-share funding provided to NuStart through FY 2006 is $77.4
million. This cost share has been divided between the three major
companies participating in the project as follows: NuStart--$11.2
million, Westinghouse--$45.9 million and GE--$20.3 million.
Activities performed with these funds ($77.4 million) include
project setup, management and administrative costs including
subcontract establishment with Westinghouse and General Electric, site
evaluations and selection, reactor technology bid specification
development, preparation (including design) of two combined
Construction and Operating License (COL) applications for the AP1000
and ESBWR, and licensing interaction with the Nuclear Regulatory
Commission (NRC) on regulatory requirements and associated regulatory
guidance related to the COL application.
Major future activities during the FY 2007 through FY 2011 include
completion of the COL application process with the NRC, licensing
interactions, and completion of engineering on the AP 1000 and ESBWR
designs.
GLOBAL NUCLEAR ENERGY PARTNERSHIP
Question 4. At today's hearing, Mr. Bodman said that GNEP is going
to be a multi-decade program. At what point does the Department intend
to tell Congress how much the entire lifecycle cost of GNEP will be?
Why is Department in the process of approving a full-scale reprocessing
facility when the research is at the lab-bench scale, as Mr. Bodman
said in the hearing today? Why is DOE in the process of approving a
fast reactor when, according to the DOE's Generation IV documents the
fast reactor is at the Technical Readiness level of ``concept
development'' and not ready for full-scale construction, as proposed?
Answer. The Department is developing a Global Nuclear Partnership
Program Management Plan (GNEP PMP) that outlines high-level
programmatic milestones, cost schedules, and timelines for GNEP. In
addition, DOE plans to further engage industry to provide additional
input for consideration leading to an informed Secretarial decision by
June 2008.
The Department is not in the process of approving a full-scale
reprocessing facility, but rather exploring alternatives with
stakeholders and industry. The Department is also engaging industry to
determine the technology development needs that exist for the large-
scale or full-scale deployment of nuclear fuel recycling centers and
advanced recycling reactors.
The Generation IV fast reactor technology program differs from GNEP
in that they are proposing to develop the ``next-generation'' of fast
reactor technology for the 2040 timeframe. By 2025, GNEP would apply,
the best available existing fast reactor technology similar to that
currently used in France, Japan, and Russia.
Response of Secretary Bodman to Question From Senator Corker
Question 1. Mr. Secretary, I would like to call your attention to
solar technology originally developed and now being commercialized in
my home state of Tennessee that appears to have fallen through the
cracks in this budget request. The technology, developed by Oak Ridge
National Laboratory, is called solar lighting. Solar lighting systems
collect sunlight on the roof-top of buildings and pipe it through
optical fibers to illuminate the inside buildings and save energy on
light bills. This past year, Oak Ridge and its private industry partner
commercializing the technology won an R&D 100 award as one of the top
100 research developments of 2006. Unfortunately, it is my
understanding that the Administration's request has largely overlooked
the funding line that supports this area of research, and I'm told that
momentum may be lost in this exciting new solar field unless solar
heating and lighting research is more adequately funded.
Would you please explain your rationale for this year's request
concerning the solar energy R&D portfolio?
Answer. The hybrid solar lighting R&D being conducted by Oak Ridge
National Laboratory is scheduled to undergo an in-depth technical
review at the end of FY 2007. This review is meant to coincide with the
completion of a market study and several improvements in the operation
and performance of the technology.
Responses of Secretary Bodman to Questions From Senator Sessions
NUCLEAR POWER 2010
Question 1. NP 2010 was authorized to provide a 50/50 cost share
between the government and private industry regarding development of
first-of-a-kind engineering for new nuclear reactors. In order for
nuclear power companies to move forward to develop the next generation
of reactors, they need to be certain that NP2010 program will be
funded. What do you expect to accomplish with the $114 million for
NP2010 in FY2008? Is NP2010 your highest priority in nuclear energy?
Given our need for baseload power, should we not seek to develop more
than 2 COL licenses nationwide?
Answer. The $114 million in FY 2008 for Nuclear Power 2010 (NP
2010) will support the submission of two combined Construction and
Operating License (COL) applications and the initiation of the Nuclear
Regulatory Commission (NRC) review of these applications including
responses to NRC's Requests for Additional Information as well as the
NRC review fees. In addition, the design certification review of the
Economic Simplified Boiling Water Reactor (ESBWR) by the NRC will be
funded through industry by the NP 2010 Program. The reactor vendors
will continue their design engineering work including first-of-akind
engineering on the two Generation III+ reactor designs, AP 1000 and
ESBWR.
The NP 2010 Program with its near-term goal of an industry decision
to build a new nuclear power plant is a very high priority for DOE.
Although NP 2010 is funding the development, submission, and NRC review
of two COL applications for approval, 15 utilities have notified NRC
that they intend to file up to 21 COL applications between 2007 and
2009. Up to 32 new units are planned by these utilities, of which 15
plants are planned by utilities involved in NP 2010.
The submission of the two NP 2010 funded COL applications will
provide critical information that benefits all subsequent COL
applications.
The COL applications being developed outside the NP 2010 program
demonstrate that the baseload power needs can be met without expanding
the program beyond its original scope.
Question 2. I want to commend the Department for their partnership
with the metalcasting industry on the EnergySMART program, but I am
concerned that over the last two years funding for the EnergySMART
program has been diverted to other projects. My understanding is that
this underfunding has delayed progress. What is the DOE doing to ensure
proper funding and adequate progress of the EnergySMART program?
Answer. The Industrial Technologies Program (ITP) has historically
worked with the eight most energy-intensive manufacturing industries to
research, develop, and implement advanced technologies that save
energy, cut costs, and reduce emissions. While these activities have
contributed to reducing overall industrial energy consumption, the
industrial landscape is changing rapidly. ITP is focusing its
technology research to be widely applicable to the U.S. industrial
base. ITP is working to leverage developments through Original
Equipment Manufacturers (OEMs) and end-users. ITP has identified four
critical technology areas (Reactions & Separations, High Temperature
Processes, Energy Conversion Systems, and Fabrication & Infrastructure)
for research which includes all the technology areas and interests of
the traditional energy intensive industries (including metal casting)
and is applicable to a much broader array of industry members. These
technology areas were identified using ITP industrial analyses,
industrial stakeholder roadmaps and other feedback. In FY 2007, ITP is
issuing two solicitations based on these technology areas. All U.S.
industries, which includes metal casting, are encouraged and expected
to participate.
The Energy-Saving Melting and Revert Reduction Technology (E-
SMARRT) portfolio fits within two of the new technology areas (``High
Temperature Processing'' and ``Fabrication and Infrastructure'')
specifically address casting technologies for melting, high-temperature
processing, fabrication, and forming of ferrous and non-ferrous metals.
This research has the capability to significantly improve productivity
and competitiveness of the domestic automobile industry. It contributes
to savings in casting energy use.
ITP recognizes the value of E-SMARRT and plans, to provide
appropriate funding when projects are meeting their milestones and ITP
objectives. ITP's strategy is to direct its investments and resources
to those projects that can provide the largest impact for reaching its
goals.
Question 3. The US manufacturing industry has considerable
challenges with global competitiveness. Nanotechnology has been
promising for several years to change the entire US industrial base,
changing products and manufacturing processes. These new products and
processes are touted to make manufacturing more energy efficient
resulting in lower carbon dioxide (GHG) emissions. How is the
Department accelerating nanotechnology into the industrial marketplace?
Answer. As a partner in the National Nanotechnology Initiative
(NNI), the Department of Energy (DOE) fully supports NNI's four goals,
one of which is ``Facilitate transfer of new technologies into products
for economic growth, jobs, and other public benefit.'' To meet this
goal the NNI has chartered a member of outreach groups in which DOE
participants, including the Nanotechnology Innovation and Liaison with
Industry Working Group. This group interacts with various industrial
sectors, including the chemicals and electronics industries, to promote
nanotechnology development and use.
Specifically within DOE, the Office of Science's Basic Energy
Sciences program is responsible for development and support of five
Nanoscale Science Research Centers, which make unique capabilities and
world-leading expertise available to industrial users for both pre-
competitive and proprietary work.
In addition, DOE has sponsored meetings with the NanoBusiness
Alliance, With representatives of other industry groups like the
Semiconductor Industry Association and the Semiconductor Research
Corporation, with community business groups like the Arlington, Texas
Chamber of Commerce, and with representatives from specific companies
like Motorola.
Support has also been provided for industrial activities through
the Department's Office of Energy Efficiency and Renewable Energy,
particularly for the chemicals industry, including support for the
Chemical Industry Vision2020 workshop on nanomaterials by design.
Responses of Secretary Bodman to Questions From Senator DeMint
Question 1. In the FY 2007 Department of Energy (DOE) budget, the
Site Completion section for the Savannah River Site (SRS), said that
``SRS is a site with an enduring mission and is not a closure site.''
This language is missing from the FY08 budget documents. Does DOE still
believe SRS is a national priority with resources that exist nowhere
else in the United States?
Answer. The SRS mission and status has not changed.
Question 2. Is it DOE's intention to maintain SRS and its enduring
missions?
Answer. Yes, the Department continues to believe that SRS is a site
with an enduring mission.
Question 3. While I appreciate DOE adding an additional $121
Million to the critical Defense Cleanup work at Savannah River Site, I
am concerned that DOE cut over $235 Million from the 2012 accelerated
completions. What programs will be affected by this reduction?
Answer. There are no programmatic impacts related to this transfer
of funding.
The FY 2008 budget does not represent a decline in 2012 Completion
Projects, but simply a shift in funding from the 2012 Completion
Projects at Savannah River to the 2035 Completion Projects account.
This shift is due to the transfer of the F-Area and H-Area activities
to the 2035 Completion Projects account. These activities include the
operation of H-Canyon and HB-Line to support the processing of legacy
nuclear materials and aluminum-clad spent nuclear fuel for disposition
consistent with the site cleanup strategy, and continue support for
efforts to blend highly enriched uranium solutions to low enriched
uranium that will be packaged and shipped to the Tennessee Valley
Authority. In addition, the Site will continue to monitor the F-Canyon
Complex facilities in a minimum surveillance and maintenance condition.
The only remaining activity in the 2012 account is the construction
funding for the 3013 Container Surveillance and Storage Capability
project.
Question 4. Secretary Bodman, do you believe this budget fully
funds the current scope of cleanup activities at the SRS and maintains
the current size of the workforce?
Answer. The proposed budget supports the risk-based cleanup
priorities at the site. The focus of the program in FY 2008 is
plutonium/uranium disposition and the reduction of the risk associated
with long-term storage of radioactive liquid waste. Adjustments to the
workforce will be necessary as some programs are completed and others
ramp up. It is anticipated that the site's overall workforce will
remain relatively stable in FY 2008.
Question 5. Secretary Bodman, if the budget is not adequate to
fully fund the scope of work and maintain the size of the workforce at
SRS, what is DOE's plan to meet the budget?
Answer. The proposed budget supports the risk-based cleanup
priorities at the site. The focus of the program in FY 2008 is
plutonium/uranium disposition and the reduction of the risk associated
with long-term storage of radioactive liquid waste. Adjustments to the
workforce will be necessary as some programs are completed and others
ramp up. It is anticipated that the site's overall workforce will
remain relatively stable in FY 2008.
Question 6. Secretary Bodman, with an understanding that there have
already been setbacks with the Salt Waste Processing Facility (SWPF),
are you willing to commit DOE's time and resources to ensure that the
SWPF does not experience further delay?
Answer. The Department is committed to completing this critical
project. Based on ongoing facility design, SWPF Project is in the
process of formally establishing a performance baseline in accordance
with DOE Order 413.3A that takes into account all delays and impacts
encountered over the last two-year period. This baseline will establish
the cost and schedule for the project and should be in place late
summer or early fall. DOE will provide the oversight required to ensure
that the baseline schedule is maintained.
Question 7. Secretary Bodman, will DOE be issuing a draft Request
for Proposal (RFP) for the Savannah River Site Liquid Waste Management
contract?
Answer. Yes, the Department is working on the draft RFP. We
anticipate releasing it for public and industry comment during the
second quarter Fiscal Year 2007.
Question 8. Secretary Bodman, when will the RFP come out?
Answer. The Department anticipates releasing the draft RFP for the
Savannah River Site Liquid Waste contract for public and industry
comment during the second quarter Fiscal Year 2007.
Question 9. Secretary Bodman, what is the schedule for bid
deadlines and decisions to be made both for the Liquid Waste contract
and the Management and Operations contract at SRS?
Answer. Upon release of the final request for proposals, bidders
will have approximately 60 days to respond to the request for
proposals. The Department will then diligently review the proposals
received and award the contracts with the goal of doing so within the
time period in the current SRS contract extension (June 2008).
Question 10. Secretary Bodman, we have over 2,000 canisters of
Defense waste at SRS and a commitment was made to SC to remove that
material. I understand DOE will submit its license to operate Yucca in
2008. Under your current timeline, when can South Carolinians expect to
see some of these Defense waste canisters leave South Carolina?
Answer. The Department intends to submit a high quality license
application to the NRC not later than June 30, 2008. Our current best
achievable schedule for opening the repository and accepting waste is
March 2017. This schedule, however, is based on appropriations
consistent with optimum Project execution, issuance of a Nuclear
Regulatory Commission (NRC) Construction Authorization consistent with
the three year period specified in the Nuclear Waste Policy Act, and
the timely issuance by the NRC to DOE of a Receive and Possess License.
This schedule is also dependent on the timely issuance of all necessary
other authorizations and permits, the absence of litigation related
delays and the enactment of legislation proposed by the Administration.
In addition, the extent to which we could ship high-level waste from
Savannah River to Yucca Mountain is dependent on the availability of a
rail line to Yucca Mountain. Once the repository is opened, we believe
that the vitrified waste from Savannah River would be an excellent
candidate for early waste acceptance and disposal at the Yucca Mountain
Repository.
Question 11. Secretary Bodman, what is your plan to dispose of the
waste at the Savannah River Site (SRS) in the most environmentally safe
and secure way possible if Yucca does not open?
Answer. The Department is currently vitrifying high-level waste and
storing the glass canisters, a stable and safe waste form, on-site at
SRS. The Department is also safely storing spent nuclear fuel on-site,
until such time that it can be processed and prepared for disposal at
Yucca Mountain. The Department currently projects Yucca Mountain
availability in 2017.
Responses of Secretary Bodman to Questions From Senator Smith
Question 1. First, let me say that I appreciate the fact that the
Administration is no longer pursuing legislation to make BPA's third-
party financing arrangements count against BPA's statutory debt
ceiling. However, the requirement in the budget proposal that BPA
dedicate net secondary revenues in excess of $500 million annually is
opposed by me and other members of the NW delegation.
Does the President's budget proposal include revenues from this
proposal? If so, please provide those annual revenue numbers, beginning
with fiscal year 2008.
Answer. Yes, the FY 2008 budget estimates assume incremental
revenues associated with the net secondary revenue proposal. These
estimates are embedded within the gross revenue and net outlays
estimates for BPA for the fiscal years 2008 through 2012. The
incremental revenue estimates are:. $91 million for FY 2008; $112
million for FY 2009; $107 million for FY 2010; $116 million for FY
2011, and $107 million for FY 2012, for a total of $533 million for the
FY 2008 through FY 2012 period.
These estimates are based on expected values. Actual incremental
revenues would depend on how the net secondary proposal is implemented
in BPA's power rate structure. Actual net secondary revenues vary
significantly from year to year due to many variables, including the
volatility of secondary power market prices and the variability of
annual stream flows.
Question 2a. What are the process and the schedule for the proposed
dialogue with the region?
Answer. The dialogue on the secondary revenue proposal would be
best conducted within the Pacific Northwest, and this would most likely
yield an approach that would meet the basic goals of the budget
proposal while positively addressing the needs and concerns of BPA's
customers. This discussion is planned to take place concurrent with the
discussions expected later this spring surrounding the rate structure
and contracts that will implement the Long Term Regional Dialogue
policy.
Question 2b. What Administration officials would be involved with
these discussions?
Answer. I have asked BPA Administrator Wright to work with
Northwest parties to convene this discussion. If the discussion does go
forward and yields a recommended approach, as I hope it will, I would
expect you and other members of the Northwest delegation will have an
opportunity to provide input on that approach before it is acted upon.
Question 3a. There is recognition in the budget (p.385 of the
Appendix) of contingencies that may arise for BPA, and there is
discussion in BPA's press release about ``access to any prepayments
should BPA's fortunes wane . . .''.
How does the Administration intend to address this need for access
to capital under certain conditions, primarily bad water years?
Answer. The anticipated regional discussions will address a desire
to balance the basic goals of the net secondary proposal with the
ability of BPA to access any prepayments should its financial fortunes
wane, such as in bad water years, and also mechanisms for assuring
durability of any agreements around the implementation of this
proposal, if and when such agreements are reached.
Question 3b. Would this require legislation?
Answer. The current proposal is intended to be administrative in
nature and it is premature to speculate whether the use of some yet-to-
be-determined implementation mechanism would require legislation.
Question 4. While I am a supporter of all renewables, I remain
concerned that the Department is ignoring the growing interest in wave
and tidal energy, particularly on the contiguous West Coast, Alaska,
and Hawaii. These innovative technologies are renewable, non-emitting
resources that can help meet our nation's growing demand for
electricity. In Oregon, it would be possible to produce and transmit
over two hundred megawatts of wave energy without any upgrades to the
existing transmission system on the coast. Already a number of
preliminary permits have been filed at the Federal Energy Regulatory
Commission for wave energy facilities off the Oregon coast.
These facilities would be virtually invisible from shore, and could
provide predictable generation that could be easily integrated with
other electricity resources. In addition, according to a January 2005
report issued by the Electric Power Research Institute, ``with proper
siting, converting ocean wave energy to electricity is believed to be
one of the most environmentally benign ways to generate electricity.''
As with many emerging renewable technologies, wave and tidal energy
are more costly than traditional generation using fossil fuels. Yet,
for our environment, and our energy security, we must provide
incentives that will encourage the development and commercialization of
these resources. Can you please explain to me why the budget for
renewable energy ignores these technologies again this year?
Answer. The Department is observing the growth of interest,
activity, and investment in wave and tidal technologies. We recognize
that several states have promising opportunities for harnessing these
forms of ocean and tidal energy, and thus we are monitoring domestic
and worldwide progress in ocean energy technologies in collaboration
with the Electric Power Research Institute and the International Energy
Agency. Some countries with higher resource potential than the United
States, relative to their overall energy needs, are active in ocean and
tidal energy R&D. Ocean, wave, and current technologies are still in
their infancy, with a small number of demonstration systems operating
worldwide. The Department will continue to consider emerging
technologies like these in evaluating its research, development and
deployment programs.
The Department is also supporting a wave energy technology R&D
project via the Small Business Innovation Research Program. The U.S.
Navy also supports ocean energy research. In addition there may be
opportunities for Federal agency procurement in order to satisfy the
green power purchase requirements mandated by the Energy Policy Act of
2005.
Question 5. For the remainder of this fiscal year, how does the
Department intend to allocate funds to institutes that have received
funding in the past years, such as the Geo-Heat Center at Oregon
Institute of Technology?
Answer. With the enactment of the FY 2007 budget for the
Department, we will be preparing and submitting a spending plan within
30 days. As we prepare that plan, we will carefully consider funding
options for projects that have contributed in the past and have the
potential to continue contributing to our research, development and
deployment goals.
Responses of Secretary Bodman to Questions From Senator Salazar
RENEWABLE ENERGY & ENERGY EFFICIENCY
Question 1. Secretary Bodman, you have been quite supportive of the
National Renewable Energy Laboratory in Golden, Colorado, as well as
Energy Efficiency and Renewable Energy programs in general. I recall
your visit to NREL in July of 2006, when we both cut the ribbon the new
Science and Technology Facility there. But when it comes to presenting
budgets like this one, there is a lack of strong leadership by this
administration for supporting EERE programs, and in particular for
NREL, where this administration proposes a cut of $6 million dollars
compared to last year's request. In inflation adjusted dollars, the
request is actually a cut in spending compared to FY06. What happened
between your visit to Colorado and now in Washington?
Answer. The Department of Energy (DOE) Office of Energy Efficiency
and Renewable Energy (EERE) provides 87% of the funding for the
National Renewable Energy Laboratory (NREL). Approximately 4% is funded
by DOE's Office of Science and 9% from other government sources and
technology partnership agreements.
Recently, some media reports have caused alarm by inaccurately
speculating on the potential for a decrease in NREL funding in fiscal
year 2008. Unfortunately, these media reports have been based on
budgetary numbers that were taken out of context and do not tell the
whole story of NREL funding. In fact, actual funding to NREL has
historically been much higher than the published budgetary numbers
referred to in the media reports. This is because, every fiscal year,
the Department of Energy awards new research grants for specific
projects above and beyond a lab's published budgetary numbers.
Government budgeting guidelines take a conservative approach and permit
publication of only the minimum amount of funding required to maintain
known, ongoing operations--not the estimated value of new research
grants.
For example in fiscal year 2006, the Government budgetary numbers
showed NREL funding of $143 million from EERE. In that year, NREL
actually received $183 million from EERE--$40 million above the
original forecast. In addition, NREL received another $18.4 million
from other DOE offices and other Federal Agencies. Overall in fiscal
year 2006, total Federal funding to NREL was 40% more than shown in the
Government budgetary numbers.
Question 2. This year's budget request shows a 5.2% increase in
spending for EERE programs over FY 2006 spending levels, the first time
in five years that the Bush administration has requested an increase in
spending over its previous year's requested when adjusting for
inflation. However, with the newest GDP deflators in this budget
request, the total EERE FY08 request is only a 0.2% increase over FY06
total EERE, due to the 5% difference in inflation between FY06 and
FY08. Again, if these programs are such a priority for the
Administration, why do the increases in spending for EERE in FY08
barely match inflation?
Answer. The Budget reflects our Nation's highest priorities,
including combating terrorism and protecting the homeland, keeping the
economy strong with low taxes, and spending taxpayer dollars wisely
while holding non-security spending growth to one percent. The
President's pro-growth economic policies, coupled with greater spending
restraint, put us on a path to reduce deficits every year and achieve a
balanced budget by 2012.
The FY 2008 EERE budget maintains support for key components of the
President's Advanced Energy Initiative (AEI), proposing increases for
the Biofuels Initiative to develop affordable, bio-based transportation
fuels from a wide variety of feedstocks and agricultural waste products
by 2012, and for the Hydrogen Fuel Initiative to develop technology
options for domestic hydrogen infrastructure and for hydrogen-powered
fuel cell vehicles by 2020. Further, the request maintains strong
support for: the Solar America Initiative to accelerate the development
of materials that convert sunlight directly to carbon-free electricity
cost competitively by 2015; wind--energy research to reduce costs and
address barriers to large-scale use of wind power in the U.S.; and
Vehicle Technologies, to support a range of advanced automobile
technologies including plug-in hybrid vehicles.
Question 3. The President has repeatedly stated his desire to
reduce America's ``addiction'' to oil. Given the proposed cuts to
NREL's budget--the nation's leading laboratory for biomass and biofuels
research, as well as solar and wind energy technologies--please explain
how DOE plans to replace 35 billion gallons per year of gasoline with
cellulosic ethanol and other alternative fuels while at the same time
cutting funding for the very programs likely to help us achieve that
goal?
FUNDING SUMMARY
[Dollars in Thousands]
------------------------------------------------------------------------
FY 2006 FY 2007 FY 2008
Program/Activity Approp. Request Request
------------------------------------------------------------------------
NREL/Biomass & Biorefinery Systems R&D.... 14,662 27,500 27,500
------------------------------------------------------------------------
Answer. The Department of Energy (DOE) is substantially increasing
funding for programs that can reduce our ``addiction to oil.'' For
example, the Biomass Program budget, which is focused on Biofuels, has
been increased by $29 million or approximately 20% between the FY 2007
and FY 2008 Budgets (and by $88 million from FY 2006 enacted to FY 2008
Budget).
Responding specifically to the question concerning the budget
request for NREL, the Biomass Program has substantially increased the
proposed workload of this laboratory between fiscal year 2006 and 2007.
The fiscal year 2008 request is maintained at the same level as 2007.
However, the Department maintains the labs should be utilized only
where they provide unique facilities or expertise. The Department
strives to increase funding allocated for competitive awards to
universities and industry wherever possible. It is important to note
that the proposed 35 billion gallon Alternative Fuel Standard has no
direct link to funding for any DOE programs.
Question 4. President Bush requested $10 million more ($176
million) than last year for vehicle technologies ($166 million), but
that is still $8 million less than we will spend in FY 2007 ($184
million, according to the Administration's estimate) and $6 million
less than was spent in FY 2006 ($182.1 million). It is puzzling to me
how requesting a cut in this program will help our ``need to press on
with battery research for plug-in and hybrid vehicles'' and ``reduce
gasoline usage in the United States by 20 percent in the next 10
years'' as President Bush stated in his State of the Union address only
two weeks ago. I read the definition of ``vehicle technologies'' in the
budget request, and it sounds like a program that should have an
increase in funding, given the President's priorities. Here is the
definition:
Vehicle Technologies
This program supports the FeedomCAR and Fuel Partnership and the
21st Century Truck Partnership with industry. Program activities
encompass a suite of technologies needed for hybrid, plug-in hybrid,
and fuel cell vehicles, including lightweight materials, electronic
power control and electric drive motors, and advanced energy storage
devices. This program also supports research to improve the efficiency
of advanced combustion engines, using fuels with formulations developed
for such engines, and incorporating non-petroleum based components. In
general, program R&D seeks technology breakthroughs that will enable
America's highway transportation to greatly reduce petroleum use. The
program also includes community-based outreach via Clean Cities
collations, competitive awards, and other activities to facilitate the
market adoption of alternative fuels and highly efficient automotive
technologies.
Mr. Secretary, why was this programs funding cut?
Answer.
FUNDING SUMMARY
[Dollars in Thousands]
------------------------------------------------------------------------
FY 2006 FY 2007 FY 2008
Program/Activity Approp. Request Request
------------------------------------------------------------------------
Vehicle Technologies...................... 178,351 166,024 176,138
------------------------------------------------------------------------
The FY 2008 estimates and proposals are based on the FY 2007 Budget
request. Relative to that request, our FY 2008 budget represents a $10
million increase for the Vehicle Technologies Program. The FY 2006
appropriation after adjustment for $24.3 million in Congressional
Directed Activities is below the FY 2007 and the FY 2008 requests. We
understand that Congress is moving to reduce and/or eliminate these
types of Congressional Directed Activities in appropriations and this
effort will help the program achieve its goals.
Question 5. For the second year in a row, the Administration would
zero out funding for research and development on geothermal and
hydropower--both energy sources that have the potential of supplying
large quantities of clean base-load power. Why?
Answer. Geothermal power production from high-temperature, shallow
resources is now a relatively mature energy technology. Projects under
construction, or which have both Power Purchase Agreements and are
undergoing production drilling, amount to 489 megawatts in the eight
Western States. The Western Governors Association's geothermal task
force recently identified more than 100 sites with an estimated 13,000
MW of near-term power development potential.
The MIT report, titled, ``The Future of Geothermal Energy,''
specifically points to the potential benefits of Enhanced Geothermal
Systems (EGS) as a long-term energy option for the Nation. For some
time, the Department has been aware of the large resource potential of
geothermal energy, including those resources accessible with EGS
technology. EGS constitutes a potential alternative energy resource for
which industry can decide if and when further investment is warranted.
The Government has provided substantial incentives that support the
near-term development and deployment of the large geothermal resource
base. Geothermal enjoys both an investment tax credit and a production
tax credit that improve the technology's competitive position.
(Qualifying facilities can claim one or the other, but not both.) The
Energy Policy Act of 2005 (EPACT) contains provisions that streamline
and accelerate the geothermal leasing process. And state-enacted
renewable portfolio standards give geothermal energy ready market
access in those areas of the country.
Since the 1970s, the Department of Energy has funded research and
development in geothermal technology valued in excess of $1.3 billion.
That investment has helped to produce the strong market for geothermal
energy we see today. The Department will continue to monitor the growth
of this industry and the emergence of new technological approaches to
geothermal power to determine to what extent a further government role
is warranted, if any.
Similarly, industry has demonstrated the ability to achieve
hydropower efficiency optimization and fish survivability performance
targets without further DOE direct investment. In the fiscal year 2006
Appropriations Conference Report, the conferees recommended $500,000
for hydropower research, directing the Department to ``complete
integration studies and close out outstanding contracts in advanced
hydropower technology.''
Question 6. The additional 9% cut to DOE's weatherization program
of $20.1 million, on top of a $78.4 million cut in FY07, brings the
total cut up to 35% compared to FY2006. This will make it even more
difficult for low income residents to save energy so they can afford
their utility bills. Weatherization assistance helps low income
families control their energy costs over the long term, through the
installation of cost-effective energy efficiency technologies. What is
the rationale for such drastic cuts in this program in particular?
Answer. Weatherization is the largest-funded program in EERE, at
the expense of other research and development (R&D) programs. In order
to address this country's energy challenges with the urgency it
deserves, we have chosen to prioritize investments in energy efficiency
and renewable energy R&D that have multiplicative returns such as
improvements to appliances and the building envelope that affect the
whole American population rather than additive returns not associated
with technological R&D that target a single segment of the population,
albeit an important one.
In addition, the expected benefits of each EERE program are shown
in our Congressional justification materials. A summary is presented on
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table
shows that the Weatherization and Intergovernmental Program has the
lowest or near lowest expected benefits in all three benefit categories
(consumer expenditure savings, carbon emissions reductions, and avoided
oil imports). Details of our modeling efforts that produce these
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
CLEAN COAL TECHNOLOGIES
Question 7. Background: Coal is the most abundant domestic energy
source. It provides more than 50% of our Nation's electricity needs,
and America has enough coal to last more than 200 years. In Colorado,
71% of the electricity we consume is generated with coal. Colorado
consumed 18.9 million tons of coal in 2004, generating 37.5 million
megawatts of electricity. Most of this coal is from Colorado, but some
is from Wyoming.
Based on my review of the President's budget for the coal research
initiative, which includes the base coal research program, the Clean
Coal Power Initiative (CCPI) and FutureGen, it appears that the two-
fold increase in funding for FutureGen ($54 million in FY 07; $108
million for FY 08) once again would come at the expense of basic coal
research.
The CCPI program is essential to accelerate development and
deployment of coal technologies that will increase the efficiency and
reliability of coal-fired power plants. What is the justification for
the substantial increase in funding for FutureGen, while CCPI would
receive only $15 million in new funding? What about advanced
combustion? What about developing alternative methods to capture
CO2 from the fleet of existing coal combustion plants?
Answer. The Administration's FY 2008 Clean Coal budget request
supports a balanced R&D portfolio, including the development of
advanced combustion technology and methods that could be applied to
capturing CO2 from existing plants. It should also be noted
that FutureGen and the basic coal R&D are one and the same coal
research program to develop technologies aimed at achieving near-zero
emissions from coal plants, including carbon sequestration. As coal
research progressively advances from bench-scale to larger scale R&D,
their scale-up viability will need to be verified. The most cost-
effective and cost-efficient demonstration of these technologies would
be to integrate them into a large size facility like FutureGen that
combines gasification, advanced coal combustion, power generation,
hydrogen production, and carbon capture and sequestration. Integrated
demonstration not only saves the cost of testing in separate
facilities, it provides data on individual component performance as
well as reliable data on how these components interact under varying
integrated system operating conditions.
The FutureGen funding requests of $54 million and $108 million for
FY 2007 and FY 2008, respectively, are consistent with the funding
profile estimate (adjusted for escalation) that the Department
submitted to Congress in a program summary dated March 2004.
The FY 2008 funding request of $73 million for the Clean Coal Power
Initiative (CCPI), includes $58 million of funds from the Clean Coal
Technology (CCT) account that are no longer needed for ongoing
projects. Available unobligated prior year funds from projects that did
not go forward in CCT and CCPI, combined with CCPI FY06, FY07, and FY08
funding are expected to be sufficient to issue the next round CCPI
solicitation in FY 2008 for advanced clean coal demonstrations, which
will focus on advanced technology systems that capture carbon dioxide
for sequestration and beneficial reuse. Using unobligated balances from
stalled projects will help CCPI reduce its backlog of unobligated
balances, currently at about $500 million.
Many of the technologies being developed in the clean coal research
portfolio are applicable to advanced combustion. These technologies
include high temperature materials for supercritical combustion system
boilers and steam turbine blades, advanced oxygen production applicable
to oxy-fuel combustion, and capture and sequestration technologies and
methods for CO2 emissions from existing coal combustion
plants.
Responses of Secretary Bodman to Questions From Senator Murkowski
GEOTHERMAL
Question 1. Alaska has a host of excellent geothermal prospects
involving both high temperature and lower-temperature geothermal
prospects, as do most of the western states. Is there any way to
convince the Department to continue funding research and providing
grants to help identify good geothermal prospects, because while the
technology for high-temperature geothermal is proven, the technology
for low-temperature is still evolving as you proved just last summer at
Chena Hot Springs in Alaska. Recent studies show that geothermal energy
could meet 10 percent of the nation's total energy needs by 2050. But
it won't meet such a goal without any federal assistance.
Answer. The DOE Geothermal Program has achieved key research
objectives for conventional hydrothermal technology development.
Geothermal power production from high-temperature, shallow resources is
now a relatively mature energy technology. Projects under construction,
or which have both Power Purchase Agreements and are undergoing
production drilling, amount to 489 megawatts in the eight Western
States. The Western Governors Association's geothermal task force
recently identified over 100 sites with an estimated 13,000 MW of near-
term power development potential.
The MIT report, titled, ``The Future of Geothermal Energy,''
specifically points to the potential benefits of Enhanced Geothermal
Systems (EGS) as a long-term energy option for the Nation. For some
time, the Department has been aware of the large resource potential of
geothermal energy, including those resources accessible with EGS
technology. EGS constitutes a potential alternative energy resource for
which industry can decide if and when further investment is warranted.
The Government has provided substantial incentives that support the
near-term development and deployment of the large geothermal resource
base. Geothermal enjoys both an investment tax credit and a production
tax credit that improve the technology's competitive position.
(Qualifying facilities can claim one or the other, but not both.) The
Energy Policy Act of 2005 (EPACT) contains provisions that streamline
and accelerate the geothermal leasing process. And state-enacted
renewable portfolio standards give geothermal energy ready market
access in those areas of the country.
Since the 1970s, the Department of Energy has funded research and
development in geothermal technology valued in excess of $1.3 billion.
That investment has helped to produce the strong market for geothermal
energy we see today. The Department will continue to monitor the growth
of this industry and the emergence of new technological approaches to
geothermal power to determine to what extent a further government role
is warranted, if any.
OCEAN ENERGY
Question 2. Coming from Alaska, where we have at least 80 towns and
villages on the coast or on major rivers, ocean energy, leashing the
power of the tides, current and waves, seems like an excellent
renewable, non-greenhouse gas emitting technology to be promoting. The
new technology is showing true promise. Why is the Department providing
no research or technology implantation support in your budget?
Answer. Department is observing the growth of interest, activity,
and investment in wave and tidal technologies. We recognize that
several states have promising opportunities for harnessing these forms
of ocean and tidal energy, and thus we are monitoring domestic and
worldwide progress in ocean energy technologies in collaboration with
the Electric Power Research Institute and the International Energy
Agency. Some countries with higher resource potential than the United
States, relative to their overall energy needs, are active in ocean and
tidal energy R&D. Ocean, wave, and current technologies are still in
their infancy, with a small number of demonstration systems operating
worldwide. The Department will continue to consider emerging
technologies like these in evaluating its research, development and
deployment programs.
The Department is also supporting a wave energy technology R&D
project via the Small Business Innovation Research Program. The U.S.
Navy also supports ocean energy research. In addition there may be
opportunities for Federal agencies to satisfy the green power purchase
requirements mandated by the Energy Policy Act of 2005.
CARBON SEQUESTRATION AND ENHANCED OIL RECOVERY
Question 3. EPACT '05 called for funding a demonstration project to
increase oil recovery from aging fields by pumping carbon dioxide into
the fields-both increasing oil production and sequestering carbon. You
did award a demonstration grant last year (Oil and gas program
announced this in FY'06). Your budget talks about funding 4 large
projects Nationwide. Can you talk more about what and where you
anticipate those projects being and what the Department hopes to learn.
Alaska's Cook Inlet and the Williston Basin in the Dakotas were both
specifically stated as good places for such demonstrations to be held
in EPACT and neither was chosen. Given that DOE studies indicate that
the Cook Inlet could yield an additional 670 million barrels of oil if
helped by a CO2 recovery effort, I'm trying to understand
why Cook Inlet wasn't funded last year and whether it might yet be
considered for assistance.
Answer. Regarding the funding of four (4) large-scale carbon
sequestration projects nationwide, DOE eventually hopes to demonstrate
and validate the capability to safely store at least 1 million tons of
carbon dioxide in multiple, diverse geological formations, consistent
with the goals of the Department's Sequestration Program. The
Sequestration R&D Program's highest priority is to demonstrate and
validate the capability to safely and predictably store large volumes
of CO2 over millennia. Before the sites are selected,
preparatory work including site evaluation, site characterization R&D,
and completion of National Environmental Policy Act (NEPA) review must
be completed.
While the four large projects discussed in the FY 2008 Budget are
to be funded from the Sequestration Program, the demonstration project
award last year was funded from the Oil and Gas Program. That
demonstration project was selected through a peer review process of all
the proposals received as a result of the competitive solicitation
issued by the DOE's National Energy Technology Laboratory. Because of
the recommendation in the FY 2008 budget to terminate the Oil and
Natural Gas Program, it is unlikely to issue another solicitation.
On the other hand, the Sequestration Program has and will continue
to pursue initiatives in the research of CO2 sequestration
in various geologic reservoirs such as depleted oil and gas fields,
producing oil fields to enhance recovery, saline formations, coals
seams with enhanced coal-bed methane production, and other promising
formations. Within the Regional Partnership Program, there are twenty-
five (25) small-scale sequestration injection tests being planned.
These tests include depleted oil and gas fields, saline reservoirs,
stacked saline and enhanced oil recovery reservoir tests, and coal
seams with enhanced coal-bed methane production. In addition to the
Regional Partnership Program, research and testing are continuing in
other sequestration field tests including an injection test in a saline
formation in Frio, Texas, and enhanced oil recovery projects at the
Weyburn and Apache oilfields in Saskatchewan, Canada that utilize
CO2 produced at the Great Plains Coal Gasification Plant.
No decision has been made as to whether the Sequestration Program
in FY 2008, or subsequently, will fund projects in Alaska's Cook Inlet
or the Williston Basin.
HEAVY OIL
Question 4. I understand the Department is reducing fossil fuels
research given current high market prices for oil. But I would suggest
there are still good research areas out there in the fossil arena:
``heavy oil'' production being one of them. You were going to fund a
production test well at Prudhoe Bay to research a new technology to
coax heavy oil out of the ground, but there was a problem last year
with drill availability. Are you going to continue that work this year
or next year, and if not, why not? When we know there is more than 30
billion barrels of heavy oil in place, it is hard to argue that
research to get it out of the ground is not worthwhile.
Answer. The Department did not fund a heavy oil test well in
Prudhoe Bay. However, the Department had planned a 2006 methane hydrate
test well in Milne Point oilfield, which was delayed because of
problems with drilling rig availability. The well was finally spudded
on February 3, 2007, and completed February 19. Over 400 feet of core,
including two thick, hydrate-bearing units, were collected. After on-
site analysis, the core was preserved for future laboratory study.
Fluid and reservoir flow-properties data was collected from several
hydrate-bearing zones. Detailed well information is available at
www.fe.doe.gov or www.net1.doe.gov. Test results and analysis will be
available in a few months.
Responses of Secretary Bodman to Questions From Senator Menendez
Question 1. Secretary Bodman, you claimed that you thought the
Weatherization Program was a bad investment because for the roughly
$3,000 cost of weatherizing a home, the program only returned about
$300 in benefits. You failed to note that it provides those $300 in
benefits, which is actually $358 in benefits, each year. On average,
these savings persist for 17 years, making the program a tremendous
return on the investment. Do you agree that, despite your statement
during the hearing, each weatherized house returns greater savings than
the initial investment?
Answer. As I testified, first-year per household savings are
roughly $300 for an up-front investment of roughly $2,500, on average.
Indeed, our internal program assessment shows a positive return on
investment over the assumed life of the weatherization improvements
using EIA projections of energy costs. Our latest study shows a
benefit-cost ratio of 1.5. A comprehensive external assessment is
underway. Of course, the benefit-cost ratio represents a wealth
transfer: the costs are borne by all taxpayers, while the benefits
accrue to those whose homes are weatherized. The context of my comments
referred to economic return relative to all our research and
development programs and technology investments, for each program
dollar invested. The expected benefits of each EERE program are shown
in our Congressional justification materials. A summary is presented on
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table
shows that the Weatherization and Intergovernmental Program has the
lowest or near lowest expected benefits in all three benefit categories
(consumer expenditure savings, carbon emissions reductions, and avoided
oil imports). Details of our modeling efforts that produce these
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
Question 2. Would you agree that a greater than 10% return on an
investment per year is actually a very good return?
Answer. As noted above, the expected benefits of the Weatherization
program are low when compared to other investments in Energy Efficiency
and Renewable Energy technology programs.
Question 3. Could you explain why weatherization doesn't have any
consumer savings benefit listed under the GPRA table in your budget
justification?
Answer. The Department's budget request presents estimated per-
household consumer savings on page 429 of Energy Supply and
Conservation. Those savings, $274, are estimated first-year cost
savings per-household, using historical results from 1993-2002, for
homes weatherized in 2006, based on energy prices in the 2005 EIA
Annual Energy Outlook. We do have analysis that models how those
consumer benefits can be projected over time for presentation in the
GPRA table, but those estimates were not ready before the budget went
to print. We will be publishing a revised GPRA table as an amendment to
the FY 2008 budget. Details of our modeling efforts that produce these
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
Question 4. Given that the budget claims a yearly savings from
weatherization of $274 per year (on page 429 of the EERE Congressional
Justification), yet you have confirmed that the actual savings is $358
per year, does this change the calculation of future benefits from the
weatherization program?
Answer. As you are aware, energy costs vary over time, and we
regularly update our estimated consumer savings to reflect changing
energy prices. Our most recently published information, available on
our web-site, updates the per-household first-year cost savings
estimate to $358 based on energy prices in the 2006 EIA Annual Energy
Outlook.
Responses of Secretary Bodman to Questions From Senator Johnson
Question 1. The FY 2008 Budget Request provides that the interest
rate for future debt obligations owed to the Treasury by Southwestern,
Southeastern, and Western for all power-related investments whose
interest rates are not specified in law be raised to equal the ``agency
rate'' governmental corporations borrow from the Treasury--reportedly
to reflect the potential ``risk'' of non-payment, but more
realistically just a ``tax'' on select electric consumers.
What evidence can you show that the PMAs pose a default risk to
treasury to justify this unilateral interest rate increase?
Answer. Although the power marketing administrations (PMAs) pose a
low risk of default to the U.S. Treasury, the risk is not zero. This is
because the ability of the PMAs to repay the Treasury is dependent on
their ability to collect revenues from the sale of power and related
services. For example, physical catastrophes (e.g. a dam failure),
electricity market volatility, problems with customer credit, or
availability of cheaper non-Federal energy sources could adversely
affect the PMAs' ability to market their power in the future.
The ``yield'' rate is the rate paid on securities backed by the
full faith and credit of the United States Government. The ``agency
rate'' of interest paid by government corporations and the Bonneville
Power Administration better reflects the risk of default than the
``yield'' interest rate the three PMAs currently use on investments
whose interest rates are not set by law.
Question 2. Congress rejected this proposal for FY '07 by including
language in the Continuing Resolution (H.J. Res 20) that would prevent
the Administration from implementing this proposal without legislation.
Where does the Administration derive the authority to administratively
change the future debt obligations by the four federal power marketing
administrations?
Answer. The Executive Branch has the authority to administratively
change interest rates for those power systems where the rate is not
specified in law. The authority to set interest rates for the power
marketing administrations is based on sections 301(b), 302(a) and 644
of the Department of Energy Organization Act (42 U.S.C. 7101 et
seq.), section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), and
the Reclamation Act of 1902 (43 U.S.C. 372 et seq.), as amended and
supplemented by subsequent enactments, particularly section 9(c) of the
Reclamation Project Act of 1939 (43 U.S.C. 485h(c)). This budget
proposal only applies to three power marketing administrations; it does
not apply to Bonneville Power Administration.
Question 3. The Department of Interior's FY 2008 Budget Request
also calls for a reassignment of the costs of unbuilt irrigation
projects in the Pick-Sloan region to federal power customers in the
region. This proposal would require legislation to be implemented, and
Congress has soundly rejected it in each of the past two years.
Has the Department of Interior consulted with you on this proposal?
Answer. No. The Department of the Interior did not consult with the
Department of Energy when it proposed in the FY 2008 budget request to
include a call for reassignment of the costs of undeveloped irrigation
projects of the Pick-Sloan program to federal power customers in the
region. However, at the staff level, we were informed by the Bureau of
Reclamation at a meeting in January 2007 that Interior would again
propose the cost reassignment for FY 2008.
Question 4. If and when you do hear from Interior, do you intend to
share with them the fact that any change in project cost allocation
must be holistic and reflect all changes in project benefits?
Answer. Yes. Pick-Sloan is an ultimate development project with
many functions and features. The authorized purposes for the project
are flood control, navigation, irrigation, municipal and industrial
water supply and power, with a relatively small amount of costs
assigned to recreation and other purposes (benefits which were
difficult to quantify at the time the existing cost allocation was
established). The budget proposal focuses only on transferring costs
from undeveloped irrigation to the Federal power customers; however, we
believe that all aspects of the cost allocation should be reviewed. For
example, the dams on the Missouri River have provided flood control
benefits worth many millions of dollars to downstream states. This
benefit is not adequately reflected in the existing allocation of
costs.
Responses of Secretary Bodman to Questions From Senator Akaka
RADIOLOGICAL SOURCES
Question 1. I see that your proposed budget for the international
radiological threat reduction program in NNSA (National Nuclear
Security Administration) has steadily been reduced since FY 2006.
However, to my knowledge, much work to control high-radiological
sources around the world remains to be done. Can you explain why this
program continues to be reduced, while other fissile material control
programs have gone up considerably?
Answer. NNSA is committed to securing and removing vulnerable
radiological sources around the world. Over the past several years,
NNSA has accelerated efforts to secure vulnerable sources and NNSA has
secured more than 500 vulnerable radiological sources worldwide since
2002. However, much work remains to be done to control high-risk
radiological sources and there are thousands of additional vulnerable
radiological sources that need to be secured worldwide.
With regard to the FY 2008 budget request, there were several
factors that led to the funding request of $6 million for GTRI's
International Radiological Threat Reduction program. First, GTRI's
highest priority is to ensure that Presidential commitments are fully
met in accordance with the Bratislava Joint Statement on Nuclear
Security Cooperation. GTRI has three program elements that are part of
the February 2005 Bratislava Joint Statement between Presidents Bush
and Putin. These include converting research reactors from the use of
HEU to LEU under our Reduced Enrichment for Research and Test Reactors
(RERTR) Program, returning Russian-origin fresh and spent fuel under
our Russian Fuel Return program, and returning U.S.-origin spent fuel
under the U.S. Foreign Research Reactor Spent Nuclear Fuel Acceptance
Program. These elements are fully funded in the FY '08 budget request.
A second factor in our budget process was to fully fund those GTRI
elements that had firm Secretarial completion dates. For example, when
GTRI was established in May 2004, former Secretary of Energy Abraham
committed that GTRI would convert 105 research reactors from the use of
HEU to LEU by 2014. In addition, he stated publicly that all Russian-
origin spent fuel would be removed by 2010. Therefore, the FY '08
budget request ensures that these program elements are fully funded.
However, GTRI's International Radiological Threat Reduction (IRTR)
program does not have any firm Secretarial completion dates. Lastly,
NNSA's internal prioritization process places a higher priority on
reducing the risk of terrorists stealing HEU that could be used in an
Improvised Nuclear Device over reducing the risk of terrorists stealing
a radiological source that could be used in a Radiological Dispersal
Device (RDD) or ``dirty bomb''. This is due to the catastrophic and
devastating consequences of a terrorist detonating a nuclear bomb. To
this end, the FY 2008 budget request also seeks a significant increase
for the safe and secure storage of BN-350 spent fuel in Kazakhstan. The
BN-350 project has a firm completion date of 2010 (completion of
movement to Baikal-1 storage facility) as agreed with the Kazakh
government. Therefore, within budget limitations, these factors played
a key role in determining the budget request for GTRI's International
Radiological Threat Reduction program in FY '08. However, the IRTR
program remains a priority for NNSA since it is the only U.S.
Government program that secures vulnerable sources internationally.
SOLAR ENERGY
Question 2. Based on the EPACT of 2005, all solar water heaters
that are eligible for the tax credit must be certified by the Solar
Rating and Certification Corporation (SRCC). There is currently an 18-
month backlog at this facility--almost as long as the remaining credit.
This seems to me to be a market barrier to solar expansion. Why, then,
did the Department decide to fund the solar heating program at only $2
million, and what are you doing to address the backlog?
Answer. There is no relationship between the Solar program's R&D
budget for solar heating and lighting and certification by the SRCC.
But we are helping the industry in other ways. We just held a workshop
(January 2007) with the solar water heating industry and other
stakeholders (e.g. utilities, builders, state energy offices) to
discuss market barriers and the actions needed to expand the market for
the technology. The Department of Energy (DOE) is committed to helping
industry increase and accelerate the market acceptance of solar water
heaters. DOE is working with Solar Rating and Certification Corporation
(SRCC) to help it decrease its backlog. In the interim, there are many
collectors and systems that are already certified and eligible for the
tax credit. There is also a second facility near Toronto which does
testing for SRCC that does not have a lengthy backlog.
Responses of Secretary Bodman to Questions From Senator Wyden
OCEAN ENERGY
Question 1. Mr. Secretary, recent estimates suggest that
utilization of new, carbon-free, technologies to tap energy from waves,
and tidal and ocean currents, could provide nearly 10% of total U.S.
electricity requirements with technology now being developed, and
perhaps far more. Yet, last year, you requested no money whatsoever for
hydropower, and this year, the same . . . nothing. You are asking for
over $500 million for next year to develop the next generation of
nuclear power plants, but nothing to develop the next generation of
hydroelectric plants, such as ocean energy. Why not?
Answer. The Department is observing the growth of interest,
activity, and investment in wave and tidal technologies. We recognize
that several states have promising opportunities for harnessing these
forms of ocean and tidal energy, and thus we are monitoring domestic
and worldwide progress in ocean energy technologies in collaboration
with the Electric Power Research Institute and the International Energy
Agency. Some countries with higher resource potential than the United
States, relative to their overall energy needs, are active in ocean and
tidal energy R&D. Ocean, wave, and current technologies are still in
their infancy, with a small number of demonstration systems operating
worldwide. The Department will continue to consider emerging
technologies like these in evaluating its research, development and
deployment programs.
The Department is also supporting a wave energy technology R&D
project via the Small Business Innovation Research Program. In addition
there may be opportunities for Federal agencies to satisfy the green
power purchase requirements mandated by the Energy Policy Act of 2005.
GEOTHERMAL
Question 2. Mr. Secretary, MIT, where you received your doctorate
and taught chemical engineering, recently issued a report on the future
of geothermal energy. The MIT team noted that the potential energy
available from geothermal in the U.S. is thousands of times our total
energy consumption. The report concluded that with a reasonable
investment in new geothermal technologies, the U.S. could have 100,000
megawatts of geothermal-powered electricity capacity within the next 50
years. That's equivalent to 166 large coal plants of base-load capacity
with a minimal release of greenhouse gases. The European Union is
spending money on this research, but not DOE. Last year, you requested
no funding for geothermal. And this year, again, you are not requesting
any funding for geothermal. You are asking for more money in this
budget for fusion energy research for one year ($428 million), than the
MIT report proposes for the entire advanced geothermal research
program. Why isn't any funding being requested for geothermal research?
Answer. The DOE Geothermal Program has achieved key research
objectives for conventional hydrothermal technology development.
Geothermal power production from high-temperature, shallow resources is
now a relatively mature energy technology. Projects under construction,
or which have both Power Purchase Agreements and are undergoing
production drilling, amount to 489 megawatts in the eight Western
States. The Western Governors Association geothermal task force
recently identified over 100 sites with an estimated 13,000 MW of near-
term power development potential.
The MIT report, titled, ``The Future of Geothermal Energy,''
specifically points to the potential benefits of Enhanced Geothermal
Systems (EGS) as a long-term energy option for the Nation. For some
time, the Department has been aware of the large resource potential of
geothermal energy, including those resources accessible with EGS
technology. EGS constitutes a potential alternative energy resource for
which industry can decide if and when further investment is warranted.
The Government has provided substantial incentives that support the
near-term development and deployment of the large geothermal resource
base. Geothermal enjoys both an investment tax credit and a production
tax credit that improve the technology's competitive position.
(Qualifying facilities can claim one or the other, but not both.) The
Energy Policy Act of 2005 (EPACT) contains provisions that streamline
and accelerate the geothermal leasing process. The Department's $9
billion request for loan guarantees, authorized by EPACT, will help to
spur on new development. And state-enacted renewable portfolio
standards give geothermal energy ready market access in those areas of
the country.
Since the 1970s, the Department of Energy has funded research and
development in geothermal technology valued in excess of $1.3 billion.
That investment has helped to produce the strong market for geothermal
energy we see today. The Department will continue to monitor the growth
of this industry and the emergence of new technological approaches to
geothermal power to determine to what extent a further Government R&D
role is warranted, if any.
CELLULOSIC BIOMASS
Question 3. The Department's ``Billion Ton'' study of the potential
energy from biomass identified forest biomass as making up more than
quarter of available biomass. Yet, I am hard pressed to find where in
your budget you are devoting any resources to the development of forest
biomass. For the record, I would like you to provide the specific
activities within the Department aimed at developing forest biomass and
the funding for those activities.
Answer. Our biomass program is requesting more than $20 million in
its FY 2008 budget request to fund cutting-edge methods of producing
ethanol from agricultural residues, wood and forest residues.
Under the ``Platform R&D'' line item, the Thermochemical
Platform is focused on developing gasification and pyrolysis
technologies that will utilize primarily woody and forest
resources for biofuels.
Under the ``Feedstock Interface Platform'' line item, we
request funds to establish Regional Feedstock Partnerships with
a number of organizations, including USDA, several
universities, industrial partners, and State organizations.
This work will facilitate the development of regional biomass
resources, including woody and forest resources. The Department
of Energy plans to work with and through the regional
partnerships to develop and validate accurate cost supply
information and improved understanding of all key components of
the supply chain of all feedstocks under consideration, with a
substantial emphasis on woody biomass, due to its prevalence in
many regions.
Under the ``Utilization of Platform Outputs'' line item,
companies that own processes converting woody biomass (forest
products and wood waste) into ethanol have been eligible to
participate into the section 932 solicitation for a commercial
biorefinery.
The Departments of Energy; Agriculture and Interior have worked for
4 years under a Memorandum of Understanding (MOU) for Woody Biomass
Utilization for Restoration and Fuel Treatments on Forest, Woodlands,
and Rangelands. This MOU aims to maximize the coordination and
effectiveness of the three departments in developing complementary
policies to encourage harvest and use of woody biomass by-products. To
further facilitate our collaborative efforts, we formed an
Interdepartmental Woody Biomass Utilization Working Group (Federal
Working Group). New partners include the Environmental Protection
Agency, and the Department of Defense.
INDUSTRIAL EFFICIENCY
Question 4. According to EIA, about one third of our total U.S.
energy consumption is consumed by the industrial sector. These
companies, as we all know, must now compete in the global economy and
for many industries--such as the pulp and paper industry in my state--
energy costs are major factor in their ability to compete. Last year,
your budget request cut funding for industrial technologies by more
than $10 million to $45 million and this year you are requesting the
same level--at $45 million. In the process, however, you also propose
to cut every single industry-specific program. Funding for the forest
and paper products industry is cut to $1.7 million. You propose to cut
funding for the aluminum industry to $1.7 million. Funding for the
glass industry you propose to cut to zero. Funding for the mining
industry also would be cut to zero. Instead of giving these industries
the help they need to become more competitive, you are going to work on
technologies that are ``crosscutting.'' Please explain, for each
industry in the industrial technology program, what industry-specific
programs will be cut and how, for each industry, the new ``cross-
cutting'' research will replace and improve upon the assistance that it
replaces including the economic competitiveness of those industries
over the next one, two, three, four, and five years, respectively.
Answer. The Industrial Technologies Program (ITP) has historically
worked with the eight most energy-intensive manufacturing industries to
research, develop, and implement advanced technologies that save
energy, cut costs, and reduce emissions. While these activities have
contributed to reducing overall industrial energy consumption, the
industrial landscape is changing rapidly. ITP is focusing its
technology research to be widely applicable to the U.S. industrial
base. ITP is working to leverage developments through Original
Equipment Manufacturers (OEMs) and end-users. ITP has identified four
technology areas (Reactions & Separations, High Temperature Processes,
Energy Conversion Systems, and Fabrication & Infrastructure) for
research which include all the technology areas and interests of the
traditional energy intensive industries (e.g. Forest Products, Glass,
Aluminum and Mining) and is applicable to a much broader array of
industry members. These technology areas were identified using ITP
industrial analyses, industrial stakeholder roadmaps and other
feedback. In FY2007, ITP is issuing two solicitations based on these
technology areas. All U.S. industries are encouraged and expected to
participate.
WEATHERIZATION
Question 6. It's not in your budget, Mr. Secretary, but the
President's budget requests $1.8 billion in Low Income Home Energy
Assistance to help states and Indian tribes assist people in paying
their utility bills. Unfortunately, that number isn't big enough to
help everyone that needs help. But what is in your budget is the
Weatherization Assistance Program which is intended to help these same
people weatherize their homes so they won't get hit with these big
bills in the first place. You requested just $144 million for this
program, a cut of $20 million. Please explain why the Administration
chose to cut $20 million from this program request? Please also
explain, why the Administration believes that it makes more sense to
provide millions of dollars in low-income energy assistance each year
than it does to weatherize the homes of the recipients of this aid so
that the impacts of energy bills can be alleviated in the first place.
Answer. Weatherization is the largest-funded program in EERE, at
the expense of other research and development (R&D) programs. In order
to address this country's energy challenges with the urgency it
deserves, we have chosen to prioritize investments in energy efficiency
and renewable energy R&D that have multiplicative returns such as
improvements to appliances and the building envelope that affect the
whole American population rather than additive returns not associated
with technological R&D that target a single segment of the population,
albeit an important one.
In addition, the expected benefits of each EERE program are shown
in our Congressional justification materials. A summary is presented on
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table
shows that the Weatherization and Intergovernmental Program has the
lowest or near lowest expected benefits in all three benefit categories
(consumer expenditure savings, carbon emissions reductions, and avoided
oil imports). Details of our modeling efforts that produce these
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
STRATEGIC PETROLEUM RESERVE EXPANSION
Question 7. The budget proposes to begin increasing the size of the
Strategic Petroleum Reserve to 1.5 billion barrels. What is the cost of
this increase, from (1) the current level, and (2) the 1 billion barrel
level authorized in EPACT 2005 in terms of the following: (1) total
capital construction of storage and transport facilities, and the
schedule of annual outlays, (2) acquisition of the additional oil, and
the schedule of annual outlays, (3) the additional operational costs of
maintaining this additional capability.
Answer. For facilities expansion to one billion barrels from the
current capacity of 727 million barrels, the estimated cost will
approach almost $4 billion over several years. The costs include
expanding capacity at two existing sites by developing additional
caverns at an estimated cost of over $700 million, and constructing a
new site capable of storing 160 million barrels of crude oil near
Richton, Mississippi at an estimated cost of about $3 billion, based on
very preliminary designs. These cost estimates will likely increase as
we develop more detailed plans. Facilities expansion from 1 billion
barrels to 1.5 billion barrels is estimated to cost almost $7 billion.
The total value of oil required to reach a 1.5 billion barrel
inventory is about $53 billion.
The Department's FY 2008 budget request includes $168 million to
begin facilities expansion activities to 1 billion barrels by acquiring
land and rights of way, and to begin detailed design work. It also
includes funding for NEPA activities for facilities expansion from 1
billion barrels to 1.5 billion barrels.
The estimated increase in the level of operations and maintenance
resulting from the expansion to 1 billion barrels is $40 million per
year. The increase associated with increasing the capacity from 1.0 to
1.5 billion barrels is $70 million per year.
ALBANY, OREGON RESEARCH LABORATORY PRIVATIZATION
Question 9. Mr. Secretary, your Department has proposed to
privatize one of your laboratories located in Albany, Oregon. This
laboratory is staffed by some six dozen federal employees and
specializes in research on the formulation, fabrication, testing and
analysis of metals, alloys and ceramics. They do not have multi-billion
dollar user facilities such as light or neutron sources. What they do
have is people--people who specialize in this particular area of
materials research. Unlike most every other DOE lab where most
employees simply go to work for the new contractor, these are federal
employees who will stop being federal employees if they go to work for
the new contractor or they will need to go to some other federal
agency. Why do you personally think it makes sense to split up this
small research team and bring in a contractor? Please describe how the
contractor will increase the effectiveness of the research done at this
facility, over the next five years and the next ten years,
respectively. Please also itemize the cost savings to the taxpayer of
this change, including the net costs of contractor overhead, award
fees, pension payments, insurance, etc. compared with the costs of a
federally-owned, federally-operated facility.
Answer. DOE launched its competitive sourcing program, part of the
President's Management Agenda, in March 2002. Since that time, seven of
the Department's nine completed OMB Circular A-76, Performance of
Commercial Activities public-private competitions have been won by the
Government's in-house team. The Department anticipates savings and
costs avoidance of approximately $540 million, compared to baseline
costs, as a result of these competitions. The Department's ongoing
studies are also expected to yield significant savings and operational
efficiencies.
The current on-going A-76 competition associated with the
commercial activities performed at NETL-ARC laboratory does not pre-
suppose bringing in a new contractor to do the work currently being
performed by Federal employees. The objective is to allow the current
NETL-ARC laboratory to compete with private sector organizations in
order to determine which service provider could provide the best value
to the American taxpayer. The use of competition has helped the
Department avoid unnecessary costs and operate more effectively. DOE
employees have successfully used this process to eliminate
inefficiencies in their activities and demonstrate their value to the
taxpayer. As the NETL-ARC competition is on-going, cost and efficiency
data associated with any of the bids is procurement sensitive and
cannot be released at this time.
Responses of Secretary Bodman to Questions From Senator Thomas
Question 1. We talk a lot about alternative fuels and we need to be
doing things. The ability alternatives to make a real difference is a
ways off, however. We need to in the short term to make fossil fuels
cleaner and more efficient. On a federal level, it is the Department of
Energy's job to make sure that happens. Fossil Energy funding is being
reduced by $25 million. The EIA shows that fossil energy will play an
important role in our energy mix for decades to come.
Please explain why fossil energy funding for national research is
being decreased rather than increased?
Answer. We agree that fossil energy will play an important role in
our energy mix for decades to come. We believe that the President's
fiscal year 2008 budget request reflects a commitment to a strategic
coal research program, including a significant increase in funding,
which will allow us to achieve that goal of making fossil fuels cleaner
and more efficient. We also believe it represents a balanced portfolio
of critical coal research that will allow us to achieve our program
goals. The oil and gas programs are terminated, because industry has
the resources and incentive to conduct this research and development on
their own. Savings from the oil and gas programs are slightly greater
than the increase in funding for the coal program.
During the 2000 campaign, the President committed to spend $2
billion over 10 years on clean coal technology. The 2008 budget request
completes that commitment 3 years ahead of schedule, with $385 million
in funding for the Coal Research Initiative in 2008. The funding levels
in the 2008 budget request for clean coal activities are among the
highest in this Administration and also from any President in the last
two decades. This budget supports key activities to keep coal an
important part of our domestic energy solution:
The FutureGen project and a strong supporting R&D program
will advance near-zero emissions technology, including large-
scale tests of carbon sequestration.
A new solicitation in the Clean Coal Power Initiative will
demonstrate near-commercial advanced technologies,
complementing the $1.65 billion in tax incentives for
deployment of early commercial clean coal technologies that the
Administration is implementing under the Energy Policy Act of
2005.
The oil and gas R&D programs focus on technologies that can be
commercialized quickly. Especially with high oil and gas prices, oil
companies have strong incentives to figure out ways to get the oil out
of the ground more cheaply and safely. Analysis of the program shows
that it has not been very effective.
The Administration strongly supports a variety of research and
development that will strengthen the Nation's energy security, and is
proposing to make the R&D investment tax credit permanent. The 2008
Budget includes initiatives for hydrogen fuel, biofuels, plug-in hybrid
vehicles, clean coal, nuclear, and solar photovoltaics to help displace
future demand for oil and natural gas. The Administration also supports
removing unnecessary barriers to developing existing reserves of oil
and gas including, for instance, the environmentally responsible
exploration and development of reserves in Alaska.
Question 2. Numerous successes have resulted from the DOE Oil & Gas
Programs this year. Small independent producers have testified to
Congress about the need for federal R&D. They have also emphasized the
importance of continuing government collaboration and research. Yet
again, as was the case last year, funding for the oil and gas programs
has been zeroed out. I fully understand that the Department does not
want to fund major oil and gas producers. However, 94 percent of the
funding for fossil R&D is directed to the needs of the 5,000
independent oil and gas companies. These companies employ less than 20
people, on average. We must not let politics overshadow responsible
policy decisions.
How can you justify zeroing out these R&D programs when our nation
is, at this very time, trying to lessen its dependence on imported oil
& gas?
Answer. The Administration strongly supports a variety of research
and development that will strengthen the Nation's energy security, and
is proposing to make the R&D investment tax credit permanent. The 2008
Budget includes initiatives for hydrogen fuel, biofuels, plug-in hybrid
vehicles, clean coal, nuclear, and solar photovoltaics to help displace
future demand for oil and natural gas. The Administration also supports
removing unnecessary barriers to developing existing reserves of oil
and gas including, for instance, the environmentally responsible
exploration and development of reserves in Alaska.
Oil and gas are mature industries and both have every incentive,
particularly at today's prices, to enhance production and continue
research and development of technologies on their own. There is no need
for taxpayers to subsidize oil companies in these efforts. Although
independent operators may not fund technology development directly, the
service industry that supplies them with equipment funds significant
development of applicable technologies. The Department expects the
service industry to continue to provide technological innovations for
use by major and independent producers.
Question 5a. The DOE budget request terminates $23 million in
funding for ``Improvements to Existing Plants''. There are over 1,500
coal-fired electricity plants in the United States. These plants
provide Americans with more than half of the electricity that they
need. I am aware of many technologies, which are available now and can
improve environmental performance. DOE must support the
commercialization of these technologies, however.
Is the Elimination of this funding a sign that DOE has given up on
improving the generation fleet that we already have in this country?
Answer. The IEP program has been developing low cost technologies
for reducing emissions from existing coal power plants in anticipation
of regulatory limits that are now being implemented through the Clean
Air Interstate Rule and the Clean Air Mercury Rule. The IEP program has
been very successful, and CAIR and CAMR were promulgated in 2005. These
regulatory drivers provide industry an incentive to continue
development and deployment of such technologies on their own. The
government role in development of these technologies has shifted to the
private sector.
Question 5b. The DOE budget request terminates $23 million in
funding for ``Improvements to Existing Plants''. There are over 1,500
coal-fired electricity plants in the United States. These plants
provide Americans with more than half of the electricity that they
need. I am aware of many technologies, which are available now and can
improve environmental performance. DOE must support the
commercialization of these technologies, however. What other components
of the Department's budget are capable of supporting environmental
improvements at existing plants and how much money is included therein?
Answer. There are three other, principal components of the DOE
budget, all under FE, which support the development of environmental
control technology that could be applicable to existing coal fired
power plants:
The Clean Coal Power Initiative, by 2010 will initiate
demonstration of advanced coal-based power generation
technologies capable of achieving: 45 percent electrical
efficiency; greater than 90 percent mercury removal at'a cost
of 70 percent of current technology; and 0.15 lb/MMBtu
NOX at 75 percent of the cost of current technology
(selective catalytic reactors). These technologies could be
configured to co-produce heat, fuels, chemicals or other useful
byproducts, and provide a deployment-ready suite of advanced
technologies that can produce substantial near-, mid-, and
long-range economic and environmental public benefits. (FY 2008
Request $73,000,000)
The FutureGen project will prove the technical feasibility
and economic viability of the ``near-zero atmospheric
emission'' (including carbon) coal concepts (FY 2008 Request
$108,000,000).
By 2012, begin operation of a nominal 275-megawatt prototype
plant that will produce electricity and hydrogen with ``near-
zero'' atmospheric emissions and prove the effectiveness,
safety, and performance of CO2 sequestration.
The Carbon Sequestration program, by 2012 will develop
technologies to separate, capture, transport, and sequester
carbon using either direct or indirect systems that result in a
less than 10 percent increase in the cost of electricity. (FY
2008 Request $79,077,000)
Near-term derivatives from these programs can be expected to
contribute significantly to improving the performance of the current
fleet.
Question 6. DOE has manufactured $257 million for themselves in
this request by eliminating the Clean Coal Technology (CCT) account,
which has been replaced by the Clean Coal Power Initiative. The
Department is hoping to move $108 million from CCT elimination to
FutureGen. The remaining $149 million would go back to the Treasury.
When Congress appropriated those funds, they were meant to advance
clean coal technologies. How do you justify the disregard for
congressional intent as evidenced by the proposed rescission of the
aforementioned $149 million?
Answer. The $149 million rescission and the $108 million
reprogramming requests are proposals to the U.S. Congress to act on and
are not unilateral actions in disregard to the original Congressional
intent. The $257 million represents prior year available funds from
Clean Coal Technology (CCT) demonstration projects that did not go
forward. CCT demonstration projects that were awarded have been
successful in demonstrating early advances coming out of the clean coal
research effort. The Clean Coal Power Initiative (CCPI) builds on the
successes of the original CCT demonstration program, and focuses on the
next generation technologies from coal research advances made since the
last CCT demos (Round 5). Technologies from the clean coal R&D effort
have progressed to the point where they can be integrated into a near-
zero atmospheric emissions coal facility, namely FutureGen, the world's
first such facility that will also capture and sequester CO2
(a greenhouse gas) from a power plant.
The Administration believes the FY 2008 request is consistent with
the goals of advancing clean coal technologies.
Question 7. It is the people at the National Energy Technology
Laboratory that facilitates research for the goals. I am concerned
about National Energy Lab employees are professionals and do incredible
work. Yet their account has a $15M shortfall in your request. We need
to pay the folks that are doing this work. Can you explain the decision
to ask for less money than is needed to do so?
Answer. The current request reflects the program direction savings
associated with the termination of the Oil and Gas programs. Overall
total NETL Program Direction funding is sufficient to meet the ongoing
goals of the Fossil Energy program while providing for continued
support of the valued employees of the lab.
Question 8a. The people of Wyoming want to convert our coal to a
more valuable resource. We want to generate clean power and produce
clean diesel fuel. These options are clearly better than digging up
coal and shipping it out on railcars. We dig a lot of it up too, 36
percent of the supply in the United States comes from Wyoming.
What provisions in the Energy Policy act do you think are best
suited to helping Wyoming's goal of exporting value-added coal
products? Please provide as comprehensive a response as possible.
Answer. Several provisions in the Energy Policy Act of 2005 are
well suited to helping Wyoming's goal of exporting value-added coal
products. The fiscal year 2008 budget request for the Clean Coal R&D
Program is focused on achieving many key goals set in the legislation
that would also contribute to achieving Wyoming's goal.
Title IV Subtitle A Section 403 report to Congress transmitted on
August 8, 2006, details the goals of the CCPI program.
Title IX Subtitle F Section 962(b)(2)(C) report to Congress
transmitted on April 28, 2006, details the goals of the FE R&D program.
Besides these Clean Coal research, development, and demonstration
activities being carried out by the Department of Energy, the following
EPACT Sections may also support Wyoming's goal of exporting value-added
coal products:
Under EPACT Sections 48A and 48B incentives are related to
gasification technologies including co-production facilities
that produce both electric power and liquid fuels from coal.
EPACT Section 1703 authorizes the Department to provide loan
guarantees for coal gasification, carbon sequestration, and
many other types of projects.
______
Responses of Secretary Bodman to Questions From Senator Bingaman
GENERIC CELLULOSE ETHANOL
Question 1. The potential of cellulose ethanol to make a valuable
contribution to our energy goals has gotten the attention of many of us
in Congress lately. A robust commercial market for cellulose ethanol
may achieve many policy objectives, including reduced dependence on oil
imports, improved energy security, rural economic development, and
reduced greenhouse gas emissions. Given that, we want to be sure that
the Department of Energy is working to use the loan guarantee program
to support commercialization efforts of companies that have
demonstrated a technical and financial readiness to develop a
commercial-scale cellulose ethanol project. Can you tell us what the
department is doing to specifically support ethanol commercialization
through the loan guarantee program?
Answer. Proposals to commercialize cellulosic ethanol fit within
the category of renewable energy projects eligible for loan guarantees
under Title XVII of EPACT 2005. Even in advance of enactment of the
Joint Resolution, Public Law 110-5, which provided $7 million in
funding for administrative expenses of the Loan Guarantee Program and
the necessary authority to issue loan guarantees, the Department began
activities under the Title XVII loan guarantee program. Specifically,
on August 8, 2006, the Department issued Guidelines and an initial
Solicitation Announcement (Solicitation No. DE-PS01-06LG00001). The
deadline for submitting Pre-Applications in response to that
solicitation (including for biomass or cellulosic ethanol projects),
closed on December 31, 2006. The Guidelines provided that technologies
for project proposals must be mature enough to assure dependable
commercial operations. These materials and other relevant documents are
available at http://www.lgprogram.energy.gov.
Among the more than 100 Pre-Applications received by the December
31, 2006 deadline were a number of biomass and cellulosic ethanol
projects. All of the timely filed Pre-Applications are currently under
preliminary review. This preliminary review will be followed by
invitations to selected entities to submit full Applications. P.L. 110-
5 requires that DOE issue final regulations for the loan guarantee
program before issuing any loan guarantees, and the Department is
actively working on a notice of proposed rulemaking that it intends to
issue soon.
Question 2a. The Joint Resolution providing funding for Fiscal Year
2007 contains the required appropriations authorization for DOE's loan
guarantee program, and established a $4 billion cap on the program.
Section XVII of EPACT 2005 permits DOE to guarantee up to 80
percent of a project's cost. Yet, language in the Joint Resolution
suggests the cap should apply to a project's ``total principal amount,
any part of which is to be guaranteed.'' As a point of clarification,
does this mean that the entire cost of the project--rather than just
the percentage of costs guaranteed by DOE--will count toward the $4
billion cap?
Answer. No. Title XVII of EPACT 2005 limits the amount of debt that
can be guaranteed to 80 percent of project costs. P.L. 110-5 sets a $4
billion cap for all guaranteed debt instruments, measured by the
``total principal amount, any part of which is to be guaranteed.''
Thus, the Joint Resolution provides that the $4 billion cap is to be
measured by the face amount of the debt instruments that are
guaranteed, even if the Department does not guarantee 100% of the debt
instruments.
Question 2b. The President's Fiscal Year 2008 budget would provide
for $9 billion in potential loan guarantees under Section XVII of EPACT
2005. Again, as a point of clarification, is this $9 billion in
addition to the $4 billion provided by the Fiscal Year 2007 Joint
Resolution? Or, alternately, does the President's budget request merely
constitute an additional $5 billion of loan guarantee authority,
presuming enactment of the Joint Resolution?
Answer. The Department anticipates $9 billion in loan guarantees in
FY 2008.
Question 3a. I understand there are a number of key steps DOE must
take in order to structure a loan guarantee program which results in a
workable financial instrument for project developers and, at the same
time, a sensible risk management strategy for American taxpayers. The
Committee is concerned that the Department take these steps as
expeditiously as possible:
Given the Department's August 2006 solicitation for loan guarantee
pre-applications, the Committee assumes DOE has taken steps to begin
developing guidelines for financial due diligence in its review of
these projects. What is the process and timeline by which DOE intends
to complete its development of these guidelines?
Answer. The Department is preparing a Notice of Proposed Rulemaking
that will propose eligibility criteria and due diligence requirements
for the Title XVII loan guarantee program. DOE is working to write and
issue that proposal as soon as possible. With the enactment of Public
Law 110-5, the Department also is moving forward expeditiously to
complete its review of the timely filed Pre-Applications, and to fully
implement the loan guarantee program.
Question 3b. Please detail the Department's plans for consulting
with members of the financial community and other federal agencies with
experience in successfully administering loan guarantee programs.
Answer. The Department has met with other federal agencies and the
financial community on several occasions in order to learn from their
experiences and gain their insights. This consultation process is
ongoing. In addition, the Department is preparing to issue a Notice of
Proposed Rulemaking for the Title XVII program, and all members of the
public, including the financial community, will have the opportunity to
review and comment on that proposal.
Question 3c. One of the key issues in administering this program is
development of a methodology for assessing subsidy cost payments from
project developers. What steps has the Department taken to date to
develop this methodology, in consultation with the Office of Management
and Budget? Has DOE performed any analysis of whether prepayment of a
subsidy fee may prove a prohibitive factor for any particular
technologies or class of pre-applicants?
Answer. The Credit Subsidy Cost constitutes the estimated long-term
liability or risk to the Federal government in issuing a loan
guarantee, and is calculated on a net present value basis. Prior to
entering into any loan guarantee agreements, the Department will
perform its own independent calculation of the Credit Subsidy Cost. OMB
will review and must approve this estimate.
The amount of equity participation, the percentage of debt
guaranteed by the Federal government, the term of the debt, the
interest rate on the debt, the strength of off-take and other revenue
generating agreements, and the other material aspects of the financial
and business structure of the project, are all factors that the
Department may consider in computing the Credit Subsidy Costs. Other
Federal agencies that issue loan guarantees must account for similar
financing considerations in calculating Credit Subsidy Cost. While the
wide range of technologies eligible under the Act represent a unique
variable in the calculation of the Credit Subsidy Cost for loan
guarantees, the Department may be able to employ aspects of those
agencies' Credit Subsidy Cost models in developing its own methodology.
The Department has not performed an analysis of whether prepayment
of a subsidy fee may prove a prohibitive factor for any particular
technologies or class of pre-applicants. However, section 1702(b) of
the Energy Policy Act of 2005 requires that the Credit Subsidy Cost be
paid in full prior to the issuance of a loan guarantee.
Question 4a. We understand that more than 100 developers submitted
responses to the Department's 2006 solicitation for loan guarantee pre-
applications.
How many of these projects will DOE be able to fully review given
the funding level for administrative expenses included in the Fiscal
Year 2007 Joint Resolution?
Answer. The Department received over 100 Pre-Applications by the
December 31, 2006 deadline for submission of proposals under the
initial Solicitation Announcement (Solicitation No. DE-PS01-06LG00001),
issued August 8, 2006. These timely filed Pre-Applications are already
under preliminary review. Once all of the preliminary reviews are
completed, invitations will be extended to selected entities to submit
full Applications. Until such time as the preliminary reviews are
completed and the number and complexity of projects receiving an
invitation to file a complete Application are known, the Department
will not know how many projects it will fully review.
Question 4b. We heard testimony at a recent Committee Biofuels
Conference to the effect that it would be wise for the Department to
begin the process of evaluating those pre-applications now, so that
decisions about advancing to the application stage can be made as
expeditiously as possible. Is the Department planning to move forward
with this analysis? What is the time frame in which DOE intends to
begin this process?
Answer. On August 8, 2006, the Department issued Guidelines and an
initial Solicitation Announcement (Solicitation No. DE-PS01-06LG00001).
The initial Solicitation and the Guidelines provided that technologies
for project proposals must be mature enough to assure dependable
commercial operations. These materials and other relevant documents are
available at www.lgprogram.energy.gov.
The timely filed Pre-Applications are currently under preliminary
review. This preliminary review will be followed by invitations to
selected entities to submit full Applications. With the enactment of
Public Law 110-5, the Department is moving forward to review these Pre-
Applications; to develop regulations for the program; and to fully
implement the loan guarantee program. So, even though P.L. 110-5
prohibits DOE from issuing any loan guarantees until it has promulgated
applicable final regulations, P.L. 110-5 does not prohibit DOE from
working to evaluate responses to the first solicitation prior to the
issuance of those final rules.
Responses of Secretary Bodman to Questions From Senator Domenici
LOAN GUARANTEES FOR INNOVATIVE TECHNOLOGIES (EPACT TITLE XVII)
Question 1. While your budget says you plan to do $9 billion in
loan guarantees for FY 2008, that number simply represents the total
face value of loan guarantees the administration chooses to grant. In
other words, there is no limitation in EPACT on the total amount of
guarantees that could be granted, correct? You could have said you
would do $9 billion, right?
Answer. No. You are correct that Title XVII of EPACT does not
contain any limitations on the total amount of loan guarantees that may
be issued under specific loan volume limitations provided in
appropriations acts. However, under the Federal Credit Reform Act of
1990, authority must be provided for in an appropriations act to enter
into new loan guarantee commitments.
Question 2. Furthermore, regardless of what that total face value
amount is, you do not have to seek appropriation of it. Under EPACT and
the Federal Credit Reform Act, only the ``cost'' or risk factor,'' if
you will needs to be set aside in the treasury in the event of default.
Under EPACT, as implemented by your program, the borrower can pay that
amount into the treasury, so no appropriation is required for that
either, correct?
Answer. The Federal Credit Reform Act of 1990, section 504, is
clear that for any discretionary federal credit program new loan
guaranteecommitments may not be made unless authority has been provided
in an appropriations act. EPACT and FCRA together mean that DOE is
authorized to carry out a loan guarantee program, but that DOE may not
actually issue guarantees until it receives new budget authority or is
otherwise provided authority to make guarantees in an appropriations
act.
Question 3. Lastly, EPACT also directs you to collect
administrative costs from the borrowers to offset any costs of running
the program, so there's no cost to the treasury there either because
those will be offsetting receipts, isn't that right?
Answer. The Department will incur administrative expenses as part
of its review of Pre-Applications and Applications. EPACT section
1702(h) requires that the Department ``charge and collect fees for
guarantees . . . sufficient to cover applicable administrative
expenses.'' P.L. 110-5 appropriates $7 million in FY 2007 for
administrative expenses. The Department anticipates addressing the
subject of fees in its incoming notice of proposed rulemaking.
The appropriations language in P.L. 110-5 and proposed in the
Administration's FY 2008 Budget for administrative expenses reflects
the offsetting nature of the 1702(h) collections. This provides the
Department the necessary authority to carry out the Loan Guarantee
Program, while also reflecting that the costs will ultimately be borne
by the Applicants/Borrowers and not the general Treasury.
Question 4. The point is, Mr. Secretary, there is no appropriation
required of the total face value of the loan guarantees, nor has
Congress set any limit on how many of these you can grant except at
your request. Isn't that your understanding?
Answer. EPACT and FCRA together mean that DOE is authorized to
carry out a loan guarantee program, but that DOE may not actually issue
guarantees until it receives new budget authority or is otherwise
provided authority to make guarantees in an appropriations act. DOE
previously conveyed this to this Committee and to the Government
Accountability Office. For example, on May 1, 2006, DOE Under Secretary
David K. Garman testified before this Committee that DOE would need an
authorization, such as a loan volume limitation, in an appropriations
act before DOE would be able to issue loan guarantees under the Title
XVII program.
Question 5. I understand that you have over 160 pre-applications
under review for this program to get these new technologies in the
marketplace. Can you commit to me that you'll move as quickly as
possible to get this program off the drawing board and into action? Can
we be confident that the Department will begin reviewing pre-
applications in the very near future?
Answer. I am committed to moving the program forward expeditiously.
The Department received over 100 Pre-Applications by the December 31,
2006 deadline for submissions under the Department's Solicitation
Announcement (Solicitation No. DE-PS01-06LG00001), issued August 8,
2006. These timely filed Pre-Applications are already under preliminary
review. Once all of the preliminary reviews are completed, invitations
will be extended to selected entities to submit full Applications. The
Department also is preparing to issue a Notice of Proposed Rulemaking
(NOPR) for this program.
NATURAL GAS AND OIL TECHNOLOGY PROGRAMS
Question 1. Consistent with the President's FY2006 and FY2007
budgets, you again propose the elimination of the natural gas and oil
technology programs within the Office of Fossil Energy for FY2008.
You state in the FY2008 budget that the Natural Gas Technology
Program was rated ``ineffective''. Will you please explain how you came
to this conclusion?
Answer. In 2003, the Natural Gas Technologies Program received an
overall PART score of 44%. The Program and Assessment Rating Tool
(PART) is an OMB designed tool to rate programs. PART consists of four
sections: 1. Program Purpose and Design, 2. Strategic Planning, 3.
Program Management, 4. Program Results. Each section consists of a
number of questions most of which are scored ``yes'' or ``no''. Scores
from the four sections are weighted (20%, 10%, 20% and 50%,
respectively) to obtain an overall score. Programs with PART scores
less than 50 out of 100 are rated ``ineffective.'' The program was
rated ``Ineffective'' in the PART analysis based primarily on not
demonstrating clear results of the research effort. Full PART
reassessments are conducted based on the level of new information
available. The Natural Gas Technology Program has not indicated
evidence of a significant change in performance and has not been
selected for a reassessment.
Question 3. Consistent with the President's FY2006 and FY2007
budgets, you again propose the elimination of the natural gas and oil
technology programs within the Office of Fossil Energy for FY2008.
What role, if any, do you believe DOE should have in advancing
technology which promotes the more efficient exploration, production
and transportation of natural gas and oil?
Answer. Oil and gas are mature industries and both have every
incentive, particularly at today's prices, to enhance production and
continue research and development of technologies on their own. There
is no need for taxpayers to subsidize oil companies in these efforts.
The Administration's Research and Development Investment Criteria
direct programs to avoid duplicating research in areas that are
receiving funding from the private sector, especially for evolutionary
advances and incremental improvements.
The 2008 Budget proposes to expand access to oil and gas resources,
streamline permitting processes, and make the R&D investment tax credit
permanent. These changes will leverage private sector ingenuity and are
preferred ways to increase domestic production of oil and gas rather
than Federally funded R&D.
Question 4. Consistent with the President's FY2006 and FY2007
budgets, you again propose the elimination of the natural gas and oil
technology programs within the Office of Fossil Energy for FY2008.
Is your decision to terminate these programs a function of budget
constraints, program ineffectiveness, other priorities, or a
combination of the three? Please explain.
Answer. Budget discipline necessitated close scrutiny of all Fossil
Energy programs, using strict guidelines to determine their
effectiveness and compare them to other programs offering more clearly
demonstrated and substantial benefits. The Program Assessment Rating
Tool (PART) was developed by OMB to provide a standardized way to
assess the effectiveness of the Federal Government's portfolio of
programs. The structured framework of the PART provides a means through
which programs can assess their activities differently than through
traditional reviews. A PART assessment of the Natural Gas R&D program
was conducted for the FY 2004 Budget and a reassessment was conducted
for the FY 2005 Budget. The program was rated ``Ineffective'' in the
PART analysis based primarily on not demonstrating clear results of the
research effort.
Question 3. Please explain your rationale for terminating this
program.
Answer. The Administration strongly supports research and
development that will increase the Nation's energy independence, and is
proposing to make the R&D investment tax credit permanent. The FY 2008
Budget includes initiatives for hydrogen fuel, biofuels, and solar
photovoltaics to help displace future demand for oil and natural gas.
The Administration also supports removing unnecessary barriers to
developing existing reserves of oil and gas including, for instance,
the environmentally responsible exploration and development of reserves
in Alaska.
The oil and gas R&D programs focus on technologies that can be
commercialized quickly. Oil companies have strong incentives to figure
out ways to get the oil out of the ground cheaply and safely. They have
shown, along with the oil services industry, remarkable engineering
prowess, including when it comes to offshore engineering. There is no
need for taxpayers to subsidize oil companies in these efforts.
BIOFUELS/LOAN GUARANTEES
Question 1. I am interested in whether the Department is working to
use the loan guarantee program to support commercialization efforts of
cellulose ethanol projects.
What is the Department doing to specifically support cellulose
ethanol commercialization through the loan guarantee program?
Answer. Proposals to commercialize cellulosic ethanol fit within
the category of renewable energy projects eligible for loan guarantees
under Title XVII of EPACT 2005. Even in advance of enactment of the
Joint Resolution, Public Law 110-5, which provided $7 million in
funding for administrative expenses of the Loan Guarantee Program, the
Department began activities under the Title XVII loan guarantee
program. Specifically, on August 8, 2006, the Department issued
Guidelines and an initial Solicitation Announcement (Solicitation No.
DE-PS01-06LG00001). The deadline for submitting Pre-Applications in
response to that solicitation (including for biomass or cellulosic
ethanol projects), closed on December 31, 2006. In addition, the
Guidelines provided that technologies for project proposals must be
mature enough to assure dependable commercial operations. These
materials and other relevant documents are available at http://
www.lgprogram.energy.gov.
Responses of Secretary Bodman to Questions From Senator Cantwell
Question 20. Secretary Bodman, you testified that the
Administration does not believe that the oil and gas industry need
incentives to expand drilling when world prices are so high. Could you
please say whether you would recommend the President sign legislation
repealing expensing of exploration and production costs and if you
recommend not signing such a bill, please explain why and how much you
estimate this tax provision current costs the federal treasury.
Answer. While I would have to see the details of particular
legislation before commenting on it, I am not likely to make
recommendations on issues that involve tax policy, which is the
jurisdiction of the Department of Treasury.
Question 21. Secretary Bodman, you testified that the
Administration does not believe that the oil and gas industry need
incentives to drill when world prices are so high. Could you please say
whether you would recommend the President sign legislation repealing
excess of percentage over cost depletion? If you recommend not signing
such legislation, please explain why and how much you estimate this tax
provision current costs the federal treasury.
Answer. While I would have to see the details of particular
legislation before commenting on it, I am not likely to make
recommendations on issues that involve tax policy, which is the
jurisdiction of the Department of Treasury.
Question 22. Secretary Bodman, you testified that the
Administration does not believe that the oil and gas industry need
incentives to drill when world prices are so high. Could you please say
whether you would recommend the President sign legislation repealing
tax credits for enhanced oil recovery costs? If you recommend not
signing such legislation, please explain why and how much you estimate
this tax provision current costs the federal treasury.
Answer. While I would have to see the details of particular
legislation before commenting on it, I am not likely to make
recommendations on issues that involve tax policy, which is the
jurisdiction of the Department of Treasury.
Question 23. Secretary Bodman, you testified that the
Administration does not believe that the oil and gas industry need
incentives to drill when world prices are so high. Could you please say
whether you would recommend the President sign legislation repealing
tax credits in EPACT 2005 including the election to expense certain
refineries, treatment of natural gas distribution lines as 15-year
property, treatment of natural gas gathering lines as 7-year property,
and the new rule for determining small refineries? If you recommend not
signing such legislation, please explain why and how much you estimate
this tax provision current costs the federal treasury.
Answer. Yes, I would recommend the repeal of some EPACT tax
incentives to reduce the revenue losses to the Federal treasury. For
example, the Administration's FY2008 budget recommends the repeal of
the EPACT provision for an acceleration of depreciation of natural gas
distribution lines. Treasury's estimated revenue increase for the
proposal is $906 million for FY 2008--2017. The FY 2008 Budget also
proposes to increase the amortization period from two to five years for
geological and geophysical expenditures (G&G) incurred by independent
oil and gas producers in connection with all oil and gas production in
the United States. The Administration's proposal recognizes that high
energy rices provide incentives for investment in exploration and that
additional p incentives in the form of accelerated amortization of G&G
are not necessary. In addition, the Budget proposal provides consistent
treatment of G&G for all oil and gas producers while retaining the
simplification benefits provided by EPACT. The estimated revenue
increase for the proposal is $582 million for FY 2008--2017.
I would add, however, that I support certain EPACT provisions that
provide significant tax simplification. For example, EPACT clarified
the tax treatment of natural gas gathering lines, resolving an issue
that had resulted in a substantial amount of litigation between IRS and
taxpayers and providing equal treatment of such gathering lines among
different types of owners.
Although I do not have an estimate of the rest of the EPACT tax
incentives, the Joint Committee on Taxation prepared such estimates in
connection with the EPACT conference agreement. Those estimates can be
found in the Joint Committee publication JCX-59-05.
Question 24. Secretary Bodman, you testified that the
Administration does not believe that the oil and gas industry need
incentives to drill when world prices are so high. Could you please say
whether you would recommend the President sign legislation adjusting
the LIFO and FIFO accounting rules for the big 5 oil companies?
Answer. The Administration has opposed proposed modifications of
inventory accounting rules for certain large oil companies. There is no
basis in sound tax accounting for requiring the adjusting of LIFO and
FIFO accounting rules for only 5 companies. Thus, it would be
inappropriate to single out 5 large oil companies for inventory tax
treatment that would differ from that allowed other firms in the oil
industry or other industries.
Question 28. Secretary Bodman, as you know China's energy demands
are rising at an incredible pace. Could you please describe any and all
programs the Department is conducting with the Chinese government, or
within China, besides the Asia Pacific Partnership?
Answer. Driven by economic growth, China's demand for energy has
been rising rapidly. This rapid growth is expected to continue over the
next decades. To help alleviate pressure on the world oil market, the
Department of Energy has actively engaged with China on strategies for
diversifying its energy supply. Our cooperation with China is focusing
on increasing China's use of clean and more efficient energy to lower
its impact on energy markets and the environment. Our energy programs
in China are described below.
Fossil Energy Programs in China: The major area of cooperation on
fossil energy is the Protocol between DOE and China's Ministry of
Science and Technology (MOST), signed in 2000, which is a bilateral
agreement that promotes scientific and technological cooperation and
exchanges in the field of fossil energy. These exchanges will help to
reduce the adverse environmental impacts of power production from coal
in China, provide commercial opportunities for U.S. businesses, and
acquire scientific and technical information of interest to DOE. DOE's
Office of Fossil Energy spent an estimated $430,000 on activities under
the China Protocol in 2006. DOE has also engaged in forums and
information exchanges through the U.S. China Oil and Gas Industry Forum
and the U.S./China Energy and Environmental Technology Center.
Energy Efficiency and Renewable Energy Programs in China: On
December 15, 2006, the DOE and MOST renewed an energy efficiency and
renewable energy Protocol, which started in 1995, for cooperation on
solar, wind, and biomass and energy efficiency technologies. In the
area of energy efficiency, current activities include evaluating gaps
in China's energy efficiency policies and promoting dialogue and
collaboration on energy efficiency measures. The Department is working
to promote energy efficiency through industrial efficiency assessments
that will promote the use of advanced efficiency technology and reduce
air pollution. This will also increase the market for U.S. products.
China's industrial sector accounts for 60% of its total energy
consumption, so this is a major target of opportunity.
The building sector is another key area for energy conservation.
The Agenda 21 Building in Beijing, completed in 2004 through a
cooperative effort between DOE and MOST, obtained a Leadership in
Energy and Environmental Design (LEED) Gold rating and demonstrated the
potential contribution to energy conservation these technologies could
make. The Department's support of the Agenda 21 Building will encourage
private sector participation by featuring state-of-the-art U.S.
building technology and serving as a training and exhibition center for
American products.
The Department also supports projects and programs in China in the
area of renewable energy, focusing on biofuels, solar, and wind
technologies. DOE is working with its Chinese counterparts to exchange
information on advances in technologies, specifically helping the
Chinese map and evaluate feedstock resources for biofuels and
approaches to expanding the use of flex fuel vehicles to reduce the
amount of oil that China will need for its growing automobile fleet.
The Office of Energy Efficiency and Renewable Energy (EERE) spent
approximately $140,000 on programs with China in 2006.
The U.S.-China Energy Policy Dialogue: Established in May 2004, the
Dialogue aims to improve mutual understanding of our respective energy
policies; to offer relevant U.S. experiences to help Chinese policy
makers improve the legal and regulatory framework for energy
investment; and to mitigate the environmental affects of China's rising
fossil energy consumption. The second and most recent Dialogue was held
in September 2006, in China.
The U.S.-China Strategic Economic Dialogue: DOE actively
participates in this Dialogue, which was established in 2006 and is led
by the Treasury Department. I co-chaired a session on ``Energy and
Environment'' with EPA Administrator Stephen Johnson and addressed
various aspects of the linkage between the use of energy and natural
resources and their impact on the environment, and sustainable economic
development.
Peaceful Uses of Nuclear Technology (PUNT) Cooperation:Established
in 1998 by the U.S. and Chinese governments, the PUNT cooperation aims
to positively influence China on nuclear nonproliferation policy and to
promote various areas of nuclear energy research and development
cooperation. The areas of cooperation are the control of exports of
nuclear materials, equipment and technologies; nuclear material control
and accounting; physical protection of nuclear materials and nuclear
facilities; nuclear reactor power plant safety; and nuclear safeguards
technology development.
DOE also cooperates with China in a number of multilateral energy
activities including:
FutureGen: The FutureGen project, announced by President Bush in
2003, is a $950 million multilateral initiative to build a near-zero
atmospheric emissions coal-fired power plant. The China Huaneng Group
is already part of the FutureGen Industry Alliance, which is a
consortium of coal producers and users who partner with DOE on the
FutureGen project. In December 2006, the Chinese government formally
expressed its willingness to join other interested foreign governments
on the U.S.-led FutureGen Government Steering Committee, which will
provide recommendations to the Alliance on development of the FutureGen
project.
Carbon Sequestration Leadership Forum (CSLF): Another potentially
transforming technology is the focus of the Department's Carbon
Sequestration Leadership Forum (CSLF). Given the potential technical
contributions and the importance of future markets, the Chinese have
been important partners in this initiative. China has been an active
member of the CSLF since its inception in 2003.
International Partnership for a Hydrogen Economy (IPHE): The U.S.
and China are also working together through the International
Partnership for a Hydrogen Economy (IPHE), which President Bush
envisages as helping to bring hydrogen-based vehicles to market
worldwide. China hosted the IPHE Steering Committee meeting in May 2004
in Beijing and the IPHE Implementation-Liaison Committee meeting in
January 2006 in Shanghai.
GenIV: In November 2006, China, together with the Russian
Federation became a member of the Generation IV International Forum
(GIF), composed of the energy ministries and agencies of 11 countries
and the European Atomic Energy Community. The Forum is a framework for
international research and development collaboration for the next
generation of nuclear systems that satisfactorily address the GIF's
criteria of safety, economy, sustainability, proliferation resistance,
and physical protection. China has announced its intention to accede to
the multilateral Framework Agreement for International Collaboration on
Research and Development of Generation IV Nuclear Energy Systems
(signed February 28, 2005), joining the governments of Canada, France,
Japan, the Republic of Korea, Switzerland, the United Kingdom, and the
United States.
ITER: President Bush announced on January 30, 2003, that the U.S.
was joining the negotiations for the International Thermal Nuclear
Experimental Reactor, now referred to as ITER, whose mission is to
demonstrate the scientific and technological feasibility of clean
fusion energy. In June 2005, the ITER parties, namely China, the
European Union, Japan, the Republic of Korea, Russia and the U.S.,
agreed to build the ITER facility in Cadarache, France, the main
research center of the French Atomic Energy Commission. India joined
the project in December 2005, and the ITER Agreement was signed by the
seven ITER parties on November 21, 2006. The U.S. and China, as non-
host partners, will each participate in the construction phase at the
level of 9.09 percent.
Response of Secretary Bodman to Question From Senator Sanders
LOAN GUARANTEES
Question 2. The budget proposes to allow the Department to support
$4 billion in proposed loan guarantees for nuclear and coal plants in
FY2008, compared to a $5 billion cap for biofuels, electricity
transmission and the vast array of renewable energies. Your Department
set these amounts, but according to your own budget request, you have
yet to evaluate the financial risks for US taxpayers. A 2003 estimate
by the Congressional Budget Office concluded the risk of loan default
for a new nuclear plant would be ``well above 50 percent.'' How did the
Department make its decision on the total amount and allocations for
loan guarantees without having evaluated the financial risks?
Answer. DOE anticipates $9 billion in loan guarantees in FY 2008.
The sub-limits in the Budget are reasonable goals for the allocation of
authority among eligible projects. That being said, there is no magic
as to how the sub limits were set. As the Budget itself states, ``[p]
recisely how any authorized would be alloca-
ted . . . ultimately would depend on the merits and benefits of
particular project proposals and their compliance with statutory and
regulatory requirements.''
Response of Secretary Bodman to Question From Senator Sessions
Question 4. Many major U.S. industries are currently under
significant competitive pressure from offshore producers that have
access to lower cost supplies and relaxed environmental regulations.
Will investments in energy efficiency [and] carbon reduction R&D help
support those industries and encourage them to stay here in the U.S.?
Answer. Energy efficiency provides a cost-effective option to save
energy, reduce greenhouse gas emissions, and help with companies'
bottom lines. One example is the Save Energy Now campaign I announced
in late 2005. Through DOE's Industrial Technologies Program, Energy
Saving Teams visited 200 of the most energy-intensive manufacturing
facilities in the country over the past 12 months. Working with plant
personnel, the teams identified savings opportunities that typically
amounted to 5 to 15 percent of a plant's total energy use, with an
average potential savings of about $2.5 million per plant if our
recommendations are implemented. In total, these assessments identified
opportunities to save over 50 trillion Btu--roughly equivalent to the
natural gas used in 700,000 American homes--and close to $500 million
per year in energy costs (including electricity). We did not calculate
the plants' investment necessary to achieve these energy cost savings,
but in many cases, our recommendations are low-cost or no-cost process
improvements. These energy savings equate to reducing carbon dioxide
emissions by 3.3 million metric tons annually. We are expanding the
program to cover another 250 plants in fiscal year 2007. In addition,
the Industrial Technologies Program promotes R&D for advanced, energy
efficient manufacturing process technologies that will improve
efficiency even more. These types of programs can help enhance our
energy security, reduce greenhouse gas emissions, and keep American
industry competitive.
Responses of Secretary Bodman to Questions From Senator Salazar
TITLE XVII LOAN GUARANTEES
Question 8. Mr. Secretary, The Energy Policy Act of 2005 authorized
loan guarantees for a variety of new clean energy technologies. It is
absolutely critical that the Department finally establish an Office of
Loan Guarantees. I am glad to see that you propose to issue $9 billion
in loans, but I remain concerned with the Department's lack of progress
establishing the loan guarantee program. Please provide me and the
Members of the Committee with a written update and statement of your
plan to implement Congress's intent in Title XVII of EPAct 2005.
Answer. In May 2006, the Department requested Congressional
approval for an appropriations transfer of $2.7 million to fund start-
up of a DOE Loan Guarantee Office. The Senate approved this request but
the House of Representatives rejected it. As a result, until the
enactment of P.L. 110-5 on February 15, 2007, which provided for funds
and authority to fully implement the Title XVII program, DOE's ability
to carry the program forward was extremely limited. The Department did
issue Guidelines and an initial Solicitation Announcement on August 8,
2006, and is currently reviewing the pre-applications received under
that solicitation. Now that it has been provided necessary funding and
legal authority, DOE intends to move forward expeditiously to implement
this program.
Among other things, the Department is preparing to issue a Notice
of Proposed Rulemaking for the program, and will move forward
expeditiously to complete its review of the completed, timely filed,
Pre-Applications submitted in response to the first solicitation.
TITLE XVII LOAN GUARANTEES
Question 9. I am particularly anxious to learn what solicitations
for project proposals the Department will issue for Integrated
Gasification Combined Cycle (IGCC) demonstration project in the western
U.S. Will you please update me on the Department's plans in that
regard?
Answer. The Clean Coal Power Initiative (CCPI) is the primary
vehicle used by the Department of Energy to fund demonstration scale
advanced coal technology projects such as IGCC. In FY 2008 CCPI will
complete the Round 3 solicitation, proposal evaluations, and project
selections to assemble the initial portfolio of advanced technology
systems that capture carbon dioxide for sequestration and beneficial
reuse.
Response of Secretary Bodman to Question From Senator Murkowski
ALASKA ENERGY OFFICE
Question 5. DOE for the past six years has operated an Alaska
Energy Office. It has never received more than $7 million annually, but
it has worked on some exciting projects: how to supply rural villages
with innovative power in places where diesel-generated power costs up
to 70 cents per kilowatt (fuel cells). How to harness coal while
sequestering carbon and enhancing oil recovery from oil fields. How to
turn coal into nitrogen and other elements through gasification. How to
get heavy oil out of the ground. How to develop gas hydrates. How, most
recently, to get power to the citizens of Southcentral Alaska now that
existing supplies of natural gas are becoming more scarce and
expensive. I'm sorry to see your decision not to return the office
again for the coming year. Could you tell me any substantive reason why
you made that decision or was it purely budget driven?
Answer. Consistent with the FY 2006 and FY 2007 Budgets, the Oil
and Natural Gas Technology programs are being terminated in FY 2008.
Budget discipline necessitated close scrutiny of all Fossil Energy
programs, using strict guidelines to determine their effectiveness and
to compare them to other programs offering more clearly demonstrated
and substantial benefits. The Program Assessment Rating Tool (PART) was
developed by OMB to provide a standardized way to assess the
effectiveness of the Federal Government's portfolio of programs. The
structured framework of the PART provides a means through which
programs can assess their activities differently than through
traditional reviews. A PART assessment of the Natural Gas R&D program
was conducted for the FY 2004 Budget and a reassessment was conducted
for the FY 2005 Budget. The program was rated ``Ineffective'' in the
PART analysis based primarily on not demonstrating clear results of the
research effort.
Responses of Secretary Bodman to Questions From Senator Wyden
Question 5. You have also apparently decided that part of your
Department's mission is to help factories in China become more energy
efficient by helping them to perform energy assessments. Please provide
a detailed explanation of exactly what your Department is doing in
China with regard to each program within the Department, e.g.
Efficiency and Renewable Energy, Fossil Energy, etc., and the funding
that will be used for these activities.
Answer. Driven by economic growth, China's demand for energy has
been rising rapidly. This rapid growth is expected to continue over the
next decades. To help alleviate pressure on the world oil market, the
Department of Energy has actively engaged with China on strategies for
diversifying its energy supply. Our cooperation with China is focusing
on increasing China's use of clean and more efficient energy to lower
its impact on energy markets and the environment. Our energy programs
in China are described below.
Fossil Energy Programs in China: There are major area of
cooperation on fossil energyis the Protocol between DOE and China's
Ministry of Science and Technology (MOST), signed in 2000, which is a
bilateral agreement that promotes scientific and technological
cooperation and exchanges in the field of fossil energy. These
exchanges will help to reduce the adverse environmental impacts of
power production from coal in China, provide commercial opportunities
for U.S. businesses, and acquire scientific and technical information
of interest to DOE. DOE's Office of Fossil Energy spent an estimated
$430,000 on activities under the China Protocol in 2006. DOE has also
engaged in forums and information exchanges through the U.S. China Oil
and Gas Industry Forum and the U.S./China Energy and Environmental
Technology Center.
Energy Efficiency and Renewable Energy Programs in China: On
December 15, 2006 the DOE and MOST renewed an energy efficiency and
renewable energy Protocol, which started in 1995, for cooperation on
solar, wind, and biomass and energy efficiency technologies. In the
area of energy efficiency, current activities include evaluating gaps
in China's energy efficiency policies and promoting dialogue and
collaboration on energy efficiency measures. The Department is working
to promote energy efficiency through industrial efficiency assessments
that will promote the use of advanced efficiency technology and reduce
air pollution. This will also increase the market for U.S. products.
China's industrial sector accounts for 60% of its total energy
consumption, so this is a major target of opportunity.
The building sector is another key area for energy conservation.
The Agenda 21 Building in Beijing, completed in 2004 through a
cooperative effort between DOE and MOST, obtained a Leadership in
Energy and Environmental Design (LEED) Gold rating and demonstrated the
potential contribution to energy conservation these technologies could
make. The Department's support of the Agenda 21 Building will encourage
private sector participation by featuring state-of-the-art U.S.
building technology and serving as a training and exhibition center for
American products.
The Department also supports projects and programs in China in the
area of renewable energy, focusing on biofuels, solar, and wind
technologies. DOE is working with its Chinese counterparts to exchange
information on advances in technologies specifically helping the
Chinese map and evaluate feedstock resources for biofuels and
approaches to expanding the use of flex fuel vehicles to reduce the
amount of oil that China will need for its growing automobile fleet.
The Office of Energy Efficiency and Renewable Energy (EERE) spent
approximately $140,000 on programs with China in 2006.
The U.S.-China Energy Policy Dialogue: Established in May 2004, the
Dialogue aims to improve mutual understanding of our respective energy
policies; to offer relevant U.S. experiences to help Chinese policy
makers improve the legal and regulatory framework for energy
investment; and to mitigate the environmental affects of China's rising
fossil energy consumption. The second and most recent Dialogue was held
in September 2006, in China.
The U.S.-China Strategic Economic Dialogue: DOE actively
participates in this Dialogue, which was established in 2006 and is led
by the Treasury Department. I co-chaired a session on ``Energy and
Environment'' with EPA Administrator Stephen Johnson and addressed
various aspects of the linkage between the use of energy and natural
resources and their impact on the environment, and sustainable economic
development.
Peaceful Uses of Nuclear Technology (PUNT) Cooperation: Established
in 1998 by the U.S. and Chinese governments, the PUNT cooperation aims
to positively influence China on nuclear nonproliferation policy and to
promote various areas of nuclear energy research and development
cooperation. The areas of cooperation are the control of exports of
nuclear materials, equipment and technologies; nuclear material control
and accounting; physical protection of nuclear materials and nuclear
facilities; nuclear reactor power plant safety; and nuclear safeguards
technology development.
DOE also cooperates with China in a number of multilateral energy
activities including:
FutureGen: The FutureGen project, announced by President Bush in
2003, is a $950 million multilateral initiative to build a near-zero
atmospheric emissions coal-fired power plant. The China Huaneng Group
is already part of the FutureGen Industry Alliance, which is a
consortium of coal producers and users who partner with DOE on the
FutureGen project. In December 2006, the Chinese government formally
expressed its willingness to join other interested foreign governments
on the U.S.-led FutureGen Government Steering Committee, which will
provide recommendations to the Alliance on development of the FutureGen
project.
Carbon Sequestration Leadership Forum (CSLF): Another potentially
transforming technology is the focus of the Department's Carbon
Sequestration Leadership Forum (CSLF). Given the potential technical
contributions and the importance of future markets, the Chinese have
been important partners in this initiative. China has been an active
member of the CSLF since its inception in 2003.
International Partnership for a Hydrogen Economy (IPHE): The U.S.
and China are also working together through the International
Partnership for a Hydrogen Economy (IPHE), which President Bush
envisages as helping to bring hydrogen-based vehicles to market
worldwide. China hosted the IPHE Steering Committee meeting in May 2004
in Beijing and the IPHE Implementation-Liaison Committee meeting in
January 2006 in Shanghai.
GenIV: In November 2006, China, together with the Russian
Federation, became a member of the Generation IV International Forum
(GIF), composed of the energy ministries and agencies of 11 countries
and the European Atomic Energy Community. The Forum is a framework for
international research and development collaboration for the next
generation of nuclear systems that satisfactorily address the GIF's
criteria of safety, economy, sustainability, proliferation resistance,
and physical protection. China has announced its intention to accede to
the multilateral Framework Agreement for International Collaboration on
Research and Development of Generation IV Nuclear Energy Systems
(signed February 28, 2005), joining the governments of Canada, France,
Japan, the Republic of Korea, Switzerland, the United Kingdom, and the
United States.
ITER: President Bush announced on January 30, 2003, that the U.S.
was joining the negotiations for the International Thermal Nuclear
Experimental Reactor, now referred to as ITER, whose mission is to
demonstrate the scientific and technological feasibility of clean
fusion energy. In June 2005, the ITER parties, namely China, the
European Union, Japan, the Republic of Korea, Russia and the U.S.,
agreed to build the ITER facility in Cadarache, France, the main
research center of the French Atomic Energy Commission. India joined
the project in December 2005, and the ITER Agreement was signed by the
seven ITER parties on November 21, 2006. The U.S. and China, as non-
host partners, will each participate in the construction phase at the
level of 9.09 percent.
Asia-Pacific Partnership (APP) for Clean Development and Climate:
APP is an effort to accelerate the development and deployment of clean
energy technologies. Founding partners Australia, China, India, Japan,
Republic of Korea, and the United States have agreed to work together
and with private sector partners to meet goals for energy security,
national air pollution reduction, and climate change in ways that
promote sustainable economic growth and poverty reduction. The
Partnership will focus on expanding investment and trade in cleaner
energy technologies, goods and services in key market sectors. The
Partners have approved eight public-private sector task forces:
Aluminum, Buildings and Appliances, Cement, Cleaner Use of Fossil
Energy, Coal Mining, Power Generation and Transmission, Renewable
Energy and Distributed Generation, and Steel. China has been actively
engaged in the task forces and hosted two task force meetings last year
(Power Generation and Transmission in Beijing and Cement in Xian).
ULTRA-DEEPWATER NATURAL GAS RESEARCH PROGRAM
Question 8. Mr. Secretary, a last minute provision tucked into the
Energy Policy Act of 2005 set aside $50 million a year in mineral
royalties and $100 million a year in authorized appropriations for an
industry research consortium to help the oil and gas industry with new
exploration methods for ultra-deepwater gas. The DOE budget proposes to
repeal this program and zeroing it out in your 2008 budget. Why does
the Administration believe that this program should be repealed?
Answer. The Administration strongly supports research and
development that will increase the Nation's energy independence, and is
proposing to make the R&D investment tax credit permanent. The 2008
Budget includes initiatives for hydrogen fuel, biofuels, and solar
photovoltaics to help displace future demand for oil and natural gas.
The Administration also supports removing unnecessary barriers to
developing existing reserves of oil and gas including, for instance,
the environmentally responsible exploration and development of reserves
in Alaska.
The oil and gas R&D programs focus on technologies that can be
commercialized quickly. Oil companies have strong incentives to figure
out ways to get the oil out of the ground cheaply and safely. They have
shown, along with the oil services industry, remarkable engineering
prowess, including when it comes to offshore engineering. There is no
need for taxpayers to subsidize oil companies in these efforts.
Responses of Secretary Bodman to Questions From Senator Thomas
ROCKY MOUNTAIN OILFIELD TESTING CENTER
Question 3a. Our ability to produce energy here at home is reliant
upon advances in technology. Increasing responsible domestic production
lowers prices and increases our security. The Rocky Mountain Oilfield
Testing Center is located in Wyoming. It's not a private company. It's
not a University or a non-profit organization. It is the Department of
Energy that owns it, runs it, and uses it to advance technologies. Yet
I have to seek an earmark every year to run a facility that belongs to
DOE.
Why do you not request money for the rocky mountain oilfield
testing center in your budget?
Answer. DOE does request funding for the Rocky Mountain Oilfield
Test Center (RMOTC) annually in the budget process. The RMOTC budget
request is included with the budget for operation of Naval Petroleum
Reserve No. 3, which is part of the larger Naval Petroleum and Oil
Shale Reserve (NPOSR) request. The past three Congressional Budget
Requests are as follows:
[Dollars in Thousands]
------------------------------------------------------------------------
FY 2006 FY 2007 FY 2008
Cong. Cong. Cong.
Request Request Request
------------------------------------------------------------------------
RMOTC/NPR-3............................... 9,004 10,258 10,110
Other NPR................................. 9,496 8,552 7,191
Total NPOSR............................... 18,500 18,810 17,301
------------------------------------------------------------------------
Question 3b. Why does the money generated from the sale of oil
produced at RMOTC go to the Federal Treasury?
Answer. Proceeds from the sale of hydrocarbons are deposited into
the U.S. Treasury as mandated by law. Section 7432 of the Naval
Petroleum Reserves Production Act of 1976 [Public Law 94-258]
established a special account for the deposit of all proceeds realized
from the sale of the U.S. share of production. For three years Congress
made appropriations for the Naval Petroleum Reserves out of this
special account. In 1979, Public Law 96-137 abolished the Naval
Petroleum Reserves special account and specified that all monies
accruing to the United States after December 12, 1979, from the Naval
Petroleum Reserves shall be conveyed to the U.S. Treasury as
miscellaneous receipts. This law is still in effect and revenues
continue to be deposited into the miscellaneous receipts account.
Question 3c. Do you support giving that money back to RMOTC to
reinvest in the important work they do?
Answer. The FY 2008 President's Budget reflects the
Administration's policy for RMOTC and NPR 3. The 2008 Budget doesn't
propose any change in the use of receipts from the sale of oil and gas
produced at NPR 3.
Question 4. Section 413 of the Energy Policy Act authorized a
federal cost share to demonstrate IGCC in the west. The west is
experiencing enormous demand growth in its electricity sector. Wyoming
is ready to help meet those needs by building clean coal power plants.
We ought to pursue clean coal instead of LNG import terminals in highly
populated areas. The people who live on our coasts do not want LNG
terminal and increasing imports of natural gas is terrifically harmful
to our nation's energy security. Why doesn't the budget request seek
funding for section 413 implementation?
Answer. The Clean Coal Power Initiative (CCPI) is the primary
vehicle used by the Department of Energy to fund demonstration scale
advanced coal technology projects such as the IGCC demonstration
authorized under section 413 of EPACT 2005. In FY 2008 CCPI will
complete the Round 3 solicitation, proposal evaluations, and project
selections to assemble the initial portfolio of advanced technology
systems that capture carbon dioxide for sequestration and beneficial
reuse.
Question 8b. The people of Wyoming want to convert our coal to a
more valuable resource. We want to generate clean power and produce
clean diesel fuel. These options are clearly better than digging up
coal and shipping it out on railcars. We dig a lot of it up too, 36
percent of the supply in the United States comes from Wyoming. How much
money is requested for these things in your 2008 budget?
Answer. The fiscal year 2008 budget request for the Clean Coal R&D
Program is focused on achieving many key goals that would also
contribute to achieving Wyoming's goal.
DOE's request for 2008 includes $448 million for clean coal
research, development, and demonstration. Of that:
$73 million is for CCPI,
$108 million is for FuturGen,
$246 million is for coal R&D in the Fuels and Power Systems
program, and
$21 million is for coal R&D by federal researchers within
the Fossil Energy R&D Program Direction line.
Title IV Subtitle A Section 403 report to Congress transmitted on
August 8, 2006, details the goals of the CCPI program.
Title IX Subtitle F Section 962(b)(2)(C) report to Congress
transmitted on April 28, 2006, details the goals of the FE R&D program.
Besides these Clean Coal research, development, and demonstration
activities being carried out by the Department of Energy, the following
EPACT Sections may also support Wyoming's goal of exporting value-added
coal products:
Under EPACT Sections 48A and 48B investment tax credits are
authorized for advanced coal technologies, which could include
gasification technology, coproduction facilities that produce
both electric power, and liquid fuels from coal. $1 billion in
investment tax credits were awarded in 2007 under this
mandatory program, and the Department expects that the
Department of Treasury will award the remaining $650 million in
2008.
EPACT Section 1703 authorizes the Department to provide loan
guarantees for coal gasification, carbon sequestration, and
many other types of projects. The 2008 budget request includes
$8.4 million to operate a Loan Guarantee Office. The Department
anticipates $9 billion in loan guarantees in FY 2008.
Question 8c. What is DOE doing to encourage growth of interstate
pipeline and electrical infrastructure? Please provide as comprehensive
response as possible.
Answer. In response to the Energy Policy Act of 2005, the
Department of Energy (DOE) is working cooperatively with other Federal
and state agencies, local governments, and industry to expedite the
permitting of interstate natural gas pipelines. Section 372(b) of the
Energy Policy Act of 2005 (EPACT) requires the signatories to a May
2002 Interagency Agreement to submit to Congress a report on the
actions Federal agencies are taking with respect to permitting
activities with interstate natural gas pipelines. The purpose of the
May 2002 Interagency Agreement is to streamline and otherwise improve
the regulatory oversight of the permitting activities of natural gas
pipelines. The draft report is titled, ``How the Federal agencies are
Incorporating and Implementing the Provisions of the May 2002
Interagency Agreement on Early Coordination of Required Environmental
and Historic Preservation Reviews Conducted in Conjunction with the
Issuance of Authorizations to Construct and Operate Interstate Natural
Gas Pipelines Certificated by the Federal Energy Regulatory
Commission.'' The report was drafted by the Department's Office of
Fossil Energy in cooperation with the Depirrtment of Army, the
Department of Agriculture, the Department of Commerce, the Department
of the Interior, the Department of Transportation, the Advisory Council
on Historic Preservation, the Federal Energy Regulatory Commission, the
Council on Environmental Quality, and the Environmental Protection
Agency. The report, which is currently under review, will summarize the
progress by Federal agencies with respect to permitting activities of
interstate natural gas pipelines.
The new authorities concerning electrical infrastructure under
EPACT include calling on DOE to cooperate with the Federal land
management agencies to designate specific energy corridors crossing
Federal land (Section 368), to coordinate Federal authorizations
required to site transmission facilities (Section 216(h)), to conduct
periodic transmission congestion studies to identify areas of concern,
and, as the Secretary determines appropriate, designate National
Interest Electric Transmission Corridors.
The agencies affected by Section 368 began work shortly after the
Energy Policy Act of 2005 was enacted in August 2005. At that time, an
interagency team was established with DOE as the lead agency. The
Bureau of Land Management is a co-lead, and the Forest Service, the
Department of Defense, the Fish and Wildlife Service and the States of
California and Wyoming are cooperating agencies. The Coeur d'Alene
tribe is also a cooperating agency. In addition, the Department of
Commerce is involved as a consulting agency. Pursuant to EPACT Section
372(a), a Memorandum of Understanding (MOU) was signed by the four main
agencies in February 2006 with respect to cooperative implementation of
Section 368.
A draft Programmatic Environmental Impact Statement (PETS) for the
proposed action is expected to be published in the late spring of 2007.
The agencies anticipate there will be a 90-day comment period for
review, including hearings in each of the eleven western states. After
the final PETS is published, the land use plans are expected to be
amended by a record of decision in December 2007.
On August 8, 2006, the Department and eight other Federal agencies
signed a MOU on Early Coordination of Federal Authorization and Related
Environmental Reviews Required in Order to Site Transmission Facilities
on Federal Lands. Since that time, DOE has assembled a team to
implement Section 216(h), and is finalizing the Department's
procedures, including the roles and responsibilities of Federal
agencies and transmission project applicants. I am encouraged by the
potential benefits of systematic coordination among Federal agencies
and appropriate state agencies, Indian tribes, and multi-state entities
to prepare the initial calendars with milestones and deadlines for the
Federal authorizations and related reviews required for the siting of
transmission facilities. We are currently preparing procedures to
implement this section.
Section 1221(a) requires the Secretary to issue a report based on
the August 8, 2006 Congestion Study. In that report, the Secretary, at
his discretion, may designate any geographic area experiencing electric
energy transmission capacity constraints or congestion that adversely
affects consumers as a National Interest Electric Transmission Corridor
(National Corridor).
In the August 8, 2006 Congestion Study, the Department invited the
public to comment on the designation of National Corridors. The
Department continues to evaluate these comments, and has not yet
determined whether, and if so, where, it is appropriate to designate
National Corridors. Because there is broad public interest in the
implementation of Section 1221(a), the Department has decided that,
prior to issuing a report that designates any National Corridor, the
Department will first issue a draft designation to allow affected
states, regional entities, and the general public additional
opportunities for review and comment. The Department notes that Section
1221(a) does not require this additional comment period.
Departmental staff have been reviewing the 400 plus comments
received in response to the August 8 Congestion Study. The staff is
continuing to analyze the data developed in the Congestion Study and
provided by commenters, to develop a recommendation for whether, and if
so, where, one or more National Corridors should be proposed. Thus far,
the staff has not presented a recommendation to the Secretary.